Operator: Our next question will come from Bob Farnam with Janney. You may now go ahead.
Bob Farnam: Hi, there. Good morning. A couple of questions on the guidance. So, the first off is the cat loss ratio, 5.1%. That’s kind of low relative to the past few years, probably low relative to the average over the last 10. So, I’m just kind of curious if that’s just because of the actions you’ve been taking to kind of reduce the volatility in cats.
Jeff Farber: If you look at that over 10 years, that’s definitely the case. So, we’ve deconcentrated properties in order to reduce that. So, the earlier periods in the 10 years, I think, had a little bit different mix of business. We’ve done our modeling. We’ve increased the load. We’ve increased the perils. We’ve done a lot of work on it, and I think we’re comfortable with the 5.1%.
Bob Farnam: Okay. And on the premium growth, so it sounds like it’s probably going to slow down a little bit relative to 2022. How do you see the growth in each segment? It sounds like from your comments, you’re going to see maybe a little slower growth in Core Commercial because of underwriting actions. Is that the right way to think about it?
Jack Roche: Hey, Bob, this is Jack. I think overall, we’re trying to reflect our premium guidance, if you will, to make sure that we’re emphasizing that margin recapture is more important than the last point of growth. That said, we’re in a pretty dynamic environment. And if we can improve our pricing and get done what we want to do on the margin with some of our underwriting actions and the market stays as firm as it is, then the growth may surpass that. But I think, at the sector level, PL, we’re making material changes in Personal Lines that may move our PIP growth down. Obviously, the pricing, we’ll work against that from a growth standpoint and keep the growth from going down too low. But we’re certainly going to see less growth in Personal Lines in 2023 than we saw in 2022.
And I think you’re right, within middle market in Core Commercial, because of the limits volatility that comes with that business, we’re going to be particularly focused on adjusting our growth and making sure that the growth is appropriate until we get more confidence in some of the pricing over loss trend. I also would be remiss if I didn’t say that there’s a number of parts of our portfolio across the Specialty Lines, in Small Commercial and even sectors within middle market where we’re very bullish. The combination of the pricing environment and our current profitability and our headroom with agents allows us to continue to stay on the offense in those parts of our portfolio. So, really, that mid-single-digit guidance is a combination of all that, but with an emphasis on the fact that margin improvement trumps the last point of price in terms of our goals.
Bob Farnam: All right. Okay. Thanks for that. And that brings up another question for Personal Lines, as the rates keep going up, you said your retention seems to be holding up pretty well. Is there a point where you maybe pull back a bit if the retention drops too low? I’m just trying to get — curious if there’s a certain level of retention that you would say, all right, maybe we pushed the rate too much?
