Selective Insurance Group Inc. Q1 2023 Earnings Call
Good day, everyone welcome to selective insurance group's first quarter 2023 earnings call.
At this time for opening remarks and introductions I.
I would like to turn the call over to Investor Relations Analyst Geely Chromebook.
Good morning.
Simulcasting this call on our website selective dot com replay is available until June 2nd.
These three measures to discuss our results and business operations.
First we use GAAP financial measures reported in our annual quarterly and current reports filed with the SEC.
Second we use non-GAAP operating measures, which we believe make it easier for investors to evaluate our insurance business.
non-GAAP operating income is net income available to common stockholders.
The after tax impact of net realized gains or losses on investments and unrealized gains or losses on equity securities.
non-GAAP operating return on common equity is non-GAAP operating income divided by average common stockholders' equity.
Adjusted book value per common share differs from book value per common share by the exclusion of total after tax unrealized gains and losses on investments included in accumulated other comprehensive loss.
GAAP reconciliations to any reference non-GAAP financial measures are in our supplemental investor package found on the investors page of our website.
Third we make statements and projections about our future performance. These are forward looking statements under the private Securities Litigation Reform Act of 1095, they are not guarantees of future performance and are subject to risks and uncertainties.
We discussed these risks and uncertainties and detail in our annual quarterly and current reports filed with the SEC.
We undertake no obligation to update or revise any forward looking statements.
Now I'll turn the call over to John <unk>, Our chairman of the Board President and Chief Executive Officer, who will be followed by Mark Wilcox, Our executive Vice President Chief Financial Officer and Charterer.
Thank you Haley.
Good morning, and thank you for joining us.
<unk> had an excellent start to the year the headline for the quarter is that we continue to deliver strong earnings and remain very well positioned to effectively navigate the economic uncertainty and elevated loss trends that our industry faces.
In the quarter, we had strong growth in all three insurance segments are all in combined ratio was $95 seven despite higher than expected catastrophe losses.
After tax net investment income was up 25% over Q1 2022.
Driven by active management of our core fixed income portfolio over the past few quarters.
And we produced a non-GAAP operating ROE of 14, 6% outperforming the 12% average we generated over the past nine years.
Let me provide some additional color on our top line growth in the quarter.
Net premiums written in our core business standard commercial lines grew 10%.
New business in this segment was up 15% as we continued finding opportunities within our traditional risk profile and pricing expectations.
Renewal premium change was a positive 12% is pure pricing increased by 7% and exposure was up four 7%.
Our standard commercial lines footprint has expanded by eight states over the past five years and that expansion contributed two points of overall growth in the quarter.
Our early success in these markets is driven by the unique operating model, we employ and the strength of the new distribution partnerships we established.
In addition to bolstering topline growth. This expansion also benefits the bottom line through greater geographic diversification.
We are working toward opening an additional five states over the next two to three years.
Net premiums written in our E&S segment grew 16% with new business growth of 9% renewal pure rate of seven 4% and stable retention.
Our mix of business has remained relatively stable in terms of limits profile and the lines of business and hazard mix.
Net premiums written in our standard personal lines segment grew 31% as we continued our transition to the mass affluent market.
The mass affluent market now represents about half of our in force book, and we expect that target business allocation to increase over the next several quarters.
I am, particularly pleased with our profitability in the face of elevated catastrophe losses.
In a quarter, where industry losses were significantly above long term averages architecture IP losses were six points on the combined ratio or about one point above expected.
Our combined ratio of $95 seven was only slightly above our 95% long term target.
Our underlying combined ratio was 91.
Let me make some further comments about profitability.
Standard commercial lines produced a 94 seven combined ratio at 91, three underlying combined ratio.
Non cat losses were about three points lower than last year, and our budget reversing the trend of increases we saw throughout 2022.
Despite this favorable outcome our view of overall loss trends remains in line with last quarter and continues to drive our pricing targets.
Commercial lines pricing move meaningfully from five 6% in Q4, 2022% to 7% in the first quarter driven by increases in the property and auto lines.
Retentions remained strong and stable.
Commercial property renewal pure rate was up 11, 8% in the quarter and exposure increased five 1% producing a renewal premium change of 17, 5%.
