Q3 2020 Rli Corp Earnings Call

As a reminder, we will open the conference up for questions and answers after the presentation.

Before we get started let me remind everyone that through the course of the teleconference. Our ally management may make comments that reflect their intentions beliefs and expectations for the future as always.

As always these forward looking statements are subject to certain factors and uncertainties, which may cause actual results to differ materially.

Please refer to the risk factors described in the Companys various SEC filings, including the annual report on form 10-K as supplemented in the form 10-Q.

Quarterly period ended September Thirtyth, 2020, which should be reviewed carefully.

Company has filed a form 8-K.

With the Securities and Exchange Commission that contains the press release announcing third quarter results.

Well, our L. <unk> management may make reference during the call to operating earnings and earnings per share from operations, which are non-GAAP measures of financial results.

<unk> operating earnings and earnings per share from operations consist of net earnings after the elimination of after tax realized gains or losses, and the after tax unrealized gains or losses on equity securities.

Our lives management believe.

Believes that measures are useful in gauging core operations.

Performance across reporting periods, but may not be comparable to other companies definitions of operating earnings.

The form 8-K contains reconciliation between operating earnings and net earnings the form.

The form 8-K and press release are available on the company's website.

Our L.I.C.O. RP dot com.

I will now turn the conference over to our L. eyes.

President and Chief investment Officer, and Treasurer Mr. Aaron deepened dollar. Please go ahead Sir.

Thank you Ryan.

Good morning, everyone and welcome to our Allies third quarter earnings call. Joining us today are Jon Michael Chairman and CEO, Craig Kliethermes, President and Chief operating Officer, and Todd Bryant, Chief Financial Officer as in prior quarters, Todd will kick things off with financial details on the three and nine month periods ending some.

Tempur Thirtyth.

Hopefully that information will answer some of your common questions Craig will follow with some detail on the product portfolio. We can then open the call to questions and Jon will close with some final thoughts Todd.

Thanks, Aaron good morning, everyone.

Last night, we reported third quarter operating earnings of 42 cents per share.

We had a quarter that was impacted by a number of severe hurricanes, we achieved 9% top line growth and posted a 99.5 combined ratio invest.

Investment income declined modestly wells Investee earnings and I realize returns on the investment portfolio reversed adverse trends experienced earlier in the year.

Positive net earnings drove book value per share up 13% for the year inclusive of dividends to end the quarter at $24.40.

Pricing momentum continued in a number of our products and the Pandemics influence was modest this quarter with casualty posting 11% top line growth from property and surety were up 8% and 1% respectively.

Greg will talk more about individual products and market conditions in a minute, but overall growth in gross premiums written was driven largely by rate increases and expanded distribution.

From an underwriting perspective, the quarter's numerous hurricanes resulted in one of our larger cat impact in periods recorded losses from Hurricane Hanna.

Yes, Laura and Sally our within our Preannounced range and stand at 39 million net of reinsurance.

35 million of that is from our property segment and 4 million impacted casualty.

A number of our package policies are reported.

Net a bonus related impacts these losses totaled 33.2 million or 58 cents per share net of tax and that is 15 points to the quarter's combined ratio.

Overall, the quarter's loss ratio was 58.9.

In addition to catastrophe losses, we maintained the elevated current year loss booking ratios I mentioned last quarter on certain financial related products were heightened exposure to pandemic related losses exists.

This resulted in recording 4 million in COVID-19 related losses, 3 million in casualty and 1 million and surety here today.

Year to date reserves established for COVID-19 totaled 15 million by segment amounts recorded totaled 2 million for property 3 million for surety and 10 million for casualty.

To date, we have not paid any cold weather related indemnity amounts that majority of claims received have been closed, but we continue to investigate and review all claims submitted.

Offsetting reserve additions in the quarter were approximately 25 million and net benefits from prior years reserve releases by segment casualty totaled 19 with the majority of products posting favorable experience surety posted 3 million in benefits and property was 3 million inclusive of some reductions in prior year storm losses.

