Meyer Shields

Meyer Shields from KBW inquired whether the shift in Fidelis Insurance Group's business mix towards longer-duration contracts, such as asset finance, presents an opportunity to extend the duration of its investment portfolio.

Answer

Group CFO Allan Decleir confirmed that extending investment portfolio duration is considered as part of capital allocation, but Fidelis prioritizes taking risks on the liability side, not the asset side. Group Managing Director Jonny Strickle clarified that asset-backed finance policies are 'long tenor' rather than 'long tail,' meaning premiums are earned over time, not all upfront, thus not drastically shifting cash flow patterns.

Meyer Shields inquired about the timeline for Fidelis Insurance Group to reach its targeted participation level with new underwriting partners, contrasting it with the immediate participation with The Fidelis Partnership. He also asked if the shift towards longer-duration contracts, such as asset finance, would create an opportunity to extend the investment portfolio's duration.

Answer

Group CEO Dan Burrows stated that while no specific timeline is set, the medium-term goal is for new partnerships to contribute 25%-30%+ of the book, emphasizing profitable and accretive growth. Group Managing Director Jonny Strickle clarified that the focus is on market opportunities rather than a fixed split between partners. Group CFO Allan Decleir explained that while investment portfolio duration is considered, the primary focus remains on liability-side risk, and the longer tenor of asset-backed finance doesn't necessarily imply a significant immediate shift in cash flow patterns compared to traditional long-tail casualty business.

Meyer Shields asked for clarification on verticalization, specifically whether it is a typical soft market phenomenon. He also inquired about the challenges and opportunities presented by disruptions in the U.S. wholesale market.

Answer

CEO Dan Burrows clarified that verticalization is prevalent across both hard and softening markets, becoming more exaggerated in recent cycles and differentiating market makers from price takers. Regarding the U.S. wholesale market, Burrows confirmed that Fidelis has seen opportunities arising from the disruption but declined to comment further on the specific market strategy.

Meyer Shields inquired whether verticalization in the insurance market should be considered a typical soft market phenomenon. He also asked for an update on the challenges and opportunities presented by recent disruptions in the US wholesale market, particularly concerning the implications of building a retail platform.

Answer

CEO Dan Burrows clarified that verticalization is prevalent across both hard and softening markets, becoming more exaggerated and differentiated in recent cycles. He emphasized Fidelis's advantage as a lead market in setting terms and conditions. Regarding the US wholesale market, Dan stated that Fidelis has observed some opportunities arising from the disruption but declined to comment further on specific strategies or market implications.

Meyer Shields of KBW inquired about the magnitude of a potential wind season loss required to impact property catastrophe pricing and asked about the current demand for political risk and terror coverages.

Answer

CEO Dan Burrows explained that a significant 'capital event' would be needed to shift the broader property market, unlike in the past where smaller events had wider effects. Regarding political risk, he noted a post-COVID uptick in deal activity and a strong pipeline of both new and repeat customers for these bespoke products, which have historically been very profitable for the firm.

Meyer Shields asked whether Fidelis views the recent increase in aviation incidents as random or a systemic trend requiring pricing adjustments. He also requested an updated view on the relative attractiveness of deploying capital to primary Property insurance versus Property Reinsurance.

Answer

CEO Dan Burrows stated that while there are 'clustering effects' in Aviation losses, Fidelis is taking a measured approach, focusing on higher-margin business and not writing policies that don't meet its return hurdles. On the Property versus Reinsurance question, he explained that while Property direct was previously more attractive, the Reinsurance market has since improved, and now both sides offer attractive margins. He also highlighted that the retrocession market is very favorable for buying protection.

Meyer Shields inquired about the potential for subrogation recoveries related to the California wildfires and asked for an explanation for the sequential decrease in net investment income from Q3 to Q4 2024.

Answer

CEO Dan Burrows stated it was too early to detail potential subrogation but noted it would be expected in such an event. CFO Allan Decleir clarified that investment returns were consistent with Q3, but the sequential income dip was due to relatively flat investable assets quarter-over-quarter, with no unusual cash needs.

Meyer Shields questioned if Fidelis still prefers the returns in property D&F over catastrophe reinsurance given current pricing trends. He also asked about the expected loss ratio for the new Euclid Mortgage reinsurance partnership.

Answer

CEO Dan Burrows explained that while D&F margins were previously superior, significant improvements in reinsurance pricing, attachment points, and terms have made it more attractive, allowing for growth with only a moderate increase in exposure. Chief Actuarial Officer Jonathan Strickle added that the Euclid partnership fits well within the Bespoke portfolio and is expected to meet or exceed the high bar set for returns on similar business.

Meyer Shields asked about the implications of prior year reserve development for price adequacy in professional and healthcare lines for 2026, and inquired about the expected loss ratio characteristics of Baleen as it matures compared to the general casualty business.

Answer

CFO Brad Mulcahey stated that pricing is considered well-positioned and above trend, with prior year reserve adjustments being minor and conservative, not indicating a significant pricing impact. CEO Stephen Sills clarified that Baleen's loss ratio is expected to be superior to the general large casualty business due to its restricted coverage, while Express casualty business might mirror the larger casualty segment.

Meyer Shields asked about the implications of prior year reserve development for price adequacy in professional and healthcare financial lines for 2026, and the expected loss ratio characteristics of Baleen as it matures compared to other segments.

Answer

Bradley Mulcahy, CFO, explained that the prior year reserve adjustments were small, conservative changes and did not imply a significant pricing impact for 2026. Stephen Sills, CEO, stated that Baleen's loss ratio is expected to be superior to the general large casualty business due to its restricted coverage, while the Express casualty business might mirror the larger casualty segment.

Meyer Shields from KBW inquired about the implications of prior year reserve development for price adequacy in Bowhead Specialty's professional and healthcare financial lines for 2026. He also asked about the expected loss ratio characteristics of Baleen as it matures, comparing it to the broader casualty business.

Answer

Brad Mulcahey, CFO, stated that the prior year reserve adjustments were small and conservative, not indicating a significant pricing impact for 2026. Stephen Sills, CEO, clarified that Baleen's loss ratio is expected to be superior to the general large casualty business due to its restricted coverage, while Express casualty business might mirror the larger casualty segment.

Meyer Shields of Keefe, Bruyette & Woods (KBW) inquired about the fungibility of underwriting capacity from the financial institutions line to other professional liability products and asked for an update on social inflation trends in professional liability.

Answer

Founder, President, CEO & Director Stephen Sills explained that the excess capacity seems restricted to the financial institutions segment for now. Regarding social inflation, he noted it is more pronounced in the casualty business, where claims that once settled for $2-3 million can now exceed $10 million. He added that a contributing factor is the tendency for carriers with smaller layers to pay their limits and exit claims, increasing the burden on the rest of the insurance tower.

Meyer Shields of Keefe, Bruyette & Woods asked for an explanation of the seasonal ULAE impact on the loss ratio, inquired about observed loss cost trends, and questioned if favorable legislative changes attract more competition.

Answer

CFO Brad Mulcahey explained that the Q1 ULAE impact is seasonal because bonuses for the internal claims team are paid in Q1 and allocated to the loss ratio, creating a temporary transfer from the expense ratio. CEO Stephen Sills noted an upward trend in claims but believes Bowhead's underwriting and pricing will outpace it. He added that the company is taking a "wait-and-see" approach to legislative changes, like those in Georgia, before changing its competitive posture.

Meyer Shields of Keefe, Bruyette & Woods inquired about the reasons for the sequential decline in Bowhead's fourth-quarter accident year loss ratio and asked for an update on the availability of underwriting talent in the market.

Answer

CFO Brad Mulcahey explained that the Q4 loss ratio movement is a recurring annual pattern due to their year-end actuarial review, making the full-year figure a more meaningful metric. He attributed the change to portfolio mix and adjustments to current accident year loss picks. CEO Stephen Sills added that while skilled excess and primary casualty underwriters are hard to find, Bowhead is actively hiring for that segment, its new environmental business, and the more scalable, tech-driven Baylin division.

Meyer Shields asked about the strong surety growth in Q4 2025 and optimism for 2026, particularly in light of concerns from other carriers regarding delayed construction projects. He also inquired about Skyward's appetite for participating in diversified facilities created by wholesale brokers, where business is externally underwritten.

Answer

Chairman and CEO Andrew Robinson explained that Q4 surety growth was driven by the release of federal funds and a well-diversified portfolio across various trades, including SBA and judiciary/fiduciary bonds, and innovations like Endwell. He noted avoiding a significant loss from a solar company failure, which will harden the solar market. Robinson stated unequivocally that Skyward will not participate in externally underwritten business or quota share arrangements on others' underwriting, emphasizing their 'grow your niche' strategy focused on distinct expertise and competitive advantage.

Meyer Shields asked about the strong Surety growth in the fourth quarter and optimism for 2026, despite broader concerns about delayed construction projects. He also inquired about Skyward's interest in externally underwritten business, such as diversified facilities created by wholesale brokers.

Answer

Andrew Robinson, Chairman and CEO of Skyward Specialty Insurance, attributed Surety growth to a well-diversified portfolio, including federal fund releases and various bond capabilities like EndWell. He stated that Skyward would never participate in externally underwritten business, emphasizing their strategy of distinct focus and competitive advantage.

Meyer Shields from KBW asked if reduced federal infrastructure spending was impacting loss activity in the surety business. He also inquired about reserve movements and current accident year loss picks for commercial auto.

Answer

CEO Andrew Robinson stated that surety performance remains exceptionally strong with no adverse loss trends, and he expects federal funding to rebound in the second half of the year. CFO Mark Haushill clarified that there were no changes to commercial auto loss picks; his comments on severity were about emergence versus indications, and the company remains booked conservatively. Favorable emergence in other lines more than offset pockets of severity.

Meyer Shields of Keefe, Bruyette & Woods questioned if the global agriculture book faces the same price-related risks from tariffs as domestic crop insurance. He also asked whether the first quarter's acquisition expense ratio is a good proxy for the remainder of the year.

Answer

CEO Andrew Robinson explained that with U.S. business comprising only about 40% of the global agriculture portfolio, diversification and conservative reserving mitigate risks like those from tariffs. On expenses, CFO Mark Haushill initially called the Q1 acquisition ratio a 'pretty good proxy,' but Robinson added a more conservative outlook, expecting the ratio to 'tick up' in coming quarters due to business mix, though partially offset by improvements in other operating expenses.

