Q2 2024 RLI Corp Earnings Call

and Aaron Diefenthaler.

Operator: Good morning, and welcome to the RLI Corp. Second Quarter Earnings Teleconference. After management's prepared remarks, we will open the conference up for questions and answers.

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, and expectations. As always, these forward-looking statements are subject to certain factors and uncertainties that could cause actual results to differ. Please refer to the risk factors described in the company's various SEC filings, including in the annual report on Form 10-K, as supplemented in Form 10-Q, all of which should be The company has filed a Form 8-K with the Securities and Exchange Commission that contains a press release announcing its third quarter results.

Please refer to the risk factors described in the company's various S E SEC filings, including in the annual report and our Form 10-K, as supplemented and Form 10-Q, all of which should be reviewed carefully. The company has filed a form 8-K with the securities and Exchange Commission that contains the press release announcing third quarter results.

Operator: During the call, RLI management may refer to operating earnings and earnings per share from operations, which are non-GAAP measures of financial results. RLI's operating earnings and earnings per share from operations consist of net earnings after the elimination of after-tax realized gains or losses and after-tax unrealized gains or losses on equity security. RLI's management believes these measures are useful in gauging core operating performance across reporting periods that may not be comparable to other companies' definitions of operating earnings.

Speaker Change: During the call I management may refer to operating earnings and earnings per share from operations, which are non-GAAP measures of financial results R. L is operating earnings and earnings per share from operations consist of net earnings after the elimination of after tax realized gains or losses and after tax.

Speaker Change: Unrealized gains or losses on equity securities.

Speaker Change: Management believes these measures are useful in Gaza and core operating performance across reporting periods.

Speaker Change: It may not be comparable to other companies' definitions of operating earnings.

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

Operator: 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 the conference over to RLI's Chief Investment Officer and Treasurer, Mr. Aaron Diefenthaler. Please go ahead.

Speaker Change: <unk> 8-K, and press release are available at the company's website.

Speaker Change: Www Dot R. L. I Corp, Dot Com I will now turn the conference over to IL is chief investment Officer, and Treasurer, Mr. Aaron decent Butler. Please go ahead.

Aaron Paul Diefenthaler: Thank you, Micaiah. Good morning, everyone. Thank you for joining us to review RLI's results for the second quarter and first half of 2024. As usual, we are joined by Craig Kliethermes, President and CEO, Jen Klobnak, Chief Operating Officer, and Todd Bryant, Chief Financial Officer. Craig is going to open with some high-level commentary.

Speaker Change: Thank you Mikael good morning, everyone. Thank.

Speaker Change: Thank you for joining us to review our aligned results for the second quarter and first half of 2024.

Aaron Paul Diefenthaler: Todd will then give us the play-by-play on financial results, Jen will offer commentary on market conditions and further details on our product portfolio, we will then open things up for questions, and Craig will close with some final thoughts.

Speaker Change: As usual, we are joined by Craig Kliethermes, President and CEO John Clarke.

Speaker Change: Chief operating officer, and Todd Bryant, Chief Financial Officer.

Speaker Change: Craig is going to open with some high level commentary Tod will then give us the play by play on financial results Jenny.

Jenny: General offer commentary on market conditions and further details on our product portfolio. We will then open things up for questions. Thank Craig will close with some final thoughts Greg.

Craig William Kliethermes: Thank you, Aaron. Good morning, everyone. We're off to a very good first half for 2024 with well-balanced growth and underwriting profitability across all of our reporting sectors. As Todd and Jen will go into in a minute, we continue to lean into opportunities where we have the expertise and track record to differentiate ourselves. Legal system abuse, particularly in wheels-based businesses, continues to be a frequent topic of vigilance within our strong collaborative underwriting and claim feedback discussions.

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

Craig William Kliethermes: We're off to a very good first half for 2024, with well balanced growth and underwriting profitability across all of our reporting segments.

Craig William Kliethermes: As Todd and John will go into in a minute.

Speaker Change: Continuing to lean into opportunities, where we have the expertise and track record to differentiate ourselves.

Legal system abuse, particularly in wheels based businesses continues to be a frequent topic of bill Jones within our strong collaborative underwriting claims feedback discussions.

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

Speaker Change: We remain cautious where the risks are more dynamic difficult to quantify or where we choose to proactively mitigate the volatility to the bottomline.

Speaker Change: I will let tod and Jim share more detail on the financials and the market in general.

Tod: It's all yours, thanks, Greg good morning, everyone.

Todd Wayne Bryant: Last night, we reported second quarter operating earnings of $1.72 per share. The quarter's results reflected solid underwriting performance and a combined ratio of 81.5, and an 18% increase in net investment income. On a GAAP basis, Q2 net earnings of $1.78 compare with $1.69 in the same period last year. Underwriting income benefited from growth and earned premiums, lower attritional losses in our property segment, and continued favorable development of prior years' losses in all three states.

Tod: Last night, we reported second quarter operating earnings of $1 72 per share per.

Tod: The quarters results reflected solid underwriting performance and a combined ratio of 81 five and.

Speaker Change: And an 18% increase in net investment income.

Speaker Change: On a GAAP basis Q2 net earnings of $1 78.

Speaker Change: Theres the $1 69 in the same period last year.

Speaker Change: Underwriting income benefited from growth in earned premium.

Speaker Change: Lower attritional losses in our property segment and continued favorable development on prior year's loss reserves in all three segments.

Todd Wayne Bryant: Overall, the loss ratio was down 3.5 points due to better emergence on prior year's reserves, favorable experience in the current accident, and support from stronger earned friends. Storm losses in the quarter totaled $16 million compared to $18 million a year ago. $15 million of that impacted the property segment, while $1 million was associated with package policies and cash.

Speaker Change: Overall, the loss ratio was down three five points due to better emergence on prior year's reserves favorable experience in the current accident year and support from a stronger earned premium.

Speaker Change: Storm losses in the quarter totaled $16 million compared to $18 million a year ago.

Speaker Change: <unk> million dollars of that impacted the property segment by $1 million was associated with packaged policies in our casualty segment.

Todd Wayne Bryant: The scale of earned premium further contributed to an improved expense ratio, which was down more than two points compared to last year. Despite tempered growth in property, total growth premiums written were up 11% and balanced across all three centers. Casualty experienced its second consecutive quarter of double-digit growth and benefited from $12.8 million of favorable prior year loss development, with notable contributions from General Liability, Commercial Access, and Executive Products. In addition, $1 million in reductions to prior year storm losses was attributed to Casualty, all of which contributed to a slight improvement in the loss ratio and a 95 combined ratio for the town and court, sure to achieve growth in the mid-teens and $ Prior year development can lose several million dollars in isolated periods for surety, which can impact the county year loss rate.

Speaker Change: The scale of earned premium further contributed to an improved expense ratio, which was down more than two points compared to last year.

Speaker Change: Despite tempered growth in property total gross premiums written were up 11% and balanced across all three segments.

Speaker Change: Casualty experienced its second consecutive quarter of double digit growth.

Speaker Change: Benefited from $12 8 million of favorable prior year's loss development with notable contributions from general liability commercial excess and executive products and.

