Q3 2023 RLI Corp Earnings Call

Good morning, and welcome to the RLI Corp, third quarter earnings teleconference. After management's prepared remarks, we'll open the call.

Rents up for question and answers.

Before we get started let me remind everyone that through the course of teleconference. RLI management may make comments that reflect their intentions beliefs and expectations for the feature.

As always these forward looking statements are subject to certain factors and uncertainties, which could cause actual results to differ materially. Please refer to the risk factors described in the company's various SEC filings, including in the annual report on Form 10-K as supplemented in Form 10-Q, all of which should be reviewed carefully the company has filed.

A form 8-K with the Securities and Exchange Commission that contains the press release announcing third quarter without.

During the call our line management may refer to operating earnings on earnings per share from operations, which are non-GAAP measures of financial without <unk>.

<unk> operating earnings and earnings pressure from operations consist of net earnings after the elimination of after tax realized gains or losses, and after tax unrealized gains or losses on equity securities.

Additionally, X gene earnings of Maui, Jim on the related taxes were excluded from operating earnings and operating EPS for 2022 due to the sale of our lives investment in the third quarter of two inch to inch T. Our life management believes these measures are useful in gauging core operating performance across reporting periods, but may not be comparable to other <unk>.

Any definition of operating earnings.

The form 8-K contains a reconciliation between operating earnings and net earnings.

The form 8-K and press release are available at the company's website at Www Dot are like Coke took hold.

I will now turn conference over to our life, Chief investment Officer, and Treasurer, Mr. R&D from Taylor. Please go ahead when you're ready.

Good morning, Thank you for joining <unk> third quarter earnings call for 2023.

Joining us are Craig <unk>, President and CEO , J <unk>, Chief operating Officer Todd.

Todd Bryant Chief Financial Officer.

Today's agenda will include Craig opening up the call with some high level remarks.

We will add detail on our financial results for the quarter.

Operator: After management of head remarks, we'll open the conference up for question and answers.

Jenn will offer additional commentary on market conditions, and our product portfolio.

Operator: Before we get started, let me remind everyone that through the course of teleconference, RLI management may make comments that reflect their intentions, police and expectations for the future. As always, these four different statements are subject to certain factors and uncertainties which could cause actual results differ materially.

The operator will then open the line for questions then Craig will close with some final thoughts Greg.

Erin and good morning, everyone.

The devastating Maui wildfires that occurred in early August were a notable event for our customers our team and our business this quarter.

Operator: Please refer to the risk factors described in the company's various SEC filings, including in the annual call on form 10K, as supplemented in form 10Q, all of which should be reviewed carefully.

We continue to extend our heartfelt support to all who are affected by this tragic event.

As Tom will touch on shortly the quarter's results were significantly impacted by this catastrophe.

Operator: The company has filed a form 8K with this Securities and Exchange Commission that contains the press release announcing third quarter results. During the call, RLI management may refer to operating earnings and earnings per share from operations which are non-gap measures of financial results. RLI's operating earnings and earnings per share from operations consists of net earnings after the elimination of after-tax realized gains or losses and after-tax unrealized gains or losses on equity securities.

Our claims team both in Hawaii and other parts of the country responded quickly to assess the damage and remain dedicated to helping affected policyholders begin to recover as quickly as possible.

Our purpose is to take on and diversify risk it can't be borne by an individual or business in exchange for a premium.

Subsequent to catastrophic or unexpected events, we execute our mission to fulfill the promises we have made to our impacted policyholders.

Operator: Additionally, equity and earnings of Maui Jim and the related taxes were excluded from operating earnings and operating EPS for 2022 due to the sale of RLI's investment in the third quarter of 2022. RLI's management believes these measures are useful in gauging core operating performance across reports and periods that may not be comparable to other company's definition of operating earnings. The form 8K contains a reconciliation between operating earnings and net earnings.

Our financial strength is a benefit to those affected as well as our shareholders.

With Todd and Jeff will go into more detail on the financials and the market in general.

Take it away thanks, Greg good morning, everyone.

Yesterday, we reported third quarter operating earnings of 61 per share.

The quarter's results were adversely affected by losses from the Hawaii wildfires, but we remain positive with an overall combined ratio below 100 and continued growth in investment income.

Operator: The form 8K and press release are available at the company's website at www.rlicorp.com.

Aaron Diefenthaler: I will now turn conference over to RLI's Chief Investment Officer and Treasurer, Mr R&D from Taylor. Please go ahead when I feel ready.

All in we posted a combined ratio of $98 seven for the quarter.

Now 88.0 year to date.

Craig Kliethermes: Good morning. Thank you for joining RLI's third quarter earnings call for 2023.

We continue to experience top line growth up 11% in the quarter, which Jen will impact in a bit.

Craig Kliethermes: Joining us are Craig Cleferman's president and CEO, Jen Klobna, Chief Operating Officer. Todd Bryant, Chief Financial Officer. Today's agenda will include Craig opening up the call with some high-level remarks. Todd will add detail on our financial results for the quarter. Jen will offer additional commentary on market conditions and our product portfolio.

Investment income advanced 50% as improved reinvestment rates and a larger invested asset base have been accretive.

Operator: The operator will then open the line for questions and Craig will close with some final thoughts.

Operating cash flow remained strong at <unk>.

$329 million year to date and continue to support growth in invested assets.

Q3 net earnings per share of <unk> 29.

Challenging to compare to last year's $9 61.

As 2022 was heavily influenced by the realized gains achieved on the sale of our stake in Maui Jim.

Craig Kliethermes: Craig, thank you Aaron and good morning everyone. The devastating Maui wildfires that occurred in early August were a notable event for our customers, our team, and our business best quarter. We continue to extend our heartfelt support to all who are affected by this tragic event.

Our underwriting profitability. The previously mentioned investment income growth and modest realized gains of $7 million were partially offset by net unrealized losses on equities of $25 million in the quarter.

Craig Kliethermes: As Todd will touch on shortly, the quarter results were significantly impacted by this catastrophe. Our claim team, both in Hawaii and other parts of the country, responded quickly to assess the damage and remain dedicated to helping affected policyholders begin to recover as quickly as possible. Our purpose is to take on and diversify risks that can't be borne by an individual or business in exchange for premium. Subsequent to catastrophic or unexpected events, we execute our mission to fulfill the promises we have made to our impacted policyholders, as well as our shareholders. Our financial strength is a benefit to those affected as well as our shareholders.

From an underwriting income perspective, the quarters 98, seven combined ratio compares to 97 reported last year.

Catastrophe activity affected both periods.

