Q4 2024 Arch Capital Group Ltd Earnings Call
Good day, ladies and gentlemen, and welcome to the Q4 2020 for arch Capital Earnings Conference call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time as a reminder, this conference call is being recorded.
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.
Basements 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.
Those should review periodic reports that are filed by the company with the S. C from time to time, including our annual report on form K 10.
<unk> 10-K for the 2020 fiscal year. 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.
Management.
Also will make reference to certain non-GAAP measures of financial performance. The reconciliation to GAAP for each non-GAAP financial measures can be found in the company's current report on form 8-K furnished to the FCC yesterday, which contains the company's earnings press release.
Speaker Change: And is available on the company's website at Www arch Koop Dot com and on the Sec's website at Www Dot FCC Dot Gov, and I would like introduce your host for today's conference Mr. Nicola Pepto Polo and mischief Houseware Moore. Please go ahead.
Speaker Change: Good morning, and welcome to our fourth quarter earnings call.
Speaker Change: I'll begin by offering a full sympathies to all of those affected by the California wildfires.
Speaker Change: As a terrible event that will require the efforts of many including insurance companies do have the affected communities recover and rebuild.
Speaker Change: And also of course fulfill our role in these efforts.
Speaker Change: Noted in Yesterdays press release, we expect the wildfires to result in a net loss between 450 and $550 million.
Speaker Change: Based on the industry loss estimates are $35 billion to $45 billion.
Speaker Change: Turning now to our results.
Speaker Change: <unk> had a solid fourth quarter, right and frequent $8 billion of net.
Speaker Change: Premium, which is a 17% increase over the same quarter last year.
Speaker Change: The $625 million.
Speaker Change: Income in the quarter is down 13% from last year.
Speaker Change: Primarily due to losses related to cat activities in the second half of 2020 for our full year results were excellent.
Speaker Change: With $3 5 billion.
Speaker Change: <unk> operating income and an operating return on average common equity of 18, 9%. Despite an increased level of debt you look at those two fees.
Book value per share our preferred measure of value creation and.
Speaker Change: In the 2024 at <unk> and <unk>.
Speaker Change: Representing a 13% increase for the year and nearly 24% increase.
Speaker Change: Adjusting for the impact of the $5 per share special dividend, we paid in December.
Speaker Change: The decision to pay a special dividend was a result of ultra strong financial performance.
Speaker Change: <unk> capital position and represented an effective means of returning excess capital to our shareholders. We also repurchased shares worth $24 million in the fourth quarter.
Speaker Change: Both the dividend and the share repurchases reflect our ongoing commitment to effective and active capital management.
Speaker Change: Market condition within all segments remain favorable with a number of select growth opportunities ahead of us as you may have heard from our peers this quarter, alright, and loss trends vary by line of business and broadly offset each other.
Speaker Change: Hans do not point to the same hour on the underwriting clock.
Speaker Change: For example, we are selectively deploying capital to the area producing attractive risk adjusted return such as insurance and reinsurance liability lines.
Speaker Change: Salty business at Lloyds and property Cat reinsurance.
Speaker Change: Alternatively in lines of business, where competitive pressures have eroded margins to levels below adequate.
Speaker Change: Underwriting teams are focused on improving our business mix within each of those lines to ensure a minimum profitability targets are met.
Speaker Change: Effective second management, the key to our strategy requires empowering underwriters to execute on both sourcing and retaining attractive business without the constraints of production targets.
Speaker Change: And classes and surpluses, we still do not meet our minimum thresholds, we have the agility and the incentives to reallocate capital to more profitable opportunities across our diversified platform.
Speaker Change: And as we have demonstrated throughout our history.
Speaker Change: <unk> digital to return excess capital to our shareholders when appropriate.
Speaker Change: I will offer a few highlights about the performance of our underwriting segments, starting with reinsurance, which finished the year with a strong fourth quarter delivering $328 million of <unk>.
Speaker Change: <unk> income.
Speaker Change: Full year result for the reinsurance group were excellent. This segment delivered a record $1 $2 billion of underwriting income while writing over $7 7 billion net premium as the January 1st when Youll. We grew the reinsurance business by selectively increasing our writings in property liability and special.
Speaker Change: <unk>.
Speaker Change: Three studies as a leading global insurer as a result of its focus on addressing water and client's needs.
Speaker Change: <unk> with its underwriting vigilance and high degree of scrutiny on the performance of its business.
So how is the how market our teams is that the conviction to increase its support and relevance with brokers and clients making.
Speaker Change: Making us more variable collaborative partner with other insurers and in some cases, even withdraw capacity.
Speaker Change: Now moving to insurance.
Speaker Change: Which also seized on strong growth opportunity in 2024, although Ericsson helium and Milton Ltd fourth quarter underwriting income to $40 million.
Speaker Change: For the full year. The insurance group was $6 9 billion of net premium a 17% increase from 2023 and delivered $345 million of underwriting income growth was enhanced by the acquisition of the U S Mid Corp, and hotel segment business.
Speaker Change: Although it's still early the performance and integration of the Mitchell and entertainment business are consistent with our expectations and objectives.
Speaker Change: Organic growth in North America came from our casualty business units, which more than offset premium decrease in professional lines International insurance remained the bright spots, but I think over $2 billion.
Speaker Change: Net premium in 2024, primarily in specialty lines out of our large platform overall.
Speaker Change: Overall rate increases remained slightly above loss trend keeping return margin relatively flat in the fourth quarter. The outlook for both North America and international insurance growth is favorable for 2025.
Speaker Change: Looking ahead, we expect primary markets conditions to remain competitive given the attractive underlying margins.
Speaker Change: However, we have experienced a slowdown in new business volumes as competition for premium volumes has increased.
Speaker Change: The mortgage segment contributed $267 million of underwriting income in the fourth quarter, resulting in the fifth consecutive years of delivering over $1 billion of under.
Speaker Change: <unk> income.
Speaker Change: Fundamental remain positive, including strong persistency of our $500 billion plus insurance enforced portfolio, while the overall credit quality of the book remains excellent.
Speaker Change: The delinquency rate in the U S. <unk> business increased modestly to just over 2% at the end of December between their historic lows.
Speaker Change: Delinquency can be attributed to expected default in area, hence by natural catastrophes.
Speaker Change: The seasoning of the insurance in force overhaul of the U S mortgage insurance industry remain discipline, despite suppress mortgage origination due to low housing supply and high mortgage rates.
