David Motemaden

David Motemaden asked for an update on Arch Capital's current excess capital position before considering growth and various sources and uses. He also inquired about higher ceding on proportional reinsurance, specifically for casualty re, and whether casualty re is still viewed as a growth opportunity in 2026.

Answer

CFO François Morin explained that excess capital is dynamic and has accumulated due to strong results. Arch Capital's primary mission is to deploy capital in the business for adequate returns, then return it to shareholders, noting that holding capital is not destroying value. CEO Nicolas Papadopoulo clarified that ceding changes on casualty are marginal, mostly impacting other property. He views casualty reinsurance as a growth opportunity due to Arch Capital's expertise, brand, and strong treaty relationships, enabling them to find growth avenues.

David Motemaden from Evercore ISI asked for an update on Arch's current excess capital position and how it should be framed, and followed up on casualty reinsurance, asking if higher ceding commissions are being seen there and if it remains a growth opportunity for 2026.

Answer

CFO and Treasurer François Morin explained that excess capital is dynamic, and while Arch has accumulated some, the primary mission is to deploy it in the business for adequate returns, with buybacks as a secondary commitment. CEO Nicolas Papadopoulo clarified that higher ceding commissions are marginal in casualty reinsurance, mostly impacting other property. He affirmed that backing the right ceding companies in the favorable primary casualty market makes it a desirable growth area, leveraging Arch's brand and treaty relationships.

David Kenneth Motemaden asked about the nature of reserve releases, specifically the movement between long-tail and short-tail lines within the insurance and reinsurance segments. He also inquired about the impact of the mix shift towards casualty lines on underlying loss ratios in both segments and its potential future implications.

Answer

François Morin (EVP, CFO, and Treasurer) noted that reserve movements were similar to prior quarters, with small, unsurprising adverse development in casualty, but overall favorable actual versus expected results, and strong performance from short-tail lines. Nicolas Papadopoulo (CEO) explained that while the mix shift to casualty hasn't fundamentally changed yet, it could impact loss ratios down the road, as casualty lines typically have a higher loss peak than short-tail lines.

David Motemaden asked about Arch Capital's reserve releases, specifically inquiring about movements between long-tail and short-tail lines within the insurance and reinsurance segments. He also questioned whether the mix shift towards casualty lines in both segments was impacting underlying loss ratios and how this might evolve going forward.

Answer

CFO Francois Morin stated that reserve movements were similar to prior quarters, with nothing unusual, noting small adverse development on casualty but overall favorable actual versus expected performance, particularly strong in short-tail lines. CEO Nicolas Papadopoulo acknowledged that a significant mix shift to casualty lines would eventually impact loss ratios due to higher loss peaks in casualty, but noted that the fundamental mix hasn't changed significantly at this stage.

David Motemaden asked for elaboration on the higher attritional losses in the Reinsurance segment and inquired about the growth outlook for specialty lines reinsurance.

Answer

CFO & Treasurer François Morin attributed the higher attritional losses to normal volatility, citing a few large events like a plane crash and refinery explosions, contrasting with an unusually benign prior-year quarter. CEO Nicolas Papadopoulo noted that while cyber pricing is a headwind in specialty, the company is finding new opportunities, particularly on the international side, and remains positive on the outlook despite a competitive market.

David Motemaden inquired about the potential for other large structured deals to non-renew in 2025 and asked about the sustainability of the insurance segment's strong underlying loss ratio performance.

Answer

CFO François Morin noted that while there are always chunky deals, the non-renewed deal this quarter was on the larger side and it's hard to predict future renewals. He cautioned against overweighting a single quarter's loss ratio, citing the random element of large losses and stating he would not expect significant movements from the current level for either the legacy or MCE business.

David Motemaden of Evercore ISI questioned the rationale for growing in casualty reinsurance amid market concerns and sought more color on the current accident year loss pick increases within the Insurance segment.

Answer

Executive Nicolas Alain Papadopoulo explained that casualty reinsurance growth is highly selective, targeting specialty E&S-style programs where Arch was previously underweight. Executive François Morin detailed that the insurance loss pick increase was driven by the MidCorp acquisition, rate decreases in professional lines like D&O and cyber, and other minor mix shifts, not by adverse trends in general liability or umbrella lines.

David Motemaden of Evercore ISI asked about the drivers for the 100+ basis point increase in the core insurance segment's underlying loss ratio (excluding MidCorp) and requested a breakdown of short-tail versus long-tail reserve development.

Answer

Executive François Morin explained the loss ratio increase was due to a business mix shift towards casualty and other liability lines, which have a higher loss ratio than property. He confirmed that reserve development was very favorable in short-tail lines, with some manageable adverse development in long-tail lines, a trend consistent with recent quarters.

David Motemaden asked Martina Cheung about any observed changes in Market Intelligence's sales cycles, particularly in response to recent Gen AI enhancements from LLMs over the past six months, and their impact on the sales pipeline.

Answer

Martina Cheung, President and CEO, stated that sales cycles generally only lengthen for very large, multi-product deals, such as those with Chief Client Office (CCO) accounts, and this trend is not specific to AI or LLMs. However, she noted a dramatic increase in the volume of meetings with clients, especially CCO accounts. This surge is attributed to S&P Global bringing its full enterprise value proposition to discussions and clients actively exploring new opportunities with the company.

David Motemaden asked if S&P Global has observed any changes in Market Intelligence sales cycles or pipeline due to the recent GenAI enhancements and Large Language Models (LLMs) over the past six months.

Answer

Martina Cheung, President and Chief Executive Officer, stated that sales cycles generally lengthen only for very large, multi-product deals, not specifically due to AI or LLMs. However, she noted a dramatic increase in the volume of meetings with clients, particularly CCO accounts, as they explore more opportunities with S&P Global, indicating a positive impact on engagement and potential for future growth.

David Motemaden of Evercore ISI followed up on Market Intelligence, asking for commentary on the sales pipeline for 2025 and whether the company is seeing signs of improvement in the external market.

Answer

President and CEO Martina Cheung confirmed that S&P Global is seeing a gradual improvement in the external environment. She stated that this is reflected in the sales pipeline, which started at a 'good, strong point for 2025.'

David Motemaden followed up on Market Intelligence, asking for elaboration on pricing competition and what incremental investments are needed to achieve the segment's 7-9% revenue growth target.

Answer

President and CEO Douglas Peterson clarified that the pressure is more about client price sensitivity and elongated sales cycles due to their expense management, rather than direct competitive pricing. Incoming President and CEO Martina Cheung added that it's an end-market story and that the company's focus on innovation and customer engagement will drive value as the market recovers.

David Motemaden asked about the performance of New York and New Jersey on Allstate's policy growth distribution slide (slide 11), the extent of their drag on growth, and the status of opening up underwriting guidelines and new product approvals in those states.

Answer

CEO Thomas J. Wilson declined to disclose specific state performance publicly but acknowledged the need for growth in New York and New Jersey. CFO Jesse Edward Merten confirmed that Allstate is currently profitable in both states, which is a crucial first step. He noted that some underwriting restrictions have been loosened. The key to renewed growth, Mr. Merten explained, is new product approvals, specifically the Affordable, Simple, Connected (ASC) auto product. He announced that New Jersey recently approved the ASC Auto product for implementation in February, while New York is still awaiting approval, with active engagement with regulators ongoing.

David Motemaden inquired about the status of New York and New Jersey regarding policy growth (assuming they are still a drag) and the progress on opening underwriting guidelines or new product approvals in these states.

Answer

Thomas J. Wilson (CEO, Allstate Corporation) acknowledged New York and New Jersey as states needing more growth. Jesse Edward Merten (CFO, Allstate Corporation) confirmed profitability but not growth in these states. He announced recent approval for the ASC Auto product in New Jersey (February) and ongoing efforts for approval in New York, which is critical for returning to a growth trajectory.

David Motemaden of Evercore ISI noted that the monthly pace of auto PIF growth slowed during the second quarter and asked for an explanation of the moving parts and the expected cadence for the second half of the year. He also asked for a timeline on the runoff of inactive brands like Esurance and Encompass.

Answer

Tom Wilson, Chairman, President & CEO, declined to comment on monthly fluctuations but reiterated confidence in the overall growth trajectory from the Transformative Growth strategy. He explained the strategic decision to sunset Esurance and Encompass was to consolidate marketing behind the Allstate brand and leverage National General's stronger IA platform. Mario Rizzo, President of Property-Liability, added that the runoff impact from these brands will diminish over time as their policy counts decrease.