Losses recorded from the Maui wildfires were $66 million for the quarter, which was on the lower end of our previously announced range.

This amount $14 million relates to reinstatement premiums on our catastrophe treaties.

Impacts from this event added 17 points to the quarter's combined ratio.

We also recorded $5 million other storm related losses in the quarter.

The comparative quarter last year included $40 million in losses from Hurricane Ian.

Todd Bryant: I will let Todd and Jen go with the more detail on the financials and the market in general. We put the combined ratio of 98.7 for the quarter, now 88.0, year to day. We continue to experience top line growth, about 11% on the quarter, which Jen will unpack in a bit. Investment income advanced 50% as improved reinvestment rates and a larger invested asset base have been created. Operating cash flow remains strong at 329 million year to date and continue to support growth and invested assets.

As a reminder, first dollar retention on our catastrophe catastrophe treaty increased to $50 million in January of 2023 up from the $25 million previously.

Apart from catastrophe events incurred losses in the property segment, where LOE for the third quarter of 2023 and remain well contained for the year.

Elevated catastrophe losses, certainly made a notable impact on our property segments loss ratio for revenue growth is also part of the story.

Earned premium growth from rates achieved over the trailing four quarters continued to moderate the overall impact of storm losses with a property segments combined ratio was 88 on a year to date basis.

From a prior year's reserves perspective casualty drove the majority of the overall benefit recorded.

Casualty posted $22 million of favorable loss emergence across a number of product lines.

Executive products commercial excess general liability and personal umbrella had notable benefits over multiple accident years.

Todd Bryant: Q3 net earnings per share of 29 cents is challenging to compare to last year's $9.61 as 2022 was heavily influenced by the real-life gain achieved on the sale of our stake in Mount Jen. Our underwriting profitability, the previously mentioned investment income growth and modest realized gains of $7 million will partially offset by net unrealized losses on equities of $25 million in the quarter. From an underwriting income perspective, the quarters 98.7 combined ratio compares to 97 reported last year as catastrophe activity affected both periods.

Property was modestly adverse on the 2021 accident year. This was largely driven by marine which remains favorable on a current year basis.

For surety favorable reserve development was $1 million driven by the commercial segment as.

As noted each quarter our approach to reserving remains the same and the quarter's results are reflective of a consistent process for evaluating loss reserves.

Moving to expenses compared to last year, our quarterly expense ratio decreased one two points to $39 two.

The decline would have been greater but for the aforementioned reinsurance reinstatement premiums. These.

Todd Bryant: Losses recorder from the mowing wildfires were 66 million for the quarter, which was on the lower end of our previous play announced range. Of this amount, 14 million relates to reinstatement premiums on our catastrophe trees impacts from this event added 17 points to the quarters combined ratio. We also recorded 5 million and other storm related losses in the quarter. The comparative quarter last year included 40 million and losses from Hurricane Ian.

These seeded premiums are fully earned as recorded and result in lower net premiums earned from a trend perspective.

The elevated seeded premiums earned adversely impact expense ratio comparisons for the quarter. The expense ratio was up one eight points due to this impact on a year to date basis, the impact was half a point increase.

We have however continued to increase investments in people and technology to support growth improve the customer experience and drive long term efficiencies.

Todd Bryant: As a reminder, first dollar attention on our catastrophe catastrophe tree increased to 50 million in January of 2023 up from the 25 million previously. Apart from catastrophe events incurred losses in the property segment were low for the third quarter of 2023 and remain well contained for the year. Elevated the catastrophe losses certainly made a notable impact on the property segments loss ratio, the revenue growth is also part of the story. Printing growth from rates achieved over the trailing for quarters continue to moderate the overall impact of storm losses with the property segments combined ratio with 88 on a year to date basis.

Turning to investments capital markets had a challenging quarter with both stocks and bonds declining resulting in a total return of minus one 7% for the combined portfolio.

High quality fixed income has dominated our purchase strategy for some time and yields averaged 5% in Q3, well above the portfolio's current book yield.

Our cash and short term investment allocation was down from June 30th that's claim activity on the repayment of our 2013 long term debt issue at RLI Corp required additional liquidity.

Todd Bryant: From a prior years reserves perspective, casualty drove the majority of the overall benefit recorded. Casualty posted 22 million of favorable loss emergence across a number of product lines. Executive products commercial excess general liability and personal umbrella had notable benefits of the multiple acts, of the years. Property was modestly adverse on the 2021 accident year. This was largely driven by marine, which remains favorable on a current year basis. For surety, favorable reserve development was 1 million driven by the commercial segment.

Portion of the proceeds used for bond repayment on September 15th were sourced by drawing $50 million from our existing credit facility with PNC.

Overall, the balance sheet is in solid shape with an increased allocation to high quality fixed income slightly lower leverage and strong available liquidity.

Incorporating fixed income declines in comprehensive earnings and adjusting for dividends book value per share declined slightly from June 30, but remains up 13% from year end 2022 to $28 47.

Todd Bryant: As noted, each quarter, our approach to reserving remains the same, and the quarter's results are reflective of a consistent process for evaluating loss reserves. Moody to expenses compared to last year are quarterly expense ratio decreased to 1.2 points to 39.2. The decline would have been greater, but for the aforementioned re-insurance reinstatement premiums. These seeded premiums are fully earned, as recorded, and result in lower net premiums earned from a trend perspective. The elevated seeded premiums adversely impact expense ratio comparisons.

Away from the traditional investment portfolio invest the earnings were up slightly when compared to the $2 million significantly excuse me when compared to the last year for the $2 million in the quarter 2022 was heavily influenced by transaction related expenses of Maui, Jim and as referenced in our press release, we have excluded.

<unk> impact on operating earnings which offers a better comparison.

All in all a solid operating quarter and continued positive momentum for the year and with that I will turn the call over to Jim.

Todd Bryant: For the quarter, the expense ratio was up 1.8 points due to this impact. On a year-to-date basis, the impact was capital-point increase. We have, however, continued to increase investments in people and technology to support growth, improved the customer experience, and drive long-term efficiencies.

Thank you Todd.

We'll jump right into some details on our business by segment.

Pretty premium for the quarter was up 26%.

<unk> continues to be led by our E&S property Division, which grew 39% and included a 42% rate increase.

The downstream market remains hard with opportunities on both hurricane and earthquake business.

Todd Bryant: Turning to investments, capital markets had a challenging quarter with those stocks and bonds declining, resulting in a total return of minus 1.7% for the combined portfolio. High quality fixed income dominated our purchase strategy for some time, and yield to average 5% of Q3 well above the portfolio's current book yield. Our cash and short-term investment allocation was down from June 30th as claim activity and the repayment of our 2013 long-term debt issue at our light core required additional liquidity.

