Q1 2024 Skyward Specialty Insurance Group Inc Earnings Call

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Operator: Good day, and thank you for standing by. Welcome to the first quarter 2024 Skyward Specialty Earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 1 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Natalie Schoolcraft, Head of Investor Relations. Please go ahead.

Good day, and thank you for standing by.

Natalie Schoolcraft: To the first quarter 2024, it Skyward specialty earnings conference call.

Natalie Schoolcraft: At this time all participants are in a listen only mode.

Natalie Schoolcraft: After the speaker's presentation, there will be a question and answer session.

Operator: I ask a question during the session you'll need to press star one one on your telephone you will then hear an automated message advising your hand just raised.

Natalie Schoolcraft: To withdraw your question. Please press star one one again.

Natalie Schoolcraft: Please be advised that today's conference is being recorded.

Operator: I would now like to hand, the conference over to Natalie Schoolcraft head of Investor Relations. Please go ahead.

Natalie Schoolcraft: Thank you, Liz. Good morning, everyone, and welcome to our first quarter 2024 earnings conference call. Today I am joined by our Chairman and Chief Executive Officer, Andrew Robinson, and Chief Financial Officer, Mark Haushill. We'll begin the call today with our prepared remarks, and then we will open the lines for questions. Our comments today may include forward-looking statements, which by their nature involve a number of risk factors and uncertainties that may affect future financial performance.

Natalie Schoolcraft: Good morning, everyone welcome to our first quarter 2024 earnings.

Natalie Schoolcraft: Today, I'm joined by our Chairman and Chief Executive Officer.

Mark William Haushill: And Chief Financial Officer, Mark will begin the call today with our prepared remarks.

Natalie Schoolcraft: On the line.

Natalie Schoolcraft: Our comments today.

Natalie Schoolcraft: Forward looking statements.

Natalie Schoolcraft: That's by their nature involved.

Natalie Schoolcraft: <unk>.

Natalie Schoolcraft: And uncertainties, which may affect future financial performance.

Natalie Schoolcraft: Such risk factors may cause actual results to differ materially from those contained in our projections or forward looking statements.

Natalie Schoolcraft: These types of factors are discussed in our press release as well as in our 10-K.

Natalie Schoolcraft: That was previously filed with Securities and Exchange Commission.

Andrew: My name is on schedule containing reconciliations of certain non-GAAP measures along with other supplemental financial information are included as part of our press release and available on our website I would insurance dot com under the investors section with that I will turn the call over to Andrew Andrew.

Natalie Schoolcraft: Such risk factors may cause actual results to differ materially from those contained in our projections or forward-looking statements. These types of factors are discussed in our press release as well as in our 10-K that was previously filed with the Securities and Exchange Commission. Financial schedules containing reconciliations of certain non-GAAP measures, along with other supplemental financial information, are included in our press release and available on our website, skywardinsurance.com, under the Investors section.

Natalie Schoolcraft: With that, I will turn the call over to Andrew. Okay?

Speaker Change: Thank you Natalie and.

Speaker Change: Good morning, everyone and thank you for joining us.

Andrew Scott Robinson: Good morning, everyone, and thank you for joining us. We started 2024 strong reporting Q1 adjusted operating income of $0.75 per diluted share. Gross written premiums grew 27%. Our continued strong growth is a direct reflection of our strategy to have a well-diversified portfolio of underwriting divisions that allow us to allocate capital to those areas we believe offer the best opportunity for profitable growth and shareholder return. I'll remind our analysts and investors that growth during 2023 was not the byproduct of writing a new property tax.

Andrew: We started 2024 strong reported Q1 adjusted operating income of 75 cents per diluted share.

Andrew Scott Robinson: Gross written premiums grew 27%.

Andrew Scott Robinson: Our continued strong growth is a direct reflection of our strategy to have a well diversified portfolio of underwriting divisions that allow us to allocate capital to those areas. We believe offer the best opportunity for profitable growth and shareholder returns.

Andrew Scott Robinson: I'll remind our analysts and investors that growth during 2023 was not the byproduct of writing new property Cat, We see limited property cat opportunities that fit with our rural or any strategy in which we aim to build defensible positions that allow us to deliver top quartile underwriting profitability across all market cycles.

Andrew Scott Robinson: We see limited property CAD opportunities that fit with our rural earnings strategy, in which we aim to build defensible positions that allow us to deliver top quartile underwriting profitability across all market cycles. Our combined ratio was 89.6%, and our annualized adjusted return on equity and tangible equity were 18.3% and 21.1%, respectively. Altogether, these metrics reflect the power of our Rural Earnings Strategy and our outstanding execution across all eight underwriting divisions and the functions that support our underwriting.

Andrew Scott Robinson: Our combined ratio was 89, 6% and our annualized adjusted return on equity and tangible equity or 18.3, and 21, 1% respectively.

Andrew Scott Robinson: Altogether. These mess these metrics reflect the power of our ruler niche strategy and our outstanding execution across all eight underwriting divisions and the functions that support our underwriters.

Andrew Scott Robinson: Operationally, rate, retention, and submission flow in the quarter continue to be strong, and we continue to find opportunities to profitably grow our business. I'll talk more about that later in the call. With that, I'll turn the call over to Mark to discuss our financial results in greater detail. Mark?

Andrew Scott Robinson: Operationally rate retention in submission flow in the quarter continued to be strong and we continue to find opportunities to profitably grow our business I'll talk more about these later in the call.

Andrew Scott Robinson: With that I'll turn the call over to Mark to discuss our financial results in greater detail Mark.

Mark William Haushill: Thank you, Andrew. For the quarter, we reported net income of $36.8 million, or $0.90 per diluted share, compared to $15.6 million, or $0.42 per diluted share, for the same period a year ago. On an adjusted operating basis, we reported income of $31 million, or $0.75 per diluted share, compared to $15.5 million, or $0.42 per diluted share for the same period a year ago. In the quarter, gross rate and premiums grew by approximately 27%. All of our underwriting divisions contributed to the growth, and our captives, transactional E&S, surety, professional lines, global property, and agriculture divisions were each up over 20%.

Mark: Andrew for the quarter, we reported net income of $36 8 million or <unk> 90 per diluted share compared to $15 6 million or 42 cents per diluted share for the same period a year ago.

Mark William Haushill: On an adjusted operating basis, we reported income of $31 million or <unk> 75 per diluted share compared to $15 5 million or <unk> 42 cents per diluted share for the same period a year ago.

Mark William Haushill: In the quarter gross written premiums grew by approximately 27%.

Mark William Haushill: All of our underwriting divisions contributed to the growth and our captives transactional E&S surety.

Mark William Haushill: Affection lines global property in agriculture divisions were each up over 20%.

Mark William Haushill: Turning to our underwriting results, the first quarter combined ratio of 89.6% improved 0.6 points compared to the first quarter of 2023. The half point improvement in the current accident year non-CAT loss ratio to 60.6% was principally driven by a changing mix of business. During the quarter, catastrophe losses were minimal and accounted for less than half a point on the combined ratio compared to the first quarter of 2023, which was impacted by 1.8 points of cat losses. Excluding the deferred benefit of the LPT, there was no net impact from prior year development.

Mark William Haushill: Turning to our underwriting results the first quarter combined ratio of 89, 6% improved <unk> six points compared to the first quarter of 2023.

Mark William Haushill: The half point improvement in the current accident year non cat loss ratio to 66% was principally driven by changing mix of business.

Mark William Haushill: During the quarter catastrophe losses were minimal and accounted for less than half a point on the combined ratio compared to the first quarter of 2023, which was impacted by one eight points of cat losses.

Mark William Haushill: Excluding the deferred benefit of the L. P T.

Mark William Haushill: There's no net impact from prior year development.

Mark William Haushill: In Q1, as has been the case in the quarters leading up to being a public company and since going public, we increased our conservatism to an already strong loss reserve. The expense ratio increased 1.3 points compared to the first quarter of 2023 and was in line with the full year 2022.

Mark William Haushill: In Q1 as has been the case in the quarters, leading up to being a public company and since going public we increased our conservatism to an already strong loss reserve position.

Mark William Haushill: The expense ratio increased 1.3 points compared to the first quarter of 2023 and was in line with our full year 2023.

Mark William Haushill: We've talked in prior quarters regarding our business makeshift and investing in the business, so this is in line with our expectations and target of a sub-30 expense ratio. Turning to our investment results, net investment income was $18.3 million in the quarter, an increase of $13.7 million compared to the same period in 2023. During the quarter, you will note we changed how we disclose our investment portfolio and the net investment income results. We will speak to the investment portfolio in four categories. Short-term Investments in Cash and Cash Equivalents, Fixed Income, Equities, and Alternative and Strategic Investments. This change was driven by a couple of factors.

Mark William Haushill: You've talked in prior quarters regarding our business mix shift and investing in the business. So this is in line with our expectations and target of a sub 30 expense ratio.

Mark William Haushill: Turning to our investment results net investment income was $18 3 million in the quarter, an increase of $13 7 million compared to the same period of 2023.

Mark William Haushill: During the quarter you will note we changed how we disclose our investment portfolio and the net investment income results.

Mark William Haushill: We will speak to the portfolio in four categories.

Mark William Haushill: Short term investments and cash and cash equivalents fixed income.

Mark William Haushill: Equities and alternative and strategic investments.

Mark William Haushill: This change was driven by a couple of factors our desire to simplify how we talk about their portfolio.

Mark William Haushill: Our desire to simplify how we talk about the portfolio, a more traditional presentation in line with the industry, and more reflective of our strategy and the underlying risk characteristics of the portfolio. Consistent with our investment strategy to deploy all free cash flow to fixed income, in the first quarter, we put $98 million to work at 5.4%. The net investment income from our fixed income portfolio increased $5 million from $7.4 million in the prior quarter, driven by improving portfolio yield and a significant increase in the invested asset base.

Mark William Haushill: More traditional president presentation in line with the industry and more reflective of our strategy and the underlying risk characteristics of the portfolio.

Mark William Haushill: Consistent with our investment strategy to deploy all free cash flow to fixed income in the first quarter, we put $98 million to work at five 4%.

Mark William Haushill: Net investment income from our fixed income portfolio increased $5 million from $7 4 million in the prior quarter, driven by improving portfolio yield and the significant increase in the invested asset base.

Mark William Haushill: Our embedded yield was 4.7% at March 31st, versus 4.0% a year ago and 4.6% at December 31st. As of March 31st, we had approximately $298 million in short-term investments, and our yield on short-term investments continued to be north of 5%.

Mark William Haushill: Our embedded yield was four 7% at March 31 versus 4.0% a year ago and four 6% at December 31.

Mark William Haushill: At March 31, we had approximately $298 million in short term investments and our yield on short term investments continued to be north of 5%.

Mark William Haushill: Lastly, April 1st is when we renew our property reinsurance program. All these renewals were orderly, and we are satisfied with the terms and structure of these programs. We increased our property cap treaty net retention from $12 to $15 million, and the cover increased from $28 million to $36 million. We were able to improve the terms of the treaty while retaining the same model return period as the expiring one. With that, I will turn the call back over to Andrew for his concluding remarks.

Mark William Haushill: Lastly April 1st is when we renew our property reinsurance programs.

Andrew: All of these renewals were orderly and we are satisfied with the terms and structure of these programs.