David Motemaden asked for the expected timing of an improvement in the auto retention ratio and whether there was evidence of a turn in October. He also probed if management felt they were on the cusp of an inflection point, pending the normalization of recent large rate increases.

Answer

Executive Thomas Wilson stated that while 'sooner is better than later' for retention improvement and some states are already showing gains, the company is not providing a specific timeline or projection. He pushed back on the idea of passively waiting for an inflection point, emphasizing that Allstate is actively working to improve the customer experience and fine-tune pricing with tools like Milewise to proactively earn back and retain customers, rather than just waiting for rate impacts to fade.

David Motemaden asked for an estimate of the stranded overhead associated with the renewal rights deal and how it is expected to diminish throughout 2026, in the context of the 6-7% OpEx expense ratio target.

Answer

Mark Kociancic, EVP and CFO, stated that the OpEx ratio is expected to start at the higher end of 6-7% and trend downwards towards the lower end of 6% by year-end. He noted that the expense load for the exited retail insurance business was in the low $400 million range last year and is expected to diminish significantly on a quarterly basis as the business transitions to AIG, potentially reaching around $50 million by year-end. However, a legacy segment will remain with associated run-rate general expenses. David Motemaden also inquired about any other material changes or call-outs for casualty reinsurance reserves in Q4 on a gross basis, beyond the reported $2 million favorable movement. Mark Kociancic confirmed that there were no material movements, as the bulk of the reserve work was completed in Q3. He expressed confidence in the adequacy of reinsurance reserves, particularly in shorter tail lines, and in casualty reserves.

David Motemaden asked for an estimate of the stranded overhead associated with the commercial retail renewal rights deal and how it would be tracked as it diminishes throughout 2026, in the context of the 6%-7% OpEx expense ratio target.

Answer

Mark Kociancic, EVP and CFO, Everest Group, stated that the OpEx expense ratio would be elevated initially (6%-7%) and trend towards the lower end of 6% by year-end. He explained that the expense load from the exited retail insurance business, which was in the low $400 million range last year, is expected to diminish significantly to around $50 million by year-end, though a legacy segment with associated run-rate general expenses will remain. Regarding reserves, Mark Kociancic confirmed immaterial net movements in Q4, with the bulk of the work completed in Q3. He expressed confidence in the adequacy of reinsurance reserves, particularly in shorter tail lines, and for casualty.

David Motemaden inquired about the status of the casualty reinsurance risk margin, specifically if it had improved to the 90th percentile or if its size had changed since the previous year's reserve update.

Answer

Mark Kociancic, EVP and CFO, stated comfort with the risk margin, noting that the uncertainty on the higher end was not observed, and that loss development factors and picks were in a good spot, with prudence applied to 2025.

David Motemaden sought further detail on the minor casualty reinsurance development observed this quarter and the trends. He also asked for the gross change on the casualty reinsurance side and the current status of the risk margin in the casualty reinsurance book, previously noted at $180 million.

Answer

Mark Kociancic, EVP and CFO, stated that casualty reinsurance development has 'definitely subsided,' impacting a few older years from seedings, all U.S. casualty-based, with overall good adequacy and embedded reserve margins. He indicated the gross change was 'a few percentage points, very small on the base.' Mr. Kociancic added that they are comfortable with the risk margin, as higher-end uncertainty is not currently observed, benefiting from stabilizing trends and prudent strengthening in 2025 picks.

David Motemaden from Evercore ISI asked if the improvement in the reinsurance attritional loss ratio was solely due to mix shift or if it also reflected changes to forward loss picks on property business. He also inquired about Everest's appetite for writing property aggregate covers.

Answer

Jim Williamson, President & CEO, confirmed that the property loss picks have been consistent and prudent, with the improvement driven by mix. He added that there is still potential for further benefit as the earned premium mix catches up to the written mix. On aggregates, Williamson stated they are not deploying significant capacity, as he believes a 'bid-ask spread' still exists between what clients will pay and what reinsurers can responsibly charge.

David Motemaden questioned why the reinsurance attritional loss ratio improvement stalled (ex-aviation) despite a favorable mix shift, and asked what level of rate reduction the property cat market could sustain while remaining attractive.

Answer

CFO Mark Kociancic attributed the attritional loss ratio performance primarily to the conservative risk margin being applied to the casualty side of the business. CEO Jim Williamson declined to specify a rate reduction threshold for property cat, instead stressing the importance of the industry maintaining pricing discipline to ensure sustainable returns over the cycle.

David Motemaden from Evercore ISI inquired about the group's overall catastrophe load following the business mix shift and whether Everest has enhanced data engagement with its casualty reinsurance cedents.

Answer

CFO Mark Kociancic and CEO Jim Williamson explained the cat load is broadly consistent, with the company taking more gross exposure net by reducing reliance on cat bonds. Williamson confirmed that rigorous data engagement with cedents, including actuary-to-actuary discussions, has been a consistent, multi-year discipline, and capacity is only deployed to clients who demonstrate strong portfolio management via their data.

David Motemaden of Evercore ISI questioned the apparent improvement in casualty reinsurance loss ratios for accident years 2018 and 2019. He also asked what percentile the new risk margin places the company's reserves in relative to the actuarial range.

Answer

Executive James Williamson attributed the 2018-2019 improvement to an industry-wide reaction against the prior soft market. Executive Mark Kociancic added that 2017 was an outlier due to specific poor-performing treaties. Regarding the risk margin, Kociancic stated it places the insurance casualty reserves at the 'high end' of the actuarial spectrum and reinsurance casualty reserves in the 'upper part'.

David Motemaden asked how the robust consumer lines growth in Chubb's Overseas General insurance business translates into margins, and about the key drivers and execution priorities for the projected 150 basis points combined ratio improvement from digital transformation.

Answer

Evan Greenberg, Chairman and CEO of Chubb, explained that margins are not broken down by specific business lines but noted the diverse nature of consumer lines (A&H, auto, homeowners, specialty personal lines) and distribution channels, each with varying acquisition costs and loss ratios. For digital transformation, Mr. Greenberg stated that most improvement is expected from expense reduction (OpEx, claims costs), with a minority from loss ratio, focusing on 9-10 discrete projects across major geographies.

David Motemaden questioned how the robust consumer lines growth in Chubb's Overseas General insurance business manifests through margins, and sought insight into the key drivers and execution priorities for the projected 150 basis points combined ratio improvement from digital transformation.

Answer

Evan Greenberg, Chairman and CEO of Chubb, explained that they do not break out margins by business but described the distinct characteristics of A&H, auto, homeowners, and specialty personal lines, and their distribution channels. For digital transformation, Mr. Greenberg clarified that most improvement is expected from expense reduction (OpEx and claims costs), with a focus on 9-10 discrete projects across North America, UK, Europe, and larger markets in Asia and Latin America.

David Motemaden of Evercore ISI questioned the durability of growth in the attractive 80% of Chubb's book and asked about the drivers behind the loss ratio improvement in North America personal lines.

Answer

Chairman & CEO Evan Greenberg affirmed the durability of double-digit growth in the core businesses, citing secular opportunities in U.S. middle market, high-net-worth lines, and enduring themes in Asia and Latin America. He explained that the personal lines improvement is a combination of achieving rate over trend over several years and, crucially, superior underwriting insight, risk selection, and risk engineering in the complex high-net-worth space.

David Motemaden of Evercore ISI questioned the durability of growth in the attractive 80% of Chubb's book and asked about the drivers behind the loss ratio improvement in North America personal lines.

Answer

Chairman & CEO Evan Greenberg affirmed the growth is durable, citing secular opportunities in U.S. middle market, strength in high-net-worth lines, and enduring themes in Asia and Latin America. For personal lines, he explained the margin improvement is a combination of achieving rate over trend over several years and, crucially, more insightful underwriting, risk selection, and risk engineering.

David Motemaden asked if the rising competition in the large account property market is a precursor for the small and middle markets, or if there are structural differences. He also inquired about the growth outlook in Europe and its positioning relative to the U.S.

Answer

Chairman and CEO Evan G. Greenberg explained that the markets are structurally different. Large account business is a brokerage-driven capacity play, whereas middle and small commercial requires broad geographic reach and deep local capabilities, making its pricing dynamics more durable. Regarding Europe, he noted that fiscal stimulus, particularly in Germany, should support economic growth, but reiterated his confidence in Chubb's ability to achieve double-digit EPS growth despite a moderated global economic outlook.

David Motemaden questioned the favorable long-tail reserve development in general casualty, which seemed to differ from recent trends, and asked about the impact of structured transactions on the North America commercial loss ratio.

