The Hanover Insurance Group, Inc. (THG) 29 Apr 202020 Q1 Earnings call transcript

Good day, and welcome to The Hanover Insurance Group’s First Quarter 2020 Earnings Conference Call. My name is Cole, and I will be your operator for today's call. [Operator Instructions]. Please note, this event is being recorded.

I would now like to turn the conference over to Oksana Lukasheva. ahead. go Please

Good for operator. thank for you Thank quarterly morning, conference us our call. joining you, and

We will President Specialty our begin Roche, today’s remarks President answer call with prepared of our after Markets; and Jeff Available prepared Executive and your Officer, Salvatore, questions our Rick remarks Chief Officer; Agency Financial lines. and Lavey, Chief are Farber. to of President from John Bryan

to and Before press John, complete the I over let earnings today's supplement session. call that of our for in release, note presentation After website financial available at answer will the the a questions we section me slide Q&A our are www.hanover.com. turn call presentation, in the Investors

of include other historical regarding among Our Statements fact, questions remarks prepared responses statements to Forward-Looking things. and your than today, other

and XXXX ongoing the performance. the impact company on COVID-XX for outlook Our pandemic of

that this and general results anticipated. reliance There cause with release, in and We are the deck you of risk the statements our to presentation the you condition. press and filings section differ those COVID-XX on with factors caution economic could certain includes respect to supplemental to the which respect, materially related statements, from pandemic SEC forward-looking our factors actual refer forward-looking to

found of financial non-GAAP will can also mentioned the closest and I on the reconciliation the website, reference financial among financial such Today’s loss discussion income posted a measures certain measures these are accident catastrophes, be release, in which operating A others. year non-GAAP to and as combined our the excluding ratios, earlier. on basis historical presentation supplement, GAAP press slide or measure as

John. the turn will I comments, call over those to With

call. thank morning, our joining you, and everyone, Good you Thank for Oksana.

say this families as just friends Hanover are healthy and Before like crisis of your hope through we safe as public on begin, possible. the we and and each of health you, well would behalf I that managing team to

the unprecedented to challenging the the strong environment Our defined by quarter pandemic. and results COVID-XX very while dynamic in Company very navigate continuing delivered

the well on to resiliency positioned are have deliver to crisis all resolve and stakeholders. commitments and We of our continue to to navigate this our

about a I the overview then provide of level portfolio will COVIT-XX our first of business will Jeff and and and some our XXXX segment thoughts our on I financial our with review current you the of investment high in-depth will environment take outlook. results operating performance. begin context comments our and provide through by XXXX in quarter

your line We will questions. open then the for

people live taken and two form especially two of are has families unprecedented Today tragic work. months, is most the by lives whose the the disease and way this have Over been COVID-XX in more created U.S. but stay-in-place order, we this time. under past in XXX,XXX than of an some changes the over worldwide billion

with selfless health on from dedication sector. the response to history. other our many our responders Thanks throughout head first as so professionals challenge I'm unique of the private collaboration and times and the country of scientists meet our have this overwhelming will we just confident the

is crisis, face working if to part, emerged pandemic, together deliver in our is we has Hanover's from Virus our that Corona nimble, that to for the committed compassionate and the and For are anything this shareholders. Company the resilient, of

Our business at speed. full running is

they for strong proud remain there and Our and being service customers of most. to our need levels we us our on when continue tradition deliver agents

employees our work to and safety had of being virtual order earliest and we to we were health priority, our ready. a in the short With environment adjust

workflow our X,XXX made incredibly to in for a a shift several proud Thank across technology employees us country I'm environment to we up. have the resolve. practices remote transitioned stepping seamlessly the has creativity, shown work and team well. business quality you investments The continuing last flexible of substantial deliver workforce our to over while to years, our commitment, work of high and and service XX% Over prepared have customers. continuity who outstanding and agile cultural of planning our have

our to of policy agents, holders, proud robust support and also I’m communities. local our response

customer premium May return auto Our program financial payment April as a includes XX% on to well relief those as options extensive personal and in flexibility need. bill for

contemplates auto expenses, and living also It expanded cover adverse repair and rental homeowners essential delays to terms of and other car from circumstances. personal goods, delivery resulting

also provide to operational and partner have agents. implemented to steps support We our technological