Mark William Haushill: We increased our property cat treaty net retention from $12 million to $15 million and the cover increased from 28 million to $36 million.

Mark William Haushill: We were able to improve the terms of the treaty, while retaining the same model return period as the expiring treaty.

Mark William Haushill: With that I will turn the call back over to Andrew for concluding remarks.

Andrew Scott Robinson: Operationally, we had another strong quarter. We continue to realize pure pricing increases in the high-mid single digits, which is above our estimated lost cost. Our new business pricing was up again over our Enforce book, an indicator that new business profitability is attractive and should contribute to margin expansion. We also continue to see strong submission activity, which was up over 30% from the prior year quarter. Retention dipped into the 70s, driven by a mixed shift towards lower retention divisions, such as transactional E&S, as well as some continued trimming of our commercial auto portfolio, which in Q1 was 14.7% of our writings, compared to 18.3% in the prior year quarter.

Andrew: Thank you Mark.

Andrew: Operationally, we had another strong quarter.

Andrew Scott Robinson: We continue to realize pure pricing increases in the high mid single digits, which is above our estimated loss cost trends.

Andrew Scott Robinson: Our new business pricing was up again over our in force book, an indicator that new business profitability is attractive and should contribute to margin expansion.

Andrew Scott Robinson: We also continue to see strong submission activity, which was up over 30% from the prior year quarter.

Andrew Scott Robinson: Retention dipped into the seventies, driven by business mix shift towards lower retention divisions, such as transactional E&S as well as some continued trimming of our commercial auto portfolio, which in Q1 was 14, 7% of our writings compared to 18, 3% in the prior year quarter.

Operator: Let me turn to the competitive marketplace for a moment. From our vantage point, it is most certainly an increasingly nuanced market for capturing profitable growth. But we continue to identify and invest in market segments that are attractive and where execution of our strategy allows us to profitably grow and deliver attractive returns for our shareholders. In Q1, we launched a new media liability unit within professional lines with a team of expert underwriting and claims professionals, each of whom has a distinctive standing and broker following in the market.

Speaker Change: Let me turn to the competitive marketplace for a moment.

Operator: From our vantage point it is most certainly an increasingly nuanced market for capturing profitable growth.

Operator: But we continue to identify and invest in market segments that are attractive where execution of our strategy allows us to profitably grow and deliver attractive returns for our shareholders in.

Operator: In Q1, we launched a new media liability unit within professional liability within professional lines with a team of expert underwriting and claims professionals each of whom has a distinctive standing and broker following in the marketplace. We remain.

Operator: We remain confident in our ability to continue to attract the very best talent and our most talented professionals with advanced technology and data analytics that has proven to be the winning formula for our success, as our results in Q1 further demonstrate. And it's visible in our results; whether it be the talent ads this past year in Surety or Transactional E&S, or the launch of Global Agriculture or Inland Marine, our investments are clearly paying off for our shareholders.

Operator: Confident in our ability to continue to attract the very best talent in our most professionals with advanced technology and data analytics that has proven to be the winning formula for our success as our results in Q1 further reinforce.

Operator: And is visible in our results whether it be the talent adds this past year in surety or transactional E&S with the launch of global agriculture or inland Marine our investments are clearly paying off for our shareholders.

Operator: Finally, we recently published our first ever Annual People Report. Our people are the lifeblood of our success, and it is what makes Skyward truly unique. The report provides a wonderful view into our company, and we encourage our investors to visit our website to access this report or contact Natalie if they'd like to have a printed copy. I'd like to now turn the call back over to the operator to open it up for Q&A. Operator? As a reminder, if you'd like to ask a question...

Operator: Finally, we recently published our first ever annual people report.

Operator: Our people are the lifeblood of our success and it is what makes skyward truly unique.

Operator: The report provides a wonderful view into our company and we encourage our investors to visit our website to access this reports or contact Natalie if you'd like to have a printed copy.

Operator: I'd like to now turn the call back over to the operator to open it up for Q&A operator.

Operator: As a reminder, if you'd like to ask a question at this time, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. Please stand by while we compile the Q&A roster. Our first question will come from the line of Mark Hughes with Truist.

Operator: As a reminder, if you'd like to ask a question at this time. Please press star one one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Operator: Please standby, while we compile the Q&A roster.

Operator: Yeah.

Operator: Our first question will come from the line of Mark Hughes with <unk> Securities.

Mark Douglas Hughes: Yeah, thank you. Good morning. Good morning, Mark.

Operator: Okay.

Mark Douglas Hughes: Yes. Thank you good morning.

Mark Douglas Hughes: Good morning, Mark.

Andrew Scott Robinson: Andrew, you mentioned 30% submission growth is very strong. Over 30%. Over 30%, okay. Even stronger.

Mark Douglas Hughes: Andrew you mentioned.

Andrew Scott Robinson: 30% ignition growth.

Andrew Scott Robinson: It was very strong.

Andrew Scott Robinson: Over over 30%.

Mark Douglas Hughes: Anyway, to break that out, you know, kind of, I assume there's underlying submission growth. Your expanded underwriting capacity presumably is contributing to that. Any way to kind of... break that out, maybe compare it to what you had been seeing in earlier quarters? Yeah, but if you're asking for a sort of same-store sales versus kind of like new capacity, we don't share that. But let me just say this: there's no question that, obviously, us bringing on talent that has a marketplace following inevitably leads to business following them.

Speaker Change: Oh, okay.

Mark Douglas Hughes: Even stronger.

Mark Douglas Hughes: Any way to break that out kind of the I assume there is underlying submission growth.

Mark Douglas Hughes: Your expanded underwriting capacity, presumably is contributing to that.

Mark Douglas Hughes: Yeah.

Mark Douglas Hughes: Any way to kind of.

Mark Douglas Hughes: Break that out maybe compare it to what you are seeing in earlier quarters. If you are asking for sort of a same store sales versus kind of like new capacity.

Mark Douglas Hughes: We don't share that but let me just say that there is no question that.

Mark Douglas Hughes: That.

Mark Douglas Hughes: Obviously us bringing on talent that has a marketplace. Following inevitably leads to business following those in some cases.

Mark Douglas Hughes: Enforce books that that those underwriters had in there in there in their prior in our prior roles.

Mark Douglas Hughes: In some cases, you know, the enforced books that those underwriters had in their prior roles. What I can tell you is that if you look across our businesses, by and large, same-store sales are up pretty materially. If you think about same-store sales, meaning our same underwriters, and then growth is also a contribution of the underwriters we've had. And I think they're in an appropriate sort of balance. But we're not going to go further than disclosing just a bit, you know, because what's important here is whether we are investing in a way that's sensible for our business, that's driving profitable growth, and we're seeing that data correspond.

Mark Douglas Hughes: I can tell you is that if you look across our business is buying.

Mark Douglas Hughes: By and large same store sales are up pretty materially. If you think about same store sales meeting our same underwriters and then growth is also a contribution of the underwriters we've had and I think they are in.

Mark Douglas Hughes: Appropriate sort of balance, but we're not going to go further than disclosing just.

Mark Douglas Hughes: Because what's important here is are we investing in a way that's sensible for our business, that's driving profitable growth and we're seeing that data correspond.

Mark Douglas Hughes: Yeah, to expand on when you say nuance, I think you've touched on a lot of interesting points. What do you mean when you say nuance? So if you could expand on that, that'd be great.

Mark Douglas Hughes: Yes.

Speaker Change: And when you say nuance I think you've touched on a lot of.

Speaker Change: Interesting point.

Mark Douglas Hughes: <unk>.

Speaker Change: What do you what do you mean, when you say nuanced.

Speaker Change: If you could expand on that that would be great.

Andrew Scott Robinson: Well, you know, all of us obviously take in the sort of various things that are being discussed around the marketplace, particularly this time of year, right, you know, during earnings reviews and so forth. And you know, I think there's almost like sort of very general views put out there about what's happening in different parts of the market, what's happening in casualty versus what's happening in property. And I have to tell you that, you know, it is just very specific to a circumstance, right?

Mark Douglas Hughes: Well.

Andrew Scott Robinson: All of Us obviously.

Andrew Scott Robinson: Taken the sort of various things that are being discussed around the marketplace. This particularly this time of year right during during earnings reviews, and so forth.

Andrew Scott Robinson: And I think it is.

Andrew Scott Robinson: It's almost like sort of very general views put out there about what's happening in different parts of the market, what's happening in casually versus what's happening in property.

Andrew Scott Robinson: And I have to tell you that it is.

Andrew Scott Robinson: Just very specific to.

Andrew Scott Robinson: Ah circumstance right so.

Andrew Scott Robinson: So, you know, we have, I would describe it as at least three, if not four, quite discrete points of focus in property, right? We have global property, inland marine, and then our transactional E&S. I would describe a portion of our book as sort of highly technical and a portion of it that's closer to sort of general property. And I can tell you that each of those four areas is behaving very differently.

Andrew Scott Robinson: We have.

Andrew Scott Robinson: I'd describe it at least three if not four quite discrete points are focused in property right. We have global property inland Marine and then our transactional E&S I would describe a portion of our book is sort of highly technical and a portion of it thats closer to sort of general property and I can tell you that each of those four areas are behaving very differently.

Andrew Scott Robinson: And so that's what we mean by nuance. You know, on the liability side, everybody's talking about, well, casualty, could it be an attractive market because prices are moving, and prices are moving because, you know, people are recognizing lost cost inflation and maybe the starting point for lost cost relative to price may not be as favorable as people think. Meanwhile, like when we think about our business, I'll take transactional E&S as an example.

Andrew Scott Robinson: That's what we mean by nuance.

Andrew Scott Robinson: The same time.

Andrew Scott Robinson: On the liability side I always talk about like for casualty could it be an attractive market because prices are moving in.

Andrew Scott Robinson: Theyre moving because people are recognizing that loss cost inflation and maybe the starting point on the loss cost relative to price may not be as favorable as people think Meanwhile, like when we think about our business I'll take transactional E&S as an example, okay in the last month.

Andrew Scott Robinson: Okay, in the last month, a carrier that was in the lifeguard services business pulled out of the market, right? Well, of course, we write lifeguards in our E&S business. Well, suddenly, we're seeing this like dramatic flow of lifeguard services. And instead of the market that pulled out, which was a $7,500 minimum premium, we have a $30,000 minimum premium. Instead of the possibility of providing, you know, abuse and molestation and assault, and you know, we have absolute exclusions for those things.

Andrew Scott Robinson: Carrier that was in.

Andrew Scott Robinson: A lifeguard services pulled out of the market alright, well of course, we write lifeguards and in our E&S business will suddenly we're seeing this like dramatic flow of lifeguard services and instead of the market that pulled out that it is 7500 dollar minimum premium we have a $30000 minimum premium instead of the possibility of providing.

Andrew Scott Robinson: Houston All station.

Andrew Scott Robinson: Salt and battery, we are absolute exclusions on those things and so theyre pull out allows us to then go pick the business the way that we want and we see those opportunities happening all the time, but it's not like that is a indicative sort of.