Speaker Change: In addition, $1 million in reductions to prior year storm losses was attributed in casualty.

Speaker Change: All of which contributed to a slight improvement in the loss ratio and a 95 combined ratio for the calendar quarter.

Speaker Change: Surety achieved growth in the mid teens and $2 4 million of favorable prior year development compared to $4 2 million of favorable emergence in Q2 2023.

Speaker Change: Prior year development can move several million dollars in isolated periods for surety, which can impact the calendar year loss ratio in this case, a smaller reserve release resulted in the loss ratio being up five points above last year's comparable quarter, but underlying results were similar as it was a year to date comparison.

Todd Wayne Bryant: In this case, the smaller release resulted in the loss ratio being up five points above last year's comparable. However, the underlying results were similar, as was the year-to-date comparison. Despite the continued growth in premium, SURE's expense ratio was up two points, as average commissions were influenced by the mix of business, and our 401 re-insurance renewal would cede an additional premium during the quarter. Property growth remained positive, up 6.4% in the quarter, with the largest contribution coming from marine and more modest increases from E&S property.

Speaker Change: Despite the continued growth in premium series expense ratio was up two points as average commissions were influenced by mix of business and our 41 reinsurance renewal, which ceded additional premium during the quarter.

Speaker Change: Property growth remained positive up six 4% in the quarter with the largest contribution coming from marine a more modest increases from E&S property.

Todd Wayne Bryant: Total losses were flat compared to last year in dollar terms, but they were much lower as a percentage of the premium, contributing to the excellent combined ratio of 60.3 for Q2. Property experienced $5.3 million in favorable loss development on prior accident, largely marine, and posted a $1 million reduction to prior year's stolen. Operating cash flow was $142 million, down slightly from the comparable quarter, as larger tax payments and the timing of several large claims weighed on the current period.

Total losses were flat compared to last year in dollar terms.

Speaker Change: Were much lower as a percentage of earned premium contributing to the excellent combined ratio of 63 for Q2.

Speaker Change: Property experienced $5 3 million in favorable loss development on prior accident years, largely marine related and posted a $1 million reduction in the prior year storm losses.

Speaker Change: Operating cash flow was $142 million down slightly from the comparable quarter as larger tax payments and the timing of several large claims weighed on the current period.

Todd Wayne Bryant: Despite the decline, we are still putting a fair amount of money to work in the investment portfolio at an attractive rate, well above our current books. Purchase activity for the quarter averaged a 5% yield and was again concentrated in high-quality fixed income. Also in the quarter, the equity portfolio posted $3.6 million of unrealized gains compared to $25 million a year earlier. Despite modestly rising US treasures, the portfolio achieved a 0.9% total return, including positive contributions from both stocks and bonds. Although credit spreads remain tight by historic standards,

Speaker Change: Despite the decline we are still putting a fair amount of money to work in the investment portfolio at attractive rates.

Speaker Change: Well above our current book yield.

Speaker Change: Activity for the quarter averaged a 5% yield and was again concentrated in high quality fixed income.

Speaker Change: Also in the quarter, the equity portfolio posted $3 6 million of unrealized gains compared to $25 million a year ago.

Speaker Change: Despite modestly rising treasury yields.

Speaker Change: Portfolio achieved a 9% total return, including positive contributions from both stocks and bonds.

Speaker Change: Although credit spreads remain tight by historic standards, we are encouraged by the higher for longer rate environment.

Todd Wayne Bryant: We are encouraged by the Hire for Longer rating bar. We have achieved more intermediate bond duration recently to ensure investment income is sustainable. The duration was up one-tenth of a year to NQ2 at 4.7 years, away from the traditional investment portfolio, investor earnings from Prime were comparable to last year at 1.6 million. Incorporating comprehensive earnings and adjusting for dividends, book value per share increased by 14% from 2023 to $34.64. Additionally, we announced a two-cent increase to our ordinary dividend during the quarter, the 49th consecutive year of paying an increase in dividends, all in a very good first half of the year. And with that, I'll turn the call over to Jen. Thank you, Todd.

We have achieved more intermediate bond duration recently to ensure investment income is sustainable.

Speaker Change: Accordingly.

Speaker Change: <unk> was up 110th of the year to end Q2 at four seven years.

Away from the traditional investment portfolio invested earnings from Prime were comparable to last year at $1 6 million.

Speaker Change: Incorporating comprehensive earnings and adjusting for dividends book value per share increased by 14% from year end 2023 to $34 64.

Speaker Change: Additionally, we announced an increase to our ordinary dividend during the quarter to 49 consecutive year of paying an increasing dividend.

Jim: All in a very good first half of the year and with that I'll turn the call over to Jim Jim. Thank you Todd.

Jennifer Leigh Klobnak: I'll provide more information by segment. Premium for the property segment grew 6% to the quarter while posting a 60 combined ratio. Top line expansion was led by the Marine Division, which grew by 20%, including a 5% rate increase. Marine continues to nurture producer relationships and creatively solve problems.

Jim: I'll provide more information by segment.

Jim Jim: Premiums in our property segment grew 6% for the quarter, while posting a 60 combined ratio.

Jim Jim: Top line expansion was led by the Marine Division, which grew by 20%, including a 5% rate increase.

Speaker Change: Marine continues to nurture producer relationships creatively solve problems.

Jennifer Leigh Klobnak: Our team has been building a larger presence in the bullish risk space, and that has driven a lot of our recent success. Hawaii homeowners' premiums also increased 27% due to a combination of our focus on service and some withdrawals by competitors. DNS property growth is slowing, and rates are flattening.

Our team has been building a larger presence in the bullish in this space and that has driven a lot of our recent success.

Speaker Change: Hawaii homeowners premium also increased 27% due to a combination of our focus on service and some retraction by competitors.

Speaker Change: E&S property growth is slowing and rates are flat.

Jennifer Leigh Klobnak: Overall, premium was up 2% while rates increased 1%. The hurricane market is stabilizing, with increased competition this spring, particularly from MGA. As they obtained more capacity from their capital providers, they increased limits and have become a little more aggressive on rates. We still believe we are achieving appropriate returns in this business. This latest hard market began in 2020.

Speaker Change: Overall premium was up 2% while rates increased 1%.

Speaker Change: The hurricane markets stabilizing with increased competition this spring, particularly from Mg.

Speaker Change: As they obtained more capacity from that capital providers.

Speaker Change: <unk> units and have become a little more aggressive on rates we used.

Speaker Change: I believe we are achieving appropriate returns in this business.

Jennifer Leigh Klobnak: Since then, our cumulative rate change on hurricane exposure is about 200 percent. We continue to manage our exposure to the catching business to stay within our risk appetite and optimize our portfolio. We are seeing more opportunity in the ENS space for non-coastal exposures.

Speaker Change: This latest turret market began in 2020 since then our cumulative rate change on hurricane exposure is about 200%.

Speaker Change: We continue to manage our exposure to catastrophe business to stay within our risk appetite and optimize our portfolio. We are seeing more opportunity in the E&S space and non coastal exposures.

