Q3 2024 Arch Capital Group Ltd Earnings Call

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.

Before the company gets started with its update management wants to first remind everyone that certain statements in today's press release and discussed on this call may constitute forward looking statements under the federal Securities laws.

These statements are based upon management's current assessments and assumptions and are subject to a number of risks and uncertainties.

Consequently, actual results may differ materially from those expressed or implied.

For more information on the risks and other factors that may affect future performance investors should review the periodic reports that are filed by the company with the SEC from time to time, including our annual report on Form 10-K for the 2023 fiscal year.

Speaker Change: Good day and thank you for standing by. Welcome to the third quarter, 2024 kite-related group trust earnings conference call. At this time on participants are an

After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need a press star 1-1 on your telephone. You will then hear an automated message, advising you your hand is raised. To withdraw your question, please press star 1-1 again.

Additionally, certain statements contained in the call that are not based on historical facts are forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.

The company intends the forward looking statements in the call to be subject to the safe Harbor created thereby.

Speaker Change: Please be a Vice today's conference is being recorded. I would now like to have conference over to your speaker today. Brian McCarthy, Senior Vice President, Corporate Marketing and Communications. Please go ahead.

Management will also make references to certain non-GAAP measures of financial performance.

The reconciliations to GAAP for each non-GAAP financial measure can be found in the company's current report.

Thank you, and good morning everyone. Welcome to Kyriel Tvruts III, Quarter, earnings call. Some of today's comments can seem forward looking statements that are based upon assumptions of future events and are subject to inherent risks and uncertainties.

On form 8-K furnished to the SEC yesterday, which contains the company's earnings press release and is available on the company's website at Www Dot arch group Dot com and on the Sec's website at Www Dot SEC Dot Gov.

Exitual results may differ materially from these statements.

is a major concern for the United States. We see our SEC filings, including our most recent long 10K.

Speaker Change: I would now like to introduce your host for today's conference Mr. Nicolas pop it up below and Mr. Francois Morin Sirs you may begin.

Today's remarks also include certain non-gap financial measures. These are referred to yesterday's Irrings Press release, Kail on our website for reconciliation. These non-gap performance measures to our Gap financial results.

Good morning, and welcome to our fourth quarter earnings call.

I'd like to begin by wishing the best to my phone and my business partner of 23.

Speaker Change: Are we done.

I'm the call with me today from Cine Realty Group. Marc Sherman and Chief Executive Officer John Cunt.

<unk>.

Speaker Change: Also the phone thank you Brian.

While we will miss him I'm very excited about the opportunities before us.

President and Chief Operating Officer Tom McGowan, Executive Vice President and Chief Financial Officer Keith Fear. Senior Vice President and Chief Accounting Officer Dave Fielock and Senior Vice President, Capital Markets and Investor Relations, Tyler Henshoff.

Speaker Change: My message to our shareholders employees and business partners.

Speaker Change: Is that it is business as usual at all.

Oh cool objective remains unchanged.

The best in class specialty lines insurer in the market.

Given the number of participants on the call, we kind of ask that you limit yourself to one question and one follow-up. If you have additional questions, we ask that you please re-chowing the queue. Now I'm turning the call over to John.

We've continued to execute on the <unk> of our strategy, which all.

The diversified mix of businesses.

Actively manage the underwriting cycle.

Prudent stewards of capital.

Speaker Change: and welcome everyone to our quarterly conference call. KRG delivered another very strong quarter, leasing approximately 1.7 million square feet of space, which is the highest quarterly volume in the company's history.

The Diamond <unk> Ultra prize and fostering a culture that drives best in class.

Back to the border where all generated.

Generated strong top and bottom line results annualized operating return on equity of 14, 4%.

Heaple walk you through the details of our quarterly results and our updated 2024 guidance. And I'll focus on the progress we continue to make on the leasing front and our longer term growth levers, including the recently announced development project at one mountain.

At eight 1% decrease in book value per share.

Our fourth quarter results included 450 million of cat losses across multiple neighborhoods, including Harrington.

It's worth noting that this cat loss is really no saltwater seasonally adjusted cap load.

Speaker Change: Over the last three years, the primary focus of our capital allocation efforts has been leasing. Our portfolio now sits at 95% least, which represents a 160-based, this point year over year increase.

Overall, the BMT environment remains very favorable despite increasing competition in many lines of business, making underwriting and risk mitigation increasingly important.

We're optimistic that this environment we can continue to drive both the anchor and small shop occupancy to the storeful heights.

Speaker Change: They're writing strategies, Barbara our businesses to respond quickly to their trading environment. This has been and remains a competitive advantage as we feel shoes those opportunities with the best risk adjusted return.

Here today we've executed 17 acre leases at 38% comparable cash spreads and 33% returns on capital.

Industry Cat losses have once again exceeded 100 billion for the fourth quarter, we should continue to support increasing demand for property insurance and reinsurance.

The man continues to be strong in both our anchor and small shafts. Your rear our small shaft, at least, right, is up by a hundred basis points as a result of signing over a hundred and eighty new leases with tenets spanning a wide spectrum of complementary uses.

Even with this increased activity, we believe the property market remains attractive and one in which disciplined underwriters can produce attractive returns.

The credit profiles of our new small shop tends are also strong and these leases are expected to generate a 57% return on capital.

Speaker Change: Currency rates continued to outpace drone, which is consistent with our hypothesis of a hardening casualty market. We are selectively increase our casualty writings in both insurance and reinsurance markets respond to claims inflation and uncertainty around loss trends, we have higher prices.

Our sign-not-open pipeline remains elevated at $33 million. It's important to note that the average ABR in our sign-not-open pipeline is over $26, which is nearly 25% above our current ABR in the portfolio.

Speaker Change: Turning now to the RV segment.

<unk> segment with one 8 billion of net premium and delivered $120 million of underwriting income in the fourth quarter.

Based on the current leasing velocity, we expect our sign-out open pipeline to stay elevated through the first half of 2025. It starts to drift down to our historical average as we head into 2026.

Our acquisition of the mid go up and I'm talking in business for ammonium and Argos helped drive a 20% growth over the same quarter a year ago.

As KRG enters the latter part of our lease up phase, we remain acutely focused on levers of growth beyond occupancy games.

Confident that the Midcoast team will be an important part of our growth story as we further enhance our capabilities in the middle markets. Excluding mutual insurance growth was mid single digits as we continue to find attractive growth opportunity in casualty programs in our London market specialty business.

The organic mark to market opportunity embedded in the portfolio continues to be strong as highlighted by the year-to-date blended non-optional renewal spreads of nearly 13%.

We consistently promote this statistic as the most reliable indicator for movement of market rents as it's not influenced by landlord capital.

Speaker Change: Emirates remain competitive E&S property and professional lines.

Speaker Change: Insurance is another excellent growth quarter with net premium written up more than 24%.

Speaker Change: We're successfully driving higher and better growth, especially on the small shop front.

Speaker Change: Over one 9 billion, along with underwriting income of $149 million as our team continued to benefit from more robust relationships with our brokers and seasons.

For new and non-option renewlies is signed in the first three quarters of 2024. The average annual growth was 3.5% which is 50 basis points higher than the small shop new and non-option new leases executed in 2023.

Speaker Change: This was driven by pork rohit stuff, including facultative business.

<unk> and other specialty.

The progress we've made over the past three quarters represents significant step towards our long-term goals of generating a more sustainable stream of cash flows and driving an outside cruising speed for out of eye growth.

Our industry, leading mortgage segment again contributed significantly to earnings with $269 million of underwriting income for the quarter.

Underlying fundamentals remain excellent for the mortgage insurance industry, including strong credit conditions and continued favorable house price appreciation mortgage origination activities remains light with new insurance return of $14 5 billion was in lung below expectation as relatively higher mortgage rates and continued high.

On the development front, we recently announced our expansion plans for one loud in the Washington DC MSA.

As we detailed in our third installment of 4 and 24, the development will include 86,000 square feet of retail and 33,000 square feet of office.

Spicer position of kit most buyer on the sidelines.

We're also in the late stage negotiations with two developers to incorporate 170 room hotel and a 400 unit multifamily complex into this next phase.

The contribution from our investment portfolio were substantial in the quarter arch investment management generated 399 million of net investment income.

Our philosophy on non-retail uses for mixed use projects is to manage our capital contribution while maintaining a stake in the project.

Speaker Change: Difficult operating cash flows from our underwriting units should support continued growth of assets under management.

will share our plans for both the hotel and multifamily phases once the agreements are finalized.

Speaker Change: Setting us up for strong investment contributions in the years to come.

Speaker Change: Looking ahead.

One of the takeaways we communicated at our 424 event was our significant amount of a developer-land adjacent to one loudened. Excluding the proposed next phase, we have entitlements for an additional 1,300 multifamily units and 1.7 million square feet of commercial GLA.

We like our position in the market opportunities.

This is true as we don't do a responsible growth bulk of the P&C cycle, we're disciplined underwriting and thoughtful risk selection of essential to success.

A few final comments in closing.

Also has proven to be an exceptional company defined by a culture of underwriting excellence underpinned by our core strategies of cycle management and thoughtful capital allocation.

Speaker Change: on over 30 acres of entitled land.

While we're focused on executing this next phase, we have plenty of optionality for additional phases to continue creating value. One loudness on track to becoming one of the premier open-air mixed use projects in the countries.

Speaker Change: That was true yesterday it is true today.

Speaker Change: Between <unk>.

I am very excited and proud to lead this company and work with our leadership team as we continue to strive to deliver the greatest value to our clients and shareholders over the long term.

While on the topic of premier opening or mixed use projects, we hosted our second installment of our 4 and 24 series of South Lake Count Square in the Dallas MSA, which is currently our largest asset.

Now turn it over to <unk> to provide some more color on the actual results in the quarter and then we return to take your questions.

When we saw control of this property in 2021, it was generating just over $20 million of

Speaker Change: Sure.

Thank you Nicolas and good morning to all as you know by now we reported third quarter. After tax operating income of $1 99 per share for an annualized operating return on average common equity of 14, 8%.

Book value per share was $57 as of September 30.

Speaker Change: Eight 1% for the quarter and 21, 4% on a year to date basis.

Once again, our three business segments delivered excellent underwriting underlying results highlighted by $538 million in underwriting income and an 86, 6% combined ratio, which was slightly elevated from an active catastrophe quarter for.

Our combined ratio was 78, 3% on an underlying ex cat accident year basis.

Overall current accident year catastrophe losses were $450 million for the group in the quarter split roughly a 20% between the reinsurance and insurance segments.

Once again, our three business segments delivered excellent underwriting underlying results highlighted by $538 million in underwriting income and an 86, 6% combined ratio, which was slightly elevated from an active catastrophe quarter, our combined ratio.

Speaker Change: Approximately 45% of our catastrophe losses. This quarter are due to hurricane Helene with the rest coming from a series of events, including Canadian events smaller named Hurricanes U S. Severe convective storms flooding in Europe and other events across the globe.

Ratio was 78, 3% on an underlying ex cat accident year basis.

Overall current accident year catastrophe losses were $450 million for the group in the quarter split roughly 80, 20% between the reinsurance and insurance segments, approximately 45% of our catastrophe losses. This quarter are due to hurricane Helene.

Speaker Change: As of October one our peak zone natural cap probable maximum loss for a single event. One in 200 year return level on a net basis increased slightly and now stands at eight 1% of tangible shareholders' equity as we incorporated exposures from the mid Corp acquisition on August.

With the rest coming from a series of events, including Canadian events smaller named Hurricanes U S severe convective storms flooding in Europe and other events across the globe.

Speaker Change: One.

Our PMO remains well below our internal limits.

Our underwriting income, including included $119 million of favorable prior year development on a pre tax basis in the quarter or three points on the combined ratio across our three segments.

As of October one our peak zone natural cap probable maximum loss for a single event. One in 200 year return level on a net basis increased slightly and now stands at eight 1% of tangible shareholders' equity as we incorporated exposures from the mid Corp acquisition on August.