Capacity has been reduced or closed for many MGA market and body facilities. The delegated authority markets are still competitive but only when the risk these are narrower appetite.

We are starting to see some limited competition returned from admitted markets.

Commercial businesses in Florida are increasing deductibles are buying less limit to control their spend we are controlling our exposure by continuing to sell lower limits and managing our concentrations by region to acceptable levels.

Our growth, which is driven predominantly by rate at this point and positively contributed to the bottom line.

Todd Bryant: A portion of the proceeds used for bond repayment on September 15th were sourced by drawing 50 million from our existing credit facility at PMC. Overall, the balance sheet is in solid shape with an increased allocation to high-quality fixed income, slightly lower leverage, and strong available liquidity. Incorporating fixed income declined in comprehensive earnings and adjusting for dividends. Book value for share declined slightly from June 30th, but remains up 13% from year-end 2022 to $28.47. Away from the traditional investment portfolio, invest the earnings were up slightly when compared to the $2 million significantly, excuse me, when compared to the last two to $2 million in quarter.

Our Hawaii homeowner both grew premium 17% in the quarter, we are in a stable market with local underwriting and claims talent supporting Hawaii homeowners for over 25 years.

Allow me to wildfire in August with an extreme a tragic event for our insurers producer partners and employees.

Otherwise immediately after the events, providing direct support including alternative housing and care packages within the first week given.

Given the severity and behind many locations were complete losses, which allowed us to quickly fulfill our promise and Dave covered claims expeditiously.

We continue to work with insurers to understand the totality of their loss and help them procure long term housing.

Committed to the Hawaii homeowners market and will continue to write new business in the state. We're proud of our associate owners response to this event.

And their ongoing commitment to providing exceptional customer service.

Todd Bryant: 2022 was heavily influenced by transaction-related expenses at Maui Gym, and as reference in our press release, we've excluded Maui Gym's impact on operating earnings which offers a better comparison.

Our marine division have slower topline growth in the quarter due to market dynamics and underwriting adjustments named however, we see continued opportunities in all of our property markets in the near term near to medium term.

Todd Bryant: All in all, a solid operating quarter and continued a positive momentum for the year, and with that, I'll turn the call over to Jim. Thank you, Todd.

The combined ratio for the quarter for our property segment was 100 wanting to do to the Hawaii losses.

Find ratio year to date is 88, which reflects the increased margins were achieving in the current hard market.

Jennifer Klobnak: I will jump right into some details on our business by segment. Property premium for the quarter was up 26%. The growth continued to be led by our EONF property division, which grew 39%, and included a 42% rating. Delegated Authority Markets are still competitive, but only when the risk leads their narrower appetite. We are starting to see some limited competition returns from admitted markets. Commercial businesses in Florida are increasing deductibles or buying less limit to control their spend.

Turning to our surety segment premium was down 2% for the quarter, while we posted an 82 combined ratio.

Contract surety premium was down 7% for the quarter, we are in a more uncertain economic period, particularly for private sector construction, which is slowing due to higher material costs and interest rates in particular.

These conditions can cause contractors to stretch to win projects, but it puts pressure on their profitability and their ability to execute.

We're closely monitoring our contractors financial security and project backlog.

We are seeing some increased claim notices and are working collaboratively with our contractors to ensure jobs are completed while closely managing claim costs.

Jennifer Klobnak: We are controlling our exposure by continuing to sell lower limits and managing our concentrations by region to acceptable levels. Our growth, which is driven predominantly by race at this point, has positively contributed to the bottom line. Our Hawaii homeowner, both three premiums, 17% in the quarter. We've been a stable market with multiple underwriting and claim talent supporting the Hawaii homeowner for over 25 years.

Commercial surety premium was also down slightly we are having broad based success in writing new business in this market, but the timing of bond renewals that shifted into the fourth quarter and the release of several sizable bond put pressure on top line growth.

As we review the overall surety industry results. We are pleased with the profitability achieved by our surety team as we continue to focus on underwriting discipline.

Jennifer Klobnak: The long and wildfire in August was an extreme and tragic event for our insurance, producer partners and employees. We mobilized immediately after the event, providing direct support, including alternative housing and care packages within the first week. Given the severity and behind on many locations for complete losses, which allowed us to quickly fulfill our promise and take cover claims expeditiously. We continue to work with insurance to understand the totality of their loss and help them secure long term housing.

Casualty premiums grew 6% on a 90 combined ratio.

Personal umbrella premium led the way with 33% growth supported by the continued market disruption.

As a reminder, our personal umbrella product is sold on a standalone basis and demand is rising in those states, where personal lines carriers have been pulling back on their auto or homeowners businesses due to losses or the inability to obtain adequate rate levels.

Jennifer Klobnak: We are committed to the Hawaii homeowner's market and will continue to write new business in the state. We are proud of our associate owner's response to this event and they're ongoing commitment to provide exceptional customer service.

Given these issues, we work with our producer partners to manage the growth and have instituted higher underlying limit requirement or have surcharge insurers, who buy down their attachment points.

Jennifer Klobnak: Our marine division has lower top line growth in the quarter due to market dynamics and underwriting adjustments made. However, we've been continued opportunities in all of our property markets in the near term, near to medium term. The combined ratio for the quarter for our property segment was 122 due to the Hawaii losses. But the combined ratio of your date is 88, which reflects the increased margins we're achieving in the current hard market.

We have also obtained rate increases from many states, which translated into a 7% rate increase per person Brahma this quarter.

Premium in our professional services and small commercial division grew 6% this quarter as we continue to focus on serving architects engineers and contractors through our broad product offerings and value added with management services.

Our other casualty businesses, we are experiencing some challenges due to competition consolidation of insurers in select market segments, a slowdown in construction in certain region and revenue decreases for some transportation and construction risks despite.

Jennifer Klobnak: Turning to our surety segment, premium was down to a process for the quarter, but we posted in the 82 combined ratio. Contract surety premium was down 7% for the quarter. We are in a more uncertain economic period, particularly for private sector construction, which is slowing due to higher material costs and interest rates in particular. These conditions can cause contractors to stretch to win projects, but it puts pressure on their profitability and their ability to execute.

Despite these challenges are more mature business units and casualty transportation and executive product are collectively flat from a production standpoint.

Rate change for the casualty segment was up 5% for the quarter, which includes a 5% decrease for executive products, which is showing some moderation and a 10% increase in transportation as we continue to stay ahead of increasing loss cost.

