Brian Meredith: Great. Thank you. And then the second question has to do with — we’ve heard a little bit about some people in the market moving down a little bit in towers to kind of accommodate demand for maybe some more attritional losses, because that was a problem last year. What are you seeing in the marketplace? Is that happening? And do we think that’s going to continue to move that direction where it seems like more competition at the very high end?
Kevin O’Donnell: There’s definitely more competition at the high end, but actually I’ll let Dave who’s more on the goal-face to answer this.
David Marra: Yes. The competition is at the high end and also the increased demands at the high end. So, those have been a nice balancing effect on each other. There has been interest in buying down below, and I think that earnings protection is something where there would be demand. The challenge is that the cost of that protection would be too expensive for most clients to want to buy it. There have been a few, just to some core partners where they’ve bought here and there around the edges, but more or less the retentions from 2023 have held in the 2024.
Brian Meredith: Got you. And can I squeeze one more in just quickly? This is more, I guess, for Bob. I looked at the acquisition expense ratio in cat, and it’s a pretty high [Technical Difficulty] there. Or is that kind of the new kind of post Validus kind of acquisition ratio in catastrophe insurance?
Robert Qutub: Yes. Thanks for the question. What’s driving a lot of the increase in the acquisition cost ratios is purchase accounting.
Brian Meredith: Okay.
Robert Qutub: The property book, you had two points come into the property. Same thing with casualty, same thing overall. That’s what’s driving it. That will taper off a lot largely over the next year.
Brian Meredith: Helpful. Thank you.
Kevin O’Donnell: Thanks, Brian.
Operator: Our next question comes from Mike Zaremski with BMO. Please go ahead.
Mike Zaremski: Okay. Thanks. I guess just want to — given there’s just a lot of moving parts with Dallas, I think I know the answer. But on capital management if share repurchases — should we thinking that’s not a meaningful part of the equation until 2025 or after given the digestion of Validus, despite excellent profitability and potentially depending on how wind season goes?
Robert Qutub: Yes. No. Thanks, Mike, for that question. I tried to address that in the prepared comments. Right now, one, we’re in a good capital position, but we’re really focused on the integration. We’ve got two large balance sheets that Kevin was referring to. The major focus right now is renewing onto that. And the second major focus is consolidating those, because what that does is at least stranded capital on those platforms. So, midyear and towards the end of the year, we’re hoping to have those balance sheets back onto our books. But more importantly, as Kevin referred to, is we’re focused on deploying capital organically at the midyear renewal. So, that’s kind of back into that. And what I was looking as to where we could optimize the returns on capital.
Mike Zaremski: Okay. That’s — makes sense. Follow up. Just curious — so lots of questions about casualty, and I think I preface with — I think most folks know that RenRe has a long history of conservative reserving. But on the social inflationary aspects of the portfolio, I’m assuming those are mostly kind of quota share agreements with your clients, and probably — maybe a naive question, but do you just simply kind of use their loss ratio and what they’re giving you, or are the actuaries able to kind of bake in their own view, so to kind of how you decide how you’re booking that? Thanks.
David Marra: Hi. This is David. About the first question on the reserving on the quota share, but a lot of it is quota share. So, we are taking a proportion of what our clients end up writing and paying in support of losses. Our actuaries have an independent view. It’s completely separate from what our clients book, and so that is fairly unrelated. What we’re seeing in social inflation is, we have a few different categories. The most intense is the commercial auto side, and that’s an area where clients have seen a lot of deterioration with social inflation. That’s a class that we historically avoided and have very little exposure to. General liability has some of that creeping into the umbrella layers and — but the rates are keeping up with that trend so far.
We have to continue to monitor that. And D&O is where there’s less social inflation exposure, but losses are elevated and we’re cutting back the portfolio there. So, we take a very proactive approach to manage the portfolio, so that we’re not as exposed to social inflation as the average in the market.
Mike Zaremski: Yes. Thank you.
Operator: Our next question comes from Charlie Lederer from Citigroup. Please go ahead.
Charlie Lederer: Hey. Maybe just a follow up on the last question. Can you share some color on maybe how border road trends have changed post a lot of the 4Q noise in casualty that we saw across the industry?
Kevin O’Donnell: Could you — just a clarification, what do you mean by border road trends?
Charlie Lederer: Just as far as like claim — actual claim movements from your cedents. I know you guys have some — like a margin above them maybe, but have that — yes.
Kevin O’Donnell: Yes. Okay. I see what you mean. So, as we get information from our cedents, where they’re booking the losses for individual claims, there has been a lot of activity, mostly from the 2016 to 2018 or 2019 period, where our cedents are putting up more reserves for individual claim settlements. It’s not as much about their IBNR level, that’s an independent judgment. And then we judge our own IBNR levels. But there’s healthy progression, meaning a significant progression of how our cedents are increasing their own case reserves, which is reflective of all the trends that we discussed.
Charlie Lederer: Got it. Thank you. And then just a follow up on the other operating expenses. I know, Bob, you said flat for the year. Did you mean off of 2023 levels or off of kind of the lower 1Q 2024 level that we saw?
Robert Qutub: Just to make sure, Charlie, you’re talking about the operating expenses, not the corporate expenses, is that right? The one time versus the other?
Charlie Lederer: Yes. The 4.3% ratio.
Robert Qutub: Yes. The ongoing costs just within the combined ratio did elevate, obviously, as a result of the casualty and property integrations coming from Validus. Casualty was proportionally a bit higher. So, you saw a higher increase coming in on the casualty side. But early on we’re going through in terms of how we can match off some of these allocated costs. But, right now, you will see an elevated cost coming in through the casualty side and property. It’s down a little bit from the last quarter, I think casualty was 48%. Last quarter was down 44%, 42% this quarter. So, kind of looking at that for now.