$XXX,XXX to and critical to organizations committed pandemic Finally, nonprofit we and medical provide donated related funds health to professionals. local assistance have supplies community local

Company perspective, very remains a From our strong. financial

liquidity, ample balance portfolio. have investment quality sheet, We solid and a high a

thoughtful insurance elements built these through profitability. will manage in continues is of COVID-XX. successfully to allow to impacts it and management, Our the mix broad-based on We us believe practice portfolio and underwriting conservative generate

have We multiple financial risk comprehensive with process modeling detailed a scenarios, incorporating executed scenario reviews. exposure economics underwriting

some in most stress performance in by that business and takes with overall indicates the the progresses. even should potential year modeling quarter and puts stable Our XXXX scenarios, as remain relatively by our operating

In to cost be auto personal premium will reduction offset return, materials and depending of we other that on auto, the economic downturn. various orders frequency in benefit. some short-term of to a stay-in-place This in the higher length frequency exposure expect by impacts result degree

impact expect business. a not our We material on do homeowners

potential hazard likely to could in losses cost moral increase This offset home of lot policyholders and materials will chain they be to claims. benefit supply time before an by become disruptions significant. a spending mitigate of While enable at due

in risks short-term. elevated down social commercial might slowdown the the we vacancy potential the inflation road. lower In the mean our in the as pause lines, activity are related possibly an mindful such and of core claims continues, But fires, if economic for increase

our our on business. should core commercial specialty effects the large, be and similar business By to

of our portfolio. Given focus liability be in small specialty this management the agency private direct consider potential account on book. focus retail and based small limited the D&O We to claim company

to compensation. exposure no exposure limited to professionals have and medical responders We first workers

our majority would commercial like multi-peril virus overwhelming policies thoughts I some have regarding exclusion. and of based The Now, are business to ISO an explicit share interruption.

our core healthcare within in policies specific where could XXX businesses and be commercial, line believe under circumstances. have specialty triggered we CMP coverage split We between

only coverage these sub-limits. their intent, with have Consistent policies with of closed $XX,XXX our underwriting facilities. not provide Many these insurance

any We these to earmarked exposures underwriting address have in COVID-XX based of actuarial others, related current and and $XX direct approximately exposures. reserves have assessment on reviewed our million

the (Ph) [VI] exposures making With up majority vast expected the liability. the of

is based be of results net our based Corona lines, we the ISO business, XX% our XXXX our of very Overall commercial on mix of underwriting predominantly lines expect impact Virus we business the in to to personal use forms. manageable.

credit travel at and We have of similar compensation workers roughly to insurance, zero and or a coverages. trade low freedom exposure our X% event percentage cancellation,

net scope to harder industry for how to both on and Company impact COVID-XX the pandemic of premiums many environment written longer term our overall. impact the much is the macroeconomic the of and related The Considering uncertainties predict the and unfolds.

declines return growth of Short-term other and midterm cancellations, personal to activity. reduction premium or a effects premium will temporary lines, endorsements in likely some due even show slow and economic overall

pricing that In terms likely rate expect will need environment, insurance trajectory continue for exists. the industry rate of in as the lines we certain

