François Morin: Well, part one of your question, there was really no material development on long-tail casualty lines of business across all years. So both pre-2015 to ’19 years and ’21 to ’23. So we’re very comfortable with that. I think our reserves are holding up nicely. And I know there’s been some concerns around the more recent years where there’s been some signs of adverse in the industry. We’re not seeing that. Actually, our metrics or our actuaries are commenting that our actual development is coming in more favorable than expected. Again, very early to declare victory, but that’s certainly for us a positive sign, and we’ll keep monitoring and see how things develop for the rest of the year.
Operator: Our next question comes from the line of Andrew Kligerman from TD Cowen.
Andrew Kligerman: Hey, thank you and good morning. Marc, you mentioned that the MI market is going and going and going. How do you think about the favorable prior year developments? I mean last year in the first quarter, it was 25 points this year. In the first quarter, it’s another 25 points. I mean does that still continue going forward as well?
Marc Grandisson: Well, I don’t have a crystal ball for the future. But we’re — like everybody else, we’re just on the receiving end of a market that’s curing better. The borrower is in good conditions. There are programs on the GSEs that help the borrower staying in their homes. Most of those that even would have a delinquency, as we speak, would have a much lower mortgage rate. So they have a lot of incentive to stay in the home and not having to do anything with it, plus there’s a lot of equity being built up in the home. So people have — are sitting on because, as you know, there’s been a significant increase in property valuation over three to 4 years. So everything is really indicating that we have a lot of the alignment between starting from the borrower, all the way to the mortgage insurer and the mortgage origination of the mortgage companies to make sure that the borrowers can make the payment, you can refinance, delay or attach it to a lot of things, a lot of tools and toolbox that weren’t there, frankly, in ’07 and ’08 when the crisis happened.
So — but what does that mean in terms of development, we’ll have to see what happens. But again, it’s been more favorable than we would have said probably 2, three years ago, and we’re just — when we see the data, we just react to it.
Andrew Kligerman: Pretty amazing stuff. And then my follow-up question is around the Allianz acquisition. And I love your analogy about the NFL draft and picking the high-quality players. Some have criticized Allianz as maybe I’ll say they weren’t a first round draft choice. So with that, what will Arch be able to do to kind of turn them into a first round type player? I mean I know I’ve heard about data and analytics, but can that help overnight? So I’d like to know what you’re going to do there to really enhance that operation?
Marc Grandisson: Well, there’s a lot of things going on. There’s a thorough and very complete plan by our unit to first integrate them, making part of our company and our culture. And we’ll have to look at everything that we can do to help them out It’s an okay, it’s okay business, very decent business, but we’ll have to make it more of an Arch business, but recognizing some of the cultural differences in the distribution, it’s a little bit of a different business. Data analytics is certainly one of them. We also bring to bear. We believe Allianz is a big company and they did a lot of work on this, where we have a strong presence in the US. as well. We also already do some middle market business. So we already have experience in that space.
And so we have a — we have a couple of things, a couple of tricks up our sleeve, if you will, to make it better. I won’t go into all the details, obviously, but I think we’re pretty excited about what we can do with the asset. And I think like I say all the time, and this is not a comparison with Allianz or us, but truthfully, it adds to the same thing to the Mortgage through UG, they’re relatively a bigger piece of our overall enterprise and perhaps they would be in some other company. So that makes it a little bit more exciting and a bit more — and the willingness from our part, obviously, to invest, right? I’ll remind everyone that some of the earnings that we make, we put aside to invest for the future. So we have a lot of things going on, and we’re pretty excited.
Operator: Our next question comes from the line of Michael Zaremski from BMO.
Michael Zaremski: Hey, thanks. Good morning. On the Insurance segment, the underlying loss ratio of 57.5%, I know I’m probably just nitpicking. But I heard the commentary about the impact from the Baltimore bridge. But just curious, you’ve grown into property, which has a lower loss ratio, attritional loss ratio, I believe. So is there anything going on in the mix, that maybe you’re putting in more conservatism on the casualty growth or anything we should be thinking about there?
François Morin: Mike, I’d say it’s just the nature of the business we’re in. I think there’s going to be some ebbs and flows. There are going to be some — I wouldn’t call them unusual or unexpected developments. There could be 1 or two claims that surfaced in the quarter. We booked them, we recognized adverse or bad news early on and see how things play out. So there’s really nothing to say that we want — that needs to be highlighted. It’s really part of the course. And yes, absolutely, this quarter, it turns out that the ex GAAP kind of underlying loss ratio was up, I’d say, 30 bps. And that’s just the reality of the world we’re in, and we think it’s still an excellent result.
Michael Zaremski: Okay. Got it. Second question is probably a quick one, but you all are kind enough to give us guidance on the cat load in the last quarter. I think you said it was in the 6% to 7% range for — I believe it’s just the premiums ex Mortgage segment. Is that expected to change or maybe be towards the high end of that range on a base case scenario as you kind of continue to lean into the hard market conditions as we think about ’24?
François Morin: Well, the comment I made last quarter was — yes, for the full year on the overall ACGL premium, 6% to 8%. We don’t see that changing at this point. I think that was based on our view of how the year had a chance to play out. That’s why we gave you a range. We were very happy with the 1/1 renewals. 401s went pretty much as expected and 6/1 so far are holding up nicely. I mean still a little bit of time to go before that gets finalized. But big picture, again, that’s the 6% to 8% range for the year in terms of cat load is holding up nicely.
