Slide Insurance Holdings, Inc. Common Stock (SLDE) Q1 2026 Earnings Report, Transcript and Summary

Greetings. Welcome to Slide Insurance, Inc. First Quarter 2026 Earnings Call. [Operator Instructions] Please note this conference is being recorded. I would now like to turn the conference over to your moderator today, Garrett Edson with ICR. Thank you, sir. You may proceed.

Thank you, and good morning. With us today are your host, 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, April 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 In addition, this call is being webcast, and an archived version will be available shortly after the call ends on the Investor Relations portion of the company's website at www.slideinsurance.com.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 first quarter 2026 earnings call. We appreciate your continued interest in Slide and are excited to be speaking with you today. We started off 2026 by delivering another quarter of strong execution across our business and reinforcing the ability of our tech-enabled coastal specialty focus to produce what we believe to be the best top and bottom line performance in our sector. Our performance was once again based on strong renewal rates on our existing book, expansion of our voluntary sales and the continued acquisition of Citizens policies. For the quarter, we meaningfully grew our gross written premiums by 49% year-over-year to $414.8 million. In the quarter, we continued to strategically capitalize on Citizens ongoing depopulation efforts. As a reminder, our extensive data capabilities and technology-driven underwriting process enables us to identify Citizens policies that offer compelling return profiles. While we plan to remain selective in pursuing Citizens assumptions this year, we expect to continue to grow our gross written premiums in 2026 year-over-year as a result of higher policy retentions, higher voluntary sales and the launch of new states. In addition to our strong top line results, Slide grew net income by 51% year-over-year to $139.5 million, which is another new quarterly record for the company. Along with net income, first quarter return on equity was once again strong at 12.5% and 50% on an annualized basis, reflecting the continued strength of our business. Meanwhile, our disciplined underwriting model continues to deliver industry-leading results with our combined ratio improving to 55.5% compared to 58.9% in the prior year quarter. Our first quarter performance continues to deliver robust profitability and attractive equity returns that create meaningful value for our shareholders. This strong start to the year positions us well to achieve our full year objectives. We have deliberately built a dynamic coastal specialty insurance platform with the strongest balance sheet in the sector, providing us with the financial flexibility to accelerate our geographic expansion throughout 2026. While we've established a strong market position in Florida, we're now strategically extending our proven capabilities into additional catastrophe-exposed markets. For example, South Carolina continued to deliver robust voluntary sales in the first quarter, and we're confident we will be able to build on this momentum moving forward. As we continue to progress through 2026, we remain committed to thoughtful geographic diversification in multiple states. Our geographic expansion will bolster our foundation for sustainable growth and long-term shareholder value. We are in the final process of completing our 2026 reinsurance program, and I anticipate completion of the reinsurance tower in the next 1 to 2 weeks. Year-over-year, risk-adjusted rate decreases are prevalent in the Florida market and the decreases have been substantial. I will not disclose the extent of the decreases in pricing at this time, out of respect for our reinsurance partners who are still negotiating with our peers. However, I will note that we increased our first event reinsurance tower by roughly $1 billion versus 2025. And despite this increase, reinsurance capacity significantly outpaced our demand as every layer of the reinsurance tower was oversubscribed on favorable terms. I'd like to thank our reinsurance partners for their unwavering commitment to Slide through hard and soft market conditions, and your partnership is greatly appreciated. During the quarter, we completed our $120 million stock repurchase program, and our Board authorized a new $125 million repurchase program in late March. In the first quarter, we repurchased approximately 7.7 million shares at a weighted average price of $17.75 per share. Since initiating our buybacks, we have repurchased approximately 13.3 million shares at an average share price of $17.30. Through our repurchase program, we have returned $230.9 million to shareholders and reduced our IPO dilution from 13% to 3%. This reflects our business model's ability to generate strong free cash flow, our willingness to opportunistically repurchase shares when we believe there is a dislocation in our valuation and our ability to successfully return capital to our shareholders in a highly value-accretive way. It is unusual for a recent IPO issuer to return IPO proceeds less than 1 year after going public, and there are a couple of reasons for our decision to aggressively pursue share buybacks. First, since our IPO was priced in June at $17 per share, we have significantly outperformed our expectations each of the last 4 quarters while providing strong guidance for 2026. Despite our consistently strong results, our share price remained close to the IPO price, which does not reflect our fair value. Second, our strong financial performance has meaningfully increased our free cash position, which continues to build. This growth in unencumbered cash has exceeded our near-term deployment needs, and we believe we have ample capital flexibility to support our growth initiatives even after repurchasing $230 million of common stock. Given our current earnings profile and outlook, we believe repurchasing shares at attractive valuations is a prudent use of capital that can enhance earnings per share and return on equity over time. We remain highly confident in our business plan and expected financial performance and believe our share repurchase program further supports our objective of delivering best-in-class returns on equity. Accordingly, the Board of Directors has authorized an additional $100 million share repurchase program. We will continue to evaluate repurchase opportunities in a disciplined manner, and we'll act when we believe doing so is in the best interest of shareholders. We expect to strengthen Slide's earnings profile and balance sheet throughout 2026, and we remain committed to deploying our excess capital in ways that maximize shareholder value. Finally, our success is built on the efforts of our exceptional team. I want to thank all our employees for their dedication and the critical role they play in Slide's performance. I'm proud of what we are accomplishing together, and I appreciate all of you. Thank you for your continued support of Slide. And with that, I'll now turn the call over to Andy Omiridis to provide some color on our excellent first quarter.