Moving to expenses, our quarterly expense ratio remained below last year down 1.3 points to 40.6.

Book value growth improved during the quarter, but continues to lag prior year as does our combined ratio, resulting in lower amounts earned under incentive compensation.

The decline in amounts under incentive plans accounts for the majority of the decrease in our expense ratio as well as the bulk of the decrease in general corporate expense, having said that while revenue has exceeded our early estimates at the onset of the pandemic targeted actions set in motion to eliminate or defer expenses have persisted.

We are continuing to evaluate areas of opportunity for efficiency gains and expense savings, while increasing our investment in technology, particularly those related to customer experience and ease of doing business.

Turning to investments we are pleased to see a continued recovery in most sectors during the quarter. Despite some september volatility for equities portfolio again produce positive results and a 2.2% total return.

No invested assets contributed to sustainable growth in book value. The current interest rate environment weighed on investment income during the quarter operating cash flow was strong this quarter and drill the continued preference for purchase activity in high quality investment grade securities while cap.

Capital markets volatility may resurface in the near term 2020 has confirmed that our sound balance sheet can weather most storms.

Outside of the core portfolio, our share of Investee earnings increased nicely in the quarter for Maui, Jim net sales improved from the second quarter's trend as the retail sector opened up further well sales remained down significantly on a year to date comparative basis basis efforts to rightsize related operating expenses have proven.

Active for Prime Investee earnings continued to advance reflected growth in revenue and earnings they are experiencing.

As mentioned previously previously results for both Investees may be influenced by any economic headwinds, particularly in the retail sector as it relates to Maui Jim.

And with that I'll turn the call over to Craig.

Thank you Todd and good morning, everyone. As Todd mentioned, we were able to grow top line, 9% and still deliver a small underwriting profit for the quarter. Despite significant headwinds 20.

2020 has been an unprecedent year to say, the least 10 named storms, making landfall in the continental U.S. wildfires across a large portion of the west its a ratio in the mid west civil unrest in many cities and an ongoing global pandemic the mark.

The market was hardening prior to these events as a result of prolong competition and rising loss cost.

We are seeing some acceleration of discipline into the market with a greater focus on limit in attachment point management tighter terms and conditions increased rates and more refined appetites, where the pain is greatest.

The market continues to improve more broadly it's still not everywhere improve.

Improving conditions, an increased submission flow are most pronounced in low frequency high severity products, where we often find the less regimented underwriting occurs.

Despite all the tragedies associated with this year or like continues to be steadfast in helping and supporting our customers. While also delivering underwriting profit and double digit book value growth to our shareholders.

Our financial strength diversified portfolio products and relentless focus on disciplined underwriting and customer service have served us well.

Our underwriters have narrow and deep knowledge in their space and know when we're being appropriately compensated for the risk. We take we will continue to take advantage of opportunities, where we have expertise and where we choose to compete.

I'll provide a little more color by operating segment.

In casualty, we were able to grow 11%, while reporting a 90 combined ratio rates.

Rates are up 10% across the segment driven by excess liability coverages and automobile exposures on commercial and executive product excess liability, we are seeing shorter limits being deployed higher attachments and tighter terms required and significantly higher rates or commercial excess liability rates.

We're up about 11% for the quarter.

While our executive product grades were up more than 35%.

We continued to see double digit revenue growth out of these products, which has largely been driven by rate.

Our personal umbrella business also continues to grow with more than a 50% increase for the quarter and year to date from investments made in technology, new and existing distribution partners as well as market disruption.

Our transportation business continues to be challenged on the top line shrinking 8% for the quarter and off more than 40% year to date, largely driven by the negative impact. The COVID-19 has had on shore on the charter transit in school bus sector.

On a brighter note rates continue to exceed loss cost the business remains profitable for us and we're starting to see signs of resiliency in the public auto business.

