Q2 2023 Skyward Specialty Insurance Group Inc Earnings Call
Okay.
Good day and thank you for standing by welcome to the Q2 2023 Sky word specialty earnings conference call. At this time, all participants are in a listen only mode.
After the speaker's presentation, there will be a question and answer session.
To ask a question during the session you will need to press star one one on your telephone you will then hear an automated message advising your hand is raised to withdraw your question. Please press star one one again please be advised that today's conference is being recorded I would now like turn the conference.
So over to your speaker today, Natalie Schoolcraft head of Investor Relations. Please go ahead.
Thank you Gigi good morning, everyone and welcome to our second quarter 2023 earnings Conference call.
I am joined by our Chief Executive Officer, Andrew Robinson, and Chief Financial Officer, Mark Hustle.
We will begin the call today with our prepared remarks, and then we will open the lines for questions.
Our comments today may include.
We're looking statements, which by their nature involve a number of risk factors and uncertainties, which may affect future financial performance.
Such risk factors may cause actual results to differ materially from those contained in our projections or forward looking statements.
These types of factors are discussed in our press release as well as in our 10-K that was previously filed with the Securities and Exchange Commission.
Financial schedules containing reconciliations of certain non-GAAP measures along with other supplemental financial information are included as part of our press release and available on our website skyward insurance Dot com under the investors section.
Now I will turn the call over to Scott <unk> CEO , Andrew Robinson Andrew.
Thank you Natalie and good morning, everyone and thank you for joining us.
Q2 was another excellent quarter, we continue to execute our rural or new strategy and to deliver solid financial performance we.
We reported strong underwriting results in the face of a high level of industry wide cat losses in the quarter.
Specifically gross written premiums grew approximately 29% in the quarter the.
The quality and breadth of our growth is a testament to the high level of execution across our underwriting divisions.
We continue to benefit from broadly favorable market conditions at 60% of our writings in the quarter were excess and surplus and non admitted lines and 58% were short tail lines of business.
Our combined ratio of 92% for the quarter included only three nine points of cat losses, despite industry incurred record convective storm losses.
Our pure rate increased to double digits this quarter and continues to be materially above our loss cost inflation estimates.
New business pricing remains in line with our in force book.
Our ongoing investments in talent acquisition and development has been instrumental in driving our success, we continue to add a plus talent across the organization, including new teams and products in our surety professional lines and Capex divisions.
With that I'll turn the call over to Mark to discuss our financial results in greater detail Mark.
Andrew for.
For the quarter, we reported net income of $19 5 million or 51 cents per diluted share compared to $5 1 million or <unk> 16 per diluted share for the same period a year ago.
On an adjusted operating basis, we reported net income of $16 million or 42 cents per diluted share compared to $16 4 million or 50 cents per diluted share the same period a year ago.
In the quarter gross written premiums grew by approximately 29%.
Free underwriting division grew in the quarter and transactional E&S.
Mobile property in agriculture professional lines sureties and captives were each up over 20%.
Net written premiums grew approximately 13% to approximately $214 million in the quarter compared to $189 million in the second quarter of 'twenty two.
Second quarter 2023, net retention was approximately 51% versus 58% second quarter of 2022.
The decrease in the net retention was driven by our mix of business and considerable growth in global property in agriculture, where we have a lower retention.
As a reminder, we expect our net premium retention to be lower in the first half of the year and higher in the second half of the year for the full year, we anticipate that our retention will be slightly higher compared to 2022.
The second quarter adjusted combined ratio of 92.2% includes an improved accident year non cat loss ratio and.
And an improved expense ratio compared to the second quarter of 'twenty two.
The 2.1 point improvement in the current accident year non cat loss ratio to 67% was driven by the changing mix of business and run off of higher loss ratio exited business.
We had no prior accident year loss development in the quarter.
During the quarter catastrophe losses were $6 8 million and accounted for three five points on the combined ratio.
<unk> from three large convective storm losses in the south and our global property and transactional E&S divisions compared to the second quarter of 'twenty, two which was not impacted by cat losses.
