Q4 2024 Kinsale Capital Group Inc Earnings Call

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Speaker Change: Before we get started let me, let me remind everyone that through the course of the teleconference. Kinsale management may make comments that reflect their intentions beliefs and expectations for the future.

Michael Kehoe: You know, I can't really speak to the specific growth rate in California or that area, but Andrew, I would look at it this way. You know, we've always written cat business because the margins are pretty compelling. And we've always written it with some degree of conservatism around risk management and making sure that we control for the volatility, whether it's wildfire or coastal wind or what have you. And so I think actually this is a result that's. kind of right in the strike zone for us. It's a very manageable loss. on business that throws off, you know, pretty attractive margins.

Speaker Change: As always these forward looking statements are subject to certain risk factors, which could cause actual results to differ materially.

Speaker Change: These risk factors are listed in the Companys various SEC filings, including the 2023 annual report on Form 10-K.

Speaker Change: Which should be reviewed carefully.

Speaker Change: The company has furnished a form 8-K with the Securities and Exchange Commission that contains the press release announcing its fourth quarter results.

Speaker Change: Can you tell if management May also reference certain non-GAAP financial measures in the call today are.

Speaker Change: A reconciliation of GAAP to these measures can be found in the in the press release, which is available at the Companys website at Www Dot himself capital group Dot com.

Speaker Change: Company has furnished a form 8-K with the Securities and Exchange Commission that contains the press release announcing its fourth quarter results.

Andrew Andersen: in general. Thank you.

Andrew Andersen: And then on the the 17% submission growth. kind of the slowest in a little bit here.

Can tell if management may also reference certain non-GAAP financial measures in the call today.

Speaker Change: I will now turn the conference over to Kim sells chairman and CEO, Mr. Michael T cells. Please go ahead Sir.

Speaker Change: A reconciliation of GAAP to these measures can be found in the in the press release, which is available at the company's website at Www Dot infill capital group Dotcom.

Brian Haney: But as we turn to 25, and maybe you could just talk about the mix within that 17, if it's more casualty going forward. But I'd also be interested to hear if you're perhaps thinking about, you know, kind of increasing your your quote to submission ratio or your bound policy to submission ratio to be more competitive and to a certain degree. We are definitely seeing a higher quote to submit ratio. It's one of the upsides of lower growth is it makes it easier for us to hit our customer service targets, including our co-ratio standards. So yeah, we are quoting more and we are buying more.

Speaker Change: Thank you operator, and good morning, everyone.

Speaker Change: As usual Bryan Petrucelli, our CFO and Brian Haney, our president and CEO of <unk>.

Speaker Change: Joining me this morning for the call.

Kim tells: I'll turn the conference over to Kim tells Chairman and CEO, Mr. Michael <unk>. Please go ahead Sir.

Speaker Change: In the fourth quarter 2024 can sales operating earnings per share increased by 19, 4%.

Speaker Change: Thank you operator, and good morning, everyone.

Speaker Change: Gross written premium grew by 12, 2%.

Speaker Change: As usual, Brian Petra, Sally, our CFO and Brian Haney, our President and CFO are joining me this morning for the call.

Speaker Change: Over the fourth quarter of 2023.

Speaker Change: For the quarter the company posted a combined ratio of 73, 4% and a fee.

Speaker Change: In the fourth quarter 2024 can sales operating earnings per share increased by 19, 4%.

Speaker Change: Full year 2024 operating return on equity of 29%.

Speaker Change: And gross written premium grew by 12, 2%.

Speaker Change: Also of note the appreciation of can sales stock price over the course of 2024 exceeded that of the S&P 500 index for the eighth time in the last nine years since our IPO back in 2016.

Brian Haney: And then keep in mind that 17%, that number does jump.

Speaker Change: Over the fourth quarter of 2023.

Speaker Change: For the quarter the company posted a combined ratio of 73, 4% and our full year 2024 operating return on equity of 29%.

Andrew Andersen: Yeah, I wasn't ready for that.

Brian Haney: Is it starting to be a bit more casualty rather than property compared to maybe the last 12 to 18 months? Yeah, I mean, it depends on what, I mean, without getting too much into the weeds, it depends on what specific product you're talking about. We are seeing a lot more personal insurance. We're seeing maybe fewer of the shared layers. But we're still seeing more inland marine submissions, you know, it varies across the book. Yeah, it's just, I think, I think, Brian, you meant we're seeing a lower growth rate in the Sheridan layer, but it's still growing.

Speaker Change: Also note the.

Speaker Change: These results largely flow from the <unk> sale business strategy.

Speaker Change: The appreciation of can sales stock price over the course of 2024 exceeded that of the S&P 500 index for the eighth time in the last nine years since our IPO back in 2016.

Speaker Change: Small E&S accounts focus.

Speaker Change: Absolute control over our underwriting and claim handling processes best.

Speaker Change: Best in class service levels and.

Speaker Change: And risk appetite that we provide our brokers.

Speaker Change: These results largely flow from the Kinsale business strategy of small E&S accounts focus.

Speaker Change: And technology driven low cost.

Speaker Change: As we've said in the past these advantages have real durability to them.

Speaker Change: Absolute control over our underwriting and claim handling processes.

Brian Haney: Right.

Scott Heleniak: Thank you.

Speaker Change: Likewise, we are investing heavily in technology automation data and analytics to drive further gains in the years ahead progress in these areas should allow us to gradually and continually improve our expense ratio, our customer service and the accuracy and competitiveness of our <unk>.

Speaker Change: Best in class service levels and risk appetite that we provide our brokers.

Scott Heleniak: Our next question comes from Scott Heleniak from RBC Capital Markets.

Scott Heleniak: Please go ahead, your line is open. I think we lost Scott. Scott.

Speaker Change: And technology driven low cost.

Speaker Change: As we've said in the past these advantages have real durability to them.

Speaker Change: Likewise, we are investing heavily in technology automation data and analytics to drive further gains in the years ahead.

Scott Heleniak: Good morning. Yeah, just wondering if you could comment on the Q4, the core accident-year-loss ratio there. You saw there was improvement year-over-year. Anything worth calling out, you know, the tick-down year-over-year? I know you kind of commented before that it sort of improves year-end if loss trends come in better than expected, but anything notable to call out there? Scott, I would characterize it as, you know, general success across the portfolio. But the impact on that quarter was probably a little bit driven by, you know, some pretty exceptional results in the property area, that shorter tail business.

Speaker Change: Your writing all to the benefit of our profitability and growth.

Speaker Change: The southern California wildfires that occurred in January created considerable insured loss for the P&C industry with estimates, mostly in the $30 billion to $50 billion range.

Speaker Change: Progress in these areas should allow us to gradually and continually improve our expense ratio, our customer service and the accuracy and competitiveness of our underwriting all to the benefit of our profitability and growth.

Speaker Change: For can sale, we expect our pretax losses net of reinsurance to be approximately $25 million.

Speaker Change: The southern California wildfires that occurred in January created considerable insured loss for the P&C industry with estimates, mostly in the $30 billion to $50 billion range.

Speaker Change: These losses arise from a mix of personal lines and commercial property business.

Speaker Change: But the overall E&S market in the fourth quarter was generally steady, but with a continued increase in competition.

Speaker Change: For <unk>, we expect our pre tax losses net of reinsurance to be approximately $25 million. These losses arise from a mix of personal lines and commercial property business.

Speaker Change: And with that I'm going to turn the call over to Bryan Petrucelli.

Scott Heleniak: So you tend to see those positive results more quickly. Okay, that makes sense.

Bryan Petrucelli: Thanks, Mike.

Bryan Petrucelli: Another solid quarter with net operating earnings increasing by 19, 4%.

Speaker Change: The overall E&S market in the fourth quarter was generally steady, but with a continued increase in competition.

Bryan Petrucelli: And then I wonder if you could expand on, you reference the agribusiness, the new product line there, if you can expand on the kind of the exposure and geographies you might be planning to go to there. And then also any other new products that you want to call out for 2025? I know there was a lot in the previous two years, but anything else to call out there too?

Bryan Petrucelli: 73, 4% combined ratio for the quarter.

Bryan Petrucelli: Included two six points from net favorable prior year loss reserve development.

Speaker Change: And with that I'm going to turn the call over to Bryan Petrucelli.

Bryan Petrucelli: Thanks, Mike another solid quarter with net operating earnings increasing by 19, 4%.

Bryan Petrucelli: Compared to two three points last year.

Bryan Petrucelli: With two two points in cat losses, this year, primarily from hurricane Milton compared to less than a half point in Q4 of last year.

Bryan Petrucelli: The 73, 4% combined ratio for the quarter include.

Bryan Petrucelli: Included two six points from net favorable prior year loss reserve development.

Bryan Petrucelli: We produced a 21, 1% expense ratio in the fourth quarter compared to 19, 9% last year.

Bryan Petrucelli: I'll answer that last question first. Most of the new products we're thinking about for 2025 aren't nearly as significant as, let's say, the personal insurance push we're making in the last few years or the agribusiness. The agribusiness would be virtually everywhere in the United States. The agricultural economy is basically present in every state. And it's going to be a mix of casualty and property exposures. You know, unique exposures relative to farming and ranch. Yeah, so I wouldn't expect any like dramatic new product in 2025, just gradual incremental moving into adjacent lines. very gradually and slowly so that we don't take excessive risk.

Bryan Petrucelli: Compared to 2.3 points last year.

Bryan Petrucelli: With two two points in cat losses, this year, primarily from hurricane Milton compared to less than a half point in Q4 of last year.

Bryan Petrucelli: The expense ratio will fluctuate from quarter to quarter.

Bryan Petrucelli: I'd point, you to the full year expense ratio is a better measure.

Bryan Petrucelli: You can see that our 26 expense ratio for the full year compares favorably with a 28% last year that being said the higher Q4 expense ratio is due primarily to higher variable compensation offset by higher ceding commissions.

Bryan Petrucelli: Reduced to 21, 1% expense ratio in the fourth quarter compared to 19, 9% last year.

The expense ratio will fluctuate from quarter to quarter I'd point, you to the full year expense ratio is a better measure you can see that our 26 expense ratio for the full year compares favorably with the 28% last year.

Bryan Petrucelli: On the investment side net investment income increased by 37, 8% in the fourth quarter.

Bryan Petrucelli: Over last year as a result of continued growth in the investment portfolio generated from strong operating cash flows and higher interest rates. The annualized gross return was four 4% for the year, so far compared to 4% last year.

Bryan Petrucelli: You said the higher Q4 expense ratio is due primarily to higher variable compensation offset by higher ceding commissions on.

Bryan Petrucelli: On the investment side net investment income increased by 37, 8% in the fourth quarter.

Bryan Petrucelli: Over last year as a result of continued growth in the investment portfolio generated from strong operating cash flows and higher interest rates. The annualized gross return was four 4% for the year, so far compared to 4% last year.

