The Hanover Insurance Group, Inc. (THG) 2 Feb 232022 Q4 Earnings call transcript

Good Day, and welcome to the Hanover Insurance Group's Fourth Quarter Earnings Conference Call. My name is Anthony, and I'll be your operator for today's call. [Operator Instructions] Please note the event is being recorded.

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

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

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

Jack, severe press from actual to presentation you the refer SEC. you with could XXXX section results the forward-looking impact performance guidance recessionary include Securities can relate inflation, a and and let or release, chain Before uncertainties the of slide filings including me supply the and to We the risks outlook release, anticipated. in statements our the today, such that at questions over I effects, forward-looking answer that statements materially turn company's to cause call press your forward-looking session. and related potential Litigation and XXXX. and the defined These respect, and as our www.hanover.com. will this other questions among fact, respect our the in and of today's conditions emerging catastrophes financial statements, for to than statements other the differ supplement under in Investors insured complete disruption, pandemic Reform call presentation prepared earnings in caution affect behavior After those evolving available the economic as our we Q&A note Act from Private weather deck and are to for and remarks with reliance presentation, statements our things, section responses other to, historical and on our website of

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

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

will you morning, with I'll Today, Good an we've performance, everyone, update overview our Oksana. us. ways future winter and storm discuss Elliott thank you you, impacts progress for storms, of year, joining Thank we our on executing begin accomplishments to address fourth made review in the of to underwriting strengthening conclude and winter past recapture strategy. a strategic quarter margins, I made competitive remarks this XXXX position our our strides important the of with winning top-tier and and my and our

and and sheet our as Next, expectations. Jeff outlook provide well operating and review our longer-term will as by financial an financial segment our on update results balance

questions. your for line the open then We'll

the share $X.XX premium For in reflections the inflationary full Both and written across segments. with standpoint, net growth income all operating generated activity year, per a fourth economic cat an for and we the strong of operating equity of we year of the return on delivered of increase the From X.X%. X.X% magnitude quarter. the environment of contributions

combined year November. toward of XX.X% on quarter earnings third provided excluding ratio, full Our guidance call the catastrophes, the we lower end our was in

and work of take of management strategic terms the recent Given of and like a we've past years, to I'd the Elliot, in in catastrophe most risks. severity like to frequency done in minute recently, unusual events catastrophes including the atmospheric our highlight the

particular, convective in We've addressing in catastrophe strong and employing built analytic data, underwriting and hurricanes strategies storms, disciplined technology. by record a augmented risks tools track

declined P&C years relative over losses the to result, our has industry a the As catastrophe significantly. X domestic share of last

saw evident storm share type prior in from period or in bring. of winter losses with our wisdom a weren't weather conventional smaller But what catastrophe quarter as the extreme than fourth as of level our same storm. in been can affected have effective Elliott, the our catastrophe market And generally results, Additionally, this losses our challenge management like line can of territories. storm cold Winter during we actions the clearly

While priority our the patterns to our few this and and pricing affecting the is to geographies, we and in volatility changing and customers weather performance. to needs financial focus we've intensified incumbent agents, of last on our our top is years. learn it management these from circumstances also all us upon With operating event over address more leverage advance

innovative are advanced risk with tools technology, We have sensors, solutions vital further decisions and technology to data we prevent expanded water from our the mitigation, Today, assessment other information temperature underwriting intelligence of make claims. AI and gathering and area collaborating and partners. risk in capabilities visual

A from of solutions early water use. number relatively temperature IoT already adopters to benefit their and of small begun property sensors and have related

to more ready We understand infrastructure believe scale we risk needed these broadly, platform customers Winter solutions as storm existing movement the Elliott drive of better have on exposure. prevention risk will market our quickly and their adoption a

implementation around weather risks actively We we cannot lower damage water which water to risks, price, loss are for deductibles efforts our sensors repricing as the in products using significantly addressing levers: focusing increasing weather consistent following deductibles and incentive. enhancing volatility of address with achieve change the adequate

less in us selection, will to enable confident innovative address more pricing more our future. but on the and these risk effectively use broad-based tools frequent We're focus even of storms

update top-tier commercial on core progress, Now margins I few the personal in you a regaining minutes persistence and of supply our and inflationary lines to despite pressures. our property will take chain

executed the underwriting margin X we value third our successfully have fourth all X we significant areas adjustments enhanced targeted to insurance includes on measures, quarter plan and in recapture As and our levers: main pricing, discussed quarter. call, in

First, on pricing.

