Kevin O’Donnell: Yes. I think Bob had mentioned some shifts in the percent participation we have in DaVinci and Fontana. I think it’s reasonable to think we split our book and retain about half of our property cat. So half of it will be with third-party vehicles will be on our owned balance sheets. And ballpark, we keep about 85% of our casualty. That moves around each year. It’s not materially different from what we had last year. But those are good estimates to think about how we’re constructing the portfolio. The other piece is more of a trading account retro, where we did see more opportunities to provide more additional excess of loss protection on some peak exposures. I think that’s very consistent with the way we’ve normally traded the portfolio, and there’s nothing specific to report there.
Alex Scott : Okay. Helpful. Next one is — just on the investment portfolio, as you brought on this Validus, it sounds like it added some duration. I mean, is the portfolio around where you wanted in terms of the investments? Anything that you’re planning on doing there in terms of whether it’s on the duration side or just broad allocation?
Robert Qutub: It came in actually shorter in duration over the course of the due diligence and integration process. We’ve matched it with our portfolio. So this is a reflection of our decision to take it and extend it out a little bit longer than it was at the end of the third quarter.
Alex Scott: Got it. So around this pie you want it already?
Operator: Next question comes from Jimmy Bhullar with J.P. Morgan.
Jimy Bhullar: So first, just a question on the competitive environment. It seems like your comments on pricing terms and commissions are fairly positive. Have you seen any of your peers sort of start to come down in terms of offering coverage in lower layers? And have you seen any move in attachment points at all versus 2023 for ’24 renewals?
Kevin O’Donnell: Dave, why don’t you take that?
David Marra: Yes. We didn’t see much competition at all really going — pushing retentions down below where they were at in 2023. Those retentions largely held. All the new demand of the new capacity is more at the top end of programs, where we did see an increase in demand for new top layers.
Jimmy Bhullar: Okay. And if we think about your returns in ’23, obviously, they’re be strong for you guys and your peers as well. To what extent is that a function of just the type of cats we saw where there were a number of events that they are relatively small versus real sort of changes in terms and conditions to where had we seen sort of normal type larger events, would your returns have been — would they have been somewhat similar? Or would they have been significantly lower?
Kevin O’Donnell: So when I look at ’23, every cat year is different. And you’re correct in that there was more small events than having the $120 billion driven by one large event. When I think about what’s driving our performance in ’23, those positive factors are persisting in ’24. So we’re in a rate environment that is very robust across most lines of business, terms and conditions largely held, retentions largely held. We have a fee business that continues to grow, and we expect greater capital partners participation, not only in our own portfolio, but on Validus’ portfolio, and the investment returns look robust for the rest of the year on a larger portfolio. Your question is if the cat loss profile is different, will we have different results.
The answer is yes. In the way the book is constructed, we are purposefully more exposed to peak territory large losses. And as mentioned in my previous comments, we would probably have a bigger percentage share of those. That said, the robustness and the diversification in the portfolio gives me great confidence in having constructed the portfolio that we have, knowing it’s resilient to even large losses that can come in.
Jimmy Bhullar: Okay. And then just lastly, can you comment on any reserve development you might have seen related to the Tokyo Millennium ADC. Has that been exhausted? Or is there some left there?
Kevin O’Donnell: That there’s still limit available on the cover. The reserves are paying down as expected. So I have nothing to report other than the coverage is still there and there’s limits still available.
Jimmy Bhullar: And are you able to say how much that is? What the remaining amount is?
Kevin O’Donnell: No. And it’s an estimate at this point. Nothing is paid on it. We’re still working through the reserves that were part of the transaction originally.
Operator: The next question comes from Bob Wang with Morgan Stanley.
Robert Wang: Most of my questions are answered. I just have one. Regarding the Validus acquisition, obviously, everything sounds fairly positive from this perspective. Just curious how we should think about expenses synergies going forward? Is it more going to come from scale and operations? Or is it more of a people’s related synergy? Maybe can you just help us on the expense side of things a little bit?
Robert Qutub: Yes, that’s a good question. I touched on it in my prepared comments, and you can go back I’ll repeat a little bit of it, but I’ll point you back in there. You’ll see a lot of the Validus related costs coming through in the — both in operating expenses where we retain a significant amount of people. We did anticipate significant synergies. But as we said, and I’ll remind you, we have a lot of talented people that came over from Validus, and we’re going to reduce the amount of targeted synergies, but not materially. We feel great about it. The integration costs are going to be down below in corporate expenses outside of operating income, which I said was going to be about $20 million going into the first quarter and how to carry through. And then no synergies will taper off towards the back end of the year.
Kevin O’Donnell: Those synergies — those costs will taper off, which reflect the realization of those synergies.
Operator: The next question comes from Brian Meredith with UBS.
Brian Meredith: Kevin, just curious. When you put your portfolio together with Validus, are there any areas geographically that you would say right now, you’re underweight and there’s potential opportunity to kind of really increase your presence if market conditions so warranted?
Kevin O’Donnell: We have the ability to grow everywhere in every line of business should we choose to, and it will be return dependent. Obviously, we’ll demand more profitability for each dollar we put out in peak territories. The portfolio that we picked up from Validus, largely had a similar profile to peak risk that our existing portfolio. They were slightly higher in Europe than us. What I would say is against the Southeast, we can continue to grow very efficiently every other cat peril and every other cat region. And then we have opportunities to grow specialty and casualty as well. I think the one that we’re focused on and thinking about what our next steps are going to be is the other property market, specifically the E&S cat exposed. Just as rates continue to change there, that might be a further opportunity for us as well.
