Greetings and welcome to the UPC Insurance First Quarter 2015 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder this conference is being recorded. I’d now like to turn the conference over to Adam Prior of The Equity Group. Thank you, please go ahead.

Thank you, operator. Good morning everyone and thank you for joining us. You can find copies of UPC’s earnings release today at www.upcinsurance.com in the Investor Relations section. You’re also welcome to contact our office at 212-836-9606 and we would be happy to send you a copy. In addition, UPC Insurance has made this broadcast available on its website. Before we get started, I would like to read the following statement on behalf of the company, except with respect to historical information statements made in this conference call constitute forward-looking statements within the meaning of the Federal Securities Laws including statements related to trends and the company’s operations and financial results and the business and the products of the company and subsidiaries. Actual results from UPC may differ materially from the results anticipated in those forward-looking statements as a result of risks and uncertainties including those described from time-to-time in UPC’s filings with the U.S. Securities and Exchange Commission. UPC specifically disclaims any obligation to update or revise any forward-looking statements whether as a result of the new information, future developments or otherwise. With that, I’d now like to turn the call over to Mr. John Forney, UPC’s Chief Executive Officer; please go ahead John.

Thank you, Adam, and good morning to everyone participating in the call. This is John Forney, President and CEO of UPC Insurance and with me today is Brad Martz, Chief Financial Officer. On behalf of everyone at UPC Insurance I want to thank you all for your interest in our company. Brad and I look forward to answering any questions you may have at the completion of our remarks. Even we’re surprised to hear the status but we were generally pleased with the progress we made in Q1 towards achieving our vision of the becoming premium provider of property insurance and capacity exposed areas. Yes, we had significant cap losses that the depleted almost all of our earnings for the quarter for those losses we due to a series of extreme events in the North East that according to one meteorological estimate we saw might occur once every 26,000 years. In addition, we purchased reinsurance on January 1st that we believe should help to differing some of those cost beyond which reflected in the earnings we released yesterday. Filing those cap losses gave our claims team a chance to skills in that events and showed agents and policyholders what we can do in response to those events. Their performance was excellent and I believe that will only strengthen our franchise in those areas affected by the winter storms. There were many other positives for the quarter. We had all time quarterly high in gross premiums earned revenue and book value per share. For the third straight quarter, we earned over $100 million in premium and our book value per share to $10 for the first time. Our production side, we saw robust growth in all states outside of Florida and in Florida we saw arch coming at our biggest new…

Thank you, John. Good morning, everyone. Before we get to the financial highlights, I would like to encourage everyone to review our press release filed yesterday as well as our Form 10-Q that we plan to file on Tuesday May 05. The highlight of UPC’s first quarter includes gross premiums earned of 115.2 million, 21.1% year-over-year growth, net income just under 200,000 or $0.01 a share despite presenting cap losses, an underlying combined ratios of 84.4 which is consistent with our long-term targets. Book value per share increasing to $10.14, up 22% from the same period a year ago and the successful integration of the consolidated results of Family Security holdings. The headline for UPC’s first quarter remain solid organic premium growth, total revenues grew 22% from 67.5 million last year to 82.4 million this quarter. For direct written premiums, they increased 17.6% from the same quarter a year ago, quarter was two-thirds with the total with all other sales of being one part of our mix. The non-Florida growth or total direct written premiums is 35.6 million versus 17.9 million a year ago, 98% year-over-year growth weekly analyst 26% of that year-over-year growth with most of that direct written coming from the Family Security. For the quarter, all of our direct written premium growth was outside of Florida but we are seeing many positive signs in Florida as well. Combining the direct and assumed written Florida was basically flat year-over-year, which we view favorably considering the 5% rate decrease and from ended in December and the increase competition in the Florida marketplace. Our retention rate also improved from roughly 82% in 2014 to 85% in the current quarter but Florida remain very important and is clearly a source profitable growth as no secrete huge in that our resources have…

Thank you, Brad. Once again we appreciate everyone’s time on the call and your interest in our company. At this point, we’d like to open it up for any questions you may have.