Meyer Shields inquired about competitive dynamics in the Surety market and asked about the key risks in the Accident & Health (A&H) book, questioning if medical inflation was the primary concern.

Answer

CEO Andrew Robinson stated there has been no significant change in Surety competition, describing Skyward's business as 'world-class' and noting that inflation is a net positive for the line. For A&H, he explained that because it is a stop-loss product, the key risk is not general medical inflation but the prevalence of high-cost 'designer drugs' and genetic treatments that can create large claims, a factor they build into their product design.

Meyer Shields inquired about Ryan Specialty's longer-term margin potential, specifically how the deferred 35% margin target beyond 2027 and the anticipated $80 million in annual savings from Project Empower align, and whether primary property margins can sustain another full year of 25%-35% rate decreases.

Answer

CFO Janice Hamilton confirmed the deferral of the 35% margin target beyond 2027, stating that Project Empower's efficiencies are intended to support modest margin expansion in most years, while allowing for continued investment in growth. She reiterated that 35% remains a realistic target without a specific timeline. CEO Tim Turner acknowledged the difficulty in conceiving continued property rate cuts at that level but stated Ryan Specialty is conservatively forecasting it, emphasizing the company's focus on winning new business and capturing opportunities.

Meyer Shields inquired about the longer-term potential for margin expansion, specifically the previous 35% margin target for 2027 and how the $80 million in savings from Project Empower will contribute, and whether primary property margins can sustain 25-35% rate decreases for another full year.

Answer

CFO Janice Hamilton confirmed that the 35% margin target has been deferred beyond 2027, with Project Empower supporting modest margin expansion in most years, but no new timeline has been set. CEO Tim Turner expressed that while it's hard to conceive continued rate cuts at such levels, Ryan Specialty is forecasting conservatively and focusing on winning new business and capturing E&S flow, similar to how professional liability brokers adapted to market changes.

Meyer Shields from Keefe, Bruyette & Woods (KBW) questioned whether casualty lines face a similar risk of unexpected and rapid softening as seen in property, and asked if property market pressures could create more MGA acquisition opportunities.

Answer

CEO Timothy Turner stated he does not see a similar softening risk in casualty, citing persistent loss cost trends, social inflation, and continued business flow into the E&S channel. Miles Wuller, CEO of Underwriting Managers, responded that while the company is always active in M&A, its property MGA portfolio is largely complete, and it is just as likely to attract new capital partners seeking quality management as it is to acquire another property MGA.

Meyer Shields questioned the drivers behind the expense ratios, specifically the increase in G&A and the decline in the compensation ratio. He also asked if the growth of the MGA business creates any channel conflict with carriers in the wholesale brokerage segment.

Answer

CFO Janice Hamilton clarified that the G&A ratio was impacted by the timing of certain benefits and professional services, while the improved compensation ratio was significantly driven by the margin profile of the US Assure acquisition earning in. CEO Tim Turner addressed the channel question, stating that the delegated authority business is 'well received' by the vast majority of carrier partners, as most E&S carriers have their own dedicated delegated authority departments, making Ryan Specialty's model an aligned and strengthening partnership.

Meyer Shields inquired about the interest rate assumptions in the fiduciary investment income forecast and the factors driving the opportunity for above-average investment in 2025.

Answer

CFO Janice Hamilton stated they use the forward curve for fiduciary investment income forecasts. CEO Tim Turner explained the above-average investment is a proactive strategy to invest in efficiency, data, and AI to maintain a competitive edge, enabled by the financial flexibility from the ACCELERATE 2025 program, rather than being driven by a specific external event.

Meyer Shields asked if there were challenges in finding E&S market capacity for transportation risks. He also inquired about the drivers behind the expense ratio trends, specifically why compensation saw more improvement than G&A in Q3, and whether business mix affects fiduciary investment income.

Answer

An executive confirmed that transportation is one of the most challenging parts of the casualty market, leading to a significant migration of business that the company is well-prepared to handle. CFO Janice Hamilton clarified that the shift in expense ratio improvement was due to the timing of savings from the Accelerate 2025 program, not business mix. She also confirmed that business mix does not impact fiduciary investment income.

Meyer Shields inquired about the cat excess of loss attachment points embedded in the 2026 guidance, whether the new construction engineering practice requires new distribution relationships, particularly for data centers, and the current and planned retentions on the casualty quota share.

Answer

Mac Armstrong, Chairman and Chief Executive Officer, stated that cat excess of loss retentions are assumed to remain at expiring levels (wind around $12 million, earthquake several million above). He and Jon Christianson, President, explained that construction engineering leverages both existing and new distribution relationships, offering a comprehensive solution across the builders risk market. Mac Armstrong also confirmed that the casualty quota share renewed with flat retentions, a 1:1 structure, and an average net limit typically less than $1 million.

Meyer Shields asked about the catastrophe excess of loss attachment points embedded in the 2026 guidance, whether the new construction engineering practice requires new distribution relationships, and the current and planned retentions on casualty quota shares.

Answer

Mac Armstrong (CEO) stated that cat excess of loss attachment points are assumed to remain at expiring levels (wind around $12 million, earthquake several million above). He noted that construction engineering leverages both existing and new distribution relationships. Jon Christianson (President) added that this new practice provides a full solution for builders risk. Mac Armstrong (CEO) confirmed that casualty quota share retentions renewed flat year-over-year, with an average net limit typically less than $1 million.

Meyer Shields from KBW sought clarification on the mechanics of the crop business, particularly the impact of booking premiums earlier. He also asked about the strategy for booking crop losses early in the season and if the company might increase its property inflation guard.

Answer

CFO Chris Uchida explained the earlier crop premium recognition was a minor timing shift between Q2 and Q3 that doesn't affect the full-year view. President Jon Christianson added that market enthusiasm drove faster reporting. Uchida noted loss picks remain conservative, with any seasonal favorability to be recognized in Q4 or later. CEO Mac Armstrong stated the current inflation guard is considered adequate but is monitored.

Meyer Shields from KBW sought clarification on the mechanics of booking crop premiums earlier than expected, the strategy for booking crop profitability before the harvest, and whether the inflation guard on property policies needs to be increased.

Answer

Chris Uchida, CFO, and Jon Christianson, President, explained the earlier crop premium recognition was a timing shift of a few days driven by agent excitement post-acquisition, which doesn't alter the full-year outlook. Uchida noted they adhere to initial loss picks, with any seasonal favorability not being recognized before Q4. Mac Armstrong, Chairman, CEO & Founder, stated that the current inflation guard is considered adequate but is actively monitored.

Meyer Shields sought clarification on the mechanics of the crop insurance business, including the earlier-than-expected premium recognition, the strategy for booking losses before harvest, and whether the inflation guard on property lines needed adjustment.

Answer

CFO Chris Uchida explained the crop premium timing was a minor shift between Q2 and Q3 that doesn't alter the full-year view, with any seasonal favorability to be recognized in Q4 or later. President Jon Christianson added that the season is progressing well. CEO Mac Armstrong confirmed that the current inflation guard is considered adequate but is continuously monitored.

Meyer Shields from Keefe, Bruyette & Woods inquired about the future of the Commercial All Risk program, whether the new expenses from the Advanced AgProtection acquisition would be operating or acquisition costs, and the accident years for the inland marine reserve releases.

Answer

Chairman and CEO Mac Armstrong stated Palomar will 'keep a toe in the water' with its Commercial All Risk program, ready to re-enter if returns improve. Executive T. Uchida clarified that Advanced AgProtection costs will be booked as operating expenses, impacting Q2. They both explained the reserve releases were from recent accident years in shorter-tail lines where conservative loss picks had not been adjusted despite rate increases.

Meyer Shields inquired about the geographic and commodity exposures in the crop business, asked whether reduced reinsurance was from government or private markets, and questioned if the residential earthquake inflation guard could be adjusted quickly.

Answer

President Jon Christianson specified the crop exposure is focused on corn and soybeans in the Upper Midwest and central U.S., with no East or West Coast exposure. He clarified the reinsurance reduction is a lower quota share to the private market, not the government. CEO Mac Armstrong confirmed the inflation guard is an underwriting rule that can be modified quickly, as was done previously when it was raised from 5% to 10%.

Meyer Shields asked if Palomar is seeing rising rate trends for smaller commercial earthquake risks, similar to other property lines. He also inquired if the strong Q3 attritional loss ratio affects 2025 expectations and asked for an outlook on casualty reinsurance availability and ceding commissions for 2025.

Answer

Mac Armstrong, Chairman and CEO, stated they are not seeing rising rates for smaller commercial earthquake risks, citing budgetary constraints on those clients in California. Chris Uchida, executive, explained that while the attritional loss ratio was strong, it benefited from some losses being categorized as catastrophes and that the ratio is expected to gradually increase in 2025 with the changing business mix. Mac Armstrong added that they feel good about casualty reinsurance prospects for 2025, seeing ample capacity for niche lines and no pressure on ceding commissions, aided by Palomar's stature as a significant reinsurance buyer.

Meyer Shields asked about the sequential increase in General Insurance interest and dividends, seeking clarification on whether it represents a sustainable run rate or includes unusual items.

Answer

Keith Walsh, CFO of AIG, attributed the increase to the successful transformation of the investment portfolio, including outsourcing asset management, actively turning over 40% of the portfolio to reinvest at higher yields, and strategic cleanups like the CVC deal for PE secondaries. He confirmed it's primarily due to reinvestment into higher yields globally.

Meyer Shields asked for more details on the additional margin being put into casualty lines. He also inquired about the sequential increase in interest and dividends within General Insurance, asking if it was unusual or a good run rate.

Answer

Keith Walsh, CFO, AIG, explained that AIG has been conservative on casualty, raising loss cost trend assumptions to double digits in 2019, and is now putting extra margin into accident year picks for longer tail lines due to macro uncertainties like social inflation and rising litigation costs, not underlying portfolio deterioration. Regarding investment income, Mr. Walsh noted the team's transformation of the portfolio, including actively turning over about 40% of the portfolio to reinvest at higher yields, selling real estate, and restructuring private equity through the CVC deal, all contributing to the increased interest and dividends.

Meyer Shields of Keefe, Bruyette & Woods (KBW) questioned the reapportionment of reserves to older accident years and asked if rising social inflation is leading to increased demand for liability coverage.

