Q1 2024 Employers Holdings Inc Earnings Call

Okay.

Operator: Good day and welcome to the Q1 2024 Employers Holdings Inc 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, please call our 1-1. As a reminder, this call may be recorded. I would like to call over to Lori Brown, General Counsel.

Speaker Change: Good day and welcome to the Q1 2020 for employers Holdings, Inc. Earnings Conference call. At this time, all participants are all listen only mode. After the speaker's presentation there'll be a question answer session.

Speaker Change: To ask a question during this session. Please star one one.

Speaker Change: As a reminder, this call maybe recorded.

Speaker Change: On this call over to Lori Brown General Counsel please.

Lori Ann Brown: Thank you, Michelle. Good morning and welcome, everyone, to the first quarter 2024 earnings call for employers. Today's call is being recorded and webcast from the investor section of our website, where a replay will be available following the call. Presenting today are Kathy Antonello, our Chief Executive Officer, and Mike Paquette, our Chief Financial Officer. Statements made during this conference call that are not based on historical facts are considered forward-looking statements. Such statements are made in reliance on the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995.

Lori Ann Brown: Please go ahead.

Thank you Michele good morning, and welcome everyone to the first quarter 2024 earnings call for employers.

Speaker Change: Today's call is being recorded and webcast from the Investor section of our website, where a replay will be available following the call.

Lori Ann Brown: Benching today are Cathy and John Melo, our Chief Executive Officer, and Mike <unk>, Our Chief Financial Officer statements made during this conference call that are not based on historical facts are considered forward looking statements.

Lori Ann Brown: These statements are made in reliance on the safe Harbor provision of the private Securities Litigation Reform Act of 1995.

Lori Ann Brown: Although we believe the expectations expressed in our forward-looking statements are reasonable, risks and uncertainties could cause actual results to be materially different from our expectations, including the risks set forth in our filings with the Securities and Exchange Commission. All remarks made during the call are current only at the time of the call and will not be updated to reflect subsequent developments. The company also uses its website as a means of disclosing material non-public information and for complying with the disclosure obligations under the SEC's Regulation FD.

Lori Ann Brown: Although we believe the expectations expressed in our forward looking statements are reasonable risks and uncertainties could cause actual results to be materially different from our expectations, including the risks set forth in our filings with the Securities and Exchange Commission.

Lori Ann Brown: All remarks made during the call are current only at the time of the call and will not be updated to reflect subsequent developments.

Lori Ann Brown: The company also uses its website as a means of disclosing material nonpublic information and for complying with disclosure obligations under the Sec's regulation FD.

Lori Ann Brown: Such disclosures will be included in the investor section of our website. Accordingly, investors should monitor that portion of our website in addition to following our press releases, SEC filings, public conference calls, and webcasts. In our earnings press release and in our remarks or responses to questions, we may use non-GAAP financial measures. Reconciliations of these non-GAAP measures to our GAAP results are included in our financial supplement as an attachment to our earnings press release, our investor presentation, and any other materials available in the investor section on our website. And now, I'll turn the call over to Katherine.

Lori Ann Brown: Such disclosures will be included in the investors section of our website accordingly investors should monitor that portion of our web site. In addition to following our press releases SEC filings public conference call and webcast.

Lori Ann Brown: In our earnings press release, and in our remarks or responses to questions. We may use non-GAAP financial measures.

Lori Ann Brown: Conciliation of these non-GAAP measures to our GAAP results are included in our financial supplement as an attachment to our earnings press release, our investor presentation and any other materials available in the investors section on our website and now I will turn the call over to Kathy.

Katherine Holt Antonello: Thank you, Lori. Good morning to everyone, and welcome to our first quarter 2024 earnings call. Today, we will follow our typical agenda where I'll begin by providing some highlights of our first quarter 2024 results. I'll then hand it over to Mike for more details on our financials, and prior to Q&A, I'll discuss the continued improvement we expect to see during the balance of 2024. Higher new and renewal premiums, strong net investment income, and investment gains drove an 8% increase in our first quarter revenue year over year.

Kathy: Thank you Lori good morning, everyone and welcome to our first quarter 'twenty 'twenty four earnings call.

Kathy: Today, we will follow our typical agenda, where I'll begin by providing some highlights of our first quarter 2024 result.