Jennifer Leigh Klobnak: Standard markets are pulling back, and business is shifting to the ENS market. Terms and conditions have improved, including increased rates and the use of percentage deductibles as a couple of examples. The combined ratio for our property segment improved with past rate increases earning through, while we experienced a similar level of catastrophe activity in the quarter versus last year. We don't expect a lot of changes to occur in the hurricane market during the season, and we will still see select growth opportunities in all of our property product offerings. Surety premium was up 17% during the quarter on an 82 combined ratio. We achieve growth and underwriting profit in each of our surety businesses. Contractory focuses on public construction projects, which has been a healthy part of the market.

Speaker Change: Energy markets are pulling back and that business is shifting to the E&S market.

Speaker Change: Terms and conditions have improved including increased rates and leaves a percentage deductibles as a couple of examples.

Speaker Change: The combined ratio for our property segment improved with past rate increases, earning through while we experienced a similar level of catastrophe activity in the quarter versus last year. We don't expect a lot of changes to occur in the hurricane markets. During the season, and we will still see select growth opportunities in all of our property product offerings.

Speaker Change: Surety premium was up 17% during the quarter on an 82 combined ratio, we achieved growth and underwriting profit in each of our surety businesses.

Speaker Change: Treasury focuses on public construction project, which has been a healthy part of the market. In addition, construction costs continue to be elevated which supports premium.

Jennifer Leigh Klobnak: In addition, construction costs continue to be elevated, which supports premiums. Contract surety grew 25% in the quarter. We have not seen an increase in our own claim frequency, which we know has picked up from the industry. A commercial surety vote has also grown through investments in relationships. Fringham was up 20%, driven by increasing success in supporting and expanding the renewable energy sector.

Speaker Change: Surety grew 25% in the quarter.

Speaker Change: We have not seen an increase in our own claim frequency, which we know has ticked up from the industry.

Speaker Change: Our commercial surety book has also grown through investments in relationships premium was up 20% driven by increasing success in supporting and expanding renewable energy sector.

Jennifer Leigh Klobnak: Transactional surety is in a highly competitive market. This product grew 6% as we continue to find new opportunities to serve producers and customers with our easy-to-use digital solutions. We renewed our surety reentrance treaty effective April 1st.

Speaker Change: Transactional surety is in a highly competitive market. This product grew 6% as we continue to find new opportunities to serve producers and customers with our easy to use digital solutions.

Speaker Change: We renewed our surety reinsurance treaty effective April 1st.

Jennifer Leigh Klobnak: Given the timing of the renewal, the impact of the harder reinsurance market was delayed for up to a year. Like other severity-driven reinsurance renewals, we increased our retention, and our costs increased as well. The increased retention for surety helps maintain a net premium balance between our three segments. We have been in the surety market for over 30 years and continue to seek opportunities in this space using our prudent approach to risk selection and exposure management. Cashless premiums were up 14%, with a 95% combined ratio for the quarter.

Speaker Change: Given the timing of a renewal the impacts of the heart of reinsurance market was delayed for us.

Speaker Change: Like others severity, driven reinsurance renewals, we increased our retention and our cost increase as well.

Speaker Change: Increase retention for surety.

Speaker Change: Maintained net premium balance between our three segments.

Speaker Change: We have been in the surety market for over 30 years and continue to seek opportunities in this space using our prudent approach to risk selection and exposure management.

Speaker Change: Casualty premiums grew by 14% with a 95 combined ratio for the quarter.

Jennifer Leigh Klobnak: Rates increased 9% for the segment, which compares favorably with 7% in the first quarter. Our first umbrella business led the way with 37% premium growth. We have been successful working with several state insurance departments to achieve both broad and targeted rate increases where they are warranted. This quarter, we recognized a 20% rate increase, and we have more approvals that will be effective later this year.

Speaker Change: Rates increased 9% for the segments, which compares favorably with 7% in the first quarter.

Speaker Change: First on boiler business, another way was 37% premium growth.

Speaker Change: We have been successful working with several state insurance department to achieve both broad and targeted rate increases where they are warranted. This quarter, we recognized 20% rate increase and we have more approvals that will be effective later this year.

Jennifer Leigh Klobnak: We also achieved growth in our professional services group, which included professional lines and package coverage. Premium was up 10% through a combination of increased marketing efforts for the construction-focused part of the business and rate increases on our auto coverage. We have had elevated auto loss activity in our package business and are addressing this issue using multiple tools, such as commission, filed rate increases, and additional scrutiny in our risk selection process. This brings me to transportation, where we now see mixed results in our portfolio. Premium was up 8% for the quarter, which matches our rate increase. The industry has seen increased severity driven by legal system abuse, which others call social inflation.

Speaker Change: We also achieved growth in our professional services group, which includes professional lines and package coverage.

Speaker Change: NIM was up 10% through a combination of increased marketing efforts for the construction focused part of this business and rate increases on our on coverages.

Speaker Change: We have had elevated auto loss activity in our package business and are addressing this issue using multiple tools such as commission filed rate increases and additional scrutiny in our risk selection process.

Speaker Change: This brings me to transportation, where we have seen mixed results in our portfolio.

Premium was up 8% for the quarter, which matches our rate increase.

Speaker Change: The industry has seen increased severity driven by legal system abuse, which others call social inflation, we are not immune to these industry trends and address them through our underwriting appetite and investment and thorough claim handling practices.

Jennifer Leigh Klobnak: We are not immune to these industry trends and address them through our underwriting appetite and investment in thorough claim handling practices. We are growing our commercial specialty auto book, where market turmoil has moved terms and positions within our appetite, and we're able to increase rates. We're also expanding into market niches, like moving and storage, to offset the unreasonable competition in spaces like traditional trucking. We believe our in-house loss control services that are applied prior to quoting have informed our underwriting process and are helping make our insurers safer.

Speaker Change: Growing our commercial specialty auto book when market turmoil have you in terms of positions within our appetite and were able to increase rates. We're also expanding into market niches like moving in storage.

Speaker Change: Unreasonable competition in spaces like traditional trucking.

Speaker Change: We believe our in house loss control services that our clients prior to putting in many cases have informed our underwriting process and are helping make our insured safer.

Jennifer Leigh Klobnak: This market is slowly improving. While competitors are making some changes, we are seeing submissions increase by over 20%. This allows us to be selective in the risks that we cover.

Speaker Change: This market is slowly improving while competitors are making some changes we are seeing submissions increase over 20%. This allows us to be selective in the rest of that recovery.

Jennifer Leigh Klobnak: As I've mentioned in recent quarters, our executive products group is in a much tougher market environment, particularly in the public data. Our book is weighted toward private insurance, and premiums were down 4% while rates were down. Although competitors are shifting toward the private space as well, we don't see drastic pressure on terms of conditions because the private market is much larger and provides plenty of opportunity.

Speaker Change: As I've mentioned in recent quarters, our executive products group is in a much tougher market environment, particularly in the public D&O space. Our book is weighted towards private insurers.

Speaker Change: NIM was down 4% while rates were down 6%.