Answer

Chairman & CEO Peter Zaffino clarified that the reserve reapportionment is a 'zero-sum game' of allocating a pre-existing uncertainty provision, not a reflection of new adverse development. He stated this prudent process will continue through 2025. On the second point, Mr. Zaffino and Don Bailey, EVP & CEO of North America Commercial Insurance, confirmed that social inflation is driving a 'flight to quality,' where clients seek long-term partners with deep casualty expertise and financial strength, benefiting AIG.

Meyer Shields inquired about the specific underwriting and pricing actions AIG is taking to manage uncertainty from potential tariffs. He also asked a modeling question about whether the Q1 impact of expenses shifting from 'Other Operations' to business segments would be consistent through 2025.

Answer

Peter Zaffino, Chairman and CEO, responded that AIG is proactively managing tariff uncertainty by reviewing inflation factors and building additional risk margins into potentially impacted lines, as was done with the international portfolio in Q1. Regarding expenses, he clarified that while Q1 shouldn't be perfectly straight-lined, the expense level achieved is a good indicator for the full year as the company has accelerated its 'lean parent' initiatives.

Meyer Shields of KBW inquired about the tangible impact of deploying artificial intelligence in underwriting and asked for a timeline on achieving underwriting profitability for the high net worth personal lines business.

Answer

Chairman and CEO Peter Zaffino explained that AIG's generative AI strategy, supported by partners like Palantir and Anthropic, is focused on driving top-line growth by accelerating the ingestion of qualified data to underwriters for better and faster decision-making. Regarding the high net worth business, Zaffino noted the combined ratio is already improving and expects accelerated profitability in 2025, driven by a balanced growth strategy, improved ceding commissions, and a new 30% quota share with strong partners.

Meyer Shields from UBS inquired about reserve development trends in older accident years for financial and casualty lines, and AIG's property reinsurance strategy for 2025.

Answer

CFO Sabra Purtill detailed the reserve movements, noting favorable development in shorter-tail lines was partially offset by adverse development in specific older U.K. and Europe casualty books and a large U.S. excess casualty settlement from years covered by the ADC. Chairman and CEO Peter Zaffino added that AIG's reinsurance strategy will remain consistent, as the company values its low attachment points and aggregate protection to manage volatility.

Meyer Shields asked about any favorable expense items beyond the Bermuda tax credits and where they showed up in the financial statements. He also inquired if the non-renewed program business hitting the income statement would have an observable impact on the acquisition expense ratio in insurance.

Answer

CFO François Morin clarified that there were no other significant favorable expense items to highlight beyond the Bermuda tax credits, which most noticeably impact the reinsurance and corporate lines. He stated that no meaningful improvement is expected in the acquisition ratio for the insurance segment due to the relatively small amount of shed premium ($200-300 million on an $8 billion base).

Meyer Shields from Keefe, Bruyette & Woods asked about any favorable expense items beyond the Bermuda tax credits that were mentioned, and whether the non-renewed program business finally hitting the income statement would have an observable impact on the acquisition expense ratio in insurance.

Answer

CFO and Treasurer François Morin clarified that there were no other significant favorable expense items to highlight beyond the Bermuda tax credits. He also stated that the non-renewed program business, representing a relatively small portion of the overall written premium, would not have a meaningful impact on the insurance segment's acquisition expense ratio.

Meyer Shields requested an update on the timing and amounts of increased spending associated with the mid-corp acquisition.

Answer

François Morin (EVP, CFO, and Treasurer) explained that increased spending was primarily focused on reinforcing capabilities in areas like actuarial, data analytics, and support functions, as the initial transfer mainly involved underwriters and claims staff. He noted that while the job market is competitive, much of this work has been done, and the incremental mid-corp business can be run at a more efficient expense ratio due to synergies, with some openings still being filled.

Meyer Shields asked if the Insurance segment's acquisition expense ratio, adjusted for an accounting impact, is a good run rate, and whether the Midcorp book experienced benign non-cat property losses.

Answer

CFO & Treasurer François Morin confirmed the adjusted acquisition ratio is a good starting point, with potential for further improvement in 2026 from underwriting actions. CEO Nicolas Papadopoulo affirmed that the Midcorp book did experience a low catastrophe quarter, which was a positive development.

Meyer Shields inquired about the profitability implications of brokers consolidating business with fewer carriers and asked how Arch manages adverse selection risk when cedents retain more business.

Answer

Executive Nicolas Alain Papadopoulo explained that success with large distributors is about strategic alignment and demonstrating value to gain access to the most desirable risks. He stated that managing adverse selection is a core underwriting skill, requiring deep insight into why a cedent is buying reinsurance. He views cedents retaining more of a well-performing book as a natural, legitimate part of the market cycle.

Meyer Shields of Keefe, Bruyette & Woods asked about changes to the Insurance segment's outward reinsurance program for 2025 and whether the MidCorp book should have a lower attritional loss ratio than legacy Arch post-integration.

Answer

Executive Nicolas Alain Papadopoulo said the main reinsurance change was successfully transitioning the large MidCorp program to an Arch-managed framework. Both he and executive François Morin clarified that they do not expect a significant change to the segment's ex-cat loss ratio post-integration, as MidCorp's cat exposure is more in secondary perils, which are part of the attritional loss base.

Meyer Shields of KBW asked for the CEO's perspective on cycle management within the newly acquired MidCorp business and for his expectations on casualty reinsurance ceding commission trends.

Answer

CEO Nicolas Alain Papadopoulo explained that while different, cycle management in the middle market is attractive due to more muted cycles and stickier client relationships not solely based on price. Regarding casualty reinsurance, he anticipates downward pressure on ceding commissions due to past loss trends, but noted the final outcome will be heavily influenced by the ample supply of capital in the market.

Meyer Shields asked about Everest's openness to additional retroactive reinsurance transactions for the future 'other' segment and the estimated capital currently supporting reserves within that segment.

Answer

Jim Williamson, President and CEO, clarified that while no additional adverse development covers (ADCs) are planned for reserve certainty, Everest is open to leveraging transactions for capital management and freeing up capital in the growing 'other' (runoff) segment. Mark Kociancic, EVP and CFO, estimated approximately $1 billion in capital supporting those reserves, expecting it to diminish significantly in the second half of 2026 and into 2027 as the renewal rights transaction matures and earned premium runs off. Meyer Shields also sought clarification on the Global Wholesale and Specialty unit's ambition for a mid-90s combined ratio, specifically whether it refers to an attritional or an all-in number. Jim Williamson confirmed it is an all-in number, noting that it is not a heavy catastrophe business. Mark Kociancic added that this shift is partly due to a change in the mix of business composition within GW&S, with a greater emphasis on short-tail lines in 2026.

Meyer Shields asked about Everest Group's openness to additional retroactive reinsurance transactions for the future 'other' segment and the amount of capital currently supporting reserves within that segment after resegmentation.

Answer

Jim Williamson, President and CEO, Everest Group, clarified that while the 2025 ADC provided reserve certainty, they are open to leveraging transactions to manage and free up capital, especially with the growing runoff business. Mark Kociancic, EVP and CFO, Everest Group, estimated approximately $1 billion in capital supporting those reserves, expecting it to diminish significantly in the second half of 2026 and into 2027. Jim Williamson also clarified that the mid-90s combined ratio target for the Global Wholesale and Specialty business is an 'all-in' number, not just attritional, given it's not a heavy cat business. Matthew Jay Rohrmann, SVP, Head of Investor Relations, Everest Group, noted this shift is due to a mix of business composition with more short-tail emphasis in 2026.

Meyer Shields inquired about the combined ratio differential between Everest's specialty and retail insurance businesses, specifically asking for the CAT load on the specialty segment. He also sought to understand the potential capital liberation from transferred reserves and non-renewed premiums.

Answer

Mark Kociancic, EVP and CFO, stated that the CAT load for the specialty business is 'quite modest, almost de minimis.' Regarding capital liberation, Mr. Kociancic explained it would be 'substantial over time,' with visibility expected in the latter half of 2026, driven by reduced capital intensity from non-renewed premiums and runoff of existing reserves.

Meyer Shields asked for an estimate of the capital liberation expected from the transferred reserves and non-renewed insurance premiums.

Answer

Mark Kociancic, EVP and CFO, explained that the capital release would be substantial over time, becoming more visible in the back half of 2026, due to the runoff of non-renewed premium and existing reserves.

Meyer Shields of Keefe, Bruyette & Woods asked if the reserve releases from well-seasoned property reinsurance could become a sustainable, recurring event. He also inquired about the international book's exposure to potential deflationary effects from U.S. tariffs.

Answer

Mark Kociancic, Executive VP & Group CFO, confirmed the premise, stating there is significant embedded margin in the reinsurance division and that such releases could become a consistent driver of margin as reserves season. Jim Williamson, President & CEO, addressed the tariff question by stating that any impact on premium is not a concern given their small market share and large growth opportunity. He added that they have not yet seen any tariff-related impact on U.S. loss costs.

Meyer Shields inquired about the mechanics of responding to potential tariff-driven inflation on existing policies and asked about the expected mix of demand between lower and higher layers at the midyear property cat renewals.

Answer

CEO Jim Williamson explained that Everest now reviews its loss trend assumptions with increased frequency (quarterly) to respond quickly to inflation, a discipline enhanced during prior inflationary periods. He added that robust risk margins provide a buffer. For renewals, he expects most new demand will be at the top end of programs, as pricing for lower layers remains a deterrent for many cedents.

Meyer Shields of Keefe, Bruyette, & Woods inquired about the expected progress of the Insurance segment's loss ratio in 2025 and the company's expense management strategy for casualty lines.

Answer

President and CEO Jim Williamson stated that the prudence from recent reserve actions will continue and that the rapid shift in business mix provides a positive tailwind. CFO Mark Kociancic noted the 2024 attritional loss ratio of 68.3% is the starting point, with favorable mix and rates offsetting the drag from runoff business. Williamson added that the company continues to invest prudently, though the expense ratio remains elevated due to these investments and remediation's impact on earned premium.

Meyer Shields of Keefe, Bruyette, & Woods inquired about the pricing achievement in U.S. insurance casualty lines relative to the 12% loss trend and asked about the company's capital adequacy and capital management plans.

