Matthew Heimermann

Matthew Heimermann asked if the AI implemented in Ategrity's back office has contributed to reducing allocated or unallocated LAE costs within the claims organization. He also sought clarification on potential AI use cases in claims and a definition of what Ategrity considers 'back office' functions for AI deployment.

Answer

Justin Cohen, CEO, stated that AI has not yet been meaningfully deployed in claims, with the primary focus being on underwriting. Chris Schenk, President and Chief Underwriting Officer, identified processing incoming claims as a potential 'easy win' for AI in the future. Mr. Schenk defined 'back office' in this context as all processes before an account reaches an underwriter, including intake, data preparation, and pre-qualification, where AI is currently used for screening. He explained that the next phase involves embedding AI into underwriting workflows for risk assessment, from full automation to guiding underwriter judgment.

Matthew Heimerman of Citi asked about the threshold for property growth before reinsurance structures would need adjustment, growth rates across premium cohorts, the split of utility investment income, and clarification on 'improved economics'.

Answer

CEO Justin Cohen confirmed property growth is manageable within existing reinsurance contracts due to a limited CAT strategy and geospatial spread. He stated account size bands haven't changed meaningfully and provided the utility investment income as less than $100,000 net in core NII. Cohen clarified 'improved economics' refers to the holistic benefit of scale in brokerage, enhancing the bottom line through commission and expense ratios.

Matthew Heimerman asked at what point property growth would necessitate changes to reinsurance structures, requested insights into growth rates by premium cohorts, asked for a split of utility income in investment disclosure, and sought elaboration on 'improved economics'.

Answer

Justin Cohen (CEO) stated property growth is manageable within existing reinsurance contracts due to a limited CAT strategy and geospatial spread. He noted account size bands haven't changed meaningfully, provided utility income as less than $100,000 net in core NII, and clarified 'improved economics' refers to holistic benefits from brokerage scale, impacting commission and expense ratios.

Matthew Heimermann questioned the acceleration of wholesale growth in the quarter, asking if it was disproportionately due to property market dynamics, and if the change in outlook and macro uncertainty disproportionately impacts the wholesale brokerage business versus delegated underwriting or binding authority segments.

Answer

CEO Tim Turner attributed most of the slowdown in wholesale growth to the property market, but highlighted firming professional liability and casualty business, contributing to an 8% increase in stamping fees in Q4. CEO of Underwriting Managers Miles Wuller stated that the delegated authority segment had strong results for the quarter and year, with ongoing opportunities in utilization and penetration into new balance sheets, emphasizing the diversity of the underwriting portfolio. Founder and Executive Chairman Pat Ryan added that the diversification provides balance to the portfolio.

Matthew Heimermann asked about the margin consequences of the MCE re-underwriting. He also inquired if Arch Capital is considering any opportunistic investments in technology or operations, or accelerating existing investments, due to the Qualified Refundable Tax Credits (QRTCs). Finally, he asked if there are any real changes to subject premium bases in reinsurance treaties that are informing demand comments or indicating a risk to subject premium bases next year.

Answer

CFO François Morin expects margins to improve from shedding worst-performing business, though market pricing could influence this. CEO Nicolas Papadopoulo added that some shed programs were cat-exposed, and Arch aims for a low 90s combined ratio for the business. François Morin stated that investments in tech/ops are based on need to streamline operations, not directly due to QRTCs, which Nicolas Papadopoulo views as an offset to high Bermuda business costs. Nicolas Papadopoulo clarified that downward revisions to premium projections are seen in other property lines (excess & surplus, energy), not casualty, and his demand comment for casualty refers to cedents retaining more, while underlying business is still growing. François Morin added that Arch actively monitors and adjusts premium projections to avoid massive downward adjustments.