Bryan Petrucelli: New money yields are averaging in the low 5% range and with book yields around four 5%. So we should see some continued investment income benefit from those higher rates as we move forward.

Bryan Petrucelli: Yeah, that makes sense.

Scott Heleniak: Just the last one too on the moving up the equity exposure, which you expect to take to 10% and eventually 12%.

Scott Heleniak: Is that a similar strategy with using the basically stock ETFs? Is that the way you're going to do that? Just upping your exposure to the existing investments you have in equities or anything different there?

Bryan Petrucelli: Additionally, we are gradually increasing our allocation to common stock from 8% to 10% of cash and invested assets.

New money yields are averaging in the low 5% range and with book yields around four 5%. So we should see some continued investment income benefit from those higher rates as we move forward. Additionally.

Bryan Petrucelli: And we will eventually increase allocation to 12% over the next year or so.

Scott Heleniak: Yes, Scott, this is Mike. We have a portfolio that we manage internally. It's kind of a value oriented, large cap, mostly dividend paying, kind of a buy and hold strategy there. And then we've got the two ETFs, you know, with the passive strategy. So it's a map, okay. Yeah. A little bit of both.

Bryan Petrucelli: Diluted operating earnings per share continues to improve and was $4 62 per share for the quarter compared to $3 87 per share for the fourth quarter of 2023.

Bryan Petrucelli: Additionally, we are gradually increasing our allocation to common stock from 8% to 10% of cash and invested assets.

Bryan Petrucelli: And will eventually increase allocation to 12% over the next year or so.

Bryan Petrucelli: Just a couple of comments regarding capital management, we repurchased $10 million in shares during the fourth quarter.

Diluted operating earnings per share continues to improve and was $4 62 per share for the quarter compared to $3 87 per share for the fourth quarter of 2023.

Speaker Change: I would expect similar modest levels of repurchases each quarter on a routine basis with larger purchases made opportunistically from time to time and with that I'll pass it over to Brian Haney. Thanks, Brian fourth quarter saw growth in our gross written premium of 12, 2% consistent with our expectation of 10% to 20% growth over the long term.

Michael Phillips: Our next question comes from Michael Phillips from Oppenheimer. Please go ahead. Your line is open.

Bryan Petrucelli: Just a couple of comments regarding capital management, we repurchased $10 million in shares during the fourth quarter.

Bryan Petrucelli: Thanks, good morning. I'm curious if you provide any updated thoughts on what you're seeing in your GL book, Lost Trends. And then, I mean, I think your commercial umbrella in excess book isn't that small relative to the overall book. Maybe if you could even go deeper into say what the trends are seeing in the umbrella piece as well. I don't think we've got a lot of specifics. You know, there's a lot of industry data out there. I think our loss trends would probably conform to what you're hearing.

Bryan Petrucelli: We'd expect similar modest levels of repurchases each quarter on a routine basis with larger purchases made opportunistically from time to time and with that I'll pass it over to Brian Haney. Thanks, Brian the fourth quarter saw growth in our gross written premium of 12, 2% consistent with our expectation of 10% to 20% growth over the long term.

Speaker Change: Our casualty underwriting divisions grew at 15% for the quarter, while property divisions grew at 6%.

Speaker Change: Declines on larger layered property transactions in particular had a dampening effect on the growth rate in the quarter as that market has normalized after a period of crisis pricing conditions in the prior years.

Bryan Petrucelli: Our casualty underwriting divisions grew at 15% for the quarter, while property divisions grew at 6% great.

Bryan Petrucelli: I didn't bring that information. I would say just on an absolute basis that the margins in our umbrella book and our geo book are really strong. And unlike...

Speaker Change: Casualty is still seeing steady growth overall with excess casualty commercial auto and general liability among the fastest growing divisions in management and professional liability among the most competitive.

Speaker Change: Great declines on larger layered property transaction in particular had a dampening effect on the growth rate in the quarter as that market has normalized after a period of crisis pricing conditions in the prior years.

Speaker Change: Catastrophe losses in the fourth quarter were a modest $8 million pre tax and as Mike mentioned, our California wildfire estimate is $25 million pre tax.

Bryan Petrucelli: I saw an interesting chart the other day. Our development has been consistently better than the industry's reserve developments. I think we are doing a better job staying on top of those lost trends in the reserve I do think that's going to be maybe a problem for the industry.

Speaker Change: Casualty is still seeing steady growth overall with excess casualty commercial auto and general liability among the fastest growing divisions in management and professional liability among the most competitive.

Speaker Change: As a reminder, we write catastrophe exposed property business, including wildfire and hurricane and earthquake and some flood.

Speaker Change: Catastrophe losses in the fourth quarter were a modest $8 million pre tax and as Mike mentioned, our California wildfire estimate is $25 million pre tax as.

Speaker Change: But in doing so we always seek to balance the margin in that business with the potential for excessive volatility.

Michael Phillips: Okay, yeah, thanks, Brian.

Michael Phillips: Um, and maybe one more on California.

Speaker Change: In addition to our careful entering approach we employ a sophisticated risk management strategy and a robust reinsurance program to limit volatility and we've been successful that approach for many years now.

Michael Phillips: I mean, given the news that we're kind of hearing about the Eaton side of the losses there, any chance you take your 25 and split it Eaton versus the Palisades? 101 and zero. It's all Palisades. Okay, perfect.

Speaker Change: As a reminder, we ranked catastrophe exposed property business, including wildfire hurricane and earthquake and some flood.

Speaker Change: But in doing so we always seek to balance the margin in that business with the potential for excessive volatility.

Speaker Change: We don't expect recent catastrophe events in the industry will be enough to change the overall market, but it may create more opportunities in personal insurance, which were already leaning into.

In addition to our careful entering approach we employ a sophisticated risk management strategy and a robust reinsurance program to limit volatility and we've been successful in that approach for many years now.

Michael Phillips: Thank you very much.

Pablo Singzon: Our next question comes from Pablo Singzon from J.P. Morgan. Please go ahead.

Speaker Change: Part of <unk> sales growth over the years has been due to a regular expansion of our product lines into adjacent markets. Most recently, we created a new agribusiness underwriting unit that focuses on opportunities in our farm <unk> ranch and related spaces. This is part of our ongoing effort to gradually expand our product line. So that we can offer solutions for all types of plays E&S accounts across the.

Pablo Singzon: Your line is open. Hi, good morning.

Speaker Change: We don't expect recent catastrophe events in the industry will be enough to change the overall market, but may create more opportunities in personal insurance, which were already leaning into.

Pablo Singzon: As you're lowering prices in exchange for growth, is the trade-off confined within a specific line, or are you willing to cross-subsidize across lines, right? Like using more profitable lines to support less profitable lines, or maybe you're looking at dollar profitability more holistically on an account level basis instead? So, you know, just some perspective on how you're carrying out this strategy would be helpful. Well, I would say we don't cross-subsidize anything because we don't have loss leaders. Every division, every product it has to be able to hit our profitability targets. It is a calculation we are kind of doing at the individual division level.

Speaker Change: Part of <unk> sales growth over the last three years has been due to a regular expansion of our product lines into adjacent markets. Most recently, we created a new agribusiness underwriting unit that focuses on opportunities in our farm <unk> ranch and related spaces. This is part of our ongoing effort to gradually expand our product line. So that we can offer solutions for all types of plays E&S accounts across the.

Speaker Change: The us no matter what coverage or sector of the economy.

Speaker Change: New business submission growth was 17% for the quarter down from 23% in the third quarter.

Speaker Change: This number is subject to some volatility but in general views submissions as a leading indicator of growth and so we see that.

Speaker Change: <unk> no matter, what coverage or sector of the economy.

Speaker Change: Submission growth rate is a positive signal.

Pablo Singzon: Obviously, some divisions, all of our divisions are doing well. Some of our divisions are doing remarkably well from a margin perspective, and those are the ones where we're looking at sharpening our pencil. getting a little more aggressive. Gotcha. That makes sense.

Speaker Change: Overall rates for the quarter were about flat.

Speaker Change: New business submission growth was 17% for the quarter down from 23% in the third quarter.

Speaker Change: Excess casualty commercial auto and construction were up high single digits, while larger layered property accounts were down mid to high teens all of other lines where somewhere in between.

Speaker Change: This number is subject to some volatility but in general view submissions as a leading indicator of growth and so we see that.

Speaker Change: Our being more aggressive in pricing in some select areas because the margins are so high that the tradeoff between a lower rate and more growth is worthwhile keep.

Submission growth rate is a positive signal.

Speaker Change: Overall rents for the quarter were about flat excess casualty commercial auto and construction were up high single digits, while larger layered property accounts were down mid to high teens all of other lines where somewhere in between.

Pablo Singzon: And then, second question, was hoping you could comment prior to your development this quarter. So, favorable overall, but would be curious about the breakdown of positives and negatives. You know, are you still adding to construction defects from over the years? And where are you getting the release? Well, we talked about property, you know, as a short tail line of business, you see those results more quickly. You know, we've we've pushed our construction related book loss ratios, you know, they're, they're well into the 80% range. And that's largely because if you go back to accident years, forget where it starts, maybe either 15 or 16, 17, 18, 19.

Speaker Change: Keep in mind, our 29% operating Roe.

Speaker Change: That would imply that half of our book is producing margins above that so by trading away some of that excess profitability on some specific lines of business, we can drive better growth and maximize wealth creation for our stockholders over time.

Speaker Change: We are being more aggressive in pricing.

Speaker Change: Pricing in some select areas because the margins are so high that the trade off between a lower rate and more growth is worthwhile.

Speaker Change: Keep in mind, our 29% operating Roe.

Speaker Change: Overall, we remain optimistic the results are good our gross prospects are good and as the low cost provider in our space. We have a journal durable competitive advantage that should allow us to continually.

Speaker Change: It would imply that half of our book is producing margins above that so by trading away some of that excess profitability on some specific lines of business, we can drive better growth and maximize wealth creation for our stockholders over time overall.

Speaker Change: Gradually and take market share from our higher expense competitors, while continuing to deliver strong returns and build wealth for our investors and with that I'll hand, it back over to Mike. Thanks, Brian Operator, we're ready for questions now.

Speaker Change: Overall, we remain optimistic the results are good our gross prospects are good and as the low cost provider in our space. We have a journal durable competitive advantage, which will allow us to continually.

Pablo Singzon: You know, we did see the impact of inflation in particular on those lines where You know, the cost of repair, labor costs, et cetera, you know, jumped pretty dramatically in a couple of year period. So, you know, we've raised rates dramatically. Our coverage is a little bit tighter than it used to be. Made a lot of adjustments on the underwriting that gives us confidence that, you know, the results for the, you know, say 20 through 24 are going to be quite a bit better. But we don't know definitively. It's a long tail line. And so we, just like we do across the whole book.

Speaker Change: Certainly as a reminder to ask a question. Please press star followed by the number one on your telephone keypad.

