The Hartford Financial Services Group, Inc. (NYSE:HIG) Q1 2024 Earnings Call Transcript

The Hartford Financial Services Group, Inc. (NYSE:HIG) Q1 2024 Earnings Call Transcript April 26, 2024

The Hartford Financial Services Group, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good morning. My name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to the Hartford Financial First Quarter 2024 Results Webcast. Today’s conference is being recorded. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session [Operator Instructions] At this time, I would like to turn the conference over to Susan Spivak, Senior Vice President, Investor Relations. Please go ahead.

Susan Spivak: Good morning, and thank you for joining us today for our call and webcast on first quarter 2024 earnings. Yesterday, we reported results and posted all the earnings-related materials on our website. Now I’d like to introduce our speakers. To start, we have Chris Swift, Chairman and Chief Executive Officer; followed by Beth Costello, our Chief Financial Officer. After their prepared remarks, we will begin taking your questions. Also with us to assist with your questions are several members of our management team. Just a few comments before Chris begins. Today’s call includes forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance, and actual results could be materially different.

We do not assume any obligation to update information or forward-looking statements provided on this call. Investors should also consider the risks and uncertainties that could cause actual results to differ from these statements. A detailed description of those risks and uncertainties can be found in our SEC filings. Our commentary today includes non-GAAP financial measures. Explanations and reconciliations of these measures to the comparable GAAP measures are included in our SEC filings as well as in the news release and financial supplement. Finally, please note that no portion of this conference call may be reproduced or rebroadcast in any form without the Hartford’s prior written consent. Replays of this webcast and an official transcript will be available on The Hartford website for one year.

I’ll now turn the call over to Chris.

Chris Swift: Good morning, and thank you for joining us today. The Hartford had a strong start to the year, outstanding financial results through the first quarter. Our strategy and ongoing investments, combined with disciplined underwriting and pricing execution, exceptional talent and innovative customer-centric technology continue to drive outperformance. Let me call your attention to some highlights achieved in the quarter. Top line growth in Commercial Lines of 8% and with an underlying combined ratio of 88.4%, strong renewal written pricing increases in Commercial and Personal Lines, Group Benefits core earnings margin of 6.1% and solid performance in our investment portfolio, all these contributed to an outstanding and industry-leading trailing 12-month core earnings ROE of 16.6% reflecting consistency of our margins and continued growth generated by our businesses.

Now let me share a few details from the quarter. Commercial Lines performance reflects strong top line growth at highly profitable margins. In the marketplace, we are prudently taking advantage of elevated submission flow, in part driven by the investments we have made to expand our product capabilities and the efficiency of the broker and agent experience. From that flow, we are using our data science advancements, pricing expertise in industry-leading underwriting tools to drive profitable double-digit new business growth in each of our three businesses. In addition, retention is steady and exposure growth remains solid although moderating from the elevated levels seen in the past couple of years. In Small Commercial, we are shattering previous quarterly written premium records while sustaining underlying margins.

New business growth was 11% in the quarter, driven by strong submission flow and growth in E&S binding. We are particularly pleased with E&S binding, a key area of focus, which is on track to grow annual written premiums by approximately 50% in 2024 to nearly $300 million. I remain incredibly pleased with the overall performance in Small Commercial and bullish on its outlook. We expect to sustain outstanding financial results by reliably serving agents and customers with industry-leading products and unmatched ease of conducting business and unrivaled pricing accuracy. Moving to Middle & Large Commercial. The financial performance continues to be exceptional. Written premium growth reflects strong renewal rate execution and new business growth of 18% with an especially good quarter in guaranteed cost construction and general industries.

We are building a track record of delivering meaningful growth, while consistently maintaining underlying margins. The stellar performance in this business is a direct result of our underwriting discipline, enabled by the investments we have made to enhance our capabilities. Combining these advantages with our best-in-class talent and the strength of our distribution relationships, we remain well-positioned to profitably grow this business. In Global Specialty, results were excellent with underlying margins consistent with last year and solid top line growth reflecting our competitive position, breadth of products and strong renewal written pricing. Written premium growth was propelled by a 20% increase in our wholesale business with significant contributions from primary and excess casualty lines.