Casualty market dynamics do appear bifurcated in that primary casualty products with limits of a million dollars or less many construction risk and workers compensation still remains very competitive for our Allied. This includes about 35% of our casualty portfolio represented by products like small professional liability.

Admitted and non admitted general liability and package policies.

In property, we achieved 8% growth, but reported a sizable underwriting loss as a result of the four named storms, we experienced during the quarter.

We have very few reported losses from the ratio and wildfires. The most significant storm for US was hurricane Laura that hits southwest, Louisiana in late August given the frequency and severity of these events the losses have fallen within our expectations. The time is now to deliver on our promise and differentiate ourselves.

And we are doing just that.

We had claimed representatives on the ground shortly after each event assessing damage in writing checks to our policyholders for covered property in time element exposures. These.

These catastrophes, along with a tighter reinsurance market will continue to drive further hardening of rigs the entire.

The entire property segment rates are up about 14% for the quarter and 12% year to date.

Wind only rates are up over 40% in the quarter, which is the fifth consecutive quarter, we have achieved increasing price momentum.

There have also been spillover effects in other property perils, including earthquake, which achieved its third consecutive quarter of double digit rate increases.

Despite the rate increases we continue to see steady competition from MGH offering capacity in the catastrophe space. Our overall exposures that remain relatively flat, while growing our property premium about 10% year to date.

Other products in the product good property worth noting include our Hawaii homeowners business, which continues to grow at a double digit pace and deliver underwriting profits. Despite the challenges to the island's economy.

Marine also continues to be a disrupted market as a result of fallout from Lloyds, we have achieved more moderate growth here, but rate continues to outpace loss trends.

All in all we are pleased with the underlying position positioning of this segment.

The surety segment was able to grow 1% reported an impressive 75 combined ratio for the quarter all the major segments within this business remain profitable are for.

Our focus on the most financially secure and well run companies has typically mitigated the fallout associated with economic downturns. We suspect there are some carriers wrestling with distressed accounts, an underlying profitability as a result of less disciplined underwriting underwriting that occurred pre pandemic.

We will continue to focus on making investments in our sales teams technology and smaller transactional businesses, which will serve us well in the long term.

Overall, a pretty good quarter in light of events that occurred and the challenges. We continue to tackle rates are continuing to move in the right direction and more broadly and top line growth is better than expected we can see.

We continue to remain connected to our customers and producers do technology phone video calls and even in person whenever possible.

We believe that online connectivity can supplement, but never replace experiences trust problem solving and relationships that are only forged in person.

People are the difference our town.

Our talented associates provide the personal service and consistent appetite that have always been differentiators and continue to serve us well through the times of both turmoil and tranquility.

Although many can't wait to move on to 2021, we believe the events of 2020 have helped highlight why ROI is different that difference is served all of our stakeholders well.

And distinguishes us I'd like to thank all of our ROI associates are going the extra mile to deliver to our customers and producers in a most challenging time being.

Being different still works thanks.

Thank you and I'll now turn it back to the moderator to open up to questions.

[laughter].

Thank you Sir.

Question and answer session will begin at this time.

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Please standby for the first question.

We'll take our first question and that is from Randy Binner with B. Riley. Please go ahead.

Hey, Thank you. Good morning, I, you know I appreciate all the detailed commentary and kind of pockets of opportunity are always have been.

Always of interest on this call.

I guess I was on.

On the kind of smaller casualty risks Com G L package.

And that's very competitive still I'd I'd kind of like to hear a little bit more about that if that's very competitive and likely to see more pain in capital lever if loss rates are manageable and out there that that can be an area, where you still see competitors being aggressive.

Well Randy this is Craig I mean, I think that I think the reaction in the market is where the pain is being felt the most I think on the shorter limits or the smaller limited liability policies package policies I think generally results for the industry ever remained decent I would say.

And.

This is not big.

