Q1 2020 Earnings Call

Thank you. Good morning, everyone. We hope you and your families and colleagues are all safe and well before we discuss the porter today, I'd like to take a brief moment to acknowledge the current environment. We recognize these are challenging time for everyone as the global pandemic has had a profound impact on the economy and many people lives our hearts go out to all of those who lost loved ones and those that continue to suffer due to the illness as an employee-owned company the well-being of our entire are like family our customers business partners and Associates is our highest priority. We responded to the prices by quickly taking action to protect our Associates as well as continuing to deliver the highest service.

Is it possible for our customers nearly? All of our employees are working from home? And we're in a good position to maintain our remote business operation for as long as necessary. Our entire team is doing an outstanding job despite the imperfect circumstances.

Throughout this transition. We've benefited from robust business continuity plans. We had in place and Investments we've made over time in our technology infrastructure of this is enabled a relatively smooth shift to a remote work model allowing us to protect our team members while maintaining business operations and strong customer support.

Really changing Dynamics continuing to evaluate all aspects of operations on a daily basis and making necessary adjustments to carefully manage our business office current climate All In by taking a moment to thank all of our Associates are going above and beyond every day to help our customers address the many challenges that they're facing. I'm very proud of our team and what they've achieved in the first quarter. I'll now turn it over to Aaron beef Impala.

Thanks for your thoughts. John. Well much has changed in the last six weeks the structure of our first quarter earnings call for 2020 will be largely the same as in Prior quarter of a part from John where it joined by by Craig McDermott president and Chief Operating Officer and Todd Bryan Chief Financial Officer. Todd will first give some comments on the corner of the results. Next Craig will get some segments color and discuss market conditions. We will then open the call to questions and John will close with some final thoughts Cod. Thanks, Aaron. Good morning everyone last night. We reported first-quarter operating earnings of 66 cents per share. We experienced 6% of top-line growth while posting a 92 combined ratio investment income Advanced 7% in the quarter while unrealized losses on the portfolio negatively impacted net earnings and Book value book value for chef.

Into the quarter at $20.38 down 7% to the year inclusive of dividends Craig. We'll talk more about our product products and market conditions in a minute walk from the Top Line standpoint is mentioned gross premiums written was up 6% in the quarter and majority of products in our Diversified portfolio experience growth. There was however, I'm over him approximately 3 million from last year's announced product exits and premium writings on our transportation book were down significantly, which Craig will discuss further both these negative effects are within our casualties segment which still into the quarter up 5% while property was up 16% in sure he was up slightly from the underwriting perspective. We cross the first quarter combined ratio of 90 to our loss ratio at 51.5 continue to benefit from favorable Reserve development.

But more reserved perspective. None of expenses Pryor's benefits were $13 for the quarter.

Well down from last year 17 million dollar benefit, all three segments developed favorably with casually adds adding $700 million in property and sharing each at 3 million months or more recent years and with the uncertainty of the current environment. We work we continue to remain cautious in our approach to reserve it moving to expenses are expensive right to the climb 2 and 1/2 points to 40.5 as discussed on prior calls amounts earned under our bonus and incentive plans are driven by various performance metrics off these metrics, which include Book value Road, we're down during the quarter and resulted in lower amounts of cheating the declining amounts of crude under bonus and incentive programs account for the majority decrease in our expense ratio as well as the bulk of the increase in General Corporate expenses.

32 Investments

Obviously Capital markets volatility in the second half of the quarter was the most significant influence on the decline in Book value from your end while price declines in a bond portfolio were roughly offset by income for a flat Total return on the quarter public equities and other invested assets were down just over 20% from 12:31. We have always taken a long-term view on investing and believed system investment income is an important component of operating earnings should treasury yields remain low and credit spreads normalize from current wide levels. We investment rates will likely be a team members.

As many aspects of the world we live in there is a fair amount of uncertainty for Capital markets as we look forward outside of the core portfolio our share of earnings and now he's dead continue to post positive results, but we're off modestly in the quarter. Now Jim results were down reflective of current retail and economic environment results for Prime were modestly higher growth in both revenue and net operating profits. Certainly the length of any downturn will impact the results of these investors particularly in lasting impact on the retail sector long as it relates to Maui Jim lastly, I will note that we replaced our revolving credit facility at the end of the quarter as our existing agreement was set to expire in may we left sides are borrowing ability to sixty million and under certain conditions of facility can be increased to a hundred and twenty million in addition to this arrangement. We have borrowing capability via our membership in federal home loan Banks dead.

