BERKLEY W R CORP — Call Transcript 2021

Great. Thanks, everybody. My name is Michael Zaremski here at Credit Suisse. It's my pleasure to introduce the entire Berkley executive team with us today. We have Rob Berkley, President and Chief Executive Officer, Bill Berkley, Founder and Executive Chairman, Rich Baio, CFO, and Karen Horvath, Director of Investor Relations. I personally hope we can revert back to the Ritz in Miami next year, but we'll see how the world shapes up in terms of corporate versus virtual events in what is hopefully a post-pandemic world in 2022. That's my pitch to everyone to come to Miami next year. Real quickly, we've been recommending shares of Berkley for going on, I think, two years now in terms of outperform rating. It's when we sensed the marketplace was changing a bit and Berkley was likely positioned better than the average insurer to capitalize. I think some investors still push back that the stock's a bit rich valuation-wise. I sometimes retort by pointing out that Berkley's compounded book value plus dividends at a low double-digit clip over the past decade, and the volatility of the stocks of that return too, has been more consistent than the peer average to boot. We're also in a good spot, I still think, in the P&C cycle. Maybe we'll start out talking about the P&C cycle. We'll keep the first question kind of broad. Bill and Rob, would love your insights on the P&C cycle we're experiencing right now. Do you think the market is becoming less fragile, and I'd say we're in the second half of the game, or are you still seeing plenty of pockets for opportunities and runway? I know there's different pieces of the business so I'll interject later. Maybe we'll talk about E&S versus other lines. Hi, Rob. I think you have to really start with the historic nature of measuring what's going on in the P&C business. It's not just where we are, but it's understanding where you are. Much of the P&C pricing reserving is all looking through the rearview mirror. Therefore, how profitable is the business really right now? How adequate or inadequate are reserves at any point in time? I always tell people my worst mistake in the history of me being in business for more than 50 years was 1986 and 1987, when, in fact, I cut back on the business we wrote. We stopped growing so fast because I didn't realize how profitable the business was in 1986 and 1987. We stopped our growth in 1988. It was a terrible mistake. We missed the opportunity probably in 1988, 1989, and 1990 for maybe as much as $1 billion in cumulative business and at huge profitability. We reported initially in 1986, sort of a loss ratio in the high 40s, and it ended up being in the high 20s. It's all an estimate. Where you are and what you do has to do with the estimates you make. That takes some common sense, extrapolating social inflation, extrapolating back a few years where you were, and price changes. We're particularly optimistic now because we think we have moved ahead of that curve with our pricing and where we've gone with that. My son hopefully is not going to make the mistakes I made. He's learned. I'm going to let him talk about what we're doing now. Thank you. I'm sure I'll find new and different mistakes to make and hopefully can avoid repeating ones that we have made in the past. Mike, I would just maybe draw people's attention to a couple of things. We have a tendency to think about cycles, maybe almost to a fault, that one is a mirror image of others from the past. The reality is, while there are some really important common threads as to what drive a cycle, one of the things that is important to recognize, in my opinion, when thinking about the marketplace today compared to where it was in 1986, if you like, or 2001, 2002, is we saw in 1986 and 2002, really a firming to a great extent across the commercial lines P&C market, almost in lockstep. Today, we certainly are seeing many product lines in some stage of firming, and as we had commented recently, our fourth quarter call, that with the exception of workers' compensation, every one of our product lines we thought we were getting rate in excess of loss cost trend at this stage. Different product lines are in a different stage of firming. Workers' compensation being an extreme example where we believe that's in the early stages of bottoming out. On the other hand, you see some of the excess liability lines having been through and continuing to be in the throes of very meaningful firming. When we think about the marketplace, certainly there are some common threads between what we're seeing today and past hardening markets. At the same time, while it is widespread, we are not seeing the product lines marching in perfect lockstep at this stage. We do see that the momentum is likely to continue to build from here for some period of time. Would you call out certain areas of the business that you feel most optimistic about? Would it be the broader excess and surplus lines marketplace or pieces of E&S, or would it be commercial auto, or Honestly, workers' comp pricing or profitability seems still excellent, just, it's going to be less excellent, most likely. Well, I think a couple of things there. First off, the specialty lines and the E&S market would be an extreme example under the umbrella of specialty lines, tend to benefit disproportionately during a hardening market. Because as that standard market resets its appetite and business is falling outside of their strike zone, and it makes its way into the specialty market or in particular the E&S market, there is opportunity for meaningful shift in the rate you charge, as well as a notable shift in terms and conditions. Workers' compensation, I think one needs to be very mindful of that and make sure that you draw an appropriate distinction between reported calendar year results versus what you believe the policy year is running at. In addition to that, it is important from our perspective that people appropriately dissect the loss ratio and think about frequency versus severity. There have been many challenges that society has faced as a result of COVID-19, and the insurance industry is certainly part of that and has faced its challenges. One of the benefits that has occurred has come about as a result of frequency of loss, and that is clearly the case in the workers' comp line. Severity trend has continued to move up, and I would at an increasing rate. One needs to be careful that the benefit, if you will, to the loss ratio or loss trend that is coming through as a result of temporary reduction in frequency due to COVID-19, that that not overshadow where loss cost trends are going, because in the short run, that reduction in frequency is subsidizing severity. I would be mindful of not underestimating the challenges that Workers' compensation could be facing over time as, again, the economy gets back on its feet, people are back to work more and more, and frequency returns to a more traditional norm. That's helpful. Maybe we could talk about reserve processes, and this might dovetail on the cycle, but I guess one of the things that we sometimes get asked by investors is, why does Berkley tend to show a low absolute level of reserve redundancy? Is it reflective at anything maybe where we are in the cycle or maybe just the reserving process as well? Any comments, Bill or Rob or Rich? I would just offer the comment that we look at our reserves both at a macro level as well as at a very granular level every 90 days. We have peer reviews that go on within the group. We have outside resources that are reviewing what we're doing as well, and we feel quite comfortable where things stand. This has been a period of time, as Mike, we have discussed in the past, where we've seen the realities of social inflation rear its head in a very real manner from our perspective and being appropriately measured in the loss picks that you carry is something that we think is very sensible at this stage. Do I think that you are going to see, just to maybe extrapolate a little bit, the benefits of the rate increases that are now starting to earn through have an impact on our loss ratio? Clearly, we have been getting rate that is outpacing, we believe, loss cost trend, and that is starting to come through on an earned basis, and we're feeling pretty good about that. As far as the reserves go, we feel like we are in a good place. We are going to be thoughtful and measured about it and not declare victory prematurely. At the same time, we are not naive to the challenges that are coming as a result of social inflation. I don't know, you may have some other thoughts to add. No, I think one of the things people have to understand is getting reserves right also talks about pricing right. People who put too much up in reserves and have these redundancies inherently also get their pricing wrong. Focusing on trying to get your reserves right really means you're in more control of your business. Our goal is trying to get them right, and we don't think we've succeeded if we have big redundancies, just like we don't think we've succeeded if we have deficiencies. It's really important to focus on getting it right to let you know how to price your business going forward. I don't know how, if somebody has big redundancies, they're really able to determine what their pricing should be going forward. We may have a different goal than some other people. That's helpful. I'll probably ask some companies that have a lot of redundancies about your insights, Bill. I guess, I know it's very early stages. I'm going to shift gears to Texas a little bit. I'd say, a couple things I think have caused people to ask questions is, some of the estimates there have said, the event could be up to 50% commercial lines. I know you guys don't have a lot of personal lines, or correct me if I'm wrong. Would you agree that there's a lot of commercial losses in Texas? If you have any views on the ranges on the loss levels are very wide. I know it'll take a time to unfold. Any comments? Yeah, from my perspective, this is going to be an event that impacts both personal and commercial lines. I think that to your point a few moments ago, Mike, it's pretty early to try and cuff it or reach a conclusion as to where this is going to come out. This is going to be a big event for the industry, and it is going to affect both the personal line space as well as the commercial line space, without a doubt. Pipes froze, pipes broke, and a lot of water came out, amongst other issues. We'll have to see how it plays out. Obviously, there's a lot of discussion as to what type of recourse there may be towards the power companies and the associations that they're affiliated with or that oversee them. We'll see how that plays out. Is it going to be similar to what we saw happen in California with the wildfires where the utility had exposure or not? Regardless, as far as claims activity, there is no doubt that this is going to affect both the personal and the commercial lines marketplace. Any other nuggets of, is this a big enough event? This seems like it was a non-modeled risk. Is this an event that could cause the market to move a little bit? If this is only a one in a 50 or one in 100, it's kind of seen as this isn't likely to ever recur again. Maybe we'll- When you have enough one in 50 and one in 100 events happening within a decade or less, I think people start to think about return periods maybe a little bit differently, and they start to think about rate accuracy maybe a little bit differently. Clearly, when people think about Nat cat, particularly in Texas, people are not thinking about winter storm and the consequences of that. Do I think that this is going to have a radical impact on the models? Maybe, maybe not. Really don't know the answer to that. What I can tell you is that it's just another turn of the vice for the property market and the insurance industry and reinsurance industry by extension overall, to really remind us bad things happen and a lot of times they're unpredictable and are we charging enough for the unforeseen event that capital is exposed to? Maybe shifting gears to macro a little bit. If you can remind us, I believe there's an asset liability duration kind of mismatch in that you're keeping some powder dry in the investment portfolio. Does the recent kind of changes in the curve and the rise in interest rates, is it intriguing enough to start kind of making some shifts? I think that you've seen the 10-year up to 1.5%, give or take, 50 basis points up. The yield curve is steepening. I think that you have a couple of risks. Number 1, you have the risk of inflation. The $1.9 trillion bill shows you that we have Congress that believes spending money is probably the answer to everything, and spending money is certainly the answer to giving us more inflation. They're going to have to start to invest, to put treasury bills out, treasury financing out longer because they can't afford to keep rolling the money over. You're going to start to see longer treasury issuance, which is going to further steepen the yield curve in our view. We'll have to see how far out they decide to put it, 20, 30, 50 years, we don't know. They can't constantly be rolling or refinancing. The historic recent buyers, China and Japan, have their own agendas, their own objectives. We think it's moving to be more attractive, the risk of inflation and are there buyers who are going to still want to be in that longer-term bond market with that risk? Is the real question. We wouldn't be surprised to see interest rates still higher on the 10-year or more. The question is how far back will that slip? The duration of our liabilities is about three and a half years. The duration of our portfolio is about 3.4 years. Excuse me, 2.4 years. We have as big a spread as we've ever had. We have a few billion dollars of cash, and it's increasing pretty dramatically. We want to have flexibility. We intend to continue that. We've been rewarded, we pay the price. Right now, we're going to continue that view and watch. I think that it puts a lot more pressure on the underwriting side of the business for greater underwriting profits, because short-term money yields very, very low. We'll continue to be cautious, but it's beginning to be a little tempting. If the higher rates move down a little further on the yield curve, we probably would be putting our toe in the water. Okay. Thank