Good day, ladies and gentlemen, and welcome to Conduit Holdings Limited Q3 2022 trading update. At this time, all participants are in listen only mode. Later, we will conduct a question and answer session through the phone lines, and instructions will follow at that time. Participants can also submit questions through the webcast page using the Ask a Question button. I would like to remind all participants that this call is being recorded. I will now hand over to Neil Eckert, Executive Chairman, Conduit Holdings Limited, to open the presentation. Please go ahead. Thank you. Let's Good morning, everyone. Right. Let's go straight into it and go to slide three. This slide is very busy, but it gives an overview of what we think is happening in the market right now. We describe it as the perfect storm. It is a coincidence of events that I don't think I've seen in my career, because you have inflation on the one hand that is affecting both the legacy and reserving. I think you will be observing sort of reserve strengthening happening. That obviously doesn't apply to us because of our legacy free situation. Inflation is also causing demand for increased limits in the cat book. That is creating a supply demand imbalance, which we have described as a capacity crunch. You've got mark to market unrealized, which is causing certain amounts of balance sheet stress. All in all, we describe this as the perfect storm, but it's a very bullish scenario for us. With that, I'll hand over to Trevor. Okay. Thanks, Neil. Next slide. Moving on to page four. Thanks. Good morning, everybody. Before we move into the numbers around the trading update, a few key points on this slide which I'd like to illustrate, and particularly around, you know, our company approach and strategy and the way we go about business. The first three bullets on here basically articulate the strategy and approach to writing business. It's always our view that a portfolio needs to be robust and able to withstand shocks. Which seems an obvious thing to say really, but it does need to have inbuilt shock absorbers, if you like, to events that when they hit, have a tendency to rock and shake up market assumptions and norms. I think we've seen that in the first couple of years, certainly since Conduit came into existence. I think at Conduit we've become known for a balanced approach and being prepared to do work on ground-up deals. That's our brand, if you like, in the market, and being known for that and focus on risk data and attention to detail is not a bad thing to my mind. Fundamentally, this requires doing the hard yards to really understand clients' ground-up insurance business, and not rely simply on pricing from pure model-driven metrics, which is where I think a lot of the industry has gotten to in probably at least a decade. All of this isn't the most glamorous or headline-catching part of the reinsurance business, but we firmly believe it's where the true value lies, in really understanding clients' margins, which how a reinsurer is able to extract optimum pricing and value from the chain. A few words on product mix. I've always said that over the long term, over market cycles, we will remain agnostic to the product type. Said that from day one, and it's still a firm belief. Be it Catastrophe XL or quota share. Rather, it's the market cycle and the underlying margins within those different product types that will always dictate our mix. In building a heavily concentrated cat portfolio, it's often easy to overextend in XL to an extreme tail, especially in the cat space. For that reason, we will always carefully balance how we bring volatility into the portfolio from what I would call the XL playing field. Points four and five on here at the end, I mean, they refer to balance sheet aspects. Elaine will talk later on our approach to managing credit quality duration on the asset side and a mark-to-market update. Key though here is the comment around legacy or back book, as many people often call it. Essentially, I suppose we don't really have one. Gregory Roberts can talk shortly in the underwriting section around sort of the broader inflationary forces. Now they're having an impact on what I'll call the industry's back book, but that's now underpinning forward pricing in the longer tail classes. As I say, given that we came into being for the January 2021 renewal season, we're in the position now of having the freedom and scope to deploy our capital as the market conditions are now dictating, and that's really important to us. A final two points on the slide refer to what I'll call the operational setup here at Conduit, and our keenness to keep the thinking current when it comes to design, management, and running of the business and processes. A few words on this. We've now got just around 50 employees here in Bermuda. One lesson we're constantly reminded of as we created this business is the value in having all those individuals in one location. It's really important for us, underwriters of all the functions around the modeling, pricing, risk management. What we knew, and it's certainly been brought to bear, that shortens the reaction time for business issues when looking to make strategic decisions. If you like, in a car driving analogy, we can put our feet immediately on the various pedals, be it the brake or the accelerator, the circumstances dictate. I think that's been the case. It's a big part of getting us to where we are now nine months through our second year. Page five. Next slide. Thanks. Yeah, this is a trading update, so data points are understandably quite limited. I think that, you know, the first nine months of 2022 show the