We recognized favorable development across many lines of business, but primarily in short tail lines in our property and casualty segments and in mortgage due to a strong cure activity.

Speaker Change: As you know we closed on our purchase of the U S. Mid Corp, and entertainment insurance businesses are millennials on August one and.

One.

<unk> remains well below our internal limits.

Speaker Change: And I would like to expand on a few items that impacted our financials this quarter.

Our underwriting income, including included $119 million of favorable prior year development on a pre tax basis in the quarter or three points on the combined ratio across our three segments. We recognized favorable development across many lines of business, but primarily in short tail lines in our property and casualty <unk>.

The net written premium coming from the acquired businesses was $209 million for the two month period contributing to the reported year over year premium growth for our insurance segment.

Speaker Change: Second in accordance with U S. GAAP the fair value of the acquired balance sheet does not include an asset for deferred acquisition costs. Therefore, since there is no amortization of deferred acquisition costs associated with the in force business at the time of the acquisition.

<unk> and in mortgage due to strong cure activity.

As you know we closed on our purchase of the U S Mid Corp, and entertainment insurance businesses or <unk> on August one.

And I would like to expand on a few items that impacted our financials this quarter.

Current quarter as acquisition expense ratio is lower than in the third quarter of 2023.

Speaker Change: First the net written premium coming from the acquired businesses was $209 million for the two month period contributing to the reported year over year premium growth for our insurance segment.

This item resulted in a benefit this quarter of approximately $1 nine point and the insurance segments acquisition expense ratio.

Second in accordance with U S. GAAP the fair value of the acquired balance sheet does not include an asset for deferred acquisition costs. Therefore, since there is no amortization of deferred acquisition costs associated with the in force business at the time of the acquisition.

Though we would expect expect this benefit to become less significant over the next three to four quarters as a larger proportion of our earned premium relates to premium written after the closing date.

Operating expenses in the new business were also somewhat lower than ultimately expected.

Speaker Change: Current quarter as acquisition expense ratio is lower than in the third quarter of 2023.

Speaker Change: As we ramp up operations contributing to a 60 basis point benefit in the quarter.

This item resulted in a benefit this quarter of approximately $1 nine point in the insurance segments acquisition expense ratio.

Speaker Change: Third as is required with business combinations, we recorded goodwill and intangibles in connection with the transaction primarily from the value of the business acquired distribution relationships and the present value adjustment related to the reserves for losses and loss adjustment expenses.

Although we would expect expect this benefit to become less significant over the next three to four quarters as a larger proportion of our earned premium relates to premium written after the closing date.

Speaker Change: This quarter, we incurred an expense for the amortization of intangibles of $88 million $63 million of which was for the mid Corp, and entertainment acquisition.

Operating expenses in the new business were also somewhat lower than ultimately expected as we ramp up operations contributing to a 60 basis point benefit in the quarter.

Speaker Change: We expect our overall amortization expense across the group to be approximately $100 million in the fourth quarter of this year and $195 million in 2025 spread evenly throughout the four quarters.

Speaker Change: Third as is required with business combinations, we recorded goodwill and intangibles in connection with the transaction primarily from the value of the business acquired distribution relationships and the present value adjustment related to the reserves for losses and loss adjustment expenses.

Speaker Change: While still early the mid core business is performing as expected or even maybe slightly better.

Speaker Change: This quarter, we incurred an expense for the amortization of intangibles of $88 million.

And we are satisfied with the progress we are making in our integration activities.

$63 million of which was for the mid Corp, and entertainment acquisition.

Turning to our reinsurance group the team delivered a very solid 92, 3% combined ratio and an active catastrophe quarter of note. The reported net written premium growth of 24, 5% in the quarter was augmented by reinstatement premiums adjusting for this item the growth rate.

We expect our overall amortization expense across the group to be approximately $100 million in.

In the fourth quarter of this year and $195 million in 2025 spread evenly throughout the four quarters.

Speaker Change: While still early the mid core business is performing as expected or even maybe slightly better and we are satisfied with the progress we are making in our integration activities.

Would have been approximately 22, 4%.

The mortgage segment reported an excellent 14, 8% combined ratio as cure activity on delinquent mortgages is strong and the underlying credit quality of the book remains very high.

Turning to our reinsurance group the team delivered a very solid 92, 3% combined ratio and an active catastrophe quarter.

The reported delinquency rate that you SMIC and shop inched up slightly this quarter and was impacted primarily by seasonal factors.

The reported net written premium growth of 24, 5% in the quarter was augmented by reinstatement premiums.

On the investment front, we earned a combined $570 million pretax from net investment income and income from funds accounted using the equity method.

Adjusting for this item the growth rate would have been approximately 22, 4%.

$1 49 per share.

Speaker Change: The mortgage segment reported an excellent 14, 8% combined ratio as cure activity on delinquent mortgages is strong and the underlying credit quality of the book remains very high.

Our investment income reflects approximately $20 million earned during the two month period from the assets. We received in connection with the mid Corp acquisition.

Speaker Change: The reported delinquency rate that use semi in shops inched up slightly this quarter and was impacted primarily by seasonal factors.

Total return for the portfolio came in at 397% for the quarter as there was significant price appreciation on our fixed income portfolio due to lower interest rates.

On the investment front, we earned a combined $570 million pretax from net investment income and income from funds accounted using the equity method or $1 49 per share.

The appreciation of our available for sale investment portfolio resulted in a book value increase of $1 56 per share net of tax.

Cash flow from operations remains strong and exceeds $5 billion on a year to date basis.

Speaker Change: Our investment income reflects approximately $20 million earned during the two month period from the assets. We received in connection with the mid Corp acquisition.

Our effective tax rate on a pre tax operating income was an expense of 8% for the third quarter and our annualized effective tax rate remains in the 9% to 11% range for the full year of 2024.

Speaker Change: Total return for the portfolio came in at $3, 97% for the quarter as there was significant price appreciation on our fixed income portfolio due to lower interest rates.

In closing our balance sheet is strong with common shareholders' equity of $21 $4 billion and a debt plus preferred to capital ratio of 14, 2%.

The appreciation of our available for sale investment portfolio resulted in a book value increase of $1 56 per share net of tax.

Cash flow from operations remains strong and exceeds $5 billion on a year to date basis.

This level of financial resources gives us flexibility to deploy capital as needed.

Can you can continue delivering outstanding results for the benefit of our shareholders.

Speaker Change: Our effective tax rate on a pre tax operating income was an expense of 8% for the third quarter and our annualized effective tax rate remains in the 9% to 11% range for the full year of 2024.

Speaker Change: These introductory comments, we are now prepared to take your questions.

Speaker Change: Thank you.

Speaker Change: If you have dialed in and would like to ask a question at this time. Please press star one on your Touchtone telephone.

Speaker Change: In closing our balance sheet is strong with common shareholders' equity of $21 $4 billion and a debt plus preferred to capital ratio of 14, 2%.

If your question has been answered or you wish to remove yourself from the queue. Please press star one again.

And if you are using a speaker phone please lift the handset.

This level of financial resources gives us flexibility to deploy capital as needed and can you and continue delivering outstanding results for the benefit of our shareholders.

Speaker Change: Our first question comes from the line of Elyse Greenspan with Wells Fargo. Please go ahead.

Hi, Thanks, good morning.

Elyse Greenspan: Hi, guys.

These introductory comments, we are now prepared to take your questions.

Elyse Greenspan: Yes. My first question is on the Allianz deal.

Speaker Change: Thank you.

Elyse Greenspan: You gave us some good color on the expenses, but anyway could you give us a sense of just the impact on the underlying loss ratio with within the insurance segment in the quarter.

Speaker Change: You have dialed in and we would like to ask a question at this time. Please press star one on your Touchtone telephone.

Speaker Change: Is your question has been answered or you wish to remove yourself from the queue. Please press star one again.

Yes, sure I mean, just to give you a bit more details on that yet.

And if you are using a speaker phone please lift the handset.

Normalized meaning ex cat accident year loss ratio for the segment was 57 six right.

Speaker Change: Our first question comes from the line of Elyse Greenspan with Wells Fargo. Please go ahead.

Elyse Greenspan: Hi, Thanks, good morning.

The standalone for for the mid core business was 62% in the quarter. So that's.

Elyse Greenspan: Hi, guys.

Yes. My first question is on the Allianz deal.

Speaker Change: Yeah.

Okay, so effectively kind of increased.

You gave us some good color on the expenses, but anyway could you give us a sense of just the impact on the underlying loss ratio within the insurance segment in the quarter.

Call it by 70 basis points and increased the reported loss ratio.

Kevin: Thanks, Kevin loss ratio.

Okay, and then in reinsurance.

Yes, sure I mean, just to give you a bit more details on that yet.

Kevin: Now the margin, sometimes does fluctuate quarter to quarter.

Normalized meaning ex cat accident year loss ratio for the segment was 57 six right.

The underlying loss ratio did trend up in the Q3 was there anything.

Kevin: Business mix in there that might have impacted that in the quarter.

The standalone for.

Nothing specific again, we will keep we will go back to our trailing 12 months way of looking at things I mean, I took another look this morning, and Theres nothing unusual in the quarter I mean that the trends are very consistent the trailing 12 months are doing very well. So the answer is nothing to report I mean, there's just kind of.

The mid core business was 62% in the quarter. So that's.

Elyse Greenspan: It came up so effectively kind of increased.

Elyse Greenspan: Call it by 70 basis points and increased the reported loss ratio.

Elyse Greenspan: Ex cat loss ratio.

Okay, and then in reinsurance.

Now the margin, sometimes does fluctuate quarter to quarter.

Kevin: Some claims happen some don't.

Over the last 12 months were very comfortable with the loss picks in how things are behaving.

Underlying loss ratio did trend up in Q3 was there anything.

There's mix in there that might have impacted that in the quarter.

Speaker Change: And then my last question is on capital right.

Speaker Change: Nothing specific again, we will keep we will go back to our trailing 12 months way of looking at things I mean I took another look this morning, and there is nothing unusual in the quarter I mean that the trends are very consistent the trailing 12 months are doing very well. So the answer is nothing to report I mean, there's just kind of.

You guys have left the door open just given your excess capital position to doing something.

Speaker Change: To return to shareholders be that by the quarterly dividend, a special or EBIT, a return to repurchase so.

Speaker Change: What's the timing there I thought maybe it was post the end of Wednesday, then does that still apply and how are you thinking about how you might look to return capital to shareholders.

Speaker Change: Some claims happens some don't.

Over the last 12 months were very comfortable with the loss picks in how things are behaving.

Speaker Change: I mean, you hit all the good points I think it's very much a conversation.

And then my last question is on capital right.

Speaker Change: Not a new conversation, it's a conversation we have all the time and yes, we had certainly.

You guys have left the door open just given your excess capital position to doing something.

I mentioned that we wanted to wait until the end of the wind season, which is <unk>.

To return to shareholders be that rate of quarterly dividend, a special or even a return to repurchase so.

Coming close to an end and as we get ready for 2025, certainly part of the.

What's the timing there I thought maybe it was post the end of wind season does that still apply and how are you thinking about how you might look to return capital to shareholders.

The outlook for 2025 growth opportunities.

Speaker Change: Where we may be able to deploy the capital is something we'll consider as well, but yes. No question that this is an area that we're focused on and I'll.

Speaker Change: I mean, you hit all the good points I think it's very much a conversation and it's not a new conversation. It's a conversation we have all the time and yes, we had certainly.

I will say that you should.

Speaker Change: We're not sleeping on ethanol, we will report back when there is more to say on that.

Kevin: Okay.

Mentioned that we wanted to wait until the end of the wind season, which is.

Speaker Change: Okay. Thank you.

Speaker Change: You're welcome.

Our next question comes from the line of Andrew <unk> with TD Cowen.