Jennifer Klobnak: We're closely monitoring our contractors, financial security and project backlogs. We are seeing some increased claim notices and are working collaboratively with our contractors to ensure jobs are completed while closely managing claim costs. The financial security premium was also down slightly. We are having broad-based success in writing new business into the market, but the timing of bond renewals that shifted into the fourth quarter and the release of several size of a bond with pressure on top line growth. As we review the overall surety industry results, we are pleased with the profitability achieved by our surety teams as we continue to focus on underwriting disciplines. The average premium is 6% on a 90 combined ratio.

We would like to see the industry news of loss emergence in older accident years drive more discipline within the market overall.

As reference there are several moving parts on casualty, but we continue to focus on risk selection with a constant eye towards underwriting profit.

Once again, we are very pleased with the performance of our product portfolio and we see positive momentum in several key areas going forward, our diverse portfolio and supported by outstanding service to our producer partners and insurance continued to perform well.

Now I will turn the call over to the moderator to open it up for some questions.

Thank you the question and answer session will begin at this time, if youre using a speakerphone. Please pick up the handset before pressing any numbers should you have a question. Please press star followed by one on your telephone keypad and if you wish to withdraw your question for any reason please press star followed by Chi.

Jennifer Klobnak: Personal umbrella premiums led the way with 33% growth supported by the continued market disruption. As a reminder, our personal umbrella product is sold on a standalone basis. The demand is rising in those states where personal lines carriers have been pulling back on their auto or their homeowner's businesses due to losses or the inability to obtain asset rate levels. Given these issues, we work with our producer partners to manage the growth and have instituted higher underlying limit requirements or have surcharge ensured to buy down their attachment points.

<unk> will be taken in the order that you just received based on biofuel first question.

Our first question today comes from Greg Peters from Raymond James Greg. Your line is now open.

Great Good morning, everyone.

I wanted to go back 10 during your comments on pricing and casualty I think you said, 7% an umbrella, but you also called out.

Jennifer Klobnak: We have also obtained rate increases from many states which translated into a 7% rate increase for personal growth in this corner. We name our professional services a small commercial division through 6% this quarter as we continue to focus on serving architects, engineers and contractors for a broad product offering and value added with management services.

<unk> products and some of the other lines, where pricing is flat or down can you spend a minute and just give us your view on how these pricing trends are matching up with your expectations around loss cost inflation.

Jennifer Klobnak: For our other Ashley businesses we are experiencing some challenges due to competition, consolidation of insurance and select market segments, a slow downing construction in certain regions, and revenue decreases for some transportation and construction risks. Despite these challenges, our more mature business units and casually transportation and executive products are collectively flat from a production standpoint. Rate change for the casual assignment was up 5% for the quarter which includes a 5% decrease for executive products which is showing some moderation and a 10% increase in transportation as we continue to stay ahead of increasing loss costs.

Sure Greg Thanks for the question.

It varies by market within the casualty segment, our casualty book is fairly diverse.

And we're seeing opportunity in a lot of spots.

Personal umbrella, leading the way on growth, but that is subject to.

Room rate filings, which we've had a lot of success in certain states and in other states I would say that it's been more challenging. So we are managing that growth by region and working with our producers to make sure that we're not growing too quickly in states, where we can't get those approvals in place.

But we think overall based on how we're managing that growth and based on our commitment to dedicated claim service in that area that we are staying on top of trends that are happening I know that in the industry that is a difficult.

Jennifer Klobnak: We would like to see the industry news of loss emergence of older action years driving more disciplines within the market overall. As referenced, there are several moving parts and casualties, but we continue to focus on risk selection with a constant eye toward underlying profits.

Coverage, we hear that from our reinsurance partners.

Jennifer Klobnak: Once again, we are very pleased with the performance of our product portfolio and we see positive momentum in several key areas going forward. Our diverse portfolios supported by outstanding service to our producer partners and insurance continue to perform well.

As they compare our book performance to others. They will continue to support us. So we think we're doing okay. In that area. I think transportation is an area. That's hit the news a lot recently too is related as far as the auto losses.

Operator: Now I'll turn the call over to the moderator, so open it up for some questions. Thank you. The question and answer session will begin at this time. If you are using a speech phone, please pick up the handset before pressing any numbers. Should you have a question, please press star followed by one on your telephone keypad and if you wish to withdraw your question for any reason, please press star followed by two. Your question will be taken in the order that it has received. Please stand by for your first question.

We've got 10% rate increase for transportation for the quarter, 7% year to date.

I've got a chart here that shows back to 2018, we had rate increases between 6% to 12% every year.

<unk> and so we continue to narrow the losses happened everyday in our transportation division. So we need to continue to get rate inflation.

And added to our bodily injury or the court system happens and we do need to continue to get rate there.

Greg Peters: Our first question today comes from Greg Peters from Raymond James. Greg, your line is now open from Philhoed. Great.

Our focus really on risk selection, though to selling our transportation division in general.

We've been shrinking in certain parts, because it's been so competitive and so it's not all about rate versus loss trend. It's about looking at the individual risks and making sure that you understand the possibility of how they are controlling losses, how their training their drivers and maintaining their trust and things of that nature. So we dig into the details there.

Jennifer Klobnak: Good morning, everyone. I wanted to go back and during your comments on pricing in casualty. I think you said 7% in umbrella, but you also called out financial products and some of the little lines where pricing is flatter down. Can you spend a minute and just give us your view on how these pricing trends are matching up with your expectations around lost cost inflation? Sure, Greg. Thanks for the question. You know, it varies by market within the casualty segment.

And then I think the other area of interest usually as are our executive products group, which includes the D&O area I mentioned, the 5% rate decrease for the quarter, 6% year to date.

Lines, there have been it's been a drastic reduction in symptom larger reductions in the first half of the year.

Jennifer Klobnak: Our casualty book is fairly diverse. And we're seeing opportunity in a lot of spots. You know, personal umbrella leading the way on growth. But that is subject to approved rate filings, which we've had a lot of success in certain states and in other states, I'd say that it's been more challenging. So, you know, we are managing that growth by reaching and working with our producers to make sure that we're not going too quickly in state for we can't get those approved votes in place.

But again is risk selection to get off of accounts, where we think that rate decreases too much.

We'll come back to individual underwriting and looking at the risks and making sure that we're comfortable with each one going forward the momentum of renewing an account, it's pretty strong, but as an underwriter that's paid on the bottom line.

Please take a moment and they look at it to see what of that risk has changed since the last renewal and should they actually continue.

