If you think about the quarter for us, we are focused on mix. That is our general focus ultimately is to get the loss ratio continue to get lower. But for us, ultimately, is really trying to make sure that we are leaning into the market where there’s opportunity and again, being disciplined around what we don’t chase. And we don’t chase the lines that we think right now. We are not showing those risk-adjusted returns. So if you took those out, particularly the workers’ comp and particularly the financial lines, our growth would have been where we are year-to-date around 9% plus. So I think for us, we tend to focus on the long term, it’s really about generating the right mix and making sure that we are driving the best loss ratio we can do.
Yaron Kinar: Thanks so much.
Operator: The next question comes from the line of Michael Zaremski with BMO. Please go ahead.
Michael Zaremski: Hey, good morning. Thank you. Maybe just looking at the paid to incurred ratio ex catastrophes and reserves. It’s been, I think, not just you all, but it’s been ticking up a bit year-over-year and quarter-over-quarter. Anything worth calling out or talking about in terms of trend there?
Mark Kociancic: Mike, it’s Mark. I wouldn’t say there’s anything specific to say there. I think it’s largely your portfolio mix that’s just driving that trend, mix of property, the long-tail lines. There’s no particular significant set of claims or COVID settlements or anything like that, that’s in the mix. So from my standpoint, it’s just a natural outcome of the portfolio mix.
Michael Zaremski: Okay. That’s helpful. I guess switching gears a bit back to the discussion on ceding commissions. The business mix has changed a lot over time. And I know you used to — I think the wording it could improve considerably. Any perspective on kind of like if ceding commissions are still — many points different than they were many years ago, right? But I know your business mix has changed a lot, too. So is there any context about what considerably could mean if things do go — continue to move in favor of reinsurers into ’24?
James Williamson: Yes, Mike, this is Jim Williamson. Look, we’ve — one of the things we said this year is that ceding commissions on Casualty Pro rata overall have moved by about a point. And obviously, it differs by deal and geography and all those sorts of things. I think our view is that, that will accelerate and needs to accelerate. And we’ve certainly seen some anecdotes that you probably would have heard of as well of deals in the back half of this year moving by more than that, and we’ve seen some of that as well. And I think that bodes well for us in 2024 being able to accelerate from that one point to a larger number. I’m not going to predict what that ends up being, but the trend line around getting a better outcome is certainly there.
Michael Zaremski: Okay. Got it. And maybe lastly, just wanted to make sure on Everest historical Cat load guidance, is it correct that your last Cat load guidance was less than 6%. And I’m — I clearly heard — but we clearly heard what you said about if Cat losses last year happened this year, what would happen, but then also you’re probably leaning into the marketplace as well and business mix has changed. So just is less than 6% the most recent update?
Mark Kociancic: Yes. Roughly 6% is the expected annual Cat load that we would have in our operating plan for the year. Now that’s consistent — broadly consistent with what we said at the IR Day back in ’21.
Michael Zaremski: Okay. Thank you.
Operator: The next question comes from the line of Mike Ward from Citi. Please go ahead.
Michael Ward: Thanks, guys. Good morning. I was just wondering if you had any preliminary view on maybe the industry exposure for Hurricane Otis in Acapulco?
Juan Andrade: Yes. Sure thing, Mike. This is Juan Andrade. Look, I think Otis is a great example of what we’ve been talking about over the last few minutes. And the reason why frankly, the property cat market will continue to be hard into ’24 and ’25. Let’s put it in the context of what we said earlier, right? We saw 80 events roughly around the world that we were able to track. The industry loss now is at about $93 billion, 9 months year-to-date, headed well probably into $100 billion plus by the end of the year. And now you have something like Otis, which if you follow what happened with that storm, it basically exploded from being a 70-mile an hour storm to be at 165 miles an hour in a period of about 12 hours, which was pretty significant strengthening and then hitting Acapulco, right?
So this is one of the things that when you look at the world, you realize that you still need to continue to push for pricing. You need to continue to push for cash flow points being up, terms and conditions, et cetera. Look, from our perspective, we expect that loss to be modest at the end of the day, I can’t speak for others out there. But I think this is also the discipline that you’ve seen from us on how we manage our volatility and our accumulations around the world.
Michael Ward: Thanks. That’s helpful. Maybe on the expense ratio front, the internal investments seem a little weighted to insurance. I guess as you look to 2024, do you expect that to set up softer comps in that segment or for the group overall?
Mark Kociancic: I missed the last three words on that, sorry. Could you repeat it, Mike?
Michael Ward: I was just — looking into ’24, I was wondering if you expect the expense ratio weighted towards insurance to set up softer comps, whether it’s insurance or just for the group overall?
Mark Kociancic: Well, we are continuing to expand in insurance, both in North America, but also internationally. So that comes with a bit of front end loaded expenses, something we think we can manage well within our combined ratio expectations for the business. It’s a bit elevated right now compared to prior years as we start to gear up. But it’s not something that I would expect to have any kind of meaningful impact on our combined ratio going forward. Having said that, I think the benefits of our expansion, this is something we’ll get into in our Investor Day, but that’s something we feel very confident about going forward in terms of being a future profit driver and an expansion of our franchise offering.
Michael Ward: Thanks, guys.
Juan Andrade: Thanks, Mike.
Operator: The next question comes from the line of Ryan Tunis with Autonomous Research. Please go ahead.
