Room to raise the ceiling: management says its own prices, rates, or terms sit below what the market would currently bea
The model's full reasoning — Q1 2022 call → NOWe need to determine if management conveys that the company is currently charging less than what the market would bear, and that they are actively closing that gap while customers stay. The transcript has management discussing rate increases, pricing, and market conditions. They mention that rate increases are exceeding loss cost trend, and they are achieving rate in excess of trend. They also discuss new business relativity, retention, and the ability to push rate. They say "we feel very good about the available margin, and as a result, in many product lines, we are willing to allow exposure growth to be the priority over rate but not across the Board." They also mention that rate increases are outpacing loss cost trend. They talk about the market being firm, and they are taking rate. They also mention that they are not seeing competition pick up in E&S. They say "the rate we are achieving is in excess of loss cost trend and by something that would be measured in hundreds of basis points." This suggests they are charging more relative to cost, but is that a gap between price and value? The question is about charging less than what the market would bear. Management is saying they are getting rate increases, but are they saying they were undercharging? They mention that they are achieving rate increases, and they are comfortable with the margin. They also mention that they are not pushing it too hard. They say "we are just not going to push it." That suggests they could push more but are choosing not to. But the question is whether they convey that they are currently charging less than the market would bear and are actively closing that gap. They say they are achieving rate in excess of trend, which means they are increasing prices faster than costs. That is not necessarily a gap between price and value; it's just price increases. They also mention that they are seeing strong submission flow and retention, which suggests customers are accepting the increases. But do they explicitly say they are undercharging? They talk about "new business relativity" being 1.018, meaning they charge 2% more for new business than renewal. That suggests they are charging more for new business, but not necessarily that they are undercharging overall.
| Ticker | Company | Call | Date | Call grade |
|---|---|---|---|---|
| MEC | Mayville Engineering Company, Inc. | Q3 2022 | 2022-11-05 | B+ |
| CAG | Conagra Brands, Inc. | Q2 2017 | 2016-12-22 | C+ |
| SOHO | Sotherly Hotels Inc. | Q3 2016 | 2016-11-08 | D |
| RCL | Royal Caribbean Cruises Ltd. | Q1 2016 | 2016-04-29 | C+ |
| HPP | Hudson Pacific Properties, Inc. | Q4 2015 | 2016-02-25 | C |
HPP · Q4 2015 → YESThe question is: Does management convey that the company is currently charging LESS for what it sells than the market would presently bear — that its own prices, rates, fees, or terms sit meaningfully...YES The transcript shows management explicitly describing a gap between its current charges and what the market now supports, then confirming that the company is already closing it through mark-to-market resets and higher new/renewal rents. Victor Coleman states that the company has “rolled out 80% plus mark to market” on recent leases 2.5 years old, and that cash rent spreads on 1.6 million square feet executed since the acquisition were “north of 30%” with “20%, 25% mark-to-market for 2016 and 2017.
MEC · Q3 2022 → YESThe question is: Does management convey that the company is currently charging LESS for what it sells than the market would presently bear — that its own prices sit meaningfully below the value custom...YES Management explicitly states that they have taken pricing actions in 2022 and have "more room for margin expansion through continued value pricing even beyond the pricing actions taken during 2022." This conveys that their current prices sit below what the market would support, and they are actively beginning to close that gap with further value pricing.
SOHO · Q3 2016 → YESThe question is: Does management convey that the company is currently charging LESS for what it sells than the market would presently bear — that its own prices, rates, fees, or terms sit meaningfully...YES The transcript shows management explicitly identifying a rate gap at the Laurel hotel (and similar situations at other properties) where current charges sit below the competitive set/market, while describing active steps already underway to close that gap through continued ramp-up and occupancy/rate improvements.