Coming close to an end and as we get ready for 2025, certainly part of the.

Speaker Change: Good morning.

Speaker Change: The outlook for 2025 growth opportunities.

Maybe following up on the.

Where we may be able to deploy the capital is something we'll consider as well, but yes. No question that this is an area that we're focused on and I'll.

Speaker Change: Insurance Division and mid Corp.

Speaker Change: <unk> swap I heard correctly.

Speaker Change: Mid Corp impact on the underlying loss ratio was about 60% to 70 basis points and if thats. The case it kind of moved up a fair amount like 250 bps year over year, So I'm trying to get a sense of.

I will say that you should.

Speaker Change: We're not sleeping on up and we'll report back when there is more to say on that.

Speaker Change: Okay.

Speaker Change: Youre welcome.

Should should we be thinking that this is kind of a good run rate underlying number.

Our next question comes from the line of Andrew <unk> with TD Cowen.

Speaker Change: Good morning.

Speaker Change: But the loss ratio, how should we think about it going forward.

Maybe following up on the.

Insurance Division and mid Corp.

Speaker Change: I mean, we indicated that we thought initially.

<unk> swap I heard correctly.

Speaker Change: We have to get call. It under the Hood, we have to understand that business, but we certainly you had said that in the first year.

Speaker Change: Mid Corp impact on the underlying loss ratio was about 60% to 70 basis points.

If that's the case it kind of moves up a fair amount like 250, bips year over year, So I'm trying to get a sense of.

Speaker Change: We thought this business was going to be breakeven for us so.

Yes, we should expect a little increase in the loss ratio and the combined ratio for the segment no question.

Should should we be thinking that this is kind of a good run rate underlying number.

In terms of run rate I'd be a little bit hesitant to commit to anything beyond call. It. The first year I think we're already making adjustments taking underwriting.

Speaker Change: But the loss ratio, how should we think about it going forward.

Speaker Change: I mean, we indicated that we thought initially.

Actions in terms of what we like what we don't like as much I think there is good traction and good opportunities in terms of the casualty business that they write the rates right environment is very strong so that will help we think so.

We have to get call. It under the Hood, we have to understand that business, but we certainly had said that in the first year.

We thought this business was going to be breakeven for us so.

Yes, we should expect a little increase in the loss ratio and the combined ratio for the segment no question.

Speaker Change: That's again the short term answer is yes, I think the combined ratio will probably inched up a little bit but.

Speaker Change: In terms of run rate it'd be a little bit hesitant to commit to anything beyond call. It. The first year I think we're already making adjustments taking underwriting.

Speaker Change: We have very.

Definitive ideas and plans on how to bring that down as we move forward.

Speaker Change: Yes, I think and maybe.

It's dynamic and then again the.

Actions in terms of what we like what we don't like as much I think there is good traction good opportunities in terms of the casualty business that they write the rates the rate environment is very strong so that will help we think so.

Speaker Change: And if you look at the insurance group overall.

Speaker Change: Non.

Speaker Change: Non property lines. So the property line that's right Luke.

Speaker Change: Loss ratios.

We are growing in the property lines in the last couple of years in the market noted makes it makes it more difficult.

That's again the short term answer is yes, I think the combined ratio will probably inch up a little bit but.

And we have a large component of professional lines where.

Speaker Change: We have very.

The rates have been challenging so that probably Interpol loss ratio and then we have casualty, where I think we think there is opportunities potentially to to grow more.

Speaker Change: Definitive ideas and plans on how to bring that down as we move forward.

Yes, I think and maybe.

Speaker Change: It's dynamic and then again.

Speaker Change: And if you look at the insurance group will go to <unk>.

Higher margin, but he may come also we have a higher loss ratio than corporate.

Speaker Change: Non property lines. So the property line, that's why new loss ratios we.

Speaker Change: Yes.

Speaker Change: That's what that is.

Thats the play moving this way we are facing.

Speaker Change: We were growing in the <unk> line.

Speaker Change: Interesting.

Speaker Change: Couple of years.

The market noted makes it makes it more difficult.

Speaker Change: And maybe maybe.

Speaker Change: Breaking down some of the lines of business and insurance.

And we have a large component of official lines, where.

Speaker Change: What kind of rate are you seeing and is this rate exceeding loss costs I suspect, it's not in property, but.

Rates have been challenging so that probably Inca bolus ratio and then we have casualty where I think we think there is opportunities book with insurers to to grow more.

Speaker Change: Maybe you could talk a little bit about some of the key lines in insurance.

Higher margin, but <unk> also we have a higher loss ratio than positive.

Speaker Change: So I mean.

It's still good with casualty, which as you know.

Speaker Change: Took us this time.

Speaker Change: That's what.

Speaker Change: That's the play moving this way we are facing.

Speaker Change: I think in casualty was definitely seeing right on the trend.

Speaker Change: Interesting.

Speaker Change: Yeah really good reasons for that I think the market is going through some pain and so I think we we are underweight casualty historically underweight casualty. So no I think based on our own analysis of the book of casualty business that we like.

Speaker Change: And maybe maybe.

Breaking down some of the lines of business and insurance.

What kind of rate are you seeing and is this rate exceeding loss costs I suspect, it's not in property, but.

Speaker Change: Maybe you could talk a little bit about some of the key lines in insurance.

Speaker Change: Selectivity growing both from the insurance and the reinsurance side so.

Speaker Change: So.

Speaker Change: So Google casualty, which is.

Two of the time.

Speaker Change: <unk>.

I think in casualty was definitely seeing right on the trend.

Speaker Change: I expect margin to expand.

Speaker Change: I think if you if you mentioned property.

Speaker Change: But they are.

Speaker Change: We had a good reason for that is I think the market is going through some pain and so I think we.

Speaker Change: If you took about reinsurance versus insurance, let's say focusing on insurance.

On E&S facility received.

We are underweight casualty still likely underweight casualty so no I think based on our own analysis of the book at the casualty business as we like we are.

Speaker Change: Yes.

Speaker Change: Profitability is actually very attractive I think although the last few year and post.

Speaker Change: Harrington Ian I think the.

Speaker Change: <unk> activity growing both from the insurance and the insurance side. So.

Speaker Change: The business as we exited with a lot of wage increase and a lot of change in terms and conditions.

Speaker Change: They are.

Speaker Change: We can make the business will be attractive today, I think I still.

<unk> margin to expand.

I think if you if you mentioned <unk>.

Speaker Change: We've all had losses.

Speaker Change: When you shop.

She took about reinsurance versus insurance, mostly focusing on insurance.

Speaker Change: We see a lot more.

Speaker Change: Competitions coming from loads coming from Ngls coming from new entrants that want to have a piece of that.

Speaker Change: On E&S Liberty receipt.

Speaker Change: Yes.

Profitability is actually very attractive I think although the last few year and post.

The business, so I think we.

Speaker Change: It's a pretty flat, but I think we would expect.

Speaker Change: Yes, Ian I think the.

Speaker Change: <unk> that.

The business as we exited with a lot of wage increase and a lot of changes jumping conditions.

Margin on the business will be will.

It will depend of the reaction to the catastrophes that just happened.

We can make the business with the attractive today I think that's still the year without losses.

Speaker Change: With mid done.

Speaker Change: Yes.

Speaker Change: When you shop.

Speaker Change: Expectation is things would stabilize that ultimately is.

We see a lot more.

Speaker Change: Competitions coming from loads coming from Ngls coming from new entrants.

The supply and the demand there is more supply we think there's more demand I think.

That want to have a piece of that.

Speaker Change: I think the demand has been constrained by the high price and high deductibles and highly attention on the reinsurance side. So I think.

The business, so I think we.

Speaker Change: It's a pretty flat, but I think we would expect that.

Speaker Change: We are close to a <unk>.

Margin on the business would be.

I think the business will remain attractive for a while.

It will depend of the reaction to the catastrophes that just happened.

Speaker Change: Awesome. Thank you very much.

With mid done and lead.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Mike Zaremski with BMO capital markets.

Additionally, these things would stabilize but ultimately it's.

Speaker Change: Hi.

The supply and the demand there is more supply we think there's more demand I think.

First question. Thanks.

Speaker Change: On.

Speaker Change: Catastrophes so.

The demand has been constrained by the high price and high deductibles in the highway pension on the reinsurance side. So I think I think we are.

Speaker Change: I don't know if you.

Can you disclose what you are assuming for Hurricanes Helene.

Close to <unk>.

Speaker Change: I know you are I think the capture a bit higher than consensus that you guys have done a good job of giving that disclosure that you've been taking more more risk than in Florida, specifically and just overall and then also should we be thinking about.

I think the business will remain attractive for us.

For a while.

Speaker Change: Awesome. Thank you very much.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Mike Zaremski with BMO capital markets.

Speaker Change: Milton.

Speaker Change: As well I think there's some conflicting numbers out there in Milton.

Speaker Change: Hi.

Speaker Change: Okay.

Speaker Change: First question is on <unk>.

Tcf is only a $5 billion so far but.

Speaker Change: Castro fees so.

Speaker Change: That's a much bigger numbers out there.

Speaker Change: I don't know if you <unk>.

You disclosed what you are assuming for Hurricanes Helene.

Speaker Change: Yes sure on Helene.

Our view is that it's going to be the type of event that probably will have a bit more leakage than you would otherwise expect staff.

I know you are.

Speaker Change: The capture a bit higher than consensus that you guys have done a good job of giving us disclosure that you've been taking more.

Speaker Change: More risk than in Florida, specifically.

Speaker Change: Multiple states and it's a lot of flooding. So we are currently assuming call it a $12 billion to $14 billion industry loss.

Overall, and then also should we be thinking about.

Speaker Change: Milton.

As well I think there's some conflicting numbers out there in Milton.

Speaker Change: Which is maybe higher than others and but that's how we see it today I mean things could change, but that hopefully informs how we thought about the events initially.

Speaker Change: Sure PCF is only a $5 billion so far but.

A much bigger numbers out there.

Speaker Change: Yes sure on Helene.

Helene: Our view is that it's going to be the type of event that probably will have a bit more leakage than you would otherwise expect I mean, thats just a multiple states and it's a lot of flooding. So we are currently assuming all at a $12 billion to $14 billion industry loss.

Speaker Change: As reflected in our third quarter numbers as it relates to Milton we need to do a bit more work, but we will certainly give you. Our initial thoughts on that I think in the coming weeks in terms of water loss with a range of estimates could be for us but.

Speaker Change: No question that what we thought what people thought it might have been.

Which is maybe higher than others and but that's how we see it today I mean things could change but that.

Speaker Change: Really scary and large event.

Speaker Change: Doesn't seem to have materialized I think industry estimates are coming down as.

Helene: Hopefully informs how we thought about the event initially and.

Speaker Change: As we speak so call it a $30 billion plus or minus.

Helene: As reflected in our third quarter numbers as it relates to Milton we need to do a bit more work, but we will certainly give you. Our initial thoughts on that I think in the coming weeks in terms of water loss with a range of estimates could be for us but.

Speaker Change: Market loss seems to be about right given what we know today and in terms of our own loss related to that I mean.

Speaker Change: Again more to come but you Shouldnt expect anything unusual from US I think it from what we can tell at this point it should be.

No question that what we thought what people thought might've been.

Speaker Change: <unk>.

Speaker Change: In a relatively consistent kind of market share for us for an event of that size.

Really scary in large events.

Helene: Doesn't seem to have materialized I think industry estimates are coming down.

Speaker Change: Got it that's helpful.

Speaker Change: My last question for me glass.

Speaker Change: As we speak.

So call it a $30 billion plus or minus.

Speaker Change: Is there any context or color you can add.

Market losses to be about right given what we know today and in terms of our own loss related to that I mean.

To that.

What why the CEO change took place.

Speaker Change: Again more to come but you Shouldnt expect anything unusual from US I think it from what we can tell at this point it should be.

Speaker Change: The number one question I'm sure you all have received and we have to.

