Q1 2024 The Hartford Financial Services Group Inc Earnings Call

Audra: Good morning, my name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to the Hartford Financial first quarter 2024 results webcast. Today's conference is being recorded. All lines have been placed on mute to prevent any background noise.

Good morning, My name is Andrea and I will be your conference operator today.

Andrea: At this time I would like to welcome everyone to the Hartford financial first quarter 2024 results webcast.

Andrea: Today's conference is being recorded all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press the star key followed by the number one on your telephone keypad. If you would like to withdraw your question Press Star one again.

Audra: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star key, followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again. At this time, I'll turn the conference over to Susan Spivak, Senior Vice President, Investor Relations. Please go ahead.

Andrea: At this time I would like to turn the conference over to Susan Spivak Senior Vice President Investor Relations. Please go ahead.

Susan Spivak Bernstein: Good morning, and thank you for joining us today for our call and webcast on First Quarter 2024 Earnings. Yesterday, we reported results and posted all of the earnings-related materials on our website. Now I'd like to introduce our speakers. To start, we have Chris Swift, Chairman and Chief Executive Officer, followed by Beth Costello, our Chief Financial Officer. After their prepared remarks, we will begin taking your questions. Also with us to assist with your questions are several members of our management team. Just a few comments before Chris begins.

Susan Spivak Bernstein: Good morning, and thank you for joining us today for our call and webcast on first quarter 2024 earnings yesterday, we reported results and posted all the earnings related materials on our website.

Susan Spivak Bernstein: Now I'd like to introduce our speakers to start we have Chris Swift Chairman and Chief Executive Officer, followed by Beth Costello, Our Chief Financial Officer. After their prepared remarks, we will begin taking your questions also with us to assist with your questions are several members of our management team.

Susan Spivak Bernstein: Just a few comments before Chris begins todays call includes forward looking statements as defined under the private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance and actual results could be materially different we do not assume any obligation to update information.

Susan Spivak Bernstein: Today's call includes forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance, and actual results could be materially different. We do not assume any obligation to update information or forward-looking statements provided in this call. Investors should also consider the risks and uncertainties that could cause actual results to differ from these statements. A detailed description of these risks and uncertainties can be found in our SEC filings.

Susan Spivak Bernstein: Our forward looking statements provided on this call investors should also consider the risks and uncertainties that could cause actual results to differ from these statements. A detailed description of those risks and uncertainties can be found in our SEC filings. Our commentary today includes non-GAAP financial measures explanations and <unk>.

Susan Spivak Bernstein: Our commentary today includes non-GAAP financial measures. Explanations and reconciliations of these measures to comparable GAAP measures are included in our SEC filings, as well as in the news release and financial supplement. Finally, please note that no portion of this conference call may be reproduced or rebroadcast in any form without Hartford's prior written consent. Replays of this webcast and an official transcript will be available on Hartford's website for one year. I'll now turn the call over to Chris.

Susan Spivak Bernstein: Reconciliations of these measures to the comparable GAAP measures are included in our SEC filings as well as in the news release and financial supplement.

Susan Spivak Bernstein: Finally, please note that no portion of this conference call may be reproduced or rebroadcast in any form without the hartford's. Prior written consent replays of this webcast and an official transcript will be available on the Hartford's website for one year I'll now turn the call over to Chris.

Christopher J. Swift: Good morning, and thank you for joining us today. Hartford had a strong start to the year, sustaining outstanding financial results through the first quarter. Our strategy and ongoing investments, combined with disciplined underwriting and pricing execution, exceptional talent, and innovative customer-centric technology, continue to drive outperformance. Let me call your attention to some highlights achieved in the quarter. Top-line growth in commercial lines of 8%, with an underlying combined ratio of 88.4. Strong Renewal Written Pricing Increases in Commercial and Personal Lines.

Christopher J. Swift: Good morning, and thank you for joining us today, the Hartford had a strong start to the year sustaining outstanding financial results through the first quarter.

Christopher J. Swift: Our strategy and ongoing investments combined with disciplined underwriting and pricing execution.

Exceptional talent and innovative customer centric technology continue to drive outperformance.

Christopher J. Swift: Let me call your attention to some highlights achieved in the quarter.

Christopher J. Swift: Topline growth in commercial lines of 8% with an underlying combined ratio of $88 four.

Christopher J. Swift: Strong renewal written pricing increases.

Christopher J. Swift: In commercial and personal lines.

Christopher J. Swift: Group Benefits Core Earnings Margin of 6.1%, and solid performance in our investment portfolio. All these contributed to an outstanding and industry-leading trailing 12-month core earnings ROE of 16.6 percent, reflecting consistency of our margins and continued growth generated by our business. Now, let me share a few details from the quarter.

Christopher J. Swift: Group benefits core earnings margin of six 1%.

Christopher J. Swift: And solid performance in our investment portfolio. All of these contributed to an outstanding and industry, leading trailing 12 month core earnings ROE of 16, 6%, reflecting consistency of our margins and continued growth generated by our businesses.

Speaker Change: So let me share a few details from the quarter.

Christopher J. Swift: Commercial lines performance reflects strong top-line growth at highly profitable margins. In the marketplace, we are prudently taking advantage of elevated submission flow, in part driven by the investments we have made to expand our product capabilities and the efficiency of the broker and agent experience. From NetFlow, we are using our data science advancements, pricing expertise, and industry-leading underwriting tools to drive profitable, double-digit new business growth in each of our three businesses. In addition, retention is steady, and exposure growth remains solid, although moderating from the elevated levels seen in the past couple of years.

Speaker Change: Commercial lines performance reflects strong top line growth and highly profitable margins in the marketplace. We are prudently taken advantage of elevated submission flow in part driven by the investments we have made to expand our product capabilities and the efficiency of the broker and agent experience.

Speaker Change: From net flow, we are using our data science advancements pricing expertise and industry, leading underwriting tools to drive profitable double digit new business growth in each of our three businesses.

In addition retention is steady and exposure growth remained solid.

Speaker Change: Although moderating from the elevated levels.

Speaker Change: In the past couple of years.

Christopher J. Swift: In small commercial, we are shattering previous quarterly written premium records while sustaining underlying margins. New business growth was 11% in the quarter, driven by strong submission flow and growth in E&S binding. We are particularly pleased with E&S Binding, a key area of focus, which is on track to grow annual written premiums by approximately 50% in 2024 to nearly $300 million. I remain incredibly pleased with the overall performance of small commercial and bullish on its outlook.

Speaker Change: In small commercial were shattering previous quarterly written premium records.

Speaker Change: Sustaining underlying margins.

Speaker Change: New business growth was 11% in the quarter driven by strong submission flow and growth in E&S binding we.

Speaker Change: We are particularly pleased with E&S binding a key area of focus which is on track to grow annual written premiums by approximately 50% in 2024 to nearly $300 million.

Speaker Change: I remain incredibly pleased with the overall performance in small commercial and bullish on its outlook, we expect to sustain outstanding financial results by reliably serving agents and customers with industry, leading products and unmatched ease of conducting business and on.

Christopher J. Swift: We expect to sustain outstanding financial results by reliably serving agents and customers with industry-leading products and Unmatched Ease of Conducting Business and Unrivaled Pricing Accuracy. Moving to middle and large commercial, the financial performance continues to be exceptional. Written premium growth reflects strong renewal rate execution and new business growth of 18 percent with an especially good quarter and guaranteed cost construction and general industry. We are building a track record of delivering meaningful growth while consistently maintaining underlying margins.

Speaker Change: Arrival pricing accuracy.

Speaker Change: Moving to middle and large commercial our financial performance continues to be exceptional.

Speaker Change: Written premium growth reflects strong renewal rate execution and <unk>.

Speaker Change: New business growth of 18% with an especially good quarter and guaranteed cost construction and general industries.

Speaker Change: We are building a track record of delivering meaningful growth, while consistently maintaining underlying margins.

Christopher J. Swift: The stellar performance in this business is a direct result of our underwriting discipline enabled by the investments we have made to enhance our capabilities. Combining these advantages with our best-in-class talent and the strength of our distribution relationships, we remain well positioned to profitably grow this business. In global specialty, results were excellent, with underlying margins consistent with last year and solid top-line growth, reflecting our competitive position, breadth of products, and strong renewal-written prices. Written premium growth was propelled by a 20% increase in our wholesale business, with significant contributions from primary and excess casualty lines. We are particularly pleased with wholesale construction activity found in the quarter, as well as overall increased emission flow, both meaningful drivers of new business growth.

Speaker Change: The stellar performance in this business as a direct result of our underwriting discipline.

Speaker Change: Enabled by the investments we have made to enhance our capabilities.

Speaker Change: Combining these advantages with our best in class talent and the strength of our distribution relationships.

Speaker Change: We remain well positioned to profitably grow this business.

Speaker Change: In global specialty results were excellent with underlying margins consistent with last year and solid topline growth.

Speaker Change: Reflecting our competitive position breadth of products.

Speaker Change: Strong renewal written pricing.

Speaker Change: Written premium growth was propelled by 20% increase in our wholesale business.

Speaker Change: With significant contributions from primary and excess casualty lines.

Speaker Change: We are particularly pleased with wholesale construction activity found in the quarter as well as overall increased submission flow.

Speaker Change: Meaningful drivers of new business growth.

Christopher J. Swift: We remain excited about the global specialty business, including our position in the wholesale and reinsurance market and from a broadened product portfolio. Looking across commercial lines, we continue to grow our property book, another key area of focus. We are capitalizing on favorable market conditions with a disciplined approach, including no change in our catastrophe risk appetite. Property written premium for the quarter was approximately 17% higher than in 2023. Turning to pricing, excluding workers' compensation, commercial lines renewal written pricing rose seven-tenths from the fourth quarter to 9%, with strong, low double-digit pricing in property and auto and high single-digit pricing in general liability. Public D&O pricing is still pressured, though relatively stable, in the fourth quarter.

Speaker Change: We remain excited about the global specialty business, including our position in wholesale and reinsurance market.

Speaker Change: And from a broadened product portfolio.

Speaker Change: Looking across commercial lines, we continue to grow our property book another key area of focus.

Speaker Change: We are capitalizing on favorable market conditions with a disciplined approach, including no change in our catastrophe risk appetite.

Speaker Change: Property written premium for the quarter was approximately 17% higher than in 2023.

Speaker Change: Turning to pricing, excluding workers' compensation commercial lines renewal written pricing rose seven.

Speaker Change: From the fourth quarter to 9%.

With strong low double digit pricing in property and auto and high single digit and general liability.

Speaker Change: Public D&O pricing is still pressured so relatively stable with the fourth quarter.

Christopher J. Swift: All in, X comp renewal written pricing in commercial lines remained comfortably above lost cost trends. In workers' compensation, renewal written pricing remained slightly positive in the quarter. In summary, Commercial Lines delivered an outstanding first quarter result with ongoing momentum in the market. Moving to personal lines, our first quarter financial performance demonstrates progress towards restoring targeted profitability in auto as we continue to address current loss trends. Auto renewal written price increases of nearly 26% have likely peaked, given our view of moderating loss trends for the remainder of the year.

Speaker Change: Olin ex comp renewal written pricing in commercial lines remained comfortably above loss cost trends.

Speaker Change: And workers compensation renewal written pricing remained slightly positive in the quarter.

Speaker Change: In summary, commercial lines delivered an outstanding first quarter results with ongoing momentum in the market.

Speaker Change: Moving to personal lines, our first quarter financial performance demonstrates progress towards restoring targeted profitability in auto as we continue to address current loss trends.

Speaker Change: Auto renewal written price increases of nearly 26% have likely peaked given our view of moderating loss trends for the remainder of the year.

Christopher J. Swift: In addition, we have achieved new business rate adequacy in the vast majority of states and, as a result, have resumed national advertising this month. For homeowners, renewal written pricing of 15% during the quarter comprised of net rate and ensured value increases outpaced underlying loss cost trends.

Speaker Change: In addition, we have achieved new business rate adequacy in the vast majority of states and as a result have resumed national advertising this month in.

Speaker Change: Homeowners renewal written pricing a 15% during the quarter comprised of net rate and insured value increases outpaced underlying loss cost trends.