Speaker Change: Although competitors are shifting towards the private space as well, we don't see drastic pressure on terms and conditions because the private market is much larger and provides plenty of opportunity there.

Jennifer Leigh Klobnak: The market is challenging, but we have been through these cycles before. Our underwriters are well positioned as they continue to focus on the bottom line. Finally, our ENF casualty division's top line was up 3%, although primary business struggled to grow premiums, and private construction projects continued to take longer to get started.

Speaker Change: Market is challenging, but we have been through these cycles before.

Speaker Change: Our underwriters are well positioned as they continue to focus on the bottom line.

Speaker Change: Finally, our E&S casualty Division top line was up 3%.

Speaker Change: Primary business struggled to grow premiums as private construction project continues to take longer to get started we're also competing against repressive standard markets and M. G H.

Jennifer Leigh Klobnak: We're also competing against Aggressive Standard Markets and MGH. On the excess side, we had more success, as there was slightly less competition, given industry results have affected some carriers. The focus in ENF Casualty is on the bottom line, where we continue to produce an underwriting process and have not experienced the adverse development that has gathered recent headlines for several competitors. Overall, another great quarter for RLI. We do a premium 11% with all segments contributing.

Speaker Change: Exercise, we had more success as there was slightly less competition, given industry results and effects and some carriers appetite.

Speaker Change: The focus in E&S casualty is on the bottom line, where we continue to produce an underwriting profit and have not experienced the adverse development and the other recent headlines for several competitors.

Speaker Change: Overall, another great quarter for <unk> with no premium of 11% with all segments contributing.

Jennifer Leigh Klobnak: We have built mean at scale and many longstanding profitable businesses. We are achieving rate increases to address loss trends, and our investments in relationships and people are paying off with increased revenue. We posted an 81.5 combined ratio for the quarter, with improvements in both the loss ratio and the expense ratio. Wealth activity has been steady, while rate increases from prior years earned through have positively impacted our bottom line. We finished the first half of the year with 12% growth on an 80% combined ratio.

Speaker Change: We have built needed scale in many longstanding profitable businesses.

Speaker Change: We are achieving rate increases to address loss trends and our investments in relationships and people are paying off with increased submissions.

Speaker Change: Posted an 81 five combined ratio for the quarter with improvements in both the loss ratio and expense ratio.

Speaker Change: Activity has been steady while rate increases from prior years earn through.

Speaker Change: The Italy impact our bottom line.

Speaker Change: We finished the first half of the year with 12% growth on an 80 combined ratio.

Jennifer Leigh Klobnak: Our insurance product portfolio is healthy, and we're in a good position to support our current and future insurers' and producers' needs in the second half of the year. Now I'll turn the call over to the moderator to open it up for some questions.

Speaker Change: <unk> product portfolio is healthy and we're in a good position to support our current and future insurance and producers' needs in the second half.

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

Operator: Thank you. The question and answer session will begin at this time. If you are using a speakerphone, please pick up the headset before pressing any numbers. Should you have a question, please press star 1 on your telephone. If you wish to withdraw your question, press star 2. Your question will be taken in the order that it is received. Please stand by for your first question. Our first question comes from the line of Greg Peters. You may proceed.

Thank you the question and answer session will begin at this time.

Speaker Change: Using a speakerphone please pick up the handset before pressing any numbers should you have a question. Please press star one on your telephone if you wish to withdraw your question Press Star two.

Speaker Change: <unk> will be taken in the order that is received please standby for your first question.

Speaker Change: Our first question comes from the line of Greg Peters You May proceed.

Jennifer Leigh Klobnak: Yeah. Hey, good morning. This is sitting in for Greg. Just hoping you could provide some more comments on the competition you're seeing across your three segments and maybe more specifically what you're seeing in the ENS property. I think you called out slower growth there, but you still see some opportunities in the non-coastal area, so some additional comments there would be helpful.

Speaker Change: Yeah, Hey, good morning, this is Sid on for Greg.

Sid: Just hoping you could provide some more comments on the competition you're seeing across your three segments and maybe more specifically what youre seeing in the E&S property I think you called out slower growth there, but you still see some opportunities in the non coastal area. So some additional comments there would be helpful.

Jennifer Leigh Klobnak: This is Jen. In the property segment, and specifically in the cat exposure, I'd say the biggest competition is coming from MGAs, some of which are backed by Louise. And, you know, with the quiet season last year, they're fairly aggressive now on trying to take advantage of the market while it remains at a pretty attractive level. So while rates have slowed, it's still, you know, a starting point is a very good place. So MGAs are starting to provide larger limits. You know, in the last couple of years, we, as well as others, have been reducing limits. We were down to offering just $2.5 million in new business.

Sid: Sure thing this is Jim.

Sid: In the property segment, specifically and the cat exposure I'd say the biggest competition is coming from <unk>, some of which are backed by Louise.

Speaker Change: Yeah. It was a quiet season last year. They are they're fairly aggressive now I'm trying to take advantage of the market. While it remains at a pretty attractive level. So while rates have slowed but it's still you know starting point is a very good place.

J D: J D.

Speaker Change: Are you starting to provide larger limits you know the last couple of years.

J D: All the others have been reducing limits.

Jennifer Leigh Klobnak: Others might have been a little higher than that, but people are moving more towards $5, $10, $20. In some cases, a lot higher than that from the MGAs. They're also expanding coverage a bit in terms of sublimits or expanding on the definition of things that are covered. We prefer to hold firm on the words because the words matter when there is an event.

J D: We were down in the offering just two and a half million dollars on new business.

Speaker Change: Others might have been a little higher than that but people are moving more towards 510 20. Some cases, a lot higher than that from the LNG Theyre also expanding coverage a bit.

Speaker Change: The sub limits.

We're expanding the definition of things that are covered.

Speaker Change: We'd prefer to hold firm on the words, because the worst matter when there is an event and.

Jennifer Leigh Klobnak: So we're watching carefully, you know, the coverage part of that. And I think there's also some competition just from going net. So if you look at our earthquake exposure in California, you know, the cumulative rate increases are causing people to wonder, should I buy this at this point or not.

Speaker Change: So we're watching carefully.

Speaker Change: Coverage part of that.

Speaker Change: And I think there's also some competition just from going that so if you look at our earthquake exposure in California.

Speaker Change: Cumulative rate increases are causing people to wonder should I buy this at this point or not and more people are taking a little bit about that.

Jennifer Leigh Klobnak: And more people are taking a little bit of that pie. I'd say competition is healthy in all of our spaces. We have seen a few areas pull back, so within the property segment in Hawaii, we've had a couple of competitors pull back post the wildfire from a couple of years ago.

Speaker Change: I'd say competition is healthy in all of our spaces, we have seen a few areas for backfill within the property segments in Hawaii. We've had a couple of competitors pull back post the the wildfire from a couple of years ago.

Jennifer Leigh Klobnak: We've also seen in areas of transportation where people have changed their appetites, which gives us a chance to look at some more business. But then there are other areas where there is a lot of competition, such as insurance, where people continue to provide very large limits on accounts in times when some companies are performing very well and others not so well. So that financial uncertainty makes us look a little bit closer at our accounts.