Answer

Chairman and CEO Evan G. Greenberg explained that the company studies different casualty portfolios each quarter, and the cohort reviewed in Q4 had favorable development due to its specific reserve strength, which is not indicative of a broader trend change. He also confirmed that structured transactions carry a higher loss ratio and the noted 40 basis point impact on the combined ratio is a reasonable proxy for the loss ratio impact.

David Motemaden of Evercore ISI questioned if the portfolio remediation in North America commercial was largely complete and asked if the company was still comfortable with its shift toward property risk given recent market dynamics.

Answer

Chairman and CEO Evan G. Greenberg explained that the remediation effort has another one to two quarters remaining but emphasized its small scale relative to the total North America premium base. He affirmed the company's continued appetite for property and catastrophe risk, attributing the quarter's lower-than-modeled cat losses to normal volatility and stating they will continue to lean into growth opportunities.

David Motemaden asked about The Hartford's strategy for property mix shift in Business Insurance given a softening property environment, the breakdown of all-in pricing into pure rate and exposure, and the outlook for exposure growth in 2026.

Answer

CEO Christopher Swift stated that property remains a strategic growth area, expecting to grow the property book to $3.6-$3.7 billion in 2026 with good margins, despite softening pricing. Head of Business Insurance A. Morris Tooker noted concerns only in the E&S and shared/layered space, with confidence in growth in the small and middle market. Swift clarified that the 4.3% all-in pricing included approximately 1.8% from exposure that acts like rate, maintaining a roughly 70-30 split, and expressed optimism for economic conditions and exposure growth in 2026.

David Motemaden asked about The Hartford's ability to continue shifting its business insurance mix towards property in 2026, given a softening property environment. He also sought a breakdown of the all-in pricing into pure rate and exposure that acts like rate, and how slowing employment growth might impact the exposure component in 2026.

Answer

CEO Christopher Swift confirmed that workers' compensation remains highly profitable and that the property mix shift is still part of the strategy, projecting property premiums to grow to $3.6-$3.7 billion in 2026 with good margins. A. Morris Tooker, Head of Business Insurance, noted concerns only in the E&S and shared/layered space, expressing confidence in growth within the small and middle market property book. Christopher Swift clarified that the 4.3% all-in pricing (6.1% ex-comp) was roughly 70-30 pure rate to exposure, and expressed optimism for 2026 economic conditions and the P&C business.

David Motemaden of Evercore ISI asked for an update on observed medical severity trends within workers' compensation. He also inquired about the non-catastrophe property weather experience in Business Insurance relative to plan and whether recent performance could be considered durable.

Answer

Chairman & CEO Christopher Swift confirmed that observed medical severity in workers' comp is trending around 3%, which is well within their 5% loss pick assumption. Regarding non-cat weather, Swift and President A. Morris Tooker clarified that year-to-date performance is largely in line with their plan, with no major favorability, unlike the prior year. Tooker added that strong terms and conditions provide confidence that their expectations remain within reach.

David Motemaden of Evercore ISI asked how workers' comp pricing is coming in versus original expectations and why there wasn't more expense ratio improvement in Business Insurance given strong growth.

Answer

CEO Christopher Swift and Executive Adin Tooker stated that workers' comp pricing is slightly favorable to their initial negative expectations and that trends are holding up as planned. CFO Beth Bombara addressed the expense ratio, explaining that improvement will be gradual over the long term as the company continues to invest in technology and other initiatives to drive topline growth and efficiency, rather than seeking a dramatic step-change.

David Motemaden followed up on general liability reserves, asking what severity assumption is now embedded for recent years and 2025. He also inquired about the reserving process, the expense ratio increase in Personal Lines, and the persistence of Asbestos & Environmental (A&E) reserve charges.

Answer

CEO Christopher Swift stated the aggregate liability loss cost trend assumption is in the 'low double-digit range' and is now baked into 2025 pricing. Regarding the Personal Lines expense ratio, Swift and executive Melinda Thompson attributed the increase to marketing spend and commissions tied to new business growth. On A&E reserves, Swift noted that while claim frequency is down, severity is up, and CFO Beth Bombara added that recent charges were also driven by specific insured accounts and higher environmental remediation costs.

David Motemaden from Evercore ISI followed up on the Commercial Lines underlying loss ratio, asking if there were any one-off items affecting the baseline. He also questioned the continued adverse development in commercial auto and what might trigger a broader reassessment of trends in that book.

Answer

CFO Beth Bombara stated there were no significant one-off items, noting only minor favorability in non-cat property. Regarding commercial auto, she characterized the recent development as consistent with the prior quarter, stemming from a few specific accounts. She reminded that the company increased its loss pick in Q4 2023 to address macro trends, and executive Adin Tooker added that they are actively managing underperforming accounts.

David Motemaden asked if Aon expects to deploy all $7 billion of available capital in 2026 and inquired whether an acquired EBITDA target for the year could be shared.

Answer

CFO Edmund Reese stated that the $7 billion represents capacity, and any excess capital not used for acquisitions would be returned through share repurchases, maintaining leverage objectives. He noted satisfaction with $42 million in acquired EBITDA in 2025, exceeding expectations, and expressed a desire for high capital deployment in NFP and other high-opportunity areas across Risk Capital and Human Capital, but did not provide a specific 2026 acquired EBITDA target.

David Motemaden asked if Aon expects to deploy all of the $7 billion of available capital in 2026, and if the company could provide an acquired EBITDA target for 2026.

Answer

CFO Edmund Reese stated that the $7 billion represents Aon's capital capacity while maintaining leverage objectives, confirming that any excess capital not used for acquisitions would be returned to shareholders through share repurchases. Regarding acquired EBITDA, he expressed satisfaction with the $42 million achieved in 2025 (exceeding the $35 million-$40 million expectation) and indicated a desire for high capital deployment in NFP and other pipeline opportunities across Risk Capital and Human Capital, without providing a specific 2026 target.

David Motemaden of Evercore ISI requested a quantification of the organic growth tailwind from M&A services and asked if the company might exceed its full-year target for hiring revenue-generating roles.

Answer

CFO Edmund Reese declined to size the M&A tailwind, stating it was not yet a significant driver of overall growth, which is instead powered by core P&C business, new business from investment hires, and strong retention. CEO Greg Case added that Aon will continue to invest in talent where opportunities exist to enhance client service, rather than being driven by a specific headcount target, emphasizing the draw of Aon's analytical platform.

David Motemaden of Evercore ISI sought to quantify the organic growth tailwind from M&A services and asked if the strong pace of hiring revenue-generating roles could lead to exceeding the full-year target.

Answer

CFO Edmund Reese declined to size the M&A impact, stating it's a modest tailwind and that growth is primarily driven by core P&C, construction, and new business. He stressed Aon is not dependent on an M&A recovery. CEO Greg Case added that hiring is opportunity-driven, not target-driven, focusing on bringing in talent that can be amplified by Aon's unique platform and capabilities to better serve clients.

David Motemaden inquired about the contribution and productivity ramp-up of recent strategic hires, particularly regarding the cadence of their impact on organic growth in Commercial Risk. He also requested clarification on the adjusted operating margin, asking for a pro-forma base to better understand the core margin improvement excluding NFP's impact.

Answer

CFO Edmund Reese explained that it is still early to see the full impact from new hires, as they typically take 18-24 months to reach full productivity, but early signs are positive. CEO Gregory Case added that these investments are funded by Aon Business Services (ABS) efficiencies and are not a drag on margins. On margins, Mr. Reese stated that on a comparable basis, core margin expansion in Q1 was over 100 basis points, and reaffirmed the full-year guidance of 80-90 basis points expansion, driven by restructuring savings and operating leverage.

David Motemaden inquired about the key components of the mid-single-digit or greater organic growth outlook for 2025, specifically asking about the expected contributions from client retention improvements and M&A services.

Answer

CFO Edmund Reese detailed that growth will be driven by new business, priority hiring, and NFP synergies, with a 0-2 point net market impact. President Eric Andersen added that retention in North America Commercial Risk is returning to historical norms, with a continued focus on improvement through enhanced client value and service.

David Motemaden asked about the achievability of NFP's full-year M&A target, given the year-to-date acquired EBITDA, and requested a segment-specific breakdown of the organic growth drivers for Commercial Risk.

Answer

CFO Edmund Reese expressed high confidence in achieving the NFP M&A target, stating the deal pipeline is very rich. Regarding the organic growth breakdown, Reese noted that the drivers are quite similar across all solution lines and that the company is considering what additional disclosures to provide in the future.

