Rob Berkley: Yes. The long story short, did we have modest exposure to the things that you’re talking about or that you flagged, yes. And then there was also some SCS exposure in there, too.
Josh Shanker: Okay. And if I can get one more in. In terms of — I know you guys gave the rate — not really loss trend. You talked a lot about commercial and where it can be. What is the loss trend in commercial auto? And what are you reserving to given your concerns about social inflation? Is there a variance between where you think the loss trends currently and where you’re booking it? I know you’re trying to be conservative but is this something that’s been prepared for in how you’re pricing and whatnot?
Rob Berkley: The short answer is on the part of the portfolio. But generally speaking, we are looking to build in a risk margin beyond what the actuarial answer would be.
Josh Shanker: Okay, well, thank you, and have a good evening.
Rob Berkley: Thank you, Josh, you too.
Operator: Our next question comes from David Motemaden with Evercore ISI.
Rob Berkley: Hey, David. Good afternoon.
David Motemaden: Hey, Rob. Good afternoon. Just had a question on the commercial auto premium growth and I guess I hear your commentary loud and clear on social inflation impacting that line, so I was a little surprised that the growth accelerated there, was that more a function of this partner that you parted ways with, resulting in I guess an easier comp or have you seen something change there on the pricing side this quarter that makes you want to lean into the commercial auto market a little bit more?
Rob Berkley: So a couple of things that’s worth noting. Yeah, part of it has to do with the a bit of run-off as you alluded to, but the bigger story from my perspective is, the rate that we are achieving. And we are pushing very hard on the rate and we’re getting it. And ultimately, we have a view as to how much we need for rate and to the extent that we’re getting it, then we don’t have a problem writing the business. But we are not going to write it if we don’t think we can get the rate that is required plus to achieve our targeted return.
David Motemaden: Got it, thanks. That’s encouraging. And then maybe, you know, I know you guys have been vocal on just workers’ comp, medical cost inflation, and staying on top of those trends. I’m wondering if you’re actually starting to see that come through, then manifest in your claims data, just in terms of the medical cost inflation starting to impact your payments.
Rob Berkley: We certainly are seeing early signs of it, and we’ve been seeing it for a little while, which has really been one of the catalysts for the caution. I think we’ve been talking about for some time, how the providers, if you will, their economic model is not sustainable. They — many of them, particularly the large health systems are destroying huge amounts of capital and something is going to have to give. And ultimately, part of how that riddle is going to get solved is through the payers. Workers’ compensation is not going to be insulated from that. The story is not just about pharma. It’s about other components of medical costs. And I think you’re putting the comp component aside for a moment. If you talk to large payers, the United, the Cigna, et cetera, and you talk about the type of trend that they are seeing and then you extrapolate from that, what does it mean for workers’ comp, who, by the way, we probably don’t actually, we definitely don’t have the same negotiating leverage that someone like a United would have, I think that’s pretty instructive.
David Motemaden: Got it. Understood. And then maybe if I can sneak one more in, just a quick one. I didn’t hear you talk at all about the fire losses. And I think is that fair to assume that that’s pretty much one you guys have re-underwritten that book, and that’s no longer impacting results? Or did that have some smallish impact this quarter as well?
Rob Berkley: The answer is that it wasn’t overly noteworthy in the quarter. I’m not inclined to declare victory because then it always comes back to bite us. But I think we’re making progress on that front. That having been said, as far as the loss picks go, for our conversation around the environment, we’re just not in a rush to do anything but be thoughtful and measured. The fact is the business is generating by any measure, great returns and we don’t see that changing. So there’s no reason to push better for us just to make sure that it is thoughtful and well controlled. And if we’re going to err, we’re comfortable erring on the side of caution.
David Motemaden: Got it. Understood. Thank you.
Rob Berkley: Thanks for the questions.
Operator: We’ll take our next question from Ryan Tunis with Autonomous Research.
Ryan Tunis: Hey, Rob. How is it going?
Rob Berkley: Es. I’m doing well.
Ryan Tunis: First question just on short tail lines. Obviously, there’s been some mix shift in that direction. I think that, that would have somewhat of a lower underlying loss ratio. Is that the right way to think about it?
Rob Berkley: I think it potentially does. But with a lot of those lines, you got to remember, we carry a cat load. So we are not going to release the cat load prematurely. So that could spill over that benefit may not be realized, if you will, we may carry that through into a future period. But yes, to your point, would it have a lower loss ratio oftentimes, yes.