you, Bill. Question on reinsurance. The formation of Lifson Re, so kind of third-party capital for those tuning in. Does this open pockets of business that you couldn't write in the past? Maybe you can kind of I don't know if it's public, kind of who you're partnering with, just any color on whether we should be thinking Lifson Re kind of gets you into new business classes, or what kind of impact it could have on the income statement? Mike, we have, as you'd expect, and I think we've discussed with you in the past. We've spent a fair amount of time over the years looking at the various models for how one can partner with alternative capital. We've had opportunities to partner with hedge funds and a whole host of other mechanisms that people have created, and many have been launched. We never really thought it made a lot of sense for us because a lot of them were solely about just fee generation, if you will. Our interest is really partnering with other types of pools of capital with a long-term focus, and perhaps they think about returns in a similar way and have a similar set of values to us. What we have done, what Lifson Re is effectively a vehicle that takes a quota share on every reinsurance placement that we put into the marketplace with more than one participant in the treaty. Lifson Re, in addition to participation by Berkley Corp shareholders, there are 2 partners at this stage. One is a very sophisticated and capable group of people that run a large pension fund, and the other one is a very large and very capable insurance organization that does not have a lot of exposure in the U.S. Both partners are organizations that we've known for some number of years. We have a shared set of values and a shared philosophy around risk-adjusted return, and we are pleased to have both of them as our partners, and we're off to a great start. I think as far as expectations go, we think going forward, will we continue to trade with traditional reinsurance? Absolutely. We have many long-term relationships, which we value those partnerships greatly, and we do not see those going away. At the same time, we did think that there was a role to complement those traditional relationships with an alternative capital model as well. I think it is likely that you will see this organization over time continue to explore other alternatives within the alternative capital space. Interesting. Why don't we switch gears to a topic of insurtech broadly? I know there's maybe some different definitions. Berkley has one of the best track records on the investment side among any insurer out there. I think Berkley also has investments in the insurtech space. You don't have to speak to them, but just maybe more broadly, do you have any opinions on whether there is a big window of opportunity for disruption in the industry, or is it more collaboration? If there is, you clearly are maybe investing in some of these disruptors. It's a very broad question, if you have any thoughts on the hype, a lot of hype that's out there too. Some of these companies are public and have raised a lot of capital, and the more capital they can raise, the more successful, the better chances of success they have. Yeah. I think insurtech, as you suggest, Mike, is a pretty broad space. From our perspective, insurtech applies on multiple different levels. Insurtech can apply to companies that are coming up with new, innovative ways to support the insurance industry, to do what we do, to complement or improve the various activities that are part of our daily activities and support our value proposition to customers. They're insurtech tools, if you will, that are created akin to that, and there are a lot of those, and we certainly are pleased to have the opportunity to participate in many of those, both as a customer as well as an investor. I think undoubtedly, there are things on that front that will pop and fizzle out, and there are other things that will prove to make the industry better. I also think as far as perhaps what you were more specifically referring to, some of the newer companies that are alternative to a traditional carrier, I think some of them will succeed. I think some of them won't. In some ways, it's reminiscent of the dot com era when everything became a dot com and there were some businesses that really found their place and brought great value and disrupted, and there were others that came out with a big bang and they faded pretty quickly. I would tell you that I don't think that the traditional industry is going to be altogether displaced and vaporized. I think insurtech, including some of the ventures that I was referring to a moment ago, I think actually are a really good thing for the industry because they are forcing the industry, forcing the traditional players to take a step back and think about how are they going to adapt, how are they going to change, how are they going to reinvent themselves. I think there are some of the traditional players that are not going to be able to find ways to pivot and reinvent themselves, and it's likely over time the world will pass them by. I think there's a meaningful number of traditional carriers, if you will, that are using this as a catalyst and taking this opportunity to find ways to reinvent themselves. I think some of the businesses that are younger and are viewed as disruptors that have come into the space, I'm not sure if you peel a few layers back, whether it's really as rosy as the PowerPoint slide would suggest. I'm not intimately familiar with all of their businesses. They don't invite me to their staff meetings, so I don't know exactly what's happening in the boiler room. I would tell you, if you look at the acquisition cost of customer, if you look at how the business is scaling, one needs to wonder, what is the economic model going to be long term? In addition to that, I believe that there are examples of some of these newer models that have gone out and raised large sums of money that actually they are looking to possibly backfill, if you will, their business model by using their currency, using their attractive cost of capital to go out and buy traditional models because that's one of the ways that they can actually get to the revenue number that they're looking to achieve. I think that there are a lot of good things going on. I think there are a lot of really skilled people with great ideas. I think there's some very interesting new ventures. I think that many will have a place in the future, and their existence, I think, is really a good thing for the industry in driving us all to up our game. That's helpful. Maybe we can switch gears a little bit to the COVID impact on the business, maybe the first topic we could hit is just Berkley, like many others, has still shown some explicit COVID losses within their numbers. Should we continue to think that there's going to be a small impact if we continue to see event cancellations and just the pandemic persists? Is there an element of Berkley would more front-load and add more IBNR, and we won't be hearing about explicit COVID impacts sometime in 2021? Mike, we think we have been thoughtful and measured about this. Is it possible that we could have a bit more? Yes. Do I think, as we suggested, both in our 10K as well as in our earnings call, do we think that we have gotten our head around it to a great extent, absolutely. Look, there are variables out there. You don't know if insurance departments or governors are going to take a position that was unforeseen as far as coverage goes. You don't know for sure how quickly states in this country and other parts of the world will choose to open things back up. Based on our estimation and based on what we can see happening, could there be a modest amount for us still out there? Yeah, there could be. In the scheme of this organization, the exposure that we see that could still be out there, based on everything we know right now, is quite manageable. On that topic a bit, kind of dovetailing is business interruption litigation. There's been way more wins for the industry than losses. Are there any data points? I think one of the large P&C insurers says that they're seeing a drop in overall suits against them, and they think the industry as well. Is the battle still kind of in the courts, and we just need more data points to play out, or anything you'd like to highlight there? Well, certainly from my perspective, I think that the battle goes on. It would be wrong to say that it's over. At the same time, I think all are recognizing what the, as you suggested earlier, where many of the decisions are coming out of the courts at this stage. As a result of that, while I don't think that everything is done and put to bed, I think one of the reasons why maybe you're seeing a reduction in activity is because the plaintiff bar is always looking to invest time where they think they will get a return on that investment. As they are oftentimes, at this stage, seeing what's coming out of the courts, they are choosing to invest their time in perhaps other ways. I don't mean to suggest that it's done, and again, put to bed. I would suggest to you that the plaintiff bar pays attention, and if they feel like they're hitting a headwind or a wall, they're going to look in a different direction. Okay. I think we have about five minutes left. Any you think potential permanent impacts on how Berkley does business as a result of learnings or clients changes as a result of the pandemic and how things are playing out? You have called out a little bit of benefit to the expense ratio that I at least in my opening remarks hope come back in terms of a little bit more travel. Just curious if you guys have any views on whether you've actually made some tangible process changes that could persist. You can go first. Mike, from my perspective, have we learned? Clearly, we have all learned many things, and quite frankly, we've learned lessons that we wish we perhaps never had to learn. As far as how we operate the business, I think there are clearly many lessons on that front as well. Do I think that we, as an organization, are all of a sudden going to be subscribing to some of the comments that have come out of other organizations where, "Geez, we're operating just fine, so everyone can continue to work from their kitchen table"? No. We are eager to get people back in the office. As you know, we have a decentralized model, and we have teams of people that have great expertise, and we look for them to work truly together as a team. We think there's a real benefit to people being in close proximity of one another. We are eager to get people back in the office. Are there certain things around travel and entertainment that people may be thinking about in a different light? Yeah, I think that's probably true. I think people have gotten far more comfortable with engagement in a digital manner where they would've assumed that they would have to get on an airplane. Do I think that people aren't going to be traveling? No, I think people will be traveling, but there may be thought around how people can engage in a different way and maybe will not necessarily need to have the same level of in-person engagement. That all being said, we are eager to get people back in the office when it is safe for us to do so. I think, Mike, that the kinds of changes that have come about are there'll be less travel. There'll be more, if you will, Zoom meetings. You'll see agents on Zoom that you wouldn't have seen because you wouldn't have gone to see them. There'll be more interaction. I think there'll be opportunities to interact with customers and help deal with complexity better. I think there'll be a lot of those kinds of things. I think all technology has moved ahead a lot. Artificial intelligence has made huge steps. It's going to allow people with skills to start from a higher base and better customized products. There'll be enormous numbers of changes every place, but in the insurance industry, it'll be particularly a good opportunity for us to be more knowledgeable about our customer and deliver products that really fit their needs more precisely, which will be a great thing, especially for the E&S business. Okay, I think we're coming up on the hour. I'm not putting you on the spot. I don't know if, Bill or Rob, there's any final remarks you'd like to make. Otherwise, I'll thank everybody. Yeah, Mike, I would just tuck one in quickly, and you may have some others. Oftentimes, we appreciate you inviting us, and oftentimes, particularly when you're in a cyclical industry like the insurance industry, there's not a lot of new news to talk about. This is actually one of those moments where the insurance industry, in spite of the broader challenges that the world, the country, the economy are facing, the insurance industry is in a not a bad spot. When we see these type of market conditions, fortunately for us, it tends to lend itself particularly well to specialty carriers, particularly those with a meaningful E&S presence. The challenges continue for the economy. We are not insulated from that. We can see that to a certain extent just in our audit premiums and things of that. As this economy opens up, we are very excited about the combination of the improving condition of our insureds along with the rating environment, and we think that the table is set for really some terrific years for the organization. Well, for me, it's a really exciting time. I think that the kind of rate increases we've been able to get, and in spite of social inflation and the potential inflation, real prices for us have gone up. I think that we're well ahead of the curve. I think interest rates are moving up. Asset appreciation is going to give us an excellent investment year this year, and I would expect next. I think that 2021, 2022 are going to be terrific years with really good returns on our capital and great opportunities for us to seize opportunities for people who might not be as well-positioned. Volatility for well-capitalized companies that are prepared is a good thing. Volatility for companies that are not prepared and have taken inappropriate risks can be death. That gives well-capitalized companies good opportunities. Mike, thanks for having us. Thank you for your words of wisdom. We look forward to following the story throughout the year. Thank you, everyone, for tuning in. Have a great rest of your day. Thank you. Bye-bye.