The expense ratio improved one point compared to the second quarter of 'twenty, two driven by a higher earned premium base. We continue to invest in the business and expect a higher run rate in the back half of the year.
Firstly offsetting the operating expense ratio improvement were slightly higher acquisition costs, driven by our change in business mix.
Turning to our investment results net investment income was $8 6 million in the quarter down $1 9 million compared to the same period in 'twenty two.
Our investment strategy initiated in 2022 to deploy all free cash flow to core fixed income is truly paying off.
We continue to deploy cash to this portfolio given the attractive yield environment.
Net investment income from our core fixed income portfolio more than doubled to 7 million from $3 3 million in the prior year quarter, driven by an improving portfolio yield.
And a significant increase in the invested asset base.
Our core fixed income portfolio now stands at $820 million up from 673 million at March 31 23.
During the quarter, we invested approximately $116 million in the portfolio at five 2% without increasing duration and our embedded yield on the portfolio is now above 4%.
The decrease in net investment income in the quarter was driven by our opportunistic fixed income portfolio.
Both second quarter, 2023, and 2022 were significantly impacted by the equity Mark to market adjustments. During this past quarter. The marks were negative compared to the positive marks in the second quarter of 'twenty two.
Again, despite the volatility we have experienced over the last three quarters. The inception to date return for this portfolio was approximately seven 3%.
This portion of our portfolio continues to decrease as we deploy cash flow to core fixed income.
At June 30, we had approximately $190 million in short term money market investments, resulting from strong operating cash flow of over $100 million.
During the quarter our yield on short term investments was north of 5% and we continue to deploy this liquidity into our core fixed income.
Lastly, during the quarter, we executed a successful secondary offering of approximately $4 4 million shares of common stock.
The offering was primarily a sale of West aims holdings, which now stands at approximately 28%.
We continue to see incredibly strong interest from our existing and new shareholders and we appreciate their support for our company and our strategy.
With that I'll turn the call back over to Andrew for concluding remarks.
Thank you Mark.
Q2 was a truly terrific quarter and the metrics bear this out.
Of our 29% growth is notable with five of eight underwriting divisions growing at 20% or more in all eight divisions growing over the prior year quarter.
The quality of our growth is equally notable is our new business pricing continues to be in line with our in force book.
Our underlying underwriting profit profitability was again strong with an 88, 7% combined ratio excluding the deferred benefit at a loss portfolio transfer and a three and a half points of cats referenced earlier.
Continue to maintain our focus on being a consistent top quartile underwriter.
Each division is delivering at or above our minimum target returns on capital and is visible in our results. Some of our divisions are seeing outstanding market opportunities to grow both top line and margins.
Our pricing is the strongest it has been since I joined over three years ago.
In this quarter, we delivered double digit pure rate with all divisions consistent or above the prior quarter complemented by a significant increase in overall rate being driven by global property.
Given the pricing along the mix along with the mix of business. We are driving we believe that the new business coming onto the books.
Fuel margin expansion in line with the margin expansion, we are observing on renewals.
Retention was similarly strong increasing from the high <unk> in the prior quarter to the low <unk> this quarter and exposure growth continues to be in the low to mid single digits.
Operationally all indicators are green, our submission counts were up around 20% from the prior year and our in force unit count is up 14% year over year and 3% from the prior quarter.
And while all of the metrics I just referenced directly reflect the progress we're making in growing a highly profitable book of business, we have equally impressive progress and other critical areas.
These include claims were reserving potential losses earlier closing claims faster and achieving more optimal outcomes.
Our technology pricing and data science efforts, we continue to deliver predictive analytics capabilities and amplify the strong technical skills of our underwriters and our claims professionals.
Altogether I cannot be more pleased with the superb execution of our 470 colleagues.
We believe we are very well positioned to continue our strong execution to take advantage of a favorable market backdrop.
I'd now like to turn the call back over to the operator to open it up for Q&A operator.
As a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again.
Please stand by while we compile the Q&A roster.
Our first question comes from the line of Mark Hughes from <unk> Securities.
Yeah. Thanks, Good morning, Andrew Good morning, Marc Good morning, Mark.