Christopher J. Swift: This year we are celebrating our 40th anniversary with AARP. In 1984, we embarked on this journey with a shared vision and commitment to serve mature market customers. Our focus on this preferred segment, coupled with our modern, innovative, and digitally enhanced product and platform, Prevail, is a competitive advantage. Our updated offering is currently available in 42 states and represents approximately 60% of our new business premium this quarter. With pricing gains, enhanced risk segmentation, and moderating loss trends, I expect personalized to meaningfully contribute to core earnings as it returns to profitability in 2024 and reaches target margins in 2025.

Speaker Change: This year, we are celebrating our 40th anniversary with RP.

Speaker Change: In 1984, we embarked on this journey with a shared vision and commitment to serve mature market customers.

Speaker Change: Our focus on this preferred segment, coupled with our modern innovative and digitally enhanced product and platform prevail is a competitive advantage.

Speaker Change: Our updated offering is currently available in 42 states and represents approximately 60% of our new business premium this quarter.

Speaker Change: With pricing gains enhanced risk segmentation and moderating loss trends.

Speaker Change: Expect personal lines to meaningfully contribute to core earnings.

Speaker Change: As it returns to profitability in 2024 and breaches target margins in 2025.

Christopher J. Swift: Turning to group benefits, our core earnings margin of 6.1% for the quarter included improved mortality trends from the prior year and continued strong long-term disability claim recovery. Fully insured ongoing premium growth of 2% reflects strong, but slightly lower persistency and a 6% decline in sales, primarily driven by group life, where we are being disciplined with pricing and underwriting in this competitive marketplace.

Speaker Change: Turning to group benefits are.

Speaker Change: Our core earnings margin of six 1% for the quarter included improved mortality trends from the prior year and continued strong long term disability claim recoveries.

Speaker Change: Fully insured ongoing premium growth of 2% reflects strong, but slightly lower persistency and a 6% decline in sales primarily driven by group life, where we are.

Speaker Change: Are being disciplined with pricing and underwriting in this competitive marketplace.

Christopher J. Swift: We continue to strengthen our capabilities for customer service with an extensive suite of tools for HR platform integration, member enrollment, process simplification, and analytics. As part of our strategy to grow amongst small and mid-sized businesses. We are investing in our platform. This includes strengthening distribution relationships and actively seeking out new partnerships. Employers are more focused than ever on the needs of their employees, and our products and services are a key part of that value proposition.

Speaker Change: We continue to strengthen our capabilities for customer service with an extensive suite of tools for HR platform integration member enrollment process simplification and analytics.

Speaker Change: As part of our strategy to grow amongst small and mid sized businesses.

Speaker Change: We are investing in our platform.

Speaker Change: This includes strengthening distribution relationships and actively seeking out new partnerships.

Employers are more focused than ever on the needs of their employees and our products and services are a key part of that value proposition.

Christopher J. Swift: Moving to investments, the portfolio continues to support Hartford's financial and strategic goals, performing well across a range of asset classes and market conditions, and Beth will provide more details. In summary, Hartford delivered another strong quarter with sustained momentum heading into the remainder of the year. Let me reiterate why I am so bullish about the future. First, our financial results continue to prove the effectiveness of our strategy and the impact of ongoing investments in our business. Second, the personal lines results are showing improvement.

Speaker Change: Moving to investments the portfolio continues to support the Hartford's financial and strategic goals.

Speaker Change: Forming well across a range of asset classes and market conditions.

Speaker Change: <unk> will provide more details.

Speaker Change: In summary, the Hartford delivered another strong quarter with sustained momentum heading into the remainder of the year.

Speaker Change: Let me reiterate why I am so bullish about the future.

Speaker Change: First our financial results continue to prove the effectiveness of our strategy and the impact of ongoing investments in our business.

Speaker Change: Second personal lines results are showing improvement.

Christopher J. Swift: We are achieving necessary rate increases and expect 2024 margins to progress towards targeted profitability. Third, with our disciplined underwriting and pricing execution, exceptional talent, and innovative customer-centric technology, we will continue to sustain superior results. Fourth, investment income remains solid, supported by elevated yields and a diversified and durable portfolio of assets. And finally, we remain dedicated to enhancing shareholder value through supporting organic growth, continued investment in our business, and proactively managing our excess capital.

Speaker Change: We are achieving necessary rate increases and expect 2020 for margins to progress towards targeted profitability.

Speaker Change: Third with our disciplined underwriting and pricing execution exceptional talent and innovative customer centric technology, we will continue to sustain superior results.

Speaker Change: Fourth investment income remains solid supported by elevated yields and a diversified and durable portfolio of assets and.

Speaker Change: And finally, we remain dedicated to enhancing shareholder value through supporting organic growth.

Speaker Change: <unk> investment in our business and proactively managing our excess capital.

Christopher J. Swift: All these factors contribute to my excitement and confidence about the future of Hartford and our ability to extend our track record of delivering industry-leading financial performance. Now, I'll turn the call over to Beth to provide more detailed commentary on the quarter.

Speaker Change: All these factors contribute to my excitement and confidence about the future of the Hartford and our ability to extend our track record of delivering industry, leading financial performance.

Speaker Change: Now I will turn the call over to Beth to provide more detailed commentary on the quarter.

Beth Costello: Thank you, Chris. Core earnings for the quarter were $709 million, or $2.34 per diluted share, with a trailing 12-month core earnings ROE of 16.6%. Commercial Lions had an outstanding quarter, core earnings of $546 million, and an underlying combined ratio of 88.4, in line with our expectations and slightly better than the prior year first quarter. Small Commercial continues to deliver excellent results, with written premium growth of 8% and an underlying combined ratio of 89.6, further building on its impressive track record of delivering an underlying combined ratio below 90.

Beth Costello: Thank you Chris core earnings for the quarter were $709 million or $2.34 per diluted share with a trailing 12 month core earnings ROE of 16, 6% commercial lines had an outstanding quarter.

Beth Costello: Core earnings of 546 million and an underlying combined ratio of 88 four in line with our expectations and slightly better than the prior year first quarter.

Beth Costello: Small commercial continues to deliver excellent results with written premium growth of 8% and an underlying combined ratio of $89. Six further building on its impressive track record of delivering an underlying combined ratio below 90.

Beth Costello: Middle and large commercial also delivered outstanding results with 9% growth over the prior year, and this marks the fourth consecutive quarter of written premium exceeding $1 billion. The underlying combined ratio was excellent at 89.2, a 0.7 point improvement over first quarter 2023, primarily due to a lower expense ratio driven by the impact of strong earned premium growth. Global Specialties' underlying combined ratio was an exceptional 85.3, relatively flat to the prior year; written premium growth of 8% was driven by accelerating renewal written price increases and new business growth of 17% excluding global rates.

Beth Costello: Middle and large commercial also delivered outstanding results with 9% growth over the prior year and this marks the fourth consecutive quarter of written premiums exceeding $1 billion.

Beth Costello: The underlying combined ratio was excellent at 89 to eight seven point improvement over our first quarter 2023, primarily due to a lower expense ratio driven by the impact of strong earned premium growth.

Beth Costello: Global specialties underlying combined ratio was an exceptional $85 three relatively flat to the prior year.

Beth Costello: Written premium growth of 8% was driven by accelerating renewal written price increases and new business growth of 17% excluding global array.

Beth Costello: In personal lines, core earnings for the quarter were $33 million with an underlying combined ratio of 96.1, including a strong homeowner's underlying combined ratio of 77. The auto underlying combined ratio of 104.4 was in line with our expectations and is a year-over-year improvement of 3.7 points once the reported ratio for the first quarter of 2023 is increased for the three points of development that occurred in the second quarter of 2023. This result is consistent with achieving the 5 to 6 point full year improvement we previously discussed.

Beth Costello: In personal lines core earnings for the quarter were 33 million with an underlying combined ratio of $96, one, including a strong homeowners underlying combined ratio of 77.

Beth Costello: The auto underlying combined ratio of 104 four was in line with our expectations and as a year over year improvement of three seven points. Once the reported ratio for the first quarter of 2023 is increased for the three points of development that occurred in the second quarter of.

Beth Costello: 2023.

Beth Costello: This result is consistent with achieving the five to six point full year improvement. We previously discussed written premium and personal lines increased 13% over the prior year driven by steady and successful rate action.

Beth Costello: Written premium and personal lines increased 13% over the prior year, driven by steady and successful rate action. In auto, we achieved written pricing increases of 25.7% and earned pricing increases of 19.1%. In homeowners, written pricing increases were 15.2% for the quarter and 14.4% on an earned basis.

Beth Costello: In auto we achieved written pricing increases of 25, 7%.

Beth Costello: <unk> earned pricing increases of 19, 1%.

Beth Costello: And homeowners written pricing increases were 15, 2% for the quarter and 14, 4% on an earned basis.

Beth Costello: The total personalized expense ratio improved by 1.2 points, primarily driven by the impact of higher earned premium, partially offset by higher direct marketing costs as we increase our marketing spend to drive new business growth in those states where rates are adequate. With respect to catastrophes, PNC's current accent year caps were $161 million before tax, or 4.2 combined ratio points, which compares to $185 million in 2023, or 5.3 points on the combined ratio.

Beth Costello: The total personal lines expense ratio improved by 1.2 points, primarily driven by the impact of higher earned premium partially offset by higher direct marketing costs as we increase our marketing spend to drive new business growth in those states, where our rates are adequate.

With respect to catastrophes P&C current accident year cats were $161 million before tax or four two combined ratio points, which compares to $185 million in 2023 or five three points on the combined ratio.

Beth Costello: The total net favorable prior asset year development within Core Earnings was $32 million, primarily due to reserve reductions in workers' compensation, which were partially offset by reserve increases in general liability, assumed reinsurance, and Ocean Marines. In addition, we had $7 million of favorable development in personal auto physical damage.

Beth Costello: Total net favorable prior accident year development within core earnings was $32 million, primarily due to reserve reductions in workers' compensation, which were partially offset by reserve increases in general liability assumed reinsurance and ocean marine.

Beth Costello: In addition, we had 7 million of favorable development in personal auto physical damage.

Beth Costello: We also recorded $24 million before tax in deferred gain amortization related to the Navigator's ADC. This positively impacted net income with no impact on core earnings. Based on our estimate of payment patterns, we expect total amortization of the deferred gain in 2024 will be approximately $125 million before tax, with the remaining balance amortized in 2025. We have provided additional information in the appendix of our earnings slide deck on both this ADC and the A&E ADC for your reference.

Beth Costello: We also recorded $24 million before tax and deferred gain amortization related to the navigators ADC.

Beth Costello: This positively impacted net income with no impact on core earnings.

Beth Costello: Based on our estimate of payment patterns, we expect total amortization of the deferred gain in 2024 will be approximately $125 million before tax with the remaining balance amortized in 2025.

Beth Costello: We have provided additional information in the appendix of our earnings slide deck on both this ADC and the A&D ADC for your reference.

Beth Costello: Turning to group benefits, core earnings in the first quarter of $107 million and a 6.1% core earnings margin reflect improved life results, continued strong disability performance, and fully insured premium growth. As a reminder, from a seasonality perspective, we tend to experience higher underlying loss costs in the first quarter. The group disability loss ratio of 70.1 improved 0.3 points from 2023, driven by continued strong claim recoveries, partially offset by higher incidence in paid family leave and short-term disability products. The group life loss ratio of 82.6 improved 4.1 points versus the prior year, reflecting improved mortality.

Beth Costello: Turning to group benefits.

Beth Costello: Core earnings in the first quarter of $107 million and a six 1% core earnings margin reflect improved life results continued strong disability performance and fully insured premium growth.

Beth Costello: As a reminder, from a seasonality perspective, we tend to experience higher underlying loss costs in the first quarter.

Beth Costello: The group disability loss ratio of 71 improved <unk> three points from 2023, driven by continued strong claim recoveries, partially offset by higher incidents and paid family leave and short term disability products.

Beth Costello: The group life loss ratio of $82 six improved $4, one point versus prior year, reflecting improved mortality.