Kathy: And then hand, it over to Mike for more details on our financials and prior to Q&A I'll discuss the continued improvement we expect to see during the balance of 'twenty 'twenty four.

Mike: Higher new and renewal premium strong net investment income and investment gains drove an 8% increase in our first quarter revenue year over year.

Katherine Holt Antonello: Our steady growth in written premium resulted from a 38% increase in new business, a 6% increase in renewal business, and continued solid audit premium recognition. Excluding adjustments for audit premium, our gross written premium increased 14% for the quarter, with all major distribution channels contributing to the growth.

Mike: Our steady growth in written premium resulted from a 38% increase in new business.

Mike: A 6% increase in renewal business and continued solid audit premium recognition.

Mike: Excluding adjustments for audit premium our gross written premium increased 14% for the quarter with all major distribution channels contributing to the growth.

Katherine Holt Antonello: Our investment performance was also a boost to revenue, with continued strong net investment income and net unrealized gains from our common stock and other investments. We recorded our current accident year loss in LAE ratio on voluntary business at 64%, slightly above the 63.3% we maintained throughout 2023 and consistent with that of 2022. We believe the accident year 2024 loss ratio we've recorded, along with our existing provision for a potential increase in medical inflation, positions us well from a reserving standpoint.

Mike: Our investment performance was also a boost to revenue with.

Mike: With continued strong net investment income and net unrealized gains from our common stock and other investments.

[laughter].

Mike: We recorded our current accident year loss and LAE ratio on voluntary business at 64% slightly above the 63, 3% we maintained throughout 2023 and consistent with that of 2022.

Mike: We believe the accident year 2020 for loss ratio, we've recorded along with our existing provision for a potential increase in medical inflation positions us well from a reserving standpoint.

Katherine Holt Antonello: As was the case in the first quarter of 2023, we did not recognize any prior year loss reserve development on our voluntary business because the full actuarial study was not performed and the amount of indicated net prior year loss reserve development was consistent with our expectations. We will evaluate our prior year reserves in more detail at mid-year when we routinely perform a full reserve study. Our commission expense ratio was 13.8 percent, up from 13.5 percent a year ago.

Mike: As was the case in the first quarter of 2023, we did not recognize any prior year loss reserve development on our voluntary business.

Mike: It is a full actuarial study was not performed and the amount of indicated net prior year loss reserve development was consistent with our expectations.

Mike: We will evaluate our prior year reserves in more detail at midyear when we routinely perform a full reserve study.

Mike: Our commission expense ratio was 13, 8% up from 13, 5% a year ago.

Katherine Holt Antonello: The increase was due to our strong new business premium growth, which is typically subject to a higher initial commission rate, and anticipated 2024 agency incentives, which are contingent on profitable growth. Our underwriting and general and administrative expense ratio was 24.8%, down from 25.7% a year ago. The expense ratio improvement primarily resulted from our recent SARITY integration, and we expect further expense ratio improvement throughout 2024. While our net income and adjusted net income per diluted share rose sharply by 29% and 12%, respectively, our first quarter 2024 gap combined ratio of 101.6% was similar to our first quarter 2023 results.

Mike: The increase was due to our strong new business premium growth, which is typically subject to a higher initial commission rate.

Mike: And anticipated 2020 for agency incentives, which are contingent unprofitable growth.

Mike: Our underwriting and general and administrative expense ratio was 24, 8% down.

Mike: Down from 25, 7% a year ago.

Mike: Spence ratio improvement primarily resulted from our recent Saturday integration and we expect further expense ratio improvement throughout 2024.

Mike: While our net income and adjusted net income per diluted share rose sharply by 29% and 12% respectively. Our first quarter 2024, GAAP combined ratio of one on one 6% was similar to our first quarter 2023 result.

Katherine Holt Antonello: Our combined ratio does not yet fully reflect the underlying enhancements, efficiencies, and economies of scale that we have recently achieved, and we expect meaningful improvements in our combined ratio for the balance of the year. With that, Mike will now provide a deeper dive into our financial results, and then I'll return to provide my closing remarks. Mike. Thank you, Kathy.

Mike: Combined ratio does not yet fully reflect the underlying enhancement efficiencies and economies of scale that we have recently achieved and we expect meaningful improvements in our combined ratio for the balance of the year.

