Q2 2024 Kemper Corp Earnings Call

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Ina: Good afternoon, ladies and gentlemen, and welcome to Kemper's second quarter 2024 earnings conference call. My name is Ina, and I will be your coordinator today. At this time, all participants are in listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. As a reminder, this conference call is being recorded for replay purposes. I would now like to introduce your host for today's conference call, Michael Marinaccio, Kemper's Vice President of Corporate Development and Investor Relations. Mr. Marinaccio, you may begin.

Unknown Executive: It is afternoon, ladies and gentlemen, and welcome to Kemper's second quarter 2024 earnings conference call.

Speaker Change: Good afternoon, ladies and gentlemen, and welcome to Kemper's second quarter 2024 earnings conference call.

Unknown Executive: My name is Ina, and I will be your co-ordinator today. At this time, all participants are in lesson-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time.

Ina: My name is Ina, and I will be your coordinator today. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. As a reminder, this conference call is being recorded for replay purposes.

Unknown Executive: As a reminder, this conference call is being recorded for replay purposes.

Michael Marinaccio: I would like to introduce your host for today's conference call, Michael Marinaccio, Kemper's Vice President of Corporate Development and Investor Relations. Mr. Marinaccio, you may begin. Thank you, Operator. Good afternoon, everyone, and welcome to Kemper's discussion of our second quarter 2024 results. This afternoon, you'll hear from Joe Locker, Kemper's President and Chief Executive Officer, Brad Camden, Kemper's Executive Vice President and Chief Financial Officer, and Matt Hunton, Kemper's Executive Vice President and President of Kemper Auto. We'll make a few more remarks to provide context around our second quarter results, followed by a Q&A session. During the interactive portion of the call, our presenters will be joined by Chris Flint, Kemper's Executive Vice President and President of Kemper Live, Dwayne Sanders, Kemper's Executive Vice President and Chief Claims Officer P&C, and Jon Bichelli, Kemper's Executive Vice President and Chief Investment Officer.

Ina: I would like to introduce your host for today's conference call, Michael Marinaccio, Kemper's Vice President of Corporate Development and Investor Relations. Mr. Marinaccio, you may begin.

Michael Marinaccio: Thank you, operator. Good afternoon, everyone, and welcome to Kemper's discussion of our second quarter 2024 results. This afternoon, you'll hear from Joe Lacher, Kemper's President and Chief Executive Officer, Brad Camden, Kemper's Executive Vice President and Chief Financial Officer, and Matt Hunton, Kemper's Executive Vice President and President of Kemper Auto. We'll make a few opening remarks to provide context around our second quarter results, followed by a Q&A session. During the interactive portion of the call, our presenters will be joined by Chris Flint, Kemper's Executive Vice President and President of Kemper Life, Dwayne Sanders, Kemper's Executive Vice President and Chief Claims Officer, P&C, and Jon Vescelli, Kemper's Executive Vice President and Chief Investment Officer.

Michael Marinaccio: Thank you, operator. Good afternoon, everyone, and welcome to Kemper's discussion of our second quarter 2024 results.

Speaker Change: This afternoon, you'll hear from Joe Lacher, Kemper's President and Chief Executive Officer, Brad Camden, Kemper's Executive Vice President and Chief Financial Officer, and Matt Hunton, Kemper's Executive Vice President and President of Kemper Auto.

Speaker Change: We'll make a few opening remarks to provide context around our second quarter results, followed by a Q&A session.

Speaker Change: During the interactive portion of the call, our presenters will be joined by Chris Flint, Kemper's Executive Vice President and President of Kemper Life, Dwayne Sanders, Kemper's Executive Vice President and Chief Claims Officer, P&C, and Jon Vescelli, Kemper's Executive Vice President and Chief Investment Officer.

Michael Marinaccio: After the market is closed today, we issued our earnings release, filed our Form 10-Q with the SEC, and published our earnings presentation and financial supplement. You can find these documents in the Investor section of our website, Kemper.com.

Michael Marinaccio: After the markets closed today, we issued our earnings release, filed our Form 10-Q with the SEC, and published our earnings presentation and financial supplement. You can find these documents in the investor section of our website, Kemper.com. Our discussion today may contain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, the company's outlook and its future results of operations and financial conditions.

Speaker Change: After the markets closed today, we issued our earnings release, filed our Form 10-Q with the SEC, and published our earnings presentation and financial supplement. You can find these documents in the investor section of our website, Kemper.com.

Michael Marinaccio: My discussion today may contain forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, the company's outlook and its future results of operation and financial condition. Our actual future results and financial condition may differ materially from these statements. For information on additional risk that may impact these forward-looking statements, please refer to our 2023 Form 10-Q and our second quarter earnings release.

Michael Marinaccio: Our actual future results and financial condition may differ materially from these estimates. For information on additional risks that may impact these forward-looking statements, please refer to our 2023 Form 10-K and our second quarter earnings report. This afternoon's discussion also includes non-GAAP financial measures we believe are meaningful to investors. In our financial supplement earnings presentation and earnings release, we've defined and reconciled all non-GAAP financial measures to GAAP, where required in accordance with SEC rules. You can find each of these in the investor section of our website, Kemper.com. All comparative references will be to the corresponding 2023 period unless otherwise stated. I will now turn the call over to Joe.

Speaker Change: Our discussion today may contain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, the company's outlook and its future results of operation and financial conditions.

Speaker Change: Our actual future results and financial condition may differ materially from these statements. For information on additional risks that may impact these forward-looking statements, please refer to our 2023 Form 10-K and our second quarter earnings release.

Michael Marinaccio: This afternoon's discussion also includes non-GAAP financial measures we believe are meaningful to investors. In our financial supplement, earnings presentation, and earnings release, we've defined and reconciled all non-GAAP financial measures to GAAP where required and going to the SEC rule. We can find each of these in the Investor section of our website, Kemper.com.

Speaker Change: This afternoon's discussion also includes non-GAAP financial measures we believe are meaningful to investors.

Speaker Change: In our Financial Supplement Earnings Presentation and Earnings Release, we've defined and reconciled all non-GAAP financial measures to GAAP where required in accordance with SEC rules. You can find each of these in the Investor section of our website, Kemper.com.

Michael Marinaccio: All comparative references will be to the corresponding 2020-23 period unless otherwise stated.

Speaker Change: All comparative references will be to the corresponding 2023 period unless otherwise stated. I will now turn the call over to Joe.

Joe Locker: I will now turn the call over to Joe. Thank you, Michael. Good afternoon, everyone. Thank you for joining us today. Let me start by saying that I'm proud of the strong results we delivered this quarter. This represents the fifth consecutive quarter of significant improvement in our underlying business. It's the third straight quarter of generating operating profitability. Our specialty auto business delivered a strong combined ratio well below our long-term target, and specialty auto generated sequential quarter pith growth of about 4.5%. Again, while we delivered great progress, these are also objectively strong results.

Joseph Lacher: Thank you, Michael. Good afternoon, everyone.

Joe Lacher: Thank you, Michael. Good afternoon, everyone. Thank you for joining us today. Let me start by saying that I'm proud of the strong results we delivered this quarter.

Joseph Lacher: Thank you for joining us today. Let me start by saying that I'm proud of the strong results we delivered this quarter. This represents the fifth consecutive quarter of significant improvement in our underlying business, and it's the third straight quarter of generating operating profitability. Our specialty auto business delivered a strong combined ratio, well below our long-term target, and specialty auto generated sequential quarter PIF growth of about four and a half percent. Again, while we delivered great progress, these are also objectively strong results.

Joe Lacher: This represents the fifth consecutive quarter of significant improvement in our underlying business.

Joe Lacher: It's the third straight quarter of generating operating profitability.

Joe Lacher: Our specialty auto business delivered a strong combined ratio well below our long-term target.

Joe Lacher: and specially auto-generated sequential quarter PIF growth of about four and a half percent.

Joe Lacher: Again, while we delivered great progress, these are also objectively strong results.

Joe Locker: Before I dive deeper into discussing these results, I'd like to step back a moment and do three things. James. First, to remind us of the backdrop of the still volatile market environment that exists. Given the pandemic induced an abrupt reduction in driving, the subsequent rapid driving restart with massive supply chain induced inflation, and the delayed impact of rate increases in a highly regulated industry. The market was virtually guaranteed to see significant losses underwriting restrictions in a subsequent hard market. The marketplace structure virtually guaranteed that this would take several years to work itself out. As we've discussed before, our response was to institute non-rate actions to partially restore profitability, while we filed for clearly nude rates.

Joseph Lacher: Before we dive deeper into discussing these results, I'd like to step back a moment and do three things. First, to remind us of the backdrop of the still volatile market environment that exists, given the pandemic-induced abrupt reduction in driving, the subsequent rapid driving restart with massive supply chain-induced inflation, and the delayed impact of rate increases in a highly regulated industry. The market was virtually guaranteed to see significant losses, underwriting restrictions, and a subsequent hard market.

Joe Lacher: Before we dive deeper into discussing these results, I'd like to step back a moment and do three things.

Joe Lacher: First, to remind us of the backdrop of the still-volatile market environment that exists.

Joe Lacher: Given the pandemic-induced abrupt reduction in driving, the subsequent rapid driving restart with massive supply chain-induced inflation, and the delayed impact of rate increases in a highly regulated industry.

Joe Lacher: The market was virtually guaranteed to see significant losses, underwriting restrictions, and a subsequent hard market.

Joseph Lacher: The marketplace structure virtually guaranteed that this would take several years to work itself out. As we've discussed before, our response was to institute non-rate actions to partially restore profitability while we filed for clearly needed rates. As those rates earned in, we would gradually remove the non-rate actions and return to a normal balance. This was likely to temporarily produce combined ratios below long-term historical range. This is where we are right now.

Joe Lacher: The marketplace structure virtually guaranteed that this would take several years to work itself out. As we've discussed before, our response was to institute non-rate actions to partially restore profitability while we filed for clearly needed rates.

