Arch Capital (ACGL) 30 Apr 242024 Q1 Earnings call transcript

Good day, ladies and gentlemen, and welcome to the Q1 2024 Arch Capital Earnings Conference Call. [Operator Instructions]

As a reminder, this conference call is being recorded.

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

differ those may or results actual materially expressed from implied. Consequently,

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

facts call the The statements historical the Private statements be Reform of in XXXX. Securities intends the created based contained within the Safe in statements certain thereby. call that Litigation forward-looking Additionally, not subject to the company forward-looking are to the on are meaning of Harbor Act

non-GAAP Management company's GAAP will at the company's also the SEC website measures measure the make the of release non-GAAP Form press on SEC's each website earnings report performance. reference can to the is to X-K, reconciliations current which found available to on in certain at company's yesterday, The contains financial www.sec.gov. and and be financial www.archgroup.com for on furnished

Mr. for now like would I you may Morin. conference, to and begin. your host Mr. Francois Sirs, today's Marc introduce Grandisson

Good morning, and Quarter you. Arch's to Call. Earnings First welcome Thank

report per pleased realized benefits million and a profitable and in from X.X% years income start book year. In to to we the posted first underwriting are We a in of strong increase $XXX share the as quarter, value we terrific several the premium growth.

deliver from positive to remain a increase continued market absolute $X.X billion changes and our our in writing XX% conditions, of above rate exceeding same our in results to hard year. loss in to units trends, long-term shareholders. P&C the premium into Underwriters targets, efforts our are quarter returns Overall, quarter, superior lean continued gross indicators last the

is in but incremental an surprising, increased still thrive. underwriting is the It underwriter's conditions favorable we are not signs that where market can of exist. Broadly, Arch market, seeing given the this appetite

needs. relationships other key market, and of partner, aiming beginning the hard as solidify a Arch to to this of it addressing mind trading establish when to back, clients' itself providers comes as remain increased pull top At sought our

client in Our to yet establishing dividends continues hard market. increasingly success deeper pay in extended, connections this competitive

served loss, collided our risky catastrophe industry Bridge Dali reminder quarter world cargo as major quarter first when the active the with in concluded as Francis Scott a ship The an with Baltimore. Key of a

Although we of the made manageable to improved and of multiple expected with loss a recognized margins, related this virtue event, business having for this positive lines event Arch.

like a pricing. core a believe line margin return builds Incidents underwriting in reinforce diversified that three, long-term we operate take by that a to tenants. our one maximizes meaningful this practice business. of reserving. global of business Two, our a we risk any view our we mitigating volatility we And of into safety the disciplined approach and importance One, total of conservative

to been for flexibility that has resources a requires Capital we opportunities. when most integral management attractive the is invest platform Arch retaining to we key we allocate operate and find Effective how profitable our company. opportunities, differentiator our while management underwriting in to the capital

with intent our to billion-plus $XXX U.S. in those see this entertainment We acquire scale to month, middle U.S. quickly Increasing unique to businesses. a insurance over attractive platform announced a of underwriting American the our as when area generate prospects came and adding can earlier returns premiums market, for we market opportunity One will North build fruition Allianz's this by cycle. our of interest recurring further middle strategic us. the businesses market long-term diversify that middle presence stable

a acquisition our [indiscernible], to will having cycle our segments. from few I'll and in middle this manager, we significantly like the opportunities come. expand years share market [indiscernible] a As for now highlights

and underwriters, is and growth particularly opportunities experience their our attractive at Arch. good skilled to Property As Casualty specialty expertise differentiate know, market for but returns, can offers The evolving, cycle you still use who

over The our quarter premium written was $XXX by segment first Underwriting million, for last XX% segment outstanding. were year. the grew while gross quarter same results the from Reinsurance income

expect While on capitalize trend there to is ages. that the as some developing cycle competition, fully quality an increased we're to observing flight and

position. is value Our strong us years emerge, provide constructed over acumen. solutions underwriting segment exercise strength is in there its cannot, [indiscernible] market Reinsurance an financial the several others Arch or casualty When in and to to enviable dislocation to allows by last opportunities from whether is clients. our and offering the that

tapered and growth continue strong behaving slowed some profit. few two past segment, as Insurance Overall, growth is support the our rationally, to conditions additional of of important capacity. years and rate highs met the dislocations by from market increases that and In the remained the were factors strong

target in first deploy quarter, and of other opportunities specialty E&S growth attractive our deliver several to we and the pricing our long-term including returns in to Casualty and remains most capital fund specialty of healthy, lines, we able above XX%. lines. Property lines, Across are order very In

to to you segment efforts itself provider win, can't you write business, and Like in for the strong don't that to clients, In opportunities. see play insurance, establish first-choice you Insurance our life, a in made have Reinsurance, more its has it. manifests and as seeing if

