Arch Capital (ACGL) 27 Oct 222022 Q3 Earnings call transcript

Good day, ladies and gentlemen. And welcome to the Third Quarter 2022 Arch Soft Capital Group Earnings Conference Call. At this time, all participants are in listen-only mode. Later we will conduct the question-and-answer session. And instructions will be given at that time.

call recorded. this reminder, a may be As

may Before wants certain to gets started securities Consequently, upon current actual this expressed statements differ federal under update, management from assumptions with are results assessments number of or based to its call on those are first may subject discussed today's release the a forward-looking press statements statements implied. the company risks laws. in and and constitute These remind everyone management's and and uncertainties. materially that

For that the more are investors periodic other to information on with the that from SEC risks should may and factors filed reports company time. performance, affect the time by future review

forward-looking contained begin. and Additionally, the can earnings introduce and of of in Management furnished Litigation and Act be The Private now your also will in meaning the the income Reform harbor measures certain Securities report conference, Marc contains reference Francois facts of today's yesterday, the operating performance. the Mr. some to call on thereby. in based to statements available is to Grandisson company's XXXX. Mr. found subject the website. reconciliation the to statements I Sir, which forward-looking are to non-GAAP company's GAAP intends Form the release definition X-K financial press within may safe on like be to The statements the SEC company current company's you of are would host for Morin. the that not call on make historical created

earnings and third morning, Good Arch's Michelle. quarter you, call. to Thank welcome

Are capital on getting Our a investors you're now? with know diversified we time-tested active that allocator. Arch,

Yes.

Okay.

again, guys. start me Let

this. about Sorry

or you're getting first of our for success. that Hurricane lives gave time-tested that a property. know of all how you capital us Ian insurance. a to the allocator diversified, hearts crucial navigate long-term investors go is importance stark cycles And Our reminder with those understands that active Arch,

As agility is never our important. we turn more to XXXX,

Arch reality we company industry always clients that protection have effects act events as insurer, in The increased decisiveness insurance The their activity they clients big opportunity and we environment that pressure across for uncertain our current for the markets the solutions of their uncertainty. opportunities these could its cat with and XXXX presents when which capacity. has quarter almost property need in manage ability Arch with relationships third is seek all the and actively an significantly our and is ripple market, capital for Ian As enhance out the on have of provide the The to reinsurance result as in those times. during to one cat times renewals. the property approach like companies.

have cat that the rates we've several property Over years, maintained inadequate. last been

Now well. events of XX insurance and the point and the market ongoing that general past The job. investments, our segments as of the Ian's a hikes, significant underwriting the repricing concerns all need reinsurance premium cost higher quarterly safety of earnings property in months the increasing for poster this discipline margin to We're the event. with limited impact to pleased the capital, recognizes being interest of a rate inflation

reducing enables Arch to an standpoint, As approach From us our have other we opportunity things. overall we cycle capital outstanding term. as our balance strong underwriting team, acumen long proactive to their and over have said management showcase are protect before, the creative participation, to sheet, our insurers

and year In up approximately XX.X ex and positive operating the continue reinsurance insurance continue quarter, growth premium solid adjusted our I shareholders third superior with operations, grow strides. attention to our the continued and to same our we see XX% segment areas for insurance third accident want the to In written a net positioning insurance your to risk current should make reward return to for in minutes take each segments strong combined reinsurance. few premium XX.X in Our in. call to delivered in quarter, period cat we where XXXX. ratios. in

professional Some cyber most growth the as lines. travel increase a of significant strong came as liability, from including in well

support we vigilant and globally, the markets increasingly insurers insurance in optimistic cyber today's companies a and business, Our for efforts risk. P&C cyber improved and become further over most our a development we has technical changed increases past several their become opportunity alignment and important has insurers mitigate project excess simply, Competition have our approach more in trend, in we Cyber and to commodity. that both to Arch's is have increased and of surplus The for quite is casualty, clients but lines the also between insurance rational, and growth more continued property achieve XXXX. rate are the the substantially taking to because pricing the quarters important suits underwriting as are robust, about significantly have market believe that to better.