Mike: With that Mike will now provide a deeper dive into our financial results and then I'll return to provide my closing remarks, Mike. Thank you Kathy.

Michael Scott Paquette: Gross premiums written were $211 million, an increase of 8%. The increase was primarily due to higher new and renewal premiums.

Mike: Gross premiums written were $211 million, an increase of 8%. The increase was primarily due to higher new and renewal premiums.

Michael Scott Paquette: Net premiums earned were $185 million, an increase of 7%. Our loss and loss adjustment expenses were $117 million, an increase of 8%, and our loss and loss adjustment expense ratio was 63% or 64% when excluding the effects of our loss portfolio transfer. As Kathy mentioned, we increased our current accident-year loss and LAE ratio on voluntary business to 64% this quarter versus 63.3% a year ago. In addition, we continue to settle claims throughout the quarter on an accelerated basis to both mitigate our overall tail risk and generate additional reserve salvage.

Mike: Net premiums earned were $185 million, an increase of 7%.

Mike: Our loss and loss adjustment expenses were $117 million, an increase of 8% and our loss and loss adjustment expense ratio was 63% or 64%.

Mike: When excluding the effects of our loss portfolio transfer.

Mike: As Kathy mentioned, we increased our current accident year loss and LAE ratio on voluntary business to 64% this quarter versus 63, 3% a year ago. In addition, we continue to settle claims throughout the quarter on an accelerated basis to both mitigate our overall tail risk and generate additional reserve.

Mike: Salvaged.

Michael Scott Paquette: Commission expenses were $26 million, an increase of 9%. And our commission expense ratio was 13.8% versus 13.5% a year ago. Underwriting and general and administrative expenses were $46 million, an increase of 3%, and our underwriting and general administration expense ratio was 24.8% versus 25.7% a year ago. The decrease was primarily due to savings associated with the fourth quarter 2023 full integration of CERTI's operations into those of employers, partially offset by increases in payroll and benefit costs and bad debt expenses.

Mike: Commission expenses were $26 million, an increase of 9% and our commission expense ratio was 13, 8% versus 13, 5% a year ago.

Mike: Underwriting and general and administrative expenses were $46 million, an increase of 3% and our underwriting and general administration expense ratio was 24, 8% versus 25, 7% a year ago.

Mike: The decrease was primarily due to savings associated with the fourth quarter 2023 full integration of <unk> operations into those of employers, partially offset by increases in payroll and benefit costs and bad debt expenses.

Michael Scott Paquette: Our net investment income was $27 million for the quarter, a decrease of 3%. The decrease was due to the unwinding of our former Federal Home Loan Bank leverage investment strategy in late 2023. When considering the more than $2 million worth of interest expense that we incurred from that former strategy in the first quarter of 2023, our net investment income was actually up 6% year over year. Our fixed maturities currently have a duration of 4.5 and an average credit quality of A+.

Mike: Our net investment income was $27 million for the quarter a decrease of 3%. The decrease was due to the unwinding of our former federal home loan bank leverage investment strategy in late 2023.

Mike: When considering the more than $2 million worth of interest expense that we incurred from that former strategy in the first quarter of 2023, our net investment income was actually up 6% year over year.

Mike: Our fixed maturities currently have a duration of $4 five and an average credit quality of a plus or.

Michael Scott Paquette: Our weighted average book yield was 4.3% at quarter end, which was up nicely from 4.1% a year ago. Our net income this quarter was favorably impacted by $10 million of net after-tax unrealized gains from equity, securities, and other investments, which are reflected in our income statement. And our stockholders' equity was unfavorably impacted by $12 million of net after-tax unrealized losses from fixed maturity securities, which are reflected on our balance sheet. During the quarter, we repurchased $5 million of our common stock at an average price of $39.45 per share, and our remaining share repurchase authority currently stands at just over $16 million.

Mike: Our weighted average book yield was four 3% at quarter end, which was up nicely from four 1% a year ago.

Our net income this quarter was favorably impacted by $10 million of net after tax unrealized gains from equity securities and other investments, which are reflected on our income statement and our stockholders' equity was unfavorably impacted by $12 million of net after tax unrealized losses from fixed maturity securities which are reflected.

Mike: On our balance sheet.