strength and certain resilience of the business model that we're putting in place, and as we continue to roll out on the plan. 2022 estimated ultimate premiums are up 55% at just over $600 million compared to the nine months ended September 2021. That's up 81% on a gross written basis over the same period. I think it shows not only substantial growth, which we've been experiencing, but also points to stable premium revenue flowing into the current year as 2021 also continues to deliver. Elaine can touch on that. That's both on the written and earned basis. As regards major loss update during the quarter, for Hurricane Ian, we're reporting an ultimate estimated loss net of reinsurance and reinstatement premiums of approximately $40 million. Measured as a percentage first half of 2022 to shareholder equity, that equates to around 4.5%. By way of an update on the Ukraine-Russia crisis, we're maintaining our previous estimate, and that's unchanged at $24.6 million. Again, net of reinsurance and reinstatement premiums. I would reiterate that that's an ultimate estimate across all classes, including aviation. Both of these are significant industry events, as we know, and I think our net position speak to some degree on the approach to managing the impact from these events on the company's bottom line, something we're always conscious of. We're nine months into the year and looking ahead to 2023, we really like what we see out there, and the business blend to date is earning through in our pipeline, and the market outlook is really favorable. Underlying business mix, it's probably worth mentioning again here that much of what we write at Conduit is the non-cat exposed classes. Currently a large part of the regular narrative in the industry, as we all know, sits around and focuses on cat exposures. On the latest headline loss events, it's a sober reminder that around 70% of the premiums that we take on board here at Conduit are actually the non-cat classes, as we call them. That's where real opportunities also lie. We're in that area. We've plainly been keen to have a major focus on it to date, being at 70%. Going forward into 2023 and beyond, we're probably equally as excited about the non-cat piece as we are about the cat. That's a really attractive space for us to be. There's an engine within the Conduit earnings stream going forward. Perhaps to conclude, just handing over to Greg, some words around how the market looks and feels versus others in the past. It's a reality that 2022 is actually my 40th underwriting year and therefore my 40th renewal season, which is quite a thought when you go back. There have been a number of times when the dynamic changed really materially. I think this is one of them. We've all said that prices are driven, not just by losses, which is where people tend to go to in their immediate thinking, but by capacity. It's falling supply currently not meeting a rising demand. Some of the reasons Greg will go into next. This is the market position now, and it's creating great opportunities for us as a reinsurer, currently in the market. Greg will talk about this imbalance, between supply and demand and are particularly relevant in the property space. I'll pass over to you now, Greg. Thanks, Trevor. Morning, everybody. Slide six, if we go to that, please. Six. Slide six. Go on. Okay, slide six, whenever it appears. It's a quick reminder of the strong pricing environments in which we are currently operating in. Now the chart is from Marsh. We've included this 'cause it's a consistent exhibit that we've referenced. Can we go back one slide, please? To slide six. Go ahead. That's better. Now for those who can recall it from prior updates, it's worth remembering this is aggregated at a global level. It shows and has been updated prior to Hurricane Ian. I think we've put a line on the end to highlight that point. A good reminder here that the bars above the line represent a positive increase, which doesn't always come across when viewing the bars initially. It shows that albeit the pace of price increases has slowed in 2020, at a global level, price is still increasing to date by around 6% in this last quarter. Now, Hurricane Ian sits expectantly on the chart, and certainly for the property related classes. Anything with worldwide or U.S.-centric focus, we do expect to see a significant uptick. As Trevor mentioned previously, while our non-cat premium or risk premiums, if you will, receive the benefit of this uptick, we're already seeing significant market adjustments occurring as the cat space is clearly dislocated by the combined impacts of supply withdrawing from the market and property demand increasing simultaneously. Now, you know, the first of January renewal season is well underway. Submissions are flowing into reinsurers, often with updated data cuts from the clients, which is really important with trying to present their most recent view of exposures. The spectrum of demonstration of that shows some clients are very good at showing the impact of inflation and how they have ultimately collected more premium for that same exposure. Some who are less good at it. This is clearly, and historically has been for us from our very beginning, a key criteria in our acceptance of underlying exposure data sets from our clients. Bear in mind that we write not just volatility products, but we are and we have a significant interest in the underlying business and the concept of attrition. It's meant that it's in our DNA to spend an awful lot of time looking at inflation and loss costs. It's worth saying here within these submissions, and we aren't yet at a position where we can see the full