Q4 2020 W. R. Berkley Corp Earnings Call
Net income.
The premiums.
Okay.
[music].
Got it.
[music].
Yes.
[music].
Okay.
[music].
Good day and welcome to W. R. Berkley Corporation fourth quarter 2020 earnings Conference call. Today's conference call is being recorded the speaker's remarks may contain forward looking statements. Some of the forward looking statements can be identified by the use of forward looking words, including without.
Limitation beliefs expects or estimates we caution you that such forward looking statements should not be regarded as a representation by us that Pete.
The plans estimates or expectations contemplated by us will in fact be achieved.
Switching to our annual report on form 10-K for the year ended December 31, 2019, and our other filings made with the SEC for a description of the business environment in which we operate and the important factors that may materially affect our results.
W. R. Berkley Corporation is not under any obligation and expressly disclaims any such obligation to update or alter its forward looking statements, whether as a result of new information future events or otherwise.
I would now like to turn the call over to Mr. Rob Berkley. Please go ahead Sir.
Christine Thank you very much and welcome all to our fourth quarter call I think we're low on our way to our safe Harbor statement being the longest component of R. R.
Paul.
But perhaps that's just a reflection of the refinery.
Sign of the times.
On the call. In addition to to me you also have Bill Berkley executive Chairman as well as.
Rich day, Executive Vice President and Chief Financial Officer.
Follow a similar agenda to what we have in the past, where which is going to lead us through some highlights for the quarter I will follow with a couple of observations on my end and then we will open it up for Q&A in the three of US are available to answer your questions to a basketball ability.
So with that rich do you want to lead off please.
Absolutely, Thanks, Rob and good evening everyone.
The company reported record quarterly net income of $312 million or $1 67 per share.
Despite the heightened catastrophes experienced by the industry slowdown in the economic environment due to the global pandemic, our financials significantly improved in the quarter.
This improvement was evidenced in our current accident year combined ratio ex cats of 88, 8% and strong investment income and net investment gains, which contributed to an annualized quarterly return on equity of 26%.
Starting first with our top line growth and our gross premiums written accelerated through the year with fourth quarter representing growth of nine 3% symbol.
Similarly, net premiums written grew by eight 2% to approximately $1 $8 billion in the quarter.
All lines of business grew in the insurance segment with the exception of workers' compensation, increasing net premiums written by seven 2% to approximately $1 $6 billion per.
Fashion, a liability led this growth with 29, 6% followed by commercial auto of 26% other liability of 10, 6% and short tail lines of 2%.
Growth in the reinsurance <unk> Monoline excess segment was 16, 8%, bringing net premiums written to $205 million.
Casualty reinsurance led this growth with 21, 2% followed by nine 3% in property reinsurance and 6% in mono line access.
Rate improvement along with lower claims frequency and non cat property losses contributed to our improvement in underwriting income of 44, 2% to $165 million.
Setting this improvement were higher catastrophe losses, resulting from natural cats, and COVID-19 related losses.
We recognized $42 million of total catastrophe losses in the quarter or two three loss ratio points of which one five loss ratio points relates to COVID-19, you.
You will see in our earnings release supplemental information that the cat losses for the reinsurance <unk> Monoline excess segment is negative due to a re class of COVID-19, <unk> to the insurance segment the.
The current quarter's natural cat losses compare favorably with the prior year quarter of $20 million R. One two loss ratio points.
The reported loss ratio was 61, 3% in the current quarter compared with 62, 4% in 2019.
Prior year loss reserves developed favorably by $4 million or 0.2 loss ratio points from the current quarter.
Accordingly, our current accident year loss ratio, excluding catastrophes was 59, 2% compared with 61, 4% a year ago.
Rounding out the combined ratio, we benefited from an improving expense ratio of one three points to 29, 6%.
We continue to benefit from growth in net premiums earned of five 6%, which outpaced an increase in underwriting expenses of one 2%.
In addition, the expense ratio is benefiting from reduced costs impacted by the global pandemic, including travel and entertainment. This contributes a benefit of more than 50 basis points to the expense ratio.
