Q1 2025 Skyward Specialty Insurance Group Inc Earnings Call

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Operator: Ladies and gentlemen, thank you for standing by and welcome to Skyward Specialty First Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session.

Speaker Change: Ladies and gentlemen, thank you for standing by and welcome to Skyboard specialty first quarter 'twenty 25 earnings conference call. At this time, all participants are in a listen only mode.

Speaker Change: The speaker's presentation, there will be a question and answer session to ask a question. During this session you would need to press star one on your telephone you wouldn't hear an automated message of biting.

Operator: To ask a question during the session, you would need to press star 11 on your telephone. You would then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again.

Speaker Change: To withdraw your question. Please press Star one wanted again, please be advised that today's conference is being recorded I would like now to turn the conference over to Natalie Schoolcraft Vice President of Investor Relations. Please go ahead.

Operator: Please be advised that today's conference is being recorded.

Natalie Schoolcraft: I would like now to turn the conference over to Natalie Schoolcraft, Vice President of Investor Relations. Please go ahead. Thank you, Michelle.

Natalie Schoolcraft: Good morning, everyone, and welcome to our first quarter 2025 Earnings Conference Call. Today, I am joined by our Chairman and Chief Executive Officer Andrew Robinson and Chief Financial Officer Mark Haushill.

Natalie Schoolcraft: Thank you Michele good morning, everyone and welcome to our first quarter 2025 earnings Conference call today, I am joined by our Chairman and Chief Executive Officer, Andrew Robinson, and Chief Financial Officer, Mark parcel, we will begin the call today with our prepared remarks, and then we will open the lines for questions.

Natalie Schoolcraft: We will begin the call today with our prepared remarks, and then we will open the lines for questions. Our comments today may include forward-looking statements, which by their nature involve a number of risk factors and uncertainties which may affect future financial performance. Such risk factors may cause actual results to differ materially from those contained in our projections or forward-looking statements.

Natalie Schoolcraft: Our comments today may include forward looking statements, which by their nature involve a number of risk factors and uncertainties, which may affect future financial performance.

Natalie Schoolcraft: Such risk factors may cause actual results to differ materially from those contained in our projections or forward looking statements.

Natalie Schoolcraft: These types of factors are discussed in our press release, as well as in our 10-K that was previously filed with the Securities and Exchange Commission.

Natalie Schoolcraft: Types of factors are discussed in our press release as well as in our 10-K that was previously filed with the Securities and Exchange Commission.

Natalie Schoolcraft: Financial schedules containing reconciliations of certain non-GET measures, along with other supplemental financial schedules, are included as part of our press release and available on our website under the Investor section.

Natalie Schoolcraft: Financial schedules containing reconciliations of certain non-GAAP measures along with other supplemental financial schedules are included as part of our press release and available on our website under the investors section with that I will turn the call over to Andrew Andrew.

Andrew Robinson: With that, I will turn the call over to Andrew. Andrew? Thank you, Natalie. Good morning, everyone, and thank you for joining us. We had a great start to the year, reporting net income of $42 million and adjusted operating income of $37.3 million, driven by $28.5 million of underwriting. For the quarter, our adjusted operating income was $0.90 per diluted share. Each metric I highlighted is the best reported in company Our strong growth this quarter of 17% is a direct result of our diversified business portfolio and the strong execution of our rule-our-niche strategy. In this quarter, our A&H Division and our Global Agriculture Unit were standouts, delivering extraordinary growth, while Transactional E&S, Charity, and Specialty programs all contributed nicely to our In this quarter, we had the widest spread of growth across our divisions that we've experienced as a public company.

Andrew Robinson: Thank you Natalie good morning, everyone and thank you for joining us.

Andrew Robinson: We had a great start to the year reporting net income of $42 million and adjusted operating income of $37 $3 million driven by $28 $5 million of underwriting income for.

Andrew Robinson: For the quarter, our adjusted operating income was <unk> 90 per diluted share.

Andrew Robinson: Each metric I highlighted is the best reported in company history.

Andrew Robinson: Our strong growth this quarter of 17% is a direct result of our diversified business portfolio and a strong execution of our rule our niche strategy.

Andrew Robinson: In this quarter, our A&H division and our global Agriculture unit were standouts delivering extraordinary growth, while transactional E&S surety and specialty programs all contributed nicely to our growth.

Andrew Robinson: In this quarter, we had the widest spread of growth across our divisions that we've experienced as a public company.

Andrew Robinson: We believe the diversity of our portfolio is unique to a company of our size and allows us to rapidly reallocate capital to underwriting units that offer the greatest returns, and importantly, to continue to deliver strong growth in operating income, when many others in this market will struggle to do so.

Andrew Robinson: We believe the diversity of our portfolio is unique to a company of our size and allows us to rapidly reallocate capital to underwriting units that offer the greatest returns and importantly to continue to deliver strong growth in operating income when many others in this market will struggle to do so.

Andrew Robinson: talk more about this later in the call.

Mark Haushill: With that, I'll turn the call over to Mark to discuss our financial results in greater detail.

Speaker Change: Talk more about this later on the call with that I'll turn the call over to Mark to discuss our financial results in greater detail Mark.

Mark Haushill: Mark. Thank you, Andrew. We had another strong quarter reporting company best adjusted operating income of $37.3 million, or $0.90 per diluted share, and net income of $42.1 million, or $1.01 per diluted share. Gross written premiums grew by 17% for the quarter. Agriculture, accident and health, specialty programs, transactional E&S, and surety each contributed meaningfully to growth this quarter. Net written premiums grew by 20 percent and our net retention of 64.1 percent was up over the prior year of 62.6 percent, but in line with our full full prior year net retention. We added agriculture and credit insurance and reinsurance as our ninth division.

Mark Parcel: Thank you Andrew we had another strong quarter reporting company best of Jeopard adjusted operating income of $37 3 million or <unk> 90 per diluted share and net income of $42 1 million or $1 <unk> per diluted share.

Mark Parcel: Gross written premiums grew by 17% for the quarter agriculture accident, and health specialty programs transactional E&S and surety each contributed meaningfully to growth this quarter.

Mark Parcel: Net written premiums grew by 20% and our net retention of 64, 1% was up over the prior year of 62, 6%, but in line with our full full prior year net retention.

Mark Parcel: We added agriculture, and credit insurance and reinsurance as our ninth division.

Mark Haushill: Previously, we consolidated agriculture with global property and credit with surety. While in the quarter, this division accounted for 16% of our gross written premiums, there is significant seasonality to these lines, and we expect that this division will account for 10 to 12% of our premiums for the full year. Turning to our underwriting results, our first quarter combined ratio was 90.5% and included 2.2 points of cat losses, principally from Midwest convective storms and California wildfires. The non-CAT loss ratio of 60.2% for the quarter improved 0.4 points compared to 2024 and is also the best in company history.

Speaker Change: Previously, we consolidated agriculture, with global property and credit with surety.

Speaker Change: In the quarter. This division accounted for 16% of our gross written premiums there is significant seasonality to these lines and we expect that this division will account for 10% to 12% of our premiums for the full year.

Speaker Change: Turning to our underwriting results, our first quarter combined ratio was 95%.

Speaker Change: Included two two points of cat losses, principally from Midwest convective storms in California, wildfires, the non cat loss ratio of 62% for the quarter improved four points compared to 2024 and is also the best in company history.

Mark Haushill: For the quarter, we did not recognize any prior year loss development, yet we saw favorable emergence. Our reserve position continues to be strong as IBNR now makes up in excess of 70% of net reserves, up from 69% at December 31st. As we have discussed previously, the proportion of our IV&R to total reserves has increased while we have also shortened our liability durations and increased the speed of recognition and claim. The expense ratio of 28.1 improved 0.6 points over the prior year quarter and was in line with our expectations of sub 30s. The business makeshift continued to impact acquisition costs for the quarter, but was offset by improvements in our other operating and general expenses ratio, benefiting from scale of our business.

Speaker Change: For the quarter, we did not recognize any prior year loss development, yet we saw favorable emergence.

Speaker Change: Our reserve position continues to be strong as IV and are now makes up in excess of 70% of net reserves.

Speaker Change: Up from 69% at December 31.

Speaker Change: As we have discussed previously the proportion of our IV and Arctic total reserves has increased while we have also shortened our liability durations and increased the speed of recognition and claims.

Speaker Change: The expense ratio of $28, one improved <unk> six points over the prior year quarter and was in line with our expectations of sub $30.

Speaker Change: The business mix shift continued to impact acquisition cost for the quarter, but was offset by improvements in our other operating and general expenses ratio benefiting from scale of our business we.

Mark Haushill: We expect our expense ratio to increase somewhat over the remainder of the year, but we're still targeting sub-30s.

Speaker Change: We expect our expense ratio expense ratio to increase somewhat over the remainder of the year, we're still targeting sub thirties.

Mark Haushill: Turning to our investment results, we reported net investment income of $19.3 million in the quarter. compared to $18.3 million a year ago. In the first quarter, we put $126 million to work at 6%. In the first quarter, we found better relative value in structure versus investment grade corporate credit as credit spreads were near an all-time tight level. The net investment income from our fixed income portfolio increased to $16.7 million from $12.5 million in the first quarter of 2024, driven by a higher portfolio yield and a significant increase in the invested asset base. Our embedded yield was 5.2% at March 31st versus 4.7% a year ago and 5.1% at December 31st.

Speaker Change: Turning to our investment results, we reported net investment income of $19 3 million in the quarter.

Speaker Change: Compared to $18 3 million a year ago.

Speaker Change: In the first quarter, we put $126 million to work at 6%.

Speaker Change: In the first quarter, we found better relative value and structure versus investment grade corporate credit as credit spreads were near at all time tight levels.

Speaker Change: The net investment income from our fixed income portfolio increased to $16 7 million from $12 5 million in the first quarter of 2024, driven by a higher portfolio yield and a significant increase in the invested asset base.

Speaker Change: Our embedded yield was five 2% at March 31 versus four 7% a year ago.

Speaker Change: And five 1% at December 31.

Mark Haushill: We reported a loss of $2.1 million in our Alternative and Strategic Investments portfolio due to the change in the fair value of limited partnership investment. Our financial leverage is modest as we finish the quarter with a low 12% debt-to-capital ratio. Given our undrawn capacity from our revolver and our current leverage, we have ample debt financing flexibility. Our effective tax rate of 18.2% was 3.5 points lower than the first quarter of 2024, driven by stock-based compensation awards that vest in the first quarter of each year. By the end of 2025, we expect our full-year effective tax rate to be between 21 and 22%.