Thank you, Bruce, and good morning, everyone. In the first quarter, net income rose 50.8% to $139.5 million from $92.5 million in the prior year period, resulting in diluted earnings per share of $1.02. Our earnings profile continues to strengthen with growth in both top and bottom line driven by increased scale achieved following our IPO in June 2025. Gross premiums written reached $414.8 million, up 49.1% from $278.2 million in the first quarter of 2025. This growth was driven by a 46% year-over-year increase in policies in force, which now stand at 508,928, driven by growth of voluntary new business, renewals of previously acquired Citizens policies and further Citizens acquisitions. During the quarter, we also acquired an additional $92.3 million in annualized gross premiums or 28,783 policies from Citizens, capitalizing on selective attractive takeout opportunities. Net losses and loss adjustment expenses totaled $111.1 million in the quarter as compared to $83.8 million in the prior year period. As a result, our accident year loss ratio improved to 28.4% from 34.2%, reflecting the continued strong performance of our book. Policy acquisition and other underwriting expenses rose to $44.1 million from $28.6 million in the prior year period, driven by increased renewal policies from prior year assumed Citizens policies, resulting in increased policy acquisition costs in 2026. General and administrative expenses increased to $46.2 million from $41.4 million, primarily due to higher staffing levels to support our growth. These trends produced an overall expense ratio of 25.1%, down from 27.4% in the prior period and a combined ratio of 55.5%, an improvement of 3.4 percentage points year-over-year. The gains reflect the operating leverage we continue to build as we scale the business. Turning to capital management. As Bruce mentioned, we completed our $120 million share repurchase program during the quarter, and our Board authorized a new $125 million program in late March. In total, we have repurchased 7.7 million shares at a weighted average price of $17.75 per share during the quarter. As of the date of this earnings call, we have repurchased an additional 3 million shares for $53.8 million at an average price of $17.95. Since inception, we have repurchased 13.3 million shares for $230.9 million at an average price of $17.30. As of March 31, 2026, we had cash and cash equivalents of $1.2 billion and total invested assets of $720 million, consisting of 33.5% corporate bonds, 31.3% municipal bonds, 24.1% U.S. government bonds and 11.1% asset-backed securities and other. As a relatively new public company, I'd like to take a moment to outline our capital priorities. We have demonstrated our ability to generate strong free cash flow and have deployed that capital both to support attractive growth opportunities and to repurchase shares when we believe it is accretive over the long term. We expect to continue managing capital in this disciplined manner, always prioritizing the actions that create the greatest long-term value for our shareholders. I'm pleased to reaffirm that the full year 2026 guidance we provided on our February earnings call, 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, including double-digit increases in policies in force and premium outside of Florida, supplemented by selective opportunities in Florida that meet our targeted returns. Finally, we expect to file our Form 10-Q after the market closes on April 30, 2026. Thank you for your time. And operator, we are now ready to open the line for questions.