Beth Costello: Fully insured, ongoing premium growth of 2% was driven by exposure growth, which remained positive, albeit at a lower rate than in the prior year. Book persistency in the first quarter of 2024 was strong at over 90%, but approximately 1.5 points below record high levels in 2023. Turning to investments, our diversified investment portfolio continues to produce solid results. For the quarter, net investment income was $593 million.

Beth Costello: Fully insured ongoing premium growth of 2% was driven by exposure growth, which remain positive, albeit at a lower rate than in the prior year.

Beth Costello: Book Persistency in the first quarter 2024 was strong at over 90%, but approximately one five points below record high levels in 2023.

Beth Costello: Turning to investments our diversified investment portfolio continues to produce solid results.

Beth Costello: For the quarter net investment income was $593 million.

Beth Costello: The total annualized portfolio yield, excluding limited partnerships, was 4.3% before tax, consistent with the fourth quarter of 2023. Our annualized LT returns were 1.3% and included positive returns from our private equity portfolio. Our real estate equity portfolio returns were impacted by lower valuations and the absence of real estate JV equity sales.

Total annualized portfolio yield excluding limited partnerships was four 3% or four tax consistent with the fourth quarter of 2023.

Beth Costello: Our annualized LP returned or one 3% and included positive returns from our private equity portfolio.

Beth Costello: Our real estate equity portfolio returns were impacted by lower valuations and the absence of real estate JV equity sales.

Beth Costello: Given the current macroeconomic backdrop, limited partnership returns in the second quarter are likely to be similar to first quarter results, with private equity returns being offset by declines in real estate valuations and property depreciation with no sales activity. We continue to believe our real estate holdings are durable, and we will be patient as it relates to any sales in order to maximize value. Although we anticipate LTU returns for the full year could be below 2023, we continue to believe that over the long term, results will continue to add value and be consistent with historical returns. The overall credit quality of the portfolio remains high, with an average credit rating of A+. Net credit losses remain insignificant.

Beth Costello: Given the current macroeconomic backdrop limited partnership returns in the second quarter are likely to be similar to first quarter results with private equity returns being offset by declines in real estate valuation and property depreciation with no sales activity.

Beth Costello: We continue to believe our real estate holdings are durable and we will be patient as it relates to any sales in order to maximize value.

Beth Costello: Although we anticipate LTE returns for the full year could be below 2023 results. We continue to believe that over the long term results will continue to add value and be consistent with historical returns.

The overall credit quality of the portfolio remains high with an average credit rating of a plus.

Beth Costello: Net credit losses remain insignificant.

Beth Costello: Turning to capital, during the quarter, we repurchased 3.8 million shares under our Share Repurchase Program for $350 million, and we expect to remain at that level of repurchases in the second quarter. At the end of the quarter, we had approximately $1 billion remaining on our share repurchase authorization through December 31, 2024. To wrap up, our first quarter results reflect another quarter of delivering on our targeted return to enhance value for all of our stakeholders. I will now turn the call back.

Beth Costello: Turning to capital during the quarter, we repurchased three 8 million shares under our share repurchase program for $350 million.

Beth Costello: Expect to remain at that level of repurchases in the second quarter.

Beth Costello: At the end of the quarter, we had approximately 1 billion remaining on our share repurchase authorization through December 31 2024.

Beth Costello: To wrap up our first quarter results reflect another quarter of delivering on our targeted return to enhance value for all of our stakeholders.

Beth Costello: I will now turn the call back to Susan.

Beth Costello: Yes.

Susan Spivak Bernstein: Thank you. We will now take your questions. Operator, could you please repeat the instructions for asking a question?

Susan Spivak Bernstein: Thank you we will now take your questions operator could you. Please repeat the instructions for asking a question.

Audra: Thank you. We'll now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. We'll take our first question from Andrew Kligerman at TD Securities.

Susan Spivak Bernstein: Thank you we will now begin the question and answer session. If you have dialed in I would like to ask a question. Please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question simply press Star one again.

Susan Spivak Bernstein: We will take our first question from Andrew Klingerman at TD Securities.

Andrew Scott Kligerman: Hey, good morning. Chris, I noticed in your opening remarks that you talked about some pressure on group lifestyle. Is that something that you foresee going forward? I mean, overall sales were, I think revenues were up about 2% in the quarter. So do you see that line being a bit pressured? And maybe you could give us a little color on what's happening in the group life area.

Andrew Scott Kligerman: Hey, good morning.

Andrew Klingerman: Yes.

Andrew Scott Kligerman: Chris I noticed in your opening remarks, you talked about some pressure on group life sales.

Andrew Scott Kligerman: That something that you foresee going forward I mean overall sales were.

Andrew Scott Kligerman: I think revenues were up about 2% in the quarter. So do you see that line being a bit pressured and maybe you could give us a little color on what's happening in the.

Andrew Scott Kligerman: And the group play sorry.

Christopher J. Swift: Happy to, Andrew. Welcome.

Speaker Change: Happy to Andrew welcome.

Christopher J. Swift: Yeah, we did that we did call out a little lighter sales volume, you know, during the quarter. Looking at Jonathan Bennett, he could give you additional color also. But I think Andrew, you might recall, we've talked about being fairly disciplined in our thinking about word mortality, is trending, you know, particularly coming out after the pandemic. And the trends are downward, you know, but we probably, we believe you were still operating in an endemic state of mortality, which means it's going to be higher than normal, which we think will continue for at least the next couple of years.

Andrew Scott Kligerman: Yeah, We did we did call out a little lighter sales.

Andrew Scott Kligerman: Volume.

Andrew Scott Kligerman: During the quarter looking at Jonathan Bennett and can give you additional color also but I think Andrew.

Andrew Scott Kligerman: You might recall, we've talked about.

Andrew Scott Kligerman: Being fairly disciplined in our thinking about where mortality.

Andrew Scott Kligerman: Trending, particularly coming out after the pandemic and the trends are downward, but we probably we believe we're still operating in a <unk>.

Andrew Scott Kligerman: <unk> state of mortality, which means it's.

Andrew Scott Kligerman: It can be higher than normal.

Andrew Scott Kligerman: Which we think will continue for at least the next couple of years and we've been pricing our product.

Christopher J. Swift: And we've been pricing our product with that view in mind, which obviously has an impact on sales if market participants don't have a similar view. So I think it's all good. It's all healthy for us. Again, key message, I want you to know we're being disciplined, but it might come at a cost of slightly lower group life sales than we maybe have enjoyed in the past. Jonathan, what would you add?

Andrew Scott Kligerman: With that view.

Andrew Scott Kligerman: Which obviously has an impact on sales.

Andrew Scott Kligerman: Market participants don't have a similar view so I think it's all good so all healthy for US again key message I want you to know we're being disciplined.

Andrew Scott Kligerman: Come at a cost of slightly lower group life sales and we maybe have enjoyed in the past, but Jonathan what would you add.

Jonathan Ross Bennett: Yeah, Chris, I agree with everything you've said. And I think Andrew just reinforced the importance of us having our point of view and executing on that in the marketplace. If you think about where we are in the group life cycle, we're looking to the future, and we're seeing improvements. When you look back at your trends, which is where you start thinking about your pricing philosophy, a lot of that data is loaded with excess mortality and COVID losses. So the first step you have to do is figure out what to extract, and how to normalize, if you will, that data.

Jonathan Ross Bennett: Yes, Chris.

Jonathan Ross Bennett: Agree with everything you've said.

Jonathan Ross Bennett: I think Andrew just reinforced the importance of us having our point of view and executing on that in the marketplace. If you think about where we are in the group lifecycle, we're looking to the future we're seeing improvements.

Jonathan Ross Bennett: When you look back at your trends, which is where you start thinking about your pricing philosophy.

Jonathan Ross Bennett: A lot of that data is loaded with excess mortality in COVID-19 losses. So the first step you have to do is figure out what to extract how to normalize if you will for that data.

Jonathan Ross Bennett: And it might sound obvious to say, well, just take all the COVID claims out, but that's not how they always get reported. And so, as a result, there is a fair amount of variation in judgment applied as you do that. And then looking forward, you need to make a call on where you feel like mortality will be in the next three to five years. And as we sit here today, if you were to pull some CDC data, I think you would see that the reported deaths are still trending, are still a bit higher than they were prior to the pandemic.

Jonathan Ross Bennett: And it might sound obvious to say well just take all the COVID-19 claims out, but that's not how they always get reported.

Jonathan Ross Bennett: So as a result, there is a fair amount of variation and judgment applied as you do that and then looking forward you need to make a call on where.

Jonathan Ross Bennett: Or you feel like mortality will be in the next three to five years.

Jonathan Ross Bennett: And as we sit here today, if you were to pull some CDC data I think you would see that.

Jonathan Ross Bennett: The reported deaths are still trending are still a bit higher than they were prior to the pandemic. So when we have all of that and we have our conviction about where we think things are going.

Jonathan Ross Bennett: So when we weave all that in, we have our conviction about where we think things are going. But I would say that the range right now in the marketplace and pricing is about as wide as it's ever been, based on all of those ambiguities in how pricing can be developed. And that really is, I think, the cause for some uncertainty in the marketplace.

Jonathan Ross Bennett: But I would say the range right now in the marketplace and pricing is about as wide as it's been ever.

Jonathan Ross Bennett: Based on all of those ambiguities.

Jonathan Ross Bennett: And how pricing can be developed and that really is I think what's the cause for some uncertainty in the marketplaces, but as Chris said, we have strong point of view on where we are we're confident and comfortable with that and we'll continue to compete our capabilities are actually as strong as ever in that marketplace and we feel quite good about our positioning.

Christopher J. Swift: But, as Chris said, we have a strong point of view on where we are. We're confident and comfortable with that, and we'll continue to compete. Our capabilities are actually as strong as ever in that marketplace, and we feel quite good about our positioning.

Andrew Scott Kligerman: That was very helpful. And then my follow-up question is: There's been a ton of talk now about long tail reserving. I mean, for a while, it was 16 to 19 underwriting years. Now people are talking about 20 to 22 or 23.

Speaker Change: That's very helpful. And then my follow up is.

Speaker Change: There's been a ton of talk now about long tail reserving I mean.

Speaker Change: For a while it's been 16 to 19 underwriting years now people are talking about 'twenty to 'twenty, two or 'twenty three.

Andrew Scott Kligerman: And when we looked at your reserves this quarter, I mean, they looked pretty modest in general liability and soon green, and Marine, you know, and those were 16 to 19 years, per your releases. Any concerns? I mean, you looked great, but some of your competitors didn't. And so anything to read into going forward? Any concerns on your part?

Speaker Change: And when we looked at your reserves this quarter I mean, it looked pretty modest in general liability and soon <unk>.

Speaker Change: And marine.

Speaker Change: And those were 16% to 19 years per your releases.

Speaker Change: Any concerns I mean, you look great, but some of your competitors didn't and so anything to read into going forward any concerns on your part.

Christopher J. Swift: You know, Andrew, I'll, I'll start, and I'll let Mo and Beth add their commentary, but yeah, I'm not going to speak to, you know, competitors because everyone's just, you know, slightly different, but, you know, the confidence that we have, particularly in our, our, current loss picks is very, very high, and I think the context in which I think Mo and Beth will speak.

Speaker Change: Andrew.

Andrew Scott Kligerman: I'll start and I'll, let Moe and bus at their commentary, but I'm not going to speak to competitors, because everyone's just slightly different but the confidence that we have.

Andrew Scott Kligerman: Particularly in our current loss picks are very very high and I think the context.

Speaker Change: I think Mohan.

Christopher J. Swift: Beth will explain to you that, you know, we've been hard at work and sort of improving our underwriting our book, you know, re-underwriting it, looking at different classes of business, changing terms and conditions, and we'll give you more color. Beth can talk about the actual analysis that we do on a quarterly basis, which is very robust and gives us a high degree of confidence in our picks, you know, particularly for the most recent years.

Speaker Change: Beth will explain to you is that we've been hard at work in sort of improving our.

Speaker Change: Underwriting our book re underwriting it.