Two the investment group, which delivered nearly $1 5 billion.
Speaker Change: Net investment income <unk> has increased to over $40 billion.
Speaker Change: Accounting for the special dividend rising investment yields and the growth of our investable assets from strong operating cash flows provide additional tailwind strong earnings and book value growth.
Speaker Change: So 2024 was another excellent year for arch looking at our primary goals is to maintain attractive margin. Despite expected heightened competition, our strong underwriting culture proven track record of cycle management.
Speaker Change: Capital management capabilities and progress to date, and becoming a data driven entrepreneurs give me confidence in our ability to navigate ever changing market dynamics with a clear objective of maximizing shareholder return.
Speaker Change: Long term as.
Speaker Change: We officially turn the page to 2025 I want to recognize their hard work and dedication of <unk> nearly 7000 employees who share is unclear.
Speaker Change: <unk> culture that demands and rewards excellence to the benefit of our clients and stakeholders now are returning to first of all to provide more detail on the financials before returning to answer your questions.
Speaker Change: Thank you Nicolas and good morning to you all as you know by now we close 2024 with fourth quarter. After tax operating income of $2 26 per share for an annualized operating return on average common equity of 16, 7% for the.
Speaker Change: The year, our net income return on average common equity was an excellent 22, 8%.
Speaker Change: Once again, our three business segments delivered excellent underlying results with an overall ex cat accident year combined ratio of 79% for the quarter and 78, 6% for the year.
Speaker Change: Current accident year catastrophe losses were $393 million for the group in the quarter.
Speaker Change: With roughly 60% and 40% between the reinsurance and insurance segments, respectively.
Speaker Change: Most of our catastrophe losses. This quarter are due to hurricane Milton a fourth quarter event with an additional contribution from hurricane lean, where we saw some delayed emergence of claims.
Speaker Change: Given the late occurrence date in the third quarter.
Speaker Change: As of January one our peak zone natural cap probable maximum loss for a single event. One in 250 year return level on a net basis increased slightly and notwithstanding at nine 2% of tangible shareholders' equity RP.
Speaker Change: Our P&L remains well below our internal limits.
As we look forward to 2025.
Speaker Change: With the recent addition of the mid Corp, and entertainment business and current market conditions in property, we expect our cat load to represent approximately 7% to 8% of our full year group wide net earned premium.
Speaker Change: Our underwriting income in the quarter included $146 million of favorable favorable prior year development on a pre tax basis or three five points on the combined ratio across our three segments.
We recognize favorable development across many lines of business, but primarily in short tail lines in our reinsurance segment, and then mortgage due to strong cure activity.
Speaker Change: As we discussed last quarter the acquisition of the mid corporate and entertainment insurance businesses has impacted some key performance metrics for our insurance segment.
Speaker Change: First the net written premium coming from the acquired businesses was $393 million for the quarter contributing 27, one points to the reported quarter over quarter premium growth for our insurance segment.
Speaker Change: Second.
Speaker Change: The acquired business lowered the insurance segment's accident year ex cat combined ratio by one six points this quarter.
Speaker Change: This result was due to the current quarters acquisition expense ratio that was lowered by two one points due to the write off of deferred acquisition costs for the acquired business at closing under purchase gap.
Speaker Change: And then operating expense ratio that was lowered by 0.8 points as our mid Corp operations aren't fully ramped up yet.
Speaker Change: Partially offsetting these benefits was an increase in the accident year ex cat loss ratio of one two points, reflecting the underlying results of the acquired business.
Speaker Change: On a related note, we expense $99 million this quarter through intangible amortization more than 75% of which was for the mid Corp, and entertainment acquisition.
Speaker Change: This expense was in line with our expected expectations as we communicated last quarter.
Speaker Change: On the investment front, we earned a combined $548 million pre tax from net investment income and income from funds accounted using the equity method or $1 43 per share.
Speaker Change: Our net investment income this quarter was partially impacted by a $1 $9 billion dividend paid in December which entail that we liquidate a portion of our investment portfolio.
Speaker Change: Cash flow from operations remained strong and was approximately $6 7 billion for the full year up 16% from 2023.
Speaker Change: Our effective tax rate on pretax operating income was an expense of six 7% for the quarter and eight 2% for the full year.
Speaker Change: As we look ahead, we would expect our annualized effective tax rate to be in the 16% to 18% range for the full year 2025, reflecting the introduction of a 15% corporate income tax in Bermuda.
Speaker Change: On a cash basis, we will start recognizing next quarter as some of the benefit we accrued with the establishment of the one 2 billion deferred tax asset at the end of 2023.
Speaker Change: As you may have heard on other calls the recent OECD guidance mate, partially impact the real is realizable value of the DTA.
Speaker Change: We will keep you apprised as additional information becomes available.
Speaker Change: In closing our balance sheet remains extremely strong with common shareholders' equity of $20 billion. After a recognition that the $1 9 billion common dividend that was paid in December <unk>.
Speaker Change: Debt plus preferred to capital ratio remains low at 15, 1%.
Sylvia: With these introductory comments, we are now prepared to take your questions Sylvia.
Sylvia: Thank you Ms Goodbye.
Speaker Change: If you would like to ask a question. Please signal by pressing star one on your telephone keypad. If you are using a speaker phone. Please lift the handset and make sure. Your mute function is turned off to allow your signal to reach our equipment.
Speaker Change: Again press Star one to ask a question and we'll pause for just a moment to allow everyone an opportunity to signal for questions.
Speaker Change: And your first question will be from Elyse Greenspan of Wells Fargo. Please go ahead.
Elyse Greenspan: Hi, Thanks.
Elyse Greenspan: Good morning, My first question is on.
Elyse Greenspan: The insurance underlying loss ratio.
Speaker Change: Ties right Francois you highlighted some of the impact right from the Ali on steel coming in right a little bit over one point I calculated kind of arch standalone running at just under 57, which is close to the Q3 is it right way to think about it that that's about where arch is and then kind of.
Speaker Change: Blend in white this a little bit over one point from mid Corp. So that insurance underlying is somewhere in the range of 58.
Speaker Change: On an ongoing basis something like that.
Speaker Change: Yes, that's about right I think.
Speaker Change: Yes, the impact of MMC is call it on the <unk>.
Speaker Change: Loss ratio about one point, so whatever the assumption you have around the <unk> kind of run rate loss ratio, which is pretty stable has been pretty stable. There are some movements up and down from quarter to quarter, but generally speaking it's been it's been stable and introducing the MCA maybe adds about one point.