As than economic typically previous the rate dependent cycle the on insurance more downturns cycle. is have demonstrated

fueled a March, and by rate steady We through increases believe continue core loss commercial inflation. were will we continued it consistent trajectory increases in in of on

serve yields an lower new additional enhanced believe for catalyst as pricing. will money also that We

out. for or crystal and industry number adversely we playing may regulatory legislative affect how changes A the see that investors don't of the about that have have we ball. potential Unfortunately, asked us a

fundamental So speak can I Contract the the perspective economy. the history, of Law only from and role in of

at proposals to of It crisis aimed legislative is regulatory and operations. its flurry not a unusual the see during industry and a insurance

on moratoriums will such expect in which We routine comply-fully and with regulatory as situations. cancellations, temporary crisis are actions

the said, as virus contracts is That the explicitly excluded as to apparel. to we in by particular constitution, of course continue uphold sanctity expect the where guaranteed

encouraged to nationwide customers efficiently NAIC and agency as the state by are well partners. of the Casualty the protect the insurance to stability our industry And as and Insurance and of work American are with We ensure legislators efforts the and continues strength insurance statements many sector. in Association for close to commissioners, we the Property contact regulators the by

with performance. generated program X.X% written We commercial quarter growth new was our to first our small business commercial, net with business. specialty meaningful in expectations. our to core premium a and turning Growth driven excluding by Now, in-line pickup

rate trajectory in X.X% at first quarter. continued the exposure excluding upward commercial on its Core

a by the continued tempered increases growth in of largely X% Additionally, anticipated. impact sequential we rate specialty saw our increases was Lines Personal on business rate well. which consistent was as retention, our

quarter renews XX We didn't to days experienced as in of to a in in business COVID-XX our XX advance. the growth most contraction first due

relative Our the in factors, which several quarter current balanced increase a year in was to loss in defined minor expectations. our on by losses resulted accident experience

reinsurance which program. fire First, loss we in under deductible an triggered aggregate risk large business, our annual property had middle-market per one our

auto Second, weather mid-March, quarter a in we decline frequency experienced in favorable well driven. due lower winter miles to as starting this as personal

believe which Auto Commercial some frequency we businesses switching is services. quarter, to enhanced changed delivery due hardly in the to

increased we which reflect potential touch COVID to Third, on. Jeff claims, will related reserves

prior balance workers’ year our the with road. by to a prior where overall bigger compensation. consistent in promptly sheet of are perspective, favorability quarter issues terms we from issues philosophy of and development, year down very In stand are reacting with comfortable we reserve reserve avoid driven with slight to Current the movements

at year. allocation accelerated strategy, million last completed share announced $XXX repurchase February, we the Looking in we our capital program

Hanover stock open In mid-March. in stock market. of addition, in stopped common we subsequently shares repurchased We approximately repurchasing XXX,XXX our the

will disciplined allocation continue forward. capital prudent and We as strategies move to follow we

well-diversified can our were current product our In expectations. broad to our we overall in-line on underwriting continue portfolio, summary, position, successfully strong quarter our Based first are navigate we confident expertise the with practices, environment. and sound results financial

being We and interest and employees acting remain agents safety the needs our health customers shareholders. maintaining long-term in the to best our of to and committed of our of the responsive

that, the call to Jeff. With over turn will I

Good you, Jack. morning, Thank everyone.

quarter income prior After in $XXX.X quarter. we compared per $XX.X loss $XX.X $X.X net $X.XX share, or reported year million, fully share with or basic diluted $XX with prior $X.XX diluted in or year compared tax net quarter. or the operating first share For million, share diluted $X.XX million, per the first million, of was a per income per of the

investment fixed reduce The of operating in the are value first the difference appreciation and a XXXX the lesser recorded subset impairments to stockholders’ fair loss These of of extent, quarter primarily unrealized securities, in of decrease equity. impairments. income income made the in between to the adjustment and reflects a equity net

ratio year ratio the was Our improvements. XX.X% in contributed catastrophes with quarter. XX.X% combined and prior Lower the expenses to combined compared