Speaker 1: Great. Thanks, everybody. My name is Michael Zaremski here at Credit Suisse. It's my pleasure to introduce the entire Berkley executive team with us today. We have Rob Berkley, President and Chief Executive Officer, Bill Berkley, Founder and Executive Chairman, Rich Baio, CFO, and Karen Horvath, Director of Investor Relations. I personally hope we can revert back to the Ritz in Miami next year, but we'll see how the world shapes up in terms of corporate versus virtual events in what is hopefully a post-pandemic world in 2022. That's my pitch to everyone to come to Miami next year. Real quickly, we've been recommending shares of Berkley for going on, I think, two years now in terms of outperform rating. It's when we sensed the marketplace was changing a bit and Berkley was likely positioned better than the average insurer to capitalize. Great. great Thanks, everybody. thanks everybody My name is Michael Zaremski here at Credit Suisse. my name is michael zaremski here at credit suisse It's my pleasure to introduce the entire Berkley executive team with us today. it's my pleasure to introduce the entire berkley executive team with us today We have Rob Berkley, President and Chief Executive Officer, Bill Berkley, Founder and Executive Chairman, Rich Baio, CFO, and Karen Horvath, Director of Investor Relations. we have rob berkley president and chief executive officer bill berkley founder and executive chairman rich baio cfo and karen horvath director of investor relations I personally hope we can revert back to the Ritz in Miami next year, but we'll see how the world shapes up in terms of corporate versus virtual events in what is hopefully a post-pandemic world in 2022. i personally hope we can revert back to the ritz in miami next year but we'll see how the world shapes up in terms of corporate versus virtual events in what is hopefully a post-pandemic world in 2022 That's my pitch to everyone to come to Miami next year. that's my pitch to everyone to come to miami next year Real quickly, we've been recommending shares of Berkley for going on, I think, two years now in terms of outperform rating. real quickly we've been recommending shares of berkley for going on i think two years now in terms of outperform rating It's when we sensed the marketplace was changing a bit and Berkley was likely positioned better than the average insurer to capitalize. it's when we sensed the marketplace was changing a bit and berkley was likely positioned better than the average insurer to capitalize I think some investors still push back that the stock's a bit rich valuation-wise. I sometimes retort by pointing out that Berkley's compounded book value plus dividends at a low double-digit clip over the past decade, and the volatility of the stocks of that return too, has been more consistent than the peer average to boot. We're also in a good spot, I still think, in the P&C cycle. Maybe we'll start out talking about the P&C cycle. We'll keep the first question kind of broad. Bill and Rob, would love your insights on the P&C cycle we're experiencing right now. Do you think the market is becoming less fragile, and I'd say we're in the second half of the game, or are you still seeing plenty of pockets for opportunities and runway? I know there's different pieces of the business so I'll interject later. I think some investors still push back that the stock's a bit rich valuation-wise. i think some investors still push back that the stock's a bit rich valuation-wise I sometimes retort by pointing out that Berkley's compounded book value plus dividends at a low double-digit clip over the past decade, and the volatility of the stocks of that return too, has been more consistent than the peer average to boot. i sometimes retort by pointing out that berkley's compounded book value plus dividends at a low double-digit clip over the past decade and the volatility of the stocks of that return too has been more consistent than the peer average to boot We're also in a good spot, I still think, in the P&C cycle. we're also in a good spot i still think in the p&c cycle Maybe we'll start out talking about the P&C cycle. maybe we'll start out talking about the p&c cycle We'll keep the first question kind of broad. we'll keep the first question kind of broad Bill and Rob, would love your insights on the P&C cycle we're experiencing right now. bill and rob would love your insights on the p&c cycle we're experiencing right now Do you think the market is becoming less fragile, and I'd say we're in the second half of the game, or are you still seeing plenty of pockets for opportunities and runway? do you think the market is becoming less fragile and i'd say we're in the second half of the game or are you still seeing plenty of pockets for opportunities and runway I know there's different pieces of the business so I'll interject later. i know there's different pieces of the business so i'll interject later Maybe we'll talk about E&S versus other lines. Maybe we'll talk about E&S versus other lines. maybe we'll talk about e&s versus other lines

Speaker 3: Hi, Rob. I think you have to really start with the historic nature of measuring what's going on in the P&C business. It's not just where we are, but it's understanding where you are. Much of the P&C pricing reserving is all looking through the rearview mirror. Therefore, how profitable is the business really right now? How adequate or inadequate are reserves at any point in time? I always tell people my worst mistake in the history of me being in business for more than 50 years was 1986 and 1987, when, in fact, I cut back on the business we wrote. We stopped growing so fast because I didn't realize how profitable the business was in 1986 and 1987. We stopped our growth in 1988. It was a terrible mistake. Hi, Rob. hi rob I think you have to really start with the historic nature of measuring what's going on in the P&C business. i think you have to really start with the historic nature of measuring what's going on in the p&c business It's not just where we are, but it's understanding where you are. it's not just where we are but it's understanding where you are Much of the P&C pricing reserving is all looking through the rearview mirror. much of the p&c pricing reserving is all looking through the rearview mirror Therefore, how profitable is the business really right now? therefore how profitable is the business really right now How adequate or inadequate are reserves at any point in time? how adequate or inadequate are reserves at any point in time I always tell people my worst mistake in the history of me being in business for more than 50 years was 1986 and 1987, when, in fact, I cut back on the business we wrote. i always tell people my worst mistake in the history of me being in business for more than 50 years was 1986 and 1987 when in fact i cut back on the business we wrote We stopped growing so fast because I didn't realize how profitable the business was in 1986 and 1987. we stopped growing so fast because i didn't realize how profitable the business was in 1986 and 1987 We stopped our growth in 1988. we stopped our growth in 1988 It was a terrible mistake. it was a terrible mistake We missed the opportunity probably in 1988, 1989, and 1990 for maybe as much as $1 billion in cumulative business and at huge profitability. We reported initially in 1986, sort of a loss ratio in the high 40s, and it ended up being in the high 20s. It's all an estimate. Where you are and what you do has to do with the estimates you make. That takes some common sense, extrapolating social inflation, extrapolating back a few years where you were, and price changes. We're particularly optimistic now because we think we have moved ahead of that curve with our pricing and where we've gone with that. My son hopefully is not going to make the mistakes I made. He's learned. I'm going to let him talk about what we're doing now. We missed the opportunity probably in 1988, 1989, and 1990 for maybe as much as $1 billion in cumulative business and at huge profitability. we missed the opportunity probably in 1988 1989 and 1990 for maybe as much as $1 billion in cumulative business and at huge profitability We reported initially in 1986, sort of a loss ratio in the high 40s, and it ended up being in the high 20s. we reported initially in 1986 sort of a loss ratio in the high 40s and it ended up being in the high 20s It's all an estimate. it's all an estimate Where you are and what you do has to do with the estimates you make. where you are and what you do has to do with the estimates you make That takes some common sense, extrapolating social inflation, extrapolating back a few years where you were, and price changes. that takes some common sense extrapolating social inflation extrapolating back a few years where you were and price changes We're particularly optimistic now because we think we have moved ahead of that curve with our pricing and where we've gone with that. we're particularly optimistic now because we think we have moved ahead of that curve with our pricing and where we've gone with that My son hopefully is not going to make the mistakes I made. my son hopefully is not going to make the mistakes i made He's learned. he's learned I'm going to let him talk about what we're doing now. i'm going to let him talk about what we're doing now

Speaker 2: Thank you. I'm sure I'll find new and different mistakes to make and hopefully can avoid repeating ones that we have made in the past. Mike, I would just maybe draw people's attention to a couple of things. We have a tendency to think about cycles, maybe almost to a fault, that one is a mirror image of others from the past. The reality is, while there are some really important common threads as to what drive a cycle, one of the things that is important to recognize, in my opinion, when thinking about the marketplace today compared to where it was in 1986, if you like, or 2001, 2002, is we saw in 1986 and 2002, really a firming to a great extent across the commercial lines P&C market, almost in lockstep. Thank you. thank you I'm sure I'll find new and different mistakes to make and hopefully can avoid repeating ones that we have made in the past. i'm sure i'll find new and different mistakes to make and hopefully can avoid repeating ones that we have made in the past Mike, I would just maybe draw people's attention to a couple of things. mike i would just maybe draw people's attention to a couple of things We have a tendency to think about cycles, maybe almost to a fault, that one is a mirror image of others from the past. we have a tendency to think about cycles maybe almost to a fault that one is a mirror image of others from the past The reality is, while there are some really important common threads as to what drive a cycle, one of the things that is important to recognize, in my opinion, when thinking about the marketplace today compared to where it was in 1986, if you like, or 2001, 2002, is we saw in 1986 and 2002, really a firming to a great extent across the commercial lines P&C market, almost in lockstep. the reality is while there are some really important common threads as to what drive a cycle one of the things that is important to recognize in my opinion when thinking about the marketplace today compared to where it was in 1986 if you like or 2001 2002 is we saw in 1986 and 2002 really a firming to a great extent across the commercial lines p&c market almost in lockstep Today, we certainly are seeing many product lines in some stage of firming, and as we had commented recently, our fourth quarter call, that with the exception of workers' compensation, every one of our product lines we thought we were getting rate in excess of loss cost trend at this stage. Different product lines are in a different stage of firming. Workers' compensation being an extreme example where we believe that's in the early stages of bottoming out. On the other hand, you see some of the excess liability lines having been through and continuing to be in the throes of very meaningful firming. When we think about the marketplace, certainly there are some common threads between what we're seeing today and past hardening markets. At the same time, while it is widespread, we are not seeing the product lines marching in perfect lockstep at this stage. Today, we certainly are seeing many product lines in some stage of firming, and as we had commented recently, our fourth quarter call, that with the exception of workers' compensation, every one of our product lines we thought we were getting rate in excess of loss cost trend at this stage. today we certainly are seeing many product lines in some stage of firming and as we had commented recently our fourth quarter call that with the exception of workers' compensation every one of our product lines we thought we were getting rate in excess of loss cost trend at this stage Different product lines are in a different stage of firming. different product lines are in a different stage of firming Workers' compensation being an extreme example where we believe that's in the early stages of bottoming out. workers' compensation being an extreme example where we believe that's in the early stages of bottoming out On the other hand, you see some of the excess liability lines having been through and continuing to be in the throes of very meaningful firming. on the other hand you see some of the excess liability lines having been through and continuing to be in the throes of very meaningful firming When we think about the marketplace, certainly there are some common threads between what we're seeing today and past hardening markets. when we think about the marketplace certainly there are some common threads between what we're seeing today and past hardening markets At the same time, while it is widespread, we are not seeing the product lines marching in perfect lockstep at this stage. at the same time while it is widespread we are not seeing the product lines marching in perfect lockstep at this stage We do see that the momentum is likely to continue to build from here for some period of time. We do see that the momentum is likely to continue to build from here for some period of time. we do see that the momentum is likely to continue to build from here for some period of time

