Q1 2024 RLI Corp Earnings Call

Operator: Good morning and welcome to the RLI Corp first quarter earnings teleconference. After management's prepared remarks, we will open the conference up for questions and answer.

Good morning, and welcome to the call.

First quarter teleconference. After management's prepared remarks, we were on the call.

A question and answer before we get started let me remind us.

Operator: Before we get started, let me remind everyone that through the course of the teleconference, RLI management may make comments that reflect their intentions, beliefs, or expectations for the future. As always, these forward-looking statements are subject to certain factors and uncertainties, which could cause actual results to differ materially. Please refer to the risk factors described in the company's various SEC filings, including in the annual report on the form 10k as supplemented by forms 10q, all of which should be reviewed carefully.

During the course of the teleconference.

Management.

Common stock reflect our intentions beliefs or expectations for the pizza.

These forward looking statements are subject to certain uncertainties.

Uncertainties, which could cause actual results to differ materially. Please refer to the risk platform described in the companys various SEC filings.

In the annual report on the Form 10-K as supplemented in the forms 10-Q, all of which should be reviewed carefully. The company has filed a form 8-K with the securities and Exchange Commission.

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

The press release announcing fourth quarter results during the call I'll outline management, maybe flat to operating on.

Adding posture for operations, which are non-GAAP measures of financial results I'll I'll always operating earnings.

Yeah full operations consist of net earnings after the elimination of after tax realized gains or losses, and after tax unrealized gains or losses on equity securities.

Operator: RLI's management believes these measures are useful in engaging core operating performance across reporting periods but may not be comparable to other companies' definitions or operating earnings. The form 8k contains a reconciliation between operating earnings and net earnings. The form 8k and press release are available on the company's website at www.rlicorp.com. I will now turn this conference call to RLI's Chief Investment Officer and Treasurer, Mr. Aaron Diefenfow

Management believes these measures are useful in gauging core operating performance across reporting periods, but may not be comparable to other companies' definitions of operating earnings.

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

Speaker Change: The form 8-K and press release are available at the company's website at Www Dot all all all I called Dot Com I will now pass this conference to all all eyes, Chief investment Officer, and Treasurer, Mr. Aaron Nathan Fowler. Please go ahead.

Aaron Paul Diefenthaler: Thank you, Candace. Good morning, everyone.

Speaker Change: Thank you Candice good morning, everyone. Thanks for joining our earnings call covering the first quarter of 2024.

Aaron Paul Diefenthaler: Thanks for joining RLI's earnings call covering the first quarter of 2024. We have the usual team assembled, including Craig Kliethermes, President and CEO, Jen Klobnak, Chief Operating Officer, and Todd Bryant, Chief Financial Officer. We will follow the same cadence as in prior quarters, where Craig will kick things off with some initial thoughts, Todd will run down the financial results for the quarter, and Jen will offer some commentary on market conditions and our product portfolio. The operator will then open the line for questions, and Craig will close it.

Speaker Change: We have the usual team assembled including critically permits president and CEO, John <unk>, Chief Operating Officer, Todd Bryant Chief Financial Officer.

Speaker Change: We will follow the same cadence as in prior quarters, where Craig will kick things off with some initial thoughts Todd.

Todd Wayne Bryant: Todd will run down the financial results for the quarter.

Todd Wayne Bryant: And Jen will offer some commentary on market conditions and our product portfolio.

Todd Wayne Bryant: Operator will then open the line for questions and Craig will close Craig.

Craig William Kliethermes: Thank you, Aaron, and good morning, everyone.

Craig: Thank you Erin and good morning, everyone. We're off to a solid start for 2024 with double digit growth and operating profitability across all of our reporting segments.

Craig William Kliethermes: We're off to a solid start for 2024 with double-digit growth and underwriting profitability across all of our reporting sectors, which Todd and Jen will go into in a minute. We continue to lean.

Craig: As Todd and John will go into in a minute, we continue to medium and the opportunities where we have the expertise and track record to differentiate ourselves.

Craig William Kliethermes: into opportunities where we have the expertise and track record to differentiate ourselves. However, we remain cautious where the risks are more dynamic.

Craig: We remain cautious where the risks are more dynamic difficult to quantify and where we choose to temper volatility to the bottom line.

Craig William Kliethermes: are more dynamic, difficult to quantify, or where we choose to temper the volatility to the bottom line. I will let Todd and Jen go into more detail on the financials and the market in general. Todd, it's all yours. Thanks, Craig. Good morning, everyone.

Craig: I will let Todd and John go into more detail on financials and the market General Todd Soyars. Thanks, Greg Good morning, everyone.

Todd Wayne Bryant: Yesterday, we reported first quarter operating earnings of $1.89 per share, aided by strong underwriting performance and continued growth and investment. Overall, we posted a combined ratio of 78.5 for the quarter and grew top line 13% with nearly all products contributing to growth. Investment income advanced 21% in the period as book yields and our invested asset base continued to grow. Operating cash flow remains supportive at $70 million for the quarter.

Greg: Yesterday, we reported first quarter operating earnings of $1 89 per share.

Todd Wayne Bryant: Aided by a strong underwriting performance and continued growth in investment income overall.

Todd Wayne Bryant: Overall, we posted a combined ratio of $78 five for the quarter and grew top line 13%.

Todd Wayne Bryant: Nearly all products contributing to growth.

Todd Wayne Bryant: Investment income advanced 21% in the period.

Todd Wayne Bryant: As book yields in our invested asset base continued to grow.

Todd Wayne Bryant: Operating cash flow remained supportive at $70 million for the quarter.

Todd Wayne Bryant: Net earnings per share were $2.77 for the quarter, favorably impacted by realized and unrealized gains recorded on the investment portfolio. Realized gains totaled $6 million, while unrealized gains on the equity portfolio totaled $45 million. Fluctant levels of unrealized gains and losses on the equity portfolio impact the comparison of net earnings between periods as mentioned on prior calls. From an underwriting income perspective, the quarter's 78.5% combined ratio compares to 77.9% reported last year.

Todd Wayne Bryant: Net earnings per share were $2 77 for the quarter.

Todd Wayne Bryant: Favourably impacted by realized and unrealized gains recorded on the investment portfolio.

Realized gains totaled $6 million, while unrealized gains on the equity portfolio totaled $45 million.

Todd Wayne Bryant: Fluctuating levels of unrealized gains and losses on the equity portfolio <unk>.

Todd Wayne Bryant: Impacts the comparison of net earnings between periods.

Todd Wayne Bryant: As mentioned on prior calls.

Todd Wayne Bryant: From an underwriting income perspective quarter $78 five combined ratio comparison to 77 nine reported last year.

Todd Wayne Bryant: Our loss ratio was up 2.7 points to 39.9 as storm losses were higher, and although favorable development on prior years was positive, the overall reserve release was down on a comparative basis, first quarter last year. Storm losses totaled $12 million and a quarter and were almost entirely contained within the property sales. They added 9 points to the property segments loss ratio versus 4 points last year. The nutritional losses in this segment remain very low and are spread across a much higher revenue band.

Todd Wayne Bryant: Loss ratio was up two seven points to $39 nine a storm losses were higher and although favorable development on prior years was positive. The overall reserve release was down on a comparative basis, the first quarter last year.

Todd Wayne Bryant: Storm losses totaled $12 million in the quarter and were almost entirely contained within the property segment.

Todd Wayne Bryant: Storm losses added nine points to the property segments loss ratio versus four last year.

Todd Wayne Bryant: Losses in this segment remained very low and we're spread across a much higher revenue base.

Todd Wayne Bryant: From a prior year's reserves perspective, all three segments benefited from favorable development, and casually posted 18 million of favorable loss emergence across a number of product lines and over multiple accidents. Notable products include General Liability, Professional Liability, and Umbrella.

