Michael Kehoe: This is Mike. I would say there is always pressure on commission. Our brokers are critical to our success. We worked very hard for them. We do pay slightly lower commissions than some of our competitors, but we also offer the marketplace and our brokers a much broader risk appetite. By not delegating underwriting authority, we’re able to consider some tougher traditionally E&S placements. Where a lot of our competitors that delegated underwriting authority, especially on small accounts, tend to almost migrate to more of a preferred type risk. We also have a very-high service model. We quota an extraordinary percentage of the new business submissions we receive, and we quote them very quickly. So, I think that helps offset some of the commission issues.
And finally, we’re a low-cost provider. One of the extraordinary things about Kinsale’s business model is, we’re able to operate with an expense ratio that’s really dramatically lower than the general marketplace, which gives us a lot of flexibility to offer more value to the business owner in the form of more competitively priced insurance, but at the same time, deliver best-in-class returns to our stockholders. So, for those reasons and a variety of others, yes, there’s always pressure on commission, but we don’t anticipate any changes there.
Andrew Anderson: Thanks. So, maybe just like a market-related question. I think we heard from a larger peer that they think of a sandbox for small commercial E&S of around $8 billion. Is that roughly how you view it, or is it a bit more of a moving target?
Michael Kehoe: No, we would say that would wildly understate the market. I haven’t seen the 2022 statistics, but the biggest E&S rider in the United States is Lloyd’s, which is obviously not a single entity, but it’s a marketplace. And I think they were close to 17% market share in 2021. I think that puts some number of over $8 billion. And most of what I think they write in the United States is small commercial. They delegated underwriting authority to all of the wholesale brokers we work with. For most of those brokers, Lloyd’s is one-off or maybe is their largest market. So, we would look at the total addressable market for E&S is somewhere between two-thirds and three-quarters. And we would estimate the market for 2022 was about $100 billion.
Andrew Anderson: Great. Thank you.
Operator: Your next question comes from the line of Pablo Singzon from J.P. Morgan. Your line is open.
Pablo Singzon: Hi, good morning. Mike, can you comment on the competitive environment you’re seeing in the market? So, other E&S companies have been growing fast as well, some of them the largest, right? And I think at this point, the broader E&S industry has recognized the attractive opportunities in E&S. So, just sort of your thoughts on the latest on where you see the competition these days.
Michael Kehoe: Yes, I think as Brian Haney indicated, we feel very positive about the market environment. It varies by product line. But in general, it’s a bit of a seller’s market, more so than a normal intensely competitive period in the insurance cycle. That being said, we only (ph) about 10% of our new business quotes, and that’s consistent with the way our book has performed over the last four years. So, I think that just reiterates, there’s plenty of competition. There’s a lot of new entrants, lots of fronting companies, 15 or 20, or maybe even more of it have opened up in the last couple of years. They exist to connect MGAs to reinsurance capacity. So, there’s lots of delegated underwriting authorities out there. But that being said, there is a lot of business being pushed from the standard to the non-standard market.