Speaker Change: Looking at different classes of business changing terms and conditions and we will give you more color you can talk to about the you know the actuarial analysis that we do on a quarterly basis, which is a very robust and.

Speaker Change: It gives us a high degree of confidence in our picks particularly for the most recent years.

Christopher J. Swift: But we're also humble enough to admit we didn't get everything right over the last five years. And when we feel that adjustments are needed, we're pretty clear and transparent about why we're making those adjustments. And that'll continue going forward. But Andrew, as we sit here today, I think you have got it right. We feel good. We're not immune, but on a relative basis. I think we'll be better than most. But, Mo, Beth, what would you add?

Speaker Change: We're also.

Speaker Change: Humble enough to admit we didn't get everything right over the last.

Speaker Change: Five years and when we feel that adjustments are made were pretty clear and transparent about why we're making those adjustments and that will continue going forward, but Andrew as we sit here today I think you've got it right we feel good.

Speaker Change: We're not immune but on a relative basis.

Speaker Change: I think it will be better than most but not all.

Speaker Change: What would you add.

Beth Costello: So I'll start and then I'll let Mo provide some color and just add on to what Chris indicated, but as you noted, Andrew, in the general liability reserves, the prior year development that we recorded this quarter was related to the 2016 to 2019 years, some large loss activity. And as Chris said, we do evaluate these reserves quarter to quarter, and when we see activity, we do react to it. As it relates to the more current years, those tend to trend very well.

Andrew Scott Kligerman: Well I'll start and then I'll, let <unk> provide some color and just add on to what Chris indicated, but as you noted Andrew in the general liability reserves for prior year development that we recorded this quarter was related to the 2016 to 2019 years since.

Some large loss activity and as Chris said, we do evaluate these reserves.

Andrew Scott Kligerman: To quarter and when we see activity, we do react to it as it relates to the more current ears.

Andrew Scott Kligerman: Those tend to trend very well as you know.

Beth Costello: As you know, these are long-tail liabilities, so even if in the short term they're looking strong, we don't react to that because, as I said, these are long-tailed in nature. But overall, we've not seen things in the more recent years that would cause us to change our picks at this point. And when I look at a variety of measures, and I know you do as well, IV&R levels, and paid activity, I think our more recent accident years stand out as being strong.

Andrew Scott Kligerman: These are long tail liabilities still even if in the short term there theyre looking strong we don't react to that because as I said these are long tailed in nature, but overall, we've not seen things.

Andrew Scott Kligerman: Things in the more recent years that would cause us to change our picks at this point and when I look at a variety of measures and I know.

Andrew Scott Kligerman: You do as well IV and our levels paid activity I think are more recent accident years standout as being strong, but it's also really important to understand as Christmas, indicating actions that we've taken over this period to improve the overall book, which even adds to how we feel about it.

Beth Costello: But it's also really important to understand, as Chris was indicating, actions that we've taken over this period to improve the overall book, which even adds to how we feel about our overall reserves in the more recent years. But maybe, Mo, I'll turn it to you to talk about some of the things that you and your team have been doing over the last several years in this area.

Andrew Scott Kligerman: Our overall reserves in the more current years, but maybe now I'll turn it to you to talk about some of the things that you and your team have been doing over the last several years in this area.

Beth Costello: Andrew, maybe three themes just to build on Beth's point about actions we've taken over that time period. So first, obviously, we've put a significant rate in each of those years since 2019 in each of the three books, and that is well within reach of some healthy trends. The second theme I would put out there is just remember the S&E nature of our book.

Andrew Scott Kligerman: Yeah, Andrew maybe three themes just to build on best point about actions, we've taken over that time period. So first is obviously, we've put significant rate in each of those years since 2019 and each of the three books and that is well in excess of.

Andrew Scott Kligerman: Some healthy trend.

Speaker Change: The second theme I would put out there is just remember that the SME nature of our book I mean, we just have a lower underlying for example auto exposure just to give you one stat.

Mo: I mean, we just have a lower underlying, for example, auto exposure, just to give you one stat. 79% of our middle market umbrella book attaches to clients with less than 10 vehicles. So it gives you a sense of the size of fleets, which is where a lot of the pressure is coming from. It's just auto.

Speaker Change: 79% of our middle market umbrella book attaches.

Speaker Change: For clients with less than 10 vehicles. So it gives you a sense of the size of suites, which is where a lot of the pressure is coming from is just auto we don't have a transportation book of any real note. We don't really we've never deployed limits with greater than $25 million gross and we have important reinsurance involved there.

Mo: We don't have a transportation book of any real note. We really don't, and we've never deployed limits of greater than $25 million gross, and we have important reinsurance involved there. And the third, Andrew, I just, I think we've taken significant underwriting actions, as both Chris and Beth referred to, since 2019. That's industry-related, it's related to litigation hotspots, and we've managed limits. Just as one example, in our global specialty book, we got out of all primary GL high hazard in 2017.

Third Andrew I, just I think we've taken significant underwriting actions as both Chris and Beth referred to since 2019.

Speaker Change: That's industry related its related to litigation hotspots, we manage limits just one.

Speaker Change: One example in a global specialty book, we got out of all primary GL high hazard in 2017, we just didn't think we could make money and we haven't gone back in just because we still don't think that marketplaces there.

Mo: We just didn't think we could make money, and we haven't gone back in, just because we still don't think that marketplace is there. And so, Andrew, I hope that gives you a sense of the book. And we continue to invest in tools that are allowing our underwriters to make choices based on litigation hotspots, based on industry, based on underlying auto. So we just, we've worked really hard at this. And I think that contributes to some of the lack of news that you're seeing here.

Speaker Change: And so just Andrew I hope that gives you a sense of the book and we continue to invest in tools that are allowing our underwriters to make choices based on litigation hotspots based on industry based on underlying auto. So we just we worked really hard at this and I think that contributes to some of the lack of news that you are seeing here.

Andrew Scott Kligerman: That's very helpful. Thanks very much.

Speaker Change: Yes, very helpful. Thanks very much.

Speaker Change: Yes.

Elyse Beth Greenspan: We'll move to our next question from Elyse Greenspan at Wells Fargo.

Speaker Change: We will move to our next question from Elyse Greenspan at Wells Fargo.

Elyse Beth Greenspan: Hi, thanks. Good morning.

Elyse Beth Greenspan: Hi, Thanks, good morning.

Elyse Beth Greenspan: My first question was on the personal line. Just kind of following up, Chris, you said that you guys are kind of turning on, you know, new business growth, or did turn on this quarter, that you're at, you know, rate adequacy in the vast majority of states. Can you just give us a sense, I guess, of what you are seeing from a frequency and severity perspective right now? And what do you expect, I guess, looking out over the next 12 months? You know, you said when you put the expectation out that you expected to get to profitability this year and reach the target in 2025.

Elyse Beth Greenspan: My first question was on the personal lines I'd.

Elyse Beth Greenspan: Just kind of following up I think Chris you said that you guys are kind of turning on new business quota did turn on this quarter.

Elyse Beth Greenspan: You're at rate adequacy in the vast majority of states.

Elyse Beth Greenspan: Can you just give us a sense I guess.

Elyse Beth Greenspan: What are you seeing from a frequency and severity perspective, right now and what do you expect I guess looking out over the next 12 months you said when you put the expectation out that you expect to get to profitability this year and reach the target in 2025.

Christopher J. Swift: Elyse, thank you for the question and joining us. We're pretty pleased with the start on personal lines in general. You saw the, you know, the metrics that we've talked about, you know, 25.7% written rate increase for auto, you know, 15-ish in home, and I think the team is, you know, executing very, very well. I would give you a couple of data points to consider. As we think about the full year in 24, we still see auto getting about 20 points a rate, plus or minus.

Speaker Change: Thank you for the question and joining us.

Speaker Change: We're pretty pleased with the start on personal lines in totality.

Speaker Change: You saw the the metrics that we've talked about 25, 7% written rate increase.

Speaker Change: For auto 15 ish and home and I think the team is executing very very well.

Speaker Change: A couple of data points to that.

Speaker Change: If you consider.

Speaker Change: As we think about the full year in 2004.

Speaker Change: We still see auto getting about 20 points of rate.

Christopher J. Swift: So we still have that conviction, which then lays the foundation for the targeted profitability in 2025 that we've been talking about. I would say we're beginning to see in moderation, both in our auto loss cost trends on a BI and a PD basis. Not going to give you precise numbers, just because it could be bouncy any one quarter to one quarter. But, you know, overall trends, you know, for 23, let's say we're in the mid single digits, and I expect, excuse me, mid-double digits. And I expect that to, you know, come down into the, you know, low double-digit range, you know, here in 24.

Speaker Change: Plus or minus so.

Speaker Change: We still have that conviction, which then lays the foundation for <unk>.

Speaker Change: The targeted profitability in 2025.

Speaker Change: We've been talking about.

Speaker Change: I would say, we're beginning to see moderation.

Speaker Change: Olson, our auto loss cost trends on a PV basis, I'm not going to give you precise numbers just because it could be balance sheet any one quarter to one quarter, but.

Speaker Change: Overall trends.

Speaker Change: 23, let's say, we're in the mid single digits.

Speaker Change: And I expect.

Speaker Change: Excuse me mid double digits.

Speaker Change: And I expect that.

Speaker Change: Come down into the low double digits range here in 2004, and maybe there could be more improvement from there, but that's our best call.

Christopher J. Swift: Maybe there could be more improvement from there, but that's our best call, you know, at this point in time. And I think Beth importantly reiterated our point of view that we do see five to six points of underlying auto loss ratio improvement in 2024 and, I think that, again, will put us on the right track to hitting the target of profitability in 25. So, yeah, we are rate-adequate in 80% of our states. There's a couple of states that are going to be laggards for a while, but they'll go nameless.

Speaker Change: At this point in time, I think Beth importantly, reiterated our point of view that.

Speaker Change: We do see 5% to six points of underlying auto loss ratio improvement in 2024.

Speaker Change: I think that again will put us on track to hitting.

Speaker Change: Hitting targeted profitability and 25, so yes, we are rate adequate and 80% of our states.

Speaker Change: A couple of states, they're gonna be laggards for a while they'll go nameless, but.

Christopher J. Swift: But we feel good about what we're doing with auto. And then, you know, likewise with home, you saw the underlying combined ratios improve over years. I thought our cap performance in total for the quarter, although slightly elevated to expectations, was still in line or within a range of long-term trends, so I'm pleased with the team and what they're doing both in auto and home, and in personal lines. Beth, would you add anything? Yeah.

Speaker Change: But we still feel good about what we're doing with auto and then likewise with home you saw the underlying combined ratios improved over years.

Speaker Change: I thought our cat performance in total.

Speaker Change: For the quarter, although slightly elevated to expectations was still.

Speaker Change: In line or within a range of long term trends so.

Speaker Change: I'm pleased with the team and what they are doing both in auto and home and personal lines. Beth would you add anything yeah. Just a couple of things also I point out that we did see some favorable development on the 23 accident year, primarily coming out of the fourth quarter for auto physical damage. So.

Beth Costello: Yeah, just a couple things. Also, I point out that we did see some favorable developments on the 23 Axinger, primarily coming out of the fourth quarter for auto physical damage. So we see that as, you know, an important proof point too. I just want to clarify Chris's comment on the book loss trend among mid-teens. So that is mid-double digits, but, just to be clear, mid-teens. And we do expect that to decline over the period.

Beth Costello: We see that as an important proof point too.

Beth Costello: Wanted to clarify on Chris's comment on the book loss trend mid teens.

Beth Costello: That isn't it double digits just to be clear mid teens.

Beth Costello: And we do expect that to decline over the period, but.

Beth Costello: But as Chris said, we're being, you know, cautious and looking at it very carefully, and feel very good to be on track to get to the improvement that we laid out at the beginning of the year.

Beth Costello: As Chris said, we're being being cautious and looking at it very carefully and feel.

Beth Costello: We feel very good to be on track to get to the improvement that we laid out at the beginning of the year.

Elyse Beth Greenspan: Thanks. And then my follow-up is on commercial lines, looking at, you know, the price disclosure, stable on a reported basis, right? But that obviously reflects the concentration.