insurance opportunity Additionally, where appropriate reached tightened, earn have we terms to level rates increased have and an believe for the return sufficiently conditions of and we retentions risk. assumption a have have an

property, to to reinsurance segment cat and reallocate actively teams renewal planning our specialty ability lines. changing hallmark been market Next, a to group our were our and X create earn eventful and an meet capital returns. likely the to Excellent to risk-adjusted the adapt inception, of excellent of likelihood are period, January reinsurance quickly constraints our has of better of its conditions growth demands capacity top the clients. market delivered and again specialty including Since line property once businesses, other

business. I with once of essentially mortgage of million delivering it, sustainable They as provided proof income their $XXX beautiful the earnings model to that by operations. group our our is again underwriting P&C call or, Now uncorrelated

mortgage the primary insurance rates U.S. XX.X% origination nearly in interest imports which and our to new to grow quarter million. of Although the they volume, X% improve affected portfolio, us rose $XXX higher also persistency our to allowed

Unemployment historical high factor low the XX% against policies equity, is home. at in Our embedded average is claims and XX% remains book equity least having the borrower of still with Homeowners Credit protecting the of score FICO a is very in superior quality in great at had a excellent. shape. XXX. key

MI addition, is the being to environment. to increasing proactive, evolving adjust rates market the In

the to the our we would in near our better diversified how and capital out. mortgage and from manage take will component most our come allocation we continue because of likely term, just be a diversified as the expect thoughtful to portfolio have our enterprise. bear segment property casual of ability We of and this we will In returns that one measured our view model, business

where again with quarter, attempting claims to negative important our after it's that is inflation note always the duration third than Fed In short rising portfolio, returns recent the us alternative to provide return mature fixed were of markdowns, our boost cash of increased higher investment yields and a challenged challenge several in outperforming income next yields most book difficulty. to years. combined conclusion, new help the level as are to in current on flows see investment even strong market with reinvest substantially yields. securities amount an that continue Obviously, and the money capital cheaper P&C should we the inflation, our quality high significant our equity. which Although the paradigm adjusting of the investment recover by was property to relatively a had supported over in insurance cat we market opportunity Ultimately, for for expect when the would

is to supply creating seen beginning becomes the leave be shortage many of an participate, shortfall. have underperformed an nearing possible Without There and funds a are of our willingness recently with point. However, the and industry the appears their of ILS obvious players inflection source investors capacity capital, in market. to to cheaper

risk. of our to in they're the our for willingness our the We're talk space the every because part capital both and and allocation reward as as us at about We XXXX. principles ahead have almost cycle more and opportunity fourth justifies shareholders, truly quarter set DNA. opportunities we Fortunately, optimistic capital management of for of regards with deploy long to the in capacity that the the into

our market We to needs. And have time like to our meet when rise over answer your to to With Francois disciplined I'll to came remained on through companies us underwriting. said, that it kept go I over is before as turn Francois? details Arch team, to to business. their needs returning to focus fundamentals financial The questions. open and for some say it of like our

Thank joining all. you, Marc, Thanks to and good us for morning today.

third catastrophe operating up events. by single results quarter in earlier other and communicated impacted being the in of the the and resulting Hurricane Ian, global equity we an loss X.X%. average operating will which reported largest ROE This of operating adversely after-tax our in demonstrates in were platform. Year-to-date, we our we value of severe result resilience nature $X.XX believe week, spite our of diversified last is return As Ian again of income our once share end the per annualized our release XX.X%. effects of on common annualized the history,

process, our of know not we We the early a losses, adjusting quite all Hurricane be to our and where determination of catastrophe in wanted and likely provide for time. final some claim color more on to loss will assessment Now bit exposure ultimate the on very it's Ian. known still

