Q4 2023 Old Republic International Corp Earnings Call
Ladies and gentlemen, thank you for standing by.
I'll come to old Republic International's fourth quarter 2023 earnings conference call.
During the presentation, all participants will be in a listen only mode.
Afterwards, we will conduct a question and answer session.
At that time, if you have a question. Please press star followed by the number one on your telephone keypad.
If at any time during the conference you need to reach an operator, Please press star zero.
As a reminder, this conference is being recorded Thursday January 25th 2024.
I would now like to turn the conference over to Joe Calabrese with the financial Relations Board.
Joe Calabrese: Thank you.
Good afternoon, everyone.
Joe Calabrese: Joining us for the old Republic conference call to discuss fourth quarter 'twenty.
Joe Calabrese: 'twenty three results.
Joe Calabrese: A copy of the press release and posted a separate financial supplement, which we assume you have seen and or otherwise have access to during the call.
Joe Calabrese: The documents are available at old Republic's website, which is www got old Republic Dot com.
Joe Calabrese: Be advised that this call may involve forward looking statements as discussed in the press release and financial supplement dated January 25th 2020 for risk.
Joe Calabrese: Risks associated with these statements can be found in the company's latest that's the T box.
Joe Calabrese: This afternoon's conference call will be led by Craig Smiddy, President and CEO of Old Republic International Corporation, and several other senior executive members as planned for this meeting.
Joe Calabrese: At this time.
Craig Smiddy: Like to turn the call over to Craig spending. Please go ahead Sir.
Craig Smiddy: Okay, Joe Thank you.
Craig Smiddy: Good afternoon, everyone and welcome again to old Republic's fourth quarter and year end 2023 earnings call.
Craig Smiddy: With me today is Frank Sodaro, our CFO, MRI and Carolyn Monroe, our president and CEO of our title insurance business.
Carolyn Monroe: So our focus on specialization and diversification across title.
Carolyn Monroe: P&C insurance enabled us to produce a consolidated combined ratio of 93.3 and $237 million of consolidated pre tax operating income in the quarter for the full year. The consolidated combined ratio was $92 six compared to <unk> 90.
One in 2022 and consolidated pre tax operating income was $938 million compared to $1.059 billion in 2022.
Carolyn Monroe: In General insurance, we continued to produce strong underwriting results with a 92 combined ratio and $195 million of pre tax operating income in the quarter for the full year. The general insurance combined ratio was 92, just slightly higher than our 89 five.
Carolyn Monroe: And then 2022 and pre tax operating income was $788 million up 14% from the $690 million, we produced in 2022.
Carolyn Monroe: And despite the headwinds from mortgage insurance rates and a soft real estate market title insurance produced profitable underwriting results with a 95, five combined ratio and $44 million of pre tax operating income in the quarter for the full year titles combined ratio was 90.
Carolyn Monroe: Seven one compared to 93, two and 2022 and pre tax operating income per title was $134 million down from the $309 million in 2022.
Carolyn Monroe: So our conservative reserving practices continue to produce favorable prior year loss development in all three segments, which by the way marks our ninth consecutive year of.
Carolyn Monroe: Favorable prior year development.
Carolyn Monroe: Our balance sheet. It remains solid even as we continue to return capital to shareholders through both dividends and share repurchases. While we continue to invest in new underwriting subsidiaries people and technology, all with a focus on the long term.
So with those introductory comments I will now turn the discussion over to Frank and then Frank I'll turn things back to me to cover General insurance, followed by Caroline who will discuss the title insurance and then we'll open up the conversation as well we do to Q&A.
Frank Sodaro: So with that Frank I handed to you.
Frank Sodaro: Thank you Craig and good afternoon, everyone. This morning, we reported net operating income of $190 million for the quarter and $750 million for the year.
Frank: On a per share basis comparable year over year results were 69.
Frank: Versus 80 cents for the quarter and $2 63.
Carolyn Monroe: Versus $2 79 for the full years.