And to on to a going going. and now let's famous from from keeps ad P&C going Mortgage, campaign which borrow pivot and just

solid its underwriting to high-quality Mortgage generate risk-adjusted income from segment portfolio. returns and Our continues

a interest While rates, remain our mortgage the of near is the high lows. remains [indiscernible] persistency Mortgage while XX.X%, healthy rate by all-time tempered originations delinquency

with our mortgage insurance When prepared we're market written given production. again, market the increase our line appetite conditions. to in is up picks New

However, duration we the current insurance persists, mortgage has quo if premium. we're the which content our with earn status situation that over extended

which within good industry a are in we disciplined, MI place. remains means Competition the

to our grew premium income significant several The investment growth continues overall generating the $XX.X through our the portfolio to to of next Investments in net quarters. $XXX quarter. tailwind extraordinary segments our float, billion, a million provides Finally, P&C which from earnings our increase

pick the pick, with while player, last selected gets worst with team In with finished first selected last. the U.S., top draft the champions NFL multiple best this select makers, success record annual they to deficiencies, expected college the making be season the a the guaranteed. The conducted difference are the Traditionally, team immediate to by picks chance player its far weekend. are from even that though the past typically a

of you're it a grow player these contribute Compare player's teams given with be short-term has coming teams rosters a successful of selecting can maker. ruin quarterback If fill have They the role in who away. throw a pressure ball players this and difference to career. to doesn't luxury seasons the specific Instead, excellent right at and the can end quickly the who talented place. off need an a with often to, the into confidence, the round time nobody can sabotage talented to select drafting

a the that's solid Adding to Our MidCorp MidCorp established acquisition team We schedule years a franchise tomorrow, all-stars, is the better a to like today business the favorable winning makes already team. of winning proposition. talent-dense a our us ahead. a player diversified have in adding winning culture and Allianz in and

over I'll to the quarter, our Francois color now Francois? it to provide we'll your on more some and questions. financial take return to turn then results from

good to and Marc, all. you, Thank morning

return average share out with after-tax for have XXXX will note, operating on equity on income per very common XX.X%. an strong annualized you $X.XX of operating the of started seen, quarter for a As we

the Book as value $XX.XX for was per quarter. up of share March XX, X.X%

all X underwriting in was Our driven the $XXX results across result XX% growth in strong by We business quarter our written highlighted million of business. business premium Reinsurance delivered by our XXXX, of outstanding flow income. over the exceptional across segment, segments, again first excellent our a performance net increase of lines

the of Growth in our for the transaction our was XX% we a last first impact unit. after business large warranty lenders quarter nonrecurring for also solid Insurance underwrote adjusting and in segment, year

an XX.X%. group from came in ratio combined excellent the at Overall, the

observed income units, activity. underwriting on development in lines primarily favorable on and due our or strong of year X our combined in [indiscernible] segments across and million basis segments. reflected $XXX Our development the many across to Property short-tail Casualty pretax ratio Mortgage a but X.X in prior points favorable We

last the X.X X.X segments event current Both in segments and of points, to insured to combined in Bridge Insurance quarter. history. on impact respectively, Scott of become Francis represent our largest ratio results marine were this these collapse the has our and the disaster, The Key an the potential this in and Baltimore estimates exposed month, Reinsurance

losses relatively subdued group We was for loss reported were smaller expectations and quarter. the events year this the in $XX event non-catastrophe for note that ratios. the our below million activity Catastrophe as portfolio, generating accident our catastrophe across series losses of our of in losses current a with