Thank you. [Operator Instructions] Our first question comes from the line of Arash Soleimani with KBW. Please go ahead with your question.

So couple of questions here, so you mentioned that it looks like the rate decreases in Florida that you took at 1-1 are working and referring to show in March, so should we expect positive growth for the balance of the year from what you’re kind of expecting now? Which was important?

Yes that’s our expectation as our growth rate kind of stead down throughout 2014, we expected to follow similar trend back up in 2015 that is our outlook.

And are those I guess water losses in the Tri-County is that something that just seems kind of random this past quarter or is that something that’s been continuing quarter to date in the second quarter as well.

It’s the cost of doing business everywhere in Florida, Tri-County no exception, but the only thing that stood out to us was looking at frequency and severity compared to allowing a quarter view and when you look at year-over-year the severity was up but not fully [indiscernible] but when you look at the longer term trend this quarter was somewhat unusual so that only quarter is [indiscernible] trend so we’re not going to overreact to it with that loss of underwriting tools in our arsenal to combat some of the challenges and virtually every territory [indiscernible] so Tri-County is in aggregate we got a lot of premium and rate accuracy it’s not impacting the loss ratio so much, so frequency and severity is just one side of the equation.

What was I mean I was surprised that there was [indiscernible] there, what do you think was causing some of the reopen to that public adjusted you think that are causing that or is there something else at play on outside?

I don’t know if you can pinpoint it to one specific cost and as Brad pointed out our currencies in this quarter appear very unusual by historical standard, so something indicative of trend.

And other question I have, do you think you can get you sort of mentioned that in the earnings release. Do you think there is a realistic probability of further recoveries on the Northeast storm from the reinsurance treaty?

We do.

Our next question comes from the line of John Hall with Wells Fargo. Please go ahead with your questions.

Just to follow up on the prior question, can you frame the order of magnitude of recoveries that that you were thinking about?

I don’t know that we want to give a number at this point, John. We're in the midst of discussions with our reinsurance partners on the losses and exchanging information and we'll have clarity on that soon, but I don’t know that we can commit to any sort of range right now.

What -- I guess what's the trigger point. What causes them to happen or not happen?

Well, we have coverage in excess of $3 million retention occurrence and there was a series of events that occurred in the Northeast back-to-back to back-to-back and so determining losses, assigning losses to which occurrence caused them is not as crystal clear that there were one occurrence or the occurrences were separated by a long period of time. And so, we're trying to make sure that we're properly allocating the losses to the correct occurrence and submitting the information to our reinsurers on both sides trying to make sure we're doing it the right way but it's a complicated situation because of the number of events that occurred in such a short period of time.

Got you. Is there a -- I guess lesson learned where a different factor that you might be taking on the next go around for your reinsurance program?

We're evaluating lots of different reinsurance coverage. This one's very effective for us. And we're happy that we put it in place. So yes, we're looking at other potential structures in the future, but as I mentioned earlier, it can't protect against everything and regional toll of snow in the Northeast and this area was over five standard deviations from the mean historically. So it is a that outlier event and we want to look at it in that context but yes we are definitely looking at all sorts of structures as we put our reinsurance program in place.

Okay. And just for a little clarity, in the Tri-county when you're saying water-related claims what exactly are we talking about?

Mainly pipes, roofs overflow, sewer backup, those types of things.

Okay. And then, can you offer someone queue just give us a way to sort of frame that the potential build of the potential opportunity that you're seeing with TWIA?