Carolyn Monroe: Net investment income increased 19% and 26% for the quarter and year, respectively, driven primarily by higher yields.
Carolyn Monroe: Our average reinvestment rate on corporate bonds.
Carolyn Monroe: The year was $5 three 5%, while the comparable book yield and balance disposal was just over two 8%.
Frank Sodaro: Non portfolio book yield is now nearly 4% compared to three 3% at year.
Frank Sodaro: Year end last year.
Frank Sodaro: Our investment portfolio mix remains consistent with last quarter and the quality of our bond portfolio remains very high with 99% in investment grade securities with an average maturity of four three years.
Frank Sodaro: During the quarter the valuation of our fixed income securities increased by approximately $445 million driven by interest rates.
Frank Sodaro: The value of the stock portfolio increase.
Frank Sodaro: <unk> $110 million and ended the year in an unrealized gain position of just over $1 1 billion.
Frank Sodaro: From a loss reserve perspective, all three operating segments recognize favorable development for all periods presented.
Frank Sodaro: In total consolidated loss ratio benefited by $4 seven.
And four six percentage points for the quarter and year, respectively compared to seven four and three seven percentage points for the same periods a year ago.
Speaker Change: Turning to our run off mortgage insurance operation.
Speaker Change: We expect the previously announced sale to close in the first half of 2024.
Speaker Change: In the meantime results were consistent with recent period and this paid $25 million dividend in the quarter, bringing the total return $210 million for the year.
Speaker Change: We ended the year with book value per share increasing to $23 31.
Which contributed a total book value return of 15, 3% for the full year. This return was driven by our strong operating earnings.
And higher investment valuation.
Speaker Change: In the quarter, we paid $67 million of dividends and repurchased $55 million worth of our shares for a total of just over $120 million returned to shareholders.
Speaker Change: For the full year, we paid over $275 million in dividends and repurchased.
Speaker Change: $530 million worth of our shares for a total of just over $805 million returned to shareholders.
Craig Smiddy: I'll now turn the call back to Craig for a discussion of general insurance.
Okay. Thanks, Brian.
Craig Smiddy: So general insurance net written premiums were up over 12% in the quarter and up nearly 10% for the year will.
Craig Smiddy: <unk> contributed to this with strong renewal retention ratios and new business growth, including new business produced through our new underwriting subsidiaries.
Craig: And we continue to achieve rate increases across most of our portfolio, which helps with the exception of D&O and workers' compensation.
Craig: As discussed a minute ago.
Frank Sodaro: The General insurance group combined ratio was 92 for the quarter and <unk> 92 for the year and pre tax operating income was $195 million for the quarter and $788 million for the year.
Frank Sodaro: We continue to produce very profitable result in our general insurance business.
Frank Sodaro: It is.
Frank Sodaro: Reflected in these numbers.
Frank Sodaro: The loss ratio for the quarter was 65, one which included five one.
Frank Sodaro: One points favorable development.
Frank Sodaro: And it was 62 for the year, which included $5 seven points of favorable development.
Frank Sodaro: The expense ratio for the quarter was $26 nine and it was $28 two for the year. All of this is very much in line with our coverage mix.
Frank Sodaro: So turning specifically to our two largest lines of coverage.
Commercial auto net premiums written grew almost 20% in the quarter, while the loss ratio came in at $78 three for the quarter and 71 five for the year.
Frank Sodaro: As we mentioned in the release.
Frank Sodaro: That loss ratio of $78 three in the quarter includes an increase for all four quarters of 2023.
Frank Sodaro: This is because severity pushed our loss trend into the low double digit.
Frank Sodaro: We have reported in the past.
Frank Sodaro: We react very quickly when we see things come through in the way of.
Higher severity and loss trend.
Frank Sodaro: However.
Frank Sodaro: For both the quarter and the year, we continued to experience favorable prior year loss development on this line.
Frank Sodaro: And we feel very comfortable with where we're at in those prior years sitting at the higher end of our reserve Actuaries ranges.