current businesses in Overall, our collapse. in to Baltimore this relative premium as the event, ago, year the ratio our Despite ex ratio the quarter few improved earned due underlying remained and cat still increase ratios with mostly Bridge from changes of this trend our from excellent of a to last our quarter ex quarters, mostly by P&C impact rate cat the lower loss growth the above points X.X expense result combined a base. our combined

quarter slightly to going quality to perspective, at everyone were platform in were in modeling grants remind the for including compensation and technology improve of like forward. analytics offset resilience the to benefits make a data by we and and in investments people, These I'd our continue and From that ratios year their due are operating retirement highest of made typically expenses, expense seasonality eligible first to March. employees our that equity-based the also

on cat PML net well internal for peak capital single our X.X% remained a from X-in-XXX-year below X, our basically X, limits. April level basis to January relative shareholders' of but natural a As tangible flat return of zone our to declined equity, event,

and reflecting interest funds came share. losses accounted for combined income Investment driven the quarter, income by securities, equity front, return earned at the for $XXX X.X% in $X.XX net from the a or from we portfolio using income unrealized Total the the fixed on million On higher Investment the pretax rates. company's per method

remains portfolio providing our duration. and Investment quality of growing to tailwinds line high and Our keeps bottom short meaningful

few primarily have significantly flow base over operations. cash to We asset investable significant our from the last years, grown

money affiliates true-up note, this attributable new at from for the was to quarter's tax operating Bermuda strong with with our at combined $XX X%, approximately income million should rates corporate a the future. Somers item. result, of deferred affiliate million. is asset connection growth operating positive the foreseeable nonrecurring in of in This further Of Investment tax, income Income income support the $XX our near

Xst equity-based range of quarter, for XXXX current timing mostly below related an effective to the tax income as tax X% slightly year, our result of rate the for benefits expected full Our pretax of to a X.X% of on compensation. XX% was operating the expense

third are business As announcement regard in the we Entertainment for and and agreement businesses portfolio obtaining around the insurance to structured related Allianz, are close for and progress A regulatory a a contracts. after. targeting reserves business is XXXX X new in from making the for At years loss approvals necessary level, agreement the to high of acquire loss quarter written to a our MidCorp U.S. XXXX transaction. and XXXX transfer

that in for even ratio leverage optimal to in transaction, the return base range. capital Overall, our when on our we expect expected earnings resources in approximately cash for It and the benefit to ample way capital a $XXX per maintain reflecting the million. shareholders. remains most accretive billion to of starting XXXX. to internal our be deploy resources is important the The contracts, to committed moderately addition deployed transaction share is in We this support the and both consideration remain in note allocating overall mid-teen be $X.X capital equity, financial long-term to of to capital strong in with

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

from first Fargo. Our comes Instructions] Elyse Greenspan the Wells from [Operator line of question

last to My the the market, in dislocation in casualty just think I on kind opportunities think, see casualty to there? something of opportunity you've this, this starting of mentioned present couple market. think comments, highlighted of your first Marc, about something you is quarter still question I Are take the market. know you an fully starting reinsurance you might that potential year. to third is Arch? a Or I emerge in opening quarters

little the for as increase We through, But respite already uncertainties, say that reunderwriting year. middle not bit thorough was it prior several last development more of but all getting may is of of year, think as -- I The ebbing. wouldn't a price inflation repricing, the market Yes. has the not in is casualty been terms last and hard, because created years. we know, have I has some getting harder going

the what business, now, being very, in Arch even still we're and to is lean underwrite how disciplined right people into more and careful leads this So so. opportunity us they very seeing which gives

bit. have of side our business the We grown casualty on insurance quite book a

you thought I and you sure just to know, want But Our all we hear here. specialized sorry, me. casualty book in are there? specialty. was some make as Elyse, there is difficulties very can E&S, still I technical

hear can you. we Yes,

a you. trooper. you, you, you're Thank Thank Okay.