Speaker Change: To that.
Speaker Change: And then my second question is on reinsurance right you guys.
Speaker Change: Pulled back a little bit at midyear 24, now the PMO went back up right, but its flat 125 with one 124 did you see conditions get incrementally better at January one I'm, just trying to understand the thought process around bringing the pms back up a little bit.
Speaker Change: I think what's happening is that we really like the business I think.
Speaker Change: The competitive nature.
Speaker Change: Other people lacking the business too I think we were looking to write more of this business. We think the returns are quite attractive.
Speaker Change: And I think at one one we had we had some opportunity to do so.
Positioning so I think we were pleased by that.
Speaker Change: And then I guess the follow up to that is right. The California fire is pretty big loss do you see that.
Speaker Change: Being able to impact other cat renewal seasons in 'twenty five.
Speaker Change: Some of it I guess might lead to 126, how do you see the market impact from the California fires and is this something where you.
Speaker Change: You guys would expect your P M Allen and Cat writings to go up during the year.
Speaker Change: So I think the.
Speaker Change: As I mentioned.
Speaker Change: So maybe this is a significant loss for the market and when we pitch it can fully 35 and 45 billion.
Speaker Change: We believe that a significant part of that but also as we go to the reinsurance market and I think it will I think mostly ensure including all set if we start the year.
Speaker Change: The loss ratio.
Speaker Change: No.
Speaker Change: In the <unk> field is depending of.
Speaker Change: Maybe higher than that so I think it would.
Speaker Change: It should dump all the answer is yes.
Speaker Change: Many market trying to be heroes.
Speaker Change: And writing the business, so I would think that.
Speaker Change: You'll have.
Speaker Change: In effect.
Speaker Change: On the rates.
Speaker Change: For the rest of the year or so.
Speaker Change: Yeah.
Speaker Change: Thank you.
Speaker Change: Thank you next question will be from Mike Zaremski of BMO. Please go ahead.
Mike Zaremski: Hey, thanks.
Mike Zaremski: I guess first question I'll just go back to the the catastrophe load guidance.
Mike Zaremski: 7% to eight.
Mike Zaremski: Probably just obvious but that so that includes right it's higher than the historical six to eight mostly because of the <unk>.
Speaker Change: California losses is that correct.
Mike Zaremski: A little bit, but also the MGE acquisition.
Mike Zaremski: Add scale on a relative basis kind of adds a little bit of.
Mike Zaremski: Of load.
Increases the cat load.
Mike Zaremski: Because it's a heavier property booked than people.
Mike Zaremski: Realize it it didn't really.
Mike Zaremski: Impact our P&L, because it's a different zones, it's more distributed but when we think about the contribution to the to the cat load throughout the year. It has a meaningful.
Mike Zaremski: Impact.
Speaker Change: Okay got it I would've actually been plugging into Kelly lost it actually would have thought the low there'd been a little bit.
Mike Zaremski: Higher but.
Mike Zaremski: Okay Thats good color.
Mike Zaremski: Switching gears just to the.
Mike Zaremski:
Mike Zaremski: I guess one of the elephant in the room for lots of insurers just going back to the kind of the casualty GL umbrella environment.
Mike Zaremski: And some of the prepared remarks it was.
Mike Zaremski: <unk> said that overall rate increases remained slightly above loss trend I think that was the primary insurance marketplace.
Mike Zaremski: Any comments on weather.
Mike Zaremski: What youre seeing.
Speaker Change: And your GL book I know that you guys are one of the more honest ones in my humble opinion and at the Investor Day, You said, you would probably be adding small amounts tier <unk> errors, but nothing that.
Speaker Change: That's really too out of trend line with what you've been doing for.
Speaker Change: For a while now and better than the industry, but any updated commentary on what youre seeing there.
Speaker Change: Yes, so I think I'll answer in two parts one on the reserve position, we didnt add to our reserves were very comfortable with the reserve position, both both in insurance and reinsurance.
Speaker Change: Our actual versus expected analysis or a year and analyses are supporting that that view that our reserves for prior accident years are very adequate so no no concern there but.
Speaker Change: But as we look at the.
Speaker Change: Second half of 'twenty, four and then into 'twenty five yes, we are seeing rate changes keeping up with loss trend. So we're not and even exceeding in some places. So we're comfortable with the environment. There, but we also recognize that there is a lot of uncertainty there. So we are being cautious and prudent.
Speaker Change: We are in some specific very targeted areas increased our initial loss picks, but it's not I think I want to make it clear it is not as I reflect its not a reflection of.
Speaker Change: Adverse development or signals, our data are telling us that we missed the mark on the old years, it's very much a function of the current rate environment.
Speaker Change: And how we perceive the risk around our initial loss picks and for that reason, we're choosing to be a bit more prudent.
Speaker Change: Okay got it and just lastly, real quick things for the tax rate guidance.
Speaker Change: Is the DTA that was established I think some of some peers have said that there could be tweaks to the DTA do the guidance from from Bermuda is that something thats influx or any way you could kind of.
Speaker Change: A handicap, whether if it if the DTA was in flux, but it changed materially or just a little bit.
Speaker Change: Yes, I mean, the guidance right now and that's an important thing its guidance thats not the law, which we do follow obviously, Bermuda law, which allows us or instruct us really to carry the DTA. The recent guidance from the OECD suggests that we may only be able to realize up to 'twenty.
Speaker Change: Percent of that amount.
Speaker Change: That is still again thats the latest guidance I mean things change pretty quick in this.
Speaker Change: When we start talking about taxes, but if I would say from your perspective, maybe worst case, that's kind of what may happen is that we end up only realizing 20% of this amount and the rest we might have to write off at some point.
Speaker Change: In 2006 or late 'twenty six 'twenty seven.
Speaker Change: Time being Bermuda law has not changed on that that's what we're following.
Speaker Change: I appreciate the color.
Speaker Change: Okay.
Speaker Change: Thank you next question will be from Jimmy Buhler at Jpmorgan. Please go ahead.
Jimmy Buhler: Hey, good morning, So just had a question on a different topic on M. I reserve releases can you go through the details on.
Jimmy Buhler: Whats driving those and how much of that is from the last one to two years versus maybe a few years back and just your overall expectations for margins in that business.
Jimmy Buhler: Yeah.