same unknown insurance insurers, believe quarter of continue cat performance year ongoing of year material and underlying an business. ratio estimated we expense the Florida increase find is ultimate ago return ago our of will seeded a book our of teams new quarter had $XX may of initial combined loss improvement losses structure over been XXXX. XX.X% our our insurance a premium underwriting next last segment, year-over-year our segment, mix the events than premium an our this REIT, year. premium large XX.X%, quarter programs much appropriate well increase similar the and segment Property covered a industry quarters the meets to expectations. to the expense by and underwriting line labor to ratio written proportional the year XXX that range over in prior in resulted end a between accident large basis the slightly on or Overall, out the of property net loss points the we in extent reinsurance to given last different expectations as significantly loss we net reducing better costs. in quarter the year split where to the an comparable reinsurance commentary, like same our a excellent search of the movement in shift in claims XX.X% among up basis the premium share from number to of third an a quarter the ratio the ago. over of return trends, this the one few and It's other produced with Somers $XX In more at catastrophe to attritional and elevated impacts our excellent In grew book net have an in supply this of compared is potential as our shift XXXX, an The same believe up the activity variability that inflationary grew one business demand with of XXX and storm of excess environment cat which of ratio Reforms by billion In higher point the Absent meets one was time others. net business. allowance is and XX.X% the our quarter pointing Our business third cat than based estimate worth an in excluding nature. Overall, thresholds. are impact, that the We We ratios being ongoing our written newly of would of combined event reflects billion. claims The also inherent in claims same this believe Insurance be business written due market group introduced able imbalances to property XX.X%, year write within result and written premium.

years. underwriting cash we portfolio quarter Australian an maturities and MI came development end a flow at XXXX Income Persistency and has of XXXX Net in mostly XX.X% first Somers with see prior increase losses our from excluding per environment the a operations to share, at expected. as over accident combined quarter higher year investment on recognized of MI loans decreased of on XX.X%. in-force of a rising in Our from second insurance terminations. came excellent considerably from underpinned most income the mortgage quarter. from to policy improving sales of generated stands was Ian. recoveries segment development continued our development claim rising our year The cure U.S. claim rate and results. Hurricane on at levels the from stood single of third development insured on The lower continue securities, CRT results per Over our better-than-expected the remainder million of mortgage favorable development It delinquencies at operations of earned portfolio. the XXXX $X.X basis. other ratio and the at recessions quarter year-to-date, the from related had up favorable rapidly of favorable basis offset U.S. with our the effects and rates premium reduces XX% $X.XX prior part of which from mortgage a by and in of this Net to to $XXX operating lien affiliates at million a this book share now the across consistent second $X.X XXXX the billion segment premiums mortgage combined from as of the refinancing of was attractiveness borrowers. due yield lien to for We continue quarter proceeds positive than XX% higher sequential XX% strong the deployed and

dollar our investment a we operating of above good our hit helped for mark-to-market and markets. solid on forward, should negative a strategy environment investment defensive value. investment our the rates in for enhance weak to Total was quarter with return X.XX% invested to of the and rates portfolio, We cautious equity relative with through the investment opportunity credit risk money basis further challenging a rising to portfolio Going results. growing interest and remain duration, new income and a minimize have this X% assets, income base book equity U.S.

relatively duration and compared our remains investment duration. Our year ago one underway to slightly relative to unchanged is liability

management. risk to Turning

on our X-in-XXX-year event PML again, at tangible return cat single or stood of of well X natural million October shareholders' internal basis a level. Our limits equity, as net the at $XXX X.X% below

Tri-County Our peak zone PML Florida is currently the region.

$XX.X the repurchased front, we common minimal at million. this quarter, shares On approximately cost capital share of a XXX,XXX amount aggregate of an

XXXX. the year the the prospects very of good meaningful business seeing in our As remain of opportunities for remainder and into

these we now With to are questions. prepared introductory take your comments,

first Our with from Instructions] Bhullar question [Operator JPMorgan. comes Jamminder

Your open. line is

Hey. Good morning.

a So the a first, growth see I -- best on for just Obviously, had market. affect question pricing And Ian, reinsurance think obviously, in hardening lines? on in do opportunities non-cat you the how where cat after pricing Arch? will you with lot do for pricing it

the for thanks question. So

think still I it's early.

else from other think out think is This the aside we Ian, see I whatever markdowns one is and because equation. have of Ian and inflation I probably the what impact also is we an on part concerns of should the business lines there.

business. the outside reasonable dripping also the the everyone four three for through expect remind gone market of effect would of years. want be that other So a to lines cat I through to hardening it has to last

