Hello, and welcome to the Lancashire Holdings Limited 2021 year-end results. Throughout the call, all participants will be in listen-only mode, and afterwards, there'll be a question and answer session. Please note this call is being recorded. Today, I am pleased to present Alex Maloney, Group CEO, Natalie Kershaw, Group CFO, and Paul Gregory, Group CUO. I wanna hand over to Alex. Please begin your meeting. Good afternoon, everyone, and thank you for joining us. I'd like to start giving an overview of 2021, and then Paul will talk through the underwriting picture before Natalie goes through the financials. At the end, I'll talk through our outlook for 2022 before we open up the questions. Slide five, please, Jelena. 2021 was a challenging year for profitability. For context, insured loss estimates from various catastrophe events during 2021 are somewhere between $105 billion and $130 billion, making this one of the costliest years on record. Only 2017 produced a larger insured loss of around $150 billion for catastrophe claims. As we underwrite a significant catastrophe exposed portfolio across our various businesses, we expect to be presented with significant claims from our clients in years such as this. It's disappointing to deliver a combined ratio of 107% and a loss for the year, but this is only the second time this has happened in our history. These losses are within our risk tolerances and management's expectations given the magnitude of these events. Importantly, too, we have taken our usual approach to reserving, where we have a tried and tested process which has seen releases come through over time, as the life of the claim matures. We have a track record of positive reserve releases and are generally on the right side of these claims. We have made great progress across our business during 2021, where on an underlying basis we can see the benefits of the investments we have made since 2018 when the rate environment turned positive. During 2021, we enjoyed the fourth year of rating momentum across our entire underwriting portfolio. The 2021 catastrophe events have marked the progress we have made throughout our business. I'll now move to slide six. On this slide, you can see the strong increase in premiums for the year in what has been a transformational year for Lancashire. We have achieved what we always said we would do. Take advantage of the improved rating environment and grow our business at the right time in the insurance cycle. As well as right sizing our positions, I'm also really pleased by the addition of the new underwriting teams and the quality of people we've been able to hire. They complement and join our existing excellent teams, where we have been promoting strong individuals from within. Looking at 2022, we continue to deliver on our strategy. Our capital position gives us optionality, and we will continue to add new teams and talent to the group. I expect these investments to future-proof our business at the right point in the cycle to deliver returns to our shareholders as they earn through. I'll now pass over to Paul to give you the underwriting picture. Thank you, Alex. Moving to slide nine. I'll start with our underwriting strategy, which has not changed. Since the turn of the market in 2018, and in line with our long-held belief in cycle management, we've been expanding our underwriting footprint and building the Lancashire franchise. The fundamental principle has been to write more business as the rating environment improves in both existing and new lines of business. The ultimate goal of building a more robust portfolio that is better insulated from the inherent volatility that some of our products provide. Slide nine clearly shows that we've grown the business as the rating environment has improved and stuck to our stated strategy. How and where we grow depends upon the market opportunity. In the years preceding 2021, growth had been skewed towards some of the less catastrophe exposed lines in specialty insurance classes such as aviation and energy. Then post-COVID, we saw a more pronounced rate improvement in the catastrophe exposed classes, so we grew our footprint here. Unfortunately, improved rating never guarantees underwriting profitability. It simply increases the probability of profits, which is why we're prepared to take more risk when margins improve. We have been deliberately consistent with our strategy. Despite a challenging last year, we have made significant progress executing the long-term strategy. From this perspective, 2021 is a transformational year for Lancashire. We've continued to build out our product offering and developed and strengthened our underwriting bench while delivering 50% year-over-year premium growth. We believe these investments are for the longer term benefit of the Lancashire group and will drive future profitability and help deliver a more robust portfolio of risk. Turning to 2021 premium growth, I'd like to highlight a few key areas. Our growth is down to three things: improved rating across our renewal portfolio, new business in existing lines, and expansion into new lines of business. On the improved rating, our healthy portfolio RPI of 109% is a blend of rate increases within each segment of the business. This is the fourth consecutive year of rate rises across the portfolio, and you can start to see this feeding through to the underlying loss and combined ratios Natalie will explain later. The P&C reinsurance segment saw by far the most growth in 2021. As previously signposted, we grew our catastrophe exposure insurance footprint during 2021 as rates accelerated. This segment also houses the three new lines of business, accident and health, specialty reinsurance, and casualty reinsurance, which account for approximately $95 million of new business, which ended up comfortably ahead of our initial estimate of $40 million-$60 million. When it comes to 2022 outlook, there are a number of key points I'd like to highlight. Firstly, we anticipate a fifth year of positive rate momentum. Based on the recent run of loss activity, increased demand, reduced supply, and evidence of market conditions at 1-1, property reinsurance risk-adjusted rate change remained in the high single- to low double-digit range at 1-1. We expect specialty reinsurance to remain positive in most lines of business, albeit the rate of increase is slowing. This is not unexpected and something we've clearly signaled for the past nine months. As we've said before, we'll focus