So think opportunities insurance I the more the grow. growing, we're but casualty side, to having market on now we're

that there's not that the a think repricing, side. I Insurance -- line some of on focus business definitely kind but on of

some of On instance. the terms anecdotally for a [indiscernible] the starting casualty to Reinsurance more of came friction we're side, the little through renewals see of renewal I think bit in it's that share, quota creating

had all get risks the we the the know belief expect and human So now and the that know stages. in going the that there's and what is and up of right human early we interaction the past. for don't rate need to long where go, that within system some casualty clearly make We it's last it's to we to people a psychological going how potentially need the in but more to misses

mentioned this you things things when road, Allianz And After want transaction, saw then now other add you need on to the like Reinsurance, maybe Are you opportunity or think guys this down with Insurance, the to about market potentially Mortgage. you there the middle you guys list think platform? the that there that other market deal. and are would middle

Yes.

we'd teams a Elyse, and tell and an one for of have is, a like the very talk We also acquire one. acquisition, know, way. We added that's one and important us. our we things significant shareholders long pleased a arsenal. want would also But very an have good Allianz what about along or part as of one we've list you that with We're as to our to

some [indiscernible] company and to we're So of a acquisition in acquired acquisition, teams thing able a everything only the pure is not do. do between. that to We've

conditions, to manager, the want to always we're the areas So what bottom a is enterprise, you as line. much depending as stable capital, a market much many on your on volatility more creates lookout. Elyse, Again, deploy cycle the less

more the phases -- multi are And not and in again, the they are cycles multi places. monolithic, market

always have with -- list, We but we So list will you team that baseball. other that our inside bit month little almost have we not a -- an call, of -- a on a it's always things a share so list. of I market was executive a opportunities willingness also every wish wish of know list is we be fact this portfolio, lookout are. and for on those. -- we what to the diversification would our accretive [indiscernible] is for additive this and Mid it, to we're the the and And our where on do this is

line comes next from Bhullar Jimmy from Our LLC. question the of JPMorgan Securities,

is to seem pretty on overall. loss Baltimore results have reported number Reinsurance. also of you And industry losses number? that much being? what the your sort conservatism market that the there the end eventually reported to your this high but the be? baked -- seems of recognize the a Just I'm fairly So this Or of question wondering Insurance is and are underestimating in I bridge is because you maybe into about were from most I'm was some IBNR, to the going losses strong just of the wondering, relative what and talked assuming event just up But what peers how

a quite just liability participant we at Jimmy, let back Reinsurance the in a reserving the to underwrite or in marine Francois talk in used way been while. for high I'll But IGA Well, have 'XX the level, level. 'XX. about group, a I

is us. This to new nothing

Barbican We also in XXXX. acquired

had in market than marine which, have we market, stronger we presence we have the is again, positioning. and So a -- [indiscernible] ever another

and do actually. do some Insurance, retro we we So Reinsurance also,

over acceptable. made returns are and bit, nothing new to business the the that and So were like money We us. still rates years. The quite it's a

not are the what this I would our we what ones in market sometimes expected that much loss But thinking mean line pretty a occurs. marketplace think would we about. what with in be or be. but I'm sure to about we the the think presence other have share is definitely

about... talk Francois let I'll

not we comment speculate Yes. again, for I may event. how others this or mean be or on can't reserving may

say not to end terms paying a for who's conservative obviously, that For unusual. up and a it. determined, of we've view the of taken in very to loss lot us, be I'd still And it's going

-- really all for is, right it's But question last we last asked specifics yes, have us all the establish and don't to IBNR, mean you now, point I the reserves. case

So we booked IBNR see develop. as and it things how we'll

pockets then overall And you of then unfavorable number? pre-COVID casualty on there development casualty any how was the trended and overall reserves, was And favorable, if post-COVID talk could your reserves specifically for about years? but within your

on was business part of really development there material years. casualty no Well, of question, your lines all long-tail across one

pre-XXXX and 'XX years both 'XX to to So 'XX.

So that. comfortable very with we're

nicely. think seeing metrics there's been there's some reserves our or our industry. actuaries I our in And commenting the actual is years been our that. I are signs recent some in holding favorable expected. of coming concerns more development adverse that know more where up the are than not around Actually, We're

early that's a things to and positive the declare we'll how of sign, for see very victory, develop for rest the year. monitoring but Again, us certainly keep and