request of additional limit required at first of January. On property cat, there is significant limit being requested to be considered in the submissions thus far. The second bullet on the diagram offers here some color. Around the casualty and longer tail lines do operate with a different set of dynamics at play. The longer term inflationary impact on back years, which in our view is certainly underpinning the broad casualty marketplace, pricing differentials. As ever, though, the spectrum of classes and risks offered to us differ greatly, and it's in classes such as D&O currently where we've concurred there is a worthiness of keeping under watch due to some of the rate reductions occurring. Classes such as this will of course remain under our scrutiny and full attention as we go through the January first renewal cycle. If we may move to page seven. This is a slide around rate change in the quarter, and we break it down again by casualty, specialty, and property. First I'd like to remind attendees that we believe it is fundamentally clearer to show the true pricing impact when discussing rate change net of inflationary loads built into our pricing models and matrix. For year to date, the portfolio has seen a risk-adjusted rate change net of inflation of around 4%, with particularly strong increases on the property side. Again here, property has a significant component of Cat throughout the year. Rate increases net of inflation on the property account, you know, ebb and flow between highs of 30s and 40s, risk adjusted up to much flatter near around our mean here, depending on where they are in the world, and their loss experience as well. We're reminded that there has been significant loss activity to test some of these data points. I'm pleased to say that the market is buoyant and reflective of that, and pricing additions are certainly responding. For specialty, Q3 is a relatively low volume quarter, but we do continue to see broader recognition by underlying clients for the need to stay ahead of fundamental inflationary trends. As the broader specialty market approaches January 1, there's no doubt the market here post Ukraine is looking for a material rewrite of contract terms and coverage provisions. It is for these reasons as much as pure rate improving that we see real opportunities in the specialty reinsurance space going through 2023. On the casualty side, the 1% net of inflation that we show here is a good reminder of the netting down effect of the inflationary loads that we put through our pricing exercises. Now, while our inflation assumptions vary across the subclasses in the casualty and longer tail lines, it is probably appropriate here to state that a single digit number is wholly representative of where we are coming from when assessing claims inflation trends within the casualty portfolio. Can you move to slide eight, please. Slide eight, please. I've got to slide eight. Go on then. Okay. Hang on one second. Slide eight, please. You're on slide nine. Yeah, slide eight, please. Slide eight is showing our premium growth trajectory. Yeah. The slide shows our cumulative premiums bound since the inception of Conduit by quota to quota. Our team here at this point has generated almost $1.1 billion of cumulative bound premiums. As the COO, I'm certainly keen to emphasize that this growth has been with strict underwriting conditions, building a top quality book of business. The trend is pretty clear and just ahead of our IPO expectations when we put the five-year plan together. While the market's delivered shocks by way of Ukraine, Ida, Bernd, and Ian among the way to date, what we see now as we approach year three is a marketplace significantly better and stronger than we were planning when we put our year three IPO plan together. Now, for us, that means we're certainly looking to continue the forward momentum that we have. While we don't provide forward guidance around our top-line premium numbers, I think we can say that we can accelerate our trajectory, and we will bring years four and, four and five closer to reality now. On a general level, before I hand over to Elaine, I would sign off by reaffirming that broadly speaking, we see the high level lineup in order of opportunity size. That is, property first, followed by specialty, and then on to casualty. Now, the marketplace is very nuanced and compromised with many moving parts, which are jockeying to present varying quality of opportunity at different times. By thinking of these broad classes in this order, it's probably the clearest way to articulate how we see that market presenting itself to us as we continue to build our book into 2023. On this point, I'll hand over to Elaine. Thanks, Greg. Morning, everyone. If we can move on to slide nine, please. Thanks. We thought about the growth of our ultimate unwritten premiums earlier in the presentation. Trevor mentioned, I want to pick up a bit on the earning of those. For the 2021 underwriting year, we said we expect to be around 80% written by the end of that first year. It's almost 100% written by the end of the second year. We also said we expected to have earned 45%-50% by the end of the first year and around 95% by the end of the second year. The 2021 underwriting year is writing and earning largely in line with those statements. Given the business mix for the 2022 underwriting year, obviously depending on how Q4 actually ends up, we expect the 2022 underwriting year to write and earn in a very similar pattern. Currently, we expect a broadly similar pattern for the 2023 underwriting year. If we can flip to the next slide to talk about investments, please. Thanks. No real changes