I'm furthering sure would same see hardening or level similar So good level really, or we not really a saw. right a But we now. we're that at the

is an that on hugely So certainly Arch. industry is in above anything accretive to that us incremental

think if come Not noticed back think you it do little a bought how about quarter. equity a that for And of has guys do you with do as total because sure But ahead of that's then just on And and lot book how down you very stock capital? values? companies, total the declining season. cat overall by affected AOCI. you as industry preserving capital about to has Because this marks well specifically, for how lot capital or I anything capital

industry, overall the to I'll for with start Francois I'll Arch. for Yeah, and turn specifics

going think the a capital I the that in big out is industry deal.

recover when surplus. point position We right unlike pretty now at the seem in least And be against are industry We that it to the a XXXX, has recovered will at rights soon. time, markdown where don't in an this quickly.

how agencies. capital or the to on pressure how terms or much in allowed write rating there's the business the So write agencies you're of regulatory you and the

pressure think think one is going to of last not to it's we'll create capital and is term. to underwriter, you decisions underwriting while. a that be We I refresh going an your So And ingredients short clients. the service main for to have as provide

except of are that there we're And environment to So you and know, we initiatives, lot are XX% using a a have these XX%, some big recession is out And talking changes. big uncertainties, there. whatever else where Jammie, it's an XX% I add, deal. in would companies inflation, as

collectively So -- of for we're all and us. quarters ahead bracing think Francois? I interesting several

wanted everybody why don't what The also below And XX% we levered was strong sheet, come our advantage one the market route? think really just-to-capital at X/XX, done I'll of . they more very part wanted a we're Yeah. Jimmy, the mean on low markdowns, balance a you leverage, of consistent right investment at in sheet. probably we else, in around, terms we're got portfolio, the and a and today on we conservative side. have with be And thinking always to wanted operated sheet, Even if our XX% optionality. are saw it's, And that and balance strong the specific a, a right? balance but have It some I I our like right? always mindset Trey, that's history. we to We've that? and with to conditions to we that conservative to improving have and thing, add principle that have we Why of that We when take able to basis.

may been moment we'll like in again, to that benefits are a tells that reasons feel the enjoy such us be this our strategy. be strategy. able that's And reap that's a we the of history -- our rewards or maintaining the So those why and

really position. going but of we're think a really, there the We're at forward. position. yet, we're and the really a about to positive. sheet one So good we'll in happens in view, least I one, market what at see We're balance point still good We're optimistic not from

minimal on buybacks And sort of the quarter? color any this

lot twofold. a, of quarter a don't it's ahead whole the season. the third again, do I'd Well, we typically say, in hurricane

matters, price in the buybacks. that's There's know, consistent as history. short always very So our and with you stock -- stock always, the

wanted be And also the -- in how the go into the So expectation the the -- business maintaining felt to ability give out. that with to critical we we we even market us. things into market, going still quarter, the that Ian, 'XX hard played hard thought why see of the just would capital that that was would write well we one on base was XXXX. And that reasons us to before

Thank you.

Fargo. Wells Our comes Elyse with next from question Greenspan

Your open. line is

thanks. Yeah,

increases some Given What see pretty growth based do have would your next expectations you could you in think on shake Florida will year? X. until think renews year. later -- you time for and at where strong next reinsurance? But we the right you business price Obviously, January your other PML out think

see that good And just obviously we're X.X%. Elyse. at Like I dependent risk-adjusted really we that would remind on the a to think in everyone want question, return underweight At it's there. I

presented We same the we little were if bit the room to opportunity. grow situation. to opportunities. we did the with same seeing a would So We XXXX, thing have in do grow be if see we

we have expertise the market the in hardening. capital, participate to the think appetite upcoming the really I and

it's is clients. be part and about to up it least to -- capacity What solutions our of diversified solution. have think going platform. be itself, going new what a the creating way are part to if at like shape a we designing we of providing I I meaningful to the we're continues We're

and As the Morin if tell willing could would flexibility you the What would take. be risk we you what But it go we were, we're we would Arch that that return is to is very hear know, up the on from is, me improve returns you incrementally increasingly position. about PML, over a in as say good in I you building mentioned, would lot the of how much expect expected as tower Francois tell the a the we up period. to to think would way I