Sure. As we previously reported, the TWIA opportunity was potentially as much as a $100 million in premium. It’s a different process entirely then Florida Depopulation where you just take a group of policies midterm and get the unearned premium and you have financial impact at that point, Texas did not do it that way. This is a new program with the first participant in it and it will be played out at renewal of the policies over time. So the impact of it will come on to the -- our book as policies renew and come on to UPC paper and the policies are pretty evenly distributed throughout the year. So even if we got all $100 million that would play out over a period of time. You first have to select the agents who are new to this program and said the program's never existed before. Most of these agents do not have a contractual relationship with the UPC, so they are new our company. So there is a getting to know each other process that takes place. We have done extensive marketing direct mail, email, webinars, lots of outreach to the agents to let them know what's going on and to solicit their interest. So far agents representing $35 million of the premium have signed up to a send us up their policy list in detail and consider this opportunity. So we view that as a very good sign. We're working on the other two-thirds to make sure that they're going to take a look at participating in the program as well and as I said we will have additional clarity as all of those agents come on and once we get everyone signed up we'll get some sort of indication to the market of what that's going to be in terms of premiums coming on over the remainder of the year.

Okay great and I just had that one point of number housekeeping type of question. In the press release you mentioned some cost redundancies in terms of G&A. I was just wondering what that level or what that number is?

That one's sort of difficult to pinpoint, but we have got most of the system expenditures we’ve incurred thus far and capitalized there is some depreciation, amortization starting to roll through in the quarter that was probably a couple of $100,000 related to those fixed assets. The professional services can slow the thing work related to the install configuration as well as maintenance hosting was at least another half a million.

So I guess on a go forward basis you’re looking to see about $700,000 roll off out of G&A?

Yes, not necessarily out of G&A because I do think the amortization of the software will pick up as these systems go live this year. The offset will come out of policy acquisition cost where and when we can transition business being processed by CSC to our new systems. Okay so we’re paying policy administrative cost that are included in policy acquisition cost not G&A to a third-party service provider today that in the future with most of that reduction coming next year not this year being totally significant and we’re paying them a very healthy sum of money, so our future operating cost model is going to be very different. But in the interim obviously we’ve got the cost associated some of the cost associated with building out our infrastructure cannot all the capital and we’re still paying CSC a process business force in all eight states in which we have greater premium for this quarter.

Our next question comes from the line of Greg Peters with Raymond James. Please go ahead with your questions.

Just one minor clarification point on the reinsurance recoverables. I presume that once there is some sort of resolution that it will just flow through in the quarter that there’s a resolution you won’t actually go back and restate the first quarter results.

That’s correct.

On the water claims in Florida, curious if it is skewed more towards some of your takeout business or if there’s any additional color on the composite that of what are the claims are coming from that you can provide?

Sure I wouldn’t say it’s necessarily more skewed towards our takeout business that being said a lot of our exposure in [indiscernible] counties did come from citizens we haven’t been an act of voluntary underwriter in those territories so to that end our mix is more bent towards assumed business versus direct business but on a state wide basis no I don’t think there’s any indication that our assumed lost ratio is performing out of line with our direct loss ratio assumptions.

In fact it’s not, there are inception to-date loss ratio and the takeouts we’ve done last couple of years is consistent with that and the rest of our book.

Have you seen any change in retention rates for the assumed versus the directors that all still running at normal levels?

Well as I mentioned earlier the direct business our retention rates improved from 80 to 85 and are inception to-date retention on the last three personal lines pickups we’ve done remains right around 60%.

So this might change there. I don’t think you really commented on the upcoming reinsurance renewal, market commentary suggest there is another rate cut in the future. I’m curious, what you guys are seeing?

We’re seeing strong interest in our program as in previous years and we are – we’ve been the beneficiary of significant rate reductions in each of the last two years. We don’t expect to continue at those double-digit plus kind of rates that we seen in the past couple of years but there is obviously still continued pressure on pricing and there is no shortage of capital available, so we expect we’ll be able to put together a very robust and cost effective program.

John, are you going to change the structure materially in this upcoming year or is this structure going to be main largely as it was in the proceeding?

Actually no, we have somewhat unique and innovative structure that is more or less a large aggregate program that cascade down, doesn’t have trap limit, very tall tower that last year went up almost to the 100 and 200 year level and also can function for second and third events. We like to add structure a lot in the market which seems to have embraced at least certain markets have. So, unless there is a clear advantage from a price standpoint or some other standpoint to changing that structure we’re going leave with that.

And any thoughts and I know this is in front of what ultimately may elect to do. But are there any thoughts on how you might adjust your deductable?

