Paul Newsome

Paul Newsome asked for a broad overview of the components driving the organic growth guidance, focusing on what factors are improving or worsening, and what led to the expectation of improved organic growth despite a soft market. He also inquired about the M&A outlook, specifically whether finding suitable transactions is becoming easier or harder.

Answer

Gordy Bunch, Founder, Chairman, and CEO of TWFG, clarified that the 10%-15% organic growth guidance includes a double-digit projection for the core Agency in a Box and corporate store businesses, with the MGA offering upside from new product development. He added that previously acquired inorganic businesses from 2025 would become organic contributors in 2026. For M&A, Mr. Bunch stated the pipeline remains robust, with larger, transformational deals facing longer discussions due to market reactions, while regular M&A opportunities are plentiful, with TWFG maintaining a selective approach based on quality, cultural fit, and strategic expansion.

Paul Newsome from Piper Sandler asked for a broad overview of the components driving TWFG's organic growth guidance, identifying factors that are improving or worsening, especially in the context of a soft market. He also sought insight into the M&A outlook, specifically whether finding suitable transactions is becoming easier or harder.

Answer

Gordy Bunch, Founder, Chairman, and CEO of TWFG, explained that the 10%-15% organic growth guidance includes a double-digit projection for the core business (Agency in a Box, corporate stores), with upside from new MGA product development. He noted that previously inorganic businesses would become organic contributors after their 12-month ownership horizon. For M&A, Mr. Bunch described a robust pipeline, emphasizing selectivity based on quality, cultural fit, and strategic geographical expansion. He suggested larger transactions might be impacted by recent market reactions, while smaller acquisitions are less correlated to public market multiples.

Paul Newsome inquired about the market environment's transition from hard to soft, its impact on organic growth, and the expected contribution timeline from newly added agents.

Answer

Gordy Bunch, CEO, Chairman, and Director, TWFG, explained that the softening market, which began in Q2 2025, impacts renewal rates and retention but increases capacity for client onboarding. Organic growth is driven by same-store sales, new MGA programs, and existing program expansion. He noted that the impact of newly added agents is baked into forecasts and becomes more meaningfully contributive over a multi-year process, rather than immediately.

Paul Newsome sought additional color on the evolving market environment, specifically how the transition from a hard to a soft market impacts organic growth drivers for 2026, considering both increased capacity and potentially lower premiums. He also asked about the expected impact and timing of contributions from newly added agents over the past year.

Answer

Gordy Bunch, CEO, Chairman, and Director, explained that the market transition impacts renewal rates and retention due to lower rates and increased carrier options. He noted that while average premiums might be lower, growth in exposure and new MGA program initiatives are offsetting this. Mr. Bunch stated that the impact of new agents is already factored into 2026 forecasts, with contributions growing over a multi-year process, becoming part of the larger organic base.

Paul Newsome from Piper Sandler inquired about Universal's current competitive environment, including market dynamics, price declines, and increased market participation, as well as the regulatory landscape, specifically addressing concerns about affordability and potential pressure on the industry to return profits.

Answer

CEO Steve Donaghy described the competitive environment as very favorable for Universal, attributing this to strong agency relationships, favorable rates, and strategic market expansion based on profitability analysis, particularly in Florida. Regarding the regulatory environment, Mr. Donaghy credited Florida's legislative reforms and Governor DeSantis for stabilizing the industry. He noted modest rate declines in 2024 and 2025, with an actuarial study for 2026 rates planned, and explained that favorable legislation, reduced claim severity/frequency, and potential reinsurance/expense reductions could allow for rate decreases without negatively impacting earnings. He also highlighted Universal's improved customer retention.

Paul Newsome asked about the current competitive environment, including observations of price declines and increased market participants, and also inquired about the regulatory environment, specifically regarding affordability issues and potential pressure on the insurance industry to return profits.

Answer

CEO Steve Donaghy stated that Universal views the competitive environment as very favorable, citing strong agency relationships, favorable implemented rates, and positive business growth in newly opened markets, particularly in Florida. Regarding the regulatory environment, Donaghy credited Florida's legislative actions for stabilizing the industry and noted that while modest rate declines occurred in 2024 and 2025, these do not necessarily reduce earnings due to favorable legislation, reduced severity and frequency, and potential reinsurance/expense reductions. He also highlighted improved customer retention.

Paul Newsome inquired about Universal's reserving philosophy, specifically if the conservative approach foreshadows changes in future profit margins, exit year loss ratios, or loss pick methodologies. He also asked about the competitive landscape in Florida and other states, noting discussions around rate decreases. Finally, Newsome questioned Universal's capital management priorities, given the high ROE relative to growth, and the potential for ongoing share repurchase activity.

Answer

CEO Steve Donaghy explained that Universal has navigated a fraudulent period in Florida, leading to a strong aggregate reserve position and reduced claims count. He indicated that while the conservative approach will continue, substantial adjustments to profit margins or loss picks would be considered in early 2026 after closing out 2025. Regarding competition, Donaghy noted a highly competitive environment outside Florida and an influx of new players in Florida. He emphasized Universal's focus on rate adequacy, service, and profitability over chasing premium. On capital management, Donaghy stated that Universal consistently views its shares positively and will continue to work with the investment committee on share acquisitions at appropriate times.

Paul Newsome inquired about Universal Insurance Holdings' reserving philosophy, its potential impact on future profit margins and loss ratios, the competitive landscape in and outside Florida, and the company's capital management strategy, specifically regarding share repurchase activity given its high return on equity.