in strategies to expect. We're keeping duration fairly low relative to our liabilities in the current environment. Duration is currently 2.3 years versus around three years on our reserve. We're comfortable with that for now, although we might look to just nudge duration a little bit. Our unrealized loss of $74.8 million for the year to date is clearly mostly driven by rising rates and rising rate expectations. It's aided by de-risking, and we also don't have any risk assets in our portfolio. Our portfolio remains high quality, and again, no risk assets. We don't have any concerns about defaults or impairments. I'll hand back to Neil Eckert to wrap up. Next slide, please. Right. We are now in a position where we have the capital. Feels to me like sort of we're reaching the end of the initial journey. Market conditions are as favorable as we could hope for, and if anything, ahead of where it would have expected at the time of the IPO. We have the capital to accelerate, and basically it's, you know, we're just looking forward to probably one of the most fascinating renewal seasons that we've received for a very long time. With that, I think, we'll hand over to get ready for Q&A. Participants can submit questions in written format via the webcast page by clicking the Ask a Question button. If you are dialed into the call and would like to ask a question, please signal by pressing star one on your telephone keypad. We will pause for a moment to assemble the queue. We will take our first question from Tryfonas Spyrou of Berenberg. Please go ahead. Oh, hi. Hi, everyone. Thank you for the presentation. I just have 2 questions. The first one is on your thinking around growing your property cat exposures next year and whether we should expect a slightly different sort of PML profile to the one you have now, given that you're expected to deploy more capital in this area. I guess, how should we think about the balance of the book next year, both in terms of premium diversification, but also on the P&L side? I guess related to that, how should we think about your overall sort of retro spend given the dislocation that is expected in that part of the markets, which you pointed out. The second question is on the ceding commissions, and whether we should expect sort of an improvement in sort of the property and casualty space next year. I appreciate from some new sources that a lot of their sort of London property cat treaties are moving, presumably to Bermuda to take advantage of better sort of conditions and ceding commissions there. Any comments around that would be appreciated. Thank you. Okay. Thanks very much. Yes, coming off the first point around PML and cat growth. For us, when we put the plan together, we were pretty clear in the way that we saw our, if you like, our PML net appetite growing in conjunction with the overall growth in the premium volume. We keep it in proportion as we move through our five years of our original plan. I guess the best way to think about that is we have stuck to that as we've got through here and into year three is where we're going. Year four and five, in our plan, we factored in increasing appetite forecast. I think that was basically moving from the kind of the 5% level where we are now, 100-year Florida, if it's a good example, up through 6.5 to I think it was 7.5 in year four. For us, you know, as the market presents itself to it, and particularly around the property space, which as Greg has said, is if you like, the main area of opportunity that we see, I think that kind of level and that kind of PML, if you like, loss, is the way that we would think about it. Maybe it's sort of an advancement of what we were looking at doing in year four and moving that forward into the current year. It will depend on how the market presents itself. When you sit around, you know the difference between the different classes of business. Catastrophe XL is obviously being very distressed at the moment, but we do have various ways of bringing that portfolio of cat on board. We can do that through various product types. In many cases we have been able to bring that in without immediately just putting it onto a, what you would refer to as a vertical PML. We have tools at our disposal. Retro spend. Yeah, good point. Obviously retro is being squeezed probably as, if you like, the tertiary product in the industry. We have a very strong panel in place with us when we started the business for the first year in 2021, renewed through in 2022. I think it's a feature in our plan that we budgeted for reasonably sizable increases in that. That would be sensible. The one thing for us is we know that those carriers are in play and in place. We've had conversations with them already. I think it's a position that we're in that some of the industry losses that have been generated, we have relied on a reinsurance program to a limited degree. It's by no means been stressed either last year or this year. I think in that respect, we've probably got some willing partners who are still willing to grow with us on that. Greg, just wanna talk about ceding commissions because that's really the blend between the two P&C. Yeah, I mean, ceding commissions are an area we obviously spend a lot of time focusing on. Trevor's referenced the combination of, in particular, loss ratio and acquisition costs, prior parts of the cycle, and comparing them to this part of the cycle. We see those changing still. There is wide commentary and a view that ceding commissions have peaked in lines of business such as casualty. We have evidence of that starting to back out. On the distribution of business we have from day one worked