7 no amounts outstanding on any of these facilities at the end of the quarter. We've also performed a number of stress tests on our cash flows and believe we have adequate liquidity to anticipate abused and with that. I'll turn the call over to Craig.

Thank you. John & Todd. Good morning. Everyone All Things Considered. We're pretty happy with the quarter enjoyed 6% top-line growth in a 92 combined ratio in the quarter cups filled with many more uncertainties than the one we entered the rli ship enjoyed a steady Breeze and pulled sales for the first two and half months of the year premium was contained to grow long digit pace and products. We know and we're we've enjoyed the most underwriting success by the middle of March the market was becalmed as a result of covid-19 took believe this new environment will differentiate those that have been disciplined risk-takers and prudent Risk Managers. I'm going to provide some commentary for each of our major segments some words on the impact of the economic shut down resulting from covid-19, and then I'll offer some closing remarks and open it back up for questions.

Casually segment through the Top Line 5% and recorded 101 combined ratio for the quarter. We realized growth across all of our major product lines except Transportation because a large number of our passenger Transportation customers are unable to effectively operate under the shelter and place orders. We allowed our customer suspend coverage for all vehicles. They were not using and return premium to them this resulted in a $23 million-dollar negative adjustment to written premium in Iraq, despite the significant headwind. We were still able to grow casualty and overall submission flow continue to be up across most of the segment rate levels continue to accelerate up 11% driven by our management liability excess liability and wheels based products.

given the

Certainly involved in the last couple of weeks in the quarter We thoughtfully examined our current accident year loss ratios and reserved position for the segment and adjusted accordingly.

The property segment through the Top Line 16% while reporting a 78 combined ratio submission counts were up double-digits for all major products in the segment and all underlying problems reported an underwriting profit rates in the segment where up 8% led by catastrophe win business, but also bolstered by improved earthquake and Marine pricing month.

For the quarter our Surety segment reported a 69 combined ratio with very small amount of growth on the top line the current contract and small miscellaneous businesses grew moderately for the month and under a profits will learn by all products The Surety space continues to be a very tough one to grow the competitive environment decline in commodity prices and consolidation within the office trees all put pressure on the top line the temporary closure of many government agencies, who are the obligee for many bonds only adds to the current challenge. We have sacrificed Top Line over recent years in order to upgrade the overall credit quality of the principles that we support. We believe this will serve as well as we move forward.

On to the impacts of the virus and the resulting economic shut down first and foremost is John mentioned earlier our allies fully operational. Roi owner Associates are all working from home with very little impact in our ability to serve our customers and distribution Partners. We have been fair and flexible with our customers in regard to modifying exposures and resulting premiums midterm. We have deep in relationships by reaching out to our distribution partners and customers to check in and offer help or possible.

Our emphasis on personal relationships and responsive service are paying off and our culture of ownership has fostered a fleet of Associates who are willing to step into the breach solve problems volunteered to take on the next challenge as owners. We are focused on doing the right thing that leads to success in the long term.

We believe there will be Revenue consequences as a result of the economic shut down the timing and amount of the impact will be dependent on the economic recovery. It is too early to quantify the rate of tax revenue deceleration for our Ally the lines that will be significantly impacted will be those products supporting the passenger Transportation non-essential and international card $5 and the energy sectors of our economy, which will be felt by about 15 to 20% of our portfolio.

Many other underlying Industries will be affected over time as exposure bases are tied to revenue payroll values insured and construction projects or other obligations undertaken.

on a more

I'll do know we have several product lines that may see little to no impact including our personalized products management liability products and property businesses.

In regard to the heightened lost exposure. We do not offer event or travel cancellation Trade Credit or pandemic related coverages. We have received approximately 500 claim notices Thursday across multiple Insurance products with about 95% of them being business Interruption related.