We expect this pricing trend to continue.
Commercial auto renewal pure rate was up 10% and exposure grew by four 9%, resulting in a total premium change of 15, 4%.
E&S continued to deliver strong margins with a combined ratio of 85 and an underlying combined ratio of 84 three.
Like standard commercial lines non cap property improved year over year and was better than expected for the quarter.
The strong rate, we've earned and underwriting improvements we've made over the past few years have favorably impacted E&S casualty loss ratios.
Standard personal lines profitability remains challenged.
Excess cat losses, largely drove the quarter's 116 combined ratio was $95 seven underlying combined ratio was about 10 points over target.
Profitability improvement will be driven primarily by price increases as we continue to transition to the mass affluent market.
In the quarter 15 filed rate changes became effective across the auto and home lines with an average increase of nine 4%.
We expect this pace to continue over the next several months.
While there is a lagged impact on renewal pricing new business pricing was up over 5% in Q1 and over 7% in the month of April .
Investments was another bright spot in the quarter the portfolio produced $73 million of after tax income in the quarter up 25% over Q1 2022.
Our investment team has been actively positioning the portfolio to increase book yield, which is up by 137 basis points. Since the start of 2022, while also moving up in credit quality.
To reiterate a point made last quarter when investment returns exceeds our long term average as we are currently experiencing we expect to outperform our 12% operating Roe target.
And we did that this quarter.
While pleased with our strong start to 2023, we fully recognize that one quarter does not make a year.
We continue to operate with great discipline, and executing our growth and profitability initiatives.
Our team of highly skilled and fully aligned employees, leveraging our sophisticated tools and technologies has positioned us as a market of choice for our top notch distribution partners.
Our executive and regional management teams hosted six regional Agency Council meetings in March as we do each year.
These sessions each of each of which includes 12% to 15 agency principals are a great opportunity to solicit feedback on our performance understand.
Understand the challenges they face in their local markets and align on opportunities for additional profitable growth.
They routinely tell us with the strength of our talent the uniqueness of our operating model and the consistent approach, we take to managing growth and profitability are the primary reasons why they make us their market of choice.
In closing, we and the industry continue to face headwinds from economic and loss trend uncertainties.
However, I'm confident we have built the organizational muscle to successfully navigate through any potential economic and market challenges.
Our long term track record of consistent strong performance, along with industry low volatility backs up that claims.
Now, let me turn the call over to Mark.
Thank you John and good morning, we reported a strong start to the year with $1 48 of fully diluted EPS in the first quarter and.
At $1 44 of non-GAAP operating EPS on.
non-GAAP operating ROE of 14, 6% came in nicely ahead of our 12% target. This strong performance was driven by solid underwriting results in significant growth in after tax net investment income.
Turning to our consolidated underwriting results for the quarter, we reported $1 billion of net premiums written for a healthy 12% growth rate over the first quarter of 2022.
With each of our three segments contributing to the growth we reported a profitable consolidated combined ratio of 95, 7%. Despite another active catastrophe quarter in the U S.
There were 18 individual pts events impacting our footprint in the first quarter resulted in $55 3 billion of net catastrophe losses are manageable six one points on the combined ratio.
The driver of the cat losses with two large storms in March and one in February totaling $38 8 million or.
70% of our first quarter cat losses.
These losses were offset in part by $13 million or one four points of net favorable prior year casualty reserve development.
The favorable reserve development included $10 million and favorable claims emergence in our workers compensation line of business and $5 million in E&S casualty.
This was offset in part by $2 billion of adverse development in personal auto.
We are also adjusted up our personal auto liability loss pick for 2023 compared to our original plan for the year.
The underlying combined ratio of 91% for the quarter was two one points lower than in the prior year period benefiting from lower non cat property losses in our commercial property in E&S property lines of business non.
Non cat property losses in total with two eight points better than expected, which drove underlying margin improvement compared to our expectations non cap property auto physical damage losses for commercial and personal auto remained elevated and above expectations.
Moving to expenses our expense ratio of 32, 6% was up 50 basis points versus the year ago. As noted last quarter, we expect modest upward pressure on the expense ratio in 2023, but have several cost containment initiatives in place over.