[Operator Instructions] The first question comes from Alex Scott with Barclays.

First one I had for you is just a follow-up on the reinsurance commentary you gave. It sounded like a fair amount of limit you added. So I wanted to check to see if you could give us an update on how much higher the modeled PML loss would be that would still be covered by your reinsurance tower? Has that meaningfully changed sort of the risk profile of your company?

Yes. Everything scales in tandem. So we've had obviously tremendous growth year-over-year at plus almost 50%. As you add more policies, your probable maximum loss on your reinsurance tower gets higher. And so apples-to-apples compared to last year, it's the same. But in total, we did increase our first event reinsurance tower by $1 billion. So the tower is at approximately $3.5 billion of first event coverage. And that is in line with what we did last year, although on a smaller book and smaller tower, they are proportionately identical to one another.

Got it. Okay. That makes sense. And just to follow up on the reinsurance costs. I mean, to the extent you have savings, which it sounds like you probably will, and that's one of your biggest costs. Can you help us think through how that translates to the loss ratio and the benefit that we actually see coming through in the underwriting?

Yes. We don't have an external quota share, so it really shouldn't have any impact on underlying loss ratio. But yes, you are correct, Alex, that reinsurance is our single largest expense of the organization. So a decrease in reinsurance pricing is good for the Florida market and Florida cedents. But the underlying loss ratio should be unchanged because our only quota share is internal.

The next question is from Paul Newsome with Piper Sandler.

I wanted to ask kind of a broader question about the Citizens takeouts. There seems to be a pretty wide range of views about whether or not you can take them out -- take Citizens takeout today versus in the past, given how active folks have been. Maybe you could just talk a little bit about why you folks remain confident and if there's any sort of particular thing that you think you have an advantage over your peers in doing those takeouts.

Yes, it's a good question, Paul. I mean, obviously, the Citizens opportunity is not as robust as it has been in prior years. But every company is different. It depends on your portfolio? Where your portfolio is located? How do the Citizens policies fit within that portfolio? Are there reinsurance synergies that are created or the debit sets that happen? So every company is going to look at the Citizens portfolio a little differently and the policies are going to model differently for everyone. We are focused on profitability, like our growth has been incredible, and we're certainly not reliant on Citizens this year. We think voluntary growth in new states is the real story for '26. But if we see opportunities in Citizens to add accretive policies that really fit well within our portfolio, we're going to do that. And we underwrite with a $6 trillion TIB underwriting set. ProCast has been proven 100 times over now. It gives very accurate forward reinsurance costs. We feel like that gives us an advantage to find policies that are accretive to the current portfolio.

And then maybe as a second question, could we have a little additional color on the competitive environment? Perhaps the biggest question I get today is given where you and other insurers or profitability is why -- why wouldn't we see a rush of competitors come into the market? And is there any early evidence that something like that might be happening?

Yes, Paul, we're not seeing it. We get this question every quarter and every quarter our answer is the same. While there have been some new entrants to the market, I will note those entrants come in with an extremely small balance sheet. They have to scale. They have to build systems. They have to hire people. It's a loss lead. Maybe Citizens can be attractive for them, maybe not. But obviously, that opportunity is not as robust as it was, say, 2 years ago. We're not seeing new capital flow in, and we're seeing some companies that got conditional approval in Florida, not able to raise the necessary funds to even operate. So we're just not seeing that at this time. I think the market has been pretty stable, and we're very happy with how we are positioned in Florida.

[Operator Instructions] The next question comes from Tommy McJoynt with KBW.

We appreciate you guys giving us the full year guide for net income. And to be clear, that guide, I think you said does not include your assumption for a major CAT event in the third quarter, which we as analysts often want to bake in. Maybe you can help us frame what would happen to your net income if a prior event like a Hurricane Helene, Milton or Ian were to repeat, what would that do to your net income? We understand it's not as simple as plugging in the full first event retention just because there's offsets from claims processing revenues as well.