Answer

Executive James Williamson confirmed they are driving rate well in excess of trend, citing Q3 figures in the mid-teens to low-20s for key casualty lines, enforced by a 'one renewal' remediation standard. Executive Mark Kociancic stated that the capital position remains strong, they are confident in their 2025 earnings engine, and he foresees normal capital management options, including being active in the market in 2025.

Meyer Shields inquired about RenaissanceRe's casualty and specialty segment, specifically if the projected high-90s% combined ratio for 2026 indicates a consistent reserve philosophy, and how reserves for older, nearly settled accident years have performed. He also asked if the company's exposure to riot and civil commotion coverage had materially changed at the 1/1 renewals compared to 2025.

Answer

Kevin J. O'Donnell, President and CEO, explained the company maintains cautious reserving in General Liability, not yet reflecting increased pricing, while older accident years are settling well, often protected by prior acquisitions. David Marra, Executive Vice President and Group Chief Underwriting Officer, confirmed no material change in exposure to riot and civil commotion, noting it's a peril covered with specific, tight terms and conditions and retentions that insulate from attritional losses.

Meyer Shields asked about the implications of the high-90s% expected combined ratio in casualty and specialty for RenaissanceRe's reserve philosophy, particularly how reserves for older accident years have performed. He also inquired about any material changes in the company's exposure to riot and civil commotion coverage following its increased inclusion in 1/1 renewals.

Answer

Kevin J. O'Donnell, President and CEO, explained that the company remains cautious in reserving, especially for General Liability, not yet reflecting increased pricing. He noted that older accident years are settling well, benefiting from protections from the Validus and Platinum acquisitions. David Marra, EVP and Group Chief Underwriting Officer, confirmed no material change in riot and civil commotion exposure, as it's covered with tight terms and conditions and high retentions.

Meyer Shields asked how favorable reserve development in both casualty and property reinsurance segments influences RenaissanceRe's pricing models. He also inquired if the competition for increased demand in the market differs from the competition for renewing demand.

Answer

EVP and CFO Bob Qutub explained that pricing and reserving are connected within their information ecosystem, with historical reserving data informing future pricing forecasts. EVP and Chief Underwriting Officer David Marra added that qualitative factors, such as terms and conditions holding up, positively impact future expectations. President and CEO Kevin O'Donnell noted that competition for increased demand is generally consistent with appetite, with RenaissanceRe having vehicles to complement its targeted demand and capturing a greater market share of increased demand last year.

Meyer Shields asked how favorable reserve development in both casualty and property reinsurance segments influences RenaissanceRe's pricing models. He also inquired if the competition for increased demand in the market differs from the competition for renewing demand.

Answer

EVP and CFO Bob Qutub explained that pricing and reserving are connected within their information ecosystem, with historical reserving data informing future pricing forecasts. EVP and Chief Underwriting Officer David Marra added that qualitative factors, such as terms and conditions holding up, positively impact future expectations. President and CEO Kevin O'Donnell noted that competition for increased demand is generally consistent with appetite, with RenaissanceRe having vehicles to complement its targeted demand and capturing a greater market share of increased demand last year.

Meyer Shields of KBW asked to differentiate the drivers for Florida growth between reform confidence and client demand, sought clarification on the company's appetite for all business classes like commercial auto, and inquired about providing a retained-basis income statement.

Answer

EVP & Group Chief Underwriting Officer David Marra attributed Florida growth to a combination of market stability from tort reform, growing demand from private markets, and new opportunities created by the Florida Hurricane Cat Fund's higher attachment point. President & CEO Kevin O'Donnell clarified his 'any class' remark was poetic license and their cautious stance on commercial auto is unchanged. EVP & CFO Robert Qutub explained that providing a fully retained income statement is onerous due to GAAP rules, but they aim to provide key retained metrics.

Meyer Shields questioned how relevant a cedent being loss-impacted is within RenaissanceRe's proprietary pricing models and whether a recent loss is treated as a predictor of future losses or simply as part of a recoupment mechanism.

Answer

EVP & Group Chief Underwriting Officer David Marra stated that a recent loss is highly relevant in renewal negotiations, often strengthening relationships with long-term clients. He highlighted the company's ability to quickly update its proprietary models post-event. CEO Kevin O'Donnell added that they do not view a past loss as a predictor of a future one, but rather use the experience to validate the accuracy of client data and their own risk assessment models.

Meyer Shields asked how far back the strengthening of general liability reserves extends and inquired about rate changes for loss-impacted accounts at the January 1 renewals and the company's appetite for aggregate covers.

Answer

CEO Kevin O'Donnell specified that the reserve strengthening focus is on the 2019-2022 accident years, as the earlier soft market years were a smaller part of their book and had transactional protections. EVP, Group Chief Underwriting Officer David Marra explained that few loss-impacted accounts renewed at January 1, so there was little rate differentiation. He added that aggregate covers are written selectively at remote attachment points where they meet return hurdles.

Meyer Shields asked for more detail on the flat reserve movements in Casualty & Specialty, specifically if there was significant variation by accident year or line of business. He also questioned how difficult it would be to shift the casualty strategy toward excess-of-loss business to reduce dependency on primary clients' rate actions.

Answer

CFO Robert Qutub explained that the reported prior-year development was distorted by about $10-11 million in purchase accounting adjustments. CEO Kevin O'Donnell added that the portfolio is healthy, having grown in better years and largely avoiding commercial auto. Regarding strategy, Group Chief Underwriting Officer David Marra stated that the market primarily trades on a quota share basis, which aligns interests, and that they can also adjust ceding commissions. O'Donnell noted that quota share is currently preferable given rising loss severity trends.

Meyer Shields asked if the broad industry trend of declining claim frequency in personal lines coverages matches what Hanover is observing in its preferred market. He also questioned whether new business growth in the 11 key diversification states would lead to a 'new business penalty' or higher initial loss ratios.

Answer

CEO Jack Roche confirmed seeing declining frequency in personal auto and homeowner coverages, attributing it to customer behavior, implemented terms and conditions, ex-cat weather, and safety technology in newer cars. He stated that Hanover does not anticipate a traditional new business penalty in the 11 key diversification states, as new business pricing has been matching renewal pricing, and diversifying risk is expected to have a positive impact. COO and President of Agency Markets Dick Lavey added that pricing is at a very adequate level for new business across all states.

Meyer Shields inquired if the observed decline in claim frequency across most Personal Lines coverages matches what The Hanover is seeing in its preferred market, and whether to anticipate a new business penalty (higher initial loss ratios) from growth in the 11 new states.

Answer

President and CEO Jack Roche confirmed seeing frequency declines, attributing them to customer behavior, terms/conditions (home), ex-CAT weather, and auto safety technology. He stated that growth in the 11 existing states, which are maturing and benefiting from the hard market, is expected to be accretive, and a traditional new business penalty is not anticipated as new business pricing has been matching renewal pricing. COO and President of Agency Markets Dick Lavey added that pricing levels are adequate.

Meyer Shields of Keefe, Bruyette & Woods (KBW) asked if the commercial auto reserve adjustment impacted the current accident year loss pick and how reinsurance and homeowners growth affect the underlying combined ratio.

Answer

EVP & CFO Jeffrey Farber confirmed the current year loss pick for commercial auto was prudently increased and noted that risk-adjusted reinsurance costs came down, which is helpful to homeowners' economics. President & CEO John Roche added that due to disciplined pricing, there is not a significant new business penalty for homeowners at this time.

Meyer Shields requested more detail on the magnitude of pricing adjustments in small commercial and asked how much of the favorable frequency in personal lines is considered sustainable and being factored into pricing.

Answer

COO Richard Lavey and President and CEO John "Jack" C. Roche explained the small commercial pricing changes are 'tweaking the dials' on new business rather than a dramatic reduction, aimed at improving competitiveness while maintaining price above loss trend. Regarding personal lines, Lavey stated it is appropriate to assume the favorable frequency trend will continue due to factors like in-car technology and customer behavior. CFO Jeffrey Farber added that while earned rate is the main driver of margin improvement, the frequency benefit is a real component and slightly larger than initially planned.

Meyer Shields inquired about the drivers behind strong growth in specialty professional and executive lines and how Hanover's stable agency incentive compensation impacts its ability to grow with agents.

Answer

President of Specialty Lines, Bryan Salvatore, attributed the growth to strong margins built on five years of rate increases exceeding loss trends, which justified investment and led to a record new business year. President and CEO John 'Jack' C. Roche explained that their proactive partnership model, which focuses on agents' overall operational economics beyond just compensation, has been a competitive advantage and a 'tailwind' for growth.

Meyer Shields from Keefe, Bruyette & Woods questioned the drivers behind the exposure unit growth in Core Commercial, whether higher deductibles were also being applied to personal auto, and if a "new business penalty" remains a concern for personal auto profitability amid growth.

Answer

President of Agency Markets Richard "Dick" Lavey attributed the exposure growth primarily to the workers' compensation line and clarified that while personal auto deductibles have seen modest increases, the main focus has been on homeowners. President and CEO John "Jack" C. Roche stated that a significant new business penalty is not anticipated in Personal Lines, as new business is being written at strong, adequate rates and the quality of the business is the "best it's ever been."

Meyer Shields asked about the uncertainty surrounding the low single-digit forecast for Medicare, specifically whether there are still unknowns regarding products carrying commissions or commission rates. He also requested annual revenue figures for Cushon and FlowStone for modeling purposes.

Answer

Julie Gebauer, President of Health, Wealth and Career, clarified that final Medicare terms are often more favorable than initial proposals and that reimbursement levels do not directly impact WTW's revenue. She explained that the latest proposal is expected to be relatively neutral due to the majority of existing customers being on Medicare Supplement policies (unaffected), the marketplace offering diverse options, and the potential for increased employer interest in individual marketplaces for group Medicare plans beyond 2026. Andrew Krasner, WTW's Chief Financial Officer, stated that the aggregate annual revenues for Cushon and FlowStone are expected to be around $300 million, with exact figures dependent on closing dates and to be shared in the next update.

Meyer Shields asked about the uncertainty surrounding BD&O's low single-digit forecast, specifically regarding Medicare concerns such as which products carry commissions and commission rates.