Mike: During the quarter, we repurchased $5 million of our common stock at an average price of $39 45 per share and our remaining share repurchase authority currently stands at just over $16 million.

Michael Scott Paquette: And earlier this week, our Board of Directors declared a second quarter 2024 regular dividend of $0.30 per share, an increase of 7% from the prior quarterly dividend of $0.28 per share. This action reflects our strong balance sheet, abundant underwriting capital, and our confidence in the company's future operations. And with that, I'll now turn the call back to Katherine.

Mike: And earlier this week, our board of directors declared a second quarter 2024 regular dividend of <unk> 30 per share an increase of 7% from the prior quarterly dividend of <unk> 28 per share.

Mike: This action reflects our strong balance sheet abundant underwriting capital and our confidence in the company's future operations.

Mike: And with that I'll now turn the call back to Kathy.

Katherine Holt Antonello: Mike, after considering dividends declared, over the last 12 months, our book value per share, including the deferred gain, increased 13% to $44.04, and our adjusted book value per share increased by 11% to $47.86. Both the combined ratio and the change in our adjusted book value per share continue to be our preferred metrics for measuring our success. We are confident we will see further improvements in these ratios in the near term. During the first quarter of 2024, we delivered a best-in-class digital claim reporting tool, which has received exceptional user experience and feedback from both agents and policyholders.

Kathy: Thanks, Mike after considering dividends declared over the last 12 months, our book value per share, including the deferred gain increased 13% to $44 <unk> and our adjusted book value per share increased by 11% to $47 86.

Both the combined ratio and the change in our adjusted book value per share continues to be our preferred metrics for measuring our success we.

Kathy: We are confident we will see further improvements in these ratios in the near term.

Kathy: During the first quarter of 2024, we delivered a best in class digital claim reporting TOEFL.

Kathy: Which has received exceptional user experience feedback from both agents and policyholders.

Katherine Holt Antonello: Throughout 2024, we plan to deliver more self-service options and continue our appetite expansion effort, which has led to profitable growth. Our strong capital position supports both our growth and technology initiatives, and we look forward to having a successful 2024.

Kathy: Throughout 2024, we plan to deliver more self service options and continue our appetite expansion effort, which has led to profitable growth.

Kathy: Our strong capital position supports both our growth and technology initiatives and we look forward to having a successful 2024.

Kathy: And with that Michelle we will now take questions.

Operator: Thank you. If you would like to ask a question, please press star 1 1. If your question hasn't been answered and you'd like to remove yourself from the queue, please press star 11 again. Our first question comes from Matt Carletti with Citizens J&P. Your line is open.

Michelle: Thank you if you'd like to ask a question. Please press star one one.

Michelle: If your question has been answered and you'd like to remove yourself from the queue. Please press star one again.

Michelle: Our first question comes from Matt <unk> with citizens JMP. Your line is open.

Matt: Hey, good morning.

Matt: Good morning, Matt.

Matthew John Carletti: I was hoping you could, it caught the 14% growth in the top line, kind of x the audit premiums. Could you break that down a level and just help us understand a little bit more about what builds up to that 14%, you know, TIF growth? Payroll, you know, exposure growth, kind of what rates are doing overall, and then alongside that, you know, what states are you seeing the strongest growth in and which states are a little more of a struggle?

Matt: I was hoping you could talk to the 14% growth from the top line ex the audit premiums could you break that down a level and just help us understand a little bit.

Matt: What builds up to that 14% growth.

Matt: Payroll exposure growth.

Matt: What rates are doing overall.

Matt: And then alongside that what states are you seeing the strongest growth out of in which.

Katherine Holt Antonello: Yeah, sure. So, you know, we're really pleased with the level of growth that we're currently seeing, and it's widespread. It's coming from all of our major distribution channels. During the first quarter, our enforced premium from our core agency segment, those are independent agents and our national partners, that premium increased by about 9%. And then our SPA segment, which is specialty, payroll, and alternative distribution, increased by 22%. A lot of that was driven by the Alternative Distribution Channel, which is our digital book.

Matt: Which states are a little more of a struggle.

Yeah sure. So you know, we're really pleased with the level of growth that we're currently seeing and its widespread it's a rising from all of our major distribution channels.

Matt: During the first quarter, our in force premium from our core agency segment, those are independent agents and our national partners.