Speaker Change: Thanks, and then my follow up is on commercial line looking at the clients' disclosure.

Speaker Change: Stable on a reported basis, but that obviously reflects the comp concentration how do you guys see to pricing across commercial lines.

Elyse Beth Greenspan: How do you guys see just pricing across commercial lines playing out, you know, as we move through this year?

Speaker Change: Playing out.

Speaker Change: As we move through this year.

Speaker Change: Yeah.

Christopher J. Swift: Yeah, I'll add my color, and then Mo will add his, but I hope you felt it in our tone, Elyse. We're really pleased, you know. The team's working hard. You know, from an execution side, you know, to have X comp, you know, our written renewal, you know, rate increase, increase 70 base points, I thought it was healthy. Yeah, that doesn't include an element of exposure, that excess rate, which we call out in the general 2.3 points range or 25%, exposure 75% rate base.

Speaker Change: Yeah, I'll add my color and then.

Speaker Change: We will add his butt.

Speaker Change: I hope you felt it in our tone at least we're really pleased.

Speaker Change: The team's working hard.

Speaker Change: From an execution side, its a half ex comp or a written renewal rate increased increased 70 basis points I thought was healthy.

Speaker Change: That doesn't include an element of exposure that excess rate, which we call out in the general two three points range or 25%.

Speaker Change: Closure of 75% rate base so.

Christopher J. Swift: So I think we see a lot of stability in the marketplace and are still very optimistic as we play out, you know, 2024 here. So I think that, again, why we talked about early on in the year about the stability of our margins and generally, you know, having a consistent outcome compared to 2023. I think it's still alive and well in our thesis as we execute, you know, here through mid-year. But, Mo, what would you add?

Speaker Change: I think we see a lot of stability in.

Speaker Change: In the marketplace and still very optimistic as we play out 2024 here so.

Speaker Change: Thats again, why we talked about early on.

Speaker Change: The year of the stability of our margins and generally having a consistent.

Speaker Change: Outcome compared to 2023, I think is still alive and well and our thesis is we execute here through midyear, but well what would you add.

Mo: Yeah, at least I would say it's competitive, but...

Speaker Change: Yes, I would say, it's competitive but generally supportive.

Elyse Beth Greenspan: Yeah, Elyse, I would say it's competitive but generally supportive, you know, because we've talked about properties moderating a little bit outside of our BOP. But the BOP is still accelerating just in terms of what we're able to get there in terms of rate. The access and umbrella is accelerating again. The car is accelerating again. So broadly, I just think we feel like the market is being fairly disciplined, fairly disciplined, and supportive of what we're trying to get done for the year.

Speaker Change: Because we've talked about properties moderating a little bit.

Speaker Change: Outside of our box.

Speaker Change: In the BOP is still accelerating just in terms of what we're able to get there in terms of rates.

Speaker Change: The excess and umbrella is accelerating again auto is accelerating again, so broadly I just I think we feel like.

Speaker Change: The market is being fairly disciplined fairly disciplined.

Speaker Change: And supportive of what we're trying to get done for the year.

Speaker Change: Thank you.

Yeah.

Speaker Change: We will take our next question from Gregory Peters at Raymond James.

Gregory Peters: We'll take our next question from Gregory Peters at Raymond James.

Gregory Peters: Great. Good morning, everyone.

Gregory Peters: Great Good morning, everyone.

Christopher J. Swift: So, Chris, in your prepared comments, you talked about, you know, the no change and sort of the catastrophe profile of your property business. And yet, you said that you're growing your property business. I think the number you cited was 17% higher in the quarter. Maybe you can help reconcile how you grow your property business and not change your cap profile.

Gregory Peters: Chris.

Gregory Peters: In your prepared comments you talked about.

Gregory Peters: No change in sort of a catastrophe profile of your property business and yet you said that you're growing your property business I think the number you just cited was 17% higher in the quarter maybe.

Gregory Peters: Maybe you can help reconcile how you grow your property business and not change your cap profile.

Christopher J. Swift: Well, a cap profile versus risk appetite, I see a little difference. I mean, you know, we're not increasing our, you know, property, cat appetite per se. We've always said that we're willing to write a property if it comes with some incremental small elements of cat, which I think we've been managing perfectly. And Mo could give you more color.

Gregory Peters: Well chat profile versus risk appetite I see a little difference I mean, we're not increasing our.

Gregory Peters: Property.

Gregory Peters: Cat appetite.

Gregory Peters: For say, we've always said that.

Gregory Peters: We're willing to write property if it comes with some incremental small elements of cat and which I think we've been managing.

Perfectly in MAU could give you more colors, but I would say let me just give you a couple of stats is that.

Christopher J. Swift: But I would say, and let me just give you a couple of stats, that pricing in our property book, our global rebusiness, is about 14% up, compared to 14.4% in the fourth quarter. As I said, we're growing that, you know, 17%. And, you know, we're growing it in an important line: Spectrum, E&S binding, and our general industries properties. Our large property capabilities are up almost 35%. And again, the pricing, I think, is still firm and holding up pretty well. But Mo, what would you add?

Gregory Peters: Pricing in our property book.

Our global re business is about 14% up.

Gregory Peters: Imperative 14, 4% in the fourth quarter.

Gregory Peters: As I said, we're growing that 17%.

And we're growing in an important lines spectrum E&S binding our general industries properties.

Gregory Peters: Our large property capabilities are up almost 35% and again the pricing I think is still firm.

Gregory Peters: And holding up pretty well, but what would you add Greg I will just say that there are a couple of cat metrics that the team are really focused on and for.

Mo: Greg, I would just say that there are a couple of CAT metrics that the team was really focused on and, you know, for example, AAL, so annual aggregate loss to premium ratios, trying to keep those flat. So as premium goes up, obviously, we would like the AAL to stay relatively flat.

Greg: For example.

Greg: So annual aggregate loss to premium ratios trying to keep those flat. So as premium goes up obviously, we would like the al just to stay relatively flat and the same thing as we think about tail. We don't want to put on the risk without thinking about the tail risk. So we are closely looking at tail multiples like.

Mo: And the same thing as we think about the tail, we don't want to put on the risk without thinking about the tail risk. So we are closely looking at tail multiples, like, you know, for example, 100-year PMLs over premiums. So those are the types of ratios that we're watching. So yes, the exposure itself is growing, certainly from a capital perspective, but we're trying to keep it in balance as to the same rate as premium growth.

Greg: For example, 100 year.

Greg: <unk> over premiums. So those are the types of ratios that we're watching so yesterday expose yourself. It is growing certainly from a cat perspective, but we're trying to keep it in balance as to the same rate as premium growth.

Speaker Change: Okay that makes sense.

Speaker Change: So then a building.

Speaker Change: Building on some of your previous answers.

Gregory Peters: Okay, that makes sense. So, building on some of your previous answers, I'm looking at the stats on new business production, policy counts inside your commercial business, and things look like they're going really well. I do remember, you know, a couple quarters ago, you calling out some price competition in the middle market area. I'm just trying to get an update on, you know... It seems pretty stable, and the outlook seems pretty bullish, but when you look forward, you know, what are the areas that you're concerned about for potential competitive challenges?

Speaker Change: I'm looking at the stats on new business production policy counts inside your commercial business.

Speaker Change: Look like they're going really well I do remember a.

Speaker Change: A couple of quarters ago, you're calling out some price competition in the middle market area.

Speaker Change: Just trying to get an update on <unk>.

It seems pretty stable and the outlook seems pretty bullish but when you look forward.

Speaker Change: What are the areas that you're concerned about for potential and competitive challenges.

Speaker Change: Yeah, it's a competitive market and I would say, especially in the larger end of each of our segments. So the larger end of small we are finding more competitive at the larger end of middle is more competitive in the larger end of the specialty business. So anything with a lot of premium on the slips typically how.

Christopher J. Swift: Yeah, it's a competitive market, and I would say, especially in the larger end of each of our segments. So the larger end of small is finding more competitive, the larger end of the middle is more competitive, and the larger end of the specialty business. So anything with a lot of premium on the slip typically has a little more competition. But the only area that we're dramatically pulling back on is, as we've talked about many times, public DNO.

Speaker Change: A little more competition to it but.

Speaker Change: But the only area that we're dramatically pulling back on as we've talked about many times is public D&O. We just haven't seen that market stabilize the way we would like to so you will see that book continues to shrink.

Outside of that Greg I think we feel pretty good about the rest of the portfolio.

Speaker Change: Makes sense thanks for the answers.

Christopher J. Swift: We just haven't seen that market stabilize the way we would like to, so you will see that book continue to shrink. But outside of that, Greg, I think we feel pretty good about the rest of the portfolio.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: We'll go next to Josh Shanker at Bank of America.

Speaker Change: Okay.

Joshua David Shanker: Thank you for taking my call.

Joshua David Shanker: Looking at the rate that you're pushing through on auto in particular, obviously a sizable.

Joshua David Shanker: Year over year, the policy count down about 5%, which that might be a good outcome given how much rate you're pushing through one of your probably the largest direct competitor in the market. They raised prices not as much as your last couple years, some lost 20% of their business.

Gregory Peters: Makes sense. Thanks for the answers.

Joshua David Shanker: We'll go next to Josh Shanker at Bank of America.

Joshua David Shanker: Thank you for taking my call, you know, looking at the rate that you're pushing through on.

Joshua David Shanker: You know, looking at the rate that you're pushing through on auto in particular, obviously it's sizable. Year over year, the policy countdown is down to about 5%, which might be a good outcome given how much rate you're pushing through. One of your, probably the largest direct competitor in the market, they raise prices not as much as you have over the last couple years, and they have lost 20% of their business. What is your experience of retaining clients, given that you are a direct carrier and you can only present them with the Hartford product? Are they wanting to change, and you're convincing them to stay? Are they doing buy-downs? How is that experience coming with retention?

Joshua David Shanker: What is the experience of retaining clients given that you are a direct carrier and you only can present them with Hartford product are they are they wanting to change and you're convinced them to stay are they doing buy downs, how has that experience coming with the retention.

Joshua David Shanker: Yeah.

Speaker Change: Hi, Josh.

Joshua David Shanker: Thank you for joining us.

Speaker Change: That's the tradeoff, we're making right now.

Speaker Change: Lower retention for more profitable cohort to get us back to the targeted profitability. So I don't think its outside of the range of expectations that we've had as far as.

Speaker Change: Tradeoffs.

Speaker Change: I think we've talked about sort of the pits count declined compared to 2000.

Christopher J. Swift: Thank you for joining us. Yeah, that's the trade-off we're making right now, lower retention for a more profitable cohort, you know, to get us back to that targeted profitability. So I don't think it's outside of, you know, the range of, you know, expectations that we've had as far as, you know, that trade-off. I think we've talked about, you know, sort of the PIF count decline compared to 2000. 23 before, we still see that in that 4% range.

Speaker Change: 23, before we still see that in that 4% range. So again that speaks to our conviction to them too.

Speaker Change: To get the necessary rate and the bookings.

Speaker Change: You are right I mean, it's a direct response business I mean, it's middle America from a customer side, so theres not a lot of.

Speaker Change: I'll call it financial engine.

Speaker Change: Engineering, we're doing vis vis rate buy downs on auto or home deductibles things like that is pretty straightforward.

Speaker Change: And again strictly in the admitted business.

Speaker Change: But I think I think generally.

Christopher J. Swift: So again, that speaks to our conviction to get the necessary rate in the book. And you're right. I mean, it's a direct response business. I mean, it's middle America, you know, from a customer side. So there's not a lot of, call it financial engineering, we're doing vis-a-vis rate buydowns on auto or home deductibles, things like that. It's pretty straightforward.

Speaker Change: People understand the need to keep up with trend.

Speaker Change: <unk> pressures the weather patterns are changing.

Speaker Change: All the social litigation.

Speaker Change: Legal abuse systems that we've talked about is keeping.

Speaker Change: Pressure on our on our loss cost and.

Speaker Change: Again, we've been able to work with our regulators to get rates approved either on a.

Speaker Change: Preapproved basis, or a file and use so I think we're executing well and its still a very dynamic and challenged environment.

