Pablo Singzon: First question maybe for Brian Haney. Appreciate the disclosure in submission comp growth. But I was hoping to get some perspective on how policies in force are growing, just given that your book is more weighted to new business than others? Would it be reasonable to assume this growth is in the same neighborhood of submission comp growth? And if not, how much lower?
Brian Haney: I don’t have those numbers off the top of my head. I think the one other way to look at it is, if you look at our average premium, it’s probably going up a bit. And then, if you look at our premium growth and back out our average premium growth, that’s going to give you a pretty good estimate of growth. So I would probably say it’s going up. It might be close to submission growth. I don’t be guessing about certain things, probably going up somewhere between 20% and 30%.
Pablo Singzon: Another one for you, Brian Haney. If we assume Kinsale loss costs increasing mid-single digit neighborhood, right, and couple that with the 5% pricing metric you provided, would it be fair to assume that nominal premiums are growing maybe high-single-digits, assuming flat risk exposures?
Brian Haney: Yes is the short answer. You’ve got the competing effects of the real rate, the premium trends. With inflation being elevated, we do get more premium just by virtue of prices of general line products going up and then the loss cost trend offsetting that. So, yes, that’s [indiscernible].
Pablo Singzon: Third question maybe for Bryan Petrucelli. The 120 bps benefit from net commissions in 2024, was that the full run rate or will there be some more of that in 2025?
Bryan Petrucelli: Again, I think that depends on the, as Mike mentioned earlier, mix of business. But as that property book grows and becomes a larger percentage of the overall premium base, we are ceding off more of that business than we do on the casualty side,
Michael Kehoe: It’s probably important to remind people that, even the business we cede away, we do get a ceding commission back, if you will, from the reinsurers that has some embedded profit in it for us.
Pablo Singzon: And then last for me, maybe for Mike or Brian Haney. I know this is something we’ll see in the filings, but I was hoping you could provide a preview on the components of the premium growth this quarter compared to the third quarter? And I’m thinking specifically of the breakdown between property, which I think grew more than 80% in the third quarter, and casualty, which grew about 20%. Seems like the growth rates for those lines are fairly consistent in fourth quarter, would you agree or disagree with that?
Michael Kehoe: Well, property grew at a robust clip in the fourth quarter. Casualty, as Brian said, was pretty steady, but very strong double-digit growth.
Brian Haney: Transportation segment grew fairly well. Professional lines probably grew a little bit less than the rest of the book. So I think what you said was accurate.
Operator: And we will take some follow-up questions from Mark Hughes with Truist.
Mark Hughes: The current accident year losses ex-cat were flat for the full year compared to 2022. Given what you see in terms of mix of business, loss cost trends, all of that. Is that a good starting point for 2024? Understanding that you have seasonality and that tends to be higher in the early part of the year and lower as the year progresses?
Bryan Petrucelli: We don’t forecast that. If you said that’s what you’re going to do, I don’t think we’d take issue with that.
Operator: And we will take follow-up questions from Mike Zaremski with BMO.
Michael Zaremski: Real quick, I know you gave us some nuggets on the expense ratio pushes and pulls in the prepared remarks. So I guess we can just use that to think through the 04/24 numbers, unless you wanted to kind of maybe hold our hands a little bit more and help us think through how much is going to run rate into the coming quarters?
Bryan Petrucelli: Yeah, I don’t think we can say any more than we did.
Michael Kehoe: Look at the annual expense ratio.
Bryan Petrucelli: If you take at the annual expense ratio, and that should be a pretty good guide for you.
Operator: And we will take follow-up questions from Pablo Singzon with J.P. Morgan.
Michael Zaremski: I thought I’d just throw in one more on reserve. So recognizing that the reserve position is good – maybe this one’s for Mike – I think in the past, you had call out pressure in specific lines. If I remember correctly, it was I think construction. Right? I was wondering if you could provide perspective on sort of where – recognizing that the repose book is in a good spot, but are there lines of business or classes where you’re probably more at risk than others?
Michael Kehoe: What’s unique to construction, Pablo, is the fact that it’s one of our longer tail lines of business, specifically a component of the construction business, which we call construction defect. There are typically water intrusion claims. Sometimes the water intrusion is so slow that the property owner isn’t even aware of it for a number of years. And by the time it’s discovered, it could be an extensive renovation, a million dollar claim. And those clients can come in late, five, seven, nine years later. California, I think, has a 10 year statute of repose. I think Colorado, maybe like seven years. Other states like Virginia, I think it’s one year. So it varies a little bit, depending on where you are, but the long tail nature of that business, combined with – I think we hit 9% inflation a couple years ago, that inflation hit labor costs, it hit building supply costs.
So there was definitely an impact on the construction book at Kinsale. Does that answer your question?
Michael Zaremski: I was wondering, aside from construction, are there any other lines perhaps where you sort of see, not major issues, but sort of these, like, I guess latent issues emerging? Or is construction top of mind for you and the rest of the lines are broadly okay?