Answer

CEO Steve Donaghy explained that the company has adopted a more conservative reserving approach after a "fraudulent time" in Florida, leading to reduced claims counts and faster claims processing. He noted that while they are in a strong position, substantial adjustments to profit margins or loss picks would be considered in early 2026. Regarding competition, Mr. Donaghy stated that outside Florida, the market is highly competitive with big names, while in Florida, new players are emerging. He emphasized Universal's focus on rate adequacy, service, and profitability, noting that agents prefer established providers. On capital management, Mr. Donaghy affirmed that the company views share repurchases positively and will continue to work with the investment committee on guidelines for future acquisitions.

Paul Newsome inquired about the drivers for the change in reinsurance ceding, the company's capital perspective following recent share buybacks, and the current competitive landscape in Florida.

Answer

CFO Frank Wilcox explained that the reinsurance ceding ratio change is due to comparing different programs earning in, as the prior year's program included a no-cost component. Regarding capital, he noted the holding company has abundant capital and repurchases shares when they are undervalued. CEO Stephen Donaghy added that Universal is not driven by competition but by its extensive experience, and while new competitors exist, they see only pockets of competition rather than a dramatic statewide increase.

Paul Newsome asked for details on the drivers behind the reinsurance ceding change, the company's capital position regarding share buybacks, and the current competitive environment in Florida.

Answer

CFO Frank Wilcox explained that the reinsurance ceding ratio change is due to comparing different programs earning in over the period, including the expiration of a prior no-cost program. He also noted that capital at the holding company is abundant, allowing for opportunistic share repurchases. CEO Stephen Donaghy added that while new competitors have entered Florida, Universal is driven by its own experience and does not see a dramatically more competitive market, only pockets of competition.

Paul Newsome followed up by asking about American Integrity's trade-off considerations between issuing special dividends and conducting share buybacks.

Answer

Ben Lurie, CFO of American Integrity Insurance Group, stated that the company prioritized special dividends over buybacks to increase the stock's float and daily trading volumes. This strategy aims to attract new public shareholders who understand and are excited about the company's growth prospects, following a recent secondary offering.

Paul Newsome with Piper Sandler asked about American Integrity's capital management strategy, the prioritization of capital in light of the special dividend, and whether the dividend signals a lack of investment opportunities. He also inquired about the trade-off between special dividends and share buybacks.

Answer

CFO Ben Lurie explained that the IPO in May was intended to fund significant growth opportunities, and the special dividend resulted from windfall earnings due to no catastrophe storms, aligning with the company's 20-year history of returning excess capital. He affirmed that remaining IPO proceeds are still positioned to fund 2026 growth initiatives. Regarding special dividends versus buybacks, Ben Lurie stated that the company's secondary offering and IPO aimed to increase float and liquidity by getting stock into the hands of new public shareholders, thus they did not want to reduce market float through buybacks at this time.

Paul Newsome with Piper Sandler inquired about American Integrity's reserve development, asking about any changes made, their impact on historical patterns, and the company's overall philosophy regarding reserves, also asking about plans for further state expansion beyond those previously mentioned.

Answer

Jon Ritchie, President, clarified that favorable reserve development was observed in non-catastrophe underlying losses, offset by some unfavorable catastrophe development. Bob Ritchie, Founder and CEO, emphasized the company's robust actuarial department and external reviews, expressing satisfaction with forecasting and book management, particularly the significant reduction in catastrophe loss inventory. Jon Ritchie confirmed that North Carolina is the only additional state for expansion, driven by home builder agent capacity needs and its profitability, which also enhances buying power in Florida. Bob Ritchie reiterated that Florida remains the core market with significant opportunities.

Paul Newsome asked for more details on American Integrity's reserve development, specifically any changes made, the expected historic pattern, and the company's overall philosophy on reserves. He also inquired about any additional statewide expansion plans beyond those already announced.

Answer

Jon Ritchie, President of American Integrity Insurance Group, noted favorable reserve development on non-catastrophe underlying losses, partially offset by some unfavorable catastrophe development. Bob Ritchie, Founder and CEO, highlighted the expertise of their actuarial department and external reviews, expressing satisfaction with forecasting and management, and the significant reduction in catastrophe loss inventory. Jon Ritchie confirmed that North Carolina is the only additional state for expansion, driven by new home builder agents, and that this business is profitable and provides buying power in Florida. Bob Ritchie expressed satisfaction with success in South Carolina and Georgia but emphasized Florida as the core market with significant opportunities in Tri-County and middle-aged homes.

Paul Newsome asked for insights into the current competitive environment in Florida, noting talk of increased aggressiveness from peers.

Answer

Founder & CEO Robert Ritchie responded that he is not deterred by new entrants, stating that the market is large enough and that he welcomes responsible competition. He expressed confidence that the Office of Insurance Regulation is preventing underpriced products from entering the market. He emphasized that American Integrity's key advantage lies in its strong, long-standing relationships with quality independent agents, which ensures a steady flow of desirable business, and noted that large national carriers are not re-entering Florida in a significant way.

Paul Newsome of Piper Sandler Companies asked about the current competitive environment in Florida, noting talk of increased aggressiveness from peers, and whether management has observed any recent changes.

Answer

Founder & CEO Robert Ritchie responded that he is not deterred by new entrants, as the market is large and the Office of Insurance Regulation is preventing underpriced competition. He emphasized that American Integrity's two-decade history and strong independent agency relationships provide a significant competitive advantage, ensuring they are well-positioned to achieve their growth forecasts without being challenged by new competition.

