Joshua Shanker

Joshua Shanker asked if the decline in premium per policy is due to customers buying down coverage, and if this strategy helps improve retention. He later theorized that post-pandemic shopping behaviors, facilitated by 'affordable and connected' products, might lead to permanently lower retention rates in the future.

Answer

CEO Thomas J. Wilson clarified that while Allstate is working to improve retention, he wouldn't categorize it as 'weak.' He confirmed that price impacts retention, which is why the SAVE program was implemented to optimize coverages and discounts. He also mentioned an initiative to transition customers to Affordable, Simple, and Connected (ASC) products to improve lifetime value. CFO Jesse Edward Merten reiterated that the SAVE program's essence is to adjust coverages and discounts, driving down average premiums while aligning with customer risk profiles. Mr. Wilson agreed that increased shopping behavior could lead to lower retention but highlighted Allstate's significant new business growth and broad distribution as effective competitive responses, emphasizing the importance of building customer relationships.

Joshua Shanker presented a theory that post-pandemic shopping behaviors have permanently changed, leading to naturally lower retention rates due to the ease of switching with 'affordable and connected' products.

Answer

Thomas J. Wilson (CEO, Allstate Corporation) agreed that shopping is up, which could impact retention. However, he emphasized that Allstate's new business is also significantly higher due to effective advertising and broad distribution, demonstrating their ability to compete. He also highlighted the importance of building customer relationships through 'connected' initiatives to counter increased shopping.

Joshua Shanker questioned the cadence of advertising spend, noting it was lower in Q1 than Q4, and asked if spending has peaked and if the strategy is playing out as designed for future growth.

Answer

Thomas Wilson (executive) clarified that advertising spend has not peaked for Allstate. He explained that spending is dynamic and will continue as long as it generates a positive, granularly-measured return on investment. He suggested competitors may have different quarterly cadences due to their channel mix. Allstate's goal remains to increase market share, and they will continue to invest in advertising to achieve it.

Joshua Shanker asked a forward-looking question about the timeline for using AI in customer interactions and a numbers-focused question on whether the significant increase in advertising spend is generating a sensible return on customer acquisition costs.

Answer

Executive Thomas Wilson responded that the use of AI is not whimsical and is already being implemented with tools like a 'sales sidekick' to enhance agent productivity. Regarding ad spend, Wilson explained that there is a ramp-up period for advertising to show its full effect. He affirmed that Allstate uses sophisticated metrics to track ROI and is confident in the investment, but retains the flexibility to dial spending down if it does not generate economic growth.

Joshua Shanker asked for insights into how property premium underwriting in Q1 2026 might compare to Q1 2025, given the reported lower PMLs as a percentage of equity, indicating reduced risk.

Answer

Jim Williamson, President and CEO, indicated that while Q1 2026 will still reflect premium recognition from 2025 growth, he wouldn't be surprised if the overall growth in total property premium begins to subside. He emphasized that Everest is well-compensated for its risk, with good program structures and adequate rate levels, and will continue to selectively reduce exposure to deals not meeting hurdle rates. Joshua Shanker also inquired about the future size and consistent profitability of Everest's insurance segment (Global Wholesale and Specialty) three years out. Jim Williamson stressed that the measure of success for these businesses is bottom-line profit and strong returns on capital, not size. He highlighted the strong management team, products, and distribution, and the strategic benefits of the retail divestiture. He reiterated that the focus is on underwriting income growth, leveraging deep expertise in specific areas like construction and engineering within U.S. E&S, rather than pursuing new greenfields.

Joshua Shanker asked about the sources of new business growth in the Insurance segment that are offsetting the U.S. casualty remediation, and questioned the rationale for the $200 million share repurchase amount.

Answer

CEO Jim Williamson identified strong growth in specialty lines, property, and the international business as key offsets to the deliberate shrinkage in U.S. casualty. CFO Mark Kociancic explained that the $200 million buyback was a comfortable starting point for the year, with the amount influenced by a shorter trading window, and that meaningful repurchases are expected to continue.