Andrew Scott Robinson: And so, you know, their pullout allows us to then go pick the business the way that we want. And we see those opportunities all the time. But it's not like that is an indicative sort of window into everything. It's very specific, you know, underwriting category by category. And it's the kind of market that plays to great underwriters, which I believe we have. And so, when I talk about nuance, that's what I mean. And I think it's a market that's a hell of a lot more favorable to a company like us than many of the other guys that are out there.

Andrew Scott Robinson: Window into everything it's a very specific and.

Andrew Scott Robinson: The writing category category by category, and it's and it's the kind of market that plays to great underwriters, which which I believe we have and so when I talk about nuance, that's what I mean, and I think it's a market. That's a hell of a lot more favorable to a company like us than many of the other guys that are out there.

Andrew Scott Robinson: Yeah, very good. I'll ask the blunt, simple question. There's talk about the pace of casualties accelerating as a general matter. Do you see that in 2024? Yeah.

Andrew Scott Robinson: We are very good.

Andrew Scott Robinson: Ill.

Andrew Scott Robinson: Yes.

Andrew Scott Robinson: Simple question.

Andrew Scott Robinson: Talking about casualty accelerating.

Andrew Scott Robinson: As a general matter do you see that in 2024.

Andrew Scott Robinson: Yeah, so what I'd say is when we look across our casualty occurrence, ex-workers comp, you know, sort of all the various touch points, again, I don't think there's one overriding theme. But what I can tell you is that we definitely see prices moving. In our case, we took some actions here over the last couple of quarters to start to raise prices, start to tighten terms in very specific areas, and also to pull back limits.

Andrew Scott Robinson: Yes, so what I'd say is when we look across our our casually occurrence.

Andrew Scott Robinson: Ex workers' comp.

Andrew Scott Robinson: Sort of all the various touch points.

Andrew Scott Robinson: I don't think there's one overriding theme, but what I can tell you is that we.

Andrew Scott Robinson: We definitely see prices moving in our case.

Andrew Scott Robinson: We took.

Andrew Scott Robinson: Some actions here over the last couple of quarters to start to price to start to tighten.

Andrew Scott Robinson: Terms in very specific areas and also to pullback limits.

Andrew Scott Robinson: And we've been able to do that, you know; we're making sure that the retention is holding, but we think that we have found the balance. So that, to me, feels like, at least amongst the competitors that we see, and the competitors in a lot of those cases, I consider to be very, very good competitors, they're amongst the better to best, seem to be operating in a similar way. So I think that's promising.

Andrew Scott Robinson: And we've been able to do that.

Andrew Scott Robinson: We're making sure that the retention is holding but we think that we found the balance so that to me feels like at least amongst the competitors that we see and the competitors in a lot of those cases I consider to be very very good competitors there.

Andrew Scott Robinson: They are amongst the better the best seem to be operating in a similar way so I think thats promising.

Andrew Scott Robinson: You know, that said, look, you know, I think, you know, hard marketing casually is all relative, right? I mean, you have to believe that you're at a technically strong starting point and that your price is in excess of the lost cost trend. And you know, I don't think that's uniform, right? I think there are some places. And there are certainly plenty of opportunities that we see; I just gave you one earlier. But I don't believe it's a uniform market. And that is very much what I mean by nuance. And I and I think, again, I think it's a great market for the best underwriting.

Andrew Scott Robinson: Said.

Andrew Scott Robinson: Look you know.

Andrew Scott Robinson: I think yeah hard.

Andrew Scott Robinson: Hardworking casually is all relative right. I mean, you have to you have to believe that you're at a technically strong starting point and then you're then your price is in excess of loss cost trend.

Andrew Scott Robinson: I don't think Thats uniform right I think I think there are places.

Andrew Scott Robinson: And there are certainly plenty of opportunities that we see I just gave you one earlier.

Andrew Scott Robinson: But I don't believe it's a uniform market that is very much what I mean by by nuance and I think again I think it's a it's a great market for the best underwriters.

Mark Douglas Hughes: I appreciate the details. Thank you.

Speaker Change: I appreciate the detail. Thank you.

Operator: Our next question comes from the line of Paul Newsome with Piper Sandler.

Mark Douglas Hughes: Our next question comes from the line of Paul Newsome with Piper Sandler.

Jon Paul Newsome: Good morning. I'm hoping you can give me a little bit more detail about investment income and just try to get to some sort of run rate thought. There's a lot of changes happening, obviously, with the new money moving around, and moving a little bit on that. Opportunistic Fixed Income Portfolio So just any thoughts that kind of help us get a sense of where that may be long term. The trend will be, run rate will be, once everything is done.

Operator: Okay.

Jon Paul Newsome: Good morning.

Speaker Change: Good morning.

Jon Paul Newsome: It will be and give me a little bit more detail about investment income and just trying to get to some sort of run rate of cost.

Jon Paul Newsome: There's a lot of changes happening obviously.

Jon Paul Newsome: The new money moving around.

Jon Paul Newsome: Moving a little bit on that.

Jon Paul Newsome: Options and fixed income portfolio.

Jon Paul Newsome: Is there any thought to kind of help us get a sense.

Jon Paul Newsome: Where that maybe long term.

Jon Paul Newsome: The trend will be run rate will be.

Jon Paul Newsome: Once everything is done.

Mark William Haushill: Hey Mark, let me see if I can translate that. You're looking for a run rate of investment income in the future, assuming that we've received the flows from Opportunistic. I just want to make sure I understand what you're asking.

Speaker Change: Hey, Mark Let me, let me see if I can.

Speaker Change: Translate that Youre looking for a run rate of investment income.

Speaker Change: In the future assuming that we have received the flows from opportunistic I just want to make sure I understand what you're asking.

Jon Paul Newsome: Yeah, that's right. I mean, assuming that you've got the flows out of the opportunistic fund plus kind of where is it, you know, what's going on with your money rate and what you're putting into the traditional fund. It's, it's always been a challenge to kind of figure out where exactly the right midpoint slash runway is for adjustment.

Mark: Yes, that's right I mean, assuming you got the flows out of the opportunistic plus kind of where it is.

Jon Paul Newsome: What's going on with.

Jon Paul Newsome: New money rate and what you are putting into <unk>.

Jon Paul Newsome: Traditional fund.

Jon Paul Newsome: It's always been a challenge to kind of figure out where exactly that.

Jon Paul Newsome: Midpoint slash run rate is for investment.

Mark William Haushill: Well, the way I think about it is pretty simple. If you look at the invested asset base for core fixed income, you know what our embedded yield is. I think the yield, I don't know what interest rates are going to do. We've been investing at over five for the better part of a year, and all of our cash flow will continue to go to fixed income. That's where it's going. Does that answer your question?

Speaker Change: Well I mean, it's.

Mark William Haushill: The way I think about it is pretty simple if you look at the invested asset base for our core fixed income you know what our embedded yield is.

Mark William Haushill: I think the yield I don't know what interest rates are going to do we've been investing at over 5% for the better part of the year and all of our cash flow will continue to go to fixed income that's where it's going does that answer your question.

Jon Paul Newsome: A little bit, but we'll take it offline, as well. Maybe back to the sort of competitive environment question. I think the concerns have been primarily that ENF is the word that the softening is, and specifically, it is not necessarily, you know. Maybe you could talk a little bit further about sort of what is really kind of a true ENS that might be, of concern, if at all, or what could be, is really not even in that spot.

Speaker Change: But we've taken offline too.

Jon Paul Newsome: Well.

Jon Paul Newsome: Maybe.

Jon Paul Newsome: Back to the sort of competitive environment question.

Jon Paul Newsome: I think the concerns have been primarily that E&S.

Jon Paul Newsome: Is.

Jon Paul Newsome: As to where the softening is.

Jon Paul Newsome: And.

Jon Paul Newsome: But especially as not necessarily maybe you could talk a little bit further about sort of what is really turn to E&S that might be.

Jon Paul Newsome: Of a concern if at all or what could be it was really not even in that box at all.

Andrew Scott Robinson: I don't know if I want to comment on the entire industry. We've said it before. We'll say it again.

Speaker Change: I don't know if I want to proper on the entire industry.

Andrew Scott Robinson: We've said it before we I'll say it again.

Andrew Scott Robinson: What we write in the surplus lines market, I would consider to be true surplus lines. So I've heard some of the questions about, you know, what's happening with the admitted carriers as a business. You know, we don't write the stuff that's E&S-like. It's just that it just isn't us.

Andrew Scott Robinson: What we write in the surplus lines market.

Andrew Scott Robinson: I would consider to be true surplus lines. So I've heard some of the questions about what's happening with the admitted carriers as business him.

Andrew Scott Robinson: We don't write the stuff that CNS light.

Andrew Scott Robinson: We're writing stuff that's in the E&S market for a reason. Now, certainly, if there's less flow coming into the E&S market, then our part of the market becomes more competitive. Right, because that's where the surplus lines writers would look. And I also, you know, get all the same data that you guys get about the early views on the major states and so forth. But here are the facts, Paul.

Andrew Scott Robinson: Just as in US we're writing stuff that's in the E&S market for a reason.

Andrew Scott Robinson: Now certainly if theres less flow coming into the E&S market, then our part of the market becomes more competitive right because thats, where the surplus lines writers would look.

Andrew Scott Robinson: And I also get all the same data that you guys get about the early views on the major states and so forth, but here are the facts Paul we.

Andrew Scott Robinson: We grew 43 percent in transactionally in us in this quarter, and we grew 27 percent in professional lines. Those two areas are pure surplus lines areas. And so, you know, I would say that that's a pretty good indicator that, regardless of what's happening in the market, I'll just reinforce it. You know, our strategy is a very specific strategy, and we seem to be executing well, and it seems to be paying off.

Andrew Scott Robinson: We grew 43% and transactional E&S in this quarter and we grew 27% and professional lines. Those those two areas are pure surplus lines areas and so.

Andrew Scott Robinson: I would say that that's a pretty good indicator that regardless of what's happening in the market.

Andrew Scott Robinson: Just to reinforce that our strategy is a very specific strategy and we seem to be executing well and it seems to be paying off two I believe that 27% growth is just like last year's 28% growth is that is that a.

Andrew Scott Robinson: Do I believe that, you know, 27 percent growth is, you know, just like last year's 28 percent growth? Is that, you know, a number you can sort of take to the bank? No, absolutely not.

Andrew Scott Robinson: Number you can sort of take to the bank no absolutely not I mean, let's just it just speaks to the excellent execution of our organization and our ability to sort of pick off opportunities like the example, I gave earlier, but I would just tell you I feel I feel like we're in a market where where we can continue to win we can take can continue to grow the.

Andrew Scott Robinson: I mean, that just speaks to the excellent execution of our organization and our ability to sort of pick off opportunities like the example I gave earlier. But I would just tell you, I feel like we're in a market where we can continue to win. We can continue to grow profitability and shareholder returns, and we can continue to grow at a level that is meaningfully enough different from sort of the cross section of the competitors that we're competing with in the market.

Andrew Scott Robinson: <unk> and the shareholder returns and we can continue to grow at a level that is meaningfully enough.

Andrew Scott Robinson: Different than sort of a cross section of the competitors that we're competing with in the market and I have highlighted for you in the past. We those are some of the pure play specialty carriers, plus the primary insurance or specialty arms of.

Andrew Scott Robinson: And I've highlighted for you in the past who those are, some of the pure play specialty carries plus the primary insurance or specialty arms of, you know, the larger sort of multiline Bermudans. And so I feel good about where we are. And I think the market is still conducive.