Speaker 1: Would you call out certain areas of the business that you feel most optimistic about? Would it be the broader excess and surplus lines marketplace or pieces of E&S, or would it be commercial auto, or Honestly, workers' comp pricing or profitability seems still excellent, just, it's going to be less excellent, most likely. Would you call out certain areas of the business that you feel most optimistic about? would you call out certain areas of the business that you feel most optimistic about Would it be the broader excess and surplus lines marketplace or pieces of E&S, or would it be commercial auto, or Honestly, workers' comp pricing or profitability seems still excellent, just, it's going to be less excellent, most likely. would it be the broader excess and surplus lines marketplace or pieces of e&s or would it be commercial auto or honestly workers' comp pricing or profitability seems still excellent just it's going to be less excellent most likely

Speaker 2: Well, I think a couple of things there. First off, the specialty lines and the E&S market would be an extreme example under the umbrella of specialty lines, tend to benefit disproportionately during a hardening market. Because as that standard market resets its appetite and business is falling outside of their strike zone, and it makes its way into the specialty market or in particular the E&S market, there is opportunity for meaningful shift in the rate you charge, as well as a notable shift in terms and conditions. Workers' compensation, I think one needs to be very mindful of that and make sure that you draw an appropriate distinction between reported calendar year results versus what you believe the policy year is running at. In addition to that, it is important from our perspective that people appropriately dissect the loss ratio and think about frequency versus severity. Well, I think a couple of things there. well i think a couple of things there First off, the specialty lines and the E&S market would be an extreme example under the umbrella of specialty lines, tend to benefit disproportionately during a hardening market. first off the specialty lines and the e&s market would be an extreme example under the umbrella of specialty lines tend to benefit disproportionately during a hardening market Because as that standard market resets its appetite and business is falling outside of their strike zone, and it makes its way into the specialty market or in particular the E&S market, there is opportunity for meaningful shift in the rate you charge, as well as a notable shift in terms and conditions. because as that standard market resets its appetite and business is falling outside of their strike zone and it makes its way into the specialty market or in particular the e&s market there is opportunity for meaningful shift in the rate you charge as well as a notable shift in terms and conditions Workers' compensation, I think one needs to be very mindful of that and make sure that you draw an appropriate distinction between reported calendar year results versus what you believe the policy year is running at. workers' compensation i think one needs to be very mindful of that and make sure that you draw an appropriate distinction between reported calendar year results versus what you believe the policy year is running at In addition to that, it is important from our perspective that people appropriately dissect the loss ratio and think about frequency versus severity. in addition to that it is important from our perspective that people appropriately dissect the loss ratio and think about frequency versus severity There have been many challenges that society has faced as a result of COVID-19, and the insurance industry is certainly part of that and has faced its challenges. One of the benefits that has occurred has come about as a result of frequency of loss, and that is clearly the case in the workers' comp line. Severity trend has continued to move up, and I would at an increasing rate. One needs to be careful that the benefit, if you will, to the loss ratio or loss trend that is coming through as a result of temporary reduction in frequency due to COVID-19, that that not overshadow where loss cost trends are going, because in the short run, that reduction in frequency is subsidizing severity. There have been many challenges that society has faced as a result of COVID-19, and the insurance industry is certainly part of that and has faced its challenges. there have been many challenges that society has faced as a result of covid-19 and the insurance industry is certainly part of that and has faced its challenges One of the benefits that has occurred has come about as a result of frequency of loss, and that is clearly the case in the workers' comp line. one of the benefits that has occurred has come about as a result of frequency of loss and that is clearly the case in the workers' comp line Severity trend has continued to move up, and I would at an increasing rate. severity trend has continued to move up and i would at an increasing rate One needs to be careful that the benefit, if you will, to the loss ratio or loss trend that is coming through as a result of temporary reduction in frequency due to COVID-19, that that not overshadow where loss cost trends are going, because in the short run, that reduction in frequency is subsidizing severity. one needs to be careful that the benefit if you will to the loss ratio or loss trend that is coming through as a result of temporary reduction in frequency due to covid-19 that that not overshadow where loss cost trends are going because in the short run that reduction in frequency is subsidizing severity I would be mindful of not underestimating the challenges that Workers' compensation could be facing over time as, again, the economy gets back on its feet, people are back to work more and more, and frequency returns to a more traditional norm. I would be mindful of not underestimating the challenges that Workers' compensation could be facing over time as, again, the economy gets back on its feet, people are back to work more and more, and frequency returns to a more traditional norm. i would be mindful of not underestimating the challenges that workers' compensation could be facing over time as again the economy gets back on its feet people are back to work more and more and frequency returns to a more traditional norm

Speaker 1: That's helpful. Maybe we could talk about reserve processes, and this might dovetail on the cycle, but I guess one of the things that we sometimes get asked by investors is, why does Berkley tend to show a low absolute level of reserve redundancy? Is it reflective at anything maybe where we are in the cycle or maybe just the reserving process as well? Any comments, Bill or Rob or Rich? That's helpful. that's helpful Maybe we could talk about reserve processes, and this might dovetail on the cycle, but I guess one of the things that we sometimes get asked by investors is, why does Berkley tend to show a low absolute level of reserve redundancy? maybe we could talk about reserve processes and this might dovetail on the cycle but i guess one of the things that we sometimes get asked by investors is why does berkley tend to show a low absolute level of reserve redundancy Is it reflective at anything maybe where we are in the cycle or maybe just the reserving process as well? is it reflective at anything maybe where we are in the cycle or maybe just the reserving process as well Any comments, Bill or Rob or Rich? any comments bill or rob or rich

Speaker 2: I would just offer the comment that we look at our reserves both at a macro level as well as at a very granular level every 90 days. We have peer reviews that go on within the group. We have outside resources that are reviewing what we're doing as well, and we feel quite comfortable where things stand. This has been a period of time, as Mike, we have discussed in the past, where we've seen the realities of social inflation rear its head in a very real manner from our perspective and being appropriately measured in the loss picks that you carry is something that we think is very sensible at this stage. Do I think that you are going to see, just to maybe extrapolate a little bit, the benefits of the rate increases that are now starting to earn through have an impact on our loss ratio? I would just offer the comment that we look at our reserves both at a macro level as well as at a very granular level every 90 days. i would just offer the comment that we look at our reserves both at a macro level as well as at a very granular level every 90 days We have peer reviews that go on within the group. we have peer reviews that go on within the group We have outside resources that are reviewing what we're doing as well, and we feel quite comfortable where things stand. we have outside resources that are reviewing what we're doing as well and we feel quite comfortable where things stand This has been a period of time, as Mike, we have discussed in the past, where we've seen the realities of social inflation rear its head in a very real manner from our perspective and being appropriately measured in the loss picks that you carry is something that we think is very sensible at this stage. this has been a period of time as mike we have discussed in the past where we've seen the realities of social inflation rear its head in a very real manner from our perspective and being appropriately measured in the loss picks that you carry is something that we think is very sensible at this stage Do I think that you are going to see, just to maybe extrapolate a little bit, the benefits of the rate increases that are now starting to earn through have an impact on our loss ratio? do i think that you are going to see just to maybe extrapolate a little bit the benefits of the rate increases that are now starting to earn through have an impact on our loss ratio Clearly, we have been getting rate that is outpacing, we believe, loss cost trend, and that is starting to come through on an earned basis, and we're feeling pretty good about that. As far as the reserves go, we feel like we are in a good place. We are going to be thoughtful and measured about it and not declare victory prematurely. At the same time, we are not naive to the challenges that are coming as a result of social inflation. I don't know, you may have some other thoughts to add. Clearly, we have been getting rate that is outpacing, we believe, loss cost trend, and that is starting to come through on an earned basis, and we're feeling pretty good about that. clearly we have been getting rate that is outpacing we believe loss cost trend and that is starting to come through on an earned basis and we're feeling pretty good about that As far as the reserves go, we feel like we are in a good place. as far as the reserves go we feel like we are in a good place We are going to be thoughtful and measured about it and not declare victory prematurely. we are going to be thoughtful and measured about it and not declare victory prematurely At the same time, we are not naive to the challenges that are coming as a result of social inflation. at the same time we are not naive to the challenges that are coming as a result of social inflation I don't know, you may have some other thoughts to add. i don't know you may have some other thoughts to add

Speaker 3: No, I think one of the things people have to understand is getting reserves right also talks about pricing right. People who put too much up in reserves and have these redundancies inherently also get their pricing wrong. Focusing on trying to get your reserves right really means you're in more control of your business. Our goal is trying to get them right, and we don't think we've succeeded if we have big redundancies, just like we don't think we've succeeded if we have deficiencies. It's really important to focus on getting it right to let you know how to price your business going forward. I don't know how, if somebody has big redundancies, they're really able to determine what their pricing should be going forward. We may have a different goal than some other people. No, I think one of the things people have to understand is getting reserves right also talks about pricing right. no i think one of the things people have to understand is getting reserves right also talks about pricing right People who put too much up in reserves and have these redundancies inherently also get their pricing wrong. people who put too much up in reserves and have these redundancies inherently also get their pricing wrong Focusing on trying to get your reserves right really means you're in more control of your business. focusing on trying to get your reserves right really means you're in more control of your business Our goal is trying to get them right, and we don't think we've succeeded if we have big redundancies, just like we don't think we've succeeded if we have deficiencies. our goal is trying to get them right and we don't think we've succeeded if we have big redundancies just like we don't think we've succeeded if we have deficiencies It's really important to focus on getting it right to let you know how to price your business going forward. it's really important to focus on getting it right to let you know how to price your business going forward I don't know how, if somebody has big redundancies, they're really able to determine what their pricing should be going forward. i don't know how if somebody has big redundancies they're really able to determine what their pricing should be going forward We may have a different goal than some other people. we may have a different goal than some other people