David Motemaden asked if Arthur J. Gallagher & Company could implement process improvements to mitigate the drag from deferred revenue assumption changes in the future, which amounted to 2% this quarter and 1% for the year.

Answer

CFO Doug Howell explained that for full years, the impact of deferred revenue assumption changes has been minor (0%, 0%, and -1% over the last three years). He argued that implementing a wholesale change to update surveys and time studies quarterly would impose a significant and likely unwarranted cost burden. He encouraged analysts to look past the quarterly noise and focus on the annual basis, hoping for a positive impact next year through continued service quality improvements.

David Motemaden with Evercore ISI asked about the deferred revenue assumption changes, which were 2% this quarter and 1% for the year, and if Arthur J. Gallagher & Company is exploring process improvements to mitigate potential future drag from these changes.

Answer

Doug Howell (CFO) explained that on a full-year basis, the impact of deferred revenue assumption changes has been minor (0% or -1% over the last three years), making a wholesale change to the process for quarterly noise not cost-effective. He asked analysts to look past the quarterly fluctuations and focus on the underlying annual organic growth, which remains strong.

David Motemaden asked for the property market outlook for Q4 and next year, given the reported 5% decrease in renewal premium changes. He also inquired about the overall renewal premium change trend for the entire book in Q3 compared to prior quarters and the expected revenue from AssuredPartners' fiduciary balances next year.

Answer

Chairman and CEO J. Patrick Gallagher, Jr. and CFO Douglas K. Howell stated that a 5-7% decrease in property is factored into next year's outlook, but they don't foresee a dramatic drop. They noted an overall 4-5% increase across the entire book (rate and exposure). CFO Douglas K. Howell identified AssuredPartners' fiduciary balances as a significant long-term opportunity for revenue generation, not yet included in synergy assumptions, through consolidating accounts and faster cash flow harvesting.

David Motemaden of Evercore ISI asked for confirmation that the back-half organic growth outlook assumes a continued 7% decline in property RPC and requested sensitivity analysis around that figure. He also asked for early thoughts on the brokerage organic growth outlook for 2026.

Answer

CFO Douglas K. Howell confirmed the outlook assumes June's property pricing continues but noted the second half is less weighted to property. He provided a sensitivity, stating a 2% net drop in property rates/exposure impacts organic by about 40 basis points. For 2026, Mr. Howell suggested that the company could potentially repeat its 2025 full-year organic growth performance.

David Motemaden of Evercore ISI asked to confirm if the back-half organic growth forecast assumes a continued 7% decline in property RPC and requested the sensitivity of organic growth to property pricing. He also asked for an early outlook on 2026 brokerage organic growth.

Answer

CFO Douglas K. Howell confirmed the outlook assumes similar property pricing trends but noted property is less weighted in the second half. He provided a sensitivity, stating a 2% net drop in property rates impacts organic growth by about 40 basis points. For 2026, he suggested that wherever 2025 organic growth lands, the company has a "shot at that next year."

David Motemaden asked for the Q1 Renewal Premium Change (RPC) figure, what RPC is assumed in the full-year outlook, and inquired about the slightly lighter-than-expected 5% organic growth in U.S. retail.

Answer

CFO Douglas Howell stated the outlook assumes a similar RPC environment to Q1, with property rates slightly down and casualty rates still rising. J. Gallagher, an executive, added that the market is behaving rationally and doesn't expect major changes. Regarding U.S. retail growth, Howell attributed the 1-point difference from prior expectations to normal business mix variations and emphasized the overall strength of the market.

David Motemaden from Evercore ISI sought to clarify the Q4 brokerage organic growth, asking if the miss versus the 8% expectation was entirely due to lower contingents. He also asked why renewal premium change remained at 5% when property pricing moderated, and questioned if the 6-8% organic growth guide for 2025 was conservative.

Answer

CFO Douglas Howell confirmed the organic growth differential was due to the contingent commission shortfall. He and CEO J. Gallagher explained that as property rates moderate, clients are buying more coverage, which supports renewal premium levels. Regarding the 2025 outlook, Mr. Howell stated the 6-8% range is consistent with prior views and does not assume major tailwinds from market events like wildfires or casualty reserve strengthening.

David Motemaden inquired about the drivers of the strong growth in contingent commissions, the historical close rate on deals in the pipeline, and the reason for a slight slowdown in U.S. retail P&C organic growth.

Answer

CFO Douglas Howell attributed the contingent commission growth to a few extra million dollars from the benefits and U.S. retail businesses, calling it 'nothing special.' Executive J. Gallagher stated there's no specific close-rate stat for the M&A pipeline, but getting to a letter of intent is a serious step. Howell noted the U.S. retail slowdown was minimal, only about half a point, and consistent with the prior quarter.

David Motemeden from Evercore ISI followed up on previous comments about potentially elevated cancellations for asset managers in Europe, asking about their impact on Q4 retention levels and the outlook for 2026.

Answer

Andy Wiechmann, CFO of MSCI, confirmed that EMEA has seen a slightly lower retention rate (below 93% in Q4) compared to the Americas (above 94%) for the past couple of years, reflecting pressures on asset managers and M&A. He does not expect any pickup in future cancellations, noting slight improvement in client dynamics. He added that the lower retention in EMEA is seen across product lines except for Sustainability & Climate.

David Motemaden inquired about the impact of potentially elevated cancellations from asset managers in Europe on Q4 retention levels and the outlook for 2026.

Answer

Andy Wiechmann, CFO of MSCI, confirmed a slightly lower retention rate in EMEA (below 93% in Q4) compared to the Americas (above 94% in Q4) over the past couple of years, attributing it to pressures on asset managers and M&A activity. He stated no expected pickup in future cancellations, with slight improvements in client dynamics, and noted that lower retention in EMEA is consistent across product lines, except for Sustainability & Climate.

David Motemaden asked for an explanation for the deceleration in the hedge fund subscription run rate growth, which slowed to 12% from the 14-15% range seen in prior quarters.

Answer

CFO Andrew Wiechmann explained that the hedge fund segment is inherently lumpy and can be skewed by individual cancels, noting a specific client event-driven cancel on the index side affected the Q2 rate. He reiterated long-term conviction in the segment as an attractive growth opportunity, driven by the expanding index ecosystem and new product offerings.

David Motemaden sought more detail on the gross sales that didn't close in Q1, asking if they were concentrated in a particular business segment.

Answer

President and COO C. Pettit reiterated that the situation was part of 'normal sales activity' and not indicative of a broader issue. He specified that the delayed deals were spread across a number of different product lines, not concentrated in one area. The key message was that MSCI expects these deals to close in Q2.

David Motemaden followed up on pricing, asking if the price increase captured in 2024 was below the long-term historical average and what should be expected for 2025.

Answer

CFO Andrew Wiechmann declined to compare the 2024 price increase to historical averages directly. He reiterated that the contribution from price increases in 2024 was slightly less than in 2023, which was an elevated year for pricing. He emphasized that MSCI's approach remains consistent: to be thoughtful and measured, linking price increases to the value delivered to clients.

David Motemaden asked what factors, beyond improved AUM, are needed to reach an inflection point for new sales, and if the historical link between AUM and client activity will hold.

Answer

CFO Andrew Wiechmann responded that while active asset managers are moving into a more 'constructive mode' which should help 2025 budgets, they are not yet in 'expansionary mode.' He emphasized that MSCI's growth is diversified, with strong momentum in other client segments like wealth, insurance, and asset owners providing multiple avenues for growth beyond the active manager recovery.

David Motemaden inquired about the drivers behind the adverse prior-year development in the insurance segment and asked for the specific impact of a non-recurring commission-related accrual benefit on the expense ratio.

Answer

CEO Rob Berkley stated that he did not have the specific details for the $11 million adverse development but offered to follow up. CFO Rich Baio clarified that the non-recurring commission-related accrual benefit had a 30 basis point positive impact on the expense ratio.

David Motemaden asked for details on prior year development (PYD), specifically the adverse development in the insurance segment and favorable development in reinsurance. He also sought to quantify the non-recurring benefit from commission-related accruals that impacted the expense ratio.

Answer

CEO Rob Berkley did not have immediate details on the $11 million adverse development but committed to having CFO Rich Baio or Karen follow up. CFO Rich Baio stated that the non-recurring benefit for commission-related accruals had approximately a 30 basis point impact on the expense ratio.