Joshua Shanker from Bank of America asked why the medical stop-loss business was exited rather than repriced, and whether the 1% market share from the California wildfires is a standard expectation for major events.

Answer

President and CEO Jim Williamson clarified that a problematic block of medical stop-loss business was non-renewed because the company did not want the risk, and the runoff is now complete. He explained the 1% wildfire market share resulted from 'exceptional underwriting' and deliberately avoiding high-risk programs, emphasizing that market share will vary by event and is not a standardized target.

Joshua Shanker of Bank of America questioned if a strategy change around 2020 led to the concentration of recent-year losses and expressed concern that the large favorable development release in reinsurance might deplete future redundancy.

Answer

Executive James Williamson clarified that the issue wasn't growth itself but specific underwriting appetite choices made from 2020 to early 2024, which have since been aggressively remediated. Executive Mark Kociancic addressed the reinsurance concern, stating they feel good about the embedded margin in the portfolio, noting similar favorable development occurred last year, and the focus was on decisively addressing the treaty casualty risk.

Joshua Shanker asked about RenaissanceRe's gold position, seeking details on its balance sheet presentation, whether the $400 million gain is included in book value, and the strategic rationale for holding it (as a hedge versus a price target). He also questioned the company's capital deployment strategy for property risk in 2026, specifically if more aggregate risk would be assumed or if capital returns to shareholders would continue as in 2025.

Answer

Kevin J. O'Donnell, President and CEO, explained the gold position serves as an enterprise risk hedge against underwriting and investment portfolios, without a specific price target. Bob Qutub, EVP and CFO, clarified that the gain is an unrealized mark-to-market gain on futures contracts, drawing modest capital. Kevin J. O'Donnell added that the plan is to hold net property risk relatively flat for the Southeast Hurricane peak in 2026, though this could change based on market opportunities.

Joshua Shanker inquired about the accounting treatment and balance sheet impact of RenaissanceRe's gold position, including the $400 million mark-to-market gain, and the company's long-term strategy for holding gold as a hedge. He also asked about the company's plans for deploying additional aggregate property risk in 2026, or if capital returns to shareholders would be prioritized.

Answer

Kevin J. O'Donnell, President and CEO, explained the gold position was initiated in 2023 as an enterprise risk hedge, not for a specific price target, and is continuously monitored. Bob Qutub, Executive Vice President and CFO, clarified it's an unrealized gain on mark-to-market for futures contracts with modest capital draw. Kevin J. O'Donnell stated the plan is to hold net property risk relatively flat for the dominant Southeast Hurricane peak in 2026, though this could change with market opportunities.

Joshua Shanker asked about the level of interest from third-party investors for capital raising in 2026, given the current pricing environment. He also explored the hypothetical scenario of third-party capital becoming a larger balance sheet for RenaissanceRe than its proprietary capital, considering the company's share buyback strategy.

Answer

President and CEO Kevin O'Donnell stated that RenaissanceRe has strong access to third-party capital due to its structures and reputation, but doesn't expect it to drive 2026 pricing. He noted that competition is more from traditional reinsurers' retained earnings. Regarding the balance sheet, O'Donnell acknowledged scenarios where third-party capital could be larger for specific target strategies but doesn't foresee this for the overall balance sheet in 2026.

Joshua Shanker asked about the level of interest from third-party investors for capital raising in 2026, given the current pricing environment. He also explored the hypothetical scenario of third-party capital becoming a larger balance sheet for RenaissanceRe than its proprietary capital, considering the company's share buyback strategy.

Answer

President and CEO Kevin O'Donnell stated that RenaissanceRe has strong access to third-party capital due to its structures and reputation, but doesn't expect it to drive 2026 pricing. He noted that competition is more from traditional reinsurers' retained earnings. Regarding the balance sheet, O'Donnell acknowledged scenarios where third-party capital could be larger for specific target strategies but doesn't foresee this for the overall balance sheet in 2026.

Joshua Shanker inquired about the proportion of catastrophe losses being absorbed by DaVinci and other third-party vehicles, and asked about the source of reserve releases, noting the favorable development came from 'other property' rather than the catastrophe segment.