Jimmy Buhler: Yeah, I mean, the reserve releases come from both I mean from all three of our segments right. There is a meaningful amount from U S. Semi again thats a little bit of the same story that we've been talking about the last few quarters, where we based on conditions at the time I want to say 'twenty, two and 'twenty three we had.
Ken: Setup initial reserves on the delinquencies that were reported at the time and it turns out that people have been curating and severity has not been to the level that we thought so that's just a normal I'd say Ken.
Ken: Process that the reserving we go through with our reserves at U S. Semi I'd say for the other pieces a little bit of the same I'd say in the CRT business, where it's a slightly different methodology, but we have initial loss picks on that business and that as.
Ken: It's proven out to be a little bit kind of in excess of what we need today. So theres been some releases there in.
Ken: Finally, the international book, a little bit of the same to where there is different methodologies in place, but the long story or the the short of it maybe is that all three books are all three pieces of our mortgage segments are performing really really well. So we like the margins and we think the margins are healthy we don't see any deterioration and how.
Ken: We think about the business and the returns we are writing today. So we're very very excited about it.
Ken: And then on share buybacks I'm, assuming part of the reason you did a little bit of buybacks this quarter versus none before it was just the decline in the stock price. So assuming the stock stays around here are reasonable to assume that you'd be active throughout 'twenty.
Ken: 25% as well.
Ken: For sure I mean, it's something we look at regularly I mean every day all the time.
Ken: No I mean in this particular situation, yes, there is all kind of opportunity in late in the fourth quarter.
Ken: Our capital position remains strong.
Ken: Even with the California, and California, wildfires, I mean, thats part of the volatility we may see from time to time, but whether again, we will not sit on our level of excess capital that we don't think we can deploy in the business. So if the if we don't we think we still think we can grow we are.
Ken: Bullish about 2025, the market conditions are still really good but.
Ken: Can we deploy all the capital we have that we generate maybe not then at that point, we'll return. It then if the price is right. We think share buybacks are a great way to do that.
Ken: To a place that.
Ken: We want to look at where we can deploy capital.
Ken: Activity in the business I think that we do that all the time, Inc.
Speaker Change: Yes, Joe.
Speaker Change: Clearly, we SSL all capital position than if we see that.
Speaker Change: Portrait it is may not be there to deploy the excess capital. That's when we consider the most effective way I would say at the time to truly turn capital to our shareholders.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: Next question will be from Wes Carmichael at autonomous. Please go ahead.
Wes Carmichael: Hey, good morning. Thank you a question or an unfavorable development in the quarter, particularly in reinsurance can you just give us a little bit of color on what drove most of that release and maybe if you had any strengthening I think you mentioned short tail lines in prepared remarks, but any more color would be helpful.
Wes Carmichael: Yes, the vast vast majority is on property cat and property other than GAAP. So thats, what we consider to be short of short tail.
Wes Carmichael: We were flat on casualty so across the reinsurance segment saw no development on casualty.
Wes Carmichael: A couple of moves up and down marine other small lines of other small items, but that's the that's the bulk of it is really property.
Wes Carmichael: Some is.
Wes Carmichael: Yes.
Wes Carmichael: I would say prior caps, meaning kind of large events that we had reserved for that or develop developing a bit favorably. Some of it is just.
Wes Carmichael: The IBM ROE, we hold for miscellaneous scan, our attritional losses that has proven out to be in excess of what we need it. So thats kind of how we we recognize that this quarter through those lines of business.
Speaker Change: Got it thanks and in prepared remarks, I think maybe a broader comment, but you mentioned some competitive pressure, where that's eroded margins in certain lines of business can you just talk a little bit about where that might be more pronounced.
Wes Carmichael: Yeah, So I think.
Wes Carmichael: I was thinking this question I was going to come up so I think it's mainly two areas I would say the most visible one is.
Wes Carmichael: Public public DNO, where I think we we've seen.
Wes Carmichael: Significant decrease.
Wes Carmichael: In the last two years and double digits and that seems to be temporary but the.
Wes Carmichael: It's richer level that Youre really has to ask yourself.
Wes Carmichael: Account by account.
Wes Carmichael: Overall line.
Wes Carmichael: As Tim profitable and the second area that we are watching us.
Wes Carmichael: Cyber area also in the excess side we've seen.
Wes Carmichael: Double digit decreases in.
Wes Carmichael: And the supply of capacity in both public D&O and cyber.
Speaker Change: That don't seem to be wanting to reduce I think Kevin.
Speaker Change: Thank you.
Speaker Change: Did you have any further questions Mr Mccall Michael.
Speaker Change: Yes, I guess I'll follow up with one more but just on an EMI in the delinquency tick up.
Speaker Change: You mentioned that can be impacted by cat exposed areas and you obviously had a couple of sizable storms last year, but just hoping you could unpack a little bit with what you saw on the pick up there.
Speaker Change: Yes, I mean, it's very much part of a natural process.
Speaker Change: As you would expect some people were affected by these events and once they.
Speaker Change: Miss two consecutive mortgage payments, they turn delinquent and that's what we fully expected what happened in the fourth quarter about half of the increase in the delinquency rate is directly attributable to.
Speaker Change: These cat affected areas.
Speaker Change: That's our best estimate at this point the historical cure rate on these types of delinquencies driven by natural events is extremely high. So that's why we think the the financial impact ultimately will be minimal.
Speaker Change: But currently that's that's how the process works they show up in the delinquency rate and we reserve for those but typically those to get <unk>.
Speaker Change: All of their cure at a high level overtime.
Speaker Change: Thank you.
Speaker Change: And then just quickly I'll add I mean, just I'll add quickly on the California wildfires slightly different different type of exposures. We expect minimal again very early too early to know, but given the types of mortgages that exist in these areas.
Speaker Change: Would not expect to be impacted at all are very certainly not significantly at all and in.
Speaker Change: Due to the California wildfires.
Speaker Change: Understood. Thank you.
Speaker Change: Yes.
Speaker Change: Thank you next question will be from David modem Maiden Evercore. Please go ahead.
David: Hey, Thanks, Good morning, I had a question I saw the solid casualty reinsurance growth in the fourth quarter as well as 2024 and it sounded like.
Speaker Change: That continued at 125.
Speaker Change: Yes, I guess I am wondering if you could just talk a little bit about the rate adequacy, specifically within the casualty reinsurance line I know that's a <unk>.
Speaker Change: Broad line.
Speaker Change: But.
Speaker Change: A little surprising to see you guys lean in there it sounds like others have been.
Speaker Change: More critical on just the rate adequacy, there. So I wonder if you could elaborate a little bit on that.