Craig Smiddy: Rate increases were in the 10% range. So we continue to push for rates to cover loss trend and we're also pulling other portfolio management levers such as increasing deductible and leveraging data analytics for risk selection.
Craig Smiddy: Moving to workers' compensation net premiums written declined for the quarter, while the loss ratio came in at 42 six for the quarter and 41, one for the year.
Craig Smiddy: Tier two for both the quarter and for the year, we continued to experience favorable prior year loss development.
Craig Smiddy: Frequency for Workers' comp continues to trend down as we've seen over many years, while severity trend remains relatively stable.
Craig Smiddy: We think our rate levels remain adequate even with some rate decreases in the low single digit range.
Craig Smiddy: Yes.
Craig Smiddy: So in general insurance, we expect solid growth and profitability to continue in 2024, reflecting the success of our specialty strategy, our excellence initiatives and our new underwriting subsidiaries.
Carolyn Monroe: So I'll leave it at that for now with General insurance and will turn the discussion over to Carolyn to report on title insurance Carolyn.
Carolyn Monroe: Thank you Craig and the title group, we reported premium and fee revenue for the quarter of $645 million at 23% decrease from the fourth quarter of 2022, our agency premiums were down 25% and direct premiums and fees were down 11%.
Carolyn Monroe: From the fourth quarter prior year.
Carolyn Monroe: Our pre tax operating income at $44 million did compared to $45 million in the fourth quarter of 2022, and our combined ratio of 95, 5% compared to 96, 2% in the fourth quarter of prior year.
Carolyn Monroe: As we have discussed on previous earnings calls 2023 was a challenging real estate market, our full year premiums and fees reflect those market conditions, and we're down around 33% compared to 2022 agency premiums made up 79% of our total premium and fees in 2000.
Carolyn Monroe: 23, while our full year pre tax operating income of $134 million was lower than 2022, we are really pleased with the progress we did make during the year, we were able to reduce our operating expenses, 19% compared to 2022, and we ended 2023.
Carolyn Monroe: With the full year combined ratio of 97, 1%.
Carolyn Monroe: In addition to managing our costs our leadership team has continued with a focus on strategic planning.
Craig Smiddy: From an it perspective modernizing the company has been a real priority.
Craig Smiddy: We have a we've had a multi year approach with several initiatives to optimize our processes procedures and operating structure. This.
Craig Smiddy: This includes improvements in automation and technology. These initiatives improve the efficiency of our teams, which will allow us to take advantage of improving market conditions, when they occur with less of a need to scale up.
Craig Smiddy: During 2024, we will continue looking to identify all economy of scale advantages.
Craig Smiddy: Commercial transactions were really not exempt from the market contraction, we saw a small decrease of around 1% and commercial premiums during the fourth quarter compared to the third quarter. Our 2023 commercial premiums decreased in line with overall premiums compared to 2022 <unk>.
Commercial premiums were 22% of our total premiums for both years, we believe our transformed nationwide footprint positions us well for when the commercial market rebounds.
Craig Smiddy: Although housing affordability low inventory and relatively elevated interest rates persist as we begin 2024, we are optimistic that market conditions will improve with just a little bit of uncertainty witness will take place and with that I'll turn it back to Craig.
Craig Smiddy: Thank you Carolyn.
Craig Smiddy: So we remain pleased with our continued profitable growth in general insurance, which is helping to mitigate the lower revenues and profit levels and title insurance.
Craig Smiddy: And we also remain pleased with our capital management efforts, including the.
Craig Smiddy: 806 million returned to shareholders through dividends and share repurchases in 2023.
Craig Smiddy: For 2024 as I say, we remain optimistic for continued profitable growth within general insurance.
Speaker Change: While we remain as Karen indicated of the view that title insurance will continue to face mortgage interest rate and real estate marketplace headwinds.
Speaker Change: So that concludes our prepared remarks.
Speaker Change: We will now open up the discussion the Q&A in either I'll answer your question or I'll ask Frank or Caroline to respond.
If you'd like to ask a question. Please press star followed by the number one on your telephone keypad.
