So, it was €“ it kind of made that number jump out at us, but again, manageable for us because the majority of our €“ both the way our premiums are constructed, as well as how we see losses through the years as it’s €“ we look at the physical damage more than the liability.
Patrick McClymont: Yes. When you think about our loss ratio, typically being 41% and being in the 45% area. The two big reconciling items are what McKeel just talked about in terms of liability. We did strengthen the reserves U.S. liability and then Ian. And so, Ian was a $10 million for us and the strengthening reserves was about 6.5. If not for those two, we’d be right back to 41%. So it tells the underlying trends in terms of frequency and severity are very, very consistent, but we just have those headwinds in 2022.
Paul Newsome: Thanks. Another big topic is the industry’s reinsurance pricing, obviously went up a lot in general January 1. Can you talk about how that feeds into your business and any overall renewals that we should be watching over the course of the year?
Patrick McClymont: Sure. It’s Patrick. Thanks for that question. So, certainly a headwind for the industry and we’re not immune from that. As we talked about on the call, it’s a little bit different for us just because of our risk profile. So, in an industry where the automotive industry was up 12 points of loss ratio, in 2022, we were only . And so, our underlying risks are different and our team worked really hard to reinforce those points as we’re putting the new reinsurance in place for 2023. And I think we’re somewhat successful at those arguments, but yes, there were definitely headwinds. The way that we thought about it was our costs were going to go up and it’s depending on who you’re talking to. For us, it was sort of a 30% to 40% number from a rate standpoint.
And so, the way that we decided to put the package together is, we’re retaining a bit more risk than we did historically. So, previously we’re at $10 million of retention and that’s going up to 25 million. And so, we use that as a tool to get to the right overall cost. And then we’ve also come up with a different approach for our high net worth collections, essentially put together a group to reinsure those differently. Folks who were interested in that risk and could price it in a way that was favorable for us. So, in the aggregate, our costs are going up by low single digit millions of dollars year-over-year. We are taking on a bit more risk to get there. So, it was manageable for us. But yes, a headwind.
Paul Newsome: So, if we €“ repeat of hurricane in the €“ which would be , that would be limited to 25% with the limited co-participation, I assume?
Patrick McClymont: Yes. Our attention is that 25 versus 10 and that one in particular, we would have in 2023 under the new program. Yes, we would have and our net risk ended up being less than 25 million, because of €“ as McKeel talked about, we just have a very different risk profile, so much lower than what others thought.
Paul Newsome: Great. Thank you. Appreciate the help as always.
Operator: Our final question today will be coming from Pablo Singzon. Please go ahead.
Pablo Singzon: Hi, thank you. Should we expect any change in the loss ratio given the you referenced for 2023 or are those funds meant to keep you steady at about the 41% level?
Patrick McClymont: I missed the middle part of that given the what?