Touching on investments net investment income for the quarter increased 32% to approximately $181 million. The increase was driven by investment fund income of $53 million due to market value adjustments and arbitrage trading income was $26 million in large part coming from investments in.
<unk> purpose acquisition companies.
Investment income from the fixed maturity portfolio declined due to lower reinvestment yields compared with the roll off of securities due to maturities calls in pay Downs. In addition, we continue to maintain a cash and cash equivalent position of approximately $2 $4 billion, enabling us to maintain a relatively short duration.
<unk> of two four years and significant liquidity.
Pretax net investment gains in the quarter of $163 million is primarily attributable to realized gains of $127 million and changes in unrealized gains on equity securities of $36 million.
As previously announced the realized gain was largely driven by the sale of a real estate investment in New York City, which resulted in a gain of $105 million.
Foreign currency losses in the quarter were driven by the weakening U S dollar.
Two items of note first you'll see that on a year to date basis, we were about breakeven.
Second the loss in the quarterly income statement as offset considerably by the increase in stockholders' equity.
In the quarter, our unrealized currency translation loss improved by $66 million, resulting in a net equity pickup of approximately $47 million.
As a reminder, expenses included a nonrecurring cost of $8 $4 million relating to the redemption of our $350 million subordinated debentures in the quarter.
Stockholders' equity increased five 3% in the quarter and book value per share before share repurchases and dividends increased six 1%.
We ended the year with more than $6 3 billion and stockholders' equity after share repurchases of approximately $6 4 million shares for $346 million at an average price per share of <unk> $54 43.
And ordinary dividends totaling $84 million.
That brings total return to shareholders of $430 million in the year.
Finally, the company had strong cash flow from operations in the quarter of $480 million and more than $1 6 billion for the full year, an increase of more than 41%.
With that I'll turn it back to Rob.
Thank you.
Okay rich thank you very much.
Very simply you leave me Youre, leaving us a discernible.
I'll come up with something that Avalon about for a relatively brief amount of time.
So from my perspective, and I believe from our perspective.
The market is clearly in the throes of affirming.
When we look at the marketplace is that what we saw at least at this stage in 86, no clearly not there is not a vacuum.
When it comes to capacity.
But clearly there is a recognition within the industry amongst carriers.
Net capacity is not going to be doled out in such a casual manner as it has been done in the past and when it is provided it will be with a lens towards a more appropriate rate associated with that.
When we look at the marketplace overall, we think that this is very appropriate.
And whether it will prove to be similar to what we saw in sort of late 2001 in 2002, and three will only see with time.
Reality is may cycle looks like any other cycle.
All that being said when we look at Q4 and when we think about our own business every product line at this stage with the exception of Workers' compensation. We believe is achieving rate in excess of loss.
Yes.
And quite frankly that is appropriate and necessary. When do you think about where trend is and in addition to that when you think about the reality of what one can expect from the investment income portfolio, particularly around the fixed income, we do need to be pushing for rate and driving down the combined ratio.
Further in order to achieve a sensible risk adjusted return.
Just to charge the different product lines Joe.
At this stage, we are seeing meaningful firming continuing in the much of the market.
Also the excess and umbrella market is quite firm as well property continues to be notably hard.
And although I would suggest is also quite firm.
One of the Laggard has been primary GL and we've been pleased to see over the past couple of quarters that seems to be building some momentum and we think that's really important given what's going on on the social inflation from and again as well as the realities of investment income and as mentioned in prior calls and just a couple of moments ago Workers' comp does.
<unk> continued to be the outlier, having said that we continue to believe that from the early stages of bottoming out and would expect that to be reversing direction by the end of <unk>.
Later part or end of <unk>.
'twenty one excuse me.
Just.
On the topic of rate.
Growth perspective, we think that there are many market participants that have a good deal of catching up to do.
When we think about that.
Past several years, there have been moments, where quite frankly, it's been a little bit lonely when we've been pushing for rate.
As you may have picked up in the release ex comp, we got 15, and a half ish points of rate in the quarter. If you go back a year earlier for Q4 19, we were getting just shy of nine points from rate Q4, four points of rate Q4 dollars 17 to three Q4 2016, we got a point of view.
<unk>.
We think that there are many parts of market.