on rate adequacy, given the cumulative rate increases the market has seen over the past four years, and the fact that the trajectory remains positive. Secondly, we will grow premiums ahead of rate in 2022, with more of this growth coming from capital light products. On top of premium growth delivered by rate, we will have a pipeline of organic growth. Firstly, the new lines of business from 2021 will continue to mature and develop in their second full year. Also, for 2022, we've added construction and engineering, expanded our property insurance offering with a new Australian office, and significantly expanded our presence in both marine and energy liability sectors. These new initiatives should deliver approximately $50 million-$60 million of additional gross premium in their first full year based upon current market conditions. Growth in catastrophe exposed products will primarily come from rate improvement. We right-sized our footprint last year, so we're happy to further optimize and take the improved margin that rate increases will deliver this year on our already expanded portfolio. We will, as always, adjust our underwriting to mirror the opportunity and have the capital to underwrite more risk if warranted. Finally, we'll continue to develop our existing underwriting team and complement with new hires should the right opportunities present themselves. We've had a really successful run over the past few years of developing our own talent and hiring new underwriters and teams, which is something we'll continue to focus on during the course of the year. As always, any investments made have to fit two key criteria. They need to be accretive to group returns over the long term and fit within our underwriting culture. All of the above means that we have a positive outlook for 2022. I've already spoken about our investment in specialty lines, which began in earnest in 2018. The market started to move out of a soft market phase. A lot of these investments have been made within Lancashire Syndicate 3010. This has been a combination of new teams and expansion of existing product lines utilizing existing underwriting talent within the broader group. We have taken a monoline syndicate writing approximately $30 million of premium to a fully fledged multi-line specialty insurance syndicate writing more than $250 million of premium, achieving light touch status at Lloyd's, given its top quartile performance. 3010 has been a real success story and is a good demonstration of the number of strategic objectives we are trying to achieve during this fifth phase of the underwriting cycle. Investment in these specialty classes requires patience and a longer term view. It takes time for earnings to come through and be accretive. With new short tail classes of business, our expectation on a mean loss basis would be for underwriting profits to not come through until year three. In longer tail classes, this period would be extended. This can be seen from the chart as Syndicate 3010 has started to see the fruits of these investments come through in the past two years. These specialty insurance classes often have a higher attritional loss ratio than catastrophe reinsurance products, but certainly less volatility and crucially, are significantly less capital intensive. The capital allocated to 3010 from a group perspective has not meaningfully changed since 2018, yet the profits generated have. This has two benefits. Firstly, as we grow these product lines, it acts as a counterbalance to the natural volatility of our catastrophe business. Second, when underwritten profitably, they are accretive to ROE. 3010 is just one example of the specialty build-out that we've been carrying out over multiple platforms across the group. It does provide a neat illustration of what we're aiming to achieve. I'll now pass over to Natalie to discuss in more detail 2021 performance and guidance for 2022. Thanks, Paul. Today, I'm going to talk through some slides on our losses, our strong capital position, and our investment returns. Starting with slide 14 on the loss environment. As Alex has mentioned, 2021 has been estimated as one of the costliest years for natural catastrophes on record. Our overall total net claims for where there were large losses in 2021 was $306.4 million. This includes the previously announced losses for Hurricane Ida, the European storms, and Winter Storm Uri, as well as political violence claims from the riots in South Africa in July 2021. During the fourth quarter of 2021, we incurred further catastrophe losses for the Midwest storms and tornadoes and Australia hailstorms. Although the extent of the losses in 2021 is obviously disappointing for us. Our efforts to grow the business and diversify our portfolio of products over the last few years was successful in providing something of an offset to the catastrophe losses. For comparison, Lancashire's 2017 catastrophe and large losses totaled $213.7 million, but resulted in a combined ratio of 124.9%. As mentioned last quarter, we have maintained the same catastrophe reserving process for the current year events. The estimated loss is built ground up on a contract by contract basis and is then challenged and assessed by representatives from across the business and across departments. For this year's events, we have been especially mindful of potential supply chain issues, demand surge, and inflation. We have historically reserved conservatively for catastrophe events. We showed you last quarter that our initial loss estimates for the 2017 catastrophe events have run off favorably, whereas the initial PCS estimates strengthened. 