too on it So you it think now, what What might to early be really, could going much be, tell. And right go. to significant. depend -- think it the should we it's will highly how really be rates change, I but it's

and to insurance, side P&C sounds insurance transpire you opportunities the based side. So I putting about on to be you guys And year, mortgage, see because more mean are next sounds could do use your as reinsurance, it will then what some insurance, like you versus seeing like on on it you think think well. the good more going reinsurance capital still

tell at company to Yes. and you, When in company, really insurance look a the of market that beauty is you if reinsurance platform, quick the the Well, proactive an our way and really, right? reinsurance do. you is Elyse, of had participate this I'll upswing a to was is

our fiscal So portfolio the in portfolio, is of most portfolio, early market could the would that I hard to reinsurance do, be capital over quickly reinsurance done whereas you at know, it's gets more we on as right, turn what a going stages be insurance year also more much the there, least our because we quicker. think need into this to unit deploying of think

were be up We side traction were same So we getting business building I like on and always and via and we to It's XXXX saw going very insurance steps in market a it's reinsurance formed. in think when take hard as reactive really, it quick our to the has market. really been. the

in who and most will risk-adjusted in will It I through. relative the to land make keeping units. a again, is depends be Francois returns They this it will return. a think And to XXXX and have -- in beyond then to quarterly we the So go where we're I prospective We go basis sure and I mentioned, on gets better our this we're as opportunity, the does we time, all argue if possible. are this over have it then same going of through front These optimal their returns. go as what case.

And then property the from elevated think number pointed basis segment, points one. X claims. reinsurance you XXX is Francois, in I

ex that So that would kind of the we're assume driven run more if cat underlying the $XXX I'm and then of out as that should business and thinking loss mix million off improvement rate that be business? in rate, and about we towards assuming property there property ratio shifts

Yeah.

the that's months business. think just way that we I to we've take to rolling of said XX constructive, the quarterly very like if on think we're our I third But the this volatility market a I of much that on or think little the It's not making about Again, to long-term blip We let being let's a longer not a it. of I even loss is book. point lines. of before, have maybe ends view going it. part everybody something. think at normal basis forward, short-term ratios not performance to worried our mean, more say, how know periods looking about the quarter, just was up in very about the

little loss come could presumably down bit. yes, ratio Specifically, a the

Thank you.

question comes BMO. Zaremski with Michael next Our from

Your line is open.

from I guys to least punching end, Or at does Is spring issue the all anything -- we about? to don't a we or model. I be they was. sticking capital guess about? a before I And version thought. maybe of the were not I getting should them I when or new morning. with you much know want And as time bag Any soon credits. the S&P release that about capital. tail always just thinking -- don't my this there too notes supposed don't Bermuda we kind Good were not they issue that a But using should of know. Is remember the was year I spend thinking senior thoughts? checking of something kind are -- debt, risk I

and we us we answered questions think were The mean that those I haven't I of many now. all they thought substantial model Yes. perform by proposals -- broad.

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thinking So version call world will -- that and just quarter. first second of the out their their the proposal know it, current what there be in let the recently they

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that from So a point point. see at is need don't it I'd and any strong, to base we of view, this say capital make our to changes

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to what carefully see So And happens. we're it. we'll attention paying

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it you of kind time you what think -- curious where Just is?

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is I'm going stick. to So that not XX:XX sure

that So be first question -- question answered. of the my sort the comment alludes to I first will and

fact are over We're were getting clearing different that of The plant. I characteristics, think products right, company these points, one, every statement, rate that different rightfully Broadly product has still most trend. you're attachment is this different that exposure rate most a different different broad are every lines trend. and geographies. overall, seeing lines many products base, point were one speaking, over specialty

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that profit returns. the and by P&C because on way is and return think if if that if the matter, and the is virtue, look it's see risk-adjusted we at And we're the there. insurance you really reinsurance risk-adjusted mortgage the focused -- grow, us for I operate on on you we

reinsurance. very So us of on and opportunity, both overall, I is presenting the market lot think still -- very, insurance, is P&C with a

of versus of all? marketplace. us dynamics you Any think you remind business how insurance that can picture in different that is in that of that are I marketplace large a marketplace the -- up you maybe surplus is kind primary for terms the in the clock? painted the maybe And excess is lines you brought And -- --