The typical what happens you know when the market starts to harden people get a much there's much more excitement or much more submission flow around the larger limits around the kit longer tail casualty products that have higher attachment points.

Hmm.

I mean, I think rates are still down overall in workers comp with the other people have reported that as well and I think although rates are up in the primary liability space that I talked about they're not nearly as much as they are on the excess casualty. So I mean, it's going in the right direction, probably covers loss trend, but you're not seeing anything that necessarily would increase long term mark.

Surgeons I think in that business in the short term.

And then can we just review I heard your comments with the Boston and charter a charter bus and I think buses public transportation that is.

I think your comment was that there's kind of a assembled permit a decrease in demand for reinsurance there because the wheels aren't moving it was that was that the take away there was there more to it than that.

Well certainly after right the right. After the pandemic could began you know almost that business came to a complete stop at least the charter bus business came to a stop so if you think about charter buses. Those are those are people a lot of times older folks that might get on there and actually take a vacation on a big you know.

Might go up and down the California Coast for example.

Where they might go to a casino where they might go to that so it's really silly.

Affiliated with travel entertainment and recreation.

And that really came to almost a screeching halt.

Huh.

First of all because of the population that typically gets on those buses, but also you know just putting that many people in it I mean to normally they would put 60 people in a bus and you can't really do that in the middle of a pandemic and I think what you're seeing now is a little resiliency. There people are trying to figure it out there either hiring more buses to do the same thing. So they have you know.

Spatial distancing on the bus.

You know and.

You know and some of the school buses are actually still are actually starting to go back a little bit and some sports are coming back which is sometimes transports people come from but then a lot of times. It takes more buses to transport. The same number of people to make sure you have that spatial distancing. So we're starting to see say resiliency resourcefulness you see in these businesses come up.

Wade just like restaurants and bars initially a lot of them were close you know they've tried to figure out how can I do it with 25% seeing how can they do it with 50%, saying how can I do it outdoors not going to do it with delivery.

<unk>.

I think it speaks to American ingenuity people figure it out over time, it's not ideal. It's certainly these people aren't making very much money.

Doing it this way.

But they're figuring it out.

Okay. Thank you for the clarification there I guess there is one more as long as I have it does.

Just on the investment income is that was there unusual items and that this quarter or is this are we kind of seen a run rate around this level of yield.

Randy This is Aaron a couple of moving moving parts. There. This year, we've just held a little higher cash balances in the portfolio out of conservatism that that's weighed weighed on things a bit we do have a floating rate component.

To the portfolio as well and as as LIBOR has has come down.

That has has an influence and overall reinvestment rates are obviously in play here as well so a number of moving parts there.

We're trying to we're.

We're in the markets every single day, putting marginal cash flow to work in the best opportunities, we see out there so.

So growing the portfolio that is an important component of maintaining investment income as much as rates are.

As well so.

Hopefully that that stemmed the tide a bit [noise].

All right I'll leave it there thank you.

Thanks Randy.

Thank you we'll move on to our next question and that is from Jeff Schmidt with William Blair. Please go ahead with your question.

Hi, Good morning question on the casualty loss ratio ex cat ex development, it's down quite a bit it looks like as much 400 basis points.

Quite a bit for the first time in a while.

How much of that is driven by do you have a sense on how much is driven by lower frequency friend that pandemic are we just at a point where rate is just that much above loss cost trends.

[noise] Yeah. This is Todd most <unk>, there's there's probably half of that or so that really is mix related when you think about we're growing.

Our personal umbrella and some other products it would be a little bit lower loss ratio, becoming a larger part.

Of the book of business, and then you'd have a little bit on I think the liability portion of the of our.

Our GBA and maybe a little bit on small commercial that has seen a bit of a decrease.

And I.

The.

Second half of the year the third quarter is really what our actuaries take a look at the current accident year booking ratio and so on some of those were is a bit of a reaction, but nothing nothing significant so you see it a little bit more from that standpoint.

