Q3 2019 Earnings Call
Yeah.
[laughter].
Hey, [laughter].
Additive earnings momentum building on a strong year, we delivered adjusted operating return on equity of 14.3% in the quarter and 13.2% year to date, we benefited from better than planned catastrophe experience and continued expense ratio improvement.
Second we generated net written premium growth of 5.6%.
Representing an increase from the 2.7% and 4% in the first and second quarters, respectively.
In particular, we grew and product lines and classes of business that meet or exceed our target returns such as professional lines business within our specialty portfolio.
Personal lines and small commercial.
At the same time, we continued to execute on our underwriting improvement initiatives as outlined earlier this year.
Despite this disciplined focus and the associated portfolio actions, our premium growth accelerated in the quarter as newer business initiatives began to more substantively contribute to our overall growth.
These drivers underscore our prudent and thoughtful approach to growth in this dynamic market.
We remain committed to delivering a top cortile return on equity while growing at a rate above the industry average.
Third our loss performance during the quarter with solid, but slightly higher than our expectations in property coverages.
We saw elevated non cat property losses in several areas of our business, including homeowners some of our specialty businesses as well as in personal auto physical damage. We believe this uncorrelated property volatility is manageable and we can address these losses effectively with pricing improved terms.
Yes, and minor adjustments in our underwriting.
On the liability side trends are elevated but they remain in line with expectations.
I've heard us discuss a deterioration in the liability trends as well as our actions to address them to the last several years.
We have attributed these trends to increase medical procedures delayed reporting and more aggressive and frequent attorney involvement like other industry participants. We are concerned about the cost to society of this tort tactics that summer referencing as social inflation, we have been addressing these trends in our book.
Through pricing underwriting risk selection and reserving for some time.
Over the last couple of years, we reduced our writings in some metro markets, where we saw an uptick in severity of slip and fall and other liability related incidents in fact, our strong presence and penetration and less litigious states in particular in Michigan, Massachusetts in Maine is influencing our loss trends.
In a positive manner.
Additionally, we believe that our risk limits and selection industry focus and lower size and complexity of risks has and will mute the impact of these liability trends.
For example, certain recent major industry liability pressure areas, such as me too and revive or statue related issues should be relatively minor for us financially based on the information. We have today of course, we're not immune to the impact of the trends, but we're not surprised by them.
And we are working hard to achieve rate increases in line with or better than loss trends.
Turning to our business highlights by segment.
In personal lines, we grew our topline by approximately 6% as a result of new business growth in mid single digit rate increases our deep agency partnerships and account focus remain important differentiators for us in the market, especially in the face of increasing competition.
We continue to increase our penetration in targeted markets executing on our strategy to be our agents carry of choice for preferred account business.
Account business now represents 85% of both new business and our overall portfolio.
Our Hanover prestige offering which focuses on customers with more complex personal insurance needs continues to be very well received by our agent partners and has become a robust source of new business.
We believe the upper middle market sector, and personal lines as attractive as it plays to our account centric approach without the high limits in geographic challenges in the high net worth sector.
Overall, we're pleased with the progress we have made in our personal lines business. So far this year.
In commercial lines topline growth in the quarter reflects our continued emphasis on profitability.
We closed.
Closely monitor pricing and loss trends and we continually look for opportunities to achieve growth in areas, where we see the most profit potential.
In core commercial the market segments, we focus on continue to behave rationally and we generated average price increases of 5.5% in them and our small commercial portfolio continues to be strong coming from broad based support across our agency plan.
In specialty are smaller and mid sized account businesses are experiencing some pricing spillover, particularly in property from broad market firming in the large account size specialty areas. We continue to round out our specialty product set and are seeing tremendous opportunities in newer specialty capabilities such as financial institutions.
Excess and surplus lines and cyber earlier. This month, we introduced Hanover cyber advantage, a standalone product for commercial lines clients, we have a very targeted and conservative underwriting appetite in this emerging line and we continue to utilize reinsurance as an important risk management tool.
Overall, I am pleased with that business dynamics and market opportunities that continue to present themselves through our results the profitable growth momentum we have established across our business is a reflection of the broad product and service capabilities, we delivered to our customers and the relevance we've achieved with our agent partners.
