Good day, and welcome to the Heritage Insurance Holdings First Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Mr. Kirk Lusk. Please go ahead, sir.

Good morning, and thank you for joining us today. We invite you to visit the Investors section of our website, investors.heritagepci.com, where the earnings release and our earnings call will be archived. These materials are available for replay or review at your convenience. Today's call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based upon management's current expectations and subject to uncertainty and changes in circumstances. In our earnings press release and our SEC filings, we detail material risks that may cause our future results to differ from our expectations. Our statements are as of today, and we have no obligation to update any forward-looking statements we may make. For a description of the forward-looking statements and the risks that could cause our results to differ materially from those described in the forward-looking statements, please refer to our annual report on Form 10-K, earnings release and other SEC filings. Our comments today will also include non-GAAP financial measures. The reconciliations of and other information regarding these measures can be found in our press release. With me on the call today is Ernie Garateix, our Chief Executive Officer. I will now turn the call over to Ernie.

Thank you, Kirk, and thank you all for joining us today. I will provide some highlights of our first quarter performance, discuss our progress in achieving key objectives and offering insights into our strategic initiatives. Following my remarks, Kirk will provide details on key financial performance metrics, after which we will open the call for Q&A.I am pleased to report another consecutive quarter of solid financial results with net income for the first quarter of $14 million. The improvement from last year reflects the progress we are making with our strategic profitability initiatives as well as the benefit of favorable weather this quarter. As I described last quarter, our strategic profitability initiatives include rate adequacy, selective underwriting, capital allocation, providing the appropriate coverage for the market and a balanced and diversified portfolio. We believe that the combination of these initiatives will enable Heritage to achieve consistent, long-term quarterly earnings and shareholder value. Our focus on rate adequacy has led to over 50 rate filings across products and states in 2021 and 2022 combined, with over 50 rate filings planned for 2023. These continued rating actions throughout our book resulted in achieving our highest in-force premium while decreasing policy count to the levels we had in 2018. We are also maintaining our underwriting discipline, including tightening underwriting criteria within regulatory guidelines and restricting new business for policies in over-concentrated markets for products. We are allocating capital to products and geographies that maximize long-term recurrence. During the quarter, we selectively grew our commercial residential in-force premium by 69.6% over the prior year quarter; while total insured value, or TIV, only increased 39.9% and policies-in-force increased by only 11.8%. We reduced the policy count for our Florida personal lines product by 16.8% from Q1 2022 and 5.9% from the fourth quarter of 2022.…

Thank you, Ernie. Good morning, everyone. As Ernie mentioned, Heritage had its second consecutive positive quarter with $14 million of net income or $0.55 per diluted share for the first quarter of 2023. This result reflects an improvement from the net loss of $30.8 million or $1.15 per diluted share in the first quarter of 2022. The improved financial results can be attributed to favorable weather during Q1, favorable loss development and progress on profit initiatives. Premiums-in-force exceed $1.3 billion for this quarter, representing a 10.9% increase from the first quarter of 2022, driven by rate increases across the portfolio, while policy count was down 9%. These actions resulted in average premium per policy increasing 21.9%, while TIV increased only 2.8%. In the first quarter of 2023, our gross premiums written increased 9.6% to $310.3 million, up from $283.2 million in the same period of 2022. Gross premiums earned increased to $317 million in Q1 of 2023, an increase of 10.3% compared to $287.4 million in Q1 of 2022. This growth in premiums can be attributed to our strategic efforts to selectively expand our commercial residential business, higher average premiums per policy throughout the book and the use of inflation guard. Total revenues for the quarter of 2023 reached $176.9 million, an 11.5% increase compared to $158.6 million in Q1 of 2022. In addition to higher net earned premiums, the growth reflects an increase in net investment income, which rose from $2 million in Q1 of 2022 to $5.6 million in Q1 of 2023. We also realized net investment gains of $1.9 million during the first quarter of 2023. The current yield curve has led us to invest proceeds from fixed income maturities and incoming premiums into short-term treasury bills and money market funds, resulting in higher yields and higher…

[Operator Instructions] And the first question will come from Maxwell Fritscher with Truist. Please go ahead.

Hi, good morning. I'm calling in for Mark Hughes. So you mentioned the significantly lower weather losses this quarter. I was wondering if there's any underlying benefit from reform on this.

No. At this point -- you're referring to the reform from the December special session?

Yes.

Yes. So as we said previously, that really is kind of very early in the ballgame here on that piece of it. So we really haven't seen much of it, but we do expect that to flow through over the next six to 12 months and maybe a little bit further into that.

Okay. Thank you. And what has the trajectory in lawsuits been like over the past several months?

Yes, it's fairly consistent with what we've seen. So I mean, at this point, again, I know that the legislation passed, but I think we're still waiting to see the impact of that in the future.

Okay. Thank you. That's all I have.

Thank you.

[Operator Instructions] This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Ernie Garateix for any closing remarks. Please go ahead.

Thank you, everyone, for joining our call today, and we hope everyone has a great weekend.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.