This quarter versus prior quarters.

But a lot of the longer tail areas were growing the excess liability and some of that to Craig talked about really no no significant changes there at all.

Okay. So just not much in lower frequency and they need the products from the pandemic well.

So Jeff this is Craig I mean, certainly we've seen fewer claims or and I guess in some sense frequency it's varies by product when.

When it comes to like the way, we look at booking things and stuff. We took a much more longer term view, but certainly you know in the short term, we've seen a reduction in and claim counts and frequency of losses in both auto exposures, but across a lot of liability products, obviously property, maybe a little bit the other way with the catastrophes and with the cobot claims but.

So.

Yeah.

But I think we believe you know, we usually take a pretty cautious approach to that we're not going to assume some kind of a short term trend is going to happen or continue for the.

Intermediate or longer term and we've always taken that approach long before cobot or any other event like this we've always taken a much longer term view of trends loss cost trends. We don't think we're very good predictors of that.

So we like to take a much longer term view. So we don't like to recognize good news the very quickly obviously, it or what we think might be good news because trends actually materialize over 3456 years in casualty. So you really don't know.

But it takes us a while to that to work through them any kind of accident year numbers, just because of our approach.

Okay.

Makes sense and then just.

On the DNS business in general I mean, there's been a dislocation there hardening market. There obviously you know another tough year.

Yeah, sorry are you just seeing even more capacity constraints rate increases just over the last month or two I mean is that hardening market I guess accelerating there that you've seen recently.

Well I think it's I think it's when I talk to more broadly is on certainly in excess liability businesses in a in the in this space, yes, but it's true also in the admitted space.

You know we don't we only play you know in some fairly narrow niches in the enough space construction being the largest by far I mean, I know you hear a lot about disruption in this space a lot of that by the way is habitational business, because we get calls every day from brokers asking us to consider habitational business.

Although rates are much improved in that space, we don't know the rates plus the terms and conditions that are out there still allow us to feel comfortable that we can make a profit. So we're not looking to necessarily right now take advantage of those opportunities, but that doesn't mean Martin doesn't harden, we would get back in there.

Okay.

And just one last one on.

On investment income again and heard what you said here, but I guess more specifically looking at that yield its tune half percent. It looks like first as it had been.

22.9, I heard what you said, where there is a bigger sort of cash component, but its that 2.5% yield what we should be thinking about sort of as a run rate instead of up to eight to nine.

I will I will tell you current reinvestment rates are in the low in the low twos, so still below that I'm referencing yield that you just mentioned.

Got you Okay. Thank you [laughter].

[noise]. Thank you well move onto our next question and that is from Meyer Shields with KBW. Please go ahead with your question.

Great. Thanks, Craig in your comments, you talked about expanded distribution and 80 actually mentioned that last quarter also is that something distinct from the opportunities in the hard market because there's some sort of distribution initiative that we should be considering.

[noise] well I think my good morning by the way I think we've been looking at running for a while if we have been talking about it for a while I mean is particularly in our transactional businesses, we're looking ways to try to expand our products portfolio.

Through other partnerships. Besides just start traditional partnerships that doesn't mean, we're going direct that's not what we're doing but we are looking to partner with other people to kinda distribute our products. We've invested a lot in technology, a p. eyes things like that to try to make it easy for other producers and in some cases aggregators when it when it comes to box.

Underwriting aggregators of way to distribute our business. So it's something we've been looking at for a while particularly in that space or transactional type businesses and we're going to continue to look at it and and I think that with disruption in the marketplace. You. You've got people that are more willing to have an open door to that discussion.

Okay that makes sense, if I can switch gears.

Briefly to the reserving size, obviously phenomenal reserve releases.

It was is there an element of increasing conservatism.

Because of the potential that depend that make and everything else is going on changes loss development patterns.

Of your processes and assumptions changed at all for that.

