Q4 2020 Kinsale Capital Group Inc Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the Q for 2020, Kinsale Capital Group, Inc. Earnings Conference call all lines have been placed on mute to prevent.
Background noise and after the Speakers' remarks, there will be a question and answer session.
To ask a question during the session you will need to press star one on your telephone keypad. If you require operator assistance. Please press star zero.
Before we get started let me, let me remind everyone that through the course of the telecom.
And sales management may make comments that reflect their intentions beliefs and expectations for the future.
As always these forward looking statements are subject to certain risk factors, which could cause actual results to differ materially.
These risk factors are listed in the Companys, various SEC filings, including.
Went any 20 quarterly reports on form 10-Q, and the 2019 annual report on form 10-K.
Which should be reviewed carefully.
The company has furnished a form 8-K with the Securities and Exchange Commission that contains the press release announcing its fourth quarter results.
Ken sales management may.
On the 20th reference certain non-GAAP financial measures in the call today.
A reconciliation of GAAP to these measures can be found in the press release, which is available at the company's website at Www Dot Kinsale capital group Dotcom.
I'll now turn the conference over to Kim sales, President and CEO, Mr. Michael Kaye.
Please go ahead Sir.
Thank you operator, good morning, everyone and thank you for joining us on our call today with me on Bryan Petrucelli can sales CFO and Brian Haney <unk> sales.
We were we will follow our usual format. This morning.
I'll handle an introduction and then Bryan Petrucelli will follow with a financial report and then Brian Haney with an operating report.
After which we will take questions.
Last night Kinsale reported operating earnings of $1 14 per diluted share for the fourth quarter of 2000.
Up over 83% of the fourth quarter 2019.
Gross written premiums were up almost 34% for the quarter.
The company posted an 86, 7% combined ratio and a 14, 7% annualized operating return on equity.
On 'twenty for the full year of 2020, consistent with our guidance of a mid <unk> combined ratio in mid teens operating return and notwithstanding the heightened cat activity in the third quarter.
Kinsale is performing at a high level due to its unique business model to recap briefly kinsale.
The trolls its own underwriting in lieu of contracting it out to third parties.
It focuses on the E&S market and it operates with a significant technology enabled extent advantage. The combination of disciplined underwriting with low costs is a winner every time.
The ongoing dislocation within the broad P&C market and the E&S market, specifically is adding a tailwind to our efforts for the time day.
Allowing us to raise rates by double digits and grow the top line by 42% for the full year 2020.
Once the market normalize.
<unk>, perhaps sometime in the next year or so kinsale remains well positioned to continue to generate strong returns and to take market share. The only significant change we expect will be a slower growth rate, perhaps in the low double digit range.
For both the fourth quarter.
Quarter and for much of 2020, Kinsale saw a lower level of reported losses than we anticipated.
We believe this slowdown in loss activity is largely due to the slowdown or the shutdown of courts around the country.
Due to the pandemic.
As we stated on our.
<unk> on order conference call, we continue to reserve as though this slowdown in losses is temporary and that there will be a catch up period in the future.
Should the slowdown in losses to be at least in part permanent we would expect a benefit in the future in the form of additional reserve redundancy.
Third from an operational standpoint, 95% of our employees successfully moved back to our one office here in Richmond, Virginia.
Early in the fourth quarter for.
For our business. This arrangement is superior to remote working.
It allows us to maintain better communication to onboard and.
Trained new employees to maintain a high level of productivity and to continue to provide superior customer service to our brokers around the country.
In sum we are positive about the results from the fourth quarter and are optimistic about our opportunity for 2021 and beyond.
And.
And I will now turn the call over to Bryan Petrucelli.
Thanks, Mike the results for the fourth quarter was strong and driven by continued solid premium growth favorable loss experienced and disciplined expense management.
We reported net income of $38 2 million for the fourth quarter of 2020, representing.
Sales of almost 114% on compared to $17 $9 million last year, due primarily to approximately $10 million increase in underwriting income and $11 $5 million increase in investment returns net operating earnings.
Which excludes the volatility from equity investment gains and losses.
<unk> increased by 84%.
$26 million up from $14 million on the fourth quarter of 2019.
The company generated underwriting income of $21 $6 million on a combined ratio of 81, 6% for the quarter.
Compared to $11 $5 million in.
And increased <unk>, 1% last year.
The combined ratio for the fourth quarter of 2020 included three one points from net favorable prior year loss reserve development compared to one three points last year.