Market participants that have not been pushing for rate for an extended period of time and again, we are going to see them needing to catch up and theyre going to need to catch a moving target.
One other comment I would just make them on this.
Related to rate and loss cost and how people think about rate adequacy.
It would appear as though there are some market participants may be thinking about loss costs slightly differently than how we think about loss costs.
When we look at the current circumstance I think it's very clear that severity is on the rise for much of the liability margin.
And recently as a result of COVID-19.
There are certainly many parts of the market that have experienced somewhat of a benign period when it comes to frequency.
And our observation is that some may be in for a little bit of a rude awakening.
We are sooner rather than later when COVID-19 is somewhat behind us we see frequency returned to a more traditional normal and that severity trend continues to take off like a rocket ship for the foreseeable future as we've been discussing.
Turning to our quarter.
As rich referenced.
Pretty healthy growth on the top line.
The growth was up about 9% the net was up about 8%.
Obviously the rate increase that we mentioned earlier is a big contributor to that we've gotten the question from time to time.
Thanks to help me.
Do the math, so youre getting 15 points of rate in the quarter or so.
We're only growing a smaller amount whats going on or you're shrinking your business from an exposure perspective and.
The answer to the question is yes, and no and what I mean by that is our policy count is actually up a bit but what's actually going on is that our insurers.
While we may be selling more policies and that number is growing many of the insurance business activity.
And revenue, particularly measured in their revenue, which we placed the policies also is down as a result of just economic activity in the industry.
So when we looked at the situation here sort of the short.
Version.
Policy count is up a little bit.
<unk> is up.
The number the amount of revenue or a number of which is if you will that our insureds are producing is down.
So what does that mean that means that we are reasonably well positioned for growth when the economy starts to open back up and you will see in all likelihood from my perspective.
Notable catch up and audit premiums as the revenue begins to pick up even those policies that we've already issued because again there is a catch up and R.
Activities.
And just a couple of other things quickly.
Expense ratio again rich.
Covered this pretty thoroughly I would just add a couple of.
Sure.
One.
So the 50 basis points benefit if you will that the expense ratio is getting as a result of the reduction of activity.
And with travel and entertainment.
That will one of these days come back, but we are actively looking at what does return to work look like for US. We certainly expect that people will be back from the office, but will the SAB will be the same or where there are opportunities to learn through this period of time, where maybe travel will not have to return to what.
Once was.
That all being said the reality is that we envision the business growing considerably more as the economy opens back up and in addition to that the higher rates, which will also contribute.
Contributing to the higher earned premiums coming through will.
We will help out on that from.
And the loss ratio front.
Obviously, there was some improvement there.
Also have heard from commentary from some.
Really asking given all the rate increases why are we not seeing more improvement in the loss ratio short answer is that we.
We're trying to be as always very measured and not declaring victory prematurely as we've shared with some in the past. The simple reality is we do not know what the legal system is going to look like and what that is going to mean for loss cost activity. Once the economy opens back up and we see.
The legal system, particularly the courts.
Operating at more of a traditional level.
Having said all of this.
We share with you.
This observation.
If one were hypothetically to look at our loss ratio.
That we had in 2020.
And one word to apply a healthy level of trend just to pick a number arbitrarily a handful of points.
And then one more to apply that type of rate increases earnings flow that we have been achieving.
I think that gives you a reasonable indication as to what the math may look like one other piece that one could factor in hypothetically speaking.
Would be perhaps reasonable.
A reasonable assumption I should say.
That.
Pandemic will not happen every year and obviously there is significant loss associated with the pandemic in our 2020 numbers. So.
Some might suggest that.
We're being a little bit optimistic.
Quite frankly, when the day is all done it's pretty simple straightforward math.
Yes.
Investing portfolio again, I'm not going to repeat what you already heard from rich but.
Again, it was a strong quarter, both as far as the gains we have shared with people in the past.
Our realized gain front, it's going to be lumpy and quite frankly, just are alternative returns are going to be lumpy.
Penciling in an average give or take $25 million per quarter is what we've suggested the people in the past, we still think thats appropriate and theyre going to be moments in time, where it may feel like theres a bit of a drought and theyre going to be moments in time, where it feels like it's raining money, but on average we think we get great risk adjusted returns.
