Yaron Kinar

Yaron Kinar asked about the implications of Equitable Holdings' shrinking market share in the RILA market on its growth engines, assuming no compromise on IRRs, and whether this suggests a moderation in growth despite overall market expansion. He also requested quantification of how the Value of New Business (VNB) payback period has changed over time.

Answer

Nick Lane, President of Equitable Financial, acknowledged the competitive landscape has changed since Equitable pioneered the RILA market but expects to maintain leadership as the market grows. He emphasized their discipline on IRRs and ability to pivot sales based on value. Mark Pearson, CEO and President of Equitable Holdings, added that $600 billion of assets annually flow from 401(k)s into this market, protecting it from economic issues, and highlighted RILA's strong customer proposition across interest rate cycles, with sales growth at record levels. Robin Raju, CFO of Equitable Holdings, stated they haven't disclosed specific VNB payback periods but confirmed that VNB has come down and IRRs have gone up. He noted that RILA is a shorter-duration product compared to older offerings, leading to shorter payback periods and faster cash conversion, stating it's 'materially lower than what it used to be.'

Yaron Kinar followed up by asking if the Value of New Business (VNB) payback period has changed over time and if any quantification could be provided.

Answer

Robin Raju, CFO of Equitable Holdings, stated that while the payback period has not been disclosed, it has materially come down over time, and IRRs have increased. He explained that the RILA product is a shorter-duration product compared to many previously sold longer-duration products. Additionally, exiting the individual third-party life market, which involved longer-duration products, has contributed to shorter payback periods and faster cash conversion for the current product portfolio.

Yaron Kinar asked if Allstate's auto Policies In Force (PIF) growth on slide 11 includes the drag from legacy Esurance and Encompass policies, and when that drag is expected to end. He also questioned if a two- or three-year look back period to determine 'excess profitability' is too short.

Answer

CFO Jesse Edward Merten confirmed that slide 11 includes inactive brands, and that Allstate is accountable for total growth, with active brands up 3.3%. Mr. Merten and CEO Thomas J. Wilson emphasized focusing on state-level growth to convert 'red states' to 'blue states.' President, Property-Liability Mario Rizzo noted that the Custom 360 rollout replaces the Encompass brand. CEO Thomas J. Wilson responded to the 'excess profitability' question by stating that the concept is unclear, especially when the industry often loses money in homeowners, and that Allstate's profitability stems from operational excellence, not 'excess rents,' advocating for cost reduction rather than profit targeting.

Yaron Kinar asked if a two- or three-year look-back period for determining 'excess profitability' in the context of regulatory and legislative changes is too short.

Answer

Thomas J. Wilson (CEO, Allstate Corporation) expressed skepticism about the concept of 'excess profits,' particularly in homeowners insurance where the industry often loses money. He argued that Allstate's higher profitability reflects superior products and cost management, and that the focus should be on reducing underlying costs through tort reform rather than penalizing efficient companies.

Yaron Kinar asked if the run-rate for auto renewal ratios should be expected to decline as Allstate grows in lower-retention channels like nonstandard auto and direct. He also questioned the lag between rate increases and retention declines, suggesting the impact from Q1 rate hikes should have moderated by Q3.

Answer

Executive Mario Rizzo acknowledged that a future mix shift towards more new business and nonstandard auto would likely put downward pressure on the overall retention rate, but the current impact is muted. Regarding the lag, Rizzo clarified that while California rates were implemented in Q1, significant rate increases in New York and New Jersey occurred in Q3, continuing the pressure on retention. Executive Thomas Wilson added that the customer shopping behavior that creates the lag is not simple or immediate.

Yaron Kinar questioned RenaissanceRe's outlook on expected returns and rate adequacy in the Property Catastrophe market for 2026, considering the rate declines at 1/1 renewals and anticipated further reductions. He also asked how the company plans to deploy capacity and which areas would be more or less attractive. Additionally, he inquired about the opportunity presented by data centers in the insurance market and RenaissanceRe's approach to managing this risk.