Joe Locker: As those rates turned in, we would gradually remove the non-rate actions and return to a normal balance. This was likely to temporarily produce combined ratios below long-term historical ranges. This is where we are right now.

Joe Lacher: As those rates earned in, we would gradually remove the non-rate actions and return to a normal balance.

Joe Lacher: This was likely to temporarily produce combined ratios below long-term historical ranges.

Joe Locker: From here, we'll continue to remove non-rate actions, take maintenance rate changes, and guide the business back to more traditional margin and growth ranges.

Joseph Lacher: From here, we'll continue to remove non-rate actions, take maintenance rate changes, and guide the business back to a more traditional margin and growth range. Second, I'm going to add some clarity and insight to our 2024 guidance. In late 23, we said we would achieve a 10% or greater ROE in 2024. Given our strong first half results, let me be clear that we expect to solidly beat that 10% for the year. We do not see deteriorating trends that would cause earnings to meaningfully decline in the second half of 2024. That said, we are not updating our guidance.

Joe Lacher: This is where we are right now. From here we'll continue to remove non-rate actions, take maintenance rate changes, and guide the business back to more traditional margin and growth ranges.

Joe Locker: Second, I'm going to add some clarity and insight to our 2024 guidance. In late 23, we said we would achieve a 10% or greater ROE in 2024. Given our strong first half results, let me be clear that we expect to solidly beat that 10% for the year. We do not see deteriorating trends, but we cause earnings to meaningfully decline in the second half of 2024. That said, we are not updating our guidance. If we update annual guidance each quarter, we'll effectively be giving half-year or quarterly guidance. This is too precise for this industry.

Joe Lacher: Second, I'm going to add some clarity and insight to our 2024 guidance.

Joe Lacher: In late 23, we said we would achieve a 10% or greater ROE in 2024.

Joe Lacher: Given our strong first half results, let me be clear that we expect to solidly beat that 10% for the year.

Joe Lacher: We do not see deteriorating trends that would cause earnings to meaningfully decline in the second half of 2024.

Joseph Lacher: If we update annual guidance each quarter, we'll effectively be giving half-year or quarterly guidance. This is too precise for this industry.

Joe Lacher: That said, we are not updating our guidance.

Joe Lacher: If we update annual guidance each quarter, we'll effectively be giving half year or quarterly guidance. This is too precise for this industry.

Joe Locker: Third, last quarter, we told you that our long-term goal for specialty auto was to produce a 96% combined ratio or better and grow as much as possible within that. This is a long-term operating parameter for this business. You should not use it as any form of earnings guidance. With this business currently generating a roughly 90% underlying combined ratio, it's safe to assume that we believe long-term shareholder value creation would be better served by allowing the combined ratio to drift closer to the 96 if increased growth can be economically delivered. That combined ratio movement will not be rapid, and it's likely to occur over at least four to six quarters.

Joseph Lacher: Last quarter, we told you that our long-term goal for specialty auto was to produce a 96% combined ratio or better and grow as much as possible within that. This is a long-term operating parameter for this business. You should not use it as any form of earnings guidance.

Joe Lacher: third

Joe Lacher: Last quarter we told you that our long-term goal for specialty auto was to produce a 96% combined ratio or better and grow as much as possible within that.

Joe Lacher: This is a long term operating parameter for this business.

Joe Lacher: You should not use it as any form of earnings guidance.

Joseph Lacher: With this business currently generating a roughly 90% underlying combined ratio, it's safe to assume that we believe long-term shareholder value creation will be better served by allowing the combined ratio to drift closer to the 96 mark if increased growth can be economically delivered. That combined racial movement will not be rapid, and it's likely to occur over at least four to six quarters. Hopefully, this backdrop provides context to both review our current results and for you to project our results going forward. Now let's move to page four and jump into this quarter's results. Overall, we delivered $75 million in net income, an ROE of about 11.5%, and an adjusted ROE of over 17%.

Joe Lacher: With this business currently generating a roughly 90% underlying combined ratio, it's safe to assume that we believe long-term shareholder value creation will be better served by allowing the combined ratio to drift closer to the 96% if increased growth can be economically delivered.

Joe Lacher: That combined ratio movement will not be rapid, and it's likely to occur over at least four to six quarters.

Joe Locker: Hopefully, this backdrop provides context to both review our current results and for you to project our results going forward.

Joe Lacher: Hopefully this backdrop provides context to both review our current results and for you to project our results going forward.

Joe Locker: Now, let's move to page four and jump into this quarter's results. Overall, we delivered 75 million of net income and ROE of about 11.5%, and an adjusted ROE of over 17%. Especially P&C generated a very strong 90% underlying combined ratio, a great improvement year over year and sequentially. In our last call, we indicated that we expected sequential quarter-pif to stabilize mid-year. As we saw our underlying results improved monthly, we were able to accelerate our new business expansion, and this resulted in a strong 4.5% sequential quarter-pif increase. James. His underscores the strength of our franchise and the competitive advantages we have in the marketplace.

Joe Lacher: Now let's move to page four and jump into this quarter's results.

Joe Lacher: Overall, we delivered $75 million of net income, an ROE of about 11.5%, and an adjusted ROE of over 17%.

Joseph Lacher: Especially PNC generated a very strong 90% underlying combined ratio, a great improvement year over year and sequentially. On our last call, we indicated that we expected sequential quarter PIF to stabilize mid-year. As we saw our underlying results improve monthly, we were able to accelerate our new business expansion, and this resulted in a strong four and a half percent sequential quarter PIP increase. This underscores the strength of our franchise and the competitive advantages we have in the marketplace.

Speaker Change: Specialty P&C generated a very strong 90% underlying combined ratio, a great improvement year-over-year and sequentially.

Speaker Change: In our last call, we indicated that we expected sequential quarter PIF to stabilize mid-year. As we saw our underlying results improve monthly, we were able to accelerate our new business expansion, and this resulted in a strong 4.5% sequential quarter PIF increase.

Speaker Change: This underscores the strength of our franchise and the competitive advantages we have in the marketplace.

Joe Locker: That said, the second half of 24 is likely to produce piff growth at a more modest rate, given the seasonality in our business.

Joseph Lacher: That said, the second half of 24 is likely to produce PIF growth at a more modest rate, given the seasonality in our business. Matt will discuss this in more detail later. The underlying fundamentals of our life business remain stable, and the business continues to produce consistent distributable cash flow. However, the segment was negatively impacted this quarter by a valuation adjustment on a real estate investment.

Speaker Change: That said, the second half of 24 is likely to produce PIF growth at a more modest rate, given the seasonality in our business.

Joe Locker: Matt will discuss this in more detail later. The underlying fundamentals of our life business remain stable, and the business continues to produce consistent, distributable cash flow. However, the segment was negatively impacted this quarter by evaluation of investment on a real estate investment.

Speaker Change: Matt will discuss this in more detail later.

Matt Hunton: The underlying fundamentals of our life business remain stable, and the business continues to produce consistent, distributable cash flow.

Matt Hunton: However, the segment was negatively impacted this quarter by a valuation adjustment on a real estate investment. Brad will touch on this later. With that, I'll turn the call over to Brad.

Brad Camden: Brad will touch on this later.

Joseph Lacher: Brad will touch on this later. With that, I'll turn the call over to Brad.

Brad Camden: With that, I'll turn the call over to Brad. Thank you, Joe. I'll begin on page five with our mentality to financial results. This quarter, we generated a fifth consecutive quarterly improvement in our underlying results in a third straight quarter of solid operating under a process. That income was 75.4 million, or $1.16 per diluted share. An adjusted consolidated operating income was 91.7 million, or $1.42 per diluted share. These earnings translate to an 11.5% return on equity and a 17.6% adjusted return on equity. Previously, we described adjusted ROE as Return on Tangible Equity. We have changed its name to more online with industry practices.

Bradley Camden: Thank you, Joe. I'll begin on page five with our consolidated financial results. This quarter we generated a fifth consecutive quarterly improvement in our underlying results and a third straight quarter of solid operating under a process. Net income was $75.4 million, or $1.16 per diluted share. An adjusted consolidated net operating income was $91.7 million, or $1.42 per diluted share.

Brad Camden: Thank you, Joe. I'll begin on page five with our consolidated financial results.

Brad Camden: This quarter we generated a fifth consecutive quarterly improvement in our underlying results and a third straight quarter of solid operating and underage profits.

Brad Camden: Net income was $75.4 million, or $1.16 per diluted share. And adjusted consolidated net operating income was $91.7 million, or $1.42 per diluted share.

Bradley Camden: These earnings translate to an 11.5% return on equity and a 17.6% adjusted return on equity. Previously, we described adjusted ROE as we turn on tangible equity. We have changed its name to more align with industry practices.

Brad Camden: These earnings translate to an 11.5% return on equity and a 17.6% adjusted return on equity.

Brad Camden: Previously we described adjusted ROE as we turn on tangible equity. We have changed its name to more align with industry practices. Further details are provided in our non-GAAP disclosures.

Brad Camden: Further details are provided in our non-GAAP disclosures.

Bradley Camden: Further details are provided in our non-GAAP disclosure. As Joe indicated, we expect the salary to be the 10% return equity guidance for the year and do not foresee trends that would cause earnings to immediately decline in the second half of 2024, driving our strong consolidated financial results this quarter with a four point sequential improvement in specialty PNCs' underlied combined ratio. Income Unearned Rate Exceeding Loss Trends and Expense Discipline were key drivers of this quarter's results.

Brad Camden: As Joe indicated, we expect the salary to be the 10% return on equity guidance for the year, and we now foresee trends that would cause earnings to meaningfully decline in the second half of 2024. Driving our strong mentality to financial results is quarter with a 4.2-inchal improvement in specialty TNC's underlying combined ratio. Incoming on earned rate exceeding loss trends and expense discipline will key drivers of this quarter's results. As we discussed during the first quarter call, we've been attempting to focus on expanding our new business writings and moving from profit restoration to growth. Due to the monthly improvement in the underlying combined ratio and specialty TNC during the quarter, we accelerated our production expansion efforts while maintaining its efficient margin of safety.