Todd Wayne Bryant: From a prior year's reserves perspective, all three segments benefited from favorable development.

Casualty posted $18 million of favorable loss emergence across a number of product lines and over multiple accident years.

Todd Wayne Bryant: Notable products.

Todd Wayne Bryant: General liability professional liability and umbrella.

Todd Wayne Bryant: Property experienced $19 million in favorable development as marine, E&S, and admitted property lines posted loss reduction. However, we did not revise our estimate for Maui wildfire losses, which remain at $61 million net of reinsurance and inclusive of reinstatement. For surety, favorable reserve development was $5 million, modestly above last year's level, which explains the majority of the decrease in that segment's loss. On the expense front, compared to last year, our expense ratio decreased 2.1 points.

Todd Wayne Bryant: Property experienced $19 million in favorable development as marine E&S and admitted property lines.

Todd Wayne Bryant: The loss reductions.

Todd Wayne Bryant: We did not revise our estimate for Maui wildfire losses, which for maintenance $61 million net of reinsurance and inclusive of reinstatement premium for surety favorable reserve development was 5 million modestly above last year's level, which explains the majority of the decrease in that segment's loss ratio.

Todd Wayne Bryant: On the expense front compared to last year, our expense ratio decreased two one points. This ratio is benefiting from our significant increase in revenue most notably within the property segment, we continue to invest in people and technology to support growth and enhance the customer experience.

Todd Wayne Bryant: This ratio is benefiting from our significant increase in revenue, most notably within the property. We continue to invest in people and technology to support growth and enhance the customer experience. Notice that retirement accruals were higher than the quarter, reflective of solid financial achievement and investment that we have been making in our associate owners over the last several years. From a segment perspective, there is one item to highlight.

Todd Wayne Bryant: Bonus and retirement accruals were higher in the quarter.

Todd Wayne Bryant: Selective of solid financially.

Todd Wayne Bryant: An investment we've been making in our associate owners over the last several years.

Todd Wayne Bryant: From a segment perspective, there is one item to highlight our surety we recorded $2 million of reinsurance reinstatement premiums related related to increased reserves on a prior period loss.

Todd Wayne Bryant: We recorded $2 million in reinsurance reinstatement premiums related to increased reserves on a prior period loss. These premiums are fully earned as recorded and result in lower net premiums earned from a trend perspective. These elevated seated premiums earned adversely impact the expense ratio compared, overall.

These premiums are fully earned as recorded and result in lower net premiums earned from a trend perspective. These elevated seeded premiums earned adversely impact the expense ratio comparison on an overall basis the expense ratio impacted muted, but for sure. The result is a five point increase in the <unk>.

Todd Wayne Bryant: The expense ratio impact is muted, but for sure, the result is a five-point increase in the expense ratio for the current period. Turning to investments, this was a quarter where equities were the largest contributor to a 1.8% total return. For us, Bond still managed a modestly positive result, as yield overcame declines in bond prices. Our strategy around Newport purchase activity has remained unchanged, with a focus on investment-grade fixed income. We are still finding solid opportunities to add high-quality positions to Creighton-Tabooki.

Todd Wayne Bryant: Hence ratio for the current period.

Todd Wayne Bryant: Turning to investments it was a quarter, where equities were the largest contributor contributor to a one 8% total return.

Todd Wayne Bryant: <unk> bonds still managed a modestly positive result at.

Todd Wayne Bryant: As yield overcame declines in bond prices.

Todd Wayne Bryant: Our strategy around new purchase activity has remained unchanged with our focus on investment grade fixed income we.

Todd Wayne Bryant: We are still finding solid opportunities to add high quality positions.

Jennifer Leigh Klobnak: In the quarter, purchase yields averaged 4.9 percent, and we are well positioned to take advantage of wider credit spreads or even lower inequities should that transpire. In regard to investing earnings, the contribution from Prime was $4.8 million compared to $3.9 million in the same period last year. Although net earnings were up in the quarter, the recent decline in bond prices weighed on Q1 comprehensively, which came in at $2.50 per share. Taking that comprehensive view, book value per share was up a respectable 8% to $33, with Adjusting Forgiveness. All in all, a very good quarter and a strong start to the year. And with that, I'll turn the call over to Jen. Thank you, Todd.

Todd Wayne Bryant: Accretive to book yield.

Todd Wayne Bryant: In the quarter purchase yields averaged four 9%.

Todd Wayne Bryant: And we are well positioned to take advantage of wider credit spreads or a new lower in equities showed that transpire.

Todd Wayne Bryant: In regards to invest the earnings contribution from Prime was $4 8 million compared to $3 9 million in the same period last year.

Todd Wayne Bryant: Although net earnings were up in the quarter. The recent decline in bond prices weighed on Q1 comprehensive earnings which came in at $2 50 per share.

Todd Wayne Bryant: With that context comprehensive view book value per share was up a respectable 8% to $33 when adjusting for dividends.

Todd Wayne Bryant: All in all a very good quarter and strong start to the year and with that I will turn the call over to Jim. Thank you Todd.

Jennifer Leigh Klobnak: I'll jump right into segment results. Property premiums grew 14% in the quarter. E&S property once again rose to the increase with 15% growth in premium and a 19% increase in risk. The rate increases over the last few years have made a positive impact on our bottom line as the premium earns through. During the first quarter, we continued to grow through rates, while our hurricane exposure decreased a bit. However, competition has resurfaced in the hurricane market. While rates were still up 25% in the quarter, the increases are slowing.

Jim: I'm afraid in the segment results.

Jim: Premiums grew 14% in the quarter.

Jim: DNS property once again drove the increase with 15% growth in premium and a 19% increase.

Jim: The rate increases over the last few years have made a positive impact on our bottom line as the premium earnings stream.

Jim: During the first quarter, we continued to grow through rate, while our hurricane exposure has decreased.

Jim: Competition is resurface in the hurricane markets.

Jim: While rates were still up 25% in Macquarie the increases are slowly.

Jennifer Leigh Klobnak: Our competitors, particularly the MGA's utilizing voice capacity, have become more aggressive. They are increasing window deployment, which reduces the number of carriers needed to participate on later accounts, and are more aggressively pricing business. For our underwriters, new business is more difficult to win, although we continue to achieve rates above our renewal book on those accounts that we buy in. With an elevated hurricane forecast, the market is tenuous and could easily restrict capacity or coverage if significant landfalling storms occur this season. We stand ready to assist our policyholders if that happens and will continue to adapt to changing market conditions. All other property businesses are also great.

Jim: Our competitors, particularly the MGA utilizing voice capacity and become more aggressive.

Jim: They are increasing limit deployment, which reduces the number of carriers need to participate on their accounts and more aggressively pricing business.

Jim: Our underwriters new business is more difficult to win although we continue to achieve rate above our original book on those accounts that were buying.

Jim: With an elevated hurricane forecast the marketing 10 minutes.

Jim: Easily restrict capacity or coverage a significant land falling storm occurred in season.

Jim: We stand ready to assist our policyholders if that happens we will continue to adapt to changing market conditions.

Jim: All other property businesses are also growing.

Jennifer Leigh Klobnak: Generally, submissions are up double digits. Our Hawaii homeowners book continues to grow due to our high level of service and due to several select competitors pulling back from the market. We remain focused on resolving claims from the Lahaina wildfire and have closed over 70% of reported claims as of the end of the first quarter. In marine, we continue to push rates and achieve the 6% increase in the first quarter, with premium growth largely attributed to inland marine, freight recession, and some underwriting adjustments creating headwinds for our ocean marine business. We've been in front of all our property producers and continue to be very responsive.

Jim: Generally submissions are up double digits.

Jim: Our Hawaii homeowners book continues to grow due to our high level of service and due to several select competitors pulling back from the market.

