Brian Meredith: Makes sense. Thank you.
Rob Berkley: Thanks for the question, Brian. Have a good night.
Operator: Your next question comes from the line of Josh Shanker with Bank of America. Your line is open.
Rob Berkley: Hi, Josh. Good evening.
Josh Shanker: Hi. Good evening, everybody. Thanks for taking my call at the end. There’s probably a Rich question here. I’m looking at the traditional investment income and stepped up materially $249 million in the third quarter, and you’re about $280 – having $288 million, I think, change for this quarter. That’s a pretty large step up and the implied yield stepped up a lot. Is there any one-time type of coupons or one-time dividends in that number, or is that a good approximation of where the yield on the book was through the fourth quarter?
RichBaio: So we have seen a – an increase, Josh, in the overall book yield, I’d say from a fixed maturity perspective, we certainly have been able to deploy capital and reinvest at higher rates, as Rob was alluding to earlier in some of his remarks in terms of the – where the new money rate is and where the roll-off is. So certainly that’s been a big contributor to it. We did have a little bit of an uptick, if you will, with regards to some securities that we own in Argentina that are inflation-adjusted as well. So that did create a little bit of an uptick. But I would tell you that the book yield in the quarter, I would say, core would be around 4.7%, which is certainly up from where we were at the end of the third quarter.
Josh Shanker: Thank you. And you spoke, Rob, about the new money yield being in excess of 5% right now.
Rob Berkley: Yes.
Josh Shanker: And given all the chatter and whatnot about rates and everything, a lot may have even happened since the new year began. Is there any desire or action going on at the company? Duration is still 2.4 years. Is there intention to crystallize some of the yield at these higher yields available in the market right now?
Rob Berkley: So, Josh, our goal is, if the opportunity presents itself, to move that duration out a bit from here, if that is your question, I want to make sure I’m understanding it.
Josh Shanker: Yes, I mean, or –
Rob Berkley: We’re going to move it out –
Josh Shanker: Yes, same way. Different way of putting it,
Rob Berkley: Yes. So our desire is to move it out, but we’re going to move it out when we see the window of opportunity. So would we like to see that move out to ’25, ’26, ’27 over time? Yes, we would. But we’re going to do that in a way that makes sense. So I would encourage you to stay tuned. And we’re – there’s a lot of volatility in the world, and when we see the things working with us, we’re going to try and lean into that window, but we’re just trying to roll with the punches. And again, it’s remarkable volatility.
Josh Shanker: And one last investment-oriented question. Given the macro outlook for things at this point in time, does it make sense to lean in and perhaps contribute more of the portfolio to the investment fund type of investments?
Rob Berkley: Actually, I think at this stage, quite to the contrary, we’re very pleased with what this traditional fixed income portfolio is offering us. And I think, just as a general mix, while we – I don’t see us exiting alternatives, I don’t think that there’s the same level of encouragement or it’s not as compelling to look in the alternative directions as it once was given where fixed income rates still are.
Josh Shanker: Thank you for all the answers. Good luck to the new year.
Rob Berkley: Thank you, sir. You too.
Operator: Your next question comes from the line of Yaron Kinar with Jefferies. Your line is open.
Rob Berkley: Good evening.
Yaron Kinar: Thanks for taking my questions. Just first question, just looking at the property market, so sounds like maybe a seat, but still pretty attractive returns there. I think you guys have gone through some remediation efforts on the property book as well. I guess with that in mind as we look at ’24, if your costs correctly, you’re still thinking of growing that book more through rate than through exposures, is that correct? Why not lean more into exposure?
Rob Berkley: I want to draw a distinction. First off, as far as things peaking, that comment was suggested that they may be peaking in the property cat market. And I’d like to draw a distinction between the primary or insurance market versus the reinsurance market. And in addition to that, I would suggest that it’s important to draw a distinction between the property cat market versus the property risk reinsurance market because they are clearly not one in the same in our opinion. As far as our desire to grow the business, look, if we like the margin, we are going to lean into it. And I think that at the moment, generally speaking, we like the opportunity that continues to exist in the reinsurance marketplace when it comes to property.
And we are certainly paying attention to a lot of the opportunity that exists in the primary property insurance space, particularly as it relates to E&S in the commercial lines. And of course, not to be forgotten, our colleagues at Berkeley, one on the high net worth front, the opportunity for rate, both on the admitted basis as well as, just as a reminder, they are using non-admitted paper as well, is creating meaningful opportunity also.
Yaron Kinar: That’s helpful. Thank you. And then my second question, and I’m not sure if you’d be willing to answer this at this stage, but…
Rob Berkley: When in doubt, ask.
Yaron Kinar: I’ll try. The – when we see the 10-K and maybe even the scheduled P later on in the year and we look at the results from this quarter, would we see a similar trend to what we’ve seen so far year to date? Namely, maybe some strengthening in liability reserves of older vintages offset by favorable releases in 2020 through ’22?