Our line comes next Cowen. TD question from Kligerman Andrew of from the

year. does you and that continue quarter, you about prior it think another forward year the points. mean In first I year XX last the mean Marc, How well? was going still do developments? in is and going quarter, the market it's I going that mentioned favorable MI the XX as points going. first this

help that curing But is receiving the crystal a conditions. their we're that's homes. we're don't good There -- like in the of on borrower are I just staying the future. market borrower programs the have GSEs in everybody Well, else, end ball The a better. for on

we rate. much have would those Most as lower a that speak, delinquency, would have even of a mortgage

and the to a to it, lot being do having incentive up have home not in stay plus lot a the home. So of equity in anything there's of with built they

because, know, in a people X years. significant property increase as So have been valuation there's on are -- sitting X to you over

borrowers So really the 'XX weren't mortgage or lot the you from lot and 'XX of and borrower, refinance, things, the that that [indiscernible] lot tools of can have the everything companies starting a insurer the is toolbox can mortgage a indicating the delay happened. make between and mortgage of all we to way crisis to in there, sure alignment a make the frankly, that when of origination payment, the the

in see what react what development, than but again, to the But favorable terms to ago, happens. that been have data, just just we'll we -- would So X does probably we're have we years we of and see mean -- when it's it. more X, said

Pretty about love And draft the high-quality Allianz picking analogy I around and follow-up question my amazing players. then the the your stuff. is And acquisition. NFL

I'll Allianz weren't criticized maybe say have Some first a as choice. draft they round

turn So operation? So able type going do first be I into with them I really like I'd enhance what but that overnight? that, do can I've heard know to to know of to to a what Arch mean will data that analytics, about there kind round to you're help player? and

we'll at Well, business, little plan integrate them. lot bit of recognizing them, it there's the okay, business. And certainly more a first cultural some of to differences our do and Data different of can it's part analytics okay Arch it's a complete of things our but a a very have an of going we of but culture. unit distribution, that and out in business, very make have to we'll [indiscernible] one to is to the There's business, company them help look thorough everything our by making on. decent

in We a they this, is as to company on presence of and where have U.S. bring lot believe big did the a also well. strong we Allianz We bear. a work

some also We market do already business. middle

experience have space. we So that already in

tricks pretty And the about of all better. won't so think asset. we a things, excited couple a I we're have what we of obviously, into the but up sleeve, you with have our go -- if it a to can make details, do couple will, we I

or thing I us, not think to be they're relatively time, other and company. and piece adds all the this Mortgage the overall would to our comparison UG, enterprise but And with truthfully, I in bigger the it some through a same Allianz perhaps say of a like they is

from little right? So a that obviously, makes a and our part, -- more bit exciting the willingness invest, bit it to more and

that aside we of put everyone the to remind that invest future. I'll make, some earnings for the we

lot and a going have pretty on, we things we're So excited. of

comes line question next from BMO. Our of the from Zaremski Michael

I'm commentary the segment, loss ratio curious, which the But On But you've ratio, nitpicking. probably has just from ratio, grown bridge. the into property, lower the loss Insurance I underlying of a the know I believe. impact XX.X%. about heard Baltimore attritional loss I just

about going on that anything on there we more there? conservatism growth in you're maybe is mix, be putting or in casualty the So anything the should thinking

it's the say nature in. I'd we're business of Mike, just the

news them be quarter. some I think unexpected X bad and developments. to play and are things surfaced out. in claims recognized I going or we early to X or ebbs there's or the going that -- There how flows. on be unusual be see adverse call We some booked wouldn't could them, There

So underlying that course. needs the and kind I'd there's yes, ratio that's it's say bps. of ex of highlighted. to an absolutely, the of nothing XX it just And up, this the And loss world was think out GAAP that to in, It's that still we we're -- turns excellent quarter, reality want say, result. be the we part really really

it. Okay. Got

on Second load cat quick the to question one, guidance probably quarter. us is enough kind the a last all give you are in but

think a base that I as lean kind we to you hard continue of to market of in X% into Is the the to you range said segment. the or be as maybe think case on high the about change -- believe I that 'XX? ex just towards scenario expected it it's was range conditions end X% premiums Mortgage for

don't the see changing I this yes, the full year made was overall -- last quarter on ACGL point. to premium, the that X%. comment at Well, We for X%

year had out. a a play how you based why on was think we I That's chance view the our range. to gave of that

much expected of nicely. were the for a up that X/X still renewals. in pretty XXXs happy nicely. year range again, X% before But far up cat so with is go mean are very big We of X/X to that's picture, to went finalized. terms the holding time I and holding gets as little load the X% bit