David Motemaden asked for elaboration on competition in the 'other liability' line, specifically if it impacted primary casualty, excess/umbrella, E&S, or large account/admitted segments. He also inquired about the split between specialty/high hazard and Main Street in workers' comp.

Answer

Rob Berkley, President and CEO, clarified that adjustments in other liability are based on the legal environment, exposure, attachment point, and jurisdiction, affecting both primary GL and umbrella across the book. He offered to follow up with specific details on the workers' comp book split if publicly available.

David Motemaden asked for more detail on competition in the other liability line, specifically across primary casualty, excess/umbrella, E&S, large account, or admitted. He also inquired about the split between specialty/high hazard and Main Street workers' comp.

Answer

Rob Berkley (President and CEO) explained that W. R. Berkley has adjusted its appetite in other liability based on the legal environment, considering exposure, attachment point, and jurisdiction, affecting both primary GL and umbrella, with these changes already underway. He did not have the specific breakdown for workers' comp at hand but offered to follow up if it's publicly available.

David Motemaden of Evercore ISI inquired if the bifurcated market dynamics seen in property are occurring in reverse for casualty lines and asked how the company is factoring potential tariffs into its loss picks.

Answer

President & CEO W. Robert Berkley, Jr. explained that while social inflation impacts the full spectrum of casualty, larger accounts are seeing more rate pressure, which then waterfalls through the market. He confirmed that potential tariff impacts are being factored into required rate needs and pricing actions, particularly in shorter-tail lines.

David Motemaden from Evercore ISI asked if the market bifurcation seen in property (large vs. small accounts) is occurring in reverse for casualty lines and how potential tariffs are being factored into loss trend assumptions.

Answer

President & CEO W. Robert Berkley, Jr. explained that while social inflation affects all casualty accounts, the rate environment for smaller accounts tends to be stickier. He confirmed that the company is actively factoring potential tariff impacts into its pricing and rate requirements, especially for shorter-tail lines like property.

David Motemaden requested more detail on the $11 million unfavorable reserve development in the Insurance segment, asked about the sustainability of growth in property reinsurance, and inquired about the company's view on recent tort reform efforts in Georgia.

Answer

Executive W. Berkley declined to provide a detailed breakdown of the reserve development on the call, citing its immateriality relative to total reserves, and suggested a follow-up. On property reinsurance, he noted that while the market is still reasonably priced, it was less attractive than a year ago, and the company would pull back if conditions change. Regarding Georgia tort reform, he viewed it as a positive step but was uncertain if it would be sufficient.

David Motemaden of Evercore ISI asked if the competitiveness in the casualty reinsurance market has caused a reevaluation of the company's own outward reinsurance program. He also inquired if rates in commercial auto and other liability are sufficient to continue leaning into growth, and asked for color on recent accident year loss development.

Answer

W. Robert Berkley, Jr. (Executive) responded that the company is always conscious of the cost of capital, both owned and rented (reinsurance), and balances market conditions with maintaining long-term partnerships. He confirmed that current rates in commercial auto and other liability are satisfactory for growth, noting that competitors coming to grips with reality is creating opportunity. He reiterated that the company is focused on product lines with potential for bodily injury, as they seem to 'turbocharge' social inflation.

David Motemaden of Evercore ISI questioned the sustainability of the accident year loss ratio improvement in the insurance business and asked about prior year development trends in the 'other liability' line for recent accident years.

Answer

Executive W. Berkley attributed the loss ratio improvement primarily to better performance in the attritional property book, which he believes reflects fundamental underwriting improvements rather than luck. He suggested that while there could be further gains, he could not guarantee future results. Regarding prior year development, he indicated there was nothing concerning or alarming and directed the analyst to the upcoming 10-Q for detailed breakdowns.

David Motemaden followed up on capital return, specifically the $1.8 billion expected in Q1, and asked for insights into buybacks for the rest of 2026 and into 2027, considering changes in debt management and healthy capital levels. He also questioned the implications of the 7.8% catastrophe loss expectation for 2026 on the aggregate XOL attachment point and any potential drag on Business Insurance premium growth.

Answer

Dan Frey (CFO, Travelers) stated there was no change in the overall capital management strategy, and future buybacks would depend on factors like cat losses, profitability, and growth environment. Alan Schnitzer (Chairman and CEO, Travelers) added that the primary objective for capital is reinvestment. Frey explained that the increased cat load is not expected to significantly drag BI premium growth due to improved reinsurance pricing. He clarified that the $3 billion CAT XOL attachment point is for tail protection, and the first $100 million of every event is retained, meaning the treaty would not have attached in 2025 even with the lower attachment point.

David Motemaden asked for further guidance on Travelers' share repurchase plans beyond Q1 2026, considering current excess capital and changes in debt management. He also sought clarification on the 2026 catastrophe loss expectation versus the aggregate XOL retention and its potential impact on Business Insurance premium growth.

Answer

Dan Frey, CFO, stated that there is no change in the overall capital management strategy, and future buybacks depend on various factors like catastrophe losses and profitability. Alan Schnitzer, Chairman and CEO, emphasized that the primary objective for capital is reinvestment into the business. Dan Frey clarified that the $3 billion aggregate XOL attachment point is for tail protection, noting the $100 million deductible per event. He does not anticipate a significant drag on Business Insurance premium growth from reinsurance costs.

David Motemaden asked for a comparison of renewal premium change (RPC) and rate excluding property from the previous quarter to the current quarter, and about property pricing trends outside of national property in Business Insurance. He also questioned the deceleration of Middle Market premium growth from Q2 to Q3 2025, asking if it was due to property dynamics.

Answer

Greg Toczydlowski, EVP and President of Business Insurance, explained that the RPC and rate excluding property metric is not a regular disclosure but was provided for context this quarter. He noted positive, though decelerating, price increases in Select and Middle Market property. Mr. Toczydlowski clarified that Middle Market premium growth was up 7% for the quarter, correcting the analyst's interpretation.

David Motemaden from Evercore followed up on property pricing, asking about the durability of rates outside of national accounts and the risk of weakness trickling down. He also questioned if the strong Business Insurance underlying loss ratio was flattered by light non-catastrophe weather, similar to the prior year.

Answer

CEO Alan Schnitzer stated the overall property landscape remains very positive and focusing on potential trickle-down is 'missing the forest for the trees.' CFO Dan Fry confirmed there was a small amount of favorability from non-cat weather again this quarter, similar to last year, but emphasized that the underlying combined ratio in Business Insurance remains outstanding regardless.

David Motemaden followed up on property pricing, asking about the durability of rates outside of national accounts and the risk of weakness trickling down. He also asked if the Business Insurance underlying loss ratio was flattered by favorable non-catastrophe weather.

Answer

Chairman and CEO Alan Schnitzer described the overall property landscape as positive and historically distinct from national accounts. CFO Dan Fry confirmed a small amount of favorability from non-cat weather, similar to the prior year, but emphasized that the underlying combined ratio in Business Insurance remains outstanding regardless.

David Motemaden questioned the durability of property pricing outside of national accounts and the risk of weakness trickling down. He also asked if the strong Business Insurance underlying loss ratio was flattered by light non-catastrophe weather, similar to the prior year.

Answer

CEO Alan Schnitzer stated that the overall property landscape is very positive and that property outside of national accounts historically performs differently. CFO Dan Fry confirmed there was some favorability from non-cat weather again this quarter, but noted the underlying combined ratio in Business Insurance remains outstanding regardless.

David Motemaden of Evercore ISI inquired about the potential impact of tariffs on Travelers' business lines and the company's strategic response, as well as how to interpret the net written premium growth in Business Insurance after accounting for reinsurance changes.

Answer

Alan Schnitzer, Chairman and CEO, explained that the direct impact of tariffs is manageable, with the most significant effect being a potential one-time, mid-single-digit increase in personal auto physical damage severity. He noted that the company might absorb this impact within its current loss pick if favorable trends continue. Regarding Business Insurance growth, Mr. Schnitzer confirmed that adding back the 4-point reinsurance drag to the reported 2% growth is a reasonable starting point, but emphasized that underlying production metrics like retention and new business remain very strong.

David Motemaden asked about the sustainability of the Business Insurance underlying loss ratio and the rationale for increasing the casualty reinsurance program.

Answer

CFO Dan Frey confirmed the underlying loss ratio was a 'pretty clean jump-off point' driven by earned price with no significant one-time benefits. Chairman and CEO Alan Schnitzer explained the decision to enhance casualty reinsurance was an opportunistic move made 'because we could,' securing more coverage at a lower attachment point on a margin-neutral basis due to favorable market conditions.