Brad Camden: As Joe indicated, we expect to solidly beat the 10% return on equity guidance for the year and do not foresee trends that would cause earnings to immediately decline in the second half of 2024.

Joe Lacher: Driving our strong consolidated financial results this quarter with a 4-point sequential improvement in specialty P&Cs underlying combined ratio, incremental earned rate exceeding loss trend, and expense-discipline were key drivers of this quarter's results.

Bradley Camden: As we discussed during the first quarter call, we have been intently focused on expanding our new business writings and moving from profit restoration to growth. Due to the monthly improvement in the underlying combined ratio and specialty TNC during the quarter, we accelerated our production expansion efforts while maintaining a sufficient margin of safety. This resulted in a 4.6% to quintuple quarterly increase in PIP.

Speaker Change: As we discussed during the first quarter call, we have been intently focused on expanding our new business writings and moving from profit restoration to growth.

Speaker Change: Due to the monthly improvement in the underlying combined ratio and specialty T&C during the quarter, we accelerated our production expansion efforts while maintaining a sufficient margin of safety.

Brad Camden: This resulted in a 4.6% to quarter the increase in PIT. Our swift return to growth highlights our franchise's strengths and competitive managers.

Speaker Change: This resulted in a 4.6% sequential quarterly increase in PIF. Our swift return to growth highlights our franchise's strengths and competitive advantages.

Bradley Camden: Our swift return to growth highlights our franchise's strength and competitive advantage. That said, given seasonal buying patterns, we expect the quintuple quarter PIF growth to moderate for the remainder of the year. As we return to a more normal operating environment and further expand new business writings, we anticipate that the combined ratio will migrate back to a more traditional range over the next four to six quarters. However, this will not be a linear transition due to seasonality and other market dynamics. Matt will provide further details on this later.

Brad Camden: That said, given season of buying payments, we expect the quarter PIT growth to moderate to the remainder of the year. As we return to a more normal operating environment and further expand business writings, we anticipate that the combined ratio will migrate back to a more traditional range over the next 4-6 quarters. However, this will not be a linear transition due to seasonality, other market dynamics.

Speaker Change: That said, given seasonal buying patterns, we expect the quintuple quarter PIF growth to moderate for the remainder of the year.

Speaker Change: As we return to a more normal operating environment and further expand new business writings, we anticipate that the combined ratio will migrate back to a more traditional range over the next four to six quarters.

Speaker Change: However, this will not be a linear transition due to seasonality and other market dynamics.

Brad Camden: That will provide further details on this later. Turning to page 6, our insurance companies are well-capitalized and have significant sources of liquidity. At the end of the quarter, parent company's liquidity was approximately 1.1 billion, consisting of revolver and inter-company lending capacity and holding company cash and investments. Our healthy liquidity balance allows the pay shareholder dividends, interest payments, and supporter operating subsidiaries. The PNC and life businesses continue to improve their capital ratios. Specialty TNC operating profits and the preferred PNC wind down are helping to increase PNC capital levels. During the second quarter, the preferred PNC exit released 44 million of capital, and an additional 50 million is expected to be released during the second half of 2024.

Speaker Change: Matt will provide further details on this later.

Bradley Camden: Our insurance companies are well capitalized and have significant sources of liquidity. At the end of the quarter, parent company liquidity was approximately $1.1 billion, consisting of revolver and intercompany lending capacity and holding company cash and investments. Our healthy liquidity balance allows us to pay shareholder dividends, interest payments, and support our operating subsidiaries. The PNC and Life businesses continue to improve their capital ratio. Specialty P&C Operating Profits and the Preferred P&C Winddown are helping to increase P&C capital levels. During the second quarter, the preferred PNC exit released $44 million of capital, and an additional $50 million is expected to be released during the second half of 2024.

Matt Hunton: Trained to pay sex. Our insurance companies are well capitalized and have significant sources of liquidity.

Matt Hunton: At the end of the quarter, parent companies equated with approximately $1.1 billion, consisting of revolver and intercompany lending capacity and holding company cash and investments.

Matt Hunton: Our healthy liquidity balance allows us to pay shareholder dividends, interest payments, and support our operating subsidiaries.

Matt Hunton: The PNC and Life businesses continue to improve their capital ratios.

Matt Hunton: Specialty P&C Operating Profits and the Preferred P&C Winddown are helping to increase P&C capital levels.

Brad Camden: This exit is mostly out of schedule and should release over 130 million of capital this year.

Bradley Camden: This exhibit is mostly ahead of schedule and should release over $130 million of capital this year. Given the slower pace of capital release going forward, we do not plan to provide additional details on this initiative after this quarter regarding our balance sheet. We remain focused on reducing our debt to capital ratio. By the end of the first quarter of 2025, we anticipate that our debt to capital ratio will be in the high 20% area.

Brad Camden: Given the slower pace of capital least going forward, we do not plan to provide additional details on this initiative after this quarter. Regarding our balance sheet, we remain focused on reducing our debt to capital ratio. By the end of the first quarter of 2025, we anticipate that our debt to capital ratio will be in the high 20% area, and by year end 2025, we expected to be in the mid 20% range. This improvement will be achieved through operating earnings and debt reproduction, including the previously discussed plan.

Matt Hunton: Given the slower pace of capital release going forward, we do not plan to provide additional details on this initiative after this quarter.

Bradley Camden: And by year end 2025, we expect it to be in the mid 20% range. This improvement will be achieved through operating earnings and debt reduction, including the previously discussed plan for the February 2025 debt maturity. Moving to slide 7, net investment income for the quarter was $93 million, and our pre-tax equivalent annualized book yield is 4%. This quarter's figures were negatively impacted by a $15 million pre-tax valuation adjustment related to a real estate investment. This is not a run rate item.

Matt Hunton: Regarding our balance sheet, we remain focused on reducing our debt-to-capital ratio. By the end of the first quarter of 2025, we anticipate that our debt-to-capital ratio will be in the high 20% area, and by year-end 2025, we expect it to be in the mid-20% range.

Matt Hunton: This improvement will be achieved through operating earnings and debt reduction, including the previously discussed plan for the February 2025 debt maturity.

Brad Camden: So the February 2025 debt maturity. We'll be to slide seven. Net investment income for the quarter was 93 million, and our pre-tax equivalent analyzed both yield is 4%. This quarter figures were negatively impacted by a 15 million pre-tax valuation adjustment related to real estate investment. This is not a run rate item. We anticipate net investment income returning to more normal levels in future periods.

Matt Hunton: Moving to slide 7.

Matt Hunton: Net investment income for the quarter was $93 million, and our pre-tax equivalent annualized book yield was 4%. This quarter's figures were negatively impacted by a $15 million pre-tax valuation adjustment related to our real estate investment.

Bradley Camden: We anticipate net investment income returning to more normal levels in future periods. Given the market interest in commercial real estate, we provide further detail on slides 13 and 14 of the earnings presentation. Here you will notice about 8% of our portfolio is in commercial real estate, of which over 80% is liquid or short term.

Matt Hunton: This is not a run rate item.

Matt Hunton: We anticipate net investment income returning to more normal levels in future periods.

Brad Camden: Given the market interest regarding commercial real estate, we provide further detail on slide 13 and 14 of the earnings presentation. Share you will notice about 8% of our portfolio is in commercial real estate, of which over 80% is a liquid or short term. Overall, we continue to maintain a high quality, well diversified, $8.7 billion investment portfolio, and it had no changes to our long term philosophy or execution.

Matt Hunton: Given the market interest regarding commercial real estate, we provide further detail on slides 13 and 14 of the earnings presentation.

Matt Hunton: Here you will notice about 8% of our portfolio is in commercial real estate, of which over 80% is liquid or short term.

Bradley Camden: Overall, we continue to maintain a high quality, well diversified $8.7 billion investment portfolio, and it has had no changes to our long-term philosophy or execution. I'll now turn the call over to Matt to discuss the specialty PNC business. Thank you, Brad, and good afternoon, everyone.

Matt Hunton: Overall, we continue to maintain a high-quality, well-diversified $8.7 billion investment portfolio, and it had no changes to our long-term philosophy or execution.

Matt Hunton: I'll now turn the call over to Matt to discuss the specialty PNC business. We have an underlying combined ratio of 89.6%, representing a four point improvement sequentially. Both our private passenger auto and commercial vehicle businesses reported underlying combined ratios of 90% or better. As we discussed last quarter, now that we've restored profitability, we pivot our focus to PIF growth. Given the volatile market environment, we continue to incorporate an additional margin of safety in our business practices. We achieved a 4.6% sequential increase in PIF this quarter and are pleased with the incremental progress.

Matt Hunton: I'll now turn the call over to Matt to discuss a specialty PNC business.

Matthew Hunton: Moving to page eight in our specialty PNC visit, for the segment, we produced an underlying combined ratio of 89.6%, representing a four-point improvement sequentially. Both our private passenger auto and commercial vehicle businesses reported underlying combined ratios of 90% or better. As we discussed last quarter, now that we've restored profitability, we've pivoted our focus to Pittsburgh. Given the volatile market environment, we continue to incorporate an additional margin of safety in our business practice. We achieved a 4.6% sequential increase in PIF this quarter and are pleased with the incremental progress. I'd like to provide some brief overall comments on the specialty auto environment.

Matt Hunton: Thank you, Brad, and good afternoon, everyone.

Matt Hunton: Moving to page 8 in our Specialty P&C Business.

Matt Hunton: For the segment, we produced an underlying combined ratio of 89.6%, representing a four-point improvement sequentially. Both our private passenger auto and commercial vehicle businesses reported underlying combined ratios of 90% or better.

Matt Hunton: As we discussed last quarter, now that we've restored profitability, we've pivoted our focus to PIF growth.

