Charlie Lederer

Charlie Lederer asked for a geographical breakdown of the improving product environment, specifically how it impacts new business and renewals, and its near-term P&L implications. He also inquired about the commercial versus personal lines tilt in the M&A pipeline and its potential impact on business mix, and finally, about the outlook for contingent financing.

Answer

Gordy Bunch, CEO, Chairman, and Director, detailed the softening personal lines market since Q2 2025, leading to reduced rates and increased capacity, except for California which remains hard. CAT-exposed regions are generally soft. For M&A, Mr. Bunch stated their focus is on cultural fit, portfolio quality, and accretiveness rather than a specific line of business, noting a mixed pipeline for Q1 2026. He also emphasized their focus on acquired revenue and EBITDA over premium. Regarding contingent financing, Mr. Bunch expressed high confidence in achieving full-year guidance due to locked-in Q3 contingencies.

Charlie Lederer asked for more detail on the $2.1 billion third-party premium guidance for 2026, specifically the breadth and pacing of the $1.8 billion already under contract, and how to think about cash flows outside of the insurance companies, including directional quantification of cash flow conversion.

Answer

Jeff Radke, Accelerant's Co-founder and CEO, explained that the transition of business to third-party insurers would result in discontinuous jumps in premium flow rather than slow growth, with acceleration expected through the quarters. He also noted that the company maintains a high degree of cash flow conversion on exchange services and MGA operations, particularly from the 8% fee on risk exchange, and offered to follow up with more detailed quantification. Jay Green, Accelerant's CFO, clarified that eliminations in financials do not impact cash flows, as cash is received upfront.

Charlie Letterer of BMO Capital Markets asked for a breakdown of the $1.8 billion under contract within the $2.1 billion third-party premium guidance for 2026, and the expected pacing of this uptick. He also inquired about the trend of cash flows outside of the insurance companies and sought quantification of cash flow conversion in the exchange services and MGA operations segments. Additionally, he asked if the medium-term two-thirds third-party guide was a change in view and about the drivers and future trend of the underwriting segment's expense ratio.

Answer

Jeff Radke, Accelerant's Co-founder and CEO, explained that the transition of business to third-party insurers would result in discontinuous jumps as products move over, leading to acceleration through the quarters. He noted that cash flow conversion is consistently high for exchange services and MGA operations, with cash received upfront for the 8% fee, but declined to quantify due to IPO expense distortions. He confirmed the medium-term guide was unchanged. Jay Green, Accelerant's CFO, attributed the lighter underwriting expense ratio to lower DAC due to higher session rates and business mix, and some OpEx migration as business moves to third-party insurers, expecting the ratio to remain relatively consistent for the near term.

Charlie Lederer of BMO Capital Markets inquired about Aspen's growth outlook for the second half of the year, the potential impact on underlying loss ratios from the business mix, and whether the company is actively pursuing opportunities in transactional liability and D&O.

Answer

Christian Dunleavy, Group President & CEO of Aspen Bermuda Limited, explained that the market is transitioning, with longer-tail lines expected to outgrow property lines, which will influence the loss ratio. He confirmed Aspen is 'ready to lean in' to transactional liability and D&O as pricing conditions show signs of bottoming and improving, respectively. He also clarified that a recent uptick in the paid-to-incurred ratio was likely due to accelerated payments for California wildfire claims.

Charlie Lederer from BMO Capital Markets inquired about Aspen's growth outlook and underlying loss ratio trends for the second half of the year, given the dynamic pricing environment. He also asked about the company's stance on leaning into transactional liability and D&O markets and questioned the recent increase in the paid-to-incurred ratio.

Answer

Christian Dunleavy, Group President & CEO of Aspen Bermuda, explained that while the market is transitioning, Aspen expects longer-tail lines to outgrow property lines, which will influence the loss ratio mix. He confirmed Aspen is 'ready to lean in' to transactional liability and D&O as pricing conditions improve. He also attributed the higher paid-to-incurred ratio to accelerated payments on California wildfire claims.

Charlie Lederer of BMO Capital Markets inquired about Aspen's growth outlook for the second half of the year, the potential trajectory of underlying loss ratios, and the company's strategy regarding opportunities in transactional liability and D&O. He also asked for clarification on the recent increase in the paid-to-incurred loss ratio.

Answer

Christian Dunleavy, Group President & CEO of Aspen Bermuda Limited, explained that Aspen is managing through various product 'mini cycles' and expects longer-tail lines to outgrow property lines, without a dramatic shift in the overall portfolio mix. He confirmed Aspen is 'ready to lean in' to transactional liability and D&O as market conditions improve. He also attributed the higher paid-to-incurred ratio to accelerated payments on California wildfire claims, as required by law.

Charlie Lederer of BMO Capital Markets inquired about Aspen's growth outlook for the latter half of the year, the trajectory of underlying loss ratios given the dynamic market, the company's stance on opportunities in transactional liability and D&O, and the reason for the recent increase in the paid-to-incurred ratio.

Answer

Christian Dunleavy, Group President & CEO of Aspen Bermuda, explained that he expects longer-tail lines to outgrow property lines, which will influence the loss ratio mix. He confirmed Aspen is 'ready to lean in' to D&O as pricing stabilizes and will capitalize on the expected hardening in the transactional liability market. He also attributed the higher paid-to-incurred ratio to accelerated payments on California wildfire claims as required by law.

Charlie Lederer from BMO Capital Markets inquired about the outlook for property rates in 2026 and asked for details on the pressures in the E&S homeowners book, including the role of reinsurance and capacity.

