Whether we are avoiding severity exposed classes on the general liability side or the professional liability side, it limits management. Whether — our max gross line is $5 million, net is $2 million. When you think about nuclear verdicts that are in the $100 million range like that, a $5 million gross line doesn’t materially swing our balance sheet or our earnings base for that matter. And then, we have a lot of different underwriting controls. Again, that’s informed by the strong leadership that we have in place. Where we sit right now, we feel that we are getting adequate rate to cover our loss costs. Our general casualty book was up 9.9%. We think that’s against loss cost that’s probably 4% to 5%. Excess liability was up 6.7%. I think it’s a similar type of loss cost.
It’s not to say, again, as I mentioned earlier, that all lines in Casualty are getting the same level of rate or have that term rate integrity. Financial lines are tough, and we do not write a lot of that, but we do write some private company D&O inside of our miscellaneous professional liability suite, and that’s not getting the rate that we’d like. So we have to be mindful of how much exposure we have there. I think the last thing that I would say is, when you look at our loss picks, we think they’re conservative. They were just vetted by our reinsurance panel at 6/1 — excuse me at 4/1 with the renewal, and we got improved terms and conditions and improved pricing there. So I think that’s a validation. I think the greatest validation is our loss pick is meaningfully above the historical results of these underwriters that we brought on.
So I know that’s a lot, but what I would say is, we do feel good about our Casualty strategy, the niche focus, feel exceptional about the leadership we have helping us execute upon that. And we don’t think that we will be releasing reserves anytime soon. So we’re going to be conservatively building the reserve base.
Peter Knudsen: That’s really helpful color. Thanks so much.
Operator: Thank you. Our next question is from Matt Carletti with Citizens JMP. Please proceed with your question.
Matt Carletti: Thanks. Good morning.
Mac Armstrong: Good morning, Matt.
Matt Carletti: Mac, I was hoping to ask a high-level question on your residential quake book, particularly things like California and other areas where the homeowners market has gotten super tight and rates have gone up a bunch. What have you seen in terms of retention in that resi quake book kind of as that happened? My thought process has been like people are paying a ton more for homeowners. How sticky? Have you seen retentions change at all? Or are they feeling the wallet get a little tight and maybe retentions are sliding a little bit?
Mac Armstrong: Yes, Matt, that’s a great question. I’m pleased to say that our retention has been consistent. It’s always been in a mid-to-high 80s level. And we have been able to continue to grow the quake book by taking share, by having great partnerships. But I would say that new home sales right now and increasing homeowners premiums is a headwind. It’s no question that it is. But because of our franchise, because of our partnership strategy and also because of the changes at the California Earthquake Authority, we’ve been able to sustain this kind of high-teens, mid-teens growth in residential quake. We’re optimistic, and we’ve been studying it, as rates come down and new home sales in more earthquake-exposed areas pick up again and the inventory starts turning over a bit more, that could be turned from a headwind into a tailwind.
I’m just not going to call win. I’m not — there are a lot of people that are focused on when rate changes are going to happen. We’re going to just play with the current market as it is and hope that when rate changes come, it provides a nice tailwind for us.
Matt Carletti: Great. Thanks, Mac. Appreciate it.
Mac Armstrong: Thank you, Matt.
Operator: Thank you. Our next question is from Andrew Andersen with Jefferies. Please proceed with your question.
Andrew Andersen: Hey, good morning. On Fronting, a little bit lower growth in the quarter. You mentioned some partnerships were slower to ramp. I think you had previously pointed to, for full-year perhaps, growth in Fronting index and growth of overall company. Is that still the case?
Mac Armstrong: Yes, Andrew, good question. Thanks for asking it. I think it’s not the case. I think it’s going to under-index the growth. So the good thing is, we have a portfolio of products in five different categories. Some are firing on all cylinders. Some are indexing the growth rate. I would say Fronting is the one that is now under-indexing. A few of our new partnerships are slower to ramp. There is a little bit of rate headwinds in one of our larger relationships that I brought up. We have a pipeline, and we do expect to add to our portfolio of Fronting partnerships, but it’s going to slow. Its growth is going to look more like the first quarter than it will the broader growth rate of the company.
Andrew Andersen: Got it. Okay. And then, on Earthquake, it sounds like high-teens, 20%-ish for full-year. If I think about the expense ratio here, does the mix of product between residential and commercial have an impact on the expense ratio? Is one lower than the other?
Mac Armstrong: Historically, residential earthquake had been a bit of a higher margin. The cost of acquisition is — might be a little bit lower. But right now, in this market, just because of the rates, the increases that we’ve seen in commercial earthquake, the underlying unit level economics are almost at parity. So, a residential earthquake policy or commercial earthquake policy in 2024 are going to have the same margins.
Chris Uchida: Yes. One follow-up on that. When you look at our acquisition expense ratio on a gross basis, right, I think 10.5% for the quarter, we expect that to be pretty flat for the year, right? So overall mix of business, whether it be residential earthquake, commercial earthquake or even changes in the Fronting dynamic, we don’t expect to have a material impact on that ratio as we go forward.
