That said, to your point, clearly the home owners line continues to need rate, it continues to need profit improvement, and we will continue to seek higher rate in home owners even though the limit increases will be subsiding. The other thing I’d point is part of the answer in home is pricing. Another big piece of the answer is non-rate actions, and we’ve been very active in the marketplace across risk selection, peril-by-peril pricing, tighter eligibility, stricter terms and conditions to drive profit improvement in the property line as well.
Ryan Tunis: Got it. Then just a follow-up on business insurance retention – you know, it’s interesting how robust that’s been. Clearly we’re seeing personal lines, retention come off as I would think you’d expect when you’re taking rate. What do you guys make of that, like why has retention been so robust, I guess despite so many rounds of rate increases?
Greg Toczydlowski: Good morning Ryan, this is Greg. I think we start every month with retaining our high quality book of business, so it’s been very much an intentional strategy of ours to make sure that we’re being thoughtful on our terms and conditions, our pricing, and all the changes that we’re making to continuously improve margins, but given the quality of that book, it’s not a surprise for us. It also is an indicator of just how rational the marketplace is right now and the need for improved margins across the entire industry, based on all those headwinds that Alan talked about. We’re not surprised by it, we’re very pleased with it, and we’re very focused on it.
Operator: Your next question comes from the line of Jimmy Bhullar from JP Morgan. Please go ahead.
Jimmy Bhullar: Hi, good morning. First, just had a question on commercial auto, and if you could just give us a little bit more insight into what’s driving the adverse development there. Some of your peers have seen that as well, and I think there is some concern that this could be the beginning of a trend, given what’s gone on in personal auto over the past two years or so.
Dan Frey: Hey Jimmy, it’s Dan again. Yes, as we said a little while ago, commercial auto is really just a modification based on the most recent data that’s come in, in terms of the development of claims in commercial auto, particularly bodily injury claims. It’s something that we’ve commented on and off probably over the last three or four quarters – numbers have been pretty modest, the themes are not inconsistent with what we anticipated, but you get a new set of data and the data looks a little bit different than your prior estimation, and so the magnitude of some of the changes that we anticipated is a little higher. Really, the focus of this most recent strengthening is the continued longer development of–or said inversely, the slower closing of claims in commercial auto, so as that continues to lag historical closure patterns, we’re making an adjustment to reflect the most recent data.
Jimmy Bhullar: And that’s just a function of repairs taking longer, or something else?
Dan Frey: This is more in the bodily injury side of commercial auto, so it’s not so much repairs themselves, although that’s been a factor in both Michael’s business and, to a smaller degree, in Greg’s business. Bodily injury, it’s more the settlement of the injury claim.
Jimmy Bhullar: Then in personal auto, where are you in terms of rate adequacy on a written basis, and is–your discount has been sort of flattish, are your competitors being fairly rational and you’re seeing price increases across the board or are there some companies that are not adjusting due to higher loss trend?
Michael Klein: Thanks Jimmy, it’s Michael. I would say that when you look at our–taking the second part of the question first, when you look at our production statistics, retention is down a bit but it’s actually been pretty resilient in the face of the rate we’ve been driving through the book, particularly given the magnitude of those numbers. I think that that’s indicative of a fairly rational market and the fact that these are again industry-wide pressures that most competitors are dealing with. In terms of written rate adequacy, again last quarter I said we’d get there in the coming quarters. Relative to the comments last quarter, we feel a little bit better sitting here today than we did 90 days ago, given the record level of RPC that we achieved in the third quarter and the fact that we’re seeing loss trends stabilize, and that’s coming through in our underlying combined ratio.
That said, I would also say that written rate adequacy still depends on the same list of things we talked about last quarter, right – it’s the price we get, it’s how quickly loss trends moderate and how much they continue to moderate, the regulatory process for getting rate approvals, and our actual loss experience. But it is at this point very much a state-by-state conversation, and we’re working each state individually and adjusting our actions accordingly.
Operator: Your next question comes from the line of Brian Meredith from UBS Financial. Please go ahead.
Brian Meredith: Yes, thanks. A couple ones here. First, let’s let Jeff answer some questions here. Jeff, on the management liability business, I think you had mentioned in the quarter that there was some favorable current year development. Maybe you can quantify that and what’s going on there with the management liability business that you’re seeing this favorable development.
Dan Frey: Hey Brian, it’s Dan. I think we’re not going to put a number on it. It’s not a significant deal. The only point Jeff was trying to make was sort of when you do the comparison year-over-year, there was some favorable CYPQ, which we called out last year in the third quarter. There was some favorable CYPQ this year as well, just not as much, so the year-over-year is unfavorable given less of a good guy.
Brian Meredith: Got you, okay. That’s helpful. The next question, I’m just curious, bigger picture in business insurance, exposure growth continues to be pretty healthy. Maybe you can give us a little context around what kind of drives that exposure growth? I would think that with the economy moderating some here, that that exposure growth would start to slow here.
