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Conference Call Transcript |
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2004 |
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FINAL TRANSCRIPT
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QNTA - Q2 2004 QUANTA CAP HLDGS LTD EARNINGS CONFERENCE CALL
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THOMSON STREETEVENTS
CONFERENCE CALL TRANSCRIPT
QNTA - Q2 2004 QUANTA CAP HLDGS LTD EARNINGS CONFERENCE CALL
EVENT DATE/TIME: AUG. 03. 2004 / 9:00AM ET
EVENT DURATION: N/A
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THOMSON STREETEVENTS streetevents@thomson.com 617.603.7900
www.streetevents.com 2
--------------------------------------------------------------------------------
(C) 2004 2002 Thomson Financial. Republished with permission. No part of this
publication may be reproduced or transmitted in any form or by any means without
the prior written consent of Thomson Financial.
{PAGE}
FINAL TRANSCRIPT
--------------------------------------------------------------------------------
QNTA - Q2 2004 QUANTA CAP HLDGS LTD EARNINGS CONFERENCE CALL
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
THOMSON STREETEVENTS streetevents@thomson.com 617.603.7900
www.streetevents.com 3
--------------------------------------------------------------------------------
(C) 2004 2002 Thomson Financial. Republished with permission. No part of this
publication may be reproduced or transmitted in any form or by any means without
the prior written consent of Thomson Financial.
{PAGE}
FINAL TRANSCRIPT
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QNTA - Q2 2004 QUANTA CAP HLDGS LTD EARNINGS CONFERENCE CALL
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CORPORATE PARTICIPANTS
AMANDA MULLIN
Quanta Capital Holdings - VP, Investor Relations
TOBEY RUSS
Quanta Capital Holdings - CEO
JOHN BRITTAIN
Quanta Capital Holdings - CFO
CONFERENCE CALL PARTICIPANTS
BEJUAN MOHANTY
Friedman Billings Ramsey - Analyst
RON BALDAN
Capital Returns - Analyst
CHRIS WINANS
Lehman Brothers - Analyst
PRESENTATION
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OPERATOR
Good day ladies and gentlemen, and welcome to your Quanta Capital Holdings
second quarter earnings conference call.
(Operator Instructions)
I would now like to turn the presentation over to your host for today Mr. Amanda
Mullin, Vice President of Investor Relations.
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AMANDA MULLIN - QUANTA CAPITAL HOLDINGS - VP, INVESTOR RELATIONS
Thank you.
Good morning everyone. Thank you for joining us today. Before we begin, I would
like to note that this conference call contains forward-looking statements
including statements regarding the company's performance for 2004 and beyond,
and other statements that are made pursuant to the Safe Harbor Provisions of the
Private Securities Litigation Reform Act of 1995.
Forward-looking statements are based on our estimates and assumptions and are
subject to number of risks, uncertainties and other factors beyond the company's
control, which may cause material differences in actual results. These risk
factors are detailed in Quanta's amended Form S-1 declared effective by the SEC
on May 13, 2004.
With that I would now like to turn the call over to Tobey Russ, Quanta's Chief
Executive Officer. Tobey?
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TOBEY RUSS - QUANTA CAPITAL HOLDINGS - CEO
Good morning, everyone, and welcome to the call. Joining me on today's call is
John Brittain, Quanta's Chief Financial Officer.
I will begin by providing an overview of our second quarter results, which
reflect the significant progress we have made since we last spoke to you. After
that I will turn the call over to John who will walk through our second quarter
financial results in more detail. And finally I will make some remarks before we
open the call up for questions.
The second quarter was an exciting and gratifying one for the company, marked by
three noteworthy highlights. One, we continued to grow the business and
implement our operating strategies as reflected, in part, by the increase in our
direct specialty insurance line as a proportion of our total business. Two, we
listed the company's shares on NASDAQ national market in
--------------------------------------------------------------------------------
THOMSON STREETEVENTS streetevents@thomson.com 617.603.7900
www.streetevents.com 4
--------------------------------------------------------------------------------
(C) 2004 2002 Thomson Financial. Republished with permission. No part of this
publication may be reproduced or transmitted in any form or by any means without
the prior written consent of Thomson Financial.
{PAGE}
FINAL TRANSCRIPT
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QNTA - Q2 2004 QUANTA CAP HLDGS LTD EARNINGS CONFERENCE CALL
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May. And three, we recorded our first profitable quarter in less than nine
months after the company commenced operations.
We believe these accomplishments are testament to the strength of our business
model as well as the quality of our people and their focus and dedication to
executing our operating plans. For those of you who are not familiar with
Quanta's background, I would like to briefly note some of the key components of
our business strategy.
First, we established company with a prudent capital structure, which would
foster disciplined underwriting in what is proving to be a cyclical industry.
Second, we focussed on hiring experienced staff with a high level of technical
depth in their respective specialty line.
With our teams in place, we implemented a net present value/intrinsic value
business model to facilitate our capital allocation and underwriting decision.
Capital isallocated to business where we believe NPV returns on a risk-adjusted
basis are greater than 20%. To reinforce this model, we implemented a unique
cash compensation plan which directly align to the interest of our employees
with those of our shareholders.
With these key components of our strategy in place, our short-term focus was to
capitalize on the immediate opportunities we saw in the reinsurance market while
we built the infrastructure necessary to enter the US specialty lines insurance
business. Our direct lines are now ramping up and, as planned, are becoming a
more significant contributor to overall financial results.
With this is the backdrop I would now like to give you a more detail view of
progress during the second quarter by reviewing the performance in each of our
three business segments.
First we are very pleased to see our specialty insurance lines become a more
significant contributor to our overall results. Specialty insurance generated
$46.9 million in net written premiums for the quarter, a 47% increase over net
written premiums of $31.8 million in the first quarter.
Specialty insurance accounted for over 41% of our total net written premiums
compared to 28% in the first quarter. Our efforts to our achieve our specialty
lines objectives are facilitated by our ability to adjust our allocation of
capital and to deploy it to those opportunities that are most attractive in an
ever-changing market place. As this specialty line strategy fully develops we
expect an increasingly positive impact on written premiums, earned premiums and
ultimately on profitability.
Our specialty line performance for the second quarter was marked by especially
strong result in our Marine, Technical Risks and Aviation line. These strong
results was attributable in large part to the continued development of our
residential builders and contractors program, which provide builders' risk,
warranty, general liability and excess liability coverage for new home
construction and accounted for $32 million in net written premiums during the
second quarter.
This program requires highly technical focus, the application of rigorous
underwriting standards and proactive risks management and, as such, fits well
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