Andrew Scott Robinson: The larger sort of multi line <unk> and so I feel good about where we're at and I think the market is still conducive for us.

Jon Paul Newsome: Okay, that's great. So I appreciate the help as always.

Speaker Change: Great that's great color. So I appreciate the help us all.

Jon Paul Newsome: Sure.

Operator: Our next question comes from the line of C. Gregory Peters with Raymond James.

Jon Paul Newsome: Our next question comes from the line of Gregory Peters with Raymond James.

Gregory Peters: Well, good morning, everyone. Good morning, Greg.

Speaker Change: Well good morning, everyone. Good morning, Greg Hi, Greg.

Gregory Peters: Okay. So... A lot of comments from you on market conditions. Your gross written premium was quite strong in the quarter. I want to go back to your comments about property and sort of integrate that with your discussion on reinsurance, the renewal, and the increased retention. As we go through 24, how should we think about your growth in your property book as it relates to..., you know, frequency and severity of cat losses? It seems like you haven't had a lot of exposure to date, so... I'm just curious that the profile is changing there.

Gregory Peters: So.

Gregory Peters: A lot of comments from you on market conditions. Your gross written premium was quite strong in the quarter.

Gregory Peters: I wanted to go back to your comments about property.

Gregory Peters: And sort of an a.

Gregory Peters: Great that with your discussion on reinsurance renewal and increase retention.

Gregory Peters: As we go through 'twenty four should we how should we think about your growth in your property book as it relates to.

Gregory Peters: Frequency and severity of cat losses.

Gregory Peters: It seems like you haven't had a lot of exposure to date. So just.

Gregory Peters: I'm just curious what the profile is changing there.

Andrew Scott Robinson: Yeah, no, it's a great question. Thanks, Greg. Let me just start and say something about the treaty, because I think it's important. So, last year, we had an attachment point at 12, and we moved that to 15 million. On a model basis, that's a 1-in-10-year attachment point. So, we effectively kept our same attachment. Our exhaustion point, while we added $8 million a cover, is in excess of the same sort of point; it's in excess of a 1 in 250 event.

Gregory Peters: Yes no.

Speaker Change: It's a great question. Thanks, Greg.

Andrew Scott Robinson: Well, let me, let me just start and say something about the treaty because I think it's important.

Andrew Scott Robinson: So last year.

Andrew Scott Robinson: We had an attachment point of 12, when we moved that to $15 million on a model basis.

Andrew Scott Robinson: One in 10 year attachment point, so we effectively kept our same attachment point or exhaustion point, while we added $8 million of cover.

Andrew Scott Robinson: Is in excess the same sort of point.

Andrew Scott Robinson: And so, well, that tells you that we've added some exposure from last year, which is no surprise because we grew property, right? You know, property's been, you know, 25 plus percent of our book pretty consistently. And so as our book grows, property's growing. And so, unsurprisingly, we're adding exposure, and we're keeping our, you know, our cat cover roughly in line on a return period basis.

Andrew Scott Robinson: It's in excess of a one and 250 event.

Andrew Scott Robinson: And so well that tells you that we've added some exposure from last year, which is no surprise because we we grew property right.

Andrew Scott Robinson: <unk> bin.

Andrew Scott Robinson: 25% of our book pretty consistently and so as our book grows property is growing and so on surprisingly, we're adding exposure and we're all we're doing is we're keeping our.

Andrew Scott Robinson: Our cat cover roughly in line on a return period basis and of course that tower that we buy is relatively small to the size of our property portfolio to your point.

Andrew Scott Robinson: And of course, that tower that we bought is relatively small compared to, you know, the size of our property portfolio. To your point, we write a well diversified book of property. So, you know, look, I don't think anything's going to change in terms of the frequency or severity of exposure to storms.

Andrew Scott Robinson: We write a well diversified book of property so.

Andrew Scott Robinson: Yeah look I don't think anything is going to change in terms of frequency or severity.

Andrew Scott Robinson: Exposure to storms.

Andrew Scott Robinson: I think you already saw that in the first quarter, there was a lot of convective activity. Again, a relatively late quarter for us, there's still a lot of convective activity going on. We'll see how Q2 turns out.

Andrew Scott Robinson: Yes, I think you already saw that in the first quarter was there was a lot of convective activity again relatively light quarter for us are still a lot of convective activity going on we'll see how Q2 turns out and then I think it was you get into the hurricane season looking a lot of that is just what paths things taken so forth, but I can say pretty confidently right now in Q1.

Andrew Scott Robinson: And then I think as we get into the hurricane season, look, you know, a lot of that is just what paths, you know, things take, and so forth. But I can say pretty confidently right now in Q1, that if we were to have a material event or a set of material events in the industry, I think that what we see in terms of our results would be very favorable on a relative basis. And then, of course, since we buy an attachment point that's a relatively conservative attachment point, I think our net results would be very good as well.

Andrew Scott Robinson: One that if we were to have a material event or a set of material events to the industry I think that what we see in terms of our results would be very favorable on a relative basis.

Andrew Scott Robinson: In General and then of course since we buy a an attachment point, that's a relatively conservative attachment point I think our net results would be very good as well. So so I feel good about all that.

Andrew Scott Robinson: So I feel good about all that. You would ask some questions about the market. So, before I say anything more, did I address your question on frequency and severity and growth and exposure? Yes, I did. Do you want me to just comment on the property market? Please do.

Andrew Scott Robinson: You had asked some questions about market. So let me before I say anything more did I did that address your question on frequency and severity and growth in exposure, Yes, you did.

Andrew Scott Robinson: Good morning, just wanted to just comment on the property market. Please do.

Andrew Scott Robinson: Okay, so, you know, it's an interesting market, right? But, I don't think everything falls into the line of this narrative, well, property pricing is attractive across the board, and, you know, casually, maybe the new opportunity, I, again, think it's much more nuanced. I'll take our global property as an example. We lost a very large account in Q1. Actually, we chose not to write it.

Speaker Change: Okay. So.

Andrew Scott Robinson: It's an interesting market right I.

Andrew Scott Robinson: I don't think everything falls into the line of this narrative well.

Andrew Scott Robinson: Property pricing is attractive across the board in <unk>.

Andrew Scott Robinson: Casually, maybe the new opportunity again, I think it's much more nuanced.

Andrew Scott Robinson: Our global property as an example, we lost a very large accounts in Q1 actually we chose not to write it.

Andrew Scott Robinson: This is a large global company, and we had the largest line on primary insurance above their retention. So think about the primary $100 million that sits above a retention that is measured in tens of millions of dollars. Great example, you know; the broker did a great job of separating out the international exposure from the U.S. exposure. International exposure made up about 40% of the insured values, yet that international exposure was primarily inside of their retention. Well, a bunch of competitors came in and provided pricing at a 40% lower rate because, theoretically, the exposure line. Well, that was just silly.

Andrew Scott Robinson: This is a large global company.

Andrew Scott Robinson: And we had the largest line on the primary insurance above their retention, so think about the primary $100 million.

Andrew Scott Robinson: It sits above a retention that is measured in tens of millions of dollars.

Andrew Scott Robinson: Great example, the broker did a great job, which is split out the international exposure from the U S exposure international exposure made up about 40% of the insured values.

Andrew Scott Robinson: Yet.

Andrew Scott Robinson: International exposure was primarily inside of their retentions.

Andrew Scott Robinson: A bunch of competitors came in and provided pricing at a 40% lower rate.

Andrew Scott Robinson: Theoretically exposure went down well that was just sell it just like a ridiculous approach and so there is an example of hungry hungry companies out there.

Andrew Scott Robinson: That's just like a ridiculous approach. And so there's an example of hungry, hungry companies out there writing things in ways that I just don't think are sensible. And we just let that account go.

Andrew Scott Robinson: Writing things in ways that I, just don't think are sensible and we just let that accounts and by the way we had that account for a very long time.

Andrew Scott Robinson: And by the way, we had that account for a very long time. And so that's an example where you're like, okay, you know, people are basically putting out lines on big accounts to try to basically grow. And that's okay. That's fine.

Andrew Scott Robinson: And so that's an example, where you're like okay.

Andrew Scott Robinson: People are basically putting putting out lines on.

Andrew Scott Robinson: Our big accounts to try to basically grow quickly and that's okay. That's fine we expect a little bit of that.

Andrew Scott Robinson: We expect a little bit of that. We've won a few in global property over the quarter as well, to offset that for sure. And then I look at places like Marine. We steer clear of things like the stock throughput stuff because it's just, it's a commodity area, and there are way too many MGAs in there.

Andrew Scott Robinson: We've won a few and global property over the over the quarter as well to offset that for sure.

Andrew Scott Robinson: And then I look at places like Marine we steer clear of things like the stock throughput stuff because it's just it's a commodity area and there's way too. Many MGA is in there and so we found in marine is that we're competing its the same competitors who seem to be very sensible.

Andrew Scott Robinson: And so what we've found in Marine is that we're competing against the same competitors who seem to be very sensible, you know, maybe a little bit of change in terms and conditions, which we're incredibly tight on. But by and large, the market feels pretty darn good. When I look at our property E&S, transactional E&S in property, submissions were just absolutely booming, like booming still. And so, you know, we're still seeing plenty of opportunity.

Andrew Scott Robinson: Maybe a little bit of change in terms and conditions, which were incredibly tight on.

Andrew Scott Robinson: But by and large the market feels pretty darn good.

Andrew Scott Robinson: When I look at our property E&S.

Andrew Scott Robinson: Transactional E&S property.

Andrew Scott Robinson: Commissions were just absolutely booming like booming still and so we're still seeing plenty of opportunity.

Andrew Scott Robinson: You know, for us on the hard technical stuff, if you're, let's say, writing a risk related to something in the wood sector, which is a very low frequency but very high severity, like we're not backing up a bit. And so, we have our line. We haven't really seen a lot of companies who are, you know, sort of poaching into that line. So, a lot of that stuff'

Andrew Scott Robinson: For us on the hard technical stuff, if you're let's say writing risks related to.

Andrew Scott Robinson: Something in the woods sector.

Andrew Scott Robinson: Which is a very low frequency, but very high severity like we're not backing up a bit and so we have our line. We haven't really seen a lot of a lot of companies who are sort of poaching into that line. So a lot of us are sticking and then in the general property part of our book I would say pricing is pretty darn rich and so if you get.

Andrew Scott Robinson: And then, in the general property part of our book, I'd say pricing is pretty darn rich. And so, if you get a little bit of competition there, you know, to be able to give up some price, you can do that and still feel great that, you know, you're able to drive a very attractive return from that portfolio. And so, those four examples are things that should give you a sense that not everything is behaving in kind of one uniform way.

Andrew Scott Robinson: A little bit of competition there.

Andrew Scott Robinson: To be able to give up some price you can do that and still feel great that youre able to drive a very attractive return from that portfolio and so those four examples are things that should give you a sense that not everything is behaving in kind of one uniform way and again, we set up our business Greg as you know.

Andrew Scott Robinson: And again, we set up our business, Greg, as you know, to have an incredibly well-diversified portfolio so that we're not stuck in single market cycles and that we can push down where we see opportunities. And I think that their results speak to sort of the benefit of that strategy.

