Josh Shanker

Josh Shanker referenced the company's past commitment to forestall M&A to demonstrate cash flow, which was followed by the CAC deal, and compared this to the current stock price and the newly announced share repurchase program. He questioned if the current stock valuation constitutes an 'emergency' requiring active execution of the buyback, similar to how the CAC deal was perceived as an unmissable opportunity, and if the full $250 million buyback would be exhausted this year if the stock price doesn't improve.

Answer

Trevor Baldwin, CEO of Baldwin Group, unequivocally stated that at 8 times EBITDA, there is no better use of capital than buying the company's own shares, confirming that the share repurchase program has been authorized and the company will be actively buying its stock. He declined to specify the exact amount or speed of deployment but reiterated that acquiring their own shares at a significant discount to open market M&A for smaller, lower-quality businesses is the best capital allocation decision.

Josh Shanker questioned the company's commitment to its share repurchase program, drawing parallels to past M&A decisions that diverged from stated investor expectations regarding deleveraging and free cash flow.

Answer

Trevor Baldwin (CEO, Baldwin Group) unequivocally stated that at 8x EBITDA, buying back the company's own shares is the best use of capital, confirming active participation in the share repurchase program. He reiterated that it is a superior use of capital compared to acquiring smaller, lower-quality businesses in the open market.

Josh Shanker of Bank of America sought clarification on whether the final contingent earn-out payments were now fully settled, including those for employees, and asked for guidance on the company's future tax rate.

Answer

CFO Brad Hale confirmed that 99% of earn-out liabilities have been extinguished, with only one minor deal remaining with less than $5 million in potential incentives. He also stated that he does not anticipate the company becoming a cash taxpayer for several years due to existing NOLs and favorable interest deductibility rules, expecting to maintain an effective rate of around 10% for adjusted earnings in the near term.

Josh Shanker from Bank of America sought clarification on whether all contingent earn-out liabilities have been fully paid and asked for guidance on the company's future tax rate.

Answer

CFO Brad Hale confirmed that 99% of earn-out liabilities are extinguished, with only one minor deal remaining. He also stated that he does not anticipate the company becoming a cash taxpayer for a number of years due to remaining NOLs and restored interest deductibility, expecting to maintain an effective rate of around 10% in adjusted earnings.

Josh Shanker of Bank of America asked about the specific cohorts driving Trupanion's improving retention rates, particularly focusing on the 'middle bucket' (under 20% rate increases), the 'over 20%' bucket, and first-year retention. He also questioned the rationale behind Landspath as a good use of company funds, seeking more granularity.

Answer

CEO and President Margi Tooth confirmed healthy retention across all cohorts, with significant improvement in the middle bucket and consistent improvement in the over 20% bucket due to effective value proposition articulation. She acknowledged first-year retention as an ongoing opportunity. CFO Fawwad Qureshi explained Landspath as an early-stage investment with favorable unit economics, expected to be a meaningful long-term margin contributor. Margi Tooth added that Landspath aims to bundle pet care (food and insurance) through veterinarians, potentially improving pet health, retention, and lifetime value.

Josh Shanker from Bank of America asked about the specific areas of improvement in Trupanion's retention rates across different cohorts, particularly where improvement is strongest and where it might be lagging. He also questioned the confidence in Landspath as a good use of funds, given its early stages.

Answer

CEO and President Margi Tooth reported healthy retention across all cohorts, with particular improvement in the 'middle bucket' (under 20% rate increases) and consistent improvement in the 'over 20%' bucket. She identified the first-year retention as an ongoing opportunity. CFO Fawwad Qureshi explained that Landspath, while early, is expected to be a meaningful long-term margin contributor due to favorable unit economics. He also mentioned other uses of AOI, such as technology investments (e.g., claims automation driving efficiency) and financial investments like debt reduction. Margi Tooth added that Landspath aims to improve pet health through portion control food, bundling it with insurance, and potentially passing savings to pet parents, while also supporting veterinarians.

