Hello, and welcome to the Lancashire Holdings Limited first quarter 2021 results. Throughout the call, all participants will be in listen-only mode, and afterwards there will be a Q&A section. Please note this call is being recorded. Today, I'm pleased to present Alex Maloney, Group CEO, Paul Gregory, Group CUO, Natalie Kershaw, Group CFO. Please begin whenever you're ready. Okay. Thank you, operator. Good afternoon, everyone. We'll now go to our investor presentation. If you can please note our safe harbor statements. The Q1 highlights. In Q1, we have generated our strongest ever gross written premium. We have demonstrated our ability and willingness to deploy additional capital into the hardening market, which is in line with our long-term strategy. We are still declining more business than we are writing. The current opportunity means we have to seek the best business and remain disciplined on rate adequacy, not headline rate changes solely. Our focus is on the aggregate rate change we have seen since 2017 across the majority of our portfolio. The RPI we are seeing is in line with our expectations that the opportunity set is up. Our Q1 underwriting performance. Winter Storm Uri is in line with management's expectations for a loss of this size. It's an historically high CAT loss to have in Q1, which is a reminder for the industry that rate momentum needs to continue. On COVID, our loss estimate remains unchanged. We are seeing little change in our claims data. We still caution any suggestion about the maturity of this loss as we are still living through COVID. We are comfortable with our number, and any change to our COVID loss does not derail our strategy. Absent Uri, all our underlying performance looks strong, and our strategy is on track. On capital, during the quarter, we had a highly successful debt raise, which provides efficient capital, which is all rating agency qualifying. Therefore, we have sufficient headroom for our budgeted growth throughout 2021. On investments, our investment portfolio is in line with management's expectations, where we will remain short duration. Go to slide four, please, Jan. We are taking advantage of the harder market, and our sole focus is to maximize ROE. We look to manage our business across all stages of the underwriting cycle to maximize fully converted book value per share. This means that we will aggressively grow at this point of the cycle and retreat when the balance of the underwriting opportunity wanes. Every action we take is to improve investor returns over the long term. On diversification, our diversification into new lines of business is solely to improve returns. Each product line has to produce acceptable standalone results. Diversification is a by-product, not a driver for us. Less volatile capital-light product lines can be written at higher combined ratios and still generate attractive returns. Since 2018, we have continued to build out our product suite as the underwriting opportunity improves. Our focus is on underwriting talent, the right underwriting returns, and culture. We remain disciplined that the opportunity set is up, and we expect to continue to grow whilst returns continue to improve. When looking at our business, we are seeing acquisition ratios declining as the underwriting opportunity improves, and our expense ratio is also declining as we grow. Our current strategy improves our combined ratio. Slide five, please, Jan. Slide five demonstrates we were patient during the soft part of the insurance cycle, but we have grown with the improving underwriting opportunity since 2017 in line with our long-term strategy. We will continue to grow whilst the underwriting opportunity remains strong and our DNA of the business remains unchanged. I'll now hand over to Paul. Thank you, Alex. We can move to slide six, please, Jan. As Alex has noted, we're extremely happy with our top-line premium growth in Q1. Market conditions were in line with our expectations. This has allowed us to deploy the capital we raised in the lines of businesses we have targeted for growth as rating moves to a level where far more business reach rating adequacy. Each segment continues to show positive rate momentum with a portfolio RPI of 112%. We're now in the fourth year of cumulative rate improvement. In many of our product lines, we are at attractive rating levels that allows us to speed up the rate of growth, and we have the capital available to support this. Within the P&C reinsurance segment, every class has delivered growth. In line with our strategy, the majority of Q1 premium growth in this segment has been driven by the property reinsurance lines. We've delivered substantial growth in both property catastrophe reinsurance and property retrocession, with both these classes demonstrating double-digit rate increases. This growth is from new business, increased rates, and growing our relationships with existing clients. Also within the P&C reinsurance segment, we started to underwrite casualty reinsurance, specialty reinsurance, and accident and health. All three classes have started the year well, and we are confident in achieving at least the upper end of the $40 million-$60 million guidance previously provided. For the property insurance segment, we have grown the