Christopher J. Swift: We're sort of, again, strictly in the emitted business. But I think generally, people understand the need to keep up with the trend, the inflationary pressures, the weather patterns are changing, all the social litigation, and legal abuse systems that we've talked about are keeping pressure on our loss costs, and Again, we've been able to work with our regulators to get rates approved either on a pre-approved basis or a file in use So I think we're executing well, and it's still a very dynamic and challenging environment.

Speaker Change: I don't mean to belabor the point, but I'm just curious if the customers are giving you a chance to retain them or are they calling up and asking what can we do to help me or you're just getting a notification that they've left to a competitor.

Speaker Change: Yeah.

Speaker Change: I think it's I think it's more of the latter I don't think were having very many negotiations over the phone as far as our product and our offering.

Speaker Change:

Speaker Change: Praveen.

Speaker Change: <unk>, when we talk to our customers, particularly the mature customers but.

Joshua David Shanker: I don't mean to belabor the point, but I'm just curious: if the customers are giving you a chance to retain them, are they calling you and asking, "What can we do to help me?", or are you just getting a notification that they've left to a competitor?

Speaker Change: Theres not theres not a negotiation.

Praveen: Okay. Thank you for the clarification to answers.

Speaker Change: We'll take our next question from Mike Ward City.

Michael Augustus Ward: Thanks, Good morning.

Michael Augustus Ward: I was wondering if you could maybe help us with some of the puts and takes driving the underlying loss ratio in commercial and I guess across the commercials sub segments.

Christopher J. Swift: I think it's I think it's more the latter. I don't think we're having very many negotiations over the phone as far as our product and our offer are concerned. And, um, we're being empathetic, you know, when we talk to our customers, particularly mature customers, but there's not, there's not a negotiation. Okay.

Michael Augustus Ward: Mike when you say puts and takes compared to prior year. What do you. What do you have what are you trying to get at.

Joshua David Shanker: Okay, thank you for the clarification, Sam.

Michael Augustus Ward: Yes, well I think you know last year, you had mentioned I think commercial small commercial was hotter.

Michael Augustus Ward: We'll take our next question from Mike Ward at Citi. Thanks. Good morning.

Michael Augustus Ward: Thanks, good morning. I was wondering if you could maybe help us with some of the political intakes driving the underlying loss ratio in commercial, and I guess across the commercial subsegments.

Michael Augustus Ward: Just trying to see how the underlying doing year over year.

Michael Augustus Ward: Yeah, I would just share with you I guess from an expectation side everything is pretty much right on line I mean, if you.

Michael Augustus Ward: Mike, when you say puts and takes compared to the prior year, what do you have in mind? What are you trying to get at?

Michael Augustus Ward: Obviously, you can see we improved slightly on a loss ratio basis from prior year, our non cat property is pretty consistent with prior year and maybe even slightly ahead of our expectations. So.

Michael Augustus Ward: Yeah, well, you know, last year you mentioned that you think commercial, small commercial, was hotter. I'm just trying to see how the underlying is doing year over year.

Christopher J. Swift: Yeah, I would just share with you what I get from an expectation side, everything is pretty much right online. I mean, if you Obviously, you can see we improved, you know, slightly on a loss ratio basis from prior year, our non-CAT property is pretty consistent with prior year and maybe even slightly ahead of our expectations. So, I don't want to avoid a question, I don't want you to feel like we're avoiding a question, but there's nothing to call out.

Speaker Change: I don't want to avoid a I don't want you to feel like we're avoiding the question, but there's nothing to call out.

Speaker Change: Okay. Thanks.

Speaker Change: And then maybe just on the loss trend.

Speaker Change: You said pricing was well ahead of loss trend.

Speaker Change: Curious how.

How loss trend.

Michael Augustus Ward: Okay, thanks. And then maybe just on the loss trend. I know, you know, you said pricing was still ahead of the loss trend. Just curious how the loss trend assumptions if they're steady in the first quarter relative to I guess, you know, 23.

Speaker Change: Our assumptions with the study in the first quarter relative to I guess.

Speaker Change: Three.

Speaker Change: I would say generally our views on loss trends from 'twenty three have increased modestly.

Speaker Change: And that's obviously reflected in what we're trying to execute from a written rate side and the discipline we have there.

Christopher J. Swift: I would say generally our views on loss trends from 23 have increased modestly. And that's obviously reflected in what we're trying to execute from a written rate side and the discipline we have there. You know, again, the guidance that we try to give our underwriters, within, with appropriate discretion, but yeah, I would say the loss trend is up modestly in 24, compared to 23.

Speaker Change: Again, the guidance that we're trying to give our underwriters.

What's up with appropriate discretion, but yeah, I would say loss trend is up modestly.

Speaker Change: In 2004.

Speaker Change: Compared to 23.

Speaker Change: Okay. Thank you.

Speaker Change: We'll move next to Brian Meredith at UBS.

Brian Meredith: Yes. Thanks good question.

Michael Augustus Ward: Okay, thank you.

Brian Meredith: We'll move next to Brian Meredith at UBS.

Brian Meredith: I was hoping could you give.

Brian Meredith: Yeah, thanks, Hey Chris. I was hoping, could you give us what your kind of E&S growth was in the quarter in your commercial line space? And just maybe your thoughts, is that a market that you continue to expect to grow at a pretty healthy rate here going forward?

Brian Meredith: Give us what your kind of E&S growth was in the quarter.

Brian Meredith: Commercial lines space and just maybe your thoughts is that in market that you continue to expect to grow at a pretty healthy rate here going forward.

Christopher J. Swift: Yeah, Brian, I looked at the motor at any color, but I there's two ENS components that you should think about. One is in the small at our U.S. Binding business, which we've called out. We'd like to try to get to that $300 million level. And then, obviously, all our E&S, you know, capabilities within global specialty, whether it be property or casualty. You know, that is an important component of what we're trying to do in the marketplace. But, Mo, what would you add from an overall growth rate perspective? No, Brian, I would say.

Speaker Change: Yeah, Brian I'll look to motor add any of his color, but theres two E&S components I'd have you think about one is in small.

Speaker Change: Our units binding business, which we've called out and we'd.

Speaker Change: We'd like to try to get to that $300 million level, and then obviously all our E&S capabilities.

Speaker Change: <unk> within global specialty whether it be property or casualty.

Speaker Change: And in Comportance components.

Speaker Change: What we're trying to do in the marketplace, but.

Speaker Change: What would you add from an overall growth rate perspective, Brian I would say we're excited about the slow in both of the channels that Chris talks about both and that binding which is the small commercial and the flow into our brokerage that continues to grow nicely.

Mo: No, Brian, I would say we're excited about the flow in both of the channels that Chris talks about, both in that binding, which is the small commercial, and the flow into our brokerage that continues to grow nicely. We saw, and we continue to see growth, as Chris called out in his prepared remarks on the binding side. And we're seeing really good growth in the brokerage side, which sits on our global specialty business in both primary casualty and excess casualty. And the rate environment continues to accelerate, as I talked about earlier.

Speaker Change: We saw it.

Speaker Change: We continue to see the growth as Chris called out in his prepared remarks on the binding side and we're seeing really good growth in the brokerage side, which sits in our global specialty business in both primary casualty excess casualty that rate environment continues to accelerate as I talked about earlier.

Speaker Change: We're undersized in property brokerage and in global specialty we are undersized in inland Marine we are undersized in auto. So we just see the especially on the global specialty side, there's plenty of opportunity in the flow is there to support them.

Speaker Change: Great. That's helpful. And then second question, Chris bigger picture question here.

Mo: We're undersized in property brokerage and in global, especially in inland marine, and we're undersized in auto. So we just see that, especially on the global specialty side, there's plenty of opportunity, and the flow is there to support it.

Speaker Change: Looking at your personal lines business and understanding that the last couple of years have been challenging from installation stuff, but if I look at your homeowners business, it's been close to a decade since you've grown unit volume there.

Brian Meredith: Great, that's helpful. And then the second question, Chris, is a bigger picture question here. Looking at your personalized business and understanding that the last couple of years have been challenging due to inflationary stuff, but if I look at your homeowner's business, it's been close to a decade since you've grown unit volume there. In auto, it's probably six, seven years, maybe a blip here and there. I'm just curious, maybe what is kind of going on during that period?

Christopher J. Swift: And auto is probably six seven years, maybe a blip here and there.

I'm just curious.

Christopher J. Swift: What is kind of what's going on during that period and as that prevailed product kind of the answer to that now where maybe at some point here, we'll see our card production start to grow unit.

Christopher J. Swift: In the personal lines space.

Speaker Change: Brian I appreciate the question.

Speaker Change: Fair the torture going back seven eight years for everyone on.

Brian Meredith: And is the Prevail product kind of the answer to that now, where maybe at some point here, we'll see Hartford actually start to grow units in the personalized space?

Speaker Change: What didn't go right, but I think more importantly.

Speaker Change: And we've talked about it.

Speaker Change: The various settings that prevail product and platform does give us a step change.

Christopher J. Swift: Brian, I appreciate the question. I'm going to spare you the torture, you know, going back seven, eight years for everyone on what didn't go right.

Speaker Change: And our ability to effectively compete.

In our core market, which is a mature preferred segment through an ERP endorsement.

Christopher J. Swift: But I think more importantly, and we've talked about it in various settings, that the prevailed product and platform does give us a step change in our ability to effectively compete in our core market, which is a mature preferred segment through an AARP endorsement that will allow us to be more competitive in auto, in home. And as much as I said, you know, we do continue to expect the PIF count, particularly in auto, to decline this year by We've also talked about, you know, that we feel like we could start to grow the PIF count modestly in 2025 and then maybe more meaningfully in 2026.

Speaker Change: Pat.

Speaker Change: We will allow us to be more competitive in auto and home.

Speaker Change: And as much as I said, we do continue to expect discount, particularly in order to decline this year by 4%.

Speaker Change: You also talked about that we feel like we can start to grow pet counts are modestly in 2005, and then maybe more meaningfully in 'twenty six.

Speaker Change: I think that's where we're at we've made the investment.

Speaker Change: We're in 42 states, we should be in 46 by the end of the year and couple of other states will lag a little bit, but I think can you give us every opportunity to to be growth oriented and then we'll see where we could take the prevail platform right now, it's obviously geared towards a direct response platform.

Christopher J. Swift: So I think that's where we are. We've made the investment, we're in 42 states, we should be in 46 by the end of the year, and a couple of other states will lag a little bit, but I think it gives us every opportunity to be growth-oriented, and then we'll see where we could take the prevail platform. Right now, it's obviously geared towards a direct response platform and Channel.

Speaker Change: And channel, but maybe there's others we would explore.

Speaker Change: Youre getting into it at the right time once we finish off the implementation of prevail in the vast majority or all of the states.

Speaker Change: Feasible, we'll start we'll start to think about the future a little bit differently, but we want to take care of that for right now we want to get it back to overall profitability, particularly in auto and then we'll build from there Brian.

Christopher J. Swift: But maybe there's others we would explore, you know, getting into it at the right time. Once we finish off the implementation of Prevail in the vast, you know, all the states, you know, feasible, we'll start, we'll start to think about the future a little bit differently. But we want to take care of the core right now. We want to get it back to overall profitability, particularly in the auto sector. And then we'll build from there, Brian.

Speaker Change: Gotcha.

Speaker Change: Understood.

Speaker Change: Their geographic constraints just given.

Brian Meredith: A lot of your customers, maybe as far as growth.

Brian Meredith: Okay.

No I mean.

Brian Meredith: We're obviously in all.

Brian Meredith: 50 states on a minute basis.

Brian Meredith: You know, we paused, our new homeowners in California, which is a.

Brian Meredith: Writing new homeowners business.

Brian Meredith: Gotcha. You know, on the homeowners, are there geographic constraints, just given that we're A lot of your customers may be, as far as growth.

Brian Meredith: Until until the regulatory reforms.

Brian Meredith: <unk> to allow us to match price and risk appropriately. So that's the only self imposed constraint we have.