It sounds like the growth environment is pretty good I'm not hearing you say anything that makes me think there was any sort of.
Yeah.
Slow down as the environment in Q3 as good as you saw on <unk>.
From a topline perspective.
Yeah. Thanks, Mark this is Andrew.
Yes look I think that I would just go back to the fact that we we have a well diversified business that allows us to see opportunities and maybe different ways than than some others and so while it's not certainly equal across all eight underwriting division by and large it is.
Describe a pretty darn favorable environment.
For the for the for the parts of the market that we're focused on.
Obviously.
We're we're sort of just a little way into the into the current quarter July continued to be.
Positive market backdrop for us.
And so we're certainly we're certainly hopeful that it will continue to be at one thing I can say is that.
Our growth or 29% growth is driven by a combination of the market backdrop and our execution. Our execution is excellent I think our execution will allow us to.
To outgrow a cross section of peer companies.
And then the market backdrop makes the numbers like 29% that we delivered in this last quarter.
That makes that possible, but I think a big part of it is our execution is Walmart.
Very good I appreciate that Mark any early view on the opportunistic fixed income how that'll shape up for the third quarter. What are your early thoughts on them.
Mark the short answer is no not really any early indications.
On that that that can can move day to day and month to month. So the short answer is no.
Mark I would just I would add.
<unk>.
Mark's comment.
The volatility that we experienced in this past quarter.
Same same thing we've spoken to you about.
It is a very small number of equity positions.
That we that we actively follow.
And again, we think it we think it certainly does not provide any.
An indication as to the ultimate performance. It is it's really from our vantage point of just a bit of a distraction here.
That volatility occurs but nothing that we're concerned about.
Understood. Thank you very much.
Thank you.
Thank you one moment far next question.
Our next question comes from the line of Matt <unk> from JMP.
Hey, good morning, Good morning, Matt Hey, Matt.
Andrew you've touched on it briefly in your opening comments and we're seeing certainly press releases kind of some sense.
The last call around some of the advances are investments youre, making in captives and expanded charity capabilities.
Around cyber Turkey.
In partnership with Taobao can you just talk a little bit about kind of what's happening there and your outlooks for those areas and then maybe EBIT next step.
What are some other areas that we might see you.
Investing in the business.
Thanks, Matt Great question.
I appreciate sort of acknowledging the things that we've been doing there.
Look what I would just generally say is that.
Were strategically oriented so we.
We are actively pursuing.
Talent and very selectively partnerships.
And in places that include those that were already in <unk> I'll note for you that ensure in this past quarter.
That included two focused expansion right. So so which we highlighted we brought on.
Two teams that really created an adjacency for what we do.
But youre going to see that continue here in this quarter.
I don't want to speak expressed explicitly too.
Two potential new divisions are new categories that we're entering into are could potentially enter into but we are certainly focused on a couple of areas that have been squarely in our focus here for a number of quarters and as you as you know, Matt we start with.
We are targeting.
People, who we believe can lead those divisions in and when.
When we ultimately get to them where patient right. We will we will wait until we get to the right person or persons.
And so it's hard to sort of say timing in and not to be.
Not to be opaque.
Not helpful for us to sort of say well here specific categories I can say in this quarter you will see.
Some some notable talent additions that debt.
That's sort of the same quality and helped us grow and develop our business consistent with the kinds of things that you saw in the last quarter and the quarter before.
Perfect. Thank you and then one quick follow up just on your commentary around.
Kind of a pure pricing in the quarter I think I caught you say kind of double digits and if I recall Q1 ways kind of high single digit. So the question is how should we think about that are there.
Areas of the business that are seeing an acceleration in pricing or is it more of just a mix of business.
Current areas seeing different growth or.
Different policies renewing in the quarter.
Great Great question.
I did try to.
Connect that in the <unk>.
In the prepared remarks, but maybe just for clarity.
Every underwriting division was at or above where it was last quarter. So so so so first thing is we didn't see a backup and I'll remind you that we've been consistent in kind of right around the high single digits. There has been I think one or two quarters in the past where were very low double digits <unk> been very consistent in the background.