with intermediaries all over the world, both in London, outside of London, regional offices, here in Bermuda. That's been our design from the very beginning, and we're happy to say that works very, very, very well. Brilliant. Thank you, Greg. The next one is from Abid Hussain of Panmure. Please go ahead. Oh, hi. Morning, and afternoon, I guess, depending on where you're based. Thanks for taking my questions. I've got three questions, if I may. The first one on accelerating growth. If the market does turn from hard to hardening, i.e., even better rates, which is I think where we're heading into on the 1/1 renewals, how aggressively do you wish to grow premiums and what are your constraints around growing into 1/1? That's the first question. Then, the second question is on inflation. It's probably less applicable to you, but I'll ask the question anyway. It's been topical at some of your peers. How confident are you on your inflation assumptions on your back book? Admittedly, your back book is relatively small, but just your inflation assumptions on your back book versus the current inflation that we're seeing versus the long-term average. If I may squeeze in a third question, just on Hurricane Ian. I think you've said that the expected loss is $40 million. Can we infer that at that sort of level your retro program is kicking in? Thanks. Thanks, Abid. Yeah, just taking the last one first. Yeah, we end at $40 million. It is after a representing reinsurance recovery on the reinsurance program. It's certainly not, as I said before, it's certainly not stressing our reinsurance partners. There is a recovery in there, but it's by no means stressing the program. Without going into complete specifics on that. Inflation for us on the back book, you're quite right. You know, we simply have two years' worth of trading to date, particularly around the casualty classes for us. It's a book which has no motor in there, and certainly we have dialed down classes right from day one on medical. For us, it's a portfolio business that would always be under review, through our own actuarial processes and also through the independent actuaries which we work with on it. There's an ongoing review quarterly, and also from the client's underlying data. A big part of what we do every quarter is review the underlying client's development patterns, particularly on the quota share side, and that feeds into our overall sort of industry picks around where inflation we believe is moving and indeed, being stressed. As I said, the third component is coming back into us through the independent actuarial reviews that we use. Certainly where we are and having written casualty business in what is predominantly a relatively high inflationary environment for the last two years, we certainly feel very comfortable around the position and the extent of our back book as we refer to it. Question around growth, you know, and where we can go with that for January 1 and into 2023. For us, I touched on it in my note, the big part of what we do is not cat business. You know, it's that risk business, fire and fire risk in property terms. That is an unbelievable opportunity for us, and we saw this emerging certainly over a year ago. It's one of the reasons that we're major in that space. There aren't many constraints on growth in that class of business because it's not generating a high contribution to our own cat PMLs. The flow of business that we've seen in that class in non-cat has really continued to, you know, over deliver, if you like, and certainly exceed our expectations. For us, the client base that we've got, the flow of business and ability to choose, pick and choose our way through there, sort of puts us in great position for January and through and beyond. The real constraint on growth, as we touched on earlier, is that cat PML. We're really sensitive to that. Looking at the blend between XL and quota share and the way that cat business is brought into the company is a big part of it. I guess that you probably articulate that as that's the main constraint around growth. I think, you know, we've already indicated where we believe a reasonable PML and a reasonable risk appetite would sit within our portfolio for next year. I mean, if I can just add to that. I think in summary, so long as we maintain the balance of our accounts, so long as we have that laser focus on our net PMLs, then, you know, we are in a period where we can achieve growth. Great. Thanks. That's very helpful. The next one is from Darius Satkauskas of RBC. Please go ahead. Hi. Morning, everyone. Hope you're well. A few questions. Maybe I'll ask them in order. The first two is just on net cats. On Hurricane Ian, I'm just keen to hear about your industry loss estimate for the event and also maybe any thoughts around the nature of the loss. I mean, were there any surprises there? You know, for example, was it purely from Catastrophe XL contracts as you would have expected or maybe, you know, some came through D&F or quota shares and whatnot. The second question on net cat is can you say what was the tally of net cat losses at the nine-month stage and how is it tracking against your internal budget? Okay. Great. Tim, take the first one. Yeah. Hi there. For industry loss range on Ian, you know, there's some obviously huge variability out there, modeling companies, PCS, and you've got a little bit of inconsistency of what's included in those indexes, you know, PCS, for example. We sort of see it on our workings sort of $50 billion-$60 billion as a range. We see the NFIP, which is a big contributor to the industry drops. National Flood Insurance Program in the U.S., which is