Andrew Scott Robinson: To have an incredibly well diversified portfolio. So that so that we're not stock in single market cycles and that we can push down where we see the opportunities and I think that there are results talk to sort of the benefit of that strategy.

Andrew Scott Robinson: That's a great color. Just to clean up, this is my follow-up question on your answers there. You mentioned limits, you know, what your company is writing out in the marketplace. Close the loop for us on limits and just sort of remind us what your net limits are, you know, broadly speaking, and then maybe by... Yeah, so...

Greg: That's great color.

Andrew Scott Robinson: Just to clean up this is my follow up question on your answers there.

Andrew Scott Robinson: You mentioned limits, what Youre companies, writing out in the marketplace, maybe you could just.

Andrew Scott Robinson: Close the loop for us on limits and just sort of remind us what your net limits are.

Andrew Scott Robinson: Broadly speaking and then maybe by a couple of more important segments.

Andrew Scott Robinson: Yeah, so in property, generally speaking, our max net limit is about three and a half million dollars. So yeah, so that applies across the entire

Andrew Scott Robinson: So so in property.

Andrew Scott Robinson: Generally speaking our Max net limit is about $3 $5 million. So.

Andrew Scott Robinson: Yes that applies across the entire piece.

Andrew Scott Robinson: and the other side. Yeah, that would apply everywhere. So that would apply when we write property and industry solutions in Inland Marine, certainly in ENAS, and then within global property. I think I've explained in the past that what we've had is long-term quota share support that allows us to be one of the largest lines in the marketplace in writing the primary of those programs, and that long-term support is obviously where we're keeping a very considerable portion of that alliance, which is sort of the That's great information. Thanks. Sure.

Andrew Scott Robinson: And the other segments too.

Andrew Scott Robinson: Sure. Thanks, Greg.

Andrew Scott Robinson: Yes that would that would imply that would apply everywhere so that would apply.

Andrew Scott Robinson: When we write property in industry solutions and inland Marine in certainly you mean Sn and then within global property I think I've explained in the past that.

Andrew Scott Robinson: What we've had is long term.

Andrew Scott Robinson: OTA share support that allows us to be one of the largest lines in the marketplace.

Andrew Scott Robinson: In writing the the primary of those programs and those long term support.

Andrew Scott Robinson: It was obviously, where we're keeping a very considerable portion of that.

Andrew Scott Robinson: Align to sort of a $3 $5 million net.

Speaker Change: That's great information thanks for the detail.

Speaker Change: Sure. Thanks, Greg.

Operator: Our next question comes from the line of Matt Carletti with Citizens JMP.

Andrew Scott Robinson: Our next question comes from the line of Matt <unk> with citizens JMP.

Matthew John Carletti: Thanks, Good morning.

Matthew John Carletti: Good morning, Matt.

Matthew John Carletti: Morning. You know, there's been a lot of focus, I'd say, industry-wide right on reserves the past several quarters. You guys are in kind of a shrinking group of companies, a rare company that's showing a lot of stability there. And I think in your opening comments, I picked up a comment about even kind of, you know, increasing the conservatism. Could you just kind of go behind the scenes a little bit and update us on what you're seeing there, kind of what some of the indications are, and how you might be reacting to those?

Operator: Morning.

Matthew John Carletti: There's been a lot of focus I'd say industry wide right on reserves the past several quarters.

Matthew John Carletti: You guys are in kind of a shrinking group a company its a rare company that's showing a lot of stability there and I think in your opening comments I picked up a comment about even kind of.

Matthew John Carletti: Increasing the conservatism.

Matthew John Carletti: Could you just kind of go behind the scenes, a little bit and update us on what youre seeing there kind of what some of the indications are and how you might be reacting to those.

Andrew Scott Robinson: Well, I'll start, and Mark can jump in, but look, just to be very specific, in this quarter, to Mark's comment and the prepared remarks, you know, our emergence in the quarter was favorable, yet we didn't recognize any of that. And I think probably the simplest way to describe how we think about things is, of course, we are looking at the level of reserve redundancy in our book, and we're also looking at the maturity of that redundancy, right? So you can have redundancy, but the question is, is that redundancy showing up in younger years or older years? And so we're constantly watching those two things.

Speaker Change: Well I'll start and Mark Mark.

Andrew Scott Robinson: Can jump in but.

Andrew Scott Robinson: Look just to be very specific in this quarter.

Andrew Scott Robinson: To Mark's comment in the prepared remarks.

Andrew Scott Robinson: Our emergence in.

Andrew Scott Robinson: In the quarter was favorable.

Andrew Scott Robinson: Yet we didn't recognize any of that.

Andrew Scott Robinson: And I think probably the simplest way to describe how we think about things is of course, we are looking at the level of reserve redundancy.

Andrew Scott Robinson: In our in our in our book and we're also looking at.

Andrew Scott Robinson: The maturity of that redundancy right. So so you can have redundancy, but the question is is that redundancy showing up in greener years or more mature years and so we're constantly watching those two things and we've been asked.

Andrew Scott Robinson: And we've been asked, probably since we started engaging with you and the other analysts and our investors from pre-IPO to today, when will you release the reserves? And our answers are the same, which is, we're not going to tell you. And quite honestly, we don't know, right? Because we have a bias, as we have said all along, to build a conservative position and then to demonstrate to ourselves that that conservative position is consistent and predictable along the lines of what we're expecting.

Andrew Scott Robinson: Probably since we started engaging with you and the.

Andrew Scott Robinson: Other analysts and our investors from pre IPO to today when will you release reserves in our answers are the same which is we're not going to tell you.

Andrew Scott Robinson: And quite honestly, we don't know right. Because we are we have we have a bias as we have said all along to build a conservative position and then and then two to demonstrate to ourselves that conservative position is consistent and predictable along the lines of what.

Andrew Scott Robinson: We are expecting.

Andrew Scott Robinson: I think we've done a really good job, but we also think that debt.

Andrew Scott Robinson: We're able to to deliver attractive results for our shareholders well, while not sort of stretching ourselves on the liability side of the balance sheet in any way and so.

Andrew Scott Robinson: And so, you know, I would just say to you, I feel like it's a good news story and that, as I've always said, and our belief based on everything that we're seeing is that our actual results are better than our reported results. And at some point, that should, to the benefit of our investors, that makes a lot of sense. Maybe a follow-up, just shifting gears.

Andrew Scott Robinson: I'd, just say to you I feel like it's a good news story and that our hope as I've always said in our belief based on everything that we're seeing is that our actual results are better than our reported results and at some point that should inure to the benefit.

Andrew Scott Robinson: All of our investors.

Andrew Scott Robinson: That makes a lot of sense.

Andrew Scott Robinson: Maybe a follow up just shifting gears I want to go back to the net investment income discussion.

Matthew John Carletti: I want to go back to the net investment income discussion and Paul's question. Maybe if I just take a different look at it. I mean, I look at this quarter, kind of the new disclosures, right? And the alternatives, they didn't really have an impact, right? I think it was 100,000. So when I look at that 18 million you reported, it looks pretty clean to me. Am I right in thinking that that's a very sustainable number going forward?

Speaker Change: Question sure.

Matthew John Carletti: Sure maybe if I just.

Matthew John Carletti: Take a different look at it.

Matthew John Carletti: I look at this quarter kind of new disclosures right than the alternatives.

Matthew John Carletti: It didn't really have an impact I think of about 100000.

Matthew John Carletti: I look at that $18 million you reported it looks it looks pretty clean to me.

Matthew John Carletti: And that obviously, the changes from there would be, you know, more cash flow coming in at higher yields, and that works over time. But at least as a jumping off point, there's no reason to think that that's not a good one.

Speaker Change: Alright, great thinking about like that's a very sustainable number going forward and that obviously the changes from there would be.

Matthew John Carletti: Yes, more cash flow coming in at higher yields in networks over time, but at least as a leaping off point.

Matthew John Carletti: There is no reason to think that thats not a good leaping off point.

Mark William Haushill: Matt, thank you. I agree. I think that's a good way to look at it. I would highlight the fact that short-term rates could change quickly, right, in the short term. So yeah, I look at that $17 million in the quarter as pretty consistent, but again, it depends on what happens with short-term rates. And look, we've been focused on deploying the cash in the short term. We've got a pretty good situation where we're generating more cash that we're putting to work. Our plan is to be fully

Matthew John Carletti: Matt. Thank you I agree I think that's a good way to look at it.

Mark William Haushill: I would I would highlight the fact that short term rates could change quickly right over.

Mark William Haushill: Short term, so yes, I look at that $17 million in the quarter and it's pretty consistent but again it depends on what happens with short term rates and look we've been focused on deploying the cash in short term.

Mark William Haushill: We've got a pretty good situation, where we're generating more cash.

Mark William Haushill: That we're putting to work our plan is to be fully deployed.

Andrew Scott Robinson: You know, Matt, I would just add one thing. You know that our assets grew by $400 million year over year, so this point last year, $400 million. To Mark's point, like, I don't know how many times he said, our plan is to fully deploy our cash by da-da-da-da-da-da-da, and, you know, we're generating so much cash, we've not been able to put it to work, and in this case, Mark made the point, which is we've been, we've been blessed with, you know, with short-term rates that are really great.

Mark William Haushill: By the end of 2004.

Speaker Change: Matt I would just add one thing.

Andrew Scott Robinson: Our assets grew by $400 million year over year. So at this point last year $400 million.

Andrew Scott Robinson: To Mark's point like.

Andrew Scott Robinson: I don't know how many times, we said our plan is to fully deploy our cash.

Andrew Scott Robinson: And.

Andrew Scott Robinson: Entering so much cash we have not been able to put it to work and in this case Mark made the point, which is we have been.

Andrew Scott Robinson: We've been blessed with.

Andrew Scott Robinson: With short term rates that are really great if.

Andrew Scott Robinson: If that changes, that's one variable here that's uncertain, but the fact is that the invested assets are growing at a pretty attractive clip, and, you know, that of course is something that we're trying to respond to, but, you know, you can only deploy so quickly, you know, within sort of the bounds of how it is that we've set our Yes, yeah, very, very, very high cost problem.

Andrew Scott Robinson: If that changes that's one that's one variable here that's uncertain, but the fact is is that the invested assets are growing at a pretty a pretty attractive clip and.

Andrew Scott Robinson: That of course is something that we're trying to respond to but.

Andrew Scott Robinson: It's you can only deploy so quickly within sort of the bounds of how it is that we set our near term investment strategy.

Andrew Scott Robinson: Yes, very very very high class problem.

Speaker Change: Yes. Thank you for the color appreciate it.

Speaker Change: Thanks, Matt.

Operator: Our next question comes from the line of Meyer Shields with KBW.

Andrew Scott Robinson: Our next question comes from the line of Meyer Shields with VW.

Meyer Shields: Good morning, Mayor. I'm surprised you're awake because you were cranking them out early into the morning.

Meyer Shields: Great. Thanks. Good morning, one quick question, Hey, good morning, Meera Im surprised youre away, because you're cranking them out early into the morning, I saw so well done to beer.

Meyer Shields: So, well done to be here. Well, thank you. My bloodstream is 95% copyrighted.

Meyer Shields: Thank you my bloodstream is 95% coffee right now.