That is as I've mentioned, you we weren't really in the categories that saw the massive increases right what happened in public D&O are in cyber or in the period, where access was getting 30, 40 50 points that skewed a lot of numbers, we just been ticking along and in this particular quarter every single.
Underwriting division was at or above its pricing after the last quarter and then we saw a very big step up in global property, which when you sort of average that all out put us into sort of the highest pure rate that we've seen.
Since I've joined the organization and importantly.
We believe that our loss cost inflation averaged across our book is probably about.
Between 5% and 6%.
With some areas.
Particularly.
Personal injury exposed classes being high single digits.
But what that would tell you is that is that.
We're not reflecting that in our picks time will tell whether that conservativism that we're assuming the gap between our pure pricing and loss cost inflation, but this quarter in.
In theory should produce some of the highest margin spread that we've seen since I joined the organization. It was it was a.
A really positive quarter for us overall on pricing.
Thanks, Great. Thanks, Andrew and congrats on a nice quarter. Thank you.
Thank you one moment far next question.
Our next question comes from the line of Meyer Shields from K B W.
Great. Thanks, so much and good morning, everyone. Good morning.
Well they start with a question for Mark if I can when you were talking about the accident year ex cat loss ratio improvement that you talked about business mix and the runoff.
Other lines and Didnt talk about rate increase above.
Earned rate increases above trend.
That's pretty consistent with conservative booking so far I was hoping we could dig into it a little bit just because it sounds like the earned rate increases are accelerating in trend is holding steady.
I mean, they're what I would echo exactly what Andrew really just said.
The incremental earnings.
Or the the rate above loss cost, we're not reflecting that in our picks.
And have not for for quite some time does that answer your question.
Yes, I guess I was looking for a number but I don't know how realistic that is.
Yes, I think maybe this is Andrew.
Yes.
We.
We like probably any other carrier have a point of view right and we said all along we are where we are absolutely intentionally trying to be conservative and time will tell whether those those views on conservativism crystallize certainly our indications would suggest that is the case.
But as Mark always says we are we are fast to react to bad news and slow to react to good news and that includes just how it is that we're allowing a price in excess of our loss cost inflation to flow through to our picks.
And we just arent, reflecting that and that's really the remixing and the run off that Mark referenced is singularly the driver that you're seeing play through.
In our accident year results.
Okay. That's helpful I'm more than happy to wait.
I know the weather across the industry with absolutely horrific in the second quarter I'm wondering whether there is any change in your appetite for more explicitly catastrophe exposed property risks.
Yes. This is Andrew.
And I'm, assuming when you asked that question Mary and correct me, if I'm wrong, you're probably talking about hurricane North Atlantic Hurricane, specifically or quake as opposed to what we're seeing is kind of a lot of Kitty cats of convective storms all over that are a lot tougher to model in and have a sort of a very.
Different profile I mean is that a fair assumption what you are asking about.
Yes, that's exactly right and just given the market dislocation there.
Yeah.
Here's what I would say.
Again.
Our notion about our strategy is about building.
Really highly durable positions and by the way we have great respect for some of our peers and our competitors who.
Look at the cat market and see it as a terrific opportunity a good risk trade.
I won't I won't say that we don't have some coming into our books, but it is not our focus we believe that certainly it appears to be a very attractive time right true North Atlantic Hurricane Cat.
But there will be a point in our view, where the tide goes out on that.
And what we're trying to do in our business is not have that kind of revenue and quite honestly margin volatility as sort of a core part of what we do so.
I guess, probably that's a long winded way to say that it's really not our principal focus for us as a company.
Okay, No thats tremendously helpful.
And if I can.
You addressed the second half.
Expenses likely going up is 30% still the right bogey or given overall growth.
Should we start taking that down a little.
Well, it's a great question, it's a great question, because we've obviously, we've been adding costs right. If you just if you look at.
If you look at the number of high quality underwriters that we've been public about clearly we're adding cost.
We've had the benefit of the growth translating to net net earned premium coming through which is which has been helpful. In keeping kind of the ratio based view of things.