Answer

David Marra, EVP and Group Chief Underwriting Officer, stated that rate adequacy remains strong despite pressure, noting U.S. cat rates were down ~10% and international/global ~15%. He highlighted strong terms and conditions and growing U.S. demand. Regarding data centers, David Marra confirmed they currently reinsure them, see mega projects as a new opportunity, and prioritize underwriting, pricing, terms, conditions, coverage, and aggregation.

Yaron Kinar asked about RenaissanceRe's expectations for rate adequacy and expected returns in the property catastrophe book for 2026 given the rate declines observed at 1/1 renewals and anticipated further declines. He also sought insight into the company's strategy for deploying capacity in this market and its approach to managing the emerging opportunity and associated risks from large data center projects.

Answer

David Marra, Executive Vice President and Group Chief Underwriting Officer, affirmed strong rate adequacy despite pressure, noting U.S. cat rates were down 10% and international 15%, with terms and conditions remaining robust. He highlighted growing demand in the U.S. and a focus on selecting the best opportunities. Regarding data centers, David Marra stated they are currently reinsured, represent a new opportunity with mega projects, and the company is focused on underwriting, pricing, terms, and aggregation.

Yaron Kinar followed up on casualty loss trends, asking why emerging issues wouldn't necessitate revisiting prior year reserves. He also questioned what specifically changed in the quarter to prompt a 50% increase in the share repurchase authorization, given the benefits of the Validus deal were previously known.

Answer

Group Chief Underwriting Officer David Marra explained that prior year reserves are resilient due to disciplined underwriting, such as avoiding commercial auto, and a conservative reserving process where they did not fully credit rapid rate improvements in 2020-2021 to their loss picks. Regarding the buyback, CFO Robert Qutub cited the company's significantly larger scale, while CEO Kevin O'Donnell added that the timing was driven by the final consolidation of Validus balance sheets, which unlocked the expected liquidity and completed the integration.

Yaron Kinar questioned the 2026 capital deployment guide, which suggests that the majority of generated free cash flow will be allocated to share repurchases (over $1 billion), and asked why M&A would not be a greater priority.

Answer

Andrew Krasner, CFO, reiterated a balanced capital allocation approach, noting that the $1 billion+ share repurchase target could change based on inorganic opportunities, and highlighted additional financial flexibility from leverage. Carl Hess, CEO, confirmed that the M&A strategy remains unchanged, focusing on thoughtful, patient bolt-on acquisitions that fit the specialty strategy in CRB and Wealth (especially wealth management and defined contribution capabilities in growing markets), and evaluating larger opportunities to enhance presence in select geographies or market segments. M&A aims to increase business mix in broking and wealth, play across the insurance value chain (like the Willis Re JV), and offer a compelling financial story by enhancing margins and free cash flow. Carl Hess, CEO, stated that retention remains at the low end of the target range. Strategic hiring continues, focusing on creative talent in specialty lines and geographies, with ongoing investments in fast-growing business areas to accelerate profitable growth and enhance margins.

Yaron Kinar questioned WTW's capital deployment guide for 2026, which projects over $1 billion in share repurchases, suggesting that the majority of generated free cash flow will be allocated to buybacks. He asked for clarification on the M&A strategy and why it might not be a greater priority. He also inquired about talent, specifically asking about current retention rates for the workforce, whether new hires are picking up or remaining steady, and if the impact of new hires on organic growth could be quantified.

Answer

Andrew Krasner, WTW's Chief Financial Officer, reiterated a balanced capital allocation approach, confirming the $1 billion share repurchase target while noting flexibility for inorganic opportunities. Carl Hess, WTW's Chief Executive Officer, clarified that the M&A strategy remains active and unchanged, with a thoughtful and patient approach. He expressed interest in bolt-on acquisitions in CRB's specialty areas and wealth management, as well as evaluating larger opportunities that enhance margins and free cash flow. Regarding talent, Mr. Hess stated that retention remains at the low end of the target range, indicating satisfaction, and that strategic hiring continues, focusing on creative talent in specialty lines and geographies to accelerate profitable growth.