We are particularly pleased with wholesale construction activity found in the quarter as well as overall increased submission flow, both meaningful drivers of new business growth. We remain excited about the Global Specialty business, including our position in wholesale and reinsurance market and from a broadened product portfolio. Looking across Commercial Lines, we continue to grow our property book, another key area of focus. We are capitalizing on favorable market conditions with a disciplined approach, including no change in our catastrophe risk appetite. Property written premium for the quarter was approximately 17% higher than in 2023. Turning to pricing. Excluding workers’ compensation, Commercial Lines renewal written pricing rose seven-tenth from the fourth quarter to 9% with strong low double-digit pricing in property and auto and high single-digit in general liability.

Public D&O pricing is still pressured, though relatively stable with the fourth quarter. All-in, ex-comp renewal written pricing in commercial lines remained comfortably above loss cost trends. In workers’ compensation, renewal written pricing remained slightly positive in the quarter. In summary, Commercial Lines delivered an outstanding first quarter results with ongoing momentum in the market. Moving to Personal Lines. Our first quarter financial performance demonstrates progress towards restoring targeted profitability in auto, as we continue to address current loss trends. Auto renewal written price increases of nearly 26% have likely peaked given our view of moderating loss trends for the remainder of the year. In addition, we have achieved new business rate adequacy in the vast majority of states and as a result have resumed national advertising this month.

In homeowners, renewal written pricing of 15% during the quarter comprised of net rate and insured value increases outpaced underlying loss cost trends. This year, we are celebrating our 40th anniversary with AARP. In 1984, we embarked on this journey with a shared vision and commitment to serve mature market customers. Our focus on this preferred segment, coupled with our modern innovative and digitally enhanced product and platform prevail is a competitive advantage. Our updated offering is currently available in 42 states and represents approximately 60% of our new business premium this quarter. With pricing gains, enhanced risk segmentation and moderating loss trends, I expect Personal Lines to meaningfully contribute to core earnings as it returns to profitability in 2024 and reaches target margins in 2025.

Turning to Group Benefits. Our core earnings margin of 6.1% for the quarter included improved mortality trends from the prior year and continued strong long-term disability claim recoveries. Fully insured ongoing premium growth of 2% reflects strong, but slightly lower persistency and a 6% decline in sales primarily driven by group life, where we are being disciplined with pricing and underwriting in this competitive marketplace. We continue to strengthen our capabilities for customer service, with an extensive suite for HR platform integration, member enrollment, process simplification and analytics. As part of our strategy to grow amongst small and midsized businesses, we are investing in our platform. This includes strengthening distribution relationships and actively seeking out new partnerships.

Employers are more focused than ever on the needs of their employees and our products and services are a key part of that value proposition. Moving to investments. The portfolio continues to support The Hartford’s financial and strategic goals performing well across a range of asset classes and market conditions, and Beth will provide more details. In summary, The Hartford delivered another strong quarter with sustained momentum heading into the remainder of the year. Let me reiterate why I am so bullish about the future. First, our financial results continue to prove the effectiveness of our strategy and the impact of ongoing investments in our business. Second, Personal Lines results are showing improvement. We are achieving necessary rate increases and expect 2024 margins to progress towards targeted profitability.

Third, with our disciplined underwriting and pricing execution, exceptional talent, an innovative customer-centric technology, we will continue to sustain superior results. Fourth, investment income remained solid, supported by elevated yields and a diversified and durable portfolio of assets. And finally, we remain dedicated to enhancing shareholder value through supporting organic growth, continued investment in our business and proactively managing our excess capital. All these factors contribute to my excitement and confidence about the future of The Hartford and our ability to extend our track record of delivering industry-leading financial performance. Now I’ll turn the call over to Beth to provide more detailed commentary on the quarter.

Beth Costello: Thank you, Chris. Core earnings for the quarter were $709 million, or $2.34 per diluted share with a trailing 12-month core earnings ROE of 16.6%. Commercial Lines had an outstanding quarter with core earnings of $546 million and an underlying combined ratio of 88.4, in line with our expectations and slightly better than the prior year first quarter. Small Commercial continued to deliver excellent results with written premium growth of 8% and an underlying combined ratio of 89.6 and further building on its impressive track record of delivering an underlying combined ratio below 90. Middle and Large commercial also delivered outstanding results with 9% growth over the prior year and this marks the fourth consecutive quarter of written premium exceeding $1 billion.

