Keith Demmings: Yes. So it’s that — first part of your question it’s unchanged. So the clients that we’ve been monitoring and working on based on the deal structures their profit share type arrangements if losses go over 100% it creates short-term pressure in our P&L and then we look to recover that contractually with rate adjustments. So it isn’t more pervasive than it was. But obviously there’s a little bit of elevation in terms of the severity around parts and labor costs in the auto sector which I think everyone is seeing. I do feel — continue to feel real good about our long-term opportunity in auto. Clients are working with us incredibly well. We’ve taken a number of rate increases over the last 18 months, 20 months.
We took more rate adjustments in the first quarter. We’ll do more in the second quarter. So really it’s about getting this business to the right spot over the long term. We talk about relative stability in the P&L at auto in 2024 and then progressively getting better as we enter 2025.
Brian Meredith: Great. Thank you.
Keith Demmings: You bet.
Operator: [Operator Instructions] We have another question comes from the line of Tommy McJoynt with KBW. Your line is open.
Keith Demmings: Hey, Tommy. Good morning.
Keith Meier: Hey, Tommy.
Tommy McJoynt: Hey. Good morning, guys. Thanks for taking my questions. The first one can you talk about as the Bank of America portfolio comes on board and perhaps also considering any other service or client additions or deletions. Is there anything that we should expect in the placement rate or the average insured values that would be different than what we should just see in the broader economy in terms of tracking mortgage delinquencies and home price appreciation anything different that’s kind of changing about the nature of your tracked portfolio?
Keith Meier: Yes. So I think I mentioned in the opening remarks where we’ve got various changes that go on within our portfolio. Obviously, Bank of America we’ve talked about. We have another client that was added by another one of our clients. So that was a positive. We also have another client that was acquired by a third-party. So those loans will be coming off. So I think there’s going to be a little bit of ups and downs. Some of those have lower placement rates than the average. Some of them have higher placement rates. But when you think about between now and the end of the year overall we should be up in our policy counts when you net those kind of movements within the quarters?
Keith Demmings: Yeah. And I think in a relatively stable placement rate as we exit the year Tommy, and it may bounce around a little bit. But to Keith’s point, policy counts at the end of the year should be higher than where we sit today.
Tommy McJoynt: Okay. Got it. That’s good color. And then switching over, can you talk about the current level and perhaps your expectations for trade-in programs and promotional activity from the carriers? And just whether or not you think that could be a swing factor in the bottom line of Connected Living as we proceed through the year?
Keith Demmings: Yeah. I think we’ve done a really good job maintaining overall margins in the trade-in side of the business. You think about the first quarter, obviously devices serviced were down. But as we signaled, margins are quite stable and we’re making up some of that with additional volume with new clients as well. So I think we feel really good about how we’re positioned. And to your point, the promotional activity was relatively light in the quarter. I think clients were focused on other things within their portfolios, and moving customers to higher tier premium rate plans et cetera and driving upgrades wasn’t a huge priority in the market, but we still performed quite well financially. So I think we’re well positioned.
And the dynamic environment particularly with the big three mobile operators is hard to predict. And obviously, we’re well positioned should that activity pick up here in the second quarter and beyond. So it’s hard to predict right now Tommy, but I think we feel really well positioned.
Tommy McJoynt: Okay. Got it. And then last one, I think I may have missed it during the remarks. I think I heard you say that the reinsurance costs decreased. I didn’t catch — well, first off could you repeat those numbers? And then secondly, did you mention like what is happening to the per event retention if there were changes to that?
Keith Meier: Yeah, sure. So well, I guess first of all, we’re really pleased with the outcome of moving to the single placement. It’s really simplified the program. I think it was well received by the reinsurers. We mentioned that the cost of the program was down year-over-year. So we’re expecting it to be approximately $190 million this year versus $207 million from last year. And overall, our per event retention stayed at one in five probable maximum loss. So that was up from $125 million. The top end of the program we actually increased from $1.4 million to $1.63 million. So moving it from 1-in-225-year to 1-in-265 year event. So a lot of good protection and lower cost. So I think overall, moving the program to the 04/01 placement date was I think a very favorable move for us.