Our strategy was further validated over the last several months.
And our many conversations with our agent partners in early October we met with the industry's leading agents and brokers at the annual CIA be conference.
Additionally, last month I participated at the ensure tech connect conference in Las Vegas, and industry event that brings together tech entrepreneurs investors brokers in insurance leaders from across the globe. The more we talk with our partners and others in and around the industry. The more confidence we have that our strategy.
Well founded and we'll continue to drive our company forward.
We continue to observe in increasing agency focus on market consolidation operational efficiencies and digital capabilities agent seek ways to use data to enhance client service and create workflow efficiencies. We believe this focus will only continue to grow as our industry becomes less fragmented and further embrace.
His technological advancements.
Agencies are seeking to partner with both carriers and ensure techs alike to take their firms that next level.
That is where we believe our strategy sets us apart and the market trends play to our advantage.
Over the years, we have developed a best in class Consultative partnership approach with our agents.
We have invested in tools to help our agents manage their books of business effectively and acquire new customers. These tools allow agents to gain operational efficiencies through a set of valuable agency benchmarking and portfolio management analytics. We also help them better understand their customers' needs whether through account rounding strategies.
Or specialization roadmaps and ultimately create mutually beneficial growth opportunities.
The way, we embrace digital innovation and ensure tax is unique in its agency orientation.
For us digital as a proxy for efficiency and a new way to engage with customers. It is not a way to eliminate the agent from the equation, but a way to provide improvements in efficiency across the insurance value chain to both our customers and agents we call it our digital assist model.
From a customer acquisition standpoint, we help agents acquire digitally inclined customers through the use of intuitive customer facing platforms like the ensure ago platform. We introduced earlier this year, we enhance the underwriting and claims management processes by leveraging data analytics and digital connect.
Activity tools to notably reduced the number of underwriting questions by pre filling perten and data in the quoting process.
We're also investing customer facing technologies to improve servicing claims handling and self service capabilities, we're incorporating robotics live chat capabilities drone technology and video collaboration tools to streamline and improve policy processing and claims handling.
Acceptance and adoption rates for many of these innovative solutions are encouraging and we are confident the company is well positioned to take advantage of the current agency and industry dynamics.
So as I said in my opening comments, we continued our momentum in the third quarter building on a strong first half of the year and advancing our strategic vision to be the premier property and casualty franchise in the independent agency channel, we are making our company even more relevant to all of our agent partners with our building capabilities.
We are intently focused on generating profitable growth.
And we are disciplined about investing in those areas that will drive our strategy to the next level with that I will turn the call over to Jeff.
Thank you Jack good morning, everyone for the third quarter, we generated net income of 118.9 million or to 96 per fully diluted share compared with 100.4 million or to 33 per diluted share in the third quarter last year. After tax operating income was 93.
The million or to 31 per diluted share compared with 84.9 million or a $1.97 per diluted share in the prior year quarter.
Our combined ratio was 94.4% in the third quarter of 2019, compared with 95.1% in the prior year quarter.
Prior year Reserve development was immaterial during the quarter.
In personal lines, we reported unfavorable prior year reserve development of 5.6 million or 1.2 points of the personal lines combined ratio driven by continued pressure from auto bodily injury severity and some one time homeowners liability claims which can be inherently volatile.
In commercial lines, we recorded favorable prior year reserve development of $5.6 million or 0.8 points of the commercial lines combined ratio driven by continued favorability in workers' comp.
Our chosen mix of smaller sized accounts lower risk profile insureds and generally favorable industry loss experience continues to drive our excellent performance.
Catastrophe losses were 35.2 million or 3.1 points on the combined ratio, reflecting a relatively quiet domestic catastrophe quarter in our footprint.
Excluding catastrophes are combined ratio was 91.3% versus 90.9% in the prior year quarter.
The increase was driven by elevated property losses in several businesses.
Our expense ratio improved 30 basis points to 31.7% from the prior year quarter as we continue to benefit from the leverage on our fixed expenses from premium growth.
Improvement was also due to the timing of agency compensation in the prior year quarter.