Christopher J. Swift: Um, no, I mean, we're obviously in all 50 states on a minute basis, you know, we, you know, we paused our new homeowners business in California, which is a writing new homeowners business, until regulatory reforms get enacted to allow us to match price and risk appropriately. So that's the only self-imposed constraint we have. There's no other constraint besides our longstanding tradition of not writing any new homeowners business in Florida since 15, 16 years, almost 20 years ago. I bet.

Brian Meredith: There is no other.

Brian Meredith: Constraint besides our long standing.

Brian Meredith: Not writing any new homeowners business in Florida since <unk>.

Brian Meredith: 15, 16 years, almost 20 years ago, but.

Speaker Change: Got it thank you.

Speaker Change: Okay.

Speaker Change: We'll go next to Michael <unk> at BMO.

Michael: Hey, Thanks, good morning.

Michael David Zaremski: We'll go next to Mike Zaremski at BMO.

Michael: Could you comment on what drove the.

Michael David Zaremski: Hey, thanks. Good morning.

Michael: The pricing increases in commercial I think it came from from global specialty.

Michael David Zaremski: Did you comment on what drove the pricing increases in commercial? I think it came from Global Specialty. Any color there on if that's a trend or just maybe something that's next one out?

Speaker Change: Any color there.

Speaker Change: Trend or just maybe some something that's new.

Speaker Change: One off.

Speaker Change: Ask the question again, Michael I don't think I understood.

Christopher J. Swift: Ask the question again, Michael. I don't think I understood. I'm sorry.

Speaker Change: Commercial.

Speaker Change: Pricing, our renewal written pricing increase.

Michael David Zaremski: Commercial pricing, renewal written pricing, increased X comp from 8.3 to 9. I think that was driven by this global specialty segment. Did you comment kind of if there's a trend there that's causing pricing to move north?

Speaker Change: Ex comp from eight three to nine I think that was driven by the.

Speaker Change: Global specialty segment could you comment on kind of if there's a trend there that's that's.

Speaker Change: Causing pricing to move.

Speaker Change: Move north.

Christopher J. Swift: Yeah, I would say that the components that are driving, you know, that are primarily global. Global had a, you know, a good quarter. I'm looking at Bill Maschitz, and all the casualty lines, property lines, international rebounded in a good way. So, that's what I would call out. But Mo, what would you add?

Speaker Change: Yes, I would say that the components that.

Speaker Change: Our driving that is primarily global global head of.

Speaker Change: A good quarter I'm looking at.

Speaker Change: No my sheets and all of the casualty lines property lines International rebounded.

Speaker Change: And the.

Speaker Change: And a good way so.

Speaker Change: What I would I would call out, but what would you add.

Mo: No, I think we are continuing to see moderation in the negative rates on public DNO. We're certainly seeing a shift in our portfolio towards more of the management and professional liability, so there's a next coming through there, that's a part of it. I don't want to get too nuanced on you. Just that's the only additional detail I would give to Chris's comment.

No I think we are continuing to see moderation in the negative rates on public D&O.

Speaker Change: We're certainly seeing a shifting our portfolio towards more of the management and professional liability. So theres a mix coming through there that's part of it I don't want get too nuanced Tanya but.

Speaker Change: Thats the only additional detail I would give to chris's comments.

Beth Costello: The only other thing I would add to that is when you look at the small commercial side, X comp, you know, definitely saw a rate increase there coming from the Spectrum product. So again, obviously, workers comp is a large portion of small commercial, but if you X that out, that contributed to the X comp growth as well.

The thing I would add to that is when you look at the small commercial side ex comp.

Speaker Change: You know definitely saw rate increase there coming from the spectrum.

Speaker Change: Our product so again, obviously, a workers' comp is a large portion of small commercial but if you ex that out that contributed to the ex comp growth as well.

Michael David Zaremski: Okay, that's a helpful caller. And I guess lastly, just, you know, not trying to nitpick, but you mentioned in your comments, Chris, that larger end of, I think, small, more competitive, yet you're successfully accelerating growth on new business and small commercial. So any kind of color you'd want to offer there on those dynamics?

Speaker Change: Okay. That's helpful color I guess lastly, just.

Speaker Change: <unk>.

Speaker Change: Not trying to nitpick, but I know that you mentioned in the prepared or in your comments, Chris that larger end of I think small more competitive.

Speaker Change: Yes.

Christopher J. Swift: Yeah successfully accelerating growth on new business in <unk>.

Christopher J. Swift: Small commercial so.

Christopher J. Swift: Any.

Speaker Change: Any kind of color you'd want to offer there on on those dynamics.

Christopher J. Swift: The only thing I'll say before Mo jumps in is that our small commercial franchise is world-class.

Speaker Change: Right well the only thing I'll say before Mike jumps in is our small commercial franchise is world class.

Mo: It's hard to build on that, but I will try. I think the nuance we're trying to strike for you is that... There are competitive spots in the marketplace, and we're just really proud of how well our underwriters are navigating what is increased flow, and that increased flow doesn't come, you know, as all business that we want to write. And that's the same in small, middle, and global. The flow is up significantly in all three businesses, and we're just trying to get underwriters to really pick their spots. And that's what we were trying to call out. Mike, thanks.

Michael Augustus Ward: Hard to build on that but I will try.

Michael Augustus Ward: I think the nuance, we're trying to strike force.

Michael Augustus Ward: There are competitive spots in the marketplace and we're just really proud of how well our underwriters are navigating what is increased flow and that increased slow doesn't come.

Michael Augustus Ward: As all business that we want to write and Thats the same as small middle and global the flow is up significantly in all three businesses and we're just trying to get underwriters are really picked our spots and thats, what we were trying to call out Mike. Thanks.

Michael David Zaremski: And I guess just the small thing is that you've brought up E&S many times, and there are different levels of different types of E&S. It's been in your prepared remarks for a number of quarters. Is this part of the E&S growth off of your small commercial chassis, which is kind of, you know, the world-class product, or is it just a totally separate type of underwrite platform? Thanks. No, that's the beauty of the model, Mike.

Speaker Change: I guess yeah.

Speaker Change: The small you brought up Ian asked many times and all those different levels of different types of E&S. It's been in your prepared remarks for a number of quarters as part of the E&S growth.

Speaker Change: Off of your small commercial chassis, which is kind of another world class products or is it totally separate.

Speaker Change: The type of underwrite platform.

Mo: No, that's the beauty of the model, Mike. We're taking all of the strengths that we've had in the retail channel and applying the same business model to the wholesale channel, and that's why we're so excited.

Speaker Change: No. That's the beauty of the model, Mike we're taking all of the strengths that we've had in the retail channel and applying the same business model to the wholesale channel and that's why we're so excited.

Speaker Change: Thanks.

Speaker Change: Okay.

Speaker Change: Next we'll move to Yaron Qunar at Jefferies.

Yaron Joseph Kinar: Next, we'll move to Yaron Kinar at Jeffries.

Yaron Joseph Kinar: I think in your prepared comments and also in response to an earlier question you talked about some of the pressure that youre seeing in the group life sales just given your mortality expectations.

Yaron Joseph Kinar: I think in your prepared comments and also in response to an earlier question, you talked about some of the pressure that you're seeing in group life sales, just given your mortality expectations. That said, I think we're also seeing some slowdown in disability and voluntary. Can you maybe talk about the

Yaron Joseph Kinar: I think we're also seeing some slowdown in disability and voluntary could you maybe talk about.

Christopher J. Swift: Yeah, I'm gonna I'll just give you my point of view. And then I'll ask Jonathan to add, I don't I don't think disability is performing exceptionally well, you know, whether it be, you know, claim recoveries and terminations and getting people back to work. I think growth has been, you know, solid. I'm just referring to levels that are behavioral.

Yaron Joseph Kinar: The drivers for that slowdown.

Yaron Joseph Kinar: Yes.

Speaker Change: Just give you my point of view and then I'll ask Jonathan to add I don't think.

I think disabilities performing exceptionally well.

Speaker Change: Whether it be.

Jonathan Ross Bennett: Claim recoveries and terminations and getting people back back to work.

Jonathan Ross Bennett: I think growth has been <unk>.

Jonathan Ross Bennett: Solid.

Jonathan Ross Bennett: Yes.

Jonathan Ross Bennett: I would say just for first levels our behavior.

Yaron Joseph Kinar: Sorry, I was referring specifically to the top line, the NP.

Jonathan Ross Bennett: Behave.

Jonathan Ross Bennett: So I was I was referring specifically to the topline for the NP.

Christopher J. Swift: Yes, I'm giving you all the good stuff. And then we'll get to that. Sorry. The top line, as I tried to address in my commentary, is a little challenged. Some of that is the exceptional 2023 we had, but some of it is challenged, as we mentioned, due to our views on life insurance and how we're going to be disciplined there. Jonathan, to give you additional color, so JB, what would you say?

Jonathan Ross Bennett: Okay.

Speaker Change: Yes, I'm, giving you all the good stuff and then we'll get to that.

Speaker Change: Sorry.

Speaker Change: So.

Speaker Change: Thank you. So again I want you to feel like the book is.

Speaker Change: As healthy.

Speaker Change: And.

Speaker Change: The topline as I tried to address in my commentary.

Speaker Change: <unk> is a little challenged some of that is.

Speaker Change: Exceptional 2023, we had.

Speaker Change: But some of it is challenged as we mentioned due to our views on life insurance and how we're gonna be disciplined there Jonathan could give you additional.

Speaker Change: Color so should it be what would you say.

Jonathan Ross Bennett: Yaron, just a couple of things on there. In terms of the top line, 23, of course, was pretty exceptional on all the key metrics, the driving result. But I think we are seeing really strong results here, even in the first quarter of 2024, comparatively speaking. But, you know, from a persistency standpoint, we still have book persistency in the low 90s, which is historically quite good. We're very excited about that. It was even higher a year ago.

Jonathan Ross Bennett: Just a couple of things on there in terms of the top line 23 of course was pretty exceptional.

On all the key metrics that drive results.

Jonathan Ross Bennett: We are seeing really strong results here, even in the first quarter of 2024 comparatively speaking but.

Jonathan Ross Bennett: From a persistency standpoint.

Jonathan Ross Bennett: We are still have book persistency in the low nineties, which has historically quite good we're very excited about that.

Jonathan Ross Bennett: Even higher a year ago, and I think that does reflect a little bit the competitive nature of the market.

Jonathan Ross Bennett: And I think that does reflect a little bit the competitive nature of the market and the greater likelihood that a customer may, in fact, take a case or take their business out to market. So we're addressing all of that. I think we're working through those renewal challenges and being quite successful with them and very much picking our spots. On the new sales, we're also a bit more competitive in that market. We're excited about adding new lines of coverage to existing cases. That's always important.

Jonathan Ross Bennett: Sure.

Jonathan Ross Bennett: Likely hood that customer May in fact take a case will take their business out to market.

Jonathan Ross Bennett: So we're addressing all of that I think we're working through those renewal challenges and.

Jonathan Ross Bennett: And being quite successful with it and very much picking our spots.

Jonathan Ross Bennett: On the new sales also a bit more competitive in that market. We're excited adding new lines of coverage to existing cases, that's always important and I think one of the best opportunities. We have to continue sales growth is rounding that out.

Jonathan Ross Bennett: And I think one of the best opportunities we have to continue sales growth is rounding that out. There can be a little bit of a downside to that, of course, in some cases around voluntary, as an example. It's a smaller set of lines. If the bigger lines like disability move, perhaps voluntary goes with it.

Jonathan Ross Bennett: There can be a little bit of a downside with that of course in some cases around voluntary as an example.

Jonathan Ross Bennett: You know, it's a smaller set of lines if the bigger lines like disability move perhaps voluntary goes with it so those kinds of effects in the marketplaces, we're working through and addressing them.

Jonathan Ross Bennett: So those kinds of effects in the marketplace as we're working through and addressing them, but we continue to have really strong results on supplemental health. And, you know, we've had some very exciting growth. It's a little bit more tapered right now, but an area that we continue to expand in and see a lot of big opportunities that trend into the future in 2024 and beyond, I can already see it continues to accelerate. So a place that we will stay focused on and continue to deliver results.

Jonathan Ross Bennett: We continue to have really strong results on supplemental health.