Matt Hunton: Given the volatile market environment, we continue to incorporate an additional margin of safety in our business practices.

Matt Hunton: We achieved a 4.6% sequential increase in PIF this quarter and are pleased with the incremental progress.

Matt Hunton: I'd like to provide some brief overall comments on the specialty auto environment. As we see the market today, we have a few tailwinds. We continue to operate in a hard market, and demand for our products remain strong. Our businesses have a long-standing set of competitive advantages that we've continued to strengthen. These capabilities have enabled us to rapidly increase PIF growth and navigate market challenges. We're deploying a methodical yet agile approach to new business; our analytics tools are allowing us to read segment level performance early and adjust as needed. As we observed our second quarter combined ratio performance coming in better than planned, we were able to increase our production appetite and more rapidly expand our policies and force.

Speaker Change: I'd like to provide some brief overall comments on the specialty auto environment.

Matthew Hunton: As we see the market today, we have a few tailwinds. We continue to operate in a hard market, and demand for our products remains strong. Our businesses have a longstanding set of competitive advantages that we've continued to strengthen. These capabilities have enabled us to rapidly increase PIF growth and navigate market challenges. We're deploying a methodical, yet agile approach to new business.

Speaker Change: As we see the market today, we have a few tailwinds.

Speaker Change: We continue to operate in a hard market and demand for our products remains strong.

Speaker Change: Our businesses have a longstanding set of competitive advantages that we've continued to strengthen. These capabilities have enabled us to rapidly increase PIF growth and navigate market challenges.

Speaker Change: We're deploying a methodical yet agile approach to new business. Our analytics tools are allowing us to read segment level performance early and adjust as needed.

Matthew Hunton: Our analytics tools are allowing us to read segment-level performance early and adjust as needed. As we observed our second quarter combined ratio performance coming in better than planned, we were able to increase our production appetite and more rapidly expand our policies and force. This was done well within our desired margin of safety.

Speaker Change: As we observed our second quarter combined ratio performance coming in better than planned, we were able to increase our production appetite and more rapidly expand our policies and force. This was done well within our desired margin of safety.

Matt Hunton: This was done well within our desired margin of safety. Like last quarter, page 9 details policy enforce trends. As noted, our sequential quarter PIF increased by 4.6% as compared to a decline of 5.5% in the prior quarter. On an annualized basis, this represents an improvement from minus 20% to plus 20%. This shows significant progress. As you can see in the bottom chart, the year-over-year metric trails and math set progress. As we shift to the back half of the year, we remain diligent and nimble with our production approach. We expect to see low single digits to quarter PIF growth in the back part of the calendar year due to lower seasonal shopping.

Matthew Hunton: Like last quarter, page nine details policy enforced trends. As noted, our sequential quarter PIF increased by 4.6% as compared to a decline of 5.5% in the prior. On an annualized basis, this represents an improvement from minus 20% to plus 20%. This shows significant progress. As you can see in the bottom chart, the year-over-year metric trails and maps that product. As we shift to the back half of the year, we remain diligent and nimble with our production approach. We expect to see low single-digit sequential quarter pith growth in the back part of the calendar year due to lower seasonal shopping.

Speaker Change: Like last quarter, page 9 details policy-enforced trends. As noted, our sequential quarter PIF increased by 4.6% as compared to a decline of 5.5% in prior quarter.

Speaker Change: On an annualized basis, this represents an improvement from minus 20% to plus 20%.

Speaker Change: This shows significant progress.

Speaker Change: As you can see in the bottom chart, the year-over-year metric trails and maps that progress.

Speaker Change: As we shift to the back half of the year, we remain diligent and nimble with our production approach. We expect to see low single-digit sequential quarter pith growth in the back part of the calendar year due to lower seasonal shopping patterns.

Matt Hunton: We expect growth to increase for 2025. Finally, we're pleased that the business is moving back to a more traditional focus on maximizing growth while maintaining a 96 or better combined ratio. We believe both are PPA and CV businesses are well positioned to navigate the ongoing market environment.

Matthew Hunton: We expect growth to increase in 2025. Finally, we're pleased that the business is moving back to a more traditional focus on maximizing growth while maintaining a 96 or better combined ratio. We believe both our PPA and CV businesses are well positioned to navigate the ongoing market environment. I'll now turn the call over to Joe to cover the life business and closing comments. Thanks, Matt.

Speaker Change: We expect growth to increase for 2025.

Speaker Change: Finally, we're pleased that the business is moving back to a more traditional focus on maximizing growth while maintaining a 96 or better combined ratio.

Speaker Change: We believe both our PPA and CV businesses are well positioned to navigate the ongoing market environment.

Joe Locker: I'll now turn the call over to Joe to cover the life business, including comments. Thanks, Matt. Turning to our life business on page 10. As we mentioned earlier, the second quarter was negatively impacted by evaluation adjustment on a real estate investment. Excluding that adjustment, adjusted net operating income for the segment would have been $11.7 million, relatively in line with last quarter. While modest inflationary pressure continues to impact low to moderate income consumers, our new business production and persistency levels can't been slightly favorable to last year; mortality remained in line with three pandemic levels.

Speaker Change: I'll now turn the call over to Joe to cover the life business and closing comments.

Joseph Lacher: Turning to our Life Business on page 10, as we mentioned earlier, the second quarter was negatively impacted by a valuation adjustment on a real estate investment. Excluding that adjustment, adjusted net operating income for the segment would have been $11.7 million, relatively in line with last quarter. While modest inflationary pressure continues to impact low to moderate income consumers, our new business production and persistency levels came in slightly favorable to last year, and mortality remained in line with pre-pandemic levels. Turning to page 11.

Joe Lacher: Thanks, Matt.

Joe Lacher: Turning to our Life Business on page 10.

Speaker Change: As we mentioned earlier, the second quarter was negatively impacted by a valuation adjustment on a real estate investment.

Joe Lacher: Excluding that adjustment, adjusted net operating income for the segment would have been $11.7 million, relatively in line with last quarter.

Joe Lacher: While modest inflationary pressure continues to impact low-to-moderate income consumers, our new business production and persistency levels came in slightly favorable to last year.

Joe Lacher: Mortality remains in line with pre-pandemic levels.

Unknown Executive: Turning to page 11.

Joe Locker: In closing, I'd like to do three things. First, reiterate the highlights for the quarter. Overall profitability was strong and continues to improve. This was led by specialty P and C strong underwriting results, which enabled us to deliver our fifth consecutive quarter of underlying business improvement. Special EP and C's improved combined ratio allowed for further expansion of our production initiatives, resulting in a 4.6% sequential increase in PIF, exceeding expectations we discussed last quarter. We anticipate low single-digit PIF growth for the remainder of the year. The underlying business fundamentals of our life business remain stable, and we maintain a well diversified high quality investment portfolio, which we expected to deliver normal ranges of net investment income going forward.

Joseph Lacher: In closing, I'd like to do three things. First, I will reiterate the highlights for the quarter. Overall profitability was strong and continues to improve. This was led by Specialty P&C's strong underwriting results, which enabled us to deliver our fifth consecutive quarter of underlying business improvement. Specialty P&C's improved combined ratio allowed for further expansion of our production initiatives, resulting in a 4.6% sequential increase in PIF, exceeding expectations we discussed last quarter. We anticipate low single-digit PIP growth for the remainder of the year.

Speaker Change: Turning to page 11.

Speaker Change: In closing, I'd like to do three things. First, reiterate the highlights for the quarter.

Speaker Change: Overall profitability was strong and continues to improve.

Speaker Change: This was led by Specialty P&C's strong underwriting results, which enabled us to deliver our fifth consecutive quarter of underlying business improvement.

Speaker Change: Specialty P&Cs improved combined ratio allowed for further expansion of our production initiatives resulting in a 4.6% sequential increase in PIF, exceeding expectations we discussed last quarter.

Speaker Change: We anticipate low single-digit PIP growth for the remainder of the year.

Joseph Lacher: The underlying business fundamentals of our life business remain stable, and we maintain a well-diversified, high-quality investment portfolio that we expect to deliver normal ranges of net investment income going forward. While I'm proud of the results we delivered this quarter, we're not satisfied. We maintain our focus on delivering consistent, long-term, profitable growth. Second, during recent quarters, we've had a practice of pre-releasing portions of our results. Now the market environment and results are returning to more traditional variability going forward.

Speaker Change: The underlying business fundamentals of our life business remain stable, and we maintain a well-diversified, high-quality investment portfolio, which we expect to deliver normal ranges of net investment income going forward.

Joe Locker: While I'm proud of the results we delivered this quarter, we're not satisfied. We maintain our focus on delivering consistent long-term profitable growth.

Speaker Change: While I'm proud of the results we delivered this quarter, we're not satisfied. We maintain our focus on delivering consistent, long-term profitable growth.

Joe Locker: Second, during recent quarters, we've had a practice of pre-releasing portion of our results. Now the market environment and results are returning to more traditional variability. Going forward, we will discontinue this practice.

Joseph Lacher: We will discontinue this practice, and third, my thanks go out to our entire Kemper team for their efforts in the quarter, and as we move forward, these results would not be possible without their hard work and dedication. With that, operator, I'll turn it over to you so that we can take questions.

Speaker Change: Second, during recent quarters, we've had a practice of pre-releasing portions of our results.

Speaker Change: Now, the market environment and results are returning to more traditional variability. Going forward, we will discontinue this practice.

Joe Locker: And third, my thanks go out to our entire camper team for their efforts in the quarter, and as we move forward, these results would not be possible without their hard work and dedication.

Speaker Change: And third, my thanks go out to our entire Kemper team for their efforts in the quarter and as we move forward. These results would not be possible without their hard work and dedication.

Unknown Executive: With that operator, I'll turn it over to you so that we can take questions. Thank you.

Speaker Change: With that, Operator, I'll turn it over to you so we can take questions.