And again the same thing applies to the phones as you suggested the people theyre going to be a moment from the funds do break they're going to be moments, where the funds are lagging a little bit but on average we suggested that people cancel and high teens call it $20 million a quarter.
Rich you mentioned and I know, we've talked about this last quarter.
The duration is sitting there too.
Two four years, we continue to have a view that one does not get rewarded for taking the duration out are going out on the yield curve. When we look at when we do the math when we look at the numbers.
Yes, we could take it the duration back out a bit.
But the simple fact is that if you move rates up call. It our modeling a 100 basis points or so.
The impact on a quarterly basis, we will pick up after tax give or take maybe $5 million.
But if you move rates up.
100 basis points.
Pat on book value will be approximately $160 million. So we are at this stage compared to mid would be slightly lower book yield.
And maintaining the flexibility the high quality and the liquidity and we think that makes sense.
One.
Last topic for me.
Listen Ray you may have picked up.
The announcement, we made gift.
<unk> from the <unk>.
The vehicle that we created to fit side.
Side by side with our traditional reinsurance.
Reinsurance partners, we remain very committed to traditional reinsurance, but we felt as though that this was a good.
<unk> platform to sit side by side.
We're very fortunate to have two outstanding partners and listen right.
And while there certainly are plenty of people to partner with these two institutions not only are financially well heeled, but they are two organizations that are both thoughtful sophisticated with tremendous expertise in the insurance industry and they are truly partners and <unk>.
<unk> to that it was very important to us that there is a shared view around the topic of risk adjusted return and a shared sense of obligation and duty to capital.
So since people tend to unplug right. After the Q&A all those tuck in my parting comments now and that is.
While some might suggest that.
I found a bit offer up excuse me optimistic.
And some might even suggest that.
It is a genetic flaw being overly optimistic.
I think the simple reality of the situation is all you need to do is look at the facts.
And do the math.
And if one were to go down that path and look at the facts and doing the math I think it paints a pretty clear picture for the next several years look like for this organization.
I am going to pause there and Christine at this time, we would like to open it up for questions.
Thank you to ask a question you will need to press star one on your telephone to withdraw.
Sorry, your question press, the pound or husky. Thanks Deb.
Part of the Q&A roster.
Your first question comes from the line of Mike domestically from.
Credit Suisse. Your line is open.
Good afternoon, good afternoon, Rob.
First question.
I saw on the release.
Talked about the paid loss ratio being 51 nine do you guys have offhand, but last year was.
Feels awfully good.
Rich do you have that handy.
So Mike can we just follow up with you or rich do you have at your fingertips.
I deal with the full year for 2019 was 55 point too.
Okay. Okay. So it's slower and so I guess.
Rob you <unk> bin.
And Tom guys pretty loud and clear that you know you there was uncertainty about.
What are the recent frequency that kind of.
Comes back to.
Two.
To normal levels in 2021 and severity has been the.
There's been a big part of the problem for the industry just curious is severity.
Currently our interests in 'twenty is severity also running at improved levels versus pre pandemic.
No at least from my perspective, and I'm using a very broad brush here, so they're going to be pockets that would not fit under this response, but generally speaking when we look at 2020, we think severity continues to be an issue this whole sort of cash.
Topic of social inflation, we think remains very real and honestly given how the courts.
Or at best brought to a crawl during the COVID-19 period.
Not sure if anyone really fully appreciate how ugly it is but certainly.
I think without a doubt we can all assume that frequency has been for many product lines remarkably benign during COVID-19, and once the world returns to a more traditional circumstance.
We'll see frequency returned to a more historic level.
Okay are there certain loans and not to think it will.
And.
Switching gears to one of your comments earlier.
About the top line.
Growth lagging pricing I guess I had thought one of the main reasons was non when youre, giving the pricing thinker and includes comp.
Does it include comp, which is more flattish to negative pricing, but but I guess my real question was <unk>.
Asked about audit premiums potentially being a plus.
Hopefully in 'twenty one.
But.
Any any color you can give us on how other premiums impacted.