The underlying combined ratio was excellent at 89.2, a 0.7 point improvement over first quarter 2023, primarily due to a lower expense ratio driven by the impact of strong earned premium growth. Global Specialties underlying combined ratio was an exceptional 85.3, relatively flat to the prior year. Written premiums growth of 8% was driven by accelerating renewal written price increases and new business growth of 17% excluding Global Re. In personal lines, core earnings for the quarter were $33 million with an underlying combined ratio of 96.1, including a strong homeowners underlying combined ratio of 77. The auto underlying combined ratio of 104.4 was in line with our expectations and is a year-over-year improvement of 3.7 points. Once the reported ratio for the first quarter of 2023 is increased for the 3 points of development that occurred in the second quarter of 2023.

This result is consistent with achieving the 5 to 6-point full year improvement we previously discussed. Written premium in Personal Lines increased 13% over the prior year, driven by steady and successful rate actions. In auto, we achieved written pricing increases of 25.7% and earned pricing increases of 19.1%. In homeowners, written pricing increases were 15.2% for the quarter and 14.4% on an earned basis. The total Personal Lines expense ratio improved by 1.2 points, primarily driven by the impact of higher earned premium, partially offset by higher direct marketing costs as we increase our marketing spend to drive new business growth in those states where rates are adequate. With respect to catastrophes, P&C current accident year cat were $161 million before tax or 4.2 combined ratio points, which compares to $185 million in 2023 or 5.3 points on the combined ratio.

Total net favorable prior accident year development within core earnings was $32 million, primarily due to reserve reductions in workers’ compensation, which were partially offset by reserve increases in general liability, assumed reinsurance and ocean marine. In addition, we had $7 million of favorable development in personal auto physical damage. We also recorded $24 million before tax in deferred gain amortization related to the Navigators ADC. This positively impacted net income with no impact on core earnings. Based on our estimate of payment patterns, we expect total amortization of the deferred gain in 2024 will be approximately $125 million before tax with the remaining balance amortized in 2025. We have provided additional information in the appendix of our earnings slide deck on both this ADC and the A&E ADC for your reference.

Turning to Group Benefits. Core earnings in the first quarter of $107 million and a 6.1% core earnings margin reflect improved Life results, continued strong disability performance and fully insured premium growth. As a reminder, from a seasonality perspective, we tend to experience higher underlying loss costs in the first quarter. The group disability loss ratio of 70.1 improved 0.3 points from 2023, driven by continued strong claim recoveries, partially offset by higher incidents in paid family leave and short-term disability products. The group life loss ratio of 82.6 improved 4.1 points versus prior year, reflecting improved mortality. Fully insured ongoing premium growth of 2% was driven by exposure growth, which remained positive, albeit at a lower rate than in the prior year.

Book persistency in the first quarter of 2024 was strong at over 90%, but approximately 1.5 points below record high levels in 2023. Turning to investments. Our diversified investment portfolio continues to produce solid results. For the quarter, net investment income was $593 million. The total annualized portfolio yield, excluding limited partnerships was 4.3% before tax, consistent with the fourth quarter of 2023. Our annualized LP returns were 1.3% and included positive returns from our private equity portfolio. Our real estate equity portfolio returns were impacted by lower valuations and the absence of real estate JV equity sales. Given the current macroeconomic backdrop, limited partnership returns in the second quarter are likely to be similar to first quarter results with private equity returns being offset by declines in real estate valuations and property depreciation with no sales activity.

We continue to believe our real estate holdings are durable, and we will be patient as it relates to any sales in order to maximize value. Although, we anticipate LP returns for the full year could be below 2023 results, we continue to believe that over the long-term, results will continue to add value and be consistent with historical returns. The overall credit quality of the portfolio remains high with an average credit rating of A+. Net credit losses remain insignificant. Turning to capital. During the quarter, we repurchased 3.8 million shares under our share repurchase program for $350 million and we expect to remain at that level of repurchases in the second quarter. At the end of the quarter, we had approximately $1 billion remaining on our share repurchase authorization through December 31st, 2024.

To wrap-up, our first quarter results reflect another quarter of delivering on our targeted returns to enhance value for all of our stakeholders. I will now turn the call back to Susan.

Susan Spivak: Thank you. We will now take your questions. Operator, could you please repeat the instructions for asking a question?

Operator: Thank you. We’ll now begin the question-and-answer session. [Operator Instructions] We’ll take our first question from Andrew Kligerman at TD Securities.