While ratio points. like accident slightly higher, loss was current the X.X year

we million March, incurred more tornadoes quarter. with that in losses or quiet earned for a struck $XX.X expectations and gave XXXX Relatively of totaled the the of the our way part losses to quarter. large a first weather Tennessee, premium from for a Catastrophe the active which impact February below quarter in X.X% January notable in of accounted cat

respect With develop We net in we expectations. continue certain to some our were business, year offset ongoing P&C development quarter. business. more compensation prior which to voluntary pools experienced for slightly adjustments were the favorable better legacy development, and specialty lines, Small by in reserves workers than in older ability favor than favorable

we same side. in time, due personal to in At bodily development years the saw prior activity accident the injury unfavorable and additional on commercial auto

picks. remain the and auto our to XXXX discretionary our with accruals. current certain However, of came the in to quarter to we expectations comfortable approach our disciplined spend accident XXXX and management, in expenses timing favorable year due financial lower Reflecting

same primarily line, period current at driven quarter excluding ratio XX% Looking year results first our for lines down the the by improvement catastrophes combined in accident losses. was the XX.X% from last by year, personal in underwriting

XX% auto physical the our first due of as footprint in throughout reflecting observed winter the to stay-in-place ratio loss orders. property X.X favorable improved the as points half the in second frequency primarily damage March, experience weather of quarter quarter, well of various more and auto comprehensive XXXX, in decline from Personal a starting

second in the higher of performing decline in are this associated our muted the impacts premium earlier are month. result trends unusual line the we personal expectations. favorable underlying XX cost potentially we expect as quarter, million refund we repairs. the be meaningful a and a with announced result severity to And Although expecting somewhat frequency increase of temporary in in and These with aside, an auto by

ratio loss XX.X% stable compared of was with year. Homeowners last

to X.X% premiums net similar focus a the increase We on partially competitive have offset by weather increased our profitability Personal fire losses. an which experienced winter lines was market. favorability from mild quarter in written ex-cat underscoring in in auto,

well as with We between account seek our balance as the a many retention, strike industry’s to of whole of and successful agents. best rate expansion offering

pressures. more Our normal competitive will continued enhanced discipline continued in to proposition position months well loss and the and account us severity responds trends as landscape coming the

to now lines. commercial Turning

combined Our reflected year excluding favorable by expenses. higher primarily current from The offset first loss ratio, and development ratio reduce year. quarter catastrophes a was XX.X% in partially accident the up increase XX.X%, last

Excluding XX.X% loss year catastrophes, major actions. related to loss COVID the two drivers. accident unusually reserve points commercial reflecting lines, large increased ratio current and fire X.X One

The CMP line CMP economic hit that painful annual in We of fire XX substantial the property a presents loss benefit determined in occurred layer always the million ratio annual itself. an deductible quarter. but XX for in in loss in the maintaining is a aggregate XX portion amount aggregate deductible, quarter and risk the the full increase our million the driving the existed had per million, of loss large it in that more this excess of

potential include policies coverage we losses, COVID-XX loss Our also virus for picks a exposures. to limit offered those commercial sub limited an related provision reserve in cover specifically in primarily that related increase lines specifically

thorough Jack intention in multiple in our and healthcare of an within property commercial total We exclusion. not payroll policies our a endorsements language policies with have and specialty of that contract by As explicit commercial virus lines mentioned, identified conducted in business XXX our very Mono BI business. review Line policies a core we do commercial

XXX,XXX of for To are this them policies of shut total. see sub total could policies to businesses. losses, of down for of in coverage. essential these have these potential policies XX,XXX limits Each since in number rather this policies we closure due business context, than Many a put being has many commercial nearly cleaning

aside our of reserves reserves quarter. these policies. of the XX first majority these exposures reserve COVID set these our million to including of facts, in we on additions and Based The accordingly XXX relate

population prior seeing prior calls. manageable. underwriting we of to X.X quite targeted excluding and action the the improved have year rate talked Given benefit and we sub will current losses that are auto be accident loss points in believe Commercial low we catastrophes limits, that the ratio, increases XX.X% about

in see didn't Compared level lines frequency stepped personal activity of reflects auto, likely industry and with sectors certain declines the which same in March, we quite geographies. delivery the most up