Our effective income tax rate for the full year of 2020 was 11, 9%.
<unk> share to 16, 7% last year, and lower primarily to larger discrete tax benefits related to stock options exercised during the year.
Annualized operating return on equity was 19% for the quarter and a little less than 15% for the year and as Mike mentioned in line with our mid teens guidance.
Gross written premiums for approximately $150 million for the quarter, representing a 34% increase over last year due primarily to continued market dislocation and the superior service standards that Mike touched on previously.
Brian Haney will cover some specifics relative to market conditions here on the debt.
On the investment side net investment increased net investment income increased by 17% over the fourth quarter last year up to $66 5 million from $5 5 million.
As a result of continued growth in the investment portfolio.
Annualized growth investment returns, excluding cash and cash equivalents.
<unk> was two 9% for the year compared to three 1% in 2019.
Diluted operating earnings per share was $1 14 per share for the quarter compared to <unk> 63 per share last year and with that I'll pass it over to Brian Haney. Thanks, Brian.
As mentioned earlier premium growth.
4% in the fourth quarter.
Growth is still strong and the market is trending in a favorable direction.
We are still seeing growth across the board.
But growth was particularly strong on our Allied health management liability inland Marine and life Sciences areas.
As we discussed last quarter. The overall economy is still being affected by.
For 30 related restrictions the significant uptick in Covid cases in the fourth quarter lead metrics based on <unk> restrictions, particularly California, and New York, which are two of our bigger states.
With the vaccine rollout from the rapid drop in cases, we've seen across the country in January and February I fully expect that those restrictions.
Covid, we loosened and we should see the release of some pent up economic activity, which should provide us with an additional tailwind.
Submission growth was in the high teens in the fourth quarter down somewhat from the mid <unk> in the third quarter.
Some of this for the ongoing effects of the lockdown.
Our binder growth remained strong in the mid <unk>.
Continue to look to improve our efficiency and customer service and this allows us to buy a higher percentage of day accounts for <unk>, while maintaining underwriting and pricing discipline.
We also continued to incrementally expand the product line.
One new segment, we are developing is ensure tech underwriting, which looks to capitalize on new distribution sources and insure tech space.
<unk>.
This is a natural fit for us as it allows us to further exploit the advantages we have in technology.
We are also expanding our offerings with our new commercial auto segment, our aviation segment as well as our.
On expanding our new entertainment segment.
As for rates, we are still pushing them up in response to market conditions.
Space as a reminder, we are a very heterogenous book of business, which complicates, reducing all the rate movement to one single number but that all has said we see rates being up in the low teens range in the aggregate during the quarter.
Even beyond getting pure rate, we are tightening terms and conditions, which should contribute even more to the bottom line and with that I'll hand, it back over to Michael.
Thank you Brian.
Operator, we're now ready for any questions.
They come in.
At this time I would like to remind everyone in order to ask a question. Please press star followed by the number one on your telephone keypad and we'll pause for just a moment, while we compile the Q&A roster.
And our first question comes from the line of Jeff Schmitt with William Blair Go ahead. Please your line is open.
Hi, good morning.
Was just wondering how submission activity is looking so far just in the first couple of months here of 2021 and given the comparisons are going.
To be tougher.
For this year are you seeing that slow down.
Yes, I mean normally we kind of like to focus on the on the.
The quarter, we just concluded where we're kind of early days.
Q1, but I would say probably not a material departure from Q4.
Okay.
And then the underlying loss ratio it sounds like it was down a little bit on you referenced.
Activity being down just during the pandemic.
Just thinking about that differential in June.
Rates versus loss cost trends, it's pretty it's pretty.
Large there.
Do you expect that to come down quite a bit more.
Jeff we think.
The best way to look at the accident year loss ratio is over the course of the.
The year versus the quarter.
There and I think if you if you look at the press release, we went from 62, 1% ex cat accident year loss ratio in 2019, it dropped to 61 five.
A couple of things I would like to reiterate in terms of loss reserving is.
Number one we strive to be very cautious.
And conservative.
It is a.
Really a fundamental part of our management strategy is to post reserves that are likely to develop favorably over time.
On the other thing is that hey, we are getting some significant rate increases and have been for some time.
That's obviously.
Allowing us to expand our margins.
Some of that I think you see in that in that.
No.
Six tenths of a point lowering of the accident year loss ratio. Some of it is showing up in more conservatism in the loss reserves.
But clearly there is a lot of companies that have.
<unk> been coming out with adverse development lately and obviously, we are striving to make sure that.