Speaker Change: To withdraw your question. Please press star one again.
Speaker Change: For just a moment to compile the Q&A roster.
Speaker Change: Once again to ask a question please press star one.
Speaker Change: Our first question.
Speaker Change: Our first question comes from Gregory Peters from Raymond James. Please go ahead. Your line is open.
Speaker Change: Well good afternoon, everyone.
Speaker Change: So.
Speaker Change: I guess.
Speaker Change: The stock markets kind of was surprised today by your numbers, even though they were pretty good but.
Speaker Change: Greg maybe you could.
Greg: Give us some more detail about around what's going on in severity in commercial auto.
Greg: And talk.
Greg: Talk about some of the rate actions you've accomplished are achieved over the last year or two sort of mitigate what's going on in severity there.
Greg: Sure, Greg I'd be happy to add more color with regard to commercial auto so I'll reiterate first by saying what I said, a few moments ago and that is when we think when we see something favorable we react quickly when we see something.
Greg Smith: Favorable we react slowly.
Greg Smith: And what we saw in the current accident year was severity that that.
Greg Smith: Sure.
Carolyn Monroe: I reported on the last quarterly call that we were seeing severity around 10% that moved up into the lower double digits.
More towards the 12% range and we took a look at where we were at.
Carolyn Monroe: In the current accident year and decided to raise our accident year loss ratio commensurate with what we were seeing in that.
Yes, I think the.
Carolyn Monroe: The issue that it gets.
Carolyn Monroe: Matt just looking at that fourth quarter result is as we said in the release.
Matt Smith: We're putting four quarters of <unk>.
Matt Smith: Increased loss ratio pick and to that end to the fourth quarter.
Matt Smith: That certainly that loss ratio is certainly not what we expect going forward.
Matt Smith: And just to put things in context here.
Matt Smith: If you look at where we ended the year.
Matt Smith: We ended the year at.
Matt Smith: At a current accident year loss ratio of 76 two.
Matt Smith: Last year in 2022.
Matt Smith: Our.
Matt Smith: Accident year loss ratio was.
Matt Smith: With 76.4.
Matt Smith: So.
Matt Smith: This is very stable.
Matt Smith: And.
Matt Smith: By no stretch our things.
Matt Smith: Developing in a way that that.
Matt Smith: We think we're overreacting to and again just looking at those current accident year.
Matt Smith: Very stable so just to round out the picture to our reported numbers.
Matt Smith: Yes.
Matt Smith: In 2023, we reported a 71.
Matt Smith: 5% loss ratio that included.
Matt Smith: <unk> seven points of favorable development and then the 76 two.
Matt Smith: Accident year loss ratio that I spoke to.
Jack: So Jack.
Joe Calabrese: Supposing that against 2022.
Joe Calabrese: We reported a 66.6.
Joe Calabrese: Loss ratio for that year, but that included nine eight points of favorable development.
Joe Calabrese: As we indicated on our on our calls when we saw.
Frank Sodaro: Very robust <unk> favorable favorable development numbers in certain quarters, we made it very clear that those were not sustainable kind of favorable develop numbers, but the four 7% and 23 is still a very robust prior year development result, so.
Frank Sodaro: Back to 'twenty two you have the 66.
Frank Sodaro: <unk> reported loss ratio development favorable development of nine eight for that year and the initial.
Joe Calabrese: Loss picked up <unk> 76 for rounding it back out where I started.
Joe Calabrese: That loss specs in 'twenty two of $76 four compares to where we ended 23 at 76 point June so.
Joe Calabrese: As I say put it in context things are very stable.
Speaker Change: And just to just to go.
Speaker Change: Go back to part of your answer.
Speaker Change: And this is I think something consistent inside of old Republic, where are you.
Speaker Change: Recognize bad news quickly, but recognize the good news more slowly is there when I think about the commercial auto our views I think on previous calls the concept of a lockbox are you still on the casing commercial auto not really recognizing any favorable trends from novartis recent.
Speaker Change: Here's a set of fare.