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Q&A Session

Andrew Kligerman: Hey good morning. Chris, I noticed in your opening remarks, you talked about some pressure on group life sales. Is that something that you foresee going forward? I mean overall sales were — I think revenues were up about 2% in the quarter. So, do you see that line being a bit pressured and maybe you could give us a little color on what’s happening in the group life area?

Chris Swift: Happy to, Andrew. Welcome. Yes, we did call out a little lighter sales volume during the quarter. I’m looking at Jonathan Bennett, he could give you additional color also. But I think, Andrew, you might recall, we’ve talked about being fairly disciplined in our thinking about where mortality is trending, particularly coming out after the pandemic. And the trends are downward, but we probably — we believe we’re still operating in an endemic state of mortality, which means it’s going to be higher than normal, which we think will continue for at least the next couple of years. And we’ve been pricing our product with that view, which obviously has an impact then on sales if market participants don’t have a similar view.

So, I think it’s all good, it’s all healthy. For us, again, key message I want you to know we’re being discipline, but it might come at a cost of slightly lower group life sales than we maybe have enjoyed in the past. But Jonathan, what would you add?

Jonathan Bennett: Yes, Chris, I agree with everything you’ve said. And I think, Andrew, just reinforced the importance of us having our point of view and executing on that in the marketplace. If you think about where we are in the group life cycle, we’re looking to the future, we’re seeing improvements. When you look back at your trends, which is where you start and thinking about your pricing philosophy, a lot of that data is loaded with excess mortality and COVID losses. So, the first step you have to do is figure out what to extract, how to normalize, if you will, for that data. And it might sound obvious to say, well, just take all the COVID claims out, but that’s not how they always get reported. And so as a result, there is a fair amount of variation in judgment applied as you do that.

And then looking forward, you need to make a call on where you feel like mortality will be in the next three to five years. And as we sit here today, if you were to pull some CDC data, I think you would see that the reported deaths are still trending — are still a bit higher than they were prior to the pandemic. So when we weave all that in, we have our conviction about where we think things are going. But I would say the range right now in the marketplace in pricing is about as wide as it’s been ever based on all of those ambiguities and how pricing can be developed. And that really is, I think, what’s the cause for some uncertainty in the marketplaces. But as Chris said, we have a strong point of view on where we are. We’re confident and comfortable with that and we’ll continue to compete.

Our capabilities are actually as strong as ever in that marketplace, and we feel quite good about our positioning.

Andrew Kligerman: That’s very helpful. And then my follow-up is, there’s been a ton of talk now about long-tail reserving. I mean, for a while, it’s been 16 to 19 underwriting years. Now people are talking about 20 to 22 or 23. And when we looked at your reserves this quarter, I mean, it looked pretty modest in general liability and sangree [ph] and marine, and those were 16 to 19 years per your releases. Any concerns? I mean, you looked great, but some of your competitors didn’t. And so anything to read into going forward? Any concerns on your part?

Chris Swift: Andrew, I’ll start and I’ll let Mo and Beth add their commentary. But yeah, I’m not going to speak to competitors because everyone is just slightly different, but the confidence that we have particularly in our current loss picks are very, very high. And I think the context that I think Mo and Beth will explain to you is that we’ve been hard at work in improving our underwriting our book, reunderwriting it, looking at different classes of business, changing terms and conditions, and Mo will give you more color. Beth can talk about the actuarial analysis that we do on a quarterly basis, which is very robust and gives us a high degree of confidence in our picks, particularly for the most recent years. But we’re also humble enough to admit we didn’t get everything right over the last five years.

And when we feel that adjustments are made, we’re pretty clear and transparent about why we’re making those adjustments, and that will continue going forward. But Andrew, as we sit here today, I think you got it right, we feel good, we’re not immune, but on a relative basis, I think we’ll be better than most, but Mo, Beth, what would you add?

Beth Costello: So I’ll start, and then I’ll let Mo provide some color and just add on to what Chris indicated. But as you noted, Andrew, in the general liability reserves, the prior year development that we recorded this quarter was related to the 2016 to 2019 years since some large loss activity. And as Chris said, we do evaluate these reserves quarter-to-quarter and when we see activity, we do react to it. As it relates to the more current years, those tend to trend very well. As you know, these are long-tail liabilities. So even if in the short-term, they’re looking strong. We don’t react to that because, as I said, these are long tailed in nature. But overall, we’ve not seen things in the more recent years that would cause us to change our picks at this point.