Speaker Change: But I'm wondering if it's performance related versus okay.

Speaker Change: <unk>.

Relatively consistent kind of market share for us for an event of that size.

Speaker Change: Some other events or anything else any color you'd be able to add.

Speaker Change: I didn't understand the deal.

Speaker Change: Got it that's helpful.

Speaker Change: Mark Mark Mark's departure.

My last question for me glass.

Alright.

Speaker Change: Should know that.

Is there is there any context or color you can add.

Speaker Change: Yeah.

Speaker Change: No I mean again it was a personal decision that is I think.

Speaker Change: To that.

What why the CEO change took place.

Speaker Change: Mark as I said market.

Speaker Change: Yes.

<unk>.

The number one question I'm sure you all have received and we have to.

The bit bittersweet for me, but.

Speaker Change: So based on this decision and actually.

Speaker Change: But I'm wondering if it's performance related versus okay.

Speaker Change: Really excited about the.

Some some other events or anything else any color you'd be able to add.

The opportunity in front of us.

Speaker Change: I think in our markets.

Speaker Change: I think also is bigger than any one of us and I think we.

I didn't understand the deal the CEO Mark Mark Mark's departure.

Speaker Change: We have.

Speaker Change: We have a lot to do and we have lots of exciting things to continue to do.

Speaker Change: Alright.

Speaker Change: Should know that.

Speaker Change: Yeah.

In the coming years, and I think we have.

No I mean again it was a personal decision that is I think.

Speaker Change: Really good.

Speaker Change: Mark as I said market.

Really good.

Speaker Change: <unk>.

Speaker Change: Agent team, we have 7000 employees with iridium engage in.

So a bit bittersweet for me, but.

Based on this decision and actually.

Speaker Change: As I said I think also is an exceptional company and I'm really looking to rollout to continue that.

Speaker Change: Really excited about.

Speaker Change: The opportunity in front of us.

Speaker Change: This is John again, and certainly I think.

I think in our markets.

Speaker Change: I think also is bigger than any one of us and I think we.

Mark departure is not performance related.

Speaker Change: We have.

We have a lot to do and we have lots of exciting things to continue to do.

Speaker Change: The guy on the IC.

Speaker Change: Leadership, and I said the company has performed amazingly well.

In the coming years, and I think we had.

Speaker Change: And I guess.

Speaker Change: Really good.

Obviously, you put your own stamp on.

Speaker Change: Really good.

Speaker Change: The company over time.

Speaker Change: Management team, we have 7000 employees with iridium engage in as I said I think also is an exceptional company and I'm really looking for rollout to continue there.

Speaker Change: Tackled later on we're all excited.

About your position, but im just curious with her now.

Speaker Change: Now that you are the boss or there are there are certain things, we should kind of stay tuned for that have kind of been on your west coast that you'll be able to kind of push through.

Speaker Change: No.

It's Jon again, and certainly I think.

Mark departure is not performance related.

Speaker Change: Or do you kind of expect more more of the same directionally.

Speaker Change: <unk>.

Speaker Change: Under his leadership and I said the company performed amazingly well.

Speaker Change: And the message to it's really business as usual.

Speaker Change: I think with the company for 23 years, and we work very closely with Mark in the last nine months <unk> city of strategies looking at population changes looking at culture. So I think.

And I guess, we'll go after.

Speaker Change: Thats helpful. Obviously, youll put your own stamp on.

On the company over time, and you have different type of later on.

About your position, but im just curious now.

Speaker Change: We are extremely alliance I think.

Now that you are the boss or there are there are certain things, we should kind of stay tuned for that have kind of been on your wish list that youll be able to kind of push through.

I would not expect any.

Speaker Change: The changes in the way we operate.

Speaker Change: Yes.

Okay.

Or do you kind of expect more more of the same directionally.

Speaker Change: Our next question comes from the line of Jimmy <unk> with J P. Morgan.

And the message to it's really business as usual.

Speaker Change: Hey, good morning Bill.

I think really the company for 23 years, and we work very closely with mark into the US Naval <unk> City of strategies looking at operation changes looking at <unk>. So I think.

Jimmy: First youre kind of question on your views on.

One one renewals.

Speaker Change: And.

Speaker Change: What do you think about the sort of supply demand imbalance and has that sort of shifted given.

Speaker Change: We are extremely aligned I think.

Losses from Milton or is it.

Speaker Change: We know they expect.

Speaker Change: Consistent with how you would have thought before.

The changes in the way we operate.

So it's a question on property cat is humor.

Speaker Change: Yes.

Speaker Change: Thank you.

Speaker Change: Yes.

Our next question comes from the line of Jimmy <unk> with J P. Morgan.

Speaker Change: Yes, so I think on <unk> I think as you've seen we've grown the book quite a bit in the last two or three years, we think the returns are.

Speaker Change: Hey, good morning Bill.

First just had a question on your views on.

Speaker Change: That will be attractive.

Speaker Change: One one renewals.

Speaker Change: The.

Speaker Change: And.

Speaker Change: Yes, I think the advent the mid term.

What do you think about the sort of supply demand imbalance and has that sort of shifted given.

Speaker Change: Lynn.

Speaker Change: In my view, what we what we hear is that you'd stabilize the market and I think there was.

Losses from Milton or is it.

Is there a view consistent with how you would have thought before.

Speaker Change: Look.

So it's a question on property cat is humor, yeah yeah.

Speaker Change: Some supply.

Speaker Change: I said earlier is therefore.

Speaker Change: Loads of for many years from competitors.

Yes, so I think on <unk> I think as you've seen we've grown the book quite a bit in the last two or three years. So we think the returns are.

Speaker Change: After one year, we've added losses really wanting to get back into the business in and realizing that they may have missed out on profitable lines of business.

Speaker Change: With the attractive.

Speaker Change: The.

But what I would expect.

Speaker Change: Yes, I think the advent of mid term then.

Speaker Change: And we sit on the insurance side that things have stabilized.

Speaker Change: In.

In my view, what we hear is that you'd stabilize the market and I think there was.

Speaker Change: <unk>.

Speaker Change: And I think Mike.

Speaker Change: My guess is.

Speaker Change: At this stage is that they will do the same on the on the on the gasoline insurance side.

Speaker Change: Look some supply as I said earlier.

Loads from engineers from competitors.

Speaker Change: And more specifically are you expecting pricing to be down flat or.

Speaker Change: After one year, we've added losses really wanting to get back into the business and.

Speaker Change: And to whatever extent you were able to qualify quantify would be helpful.

Realizing that you may have missed out on the coffee table lines of business.

Yes.

Speaker Change: I don't have a crystal ball.

Speaker Change: But.

Speaker Change: But what I would expect.

Speaker Change: I would say no.

Speaker Change: Again.

We sit on the insurance side that things have stabilized.

Speaker Change: So as I said.

Speaker Change: Programs are they being impacted by losses I would expect prices to go up.

Speaker Change: And I think Mike.

Speaker Change: My guess is it.

Speaker Change: In regions that had no losses.

This stage is that they will do the same on the on the gasoline shown side.

Speaker Change: You could see.

Speaker Change: In the bottom of the programs I think people are still really scaled about frequency. So I would expect.

And more specifically are you expecting pricing to be down flat or.

Speaker Change: The bottom to either side of the call on to to perform well the affiliates.

Speaker Change: And to whatever extent you were able to qualify quantify would be helpful.

Speaker Change: Yes.

Speaker Change: I don't have a crystal ball.

Speaker Change: We have people who seem to be more comfortable to play where competition is coming because you are away from the mid size vessels, it could be a little bit of weakness but.

Speaker Change: But.

Speaker Change: I'd say.

Speaker Change: <unk>.

Again, it's.

So as I said.

Speaker Change: Yes.

Programs are they being impacted by losses I would expect prices to go up.

Speaker Change: No not really have a strong conviction in a way, but I think mostly stable.

Speaker Change: In regions that are no losses, you could see.

In the bottom of the programs I think people are still really scaled about frequency. So I would expect the.

And then on.

Speaker Change: Casualty reserves.

Speaker Change: Lot of companies have had.

The bottom side.

Speaker Change: Adverse development on recent years some money then.

Side of the call on to to perform well.

Speaker Change: Someone peak over the years as well.

Speaker Change: <unk>.

Speaker Change: Can you talk about your own comfort with your casualty reserves.

Speaker Change: Anywhere where people seem to be more comfortable to play where competition is coming because you are away from the <unk>.

Speaker Change: On your legacy book is but I love.

Speaker Change: The Watford business.

<unk> it could be a little bit of weakness, but.

Speaker Change: Sure I mean reserves is something we looked at we look at regularly quarterly right. So it's nothing new here I think to answer your question, we're very comfortable with our reserve levels I think.

Not really have a strong conviction.

Speaker Change: But I think mostly stable.

Speaker Change: And then on <unk>.

Speaker Change: I shouldn't do reserves.

Speaker Change: From a.

Speaker Change: A lot of companies have had.

Speaker Change: Couple of reasons. One is we were as Nicholas said, we have been underweight in casualty for a number of years. So as much as yes, we do feel and see some of the impacts of social inflation.

Adverse development on recent years, some money and then.

Some on peak over the years as well.

Can you talk about your own comfort with your casualty reserves.

Speaker Change: Pressures on loss trends on casualty business in general I mean, the fact that we're underweight in those lines has been very helpful. So.

On your legacy book as well as.

Speaker Change: The Watford business.

Speaker Change: Sure I mean reserves is something we looked at we look at regularly quarterly right. So it's nothing new here I think to answer your question, we're very comfortable with our reserve levels I think.

So yes, we are monitoring casualty reserves that we have experienced some adverse development, but it's been overall very manageable.

Speaker Change: For.

Couple of reasons. One is we were as Nicholas said, we have been underweight in casualty for a number of years. So as much as yes, we do feel and see some of the impacts of social inflation.

Speaker Change: And that explains in our mind is a big reason as to why.

Speaker Change: Rates are moving up because the industry is seeing the pressure and.

Speaker Change: Way to correct for those.

Pressures on loss trends on casualty business in general I mean, the fact that we're underweight in those lines has been very helpful. So.

Speaker Change: The result is really by by getting more rate.

Speaker Change: Thank you.

Speaker Change: Yes.

Our next question comes from the line of JV Montazeri with Deutsche Bank.

Speaker Change: So yes, we are monitoring casualty reserves.

Speaker Change: Good morning first question is on growth.

Speaker Change: Have experienced some adverse development, but it's been overall very manageable.

Speaker Change: I guess first of all you've already explained the growth in primary insurance.

Speaker Change: And that explains in our mind is a big reason as to why.

Speaker Change: I guess underlying once you exclude mid corporates about 5%.

Rates are moving up because the industry is seeing the pressure and.

In reinsurance you also mentioned the impact of reinstatement premium costing you said it was still a 22% growth even adjusting for that.

A way to correct for those.

Speaker Change: Results is really by by getting more rate.

Speaker Change: So the big number could you give us a bit more color on like what drove that in terms of how much of that was pricing how much of that was like unit growth how much of that was.

Thank you.

Speaker Change: Yes.

Our next question comes from the line of JV Montazeri with Deutsche Bank.

Speaker Change: Good morning.

Maybe writing more casualty business.

First question is on growth.

Speaker Change: Any type of color on that would be quite helpful. Please.

Yes first of all you've already explained the growth in primary insurance.

Speaker Change: Yes, I think for the for the for the quarter I think the driver of the growth was.

I guess underlying once you exclude mid corporates about 5% and in reinsurance you also mentioned the impact of reinstatement premiums.

Speaker Change: A bit of casualty return mostly.

You said it was still 22% growth even adjusting for that.

Speaker Change: U S U S company, where I think we we selectively are trying to getting on programs that we haven't been as rates gets better we think there's opportunities for us too.

So the big number can you give us a bit more color on like what drove that in terms of how much of that was pricing how much of that was like unit growth how much of that was maybe writing more casualty business.