On the reinsurance program, Greg are you asking about?

Yes.

We kept several quotes right now, we’re evaluating we haven’t made formal decisions yet but the layer we like a lot is a 20 extra files that would be a main storm cover to fill in the gap outside of Florida. So we have got coverage from [indiscernible] and a sectary that was sort of more target in sort of 20 extra site right now that could change or this using as a illustrative example outside of Florida for that would be hurricane tropical storm and main storms only to supplement that underlying cap tree where we have. I think those two in conjunction with we’re okay with the retention being unchanged year-over-year in Florida where we do expect to maintain $25 million retention overall on the program but there is probably going to be some opportunity to do some other underlying by dams or retention outside of Florida.

Thanks for the color on that one. Finally, John, you’ve commented in the past about you made big reference to M&A opportunities discussions with other parities about new partnership et cetera. I’m wondering if you can provide an update on that area.

Well, I think probably the main difference that we face in that area obviously we close at the end security acquisition this quarter and we’ve been very pleased with sales we have been able to integrate that. We learned a lot in that transaction meeting up to it and executing it that we think gives us maximum mobility to acquire and integrate other companies so they be available and we’re open to that possibility and actively pursuing it.

Our next question comes from the line of Dan Harvey with Southeast Companies. Please go ahead with your question.

Can you expand on how we -- what kind of was it roofs collapsing or pipes busting up there in the North East so all those 5 feet of snowing and how did you take a look at those losses. We’re working with the people up there to review, we’re working out of the down town office. Can you get into that a little bit?

First of all, there was a lot more than 5 feet of snow, in 130 days period there was 94 inch of the snow which has broke the previous record for a 30 day period by over 3 feet. So there was an extreme amount of snow that and extremely amount of cold temperatures that’s one of the close to 30 day period record in combination with that. So, you have all sorts of problems that come from that with regard to water intrusion, roof collapse, pipe swiping that the way pretty much once again that comprise the causes.

Yes. Ice stands were probably the leading cause of loss. But you can’t get good straight line what’s when with somebody’s that knocked down trees which knocked down roofs. So, it’s not that snow collapse, ice trees, pipe all that comes up water intrusion as a result of fall plays a part.

Okay. And how do you research those claims up there in the North East?

We have relationships with independent adjusters, large international forums there that do work for us, obviously we have a big book of business in the Northeast. So we have existing relationships, they are glad and do the field inspection document the damage, take photos of it send it back here and all of our claims are adjusted by UPC personnel from this office. But based on inputs when inspection was done in the field than photographic evidence is send back to us.

Okay. And let me switch over to reinsurance program. Have you notice that with the Florida cap fund going off and trying to and buy in a couple of billion dollars with the reinsurance. Has that at any impact on far our market and where is the cap fund coming in with their costs to reinsurance to us?

We have not seen any impact in terms of on pricing our availability as a result of cap funds participation in the market.

They did provide guidance during the March 24th meeting that expected rate online could increase for this current year, which we’ll make it easier potentially replace a portion of the cap and in the private market, we’re considering that as well. But ultimately most reinsurances going to be our program with the 90% cap fund, with all the caps getting limit in earning, for the cap fund being in earning.

That’s good news, if we go after the private market and get off of the state cap fund a little bit. Can you expand on that $5 million gain, we took on our sales of assets in the first quarter and how typical is that going to be going forward?

There was no gain, I mentioned the 5.5 million on unrealized gain and see other comprehensive income currently invest embedded in shareholders’ equity at March 31st, it was not inflow into the P&L for the quarter.

That’s good news. And then on the annual meeting, because this coming on May 5th, will there be a robust Q&A portion available there for the stock orders that are showing up?

One correction on the date it’s May 6th.

May 6th, okay.

And yes there will be Q&A.

Alright, great top-line sales growth and I think that’s going to really that shows how well you are plan of expanding has been working. So congratulations on the top-line growth.

Our next question comes from the line of Adam James Private Investor. Please go ahead with your questions.

