So Jeff guided you on some low-50s loss ratios overall, which I think kind of is where we prefer to stay in terms of our guidance and upper single-digit growth for next year. And frankly, if we see the environment prove beneficial, we’ll push harder than that. But right now, based on our outlook, that feels like the right guidance.
Grace Carter: Thank you.
Jack Roche: Thank you, Grace.
Operator: The next question comes from Paul Newsome with Piper Sandler. Please go ahead.
Paul Newsome: Good morning Thanks for the help as always. First question, I was hoping you could just give us a little bit more details on the — or even reminders on the swings in the expense ratio. It’s — obviously looks like it’s going up this year versus last, but there were some pieces in there that were probably not sustainable. If you could unpack that a little bit, just to give us a better understanding of what’s the return to normal? And what is even potentially new investments?
Jeff Farber: Thank you, Paul. So 30.5% was the actual 2023 expense ratio. 30.8% was our original guidance for 2023. And if you normalize for the agent — reduced agent comp and, to some degree, reduced employee variable compensation for essentially CATs during the year, you’d get right back to the 30.8%. So going forward, we’ve guided to 30.7%. And this is the first time that we’ve guided to only a 10-point reduction. So I think what we’re doing is asking for your patience for this one year to only go down 10 points — 10 basis points and what we’re really trying to do is we’ve had some expense pressures largely around and including doing everything we can on margin recovery. So we’re focused on the loss ratio which is hundreds of basis points versus the 10 basis points, and we’re focused overall on the combined ratio.
Paul Newsome: Great. That’s great. And a separate question, maybe a few additional thoughts on the PIF growth or lack there of the shrinkage. In Personal Lines, it seems to be the thing that I’m getting the most questions this morning from investors is, if this is — I mean to me, it seems what logical from what you’re trying to do, but I guess there’s some CAT assurance out there that it never stops. So any thoughts on sort of — when you think that might just sort of have the waterfall work for policy in force it changes on the Personal Line side as you work your way through the recovery?
Jack Roche: Yes, Paul, this is Jack. I really appreciate that question because we want to be able to express kind of where we are in that journey. And first off, I would start off by saying that we are really right on our targeted outcomes that we put in front of ourselves when we realized that we needed to show tremendous agility in terms of adjusting our pricing, looking at our CAT exposures more assertively. And so I couldn’t be happier with where we are coming out of the year in terms of adjusting our growth, slowing down new business, particularly where we have the most concentrations and allowing the earned pricing to catch up and for us to start initiating our deductible approaches into the renewal book. So I’ll turn it over to Dick, but I have a lot of confidence that the Personal Lines team is not only performing well in this very dynamic environment, but has all the right levers and controls in place to optimize in ’24.
Dick Lavey: Great. Thanks, Jack. So just maybe a couple of other comments, and then I’ll get to your question of just sort of what’s the future look like in terms of PIF shrinkage. So yes, we couldn’t be happier with the way our results came through in the fourth quarter based on what we had architected as our plan, specifically shrinking in the Midwest 3 times as much as the rest of the country. That was a really important outcome for us, but also keeping profitable business. We have sophisticated segmentation. So keeping the tenured business, the customers that have been with us longer versus those that just came on the books most recently. So very kind of complex set of KPIs and trade-offs that we make. We put guardrails in place.
To your point, we want to make sure we continue to achieve those targeted outcomes. And we’re already sort of tweaking the dial, so to speak, and turning either new business guidelines off that we might have turned on, adjusting new business rates, adjusting renewal rates, to accomplish the kind of growth in the right places. There isn’t a single answer. There’s a very nuanced response that we’re seeing from competitors. We’re all using the same levers, but to different degrees with either rate or terms and conditions. So we’re — I’m really happy with the outcomes. We’re going to watch it carefully, but we will see tip shrinkage throughout 2024 as we execute this plan.
Paul Newsome: Thank you. Appreciate the help as always.
Dick Lavey: Thanks, Paul.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Oksana Lukasheva for any closing remarks.
Oksana Lukasheva: Thank you and appreciate your participation today. We are looking forward to talking to you next quarter.
Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