2021 was the first year since our inception that we incurred losses of any significance in our terrorism and political risk book due to the political unrest in South Africa. This loss is within our expectations for this type of event and magnitude of industry loss. Our terrorism and political risk book has historically been one of the most profitable classes of business for Lancashire. That's not to say it can never have a loss. Turning to reserve releases. We have had overall favorable prior year loss development in every calendar year since the company was formed. For 2021, our total favorable prior year development was $86.5 million in excess of the previous guidance of $45 million-$60 million. The favorable prior year development was positively impacted by the release of two large risk claims from older years in our favor, as well as releases across the 2017 cat losses. As we have noted before, and given the lines of business that we write, we are exposed to large risk claims that can see movements on prior years. However, given the growth in both our premium and loss reserves this year, I would estimate prior year releases for 2022 to be higher than previous guidance in the region of $70 million-$80 million. Turning to slide 15. This slide is a reminder of the inherent volatility of catastrophe business, which has always been a significant proportion of the business that we write. The first chart shows the pattern of catastrophe losses over a long time horizon. Insured catastrophe events were much higher in the last five years than the five years preceding those, and over time, there appears to be some clustering of catastrophe events. The second chart shows the relative components of our combined ratio over the last 10 years. This demonstrates the inherent volatility in our returns from the catastrophe business that are necessarily impacted by catastrophe losses in years of heightened activity. However, since Lancashire's inception, the net loss ratio for our property catastrophe and retrocession classes of business is well under 50%. Although we will have years of volatility, we expect that these classes will continue to be profitable for us over the long term. As I said last quarter, we expect continued growth in the new, more attritional lines of business to offset the volatility and catastrophe losses to some extent. Although these will have a dampening effect on the underlying attritional ratio, as we tend to reserve new classes conservatively in the initial years of writing. These newer lines of business are far less exposed to catastrophe losses and are not capital intensive. They help to diversify our book and give us a stable income stream to help offset volatility from the catastrophe and large risk exposed business. As we have said before, they are accretive to the change in fully converted book value per share. Without these new lines, our earned premium would be lower, and this year's catastrophe events would have resulted in a higher combined ratio and overall loss for the year. Moving to the next slide. A number of you have asked us to look at the underlying combined ratio. Removing the benefit of reserve releases and adjusting for catastrophe and large losses, you can see the positive impact of rate increases on our combined ratio since 2017. Our attritional ratio was 36% in 2021, running at the lower end of the 35%-40% range previously given. For 2022, with increased rates across the majority of our business, the attritional ratio guidance range has improved to 33%-37%. The actual ratio will very much depend on the business mix that we write, which is itself dependent on the market opportunities that we see. This year's premium growth will continue to earn through in 2022, and our net premiums earned will further benefit from the expected 2022 new business that Paul has spoken about. This higher premium level will benefit our overall combined ratio. We expect a G&A ratio in the region of 18% for next year and anticipate that the acquisition cost ratio will remain broadly the same as this year. Moving on to capital on slide 17. Even given the losses in 2021, we retain a strong and robust capital position. As a reminder, we started 2020 in a stronger than usual capital position as we retained earnings to fund growth. We then raised $340 million in equity capital in 2020 and an additional $123 million of debt capital in early 2021. Although we have used a substantial portion of this additional capital to fund our growth in the last couple of years, we retain more than sufficient capital to fund our current planned 2022 growth. We still maintain a strong regulatory capital position following the year's losses with a solvency ratio of 222% at Q3 2021. Our year end position is likely to be slightly higher than this as we expect that our 2022 reinsurance program will be beneficial at the regulatory loss return periods. We will provide the final year end regulatory position at the Q1 earnings call. As I previously noted, we generally expect that our BMA solvency ratio will be comfortably above 200% going forward. At this level, we are more than sufficiently capitalized from a rating agency perspective. In line with our stated dividend policy, we are declaring a normal final dividend of $0.10 per share. Finally, to investments. Slide 19 illustrates our relatively conservative portfolio structure with an overall credit rating at A+. Our 2021 investment performance, including net unrealized losses, was marginally positive at 0.1%. The significant increase in treasury yields, particularly between the two-year and five-year treasuries, resulted in losses in our fixed maturity portfolios. These unrealized losses were mitigated somewhat by the majority of the risk assets which generated strong returns, notably the bank loans, hedge funds, and the private debt funds. We do not anticipate major changes to our investment portfolio in 2022. Slide 21 provides a summary of guidance previously given, how we performed in 2021 and the new guidance for 2022. With that, I'll now hand back to Alex to conclude. Okay. Thank you, Natalie. We've got slide 22 on the outlook. You've already heard me say that our strategy remains unchanged. We're an underwriting focused business, and we're continuing to underwrite the opportunity in front of us. Our balance sheet is strong and allows us the flexibility to navigate the insurance cycle. Saying that, our franchise is more resilient now due to the investments we've been making since 2018. Our non-catastrophe capital light lines are lowering the volatility of our results even in challenging years. Our outlook is positive for 2022, as highlighted by Paul's commentary and the improved guidance Natalie gave you. We expect to grow this year as long as we see the underwriting opportunity and to improve our returns. We will do this through the rate increases we expect, the growth of the existing teams we have and the addition of new underwriting teams. Lastly, I'd like to thank all our shareholders for their support and all my colleagues for their continued hard work making our company what it is today. With that, I'll hand back to the operator for questions. Thank you. Ladies and gentlemen, if you wish to ask an audio question, please press zero one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing zero two to cancel. Once again, that's zero