X% insurance to premiums on is mortgage X% company... all just that ex or total Sorry, with

Total total. company-wide, ACGL

Our next KBW. comes [indiscernible] question from of the line from

first was the My going to X ratio saw ticked reinsurance? reinsurance. down on wondering, is was there? I that that a points there on gross in is year-over-year. question Or else net about I it function of buying more anything

No.

if think it's I the good a look you question. at --

you X larger last XX%. a quarter, to If between the transaction to through that year, was net ratio that see X or the look in at last XX% because Last hovers gross XX% had years came it first we our quarter [indiscernible]. you'll

a that's is it's comparison -- just what's just period not comparison So X of really on. not reflective going

nothing so at term, longer there. XX% look If the to XX%, at you you changed look the

bit to thing, shifting a And next then I rate lines surprised insurance to the solid given back growth the there. environment the Professional see Okay. business, was within

professional seeing So dynamics that that the the can coming maybe that? And Or growth market is lines? within opportunities talk from that you or you're D&O? about is in other

Yes.

agents company D&O, company, smaller -- based. this, it. private, liability in and some liability more it's stuff has cyber public like E&O our many thing -- like and got large It's has a the the professional that's got some large things So it's -- also professional into it

the growth the attributed largely that cyber. to is think I

a bit cyber a a to developing and leaning a need something a of more little for into that of. Europe, what and need or we there's and couple more are acquired more starting teams as we've big realize that's see Europe, we're it, Our grow in in team team also for

get the very of we it's as some a reason we went very it's of us it harder favorable It's bit even of still all coverage. doing little other because though lines for terms believe, proposition to down favorable, our slightly, in And value creates to us for in is cyber still business very, underwrite. Also heard, it because helps grown the a clients. rates,

on On decreases and we bad where D&O, D&O portfolio. about the as that the or note, ago. was went X% On valuation would in as where in not our this profitability the we see are rates it or depending relative have the increases of down X.X quarter, years the rates

that to there's bit You comments when believe we [indiscernible] have lot there's circumspect as be still well. this. in favorable that We heard segment do a just little still more a of opportunities the -- we

next question David from line ISI. of Our comes from the Evercore Motemaden

elaborate that you remarks are your prepared you're mentioned that? within underwriting little competition, and responding lines seeing about increased talk appetite Marc, in just where seeing in And specific you that Reinsurance. developing you're and seeing you specifically Could that that, you're to on a bit? how what guys

Yes.

can run Reinsurance, many gamut, seeing cyber we're also I that what we them. the -- now, short-tail more higher and Insurance right there nature. Typically, are [indiscernible] now, in are that think a mean, is I appetite, right is more of of what one sure, them. would That's are for

to We And or more to typically first take You [indiscernible] as if is, decrease with as at not will just piece participation. the And close much new for you. it business conditions, too you of willingness we of more will it a how a do. new it's might if overall the price some competition. the kind can if comfort, business bit bit not and have down things see our or we little go is, get what risk rates to if to little a look -- it's actually from the tend we we the return rates as many stay react the

the an bit time. believe you underwriters' that a will. have through a on better that really also this clients little just we market really might at chance market, And maneuver we stay if to sideways It's

the underlying loss. is Got there think should it bridge results strong on it. there is just sustainable? that sustainability fairly guess results? margins and better, the results there Can the lines in side? are within if more the Reinsurance, anything of if of these And earn-in you more and flatter property, would I I about I sort were about exclude talk short-tail Reinsurance the how the just the of even the Or

great Yes. saying few I it's a been quarters. for mean market, And that we've right? a

and I before, think on encourage I XX-month to we it all said you we've a basis. think at trailing look results

a it's more to volatility that to sometimes think, think less hard I bit predict. I reliable, prone is

we and mean, -- said I it. yes. Marc But

ahead, I and better than whether more book going don't say we how bit maybe that in. know. the this the rate? a view in month, more again, of long-term quarter Maybe, now of to that's run excellent, again, a a try think -- force right is But the trailing I'd But earn reliable. look is to probably was quality XX as bit we're little you

next question Bank of of line from comes the America. Our Shanker from Josh

excellent this as this, very And if enough On a doesn't was Coface. company other income stock presages quarter but the because maybe XQ past into we return strong Somers and to model the I was very, I'm the attention, weak return I'm misunderstanding and which Coface XQ quarter a head for an had bring how that It for income that's XQ 'XX, this in up yet Coface quite 'XX. other other get strong wondering 'XX?