Speaker Change: Gradually and take market share from our higher expense competitors, while continuing to deliver strong returns and build wealth for our investors and with that I'll hand, it back over to Mike. Thanks, Brian Operator, we're ready for questions now.

Speaker Change: Our first question comes from Michael Zaremski from BMO Capital markets. Please go ahead. Your line is open.

Speaker Change: Hey, good morning.

Speaker Change: Just back to the commentary on the market environment.

Speaker Change: Certainly as a reminder to ask a question. Please press star followed by the number one on your telephone keypad.

Speaker Change: Is it.

Speaker Change: Our first question comes from Michael Zaremski from BMO Capital markets. Please go ahead. Your line is open.

Speaker Change: It sounds like.

Speaker Change: Larger a shared account property.

Michael Zaremski: Hey, good morning.

Speaker Change: And one of the more meaningful impacts on the growth this quarter.

Speaker Change: So back to the commentary on the market environment.

Speaker Change: You can kind of confirm that or I don't know I think that for the 10-K to see the Mexico casualty versus property. If you were able to preview it.

Michael Zaremski: Is.

Pablo Singzon: We've set aside what we think are very conservative loss reserves. And if there's good news in the future, that'll be great. If not, we're prepared, you know, with our current reserves to absorb that. Gotcha. Thanks, Mike.

Michael Zaremski: It sounds like.

Michael Zaremski: Larger a shared account property.

Speaker Change: And just along those lines too.

Speaker Change: How is pricing looking at and kind of small commercial casualty.

Michael Zaremski: And one of the more meaningful impacts on growth this quarter.

Mike: Mike This is Mike.

Michael Zaremski: You can kind of confirm that or I don't know I think the way to look for the 10-K that or see the mix of casualty versus property. If you were able to preview it and then just along those lines too.

Mike: I think our mix of business.

Pablo Singzon: And then sneaking just last one, as a follow up on the question about the attrition loss ratio, would it be reasonable to assume flat to higher attrition loss ratios just, you know, given the more competitive pricing environment and your strategy of trading off pricing and growth going forward? Thank you. Well, you know, it's a broad product line with a lot of different component pieces, but, you know, in general, as Brian, I think, said earlier, rates are flat for the quarter. So, you know, I would make some assumptions based on that.

Speaker Change: Generally as one third two thirds, one third property <unk> casualty.

Michael Zaremski: How is pricing looking at and kind of small commercial casualty.

Speaker Change: The larger layer deals as Brian indicated are under some <unk>.

Mike: Mike This is Mike.

Speaker Change: Competitive pressure after.

I think our mix of business.

Speaker Change: Just seeing any.

Speaker Change: Tremendous inflation in rates over the prior several years. So we think that's a.

Mike: Generally as one third two thirds, one third property <unk> casualty.

Speaker Change: A normal evolution of that market. The returns have been extraordinary and it makes sense a lot of capital has flowed back into that space are small property divisions are still growing very rapidly and we're getting positive rate increases there. So.

Mike: Larger layer deals as Brian indicated.

Mike: Under some <unk>.

Competitive pressure after.

Mike: Just saying.

Mike: Tremendous inflation in rates over the prior several years, so we think thats.

Andrew Kligerman: Thank you. Our next question comes from Andrew Kligerman from TD Securities. Please go ahead. Your line is open.

Speaker Change: We're upbeat on property.

Mike: A normal evolution of that market. The returns have been extraordinary and it makes sense a lot of capital has flowed back into that space are small property divisions are still growing very rapidly and we're getting positive rate increases there. So.

Brian Petrucelli: Small casualty I think as Brian said, it kind of varies by byproduct line. So on construction commercial auto access.

Andrew Kligerman: Good morning, just a little nuance on some of the prior questions, I guess. Tacking on to the loss ratio question, I mean, you came in at an exceptional 73.4% combined. I mean, any other company, I would have thought it was their loss ratio, not their combined, but If, and if I look at a chart. And I go back 10 years, I see that you've kind of, you know, maybe closer to 10 years ago, you were in the low 70s, one year, you were at 60, maybe in the middle years that you were in the low to low to lower mid 80s.

Speaker Change: Very healthy rate increases.

Speaker Change: Other lines like management liability professional liability.

Mike: We're update on property.

Small casualty I think as Brian said, it kind of varies by byproduct line. So on construction commercial auto access.

Speaker Change: We've seen some extraordinary levels of profitability, we're trying to be incrementally more aggressive.

Speaker Change: Yeah.

Speaker Change: Got it.

Mike: Very healthy rate increases.

Speaker Change: Okay and Thats helpful.

Mike: Other lines like management liability professional liability, where we've seen some extraordinary.

Speaker Change: Maybe switching gears to the point of of excellent profit margins.

Speaker Change: Staying on this call and he said in the past too that youre willing to trade off.

Mike: Levels of profitability, we're trying to be incrementally more aggressive.

Speaker Change: Les excellent profits for.

Mike: Got it.

Speaker Change: It sounds like more growth.

Mike: Okay and Thats helpful.

Mike: Maybe switching gears to the point of of excellent profit margin. So.

Speaker Change: That actually.

Michael Kehoe: So, you know, given that the environment is getting a lot more competitive in various areas, Any sense of the cadence of what could happen going forward? Could we see kind of a gradual drift into the low 80s over the next few years? I think that's certainly possible. You know, we want to maximize wealth building for our stockholders. And I think you do that by balancing profitability and growth. And I think that's what Brian's trying to address earlier with his comments around you know, fine tuning our pricing on certain ultra high margin lines. You know, but in general, I think what we're going to maintain is best in class profitability.

Speaker Change: We actually see because I know there is.

Speaker Change: Overlaying impact maybe from large property, having a negative impact on an overall growth but.

Mike: Staying on this call he said in the past too that youre willing to trade off.

Mike: Les excellent profits for.

Speaker Change: Would you say that.

Mike: It sounds like more growth.

Speaker Change: We might be reaching a trough in terms of.

Mike: That actually.

Speaker Change: The ability for.

Mike: We actually see because I know there's.

Speaker Change: To drop price enough to kind of reaccelerate certain elements of growth and on the casualty front.

Mike: <unk> impact may be from large property, having a negative impact on an overall growth but.

Mike: Would you say that.

Speaker Change: I would say keep in mind that the margins on some of our highest margin business is extraordinary.

Mike: We might be reaching a trough in terms of.

Mike: The ability to four.

Mike: To drop price enough to kind of reaccelerate certain elements of growth and on the casualty front.

Speaker Change: When we when you lower rates in certain select areas. The effect is not immediate on the profitability and the growth.

Mike: Okay.

Mike: I would say keep in mind that the mall.

Speaker Change: It takes a little while to purchase so I don't think we can.

Mike: <unk> on some of our highest margin business is extraordinary.

Speaker Change: Hit the point, where.

Okay.

Speaker Change: We haven't exhausted our ability to pull that lever, let's put it that way.

When we when you lower rates.

Michael Kehoe: Very strong growth rates, and we expect Kinsale's stock price to appreciate in value in the years ahead.

Mike: Certain select areas. The effect is not immediate on the profitability and the growth. It takes a little while on furniture. So I don't think we hit the point where.

Speaker Change: And then in terms of the market Mike you got to remember how diverse it is right it doesn't move monolithically.

Mike: Sure.

Michael Kehoe: Skype.

Mike: Okay.

Speaker Change: Large accounts small some states versus others cat exposed versus non cat exposed.

Michael Kehoe: And maybe on the verticals, could you remind me of how many segments that you have right now, you know, similar to the ag segment. And I know you mentioned in an earlier question that, you know, this year is going to be big in personal lines and ag for growth.

Mike: We haven't exhausted our ability to pull that lever I'll just put it that way.

Speaker Change: Clean accounts versus accounts with loss problems.

Bryan Petrucelli: And then in terms of the market Mike you got to remember how diverse it is Ryan it doesn't move monolithically large accounts small some states versus others cat exposed versus non cat exposed.

Speaker Change: The market is all over the place.

Speaker Change: We feel very comfortable with the guidance around 10% to 20% growth.

Michael Kehoe: You know, maybe thinking out to 26 or 27, how many of these verticals would you like to add each year? And then, and again, how many do you have right now? Yeah, look, we have 26. Now, I would look at these verticals as a judgmental way to divide and organize our underwriting teams around industry segments and coverage. Right. So we want experts at the at the desk level. And so you have to have some degree of focus. to really be an expert at the underwriting and understanding the businesses we're insuring and all the characteristics of those businesses that drive loss exposure and trends on the legal side and who are our competitors and how do they segment and price risk.

Speaker Change: Okay. Thank you very much.

Mike: Clean accounts versus accounts with loss problems.

Speaker Change: Our next question comes from Bill Kirk cash from Wolfe Research. Please go ahead. Your line is open.

Bryan Petrucelli: The markets all over the place.

Bryan Petrucelli: We feel very comfortable with the guidance around 10% to 20% growth.

Speaker Change: Hi, Good morning, Mike following up on.

Speaker Change: Your growth comment.

Bryan Petrucelli: Okay. Thank you very much.

Speaker Change: Seeing kinsale grew at roughly 40% clip since 2019 and hearing you talk about it seemed like that entire timeframe.

Speaker Change: Our next question comes from Bill Kirk cash from Wolfe Research. Please go ahead. Your line is open.

Michael Zaremski: Hi, Good morning, Mike following up on <unk>.

Speaker Change: That growth was sustainable we've indeed now seeing your growth rate decelerate much more sharply.

Speaker Change: Your growth comment.

Speaker Change: After seeing Kinsale grew at roughly 40% clip since 2019 and hearing you talk about it seem like that entire timeframe.

Speaker Change: Is this sort of low teens growth rate is something that you think is now at a level that you would view as sustainable going forward from here I understand you don't provide specific growth guidance, but I think your investors would really appreciate hearing your thoughts, particularly those who are unable to attend the investor day.

Speaker Change: That growth wasn't sustainable we've indeed now seeing your growth rate decelerate much more sharply.

Michael Kehoe: So there's no magic number. You know, it certainly may incrementally grow over time.

Speaker Change: Sort of low teens growth rate something that you think is now at a level that you would view as sustainable going forward from here I understand you don't provide specific growth guidance, but I think your investors would really appreciate you sharing your thoughts, particularly those who are unable to attend the investor day.

Speaker Change: And whether you see further deceleration from here versus the idea that at some point growth should plateau.

Michael Kehoe: And then just a quick correction on the new business lines. I think Bryan said earlier, we don't expect extraordinary growth from our new business. We expand the product line over and over again over the years and we get incremental growth. You know, it's part of our strategy to roll out new products in a methodical fashion. to really increase the probability that we're getting things right. When you say, Mike, expanding incrementally, that would mean within a vertical, maybe adding a new product line. Yeah, incremental expansion of the product. But if we roll out a new underwriting division, you know, we might write, you know, several million dollars, we're not going to go corner of the market the first, you know, year we're in business.

Speaker Change: And Youll, how close are we to that point.

