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Operator: Greetings. Welcome to the Reliance Global Second Quarter 2023 Financial Results and Business Update Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to your host, Ted Ayvas, Investor Relations. You may begin.

Theodore Ayvas: Thank you, Holly. Good afternoon and thank you for joining Reliance Global Group’s 2023 second quarter financial results and business update conference call. On the call with us today are Ezra Beyman, Chairman and Chief Executive Officer of Reliance Global Group; Joel Markovits, Chief Financial Officer of Reliance; Grant Barra, Senior Vice President of Operations at Reliance; and Moshe Fishman, Director of Insurtech Operations at Reliance. Earlier today, the company announced its operating results for the three months ended June 30, 2023. The press release is posted on the company’s website, www.relianceglobalgroup.com. In addition, the company has filed its quarterly report on Form 10-Q with the U.S. Securities and Exchange Commission today, which could also be accessed on the company’s website as well as the SEC’s website at www.sec.gov.

If you have any questions after the call or would like any additional information about the company, please contact Crescendo Communications at (212) 671-1020. Before Mr. Beyman reviews the company’s operating results for the quarter ended June 30, 2023, we would like to remind everyone that this conference call may contain forward-looking statements. All statements other than statements of historical facts contained in this conference call including statements regarding our future results of operations and financial position, strategy and plans and our expectations for future operations are forward-looking statements. The words anticipate, estimate, expect, project, plan, seek, intend, believe, may, might, will, should, could, likely, continue, design and the negative of such terms in other words in terms of similar expressions are intended to identify forward-looking statements.

These forward-looking statements are based largely on the company’s current expectations and projections about future events and trends that it believes may affect its financial condition, results of operations, strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to several risks, uncertainties and assumptions as described in the company’s Form 10-K filed with the U.S. Securities and Exchange Commission on March 30, 2023. Because of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this conference call may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. Although the company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, level of activity, performance or achievements. In addition, neither the company nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. The company disclaims any duty to update any of these forward-looking statements. All forward-looking statements attributable to the company are expressly qualified in their entirety by these cautionary statements as well as others made in this conference call. We should evaluate all forward-looking statements made by the company in the context of these risks and uncertainties.

Having said that, I’d now like to turn the call over to Ezra Beyman, Chairman and Chief Executive Officer of Reliance Global Group. Ezra?

Ezra Beyman: Thank you, Ted. Good afternoon, and thanks for everyone for joining us today. We are pleased to report that our revenue grew 12% compared to the same period of 2022, which primarily reflects the organic growth of the business. It’s important to note that we acquired Barra & Associates in April of 2022. So we had two full months of revenue for the second quarter of last year and all of our other acquisitions were reflected in our revenues in both periods. Since the acquisition of Barra and its rebranding as RELI Exchange, we have experienced steady growth of the agency network. And despite significant investments in RELI Exchange, we reduced our loss from operations by 30% in the first six months of 2023 over the same period in 2022.

We view RELI Exchange as core to the company’s long-term strategic growth plan and are extremely pleased with our progress to date. RELI Exchange continues to expand, currently supporting over 310 agency partners, representing a more than 100% increase since the beginning of the year. This achievement stems from the unique value proposition that RELI Exchange offers independent insurance agents. By leveraging the most recent technologies and AI capabilities, the platform provides independent agents with a comprehensive toolbox for their businesses, allowing them to not only compete against larger national agencies, but also surpass them in their services and offerings. I would like now to turn the call over to Grant Barra, Senior Vice President of Operations, to provide an overview of how we at Reliance Global view the market opportunities and growth drivers in our industry.

Grant?

Grant Barra: Thanks, Ezra, and good afternoon to all the listeners. The total U.S. insurance market is sizable. The current value is approximately $2.7 trillion, which accounts for more than 39% of the total global insurance market. It is expected that by 2027, the U.S. market will grow by 26%, reaching $3.4 trillion. Serving this industry are approximately 410,000 licensed U.S. insurance agents. That’s comprised of nearly 60% of them being independent and the other 40% being captive insurance agents. Of the 60% of the market that are independent agents, our strategy is to recruit many of these agents onto our platform. The feedback that we’ve been receiving from this group has been overwhelmingly positive. At the same time, amongst the 40% that are captive to a particular carrier, our goal is to either recruit them away, offering them the ability to become independent agency partners with RELI Exchange or simply winning the business controlled by the captive carriers with our much more attractive offerings.

Not only are we focused on gaining market share. But overall – but the overall market is also expected to grow. So there are several factors driving this growth, including an aging population and a growing demand for health, property, casualty and other forms of insurance. So it’s also important to note that as an agency, we do not have the same risk exposure as the carriers. To the contrary, the increasing premiums positively affect our margins. Also, with inflation and rising premiums, customers often seek alternative options, alternative quotes replacing their existing policies with ones that offer greater value at a more competitive price. That’s exactly how we’re positioned. Customers are much more likely to get the best pricing through independent agencies as opposed to captive agents who can only sell policies from one single carrier.

In fact, the average quote-to-close ratio for a captive agent very low for that reason. In contrast, our platform allows agents to compare quotes across a very wide selection of carriers within minutes. It makes sure customers are not only getting the best price but also the best offering to suit their specific needs. As a result, we believe RELI Exchange is perfectly positioned in the market to offer real value for both agents and the consumers. As we’ve discussed in the past, RELI Exchange allows agents to maintain their independent brand. And we can even provide them with their own professional and interactive website on day one. We not only allow them to access many of the major carriers in the insurance market, but we also provide support and mentorship both in the start-up of their individual agencies, and that mentorship continues as long as they’re with RELI Exchange.

So what does that mean to the agents and why are more and more of them switching to RELI Exchange. The answer is simple. We can offer them more opportunity. The way they are able to conduct business with their clients on our platform is easier. It’s faster, it puts our agency partners in a more competitive position. When they start their agency, they are immediately able to compete against some of the biggest players in our industry. This results in more business, more premiums that drive more revenue into our company. I would like to now turn over the call to Moshe Fishman, Director of Insurtech and Operations; to review our operating subsidiaries and plans to consolidate them in the future. Moshe?

Moshe Fishman: Thanks, Grant, and good afternoon. Before discussing our one firm plan, which is well underway, designed to consolidate our wholly-owned stand-alone operating agencies to have the strength and efficiencies of a single firm, I would like to quickly take a look at each of our current offices. Fortman Insurance Services provides all lines of insurance and operates in 49 states across the United States. Altruis provides group and individual health insurance. Southwest Montana Insurance Center provides group health insurance and is very respected amongst government clients. Employee Benefits Solutions provide group health to middle market customers. U.S. Benefits Alliance provides individual and group health insurance, UIS agency provides specialty line transportation insurance.

J.P. Kush and Associates provides individual health insurance across the United States. And lastly, RELI Exchange our exclusive agency partner network and distribution platform. So as you can see, we have very broad capabilities across a wide range of insurance category, and we now have a very strong nationwide presence. Collectively, these agencies have more than 1,100 total producing agents with an estimated 58,500 active policies under management, representing an estimated $450 million of premiums. Looking ahead, we are in the process of merging our stand-alone agencies under a single brand of the Reliance Global Group, we anticipate that this consolidation will furnish the company with considerable advantages and operational efficiencies.

By uniting under one brand across all lines of business, Reliance Global Group’s market presence throughout the United States will be immediately enhanced. Furthermore, the consolidation is expected to improve our commissions and bonus structures with the carriers due to increased volume. It will also foster greater cross-selling opportunities and enable more effective utilization of our talent across the organization with their respective insurance specialties. With the majority of the investment of RELI Exchange now behind us and consistent strong performance across our operating subsidiaries, we have effectively built what we consider to be a highly scalable business model as we persist in our organic growth and deepen our presence across the United States, we believe we are well positioned for success in the immediate future, while simultaneously laying the groundwork for substantial and sustained long-term growth.

Our strategic, cost-effective and unique approach to the market gives us tremendous confidence in our ability to generate significant long-term returns for our shareholders. I would now like to turn the call over to Joel Markovits, Chief Financial Officer of Reliance Global, who will review the financial results for the quarter ended June 30, 2023. Joel?

Joel Markovits: Thanks, Moshe, and good afternoon all. It’s great to be here with you today. Super excited to share our financial results for the second quarter of 2023. Figures presented are approximates. Company’s revenue for the three and six months ended June 2023, was $3.2 million and $7.1 million, respectively. For the three months, this represents a 12% increase from $2.8 million in the previous year. For the six months, this represents a 21% increase from $5.9 million in the previous year. Ezra and the team did a great job presenting the movement behind these positive revenue increases. Total operating expense for the three months ended June 30, 2023, increased by only 9% or $414,000 from the same period in the prior year, notwithstanding a 12% increase in topline revenue.

For the six months ended June 2023, total operating expense decreased by 1%, notwithstanding a 21% increase in topline revenue. This illustrates the efficiencies the company has incorporated, which are demonstrated in these enhanced financial results. Loss from operations increased by a modest 4% or $65,000 for the three months ended June 30, 2023, whereas for the six months loss from operations decreased by 31% or $1.3 million. Net loss for the three and six months ended June 30, 2023, was $1.1 million and $2.8 million, respectively. In the same period in the prior year, there was net income that was due to significant unrealized gains in the valuation of our derivative positions, which did not recur in 2023. Working capital increased by $6.8 million or 150% as of June 30, 2023 from December 31, 2022.

This represents a healthy balance sheet where current assets outdo current liabilities by close to 1.5x. With this, we conclude our prepared remarks. Happy to answer any questions or comments participants may have. Operator, kindly open the lines.

Operator: Certainly. At this time we will be conducting a question-and-answer session. [Operator Instructions] Your first question for today is coming from Mike Albanese with EF Hutton.

Michael Albanese: Hey, guys. Thanks for taking my question. I just want to dive into the agency consolidation a bit. Can you just kind of walk us through how or what your expectation is regarding kind of the, I guess, uptick in commissions and volumes as a result of the rebranding. Could you just kind of dissect that a little bit?

Moshe Fishman: Sure. Thank you, Mike. It’s Moshe Fishman speaking. With the different carrier relationships that we have, when you come with a bigger book of business to a particular carrier, not only do you have better bargaining power on the first commission, but you also open up for better bonuses based on the loss ratios. So the simple consolidation even before writing new business, should immediately enhance the revenue with the consolidation besides more of the benefits that it brings.

Michael Albanese: Got it. Thank you. Okay. And then just regarding kind of reaching that inflection point of producing positive cash flow. I guess just only, how do you get there from here? What is kind of your expectation on reaching that milestone?

Ezra Beyman: Two ways. Hi, it’s Ezra Beyman. I mean the organic growth is picking up, and we’re actually now focused on going after agents that produce business on day one. That helps. And we’re only actually one acquisition away in all probability from being cash positive. Anyway, we’re looking at various options, and we’re close enough to the breakeven point that any acquisition should God willing bring us over the line. And that, combined with the organic and the streamlining of the consolidation as Moshe Fishman was talking about is already well underway. It doesn’t reflect yet in this quarter as much, but it’s not long-term. So I think all these components combined should be a very healthy, profitable operation.

Michael Albanese: Got it. Thank you. And then just my last question. I think you said in your prepared remarks, you have about 310 agencies on the platform up significantly. I mean, can you give us some additional color maybe on what were your expectations for that number is, call it, the end of the year or maybe like a monthly growth rate or just how you’re thinking about scaling the platform.

Ezra Beyman: I think, Grant, that’s in your ballpark.

Grant Barra: Yes. This is Grant Barra. Let me go ahead and take that question. So the growth of the agency partner network is a core focus of the organization. And the way that, that happens is there’s really two target markets, two targets, candidate prospect pools that drive – we find drive the best results. The first prospect pools is going to be an independent or a captive individual that works for an agent or an agency owner and they aspire to what time as most insurance agents in our industry to have their own agency. These are experienced individuals who have existing relationships and have a very dialed-in process in how to generate new opportunities and new clients that will allow them to quote them in the existing system that they have in place.

The second group are captive agency owners. So these are agency owners that are captive with a single insurance carrier. And these are also individuals that are very dialed in new business process. So they’re very good at developing opportunities that allow them to quote through their existing platform. Now in many of these circumstances, these agency partners are only able to offer a single – I’m sorry, these agency owners in the field are only able to offer a single carrier as a solution for the end clients. That is very limiting and does not allow them to be competitive very often in the field that rates really hovers in the very low teens. So by bringing those agency partners onto our platform. They are immediately able to continue the same existing prospect and new business prospecting process that they have already established and proven successful at a lower close rates.

It allows them to be on our platform instantly increasing the number of opportunities that they have to close new business because of our wide variety of existing carrier relations. And also the technology that allows them to process all the information from all the different carriers much faster, much more efficient and much more accurate in order to give those rates to the end clients. So these are tremendous benefits. We continue to grow our agency partner offering through courting of these captive and independent insurance agents through our team of sales directors in the office who have experience in our industry and court them and help them understand the advantages in the industry of coming over and transitioning from being captive to independent or transitioning from working for an agent or agency owner to having their own agency as an agency partner with RELI Exchange.

If you’d like me to go into any additional detail, please ask more questions.

Michael Albanese: Sure. No, that’s all great context. I appreciate it. So I guess specifically regarding RELI Exchange, I mean, just I think 310 agents on the platform. I mean, what’s your expectation for growth? I mean this is win-win. It seems like a good value proposition, obviously, to the agents and then both and then the customers as well. I mean you grew at over 100% from I think Q4. I’m just trying to come up with some perspective in terms of moving forward, 100% growth rate maybe is unsustainable or maybe it’s sustainable for a short amount of time. Can you just help provide some perspective in what I can expect for growth there?

Grant Barra: Yes. Let me add some color around that. So if we chose to, I do believe we can grow RELI Exchange at just about any clip that we choose to. I mean there’s that many opportunities out there to bring agents into a platform that provides them significant benefits in being able to close business and drive revenue into their agencies. With that said, we want to focus our efforts on agencies who are going to drive the most value to both for themselves and for the organization. So we have a rating system of every individual that we potentially are going to work with in the field. And we prioritize these agents based on their experience, their past activity, their attitude and we want to make sure we’re spending a majority of our time with the individuals who are going to drive the most revenue.

So while I do not believe our recruiting is going too slow because we’ve continued to ramp up, I actually believe our current pace where we’ve added more than 150 agency partners this year will remain stable to increase. So we will, over the next same period, we will increase the number that we’ve brought on. With that said, though, the individuals that we bring on are significantly stronger as we’ve dialed in our process and we’ll be able to return significantly more premium volume into the company. Ultimately, they’re going to earn more on an individual basis. So I wanted to go into a little detail on why our focus is on the individuals – why our focus is on these individuals. So the growth rate will be 20-plus experienced agency partners on a monthly basis.

Michael Albanese: Got it. Okay. Right. And then you take these agents, you essentially put them on a better platform, a higher conversion rate. I mean, you only have so many quarters here of data. I understand that. But I mean, if you just think about this on kind of like a unit level basis, meaning the agent being the unit, that should be driving higher revenues per unit moving forward. Is that fair to say that’s kind of the expectation?

Grant Barra: No, that’s fair to say. So they’re going to be driving higher revenues on a per unit basis, but you also need to take into consideration that the revenues that they produce year one for themselves. It’s not like those revenues go away. Those revenues continue to renew year after year. So any additional efforts in new business that are put in year two, year three, year four, stack on top of the new business from all previous years that we’re able to retain. And I’d estimate a retention ratio of those premiums upwards of 90-plus percent.

Michael Albanese: Got it. Okay. Great. Thanks for answering my question guys. It’s really helpful for me today.

Operator: [Operator Instructions] Your next question for today is coming from Nick Pincus at Forest Capital.

Unidentified Analyst: Thanks for taking my call. Congrats on another solid quarter. You actually answered part of my question in your earlier response. But the second part is, are you finding more success recruiting agents that are already independent? Or is it easier to recruit talent from the captive agencies? And can you talk about the feedback that you’ve gotten from the agents once they’re onboarded to the network?

Grant Barra: So this is Grant Barra. Let me jump on this one again. We are finding exponentially more success with agents coming from captive platforms. So these agents on captive platforms are restricted in what they’re able to offer the end clients. So they’re going to provide the best solution that they have available to them for the clients. Unfortunately, that solution is one carrier. And no matter what the client’s circumstances are, it’s always – their best solution, there’s always going to be the one carrier that they have access to. It just doesn’t work for everyone. The future is in independent agencies. Now as these captive agents continue to lose premiums to the ultra-competitive independent agencies like RELI Exchange in the field, I mean, their eyes are open, they have to make a change, if they want to grow the organization at the same clip they did in the past or even faster.

So when we’re able to take a captive agent who already has the new business prospecting process absolutely dialed in, we can move them over to our platform, and it’s instantaneous that they’re able to have a significantly higher close ratio. Now when I say significantly higher close ratio, I’m talking a multiple of where they’re coming from. So their ability to write and scale – write new business and scale the amount of business that they’re able to not only quote but close and bring in to their agency is very, very high. The feedback that we’re getting from these captive agents, a lot of times, the feedback is along the lines of I wish I never joined a captive organization because of the limitations that are in place, why didn’t I start out as independent.

But the reality is most insurance agents in our industry have no idea that when they’re entering the insurance industry, an independent opportunity even exists. That’s why we have the team of sales directors in place. So we can manage that outreach, educate these individuals and court them from their existing situation, which is good, to become independent on the RELI Exchange platform, which essentially makes their situation very good. I hope that answers your question.

Unidentified Analyst: Definitely. Thanks. The other part of it is it seems like a very scalable model. Can you talk about your cost to onboard the agents onto the platform?

Ezra Beyman: Grant, I’m going to just start and hand it over to you. I’m excited about that part. Basically, we’ve – really, the infrastructure is in place. And we now have, I think, nine or 10, we call them sales directors or recruiters and the technology is in place. So going from here to thousands of agents cost us almost nothing relatively speaking, to increase. That’s the beautiful part of it. It’s not like the direct-to-consumer models that are spending literally hundreds of million dollars of marketing. We’re spending almost nothing in marketing because the agents bring their business. And we only pay for that business when money comes in, they bring money to the bank, we give you money. So Grant, you could elaborate, if you like, but that’s the beauty of it.

We’ve been working on infrastructure for the last now a little over a year, not too bad in this world to get everything in place, ready to go. And now we want to go from a sedan to a rocket trip. Go ahead, Grant.

Grant Barra: Ezra – so this is Grant Barra. Ezra really hit the nail on the head here. We have the existing infrastructure in place. There’s little to no cost to grow from this point on. An individual that we are able to contract and bring into the fold cost of the company of our employees’ time and the training and the setup and getting them up and running, which is incredibly fast. I’m not sure any organization can onboard people as fast as we can today. But as we are able to continue to do that, there’s really no variable costs that we’re experiencing.

Unidentified Analyst: That’s great. Thank you.

Operator: Your next question is coming from Emmanuel Kramer, a Private Investor.

Unidentified Analyst: Hey, good morning. Thanks for the quarter improvement. You recently got about $3 million investment, the court approved it and you got it. The investors have been suffering for a while due to reverse splits. You think investors can participate in those cash that you received.

Ezra Beyman: And that’s really part of the business. And I think the way the investors can enjoy and benefit will be a little bit patient. And as we carry out our plan, and the reverse splits were not something that we chose, we were required to do them but to grow. But I think a little patience and will – I know I’m disappointed as well. I’m the largest shareholder by far or at least individual shareholder. So – and I put a lot of millions of my own money into the company besides. So I think just holding out, you’re letting us using the money that we have to grow the business more and have a little more patience. The model works – now we just have to scale it big time, like I mentioned before. So that would be the best use of the funds, okay?

And we treat this like a private business, no one takes here great crazy salaries, not extravagant offices, very practical down to earth, treating it like our own. So you should have confidence that we’re running it, and there were some hitches and delays, but we’re on the way. God willing, we’ll get there pretty quick. Thank you very much.

Operator: We have reached the end of the question-and-answer session. And I will now turn the call over to Ezra for closing remarks.

Ezra Beyman: Take it Joel, yes.

Joel Markovits: Yes. This is Joel. I’ll take this and wrap the call up. So on behalf of Ezra, Grant, Moshe and the entire Reliance team, we very much appreciate your participation in this business update. We’re thrilled about the outlook of the business and considerable growth landscape. Until next time, thank you.

Operator: Thank you. This concludes today’s conference, and you may disconnect your lines at this time. Thank you for your participation.