Jennifer Klobnak: But we think overall based on how we're managing that growth and based on our commitment to dedicated claim service in that area that we are staying on top of trends that are happening. I know that in the industry, that is a difficult coverage. We hear that from our reentry partners. But as they compare our book performance to others, they continue to support it. So we think we're doing okay in that area.

Even if there is a may decrease and sometimes the answer is yes that that account has performed well.

We can keep supporting them and at other times, we have to be able to walk away.

So that's.

Kind of a scenario if you have questions on any of the other areas I'm happy to answer any other questions on that.

Well that was that was great color. Thank you.

I guess.

I would like to pivot for a second on.

Jennifer Klobnak: I think transportation is an area that's hit the news a lot recently too. You know, it's related as far as the auto losses. You know, we've got 10% rate increase for transportation from the core. 7% year to date. I've got a chart here that shows back to 2018 and rate increase between 6% and 12% every year. And so, you know, we continue to know that lots of happen every day in our transportation division.

On the reinsurance portion just curious about how I think you said, the Hawaii losses wound up coming at the low end of the range of what you originally guided to so just curious about how the reinsurance worked for that loss.

Much covers loft or some parameters that you can provide and then.

Okay.

Jennifer Klobnak: So we need to continue to get rate of inflation, whether it's, you know, if they manage or probably injury or the court system happens, you know, we need to continue to get rate there. We're focused really on risk selection, though, too. So in our transportation division in general, you know, we've been shrinking in certain parts because it's been so competitive. And so it's not all about rate versus loss trend. It's about, you know, looking at the individual risks and making sure that you understand the possibility of how they are controlling losses, how they're training their drivers and maintaining their trust and things of that nature.

Do you think it's going to affect your pricing for next year or considering your catastrophe results were been pretty limited at least year to date, maybe you'll get a pass on that I'm. Just curious if you have an early view on reinsurance costs for next year.

Well I'm going to let Jeff. This is Craig I'm going to let Jim talk about what you think about next year, because quite a lot closer to.

That all I can say is the loss with the reinstatement premium that Todd referred to there are no holes in our program live programming exist just look at the previous to the Maui loss. So if we were to have another large event, we would have coverage through the power of just like it was free borrowing as a result of reinstatement premiums.

Jennifer Klobnak: So we dig into the details there, and then I think the other areas of interest usually is our executive products group, which includes the D&O area. I mentioned the 5% by decrease for the quarter, 6% year to date. The headlines there have been that it's been a drastic reduction and now we just see some larger reductions in the first half of the year. But again, we've used risk selections to get off of accounts where we think that rate decrease is too much.

Yes, so we had disclosed $65 million to $75 million range net of reinsurance that would be and that would include all in so that includes reinstatement premium we look $66 million you can see it was at the low end of the range that included $14 million of reinstatement premium as Tom referenced earlier.

Jennifer Klobnak: And so come back to individual underwriting and looking at some risks and making sure that they're comfortable with each one going forward. The momentum of renewing an account is pretty strong, but as an underwearer that's paid on the bottom line, they take a moment and they look at it to see what does that risk has changed since the last renewal and should they actually continue even if there is a raise decrease. And sometimes the answer is yes. That account is performed well and we can keep supporting them and at other times we have to be able to walk away. And so that's kind of the scenario.

If you look at it our tower is at $750 million tower excess of $50 million retention.

We're not going to get near.

The top of that tower with this event.

Back towards the lower end.

We think we have plenty of coverage for events like this I think this wasn't other than if you talk to our local Hawaii underwriting and claims staff. They let's say they are.

I've never seen anything like this on the island.

They've been there quite a while it was quite a severe events, but we look at concentrations for property business across our portfolio. We have a number of units that write property business from E&S property and marine to a package product to Hawaii.

Greg Peters: If you have questions on any of the other areas on happy to answer any other questions on that. Well, that was that was great color. Thank you.

Todd Bryant: I guess, you know, I would like to pivot for a second on the reinsurance portion. Just curious about how I think you said the Hawaii losses wound up coming at the low end of the range of what you originally guided to. So just curious about how the reinsurance worked for that loss. You know, how much covers left or some parameters that you can provide. And then do you think it's going to affect your pricing for next year or considering that your catastrophes elsewhere have been pretty limited at least here today.

All cases.

Good old fashion circles of limit how much limit that we put in an area and are we comfortable that as that particular event whatever time came through that area are we comfortable sustaining net loss on a net basis.

Just sharing that information with our reinsurers.

I think we will have more conversations with our reinsurance given the unusual for our portfolio at least in our history.

But we have been in contact with them, we've been regardless to Bermuda and London already this year or so or <unk>.

<unk> talked with everybody, we're pretty transparent when it comes to a loss. So we give them a lot of detail around.

Todd Bryant: Maybe you'll get a pass on that. I'm just curious. If you have an early view on reinsurance costs for next year. Well, I'm going to let Jim, I'm just crying. I'm going to let Jim talk about who should think about next year because she's quite a lot closer to me. But all you say is the loss with the reins being printed in the top referred to. There are no holes in our program that are programming this just like it did previous to the Maui loss.

The particular individual losses, and what's happening and how we adjusted claims.

And this particular event in Hawaii.

Our thermal coverages involved so.

And our last estimate yes, we looked at things like additional letting expense for example than we are.

Reserve the full amount of that limit because we have seen an increased cost for housing in the area and we think it will take a long time to rebuild so we've built in all of those assumptions into our estimate and we're comfortable with that.

Todd Bryant: So if we were to have another large event, we would have coverage to the power of just like it was free Maui as a result of the premium that we paid. Yeah, so we had this close to 65 to 75 million that range that have re-uturned that with me. And that would include all in. So that includes reinstatement premium. We booked 66 million. You can see it was at the low end of the range.

Going forward the reentry of the course of it and say we want to charge you more but that's what they do you hear that in all of the headlines.

Work with them to show them, what our exposure is what our processes and look for differentiation in the market because again, we think we do a pretty good job in this area. We've been doing it for a long time and so we wouldn't expect it to.

Todd Bryant: That included 14 million of reinstatement premium as child reference earlier. If you look at it, our tower is 750 million dollar tower acts as a 50 million retention. But we're not going to get near the top of that tower with this event. In fact, we're towards the lower end. We think we have plenty of coverage for events like this. I think this was an odd event. If you talk to our local Maui underwriting and claims staff, they would say they've seen everything anything like this on the island.

Cause a huge impact to our reinsurance renewal process.

But we're very early stages of negotiation for one ones at this point, so we'll see how it turns out.

Excellent. Thanks for that color I guess the final question I had is just in the area of surety.