Matthew Heimermann followed up on Kevin O'Donnell's comment about casualty technical ratios eventually decreasing, asking whether this anticipated improvement would primarily stem from better loss trends or increasing rates. He also inquired about any limitations posed by Bermuda's location on the speed of the company's technology roadmap execution and sought more details on the specific enhancements being made to the underwriting systems.

Answer

Kevin J. O'Donnell, President and CEO, indicated the decrease in technical ratios would more likely reflect the persistence of price benefits and increased confidence in those prices, rather than a decrease in loss trends. He also stated that RenaissanceRe's global platform and technology for collaboration mitigate any talent or execution constraints due to Bermuda's location. Kevin J. O'Donnell further detailed enhancements to the REMS underwriting platform, shifting it to be more client-centric and updating its architecture for seamless integration of AI for automation and augmentation.

Matthew Heimermann asked about the anticipated decrease in casualty technical ratios, specifically whether it would be driven more by improved loss trends or sustained rate increases. He also inquired about the types of add-ons and enhancements being made to RenaissanceRe's underwriting systems and whether being based in Bermuda poses any talent-related limitations to executing their technology roadmap.

Answer

Kevin J. O'Donnell, President and CEO, believes the decrease in technical ratios is more likely a reflection of persistent pricing benefits and increased confidence in those rates, rather than a decrease in loss trend. He explained that underwriting system enhancements are shifting to a client-centric platform and updating architecture for seamless AI integration. He also stated that RenaissanceRe's global platform, with talent distributed across multiple locations, ensures no constraints in accessing top talent.

Matthew Heimermann sought clarification on Chubb's comment about 'more favorable January 1 conditions for all directions,' specifically whether it pertained to growth, pricing, or geopolitical factors. He also asked about potential constraints on the pace of digital transformation from external stakeholders like distributors or technology providers.

Answer

Evan Greenberg, Chairman and CEO of Chubb, clarified that the 'January 1 conditions' comment referred to a better-than-expected start for large account business, particularly in Europe and the UK, and was not geopolitical. Regarding digital transformation, Mr. Greenberg identified the primary constraint as the prioritization by digital partners in terms of connectivity, data, and analytics, which affects Chubb's ability to distribute through their pipelines.

Matthew Heimermann sought clarification on the comment about 'more favorable January 1 conditions for all directions,' and asked about potential constraints from stakeholders (distributors, customers, technology providers) on the pace of Chubb's digital transformation.

Answer

Evan Greenberg, Chairman and CEO of Chubb, clarified that the 'January 1 conditions' comment referred to the large account business, particularly in Europe and the UK, performing better than anticipated, indicating a good start. Regarding digital transformation, Mr. Greenberg noted that the only significant constraint comes from digital partners and their prioritization of connectivity and data sharing for Chubb to effectively distribute through their pipelines.

Matthew Heimermann asked whether market share in the new data center opportunity correlates with historical market share, given the different constituents driving investment. He also inquired about the advantage of Aon's M&A practice and relationships with asset owners and financing parties in this data center opportunity.

Answer

CEO Greg Case stated that 'past is not prologue' for the data center opportunity, which involves new constituents and demands net new innovation, highlighting Aon's integrated Risk Capital approach. He emphasized that the race is just beginning, and Aon's prior investments in an AI-embedded ABS platform and Risk/Human Capital structure were preparations for this market. He affirmed that accessing principals at the top of the house is fundamental, allowing Aon to help them understand integrated risk management strategies. He highlighted Aon's privileged position through its M&A services, financial sponsors relationships, and work with various stakeholders, stressing that Aon's analytics are crucial to convince capital to buy down volatility, making it a 'tour de force' of analytics, Reinsurance, and Commercial Risk, with a profound Human Capital opportunity as well.

Matthew Heimermann inquired whether market share in the new, complex data center opportunity correlates with historical market share, given the diverse constituents, and asked about the advantage of Aon's M&A services and financial sponsor relationships in this evolving market.