Speaker Change: Sort of with that as well.

Speaker Change: The backdrop, then could you also frame whatever that top line view as you move down the P&L.

Speaker Change: And whether you see further deceleration from here versus the idea that at some point growth should plateau and Youll, how close are we to that point and sort of.

Speaker Change: Is it reasonable for your investors to expect that the business model is capable of generating mid to high teens EPS growth sustainably through the cycle.

Speaker Change: With that as a backdrop then can you also frame whatever that top line view is as you move down the P&L.

Speaker Change: Yes Bill.

Speaker Change: I think that 10% to 20% growth as a conservative and good faith estimate as to where we go from here I think if you look back over five years, when we were growing.

Is it reasonable for your investors to expect that the business model is capable of generating mid to high teens EPS growth sustainably through the cycle.

Speaker Change: At a 40% that was driven in large part by our business model.

Speaker Change: Yes.

Speaker Change: I think that 10% to 20% growth as a conservative and good faith estimate as to where we go from here I think if you look back over five years, when we were growing.

Speaker Change: We're the low cost operator, we've got the best customer service in the industry bar none.

Speaker Change: I think we've got the broadest risk appetite that we offer our brokers.

Speaker Change: At a 40% that was driven in large part by our business model.

Speaker Change: We've got a handle on technology that.

Michael Kehoe: And That's, that's been a good strategy for us over the six, this is our 16th year in business. So it's, I think it's worked well for us over time.

Speaker Change: I'm not familiar with any company that's.

Speaker Change: We're the low cost operator, we've got the best customer service in the industry bar none.

Speaker Change: In a similar position that we are.

Speaker Change: In terms of low cost, but also.

Speaker Change: I think we've got the broadest risk appetite that we offer our brokers.

Michael Zaremski: Super helpful. Thanks a lot.

Speaker Change: Data and analytics. So we're very confident in what we're doing.

Michael Zaremski: Our next question comes from Michael Zaremski from BMO Capital Markets. Please go ahead. Your line is open.

Speaker Change: We've got a handle on technology that.

Speaker Change: It will allow us to continue to grow at that 10% to 20% clip.

Speaker Change: I'm not familiar with any company that's.

Michael Zaremski: Okay, great. Just a couple follow ups. In terms of employee growth, you know, I know that another 10k is not out.

Speaker Change: In a similar position that we are in.

Speaker Change: The 40% growth was driven in part by a level of dislocation around the industry and some of Thats abated, we've seen billions and billions of dollars of new capital come into the industry and so it's.

Speaker Change: In terms of low cost, but also.

Speaker Change: Data and analytics. So we're very confident in what we're doing.

Michael Kehoe: But um, what do you just say kind of high level as the company gets larger that the employee growth rate has been decelerating a little bit or any color there? I think we've gotten incremental gains in productivity every year if you measure that by gross written premium per full-time employee. I think it's gone up every year. And, you know, with the The work we're doing in the technology area, we certainly would expect that to continue. Got it.

Speaker Change: We will allow us to continue to grow at that 10% to 20% clip.

Speaker Change: Things are more competitive now than they were but we're bullish.

Speaker Change: The 40% growth was driven in part by a level of dislocation around the industry and some of Thats abated, we've seen billions and billions of dollars of new capital come into the industry and so it's.

Thanks, Mike and just to be Crystal clear.

Speaker Change: 10% to 20% growth is in reference to the topline.

Speaker Change: Correct.

Speaker Change: Because you also in your opening comments made some comp.

Speaker Change: Things are more competitive now than they were but we're bullish.

Speaker Change: Comments around expecting to make continued investments that are going to improve the efficiency ratio and so we should see.

Speaker Change: Thanks, Mike and just to be Crystal clear.

Speaker Change: 10% to 20% growth is in reference to top line.

Speaker Change: Sure.

Michael Kehoe: And lastly, you know, going back to kind of lost cost trend and reserves. Tell me if I'm crazy, but, you know, given how robust your Kinsale's reserve releases have been, you know, relative to the kind of the pricing stats you all give out, it kind of implies that your lost cost trend is closer to zero than to the high single digits that lots of companies talk about on the casualty side. Any comments? Yeah, our loss trend assumptions would definitely not be zero. It would be somewhere in the high single digits, there's some variability by line of business, but we're definitely conservative on estimating future loss.

Speaker Change: The rate of revenue growth to exceed expense growth with positive operating leverage youre doing buybacks. So the rate of earnings growth.

Speaker Change: Correct.

Speaker Change: Because you also in your opening comments made some comment.

Speaker Change: We would certainly be much stronger than that.

Speaker Change: Comments around it.

Speaker Change: <unk> to make continued investments that are going to improve the efficiency ratio and so we should see.

Speaker Change: I think it would be yes, because of productivity gains Brian.

Speaker Change: <unk>.

Speaker Change: Brian talked about our new money in the investment portfolio is being invested higher rates than the.

Speaker Change: The rate of revenue growth exceeds expense growth with positive operating leverage youre doing buybacks. So the rate of earnings growth.

Speaker Change: Current book yield of the portfolio.

Speaker Change: We would certainly be much stronger than that.

Speaker Change: I think it would be yes, because of productivity gains Brian.

Speaker Change: Yes, absolutely.

Speaker Change: Okay. Thank you that's very <unk>.

Speaker Change: Brian talked about our new money in the investment portfolio is being invested higher rates than the.

Speaker Change: And then separately if I may for Bryan Petrucelli, and Brian Haney, <unk> capital and buybacks.

Speaker Change: I think investors appreciate that can still operate so highly capital accretive business model that is capable of supporting faster growth environments, but it seems like when growth slows your buyback capacity increases so.

Speaker Change: Current book yield of the portfolio.

Speaker Change: <unk>.

Speaker Change: Yes, absolutely.

Speaker Change: Okay. Thank you that's very <unk>.

Speaker Change: And then separately if I may for Bryan Petrucelli, and Brian Haney on capital and buybacks.

Speaker Change: I think following up on that thought.

Speaker Change: I think investors appreciate that <unk> operates a highly capital accretive business model that is capable of supporting faster growth environment, but it seems like when growth slows your buyback capacity increases.

Michael Zaremski: Okay, I tried, it's been a pretty steady reserve releases, so I'm appalled you're being a little too conservative. Okay, thank you.

Speaker Change: How much capital does sale need to operate the business as if gross written premium growth.

Speaker Change: Gross written premium growth remains near current levels.

Speaker Change: Is the 23000 sort of shares that you repurchased this quarter a reasonable run rate for investors to expect like sort of steady state and then you would be.

Casey Alexander: Our last question will come from Casey Alexander from Compassport. Please go ahead. Your line is open.

Speaker Change: I think following up on that thought.

Speaker Change: How much capital does is they all need to operate the business as if gross written premium growth gross.

Casey Alexander: Hey, good morning. Most of my questions have been asked and answered, but I have a couple for you. First of all, when you talk about the wildfires, with 45 million, of which 25 million is your end of it, is that top of limit without much slack to that number, or because the losses are kind of across personal and commercial property, is, as you adjudicate those losses, is there some opportunity to drive that 25 million number down? Yeah, I mean, it's an estimate, Casey. I mean, we're, you know, we're working through quickly. I mean, property claims typically are resolved much more quickly than they are on the casualty side.

Speaker Change: Adding additional buyback on top of that if you wanted to be opportunistic maybe if you could just frame how to think about those dynamics. Thank you.

Speaker Change: Gross written premium growth remains near current levels.

Speaker Change: Is the 23000 sort of shares that you repurchased this quarter a reasonable run rate for investors to expect sort of steady state and then you would be.

Speaker Change: Yes, Bill this is Mike if you look at our.

Speaker Change: Our current buyback strategy.

Speaker Change: It's similar to our dividend strategy and that it's very modest.

Speaker Change: Adding additional buyback on top of that if you wanted to be opportunistic maybe if you could just frame how to think about those dynamics. Thank you.

Speaker Change: <unk>.

Speaker Change: As Brian said in his comments at the beginning of the call.

Speaker Change: Yes, Bill this is Mike if you look at our.

Speaker Change: We expect to make modest buybacks each quarter I think the fourth quarter is a good indicator of what we mean by that.

Speaker Change: Our current buyback strategy.

Speaker Change: Yes.

Speaker Change: It's similar to our dividend strategy and that it's very modest.

Speaker Change: And then hey, we're always prepared to move Opportunistically.

Speaker Change: And.

Speaker Change: As Brian said in his comments at the beginning of the call. We expect to make modest buybacks each quarter I think the fourth quarter is a good indicator of what we mean by that.

Speaker Change: Something arises where that makes sense.

Speaker Change: The dividend that we have is very modest it's grown incrementally over the years and I think the share buybacks.

Michael Kehoe: So, but I, you know, I think it's a good faith estimate. And it's certainly possible it could move up or down, but I wouldn't expect it to be dramatically different.

Speaker Change: And then hey, we're always prepared to move Opportunistically.

Speaker Change: Also kind of a modest capital allocation strategy and.

Speaker Change: Something arises where that makes sense.

Casey Alexander: Thank you.

Casey Alexander: Secondly, I'm just kind of curious, and I'm not trying to irritate you, because I know you guys don't like to be measured on a price-to-book basis. You don't think that's appropriate. But the fact of the matter is that there's a lot of investors who look at the price-to-book value, and it just slows them down in terms of whether or not to invest in the company based upon the valuation.

Speaker Change: There is.

Speaker Change: Sure.

Speaker Change: The dividend that we have is very modest it's grown incrementally over the years and I think the share buybacks.

Speaker Change: The capital model that we use to manage the business.

Speaker Change: As a fair degree of complexity to it that I don't think it would be prudent to get into that on the call but.

Speaker Change: Also kind of a modest capital allocation strategy.

Speaker Change: General.

Speaker Change: <unk>.

Speaker Change: We're going to.

Speaker Change: There is.

Always make sure we have enough capital to maintain our rating and satisfy the regulators, but we don't want to have a super abundance of capital beyond what's required for that.

Speaker Change: The capital model that we use to manage the business.

Speaker Change: As a fair degree of complexity to it that I don't think it would be prudent to get into that on the call but in general.

Michael Kehoe: So I'm curious why the share repurchase program is sort of an on-the-run thing that actually is dilutive to your book value, when you could easily take some of that capital and better devote it to the dividend, which wouldn't have necessarily the same level of impact on your book value and would still be a positive way of returning capital to shareholders, and thus leaving the share repurchase program for periods where there was really excess volatility in the market. I'm just curious. Yes, so number one, the share repurchase program is very modest. Right, we bought $10 million worth of stock on a market cap of somewhere north of $10 billion.

Speaker Change: So we think of the dividend and the buybacks as a way to address excess capital over the years ahead.

Speaker Change: We're going to <unk>.

Speaker Change: I always make sure we have enough capital to maintain our rating and satisfy the regulators, but we don't want to have a super abundance of capital beyond what's required for that and so we think of the dividend and the buybacks as a way to address excess capital over the years ahead.