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number one on your telephone keypad. You will hear a three-tone prompt acknowledging your request. Questions will be taken in the order received. Should you wish to cancel your request, please press the star followed by the two. And if you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from the line of Gregory Peters from Raymond James. Please go ahead.

Gregory Peters: Ladies and gentlemen, we will now begin the question-and-answer session. Your first question comes from the line of Gregory Peters from Raymond James. Please go ahead. Well, good afternoon everyone. So for the first question, I'd like to go back to the PIF result and the growth on a sequential basis in the second quarter. I'm wondering if you could provide us some additional market information about which GR. and I'm just trying to get a lay of the land in terms of how your markets are a competitive position from pricing because there's been so much pricing change that's happened in the marketplace. Just curious how that all rolls up into your guidance for the second half of the year.

Speaker Change: Thank you.

Speaker Change: Ladies and gentlemen, we will now begin the question and answer session.

Speaker Change: Should you have a question, please press star 4801 on your telephone keypad.

Speaker Change: You will hear a three-tone prompt acknowledging a request. Questions will be taken in the order received. Should you wish to cancel your request, please press star followed by the two. And if you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question.

Speaker Change: Your first question comes from the line of Gregory Peters from Raymond James. Please go ahead.

Gregory Peters: Well, good afternoon, everyone. For the first question, I'd like to go back to the PIF result and growth on a sequential basis in the second quarter. I'm wondering if you could provide us with some additional information, market information about which geographies you're having more success and growing in. And I'm just trying to get a lay of the land in terms of how your markets are positioned from a competitive position in terms of pricing, because there's been so much pricing change that's happened in the marketplace. Just curious, you know how that all rolls up into your guidance for the second half of the year.

Gregory Peters: Well good afternoon everyone. So for the first question I'd like to go back to the PIF result and the growth on a sequential basis in the second quarter.

Gregory Peters: I'm wondering if you could provide us some additional...

Speaker Change: Market information about which geographies you're having more success and growing.

Speaker Change: and I'm just trying to get a lay of the land in terms of how your markets are positioned from a competitive position from pricing because there's been so much pricing change that's happened in the marketplace. Just curious.

Speaker Change: You know how that all

Speaker Change: That rolls up into your guidance for PIF for the second half of the year.

Joseph Lacher: Sure, Greg, I'm going to throw most of the commentary over to Matt to do this. I'm just going to take the last 10th of your question, which was, "How does this all roll up into our guidance for the second half of the year?" The biggest piece of our guidance for the second half of the year is around seasonal buying patterns. And historically, in this business, our customer segment and consumers just did less shopping, buying, and switching in the back half of the year.

Joe Locker: Sure, Greg, I'm going to throw most of the commentary over to Matt to do this. I'm just going to take the last 10th of your question, which was how does this all roll up into our guidance for the second half of the year. We're the biggest piece of our guidance for the second half of the year is around seasonal buying patterns and historically in this business, our customer segment and consumers just at less shopping, buying, switching in the back half of the year. We've talked to you about that for years. We talked to you about it last quarter.

Speaker Change: Sure, Greg, I'm going to throw most of the commentary over to Matt to do this. I'm just going to take the last

Matt Hunton: 10th of your question, which was how does this all roll up into our guidance for the second half of the year? The biggest piece of our guidance for the second half of the year is around seasonal buying patterns.

Matt Hunton: and historically in this business.

Joseph Lacher: We've talked to you about that for years. We talked to you about it last quarter. That stays in our forecast and our expectation setting process. It's possible, in this environment, that turns out to be different, but that's the basis for that expectation that starts with that. And with that, I'm going to let Matt talk about the state level commentary and the bulk of your questions.

Matt Hunton: Our customer segment and consumers just did less shopping, buying, switching.

Matt Hunton: In the back half of the year. We've talked to you about that for years. We talked to you about it last quarter That that stays in our forecast and our expectation setting process

Joe Locker: That stays in our forecast and our expectation setting process. It's possible in that in this environment that turns out to be different, but that's the basis for that expectation that starts with that.

Matt Hunton: It's possible in this environment that turns out to be different, but that's the basis for that expectation that starts with that. And with that, I'm going to let Matt talk about the state-level commentary and the bulk of your question.

Matt Hunton: And with that, I'm going to let Matt talk about the state level commentary and the bulkier question. Thanks, Joe. So I think the comments overall are being on the demand side. From a customer perspective, we've seen continued demand for our products. We're seeing that at agent level as well. I think that's generally true across all markets when you think about the geographic dynamics that's underneath there. And from a supply perspective, a carrier perspective, I think the story varies pretty greatly by market. When you think about California, Florida, that's where the predominance of our production, at least out of the gate, has come from as we look to continue to methodically expand our business.

Joseph Lacher: Right. Thanks, Joe.

Matt Hunton: Right. Thanks, Joe.

Matt Hunton: So I think the comments overall are bang on on the demand side. From a customer perspective, we've seen continued demand for our products. We're seeing it at an agent level as well.

Matthew Hunton: So I think the comments overall are bang on the demand side. From a customer perspective, we've seen continued demand for our products. We're seeing that at agent level as well.

Matthew Hunton: I think that's generally true across all markets when you think about the geographic dynamics underneath there. And from a supply perspective, a carrier perspective, I think the story varies pretty greatly by market. When you think about California and Florida, that's where the predominance of our production, at least out of the gate, has come from as we look to continue to methodically expand our business. We'll continue to grow in our other markets. But it's really a function of where the market is from a competitiveness perspective.

Matt Hunton: I think that's generally true across all markets when you think about the geographic dynamics that sit underneath there.

Matt Hunton: And from a supply perspective, a carrier perspective, I think the story varies pretty greatly by market. When you think about California, Florida, that's where the predominance of our production, at least out of the gate, has come from as we look to continue to methodically expand our business.

Matt Hunton: We'll continue to grow on our other markets, but it's really a function of where the market is from a competitiveness perspective. When you think about the non-standard auto marketplace, competitors are re-engaging at different rates. I think some of the larger players are feeling more confident about their adequacy, yet they still maintain some underwriting discipline that's maybe more rigorous than a traditional marketplace, whereas the smaller players, the regional players are a bit slower to react and stabilize there. And so there's a lot of texture by geography, but both from a supply perspective and a demand perspective, I think generally feel good about our ability to balance.

Matt Hunton: You know, we'll continue to grow on our other markets, but it's really a function of, you know, where the market is from a competitiveness perspective.

Matthew Hunton: When you think about the non-standard auto marketplace, competitors are reengaging at different rates. I think some of the larger players are feeling more confident about their adequacy, yet they still maintain some underwriting discipline that's maybe more rigorous than a traditional marketplace, whereas the smaller players, the regional players, are a bit slower to react and stabilize there. So there's a lot of texture by geography, but both from a supply perspective and a demand perspective, I think I generally feel good about our ability to balance. And as Joe said, as we continue to march forward with our re-expansion and our production, we'll be opportunistic about how we take advantage of the opportunities that are presented to us.

Matt Hunton: When you think about the non-standard auto marketplace.

Speaker Change: competitors are reengaging at different rates. I think some of the larger players are feeling more confident about their adequacy, yet they still maintain some underwriting discipline that's maybe more rigorous than a traditional marketplace, whereas the smaller players, the regional players, are a bit slower to react and stabilize there.

Speaker Change: And so there's a lot of texture by geography, but both from a supply perspective and a demand perspective, I think, you know, generally feel good about our ability to balance. And as Joe said, as we, you know, continue to march forward on our re-expansion and our production, we'll be opportunistic about how we take advantage of the opportunities that are presented to us.

Matt Hunton: And as Joe said, as we continue to march forward on our re-expansion and our production, we'll be opportunistic about how we take advantage of the opportunities that are presented to us.

Joseph Lacher: Okay, well, one of the things you said about the combined ratio targets the 96. Can you talk a little bit about the concept of the new business penalty as you turn the spigot on and start growing your new policy counts? What is the drift up in the combined ratio? Is that driven by the new business penalty, or is there something else going on inside that?

Joe Locker: Okay. Well, I'm mindful of Joe's comments about the combined ratio targets, the 96. Can you talk a little bit about the concept of the new business penalty as you turn the spigot on and start growing your new policy counts? What is the drift up in the combined ratio? Is that driven by a new business penalty, or is there something else going on inside that? Sure. And now I'm going to break this into a couple of parts. We will see a drift generally back towards what I would say are traditional camper combined ratios that are probably in that 93, 94, 95 range.

Speaker Change: Okay, well, one of the, I'm mindful of Joe, your comments about the combined ratio, you know, targets the 96.

Speaker Change: Can you talk a little bit and...

Speaker Change: About the concept of the new business penalty, as you turn the spigot on and start growing your new, your policy counts, what is the drift up in the combined ratio? Is that driven by a new business penalty or is there something else going on inside that?

Joseph Lacher: Sure, and I'm going to break this into a couple of parts. We will see a drift generally back towards what I would say are traditional Kemper combined ratios that are probably in that 93, 94, and 95 range. 96, I would say, is more of a ceiling than a target. We're not trying to get to a 96 and hover; we're trying not to exceed a 96 and then grow as much as possible. What will cause that drift is

Speaker Change: Sure, and I'm going to break this into a couple of parts. We will see a drift generally back towards what I would say are traditional Kemper combined ratios that are probably in that 93, 94, 95 range.

Joe Locker: College. 96, I would say, is more of a ceiling than a target. We're not trying to get to a 96 and hover. We're trying not to exceed a 96 and then grow as much as possible. What will cause that drift is part of the new business penalty as we start new business again, partly taking non-rate actions off, those other things we did that restricted growth. And we said we were always going to take those off. We were going to get a little extra rate, which allowed those to come off because those effectively restricted production and customer service and another opportunity.

Speaker Change: 96, I would say, is more of a ceiling than a target. We're not trying to get to a 96 and hover. We're trying not to exceed a 96 and then grow as much as possible.