David Motemaden questioned the sustainability of the current rate environment in Business Insurance, the potential impact of recent hurricanes on property rates, and the company's appetite for growth in liability lines.

Answer

Chairman and CEO Alan Schnitzer responded that he expects renewal price changes to remain 'positive and strong,' noting that property pricing is rational relative to its returns. He added that reacting quickly to loss cost trends gives the company confidence to pursue growth and profitability in liability lines like umbrella.

David Motemaden (Evercore ISI) asked to reconcile FactSet's positive pipeline and constructive environment comments with the addition of only seven net new clients this quarter, which is historically low, suggesting new logo adds might be lagging despite solid retention.

Answer

Sanoke Viswanathan, CEO of FactSet, stated that the client count is broadly in line with typical early-year trends and not a concern, as there's a very strong pipeline of new business opportunities and strong ASV growth from new business. Goran Skoko, CRO, reiterated that Q1 is historically slower for net client growth and expects strong delivery for the rest of the year.

David Motemaden asked FactSet to reconcile its positive outlook on pipeline, constructive environment, and traction from sales incentives/product investments with the addition of only seven net new clients this quarter, which he noted as the lowest in some time, suggesting new logo adds might be lagging despite solid retention.

Answer

CEO Sanoke Viswanathan stated that the client count is broadly in line, typically lower in the early part of the year, and FactSet is not worried about the number. He highlighted a very strong pipeline of new business opportunities and strong ASV growth from new business. CRO Goran Skoko added that Q1 is historically slower for net client growth but reiterated strong pipeline and positivity for the rest of the year.

David Motemaden of Evercore ISI asked for an update on the company's progress toward its 30-50 basis point ASV contribution target from GenAI and whether this could accelerate.

Answer

CEO Philip Snow confirmed that FactSet is tracking toward its GenAI target, with multiple products reaching seven-figure revenue levels. He expressed optimism for future acceleration as new products are released, such as fixed income portfolio commentary, and as the company develops more advanced agentic AI workflows.

David Motemaden asked about the uptick in client retention to 91%, noting that historically this has correlated with ASV acceleration, which did not occur this quarter, and asked for the drivers of the increase.

Answer

Chief Revenue Officer Goran Skoko attributed the improvement to new processes that resulted in fewer full client cancellations. Chief Financial Officer Helen Shan added that with a large client base, a 1% change can be driven by churn at the low end and is less impactful than ASV retention, which remains strong at over 95%.

David Motemaden from Evercore ISI pointed out the increase in client retention to 91% and asked why this improvement did not translate into an ASV reacceleration in the quarter, questioning the underlying drivers.

Answer

Chief Revenue Officer Goran Skoko noted that the improvement was driven by fewer full client cancellations and that retention efforts are showing results in specific areas like investment management in the Americas. CFO Helen Shan added that given the large number of clients, a 1% change can be influenced by churn among smaller clients and is less impactful than the ASV retention rate, which remained above 95%.

David Motemaden asked about Fidelis Insurance Group's expectations for 1-to-1 renewals, both inwards and outwards, and the company's outlook for achieving similar top-line growth in 2026 as in the current year. He also inquired about the stability of RPIs, specific pressures in property lines, and the impact of outwards reinsurance. Additionally, he sought clarification on the direct property book's growth, new homeowners business, and potential tailwinds from data center construction opportunities.

Answer

CEO Dan Burrows expressed bullishness on the market, anticipating continued growth opportunities through the Fidelis Partnership and new underwriting partners, leveraging a verticalized market and lead positioning. He noted the importance of aligning inwards and outwards reinsurance for efficiency, expecting the outwards market to be competitive. Dan also explained that RPIs reflect price, terms, and conditions, with robust coverage structures and retentions, and highlighted new high-value homeowners business and strong direct property loss ratios. Group Managing Director Jonny Strickle elaborated on data center opportunities, emphasizing Fidelis's ability to deploy meaningful line sizes through its structure and partnerships to drive favorable terms.

David Motemaden asked about Fidelis's expectations for 1/1 renewals, both inwards and outwards, and whether the company anticipates achieving similar top-line growth in 2026 as in the current year. He also inquired about the stability of RPIs despite pressure in property lines and the potential tailwinds from data center construction in the direct property book.

Answer

CEO Dan Burrows expressed bullishness on the market, anticipating growth opportunities with both the Fidelis Partnership and new underwriting partners, leveraging a verticalized market and differentiated outcomes. He noted that outward reinsurance would focus on broadening cover and efficiency in a competitive market. Burrows confirmed pressure in certain property lines but highlighted strong retention, margins, and new high-value homeowners business. Group Managing Director Jonny Strickle explained that Fidelis's structure allows for meaningful line sizes on large risks like data centers, leveraging reinsurance and the Fidelis Partnership to drive terms and conditions without unbalancing the portfolio.

David Motemaden from Evercore ISI questioned the extent of the pricing decline in property D&F, its continuation into July, and whether increased competition was coming from Lloyd's syndicates. He also asked about the normalized growth outlook for the Insurance segment.

Answer

CEO Dan Burrows clarified that as a market leader, Fidelis sees pricing that is flat to down 10%, far better than the double-digit reductions in the subscription market. He attributed this to their ability to cross-sell and leverage their position, noting competition comes from smaller, late-to-market players rather than a specific group like Lloyd's. Regarding growth, he stated the company has a strong pipeline and is comfortable with its full-year estimates, despite quarterly lumpiness and walking away from underpriced business like in aviation.

David Motemaden asked for an update on Rate Per Mille (RPIs) in the D&F book and for quantification of the margin benefit from favorable outwards reinsurance buying. He also questioned how the pending U.K. aviation litigation outcome affects the company's appetite for share repurchases.

Answer

CEO Dan Burrows noted the overall portfolio RPI was around 104% and that the D&F market is 'flatter' but margins remain excellent. He quantified the outwards buying benefit, stating the retrocessional program was purchased at an RPI of around 80%, implying a 20% rate reduction. CFO Allan Decleir affirmed the company's capital position is strong and that it will continue to opportunistically use its $103 million remaining repurchase authorization.

David Motemaden asked for an explanation of the higher acquisition ratio in the Specialty segment and its future outlook. He also sought to confirm if the 14% to 16% ROE expectation extends to 2025.

Answer

CFO Allan Decleir explained the higher acquisition ratio was driven by increased variable profit commissions tied to strong underlying profitability, calling it lumpy and not a new run rate. He suggested the year-to-date rate of 28-29% is more representative. CEO Dan Burrows confirmed that while it's early, the 14-16% ROE target remains their focus for 2025.

David Motemaden questioned Progressive's stable pricing in Q3 despite strong margins, asking if the company is considering lowering prices to accelerate growth and improve retention, and also inquired about the long-term impact of collision avoidance systems (ADAS) on frequency and business growth.

Answer

President and CEO Tricia Griffith confirmed that Progressive is actively considering rate reductions for growth and retention, having decreased rates in about 10 states and increased in 6 during the quarter, emphasizing a surgical approach by channel, product, and state. She noted that initial conservatism regarding tariffs has lessened. On ADAS, Griffith stated that frequency has been declining for 50 years due to safer vehicles and stricter laws, but this has been offset by severity increases. She highlighted that severity has grown more than frequency, and the company is continuously analyzing factors like parts, repair capabilities, and talent for its long-term strategy. CFO John Sauerland added that the increasing number and average age of cars on the road, alongside pure premiums, have led to a larger marketplace than initially anticipated.

David Motemeden with Evercore ISI asked about Progressive's stable pricing despite strong margins, questioning if rate reductions are being considered to accelerate growth and improve retention, and the impact of tariffs. He also inquired about the long-term impact of collision avoidance systems (ADAS) on frequency decline and business growth.

Answer

Tricia Griffith, President and CEO, confirmed that Progressive is considering rate reductions for growth and retention, having decreased rates in 10 states and increased in 6, taking a surgical approach. She noted less concern about tariffs currently. On ADAS, she explained that frequency has been declining for 50 years, offset by severity increases. John Sauerland, CFO, added that the increasing number and average age of vehicles on the road also affect the overall market size.

David Motemaden of Evercore ISI sought to distinguish the drivers of lower policy life expectancy, asking how much was due to business mix versus competition. He also asked if favorable frequency trends were influenced by customers absorbing small claims themselves versus the impact of ADAS.

Answer

Tricia Griffith, CEO, President & Director, declined to break down retention by segment but reiterated that a combination of increased consumer shopping and business mix shift are the primary drivers. She attributed the majority of the frequency decline to changes in business mix and trends in vehicle miles traveled.

