So like we have built a reinsurance structure, we built a gross portfolio that we can flex depending on market conditions. I mentioned global specialty, we think there’s growth opportunities there, we think there’s growth opportunities in our personal insurance business. So we’re cautious, but optimistic that the growth rate that you outline, the high single digits is going to be achieved. But again, we have to be in the year and we’ll give you updates every quarter, but we’re optimistic.
Elyse Greenspan: Thanks, Peter.
Peter Zaffino: Absolutely.
Operator: Thank you. Our next question comes from Mike Ward with Citi. Your line is open.
Michael Ward: Thanks, guys. Good morning. Maybe kind of a similar question, but specifically on international. I think rate is a little below loss cost, so just wondering if you have any commentary on how you see the top line growth there playing out.
Peter Zaffino: Good morning, Mike. Thanks for the question. If I look at international on the rate side, just a reminder that we do rate on gross premium written, not net. And so like as you take that from the portfolio, there’s a heavy weighting of our specialty business in the fourth quarter. And the specialty business does have a lot of quota shares and has a terrific reinsurance partnership, but it’s almost 50% of the business, roughly between 40% to 50% in the quarter. And so specialty, while had good rate increase in marine political risk, had a weighting on rate in the quarter, as well as Financial Lines. Financial Lines are 20% of the gross premium written in the quarter and having a negative — that just weights the overall rate environment.
But we had very strong rate in property. We had very good rate, as I mentioned in my prepared marks of 8% in Marine. And so yes, the overall index was at or perhaps slightly below lost cost trend, but it’s not something we’re concerned about. The other thing too in specialty you should realize is that, December 1st is when all aviation renews. And so, that was low single digits, again, waiting on it. But it’s mixed of business. It’s gross. And why I say gross is that, when you take the gross to net for our specialty businesses, it’s basically 50% net premium written to gross. And so, we put that in the math in terms of our ceding commissions and profitability of the portfolio. But overall, we were pleased and think that there’s opportunities to improve that in 2024.
Michael Ward: Thanks, Peter. And then maybe just on the adverse PYD in Russia, Ukraine, just is that related to aviation? Is that just accident year 2022? Because I think there was some adverse in other [2019] (ph).
Peter Zaffino: Sabra, do you want to provide a little bit of update in terms of how we got to the adverse?
Sabra Purtill: Sure. And I’ll just start by, overall, as I mentioned, we did have some favorable prior year development from older catastrophe years. So those were basically in years 2018 through 2020. If you look at the more recent accident years, as we indicated, we did put up $75 million of additional reserves related to Russia and Ukraine-related claims. We’ve been evaluating our exposure for some time, and based on the analysis where we are at the end of the year, we felt it was appropriate to increase our reserves for the quarter. But I would also note that in the 2022 accident year, we did have some adverse development on winter storm Elliott, which was at the very tail end of the fourth quarter of 2022. And then in the older accident years, as I said, in general, we netted to a favorable reserve development, but we did have some adverse development in the 2018 and 2019 accident years on some mergers and acquisitions related exposures.
Michael Ward: Thanks, Sabra.
Operator: Thank you. Our next question comes from Brian Meredith with UBS. Your line is open.
Brian Meredith: Yes, thanks. First question, just curious, as we look at this, you’re getting close to the 600 million kind of share count. As we think about that and the use of proceeds from Corebridge, are you willing to go kind of meaningfully below that and if not, what is the other kind of potential use of capital here that you’re thinking about to mitigate dilution from selling down your remaining interest in Corebridge?
Peter Zaffino: Thank you, Brian. It’s a good question it’s a little leading, but we had outlined the capital management strategy for the first six months, and that gets us below the 650 million share count at a base assumption of a stock price around where we are now. And so there’s a few variables that could accelerate that or slow it down depending on market conditions and share price. But we know we have the liquidity and we just wanted to outline what we thought we would do within the first six months. The next is dependent upon when we do a secondary sell down, which I would expect before the end of the second quarter, another sell down, which gives us more liquidity. And the primary focus is going to be on share repurchase and dividend payment and believe that we can then, get by the end of the year down to the lower end of the range or the 600 million.
Once we’re closer to that, we feel like we’ve made enormous progress on all the elements of our capital management strategy. It has been very balanced and believe we would have to give guidance after that in terms of what we intend to do. But I kind of want to get to the range first in the 600 to 650 and then get to the lower end of the range with proceeds and then we would provide additional guidance.
Brian Meredith: Great thanks. It’s helpful. And then Peter just want to touch briefly on the Financial Lines business. It seems like everybody’s cutting Financial Lines. I’m just kind of wondering like who is actually running the business? And do we think we’re getting closer to a bottom here? And do you think that’s still a significant headwind to 2024 premium growth?
Peter Zaffino: Thank you, Brian, for the question. And I’ve been trying to find a way to bring in McElroy to close it out. So Dave, why don’t you give Brian some insight and then we’ll send it back to me and we’ll finish up.
David McElroy: Thank you, Brian, and thank you, Peter. Honestly, Brian, you see the weighting of Financial Lines in our portfolio. It’s a bit of an outside influence, but we’ve also gone through the year, and I think we trade the market we’re in, not the market we hoped for. So I think we’ve been prudent around letting excess underpriced [P&O] (ph) business go. I think we’ve been good about holding on to our primary business. I think that actually has held up well. I do also think that it’s always worth understanding there’s a lot of other products in the portfolio and they’ve held up well, whether that’s private company business or professional indemnity or the fidelity businesses, those are strong and we actually anticipate those will continue to hold up in 2024.
The seminal event is 2023 showed up with different [securities] (ph) class action experience than the 2-20 to 2022 cohort year. It actually looks more like 2016 to 2019. The question will be whether the industry reacts to that. Okay. Much more severity flowing through that year. It obviously exposes the verticality of loss. I do think it’s put a little bit of a floor on the market going into 2024. We’re seeing that now. There’s definitely going to be more control in primary, but I’m not going to be — we won’t sit on the front cover of CNBC or sitting in the middle of CNBC, but we like the business, we like the pricing of the business, and we also think that it’s tethered to the economy. As that shows up, that will also help with new business opportunities that we see, both in M&A, both in IPOs, and both in structures.
So it is the first time in three years that I might give it a little bit of optimism.
Quentin McMillan: Thanks, Dave. Thank you very much. And thanks, Brian. Thank you, everyone for coming to the earnings call today and greatly appreciate the engagement. And I want to thank all of our colleagues around the world for all they’ve done to progress the strategic progress that we’ve made and just have delivered tremendous results. So everybody have a great day and thank you.
Operator: Thank you for participating in today’s conference. This does conclude the program. You may now disconnect. Everyone have a great day.