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premium three from now E&S about almost in right E&S we at because U. Our the what in in write premium U.S. double four of hard decipher to it's ago. the was London. that or S., it's what's our is But years XX% it

to really we continue that and do so. So leaned heavily have marketplace into

S -- E& should to is kind specific property potentially casualty property I and I that a acute to our more more freedom a where think acumen a well. could everyone I with little think some of showcase expertise this freedom and business specialty as happening and this underwriting have what's underwriting beautiful remind insurance opportunity itself. because E&S company opportunities really for Ian great you want as need form, the have of of capacity, and mean is bit

Thank you. Best of luck.

next question Jefferies. Yaron from with Kinar Our comes

open. is line Your

see Good first And potentially not and to to you rates do retention only the My market. do increasing also you that but costs? leading changing if ratio insurance what having morning. reinsurance so, changing see lowering line in that acquisition and reinsurance? with is on top on the attritional the both question loss impact regards the

we're great It's intently I question. Yaron. think And That's question, broad a a all observing. incurring

X way there could it if back took insurance of the I turning make but that their again think best way -- the to a I draw a back Katrina re-underwrite portfolio allow reshape evolved to sure parallel in. time, it the second was we'll maybe years insurance reform, It's the let's me and -- repurpose really long took and go come sort level. company The and to not back for better. insurance to , and and with exactly XXth X.X for

that that So as takes believe to have but do exposure. for are XX doing readjusting XX be the before, But next long risk the time off, taking still is not -- issuance In companies the said to a so. you the risk will it I risk months. I something meantime, they

what you're for happens little portfolio. while. well, volatility the We you into providing what returns going in Year, take the is right? interest the appropriate a it's exception, that that is to to still and and So cat group So That capacity and what typically, need we're a as New in, where 'XX, going changed still a you we're months get prudent the buyer, of purchase. hasn't see want portfolio then happened, our to was is companies to impact, last what you do going more two say, reinsurance. as no come to to capital need reinsurance reinsurance buy It's the -- to

available. have retention. still somewhat, might pull constraints is a go would have be push constraint limit maybe up So and some and on what your Presumably, on to the purchasing retention There occurs. the

if as the X/X, cat portfolio year, a is the there'll towards likely think you more the back market insurance reinsurance be together, reacting them, the reinsurance I put mentioned. So Florida more and I at side, it's that from as And costly of changes we it perspective. all be in of telling shifting go sort renewal what will to the

I renewal not develop. done. take long mean, it's a time to like one So and a might

I actually some think we I the so you ratio. do on or for the some if retentions same think, but but higher a Right, to ratio, would lower entrance guess maybe loss you the headed improvement acquisition maybe ultimately, in at attritional time, segment the with second, see focus

Sorry, question your apologize. that's

there viewpoint. the answer So the second is

that as you to or lost get to expensive, see The insurance telling you is gets to chart the more what is buy very, a cat As the reinsure so very for them also now to very, they informative and can market reinsurance team they cat need for side perhaps it's more protection need of charge reinsurance. something to know the chart make you the up what price with. because change

So you right. are

insurance point have increase on lead portfolios, the with attrition to perspective a the to losses lead overall, or primary attritional to So agreement. will because your from an ratio, our should which pricing of kind loss -- it's same lower we'll

for a fair assessment verifications. is that yes, So

as follow-up doesn't I stat had Okay. with agencies also that thought And on some exception thought through the S&P. marks, interest really then of part. you I a looking largely earlier always with rating And accounting marks, account maybe rate interest made statement for related

issue? industry that So why become capital would an or led

next side so But year. XXX Well, official XX% up consider look all. companies doesn't rates think it's things. I -- how or here. official of -- what let's the puts at totally don't view certain think the pronouncement people I there's going be honest anybody or back going at capital months, you five to There's it a go a and to another to that's that their have plus to XXX, the of markets and this far plus have plan are on basis either If or XX four have points view one. business book over P&C you push can't there's point, remediate or three people revert are -- at when got mean, back. I just a write to those to some at base lost, or of -- the it diversified

So camp. agencies think, are, rating in I that

but It's I don't infinite. all. consider not they think some us it latitude, and at not they'll others give like it's

point like that, capital but work being. need time has some or we our permanently, it it here So that's something really to is not, for the not evaporated, It's through.