Property D&F Insurance portfolio as rates continue their upward trajectory, and we deploy more capital across both the Lloyd's and company platform into this class. This D&F growth is offset by premium reductions in Terrorism and Political Risk classes. Market conditions here remain stable with broadly flat rating environment, but the reduction in premium is driven by the political risk book, where the majority of risks are one-off in nature, and there is no renewal pattern, which means we can have lumpy premium quarters. This is also a class that is linked to economic activity levels, so we expect some demand pickup as the world gradually recovers. The energy segment continues to see premium growth given the continuing maturity of the power and downstream energy portfolios, which is helped by a favorable rating environment as momentum in these subclasses continues. We've also grown our energy liability portfolio, as this subclass also experiences strong rate improvement. Within upstream energy, it remains less sophisticated, albeit still positive, and our appetite here remains relatively stable. Both the marine and aviation segments have seen year-on-year premium reductions. In both instances, this is purely down to timing. In aviation, where Q1 is traditionally a quiet quarter anyway, there are a small number of contracts that are due for renewal later in the year. In marine, there were a small number of large premium multi-year contracts written in Q1 last year, not due for renewal in 2021. Market conditions in both aviation and marine remain favorable, with continued rate momentum and our outlook for 2021 premium growth in both segments remains positive. Whilst acknowledging the potential demand headwinds that are likely to impact the aviation market later in the year. In marine, we will be expanding our marine liability offering when our new underwriter joins us later this year, albeit the top-line premium impact will not start to be seen until 2022. As ever, we continue to assess new underwriting opportunities all of the time. If we can bring additional underwriting talent to the group that can improve our underwriting return over time, then we will do so. Turning to slide seven. Our business mix between high and low attrition business can change given that we grow and shrink our top line quite dramatically given underlying market conditions. Market conditions in some of the specialty insurance lines with higher Attritional Loss Ratios, such as aviation, energy, and marine, started to improve more favorably at a greater pace than other areas of the portfolio. We grew into this favorable market. As such, the business mix shifted. To reiterate what we have always said, we are agnostic as to what the mix is. The focus is to maximize the return on capital from underwriting, and each product line can run at a different loss ratio while still being accretive to the underwriting return on capital. Before I turn over to Natalie, I just wanted to give a quick update on the Japanese property cat renewals. I'm pleased with the rate increases we were able to achieve and the new business volumes we saw, which allowed us to further grow our Japanese portfolio. We've had long-standing relationships with our Japanese clients, and we continue to support them as they look to buy more capacity. I'll now hand over to Natalie. Thanks, Paul. Hi, everybody. I'm going to talk through some slides on our business mix and also capital. If we can go to slide eight, Joanna. Following on from what Paul has said about changes to business mix, slide eight gives some further detail around the relative benefits of different lines of business. Where lines have heavy exposure to catastrophe losses, there is a high capital charge due to the volatile nature of the business written. The benefit of this type of business is that the underlying attritional losses are low, and therefore in light catastrophe years can be very profitable. When you look at the more attritional lines, they are much less volatile and require significantly less capital. As long as these lines are profitable, they are accretive to return. Building a more diverse book of business with some new, more attritional lines that are still profitable gives us a stable earnings stream. Higher volumes of business also increase premium earnings over time, leading to lower expense ratios. The relatively wide guidance on the attritional ratio of 35%-40% that I gave last quarter and have noted on this slide is due to two main factors. Firstly, our business mix can change quickly as market conditions change, affecting the underlying rate of attrition. As we enter new lines, we tend to reserve conservatively as we get comfortable with our performance. Secondly, our traditional specialty lines such as marine and energy are exposed to irregular larger losses such as tanker sinking, oil rig explosions, and so on, which can have a material impact on the Attritional Loss Ratio in the period in which they occur. As we have always said, our focus is on ROE as measured by the change in fully converted book value per share, and we look to deliver and improve return to shareholders at all times. We tend to be agnostic on business mix. Moving on to capital, starting on slide nine. There are two main