Q3 2021 W R Berkley Corp Earnings Call
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Good day and welcome to W. R. Berkley Berkley Corporation third quarter 2021 earnings Conference call Today's conference call is being recorded.
Beakers 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 the future plans estimates or expectations.
Expectations contemplated by Us will.
I could be achieved.
Please refer to our annual report on Form 10-K for the year ended December 31, 2020, 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.
Thank you very much and good afternoon.
Thanks for joining for our third quarter call.
So in addition to me on this end of the phone you also have bill Berkley, our executive chair as well as Richard <unk> Executive Vice President and Chief Financial Officer.
We are going to follow our typical agenda, where in a couple of moments I'm going to hand, it over to rich she's going to walk us through.
The highlights from the quarter I will follow him with a couple of brief soundbites or reflections and then in pretty short order, we will open it up for Q&A and happy to take the conversation in any direction, where people would like to.
But before I hand, the mic to rich.
I did want to flag with with folks.
One sort of macro observation.
We were chatting internally earlier and how it seems like the.
The quarterly calls oftentimes turn into and every 90 day session talking about certain.
Numbers, which oftentimes go out a certain number of basis points.
And while those discussions are worthwhile and productive from our perspective. It's also important that people not lose sight of the macro and that is something that we spend a lot of time.
Every day thinking about and that is.
What is the goal of the exercise what we are trying to do and.
And clearly one of the cornerstone gold is building book value.
Building book value is an important thing for a whole host of reasons, including building book value allows the organization.
Live up or meet the needs of.
With various stakeholders.
When we think about building book value. We approach. It was an idea that we will refer to as risk adjusted return that many of you have heard us talk about in the past.
We take this approach and apply it to both are investing as well as our underwriting.
Of <unk>.
And while you probably hear more company has been not in their own words talked about these concepts I think one of the different differentiating excuse me ways that we approach. This idea is how we think about volatility as a component of risk.
And again this is something that we've discussed in the past, but I think it's particularly timely particularly relevant.
When we have a quarter for the industry for society like we saw in Q3.
Yeah.
This idea of volatility as a component of risk adjusted.
In return, we certainly grapple with both the investing and underwriting side of the business.
You can see it on the investment side for example, and how we have thought about duration.
And how we have been willing to keep our duration short and even though that comes at a cost we do not think the.
Adjusted adjusted return is there to justify.
Going out on the curve and extending that duration, we do not believe you get paid enough for that potential risk.
In addition to that again as it once again crystallized in the third quarter when we think.
Risk underwriting activities.
And we think about volatility as a component of risk.
Clearly the industry is feeling the challenges that come along with cat activity.
From our perspective cat activity is there on a regular basis.
And why people.
About the back it out on a regular basis doesn't make a whole lot of sense to us.
Yeah.
Our view is that volatility is real it is a real component of risks.
When we think about running the business.
It is of great priority to us.
As to how we think about <unk>.
Deploying capital.
So I'm going to pause there, but before I do I guess, one last comment.
I know that there are a lot of people that will look at our numbers and then rich will walk you through it and you'll do the math and you'll come up with an ex cat accident year loss ratio in.
What does that mean it is on a combined ratio and that will probably get you to approximately an $86 nine.
But from our perspective, if one chooses to slip off the rose colored glasses for a moment we.
We generated a 94.
That is reality.
From our perspective.
But in spite of the cats.
And the impact we did achieve a very healthy underwriting results.
And in the process, we achieved a 16, 6% return on equity.
Ultimately when one thinks about building book value.
You can't just think about.
Steps forward that you take you need to think about how you avoid the steps backwards.
And when you think about compounding book value over an extended period of time.
When do you think about value creation for shareholders amongst other stakeholders.
Not taking those steps backwards.
This is a big part of the puzzle.
So with that rich I'll hand, it over to you if you would please.
Walk us through.
Terrific, Rob Thanks, very much and good afternoon, everyone.
Yeah.
Operating income increased by more than 100% to $247 million.
$1 32 per share, which is compared with $121 million or <unk> 65 per share.
The increase was primarily attributable to strong underwriting results.
Net investment income and foreign currency gains.
The company built upon a strong first half of the year.