You talked.

The premium growth you've talked about some of the economic challenges for for premium growth in that business.

Just curious you know theres a lot of.

Todd Bryant: They've been there quite a while. It was quite a severe event. But we look at cost iterations for property business across our portfolio. We have a number of units that write property business from the end of properties and marine to our package products to Hawaii. In all cases, we do the old fashioned circles of limits, how much limits do we put in an area. And we're comfortable that it's a particular event of whatever trying to go through that area are we comfortable sustaining that law on a bad basis and sharing that information with our re-insured.

There's a lot of headlines out there and noise in the marketplace about how the economy is going to look for next year.

And as you guys are going through the budgeting process I'm curious with your customer set how do you think the surety business might shape up next year any sort of guidepost you might be willing to provide would be helpful. That's my last question.

Sure. So I don't know if you follow the SFA results that get published every quarter. They came out about a month ago.

There was a pretty big lag, but if you look at the results for the industry they've been elevated for the last couple of years and you look at our results, our performing very well compared to the industry from a from a bottomline perspective from a top line perspective, you'll see that we've actually.

Todd Bryant: I think we'll have more conversations with our re-insured given that was unusual for our portfolio at least in our history. But we have been in contact with them. We've been we've got our trips to Bermuda and London already this year. So we're in contact with everybody. We're pretty transparent when it comes to a loss. So we give them a lot of detail around the particular individual losses and what's happening and how we adjusted the claim.

I'll say fallen down the chart a little bit in terms of the largest surety market. So we're now ranked around the 20th largest surety market.

And some people say Oh, it's disappointing that we're not used to be I think the 10th largest.

Well compared to the industry from a from a bottomline perspective from a top line perspective, you'll see that we've actually.

Todd Bryant: In this particular event, Hawaii, you know, there are several converges involved. So we in our loss estimate, you know, we looked at things like additional living expenses. For example, and we have reserved the full amount of that limit because we have seen an increased cost for housing in the area. And we think it'll take a long time to rebuild. So we've built in all of those assumptions into our estimate. We're comfortable with that.

I will say fallen down the chart a little bit in terms of the largest surety market. So we're now ranked around the 20th largest surety market and some people say Oh, it's disappointing that we're not used to be I think the 10th largest and so that is a little bit disappointing, but the point.

It's more competitive.

James as I mentioned and distractions, but we want to be sure they bid projects under contract by in particular.

Todd Bryant: Going forward, the re-insured of course are going to say, you know, we want to charge you more. That's what they do. You hear that in all the headlines. We're going to work with them to show them what our exposure is, what our processes look for differentiation in the market. Because again, we think we did pretty good job in this area. We've been doing it for a long time. And so we wouldn't expect it to cause a huge impact to our re-enteral renewal process. But we're very early stages of investigation for one month at this point.

And in the process of Sustainment business.

So it's hard to say, how our business has been to grow it's going to depend on how our competitors Act.

For us we're going to continue to focus on the discipline and the selection.

Yeah.

Great. Thank you for your answers.

Thank you Greg. Our next question comes from Andrew Anderson from Jefferies. Andrew. Your line is now open. Please proceed with your question.

Greg Peters: So we'll see how it turns out. Excellent. Thanks for that color.

Greg Peters: I guess the final question I had is just in the area of surety, you talked, you know, the premium growth, you talked about some of the economic challenges for premium growth in that business. I'm just curious, you know, there's a lot of, there's a lot of headlines out there in noise in the marketplace about how the economy is going to look for next year. And, you know, as you guys are going through the budgeting process.

Hey, good morning, looking at casually reserve releases that were a bit stronger quarter over quarter, though a little bit lower year over year I guess to start is there a different reserves that are reviewed in the third quarter versus the second.

Secondly has the approach to reserve studies and viewing inflation trends change through nine months this year.

Hi, Andrew.

Todd the processes, let's say, so theres nothing different.

Greg Peters: I'm curious with your customer set, how you think the surety business might shape up next year, any sort of guide post you might be willing to provide would be helpful. That's my last question. Sure, so I don't know if you follow the SFA results that get published every quarter, they came out about a week ago. They're a pretty big lag, but if you look at the results for the industry, they've been elevated for the last couple of years.

Quarter to quarter, so nothing unique about the third quarter relative to the first two quarters and nothing different as we compare to two what would have been the third quarter of last year. So no change whatsoever. This is just how.

Greg Peters: And if you look at our results, we're probably very well referred to the industry from a, from a bottom line perspective. From a top line perspective, you'll see that we'd actually, I'll say fallen down the chart a little bit in terms of the larger surety markets. So we're now ranked around the 20th largest surety market. And some people say, oh, it's disappointing that we're not, and we used to be, I think, the 10th largest.

How the studies fell out if you will.

Yeah.

Yes.

Greg Peters: Well, I've heard of the industry from a, from a bottom line perspective. From a top line perspective, you'll see that we'd actually, I'll say fallen down the chart a little bit in terms of the larger surety markets. So we're now ranked around the 20th largest surety market. And some people say, oh, it's disappointing that we're not, and we used to be, I think, the 10th largest. So that is a little bit disappointing, but the point is more competitive, you know, sometimes, as I mentioned, they do stretch.

Got it and I think in the second quarter of this year, you've made some changes to current accident year picks for some of the energy business was there any similar type of changes and current <unk> this quarter and casualty.

Nothing nothing material whatsoever on the current accident year not at all.

Okay, and maybe last one for me at the top of the call you had kind of mentioned the expense ratio, improving and perhaps a little bit of noise from the reinstatement premium, but what kind of opportunities do you see here with the investments that you're making in technology to perhaps improve the expense ratio a little bit from here.

Well, yes, that's a good question I think we're always looking to see where we can drive efficiencies as we grow.

So there is opportunity there.

Greg Peters: So I want to be sure that they did projects on the contract science particular, that they're building in enough process to sustain their business. So it's hard to say how our business has been a grow. It's going to depend on how our competitors act. But for us, we're going to continue to focus on the discipline in the next election. Great. Thank you for the answers. Thank you, Greg.

Technology front.

Trying to get fewer either front end systems or getting to one billing system. So look at all of the efficiencies there, but a big part of it is really about customer experience. So that anything positive that we do from that standpoint.

Hope would be that would.

Would be supportive of growth growth in premium which will also.

Andrew Andersen: Our next question comes from Andrew Anderson from Jeffrey. Andrew, your line is now way from, please proceed. Your question.

The expense ratio, so theres opportunity certainly investments we need to make.

We're focused on all of that.