At the same time, we continue to fund strategic investments in our businesses from expense savings across our organization. We remain committed to deliver the expected expense ratio improvement of 20 basis points in the fourth quarter.
I will now review the financial results of our two main businesses.
Starting with personal lines, we delivered a current accident year combined ratio, excluding catastrophes of 89.2% up from 87.9% in the same period last year due to higher losses from physical damage.
In homeowners are ex cat current accident year loss ratio was 48.3% 1.2 points higher than the prior year period, primarily due to non cat weather losses.
We have had elevated non cat weather experience in the first three quarters of this year, which we are addressing by taking rate in targeted areas.
The personal auto ex cat current accident year loss ratio was 69.8% 1.9 points higher than the third quarter of 2018.
This increase reflects the timing of 2018 liability loss selections and auto liability trends are tracking in line with our expectations in the quarter.
On the property side, we saw an increase in losses and comprehensive coverage stemming from animal hits as well as hail, particularly in the Midwest in the northeast as discussed by others in the industry. We are also watching for increases in physical damage severity due to the cost of repairs. Despite some loss per.
Sure our personal lines business remains highly profitable and delivers target returns.
With that said, we continue to address the areas of pressure through rate and targeted mix initiatives.
Personal lines net written premiums increased 6.1% in the quarter driven by rate increases and organic new business momentum.
Retention declined very slightly an indication of the competitive market and our disciplined to pursue rate where needed but it remains at a healthy level.
Our growth in personal lines is a reflection of our strong market position and differentiated product set.
Moving to commercial lines, our current accident year combined ratio, excluding catastrophes was 92.7% consistent with the prior year quarter, our commercial lines ex cat current accident year loss ratio decreased 20 basis points from the prior year quarter to 58% commercial lines.
Profitability was affected by large property losses in other commercial lines, primarily in marine this was offset by improvements in workers' comp and the timing of current accident year loss adjustments in auto in the third quarter of last year.
In addition property experience in commercial auto physical damage was also favorable this quarter auto liability loss selections remained consistent with prior quarters, we achieved rate increases in this coverage of 11% in Q3, consistent with the second quarter as the market continue to support the need for addition.
Bill rate.
Turning to workers comp the current accident year loss ratio improved by 1.2 points to 61.2%.
Based on our loss experience an updated view of our prior year trends, while we remain pleased with a solid performance in workers' comp. We continue to monitor this line closely given ongoing rate pressure.
Commercial lines net written premiums grew 5.2% for the quarter led by our specialty business growth continues to track favorably. Despite the continued impact of targeted profit improvement actions.
Moving onto our investment performance net investment income was 68.8 million for the quarter, 3.6% higher than the prior year period due to increased cash flows from operations, partially offset by lower partnership income.
In addition, we are seeing a minor impact from lower interest rates, which have reduced yields on the reinvestment of fixed income assets.
Cash and invested assets were 8.4 billion at September Thirtyth 2019, with fixed income securities and cash representing 85% of the total.
Our fixed maturity investment portfolio has a duration of 4.2 years and is 96% investment grade.
Our well Laddered and diversified portfolio remains high quality with a weighted average of a plus.
Our operating effective tax rate for the quarter was 20.4% slightly lower than the statutory rate due to the net favorable impact of excess tax deductions on certain stock compensation.
We anticipate the effective tax rate going forward will approximate the statutory rate of 21%.
During the quarter, we made final true ups related to the Chaucer sale, including a final adjustment of the contingent consideration and various other tax related items, which resulted in a 12.8 million increase to after tax non operating income.
Turning now to equity in our capital position.
Our book value per share was 78 old one up 4.9% for the quarter compared with 70 439 per share at the end of the second quarter.
The increase was attributable to net income and unrealized and realized gains on investments. This was partially offset by the payment of regular quarterly dividends.
The 150 million ANSR program, we entered into with Scotia Bank on June 27th completed on October 20, Eightth and we received the final delivery of approximately 200000 shares yesterday in total we purchased 1.150 million shares.
Under the agreement.
Our remaining deployable equity related to the sale of Chaucer is now approximately 250 million over the next month or so we will complete the usual annual financial planning cycle, which will give us a clear view of investment needs and opportunities. In addition, cat season will end soon.