Speaker Change: We've also seen and there is a transportation where people change their appetite, which gives us a chance to look at some more business.

Speaker Change: But then there are other spaces, where there's a lot of competition, whether that's in surety or people continue to provide very large limits are two accounts in cyrusone.

Speaker Change: Some companies are performing very well and others not so well so that financial.

Speaker Change: Uncertainty it makes us look a little bit closer at accounts.

Jennifer Leigh Klobnak: And then when you look at the casualty books, you know, places like Casualty, where we focus on construction, there are smaller contractors that are struggling in some cases. And so, you know, providing that coverage, you have to be careful. The person can even pay the premium.

Speaker Change: And then when you look at the.

The casualty book, you know places like casualty, where we focus on construction there are smaller contractors that are struggling in some cases with the provider.

Speaker Change: Providing that coverage you have to be careful.

Speaker Change: Burlington, Dave of Freedom, and then in other cases, the larger contractors seem to be doing very well and so they see more stable and able to them to buy coverage until there's more competition in that space.

Jennifer Leigh Klobnak: And then, in other cases, the larger contractors seem to be doing very well, and so they seem more stable and able to buy coverage. And so there's more competition in that space. But it's difficult to talk about competition in our books because we have such a diverse portfolio. And so, in any given business unit, you're competing with a handful of folks, and another business unit is competing with a different handful of folks.

Speaker Change: It's difficult to talk about competition in our books, because we have such a diverse portfolio.

Speaker Change: And so in any given business unit, you're competing with a handful of folks in another business unit being with a different name Closeouts and and so it's very hard to roll that up into a distinct answer for you, but it gives you a sense of what we're doing in the market I would say that's why we focus on providing our underwriters the autonomy to work within their space.

Jennifer Leigh Klobnak: And so it's very hard to roll that up into a succinct answer for you, but it gives you a sense of what we're doing in the market. I'd say that's why we focus on providing our underwriters with the autonomy to work within their space and decide what they need to do to be successful in that space, depending on what's going on in the company.

Speaker Change: And decide what they need to do to be successful in that space spending what's going on with competition.

Jennifer Leigh Klobnak: Okay, great. Yeah, thanks for the answer. And then just as a quick follow-up, I believe a couple of quarters ago you called out increasing PICs in the casualty book, and I know you're getting additional pricing, but just curious if you've seen any changes in the severity trends there, if it's been relatively stable since you made those changes.

Okay, great Yeah. Thanks for the answer and then just as a quick follow up I believe a couple of quarters ago, you called out increasing picks in the casualty book and I know you're getting additional pricing, but just curious if you've seen any changes in the severity trends there or if it's been relatively stable since you made those.

Changes.

Jennifer Leigh Klobnak: So, I missed the very first part of your question. You said, I saw something increasing in the gasoline segment.

Speaker Change: So I missed the very first part of your question you said I saw increasing something in the casualty segment.

Jennifer Leigh Klobnak: Lost pitch. Sorry.

Speaker Change: Loss pick when you would be sorry.

Jennifer Leigh Klobnak: I would say in the casualty segment, again, we have a very diverse portfolio. We have increased our loss trends over the last couple of years, recognizing that severity in the industry is higher. I will tell you that in our book, we tend to see that the trends that we pick for our estimates tend to be a little bit higher than what our actual experience shows. So we use our own experience, and we also use industry experience to understand what might be going on.

Speaker Change: Yeah, sorry, I would say in the casualty segment again, we have a very diverse portfolio. We have increased our our loss trends over the last couple of years, recognizing the severity and the industry is higher I will tell you that in our book, we intend to see that as a trend that we are picking for our estimates tend to be a little bit higher than what our actual experience shows.

Speaker Change: So we use our own experience that we also use industry experience to understand what might be going on he also relies on our reinsurance brokers for that type of insight.

Jennifer Leigh Klobnak: We also rely a bit on our reinsurance brokers for that type of insight. So we would say that severity is up a bit, especially in auto coverages, and that's why we're so diligent around risk selection and around our claim handling practices to address that, because it's very hard to overcome severity. You really have to look at other ways of looking at it.

Speaker Change: So we would say that severity is up a bit, especially in auto coverages and that's why we're so diligent around risk selection and around our claim handling practices just to address that because it's very hard to overcome so they are in the fleet.

Speaker Change: Do you really have to look at other other ways of looking at it.

Jennifer Leigh Klobnak: I would just add there too, and Jen has a good summary, I think if you look at the overall underlying loss ratio for our casualty book, it's fairly similar to what it was in the mid-60s, 60-40. And from a loss trend standpoint, I think our rate on the casualty side overall is a couple points above what we're assuming, but again, the actual rate is often below the loss trend, the net trend, and what we see when it comes through on an actual basis versus an estimated basis. So we feel pretty good about the casualty book.

Speaker Change: I would just add there to a gen. Gen is good good summary, I think if you look at the overall underlying loss ratio for our casualty book.

Speaker Change: It's fairly similar to what it was.

Speaker Change: Mid 60, 64 range and from a from a loss trend standpoint, I think our rate on the casualty side overall as a couple of points above what we're assuming right, but again the actual rate is often below what loss trend that trend and what we what we see when it comes through in <unk>.

Speaker Change: Natural basis versus an estimated basis, so we feel pretty good about about the casual casualty book.

Jennifer Leigh Klobnak: Okay, I got it. Thank you.

Speaker Change: Okay got it thank you.

Operator: Thank you. The next question is from the line of Andrew Andersen. You may proceed.

Speaker Change: Thank you. The next question is from the line of Andrew Anderson You May proceed.

Andrew E. Andersen: Hey, good morning; maybe sticking on casually, seems pricing improved sequentially by a couple points really led by the umbrella product. But do you expect the casual segment as a whole to keep seeing right momentum and perhaps accelerate in the second half?

Andrew E. Andersen: Hey, good morning, maybe just sticking on casually seems pricing improved sequentially a couple of points really led by the umbrella product, but do you expect casualty segment as a whole to keep saying rate momentum and perhaps accelerate in the second half.

Jennifer Leigh Klobnak: I would love to see that. You know, you're right that Umbrella is driving in this case, so it's really a mixed change that's causing that increase from the 7% in the first quarter to the 9% personal umbrella leading the way. You know, as I mentioned, we have a couple more approvals already in the pipeline in different states for personal umbrellas, so we'll continue to see some improvement on that right there. Other than that, you know, we, on the right, at an individual level, a lot of these business units we have are looking at individual risks and trying to achieve overall rates to address loss trends and claim experience that we have.

Speaker Change: I would love to see that.

Speaker Change: You know youre right that umbrella is driving in this case, it's really a mix change that's causing that increase from the 7% in first quarter. The ninth personal umbrella, leading the way as I mentioned, we have a couple more approvals already in the can in different states for personal umbrella. So we'll continue to see some improvement on rate there other than that.

Speaker Change: We underwrite at an individual level the amount of these fitness units, we have I'm looking at individual risks and trying to achieve overall rate too.

