Brian Meredith: Yes, thanks. A couple here. First, for Jeff, I know you talked about surety losses just being a couple and they can be lumpy. But then are we seeing any signs of maybe some pressures in that line from a loss cost perspective given what’s going on with commercial real estate and other things that are happening right now?
Jeff Klenk: Hi, Brian. It’s Jeff. Thanks. I would say that we’re watching inflation in materials and labor costs relative to construction. But honestly, really I think the prepared remarks really summed it up for you, right? We had a couple of losses that drove the underlying loss ratio change and ultimately this can be a lumpy line, and we feel really good about our market-leading surety book.
Brian Meredith: Maybe Higher interest rates matter also, I mean, when you get a big jump in financing costs, right, for contractors and stuff?
Jeff Klenk: Sure. The credit availability for our contractors is absolutely an issue. We take that into account with our high credit quality book of business the way we underwrite this book. We got a high-quality book of contractors that we focus on there. And so your point is well taken. It’s a part of the underwriting process. That’s where I’d leave it. Thanks for the question.
Brian Meredith: Thanks, Jeff. And then, Mike, I’m just curious, can you talk a little bit about kind of the regulatory environment right now in personal lines? Obviously, some states are getting a little more content on rate, but are we seeing any push back kind of starting to emerge from certain states as far as the level of rate going through?
Michael Klein: Yes, Brian, thanks for thanks for the question, and I think it’s – I think it’s a good observation. As we talk about pretty consistently, we feel pretty good about our relationships with the departments of insurance, are we really endeavored to make sure they have all the information necessary to evaluate and approve our rate increase requests? And starting with us, we continue to file for increases that align with our most recent experience and our indicated rate needs. That said, what we’re seeing and you’re seeing in the headlines, some news about increased scrutiny and/or states considering or proposing changes to the way that they regulate pricing in response to the continued period of increases necessary to keep up with loss costs.
And so I’d say, on the margin, there is a couple of places where it’s getting a little more challenging. But broadly speaking, we have still been able to file and get approved the rate we think we need in response to the increased costs.
Brian Meredith: Thank you.
Operator: Thank you. Your next question comes from the line of Josh Shanker of Bank of America. Please go ahead.
Joshua Shanker: Yes, thank you. Alan, you began the conference call with the preamble on artificial intelligence and analytics. It’s been an unusual three years in terms of interpreting loss cost trend with the courts being open and closed during COVID and very wildly changing conditions under loss trend. Is the data quality that you are looking at right now any less reliable in your mind than you think that normally is? are we in a state where extra caution needs to be placed on being comfortable with those numbers that you’re using for reserving practices?
Alan Schnitzer: I would say the answer to that Josh is, yes. And I think we’ve said pretty consistently over the last few years that we have been cautious and reflecting that level of uncertainty into the way we think about loss cost and reserves. So I think the answer is yes, and we’ve been doing exactly that.
Joshua Shanker: And then, I mean, look, we’re all just throwing shelves from the cheap seats, a little bit. Can you talk a little bit about some of that, how you get more conservative or how you – in a time of uncertainty, how you get better or what you’re doing in order to offset the risks associated around what’s bad data and whatnot?
Alan Schnitzer: Yes, it’s probably a longer conversation, Josh. We can follow-up it. But let me just give you one example, and I think we’ve said this over the last couple of years. If you were just looking at the data, you might have assumed that some aspects of loss trend had improved over the last couple of years. And whether that’s true in Personal Insurance, and you see the lack of negative PYD in personal auto, for example. Or if you look at social inflation, we said if the courts were closed, then that data could have been misinterpreted to mean things are getting better. You look at that data and you say, I don’t believe it and we understand that it’s distorted and that there are other things that could be impacting it.
And so we are going to do the best we can to try to understand where the uncertainty is coming from and to make sure that we’re – that we’re reflecting our view of uncertainty as we’re thinking about either our prior-year reserves or managing our current loss taxes.
Operator: Thank you. Your next question comes from the line of Meyer Shields of KBW. Please go ahead.