Speaker Change: Assessment of what's going on inside that line of business.
Speaker Change: Yes, consistent with our past practice.
Greg Smith: As you say, Greg our approach is to lock down the.
Greg Smith: The accident years raise those loss picks if we see anything coming through that looks unfavorable.
And the only time, you and I have discussed on prior calls that where we feel forced to.
Greg Smith: Release, some reserves as when we exceed the higher end of the range and because our reserves are so redundant in those prior years that.
Greg Smith: We would be deemed excessive that's the only case.
Greg Smith: Where we would.
Greg Smith: <unk> looking at at those locked down years, but relatively speaking.
Craig Smiddy: The practices absolutely the same as it has always been very conservative approach and we hold as much as we possibly can on prior year and the way.
Craig Smiddy: <unk>.
Craig Smiddy: Those loss ratio.
Speaker Change: Fair enough and then I wanted to in the press release in previous conversations you've you've highlighted.
Speaker Change: Concept of what the targeted combined ratios.
Speaker Change: By in General insurance business should look like.
Speaker Change: Over the course of the cycle in your press release I think you cited this 90 to 95 sort of range.
Speaker Change: And if I look at the results for the last three years all at the low end of what are the.
Speaker Change: The low end of that range coming in around 90.
Speaker Change: I think that's kind of consistent with what's going on with pricing because we've been in pretty much of a hard market is there anything that's happened in the last year.
It would cause at least the near term outlook to go from this low ninety's to the upper end or the middle of the range other than.
Speaker Change: Okay.
Speaker Change: Maybe the severity issues, causing it or I don't know.
Speaker Change: Just give us some perspective on how you feel about where 24 will settle out inside that range. If you can provide some guidance that'd be helpful.
Greg: Thanks, Greg for the question.
Greg Smith: Right so the.
Greg Smith: Yes.
Greg Smith: Current year.
Greg Smith: Result.
Greg Smith: Of course inclusive of prior year favorable development.
Greg Smith: And as I mentioned, just a few moments ago as I mentioned in prior quarters, we've had very robust phase.
Greg Smith: Favorable prior year development.
Greg Smith: So coming in at that level as we go forward.
Greg Smith: We ended 23, yet at five seven points of favorable development that more than.
Greg Smith: We should expect going forward consistent with comments previously made.
Greg Smith: We want to err on the side of at least a couple points of favourable development each year.
Greg Smith: We'd rather err on the side of favourable development of course as opposed to unfavorable.
Greg Smith: No.
Greg Smith: Consistent with your question and those comments you could expect that favorable development.
Greg Smith: <unk> has been coming in the last few years.
Frank Sodaro: Again in a very robust way that is not sustainable.
Frank Sodaro: However.
Frank Sodaro: The current accident year loss ratio.
We're not where we want to be.
Frank Sodaro: Yet we still have.
Frank Sodaro: Areas in our business where that current.
Frank Sodaro: Accident year loss ratio is higher than we want it to be.
Frank Sodaro: So as we continue to make improvements and here too we take a very conservative approach, where even though we see the improvements being made there coming through in the short term, we are very reluctant to lower accident.
At your loss picks.
Frank Sodaro: Until we have a high degree of confidence that that's downhole and so we've gone very slowly.
Frank Sodaro: May be we think I'll give an example, maybe we think that we've improved.
Frank Sodaro: The loss ratio by five points, but or maybe we will only take one point.
Improvement in the pit.
Frank Sodaro: And gradually get to where we think we are so the point being that we would expect over time the accident your.
Frank Sodaro: Loss ratio to trend lower but we would also expect going back to where I started that this high level of favorable prior year loss development.
Frank Sodaro: Won't be sustained.
Frank Sodaro: Thats excellent detail.
Frank Sodaro: I'm kind of smiling as I hear Chicago's finance driving back to the station from lunch hour.
Frank Sodaro: To be what August quarterly tradition with your conference calls.
What would be an old Republic International conference call without <unk>.