Answer

CEO Kevin O'Donnell stated that the allocation of risk to DaVinci has been relatively stable since the Validus acquisition. CFO Bob Qutub clarified that the favorable development in the 'other property' segment was a byproduct of their standard annual review process and does not signify a change in the company's conservative reserving philosophy.

Joshua Shanker asked for details on the unique losses in the Casualty & Specialty segment to distinguish volatility from run-rate trends and questioned if the company was fortifying long-tail casualty reserves with releases from short-tail specialty lines.

Answer

EVP, Group Chief Underwriting Officer David Marra and CEO Kevin O'Donnell addressed the questions. Marra noted that quarterly movements are the outcome of their normal reserving process across a diversified portfolio. O'Donnell added that while there was some minor "noise" from one-off losses, the key "signal" is that primary rate increases are now above their loss trend assumptions. O'Donnell confirmed that they have been adding to casualty reserves while seeing favorable development in shorter-tail specialty lines, describing it as a core part of managing a diversified portfolio.

Joshua Shanker asked if the new $750 million share repurchase authorization is adequate for the year ahead, considering the company's high rate of capital generation. He also inquired about the company's stance on using special dividends as a method for capital return.

Answer

CFO Robert Qutub clarified that the repurchase authorization is reviewed and re-approved quarterly, not annually, providing ongoing flexibility. President and CEO Kevin O'Donnell addressed the special dividend question by stating that while all options are considered, share repurchases remain the preferred method as they are deemed most accretive to long-term tangible book value per share for existing shareholders.

Joshua Shanker asked if the industry is entering an extended period of suboptimal growth, likening the hard market to an elevator and the soft market to an escalator. He also questioned whether Brown & Brown's business aims to outgrow the industry's organic pace over the next three years, or if cash flow will remain the primary guiding factor.

Answer

J. Powell Brown, CEO, stated that the company is entering a 'more normal, historical growth rate,' not suboptimal, and emphasized the importance of cash flow and margins over solely organic growth, noting GAAP changes can diverge from real cash. He highlighted the company's focus on profitable growth, teammate wealth creation, and translating revenues into cash for strategic capital allocation. R. Andrew Watts, CFO, added that admitted market rates have stabilized, and the company does not perceive a 'significant softening market.' Mr. Watts further clarified that organic growth is only one part of the equation, stressing that contingents must be included for a true understanding of performance, and that businesses should be valued off cash flow, which grew 24% last year.

Joshua Shanker asked if the industry is entering an extended period of suboptimal growth, contrasting the 'hard market as an elevator' with the 'soft market as an escalator.' He also questioned whether Brown & Brown's business can outgrow the industry's organic pace over the next three years, or if cash flow remains the primary guiding factor.

Answer

J. Powell Brown, President and Chief Executive Officer, believes the industry is returning to a more normal, historical growth rate, not necessarily suboptimal. He emphasized that Brown & Brown focuses on profitable growth, rewarding teammates, and translating revenues into cash flow, which was 24.6% for the year. R. Andrew Watts, Chief Financial Officer, added that organic growth is only one part of the equation, and contingent commissions must be considered for a true understanding of performance, as the business should be valued off cash flow, not solely organic growth.

Joshua Shanker questioned whether the overall cost of risk is declining in Florida, its potential impact on the state's growth relative to the nation, and if there have been changes in casualty liability costs and legal fees.

Answer

Executive J. Powell Brown explained that while cat property rates are decreasing, the overall cost of risk for consumers is not necessarily going down due to rising construction costs (insurance-to-value). He noted that auto and liability costs continue to rise. Brown believes Florida's economy will continue to grow despite rising living costs. He also stated that despite recent tort reform, the size and frequency of large legal settlements are still pushing casualty rates upward.

Joshua Shanker questioned the efficacy of advertising spend, noting that while spending increased, retention worsened. He also asked about future spending plans and how current retention levels compare to past competitive periods like 2019.

Answer

CEO Susan Griffith affirmed that ad spend remains efficient and below target acquisition costs, and the company will continue to spend as long as it can grow profitably, especially given the strong Q1 margin. Regarding retention, she stated that while the current mix has changed, she believes current levels are 'probably about even' with past competitive periods like 2019.