Putting us in a better position to make capital deployment decisions.
To be clear, we will not be presenting an adjusted operating Aro way in 2020.
Annualized operating return on equity was 13.3% for the quarter or 14.3% after adjusting for the remaining undeployed equity and net investment income related to the Chaucer sale.
Our strong third quarter performance reinforces our strategic focus financial discipline and commitment to delivering sustainable top cortile results and as always we are carefully managing our expenses positioning us to continue investing in the area.
Is that are important to our agents and customers.
Looking ahead, we are progressing toward performance targets set forth at the beginning of the year. We also note that our fourth quarter catastrophe assumption is set at 3.6% with that we will now open the line for your questions operator.
Well now begin the question and answer session. You asked a question you know press Star then one on your Touchtone phone. If you are using a speakerphone. Please pick up your hands out before passing the key to withdraw from the question can you. Please press Star then Q.
My first question comes from Matt Carletti of JMP. Please go ahead.
Thanks, Good morning.
Pointing.
Good morning, Jakone Jaktwo opening comments I think I heard that you referenced particularly in commercial some of the stronger growth coming from new initiatives and I was wondering specifically if that more of the specialty oriented business that you've been talking little bit about and trying to grow and if so if you could give us a little more color there on where you're seeing success and what sorts of London.
Yes.
Yes, Thanks, Matt appreciate your question.
Yes, I think clearly we are getting additional traction and some of the new areas that we focused on within specialty.
We.
Advanced.
Financial institutions practice that started with.
Some of the professional coverages and followed up with some of the PNC coverages and.
Brian can elaborate on that further we've been moving forward with the kind of a retail ns orientation, we've been moving forward with our cyber.
Product, both the embedded product as well as a model line product, but I would also say Matt that more broadly when we're saying initiatives, we have a number of initiatives across the firm to accelerate our penetration in our existing products with more agents as our business model matures, we're getting.
A more and more of our specialty.
Resources deployed to more agents.
And we have got better alignment across the regions in order to get that deeper penetration from broader agents.
So Brian I don't know if you want to elaborate further on that.
Yes sure.
So we are definitely starting to get some traction on our newer product offerings that Jack referenced but I do think for the quarter. The biggest impact for specialty came from those initiatives that Jack mentioned it was really embedding our relationships.
More fulsomely with the specialty lines and and just to share some of the numbers around that the growth was strong bond <unk> specialty growth for the quarter was 7.1% a lot of that was driven by our most profitable lines. So in for example, our professional liability healthcare lines, we had over 10% growth.
And our Ns and our HR size businesses, we had double digit growth so really seeing some traction from these initiatives out we're pushing on.
Great and then just one other if I could probably more for Jeff.
Jeff you mentioned kind of auto.
Continuing to.
Maybe a new since and I think that the industry wide.
No problem is there if you as we kind of moved on an 8% has anything.
Seen any new drivers of it emerge kind of the reasons behind it or do you think that at the same drivers.
Related products continue to get worse or not kind of move the other way.
Thanks, Matt.
We really with respect to personal lines auto, which you know the comments were related to an in general it's really more of the same. So those are the active lawyer involvement some of the delayed reporting some of the increased medical.
Overall as you know that's a really profitable book for Us and.
We are getting a lot of rate in fact and be a personal auto specifically, we're getting 10% of of rate and overall, we had no favorable or unfavorable development and so we had we had.
Workers comp, which which certainly offset the personal auto development.
Great. Thank you for the color and best of luck on board.
Thanks very much.
The next question is from Christopher Campbell of KBW. Please go ahead.
Hi, good morning, Congrats on the Colorado.
Thank you Chris.
I guess my first question is can you break down the promotional pricing.
It's slow down this quarter end of the rate exposure pieces.
And we just kind of going the opposite way from the industry survey and I know that you guys baking rate and exposure in there. So just trying to understand those those components.
Sure This is Jack.
Let me make a couple of overarching comments about that and I'd love for for Dichter kind of follow up on some of the specifics.
As we said in our prepared remarks.
The dip over second quarter was entirely attributable to the exposure element, which it does bounce around from quarter to quarter and I wouldn't say that theres anything in the back that exposure.