Speaker 1: That's helpful. I'll probably ask some companies that have a lot of redundancies about your insights, Bill. I guess, I know it's very early stages. I'm going to shift gears to Texas a little bit. I'd say, a couple things I think have caused people to ask questions is, some of the estimates there have said, the event could be up to 50% commercial lines. I know you guys don't have a lot of personal lines, or correct me if I'm wrong. Would you agree that there's a lot of commercial losses in Texas? If you have any views on the ranges on the loss levels are very wide. I know it'll take a time to unfold. Any comments? That's helpful. that's helpful I'll probably ask some companies that have a lot of redundancies about your insights, Bill. i'll probably ask some companies that have a lot of redundancies about your insights bill I guess, I know it's very early stages. i guess i know it's very early stages I'm going to shift gears to Texas a little bit. i'm going to shift gears to texas a little bit I'd say, a couple things I think have caused people to ask questions is, some of the estimates there have said, the event could be up to 50% commercial lines. i'd say a couple things i think have caused people to ask questions is some of the estimates there have said the event could be up to 50% commercial lines I know you guys don't have a lot of personal lines, or correct me if I'm wrong. i know you guys don't have a lot of personal lines or correct me if i'm wrong Would you agree that there's a lot of commercial losses in Texas? would you agree that there's a lot of commercial losses in texas If you have any views on the ranges on the loss levels are very wide. if you have any views on the ranges on the loss levels are very wide I know it'll take a time to unfold. i know it'll take a time to unfold Any comments? any comments

Speaker 2: Yeah, from my perspective, this is going to be an event that impacts both personal and commercial lines. I think that to your point a few moments ago, Mike, it's pretty early to try and cuff it or reach a conclusion as to where this is going to come out. This is going to be a big event for the industry, and it is going to affect both the personal line space as well as the commercial line space, without a doubt. Pipes froze, pipes broke, and a lot of water came out, amongst other issues. We'll have to see how it plays out. Obviously, there's a lot of discussion as to what type of recourse there may be towards the power companies and the associations that they're affiliated with or that oversee them. We'll see how that plays out. Yeah, from my perspective, this is going to be an event that impacts both personal and commercial lines. yeah from my perspective this is going to be an event that impacts both personal and commercial lines I think that to your point a few moments ago, Mike, it's pretty early to try and cuff it or reach a conclusion as to where this is going to come out. i think that to your point a few moments ago mike it's pretty early to try and cuff it or reach a conclusion as to where this is going to come out This is going to be a big event for the industry, and it is going to affect both the personal line space as well as the commercial line space, without a doubt. this is going to be a big event for the industry and it is going to affect both the personal line space as well as the commercial line space without a doubt Pipes froze, pipes broke, and a lot of water came out, amongst other issues. pipes froze pipes broke and a lot of water came out amongst other issues We'll have to see how it plays out. we'll have to see how it plays out Obviously, there's a lot of discussion as to what type of recourse there may be towards the power companies and the associations that they're affiliated with or that oversee them. obviously there's a lot of discussion as to what type of recourse there may be towards the power companies and the associations that they're affiliated with or that oversee them We'll see how that plays out. we'll see how that plays out Is it going to be similar to what we saw happen in California with the wildfires where the utility had exposure or not? Regardless, as far as claims activity, there is no doubt that this is going to affect both the personal and the commercial lines marketplace. Is it going to be similar to what we saw happen in California with the wildfires where the utility had exposure or not? is it going to be similar to what we saw happen in california with the wildfires where the utility had exposure or not Regardless, as far as claims activity, there is no doubt that this is going to affect both the personal and the commercial lines marketplace. regardless as far as claims activity there is no doubt that this is going to affect both the personal and the commercial lines marketplace

Speaker 1: Any other nuggets of, is this a big enough event? This seems like it was a non-modeled risk. Is this an event that could cause the market to move a little bit? If this is only a one in a 50 or one in 100, it's kind of seen as this isn't likely to ever recur again. Maybe we'll- Any other nuggets of, is this a big enough event? any other nuggets of is this a big enough event This seems like it was a non-modeled risk. this seems like it was a non-modeled risk Is this an event that could cause the market to move a little bit? is this an event that could cause the market to move a little bit If this is only a one in a 50 or one in 100, it's kind of seen as this isn't likely to ever recur again. if this is only a one in a 50 or one in 100 it's kind of seen as this isn't likely to ever recur again Maybe we'll- maybe we'll-

Speaker 2: When you have enough one in 50 and one in 100 events happening within a decade or less, I think people start to think about return periods maybe a little bit differently, and they start to think about rate accuracy maybe a little bit differently. Clearly, when people think about Nat cat, particularly in Texas, people are not thinking about winter storm and the consequences of that. Do I think that this is going to have a radical impact on the models? Maybe, maybe not. Really don't know the answer to that. What I can tell you is that it's just another turn of the vice for the property market and the insurance industry and reinsurance industry by extension overall, to really remind us bad things happen and a lot of times they're unpredictable and are we charging enough for the unforeseen event that capital is exposed to? When you have enough one in 50 and one in 100 events happening within a decade or less, I think people start to think about return periods maybe a little bit differently, and they start to think about rate accuracy maybe a little bit differently. when you have enough one in 50 and one in 100 events happening within a decade or less i think people start to think about return periods maybe a little bit differently and they start to think about rate accuracy maybe a little bit differently Clearly, when people think about Nat cat, particularly in Texas, people are not thinking about winter storm and the consequences of that. clearly when people think about nat cat particularly in texas people are not thinking about winter storm and the consequences of that Do I think that this is going to have a radical impact on the models? do i think that this is going to have a radical impact on the models Maybe, maybe not. maybe maybe not Really don't know the answer to that. really don't know the answer to that What I can tell you is that it's just another turn of the vice for the property market and the insurance industry and reinsurance industry by extension overall, to really remind us bad things happen and a lot of times they're unpredictable and are we charging enough for the unforeseen event that capital is exposed to? what i can tell you is that it's just another turn of the vice for the property market and the insurance industry and reinsurance industry by extension overall to really remind us bad things happen and a lot of times they're unpredictable and are we charging enough for the unforeseen event that capital is exposed to

Speaker 1: Maybe shifting gears to macro a little bit. If you can remind us, I believe there's an asset liability duration kind of mismatch in that you're keeping some powder dry in the investment portfolio. Does the recent kind of changes in the curve and the rise in interest rates, is it intriguing enough to start kind of making some shifts? Maybe shifting gears to macro a little bit. maybe shifting gears to macro a little bit If you can remind us, I believe there's an asset liability duration kind of mismatch in that you're keeping some powder dry in the investment portfolio. if you can remind us i believe there's an asset liability duration kind of mismatch in that you're keeping some powder dry in the investment portfolio Does the recent kind of changes in the curve and the rise in interest rates, is it intriguing enough to start kind of making some shifts? does the recent kind of changes in the curve and the rise in interest rates is it intriguing enough to start kind of making some shifts

Speaker 3: I think that you've seen the 10-year up to 1.5%, give or take, 50 basis points up. The yield curve is steepening. I think that you have a couple of risks. Number 1, you have the risk of inflation. The $1.9 trillion bill shows you that we have Congress that believes spending money is probably the answer to everything, and spending money is certainly the answer to giving us more inflation. They're going to have to start to invest, to put treasury bills out, treasury financing out longer because they can't afford to keep rolling the money over. You're going to start to see longer treasury issuance, which is going to further steepen the yield curve in our view. We'll have to see how far out they decide to put it, 20, 30, 50 years, we don't know. They can't constantly be rolling or refinancing. I think that you've seen the 10-year up to 1.5%, give or take, 50 basis points up. i think that you've seen the 10-year up to 1.5% give or take 50 basis points up The yield curve is steepening. the yield curve is steepening I think that you have a couple of risks. i think that you have a couple of risks Number 1, you have the risk of inflation. number 1 you have the risk of inflation The $1.9 trillion bill shows you that we have Congress that believes spending money is probably the answer to everything, and spending money is certainly the answer to giving us more inflation. the $1.9 trillion bill shows you that we have congress that believes spending money is probably the answer to everything and spending money is certainly the answer to giving us more inflation They're going to have to start to invest, to put treasury bills out, treasury financing out longer because they can't afford to keep rolling the money over. they're going to have to start to invest to put treasury bills out treasury financing out longer because they can't afford to keep rolling the money over You're going to start to see longer treasury issuance, which is going to further steepen the yield curve in our view. you're going to start to see longer treasury issuance which is going to further steepen the yield curve in our view We'll have to see how far out they decide to put it, 20, 30, 50 years, we don't know. we'll have to see how far out they decide to put it 20 30 50 years we don't know They can't constantly be rolling or refinancing. they can't constantly be rolling or refinancing The historic recent buyers, China and Japan, have their own agendas, their own objectives. We think it's moving to be more attractive, the risk of inflation and are there buyers who are going to still want to be in that longer-term bond market with that risk? Is the real question. We wouldn't be surprised to see interest rates still higher on the 10-year or more. The question is how far back will that slip? The duration of our liabilities is about three and a half years. The duration of our portfolio is about 3.4 years. Excuse me, 2.4 years. We have as big a spread as we've ever had. We have a few billion dollars of cash, and it's increasing pretty dramatically. We want to have flexibility. We intend to continue that. We've been rewarded, we pay the price. The historic recent buyers, China and Japan, have their own agendas, their own objectives. the historic recent buyers china and japan have their own agendas their own objectives We think it's moving to be more attractive, the risk of inflation and are there buyers who are going to still want to be in that longer-term bond market with that risk? we think it's moving to be more attractive the risk of inflation and are there buyers who are going to still want to be in that longer-term bond market with that risk Is the real question. is the real question We wouldn't be surprised to see interest rates still higher on the 10-year or more. we wouldn't be surprised to see interest rates still higher on the 10-year or more The question is how far back will that slip? the question is how far back will that slip The duration of our liabilities is about three and a half years. the duration of our liabilities is about three and a half years The duration of our portfolio is about 3.4 years. the duration of our portfolio is about 3.4 years Excuse me, 2.4 years. excuse me 2.4 years We have as big a spread as we've ever had. we have as big a spread as we've ever had We have a few billion dollars of cash, and it's increasing pretty dramatically. we have a few billion dollars of cash and it's increasing pretty dramatically We want to have flexibility. we want to have flexibility We intend to continue that. we intend to continue that We've been rewarded, we pay the price. we've been rewarded we pay the price Right now, we're going to continue that view and watch. I think that it puts a lot more pressure on the underwriting side of the business for greater underwriting profits, because short-term money yields very, very low. We'll continue to be cautious, but it's beginning to be a little tempting. If the higher rates move down a little further on the yield curve, we probably would be putting our toe in the water. Right now, we're going to continue that view and watch. right now we're going to continue that view and watch I think that it puts a lot more pressure on the underwriting side of the business for greater underwriting profits, because short-term money yields very, very low. i think that it puts a lot more pressure on the underwriting side of the business for greater underwriting profits because short-term money yields very very low We'll continue to be cautious, but it's beginning to be a little tempting. we'll continue to be cautious but it's beginning to be a little tempting If the higher rates move down a little further on the yield curve, we probably would be putting our toe in the water. if the higher rates move down a little further on the yield curve we probably would be putting our toe in the water