Frank Sodaro: Chicago Fire Department.
Frank Sodaro: Got it great.
Frank Sodaro: Returning returning from lunch exactly.
Speaker Change: Can we pivot my my.
Carolyn Monroe: Last question I'd like to give Carolyn some some an opportunity to talk and I think in your prepared remarks, Carolyne Yu you talked about.
Carolyne Yu: Technology investments.
Carolyne Yu: And with revenue having declined substantially entitle curious how the technology budget has changed with the lower revenues and how you think about these investments going forward.
Carolyne Yu: So we.
Carolyne Yu: We're very mindful of.
Carolyne Yu: The way this slower revenues, but there's just some themes that when you're a company that manages for the long run that you have to continue doing and we are fortunate that we've been allowed to continue investing.
Carolyn Monroe: In our technology and a lot of it has to do with.
Carolyn Monroe: Being prepared for Westwood.
Carolyn Monroe: The cyber issues that type of thing.
Carolyn Monroe: It just isn't the right time to really cut back.
Carolyn Monroe: We have put some things that maybe we could say we are a lower priority that we've set aside but the things that really help us manage our business that help make.
Make it easier to do business with us.
Carolyn Monroe: That enable us to be more efficient, we really didnt have to cut back doing were allowed to continue with those investments.
Carolyn Monroe: Okay fair enough well, thank you for the answers.
Greg Smith: Thank you thank you Greg.
Greg Smith: As a reminder to ask a question. Please press star followed by the number one our next question comes from Greg Powell from Miller Howard investments. Please go ahead. Your line is open.
Hi, My question is about the run off business I was little surprised that you had a loss on that sale.
Greg Powell: Given that you've been.
Greg Powell: Dividend cash out of it.
Greg Powell: So I have two questions could you just explain the loss in snacking is the 25 million the last dividend from that unit.
Greg Powell: Sure I'd be happy.
Greg Powell: Just start with the easy part which is.
Carolyn Monroe: Yes, the $25 million is the last dividend.
Carolyn Monroe: The other part of the question.
Carolyn Monroe: There are several factors here.
Carolyn Monroe: Yes.
Carolyn Monroe: What mortgage insurance companies are valued at right now and.
Frank Sodaro: <unk> valued at approximately book value.
Yes.
And then you compare that to our run off mortgage company without any.
Frank Sodaro: New business coming in.
Speaker Change: And the valuation, which we did a very robust.
<unk> market.
Speaker Change: Evaluation with our investment banker and a very robust.
Speaker Change: Bidding process.
Craig Smiddy: Believed there were about actually 30 different parties that we reached out too.
Craig Smiddy: The valuation.
Craig Smiddy: It was actually <unk>.
Craig Smiddy: Very good in our opinion.
Craig Smiddy: Many other outsiders opinion as to where we ultimately sold the business.
Craig Smiddy: <unk>.
Craig Smiddy: The thing you have to look at is the diminishing level.
Premium that is occurring in that book of business.
Greg Smith: As it is run off and in.
Frank Sodaro: The diminishing level of reserves commensurate with that premium.
Frank Sodaro: And then ultimately how much going forward.
Frank Sodaro: We would be able to generate additional revenue that would allow us to.
Frank Sodaro: Produce a profit.
Frank Sodaro: And release much more capital at some point.
Frank Sodaro: Things like fixed expenses hit a point, where you just can't cut any more.
Frank Sodaro: And.
Frank Sodaro: Premiums are coming down so you hit a point where you.
Frank Sodaro: You actually will create an earnings drag and that.
Frank Sodaro: That makes it very difficult to.
Frank Sodaro: Produce revenue and.
Frank Sodaro: And the ability to release capital diminishes over time, so we really hit an inflection point, where it made perfect sense too.
Frank Sodaro: To enter into the sale.
Frank Sodaro: Even though.
Frank Sodaro: It was.
Frank Sodaro: A lots to book value.
Frank Sodaro: We think over time.
Frank Sodaro: Again, we would've seen an earnings drag then and not been able.
