Jonathan Bennett: So Yaron, just a couple of things on there. In terms of the top line, 2023, of course, was pretty exceptional on all the key metrics, the drive result. But I think we are seeing really strong results here even in the first quarter of 2024 comparatively speaking. But from a persistency standpoint, we still have book persistency in the low 90s, which is historically quite good. We’re very excited about that. It was even higher a year ago. And I think that does reflect a little bit the competitive nature of the market and the more likelihood that a customer may, in fact, take a case or take their business out to market. So we’re addressing all of that. I think we’re working through those renewal challenges and being quite successful with it and very much picking our spots.
On the new sales, also a bit more competitive in that market. We’re excited adding new lines of coverage to existing cases. That’s always important. And I think one of the best opportunities we have to continue sales growth is rounding that out. There can be a little bit of a downside with that, of course, in some cases, around voluntary as an example. It’s a smaller set of lines if the bigger lines like disability move, perhaps voluntary goes with it. So those kinds of effects in the marketplace as we’re working through and addressing them, but we continue to have really strong results on supplemental health. And we’ve had some very exciting growth. It’s a little bit more tapered right now, but an area that we continue to expand in and see a lot of big opportunities that trend into the future in 2024 and beyond, I can already see, continues to accelerate.
So a place that we will stay focused and continue to deliver results.
Yaron Kinar: Thank you. And my second question, I want to make sure I heard, Chris, your comment correctly with regards to loss trends in personal auto. Did you say that they’re currently in the low-teens or you expect them to be in the low-teens for 2024?
Chris Swift: I was trying to do compared to 2023 to 2024. Mid-teens in 2023, low double-digits in 2024 or for the full year whatever I was just trying to say is that it bounces around from quarter-to-quarter. So I’d rather have you see the bigger picture trend that going from mid-teens down to even high double-digits is a pretty meaningful move.
Yaron Kinar: And I guess the reason I’m asking this is it does seem to be a little bit higher than what we’re seeing industry-wide right now? Is there something unique to the AARP book or to the policies that you’re writing that, that would keep the loss trend a bit above maybe mid- to high single digits?
Chris Swift: I would just say our judgment and prudence is leading us to call that number where we sit today. And if it changes during the year, we’ll let you know.
Yaron Kinar: Okay. Thank you.
Operator: Moving next, we’ll go to Meyer Shields at KBW.
Meyer Shields: Great. Thanks for fitting me in. I just had one question. I was hoping you could give us some guidance on how to think about how much lower the current Personal Lines expense ratio is compared to when you’re in normal growth mode?
Chris Swift : So I would say on the expense ratio, I would have you think of the full year 2023 compared to the full year 2024 about being the same. Beth, I don’t know if you would add any?
Beth Costello: Yes, I would agree with that. As we go through 2024, you might see a slight uptick in Q2, because as we said, we are turning on marketing. And again, as the rate continues to earn into the book, that will start to level off. But our overall expectation right now for Personal Lines expense ratio, as Chris said, full year this year to full year last year will be relatively flat.
Meyer Shields: Okay. Is it fair to think of it as being a little bit depressed just because of, I guess, the states where growth is, it doesn’t make sense at?
Chris Swift : I don’t think I understood the question. It was just hard to hear you, Meyer.
Meyer Shields: I’m sorry. No, I was trying to get a sense as to whether we should expect we look out to whenever personal auto is normalized, that the expense ratio should be a little bit higher than where it’s been running for the past couple of years.
Chris Swift : Not necessarily, right? I mean there’s a volume issue, dollars and then a rate. So again, with the amount of rate we’re getting the book, I think it’s helping keep the ratio the same. We might actually be increasing dollars, which we are sort of in a J-curve model this year. But from a ratio side, that’s why I tried to give you that full year number to sort of manage your expectation.
Meyer Shields: Okay. That’s prefect. Thank you so much.
Operator: And we’ll move next to David Motemaden at Evercore ISI.
David Motemaden: Hi. Thanks for squeezing me in. Just a question on the expense ratio in Commercial Lines. 20 basis points year-over-year improvement, obviously, following a strong year last year. I was wondering, is there anything one-off or anything that prevented us from seeing more expense ratio improvement year-over-year?
Beth Costello: So if you’re looking at just quarter one to where we ended last year, I’ll just remind you that in first quarter, we tend to see a higher expense ratio just because of some expense items that hit more heavily in Q1. When I think about Commercial Lines sort of full year this year for 2024 compared to 2023 expecting it to be relatively flat as we go through the year. Again, any one quarter, you can have some movements relative to bad debt reserve adjustments and things like that. But overall, we see it relatively consistent.
David Motemaden: Got it. Thanks. That’s helpful.
Operator: And we’ll go next to Bob Huang at Morgan Stanley.
Bob Huang: Thank you. Just maybe a follow-up on reserving. I think this is for rather Beth or Mo. When we think about the favorable reserving in workers’ comp, just curious if there’s a dollar amount that you can give us in terms of how favorable it was and how adverse general liability was?
Beth Costello: Sure. I’ll take that. We actually have very detailed disclosures in our 10-Q and our IFS on that. So for workers’ compensation, releases were about $67 million and then we always have the workers discount accretion that comes in for 12 that goes offset against that. And then general liability was 17 and marine was seven and assumed reinsurance is nine. But you could go to page 38 in our 10-Q, and it lays it all out for you.
Bob Wang: Yeah, sorry for that. So that’s totally my fault. So maybe just a follow-up on that. Can you maybe talk about the current reserving environment for workers’ comp in terms of as we now three years out from COVID, there’s still quite a bit of favorable uplift, so to speak, post-COVID or do you think the workers’ comp book from a reserving perspective is likely to normalize back down to more of a pre-2019 environment?
Chris Swift: Yeah. It’s a complicated question, but I would say, I think it’s normalized. Obviously, during COVID, there were a lot of assumptions made as far as where trends were that obviously turned out to be prudent, but sort of two years out from the official end of workers’ comp, I think trends are behaving as we would expect. Frequency continues to be positive. Severity is still within our expectations, which we always talked about, Bob, being a 5% trend, which, again, severity is behaving within that expectation. So yes, as I think about 2023 and 2024, a lot of continuity and consistency in workers’ comp trends.
Bob Wang: Really appreciate that. Thank you very much.
Operator: And that concludes our Q&A session. I will now turn the conference back over to Susan Spivak for closing remarks.
Susan Spivak: Thank you all for joining us today. And as always, please reach out with any additional questions. Have a great day.
Operator: This concludes today’s conference call. Thank you for your participation. You may now disconnect.