Maybe this is Todd they have not I think our actuaries approach things the same way I mean, certainly cobot is unique and that's why we call it out of bed, but.

But the but the processes have not changed if you look at just look at the development <unk> quarter over quarter right compared to last year certainly it was larger.

But but from a product standpoint, you know you would've had some change in or maybe a couple of products. It would've been adverse that were favorable this quarter. I mean, most all products were favorable so you'll get a little bit more on casualty from that standpoint transfer.

Transportation was was a bit more favorable we would've had the medical professional book that we exited the beginning of a.

2019 had a couple of million of adverse on the 2018 year last year in the third quarter and then I think if you look at surety.

I don't think we had any favorable development third quarter comparatively and there was I think around 3 million. There so not really any no changes in the approach from our actuaries standpoint, though.

But element that is that I mean, we I think our claim and actual team do a phenomenal job talking to each other and you know weve learned has gotten better over time to have those conversations we have regular conversations the actuaries are engaged or not they're not doing the reserving methodologies in you know in a vacuum or in a closet or having conversations.

They look at data and trying to help explain why are things coming in better or whatever and you know the claims people say hey, you know what they might be a temporary thing I can't say, how that might work into an actuary said as far as things go and as well as you know.

There's we have multiple actuarial methods and many of those don't respond very quickly to just the short term frequency and severity issue.

I'm, just bear I'm still trying to understand how the Cape Cod method.

Impacts so I kinda quit trying on that.

All right, we can take that part offline I'm happy to go through it with you.

Final question, if I can you know every day, we look at you know insurance.

New source is there's a lot of talent moving around the space people are looking to form new companies.

[noise] what are you guys seeing in terms of I don't know retention opportunities for recruit.

<unk> recruitment on the underwriting side I think is changing as dramatically as he said lies might suggest.

[noise] well my or we do notice that there's a lot of new people raising capital out. There are you know I mean, we obviously, we always look for new good people that are a good fit to our culture.

And bring something to the table so but.

We haven't seen a lot of a lot of times those people were open up new shops, they don't get into a lot of the smaller mid size accounts that we right because it's a little harder to get into then going out with bigger you know, let's say a $5 million or 10 million dollar account bigger accounts mid size to larger accounts as well easier to kinda.

Open up your.

Door and start writing that business, that's not really a space. We're in so we have not run into them yet that doesn't mean, we're not going to because obviously I mean every day I read about a new team that's raising capital I don't know where their funding all these people.

You know unfortunately, weve not really lost any key people throughout this timeframe. So.

I don't have any good answer I guess.

No that's fantastic. Thank you very much.

Thank you we'll move onto our next question and that is from Scott Heleniak with RBC capital markets. Please go ahead with your question.

Hi, good morning.

I'm just wondering I'm sure. If you can talk about kind of what you're seeing in terms of.

The impact on the economy have construction to this business and whether we're seeing signs of improving growth outlook. There. You had you had a little bit of gross you know that that.

That turned positive and I'm wondering what.

I'm wondering what you're seeing there in terms of all those things and if you see any any kind of.

Any change an uptick in claims since since COVID-19 started and anything you can add on just what's going on there.

Oh, we I mean, we obviously had a few small I think incidents that were reported to US I don't think we've paid and we haven't paid anything on any surety claims are relatively small.

I mean, I think that you know I think that anytime there is a financial downturn, there's going to be more financial stress on some of these organizations.

You know we look we look at trying to write the best management teams and the best financially run companies, which usually means that even when they do run into financial problems somebody wants to continue to run that business or in lead times with the same management team. So.

Well you know, we think construction, which we write in the construction space. There certainly are in the short term or construction work is continuing.

We're always concerned that what happens it's it's a prolonged downturn in the economy will that type of construction work continue.

So you know I can't predict the future on that but were always you know, but in the short term I think we haven't really been as impacted as as I might have expected.