is account increase strong the a which points moderation, sequentially, Personal As relationships. our and guided, retention XX% in Lines Lines above only slight remained and to agency of auto with testament quarter, both unique home we achieved pricing nearly Personal up X meaningful fourth in with solidly sequential gains XX% pricing. proposition

an hard lines. are evolving in in allow unprecedented regulatory market further is And in most increases to personal rate environment Additionally, operating we the states.

pricing trends, end loss XXXX conditions now to market disciplined mid-teens. Lines and Personal we expect elevated the in strengthen the and further Given

meaningful made higher price underlying for levels core up slightly commercial even change third also property and XX%, expect strides pricing, quarter renewal We XXXX. above increases increasing with

A hit disciplined satisfactory is position levels. essential while and strategy market maintaining and in environment. pricing superior agent the partnerships to current targets retention enable strong us our should our

renewal middle points premiums using market the we're added year, increases completed fourth work adjustments to the to risks. -- throughout certain combination made in XXXX. Second, the adjustments for we in insurance we with in complement The property middle-market property-specific value of approximately X quarter,

continue our strategies. to we enhancements make third, And to underwriting

updating We guidelines, appetite our challenging particularly perils. new business to secondary to tightening and related targeted with are criteria in classes underwriting and renewals industry risk underwriting restrict

we year, approximately volatility. million outsized the For of $XX middle nonrenewed presented commercial that market business property

to CMP the in all points approximately by Overall, this XXXX, made in pressures improve quarter recent the things equal. inflationary to profitability with expect I X.X property am pleased address in property. we We being strides

result already solid beginning to see actions. the of profitability a are to and XXXX We impact as achieve in plan these our gains of action expect

look let's our at accomplishments past XXXX. strategic a Now discuss broader take year and the in

and enhance of strategic use, build our partnerships without not execution our investment talent our challenges, broaden and year was business, deepen expansion our of cultivate the and continued the technology analytics momentum. priorities, track certainly we ease on in specialty further well our culture strong of While agency to on on remain innovative to

combined nearly from delivered Our even of proposition. a of Specialty property continues our of to terms to for Specialty time. casualty better full a value in Lines X balance continues between as business XX% in becoming XXXX. as well growth, and annual risks of deliver to the serve year, XX.X% points an over ratio improvement agency contributions financial This XXXX as a premiums major business element increasing an critical pursue by enabling us and of source

us highly agents to diversified portfolio enables ranges of small our the and retail to Our market. the broadest offer products of midsized in one specialized

nationwide XXXX. sectors. management our institutions, We and other specialty liability offerings of strengthening in general offerings liability E&S, our And retail, expand completing financial and the rollout to for continue product

and Additionally, agents. we capabilities us underwriting and and both renewal reducing automatic for lines, implemented for greater efficiencies manual the our creating system professional intervention in executive operational

be it our specialty our us and work team in success strategic to gives And business. of continued with and to this ability certainly drive initiatives diligent forward. continue their We the momentum confidence impressed in our

On the react underwriting to technology in our digital quickly more environment tools we capabilities, investments dynamic enabled platforms XXXX. front, and us the faced in to innovative

while improve small customer similar for to user, platform experiences driving agent workarounds, business manual launched and In Digital We agents. streamline Exchange process a increased made gateway intervention Business reducing Hanover to Small productivity. vein, and to we our the placement enhancements claims

employment helping relationships, continuing important many trends midst succeed strides market serve consolidation XXXX in a customers. We and their our also advancing and in and agency independent challenging better the of agents made

existing making market the agents at We specialty same appointments, small agency gained niche share while many with time, and XXX personal access. enhancing commercial lines, new great

our we investments and build additional XXXX, retain for strength to continue believe to this we been in attract, has organizational distinct Finally, And a competitive us. culture cultivate making advantage on further talent.

and equity initiatives challenging workshops. acquisition. efforts real diversity market, with our and the and employee our training engagement From to skills employment to momentum talent we advance Despite have inclusion, opportunities multiple

increases XXXX advantage last years expect year quarters of culture the our accomplishments and strong great rate of depth several the expertise. and underwriting the to sophisticated benefit in from of We feed our entered talent ahead. We with

the We I delivering for the to ahead, will the our anticipate confidence to the continue changing dynamic, of expertise all we environment. value rapidly of necessary have And team and adjusting every of stakeholders. the our have necessary long-term changes work impact

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

segment good more Jack, begin discussing performance I reviewing you, and our in results by our and operating will Thank morning, consolidated detail. everyone.