Paul Newsome inquired about the competitive environment, specifically regarding price declines in Florida and other regions, and how these trends might influence Slide's geographic growth strategy or other strategic adjustments. He also asked if the expectation for lower reinsurance costs is primarily due to diversification benefits or actual apples-to-apples price reductions.

Answer

Chairman and CEO Bruce Lucas stated that Slide is not observing significant price swings, attributing some market pressure to thinly capitalized new entrants. He emphasized that reinsurance pricing, which constitutes 70% or more of the premium dollar, is the primary determinant of future rates, with the 6/1 renewal process still underway. Lucas expressed confidence that margins would be maintained even with potential rate decreases and highlighted substantial reinsurance synergies from expanding into new states like California, New York, New Jersey, and Rhode Island. He confirmed that lower reinsurance costs are anticipated from both risk-adjusted rate reductions and diversification benefits.

Paul Newsome asked about the competitive environment, specifically regarding price declines in Florida and other regions, and how these trends might influence Slide's geographic growth strategy or other strategic adjustments. He also followed up by asking if the expectation for lower reinsurance costs in Slide's guidance is primarily due to diversification benefits from new geographies or an anticipated fall in apples-to-apples reinsurance prices.

Answer

Chairman and CEO Bruce Lucas noted that while the market is trending slightly lower, Slide isn't seeing significant price swings. He emphasized that reinsurance pricing (70%+ of premium) is the key factor, with 6/1 renewals pending. He expects margins to be maintained even with potential rate declines and highlighted significant reinsurance synergies from geographic expansion into new states like California (E&S), New York, New Jersey, and Rhode Island. Mr. Lucas clarified that the expectation for lower reinsurance costs stems from both anticipated risk-adjusted rate reductions in 2026 and the diversification benefits gained by expanding Slide's geographic footprint.

Paul Newsome with Piper Sandler asked about the impact of tort reform on Florida's insurance rates, specifically if Slide anticipates needing to cut rates due to market pressure, and how the company is addressing inflation-guarded offsets. Paul Newsome also noted Slide's better-than-expected premium growth rate and inquired if a similar shift in policy pickup within Florida, which previously reduced average premiums, was occurring this quarter, or if other factors were at play.

Answer

Chairman and CEO Bruce Lucas stated that Slide has been steadily decreasing rates for two years and does not foresee significant further rate decreases, citing a stable market and the influence of their reinsurance program. He confirmed a 5% increase on Total Insured Value (TIV) at renewal to account for inflationary rebuilding costs. Bruce Lucas explained that Q2's conservative approach, driven by reinsurance projections, allowed for record growth in Q3. He highlighted a meaningful increase in commercial residential premiums, which have higher average premiums, as a significant contributor to the improved growth rate.

Paul Newsome (Piper Sandler) inquired about the impact of tort reform on Slide Insurance's rates, specifically if the company anticipates having to decrease rates due to market pressure. He also asked about the company's approach to inflation-guarded offsets and the factors contributing to the better-than-expected premium growth in the quarter, including any shifts in policy acquisition or commercial residential premium.

Answer

Bruce Lucas, Chairman and CEO of Slide Insurance Holdings Inc, stated that Slide has been steadily decreasing rates for the past two years and does not foresee significant further rate decreases, as the current market is stable and rates are justified by reinsurance program expenses. Lucas confirmed a 5% increase on TIV at renewal for inflation-guarded offsets. He attributed the strong premium growth to conservative underwriting capacity management in Q2, record voluntary growth in Q3, and a meaningful increase in commercial residential premium, which carries higher average premiums.

Paul Newsome from Piper Sandler asked if Goosehead Insurance's 2026 guidance incorporates any assumptions about changes in product availability over time. He also sought general thoughts on the current state of carrier openness, specifically whether all carriers are now open for business or if further improvements in product availability are expected.

Answer

President and CEO Mark Miller stated that auto product availability has been wide open for some time, and home product availability is now "pretty wide open," with no significant product availability issues in any operating market. He noted that carrier appetite is returning, with only slight restrictions (e.g., bundling requirements) from some carriers. CFO and COO Mark Jones Jr. confirmed that the 2026 guidance does not contemplate changes in the product environment, as they don't foresee significant shifts in 2026.

Paul Newsome asked if Goosehead's 2026 guidance incorporates any changes in product availability, specifically whether the market is now fully open or if further improvements are expected.

Answer

President and CEO Mark Miller confirmed that the auto market has been wide open, and the home market is now 'pretty wide open,' with no significant product availability issues in their operating markets. He noted that carrier appetite is returning, with only minor restrictions. CFO and COO Mark Jones Jr. added that the guidance does not contemplate changes in the product environment.

Paul Newsome asked about the amortization schedule for capitalized digital investments and how much the digital piece contributes to the expected acceleration growth next year.

Answer

Mark Jones (CFO and COO) stated that capitalized software is typically amortized over 10 years. He clarified that the core revenue and premium growth rates for next year do not contemplate much attribution from the digital agent, as its baseline is zero, expecting continued consistent improvement from corporate, franchise, and enterprise sales businesses.

Paul Newsome asked about the amortization schedule for capitalized digital investments and the extent to which the digital agent piece contributes to the expected acceleration growth next year, versus other factors.

Answer

Mark Jones (CFO and COO) stated that capitalized software, like the digital agent, is typically amortized over 10 years. He clarified that the core revenue and premium growth rate expectations for next year do not largely contemplate attribution from the digital agent, as its baseline is near zero. He expects material uplift from the digital agent over the longer term, with consistent improvement in corporate, franchise, and enterprise sales businesses driving next year's acceleration.

