We know what the experience is, what the real exposures are, where losses are coming from and market in pockets of that, important pockets, irrational, dumb. Employment practices liability. Again, not going to say which cohorts, but market is many, are very naive and don’t understand the trends and the exposures that are driving EPLI. And where it’s being driven, what states, where have laws changed? Is it around, it’s not simply wage an hour, now technology impacts it. There are those who have no idea what’s catching up to them. And then you have legal changes that are occurring at the federal level, that are impacting financial lines. You can see it and it’s coming. So the good news about the business is, its claims made, reveals its secrets pretty quickly.
That will occur and this is a big company. We got a lot of opportunity in a lot of places. And in some of those areas, we’re just not going to follow people off the cliff. It doesn’t matter.
Ryan Tunis: Got you. And to follow-up, just shifting gears, just curious about priorities in US personal lines. It kind of felt like you had this stuff in California a few years ago that in the past few years have sort of been more of a business where you’ve been focused more on risk selection and growth for good reason. But I mean, it looks like it’s more than $1 billion of underwriting earnings today. It looks well underwritten. I guess maybe if you could update us on, yeah, what are the key sets of priorities in terms of managing that business right now?
Evan Greenberg: Well, key sense of priorities. Good question. On one hand, we can continue pushing the envelope and we’re impatient about it. How we define the services and coverage, is that a customer in our space ought to expect from a great carrier, the kind of resiliency services and engineering service, the kinds of technology that we can use to interface with our customers, give them a better rate. How we can use technology and claims and manage a better and more seamless outcome for them. All of that is wrapped up in how we think about that part of the business. Our clients are CAT exposed. They work in a world where they choose to live where they live, and know and make the choice to live where they are more CAT exposed.
They will share more risk with us, but we can help them manage that risk and the portion that they share and as well reduce the exposure to loss on the portion we take. It also is allowing us, as we’re doing that both through admitted and non-admitted, to in a sense manufacture more CAT capacity, which is really a part of the ability or fuel to take on more exposure. We have a finite balance sheet. We can’t take infinite risk, so we think about it in that regard. Our pricing and the rate against exposure from perils continues to improve. We can keep pushing the envelope on how granular we become in terms of risk rating, more cohorts of risk to apply rate and price against. We’re continuing to do that, but we’re restless about that. We can be even better at it.
That allows us to provide more coverage in areas. Think about it, like flood, where we have areas where we’re actually leaning in to offer more protection to clients, but be able to manage the portfolio. Maybe that gives you a few.
Ryan Tunis: Yeah. That’s helpful, thanks.
Operator: Your next question comes from the line of Brian Meredith with UBS. Please go ahead.
Brian Meredith: Thank you. I appreciate it. Evan, I’m just curious and I’m sure there’s some moving parts here, but can you help me kind of square. In North America commercial, I’m looking at gross written premiums up a little over 2% and then your net’s up 9.5%. In a seed, your seeded premiums continue to drop the last couple of quarters, is there something going on there? Is it technical? Are you buying less reinsurance? What’s going on?
Evan Greenberg: I’m going to let John Lupica give this to you. It came this quarter from two things and that LPT, I forget they had an impact. It distorted the gross.
John Lupica: Yeah, Brian. As Evan had noted, we had that large structure transaction this quarter that produced net written premium with no gross written premium. In addition, we had exited two large MGAs or fronted programs that historically produced a lot of gross with very little net. When you adjust for those three items, the gross and net are virtually identical. That’s the same answer on the net to gross ratio.
Evan Greenberg: It’s really transactional, not fundamental.
Brian Meredith: Got you. No change in reinsurance buying habits. Makes sense.
Evan Greenberg: I just see.
Brian Meredith: Okay. Excellent. Then Evan, I may have missed this, but you provide a lot of great pricing rate and trend exposure commentary. Did you give us what the total North America commercial pricing, call it rate and trend was? If not, could we get that? You typically provided it.
Evan Greenberg: I did give it to you. Are you asking me to go back and do it again? Do you actually want me to look at it? I’ll give it to you if you want me to take my notes and do it or interpret forward. Listen, North America I said pricing increased 12.8, including in P&C, including rate of 9 and exposure change of 3.1 and loss cost. So we’re trending short tail at 6.8 and long tail, short tail – sorry, overall loss cost 6.8, short tail, 5.3, long tail, 7.6.
Brian Meredith: Great. That’s helpful. Thank you.
Evan Greenberg: Yeah, this is full service.
Brian Meredith: I appreciate it.
Evan Greenberg: See you.
Brian Meredith: Just like homeowners.
Evan Greenberg: Pay your bill.
Operator: Your next question comes from the line of Bob Huang with Morgan Stanley. Please go ahead.
Bob Huang: Yeah, good morning. Hopefully, I’m not asking anyone to repeat anything, but just a quick question. On your annual shareholder letter right, you talked about the willingness to pull back on unprofitable lines, a demonstration of underwriting discipline. But just kind of really curious as to how to square away that line of thinking with your first quarter results, because it seems like the first quarter results continue to demonstrate a lot of strength, a lot of growth. Is the financial line somewhere you are looking at as a….