Speaker Change: Yes, I think.
Speaker Change: We started from a position that we will.
Speaker Change: Really I think underweight on the on the casualty Treaty reinsurance.
Speaker Change: I think.
Speaker Change: All of you and it is true by the way on the insurance side is that we.
Speaker Change: We've tried over the years too.
Speaker Change: Yeah.
Get into program that are more I would say specialty casualty I think of it as more with an E&S flavor. So.
Speaker Change: Similar to what we would be writing.
Speaker Change: Growing on the on the insurance side, So I think it is.
Speaker Change: It's been it's been in line, but I think based on the.
Speaker Change: Yes additional cloud.
Speaker Change: The value of the brand on the reinsurance side I think we've been in.
Speaker Change: And our ceding companies.
Speaker Change: Forecasting some wavering from the from maybe some of the reinsurance or less appetite for the casualty I think we've been able to find out.
Speaker Change: Get onto Pope.
Speaker Change: Programs, a reinsurance program that we think are backing the right people to take advantage of the opportunity. So that has been really the the.
Speaker Change: The engine behind behind the growth.
Speaker Change: We're not underwriting the mark.
Speaker Change: <unk>.
Speaker Change: We just underwriting seductive underwriters that we think have the knowhow and.
Speaker Change: And the expertise to to be able to.
Speaker Change: Deliver attractive return for us so.
Speaker Change: Great Yep understood. Yeah definitely you guys are underweight, there so that makes sense.
Speaker Change: So maybe just switching gears to the insurance segment.
And just wanted to get a little bit more color on the current accident year loss pick increases that you noted it sounded like it was minor but wanted to just get a little bit more detail on what lines. It was and it didn't sound like that had any impact on the prior year reserve.
Speaker Change: Prior year reserve impact.
Speaker Change: But just wanted to understand.
Speaker Change: How that's how that happened.
Speaker Change: Yes, I mean again, roughly if we break it down call. It a third of the increase is due to the mid corporate and entertainment include.
Speaker Change: Inclusion or addition to the segment.
Speaker Change: There is another third I'd say, it's lines of business, where we just.
Speaker Change: Reacting to the rate environment. An example of that would be professional lines like both cyber and D&O, where you guys have seen it we've seen it you've heard it I mean rates have been coming down over the last couple of years pretty significantly and Thats a big part of our book So naturally I think you'd expect us and we are booking.
Speaker Change: Higher loss ratio this year than we did a year ago and that's just a function of the rate environment. So that's an example, another example is some of our auto warranty product, our GAAP product, where due to the different market conditions different economic realities with the <unk>.
Speaker Change: Value of used cars in what we ensure we cover loss ratio inched up a little bit there so nothing that was.
Speaker Change: Surprising to us, but again, we're reflecting are reacting to the data.
Speaker Change: And.
Speaker Change: And obviously there is always mix a little bit at the end, but those are some examples of kind of minor or kind of small adjustments that contributed to the overall increase.
Speaker Change: Got it okay. So it doesn't sound like that was any GL or.
Speaker Change: <unk> related pick increases there was it was more in other lines.
Speaker Change: Correct.
Speaker Change: Great. Thank you.
Speaker Change: Youre welcome.
Speaker Change: Next question will be from Andrew.
Speaker Change: TD Securities. Please go ahead.
Speaker Change: Thanks, a lot.
Speaker Change: <unk>.
Speaker Change: First question, maybe you could drill down a little more.
Speaker Change: Into the casualty lines, the E&S areas of casualty, where you'd like to grow or where you are growing.
Speaker Change: In both insurance and reinsurance respectively, and then with that could you give us a sense of.
Speaker Change: The rate changes in those areas in both reinsurance and insurance respectively.
Speaker Change: So those are I would say for the last fall.
Speaker Change: Similar book of business, So it's really.
Speaker Change: E&S.
Speaker Change: E&S liability.
Speaker Change: It's more middle to high excess layers.
Speaker Change: We've seen the market.
Speaker Change: Reacting to the pulp and the city of <unk>.
Speaker Change: <unk> losses in the last.
Speaker Change: So what's happening in that market. It is people used to have on the retail side first big limits. So once once that once the once the admitted market.
Speaker Change: Size of that.
Speaker Change: They are not going to be able to offer those limits anymore.
Speaker Change: So by definition, if you add the 200 million.
Speaker Change: Paul I believe maybe five or seven players.
Speaker Change: <unk>.
Speaker Change: Now that the admitted players decided to reduce their limit to 10 million youre going to need 20 people too.
Speaker Change: So the way the markets work is and Thats been going on for a while a lot of that business now is getting repriced into the E&S market not only on the pricing side, but also on the terms and conditions are able to get the exclusion that you would not be able to get on the on the.
Speaker Change: The admitted we sell side so we.
Speaker Change: Lack that business, we've been writing that business been underweight in that business for us.
Speaker Change: <unk>.
Speaker Change: We have experienced we've been writing the business for 20 years and we have.
Speaker Change: We this specific line of business I'm not going to go over it.
Speaker Change: The call, but that we actually have experiencing its we have.
Speaker Change: We know the venues where to Rite aid we know the.
Speaker Change: Type of severity of claims we know we know the exposure to commercial auto that's embedded in those in those risk and so we were able to selectively and good good companies. Good said activity pick a subset of the market and we are still getting it.
Speaker Change: Additional rate increases I think double digit and I think it has been the only to increase had been going on for what they were.
Speaker Change: Back in the <unk> they are willing to double digit and then they went through the single digit then we're back into double digit of late and so we think we're getting rates of the trends I think we think of the business unduly to properly with the right limits I think could be very attractive, but you have to pick and choose it's not it's not again the cause of the board.
Speaker Change: Beds that we make.
Speaker Change: And.
Speaker Change: That's very very helpful answers.
Speaker Change: I guess as I think about it a lot of your competitors are running scared.
Speaker Change: On the high layer excess of loss casualty just given the inflationary environment. So maybe just a little color on and you kind of gave some of it just in terms of your experience in the market, but maybe a little color on why you don't fear that that.
Speaker Change: That could get out of hand, and we could wake up one day and just see arch arch get hit with a lot of these things kind of jumping into the high layers.
Speaker Change: So this is not.
Speaker Change: This is associated with market do when when you when you have a lot of severity losses related to property.
Speaker Change: Its liability and reaction of the market is to cut limits.
I think if you think of it together that's a <unk>.
