Slide Insurance Holdings, Inc. (SLDE) Earnings Call Transcript & Summary

Greetings, and welcome to the Slide Insurance Second Quarter 2026 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I will now turn the call over to Investor Relations. Thank you. You may begin.

Thank you, and good morning. With us today are your hosts, Bruce Lucas, Chairman and Chief Executive Officer of Slide and Andy Omiridis, Chief Financial Officer. By now, everyone should have access to our earnings release, which was published yesterday after the market closed and can be found on our website at ir.slideinsurance.com. Before we begin our formal remarks, I need to remind everyone that part of our discussion today may include forward-looking statements which are based on the expectations, estimates and projections of management regarding the company's future performance, anticipated events or trends and other matters that are not historical facts -- forward-looking statements in our discussion are subject to various assumptions, risks, uncertainties and other factors that are difficult to predict and which could cause actual results to differ materially from those expressed or implied in the forward-looking statements. These statements are not guarantees of future performance, and therefore, undue reliance should not be placed upon them. We refer all of you to our earnings release and recent filings with the SEC for a more detailed discussion of the risks and uncertainties that could impact the future operating results and financial condition of slide. Our statements are as of today, July 29, 2026, and we undertake no obligation to update any forward-looking statements we may make except as required by law. In addition, this call is being webcast, and an archived version will be available shortly after the call ends on the Investor Relations portion of the company's website at www.slideinsurance.com. With that, I'd now like to turn the call over to our Founder, Chairman and CEO, Bruce Lucas. Please go ahead.

Thank you, and welcome to our second quarter 2026 earnings call. We once again executed at a high level this quarter, reinforcing the strength of our tech-enabled coastal specialty model and its ability to produce industry-leading top and bottom line results. For the quarter, we grew gross written premiums by 16.7% year-over-year to $508 million, driven by continued growth in voluntary sales and renewals of previously acquired Citizens policies. In the second quarter, our pace of Citizens assumption slowed in order to allow the company to bind its 2026 reinsurance treaty. We continued to grow gross written premiums driven by policy retention and continued growth in voluntary sales and the launch of our California E&S products. In addition to our top line growth, Slide grew net income by 92.4% year-over-year to $134.9 million with diluted earnings per share of $1.06. Second quarter return on equity was 11.7%, and our combined ratio improved to 57.5%, reflecting continued underwriting discipline and a lower level of catastrophe losses. For the first 6 months of 2026, our combined ratio is 56.5%, and our return on equity is 23.8%, which equates to an annualized ROE of 45%. Our second quarter results provide further testament to our ability to deliver meaningful value creation for our shareholders. We continue to make meaningful progress in expanding our footprint. In May, we launched our residential property excess and surplus lines program in California, bringing much needed capacity to an underserved homeowners market. As we have been in the state for a couple of months, we are taking a thoughtful approach to underwriting new policies, and we expect to accelerate our growth within California towards the end of the year. In addition, we recently received regulatory approval to enter both Rhode Island and New Jersey, our fourth and fifth states of operation, respectively. Our expansion to the Northeast U.S. further reflects the scalability of our platform and our ability to identify and act on attractive opportunities outside of Florida, where we believe we have an expertise to produce significant growth coupled with attractive returns. We remain confident in our ability to execute on our diversified growth strategy, creating long-term value for our shareholders. We have purposely built our coastal specialty platform around one of the strongest balance sheets in the sector, giving us the financial flexibility to pursue this kind of expansion. As we move through the back half of the year, we expect to continue investing in the systems and underwriting talent to maintain our industry-leading top and bottom line results. During the quarter, we completed our 2026 cat reinsurance program. All in, we recorded a double-digit year-over-year risk-adjusted rate decrease, while maintaining one of the strongest reinsurance tower in Slide's history. We increased our first event reinsurance tower by $1.4 billion versus 2025, while significantly expanding our total capacity by over $2 billion. As we move further into the Atlanta hurricane season, our substantially expanded reinsurance program provides robust protection designed to safeguard our balance sheet and limit the impact of any catastrophe events. We will continue to manage our exposure with the same disciplined approach that has defined our results to date. I'd once again like to thank our reinsurance partners for their unwavering commitment to Slide through hard and soft market conditions, your partnership is greatly appreciated. Turning to capital management. We repurchased approximately 3 million shares of common stock during the second quarter at a weighted average price of $17.95 per share under our share repurchase program. This continues to reflect our business model's ability to generate strong free cash flow and maintain a stalwart balance sheet, our commitment to returning capital to shareholders in a value-accretive way alongside funding our growth initiatives. In addition, I am pleased to announce that our Board of Directors has approved the initiation of a quarterly cash dividend of $0.07 per share. This decision reflects the consistency and durability of our earnings power, the strength of our free cash flow generation and the robust capital position at Slide. initiating a regular dividend marks an important milestone for Slide as a public company. It allows us to return capital to shareholders on an ongoing basis, while continuing to invest in our growth initiatives and maintain the balance sheet strength that underpins our competitive advantage. The dividend complements our share repurchase program and underscores our confidence in the long-term trajectory of the business. We expect continued strength in Slide's earnings and balance sheet through the back half of 2026 and expect to continue investing in our growth initiatives and returning excess capital to shareholders to maximize shareholder value. Finally, our results this quarter reflect the dedicated work of our entire team. I want to thank all our employees for their relentless efforts and the important role they play in Slide's performance. I'm proud of what we're accomplishing together, and I truly appreciate all of you. Thank you for your continuing support of Slide. And with that, I will now turn the call over to Andy Omiridis to provide some color on our second quarter results.

Thank you, Bruce, and good morning, everyone. In the second quarter, net income rose 92.4% to $134.9 million from $70.1 million in the prior year period, resulting in diluted earnings per share of $1.06. Our earnings profile continues to strengthen with growth in both the top and bottom lines. Gross written premiums reached $508 million, up 16.7% from $435.4 million in the second quarter of 2025, driven by continued growth in voluntary new business and renewals of previously acquired Citizens policies. Total revenue increased 47.9% to $386.8 million from $261.6 million in the prior year period, with net premiums earned also growing 47.9% to $360.6 million from $243.9 million, reflecting continued top line growth. Net losses and loss adjustment expenses totaled $108.7 million in the quarter as compared to $91.4 million in the prior year period, which included $8.8 million of convective storm losses compared with $5.5 million in the prior year period. Our accident year loss ratio improved to 30.2% from 37.2% primarily due to an improvement in overall loss experience. Policy acquisition and other underwriting expenses rose to $42.3 million from $32.1 million in the prior year period, driven by continued strong top line growth, resulting in an increased policy acquisition costs. General and administrative expenses increased to $55 million from $37.9 million in the prior year period, primarily due to higher staffing levels supporting our growth. These trends reduced an overall expense ratio of 27.4%, down from 30% in the prior year period and a combined ratio of 57.5%, an improvement of 990 basis points year-over-year. The gains reflect the operating leverage we continue to build as we scale the business. As of June 30, 2026, we had cash and cash equivalents of $1.24 billion and total invested assets of $839.1 million, consisting primarily of fixed maturity securities available for sale. Turning to capital management. As Bruce mentioned, we repurchased approximately 3 million shares during the quarter at a weighted average price of $17.95 per share under our share repurchase program. There remains $114.1 million of availability under the program. In addition, our Board approved Slide's first quarterly cash dividend of $0.07 per share. This further the company's balanced approach to capital returns, while preserving the financial flexibility to fund diversified growth. We will continue to manage capital in a disciplined manner, prioritizing the actions that create the greatest long-term value for our shareholders. Once again, I'm pleased to reaffirm our full year 2026 guidance. We continue to expect gross written premiums between $1.85 billion and $1.95 billion and net income between $455 million and $470 million. Top line growth is expected to come primarily from sustained organic expansion from premiums outside of Florida, implemented by selective opportunities in Florida that meet our targeted returns. Thank you for your time. Operator, we are now ready to open the line for questions.

[Operator Instructions] The first question is from Tommy McJoynt from KBW.

The first one here is around the reinsurance program. I appreciate some of those details that you gave in early June with the New Year program. My question though is, do you have a sense for what the cost of this year's program is relative to last year where you cited the expectation for the cost of that XOL reinsurance program for the '25, '26 year to be $431 million. Do you have an updated metric for the cost of this year's program relative to that figure?

Well, it's hard to do an apples-to-apples, Tommy, because we've had so much growth over the last year. What I can tell you is that on a risk-adjusted basis, we saw reinsurance rate declines that were double digit. To give you an exact number, we'd have to go in and pull it and then risk-adjust it year-over-year.

Okay. And with all that growth, if we were to fast forward to the end of the year to look at an in-force premium metric, do you have a sense for what the rough geographic mix would be between Florida, California and the Northeast as you've opened some of those new markets?

Yes. I mean the newer markets are still relatively nascent. I mean, we recently launched California. So there's probably a couple of million of premium there already. But you start with beta task with a handful of agents. You then scale it over the next couple of quarters as you add more producers to your network. New York is something that we hope to get launched here this quarter. So the vast majority of premium through year-end is going to be Florida because of the size of the portfolio, but we expect that geographic mix to really changed in a material way, as we head into 2027.

And I'll just sneak in one more modeling one. With the pace of Citizens takeout slowing significantly, where do you see the expense ratio trending from where it was in the first half of this year?

Tommy, I think, we're going to be right around $28 million. We look at -- we will below $30 million, but at the end of the day, we -- not ourselves between $28 million and $30 million.

The next question is from Paul Newsome from Piper Sandler.

I was wondering if you could give us a few thoughts on the guidance it looks like first half of the year was a happy situation from a weather perspective, which would imply maybe excess earnings relative to what you would expect at the beginning of the guidance didn't change. Are you thinking just trying to be more conservative? Is there anything under those base assumptions that we should think of that's changed in a significant way?

Yes, Paul, it's a great question. And this is something that we've been going back and forth on internally for months now. We just want to maintain a very conservative forward guidance. I think that's important. If you look at our life cycle over the last several years, whenever we've gotten in front of investors and talked about where we project the future to be, we've always been very conservative that goes back to even pre-IPO and post-IPO. So at this point in time, if you think about top line, for example, we're pretty confident that we're going to be in that range, maybe even exceed it. But we are managing our exposures during this quarter for our reinsurance treaty. And so we have to be cognizant of that because if we exceed the projections we gave to our reinsurers, there could be a very substantial true-up payment that would impact net income. I think net income, we're probably trending in the right direction to exceed those estimates for sure. And I think top line is most definitely going to be in that range, if not a little bit better, but we're just trying to be conservative at this point in time.

And then a totally different topic. We hear a lot about for competition and pricing and the potential that on the margin competition is pushing the underlying profitability down. What's your view currently, what are you seeing in the market? And how could it affect line?

Yes. Another excellent question. When we get this question every quarter, I'm not seeing anything different from first quarter, fourth quarter, third quarter. There are couple of new entrants that squeaked in with the very minimum of capital. They can't really write any business until after a hurricane season because we don't have reinsurance and they just don't have a lot of underwriting capacity. So not really seeing any type of impact to top line from increased competition. If you look in the Florida market, the main drivers of competition aren't these little companies that have very small balance sheets. It's the bigger carriers, the publicly traded Florida -- private, but they're a very big player here in Florida. And we're not seeing any kind of change taking place within that core competitive group that we really compete with for top line growth. And in terms of margin contraction, definitely not seeing margin contraction. If rates do ultimately trend lower in Florida because of reinsurance pricing and loss ratios, your profit margins are going to be lockstep with whatever that decrease is. So while the premium might go higher, your combined ratio is probably going to remain relatively static. Just not seeing any kind of warning sign right now that there's an issue in the near or medium term.