In check.
Mark's guidance has always been that we are aiming to be sub 30.
And we still think that that's the right number.
But we are getting the benefit of earned premium running through our books were continuing.
Very material way to invest in talent in advance of sort of the full production benefit of that.
Coming through which is which is good for future quarters.
But it seems like our Formula right now is working right. We invest in talent, we're seeing great growth. It allows us to invest more on talent and overall the financial results that we're producing are in line with.
With the kind of expectations that we set with you and all of that would say, 30% and under is kind of the target that we really believe is appropriate for us as a company.
Okay fantastic. Thank you so much.
Thank you one moment far next question.
Yes.
Our next question comes from the line of Paul Newsome from Piper Sandler.
Good morning, congrats on the quarter.
Thanks, Paul Good morning.
Couple of essentially follow up call for questions.
So I heard what you said tomorrow.
And.
But you are growing the property book.
General right. So I was wondering if that has any effect on the overall cat load.
Tom.
Yes.
Prospectively as we think about the company.
Yes.
Absolutely can understand the question.
Let me just point you. There's two principal places, where we are materially growing our property exposure. One is in transactional E&S I'll just remind you that we really steer clear of.
Kind of.
Tier one cat or let's just call it North Atlantic Hurricane.
Fires the principal apparel that were we're targeting there.
And so inevitably you pick up some some cat load, but can't really is not the principal exposure, we're not writing cat.
And then global property.
Just given the very nature of that right that is a.
That is.
Made up of of <unk>.
Risks and exposures that are highly diversified that include <unk>.
Technical risks as well as cat risks. So so we will grow.
Our cat exposure as we grow global property and that has been the case.
I define that differently than targeting cat right. So so we will pick up some cat exposure, but that's part of a larger risks that we're writing and again.
We grew it not in considerably last year.
And you saw what happened in terms of our placement right. We went from a placement that we modestly increased our attachment point very modestly and we added a few million dollars of cover up top and still.
Maintained a posture that was.
Well in excess of one and $2 50 kind of loss event cover.
So that should give you an indication that yes, it's growing but it's not again, it's not a principal focus for us is not it's not a key area that we're targeting for the reasons I mentioned earlier.
Okay.
And then maybe some general thoughts on cost of talent.
I don't know if its getting more or less expensive.
The craziness.
Industry itself at the moment.
You are obviously out there.
Looking for people and paying them is it getting less more or less expensive to find.
Good talent.
It's also a great question.
I think that.
There is certainly a true.
I personally viewed the cost of talent is being.
Really there are points, where as irrational.
I would say is we're not kind of in the spot market part of the talent.
People are coming to us.
Because of the full package of what we have to offer certainly it's a cultural thing an environmental thing.
We certainly.
We provide people attractive compensations.
And to the extent that they participate in equity.
That's an attractive feature for them.
Also our believers that our underwriters need to be compensated for long term consistent excellent underwriting performance. They do that's a chance to over earn.
We have not found it to be a barriers what I'd say people are coming to us are coming to us for the right reasons. They are they are world class professional underwriters want to be in an environment, where underwriters can underwrite.
And they should be rewarded appropriately and we've got that constructed in a way that seems to be working.
I would put the quality and the <unk>.
Relative number of people given the size of our organization of talent acquisition that have come to our company over the course of the last couple of years I'd put it up against any other organization. It's been probably the most compelling feature our ability to attract what I would what I would consider to be the talent in our industry.
That makes sense, Mike My question, a little bit stems from the fact that it seemed like a couple of years ago.
There was a lot of private equity going after the formation of blood or MGA is causing a lot of talent out with big numbers and I don't know if thats really changed.
Given.
The change in the interest rate environment.
No.
Paul I do think it's calmed down, but I would also say to you that.
It was it would be very unusual for us to be competing against private equity backed MGA is for talent.
We have found in almost all cases that the people who want to come to our organization.
We are interested in having.
<unk> be part of something that directly controls the balance sheet be directly connected to the to the the underwriting contribution.