Matt: That premium increased by about 9%.

Matt: And then our Spa segment, which is a specialty payroll and alternative distributions increased by 22% a lot of that was driven by the alternative distribution channel, which is our digital book.

Katherine Holt Antonello: You know, as I've mentioned in the past, we continue to see a big shift towards API utilization, so we're seeing major upticks in our submissions and our quotes and our binds because we put a lot of energy into providing ease to our distribution partners in terms of finding the policies. And then, you know, I'd also say our appetite expansion effort is contributing to that overall growth. That business is performing at a loss ratio similar to our other target classes. In the first quarter, our appetite expansion classes generated 38 million, or 18% of our new and renewal premium. So hopefully, that gives you a little bit of color.

Speaker Change: Got it.

Speaker Change: I've mentioned in the past, we continued to see a big shift towards the API utilization. So we're seeing major upticks, then our submission and our quotes in our bonds, because we put a lot of energy and to providing ease to our distribution partners in terms of.

Speaker Change: Finding the policies and the.

Speaker Change: And finally, I'd also say our appetite expansion effort is contributing to that overall growth.

Speaker Change: That business is performing at a loss ratio similar to our other targeted classes in the first quarter, our appetite expansion classes generated $38 million or 18% of our new and renewal premium. So hopefully that gives you a little bit of color.

Matthew John Carletti: Yeah, that's super helpful. Thank you.

That's super helpful. Thank you.

Michael Scott Paquette: One other question, if I could, you talked a little bit about the expense ratio about, you know, a couple of reasons why it may be a little high during the quarter but continuing to expect good improvement throughout the year. Is there any one time kind of exception in that number in Q1? Could you point those out? What might just be in there and won't happen again versus more of a kind of pulling expenses out through desert consolidation or leveraging growth, things like that?

Speaker Change: One other if I could you talked a little bit.

Speaker Change: On the expense ratio.

Speaker Change: About.

Speaker Change: Couple of reasons why is maybe a little high during the quarter, but continuing to expect good improvement throughout the year.

Speaker Change: Could you is there any one times cut in that number in Q1.

Speaker Change: Could you could you point those out what might be in there and will happen again versus more kind of pulling expenses out through Saturday consolidation or leveraging growth things like that.

Michael Scott Paquette: Sure, Matt. I'll take that. So, the Saturday savings were pretty much as expected. And as we mentioned before, they nearly fully emerged in the first quarter. So, no surprises there. You know, we mentioned payroll and benefit costs, and those are seasonally higher in the first quarter because all kinds of things reset. So, if you look year over year, you'll see that that's kind of seasonally higher.

Speaker Change: Sure, Matt I'll take that.

Matt: So the 30 savings were pretty much as expected and as we mentioned before they base nearly fully emerged in the first quarter. So no surprises there.

Speaker Change: We mentioned payroll and benefit costs and those those are seasonally higher in the first quarter, because all kinds of things reset.

Speaker Change: Year over year, Youll see that that is kind of seasonally higher.

Michael Scott Paquette: I think what you're referring to in this quarter, in a bit of a non-recurring manner, is that we did have about $ 500,000 of incremental bad debt expense related to some non-compliant policies. I say non-compliant because they never conform to their final audit. And that is behind us. So, we do not expect to see anything like that in future quarters as it relates to our non-compliance. And that was about it.

Speaker Change: I think what youre, referring to in this quarter.

Speaker Change: Bit of a nonrecurring manner as we didn't have.

Speaker Change: About $1 million five.

Speaker Change: Incremental bad debt expense.

Speaker Change: And that related to some noncompliant policies, I say noncompliant, because they never conform to their final audit and that is behind us. So we do not expect to see anything like that in future quarters as it relates to our noncompliant premium and that was about it.

Matthew John Carletti: Perfect. Very helpful. Appreciate the call. Thank you.

Speaker Change: Okay very helpful. I appreciate the color. Thank you.

Operator: Thank you. As a reminder, to ask a question, please press star 11. Our next question comes from Mark Hughes on Truist.

Speaker Change: Thank you. Thank you.

Speaker Change: As a reminder to ask a question. Please press star one one.

Speaker Change: Our next question comes from Mark Hughes with tourist Securities. Your line is open.