David Motemaden asked for clarification on the dynamic of improving renewal application growth occurring at the same time as a decline in policy life expectancy (PLE). He also inquired if the competitive environment is approaching 2018 levels, where price cuts became more common.

Answer

Personal Lines President Patrick Callahan explained that renewal applications are a lagging indicator of new business written 6-9 months prior, while PLE is a forward-looking projection. CEO Susan Griffith noted the market is more competitive but emphasized that Progressive will continue to leverage advertising and a strong focus on expense discipline to fuel growth, rather than just competing on price.

David Motemaden inquired about Progressive's appetite for increasing advertising spend, the current cost-per-sale versus target acquisition cost, and the outlook for retention given the recent decline in policy life expectancy.

Answer

CEO Susan Griffith explained that the cost-per-sale (CPS) and target acquisition cost (TAC) are now much closer following increased investment. She stated that ad spend will remain flexible to capitalize on opportunities while adhering to the 96% combined ratio target. Regarding retention, Griffith acknowledged the dip in policy life expectancy was an expected result of significant rate increases but anticipates a turnaround as rates stabilize, which she views as key to improving customer retention.

David Motemaden asked if recent hurricanes affected auto shopping trends, whether the cost per sale is still well below target, and if ambient shopping levels have declined.

Answer

CEO Susan Griffith responded that the hurricanes did not have a notable impact on policy growth. She confirmed that ambient shopping remains high and that the cost per sale (CPS) in Q3 was still favorable relative to the target acquisition cost (TAC), supporting continued media investment.

David Motemaden asked about the long-term outlook for Risk and Broking's mid-to-high single-digit growth target, given the current challenging pricing environment, and how general employment levels and turnover might impact the recurring revenues of the Health, Wealth & Career (HWC) and Benefits Delivery & Outsourcing (BD&O) businesses.

Answer

Carl Hess, CEO, reaffirmed commitment to mid-to-high single-digit growth for R&B for the year, acknowledging that high single-digit growth is more challenging. Lucy Clarke, President of Risk and Broking, stated they would comment on 2026 next quarter but expressed optimism for continued market-leading growth due to client demand and their specialty structure. Julie Gebauer, President of Health, Wealth, and Career, noted that softening employment has not impacted HWC's overall revenue, with mid-single-digit growth expected. She highlighted continued high competition for certain jobs and skills, and client needs driven by healthcare inflation, pension funded status, and new legislation, which generally favors HWC services, including BD&O.

David Motemaden asked about the long-term viability of the Risk and Broking mid-to-high single-digit growth target given the current pricing environment, and the sensitivity of HWC businesses, particularly BD&O, to general employment levels.

Answer

Carl Hess, CEO, reaffirmed commitment to mid-to-high single-digit growth for R&B for the year, acknowledging high single-digit is more challenging. Lucy Clarke, President of Risk and Broking, stated they see plenty of room for growth and expect market-leading growth rates. Julie Gebauer, President of Health, Wealth, and Career, noted that softening employment has not impacted HWC revenue overall, with mid-single-digit growth expected, supported by high competition for certain skills, healthcare inflation, pension funded status, and new legislation.

Asked if the previous guidance of 70 basis points of natural operating leverage per year is still a good baseline given the change in business mix. He also inquired about the employee headcount growth rate in 2024 and if it's a good proxy for 2025.

Answer

The prior 70 basis point guidance is no longer relevant due to the changed business portfolio. The best way to model margin expansion is to consider the ~100 bps average in R&B, continued incremental improvement in HWC, and the enterprise-level tailwind from the TRANZACT divestiture. A headcount growth rate similar to the 2-3% seen in 2023 is a reasonable way to think about it, but current hiring is more opportunistic, and any investments in talent will not prevent the company from hitting its margin targets.

David Motemaden asked for clarification on the 17% operating ROE year-to-date and how RenaissanceRe's ROE profile might evolve heading into 2026, given anticipated pricing dynamics. He also inquired about the strategic implications, opportunities, and risks associated with increased interest from third-party capital in longer-tail liabilities.

Answer

President and CEO Kevin O'Donnell clarified that the 17% operating ROE was a comparison of modeled vs. actual loss ratios for property catastrophe. He reiterated that property catastrophe will remain a well-rated book in 2026, albeit slightly less so than in 2025, with strong fee and investment income. O'Donnell views increased third-party capital interest in longer-tail liabilities as an opportunity, leveraging RenaissanceRe's history of matching efficient capital with desirable risk, and structuring vehicles to share this risk, while also monitoring potential competition.

David Motemaden asked for clarification on the 17% operating ROE year-to-date and how RenaissanceRe's ROE profile might evolve heading into 2026, given anticipated pricing dynamics. He also inquired about the strategic implications, opportunities, and risks associated with increased interest from third-party capital in longer-tail liabilities.

Answer

President and CEO Kevin O'Donnell clarified that the 17% operating ROE was a comparison of modeled vs. actual loss ratios for property catastrophe. He reiterated that property catastrophe will remain a well-rated book in 2026, albeit slightly less so than in 2025, with strong fee and investment income. O'Donnell views increased third-party capital interest in longer-tail liabilities as an opportunity, leveraging RenaissanceRe's history of matching efficient capital with desirable risk, and structuring vehicles to share this risk, while also monitoring potential competition.

David Motemaden from Evercore ISI asked for a pricing comparison between the 80% of catastrophe business done via private deals versus the other 20%, and followed up on whether specific reserve actions were taken on the general liability book where exposure was recently cut.

Answer

EVP & Group Chief Underwriting Officer David Marra confirmed that pricing on the private deals was above market, which was critical to achieving a flat overall rate for the Florida book. President & CEO Kevin O'Donnell stated that while they have previously shifted some reserve redundancy to the GL portfolio from other lines, the overall casualty book is healthy and no unusual reserve actions were taken in the quarter related to the exposure reduction.

David Motemaden asked if there are sufficient opportunities at the upcoming 6/1 renewals to accelerate property catastrophe premium growth beyond the flattish trend seen at the 1/1 renewals.

Answer

CEO Kevin O'Donnell responded that while the market is growing and provides opportunities, the company's primary focus is on preserving margin and maintaining the capital efficiency of the portfolio. He indicated that decisions to grow will be made on a deal-by-deal basis, contingent on whether the new business enhances portfolio efficiency, rather than pursuing top-line growth for its own sake.

David Motemaden sought clarification on whether the company had newly begun to recognize adverse reserve development on recent accident years for general casualty, noting it seemed to be a change from the prior quarter's commentary.

Answer

CFO Bob Qutub clarified that the volatility mentioned was in the current accident year, not prior years. He explained that the prior year development has consistently involved a balancing act, where adverse trends in lines like general liability are offset by favorable trends in shorter-tail lines. He emphasized this is part of their ongoing reserving process across many classes of business and not a new development this quarter.

David Motemaden asked for specifics on how much loss ratio improvement RenaissanceRe assumed in its casualty picks during the hard market years of 2020-2022 compared to 2019. He also inquired about the progress of the company's increased engagement and information gathering with its casualty cedents.

Answer

President and CEO Kevin O'Donnell did not provide specific numbers but reiterated their conservative process of setting initial picks higher than primaries and being slow to recognize good news. He framed the current push for rate as a forward-looking effort to enhance margins. Group Chief Underwriting Officer David Marra explained that the engagement with cedents began much earlier this year, and the focus is on using the enhanced data to correctly price risk and select their portfolio for 2025.

David Motemaden questioned the reported 5.5% OCC growth (6.5% normalized) compared to the historical 6.8% in softer markets, asking what factors are currently dragging down growth and for confidence in future acceleration.

Answer

CFO Elizabeth Mann attributed the variability to quarterly fluctuations and reiterated confidence in delivering long-term organic targets. President and CEO Lee Shavel emphasized the exceptionally strong subscription growth as a function of value delivery, distinguishing it from the primarily transactional impact on the overall OCC growth.

David Motemaden questioned the deceleration of OCC growth, noting that even after normalizing for light weather and the government contract, the 6.5% growth was below the historical 6.8% in softer markets. He asked what factors are currently dragging down OCC growth.

Answer

Elizabeth Mann, Verisk's Chief Financial Officer, attributed the quarterly variability to factors like the government contract and auto softness, which were anticipated, plus the unexpected light weather activity. Lee Shavel, President and Chief Executive Officer, emphasized that strong subscription growth, driven by value delivery, underpins confidence in adhering to the long-term growth model despite transactional impacts.