Yes.

a booked lag, the basis. is -- on Coface be one one to a lag make just page, -- sure lag we're right? there's So quarter same So on

for reported just up numbers. they what So show in QX will QX our

on a Somers is real-time basis.

through a closely your quarter. yes. Reinsurance But that Coface second if picture, book strong a it. effectively nuances some follow in that the of because as know, And booked big book. there's of relatively to to closely mean But Somers point, should QX, is it's I our and real-time our fairly see mirror [indiscernible] performance the we benefits you basis should reported to out our flow Reinsurance on should

In appears in income Reinsurance be some I theory, which underwriting segment there other if guess, saying and correlation should you're -- Somers, between that line?

Correct. conditions it's the correlated Reinsurance, the entire they It's mean, still I Bermuda similar follow. not whole Yes. that and are from mostly basis. -- picture perfectly because Somers the market a but not unit benefit we on -- Reinsurance segment. that is Not the that It's big if the will business, good

to way is or you few a ago, how capital other think sitting the one ability question Model, any find you're the possibility interesting if And to much deploy? think other about if numbers the items, smartly excess you change post on the S&P months M&A quickly from there

can. mean an to in think the always are putting where focused we capital I right? evolving I business always topic, Yes. work we the that's on

I that fair with think a Reinsurance of quarter that, we've amount growth the this obviously, done saw. we

$X.X will that Allianz example. billion another The transaction support the is

plays We for can't we'll place to time with find to out. significant be And question that, in No us really line. it. a generating of it's ways we and But year earnings so the patient flexibility. it really the in will goes how lot gives see deploy -- good being, that bottom until a of the we're capital other we're terms

line Brian from the from UBS. Meredith comes of question next Our

numbers quick of couple big-picture A and all. one for you question

give guess, deal, the it cash the, quickly, one, is cash position I expecting just net expecting... you're in first The to Allianz us possible on [indiscernible] much to how you're from come

billion goes $X So spending to consideration. dollar, right? that billion the were Yes, it's with [indiscernible] back a big we dollar get them and picture, cash for in we out $XXX million cash, for $X

incremental we billion will cash get. So it's that net-net, $X.X of

new then time, on overall the investment business, be the flow as assets -- invested call income incremental the get. it's, we will we that premium business, the it, over that the or rest that's And will that write with it's

That's helpful.

question here. quick Second

ceded your exactly is that? contingent You referenced business in Reinsurance. in commissions What your on commentary higher

a third-party the a of A lot is year of last capital, that for was right? year performance We it good light book. very -- or

pay them commission aspect variable that. a kind many a agreements, and was of to -- of large that base of those of there's then So a that some a there's lot a -- it, us actually part then is

property performance-based business. effectively property or that's commissions on cat So

here. your the one question you then you at your on seeing bigger-picture And are cut your development of quarter, business? curious, seeing I'm What just to getting clients. a and on quota during with Obviously, casualty of your Reinsurance business, that clients, against respect first protect adverse right? reserve from development share [indiscernible] seeing clients how sense. of coming in that of kind Makes you're lot not some are potentially And that

Yes.

mentioned means recent the having think frequently. right is which point Francois that or to in and have of starting don't the policy correct expected, the I accident actual on -- which insurance reinsurance consistent year, So sort you the both really is more

say would Reinsurance we're I that on So we surprised see. the not about what

anecdotally -- earlier, people Insurance going some of make and and heavy that is as between lot companies be. But there would sure friction, I is to think to a book as more say, I I agreement to said an Reinsurance get the what ultimate

this in So going the we're hearing marketplace.