Change that.
Is really that relevant to.
Two.
Our pricing.
But what has been happening is steadily we have been getting some increases in the rate component of.
What we called new money or our overall pricing.
And so thats encouraging we have.
Seeing I think more and more.
Expansion of that and we're anticipating that will continue based on a lot of the noise that you're hearing in the quarter.
And so maybe what would be good.
Addicted just provide a little bit of color and then just finished with.
Kind of building off of the commentary that Brian .
Started with last quarter about we are seeing some improvement on the specialty side of pricing that doesn't doesn't necessarily get as much attention.
Sure. So essentially we believe pricing is essentially at or close to loss trend and of course that dynamic differs by line of business. So maybe just a few comments about a couple of them. So on the commercial auto side.
We're seeing our highest price increases here, where we needed the most by 11 points in the quarter for US. This is above loss trend in both our middle market and our small commercial business and frankly seeing broad based acceptance of this level and we believe we need to continue at that level for the several quarters going forward on the work comp side, Jack just rough.
Kansas, We we've been able to manage through the state.
Filed rate decreases effectively.
However, still experiencing negative rate like the industry and were below long long term loss trends for this line, but exposure is on the rise due to the strong economy and higher payrolls, which is offsetting that negative rate increase in some percentage of that exposure. We believe definitely acts axes rate so watching the frequency close.
Lastly on that as the labor market tightens and when this lines going to firm up and pricing.
And we do see some good competition there.
Good news is where we're growing our small commercial work comp book at a much higher rate essentially all of our growth is coming from small commercial side, where where we have five to 10 point performance advantage and then a property NGL and has been positive over the last several quarters in the low mid single digit pricing, we see room there too.
To push on both both sides.
Yes, and then relative to specialty I think I'll, just remind us of something Chuck said also which is and we do operate in the marketplace below those large accounts that have been getting a lot of the attention relative to pricing recently that said, we are seeing some spillover and so the ability to get price how much.
Plus a lot of the specialty lines exist and we had been good getting that price going after it and achieving it and the way that I would say some is measured.
Appropriate and segmented, but we're getting the right now and live and we're seeing that for me.
Okay, great well thanks for that are very helpful.
Question on all those Tom I noticed the core loss ratio was down 120 bit here over the year then the reserve releases fell by about 3 million.
Year over year as well, so I guess, if you're still getting us redundancies in the older accident year, and then rates are coming down why are the loss costs picks in workers' comp rising.
Yes, I think first and foremost.
What <expletive> said is a.
Is a a major factor for us is that the loss ratio differential between our small commercial business in our middle market business and that's true for the industry is pretty substantial so when you have.
Robust small commercial growth combined with flattish.
Middle market workers comp growth.
The math actually works quite well.
Rationally and.
So that said, we our own biggest.
No critic about where are we with loss trends.
What are we seeing in the current accident year versus what what we're seeing in the development of the.
The prior years, and we continue to be surprised frankly.
That the loss trend the current loss trend that we're experiencing is still very benign.
So the combination of mix change and and a continuation of very benign loss trends we believe.
As benefiting us and many in the industry.
Okay, Great and then a question on little reserves. So just a very aggregate level. So I was looking back and this is like your 11th consecutive quarter of like no net development. So I guess, just how likely could it be that hanover's, either building up like a very sizeable lease or a potential charged down the road.
And I guess why aren't they reserve movements more like naturally flowing.
Well. Thank you. Thanks to the question Chris This is Jeff overall, we feel very good about our reserves and.
We are committed to reacting when we see things.
And we want to be comfortable with our reserve position and I think given all of the loss trends on the challenges I think it's.
No not appropriate to expect meaningful favorable releases anytime soon and we feel comfortable with the reserves on the position, but we show lots of detail in our lines, So you're always going to see.
Items, where we need to shore up a little bit more and then we've got Fortunately weve had plenty of room and other lines to be able to naturally offset that.
Okay, great. Thanks, very helpful. And then just one last one on the share repurchases in Charleston proceeds I guess what are the plans for the remaining 256 million and then beyond that like if those potentially or used for it and additional assets.
What percentage what should we be thinking about just normal repurchases once all the Chaucer or capital is gone is there like a certain.
I'll give you guys have in terms of like returning like operating income.
Add repurchases over time, I guess, just trying to get a sense for once we get all the noise of the Chaucer capital going away, how should we be modeling just kind of more the attritional repurchases over time.
So overall as we said in the prepared remarks, we're in the final stages of going through our annual planning process and that gives us an idea do we have what opportunities what needs we have for that capital where in the late stages of the cat season, So it's sort of convenient to wait a little bit and just make sure.
But we don't have anything that.
Could surprise us and then in reasonably short order will make final decisions on what we want to do with that.
Capital you know where.
We'll we'll be coming back to investors with our plans. After we've determined those because as I mentioned and I meant it we're not going to be preparing ended or or providing an adjusted operating our away. So we feel pretty comfortable that that won't need to be provided or going forward.
The second part of your question on capital management Historically, we haven't really provided specific guidance on what we're going to do I'm. Historically, we have had a pattern of adjusting the dividends. So that we can return about 30 to two it.
30% to a third of the operating earnings and then we have generally supplemented that as appropriate with stock buyback. So we will continue to do that overtime and I think it will probably return to a more traditional level.
Of routine dividend ordinary dividends and stock buyback as appropriate, but we're very focused on the return on equity. So obviously, we've got a REIT continued to rightsize the capital as we continue generated at a rapid level.
Okay, great well. Thanks, all the answer is about the lock in the fourth quarter.
Thanks, so much Chris.
The next question is from Amit Kumar of Buckingham Research Group. Please go ahead.
Thanks, and good morning, and congrats on the Brent.
A few questions for you, let's maybe going to reverse order on the sticking to Chris is discussion on capital.
Just to be very clear.
Our youth signaling.
Complete.
The shape of the remaining excess capital by year end.
Im just trying to connect the dots on your comments that you want to be using the adjusted already map going forward.
This is Jack amid thanks for the question.
I think we are going to maintain a very consistent approach to this question I think our track record is is a good one in terms of being clear that while we continue to investigate opportunities that are emerging in the market, both organically and organic and.
Inorganically Inorganically.
That we we have pretty strict criteria and we have a high level of discipline about how we develop smart growth and in today's current environment that does provide some guardrails not only in terms of our strict criteria, but in terms of the market environment that we're playing in so what we are signaling to you is that.
Unless something significantly changes, we continue to fall down a path of being very shareholder oriented returning the capital that we don't plan to use in relatively short order and then continuing to assess the capital needs that we have for the kind of growth that we're anticipating.
And as we head into 2020, we do believe there'll be some opportunities, but we also know as Jeff said that we're generating a fair amount of excess capital to our.
Through our returns and that means that we should be.
Focused on when and how we can deliver that capital back to our shareholders.
Just sort of keeping on that point.
We've been talking about and.
Inorganic opportunities for some time and they know we've talked about you mentioned the guardrails.
Could you give investors some confidence that we won't wake up over the next few months and see that.
Hanover is involved in some sort of large acquisition.
In terms to unite tried to utilize this capital.
Yes.
I think I think I've personally been very consistent on this point admit and so I can really reiterate what I said.
Along this last year that we do not anticipate any type of transformational.
Acquisition based on.
The market conditions as well as the inventory that we have reviewed.
We will continue to look for small or capability oriented.
Acquisitions, and unfortunately, we have not been able to find something to our liking.
We would never discount that.
But I can I can committed as I have that we're not planning on doing anything transformational from a M&A perspective.
Got it that's super helpful.
I have two other quick questions.
No. The one other question is on personal auto and I think you talked a bit about in the prepared remarks.
And at the auto B. I and the trends you've seen and I wanted to I think you might have mentioned some regional component to that or the though.
The usual state slip there one state where you saw that and do you plan to take additional rate action, maybe just expand a bit more on that top process on the higher.
Caught up yet.
Yes. This is Jack again and I. Appreciate this this question in the way you worded admit because I think we have a very good story to tell here in it and it's helpful to go back.
Over the last couple of years and see.
How we've consistently tried to address.
What has been continued elevated loss trend in the commercial auto arena.
So as you know, we we like most people in the industry.
Observe some some.
Accelerated severity.
Back in the 2012 area, we filed that.
For.
Oh I'm sorry.
I was just over on commercial lines I understand the question was more personal lines oriented effort that is that true. That's like yes, that's correct, but I'll take your discussion may not Isaac.
Yes, sorry.
I'd like to first of all have gone.
Yes, let me just finished up on commercial and then I have the actually have <expletive> follow up on PL also.
But anyway, I think what we're proud of and what we're trying to stay diligent on is that.
If you recall last year about midway through the year, we started to observe some further elevation in loss trends and commercial auto that concerned us and so in the third quarter of 2018, we decided to.
Change our picks not only for the third quarter, but retrospectively for the year and that created some elevated.
Current accident year loss ratios at the time and also caused us to look back at the recent prior year.
Prior accident years, and make sure that we were truing those up appropriately. So as we look back over the last year, we acknowledge that the loss trends have continued to elevate but we think that the changes that we made in our pets in our reserves in our claims procedures.
And importantly in our underwriting and pricing approaches.
Our what's helping us mute and address some of these elevated trends.
And so we're not immune to these trends, but I'd like to believe that we are is on top of these trends and addressing them as much as as it possibly can be done and if you remember we came into this year it telling telling the investment community that we were going to taper the growth a little.
You bet.
In part to make sure that we could get after some commercial auto.
Issues and not let this get away from us.
And on the personal auto do you want to.
Sure.
Sorry, I can give you a brief answer on that so the auto be a trend that we see really is across the footprint in the in the BDI states now outside of the tip the tip states, though.
So we watch that very carefully as you know personalized is all about your performance in individual states and we are able to achieve the rate that 910% on the beach.
In the states, where we need at the most.
So we watch that trend and specific about I wouldn't say that it's coming from one or two states. It's more broad based on that yet.
Okay. That's on that last question.
I think Jennifer someone made some comments regarding the meat to and Viber and.
The comments exactly was this is relatively minor for us based on information, we have today up well theres some sort of a ground up analysis, which you did or examination of old document or maybe just talk a bit more about that thanks.
Yes. This is Jack again, we like I would imagine most people in our industry have done thorough.
Analysis and assessment of what these exposures.
Could mean to us in our prior portfolio as well as in our existing portfolios because even if you don't have any legacy exposures.
Clearly we believe these trends have an impact on how you price your business going forward and frankly, what kind of business.
You decide to pursue so as as particularly if you think about the revive or laws and anticipating how that could continue to evolve we did a thorough assessment of what our exposures were back well back to the seventies identified what types of policies we.
Have and and frankly what limits.
We're exposed so as we see this issue develop.
We have a relatively high level confidence that not only do we not over participate in the kind of business that lends itself to this exposure, but where we did the limits were extremely low and then lastly, the reinsurance attachment points that we've had historically.
Also provided additional level.
Comfort.
Got it this is super helpful. I'll stop here. Thanks for all the answers and good luck for the future. Thank.
Thank you.
Okay and if you have a question. Please press Star then one the next question comes from Paul Newsome, a Sandler O'neil. Please go ahead.
Good morning gradually or call.
Please.
Chris emit were nice enough to ask the first 20 425 question.
So.
The only thing I wanted to ask was.
The.
We've talked a lot about bodily injury on the.
Personalized side, but.
Often action has spike physical damage frequency did you see any of that as well or is that maybe just off.
Yes, I'll, let Doug this is turn that over to maybe so we did see an increase in our frequency trend on the comprehensive coverage part.
Which we referenced in our.
Prior comments around animal hits.
Glass and towing also with an increase in frequency.
And severity right, so more expensive windshields to repair longer repair times.
So rental tend to be a bit longer so nothing that we can't overcome and price for but that is that is something that emerged in our but we we are not seeing frequency.
The property image or the collision side.
So.
Great. Thank feel that we feel good about.
Thank you appreciate it.
This concludes our question and answer session I would like to turn the conference back over to Oksana Lukasheva for closing remarks.
Thank everybody for participating today looking forward to talking to your next quarter.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.