We believe that any exposure rising out of the spread of covid-19 and resulting shutdown will take significant time to reveal and resolve itself are alive more notable exposures are in the financial related product lines, like management liability insurance t for some perspective the 2007 through 2008 financial crisis had no material impact on our lives a great performance, but we recognize the impact of this economic shutdown will be different. Our claim department has always been a differentiator for our company the claim examiner conducts an investigation of each claim including taking into account the Lost details and any documentation provided by the insured the nature of the plane as well as any other relevant and available lost details.

Every claim is individually analyzed in conjunction with the insurance product purchased by the insured and then handled in accordance with the appropriate claim handling laws and regulations that affect morale I will stand by and fulfill its obligation to pay claims we owe but it will take more time to assess and quantify any amount.

The insurance industry is a key contributor and provides important protection to the engines of our economy viable insurance industry operating with contract certainty is necessary for me to restart and function normally and efficiently.

Who governmental overreach and has opportunity and an opportunistic plane of bar? We are bearing witness to another attempt to retroactively rewrite and impose coverage into policy wage don't provide it. This poses a visible threat to the insurance industry and will impact the cost and availability of insurance going forward. No industry should be asked to assuage accept the transfer of risk onto its balance sheet without the opportunity to consider price under right or risk manage the exposure.

Versify portfolio products underwriting process Financial strength and resiliency will continue to lead the way and distinguish our lot in life. We had a good solid start to the year with a 92 combined ratio on 6% top-line growth.

I want to leave you with a twenty-year-old quote from our founder Jerry Stevens URL. I ship is a sturdy vessel. It's built for the long haul it can weather the storms because the boss knows how to adjust the sails to avoid the roughest weather and even if the weather gets bad and the waves crash onto the deck, there is no port in the world that we can't reach. I'm very proud to work up such a dedicated committed Roi crew. We will navigate the storm. Thank you. I will now have the battery open it up for questions wage. But thank you sir. The question answer session will begin at this time. If you're using a speaker phone, please pick up the handset before pressing any numbers. If you have a question, please press star one on your telephone, and if you wish to age your question, please press star to your questions will be taking an order that it's received. Please standby for your first question.

Looks like a first place on the line and dinner would be Riley.

I just have a couple the first is just related to covid-19. We saw some other commercialize writers, uh, take charges. They're relatively small kind of directly relates to the crisis. Have you put up any reserves related to covid-19?

Hey Randy, it's Todd. We have a bit on the just given the sheer number of the claims Craig talked about the claims team is in the process of them individually analyzing all those we have not put up any Indemnity estimate in the quarter, but just given the sheer number of the claims. We did put some put up put up five million in the quarter for the cost of investigating and Defending Your adjusting those lines. The other thing I think if we talked about this on prior calls, you know, just from an uncertainty standpoint that doesn't influence. Our our loss pics in reserve positions as it relates to both current and prior year so we can seat a bit of a lower emergence on prior losses accident years than we expected in the first quarter that need to shut Downs late in the club.

Impacting access to courts and access to Medical Services that did add a little bit of additional uncertainty from from our perspective. We thought about things and so we did not recognize all the dedicated net Reserve benefits on prior years. It's not something we would we put a number on but certainly that that uncertainty did influence the selections and considerations there.

Okay, and then I'm sure the could you review kind of the nature of the your energy security exposure and then kind of dementia and yeah, you mentioned some of the this kind of the financial related exposures within Surety but everything would be helpful for me and some others just to have a review particular with energy. I know we discussed this back. I think it was in 2016. Just kind of the nature of where you're exposed with and you know kind of the energy production shame.

Sure, this is Randy this correctly from the soul energy as a proportion of our total security book is less than 15% just to kind of frame it and we do basically provide bonds for plugging in a management of of oil wells both onshore and offshore. We do we have been focused and Ashes finishing part of our portfolio over the last couple of years because we have continued to focus on only the best operators in the Gulf as well as on tour. So we think that the quality of life over all of ours are the best in class that are operating in the gulf and onshore but if there was a case where that that company or a a person a principle that we bonded uh ended up in bankruptcy could not fulfill the obligation to plug or abandoned or or to plug the well.

and the success

Or organization that bought them or purchased their assets was not going to actually put that into activation was actually going to to to use the well, then we would be asked to move to do the work to pay somebody to do the work to plug that and well doesn't happen very often.

But it could happen.