So can you had growth in premium and expansion in underwriting profits.
From a production perspective gross premiums written grew by $525 million or 23, 2% to a record of almost $2 $8 billion.
Net premiums written grew by $446 million or 23.
With 7% to.
To another record of more than $2.3 billion.
The session rate was fairly consistent at 16, 6% in the current quarter.
Breaking down the results further the insurance segment grew net premiums written by 23, 3% to more than 2 billion.
Three point, reflecting increases in all lines of business.
<unk> liability led this growth with 58, 7% followed by commercial auto of 28, 1%.
Other liability of 25, 3% short tail lines of eight 6% and workers' compensation.
And of seven 7%.
The reinsurance <unk> Monoline excess segment grew 26, 7% to $318 million with an increase in casualty reinsurance of 36% and monoline excess of 27, 4%.
Partially offset by a small decline.
Sensation property reinsurance of one 4%.
The increase in net premiums written on a year to date basis with more than 20%, resulting from growth in exposure and compounding rate improvements that will continue to earn through in the coming quarters. This was evidenced by the increase in net premiums earned of 19%.
Klein in the current quarter.
Included in the quarter were current accident year.
Catastrophe losses of $74 million or three and a half loss ratio points compared with $73 million or four two loss ratio points in the prior year.
As a result quarterly underwriting profits increased 80.
<unk> to $200 million slightly off the record quarterly underwriting results in the second quarter of this year.
The reported loss ratio improved one three loss ratio points to 62, 4% from the prior year, primarily driven by rate improvement in business mix.
Prior year loss.
Percent developed favorably by approximately $1.5 million in the current quarter.
The expense ratio improved two points to 28% in large part due to the gross and net premiums earned which is outpacing underwriting expenses by approximately seven 5%.
This improvement.
Reserve and from an operating cost as well as acquisition cost perspective, we continue to highlight the partial benefit from reduced travel and entertainment, which is slowly coming back.
Closing out the underwriting performance our current accident year combined ratio, excluding catastrophes was 86, 9%.
<unk> for the quarter compared with 89, 8% for the prior year quarter.
Turning to investments net investment income increased 26, 1% to $180 million driven by strong results in investment funds the.
A significant contribution and investment funds represents III.
Does that have a decorative quarters of outperformance and we feel it's important to highlight that the investment fund results are not necessarily representative of future earnings.
Despite the ongoing growth in invested assets the fixed maturity portfolio represents 69% of the total invested assets and the associated investment income.
<unk> declined quarter over quarter due to the persistent low interest rate environment.
Strong operating cash flows of more than $825 million in the quarter contributed to the increased cash and cash equivalents as of September 30th.
This resulted in a slightly shorter duration of two three.
<unk> in the current quarter compared with 2.4 years in the second quarter.
The credit quality of the fixed maturity portfolio remains high at double a minus.
Pre tax net investment gains in the quarter of $20 million is primarily comprised of realized gains on investments of $36 million.
Three year offset by a reduction in unrealized gains on equity securities of $19 million.
The realized gains was largely driven by the sale of real estate properties in the southeast.
The effective tax rate was 19, 6% in the quarter, which largely benefited from equity based compensation that predominant.
Partially only vest.
<unk> in August of each year.
Overall strong performance resulted in annualized return on beginning of your equity of 16, 6% as Rob alluded to him.
Stockholders' equity increased by $70 million to approximately $6 $6 billion in the quarter after.
Monocular dividends of $23 million and share repurchases of $93 million.
The company repurchased approximately one 3 million shares at an average price of $72.03 per share in the quarter.
Book value per share increased one 5% in the quarter.
After value per share before dividends and share repurchases increased two 5%.
And with that I'll turn it back to Rob.
Rich thank you very much.
Very clear very helpful.
A couple of quick thoughts from for me.
On Rich's comments.
Well <unk>.
And book value by virtually any measure.
Pretty.
A pretty attractive and healthy quarter topline bottomline and pretty much everything in between the two bookends.
Far as the topline grows obviously the growth just shy of a 24% Richie and I, we're doing a little bit of math together earlier when you.
Started back growth.
Just shy of 40% of the growth is coming from rate.