Speaker 1: Okay. Thank you, Bill. Question on reinsurance. The formation of Lifson Re, so kind of third-party capital for those tuning in. Does this open pockets of business that you couldn't write in the past? Maybe you can kind of I don't know if it's public, kind of who you're partnering with, just any color on whether we should be thinking Lifson Re kind of gets you into new business classes, or what kind of impact it could have on the income statement? Okay. okay Thank you, Bill. thank you bill Question on reinsurance. question on reinsurance The formation of Lifson Re, so kind of third-party capital for those tuning in. the formation of lifson re so kind of third-party capital for those tuning in Does this open pockets of business that you couldn't write in the past? does this open pockets of business that you couldn't write in the past Maybe you can kind of I don't know if it's public, kind of who you're partnering with, just any color on whether we should be thinking Lifson Re kind of gets you into new business classes, or what kind of impact it could have on the income statement? maybe you can kind of i don't know if it's public kind of who you're partnering with just any color on whether we should be thinking lifson re kind of gets you into new business classes or what kind of impact it could have on the income statement

Speaker 2: Mike, we have, as you'd expect, and I think we've discussed with you in the past. We've spent a fair amount of time over the years looking at the various models for how one can partner with alternative capital. We've had opportunities to partner with hedge funds and a whole host of other mechanisms that people have created, and many have been launched. We never really thought it made a lot of sense for us because a lot of them were solely about just fee generation, if you will. Our interest is really partnering with other types of pools of capital with a long-term focus, and perhaps they think about returns in a similar way and have a similar set of values to us. Mike, we have, as you'd expect, and I think we've discussed with you in the past. mike we have as you'd expect and i think we've discussed with you in the past We've spent a fair amount of time over the years looking at the various models for how one can partner with alternative capital. we've spent a fair amount of time over the years looking at the various models for how one can partner with alternative capital We've had opportunities to partner with hedge funds and a whole host of other mechanisms that people have created, and many have been launched. we've had opportunities to partner with hedge funds and a whole host of other mechanisms that people have created and many have been launched We never really thought it made a lot of sense for us because a lot of them were solely about just fee generation, if you will. we never really thought it made a lot of sense for us because a lot of them were solely about just fee generation if you will Our interest is really partnering with other types of pools of capital with a long-term focus, and perhaps they think about returns in a similar way and have a similar set of values to us. our interest is really partnering with other types of pools of capital with a long-term focus and perhaps they think about returns in a similar way and have a similar set of values to us What we have done, what Lifson Re is effectively a vehicle that takes a quota share on every reinsurance placement that we put into the marketplace with more than one participant in the treaty. Lifson Re, in addition to participation by Berkley Corp shareholders, there are 2 partners at this stage. One is a very sophisticated and capable group of people that run a large pension fund, and the other one is a very large and very capable insurance organization that does not have a lot of exposure in the U.S. Both partners are organizations that we've known for some number of years. We have a shared set of values and a shared philosophy around risk-adjusted return, and we are pleased to have both of them as our partners, and we're off to a great start. What we have done, what Lifson Re is effectively a vehicle that takes a quota share on every reinsurance placement that we put into the marketplace with more than one participant in the treaty. what we have done what lifson re is effectively a vehicle that takes a quota share on every reinsurance placement that we put into the marketplace with more than one participant in the treaty Lifson Re, in addition to participation by Berkley Corp shareholders, there are 2 partners at this stage. lifson re in addition to participation by berkley corp shareholders there are 2 partners at this stage One is a very sophisticated and capable group of people that run a large pension fund, and the other one is a very large and very capable insurance organization that does not have a lot of exposure in the U.S. one is a very sophisticated and capable group of people that run a large pension fund and the other one is a very large and very capable insurance organization that does not have a lot of exposure in the u.s Both partners are organizations that we've known for some number of years. both partners are organizations that we've known for some number of years We have a shared set of values and a shared philosophy around risk-adjusted return, and we are pleased to have both of them as our partners, and we're off to a great start. we have a shared set of values and a shared philosophy around risk-adjusted return and we are pleased to have both of them as our partners and we're off to a great start I think as far as expectations go, we think going forward, will we continue to trade with traditional reinsurance? Absolutely. We have many long-term relationships, which we value those partnerships greatly, and we do not see those going away. At the same time, we did think that there was a role to complement those traditional relationships with an alternative capital model as well. I think it is likely that you will see this organization over time continue to explore other alternatives within the alternative capital space. I think as far as expectations go, we think going forward, will we continue to trade with traditional reinsurance? i think as far as expectations go we think going forward will we continue to trade with traditional reinsurance Absolutely. absolutely We have many long-term relationships, which we value those partnerships greatly, and we do not see those going away. we have many long-term relationships which we value those partnerships greatly and we do not see those going away At the same time, we did think that there was a role to complement those traditional relationships with an alternative capital model as well. at the same time we did think that there was a role to complement those traditional relationships with an alternative capital model as well I think it is likely that you will see this organization over time continue to explore other alternatives within the alternative capital space. i think it is likely that you will see this organization over time continue to explore other alternatives within the alternative capital space

Speaker 1: Interesting. Why don't we switch gears to a topic of insurtech broadly? I know there's maybe some different definitions. Berkley has one of the best track records on the investment side among any insurer out there. I think Berkley also has investments in the insurtech space. You don't have to speak to them, but just maybe more broadly, do you have any opinions on whether there is a big window of opportunity for disruption in the industry, or is it more collaboration? If there is, you clearly are maybe investing in some of these disruptors. It's a very broad question, if you have any thoughts on the hype, a lot of hype that's out there too. Some of these companies are public and have raised a lot of capital, and the more capital they can raise, the more successful, the better chances of success they have. Interesting. interesting Why don't we switch gears to a topic of insurtech broadly? why don't we switch gears to a topic of insurtech broadly I know there's maybe some different definitions. i know there's maybe some different definitions Berkley has one of the best track records on the investment side among any insurer out there. berkley has one of the best track records on the investment side among any insurer out there I think Berkley also has investments in the insurtech space. i think berkley also has investments in the insurtech space You don't have to speak to them, but just maybe more broadly, do you have any opinions on whether there is a big window of opportunity for disruption in the industry, or is it more collaboration? you don't have to speak to them but just maybe more broadly do you have any opinions on whether there is a big window of opportunity for disruption in the industry or is it more collaboration If there is, you clearly are maybe investing in some of these disruptors. if there is you clearly are maybe investing in some of these disruptors It's a very broad question, if you have any thoughts on the hype, a lot of hype that's out there too. it's a very broad question if you have any thoughts on the hype a lot of hype that's out there too Some of these companies are public and have raised a lot of capital, and the more capital they can raise, the more successful, the better chances of success they have. some of these companies are public and have raised a lot of capital and the more capital they can raise the more successful the better chances of success they have