effectively the issuer of a lot of primary flood, which is clearly a component of Hurricane Ian. You think of the imagery from the landfall in counties, much of them being underwater. A lot of that's sitting with the NFIP and those who support the NFIP, and I think they publicly show that as well as a reinsurance bank. With the industry loss, the makeup, you know, obviously property is the dominant class Producing losses for EM. On the sort of form of reinsurance contract, you're most definitely going to have, you know, quota shares, excess of loss contracts, all included such as the size of the event. As a reminder, quota shares, you know, for us are structured and set up with event limits and bits and pieces. They behave much like XL from like that. Certainly that and some elements of specialty investing as well, which is pretty standard for something like that. You'd see images of, you know, boats on front lawns and things like that. Often they're uninsured, but some of them are insured in fact as well. Just, I mean, that's industry background data. To be clear, we've given a figure of 40, and there's a range around that which is fairly tight. That's probably irrespective of whether it's at the bottom or the top end of the range that Greg discussed. Elaine Whelan? Yeah. Hi there. Just on the budget question, we don't disclose CapEx budgets. We do have our guidelines out there, but we don't disclose CapEx budgets or any other loss budgets for that matter. I think it's safe to say that we've had an above-mean loss year. Also within that stage that we're at with the development of our earnings, you know, year two is still a development phase, all that. They're not quite there yet to absorb these kind of losses. I think if you put that in context, I think we've done a pretty good job on that front. Yep, yep. Thanks. Couple of follow-ups if I may. Firstly, I mean, it's pretty encouraging to hear about how, you know, you're potentially accelerating your plans there. I'm just curious to know about the source of the business within that plan. I mean, do you have a lot of scope to expand your shares with existing clients, or there's a need to actually compete to get into new panels, you know, to support that acceleration? Secondly, just going back to our topic of inflation, risk-adjusted rates, you know, plus 4% unchanged from H1. I guess at the same time, you know, just the back of Q3 releases, we're hearing some of your peers, including larger ones, reviewing their inflation assumptions as well. I mean, how comfortable with you know, are you with your inflation assumption within that, you know, 4% of rates? Because, you know, I think we're approaching year-end, so, you know, you will be getting some new data from your cedents as they complete their year-end reserving review. I'm just worried about a risk of, you know, yourself having to revise that assumption there. Any comments on that, please? Thank you. Okay. Yeah, just picking up on the acceleration piece there, first part of your question. For us, that's really driven our growth to date, and certainly looking forward, it's driven out of the renewal book that we've got, which is now becoming very substantial, and the enormous amount of new submissions which we receive every year. In our first two years, we've received hundreds of additional submissions, which we've evaluated. We haven't written because they didn't make the hurdle. And the business we've written, obviously do. So for us, we have all of those previously, should we say, declined contracts which are now due to be represented, and they're being represented in a new world. You know, there's a new normal in terms of rating, pricing, and hurdles. When we look at that portfolio that is due to tick through both renewal and the previously declined, it's a massive volume of business which we can continue to select from. In essence, the best way to think about that is in the rising tide of the market and rates, more of those will meet our hurdle going forward. Without going into further details, Greg, particularly on the property side, is inundated currently with requests for calls from clients and new clients, who are all looking to purchase more in a rising demand market. We know there's genuinely new business there, but also the portfolio that we've got and we've seen that will now hit our hurdle rate more. Perhaps, yeah, around the inflation, and I did touch on this with the previous question. We have amazingly granular insight into our clients' underlying portfolios through that quota share book of business. The data set which we created in the two years across the industry development patterns, let's call it those, from clients through that quota share is incredibly valuable tool. It gives us a great insight into specific classes, product types, and by geography. Actually, the work that we engage with, which I touched on earlier, is sharing that with our independent actuarial reviewers. It's a great data set to be able to look at and just see what's emerging. Last point on it, we've said in previous trading updates and quarterly reviews that the main reason that we have not matched with clients and have declined a very large portion of casualty business is because of our casualty assumptions, inflation assumptions around casualty. That's been the main, if you like, block on growth of casualty for us. That's been a good housekeeping item to have in there. For us, we know we're probably at the higher end of the spectrum that's being presented in terms of claims assumptions. I don't see that changing. It's just a hurdle which we have in place. I think it reflects our sort of conservative