Elliott likely the we week the the approximately largest of will property and burst catastrophe which time of XX.X position. by Properties I'll with you period discovery for points guidance points. were delayed of And book. Elliott for we storm $XXX of pipes. million quarter, Winter have or XX% of I believe may unoccupied an were prepared then losses for and resulted $XXX portfolio the core the from the from Over my update losses. Next, total extended our XXXX. damage commercial holiday within that during losses water losses million remediation our capital fourth close XX.X providing In accounted remarks investment or our on incurred

strong, provided the business very results ratio our XX.X%. XX.X% Catastrophe prior deliver year quarter, guidance full quarter of we remain cat was in ability were evidenced combined as losses our aside, within The the excluding the line loss trends bringing enterprise in the expectations catastrophes, with fourth ratio, ex fundamentals the to on by to and our call.

delivered in expense ratio by well the leverage from results year agency which These year variable impact For with including an year lines we've XXXX an expense X.X the comp. of reflected position heightened and of in by lower-than-expected $XX.X million a of driven XXXX, over some fourth underscore year, XX.X% entered reserve quarter, balance of favorability in from had employee ratio success a assessing XX.X% catastrophes basis quarter. the the points a prior sheet full excluding past the cost specialty XX really development, we primarily solid building as vigilance strong We favorability, driven several full growth onetime improvement liability The favorable prior as We strong in and continued improvement or in recorded came and the trends. points compensation. at and from workers' years. fixed

our long-term trajectory remain expense ratio We our target. towards well on

year, discussion in a loss year XX.X% to performance. ratio large costs underlying to increased X.X of points for loss and to and inflation quarter, quarter second to the Moving higher the to underwriting X.X XX.X% on reflecting consolidated of year. for prior points and underlying increased half the fourth our full losses higher the Compared the due the loss property

personal to CMP offset quarter severity and provided third auto our Fourth was by impact by call. and some quarter comprehensive puts specialty in levels earnings of takes more of benign relative with in outlook higher were the business and and coverage. with home loss third expectations, improvements segment. Relative quarter property frequency strong experience large we consistent outcome losses the our on in to our

Looking for uptick to at points property The loss underwriting second core of commercial. the commercial by year, increased fourth an loss and with X.X large points primarily core quarter the the ratio, results and full excluding half increased for X.X cost in in segment, the due inflation losses starting year. catastrophes,

which property see supports. abate the from levels. additional the in to loss somewhat business, were fourth continue certainly We market to in commercial said, CMP quarter That QX pleased core elevated push of pressure we rate the book for across

increases and rate property book specifically, in from slightly More the of increases price exposure up while robust COVID quarter portion increases experienced the beginning of achieved see XXXX. XX.X% in of X.X% In some renewal total XX.X%. the increases quarter, continue of third we was additional the coverages, rates, of we post we to to normalize. and In casualty we renewal expect change price are the the elevated

remain we core mentioned, insurance-to-value leveraging target to margins Jack focused As recapture property-specific in property lines. adjustments on

to and positions and quickly us with analytics forward. align deliver Our core with margins in underwriting inflation granular exposures going adjust combined actions data ability well to targeted to improved commercial prevailing

in be actions we reinsurance by Looking cost same earned reinsurance commercial are property of cognizant offset this market and in to the treaty X expect into underwriting book. we meaningfully improvement drive increase time, and our dynamics XXXX, part expect improvement renewals. July an the margin to the with core of the temporarily price of select At current

delivering posted a of ratio growth combined excellent and line X.X% Specialty of another of results, XX.X%. top quarter

XX.X% quarter a quarter. prior year majority remains growth year, both our fourth ratio, basis growth. renewal achieved from markets and improvement catastrophes, written specialty fourth from pricing resulting the For was reflecting we of as combined from The the a team in Specialty rate third an price accident sub-XXs of increase XX the in net XX.X% XX environment year excluding points firm ratio. basis quarter, specialty current delivered of XX.X%, premium and of points sequential the exposure acceleration our the loss

our business for At confidence same contributor more relative embedded an liability expected XXXX well to assumptions as in time, uptick light XXXX in will full the to be outsized results. in specialty lines We as our an have to medical inflation loss certain of prudence that our results. in continue for picks conservative we expectations

chain quarter, of Turning of combined year approximately elevated fourth impact reported above inflation quarter on frequency the to current homeowners by property. the accident the fourth Personal and loss animal ratio, business XX.X% for was our supply personal Auto, catastrophes, ratio, excluding primarily was Personal catastrophes, Lines. delays the which auto excluding for a to QX, -- the The driven expectations X and of points exiting hits. In due

remain and frequency where our QX track loss insurers Putting the Michigan, line Deer with of are in trends personal in among largest the and reached auto the pre-COVID impact coverage We comprehensive claims. severity levels. comprehensive in underlying hits and their below frequency aside, peak to auto in coverage expectations continues

