Jim Williamson: Sure, Josh. This is Jim. So a couple of things. One, if you look at our gross PML and then further our net PMLs as they’ve trajected over the last several renewals, they’re up modestly. I would say that’s being driven more by taking advantage of the property cat XOL market. We’ve been pretty cautious on how much cat exposure we’re taking in the property pro rata book. Obviously, it exists, but we’re being thoughtful about that balance. I would further say, there’s no constraint, given our available capacity, where we are relative to our risk appetite, as you would have seen in the investor presentation, we still have plenty of room to maneuver. And so there’s not going to be a point where — the fact that we’ve taken advantage of some really exciting opportunities in the property pro rata space, where we then can’t go and grow where we want to with key clients on the property cat XOL, that is definitely not a trade-off we’re making.
And we would not disadvantage the cat book for any other opportunity.
Josh Shanker : And capital utilization?
Jim Williamson: Are you referring in terms of how we put the capital to work?
Josh Shanker : Yes. As you’ve grown that book, does that — obviously, more efficiently, I guess, [indiscernible]. Does that — is there a binding constraint on how much of this property pro rata you can write?
Mark Kociancic: No. Josh, it’s Mark. The answer is no. Despite the large level of growth, very manageable full degrees of freedom to underwrite as we see in the market going forward. No issue on that side.
Josh Shanker : And then switching gears to casualty reinsurance. Can you talk about what you’re seeing in terms of incurred loss activity versus claims as disclosed by your customers on the reinsurance side for the older accident years as they deal with social inflation? Have they taken their picks up enough? Or are you — do you think that they’re playing a game of sort of catch-up based on picks that you’ve set in the space?
Jim Williamson: Yes, Josh, it’s Jim again. Look, I’m not going to comment on the approach that other companies are taking to lost pick selection. What I would say is — and this is true of older accident years and more recent accident years, we take a very prudent approach to ultimate loss ratio selection. We certainly did that over the last few years as we’ve strengthened reserves in reinsurance casualty. You saw us do that. We took a very conservative approach to how we set those ultimate loss ratios and put ourselves in a position to ensure that, that’s in the rearview mirror. And then we do the same thing on more recent accident years, which, in some cases, means that we have a different view of the ultimate loss ratio that our clients have.
And you would have heard us describe in the last earnings call that we stepped back from some casualty in the — at the January 1 renewal. We reduced our expiring book by about 15% due to portfolio management actions. And in many cases, that was due to the fact that we had our own independent view of the expected loss pick, and that may have been higher than what our clients expected. So we’re absolutely applying our own disciplines and analytics to what others are reporting, whether they’re reporting it in their financials or reporting it to us in their submissions, and we think that puts us in good stead.
Operator: And now we have a question from Elyse Greenspan from Wells Fargo.
Elyse Greenspan: Sorry to follow up again on the property cat question, but just going back to the 4% reported growth. And Jim, I know you said that the property cat XOL book grew 24%, sorry, at 1/1. I understand that debt premium earn lags as you write business. I just didn’t, I guess, appreciate that there’s a lag on a gross or net premiums written basis on business that you would have written in the middle of last year. Can you just, I guess, just kind of explain that just that concept to me, just like the lag on the written that would, I guess, flow through 6 months later?
Jim Williamson: Yes. Sure, Elyse. It’s Jim. Yes, we’ve recognized written. We don’t recognize written premium on a reinsurance contract the way you might on a primary insurance contract where you recognize all of the written premium in the period that you originally incepted the deal. Instead, the written recognition of premium is spread out. In the case of property cat, it would typically be over a 4-quarter period, whereas something like casualty pro rata is typically recognized over an 8-quarter period, and you don’t recognize all the premium in a straight line, particularly for casualty pro rata. And you may recall earlier in the year and last year, we talked a lot about this relative to the recognition of growth from the Jan 1, 2023 renewal relative to casualty.
And so there are going to be these effects. But as I indicated earlier, we’re seeing — we’ve seen strong growth pretty much at every renewal since January of 2023 and actually going back into June of ’22, as the market started to correct. The only renewal that we’ve had in that entire time that showed a reduction was the June 2023 renewal because we stepped back a bit in Florida because a lot of smaller clients weren’t able to meet our quite stringent financial underwriting approach. So to give you some statistics, we talked about January ’24, July ’23 almost 25% growth, April ’23, 30% growth. Jan ’23, almost 50% growth. And it was only June ’23, where we actually reduced the book by about 2.3%. So it just gives you a sense of the fact that we are delivering strong growth at terrific economics at all of these renewals.
Got a little bit of a blip in this quarter, and we expect that to correct. Now the other thing I would indicate, of course, as you’ll see in the financials is earned premium for cat XOL was up almost 20%, which is much more consistent with what you might expect.
Elyse Greenspan: Okay. And then on the — on the capital side, you guys started to buy back a little bit of your stock this quarter. I think you used the word opportunistic around that. So can you just give us a sense of just kind of capital return thoughts from here just balancing growth? And I guess, obviously, as we get closer to win season?
Mark Kociancic: Elyse, it’s Mark. So you’re right. We did start some modest share buybacks in the first quarter, really no change from what we’ve been saying all along. We’re privileging the organic growth, no reason we can’t do capital management actions like share buybacks. At the same time, we demonstrated that in March, and no reason it won’t continue going forward, it’s an attractive level.
Operator: And our next question comes from Gregory Peters from Raymond James.