Speaker Change: Demand at our limit you are writing.
Speaker Change: The $100 million portfolio to show clause in your loss ratio is 100% I think what we've seen is people are cutting their limit dramatically to five intent. So no. When we get the full tell will also the contribution to your portfolio is 510 minutes. So it makes.
Speaker Change: <unk>.
Speaker Change: The beauty of diversification makes it makes the loss ratio look more stable and I think when this happens because as I said earlier before to do like 200 million.
Speaker Change: Tower.
Speaker Change: Rob you needed $5 seven market because now you need 20.
Speaker Change: By definition it costs a lot more and so the the.
Speaker Change: The price of the quest is a lot better so that's what we're seeing.
Speaker Change: Got it thanks a lot.
KV Montazeri: Thank you next question will be from kv Montazeri at Deutsche Bank. Please go ahead.
Thank you.
KV Montazeri: Another question on cash flow.
KV Montazeri: That's why you see good growth opportunities.
KV Montazeri: We're seeing good rate increases on the primary side.
Speaker Change: She is also helping quota share reinsurance.
Speaker Change: The ceding commissions didn't change much at one one despite the adverse development.
Speaker Change: Carriers continue to face.
Speaker Change: My question is worthy incremental supply of casualty reinsurance at one one higher than what you would have expected.
And I know you're adding both.
Speaker Change: And yes, it will depend on the specific line is currently more attracted to write new casualty business on the primary side rather than on the reinsurance side.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: So first I will answer the first question I think the supply of.
Speaker Change: As you'll see in treaty reinsurance I think we are hearing bubbles of people on the call, saying that they don't think it's attractive so.
Speaker Change: Fully the withdrawal.
Speaker Change: No I think it's there's plenty of people willing to drive the business. So I think it's.
Speaker Change: The supply and demand.
Speaker Change: Sydney Commission will go down today, where people putting their foot on the ground and say listen I'm not going to write it unless the ceding Commission is down two 3%. So we.
Speaker Change: We haven't seen that even on the business that we place.
Speaker Change: We haven't seen that so I think that.
Speaker Change: So for sure thing.
Speaker Change: The math for the insurer.
Speaker Change: They get the rate increase to get to a lower commission.
Speaker Change: Justifying why you would write those those business so.
Speaker Change: But I think for US I think we I think we are more bullish on the.
Speaker Change: The primarily side today on the E&S side because.
Speaker Change: We are a true expertise there we underwrite the business one by one.
I think we have.
Speaker Change: We'd say that's I put it on the list I would say that goes number one.
Speaker Change: Two.
Speaker Change: Theres good competitors of ours.
Speaker Change: We admire we high under ideal from being able to.
Speaker Change: To ship all those people on the floor of our reinsurance team I think it makes sense to me so I think yes.
Speaker Change: The commission may be a little high but I think if you pick people that can outperform on the loss ratio.
Speaker Change: You may still be alright.
Speaker Change: Okay and then my.
Speaker Change: Second question still on growth on the private side this time clearly.
Speaker Change: Early days, but can you give us an update on how the integration of medco pits going and is the growth prospects, how that's evolving versus your expectations prior to the deal.
Speaker Change: Yes, I think I think we are pretty much on plan to be honest I think the integration is.
Speaker Change: It's a big lift, but I think we were pretty comfortable so far that things are pretty much on plan in terms of the business itself is it's early to tell.
Speaker Change: The business is pretty much what we expected I don't think it's.
Speaker Change: I think it's better or worse I think it's pretty much what we had planned.
Speaker Change: Okay.
Speaker Change: And I think on the the good news for us on the.
Speaker Change: Mid Corp aspect is that we're seeing some double digit rent increases on the on the public side and.
Speaker Change: And also the liability side, so I think on the appropriate decided is really driven by the secondary periods.
Speaker Change: Yeah.
Speaker Change: Not only for us, but for others on the market side I've been upon them in the past so people.
Speaker Change: Underwriting around it but also getting rate increases and we're seeing the same.
Speaker Change: So some of the same related inquiries on the auto liability and GL.
Speaker Change: Thanks.
Speaker Change: Yes.
Speaker Change: Thank you next question will be from Alex Scott of Barclays. Please go ahead.
Alex Scott: Good morning, Chris.
Speaker Change: First one I had.
Speaker Change: Is on the PMO.
Speaker Change: Wanted to understand to what degree you are exposure to aggregate.
Speaker Change: Reinsurance treaties and and just when we think about it pro forma for some of the wildfire losses would that.
Speaker Change: Cause any upward pressure of note to the P&L.
Speaker Change: Yes think about heading into wind season.
Speaker Change: So we do some but we have very limited exposure to aggregate.
Speaker Change: It is I think it is.
Speaker Change: As a general.
Speaker Change: Underwriting philosophy, it's hard enough to price the severity.
Speaker Change: The frequency is really really hard to price. So I think we do it but when we really feel that we have.
Speaker Change: Because of the lines of business and the exposure are good we could have a good grasp on the frequency.
Speaker Change: We get enough away from the from the frequency that maybe providing an aggregate cover them that makes sense. So we have very limited exposure to aggregates aggregates covers.
In terms of the <unk>.
Speaker Change: Can you repeat the second question.
Speaker Change: Just forgot.
Speaker Change: Well it was the as long as he might as I was just trying to understand if you add exposure to aggregate treaties.
Speaker Change: To what extent.
Speaker Change: Would it potentially increase your P&L is just thinking through okay.
Speaker Change: For example, a competitive.
Speaker Change: Primary this morning announced a wildfire number that when you look at their baseline capital budget I think it would potentially.
Speaker Change: Appears the aggregate yes.
Speaker Change: My guess is immaterial for us.
Speaker Change: Got it okay.
Speaker Change: And then just as a separate follow up on.
Speaker Change: On mid Corp, I, just wanted to probe there now that you have.
Speaker Change: It sounds like things are going to plan, but.
Speaker Change: Could you could you talk about like what portion of those premiums that you've gotten in or going through the heavier remediation and just how we should think about the trajectory of premiums considering that.
Speaker Change: Some remediation work going on in the background.
Speaker Change: I think it's mainly around I would say the program book of business when we bought <unk>.
Speaker Change: Again, I think there was a $500 million.
Speaker Change: <unk> this is not what we bought.
Speaker Change: Mid Corp, and I think we have all serve a significant I think.
Speaker Change: So things like.
Speaker Change: Our book of business I think that's where.
