Dean Criscitiello: And my next question was on sort of the profit improvement plan in Personal Lines. And obviously this quarter, both new business and retention ticked down a bit. Were there fundamental changes happen in this quarter that didn’t happen in the last quarter? And I’m sort of asking in the context of slowing growth within personal auto, like how should we think about growth going forward? And like, how long do you think these corrective actions are going to persist within the Personal Lines book?
John Marchioni: I think similar to the answer that I gave on the Commercial Lines growth question that Mike asked, I think it’s a similar story in Personal Lines. If you look at our renewal pricing has continued to move higher. It was about 9% in Q4. It’s about a little over 14%, 14.3% in Q1, and new business pricing where you don’t have the lag between the effective date of the filing and the impact on premium. New business pricing has been about 18.4% in the quarter. I think that’s driving hit ratios, that’s driving overall growth. It’s driving, to a certain extent, retention. And as we’ve talked about, we expected that to continue to build over the course of the year, and I think we reiterated in the prepared comments that we expect to have full-year pricing in excess of 20%.
So I think that pressure will continue with regard to the top line. But we — as we expect to earn that rate and start to approach our target combined ratio for that segment, I think you’ll see that settle into a more normal growth rate into next year.
Operator: Your next question will come from the line of Matt Carletti with Citizens JMP.
Matt Carletti: Going back to the reserve charges in general liability, as you kind of look at the last couple of quarters in total, can you help us with — I’m just trying to get a feel for kind of how much more maybe management conservatism has been put into the view of those reserves. So, can you help us with a little bit of maybe how much of that is kind of actuals versus reported or I guess, maybe one way to think of it is, maybe where you sit today versus, say, actual midpoint or some metric like that versus maybe where you sat 6 months ago before you took these charges?
John Marchioni: I guess what I would say is, we continue to have a consistent approach and philosophy with regard to the reserve decisions that we make. And I realize this might not be satisfying, but based on the different methods we evaluate and you have to weight those different methods, we’re reacting to early paid emergence in the last few accident years. And I think that’s about as much as I could tell you. We had a trend assumption for each of the last few accident years. You now start to get more insight into what’s actually happening with average severity change. That’s what we’re responding to, and that’s what we’ve been responding to by increasing our forward trend assumptions over each of the last five years. And I think it was even a bigger move into 2024 when we raised that casualty trend assumption embedded in our loss fixed at 8%, and above that for ex-comp.
I think that’s how you want to think about it from our perspective is, very consistent underwriting portfolio, as I mentioned earlier, from a limits industry classification perspective, very consistent approach to evaluating and booking reserves and at a very consistent approach relative to establishing and updating our trend assumptions, and all of that goes into the process, and I think that process has remained fairly consistent. And how we think about reserve booking decisions is always in the context of what we think about in terms of the risk factors to reserves that are out there that we need to make sure we’re contemplating. And the risk factors we’ve been highlighting over the last couple of years is not just elevated loss trends, but more uncertain loss trends driven by social inflation and driven by what still is the pandemic effect in your experience period, in the ’20 and ’21 years in particular.
Matt Carletti: And then just a quick numbers question, if I could. Could you break-out the cat losses within Standard Commercial just by the sublines that — I mean, commercial auto, commercial property and BOP?
Tony Harnett: Within Standard Commercial, we had the $38.5 million of cat losses. Commercial property was $32.9 million. Our BOP line of business was $4.2 million, and commercial auto was $1.4 million.
Operator: Our next question will come from the line of Grace Carter with Bank of America.
Grace Carter: I wanted to dig into the updated guidance for the combined ratio a little bit. Just kind of considering the 58.4% core loss ratio this quarter, if I assume flat expenses year-over-year or a flat expense ratio year-over-year, like I get roughly 59% implied core loss ratio for the year. I know you all had mentioned some favorable non-cat property losses this quarter, but I just kind of wanted to make sure that my assumptions on that are correct, just kind of as we think about sort of the computing impacts of the higher liability loss cost trends that you all are thinking about versus potential tailwinds from improvement in the Personal Lines book and just kind of where that deterioration might come from?
Tony Harnett: In terms of the non-cat that you mentioned, I just wanted to point out that, in our ongoing assumption the favorable — or the favorable variance we saw in the non-cat in the first quarter relative to our expectation, we neutralized that in our assumptions over the course of the remainder of the year. So we don’t assume that benefit will carry through over the course of the year due to the natural volatility of property.
John Marchioni: And that’s the primary difference.
Grace Carter: And you also mentioned your casualty reinsurance. I was just curious at the upcoming renewals. We’ve heard some commentary suggesting that reinsurers are getting a bit more cautious on casualty lines. I was just wondering how you all are thinking about that renewal and just in light of the social inflation environment, if there’s any tweaks that you all would like to implement? And just kind of how you’re thinking about that versus a potential tightening in the — from the reinsurers.
John Marchioni: Grace, I think — and obviously, we’re early in the process. Our program renews on July 1. But clearly, we’ve started to have some early conversations. And I think like we do with all of our reinsurance programs, we’re going to ultimately evaluate our view of where pricing actually comes in on our proposed program terms and make a decision around whether or not it makes sense for us to make any structural changes. That’s always been our process, that $2 million retention has been there for a very long time. I think back into the late ’90s, and we’ll evaluate that based on pricing. It’s sort of the same philosophy we took when the property market started to move. You’re ultimately evaluating the indicated rates online relative to the expected ceded losses — so ceded premiums relative to ceded losses and make a decision based on the economics of that, and then, also how we think about managing the volatility profile in our combined ratio results.