Paul Newsome from Piper Sandler Companies requested more details on the company's direct-to-consumer channel plans and investment size, and asked if the increased proportion of state-fund policies had impacted contingent commissions.

Answer

President & CEO Mark Miller indicated the direct channel investment builds on prior technology work to enable cross-sells and enterprise sales, with the project's size still being determined. CFO Mark Jones Jr. confirmed that state-run plans do not pay contingent commissions, so a shift away from that business creates more opportunities for such earnings.

Paul Newsome questioned whether the shift in business mix away from earthquake and increasing retentions would inevitably lead to lower returns on equity (ROE) long-term, and if the fronting business is expected to stabilize without new operations.

Answer

Mac Armstrong (CEO) affirmed that Palomar 2X (ROE > 20%) is sustainable, even with a changing book, noting that earthquake remains a top line and Surety offers attractive margins. Chris Uchida (CFO) added that diversification allows for more efficient capital leverage and increased investment leverage. Mac Armstrong (CEO) also stated that fronting is no longer a strategic focus due to market evolution towards participatory fronts, leading to its integration into other product categories.

Paul Newsome asked about the long-term implications for Palomar's return on equity as the business mix shifts away from earthquake and retentions increase, and sought clarity on the expected stability of the fronting business given the reduced strategic focus.

Answer

Mac Armstrong, Chairman and Chief Executive Officer, and Chris Uchida, Chief Financial Officer, affirmed that Palomar 2X (ROE > 20%) is sustainable, leveraging capital efficiency and investment leverage despite the changing business mix, noting that new segments like Surety offer attractive margins. Mac Armstrong also stated that fronting is no longer a strategic focus, its premium has declined, and it will be collapsed into appropriate product categories, as it has evolved into a participatory, rather than risk-free, fee-generative business.

Paul Newsome of Piper Sandler Companies asked about the increasing competition in the property market, particularly the risk of declining commercial earthquake pricing spreading and impacting Palomar's growth. He also inquired about emerging growth areas or "green shoots" in the business.

Answer

Chairman and CEO Mac Armstrong explained that Palomar's balanced portfolio across residential, commercial, admitted, and E&S markets allows it to navigate market cycles and still achieve high single-digit growth in earthquake. He highlighted the strength of the residential earthquake book. For new growth, Armstrong pointed to Casualty, Crop, and Surety as significant opportunities where the company is growing with underwriting discipline.

Paul Newsome of Piper Sandler Companies inquired about the competitive pressures in property lines, particularly the risk of declining commercial earthquake pricing spreading, and asked about emerging growth opportunities or 'green shoots' in newer business segments.

Answer

Mac Armstrong, Chairman, CEO & Founder, explained that Palomar's balanced portfolio across residential/commercial and admitted/E&S markets allows it to navigate market cycles and sustain growth. He highlighted that strong performance in residential earthquake, which has an inflation guard and high retention, is offsetting commercial rate pressure. Armstrong identified casualty, crop, and surety as key growth vectors where the company is expanding with disciplined underwriting.

Paul Newsome inquired about the increasing competition in the property market, particularly the risk of declining commercial earthquake pricing spreading and impacting Palomar's growth, and also asked about emerging growth opportunities or "green shoots" in newer business lines.

Answer

Mac Armstrong, Chairman & CEO, addressed these concerns by highlighting Palomar's balanced portfolio of residential and commercial lines, which allows for growth despite market cyclicality. He noted that while large commercial earthquake accounts face rate pressure, the residential book is growing rapidly. For new opportunities, he pointed to significant potential in casualty, crop insurance, and surety as key growth vectors.

Paul Newsome asked about potential margin compression in the alternative distribution (student insurance/treaty) business given market dynamics. He also sought a deeper explanation for the lower profitability in the 'other liability' line compared to other business segments and whether nuclear verdicts were a contributing factor.

Answer

Julie Stephenson, EVP and COO, acknowledged increased competition affecting rates and terms in the alternative distribution book but affirmed UFG's commitment to disciplined underwriting and profit expectations, even if it means writing fewer treaties. Regarding 'other liability,' she attributed pressure primarily to the umbrella line due to large losses, noting UFG has implemented new rate filings, raised minimum premiums, and consistently strengthened reserves since Q2 2022 to protect profitability against social inflation impacts.

Paul Newsome from Piper Sandler asked about potential margin compression in the assumed insurance business due to market dynamics. He also sought a deeper explanation for the comparatively lower profitability in the other liability line, specifically inquiring if "nuclear verdicts" or broader social inflation trends were impacting the umbrella segment.

Answer

EVP and COO Julie Stephenson confirmed increased competition in the assumed insurance market, affecting rates and terms, but reiterated UFG's commitment to disciplined underwriting and profit expectations. Regarding other liability, she attributed lower profitability primarily to the umbrella line, citing a few large losses and the broader impact of social inflation, not necessarily "nuclear verdicts." She highlighted proactive measures like new rate filings, raised minimum premiums, and consistent reserve strengthening since Q2 2022 to address these pressures.

Paul Newsome inquired about UFG Insurance's strategic adjustments and capital management philosophy in response to an evolving soft market environment.

Answer

Kevin Leidwinger, President and CEO, outlined UFG's strategy to achieve superior financial performance and increased relevance through specialization, focusing on consistent profitability, diversified growth, talent, innovation, and expense management. Julie Stephenson, EVP and COO, added that a significant portion of the core commercial book written under tighter guidelines positions UFG well. Eric Martin, EVP and CFO, confirmed no changes to capital management, prioritizing growth and dividend philosophy.