Todd Bryant: Hey, good morning. Looking at casually reserve releases that were a bit stronger, quarter over quarter, though a little bit lower year over year. I have to start, is there different reserves that are reviewed in the third quarter versus the second? And secondly, has the approach to reserve studies and viewing inflation trends changed through nine months this year? I am, it's time. The process is the same. So there's nothing different quarter to quarter.

Great. Thank you.

But.

Thank you as a reminder, if you'd like to ask a question. Please press star followed by one when is how to think he put.

Our next question comes from Meyer Shields from <unk>. Your line is now open. Please go home whenever you're ready.

Okay.

Great. Thank you.

One quick question for John you talked about underwriting adjustments Marine I was hoping you could expand on that a little bit.

Todd Bryant: So nothing unique about the third quarter relative to the first two quarters. And nothing different as we compare to what would have been done third quarter last year. So no change whatsoever. This is just how the studies fell out if you will. God, and I think in the second quarter this year, you made some changes to current acts in ear picks for some of the energy business. Was there any similar type of change in current ear picks this quarter and casualty? Nothing, nothing material whatsoever on the current act that you're not alone.

Sorry, you were talking so fast I didnt understand the question.

I'm sorry.

Additional hazard yet.

In your opening comments, you talked about underwriting adjustments in marine and I'm not sure what that actually means.

Sure. So you may have heard Tom say that the property reserve.

Loss reserve release was a little standards for this quarter and that was related to marine liability claims that we had from a couple of years ago submarine is even though the property segment is the combination of both property and liability coverages predominantly property. That's why it's in that segment, but.

But we have seen a little bit of activity on the liability side and we have seen some issues in our cargo bucket. So we've made a few small underwriting adjustment side alone were not like we underwrite the book, but we're just adjusting on the edge of the pit, which has caused us to reduce a little bit the growth that we've seen historically in marine as of late.

Todd Bryant: Okay, and maybe last one for me, at the top of the call, you'd kind of mentioned the expense ratio improving in perhaps a little bit of noise from the reinstatement premium, but what kind of opportunities do you see here with the investments that you're making in technology to perhaps improve the expense ratio a little bit from here? Well, yeah, that's a good question. I think we're always looking to see where we can drive efficiencies as we grow, so there is opportunity there on the technology front, you know, trying to get fewer either front end systems or getting to one deline system, so looking on the efficiencies there, but a big part of it is really that customer experience.

Oh, that's a very healthy book, though we continue to get positive rate in marine so for the quarter, we had a 5% rate increase in marine.

6% year to date, so we're just taking minor underwriting acumen.

We do for a while but in this particular case it was a little bit more noticeable on the top line.

So that's a second marine bunker.

Okay. So it wasn't like a numerical adjustment there just tightening of underwriting standards.

Todd Bryant: So that anything positive that we do from that standpoint, you know, the whole would be, you know, that would be supportive of growth at growth and premium, which will also improve the expense ratio. So there's opportunity, certainly investments we need to make and we're focused on all of that.

Yes, yes.

Okay, Alright, sorry, I wasn't sure.

Related question I know, we've talked a lot about how.

Turmoil in the personal lines market is creating opportunity.

For Standalone personal umbrella and I'm wondering are there any down side are there any business loss sort of on that that you wouldn't want to leave because of.

Todd Bryant: Great, thank you, but. Thank you.

Because of all the challenges in personal lines.

Operator: As a reminder, if you'd like to ask a question, please press star, followed by one on your telephone keypad.

That's an interesting question.

Meyer Shields: Our next question comes from Meyer Shields from KBW. May your line is now open.

Yeah, we're not really losing business right now we are on retention is pretty much steady so I would say there's nothing notable there.

Jennifer Klobnak: Please go home whenever you're ready. Great. Thank you. Good morning. One quick question for Jen, you talked about underwriting injustice and marina, it's hoping you could expand on that a little bit. Sorry, you were talking so fast, I didn't understand the question. Sorry, that's an occasional hazard. Yeah, in your opening comments, you talked about underwriting adjustments in marine, and I'm not sure what that actually means. Sure, so you may have heard to us say that these property reserves, loss reserves, the lease was a little bit adverse in this quarter, and that was related to marine liabilities, a place that we had from a couple of years ago.

In fact, it would be nice if our retention was higher because it does take effort to gaining new business or anything like that that would be higher but.

We're not seeing any business that were losing that we would not want to leave it at this point.

Okay excellent and then one final question just for.

For modeling purposes.

Is there a breakdown of the catastrophe losses and reinstatement premium between the property and casualty segments that we can use.

Yes Meredith.

For the quarter it really was contained.

Jennifer Klobnak: So marine is, even though it's a property segment, it's a combination of both property and liability coverage is predominantly property, that's why it's in that segment. But we have seen a little bit of activity on the liability side, and we have seen some issues in our cargo book, and so we've made a few small underwriting adjustments. I don't want to, we're not with me underwriting the book, so we're just adjusting on the edges of it, which has calmed us to reduce the little bit of growth that we've seen historically in marine as of late.

All of the Maui losses were contained within the property segment as well as the reinstatement premium.

Other storm losses in the quarter, but the other 5 million that I mentioned, there was around $1 million above just about $1 million.

In the casualty segment. So the bulk of bulk of that was in the property segment as well.

Okay perfect. Thank you so much.

But.

Jennifer Klobnak: That's a very healthy book, though. We continue to get positive rate in marine, so for the corner, we have a 5% rate increase in marine, a 6% year date. So we're just taking minor underwriting issues, so we do throughout, but in this particular case, it's a little bit more noticeable on the track line, so that's what's going on in marine book. Okay, so it wasn't like a numerical adjustment, it was just fighting under calmed writing standards. Yeah, yeah. Okay, all right, sorry, I wasn't sure.

Thank you as a final reminder, if you'd like to ask a question. Please press star followed by one on your kind of thing can you Pat.

Our next question comes from Scott <unk> from RBC capital.

Please go ahead whenever you're ready.

Hi, Yes. Good morning, I was wondering if you could if you're able to share the what the gross losses are from Hawaii wildfires I think.

Somebody was trying to get at that before but is that is that something you're able to share.

Jennifer Klobnak: Related question, I know we talked a lot about how turmoil in the personal line market is creating opportunity for standalone personal umbrella. And wondering, I've seen already downside that there are any business that's lost sort of on that you wouldn't want to leave because of all the challenges in person. That's an interesting question. I, you know, we're not really losing business right now. We are attention. It's pretty much steady. So I would say there's nothing notable there.

Got it it's Tom.