And when I look at a variety of measures, and I know you do as well, IBNR levels, paid activity, I think our more recent accident years stand out as being strong. But it’s also really important to understand, as Chris was indicating, actions that we’ve taken over this period to improve the overall book, which even adds to how we feel about our overall reserves in years. But maybe, Mo, I’ll turn it to you to talk about some of the things that you and your team have been doing over the last several years in this area.

Morris Tooker: Yes, maybe three themes just to build on Beth’s point about actions we’ve taken over that time period. So, first is, obviously, we’ve put significant rate in each of those years since 2019 in each of the three books, and that is well in access of some healthy trend. Second theme I would put out there is just remember the SME nature of our book, I mean, we just have a lower underlying, for example, auto exposure. Just to give you one stat, 79% of our middle-market umbrella book attaches for clients with less than 10 vehicles. So, it gives you a sense of the size of fleets, which is where a lot of the pressure is coming from is just auto. We don’t have a transportation book of any real note. We don’t really — we’ve never deployed limits of greater than $25 million gross, and we have important reinsurance involved there.

And then the third, Andrew, I just — I think we’ve taken significant underwriting actions as both Chris and Beth referred to since 2019, and that’s industry related, it’s related to litigation hotspots. We’ve managed limits. Just as one example in our global specialty book, we got out of all primary GL high-hazard in 2017. We just didn’t think we could make money. And we haven’t gone back in just because we still don’t think that marketplace is there. And so I just — Andrew, I hope that gives you a sense of the book, and we continue to invest in tools that are allowing our underwriters to make choices based on litigation hotspots, based on industry, based on underlying auto. So, we just — we’ve worked really hard at this, and I think that contributes to some of the lack of news that you’re seeing here.

Andrew Kligerman: Yes, very helpful. Thanks very much.

Operator: We’ll move to our next question from Elyse Greenspan at Wells Fargo.

Elyse Greenspan: Hi thanks. Good morning. My first question was on the Personal Lines side. Just kind of following up, I think, Chris, you said that you guys are kind of turning on new business growth or did turn on this quarter that you’re at rate adequacy in the vast majority of states. Can you just give us a sense, I guess, what are you seeing from a frequency and severity perspective right now? And what do you expect, I guess, looking out over the next 12 months, you said when you put the expectation out that you expect to get to profitability this year and then reach the target in 2025?

Chris Swift: Elyse, thank you for the question and joining us. We’re pretty pleased with the start on Personal Lines in totality. You saw the metrics that we’ve talked about, 25.7% written rate increase for auto, 15%-ish in home, and I think the team is executing very, very well. I would give you a couple of data points to have you consider. As we think about the full year in 2024, we still see auto getting about 20 points of rate, plus or minus. So, we still have that conviction, which then lays the foundation for the targeted profitability in 2025 that we’ve been talking about. I would say we’re beginning to see moderation both in our auto loss cost trends on a BI and a PD basis, not going to give you precise numbers just because it could be bouncy any one quarter to one quarter.

But overall trends for 2023, let’s say, we’re in the mid-single digits. And I expect — excuse me, mid-double digits. And I expect that to come down into the low double-digit range here in 2024. Maybe there could be more improvement from there, but that’s our best call at this point in time. And I think Beth importantly, reiterated our point of view that we do see 5 to 6 points of underlying auto loss ratio improvement in 2024. And I think that, again, will put us on the right track to hitting targeted profitability in 2025. So yes, we are rate adequate in 80% of our states. There’s a couple of states that are going to be laggards for a while. They’ll go nameless. But we feel good about what we’re doing with auto. And then likewise, with home, you saw the underlying combined ratios improved over years.

I thought our cat performance in total for the quarter, although slightly elevated to expectations, was still in line or within a range of long-term trends. So pleased with the team and what they’re doing both in auto and home in Personal Lines. Beth, would you add anything?

Beth Costello: Yes. Just a couple of things. Also, I’d point out that we did see some favorable development on the 2023 accident year primarily coming out of the fourth quarter for auto physical damage. So we see that as an important proof point, too. I just want to clarify on Chris’ comment on the book loss trend, mid-teens. So that is mid double-digit, but just to be clear, mid-teens, and we do expect that to decline over the period. But as Chris said, we’re being cautious and looking at it very carefully and feel very good to be on track to get to the improvement that we laid out at the beginning of the year.

Elyse Greenspan: And then my follow-up is on Commercial Lines. Looking at the price disclosure, stable on a reported basis, right, but that obviously reflects the comp concentration. How do you guys see just pricing across Commercial Lines playing out as we move through this year?