We're not we're not ever going to be in that camp.
Right right, yes, that's what I meant on that annual basis.
On that differential so large it just seems it seems like.
Yes.
Like you said you're being conservative there.
Okay.
That's all I had thanks.
You bet.
Yeah.
Our next question comes from the line of Mark Hughes with Truest go ahead. Please your line is open.
Yes, thanks, good morning.
More on Mark.
What would the debt.
Brian the submission.
References for Q4 versus Q3, I didn't pick that up what did you say.
We were in.
Especially growth rate is on the mid I'm, sorry, the upper teens in the fourth quarter on the mid Twenty's in the third quarter.
Okay.
And then the.
Courts being closed what has that meant in terms of development on older claims.
Hello to down no impact.
What's the effect of that.
Yeah.
Mark This is Mike.
We actually and I think this is true across the industry.
We only try a small percentage of our cases go to trial.
To be resolved.
But the slowdown in the court system. The court system, a lot of times acts as a catalyst for.
Mandatory settlement conferences.
He patients and the like so.
The fact that a lot of course have been closed now.
Either in whole or in part for almost a year has clearly impacted kind of the claims.
System overall and.
You know we've seen that in this drop off.
Often reported losses. It involves 2020 accident year on some of the prior years as well I think the question is.
As I commented earlier, Hey is there a bounce back where you know you go through a catch up period as the courts reopen or hey, maybe just some accidents never took place.
Meeting changes in People's behavior, given the lockdown across the.
The economy and.
So.
We just want to reassure our investors that hey, we always take the conservative approach, we're assuming that those losses are going to bounce back. So we've reserved as though there is no slowdown and then hey, if there's good news day.
Hey on the road and that'll be that'll be fun too to announce.
Sure.
And then how do you feel about the.
Kind of cycle, where we sit now I think you said perhaps on television.
For the next year or so when things normalize.
I think <unk> been pretty good.
<unk>.
Our balance.
Because.
Timeline for.
How do you feel about it for the.
I think we feel you know.
We haven't changed our minds right I mean, you know.
We grew at almost 34% in Q4, that's an extraordinary growth rate.
At some point that's going on obviously normalized there is a lot of new capital coming into the industry, but as you see from a lot of these.
Announcements of other companies around the industry.
There's a lot of distress out there that people are trying to work through and interest takes some time so.
At some point that new capital.
Overwhelms the distress.
And you get a more normalized competitive market.
You know, we feel pretty optimistic about 2021.
Beyond that it gets it gets fairly speculative.
Yeah, Yeah, Hi, Bob from net expense ratio standpoint.
<unk>, a little bit sequentially this quarter, but on.
Obviously, you're getting very good top line growth and getting leverage.
How do you think that shapes out in 'twenty until they want.
Markets Bryan Petrucelli.
I think from an expense ratio standpoint, I wouldn't expect much of a change obviously.
Okay.
With premium growth you do get some economies of scale, but I wouldn't expect.
Any significant deviation from what Youre seeing.
It's going to bounce around a little bit from quarter to quarter, but.
I think I think if you look at what we've done over the past year, that's a pretty good guidance.
That's a good one more if I might just.
Anything on the cat losses this quarter.
The.
Clearly Q3 was much larger but for Q4 you had the.
Cat losses that were higher than your nor anything about the geography or.
Okay.
Really lines of business, where you were affected there any changes.
You might have made given the experience in the second half for <unk> only.
Mark It's Mike.
We haven't changed our strategy around natural catastrophe risk.
We like the business.
As we approach it in a conservative fashion.
In terms of did you ask about the first quarter activity.
No no I was just.
Curious for acute well if you want to stay for other tier one on all the years.
I was thinking about the Q for Q3.
Yeah.
If there is any dip.
A different complexion to the cat losses.
Yeah, no. It's a similar strategy, we're very conservative in how we manage the risk because it's quite volatile.
Historically, the margins have been pretty compelling right. So we're trying to balance the return prospects with.
Making sure we match.
Managed the volatility appropriately.
So really no changes obviously the.
There was a couple straggler storms in Q4 Delta on data I think and so.
That's where you see a little bit about.
On a cat activity there.
In.
Okay.
Thank you very much you bet.
Net.
Our next question comes from the line of Mike Carlotti with J M. P. Go ahead. Please your line is open.
Hey, Thanks, good morning.
Jeff and Mark covered most of what I had but Michael.