Yaron Kinar asked if The Hartford, with its significant weighting in the small account space, could be a net winner from an increase in startup activity and small businesses emerging to support AI capabilities. He also inquired about the initial thoughts on Winter Storm Fern and its potential impact on the industry and The Hartford specifically.

Answer

CEO Christopher Swift believed The Hartford could take advantage of tech broadly defined in its SME orientation due to its brand, capabilities, reputation, and tech-forward mindset. CFO Beth Bombara stated that Winter Storm Fern was a relatively minor event, with claim activity less than other recent storms, and that the company is watching ice and power outages, but it appears very manageable.

Yaron Kinar questioned whether the AI revolution could lead to increased startup activity and small businesses, positioning The Hartford as a net winner due to its SME focus, and asked for initial thoughts on the impact of Winter Storm Fern.

Answer

CEO Christopher Swift agreed that The Hartford, with its brand, capabilities, and tech-forward mindset, is well-positioned to benefit from tech broadly defined and its SME orientation, especially if new business formation increases. CFO Beth Bombara described Winter Storm Fern as a relatively minor and manageable event, noting that early claim activity is less compared to other recent storms, with ice and power outages being key factors to watch.

Yaron Kinar with Mizuho Securities asked if variable compensation would remain a headwind for the expense ratio in 2026 and beyond, given strong performance. He also questioned if AXIS would prioritize opportunistic growth investments over strictly adhering to the 11% G&A target, and sought confirmation on whether the 90% combined ratio target was reported or underlying. Finally, he inquired about the sustainability of a payout ratio above 60%.

Answer

CFO Pete Vogt stated that variable compensation is a 'headwind' that shareholders would likely agree to if it reflects tremendous financial performance. President and CEO Vince Tizzio emphasized leveraging operational investments and increased fee income to achieve the 11% G&A target, but confirmed willingness to pursue strategic hiring even if it slightly delays the target. Pete Vogt confirmed the 90% combined ratio target is reported. Regarding the payout ratio, Pete Vogt indicated that modeling above 60% would be 'a bit high side'.

Yaron Kinar from Mizuho questioned whether variable compensation, a factor in the 2025 expense ratio increase, would continue to be a headwind in 2026 and beyond, even with strong performance. He also asked if AXIS Capital would prioritize opportunistic hiring for growth over strictly adhering to the 11% G&A target. Kinar sought confirmation on whether the 90% combined ratio target was a reported figure, not an underlying one, and inquired about the sustainability of a payout ratio above the 60% range, considering growth and capital-light business lines.

Answer

CFO Pete Vogt acknowledged that variable compensation could remain a 'headwind' if it reflects tremendous financial performance, which he believes shareholders would find agreeable. President and CEO Vince Tizzio emphasized the expected leverage from operating model investments, increased productivity, reshaping of the general cost structure, and growing fee income, all contributing to the 11% G&A target. Vince Tizzio confirmed that AXIS would be willing to pursue opportunistic hiring for growth, even if it meant a slight delay in the 11% G&A target. Pete Vogt confirmed that the 90% combined ratio target is a reported figure. Regarding the payout ratio, Pete Vogt indicated that modeling above 60% would be 'a bit high side,' suggesting a lower expectation, and Vince Tizzio added that capital use in some specialty lines might be larger than anticipated.

Yaron Kinar sought confirmation that the risk margin for U.S. casualty reserves set in the prior year remains intact. He also asked about the loss cost trends underlying the significant rate increases in casualty lines and potential wildfire exposure through the company's London-based specie book.

Answer

CFO Pete Vogt confirmed that recent studies and claims data reinforce the company's confidence in its casualty reserves and 2024 loss picks. President and CEO Vincent Tizzio added that the primary casualty book is underwritten through the E&S channel, allowing for freedom of form and rate. Regarding the specie book, Tizzio acknowledged some exposure but stated it was contemplated within his estimate that the wildfires would not be a material event, with Vogt adding that the book has a $10 million event deductible.

