General Liability Loss Trends
Q: Why did GL loss picks increase this quarter?
A: Management explained that data shows more attorney representation in claims of all sizes, leading to a higher percentage of claims coming in with attorneys, which is increasing rapidly. Additionally, the average settlement rate of claims, including simple slip and falls, is increasing rapidly. These two factors led to a $32 million adjustment in prior year picks. - -

Commercial Auto Adverse Development
Q: Are adverse trends in commercial auto continuing?
A: Yes, adverse development in commercial auto continued this quarter, primarily related to specific accounts within certain lines. Management is actively managing these exposures by moving larger fleets to loss-sensitive programs or exiting accounts altogether. They are pushing rates hard in auto lines and feel good about current year loss picks. - -

Workers' Comp Trends and Reserves
Q: What's the outlook for workers' comp reserves and trends?
A: Workers' comp reserve releases have been significant over the last seven quarters. Management sees trends as generally stable, with medical severity within their assumption of 5%. They continue to view workers' comp as a highly profitable line but are being selective on new business and sensitive to states taking bigger price adjustments. - - -

Commercial Lines Growth and Market Share
Q: Can you discuss growth and market share in Commercial Lines?
A: The company reported solid premium growth across Commercial Lines, with 10% in Small Commercial, 8% in Middle Market, and 9% in Specialty. They believe they are gaining market share through differentiated capabilities, such as improvements in data science, analytics, and underwriting. Submission flows remain strong, and they feel confident about growth prospects. - -

Personal Lines Profitability Targets
Q: What's the outlook for Personal Lines profitability?
A: Management aims to return to overall profitability targets, roughly a 15% to 17% ROE. While they refrained from giving specific combined ratio targets, they are focused on improving margins and feel good about the progress in Personal Lines. - -

Group Benefits Margins and Competition
Q: What's driving high margins in Group Benefits, and how is competition?
A: Group Benefits delivered a margin of 8.7%, well above the 6% to 7% guidance. Despite a competitive market and sales being down about 15% from the prior year, persistency remains strong at over 90%. They are pricing for an endemic state in life insurance, which has impacted sales, but are pleased with new products in absence and paid family leave. - - - -

Property Pricing Dynamics
Q: Why is property pricing still strong in SME markets?
A: Property pricing remains strong in the SME space, with pricing accelerating 60 basis points during the quarter to 12.8%. Products like Spectrum saw pricing up 60 basis points to 17.6%, and general industry property capabilities up 60 basis points to 8.5%. Management feels good about being in the SME space where pricing remains firm, unlike in larger property accounts where pricing is softening. -

E&S Growth Progress
Q: What's the progress on E&S growth targets?
A: The company is on track to achieve its $300 million goal in E&S binding this year. They are benefiting from increased flow to the E&S channels due to social inflation, capturing more of the flow in the small and middle market segments. They see strong momentum in both E&S binding and the wholesale space within Global Specialty. -

Homeowners Combined Ratio Improvement
Q: Why hasn't homeowners' combined ratio improved more despite rate increases?
A: Although they have implemented mid-teens rate increases consistently, loss cost trends are increasing, which is why they're putting in the rate. Catastrophe losses were elevated during the quarter, affecting the combined ratio. Management feels they are ahead of loss trends and close to hitting their target margins in total. - -

Middle & Large Commercial Growth Outlook
Q: How is growth trending in Middle & Large Commercial?
A: Growth in Middle Market was around 7% this quarter, slightly lower than the year-to-date growth of 9.9%. Despite this, they feel really good about growth possibilities as submission flows remain strong and underwriters are active in the marketplace. They believe they will benefit from agents' desire to consolidate carriers. - -

A&E Reserve Review Status
Q: What's the status of the A&E reserve review?
A: Management is currently conducting the A&E reserve review and will announce the results with the fourth quarter earnings. They have nothing to speculate on at this time. -

Commercial Rate Environment
Q: What's driving commercial rate increases despite healthy ROEs?
A: The pricing environment is driven primarily by loss trends rather than investment income. Management believes it's rational and thoughtful, focused on maintaining margins. Underwriting is challenging, and their teams are making difficult choices every day, with investments in data science and feedback loops being crucial. - -

Group Disability Claims Trends
Q: Any new trends in group disability claims this year?
A: No significant new trends have emerged; it's been more of the same as in previous years. They are pleased with their absence and paid family leave products, which are performing well in six states and are complementary to their disability offerings. -

Personal Lines Expense Ratio
Q: What's happening with the Personal Lines expense ratio?
A: There is nothing significant to call out regarding the expense ratio. Last quarter, they restarted national advertising and solicitation for their direct response business. They expect the expense ratio to normalize and decrease over time as they gain operating leverage with resumed growth. -