Jim: We remain focused on resolving claims from them within a wildfire and have closed over 70% of reported claims as of the end of the first quarter.

Jim: In Marine we continue to push rate and achieved a 6% increase in the first quarter with premium growth largely attributed to inventory.

Jim: A freight recession, and some underwriting adjustments created a headwind for our ocean Marine business.

Jim: We've been staying in front of all of our property producers and continue to be very responsive as a result, we've been rewarded with profitable growth opportunities.

Jennifer Leigh Klobnak: As a result, we've been rewarded with profitable growth opportunities. Surely gross written premium grew by 12% this quarter. Although all areas of surety contributed, contract led the way.

Surety gross written premium grew by 12% this quarter.

Jim: Although all areas of surety contributed contract led the way.

Jennifer Leigh Klobnak: Overall growth is being driven by elevated construction materials costs, growing our expertise in various commercial fueling segments, and investing in our people to ensure a high level of service. Surety remains highly competitive, even though there have been increased industry losses in both commercial and contract surety. However, we are not seeing increased frequency. In fact, claim counts are flat.

Jim: Overall growth driven by elevated construction material costs.

Jim: Our expertise in various commercial surety segments and investing in our people to ensure a high level of service.

Jim: Surety remains highly dependent even though there have been increased industry losses in both commercial and contract surety.

Jim: We are not seeing increased frequency in fact claim counts are flat.

Jennifer Leigh Klobnak: So we have seen a couple of larger claims during this market cycle. TAB mentioned that we adjusted one loss reserve that triggered a re-insurance re-estatement premium for the quarter. Despite this loss, our surety portfolio remains profitable and is well positioned. We have grown more slowly than the industry as we focused on underwriting and risk selection during this extended period of economic uncertainty. We have some momentum from investments we've made in underwriters, producer relationships, and capabilities, and anticipate further growth where it makes sense in this segment. In the cashier segment, premiums grew 13% while rates were up 7%.

Jim: We have seen a couple of larger claims during this market cycle.

Jim: I've mentioned that the adjusted one loss reserve are triggered reinsurance reinstatement premiums for the quarter.

Jim: Despite this loss our surety portfolio remains profitable and is well positioned.

Jim: We have grown more slowly than the industry as we focus on underwriting and risk selection. During this extended period of economic uncertainty.

Jim: We have some momentum from investments, we've made and underwriters producer relationships and capabilities and anticipate further growth where it makes sense in this segment.

And the casualty segment premium grew 13% while rates were up 7%.

Jennifer Leigh Klobnak: This was led by Personal Umbrella, which grew 33%, including a 13% rate increase. The personalized primary market continues to be impacted by changes in underwriting appetite, which has increased the demand for our standalone personal umbrella products. We monitor our growth closely in terms of risk characteristics like geography to ensure we maintain a balanced risk profile. We have also enhanced digital capabilities for our producers and insurers, resulting in new business and improving our retention ratio. These actions seem to be working, and we continue to experience a lot of momentum in this book. Transportation premiums are 27%, with submissions up 8%.

Jim: This was led by personal umbrella, which grew 33%, including a 13% rate increase.

Jim: The personal lines primary market continues to be impacted by changes in underwriting appetite, which has increased the demand for our standalone personal umbrella products.

Jim: We monitor our growth closely in terms of risk characteristics like geography to ensure we maintain a balanced risk profile.

Jim: We have also enhanced digital capabilities for our producers and insurance, resulting in new business and improving our retention ratio.

Jim: These actions seem to be working and we continue to experience a lot of momentum in this book.

Jim: Transportation premiums grew 27% with submissions up 8%.

Jennifer Leigh Klobnak: Some of the growth was explained by one large trucking account that renewed early this quarter. With the adverse loss development reported by the industry, we have observed some competitors introducing underwriting changes. This is giving customers a chance to shop.

Jim: Some of the growth was explained by one large trucking accounts that renewed early this quarter.

Jim: With the adverse loss development reported by the industry, we have observed some competitors introducing underwriting changes.

Jim: This is causing accounts to shop.

Jennifer Leigh Klobnak: Existing customers appreciate our loss control service and claim expertise, which has resulted in a steady reno retention ratio. Because risk selection is vital, we carefully choose which accounts to spend time on and are typically successful when we decide to issue a post. With elevated severity for this class in the industry, we know it's important to continue pushing the boundaries. We achieved a 9% rate increase for the quarter, a similar level to what we have attained in each of the last several years. Premiums are 6% for our E&F casualty brokerage business. This includes primary and excess liability coverage for the concentration in the construction industry. However, contractors are still experiencing issues with financing and the need to extend projects.

Jim: Existing customers appreciate our loss control service and claim expertise, which has resulted in a steady renewal retention ratio.

Jim: Because risk selection and vital we carefully choose which accounts and timeline and are typically successful when we decided to issue a quote.

Jim: With elevated severity for this class in the industry, we know what's important to continue pushing rates.

Jim: She is a 9% rate increase for the quarter a similar level to what we have attained in each of the last several years.

Jim: Premiums grew 6% for E&S casualty brokerage business. This includes primary and excess liability coverage with a concentration in the construction industry.

Jim: Contractors are still experiencing issues with financing and the need to extend projects. This has created opportunities for us as we individually evaluate and carefully select risk.

Jennifer Leigh Klobnak: This has created opportunities for us as we individually evaluate and carefully select. Several carriers have reported adverse loss development for general liability and have referenced construction businesses. We have not seen this trend emerge in our own business but are aware that claims are taking more time to resolve. This data point, in addition to increased severity in the industry, has resulted in an even more cautious approach to initial loss estimates and in our reserving analysis.

Jim: Several carriers have reported adverse loss development for general liability and have referenced construction business. We have not seen this trend emerge in our own business, but are aware that claims are taking more time to resolve this.

Jim: This data point in addition to increased severity in the industry as resulted in an even more cautious approach and initial loss estimates.

Jim: And in our reserving analysis.

Jennifer Leigh Klobnak: Some of our competitors are taking underwriting actions based on their results, but we continue to see less disciplined markets who are buying the business to meet top-line goals. We have also encountered youth carriers, and MGAs, in particular, that are hoping to take advantage of the E&S market momentum. We have served the construction market with liability coverage for decades and will continue to adjust to these changing market conditions as needed and remain disciplined in our approach.

Jim: Some of our competitors are taking underwriting actions based on their results, but we continue to see less disciplined markets, who are buying the business to be topline goals.

Jim: We've also encountered new carriers and the MTA is in particular that are moving to take advantage of the E&S market momentum.

Jim: We have serviced the construction market with liability coverages for decades, and will continue to adjust to these changing market conditions as needed and remain disciplined in our approach.

Jennifer Leigh Klobnak: One area of our product portfolio that continues to feel market pressure is our executive products group, which includes our directors and officers business. Premium declined by 8% with rate decreases becoming more moderate at negative 3%. The rate decreases are concentrated in public company professional liability coverages, which represents about a third of our book.

One area of our product portfolio that continues to fuel market pressure as our executive products group, which includes our directors and officers business pre.

Jim: Premium declined by 8% with rate decreases becoming more moderate at negative 3%.

Jim: The rate decreases are concentrated in public company professional liability coverages, which represents about a third of our book.

Operator: This quarter was marked by consistent growth across all three segments. We capitalized on several new business opportunities due to our strong relationships, which we continued to invest in, and enjoyed productive in-person visits with many of our producer partners during the quarter. We obtained rate increases on almost all of our coverages. Considering claim counts increase at a much slower pace than premiums, loss activities were manageable. Developing and connecting our people has resulted in new partnerships and opportunities to support our sustainable business model.

This quarter was marked by consistent growth across all three segments, we capitalized on several new business opportunities due to our strong relationships, which we continue to invest in and enjoy productive in person visits with many of our feelings are partners during the quarter.