quarter adjustment an the selections last points loss timing Turning X.X in the year. XX.X% quarter reflects year in loss increase industry comp, prudent from prior to of first selection our as decrease as worker's accident year, the the of increased the to in wide ex-CAT loss the well ratio rate of face a

property other remaining business, catastrophes with prudent of comfortable current pricing very in losses earlier. current lines, mentioned are the increased favorable year of COVID-XX book earlier. portion potential We our points commercial overall heavy year to XX.X% in cover to loss the reserve is provision however, a ratio we accident In comparison environment. losses The our to plan a and are loss includes excluding to line a this improved ratio X.X relative the reflecting I that elevated

in Commercial lines X.X% the written net premiums grew quarter. first

and such pricing as non businesses, industries underwriting granular to programs. growing continuing team on Our targets in geographies laser actions focused meet specialized in on and while that profitability execute our is areas

by businesses The by our was in we as growth and partially core worker's programs push rate strong continued through about auto We to strong momentum commercial of growth planned lines. X%. in CMP underlying March led the saw on reduction our offset portfolio comp

to Moving investment performance.

investment current very for net was net The the investment market the vast to Our majority income of is resilient million income environment. quarter. our XX.X

over less corporate recent just a continue X.X than rates year. spreads. we is interest our prudently credit rates to interest an duration portfolio years, manageable so in portfolio every navigate of is widening expected decline effect Our of have the turn and to and eighth Short-term

in the seven of quarter impact that income, of approximately was appreciation included income XXXX. market million end our It the through investment included partnership noting first is which and the of income in worth

partnerships the a report lag really one We on we as after come start have quarter earnings. results in and

S&P. credit Our have and partnership markets, broader funds to less historically than mix correlated still has a toward are the the volatile higher somewhat waving which equity but mezzanine been

it report XXst, possibility valuations partnerships quarter. on loss these is us second Based for on the March certainly at in a a to

with We returns a long-term the can in this asset volatility. is we tolerate strong the class investor long confident for know fund horizon and are the managers that who

billion comfortable We quality, it portfolio. quality high with A eight portfolio and X% plus, and is is average portfolio. XX% of investment the overall a weighted our industry first remain confident and investment grade. total quarter, income investment by It and of cash At of represent the well-diversified XX% of equity composition and with laddered of asset class. is our well approximately the security end represented our Fixed

X% issuers BBB to to X%. Additionally, years, our exposure grade have below past our from income three fixed X% issuers reduced over the and exposure to of X% to we from investment

we absorb As fallout portfolio the associated potential result, downward outbreak. economic can are with comfortable that, a Virus the migration our Corona ratings of

exposure example, have are only fixed also years compared overall X.X% our industry classes to with now is certain fixed volatile. meaningfully up and ago more XX% inherently grade. We that X.X% three portfolio, income for income reduced Energy, investment of our makes

half is sub-sector fee of backed where uncertainty. them our the fixed resilient most making by than energy contracts, the more in times are exposure of More midstream in operations of economic

have are airlines, impact sensitive to which of the portfolio. of together COVID-XX limited that our to up the hospitality X% less economic make industries and exposure than including We retail, of some more

metro AAA securities commercial Our mortgage-backed rated and vintage type, are area year. by XX% well-diversified and property

lower the strong Our our and public CMBS in enhancement, we holdings than also metrics. universe retail exposure loan-to-value conduit from CMBS with holdings to credit very have benefit greater-than substantially industries XX%

accounting income. after first X.X% unprecedented our in overall book immune of of for the operating the value in decline the per leading an the not Despite investment volatility to strength was share even to solid portfolio, quarter, it

manage and that are allocators financial current We volatility. capital market are we confident risk long-term will effectively and

a the value, we of of and portion as market In in of fact, quality recovered based on decline strength have portfolio. the substantial underscoring the Friday, last values book the