Over the medium and longer term, we remain focused on lowering the expense ratio through various initiatives, while ensuring we are investing appropriately to support our longer term strategic objectives.
Corporate expenses, which principally include holding company costs and long term stock compensation totaled $12 1 million in the quarter.
Moving to investments our portfolio remains well positioned as of March 30, <unk>, 93% of our portfolio was in fixed income and short term investments with an average credit rating of double a minus and an effective duration of four one years brisk assets were approximately nine 9% of our portfolio as of March 31st.
In line with last quarter, but down from 11, 8% a year ago as we have modestly derisk the portfolio against market expectations of a recession later this year.
For the quarter after tax net investment income was $73 1 million up 25% relative to $58 5 million in the year ago period.
Even by significant growth in investment income from our core fixed income portfolio.
This was partially offset by a lower contribution from alternatives, which are reported on a one quarter lag and generated $6 1 million of after tax gains compared to $15 1 million a year ago.
Strong growth in fixed income was driven by our active portfolio management last year, we put $2 7 billion to work at high yields.
After tax yield on the total portfolio was three 7% for the first quarter translating to a healthy 12 two points of ROE contribution.
In anticipation of a potential decline in short term interest rates. Later this year, we have been lowering our allocation to floating rate securities approximately eight 4% of our fixed income and short term investment portfolio remains in floating rate securities, which is down from 10, 4% at year end and around 15% just over a year ago.
As we have pared back our floaters, we have instead elected to lock in the current higher new money rates for a longer period of time, while managing our duration and credit quality targets. In addition, consistent with 2022, we continued our theme of active portfolio management in the quarter and put $1 1 billion of new money to work at a <unk>.
The tax yield of five 5%.
Our current book yield now stands at 433% up 20 basis points in the quarter and 137 basis points since the start of 2022.
As a reminder, every 100 basis points of high yields on our total investment portfolio.
Slates to about two six points.
I'd also like to highlight the strength of our investment portfolio in light of the recent turmoil, particularly within the banking sector.
We have no direct exposure to the securities for the particular banks that have recently been wound down our exposure to the bonds of financial institutions is well diversified across sectors with a focus on large money center banks within banking.
Given the recent focus on commercial real estate I thought I'd also briefly highlight our exposure to this asset class commercial real estate represents about 11, 8% of our investment portfolio and principally arises from our allocation to agency and non agency commercial mortgage backed securities, which totals eight 1% of our portfolio.
Just over 93% of these securities are invested in AAA and double a rated tranches and have a low likelihood of last attachment in part driven by the strong level of subordination and these high rated tranches. We also have a one 8% allocation to commercial mortgage loans, which are all performing with an underwritten loan to value of 58.
Percent and debt service coverage ratio of one eight times.
Investment grade real estate investment trust that makes up one 3% of the portfolio for real estate investment trusts equity represents 0.3% and commercial real estate debt and equity within our alternative portfolio makes up the remaining 33%.
Overall, we feel good about the credit quality and liquidity profile of our investment portfolio. However, we are closely monitoring credit and liquidity conditions in the market and have a general bias to remain underweight risk assets at this time and to stay up in terms of credit quality and to maintain a strong liquidity position.
Turning to capital our capital position remains extremely strong with $2 7 billion of Capex and $2 5 billion of statutory capital and surplus as of quarter end.
Book value per share increased five 8% during the quarter.
Adjusted book value per share was up two 5% for the quarter were three 1% adjusted for dividends.
Our parent company cash and investment position stands at $497 million, which is above our longer term target.
Net premiums written to surplus ratio of 146 times is in the middle of our target range.
Debt to capital ratio of 15, 9% as the low end is on the low end of our target range. These metrics provide us with significant financial flexibility to support our growth and execute on our strategic.
Initiatives.
We did not repurchase any shares during the first quarter, we had $84 2 million of remaining capacity under our share repurchase authorization, which we plan to use opportunistically in 2023.
Finally, turning to our outlook for 2023, our full year expectations remain unchanged from last quarter and are as follows a GAAP combined ratio of 96, 5% inclusive of four five points of catastrophe losses. This assumes no additional prior accident year Reserve development.