Well, if it's an event like Helene, there's virtually zero impact to our earnings. If there's an event like Milton, there's going to be a larger impact because it was a CAT 4 that hit Tampa. Whereas Helene was primarily a flood event. We're still finalizing in the reinsurance tower what our first event retention is going to be. But I would say that as a guidepost, we have consistently kept our retention to no more than 25% of pretax earnings. So even if you had a full event retention, I would expect pretax earnings to go down by about 25% for the year. And so maybe we run a 40% ROE. It's -- we're in a very good spot here. And the retention is also spread out across a very large reinsurance tower. So it's not like you have a $200 million loss and all of that loss is absorbed by the company. We spread that retention throughout different layers. We call it COPAR. And we like to do that just to hedge the risk and show the reinsurers that we have real skin in the game. But -- and event is not some armageddon for us. It's just a ding to earnings for the year, but those earnings will still be incredibly robust.

And are there any details that you can share around second and third event loss retentions as well, the sideways protection in the reinsurance tower? Or will we need to wait for more details on the reinsurance program?

Yes. Good question. Expect something similar in terms of structure to what we did last year. We do like to step down retentions on event too. We do buy third event cover, and that is a rarity in the Florida market. In fact, I'm unaware of anyone that does that besides us. So as we get a higher number of catastrophe events, our retention steps down for each event. But we're still in the process of finalizing what that will look like, but not dissimilar to last year.

And then just last one. When we think about the new business -- sort of new business that you're generating, both in the voluntary and what I'll call the Citizens assumption side, which one of those is a larger contributor to new business growth in '26? Is it still Citizens takeouts? Or are the voluntary channels in Florida and in the other states contributing more than that this year?

It's voluntary. That will be the larger channel for sure.

The next question comes from Randy Binner with Texas Capital.

Just picking up on that question. Can you comment on the kind of the pace and the composition of the top line growth for the rest of the year? Is there going to be -- is it going to be for the voluntary business or the business in new states? Is it going to be pretty linear? Is there any seasonality? There's kind of a tough comp in the fourth quarter. It'd just be helpful to kind of understand high level, how you see the rest of the top line coming in for the remaining 3 quarters in the year?

Yes. I would expect top line to steadily increase as we move through 2026 with the launch of new products, new states, et cetera. We do have to watch our growth because we're purchasing a reinsurance tower, and that tower has projections as to what our in-force portfolio will look like at September 30. And -- so we have to kind of navigate within the tower on the top line growth, but we did model in some very strong top line growth into the reinsurance purchase. So we're able to kind of go full steam at this point and continue to fill the exposure set within our reinsurance tower. But I definitely think you're going to see an acceleration, particularly in the third and fourth quarters.

Okay. That's helpful. And then just one detailed question. Do you -- was there any PYD or Cat in the loss ratio in the quarter?

We had some CAT in there. We had some relatively minor events in the first quarter, but there is no PYD. The earnings number that we posted is 100% a quarterly function with no PYD in it.

Okay. Got it. And then just one more, if I could. The cash balance seems high. I'm a little newer to the story, so maybe I'm not up to speed on this. But it seems like some of the cash balance on the balance sheet could shift into investments that could generate a higher yield. Is that the right way to think of how the investment income line might develop over time?

I believe, yes. And the reason the cash balance is so high is because the company keeps crushing its own projections in terms of profitability, and it is meaningfully accretive to our cash balance. As a result of the cash balance accelerating, particularly over the last 4 quarters, we've been able to do things like return $230 million of equity back to shareholders. And we still believe that we have more capital on the balance sheet than we need to execute on the business plan. So we are working closely with our financial advisers. We are reinvesting those cash proceeds into higher-yielding assets. But at this point in time, nothing is a higher yield than just the underwriting. I mean when you're running 55 combined ratios, you want to continue to bolster and increase your underwriting capability. But it is a [ chance, ] and it takes time to deploy capital in an effective and thoughtful way. But it's a good problem to have, and we expect that problem to get a little bit bigger as we go through the year, and we start posting earnings numbers for the rest of the 2026 quarters.

The next question comes from Matt Carletti with Citizens Capital Markets.