Speaker Change: Right.

Speaker Change: <unk> casualty business.

Speaker Change: Type of color on that would be quite helpful. Please.

Speaker Change: And the other side of the business that grew as is the specialty business.

Speaker Change: Yes, I think for the for the for the quarter I think the driver of the growth was.

Speaker Change: We can and Thats more.

A bit of casualty return mostly.

Speaker Change: Business that we wrote in one one.

It's coming in on quota shares and some of it is we.

Speaker Change: <unk>.

Speaker Change: U S U S company, where I think we we selectively are trying to getting on programs that we are indeed as rates gets better we think there's opportunities for us to too right.

Speaker Change: We have a decent sized book of business that support loads.

Speaker Change: Lloyd syndicates.

It's called <unk>, where we get quota shares where they are right net of their protection. So that that business is growing is growing and we think it's profitable business. So we benefit from that and.

Speaker Change: Casualty business.

Speaker Change: And on the other side of the business that grew as is the specialty business.

The second aspect as well.

Speaker Change: Have a decent sized book of module.

Speaker Change: As we can.

Speaker Change: That's more of a.

Speaker Change: United Kingdom, our Mojo on.

Speaker Change: <unk>.

Business, which we wrote down one one.

And that business is really a dislocated has been dislocated and we.

It's coming in on quota shares and some of it is we have a decent size book of business that support blogs.

Speaker Change: We've been playing.

Speaker Change: Staying in that field for a while and as rates are continuing to go up and I think the added at one one additional relationship we benefit benefiting of us in the quarter.

Speaker Change: Those syndicates.

It's called <unk>, where we get quota share when they arise net of their protections for that.

Speaker Change: Business is growing it is growing and we think it's profitable business. So we benefit from that.

Speaker Change: Any action that we actually took doing this specific quarter.

Speaker Change: Okay.

Speaker Change: And.

Speaker Change: The last piece is.

I just wanted to say we.

If I could tell cave operation Thats there.

Speaker Change: Have a decent sized book of virtual.

Speaker Change: The amazing track record in.

It's a kingdom our Mojo on.

Speaker Change: Is is one of the leading <unk> operation and corporate to your operation in North America.

And that business is really a dislocated as being dislocated.

Speaker Change: We have been.

Speaker Change: We also have shown some excellent growth.

Speaker Change: Bidding in that field for a while and.

Rates are continuing to go up and I think the other that one loan initial relationship we benefit benefiting of us in the quarter.

Speaker Change: Perfect.

Speaker Change: Follow up is on the mortgage insurance business.

Speaker Change: I guess.

Speaker Change: Two parts to that question. The first one is.

Any action that we actually took doing this specific quarter.

Speaker Change: The growth in the quarter was that primarily driven by the fed cuts.

Speaker Change: Okay.

Speaker Change: The last piece is.

Speaker Change: That's just did the math and I guess linked to that is the pickup in delinquency and mortgage insurance is that also just linked to more activity. I know you mentioned some seasonal factors upon our software does any details we can have on that please.

Speaker Change: If I could tell cave operation.

Is that an amazing track record in it.

Speaker Change: It was one of the leading edge.

Speaker Change: These operation corporate to your operation in North America.

There are also options of mixing on growth.

Speaker Change: I'll start with that I think that delinquency again, yes itself, but it's absolutely very much within our expectations.

Speaker Change: Perfect.

Elyse Greenspan: My follow up is on the mortgage insurance business.

I guess.

Speaker Change: Two parts to that question. The first one is.

Speaker Change: One thing maybe for people to remember or appreciate is.

The growth in the quarter was that primarily driven by the fed cuts.

Speaker Change: Given we refinanced a significant part of the book in 2020 in 2021.

That's just boosted the man and I guess linked to that is the pickup in delinquency and mortgage insurance is that also just linked to more activity. I know you mentioned some seasonal factors from our software does any details we can have on that please.

Speaker Change: We're now entering the call it the prime years of when delinquencies get reported so thats a very much part of again within our expectations right. So as you know.

Speaker Change: New loans get on the books, usually it takes three or four years for them to show a bit of just call. It really really predictable and normal delinquency. So that explains why in aggregate working on delinquency ratio is trending up a little bit and more specifically on the seasonal aspect I mean every year.

I'll start with that I think that delinquency again, yes itself, but it's absolutely very much within our expectations.

Speaker Change: One thing maybe for people to remember or appreciate is.

Given we refinanced a significant part of the book in 2020 in 2021.

We're now entering.

Fairly predictable.

Speaker Change: Call it the prime years of <unk>.

Speaker Change: The behaviors that we see from the from the borrowers whether they get their tax refunds and in the first quarter and then they catch up on their mortgages and whether they borrow more to buy holiday present, so that that happens and then the third quarter is typically expected in CNS as we I mean, we've seen that in the <unk>.

Speaker Change: When delinquencies get reported so thats very much part of again within our expectations right. So as new loans get on the books, usually it takes three or four years for them to show a bit of just call. It rarely really predictable and normal delinquency. So that explains why in aggregate working on delinquency.

Speaker Change: History that.

Speaker Change: The delinquency rate just goes up in the third quarter without any more.

This is trending up a little bit and more specifically on the seasonal aspect I mean every year.

Speaker Change: So.

Again, we're very comfortable with the overall rate and again there is a little bit the same differential that I mentioned last quarter related to the <unk>.

Speaker Change: Is fairly predictable.

Behaviors that we see from the from the borrowers whether they get their tax refunds.

<unk> acquisition is still there. So it's it's a pre financial crisis book that is has its own set of characteristics of work again.

Speaker Change: In the first quarter and then they catch up on their mortgages and whether they borrow more to buy holiday presence. So that happens in the third quarter is typically expected in the scene.

Speaker Change: Overall, very happy very comfortable with the delinquency rate and in terms of the premium your first part of the question.

We've seen that in the recent history that.

Speaker Change: There's a couple of accounting.

The delinquency rate just goes up in the third quarter without any more.

Speaker Change: Differences or nuances this quarter, so I wouldn't read too much I think in the.

Speaker Change: Seasonal so.

Again, we're very comfortable with the overall rate and again there is a little bit the same differential that I mentioned last quarter related to the <unk>.

Speaker Change: And the growth that we saw this quarter there is a bit of a catch up on on premium that was related to old.

<unk> acquisition is still there so.

Speaker Change: Related to <unk> transactions on the ceded side so.

Financial crisis book that is as its own set of characteristics to work again.

Generally speaking I would say the mortgage segment as is relatively flat in terms of growth opportunities.

Overall, very happy very comfortable with the delinquency rate and in terms of the premium your first part of the question.

Speaker Change: Thank you.

Speaker Change: Youre welcome.

Our next question comes from the line of David <unk> with Evercore ISI.

Speaker Change: There's a couple of accounting.

Speaker Change: Differences or nuances this quarter, so I wouldn't read too much I think in the in.

Speaker Change: Thanks, Good morning.

Speaker Change: And the growth that we saw this quarter there is a bit of a catch up on on premium that was related to old.

Speaker Change: Francois. Thanks, Thanks, so much for all the detail you gave on the insurance underlying loss ratio.

Speaker Change: Related to <unk> transactions on the CD side so.

Speaker Change: Both.

Speaker Change: Including and excluding the mid Corp acquisition so.

Generally speaking I would say the mortgage segment as is relatively flat in terms of growth opportunities.

Speaker Change: I guess, just sort of running through those numbers there it looks like if I take out mid Corp was about 57% underlying loss ratio for the.

Speaker Change: Thank you.

Youre welcome.

Our next question comes from the line of David <unk> with Evercore ISI.

Speaker Change: Yes sort of.

Core arch insurance business, and so that kicked up a little over 100 basis points.

Speaker Change: Yeah.

Speaker Change: Thanks, Good morning.

Francois. Thanks, Thanks, so much for all the detail you gave on the insurance underlying loss ratio.

Speaker Change: Versus last quarter and also on a year over year basis. So I'm just wondering if you could help me think through some of the drivers.

Speaker Change: Both.

Including and excluding the mid Corp acquisition so.

Of that increase.

Speaker Change: Yes, I would say again, it's Nicolas touch on its growth related and mix right in the sense that where you saw us grow this quarter.

Speaker Change: I guess, just sort of running through those numbers there it looks like if I take out mid Corp was about 57% underlying loss ratio for the.

Speaker Change: I don't think you have the time to look at the supplement how we report the lines of business, which is.

Speaker Change: Sort of.

Speaker Change: Core arch insurance business, and so that kicked up a little over 100 basis points.

Speaker Change: We have changed this quarter relative to the.

Speaker Change: The past more growth in casualty and other liability lines of business. Both I mean, primarily on a current basis claims made which is more of a professional lines book and cyber that has come down.

Speaker Change: Versus last quarter and also on a year over year basis. So I'm just wondering if you could help me think through some of the drivers.

Speaker Change: Of that increase.

Yes, I would say again, it's Nicolas touch on its growth related and mix right in the sense that where you saw us grow this quarter.

Speaker Change: But that business.

Speaker Change: Typically carries a higher.

Speaker Change: Accident year loss ratio than property business once we remove the cap load so.

Speaker Change: <unk>.

I don't think you have the time to look at the supplement how we report the lines of business, which is.

Speaker Change: That is really the big the big driver of the pickup is really mix.

We have changed this quarter relative to.

The past more growth in casualty and other liability lines of business. Both I mean, primarily on an occurrence basis claims made which is more of a professional lines book and cyber that has come down.

Speaker Change: As we have grown in the last little while more in casualty and.

Speaker Change: Remained relatively flat on property.

Speaker Change: Got it okay. That's that's helpful. I appreciate that.

Speaker Change: And then.

But that business.

Elyse Greenspan: Maybe a follow up on.

Speaker Change: Typically carries a higher.

Elyse Greenspan: On the reserves.

Accident year loss ratio than property business once we remove the cap load so.

Speaker Change: Within insurance and reinsurance I was wondering if there's any way you could size those moving pieces for us between the short tail and the long tail development.

Speaker Change: That is really the big the big driver of the pickup is really mix.

As we have grown in the last little while more in casualty and.

Speaker Change: Well I mean in total I mean and that'll be in the Q, but.

Speaker Change: Remained relatively flat on property.

Speaker Change: Yes, we do.

Speaker Change: Definitely very favorable on on short tail lines of business, a little bit of adverse on long tail lines. So that's consistent with recent trends I mean as I mentioned earlier that we are.

Got it okay. That's that's helpful. I appreciate that.

Speaker Change: And then <unk>.

Speaker Change: Maybe a follow up on.

On the reserves.

Speaker Change: We're seeing a little bit of pressure on casualty longer tail lines of business.

Speaker Change: Within insurance and reinsurance I was wondering if there's any way you could size those moving pieces for us between the short tail and the long tail development.

Speaker Change: There's been some favorable on workers comp as you've seen I'm sure with with many of our.

Competitors I think thats been a consistent story for quite some time, but.

Speaker Change: Well I mean in total I mean and that'll be in the Q, but.

Speaker Change: Again, the Bottomline in aggregate is where we're able to we're observing kind of.

Speaker Change: Yes, we do.

Speaker Change: Definitely very favorable on on short tail lines of business, a little bit of adverse on long tail lines. So thats consistent with recent trends I mean, as I mentioned earlier that we are.

Speaker Change: Favorable development lower actual than expected and that is coming through in our numbers.

Speaker Change: Understood. Thank you.

We're seeing a little bit of pressure on casualty longer tail lines of business.

Speaker Change: Youre welcome.

Speaker Change: Our next question comes from the line of your own Qunar with Jefferies.

There's been some favorable on workers comp as you've seen I'm sure with many of our.

Speaker Change: Competitors I think thats.

Then a consistent story for quite some time, but.

Again, the bottom line in aggregate is where we're able to we're observing.

Speaker Change: Yes. Thank.