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

Operator: Katherine, thank you for how you were, you were assuming that, or you were making provision in your reserves for a step up in medical inflation. Could you go into more detail? What is medical inflation as you see it now? What kind of buffer are you putting in?

Mark Douglas Hughes: Yes. Thank you good morning.

Mark Douglas Hughes: Good morning, Mark how youre youre assuming that.

You're.

Mark Douglas Hughes: Making provisioning your reserves for.

Mark Douglas Hughes: Up in medical inflation could you go into more detail.

Mark Douglas Hughes: What is the medical inflation as you see it now.

Mark Douglas Hughes: Hum.

Mark Douglas Hughes: What kind of buffer you're putting in.

Katherine Holt Antonello: Maybe not by expectation, but in case medical inflation does pick up.

Mark Douglas Hughes: <unk>.

Mark Douglas Hughes: And maybe not expectation but.

Mark Douglas Hughes: Keith.

Mark Douglas Hughes: Medical inflation does pick up.

Katherine Holt Antonello: Yeah, so, you know, up to this point, and I like the fact that you said in case medical inflation does pick up, but because, up to this point, medical inflation and the economic data that we review have remained relatively mild when you compare it to other sectors, like energy or housing or food. And so that's really good news for workers' compensation for us. We continue to monitor our prescription drug costs. We started doing that about a year ago.

Keith: Yeah, so up to this point and I like the fact that you said in case medical inflation does pick up but because up to this point medical inflation and the economic data that we review has remained relatively mild.

Keith: When you compare it to other sectors like energy or housing or food and so that's really good news for workers' compensation and for us.

Keith: We continue to monitor our prescription drug costs, we started doing that about a year ago.

Katherine Holt Antonello: After controlling for the mix of drugs over time, we've seen that our internal index for in-network pharmacy costs is really fair; they're generally consistent with what we experienced prior to the pandemic. We did see a bit of an uptick in the most recent year, but it was really a reversal of the decrease in drug costs that we experienced in the preceding years. So it's really back to kind of where it was before.

Keith: Controlling for the mix of drugs over time.

Keith: <unk> seen that our internal index.

For in network pharmacy costs are really.

Keith: Fairly theyre generally consistent with what we've experience prior to the pandemic, we did see a bit of an uptick in the most recent year, but it was really a reversal of the decrease in direct costs that we experienced in the preceding years. So it's really back to kind of where it was before.

Katherine Holt Antonello: That additional reserve that you spoke about that we're holding for the possibility of increased inflation, that's sort of over and above the implicit amount that's buried in our reserve triangles is a little over $14 million right now. And when you think about the accident-year loss ratio that we booked, which was slightly higher, we felt, when we put those two together, that we're in a good place should we see an uptick in inflation.

Keith: That additional reserve that you spoke about.

Keith: That we're holding for the possibility of an increase in inflation.

Keith: Sort of over and above the implicit amount. That's buried in our reserve triangles is a little over $14 million right now.

Keith: Yes.

Keith: And when you think about the accident year loss ratios that we booked at with slightly higher we felt when we put those two together that we're in a good place should we see an uptick in inflation.

Katherine Holt Antonello: You see competition. Clearly, you're doing pretty well on new business. Do you perceive any change in appetite on the part of other carriers, or is it steady as she goes?

Speaker Change: Do you see competition, clearly youre doing pretty well on new business.

Speaker Change: Perceive any change in the appetite on the part of other carriers or is it steady as she goes.

Katherine Holt Antonello: Yeah, we're not really seeing too much of a change there for the business sectors and the premium sizes that we write. We continue to characterize the environment as competitive. You know, we're having more success finding policies that are a little bit larger than our, our typical average policy size. So, that increased our average policy size by about nine percent in Q1, but it's still very small at about fifty six hundred.

Yeah, we're not really seeing too much of a change there for that business sectors and the premium sizes that we buy.

Speaker Change: We continue.

Speaker Change: To characterize the environment as competitive.

Speaker Change: We're having more success finding policies that are a little bit larger than.

Speaker Change: Our typical average policy size.

So that increased our average policy size by about 9%.

Speaker Change: Q1, but it's still very small at about 5600.