Josh Shanker inquired about potential issues in medical stop loss, specifically a reported rise in cancer among young people, and whether Unum observes similar trends impacting its disability or group life business pricing. He further asked if this trend of cancer diagnosis in younger ages manifests in disability claims, leading to individuals being out of the workplace.

Answer

President and CEO Rick McKenney stated that Unum exited the medical stop-loss business years ago. He confirmed that Unum has not seen a significant change in younger mortality from cancer diagnoses within its working lifetime group life block. While cancer is a large component of long-term disability, Unum has not observed the acute, younger-age trend specifically impacting its disability books, noting submitted LTD levels are in line and group life mortality has been favorable.

Josh Shanker followed up, asking if the trend of cancer diagnoses in younger ages, even if not fatal, is causing individuals to be taken out of the workplace, impacting disability claims.

Answer

Rick McKenney, President and CEO, reiterated that Unum has not seen this specific trend significantly impact its book of business. He acknowledged cancer is a large component of long-term disability but stated that submitted LTD levels are in line, and Group Life mortality levels have been favorable, indicating no specific acute increase in younger-age claims.

Josh Shanker asked for clarification on Unum's decision to discontinue adding new employees to existing group Long-Term Care (LTC) contracts, noting that this business was beneficial and cost $200 million in the review. He questioned the motivation for foregoing positive cash flows to make the block smaller.

Answer

President and CEO Rick McKenney clarified that Unum stopped writing new group LTC *cases* in 2012. The current action is to curtail adding *new employees* to *existing* group LTC contracts. While these new enrollments were profitable due to more recent pricing, the decision was a strategic trade-off to reduce the overall size of the closed block. Mr. McKenney confirmed that Unum is indeed foregoing positive cash flows because LTC is not aligned with the company's core strategy of protecting people during their working lifetime, and reducing the block is strategically important.

Josh Shanker from Bank of America questioned the decision to discontinue adding new employees to existing group Long-Term Care (LTC) contracts, especially since these additions were profitable and cost $200 million in the review. He sought clarification on the motivation behind forgoing positive cash flows to make the closed block smaller.

Answer

CEO Rick McKenney clarified that while new group cases were closed in 2012, the recent decision was to stop allowing new employees onto existing group LTC contracts. He confirmed that these new employees were profitable due to updated pricing, but the strategic motivation is to reduce the overall size of the closed block and align with Unum Group's core purpose of protecting people during their working lifetime, making it a deliberate trade-off to simplify and reduce the legacy business.

Josh Shanker asked how Everest Group's property premium underwritings in Q1 2026 might compare to Q1 2025, given the reported reduction in PMLs as a percentage of equity.

Answer

Jim Williamson, President and CEO, Everest Group, indicated that while Q1 2026 will still reflect premium recognition from 2025, he expects the growth in total property premium to subside. He emphasized that the company is well-compensated for risk, with good program structures and adequate rate levels, and will continue to selectively reduce exposure. Regarding the insurance segment's future, Jim Williamson stressed that profitability and strong returns on capital are the key metrics, not size. He believes Everest can be relevant through its management team, products, and distribution, focusing on underwriting income growth and deepening expertise in areas like U.S. E&S construction and engineering.

Josh Shanker asked about Everest Group's appetite for returning capital to shareholders, particularly through share repurchases, given recent strategic announcements. He also questioned the chronology of the decision to exit retail risk and any concerns about 2025 reserves from recent underwriting.

Answer

Mark Kociancic, EVP and CFO, affirmed that share buybacks are attractive, indicating that first-half 2025 activity represents a floor and future transactions will unlock more capital. Jim Williamson, President and CEO, clarified that the re-underwriting process is complete, with 80% of 2025 U.S. casualty development stemming from eliminated policies. He emphasized that the decision to exit retail was a comprehensive strategic review focused on maximizing shareholder value, not driven by reserve observations.

Josh Shanker sought to understand the chronology of the decision to exit retail risk and expressed concern about the adequacy of 2025 reserves for underwriting done in the past six months.