Speaker Change: Thank you might've dropped where we're not hearing anything.

Speaker Change: Favorable development lower actual than expected and that is coming through in our numbers.

Speaker Change: Our next question comes from the line of Meyer Shields with <unk>.

Speaker Change: Great. Thanks, so much.

I think we've talked about this in the past, but I wanted to get Nichols with thoughts on cycle management, specifically, I guess with retail distribution and in particular, the mid core business is that less.

Speaker Change: Understood. Thank you.

Speaker Change: Youre welcome.

Our next question comes from the line of your own Qunar with Jefferies.

Speaker Change: Amenable to cycle management.

Speaker Change: So my view is.

Speaker Change: It's a different type of equity management.

Yes, I think he might have dropped where we're not hearing anything.

Speaker Change: That's likely with the medical business is it's more stable, so which mean that.

Our next question comes from the line of Meyer Shields with <unk>.

Speaker Change: The cycle a more muted you don't see.

Great. Thanks, so much.

Speaker Change: We don't see the same.

Meyer Shields: I think we've talked about this in the past, but I wanted to get Nicholson spot on cycle management, specifically, I guess with retail distribution and in particular, the mid core business does that lift.

Speaker Change: Price going up and down like <unk>.

Speaker Change: 40, and you make up 20 or 10, so I think in the middle market business I think you have more.

<unk> two cycle management.

Speaker Change: It's going up slower.

Speaker Change: Okay.

Speaker Change: And it's going down much lower so I think that.

So I mean in my view is it's a different type of cycle management.

Speaker Change: That's the thing we like is that provided that much.

Speaker Change: That's right with the medical business is it's more stable, so which mean that.

Speaker Change: That answer too.

Speaker Change: Our insurance book that has a large component of.

The cycle a more muted you don't see.

Speaker Change: Larger corporate Cocoa's risks that are more subject to.

You don't see the same.

Rice going up and down like <unk> you've got.

Speaker Change: Lost situations.

<unk> soon.

Speaker Change: <unk> make up 20, <unk>, so I think in the middle market business I think you have more.

Speaker Change: And.

Speaker Change: Yes.

Speaker Change: The thing that's attractive to us is the <unk>.

Speaker Change: <unk> proposition of Italian <unk> in the <unk> segment is.

It is going up slower.

And this is going down much lower so I think thats that provide.

Speaker Change: Is better because usually the distribution partner or the broker who rely on <unk> to provide more than one line of business Mike.

Speaker Change: Between reality that provide that much.

Speaker Change: The balance too.

Insurance move that as a large component of.

Speaker Change: So you are more important to in the Intel shouldn't be the Kalgoorlie is more valued so so you create the stickiness that really head units competing solely on price.

Speaker Change: Larger kaplowitz convoys risks that are more subject to.

Speaker Change: Lost situations.

Speaker Change: So.

Speaker Change: And.

Speaker Change: When you do have a large account and our risk manager price is an important component of the value proposition, but here.

Speaker Change: Yes.

The thing that's attractive to us is.

The value proposition of Italian <unk> in the medical segment is.

I think so it says less subject to price competition, which make it more stable and more attractive and.

Is better because usually the distribution partner of the volcker rely on <unk> to provide more than one line of business.

Speaker Change: And I think the thing Thats interesting to us.

Speaker Change: We have the midcon acquisition.

Speaker Change: So you are more important to him.

The timing is pretty good because we have seen.

Speaker Change: The Intel shouldn't be the calculus is more valued so so you create the stickiness that really head unit competing solely on price.

Speaker Change: Price increases on the <unk>.

Speaker Change: Size because the book is more exposed to secondary peer reviews.

Speaker Change: When you do have a large accounts and our risk manager.

Speaker Change: And the liability component of the book is subject to the discussion that we talked about before so I think we are.

Price is an important component.

Speaker Change: The value proposition, but yes, I think so it says less subject to price competition, which make it more stable and more attractive and.

Speaker Change: Our timing is really good I think the.

Speaker Change: The book looks to be performing well.

Speaker Change: And so we are pretty excited to be able to find it easier to like.

Speaker Change: And I think.

Speaker Change: The thing Thats interesting to us.

Additional chunk of their business and to be at scale and being able to expand our footprint.

We have the midcon acquisition.

The timing is pretty good because we've seen.

Speaker Change: We think it's a very attractive part of the market.

Speaker Change: Price increases on the corporate.

Speaker Change: Okay. That's very helpful. And then if I can switch gears a little bit I.

The size because of the book is more exposed to secondary peer reviews and the liability component. The Dubuque is subject to the discussion that we talked about before so I think our timing is really good I think the.

Speaker Change: I know it's early on the.

Speaker Change: January one discussions for property Cat is there anything you can share with regard to expectations for ceding commission trends in casualty reinsurance.

The book looks to be performing well.

Speaker Change: Enough.

And so we are pretty excited to be able to find it easier to like.

Speaker Change: So.

Speaker Change: I'm going to be the right lifestyle soon here I think as as reinsure.

Speaker Change: A decent chunk of their business and to be at scale and being able to expand our footprint.

Speaker Change: Including ourselves see see more bad news coming from our from the past.

When we think it's a very attractive part of the market.

Okay. That's very helpful. And then if I can switch gears a little bit.

Speaker Change: There will be there will be pressure on ceding Commission you would expect that the question. The question is the supply.

No it's early on the.

Speaker Change: January one discussions for property Cat and anything you can share with regard to expectations for ceding commission trends in casualty reinsurance.

Speaker Change: The pressure on the ceding commission will be muted by the supply because it.

Speaker Change: There's more people wanting the business and there is a limited amount of business in place.

Speaker Change: So.

Speaker Change: I'm going to be the right lifestyle soon here I think as as reinsure.

Speaker Change: I think the volcker.

Including all subsea seem more bad news coming from our from the past.

Speaker Change: That's going to play a big role in minimizing.

Speaker Change: The directions of where the ceiling.

Speaker Change:

Speaker Change: The ceding commission is going to be.

They will be there will be pressure on.

Speaker Change: Yes.

Non ceding Commission you would expect that the question. The question is the supply.

Speaker Change: Some sort of.

A conflict between what the reinsurance wants and what the ceding companies are willing to.

The pressure on the ceding commission will be muted by the supply because it.

Speaker Change: I'm willing to do.

Speaker Change: The driver would be the supply versus the demand and I think.

Is there is more people wanting the business and there is a limited amount of business in place.

Speaker Change: What im hearing is that there is ample supply in the marketplace.

I think the volcker.

Speaker Change: Okay perfect. Thank you so much.

And we play a big role in minimizing.

Speaker Change: Okay. Our next question comes from the line of your own Qunar with Jefferies.

The directions of where the ceiling.

The ceding commission is going to be.

Speaker Change: Thank you good morning, and I apologize for dropping earlier.

Speaker Change: Yes.

Speaker Change: Some sort of.

Speaker Change: I wanted to dive a little bit deeper into the other liability occurrence growth in insurance, how much of that came from <unk> versus just organic or legacy growth.

A conflict between what the reinsurance wants and what the sitting continues are willing to.

Are we going to do and but.

Speaker Change: The driver would be the supply versus the demand and I think.

What im hearing is that there is ample supply in the marketplace.

Speaker Change: It's a good question.

Speaker Change: There was a fair amount of E&S casualty business on are kind of like there is just organic right. So that that is an area of maybe that the most.

Speaker Change: Okay perfect. Thank you so much.

Our next question comes from the line of your own Qunar with Jefferies.

Speaker Change: Ken.

Speaker Change: Exciting area for us I mean, where rates are.

Thank you good morning, and I apologize for dropping earlier.

Speaker Change: Well into the double digits in terms of rate increases so that is a very very attractive area.

I wanted to.

Dive a little bit deeper into the other liability occurrence growth in insurance, how much of that came from <unk> versus just organic or legacy growth.

Speaker Change: <unk> book is split Theres, some commercial multi peril or some occurrence or the liability or current so its a.

Speaker Change: Okay.

Speaker Change: It's a mixed bag, but I would say.

Speaker Change: It's a good question.

Speaker Change: I don't have the exact numbers in front of me, but I think you are the.

There was a fair amount of E&S casualty business on our kind of like there is just organic right. So that that is an area of maybe the most.

Speaker Change: You should.

Speaker Change: The takeaway is that the rate the rate environment in that particular line of business is very very good right now.

Speaker Change: Okay.

Exciting area for us where rates are well into the double digits in terms of rate increases. So that is a very very attractive area.

Speaker Change: And what is it about the third quarter, where the environment.

Speaker Change: <unk> accelerated significantly or at least the opportunity set another liability occurrence accelerated significantly.

Speaker Change: The MCA book is split Theres, some commercial multi peril, there's some occurrence or the liability occurrence. So.

Speaker Change: I think it's just the.

<unk>.

It's a mixed bag, but I'd say.

Speaker Change: Our functions of people realizing that.

Speaker Change: I don't have the exact numbers in front of me, but I think you are the.

Speaker Change: The.

Speaker Change: You should.

Speaker Change: The way they were looking at the reserves.

The takeaway is that the rate the rate environment in that particular line of business is very very good right now.

Speaker Change: In the last.

Speaker Change: A few years is not exactly playing out I think COVID-19 full line muted.

Speaker Change: Okay.

And what is it about the third quarter, where the environment.

Speaker Change: So people kind of.

Speaker Change: And my view sitting out there to make sure they were not.

Speaker Change: <unk> accelerated significantly or at least the opportunity set another liability occurrence accelerated significantly.

Speaker Change: Making the wrong reason and since Covid I think we we've.

Speaker Change: We've seen.

Speaker Change: I think it's just.

Speaker Change: We've seen some severity large now Julia will plenty Julia worlds and we've seen it.

Speaker Change: <unk>.

Our functions of people realizing that.

Speaker Change: Yes.

Speaker Change: The the.

Speaker Change: And we've seen more and more.

The way they were looking at the reserves.

Speaker Change: More places where those Julia world.

Speaker Change: In the last.

Speaker Change: We're taking place larger Europe. So I think you had like.

A few euros is not exactly playing out I think COVID-19 full line muted the claims so people kind of.

Speaker Change: Especially inflation, that's driving much more severity and you had also.

And my view sitting out there to make sure they run.

Speaker Change: Frequency of places used to be Cook County.

We're making the wrong reason and since Covid I think.

Speaker Change: So it takes us Mexican border Mcnally of Georgia, simplicity, Nevada, where certain juries.

Speaker Change: We've seen.

We've seen some severity large now Julia well plenty Julia worlds and we've seen.

Speaker Change: And actually if you should get quoted in one of those Julien youre going to have yet to see a significantly larger world. So I think it's a combination of frequency and severity and people realizing that they have to.

Speaker Change: Yes.

And we've seen more more.

More places where those <unk>.

Speaker Change: Our taking place larger Europe. So I think you have like.

Speaker Change: Have to say.

Speaker Change: Ahead of those in the <unk>.

Social inflation, that's driving much more severity and you have.

Speaker Change: The normal reaction, which I think is the right reaction for the market has been to cut limits because if you're caught up in one of those.

The frequency of places used to be Cook County.

Difficult.

So it takes us mixing border Mcnally of Georgia.

Speaker Change: <unk> you want to add small limits and typically when you when you had I don't know.

Speaker Change: Listen, Nevada, where certain julie's.

Speaker Change: Actually you should get quoted in one of those is Julia youre going to have yet to see a significantly larger world. So I think it's a combination of frequency and severity and people realizing that they have.

Speaker Change: Tell me the end of this month, we have 10 players.

Speaker Change: And you said Hey, you have 40 players to complete the placement of some of the some of those layers going to the market.

Have to they have to stay.

Speaker Change: You're starting to see some drastic rate increases and Thats, what thats, what we are witnessing right now.

Ahead of those in the.

Speaker Change: The normal reaction, which I think is the right reaction for the market as being too kept limits because if you're if you're caught up in one of those.