Katherine Holt Antonello: But when you look at new business, our average policy size is up about twelve percent to about fifty eight hundred. And our average rate change for the quarter was a decrease between five and six percent. But when you adjust that for exposure and split it out between wages and employment changes, it's closer to what we've been seeing in the 2 to 4% range.

Speaker Change: But when you look at new business. Our average policy size is up about 12% to about 5800.

Speaker Change: Our average rate change for the quarter was a decrease between 5%, 6%, but when you.

Speaker Change: Adjust that.

Speaker Change: Sure you know exposure and split it out between wages and employment.

Speaker Change: Changes.

Speaker Change: Closer to what we've been seeing in the 2% to 4% range.

Katherine Holt Antonello: That up 2 to 4 or down 2 to 4? Down. Down. Sorry. Down 2 to 4. So the rate would be down 5 to 6.

That's up two to four or down to four.

Speaker Change: Alright, okay down to the rate would be down five to six when you take into account wages exposures.

Katherine Holt Antonello: It's not as big of a decrease, correct?

Katherine Holt Antonello: What's your stance on... Going back to your NCCI days, in tearing forward, what's your sense about the... The pace of industry-wide reserve gains. Where do you think we stand? Do you think that the industry is past its peak? Or do you think it can continue at the current level or maybe even increase in the coming periods? Just sort of, not trying to get information about your outlook on your own book but just your sense of where the industry stands.

Speaker Change: Down to it.

Speaker Change: It's not as big of a decreased correct.

Speaker Change: Yes.

Speaker Change: What's your sense.

Speaker Change: Going back to your end CCI Dave.

Speaker Change: And carrying forward, what's your sense about the.

Speaker Change: Hey, <unk>.

Speaker Change: History wide reserve gains.

Speaker Change: Where do you think we stand do you think.

Speaker Change: The industry is.

Speaker Change: Past peak.

Speaker Change: <unk>.

Or do you think.

Speaker Change: Ken.

Speaker Change: Continue at the current level or maybe even increase.

In coming periods.

Speaker Change: Sure.

I'm trying to get information about it.

Speaker Change: Our outlook on your own book, but just.

Katherine Holt Antonello: Yeah, you know, it's hard to say. I always look forward to AIS, which we'll be going to in a couple of weeks, and NCCI will be putting out their reserve redundancy or deficiency estimates then. You know, last year, they increased the level of redundancy from the prior year. I was a little surprised to see that, but, you know, it's a very healthy redundancy is what they came up with last year. So, it'll be very interesting to see what they say this year. However, it appears as though carriers are continuing to release reserves, including us. So, I haven't seen too much of a change there when I look at the industry as a whole, in terms of behaviors on reserve.

Speaker Change: Your sense of where the industry stands.

Speaker Change: Yeah, it's hard to say I always look forward to aaas, which will be going to.

Speaker Change: Couple of weeks then.

Speaker Change: NCI will be putting out their reserves.

Speaker Change: C or deficiency estimates then.

Speaker Change: Last year that they increased the level of redundancy from the prior year.

Speaker Change: Yes.

Speaker Change: I was a little surprised to see that but.

Speaker Change: It's a very healthy thing thats.

Speaker Change: What they came up with last year, so it'll be very interesting to see what they say this year.

Speaker Change: Yeah.

Speaker Change: It appears as though.

Speaker Change: Orders are continuing to release reserves, including us so.

Speaker Change: I haven't seen too much of a change there when I look at the.

Speaker Change: The industry as a whole in terms of behaviors on our reserves.

Speaker Change: Yes.

Mark Douglas Hughes: Okay, thank you very much.

Speaker Change: Okay. Thank you very much.

Operator: Thank you. There are no further questions at this time. I'd like to turn the call back over to Kathy Antonello for closing remarks.

Speaker Change: Thanks Mark.

Speaker Change: Thank you there are no further questions at this time I'd like to turn the call back over to Kathy Antonello for closing remarks.

Katherine Holt Antonello: Thank you, Michelle, and thank you everyone for joining us this morning. I look forward to meeting with you again in July.

Katherine Holt Antonello: Thank you Michelle and thank you everyone for joining us. This morning, I look forward to meeting with you again in July.

Operator: Thank you for your participation. This does conclude the program, and you may now disconnect. Everyone have a great day.

Speaker Change: Thank you for your participation. This does conclude the program and you may now disconnect everyone have a great day.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: