RLI Q4 2025 RLI Corp Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 RLI Corp Earnings Call
Speaker #1: Good morning, and welcome to the RLI Corp fourth quarter earnings teleconference. After management's prepared remarks, we will open the conference up for questions and answers.
Operator: Good morning, and welcome to the RLI Corp. Q4 earnings teleconference. After management's prepared remarks, we will open the conference up for questions and answers. Before we get started, let me remind everyone that through the course of the teleconference, RLI management may make comments that reflect their intentions, beliefs, and expectations for the future. As always, these forward-looking statements are subject to certain factors and uncertainties, which could cause actual results to differ materially. Please refer to the risk factors described in the company's various SEC filings, including in the annual report on Form 10-K, as supplemented in Forms 10-Q, all of which should be reviewed carefully. The company has filed a Form 8-K with the Securities and Exchange Commission that contains the press release announcing Q4 results.
Operator: Good morning, and welcome to the RLI Corp. Q4 earnings teleconference. After management's prepared remarks, we will open the conference up for questions and answers. Before we get started, let me remind everyone that through the course of the teleconference, RLI management may make comments that reflect their intentions, beliefs, and expectations for the future. As always, these forward-looking statements are subject to certain factors and uncertainties, which could cause actual results to differ materially. Please refer to the risk factors described in the company's various SEC filings, including in the annual report on Form 10-K, as supplemented in Forms 10-Q, all of which should be reviewed carefully. The company has filed a Form 8-K with the Securities and Exchange Commission that contains the press release announcing Q4 results.
Speaker #1: Before we get started, let me remind everyone that, through the course of the teleconference, RLI management may make comments that reflect their intentions, beliefs, and expectations for the future.
Speaker #1: As always, these forward-looking statements are subject to certain factors and uncertainties, which could cause actual results to differ materially. Please refer to the risk factors described in the company's various SEC filings, including in the annual report on Form 10-K, as supplemented in Forms 10-Q, all of which should be reviewed carefully.
Speaker #1: The company has filed a Form 8-K with the Securities and Exchange Commission that contains the press release announcing fourth quarter results. During the call, RLI management may refer to operating earnings and earnings per share from operations, which are non-GAAP measures of financial results.
Operator: During the call, RLI management may refer to operating earnings and earnings per share from operations, which are non-GAAP measures of financial results. RLI's operating earnings and earnings per share from operations consist of net earnings after the elimination of after-tax realized gains or losses and after-tax unrealized gains or losses on equity securities. Additionally, equity and earnings of unconsolidated investees and related taxes were removed from operating earnings and operating EPS to present a consistent approach in excluding all unrealized changes in value from equity investments. RLI's management believes these measures are useful in gauging core operating performance across reporting periods but may not be comparable to other companies' definitions of operating earnings. The Form 8-K contains a reconciliation between operating earnings and net earnings. The Form 8-K and press release are available at the company's website at www.rlicorp.com.
During the call, RLI management may refer to operating earnings and earnings per share from operations, which are non-GAAP measures of financial results. RLI's operating earnings and earnings per share from operations consist of net earnings after the elimination of after-tax realized gains or losses and after-tax unrealized gains or losses on equity securities. Additionally, equity and earnings of unconsolidated investees and related taxes were removed from operating earnings and operating EPS to present a consistent approach in excluding all unrealized changes in value from equity investments. RLI's management believes these measures are useful in gauging core operating performance across reporting periods but may not be comparable to other companies' definitions of operating earnings. The Form 8-K contains a reconciliation between operating earnings and net earnings. The Form 8-K and press release are available at the company's website at www.rlicorp.com.
Speaker #1: RLI's operating earnings and earnings per share from operations consist of net earnings after the elimination of after-tax realized gains or losses in after-tax unrealized gains or losses on equity securities.
Speaker #1: Additionally, equity and earnings of unconsolidated investees and related taxes were removed from operating earnings and operating EPS to present a consistent approach in excluding all unrealized changes in value from equity investments.
Speaker #1: RLI's management believes these measures are useful in gauging core operating performance across reporting periods, but may not be comparable to other companies' definitions of operating earnings.
Speaker #1: The Form 8-K contains a reconciliation between operating earnings and net earnings. The Form 8-K and press release are available at the company's website at www.rli-corp.com.
Speaker #1: I will now turn the conference over to RLI's President and Chief Executive Officer, Mr. Craig Kliethermes. Please go ahead.
Operator: I will now turn the conference over to RLI's President and Chief Executive Officer, Mr. Craig Kliethermese. Please go ahead.
I will now turn the conference over to RLI's President and Chief Executive Officer, Mr. Craig Kliethermese. Please go ahead.
Speaker #2: Good morning, everyone. We appreciate you being with us today, and I'd like to introduce Aaron Diefenthaler, our chief financial officer, and Jen Klobnak, our chief operating officer, who are joining me.
Craig Kliethermes: Good morning, everyone. We appreciate you being with us today, and I'd like to introduce Aaron Diefenthaler, our Chief Financial Officer, and Jenny Klobnak, our Chief Operating Officer, who are joining me. I'll start by saying we feel very good about where RLI is today and, just as importantly, where we're headed. 2025 was another strong year for our company. We delivered underwriting income of $264 million on an 84 combined ratio, grew book value per share by 33% inclusive of dividends, and achieved our 30th consecutive year of underwriting profitability. That kind of consistency is extremely rare in our industry, and it certainly doesn't happen by accident. It's too long to be considered a hot streak. It reflects disciplined execution over time and the principles we work to uphold every day.
Craig Kliethermes: Good morning, everyone. We appreciate you being with us today, and I'd like to introduce Aaron Diefenthaler, our Chief Financial Officer, and Jenny Klobnak, our Chief Operating Officer, who are joining me. I'll start by saying we feel very good about where RLI is today and, just as importantly, where we're headed. 2025 was another strong year for our company. We delivered underwriting income of $264 million on an 84 combined ratio, grew book value per share by 33% inclusive of dividends, and achieved our 30th consecutive year of underwriting profitability. That kind of consistency is extremely rare in our industry, and it certainly doesn't happen by accident. It's too long to be considered a hot streak. It reflects disciplined execution over time and the principles we work to uphold every day.
Speaker #2: I'll start by saying we feel very good about where RLI is today and, just as importantly, where we're headed. 2025 was another strong year for our company. We delivered underwriting income of $264 million on an 84 combined ratio, grew book value per share by 33% inclusive of dividends, and achieved our 30th consecutive year of underwriting profitability.
Speaker #2: That kind of consistency is extremely rare in our industry, and it certainly doesn't happen by accident. It's too long to be considered a hot streak; it reflects disciplined execution over time and the principles we worked to uphold every day.
Speaker #2: The environment remains competitive. And premium growth was modest. But that's exactly when our model tends to show its strength. We don't measure success by how fast we grow; we measure it by how well we grow.
Craig Kliethermes: The environment remains competitive, and premium growth was modest, but that's exactly when our model tends to show its strength. We don't measure success by how fast we grow. We measure it by how well we grow and whether today's decisions stand the test of time. Jerry Stephens, our founder, used to remind us that you don't win the long game by swinging at every pitch. You win it by knowing which ones to let go by. That mindset is deeply ingrained at RLI. We're comfortable pulling back when the risk-reward equation doesn't work, and we're confident leaning in where we have the expertise and when the market supports it. Our diversified specialty portfolio, strong balance sheet, and ownership culture give us a lot of flexibility and a lot of confidence as we look ahead.
The environment remains competitive, and premium growth was modest, but that's exactly when our model tends to show its strength. We don't measure success by how fast we grow. We measure it by how well we grow and whether today's decisions stand the test of time. Jerry Stephens, our founder, used to remind us that you don't win the long game by swinging at every pitch. You win it by knowing which ones to let go by. That mindset is deeply ingrained at RLI. We're comfortable pulling back when the risk-reward equation doesn't work, and we're confident leaning in where we have the expertise and when the market supports it. Our diversified specialty portfolio, strong balance sheet, and ownership culture give us a lot of flexibility and a lot of confidence as we look ahead.
Speaker #2: And whether today's decisions stand the test of time. Gary Stevens, our founder, used to remind us that you don't win the long game by swinging at every pitch.
Speaker #2: You win it by knowing which ones to let go by. That mindset is deeply ingrained at RLI. We're comfortable pulling back when the risk-reward equation doesn't work, and we're confident leaning in where we have the expertise and when the market supports it.
Speaker #2: Our diversified specialty portfolio—strong balance sheet and ownership culture—gives us a lot of flexibility and a lot of confidence as we look ahead. We're well positioned and optimistic about the opportunities in front of us, and with that, I'll turn it over to Aaron to walk through the financials in more detail.
Craig Kliethermes: We're well-positioned and optimistic about the opportunities in front of us, and with that, I'll turn it over to Aaron to walk through the financials in more detail.
We're well-positioned and optimistic about the opportunities in front of us, and with that, I'll turn it over to Aaron to walk through the financials in more detail.
Speaker #2: detail. Thanks, Craig,
[Analyst] (KBW): Thanks, Craig, and good morning, everyone. Yesterday, we reported Q4 operating earnings of $0.94 per share, up from $0.52 in the year-ago period. Better underwriting performance, minimal storm activity, and increases in investment income drove most of the improvement compared to last year. For the quarter, we generated $71 million of underwriting income on an 82.6 combined ratio versus $22 million on a 94.4 combined ratio in Q4 last year. For the full year, we delivered $264 million of underwriting income on, as Craig mentioned, an 83.6 combined ratio, marking our 30th consecutive year of underwriting profits. I wanted to call your attention to a change we made to our definition of operating earnings. As referenced in a footnote on page 1 of our release and in the non-GAAP disclosures on page 2, operating earnings now excludes equity and earnings of unconsolidated investees and related taxes.
Aaron Diefenthaler: Thanks, Craig, and good morning, everyone. Yesterday, we reported Q4 operating earnings of $0.94 per share, up from $0.52 in the year-ago period. Better underwriting performance, minimal storm activity, and increases in investment income drove most of the improvement compared to last year. For the quarter, we generated $71 million of underwriting income on an 82.6 combined ratio versus $22 million on a 94.4 combined ratio in Q4 last year. For the full year, we delivered $264 million of underwriting income on, as Craig mentioned, an 83.6 combined ratio, marking our 30th consecutive year of underwriting profits. I wanted to call your attention to a change we made to our definition of operating earnings. As referenced in a footnote on page 1 of our release and in the non-GAAP disclosures on page 2, operating earnings now excludes equity and earnings of unconsolidated investees and related taxes.
Speaker #3: and good morning, everyone. Yesterday, we reported fourth quarter operating earnings of $94 cents per share, up from $52
Speaker #1: the year In ago period . Better underwriting performance , minimal storm activity and increases in investment income drove most of the improvement compared to last year .
Speaker #1: For the quarter , we generated 71 million in investment income , drove most of the improvement compared to last year For the . quarter , we generated 71 million of underwriting income on an 82.6 combined ratio ratio , versus 22 million on a 94.4 combined ratio in Q4 last year .
Speaker #1: For the full year , we delivered 264 million of underwriting income on . As Craig mentioned , an 83.6 combined ratio marking our 30th consecutive year of underwriting profit .
Speaker #1: I wanted to call your attention to a made to our change we definition of operating earnings , as referenced in a footnote on page one of our release and in the non GAAP disclosures on page two , operating earnings now excludes equity in earnings of unconsolidated investees and related taxes .
[Analyst] (KBW): Prior periods were recast to conform to that definition for comparability. Currently, unconsolidated investees only include our minority investment in Prime Holdings. We believe excluding these investments from operating earnings better reflects RLI's core operations, where we maintain full operational control, and aligns the treatment of investee results with other equity investments. On a GAAP basis, net earnings were $0.99 in the quarter and $4.37 for the year, an increase of 17% over full year 2024. In addition to operating earnings, net earnings include net realized gains and losses, net unrealized gains and losses from equity securities, and now earnings of unconsolidated investees from Prime. Our Q4 net earnings reflect Prime's core operating results based on our minority ownership and a reduction to Prime's value on our balance sheet to $53 million.
Prior periods were recast to conform to that definition for comparability. Currently, unconsolidated investees only include our minority investment in Prime Holdings. We believe excluding these investments from operating earnings better reflects RLI's core operations, where we maintain full operational control, and aligns the treatment of investee results with other equity investments. On a GAAP basis, net earnings were $0.99 in the quarter and $4.37 for the year, an increase of 17% over full year 2024. In addition to operating earnings, net earnings include net realized gains and losses, net unrealized gains and losses from equity securities, and now earnings of unconsolidated investees from Prime. Our Q4 net earnings reflect Prime's core operating results based on our minority ownership and a reduction to Prime's value on our balance sheet to $53 million.
Speaker #1: Prior periods were recast to conform to that definition for comparability . Currently unconsolidated investees only includes our minority investment in Prime Holdings . We believe excluding these investments from operating earnings better reflects our core operations where we maintain operational full control aligns the results with investee and other equity investments a GAAP basis , net .
Speaker #1: On earnings were $0.99 in the quarter and $4.37 for the year , an increase of 17% over full year 2020 . For in addition to operating earnings , net earnings include net realized gains and losses , net unrealized gains and losses from securities , now and equity of unconsolidated investees prime from .
Speaker #1: Our Q4 net earnings . Earnings reflect Prime's core operating results . Based on our minority ownership and a reduction to Prime's value on our balance sheet to $53 million .
[Analyst] (KBW): Turning to premium, top-line growth was down 2% for Q4 and up 1% for the full year as competitive dynamics necessitated heightened discipline in several businesses, while other products continued to find opportunities. Property premium was down 11% during the quarter, consistent with the rate environment for catastrophe-exposed commercial property, although other parts of the segment, marine, and Hawaii homeowners, continued to grow. Property's underwriting profitability was supported by $17 million of favorable loss emergence on prior year's catastrophes, modestly offset by $4 million of storm activity in the quarter. Inclusive of these net benefits, property's combined ratio was 49.2 in Q4 and 57.2 on the year. Casualty premium was up 2% in the quarter and 7% on the year with strong contributions from personal umbrella. The bottom line for casualty benefited from $4 million of favorable prior year's loss development.
Turning to premium, top-line growth was down 2% for Q4 and up 1% for the full year as competitive dynamics necessitated heightened discipline in several businesses, while other products continued to find opportunities. Property premium was down 11% during the quarter, consistent with the rate environment for catastrophe-exposed commercial property, although other parts of the segment, marine, and Hawaii homeowners, continued to grow. Property's underwriting profitability was supported by $17 million of favorable loss emergence on prior year's catastrophes, modestly offset by $4 million of storm activity in the quarter. Inclusive of these net benefits, property's combined ratio was 49.2 in Q4 and 57.2 on the year. Casualty premium was up 2% in the quarter and 7% on the year with strong contributions from personal umbrella. The bottom line for casualty benefited from $4 million of favorable prior year's loss development.
Speaker #1: Turning to premium, top line growth was down 2% for Q4 and up 1% for the full year, as competitive dynamics necessitated heightened discipline in several businesses.
Speaker #1: While other products continue to find opportunities, property premium was down 11% during the quarter, consistent with the rate environment for catastrophe-exposed commercial property.
Speaker #1: Although other parts of the segment Marine and Hawaii homeowners continue to grow properties underwriting profitability was supported by 17 million of favorable loss .
Speaker #1: on prior Emergence years . Catastrophes . Modestly offset by 4 million of storm activity in the quarter . Inclusive of these net benefits , properties , combined ratio was 49.2 and Q4 and 57.2 on the year .
Speaker #1: Casualty premium was up 2% in the quarter and 7% on the year , with strong contributions from personal Umbrella , the bottom line for casualty benefited from 4 million of favorable prior year's loss development , just under 2 million of this release was related to prior year catastrophe activity , surety premium remains flat in the current period and up slightly on a year to date basis .
[Analyst] (KBW): Just under $2 million of this release was related to prior year catastrophe activity. Surety premium remains flat in the current period and up slightly on a year-to-date basis. The segment's quarterly underwriting results included 2.7 points of favorable loss emergence from prior years, which improved Surety's loss ratio by 7 points in the quarter. On the expense ratio, Q4 came in at 39.3, up from 37.6 a year ago. Bonus and profit-sharing expenses were higher on strong results, and business-level expenses were up as we've continued to invest in people and technology. On the investment side, net investment income increased 9% in the quarter, and the portfolio generated 1.5% total return in Q4 and 9% for the year. The yield environment has been relatively stable for intermediate maturities, and we continue to find accretive fixed income opportunities.
Just under $2 million of this release was related to prior year catastrophe activity. Surety premium remains flat in the current period and up slightly on a year-to-date basis. The segment's quarterly underwriting results included 2.7 points of favorable loss emergence from prior years, which improved Surety's loss ratio by 7 points in the quarter. On the expense ratio, Q4 came in at 39.3, up from 37.6 a year ago. Bonus and profit-sharing expenses were higher on strong results, and business-level expenses were up as we've continued to invest in people and technology. On the investment side, net investment income increased 9% in the quarter, and the portfolio generated 1.5% total return in Q4 and 9% for the year. The yield environment has been relatively stable for intermediate maturities, and we continue to find accretive fixed income opportunities.
Speaker #1: The segment's quarterly underlying underwriting results included $2.7 million of favorable loss emergence from prior years, which improved the surety loss ratio by seven points in the quarter.
Speaker #1: On expense ratio , Q4 came in at 39.3 , up from 37.6 a year ago . Bonus and profit sharing expenses were higher on strong results and business level expenses were up .
Speaker #1: As we’ve continued to invest in people and technology on the investment side, net investment income increased 9% in the quarter, and the portfolio generated a 1.5% total return in Q4 and 9% for the year.
Speaker #1: The yield environment has been relatively stable for intermediate maturities, and we continue to find accretive fixed income opportunities. Purchase yields averaged 4.9% in the quarter, which was 70 basis points above our book yield.
[Analyst] (KBW): Purchase yields averaged 4.9% in the quarter, which was 70 basis points above our book yield. Putting it all together, we produced $5.29 of comprehensive earnings for the year, driving 33% growth in book value per share inclusive of dividends. This level of generated capital again allowed for a special dividend to shareholders of $2 per share in addition to our ordinary Q4 dividend. Overall, a solidly profitable championship-caliber close to 2025. With that, I'll turn it over to Jen for more color on market conditions.
Purchase yields averaged 4.9% in the quarter, which was 70 basis points above our book yield. Putting it all together, we produced $5.29 of comprehensive earnings for the year, driving 33% growth in book value per share inclusive of dividends. This level of generated capital again allowed for a special dividend to shareholders of $2 per share in addition to our ordinary Q4 dividend. Overall, a solidly profitable championship-caliber close to 2025. With that, I'll turn it over to Jen for more color on market conditions.
Speaker #1: Putting it all together, we produced $5.29 of comprehensive earnings for the year, driving 33% growth in book value per share, inclusive of dividends.
Speaker #1: This level of generated capital again allowed for a special dividend to shareholders of $2 per share, in addition to our ordinary fourth quarter dividend.
Speaker #1: Overall , a solidly profitable championship caliber close to 2025 . With that , I'll turn it over to Jen for more color on market conditions .
[Analyst] (Raymond James): Thank you, Aaron. I will dive right into our segments, starting with property. While premium declined 11% in the Q4, our property team delivered an excellent 49 combined ratio, underscoring the quality of our portfolio and ability to execute. E&S property premium decreased by 18% amid intense competition from other carriers and MGAs, along with increased risk retention in some areas by insurers. Hurricane rates were down 15%, while submissions continued to grow as insurers shopped for the best terms. We are seeing pressure on terms and conditions, and our underwriters are flexing selectively to retain high-quality accounts. This competitive dynamic extends to other property lines as well. Earthquake rates declined 12% as insurers sought rate relief or decided to retain the risk. We see carrier competitors in the E&S property market slowly giving back terms and conditions, while MGAs are being more aggressive.
Jennifer Klobnak: Thank you, Aaron. I will dive right into our segments, starting with property. While premium declined 11% in the Q4, our property team delivered an excellent 49 combined ratio, underscoring the quality of our portfolio and ability to execute. E&S property premium decreased by 18% amid intense competition from other carriers and MGAs, along with increased risk retention in some areas by insurers. Hurricane rates were down 15%, while submissions continued to grow as insurers shopped for the best terms. We are seeing pressure on terms and conditions, and our underwriters are flexing selectively to retain high-quality accounts. This competitive dynamic extends to other property lines as well. Earthquake rates declined 12% as insurers sought rate relief or decided to retain the risk. We see carrier competitors in the E&S property market slowly giving back terms and conditions, while MGAs are being more aggressive.
Speaker #1: Thank you . Erin . I will dive right into our segments , starting with property . While premiums declined 11% in the fourth quarter , our property team delivered an excellent 49 combined ratio quality , underscoring the of our portfolio and ability to execute .
Speaker #1: Property premium decreased by 18% amid intense competition from other carriers and mgas . Along with increased risk retention in some areas by insurance .
Speaker #1: Hurricane rates were down 15% , whilst continued to grow as insurers shopped for the best terms . We are seeing pressure on terms and conditions and our underwriters are flexing selectively to retain high quality accounts .
Speaker #1: This competitive dynamic extends to other property lines as well. Earthquake rates declined 12% as insurers saw rate relief or decided to retain the risk.
[Analyst] (Raymond James): Despite the rate moderation on catastrophe coverages, we continue to achieve returns on retained business that exceed our long-term targets. Our experienced E&S property team delivered a meaningful underwriting profit despite challenging market conditions. They have navigated many hard and soft market cycles with discipline and remain focused on securing terms and conditions at an appropriate rate while reducing uncertainty when a loss occurs. Hawaii homeowners' premium grew 5% in the quarter, supported by a 16% rate increase. For the year, premium was up 26%, due in part to a couple of book rollovers we assumed following the Maui wildfires. We will continue to seek growth in this profitable book through our outstanding local customer service, investments in customer experiences, and additional rate increases from recent filing approvals. Marine premium was up 2% in the quarter. Our diverse portfolio is evolving based on market opportunities.
Despite the rate moderation on catastrophe coverages, we continue to achieve returns on retained business that exceed our long-term targets. Our experienced E&S property team delivered a meaningful underwriting profit despite challenging market conditions. They have navigated many hard and soft market cycles with discipline and remain focused on securing terms and conditions at an appropriate rate while reducing uncertainty when a loss occurs. Hawaii homeowners' premium grew 5% in the quarter, supported by a 16% rate increase. For the year, premium was up 26%, due in part to a couple of book rollovers we assumed following the Maui wildfires. We will continue to seek growth in this profitable book through our outstanding local customer service, investments in customer experiences, and additional rate increases from recent filing approvals. Marine premium was up 2% in the quarter. Our diverse portfolio is evolving based on market opportunities.
Speaker #1: We see carrier competitors in the property market slowly giving back . Terms and conditions while mgas are being more aggressive . Despite the rate moderation on catastrophe coverages , we continue to achieve returns on retained business that exceed our long term targets .
Speaker #1: Our experienced team delivered a meaningful underwriting profit despite challenging market conditions . They have navigated many hard and soft market cycles with discipline and remain focused on securing terms and conditions at an appropriate rate .
Speaker #1: While reducing uncertainties, when a loss occurs, Hawaii homeowner's premium grew 5% in the quarter, supported by a 16% rate increase for the year.
Speaker #1: Premium was up 26% , due in part to a couple of book rollovers . We assumed following the Maui wildfires . We will seek continue to growth in this profitable book through our outstanding local customer service investments and customer experiences and additional rate increases from recent filing approval .
[Analyst] (Raymond James): Inland Marine continues to grow through strategic talent additions and new product adjacencies. Ocean Marine remains competitive, particularly in cargo, where we have pulled back. Our underwriting teams continue to apply patience and discipline, which resulted in underwriting profit across both inland and ocean in 2025. Surety premium was flat but produced a strong 80 combined ratio in the Q4. Transactional Surety grew 4% through continuous marketing efforts and investments in our distribution capabilities. These are very small premium bonds, so it takes significant volume to move the needle. Commercial Surety also grew 4% as our talented team secured new accounts by closely engaging with our distribution partners. Increased customs bond requests offset the slowdown in renewable energy, with both trends driven by government policy. On the contract surety side, premium declined 5% as we navigated the ending to a year that included multiple fits and starts in construction spending.
Inland Marine continues to grow through strategic talent additions and new product adjacencies. Ocean Marine remains competitive, particularly in cargo, where we have pulled back. Our underwriting teams continue to apply patience and discipline, which resulted in underwriting profit across both inland and ocean in 2025. Surety premium was flat but produced a strong 80 combined ratio in the Q4. Transactional Surety grew 4% through continuous marketing efforts and investments in our distribution capabilities. These are very small premium bonds, so it takes significant volume to move the needle. Commercial Surety also grew 4% as our talented team secured new accounts by closely engaging with our distribution partners. Increased customs bond requests offset the slowdown in renewable energy, with both trends driven by government policy. On the contract surety side, premium declined 5% as we navigated the ending to a year that included multiple fits and starts in construction spending.
Speaker #1: Marine premium was up 2% in the quarter . Our diverse portfolio is evolving based on market opportunities in the marine continues to grow through strategic talent additions and new product adjacencies .
Speaker #1: Ocean marine remains competitive , particularly in cargo , where we have pulled back our underwriting teams , continue to apply patients and discipline , which resulted in underwriting profit across both inland and ocean .
Speaker #1: In 2025 . Premium was flat , but produced a strong 80 combined ratio in the fourth quarter . Transactional surety grew 4% through continuous marketing efforts and investments in our distribution capabilities .
Speaker #1: These are very small premium bonds , so it takes significant volume to move the needle . Commercial surety also grew 4% as our talented team secured new accounts by closely engaging with our distribution partners .
Speaker #1: Increased customer bond requests offset the slowdown in renewable energy, with both trends driven by government policy. On the contract surety side, premium declined 5% as we navigated the ending to a year that included multiple fits and starts in construction spending.
[Analyst] (Raymond James): We know that infrastructure investments are needed at the federal, state, and local level, and we remain well-positioned to support that business as public funding increases. Our surety underwriting teams remain committed to underwriting discipline and prudent risk selection in this evolving environment. The casualty segment premium grew 2% on a 99.6 combined ratio for the Q4. Personal umbrella led the way with premium growth of 24%. This included a 12% rate increase, and we secured additional approvals that will further add rate to the book in 2026. This controlled growth reflects reduced new business in several challenging states where we have taken larger rate increases, required higher underwriting, I'm sorry, underlying limits, and worked with our distribution partners to improve the quality of our book. The personal umbrella market continues to present opportunities as our competitors responded to deteriorating results by adjusting their appetite and terms and conditions.
We know that infrastructure investments are needed at the federal, state, and local level, and we remain well-positioned to support that business as public funding increases. Our surety underwriting teams remain committed to underwriting discipline and prudent risk selection in this evolving environment. The casualty segment premium grew 2% on a 99.6 combined ratio for the Q4. Personal umbrella led the way with premium growth of 24%. This included a 12% rate increase, and we secured additional approvals that will further add rate to the book in 2026. This controlled growth reflects reduced new business in several challenging states where we have taken larger rate increases, required higher underwriting, I'm sorry, underlying limits, and worked with our distribution partners to improve the quality of our book. The personal umbrella market continues to present opportunities as our competitors responded to deteriorating results by adjusting their appetite and terms and conditions.
Speaker #1: We know that infrastructure investments are needed at the federal, state, and local levels, and we remain well positioned to support that business as public funding increases. Our surety underwriting teams remain committed to underwriting discipline and prudent risk selection in this evolving environment.
Speaker #1: The casualty segment premium grew 2% on a 99.6 combined ratio for the fourth quarter. Personal led the way with premium growth of 24%.
Speaker #1: This included a 12% rate increase, and we secured additional approvals that will further add rate to the book in 2026. This controlled growth reflects reduced business new in several challenging states, where we have taken larger rate increases and required higher underwriting.
Speaker #1: I'm sorry , underlying limits , and worked with our distribution partners to improve the quality of our book . The personal umbrella market continues to present opportunities as our competitors responded to deteriorating results by adjusting their appetite and terms and conditions .
[Analyst] (Raymond James): Our continuous product collaboration, supported by extensive data mining, actuarial analysis, and claim trend identification, produced an underwriting profit for the year. Transportation premium declined 10% in the quarter despite a 13% increase in rates as we continue to prioritize profitability over volume in a highly competitive environment. Severity trends and economic pressures have reshaped the market, with heightened volatility and increased expenses forcing some transportation companies to consolidate or close, reducing the demand for insurance. At the same time, despite some insurance providers leaving this space due to poor financial performance, there always seem to be new markets entering and pushing for growth. Acute pressure on the largest size accounts has led to a decrease in our average account size over the last two years. Our in-house loss control team provides an advantage as they assess and try to improve the safety of our insured, which helps all drivers.
Our continuous product collaboration, supported by extensive data mining, actuarial analysis, and claim trend identification, produced an underwriting profit for the year. Transportation premium declined 10% in the quarter despite a 13% increase in rates as we continue to prioritize profitability over volume in a highly competitive environment. Severity trends and economic pressures have reshaped the market, with heightened volatility and increased expenses forcing some transportation companies to consolidate or close, reducing the demand for insurance. At the same time, despite some insurance providers leaving this space due to poor financial performance, there always seem to be new markets entering and pushing for growth. Acute pressure on the largest size accounts has led to a decrease in our average account size over the last two years. Our in-house loss control team provides an advantage as they assess and try to improve the safety of our insured, which helps all drivers.
Speaker #1: Our continuous product collaboration, supported by extensive data mining, actuarial analysis, and claim trend identification, reduced underwriting profit for the year.
Speaker #1: Transportation premium declined 10% in the quarter despite a 13% increase in rates, as we continue to prioritize profitability over volume in a highly competitive environment.
Speaker #1: Severity trends and economic pressures have reshaped the market with heightened volatility and increased expenses, forcing some transportation companies to consolidate or close, reducing the demand for insurance.
Speaker #1: At the time, same despite some insurance space due to poor financial providers' performance, there always seem to be new markets entering and pushing for growth.
Speaker #1: Acute pressure on the largest sized accounts has led to a decrease in our average account size over the last two years . Our in-house lost control team provides an advantage as they assess and try to improve the safety of our insurers , which helps all drivers , our underwriters are empowered to make bottom line driven decisions .
[Analyst] (Raymond James): Our underwriters are empowered to make bottom-line-driven decisions. We remain disciplined, pushing for more rates and walking away from underpriced accounts. Our executive product group achieved an underwriting profit again this year. Premium in the Q4 was down 2%, with rates down 1%. The market is stabilizing amid broader industry loss development. Our focus remains on marketing to increase access to business and disciplined risk selection to maintain our quality book. The E&S casualty team also produced an underwriting profit for the year. We saw increased competition in the Q4, particularly on larger six-figure premium accounts due to competitors chasing top-line growth, presumably to meet year-end goals. Our primary excess liability premium declined 8% in the quarter, but full-year premium finished up 10%. Competition varied by region, with some markets exiting while others leaned in.
Our underwriters are empowered to make bottom-line-driven decisions. We remain disciplined, pushing for more rates and walking away from underpriced accounts. Our executive product group achieved an underwriting profit again this year. Premium in the Q4 was down 2%, with rates down 1%. The market is stabilizing amid broader industry loss development. Our focus remains on marketing to increase access to business and disciplined risk selection to maintain our quality book. The E&S casualty team also produced an underwriting profit for the year. We saw increased competition in the Q4, particularly on larger six-figure premium accounts due to competitors chasing top-line growth, presumably to meet year-end goals. Our primary excess liability premium declined 8% in the quarter, but full-year premium finished up 10%. Competition varied by region, with some markets exiting while others leaned in.
Speaker #1: We remain disciplined, pushing for more rate and walking away from underpriced accounts. Our second product group achieved an underwriting profit again this year. Premium in the fourth quarter.
Speaker #1: was down 2% , with rates down 1% . The market is stabilizing amid broader industry loss development . Our focus remains on marketing to increase access to business and disciplined risk selection to maintain our quality book , the team also produced an underwriting profit for the year .
Speaker #1: We saw increased competition in the fourth quarter , particularly on six figure larger premium due to accounts competitors chasing top line growth , presumably to meet year end goals .
Speaker #1: Our primary excess liability premiums declined 8% in the quarter , but full year premiums finished up 10% . Competition varied by region , with some markets exiting while others leaned in .
[Analyst] (Raymond James): Submissions increased by double digits, and we are constantly engaging producers to see the best new business opportunities. Much of our business is construction-related, and projects are taking longer to bind. We have many quotes outstanding waiting for permitting or funding. The group knows that words matter and have not relaxed terms and conditions despite competitive pressure. We continue to provide a stable solution for our business partners in the construction space. Before I provide perspective on the full year, I'll update you on our reinsurance renewals. On 1 January, we renewed about 2/3 of our annual reinsurance spend. It was a buyer's market for property. We secured 15% to 20% rate decreases on our catastrophe program and more modest relief on our property working layers. With our reduced exposure and continuing soft market conditions, we purchased $150 million less catastrophe limit for 2026.
Submissions increased by double digits, and we are constantly engaging producers to see the best new business opportunities. Much of our business is construction-related, and projects are taking longer to bind. We have many quotes outstanding waiting for permitting or funding. The group knows that words matter and have not relaxed terms and conditions despite competitive pressure. We continue to provide a stable solution for our business partners in the construction space. Before I provide perspective on the full year, I'll update you on our reinsurance renewals. On 1 January, we renewed about 2/3 of our annual reinsurance spend. It was a buyer's market for property. We secured 15% to 20% rate decreases on our catastrophe program and more modest relief on our property working layers. With our reduced exposure and continuing soft market conditions, we purchased $150 million less catastrophe limit for 2026.
Speaker #1: Submissions increased by double digits, and we are constantly engaging producers to see the best new business opportunities. Much of our business is construction-related, and projects are taking longer to bind.
Speaker #1: We have many outstanding, waiting for permitting or funding. The group knows that words matter and have not relaxed terms and conditions despite competitive pressure.
Speaker #1: We continue to provide a stable solution for our business partners in the construction space. Before I provide perspective on the full year, I'll update you on our renewals.
Speaker #1: On January 1st , we renewed about two thirds of our annual reinsurance spend . It was a buyer's market for property we secured 15 to 20% rate decreases on our catastrophe program , and more modest relief on our property .
Speaker #1: Working layers with our reduced exposure and the market continuing soft conditions. We purchased $150 million less catastrophe limit for 2026, but we remain ready to approach the market mid-term should an opportunity present itself, as we have done in previous years.
[Analyst] (Raymond James): But we remain ready to approach the market midterm should an opportunity present itself, as we have done in previous years. On the casualty side, rates were down around 5%. We achieved similar terms and conditions with some broadening of coverage in the property treaties. For the full year, we achieved modest growth while producing an 84 combined ratio. While E&S property prudently contracted in response to softening market conditions, other teams capitalized on opportunities, most notably personal umbrella, E&S casualty, and Hawaii homeowners. We pushed for rate change where we needed it, achieving an overall 16% rate increase in auto liability coverages across our portfolio. In 2025, we also spent time with our distribution partners, broadening and deepening those relationships, and we invested in operational efficiencies.
But we remain ready to approach the market midterm should an opportunity present itself, as we have done in previous years. On the casualty side, rates were down around 5%. We achieved similar terms and conditions with some broadening of coverage in the property treaties. For the full year, we achieved modest growth while producing an 84 combined ratio. While E&S property prudently contracted in response to softening market conditions, other teams capitalized on opportunities, most notably personal umbrella, E&S casualty, and Hawaii homeowners. We pushed for rate change where we needed it, achieving an overall 16% rate increase in auto liability coverages across our portfolio. In 2025, we also spent time with our distribution partners, broadening and deepening those relationships, and we invested in operational efficiencies.
Speaker #1: On the casualty side, rates were down around 5%. We achieved similar terms and conditions, with some broadening of coverage in the property.
Speaker #1: Trees . For the full year , we achieved modest growth while producing an 84 combined ratio . While EMS property prudently contracted in response to softening market conditions .
Speaker #1: Other teams capitalized on opportunities , most notably personal umbrella ins , casualty and Hawaii homeowners . We pushed for rate change where we needed it , achieving an overall 16% rate increase in auto liability coverages across our portfolio in 2025 .
[Analyst] (Raymond James): This included simplifying and automating processes, developing new capabilities to improve ease of doing business, and investing in our data infrastructure to support granular, real-time decision-making. Internally, we brought our teams together regularly to talk about how we are doing and where we can improve. These actions position us well for another successful year in 2026. In a more challenging environment, capital discipline and alignment of interests differentiate successful insurers. Underwriting, which we define as underwriters, claims, and analytics collaborating to evolve our products, is the disciplined pursuit of opportunity. We are an underwriting company, as evidenced by our unmatched track record of 30 consecutive years of underwriting profit. I am incredibly proud of our entire team for producing these results and for how they do it, by taking care of our customers and striving to improve every day because they are owners.
This included simplifying and automating processes, developing new capabilities to improve ease of doing business, and investing in our data infrastructure to support granular, real-time decision-making. Internally, we brought our teams together regularly to talk about how we are doing and where we can improve. These actions position us well for another successful year in 2026. In a more challenging environment, capital discipline and alignment of interests differentiate successful insurers. Underwriting, which we define as underwriters, claims, and analytics collaborating to evolve our products, is the disciplined pursuit of opportunity. We are an underwriting company, as evidenced by our unmatched track record of 30 consecutive years of underwriting profit. I am incredibly proud of our entire team for producing these results and for how they do it, by taking care of our customers and striving to improve every day because they are owners.
Speaker #1: also We spent time with our distribution partners , broadening and deepening those relationships and we invested in operational efficiencies . This included simplifying and automating processes , developing new capabilities to improve ease of doing business , and investing in our data infrastructure to support granular , real time decision making .
Speaker #1: Internally, we brought our teams together regularly to talk about how we are doing and where we can improve. These actions position us well for another successful year in 2026.
Speaker #1: In a more challenging environment, capital, discipline, and alignment of interests differentiate successful insurers' underwriting, which we define as underwriters, claims, and analytics collaborating to evolve our products. It is the disciplined pursuit of opportunity.
Speaker #1: We are an underwriting company, as evidenced by our unmatched track record of 30 consecutive years of underwriting profit. I am incredibly proud of our entire team for producing these results, and they do it.
[Analyst] (Raymond James): With that, I will turn the call over to the moderator to open it up for questions.
With that, I will turn the call over to the moderator to open it up for questions.
Speaker #1: for how By taking care of our customers and striving to improve every day because they are owners . With that , I will turn the call over to the moderator to open it up for questions .
Operator: Thank you very much. The question and answer session will begin at this time. If you are using a speakerphone, please pick up the handset before pressing any numbers. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, press star one again. Please stand by for your first question. Your first question comes from Michael Phillips with Oppenheimer. Your line is open.
Operator: Thank you very much. The question and answer session will begin at this time. If you are using a speakerphone, please pick up the handset before pressing any numbers. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, press star one again. Please stand by for your first question. Your first question comes from Michael Phillips with Oppenheimer. Your line is open.
Speaker #2: Thank you very much . The question . Question and answer session will begin at this time . If you are using a speakerphone , please pick up the handset before pressing any numbers .
Speaker #2: If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, press star one.
Speaker #2: Again . Please stand by for your first question . Your first question comes from Michael Phillips with Oppenheimer . Your line is open .
[Analyst] (Oppenheimer): The accident or loss ratio in casualty improved a bit from last year, once you back out that reserve addition you did. Can you talk about how much of that was because of the mix shift from pulling away from transportation book versus anything else that might have caused that improvement?
Michael Phillips: The accident or loss ratio in casualty improved a bit from last year, once you back out that reserve addition you did. Can you talk about how much of that was because of the mix shift from pulling away from transportation book versus anything else that might have caused that improvement?
Speaker #3: The action of your loss ratio and casualty improved a bit from last year . Once you back out that reservation , you did .
Speaker #3: Can you talk about how much of that was because the mix shift from your point away from transportation book versus anything else that might have caused that improvement ?
Jennifer Klobnak: So as you look at the casualty loss ratio, you did see improvement. We did pull back in both transportation and other areas of auto where we provide coverage, like in our package businesses. Last year, in the Q4, we did recognize additional reserving related to those auto-related coverages, both in our transportation and our personal umbrella product. This year, as we looked at losses coming in, we did not see the need to take such action. So you did see that improvement. I can't quantify specifically the difference. Aaron?
Jennifer Klobnak: So as you look at the casualty loss ratio, you did see improvement. We did pull back in both transportation and other areas of auto where we provide coverage, like in our package businesses. Last year, in the Q4, we did recognize additional reserving related to those auto-related coverages, both in our transportation and our personal umbrella product. This year, as we looked at losses coming in, we did not see the need to take such action. So you did see that improvement. I can't quantify specifically the difference. Aaron?
Speaker #1: So as you look at the casualty ratio, loss, you did see improvement. And we did pull back in both transportation and other areas of auto where we provide coverage, like in our package businesses.
Speaker #1: Last year , in the fourth quarter , we did recognize additional reserving related to those those auto related coverages , both in our transportation and our first umbrella product .
Speaker #1: This year, as we looked at losses coming in, we did not see the need to take such action. And so you did see that improvement.
Aaron Diefenthaler: Yeah. I think the bulk there, on a comparative basis, the Q4 of last year that you're seeing is the action we took for the full accident year in 2024 around auto-related exposures, also true of the 2023 accident year as well. So we feel we're on more stable footing around those exposures because we didn't take the same level of action in the current accident year. Still cautious around auto-related exposures. And our incentive structure is set up for those business leaders to pull back from those markets when they see underpriced competition coming to bear on submission activity. So everything is set up for there to be a natural pullback from markets that are underpriced. But the underlying results themselves that we're seeing, we feel better about because of the stability relative to the action we took the last couple of years.
Aaron Diefenthaler: Yeah. I think the bulk there, on a comparative basis, the Q4 of last year that you're seeing is the action we took for the full accident year in 2024 around auto-related exposures, also true of the 2023 accident year as well. So we feel we're on more stable footing around those exposures because we didn't take the same level of action in the current accident year. Still cautious around auto-related exposures. And our incentive structure is set up for those business leaders to pull back from those markets when they see underpriced competition coming to bear on submission activity. So everything is set up for there to be a natural pullback from markets that are underpriced. But the underlying results themselves that we're seeing, we feel better about because of the stability relative to the action we took the last couple of years.
Speaker #1: I can't quantify specifically the difference . Erin . Yeah , I think . the bulk there on a comparative basis to Q4 of last year that you're seeing is the action we took for the full accident year in 2024 around auto related exposures .
Speaker #1: Also true of the 2023 accident year as well. So we feel we're on more stable footing around those exposures, because we didn't take the same level of action in the current accident year.
Speaker #1: Still cautious around auto related exposures and our incentive structure is set up for those business leaders to pull back from those markets when they see underpriced competition coming to bear on on the on submission So you know , everything is set up for there to be a natural pullback for markets that are that are under underpriced .
Speaker #1: But the underlying results themselves that we're seeing—we feel better about because of the stability, relative to the action we took the last couple of years.
[Analyst] (Oppenheimer): Okay. Thanks. I guess on that last year's reserve addition, I mean, I think it was from higher severity in umbrella and transportation. And this year, you've seen a bit of a casualty, a bit of a slowdown in favor of PYD. I assume that means you're still seeing that same level of severity that caused you to take those reserve additions last year. I guess the question would be, I'm not sure how much that reserve addition was because of the accounts that you've now subsequently lost from midterm cancellations that you've talked about last quarter. But to the extent some of that was, and those accounts are no longer here, I guess, what does that mean for any potential favorable development if those accounts are no longer here, I guess, going forward?
Michael Phillips: Okay. Thanks. I guess on that last year's reserve addition, I mean, I think it was from higher severity in umbrella and transportation. And this year, you've seen a bit of a casualty, a bit of a slowdown in favor of PYD. I assume that means you're still seeing that same level of severity that caused you to take those reserve additions last year. I guess the question would be, I'm not sure how much that reserve addition was because of the accounts that you've now subsequently lost from midterm cancellations that you've talked about last quarter. But to the extent some of that was, and those accounts are no longer here, I guess, what does that mean for any potential favorable development if those accounts are no longer here, I guess, going forward?
Speaker #3: Okay, thanks. I guess on that last year's reserve addition, I think it was from higher severity in umbrella and transportation.
Speaker #3: And this year you've seen a bit of a a bit of a slowdown in favorable PYD . I assume that means you're still seeing that same level of severity that you that caused you to take those reserve additions last year .
Speaker #3: I guess the question would be, I'm not sure how much reserve that addition was, because of the accounts that you've now subsequently lost from midterm cancellations that you talked about last quarter.
Speaker #3: But to the extent some of that was, and those accounts are no longer here, I guess, what does that mean for any potential favorable development?
Aaron Diefenthaler: Yeah. Well, it's hard to get down to the account level when you're examining these things. But I'll just say overall, you're right to identify lower levels of favorable development for casualty here in the Q4. I think you do have to right-size that for a small proportion of the prior year CAT activity as well to get closer to that $4 million number that I referenced. However, just overall, we're seeing lower levels of favorable development out of casualty. We're still seeing drivers out of GL and commercial excess, and still some challenges around auto-related exposures, all of that being maybe to a lesser extent than what we saw in the year ago period.
Aaron Diefenthaler: Yeah. Well, it's hard to get down to the account level when you're examining these things. But I'll just say overall, you're right to identify lower levels of favorable development for casualty here in the Q4. I think you do have to right-size that for a small proportion of the prior year CAT activity as well to get closer to that $4 million number that I referenced. However, just overall, we're seeing lower levels of favorable development out of casualty. We're still seeing drivers out of GL and commercial excess, and still some challenges around auto-related exposures, all of that being maybe to a lesser extent than what we saw in the year ago period.
Speaker #3: If those accounts are no longer here going forward, what does that mean?
Speaker #1: Yeah . Well , it's hard to get down to the account level when you're when you're examining these things . But I'll just say overall , you're right to identify lower levels of favorable development for for casualty here in the fourth quarter .
Speaker #1: I think you do have to right-size that for the small proportion of the prior year cat activity as well, to get closer to $4 million, the number that I referenced.
Speaker #1: However , just overall we're seeing lower levels of of favorable development out of casualty . We're still seeing drivers out of GL and commercial excess and still some challenges around auto related exposures .
Jennifer Klobnak: Yeah. To supplement that, I would just add that there are many metrics that you can track to see what direction you're headed. And I'll tell you that new claim counts in 2025 were down significantly in those auto spots. So, for example, our transportation division, new claim counts were down 24% for the year, which is a positive indicator that the actions we're taking are going to translate into a more stable look going forward.
Jennifer Klobnak: Yeah. To supplement that, I would just add that there are many metrics that you can track to see what direction you're headed. And I'll tell you that new claim counts in 2025 were down significantly in those auto spots. So, for example, our transportation division, new claim counts were down 24% for the year, which is a positive indicator that the actions we're taking are going to translate into a more stable look going forward.
Speaker #1: All of that being maybe to a lesser extent than what we saw in the year-ago period. Yeah, to supplement.
Speaker #4: To that, I would just add that, you know, there are many metrics that you can track to see what direction you're headed.
Speaker #4: And I'll tell you that that new claim count in 2025 were down significantly in those auto spots . So , for example , our transportation division , new claim counts were down 24% for the year , which is a positive indicator that the actions we're taking are going to translate into a more stable look going forward .
[Analyst] (Oppenheimer): Yeah. Okay. Perfect. That's helpful, Jen. Thank you. Both of you, thank you. I guess just switching gears, last question on the property side. I mean, last hard market, you talked a lot about how you've kind of leaned in and made some investments there as you were growing in that hard market. What does that mean today, given just the opposite? Is there any, I guess, lack of a better term, fat there on the property side that may need to be trimmed as there's pressure on the expense ratio in property over the next year or so?
Michael Phillips: Yeah. Okay. Perfect. That's helpful, Jen. Thank you. Both of you, thank you. I guess just switching gears, last question on the property side. I mean, last hard market, you talked a lot about how you've kind of leaned in and made some investments there as you were growing in that hard market. What does that mean today, given just the opposite? Is there any, I guess, lack of a better term, fat there on the property side that may need to be trimmed as there's pressure on the expense ratio in property over the next year or so?
Speaker #3: Yeah . Okay . Perfect . That's helpful Jim . Thank you . Thank you . I guess just switching gears , last question on on the property side .
Speaker #3: I mean, last week you talked a lot about how you've kind of leaned in and made some investments there as you were growing in that market.
Speaker #3: What does that mean today, given just the opposite? Is there any, I guess, for lack of a better term, fat?
Speaker #3: There on the property side, that may need to be trimmed, as there's pressure on your expense ratio and property over the next year or so.
Jennifer Klobnak: Well, that's an interesting question. I would say the one thing we did do to ramp up, in addition to trying to be more efficient to handle more submissions, is that we added additional talent. We've had some very experienced underwriters that have really enjoyed this hard market. And I think as they come towards the end of their career, not that I'm encouraging anyone listening to retire, but I think we will see a handful of retirements in that space. And now we'll be ready because we've already started training the next generation in that group. In addition to that, though, I'll tell you, our submission count is still up. We continue to see growth in submissions throughout that property book. And we do want to look at that business. So it's harder to work now.
Jennifer Klobnak: Well, that's an interesting question. I would say the one thing we did do to ramp up, in addition to trying to be more efficient to handle more submissions, is that we added additional talent. We've had some very experienced underwriters that have really enjoyed this hard market. And I think as they come towards the end of their career, not that I'm encouraging anyone listening to retire, but I think we will see a handful of retirements in that space. And now we'll be ready because we've already started training the next generation in that group. In addition to that, though, I'll tell you, our submission count is still up. We continue to see growth in submissions throughout that property book. And we do want to look at that business. So it's harder to work now.
Speaker #4: Well , that's an interesting question . I would say the one thing we did do to ramp up , in addition to trying to be more efficient , to handle more submissions , is that we added additional talent .
Speaker #4: We've had some very experienced underwriters that have really enjoyed this hard market . And I think as they come towards the end of their career , not that I'm anyone listening to retire , but I think we will see a handful of retirements in that space and now we'll be ready as we've already started training the next generation in that group .
Speaker #4: In addition to that , though , I will tell you our submission count is still up . We continue to see growth in submissions throughout that property book , and we do want to look at that business .
Jennifer Klobnak: There's just as much work, if not more, despite the fact that terms and conditions are more challenging. So you can't necessarily shortcut that. You do want to support the producers that are sending you business. So there's a little bit of we still need to keep investing in supporting that.
There's just as much work, if not more, despite the fact that terms and conditions are more challenging. So you can't necessarily shortcut that. You do want to support the producers that are sending you business. So there's a little bit of we still need to keep investing in supporting that.
Speaker #4: So , you know , it's harder to work now . There's just as much work , if not more , despite the fact that terms and conditions are more challenging .
Speaker #4: So you can't necessarily shortcut that . You do want to support the producers that are sending your business . So there's a little bit of still need , you know , we to keep investing in supporting that .
[Analyst] (Oppenheimer): Okay. Thank you, Jen, for the answers. Appreciate it.
Michael Phillips: Okay. Thank you, Jen, for the answers. Appreciate it.
Operator: Thank you very much. Our next question comes from Christian Getzoff with Wells Fargo. Your line is unmuted.
Operator: Thank you very much. Our next question comes from Christian Getzoff with Wells Fargo. Your line is unmuted.
Speaker #3: Okay. Thank you, Jen. I appreciate it.
Speaker #2: Thank you very much . Our next question comes from Christine Getzoff with Wells Fargo . Your line . Your line is unmuted .
[Analyst] (Wells Fargo): Thank you. Good morning. On the property competition, I guess, what needs to happen in the market for us to see an inflection in the rate decreases, at least moderate from here? Thinking about it, is it simple as a large outsized cat event, call it north of $50 billion? And then I guess on the competitive dynamics you're seeing in the space, how much of that competition would you classify as being irrational in pricing versus a more rational normalization of the cycle given the strong rate increases in profitability we've seen in the line?
Christian Getzoff: Thank you. Good morning. On the property competition, I guess, what needs to happen in the market for us to see an inflection in the rate decreases, at least moderate from here? Thinking about it, is it simple as a large outsized cat event, call it north of $50 billion? And then I guess on the competitive dynamics you're seeing in the space, how much of that competition would you classify as being irrational in pricing versus a more rational normalization of the cycle given the strong rate increases in profitability we've seen in the line?
Speaker #5: Thank you . Good morning . On the property competition , I guess what needs to happen in the market for us to see an inflection in the rate decreases , at least , like moderate from here .
Speaker #5: Is it like thinking about is it as simple as a large outsized cat event ? Call it north of 50 billion . And then I guess on the competitive dynamics you're seeing in the space , like how much of that competition would you classify as being irrational and pricing versus a more rational normalization of the cycle , given the strong rate increases in profitability we've seen in the line ?
Jennifer Klobnak: Well, this is Jen. I think what we need is a little bit less capacity. And whatever can cause that to happen would be beneficial to the market. So whether that's an incredible cat event, whether that's a change in the investment opportunities to shift to a better opportunity in the greater space, anything of that nature that would reduce capacity would be beneficial. Having said that, all we need is a stable market. I will tell you that the current catastrophe market is well priced with reasonable terms and conditions in a lot of places. So we can navigate this market easily if it would stay where it's at. Now, with reinsurance renewals being a little more friendly on 1/1, it could soften further. And so again, looking for either a large cat or some other event that would take capacity out of the market would be beneficial.
Jennifer Klobnak: Well, this is Jen. I think what we need is a little bit less capacity. And whatever can cause that to happen would be beneficial to the market. So whether that's an incredible cat event, whether that's a change in the investment opportunities to shift to a better opportunity in the greater space, anything of that nature that would reduce capacity would be beneficial. Having said that, all we need is a stable market. I will tell you that the current catastrophe market is well priced with reasonable terms and conditions in a lot of places. So we can navigate this market easily if it would stay where it's at. Now, with reinsurance renewals being a little more friendly on 1/1, it could soften further. And so again, looking for either a large cat or some other event that would take capacity out of the market would be beneficial.
Speaker #4: Well, this is Jen. I think what we need is a little bit less capacity, and whatever can cause that to happen would be beneficial to the market.
Speaker #4: So, whether that's an incredible cat event, whether that's a change in the investment opportunities to shift to a better opportunity in the greater space, anything of that nature that would reduce capacity would be beneficial.
Speaker #4: Having said that , all we need is a stable market . I will tell you that the current catastrophe market is well priced with reasonable terms and conditions in a lot of places , so we can navigate this market easily .
Speaker #4: If it was , say , where it's at now , if reinsurance renewals being a little more friendly on one one , you know , it could soften further .
Jennifer Klobnak: I can't quantify how many are reasonable or unreasonable. As we are navigating that market every day, responding to our producers, we see business being stolen between producers. There's a lot of movement going on just because people have changed which wholesalers they work for. So that's one factor. But we also see carriers that have aligned interests being responsible. And so we don't mind competing against those people. That's a fair playground. It's where capital providers that don't have aligned interests. The MGAs, in some cases, have no downside. It's not aligned with the carriers who have to pay those claims at some point. That's where there's a disconnect and where the MGAs want to use up that capacity quickly because right now the market could be better than it is a few months from now. So I don't know how much of that market there is.
I can't quantify how many are reasonable or unreasonable. As we are navigating that market every day, responding to our producers, we see business being stolen between producers. There's a lot of movement going on just because people have changed which wholesalers they work for. So that's one factor. But we also see carriers that have aligned interests being responsible. And so we don't mind competing against those people. That's a fair playground. It's where capital providers that don't have aligned interests. The MGAs, in some cases, have no downside. It's not aligned with the carriers who have to pay those claims at some point. That's where there's a disconnect and where the MGAs want to use up that capacity quickly because right now the market could be better than it is a few months from now. So I don't know how much of that market there is.
Speaker #4: And so, again, looking for either a large cat or some other event that would take capacity out of the market would be beneficial.
Speaker #4: I can't quantify how many are reasonable or unreasonable, as we are navigating that market every day, responding to our producers. We see business being stolen between producers.
Speaker #4: There's a lot of movement going on because people changed have just which which wholesalers they work for . So that's one factor . But we also see carrier carriers that have aligned interests being responsible .
Speaker #4: And so we don't mind competing against those people . That's a fair , fair play . It's where capital providers that don't have aligned interests , they you know , the mgas in some cases have no downside .
Speaker #4: It's not aligned with the carriers that have to pay those kinds of at some point . That's where there's a disconnect . And where the Mgas want to use up that capacity quickly , now the because right market could be better than it is a few months from now .
Jennifer Klobnak: I can tell you there are examples where people have received capacity for this year that are multiples and multiples of what they were able to provide in terms of capacity last year. So we just know that we can't compete on some of that, so we don't spend a lot of time on those types of deals. We kind of move in the spaces where we know we have a chance as a business.
I can tell you there are examples where people have received capacity for this year that are multiples and multiples of what they were able to provide in terms of capacity last year. So we just know that we can't compete on some of that, so we don't spend a lot of time on those types of deals. We kind of move in the spaces where we know we have a chance as a business.
Speaker #4: So I don't know how much of that market there is . I can tell you there are examples where people have received capacity for this year that are multiples and multiples of what they were able to provide in terms of capacity .
Speaker #4: Last year . So , you know , we just know that we can't compete on some of that . So we don't spend a lot of time on those types of deals .
[Analyst] (Wells Fargo): Got it. Thank you for all the color. And then switching to Personal Umbrella, are you seeing a shift in the competitive dynamics there? Just given we're seeing more of a focus on growth from some of the bigger personal line carriers and mutuals, I'm trying to get a sense of the ability to compete as a monoline provider becomes more challenging given a lot of these other players are focused on bundling, which would include Personal Umbrella. Thank you.
Christian Getzoff: Got it. Thank you for all the color. And then switching to Personal Umbrella, are you seeing a shift in the competitive dynamics there? Just given we're seeing more of a focus on growth from some of the bigger personal line carriers and mutuals, I'm trying to get a sense of the ability to compete as a monoline provider becomes more challenging given a lot of these other players are focused on bundling, which would include Personal Umbrella. Thank you.
Speaker #4: We move in the spaces where we know we have a chance as a business.
Speaker #5: Got it . Thank you for all the color . And then switching to personal umbrella . Are you seeing a shift in the competitive dynamics there ?
Speaker #5: Just given seeing more we're of a focus on growth from , you know , some of the bigger personal line carriers and mutuals , I'm trying to get a sense of the ability to compete as a monoline provider becomes more challenging given a lot of these , you know , other players are focused on bundling , which would include personal umbrella .
Jennifer Klobnak: Yeah. I'm a fan of the bundled auto commercial. But other than that, I would say the personal umbrella market continues to evolve. Some of those personal line carriers that bundle their business, I know, are increasing rates tremendously, changing their coverage. You see that in filings. You see that in the press. And we do partner with some of those same carriers to offer our personal umbrella when it doesn't match their appetite. We have a pretty wide moat around our business. We're pretty embedded with our business partners. They find value in our product and in how we support that product through servicing. So we update our information daily on what kind of business we're getting in the door. We're talking to our producer partners monthly to see what they need and how we can service that business.
Jennifer Klobnak: Yeah. I'm a fan of the bundled auto commercial. But other than that, I would say the personal umbrella market continues to evolve. Some of those personal line carriers that bundle their business, I know, are increasing rates tremendously, changing their coverage. You see that in filings. You see that in the press. And we do partner with some of those same carriers to offer our personal umbrella when it doesn't match their appetite. We have a pretty wide moat around our business. We're pretty embedded with our business partners. They find value in our product and in how we support that product through servicing. So we update our information daily on what kind of business we're getting in the door. We're talking to our producer partners monthly to see what they need and how we can service that business.
Speaker #5: Thank you .
Speaker #4: Yeah, I'm a fan of the bundle commercial, but other than that, I would say the first umbrella market continues to evolve.
Speaker #4: Some of those personal line carriers that that bundle their business . I know our increasing rates tremendously , changing their You see coverage .
Speaker #4: You see that in filings. You see that in the press. And we do partner with some of those same carriers to offer our umbrella, when it matches their appetite.
Speaker #4: We have a pretty wide moat around our business. We're pretty embedded with our business. They partners find value in our product and in how we support that product through servicing.
Speaker #4: So we we we update our information daily on what kind of business we're getting in the door . We're talking to our producer partners monthly to see , you know , what they need and how we can service that business .
Jennifer Klobnak: So I feel pretty good that we have a good base to go from, a position of strength going into the next year. We're also still getting some rate increases in various states where we need some rate. And so I see opportunity for growth from both rate but also from our continued great service that we provide to our producers. I think we'll have more opportunity there. So while there's some more competition coming in on the edges, I think people might be noticing that we do a pretty good job of this. There's some people talking about getting in. We're going to defend our space. We're going to continue to evolve this product and offer a quality product to ensure it's out there and we need this coverage.
So I feel pretty good that we have a good base to go from, a position of strength going into the next year. We're also still getting some rate increases in various states where we need some rate. And so I see opportunity for growth from both rate but also from our continued great service that we provide to our producers. I think we'll have more opportunity there. So while there's some more competition coming in on the edges, I think people might be noticing that we do a pretty good job of this. There's some people talking about getting in. We're going to defend our space. We're going to continue to evolve this product and offer a quality product to ensure it's out there and we need this coverage.
Speaker #4: So I feel pretty good that we have a good base to go from a position of strength going into the next year. We're also still getting some rate increases in various states where we need some rate.
Speaker #4: And so I see opportunity for growth from both rates, but also from our continued great service that we provide to our producers.
Speaker #4: I think we'll have more opportunity there . So while there's a there's some more competition coming in on the edges , I think people might be noticing that we do a pretty good job of this .
Speaker #4: There's some people talking about getting in . We're going to defend our space . We're going to continue to evolve this product and offer a quality product to ensure it's out there is coverage .
[Analyst] (Wells Fargo): Got it. And if I could sneak one more, have you seen any benefit on submission volumes from the elimination of the diligence search documentation requirement for surplus lines in Florida? I know that's a pretty good portion of your premium mix. And I just wanted to see if there's any updated thoughts there. And then also if you have any updated thoughts around the general tort reform we've seen, not only in Florida, but in states like Georgia, on loss trends. Thank you.
Christian Getzoff: Got it. And if I could sneak one more, have you seen any benefit on submission volumes from the elimination of the diligence search documentation requirement for surplus lines in Florida? I know that's a pretty good portion of your premium mix. And I just wanted to see if there's any updated thoughts there. And then also if you have any updated thoughts around the general tort reform we've seen, not only in Florida, but in states like Georgia, on loss trends. Thank you.
Speaker #5: Got it. And if I could sneak one more, have you seen any benefit on submission volumes from the elimination of the diligent search documentation requirement for surplus lines in Florida?
Speaker #5: I know that's a pretty good portion of your premium mix , and I just wanted to see if there's any updated thoughts there .
Speaker #5: And then also , if you have any updated thoughts around the general tort reform we've seen , not only in Florida , but , you know , in states like Georgia on loss trends .
Jennifer Klobnak: I'll tell you that in Florida, in the last year, we have actually tried to slow our new business a little bit given the severity that we were seeing previously. I mean, we just talked about our actions from last Q4, for example. And so with some of the actions we've taken between rate attachment points and curtailing some of the production we want from certain producers, we haven't really seen an impact from that specific regulation just because we're more controlling our growth at this point in that state. On the other side of it, I'll tell you, tort reform has been a positive.
Jennifer Klobnak: I'll tell you that in Florida, in the last year, we have actually tried to slow our new business a little bit given the severity that we were seeing previously. I mean, we just talked about our actions from last Q4, for example. And so with some of the actions we've taken between rate attachment points and curtailing some of the production we want from certain producers, we haven't really seen an impact from that specific regulation just because we're more controlling our growth at this point in that state. On the other side of it, I'll tell you, tort reform has been a positive.
Speaker #5: Thank you .
Speaker #4: I'll tell you that in Florida in the last year, we have actually tried to slow our new business a little bit, given the severity that we were seeing previously.
Speaker #4: And we just talked about our actions from last fourth quarter . For example . And so with some of the actions we've taken between rate attachment points and curtailing some of the production , we want from certain producers , we haven't really seen an impact from that specific regulation just because we're more controlling our growth at this point in that state .
Jennifer Klobnak: We don't necessarily have a number we can point to, but we do see on individual cases where we have a more reasonable resolution because we can present actual medical costs, what people paid, just the things that we can do to fight the plaintiff's attorneys and their playbook, create a more fair playing field there to resolve claims fairly for that insured who has an actual loss. We're willing to pay for that loss. We just don't want to pay the attorneys much. And so that environment has changed and has improved. We'll probably see that in other states. It's a little more early, like for Georgia, for example. But some of the things they have passed have been favorable as well.
We don't necessarily have a number we can point to, but we do see on individual cases where we have a more reasonable resolution because we can present actual medical costs, what people paid, just the things that we can do to fight the plaintiff's attorneys and their playbook, create a more fair playing field there to resolve claims fairly for that insured who has an actual loss. We're willing to pay for that loss. We just don't want to pay the attorneys much. And so that environment has changed and has improved. We'll probably see that in other states. It's a little more early, like for Georgia, for example. But some of the things they have passed have been favorable as well.
Speaker #4: On the other side of it , I'll pay a Tory reform has been a positive . We don't necessarily have a number we can point to , but we do see an individual cases where we have a more reasonable resolution because we can present actual medical costs .
Speaker #4: What people paid. Just the things that we can do to fight the plaintiff's attorneys and their playbook, create a more fair playing field.
Speaker #4: We're there to resolve claims fairly. For that insured who has an actual loss, we're willing to pay for that loss. We just don't want to pay the attorneys as much.
Speaker #4: And so that environment has changed and has improved , and we'll probably see that in other states . It's a little more early , like for Georgia , for example .
Jennifer Klobnak: In addition to that, all of that third-party litigation, there's a lot of states now that have started passing legislation to get those kind of arrangements disclosed and that kind of thing, which will also help both in personal umbrella as well as broader auto coverages.
In addition to that, all of that third-party litigation, there's a lot of states now that have started passing legislation to get those kind of arrangements disclosed and that kind of thing, which will also help both in personal umbrella as well as broader auto coverages.
Speaker #4: But some of the things they have passed have been favorable as well . And in addition to that , all of that third party litigation , there's a lot of states now that have started passing legislation to get those kind of arrangements disclosed and that kind of thing , which will also help both in umbrella as well as auto broader coverages .
[Analyst] (Wells Fargo): Thank you.
Christian Getzoff: Thank you.
Operator: Thank you very much. Your next question comes from Andrew Andersen with Jefferies. Your line is open.
Operator: Thank you very much. Your next question comes from Andrew Andersen with Jefferies. Your line is open.
Speaker #5: Thank you .
Andrew Anderson: Hey, good morning. Recognizing really strong overall results and a very good long-term track record here, if we just kind of focus on casualty over the last two years, 98 reported a combined ratio, a little bit uncharacteristic to have that two years in a row. I realize there were some headwinds on trucking, both on the reserving side and on the premium side. But do you feel that some of these headwinds within this casualty segment are behind you or have really worked their way through and you're kind of entering 2026 in a better position, both from a combined ratio and from any premium growth headwind into next year?
Andrew Andersen: Hey, good morning. Recognizing really strong overall results and a very good long-term track record here, if we just kind of focus on casualty over the last two years, 98 reported a combined ratio, a little bit uncharacteristic to have that two years in a row. I realize there were some headwinds on trucking, both on the reserving side and on the premium side. But do you feel that some of these headwinds within this casualty segment are behind you or have really worked their way through and you're kind of entering 2026 in a better position, both from a combined ratio and from any premium growth headwind into next year?
Speaker #2: Thank you very much. Your next question comes from Andrew Anderson with Jefferies. Your line is open.
Speaker #6: Hey good morning . Recognizing really strong overall results and a very good long term track record here . If we just kind of focus on on casualty over the last two years , 98 reported combined ratio a little bit uncharacteristic to have that two years in a row .
Speaker #6: And I realized there were some headwinds on on trucking , both on the reserving side and on the premium side . But do you feel that some of these headwinds within this casualty segment are behind you or have really worked their way through and you're kind of entering 26 in a better position , both from a booking ratio and from any premium growth headwind into next year ?
Craig Kliethermes: Well, Andrew, I think as we've characterized the product-level rate increases we've gotten within the casualty segment, we think that's probably the strongest foundation we can offer in terms of data itself. We feel better about where the overall rate level is for a lot of these businesses that have had some challenges related to them. So it's hard to say the exact point in time where you turn the corner into something that may offer some additional potential for expanded margins. But having that rate profile and having some compounding of those rates over multiple years, we think, is a good foundation.
Craig Kliethermes: Well, Andrew, I think as we've characterized the product-level rate increases we've gotten within the casualty segment, we think that's probably the strongest foundation we can offer in terms of data itself. We feel better about where the overall rate level is for a lot of these businesses that have had some challenges related to them. So it's hard to say the exact point in time where you turn the corner into something that may offer some additional potential for expanded margins. But having that rate profile and having some compounding of those rates over multiple years, we think, is a good foundation.
Speaker #1: Well , Andrew , I think , you know , as we've characterized the product level , rate increases , we've gotten within the casualty think segment , we that's probably the strongest foundation we can offer in terms of data itself .
Speaker #1: You know , we we better about where the feel overall rate level is for a lot of these businesses that have had some challenges related to them .
Speaker #1: So , you know , it's hard to say , you know , the exact point in time where you you turn the corner into something that may offer some additional potential for expanded margins .
Speaker #1: But, you know, having that rate profile and having some compounding of those rates over multiple years, we think is a good foundation.
Jennifer Klobnak: Yeah. In addition to that, I would say we have clearly slowed a bit releasing reserves for some of those coverages. I mean, we've talked about that in the past, too. Initial booking ratios tend to hold up a little longer. While we may be seeing positive signs like claim counts that I look at, we're not acting. We tend to be pessimists. So we don't tend to act on the good news. We tend to wait and make sure that we are seeing enough good news for a while that we get the trend before we're going to recognize it for sure.
Jennifer Klobnak: Yeah. In addition to that, I would say we have clearly slowed a bit releasing reserves for some of those coverages. I mean, we've talked about that in the past, too. Initial booking ratios tend to hold up a little longer. While we may be seeing positive signs like claim counts that I look at, we're not acting. We tend to be pessimists. So we don't tend to act on the good news. We tend to wait and make sure that we are seeing enough good news for a while that we get the trend before we're going to recognize it for sure.
Speaker #4: Yeah . In addition to that , I would say , you know , we have clearly slowed a bit releasing reserves for some of those coverages .
Speaker #4: I mean, we've talked about that in the past, too. You know, initial booking ratios tend to hold up a little longer.
Speaker #4: While we may be seeing positive signs like that , I look at , you know , we're not acting . We tend to be pessimistic .
Speaker #4: act tend to We don't on the good news . We tend to wait and sure that make we are seeing enough good news for a while .
Craig Kliethermes: Andrew, I grew up in the Show-Me State of Missouri. So we've got to wait and see. On good news, we're slower to usually recognize that. But if we see something go in the other direction, we obviously like to try to get that up as quickly as possible. So that's the way we look at things.
Craig Kliethermes: Andrew, I grew up in the Show-Me State of Missouri. So we've got to wait and see. On good news, we're slower to usually recognize that. But if we see something go in the other direction, we obviously like to try to get that up as quickly as possible. So that's the way we look at things.
Speaker #4: That becomes a trend before we're going to recognize it for sure.
Speaker #1: Andrew , I grew up in the Show-Me state of Missouri , so we we got to wait and see on on good news , we're slower to usually recognize that .
Speaker #1: But if we see something going the other direction, we always like to try to get that up as quickly as possible. So that's the way we look at things.
Andrew Anderson: Understood. On the property side, you've talked quite a bit about the MGA market being aggressive there. How would you characterize kind of more of the traditional or admitted carriers?
Andrew Andersen: Understood. On the property side, you've talked quite a bit about the MGA market being aggressive there. How would you characterize kind of more of the traditional or admitted carriers?
Speaker #6: Understood . And on the property side , you've talked quite a bit about the MGA market being aggressive . There . How would you characterize kind of more of the traditional or admitted carriers .
Jennifer Klobnak: Well, I would say that everybody wants premium. So it's a fight out there. But I would say the other E&S carriers are fairly responsible. I'll give them credit. And so again, we don't mind competing against them. I think if we could just reduce the local capacity in that market, it would at least stabilize, which would be great.
Jennifer Klobnak: Well, I would say that everybody wants premium. So it's a fight out there. But I would say the other E&S carriers are fairly responsible. I'll give them credit. And so again, we don't mind competing against them. I think if we could just reduce the local capacity in that market, it would at least stabilize, which would be great.
Speaker #4: Well , I would say that , you know , everybody wants premium . So it is a it's a fight out there . But I would say the , the , the other carriers are fairly responsible .
Speaker #4: I'll give them credit . And so we don't again , we don't mind competing against them . I think if we could just reduce a little capacity in that market , it could , it would at least stabilize , which would be great .
Andrew Anderson: Thanks. Then maybe last one. I think I heard 5% for Hawaii Home. Is that just reflective of we've lapped kind of the book rolls here because it's quite a dismal quarter over quarter?
Andrew Andersen: Thanks. Then maybe last one. I think I heard 5% for Hawaii Home. Is that just reflective of we've lapped kind of the book rolls here because it's quite a dismal quarter over quarter?
Speaker #6: Thanks . And then maybe last one , I think I heard 5% for Hawaii home . Is that reflective of just we've lapped kind of the book rolls here because it's quite a Decel quarter over quarter .
Jennifer Klobnak: Yeah, that's correct. We had a couple of book rolls that ended right at the end of Q3. And so now we're back to our outstanding local service and just competing on a regular basis at this point. In addition to getting rate, we have gotten rate increases that'll drive a little bit of growth as well.
Jennifer Klobnak: Yeah, that's correct. We had a couple of book rolls that ended right at the end of Q3. And so now we're back to our outstanding local service and just competing on a regular basis at this point. In addition to getting rate, we have gotten rate increases that'll drive a little bit of growth as well.
Speaker #4: Yeah . That's correct . We had a couple of book rolls that ended right at the end of the third quarter . And so , you know , now we're back to our outstanding local service .
Speaker #4: And competing on a regular basis at this point , in addition to getting have gotten great increases that will drive a little bit of growth as well .
Andrew Anderson: Thank you.
Andrew Andersen: Thank you.
Operator: Thank you very much. Your next question comes with Mark Hughes with Truist. Your line is open.
Operator: Thank you very much. Your next question comes with Mark Hughes with Truist. Your line is open.
Speaker #6: Thank you .
[Analyst] (Truist): Yeah. Thank you very much. Good morning.
Mark Hughes: Yeah. Thank you very much. Good morning.
Speaker #2: Thank you very much. Your next question comes from Mark Hughes with Truist. Your line is open.
Andrew Anderson: Any granularity you can provide on that property dynamic just in terms of the competitive pressure as you think about Q4 relative to Q3 or even through the quarter, kind of the monthly pressure? I know it's certainly more challenging year over year, but has it stabilized at all, or is it still under incremental pressure?
Any granularity you can provide on that property dynamic just in terms of the competitive pressure as you think about Q4 relative to Q3 or even through the quarter, kind of the monthly pressure? I know it's certainly more challenging year over year, but has it stabilized at all, or is it still under incremental pressure?
Speaker #1: Yeah .
Speaker #7: Thank you very much . Good morning . Any granularity you can provide on that property dynamic , just in terms of the competitive pressure as you think about Q4 relative to Q3 or even through the kind of the quarter , monthly pressure , does there .
Speaker #7: I know it's certainly challenging year over year, but has it stabilized at all, or is it still under incremental pressure?
Jennifer Klobnak: That's a tough question. You're getting pretty granular, I would say. Every month, obviously, we look at it on a very regular basis. Each month, if it's good news, we hope it begins a trend. If it's down, we're, "Oh, what's going on?" I don't know that I should provide color on a monthly basis. I'll tell you that in the fourth quarter, that's the smallest quarter for renewals. I mean, there's just not as many renewal dates out there. It's a tough quarter to really conclude about anything. One-one is a big date. Then in the spring, four-one, five-one, six-one, seven-one, all those are bigger dates. That's really where you make your book of business. All of that is coming up. I think providing any one-one color on renewals will probably provide you a little too much information.
Jennifer Klobnak: That's a tough question. You're getting pretty granular, I would say. Every month, obviously, we look at it on a very regular basis. Each month, if it's good news, we hope it begins a trend. If it's down, we're, "Oh, what's going on?" I don't know that I should provide color on a monthly basis. I'll tell you that in the fourth quarter, that's the smallest quarter for renewals. I mean, there's just not as many renewal dates out there. It's a tough quarter to really conclude about anything. One-one is a big date. Then in the spring, four-one, five-one, six-one, seven-one, all those are bigger dates. That's really where you make your book of business. All of that is coming up. I think providing any one-one color on renewals will probably provide you a little too much information.
Speaker #4: That's a tough question . You're getting pretty granular . I would say , you know , every month we obviously we look at it on a very regular basis .
Speaker #4: And each month we , you know , if it's good news , we hope it begins a trend . If it's down , or oh , what's going on .
Speaker #4: So, I don't know that I should provide color on a monthly basis. I'll tell you that in the fourth quarter.
Speaker #4: That's the smallest quarter for renewals . I mean , there's just not as many renewal dates out there . So it's a tough quarter to really conclude about anything .
Speaker #4: One one is a big date . And then in the spring , 4151617 all those are bigger dates . And that's really where you make your book of business .
Jennifer Klobnak: The market is still competitive. It continues to be. We will see how that plays out this year.
Speaker #4: So all of that is coming up . I think providing any one one color on renewals is probably a little too much information .
The market is still competitive. It continues to be. We will see how that plays out this year.
Speaker #4: So, the market is still competitive. It continues to be, and we will see how that plays out this year.
Andrew Anderson: Yeah. Thank you for that. And then thinking about the lower reinsurance costs, would you say pricing was already incorporating that? There seemed to be a pretty wide expectation for a 10% to 20% decline. Just thinking about when that actually happens, does that mean much for the market in the near term?
Mark Hughes: Yeah. Thank you for that. And then thinking about the lower reinsurance costs, would you say pricing was already incorporating that? There seemed to be a pretty wide expectation for a 10% to 20% decline. Just thinking about when that actually happens, does that mean much for the market in the near term?
Speaker #7: Yeah . Thank you for that . And then the thinking about the lower reinsurance costs , would you say pricing was already incorporating that .
Speaker #7: There seemed to be pretty wide expectation for a 10 to 20% decline. Just thinking about whether, when that actually happens, does that mean much for the market in the near term?
Jennifer Klobnak: Well, as we prepared for our 1/1 renewals, we did contemplate a bit of a decrease in our costs. So we built that into our benchmark pricing, which indicates how we need to price the business. I don't know what other companies do. I will tell you that last year in January 2025, we didn't really see an impact from the reinsurance renewals. But in February, we noticed that that's when all of that information trickled down to the underwriter desk, and people got more aggressive because they did get relief last year on 1/1. So January, we're just going to put it in the books, and we'll see if the behavior changes later this spring to incorporate that. We also see changes on 4/1 because that's when some MGA relationships renew their capacity. So we may see further change of behavior at that point in time.
Jennifer Klobnak: Well, as we prepared for our 1/1 renewals, we did contemplate a bit of a decrease in our costs. So we built that into our benchmark pricing, which indicates how we need to price the business. I don't know what other companies do. I will tell you that last year in January 2025, we didn't really see an impact from the reinsurance renewals. But in February, we noticed that that's when all of that information trickled down to the underwriter desk, and people got more aggressive because they did get relief last year on 1/1. So January, we're just going to put it in the books, and we'll see if the behavior changes later this spring to incorporate that. We also see changes on 4/1 because that's when some MGA relationships renew their capacity. So we may see further change of behavior at that point in time.
Speaker #4: Well , as we prepared for our one one renewals , we did contemplate a bit of a decrease in our costs . And so we built that into our benchmark pricing , which indicates how we need to price the business .
Speaker #4: I what other don't know companies do . I will tell you that last year , in 2025 , January , we didn't really see an impact from the reinsurance renewals .
Speaker #4: But in February , we noticed that that's when all of that trickled down to the and people got more underwriting desk aggressive because they did get relief .
Speaker #4: On last year, one-on-one. So January, we're just going to put it books in the, and we'll see if the behavior changes later.
Speaker #4: This spring to incorporate that , we also see changes on four one , because that's when some MGA relationships renew their capacity . And so we may see further change of behavior at that point in time .
Jennifer Klobnak: But that's yet to be determined.
But that's yet to be determined.
Andrew Anderson: And then one quick one, if I might. You'd mentioned that you were seeking additional rate increases in personal umbrella, and that would help 2026. Can you size that?
Mark Hughes: And then one quick one, if I might. You'd mentioned that you were seeking additional rate increases in personal umbrella, and that would help 2026. Can you size that?
Speaker #4: But that's yet to be determined.
Speaker #7: And then one quick one , if I might . You mentioned that you were seeking additional rate increases and personal umbrella , and that would help 2026 .
Jennifer Klobnak: Well, this is a 50-state product where we have to file in each state, and each state has a different process. So I can tell you that effective 1 December, we did get a California rate increase of about 20%. And so that will bleed into part of the book. California is one of our bigger states. I can tell you our process is that every quarter, and now that we have year-end, it would be nice to, again, look at results to see which states require rate, where are we not getting adequate rate, and where are we. Those analyses are underway already. And so we'll conclude in the next couple of weeks if we need to start taking additional action.
Jennifer Klobnak: Well, this is a 50-state product where we have to file in each state, and each state has a different process. So I can tell you that effective 1 December, we did get a California rate increase of about 20%. And so that will bleed into part of the book. California is one of our bigger states. I can tell you our process is that every quarter, and now that we have year-end, it would be nice to, again, look at results to see which states require rate, where are we not getting adequate rate, and where are we. Those analyses are underway already. And so we'll conclude in the next couple of weeks if we need to start taking additional action.
Speaker #7: Can you size that ?
Speaker #4: Well, you know, this is a 50-state product where we have to file in each state, and each state has a different process.
Speaker #4: So I can tell you that effective December 1st , we did get a California rate increase of about 20% . And so that will bleed into part of the book .
Speaker #4: California is one of our bigger states . I can tell you our process is that every quarter and now that we have year end , it'll be nice to again look at results to see which states require rate .
Speaker #4: Where are we not getting adequate rate and where where are we ? Those analyses are underway already . And so we'll conclude in the next couple of weeks if we need to start taking additional action .
Jennifer Klobnak: Just based on the filings that were approved in the second half of last year, we know that there will be a pretty good amount of rate going into the book this year as well.
Just based on the filings that were approved in the second half of last year, we know that there will be a pretty good amount of rate going into the book this year as well.
Speaker #4: But just based on the filings that were approved in the second half of last year , we know that there will be , you know , a pretty good amount of rate going this year as into the book well .
Andrew Anderson: Thank you very much.
Mark Hughes: Thank you very much.
Operator: Thank you. Thank you. Our next question comes from Meyer Shields with Keefe, Bruyette & Woods. Your line is open.
Operator: Thank you. Thank you. Our next question comes from Meyer Shields with Keefe, Bruyette & Woods. Your line is open.
Speaker #7: Thank you very much .
Speaker #1: Thank you .
[Analyst] (KBW): Great. Thanks so much. Jen, when you talk about lower auto claim emergence, is that across accident years or was that an accident year 2025 comment?
Meyer Shields: Great. Thanks so much. Jen, when you talk about lower auto claim emergence, is that across accident years or was that an accident year 2025 comment?
Speaker #2: Thank you . Our next question comes from Maya Shields with Keefe Bruyette Woods . Your line is open .
Speaker #3: Great . Thanks so much , Jen .
Speaker #1: When you talked about lower auto claim emergence, is that across years, or was that a next year—2025—comment?
Jennifer Klobnak: These are just new claims that are received in 2025. They could be related to the 2025 accident year or previous accident years.
Jennifer Klobnak: These are just new claims that are received in 2025. They could be related to the 2025 accident year or previous accident years.
Speaker #4: These are just new claims that are received in 2025 . They could be related to 2025 accident year or previous accident years .
[Analyst] (KBW): Okay. Thank you.
Meyer Shields: Okay. Thank you.
Craig Kliethermes: But on the reduction.
Craig Kliethermes: But on the reduction.
Andrew Anderson: Go ahead.
Meyer Shields: Go ahead.
Craig Kliethermes: I was just going to say, I think we did see a reduction last year as well, though, so two years in a row.
Craig Kliethermes: I was just going to say, I think we did see a reduction last year as well, though, so two years in a row.
Speaker #1: Okay . Thank you . On the go ahead , I was just going to say did see a reduction last year I think we as well , though .
[Analyst] (KBW): Right. Okay. No, that's all right. I just wanted to make sure that I was understanding that correctly. The $150 million catastrophe reinsurance limit reduction, was that at the top end of the tower? Did your attachment point change at all because of the smaller book?
Meyer Shields: Right. Okay. No, that's all right. I just wanted to make sure that I was understanding that correctly. The $150 million catastrophe reinsurance limit reduction, was that at the top end of the tower? Did your attachment point change at all because of the smaller book?
Speaker #1: So two years in a row , right ? Okay . No , I'll make sense . I want to make sure that I understand that correctly .
Speaker #1: The $150 million catastrophe reinsurance limit reduction was that at the top tower , end of the did your attachment point change at all because of the smaller book ?
Jennifer Klobnak: No. So we maintained our $50 million attachment on the cap tower and just brought that tower down.
Jennifer Klobnak: No. So we maintained our $50 million attachment on the cap tower and just brought that tower down.
Speaker #4: No. So we maintained our $50 million attachment on the tower and brought that tower down.
[Analyst] (KBW): Okay. And then, final question. You mentioned, I guess, concerns about competitors seeking to meet their budgets. How significant is maybe fourth-quarter competition compared to other quarters? I've heard the comments a lot. I'm just trying to get a sense of how material you think it is in the market.
Meyer Shields: Okay. And then, final question. You mentioned, I guess, concerns about competitors seeking to meet their budgets. How significant is maybe fourth-quarter competition compared to other quarters? I've heard the comments a lot. I'm just trying to get a sense of how material you think it is in the market.
Speaker #1: Okay . And then final question . And just you mentioned , I guess , concerns about competitors seeking to meet their budgets , how significant is maybe fourth quarter competition compared to other quarters ?
Jennifer Klobnak: I mean, overall, Q4 is always challenging. Our underwriters will always say, "Oh, other people," and it's legitimate. Other people are compensated on top line directly, sometimes not even compensated on bottom line. It's just strictly top line. You do see a rush to meet people's bonuses. I argue with them that that happens every year. The real test is, is it worse this year in Q4 versus last year's Q4, the sprint to the finish? In some of our segments, I would say people have this feeling it's worse, but it is a lot of feeling as opposed to something you can measure to some extent. That's offset by, in some cases, like in property where we have just less business that renews.
Jennifer Klobnak: I mean, overall, Q4 is always challenging. Our underwriters will always say, "Oh, other people," and it's legitimate. Other people are compensated on top line directly, sometimes not even compensated on bottom line. It's just strictly top line. You do see a rush to meet people's bonuses. I argue with them that that happens every year. The real test is, is it worse this year in Q4 versus last year's Q4, the sprint to the finish? In some of our segments, I would say people have this feeling it's worse, but it is a lot of feeling as opposed to something you can measure to some extent. That's offset by, in some cases, like in property where we have just less business that renews.
Speaker #1: I've heard the comments a lot . I'm just trying to get a sense of how material you think it is in the market .
Speaker #4: I mean , overall , the fourth quarter is always challenging and our underwriters always say , oh , other people . And it's legitimate .
Speaker #4: Other people are compensated on line top directly . Sometimes not even compensated on bottom line . It's just strictly top line . you do So see a rush to meet people's bonuses .
Speaker #4: But I argue with them that that happens every year . So the real test is , is it worse this year ? In the fourth quarter versus last year , fourth quarter , the sprint to the finish and in some of our segments , I would say people have this feeling it's worse , but it is a lot of feeling as opposed to something you can measure to some extent .
Jennifer Klobnak: So you can't really measure what's going on as well as other quarters where there's just more business available.
So you can't really measure what's going on as well as other quarters where there's just more business available.
Speaker #4: That's offset by . In some cases , like in property where we have just less business that renews . So you can't really measure what's going on as well as quarters where there's just other more , more business available .
[Analyst] (KBW): Okay. No, that makes sense. I guess the question for me is always, is the first quarter so far less competitive than the fourth quarter that just ended?
Meyer Shields: Okay. No, that makes sense. I guess the question for me is always, is the first quarter so far less competitive than the fourth quarter that just ended?
Speaker #1: Okay , that makes sense . I guess the question for me , as always , is the first quarter . So far less competitive than the fourth quarter that just ended ?
Jennifer Klobnak: Sorry, I didn't follow that.
Jennifer Klobnak: Sorry, I didn't follow that.
[Analyst] (KBW): Oh, I'm just asking whether some of that competitive pressure has abated in Q1 because right now, people aren't as worried about 2026 premium budgets. I know it's early in Q1 to even ask.
Meyer Shields: Oh, I'm just asking whether some of that competitive pressure has abated in Q1 because right now, people aren't as worried about 2026 premium budgets. I know it's early in Q1 to even ask.
Speaker #4: Sorry , I didn't follow that .
Speaker #1: Oh, I'm just asking whether some of that competitive pressure has abated in the first quarter, because right now people aren't as worried about 2026 premium budgets.
Jennifer Klobnak: Well, it's too early to ask. Yeah. We haven't closed January yet. So it's hard to see. I see a partial month is all I have right now.
Jennifer Klobnak: Well, it's too early to ask. Yeah. We haven't closed January yet. So it's hard to see. I see a partial month is all I have right now.
Speaker #1: I know it's early in the first quarter . It's even ask .
Speaker #4: Well , it's too early to ask . Yeah , we haven't closed January yet , so it's hard to see . I see a partial a partial month have right is all I now .
[Analyst] (KBW): Fair enough. Okay. Thanks so much.
Meyer Shields: Fair enough. Okay. Thanks so much.
Operator: Thank you. Your next question comes from the line of Carol Brizese with Philo Smith & Co.
Operator: Thank you. Your next question comes from the line of Carol Brizese with Philo Smith & Co.
Speaker #1: enough . Fair Okay . Thanks so much .
Speaker #2: Thank you. Your next question comes from the line of Carol Bridges with Willow Smith and Co.
[Analyst] (KBW): Sorry, it's Jamie Inglis. Hey, guys. Great quarter and year. But I've got a question about the reserve development. If you look at the 2024 and prior CAT events, there was a big swing both the quarter and the year. And I'm wondering, is that just sort of a normal thing, time to figure out what the CATs actually ended up as, or is there something specific or unusual in there?
Jamie Inglis: Sorry, it's Jamie Inglis. Hey, guys. Great quarter and year. But I've got a question about the reserve development. If you look at the 2024 and prior CAT events, there was a big swing both the quarter and the year. And I'm wondering, is that just sort of a normal thing, time to figure out what the CATs actually ended up as, or is there something specific or unusual in there?
Speaker #8: I'm sorry , it's Jamie Inglis . Hey , guys . Great quarter in year a . But I've got question about the reserve development .
Speaker #8: If you look at the 24 and prior CAD events , there was a big swing in both the quarter and the year . And I'm wondering , is that just sort of the , you know , a normal thing ?
Speaker #8: Time to figure out what what the you know , what the cats actually ended up as . Or is there something specific or unusual in there ?
Craig Kliethermes: Not unusual, Jamie. This is Aaron. You think back to last year; we had a couple of sizable storms in Helene and Beryl. I think we outlined our expectations for there in our third quarter results. And also, at that time, offered a range of potential loss activity around Hurricane Milton, which was early days in the fourth quarter of last year. We tightened up our expectations as of the fourth quarter release last year, but that was close to $50 million of an estimate just on Milton alone. And so you get a year on from those events and then some, and you have some more comfort around what actual losses are going to transpire. And we felt it prudent to take down some of the IBNR. Those were not the only events that were incorporated in that analysis.
Craig Kliethermes: Not unusual, Jamie. This is Aaron. You think back to last year; we had a couple of sizable storms in Helene and Beryl. I think we outlined our expectations for there in our third quarter results. And also, at that time, offered a range of potential loss activity around Hurricane Milton, which was early days in the fourth quarter of last year. We tightened up our expectations as of the fourth quarter release last year, but that was close to $50 million of an estimate just on Milton alone. And so you get a year on from those events and then some, and you have some more comfort around what actual losses are going to transpire. And we felt it prudent to take down some of the IBNR. Those were not the only events that were incorporated in that analysis.
Speaker #4: Not unusual . Jamie , this Aaron is . You know , you think back to last year , we had a couple of sizable storms in Halloween .
Speaker #4: And Beryl , I think we outlined our expectations for there in our third quarter results . And also at that time offered a range of of potential loss activity around Hurricane Milton , which was early days .
Speaker #4: In the fourth quarter of last year . We tightened up our expectations . As of the fourth quarter release last that you know , was , year , but close to $50 million of an estimate just on Milton alone .
Speaker #4: so you get a And year on from from those events . And then some . And you have some more comfort around what actual losses are going to transpire .
Speaker #4: And we felt it prudent to take down some of the inner those were not the only events that that were incorporated in that analysis .
Craig Kliethermes: We have CAT activity going back over several years that we examined. Each storm stands unto itself. It's a hand-to-hand combat in terms of examining claim activity, what's outstanding, what may be in litigation, all fitting into our thinking on what to take down there, so.
We have CAT activity going back over several years that we examined. Each storm stands unto itself. It's a hand-to-hand combat in terms of examining claim activity, what's outstanding, what may be in litigation, all fitting into our thinking on what to take down there, so.
Speaker #4: We have known, we, you know, cat activity going back over several years that we examined and, you know, each storm stands unto itself, and it's a hand-to-hand combat in terms of examining claim activity.
Speaker #4: What's not standing , what may be in litigation , all fitting into our thinking on what to take down there . So .
[Analyst] (KBW): Okay. Great. That's good. Thanks a lot.
Jamie Inglis: Okay. Great. That's good. Thanks a lot.
Craig Kliethermes: Yeah. Thank you, Jamie.
Craig Kliethermes: Yeah. Thank you, Jamie.
Operator: Your next question comes from the line of Gregory Peters with Raymond James. Your line is open.
Operator: Your next question comes from the line of Gregory Peters with Raymond James. Your line is open.
Speaker #8: Okay , great . That's good . Thanks a lot .
Speaker #4: Thank you Jamie .
[Analyst] (Raymond James): Hey, good morning, guys. This is Mitch Rubin. Thanks for taking my call. You referenced the 13% rate increase in transportation this quarter. Is there any quantification you could provide on the magnitude of the underlying loss trend you're seeing in the portfolio and what level of rate increases you believe might be required in 2026 to sustain rate adequacy in the book? Thanks.
Gregory Peters: Hey, good morning, guys. This is Mitch Rubin. Thanks for taking my call. You referenced the 13% rate increase in transportation this quarter. Is there any quantification you could provide on the magnitude of the underlying loss trend you're seeing in the portfolio and what level of rate increases you believe might be required in 2026 to sustain rate adequacy in the book? Thanks.
Speaker #2: Your next question comes from the line of Peters with Raymond James. Your line is open, Gregory.
Speaker #5: Hey good morning guys . This is Mitch Rubin . Thanks for taking my call . You referenced the 13% rate increase in transportation this quarter .
Speaker #5: Is there any quantification you could provide on the magnitude of the underlying loss trend you're seeing in the portfolio? And what level of rate increases you believe might be required in 2026 to sustain rate adequacy?
Craig Kliethermes: Yeah. This is Craig Kliethermes, and so I'll speak to that. So I mean, we anticipate continuing to try to get increases going forward, probably double-digit increases. And we have seen elevated severity trends in pretty much all auto businesses since COVID, since the courts have opened back up. At some point, we think that has to subside. I mean, people are going to want to continue to pay 10%, 15% increases in their insurance, or they can't afford to pay 10%, 15% increases in their insurance. So at some point, there's going to be a breaking point where they're either going to get more tort reform in some of these states so that we can moderate this loss severity trend. In the meantime, you can expect us. I can't speak for other companies, but you can speak to us.
Craig Kliethermes: Yeah. This is Craig Kliethermes, and so I'll speak to that. So I mean, we anticipate continuing to try to get increases going forward, probably double-digit increases. And we have seen elevated severity trends in pretty much all auto businesses since COVID, since the courts have opened back up. At some point, we think that has to subside. I mean, people are going to want to continue to pay 10%, 15% increases in their insurance, or they can't afford to pay 10%, 15% increases in their insurance. So at some point, there's going to be a breaking point where they're either going to get more tort reform in some of these states so that we can moderate this loss severity trend. In the meantime, you can expect us. I can't speak for other companies, but you can speak to us.
Speaker #5: In the book? Thanks.
Speaker #4: Yeah , this is Craig Kliethermes . So I'll speak to that . So I mean , we anticipate continue to try to get increases going forward .
Speaker #4: Probably double digit increases . We have seen elevated severity trends in pretty much all auto businesses since Covid , since the courts have opened back up , at some point , we think that has to subside .
Speaker #4: I mean, people aren't going to want to continue to pay, right? Ten, you know, 15% increases in their insurance, or they can't afford to pay in their 10 to 15% increases in insurance.
Speaker #4: So, at some point, there's going to be a breaking point where we're either going to get more tort reform in some of these states so that we can moderate loss severity trend.
Craig Kliethermes: We try to at least get the increase to cover trend. If we can't, we'll get smaller. That's just the way we operate. We're going to try to continue to get 10%, 15% increases on auto business going forward until we see that loss cost trend subside.
We try to at least get the increase to cover trend. If we can't, we'll get smaller. That's just the way we operate. We're going to try to continue to get 10%, 15% increases on auto business going forward until we see that loss cost trend subside.
Speaker #4: In the meantime, you can expect us—I can't speak for other companies—but you can speak to us and try to at least get the increase to cover trend.
Speaker #4: And if we can't , we'll get smaller . That's just the way we operate . So we're going to try to continue to get , you know , ten , 15% increases on auto business going forward until we that see loss cost trend subside .
[Analyst] (Raymond James): Great. Thank you for the color. That's very helpful. Can you provide any additional detail on how your technology investments over the past several years have impacted your underwriting performance, particularly touching on changes in submission to bind ratios within the transactional surety business? Thanks.
Gregory Peters: Great. Thank you for the color. That's very helpful. Can you provide any additional detail on how your technology investments over the past several years have impacted your underwriting performance, particularly touching on changes in submission to bind ratios within the transactional surety business? Thanks.
Speaker #5: Great . Thank you for the color . That's very helpful . Can you provide any additional detail on how your technology investments over the past several years have impacted your underwriting performance , particularly touching on changes in submission to bind ratios within the transactional business ?
Jennifer Klobnak: Well, I would say our investments in technology have done a couple of things. I'm focused on a couple of things. One is really improving our customer experience. And that starts actually before the technology. So considering, for example, what questions we ask, we've tried to simplify it in a few places. The application questions that we're asking, making them more straightforward. I don't know about you, but whenever I get an application, I struggle with, "How do you answer this question?" So trying to simplify it based on feedback and input from our producer partners, and insurers has been really critical. Then providing that through automation and modern systems, which we've been upgrading over the last few years. For example, Insurity, we're rolling out an upgrade to our current offering. We've been in that business since 1992. As you can imagine, that technology has changed tremendously over the decades.
Jennifer Klobnak: Well, I would say our investments in technology have done a couple of things. I'm focused on a couple of things. One is really improving our customer experience. And that starts actually before the technology. So considering, for example, what questions we ask, we've tried to simplify it in a few places. The application questions that we're asking, making them more straightforward. I don't know about you, but whenever I get an application, I struggle with, "How do you answer this question?" So trying to simplify it based on feedback and input from our producer partners, and insurers has been really critical. Then providing that through automation and modern systems, which we've been upgrading over the last few years. For example, Insurity, we're rolling out an upgrade to our current offering. We've been in that business since 1992. As you can imagine, that technology has changed tremendously over the decades.
Speaker #5: Thanks
Speaker #5: .
Speaker #9: our investments in would say technology Well , I have done a couple of things , been focused on a things . couple of One is really improving our customer experience , and that starts actually before the technology .
Speaker #9: So considering , for example , what questions we ask . We've tried to simplify it in a few places . The application questions that we're asking , making them more straightforward .
Speaker #9: I don't know about you , but whenever I get an application I struggle with , how do you answer this question ? So trying to simplify it based on feedback and input from our producer partners and insurers has been really critical .
Speaker #9: Then providing that through automation in modern systems , which we've been upgrading over the last few years in example , , for surety , we're rolling out an an upgrade to our current offering .
Jennifer Klobnak: And so our recent investment is rolling out to provide end-to-end ability to look at what's going on with surety bonds by those producers so that they can service that business better without feeling like they're bothering us to ask questions and whatnot. So that'll be very helpful to them. So really, kind of that customer experience and getting business in the door has been a big investment. A second large bucket would be efficiencies. So there are a number of things we've done with efficiencies through various types of artificial intelligence and various types of other automation to try to just have people spend more time using their brains instead of doing administrative tasks. So that can include things like summarizing submission information, summarizing claims, and lengthy claim information.
And so our recent investment is rolling out to provide end-to-end ability to look at what's going on with surety bonds by those producers so that they can service that business better without feeling like they're bothering us to ask questions and whatnot. So that'll be very helpful to them. So really, kind of that customer experience and getting business in the door has been a big investment. A second large bucket would be efficiencies. So there are a number of things we've done with efficiencies through various types of artificial intelligence and various types of other automation to try to just have people spend more time using their brains instead of doing administrative tasks. So that can include things like summarizing submission information, summarizing claims, and lengthy claim information.
Speaker #9: We've been in that business since 1992 . As you can imagine , that technology has changed tremendously over the decades . And so our recent investment is rolling out to provide end to end ability to look at what's going on with surety bonds , buy those producers so that they can service that business better without feeling like they're bothering us to ask whatnot .
Speaker #9: Questions, and so that'll be very helpful to them. So really, that customer experience and business in the getting door has been a big investment.
Speaker #9: A second large bucket would be efficiencies. So there are a number of things we've done with efficiencies through various types of artificial intelligence and various types of other automation to try to just have people spend more time using their brains instead of doing administrative tasks.
Speaker #9: So that can include things like summarizing , submission information , summarizing claims , lengthy claim information . It can mean inputting various emails that come in regarding claims that go straight into claim files .
Jennifer Klobnak: It can mean inputting various emails that come in regarding claims that go straight into claim files so nobody has to look at them and decide where they go, updating loss runs that come right in and go straight into our systems. So things of that nature on efficiencies have been a big category. And then lastly, I would say is just that improving that feedback loop that we have between underwriting, claim, and analytics, really getting our data in places where we can really look at it, slice and dice it very granularly, having the ability to update that daily where it makes sense. So in some business units, that doesn't make sense. We don't need to invest in that. But in others, there's data available to drive decisions that we'd like it updated more often. So we've invested in that.
It can mean inputting various emails that come in regarding claims that go straight into claim files so nobody has to look at them and decide where they go, updating loss runs that come right in and go straight into our systems. So things of that nature on efficiencies have been a big category. And then lastly, I would say is just that improving that feedback loop that we have between underwriting, claim, and analytics, really getting our data in places where we can really look at it, slice and dice it very granularly, having the ability to update that daily where it makes sense. So in some business units, that doesn't make sense. We don't need to invest in that. But in others, there's data available to drive decisions that we'd like it updated more often. So we've invested in that.
Speaker #9: So nobody has to look at them and decide where they go. Updating loss runs that come right in and go straight into our system.
Speaker #9: So things of that nature on efficiencies have been a big category . And then lastly , I would say is just that improving that feedback loop that we have between underwriting claim and analytics .
Speaker #9: You know, really getting our data in places where we can really look at it, slice and dice it very granularly, having the ability to update that daily where it makes sense, since business units.
Speaker #9: That doesn't make sense . We don't need to invest in that . But in others there's there's data available to drive decisions that we'd like it updated more often .
Jennifer Klobnak: We've rolled out a number of dashboards to provide people insight into submission counts, binding percentages, as well as marrying that up with loss information. So which producers, which states, which types of business, which attributes of an insured drive loss activity. All of that information has been ramped up to help us make better decisions as we're underwriting and handling claims. So those are kind of the three big buckets that we have focused on. And I would say, given our diverse portfolio, you're never done. But we have spent a lot of time and effort, and I think we're reaping the rewards in that we continue to make an underwriting profit, which is in a more challenging environment as the market softens. We've got everything in place so that we can keep making great decisions for that bottom line.
We've rolled out a number of dashboards to provide people insight into submission counts, binding percentages, as well as marrying that up with loss information. So which producers, which states, which types of business, which attributes of an insured drive loss activity. All of that information has been ramped up to help us make better decisions as we're underwriting and handling claims. So those are kind of the three big buckets that we have focused on. And I would say, given our diverse portfolio, you're never done. But we have spent a lot of time and effort, and I think we're reaping the rewards in that we continue to make an underwriting profit, which is in a more challenging environment as the market softens. We've got everything in place so that we can keep making great decisions for that bottom line.
Speaker #9: So we've invested in that . We've had rolled out a number of dashboards to provide people insight into submission counts , findings , percentages , as well as marrying that up with lost which information .
Speaker #9: So producers which types of states business which , which an attributes of insured drive loss activity ? All of that information has been ramped up to help us make better decisions as we're underwriting and handling claims .
Speaker #9: So those are the three big buckets that we have focused on. And I would say, given our diverse portfolio, you're never done.
Speaker #9: But we have spent a lot of time and effort, and I think we're reaping the rewards in that we continue to make an underwriting profit, which is in a more challenging environment. As the markets, we've got everything in place so that we can keep making great decisions for that bottom line.
[Analyst] (Raymond James): Great. Thank you for the responses.
Gregory Peters: Great. Thank you for the responses.
Operator: There are no further questions at this time. So I'll turn the conference over to Mr. Kliethermes, RLI's President and CEO, for some closing remarks.
Operator: There are no further questions at this time. So I'll turn the conference over to Mr. Kliethermes, RLI's President and CEO, for some closing remarks.
Speaker #5: Great. Thank you for the responses.
Craig Kliethermes: Thank you. Before we wrap up, I want to take a minute to reflect on what this year, our 30th consecutive year of underwriting profitability, truly represents. Thirty years ago, RLI was a very different company. We wrote about $270 million of gross rate and premium. Roughly 1/3 of our business was earthquake insurance. We were still in the contact lens business. Our market cap was under $200 million, and we were proud to make Ward's top 50 performing insurance companies for the fifth straight year. For the record, 2025 represented our 35th consecutive year on that list. The world was a different place too. Public access to the internet was just getting started with AOL and Prodigy. The Sony PlayStation had just hit the market. Cell phones were used for one thing: to make phone calls.
Craig Kliethermes: Thank you. Before we wrap up, I want to take a minute to reflect on what this year, our 30th consecutive year of underwriting profitability, truly represents. Thirty years ago, RLI was a very different company. We wrote about $270 million of gross rate and premium. Roughly 1/3 of our business was earthquake insurance. We were still in the contact lens business. Our market cap was under $200 million, and we were proud to make Ward's top 50 performing insurance companies for the fifth straight year. For the record, 2025 represented our 35th consecutive year on that list. The world was a different place too. Public access to the internet was just getting started with AOL and Prodigy. The Sony PlayStation had just hit the market. Cell phones were used for one thing: to make phone calls.
Speaker #2: There are no further questions at this time , so I'll turn the conference over to Mr. . Our allies , president and CEO for some closing remarks .
Speaker #4: Thank you . Before we wrap up , I want to take a minute to reflect on what this year , our 30th consecutive year of underwriting profitability , truly represents 30 years .
Speaker #4: Ago, ROE was a very different company. We wrote about $270 million of gross written premium; roughly a third of our business was earthquake insurance.
Speaker #4: We were still in the contact lens business. Our market cap was under $200 million, and we were proud to make Ward's Top 50 performing insurance companies for the fifth straight year.
Speaker #4: For the record , 2025 represented our 35th consecutive year on that list . The world was a different place to public access to the internet was just getting started with AOL and prodigy , the Sony PlayStation had just hit the market .
Craig Kliethermes: A lot has changed over those 30 years, but the things that matter most to us haven't. There are still no shortcuts in this business. Sustained success is built the same way it has always been, with discipline, accountability, and a lot of hard work. What gives me the most confidence as we look forward is not just our results, but how we produce them. We have a strong balance sheet, a diversified portfolio, and a team of engaged employee owners who care deeply about the decisions they make and the outcomes they produce. Every day, they show up committed to making RLI a better company for its customers, their coworkers, and our shareholders. Our founder liked to say that great companies are built one good decision at a time and that those decisions never seem easy in the moment.
A lot has changed over those 30 years, but the things that matter most to us haven't. There are still no shortcuts in this business. Sustained success is built the same way it has always been, with discipline, accountability, and a lot of hard work. What gives me the most confidence as we look forward is not just our results, but how we produce them. We have a strong balance sheet, a diversified portfolio, and a team of engaged employee owners who care deeply about the decisions they make and the outcomes they produce. Every day, they show up committed to making RLI a better company for its customers, their coworkers, and our shareholders. Our founder liked to say that great companies are built one good decision at a time and that those decisions never seem easy in the moment.
Speaker #4: Cell phones were used for one thing—to make phone calls. A lot has changed over those 30 years, but the things that matter most to us haven't.
Speaker #4: There are still no shortcuts in this business . Sustained success is built the same way . It has always been with discipline , accountability , and a lot of work hard .
Speaker #4: What gives me the most confidence as we look forward is not just our results, but how we produce them. We have a strong balance sheet, a diversified portfolio, and a team of engaged employee owners who care deeply about the decisions they make and the outcomes they produce.
Speaker #4: They show every day, up committed to making RLI a better company for its customers, their coworkers, and our shareholders. Our founder liked to say that great companies are built.
Craig Kliethermes: That philosophy has served RLI well for three decades, and it continues to guide us today. We're proud of what we've accomplished, but we're not done. We're optimistic about the future, confident in our approach, and committed to doing what we've always done: staying disciplined, staying different, and playing the long game. I would be remiss to end without thanking Todd Bryant, our CFO, who just retired at year-end after 31 years of dedicated service to RLI. I also want to thank our employee owners for their hard work, and we appreciate y'all for your continued interest in RLI. We look forward to speaking with you again next quarter.
That philosophy has served RLI well for three decades, and it continues to guide us today. We're proud of what we've accomplished, but we're not done. We're optimistic about the future, confident in our approach, and committed to doing what we've always done: staying disciplined, staying different, and playing the long game. I would be remiss to end without thanking Todd Bryant, our CFO, who just retired at year-end after 31 years of dedicated service to RLI. I also want to thank our employee owners for their hard work, and we appreciate y'all for your continued interest in RLI. We look forward to speaking with you again next quarter.
Speaker #4: One good decision at a time, and that those decisions never seem easy in the moment. That philosophy has served RLI well for three decades, and it continues to guide us today.
Speaker #4: We're proud of what accomplished , but we're not done . We're optimistic about the future , confident in our approach , and committed to doing what we've always done .
Speaker #4: Staying disciplined , staying different and playing the long game . I would be remiss to end without thanking Todd Bryant , our CFO , who just retired at year end after 31 years of dedicated service to to thank our owners for their hard also want , and ROI .
Speaker #4: I we appreciate for your you all continued interest in ROI . We look forward to speaking with you again next quarter .
Operator: That concludes today's call. Thank you all for attending. You may now disconnect.
Operator: That concludes today's call. Thank you all for attending. You may now disconnect.