Speaker Change: Thank you I appreciate youre, taking my questions.

Mark Hughes: Our next question comes from Mark Hughes from <unk> Securities. Please go ahead. Your line is open.

Speaker Change: Yes.

Speaker Change: Thank you.

Anything on January result.

Speaker Change: Thank you I appreciate your taking my questions.

Speaker Change: That we're midway through February anything in January that you'd call out.

Speaker Change: Okay.

Speaker Change: Our next question comes from Mark Hughes from <unk> Securities. Please go ahead. Your line is open.

Speaker Change: Okay.

Mark Hughes: Well I don't think we want to comment on January but mark we've reiterated our confidence in the 2000.

Speaker Change: Thank you.

Speaker Change: 10% to 20% growth.

Speaker Change: Anything on January results, given that we're midway through February anything in January that you'd call out.

Speaker Change: And we've talked about the cat loss on the.

Speaker Change: The wildfires in Los Angeles.

Speaker Change: Yes.

Speaker Change: Well I don't think we want to comment on January but.

Speaker Change: So that's probably.

Speaker Change: Mark we've reiterated our confidence in the 20% or the 10% to 20% growth.

Speaker Change: Where are we going to go at this point.

Michael Kehoe: The second point I'd make is we, we respect the fact that a lot of people look at price to book. It's just that you have to remember we, we are, we are a very capital efficient company. So we have enough capital. to operate our business. And then we have some extra because there's some variability in our business and we have to be able to absorb that. But we have competitors that have tremendous amounts of redundant capital beyond what they need to operate the business. So someone that has a very bloated capital base and Kinsale that has a very efficient capital base.

Speaker Change: The expense ratio was a little bit higher this quarter, Bryan petrucelli anything unusual in that.

Speaker Change: And we've talked about the cat loss on the.

Speaker Change: The wildfires in Los Angeles.

Speaker Change: As I commented.

Speaker Change: But thats probably enough.

Speaker Change: In my in my notes.

Speaker Change: Where we want to go at this point.

Speaker Change: It's largely driven by <unk> and.

Speaker Change: The expense ratio was a little bit higher this quarter Bryan petrucelli anything unusual in there.

Speaker Change: An increase in variable compensation that and as we've talked in the past that that.

Speaker Change: That ratio is going to jump around quarter to quarter.

Speaker Change: As I commented.

Speaker Change: So as Youre sort of trying to model things out I think looking at that that 12 month ratios probably.

Speaker Change: In my in my notes.

Speaker Change: It's largely driven by <unk> and.

Speaker Change: An increase in variable compensation and as we've talked in the past that that.

Speaker Change: What you should be.

Speaker Change: Where I'm going to direct you.

Speaker Change: Yes.

Michael Kehoe: And if you're comparing our respective price to book multiples, you're comparing apples and oranges. Whereas, if you look at forward earnings or last 12 months' earnings, I think it's more of an apples-to-apples comparison. And then the last point I'd make is we think our stock price is really... driven by, you know, expectations around future earnings. And we think most investors don't value us on our assets or, you know, assets minus liabilities or our book value. So that's the rationale, basically.

Speaker Change: That ratio is going to jump around quarter to quarter.

Speaker Change: Cash flow in a.

Speaker Change: Environment, where.

So as Youre sort of trying to model things out I think looking at that that 12 month ratios probably.

Speaker Change: You're in the 10 to 20 range.

Speaker Change: If you were to parallel kind of the low double digit quarter, how does cash from operations look that's been.

Speaker Change: What you should be.

Speaker Change: I met a director.

Speaker Change: Yes.

Speaker Change: Obviously quite strong physical helping to support your.

Speaker Change: Cash flow in a.

Speaker Change: Environment, where.

Speaker Change: Net investment income.

Speaker Change: You are in the 10 to 20 range.

Speaker Change: What does it look like.

Speaker Change: If you were to parallel.

Speaker Change: In a more modest growth environment does that.

Speaker Change: The low double digits quarter, how does cash from operations look that's been.

Speaker Change: Flattened out does that go down how do we think about that.

Speaker Change: Obviously quite strong thats been helping.

Speaker Change: Pretty steady it should grow with the premium I think.

Speaker Change: Helping to support your.

Speaker Change: Net investment income.

Casey Alexander: Thank you for taking my question. Okay, you bet.

Speaker Change: What does it look like.

Speaker Change: In a more modest growth environment does that.

Speaker Change: Okay.

Speaker Change: Very good and then.

Operator: We have no further questions.

Speaker Change: Flattened out does it go down how do we think about that.

Michael Kehoe: I'd like to turn the call back over to Michael Kehoe for closing remarks. Okay. Well, we appreciate everybody's time this morning. We're optimistic about the future and look forward to talking again here in a couple months. Have a great day.

Speaker Change: You talked about leaning into personal loans.

Speaker Change: I know, it's pretty small, but what could that mean for the top line. If you do lean in the personal words.

Speaker Change: Pretty steady it should grow with the premium I think.

Speaker Change: Yes. This is Brian Haney I mean, if you look at it.

Speaker Change: Very good and then.

Speaker Change: Homeowners space is larger by itself in the E&S space in the U S and an increasing percentage of it even though it's small is moving into the E&S space.

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.

Speaker Change: You talked about leaning into personal loans.

Speaker Change: I know, it's pretty small, but what could that mean for the top line. If you do later in the personal words.

Speaker Change: So I think there's a huge opportunity for us, especially given.

Speaker Change: Yes. This is Brian Haney I mean, if you look at it yes.

Speaker Change: Homeowners space is larger by itself in the E&S space in the U S and an increasing percentage of it even though it's small is moving into the E&S space.

Speaker Change: Like things like high value homeowners in California, it's like it's a very concentrated market that has suffered.

Speaker Change: <unk> loss.

Speaker Change: Among a small number of players. So I think there is an opportunity there I think there is an opportunity to expand what we do on the manufactured housing space I think there's opportunity to expand into sort of adjacent type of businesses like.

Speaker Change: So I think there's a huge opportunity for us, especially given.

Speaker Change: Like things like high value homeowners in California, it's like it's a very concentrated market that has suffered at.

Speaker Change: A giant loss.

Speaker Change: Stick built homes.

Speaker Change: Amongst a small number of players. So I think there is an opportunity there I think there's an opportunity to expand what we do on the manufactured housing space I think there's a.

Speaker Change: Non manufactured housing homes.

Speaker Change: These are hard to play as catastrophe exposed high margin business, but.

Speaker Change: Theres just a lot of it and right now I think it's probably one of the harder areas and the overall P&C industry.

Speaker Change: Opportunity to expand in the sort of adjacent type of businesses like.

Speaker Change: <unk> non.

Speaker Change: Manufactured housing homes.

Speaker Change: And then it'll be kind of a gradual expansion over time. So I think it was like 2% of our book last year.

Speaker Change: These are hard to play as catastrophe exposed.

Speaker Change: High margin business, but theres, just a lot of it.

Speaker Change: But we're optimistic that we'll continue to grow quite a bit in the years ahead.

Speaker Change: And right now I think it is.

Speaker Change: Probably one of the harder areas and the overall PNC industry.

Speaker Change: Sure.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: Our next question come from Andrew Anderson from Jefferies. Please go ahead. Your line is open.

Speaker Change: And then it will be kind of a gradual expansion over time. So I think it was like 2% of our book last year.

Speaker Change: Hey, good morning.

Speaker Change: But were optimistic and will continue to grow quite a bit in the years ahead.

Speaker Change: Just thinking about the California loss, maybe a little bit bigger than I would've thought just given exposures in the state as of year end 'twenty three could you maybe talk about maybe the size of the gross loss there where the losses are coming from and kind of how growth has trended over the last year and maybe how you see it in the 25 for California, specifically.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: Our next question come from Andrew Anderson from Jefferies. Please go ahead. Your line is open.

Andrew Anderson: Hey, good morning.

Andrew Anderson: Thinking about the California loss, maybe a little bit bigger than I would've thought just given exposures in the state as of year end 'twenty three.

Speaker Change: The cross was about 45 in the net pretax 20.

Andrew Anderson: Could you maybe talk about maybe the size of the gross loss there where the losses are coming from and kind of how growth has trended over the last year and maybe how you see it in the 25 for California, specifically.

Speaker Change: <unk>.

Speaker Change: It's a mix of commercial inland marine personal lines.

Speaker Change: Yes.

Andrew Anderson: The growth was about 45 in the net pretax 20.

Speaker Change: I can't really speak to the specific growth rate in California or that area, but.

Speaker Change: Andrew I would look at it this way we've always written Caf business, because the margins are pretty compelling and we've always written it with some degree of conservatism around risk management, and making sure that we control for the volatility whether its wildfire or coastal wind or what.

Andrew Anderson: It's a mix of commercial inland marine personal lines.

Andrew Anderson: Yes.

Andrew Anderson: Can't really speak to the specific growth rate in California or that area, but.

Andrew Anderson: Andrew I would look at it this way we've always written.

Andrew Anderson: That business because the margins are pretty compelling and we've always written it with.

Speaker Change: India.

Speaker Change: And so I think actually this is a result that's.

Speaker Change: Kind of right in the strike zone for us, it's a very manageable loss.

Andrew Anderson: Some degree of conservatism around risk management, and making sure that we control for the volatility whether its wildfire or coastal wind or what have you.

Speaker Change: On business that throws off.

Speaker Change: Pretty attractive margins and.

Speaker Change: In general.

Andrew Anderson: And so I think actually this is a result that's.

Speaker Change: Thank you and then on the 17% submission growth.

Andrew Anderson: Kind of right in the strike zone for us, it's a very manageable loss.

Speaker Change: Kind of the slowest and a little bit here, but as we turn to 25 and maybe you could just talk about the mix within that 2017, if it's more casualty going forward, but I'd also be interested to hear if you are perhaps thinking about.

Andrew Anderson: On business that runs off.

Andrew Anderson: Pretty attractive margins.

Andrew Anderson: In general.

Andrew Anderson: Thank you and then on the 17% submission growth.

Speaker Change: Kind of increasing your quote to submission ratio or youre bound policy to submission ratio to be more competitive to a certain degree.

Andrew Anderson: Kind of the slowest and a little bit here, but as we turn to 25 and maybe you could just talk about the mix within that 17, if it's more casualty going forward, but I'd also be interested to hear if you are perhaps thinking about kind of increasing your quota submission ratio or youre bound policy to submission ratio.

Speaker Change: We are definitely.

Speaker Change: Seeing a higher quote to submerge ratio.

Speaker Change: Just wanted to athletic upsides of lower growth is.

Speaker Change: It makes.

Speaker Change: It makes it easier for us to hit our customer service targets, including our quote ratio of standards. So yes. We are we are quoting more and we are finding more.

Andrew Anderson: To be more competitive to a certain degree.

Andrew Anderson: We are definitely.