questions, the me XXXX opening Before for provide our line on thoughts outlook. let some

we undertook Jack strong the Company. financial a with modeling comprehensive very exercise As mentioned, across participation cross-functional

further several premium pressure portfolio, endorsements related as properties, cancellations across risks. entire as stress and potential from prolonged We activity assumptions surety orders, increased of including and our recession-related as well such related stay-in-place business losses vacant lawyer risks

of good to helpful updated provides this We ex-CAT our original our the output combined of Accordingly, about which really outlook. parameters XX% guidance ratio XXXX feel exercise, we are reaffirming for XX%.

length level on the growth guidance give of uncertainty the is possible great not the it premium us of around the premium to for and slowdown decline, Because today. of

announced return we recovery that closely monitoring economic very the now is premium Beyond hard will the on cancellation endorsement, to recession ultimate measures and that we predict. which activity, month, this and earlier of business are the new speed depend and level

longer where related our to confident of over financial ability and frequency, year, our the discipline term strategic expenses the and of Regardless loss balancing focus. needs while premium in with reduction about levels short-term flex land we feel course the

Closing full-year we at still given catastrophe seasonality, X.X% assumption out X.X%. is at a basis. our and set geographic underwriting catastrophe performance, quarter second note, on expect Please footprint losses our

investment of bulk feel the overtime. from still In assuming the in improvement our of good quarter classes, aside, likely loss asset current incorporating partnerships market about second net gradual conditions component for terms we the putting the a of income, partnership and income various assumptions

at million side. for Our around now variability overall NII either or XXXX give outlook a take little $XXX on stands

investment a the reminder, our potential less overall investment the marks $X investment in run portfolio. than represent $XXX XXXX partnerships, be income quarterly partnerships of as net investment than second believe quarter given for We for rate million will lower billion the on

confidence economic years. results our we expected premiums optimistic to the our future are on about have navigate summarize, XXXX To impact in and ability overall in

will ability our times challenging so. to we in demonstrated very to have do continue We perform and

remains company very Our strong.

strengthening and next, have portfolio years the business. state stream and diversified the we by Over each our earnings while

have liquidity these an will and We industry. strong market believe solid us the investment a manage performer as even in and any sheet through high-quality emerge a to allow We balance portfolio. stronger elements successfully challenges

now questions. that, for line the open we will Operator? With

Thank you.

Instructions] We go will our Carletti JMP. And session. ahead. [Operator Matt from question and first Please today comes now begin answer the with question

Good Thanks. morning.

you can But with kind business what far It have in far? you've comments start new will any idea I seen the terms there the long give and could in Maybe Jack even Is And questions. of be we we few this on in shape upside. I Jeff. just as of at you us of endorsements, any stay goes so a qualitatively no production helpful. what insight how you or further into of seen of and color stuff. April, just into give the your downside have have kind retention, so April appreciate gotten you Just would home cancellations, that

is thanks still is tell you Yes, very Matt it John, the for I this question. will early. that

surprised pleasantly We well agents transitioned remote of very that our have environment. are the many to

I'm of I and think that and property responsive customer’s going think needs. to insurance being is industry, as casualty business an I impressed well frankly, the

that down. indications that early is It expected come but geography. that The some class, business to will specific, new is degree we there we some activity also ranges that are substantially submission and industry anything see by to say early

not we get the and analytical is have our with with are and encouraged we flow to just agents work help that in pipelining we to active that that What fact accounts work that that have may we out on that will doing to are responding agents reduced. want where through us we that use our identified period more approach about comes

retentions escalate. do will We expect that

in encouraged I how that, of top at But come the are onset. and the it we a innings that trajectory. stability is there exposures you see are And into level early the I early the will in tell do at of will be, and line that then factor the cancellations least affect card midterm think wild terms much indications fact we will happen. in adjustments overtime that that will

in the quite And reduction are in of seeing there claims meaningful. clearly areas a lot a claims side, we on Matt across