Got it? Thank you.

Benguigui comes with Barclays. next Our question from Tracy

open. is line Your

on your you. have ability capitalization. cat risk follow-up Thank questions prop and grow to I

equity I XXX consideration your easy So tangible basis. target a appetite large your to XX% realized is allocating PML like I at communicate feel capital to Street. is risk-adjusted way and an a X on of the But

if take So can your you how restrict another way, diversification cat do MI there diversification consumption risks capital on covariance from credit risk prop even remind or catastrophes? and MI ability adjusted you us, to said between view credit? Or does your is

can world. of at a between between already good the they there two. the But going look Very economic economic There's question. of benefits and go that a multitude model, correlation amount there's lot is know on of lack Tracy. I stuff model also is. divulge mean won't around we of But large and Also really non-correlation you if correlation MI what back that doesn't the an P&C some from not we what derive

have we a diversified very, portfolio. very So

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of So we growing pretty recovery the overall, just beyond think quickly the that book the value markets. should start

Thank you.

are You welcome.

Our next Bank question of from Shanker with comes America. Josh

Your line is open.

even insurance if I there here next at wonder can Are for while? Yes, this year? mortgages issuance Does bottom right stand over purchasing the to now? of little fewer be opportunities? do little insurance Where thank we you. last are a you a we the that cycle the sector? give on going outlook for Are the mortgage

Sorry, Josh. of on side the are or In -- MI primary sense what you…?

are home I'm primary, new down. sales clearly Yes, MI. like

this from Or obviously, is kind we're a I business? -- holiday for here? issuance And going to to so less what Is a flow. continue to like MI going guess of decline from the it mortgage expect looks

we've Well, before. said it

the next three of for for in-force mean, of still foreseeable are as said the down. because refinancing we activities coming years as for level to we performance And the and with drive very the now, before, part comfortable right depreciation book or that a is that, we've so. income refinance of underwriting going big the it is holds. years. whether I declining next matter production the where we're materially the increasing our is right Doesn't and increases, most is book really income two in-force generate books, think, stable, I going to three to the know, underwriting future,

so persistency etc. is up, And

of declining direction yes. extended we no in-force anytime levels of that's kind show don't levels, is soon. to very doing That a will book maybe and things a production keep we think starts numbers, if lot new period, time, there's an for Over So then to us low but keeps on doing question well, well that the pointing of think. in saying the

the Francois decrease. on you lot by the which new much numbers, purchase not a market, about of important look stable, is as the for And mentioned NBA at is business, INW, which a the far there's MI the more just if production, most one,

So is north still as team up remind we're quarters. to we're know again, nice everyone some over positive, you several the still I of fairly going that our X%. get that next production from mortgages And

home. forward-looking. the still which get INW, up make active So it there's well for the it if market But pretty purchase several a housing to should is, pent a bodes into stay for bit demand for does just fact quarters, next our hard

does mean, it And if in tick yield I continue force. there a on coming is should the years? to we down that declines premium be in insurance expecting? Or bottom

but that in the disciplined I see think the right, what's have believe, potential happen we the is always deliberate is about and MI, doing. raising I that now. like else. right in case premium the good else a industry that everyone seeing it industry in which news, mentioned just speaks world, is it's my Yeah, happening lot the like an to rate is here which thing we it mortgage, mortgage sector, could and happen life volume life, I on discussions, more that, as comments, the It's is call it's rates talking around speak in expected, new for what industry would the The have something good real in whatever environment, on uncertainties, we raising we are some

the at ROIC still what insurance is X/X mortgage of Pending highest happens your opportunity?

lot Right gaining MI the of ENC operations that it, discussions tell a units P&C have ahead lead. getting of it about squarely But don't that. are We now. this. we taking our slightly are our seems now Right group believe that the and

much. you very Thank

You welcome. are

comes Morgan Our Michael with question Phillips next from Stanley.