Speaker Change: Less loss trends in claim experience that we have so I think there's some potential for it but you know it's a it's a fight every day to see what our given our crowd is willing to to do based on our competition, which in some cases it makes no sense to us and that they've been cutting rates in some areas. So that's all I'll stick with you.

Jennifer Leigh Klobnak: So I think there's some potential for it, but, you know, it's a fight every day to see what a given account is willing to do based on our competition, which in some cases makes no sense to us in that they've been cutting rates in some areas. So, I'll stick with you and say, hopefully, rates will continue to go up, but I'm not going to put that in writing at this point.

Speaker Change: Hopefully rates will continue to go up but I'm not going to put that in writing at this point.

Speaker Change: Yeah.

Todd Wayne Bryant: Okay, and maybe on the casualty reserves. Favorable PYD was pretty good here this quarter, but could you talk about any movements you may have had on more recent accident years? Have you been adjusting those either way or holding steady? Yes, this is Todd. I think the...

Speaker Change: Okay, and maybe on the casualty reserves favorable Pea idea was pretty good here this quarter, but could you talk about any movements. You may have had on more recent accident years have you been adjusting those either way or holding steady.

Todd Wayne Bryant: Yes, this is Todd. I think the actuarial approach has not changed. There are areas I would say we're extending the tail a little bit. Jen mentioned that in her comments with respect to transportation. So there's a bit of that. But the approach is the same.

Todd Wayne Bryant: Yes. This is Todd I think the actuarial approach has not changed there are areas I would say, we're extending a tail a little bit Jim had mentioned that in her comments.

Speaker Change: With respect to transportation, so theres a bit of that the approach is the same I think if you look at the years from that standpoint or development was.

Todd Wayne Bryant: I think if you look at the years from that standpoint where development was, it's pretty spread out. There's nothing big in any given year. So, 2019 to 2023, pretty spread out. Some in 17, and so we haven't really changed our approach on a current basis. Certainly not, and not as we look back over the prior years either.

Speaker Change: It's pretty spread out there's nothing big in any given year. So your 2019 to 2023.

Speaker Change: Pretty spread out some in 17, so we haven't really changed our approach on a current basis, certainly not and not as we look back over over the prior years either.

Speaker Change: Yeah.

Speaker Change: Okay. Thank you.

Operator: Thank you. The next question is from Alon of Scott Heleniak with RBC. You may proceed.

Scott Gregory Heleniak: Thank you. The next question is from the line of Scott <unk> with RBC you May proceed.

Scott Gregory Heleniak: Thanks. Good morning.

Scott Gregory Heleniak: Yes. Thanks. Good morning, just had a question to follow up on the umbrella line.

Scott: Obviously, the significant growth of 37% the rate increases can you just talk about the profitability of the book, it's been a tougher line for a lot of a lot of your peers a lot of your competitors and Roy has done really well with that but just can you see can you just give us an update on what youre seeing in terms of loss trend and where you're seeing the opportune.

Jennifer Leigh Klobnak: Just had a question to follow up on the umbrella line. Obviously, there's been significant growth of 37% and rate increases. Can you just talk about the profitability of the book? It's been a tougher line for a lot of your peers, a lot of your competitors, and RLI has done really well with that. Can you just give us an update on what you're seeing in terms of the lost trend and where you're seeing the opportunity, maybe what you're doing a little bit different in terms of focus, and how you've been able to weather that better than others?

Scott: And maybe what youre doing a little bit different in terms of focus and how you've been able to weather that better than others.

Jennifer Leigh Klobnak: Sure, so we've been in the personal umbrella business since the late 80s, mid to late 80s, so I've been doing this for a little bit, and in recent years, probably the last five years or so, we have leaned more into growing this book. And that's because the market has been in turmoil. There's been a lot of changes by competitors and their appetites, in addition to the standard carriers, where the homeowners and the auto books have become disconnected, and carriers are only willing to cover one or the other. And so, their overall personal umbrella is not eligible for that insurance. So we step in, and we provide only a standalone personal umbrella policy.

Scott: Sure. So we've done and the personal umbrella business since the late <unk>.

Roy: Mid to late eighties, so I've been doing this for a little bit and.

Roy: More recent years, probably the last five years or so we have lean into growing this book and that's because the market has been in turmoil. There's been a lot of changes by competitors and their appetite. In addition to the standard carriers, where the homeowners and the auto books have become disconnected and carriers are only willing to cover them.

Jennifer Leigh Klobnak: And so we've actually partnered with some of those carriers to help them out with their insurance. So that's where the growth comes from. We have a lot of data, as you can imagine. We have close to 400,000 insured. So we have a lot of data over the years and in our current book to see what's going on in terms of trends, what's driving losses, etc. I'd say our loss activity actually has been fairly stable from a frequency standpoint.

Roy: One or the other and so then there overall for somebody who is not eligible for that sure. So we stepped in and we provide only a standalone personal umbrella policies. So we can actually partner with some of those carriers to help them out with their insurers, so that's where the growth of Samsung.

Speaker Change: A lot of data as you can imagine we have them.

Speaker Change: Close to 400000 insurers. So we have a lot of data over the years and are critical to see what's going on in terms of trends.

Speaker Change: What's driving losses et cetera, I'd say are our our loss activity actually has been.

Jennifer Leigh Klobnak: You know, the industry has seen severity. We've seen a lot of severity as well, as you would expect. But we continue to stay ahead of it by looking at rates, what rate is needed by state, by type of insured, on a highly regular basis. We're constantly looking at what rate we need to tweak here or there. We're constantly meeting with our producers to understand where the opportunities are, and where our book might be shifting.

Speaker Change: Fairly stable from a frequency standpoint, you know the industry has seen severity. We've seen a lot of is very as well as you would expect but.

Speaker Change: While we continue to stay ahead of it by looking at what rate is needed by state.

Type of insured on a highly regular basis I'll say, we're constantly looking at what state you need to tweak here or there, but constantly meeting with our producers to understand where the opportunities are where our book might be shifting so we use a lot of data.

Jennifer Leigh Klobnak: So we use a lot of data. Our underwriters meet with our claim department and meet with our actuaries to talk about specific venues, specific claim trends that we're seeing, and that kind of thing to kind of continuously tweak what we're doing with that book. So, with new growth, we're always a little more conservative in how we look at the book. So we're expecting that book to have some issues just because we've been growing a lot.

Speaker Change: <unk> made with our claim department.

Speaker Change: Sure I used to talk about specific venues.

Speaker Change: Claim trends that we're seeing and that kind of thing to kind of continuously tweaked, what we're doing with that book so.

Speaker Change: We with new growth, we always are a little more conservative on how we look at the book. So we're expecting that looked to have some issues just because we've been growing a lot, but we're staying on top of it and trying to monitor and make sure that we're staying up to date on particularly right.

Jennifer Leigh Klobnak: But we're staying on top of it and trying to monitor and make sure that we're staying up to date on the particular rate, but on other terms. So, as an example, with the severity in the industry, we've changed our appetite a bit to require a 500,000, excuse me, underlying auto liability limit in the state of California, as opposed to a 250, and with that, you know, it takes another minute to get to our layer on a loss, and we think that that's prudent as we look forward to more severity in the industry. So, that's just one example of a lot of things that we look at on a constant basis in that book.