Jim: We obtained rate increases on almost all of our coverages.

Jim: Considering claim counts increase at a much slower pace than premium loss activities with manageable.

Jim: Developing and connecting our people have resulted in new partnerships and opportunities to support our sustainable business model.

Operator: Although competition remains persistent in a number of the markets we participate in, we started the year with strong momentum and see opportunity for continued profitable growth in all three of our product segments. Now I'll turn the call back over to the moderator to open it up for questions.

Jim: The competition remains persistent in the number of the markets we participate in.

Jim: Started the year with strong momentum and see opportunity for continued profitable growth in all three of our product segments.

Speaker Change: Now I'll turn the call back over to the moderator to open it up for questions.

Operator: The question and answer session will begin at this time. If you are using a speakerphone, please pick up the handset before pressing any numbers.

Speaker Change: Thank you.

Speaker Change: The question and answer session will begin at this time, if you are using a speakerphone. Please pick up the handset before pressing any numbers should you have a question. Please press star one on your telephone keypad. If you wish to withdraw your question. Please press star two.

Operator: Should you have a question, please press star one on your telephone keypad. If you wish to withdraw your question, please press star two. Your questions will be taken in order that they are received. Please stand by for our first question. Our first question comes from the line of Gregory Peters of Raymond James. Your line is now open, please go ahead.

Your questions will be taken in a without that.

Speaker Change: Theocracy pay standby whilst last question.

Speaker Change: Okay.

Speaker Change: Our first question comes from the line of quite repeaters of Raymond James Your line is now open. Please go ahead.

Jennifer Leigh Klobnak: Okay, good morning everyone. I wanted to focus one of the questions on the casualty top line result where you provided some detail. I'm curious about the personal umbrella piece because that seems to be growing quite nicely. Can you give us a sense of what loss frequency and severity looks like for that business considering the growth that you're generating?

Speaker Change: Okay. Good morning, everyone.

Quite Repeater: Hi, I wanted to focus one of the questions on the casualty topline result, where I know you provided some detail I'm curious about the personal umbrella piece because that seems to be growing quite nicely can you give us a sense of what loss frequency and severity looks like for that business.

Quite Repeater: Considering the growth that you're generating.

Jennifer Leigh Klobnak: Sure, thank you, Greg. First Umbrella has been growing, just a little bit of background. As you read in the news all the time, there are primary carriers that are making changes in different regions of the country. And when they do that, they stop covering some of those underlying coverages, which opens it up for a standalone product to enter. So we've been solving that need for our producers and our insurers for several years now with notable growth.

Speaker Change: Sure. Thank you Brad.

Speaker Change: Personal umbrella has been growing just a little bit of background as you read in the news all the time, they're primary carriers that are making changes.

Speaker Change: Different regions of the country and when they do that.

Covering some of those underlying coverages, which opens it up for a standalone product to enter so we've been solving that need for our producers and our insurers for several years now with a notable growth.

Jennifer Leigh Klobnak: More recently, we were able to receive a couple of approvals for some rate increases that were approved by the state. And so that has bumped up our rate change in the last couple of quarters. And we continue to make sure that we have adequate rates. When you look at the loss trend, the loss frequency has actually remained fairly stable in that book of business. We are watching severity trends. When we do our analysis, we use loss trend assumptions that tend to reflect industry results.

Speaker Change: And we were able to receive a couple over approvals for some rate increases that are approved by the state and so that has bumped up our rate change in the last couple of quarters.

Speaker Change: And they continue to make sure that we have adequate rate.

Speaker Change: When you look at the loss trend.

Speaker Change: Frequency has actually remained fairly stable in that book of business.

Speaker Change: I'm watching severity trends when we do our analysis, we use a loss trend assumptions that tend to reflect industry results, but we have found in our own data, but our results tend to be a bit below what the loss trends are in the industry, which we find very attractive. However, we're going to be prudent in our analysis.

Jennifer Leigh Klobnak: But we have found in our own data that our results tend to be a bit below what the loss trends are in the industry, which we find very attractive. However, we're going to be prudent in our analysis of what we're doing and our rate needs. And so we use generally industry loss trends. So for us, you know, we're monitoring the growth. Whenever there's growth, you need to pay attention to that new business because you don't know it as well.

Speaker Change: And so what we're doing in our rate need and so we generally industry loss trends so.

Speaker Change: So for us.

Speaker Change: Monitoring the growth whenever theres growth.

Speaker Change: Pay attention to that new business, because you don't know what as well. So we are slightly revising that book in every which way you can imagine.

Jennifer Leigh Klobnak: So we are slicing and dicing that book in every way you can imagine and continuing to do a rate analysis by state to make sure that we are up to date on what we need to cover exposure. And so that's kind of what the trend has been. And we think that with the continued changes in the market, we will continue to see some growth in that area.

Speaker Change: Turning to view.

Speaker Change: Dean analysis by state to make sure that we are up to date on what we need to cover exposure.

And so that's kind of what the trend has been and we think that with the continued changes in the market. We will continue to see some growth in that area.

Speaker Change: Okay.

Todd Wayne Bryant: Thanks for the detail. I wanted to pivot to the expense ratio piece. I didn't seem to move much with casualty, but there was some movement in the corridor and property. Is there anything worth revisiting in the Q&A portion of this call to talk to us about trends and the expense ratio?

Speaker Change: Thanks for the detail I.

Speaker Change: I wanted to pivot to the expense ratio piece.

I didnt seem to move much with casualty, but there was some movement in the quarter and property or anything.

Speaker Change: Worth revisiting in the Q&A portion of this call to talk to us about trends in the expense ratio.

Todd Wayne Bryant: Greg, it's Tom. I don't think there necessarily is, particularly with respect to property. I mean, there is, you know, benefit there from a volume perspective, certainly, in the growth we're seeing in revenue. You really notice that in the property expense ratio. I did talk a bit about, on an overall basis, an increase in some of the incentive-related amounts that will affect all three segments. But I don't think there's anything of note, really, trend-wise, in that property segment outside of benefit from quite a bit from the increase in enrollment.

Speaker Change: Greg It's fine I don't think they're necessarily as particularly with respect to property.

Greg: There is a benefit there from a volume perspective, certainly the growth we're seeing in revenue.

Greg: We noticed that in the property expense ratio, we did I did talk a bit about on an overall basis.

Greg: An increase in some of the incentive related amounts.

Greg: That will affect all three segments.

Greg: But I don't think Theres anything of note really trend wise in that in that property segment outside of benefiting quite a bit from.

Greg: The increase in revenue.

Greg: Okay.

Jennifer Leigh Klobnak: I guess the last question I'll have is just, you know, I know some pieces of your reinsurance came up for renewal on April 1st, and you had another piece in June. Just give us an updated perspective of how retentions look for this year and how your reinsurance costs are shaping up.

Speaker Change: I guess the last question I will have is just you know I know some pieces of your reinsurance came up for renewal on April 1st you had another piece on June <unk>.

Speaker Change: Just give us an updated perspective of how retention is look for this year and how your reinsurance costs are shaping up.

Speaker Change: Yeah.

Jennifer Leigh Klobnak: Sure, Greg. This is Jen.

Speaker Change: Sure Greg This is Jim.

Jennifer Leigh Klobnak: We did have a couple of renewals on April 1st. I would say, overall, the reinsurance market is becoming a little more palatable. You know, expectations have been managed.

Jim: Didn't have a couple of renewals on April 1st I would say overall, the reinsurance market is becoming a little more palatable.

Jim: You know expectations have been managed our reinsurers are relaxing just a bit. So we are able to navigate the market a little better than months ending January 23 for example.