Joshua Shanker asked for clarification on how 'delayed response advertising' works and its relationship to PIF growth. He also requested evidence that claims technology efficiencies are measurably reducing the cost per claim.

Answer

CEO Susan Griffith explained that immediate response ads are measured by metrics like NP6 (new prospects in 6 months) and CPS vs. TAC. The newer 'delayed response' ads are a longer-term brand-building effort with different measurements still in development. On claims efficiency, she confirmed they track metrics like cost per feature and features per FTE per day to ensure throughput improves without sacrificing accuracy, which directly supports their competitive pricing strategy.

Joshua Shanker asked whether Progressive's growth target is based on policy count or premium, and if the company's current high margins might lead to near-term price cuts.

Answer

CEO Susan Griffith clarified that while both are monitored, policy unit growth is the preferred metric. She explained that strong margins are being reinvested into media spend to propel further growth, rather than being used for broad price cuts, although targeted rate adjustments are occurring.

Joshua Shanker of BofA Securities questioned the strategic value of the reinsurance segment (Cincinnati Re) as a diversifier, given its recent volatility and large catastrophe losses. He also asked how appointing 134 new agencies in one quarter affects the company's 'family operation' culture.

Answer

CEO Steve Spray affirmed that the reinsurance segment remains a core part of the strategy, providing long-term diversifying revenue and profit streams, highlighting its profitable inception-to-date combined ratio. Regarding agency growth, Spray emphasized the focus is on appointing high-quality, aligned agencies. He explained that the company's regional structure, with local field and claims representatives, ensures the 'Cincinnati experience' and culture are maintained as they expand distribution.

Joshua Shanker questioned the significant increase in the cohort of customers receiving >20% rate hikes, the drop in retention for first-year customers, and the correlation between PAC spend and conversion.

Answer

CEO Margi Tooth explained that the >20% rate hike cohort is now declining as rate adjustments normalize. She attributed the first-year retention drop to a temporary shift in focus to retaining the high-increase cohort, a strategy that is now being rebalanced. She clarified that consistent, not erratic, PAC spend is required to sustain conversion rate improvements.

Joshua Shanker requested details on retention by cohort, asking if the percentage of customers receiving a rate increase of 20% or more has changed. He also asked for projections on when overall retention might bottom out and begin to improve.

Answer

CEO Margi Tooth stated that while retention has declined as expected due to unprecedented rate increases, performance remains strong. She confirmed that the number of members in the high-increase bucket is starting to reduce, which gives her confidence that retention will improve as the average rate increase moves closer to a more traditional level. She affirmed that Q3 likely represented the peak number of members receiving the largest increases.

Joshua Shanker inquired about the execution and sustainability of the large $440 million share buyback and whether the capital from the Enstar LPT deal was already factored into the repurchase authorization.

Answer

CFO Pete Vogt disclosed that $400 million of the repurchase was executed via two large, non-open market transactions with a major shareholder, making the volume achievable. He confirmed the capital impact of the LPT deal was already contemplated when the board approved the current buyback authorization, and the remaining $160 million will be deployed opportunistically.

Joshua Shanker asked about AXIS's potential exposure in the aviation market following a recent crash, specifically concerning liability. He also inquired about the nature of the goodwill adjustment during the quarter and sought more precise timing for the closure of the Loss Portfolio Transfer (LPT) with Enstar.

Answer

President and CEO Vincent Tizzio stated he did not have enough information to comment on the aviation incident but noted that AXIS does not believe it was on the American plane involved. CFO Pete Vogt explained the goodwill adjustment was a non-impairment true-up related to a deferred tax asset from the 2017 Novae acquisition. Vogt also confirmed that the LPT closing is pending regulatory approval, with mid-Q2 being the best current estimate.

Joshua Shanker questioned the capital management philosophy of using both special dividends and buybacks, suggesting the market may be underestimating Arch's earnings power, and asked about the feasibility of a large buyback.

