Charles Peters: Excellent detail. Just one quick follow-up. What’s the surety retention moved up to? You said you thought about it and you moved it up a little bit. What was that number?
Jen Klobnak: We moved it up to $5 million?
Operator: Your next question comes from the line of Andrew Anderson of Jefferies.
Andrew Andersen: I think I heard you mention increased conservatism in loss picks. Was that specific to construction GL or are you reflecting that across the casualty book because I think you had mentioned a quarter ago, an increased in picks. So is this another step-up?
Todd Bryant: Andrew, it’s Todd. I think just that our approach tends to be cautious or you can use the word conservative, not just in the construction side, but in the broader sense. I think if you look at the underlying loss ratio on casualty it’s not significantly different than what it was last year. But we are watching the tail on our excess. I mean there’s caution and just keeping an eye on those things, but not a significant change on an overall basis.
Andrew Andersen: Okay. And maybe just casualty, E&S flows, I think there’s been a lot of industry commentary and kind of some numbers going around with regards to where we are in the cycle. Have you seen kind of casualty E&S flows pick up into ROI’s kind of bucket? Or how should we think about the nature of this segment?
Jen Klobnak: Yes. I would say on the casualty side, we have seen an increase in submissions. A lot of those are pro habitational business, which were not as — we haven’t leaned into as much. We think the habitational market is still a bit underpriced. So we have a fairly small portfolio of that. The construction fees remains fairly competitive. We’re getting into better weather. So we’ll see how that translates into more submissions. It also varies quite a bit by region. So there are certain regions where you travel and you see there’s a lot of construction going on. Other regions like here locally are pretty quiet. So that does vary. On the property side, we’ve also seen submissions move into the E&S space. A lot of that is, I’ll say, non-win, business.
So it could be exposed a bit to that, but it’s more focused on the Midwest and California wildfire and those other secondary perils that people talk about. That — more of that business has shifted into the E&S space that we are taking advantage of that where it makes sense. And so the pricing there has moved towards our direction.
Operator: Your next question comes from the line of [indiscernible] of Citizens JPM.
Unidentified Analyst: And I’m just going to follow up on this property retention rate. I think you said that it was reflected correctly in this past quarter in terms of the renewal. And so is that an indicator that it’s a clean quarter and that this should be the go-forward rate for this retention rate?
Jen Klobnak: So you saw that really stand out in the third quarter of last year and here full quarter of that new layer of CAT coverage. So this second quarter, you’ll see there’ll be 2 months where we have kind of the lower limits that we purchased of CAT in and 1 month of higher limit. So you’ll see something in between for this quarter. And then starting in the third quarter, it will be more flat, I would say, in terms of the rate that the reinsurance costs.
Todd Bryant: One other thing there is as you do to Jen’s point, really need to look over a longer time horizon because we will get some movement between quarters, whether it’s adding some additional reinsurance on top or sometimes we’ll have reinstatement premiums in a given quarter. So I think if you look at property over the last probably 3 or 4 years, it’s been in that mid-70 net retention, net to gross. So sometimes, we’ll get a little volatility to Jen’s point in a quarter, but look at it over that longer time horizon and it can give good estimation.
Operator: The next question comes from the line of Scott Heleniak of RBC Capital Markets.
Scott Heleniak: I first want to touch on property again. Just can you just comment on your appetite for property right now? You mentioned the good growth in the E&S property and really strong rates so but — are you still seeing really good opportunities for property there? Are you viewing that differently than you did in 2023? Is it any less attractive? Or how are you thinking about that for the rest of 2024 as it seems like rates are still strong, but maybe not quite as strong as last year.
Jen Klobnak: Yes. Good question, Scott. I would say we see a lot of great opportunity in the property market. So we should start with that. Yes, competition is returning and it’s making some ways. The MGAs have some capacity back and they feel like they have to use this very quickly, it seems like. So they do put out those larger limits and are cutting some rates. And so we’re in a competitive market. However, the starting point is very attractive. So we’re focused on, hanging on to our renewals and making sure that we have authority at the underwriting debt to maneuver through this market — this changing market that we have. When we think about our appetite, we have a number of metrics that define our risk appetite in this space.
We have plenty of room in our appetite in certain aspects. But we do recognize that there is a model change coming up. And so we use the RMS model at the underwriter’s desk that is increasing the view of risk going forward. And so we already incorporated that in view into our exposure and how we look at the risk. And with that, we are being a little more conservative on growth from an exposure standpoint. And so most of our growth at this point in time is coming from rates. I do hate to give market updates for property because it’s changing — the market is changing so quickly that I say that what’s happening right now, but in a couple of months, the hurricane season begins, there’s going to be a lot of changes that go on in the market. So that’s kind of real-time info.
And then next quarter, I can provide another update.