Jennifer Leigh Klobnak: Reinsurers are relaxing just a bit, so we are able to navigate the market a little better than, let's say, January 1st of 23, for example, which is nice to see. I think the market is differentiating a bit by coverage, so where there have been losses, they're pushing, and it also depends on what our results have been. So, on some of our renewals, you know, we are able to differentiate and maybe get a better result.

Jim: Which is nice to see I think the market is differentiating a bit by coverage, so where there have been lots of as they're pushing them and it also depends on what our results have been so some of our renewals we are able to differentiate and maybe get a better result.

Jennifer Leigh Klobnak: And we balance that with a kind of pressure from industry results as well. For April 1st, we did have a surety renewal. The surety reinsurance market has become fairly hard. I know that started at least on January 1st, but probably before that, to some extent.

Jim: We balance that with kind of pressure from industry results as well mm.

Jim: For April 1st we did have a surety.

Jim: The surety reinsurance market has become fairly hard I know that started at least in January one, but probably before that to some extent.

Jennifer Leigh Klobnak: Again, I referenced some industry loss activity there, and so that is pressuring reinsurance placements. We actually increased our retention on surety, which we have been thinking about for quite some time, but in this case, the economics made sense to increase it. And so we did that, and we are paying a bit more, and so that renewal has come through successfully. We also put in place a professional liability insurance policy that was almost a non-event, which was good to see. We've had good results with that book as well.

Jim: And I referenced some industry loss activity, there and so that is pressuring our reinsurance placements.

Jim: We actually increased our retention on surety, which we had been thinking about for quite some time, but in.

Jim: In this case, the economics made sense to increase it and so we did that and we are paying a bit more.

Jim: And so that renewal has come through.

Successfully we also placed a professional liability treaty that was almost none of that which was good to see we had good results in that book as well.

Jennifer Leigh Klobnak: And then we have a few in the hopper that we're working on now. So we have a marine renewal, we have our DNO treaty, and we have our earthquake-focused treaty that we're working on now. And we're in the process, so we'll see how that goes. But, generally speaking, I find the insurance market to be more reasonable.

Jim: We have a few in the hopper that we're working on now so we have a marine renewal, we haven't our D&O treaty and we have our earthquake focus treaty that we're working on now and we're in the process. So we'll see how that goes but generally speaking I find in the reinsurance market to be more reasonable I think the cost when you think about the cost for the year, you'll notice for example that the proper.

Jennifer Leigh Klobnak: I think the cost, when you think about the cost for the year, you'll notice, for example, that the property retention of premiums for the first quarter of 24 was lower than that in 23. The big driver there was that, on June 1st of 2024, excuse me, we purchased an additional $150 million layer of cat limit on top of our treaty. And so that was reflected, and will be reflected this quarter, but wasn't in existence last quarter.

<unk> retention of premiums for the first quarter of 24 was lower than that in 'twenty three the big driver. There was that June 1st of 'twenty 'twenty four 'twenty three excuse me, we purchased an additional $150 million layer of cat one on top of our treaty and so that was reflected as we expected this quarter, but wasn't in existence last first quarter.

Jennifer Leigh Klobnak: We also filled out a little bit more of our 58 million x 50 cat layer. And so costs are up a bit from that perspective, but generally speaking, we don't see a lot of rate change, a lot of rate change going forward in the insurance business. I think it'll be a more flat experience, hopefully. At least that's what we hope for.

Jim: We also filled out a little bit more about 58 million a 50 count later and so the costs are up a bit from that perspective.

Jim: But.

Jim: Generally speaking, we don't see a lot of rate change.

Jim: There's been a lot of rate change going forward in reinsurance and think it will be.

Jim: More flat.

Jim: Hopefully at least that's what we hope for.

Jim: Okay.

Jennifer Leigh Klobnak: Excellent detail. Just one quick follow-up. What's the surety retention moved up to? You said you thought about it, and you moved it up a little bit. What was that number? We moved it up to $5 million.

Speaker Change: Excellent detail just one quick follow up what's the surety retention moved up to you said you thought about it you moved it up a little bit what's what was that number.

Speaker Change: We moved it up to $5 million.

Speaker Change: Perfect. Thank you.

Jennifer Leigh Klobnak: Perfect. Thank you.

Speaker Change: Yep.

Speaker Change: Thank you Keith.

Operator: Your next question comes from the line of Andrew Andersen of Jefferies. Your lines are open, please go ahead.

Speaker Change: Your next question comes from the line of Andrew Anderson of Jefferies. Your line's open. Please go ahead.

Operator: Hey, good morning. I think I heard you mention increased conservatism in lost picks. Was that specific to Construction GL, or are you reflecting that across the casualty book? Because I think you mentioned a quarter ago an increase in picks. So is this another step up?

Andrew E. Andersen: Hey, good morning, I think I heard you mentioned increased conservatism in loss picks was that specific to construction G. L or are you reflecting that across the casualty book because I think you had mentioned a quarter ago and increased in pick. So is this another step up.

Todd Wayne Bryant: Hey Andrew, it's Tom. I think our approach tends to be cautious, or you can use the word conservative, not just in the construction side but in the broader sense. I think if you look at the underlying, loss ratio casually, it's not significantly different than what it was last year. But we are watching the tail on our excess. I mean, there's caution and just keeping an eye on those things, but not a significant change on an overall basis.

Andrew E. Andersen: Hey, Andrew It's Tom I think just that our approach.

Tom: Tends to be cautious where you can use the word conservative not just in the construction side, but in the broader sense I think if you look at the underlying.

Tom: Loss ratio on casualty is not significantly different from what it was last year, but we are watching the tail on our excess I mean, there's there's caution and just keeping an eye on those things, but not a significant change on a on an overall basis.

Jennifer Leigh Klobnak: Okay, thank you. And maybe just on casualty E&S flows. There's been a lot of industry commentary and kind of some numbers going around with regard to where we are in the cycle. Have you seen any kind of casualty E&S flows pick up in RLI's kind of bucket? Or how should we think about the nature of this segment? Yeah, I would say on the campus...

Speaker Change: Okay. Thank you and maybe just on casually E&S flows I mean, theres been a lot of industry commentary and kind of some numbers going around.

Speaker Change: With regards to where we are in the cycle have you seen kind of casualty E&S flows pick up into rois kind of bucket or how should we think about the nature of this segment.

Jennifer Leigh Klobnak: Yeah, I would say on the casual side, we have seen an increase in submissions. A lot of those are for habitational business, which we're not as, you know, we haven't leaned into as much. We think the habitational market is still a bit underpriced, so we have a fairly small portfolio of that.

Speaker Change: Yeah, I would say on the casualty side, we have seen an increase in submissions a lot of those are for habitation all business, which we're not.

Speaker Change: Yeah, we haven't leaned into as much you think the hesitation on market and settlement under priced so we haven't fairly small portfolio of that.

Jennifer Leigh Klobnak: The construction fees remain fairly competitive. You know, we're getting into better weather, so we'll see how that translates into more submissions. It also varies quite a bit by region. So there are certain regions where you travel and you see there's a lot of construction going on. Other regions, like here locally, are pretty quiet. So that does vary.

Speaker Change: <unk> remains a fairly competitive you know we're getting into a better weather. So we'll see how that.

Speaker Change: Translates into more submissions are it's also vary quite a bit by region. So there are certain regions, where you travel youll see theres a lot of construction going on other regions like here locally are pretty quiet.

Jennifer Leigh Klobnak: On the property side, we've also seen submissions move into the EMS space. A lot of that is, I'll say, non-wind, non-quake business. So it could be exposed a bit to that, but it's more focused on the Midwest and California wildfires and those other secondary perils that people talk about. More of that business has shifted into the EMS space, and we are taking advantage of that where it makes sense. And so the pricing there has moved towards our direction.

That does vary on the property side. We've also seen physicians move into the E&S space a lot of that is I'll say non <unk> non quake business. So.

Speaker Change: It could be.