Paul Newsome from Piper Sandler Companies asked for an overview of the competitive environment, noting discussions of accelerating competition and rate moderation, particularly in property and reinsurance. He also sought to understand how much of the improved catastrophe loss result was due to strategic improvements versus favorable weather.

Answer

EVP & Chief Operating Officer, Julie Stephenson, acknowledged a competitive market with some expected rate moderation, especially in property, but expressed confidence in UFG's ability to compete due to strong risk selection and pricing. She noted the reinsurance market has been softer, leading to the non-renewal of some treaties. Regarding catastrophes, she stated confidence that improved management, including higher deductibles and a risk profile reset in Florida, is driving the favorable outcomes, not just luck.

Paul Newsome from Piper Sandler Companies asked for an overview of the competitive environment, noting discussions of accelerating competition and rate moderation, and inquired about differences between the primary and reinsurance businesses. He also sought to understand the drivers behind the improved catastrophe loss ratio, asking to parse between underlying strategic improvements and favorable weather.

Answer

EVP & Chief Operating Officer Julie Stephenson acknowledged rate moderation, especially in property, but expressed confidence in UFG's competitive position due to improved risk selection and pricing. She noted the reinsurance market has been softer, leading to the non-renewal of some treaties. Regarding catastrophes, she attributed the favorable results to deliberate actions like increased deductibles, a risk profile reset in Florida, and better pricing, rather than just luck, highlighting an 11% year-over-year decrease in modeled average annual loss.

Paul Newsome of Piper Sandler Companies asked for an overview of the competitive environment, particularly regarding potential acceleration of competition in property and reinsurance. He also inquired about the improved catastrophe loss results, seeking to distinguish between strategic management and favorable weather.

Answer

EVP & Chief Operating Officer, Julie Stephenson, acknowledged that the market remains competitive with moderating rates, especially in property, but expressed confidence in UFG's ability to compete due to improved risk selection and pricing. She noted the reinsurance market has been softer, leading UFG to non-renew certain treaties. On catastrophe management, Stephenson attributed the favorable results to strategic actions like increased deductibles, improved risk profiles, and a reset on hurricane exposure, rather than just luck, giving them confidence in their annual cat plan.

Paul Newsome asked for Peter Zaffino's perspective on AIG's experience in the current soft market, how he expects it to evolve, and whether it will be extended or short. He also inquired if the recent M&A deals, viewed as better than buybacks, set a new baseline for prospective M&A decisions.

Answer

Peter Zaffino, Chairman and CEO, AIG, emphasized preparing well in advance for market conditions, focusing on risk-adjusted returns, and not overreacting to market indices. He noted that property, despite rate reductions, had its best year on a combined ratio basis, and E&S submission counts are up significantly in parts of Lexington. Jon Hancock, Chief Operating Officer, AIG, added that the market is diverse with multiple cycles, and AIG's planning, robust reserve reviews, and clinical approach to risk-adjusted returns position it well. Mr. Zaffino concluded that M&A decisions are evaluated against earnings, EPS, and ROE compared to share repurchases, and while current Corebridge proceeds are best used for buybacks, future trade-offs will be assessed.

Paul Newsome inquired if the recent strategic deals, which AIG views as potentially more accretive than buybacks, represent the new baseline for prospective M&A decisions.

Answer

Peter Zaffino, Chairman and CEO of AIG, clarified that while the comparison to share repurchases (in terms of earnings, EPS, and ROE) is a key consideration for M&A, it's not an 'always or never' rule. He stated that for the current environment, share repurchases are the best use of Corebridge proceeds, while recent investments are expected to propel AIG over the next two years.

Paul Newsome inquired about the nature of commercial competition, specifically whether it remains concentrated in large accounts or is expanding to smaller ones, and the source of this competition (disciplined vs. undisciplined carriers/MGAs). He also asked for an update on the de-risking process in personal lines, particularly in California, and the expected timeline for its completion.

Answer

CEO Steve Spray confirmed that competition is still leaning towards larger accounts, especially large property, but has become more competitive in the middle market. He contextualized the current softening against an 'unprecedented hard market' in prior years, highlighting strong new business growth (e.g., commercial lines up 31% from 2023 to 2025) and the company's commitment to pricing discipline. Regarding personal lines de-risking, Spray stated they are 'well into the process,' exceeding expectations, and mentioned moratoriums on new business in certain areas and a 'new view of risk' for E&S homeowner business in California.

Paul Newsome from Piper Sandler followed up on commercial competition, asking if it was still primarily impacting large accounts or if it was creeping into smaller segments, and sought insights into the source of this competition. He also inquired about the progress of de-risking efforts in personal lines, particularly in California and other affected regions.

Answer

President and CEO Steve Spray noted that while competition still leans towards larger accounts and property, it has become more competitive in the middle market. He contextualized the current market as a natural moderation after an 'unprecedented hard market,' highlighting strong new business growth in 2025 compared to 2023 across all segments. Mr. Spray affirmed the company's commitment to underwriting discipline and value-based selling. Regarding personal lines de-risking, he stated the process is 'well into it,' exceeding expectations, and involves new business moratoriums and a revised view of risk for E&S homeowner business in California.

Paul Newsome from Piper Sandler asked for insights into general liability prior year development, drawing parallels to commercial auto issues seen in the industry. He also questioned if there had been any changes in the credit quality profile of the investment portfolio, specifically regarding any subprime or different bond holdings.