Was hoping I could ask you to expand on a on a comment you had there and in your answer to one of the prior questions you know referencing kind of new capital coming into the market.
Are you.
We've seen all the announcements of new capital in and I think everybody realizes some of that's in the DNA E&S space broadly can.
Can you can you give us a little more color on what you are seeing.
On the finance your pocket of E&S market being a bit smaller limit and then obviously your guide.
Leveraging your <unk>.
Quick broker service and technology and so forth is it elsewhere E&S are you seeing it a bit directly.
I would say, we're really not seeing any kind of dramatic impact in the market as of today right. So when.
When we talk about new capital, it's mostly things we're reading about in the trade press.
We're different.
<unk> on our new companies are raising billions of dollars some of which will go into the reinsurance market. Some of it clearly will end up in the E&S market and eventually paid Newcastle.
On the invitation.
Shifting to the balance between supply and demand and inevitably it will affect us mostly in terms of the growth rate, but as of today you know I think you're hearing a continued sense of optimism.
Okay, great. Thank you.
Yes.
Our next question comes from the line of Colin Ducharme with Sterling Capital Go ahead. Please your line is open hi, good.
Morning, Thanks for the question and I appreciate the solid results in Q4 here just a couple of quick housekeeping items upfront.
Mike I was interested in your headquarter update there 95% of employees on site that sounds great can you.
Give us a little color in terms of the.
The advantages that that now gives you inferred a little kind of speed to market there, but maybe if you could just offer some color on what hindrances you were facing in a remote environment and now what you advantages gained in the in person environment today versus where some of your peers.
Promote space might still be facing and then I've got a couple of follow ups.
Okay.
Let's say first of all you know when the pandemic struck you know that's probably 90 plus percent of our employees were working remotely.
We clearly have the flexibility in terms of our system and whatnot to accommodate that.
Just that.
That you know.
We're a company that's in a period of rapid growth. So as you can expect we're hiring.
Uh huh.
On a regular basis underwriters.
Claims examiners.
Expanded dramatically I think our I T shop over the quarters for the last year or so.
So a part of.
<unk>.
Debt Onboarding of new employees as training right because you hire some employees that are new to the industry, but a lot of it is getting employees familiar with our business culture.
How we operate and it's very challenging to do that when everybody is working by themselves.
And so okay.
It made sense for eight or 10 months, if you will to have people working remotely.
And I think we've worked hard to make sure people remain productive.
But it also makes sense to me.
Move people back to the arrangement, we have today theres probably about.
About a 5%.
The word of employees for a variety of medical reasons and alike that are continuing to work remotely and net and that works fine but in general.
Big believers in.
Having the team here in one location where.
The training the on boarding the communication.
<unk> had its best I would say can sale.
Far and away maintains the best service standards with our brokers I mean, not hear that constantly we turn quotes around very quickly.
We ask a lot of our employees and I think we tend to pay better than our competitors here in town as a consequence.
And I.
I think that's a material part of our success as a business for.
<unk>, a good customer service experience to our to our brokers so having people back in the office.
I think long term.
<unk> facilitates that as well.
Okay. Thanks, and then in terms of pricing if you could offer some color.
Regarding the relative pricing position kinsale.
It is now seeing in the market versus peers and so we've seen from other peers, who have already reported and also on trade press continued rate increases elsewhere I don't know if you're experiencing an improved pricing umbrella as peers have continued to kind of.
Straight up and so if you've got some anecdotal color or perhaps more quantitatively on our buying to quote percentage how that differential has trended through time.
What's the relative positioning how has that trended for kinsale.
Yeah. This is Brian Haney.
So we are seeing.
No.
Push duration phases, it's gradual but that's been going on for a long time out on the fourth quarter continued on.
Despite all the other stuff going on.
I would say generally when you look at industry commentary or industry surveys on rates. What we're seeing is consistent with them I think for the extent that we're getting better.
Moving on to submit.
Numbers, it's through at.
Our customer service.
From that angle rather than through.
On top.
For a more competitive posture with regards to range.
Sorry.
History is pushing on price, we were pushing on price with them and then making up.
Our productivity and efficiency.
Okay. Thanks, and then just cleaning up last couple of items here kind of more forward looking just in thinking about how to properly kind of.
View, the next 12 or so months.
If you could comment on the Midwest weather events I'm assuming.
Down the down the middle of the fairway in terms of exposures.
And how you think of the in force book and then perhaps longer term when we start to think about eco data beginning to improve and.
Domestic recovery.
Taking hold if you could just talk about embedded potential.
