Brian Meredith: Makes sense. And then just quickly on market conditions. A little early right now, but 4/1 renewals, particularly looking at APAC, kind of thoughts on opportunities there?
Kevin O’Donnell: I think we’re just getting into the Japanese renewals. It looks like the earthquake that happened earlier in January, will have limited effect on the reinsurance. I think Japan is a very stable market. I’m optimistic that the solid rate that we achieved last year will be at least achieved this year in the renewals that we target.
Operator: The next question comes from Charlie Lederer with Citi.
Charlie Lederer : Thank you. Question, is there a PGAAP impact in the loss ratio? And is that material?
Robert Qutub: There is — thanks for that question. Most of you see right now is in the acquisition ratio. That’s why I talked about in my prepared comments, that was probably most predominantly in casualty about 2.3 points. The impact of the reserves will be modest and it will have a little bit longer tail on it, will go up probably 5, 6, 7 years, but it won’t be as impactful as what you’re seeing on the acquisition ratio.
Charlie Lederer: Got it. And I think you mentioned it a little bit, but is it your sense that the DTA is created this quarter for the corporate income tax are going to be enough? Or do you expect offsets to the P&L tax rates from things like payroll taxes or other things by the time ’25 rolls around?
Robert Qutub: It’s early right now in this whole process. The legislation was just passed and what we calculated was the deferred tax benefit to reduce cash payments going forward. How the legislation adapts in 2024, we’ll be paying close attention to what those changes are. I referred to some of them maybe, but we just don’t know. So it’s too early to tell.
Operator: The next question comes from Andrew Kligerman with TD Cowen.
Andrew Kligerman: Question around your growth in casualty and specialty. I mean it looked great, obviously, a lot from Validus there. But could you talk a little bit about the and then, of course, the offset with professional liability down about $109 million year-over-year. Could you talk about the specialty lines where you’re — you’re kind of most excited about seeing more growth as well as the casualty lines? And where within professional liability, are you moving away from? Is it just public D&O and access D&O? Or is there more of that professional — it where you’re moving away?
David Marra: Andrew, this is David. I’ll start with that one. Starting with your comment on casualty and professional lines and D&O. It definitely is the public D&O in the excess in particular, which is under the most pressure. Most D&O books have a variety of different D&O exposures. So that’s one opportunity we have is to shave our underwriting away from public D&O and towards the other classes. Giving this happening in D&O, as we’re getting a reduction in ceding commissions to compensate the pressure on insurance rates that, that we’re seeing. On the specialty classes, Validus had a very significant specialty footprint. We also had a significant specialty footprint. So we put those together. We’re really excited about the opportunities there.
Marine and energy and the associated lines like terrorism that is underwritten as part of Marine and Energy are big areas of focus there. We also are growing in the aviation space, which is experiencing some positive rate in the excess of loss. So it lines like that.
Andrew Kligerman: Very helpful. With regard to the third-party capital, I was a bit surprised to see that $364 million — I’m sorry, that yes, was returned. But then I think I heard on this call that you raised another $495 million. I’m not sure if I heard that right. But just given the size of Validus coming on the books, coupled with the fact that you had some ratio as you cited earlier, I think, 50% of property cat, 15% of casualty. Should we expect a lot more capital in the third-party area to be raise throughout the course of the year?
Kevin O’Donnell: I think we’ll continue to look for opportunities to deploy into the market. Right now, all of our vehicles are sufficiently capitalized to achieve the target state of where we want to renew the Validus book, the RenRe book and the additional growth that we have. So do not need additional capital in any of the vehicles, but we’ll be opportunistic should we see it more opportunity. Yes, so I would say we’re rightly sized for where we want to be right now.
Operator: Our last question comes from David Motemaden with Evercore.
David Motemaden: Just had a question on the competitive environment. And we’ve read a lot about more competition in the higher layers of programs. But I think it was David who mentioned, there’s more demand coming in at the top end of programs as well. So I’m wondering, just maybe you could just talk about what you’re seeing, how you’re managing that and your expectations going forward? And if there is pressure on those higher layers.
David Marra: Yes, this is David. I’ll continue on. I guess in property cat, we did see demand in the high single-digit percentages. That’s mostly in the top layers. That’s also where the capacity was. If you think about what capacity came in to the cap on market through 2023, it’s the same type of risk profile that’s attracting the capacity in the property cat towers at 1/1/2024. But increase in demand is a continuation of the trend that we saw in 2023 also, ensured values during creating clients are looking to protect their books. But the difference this year is they were able to have the budget to do that. And so we did see more clients buying top-end programs. We expect that, that will continue. A lot of clients are talking about it and not everyone bought, we think that, that will continue through the mid-year renewals.
David Motemaden: Got it. And I think you guys had been talking about that, the demand hadn’t really come to market relative to your expectations. Is that after 1/1, is it mostly in line with what you would expect? Or is it still — do you think there’s still a little bit extra demand that should be coming?
David Marra: I would say we’re continuing on that path, and there’s more to come.
David Motemaden: Got it. And then maybe just a quick numbers one for Bob. So thanks for the numbers in terms of the earned premium expectations with Validus. I’m wondering if the extra two months of Validus that you had in the fourth quarter, did that distort any of the adjusted combined ratio metrics that you guys disclosed?
Robert Qutub: No. I mean, consistently with casualty, we printed for the quarter and for the year, 94 on an adjusted combined ratio basis. Even if you add for the year, the PGAAP impact, it’s not significant. So everything has been in line, as we said it would. The Validus portfolio has fallen right in line with ours.
Operator: This does conclude today’s question-and-answer session. I will now turn the program back over to Kevin O’Donnell for any additional or closing remarks.