points to note on this slide. Firstly, flexible capital management has always been a cornerstone of our strategy, and we flex our capital depending on the underwriting conditions that we see in the market. This has meant we have returned $2.9 billion to shareholders since inception, including the current final dividend payment. In the last few years, as rates have increased, we have retained capital within the business and have raised both equity capital and additional debt capital to fund underwriting growth. The chart on this slide shows that AM Best is our most constraining capital requirement. We always aim to keep some headroom over this requirement. The quantum of headroom is flexible depending on market conditions, but generally sufficient for us to withstand a reasonable cat loss and retain adequate capital post the event to take advantage of any subsequent rate hardening. Moving on to slide 10. Slide 10 gives a bit more flavor around our strong capital position. Our capital adequacy, as measured by AM Best on their standard model, is high for all return periods and as the chart shows, is higher than the peer average. One reason for this is that we monitor capital against the AM Best cat stress model rather than the standard model, and this requires a one in 100 year worldwide all perils PML to be deducted from capital. As we write a relatively high proportion of CAT business, this reduces our available capital under AM Best considerably. More importantly, we hold a conservative capital position such that post-event, we can react quickly and continue to write business. This enables one of our key strategic aims to operate nimbly through the cycle. Our recent successful debt issuance has improved our capital position as all our debt is now allowable under all the rating agency and regulatory models. Our previous debt was not allowable capital for the BMA, so the issuance gives a significant boost to our regulatory capital position, which is further detailed on slide 11. On slide 11, the waterfall chart shows how our regulatory capital position has developed since the end of 2019 and includes a pro forma 2021 position incorporating the debt raise and anticipated new business in 2021. To be clear, the 2019 and 2020 ratios do not include any debt capital. Most importantly, this diagram shows that we still maintain a strong regulatory capital position following a one in 100 year Gulf of Mexico wind event. We expect our BMA solvency ratio to be comfortably above 200% going forward, depending on market conditions. To sum up, whilst our attritional loss ratio may move around quarter to quarter and year on year, our focus remains the same, to deliver an agreed ROE for our shareholders, which is now supported by the better underwriting environment Paul has just talked about. Active capital management remains a cornerstone of our strategy, and we remain strongly capitalized. With that, I'll pass back to Alex. Okay, thanks, Natalie. Slide 12 please, Jana. ESG. We aim to run a sustainable profitable business while contributing to society and the environment. We partner with our clients during the heightened period of climate change to help them recover during periods of disruption caused by climate change. The Lancashire Foundation supports some of the poorest sections of the world's communities most affected by climate change. In social, we believe a strong company culture is directly linked to success. We listen to our colleagues through regular engagements. We want the best people from all communities and backgrounds, with no barriers to entry and a strict meritocracy. On governance, we constantly have dialogue with all stakeholders and are completely aligned. We have a culture of positive change, risk learning, and constant improvement. Slide 13 please, Jana. To summarize this quarter, we are executing on our long-term strategy. Our growth continues to improve our cross-cycle returns. We are well capitalized for the opportunity we see, but the DNA of the business remains unchanged. We will now go to the operator for questions. Thank you. If you do wish to ask a question, please press zero one on your telephone keypad. If you do wish to withdraw your question, you can do so by pressing zero two on your telephone keypad. Our first question comes from the line of Freya Kong from Bank of America. Please go ahead, and I'll switch in. Hi. Good afternoon. Thanks for taking my questions. I've got two, please. First question, you've typically not disclosed your ECR with your results. Is this something that you will look to incorporate more of going forward? Is there any sort of ECR level that you can guide us to that would be comparable to your minimum BCAR tolerance? Second question, on slide 10, it looks like you're operating at 60% on your standard BCAR formula. Maybe on a stress basis, closer to 50% or 55%, which is obviously quite a large buffer on top of that 10% tolerance. What should this ratio look like in a more normal year? Thanks. Hi, Freya. It's Natalie. Can you just repeat question two, please? The second question. Yeah, sure. On slide 10, you guys show that on the 99.6 standard BCAR, you operate at about 60%. I think maybe on a stress basis, you're closer to 50%. That's still quite a big buffer above that 