Answer

President and CEO Greg Case stated that 'past is not prologue' for the data center opportunity, emphasizing the need for net new innovation and an integrated risk capital approach involving hyperscalers, builders, and asset gatherers. He highlighted Aon's privileged position to access principals and leverage M&A services and financial sponsor relationships to drive analytics and attract capital, underscoring the profound human capital opportunity as well.

Matthew Heimermann inquired about the interplay of cross currents affecting the employee benefits business, such as cost push, slower labor market growth, and cost management efforts.

Answer

Powell Brown, President and CEO, explained that smaller groups often receive per-head-per-month compensation, so flat employment means flat commissions. Companies are modifying plans (e.g., limiting GLP-1 coverage for weight loss) to contain spend. He emphasized strategic, multi-year cost management and Brown & Brown's capabilities for customers of all sizes. Andrew Watts, CFO, added that these trends have been anticipated since the ACA.

Matthew Heimerman inquired about the initial uptake of private flood products and their ability to offset demand not fulfilled by the Write Your Own program, and how various cross-currents affect the employee benefits business from a subject premium standpoint.

Answer

CEO Powell Brown confirmed the company's historical private flood business and recent acquisition of Poulton, cautioning that private flood isn't a universal solution. CFO Andrew Watts clarified that private flood is written under a separate carrier, not the NFIP-aligned Wright Flood platform. For employee benefits, Powell Brown explained that smaller groups (under 100 lives) are impacted by stagnant headcounts due to per-head compensation, while larger groups focus on containing spend by modifying plans (e.g., GLP-1 limitations) to maintain quality coverage amidst rising costs. Andrew Watts highlighted significant investments in employee benefits capabilities.

Matthew Heimermann from Citi asked for specifics on which business lines Aspen currently views as not being price adequate. He also inquired about how recent global geopolitical tensions are impacting the loss outlook for Aspen's political risk portfolio.

Answer

Christian Dunleavy, Group President & CEO of Aspen Bermuda, identified primary casualty and D&O as lines that still require significant rate improvement. He also noted that non-cat property is on the 'brink' of price adequacy. Regarding political risk, he stated that while recent global events require careful monitoring, they have not yet resulted in significant loss activity for the company's well-diversified portfolio in that area.

Matthew Heimermann from Citi asked for clarification on which business lines Aspen considers not to be price adequate and questioned if recent geopolitical tensions are affecting loss perceptions in the political risk portfolio.

Answer

Christian Dunleavy, Group President & CEO of Aspen Bermuda Limited, identified primary casualty and D&O as lines that still require rate improvement. He also noted that property non-cat is 'on the brink' of price adequacy. Regarding political risk, he stated that while events like attacks on ships require careful monitoring, they have not yet resulted in significant market losses, and Aspen's diversified portfolio in this area has performed well over time.

Matthew Heimermann from Citi asked for clarification on which specific business lines Aspen does not consider to be price adequate, and whether recent geopolitical tensions have altered the loss content or risk perception within its political risk portfolio.

Answer

Christian Dunleavy, Group President & CEO of Aspen Bermuda, identified primary casualty and D&O as lines that still require significant rate improvement. He also noted that property non-cat is on the 'brink' of price adequacy. Regarding political risk, he stated that while events like attacks on ships have occurred, they have not yet led to significant loss activity for the market, and Aspen's diversified book in this area continues to perform well.

Matthew Heimermann from Citi asked for identification of business lines that Aspen does not currently consider to be price adequate. He also inquired whether recent geopolitical tensions have altered loss content or risk perception within Aspen's political risk portfolio.

Answer

Christian Dunleavy, Group President & CEO of Aspen Bermuda Limited, identified primary casualty as a line that still requires more rate increases to be considered price adequate. He also noted that property non-cat is 'on the brink' and D&O needs more work. Regarding political risk, he acknowledged that while events like attacks on ships require careful monitoring, the diversified nature of the portfolio, which includes credit and terror risk, helps balance overall exposure.