one to register for a question. Our first question is from Faizan Lakhani of HSBC. Please go ahead. Morning. Thank you for taking my question. Well, afternoon now, sorry. My first question is on the S&P rating model changes. They are in the process of collecting comments on the revised capital model, in particular on the focus on Nat Cat. Could S&P become the binding constraint going forward? Any color on this would be great. The second is on the attritional guidance. I wanted to understand how I should be disaggregating the impact of business mix shifts in what's been achieved in 2021 and the rate impact. If I look at the shift on gross written premium, the proportion of property has increased to 63% and that still has to earn through. Just understanding that would be helpful. The final question is on the cat loss ratio. Is this still a good proxy to use historical performance given the fact that you've had a quite strong shift in business mix and we've had the change in the claims environment? Thank you. Okay, thanks, Faizan. I think I'll take all of those. The first one on S&P. Yeah, so obviously they haven't released the full model in Excel format, which is not massively helpful. It's quite difficult to assess the full impact. We don't anticipate a significant change to our rating. Actually we don't expect S&P to become the binding constraint for us. What we do think is that the increase in risk charges will be offset by diversification benefits. We'll also get a capital benefit on our new model for the allowance of deferred acquisition costs. Just as a reminder, the debt refinancing that we did in early 2021 was all Tier two debt. That's all fully allowable in the new S&P model. On attrition, one thing I can tell you is that the improvement that we've seen so far in the attritional ratio has been dampened since what we would term the new lines of business written since 2018. If you were to exclude those new lines, the ratio has decreased more directly in line with rate increases. We would estimate in 2021, as an example, that the new lines of business increased the attritional ratio in the region of 6 percentage points, if that's helpful. That is. Thank you. On the cat performance, I think we normally state to look at the last 10 years average, cat percentage, loss ratio. I think we've previously given 15%. If you look at the last 10 years now rolling average, it's maybe just under that. Is that still relevant given the fact that you've grown very strongly in the last year, and there's talk about climate change and, you know, claim inflation? Does that still work, that sort of rough guide? Yeah, I think that still works because we are obviously in the process of growing the more attritional lines on the specialty book as well. It's not just the cat lines that we're growing. Great. Thank you very much. Thank you. Our next question is from Freya Kong of Bank of America. Please go ahead. Hi, good afternoon. I've got three questions, please. Just on your attritional loss ratio guidance of 33%-37%, this is quite a wide range. Could you give us some more color on what sort of conditions you would need to see to hit the bottom of this range or coming closer to the top? My second question is on business mix. If the opportunities are available to you, what would be an ideal long run business mix for Lancashire? Third question is just on reserve releases. You've guided for $70 million-$80 million for 2022. Is this 2022 specific or guidance for an ongoing basis? Thanks. I think, Freya, look, on business mix, I think we've always been very clear on this one, that we've always said that we sort of underwrite the opportunity that is there at the time. We've never been wedded to sort of percentages across our whole underwriting portfolio. I suppose this year is a great example, isn't it, of where, you know, we've got, you know, a better balanced portfolio, but we're happy to hold our cat footprint. I think we just try and look at the opportunities. We're not wedded to any product line. We're just looking to generate better returns across our whole portfolio. We've never been wedded on business mix. I think on attritional ratios, you know, what I would say, just to remind you that you have to understand the business that we write, and we still write, you know, big ticket specialty items that can move around. So for us, on attrition, it's always gonna be very difficult to really sort of get to the granular data that maybe you're looking for. But clearly what we've demonstrated in the last year or so is the improvement in our portfolio, the improvement in our attritional ratio. You're seeing the benefits from, you know, five years of rate change now. Obviously as the capital lines sort of earn through, you know, you're seeing the benefit there. It's very hard for us to give you a pinpoint number. Clearly our numbers can move around as always been the case at Lancashire. I think you are now, you know, we're now giving you positive improvements and better guidance, which I think is, you know, a real demonstration of our conviction of the portfolio we've built. Hi, Freya. On the reserve releases, I would say just keep that number in for next year. We'll revisit it this time next year and give updated guidance. Obviously, theoretically, as premiums increase, and your reserve balance increase, then your reserve releases will also increase as well. Yeah. Given there's no change to our reserving methodology. Okay, great. Thanks. Sorry, just to follow up on the business mix. I mean, yeah, you've been investing in specialty lines since 2018 and building that out quite successfully. Do you see that trajectory ongoing or yeah, because you need to balance the volatility of the cat portfolio. I just want to get a better understanding of what sort of business mix is ideal for you guys. I think there's two separate things. You know, we've invested in these product lines because we believe that they improve our returns over time. All the time we can find new people, all the times that we can expand into more specialty classes, we will continue to do that. That will inevitably change the business mix. You are correct, that will help balance out the volatility, the inherent volatility of a cat portfolio, as you've seen this year. You know, our result is still over 100, which obviously is not ideal, but I think the point we were trying to make earlier is that we have more ballast across our business, and we have more sort of non-volatile business. But