Speaker Change: Exposed a bit to that but it's more focused on the mid west and California.

Speaker Change: Wildfire and other.

Speaker Change: Other secondary payrolls that people talk about that more of that business has shifted into the E&S space that we are taking advantage of that where it makes sense.

Speaker Change: And so the pricing there has moved towards our direction.

Operator: Thank you. Your next question comes from the line of Carol Chemiel of Citizens JPM. Your line is now open. Please go ahead.

Speaker Change: Thank you.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Cairo, She Meows all citizens J P. M. Your line is now open. Please go ahead.

Operator: Good morning. Thank you for all the details earlier. And I'm just going to follow up on this property retention rate. I think you said that it was correctly reflected this past quarter in terms of the 6-1 renewal. And so is that an indicator that it's a clean quarter and that this should be the go-forward rate for this retention rate?

Cairo: Good morning, Thank you for all the details.

Cairo: Earlier, and I'm, just going to follow up on this.

Cairo: <unk> retention rate I think you said that it was reflected.

Cairo: [noise] correctly this past quarter in terms of the.

Cairo: Six one renewal.

Cairo: And so it is is that an indicator that the.

Cairo: It's a clean quarter in that this should be the go forward rate for this retention rate.

Jennifer Leigh Klobnak: So you saw that really stand out in the third quarter of last year when we had a full quarter of that new layer of cap coverage. So this second quarter, you'll see there are two months where we have kind of the lower limits that we purchased a cap and one month of higher limits. So you'll see something in between for this quarter and then starting in the third quarter, it will be more flat, I would say, in terms of the rate of the reinsurance costs.

Cairo: So you saw that really stand out in the third quarter of last year. When you have a full quarter of that new layer of cap coverage. So this second quarter, you'll see there'll be two months, where we have kind of the lower limits that we purchase are counted one month of <unk> higher than that so you'll see something in between this quarter and then starting.

In the third quarter will be more flat I would say in terms of the rate that we're at.

Cairo: I'm gonna reinsurance costs.

Todd Wayne Bryant: One other thing there is you do, to Jim's point, really need to look over a longer time horizon, because we will get some movement between quarters, whether it's adding some additional reinsurance on top, or sometimes we'll have reinstatement premiums in a given quarter. So I think if you look at property over the last probably three or four years, it's been in that mid-70s net retention, net to growth. So sometimes we'll get a little volatility, to Jim's point, in a quarter, but look at it over that longer time horizon, and we can give you a good estimate. Okay. Thank you very much.

Speaker Change: One other thing one other thing there is you do to Jim's point really need to look over a longer time horizon, because we will get some movement between quarters, whether it's adding some additional reinsurance on top or sometimes will have reinstatement premiums in a given quarter. So I think if you look at property over the.

Last probably three or four years, it's been in that mid 70 net retention.

Speaker Change: Net to gross so sometimes we'll get a little volatility to Jim's point in a quarter, but look at it over a longer time horizon.

Speaker Change: He can give you a good estimation.

Speaker Change: Understood. Thank you very much.

Operator: I understand. Thank you very much.

Speaker Change: Thank you.

Speaker Change: Okay.

Operator: The next question comes from the line of Scott Heleniak, of RBC Capital Markets. Your line is now open, please go ahead.

Speaker Change: The next question comes from the line.

Speaker Change: Hello knock.

Speaker Change: Of RBC capital markets. Your line is now open. Please go ahead.

Jennifer Leigh Klobnak: Yes, good morning. First, I want to touch on property again. Can you just comment on your appetite for property right now? You mentioned the good growth in ENS property and the really strong rates still, but are you still seeing really good opportunities for property there? Are you viewing that differently than you did in 2023? Is it any less attractive?

Knock: Yes, good morning, I wanted to touch on property again, just can you just comment on your appetite for property right now you mentioned.

Knock: The good growth in the E&S property in the really strong rates. So but are you still seeing really good opportunities for property there.

Knock: Or are you viewing that differently than you did in 2023 is it is it any less attractive or how are you thinking about that for the the rest of 2024 as it seems like rates are.

Jennifer Leigh Klobnak: I would say we see a lot of great opportunity in the property market, so we should start with that. Yes, competition is returning, and it's making some waves. The NGA has some capacity back, and they feel like they have to use it very quickly, it seems like.

Knock: Strong, but maybe not quite as strong as last year.

Speaker Change: Yes. Good question, Scott I would say, we see a lot of great opportunity in the property market. So we should start with that.

Speaker Change: Yes competition is returning and it's it's making some ways yeah. The NGA to have some capacity back and they feel like they have to use them very quickly. It seems like so they do put out those larger limits.

Jennifer Leigh Klobnak: So they do put out those larger limits and are cutting some rates. And so we're in a competitive market. However, the starting point is very attractive.

Speaker Change: Letting some rates.

Speaker Change: And so we're in a competitive market. However, you know the starting point is very attractive. So we're focused on hanging onto our renewables and on making sure that we have authority at the underwriting desk to maneuver through this market the changing market that right now when we think about our appetite we have a number of bets.

Jennifer Leigh Klobnak: So we're focused on hanging on to our renewals and making sure that we have authority at the underwriting desk to maneuver through this changing market that we have. When we think about our appetite, we have a number of metrics that define our risk appetite in this space. We have plenty of room within our appetite in certain aspects, but we do recognize that there is a model change coming up, and so we use the RMS model at the underwriters' desk.

Speaker Change: Tricks that define our risk appetite in this space.

Have plenty of room within our appetite.

Speaker Change: In certain aspects, but we do recognize that there is a model change coming up and so we use the RMS model at the underwriters desk.

Jennifer Leigh Klobnak: That is increasing the view of risk going forward, and so we've already incorporated that new view into our exposure and how we look at the risk. And with that, we are being a little more conservative on growth from an exposure standpoint, and so most of our growth at this point in time is coming from rates. I do need to give market updates for property because the market is changing so quickly that I say that's what's happening right now, but in a couple months, as hurricane season begins, there could be a lot of changes that go on in the market. So that's kind of real-time info, and then next quarter I can provide another update.

Speaker Change: That is increasing the view of risk going forward and so we've already incorporated that into our exposure and how we look at the risks and with that we are being a little more conservative on growth from exposure standpoint, and so most of our growth at this point in time, it's coming from rate I do hate to give market updates for property because it's.

Speaker Change: Changing the market is changing so quickly that I say and that's what's happening right now, but in a couple of months as hurricane season begins it can be a lot of changes that go on in the market. So that's kind of a real time info and then the next quarter I can provide another update.

Jennifer Leigh Klobnak: I understood that. That's a helpful detail on how you're looking at that. I just wanted to ask, too, about the property reserve lease that was pretty significant in the quarter. I know you mentioned Marine E&S admitted, but was that just a true-up from some recent events? Was that spread over from several years or any more detail you can give on that? Because it was a little more significant than normal.

Okay. Understood then that's that's a helpful detail on how youre looking at that I. Just wanted to ask you about the property reserve release, there was pretty significant in the quarter. I know you mentioned marine E&S admit it but was that was that just a true up from some recent events was that just was that spread over from several several years.

Speaker Change: Or.

Speaker Change: Any more detail you can give.

Speaker Change: On that because it was just it was a little more significant than normal.

Todd Wayne Bryant: It was, this is Todd. It was larger, I would agree. I think, you know, Maureen is one, the commercial property is another.

Speaker Change: It was this is Todd it was larger I would agree I think marine is on the.

Todd Wayne Bryant: The commercial properties another.

Todd Wayne Bryant: The one thing I think we should think about as we head into the end of the year is that we're expecting, we put an IV&R up, and expecting that in the first quarter we're going to have some of those prior year losses reported to us. And I mentioned in my comments that it was just a very low non-cap. Corridor from that standpoint. So naturally, you end up with some relief just in the nature of very short-tailed products. So outside of that, there wasn't anything unusual, just really favorable loss experience, and the other thing.

