Mark Hughes: Yes. Thank you. Good afternoon. In times past you’ve given the source of new business. I think you — earlier on it was kind of 60% came from the mortgage market. I hear what you’re saying that you’re looking at expanding that going through other electronic sources. Is there an updated mix of new business you might be able to share?
Mark Jones: So today that’s still about right where it’s in excess of 50% of the lead generation from new business comes out of a mortgage transaction. We’re building up the partnership and the digital lead generation efforts which I think that’s why it’s even more impressive that our lead flow is up 18% year-over-year with fewer agents and considerably less housing transactions. Our agents have just been doing a really good job marketing out there and the value to referral partners today as we mentioned in our prepared remarks it’s never more evident than it’s been in our history. The insurance cost on a mortgage transaction now is a real consideration especially with rising interest rates. And so we’re able to provide a really differentiated service today in the face of those headwinds.
Mark Hughes: I had a question about the geography or the flow in the income statement. When I think about renewal commissions say for this quarter the line items that flow into that would be renewal commissions in this quarter last year presumably that business would be renewing again and then the new business commissions those would also be up for renewal and therefore would be reflected in the renewal commissions. Is that right? It’s those two categories from last year that flow into the renewal commissions this year and that’s all corporate agent activity is that correct?
Mark Jones: Yes. That’s the right way to think about it.
Mark Hughes: And same with the renewal royalty fees that renews, but the new business royalty fees they step up kind of the 5% to 50% retention versus the 20%.
Mark Jones: Right. So the way you would do the math with the royalty fees is you would just gross them up so you would do your new business royalties our portion of that is only the 20% so you gross that up and then same thing on the renewals our portion is the 50%. And then to get to the next years you obviously just multiply that by 50% that would be our portion.
Mark Hughes: Yes, yes exactly. Okay. And then one other quick question just the rate contribution to growth any meaningful changes this quarter by that I mean the kind of pricing the premiums that the policyholders are paying for auto and homeowner’s insurance how has that contribution changed perhaps?
Mark Jones: We’re still seeing price inflation, but in our minds the product availability that’s the other side of that price inflation has been a bigger headwind than the price inflation has been a tailwind. And you can see that in retention you can see that in some stats that we track internally like policies per lead we mentioned buying rate and package rate as well in our prepared remarks so we believe that the product environment is more of a headwind today than price inflation has been a tailwind.
Mark Hughes: Thank you.
Operator: Thank you. Please standby for our next question. Our next question comes from the line of Meyer Shields with Keefe, Bruyette & Woods.
Meyer Shields: Great. Thank you. A couple of small questions. First are there additional expenses associated with pursuing leads through the partnerships and digital channels? Does that change the equation at all?
Mark Jones: So we — the digital channel is A our digital agent as well as leads from our partnerships and other organizations. The digital agent all of that is already built in from previous spending. The partnership leads there’s some reciprocal dollars that flow back and forth but there’s not any more customer acquisition costs than would be a traditional go-to-market strategy.
Meyer Shields: Okay. Excellent. And going back to contingents, I’m probably a step behind, but if the increasing certainty with regard to loss ratio-based contingents is what drove the contingents in the quarter, shouldn’t that and the year-to-date numbers imply more than 40 basis points for the full year?
Mark Jones: Yeah. The language we use is around 40 basis points. Things could still happen in the fourth quarter that could have adverse impact on that, but we feel comfortable that we will be at least a 40 basis point flow.
Meyer Shields: Okay. That’s helpful. And I guess kind of a question just because I don’t know if there was an explicit comment, but I think Mark you talked about some initial signs of carriers app sites expanding. Is there any initial change or inflection in what you’re seeing with regard to housing?
Mark Jones: We have not seen sort of a turnaround in the housing market yet, no.
Meyer Shields: Okay.
Mark Jones: I wish it were different but it’s not.
Meyer Shields: Absolutely understood.
Operator: Thank you. Please standby for our next question. Our next question comes from the line of Paul Newsome with Piper Sandler. Your line is open. Paul, check to see if you are on mute? Our next question comes from the line of Scott Heleniak with RBC Capital Markets. Your line is open.
Scott Heleniak: Yeah. Thanks. I was just wondering with the franchise reductions probably just about over it seems like at least that’s kind of what you had said on the last quarter of the call. Can you just comment on the franchise inquiries that you’re getting and your plans to expand that in 2024 and beyond and just any kind of information or backlog information you can share on the franchise side?