ultimately, remember, the only time we enter any product line is to improve our returns. You know, that's the sole purpose of everything we're trying to do. Yep. Thanks, guys. Thank you. Our next question is from Nick Johnson of Numis. Please go ahead. Hi, everybody. Three questions, please. Firstly, on reinstatement premiums, just wondering how much of the outwards reinsurance in 2021 was reinstatements. Just wondering if you could quantify that if possible, please, to even get a better sense for the underlying. And secondly, on tax rate, what should we be assuming for 2023 tax rate given the OECD 15% agreement? Just wondering what signals you're hearing from the Bermuda authorities. Apologies if you already answered that question before, but wondering if there's any update. And lastly, on investments, just wondering if you can say anything about the risk asset performance in the year to date. Are we in negative territory on those assets or are they holding up okay? Thank you. Okay. I'll take the first two and then I'll hand over to Denise with the investment question. On reinstatements, what I can say is they were a relatively small proportion of both the inwards and outwards premiums, and they actually virtually offset each other, so there's no bottom line impact from those. On the tax rate changes, obviously we're maintaining a watching brief on that. We don't have any updates from previously. Certainly we're not expecting a change for 2023. Okay. Hi, Nick. It's Denise here. Yeah, no, our risk assets really diversified the portfolio quite well. They had positive returns year to date, so it was beneficial to the fixed maturities that were hit by the increase in Treasury yields. Yeah. Okay. In positive territory. Okay. That's great. Thanks very much indeed. Positive territory. Yeah. They were good return. Thanks. Thank you. Thank you. Our next question is from Andrew Ritchie of Autonomous. Please go ahead. Oh, hi there. Thanks for the additional detail in the presentation today. It's very welcome. First question. I think you implied if the cat business, to the extent you would grow in 2022 is purely rate, not exposure. In that context, should I assume when I look at your PMLs, which clearly went up dramatically with the growth in 2021, that they'll stay where they are, all other things being equal in 2022. That's the first question. Second question, when would you get comfortable on releasing some of your COVID reserves? 'Cause I think particularly on the type of exposure you would have had, there should be some finality now on those claims. The final question, I'm intrigued. I should understand what this means, but the footnote on slide 17, I don't really know what it means. It says, "Our year-end position is likely to be higher than this, as we expect that our 2022 reinsurance program will be beneficial." What do you mean by that? I guess linked to that, can you give us some color on the placement of your protections for 2022, both reinsurance and retro, given it's been clearly a much tighter market? Thanks. Sure, Andrew. If I take questions one and three, and then, Alex will take, question two. Yeah, your assumption on PMLs is correct. Obviously, PMLs do move around for a whole host of reasons. As a broad comment, if we keep our cat footprint the same, you would expect the PMLs to be much more stable than they were last year. That's a fair assumption. On reinsurance, I think it's best if you split this into two parts. As you know, we buy a lot of our reinsurance at the 1st of January. Not all of it, but the vast majority of it, at the 1st of January. We should really split this into kind of catastrophe exposed reinsurance protections and non-catastrophe exposed. Mm-hmm. For the catastrophe exposed reinsurance, you know, our experience in the market was broadly similar to the general market dynamics, albeit we were a little insulated, given the vast majority of our reinsurance is generally from rated carriers with limited limit purchase from ILS markets. In general, for the cat products we purchased, we paid more for our cover in line with market dynamics, and our retentions on our core programs did increase a bit, albeit we purchased a little bit more limit, which is where you're seeing some of the benefit come from a capital perspective. We were able to purchase more limit on an aggregate basis, which again provides greater protection from loss frequency, but also provides some additional capital relief. On the non-cat side, so on the specialty reinsurance side, the market was a lot more stable than the catastrophe exposed space. Very simply, it's broadly similar to last year in terms of spend, and broadly similar in terms of structure. If you think from a spend perspective, much like last year, the dollar amount of spend will probably go up. Two reasons. We've paid more for cat protections, and secondly, again, we're adding more teams, and there comes a disproportionate percentage spend on reinsurance for the new teams. As an overall percentage of inwards premium, much like last year, we'd expect the ratio to go down again, given the anticipated growth in top line. Okay. Sorry, just to clarify. Okay. Sorry, just to clarify on that. The reason there's a regulatory benefit is because you've bought more, essentially, more limit, more cover. More and more. There was some more limit purchase, correct. But also, because we bought more aggregate protection, which is in effect more limit. That has worked quite well from a capital perspective. Another way of putting it, so in effect then, your net cat exposure has gone down then. Well, at least the model says that. Well, it's broadly stable year-over-year. Right. But- Okay. Sorry, Alex. Sorry. On COVID, I mean, I'll make some comments about our own book and then I'll give you a sort of a wider view. I think for our own book, in the same way that any other reserve can move around, you know, we've seen nothing to change our view, i.e. no evidence to reduce our current COVID reserves. You know, that's why they've been stable for a long time now. My personal view on our book is that, you know, we are, you know, nowhere near close to the end of the process of assessing the claims that we have and the reinsurance we have available. There's no reason for us to change our COVID reserve. I was surprised that some others are bringing their COVID reserves down now. That doesn't really make a huge amount of sense to me. Obviously, different carriers have different books of business