Answer

President and CEO Steve Spray acknowledged the impact of legal system abuse on the industry but expressed confidence in Cincinnati Financial's consistent reserving process and 30+ year track record of all-lines favorable development. He noted that initial picks for all accident years from 2020 forward, including casualty, have developed favorably. Chief Investment Officer Steve Seloria confirmed that the overall investment strategy remains focused on higher quality, investment-grade bonds, primarily double-B in high yield, without reaching for yield.

Paul Newsome from Piper Sandler asked American Financial Group about the status of remediation efforts in its social inflation-exposed businesses, including nonprofit and Excess Liability, and their potential for future growth. Newsome also questioned the factors needed for the alternative investment portfolio to return to historical return levels and followed up on political exposure concerns for the lender-placed property business.

Answer

Carl Lindner III, Co-CEO, indicated that remediation actions in nonprofit and Excess Liability businesses are largely complete, with expectations for modest premium growth in 2026. Craig Lindner, Co-CEO, explained that the return to historical alternative investment levels depends on the multifamily market recovery, driven by reduced new starts and declining completions. Carl Lindner III further clarified that he sees minimal political risk for the lender-placed property business, viewing it as a crucial service for financial institutions.

Paul Newsome inquired about the competitive environment in Middle Market commercial, specifically if large account pressure is impacting this segment, and the company's longer-term strategy for catastrophe management and property exposure.

Answer

President and CEO Jack Roche acknowledged heightened competition in larger property schedules and certain sectors but noted firming in liability for human services. He anticipates liability pricing will eventually become a key focus. Regarding CAT management, Jack Roche stated the objective is to reduce earnings volatility and drive down the CAT load over time by addressing micro concentrations, pricing, and terms/conditions, with a focus on severe convective storms.

Paul Newsome requested more details on the competitive environment in middle market commercial, specifically if large account competition is pushing into this segment. He also asked about Hanover's long-term catastrophe management strategy, questioning if the company aims to reduce property exposure to lower future cat loads.

Answer

CEO Jack Roche acknowledged heightened competition in larger property schedules and certain middle market sectors, but highlighted firming conditions in areas like human services (liability side). He stated Hanover's strategy of focusing on low to mid-size accounts is effective and expects liability pricing to become a key driver. Regarding cat management, Jack Roche explained the objective is to reduce earnings volatility by addressing micro concentrations and optimizing pricing/terms, aiming to drive down the cat load over time while remaining conservative in modeling, particularly focusing on severe convective storms.

Paul Newsome of Piper Sandler Companies questioned Hanover's personal lines distribution strategy and asked for tangible evidence of the company's technology investments differentiating it from peers.

Answer

President & CEO John Roche stated the company is focused on diversifying within its current geographic footprint by adding select agents, rather than expanding to new states. Roche and EVP & COO Richard Lavey explained that tech investments are focused on scalability and operational efficiency, highlighting their agency insight tools and consolidation capabilities as current differentiators.

Paul Newsome posed a big-picture question about strategic lessons learned from the Personal Lines recovery and questioned the trade-offs of making incremental casualty reserve increases versus a larger, more aggressive adjustment.

Answer

President and CEO John 'Jack' C. Roche highlighted accelerated geographic diversification, particularly reducing Midwest concentration, as a key strategic outcome. CFO Jeff Farber defended the reserving approach, stating the adjustments are minor additions to prudence in the current accident year, not 'nibbling away at an issue,' especially given the offsetting benefit of lower claim frequency.

Paul Newsome inquired if there were specific geographic or underlying patterns contributing to the commercial auto case reserve increases, whether loss trends differed between long-haul trucking and other commercial auto segments, and what non-rate actions, such as changes in terms, conditions, or risk selection, Old Republic International is considering to address evolving loss trends.

Answer

Craig Smiddy, President and CEO, stated no specific geographic patterns were detected but noted higher bodily injury claims, increased attorney representation, and more litigation, attributing these to "litigation system abuse" and attorney advertising. He confirmed that trends were more pronounced in long-haul trucking due to larger policy limits and targeting by plaintiff attorneys. Mr. Smiddy emphasized sophisticated data analytics for targeted rate adjustments and risk selection, particularly in long-haul trucking, but noted limited scope for terms and conditions changes in commercial auto. He reiterated the commitment to staying ahead of trends with rate increases and maintaining the 2026 loss ratio outlook.

Paul Newsome inquired about any specific geographic or pattern-based insights into the commercial auto case reserve increases, whether loss trends differed between long-haul trucking and other commercial auto segments, and what non-rate actions, such as changes in terms, conditions, or risk selection, Old Republic International is considering to address the evolving loss trends.

Answer

President and CEO Craig Smiddy stated that no specific geographic patterns were detected for the commercial auto case reserve increases, but highlighted a rise in bodily injury claims, attorney representation, and litigation, attributing these to 'litigation system abuse' and pervasive attorney advertising. He confirmed that loss trends were more pronounced in long-haul trucking compared to other commercial auto segments, which are often targeted by plaintiff attorneys. Smiddy emphasized the use of sophisticated data analytics for targeted rate increases and refined risk selection, noting limited scope for terms and conditions changes in commercial auto but reiterating the company's commitment to maintaining pricing discipline and staying ahead of loss trends with rate adjustments, without altering the 2026 loss ratio outlook.

Paul Newsome pressed for more precise details on how the ECM acquisition will influence Old Republic's near-future capital decisions, specifically regarding statutory capital requirements, potential additional capital contributions to ECM, and the timing of these considerations. He also sought Old Republic's perspective on the broader commercial auto insurance market, particularly in light of recent negative news from a peer, and asked for insights into Old Republic's strategy and performance that positions them ahead of industry challenges.