Speaker Change: What will cause that drift is

Joseph Lacher: Part of the new business penalty is we start new business again, partly taking non-rate actions off, those other things we did that restricted growth. And we said we were always going to take those off. We were going to get a little extra rate, which allowed those to come off because they effectively restricted production and customer service and other opportunities. So we're getting that back to a balance. We would also expect that sometime in 2025, despite us taking what we would call the maintenance rate, we will get to a spot where there's likely to be some loss inflation that is a bit in excess of earned rate just because of the fact that right now we're probably well below long-term target combined ratios. We expected to overshoot a little bit. We hope that it's only for a few quarters.

Speaker Change: Part of the new business penalty is we start new business again, partly taking non-rate actions off, those other things we did that restricted growth.

Speaker Change: And we said we were always going to take those off, we were going to get a little extra rate which allowed those to come off because those effectively restricted production and customer service and other opportunities. So we're getting that back to a balance.

Joe Locker: So we're getting that back to a balance. We would also expect that sometime in 25, despite us taking what we would call maintenance rate, we will get to a spot where there's likely to be some loss inflation. There's a bit in excess of earned rate, just because of the fact that right now we're probably well below long term target combined ratios. We expected to overshoot a little bit. We hope that's only for a few quarters. I'm not specifying what a few is. I'm deliberately not saying whether it's 1, 2, 3, or 4, but some period of time as we try to opportunistically grow as much as we can while being below a 96.

Speaker Change: We would also expect that sometime in 2025...

Speaker Change: Despite us taking

Speaker Change: What we would call maintenance rate, we will get to a spot where there's likely to be some loss inflation that is a bit in excess of earned rate, just because of the fact that right now we're probably well below long-term target combined ratios. We expected to overshoot a little bit.

Joseph Lacher: I'm not specifying what a few is. I'm deliberately not saying whether it's 1, 2, 3, 4, but some period of time as we try to opportunistically grow as much as we can while being below a 96. I'm not trying to be cute, but what I'm trying to do is gauge your ability to exactly model rate, loss trend, new business penalty, and, largely, very difficult for you to do because we can't even give you some good guidance on it because we're going to we're going to adjust as we're moving. What we've tried to do is give you a picture of the pace of the slope of change and help you get the answer that way.

Speaker Change: We hope that's only for a few quarters. I'm not specifying what a few is. I'm deliberately not saying whether it's one, two, three, four, but some period of time as we try to opportunistically, you know, grow as much as we can while being below a 96.

Joe Locker: I'm not trying to be cute, but what I'm trying to do is your ability to exactly model rate, loss trend, new business penalty and non-rate actions will be largely very difficult for you to do because we can't even give you some good guidance on it because we're going to adjust as we're moving. What we've tried to do is give you a picture of the pace of the slope of change and help you get the answer that way.

Speaker Change: I'm not trying to be cute, but I'm what I'm trying to do is your ability to exactly model rate loss trend, new business penalty and non rate actions will be

Speaker Change: Unknown Speaker In largely very difficult for you to do because we can't even give you some good guidance on it because we're going to adjust as we're moving. What we've tried to do is give you a picture of the pace of the slope of change.

Speaker Change: and help you get the answer that way.

Gregory Peters: Okay, and just a clarification. One of your, well, the largest non-standard, most visible company, publicly traded company out there came out with their cue, and I think they said they called out a couple rate decreases in the second quarter. Just to close out my questions, did you guys do any downward rate revisions in the second quarter? Are you still where you were at the end of the first quarter in terms of rate levels?

Gregory Peters: Just a clarification. One of your largest non-standard, most visible company, publicly tried to company out there, came out with their cue and I think they called out a couple rate decreases in the second quarter. Just to close out my questions, did you guys do any downward rate revisions in the second quarter, or are you still where you were at the end of the first quarter in terms of rate levels? We did a small one in Florida that was heavily textured.

Speaker Change: Okay, and just a clarification.

Speaker Change: One of your largest, non-standard, most visible publicly traded company out there came out with their cue and I think they said they called out a couple rate decreases in the second quarter.

Speaker Change: Just to close out my questions, did you guys do any downward rate revisions in the second quarter or are you still where you were at the end of the first quarter?

Joseph Lacher: We did a small one in Florida that was heavily textured. Matt, do you want to provide more commentary?

Speaker Change: in terms of rate levels.

Matt Hunton: Matt, do you want to provide more commentary? Yeah, in Florida we did a small minus 2% in aggregate rate change. It was heavily textured, segmented. It balanced our rate need by coverage in a way that I think sets us up more optimally going forward as we prospect out over the next 12-18 months. That was the only negative change that we had planned at this point. Again, Greg, this goes back to what we would have described. We're moving into a phase where we're going back to maintenance rate and normal ordinary course of business. We expressed a high degree of confidence in what our profitability targets were in the back half of this year.

Speaker Change: We did a small one in Florida that was heavily textured. Matt, do you want to provide more commentary?

Matthew Hunton: Yeah, in Florida, we did a small minus 2% in aggregate rate change; it was heavily textured and segmented, it balanced our rate need by coverage in a way that I think sets us up more optimally going forward as we prospect out over the next 1218 months. But that was the only negative change that we have planned at

Matt Hunton: Yeah, in Florida, we did a small minus 2% in aggregate rate change. It was heavily textured, segmented. It balanced our rate need by coverage in a way that I think sets us up more optimally going forward as we prospect out over the next 12-18 months, but that was the only negative change that we have planned at this point.

Joseph Lacher: And again, Greg, this goes back to what we would have described as we're moving into a phase where we're going back to maintenance rates and more normal ordinary course of business. We expressed a high degree of confidence in what our profitability targets were in the back half of this year when we said we didn't see anything that was going to meaningfully move earnings on a downward trajectory over that time period. And we're trying to say, as we go through what I've described as the rebalancing phase, by the time we get into 2025, we expect this to be a more normal earned rate, loss trend, and growth dynamic where we're talking about market dynamics and not sort of these disrupted swings. So we're in the back part of that.

Matt Hunton: And again, Greg, this goes back to what we would have described, we're moving into a phase where we're going back to maintenance rate and more normal ordinary course of business.

Matt Hunton: We expressed a high degree of confidence in what our profitability targets were in the back half of this year when we said we didn't see anything that was going to meaningfully move earnings in a downward trajectory over that time period.

Matt Hunton: When we said we didn't see anything, it was going to meaningfully move earnings in a downward trajectory over that time period. We're trying to say that we go through what I've described as the rebalancing phase. By the time we get into 25, we expect this to be a more normal, earned rate, loss-trend, growth dynamic where we're talking about market dynamics and not sort of these disrupted swings. We're in the back part of that. It becomes a little hard to pick quarterly or six-month numbers. That category of maintenance rate changes. Sometimes they're up a little; sometimes they're down a little.

Greg: and we're trying to say...

Matt Hunton: As we go through what I've described as the rebalancing phase, by the time we get into twenty five, we expect this to be a more normal.

Matt Hunton: earned rate, loss trend, growth dynamic, where we're talking about market dynamics and not sort of these disrupted swings. So we're in the back part of that. It becomes a little hard to pick, you know, quarterly or six month.

Gregory Peters: It becomes a little hard to pick, you know, quarterly or six-month numbers. And that category of maintenance rate changes, sometimes they're up a little, sometimes they're down a little. They're either in line with inflation or they're getting us tuned by coverage. Got it. Thanks for the detail.

Matt Hunton: Numbers. And that category of maintenance rate changes, sometimes they're up a little, sometimes they're down a little. They're either in line with inflation or they're getting us tuned by coverage.

Gregory Peters: They're either in line with inflation or they're getting us tuned by coverage. George, got it. Thanks for the detail.

Speaker Change: Got it. Thanks for the detail.

Unknown Executive: Thank you.

Paul Newsome: And your next question comes from the line of Paul Newsome, from Piper Sandler. Please go ahead. Good afternoon. Just a little bit of a follow up. Where would you put yourself in terms of taking off the non-reaction? Do you feel like you're very much in the middle of pretty much done? How do you think of that from a maybe a spectrum perspective? It's hard to exactly measure Paul. We, depending on how we were talking about, anywhere from two thirds to 80%. And there's times when we sometimes argue with ourselves about where exactly it is, but that's somewhere in that range; probably three quarters is a good, a good guess.

Operator: Thank you. And your next question comes from the line of Paul Newsome from Piper Sandler. Please go ahead.

Speaker Change: Thank you. And your next question comes from the line of Paul Newsome from Piper Sandler. Please go ahead.

Paul Newsome: Good afternoon. Just with a little bit of a follow-up, where would you put yourself in terms of taking off the non-reaction? Do you feel like you're very much in the middle? Pretty much done? How do you think of that from a, maybe a spectra? Unknown Speaker.

Paul Newsom: Good afternoon. Just maybe a little bit of a follow up. Where would you put yourself in terms of taking off the non-reaction? Do you feel like you're very much in the middle, pretty much done? How do you think of that from maybe a spectrum perspective?

Joseph Lacher: It's hard to exactly measure Paul, depending on how we were talking about anywhere from two thirds to 80%, and there are times when we sometimes argue with ourselves about where exactly it is, but that it's somewhere in that range, probably probably three quarters is a good, good guess. And there's a lot of feel to it in terms of what it is.

Speaker Change: It's hard to exactly measure, Paul. We, depending on how we were talking about it, anywhere from two-thirds to eighty percent.

Paul Newsom: And there's times when we sometimes argue with ourselves about where exactly it is. But it's somewhere in that range, probably three quarters is a good guess.

Joe Locker: Makes sense. And there's a lot of, there's a lot of feel to it in terms of what it is. Yeah, it's almost by definition, it's hard to quantify it. The, is there anything we look at the outlook for investment income other than that real estate item that would, you know, make it, you know, not a run rate? And maybe a little bit on the life company piece soon, in particular, given that you need a lot of capital out of there. So I assume shifted a lot of investment income over, you know, does that, you know, is we look particularly at the life coming.