Speaker 2: Yeah. I think insurtech, as you suggest, Mike, is a pretty broad space. From our perspective, insurtech applies on multiple different levels. Insurtech can apply to companies that are coming up with new, innovative ways to support the insurance industry, to do what we do, to complement or improve the various activities that are part of our daily activities and support our value proposition to customers. They're insurtech tools, if you will, that are created akin to that, and there are a lot of those, and we certainly are pleased to have the opportunity to participate in many of those, both as a customer as well as an investor. I think undoubtedly, there are things on that front that will pop and fizzle out, and there are other things that will prove to make the industry better. Yeah. yeah I think insurtech, as you suggest, Mike, is a pretty broad space. i think insurtech as you suggest mike is a pretty broad space From our perspective, insurtech applies on multiple different levels. from our perspective insurtech applies on multiple different levels Insurtech can apply to companies that are coming up with new, innovative ways to support the insurance industry, to do what we do, to complement or improve the various activities that are part of our daily activities and support our value proposition to customers. insurtech can apply to companies that are coming up with new innovative ways to support the insurance industry to do what we do to complement or improve the various activities that are part of our daily activities and support our value proposition to customers They're insurtech tools, if you will, that are created akin to that, and there are a lot of those, and we certainly are pleased to have the opportunity to participate in many of those, both as a customer as well as an investor. they're insurtech tools if you will that are created akin to that and there are a lot of those and we certainly are pleased to have the opportunity to participate in many of those both as a customer as well as an investor I think undoubtedly, there are things on that front that will pop and fizzle out, and there are other things that will prove to make the industry better. i think undoubtedly there are things on that front that will pop and fizzle out and there are other things that will prove to make the industry better I also think as far as perhaps what you were more specifically referring to, some of the newer companies that are alternative to a traditional carrier, I think some of them will succeed. I think some of them won't. In some ways, it's reminiscent of the dot com era when everything became a dot com and there were some businesses that really found their place and brought great value and disrupted, and there were others that came out with a big bang and they faded pretty quickly. I would tell you that I don't think that the traditional industry is going to be altogether displaced and vaporized. I also think as far as perhaps what you were more specifically referring to, some of the newer companies that are alternative to a traditional carrier, I think some of them will succeed. i also think as far as perhaps what you were more specifically referring to some of the newer companies that are alternative to a traditional carrier i think some of them will succeed I think some of them won't. i think some of them won't In some ways, it's reminiscent of the dot com era when everything became a dot com and there were some businesses that really found their place and brought great value and disrupted, and there were others that came out with a big bang and they faded pretty quickly. in some ways it's reminiscent of the dot com era when everything became a dot com and there were some businesses that really found their place and brought great value and disrupted and there were others that came out with a big bang and they faded pretty quickly I would tell you that I don't think that the traditional industry is going to be altogether displaced and vaporized. i would tell you that i don't think that the traditional industry is going to be altogether displaced and vaporized I think insurtech, including some of the ventures that I was referring to a moment ago, I think actually are a really good thing for the industry because they are forcing the industry, forcing the traditional players to take a step back and think about how are they going to adapt, how are they going to change, how are they going to reinvent themselves. I think there are some of the traditional players that are not going to be able to find ways to pivot and reinvent themselves, and it's likely over time the world will pass them by. I think there's a meaningful number of traditional carriers, if you will, that are using this as a catalyst and taking this opportunity to find ways to reinvent themselves. I think insurtech, including some of the ventures that I was referring to a moment ago, I think actually are a really good thing for the industry because they are forcing the industry, forcing the traditional players to take a step back and think about how are they going to adapt, how are they going to change, how are they going to reinvent themselves. i think insurtech including some of the ventures that i was referring to a moment ago i think actually are a really good thing for the industry because they are forcing the industry forcing the traditional players to take a step back and think about how are they going to adapt how are they going to change how are they going to reinvent themselves I think there are some of the traditional players that are not going to be able to find ways to pivot and reinvent themselves, and it's likely over time the world will pass them by. i think there are some of the traditional players that are not going to be able to find ways to pivot and reinvent themselves and it's likely over time the world will pass them by I think there's a meaningful number of traditional carriers, if you will, that are using this as a catalyst and taking this opportunity to find ways to reinvent themselves. i think there's a meaningful number of traditional carriers if you will that are using this as a catalyst and taking this opportunity to find ways to reinvent themselves I think some of the businesses that are younger and are viewed as disruptors that have come into the space, I'm not sure if you peel a few layers back, whether it's really as rosy as the PowerPoint slide would suggest. I'm not intimately familiar with all of their businesses. They don't invite me to their staff meetings, so I don't know exactly what's happening in the boiler room. I would tell you, if you look at the acquisition cost of customer, if you look at how the business is scaling, one needs to wonder, what is the economic model going to be long term? I think some of the businesses that are younger and are viewed as disruptors that have come into the space, I'm not sure if you peel a few layers back, whether it's really as rosy as the PowerPoint slide would suggest. i think some of the businesses that are younger and are viewed as disruptors that have come into the space i'm not sure if you peel a few layers back whether it's really as rosy as the powerpoint slide would suggest I'm not intimately familiar with all of their businesses. i'm not intimately familiar with all of their businesses They don't invite me to their staff meetings, so I don't know exactly what's happening in the boiler room. they don't invite me to their staff meetings so i don't know exactly what's happening in the boiler room I would tell you, if you look at the acquisition cost of customer, if you look at how the business is scaling, one needs to wonder, what is the economic model going to be long term? i would tell you if you look at the acquisition cost of customer if you look at how the business is scaling one needs to wonder what is the economic model going to be long term In addition to that, I believe that there are examples of some of these newer models that have gone out and raised large sums of money that actually they are looking to possibly backfill, if you will, their business model by using their currency, using their attractive cost of capital to go out and buy traditional models because that's one of the ways that they can actually get to the revenue number that they're looking to achieve. I think that there are a lot of good things going on. I think there are a lot of really skilled people with great ideas. I think there's some very interesting new ventures. I think that many will have a place in the future, and their existence, I think, is really a good thing for the industry in driving us all to up our game. In addition to that, I believe that there are examples of some of these newer models that have gone out and raised large sums of money that actually they are looking to possibly backfill, if you will, their business model by using their currency, using their attractive cost of capital to go out and buy traditional models because that's one of the ways that they can actually get to the revenue number that they're looking to achieve. in addition to that i believe that there are examples of some of these newer models that have gone out and raised large sums of money that actually they are looking to possibly backfill if you will their business model by using their currency using their attractive cost of capital to go out and buy traditional models because that's one of the ways that they can actually get to the revenue number that they're looking to achieve I think that there are a lot of good things going on. i think that there are a lot of good things going on I think there are a lot of really skilled people with great ideas. i think there are a lot of really skilled people with great ideas I think there's some very interesting new ventures. i think there's some very interesting new ventures I think that many will have a place in the future, and their existence, I think, is really a good thing for the industry in driving us all to up our game. i think that many will have a place in the future and their existence i think is really a good thing for the industry in driving us all to up our game

Speaker 1: That's helpful. Maybe we can switch gears a little bit to the COVID impact on the business, maybe the first topic we could hit is just Berkley, like many others, has still shown some explicit COVID losses within their numbers. Should we continue to think that there's going to be a small impact if we continue to see event cancellations and just the pandemic persists? Is there an element of Berkley would more front-load and add more IBNR, and we won't be hearing about explicit COVID impacts sometime in 2021? That's helpful. that's helpful Maybe we can switch gears a little bit to the COVID impact on the business, maybe the first topic we could hit is just Berkley, like many others, has still shown some explicit COVID losses within their numbers. maybe we can switch gears a little bit to the covid impact on the business maybe the first topic we could hit is just berkley like many others has still shown some explicit covid losses within their numbers Should we continue to think that there's going to be a small impact if we continue to see event cancellations and just the pandemic persists? should we continue to think that there's going to be a small impact if we continue to see event cancellations and just the pandemic persists Is there an element of Berkley would more front-load and add more IBNR, and we won't be hearing about explicit COVID impacts sometime in 2021? is there an element of berkley would more front-load and add more ibnr and we won't be hearing about explicit covid impacts sometime in 2021

Speaker 2: Mike, we think we have been thoughtful and measured about this. Is it possible that we could have a bit more? Yes. Do I think, as we suggested, both in our 10K as well as in our earnings call, do we think that we have gotten our head around it to a great extent, absolutely. Look, there are variables out there. You don't know if insurance departments or governors are going to take a position that was unforeseen as far as coverage goes. You don't know for sure how quickly states in this country and other parts of the world will choose to open things back up. Based on our estimation and based on what we can see happening, could there be a modest amount for us still out there? Yeah, there could be. Mike, we think we have been thoughtful and measured about this. mike we think we have been thoughtful and measured about this Is it possible that we could have a bit more? is it possible that we could have a bit more Yes. yes Do I think, as we suggested, both in our 10K as well as in our earnings call, do we think that we have gotten our head around it to a great extent, absolutely. do i think as we suggested both in our 10k as well as in our earnings call do we think that we have gotten our head around it to a great extent absolutely Look, there are variables out there. look there are variables out there You don't know if insurance departments or governors are going to take a position that was unforeseen as far as coverage goes. you don't know if insurance departments or governors are going to take a position that was unforeseen as far as coverage goes You don't know for sure how quickly states in this country and other parts of the world will choose to open things back up. you don't know for sure how quickly states in this country and other parts of the world will choose to open things back up Based on our estimation and based on what we can see happening, could there be a modest amount for us still out there? based on our estimation and based on what we can see happening could there be a modest amount for us still out there Yeah, there could be. yeah there could be In the scheme of this organization, the exposure that we see that could still be out there, based on everything we know right now, is quite manageable. In the scheme of this organization, the exposure that we see that could still be out there, based on everything we know right now, is quite manageable. in the scheme of this organization the exposure that we see that could still be out there based on everything we know right now is quite manageable

Speaker 1: On that topic a bit, kind of dovetailing is business interruption litigation. There's been way more wins for the industry than losses. Are there any data points? I think one of the large P&C insurers says that they're seeing a drop in overall suits against them, and they think the industry as well. Is the battle still kind of in the courts, and we just need more data points to play out, or anything you'd like to highlight there? On that topic a bit, kind of dovetailing is business interruption litigation. on that topic a bit kind of dovetailing is business interruption litigation There's been way more wins for the industry than losses. there's been way more wins for the industry than losses Are there any data points? are there any data points I think one of the large P&C insurers says that they're seeing a drop in overall suits against them, and they think the industry as well. i think one of the large p&c insurers says that they're seeing a drop in overall suits against them and they think the industry as well Is the battle still kind of in the courts, and we just need more data points to play out, or anything you'd like to highlight there? is the battle still kind of in the courts and we just need more data points to play out or anything you'd like to highlight there

Speaker 2: Well, certainly from my perspective, I think that the battle goes on. It would be wrong to say that it's over. At the same time, I think all are recognizing what the, as you suggested earlier, where many of the decisions are coming out of the courts at this stage. As a result of that, while I don't think that everything is done and put to bed, I think one of the reasons why maybe you're seeing a reduction in activity is because the plaintiff bar is always looking to invest time where they think they will get a return on that investment. As they are oftentimes, at this stage, seeing what's coming out of the courts, they are choosing to invest their time in perhaps other ways. I don't mean to suggest that it's done, and again, put to bed. Well, certainly from my perspective, I think that the battle goes on. well certainly from my perspective i think that the battle goes on It would be wrong to say that it's over. it would be wrong to say that it's over At the same time, I think all are recognizing what the, as you suggested earlier, where many of the decisions are coming out of the courts at this stage. at the same time i think all are recognizing what the as you suggested earlier where many of the decisions are coming out of the courts at this stage As a result of that, while I don't think that everything is done and put to bed, I think one of the reasons why maybe you're seeing a reduction in activity is because the plaintiff bar is always looking to invest time where they think they will get a return on that investment. as a result of that while i don't think that everything is done and put to bed i think one of the reasons why maybe you're seeing a reduction in activity is because the plaintiff bar is always looking to invest time where they think they will get a return on that investment As they are oftentimes, at this stage, seeing what's coming out of the courts, they are choosing to invest their time in perhaps other ways. as they are oftentimes at this stage seeing what's coming out of the courts they are choosing to invest their time in perhaps other ways I don't mean to suggest that it's done, and again, put to bed. i don't mean to suggest that it's done and again put to bed I would suggest to you that the plaintiff bar pays attention, and if they feel like they're hitting a headwind or a wall, they're going to look in a different direction. I would suggest to you that the plaintiff bar pays attention, and if they feel like they're hitting a headwind or a wall, they're going to look in a different direction. i would suggest to you that the plaintiff bar pays attention and if they feel like they're hitting a headwind or a wall they're going to look in a different direction

Speaker 1: Okay. I think we have about five minutes left. Any you think potential permanent impacts on how Berkley does business as a result of learnings or clients changes as a result of the pandemic and how things are playing out? You have called out a little bit of benefit to the expense ratio that I at least in my opening remarks hope come back in terms of a little bit more travel. Just curious if you guys have any views on whether you've actually made some tangible process changes that could persist. Okay. okay I think we have about five minutes left. i think we have about five minutes left Any you think potential permanent impacts on how Berkley does business as a result of learnings or clients changes as a result of the pandemic and how things are playing out? any you think potential permanent impacts on how berkley does business as a result of learnings or clients changes as a result of the pandemic and how things are playing out You have called out a little bit of benefit to the expense ratio that I at least in my opening remarks hope come back in terms of a little bit more travel. you have called out a little bit of benefit to the expense ratio that i at least in my opening remarks hope come back in terms of a little bit more travel Just curious if you guys have any views on whether you've actually made some tangible process changes that could persist. just curious if you guys have any views on whether you've actually made some tangible process changes that could persist