Answer

Jim Williamson, President and CEO, detailed the comprehensive strategic review process, emphasizing that the decision was not reserve-driven. He noted that 80% of 2025 U.S. casualty development came from policies eliminated during remediation, indicating the go-forward portfolio's expected strong performance.

Josh Shanker from Bank of America asked about the decision to increase property cat probable maximum losses (PMLs) in what some describe as a softening market. He also questioned if, in hindsight, more capital should have been deployed last year.

Answer

Jim Williamson, President & CEO, strongly refuted the 'soft market' label for property cat, emphasizing that rates remain historically very strong and offer excellent returns. He justified the PML increase by the highly attractive risk-reward profile, which makes it a better use of capital than other options. Williamson dismissed a retrospective look at last year's deployment, noting that increasing line sizes with clients is a gradual process.

Josh Shanker with Bank of America Securities asked about the expected size of third-party underwriting (delegated business) as a percentage of the total portfolio in 2026, identifying areas of biggest surge, and comparing expense and acquisition ratios of third-party versus in-house business. He also questioned whether the growth in delegated underwriting represents a structural industry change or a soft market strategy.

Answer

President and CEO Vince Tizzio stated that delegated business represented approximately 32% of volume at year-end 2025, driven by four key relationships (Pet, Surety, Transactional Liability, Portfolio Solutions Group). He expects it to remain in the 30-odd range, noting North American delegated is 14% of total volume. He indicated that acquisition costs are contemplated in overall estimates but difficult to fine-point due to profit-sharing. Vince Tizzio believes there is structural change in the delegated space, particularly with U.S. wholesale distribution MGUs, emphasizing enhanced controls, data analytics, and economic alignment of interest since the prior reserve charge.

Josh Shanker from Bank of America asked about the expected growth of third-party underwriting (delegated business) as a percentage of AXIS Capital's total portfolio in 2026, identifying which segments might see the biggest surge, and comparing the expense and acquisition ratios of third-party versus in-house business. He also questioned whether the increasing reliance on delegated underwriting represents a structural industry change or a soft market strategy that might reverse in the future.

Answer

President and CEO Vince Tizzio stated that delegated business represented approximately 32% of AXIS's volume at the end of 2025, driven by four key relationships: pet, surety, transactional liability, and London's portfolio solutions group. He expects the delegated book to remain in the 30-odd range, noting that North American delegated is 14% of total volume. Vince Tizzio explained that acquisition costs are contemplated in overall estimates, but difficult to pinpoint due to profit-sharing agreements. He believes there is structural change in the delegated space, particularly with investments in MGU entities within US wholesale distribution, which have 'staying power.' He emphasized that AXIS redefined the role of MGAs after a painful set of lessons, now focusing on controls, data analytics, and economic alignment of interest through profit-sharing agreements, citing Rak Re as an example of this changed dynamic.

Josh Shanker from Bank of America asked for details on the amortization of the Deferred Tax Asset (DTA), the split between cash and non-cash tax payments, and the potential risks from global tax changes. He also requested more specifics on the drivers of the high paid-to-incurred loss ratio in the insurance segment.

Answer

CFO Peter Vogt explained that the DTA will amortize over approximately 10 years, and this amortization is treated as a non-operating, non-cash item for consistency with how it was established. He noted the OECD has provided clarity through 2026, but beyond that is uncertain. Regarding the paid loss ratio, Mr. Vogt and CEO Vincent Tizzio attributed the quarterly increase to several large, older claims in the marine, aviation, and professional lines, as well as wildfire claim payments, rather than a change in underlying trends.

Josh Shanker questioned whether current market softening reflects changing loss conditions or an inability to achieve necessary price increases for expected loss trajectories, and asked if there are marginally attractive pockets of the market that W. R. Berkley is choosing not to pursue.

Answer

CEO Rob Berkley emphasized that different product lines are in different cycle places, requiring a 'fine brush.' He noted discipline in excess and umbrella, ongoing problems in auto liability, and fading discipline in property cat. He reiterated that W. R. Berkley is a 'return-driven business,' not combined-ratio-driven, and makes daily judgments on loss picks versus achievable rates, leading to exposure shrinking in some areas.