Answer

Julie Gebauer, President of Health, Wealth and Career, explained that final Medicare terms are often more favorable than advanced proposals, and reimbursement levels do not directly impact WTW's revenue. She expects the latest proposal to be relatively neutral because most existing retiree marketplace customers use unaffected Medicare Supplement policies, the marketplace offers diverse options despite potential Medicare Advantage price increases (switching helps WTW), and significant price increases for group Medicare plans will likely drive employers to individual marketplaces, which is a positive beyond 2026. Andrew Krasner, CFO, stated that annual revenues for Cushon and FlowStone would depend on their respective closing dates, but in aggregate, they are expected to be around $300 million, with more details to be shared in the next update.

Meyer Shields questioned why the 2025 share repurchase target remained at $1.5 billion, given $1.3 billion year-to-date and Q4 being the strongest free cash flow quarter, and asked if expenses for deferred survey-related revenues were booked in Q3.

Answer

Andrew Krasner, CFO, reiterated the $1.5 billion share repurchase target, subject to market conditions and potential capital allocation to investment opportunities, noting they continuously monitor cash levels to accelerate repurchases if prudent. He confirmed that associated expenses for survey-related revenues deferred to Q4 were indeed booked in Q3 due to a temporary timing shift.

Meyer Shields questioned why the share repurchase target for 2025 remained at $1.5 billion, given that $1.3 billion had already been repurchased year-to-date and Q4 is typically the strongest free cash flow quarter. He also asked if the expenses associated with survey-related revenues deferred to Q4 were still booked in Q3.

Answer

Andrew Krasner, CFO, reiterated the $1.5 billion share repurchase target, subject to market conditions and potential inorganic investment opportunities. He stated that WTW continuously monitors cash levels and market conditions to accelerate repurchases if prudent, evaluating all capital allocation options. Regarding deferred survey revenue, he confirmed that the associated expenses were indeed booked in Q3, with revenue expected to 'bleed over' into Q4 due to a temporary timing shift.

Meyer Shields inquired whether disruption in the London wholesaling market, caused by a major player building a U.S. retail platform, presents an opportunity for Gallagher's RPS or its London-based wholesaling operations, or if Gallagher's own retail presence makes it a tougher sell.

Answer

Chairman and CEO J. Patrick Gallagher, Jr. confirmed that this market disruption represents a 'big opportunity' for both RPS and Gallagher's London-based wholesaling operations, as clients seek new outlets for their wholesale placements.

Meyer Shields from KBW inquired about potential disruption in the London wholesaling market due to a major player building a retail platform in the U.S., and whether this presents an opportunity for Gallagher's RPS unit or makes it a tougher sell given Gallagher's own retail operations.

Answer

J. Patrick Gallagher, Jr. (Chairman and CEO) stated that this situation presents a big opportunity for both RPS and Gallagher's London-based wholesaling operations, as customers of the unnamed competitor may seek new outlets for their wholesale placements.

Meyer Shields asked if the cross-selling synergies from the Gallagher Re acquisition are still a major factor in its growth and questioned whether large account revenue is more or less sensitive to the insurance cycle given its fee-based nature.

Answer

J. Gallagher, an executive, confirmed that cross-pollination between the reinsurance, retail, and wholesale teams is a 'big factor' and is working as they had 'dreamed.' He also explained that large account revenue is likely less sensitive to market cycles because it is primarily fee-based, which protects revenue from declining premiums in a softening market.

Meyer Shields from Keefe, Bruyette & Woods inquired if adverse development in general liability directly impacts Gallagher Bassett's revenue through claim frequency or complexity. He also asked for an update on M&A multiples for tuck-in deals in light of recent large-scale industry transactions.

Answer

CEO J. Gallagher and CFO Douglas Howell explained that higher claim frequency directly benefits Gallagher Bassett's revenue, as they are paid per claim, but severity does not. They added that increased claim complexity allows them to demonstrate more value to clients. On M&A, Mr. Gallagher stated that their tuck-in multiples remain well below 'treetop levels' and suggested the AssuredPartners deal sent a 'signal' to the market, implying disciplined valuation.

Meyer Shields asked about the timing of the $15 million adjustment-related contingents, specifically if it's a fourth-quarter issue or when the drop-off should be expected. He also clarified if the expectation for improved organic growth (better than 2.8%) applies to the specialty distribution segment as well as retail.

Answer

R. Andrew Watts, CFO, stated that the $15 million adjustment-related contingents are expected to be spread between the third and fourth quarters of next year. He confirmed that organic growth is also expected to improve for the specialty distribution segment during the year.

Meyer Shields asked about the timing of the anticipated $15 million drop-off in adjustment-related contingents, specifically if it's a Q4 issue or spread across quarters. He also inquired if the expectation for 'better than 2.8% organic growth' applies to the Specialty Distribution segment as well as Retail.

Answer

R. Andrew Watts, Chief Financial Officer, clarified that the $15 million adjustment-related contingents drop-off is expected to be spread between the third and fourth quarters of next year. He confirmed that the company anticipates organic growth to improve for the Specialty Distribution segment during the year, similar to the Retail segment.

Meyer Shields from KBW requested an updated view on the split between economic growth and pricing as drivers of organic growth and asked if the company has a specific threshold for underperformance.

Answer

President, CEO & Director J. Powell Brown and EVP, CFO & Treasurer R. Andrew Watts responded that while the two-thirds exposure and one-third rate split generally holds, rate becomes a more significant factor in volatile markets. They emphasized that one quarter does not make a trend and they do not manage to a specific numerical 'red light,' instead focusing on strong year-to-date results and long-term profitable growth.

Meyer Shields sought clarification on the Q4 Programs organic growth forecast, asked if standard market insurers are re-entering cat property and bypassing wholesalers, and inquired about differences in economic growth expectations between U.S. and international clients.

Answer

Executive R. Watts confirmed that if there is minimal flood claim revenue in Q4, the Programs segment's organic growth would be near zero. Executive J. Powell Brown stated that, generally, standard market carriers are not re-entering the cat property space to compete directly on price with the E&S market for new business. Regarding international clients, Brown and Watts noted that while there are more questions about growth overseas, the economic backdrop in their key European markets remains good with no material change in outlook.

Meyer Shields sought clarification on the $15 million of lender-placed insurance revenue in the Programs segment, asking what period of revenue it represents and if it impacted segment margins.

Answer

J. Powell Brown, an executive, explained that the $15 million represents approximately six months of revenue that was recognized in the quarter due to onboarding timing. He stated this revenue will be recognized more evenly in 2025 and does not impact full-year margins, only the timing of recognition between quarters.

Meyer Shields sought confirmation that reevaluating recent accident years suggests less need for rate, asking if this relates to lower-than-expected claims frequency in claims-made policies, and whether this optimism impacted the accident year 2025 loss picks.

Answer

CEO Rob Berkley confirmed that early indications across the board, not limited to claims-made forms, suggest underwriting and rate actions are having the desired impact, leading to a more comfortable position. He explicitly stated that the accident year 2025 loss picks were not adjusted based on this changing viewpoint.

Meyer Shields sought to confirm if the reevaluation of recent accident years, suggesting less need for rate, relates to lower-than-expected claims frequency. He also asked if the positive emergence was on the frequency or severity side, and whether this changing viewpoint impacted the full year 2025 accident year loss picks for exposed lines.

Answer

CEO Rob Berkley confirmed that the positive indications are 'across the board,' with underwriting and rate actions in recent years having a positive impact, even for lines with some tail, and not limited to claims-made forms. He invited Meyer to call CFO Rich Baio for detailed data on frequency versus severity. He explicitly stated that they 'did not touch' the full year 2025 accident year loss picks.

Meyer Shields asked if W. R. Berkley's overall view of casualty loss trends had changed over the past three to six months, following comments on portfolio pivoting. He also questioned the rationale behind extending the duration of the investment portfolio.

Answer

Rob Berkley, President and CEO, stated there was no change in the overall view of casualty loss cost trends, but constant re-examination of specific niches informs appetite. He cautioned against over-interpreting the slight duration extension (2.8 to 2.9 years), noting it's opportunistic but influenced by falling short-term rates.

Meyer Shields asked if W. R. Berkley's overall view of casualty loss trends has changed in the past 3-6 months. He also inquired about the rationale for extending duration (from 2.8% to 2.9%) despite declining interest rates.

Answer

Rob Berkley (President and CEO) stated that the overall view of casualty loss trends has not changed, but the company continuously examines specific niches. He cautioned against over-interpreting the slight duration extension, noting it's a small change, and mentioned that declining short-term rates add pressure to put money to work opportunistically.

Meyer Shields of Keefe, Bruyette & Woods (KBW) asked about client demand for higher casualty limits and whether the recent workers' compensation rate action in California is a leading indicator for the rest of the U.S.

Answer

President & CEO W. Robert Berkley, Jr. noted no consequential increase in demand for higher limits from smaller clients, who are balancing need versus affordability. He views the California action not as a perfect proxy for the U.S. but as an indicator that markets require a response when rates are suppressed for too long.

Meyer Shields of KBW inquired whether clients are demanding higher casualty limits and if the recent workers' compensation loss cost increase in California is a leading indicator for the U.S.

Answer

President & CEO W. Robert Berkley, Jr. noted that smaller commercial clients are not significantly increasing their demand for higher limits, often constrained by affordability. He views the California workers' comp action as necessary but not a direct proxy for the rest of the country, though it highlights the negative consequences of prolonged rate suppression.

Meyer Shields questioned whether the underwriting and claims tools for the growing specialty workers' compensation book differ from the company's legacy book. He also asked for clarification on what Mitsui Sumitomo's intention to 'deploy their network' means for Berkley's growth potential.

Answer

Executive W. Berkley affirmed that the tools and teams are different, explaining that the company's decentralized structure means each business, including the higher-hazard comp units, has its own specialized focus and expertise. Regarding Mitsui Sumitomo, he stated that the company is open to partnership opportunities that make business sense but that it remains to be seen how things will develop over time.

Meyer Shields of KBW asked if the loss trend in bodily injury claims, which exacerbates social inflation, is worsening or if it's a long-standing issue. He also inquired how to think about the impact of shifting legal jurisdictions on reserves for longer-tail lines and how the business mix change affected the expense ratio.

