Pete Vogt: Yeah. I think Vince, what I would add on top of that Alex would be given the given the change in business mix we’ve seen the acquisition cost for insurance are probably at a consistent run rate what we’re seeing in this third quarter. But I’d also add that, given that we’re now hearing the reinsurance markets talking about increasing pricing to the primary markets as we’re now thinking about 2024 our primary teams are considering that as they’re now thinking about the price increases they need to get. So we’ve talked about this phenomenon driving pricing and property through the first nine months of this year. My expectation, I think our expectation is we continue to see if we see reinsurance costs go up the primary markets are going to respond to that and continue to see price increases on that side of the business as we look to 2024.
Unidentified Analyst : Got it. That’s all very helpful. Second question, I have is in the casualty re business can you give an update on how far through just negotiations around stuff that was packaged between property and casualty within reinsurance. So how far through that are we at this point? And one of the concerns that I’ve expressed is just that there could be some adverse selection associated with that process and the business that was packaged that remains what are you doing to avoid that? I mean, is there anything you can point to that can give more confidence that there’s not going to be a headwind associated with that versus selection?
Pete Vogt: Hi, Alex, this is Pete. I’ll start and then I’ll pass it over to Vince, but we’re substantially through all of that business. So as I look at the first — the fourth quarter of this year there is low single-digit millions left of that business. So we can look to what’s happened so far this year and actually start to see what we did with that particular group of policies. Overall, because the only way we were really able to keep some of that business is our client actually had to split policies. There was a really good focus on the terms and conditions, the rate, the limits deployed, as well as looking at the true underwriting of that underlying company. So we got to choose whether we wanted to be on that treaty or not proactively.
And where we wanted to play and actually how much capacity we wanted to put out. So I would say that, when you think about adverse selection on what’s remaining each one of those was approached by our reinsurance team as a brand-new client essentially. And so I would say, we minimize that particular impact, because of the way it had to renew with us. And I think I’d ask Vince to add any comments on top of that.
Vince Tizzio: Thank you, Pete. Alex what I would say is that the confidence that we feel in our underwriting process around risk selection, terms and limits gives us confidence. Of course, pricing is included. And so I think taken together the consistency of that underwriting approach complemented by the integrated underwriting strategy that we’ve talked about in prior quarters involving our COO office and our pricing actuaries gives us confidence, along with our claims leadership that we’re making the right risk selections on behalf of our company and providing real value to our cedents.
Unidentified Analyst : Got it. Thank you for the responses.
Vince Tizzio: Thank you.
Operator: The next question will come from Josh Shanker with Bank of America. Please go ahead.
Josh Shanker: Thank you. Good morning, everyone. At the risk of mischaracterizing things as you — as a reinsurer are fronting a lot of the underwriting that you’re going to transfer to a third party a how does that affect clients’ desire to reinsure through you knowing that it’s not your balance sheet taking the risk? And two, even though Monarch is a closely monitored partner reviewers and when you think about being in this business on a multiyear basis is there a risk that when you’re running a business with the intention of ceding the premium elsewhere that your business or business strategy is too reliant on that third party capital?
Vince Tizzio: Josh, good morning, this is Vince. On the first part of your question Pete will take the second part. We have had ILS capacity inside our reinsurance portfolio for some time now. And as is the case in Monarch it’s AXIS underwriters that are making the risk selections and the bets. And the trust that comes from these agreements of course is that we will make the right decision on behalf of our company and by extension our financial relationship through these transactions. And our cedents count on that responsibility as well including claims control.
Pete Vogt: Yeah. And I would reiterate what Vince just said, we’ve used ILS capacity in the reinsurance world Josh for quite a number of years. We did it when we were involved in property and catastrophe, but today we still have multiple vehicles that we work with on long-tail liabilities on our reinsurance book. So again, it’s AXIS paper to our cedents and then it’s us managing where we want to put the risk based upon the capital preferences that we have anything from our balance sheet to using a third party. And since it is quota share to the third parties we’re ceding to our interests are very much aligned, because it’s a quota-share treaty we’re still keeping a bunch of it as a reinsurer before we give it to our third-party capital partners.
And so our interests are all aligned through the entire transaction. So we feel good about that. And with regard to our third-party transactions, we’re close with them. These are funded vehicles, Josh. So we look at the reserves, we have contracts in place to make sure that the reserves are appropriate because we understand these are long-term liabilities and we want to make sure that the funding will be there when it’s required. So we’re comfortable with what we have there especially with our collateral agreements.
Josh Shanker: And my second question. Thank you for the answers. I mean I have the same question I asked on the last conference call with a little bit of a twist. The Monarch transaction it’s freeing up a lot of capital. I know you really want to invest in your own business and write a lot more insurance but some of those lines are really, really soft. The stock is trading at a deep discount to peer valuation. How is share repurchase not the best use of capital right now and especially, with your freeing up more capital, why isn’t that a bigger part of your strategy?
Pete Vogt: Hi, Josh, this is Pete. I’ll handle that. I’d say there’s a couple of things we want to get through. One, even though it’s now the end of the third quarter obviously, going into wind season, we still have exposure to cat through our insurance business. So we’re aware of that. We still know that we are waiting for the S&P formula to finalize. We’ll know more about that at the end of the year. But given what their initial formula and statement was, you’d know that there’s a fair amount of senior debt in our capital stack that could or could not be considered capital on a go-forward. So we want clarity of that as we go forward. And then lastly, given the negative AOCI we have in our capital, we still have a high financial leverage ratio.
