John Campbell: So, on the extra – yes, for sure on the extra disclosures around warranty and Rhino [ph], that was great. Those are solid businesses. If you guys hit the 2024 targets for warranty and Rhino and then obviously just sold EIG, so that’s going to add back another $3 million of losses, that’s $27 million in EBITDA. Obviously, you have got the Corporate segment, if you take that out, I mean you are going to basically need about $40 million outside of warranty and Rhino. So, a few questions here, first on, just bigger picture, are you largely done with the cost actions within corporate and how we should maybe think about that this year? And then secondly, if you can help us unpack that remaining $40 million, is that mostly just HOA and improved gross loss ratio versus last year?
Matt Ehrlichman: Yes, I can take that one. Some good questions in there. First, I will say on the corporate cost actions, those have already – those are done, but the benefits of the P&L will show in 2024 as they annualizes as opposed to 2023 was partial year. But the actions themselves are done. With respect to insurance profitability, one of the things, I think Matt mentioned in his prepared remarks is in the second half of the year, which is really when the insurance profitability actions we talked about really kicked in. We were $45 million better this year EBITDA than we were into the second half of 2022. And there is more of that, that have already been to come in 2024. So, that just kind of maybe sets the tone a little bit.
And then the other the other – some other drivers of profitability in our software businesses, we continue to roll out products and increased prices as we create more value for our customers there. That all that will benefit profitability and a lot of those have already been launched is the other thing, it’s just now we need to see it kind of roll through. The second thing I will mention is, we are also continuing to increase this premium per policy. I think we mentioned today some Texas filings that we have done there. So, those are the main drivers that get us to the profitability improvement every year-over-year.
John Campbell: Okay. That’s very helpful. And then kind of staying on that line of questioning, you mentioned the 63% gross loss ratio for this year, that’s going to be based on the past 5 years, I think you said weighted average, I am guessing 2020 was lower than normal. But the last 2 years have been pretty tough. It seems like way outside of the norm. And then you have also got the new storm coverage. But the question here is how does that 63% gross loss ratio compared to about the historical average beyond the past 5-year look?
Matt Ehrlichman: So, couple of things on the gross loss ratio. One is that we are – we think set up quite well actually with that given what we have done with reinsurance. So, for example, last year, John, was a tough weather year in terms of hail particularly, due to some weather in Q1, hit that same year happened again this year. Again with this new, whoever insurance provides us is an aggregate cover. So, while we typically and continue to get reinsurance for large event protection, we now have protection against a series of small events. We actually would have gotten the $30 million backup of additional cover, if last year were to happen again. And so that certainly just lowers our risk for the similar type of weather.
As we look further back in the time, weather, more than 5 years ago and the gross loss ratio was consistently around this type of a level, but I would note that things have changed quite a bit. So, when we put in place higher deductibles, this last year there was a 2% wind inhale deductible that’s being raised a 3% went inhaled deductible, that’s important in terms of what impact it makes on a gross loss ratio and perhaps underappreciated. And so that certainly is a driver that helps us this year.
Shawn Tabak: Yes. And I think the other thing that we are…
John Campbell: Okay. That’s very helpful.
Shawn Tabak: I was just going to add to that. Yes, the other thing that we are seeing in the book here is improvements in underwriting, right, and risk selection. And so I think as 5 years ago, obviously HOA wasn’t using Porch data at that point in time. And so – and then, as well as some of the other things that Matt mentioned there. So, really the combination of the things we talked about increases in premiums, underwriting actions, deductible, various exclusions, non-renewing certain policies. I think have set us up really well for this year on that front.
John Campbell: Okay. Thank you guys.
Matt Ehrlichman: Thanks John.
Operator: Your next your next question comes from the line of Josh Siegler from Cantor Fitzgerald. Your line is open.
Josh Siegler: Yes. Hi guys. Good afternoon. Thanks for taking my question. Congrats on the really strong quarter here. First, I just wanted to dive into, with near-term profitability on the horizon, how are you really thinking about future capital allocation and could M&A really be on the table as we progress through ‘24 and ‘25?
Shawn Tabak: I will take M&A one first. I would not expect any M&A or material amount of M&A. Here in the 2024 year, where we have one more year in front of us and just really being heads down, focused making sure we just execute flawlessly and produce a really solid clean year. So, that’s where we are at now. Does M&A open up back up, for us ahead, we do think that’s a capability that we have as a company and we are looking forward to the right time to be able to turn that engine back on.