Answer

W. Robert Berkley, Jr. (Executive) clarified that the steeper trend for bodily injury claims is not new but has been apparent for some time. He stated that the company has been responding to shifting legal environments for years, so these actions are already well-entrenched in their reserving and underwriting. Richard Baio (CFO) added that the business mix change had a minimal 0.1% impact on the expense ratio, with the main driver of acquisition cost changes being shifts in reinsurance structure (e.g., quota share vs. XOL).

Meyer Shields asked if the lower auto claim emergence was across all accident years or specific to accident year 2025. He also inquired if the $150 million catastrophe reinsurance limit reduction was at the top end of the tower and if the attachment point changed. Lastly, he questioned the significance of fourth-quarter competition driven by competitors seeking to meet budgets and whether this pressure abates in the first quarter.

Answer

Jen Klobnak (COO) clarified that the lower auto claim emergence referred to new claims received in 2025, which could relate to current or previous accident years, with Craig Kliethermes (President and CEO) adding that reductions were seen for two consecutive years. Jen Klobnak confirmed that the $150 million catastrophe reinsurance limit reduction maintained the $50 million attachment point. Regarding Q4 competition, Jen Klobnak acknowledged it's always challenging due to top-line compensation incentives but noted it's hard to quantify if it was worse than previous years, and it's too early in Q1 to assess if competitive pressure has abated.

Meyer Shields asked if the lower auto claim emergence was across all accident years or specific to 2025, about the details of the $150 million catastrophe reinsurance limit reduction, and the materiality of Q4 competition driven by competitors seeking to meet budgets.

Answer

Jen Klobnak (COO) clarified that lower auto claim emergence referred to new claims received in 2025, potentially related to current or prior accident years, with Craig Kliethermes (President and CEO) adding it was a two-year trend. Jen Klobnak confirmed the catastrophe reinsurance limit reduction maintained the $50 million attachment point, simply reducing the overall tower. She acknowledged Q4 is typically challenging due to year-end goals but found it hard to quantify if it was worse than previous Q4s, and too early to assess Q1 2026.

Meyer Shields of Keefe, Bruyette & Woods (KBW) requested more detail on the mix shift within the surety segment to understand the change in the accident year combined ratio. He also asked if any benefits from recent tort reform were yet visible.

Answer

COO Jen Klobnak explained the surety expense ratio was impacted by a new reinsurance layer purchased April 1st and that the business mix shift was minor, aside from a move from oil and gas to solar projects. CFO Todd Bryant noted that favorable reserve development was significantly higher in Q1 than Q2. Regarding tort reform, CEO Craig Kliethermes said it is too early for Georgia and Louisiana, but they have seen anecdotal benefits in Florida, which boosts underwriter confidence. He also highlighted the industry's push for third-party litigation financing disclosure.

Meyer Shields of KBW inquired about the drivers of the surety segment's combined ratio change from the prior quarter and asked if any benefits from recent state-level tort reform are yet visible in loss emergence.

Answer

COO Jen Klobnak and CFO Todd Bryant explained the surety combined ratio was impacted by lower favorable reserve development compared to Q1 and higher expenses from a new reinsurance layer and ongoing technology investments. President and CEO Craig Kliethermes addressed tort reform, stating it is too early to see loss benefits in Georgia and Louisiana but that it improves underwriter confidence. He noted anecdotal benefits are being seen in Florida, and the industry continues to push for third-party litigation financing disclosure.

Meyer Shields of KBW requested more detail on the mix shift within the surety segment to understand the change in the accident year combined ratio. He also asked if the company is observing any benefits from recent tort reforms in states like Florida, Georgia, and Louisiana.

Answer

COO Jen Klobnak explained the surety expense ratio was impacted by a new reinsurance layer purchased April 1 and that the business mix had not changed significantly, aside from a shift from oil and gas to solar projects. CFO Todd Bryant added that Q1 had much larger favorable development than Q2. Regarding tort reform, CEO Craig Kliethermes noted it is too early to see benefits in Georgia and Louisiana but that anecdotally, they are seeing some positive effects in Florida, which boosts underwriter confidence.

Meyer Shields of KBW sought clarification on whether transportation non-renewals were driven by RLI's decisions or by insureds rejecting price increases. He also asked if the recent reserve strengthening in transportation incorporates the same conservatism seen in past years that led to favorable development.

Answer

COO Jenni Klobnak clarified that transportation non-renewals are a combination of both scenarios: RLI actively non-renews some accounts, while others leave after receiving necessary rate increases. CFO Todd Bryant explained that current reserving factors in all data, including recent adverse development in the 2023 accident year, reflecting RLI's disciplined approach to address challenging trends promptly rather than assuming future favorable development.

Meyer Shields of KBW asked for several specific data points: a breakdown of catastrophe losses by segment, clarification on the loss pick for the Prime quota share, the net impact of property rate changes on 2025 profitability, and whether to expect significant earthquake premium refunds due to the California wildfires.

Answer

CFO Todd Bryant provided the cat loss breakdown ($1.5M in Casualty, the rest in Property). President and CEO Craig Kliethermes clarified that for the Prime reinsurance treaty, RLI books a more conservative loss ratio than Prime itself. COO Jen Klobnak stated that 2025 property profitability depends on actual cat events and that the impact from potential earthquake premium refunds would not be material, as RLI's exposure is commercial, not residential.

A representative on behalf of Meyer Shields questioned the sequential and year-over-year increase in the Casualty segment's accident year loss ratio, and asked for commentary on severity trends within RLI's commercial auto book.

Answer

CFO Todd Bryant confirmed the increase in the current accident year loss ratio for Casualty was a prudent measure, reflecting second-half increases in the loss booking ratio for wheel-based exposures. COO Jen Klobnak addressed commercial auto severity, stating that while they see some severity, they mitigate it through internal loss control, disciplined risk selection, and pushing for adequate rates. President and CEO Craig Kliethermes added that RLI's culture encourages underwriters to demand claims reserves are set appropriately and quickly to inform pricing.

Meyer Shields asked if lowering the catastrophe reinsurance attachment point would impact seasonal combined ratio components, particularly Q1. He also inquired about Travelers' comfort level with growing policy counts in cat-prone states in 2026 and beyond, relative to the overall book.

Answer

Dan Frey, CFO, stated that he does not expect a significant impact on seasonal combined ratio components due to overall ceded premium management and favorable reinsurance pricing dynamics. Michael Klein, President of Personal Insurance, indicated that growth in cat-prone states would, at most, be in line with the rest of the portfolio, with some constraints remaining. He expects property policies in force (PIF) growth to continue trailing auto, but both lines' growth trajectories should improve.

Meyer Shields asked if lowering the catastrophe reinsurance attachment point would have any seasonal impact on combined ratio components, particularly in the first quarter. He also questioned whether Travelers is comfortable growing policy counts in more cat-prone states in line with the overall book in 2026 and beyond, or if growth constraints would continue.

Answer

Dan Frey (CFO, Travelers) stated that he does not expect much seasonal impact on the combined ratio from the reinsurance changes, given the overall ceded premium and favorable pricing dynamics. Michael Klein (President of Personal Insurance, Travelers) indicated that at most, cat-prone states would grow in line with the rest of the portfolio, with some areas still constrained. He expects property policies in force (PIF) growth to continue trailing auto, but both lines' growth trajectories should improve.

Meyer Shields asked if Travelers could disentangle how much of the property premium decline in Business Insurance was due to non-renewed business versus accepting lower rates. He also inquired about Personal Insurance book rolls, specifically if they involve changes to agency commissions and what other tools are used to encourage them.

Answer

Alan Schnitzer, Chairman and CEO, stated that Travelers would not unpack the specific drivers of the property premium decline in Business Insurance at that level of detail. Michael Klein, EVP and President of Personal Insurance, confirmed that book rolls and consolidations are standard practice, and it is typical to offer enhanced commissions for the first term of a book roll. He noted Travelers is re-engaging in these activities after focusing on profitability.

Meyer Shields from KBW asked about the potential for telematics-related adverse selection in Personal Lines, given new business growth without a corresponding rebound in retention. He also questioned if the softening in certain commercial lines, like property, is occurring more rapidly than in past cycles.

Answer

Michael Klein, President of Personal Insurance, stated they see no signs of adverse selection in their profile metrics for new or retained business. CEO Alan Schnitzer addressed the second question, suggesting the larger trend is not faster softening but a shrinking amplitude of the pricing cycle and greater price dispersion by line of business based on returns.

Meyer Shields inquired about the potential for telematics-related adverse selection in Personal Lines, given new business growth while retention remains low. He also asked if commercial lines are softening faster in the current cycle compared to past hard markets.

Answer

Michael Klein, President of Personal Insurance, stated they see no signs of adverse selection in their new or retained business profiles. CEO Alan Schnitzer suggested the larger market trend is a shrinking amplitude of the pricing cycle and greater price dispersion by line based on returns, rather than an unusually rapid softening.

Meyer Shields asked about the potential for adverse selection in Personal Lines, given that new business is growing while retention has not fully recovered. He also questioned if commercial lines are softening faster in the current cycle compared to past cycles.

Answer

Michael Klein, President of Personal Insurance, stated they see no signs of adverse selection in their new or retained business profiles. Chairman and CEO Alan Schnitzer suggested that the long-term pricing cycle amplitude is shrinking and that current pricing is rational and segmented by line of business, not indicative of a rapid, broad softening.

Meyer Shields of Keefe, Bruyette & Woods inquired about how insureds are reacting to economic uncertainty. He also asked about the speed of Travelers' response to potential inflections in loss costs and the rationale for shifting towards 6-month auto policies.

Answer

Alan Schnitzer, Chairman and CEO, stated it was too early to discern a clear response from insureds to the uncertain economy. Michael Klein, President of Personal Insurance, explained that the company can react to loss cost changes quickly. He also confirmed that Travelers has already been shifting new monoline auto policies to a 6-month basis, which is gradually increasing their proportion in the portfolio.

Meyer Shields inquired if a higher percentage of earned premiums in property and transportation in Q3 2025 compared to Q3 2024 contributed to a higher attritional loss ratio. He also asked about the impact of a new participating insurance company in the crop market on American Financial Group's premium acquisition from agents and agent mobility.

Answer

Brian Hertzman, CFO, clarified that American Financial Group booked less crop income in Q3 2025 than in Q3 2024, as they were more optimistic about an above-average crop year last year. He explained that about half of the crop premium is earned in Q3 at close to a 100% combined ratio this year. He added that, excluding crop-related noise, the ex-cat loss ratio for property and transportation actually improved due to lower frequency in transportation and marine businesses. Carl Lindner, Co-CEO, stated that the new crop competitor likely impacts them marginally, primarily attracting business they are 'least excited about'.