Our first quarter combined ratio came in better than expected, it's too early to adjust our full year expectations.
After tax investment income of 300 million, including $30 million and after tax gains from alternative investments and overall effective tax rate of approximately 21%, which includes an effective tax rate of 20% for net investment income and 21% for all other items.
And weighted average shares of $61 million on a diluted basis, which does not reflect any share repurchases. We may make under authorization overall, we're off to an excellent start to the year in terms of growth and profitability.
With that I'll ask the operator to open up the call for questions.
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Our first question comes from Mike Zaremski with BMO. Your line is now open.
Hey, good morning.
Thanks.
Maybe I might have missed this I came on a few minutes late.
Any color on the <unk>.
Your development.
And minuses.
I did hear the commentary that I don't think Youre view of loss trend has.
Change meaningfully quarter over quarter, but I'll just curious.
Any color on <unk> by the way just come a little light versus I guess P&L at least our expectations in commercial lines.
Hey, Bob excuse me, Mike, It's Mark Wilcox I'll start and John May jump in as well.
<unk> for Q1, 2023 was $13 million.
And there are a couple of puts and takes in there first off really consistent with a year ago. We continue to see favorable claim solutions within those workers compensation line of business really driven by lower severity.
2020 and Brian .
We also saw loss severities for accident years, 2021, and fraud with Ed E&S casualty.
So about $5 $5 million of favorable reserve development.
But then the one other item in the quarter.
The direction.
First of all no liability for the 2022.
That was to the tune of $2 million from an adverse development. So.
The favorable.
Two unfavorable net <unk>, one full benefit on the combined ratio during the quarter.
Also I mentioned in my prepared comments, which you may or may not occur.
What we did actually on the back of the increase in the 2022 accident year. So first of all that liability increased our loss picks.
Versus expectations for the 2023 year that's embedded.
Alluded in the current year numbers it doesn't jump out per se.
But we did make an adjustment there in light of the trend that we see.
Got it.
Helpful.
I guess.
Stepping back and thinking about.
Both the competitive environment in <unk>.
<unk>.
<unk> is taking too.
Maybe my words getting front of elevated inflation on the property side.
I noticed in the prepared remarks exposure was up close to 5% just curious is.
Thats something noteworthy.
Or is that just pure new business or is it is that an element of kind of actions.
Selective is taking to proactively kind of reprice.
Maybe on the property side and maybe just I'll add in just is.
Is the overall competitive environment feels like selective was earlier than peers kind of talking about.
Some of the inflationary trends being being higher.
Pricing.
For the industry feels like its moving north in the right direction, but I'm just curious if you think the kind of both.
Also the overall competitive environment is kind of moving.
More your way thanks.
Yes, sure Mike Thanks, I'll try to tackle all of the aspects of that question with regard to exposure certain commercial lines overall exposure in the quarter ends up.
About four 7%, which is pretty much in line with what we saw in the fourth quarter to the fourth quarter for commercial lines was for sure.
And property was the same property was 5% exposure increase in Q4 and five 1%.
Q1.
And I think.
Your questions the starting point matters and I think we've always had a lot of diligence around making sure our properties were properly insured to value and we put a lot of work and effort into that and are always evaluating our portfolio account by account to make those adjustments and then what happened over the course of <unk>.
<unk> thousand 22, less inflation, starting to really accelerate we did it to make sure. We stay ahead of that and so I think that's always been our practice, we will continue to be our practice.
The pricing is also moving and we'll be pretty materially and we think that's appropriate. In addition to the exposure change because you really do you want to understand both of those pieces as they both do impact profitability. The commercial property pricing for US was up almost four points on a sequential basis due to a 11, 8%.
<unk>.
And we will continue to push for more rate adequacy, because that the terms of the commercial property line, we've got a lower risk adjusted charge combined ratio on that we need to continue to improve that performance.
I think the other important point just relative to property in the quarter.
It's been some some commentary around the miss relative to expectations in the quarter driven by caps.
Q1 tends to be at the higher not lower quarter for us relative to the full year and you saw in the prepared comments it was about a point above expected.