Josh Shanker asked whether the industry is currently experiencing changing loss conditions or if it's simply unable to achieve necessary price increases for the expected loss trajectory, focusing on casualty lines. He also questioned if there are marginally attractive pockets (e.g., 91-94% combined ratio) that could be written for growth but are not pursued, or if such opportunities are simply not available.

Answer

CEO Rob Berkley emphasized a 'fine brush' approach, noting different product lines are in different cycle stages. He highlighted discipline in Excess & Umbrella, problems in Auto Liability, and a fading concept of appropriate cat load in property. He reiterated that WR Berkley is a return-driven business, not combined-ratio-driven, and makes daily judgments on loss picks versus achievable rates. He stated that the goal is to make money and good returns, not just issue policies, and that the company navigates by responding to market conditions and data on current margins.

Josh Shanker expressed concern over the 'self-sabotage' comment and asked about the current pricing environment compared to three months prior. He also inquired if carriers are increasing commissions to distributors to gain market share.

Answer

Rob Berkley, President and CEO, clarified that W. R. Berkley's overall rate increase (ex-comp) was similar to the previous quarter (7.6%), but market dynamics differed, with property catastrophe and E&S property under the greatest pressure. He stated that increasing commissions is 'chapter two,' implying it's not yet a widespread trend.

Josh Shanker asked about the overall pricing trend compared to three months ago, given Rob Berkley's 'self-sabotage' comment. He also inquired if carriers are offering increased commissions to distributors to gain market share.

Answer

Rob Berkley (President and CEO) stated that the overall book's rate increase (ex-comp) was essentially flat at 7.6% compared to last quarter, despite underlying shifts. He noted property catastrophe and E&S property are under the greatest pressure, but W. R. Berkley's modest participation limits its impact. He believes increased commissions are 'chapter two,' and the industry is 'still in chapter one.'

Josh Shanker from Bank of America asked for clarification on the company's disappointment with casualty reinsurance trends and questioned how higher investment yields are influencing underwriting pricing discipline.

Answer

President & CEO W. Robert Berkley, Jr. specified his disappointment was with high ceding commissions in the assumed reinsurance market and a lack of discipline in the casualty facultative space. He acknowledged the link between investment income and underwriting but dismissed a return to cash-flow underwriting, noting competitive pressures are highest in short-tail lines.

Josh Shanker of Bank of America sought clarification on management's disappointment with casualty reinsurance trends and asked how higher investment yields are influencing underwriting discipline.

Answer

President & CEO W. Robert Berkley, Jr. specified his disappointment was with high ceding commissions in the assumed reinsurance market. He acknowledged the link between investment income and underwriting returns but firmly stated it would not lead to a return to cash-flow underwriting, especially as the most competitive lines are short-tail.

Josh Shanker with Bank of America asked about where business is churning to, given that competitors are not growing quickly and Progressive's policy account growth has decelerated. He also inquired about the transparency of capital return, comparing it to the more formulaic program prior to 2020.

Answer

Tricia Griffith, President and CEO, noted that some competitors are expanding into non-standard and independent agent channels, but reiterated Progressive's substantial growth despite deceleration compared to its best year. On capital return, she explained that the formulaic program changed due to the need for capital to fund high growth. John Sauerland, CFO, clarified that investors can estimate excess capital beyond regulatory and contingency needs, which would be the source for a variable dividend, though no specific formula is provided.

Josh Shanker asked about the competitive landscape, specifically where business is churning given that major competitors are not growing quickly while Progressive's growth has decelerated. He also questioned the transparency of Progressive's capital return program, comparing it to the more formulaic approach prior to 2020.