It's still within your in force book and what I'm trying to articulate here is you know as you go through and do perhaps policy audits with.
Smbs with which you have exposure to the extent they are experiencing a snap back in revenues and perhaps your exposure units are greater than you initially underwrote.
<unk>.
Is there a chance in your in force book that you've got an embedded.
<unk>.
Right tailwind.
That can take hold as the economy recovers I hope I'm articulating that well thank you.
This is Mike I'll start.
<unk>.
At the Midwest cash I think you're referencing kind of the.
The cold wave in the power disruption in Texas.
<unk>.
There are some industry headlines, there's some trade press articles, saying that the industry loss could parallel hurricane Harvey from a number of years ago.
Which clearly it looks like it will I would say it should be much less material for kinsale.
We don't expect an enormous flow.
So a claims from that I'm sure there'll be some but shouldnt be that material for us and then in terms of.
The impact.
Economic growth on our thoughts on that I think youre, absolutely spot on Colin I think that.
There is some pent up economic activity I was talking about is going to result in at some point down the road increase on it and an increased revenue and exposure on at all so there's solid growth for going to get just for on Whatsapp.
It's on a contractor.
Who maybe had his sales go down 25% during the pandemic.
<unk>.
On 25 per cent for 30% or whatever on and there should always be some growth that we got in just five weeks from described because most of our exposure bases are related to revenue.
Like items.
Thank you.
Our next question comes from the line of Scott <unk> with RBC capital markets. Go ahead. Please your line is open.
Yes, good morning, I Wonder if you could talk about the you mentioned some of the product offering.
Expansion aviation product.
Commercial auto Entertainment I Wonder if you could comment a little more on that and how that's going to.
Impact your growth rate in terms of.
Is that you're going to be able to maintain.
Kind of a similar growth rate that you saw maybe not necessarily in the.
The past few quarters, but maybe in the fourth.
Quarter, so somewhere in the 2030% growth rate or more.
And how much of that is going to be through.
New product expansion or a distribution expansion.
Yes, I would say that.
Any.
New product offerings for any product expenses together all of our incremental we're not trying to corner the market.
Market, a long time, so I wouldn't expect new products right out of the day really affect growth rate kind of in the near term. It's really for the long term, we're sending it out we want to be able to compete down the road.
These things take off slowly.
Is that we're completely on account of that.
The short answer is if youre looking.
So the impact like next quarter for it for right now I don't think aviation or entertainment on these other segments are going to materially move the needle years down the road probably on.
Okay.
Fair and then you've highlighted really I'd say pretty much all year, how you've taken the opportunity to just from the terms and conditions.
<unk>.
And how that's helped your margin so I wonder if you could just give us a few examples of.
Some of the biggest shifts you've seen as it limits or deductibles or exclusions and are you kind of how that's evolved over the past few quarters and how that's.
How that sort of benefited you.
Yeah, I would say.
Definitely.
We have restricted our use of higher limits. So basically on the capital on a $10 million or a limit on how theyre getting a five 5 million on element two and a half.
Definitely adding sub limits were.
Where we have exclusions were tightening the wording to make them even.
Stricter.
And then we're just adding your exclusions because we counted on.
And then other areas might be more frequent use of deductibles.
We have two principal covered coverage triggers we use the occurrence trigger is broader than the claims made.
Not to get too technical here on an investor call, but.
We're pushing the more restrictive on the two which gives us more certainty over the development of claims on the long haul but.
There's a lot of things debt in a more favorable market environment were able to negotiate terms that are a little bit more favorable.
To us the risk there.
Okay. That's good detail and then the last one on how we just on the day net premium retention ratio. So net written premiums.
As a percent of gross premiums.
So it was a it was up a little bit year over year on the first half of 'twenty and down a little bit year over year in second half 'twenty.
<unk>.
Any sense of where that might fall for 2021, and any expectations that well.
You will see any any shifts in reinsurance treaties that might impact up for the year.
Yes.
I think what you're seeing.
Really is.
Mix of business is going to drive that so.
We've had a tremendous increase in our commercial property book and our excess casualty book debt.
It's subject to reinsurance so I.
I think youre seeing retention react to that I think going forward.
I was going to bounce around a little bit.
Depending on on.
On mix a bit.
But I think if you if you use where we are here on the fourth quarter for our guide here for the next six six months or years probably on.
Probably as good as <unk>.
Hardly a good guidance.
Okay. Thanks for the answers best of luck.