That six points and you can see throughout the industry the impact was much more significant.
Any others and we do think Thats, a testament to how we've always managed our underwriting and pricing philosophy relative to commercial property.
I would suggest the market dynamic there will continue to be as you've seen in Q1, we did try to stay ahead of it in 'twenty. Two I don't think we're ready to declare a shift in severity trends in property, but it is favorable or a nice to have.
Quarter, where property losses on a non cat basis came in better than expected.
On a year over year basis.
And Mike I might not get all the pieces of the question so feel free to follow up.
You did that was a long winded question, maybe maybe lastly.
On the.
Enhanced.
Disclosure.
Commentary from Mark on commercial real estate.
You did mention.
Our low likelihood of loss attachment this is hugh.
<unk>.
One.
Obviously getting a lot of incoming.
On this asset class exposure.
No.
Any commentary.
About.
See MBS exposure you have is it is the mark to market losses are they being driven more by spreads or just interest rates because there's plenty of at least on my screen kind of very high quality, a AAA double a rated <unk> trading at a fairly substantial unrealized.
Loss relative.
Commentary about low likelihood of a velocity catchment. So just maybe any color you'd like to add there on and what makes you. So what makes you comfortable.
Yes, So let me give you a couple of statistics and a little bit more color on the commercial real estate exposure, particularly.
Non agency MBS, which is about about 81% of our total.
<unk> portfolio.
C piece to the side.
Hey guarantees behind it but we feel very good about commercial real estate exposure, particularly within <unk>, but also the other allocations as well, but we recognize that.
<unk> market and their own pressure on valuation.
By type of real estate and it varies by location.
I think cost within the virus.
Commercial real estate sectors as well.
The real estate is.
Equal.
Could be some pressures.
Throughout 2023 as it relates to our portfolio I would say that the unrealized losses within our non agency MBS is really driven by higher benchmark interest rates and some widening of credit spreads on the back of that concern.
Commercial real estate, but we do feel good about the exposure that our duration is three one years alphabet onsite costs as I mentioned in my prepared comments, 93% of it is.
AAA or AA rated and wisdom.
Hi, tranches, you havent level of subordination and across a whole non agency MBS, we have about a third.
It would be 3% subordination, which provides us.
Quite a bit of protection in terms of losses that might come into the portfolio. The average loan to value across the whole non agency MBS portfolio is 56%. So what I, what we would describe as an effective loan to value would you consider that the loan to values plus the subordination is 36%.
So pretty far removed from.
One dollar of loss in terms of tree losses is clearly going to be some mark to market losses.
Students and others have concerns about commercial real estate, but in terms of true.
And credit losses, we feel pretty good about that.
Maybe just a couple of other quick statistic.
We've done quite a bit of work on this from a risk management perspective, but we have been stress testing the portfolio.
If you go back to the <unk>.
Great financial crisis back in 2008 2009.
Peak to trough in terms of commercial real estate from a property index perspective, which is calibrated to that so the Green Street commercial company index. It was about a $36 seven decreased peak to trough in terms of the value of real estate.
So a pretty healthy decrease but.
But when you think on a go forward basis, how much do you think commercial real estate is going to be down by.
When we stress tested our portfolio.
Non agency MBS together the dollars of loss across the portfolio, we have to have a 40% decrease in the value of that real estate. So we had a 50% decrease in the value of the real estate.
Have about a $9 million loss. So those are just a couple of kind of risk management metrics. We're taking a look at so you have to have a worst situation that the great financial crisis, but Hawaii is another nine.
From a valuation perspective.
Any meaningful actual credit losses, but again, there's always the mark to market impact.
And FX causes to selloff and spreads could widen so cautious but feel very good from a loss perspective, but then.
Agency MBS.
We can take this offline, but as a follow up.
We're talking about.
Your comment about subordination versus LTV, and how you get to the 36, because another one of your peers has been saying something similar and I feel like there is some confusion, but we can take it offline, but let's take that offline and we'll get into a little bit into the weeds here, but happy to follow up on the conversation after the fact.
Thank you.
Thank you. Our next question comes from Chris Carter with Bank of America. Your line is now open.