Answer

CFO François Morin affirmed that they like the stock and are within their 3-year payback metric. He explained that the primary reason for using special dividends is execution speed, as daily trading volume limits make it 'hard' to execute a multi-billion dollar buyback in a timely manner without losing flexibility.

Joshua Shanker of Bank of America inquired about the current return on capital outlook for Arch's three segments and whether the company could grow its mortgage insurance market share without damaging industry pricing.

Answer

Executive François Morin indicated that while all segments are performing well, reinsurance currently offers the best returns, pending the 1/1 renewals. Both he and CEO Nicolas Alain Papadopoulo stated that attempting to grow mortgage market share would likely trigger price competition from monoline peers, ultimately hurting margins, making the current market position the most prudent.

Joshua Shanker of Bank of America asked about agent receptivity to the homeowners and auto products and questioned the risk of writing monoline home policies.

Answer

CEO Christopher Swift and Executive Melinda Thompson confirmed they are re-engaging agents, capitalizing on market disruption and The Hartford's brand. They are leveraging the new Prevail platform, with pilots starting in two states. They clarified that writing monoline home is not the preferred approach, as the vast majority of their business is bundled, and that the homeowners' book has a strong long-term track record of profitability.

Joshua Shanker questioned the philosophy behind the general liability reserve charge, asking if management added an extra layer of caution to 'put the issue to bed' or if it was simply a precise adjustment to new data. He also asked about Personal Lines product design, inquiring if it's primarily a home-auto bundle and if there's an adverse selection risk from selling monoline homeowners policies.

Answer

CFO Beth Bombara responded that while she wouldn't call it 'caution,' they did evaluate reserves 'a little differently' by building the expectation of continued adverse trends into prior year estimates, the current year, and forward pricing. On Personal Lines, CEO Christopher Swift stated that about 75% of homeowners business is bundled with auto. He and executive Melinda Thompson expressed confidence in their ability to judiciously grow the homeowners book, both bundled and monoline, citing strong historical performance and significant improvements in risk modeling and pricing.

Joshua Shanker of Bank of America asked about the Group Benefits business, focusing on sales conversion, renewal success, and the outlook for 2025. He also questioned if The Hartford's high margins were prompting competitors to cut prices in the market.

Answer

CEO Christopher Swift and executive Michael Fish noted that while sales were down against a tough comparison, quote volume is consistent and persistency remains very strong at over 90%. Swift declined to speculate on competitor pricing but stressed The Hartford's discipline, stating they are willing to "put the pencil down" on deals that don't meet their return hurdles, especially those with multi-year rate guarantees.

Joshua Shanker sought clarification on the nature of the 'specialty workers' comp' driving growth and its sustainability. He also asked about the decline in commercial auto liability premium and whether the quarter's high catastrophe losses signal a change in the company's risk appetite.

Answer

Executive W. Berkley clarified that 'specialty' refers to higher-hazard business where standard carriers are less competitive, and the company will pursue it as long as the opportunity exists. He attributed the commercial auto slowdown to a commitment to rate adequacy in a sluggish market. Regarding cat losses, he stated they were from the commercial lines book where the company opportunistically took on exposure at good prices, emphasizing this was not a 'sea change' in cat appetite.

Joshua Shanker of Bank of America asked what regulatory reforms in California might make the state attractive for the Berkley One homeowners business. He also questioned the alternative investment portfolio's performance in 2024, a strong year for public equities, and its outlook.

Answer

W. Robert Berkley, Jr. (Executive) stated that the Berkley One team has no plans to enter the challenging California market in the foreseeable future, preferring to focus on existing opportunities. On investments, he noted a healthy unrealized gain in public securities. William Berkley (Executive Chairman) added that the overall 2024 alternative portfolio performance was adversely impacted by one private equity fund, an issue he believes is now behind them. He also suggested the bar for private equity investing is now higher given returns available in more liquid markets.

Joshua Shanker from Bank of America asked about the new money yield on current investments, whether the duration of new purchases is changing, and the company's current level of concern about credit risk.