Chris Swift: Yes. I’ll add my color and then Mo will add his. But I hope you felt it in our tone, Elyse, we’re really pleased. The team is working hard from an execution side, to have ex-comp. Our written renewal rate increase increased 70 basis points, I thought was healthy. That doesn’t include an element of exposure that excess rate, which we call out in the general 2.3 points range or 25% exposure, 75% rate base. So I think we see a lot of stability in the marketplace and still very optimistic as we play out 2024 here. So I think that, again, why we talked about early on of the year of the stability of our margins and generally having a consistent outcome compared to 2023, I think it’s still alive and well in our thesis as we execute here through midyear. But Mo, what would you add?

Morris Tooker: Yes, Elyse, I would say it’s competitive but generally supportive because we talked about properties moderating a little bit outside of our BOP and the BOP is still accelerating just in terms of what we’re able to get there in terms of rate. The XS [ph] umbrella is accelerating again, auto is accelerating again. So broadly, I just — I think we feel like the market as being fairly disciplined, fairly disciplined, and supportive of what we’re trying to get done for the year.

Elyse Greenspan: Thank you.

Operator: We’ll take our next question from Gregory Peters at Raymond James.

Gregory Peters: Great. Good morning, everyone. So Chris, in your prepared comments, you talked about the no change in sort of the catastrophe profile of your property business. And yet you said that you’re growing your property business, I think you — the number you cited was 17% higher in the quarter. Maybe you can help reconcile how you grow your property business and not change your cap profile?

Chris Swift: Well, cap profile versus risk appetite, I’d see a little difference. I mean, we’re not increasing our property cat appetite per se. We’ve always said that we’re willing to write property if it comes with some incremental small elements of cat, in which I think we’ve been managing perfectly and Mo could give you more colors. But I would say — and let me just give you a couple of stats is that pricing in our property book, ex our Global Re business is about 14% up, compared to 14.4% in the fourth quarter. As I said, we’re growing at 17% and we’re growing it in an important line: spectrum, E&S binding, our general industries properties. Our large property capabilities are up almost 35%. And again, the pricing, I think, is still firm and holding up pretty well. But Mo, what would you add?

Morris Tooker: Yes, Greg, I would just say that there are a couple of cat metrics that the team were really focused on. And for example, a, also annual aggregate loss to premium ratios trying to keep those flat. So as premium goes up, obviously, we would like the AAL to stay relatively flat. And the same thing as we think about tail, we don’t want to put on the risk without thinking about the tail risk. So we are closely looking at tail multiples like, for example, 100-year PMLs over premium. So those are the types of ratios that we’re watching. So yes, the exposure itself is growing certainly from a cat perspective, but we’re trying to keep it in balance as to the same rate as premium growth.

Gregory Peters: Okay. That makes sense. So then building on some of your previous answers, I’m looking at the stats on new business production, policy counts inside your commercial business and things look like they’re going really well. I do remember a couple of quarters ago, you calling out some price competition in the middle market area. Just trying to get an update on, it seems pretty stable and the outlook seems pretty bullish. But when you look forward, what are the areas that you’re concerned about for potential competitive challenges?

Chris Swift: Yes. It’s a competitive market. And I would say, especially in the larger end of each of our segments the larger end of small, we are finding more competitive, the larger end of middle is more competitive and the larger end of the specialty business. So anything with a lot of premium on the slip typically has a little more competition to it. But the only area that we’re dramatically pulling back on is, as we’ve talked about many times, is public D&O. We just haven’t seen that market stabilize the way we would like to. So you will see that book continue to shrink. Outside of that, Greg, I think we feel pretty good about the rest of the portfolio.

Gregory Peters : Makes sense. Thanks for the answers.

Operator: We’ll go next to Josh Shanker at Bank of America.

Josh Shanker: Thank you for taking my call. Looking at the rate that you’re pushing through on auto, in particular, obviously, it’s sizable. Year-over-year, the policy count is down about 5%, which — that might be a good outcome given how much rate you’re pushing through. One of your probably the largest direct competitor in the market, they raised prices not as much as you over the last couple of years have lost 20% of their business. What is the experience of retaining clients given that you are a direct carrier and you only can present them with Hartford product? Are they wanting to change and you’re committing them to stay? Are they doing buy-downs? How is that experience coming with the retention?