an X% third severity quarter through robust renewal We of and to from pricing rate of are X.X% of expect and auto price Furthermore, X.X approximately line actions. first in addressing the sight Auto further achieve higher in increases of non-rate prevailing we XXXX. increases acceleration the price quarter. of have quarter points change auto reflected to the

expectation property to fourth to frequency homeowners, of due stabilize non-cat we on The losses. same In lower our ratio to pleased was inflation experience underlying large losses. were reduced than slightly the the loss in we homeowners somewhat quarter. time, continue see weather better somewhat At loss elevated experience somewhat

the beginning our as remains price on homeowners upward impact increases by home. quarter. Written the XX% to in increases trajectory book change of the robust nearly see in We of profitability evidenced pricing fourth a on are in strong

year. We have quarter line teens for it in remainder in remain XXXX, of further acceleration the the sight to to the the price expect of of and to upper XX% first

Lines intently business As account an the our profitability as writer, on of focused we are whole. Personal a

expect sequential overall XXXX to seasonality, normal We each reflect from in weather by quarter ratio X homeowners. lines XXXX of personal XXXX to improvement. led Adjusting by expect a improve points over loss for we

a and of auto some early auto from future half residual rate benefit progression underlying actions XXXX. more current create will frequency the in paced as anticipate the XXXX for in earn headwinds and We comparison levels follow results of first

auto However, in we and improvement all this lines XXXX, and to further personal business target equal. in both profitability should expect by return home, things XXXX, supported

casualty Turning to successfully our reinsurance. we reinsurance multiline completed On January X, renewals.

our an renew to ability price. our and with with changes limited pleased are We acceptable treaties at

is where renews seek reinsurance exposures study risk on gives reminder, options to of program our rolling and coverage program our necessary X-year cost X, cat time increases a ahead increases. a pricing which that anticipated adjust As July us

Higher Now moving our offset a provide income and to investment expectations sheet continue quarter. of rates in our higher portfolio. a In earnings. than $XX.X quarter, helped by slight net the investment underperformance balance came interest discussion net reinvestment partnership to million. to which meaningful income on and the lift more investment overall in our above fourth at yields, bond

we income about For net original year, the delivered of our which by million. million investment $XXX.X $XX expectations beat

investment turns substantial the impact higher expect to current at net income is interest we ahead, building rate portfolio reinvested and interest as a environment on have the rates. over Looking

We our is also rolling new off maturities yields money continue total above portfolio. above of portfolio achieve the fixed to and well on -- what yield. purchases

tailwind higher our experienced quarter, of interest flows portfolio remains of value and but -- by provide securities, rates an in the unrealized to the tax loss We fourth fair $XX.X we expect change investment in driven valuations during million cash meaningful income portfolio a before increase in the a We position favorable in year-end. fixed at the XXXX.

rate-driven concerned We the attractive are Portfolio at duration allowed market us market shorter has yields beginning X.X we at securities to XXXX. rates of in value cash to to and invest fixed years in and interest maturity, typically the hold compared increase portfolio portfolio. at higher stood and temporary of not year-end quality X.X at in income flows at duration. years The overly movements with the interest XXXX therefore,

equity Looking position. capital our and at

capital Statutory to securities year as nearly the at end in down insurance year a billion $XXX relatively parent investment remained fourth mark-to-market on losses the increased to were equity and dividend payment to of by offset due million for portfolio. the earnings. investment while on compared being value book $X.X company our last quarter, Our losses the unchanged

We In value of to remain reaffirms commitment the the of of capital capital. disciplined Directors Board our committed in management potential company's This strong our to and approved increase and priorities December, maximize our increase and X% reinforces earnings balanced stewards our in business. on the shareholders our quarterly being for dividend. an confidence long-term

to for our guidance Turning XXXX.

in growth most driven commercial impact net in of and partially by underwriting premium certain businesses, profitable by the offset the overall mid-single be repricing in of consolidated lines targeted expect business. growth our to We parts written actions digits,

growth income assumption investment net expect to performance incorporating We approximately partnership XXXX relative XXXX. in some an lower after for of X%

income investment securities is approximately higher income higher to operating fixed Net propelled by yields. on expected and by increase cash XX%, flows

expense XX ratio at XXXX for Our be and the XX.X% should basis the basis improvement improving over guidance year, points points of XX years. us X putting from

full catastrophes, XX%. the The of excluding in range be should year combined ratio, XX% to

In personal be ratios impacted addition quarterly usual of our earning combined by seasonality weather for the auto. progressive and to increases ex-cat will of in frequency changes price and

will of Additionally, the to cat XXXX XXXX basis rate first which XX%. frequency the for quarterly year. comparisons XXXX The quarter statutory load increases points expect the we rate, tax by in to the is The XXXX XX guidance auto of first be load to effective for cat lower from claims X.X%. of XXXX the impacted X.X%. half And an is approximate