First just generally, it looks like currencies has gone up significantly year-over-year which is to be expected with the kind of growth you guys are seeing outside of Florida. Broadly, what’s management’s plan to keep and expenses as you continue to grow in the future?

As we mentioned earlier, a large part of the expense growth is because we are moving towards the in-sourcing of functions that have been previously outsourced and changing both our policy processing and our claims management systems that will, it allows a lot of the investment and running parallel systems for a period of time. And so as we roll that, as we complete that implementation here, later this year or next year the expenses as a percentage of our premium will go down.

And it is also worth mentioning that the consolidation of Family Security did add about $850,000 for the total operating expense excluding losses just talking about how the acquisition costs operating underwriting and general administrative that create a little bit of their ability challenge with the prior year.

And the second question is again pretty general here, if you about looks like around 35% of your gross written premium was outside of Florida a year from now what would you expect that percentage to be?

We expect continue to grow, we don’t have a prediction for it. It will be a year from now, we are on record to say that we like to get to a 50-50 mix inside and outside of Florida overtime. And we expect that we’ll be able to achieve that goal but I don’t have a timeframe to give you on that.

Our next question is come from the line of Edward Hemmelgarn with Shaker Investments. Please go ahead with your questions.

Just as a follow-up to that question, because you have talked about you desire to get to a point of having a small amount of the insured in all these states and how about all diversify your risk diversify your risks. So to that extent wouldn’t, ultimately wouldn’t you want a more outside of Florida than 50-50?

I think that's definitely possible based on the market opportunity. We see the total insured value opportunity from taxes domain inclusive of Florida 80% of that is outside of Florida. Total Florida is a small component of the overall opportunities. So yes, I think we would strive for that but we've been guiding towards the 50/50 balance just using a three to five year timeframe but absolutely longer term I think you're exactly right. And I think we will see once we build up a much larger, more profitable book of business outside of Florida and it'll be the first time for us. So when wind blows here in Florida and there are cap losses we'll have earnings drained up cost up that. This quarter was the interest of that but I think our non quarter growth is going to provide some stability of earnings, long term.

Okay. Then the other question is regarding catastrophic losses and reinsurance. Will there be lag or do you think that in most quarters you should have a pretty good idea of what your recoveries will be under catastrophic under the reinsurance. I know this time, because you just put the reinsurance on effective January 1st, so there could be a question of just how you -- how much you get out of it but ordinarily is there going to be a lag or will for the most part what your recoveries are during the quarters.

It depends, a lot confirm then in the quarter and if that takes place and it then takes place the last week in the quarter, it's probably going to be difficult for us to know what our recoveries are. And as I said earlier that the complication on this series of events was, that was a series of events it took place in a short period of time and we have a per occurrence reinsurance treaty and making sure the cost get allocated correctly when in many cases the home owners themselves don’t know what the date of loss was because there were just so many instances of snow and rain. So, that's a complicated factor. So we could know in certain cases and others that may be less clear in the quarter.

Yes, I mean I would think that having also having house here in the North, one in having had ice being back up, one never knows what store is from. So wouldn’t it have to -- wouldn't your reinsurance have to cover for something like that an entire season.

Definitely we like that argument.

No, I 'm just trying to say is -- I mean having suffered it numerous times, as of you never know I mean because it's the snow builds up over time. Would you write the treaty that way? My question is wouldn’t you write the treaty that way for it, I mean so as opposed to be in per occurrence for something like that. I mean since you can't identify what the occurrence is, wouldn’t you have to write the reinsurance to cover it over a season as opposed to insurance.

You could do that. An aggregate treaty with a much higher retention, you could do that. An aggravate treaty with a lower retention it's going to be extremely expensive. So yes you could do a cumulative aggregate sort of cover, but there is depending on what level of tax rate it could be prohibitively expensive.

It’s a tricky cost analysis.

Our next question comes from the line of Samir Khare with Capital Returns. Please go ahead with your questions.

I have some questions about top line. On the commercial residential take out that you guys had, I think in January, could you tell us what the success both the premium and the number of policies are stuck?

