Katherine Antonello: Not in a significant way. For the business sectors and the premium sizes that we are writing, I would continue to characterize the environment as competitive. There have been pockets that I’ve heard chatter about where the insurtechs are either pulling out or kind of tightening their pricing to achieve some profitability. That could be opening up some opportunities for us to participate in areas where we felt like pricing was somewhat inadequate before. For our renewal book, we — when we adjust for changes in exposure, I can tell you that our Q4 2022 average pricing did show the smallest year-over-year rate decrease that we’ve seen in many, many years. It’s almost approaching flat. But I would say kind of, in a nutshell, it’s still not a hard market but there could be some fundamental changes going on.
Paul Newsome: So what might be the drivers of that? Is it just simply less frequency benefit? Or is there something else that you think is maybe helping us out a little bit on the margin?
Katherine Antonello: I don’t think it’s anything going on with frequency. I can talk about that for a second. When we look at frequency, we’re currently comparing our current accident year which I’m still referring to accident year 2022. If we compare that to accident year 2019 to remove sort of any interim distortions from the pandemic, so far our accident year 2022 frequency and this is based on on-level premium, it’s really emerging well below the accident year 2019 level. So pretty significant decreases in frequency still coming through. On the severity side, I think we’ll have to keep an eye on that. I don’t think medical inflation is causing any kind of problem right now. But we’re seeing a tiny uptick in severity but it’s still too early, I would say, for accident year 2022 to really know where that’s going to land. Nothing concerning that I’m seeing thus far.
Operator: And our next question is a follow-up from the line of Mark Hughes from Truist.
Mark Hughes: Kathy, I just wanted to clarify when you said the frequency is down. Would you say on a premium basis, so not necessarily on the closure but relative to premium?
Katherine Antonello: Yes. We like to look at frequency relative to on-level premium which puts all of the years on the same premium level, so that you’re truly just measuring the pure frequency decline. And we are continuing to see pretty significant decreases in frequency in our comp book. And I don’t think that’s any — go ahead.
Mark Hughes: No, I’m sorry, I cut you off. But I was going to say that’s — thinking of it in terms of exposures with
Katherine Antonello: yes, we’re seeing a decrease across the line, whether you look at it on an exposure basis, on a not on-level premium basis or on an on-level premium basis. So yes, versus payroll or premium, it’s decreasing.
Mark Hughes: Yes. What’s the latest you’re seeing, if you look at the state data on like NCCI loss costs. Is there a particular trend in what they’re putting out in the market?
Katherine Antonello: Loss costs are continuing to decline in most of the NCCI states. In California, the WCIRB filed for a pure premium increase of 7.6% last fall but the commissioner approved no change. I guess I would say I’m a little surprised at some of the sizable decreases that are being filed but these are just the loss costs and every carrier can file what is appropriate for them. And it’s good that carriers have that flexibility. I have a lot of faith in our team of actuaries and feel like they’re best-in-class and we always complete our own analysis and make filings that represent what we feel is appropriate rate adequacy for both Employers and Cerity. But yes, that’s kind of the overall trend I’m seeing is WCIRB tends to be seeing some upward pressure in California, NCCI states are still drifting down for the most part.