and may have reserved in a different way, but it does feel premature to me, for anyone really, to be moving their COVID numbers down at this point. As I said, clearly they may have a different process to us and different portfolios of business. Okay, thanks. Thanks. Our next question is from Iain Pearce of Credit Suisse. Please go ahead. Hi. Thank you for taking my questions. I think they're largely two follow-ups on what Andrew was asking about. The first one was on catastrophe appetite. If I'm just trying to understand sort of rates being up again on a risk-adjusted basis this year, if you're thinking about the underwriting opportunity, why you wouldn't be growing your cat book this year when you would last year significantly? Is that a business mix thing? Is that something to do with, you know, PMLs being at the upper end of where you want them to be? Just trying to understand, you know, or is there no opportunity that you grow the cat book this year as well as a result of sort of, you know, business mix considerations? On the reinsurance changes, I think Natalie talked about favorable benefits at key regulatory return periods. Which regulatory return periods are sort of seeing the most benefit as a result of the changes in the reinsurance program? Thanks. Okay. Look, you know, I think I've said this on our last call. Like, we'd never sit here and say we'd never grow our cat book because until you see the opportunity, you can't make those calls. I think there are circumstances where we would grow our cat book. If you think where we are today, we've only seen the first of January renewals so far, which get a huge amount of attention. My personal belief is that, you know, the meat of the cat portfolio is the U.S. renewals, and until we see those renewals, we won't get a true picture of the opportunity, which could be better than we think it is. I don't think it will be worse than what we've planned for in any circumstance, but it could be better. We could grow our cat book. Equally, you know, as we've said at the start of the call, your cat portfolio brings an inherent level of volatility to your overall business. There will be a point where any carrier's just gonna make that decision that you've just got enough cat business. I think as you can see from this year, we run a fair bit of volatility already. There's not an unlimited appetite for cat, but we do have the capital and the ability if pricing moves on again to write more cat business. I think by the time we have our next call, we'll have a much better view of the market and the opportunity, and we can update you further from there. Hi, Iain. Sorry, can you just repeat that second question, please? Yeah, sure. It's just on you. You talked about the benefit, the different regulatory key regulatory return periods from the reinsurance changes. Sort of, which are the key regulatory return periods that you're seeing the benefit? Some of the reinsurance that we've bought, particularly the aggregate cover that Paul's mentioned, gives us more benefit, kind of in the tail of the risk, so kind of the more extreme end of the return period, and that's where it benefits the rating agency and regulatory models. You won't necessarily see the same benefit on our just normal occurrence PMLs when they come out at Q2. Okay, perfect. Perhaps if there's more specifics you want in that call, I can provide some more detail. Sure. No, no, that's great. That's great. Thanks. Alex and Paul, if I could just follow up on the cat business. I think in last year you saw big European PML growth. At 1-1, we sort of shouldn't. Is that fair to assume that PML growth won't be significant based on the sort of appetite that you have at the moment? Yeah, I think as we answered to an earlier question, it's a fair assumption to think that our PMLs are gonna be broadly stable this year versus last. There are things that happen within models that aren't necessarily always intuitive, so you do get things that move around. But as a general statement, you would expect our PMLs to be broadly similar. Perfect. Thank you. Mm-hmm. Thank you. Our next question is from Ben Cohen of Investec. Please go ahead. Oh, hi there. Good afternoon, everyone. I have two questions, please. Firstly, I was interested in your view of pricing adequacy in catastrophe business, particularly for sort of secondary perils, maybe where, you know, I guess large parts of the market, including yourselves arguably, were caught out last year. Is your view on the pricing of those perils, has that changed over the course of the year? Secondly, I'd like your view on the relative pricing of catastrophe risk between the reinsurance book and the insurance book. Maybe you could give us some indication in terms of how you're looking to shift that balance between the two over the course of this year. Thank you. Yeah. Look, Ben, I think secondary perils have certainly been highlighted in more recent years. I think there's always been an acknowledgement that the models have struggled to, you know, capture them. You know, it's one reason, to be honest, we've never solely relied on modeled outputs for pricing risk, given that no model's perfect. You know, part of underwriting is understanding those weaknesses within models, and one of those weaknesses is certain secondary perils. Absolutely, we've seen a number of secondary peril losses through the course of 2021. I mean, obviously we're seeing risk-adjusted pricing at 1-1. I think pricing is one tool. I think another thing that as a market we forget to talk about enough is, you know, attachment point of risk, and I think this is particularly important on secondary perils. I think there was a lot of focus, certainly at the first of January, on getting clients to assume more risk at the bottom end of programs. I think a lot of that was as a result of trying to move away from the impact of the secondary perils. You know, you're clearly in a better position in 2022 versus 2021 for a combination of price increases and level increases. Your second question. Sorry, again, was that the balance between how we see reinsurance and property insurance? Yes, that's right. Yeah. Okay. Over the past couple of years, we've been growing both. You'll recall that our property insurance product was predominantly sold from our syndicate and then 18 months, two years ago now, we expanded that to also offer from the company platform. We've been gradually, like building that out as the market improved. We obviously saw more