Alan Schnitzer: Yes. Again, we’re executing at a very granular level, looking at what it is we need to do by account. And you look at that 10.1% overall renewal premium change, very strong near-record levels. And the fact that there is a little bit of movement back and forth between rate and exposure to us almost inconsequential. So you can look at that 0.5 point of change in isolation and try to make something out of it. We look at the overall production picture, and it just looks fantastic. So €“ and again, Greg made a really important comment in his remarks, which is we’re €“ the execution you see is balancing a bunch of things going on. On the one hand, there is headwinds and some uncertainty. We’ve got inflation in the marketplace, supply chain is €“ hasn’t returned to pre-pandemic levels.
We’ve got weather volatility. We’ve got reinsurance. We’ve got social inflation we’ve talked about over the years. So on the one hand, that continues to be a headwind for us, and we take that into account. But on the other hand, we’ve got a bunch of years of very strong pricing and look at where the margins are today. So the rate change of 4.5% and the overall RPC doesn’t happen to us. That’s a very deliberate execution on our part, taking into account everything that we see in front of us.
Greg Peters: Great. And just the last clarification point, you talked about the inflation factors. And I think in the comments, you mentioned there are some issues in umbrella, minor issues. What’s your view on inflation trends as it might affect the reserve levels for €˜23 relative to what your assumptions may have been last year? That’s it.
Dan Frey: Hey, Greg, it’s Dan. So I don’t think anything terribly surprising. And I guess I’d step back and look at reserve development over the course of 2022 and say, full year number, $650 million of favorable reserve development. Of course, there are some lines that are going to develop a little better and some that are going to develop a little worse. But $50 million over the course of the year, favorable development in all three segments of the business. Umbrella, not really different than our overall thesis, but sort of the degree to which severity moved was a little more than we expected. So as we usually do, we’re trying to look at the data as quickly as possible and react as quickly as possible and all of that inside of a net favorable PYD. So we’re feeling very good about where the balance sheet is.
Operator: Our next question comes from Ryan Tunis with Autonomous Research.
Ryan Tunis: Hey, thanks. First question, just around the excess capital position. Historically, the company has been able to easily return operating earnings and in some years, even more than debt of shareholders. We’ve never seen this level of first of all, exposure growth and also just seeing the retention go up on the property cat treaty. Are we at a point yet where I guess the growth and the risk of the business could start to impact capital return decisions?
Dan Frey: Hey, Ryan. Good morning. It’s Dan. Yes, look, I think we’ve talked even a couple of years ago about the fact that we were seeing an increase in the level of top line growth. We knew we were going to need to hold more capital to reflect both a bigger top line book of business, which brings with it a higher level of reserves on the balance sheet. And so we said at that time, we don’t expect us to continue to be able to return nearly 100% in terms of operating earnings between buybacks and dividends. I think what you see in 2022, in particular, is the fact that we had a good strong capital position coming out of 2021. Remember, earnings in the fourth quarter of last year were tremendously strong. So we probably exited last year with a little more capital than we might have forecasted we were going to end the year.