It didn't happen a lot though back in 2016, correct?

We don't have a lot of losses in that space. So the loss ratio is is relatively well, but it's a high severity line. So why we Insurance off and then just on the standards and security just the nature of the financial exposures is that in the opening script? I think you mentioned some professional Indemnity. Is that within Surety and where you referring to or to just kind of a general credit exposure to folks who bought the policy

Thank you. Good morning, too.

I don't want to confuse. I think I said management liability which is like a you know, and and those type of risks. So that would be a separate product line for us. That's that's women casual.

Yes, so, I'm sorry. What was the question again?

Yeah, I I misheard you. I apologize. I thought you were okay. The only thing I would be clear. It's really a to trigger type scenario, right? You have to have someone that doesn't have the financial wherewithal to be able to perform their obligation. And then either they do not perform that obligation or the successor organization doesn't perform at that goes for most of security and don't forget we have personal identification against a lot of these principles that we can go after their assets and we have collateral as well. So

All right. Thanks.

J&P we have currently.

Good morning.

Morning morning so I can follow up on I heard the comments on Commercial Auto. I think they're largely Revenue side. Can you give us a sense of what you're seeing on the left side, but frequency and severity. I know only part of the first quarter maybe March you might see it. But if you saw anything there what changed and you may be what April?

Sure math is Craig. So this remember we have three parts to our transportation does this one is the public transportation which is the one that talked about where we returned twenty-three million dollars worth of Premium because most of those are charter buses school buses transit buses. When those that are laid up there not really operating so long when you pick of light up light up means to us is they've been taken off the policy and there's no liability coverage. So therefore they should be entitled to some return of Premium because they're basically canceling parts of their policy month. We also ensure the trucking industry and actually from the trucking standpoint. We've actually seen miles driven increased at least in the short-term, you know, there's been an increase in delivery of goods particularly consumable. So, you know, the miles driven may actually be up for some of our Trucking birth.

obviously you probably heard congestion is down the average speed of

Higher so they can actually deliver more Goods faster. But you know that that also potentially might lead to more severely. I mean we have not observed that you know, obviously you could have a more severe Act. Of course, they may have to hit something so there's not as many cars on the road with it. So, I mean, I think it kind of cuts both ways to Transportation. I think we would suspect that made the speed of traffic sup. So that's a downside maybe severity could possibly be up but certainly the congestion is down and you have more experienced drivers off the road. I should also add the truckers are typically experienced driver to do it for a profession and with fewer and fewer people to hit passenger vehicles. You have left accident. So we took in the number of losses drop the claims count drop significantly, but again remember on the public transportation side. We also have the exposures that have drop-off.

Significantly, so if I could get cut both ways.

Okay, great. And then just wanted to see if you mentioned the the 500 claims. It's not like most all of them. Is there any color you can give us on you know, I don't know if it varies across kind of all of our Lives policies would be I comes into play or if there's some rule of thumb but are there government action virus exclusions? Is it is it for the standard, you know direct physical damage language that that is a defense. I'm just curious kind of how you guys have gone a bit over the years. So this is our first of all those policies. I mean, I've read a few VIP policies in the last couple of weeks just so you know, so it's been a while to you as well. So it's probably thirty years since they actually had a life insurance policy, but I read a few business Interruption policies are property policies that every policy that I've seen and I can't guarantee that that's 100% of all that we've offered but certainly I'm

What's it all of our major policies and everyone has a trigger that basically says that there has to be direct physical loss of or damage to property in some cases worth more than some in the vast vast majority of our policies particularly the ones in the admitted space. I mean, we have a specific virus or communicable disease exclusion, but that's not worth every policy. But certainly the vast vast majority contain those exclusions.

I mean, I guess that's how much is the, that's helpful very helpful. And the last question about any observations on kind of the pricing momentum or pricing cycle. So either you've lived in March or April, I'm just took all this is hit. I know it's early but just curious if you've observed anything if prices kind of kept momentum or things have cooled off a little bit. I mean I had that conversation with her product leaders off last week or so and I think they feel that we so far. I mean the price will pricing momentum has stayed about the same. So we are some exceptions I take the certainly in some of these projects like I say public auto where people are not public transportation or passenger Transportation businesses. I mean, they're hardly operational. So I think there's going to be some pressure there or some wage

That may not continue at the same Pace as that has in the past on the public transportation side, but I would say broadly across the rest of our portfolio.