significant growth on the reinsurance side last year as that price momentum kicked. We saw pricing increasing certainly start earlier on the insurance book, and that momentum has continued. I'll go back to what we always say. Obviously, it will be driven by market conditions this year, but I'd probably expect to grow a little bit more on property insurance versus reinsurance in 2022. as we know, things can change quite quickly. If the opportunity is different, then we're more than happy to pivot between the two. Okay. Thank you very much. Thank you. Our next question is from Will Hardcastle of UBS. Please go ahead. Hey, everyone. It's a really high level one. Just really thinking about the interest rates have moved. Obviously, it was a key factor in keeping the price momentum going. At what stage do brokers start pressing the flesh that interest rates have moved to using that against underwriters? And perhaps just also as an extension, just thinking about how rising interest rates presumably benefit the capital ratio and how that feeds through and any sensitivity. I mean, Will, on that first question, we didn't really get that. I think you said something about interest rates and brokers using that against us. Was that correct? Yeah, that's right. I think for our portfolio that we underwrite, the interest rate argument is just not one that's prevalent with brokers when they come to us to broker their clients' deals. It fundamentally is more about what demand and supply there is in the market and using those dynamics to either pressure us to give reductions or ask us for capacity, which means we can put pricing up. I think it's probably more relevant if you've got a longer skew towards the longer tail classes, which at the moment, as you know, we have some, but it's relatively limited compared to the rest of the portfolio. I'll be honest, it's not really something that we have presented to us from brokers as a reason to start giving rate reductions. Okay. I don't think we quite caught the second part of the question. It was just how higher rates, even if it's just at the short end, benefit your capital ratio. Any sensitivity could help. Hi, it's Jelena. We are very short duration. If you look, roughly 100 basis points move is something like $15 million-$20 million impact. That's tiny. I mean, it's a very, very small impact on for us. It's more of an impact. Rising interest rates tend to be more of an impact for us on earnings as a positive, as opposed to necessarily impacting our capital base. I think I would just add that, you know, our, with the short duration portfolio, we'll turn over very quick and our reinvestment yield goes up very quickly. Thank you. Our next question is from Ashik Musaddi of Morgan Stanley. Please go ahead. Yeah, thank you, and good afternoon, everyone. Just one simple question is like, clearly the property book has gone up quite a lot last year, and most likely it is going to continue to grow this year as well. Can you just give some color as to which geographies you're putting a bit more in terms of growth? I get it that that pricing is what drives the focus. If we can get some visibility as to, okay, out of the 50% growth, like, say, a large half of that is coming from U.S., some from Europe. Any visibility on that would be very helpful. Is there any particular line of property where you are going a bit more exposure? That would be very helpful as well. Thanks. Hi. I think to be honest, as we mentioned in property catastrophe exposed property business, whether it be insurance or reinsurance, you know, growth, we have rightsized our portfolio quite a lot during 2021. I think as Alex mentioned, from a risk perspective on an inwards basis, you know, it's gonna be broadly similar this year. In terms of where we underwrite the risk, we have a global footprint when it comes to property catastrophe business. As with most markets, you know, there's a lot of dominance from the U.S. We obviously write business all around the world from Australia, Japan, Europe, et cetera. I don't expect the balance of that to change significantly year on year. Okay, thank you. Thank you. Our next question is from Tryfonas Spyrou of Berenberg. Please go ahead. Hi. Good afternoon, everybody. Just two questions. The first one on marine. I think premiums grew by just 2%, RPI was at nine. I think you mentioned the impact of some multi-year contracts. I guess should we expect to catch up in growth in 2022, given also you have the new teams in place? The second question is on G&A ratio guidance being around 18 points. If I apply this to a reasonable expected net owned premium figure for 2022, the absolute number of expenses comes up quite a lot. I was wondering if you could comment on this. I would have expected that to gradually come down a bit more given the growth that you're seeing this year as well, and obviously the net premiums earning curve from 2021. Thank you. All right. On the first question, yeah, you're quite right. The marine portfolio did have some multi-year policies in there that weren't due for renewal. We would expect some of those to renew in this year, 2022. Obviously, that would be subject to acceptable renewal terms, et cetera. Also as you said, you know, we've invested specifically in the marine liability sector, where our underwriter joined us kind of halfway through 2021. We would expect that line of business to build out during 2022. Yes, you would expect to see some growth certainly larger than we saw in 2021 come through in 2022. On the G&A ratio question. The ratio for the current year is probably around 2 percentage points lower than a normal rate because we have reduced the variable pay element of compensation due to the performance in the year. It's kind of artificially a little bit low this year. Also, if you look into next year, the 18% as well includes some relatively conservative assumptions on headcount, which is the main driver of our G&A ratio, and wage inflation. The 18% I would say is relatively conservative, but you have to take into account that this year is also a bit lower than normal. Okay. That's clear. Thank you. Thank you. Our next question is from Ivan Bokhmat of Barclays. Please go ahead. Hi. Good afternoon, everyone. A couple questions from me. The first one is, perhaps a bit cheeky. It's on growth. Obviously last year you've increased your book by 50%. 9% from rate movement, I guess 12% from new teams. That's GBP 95 million. 