XXXX beyond. discipline top-tier offerings, way XXXX position and In from should XXXX strong pricing on XXXX, profitability. to conclusion, return and our our underwriting to improvement operating meaningful differentiated performance and well represent solid us capabilities for

margin with throughout growth to year. the partner forward to the best We agents look nation's driving continue and

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

from with first Our Zaremski Instructions] question [Operator Mike will BMO. come

great heard have on not about and property first offer you curious talked of property I we're think Our color there's the inflation, us appreciate did, an than about just and -- question maybe get and to side. if there a inflation cost you're moving rather property a bids whether I that update, but side, question. give the more just Maybe if seeing can bit I seeing pickup, of and is of the but mentioned liability which on all inflation peers up understand medical to bit kind on side, loss a elaborate more I kind accelerate we rate better in you the think commentary. front First any you well. my as But more can That's some you

Jack. is This question. Mike. the appreciate I Thanks,

which only while itself I obviously eventual evidence in think watching comp that we're in see line, the expect we any to we are workers' this material we're not to also liability the We it inflation at lines point, if see medical eventually. some but look lift carefully. very in do inflation, seeing to for not starting medical

the On from top of evidence social broadly, continue show and inflation to more elements standpoint. some a of environment see we the on litigation to trends and analytics and starting of up, to that claims monitor tried stay we've liability

frankly, that, captured we've think picks. I in our

we're see making on any analytics contemplated underwriter, haven't the prudent seeing anything the up and that have the through. in watching a courts really it So not fully we're like their what's date. and we place hawk like running, that sure making we to way are to right that are and But those cases now horizon

concerned are involvement and expectations procedures guidance for lawyer costs those some as XXXX, incorporated medical the in there and increases picks. into on we've increased far As or

changes you a rolling levels is in in into the in any know side, high But down has not what have sorry, there trailing what's costs. terms I property account reinsurance side property terms from inflation seeing of guys maybe historically you're of company XX the On program. been or a step -- reinsurance taking the months?

material I down as don't step we've think the yet. of experienced

material that have and of not We're to of lumber reflecting up seen certainly things than, something for yet. our in we're haven't not And a show more that hoping come the a and eventually say, picks. dip watching -- bit, terms we down but so that in cost

some get we've ahead done overall, losses, after we've and to CMP little particularly of to earlier seen large I to glad our were from anticipated in we is pricing we as we But year. of see try the related a and lot have a in which to stabilization trends much as standpoint some pretty stay seeing this of at the our things a volatility in some property to think property possible. try an robust underwriting environment, volatility of overall,

are a -- trend XXXX through the rate in inflation then increase virtually of pricing begins high a is it assumption We're we lot in bit that getting than terms made different as to the segments. you later the and remains XXXX. all in more to loss soften of we've little across begins And get

we years one, and long-term expectations when curious, a world last compensation and a final level, we and we of that investors lot 'XX you'll for the that this follow-up takes? and about ultimately, kind we ROE be lower just guidance, in in equity long long-term see just My is you kind look given return implies Investor about has it targets the know out of higher also, I XX about cognizant, Okay. front targets is expect can should the makers, that thinking proxies the getting in maybe current that should And put thinking Day being curious, guess, the the I X.X than of on what the upper over number of term. at time? is and step-up know targets environment just changed we X.X the it. and decision somewhat years ago a But a be inflationary at level is different to elevated puts 'XX

the over have right. the results. very you're Mike, solid XXXX be the long-term lot XX-plus we and period a time in And to of of So will confidence percent drive the trajectory

strong be, XX.X% XXXX, XXXX, the where are in think do we anticipated that's you would the about stronger, about Investor would something not math, rate investment earns in to But were we the it's And we think as to the not bit XX% you when in it ROE. as think to how but if and you have it and If for imply wanted every income. we like guidance Day, bake solid. as

that. about So but on trajectory. But fine very we're XXXX are not 'XX line, clearly, perfectly I think into we're optimistic with that and the even still very, exactly

over will firm compensation -- just we're comments on Any -- X.X in the step-up given reflect time? years firm's the does structure ROE a it in

Well, remember our heavily long-term particularly by for our compensation influenced executives, senior stock. we're that in

that heavily investors -- argue would in I expectations our our I But to think of meeting regularly the Human Capital and So is targets appropriately weighted and intersects those that starts with will management goals reflect compensation team environment performance, longer-term and to goals our Compensation going like scheme. with improve, Committee to expectations have to achieve and our we're that. we those said, aggressive our set we high adjust the as

