Tracy Benguigui: Okay. So that’s what I thought. I just wanted to bridge those two comments together, thank you for that. And this one may be a bit of a wildcard question. Can you discuss your process of placing business on behalf of an MGU? What due diligence do you do to ensure that the risk is backed by a rated insurer and also on the back of higher financial line rates, I’m wondering as a corporate buyer of insurance, if you’re expecting higher E&O insurance costs and if that’s meaningful in any way?
Jeremiah Bickham: Tracy, we’ve got industry standard procedures whenever we’re onboarding a new MGU. We make sure that they’re licensed. We make sure that their — the quality of their security meets our standards for counterparties and things like that. So very much in line with industry standards there. What was the other part of your question?
Tracy Benguigui: I mean, on the back of just higher financial lines rates in general, I mean, a lot of brokers buy E&O insurance. So as a corporate buyer, are you seeing higher costs and if that’s meaningful in any way?
Jeremiah Bickham: Well, certainly, our D&O insurance went up significantly when we went public. It’s been pretty stable since then. It’s too early to talk about any of the renewals for our professional lines, which come up later in the year. So right now, everything looks stable.
Operator: The next question is from Derek of KBW.
Unidentified Analyst: My first question is on fiduciary investment income. It looks like it stepped up $3 million quarter-over-quarter. Is that kind of the sequential step-up that we should think about for 1Q ’23?
Jeremiah Bickham: For modeling purposes or what we would recommend — what we always recommend is to take 30-day term SOFR, minus 50 basis points, and multiply that by our fiduciary income balance, which is broken out on the cash flow statement. At year-end, it was around $770 million. That’s what we earn investment income on.
Unidentified Analyst: Got it. And then my second question is on the compensation costs for next year. It looks like you’re hiring pretty significantly. But are you anticipating any upwards pressure on comp expenses? I know this is just in context of one of your competitors sold the stake to a private equity firm to create equity incentives for their producers. And I’m wondering if that has any impact on your comp costs?
Jeremiah Bickham: So we are expecting increased comp costs, like I think probably every other company now. But fortunately, the majority of our comp cost is production related and so it’s variable to revenue. So wage inflation doesn’t affect a wholesale broker, for example, the same way it does a salaried employee. So we’re dealing with it like everyone else, but it hasn’t gotten out of control for us yet just because of the attribution of our comp that is production related and paid out as a percentage of revenue.
Unidentified Analyst: Okay. And just to follow up on that. Do you anticipate that impacting your retention of producers? I know Ryan is obviously a great home for talent, but just kind of curious about the impact maybe throughout 2023.
Tim Turner: We expect to continue to have a very high industry-leading retention level for brokers and underwriters and all of our staff. No change at all.
Operator: The next question is from Jimmy Bhullar of JPMorgan.