Yaron Kinar questioned the Specialty Distribution segment's organic growth, which decreased even after adjusting for flood revenues, citing property cat pricing pressure and business moving to admitted markets. He asked about offset drivers for positive organic growth in 2026 and inquired about a steady-state organic growth level for the segment.

Answer

R. Andrew Watts, Chief Financial Officer, explained that Specialty Distribution's organic growth will be challenged in Q1 due to prior year flood claims and continued cat property rate decreases in Q2. He anticipates momentum building in the back half of 2026 from the organic growth of Accession's Specialty Distribution businesses, which have little cat exposure. Mr. Watts also stated that Specialty Distribution generally grows faster than Retail due to its E&S component.

Yaron Kinar questioned how specialty distribution organic growth, which decreased low single digits even after adjusting for flood revenues, would return to positive growth in 2026 given ongoing cat property pressure and business moving to the admitted market. He also asked for a steady-state organic growth level for the specialty distribution segment, comparable to retail's low-to-mid single digits.

Answer

R. Andrew Watts, CFO, anticipated challenges for specialty distribution organic growth in Q1 due to prior year flood claims and in Q2 from cat property pricing. He expects momentum to pick up in the back half of 2026, benefiting from Accession's specialty distribution businesses, which have low cat exposure and higher casualty/other specialty lines. Mr. Watts also stated that specialty distribution is generally expected to grow slightly faster than retail due to its E&S component.

Yaron Kinar asked about the impact of a recent captives transaction, which created a noncontrolling interest (NCI), on the Programs segment's reported organic growth and margins.

Answer

R. Watts, an executive, clarified that the transaction has no impact on the Programs segment's organic growth or margins. He explained that accounting rules require the company to report revenue on a gross basis at the segment level, with the NCI adjustment occurring below the pretax income line, making a segment-level adjustment irrelevant.

Yaron Kinar sought to connect the dots between the Q4 premium slowdown and the company's outlook, asking if competition is flattening or if W. R. Berkley has a greater appetite for premiums, and questioned how AI/machine learning, being data-driven, plays out across the company's 60+ operating units.

Answer

CEO Rob Berkley cautioned against over-interpreting the Q4 slowdown, citing stronger December and January trends, and noted that certain portfolio pockets are more comfortable than previously thought. He clarified that having multiple businesses does not prevent data aggregation or leveraging tools across the broader organization for AI initiatives.

Yaron Kinar sought to connect the dots on the insurance premium slowdown in October/November due to increased competition versus the caution not to over-read it, asking if competition is flattening or if the company is seeking more premiums. He also questioned how AI/machine learning, being data-driven, plays out with WR Berkley's structure of 60+ operating units.

Answer

CEO Rob Berkley cautioned against over-interpreting two months of data, highlighting stronger December and January, and noted that early reserve returns suggest some portfolio pockets are more comfortable. He clarified that having many businesses does not prevent aggregating and using data across them or building tools to leverage across the organization, inviting further offline discussion.

Andrew, on behalf of Yaron Kinar of Jefferies, asked for the specific drivers of the strong growth in short-tail insurance lines, questioning if it was property, inland marine, or A&H. He also inquired about the 50 basis point impact on the current year loss ratio, noting that property growth should have been beneficial.

Answer

W. Robert Berkley, Jr. (Executive) confirmed that property and inland marine were the primary drivers of short-tail growth. Richard Baio (CFO) explained that while property growth is beneficial to the loss ratio, its positive impact was offset by the mix, as casualty lines like other liability and auto, which have higher loss ratios, still represent nearly 50% of the total book.

Yaron Kinar questioned the apparent disconnect between the 2% gross premium growth in North America Commercial and the significantly higher reported pricing increases.

Answer

Chairman and CEO Evan G. Greenberg advised focusing on net premium growth, as gross figures are often distorted by large, structured transactions. He further explained that even net premium growth does not translate directly from pricing due to the complex interplay of business mix, retention rates, and new business volume, which vary by line.

Yaron Kinar from Jefferies asked if low exposure growth in North America casualty implied a future increase in appetite and questioned if the competitive behavior in London applied to both property and casualty lines.