About 59% is coming in some form of exposure, whether its new policies or auto premiums or whatever and then theres a de minimis amount coming from some some other stuff.
Okay.
You think of a good moment.
For the P&C space quite frankly excess ex most of the workers comp market, which continues to feel a bit of a growing headwind.
Obviously property felt some pain in the quarter, but just general market conditions.
Reasonably.
It's very active.
And we don't see that trend changing.
More specifically it is a good moment for specialty writers, particularly casualty related specialty writers and even more so the E&S market. We continue to see a growing flow of opportunities both in specialty and even.
Okay. So in E&S and there's nothing that leads us to believe that that tide is going to reverse anytime soon so that's definitely encouraging on the loss side, we're trying to be thoughtful and measured as we've discussed in the past you know clearly there is inflation out there we spent.
Years talking about social inflation is still there a fair amount or at least through our lens and in addition to the realities of financial inflation.
Clearly are having an impact on loss costs and those are two very leveraged assumptions. So when we look at our book, we believe the rate increases.
Even more of a getting and virtually all P&C lines with the exception of workers' comp are outpacing trend, we are paying close attention to trends and as suggested a moment or two ago trying to be very thoughtful and measured around that.
On the expense side rich pretty much covered it.
But I would just sort of take a half a paste back for those that have followed the company for some period of time. So this is an organization where we have not made many acquisitions, we have been much more of a subscriber to the de Novo model. We have started 47 of the 54 operating units from scratch some of those business.
Businesses have not gotten to a critical math and but they are on their way to getting to critical mass and a tailwind as far as market conditions is allowing that to happen. So when you look at the leverage that we're getting on the expense ratio as that earned premium continues to build a lot of that is yes market conditions, which.
Some of our more mature businesses to scale, but it's also some of our smaller operations that are now seeing the window of opportunity to put more meat on the bones.
Not much to add.
Investment portfolio, obviously, the duration as I had referenced in rich covered is sitting there at 2.3 book.
Yield is about $2 three comes at a cost to have that discipline and to have that optionality going forward from our perspective inflation is here it's real.
And there's likely for it to be around for some period of time.
I think I am going to pause there.
And I will say that a couple of comments for the tail end, but actually before I do that since most people after the Q&A just hang up I will.
Again.
Make the comment that when we not just look at our results, but when we look at the front windshield. There is really nothing that we see in front.
Sure.
That is going to derail the momentum that we are enjoying today, it's a cyclical business. This will not go on forever, but for the moment the momentum continues.
One five.
Finally stop there and let's see what the participants would like to talk about.
[noise].
If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad if.
If you would like to try your question again press Star one we'll pause for just a moment to compile the Q&A roster.
Okay.
Yeah.
Your first question comes from the line of Elyse Greenspan with Wells Fargo. Your line is open.
Good afternoon.
Thanks, Good afternoon as well Mike.
Great question.
Wait.
<unk> bye.
Your level of rate increases.
Oh, My gosh, it could go up a little bit in the quarter.
I'm, assuming maybe that was just one kind of big.
Next between the Q2 into Q3, but anything changing on what youre seeing on the pricing environment in any business lines in the quarter.
I think it well, obviously mix is always a bit of.
The important I would tell you it has more to do with what the market will bear.
And we are continuing to try and make sure that.
As we price our product that is appropriately priced for our needs in.
Quite frankly, there was.
Just more opportunity to push the rates.
Okay. That's helpful and then EMEA.
Thanks, Rachel So two questions. One on you mentioned that the Covid benefit is.
If you could just give us a sense of.
What it was in the quarter and then the second question.
You might get to the leverage from the quality.
The expense ratio continues to trend down on its pretty good leverage there every quarter. So can you just help us think about kind of a run rate basis.
Given.
That strong 28%.
So.
As we.
<unk> entered in the past the benefit if you will from Covid on the.
Expense ratio was probably worth somewhere between 40 and 50 basis points.
Things are starting to open back up people are starting to travel.
And we have a 40 or 50 basis points that we saw.
Earlier this year than last.
Comment is probably now down to I don't know call it 30 basis points or so.
That will probably over time.
Juice from here, but you know the earned premium continues to grow so what do we think the expense ratio is going to be going forward will we be.