Paul Newsom: And there's a lot of feel to it in terms of what it is.

Unknown Speaker: Yeah, it's almost by definition hard to quantify, right? Then, is there anything we look at in the outlook for investment income other than real estate? Item that would, you know, make it not a run rate, and maybe a little bit on the life company piece, too, in particular, given that you need a lot of capital out of there. So I assume you have shifted a lot of investment income over, you know, does that, you know, as we look particularly at the lifetime income but also investment income overall, or are we at sort of a run rate perspective for that, or is [inaudible]

Paul Newsom: Yeah, it's almost by definition. It's hard to quantify, right?

Speaker Change: Is there anything when we look at the outlook for net investment income other than that real estate?

Speaker Change: that would make it not a run rate. And maybe a little bit on the life company piece too, in particular, given that you need a lot of capital out of there, so I assume.

Speaker Change: shifted a lot of investment income over. You know, does that, you know, as we look particularly at the life coming, also investment income overall, are we at sort of a run rate perspective for that or not?

Brad Camden: And we would also invest in income overall, are we at sort of a run rate perspective through that or not? Is there more sort of cash flow changes to happen? For that investment?

Speaker Change: There are more cash flow changes to happen that will affect investment.

Brad Camden: Brad, once you take a shot at the overall, and then we may ask a follow-up, Paul, to make sure we're thinking about the life question right away. Hey, Paul, good afternoon. When you look at that investment of income overall, it was down about, you know, 12 million with respect to that real estate investment. You know, so if you add that back, you're close to like a 105-ish type number in line with where we were in Q2 through Q4 of last year. You know, I'd expect us to be back there, given where rates have been and continue to be, and so forth.

Speaker Change: Brad, why don't you take a shot at the overall and then we may ask a follow-up, Paul, to make sure we're thinking about the life course in the right way.

Bradley Camden: Brad, once you take a shot at the overall, and then we may ask a follow-up question, Paul, to make sure we're thinking about life in the right way.

Bradley Camden: When you look at net investment income overall, it was down about $12 million with respect to that real estate investment. You know, so if you add that back, you're close to a 105-ish type number in line with where we were in Q2 through Q4 of last year. You know, I'd expect us to be back there, given where rates have been and continue to be, and so forth. So think of this as a one-time, not a one-time, but a non-run rate adjustment this quarter. And then going forward, we'll be back up to where we were historically. Can you do me a quick favor and just rephrase the second part of your question with respect to life?

Brad Camden: Hey Paul, good afternoon. When you look at net investment income overall, it was down about $12 million with respect to that real estate investment.

Speaker Change: You know so

Speaker Change: If you add that back, you're close to a 105-ish type number in line with where we were in Q2 through Q4 of last year.

Speaker Change: I'd expect us to be back there, given where rates have been and continue to be, and so forth. So think of this as a one-time, not a one-time, but a non-run rate adjustment this quarter. And then going forward, we'll be back up to where we were historically.

Brad Camden: So think of this as a one time, not a one time, but a non-run rate adjustment this quarter, and then going forward, we'll back up to where we were historically.

Brad Camden: Can you do me a quick favor and just re-ask the second part of your question with respect to life? Sure, sorry, I'm not as coherent as this should be. So the life operation earnings would get a lot in part because of that one write off. But if you look at it more broadly, you have reduced a lot of the investment income in that item in that line because of the capital moves you made. And I'm not certain where, you know, I think I'm trying to get to a run rate of what the life company earnings would be given the changes and investment income in that line that have to do with, you know, not just one-time real estate write-down this quarter, but also all the other shifting.

Speaker Change: Can you do me a quick favor and just re-ask the second part of your question with respect to life?

Paul Newsome: Sure, sorry if I'm not as coherent as I should be. So the life operation earnings were down a lot, in part because of that one write-off. But if you look at it more broadly, you have reduced a lot of the investment income in that item, in that line, because of the capital moves you made. And I'm not certain where, you know, essentially, I'm trying to get to a runway of what the light company earnings would be, given the changes in investment income in that line that have to do with not just the one-time real estate right down this quarter but also all the other shifting we've done from a

Speaker Change: I'm sorry if I'm not as coherent as I should be. So the life operation earnings were down a lot in part because of that one write-off.

Speaker Change: But if you look at it more broadly, you have reduced a lot of the investment income in that item, in that line because of the capital moves you made.

Speaker Change: And I'm not certain where, you know, essentially I'm trying to get to a run rate of what the life company earnings would be, given the changes in investment income in that line that have to do with

Speaker Change: You know, not just the one-time real estate right down this corner, but also all the other shifting we've done from a CACO perspective.

Brad Camden: from the Capital. Got it. And you're referencing the capital that we've taken out is with respect to the Bermuda optimization. So I'd expect the run rate earnings and life to be lower by about 15 to 20 million as a result of that capital moved up to the parent over the course of a full year. Okay. Thanks. We should help. And to be clear, the real estate investment we're really telling you that that valuation adjustment has no impact. You're asking the question of the right way; the capital distribution will shift it from life to the parent.

Bradley Camden: Got it. And you're referencing the capital that we've taken out in regard with respect to the Bermuda optimization. So I'd expect the run rate earnings in life to be lower by about 15 to 20 million as a result of that capital moved up to the parent over the course of a full year.

Speaker Change: Got it. And you're referencing the capital that we've taken out with respect to the Bermuda optimization. So I'd expect the the run rate earnings in life to be lower by about 15 to 20 million as a result of that capital moved up to the parent over the course of a full year.

Bradley Camden: over the course of a full year.

Paul Newsome: Okay, thanks, I appreciate the help. And to be clear, the real estate

Bradley Camden: And to be clear, the real estate investment; we're really telling you that that valuation adjustment has no impact on runway. You're asking the question, though, the right way. The capital distribution will shift it from life to the parent.

Speaker Change: Okay, thanks, appreciate the help.

Speaker Change: And to be clear, the real estate investment, we're really telling you that that valuation adjustment has no impact on runway. You're asking the question of the right way. The capital distribution will shift it from from life to the parent.

Unknown Executive: Thank you.

Operator: Thank you. Once again, should you have a question, please press star then the number one on your telephone keypad. Your next question comes from Andrew Kligerman from TD Securities. Please go ahead.

Unknown Executive: Once again, should you have a question, be smart and the number one on your telephone keypad.

Speaker Change: Thank you. Once again, should you have a question, please press star then the number one on your telephone keypad.

Andrew Kligerman: Your next question comes in the line of Andrew Kligerman from TD Securities. Please go ahead. Hey, good afternoon.

Andrew Kligerman: Your next question comes in the line of Andrew Kligerman from TD Securities. Please go ahead. Hey, good afternoon. Just before I ask my two questions, clarification, Joe, oh and by the way, really nice progress in this quarter.

Andrew Kligerman: Hey, good afternoon. Just before I ask my two questions, clarification, Joe, and by the way, really nice progress in this quarter. I think Greg was asking something earlier and you said you expected to overshoot a bit. Um, does that mean you would drip sort of to the northern end of 93 to 95%? I wasn't quite sure what you meant by that, so that's a great clarification. I meant the other direction.

Joe Locker: Just before I ask my two questions, clarification, Joe. And by the way, really nice progress in this corner. I think Greg is asking something earlier, and you said you expect to overshoot a bit. Does that mean you would trip sort of to the northern end of 93 to 95 percent? I wasn't quite sure what you meant by. That's a great clarification. I meant the other direction. And then when things were ugly and we were 100 plus, we expected that we would add rate that perhaps the combination of rate actions and non-rate actions might exceed our need.

Speaker Change: I think Greg was asking something earlier, and you said,

Speaker Change: You expect to overshoot a bit.

Speaker Change: [inaudible]

Joseph Lacher: I meant when things were ugly and we were 100 plus, we expected that we would add rates, that perhaps the combination of rate actions and non-rate actions might exceed our need. We would put on the non-rate actions, which were inadequate among themselves. We would wait till the combined ratio improved to an attractive level, and we were confident in that. Then we would take the non-rate actions off. As a result, if we were trying to get to a 95, we might get down to a 90.

Joe Lacher: We expected that we would add rate.

Speaker Change: that perhaps

Speaker Change: The combination of rate actions and non-rate actions might exceed our need. We would put on the non-rate actions which were inadequate among themselves.

Joe Locker: We would put on the non rate actions, which were inadequate in the known among themselves. We would wait till the combined ratio improved to an attractive level, and we were confident in that; then we would take the non-rate actions off. As a result, if we were trying to get to a 95, we might get down to a 90. Then the non-rate actions work themselves off, and we move back up. We're in the overshoot part of overshooting a little bit too much to the good after having been in the bad. Not that I expect that we're going to get over the 96.

Speaker Change: We would wait till the combined ratio improved to an attractive level, and we were confident in that, then we would take the non-rate actions off. As a result, if we were trying to get to a 95, we might get down to a 90.

Joseph Lacher: Then the non-rate actions work themselves off, and we move back up. We're in the overshoot part of overshooting a little bit too much to the good after having been in the bad. But not that I expect that we're going to get over the 96.

Speaker Change: Then the non-raid actions work themselves off and we move back up. We're in the overshoot part of overshooting a little bit too much to the good after having been in the bad. Not that I expect that we're going to get over the 96.

Andrew Kligerman: I think right now we're in the part where I would say we've overshot a long-term target to the good. Does that make sense? Did we lose you, Andrew? Absolutely not. Can you hear me? We can. Okay, great. Yeah, now makes a ton of sense.

Andrew Kligerman: I think right now we're in the part where I would say we've overshot a long-term target, to the good. Does that make sense? Did we lose you, Andrew?

Speaker Change: I think right now we're in the part where I would say we've overshot a long-term target.

Speaker Change: to the good.

Andrew Kligerman: Absolutely not.

Speaker Change: That make sense? Did we lose you, Andrew?