Berkley income statement in 2020.
I don't have those numbers in Carrington, perhaps follow up really well with whatever we are able to share, but what I can tell you is this.
For policies that were written during.
The 19 that we're providing coverage during 'twenty or policies that were written early in 'twenty.
Obviously, the expectation that many of those insured pad well.
Their revenue in all likelihood would be significantly above what it turned out to be when much of the economy is shut down and obviously that had an impact on their revenue.
So what I'm, suggesting is if you assume that at some point during 2021, the economy begins to more meaningfully open up in this country and other economies around the world.
I think what you will see is when people go out to do audits.
Economic activity was more than they had estimated.
For 2021, and there will be a lot of.
Premiums catch up through the audit process.
I own a store and I buy a policy today I'm, probably estimating that my revenue is going to be considerably less perhaps than it was in 2019.
But if the economy opens back up my revenue in all likelihood will open will pick up considerably and when the insurance company goes out and does an audit to see what your revenues or.
You will all the insurance company considerable premiums.
And there will be a catch up.
Okay. That's helpful and lastly, a numbers question. If you have it on the IV sorry, the COVID-19 charges, you've taken the churn from 'twenty what percentage is sitting in the IV non bucket still I'm, sorry could you repeat that once more and once you brought it up.
A little bit sorry that COVID-19 charges taken in 2020, what percentage are sitting in IV and R. Roughly.
The total amount that we have put up.
Somewhere between 45, and 50% is still sitting in IBM R.
Thank you.
Your next question comes from the line of Jan Tomorrow from Goldman Sachs. Your line is open.
Thank you good evening.
Mike.
My first question is around the severity trend Rob.
Just wanted to clarify on your comment that it continues to take off like a rocket ship out from Covid are you expecting further deterioration in the trend once COVID-19 hit.
It's my view that social inflation is a moving target.
<unk>.
It continues to tick along and I think that there are some people that have underestimated that.
And we have.
Worked very hard as an organization not to get caught behind.
But so my view is that.
I'd say a rocket ship I think that there are a lot of people that.
R R.
Unfortunately consumed by what.
It was a benign period.
For many many years and it really wasn't.
Phil maybe in the past two three years or so.
We started to see it really weird test.
But it's not necessarily that this trend gets worse, it's just that others may have been slow guidance up to this realization.
Others, maybe flow through to.
Wake up to it and I think in addition to that that it continues and you get a compounding effect and if you haven't been keeping up with it you will continue to fall further behind.
Got it.
And then my second question is so for a company that has recognized.
And currently.
And as also shortened duration.
On the asset side.
Third the opportunity to perhaps take the foot off of the rate pedal in order to take market share and what is potentially much more accretive business today, considering that you have recognize these trends already.
So we look at each product line by operating unit.
Try and strike the balance between rate versus growth.
And there certainly are parts of the business where.
We are very satisfied with the margin.
And we are actively growing policy count.
And then there are other parts of the business, where given where rates have gone workers comp as an example, where there are pockets of the workers' comp market, where we have no problem whatsoever shedding policy count.
Okay. Thank you.
Thank you for the question.
Your next question comes from the line of Ryan Tunis from Autonomous Research. Your line is open.
Hey, Thanks, Good evening guys.
So I guess my question is just it looks like in the insurance segment the past three quarters have been.
Underlying loss ratio pretty steady kind of 59 to 60.
It doesn't look like we're really seeing that much.
Positive margin impact from this relationship between.
Between rate and loss trend I was just hoping maybe.
We wanted to quantify at this juncture, how much is that dynamic.
If at all helping your margins on a quarterly basis.
I think that.
When you say how much what dynamic just helping our margins on a quarterly I just want to make sure Im understanding I am sorry, I was just wondering so the relationship between earned rate exceeding loss trend.
Good day margins by how much this quarter.
Relative to a year ago.
So.
I'm trying to think about how I can answer.
Our margins we believe.
The impact of rate increases will become more visible.
In 2021, I would suggest to you over the past several quarters. Obviously, we have had an impact associated with COVID-19, as both Richard and I have discussed and that has been disproportionately weighted towards the insurance segment.
