Michael Kehoe: Yes. I think, Andrew, this is Mike. We’re looking every quarter at actual loss activity and obviously reevaluating all the actuarial assumptions we make. And so I would say that this past quarter consistent with prior years, our actual loss activity was below expectations. It’s just that we’re looking at a backdrop of inflation, loss cost trend etcetera and we always want to position the company to be in a very conservative posture. So I think the one point observation that you had is a good one.
Andrew Andersen: And I think you mentioned some new division’s kind of launching growth commercial auto and homeowners. Where are we in the development for that? Is that contributing meaningfully to growth currently? And I think the commercial auto comment was new. Is that correct?
Michael Kehoe: No, it’s not new. We’ve been in that for a while. If you look at the 10-K, we break out production by underwriting division on an annual basis, but we don’t do it quarterly. But the annual numbers will give you a pretty good insight.
Bryan Petrucelli: I would say they’re not to the total they’re not contributing meaningfully now. But if you look at kind of the way product development works, we start out slowly. We don’t try to corner a market and then we grow over time. And then so maybe 3, 4, 5 years down the road, it starts becoming more and more meaningful. So if you look at we’ve probably added I think 14 divisions since we started the company and they all have that sort of trajectory.
Operator: [Operator Instructions] Your next question comes from the line of Bill Carcache from Wolfe Research.
Bill Carcache: As the industry is low cost producer, do you think Kinsale is leveraging its competitive advantage to the extent possible? How much room is there for Kinsale to potentially nudge pricing a little bit lower to sustain longer growth? And your operating ROEs are certainly very strong, but is there room for you to sort of accept a slightly lower ROE in exchange for incremental growth that kind of just there’s a lot there, but it sort of raises questions around how you think about the tradeoff between returns, growth and pricing?
Brian Haney: Hey Bill, this is Brian Haney. So yes, obviously, what we’re trying to do is maximize the wealth building for the investors, and I think that starts with maximizing underwriting profit. And so what we’re really trying to solve for is what combination of ROE and growth is the right number to maximize that. I think you’re absolutely correct. We don’t have to have a 30-ish ROE to maximize book value. So in certain areas, we are looking at cutting rates to grow faster. In certain areas in some of the calendar lines we don’t need to do that because we’re growing fast enough as it is. So yes, division by division we’re looking at that exact calculation regularly. And again, the goal is not to have a certain, the goal is to drive as much value to the company and the investors as we can. But there is definitely room and you’re right. Being a low cost operator provides us a leeway I think that our competitors don’t have.
Michael Kehoe: And just following up on that that’s why I made the comment earlier about the fact that in a more competitive market that low cost feature of our business model becomes even more powerful.
Bill Carcache: As you think about sort of the longer term sustainability of the growth of the revenue stream for the business, how do you view the possibility of possibly unlocking a new market opportunity perhaps in the specialty admitted space? Just curious whether that’s a potential vehicle for longer term growth?
Michael Kehoe: Yes, Bill, this is Mike. I would say in the next couple of years, we’re going to continue to just execute the current plan, focusing on building out our position in the E&S market. We’re doing a lot of work with new product development and we’re doing a lot of work with system enhancements. If you go out several years, I think it’s highly likely we’ll be in the specialty admitted space, but not the next couple of years.
Bill Carcache: And if I could squeeze in one last one. I guess one could argue that many of the top carriers in the E&S space are also the same players writing admitted business. They have little to gain from seeing that business migrate back to the admitted markets. Maybe could you speak to whether you’re seeing any evidence of admitted carriers trying to use pricing to win business back from E&S?
Bryan Petrucelli: The short answer is no. We’re not creating business flow out of E&S into admitted. And I think you’re correct. Most of the big admitted companies also have big E&S operations. To the extent that we’re seeing increased competition or where we’re seeing increased competition, it’s not from admitted. It’s generally from MGAs.
Operator: Your next question comes from the line of Pablo Singzon from JPMorgan.
Pablo Singzon: First one, just about the conservatism you’re adding to your accident year loss pick. I’m curious, is it justified by the data you’re seeing today? In other words, are you sort of assuming a better spread between nominal pricing and loss trends? Or are you just adding an extra level of conservatism beyond what you’re actually seeing in the data and the loss results now?
Michael Kehoe: Well, this is Mike, Pablo. Good morning. Our actual losses are coming in below expectations, okay. And that’s this quarter and that’s been a trend for a number of years. On the other hand, there’s a lot of assumptions in our actuarial model that are forward looking, loss cost trend and the like. And given the heightened inflation in the economy, I think it just injects a little bit more uncertainty. And so, we’re offsetting that uncertainty with a little bit more conservatism.