Hi, everyone.
Good morning breakthroughs.
I was hoping we could talk a little bit about the components of the combined ratio guide for this year.
Thanks.
Last quarter, you augments and 32, 6% expense ratio target and I think 0.1% dividend ratio target.
So I was just curious kind of using that 96, five and backing all the expenses and the.
The catastrophe load as well as the.
Full year impact of reserve development in the quarter I'm getting <unk>.
I think of 59, 6%.
Core loss ratio for the year, which is a little bit higher than the 59, 3% debt.
I mentioned last quarter. So I was just curious.
Just trying to square that versus <unk>.
Favorable core loss ratio reported in <unk> 2003, or if any of the other components have moved around.
Yeah, Chris It's Mark you haven't correct and what I would say, it's just too early in the year to make a change to our full year guidance.
If you take our full year guidance to 96.
Four five points of cats, which clearly implies to John's point being the point about a point above expectations, a little bit of favorable cat loss activity later in the year.
I'll file line.
The variability around that and then if you kind of annualize the Q1 favorable development of one full point through the rest of the year, assuming no more favorable reserve development.
It gets you to an underlying combined ratio of 92 three.
For the full year to come back to the 96, 5% and four to five points, assuming the expense ratio doesn't change and that actually implies I think an underlying combined of 92 eight for the rest of the year Q2, Q4s against that.
So I would say is we.
Feel really good about Q1 cash.
Yes.
Apple.
Well they are a little bit.
That heavy but overall, we saw the non cap property loss ratio covenant, two eight points better than expected.
Spence ratio came in right on track and feel really good about all the other components of the combined ratio.
Just a little bit too soon for us to.
To take that benefit that rolls through the rest of the year, we're just assuming things normalize back to our initial expectations for the full year, but we'll give you a further update.
Little bit better insight into the full year.
Goldman Sachs again in 90 days' time.
Okay. Thank you that's helpful.
And on personal lines I think last quarter, you all had mentioned maybe needing to catch up a little bit on rate versus the industry just given some of the distraction from changing mix in our book over the past few quarters.
Some of your peers have mentioned targeting reaching a.
Target profitability by the end of 2024 I was just curious on the outlook for when you all think that your personal lines. Both can reach target profitability and if next year is a fair assumption for for your book as well.
Yes, Chris This is John first of all I think it's always dangerous to put a target out there, especially in an uncertain the loss trend environment, because the big driver on what happens to margins in personal lines is what happens with regards to loss trends.
All of US are selective included have a clear understanding of what our rate plan is in terms of written and earned over the next several quarters next year, plus and we have to make assumptions around the direction of loss trend and I realize sometimes some of our peers do make pretty convicted states.
<unk> surround rate relative to loss trend.
I do think you have to put some qualifiers around that when you project out loss ratios not foreign events, we have our sights on achieving profitability, we have assumptions in that plan around where loss trends go.
In subsequent quarters, but all we have to do as an industry as you look back to the last five quarters and realize that loss trends can be can surprise us.
I think that always has a reason to be somewhat hesitant about putting near term profit improvement targets out. There that said you have to remember our book and puts us in context personal lines was eight 5% of our premium in the quarter, but that book is also going through a significant transformation in the.
Change in the in force from mass marketing to mass affluent which is a place that we think we're much better positioned to compete.
It is impacting our run rate profitability and we think long term will impacted in a positive way and then the rate changes, which we've indicated have a bit of a lag from new to renewal as we get these filings approved and implemented we will start to come through on an earned rate basis.
Move through subsequent quarters, we are on a path to profitability, but I'm going to stop short of putting a specific quarter out there.
Thank you.
Hugh.
Thank you. Our next question comes from Paul Newsome from Piper Sandler Your line is now open.
Good morning, Thanks for the call.
Almost as a follow up here.
In the past, we've seen claim trends diverge between.
Passenger auto and commercial auto, but maybe it's converging now.
Could you just kind of maybe contrast, what you're seeing in those two books.
Where they may or may not be different.
In.
Please inflation perspective.
Yes.
Thank <unk>.
From an auto physical damage standpoint, I think the trends were fairly well in line those were the ones that were driven by inflationary impacts.