Bruce, I was hoping you could just spend a minute talking about some of the new states you talked about kind of New York, New Jersey, California and so forth. And just help us with kind of which ones you might find most attractive. Some of those have been in the news in different ways. Obviously, California has a bit of a capacity issue going on to the wildfires. There's been kind of proposed profit caps in New York, which I know it won't be a big state for you overnight and maybe it's a bunch of noise about nothing. But just curious kind of your views as you sit there and think about kind of where to put your chits as you kind of expand outside of Florida.

Yes, it's a good question, Matt. I would say #1 for us is definitely California. We've spent a lot of time developing on California product and partnerships, distribution, that launch is imminent. I mean it could happen this week. I mean we're that close. We're just putting the finishing touches on systems at this point in time. So we expect to launch that product in the near term, but we think there's a tremendous opportunity in California. We also do believe that New York and New Jersey are still very accretive. And the primary reason for that is there is a capacity shortfall in both of those markets. There are tremendous reinsurance synergies that we pick up as we scale in the Northeast. It's the blueprint and model that I kind of created when I was at Heritage and it was very successful. So I have a high degree of confidence in that execution strategy. We'll see what New York does on profit caps. I think that's going to be a much bigger issue for, say, a company that has 100% of their premium in New York not a company at the end of the year that will have 4% or 5% of its premium in Europe, if that. So it's not really an issue at this point in time. We're still on track and on schedule to launch all of our new states, and we feel pretty bullish about that growth opportunity.

The next question is a follow-up from Alex Scott with Barclays.

I wanted to see if you could comment a little bit more on some of your efforts on distribution in California ahead of the launch. I mean, is that -- is building out distribution something that takes a long time and sort of you have the blueprint and some of the initial foundation laid, but it will kind of come in over time? Or has a lot of that work been done upfront? I'm just trying to understand how impactful this launch could be on growth for the rest of the year.

Yes, Alex, good question. All of our distribution is in place. So we spent the time on the front end to identify the right distribution partners in a very large and differentiated market. California is huge. It's not like there's 2 or 3 markets. There's probably 20 markets within California. So all of that work is done. Really at this point, we're just fine-tuning some system issues, technical issues, but it will get launched here in short order. And we do think there's an opportunity to grow top line this year by $50 million to $100 million just in California, if not more. So we're really chomping at the bit to get the finishing touches on and launch the program.

Got it. That's helpful. Follow-up I had is on just the prioritization of capital return. You're in a unique position where you have enough cash coming in to potentially grow and return capital. And I look at my own model even and -- even with a good amount of growth, premium to surplus is coming down in my model, which probably doesn't make a whole lot of sense. With the stock trading at what is -- at 5.5x price to earnings, I mean, a significant discount even to the arguably more volatile reinsurers and property CAT, will you continue to leverage buybacks to reduce your share count the way you did this quarter until that's corrected?

Yes, that's a great question. It's something that we talk about a lot is capital management. And you're right. This is a good problem to have. Most companies do not have the problem that we have on profitability and cash. But we are always, first and foremost, looking for the highest return on equity for our shareholders. That is our #1 mission at Slide. It should be everyone's #1. And so the first thing we do is we really pick apart the business plan. We look at the opportunities in front of us, the amount of capital that will be required, what we believe the ROE will be on those opportunities. And once we have that cash position set aside for the growth initiatives, we then start looking at excess cash, what's the best use of it. There are definitely instances where you'd want to have some redundant capital on your balance sheet. I think that is prudent. It helps us kind of hedge out any volatility in the portfolio. But we have been generating such rapid increases in profitability and free cash that buying back stock at an average of $17.30 a share, which is less than 2% higher than the IPO price, that's a no-brainer. We'll take that trade all day. When we went public in June of last year, there were analyst projections that were issued to the Street as to what we were going to do in '25 and '26. I think it's very safe to say that we have absolutely surpassed all of those expectations in a meaningful way, yet the stock had been kind of stuck right around that IPO price. When we see that type of dislocation, we're a strong and aggressive buyer. And as we continue to increase our earnings, increase our top line, you should expect us to be very active in share buybacks as long as the price is not indicative of fair value.

Thank you. At this time, I would like to turn it back over to Mr. Bruce Lucas for closing comments.

I would just like to thank everyone for participating in our first quarter earnings call.

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.