And in our other Wheels based businesses, we continue to expect it. And as I said before depending on I mean depending on I mean, I certainly there's a couple of uncertainty out there and then certainly doesn't usually bode well for the consumer unfortunately in regards to risk companies are going to want to factor that risk into the pricing of the products.

Well, thank you for the answers and the best of luck on board.

Thank you. Thank you.

Moving on we have Jeff Schmitt with William. Hi, good morning. Everyone. You discuss how mileage results are bulky or what your outlook is. They're just giving us slow down and I mean it's still operational I presume but what's your sense? They're dead. Yes. Yes. It says John Michael here. Yeah, Jim is is impacted. Obviously, they're largely their Outlets are largely retail. They do have a mailing to them direct and and Amazon operation. So they are impacted from the economic slowdown. There's no question about it off in the first quarter from the economic slowdown. So management very strong company. They've got liquidity that I can vary birth.

Withstand the slow down but yeah, they will be impacted. It's you have to be seen how much that will impact their results, but they have taken steps already through this slow down.

Is there a potential even for four losses there? I mean you think of the second quarter or is it not that not that bad?

Well, that's you have to be seen but yeah, I think that they potentially could have some losses and until markets beginning up back up again just to go they're going to be they're going to be a struggle with that through the summer. This is there if you think about it, this is when Maui Jim, you know makes a lot of their sales. It's pretty seasonal going through spring and summer so

And then I was interested to hear you mentioned you think management liability was going to be impacted some other insurance had thought that was odd, you know could even be one of the key areas. They could be impacting not surprised you'd said that what is what is the make up or what class the business? Why do you think that won't be impacted. When you say won't be impact or will be I mean, I actually believe it will be impacted. I think that would be my opening remarks better. But I mean, we we do that as a I mean management liability has had several different product lines in it. There's public dno in there. There's side a coverage. There's employment package liability coverage subscriber coverage, uh, fiduciary coverage. I mean, we saw the same thing back when the financial crisis of mm

Occurred, you know, it turned out to be a blip for us.

But I do think there'll be a heightened number of claims made under those try to make under those covers now. We write excess in a lot of cases. So they're going to take a while to even even if they do material to get to our later. So I have to take those into consideration. Meanwhile as we talked about before I mean want to places we are continue to see pricing on that and I think you're going to see the mower after this is is in the management liability space. So it was already getting close to 50% rate increases. So I think you're going to see rate increases even accelerate their home now from a risk management standpoint. I would also just add that. I mean, this is also one that we heavily reinsure. So we're for any policy issues after one one. Basically. We're we only take about twenty two and a half percent of the exposure.

on those planes, so

got it. Okay. I'll take you.

Next question thanks to the month or a little bit of distinguish between you know, the physical law of the rest of the damage trigger between admitted and the policies with that distinction also apply down to the prevalence of a virus exclusion. Is that likely to be less present on the paper?

Tomorrow is Craig. You're asking me what the terminology no direct have requiring direct physical loss of or damage to property being also being a standard wording in a policy. You got the question. No, I'm asking about the the viral the virus exclusion. In other words the backing less common on the papers and on a good neighbor that is dead. That's correct. I mean is not very commonplace in the excess and surplus lines stated that is not uniformly true. And I would say we have enough table is with virus exclusions on them significant portion of the number of policies have them on them. So

But it's not universally true. It really depends on the competitive Marketplace and a lot of people in that states do not have specific viruses Solutions on our policy.

Okay, that's helpful. Is there any way of comparing the five hundred or so business Interruption claims to what the normal flow would do?

Well, I can tell you that claim Fiats are actually still down for the year despite despite the influx of those five hundred times I talked about so they would be down in a more without them and certainly is the flow of business Interruption claims is is I mean, it's not a number that we would never have faith in a year. I don't think uh, unless it was a extremely catastrophic Year from like our hurricane standpoint.

Okay.

And then I know this is Tiny like 1% of the book, but can you give us a sense to what sector to ensure in or per account?