Answer

President and CEO Tricia Griffith noted that some competitors are expanding into new channels (e.g., captive to independent agents, direct to agency), while Progressive has always maintained a broad presence. She reiterated that Progressive's growth remains substantial, building on its best historical year. Regarding capital return, Griffith explained that the formulaic dividend program was changed to retain capital for high growth opportunities. She stated that while there isn't a new formula, the company currently has excess capital, and the board will decide on buybacks and dividends, aiming to maintain 'dry powder.' CFO John Sauerland elaborated on regulatory and contingency capital layers, explaining that capital in excess of these layers would be considered for variable dividends or buybacks.

Josh Shanker of Bank of America questioned if retention would naturally improve as the large volume of lower-retention 'SAM' customers acquired in 2024 normalizes. He also asked if the high ad spend is justified if it primarily attracts these low-duration customers.

Answer

Tricia Griffith, CEO, President & Director, agreed with the logic in a stable environment but cautioned that the market is dynamic, with factors like a strategic push for 'Robinsons' and ongoing consumer shopping creating noise. She affirmed the ad spend is justified, as they only acquire customers they expect to be profitable, and today's 'SAMs' can become tomorrow's 'Robinsons', aligning with their long-term customer lifecycle strategy.

Josh Shanker inquired about Arch Capital's share buyback activity in Q3, specifically its consistency and appetite for Q4 and Q1, noting the company's comfort buying during hurricane season. He also asked if Arch believes it can satisfy all desired capital return through repurchases, or if a special dividend might still be considered.

Answer

François Morin (EVP, CFO, and Treasurer) confirmed buybacks were consistent throughout Q3, with increased activity in September and October. He stated that Arch is now more diversified and stronger, making them comfortable with buybacks during wind season. He added that the company evaluates capital return daily, believes it can do more, and will continue repurchasing as much as possible at attractive prices, without setting a specific target.

Josh Shanker questioned Arch Capital's share buyback strategy, specifically asking about the consistency of buybacks throughout Q3 2025 and the company's appetite for repurchases in Q4 2025 and Q1 2026, given past concerns about hurricane season. He also asked if Arch believes it can meet all its capital return objectives solely through buybacks, contrasting it with previous special dividends.

Answer

CFO Francois Morin confirmed that buybacks were consistent throughout Q3 2025, with increased activity in September and October. He stated that Arch is now more diversified and less exposed to large catastrophes, making them comfortable with buybacks during wind season. Mr. Morin emphasized that Arch evaluates capital return daily and believes they can do more buybacks, but does not set a specific target, noting the stock's liquidity and attractive price.

Josh Shanker sought to reconcile commentary about the attractiveness of property cat with the year-over-year decline in written premiums and asked about the impact of these shifts on the reinsurance acquisition cost ratio.

Answer

CEO Nicolas Papadopoulo and CFO & Treasurer François Morin clarified that after adjusting for a timing issue, property cat premiums were actually up ~20%. The decline in 'other property' was due to selective underwriting, including cedent retention and non-renewal of a large contract. Morin added that these mix shifts did not have a significant impact on the acquisition cost ratio, which is more sensitive to profit commissions.

Josh Shanker sought to understand the effective retention numbers for Personal Auto and Home, asking if retention has bottomed and is now improving, or if the current numbers are projections. He also asked for confirmation if retention has improved from a year ago.

Answer

Dan Frey, EVP and CFO, explained that retention statistics are actuarial estimates that get updated over time and provide color on top-line trends, making precise A+B=C calculations challenging. He confirmed that Travelers is confident in saying that retention has improved from a year ago.

Josh Shanker of Bank of America asked about the competitive positioning of the Medical Stop Loss business heading into 2026 and its strategic fit within the broader Employee Benefits segment, given its unique characteristics.

Answer

CEO & Director Heather Lavallee reaffirmed that Voya's priority is margin over premium growth. CEO - Workplace Solutions Jay Kaduson added that the team is now culturally aligned on disciplined pricing and risk selection. EVP & CFO Michael Katz explained the strategic fit by framing stop loss as a complementary risk-transfer product for employers who self-insure. He acknowledged its volatility but stressed it is managed by dedicated teams within the Employee Benefits business.