Speaker Change: Their terms so as an example, with the severity of the industry I always change your appetite a bit to require a 500000 excuse me underlying auto liability limit the state of California as opposed to a $2 50 and with that you know it takes another minute to get to earlier on a loss and we think that's prudent as we look forward to.

Speaker Change: Any in the industry. So that's just one example of a lot of things that we look at on a constant basis as that book.

Craig William Kliethermes: This is Craig. I would like to add that we, this is Craig Kliethermes. I'm just going to add, we invest heavily on the claims side of the house as much as we do on the underwriting side of the house, with Narrow and Deep Expertise, our claim people for personal umbrella insurance basically handle personal umbrella claims only. So they're dedicated to the space, they understand the underlying, sometimes they know the underlying carrier or claim people that they're doing business with or that they have handoffs from.

Speaker Change: This is Craig I wouldn't try to add that.

Craig William Kliethermes: This is correctly there were some scab.

Speaker Change: Best heavily on the claims side of the house as much as we do on the underwriting side of the house.

Speaker Change: Narrow and deep expertise our claim people for personal umbrella basically handle personal umbrella claims only.

Speaker Change: So there are dedicated in this space they understand the underlying sometimes they know the underlying carrier claim people, but theyre doing business with us that they are getting handoffs from so sometimes they are working closely with those folks to try to make sure we get the best outcome.

Craig William Kliethermes: So sometimes they're working closely with those folks to try to make sure we get the best outcome for the insured, for the defendant, and for our company. So I would not understate the value of having dedicated claim people that only handle excess claims in the personal auto space for the most part.

Speaker Change: For the insured for these centers.

Speaker Change: And for our company so.

Speaker Change: I would not.

Speaker Change: Understate the value of having dedicated claims people that only handle.

Speaker Change: Excess claims personal auto space for the most part.

Speaker Change: Yeah.

Jennifer Leigh Klobnak: Okay, I appreciate the detail. Then just one follow-up, just on the surety growth, which was pretty significant. And I mean, that's been a more competitive line. You guys have talked about that the past few years and not gotten a ton of rate increases. So is some of that just kind of, I know, you mentioned expansion and good relationships with customers, but some of that, just what's happening in the market, is there just more construction activity and more opportunity? Or is there? Or is it just something else you are taking from others? Or what do you think is going on?

Speaker Change: Okay I appreciate the detail and then just one follow up just on the surety growth, which was pretty significant and I mean thats been a more competitive line you guys have talked about that was past few years and not getting a ton of rate increases.

Speaker Change: Is that is some of that just kind of and I know you mentioned expansion and good relationships with customers, but some of that just whats happening market wide. There's just more construction activity any more opportunity or is there or is it just something else youre, taking share from others or.

Speaker Change: What are what do you think is going on there.

Jennifer Leigh Klobnak: Sure, so in the contract space, you know, that business unit focuses on public construction, whereas a lot of our P&C products focus on private construction. And as you know, the government is really good at investing in private construction projects, so we've seen plenty of inventory out there, and our contractors have been very active in bidding on those projects, so we have a lot of bid bonds and, ultimately, project bonds as well. On the commercial side, I'll tell you a similar story in the energy sector and then the marketing aspect.

Speaker Change: Sure. So in the contract space you know that that's a business unit focuses on public construction, whereas a lot of our P&C.

Speaker Change: Focus on the private construction as you know.

Speaker Change: The government is really good at investing.

Speaker Change: Private construction projects. So we've seen plenty of inventory out there and our contractors have been very active in bidding on those projects that we have a lot of bid bonds, resulting in project problems as well and with construction materials continue to be at a higher price and that's the basis for the rating for that helps support the freedom.

Speaker Change: In addition to that we have some pretty energetic folks out there then they're asking for business.

Speaker Change: It sounds silly, but didnt get in front of you for easier than market.

Speaker Change: Zero basis.

Speaker Change: That's just blocking exactly what that was producing so that's that's important.

Jennifer Leigh Klobnak: I think we, you know, there are a lot of different industries that we support. We develop some expertise in the renewable energy space that's providing some benefit there, but again, it's getting out there and being in front of your producers and answering the phone and being there when they need you, and so that's really driving the growth in that space.

Speaker Change: Besides I'll say a similar story in the energy and then the marketing aspect I think theres a lot of different industries that we support we developed some expertise in the renewable energy space, that's providing some benefit there, but again, it's getting out there and being in front of your producers and in answering the phone and being there when the Egypt.

Speaker Change: So that's really driving the growth in that space.

Speaker Change: Okay, Great I appreciate all the detail thanks.

Jennifer Leigh Klobnak: Great. I appreciate all the detail. Thanks.

Speaker Change: Thank you.

Operator: from the line of Meyer Shields. You may proceed.

Speaker Change: Next question is from the line of Meyer Shields you May proceed.

Meyer Shields: Thanks. I actually wanted to start with a question on a point that Jen just made about asking for more business. I know you were talking about this earlier.

Speaker Change: Yeah.

Meyer Shields: Thanks, I just wanted to start.

Meyer Shields: Start with a question on it but it doesn't just made about asking for.

Meyer Shields: More business I know you talked about it for a while we're seeing the success is there any way of.

Speaker Change: Benchmarking anyhow.

Speaker Change: How much of this effort is already panned out more opportunity there going forward.

Jennifer Leigh Klobnak: Romero, it's a little hard to hear you, but I think you're asking about, you know, we are increasing our marketing efforts. We've been in front of a lot of folks, and how much stands out versus how much might keep going? I believe that's your question.

Speaker Change: Well, maybe it's a little hard degree of I think you're asking about.

Speaker Change: Our increasing our marketing efforts, we've been putting a lot of folks and how much and out versus how much might keep going but.

Jennifer Leigh Klobnak: So I would answer that by saying, you know, we've been incredibly active in the first half of the year in meeting with producers. We've had a number of in-person cross-product gatherings where, you know, we've had a very educational discussion about what we offer, and people have been very receptive to saying, hey, I think I could use you in this space or that space. That's been good.

Speaker Change: Please ask your question, so I'm going to answer that but you know we've been incredibly active in the first half of the year and meeting with producers and we've had a number of in person.

Speaker Change: <unk> product gatherings, where you know we see.

Speaker Change: Educating them about what we offer and people have been very receptive to say, hey, I think I could use you in this space or that space. That's been good I think that just creates momentum and as long as you continue to invest in those relationships.

Speaker Change: That organic growth is possible going forward as well so I don't I think.

Jennifer Leigh Klobnak: I think that just creates momentum, and as long as you continue to invest in those relationships, I think that organic growth is possible going forward as well. So I don't think, you know, it's not time to stay home. We're going to continue to be mobile out there in the second half of the year, and we hope to see more growth just from staying in front of our producers.

Speaker Change: So that time to stay home Venezuelans boundaries, we get we're going to continue to be mobile out there in the second half of the year and we should hope to see more growth just from.