So I think if you talk about the insurance segment and do moved COVID-19, now you might see it a little differently or if you looked at insurance segment.
Your loss ratio ex cats.
You might see a different picture too.
So robin in your mind, what what impact has COVID-19 had on the Attritional loss ratio in insurance in 2020.
Well when you say attritional loss ratio, we view COVID-19 as a cap.
Okay.
How about on the on the ex cat loss ratio in terms of things in our direct losses right.
Whether it's lower frequency of various things vs.
Non.
As far as benefit stemming from Covid.
On the frequency front.
<unk> been very reluctant to come off of our loss picks yes, maybe we have gotten a little bit of a benefit.
The physical damage front of auto.
But other than that we are facing that one needs to be very cautious around reaching its inclusion on the frequency front and the reason for that is no. One really knows for sure when Covid is behind us and the legal system opens back up what the catch up is going to be so.
When you look at our loss ratios for the past couple of quarters in the insurance segment, you are seeing the impact of Covid.
As far as claims that we've had to deal with but as far as the reduction in frequency youre seeing a very modest recognition of that.
Got it okay. Thank you.
I'm sorry, it took so long to understand the question on my end.
Your next question comes from the line of Michael.
Morgan Stanley Your line is open.
Hi, Michael.
Good evening. Thanks, Thanks, guys.
Another one maybe on I guess my question gets to the heart of neuro needed for continued rate versus industries.
And when you say some will be shocked with frequency and severity consult you won't be shocked and you've already contemplated you've said a lot here with social inflation and your concern so you've already kind of built things in for that.
Take that with the backdrop of about 88.
Core combined.
It would appear to be your need for continued rate is significantly less than the industry and I guess that's.
That's the question.
So then I would assume that bodes well for <unk>.
Competitive position for you going forward.
Yes, we share your observation that we think we're in a good place.
We have been pushing for rate for a while which is one of the reasons why we probably have a little bit.
We don't have to catch up the way from some others do.
And as far as our positioning we think we're in a good place because we don't have the kind of legacy issues that others may need to deal with.
At the same time.
We think our margins not every place but in many places are quite attractive.
Okay, Yeah, I guess, what I read your commentary on the press release and you talk about.
The need for additional rate I assume you're saying they are more for your peers and per year is that correct.
I think that the marketplace needs additional rate and certainly to the extent that rate is available.
We will be.
We will be taking the rate.
Okay perfect.
Okay. That's perfect. Thank you well I guess its unrelated question.
The new administration in place anything you want to share on how you might want to manage potential changes in tax with maybe something in Bermuda or whatever else anything you can share there and how you think about managing that.
In Italy, we are conscious that the new administration is likely to be raising taxes.
Any way of constantly Ken and corporate taxes are likely a piece of that we are conscious of that.
Moving to annualize it appropriately.
Okay. Thanks, Bob.
Your next question comes from the line of Meyer Shields from Keefe Bruyette <unk> Woods. Your line is open.
Great. Thanks.
Rob you can go back to your comment on the difference between rate and premium growth. You mentioned I guess net exposure units are down does that itself have any impact on your underwriting results.
So just to make sure that we're clear what I'm, suggesting is that the exposure units may be down if you will but the number of policies is up in the rate is up and does that have an impact on what sorry.
The impact on what.
So when you've got that.
Decline in expenses through a smaller increase does that itself have any impact on any elements of the combined ratio.
Well certainly when we calculate our rate we think about the number of the exposure to come up with the rate that we're achieving.
So.
It impacts how we think about our loss ratio.
Okay understood.
Quick question I guess now that we've gone through at least January one.
Is.
Reasonable to expect.
Growth in reinsurance either per property casualty to be in line with the growth that we saw in 2020. This is going to be in trade volume.
None of US know exactly what tomorrow will bring I think theres clearly more discipline in the reinsurance marketplace than there has been an extended period of time.
Kudos to our colleagues that run our reinsurance businesses for exercising tremendous discipline, which came undoubtedly great frustration and pain and pain at times, but they did it and they did it very well.
And I think as long as we see an attractive market.
That team will people will look to capitalize on it.
We will utilize the shareholders' capital when they think they can make a good risk adjusted return there is nothing that leads me to believe based on everything I know that.