I'm not sure of the relevance from that standpoint, I mean to the extent that you are trying to do a comparative to <unk>.

Prior periods when you think in terms of changes in our reinsurance.

But but it's you're going to be in that 150, plus range. I mean, you can kind of see it.

And the initial reserves that we estimates that we have made.

Jennifer Klobnak: In fact, it'd be nice if our retention was higher because it does take efforts, you know, to get you new business. So it'd be nice if that would be higher. But, you know, we're not seeing any business that we're losing that we would not want to leave without a safe point.

Meyer Shields: Okay, excellent.

We're going to do a $1 30 to $1 50 range and we're constantly attempting in any way to be to be more on the conservative side.

Our initial initial book.

Okay. That's helpful and then just.

Touching on the reserve releases again was there any particular accident years.

We're.

Todd Bryant: And then one final question, just for modeling purposes. Is there a given breakdown of the catastrophe losses and the reinstatement premium between the property and casualty segments that we can use? Yes, Mayor Todd. For the quarter, it really was contained all of the mowly losses were contained within the property segment as well as the reinstatement premium. The other storm losses in the quarter, but the other five million that I mentioned, there was around a million about just found the money that was in the casualty segment. So the bulk of bulk of that was in the property segment as well. Okay, perfect. Thank you so much. Thank you.

Most of those releases came from or was it was it spread out anything notable there.

It was it was spread out I mean, we have a little bit in the 15 to 17. Some of the 19 to 21 I mean, it really wasn't any particular accident year that a bulk of that was coming through pretty spread.

Okay and then just my last one was a comment that was made about I think it was.

The property book there was a.

Some signs of increased competition for middle market carriers.

And I was wondering if you might be able to give a little more detail on that is are you just saying that from one or two.

Areas certain regions or.

Just curious if you can share anything more on that.

Scott Heleniak: As a final reminder, if you'd like to ask questions, please press star followed by one on your telephone keypad. Our next question comes from Scott Helen Jackson, RBC Capitol. Scott, please go ahead whenever you're ready. Yeah, morning, I was wondering if you could, if you're able to share the, what the gross losses are from the Hawaii wildfires. I think somebody was trying to get at that before, but is that, is that something you're able to share?

Sure. So this is Joe.

We focus on Florida. These days, so I think Florida, we're seeing it was surprising to see some we lost one account to somebody but it's not widespread but you see these little green shoots are you surprised by that so I think that Florida market in particular will be very difficult to navigate on an admitted basis. So.

I don't know that that's the start of a trend I think the big competition comes from a lot of those MGA. So things, but then also citizens as well.

It needs to be a big force, there, which is unfortunate to see that you'd hoped that that would be less of an emphasis.

Scott Heleniak: Got it. It's time. I mean, I'm not sure the relevance from that standpoint. I mean, to the extent that you're trying to do a comparative to prior periods when you think in terms of changes and the reinsurance. But, but it's you're going to be in that 150 plus range. I mean, you can kind of see it. And the initial reserves that we estimates that we have have made. What we're going to do, you know, 130 to 150 range. And we're constantly attempting anyway to be, to be more on the conservative side in our initial initial book.

Scott Heleniak: Okay, that's that's helpful.

So I don't know that market will continue to evolve we're not we're not seeing a ton of competition there, but there is some some starting to emerge.

Okay I appreciate that thanks.

Thank you as there are no further questions I will now turn the conference over to Craig <unk> for any closing remarks.

Thank you everyone for joining today.

The financial results, we reported yesterday reflects our organizational resiliency.

Consistent profitability and topline growth are a testament to our diversified specialty product portfolio, our deep underwriting and claim expertise in our chosen markets and a willingness to prudently lean into district disruption, where we understand the exposures and the market environment.

Scott Heleniak: And then just touching on the reserve releases again, was there any particular accident here that stood out where most of those releases came from, or was it, was it spread out anything notable there? It was it was spread out. I mean, we have a little bit in the 15 to 17 some of the 19 to 21. I mean, it really wasn't any particular accident here that a bulk of that was coming through pretty pretty spread. Okay.

We grow with the opportunities and with investments in talent as experts and deep relationships, we don't see growth simply for growth's sake, and we don't run away from markets, we serve with the first large loss.

Our disciplined commitment to make the best long term decisions for our customers and our shareholders has served us well and is a differentiator of our culture in the organization.

Jennifer Klobnak: And then just my last one was a comment that was made about, I think it was on the property book. There was some signs of increased competition from the market carriers. And I was wondering if you might be able to give a little more detail on that is you just seeing that from one or two in certain areas, certain regions or just curious if you can share anything more on that. Sure.

Proud of our associate owners effort and a unique ownership model. We have maintained we are committed to being different because being different works look forward to visiting with you all next quarter.

Okay.

Ladies and gentlemen, if you wish to access the replay for this call you may do say by dialing 18668139403 with an access code of 457 397. This concludes our conference call for today. Thank you participating and have a nice rest of your day all parties may.

Jennifer Klobnak: So, this is Jen. So, you know, we focus on Florida these days. Same Florida we're seeing it was surprising to see some we lost one account to somebody, but it's not widespread. But, you know, you see these little green shoes and you're surprised by it. So, I think the Florida market in particular would be very difficult to navigate on an independent basis. So, I don't know if that's the sort of a trend.

Now disconnect.

[music].

Jennifer Klobnak: I think that the big competition comes from, you know, a lot of those M.G.A.s and things but then also citizens as well, continues to be a big force there, which is unfortunate to see. You hope that that would be less of an emphasis. So, I don't know. That market will continue to evolve. We're not we're not seeing a ton of competition there, but there is some, some sorry to emerge. Okay. I appreciate that. Thanks. Thank you.

Operator: Is there no further questions?

Craig Kliethermes: I'll now turn the conference over to Craig. Kill tonight for any closing remarks. Thank you, everyone, for joining today. The financial results we reported yesterday reflects our organizational resiliency. Consistent profitability and top-line growth are a testament to our diversified specialty product portfolio, our deep underwriting and claim expertise in our chosen markets and a willingness to serve with the first large loss. Our discipline commitment to make the best long-term decisions for our customers and our shareholders has served us well, and is a differentiator of our culture and our organization. I'm proud of our associate owners effort and the unique ownership model we have maintained. We are committed to being different because being different works, look forward to visiting with you all next quarter.

Operator: Ladies and gentlemen, if you wish to access the replay for this call, you may do so by dialing 1-866-813-9403 with an access code of 457-397.

Operator: This concludes our conference call for today. Thank you all participating and have a nice rest of your day. All parties may now disconnect.