Meyer Shields: Thank you. Are you seeing any change in the inflation rate for claims on short-tailed lines like property or inland marine? No. Okay, second question just on comments you made earlier, Andrew, with regard to

Meyer Shields: Yeah.

Meyer Shields: Are you seeing any change in the inflation rate for claims on short tailed lines like property or in the marine.

Meyer Shields: No.

Meyer Shields: Okay.

Meyer Shields: The second question just on comments you made earlier, Andrew with regard to dominant in some commercial auto. So we're definitely hearing a lot of talk of sustained or accelerating commercial auto rate increases.

Andrew Scott Robinson: and John Renners from Commercial Auto. So we're definitely hearing a lot of talk of sustained or accelerating commercial auto ratings. And I was hoping you could talk about, at least conceptually, why non-renewal made more sense than just jack. Okay, so, I, I know that, um, certainly on this exact same call last year and maybe even the call before that, I kept making the point that, as it relates to commercial auto, if we are seeing high single digits, 10-ish loss cost inflation.

Andrew Scott Robinson: Hoping you could talk to at least conceptually why non renewal made more sense than just jacking up right.

Speaker Change: Okay. So.

Speaker Change: I know that.

Andrew Scott Robinson: Certainly at this exact same call last year.

Andrew Scott Robinson: And maybe even maybe even the call before that.

Andrew Scott Robinson: I kept making the point that.

Andrew Scott Robinson: As it relates to commercial auto.

Andrew Scott Robinson: We are seeing.

Andrew Scott Robinson: High single digits, 10 ish loss cost inflation.

Andrew Scott Robinson: And now we kind of see that unabating, and I can give you a granular kind of view as well in a moment, Mayor, but... like that. That feels unsustainable when you keep saying that over and over and over, right? So, okay, so what are you going to get, 11% or 12% rate, but you're in a 10% lost cost inflation environment? That is not the kind of marketplace that we want to grow into. And I think that what has happened here with elements of the plaintiff bar and social inflation finding its way into different things. I'll give you a simple example.

Andrew Scott Robinson: And now we kind of see that unabated and I can I can give you a granular kind of view as well in a moment.

Andrew Scott Robinson: But.

Speaker Change: I like that.

Andrew Scott Robinson: That feels unsustainable when you keep saying that over and over and over right. So okay. So what are you going to get 11, or 12% rate, but youre in a 10% loss cost inflation environment.

Andrew Scott Robinson: That is not the kind of marketplace that we want to grow into and.

Andrew Scott Robinson: And I think that what has happened here with elements of.

Andrew Scott Robinson: The plaintiff bar and social inflation, finding its ways into different things give you a simple example.

Andrew Scott Robinson: Yes.

Andrew Scott Robinson: Sorry, this week we received our first ever, first notice of loss with a Stowers demand, a time limit demand, attached to the first notice of loss, right? And, by the way, it was a pretty heavily prepared document from a plaintiff lawyer. Like that just feels like a different day.

Andrew Scott Robinson: Sorry. This week, we received our first ever first notice of loss with a star wars demand a time limit demand attached to the first notice of loss right and by the way. It was a pretty heavily prepared document from from a plaintiff lawyer like that just feels.

Andrew Scott Robinson: Now, whether there's validity to it or not, just the effort to respond to a first notice of loss like that is, in itself, a heavy lift, but it is an indication as to what's happening in this marketplace. And we just, you know, on the personal injury part of the market, if we can, if we can lean up on the accelerator and tap on the brake, we're going to do so.

Andrew Scott Robinson: A different day now whether there is validity to it or not just the effort to respond to a first notice of loss like that.

Andrew Scott Robinson: Is in itself a heavy lift but it is an indication as to what's happening in this marketplace and we just on the personal injury.

Andrew Scott Robinson: Part of the market.

Andrew Scott Robinson: If we can if we can lean up on the accelerator and tap on the break.

Andrew Scott Robinson: And then ultimately, it's up to the states as to whether they can reform, you know, the legal environment, the tort environment to make it more reasonable. Cause it is just, it is, it's out of control. And, you know, everybody who's close to it understands it viscerally. And so, you know, we've been studying it and studying it. And I think I indicated that we were going to ease up on exposure, and we have been easing up on exposure.

Andrew Scott Robinson: We're going to do so and then ultimately it's up to the states as to whether they can reform.

Andrew Scott Robinson: The legal environment, the tort environment to make it more reasonable because it is just it is it's out of control.

Andrew Scott Robinson: And.

Andrew Scott Robinson: Everybody everybody who's close to it understands it this early.

Andrew Scott Robinson: And so we've been studying it and studying and studying it and I think I indicated that we were going to ease up on exposure and we have an easing up on exposure and that premium doesn't even fully reflect the lower exposure because the rate that we've been getting for each each unit that we write is higher than the average rates for the rest of our business.

Andrew Scott Robinson: And that premium doesn't even fully reflect the lower exposure because the rate that we've been getting for each unit that we write is higher than the average rate for the rest of our business. So that's the thinking behind it.

Andrew Scott Robinson: So that's the thinking behind it.

Meyer Shields: Okay, perfect. That's very unusual.

Speaker Change: Okay, perfect Thats very helpful.

Meyer Shields: And one last quick one, if I can, just updated expectations, maybe for the net.

Speaker Change: And one last quick one if I can.

Speaker Change: Updated expectations may be for the net to gross written premium ratio for 2024 first quarter came in a little higher than I expected.

Meyer Shields: Net-to-Gross Premium Ratio for 2024. The first quarter came in a little higher than I expected.

Mark William Haushill: No, I mean, Mayor, it's Mark. It's in line with where we were in the first quarter. Low 60s is what we're looking for, so I think it's, I think it's right where we thought it would be.

Meyer Shields: No.

Mark William Haushill: Marriott's markets in line with where we were in the first quarter.

Mark William Haushill: Low <unk> is what we're looking for so.

Speaker Change: I think it's I think it's right, where we thought it would be Mariner I would remind you that there is a little bit of noise for you and others as well there is a little bit of noise last year, we had a we had a quota share contract that that.

Andrew Scott Robinson: Mayor, I'd remind you that there was a little bit of noise for you and others as well. There was a little bit of noise last year, too. We had a quota share contract that ran through the first and second quarters that we unwound in the third quarter, and so there are some geography issues that play out. But I also do think that when we set guidance for the full year, we were quite explicit in saying that our full year 23 gross to net is a reasonable planning assumption for your models.

Andrew Scott Robinson: Ran through first and second quarter that we that we unwound in the third quarter and so there is there's some geography issues that play through but I also do think that when we set guidance.

Andrew Scott Robinson: For the full year, we were quite explicit saying that our full year 'twenty three gross to net is a reasonable planning assumption for your models.

Meyer Shields: Yeah, perfect. I just wanted to see if there was an update. That's very helpful. Thank you.

Speaker Change: Yeah, perfect I, just wanted to build up it thats very helpful. Thank you so much thank.

Operator: Thank you. Thanks, Claire.

Meyer Shields: Thank you experiment.

Yaron Kinar: Our next question comes from the line of Yaron Kinar with Jeffreys. Thank you.

Operator: Our next question comes from the line of Yaron Qunar with Jefferies.

Yaron Kinar: Thank you. Good morning. Good morning. Good morning. I just want to start with, maybe, a quick one.

Yaron Kinar: Thank you good morning.

Yaron Kinar: The Baltimore Bridge collapse, do you have any exposure to that? None. Okay.

Yaron Kinar: Morning.

Yaron Kinar: Good morning, good morning.

Yaron Kinar: The I just want to start with maybe a quick one the Baltimore bridge collapsed do you have any exposure to that.

Yaron Kinar: No.

Andrew Scott Robinson: Then maybe a broader conceptual question with regard to the mixed shift, obviously benefiting the underlying loss ratio to an extent, but we also see that coming back a little bit through a higher expense ratio. So can you maybe talk through in a more holistic sense about what the benefit of the mixed shift is? Maybe beyond the underlying combined ratio, is it better in terms of capital efficiency? Is it a better long-term risk profile? What do you think about that mix?

Yaron Kinar: Okay.

Yaron Kinar: Then maybe product conceptual question with regards to that mix shift.

Andrew Scott Robinson: Obviously benefited the underlying loss ratio to an extent, we also see that coming back a while back through a higher expense ratio. So Jim maybe talk through in a more holistic sense like what the benefit of the mix shift is.

Andrew Scott Robinson: Maybe beyond the underlying.

Andrew Scott Robinson: Our combined ratio is at a better capital.

Andrew Scott Robinson: Fishing fee is that a better long term risk profile, what do you see about feed that mix that that is attractive.

Andrew Scott Robinson: Well, look, a great question, by the way. And the answer is that it's parts of all the things that you talked about. So, you know, if you really look at where the growth has been coming from, you know, we've driven a lot of growth from surety. We've certainly driven a lot of growth from our transactional E&S. You are correct, they are higher expense ratio businesses. Part of that is they're, you know, in the case of E&S, it's wholesale, so your commissions are higher there. Surety is obviously the highest commission.

Speaker Change: Well look great question by the way and the answer is its parts of all of the things that you talked about so if you really look at a lot of where the growth has been coming from we've driven a lot of growth from from surety.

Andrew Scott Robinson: We've driven.

Andrew Scott Robinson: Certainly a lot of growth from our transactional E&S you are correct there higher expense ratio business part of that is there.

Andrew Scott Robinson: <unk>.

Andrew Scott Robinson: In the case of E&S.

Andrew Scott Robinson: Wholesale so your commissions are higher their surety is obviously the highest commissions.

Andrew Scott Robinson: And yes, we're comfortable with that tradeoff. We think that our sort of belief that that sort of profile of risk exposure and then ultimately loss has less of some of the things that, for example, we were just talking about, which is, you know, the kind of uncertainty around loss inflation on personal injury. And that's included, by the way, for what we write in our general liability within transactional E&S. I would characterize that the same way.

Andrew Scott Robinson: And yes, we're comfortable with that trade off we think that we.

Andrew Scott Robinson: We think that both are sort of belief that.

Andrew Scott Robinson: That that sort of profile of risk exposure and then ultimately loss.

Andrew Scott Robinson: Has less of some of the things that for example, we were just talking about which is.

Andrew Scott Robinson: Kind of uncertainty around loss inflation on personal injury and that's included by the way in our for what we write in our in our.

Andrew Scott Robinson: General liability within transactional E&S I would characterize that same way.

Andrew Scott Robinson: And then, by the way, in the case of surety and others, they're incredibly good applications of our capital, very diversifying. And, quite honestly, you know, one of the reasons that I believe that we're able to sort of achieve the kind of capital leverage that we've been able to achieve, so it is all those things. I think the other part of it is that we keep just coming back to it. We want to have a well-diversified portfolio, right?

Andrew Scott Robinson: And then and then by the way in the case of surety and others, they're incredibly good.

Andrew Scott Robinson: Applications of our capital very diversifying.

Andrew Scott Robinson: And quite honestly.

Andrew Scott Robinson: One of the reasons that I believe that we're able to sort of achieve the kind of capital leverage that we've been able to achieve so.

Andrew Scott Robinson: So it is all of those things I think the other part of it is.

Andrew Scott Robinson: Keith just coming back to it we want to have a well diversified portfolio right. So.