David Motemaden of Evercore ISI asked whether the high-growth profile of AccuLinks could lead Verisk to revise its long-term 6-8% organic growth target once the acquisition is integrated.

Answer

CFO Elizabeth Mann acknowledged that the acquisition is accretive to Verisk's growth profile. However, she noted that because it represents a smaller portion of the company's total revenue, they will need to evaluate any potential changes to the long-term guidance as they approach 2027 when it enters the organic base.

David Motemaden of Evercore ISI asked if the increasingly competitive P&C insurance pricing environment is causing Verisk's customers to become more focused on controlling expenses.

Answer

President and CEO Lee Shavel responded that clients have been consistently focused on efficiency and he has not observed a material change driven by pricing trends. He pointed out that the industry's return to underwriting profitability in 2024 suggests a continued appetite for investment in solutions that drive efficiency.

David Motemaden asked if the planned rollout of more Core Lines Reimagined modules in 2025 could lead to an acceleration in price realization compared to 2024.

Answer

President and CEO Lee Shavel affirmed that each new module adds client value, creating an opportunity to capture a portion of it. However, CFO Elizabeth Mann clarified that because many large clients are on multi-year contracts, the pricing benefit is realized as a gradual and sustained opportunity over time, not as a sharp, single-year uptick.

David Motemaden asked about the Thrive program's $400 million gross savings, specifically how the reinvestment portion will be allocated, particularly concerning talent acquisition, given past talent-related noise and the McGriff acquisition. He also sought clarification on the deceleration of organic growth in Marsh's U.S. and Canada segment during the quarter, questioning if it was due to talent issues, despite a seemingly stable economy and M&A tailwinds.

Answer

President and CEO John Doyle confirmed that investments from Thrive savings would target talent and accelerating the AI journey, emphasizing continuous organic and inorganic talent investment without generating headlines. He clarified that Thrive is not a strategic shift but an improvement initiative to build a new Marsh brand, simplify the story, and leverage unique firm attributes like data, analytics, and a team-based culture. Regarding U.S. and Canada organic growth, Mr. Doyle attributed softness to hesitancy from larger clients in an uneven economy and noted that talent headlines had no overall company impact. He highlighted that while pricing may be down, the increasing cost of risk (extreme weather, liability, healthcare) drives resilient demand for Marsh McLennan's services.

David Motemaden followed up on the deceleration in Marsh's U.S. and Canada organic growth, asking for insights into its causes despite a seemingly stable economy, and if recent talent issues played a role, as well as expectations for its progression.

Answer

John Doyle, President and CEO of Marsh McLennan, reiterated that talent issues had no overall company impact. He described the economy as 'quite uneven' and noted that larger U.S. clients are being more defensive. He highlighted that while pricing may be down and the economy is slowing, the rising 'cost of risk' (e.g., extreme weather, liability, healthcare) is increasing faster than GDP, ensuring resilient demand for Marsh McLennan's services, which he is confident will continue.

David Motemaden from Evercore ISI questioned the durability of Marsh's strong international growth amid negative pricing. He also asked for clarification on the proportion of the company's revenue base that is exposed to more discretionary or project-based spending.

Answer

Martin South, President & CEO of Marsh, detailed that strong international growth was driven by new business wins and strength in construction, credit, cyber, and benefits across key regions like EMEA, Japan, and India. President & CEO John Doyle estimated that 15-20% of the revenue base is more exposed to economic softness. Nick Studer, President & CEO of Oliver Wyman, added that while some consulting work is affected by client uncertainty, demand remains for strategic advice on growth, AI, and resilience.

David Motemaden of Evercore ISI asked about the durability of Marsh's strong international growth amid negative pricing trends. He also requested clarification on the proportion of Marsh McLennan's revenue base that is exposed to more discretionary or project-based spending.

Answer

Martin South, President & CEO of Marsh, detailed the international strength, citing strong new business and broad-based growth across EMEA, Asia Pacific, and Latin America, driven by capabilities in construction, credit, cyber, and benefits. President & CEO John Doyle estimated that roughly 15-20% of the total revenue base is more exposed to economic softness. Nick Studer, President & CEO of Oliver Wyman, added color on consulting, noting resilience in areas like AI strategy and energy transition, balanced by softness in M&A-related work.

David Motemaden inquired about the company's exposure to government contracts and sought clarification on the drivers of the revenue growth slowdown in Marsh's U.S. and Canada division.

Answer

President and CEO John Doyle stated that while the company does work for governments globally, the exposure is not material to overall results. Regarding the Marsh division, Doyle and Marsh CEO Martin South clarified the slowdown was unrelated to McGriff. South attributed the 4% growth, which was on top of a tough 8% comp, to weakness in the construction practice and declining property rates, which offset strong performance in MMA and specialty.

David Motemaden inquired about the potential impact of the recent California wildfires on the primary and reinsurance property markets. He also asked for an explanation of the underlying growth deceleration in Mercer's Health business during the quarter.

Answer

CEO John Doyle and Guy Carpenter CEO Dean Kilsura stated it's too early to determine the full market impact of the wildfires, though Kilsura noted it could temper the rate reductions seen in January. Doyle emphasized the need for resilience over insurance subsidies. Mercer CEO Pat Tomlinson addressed the Health business, stating the 8% full-year growth is more reflective of performance than the 5% in Q4, which can have quarterly variability. He cited strong ongoing demand driven by medical cost inflation and regulatory changes.

David Motemaden of Evercore ISI inquired about the reinsurance renewal outlook, questioning why guidance remains 'flat to down 5%' when the Torrey Pines cat bond priced down 15%. He also asked for the rationale behind splitting the La Lima Hawaii program from the core placement and sought details on the drivers of the 23% earthquake premium growth.

Answer

Chairman and CEO Mac Armstrong explained that the guidance contains conservatism as a large portion of the treaty is yet to be placed, though all placements to date have been favorable. He noted the La Lima separation is a long-term strategy to establish it as a stand-alone, fee-generating entity. Regarding earthquake growth, Armstrong and President Jon Christianson confirmed strong performance in both residential and commercial segments, with residential benefiting from heightened awareness and new partnerships.

David Motemaden questioned if the current year's catastrophe loss impact of 5-6% on the combined ratio is the new expected level and asked for commentary on the expected cat load. He also sought clarity on the run-rate for the other underwriting expense ratio and inquired about the source of competition causing commercial earthquake rates to plateau.

Answer

Mac Armstrong, Chairman and CEO, responded that this year's cat load is slightly elevated and that a 3-4 point impact is a more appropriate steady-state expectation, as the company plans to reduce some hurricane exposure. Chris Uchida, executive, clarified that the Q3 underwriting expense ratio was artificially low due to crop seasonality and a mid-6% to 7% range is a better run-rate expectation, noting continued investment in talent. Regarding commercial earthquake, Mac Armstrong attributed the rate plateau to rate fatigue after years of increases, a strategic trade-off of rate for better terms, and new capacity from MGAs and Lloyd's syndicates.

David Motemaden from Evercore ISI asked about the sensitivities of the MIS outlook, specifically how more Fed rate cuts or flat M&A activity (versus the guided 15% growth) would impact the forecast.

Answer

CEO Robert Fauber described potential Fed rate cuts as a 'mixed bag,' as the benefit of lower rates could be offset by the negative impact of the decelerating economic growth that would likely trigger them. Regarding M&A, he provided a sensitivity metric, stating that every 10% change in M&A volume corresponds to approximately $35 million in rating revenue.

David Motemaden from Evercore ISI questioned the drivers behind the updated, higher medium-term revenue growth outlook for Moody's Investors Service (MIS) and asked about the contribution from private credit rating assessments.

Answer

CEO Robert Fauber clarified that the updated outlook is anchored to strong performance already achieved since the 2022 base year. Michael West, President of MIS, detailed the durable growth drivers beyond traditional markets, highlighting the significant, multi-trillion dollar opportunities in private credit, sustainable and transition finance, and digital infrastructure, which are all areas of focused investment.

David Motemaden asked for an updated perspective on the extent of issuance pull-forward that has occurred in 2024 and whether it has negatively impacted expectations for 2025.

Answer

CEO Robert Fauber explained that there has been more pull-forward in speculative-grade debt, which is typical, but less in investment-grade. On an aggregate basis, he stated that the pull-forward from one-year forward maturities is almost exactly in line with historical averages. He concluded that the overall refunding wall profile remains a net tailwind for near-term issuance.