Speaker Change: We reported a loss of $2 1 million and our alternative and strategic investments portfolio due to the change in the fair value of limited partnership investments.

Speaker Change: Our financial leverage is modest as we finished the quarter with a low 12% debt to capital ratio given our under our undrawn capacity from our revolver and our current leverage we have ample debt financing flexibility.

Speaker Change: Our effective tax rate of 18, 2% was three five points lower than the first quarter of 2024, driven by stock based compensation awards that vest in the first quarter of each year by the end of 2025, we expect our full year effective tax rate to be between 21 and 22%.

Mark Haushill: With respect to the material weakness in IT controls that we reported at year-end, which I'll remind you had no impact on our financial statement. New controls and procedures have been designed and are in the process of being implemented. We expect to remediate the material weakness this year.

Speaker Change: With respect to the material weakness in controls that we reported at year end, which I'll remind you had no impact on our financial statements new controls and procedures have been designed arent in the process of being implemented we expect to remediate the material weakness this year.

Mark Haushill: Lastly, April 1st is when we renew property reinsurance programs, including our CAP program, global property quota share, and property access of law. All of these renewals were orderly and we are satisfied with the terms and structures of these programs. Our Property Cat Treaty renewed at the expiring structure, specifically a $15 million first event net retention and $36 million cover.

Speaker Change: Lastly April one is when we renew property reinsurance programs, including our Cat program global property quota share and property excess of loss.

Speaker Change: All of these renewals were orderly and we are satisfied with the terms and structures of these programs.

Speaker Change: Our property Cat Treaty renewed at the expiring structure, specifically, a $15 million first event net retention and $36 million cover.

Andrew Robinson: Overall, our property placements provide greater protection at lower costs and or better terms. Now I'll turn the call back over to Andrew. Thank you, Mark. Our outstanding first quarter performance reflects the strength of our diversified portfolio, our underwriting discipline in light of the softening market across several lines, and our ability to adapt quickly to evolving market conditions. Our Global Agriculture Unit and Accident Health Division contributed meaningfully to our growth this quarter. This is noteworthy since we're intentionally seeking growth in high-return areas that are less exposed to the PNC's Our investment in our agriculture unit has been timely given the changes in the PNC backdrop.

Overall, our property placements provide greater protection at lower costs and better terms.

Andrew Robinson: Now I will turn the call back over to Andrew.

Thank you Mark our outstanding first quarter performance reflects the strength of our diversified portfolio, our underwriting discipline in light of the softening market across several lines and our ability to adapt quickly to evolving market conditions.

Andrew Robinson: Our global Agriculture unit and accident and Health Division contributed meaningfully to our growth this quarter. This.

Andrew Robinson: This is noteworthy since we're intentionally seeking growth in high return areas that are less exposed to the P&C cycles.

Andrew Robinson: Our investment in our agricultural unit has been timely given the changes in the P&C backdrop, we serve markets that are government subsidized programs and we've constructed a well diversified global portfolio.

Andrew Robinson: We serve markets that have government-subsidized programs, and we've constructed a well-diversified global portfolio. In specific instances, we've developed unique solutions that are in high demand from our clients and our results so far are even better than we expected. We are very bullish that we can continue to grow earnings in this business with very attractive returns on. Our Accident and Health Division had strong growth in 2024, driven principally by our captive offering to the medical stop-loss mark. The first quarter was a continuation of that trend plus a return to growth in the traditional stop-loss business as a result of the failures of a handful of MGAs due to poor performance.

Andrew Robinson: In specific instances, we develop unique solutions that are in high demand from our clients and our results. So far are even better than we expected. We are very bullish that we can continue to grow earnings in this business with very attractive returns on capital.

Andrew Robinson: Our accident Health Division had strong growth in 2024, driven principally by our captive offering to the medical stop loss market.

Andrew Robinson: The first quarter was a continuation of that trend plus a return to growth in the traditional stop loss business. As a result of the failures of a handful of <unk> due to poor performance.

Andrew Robinson: We had anticipated this given an irrational pricing and the market capacity that supports Just a reminder that we are not competing against companies focused on large accounts. Our focus is on smaller accounts, generally with 500 lives or less. That said, the poor performance in the large group market has been a contributor to the improving conditions in the market we see. Our USP around medical cost management is distinct and is one reason we are winning. Our approach to claims is a second reason we are winning, as providers are systematically cost-shifting, which is a trend that will increase given the administration's cutback on health care funding.

Andrew Robinson: We had anticipated this given the irrational pricing in the market capacity that supports it.

Andrew Robinson: Just a reminder, that we are not competing against companies focused on large accounts are focuses on smaller accounts generally with 500 lives or less that said the poor performance in large group market has been a contributor to the improving conditions in the market we serve.

Andrew Robinson: Our USP around medical cost management is distinct and is one reason we are winning our approach to claims and the second reason we are winning as providers are systematically cost shifting which is a trend that will increase given the administration's cutback on healthcare funding or.

Andrew Robinson: Our competitors are paying and pursuing, as compared to our unique capabilities, to negotiate final payment before any cash goes out the door. And of course, our talent and technology are the third reason we're winning. We simply have an outstanding team. And as I've discussed in the past, we have a leadership position in technology, including our use of AI and predictive analytics and risk selection and price. We continue to see a decrease in global property premiums, but we are very pleased with the first quarter performance. with a 95-plus percent account retention. And while the market softened very quickly, we were prepared in our underwriting strategy to deploy our primary layer capacity over longer stretches to defend our position.

Andrew Robinson: Our competitors are paying and pursuing as compared to our unique capabilities to negotiate final payments before any cash goes out the door.

And of course, our talents and technology are the third reason, we're winning we simply have an outstanding team and as I've discussed in the past we have a leadership position in technology, including our use of AI and predictive analytics and risk selection and pricing.

Andrew Robinson: We continue to see a decrease in global property premiums, but we are very pleased with the first quarter performance with a 95 plus percent account retention and while the market softened very quickly we were prepared and our underwriting strategy to deploy our primary layer capacity over longer stretches to defend our position this will.

Andrew Robinson: This allowed us to keep accounts, maintain a strong risk-adjusted price, while foregoing some premium to maintain underwriting margins. The strength and performance of our global property business, where we often lead on the primary layer, was rewarded with a strong renewal of our quota share reinsurance program, including an increase in capacity, which will enable us to go further with the underwriting strategy I just outlined. Our lead role in writing the primary layer and, when appropriate, leading the market in settling claims, plus our longstanding relationships with the chief risk officers of our insureds, strengthens our ability to weather what is clearly a tougher market.

Andrew Robinson: Allowed us to keep accounts maintain a strong risk adjusted price, while forgoing some premium to maintain underwriting margins.

Andrew Robinson: The strength and performance of our global property business, where we often lead on the primary layer was rewarded with a strong renewal of our quota share reinsurance program, including an increase in capacity, which will enable us to go further with the underwriting strategy I just outlined.

Andrew Robinson: A lead role in writing the primary layer and when appropriate leading the market in settling claims plus our longstanding relationships with the chief risk officers of our Insureds strengthens our ability to weather what is clearly a tougher market.

Andrew Robinson: Beyond what I just noted, we have double-digit growth in transactional E&S, surety, and specialty programs. Transactional E&S remains a vibrant division, and as a true surplus lines writer of property and liability, our book is somewhat less exposed to the E&S light risks that flow back and forth between the admitted and non-admitted markets. Nonetheless, there are no shortage of instances of irresponsible behavior we observe in our market, in particular from fronted programs and certain MGA. In surety, we are very mindful of both the potential economic slowdown and reduced federal funding, including that flowing to states and munis.

Andrew Robinson: Beyond what I just noted we had double digit growth in transactional E&S surety and specialty programs.

Andrew Robinson: Transactional E&S remains a vibrant division and is a true surplus lines writer property and liability. Our book is somewhat less exposed to the E&S late risks that flow back and forth between the admitted and non admitted market.

Andrew Robinson: Nonetheless, there are no shortage of instances of irresponsible behavior, we observe in our market in particular from fronted programs and certain mgs.

Andrew Robinson: And surety were very mindful of both the potential economic slowdown and reduced federal funding, including that flowing to states and munis.

Andrew Robinson: We did observe a reduction in bonding activity for federal contractors, but on the other hand, our SBA activity continues to be strong. Overall, Q1 bid bond requests were up 19% from the prior year, and so notwithstanding my comments on the federal contracts, the demand in Q1 was robust. In programs, our growth was originated by those program managers where we have an ownership position, which is roughly 75% of our total program's division. This ownership is a further measure of alignment in addition to the underwriting performance compensation structures we employ when we delegate authority. Professional lines was down slightly given softening conditions in the lines we target.

Andrew Robinson: We did observe a reduction in bonding activity for federal contractors, but on the other hand, our SBA activity continues to be strong.

Andrew Robinson: Overall Q1 bid bond requests were up 19% from the prior year and so notwithstanding my comments on the federal contracts the demand in Q1 was robust.

Andrew Robinson: In programs our growth was originated by those program managers, where we have an ownership position, which is roughly 75% of our total programs division.

Andrew Robinson: This ownership is a further measure of alignment in addition to the underwriting performance compensation structures, we employ when we delegate authority.

Andrew Robinson: Professional lines was down slightly given softening.

Andrew Robinson: Conditions in the lines we target.

Andrew Robinson: Irresponsible competition is coming from a number of sources, but again, fronted programs and certain MGAs seem to work on economics that is distinct from the rest of the industry. It will only be a matter of time before the irresponsible fronts in these MGAs and professional and transactional E&S and the capacity that supports those programs recognize the financial outcomes of their actions. Until then, we'll keep our powder dry. Lastly, construction and energy solutions was somewhat impacted by our intentional actions in commercial auto and a selective approach on other casualty. That said, we continue to find attractive new business opportunities in both areas.

Andrew Robinson: Irresponsible with competition is coming from a number of sources, but again fronted programs and certain MGA seem to work on economics that is distinct from the rest of the industry. It will only be a matter of time before the irresponsible fronts in these <unk> and professional and transactional E&S and the capacity that supports those programs recognize the financial outcomes of their actions.

Andrew Robinson: Until then we'll keep our powder dry.

Andrew Robinson: Lastly, construction and energy solutions was somewhat impacted by our intentional actions in commercial auto and our selective approach on other casualty that said, we continue to find attractive new business opportunities in both areas.

Andrew Robinson: Turn to operational metrics. We saw some improvements compared to the fourth quarter. On renewal pricing, we were consistent with our prior quarter at mid-single digits plus pure rate. Retention improved to roughly 80% for the quarter, driven by business mix and the wrap-up of actions on commercial law. Lastly, we continue to see strong submission growth, which was in the mid-teens this quarter and over 20% in transactional E&S. Altogether, our low earnings volatility, consistent earnings growth, our strong underwriting results, and strong returns on equity are a direct outflow of the Skyward team's excellent execution of our rural earnings strategy.

Andrew Robinson: Turning to operational metrics, we saw some improvements compared to the fourth quarter on renewal pricing were consistent with our prior quarter at mid single digits, plus pure rig <unk>.

Andrew Robinson: Retention improved to roughly 80% for the quarter driven by business mix and the wrap up of actions on commercial auto.

Andrew Robinson: Lastly, we continue to see strong submission growth, which was in the mid teens this quarter and over 20% in transactional E&S.

Andrew Robinson: Altogether, our lower earnings volatility consistent earnings growth, our strong underwriting results and strong returns on equity are direct outflow of the skyward team's excellent execution of our ruler niche strategy. We remain confident we will continue to generate top quartile returns at all parts of the market cycle.

Andrew Robinson: We remain confident we'll continue to generate top quartile returns at all parts of the market.

Operator: I'd now like to turn the call back over to the operator to open up for the open up for Q&A operator. Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Andrew Robinson: I'd now like to turn the call back over to the operator to open up for the open up for Q&A operator.

Speaker Change: Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press Star One again. The first question comes from Alex Scott with Barclays. Your line is open.

Alex Scott: The first question comes from Alex Scott with Barclays. Your line is open. Hey, good morning.

Andrew Robinson: First one I had is on the growth opportunities you're seeing in agriculture and credit insurance in particular. And maybe if you could just give us a little more color and texture to what you're doing there and how it's driving such great growth. Yeah, thanks. Thanks, Alex, and thanks for the question.

Alex Scott: Hey, good morning.

Alex Scott: First one I had is on the growth opportunities you are seeing in agriculture and credit insurance in particular, and maybe if you could just give us.

Alex Scott: Little more color and texture to what Youre doing there and how it's driving.

Alex Scott: Such great growth.

Alex Scott: Yeah. Thanks, Thanks, Alex and thanks for the question.

Andrew Robinson: So, first on ag, you know, I don't know if I want to say too much more in this instance beyond what I said in the prepared remarks. What I will highlight, you know, we hired just a fantastic industry veteran, James Tran, to lead our entry into it, and we had sort of the basic premise that we wanted to have a global portfolio because we want to be well diversified. We didn't want to add volatility to our business, and I just think that, you know, he's brought that capability. We, I think we're probably active in, you know, probably eight or nine different countries at this point, and what we have seen is just some great opportunities where, you know, we've been able to press down.

Alex Scott: So.

Alex Scott: First on AG.

Alex Scott: I don't know if I want to say too much more in this instance, beyond what I said in the prepared remarks.

Alex Scott: What I will highlight we hired a just a fantastic industry veteran James trend to lead our entry into it.

Alex Scott: And we had.

Alex Scott: We had sort of the basic premise that we wanted to have a global portfolio, because we want to be well diversified we didn't want to add volatility of our business.

Alex Scott: And I just think that he has brought that capability.

Alex Scott: We.

Alex Scott: We're probably active in probably eight or nine different countries at this point and what we've seen is just some great opportunities, where we've been able to press down there and the same opportunities year to year.

Andrew Robinson: They aren't the same opportunities year to year, but James and his team have done an excellent job, and I think we just, we feel very good about how we're approaching those markets, the position that we've built quickly, and the portfolio that we have. And I think just our general sense is that we have a line of sight for that to continue, quite honestly, already with some very substantial treaty opportunities that are lined up for Q3.

Speaker Change: But James and his team have done an excellent job and I think we just we feel very good about about how we're approaching those markets.

Alex Scott: Physician that we built quickly.

Alex Scott: And the portfolio that we have and I think our just our general sense is that we have line of sight for that to continue.

Alex Scott: Quite honestly already with some very substantial treaty opportunities, they're lined up for Q3.

Andrew Robinson: With credit, it's quite a diversified approach, so we started with a focus on mortgage. Obviously, it's a relatively quiet time in mortgage. We're an insurer for Fannie and Freddie. We're reinsurers for the PMIs, but the fellow that we hired, J.P. Latour, to lead that effort has also brought us into, you know, to participate on a reinsurance basis and trade credit and other areas of credit insurance, and I think today we're probably being a little bit more defensive than we were last year, just simply because, you know, the uncertain economic backdrop, and so in this quarter, that really wasn't a particularly meaningful contributor to the growth that you saw in that reporting division.

Alex Scott: With credit it's quite a diversified.

Alex Scott: <unk> approach. So we started with a focus on mortgage obviously.

Alex Scott: It's a relatively quiet time in mortgage where an insurer for Fannie and Freddie or reinsurers for the <unk>.

Speaker Change: But the fellow that we hired JP Latour to lead that effort has also brought us into.

Speaker Change: To participate on a reinsurance basis and trade credit and.

Speaker Change: In other areas of credit insurance and I think today, we're probably being a little bit more defensive than we were last year, just simply because the uncertain economic backdrop and so in this quarter that really wasn't a particularly meaningful contributed to the growth that you saw in that reporting division.

Alex Scott: Got it. That's all helpful.

Speaker Change: Got it that's all helpful.

Alex Scott: For the next one, I wanted to see if you could talk a little bit about the environment and just tariffs in general and, you know, how you're thinking about lost cost trend across your businesses. I mean. You know, you guys are in a lot of niche areas, so it's not always easy for us on the outside to kind of tell how some of these things would funnel their way into your loss-cost trend.

Speaker Change: So the next one I wanted to see if you could talk a little bit about the environment and just tariffs in general.

How youre thinking about loss cost trend across your businesses I mean.

Speaker Change: You guys are in a lot of niche areas.

Speaker Change: Not always easy for us from the outside to kind of tell how some of these things would find their way into your loss cost trend.

Andrew Robinson: Yeah, so great question, Alex. And you're right with how you framed it. You know, there's a lot about sort of the specifics of our business that, you know, probably makes unpacking it a little bit more difficult. But, you know, overall, I think we're still in the view that, you know, lost cost trend in our portfolio in total is somewhere in the five to six range. By and large, we've tried to limit the amount of exposure we have in what we see as being sort of the high inflation exposed bodily injury categories and, you know, in casualty and liability.

Alex Scott: Yes, so great question Alex.

Alex Scott: And Youre right with how you framed it theres a lot about sort of the specifics of our business that.

Alex Scott: Probably make some packing it a little bit more difficult, but overall I think we're still in the view that loss cost trend in our portfolio in total is somewhere in the five to six range.

Alex Scott: By and large we've tried to.

Alex Scott: Two two.

Alex Scott: To limit the amount of exposure, we have and what we see as being sort of the high inflation exposed bodily injury categories and in casualty and liability.

Andrew Robinson: I think one of the things that we make sure that we do is we're, you know, we're keeping our limits short. Much of what we do in excess is written over our own primary. And so, you know, from a casualty perspective, we're trying to keep it in check as much as we can. You know, on the property side, you know, there's probably, you know, a few different pieces to it. I think, you know, from an inflation related to tariffs, you know, we probably have some some an APD and certainly on the global property side, you know, reconstruction costs are going to go up.

Alex Scott: I think one of the things that we make sure that we do is we're we're keeping our limits short.

Alex Scott: Much of what we do in excesses written over our own our own primary.

Alex Scott: And so from a from a casualty perspective, we're trying to keep it in check as much as we can on.

Alex Scott: On the property side.

Alex Scott: Theres probably.

Alex Scott: Few different pieces to it I think from an inflation.

Alex Scott: Related to tariffs, we probably have some some an apd and certainly on the global property side.

Alex Scott: Reconstruction costs are going to go up I think on the flip side much of what we have inside of our E&S portfolio as a cash value and so I think it's less inflation exposed and as I've mentioned in the past as materials go up.

Andrew Robinson: I think on the flip side, you know, much of what we have inside of our E&S portfolio is a cash value. And so I think it's less inflation exposed. And as I've mentioned in the past, as materials go up, we benefit from that on surety because effectively you're getting a bond that's increasing in size without sort of a proportionate, you know, loss cost increase. And so, you know, we have some countermeasures that are that are beneficial in our book.

Alex Scott: We benefit from that on surety because effectively you are getting a bond that's increasing in size without sort of a proportionate loss cost increase and so we have some countermeasures that are that are beneficial in our book.

Andrew Robinson: I think the other thing I'd say to you, Alex, is that, you know, a little bit surprises because we've listened to the questions that have come in prior calls. And while, you know, for us, we're certainly not ignoring the tariffs question, it's clearly on our, you know, on our thinking. We just think that there's so many other things that are going on in the economy to pay attention to that our leaders have started to prepare themselves and are monitoring, whether it be cost shifting in health care going on. I think, you know, certainly tariffs might impact the cost of drugs and particularly from coming from, you know, other countries.

Alex Scott: I think the other thing I would say to you Alex is that.

Alex Scott: Little bit surprises, because we've listened to the questions that have come in prior calls.

Alex Scott: And well for us we're certainly not ignoring the tariffs question. It's clearly on our on our thinking we just think that there's so many other things that are going on in the economy to pay attention to that our leaders have have started to prepare themselves and are monitoring whether it be cost shifting in healthcare.

Alex Scott: On I think.

Alex Scott: Certainly tariffs might impact the cost of drugs and particularly from coming from other countries.

Andrew Robinson: I will say that the, you know, the reduction in federal funds that are flowing downstream to states and to munis is probably going to lead to a reduction in capital projects and some cost shifting going on. You know, watching sort of the credit environment, you know, we're watching obviously safety, you know, on job sites and so forth, because you're going to have probably a reduction in oversight at OSHA. And if we have a softer economy, you know, the sort of the maintenance and attention to safety might come under pressure. So, you know, we're looking at all these things and you layer on top of it potential, you know, economy that as it gets a little bit tougher, you start to see instances of moral hazard emerging.

Alex Scott: I will say that the.

Alex Scott: The reduction in federal funds that are flowing downstream to states.

Alex Scott: And <unk> is probably going to lead to a reduction in capital projects and some cost shifting going on.

Alex Scott: Watching sort of the credit environment.

Alex Scott: We're watching obviously safety on job sites, and so forth because youre going to have probably a reduction in oversight and osha and if we have a softer economy.

Alex Scott: The maintenance and attention to safety might come under pressure. So we're looking at all of these things and you layer on top of that potential.

Alex Scott: Economy that as it gets a little bit tougher you start to see instances of moral hazard emerging and so so when we think about the environment, we're thinking about all of those things.

Andrew Robinson: And so when we think about the environment, you know, we're thinking about all those things. And I have to sort of to the leaders of our organization, they've done an excellent job of sort of outlining, you know, which of those things are potentially impactful to each of their businesses and how it is that we're preparing ourselves from a countermeasures perspective. And so I would just widen the conversation and say, that's the dialogue. And I think we're probably about as well prepared as anybody can be given the uncertainty that we're seeing right now.

Alex Scott: I have to sort of handed to the leaders of our organization they've done an excellent job of sort of outlining which of those things are potentially impactful to each of their businesses and how it is that we're preparing ourselves from our countermeasures perspective, and so I would just I would widen the conversation say, that's the dialogue and I think we're probably about.

Alex Scott: As well prepared as anybody can be given the uncertainty that we're seeing right now.

Alex Scott: Got it. Thank you. You're welcome.

Alex Scott: Got it thank you.

Matt Carletti: And our next question comes from Matt Carletti with. your line is open. Thanks. Good morning. Good morning, Andrew.

Alex Scott: Youre welcome.

Speaker Change: And our next question comes from Matt <unk> with <unk>. Your line is open.

Matt: Hi, Thanks, good morning.

Andrew Robinson: Andrew, you talked a bit in your opening comments about some of the extraordinary growth you saw in crop and A&H, and if I recall, kind of last year, there was definitely some, you know, for lack of a better term, kind of seasonality to the growth rate across the year. I was hoping maybe you could just touch on that, how much kind of frame Q1 within kind of your expectations for the rest of the year and how much of that might be. helped or hindered by some of the opportunities that are specific to kind of Q1 time frame.

Andrew Robinson: Good morning, Andrew.

Speaker Change: And you talked a bit in your opening comments about some of the extraordinary growth you saw in crop in A&H and if I recall last year. There was definitely some for lack of a better term kind of seasonality to the growth rate across the year I was hoping maybe you could just touch on that how much kind of framed Q1 within kind of your expectations there.

Andrew Robinson: Rest of the year and how much of that might be.

Andrew Robinson: Helped or hindered by some of the opportunities that are specific to kind of Q1 timeframe.

Andrew Robinson: Yeah, thanks, Matt. I appreciate the question because it does give us a chance to talk a little about this. So, last year, I think you'll remember, we grew at 20% for the full year. First quarter was a high growth quarter. Second quarter was a lower growth quarter. Third and fourth quarters were, again, high growth quarters. And there is definitely seasonality. I'll just, I'll highlight a few of the items that are particularly important today. You know, the January 1 renewals in A&H is a monster renewal. It tends to make up over 50% of the annual written premium.

Andrew Robinson: Yes.

Andrew Robinson: Thanks, Matt.

Andrew Robinson: Appreciate the question because it does give us a chance to talk a little about this so.

Andrew Robinson: Last year I think you'll remember we grew at 20% for the full year first quarter was was a high growth quarter second quarter was a lower growth quarter third and fourth quarters were again high growth quarters, and there is definitely seasonality I'll just I'll highlight a few of the few of the items that are particularly important today.

Andrew Robinson: The January one renewals in A&H is a monster renewal it tends to make up over 50% of the annual rich.

Andrew Robinson: And so, if you're going to capture, you know, a market opportunity, that's the moment in time that you're going to capture it. So, it kind of amplifies what you see in terms of growth overall. And so, and you saw that here, as I mentioned, you know, sort of the backdrop and the reasons why. You know, on the flip side, you know, it's a lower sort of, you know, renewal quarter in the second quarter. And conversely, global property, the second quarter is the largest quarter for the year. And in the sort of go back two years, you'll see that it was an incredibly large growth quarter in global property.

Andrew Robinson: Written premium and so.

Speaker Change: If youre going to capture our market opportunity.

Speaker Change: That's the moment in time that youre going to capture it so it kind of amplifies what you see in terms of growth overall.

Speaker Change: And so and you saw that here as I mentioned sort of the backdrop and the reasons why on the flip side.

Speaker Change: It's a lower sort of.

Speaker Change: Renewal quarter in the second quarter.

Speaker Change: And conversed Lee Global property, the second quarter is the largest.

Speaker Change: The quarter for the year and in the sort of go back two years Youll see that it was an incredibly large growth quarter in global property last year were down a little bit I think six or 7% and and of course.

Andrew Robinson: Last year, we were down a little bit, I think six or 7%. And, you know, and of course, you know, this year, we're in a tougher market. So, you know, I wouldn't be surprised if global property shrinks a bit. And so, when we do look at it altogether, the second quarter is for us going to be a lower growth quarter. The third quarter will be a higher growth quarter. And the fourth quarter is really determined on, you know, what the sort of the end of the year competition looks like as folks are trying to close out their plans.

This year, we're in a tougher market so.

Speaker Change: I wouldn't be surprised if global property.

Speaker Change: Shrinks a bit and so when we do look at it all together the second quarter is for us going to be a lower growth quarter. The third quarter will be a higher growth quarter in the fourth quarter is really determined on what the sort of the end of the year competition looks like as folks are trying to close out their plans, but I will go back.

Andrew Robinson: But I'll go back to what I said when we gave guidance last quarter. You know, we guided to a mid-teens growth number. We did that last year as well. We got into mid-teens last year, we delivered 20. This year, we got into mid-teens again. And I feel confident notwithstanding some of the uncertainty, you know, in the economic backdrop that we're well positioned to deliver that and probably be at a rather distinctive level of growth for the year, you know, given our portfolio. It's super helpful. Thank you.

Speaker Change: What I said.

Speaker Change: We gave guidance.

Speaker Change: Last quarter, we guided to mid.

Speaker Change: Mid teens growth number we.

Speaker Change: We did that last year as well we got into mid teens last year. We delivered 20. This year, we guided to mid teens again, and I feel confident notwithstanding some of the uncertainty in the economic backdrop that we're well positioned to deliver that and probably be at a rather distinctive level of growth for the year.

Speaker Change: Given our portfolio.

Matt Carletti: And then if I could ask one more, just on reserves, I think Mark, you commented that there was, you know, obviously you didn't release anything during the quarter, but that there was favorable emergence behind the scenes and walked us through some of the other numbers.

Speaker Change: Great. That's super helpful. Thank you and then if I could ask one more.

Speaker Change: On reserves I think Mark you commented that there was.

Speaker Change: Obviously didn't release and even during the quarter, but there was favorable emergence behind the scenes and walk us through some of the other numbers could you just give a little color on kind of what areas of the book Youre seeing that favorable emergence.

Mark Haushill: Could you just give a little color on kind of what areas of the book you're seeing that favorable emergence? Sure. So, just a little bit of background. Look, we just finished year-end right where we did our ground-up. So, in the first quarter, what we rely on is our A to E. And in the quarter 2020, our accident years 2020 and after emerged favorably, specifically a mat in property surety and professional liability. The occurrence liability lines also developed or emerged favorably for the same accident years while we had a little bit of increase in the prior accident years, meaning 19 and prior.

Speaker Change: Sure. So just a little bit of background look we just finished year end right, where we did our ground up so in the first quarter.

Speaker Change: We rely on is our AE.

Speaker Change: And in the quarter 2020, our accident years 2020, and after emerged favorably specifically, a map and property surety and professional liability.

Speaker Change: The current liability lines also developed or emerged favorably for the same accident years, while we had a little bit of increase in the in the prior accident years, meaning 19 in Pryor all in Matt we saw favorable emergence across across the company, but we didn't recognize that.

Matt Carletti: All in that, we saw favorable emergence across the company, but we didn't recognize that. We've talked a lot about here how we look at reserves relative to indicated seasonality and magnitude. And once the accident years we feel like are mature, they'll converge. But all in, Matt, it was favorable emergence in the quarter and our book versus indicated the margin is increased relative to where it was at the end of the year. Does that help? That's perfect. Thanks for the color. Appreciate it. Thanks, Matt.

Speaker Change: We've talked a lot about here, how we look at reserves relative to indicated seasonality in magnitude and once the accident years, we feel like our mature they will converge.

Speaker Change: But all in Matt It was favorable emergence in the quarter and our our book versus indicated the margin has increased relative to where it was at the end of the year that help.

Speaker Change: That's perfect. Thanks for the color I appreciate it thanks, Matt.

Meyer Shields: And the next question is from Meyer Shields. with KBW, your line is open. Great, thanks so much.

Speaker Change: And the next question is from Meyer Shields.

Speaker Change: With K BW your line is open.

Andrew Robinson: Andrew, one last tariff question, if I can. I understand that it's maybe not the most pressing issue, but in terms of the global agriculture, Brooke, does it face the same challenges as domestic crop insurance does if crop prices fall? And how should we think about that risk more broadly? Well, look, I mean, you know that here in the U.S., you know, the federal program is effectively a price and yield program. And so, you know, there is obviously, you know, some exposure relative to price of consumption due to exports and, you know, it becomes an issue.

Meyer Shields: Great. Thanks, so much Andrew one last question, if I can I understand that it's maybe not.

Meyer Shields: The most pressing issue, but in terms of the global agricultural book.

Meyer Shields: Does that face the same challenges.

Meyer Shields: Domestic crop insurance does if crop prices fall and how should we think about that risk more broadly.

Meyer Shields: Well look I mean, you.

Meyer Shields: You know that here in the U S.

Meyer Shields: The federal program is effectively a pricing yield program and so.

Meyer Shields: There is obviously.

Meyer Shields: Some some exposure relative to price it consumption due to exports.

Andrew Robinson: And similarly, although it's very crop specific, whether, you know, imports might create greater demand domestically, what I'd say to you is that of what we have written so far this year, our U.S. business is about 40 percent of our portfolio. This goes back to my point of being well diversified. And I think that we've taken measures to protect ourselves. And I will also say to you, Mayor, that we have reserved very conservatively, I'd say well above what we would the ultimates to be. And so I feel like even under sort of a stress situation that we're pretty well protected.

Meyer Shields: Becomes an issue and similarly, although it's.

Meyer Shields: It's very crop specific weather.

Meyer Shields: Imports might create greater demand domestically.

Meyer Shields: What I'd say to you is that of what we have written so far this year.

Meyer Shields: Our U S business is about 40% of our portfolio that goes back to my point of being well diversified and and I think that we've taken measures to protect ourselves and I will also say to you that.

Meyer Shields: We have reserved very conservatively I would say well above what we would expect the ultimate b.

Meyer Shields: And so I feel like even under sort of a stress situations that we're pretty well protected.

Meyer Shields: Okay, that's very helpful. Thank you.

Speaker Change: Okay. That's very helpful. Thank you.

Meyer Shields: And then I apologize if I missed this, but is the first quarter acquisition expense ratio a good proxy for the rest of the year? I know you talked about other expenses coming back maybe later in the year.

Speaker Change: And then I apologize if I missed this but.

Is the first quarter acquisition expense ratio a good proxy for the rest of the year I know you talked about other expenses coming back maybe later in the year.

Mark Haushill: Yeah, Mayor, I maybe I didn't do a good job. Yeah, I think it's a pretty good proxy. Look, I'm expecting it to take up a little bit. But yeah, I would, I would look at the first quarter as a pretty good proxy. Yeah. Mayor, the thing, the thing that, you know, you can imagine is that, you know, there's a really wide spread, right? So unsurprisingly, most of our wholesale driven businesses, right? Transactional E&S, our marine unit, which sits in there, our professional lines business, all that is relatively high acquisition costs. Obviously, surety is off the charts.

Speaker Change: Yes.

Speaker Change: Maybe I didn't do a good job, yes, I think it's a pretty good proxy look I'm expecting it to tick up a little bit.

Speaker Change: But yes, I would I would look at the first quarter is a pretty good proxy.

Speaker Change: The thing the thing that you can imagine is that there's a really widespread right. So.

Speaker Change: Unsurprisingly most of our wholesale driven businesses right transactional E&S, our marine unit, which sits in there.

Speaker Change: Our professional lines business all of that is relatively high acquisition costs. Obviously surety is off the chart surety in fact depend.

Mark Haushill: Surety, in fact, you know, depending on what class could be, can be as much as 40%. You know, on the other hand, we have some quite low acquisition cost businesses. And so part of this is just, you know, where we're seeing the growth.

Speaker Change: Depending on what class could be can be as much as 40%.

Speaker Change: On the other hand, we have some quite low acquisition cost businesses and so part of this is just.

Andrew Robinson: And I think I'd echo Mark maybe a little bit more conservatively. I personally, given how I sort of see the sort of the earn through and the opportunities that are in front of us, I think that we will see acquisition costs tick up here, you know, over the coming few quarters. I believe we'll also make some progress, continued progress on our controllable OUE. But in aggregate, you know, it's probably likely that we're going to go up from kind of the low 28 number, you know, due just to the mix of business. And also, you know, we're going to continue to invest in our business because we continue to believe there's good opportunity.

Speaker Change: Where we're seeing the growth and I think I'd Echo Mark maybe a little bit more conservatively.

Speaker Change: Personally given our I sort of see the out.

Speaker Change: The earned through in the the.

Speaker Change: Opportunities are in front of us I think that we will see acquisition cost tick.

Tick up here over the coming few quarters.

Speaker Change: I believe we will also make some progress continued progress on our controllable.

Speaker Change: But in aggregate it's <unk>.

Speaker Change: Likely that we're going to go up from kind of that low 28 number.

Speaker Change: Partly due just to the mix of <unk>.

Speaker Change: Business and also we're going to continue to invest in our business because we continue to believe theres good opportunities.

Meyer Shields: Okay, that's very helpful.

Mark Haushill: And Mark, it's for sure me.

Speaker Change: Okay, that's very helpful and markets for Cherokee thought here.

Speaker Change: Yes.

Gregory Peters: And our next question is from Gregory Peters with Raymond James. Andrew and Mark. Hey Greg. Good morning. So. Andrew, in your comments, you spoke about the submission growth and the retention. And I, you know, all submissions aren't necessarily created equal, right? And so, you know, some of the other companies in the public market have reported some volatility around their submissions. So maybe you could give us some texture about what you're seeing in the submissions. Is it all, are they all interesting opportunities? Are you still turning away a big chunk of them? Any color there would be helpful.

Speaker Change: Okay.

Speaker Change: And our next question is from Greg Peters with Raymond James.

Greg Peters: Morning, Andrew or Marc.

Speaker Change: Good morning.

Greg Peters: So.

Greg Peters: Andrew in your comments.

Greg Peters: You spoke about the submission growth in the retention.

Speaker Change: And I.

Speaker Change: All submissions arent necessarily created equal right.

Speaker Change: So.

Speaker Change: Some of the other companies in the public market have reported.

Speaker Change: Some volatility around the submission so maybe you could give us some texture about what youre seeing in the submission says it all are they are they all interesting opportunities or you're still turning away a big chunk of them.

Speaker Change: Any color there would be helpful.

Andrew Robinson: Yeah, that's a great question. So I'll see if I can sort of parse it out. Let me start with the big one that a lot of folks focus on, which is within our E&S area, where I highlighted that in this quarter, we were above 20%. And I would actually say materially above 20%. I think that there's still a very good flow. I will say that the competition for the business is increasing. So I don't, I wouldn't, I wouldn't distinguish by saying we're seeing more submission activity that doesn't, you know, fit as compared to, you know, to prior quarters as, as much as we're seeing more competition, you know, on the, on the things that are, that are flowing.

Speaker Change: Yes, that's a great question. So so I'll see if I can sort of parse it out.

Speaker Change: Let me, let me start with with the the big one that a lot of folks focus on which is within our E&S area, where I highlighted that in this quarter, we were above 20%.

Speaker Change: I actually say materially above 20%.

I think that there is still a very good flow.

Speaker Change: I will say that the competition for the business.

Speaker Change: Is increasing so I.

Speaker Change: I don't I wouldn't I wouldn't distinguish by saying, we're seeing more submission activity that doesn't.

Speaker Change: Fit.

Speaker Change: As compared to prior quarters as much as we're seeing more competition on the.

Andrew Robinson: Now, I will, I will tell you that we really are a true surplus lines writer. So a lot of the stuff that we're writing is less exposed, but boy, you know, occasionally you see, you see some pretty crazy behavior out there. And sometimes you see, you know, a lot more activity than otherwise you might see. But good submission activity. And I don't think there's a difference in terms of the quality within, you know, a couple other areas. So for example, in industry solutions, you know, that, that submission activity is kind of running around 10%. And I think that we're pretty focused in, in terms of our distribution.

Speaker Change: On the things that are that are flowing now I will I will tell you that we really are a true surplus lines writers. So a lot of the stuff that we're writing is less exposed but boy.

Speaker Change: Occasionally you see you see some pretty crazy behavior out there and sometimes you see.

Speaker Change: Lot more activity than otherwise you might see but.

Speaker Change: Good submission activity.

Speaker Change: And I don't think there is a difference in terms of the quality within a couple of other areas. So for example in industry solutions.

Speaker Change: That submission activity is kind of running around 10% and I think that we're pretty focused in terms of our distributions and quite honestly, we we tend to know the books reasonably well so unless it's new business to those to those brokers it might be accounts that we've competed on in the past.

Andrew Robinson: And, and, and quite honestly, we, we tend to know the books reasonably well. So unless it's new business to those, to those brokers, it might be accounts that we've competed on in the past, haven't won, and we want to compete again this year. And so I, I think that that's pretty steady. And I, and I gave my, my commentary on, on surety where, you know, we don't, you know, we don't include bid bonds in our submission activity, but bid bonds are the best early indicator. And the, the numbers of 19% up, you know, over the prior year is a pretty good indicator that there's still a, you know, a strong flow that's going to follow.

Speaker Change: Haven't won and we want to compete again this year.

Speaker Change: And so I think that Thats pretty steady and I gave my my commentary on.

Speaker Change: On surety, where we don't.

Speaker Change: Include bid bonds in our submission activity, but did bonds are the best early indicator in the the numbers of 19% up.

Speaker Change: Over the prior year is a pretty good indicator that there is still a strong flow thats going to follow.

Andrew Robinson: And then, you know, I would just say to you, as it relates to other parts of our business, global property, A&H, the numbers aren't big enough to, you know, to, to make a difference. But one highlight for you is that in, just to give you a sense for how strong we're hitting in A&H, our RFP submission count for A&H was up 59% year over year, which, which speaks entirely to, you know, what a compelling proposition we've built in that market. We have a lot of distributors, trading partners who want to do more business with us, and we're seeing that in the, in the RFP submission count.

Speaker Change: And then I would just say to you as it relates to other parts of our business global property A&H the numbers aren't big enough to.

Speaker Change: To make a difference but one highlight for you is that in just to give you a sense for how strong we're hitting in A&H RFP submission count for A&H was up 59% year over year, which which speaks entirely to what a compelling proposition we've built in that market we have.

Speaker Change: A lot of distributors trading partners, who want to do more business with us and we're seeing that in the in the RFP submission count.

Andrew Robinson: Interesting detail. In one of the other answers, or I guess it was in your commentary, when you're talking about the surety business, you talked about the government-related work, the federal contractors and stuff. Can you give us a sense of or size that, that component, you know, how much of your business is government related versus private contractors? Yeah, so the government, the government portion, and I won't get these numbers exact, but, you know, the $150 million plus, excluding anything tied to the SBA, is about, I don't know, probably $20 million of our book. And we have a, you know, we have a couple of distributors who are really sort of, you know, focused on that part of the market.

Speaker Change: Interesting detail.

Speaker Change: And one of the other answers.

Speaker Change: I guess it was in your commentary.

Speaker Change: When youre talking about the surety business you talked about.

Speaker Change: The government related work for the federal contractors and stuff.

Speaker Change: Can you give us a sense of size that that component how much of your business is government related versus private contractors, yes. So the government the government.

<unk> and I won't get these numbers exact but.

Speaker Change: The $150 million plus excluding anything tied to the SBA.

Speaker Change: Is about probably $20 million of our book.

Speaker Change: And we have.

Speaker Change: A couple of distributors, who are really sort of.

Speaker Change: Focused on that part of the market and then yes, and otherwise the business is either.

Gregory Peters: And then, you know, and otherwise the business is either, you know, business that is, you know, private or public-private together or public works. And, and, you know, that runs the gamut, you know, states, unis, et cetera. And, and I highlighted the, the federal sort of piece, because it was the one piece in the first quarter that stood out. In fact, it's, it's probably the only piece where we, we saw an outcome that was less than what we'd expected. I got it. Okay. Um, if I could just slip in one follow up question on the program business, you know, you, you were, you emphasize that you have an ownership position.

Speaker Change: Business that is.

Speaker Change: Private or public private together or public works and that runs the gamut states unions et cetera.

Speaker Change: And I highlighted the.

The federal sort of piece because it was the one piece in the first quarter that stood out in fact.

Speaker Change: It's probably the only piece where we we.

Speaker Change: We saw an outcome that was less than what we'd expected.

Speaker Change: Got it okay.

If I could just slip in one.

Speaker Change: Follow up question on the program business.

Speaker Change: Were you emphasized that you have an ownership position feels like in the marketplace.

Gregory Peters: It feels like in the marketplace, there's. growing. interest in the program market, or at least a lot of other companies are talking about that. Can you give us just a reminder, a refresher on how you approach new programs and the due diligence process, et cetera, and how you're thinking about that market for the next couple of years? Yeah, Greg, thank you. That's a great question. Let me just start. I think probably most folks are aware that the program world has meaningfully outgrown the rest of the commercial market. and there's a whole bunch of reasons. There, you know, there's obviously a great deal of private equity and private equity consolidation, a huge amount of money behind it.

Speaker Change: Growing.

Speaker Change: Interest in the program market or at least a lot of other companies are talking about that.

Speaker Change: Can you can you can you give us just a reminder, a refresher on how you approach new programs and the due diligence process et cetera, and how youre thinking about that market.

Speaker Change: Yes, Yes, correct next couple of years, yes, Greg. Thank you. That's a great question. Let me just start I think probably most folks are aware of that.

Speaker Change: The program World has.

Speaker Change: Meaningfully outgrow the rest of the commercial market.

Speaker Change: And there's a whole bunch of reasons there, there's obviously a great deal of private equity and private equity consolidation and huge amount of money behind it.

Andrew Robinson: And, you know, and I will say that there are some fantastic MGA's program administrators out there, and I'd like to think that, you know, we want to partner with those guys. Our strategy around that world is the same as our strategy with everything that we do, that we manufacture, which is we're looking to So, if we can partner with somebody who has capabilities that we can't replicate on our own, whether they be owing to some technology or product or expertise or distribution relationship or whatever the case may be, and we see them as having a, you know, a view on how to build a really competitive position, and we can partner with them the right way, that's the sort of profile for success.

Speaker Change: And and.

Speaker Change: And I will say that there are some fantastic.

Speaker Change: MGA program administrators out there and I'd like to think that we want to partner with those guys or strategy around that world is the same as our strategy.

Speaker Change: With everything that we do that we manufacturer, which is we're looking to rule our needs. So we can partner with somebody who has capabilities that we can't replicate it on our own whether they'd be owing to some technology or product or expertise or distribution relationships or whatever the case may be.

Speaker Change: And we see them as having a.

Speaker Change: Our view on how to build a really competitive position and we can partner with them. The right way that's the sort of profile for success in and if you go down sort of our roster of.

Andrew Robinson: And if you go down sort of our roster of program partnerships, they check the box on those items. Now, I'll highlight a couple other things for you that are really important. You know, as I mentioned, we have material investments, you know, and that is a further mechanism for alignment. We try to ensure that the mechanisms that we use for compensating the program administrators align as much as possible to our own internal measures for how it is that we compensate underwriters. And so, that's a critical component. I'll highlight a couple other things that are really important.

Speaker Change: Program partnerships they check the box on those items.

Speaker Change: Now I'll highlight a couple of things for you that are really important.

Speaker Change: As I mentioned, we have.

Speaker Change: Material investments.

Speaker Change: And that is a further mechanism for alignment we try to ensure that the mechanisms that we use for compensating.

Speaker Change: The program administrators align as much as possible to our own internal measures for how it is that we compensate underwriters.

Speaker Change: And so that's a critical component I'll highlight a couple of other things that are really important.

Andrew Robinson: We are very intentional about ensuring that at a minimum, the data flow that we are receiving is as close to equal to the data flow that we have for our internally managed businesses, so that if we want to ask and answer a question on, hey, we want to look at a particular risk factor in terms of the frequency in, you know, developed over the first six months as compared to every prior, you know, accident year, you know, can we answer that question? And we should be able to answer that question as we could with any internally underwritten business.

Speaker Change: We're very intentional about ensuring that at a minimum the data flow that we are receiving is is as close to equal to the data <unk> data flow that we have for our internally managed businesses. So that if we want to ask and answer a question on Hey, we want to look at a particular risk factor in terms of the frequency.

Speaker Change: In.

Speaker Change: <unk> developed over the first six months as compared to every prior accident year can we answer that question and we should be able to answer that question as we could with any internally managed.

Andrew Robinson: And so, whether it be data as a minimum has to be equal, but oftentimes we're exchanging technology and other things. And the last point I would make that's really important is I would argue that in many classes in our industry, it is absolutely impossible to perform at an equivalent level to a competent full-stack insurer that has the claims. And now there are instances, for example, you know, we have a brown water, green water marine program with a great program administrator. And the claims expertise around that is very specific and who does the claims is sort of singularly focused on that area of expertise.

Speaker Change: Internally underwritten business.

Speaker Change: So whether it be data as a minimum has to be equal, but oftentimes, we're exchanging technology and other things and the last point I would make that's really important.

I would argue that in many classes in our industry. It is absolutely impossible.

Speaker Change: Two to perform an equivalent level to a competent full stack insurer that has the claims and.

Speaker Change: Yes, there are instances for example.

Speaker Change: We have a brown water green water Marine program with a great program administrator and the claims expertise around that is very specific and who does the claims is.

Speaker Change: Is sort of a singularly focused on that area of expertise.

Andrew Robinson: But it's really hard in like a GL class or a, you know, or a PL class to believe that they're going to do it anywhere near as well as we can. And so, in every instance where we can do the claims, we do. And that's a huge difference in terms of how we approach it. And, you know, this bifurcation between underwriting and claims and the belief that you can deliver excellent results with those things sort of operating independently inside different organizations, particularly if those organizations are kind of like the larger TPAs, is absolutely just, that's a proposition that I just don't believe in and don't support.

Speaker Change: But it's really hard and like a GL class or.

Speaker Change: Or a P. L class to believe that they're going to do it anywhere near as well as we can and so in every instance, where we can do the claims we do and that's a huge difference in terms of how we approach it and this bifurcation between underwriting and claims.

Speaker Change: The belief that you can deliver excellent results with those things sort of operating independently inside different organizations, particularly if those organizations are kind of like the larger tpa as.

Speaker Change: Is absolutely just that is a proposition that I, just don't believe in and don't support and we tend to sort of operate.

Gregory Peters: And we tend to sort of operate, you know, our specialty programs business accordingly. That's great detail. Thanks for the answers. You're welcome.

Speaker Change: Our specialty programs business accordingly.

Speaker Change: That's great detail thanks for the answers.

Andrew Kligerman: And the next question comes from Andrew Kligerman with TV Co. and your line is open. Hey, good morning. So, um, Global Ag, terrific. Terrific growth.

Speaker Change: Youre welcome.

Andrew Robinson: And the next question comes from Andrew <unk> with TV Cowen Your line is open.

Andrew Robinson: Hey, good morning so.

Speaker Change: Global lag terrific.

Andrew Robinson: And I'm kind of would like to get a little more kind of color on where you're participating in the reinsurance markets. Is it more quota share? Excessive losses? Is some of it catastrophic in nature? What what countries outside of the US are really big for you? I'm just trying to get a little color around, you know, what you like there and and the kind of returns, you know, whatever you could share. Yeah, thanks, Andrew, and thanks for the question.

Andrew Robinson: Terrific growth.

Speaker Change: And I'm kind of like to get a little more kind of color on where you are participating in the reinsurance market is it more quota share excess of loss some of the catastrophic in nature.

What countries outside of the U S are really big for you.

Speaker Change: Im just trying to get a little color around.

Speaker Change: What you like there in the kind of returns whatever you could share.

Andrew Robinson: Yes, Thanks, Andrew.

Speaker Change: Thanks for the question.

Andrew Robinson: So I'll share, you know, this is an area where I'm normally very open and transparent as an area. I'm going to be, I actually listened to another company's call and a similar question was asked and that particular CEO was not answering the question fully and I might not answer your question fully because I think there's a lot we want to say. But that said, look, to just list the countries and this would not be a complete list. It would include, in addition to the U.S., Canada, Brazil, China, India, Thailand would be a handful. Are there others I'm missing?

Andrew Robinson: So.

Andrew Robinson: I'll share. This is an area, where normally very open and transparent as an area.

Andrew Robinson: I'm going to be actually listened to a another company's call and a similar question was asked in.

That particular CEO was.

Andrew Robinson: Was.

Andrew Robinson: Was not answering the question fully and I might not answer your question fully.

Andrew Robinson: But we want to say, but that said looked at just list the countries.

Andrew Robinson: And this would not be a complete list. It would include in addition to the U S, Canada, Brazil, China, India, Thailand.

Andrew Robinson: Would be a handful are there others others are missing those are those are the major ones.

Andrew Robinson: Those are those are major ones. It would include both crop as well as dairy livestock. We actually think of a couple things in aquaculture, believe it or not, so it really runs the gamut. I'd say probably 90% of our exposure is quota share. And yeah, I don't think that there's much more than I can say about it, other than as I referenced in my commentary, at least in a couple of instances, we have product that we believe nobody else offers in the marketplace, which is part of the reason that we're winning. And as I said, I don't want to go too much further, but this is one of the places where, you know, if you bring in one of the best people out there and, you know, we surround them with sort of the right kind of capabilities, you can do something special.

Andrew Robinson: It would include full crop as well as dairy livestock, we actually think of a couple of things in agriculture believe it or not.

Andrew Robinson: So it really runs the gamut I'd say, probably 90% of our exposure is is quota share.

Andrew Robinson: And.

Andrew Robinson: Yes, I don't think that there is much more than I can say about it other than.

Andrew Robinson: As I referenced in my commentary.

Andrew Robinson: At least in a couple of instances.

Andrew Robinson: We have product that we believe nobody else offers in the marketplace, which is part of the reason that we're winning.

Andrew Robinson: And as I said I don't want to go too much further but.

Andrew Robinson: This is one of the one of the places where if you bring in one of the best people out there.

Andrew Robinson: And we surround them with sort of.

Andrew Robinson: The right kind of capabilities, you can do something special and I think it's showing up in our results.

Andrew Robinson: And I think it's showing up in our results.

Andrew Kligerman: That was actually very helpful.

Andrew Robinson: That was actually very helpful.

Andrew Kligerman: So the next question is around the global property. So I see your gross written premium came off about 18.5%, but the retention was very good. I think you called that out in your remarks.

Andrew Robinson: The next question is around the global property, so I see.

Your gross written premium came off about 18, 5%.

Speaker Change: But the retention was very good I think you called that out in your remarks, So maybe Andrew could you talk a little bit.

Andrew Robinson: So maybe, Andrew, could you talk a little bit? about the pricing environment, maybe any color on, you know, where is, where rate's going and maybe, maybe into kind of. subcategories of the global property. regional, whatever, yeah, again, same thing, whatever you can share there would be of interest. Yeah, no, I'd be happy to share quite a bit. So, and also, thank you for that question. So, well, first off, you know, we're writing Global 1000 accounts. We're writing accounts with, you know, very, very, very large schedules. As I mentioned, we're writing the primary layer. What that means is we're writing the layer that sits right above, you know, their deductible self-insured retention, which, you know, will oftentimes run in the tens of millions of dollars.

Andrew Robinson: About the pricing environment, maybe any color on.

Speaker Change: Whereas where rates going and maybe maybe into kind of.

Andrew Robinson: Subcategories of the global property.

Andrew Robinson: Regional whenever you again.

Andrew Robinson: Same thing whenever you can share there would be of interest.

Andrew Robinson: Happy to have this year quite a bit so and also thank you for that question. So.

Andrew Robinson: So well first off we're writing global 1000 accounts, where writing accounts with.

Andrew Robinson: Very very very large schedules as I mentioned, we're writing the primary layer what that means is we're writing the layer that sits right above.

Andrew Robinson: Their deductible self insured retention, which will oftentimes run in the tens of millions of dollars.

Andrew Robinson: You know, during sort of a hard market period, we might write, for example, a share of the primary 100 million. And as I mentioned in the remarks, one of the things that we're doing is we're writing over larger stretches. So, we might be writing over 200, $250 million. And the way that we've been able to do that is, you know, I think that there is a greater abundance of, in addition to, we have a very large line that we work with, with quota share support. And that line, by the way, got even larger by a full third as a result of our 401 renewal.

Andrew Robinson: During sort of a hard market period, we might write for example, a share of the primary $100 million and as I mentioned in the remarks, one of the things that we're doing is we're writing over a larger stretches so we might be writing over $200 million to $250 million.

Andrew Robinson: <unk>.

Andrew Robinson: And the way that we've been able to do that is I think that there is a greater abundance of.

Andrew Robinson: In addition to we have a very large line that we work with with quota share support and that line by the way got even larger by a full third.

Andrew Robinson: As a result of our 401 renewal, but prior to that.

Andrew Robinson: But prior to that, you know, we were using that full line and then augmenting it with, I think, what's been a relatively abundant FAC market, you know, to provide something that is a really substantive, you know, primary layer cover. And what I'd say to you is in terms of pricing, you know, it's a little bit hard because you're stretching over longer stretches and so forth. But, you know, it's definitely down, you know, kind of high single digits. But that said, the way that sort of the through for us, we are pretty darn confident that in combination with where we use FAC and so forth, that our risk adjusted pricing or effectively our expected net underwriting margin probably is a lot less than the reduction in pure rate.

Andrew Robinson: We're using that full line and then augmenting it with I think what's been a relatively abundant.

Andrew Robinson: Fac market.

Andrew Robinson: No.

Andrew Robinson: To provide something that is a really substantive.

Andrew Robinson: Primary layer cover and what I'd say to you is in terms of pricing.

Andrew Robinson: It's a little bit hard because youre stretching over over longer stretches and so forth, but it's definitely down.

Andrew Robinson: Kind of high single digits, but that said.

Andrew Robinson: The way that sort of the risk adjusted pricing runs through for US, we're pretty darn confident.

Andrew Robinson: That in combination with where we use back and so forth that are risk adjusted pricing or effectively our expected net underwriting margin.

Andrew Robinson: Probably is a lot less than the reduction in pure rate.

Andrew Robinson: I will say, our results have been so damn good that this is the reason that we were able to not only increase our capacity by a full third, we had a very significant increase in participants who support us. And I'm actually, I can't, we're so well positioned against this market right now. I'm really, really pleased where we are in what is clearly a very, very sort of rapidly changing rate environment. But I think our proposition is one that's rather unique just simply because the line size that we can bring.

Andrew Robinson: I see.

Andrew Robinson: And thats it.

Andrew Robinson: I will say our results our results have been so damn. Good that this is the reason that we were able to not only increase.

Andrew Robinson: Our capacity by a full third we had a very significant increase in participants who support us.

Andrew Robinson: And I <unk>.

I'm actually I can't.

Andrew Robinson: So well positioned against this market right now.

Andrew Robinson: I'm really really pleased where we are in what is clearly a very very.

Andrew Robinson: Sort of rapidly changing rate environment, but I think our proposition is one that's rather unique just simply because of the line size that we can bring.

Andrew Robinson: So it sounds like you really like your returns in that business. Is there is there a risk that pricing comes off a lot more sharply, you know, in the next year or two, or do you think it could stabilize? Well, it's come off really fast. Like, I mean, you know, like, we were tracing it. So last year, last year, this quarter, the second quarter last year, I think we were down about 7%. And that's where we really started to see things kind of level and maybe come off a bit. And, you know, the third quarter is a very quiet quarter for the global property market.

Andrew Robinson: So it sounds like you're really like your returns in that business is there is there a risk that pricing comes awful lot more sharply.

Andrew Robinson: The next year or two or do you think it could stabilize.

Andrew Robinson: Well, it's come off really fast.

Andrew Robinson: Yes.

Andrew Robinson: We were tracing and so last year last year. This quarter. The second quarter of last year I think we were down about 7% and that's where we really started to see things kind of level and maybe come off a bit in the third quarter is a very quiet quarter for the global property market in the fourth quarter.

Andrew Robinson: And the fourth quarter is, you know, quite a quite an active quarter. And so, you know, fourth quarter, things came up, it felt like just things just the bottom dropped out here in the first quarter. And I, you know, listen, I don't, I don't know. You know, it's, it's one of these things where we like our position. I think we rode the market up, you know, as the market presented, but, you know, the fact that we have, you know, over 95% account retention tells you that, you know, of the hundred plus accounts that make up that book, it's really sticky stuff.

Andrew Robinson: An active quarter and so fourth quarter things came out of it felt like just things just the bottom dropped out here in the first quarter and.

Andrew Robinson: I don't I don't know.

Andrew Robinson: No.

Andrew Robinson: It's one of these things, where we like our position.

Andrew Robinson: I think we rode the market up.

Andrew Robinson: As the market presented but yes. The fact that we have over 95% account retention tells you that.

Andrew Robinson: 100, plus accounts that make up that book, it's really sticky stuff and.

Andrew Robinson: And, and I feel like we're going to continue to generate a good underwriting return, you know, under most, under most sort of backdrops. And that compares, Andrew, I'll remind you that, like, when the cat markets were going crazy 18 months, two years ago, we expressly said, you know, we're not going to just go right into the cat markets, because that stuff's going to come off. You know, I was listening to the commentary of, you know, one of our competitors on their earnings call saying, you know, well, you know, the market's gotten soft really quickly. And, you know, and we're losing accounts.

Andrew Robinson: And I feel like we're going to continue to generate a good underwriting return.

Andrew Robinson: Under most.

Andrew Robinson: Under most sort of backdrops and that compares Andrew I'll remind you that like when the cap markets were going Crazy 18 months two years ago. We expressly said, we're not going to just go right into the cat market, because that stuff's going to come off.

Speaker Change: I was listening to the commentary of one of our competitors on their earnings call, saying Wow.

Andrew Robinson: Well.

Andrew Robinson: Okay.

Andrew Robinson: The market has gotten soft really quickly.

Andrew Robinson: Of course, that's capacity swapping in that market. And we don't want to be in that place. We want to be in a place that we can be durable, even as the market softens. And I think global property is a really good example of that. And, you know, I think that even if the market softens, yeah, could our business be when it peaked out at 250? Could it go down to 150? Sure. But my guess is that we will find a way to make a good underwriting profit. And we will find a way to maintain a decent position with, you know, with a good portion of that hundred plus accounts that we do business with.

Andrew Robinson: And we're losing accounts of course, that's capacity swapping in that market and we don't want to be in that place we want to be in a place that we can be durable even as the market softens in I think global property is a really good example of that.

Andrew Robinson: And I think that even if the market softens, yet, but our business be when it peaked out at $2 50 could it go down to $1 50 sure. But my guess is that we will find a way to make it good underwriting profit and we will find a way to maintain a decent position with.

Andrew Robinson: With a good portion of that 100, plus accounts that we do business with.

Andrew Robinson: That's great.

Mark Hughes: Thanks for the insight.

Andrew Robinson: Great. Thanks for the insights.

Mark Hughes: And our next question comes from Mark Hughes with Truist Securities. Your line is open. Yeah, thank you. Good morning. Anything on the loss pick when we think about subsequent quarters? You've talked about some of those growth dynamics and that's very helpful.

Mark Hughes: And our next question comes from Mark Hughes with true with Securities. Your line is open.

Andrew Robinson: Yes. Thank you good morning.

Andrew Robinson: Anything on the loss pick when we think about subsequent quarters, you've talked about some of the growth dynamics and that's very helpful.

Mark Haushill: When we think about the accident here, lost pick, is this a good place to go or will that move around a little bit?

Andrew Robinson: Think about the.

Andrew Robinson: Accident year loss pick.

Andrew Robinson: Is this a good place to go or will that move around a little bit.