Andrew Scott Robinson: So, you know, for example, if we could press down faster and harder in A&H because, for us, that's great diversification, we would. But there are boundaries to our ability to grow profitably there at maybe the same speed we can in certain areas. That may change a year from now, but that's what we're seeing right now.

Andrew Scott Robinson: For example, if we could if we could press down faster and harder in A&H because for US. It's great diversification, we would there's boundaries to our ability to grow profitably.

Andrew Scott Robinson: There may be the same speed, we can in certain areas that may change a year from now, but that's what we're seeing right now.

Yaron Kinar: Thanks, that's helpful. If I could also sneak in one comment slash question, and forgive me if I missed this, I did not see disclosures of premiums by division in the press release last night. And if you chose to remove those, I'm just curious as to why. Just considering that so much of the story, I think, at Skyward is about exceptional premium growth, and understanding the drivers for that growth is helpful for us in the investment.

Andrew Scott Robinson: Thanks.

Yaron Kinar: Helpful. If I could.

Yaron Kinar: Awesome.

Yaron Kinar: One comment flash question and forgive if I missed this I.

Yaron Kinar: Did not see disclosures of premiums by division.

Yaron Kinar: Press release last night.

Yaron Kinar: And if you chose to remove those I'm just curious as to why.

Yaron Kinar: Just considering that so much of the story I think that Scott is about.

Yaron Kinar: Perception on premium growth and understanding the drivers for that growth is helpful for us in the investment community.

Mark William Haushill: Your Honor, hey, it's Mark. A good question. We will be including it in the press release going forward. The cue will be out tomorrow, so it's there. It was just a matter of it being in the cue. We'll have it in the press releases going forward, but you'll see it in the cue tomorrow.

Yaron Kinar: Youre on Hey, it's Mark good question.

Mark William Haushill: We will be we will be including in the press release going forward. The Q will be out tomorrow. So.

Mark William Haushill: It's there.

Mark William Haushill: It was just a matter of it will be in the queue. We will have it in the press releases going forward, but you'll see in the Q tomorrow.

Andrew Scott Robinson: And just for your benefit, not to sort of throw a bunch of numbers at you, but industry solutions through 16%, global property and ag 35%, programs 7%, A&H 14%, captives 49%, lines 27%, surety 37%, and transactional E&S 43%.

Andrew Scott Robinson: <unk>.

Andrew Scott Robinson: Ron just I mean, just just for your benefit.

Andrew Scott Robinson: To sort of throw a bunch of numbers at you, but industry solutions grew 16% global property in AG, 35% programs, 7%, A&H, 14% captives, 49% professional lines, 27% surety.

Andrew Scott Robinson: 37% and transactional E&S, 43%.

Andrew Scott Robinson: Awesome. Thank you. An apology.

Speaker Change: Awesome. Thank you so much.

Yaron Kinar: And apologies for the oversight. We will correct that. Thank you for that. You're right in that observation.

Speaker Change: Apologies for the oversight, we will we will correct that thank you for that and Youre right in that observation.

Operator: Our next question comes from the line of Bill Carcache with Wolf Research.

Yaron Kinar: Our next question comes from the line of Bill <unk> with Wolfe Research.

Bill Carcache: Thanks. Good morning, Andrew and Mark. [inaudible] As investors analyze the interplay between your growth and returns, how much of that is an outcome versus something that you're actively managing? I appreciate your comments on a nuanced market with attractive opportunities for the best underwriters. And, you know, it seems like you're focused on identifying those areas where you're competing beyond just price, but it would be helpful if you could sort of address how important of a lever pricing is as you manage to your target. Yeah, I mean,

Bill Carcache: Thanks, Good morning, Andrew Marc.

Bill Carcache: Yes.

Bill Carcache: As investors analyze the interplay between your growth on returns how much of that is an outcome versus something that you're actively managing to I. Appreciate your comments around the nuance market with attractive opportunities for the best underwriters and.

Bill Carcache: It seems like you are focused on identifying those areas.

Bill Carcache: Where you're competing.

Bill Carcache: Price, but it would be helpful. If you could sort of address how important of a lever pricing as you manage to your targets.

Andrew Scott Robinson: Yeah, I mean, it's implicit in your question. Thank you, by the way.

Bill Carcache: Yes.

Andrew Scott Robinson: Implicitly youre quite thank you by the way that's a great question I think implicit in your question.

Andrew Scott Robinson: It's a great question. I think implicit in your question, if I'm correct, is just the question, hey, what happens if you got double the price, but you got less growth? How does that look?

Andrew Scott Robinson: If I if I'm if I'm correct is just the hey, what happens if you've got double the price, but you you.

Andrew Scott Robinson: <unk> got less growth how does that look.

Andrew Scott Robinson: And I think our general philosophy is as follows, which is that we've stated in unambiguous terms that we're targeting a 15 plus percent return on equity. And I think that, and by the way, we've been consistently kind of showing up at or above that number. And our sense here is, as long as we can add units, and we believe the units kind of fit with our strategy, that our ability to sort of capture value in some of our businesses and keep that value for a long time, yes, it'd be a great example of that, that that's a good proposition for our shareholders, right?

Andrew Scott Robinson: And I think our general philosophy is as follows which is that we have.

Andrew Scott Robinson: We've stated an unambiguous terms that.

Andrew Scott Robinson: We're targeting a 15 plus percent return on equity.

Andrew Scott Robinson: And I think that and by the way, we've been consistently kind of showing up at or above that number.

Andrew Scott Robinson: And our sense here is as long as we can add units and we believe the units kind of fit with our strategy our ability to sort of capture value in some in some of our businesses keep that value for a long time right surety it'd be a great example of that.

Andrew Scott Robinson: Areas like transactionally, and that's our more transactional business. They're sort of a lower retention business. You might write an account for a couple of years, and then you might not write it again. And so, but I just want to tell you that the watermark for us is trying to make sure that we're writing above a 15 percent return. And if we can add more units there, we generally will do so. And, you know, and then the good news is, if we do that, well, you might get some expense leverage, you might get some capital leverage that ends up giving you, you know, a bit more juice in terms of your ROEs that aren't quite as formulaic.

Andrew Scott Robinson: Thats a good proposition for our shareholders great areas like transactional E&S, our more transactional or are there sort of a lower retention business you might we might write an account for a couple of years.

Andrew Scott Robinson: And then you might not write it again and so.

Andrew Scott Robinson: But I just will tell you that the watermark for US is trying to make sure that we're writing above a 15% return and if we can add more units. There we generally will do so.

Andrew Scott Robinson: And then the good news is if we do that well you might get some expense leverage you might get some capital leverage that ends up giving you a bit more juice in terms of your ROE is that kind of our formula.

Andrew Scott Robinson: And then following up on your success in onboarding underwriting talent and enjoying the incremental business that's come with that, how concerned are you about competitors, you know, potentially poaching some of that talent in the future? Have you seen evidence of that? Maybe speak to your success rate in retaining the talent that you have onboarded.

Speaker Change: That's very helpful. Thank you and then following up on your success on boarding underwriting talent and enjoying incremental business that's come with that.

Andrew Scott Robinson: How concerned are you about competitors.

Andrew Scott Robinson: Potentially poaching some of that talent in the future have you seen evidence of that and maybe speak to your success rate and retaining the talent that you have on boarded.

Andrew Scott Robinson: It's a really excellent question. What I can tell you is that our voluntary attrition last year was 7%, and we share data with a consortium of other insurers, not just on retention but on a range of people, and HR matters. And by our measure, that's kind of close to the best, if not the best out there. So, and I think as you get into the specialty space, I think the war for talent is much greater than, for example, if you're in personal lines or small commercial. So, because there's just, there's a dearth of talent and it's a specialty, right? Which means that, generally speaking, people are good at neurotechnical, focus areas, and so forth. They're harder to come by, though.

Speaker Change: And actually it's a really excellent question.

Andrew Scott Robinson: What I can tell you is that our voluntary attrition last year was 7% and we share data with a consortium of other insurers.

Andrew Scott Robinson: Not just on retention, but on a range of.

Andrew Scott Robinson: People HR matters.

Andrew Scott Robinson: And by our measure that's kind of close to the best if not the best out there so and I think as you get into the specialty space I think the war for talent is much greater than for example, if you're in personal lines, our small commercial so.

Andrew Scott Robinson: Because there's just there's a dearth of talent and it is specialty right, which means that generally speaking people are good narrow technical focus areas and so forth they are harder to come by and so.

Andrew Scott Robinson: And so, I feel very good about our education. Yes, I think the war for talent continues, and yes, we are concerned. It is one of the reasons, and listen, we beat the drum on this all the time. It's one of the reasons that we are so, so focused on the people dimensions of our business. It is born from a genuine interest, starting with me and the other members of our ELT team, that this is the kind of company that we want to have, you know, a company that is very people-centric.

Andrew Scott Robinson: So I feel very good about our traditionally yes.

Andrew Scott Robinson: I think the war for talent continues and yes, we are concerned.

Andrew Scott Robinson: It is one of the reasons and listen we'd beat the drum on this all the time, it's one of the reasons that we're so so focused on the people dimensions of our business. It is born from like a genuine interest starting with me and the other members of our ELT that this is the kind of company that we want to have a company that is very <unk>.

Andrew Scott Robinson: But I also think there's just like a practical competitive consideration, which is if we create a culture that people feel genuinely part of and connected to and personal owners in, that is probably the best defense that we possibly can have. And I will say there's always, I mean, the MGAs are just crazy, right? They're just a spot market sort of pricing for talent that's not rational when you look at the economics of our industry. But, you know, that's just the nature of the beast. If there's a dearth of talent, that's what's going to happen.

Andrew Scott Robinson: <unk> centric.

Andrew Scott Robinson: But I also think there's just like a practical competitive consideration, which is if we create a culture that people feel genuinely part of and connected to and personal owners in.

Andrew Scott Robinson: That is probably the best defense that we possibly can have.

Andrew Scott Robinson: And I will say there is always I mean, the MGA is are just it's crazy right there just spot market.

Andrew Scott Robinson: Pricing for talent, that's not rational when you look at the economics of our industry.

Andrew Scott Robinson: But that's just the nature of the Beast. If there is a dearth of talent that's going to happen and then ultimately we rely on the.

Andrew Scott Robinson: And then ultimately, you know, we rely on the ecosystem that we've built. And I will say to you, and I really do encourage this, go look at our annual people report. It is, if you're not part of our organization, it's the best way to have a window into our organization. And I think that from that, you will understand why we're certainly not. It's not a topic that we're ignorant of, but we've done the things that we should be doing to put ourselves in a great position as it relates to that.

Andrew Scott Robinson: Ecosystem that we've built and I will say to you I really do encourage this go look at our annual people report it is.

Andrew Scott Robinson: If youre not part of our organization, it's the best way to have a window into our organization.

Andrew Scott Robinson: From that you will understand why we're certainly not it's not a topic that we're ignorant.

Andrew Scott Robinson: But we've done the things that we should be doing to put ourselves in a great position as it relates to that.

Bill Carcache: Thank you. That's very helpful. And then, if I could squeeze in one last one, how focused are you on downside risk estimates from a lower rate environment? Is there a point, maybe if you could share your thoughts with us where you look to protect yourself from lower rates, any actions that you take potentially, you know, lock in relatively more attractive higher rates?