Jonathan Ross Bennett: And we've had some very exciting growth, it's a little bit more tapered right now, but an area that we continue to expand in and see a lot of big opportunities that trend into the future in 2024.

Jonathan Ross Bennett: But I can already see continues to accelerate so a place that we will stay focused and continue to deliver result.

Yaron Joseph Kinar: Thank you. And my second question, Chris, I want to make sure I understood your comment correctly with regard to loss trends and personal auto. Did you say that they're currently in the low teens, or do you expect them to be in the low teens for 24?

Speaker Change: Thank you.

My second question I want to make sure I heard.

Speaker Change: Chris your comment correctly with regards to loss trends in personal auto.

Speaker Change: Did you say that they are currently in the low teens or you expect them to be in the low teens for 2004.

Christopher J. Swift: I was trying to do a comparison to 23 to 24, mid-teens in 23, low double digits in 24. Yeah, for the full year. And what I was just trying to say is that bounces around from quarter to quarter. So I'd rather have you see the bigger picture trend, you know, that going from mid-mid teens down to even, you know, high double digits is a pretty meaningful moment, and I.

Speaker Change: I was trying to do a compare to 'twenty three to 'twenty four.

Speaker Change: Mid teens, and 23 low low double digits in 'twenty four.

Speaker Change: For the full for the full year and what I was just trying to say is that it bounces around from quarter to quarter. So I'd, rather have you see the bigger picture trend that youre going from mid mid teens down to even.

Speaker Change: High double digits is pretty meaningful move.

Christopher J. Swift: And I guess the reason I'm asking this is it does seem to be a little bit higher than what we're seeing industry-wide right now. Is there something unique to the AARP book or to the policies that you're writing that would keep the loss trend a bit above maybe mid to high single digits?

Speaker Change: And I guess the reason I'm asking this is it does seem to be a little bit higher than what were seeing industry wide right. Now is there something unique to the AARP book.

Speaker Change: The policies that Youre, writing that that would keep the philosophy and a bit above maybe mid to high single digits.

Christopher J. Swift: Today, our judgment and prudence are leading us to call that number where we sit today. And if it changes during the year, we'll let you know.

Speaker Change: I would just say.

Speaker Change: Our judgment and prudence.

Speaker Change: Leading us to call that number where we sit today.

Meyer Shields: Moving next, we'll go to Meyer Shields at KBW. Great, thank you very much.

Speaker Change: And if it changes during the year, we'll let you know.

Speaker Change: Okay. Thank you.

Meyer Shields: Great, thank you so much for putting me in. I just have one question. I was hoping you could give us some guidance on how to think about how much lower the current personal line expense ratio is compared to when you're in normal growth mode.

Okay.

Speaker Change: Moving next we'll go to Meyer shields of K B W.

Speaker Change: Great.

Meyer Shields: I just had one question I was hoping you could give us some.

Meyer Shields: Guidance on how to think about.

Meyer Shields: How much lower the current personal lines expense ratio is.

Meyer Shields: Compared to wind or in normal growth mode.

Christopher J. Swift: So I would say on the expense ratio. I would have you think of the full year 23, compared to the full year, 24, about being the same. Beth, I don't know if you would add any. Yeah, I would.

Meyer Shields: So I would say on the expense.

Meyer Shields: Ratio.

Meyer Shields: I would have you think of the full year 'twenty three.

Meyer Shields: Compared to the full year 24 about being the same.

Speaker Change: So I don't know if you would add any yeah, I would I would agree with that.

Beth Costello: Yeah, I would agree with that. You know, as we go through 24, you might see a slight uptick in Q2, because, as we said, we are turning on marketing. And again, as the rate continues to earn into the book, that'll start to level off. But our overall expectation right now for personalized expense ratio, as Chris said, full year this year to full year last year will be relatively flat.

Speaker Change: As we go through 'twenty four.

Speaker Change: You might see a slight uptick in Q2, because as we said we are turning on marketing and again as the rate continues to earn into the book that will start to level off but.

Speaker Change: Our overall expectation right now for personal lines expense ratio as Chris said full year. This year to full year last year will be relatively flat.

Meyer Shields: Okay, is it fair to think of it as being a little bit depressed just because of the I guess the states where growth is, it doesn't make sense yet.

Speaker Change: Okay.

Speaker Change: Okay is it fair to think of it of being a little bit depressed because of the.

Speaker Change: I guess in the states where growth is it does make that bet.

Speaker Change: Okay.

Meyer Shields: I don't think I understood the question. It was just hard to hear you, Meyer. Oh, I'm sorry. No.

Speaker Change: I don't think I understood. The question was just hard to hear Ya man.

Meyer Shields: I'm sorry, no, I was trying to get a sense as to whether we should expect, you know, we look out for whenever personal auto is normalized, that the expense ratio should be a little bit higher than where it's been running for the past couple of years.

Speaker Change: Sorry no.

Speaker Change: I was just trying to get a sense as to whether we should expect when we look out to.

Speaker Change: Whenever personal auto with normalized that defense was supposed to be a little bit higher.

Speaker Change: Than where it's been running for the past couple of years.

Christopher J. Swift: Not necessarily, right? I mean, there's a volume issue, dollars, and then a rate. So again, with the amount of rate we're getting on the book, I think it's helping keep the ratio the same. We might actually be increasing dollars, which we are sort of in a J curve model this year. But from a ratio side, that's why I tried to give you that full year number to sort of manage your expectations.

Speaker Change: Not necessarily right I mean, there is a volume issue dollars and then our rate.

So again with the amount of rate, we're getting the book I think it's helping keep the ratio of <unk>.

Speaker Change: Same we might actually be increasing dollars, so which we are sort of in a J curve model this year, but.

From a ratio side Thats why I tried to give you that full year number to sort of manage your expectation.

Speaker Change: Okay. That's perfect. Thank you so much.

Speaker Change: Yeah.

Meyer Shields: Okay, that's perfect. Thank you so much. And we'll move next to David Motemaden at Evercore ISI. Hi, thanks for squeezing me in. Just a question on

Speaker Change: And we'll move next to David Mcmahon <unk> at Evercore ISI.

David Mcmahon: Hi, Thanks for squeezing me in.

David Mcmahon: Just a question on the expense ratio in commercial lines.

David Mcmahon:

David Mcmahon: 20 basis points year over year improvement.

Speaker Change: Obviously following strong year last year.

David Kenneth Motemaden: And we'll move next to David Motemaden at Evercore ISI. Hi, thanks for squeezing in.

Speaker Change: I was wondering is there anything one off or anything that prevented us from seeing more expense ratio improvement year over year.

Beth Costello: So if you're looking at just quarter one compared to where we ended last year, I'll just remind you that in the first quarter, we tend to see a higher expense ratio just because of some expense items that hit more heavily in Q1. When I think about commercial lines for the full year this year for 24 compared to 23, I expect it to be relatively flat as we go through the year. Again, any one quarter, you can have some movements relative to bad debt reserve adjustments and things like that. But overall, we see it relatively consistent.

Speaker Change: Okay.

Speaker Change: So if youre looking at just a quarter one to where we ended last year I'll just remind you that in first quarter, we tend to see a higher expense ratio just because of.

Speaker Change: Some expense items that should have some more heavily in Q1, when I think about commercial lines sort of full year. This year.

Speaker Change: <unk> 24 compared to 23.

Speaker Change: Expecting it to be relatively flat as we as we go through the year again any one quarter you can have some movements.

Speaker Change: Relative to.

Speaker Change: Bad debt reserve adjustments and things like that but overall, we see it relatively consistent.

Bob Wang: And we'll go next to Bob Wang at Morgan Stanley.

Speaker Change: Got it thanks that's helpful.

Speaker Change: And we will go next to Bob Wang at Morgan Stanley.

Bob Wang: Thank you. Just maybe a follow-up on reserving. I think this is for either Beth or Mo. When we think about the favorable reserving in workers' comp, just curious if there's a dollar amount that you can give us in terms of how favorable it was and how adverse general liability was.

Speaker Change: Yeah.

Bob Wang: Thank you.

Bob Wang: Maybe a follow up on our reserving I think this is for either a bath or a more when we think about the favorable reserving in workers comp.

Bob Wang: Just curious if there's a dollar amount that you can give us in terms of how favorable it was and how adverse general liability was.

Beth Costello: Sure, I'll take that. We actually have very detailed disclosures in our 10-Q and our IFS about that. So for workers' compensation releases, we are about $67 million. And then we always have the workers' discount accretion that comes in for 12 that goes offset against that. And then general liability was $17, marine was $7, and assumed reinsurance was $9. But you could go to page 38 in our 10-Q, and it lays it all out for you. [inaudible]

Bob Wang: Okay.

Speaker Change: Sure I'll take that we actually have very detailed disclosures in our 10-Q and our iff's on that so for.

Speaker Change: For workers compensation releases were about $67 million and then always we always have the workers comp discount accretion that comes in for 12 that goes offsets against that and then.

Speaker Change: General liability was with 17 in Marine was seven and assumed reinsurance with nine but.

Speaker Change: You can go to page 38, and our 10-Q and it lays it all out for you.

Bob Wang: Yeah, sorry for that. I must have missed it, so that's totally my fault. So maybe just a follow-up on that. Can you maybe talk about the current just reserving environment for workers' comp in terms of, as we now, three years after COVID, is there still quite a bit of a favorable uplift, so to speak, post-COVID, or do you think the workers' comp book, from a reserving perspective, is likely to kind of normalize back down to more of a pre-2019 environment?

Speaker Change: Oh, yes, sorry for that.

Speaker Change: Totally my fault, so maybe just a follow up on that.

Speaker Change: Can you maybe talk about the current reserving environment for workers' comp in terms of athlete.

We now three years after Covid are there still quite a bit of a favorable uplift.

Speaker Change: Post Covid or do you think the workers' comp book from a reserving perspective is it likely to kind of normalize back down to a more of a 'twenty pre 2019 your environment.

Christopher J. Swift: Yeah, it's a complicated question, but I would say... I think it's normalized, you know. Obviously, during COVID, you know, there were a lot of assumptions made as far as where trends were. That obviously turned out to be prudent. But, you know, it's sort of, Two years out from sort of the official end of, you know, workers' comp, I think trends are behaving as we would expect. You know, frequency continues to be positive.

Speaker Change: Yeah.

Speaker Change: It's a complicated question.

But I would say.

Speaker Change: I think it's normalized.

Speaker Change:

Speaker Change: No.

Speaker Change: Obviously during Covid there were there were a lot of assumptions made as far as where trends were.

Speaker Change: Obviously turned out to be prudent but sort of.

Speaker Change: Two years out from sort of the official end of workers' comp.

Speaker Change: I think trends are behaving as we would expect frequency continues to be positive severity.

Christopher J. Swift: Severity, you know, is still within our expectations, which we always talked about, Bob, of being a 5% trend, which, again, severity is behaving within that expectation. As I think about 23 and 24, there's a lot of continuity and consistency in workers' comp trends.

<unk>.

Speaker Change: It's still within our expectations, which we always talked about Bob of being a 5% trend which again.

Speaker Change: Severity is behaving within that expectation so.

Bob Wang: Yeah, as I think about 23% and 24, there's a lot of continuity and consistency in workers' comp trends.

Bob Wang: Okay.

Christopher J. Swift: I really appreciate that. Thank you very much.

Speaker Change: Really appreciate that thank you very much.

Susan Spivak Bernstein: And that concludes our Q&A session. I will now turn the conference back over to Susan Sivak for closing remarks.

Speaker Change: And that concludes our Q&A session I will now turn the conference back over to Susan Spivak for closing remarks.

Susan Spivak Bernstein: Thank you all for joining us today, and as always, please reach out with any additional questions. Have a great day!

Susan Spivak Bernstein: Thank you all for joining us today and as always please reach out with any additional questions have a great day.

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.

Speaker Change #100: This concludes today's conference call. Thank you for your participation you may now disconnect.

Speaker Change #100: Yeah.

Speaker Change #100:

Speaker Change #100:

Speaker Change #100:

Speaker Change #100: Yeah.

Speaker Change #100: Yeah.