Meyer Shields inquired about the impact of earned premium timing on the property and transportation group's attritional loss ratio, specifically regarding crop business, and asked about the competitive impact of a new participating insurance company in the crop market.

Answer

CFO Brian Hertzman clarified that last year's third quarter saw more crop income booked due to optimism for an above-average year, whereas this year, about half of the crop premium was earned at a near 100% combined ratio. He added that excluding crop, the property and transportation loss ratio improved due to lower frequency in transportation and marine. Co-CEO Carl Lindner stated that a new participating insurer in the crop market has only a marginal impact, primarily attracting business AFG is 'least excited about.'

Meyer Shields of Keefe, Bruyette & Woods requested a deeper analysis of pricing and rate adequacy in professional lines, particularly D&O, and asked for clarification on the quarterly P&L impact of the earlier crop insurance reporting.

Answer

Co-CEO Carl Lindner III responded that while the public D&O market remains competitive, he is encouraged by signs of stabilization, with rates down only 1.6% in Q2 and overall D&O rates flat. CFO Brian Hertzman clarified that the earlier crop reporting shifted approximately $40 million in net written premium from Q3 to Q2 but has no material impact on quarterly profit recognition, as crop profitability is primarily booked in the fourth quarter.

Meyer Shields requested a deeper analysis of pricing and rate adequacy in professional lines, noting management's cautious tone compared to others. He also sought to confirm the accounting impact of earlier crop reporting, specifically how it shifts premiums and profitability between the second and third quarters.

Answer

Co-CEO Carl Lindner III clarified that while public D&O remains competitive, he is enthusiastic about stabilizing rates, with overall D&O rates flat in Q2. CFO Brian Hertzman explained that earlier crop reporting shifted approximately $40 million in net written premium from Q3 to Q2, but this does not materially impact the timing of profit recognition, which occurs primarily in Q3 and Q4.

Meyer Shields asked for details on pricing and rate adequacy in professional lines, particularly D&O, and sought to clarify the P&L impact of the earlier crop premium reporting.

Answer

Co-CEO Carl Lindner III noted that while public D&O remains competitive, rates are stabilizing, with overall D&O rates flat in Q2. CFO Brian Hertzman explained the crop timing shift primarily affects quarterly written premium figures, moving about $40 million net from Q3 to Q2, but does not materially alter the timing of profit recognition, which occurs later in the year.

Meyer Shields requested a deeper perspective on pricing and rate adequacy in professional lines, noting other carriers see signs of bottoming, and asked for clarification on how earlier crop reporting impacts quarterly premium and expense recognition.

Answer

Co-CEO Carl Lindner III confirmed signs of stabilization in professional lines, noting that overall D&O rates were flat in Q2 and public company D&O pricing was down only 1.6%. SVP & CFO Brian Hertzman explained that earlier crop reporting shifted about $40 million in net written premium from Q3 to Q2 but does not materially impact the timing of profit recognition, which occurs primarily in the fourth quarter.

Meyer Shields requested deeper insight into pricing and rate adequacy in professional lines, particularly D&O, and asked for clarification on the financial impact of the earlier reporting of crop insurance premiums.

Answer

Co-CEO Carl Lindner III responded that while public D&O remains competitive, he is encouraged by signs of stabilization, with overall D&O rates flat in Q2. CFO Brian Hertzman clarified the crop reporting impact, explaining that it shifted approximately $40 million in net written premium from Q3 to Q2 but had no material impact on quarterly profit recognition, as crop profitability is primarily booked in the second half of the year.

Meyer Shields questioned whether the premium declines in the Property and Transportation group would persist due to ongoing account reviews. He also asked about the adverse development in the Specialty Casualty group and the company's actions to address underlying issues like social inflation.

Answer

Co-CEO Carl Lindner explained that forecasting Property and Transportation premiums is difficult due to the lumpy nature of large account renewals, but reiterated his focus on improving margins in commercial auto, which may involve non-renewing business. CFO Brian Hertzman noted that in Specialty Casualty, modest adverse development in social inflation-exposed lines outweighed the favorable development from workers' comp. Carl Lindner added that the segment's results were also impacted by the reclassification of the internal reinsurance facility, which consolidated adverse development from excess liability business into the group.

Meyer Shields of Keefe, Bruyette, & Woods asked for clarification on the offsetting factors in Specialty Casualty, as the extrapolation of higher severity from older to newer accident years was not more apparent in the results. He also requested an update on the targeted profitability of the commercial auto business.

Answer

CFO Brian Hertzman explained that the impact of increased severity is being factored into loss picks for recent accident years, which prevents the loss pick from being lower than it otherwise would be. Co-CEO Carl Lindner stated that the overall commercial auto business is achieving a small underwriting profit, driven by strong rate increases (20% in Q4) and active management of its book, and that its performance is believed to be significantly better than competitors'.

Meyer Shields questioned whether commercial auto required a reserve adjustment, how AFG is reassessing non-coastal catastrophe exposure after Hurricane Helene, and how a 'higher for longer' interest rate environment impacts investment strategy.

Answer

CFO Brian Hertzman clarified that significant adverse development was not from the Transportation segment's commercial auto, but a small amount came from Casualty program business. Co-CEO Carl Lindner explained that the company learns from every event and can adjust pricing and exposure limits. Co-CEO Craig Lindner stated that the portfolio's intentionally short duration positions it well to benefit from higher rates, with current reinvestment yields exceeding 5.5%.

Meyer Shields, Managing Director of Research at KBW, asked about Cincinnati Financial's strategy for catastrophe reinsurance for 2026, considering recent significant fire losses and more benign catastrophe periods.

Answer

President and CEO Steve Spray stated that while the 2026 property CAT cover is not finalized, the company will remain consistent in purchasing for balance sheet protection. He reiterated the philosophy of underwriting and pricing their own business, sharing in losses, and increasing retention and program size as the company grows and capital position strengthens.

Meyer Shields of Keefe, Bruyette & Woods asked if Cincinnati Financial was observing the same large decrease in personal auto physical damage frequency seen in industry data. He also sought clarity on the growth drivers for the Cincinnati Re segment, specifically its property versus casualty focus.

Answer

CEO Steve Spray stated he could not confirm seeing a similar trend in their own personal auto physical damage frequency data. Regarding Cincinnati Re, Spray noted they have pared back on property exposure, with the book being roughly 42% casualty, 33% property, and 25% specialty. CFO Mike Sewell added that the Q1 earned premium mix was consistent with the full-year 2024 breakout, indicating no significant shift in focus during the quarter.

Meyer Shields of Keefe, Bruyette & Woods (KBW) asked about the current loss trends in the professional liability lines AXIS is actively writing and whether the quarter-end unrestricted cash balance of approximately $850 million is a sustainable level.

Answer

President & CEO Vincent Tizzio indicated that loss trends in the professional lines portfolio are in the low single digits, emphasizing that this excludes public D&O, which is now a very small part of the book. CFO Peter Vogt confirmed that the pricing in public D&O may be bottoming out but did not contribute to recent growth. Mr. Vogt also affirmed that the current cash level is considered a normal run-rate for the organization, following elevated levels in prior quarters used to fund the LPT transaction.

Meyer Shields questioned the exposure of the growing credit and political risk insurance line to potential tariffs and asked if decelerating U.K. primary motor rates would continue to impact reinsurance written premiums throughout the year.

Answer

CEO Vince Tizzio clarified that the growth in the credit and political risk line was primarily driven by the surety business, which is distinct from structured credit offerings. CFO Pete Vogt explained that the competitive U.K. motor market pressure seen at the 1/1 renewals will likely impact the full year, as most of that business renews early and a recovery is not anticipated in 2025.

Meyer Shields of KBW asked about client sensitivity to social inflation risk in the U.S. and inquired about Aon's strategy for developing talent internally versus primarily recruiting externally.

Answer

CEO Greg Case stated that social inflation is a significant concern for clients of all sizes, and Aon has taken a public stance against it. On talent, he emphasized that Aon's strategy is to make all colleagues better, not just move people around. This is achieved by providing them with superior tools and analytics, like Broker Copilot and property analyzers, which enables them to deliver better client solutions and makes Aon an attractive destination for talent.

Meyer Shields of Keefe, Bruyette & Woods asked about client sensitivity to social inflation in the U.S. and inquired about Aon's strategy for developing and training talent internally versus recruiting externally.

Answer

CEO Greg Case confirmed that social inflation is a major concern for clients of all sizes, prompting Aon to publicly oppose related market trends. On talent, Case emphasized that Aon's strategy is to make its people better by providing proprietary tools like its seven analyzers and Broker Copilot. He stated this focus on enabling colleagues to deliver superior client outcomes is the core of Aon's talent strategy and differentiates it from competitors.

Meyer Shields requested more detail on the specific drivers of the strong Q1 growth in Wealth Solutions, given the tougher upcoming comparable. He also asked if the unique, client-favorable multiyear reinsurance deal signaled a new trend or if it was a one-off situation.

Answer

CEO Gregory Case attributed the Wealth Solutions performance to strong new business and retention driven by macro trends like retirement readiness, wealth transfer, and significant pension risk transfer activity. Regarding the reinsurance deal, Mr. Case stressed it was a 'very unique and very substantial' situation, not indicative of a new trend, though it reflects Aon's philosophy of creating high value for clients. CFO Edmund Reese added that Aon's diversified model allows it to absorb such timing impacts.

Meyer Shields of Keefe, Bruyette & Woods (KBW) inquired about how social inflation is affecting coverage demand from large domestic accounts and asked for a breakdown of international growth drivers.

Answer

Chairman & CEO Evan Greenberg explained that for large accounts, the trend has been to tighten terms and increase client retentions, shifting more risk back to them to counter social inflation. He described international growth as multi-dimensional, stemming from a combination of market share gains, capturing new buyers as economies develop, and introducing sophisticated products like cyber and environmental liability that local competitors lack.

Meyer Shields of KBW inquired about how social inflation is affecting coverage demand from large domestic accounts and asked for a breakdown of international growth drivers between market share gains and new product introductions.