Speaker Change: Lying in front of our producers.

Jennifer Leigh Klobnak: Okay, that's very helpful. The second question, and I guess this is on the casualty side, I was hoping you'd give us a sense of regional differences in terms of how much... Social Inflation or Lawsuit Abuse you're seeing or is out there.

Speaker Change: Okay, that's very helpful.

Speaker Change: The second question I guess, it's sort of all the casualty side I was hoping you could give us a sense of regional differences in terms of how much.

Speaker Change: Social inflation or lawsuit abuse, you're seeing or is out there.

Speaker Change: Sure.

Speaker Change: Oh, Oh Oh.

Jennifer Leigh Klobnak: Oh, it's very hard to hear you in there. I don't know how you're using your phone today, but I think you said something about regional differences. Is that specific to a particular product?

Speaker Change: So it's very hard here and there I don't know how you're using your own data.

Speaker Change: It's been about regional differences is that specific to us.

<unk>.

Jennifer Leigh Klobnak: and the issues with social inflation or lawsuit abuse.

Speaker Change: Casually.

The.

Speaker Change: Issues with social inflation or lawsuit abuse.

Jennifer Leigh Klobnak: Yeah, so, you know. In the United States, as you know, every state is a different story, right? So there are some states where the dynamics of legal system abuse, which is what I'm calling it, are different than others. I'll say that, you know, the states that are challenging. California is obviously a challenging state, and we do have a fair amount of business there. And that's why you have to look at, you know, as we do, our underwriting appetite and risk selections and see where we're willing to take risks there.

Speaker Change: Yeah. So you know.

Speaker Change: And then in United States as you know every state has a different story right. So there are some states where.

Speaker Change: The dynamics are legal system, which is what I'm, calling it are different than others.

Speaker Change: I'll say that the states are challenged in California is obviously, a challenging phase and we do have a fair amount of business there and that's why you have to look at them as we do look at our underwriting appetite and risk selection, because even where we're willing to take risks there, but then when claims come in you have to stay on top of and investigate quickly and understand the situation. So you can do.

Jennifer Leigh Klobnak: But then when claims come in, you have to stay on top of them, investigate quickly, and understand the situation so you can get ahead of any sort of attorney tactics that might drive the exposure quite a bit higher.

Speaker Change: Get ahead of any sort of attorney tactics that might drive them the exposure quite a bit higher other states have done a better job with reform.

Jennifer Leigh Klobnak: Other states, you know, have done a better job with reform. So the reforms that have happened in Florida have been very helpful. It's still early to say, you know, exactly or quantify or say exactly what the impact of those reforms has been. But we know, you know, from claim counts and just from stories of certain claims that we've been able to resolve that those reforms have helped. And so each state is unique.

Speaker Change: That has happened is Florida has been very helpful. It's still early to say exactly to quantify or to say exactly what the impact of those reforms Amendment, we know from claim counts and just from stories of certain claims that.

<unk> been able to resolve that those reforms that helped.

Speaker Change: So each state is unique I know, Louisiana has taken a triage I'd be more friendly towards business, but it hasn't quite gotten there yet I think so we're pretty careful in that state.

Jennifer Leigh Klobnak: I know Louisiana has tried to be more friendly towards business, but it hasn't quite gotten there yet, I think. So we're pretty careful in that state. So it does affect our appetite and our underwriting, but it is unique and it does change as laws and case law, you know, solidify in different states.

Speaker Change: So it does affect us.

Speaker Change: Our appetite and our underwriting.

Speaker Change: But it is unique and it does change laws in place cases, Keith case law solidifies in different states.

Jennifer Leigh Klobnak: Mayor, I'll just add, I know we've talked about this before, but we talk about our feedback loop. We have a very strong feedback loop between our claims, our underwriting, and our actuaries, and those conversations are going on every day. When our claim people see problem areas, problem jurisdictions, they give that feedback to the underwriters as quickly as possible. Sometimes we change our appetite in regards to locations.

Speaker Change: Maryland, Okay. Thank you very much.

Speaker Change: Good there I'll just add I know we've talked about this before but we talked about are the feedback loop, we have very strong feedback loop between our claims our underwriting and our actuaries.

Speaker Change: Those conversations are going on every day when our claim people see problem areas problem jurisdictions, they give that feedback to the underwriter as quickly as possible, sometimes we change your appetite in regards to locations, sometimes it's even within states might be it could be.

Jennifer Leigh Klobnak: Sometimes it's even within states. It could be a portion of Texas even that we may want to watch or be careful in regards to how much limit we might want to deploy, the type of risks we might want to write, the type of insured classes, and the limits we might deploy. Those all vary and can vary even within a region, within a state. But that feedback loop is critical to getting that information in the hands of the underwriters.

Speaker Change: A portion of Texas, even though we may want to watch for be careful in regards to how much limit we want to deploy the type of risk we might Wanna right type of type of insured classes or the limits, we might deploy those all vary and can vary even within region within a state so but that feedback.

Speaker Change: Group is critical to getting that information in the hands of the underwriter and obviously as we've explained before the way. Our model works is are under are very receptive, whereas in other places maybe there's less receptive.

Jennifer Leigh Klobnak: Obviously, as we've explained before, the way our model works is that our underwriters are very receptive, whereas in other places, maybe they're less receptive to that information because it helps them build their business out in a profitable way.

Speaker Change: That information because it helps them build their business out in a profitable way so.

Jennifer Leigh Klobnak: Okay, thank you very much; that was very kind.

Speaker Change: Okay. Thank you very much that's very helpful.

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

Speaker Change: If there are no further questions I will now turn the conference over to Mr. Clint Craig Kliethermes for some closing remarks.

Craig William Kliethermes: Well, thank you all for joining us today. A good quarter and first half of the year, 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. As our founder, Jerry Stevens, once said, "We do it right because we all work for a company we own. We know if the company succeeds, so do we." That's different.

Speaker Change: Well, thank you all for joining us today.

Speaker Change: A good quarter and first half of the year, we believe our hallmark underwriting discipline and diversified portfolio of specialty products should translate into consistent financial overcome outcomes over time and allow us to continue serving as a stable market for our customers.

Speaker Change: As our founder Jerry Stephens wants that.

Jerry Stephens: We do it right because we all work for our company we own we know if the company succeeds so do we.

Jerry Stephens: Different we're not like other companies.

Craig William Kliethermes: We're not like other companies. I would like to thank all of our RLI Associate Owners for their contributions to our shared success and encourage them to keep delivering on the difference that works. Thank you all again for tuning in, and we'll visit again next quarter.

Speaker Change: I would like to thank all of our RLI associate owners for their contributions to our shared success and encourage them to keep delivering on the difference that works. Thank you all again for tuning in and we will visit again next quarter.

Operator: Ladies and gentlemen, if you wish to access the replay for this call, you may do so on the RLI homepage at www.rlicorp.com. This concludes our conference for today. Thank you all for participating. 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 <unk> homepage at Www Dot RLI Corp. Dot Com. This concludes our conference for today. Thank you all for participating have a nice day all parties may now disconnect.