Well, commercial residential, it’s a combination of voluntary and take out. I think our book as up to 6 and $7 million, which is just about evenly split between step that we take now and organic growth. Organic growth its' the name of the game for us in all of our business especially in the commercial, residential take out area, I don’t think it will be doing a lot of anymore take outs from citizen on that but we feel great about the pace of coding and binding that we’re seeing now from our commercial partner.

Just want to ask then, how many voluntary commercial residential policies did you guys rate? And then, how much – do you have repeated that represent in the quarter?

I’d just mention enforce premium if you don’t mind Samir we’ll get 4 million enforce premium on a voluntary basis. We assumed enforce is about 3.1 so John is right little bit even split but again the assumed give us a nice base line of work with and covers some of the upturn start-up cost regarding the claim, but the voluntary side is really gaining some good momentum we’ll get a good pipeline and we expect a [indiscernible] on the commercial side.

I’m just trying to figure out what the ramp up could be for that group so is there any way you can help us figure out in the second quarter how much it could possibly write and going forward?

First quarter voluntary premiums were roughly 1.8 million.

And then can you give us the I think you gave us the retention for Florida went up to 85%, can you give us retentions for outside Florida and then the new business volume for inside and outside Florida?

South Carolina retention rate this year is 87.5, Mas 86, Rhode Island 84.8 those are big states I can give it to you state by state I don’t have it broken out this out for total non-Florida but it’s performing very well we don’t have any retention issues in any states.

And then just the credit environment in Florida and you talked about, you mentioned the March was the best new business month since I think you said last July. Has something changed say from January, February and into March and if so what has changed and have you continue to see by the new business momentum in April thus far?

The answer to the last question is yes we’ve continued to see building momentum and what change was we did what we are referring to as the promise to work. Our company’s motto is keep the promise and we took basically the entire executive team on a roadshow around Florida, we went to nine different location we had groups of 50 or more agents at each location, we talked about our company we talked about our products, we talked about our claim service we talked about the reposition that we did and we ask for them to write more business with us and they’re responding.

And then for Family Securities, can you give us some metrics would you give us the interim premium that you guys got from family securities in Q1?

The interim premium on their books as of March 31st was 10.2 million.

So let’s say that would probably been what came onto your books in January, approximately this 10 million?

Yes early February it’s close to that we’re around 10 million yes.

Okay. And were there any cap losses outside the five winter losses that cause 15.3 million?

No.

And just on the Tri-County how many reopened claims and how many new claims contributed to the water claims that you guys outlined?

We’ll get you that information we don’t have that in front of right in front of us.

Yes the claim accounts are really what’s important it’s relatively to reinforce because our book has changed year-over-year in terms of its size in Tri-County so that’s why frequency is a better measure than just absolutely claim account.

And just three quick metrics cash and hold, stats surplus and PIF inside and outside Florida?

Do we take PIF inside and outside of Florida?

Policies in force, yes.

Okay. I’ll give you all of them and the off season for us outside of Florida 98,347. Since the end of the quarter we’ll be gone over 100,000. And inside Florida 171,000, so total 278,000.

Okay. And the stat surplus in the cash in the holding company.

Okay. Cash outside of the insurance company roughly books includes surplus is 123 million roughly. Let me get back to you on cash outside of insurance company.

Our next question comes from the line of Wesley Odom with Armada Advisors. Please go ahead with your questions.

When you market to people in stay insurance typically what percentage of customers do you obtain versus other carriers?

I’m not sure, I’ve understand question. What are you talking about the takeouts from insurance in Florida?

Right, soon going after Texas thing and all the other states like Louisiana state insurance pulls who eventually will be liquated.

Well, I don’t know any of them will eventually be liquidated but we have some policies and maybe smaller. We always say that we have take outs is Florida, Florida citizen, the Texas community is very different and no one has ever done it before. So, there is no historical benchmark on how many policies you have so you get. In Florida as Brad said our retention rates on the take out so we’ve done it about 60%.

Okay. You mentioned that you were interested in other M&A deals, could you comment about what kind of size you looking at.

No. We’re just looking for companies that are geographically compatible and strategically consistent with what we’re trying to accomplish.

Thank you. Our next question comes from the line of Arash Soleimani with KBW. Please go ahead with your question.

Couple of follow up, can you talk about the severity of the water losses and just in terms of driving the loss is in terms of three large dollar amount losses?

Sure. If I could take a momentum to for answer that question to follow up and a previously asked question about cash and holding company it was 61.5 million, our debt cash in short term investments outside insurance company. The average celerity of water loss in Florida was $15,640 for the quarter, inside county that was 18,800. So significantly higher in county than the state is cold.

And our roof falls, like what’s the most common type that you are seeing this quarter. Was it roofs or the pipe?

It is pipes.

Thanks. And I also thought of asking this before, looking little bit of core gross loss ratio increased it looks like obviously came from those water losses. Should we expect from what you’re seeing in April so far this year kind of similar increases core gross loss ratio, it’s a issue or is that really not -- really isolated just kind of 1Q.

The core gross loss ratio it’s a 31% consistent with our expectations to be right around 30 to be a little below, could be a little above that, we open a chain in that which indicates that our underlying loss ratio trends are going up.

I’m thinking with those water losses yours, you’re not seeing in April kind of that trend continue that you’re seeing in Q1. Multiple Speakers

Right. I mean, if frequency is definitely not concern for water, but severity something where less than with a little bit, but the answer overall as we feel final loss trends.

And one do you get it better hand or in terms of taxes, in terms of one you actually know have okay, we’re getting these policies from the agents. When do you have more clarity over that I know you said have been getting the traction what the agent, but in terms of actually signing moving forward to taking those policies into UIHC?

I think by the end of the second quarter, we’ll have good clarity.

That’s the general, I guess thought as you feel pretty optimistic still that you get good traction there in terms of policy pick-up?

We do in all the right things to make that happen and it’s a compelling value proposition for agents and policyholders.

And I guess the other question what the reinsurance environment obviously that’s going to helps you guys. What extent do you see, are you seeing a lot more pressure are going forward in terms of the primary relation in Florida? I know you said the rate decrease that January 1st of this year, but just looking at the competitive environment. Is that something where you expect new competitors to pressure that even further?

Yes, there is competitive pressure in Florida. There are a number of large company that only have Florida as their growth opportunity and they don’t have any other weighted growth and to reduce their prices. And so you’ve seen that happen but that need to grow top-line to share investors are growing and only have Florida as an uplift. So in first day, it’s competitive in Florida which is no interest and participating in a rate to the bottom, which is why you see us sort of trading water for now in Florida and aggressively growing our book of business outside of the state.

And so long as the cost of reinsurance capital continuous to decline that will be opportunities to past some of them on to customers without negatively impacting our margins, but that is being offset by slightly upward trending AOP long-term. So you have a win indication separate from all of it payrolls. And it just depends on the dynamic how those two into pack with each other going forward.

And then in terms of the expense ratio so that’s one thing you’ll be say 2016 is one the cost redundancy to go away and start to see improvement there?

That’s correct. We’ll bringing our first state line on our new system this quarter. And as I mentioned in my comments we have five new states to rollout this year or which we’ll be launched on our new system. And the next five, next year as well and in between those new state launches will be converting some of the existing states. And timing of that still a little bit uncertain we’ve got a perfect plan, but that it’s highly dynamic as you might imagine as our priorities are constantly shifted. But we’ve got a long-term outlook -- second half 2016 which was about being but we converted to our new platform.

Thank you, ladies and gentlemen. We would now like to turn the floor back over to management for closing remarks.

This is John Forney, I want to thank everybody for all the questions, which demonstrate strong interest in the company and strong understanding of what we’re trying to do. We continue to be optimistic as we diversify and grow our book of business but in Florida and outside of Florida. And we look forward to take the journey for but all of you. Thank you again for your time today.

Thank you. This does conclude today’s teleconference. You may disconnect your lines at this time. And thank you for your participation.