Speaker Change: We are trying to integrate the teams we've all teams and we.
Speaker Change: We have a very defined risk appetite for the.
Speaker Change: The type of.
Speaker Change: Although it manager that we do business, we have the type of back office integration that we require to get information very quickly. So I think we were going through the book of business to make sure, which which one qualify and then which one which one doesn't so.
Speaker Change: Yes, the answer that I mean, we have already taken action on a number of programs, but given the.
Speaker Change: The period.
Speaker Change: Notice it will start to show more in the second half of 2025.
Speaker Change: The impact of those actions.
Speaker Change: On the top line at least and certainly we think the bottom line the loss ratios will follow as well.
Speaker Change: Got you okay. Thank you.
Speaker Change: Youre welcome.
Speaker Change: Next question will be from Andrew Anderson at Jefferies. Please go ahead.
Andrew Anderson: Hey, Good morning, you had mentioned.
Andrew Anderson: Putting capital into London specialty markets, I would've thought that scenario, where perhaps a bit more competition has come in and maybe rate is decelerating, but.
Andrew Anderson: But perhaps an adequate level can you just maybe talk about the growth environment there.
Andrew Anderson: Philosophically.
Andrew Anderson: Personally and we I think we are bullish in the lender market I think the thing that yes. There is more competition I think rates.
Andrew Anderson: Ill have flattened in certain of our certain of our business, but I think the.
Andrew Anderson: Things that help us in the London market as well.
Andrew Anderson: We've grown from.
Andrew Anderson: Being as sub standard.
Andrew Anderson: <unk>.
Andrew Anderson: Scale.
Andrew Anderson: Business to business today, that's right close to.
Andrew Anderson: In the London market.
Andrew Anderson: <unk> five or more of a premium. So we are one of the and the market is consolidating around <unk>.
Andrew Anderson: <unk> number of carrier. So we are we.
Andrew Anderson: One of the beneficiary of that consolidation, but not the only one but I think we beneficiary and we will build the team has done an amazing job building leading capabilities in.
Andrew Anderson: In a number of lines of business and that makes a huge difference so I think.
Andrew Anderson: We get to pick first which businesses.
Andrew Anderson: Is a huge advantage.
Okay.
Andrew Anderson: And then maybe just within reinsurance it sounds like still kind of positive on prop cat.
Andrew Anderson: The other specialty line I realize there's probably a number of different businesses in here, but declined in the quarter can you maybe just touch on the drivers of the decrease year over year.
Andrew Anderson: Yes, so I think I think the.
Andrew Anderson: First first is.
Andrew Anderson: The fourth quarter is really.
Andrew Anderson: Small so small in the fourth quarter or so.
Andrew Anderson: I think I don't want people to understand and reinsurance is to in insurance as well as that we are extremely dynamic.
We don't see something.
Andrew Anderson: Doesn't fit our ceding company decided to <unk>.
Andrew Anderson: For instance happened senior company decided to change from proportional to.
Andrew Anderson: To access premium I mean, it says he is nevertheless targets not trying to replace that premium.
Truly looking for profitable premium. So those are two different concepts. So I think in the fourth quarter. What happened is I think we.
Andrew Anderson: We are starting to have a negative bias on cyber to be honest I think we are a big provider of quota share.
Andrew Anderson: And the <unk> side, so a couple of our contracts.
Andrew Anderson: Even though the ceding company retained more which I think is we may have cut back on the number one based on the new terms and conditions and that explain most of it.
Andrew Anderson: Thank you.
Andrew Anderson: Thank you.
Speaker Change: Next question will be from Meyer Shields at <unk>. Please go ahead.
Great. Thank you very much I.
Speaker Change: I guess one question for 2025 on the insurance segment can you talk about how reinsurance purchase is your reinsurance outwards reinsurance purchases.
Speaker Change: I don't know, whether that's a market question or mid core question or both.
Speaker Change: So I think.
Speaker Change: Maybe.
Speaker Change: If I understand this.
Speaker Change: Did it change.
Speaker Change: Whats the outlook.
Speaker Change: I think the one chance.
Speaker Change: Yes.
Speaker Change: The one thing that we had to do is we had to.
Speaker Change: Anything else was buying reinsurance to cover the mid cap portfolio.
Speaker Change: Being popular some of it being casualty. So so I think we at one one I think on the pop health decided I think we add too and in Dubai. They both large limit limits of up to seven or $800 million. So I think we had two and that was one thing we bought so we have to transfer that reinsurance onto.
Speaker Change: <unk>.
Speaker Change: Onto an arch.
Speaker Change: Manage framework so outside of the the other.
Speaker Change: Also seated ceded department, so and within the Australian Department, So that happened at one one I think the team did a.
Speaker Change: Great job.
And.
Speaker Change: We kept the capacity, which is a huge part of the value proposition that the mid Corp. Alpha is that to.
Speaker Change: To be able to compete in the in the middle market you need the large capacity.
Up to set us up to $1 billion on anyone.
Speaker Change: Account or allocation, so I think that.
Speaker Change: By being able to do that I think we secured.
Speaker Change: A lot of the a lot of the brand the value that we bought so I think that was a very satisfactory outcome.
Speaker Change: Okay, great. Thank you and then Francois you mentioned that there's a lot of property and therefore cat risk within the MP portfolio right.
Speaker Change: Right now obviously the underlying loss ratio is elevated once all of that is done.
Speaker Change: So that would be have a lower.
Speaker Change: Attritional loss ratios than the legacy <unk> side of things because of that cat exposure.
Speaker Change: So I think.
Speaker Change: The cat exposure.
Speaker Change: The medical business is more around.
Speaker Change: The secondary period than it is around the primary barrier hurricane in and so I think that was something attractive for us because he was very complimentary to.
Speaker Change: Two to the footprint that we have that.
Speaker Change: We that we had so I think.
Speaker Change: No.
Speaker Change: The going forward I think those secondary areas.
Speaker Change: Our attritional cat loss ratio they remained thats part of it.
Speaker Change: We underwrite we underwrite the floods, we underwrite the tornadoes, we underwrite but.
Speaker Change: Typically the so.
Speaker Change: We really don't expect the Attritional loss ratio coming from the mid Corp to any challenge going forward.
Speaker Change: Yes, that's yes.
Speaker Change: Yes, exactly that I mean, I think pre and post EMC after call. It we fully integrated the business.
Speaker Change: I would not expect a significant change to the.
Speaker Change: The ex cat loss ratio.