Andrew Anderson: Seeing a higher <unk> ratio.

Speaker Change: And then keep in mind that 17% of that number does jump around.

Andrew Anderson: Just wanted to athletic upsides of lower growth is.

Speaker Change: Yes.

Speaker Change: Kevin.

It makes it easier for us to hit our customer service targets, including our quote ratio of standards. So yes. We are we are quoting more and we are buying more.

Speaker Change: Is it starting to be a bit more casually rather than property compared to maybe the last 12 to 18 months, yes, I mean, it depends on what I mean.

Speaker Change: Without getting too much into the weeds it depends on what specific product youre talking about we are seeing a lot more personal insurance submissions.

Andrew Anderson: I'll keep mind that 17% of that number does jump around.

Andrew Anderson: Yes.

Andrew Anderson: It.

Andrew Anderson: Is it starting to be a bit more casually rather than property compared to maybe the last 12 to 18 months.

Speaker Change: Maybe fewer of a shared and layered submissions.

Speaker Change: But we're still seeing more inland submissions.

Andrew Anderson: Yes, I mean, it depends on what I mean.

Speaker Change: It varies across the book.

Andrew Anderson: Without getting too much into the weeds. It depends on what specific product you are talking about we are seeing a lot more personal insurance submissions were saying maybe fewer of the shared and layered submissions.

Speaker Change: Yes.

Speaker Change: I think Brian demand, we're seeing a lower growth rate in the Sheraton, Larry but it's still growing right.

Thank you.

Andrew Anderson: But we're still seeing more inland submissions.

Speaker Change: Our next question comes from Scott <unk>.

Andrew Anderson: It varies across the book.

Speaker Change: From RBC capital markets. Please go ahead your line is open.

Andrew Anderson: Yes.

Speaker Change: I think Brian demand, we're seeing a lower growth rate in the Sheraton, Larry but it's still growing right.

Speaker Change: Yeah.

Speaker Change: Okay.

Andrew Anderson: Thank you.

Speaker Change: I think we lost Scott Scott.

Speaker Change: Our next question comes from Scott <unk> from.

Speaker Change: Yes.

Speaker Change: From RBC capital markets. Please go ahead your line is open.

Speaker Change: Yes, good morning, yes, yes.

Speaker Change: Just wondering if you could comment on the Q4.

Speaker Change: Core accident year loss ratio there you saw.

Speaker Change: I think we lost Scott Scott.

Speaker Change: Improvement year over year.

Speaker Change: Fourth worth calling out.

Speaker Change: Maybe another one.

Speaker Change: Down year over year, I know I know you kind of comment before or is it sort of improves yearend if loss trends come in better than expected, but anything notable to call out there.

Speaker Change: Yes, good morning.

Speaker Change: Just wondering if you could comment on the Q4.

Speaker Change: Core accident year loss ratio. There you saw there was improvement year over year anything.

Scott I would characterize it is.

Speaker Change: General success across the portfolio.

Speaker Change: Calling out the ticked down year over year, I know I know you kind of commented before as it sort of improves yearend if loss trends come in better than expected, but anything notable to call out there.

Speaker Change: But the impact on that quarter was probably a little bit driven by.

Speaker Change: Some pretty exceptional results in the property area, that's shorter tail business. So you tend to see those positive results more quickly.

Speaker Change: Scott I would characterize it as <unk>.

Speaker Change: General success across the portfolio.

Speaker Change: Okay that makes sense and then I'm wondering if you could expand on your U R.

Speaker Change: But the impact on that quarter was probably a little bit driven by.

Speaker Change: Reference the agro business the new product line there if you can expand on the.

Speaker Change: Some pretty exceptional results in the property area, that's shorter tail business. So you tend to see those positive results more quickly.

Speaker Change: Kind of the exposure in geographies you might be.

Speaker Change: Okay that makes sense and then I'm wondering if you could expand on you meant you referenced the agro business the new product line. There if you can expand on.

Speaker Change: We're planning to go through there and then also any any other new products that you want to call out for 2025, I know there was a lot in that.

Speaker Change: The previous two years, but anything else to call out there too.

Speaker Change: Kind of the exposure in geographies you might be.

Speaker Change: I'll answer that last question first most of the new products, we're thinking about for 2025 arent nearly as significant as let's say the personal insurance push we're making in the last few years or the agribusiness.

Speaker Change: Planning to go through there and then also any any other new products that you want to call out for 2025, I know there was a lot in that.

Speaker Change: Previous two years, but anything else to call out there too.

Speaker Change: The agribusiness would be virtually everywhere in the United States agricultural.

Speaker Change: I'll answer that last question first most of the new products. We're thinking about for 2025 are nearly as significant as let's say in the personal insurance push we're making in the last few years or the agribusiness.

Speaker Change: The agricultural economy is basically present in every state.

Speaker Change: That's going to be mix.

Speaker Change: Casualty and property exposures and then some sort of.

Speaker Change: Unique exposures relative to farming and ranch.

Speaker Change: The agribusiness would be virtually everywhere in the United States agricultural.

Speaker Change: Sure.

Speaker Change: Yes, so I wouldn't expect any like dramatic.

Speaker Change: The agricultural economy is physically present in every state.

Speaker Change: New product in 2025, just gradual incremental.

Speaker Change: As can be a mix of casualty and property exposures in some sort of.

Speaker Change: Moving into adjacent lines.

Speaker Change: Unique exposures relative to farming and ranch.

Speaker Change: Graduated sideways.

Speaker Change: Take care.

Speaker Change: Excessive risk.

Speaker Change: Yes, so I wouldn't expect any dramatic new.

Speaker Change: Got it that makes sense.

Speaker Change: New product in 2025, just gradual incremental.

Speaker Change: Just the last one two on.

Speaker Change: Moving up the equity exposure, which you expect to take the 10, 10% eventually 12% is that is that a similar strategy with using the.

Speaker Change: Moving into adjacent lines.

Speaker Change: I graduated salary.

Speaker Change: Take care.

Speaker Change: Excess of risk.

Speaker Change: Basically stock Etfs is that is that the way youre going to do that just stopping your exposure to the existing investments you haven't in equities or anything different there.

Speaker Change: Got it and just.

Speaker Change: Just a last one too on the.

Speaker Change: Moving up the equity exposure, which you expect to take the 10, 10% eventually 12% is that is that a similar strategy with street using the yes.

Speaker Change: Yes, Scott This is Mike Lee we have a.

Mike Lee: Portfolio that we manage internally.

Speaker Change: Basically stock Etfs is that is that the way youre going to do that just stopping your exposure to the existing investments you haven't in equities or anything different there.

Mike Lee: It's kind of a value oriented large cap, mostly dividend paying kind of a buy and hold strategy. There and then we've got the two etfs.

Mike: Yes, Scott this is Mike we have.

Mike Lee: With the passive strategy.

Mike: Portfolio that we manage internally.

Mike Lee: So it's a net okay, yes.

Mike Lee: Okay.

Mike: It's kind of a value oriented large cap, mostly dividend paying kind of a buy and hold strategy. There and then we've got two etfs.

Mike Lee: Okay.

Mike Lee: Yeah.

Speaker Change: Our next question comes from Michael Phillips from Oppenheimer. Please go ahead. Your line is open.

Mike: With the passive strategy.

Michael Phillips: Thanks, Good morning, I'm curious if you provide any updated thoughts on what youre seeing in your GL book loss trend and then.

Mike: With a net okay.

Mike: Both okay.

Michael Phillips: I mean, I think your commercial umbrella and excess book isn't that small relative to the overall book. So maybe if you could even go deeper into say, what the trends youre seeing in the umbrella piece as well.

Our next question comes from Michael Phillips from Oppenheimer. Please go ahead. Your line is open.

Michael Phillips: Thanks, Good morning, I'm curious if you'd provide any updated thoughts on what youre seeing in your GL book loss trends and then.

Michael Phillips: I don't think we've got a lot of specifics, there's a lot of industry data out there I would take our loss trends will probably conform to what youre hearing.

Michael Phillips: I think your commercial umbrella and excess book isn't that small relative to the overall book. So maybe if you could even go deeper and say what the trends youre seeing in the umbrella piece as well.

Speaker Change: I Didnt bring that information I would say just on an absolute basis the margins in our.

Michael Phillips: <unk> and our GL book are really strong.

Michael Phillips: I don't think we've got a lot of specifics there's a lot of industry data out there I think our loss trends will probably conform to what youre hearing.

Speaker Change: Unlike.

Speaker Change: <unk>.

Speaker Change: So an interesting chart yesterday, our development has been consistently better than the industry's reserve developments I think we are doing a better job.

Michael Phillips: I didn't I didn't bring that information.

Michael Phillips: Say just on an absolute basis as a margins in our.

Michael Phillips: Umbrella book and our GL book are really strong and unlike.

Speaker Change: Staying on top of those.

Speaker Change: Loss trends in the reserving process.

Michael Phillips: Sure.

Michael Phillips: So an interesting chart yesterday, our development has been consistently better than the industry reserve developments I think we are doing a better job.

Speaker Change: There may be a problem for the industry going forward.

Brent: Okay, yes, thanks Brent.

Speaker Change: And maybe one more on California.

Speaker Change: Given the news that we're kind of hearing about the Eden <unk> is there any chance you can take your 25 and split it.

Michael Phillips: Staying on top of those.

Michael Phillips: Loss trends and reserving process.

Michael Phillips: It's going to be maybe a probably industry going forward.

Speaker Change: Eaton versus <unk>.

Speaker Change: 101, and zero insult Palisades.

Speaker Change: Okay. Thanks, Brian.

Speaker Change: And maybe one more on California.

Speaker Change: Okay perfect. Thank you very much.

Speaker Change: Given the news that we're kind of hearing about the Eaton side of <unk> is there any chance you would take your 25% and split it.

Speaker Change: Yeah.

Speaker Change: Our next question comes from Pablo <unk> from Jpmorgan. Please go ahead. Your line is open.

Speaker Change: Eaton versus and deposits.

Speaker Change: 201, and zero, it's all <unk>.

Speaker Change: Hi, good morning.

Speaker Change: We're looking at prices in exchange for a growth.

Speaker Change: Okay perfect. Thank you very much.

Speaker Change: It off confined within a specific line or are you willing to cross subsidize across the line strike like using more profitable licensed sports that's profitable lines or maybe youre looking at dollar profitability more holistically on a comp level based instead. So just some perspective on how you are carrying out this strategy would be helpful. Thanks, well I would say, we don't cross subsidize anything because we don't have loss leaders every every.

Speaker Change: Our next question comes from Pablo <unk> Zhan from J P. Morgan. Please go ahead. Your line is open.

Speaker Change: Hi, good morning.

Speaker Change: Moving prices in exchange for growth is the tradeoff confined within the specific line or are you willing to cross subsidize across the line strike using more profitable licensed sports less profitable lines or maybe youre looking at dollar profitability more holistically on an account level based instead. So just some perspective on how you are carrying out this strategy would be helpful. Thanks, well I would say, we don't cross subsidize.

