Pablo Singzon: Yes. All that makes sense. And then, second question, just thinking about the business mix change, I think, Chris, you had said on this call about 1 point to 2 points deterioration in the attritional per quarter. My memory might be rusty, but it seems like that might be a tad faster than what you said before. Is that because attritional lines are growing faster? And then, as a follow-up to that, I think in the 2022 Investor Day, you guys had given all-in combined ratio guidance for Earthquake and, let’s just call it, non-Earthquake. Do those like margin — does that margin guidance still stand as we think about the mix here?
Chris Uchida: Yes, that’s a good question. Yes, I think maybe 1 point to 2 points is, I would say, a little bit conservative. I think if we get up to the midpoint of our range of 21% to 25%, which is kind of in that 23% range, we feel good about where it is for the full year. I think it does move around on a quarterly basis. You guys are very familiar with the insurance business. Obviously, we don’t control the losses. So if it swings up 1 point or 2 points in a quarter, it doesn’t mean anything is going wrong. It’s just naturally where things go, and it can also go the other direction, 1 point or 2 points down. But overall, we’re very comfortable with where things are going. We are seeing very good strong growth in our lines of business that you have attritional — that’s going to be the Inland Marine and special property.
That’s going to be some Casualty. So everything is going the way we expected, strong growth there. When I look back and think about Investor Day, I’d have to — I’m going off a lot of memory here, but it does feel pretty consistent with how we’ve lined up. We haven’t made significant changes to any of our quota shares. We started taking a little bit more on some of those, but not what I’d call a material variation from what we shared with Investor Day. And some of that thesis at Investor Day was maintaining the same participation. And so, that is still, I would say, a lever we have to pull over time. Then we can start — as our balance sheet grows, we can start taking more and more on some of those lines, which will obviously help profitability or the bottom line continue to grow because these are profitable lines of business where we are, I would say, sharing a lot of that margin with the reinsurers that, over time, we will start putting on our balance sheet.
That’s not going to happen all next year. But I’d say over a five to 10 year horizon, more and more will start coming onto our balance sheet, which will help continue to grow that bottom line.
Mac Armstrong: And, Pablo, the thing that I would add is, we still feel very good about a sub-75% combined, even if that loss ratio moves up 1 point or 2 points, like Chris was describing.
Pablo Singzon: Yes. That makes sense. And then, last for me, you had referenced better ceding commissions on the Casualty quota share. But then you also said that, I think, as a percentage of gross earned, you think acquisition expenses stayed flat. So it doesn’t seem like that benefit on the ceding is that meaningful, right? Is that the correct read? Then with the overall number, I guess, that’s a more appropriate thing to say. Is that fair?
Mac Armstrong: Yes. I think it’s just a matter of business mix, right? Inland Marine and Other Property — Casualty is only 14% of the business. And what was in that quota share probably constitutes about 40% of that number. So that’s — call it, 5% of that overall did see slightly improved ceding commission. It’s just business mix.
Pablo Singzon: Yes, yes, okay, thank you.
Operator: Thank you. There are no further questions at this time. I would like to hand the floor back over to Mac Armstrong for any closing comments.
Mac Armstrong: Well, thank you, operator, and thank you to all who joined us this morning. We appreciate your participation, your questions, and most of all, your continued support. To conclude, we’re off to a strong start to the year. And I would be remiss if I didn’t thank our team at Palomar for their continued dedication and hard work, which is ultimately the driving force behind our terrific results and success, not just this quarter, but these past 10 years. I remain confident in the growth trajectory of our business, combined with our continued focus and our ability to deliver predictable earnings and returns. As an aside, in addition to our 10-year anniversary, we recently celebrated our fifth year as a public company. And so, I want to thank our investors for support these last five years. We will continue to work in earnest on your behalf and will drive shareholder value. Thank you very much. Have a nice day, and speak to you next quarter.
Operator: This concludes today’s conference call. You may disconnect your lines at this time. Thank you for your participation.