Answer

CEO Trevor Baldwin stated he expects some degree of stabilization in the property market in 2026. Regarding the E&S home pressure, he clarified it is entirely driven by market competition and new capacity, not reinsurance renewals. He emphasized that The Baldwin Group is maintaining underwriting discipline, which is impacting new business generation in that specific line but is the prudent course of action. The pressure is concentrated in typical E&S geographies like Florida, Texas, and California.

Charlie Lederer of BMO Capital Markets inquired about the outlook for property rate and exposure in 2026 and asked for more detail on the pressures affecting the E&S homeowners book, including its drivers and geographic concentration.

Answer

CEO Trevor Baldwin stated that he expects some degree of stabilization in the property market in 2026, as pricing cycles tend to be short. He clarified that the pressure on the E&S home book is entirely driven by increased market competition and aggressive pricing from new entrants, not by reinsurance or capacity issues. This has led to a disciplined underwriting approach that is impacting new business volume in coastal E&S markets like Florida, Texas, and California.

Charlie Lederer from BMO Capital Markets requested the all-in renewal premium change (RPC) number and how it would look with a more typical Q3/Q4 business mix. He also asked if the back-half organic growth would be driven by base business acceleration or by supplemental and contingent commissions.

Answer

CEO J. Patrick Gallagher estimated the all-in RPC would be around 4%. CFO Douglas K. Howell added that the overall market is still seeing mid-single-digit increases due to strength in casualty, which is more heavily weighted in the second half. Mr. Howell also noted that he views base and supplemental commissions together, which are driving growth around 5%, and expects that to continue.

Charlie Lederer of BMO Capital Markets requested the all-in renewal premium change (RPC) figure for the quarter and how it might look with a more typical Q3/Q4 business mix. He also asked if the back-half organic growth would be driven by base business acceleration or by supplemental and contingent commissions.

Answer

CEO J. Patrick Gallagher estimated the all-in RPC would be around 4%. CFO Douglas K. Howell elaborated that the overall market is still seeing mid-single-digit rate increases when casualty lines are factored in, a trend he expects to continue. He also noted that base and supplemental commissions combined are driving growth around 5% and expects that to continue.

Charlie Lederer from BMO Capital Markets asked for an analysis of Q2 free cash flow performance and the outlook for the rest of the year. He also inquired about the competitive landscape for insurance brokerage talent and WTW's response.

Answer

CFO Andrew Krasner detailed the first-half free cash flow headwinds, such as compensation and the absence of TRANZACT inflows, and outlined expected second-half tailwinds, reaffirming confidence in full-year margin expansion. CEO Carl Hess and President of Risk & Broking Lucy Clarke addressed talent, stating that competition is not new and that WTW's deliberate, strategic hiring approach, part of its long-term strategy, continues to be successful in attracting key talent.

Charlie Lederer from BMO Capital Markets asked whether pricing is currently ahead of loss cost trends in both the insurance and reinsurance segments, sought clarification on the paid loss and IBNR trends in the insurance segment, and questioned the drivers behind the recent moves in the insurance expense ratio.

Answer

President & CEO Vincent Tizzio confirmed that in liability and casualty, pricing is comfortably ahead of trend, and while property pricing has seen deterioration, the overall portfolio's premium adequacy remains excellent. Regarding paid losses, both Mr. Tizzio and CFO Peter Vogt attributed the quarterly increase to payments on some larger, older claims and recent wildfire claims, noting the metric can be noisy. Mr. Vogt clarified the expense ratio moves were due to prior-year restructuring charges affecting G&A comparisons and improved ceding commissions impacting the acquisition cost.

Charles Lederer asked about the future trajectory of the insurance segment's loss ratios given mix shifts, the potential impact of tariffs on specific lines, and the duration of the pet insurance quota share's impact on net premiums.

Answer

CFO Pete Vogt projected the insurance ex-cat loss ratio would remain stable in the 52-53% range for the year. CEO Vince Tizzio identified property and cargo as lines most exposed to tariffs but noted AXIS is positioned to meet emerging needs. Vogt clarified the pet insurance dynamic would have a more pronounced impact in the first half of 2025 before lapping.

Charles Lederer sought to confirm that the investment income impact from the LPT would only begin after the transaction closes. He also asked about the sustainability of fee income growth and its expected impact on the 2025 expense ratio, and whether variable compensation should be modeled quarterly or as a year-end true-up.

Answer

CFO Pete Vogt confirmed that the LPT's investment income impact will begin post-close. He stated that the fee income from ILS partners seen in 2024 should be consistent in 2025. Vogt also clarified that variable compensation is best viewed as a Q4 true-up item, given the potential for volatility during the year. President and CEO Vincent Tizzio added that the strong fee income is a testament to market confidence in AXIS's underwriting.

Charlie Lederer, on for Andrew Anderson, asked about the performance of the lender-placed insurance business in Q1, specifically if there were any incremental headwinds or benefits, and about its seasonality.

Answer

Executive R. Watts clarified there were no headwinds to the lender-placed business year-over-year, but its growth rate has moderated from the prior year. He emphasized that growth comes from winning new accounts, not from an increase in the lender-placed ratio, which indicates continued economic health among homeowners. Watts also explained the business lacks traditional seasonality; instead, revenue bumps occur when onboarding large new accounts.

In a follow-up, Charles Lederer of BMO Capital Markets asked for an update on where contingent commissions landed for Hurricanes Helene and Milton and if any future adjustments are expected.

Answer

R. Watts, an executive, reported that adjustments for the hurricanes were made in Q3 and Q4 but were not significant enough to be called out. He noted that the ultimate impact on 2025 contingents remains uncertain pending further loss development, which contributes to the company's cautious outlook.