Speaker Change: The one thing I think to think about it as we as we head into the end of the year.

Speaker Change: We're expecting.

Speaker Change: We put an IV in RF and expecting that.

Speaker Change: In the first quarter, we're going to have some of those prior year losses reported to us and I've mentioned.

Speaker Change: In my comments that it was just a very low.

Speaker Change: Non cat quarter.

Speaker Change: Quarter from that standpoint, so naturally you end up with some some relief just in the nature of various short tail products. So outside of that there wasn't anything.

Unusual just really favorable loss experience and the other thing to note is that Berry has grown a lot.

Todd Wayne Bryant: And the other thing to note is that burning has grown a lot, and the property component has, and so the dollar amounts are getting bigger. We're adjusting to that ourselves, seeing larger numbers. And so if the year has been good in terms of activity, loss activity, you know, larger numbers in that first quarter given that growth.

The property component has and so the dollar amounts are getting bigger we're adjusting to that ourselves are seeing larger numbers and so if the euro has been good in terms of activity lots of activity.

Speaker Change: Larger numbers in the first quarter given that growth.

Jennifer Leigh Klobnak: Okay, that makes sense. Just the last one, you mentioned in your comments about Hawaii. You said you're still seeing growth there, but you're seeing some competitors pull back. Is that mostly rate-driven growth for you? Are you still seeing that as kind of a growth opportunity for you over the next few years as you continue to see competitors pull back? Just anything you can kind of comment on that market now that markets have had a few quarters to adjust the velocity.

Speaker Change: Okay that makes sense and just a last one you mentioned in your comments about Hawaii or so you said youre still seeing growth. There are you seeing some competitors pull back.

Speaker Change: Is that mostly rate driven growth for you are you still seeing that as a kind of a growth opportunity for you over the next few years as you continue to see competitors pull back.

Speaker Change: Just anything you can kind of comment on that market now.

Speaker Change: Mark it's out a few quarters.

Jennifer Leigh Klobnak: Sure. So, in Hawaii, we cover homes as well as condos, and everything is admitted, so we have to go through the state and get some approvals. We've gotten some approvals and are waiting on others, and so a little bit of that growth is great, but the majority at this point in time is winning business from our amazing service by our local team, both on the underwriting and the claims side.

Speaker Change: Just the Gloucester.

Sure so in Hawaii recover homes about condos and everything is a minute. So we have to go through to the state and get some approvals. We got some approvals and are waiting on others and so a little bit of background is right, but the majority at this point in time is winning business from our amazing service by our local team.

Speaker Change: On the underwriting and the claim side, we've been really proactive in responding to our insurers in their time of need and that has translated into our producers wanting to give us more business as other markets are pulling back and so we look at that and manage.

Jennifer Leigh Klobnak: We've been really proactive in responding to our insurers and their times of need, and that has translated into our producers wanting to give us more business as other markets pull back. And so we look at that and manage how much business we're taking in, make sure that we are comfortable with the pricing and where things are located, and as long as it meets our appetite, then we've been taking on more risks as well.

Speaker Change: How much business, we're taking it to make sure that we are comfortable with the pricing.

Speaker Change: And where things are located and as long as it meets our appetite than we've been taking on more risks as well.

Operator: Okay, I got it. Thanks for the answers.

Speaker Change: Okay got it thanks for the answers.

Speaker Change: Yeah.

Thank you.

Operator: Your next question comes from the line of Fiona Diamond on behalf of William Blair. Your line is now open; please go ahead.

Speaker Change: Your next question comes from the line of Fiona Diamond with William Blair. Your line is now open. Please go ahead.

Operator: Hi, thank you. This is Fiona Unfer, Adam Klobber.

Fiona Diamond: Hi, Thank you Ms. Fiona on for Adam Klauber I was just wondering.

Todd Wayne Bryant: I was just wondering, going back to the development trends, is there any way you could expand upon or just give any commentary on the trend, how more recent accident years are trending, so like 22, 23, versus maybe some of the more, you know, 19, 20 years, and that's primarily focused on property and casualty. Just how the development of more recent accident years is trending compared to maybe more later years.

Fiona Diamond: Going back to the development trends.

Fiona Diamond: Are there any way you could.

Fiona Diamond: Third the pod are just give any commentary on that trend and how more recent accident years are trending so like 'twenty two 'twenty three versus maybe some of the more 1920 years.

Fiona Diamond: Yes, and that's.

Fiona Diamond: Primarily focused on property and casualty just how more recent accident your development is.

Fiona Diamond: Trending compared to maybe more later years that makes sense.

Todd Wayne Bryant: It does. I think if you look at the 2016 to 2019 years, which I know the industry has reported unfavorably there, we have yet to see that. So those were still favorable. However, 2020 was pretty flat. We had a little bit of adverse in the 21, but again, we're talking a couple million dollars, which we, The surety loss was a 21 accident year. So, 23 certainly makes up a decent portion of it when you think in terms of where property was so favorable, but it's pretty spread out. I don't think we're seeing, you know, much difference between accident years as developing favorably for the most part. Thank you.

And it does I think if you look at the 2016 to 2019 years, which I know the industry has reported.

Fiona Diamond: Favorable there we have yet to see that so those those were still favorable for us.

Fiona Diamond: <unk> was pretty flat.

Fiona Diamond: A little bit of adverse in in 'twenty, one, but again, we're talking a couple million dollars, which we are.

Fiona Diamond: The surety loss was a 21 accident year.

Fiona Diamond: So 23, certainly makes up a decent portion of it when do you think in terms of where property.

Fiona Diamond: So favorable but its pretty spread out I don't think we're seeing.

Fiona Diamond: Much difference between accident years is developing favorably for the most part.

Operator: Got it. Thank you. I appreciate that.

Got it thank you I appreciate that.

Operator: Your next question comes from the line of Meyer Shields of KBW. Your line is now open; please go ahead.

Sure.

Meyer Shields: Your next question comes from the line of masks Shields O K B W. Your line is now open. Please go ahead.

Jennifer Leigh Klobnak: Hi, this is Dean on behalf of Meyer. My first question was back to the premium growth and casualty lines. I've noticed a nice uptick in recent quarters in the premium growth, and I was wondering if that was more just rate driven or if your appetite has expanded potentially into different product lines or certain ones.

Hi, This is dean on Premier.

Dean: My first question was back to the premium growth in casualty lines I've noticed like a nice uptick in recent quarters and the premium growth and I was wondering if that was more just a rate driven or if.

Your appetite has expanded.

Potentially into different product lines or certain ones.

Jennifer Leigh Klobnak: Well, thanks for the question. I would say our rate has increased a bit. So in the first quarter of 24, overall, the casualty rate change was 7%, and in the fourth quarter of 23, it was 5%. So we're seeing a little bit more rate. A lot of that is mixed change with First Umbrella growing and getting a 13% rate increase. That explains the math there. The other part of the grove, I would say, is really taking advantage of market opportunities where they exist. So that's applicable to our previous discussion on First Umbrella.

Well. Thanks for the question I would say our rate has increased event. So in the first quarter of 'twenty four overall casualty rate change was 7% and.

Speaker Change: And in the fourth quarter of 23, 5%. So we're seeing a little bit more rate a lot of that mix.

Speaker Change: Mix changed with personal umbrella growing and getting a 13th celebrated great Plains. A map there are the other part of the probe I would say is really taking advantage of market opportunities where they exist. So that's applicable to our previous discussion on for some rollout.

Jennifer Leigh Klobnak: It's also applicable to where we're seeing regional opportunities in our construction growth, whether that's in the admitted smaller contractor space or the larger kind of mid-market, I'll call it, E&S contractors that we support. We see spotty growth in transportation. We happen to have it this quarter, but those can be chunky accounts. And so if you win one or if you lose one, that can make a big difference within a quarter. But over the long term, I think we see some potential there as well.