Yes, so this is basically the only real places we do workers comp is office professionals and specifically Architects and Engineers is really County 9% of our exposure. And as far as we know those clients are actually still working. They're working much like us just working from home so long.

But they're not likely to have production getting sick at work.

Not not based on the broad things where they tried to focus on the First Responders. We don't we don't do any workers comp in the First Responders, but

Okay, perfect. Thank you so much.

Well, yeah, good morning couple additional questions mentioned about 23 of returned premium related to some portions of the transportation book just walk through like Which accounting lines are impacted that's is that all premium written and earned are there any expense offsets? Just I'm trying to understand all the lines that are impacted when you do something like this.

Markets Todd that that is so no a minuscule impact on the arm standpoint. I mean certainly would have, you know have commissioned related to that. But again, it's purely written from that standpoint. It's so unemployment is really the impact there. So I think in to think of it in terms of money from a from a cash flow standpoint, those are a lot of those are installment based. So from the pure cash standpoint, I think the actual cash return is closer to six months in some instances, you know, I think it's being left a credit on account because they do anticipate it is Craig mentioned returning returning the business.

Also have the work they'll be returned permissions on that and they'll be we won't have losses on that business either.

It's fairly small margin exposure production exposure that really doesn't ultimately impact sort of a combined ratio in quarter. It's just in terms of the growth rate in premiums, you know, all else equal would have been a little bit better had to do not make this, you know make this Choice. Yeah, I think that's that's correct. I mean I thought you would have if you were to pull this out casually would have been up closer to 20% and overall more than that 15% range. Thank you. The second question that I had goes back to one of the early questions related to the plug in a band and on the The Surety book are there what's the typical kind of limits that you right on that business? I'm sure it's not one-size-fits-all but it's probably like, you know a normal and a Max maybe something like that if you can share that.

Well, it's this is Craig D. I mean there's a quite diverse group of bond amounts there. There's many of them that are very small a million or two million and then there's I mean there are a few that are a little larger when you say, I mean, I don't know if you talk about an individual Bond or or bonding capacity for an entire account that I mean that would vary because the individual bonds would be I mean could be ten million dollars as big as ten fifteen twenty five million dollars but ranging from $500,000 to for that size.

The exposure I would ultimately be account for the more so than in somebody's not going to pick and choose and say hello and cations $3 a month. I mean, so if you think about so you have all this example, if you had five Wells you were Drilling and four of them have a lot of capacity left in the ground and one does not offer the for that have a lot of capacity are very marketable and somebody might very well want to buy those if they choose to buy them and and and and let's say they don't even want to continue to they are they want to choke down the well, they own the well that's their responsibility. We don't have to go plug that well until they decide to use it. That's they're response to the new owners responsible. So as long as there's buyers in the market for these Wells that are active and that's that's part of our underwriting. We don't just under right the financial wherewithal of the operator we also dead.

We also underwrite the Assets in the ground to make sure there's real assets that are so that you're very very unlikely to be on Wells that are at the end of their useful life.

So that's why we've kept our number planes down significantly just

and then one other question, I mean people have been very diligent in highlighting lines that could be exposed are their lines that you're writing that are getting benefit from the fact that everybody's staying home and nobody's doing anything. I mean, I I know there's certainly an s coverages that you write down already four bars and restaurants or things like that that I would assume that those are getting very favorable experience.

Well, it's Craig and I mean we don't we don't do a ton of bars in restaurants. So we do some but not a time. We certainly aren't doing the ones with the big chefs or anything like that, but

I mean we write personal umbrella, which is you know, it is both been Auto and homeowners liability exposure again, you could say, oh maybe less personal driving on the road. Although there are more pedestrians and bikers bikers on the road. They're also more people at home, which can create a potential risk, you know at home or in your house as well from the liability standpoint. So so but that's one that may benefit that we can't we cannot quantify that certainly I I think I talked to the commercial auto side of things. We think that's probably beneficiary they're beneficial to us.

No.

And even though it may not be beneficial we would expect as exposures drop and premium drops. So would the loss propensity drop so I don't know the other than the products. I'm not I'm not sure. I'm I believe that we think that we've that the things are fairly proportional.

Okay. Thanks very much. Those are those are all my questions.