But if.

Speaker Change: If I could maybe flesh this out a little more.

Speaker Change: Difficult.

What youre describing is not new I mean, if we go back to previous management meetings conferences calls.

Speaker Change: <unk> you want to add small limits and typically when you when you had.

Speaker Change: We have been hearing more talk about this for several quarters. If not here is even in some cases, so what's happened in the third quarter that <unk> <unk>.

Speaker Change: Totally end of this month, we have 10 players.

And you said Hey, you have 40 players to complete the placement of some of the some of those layers going to the E&S market, you're starting to see some drastic rate increases and thats, what thats, what we are witnessing right now.

Speaker Change: Some significant change.

I think it's just the accumulation.

Speaker Change: People took actions but.

Speaker Change: When.

Speaker Change: The actuaries are managements look at.

Speaker Change: But.

Speaker Change: If I could maybe flesh this out a little more.

Speaker Change: The challenge for the business, we're writing today to be to be profitable the ads themselves. They need more safety margin I think it is.

What you are describing is not new I mean, if we go back to previous management meetings conferences calls.

Speaker Change: Hi.

Speaker Change: We have been hearing managements talk about this for several quarters. If not here is even in some cases, so what's happened in the third quarter that two thirds.

Speaker Change: I think.

Speaker Change: There was some wage increase double digit rate increases to two or three years ago. Then we fall a little wide. We went to single digit and certainly we're back in double digit. It tells you that there is pain.

Speaker Change: Some significant change.

I think it's just the accumulation.

Speaker Change: In the backyard.

Speaker Change: People took actions but.

Speaker Change: People that have written the business.

Speaker Change: Glenn.

Speaker Change: The actuaries are manageable and look at.

Speaker Change: And in the last few years.

Speaker Change: The challenge for the business. They are writing today to be to be profitable the ads themselves. They need more safety margin I think it is.

Speaker Change: And usually the reaction, it's nothing unusual that the reactions of Marlborough because that.

Speaker Change: At some point management's lose lose faith in.

Speaker Change: Hi.

Speaker Change: I think.

Speaker Change: Understood.

Speaker Change: It will stimulate increased double digit rate increases.

Speaker Change: So they require a more drastic actions.

Two to three years ago, then we for.

Speaker Change: Thats a usual playbook of how.

Speaker Change: So a little wide, we went to a single digit and certainly we're back in double digit. It tells you that there is pain.

Speaker Change: Market happen.

Speaker Change: Thank you.

Speaker Change: Welcome.

Speaker Change: In the backyard.

Speaker Change: Our next question comes from the line of Brian Meredith with UBS financial.

People that have returned that business.

Speaker Change: Earlier.

And in the last few years.

Yes, thanks, Nick.

Speaker Change: Follow up on that a little just a little bit so so.

And usually the reaction, it's not unusual that the reactions of Marlborough because.

I understand what youre, saying about your opportunities for growth here and some of the casualty lines, but maybe you can get your perspective, a little bit more on what do you think casualty trend isn't where is it going just because you must be pretty confident in kind of having good grasp on where cathay trend just given that you are growing in some other are shrinking.

At some point management's lose lose faith in.

<unk> been told so they require a more drastic actions.

Speaker Change: It's a usual playbook of how.

Speaker Change: How market happen.

Speaker Change: Thank you.

Speaker Change: Welcome.

Speaker Change: Yes, so I think yes.

Our next question comes from the line of Brian Meredith with UBS financial.

Speaker Change: It is a tale of single stories I think.

Speaker Change: At the bottom of the program I think people, who can have a pretty good idea what.

Brian Meredith: Yes, Thanks, Nick I wanted to follow up on that a little just a little bit so so.

Speaker Change: Casualty China is Mr.

Brian Meredith: I understand what youre, saying about your opportunities for growth here and some of the casualty lines, but maybe you can get your perspective, a little bit more on what do you think casualty trend is and where is it going just because you must be pretty confident in kind of having good grasp on where casualty trend is given that youre growing in some other are shrinking.

Speaker Change: Mid single digit.

Speaker Change: Issue is when you go exercise, if you're going to exercise on the $50 million excess of $100 million.

Speaker Change: Yeah.

The trend yet.

Speaker Change: <unk>.

Speaker Change: And certainly in double digits.

Speaker Change: I think also.

Speaker Change: In a way we can.

Speaker Change: Yes, so I think yes.

Speaker Change: We were lucky we didn't have a huge footprint on the casualty business, but we are innovative footprint to be able to do our own analysis and again.

It is instead of single stories I think.

At the bottom of the program I think people, who can have a pretty good idea what the.

Casualty, China is whether it's mid single.

Speaker Change: Its syndicate.

Speaker Change: <unk> is.

Speaker Change: Digits.

Speaker Change: As to traditional intensive business different geographies.

The issue is when you go excess sugar excise the $50 million excess of $100 million, that's where.

Speaker Change: You have to be able to do really selective price increases analysis too.

Speaker Change: The trend yet.

Speaker Change: <unk>.

Speaker Change: And certainly in double digits.

To get comfortable that.

Speaker Change: Southern jurisdictions with certain classes of business, we're seeing the business based on your own actual experience the business makes sense to me to be return. So it is not.

Speaker Change: Also.

In a way we can.

Speaker Change: We were lucky we didn't have a huge footprints on the casualty business, but we have the footprint to be able to do a whole new notices and again.

Speaker Change: We don't see it as a sea change that certainly any pieces of business that come across your desk is going to be profitable you have to be you have to be selective in.

Speaker Change: Its syndicate.

Yes to traditional intensive business do you feel on geographies.

Speaker Change: And have a full suite approach to what you want to underwrite because that's a market reality.

Speaker Change: Okay.

Speaker Change: You have to be able to do really selective price increases analysis too.

Speaker Change: Got you got you and the same question I guess for reinsurance.

Shrinks are kind of relying on the.

Speaker Change: To get comfortable that certain southern jurisdictions with certain class of business do you think the business based on your own actual experience the business makes sense to be a weekend. So it's not I wouldn't.

Speaker Change: The seats.

Speaker Change: Yes, so again.

Speaker Change: The job of the reinsurers feedback right companies I think we are.

Speaker Change: So while I think we've been really underweight.

Speaker Change: I'd say its a sea change that certainly any pieces of this note that come across your desk is going to be profitable you have to be you have to be selective in.

Speaker Change: Casualty U S.

Porto shales in excess of loss and I think this dislocation in the marketplace.

And have a full suite approach to what you want to own their lives that's a market reality.

Speaker Change: <unk> allowed us to to get them program that we wanted to get on to a few years ago, because we really like the underwriting we liked the limit disciplined we like the class of business. They write but we couldnt get out because nobody nobody was exiting I think.

Got you got you and the same question I guess for reinsurance reinsurance are kind of relying on.

The seeds.

Speaker Change: Yes again.

The job of the reinsurers to buy the right companies, but I think.

Speaker Change: I think there is some sort of a slight.

Speaker Change: Into quality of.

Total line I think we've been really underweight.

Who is here for the long term and who is not and I think we're benefiting from that.

Speaker Change: <unk> U S.

Porto shales and excess of loss and I think this dislocation in the marketplace.

Speaker Change: Makes sense and then franchise one quick one here for you on the investment portfolio I guess, one where where are we looking at new money yields versus current book yields and where are you deploying the assets you got out of mid corporate share.

<unk> allowed us to to get on program that we wanted to get on to a few years ago, because we we like the underwriting we liked the limit disciplined we like the cloud solution as they arise.

Speaker Change: Some more potential book yield to come out going forward.

We couldnt get out because nobody nobody was exiting I think we and I think.

Speaker Change: Yes, I mean part of the transaction was certainly some of it may a good chunk of the assets came in cash so our investment team has been very disciplined and thoughtful on.

Speaker Change: There is some sort of a flight.

Speaker Change: Into quality of.

Who is here for the long term and who is not and I think we're benefiting from that.

Speaker Change: Where to put that money to work in and but the good thing is just on money market. Our cash we're still getting a decent yield, but yes, I would say call. It four 5% on new money yields I mean as you see the book yield on the new money yields are kind of.

Makes sense and then one quick one here for you on the investment portfolio I guess, one where where are we looking at new money yields versus current book yields and where are you deploying the assets you got out of mid corporate share.

Pretty close to each other right now.

More potential book yield to come out going forward.

Speaker Change: We're still very young.

Speaker Change: Very short duration very high quality fixed income book, so thats not changing but yes. There is certainly been call it the.

Yes, I mean part of the transaction was certainly some of it may a good chunk of the assets came in cash. So our investment team has been very disciplined and thoughtful on where to put that money to work in and but the good thing is just on money market, our cash we're still getting a decent yield.

Speaker Change: The $2 billion in assets that we got.

Speaker Change: We are.

Speaker Change: Putting that to work and.

Speaker Change: Trying to tie that into the portfolio as best we can.

Speaker Change: Great. Thank you.

Speaker Change: Youre welcome.

Speaker Change: Say call it four 5% on new money yields I mean, as you see the book yield on the new money yields are kind of pretty close to each other right now.

Speaker Change: Our next question comes from the line of Joshua Shanker with Bank of America.

Joshua Shanker: Yes, good morning, almost afternoon, everybody how are you doing.

Speaker Change: We're still very young.

Speaker Change: Very short duration very high quality fixed income book, so thats not changing but yes. There is certainly been call it the.

Joshua Shanker: Good for Hungary.

Joshua Shanker: I get it I get it there's less bebe sports talk than ever but.

The $2 billion in assets that we got.

Joshua Shanker: I was wondering you know in the past we've talked about the ROI on the different legs of the arch.

Speaker Change: We are.

Putting that to work and.

Trying to tie that into the portfolio as best we can.

Joshua Shanker: Reinsurance insurance mortgage could you review right now with sort of a state of Union on what's the return on new capital is for the various businesses.

Speaker Change: Great. Thank you.

Speaker Change: Youre welcome.

Speaker Change: Our next question comes from the line of Joshua Shanker with Bank of America.

Speaker Change: We like all our businesses that has not changed the one thing that I'd say right. Now is I mean fourth quarter were a little bit kind of dependent on where the market goes at one one so that is.

Yeah, good or you're almost afternoon, everybody how are you doing.

Good for Hungary.

I get it I get it there's less bebe sports talk than ever but.

Speaker Change: Certainly reinsurance has been just a really really good environment for.

I was wondering you know in the past we've talked about the ROI on the different legs of the arch Street.

Speaker Change: For 2024, how does it how does it play out in 'twenty five it's still a bit early to know for sure. We think it's going to be still a very good market.

Speaker Change: While reinsurance insurance mortgage could you review right now with sort of a state of the union on what's the return on new capital is for the various businesses.

Speaker Change: Is it going to get better or to the point, where we have the ability to deploy that much more capital in the reinsurance we don't know quite yet so.

We like all our businesses that has not changed the one thing that I'd say right. Now is I mean fourth quarter were a little bit kind of dependent on where the market goes at one one so that is.

Speaker Change: Bob.

Bob: It's kind of the answer I mean, there were a little bit.

Wait and see approach in terms of how the market plays out but again, what we talked about this morning the growth opportunities in casualty in particular I think are exciting to us are both insurance and reinsurance I think we are.

Certainly reinsurance has been a just a really really good environment for them.

For 2024, how does it how does it play out in 'twenty five it's still a bit early to know for sure. We think it is going to be still a very good market.

Bob: We're ready to play and in mortgage is don't.

Bob: Don't want to forget about mortgage I mean, this has been a terrific engine for US no question that the.

Is it going to get better or to the point, where we have the ability to deploy that much more capital in the reinsurance we don't know quite yet so.

Bob: The origination market is not as large as we'd like it to be but that's okay. I mean, we've got terrific earnings coming from the in force book.

Speaker Change: That's kind of the answer I mean, there were a little bit.