Answer

Chairman and CEO Evan G. Greenberg corrected the premise of the first question, clarifying that the analyst was confusing the 'exposure' component of pricing with overall premium growth and asserted that casualty lines are, in fact, growing quickly. He confirmed that the competitive behavior he observed in the London market was occurring 'across the board' in both property and casualty.

Yaron Kinar of Jefferies asked for tangible examples of changes in risk selection for new business and questioned whether the decisive 'one renewal' strategy could risk alienating broker relationships.

Answer

Executive James Williamson provided examples of the pivot, such as writing marquee loss-sensitive accounts in sectors like manufacturing and tech instead of guaranteed-cost real estate, and focusing on rounded accounts. Regarding brokers, he expressed confidence, stating that sophisticated partners understand the need for corrective action on underperforming business and that strong new business flow with these same brokers proves the relationship remains solid.

Yaron Kinar asked how the California wildfires might affect Travelers' appetite for property business in the state and whether the growing appetite in auto considers potential tariffs.

Answer

CEO Alan Schnitzer stated their future appetite in California depends on market reaction and potential regulatory reforms. President of Personal Insurance Michael Klein added they were already shrinking in the state. Regarding auto, Klein said they would react to tariffs if they materialize rather than trying to predict them, given their current confidence in margins.

Yaron Kinar asked for a discussion on the relationship between large and attritional losses and how to reconcile the commentary on benign attritional activity with the company's holistic view of losses.

Answer

Chief Actuarial Officer Jonathan Strickle explained that the company focuses on the overall combined ratio rather than distinguishing heavily between loss types, as the classification can be arbitrary in a single quarter. He confirmed the attritional experience was benign year-over-year but cautioned that the metric can look artificially low if medium-sized events are classified as large losses.

Yaron Kinar inquired about the scale of Hippo's new homes channel, seeking a nationwide figure for homes serviced and data on retention and loss ratios as these homes age. He also asked for clarification on the EBITDA impact from the sale of the First Connect platform.

Answer

President and CEO Rick McCathron clarified that Hippo has access to approximately 200,000 new homes annually nationwide and noted that retention in this channel is very high. CFO Stewart Ellis added that while long-term data is still developing, early results show new homes perform better on losses than older homes. Ellis also confirmed the First Connect sale has a small positive impact on adjusted EBITDA as the unit was not yet profitable.

Yaron Kinar of Jefferies inquired about the source of growth in other liability occurrence lines (organic vs. acquisition) and what market dynamics specifically accelerated this opportunity in the third quarter.

Answer

Executive François Morin confirmed a significant portion of the growth was organic E&S casualty, driven by double-digit rate increases. CEO Nicolas Alain Papadopoulo explained the Q3 acceleration reflects a broader market realization of inadequate past reserves, fueled by rising social inflation and claim severity. This has prompted more drastic and widespread underwriting actions, creating attractive opportunities.

Yaron Kinar of Jefferies questioned the trends in cohort-based policy churn, the potential for accelerated retention improvement, and the timing and strategy behind potential rate reductions given the strong recent loss ratio performance.

Answer

CEO Alex Timm noted a modest improvement in cohort-based retention, which he expects to accelerate as the higher-retaining partnership channel grows and the company expands into marketing channels that attract stickier customers. Regarding pricing, Timm explained that rate reductions are a reaction to hitting target loss ratios based on credible data and improved segmentation from new models, rather than a strategy to aggressively pursue market share.

Yaron Kinar asked why gross written premiums in the Professional Lines and Industry Solutions segments began to decline in the quarter. He also questioned the full-year catastrophe loss guidance, noting it implied a historically high Q4 cat load.

Answer

CEO Andrew Robinson attributed the Professional Lines decline to intense competition in private company D&O and miscellaneous E&O. The Industry Solutions decline was driven by intentional, ongoing cuts in Commercial Auto. Regarding cat losses, he confirmed the full-year guidance of 2.0% to 2.5% reflects their conservative view and that they feel good about Q4 results, suggesting the implied high dollar amount for Q4 was an overestimation.