Speaker 3: You can go first. You can go first. you can go first

Speaker 2: Mike, from my perspective, have we learned? Clearly, we have all learned many things, and quite frankly, we've learned lessons that we wish we perhaps never had to learn. As far as how we operate the business, I think there are clearly many lessons on that front as well. Do I think that we, as an organization, are all of a sudden going to be subscribing to some of the comments that have come out of other organizations where, "Geez, we're operating just fine, so everyone can continue to work from their kitchen table"? No. We are eager to get people back in the office. As you know, we have a decentralized model, and we have teams of people that have great expertise, and we look for them to work truly together as a team. Mike, from my perspective, have we learned? mike from my perspective have we learned Clearly, we have all learned many things, and quite frankly, we've learned lessons that we wish we perhaps never had to learn. clearly we have all learned many things and quite frankly we've learned lessons that we wish we perhaps never had to learn As far as how we operate the business, I think there are clearly many lessons on that front as well. as far as how we operate the business i think there are clearly many lessons on that front as well Do I think that we, as an organization, are all of a sudden going to be subscribing to some of the comments that have come out of other organizations where, "Geez, we're operating just fine, so everyone can continue to work from their kitchen table"? do i think that we as an organization are all of a sudden going to be subscribing to some of the comments that have come out of other organizations where "geez we're operating just fine so everyone can continue to work from their kitchen table" No. no We are eager to get people back in the office. we are eager to get people back in the office As you know, we have a decentralized model, and we have teams of people that have great expertise, and we look for them to work truly together as a team. as you know we have a decentralized model and we have teams of people that have great expertise and we look for them to work truly together as a team We think there's a real benefit to people being in close proximity of one another. We are eager to get people back in the office. Are there certain things around travel and entertainment that people may be thinking about in a different light? Yeah, I think that's probably true. I think people have gotten far more comfortable with engagement in a digital manner where they would've assumed that they would have to get on an airplane. Do I think that people aren't going to be traveling? No, I think people will be traveling, but there may be thought around how people can engage in a different way and maybe will not necessarily need to have the same level of in-person engagement. That all being said, we are eager to get people back in the office when it is safe for us to do so. We think there's a real benefit to people being in close proximity of one another. we think there's a real benefit to people being in close proximity of one another We are eager to get people back in the office. we are eager to get people back in the office Are there certain things around travel and entertainment that people may be thinking about in a different light? are there certain things around travel and entertainment that people may be thinking about in a different light Yeah, I think that's probably true. yeah i think that's probably true I think people have gotten far more comfortable with engagement in a digital manner where they would've assumed that they would have to get on an airplane. i think people have gotten far more comfortable with engagement in a digital manner where they would've assumed that they would have to get on an airplane Do I think that people aren't going to be traveling? do i think that people aren't going to be traveling No, I think people will be traveling, but there may be thought around how people can engage in a different way and maybe will not necessarily need to have the same level of in-person engagement. no i think people will be traveling but there may be thought around how people can engage in a different way and maybe will not necessarily need to have the same level of in-person engagement That all being said, we are eager to get people back in the office when it is safe for us to do so. that all being said we are eager to get people back in the office when it is safe for us to do so

Speaker 3: I think, Mike, that the kinds of changes that have come about are there'll be less travel. There'll be more, if you will, Zoom meetings. You'll see agents on Zoom that you wouldn't have seen because you wouldn't have gone to see them. There'll be more interaction. I think there'll be opportunities to interact with customers and help deal with complexity better. I think there'll be a lot of those kinds of things. I think all technology has moved ahead a lot. Artificial intelligence has made huge steps. It's going to allow people with skills to start from a higher base and better customized products. I think, Mike, that the kinds of changes that have come about are there'll be less travel. i think mike that the kinds of changes that have come about are there'll be less travel There'll be more, if you will, Zoom meetings. there'll be more if you will zoom meetings You'll see agents on Zoom that you wouldn't have seen because you wouldn't have gone to see them. you'll see agents on zoom that you wouldn't have seen because you wouldn't have gone to see them There'll be more interaction. there'll be more interaction I think there'll be opportunities to interact with customers and help deal with complexity better. i think there'll be opportunities to interact with customers and help deal with complexity better I think there'll be a lot of those kinds of things. i think there'll be a lot of those kinds of things I think all technology has moved ahead a lot. i think all technology has moved ahead a lot Artificial intelligence has made huge steps. artificial intelligence has made huge steps It's going to allow people with skills to start from a higher base and better customized products. it's going to allow people with skills to start from a higher base and better customized products There'll be enormous numbers of changes every place, but in the insurance industry, it'll be particularly a good opportunity for us to be more knowledgeable about our customer and deliver products that really fit their needs more precisely, which will be a great thing, especially for the E&S business. There'll be enormous numbers of changes every place, but in the insurance industry, it'll be particularly a good opportunity for us to be more knowledgeable about our customer and deliver products that really fit their needs more precisely, which will be a great thing, especially for the E&S business. there'll be enormous numbers of changes every place but in the insurance industry it'll be particularly a good opportunity for us to be more knowledgeable about our customer and deliver products that really fit their needs more precisely which will be a great thing especially for the e&s business

Speaker 1: Okay, I think we're coming up on the hour. I'm not putting you on the spot. I don't know if, Bill or Rob, there's any final remarks you'd like to make. Otherwise, I'll thank everybody. Okay, I think we're coming up on the hour. okay i think we're coming up on the hour I'm not putting you on the spot. i'm not putting you on the spot I don't know if, Bill or Rob, there's any final remarks you'd like to make. i don't know if bill or rob there's any final remarks you'd like to make Otherwise, I'll thank everybody. otherwise i'll thank everybody

Speaker 2: Yeah, Mike, I would just tuck one in quickly, and you may have some others. Oftentimes, we appreciate you inviting us, and oftentimes, particularly when you're in a cyclical industry like the insurance industry, there's not a lot of new news to talk about. This is actually one of those moments where the insurance industry, in spite of the broader challenges that the world, the country, the economy are facing, the insurance industry is in a not a bad spot. When we see these type of market conditions, fortunately for us, it tends to lend itself particularly well to specialty carriers, particularly those with a meaningful E&S presence. The challenges continue for the economy. We are not insulated from that. We can see that to a certain extent just in our audit premiums and things of that. Yeah, Mike, I would just tuck one in quickly, and you may have some others. yeah mike i would just tuck one in quickly and you may have some others Oftentimes, we appreciate you inviting us, and oftentimes, particularly when you're in a cyclical industry like the insurance industry, there's not a lot of new news to talk about. oftentimes we appreciate you inviting us and oftentimes particularly when you're in a cyclical industry like the insurance industry there's not a lot of new news to talk about This is actually one of those moments where the insurance industry, in spite of the broader challenges that the world, the country, the economy are facing, the insurance industry is in a not a bad spot. this is actually one of those moments where the insurance industry in spite of the broader challenges that the world the country the economy are facing the insurance industry is in a not a bad spot When we see these type of market conditions, fortunately for us, it tends to lend itself particularly well to specialty carriers, particularly those with a meaningful E&S presence. when we see these type of market conditions fortunately for us it tends to lend itself particularly well to specialty carriers particularly those with a meaningful e&s presence The challenges continue for the economy. the challenges continue for the economy We are not insulated from that. we are not insulated from that We can see that to a certain extent just in our audit premiums and things of that. we can see that to a certain extent just in our audit premiums and things of that As this economy opens up, we are very excited about the combination of the improving condition of our insureds along with the rating environment, and we think that the table is set for really some terrific years for the organization. As this economy opens up, we are very excited about the combination of the improving condition of our insureds along with the rating environment, and we think that the table is set for really some terrific years for the organization. as this economy opens up we are very excited about the combination of the improving condition of our insureds along with the rating environment and we think that the table is set for really some terrific years for the organization

Speaker 3: Well, for me, it's a really exciting time. I think that the kind of rate increases we've been able to get, and in spite of social inflation and the potential inflation, real prices for us have gone up. I think that we're well ahead of the curve. I think interest rates are moving up. Asset appreciation is going to give us an excellent investment year this year, and I would expect next. I think that 2021, 2022 are going to be terrific years with really good returns on our capital and great opportunities for us to seize opportunities for people who might not be as well-positioned. Volatility for well-capitalized companies that are prepared is a good thing. Volatility for companies that are not prepared and have taken inappropriate risks can be death. That gives well-capitalized companies good opportunities. Well, for me, it's a really exciting time. well for me it's a really exciting time I think that the kind of rate increases we've been able to get, and in spite of social inflation and the potential inflation, real prices for us have gone up. i think that the kind of rate increases we've been able to get and in spite of social inflation and the potential inflation real prices for us have gone up I think that we're well ahead of the curve. i think that we're well ahead of the curve I think interest rates are moving up. i think interest rates are moving up Asset appreciation is going to give us an excellent investment year this year, and I would expect next. asset appreciation is going to give us an excellent investment year this year and i would expect next I think that 2021, 2022 are going to be terrific years with really good returns on our capital and great opportunities for us to seize opportunities for people who might not be as well-positioned. i think that 2021 2022 are going to be terrific years with really good returns on our capital and great opportunities for us to seize opportunities for people who might not be as well-positioned Volatility for well-capitalized companies that are prepared is a good thing. volatility for well-capitalized companies that are prepared is a good thing Volatility for companies that are not prepared and have taken inappropriate risks can be death. volatility for companies that are not prepared and have taken inappropriate risks can be death That gives well-capitalized companies good opportunities. that gives well-capitalized companies good opportunities

Speaker 2: Mike, thanks for having us. Mike, thanks for having us. mike thanks for having us

Speaker 1: Thank you for your words of wisdom. We look forward to following the story throughout the year. Thank you, everyone, for tuning in. Have a great rest of your day. Thank you for your words of wisdom. thank you for your words of wisdom We look forward to following the story throughout the year. we look forward to following the story throughout the year Thank you, everyone, for tuning in. thank you everyone for tuning in Have a great rest of your day. have a great rest of your day

Speaker 3: Thank you. Bye-bye. Thank you. thank you Bye-bye. bye-bye