Our next question comes from the line of Casey Alexander with Compass Point go ahead. Please your line is open.
Yes, hi, good morning.
Thanks for taking my question most of my questions have been asked and answered, but I would ask Brian.
Brian do you have a reasonable tax rate to go.
Going forward to use for modeling purposes.
Yes, so obviously for our 21% statutory taxpayer.
And.
When we when we went public in 2016.
We issued our options at that point.
The last tranche of investing this year, so I would expect to see fewer of those.
Key exercise going forward. They are there are still a fair amount outstanding but.
On.
You Shouldnt see as much of an impact going forward as he gave you on the fourth quarter.
I think for our guidance long term.
17, 5% to 18 is probably a good guide.
Alright, great. Thank you.
My only remaining question. So thanks for taking my question.
Okay.
And ladies and gentlemen, as a reminder, if you'd like.
Your question. Please press star followed by the number one on your telephone keypad. Our next question comes from the line of Ron Baughman with capital returns go ahead. Please your line is open.
Hi, Thanks, and congrats on the continued fabulous results.
Almost all of the questions I had in mind.
<unk>.
To ask but I would be curious, Mike you talked about the current weather and losses.
And the conversation about it being a little bit.
Sized.
In the Harvey neighborhood.
I imagine that.
Net youre speaking to.
Yeah.
Chicken sales exposure to be.
Not all that significant I guess it because your book is principally predominantly casualty book.
But I was wondering if I could sort of test your knowledge for.
Those companies debt write E&S property.
Is E&S property.
We just want to say like exposed to this event as admitted property or would be in E&S property writer via a little bit less exposed whether it be because of coverage terms or deductibles would you would you hazard a guess as to sort of the relative vulnerability to this event for.
For that type of writer and again I know.
You guys dominate your book with casualty business.
On the.
The modest or insignificant exposure that you referenced.
Yeah, I think for the industry, it's significant I think it's significant for the admitted companies and.
And the E&S companies you've got.
Coastal exposure along the Gulf you've got.
Rail is a big issue in the Dallas area, a lot of E. N S. Homeowners is written up there.
And then you know Texas is.
<unk>.
It's a big E&S state anyway right.
There's plenty of VNS.
Pleasure I just think for Kinsale.
It's early days, we don't know definitively, but I suspect.
Whatever the problem is for the industry, it's gonna be considerably lighter than it for us it can sale just because of our strategy.
Okay.
The thing I'd add is Mike you said that if when the courts reopened.
<unk> and the debt.
Plumbing sort of gets on club that if the losses don't come in and it'll be fun to report that good news, having put up on an 81 combined.
I would think that you'd be plenty of fun reporting today. These results so keen.
Congrats but I don't know maybe it's for.
It will be fun or if that happened but.
Standing outstanding Operation and report results.
Yeah.
Thanks, Rob appreciate it.
Yeah.
Our next question comes from the line of Heather Takahashi with thriving.
Please your line is open.
Hi, guys.
Yes.
Good morning, a couple of on a question.
You mentioned in your opening remarks that you would've been.
Been hit by the closures and New York and California in.
Go on as the premium growth in the quarter do you have a sense of what it would have been you know very very roughly if it hadn't been for the Covid lockdowns.
Non operating.
I can just tell you that the we write a lot of construction business and we ran a lot of on premises related business from those would have.
In terms of.
Most affected.
It would be tough to debt.
We had material impacts from day one.
Okay. Okay. Okay.
Okay and then.
Another question, you mentioned that youre expanding into ensure cat underwriting could you talk.
A bit more about that.
So there's a lot of new debt.
Our non traditional brokers, but really sort of fulfill a roll on distribution.
And they saw themselves as insurance on the road of technology companies.
And we're.
We're creating a unit whose job.
Is to distribute through the sources.
Just the way, we will distribute for wholesale and.
The raise we're creating a separate unit for us because it's going to have to be a different set of processes much more text intensive as much lighter human touch.
But basically the same type of business still E&S still smaller.
Small and medium size accounts still controlling underwriting on the pricing, it's just throw there for cloud.
Okay. So it's just a.
The distribution is different same business through a different distribution channel.
Yeah.
Great. Thank you.
Thanks for that.
And there are no further questions at this time I would like to turn the call back over to Mr. Koo.
Okay well.
Just want to thank everybody for participating today, and we look forward to.
Speaking with you again here in at the end of the first quarter have a great day.
Ladies and gentlemen, this concludes today's conference call.
Call you may now disconnect.
[music].