Okay. sneak maybe And Understood. in. one one last

on there. still lot of side give of kind property Is of Just I you work if -- in or of inflation side terms to that the analogy in terms of reunderwriting kind of couple the a maybe the don't baseball of property values could insights us the to on portfolio, innings years. do there last of over some it's kind into? Is commercial of know baseball reflect it and appraising an kind latter in half

and assessing we've and including And going I years, our reflects pandemic our few that his overall in one dynamics say the of on the dynamic. of implications well as last over those Jack, is terms in that never pressures, This is but supply as pricing against let job our our quick Dick is on Well, changes. the sure inflationary and trends But s the those I'll this. just making and the done chain perspective repricing, some underwriting along learned if weather And portfolio. re-underwriting pretty environment property then would a we're maybe far get our the say thing about thing table.

But say the the confident adjustments. I hard it's what right the So think we I'm making that is, continues, that? on of you may to going be build do it and Dick, But to know think match where a until PKs and game game we're how that the to that are to you because just dynamics, I done. Mike, like soccer keep inning more have do in the want all

business exactly. income. say closely, watch we'll year, both this leaning and on would the right, ITV into the increases throughout I the contents, it building No, we're next values,

renewal. So increased rolls to each meaningfully upon on we've sort what policy of

And so a continue then pretty said, to a watch we undervalued properties. -- look might we'll be going loss just the hard our at at as that there Jack that level also, took we put high might to -- cost. be But and we're see where within book, actual

you so of that a analyze in onetime may not and at basis ITV where adjustments. fall get And where sort you you short make

XX we're that far just So process. -- be this front the that absolutely us will along next pretty is to for in of on And XX one months.

Farnam Our with from Janney. next question come Bob will

on questions the of guidance. couple A

first off kind ratio, the average X.X%. relative of low probably is the to XX. last the the to past So the over loss few years, low That's relative cat

just that's actions curious in just the the cats? I'm of reduce of taking volatility of to kind So because if kind been you've

at you the If that's look XX over case. definitely years, that

So properties deconcentrated order in reduce that. to we've

periods the we're We've business. a increased X.X%. think, and the So years, lot the We've I earlier perils. increased done it, We've the in with of our work I modeling. bit done on the We've had mix load. think XX little comfortable a different of

in each XXXX. commercial going slow to Is core way you see the to on growth like comments, bit growth think sounds of a it slower down little a underwriting that it? It from Okay. your probably to How so segment? do right actions. in the about like maybe premium it's And little growth, going see sounds relative because the to you're

this Jack. is Bob,

get be that will, improve make I we're firm the see dynamic That emphasizing in the the a from PL, is said, done we're to environment. we're if we right, trying down that guidance, middle than material comes growth low. from is growth. as some limits against market our that our commercial growth think of level, confidence sure margin the that is we're volatility to loss more what last pricing core we point premium market growth we're PIP you're in making that. in going on on that as may overall, in think will growth growth we pricing some pretty think, do our lines personal actions get can the our that And going than adjusting may lines sure And it if margin and we're important saw appropriate reflect to of I and I standpoint But underwriting the the growth work the at business, to a keep over until in and obviously, we growth focused recapture sector XXXX in than with But with stays surpass the our want of within you because move that pricing certainly changes too of in particularly making personal more to trend. less going XXXX. the down and

where environment of with be agents didn't The within to continue in of I across middle combination the also on there's our and market headroom and pricing number parts those of bullish. a would if I portfolio us that allows specialty commercial in sectors we're current even of say to parts remiss lines, our stay and very small our our profitability offense portfolio. the the

emphasis improvement an with all trumps combination last a of So but the point mid-single-digit guidance in really, that, margin our fact price on that terms the goals. of of that is

right. All

for up. the Alliance that rates going as keep brings another And up Okay. Personal question

seems say, where drops we maybe retention right, if to pull your I'm of pushed bit a there's retention the to all if much. back get trying that just said low. certain holding would too maybe be up retention a too rate point the you curious Is a there You level well. pretty you

particularly dynamic that this Well, well over in watch last few pricing on let I Dick a me you let think comment years, managed pretty because if the us environment. we've

more an few writing and monoline I And are Dick, why monoline things. a don't writer, think stability that a so bit to you share those But that auto tends being home stabilize than retentions. little us account gives

we the trade-off, state at management by customer heart is by and and science what actuarial every our of day moment of spend looking retention price at segment. price, the This waking the state,

and We that obviously we pools protect. have profit to of want know

we retention we our those. metrics we watch So appropriate protect such those closely, that very and make pricing increases

times little see it a on as made number our we back So were think and level bit drop the were we rates, And referenced, our quite we're this effectively. higher in I a reducing se. we retention rates, sticking in to and did capabilities Jack adjustments when start of proud per put and particular pandemic with others wouldn't regard

in -- retention high with account our to the certainly We mid- strategy. So like the XXs.