Year to sustain a 28, okay. It's a cyclical business and we continue to try and operate in.
<unk> is the opportunity that's in front of us at.
At the same time at some point.
And we will shift direction and being the disciplined underwriting operation that we are that our top.
Are you able to at some point start to shrink in the expense ratio will go the other way. So do I think that you should I'm not going to tell you what number two pencil in but I would tell you that if you look at our written premium you should be able to extrapolate where our earned premium is going and that should give you a good sense as to how.
You might want to think about expenses.
Okay. Thanks appreciate the color thanks for the questions.
Your next question comes from the line of Mike Zaremski with Wolfe Research. Your line is open Hi, Mike.
Good afternoon.
Hey, good afternoon.
One man.
I guess, just going back to the expense ratio.
Is it kind of feels like not too long ago. It was in the low thirties and so yeah.
It's been a.
Improved a lot.
I guess, sometimes investors will say you know they feel like they want to discount the expense ratio.
The cyclicality of the business, but I think you also kind of spoke to a lot of kind of structural elements that could kind of permanently help the expense ratio. So they get a.
Maybe if possible what like a 100000 foot level.
If we ever did go back into kind of a softer market with you kind of expect a lot of give back or.
And I think you know how much is this because it's kind of run ratable beyond just thinking about a year or so from now given market conditions are excellent.
Nobody knows for sure exactly how that's going to pan out, but I think we have a lot of headroom between where we are now and going above 30.
From.
Our perspective, we're going to continue to try and be diligent around efficiencies and costs.
But I don't think anyone has an expectation that the group is going to go back to the range that you had referenced from an expense ratio perspective.
That's helpful.
Maybe switching there Mike.
And additionally to that I do find it.
Interesting and quite frankly, a little bit bizarre that people discounts.
Expense ratio because quite frankly that is real that is tangible loss ratios.
We know that reality.
<unk> overtime, but the idea that an expense ratio doesn't count.
Yeah.
But this strikes me as a little bit odd so I don't know whoever suggesting that you could tell them I respectfully disagree I suspect those people probably back out attached to them.
Yeah.
Appreciate it.
Clearly they are expense leverage is it's created a lot of shareholder value.
<unk> gears to.
Loss expense inflation I know there's.
A lot of different business lines that maybe.
You could paint a broad brush, if we think kind of on the casualty side.
We continue to hear that there's kind of a lull in the court system and.
We are hearing seeing data points about less.
Lawsuits and even some of the settlements not being.
As large as thought but maybe that's.
We know those are anecdotes, so any changes or anything youre seeing.
That's changing your view on on.
On loss trend on the casualty side.
I think that one needs to be very mindful around how they think about loss trend I think it's a pretty foggy picture at this moment in time.
Time between.
The inflationary the inflationary environment, where in both social and financial and then of course, you have the COVID-19 situation that muddies the water as you referred to.
How much of the reduction in frequency.
Is real versus just a delay how much of it is permanent.
And we will be.
Reality prospectively I don't think anyone knows for sure.
I think that there are some people that may be susceptible to possibly declaring victory prematurely.
I don't think we know for sure how much is.
Still hanging out there.
We as an organization are trying to be very thoughtful about it.
Things for them.
Fortunately it will prove to be that we were there.
We were cautious.
If it <unk>.
Proves that no there was just a pinch point and there is so big.
A surge of claims activity.
We will be prepared.
And maybe as a quick follow up any thoughts on the on the property side. It feels like this is yet another year of slightly higher or maybe not slightly for certain companies.
Expected.
Property losses.
To come as the tone changing in the marketplace that are the models that the risk miles, which not probably think theyre inherently wrong.
But they are they kind of tweaking up the the risk style.
Thank you.
I think the.
I would assume the most marketable.
<unk> participants.
Looking at their loss cost, particularly around property.
And should be actively thinking about back to the comments earlier in the call there are risk adjusted return.
And while it's very easy to do the math and to back the cash out.
I think when all of a sudden you start to really reflect on one of your points a moment ago the frequency of cat activity.
Not so clear that one should be backing them out.
And when they think about how they.
Rice their business what is an appropriate rate.