And I think you saw those.
<unk> fairly well aligned and continue to be fairly well aligned I think from a liability perspective, you might have seen a little bit of a difference on the social inflationary impacts generally with us in an industry, you've got a higher limits profile on commercial automobile IV, because you want personal auto and.
Moving and litigation rates I do think you probably saw a little bit more of a lag where it impacted commercial auto more quickly than I might have impacted personal what else. So I think those are probably the two differences, but ultimately the societal factors that are driving social inflationary trends will ultimately impactful blind.
That's all I have in terms of anything else before August .
I appreciate the help very much so.
Thank you.
Yes.
Thank you. Our next question comes from Derek Khan with <unk>. Your line is now open.
Good morning. Thank you so just going back to the guidance I completely understand your conservatism just given the uncertainty and elevated loss trends.
But if we're thinking about.
Just.
How should we think about the pricing, we accelerating to 7% and commercial and just be assumed loss trends.
Gary I think last quarter, you talked about six 5% loss trends.
I'm just wondering if there's an update to that number.
Alright.
$6 five we cited.
In January for the full year that broke down to 6% on casualty and 7% on property and as Mark indicated earlier in his prepared comments and then some.
So quick question.
Don't see the need to change those at this point and I think and again, we always want to make sure we talk about loss trends separating casualty from property.
Because they are different in casualty that 6% trend that we mentioned is embedded in our loss picks in our corner into the year, we or anybody else would be very hard pressed to say there is enough.
Full year expectation for property on the non cat side, but ultimately what drives that variability is it's really what's the actual change in frequency or severity.
We had an assumed.
Loss trend or an assumed change in frequency and severity that would equate to 7% in the beginning of the year with three three months in the books, we're seeing largely severity has come in better than expected.
But it's too early to assume that that will continue to the extent it does you'll see that come through in results relatively quickly.
Almost immediately.
And I think that's where that's how you want to think about it we're generating significant rate on the commercial property line.
Additional exposure.
And to the extent that severity trends come in better than we anticipated and youll see that come through our reported results.
Got it that's really helpful. And then my second question.
As you constantly do like underwriting mix changes or claim benefits.
Where youre benefiting from those kind of changes that youre, making on the underwriting side.
Yes, I think it kind of ties back to the to the first question there, which is so the non cap property better than expected and better than prior year is the primary driver.
The underlying loss ratio that you are talking about here, but at this point I would I would equate it to all of those factors there is inherent volatile variability.
Ever lose sight of that but we've also if you look at what we did in 2022, recognizing the trends of our emerging the pricing increases accelerated throughout the year. We picked up exposure that is earning its way in and we've always had.
Barry.
Disciplined approach to underwriting and risk selection on the property lines.
Contributing I'm not going to attempt to.
Sub segment that that year over year improvement into those different areas variability versus underwriting and pricing, but theyre all contributing.
Okay, and then last quick question on personal lines, New business was up $16 7 million, that's up quarter over quarter and significantly year over year does that just easy comps and I'm just surprised but how much new business is growing given the struggles pressures in personal lines.
Yes.
The prior year comparison quarter wasn't all that was.
A low quarter from a production perspective, but I think this is us starting to hit our stride in terms of the market repositioning that we've been working on.
But again I think <unk> needs to start to earn its way in and it will start to earn into Miami.
That was.
Two big drivers tougher prior year comparison from the first quarter 'twenty, two but also starting to realize the success of repositioning into the mass affluent market.
Okay. Thank you very much.
Thank you. Our next question comes from Matt <unk> with JMP Securities. Your line is now open.
Hey, Thanks, good morning.
Just a <unk>.
Cleanup question is all I've got left Mark I apologize if I missed it early on I was hoping you could break out the $35 million or so of cat losses in the standard commercial segment.
By line.
Certainly Matt.
Going by line and commercial auto that's 200000.
The property was $27 7 million.
And then Bob was $7 2 million that gets you to the 35, 1%.
Four eight points on the say the commercial lines and then just.
I guess within personal lines it really April .
E&S property sold property, so those self evident.
Alright wonderful very helpful. Thank you.
Yes.
Thank you.
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