Jack Roche: Thank you.
Operator: Our next question will come from Grace Carter with Bank of America. You may now go ahead.
Grace Carter: Hi. Considering the catastrophe loss guidance for this year, I was wondering how the outlook for midyear reinsurance renewal factors into the increase? And just kind of if we should expect a bigger step-up in the second half of the year compared to the first half?
Jack Roche: Grace, we went through our casualty renewals, as we said, and that was unremarkable or uneventful. We did a lot of additional buying last year. We added to the cat tower. We also put in place a cat bond, which has a three-year program on it, assuming we don’t hit it, which is highly unlikely to hit given it just at the very top. We have assumed a firm market based on what we see and what we read for (ph). I suspect we’ll be in good shape in getting it done since we’ve never impacted our treaty since Katrina. But we buy the program on a three-year rolling basis. So, we’re always pushing out a third. So, we’ve been conservative in how we’ve set our assumptions, but I’m feeling pretty good about it.
Grace Carter: Thank you. And one more quick one. As we consider, I guess, casualty loss cost trends being under more scrutiny, have you all noticed any difference in umbrella loss cost trends in the latter part of the year?
Jack Roche: Well, I think umbrella, Grace is I think it’s hard to look at those losses on a quarter or even a half year basis, because they’re kind of the law of small numbers, very few claims obviously produce your umbrella losses. I can’t say that we’ve seen any huge material changes. But like many in the industry, we are observing more cases going to trial or staying longer in the litigation process. We are seeing some awards that appear to be above traditional levels, some of which get resolved and appeal, others don’t. So, we’re clearly monitoring the true implications of social inflation, which we believe exists, but we’re not seeing a tremendous delta, if you will, on that aspect of our portfolio yet.
Grace Carter: Thank you.
Jack Roche: Thanks, Grace.
Operator: Our next question will come from Meyer Shields with KBW. You may now go ahead.
Meyer Shields: Great. Thank you very much. Two quick questions, I guess. One, we’ve got the expense ratio guidance, obviously. But I was wondering if you could talk about the impact of inflationary pressures on incentive compensation in 2022? And how we should think about that component changing in 2023, 2024?
Jeff Farber: Meyer, are you talking about employee incentive compensation or you talking about agent incentive compensation?
Meyer Shields: I guess both, because I assume that they are going to both be included in the expense ratio. But if I’m thinking about that incorrectly, please let me know.
Jeff Farber: Sure. So, with respect to 2022, one of the reasons that the expense ratio was 50 basis points better than it was the year earlier or 30 basis points better than the guidance was both of those elements were impacted by Elliott and were impacted by inflationary pressures in general. And they follow the fortunes of the underlying firm in both cases.
Meyer Shields: So, does the 30.8% anticipate normal levels of incentive comp?