I think they need to think about this frequency.
Quincy observation that you're referencing I think it's a really important point that you raise.
Thank you.
Your next question comes from the line of Ryan Tunis with Autonomous Research. Your line is open.
Good afternoon, Dan.
Hey, How's it going.
First question just following up I guess on what you just said.
Within a short tail lines, Rob would you anticipate.
Uh huh.
I guess lowering your exposure to cat expose lines over the next 12 months or so.
Is that your expectation even less cat risk.
No not necessarily I think as a clumsy way I tried to allude to earlier in the call. We're all about risk adjusted return and quite frankly, we don't have a problem with volatility. If we think you are getting paid appropriately for it.
So if we see.
Pretty rates moving up to a level that we think is appropriate.
Then you will see us prepare to significantly grow that line.
Just as a data point or a point of reference Ryan Youll remember you've known us for some years. There was a time that we were shrinking the daylight.
Proud of our reinsurance business in general because the reinsurance market that didn't make any sense to us now as you can see we're growing it considerably. So we're able to have a toe and a lot of ponds with the idea that if the water temperature is right. We can put a lot more than that than a toe.
That water.
So look if property rates are.
A road from here, you'll see us write less and less if property rates improve dramatically from here.
<unk>, you'll see us take on more.
Got it.
And then.
And the one capital management.
It felt like the biggest buyback quarter, we've seen in some time and I went back and looked at.
Yeah. It was in the first half of 2020.
When you guys were buying back stock in a material way I mean can you just remind us what the thought process.
Is on.
When.
Hello, I decided to manage capital more aggressively from share repurchase what you were thinking in early 'twenty and why it looks like you.
We decided to pick that back up this quarter.
Hmm.
So let me leave that to.
And my boss to answer I might have a comment to the yen, but let me leave it up to him Hey, Ryan.
Ryan Ryan I think it's really a function of looking at how much capital, we're generating and how much we're going to use it.
And Oh, we start to look at what what's the value of the anchor price compared to what the stock is selling yet so whereas two years before 72 might not.
Seemed like the right price given our book value in a way.
It changes how it looks given where our book value was and what our returns were based on how we looked at things. So it's a constantly changing target and how much capital, we're generating more than we need them.
And frankly.
At the same time.
We we look at the relative price of the stock as to what we think of it in terms of the value going forward. So.
In this case, we got the.
Attractiveness of the stock price at a particular point.
Time was such.
And.
It's a constantly changing judgment and it's we are trying always to manage that we have the right appropriate amount of capital and we adjust that by dividends and buybacks and.
We do our best by making that assessment of the REIT.
Oh the capital in.
Unfortunately, it doesn't always.
So up the best and how people calculate the numbers no different than starting companies don't.
Frequently.
The best reported results well as opposed to buying them, but at the end.
Tangible book value as opposed to intangibles so.
For us it's okay.
Got it.
That's clear thanks, guys.
Thanks for the question Ryan.
Your next question comes from the line of Brian Meredith with UBS. Your line is open.
Thanks.
Hey, How're you doing.
I want to focus a little bit on the comp and the growth that you saw there I guess the first question is is that audit premiums coming through or is there kind of a change in your view of comp because it's just I remember a couple of quarters ago, you were a little concerned that as the economy opens up we may see a pop in frequency and that could.
The problematic for comp.
So the way that we're thinking about comp is the growth that you saw there is really just.
Payroll growth, if you will a combination of wages as well as people.
Coming back to work, we still find the market generally speaking.
Speaking to be.
Notably competitive and I think the hope that the market was going with the comp market was going to be firming by the end of this year or early next year is likely again through through our lens.
Getting pushed out a bit probably.
By 12 months, that's when we look at market conditions and trying to grapple with.
We are in the cycle.
And what's your view with respect to kind of loss trend in comp, but potentially it doesn't seem like it is the frequency situation, but could it could it be a problem here.
Yes.
We have been more concerned about the severity I think the frequency is generally speaking been a friend of the industry.
That having been said clearly frequency trend the improvement that you saw as a result of Covid was that.
Dissipating because people are back to.
To work.
The severity trend has been a bit more of of our concern and it remains a point of sensitivity and how we think about the product line.
