Operator: Your next question comes from the line of Jeff Schmitt of William Blair.
Jeffrey Schmitt: Back to growth in Global Housing. So PFO growth was 23% in the quarter. And I’m just trying to think through the components. You had mentioned inflation guard was 3%, I think, in June or July, but I guess 12% last year. So maybe kind of a mix there earning through. What’s rate at? How much was the rate component? And how much was the unit growth component? I’m just trying to think of the different parts there.
Keith Demmings: Yes. So maybe I can start and then certainly, Richard can jump in. Obviously, when you look at Housing’s revenue year-over-year, it’s up meaningfully, $100 million, $103 million year-over-year. All of that is from growth in homeowners, which is up 31% year-over-year in terms of revenue. If we think about what’s driving the performance from an underlying EBITDA perspective and Richard obviously talked about the prior period development. If you adjust the development, $15 million this year against adverse development last year of ’24, we still see a $67 million increase in our underlying EBITDA. And I would say 2/3 of that is really driven by rates average insured values, which obviously play together, and then relatively stable losses related to higher levels of premium rolling through.
And then the balance, maybe 1/3 is split between policy growth, which is up 3.5% year-over-year and then investment income, which is obviously helping with cash yields and more assets being held. But Richard, happy to have you add any other detail.
Richard Dziadzio: Yes, sure. Yes, that’s exact. And I guess I would add, by the way, good morning Jeff, what I would add is that if you just look at the premium component that Keith just talked about, think about it generally as being 1/3 for each of the components that we’ve just discussed. It’s the increase in rates, average insured values and inflation guard. That’s sort of the way to look at it. And the other thing, too, that I would mention is you see — you heard Keith talk about how much drops to the bottom line. I think that’s also a credit to the expense discipline that we’ve had and the leverage we’re getting, and you can see that coming out in the expense ratios that the growth in the premiums and the leverage that we have in the business is really allowing us to increase the bottom line.
Jeffrey Schmitt: Got it. Very helpful. And then in Global Lifestyle, just looking at that benefit ratio kind of continue to move up. Despite rate increases, it was 23% in the quarter, mainly driven by auto, it sounds like. Could you maybe just discuss the pricing strategy there? Like when does that begin? What level of pricing can you get in this market? Really, any detail on that would be helpful.
Keith Demmings: Yes, I can certainly start, Richard. So if I think about the auto business, I’m actually pleased with the work done by our team. So we started making adjustments to rate late last year. So we’ve probably been in about a 12-month cycle, making adjustments with clients. We’re really on the risk in a meaningful way for 4 or 5 different programs. So it’s not the bulk of our business, as we’ve talked about before. Most of that business is reinsured. So there’s a handful of clients that we’re working with very closely. And we put rate in place that we feel is appropriate to get the business to perform at the levels that are expected. So that work has been done. It’s been ongoing for the last 4 quarters or so feel good about the adjustments we’ve made.