Your line is open.

morning, everybody. good Thanks,

and what continue the a in very property, to this of for movements and looking in of on times the property rate cat, cat a the innings on heels everything in and we're lots period, the even do and and in the think extent has time? to pricing, property hurricane current But interest will around of happened with we're discount very more obviously. you with long no on Just mark long actually, respect early which environment term, over cat questions clearly -- what's massive markets. not But else going

you're else adjust or next bit equation. point that to right getting cushion conservativeness, you're things a to make put and And extra side than prediction. the the worse, last going, of we on and sure on year's much your And know, protecting But trying out modeling you're Well, cutting it's expectation. future. the again, answer with edge that a it. mean, this there on else certainly on and right? is like the we the address We there's I neurologists of are don't is to have of to ourselves it. lot is sure everything top make on if we're mean, everyone I staff it's we you getting level the as into a of little try fighting keep data of better

think on lot of allocate take a -- a my on cat were of going I step -- are into putting charged if large in I'm which over which if also losses, numbers it that should I of a and what we to of the expected that you comment, disregarded you cat always we expected for you risk that the of back, the more didn't. as without an true cat lot run, you what's priced we with about also weight is long go what that increase is sort cat talked just the we reminded some pricing, more, have for of deserve, industry law the says, And factors get results. or

perhaps, from case the far it climate be charging it's also but mispricing. just So just be reap think change, a that could enough sort of that of that to a a of that not you could over reward not the change perhaps get time -- necessarily mind my but virtue not you by

of Thank okay, I Yeah, all I That's But you. that's kind to. had. perfect. what alluding was

you. Thank

next question from Yaron comes with Jefferies. Our Kinar

open. is line Your

take cyber. opportunity on mentioned you follow-up I'd thought in something this script, the Thanks. to Yeah, I

So questions there. two maybe

side, First, is management. attritional about it's my active on that understanding really the

So the wheel and renewal, time not identifying time vulnerabilities. just but at questionnaire annual managing the of really

insurer, traditional to a a third angle? with As party do that capabilities have you front from Are what this? on partnering you achieve vendors tech

latest forensic up that's who the to answer think great clients. edge I on really, with so a work top place and really the guys number yeah, partnering latest one Yeah, the question, for of cutting technology, our are is good we're And be.

on the We part enough, our team. funny tech the cyber not underwriting of are teams a also have were of lot for a But risk team. side

within people as we the it. well underwriting on are vendors IT people of themselves that other So third make also party who than more top they have cyber sure contract units a specialists, to of actually lot we're and with

within a it other addition look In to want and have out It's party third that the more ourselves investment. to we vendor so company, and also understand big we more.

more the And more talking tail, this competitors the your really question get line. to on pursuing the I had this one in was comfortable other growth it? Got significant cyber. need as before about of today Actually then well, with

allow about up you're you to comfort in are tail? how the you So to thinking to pick how taking the are grow? there actions order it manage yourself And and --are

This level a at a you manage right? cloud it's can and good appreciate, other as technical is That's really question. very systems. harder the Because to

it. do is in favor. we odds can at structure every run returns worst we We business. do should that the But listen, about weighing we various come that which case realistic instead a technical we're in our with the I'm is we is And have seeing. we're top be. of of now that adding scenario what that the infrastructure, life. And on think sure I think of [indiscernible], that's think quarter risk lieu we like make downside some we point, we're fairly in what right again, scenarios everything it shortfall this again, to the the there's And reward downside of to

to event. think event, capital Yaron to I'll an earnings add one a us, And as we it is not thing that of

of some events of, we think these capital our widespread hurt not So we base. -- would kind pretty severe,

portfolio or still become you also relatively tech if probably so it proper capital protection, could and small overall does a book grow on. have risk exclusions That's because and is the unless the

things also that we and Yeah, reinsurance buy other there well. as do have we'll that can we

So yes.

Okay.

of Thank luck. Okay. you. Best

Yes, thank you.

back Grandisson for I'm questions. closing the remarks. not I'd call turn like over Marc showing any further to

your Thank very you for much our listening to call.

market very what Thank us. you Looking We'll you gives exciting perhaps forward to more much. see talk to in the Year with New the news. again

conference, today's concludes In program. this the

Everyone all disconnect. day. have great now may a You