Great and then one other just quick one.
Labor are you much of a player in that market and then what are your thoughts there.
We are a player we're very fortunate to have some exceptionally skilled people in the space and we think that it is a line of business that is heavily dependent on expertise.
And there are a lot of people that seem to want to play the game without the expertise.
And it's possible that could end in tears.
But that is not our approach and again, we we.
We do write it but we have great people, who control it very tightly.
Great. Thank you.
Thank you.
Your next question comes from the line of Meyer Shields with <unk>.
Your line is open.
Thanks, and good evening.
Hi, Martin Good evening Robin.
When you mentioned that workers compensation is becoming a growing headwind if I have it.
If I'm quoting you correctly when you're talking about this.
Pricing dynamic.
I think rates this can remain very competitive.
Competitive that was I guess, the overarching point and there was a moment in time.
What Brian was referring to when we had thought that the market may shift direction.
<unk>. This year early next year and again, our thought is that that will happen, but it's probably pushed out a year.
Okay.
So when we when you look across I don't know if it's year to date with the most recent quarter.
One of the things that's been relatively moderate so far it's been medical inflation.
Can you talk about what Youre seeing with regard to actual paid claims is is there any sign of inflection in medical inflation itself.
That's helped think that medical inflation.
Is.
Is a challenging area I think that there is maybe a.
Perhaps amongst some a false sense of comfort I think one of the things that happened during COVID-19 is that people in general whether it would be related to comp.
Comp or other health needs people were reluctant to go into.
Health related or medical related venues.
And as a result of that your people were not getting the care.
It is certainly possible you're going to see an uptick.
So if you forget about the insurance industry for a moment and you look at the parts of the healthcare industry. For example, the hospital industry you will see that there are.
A huge surge in patients and hospitals and they are coming in.
And worse condition than.
And they were pre Covid and a lot of that is not COVID-19 related directly per se. It's because people were not getting care or are they broke postponing the care and they are sicker. So I would suggest to you whether it's comp or health care in general you saw I think.
There is medical.
<unk> inflation I think pharma prices continued decline I think costs in general continued decline, but you need to separate out out actually the cost of care versus the volume.
Understood. Thank you very much.
Your.
Your next question comes from the line of Mark Dwelle with RBC capital markets. Your line is open.
Good afternoon, and good evening.
Yeah.
My first question.
Are there any are there any COVID-19 charges embedded within the catastrophe number you provided that is a number that I would like to.
Even if it's a if it's classified as a catastrophe.
Well Mark we certainly are hoping that COVID-19 has not event that as a recurring with the frequency that Nat cats are a rich I cant remember was it six or 7 million Bucks.
$6 million up six.
The Bakken Ducks.
So.
Was it there, yes, but in the scheme of.
Two point something billion dollars of earned premium it's definitely tapering off.
Yes, Greg.
The second question that I had is.
Again, just kind of a market.
<unk> question is.
We're still continuing to see a significant amount of business flow from the standard or admitted markets.
Towards the E&S market or is that.
<unk> begun to slow down or neutralize at this point.
No we're seeing it continue to accelerate it certainly.
$6 million more robust now than it was.
Without a doubt last year its more robust than it was in Q1 and that quite frankly is notably more robust than it wasn't Q2. So we're seeing that continue to accelerate.
Any particular lines or classes that are it seems more prevalent in or it's across the.
The cost of the gamma.
By and large it's across the gamut I would tell you that maybe certain aspects ironically of property may have slowed a little bit, but the liability lines remained turbocharged.
Thanks, very much I appreciate the color.
Thanks for the question.
Okay.
Your next question comes from the line of Josh Shanker with Bank of America.
Hi, John.
Good evening or good afternoon.
Just curious to learn a little bit more about the reinsurance monoline segment or the growth is.
So very very strong quarter and.
Given that it saw some unusual items in there, maybe regardless or detail about whats happening there.
Really it's primarily a reflection of the liability lines.
And the strength that we're seeing and the opportunities there on the treaty side and then we're also seeing some.
Sorry, I'm on the fax side, but they are both liability and property to a certain extent.
And can we extrapolate uncle.
Going back a quarter looking forward of course strengthen that it couldn't be stronger going forward.