approach to what is an emerging pattern in the industry. Yeah, great. Thank you very much. The next one is from Andreas van Embden of Peel Hunt. Please go ahead. Hello, good afternoon. Just had two questions. One is on Hurricane Ian. Could you maybe mention how much of your exposure in Florida was really through the local insurance companies, and/or Citizens, and how much really was through the nationwide programs? Just trying to get a feel for whether it's a local exposure or whether it's sort of across the larger sort of programs in the U.S. The second one on Ian is, have you benefited at all from the Florida Hurricane Catastrophe Fund in your quota share program, and how big was that benefit? Was that very material? My final question is on capital. You know, you raised around $1 billion of capital back in 2020, and it's been a volatile number of years. I think you say in your press release you've got around $800 million of capital going into 2023. I just wondered how much of your current renewal book is utilizing that capital? Is that sitting around 60%, 70% or 80%? How much do you have unutilized that you could deploy for growth next year? Would you consider raising debt if the opportunity is really that sort of attractive that most of the deals you're seeing meet your hurdle rates and you'd say, "Well, let's raise some debt and invite more business." Thanks. First question. The catastrophe portfolio is really what we're talking about here. You know, from the beginning of our portfolio, property catastrophe in particular, you know, we were quite clear on saying we struggled the most with finding rate adequacy with, you know, nationwide excess of loss contracts. We've talked extensively about coverage in those contracts that's not really explicitly priced for, when you think of it on kind of a peril basis. You know, nationwide is a very small part of our portfolio. Now within Florida, businesses themselves, and I think you're referencing the sort of Demotech style businesses. Again, due to sort of fundamentals, with, you know, capital levels, et cetera, with those companies, that was always a very difficult area for us to find risk advertising. You know, Florida, there are those who do it very well, in our opinion, and issue property insurance contracts, in a form in which they, now they know their exposures, they know their underlying business, and they price appropriately. Those are the contracts that are interesting to us. Now from a deployment perspective, quota share exposure or otherwise, the FHCF, you know, as a reinsurer- What? Florida Hurricane Catastrophe Fund, which is effectively the reinsurer of last resort in Florida. That is available to personal lines writers, insurance companies to purchase. Where we follow that business either via quota share or excess of loss, we would obviously obtain and take benefit of recoveries from the Florida Hurricane Catastrophe Fund. In fact, last year was the first year in which the new products, a new sort of support mechanism, the RAP, was issued. Again, we would also take benefit from that as well. You know, the Florida Hurricane Catastrophe Fund, where it sits, you know, from an industry attachment point and what it's in fact designed to do, takes a significant proportion of the retained losses that would have occurred, particularly around those counties of the landfall area for Ian. Okay, thanks. Bye for now. Hi, Andreas. Just on the capital question, I'll probably start with the subordinated bonds, which is, we don't disclose that. The joking aside, we do obviously have stuff in about regulatory capital levels in our year-end disclosures, so you can look for that. We did raise capital for a five-year plan with buffers in there, so we're very comfortable with the capital position that we've got and the excess capital that we have there. It's certainly been a couple of tough years in terms of loss performance, but I think it's put that in the context of the book build that we've been going through and the level of maturity of the earnings in those years. Given the excess capital position that we've had and that book build, we don't have to trim anything to fit something else in. It's cat that drives the rating agency models. We've talked about the kind of 30% cat exposure that we've got there. We certainly don't have any concerns about the availability of capital to take advantage of the market that we're seeing ahead of us. You know, debt might be something that we consider at some point in the future, but there isn't a need just now. If there's no need just now, then I don't think it's attractive to be issuing debt. Hope that answers your question. Okay. Yes, thank you very much. The next one is from Barrie Cornes of Panmure Gordon. Please go ahead. Barrie, your line is open. Please go ahead. Barrie Cornes with Panmure Gordon. Can you hear me now? Can you hear me now? Okay, sorry about that. Thank you very much for taking my questions, and good afternoon, everybody. I've got three general questions, if I may. First of all, just wonder your views on the background to the capacity squeeze that we're very aware of. Just wonder if you think it's driven more by industry losses or perhaps more by the expectations of increased frequency and quantum of claims or the cats going forward. That's the first one. Second one, just wondered as others exit the market if you see an opportunity to expand either underwriting teams or classes of business that you'd write. My last question, just wondered a bit more if you give some more color on what's taking place between brokers and either yourselves or other reinsurers about 1/1 renewals, and any color on