Joseph Lacher: Okay, great. Yeah, no, it makes a ton of sense. And just another clarification, I think I heard Matt and you, Joe, mentioned that you expect low single-digit PIF in the upcoming quarters. So how does that align with, and this is something you talked about last quarter, you said the second quarter versus the first quarter, typically based on seasonality, is up 25%. And then the first and third quarters are slightly, yeah, or actually, the third quarter is slightly less than the first. And then the fourth quarter is down 40% versus the first. So the pressure is on.

Andrew Kligerman: Absolutely not. Can you hear me? We can.

Joe Locker: And just another clarification. I think I heard Matt and you, Joe, mention that you expect low single-digit piff in the upcoming quarters. So is that a line with this is something you talked about last quarter? You said the second quarter versus the first quarter typically, based on seasonality, is up 25%. And then the first and third quarters are slightly; actually, the third quarter is slightly less than the first, and then the fourth quarter is down 40% versus the first. Yeah, let's look. Yeah, let's break. I'm interrupting. You know, let's break them apart that there's lost frequency seasonality and there's sales seasonality.

Andrew Kligerman: Okay, great. Yeah, no, it makes a ton of sense.

Andrew Kligerman: And just another clarification, I think I heard Matt and you, Joe, mention that...

Speaker Change: You expect low single-digit PIF in the upcoming quarters.

Speaker Change: So how does that align with, and this is something you talked about last quarter, you said the second quarter versus the first quarter, typically based on seasonality, is up 25% and then the first and third quarters are slightly

Speaker Change: Yeah, or actually the third quarter is slightly less than the first, and then the fourth quarter is down 40% versus the first. So the pressure is on. Yeah, let's break, I'm interrupting, let's break them apart. There's loss frequency seasonality and there's sales seasonality.

Joseph Lacher: Yeah, let's let's take a break, I'm interrupting, let's break them apart. There's loss frequency seasonality, and there's sales seasonality. The first half of the year sees more buying activity than the second half of the year. The first and second quarters are the two highest quarters for new business, and the third and fourth are the lowest. First and second are close; sometimes one's higher than another. The third is distinctively lower than the first and second, and the fourth is the lowest of all four. And to some degree, we're not 100% sure. There's not a poll.

Joe Locker: The first half of the year sees more buying activity than the second half of the year. The first and second quarter are the two highest quarters for new business, and the third and fourth are the lowest. First and second are close. Sometimes one higher than another third is distinctly lower than the first and second, and the fourth is the lowest of all four. And to some degree, we're not 100% sure there's not a poll. It appears to us that people shop for auto insurance less and spend more less money on that. And in the holidays, either they're busy or they're saving up money for the holidays or they're doing something, they're shopping. You increase it; maybe it's car buying season, they've paid off the holiday bills, they've gotten their income tax return, they buy a new car that triggers shopping activity.

Speaker Change: The first half of the year sees more buying activity than the second half of the year.

Speaker Change: The first and second quarter are the two highest quarters for new business, and the third and fourth are the lowest.

Speaker Change: First and second are close, sometimes one's higher than another. Third is distinctly lower than the first and second, and the fourth is the lowest of all four.

Speaker Change: And to some degree, we're not 100% sure. There's not a poll. It appears to us that that people shop for auto insurance less and spend more money less money on that. In the holidays, either they're busy or they're saving up money for the holidays or they're doing something.

Joseph Lacher: It appears to us that people shop for auto insurance less and spend more money on that. During the holidays, either they're busy, or they're saving up money for the holidays, or they're doing something. Their shopping increases, maybe it's the car buying season, they've paid off the holiday bills, they've gotten their income tax return, or they buy a new car that triggers shopping activity. It appears to be around those kinds of behaviors that cause more non-standard auto shopping in the first and second quarters, less in the third, and even less in the fourth.

Speaker Change: They're shopping increases. Maybe it's car buying season. They've paid off the holiday bills. They've gotten their income tax return. They buy a new car. That triggers shopping activity. It appears to be around those kind of behaviors.

Joe Locker: It appears to be around those kind of behaviors that causes more non standard auto shopping in the first and second quarters, less than the third and even less than the fourth. So we're expecting fewer; the same way Macy's expects more sales in November and December and less than May and June. We expect more in the first six months of the year and less than the last six months. And if there's just fewer shoppers, we might actually capture a greater share of the shoppers, but less sequential porter piss growth. Great. So basically no standard, no non-standard auto Christmas presents in December, but with that said, you're still saying though, low single-digit Piff growth sequentially in the next two quarters.

Speaker Change: that causes more non-standard auto shopping in the first and second quarters, less in the third, and even less in the fourth.

Joseph Lacher: So we're expecting fewer, the same way Macy's expects more sales in November and December and less in May and June; we expect more in the first six months of the year and less in the last six months. And if there are just fewer shoppers, we might actually capture a greater share of the shoppers, but less sequential quarter PIF growth as a result.

Speaker Change: So, we're expecting fewer, the same way Macy's expects more sales in November and December and less in May and June , we expect more in the first six months of the year and less in the last six months.

Speaker Change: And if there's just fewer shoppers, we might actually capture a greater share of the shoppers, but less sequential porter piff growth as a result.

Andrew Kligerman: Great, so basically, no non-standard auto Christmas presents in December, but with that said, you're still saying low single-digit PIF growth sequentially in the next two quarters. I want to make sure because even with that pressure, it sounds like you could still be up in the low single digits if I understood that correctly.

Speaker Change: Great, so basically no non-standard auto Christmas presents in December , but with that said, you're still saying though, low single digit PIF growth sequentially in the next two quarters. I want to make sure because even with that pressure, it sounds like you could still be up in the low single digits if I understood that.

Brad Camden: I want to make sure because even with that pressure, it sounds like you could still be up in the low single digits if I understood that correctly. Our general expectation. Perfect. And then the last clarification, the thinking was last quarter that the rates you'd earn in about seven points in the second quarter and seven in the second half. And then if I looked at slide eight, it looks like you've got eight points in the second quarter. And then maybe the balance comes in the second half. It looked like around five. So there's still five to earn in.

Joseph Lacher: That's our general expectation.

Andrew Kligerman: Perfect. And then the last clarification, the thinking was last quarter that rates, you'd earn about seven points in the second quarter and seven in the second half. And then, if I looked at slide eight, it looks like you've got eight points in the second quarter. And then maybe the balance will come in the second half. It looked like around five, so there's still five to earn. Is that the way to think about it for the balance of the year?

Speaker Change: Correctly. Our general expectation. Perfect. And then the last clarification, the thinking was last quarter that, that rates, you'd earn in about seven points in the second quarter and seven in the second half. And then if I looked at

Speaker Change: Slide 8, it looks like you've got 8 points in the second quarter, and then maybe the balance comes in the second half. It looks like around 5.

Brad Camden: Is that the way to think about it for the balance of the year? Close, Andrew. We've got about 17 points of rate earned. What we've revived there on slide eight, I believe, is in the upper right-hand area, is the estimate for the third quarter, which is about another five points. And maybe there are two or three points to be earned in the fourth quarter. So we got for the back half of the year, seven, eight points left to be earned in. And that was, you know, I think we answered this question in the first quarter.

Speaker Change: So there's still five to earn in. Is that the way to think about it for the balance of the year?

Bradley Camden: Close, Andrew. So far, year-to-date, we've got about 17 points of rate earned. What we provide on slide eight, I believe, is in the upper right-hand area is the estimate for the third quarter, which is about another five points and maybe there's two or three points to be earned in the fourth quarter. So we have, for the back half of the year, seven or eight points left to be earned. And that was, you know, I think we answered this question in the first quarter. We expected about 24 points of rate to be earned in for the year.

Speaker Change: Close, Andrew. So far, year-to-date, we've got about 17 points of rate earned.

Speaker Change: What we provide there on slide 8, I believe, in the upper right-hand area, is the estimate for the third quarter, which is about another 5 points.

Speaker Change: Maybe there's two or three points to be earned in the fourth quarter. So we've got, for the back half of the year, seven or eight points left to be earned in.

Speaker Change: And that was, you know, I think we answered this question in the first quarter. We expected about 24 points of rate to be earned in for the year. So that's how it gets broken down. Perfect. Thanks, Brad and Joe. Appreciate it.

Brad Camden: We expected about 24 points of rate to be earned in for the year. So that's how it gets broken down. Perfect.

Bradley Camden: So that's how it gets broken down. Perfect. Thanks, Brad and Joe.

Andrew Kligerman: Perfect. Thanks, Brad and Joe. I appreciate it.

Andrew Kligerman: Thanks, Brad and Joe, appreciating. Thank you.

Joseph Lacher: Thank you. There are no further questions at this time. I will now hand the call back to Mr. Joe Lacher for any closing remarks.

Unknown Executive: There are no further questions.

Unknown Executive: At this time, I will now hand the call back to Mr. Chulokker for any closing remarks. Thank you, operator, and thanks to everybody for joining us today and for your continued interest. Again, we're pleased with the results that we have right now, and we're going to continue to drive forward on improving them. I look forward to talking to you again next quarter. Take care.

Speaker Change: Thank you. There are no further questions at this time. I will now hand the call back to Mr. Joel Lacher for any closing remarks.

Joseph Lacher: Thank you, Operator, and thanks to everybody for joining us today and for your continued interest. Again, we're pleased with the results that we have right now, and we're going to continue to drive forward with improving them, and look forward to talking to you again next quarter. Take care.

Joel Lacher: Thank you, Operator, and thanks to everybody for joining us today and for your continued interest. Again, we're pleased with the results that we have right now, and we're going to continue to drive forward on improving them, and look forward to talking to you again next quarter. Take care.

Unknown Executive: Thank you; that concludes our conference for today. Thank you for participating. You may all disconnect.

Operator: Thank you. That concludes our conference for today. Thank you for participating. You may all disconnect.

Speaker Change: Thank you. That concludes our conference for today. Thank you for participating. You may all disconnect.