Look I think we're gonna have to see.
How things shake out at one one.
And that will be very instructive as to how we should think about the reinsurance market going forward.
You know I think we commented.
In Q2 that our treaty colleagues and are applauding their discipline there are a couple of treat.
<unk> that they had decided to move away from them and that came through in the numbers earlier in the year.
You know without a doubt well we'll have to see.
How the reinsurance market takes shape or around one one I think clearly on the property front there was a bit of a wake up call and I think theres probably.
<unk> liability paying for the industry, particularly those that chose to grow in the what I would define as sort of 16 through 18 years, you know that there they probably have a handful right now and are maybe going to be thinking about rate a little differently.
On the reinsurance market is very one one.
Dependent but your Rune mountain segment doesn't seem to have that same kind of seasonality.
I'm sorry, Josh.
Could you just repeat it the the reinsurance market tends to be very what I beg your pardon 1111 dependent.
Yeah, I'm sorry, yes.
Hum modeling.
Segment. It doesn't have the same kind of seasonality. So I thought maybe you could give us a little education I'm like the fourth quarter, there's very little reinsurance for the industry in the fourth quarter, but you guys tend to write a good amount of it. So I was trying to figure out.
One one in bottom line stuff.
One is obviously a big date for the industry in general.
On the reinsurance market included I think over the years, that's sort of gotten spread out a bit but there continue to be certain dates that are our big ex dates I would tell you that you got to remember that some of the growth comes through over time through border rows. So we have certain estimates, but the way it comes through is through borders.
Time.
Alright. Thank you very much for clarification. Thanks for the question Josh have a good evening.
Okay.
Your next question comes from the line of Michael Phillips with Morgan Stanley. Your line is open.
Hi, Michael Good evening.
Good morning, good evening.
Okay.
One more on reinsurance quickly are there any notable changes.
And what you're accepting or demanding on just kind of the terms and conditions of the casualty reinsurance book in terms of the contracts you have maybe today versus say a year ago.
Anything worth noting.
I think my colleagues.
Have been in.
What needs to be very disciplined.
To their credit I don't think that they're accepting anything today.
Uh huh.
Wouldn't have accepted yesterday or vice versa.
I think what's happened is that the market is moving towards the position that my colleagues and their.
Continued discipline have taken.
So again I think they my colleagues are in the market every day in a manner that they think makes sense for the capital market moves away the market moves towards them as the market moved towards them, they're able to.
Participate in a greater way and Thats, what you see happening.
Just like that's what you see happening with our specialty and E&S businesses.
Do you see happening with all of our businesses. We are in the market every day in the manner that we think makes sense.
Market moves towards us as the market moves away from us and much of what we do the market is moving towards us right now.
Okay. Thank you.
Yes.
Underwriting I guess I'm just curious to hear how you think about you said, it's obviously cyclical business. This is not going to last forever.
Do you look for a bit in terms of things in advance to see for you to think that things might be turning a time for you to start backing away what things do you look for there.
Well.
I think that.
First off I would tell you that.
Through our lens, we don't think that that's something we're going to need to.
Be overly preoccupied with for some period of time, given the strength of the tailwind.
That having been said there are a whole host of things that we're looking at that.
Lead us to.
You have a view around rate adequacy impact, how we think about terms and conditions of course, we're looking at submission flow.
We're looking at hit ratios so.
Honestly all of our businesses have a variety of different data points that they use to triangulate off of to form a view of market conditions.
Okay, well, thank you very much.
Thank you for the question I have a good evening.
Okay.
At this time there are no further questions I would like to turn the call back over to the presenters.
Okay.
Thank you very much and for those that may actually still be on the call I would just tell you.
This is clearly one of those moments, where the planets and the stars for much of what we do are lined up this is a moment, where our expertise and our discipline is clearly paying off.
And the success that we have had to date and we'll continue to have is really a reflection.
<unk> of more than 6500 people all working together on behalf of our.
Various stakeholders in particular, our shareholders. So we.
We're very grateful for their efforts.
That's about it for US we will look forward to updating you in 90 days. Thank you for joining this evening.
This concludes today's.
Thanks, Carl you may now disconnect.
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