The reinsurance market is going to lose momentum.
In the 2021 year.
<unk>.
But again no one knows for sure what tomorrow will bring.
Okay. That's perfect. Thank you so much.
Your next question comes from the line of Jan <unk> from Goldman Sachs. Your line is open.
Mr. <unk> your line is open.
Alright, sorry, I was on mute.
Yes.
A couple of.
Follow up questions I guess, one can you maybe talk about the sources of Covid losses this quarter.
The lions share of our Covid loss activity as a group has stemmed from event cancellation.
Okay this quarter, but.
From inception.
Okay.
In this quarter, specifically I'm, assuming that's from policies that have yet to be renewed in the COVID-19.
Environment.
It is from exposures.
A whole mishmash, but the biggest piece of what we saw in the quarter related to Covid was.
We are constantly looking at the exposure and as Lee and won the Big assessment is how long is it going to go on for how severe is it going to be and to what extent are people going to come up with a plan b as opposed to having to cancel the event. If you will altogether when it comes to event cancellation and <unk>.
What we did hear again from the most part was.
Spending a lot of time trying to look forward thinking about how long do we see this going on for and what adjustments do we need to make to take that into account.
Got it.
And then my second question.
From.
Insurance segment, there was a bit of a non crude from ceded.
Premiums as well as a function of changing multiple watson purchasing more from.
Followed per dollar.
It's primarily a shift in business mix.
And to a certain extent from reinsurance pricing has gone up.
Think one of the things you may likely see as the year goes on and quite frankly reinsurance pricing is firming further you may see us revisiting what our net retentions are.
And perhaps keeping more net.
Got it thank you and good luck.
Okay.
Thank you very much your.
Your next question comes from the line of Brian Meredith from UBS. Your line is open.
Hey, good evening, Rob a.
Hey quick question questions here for you. So if I take a look back at kind of the 2000 through 2004 time period for you all.
You had 24 points of just Attritional combined ratio improvement.
As much on that kind of reported can you maybe compare and contrast, a little bit today's market vs.
Back then granted I understand it right is not as high as it was back then but then again loss trend is not as high as it was back then.
Yes, So my my take on it and then maybe the.
No.
Our chairman May have a view.
But my take on it is that.
It's not nearly as ugly right now and it may prove to be uglier than we even realize but it's not in all likelihood ugly as it was in <unk>.
99, 2000 and 2001.
And there is a general rule of thumb that the Florida, the pendulum swings in one direction or further it will swing back in the other.
No I don't think we know for sure.
How much pain is going to come out of the past several years I don't think that its fully come into focus for many industry participants to be perfectly honest.
Clearly so far there are parts of the market that have firmed considerably.
There are opportunities from our perspective to make very healthy returns as it relates to our numbers.
I think in the late nineties.
For two.
2000 and 2001.
There are parts of our business.
Maybe drifted a little farther off course, I think it is highly unlikely that you will see that type of circumstance rear its head again.
Hi.
I think one of the things you need to remember there is something else in there.
Then as Youre seeing companies report.
Substantial reserve issues.
And the market is just ignoring them.
Back in the late Ninety's early two thousands.
When people.
We had big reserve problems.
Their stocks and their ability to raise capital is not really punished.
And the cost of raising capital increase dramatically.
The availability of capital was quite different.
So I think that.
These things take their own lives, but I think.
If I had to guess.
The results are worse than we're seeing in a number of cases.
The company has done a good job will continue to benefit.
The companies who have not flow.
Or more.
Great Thanks for that.
There are no further questions at this time I'll turn the call back over to Mr. Rob Berkley.
Okay. Christine Thank you very much and thank you to all for dialing in.
I think by virtually any measure it was a great quarter and Thats really a result from.
The efforts of the whole team.
Thousands of people. So we thank them for their efforts on behalf of all stakeholders and we think again, we are very well positioned and we look forward to the net.
Coming years.
Have a good evening. Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
Yes.
Okay.
Moving on.
[music] Capex.
Sure.
Yes.
Okay.
Okay.
Thanks.
Okay.
Hi.
Yes.
Okay.