Josh Shanker of Bank of America requested clarification on the Ryan Re business model, asking about its capabilities and how it competes with the major reinsurance brokers, and whether it has its own broking function.

Answer

Founder & Executive Chairman Patrick Ryan and Miles Wuller, CEO of Underwriting Managers, emphatically clarified that Ryan Re is a reinsurance underwriter (MGU), not a reinsurance broker. They explained that the large reinsurance brokers are not competitors but are in fact clients and a primary production source, bringing business to Ryan Re to underwrite on behalf of its capital provider, Nationwide.

Josh Shanker of Bank of America Merrill Lynch asked about the drivers behind the significant surge in Allstate's roadside assistance policies and whether it serves as a tool for improving customer persistency. He also inquired about the success of the company's bundling strategy now compared to five years ago.

Answer

Suren Gupta, President of Allstate Protection Products & Enterprise Services, confirmed that a key driver for roadside assistance growth is the bundling of the product with auto policies sold by agents. Tom Wilson, Chairman, President & CEO, added that bundling is much more successful today due to an improved technology stack, but significant opportunity remains in areas like renters and boat insurance.

Josh Shanker of Bank of America asked about the drivers behind the accelerating growth in commercial lines, questioning if it stemmed from new agencies or other factors. He also inquired about the go-forward strategy for the inbound reinsurance business (Cincinnati Re) and whether the primary portfolio's risk profile has changed enough to alter the outcome of another major wildfire event.

Answer

President & CEO Stephen Spray attributed the strong commercial growth to an 'all of the above' strategy, including deep agent relationships, new agency appointments, and new product additions. For Cincinnati Re, he stated it is executing its disciplined strategy of pulling back when pricing is inadequate. He noted that the primary homeowners' portfolio shape has seen little change in the last six months that would alter its response to a major event.

Josh Shanker of Bank of America questioned the drivers of accelerating commercial lines growth and asked about the go-forward strategy for the inbound reinsurance business (Cincinnati Re), and if primary exposures have changed since the Q1 wildfires.

Answer

President & CEO Stephen Spray attributed the strong commercial growth to an 'all of the above' strategy, including new agency appointments, E&S growth, and new products. For Cincinnati Re, he stated it is executing its strategy of disciplined underwriting, pulling back where pricing is inadequate. He noted that the primary business portfolio has seen 'little change' in the last six months that would alter the outcome of a similar wildfire event.

Josh Shanker of Bank of America inquired about acquisition earnouts, asking if they have been consistently maximized and if that trend should normalize. He also asked for commentary on the MGA space.

Answer

EVP, CFO & Treasurer R. Andrew Watts noted that the change in estimated earnouts has been immaterial over time, as initial estimates are robust. President, CEO & Director J. Powell Brown added that future performance is business-dependent. Regarding MGAs, Brown stressed that success is built on trust and underwriting discipline, and he sees carrier support for Brown & Brown's MGA facilities as stronger than ever.

Josh Shanker from Bank of America asked about the unexpectedly rapid rebound in management fees and questioned the portfolio dynamics between the wind-down of AlphaCat and the premium growth in the DaVinci vehicle.

Answer

President & CEO Kevin O'Donnell and EVP & CFO Robert Qutub explained that the fee recovery was accelerated by a light catastrophe quarter and favorable development, which was faster than budgeted. They clarified that DaVinci Re effectively operates like a quota share of RenRe Limited and is the focus for growth, while the acquired AlphaCat vehicle is being managed down and is not a significant contributor.

Asked about the economic sensitivity of the business, specifically whether it impacts revenue or margins more during a recession. He also inquired how the business would be affected by a simultaneous recession and inflation.

Answer

The business has historically grown revenue through various economic conditions, though growth can be muted in downturns. Margins are more stable due to a substantial portion of compensation being variable, which helps manage the bottom line. In a stagflationary environment, different parts of the business react differently; inflation can boost commission-based income but also raises costs. The company believes its operational flexibility, particularly in managing its cost base, positions it well to weather all types of economic climates.