watch So closely. a that's barometer that certainly we'll

RRight.

question And for Jeff. last one numbers Okay. probably

keep in you that Just money new -- the rates excess are expiring. mentioning of

what just So is these days? rate the us can give money new you actual

X%, that. shared haven't in We I the like but range, in I somewhere guess moving treasuries X% quarter X% something quickly, around it's so that range. are that would suspect or to somewhere

Newsome Paul with question Our will Sandler. come Piper next from

but philosophical wanted thanks Good investors It's of it. the morning, of call, is a guys, maybe -- the question , am a help. from [indiscernible] ask that you a getting are of of you sort me, various little expect, I is, today bit surprises I primarily in which folks businesses. should you a on it be all more the to improvements. focusing I think why -- like top for question, line cycle, profitability would shouldn't on be growth. philosophically, guess do focused I you part ] the more [indiscernible this question what sounds in and

mostly people think lines maybe I increases how do price personal philosophically, think pretty But in that? are at competition. this where seeing guys just and a you about heavy -- is coming think they from we're looking reduction

think that And period time. goals. I ahead the appreciate question actually business over The really you the think question in. I returns that aspirational Paul, business growth the a generate multiyear is aspiration appropriate grow a in the I given in September underwriters our of good are of because market our to of basis. that XXXX over best our saw able And is we're and

have combination that more the be growth proper us and the a hyperinflation the we've of track make a challenging of certain weeks our humility have that darn we with regard little we want will, caused plenty firm. capability confidence to we coming balance I hope to complete the headroom way as have improve so to the margins being. we the a -- growth all back have and And X we it in performer firm to we to XXXX well top-tier rates bit cautious as can to environment accustomed out year play on a the of been and know year, our profitability storm can that and as this like back and of we elevate be think last growth margins out and were, our where I we see a get quite that we

the confidence example, XXXX a growth just to over on out for have a in that as September our we we've quarters we Day, the of X-year since the we set XX% X an averaged the X And ability lot out there that Investor growth versus put goals period. Paul, deliver about plus there.

to slightly So where we're make just fine Jack margins with are the if that, below period said. a X% We're our time there's great. as perfectly sure of

same couple to a little looks actually people across pulling material losses businesses. little of and mixed on getting and the your material is competitors maybe it me just that that's And back bit fair be and may Is place the pulling less the It volatility environment more think actually back that all are a or basically just some be really assessment? and a given thoughts a competitive competitive environment really a bit of earnings big that are better. areas broader lines like where various of It kind are there's actually -- additional places. that do craziness with the -- isn't you at people the just in clear Or environment competitive. our pretty may

overall, think marketplace. a we are that I disciplined in reasonably

-- there see lines of and business and be based on predicted, many sectors we of we cycles think the business. will as I

be There to Med-Mal areas I and real extreme portfolio, Relative some hard of but and like signs think we starts think that the in reaffirm a I subside already see the may our that thing. bit, little of same you saw market some tougher areas. specialty was on to the a may that

you we're If specialty have but well. look good the areas business we of pricing. that pretty performing specialty, getting extremely are at still

that what are the utmost traditionally, that evidencing horizon happen that coming see developed. To the respect a would could hyper competition be And would themselves, still liability out around and you means acknowledging is me, of some for is pandemic. trends what that there particularly

you're know maybe some maybe that example to line, specialty probably could Bryan, So margins pretty together, sense, market but all the when by I best the in the and is pretty good is stable still of despite I firm companies. on me where add put you the some for your better

potential there Look, I that. the costs paying to think social rising of way the weigh say, I the that agree to terms glad with for that the reinsurance potential and about in. it. out would that's thinking I Jack, you are enough rising in and folks Yes, attention would -- insurance there's inflation, And we're for

push monitor appropriately good to right, to achieve feel So that growth results I push, I our we the did, that is on would rate, continue the side. XX.X% kind it's and the way adjust accordingly. last continuing the or able describe property of we on year, were we side whether it, while on to casualty

retentions are So and holding the that side, property our continue to is holding on and quite push we nicely.