Speaker Change: Okay perfect that's what he's done.
Speaker Change: Thank you next.
Speaker Change: Next question will be from Brian Meredith of UBS. Please go ahead.
Brian Meredith: Yes, Thanks, Firstly liquidity first of all I'm, just curious how you're thinking about the potential impact of tariffs on your business.
Speaker Change: Nothing significant for us at this point.
Brian Meredith: <unk>.
Brian Meredith: As you know I mean, the businesses are transacted locally between local carriers in each of the jurisdictions in which we operate in.
Brian Meredith: So from that point of view.
Brian Meredith: I don't think Theres, an issue there or any concern.
Brian Meredith: Does it.
Brian Meredith: Does it slow down trade in a broader sense, maybe I think thats.
Brian Meredith: I could see a potential impact on <unk>.
Brian Meredith: Our coal fast investment for example, you could see some some reductions in world trade and that how that might have an impact, but I think too early to tell it would be our answer but that's something obviously, we're watching it.
Brian Meredith: Great. Thanks, and then second question I think you've kind of answered this round about way but.
Brian Meredith: What are you assuming right now in your reserving and pricing with respect to GL call it loss trend.
Brian Meredith: I mean, it varies by cell, but certainly it's for the excess business, it's double digits at slide 12% to 14% on the primary E&S kind of low limit casualty is probably around five 6%.
Brian Meredith: Five or six in La County, and then one other one and then quickly switch.
Brian Meredith: I've been here.
Brian Meredith: You all have typically done in a reasonable amount of structured transactions in your reinsurance youre. Good at that surplus fleet that kind of stuff are you seeing much opportunity here in 2005 and 26 on that.
Brian Meredith: We don't.
<unk>.
Brian Meredith: We don't think so I think there has been a few again.
Brian Meredith: It's really we are in that business.
Brian Meredith: We need the.
Brian Meredith: The margin to make sense for us to arrive at.
Brian Meredith: I think for a while we were successful because it seems that.
Brian Meredith: Some of the traditional players elsewhere, putting back so we got a couple of opportunities to participate at all terms in a couple of transactions.
Brian Meredith: It looks like the maybe some capacity is coming back so it's always hard to tell.
Speaker Change: What's <unk>.
Speaker Change: Something we we.
Speaker Change: We target I think as we.
Speaker Change: We are in that business and do we.
Speaker Change: <unk> fits we do it and if it doesn't we just don't yes.
Speaker Change: Not our typical arch thing, but a little bit more reactive on that type of business. We don't drive the demand for it sometimes you have a company that may be it may have some capital issues because of caps or any other or some other.
Speaker Change: What kind of results or it could be reserve development. So that's where it's hard to predict whether the demand will be there for these products, but we're we're open for business I think we benefit there again.
Speaker Change: The support we have failed to some of the <unk> I think.
Speaker Change: Today, especially in the U S. We have.
Speaker Change: Our multi line to ensure so we just don't do the cat cat.
Speaker Change: Yes, we do.
Speaker Change: Sure so.
Speaker Change: No.
Speaker Change: Fortunately that we got is one of those <unk> they think of US as one of the partners. So they so thats how some of those opportunities came to us is more like because of all the all the things we were doing for them like this one we have is probably March could you help us doing this and then.
Speaker Change: We looked at it together, so I think that.
Speaker Change: That's probably put a bit more tailwind in our ability to do this but again it has to be the right estimate the right price.
Speaker Change: Great I appreciate it thank you.
Youre welcome.
Speaker Change: Next question will be from Elyse Greenspan of Wells Fargo. Please go ahead.
Speaker Change: Hi, Thanks, just a couple of follow ups.
Speaker Change: The first one Francois was on the 7% to eight point cat load I just want to understand that correctly that does include the fire. So then would that also be the cat load for 2006 are you assuming in that <unk>.
Speaker Change: Here's kind of take the place of another large loss that you might have seen this year.
Speaker Change: Yes.
Speaker Change: It does.
Speaker Change: It does not include the buyers in a direct way in a sense that this is our this is our going in on January one. This is what we thought the cat losses, our cat load was for the year now if it turns out that the wildfires, which so far may end up being higher than what our cat load specifically for a while.
Speaker Change: <unk> for the year would have been then yes. There is a chance that we exceed the total that total of load, but by the same token hurricanes and up could end up being lower so thats truly a start of the year without any kind of.
Speaker Change: Additional knowledge reflected in that number.
Speaker Change: Okay and then my second question.
Speaker Change: Mid Corp, right. When you guys announced the transaction you said post integration right. It would run at a low ninety's combined ratio. It sounds like from everything you were saying it's money in chocolate plan, so that would still be the target as you guys said.
Speaker Change: When when.
Speaker Change: When when we might see that low ninety's number like what would be considered post integration.
Speaker Change: And you didn't say when.
Speaker Change: And it takes some time and I think those things takes always longer than I think the.
Speaker Change: The goal I think from what we know today, we I think I've said vehicle affordable that we get there again, we have to finish the integration.
Speaker Change: People were still operating.
Speaker Change: The business on Eylea on system. So you can see that there is a limit to what we can do.
Speaker Change: In terms of inside and so we are preparing for.
Speaker Change: The lift overall arps, thats, where it should happen sometime next year. So I think it's just going to take a bit of time.
Speaker Change: <unk>.
Speaker Change: And then just one follow up rental I think someone asked a question then you implied that mid Corp would maybe one at the same loss ratio lines integrated with the point, meaning run at the same loss ratio legacy arch is that what you were saying there.
Speaker Change: Yeah, I mean, I mean, I haven't done the math recently, but my expectation would be that the.
Speaker Change: Again, the ex cat accident year loss ratio pre MGE or legacy arch and.
Speaker Change: That same metric once you include MTBE after the integrations completed meaning a little bit of remediation on some of the business. We acquired I don't think it would be that different so I think those would be pretty much in line.
Speaker Change: Okay got it thank you.
Speaker Change: Youre welcome.
Speaker Change: Thank you.
Speaker Change: Showing any further questions I would like to turn the conference over to Mr. Nicola.
Speaker Change: For closing remarks.
Nicola: So thank you for your time today and yes, we.
Speaker Change: We'll see.
Nicola: See you next quarter. Thank you.
Speaker Change: Thank you Sir.
Speaker Change: Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending and at this time, we do ask that you. Please disconnect your lines.
Speaker Change: [noise].
Speaker Change: Yeah.