Answer

Chairman & CEO Evan Greenberg explained that for large accounts, the trend has been to tighten terms and increase client retentions, shifting more risk back to them to counter social inflation. For international growth, he described it as multi-dimensional, driven by market share gains, the emergence of new insurance buyers and industries in developing economies, and the introduction of sophisticated products like cyber and environmental liability.

Meyer Shields requested a deeper explanation for the judgment behind lowering loss cost trends, especially given risks from social inflation and tariffs. He also asked about the potential impact of tariffs on the North American agriculture business.

Answer

Chairman and CEO Evan G. Greenberg clarified that while the aggregate long-tail loss cost trend is up modestly, the trend for property lines is down slightly. He stated that the company's loss picks are set conservatively and already contemplate potential tariff impacts. On agriculture, he noted that key crop prices are currently stable relative to when policies were priced and that the company actively uses hedging tools to manage volatility.

Meyer Shields asked about any changes to Chubb's reinsurance purchasing at the January 1 renewals and questioned a slight uptick in administrative expenses in North America Commercial.

Answer

Chairman and CEO Evan G. Greenberg stated there were no changes to the company's reinsurance purchasing. He dismissed the minor increase in administrative expenses as insignificant 'noise' and quarterly variability, not indicative of a trend.

Meyer Shields from Keefe, Bruyette & Woods asked if the mix of pricing between rate and exposure has implications for loss ratios and if a slowdown in the exposure component could impact underwriting profitability.

Answer

Chairman and CEO Evan G. Greenberg stated that the components of pricing do not have different implications for loss ratios, as they all earn in the same way. He dismissed the second question about a slowing exposure component, stating it would not have a direct impact on underwriting profitability as they see it.

Meyer Shields of Keefe, Bruyette & Woods asked if clients are demanding more liability coverage in response to the stressed litigation environment. He also questioned if the slowdown in Latin America's organic growth was due to uncertainty or other factors like deflation.

Answer

President & CEO John Doyle responded that while the company advises clients on the rising risks, they are not seeing a significant increase in demand for excess liability coverage as businesses remain focused on cost control in the current environment. Regarding Latin America, he attributed the quarterly slowdown to idiosyncratic issues rather than a broader macro trend, stating that the company remains bullish on its prospects in the region.

Meyer Shields from Keefe, Bruyette & Woods (KBW) asked if pressure from the U.S. litigation system is driving clients to seek additional insurance coverage. He also inquired about the reasons for the slowdown in Latin America's organic growth.

Answer

President & CEO John Doyle responded that despite the challenging liability environment, the company is not seeing a significant increase in demand for additional coverage, as clients are focused on cost control. He attributed the quarterly slowdown in Latin America to specific 'idiosyncratic issues' rather than broader macro trends, stating the company remains bullish on the region's long-term prospects.

Meyer Shields asked how reinsurance pricing impacts Guy Carpenter's organic growth and whether foreign exchange had a material effect on segment margins.

Answer

President and CEO John Doyle explained that while Guy Carpenter is paid on commission, outcomes are negotiated, making the revenue model somewhat 'fee-like,' though pricing pressure does have an impact. CFO Mark McGivney stated that FX was not a material factor for margins in the quarter. Doyle added that the primary margin headwind came from recent M&A activity, particularly the McGriff acquisition.

Meyer Shields asked if the management effort required to integrate the large McGriff acquisition would impede the company's ability to pursue other large deals. He also asked for clarification on the 'difficult organic growth comp' mentioned for the upcoming first quarter.

Answer

CEO John Doyle stated that while management capacity is always a consideration, the company is more likely to continue its 'string of pearls' M&A strategy but retains the ability to do a larger deal if it makes sense. He explained the difficult Q1 comp is not due to non-recurring revenue from the prior year but a combination of headwinds from FX, tax, McGriff's seasonality, and fiduciary income.

Meyer Shields asked if the cost per unit of advertising increases as more competitors enter the market to grow. He also questioned what is driving continued high levels of consumer shopping now that significant rate increases are slowing down.

Answer

CEO Susan Griffith confirmed that increased competition does create more pressure and competitiveness in advertising auctions, but Progressive's data allows it to bid efficiently. She attributed the continued shopping behavior to the general ease of shopping online and broader inflationary pressures causing consumers to seek savings across all household expenses, including insurance.

Meyer Shields asked if Personal Lines margin outperformance was a deliberate choice over growth or a result of favorable loss trends, and what further steps are planned for the property business.

Answer

Executive Patrick Callahan clarified that the outsized growth was the unexpected variable, driven by competitor actions that made media spend highly efficient. For property, CEO Susan Griffith reiterated a multi-pronged strategy including rate, segmentation, cost-sharing via deductibles, and targeted agency actions.

An analyst on behalf of Meyer Shields of Keefe, Bruyette & Woods asked for more detail on actions being taken to address the macroeconomic environment and questioned the sustainability of strong new business growth in Small Commercial if the pricing environment becomes more competitive.

Answer

CEO Christopher Swift stated that actions to address the macro environment are targeted, primarily in commercial auto and commercial property lines. Executive Adin Tooker addressed the Small Commercial question, expressing optimism that the pricing environment (ex-workers' comp) will hold up well, as industry-wide combined ratios still need improvement, supporting The Hartford's ability to continue growing market share.

An analyst from Keefe, Bruyette & Woods inquired about the Personal Lines expense ratio, which rose year-over-year but fell sequentially. They also requested an update on the progress toward the $300 million E&S binding premium target and whether social inflation was driving more submissions to that channel.

Answer

CEO Christopher Swift said there was nothing new to call out on the expense ratio beyond the previously discussed restart of national advertising, and he expects it to normalize over time. He confirmed that the company is on track to achieve its $300 million E&S binding goal, with executive Adin Tooker adding that momentum is also strong in the broader wholesale space.

Meyer Shields of Keefe, Bruyette & Woods, Inc. inquired whether Selective is observing the industry-wide decrease in auto physical damage claim frequency and asked about the surety book's sensitivity to economic pressures and inflation.

Answer

CEO John J. Marchioni confirmed they are seeing the same favorable frequency trend in both personal and commercial auto physical damage. He clarified that the surety book is relatively small at about 1% of premium and focuses on the small to lower-mid market, which limits its exposure to broad macroeconomic pressures on large construction projects.

Meyer Shields asked if the observed decrease in physical damage claim frequency was also present in Selective's affluent personal lines book and inquired about the surety book's sensitivity to construction material inflation and macroeconomic pressures.

Answer

CEO John J. Marchioni confirmed that Selective is seeing the same favorable claim frequency trend in both its commercial and personal auto physical damage lines. Regarding the surety book, he explained that it is a relatively small portfolio of about $49 million, focused on the small and lower-end of the mid-market, which mitigates its exposure to large-scale macroeconomic pressures and that pricing would be adjusted as needed.

Meyer Shields asked how the company ensures that lower non-cat property losses are not merely an artifact of high catastrophe losses pushing events over a threshold. He also inquired about the quantifiable impact of elevated cat losses on incentive compensation.

Answer

John J. Marchioni, Chairman, President & CEO, clarified that non-cat property losses are defined independently from catastrophe events (which are PCS-designated), so the two are not mechanically linked. He confirmed that employee incentive compensation is based on the all-in combined ratio, meaning high cat losses directly reduce payouts. Anthony David Harnett, SVP & Chief Accounting Officer, added that this variability was a key driver of the quarter's improved expense ratio.

Meyer Shields asked how the company determined that lower non-cat property losses were not simply a function of high cat losses pushing claims above the catastrophe threshold. He also asked about the quantifiable impact of elevated catastrophe losses on incentive compensation.

Answer

CEO John J. Marchioni clarified that non-cat property losses are defined independently from catastrophe losses and a high cat quarter does not inherently lower non-cat results. SVP & Chief Accounting Officer Tony Harnett added that auto physical damage and fire are the largest non-cat components. Marchioni also explained that employee incentive compensation is based on the all-in combined ratio, so high cat losses put downward pressure on payouts, which was reflected in the improved expense ratio.

Meyer Shields of Keefe, Bruyette & Woods inquired about James River's submission growth trends for 2025, the competitive environment, and the drivers behind the company's conservative loss picks for the upcoming year, particularly in excess and general casualty.

Answer

CEO Frank D’Orazio stated that Q4 submission growth was a strong 9%, and he anticipates growth will accelerate in 2025 now that the company's strategic review is complete. He noted competition is stable and primarily in the property market. Regarding loss picks, D'Orazio explained that while the 2025 loss trend view is slightly higher due to excess and general casualty, the overall portfolio loss trend remains in the high single-digits, which the company believes will be more than offset by positive rate achievement.

Meyer Shields questioned why recent accident year reserves are considered adequate despite higher trends in earlier years and asked if the Q3 pricing slowdown was solely due to property market pressure.

Answer

CEO Frank D'Orazio clarified that current accident year loss picks already incorporate higher severity trends and benefit from years of underwriting improvements and compounded rate increases. He stated that pricing remains robust, with E&S renewal rates up 8.6%, and noted an acceleration in excess casualty rates to over 20%, suggesting industry-wide reserve issues will continue to support pricing discipline.

Meyer Shields posed two frequency-related questions: first, whether lower-than-modeled utilization in the supplemental business is affecting customer demand, and second, for color on current auto frequency trends and how the company is pricing for the possibility that these trends are temporary.

Answer

EVP and CFO Ryan Greenier explained that the supplemental segment's results reflect favorable morbidity trends, leading to reserve releases, but long-term benefit ratio targets remain higher. President and CEO Marita Zuraitis affirmed that demand remains strong, citing record Q4 sales. On auto frequency, executive Mark Desrochers noted that while frequency was down, some of this is attributed to lighter weather. He stated that pricing plans assume a return to more normal low-to-mid-single-digit loss trends to avoid overreacting to short-term changes.

Meyer Shields of Keefe, Bruyette, & Woods, Inc. inquired about the sources of the $1.3 million in Q2 claims recovery income and the financial impact of partnerships with external law firms.

Answer

Founder and CEO John H. Ruiz explained that the recovery income was split between daily processed claims and historical claims, noting that current collections represent only a fraction of the total owed under settlement terms, which can be 4x to 6x the paid amount. Ruiz also clarified that strategic alliances with law firms add significant legal resources to accelerate recoveries without altering MSP Recovery's projected financial outcomes or increasing its costs.