On the casualty well. to side, we push as continue

for year. we have an throughout where deviate creating feel from our like competition environment to now. watch -- the And that not But the is And us so we'll right we one is interesting our only composition an the add thing given guess would limit risks and lower skews middle with I is, towards sort it book smaller a of other profile. I that that

us are attributes well. those also so And serving

a we to gotten. So a I continue on in we've increases think and appropriate we where we're given continue can can push. year-on-year in to the watch, think rate should space it's We we're to rate adjust position the

Carter question next from of Our Bank America. with will come Grace

we was increase? into kind step-up catastrophe I the loss the factors half outlook of first compared And half. wondering the expect should for just bigger the how reinsurance of second year, the the if midyear for in this to a guidance Considering renewal year

uneventful. did of we renewals, We through buying tower. cat as the We went added a last additional said, or casualty to lot we our was Grace, that unremarkable and year.

which We it, bond, very program highly given assuming also we is at on it don't just which place hit cat put the a top. X-year has unlikely in hit it, to a

in shape in see good treaty I impacted rolling X/X. X-year since suspect be getting program our we'll what But based for we've We a have it since we assumed market buy done we on a the what Katrina. read we never basis. firm on and

a So out pushing third. we're always

about we've feeling I'm set but in been good our conservative So how assumptions, we've it. pretty

one. quick more one And

I in cost latter guess, scrutiny, umbrella trends casualty loss being the part trends under any consider, cost the noticed more year? loss you difference we in of As have

Well, say in I I of trial the kind the hard it's litigation I that law changes. half more of staying a losses. obviously are seen going losses Grace or But even at material few can't small longer because the we've or numbers, observing claims they're in process. we to many very produce think umbrella your on umbrella, industry, quarter is basis those think a year to look cases like any huge

appear and awards some seeing others are that which resolved some We get appeal, be above to traditional don't. of levels,

believe So aspect of delta, we're social of exists, seeing a we monitoring clearly that but the implications tremendous our not yet. inflation, which we're will, if true you on portfolio

from come [Operator with Shields Meyer Instructions] question KBW. will Our next

think the in guidance, that XXXX. And changing impact XXXX, XXXX? about got But on wondering Great. compensation Two guess. if you was quick I obviously. incentive we've we how questions, component talk I in pressures One, ratio the of inflationary about could expense should

Meyer, incentive compensation? about about talking compensation. you agent incentive employee are Or you talking

about that I both thinking assume incorrectly, in they going know. both to are expense because be me I'm ratio. please that guess I included if let the But

Sure.

So they expense year firm of points Elliott better than was with basis of in general. the guidance by earlier cases. the the or to it the was basis ratio one better impacted points underlying by inflationary And XXXX, XX were the both were that those reasons both in the fortunes XX of elements pressures respect impacted follow and was than

levels comp? of incentive So anticipate does the normal XX.X%

Absolutely.

we gets have. that based rebaselined on and guidance So the obviously, replanned everything

gave. XX we And basis a a XX.X%, XXXX period over or XXXX so improvement the over X-year is point point guidance improvement basis that flat a to while XX the

On compensation side. the agency

the every profit puts the at as or There's year. calculation. look that well single we and as compensation plan takes So sharing on direct bonus

So that's expense ratio. embedded ups this some in you'll on downs see but that, and

That's Okay. helpful. No, perfect. that's

in actually that like Is there pricing rate exposure and I expect don't the unit in meaningful, from forward? but is the And it going this Specialty and growth tease is specialty. seems question, if commercial on we up second exposure changes Commercial to Is out if something growth core and The random? there? unit continue going should that we know and Core decelerating in picking

question, great actually. So

If you stable. pricing have terms in look our it progress made in overall commercial, rate we at of getting up core and holding

exposures -- side go that We continue to expect will on the will that, property continue up.

up types Dick the that for driven get said, classes if will many increases. general in We casualty particularly those are appropriately certain occupancies as just business ratcheting and exposures and making more insurance fluctuate, are to hits by payroll sure, value sectors reflected different the and/or The economy than ways. and different sales,

of little a frankly, saw we And that XXXX. in

casualty we tend of loss follow So generally exposures that because those down, try to rate when that. the that. reflect mostly because come in to costs on lines We're focused

is think, in for lines, payroll but exposures most to the sales. I those as specialty aren't in think been exposures the part, also portfolio. our specialty sensitive some I there because growing property and have our

down, up kind casualty And you don't of so think on that specialty. the and of I see to side will, same you're going if

property exposure more relative maybe to not for commercial? in Should premium property into the specialty there's Okay. infer coming that mix core we

No. I would not come to that conclusion.

that just when workers' doesn't just think downside some of and I dynamic comp exposure, the it. less and the it in of you or it's think on retail particularly wholesale, casualty manufacturing on sales have

any This over for the concludes to I conference our Oksana turn session. to remarks. Lukasheva closing back like would question-and-answer

for next today, you Thank and you talking all quarter. to forward your to we're all questions looking

now presentation. for concluded. attending has Thank today's conference The you

now disconnect. may You