Wait and see approach in terms of how the market plays out but again, what we talked about this morning, the growth opportunities in casualty in particular, I think are exciting to us so both insurance and reinsurance I think we are.

Bob: <unk>.

Bob: Finding other our other opportunities outside of primary <unk> in the U S.

Bob: And for.

Bob: We are deploying the capital in the right way. So we're we're very very comfortable with the mix right now.

We're ready to play and in mortgage is don't.

Speaker Change: Would it be wrong to paraphrase that reinsurance is better than insurance and mortgage but that's pending what happens on one one.

Don't want to forget about mortgage I mean, this has been a terrific engine for US no question that the.

Speaker Change: It's not wrong I think that's a fair statement, it's better right now we like we'd like to think it's going to stay better but.

The origination market is not as large as we'd like it to be but that's okay. I mean, we've got terrific earnings coming from the in force book.

Speaker Change: Don't know quite yet.

Speaker Change: It's a higher component.

Speaker Change: <unk>.

Speaker Change: Reinsurance.

Finding out there are other opportunities outside of primary <unk> in the U S and.

Speaker Change: Reinsurance is a higher component of property business you have to think of the.

We're deploying the capital in the right way. So we're we're very very comfortable with the mix right now.

Half of the business is probability so U S.

It's high risk high reward.

Speaker Change: Would it be wrong to paraphrase that reinsurance is better than insurance and mortgage but that's pending what happens on one one.

Speaker Change: I think we have we get better high.

Speaker Change: High return, but it's also high risk as we saw this quarter.

It's not wrong I think that's a fair statement, it's better right now we like we'd like to think it's going to stay better, but just don't know quite yet.

Speaker Change: The insurance book is much more heavily geared towards casualty and professional lines. So I think it's a.

Speaker Change: It's an environment that has its own challenges.

Speaker Change: It's a higher component.

Speaker Change: But it's a different set of return measures I. Thank you.

Speaker Change: Yes sure.

Reinsurance is a higher component of property business you have to think of.

Speaker Change: Yes, you have to balance those two so and sometimes the E. In the OE doesn't doesn't do enough of that.

Speaker Change: Half of the business appropriately so.

As high risk highly world.

Speaker Change: So I think we have we get paid their high.

Speaker Change: And Francois you made the comment that the origination market and mortgage isn't quite as strong as you'd like it to be but also arch has.

Speaker Change: High return, but it's also highlights as we saw this quarter.

I think the insurance book is much more heavily.

Lowered its market share of new business compared to where it was three years ago or so.

To casualty and professional lines, so I think.

It's an alignment that is onshore.

Speaker Change: Arch wanted too.

But it's a different set of Vita menus I. Thank you.

You know ramp it up is there a possibility.

Yes, yes, you have to balance those two so.

Speaker Change: Growing that business without improvements.

And sometimes the E in the OE doesn't doesn't do enough of that.

Speaker Change: Origination market or would that cause a pause.

Speaker Change: <unk> and margins to weaken the method.

Speaker Change: Yes, it's becoming a more.

And Francois you made the comment that the origination market and mortgage isn't quite as strong as you'd like it speeds, but also arch has.

Speaker Change: Then a homogeneous market right. So I think the the risk of of trying to grow market share is just as you said I think you have to cut prices.

Speaker Change: Lowered its <unk>.

Speaker Change: Market share of new business compared to where it was three years ago.

Speaker Change: We've built a very resilient and very high quality book through.

Speaker Change: So.

Speaker Change: If arch wanted too.

Speaker Change: Picking different types of loans to ensure a different geographies I think we I mean, we are very comfortable with what we've done but for us to move from call. It 16%, 17% market share and say, we want to be at 18, 19% 20%.

No ramp it up is there a possibility of.

Growing that business without improvements in the origination market or would that cause a pricing and margins to weaken in that business.

Yes, it's becoming more.

Speaker Change: Right now, we just don't see that happening because the market I think we'll just react with us and it will just push prices down so I think right now I mean.

Homogeneous market right. So I think the the risk of.

Speaker Change: <unk> trying to grow market share is just as you said I think you have to cut prices.

Speaker Change: I'd just be.

I think we've built a very resilient and very high quality book through.

Speaker Change: Be surprising for us to grow our market share that debt that significantly in the near term. Yes. We have asked this question all the time.

Picking different types of loans to ensure a different geographies I think we I mean, we.

Speaker Change: And the answer is that we ended up in a worst place.

Speaker Change: We are very comfortable with what we've done but for us to move from the call. It 16%, 17% market share and say, we want to be at 18%, 19%, 20% right. Now we just don't see that happening because the market I think we'll just react with us and it will just push prices down so I think right now I mean.

Speaker Change: Zinc statues quo accounts that your score based on the.

Remember, we are dealing with mono line business Thats all what they have so I think intimately the theyre going to defend our book and we end up.

Speaker Change: In the workplace.

Speaker Change: Yes that is that with cabinets.

Speaker Change: Well. Thank you very much for all the answers and I'll, let you go to lunch.

Speaker Change: Yes.

Be surprising for us to grow our market share that debt that significantly in the near term. Yes. We've asked this question all the time.

Josh: Thanks, Josh.

Speaker Change: Our next question comes from Elyse Greenspan with Wells Fargo.

And the answer is that we ended up in the workplace.

Elyse Greenspan: Hey, thanks.

I think that your score the counts that you score based on the.

If you were in before lunch, but my first question.

Remember, we are getting with mono line business. That's all what they have so I think intimately the theyre going to defend our book and we end up.

Elyse Greenspan: Is that a hurricane right I think you guys said.

Speaker Change: It was 45% of cats, if I calculate that at.

Speaker Change: In the workplace.

Speaker Change: Just over $200 million.

Yes that is that we carry.

Speaker Change: So that's like one five to one 7% market share given your 12% to 14 is that about what you would expect I guess are these large type events and is that share a good frame of reference when thinking about melton.

Speaker Change: Okay.

Well. Thank you very much for all the answers and I'll, let you go to lunch.

Speaker Change: Thanks, Josh.

Speaker Change: Our next question comes from Elyse Greenspan with Wells Fargo.

Elyse Greenspan: Hey, thanks.

Speaker Change: I think your math is about right, but the.

Elyse Greenspan: If you were in before lunch, but my first question.

Speaker Change: Leans a bit unusual for us I mean, it's a little bit on the elevated side in terms of market share based on some of the accounts we wrote.

Is that Hurricane Halloween right I think you guys said.

Speaker Change: It was 45% of catch.

Speaker Change: Again, Milton is different because it's Florida, only so which we we have a different mix of business. There are different type of accounts we right.

Calculate that at.

Just over $200 million.

Speaker Change: So that's like one five to one 7% market share given your 12 to 14 is that about what you would expect I guess are these large type events and is that share a good frame of reference when thinking about melton.

Speaker Change: So yes so.

Speaker Change: So I would not draw.

Speaker Change: A correlation or an analogy from Helene.

Speaker Change: All it implied market share to what Milton.

I mean, your math is about right, but the.

Speaker Change: Could look like.

Okay. That's helpful and then.

Leans a bit unusual for us I mean, it's a little bit on the elevated side in terms of market share based on some of the accounts we wrote.

Speaker Change: My second one I guess as a follow up on reserves right we had a.

Speaker Change: Another company. This for you that kind of flat or kind of going to take.

God in depth review and there might be some movement with their fourth quarter review it sounds like from earlier questions have you guys really haven't seen that change.

Again, Milton is different because it's Florida, only so which we we have a different mix of business. There are different type of accounts we right.

Elyse Greenspan: So so.

Speaker Change: Change in loss trends or actual versus expected in the third quarter versus earlier in the year.

So I would not draw.

A correlation or an analogy from the.

Speaker Change: There anything I guess that you're concerned about or anything thats come up with a quarterly reviews that you guys are.

Call it implied market share to what Hilton.

Speaker Change: Look like.

Speaker Change: Okay. That's helpful and then my.

Speaker Change: Hang particular attention to will be coming to the end of your review.

My second one I guess as a follow up on reserves right we had a.

Speaker Change: Okay.

Speaker Change: There's nothing unusual I mean, it's something we look at all the time.

The other company. This for you that kind of flat there kind of going to take that.

For you and there might be some movement with their fourth quarter review it sounds like from earlier question, but you guys really haven't seen that change.

Speaker Change: The trends are relatively stable I mean, we have views going way back that.

Speaker Change: Loss trends that we were seeing in the market were a bit optimistic. So we are we've always taken a longer term view of trends.

Change in loss trends or actual versus expected in the third quarter versus later in the year, but is there anything I guess that you're concerned about or anything thats come up with a quarterly reviews that you guys are.

Speaker Change: And we refer you review those you know annually at a minimum sometimes some twice a year, but yes.

Speaker Change: Particular attention to will be selling to the end of your review.

Speaker Change: Yes, really nothing that stands out that's I'd say unusual or that we're overly concerned with.

Speaker Change: Yes.

There's nothing unusual I mean, it's something we look at all the time.

Speaker Change: Standard.

The trends are relatively stable I mean, we have views going way back that.

Speaker Change: Themes that we've been talking about for quite some time.

Speaker Change: And then I might just shove one last one in there you guys have an upcoming investor day in a couple of weeks.

Loss trends that we were seeing in the market were a bit optimistic. So we are we've always taken a longer term view of trends.

Speaker Change: Thank you guys.

Speaker Change: Expecting to use this to lay out bigger strategy financial targets something on capital I guess can you just give us a little bit of a preview of what you expect to talk to us about in a few weeks.

Speaker Change: And we refer you review those you know annually at a minimum sometimes some twice a year but.

Yes, really nothing that stands out that's I'd say unusual or that we're overly concerned with.

Speaker Change: We're just missing you guys would be in person. So that's why we will schedule. This but no other as I wouldn't expect anything really unusual from the upcoming Investor day we.

Speaker Change: Standard kind of.

Speaker Change: Themes that we've been talking about for quite some time.

And then I might just shove one last one in there you guys have an upcoming investor day in a couple of weeks.

Speaker Change: Yes, you've known us for a while and our strategy remains the same Nicholas will obviously be.

<unk> points, and we'll make sure everybody gets to hear a bit more from how we wants to shape the company going forward, but I would not.

Now is this are you guys expecting to use this to lay out bigger strategy financial targets something on capital I guess can you just give us a little bit of a preview of what you expect to talk to us about in a few weeks.

A message or or think that theres anything.

Speaker Change: Unusual or.

Well, we're just missing you guys <unk> in person. So that's why we will schedule. This but no I wouldn't expect anything really unusual from the upcoming Investor day we.

Speaker Change: Kind of a new revelation that you should expect to hear from us.

And a couple of weeks.

Speaker Change: Okay. Thank you.

Speaker Change #100: You're welcome.

Speaker Change #101: I would now like to turn the conference over to Mr. Nicholas <unk> for closing remarks.

Speaker Change: Yes, you've known us for a while and our strategy remains the same Nicholas will obviously be.

Speaker Change #102: Yes, so theres not any more questions. So this will conclude though.

Local points. So we'll make sure everybody gets to hear a bit more from how we want to.

Speaker Change #102: Today and thank you for your questions and we see you next quarter.

Shape, the company going forward, but I would not.

Speaker Change: <unk>.

Speaker Change #102: Hopefully gentlemen.

That there is anything.

Speaker Change #103: Thank you for participating in today's conference. This concludes the program you may all disconnect.

Speaker Change: Unusual or.

Speaker Change: A new regulation that you should expect to hear from us.

Couple of them.

Speaker Change: Okay. Thank you.

Youre welcome.

I would now like to turn the conference over to Mr. Nicholas Papadopoulos for closing remarks.

Nicholas Papadopoulos: Yes, so theres not any more questions. So this will conclude though.

And thank you for your questions and we see you next quarter.

Speaker Change: It took me gentlemen.

Thank you for participating in today's conference. This concludes the program you may all disconnect.

Speaker Change: [music].