30% from exposure growth. What you give us now for guidance is just on the new teams component. I was wondering if you could give some quantitative or qualitative feel of where the other two might go, in 2022. The second one is, I guess a little more technical. Just drawing on the comparison, Natalie, that you made to the 2017 year. When I look at the triangles, the 2021 is 79% of your net earned premiums. 2017 was far higher, it was 94, while actually the Nat Cat component as percent of premiums as you've highlighted, was actually quite similar. I was just wondering what's different between the way you've reserved for those two years, and how the runoff may look different? Thank you. Okay. Ivan, hi. I'll take your question on growth, and it will definitely be more of a qualitative answer than a quantitative on the growth. I think look, as I mentioned in my script, we definitely expect to grow ahead of rate this year, albeit certainly not to the same extent that we saw in 2021 when you know, the growth was you know, pretty exceptional. We're gonna see growth from three principal areas. Obviously, as we mentioned, it's gonna be the fifth consecutive year of positive rate momentum. You know, rates are likely to be more pronounced on the catastrophe exposed products than the specialty exposed products, albeit we still expect positive rate momentum in specialty. That's gonna be the first area. Secondly, those new classes where we add, that we added in 2021, those that contributed $95 million in 2021, well, they're gonna be in their second full year. You're gonna continue to see them mature. And then thirdly is the quantitative part that we've given you, which is those four new teams we mentioned starting underwriting in 2022. Based on current market conditions, our, you know, our current estimation is $50 million-$60 million of additional GWP. Look, we do anticipate good growth in 2022, but we're obviously mindful to caveat that it certainly won't be to the same extent as 2021. Hi, Ivan. On your second question, yeah, it does sound quite technical. I might have to follow up after the call on what data you're looking at. I would say that we were writing lower attritional business in 2017. That might be the answer to your question. I think maybe we should follow up after the call. I suppose the level of rate adequacy has also changed quite a bit. Okay. Look, maybe just to follow up on the first question. I suppose it would be pointless to try to highlight, you know, to guide you towards high single digits, low teens type guidance. Is it too early for that? I mean, maybe just as an outcome for the 1-1 renewals, you could suggest what that points towards. Sorry for being persistent. No, fine to be persistent. Unfortunately, I'll be stubborn back in that I haven't. I can't give guidance on that because they're, you know, numbers that we haven't yet put out in the public domain. Obviously when we come to our next earnings update, we're gonna be able to give you a lot more color on that. Absolutely the numbers we produce in terms of premiums for Q1 are gonna give you a very good guide as to what you can expect for the balance of 2022. Sorry I can't be more helpful. Okay. Appreciate it. Thank you. We have time for one last question, and that will be from Barrie Cornes of Panmure Gordon. Please go ahead. Thank you. Hello, everybody. I just got the two questions. First of all, I just wondered if you could give us a feel for your appetite between quota share and excess of loss business and how attractive each one is relative to the other. The second question was maybe slightly wider market question really. Just wondered, given 2021 losses, whether or not you think that risk modeling needs recalibrating generally, and if you take a view internally anyway. Thank you. Okay. Hi, Barrie. I'll take question one. Historically, I assume you're referring to the reinsurance portfolio. Yes. Our appetite has been heavily skewed towards excess of loss business, whether that be property catastrophe or other areas. In the last couple of years, we have written a little bit more quota share business as some of those underlying rates with some of our cedents have improved. We've partnered with a few clients where we have an excess of loss relationship as they build out, you know, their business. This is predominantly in the U.S., to be fair. We've done a little bit more of that at 1-1, but it's still the minority of our business from a catastrophe exposed reinsurance lines. Mm-hmm. Obviously we started underwriting casualty reinsurance last year. It's the opposite. The predominance of that business is quota share reinsurance as opposed to excess of loss. Obviously the casualty reinsurance piece is still a relatively small part of our overall income. Sorry. Your comment about models is interesting because, you know, there's a lot of commentary at the moment about models and how good they are for cat business. I think, you know, one thing we've always been very clear on over the years at Lancashire is that I think the modeling aspect of catastrophe underwriting is only one part of the process. I think that too much reliance on models is probably as dangerous as, you know, having no models at all. I think that where you... What you need to do or what any good underwriter needs to do when they are underwriting a cat portfolio or a piece of business is that, you know, use the model for what you believe it's good for, but totally accept the parts of the model that are just not adequate for the process. I think when people talk about climate change or they talk about unmodeled perils or secondary perils, inflation, all these factors have to be factored into every underwriting decision. What we've always tried to do here is take the modeling data, take the actuarial view, take the science, but then overlay it with some experienced underwriting views, and we believe that gives you the right outcome. I think people expecting the model to give you the perfect answer on a catastrophe portfolio are kinda kidding themselves. Yes, models get better over time, and every time you have a loss, you can recalibrate your model. You can look at the things that are not good. Clearly, you know, every loss gives you a new data set. I think anyone over-reliant on models are sort of kidding themselves are gonna give it the answer. I think our view is you just need that blend, and that should give you a better outcome. Great. Thank you. It's really useful. Thank you. Okay. Thank you for your questions and, we'll leave it at that.