the pretty complete I around, sense me, which from of that affirmed think guidance there. ratio, have bit Really pressure my question ratio expect into on of is you and the they little your can some guidance, expense centers suspended not each that peers guidance the Maybe But indicated benefit some can talk you upward to that improvement. what which downward, tying I you common expense where, your premiums, of of Jeff, Is to kind reaffirm kind expense the outlook that, dichotomy ability you net about the does comments in expected relate in fuzzier on decisions there with written make more you back to to ratio you people? than can some back have other spend about, not about where your referenced pull Okay. pull makes a the optional pieces. top-line anybody flex and think that maybe or

Yes.

the if point ratio, you expense So its two basis break we combined the a ratio reaffirmed components, XX improvement. into

have we will are long-term in we to scenarios we So offset that to the balance pretty the confident can From and that ability the in premiums. activity be the short-term to deliver able the in we loss expense net XXXX focus on a perspective, the that see. expenses seeing ratio or in to likely decline that claims see on are

it did recently. reduced think or we downward capital near-term, line management of I just open and about at there. I How maybe pressure looking commented, views valuation should than we that? can us capital you saw I then on trading about said activity a lower likely least halted QX. at mid-March. stock a if referenced on How either, closed were think in forward? give mean management, And one out top purchases, additional last you some obviously on kind some of mean, but kind an just do I market Alright. you you Okay. ASR update There growth your forget at least who the

moment another a wait on we take said, So mid-March. or And, you Matt, see XX and additional yes finished the as the our paused buybacks in ASR. I million and think We so we really then view did at is approach. buybacks

So going are we we jump to that haven't determined back in.

We things year. haven't we for depend determined will about really the that and how go It on feel we it. how also done are

At the moment.

to clear, follow My we feel It would being good about dividends but capital of without be in buybacks. changes We we to operations, see. saying, have we is same go may wait don’t be any but just the dividend anticipate as impacted. and certainly special ample the prudent are view think ordinary I and would guess any view

the much color very for best you Thank and Great. luck. of

Thank you Matt.

And go next with comes from Please question ahead. Newsome our Piper Sandler. Paul

just morning. very One two questions. small. Good is two have big Normal I got one questions. picture, is

have things. maybe your time major there big areas seen underwrite big underwriting first. are either in think changes I’m big, change risk? how in you we look like really how will picture seen where or wondering people from the perspective, So, fundamentally events others at this, Every have we the you

might Yes. think Jeff that scenario happen of some contemplate our that respond Roche. about existing how we had Thanks coming that Jeff is talked question. have and for start would us. financial Paul, this could do work the factors to the that at on we financials portfolio done and look at will what based the various

been and way the to thoughts the interested business the it going sectors frankly this might goes have a lot same would of absorbing and our be hunches is and the business we What in see and we aversion? of prolongs working time, kind our way Bryan do around, actively At some the that and that, Rick pace. if to of an be would are customers change that do accelerated of implications or the business at right

So, restaurants and the some Rick, we really some in some the shifts the that hospitality and have can of of reduced that, made already areas. of we our that, on when pretty the penetration long we are of have done we it you of and maybe have comment short this proud analysis, that

those back bit scaled But, a that of serve did that I of actually years effort. of us liability trends the think major little we part the back. will because And a as some areas that well. metropolitan of we couple observed We in

I serve us well. think that will

but the much Rick. success I as to see future. are doing we of try economy a different amount prosper, fair the we in a that and ourselves in project future, and work scenario we for So service the way position think anticipate into to continuing to

Yes.

of core our you most I sort as do some just us here, To that color book to downturn. of specifically the provides those Jack So, that. areas being the that said, resiliency adding know X% percentage. restaurants, certainly major did than are move last some substantially our more to - those we a agree effected hospitality mean, is about less of book, those bit metropolitan out what is XX% sectors a think we we briefly about that, in of think we a that which over that is COVID. metro those The impacted years four small and by areas of down are work

would but industries commentary as, color today and an looks look underwriting and that them become financial this also their component. other their may classes at at how important I we affect strength, our make will operations, one just Maybe certainly and