Speaker Change: Thank you.

Bill Carcache: Very helpful and then if I could squeeze in one last one.

Bill Carcache: How focused are you on downside risk to estimates from a lower rate environment is there a point.

Bill Carcache: Maybe if you could share any thoughts with us where you live.

Bill Carcache: To protect yourself from lower rates and the actions that you take potentially.

Bill Carcache: Lack in relatively more attractive higher rates.

Bill Carcache: So, Bill, just for our clarification, you're talking about, on the asset side, investments, correct? Yes. Yes. That's correct.

Speaker Change: So bill just for our clarification, you're talking about on the asset side investments correct, Yes, yes, sorry about that yes, that's correct.

Mark William Haushill: You know, Bill, look, we kept our duration right at about 4. No real interest in extending it. We'll see how rates move during the year, but I think where we are in our duration, I like it, and I think the returns are fine. We're not going to react immediately. We'll just see how the interest rates play out.

Bill Carcache: Yes.

Mark William Haushill: Bill we look we kept our duration right at about four.

Mark William Haushill: No real interest in extending it.

Mark William Haushill: We will see how rates move during the year, but I think where we are and our duration I like it and I think the returns are fine.

Mark William Haushill: We're not going to react immediately I will just see how interest rates play out.

Andrew Scott Robinson: Bill, I'd add one thing. You know, we've had, we've been blessed with the interest rate environment that we're in. And so, you know, as Mark has commented, every time we put our free cashflow to work in our, in our, in our core fixed income, it's going to be very, very, very high quality, you know, very high quality assets. And so, you know, if the rates start to back up, you know, the first place that we would look is can we start to blend in slightly lower credit, and we're not talking about, you know, like jumping into the junk, just like moving down, you know, the investment grade credit and, and, and having a bit more of the lower end of that.

Speaker Change: Bill I would add one thing.

Andrew Scott Robinson: We've had we've been blessed with the interest rate environment that we're in and so.

Andrew Scott Robinson: As Mark has commented every time, we put our free cash flow to work in our in our in our core fixed income.

Andrew Scott Robinson: Going to very very very high quality.

Andrew Scott Robinson: Very high quality.

Andrew Scott Robinson: Assets and so.

Andrew Scott Robinson: Like if the if the rates start to back up the first place that we would look as can we start to blend in slightly lower credit and that we're not talking about like jumping in the jump just moving down.

Andrew Scott Robinson: The investment grade credit and having a bit more of the lower end of that and then if we ever God.

Andrew Scott Robinson: And then, you know, if we ever, God forbid, find ourselves in that like 0% interest rate environment, you know, where new money yields are, you know, 2%, you know, I think at that point, you both have to reconsider how you think about the way that you talk about your returns on capital because, obviously, it's a different cost of capital environment, but also, you kind of reevaluate your investment strategy in But I feel like we have a long way to go before that.

Andrew Scott Robinson: God forbid finding ourselves in that like zero percent interest rate environment, where new money yields were 2%.

Andrew Scott Robinson: At that point you both have to reconsider how you think about the way that you talk about your returns on capital because obviously, it's a different cost of capital environment, but also.

Andrew Scott Robinson: Kind of reevaluate your investment strategy in a different context, but I feel like we've got a long way to go before that and we keep growing our embedded yield.

Andrew Scott Robinson: And we keep growing our embedded yield. And even if interest rates were 4%, you know, in the medium term, that's still an attractive place for us to continue to have an allocation to, to high quality core fixed income.

Andrew Scott Robinson: And even if interest rates were 4% in.

Andrew Scott Robinson: In the medium term.

Andrew Scott Robinson: It's still an attractive place for us to continue to have.

Andrew Scott Robinson: And allocation to the high quality core fixed income.

Bill Carcache: That's very helpful, Culler. Thank you for taking the time to answer my questions. Sure.

Speaker Change: That's very helpful color. Thank you for taking my questions.

Bill Carcache: Sure.

Operator: Our next question comes from the line of Michael Zaremski with BMO.

Bill Carcache: Our next question comes from the line of Michael <unk> with BMO.

Michael David Zaremski: Hey, thanks. I think I can ask one more. A lot of good questions. So, you know, given the majority of our questions are on cash inflation, you've given us some good color. Now, Andrew, you talked about kind of, I think it might have been your prepared remarks, but pulling back some limits and tightening some terms. I believe that I'm assuming you guys have had excellent margin experience and reserve experience.

Michael David Zaremski: Hi, Thanks.

Speaker Change: So if I can ask one more a lot of good questions sorry.

Michael David Zaremski: Given given the majority of our questions are on casualty in place and you've given us some good color.

Michael David Zaremski: Now Andrew you talked about kind of I think.

Michael David Zaremski: It might be in your prepared remarks about pulling back some limits and cutting some terms I believe that I'm, assuming that you guys have had excellent margin experience and reserve experience that's more on the commercial auto side, but maybe.

Michael David Zaremski: That's more on the commercial auto side. But maybe, maybe you can clarify that or maybe it is just, you know, all casualties and just also, maybe more broadly from a macro standpoint, are there, you know, maybe certain states that you guys feel are more social inflationary, if that's a word, and you've looked at kind of pulling back on or any other gauges you guys kind of look at to try to keep social inflation in check?

Michael David Zaremski: Maybe you could clarify that or maybe it's just all casualty and just also maybe more broadly from a macro standpoint or other maybe certain states that you guys are more social inflationary if thats a word and.

Michael David Zaremski: You've looked at kind of <unk>.

Michael David Zaremski: Pull back on or maybe I'm wrong.

Michael David Zaremski: Any other gauges you guys kind of look at that to try to.

Michael David Zaremski: Keep social inflation in check.

Andrew Scott Robinson: Yeah, no, great question. I think for us, my comments on the terms and limits actually were principally around the general liability and excess, and of course, the excess, you know, you'll pick up both auto exposure as well as general liability, employer's liability as well as exposure. And so, you know, a lot of this is around things like additional insureds and where that comes into play. And so we've taken, you know, just we're, you know, obviously like every good underwriter, right, you watch, you see, you look for early indicators, you try to turn the crank.

Speaker Change: Yes, no great Great question I think for US my comments on the terms.

Andrew Scott Robinson: And limits actually were principally around the general liability and excess in of course excess.

Andrew Scott Robinson: Youll pick up both auto exposure as well as.

Andrew Scott Robinson: General liability employers liability as well exposure and so.

Andrew Scott Robinson: A lot of this is around.

Andrew Scott Robinson: Things like additional insureds and where that comes into play.

Andrew Scott Robinson: So we've taken just we're obviously like every good underwriter I view you watch you see you look for early indicators you try to turn the crank. If you see something that's popping that you're like well I want to make sure that we're moving on that before everything is fully baked in so.

Andrew Scott Robinson: If you see something that's popping, you're like, well, I want to make sure that, you know, we're moving on that before everything is fully baked, and so that was really more of a reference to that.

Andrew Scott Robinson: That it was really more of a reference to that.

Andrew Scott Robinson: I think relative to auto, we've gone pretty far down the path of, you know, even down to things like in one part of our business, if you're not using telematics and an accident occurs, you get knocked back to the statutory minimum limit available. We had things around reporting times and the deductible to the insured. I mean, some, you know, because we write that on an ENS basis. So I think we've done pretty much what we can do on auto, outside of risk selection and price.

Andrew Scott Robinson: I think relative to auto we've we've gone pretty far down the down the path of <unk>.

Andrew Scott Robinson: Even down to things like.

Andrew Scott Robinson: One part of our business, if you're not using telematics has not turned on in an accident occurs that you get knocked back to the statutory minimum limited available we add things around reporting times and the deductible to the insured.

Andrew Scott Robinson: Yes, because we write we write that on an E&S basis. So.

Andrew Scott Robinson: So I think we've done pretty much what we can do on auto outside of risk selection and price.

Andrew Scott Robinson: As it relates to venue, Look, I think that, in theory, every venue could be a political or could be a judicial hellhole right as opposed to, you know, the ones that are always publicized as judicial hellholes. Look, very few of our claims end up in front of a jury. But I think the truth is that there is certainly a great exposure to juries not being representative of how a particular jurisdiction is viewed on its level of conservativism.

Andrew Scott Robinson: As it relates to venue look I think that.

Andrew Scott Robinson: In theory every venue could be a political or it could be a judicial hellhole right as opposed to the.

Andrew Scott Robinson: The ones that are always publicizes judicial halls.

Andrew Scott Robinson: Look very few of our claims end up in a in front of a journey, but I think the truth is is that there is there are certainly great exposure to juries not being representative of how a particular jurisdiction is viewed on it.

Andrew Scott Robinson: Level of conservativism.

Andrew Scott Robinson: That said, I mean, I saw a case yesterday where, not yesterday, it was this week, I can't remember the specifics, but I'll pull out for you, where a jury gave a crazy award, like a $30 million award, and the judge basically pulled it back to a million, to the coverage level of a million dollars, right? So the jury went wild, and the judge kind of stepped in, and that was in Pennsylvania.

Andrew Scott Robinson: That said I mean, it's all case yesterday, where now USA.

Andrew Scott Robinson: This week I can't remember the specifics about pull it out for you where the jury did like a crazy World I got $30 million Award.

Andrew Scott Robinson: And the judge basically pulled it back to Emily to.

Andrew Scott Robinson: To the to the coverage level of $1 billion right. So the kind of jewelry. While then the judge kind of stepped in and that was in Pennsylvania and so.

Andrew Scott Robinson: There are certainly reasons to say that.

Andrew Scott Robinson: The conservative conservativism of the jurisdiction.

Andrew Scott Robinson: And so, you know, there are certainly reasons to say that the kind of conservativism of the jurisdiction can really make a difference, and that's an example. What I will say to you is that it's not a state-by-state thing at this point, and so, you know, it would be hard to enumerate it, but this is something that we absolutely watch, and we're trying to address in terms of where it is that we are taking on exposure.

Andrew Scott Robinson: Can really make a difference and that's an example of what I will say to you is that it's not a state by state as a county by county kind of thing.

Andrew Scott Robinson: At this point and so.

Andrew Scott Robinson: It would be hard to enumerate it but this is something that we absolutely watch and we're trying to to address in terms of where it is that we are taking on exposure.

Michael David Zaremski: That's a helpful color. That's all I have. Thank you.

Speaker Change: Okay. That's helpful color, that's all I have thank you.

Speaker Change: Thanks, Mike.

Natalie Schoolcraft: That concludes today's question-and-answer session. I'd like to turn the call back to Natalie Schoolcraft for closing remarks.

Michael David Zaremski: That concludes today's question and answer session I would like to turn the call back to Natalie Schoolcraft for closing remarks.

Natalie Schoolcraft: Thank you everyone for your questions, for participating in our conference call, and for your continued interest in and support of Skyward Specialty. I am available after the call to answer any additional questions that you may have. We look forward to speaking with you again on our second quarter earnings call. Thank you, and have a wonderful day.

Natalie Schoolcraft: Thanks, everyone for your questions for participating in our conference call and for your continued interest in and support of private investor.

Speaker Change: And now we'll open the call to answer any additional questions that you may have as far to speaking with you again on our second quarter earnings call. Thank you and have a wonderful day.

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

Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.

Operator: [music].