Answer

Craig Smiddy, President and CEO, clarified that the ECM acquisition, structured as a sponsored demutualization, is expected to be accretive to book value per share and will not materially affect Old Republic's year-end capital analysis or recommendations for shareholder returns. He attributed Old Republic's strong commercial auto position to early identification of severity trends, commensurate rate increases, and a specialized approach through Great West, detailing their real-time, proprietary rate filings, dedicated data analysts, specialized claims team, and conservative reserving practices.

Paul Newsome of Piper Sandler Companies asked for the rationale behind the pause in share repurchases, the company's overall capital management strategy, and the outlook for net investment income.

Answer

President & CEO Craig Smiddy explained that the pause in share repurchases follows a significant special dividend in Q1 and considers the stock's price-to-book value. He emphasized a thoughtful capital management strategy that utilizes both buybacks and special dividends to maintain a strong balance sheet while being mindful of ROE. On the investment outlook, CFO Frank Sodaro noted that while new money yields are still slightly above the portfolio yield, the spread has tightened, and future growth in investment income is expected to moderate to the mid-single digits.

Paul Newsome asked about the regularity of members leaving Accelerant's platform, particularly in a softening market, and whether this is a natural part of the process or an exceptional occurrence. He also inquired about the reasons behind the declining gross loss ratio, especially when competitors are seeing increases, and if it's due to mix changes or other factors.

Answer

Jeff Radke, Accelerant's Co-founder and CEO, stated that parting ways with members is infrequent, with only about 15 members leaving since 2018-2019, mostly due to inability to attract business flow. He noted that only about five left due to underwriting or performance issues, which were idiosyncratic and not driven by market conditions or rate levels. He attributed the strong gross loss ratio (low 50s) to the portfolio's composition of small policies (95% under $10,000 premium), which insulates it from dramatic rate movements and liability loss trends, and the company's data-driven risk selection. He also mentioned favorable prior year development, particularly in property, contributed to the Q3 50% loss ratio.

Paul Newsome from Piper Sandler inquired about the regularity of members being asked to leave Accelerant's pool, particularly in a softening market, and whether this is a natural process or an exceptional occurrence. He also asked for insights into why Accelerant's gross loss ratio has decreased while others are seeing increases, questioning if it's due to mix changes or other factors.

Answer

Jeff Radke, Accelerant's Co-founder and CEO, explained that parting ways with members is infrequent, with only about 15 since 2018-2019, mostly due to inability to attract business, and only about five for underwriting performance issues. He emphasized that market conditions or rate levels are not typically the cause, but rather risk selection. He attributed the strong gross loss ratio (low 50s) to the portfolio's unique composition of small policies (95% under $10,000 premium), which insulates it from dramatic rate movements and liability loss trends, and the effectiveness of Accelerant's data models.

Paul Newsome inquired about severity trends in both private passenger and commercial auto, noting an apparent acceleration in personal auto and peer troubles in commercial auto. He also asked about the maturity and usage of Progressive's telematics program.

Answer

President and CEO Tricia Griffith clarified that Progressive reports incurred severity, which can differ from competitors' impaired reporting. She noted that personal auto property damage (PD) severity, adjusted for reserve decreases, is around 4.5%, while bodily injury (BI) continues to see increases from specials, attorney representation, and medical costs. For commercial lines, she believes Progressive is in a better position than peers due to proactive rate adjustments, despite rising severity. Regarding telematics, Griffith highlighted its role in understanding trends (e.g., 4% decrease in vehicle miles traveled from OBD devices) and its power as a rating variable, especially for safe drivers. President of Personal Lines Pat Callahan added that telematics is a continuously refined, predictive variable with strong consumer adoption, and there's still opportunity to increase usage, particularly in the agency channel.

Paul Newsome with Piper Sandler asked about severity trends in both personal auto (acceleration and reasons) and commercial auto (comparison to peers). He also inquired about the maturity of telematics usage and Progressive's ability to leverage the data.

Answer

Tricia Griffith, President and CEO, clarified that personal auto PD severity appears higher due to a prior reserve decrease, with actual trends being lower. BI severity is increasing due to specials, attorney representation, and higher minimum limits. Commercial lines severity is also up, but Progressive is in a better position due to proactive rates. On telematics, she noted a 4% decrease in vehicle miles traveled (VMT) from OBD data and strong mobile device adoption. Pat Callahan, President of Personal Lines, added that telematics is a powerful, continuously refined predictive variable, with opportunities for increased adoption, especially in the agency channel.

Paul Newsome inquired about the 'war for talent' in the property and casualty sector, asking about WTW's position in attracting and retaining talent, and whether the company is experiencing heightened poaching or achieving more than its fair share of talent.

Answer

Carl Hess, CEO, expressed satisfaction with WTW's ability to attract and retain top talent, highlighting the success of their strategy and world-class resources as attractive to prospective employees. He noted strategic hiring focused on accretive talent in specialty lines and geographies. Lucy Clarke, President of Risk and Broking, emphasized that talent is central to their business and a key driver of organic and new business growth, confirming continued strategic hires in impactful areas.

Paul Newsome inquired about the 'war for talent' in the property casualty sector, WTW's position in attracting and retaining talent, and whether the company was experiencing heightened poaching or had reached a steady state of growth in talent acquisition.