Frank Sodaro: Released the levels of capital that we had extracted we had extracted.
Frank Sodaro: A large amount of capital.
Frank Sodaro: The business went into runoff.
Frank Sodaro: And.
Frank Sodaro: Bob.
Frank Sodaro: Again, we were hitting an inflection point.
Frank Sodaro: Okay.
Frank Sodaro: Can you tell us what the book value.
Frank Sodaro: Yes.
Frank Sodaro: With the book value, we're saying that.
Frank Sodaro: It's about $170 million at year end.
Frank Sodaro: Okay. So the 80% of that was that component was 80% price for the sale and then we have transaction costs. The net net of tax losses should be about $30 million.
Carolyn Monroe: Okay got you. Thank you.
Carolyn Monroe: And just on <unk>.
Carolyn Monroe: On the commercial auto could you just made.
Maybe give us a little more confidence that the 10% price increases are announced.
Carolyn Monroe: Okay.
Carolyn Monroe: Well.
Carolyn Monroe: Sure.
As best we can we keep a very close eye on it.
Refer to our track record beef.
Carolyn Monroe: Visa B.
Our competitors in the industry.
Carolyn Monroe: I think we're one of the very few that has prior year favorable development on commercial auto because we got that in early recognize and I'm going back four or five years recognized the severity trend.
Carolyn Monroe: Achieved rate increases.
Visa B: Above or at those severity trends, which is why we were able to produce such levels of favorable development in those prior years. So I think our track record speaks for itself that.
Visa B: Just look at the level of.
Craig Smiddy: Favorable reserve development from those prior years as a result of us keeping up with trend and the action. We took on accident year 2003 in the fourth quarter was because it's doing exactly what we say we do when we see something.
Craig Smiddy: <unk>.
Craig Smiddy: Okay.
Speaker Change: Ladies and gentlemen, this is the operator, we are experiencing technical difficulties. Please standby.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Can you hear us.
Speaker Change: And now we can.
I don't want to.
Right.
Speaker Change: Hello.
Speaker Change: Hello, Mr. Paul.
Speaker Change: Yes.
Speaker Change: This is the operator I'm just reconnecting.
Speaker Change: Okay, great. Thank you.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: And to reconnect.
Speaker Change: Okay. Thank you very much.
Speaker Change: We here in Chicago are back on there was a technical difficulty and we lost our connection and we apologize to everyone for that.
So I'll just pick up with that last question about.
Speaker Change: The severity.
Speaker Change: Commercial auto again.
Speaker Change: We think our track record speaks for itself.
Speaker Change: We unlike most of our competitors have had favorable prior year reserve development.
Speaker Change: On commercial auto.
Speaker Change: And why that is the case is because for five years ago. When severity started to come through we reacted with rates and risk selection.
Speaker Change: And.
Speaker Change: Produced those strong accident year results that led the favorable development. So we're very quick to react.
Speaker Change: When we when we see severity coming through.
Speaker Change: And the rate increases that we've had over the last many years has.
Speaker Change: Demonstrated in the numbers that we do a very good job.
Speaker Change: Noticing severity and reacting to severity.
Speaker Change: Particularly with.
Speaker Change: Making sure that our rate changes are commensurate with that.
Speaker Change: <unk> or <unk> or even in excess of that severity that we're observing.
Speaker Change: Yes.
Speaker Change: So.
Speaker Change: I'll leave it at that is are there any other questions.
Speaker Change: I'm all set thank you.
Speaker Change: We have no further questions in queue I would like to turn the call back over to management for closing remarks.
Jen: Okay, well. Thank you everyone very much Jen, we apologize for that technical glitch.
Jen: But we appreciate your patience we appreciate your support.
Jen: We had a strong 2023.
Jen: And we are there.
Jen: Very optimistic as we head into 'twenty four.
Jen: 2024 will be a very strong year as well.
Jen: Thank you all very much.
Jen: This concludes today's conference call. Thank you for your participation you may now disconnect.
Jen: [music].
Jen: [music].