That may or may not be a bright line for the industry. It's certainly a bright line for the people who come come join our organization.
Makes sense. Thanks for the help as always I appreciate it.
Thank you.
Thank you one moment far next question.
Our next question comes from the line of Michael Zaremski from BMO.
Hey, great good morning.
Yes.
To the.
Cat load out discussion cognizant that your cat.
Cat levels Werent on an absolute level.
Yes, hi.
Any context around.
How abnormal discolored wise versus kind of.
According to what normal expectations.
Well I mean the.
The texture and the color of it Mike.
Is really simple we had three large losses, one was a tornado that hit on the top of the.
A very high value.
Building.
Second was a location where it was a relatively large surface area roof Hale with a lot of HVAC equipment.
We constructed the cover in a way that was appropriate to the exposure and then the third was also hail loss.
Loss.
<unk> made up the lion's share of what came through.
Don't know how to characterize it other than.
There was just a lot of convective storm tornado straight line win.
In the second quarter and.
We have good.
Distribution of risk and it just so happened we picked up a bit more than otherwise we would have expected in the second quarter.
Don't think it says anything about our risk management or aggregation management.
It's a number that is in our view an entirely acceptable number in the context of <unk>.
The kind of industry losses, we saw and I don't read into it.
Nor does it change our thinking or our behavior in any way.
I think it's just it's more of a byproduct of.
Spread of risk in the kind of storms that happened in the second quarter.
Okay. That's good color.
I guess my follow ups on the expense ratio I know, you've given some color already but the expense ratio overall seems like it's been coming down a little bit more than expected.
Does that is that mostly just due to your kind of operating leverage and.
So of course continues we should we should kind of keep that in mind.
Our heightened pace and also just curious if there is any higher reinsurance costs flowing through the expense ratio too. Thanks.
So again, thanks for the question.
I'll try to pick them off in order and Mark.
It may very well have something to add but on the first item.
To be direct where were we.
We are now sort of spending on new resource new talent consistent with our plan Whats ahead of plan for US is the net earned premium that's running through which is which is making the ratios.
Look pretty good for us.
And so I think that that that might explain like if you were to look at absolute numbers versus.
Ratio basis, Theres, two different things going on the growth has certainly helped us.
And then the second question.
We did cover this at the on the <unk>.
March 1st call and then after the first quarter call.
We've had.
We've had very good.
Placement on our reinsurance everything that was placed.
Was consistent with expectations Unsurprisingly, there was there was a little bit higher cost.
On our cat placement and I do mean, a little now remember our.
You can sort of do the math right are our cat tower is not that big you can do an average rate of just a little bit of change does not mean a lot for us.
Otherwise.
Most of our placements have been very consistent orderly terms and conditions, we're happy with that.
That is not having an impact that's really not having an impact in a way and what youre seeing in our financial results.
Okay and then just lastly, that's helpful and I do see the commentary from last quarter.
Just on the overall marketplace pricing environment, maybe you can kind of give a little more context.
You added some color on the property side, but what are you seeing competitive.
The market become less competitive you're mentioning our strongest pricing in three years or are you are you surprised at all by kind of see that competitive.
The environment easing.
Maybe easing a bit I don't want to put words in your mouth. Some any other context, there on the marketplace would be great.
I don't I wouldn't I don't know if I would characterize it is easing.
Is that some of this is just it's just math.
Uh huh.
If we if were at or above on.
Sort of every area, except for global property and global property takes a big step up in your kind of.
You weighed average that all together it just happened to produce a number that on a pure rate basis was the best that we've achieved.
Look I think the thing that we're constantly looking at is.
The combination of pure rate, we obviously pay attention to exposure there may be a little bit of margin exposure that.
Is right like.
We look at our retention and we looked at our new business pricing and it's kind of that.
Turning to the things that we're constantly checking against to sort of gauge our own view about where the market is and what I would say is the market.
Is it is early in the parts of the.
The parts of the market, where we compete it's very attractive on the property side and it's the kind of market, where a well executing organization like ours with with really great underwriting shops. This is the place where we accelerate and win.