Answer

Carl Hess, CEO, expressed satisfaction with WTW's ability to attract and retain top talent, emphasizing strategic hiring in specialty lines and geographies. Lucy Clarke, President of Risk and Broking, highlighted that talent is central to their business and a key driver of organic growth, confirming their continued strategy of complementing existing talent with strategic hires in impactful areas.

Paul Newsome asked about Travelers' exposure to Florida's excess profit charge, referencing recent news from a peer, and how Travelers accounts for such restrictions on profitability in Florida and other states.

Answer

Michael Klein, EVP and President of Personal Insurance, clarified that Florida's excess profit provision is not new and returns are infrequent. He stated Travelers does not expect to return premiums for the 2023-2025 period and noted the small size of their Florida auto business (less than 1.5% of overall premium), making it an insignificant issue. Dan Frey, EVP and CFO, added that accounting for such provisions can vary across the industry, and Travelers has not done a deep dive as they don't anticipate a significant impact.

Paul Newsome of Piper Sandler Companies questioned if the faster growth in long-tail business would naturally lead to a higher loss ratio and inquired about the demand dynamics from alternative capital providers.

Answer

Mark Pickering, Group CFO & Treasurer, confirmed that a mix shift towards more casualty reinsurance would cause a slight uptick in the accident year ex-cat loss ratio. Christian Dunleavy, Group President & CEO of Aspen Bermuda Limited, added that interest from third-party capital in longer-tail lines remains strong and is viewed as a permanent market feature, noting Aspen is well-positioned as an early mover in this space.

Paul Newsome from Piper Sandler sought confirmation on whether the strategic shift towards growing long-tail business would naturally lead to a higher loss ratio. He also asked about the current demand trends from alternative capital partners and how that might be influencing the market.

Answer

Group CFO Mark Pickering confirmed that a mix shift towards longer-tail casualty business is the primary driver for the slight uptick in the reinsurance segment's accident year ex-cat loss ratio. Christian Dunleavy, Group President & CEO of Aspen Bermuda, added that demand from third-party capital for longer-tail lines remains strong and structural, noting Aspen is well-positioned as a first mover in this space with a robust pipeline of aligned opportunities.

Paul Newsome of Piper Sandler Companies asked if the faster growth in long-tail business would naturally lead to a higher loss ratio. He also inquired about the demand from alternative capital providers and whether Aspen is seeing increased competition from MGAs backed by this capital.

Answer

Mark Pickering, Group CFO & Treasurer, confirmed that a mix shift towards longer-tail casualty business would cause a slight uptick in the accident year ex-cat loss ratio, particularly in the Reinsurance segment. Christian Dunleavy, Group President & CEO of Aspen Bermuda Limited, added that interest from third-party capital in longer-tail lines is a structural and permanent market feature, noting that Aspen is well-positioned as a first mover in this area.

Paul Newsome of Piper Sandler sought to confirm if faster growth in long-tail business implies a higher loss ratio. He also asked about the demand from alternative capital providers and how the supply of such capital might be changing, particularly in the context of MGA competition.

Answer

Group CFO Mark Pickering confirmed that a mix shift towards more casualty reinsurance would cause a slight uptick in the accident year ex-cat loss ratio, noting the current 48.5% is in line with expectations. Christian Dunleavy, Group President & CEO of Aspen Bermuda, added that interest from third-party capital in longer-tail lines is a structural and permanent market feature, and Aspen is well-positioned with a strong, selective pipeline of opportunities.

Paul Newsome of Piper Sandler Companies requested more detail on expected policy growth by region and asked about the current underlying property claim trends, specifically frequency and severity.

Answer

CEO Ernie Garateix detailed the expected policy-in-force (PIF) growth, highlighting momentum in the Mid-Atlantic (Virginia) and the Northeast (New York), with Florida's PIF count expected to turn positive soon. CFO Kirk Lusk added that underlying claim trends are stable and manageable, with three-year frequency nearly flat (down 0.9%) and three-year severity up a modest 5.4%, indicating a moderation from prior years.

Paul Newsome of Piper Sandler Companies asked for an outlook on investment income, specifically how the shift to long-tail business and rapid growth would affect underlying cash flows and the investment portfolio's growth rate.

Answer

CFO Brad Mulcahey stated that investment income should continue to grow due to increased balances from long-tail lines. He estimated that between $60 million and $90 million in cash could be added to the investment portfolio each quarter. He emphasized that growth will primarily be driven by the increasing size of the portfolio at current new money rates, rather than by trying to predict or control future interest rate movements.

Paul Newsome of Piper Sandler Companies asked for The Hartford's perspective on social inflation and litigation finance challenges. He also questioned if it was possible to measure the specific impact of litigation finance separately from other social inflation drivers.

Answer

Chairman & CEO Christopher Swift described social inflation as an ongoing 'tax' on the system but expressed optimism about growing legislative efforts to enact tort reform. He acknowledged that litigation finance contributes to higher loss trends and expenses. While not providing a specific measurement, he confirmed that both inflated average costs from lawyers and nuclear verdicts are contributing factors that the company tracks.

Paul Newsome asked for an update on the investment portfolio, specifically what changes have been made and what is left to do, to better understand the prospective net investment income run rate.

Answer

CFO Mark Haushill stated that very little is left to do with the investment portfolio, as they are pleased with its structure, allocation, and duration. The main focus is completing redemptions from the alternatives portfolio, which is now under 6% of total investments. CEO Andrew Robinson added that while cash flow continues to be deployed into fixed income, the extraordinary yields earned on cash in 2024 will not be replicated, creating a headwind for year-over-year investment income growth.