Mark Haushill: Well, I'll let Mark jump in. I think that, you know, probably in, as opposed to the prior years, in select circumstances for this accident year, you know, our loss picks, we started to reflect some of the, you know, the performance that we were seeing, meaning in specific circumstances we adjusted down, some circumstances we adjusted up. Yeah, look, I mean, I think that, that, you know, setting aside kind of the earn through on mix, you know, it was a good quarter for us. It was our best XCAT, you know, you know, accident year loss result that we've ever had.

Mark: Well I'll, let mark jump in I think I think that probably.

Mark: As opposed to the prior years in select circumstances for this accident year.

Mark: Loss picks we started to reflect some of the performance that we're seeing meaning in specific circumstances, we adjusted down some circumstances, we adjusted up.

Mark: Yes look I mean, I think that that.

Mark: Setting aside kind of the earn through on mix.

Mark: It was a good quarter for us it was our best X cat.

Mark: The accident year loss result that we've ever ad.

Mark Haushill: And I think it's a good reference point. I wouldn't encourage anybody to take down their, their model. So, you know, we, we, we, we think that, you know, kind of the, the overall guidance that we gave at the beginning of the year is probably the right guidance. And, you know, but yeah, I think that you won't see a lot of volatility in our, in our, in our accident year loss results as you haven't seen a lot of volatility in our accident year loss results in the 12 quarters that we've been public. Yeah, very good.

Mark: And I think it's a good reference point I want to encourage anybody to take down there.

Mark: So.

Mark: We think that kind of the.

Mark: The overall guidance that we gave at the beginning of the year is probably the right guidance.

Mark: But yes, I think that you won't see a lot of volatility in our and our and our accident year loss results as you haven't seen a lot of volatility our accident year loss results in the 12 quarters that we've been public.

Mark: Alright.

Mark: Very good.

Mark Hughes: Andrew, a key part of your strategy has been to hire new people, bring them on, they build out their books, and that supports your overall top-line growth. How is that climate now, your ability to hire, your appetite for hiring, is this the right time in the cycle to be doing that, just some perspective would be helpful. It's a great question. I think that what we are doing, Mark, is that we're evaluating our hiring plans based on what we're seeing in the performance of our business. So if we're performing according to expectations and we don't see things moving to yellow in the markets, we're proceeding.

Mark: Andrew.

Speaker Change: Key part of your strategy has been to hire new people bring them on they build out their books and that supports your overall topline growth.

Speaker Change: That climate now your ability to hire your appetite for hiring is this the right time in the cycle to be doing that just some perspective would be great.

It's a great. It's a great question I think that what we are doing.

Speaker Change: Mark is that.

Speaker Change: We're evaluating.

Speaker Change: Our hiring plans based on what we're seeing in the performance of our business. So if we are.

Speaker Change: If were performing according to expectations.

Speaker Change: We don't see.

Things moving to yellow in the markets, we're proceeding and in other instances.

Mark Hughes: And in other instances, we're unquestionably slowing down.

Andrew Robinson: There are a couple of things that we're working on that are strategic. They tend to be combining the expertise of our organization as it stands today with technology to potentially go after an adjacent part of the market. And those investments and the resourcing around them are going to continue because they're strategic for us.

Speaker Change: We are unquestionably slowing down there are a couple of things that we're working on that are strategic.

Speaker Change: They tend to be combining the expertise of our of our organization as it as it stands today with technology to potentially go after an adjacent part of the market and those investments in the resourcing around them are are going to continue because they are strategic for us.

Mark Hughes: But I think if you ask, hey, there's a particular region in surety that we've been to fill. And if we have a candidate, we would say, how are we performing? Do we have confidence? Do we want to make that kind of commitment right now? And that kind of conversation repeats itself every day in our organization. I think as opposed to a year and two years ago, I think we were just sort of pedal to the metal because we had confidence across the board. Now we're just making sure that we're not making decisions on resources that we're going to regret at a later Yeah, okay.

Speaker Change: But I think if you asked hey, there.

Speaker Change: A particular region in surety that we have been looking to fill.

And if we have a candidate we would say.

Speaker Change: How are we performing do we have confidence do we want to make that that kind of commitment right now and that kind of conversation repeats itself every day in our organization.

Speaker Change: I think as opposed to a year and two years ago. I think we were just sort of pedal to the metal because we had confidence across the board now, we're just making sure that we're not making decisions.

Speaker Change: On resources that we're going to regret at a later point.

Mark Haushill: Mark, do you have the cash flow number in the quarter? I think you said you put $126 million to work. Um, but if you looked at the cash from operation, do you happen to have that number?

Mark: Okay Mark.

Speaker Change: The cash flow number in the quarter I think you said you put $126 million to work at 6%.

Mark: But if you looked at the cash.

Speaker Change: Cash from operations chip and have that number.

Mark Haushill: Uh, I'll get back. I'm pretty sure it's right at a hundred million, uh, Mark, but I'll confirm it. I'm pretty sure. Okay, very good.

Speaker Change: I'll give that I'm pretty sure it's running at a $100 million, Mark, but I will confirm it I'm pretty sure.

Mark Hughes: Thank you. Thanks, Mark.

Speaker Change: Okay very good thank you.

Speaker Change: Thanks Mark.

Michael Phillips: And our next question comes from Michael Phillips with Oppenheimer. Your line is open. Good morning, Mike. Hello? Sorry, if you haven't, can you hear me okay? We can hear you now, yeah, for sure. Yeah, thank you, thanks, you hit the bumps.

Speaker Change: And our next question comes from Michael Phillips with Oppenheimer. Your line is open.

Michael Phillips: Good morning, Mike.

Michael Phillips: Hello.

Michael Phillips: Sorry, you haven't can you hear me Okay. We can hear you now yes for sure.

Michael Phillips: Set score data, you recast that to action year basis, I think for the recent four or so action years. When I look at, and Andrew, this is kind of around, I guess your commentary on commercial auto recently, pretty cautionary comments. When I look at the action year loss pick for commercial auto, it's down, you know, six, seven points in the recent action year, 2024. I assume that's just maybe because of repositioning that you've done, but just any comments you can make there on that pick for commercial auto.

Michael Phillips: Thanks for to hit the pumps.

First our data.

Michael Phillips: Recap that thats in your basis for I think for the reason for personal accident years.

Michael Phillips: I look at it.

Michael Phillips: And that's kind of around I guess your commentary on commercial auto recently pretty close generic Thomas when I look at the accident your loss pick for commercial auto it's down.

Michael Phillips: Seven points in the recent accident year 2024, I assume that's just maybe because of repositioning that we've done.

Michael Phillips: But just any comments you can make there.

Michael Phillips: On a pick for commercial auto.

Andrew Robinson: Yeah, I think it's three simple things. One is, to your point, it's absolutely about mix. We're down to a book where we really were very satisfied with the mix. Obviously, we've driven a lot of price in, as has everybody. No surprise there.

Michael Phillips: Yes, I think it's I think it's three simple things one is to your point, it's absolutely about mix, we're at or down too.

Michael Phillips: Our book, where we really were very satisfied of the mix, obviously, we've driven a lot of price and as has everybody no surprise there.

Andrew Robinson: But the thing I would absolutely, unequivocally point you to is please do look at our frequency. If you look at the 24-year as of 12 months, the frequency is down by over 50% as compared to only five years earlier. And you'll see at every period of seasoning, so 12 months for 24, 24 months for 23, et cetera, et cetera, the frequency is way, way, way down. And that frequency is really a key driver, obviously, against an increasing severity backdrop that is flowing through into our loss.

Michael Phillips: But the thing I would absolutely unequivocally point you to is please do look at our frequency.

Michael Phillips: If you look at the 24 year as of 12 months.

Michael Phillips: Frequency is down by over 50% as compared to only five years earlier and Youll see.

Michael Phillips: Every period of seasoning, So 12 months for 'twenty for 24 months for 'twenty, three et cetera et cetera.

Michael Phillips: The frequency is way way way down and.

Michael Phillips: And that frequency is really.

Michael Phillips: Key driver obviously.

Michael Phillips: Against the increasing severity backdrop that is flowing through into our loss picks.

Michael Phillips: Yeah, okay, perfect. Thank you. I saw that. Appreciate that.

Yes, okay perfect. Thank you so I appreciate that.

Mark Haushill: And totally random question. But when we see lumpiness in the alts and strategic investments row, you know, I know your strategic investments is more on a private insurance base. Is that lumpiness? I assume the lumpiness is more from the alts and not the latter. Just kind of want to check on that. Yeah, it is the ults. Yeah, and it's the old opportunistic fixed income portfolio, the arena managed portfolio that, you know, is down to 5% of our total investments at this point. That's the driver of the volatility. Okay, thank you very much. You're welcome.

Speaker Change: Random question, but when we see lumpiness.

Speaker Change: Awesome strategic investments Roe.

I know your strategic investments is more on the private insurance space.

Speaker Change: Is that I think the Lumpiness was more from the <unk> and not the latter just kind of when check on that.

Speaker Change: Yes. It is yes, the old opportunistic fixed income portfolio.

Speaker Change: The arena managed portfolio that debt.

Speaker Change: It was down to 5% of our of our total investments at this point, that's that's the driver of the volatility.

Speaker Change: Okay. Thank you very much.

Operator: I am showing no further questions at this time.

Speaker Change: Youre welcome.

Speaker Change: Im showing no further questions at this time I would now like to turn the call back over to Natalie Schoolcraft for closing remarks.

Natalie Schoolcraft: I would now like to turn the call back over to Natalie Schoolcraft for closing remarks. Thanks everyone for your questions, for participating in our conference call, and for your continued interest in and support of Skyward Specialty. I am available after the call to answer any additional questions that you may have.

Natalie Schoolcraft: Thanks, everyone for your questions for participating in our conference call and for your continued interest in and support of Skyline specialty I am available after the call to answer any additional questions that you may have we look forward to speaking with you again on our second quarter earnings call. Thank you and have a wonderful day.

Natalie Schoolcraft: We look forward to speaking with you again on our second quarter earnings call. Thank you and have a wonderful day.

Operator: This concludes today's conference call. Thank you for participating.

Natalie Schoolcraft: This concludes today's conference call. Thank you for participating you may now disconnect.

Operator: You may now disconnect.

Natalie Schoolcraft: [music].

Natalie Schoolcraft: [music].

Natalie Schoolcraft: Okay.

Natalie Schoolcraft: Okay.

Natalie Schoolcraft: Thanks.

Natalie Schoolcraft: [music].

Natalie Schoolcraft: Yes.

Natalie Schoolcraft: Okay.

Natalie Schoolcraft: Okay.