for of we're people seeing this very defensive. years and about. talking whole have that are to areas the that been XXXX, have us. everyone those but were We a big harder-in-developing I other And we and not lot issue that pre-XXXX want Of participate premium as that, course, we would a do being remind those not in

more types see So you write more the present this of worst I to but I expect write and opportunities those to see say opportunities of we we to those, those more in years, wouldn't are year, will if will. that most say we of that deals

comes the from Bank. question from next Our line Deutsche Cave Montazeri of

us total have the have one carriers, Reinsurance to Florida be know guys any a can only impact primary implemented coming on This some to in a you color very reform market that today of you share year on capital have The positive I Do the is over the the you market market. Florida? seems back. seems ago with state well. had on and question

coming Southeast potentially picking the to No, there's in is storms. And through, up. of all of also your but of U.S. hear, some also, the it's the I activity inflation and more we think are activities as -- there's point, in adjustments terms

out in do are to what this that think will time. at point people sort I they So trying

ahead in think bit very well risk-adjusted have the priced the from a of market get line participating think basis. already game we a Florida and a the I expect bottom relationships But we participation good little marketplace. existing and of terms be to will us in getting we that is

been I everybody of and for everything take other exposure else in whatever care Even, [indiscernible] the else property Nothing around the between, it's that's still to -- done indicates than anything course, that. largest the think, world. is cat But helpful.

if some in thinking of the a start some years we even softening have couple we and made corrections, heavy market. think you before So have about they corrections a having still make I

a might market be the some still There be and we here reinsurer. but believe as healthy there, will

Our Bob from Morgan of comes next Huang from question the Stanley. line

historically view. Quick durable question on have cycle side. Obviously, generated underwriting in very my M&A you returns, of mainly management, because

Just M&A we your road? or into curious down the move potential and your when as business mix, does retention that for you think ability impact management about M&A diversify cycle levels M&A

I degree No, management of mean going is -- to of cycle a to anything, be core principle change. doesn't a like do perhaps. it's we'd if matter And it ours. able be to

much have management business about Some would be because I the lines probably management attractive more cycle also heavily more cycle right, MidCorp the that's in U.S. expect and because Allianz the for it, they're it stability of to commoditized. what's the portfolio. acute business. more softer creates And

is or that more No, Got business generating that's future to case, use first given this in then where to preference deals? is excess things the is excess preferable it cash the stocks Or about M&A M&A very the capital you're think it. that to the of use helpful. And of when do valuation nature? and some it or from we M&A, the

no I that. one to mean there's answer

I doesn't we that happen often. always there's and M&A, I -- M&A mean, but think about talk

much there's our using in own stock? of -- matters, could So size a that need would we we terms raise how need to

use as trying we options. if of there's plenty think capacity better terms We've at, debt our got we to to in cash. always, optimize raising the many considerations can in all of be. best we Certainly, too, dilution, need kind But it's of look

opportunity. own go of function a there. specific at much circumstance, very We each from it look on it's each specific So its and

fair is just case, clarification can Is that then or I that clarification little little bit and have less more bit [indiscernible]? equity I'm on preferable it. Sorry, on a just be it sorry, and So debt may cash of say if that. to a little in bit a maybe

that's it's I speculate been could what preference mean, mean to be the But the next hard thing. again, historically. I on

things over So too. yes, historically, time, but change

question next comes from from Michael the line of BMO. Zaremski Our

follow-up. quick a Just

kind income us a update derived can fee sources percentage on you of these of from Arch high diversified mentioned level? lot way a has You Is of what earlier. at maybe income. your was of fee type arrangements year last a of kind income earnings there

it's mean the over years, sure. I grown for

it, own internal the that some fees expense revenue the -- of face are we are those get reality that some that think of co-mingled expenses. these we our has somewhat difficulty I expenses with and is -- the or kind go the with with

yes, capabilities, do. the of it, leveraging the we segments, leveraging of It's underwriting It's it's a margin what in our call those contracts part our isolating, all little But bit cloudy. So on grown. platform, part right? is kind our of

All more comes that some X it's But segments have yes, well. Obviously, part into of income the bit is that fee us. become errors. as sizable Somers for a

now would turn for like Mr. Marc to the I to closing you. remarks. Thank conference over Grandisson

earnings. for the to much you year. our start seeing We you all in forward of very Thank Great look July. hearing

program. the and participating This gentlemen, conference. concludes for in you Ladies today's thank

all may You disconnect.