On them small miscellaneous transactional stuff license funds things like that I mean, there has been a little slow down there because sometimes the court houses aren't open.

The normal obligations that we would we would that wouldn't that wouldn't be would need a bond or one a bond.

They're not they're not open for business right now so or any new opportunities. So.

I mean, we're hopeful we did it we think we've done a good job. We were very you know, we're probably one of the most conservative underwriters I think well across the board, particularly in surety and.

And I think that will serve us well in the long term.

Okay. It sounds like that business is Uh huh.

So then and pretty stable.

Question on casualty, the gross but picked up quite a bit compared to you know where it had been the past couple of quarters of double digits and I know I know you mentioned some some lines, but is there is there a particular class where you saw a big pick up you know Q Q3 versus the past few quarters, you saw a lot more opportunity than maybe you did you know it to be.

Beginning of the year or or you know in Q2.

[noise], there's just across the board yes.

Yes, some of it is going to be a little less drag from the transportation standpoint, it was still down but not to the level. It was I think that's largely the explanation is that you know that first or second quarter, because it was free in the first quarter and some insight at quarter. You know we had a basically.

Return a lot of premium which was an offset stuff that was already written so that was quite a bit of a headwind now you're starting to see some people reinstate some of their buses not all of them, they're now back to 100% capacity with the bringing some back online which is a good thing.

And you're not so don't have any negative offsets that you've had before that we had to take care of it because it.

The immediate and accounted for that.

Yeah that makes sense and I'm on the expense ratio. That's that's come down quite a bit. This year I know you mentioned some expense deferrals and curtailments and what else do you expect to see that creep up in 2021 is some of those costs. Those costs you know I I know you mentioned some of the investments, but some of those come back online are you do you still think it will go up.

Be able to kind of maintain it where it is.

You know a lot of it as I mentioned is really how our incentive plans go that's the larger impact certainly there's just a natural reduction from.

T. and eat that type of stuff with people not traveling we certainly will.

Look to look for that to move up but as Craig talked about I mean, we want we want our our folks out there visiting.

Building the relationships from that standpoint, but we're looking we're looking at a number of things on the efficiency front and certainly growth in revenue I'm certainly helps from that standpoint, So we'll keep well keep plugging away at it for sure.

Yeah, Okay and Oh.

Last one is just on reinsurance prices, which you know it.

By all accounts those are going to be up you know for January one of next year, just like primary pricing and I'm. Just wondering how you. How you anticipate your genuine January 1st renewals. What do you you anticipate making any kind of changes based on what you're seeing now or how are you thinking about that.

Yeah I mean.

First of all I'll tell you what we tell the reinsurers were getting rate. So they don't have to but ER and we asked them to differentiate us based on our past performance and their friend their partnership with us, but I don't think we anticipate any substantial or even.

Even marginal changes necessarily in our retentions or how much we buy we always we always price that business and look at what we think is a fair price and we may adjust our co participations.

In certain layers, because we think the price is too high or maybe if it's a good.

A great price, we might buy more.

But that's always on the margins that's not I mean, we view reinsurers first first and foremost securities. The most important and we're looking for people that value.

Our business model and one long term partnerships.

Alright, great I appreciate all the answers thanks.

Thank you thanks Scott.

Thank you at this time there are no further questions I will now turn the conference back over to Mr. Jonathan Michael.

Thank you for joining us again.

Another good quarter.

Arguing markets.

We are.

Bullish on our ability to perform Oh during <unk>.

During this time we've.

So we've done it our associates are incredible.

So.

Thank you again and Todd I, just wanted to point out is in Madrid and in Milan.

It's not I'd say, yes.

He said, yes [laughter]. Thank you all [laughter] thanks, John.

Thank you, ladies and gentlemen, if you wish to access the replay for this call you may do so by dialing 18882 03111 too.

With an I'd number of 1611 920. This concludes our conference for today. Thank you all for participating and have a nice day all participants may now disconnect.

[music].