Meyer Shields: Okay. Perfect. Thank you so much.
Operator: Our final question in the queue is from Scott Heleniak of RBC Capital Markets. Please go ahead.
Scott Heleniak: Yes, good morning. I had a question on retentions, too. But on the Casualty side, the net written premium, the gross written premium retention, that had been up a lot in 2023. Just wondering if you expect that trend to continue into 2024. And then, also just on — while we’re talking about Casualty, any areas you’re pulling back from that are worth calling out in Casualty? I know you mentioned a little bit of increased competition, but can you comment a little bit on both those things, the retention and the growth opportunity for Casualty?
Jen Klobnak: Sure. So, the Casualty retention, I’d say, in 2023, knowing that we were going into the year with additional retention on the Property side, we also increased our co-participation on our Casualty, our main Casualty treaties. So, sharing in that exposure at the side of our tower with our reinsurance partners. And that is why our retention in ’23 and ’24 now is a little bit bigger than prior. But outside of that change, there’s really nothing I can point to that I would say that the retention is probably a mix of business issue in some way. In terms of business that we’re a little more wary of, obviously, the D&O market gets talked about a lot. So, we’re being very careful in that space. I’d say that the auto market is tough.
Again, I don’t quite understand it because losses are up, frequency has returned. There’s real activity there, but the marketplace is very competitive. So, we’re going to do the right thing. And if that means we lose a little bit of business, then so be it. But we’re going to try to be a stable market long term, and so people will know that we’re there when they want to come back to us. And other than that, our portfolio is in pretty good shape. So, we have minor tweaks going on all the time in different places, but nothing material to point to.
Scott Heleniak: Okay. That’s good color. Question two on just the expense ratio. You mentioned a couple of impacts, your commissions and compensation, investments in technology. Do you see that trending up in 2024 versus 2023? I don’t know if that — I take those comments to mean that, but is there anything you can comment specifically on where that might trend?
Jen Klobnak: I think when you look at how it supports this growth, we’ve added not just underwriting claims, but it takes operational staff, it takes everybody who has to touch our business because we are committed to underwriting, which means people using data and technology to make decisions. So, we come down to underwriting decisions, claim decisions that require experienced and talented people. So, we will look at what the growth opportunities are and be there to support that growth. We want to get behind it and be understaffed because we tend to win on service. So, we got to be there for our customers. On the technology side, we have — we’re trying to modernize like everybody else. And so, we always have things going on.
You lock-in a certain amount of depreciation that goes in the future. We’re not — I mean, I would say, we ramped up in the last couple of years, a couple of projects we’re working on, but I don’t see us ramping up further than that. We’re going to continue what we’re working on, try not to sign on to too many additional things at this point, but trying to work our way through our portfolio and make sure that each of our products are a sustainable modern platform that will help support the capabilities we need for our customers.
Todd Bryant: Yeah. I think if you look at — to Jim’s point on the technology side, we probably have — are up 50%-plus in the last couple of years, we’re investing there, which is a positive. As you look forward, it certainly is a drag currently. But one thing I would think to not lose sight of too is the — we talk a lot about the incentive structure here at RLI. And I’ll generically mention the impact that, that has on our expense ratio. And I think that’s one thing that would lower our expense ratio as if we weren’t as successful. We’re not looking for that. But it is, it’s about 6 points, expense ratio points this quarter on that expense ratio so that incentive stuff. And it will vary, I’ve said before, from 2 to 6 points. But that means we have a very low loss ratio. So I mean, it’s been a trade that we’ve been willing to make for quite a while.
Scott Heleniak: Yeah. I get it. It’s totally worth it to have the higher expense ratio. If you have the lower loss ratio, you can make up for it. But I was just curious. That’s helpful comments on that. Thanks.
Operator: [Operator Instructions] We have no further questions. So, I will now turn the conference over to Mr. Craig Kliethermes for some closing remarks.
Craig Kliethermes: Well, thank you all for joining today. The Kansas City Chiefs are playing in their sixth consecutive AFC championship game this weekend. Sustained success is demanding and requires discipline and commitment and has proven somewhat elusive in our industry. RLI has been able to reward shareholders with 28 consecutive years of underwriting success. This achievement doesn’t come easy, and it doesn’t come without a high level of engagement from the RLI team. We focused on three things: serving our customers as a financial secure and stable market; creating a community and culture of ownership and underwriting discipline; and continuously improving and adapting to the market environment where we have narrow and deep expertise and have chosen to compete.
These principles have not changed since we were founded some 59 years ago, and have allowed us to outperform through all market cycles. I’d like to thank our 1,100 RLI associate owners for their past, current and future contributions to our shared success. I ask them to keep being different because their difference works. See you all next quarter, and best of luck to the Chiefs.
Operator: Ladies and gentlemen, if you wish to access the replay for this call, you may do so by dialing 1866-813-9403 with an ID number of 474923. This concludes our conference for today. Thank you all for participating, and have a great day. All parties may now disconnect.