Answer

Executive W. Berkley stated the new money yield on domestic fixed income is between 5.0% and 5.25%, compared to the current book yield of 4.5%. He noted that duration is being extended only incrementally so far. He also stressed that the company remains highly concerned about credit risk and will not compromise on quality, maintaining a strong AA- average credit quality in the portfolio.

Joshua Shanker asked about the duration of the impact from growth investments on the elevated U.S. expense ratio and its expected long-term trajectory.

Answer

Virgil Miller, President of Aflac U.S., noted that they are already 'bending the curve' on expenses, with the ratio declining to 38.5%. He expects further incremental decreases in 2025, 2026, and 2027 as new business lines scale. CEO Daniel Amos added that the underlying strategy is sound and execution is now on track.

Joshua Shanker questioned Unum's disability pricing strategy, asking if they are pricing for a low-60s benefit ratio while expecting favorable trends, or pricing for a sub-60s outcome. He also asked how much growth could be stimulated by lowering price.

Answer

Management clarified they are guiding to a low-60s loss ratio and counting on their claims organization's continued high performance. They explained that while lowering prices could win commodity buyers down-market, value is the primary driver for mid and upper-market clients, making deep price cuts an ineffective long-term growth strategy.

Joshua Shanker probed whether Unum is pricing group disability for a low-60s benefit ratio while expecting better results, or pricing for a sub-60 experience, and asked how much price impacts winning new business.

Answer

Management clarified they are pricing to achieve the guided low-60s loss ratio, relying on their claims organization's continued strong performance. They emphasized that while price is a factor, the complete package of solutions and value is more critical, especially in mid and upper markets. Simply underpricing by a few points would not be a sustainable growth strategy.

Joshua Shanker inquired about the extent to which Travelers' policies in California exclude fire and asked about the company's appetite for high-value homes in the state.

Answer

Michael Klein, President of Personal Insurance, explained they offer both standard policies that include fire coverage and Difference in Conditions (DIC) policies that exclude it, which can be paired with a FAIR Plan policy. He clarified that their appetite for very high-value homes (e.g., $5 million) is 'very limited,' as their focus is on the middle market and mass affluent segments.

Joshua Shanker asked about the source of favorable prior year development in Personal Lines, whether it implied a pricing overreaction, and if the recent large favorable development is a sustainable trend.

Answer

CFO Dan Frey attributed the development to increased confidence as recent accident years mature, noting favorability across the last 10 years. Michael Klein, President of Personal Insurance, pointed to a 97.4% accident year combined ratio as evidence against over-pricing. Frey cautioned against viewing prior year development as a 'trend,' stating it reflects quarterly assessments.

Joshua Shanker questioned whether Voya's underpricing in 2024 led to outsized new sales volume and market share gains. He followed up by asking if 2025 new business generation would revert to 2023 levels or be even lower due to the aggressive repricing.

Answer

Executive Rob Grubka acknowledged that the 2024 new sales volume was "outsized" relative to prior growth rates due to the pricing. Regarding 2025, he pivoted away from a volume forecast, reiterating that the primary focus is on achieving the right rate and margin for both new and renewal business to ensure a meaningful improvement in profitability.

Joshua Shanker from Bank of America questioned the amount of excess capital available for shareholder return and asked if the company intends to operate above its long-term capital ratio targets.

Answer

CFO Elias Habayeb emphasized that the balance sheet is in a very strong position with capital and liquidity above targets, allowing for a disciplined balance between shareholder returns and business investment. He clarified that the company views its balance sheet holistically, and while the 400% RBC ratio is a management threshold, it is not a rigid line, allowing for flexibility based on the collective risk profile.

Joshua Shanker of Bank of America asked for details on the 'model refinements' in the annual assumption review and questioned why improved lapse persistency on term life policies would result in a charge.

Answer

Interim CFO Joel Pitz explained the refinements related to more granular YRT modeling with no change to expected costs, just the amortization pattern. Regarding lapses, Pitz, Amy Friedrich, and Deanna Strable-Soethout clarified that while higher persistency is good for business long-term, it increases the accounting liability because more policies remain in-force into later, higher-mortality-risk years than previously assumed, increasing expected claims.