And I would say that you can see that in our.
And what's happening in our results.
So this is I think orderly as generally good right for a company like ours.
It may very well be that with some of the disruption that's happening in other parts of the market that that is by and large helpful. Tightening of reinsurance and my view is by and large helpful.
So in that in that in that sense, its probably a positive but I would characterize outside of property for the places we compete orderly and really supportive of our ability to more than win our fair share.
Very helpful. Thank you.
Thank you.
Thank you one moment far next question.
Our next question comes from the line of Tracy Bengie from Barclays.
Sure.
Hey, good morning. So my questions are already asked so maybe I'll just ask for more specifics. So your prop cat treaty renewal at five one what were the specific changes I think the prior was $25 million in excess of $10 million retention.
You also mentioned that the pricing increases were modest, but if you could add more contacts to that.
Yeah for sure. Thanks, Tracy so our SaaS, one pointed to expiring I'm doing us off the top of my head I Hope I'll get this all right was $10 million.
In our prior treaty year, we moved it to $12 million I think or exhaustion in the prior treaty year was $36 million, we moved it to 40.
Our our attachment point on a model basis went down a little bit we were a little bit above a 1 million tonne.
Return period, and this is sort of an average across.
Quake in.
And hurricane it's down below one times, so we slightly reduced the model the attachment point, even though it went up a couple of million dollars or risk adjusted rate. It was in the order of between 15% to 20% increase again, if you are buying as we are.
$28 million of cover you can kind of just put an average rate across the tower no. That's that's.
In the Grand scheme of an organization of our size a de minimis amount.
I will tell you as well on the second and third event cover drops down so the way to think about that is that is that we have a bit more protection. If there is a series or frequency of severity.
So I think by and large we were really happy with our placement we thought it was.
We thought it was a great outcome given the backdrop of what everybody was saying and I think lastly, one thing to highlight is.
Moved.
We've been consistently trying to move our treaty forward.
A month over the each of the last few years to get greater distance from the Big Florida placement.
And so we're set up for next year.
<unk>.
The placement I believe now on 401, if I, if I'm correct, which.
Which allows us to sort of have a maybe a more attention in the market without the sort of <unk>.
All of the stuff that goes on regarding the Florida placements.
Got it I think you said, 15% to 20% risk adjusted pricing I mean, how much of that are you able to pass down in your global property pricing Oh My God. We are we are so so first off remember Pat as.
You think about it.
Sort of if you if you talk about the cat pricing on any account. It's a small portion of the overall pricing between transactional E&S global property and airlines and we are passing that plus some for the cat exposure loan and then obviously, we're capturing a lot of pure rate on an X cat.
Fire and other.
Obviously as you see in the results I just spoke to you about so yes, we're not it's not the muni.
If your question is our cat margins kind of being the immune the answer is no not at all.
Excellent.
Given the news on best to have used this opportunity to review the quality of your lessees and collateral provided by your reinsurance partners.
Yes for sure we're watching our collateral.
All the time to the extent we have them.
B practical Tracy without sort of overdoing. It there's really only two sort of core places. We added one is on our loss portfolio transfer were fully collateralized.
Our long standing relationship obviously with <unk>.
Principal area of focus that we made sure that.
The investor community understood during during our IPO.
Process and the other is as captives and.
And we are constantly working with the same set of banks.
And quite honestly the principally the same set of captive managers.
But we do have a process to two.
We do have a process to make sure that that.
Not only are they are high quality for sure that we can take full credit for them.
Surely, but importantly, you know.
In this particular case.
And you always want to make sure that your controls per tax protect against fraud.
I think everybody is paying attention to that for sure and we are as well.
Thank you thank.
Thank you.
Thank you I would now like to turn the conference back over to Natalie for closing remarks.
Thanks, <unk> and thank you everyone for your questions for participating in our conference call and for your continued interest and support of Sky Ridge facility.
Available after the call to answer any additional questions that you may have we look forward to speaking with you again on our third quarter earnings call. Thank you and have a wonderful day.
This concludes today's conference call. Thank you for participating you may now disconnect.
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