And moving on the next question coming from Ron baublitz Capital returns. Good morning. I had a couple of questions about wanting of late if you've noticed any change in the buying the quote ratio sort of the success in converting poles to Bynes first and if that's what the competitive Behavior setting an impact on your success there.

particularly american commercial property

May I speak to I don't even notice anything anything that stands out in regards to the bank to quote and certainly the number of the amount of new business that is a soft is is decreasing We Believe at least that's what we see at least in April beginning of April. Probably, you know submission cat submissions are down a little bit but they pick up because people aren't shopping your business, you know, and but which I think will also increase uh-uh retention for the business you already have. So so I think you're going to see an increase in retention and may drop off at new business is what you see across not just are alive, but I think the industry I'm guessing based on what we're seeing producer just aren't as productive and and they don't they don't have that face-to-face meeting with people. It's a lot harder to move accounts.

Got you in the in the well plugging surety bond book when there's a transmission in the oil changes hands to the bond obligation continue order to see sort of coincident with the changing ownership.

The only time that we would have to actually opt into that so they've actually have to elect I mean basically the bond is exonerated at that point in time and then we may want if they would like us as they're off their Surety. We we may very well continue, but that's our option and their options if the contract is ceased effectively. Okay, and then do you have insurance on that book off? Yes, could you tell you that we have to do that?

Well, we buy $75 Tower. So we have two million retention first our attention and some KO participation alongside.

Okay, then the last question was you mentioned, you know sessions and relatively small amount that you see if I can get the 22% as of one one this year off on the mindset to consider increasing your attention prior to the next renewal date and can even do that if you wanted to.

You can certainly there's that opportunity. I think we actually have reduced our retention from where we were a year ago. I think we were both wearing the 35% if you go back a year and and we elected to to reduce that looking at all things looking at the total limit that we would take from that standpoint from home. So there's there's a lot that goes into that that consideration. I mean the only thing I mean a lot of things that factor in but as I mentioned before any rates rates are increasing dramatically right now, so you'd be seating install that rate increased to a Rancher. So I mean, we're going to strike the right balance. We're going to look at that. We obviously you're going to continue to buy reinsurance.

Whether the retention changes, I don't think they're actively pursuing to raise or lower our attention. We'll see what happens in the marketplace and

okay. Hey, thanks a lot, John.

Good morning drive morning. I'm trying to get a sense of where the name is Michael in the meeting right now. We have a positive environment. But on the other hand was undoubtedly, he's going to have some kind of question. We don't know but it clearly wage economic impact as a result of staying at home sort of etcetera to get a funeral to what that means to your business meaning if he continues down by X percent what might happen to your top-line that's that's admittedly it's a net premium issue and not interim premium issue immediately. Is there any way to get a sense of how that life?

Yeah, I think it is very difficult to to begin to estimate that but this point I mean certainly we have we've talked about that before a third or so. I thought you said is it is economically sensitive from a construction standpoint to the construction industry. But but at this point, it's just it's too early to to make that wage type of estimation.

Okay, that's good lesson the questions brought. Yes. Thank you.

Is the operator? Yes sir this time. There's no further questions. I'd like to thank you for joining us this morning. Once again, our hearts go out to those who have suffered most through illness or the death of a loved one or prayers go to all First Responders and put themselves In Harm's Way someone who have made the ultimate sacrifice.

Our thoughts are with those who have suffered financially including our customers.

Bar industry the real existential threat is that regulators and politicians are attempting to retroactively impose coverage on policies that did not provide coverage and insurers did not underwrite for that coverage nor charge premium for that coverage.

Plaintiff attorneys will attempt to force the issue as well in the end.

Bowling the lawyers win. My view is the only solution to this is a federal one similar to what happened after nine-eleven. Our industry needs to help shape that solution so that if and when this happens again, there's a fund and backstop for uninsurable pandemics. Lastly thanks to all our Associates will continue to underwrite process premium and pay claims and all the things we do daily to support our customers and other stakeholders sincere. Thank you. Thanks again Thursday evening. Stay safe and stay healthy.

If you wish to access you may do so by pressing you can 1 2 0 3 1 1 1 2 with the idea of two zero three months in our conference for today. Thank you all for participating. Have a nice day. I'll participate now dismiss.

Thursday

Thursday

dead dead dead.