Joe Lacher: Yes, we don’t typically give a target combined ratio. But we will definitely be there to generate. Our guidance has provided you guys a view that we’re going to be a 10% ROE next year, or 10% plus next year. We’ve targeted a low double digit ROE over the cycle. So we’re obviously at the lower end of that range, but inside of that, to achieve that for the year, you would reasonably expect that the combined ratios are in the zone of our targets early on in the year. And if you just did a little math and said, if we had 100.5 underlying combined ratio and specialty auto in the third quarter, and we’ve tried to point out that that has very little earned rate from California running through it. You could reasonably expect that earned rate will more than offset loss trend and will continue to provide combined ratio improvement over the next couple of quarters.
I think we’ve been very careful about that in describing that. So that should provide a plus. At the same time, we’ll start writing a little bit more new business. That will have its new business penalty. And you will not see the combined ratio continue to improve way in excess of what might be a target that would produce that combined ratio. Those two will converge and will sort of hold our ground over the course of the year.
Operator: Next question comes from Paul Newsome of Piper Sandler.
Paul Newsome: Thank you. It’s always helpful in the call. Can I ask you about the reduction in the revolver capacity? Was that just — well, just can tell you what’s driving that. Is that the other piece of the holding company? Liquidity that’s changing.
Matt Hunton : Yes, sure, Paul. We’re hitting a covenant, a leverage covenant that’s driving that and bringing that down. I’d highlight we did our revolver last year. We upped it from $400 million to $600 million. And so we’re slightly below the $400 million today. So if you look at it from a historical perspective and how we actually shrunk in new business over the last year where we stand at $375 million, roughly, that’s plenty of liquidity. And no concern. I don’t have any concerns with that.
Paul Newsome: Great. Different topic. The accounting for the preferred business, obviously you’re running it from this non-core line, but it doesn’t look like it’s being treated as discontinued operations. It looks like the revenues and expenses are all going through on a consolidated basis like they were before. You’re just not breaking it out as a separate segment. Is that right? Am I gaining that right or am I wrong? It’s, you are treating like a discontinued operation. This is below the line. But it’s not technically below the line, right?
Matt Hunton : Technically it’s below the line. It’s free as non-core operations. Discontinued ops would have to be something that’s sold or we have a deal on the table, et cetera. So it’s non-core operations. It’s being wound down as planned. You can see that I think it was $7 million from non-core operations this quarter. We’ll try to provide as much information as possible to you. I think we also included about $14 million of catastrophe losses, et cetera. But you won’t see it as a segment going forward.
Paul Newsome: But it will be in the consolidated numbers. Like this consolidated revenue, for example, will include premiums from being [inaudible] business.
Matt Hunton : You won’t see any of the detail from like a premium standpoint, and net investment income standpoint, any of those things. It all is getting lumped into one component in non-core operations. So think about taking that.
Paul Newsome: I have to take it.
Matt Hunton : Yes. So think about that segment previously Kemper preferred insurance. All of those components are being truncated to one line. And so you’re seeing the net impact of that business performance there. And maybe you’re wrong on this, Paul. I’m not an accountant, but I think part of the issue on the discontinued ops. I’m adding on to Brad’s. I know it’s the sale or the exit, but if we’re just shutting it down, we didn’t exit all private passenger auto. So that was, I think, some of the advice we were getting is that’s part of why we can’t move it to discontinued ops.