discussions coming out of Monte Carlo and Baden-Baden. Thank you. Okay, thanks very much, Barry. I'll take the first couple there, and Greg can put some color around some of the Monte Carlo and early renewal discussions with reinsurers. Capacity squeeze, you said, you know, is that driven by frequency or severity, current or sort of forward view? I think it's a combination of both. Probably the main driver is the performance to date, so the increased frequency and what we refer to as the model misses that have been coming through. Portfolios being put together with quite extreme tails. The model really being the main route to guidance, if you like, in terms of putting the portfolios together and the surprise is being delivered. I think to a degree, it's probably more the frequency of claims that have been coming through, but allied with the size of those. I think that's probably the main reason for the reduction in capacity. Just on teams expansion, we're always alert to that and alive to that. We do obviously make a case for being a diversified writer. It's really in our interest to have that balance across the various classes. We're really well set up with the structure we've got and the way that we've gone to market currently. The one area we've always said is that, and it was the reason we did it around specialty initially, keep our interest very focused around specific classes that we knew you had the skill set in. Especially as a very broad church, there are some very broad classes of business that sit within there, and that's probably one area where we would look going forward to add to a specific skill set in an area such as specialty. That's probably the one area. One more renewal is great. Early discussions, Monte Carlo, et cetera. Yeah, sure. Hi, Barry. Monte Carlo was obviously very lively and active with discussions and you know, telegraphing needs for reinsurance. I think what always stands out for me is you know, brokers as intermediaries clearly know their clients and their clients' needs very well and they'll spend a lot of time working with them on that. The best brokers know their markets very well as well. In an environment where supply of capacity and we sort of tend to focus on property cat here as the best example is not increasing and in fact not meeting the demands of the increased limit. You know, the best brokers manage that very rapidly and secure the capacity for their clients at a faster pace. I suppose that is in part what we're seeing first-of-January renewals even now with some of the firm orders that are being issued to the market with large limit purchases that are either increasing or rising by attachment point, particularly here on the excess of loss side, and paying increased prices and therefore for us as reinsurers, increased margins. You know, anecdotally for even single region, single territory, single perils, we have examples of sort of +30% risk-adjusted as we speak today. I think responding quickly, recognizing the market dynamics and moving quickly to secure capacity at what ultimately are going to be significantly increased risk-adjusted terms is a smart move. Barry, can I just add one thing back to your question? One of the fundamental drivers is inflation. At Monte Carlo, Guy Carpenter estimated that there would be demand for between $20 billion and $30 billion of new coverage, and that's at a time when we are seeing some withdrawal of capacity. The background, it's a confluence of factors, and it's not just loss driven. There is definitely a supply and demand imbalance. Okay. That's very clear. Thank you very much. There are no further questions on the conference line. I will now hand over to the SparkLive team to read out the written questions. Thank you. There's been one question submitted via the webcasting page, and that comes from Ben Cohen at Investec. He asks, "Other cat losses in the quarter, how close are you to target mid-eighties underlying COR in Q3? Should this outlook not be improving given outlook for pricing into 2023? Yeah. I'll take that one. In terms of other cat losses in the quarter, things like hailstorms, but nothing material or pretty small in the overall scheme of things. In terms of that target mid-eighties, that's a development number, if you like. In the first couple of years, they are very much still in the books. We think as we move into year three, that's when we're starting to reach the maturity in terms of the earnings coming through. OpEx ratio will start to come down a little bit, all those kind of things. That's, as we say, a medium-term aspiration and, you know, further beyond that, we're not really able to comment too much on it at this stage. I think certainly after we've gone through the January monthly renewals and then just looking at year-end Q1, then we'll have clarity on that. Thank you. There are no further questions, so I will hand back to Neil Eckert for closing remarks. Okay. Well, thank you everyone for attending. I think you get the general sentiment. You know, we are looking forward to the renewal season. Great work and good luck, Greg, for the next two to three months. Don't plan on taking any holidays. I wouldn't want to. Yeah, it's, you know, hopefully as each quarter goes by, our mantra is just to deliver. I think we have a solid foundation and we look forward to further updating you. I mean, the next two or three months will be fascinating because we feel like the market's pregnant with promise. We will have many more data points when we report in February. That will really, I think, see a pattern emerging. Thank you everyone for your time and we look forward to updating you in a few weeks time.