Speaker Change: So it sounds like a little to where we're seeing regional opportunities that are in construction, but whether thats in the admitted smaller contractor space or the merger.

Speaker Change: Mid market I'll call. It yes, our contractors that we support them, we see spotty growth in transportation and happen to have it this quarter, but those can be chunky accounts and so if you win one or if you lose one that can make a big difference within a quarter.

Speaker Change: Over the long term I think we see some potential there as well so I think it's a mix of rate and opportunity and just relying on our underwriters to make those solid underwriting decisions because they are all focused on making sure that we make an underwriting profit in the long term, we can pay our claims when they come up.

Jennifer Leigh Klobnak: So I think it's a mix of rate and opportunity and just relying on our underwriters to make those solid underwriting decisions because they're all focused on making sure that we make an underwriting profit for the long term so we can pay our claims when they come up.

Jennifer Leigh Klobnak: Yes, thank you. That's helpful. And my last one is back to property. Can you talk about maybe some non-raid actions that you've sort of gone through in the property book to address things like that severe convective storm and the non-catastrophe activity?

Speaker Change: Yes. Thank you that's helpful and my.

Speaker Change: My last one is back to the property can you talk about maybe some non rate actions that you.

Speaker Change: You've sort of gone through and the property back to sort of address like that severe convective storm in the non catastrophe activity.

Jennifer Leigh Klobnak: That's an interesting question. So I would say, outside of rates, we do focus on coverage. So we have a discussion between our underwriters and our claim staff. You know, we've had one-off fires collapse. We've had pipes burst. We've had a guy step on a pipe that burst then.

Speaker Change: Oh, let's see that's that's an interesting question. So I would say outside of rate. We do focus on coverage. So we have a discussion between our underwriters our claim staff we've had.

Speaker Change: One offs fires collapse them we've had.

Speaker Change: Burst, we had a guy step on a pipe that burst them. So we have these interesting scenarios that occur outside of wind and earthquake type of claim and we looked at each one of these I mean, you think about it is that scenario described in our form can be covered not covered and do we want to cover that army pricing for that.

Jennifer Leigh Klobnak: So we have these interesting scenarios that occur outside of wind or earthquake type claims. And we look at each one of these, and we think about, you know, is that scenario described in our form? Can we cover it, or not cover it? Do we want to cover that? And are we pricing for that? That goes back to what we call here the big you feedback loop, which is all about underwriting.

Speaker Change: So it goes back to what we call here, a big you feedback loop, which is all about underwriting.

Jennifer Leigh Klobnak: So we do look at the words and make sure that we describe things like water damage very carefully. And we have evolved those kinds of clauses over time. We also look at deductibles. How much should people retain of those losses versus how much should we cover? So those are a couple of the levers that we have adjusted.

Speaker Change: So we didn't look at the words and making sure that we described things like water damage very carefully and we have evolved those kind of clauses overtime also looked at deductibles.

I mean, how much should show people retain above losses versus how much you know should we cover so those are a couple of the levers that we have adjusted our I would say nothing material in that space. So we've made some minor adjustments to coverage and things of that nature over the last couple of years, we still see there's a need for more rate in the conversational space.

Jennifer Leigh Klobnak: I would say nothing material in that space, but we've made some minor adjustments to coverage and things of that nature over the last couple of years. We still see there's a need for more speed in those habitational spaces in the Midwest. A lot of people talk about the Midwest hail storms and things. We're here in the Midwest, so we see the events happen. And so there still needs to be more movement there before we would be willing to grow in this area too much.

Speaker Change: In the Midwest a lot of people talk about the Midwest Hailstorms. The thing we're here in the Midwest. So we see the events happen and so there's still going to be more movement, there before we'd like to grow in this area too much.

Speaker Change: I appreciate it thank you.

Keith: Thank Keith.

Operator: We now have a follow-up question from Andrew Andersen of Jefferies. Your line is now open; please go ahead.

Keith: We now have a follow up question from Andrew <unk> of Jefferies. Your line is now open. Please go ahead.

Operator: Hey, thanks for the follow up. Just on NII, I guess I would have thought there would be a little bit more expansion quarter over quarter. Is there anything kind of one-off in this quarter's number and something to think about for the full year?

Andrew E. Andersen: Hey, Thanks for the follow up just on NII, I guess I would've thought there would be a little bit more expansion quarter over quarter or was there anything kind of one off in this quarter's number and a way to think about for the full year.

Aaron Paul Diefenthaler: Andrew, it's Aaron. Nothing unusual. As Todd mentioned, we're sticking to our knitting with high-quality assets on the new purchase side of things. Operating cash flow tends to be a little bit lighter in the first quarter versus other quarters throughout the year.

Andrew E. Andersen: Andrew It's Erin nothing unusual as Todd mentioned, we're sticking to our knitting with high quality assets on the new purchase side.

Andrew E. Andersen: Things.

Andrew E. Andersen: Operating cash flow tends to be a little bit lighter in the first quarter versus other quarters.

Aaron Paul Diefenthaler: throughout the year. We've got a lot of reinsurance renewals in Q1, and bonus and profit sharing payments go out in the first quarter. Still very strong, positive operating cash flow.

Andrew E. Andersen: Throughout the year, we've got a lot of reinsurance renewals in Q1 bonus and profit sharing payments go out in the first quarter still very strong positive operating cash flow.

Aaron Paul Diefenthaler: We're happy to have that accrued to the portfolio, but that should pick up in the balance of the year. So, outside of that, there is nothing unusual there.

Andrew E. Andersen: We're happy to have that accrued to the portfolio.

Andrew E. Andersen: But that should pick up in the balance of the year so outside of that nothing unusual there.

Craig William Kliethermes: As there are no further questions, I will now turn the conference back over to Mr. Craig Kliethermes for closing remarks.

Speaker Change: Got it thank you.

Speaker Change: Thank you.

Speaker Change: Oh, sorry, no further questions I will now turn the conference back right back to the quake costs and pay for them as well.

Craig William Kliethermes: Well, thank you all for joining us today. A good quarter to build upon.

Speaker Change: Remark.

Speaker Change: Well. Thank you all for joining us today for good quarter to build upon.

Craig William Kliethermes: We believe our hallmark underwriting discipline and diversified portfolio of specialty products should translate into consistent financial outcomes over time and allow us to continue serving as a stable market for our customers. I would like to thank all of our RLI Associate Owners for their contributions to our shared success. We will continue to focus on making decisions and executing on strategic initiatives that are in the long-term best interests of our company, our shareholders, and our customers. Our team is very comfortable being different because being different works. Thank you all again for tuning in, and we'll visit again next quarter.

Speaker Change: Believe our hallmark underwriting discipline and diversified portfolio of specialty products should translate into consistent financial outcomes over time and allow us to continue serving as a stable market for our customers.

Speaker Change: I would like to thank all of our RLI associate owners for their contributions to our shared success. We will continue to focus on making decisions and executing on strategic initiatives that are in the long term best interest of our company our shareholders and our customers are.

Speaker Change: Our team is very comfortable being different because being different works. Thank you all again for tuning in and we'll visit again next quarter.

Operator: Ladies and gentlemen, if you wish to access or replace this call, you may do so on the RLI homepage at www.rlicorp.com. This concludes our conference call for today. Thank you for your participation and have a nice day. All parties may now disconnect.

Speaker Change: Ladies and gentlemen, if you wish to access the replay for this call you may do so on the Oh I home page at Www Dot Dot Com. This concludes our conference for today. Thank you for your participation.

Speaker Change: On top of a nice day all parties.

Speaker Change: You may now disconnect.

Speaker Change: [music].