Speaker Change: Division and every product is suppose it has to be able to hit our profitability targets. It is a calculation we are kind of doing abbvie individuals' division level, obviously some divisions.

Speaker Change: All of our divisions are doing well some of our divisions are doing.

Speaker Change: And I think because we don't have loss leaders every every division and every product is it has to be able to hit our profitability targets. It is a calculation we are kind of doing abbvie individuals' division level, obviously some divisions.

Speaker Change: Remarkably well from a margin perspective, and those are the ones, where we're looking at sharpening our pencil in.

Speaker Change: Getting a little more aggressive in places.

Speaker Change: Gotcha that makes sense.

Speaker Change: All of our divisions are doing well some of our divisions are doing.

Speaker Change: Then.

Speaker Change: Second question.

Speaker Change: Was hoping you could comment on prior year development. This quarter, so favorable overall, but would be curious about the breakdown of path as a negative or are you still adding to construction defect reserves from older years.

Speaker Change: Remarkably well from a margin perspective, and those are the ones, where we're looking at sharpening our pencil in.

Speaker Change: Getting a little more aggressive in places.

Speaker Change: Got you that makes sense.

Speaker Change: Or are you getting the releases.

Speaker Change: And then.

Speaker Change: Second question.

Speaker Change: Well, we talked about property.

Speaker Change: I was hoping you could comment on prior year development. This quarter saw favorable overall, but would be curious about the breakdown of positives and negatives are you still adding to construction defect reserves from older years.

Speaker Change: A short tail line of business you see those results more quickly.

Speaker Change: <unk>.

Speaker Change: We've pushed our construction related.

Speaker Change: Where are you getting the releases.

Speaker Change: Booked loss ratios.

Speaker Change: Well, we talked about property as a short tail line of business you see those results more quickly.

Speaker Change: They are well into the 80% range.

Speaker Change: And thats largely because if you go back to accident years.

Speaker Change: <unk>.

Speaker Change: We pushed our construction related.

Speaker Change: Forget where it starts may be either 15, or 16, 17, 18 19, we did see the impact of inflation in particular on those.

Speaker Change: Booked loss ratios.

They are well into the 80% range.

Speaker Change: And thats largely because if you go back to accident years.

Speaker Change: Lines were.

Speaker Change: The cost of repair labor costs et cetera jumped pretty dramatically in a couple of year period. So.

Speaker Change: Forget where it starts may be either 15, or 16, 17, 18 19, we did see the impact of inflation in particular on those.

Speaker Change: We've raised rates dramatically.

Speaker Change: Our coverage is a little bit tighter than it used to be made a lot of adjustments on the underwriting that gives us confidence that.

Speaker Change: Lines were.

Speaker Change: So the cost of repair labor costs et cetera jumped pretty dramatically in a couple of year period. So.

Speaker Change: The results for say.

Speaker Change: Say 'twenty through 'twenty, four going to be quite a bit better.

Speaker Change: We've raised rates dramatically.

Speaker Change: But we don't know definitively it's a long tail line and so we.

Speaker Change: Our coverage is a little bit tighter than it used to be made a lot of adjustments on the underwriting that gives us confidence that.

Speaker Change: Just like we do across the whole book.

Speaker Change: We set aside what we think are very conservative loss reserves and if there's good news in the future of that'll be great.

Speaker Change: The results for the say.

Speaker Change: <unk> 'twenty through 'twenty, four are going to be quite a bit better.

Speaker Change: But we don't know definitively it's a long tail line and so we.

Speaker Change: Not we're prepared.

Speaker Change: With our current reserves too.

Speaker Change: To absorb that.

Speaker Change: Just like we do across the whole book.

Speaker Change: Got you Thanks, Mike and then just last one.

Speaker Change: We set aside what we think are very conservative loss reserves and if there's good news in the future of that'll be great.

Speaker Change: As a follow up on the question about the Attritional loss ratio.

Speaker Change: Would it be reasonable to assume flat to higher attritional loss ratios, just given the more competitive pricing environment and your strategy of trading off pricing and growth going forward. Thank you.

Speaker Change: Not we're prepared.

Speaker Change: With our current reserves too.

To absorb that.

Speaker Change: Got you Thanks, Mike and then sneak in just last one.

Michael Zaremski: As a follow up on the question about the Attritional loss ratio would it be reasonable to assume flat to higher attritional loss ratios, just given the more competitive pricing environment and your strategy of trading off pricing and growth going forward. Thank you.

Speaker Change: Well.

Speaker Change: It's a broad process behind with a lot of.

Speaker Change: A lot of different component pieces, but.

Speaker Change: In general as Brian I think said earlier rates are flat for the quarter. So.

Speaker Change: I will make some assumptions based on that.

Michael Zaremski: Well, it's a broad prospects behind with a lot of.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Andrew <unk> from TD Securities. Please go ahead. Your line is open.

Michael Zaremski: A lot of different component pieces, but in general as Brian I think said earlier rates are flat for the quarter. So.

Speaker Change: Hey, good morning, just a little nuance on.

Michael Zaremski: Make some assumptions based on that.

Speaker Change: Some of the prior questions I guess.

Speaker Change: Thank you.

Speaker Change: Catching onto the loss ratio question I mean, you came in.

Speaker Change: Our next question comes from Andrew <unk> from TD Securities. Please go ahead. Your line is open.

Speaker Change: An exceptional 73, 4% combined.

Speaker Change: Hey, good morning, just a little nuance on some of the prior questions I guess.

Speaker Change: Any other company I would've thought it was that loss ratio not the combined but.

Speaker Change: Tacking on to the loss ratio question I mean, you came in.

Speaker Change: If I look at it short.

Speaker Change: And I go back 10 years.

Speaker Change: An exceptional 73, 4% combined.

Speaker Change: I see that you've kind of maybe closer to 10 years ago, you were in the low seventies. One year you were at 60, maybe in the middle years that you were in the low to low to lower mid Eighty's.

Speaker Change: Any other company I would have thought at least our loss ratio not the combined but.

Speaker Change: If I look at a chart.

Speaker Change: And I go back 10 years.

Speaker Change: So.

Speaker Change: Given that the environment is getting a lot more competitive in various areas.

Speaker Change: I see that you've kind of maybe.

Speaker Change: Maybe closer to 10 years ago, you were in the low seventies. One year you were at 60, maybe in the middle years that you were in the low to low to lower mid Eighty's.

Speaker Change: Any sense of the cadence of what could happen going forward could we could we see kind of a gradual drift into the low <unk> over the next few years.

Speaker Change: So.

Speaker Change: Given that the environment is getting a lot more competitive in various areas.

Speaker Change: I think thats certainly possible.

Speaker Change: Any sense of the cadence of what could happen going forward could we could we see kind of a gradual drift into the low eighty's over the next few years.

Speaker Change: We want to maximize.

Speaker Change: Wealth building for our stockholders and I think you do that by balancing profitability and growth.

I think thats certainly possible.

Brian Petrucelli: And I think that's what Brian was trying to address earlier with his comments around.

Speaker Change: <unk>.

Speaker Change: We want to maximize.

Brian Petrucelli: Fine tuning our pricing on certain ultra high margin lines.

Speaker Change: Wealth building for our stockholders and I think you do that by balancing profitability and growth.

Brian Petrucelli:

Brian Petrucelli: But in general I think what we're going to maintain as best in class profitability.

Speaker Change: And I think that's what Brian was trying to address earlier with his comments around.

Brian Petrucelli: Very strong growth rates and we expect can sales stock price to appreciate in value.

Speaker Change: Fine tuning our pricing on certain ultra high margin lines.

Brian Petrucelli: In the years ahead.

Speaker Change: But in general I think what we're going to maintain as best in class profitability.

Brian Petrucelli: Okay.

Brian Petrucelli: Maybe on the verticals.

Brian Petrucelli: Could you remind me of how many.

Speaker Change: Very strong growth rates and we expect can sales stock price to appreciate in value.

Brian Petrucelli: Segments that you have right now.

Similar to the AG segments, and I know you mentioned in an earlier question that this year, it's going to be big in personal lines in AG for growth.

Speaker Change: In the years ahead.

Speaker Change: Okay.

Speaker Change: Maybe on the verticals.

Speaker Change: Could you remind me of how many.

Brian Petrucelli: Maybe thinking out to 2006 or 2007, how many of these verticals would you like to add each year and then again, how many do you have right now.

Speaker Change: Segments that you have right now.

Speaker Change: To the AG segments, and I know you mentioned in an earlier question that this year, it's going to be big in personal lines in AG for growth.

Brian Petrucelli: Yes look we have 26 now I would look at these verticals as a judgmental way to divide and organize our underwriting teams.

Speaker Change: Maybe thinking out to <unk> 26, or 27, how many of these verticals would you like to add each year and then again, how many do you have right now.

Brian Petrucelli: Around industry segments and coverage.

Brian Petrucelli: So we won't experts at that at the desk level and so you have to have some degree of focus.

Speaker Change: Yes look we have 26 now I would look at these verticals is that judgmental way to divide and organize our underwriting teams around industry segments and coverage.

Brian Petrucelli: To really be an expert at the underwriting and understanding the businesses were ensuring and all the characteristics of those business that drive loss exposure and trends on the legal side and who are competitors and had in any segment and price risk.

Speaker Change: So we want experts at the at the desk level and so you have to have some degree of focus.

To really be an expert at the underwriting and understanding the businesses were ensuring and all of the characteristics of this business to drive loss exposure and trends on the legal side and who are competitors and had in any segment and price risk.

Brian Petrucelli: So there is no magic number.

Brian Petrucelli: It certainly may incrementally grow overtime, and then just just a quick correction on the.

Brian Petrucelli: The new business lines, I think Brian said earlier.

Brian Petrucelli: We don't expect extraordinary growth from our new business, we expand the product line over and over again over the years and.

Speaker Change: So there is no magic number.

Speaker Change: It certainly may incrementally grow over time, and then just just a quick correction on the.

Brian Petrucelli: And we get incremental growth.

Brian Petrucelli: It's part of.

Speaker Change: The new business lines, I think Brian said earlier.

Brian Petrucelli: Our strategy to rollout new products and a method.

Brian Petrucelli: Methodical fashion.

Speaker Change: We don't expect extraordinary growth from our new business, we expand the product line over and over again over the years and.

Brian Petrucelli: Two.

Brian Petrucelli: Really increased the probability that we're getting things.

Brian Petrucelli: Right.

Speaker Change: And we get incremental growth.

Brian Petrucelli: I see.

Speaker Change: It's part of.

Brian Petrucelli: When you say.

Speaker Change: Our strategy to rollout new products and our method.

Brian Petrucelli: When you say Mike.

Speaker Change: Methodical fashion.

Brian Petrucelli: Expanding incrementally that would mean within a vertical maybe adding a new <unk>.

Speaker Change: Two.