You that things are making and in think schools sure their about financial solid. arena is rock happening stability that

So, role serve as think will our we well. current

questions the some, had Alright a getting of thank I there the you. a in what maybe about triggered was you you could auto reserve little talk couple and bit on commercial and I is development be you give But guess a turnaround year on there? maybe of what we the all can year this the going sense us in just little general. hoped would that of environment

look think development would I prior you overall. at if year our So.

commercial was worker’s It overall. favorable commercial And lines was it favorable by in auto, right, was you was overall, lines. lines. favorable was It in it in other remember, it are favorable Let’s favorability. offset unfavorable comp personal

feel with comfortable overall think very our reserves. we I

last really felt saw are-underwriting. we with and that and XXXX, feel and XXXX some unique injury all needed to we auto have and our about still commercial we the In those. good very to XXXX on bodily this rate been there over that situations particular the of We six the particularly auto, react getting quarters picks we quarter,

overall. reasonable we So I shape are think in

changes what for is trend specific or that So changes? case that are those issues

Mostly immune not unique are so case some Obviously litigation it issues, we is issues. specific a to trends.

As last years, over have cases seen but people is really the few there. use mostly it specific

Great. Congratulations quarter for the guys.

you Thank Paul.

And comes go Meyer Shields from question with Please our KBW. next ahead.

Great, thanks.

allocation you for new for about money there a now? is there shift talk think strategy any is in rates I whether investment and new Jeff. money question Can your

little down bit. way. haven’t have down. spreads we material mix any The rates new are a No, money changed our have really come in Obviously widened and rates portfolio

spreads gap. have covered some of the So that

off. for And eight be do sort with year the generally a of tends the X.X new flows, a of later. first of four timing investing about the we portfolio lot months cash of the roll year of because years don't it duration, And in to to takes

to about that. are go we at now So

those So higher no, are our are a bit the portfolio, Mayer. yields we reshaping baked chasing year. that a have money the down the we seeking yield or But or guidance and little new we have for levels given not into

thanks. Okay,

quarter XXXX? little into Second pull question, the can expenses and over the on back how give in that that impact you rest the first maybe us a insight would of operations you

was we didn't down the ratio expense any were So not expenses much to make really specific of as quarter. in but the know they were in mean, you terms bit first guidance. little down down year-over-year, a our decisions I guidance, relative

it just or that largely of or things of adjustments. So nature accrual some was the hires timing new

down, go in be things expenses year, premium there I able ratio. like then in just think order that about and around other flexibility decline deal have that be And like travel importantly, we with more be some to conferences, an to as think naturally will expense will expenses manage that. we some the entertainment, there the to

looks, as Commercial final that fourth absolute, is then on my and slowed It math right, question, talk the that. change like And will rate the rough bit very the a - be little on quarter about Lines if the Okay. like

the Jack, let make question. I is This me sure understand

of pricing? You about the lines are commercial asking our trajectory

Yes.

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in quarter tried fourth that to call. speak I we think the And to

of know base that it bit that through little or that whatever if total in X.X was pricing terms people So would you quarter. the exposure was particular based on will, a inflated ran

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you seeing the running book our portfolio, that over into are some And getting. that look been in you X.X% incremental we specialty portfolio. at an rate when even actually is look what we core that further if So additional that have improvement improvement through is

very you much. Thank Fantastic. Okay.

Thank Meyer. you

Lukasheva answer closing the And to this will question Oksana conference to like over conclude back our and any session. turn for would remarks. I

for today. your Thanks everybody participation

We next are you healthy. the to talking looking stay forward to and quarter

well. Be

for concluded. conference you now The Thank is attending today’s presentation.

You may and your a now have lines disconnect great day.