Speaker Change: Really increase the probability that we're getting things.

Brian Petrucelli: New product line.

Speaker Change: Right.

Brian Petrucelli: The incremental expansion of the product, but if we rollout a new underwriting division.

Speaker Change: I see.

Speaker Change: When you say.

Speaker Change: When you say Mike.

Brian Petrucelli: Right.

Speaker Change: Expanding incrementally that would mean within a vertical may be adding a new.

Brian Petrucelli: Several million dollars, we're not going to go corner of the market first.

Brian Petrucelli: Year, we're in business and.

Speaker Change: Our new product line.

Speaker Change: Yes incremental expansion of the product, but if we roll out a new underwriting division.

Brian Petrucelli: That's been a good strategy for us over the six this is our 16th year in business. So it's I think it's worked well for us over time.

Speaker Change: We might right.

Speaker Change: Several million dollars, we're not going to go corner of the market first.

Brian Petrucelli: Super helpful. Thanks, a lot.

Speaker Change: Our next question comes from Michael Zaremski from BMO Capital markets. Please go ahead. Your line is open.

Year, we're in business and.

Speaker Change: That's been a good strategy for us over the six this is our 16th year in business.

Speaker Change: Hey, Greg just a couple of follow ups.

Speaker Change: Yes, I think it's worked well for us over time.

Speaker Change: In terms of employee growth.

Speaker Change: Super helpful. Thanks, a lot.

Speaker Change: Another 10 case that out but when you just take kind of a high level as the company gets larger.

Michael: Our next question comes from Michael <unk> from BMO Capital markets. Please go ahead. Your line is open.

Speaker Change: Play growth rate has been decelerating, a little bit or any color there.

Hey, Greg just a couple of follow ups.

Michael: In terms of employee growth.

Speaker Change: I think we've gotten incremental gains in productivity every year. If you measure that by gross written premium per full time employee.

Michael: Another 10-K is not out but when you just take a high level as the company gets larger.

Speaker Change: I think it has gone up every year.

Michael: Play growth rate has been decelerating, a little bit or any color there.

Speaker Change: Yeah.

Speaker Change: Work, we're doing in the technology area, we certainly would expect that to continue.

Michael: I think we've got an incremental gains in productivity every year. If you measure that by gross written premium per full time employee.

Speaker Change: Okay got it.

Speaker Change: Lastly.

Speaker Change: Going back to kind of loss cost trend and reserves.

Michael: I think it has gone up every year.

Michael: Sure.

Michael: Work, we're doing in the technology area, we certainly would expect that to continue.

Speaker Change: Tell me, if I'm crazy, but.

Speaker Change: Given how robust.

Speaker Change: Conceals reserve releases have been relative to that kind of the pricing stats you all give out.

Michael: Okay got it.

Michael: Lastly, in us from coming back to kind of loss cost trend and reserves.

Speaker Change: It kind of implies that your loss cost trend is.

Michael: Tell me, if I'm crazy, but.

Speaker Change: Closer to zero.

Michael: Given how robust.

Speaker Change: <unk>.

Speaker Change: And to the high single digits lots of pump they've talked about on the casualty side.

Michael: Can sales reserve releases have been relative to that kind of the pricing stats you I'll give out.

Speaker Change: Any comments.

Michael: It kind of implies that your loss cost trend is.

Speaker Change: Yes.

Speaker Change: Loss.

Michael: Closer to zero than.

Speaker Change: Trend assumptions would definitely not be zero.

Michael: Two.

Michael: Then to the high single digits lots of companies talk about the casualty side.

Speaker Change: It would be somewhere in the high single digits Theres, some variability by line of business, but.

Michael: Any comments.

Speaker Change: We were definitely conservative on estimating future losses.

Michael: Yes.

Loss.

Michael: Trend assumptions would definitely not be zero.

Speaker Change: Okay.

Speaker Change: I try to spin.

Speaker Change: Pretty steady reserve releases, so pause youre being too conservative okay. Thank you.

Michael: It would be somewhere in the high single digits Theres, some variability by line of business, but.

Speaker Change: Alright.

Michael: We were definitely conservative on estimating future losses.

Speaker Change: Our last question will come from Casey Alexander from Compass Point. Please go ahead. Your line is open.

Michael: Okay.

Michael: I tried to set.

Casey Alexander: Hey, good morning, most of my questions have been.

Michael: Pretty steady reserve releases, so pause youre being too conservative okay. Thank you.

Casey Alexander: Asked and answered, but I have a couple for you first of all when you talk about.

Michael: Alright.

Casey Alexander: Sure.

Speaker Change: Our last question will come from Casey Alexander from Compass Point. Please go ahead. Your line is open.

Casey Alexander: Wildfires with $45 million.

Casey Alexander: Of which 25 billion is is your end of it is that top of limit without much slack to that number or because because the losses are kind of.

Michael: Hey, good morning, most of my questions if I may.

Speaker Change: Asked and answered, but I have a couple for you first of all when you talk about.

Speaker Change: <unk>.

Speaker Change: Wildfires with $45 million.

Casey Alexander: Across personal and commercial property is as you adjudicate those losses is there some opportunity to drive that $25 million number down some.

Speaker Change: Of which $25 million is is your end of it is that top of limit without much slack to that number or because because the losses are kind of.

Casey Alexander: Yes, I mean, it's an estimate Casey.

Casey Alexander: We're working through quickly I mean property claims typically are resolved much more quickly than they are on the casualty side. So.

Speaker Change: Across personal and commercial property is as you adjudicate those losses is there some opportunity to drive that $25 million number of downtown.

Casey Alexander: But I think it's a good faith estimate and it's certainly possible it could move up or down, but I wouldn't expect it to be dramatically different.

Speaker Change: Yes, I mean, it's an estimate Casey I think.

Speaker Change: We're working through quickly I mean property claims typically are resolved much more quickly than they are on the casualty side. So.

Casey Alexander: Okay. Thank you.

Casey Alexander: Secondly, I'm just kind of curious.

Casey Alexander: I'm not trying to irritate you because I know you guys don't like to be measured on.

Speaker Change: But I think it's a good faith estimate and it's certainly possible that could move up or down, but I wouldn't expect it to be dramatically different.

Casey Alexander: Our price to book basis, you don't think thats appropriate, but the fact of the matter is is that there is a lot of investors who look at the price to book value in it and it just slows them down in terms of whether or not to invest in the company based upon the valuation so I'm curious why that.

Speaker Change: Okay. Thank you.

Speaker Change: Secondly, I am just kind of curious.

Speaker Change: Yeah.

Speaker Change: I'm not trying to irritate you because I know you guys don't like to be measured on.

Speaker Change: Our price to book basis, you don't think thats appropriate, but the fact of the matter is is that there is a lot of investors who look at the price to book value in it and it just slows them down in terms of whether or not to invest in the company based upon the valuation so I'm curious why that.

Casey Alexander: The share repurchase program is sort of on the run thing.

Casey Alexander: Net debt actually is dilutive to your book value when you could easily take some of that capital and better devoted to the dividend, which wouldn't have necessarily the same level of impact on your book value and would still be.

Speaker Change: The share repurchase program is sort of on the run paying that that actually is dilutive to your book value. When you could easily take some of that capital and better devoted to the dividend, which wouldn't have necessarily the same level of impact.

Casey Alexander: Positive way of returning capital to shareholders and thus, leaving the share repurchase program for periods, where there was really excess volatility in the market I'm just curious.

Casey Alexander: Yes so.

Casey Alexander: Number one the share repurchase program is very modest.

Speaker Change: On your book value and would still be.

Speaker Change: Positive way of returning capital to shareholders and thus, leaving the share repurchase program for periods, where there was really excess volatility in the market I'm just curious.

Casey Alexander: Alright, we bought $10 million worth of stock on a market cap somewhere in north of $10 billion.

Casey Alexander: The second point I'd make is we we respect the fact that a lot of people look at price to book.

Speaker Change: Yes so.

Speaker Change: Number one the share repurchase program is very modest alright, we bought $10 million worth of stock on a market cap of somewhere north of $10 billion.

Casey Alexander: It's just that you have to remember we are we are a very capital efficient company.

Casey Alexander: So we have enough capital.

Speaker Change: The second point I'd make is we we respect the fact that a lot of people look at price to book.

Casey Alexander: To operate our business and then we have some extra because theres some variability in our business and we have to be able to absorb that but.

Speaker Change: It just that you have to remember we are we are a very capital efficient company.

Speaker Change: But we have competitors that have tremendous amounts of redundant capital beyond what they need to operate the business. So some of that has a very bloated capital base and Ken sale that has a very efficient capital base and if you are comparing our respective price to book multiples.

Speaker Change: So we have enough capital.

Speaker Change: To operate our business and then we have some extra because theres some variability in our business and we have to be able to absorb that but.

Speaker Change: But we have competitors that have tremendous amounts of redundant capital beyond what they need to operate their business. So someone that has a very bloated capital base and Ken sale that has a very efficient capital base and if you are comparing our respective price to book multiples.

Casey Alexander: Youre, comparing apples and oranges.

Speaker Change: Whereas if you look at forward earnings or last 12 months earnings.

Speaker Change: I think it's more of an apples to apples comparison.

Speaker Change: And then the last point I'd make is we think our stock price is really.

Speaker Change: Youre, comparing apples and oranges.

Speaker Change: Driven by.

Speaker Change: Whereas if you look at forward earnings or last 12 months earnings.

Speaker Change: Expectations around future earnings.

Speaker Change: I think it's more of an apples to apples comparison.

Speaker Change: And we think most investors don't value us on our assets.

Speaker Change: And then the last point I'd make is we think our stock price is really.

Speaker Change: Our assets minus liabilities of our book value.

Speaker Change: So.

Speaker Change: Driven by.

Speaker Change: The rationale basically.

Speaker Change: Alright, Thank you for taking my questions.

Speaker Change: Expectations around future earnings.

Speaker Change: Okay you bet.

Speaker Change: And we think most investors don't value us on our assets.

Speaker Change: We have no further questions I'd like to turn the call back over to Michael Kaye for closing remarks.

Speaker Change: Our assets minus liabilities in our book value.

Speaker Change: So.

Speaker Change: Okay.

Speaker Change: That's the rationale for Glenn.

Michael Kaye: I appreciate everybody's time this morning.

Speaker Change: Alright, Thank you for taking my questions.

Michael Kaye: We are optimistic about the future and look forward to talking again here in a couple of months have a great day.

Speaker Change: Okay you bet.

Speaker Change: We have no further questions I'd like to turn the call back over to Michael Kaye Hill for closing remarks.

This concludes today's conference call. Thank you for your participation you may now disconnect.

Speaker Change: Okay.

Speaker Change: I appreciate everybody's time this morning.

Speaker Change: We're optimistic about the future and look forward to talking again here in a couple of months have a great day.

Speaker Change: This concludes today's conference call. Thank you for your participation you may now disconnect.

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: Okay.