10% tolerance that you manage to. What sort of buffer should we look for in a normal year? Thanks. Okay, thanks, Freya. Taking that second question first, as I said in my remarks, we have to reduce our available capital by a one in 100 worldwide all perils PML, and that's quite a significant amount of capital to reduce by for the stress BCAR. I would say we're lower than the 50% that you're suggesting on that. On the ECR going forward, yes, we'll do the same kind of disclosure around this time of year. We have to submit our ECRs to the CMA by the end of May, this quarter is a good time to publish our ECRs going forward. We're not in a position to disclose how the ECR equates to the AMS ratio. As I've said, we look to be significantly higher than the 200 going forward. Okay, thanks. Thank you. Our next question comes from the line of Andrew Richard from Autonomous. Please go ahead. Hi there. Thanks for the presentation and the capital disclosure today. Three quick ones, I think. Alex, you said at the beginning the RPI was in line, but the opportunity set was up. I didn't quite know what you meant. Are you referring year-over-year or relative to when you last talked to us in Q4? If you could just color those two statements, that would be helpful. Second question, of the new lines that you're growing in, and you said you're putting up more conservative loss picks, understandably. What's the kind of seasoning period we would expect for those new lines? I know they're longer tail than CAT, but I don't think the nature of them is that long tail. What's the kind of seasoning period where you would say, "Okay, now we can relax those loss picks." The final question, you provide on slide 11 scenario analysis with a stress scenario of a one in 100 Gulf of Mexico. I don't think that 1 in 100 has been updated for growth. What would it be roughly if I updated it for growth that you expect to put in in 2021? Okay, thank you. Yeah, on point one, just to clarify what I was trying to say. During the first quarter, the pricing of our insurance portfolio was in line with our expectations. It wasn't better or worse, and it was in line. I think we previously mentioned that. I think what we're trying to say is when we say the opportunity set is up is we just saw a lot more business. The main reason for that is when you're in a hardening market, the broker has to market more business, and therefore you have more business to turn. You just see more business than perhaps what we saw during Q1. The pricing was in line. The physical amount of business we saw was definitely up. The opportunities we see across the piece are up, and some of that is a function of brokers marketing more heavily in a pricing environment that's going up. The roots are right-sized and therefore, and so we just see more opportunity all the time. That's the point I was trying to make. That's it. Okay. Okay. Hi, Andrew. On point two on the new lines, we would say we would monitor for around three years, depending on the line of business. Okay. On your question three, Andrew, we publicly update our one in 100, one in 250 numbers at half year. You'll see those at our next set of earnings. What I would say, and as is obvious with the growth we've put on, you would be expecting those catastrophe PMLs to be increasing given the additional new business we've written, but also that proportionately we're buying less reinsurance than we were a year ago. The combination of the two, you'll see directionally those PMLs move up, but you'll see the whole estate up in three months' time. Okay, thanks. Thank you. Our next question comes from the line of Kamran Hossain from RBC. Please go ahead. Your line is open. Afternoon, everyone. First question is on, I guess the business mix and attritional loss ratio. I really like the slide which shows the split between attrition and lower attrition business. I kind of understand the backwards-looking story. Attritional focus lines increased to 2020, therefore that ratio hasn't moved that much. I guess looking to what you've done in 2021, the majority of growth at Q1 has been from reinsurance. I assume that although you're planning to grow in casualty, the majority of that will be from property-based classes, which I assume have relatively low attrition. Just trying to square that. Should the attrition therefore improve pretty sharply as this business you've written at 1/1 or within the first quarter earns through? The second question is on, I guess, the growth for the remainder of the year. We saw some of the reinsurers pull back in January. Do you think there'll be a similar opportunity to grow, maybe not as much as you did in Q1, but do you think there'll be a similar opportunity later in the year? Thank you. Hi, Kamran. I'll take these. I think what's probably obviously in Q1, we've seen a lot of growth come through the property lines. I think, as you know, the bulk of our specialty business renews Q2 and beyond. We're definitely intending to continue to grow in those areas. For example, we're still seeing good rate improvement in things like downstream energy power. We expect to see continued improvement in things like marine and aviation, as I covered off in my opening remarks. Look, we've made the point our attrition can swing dependent upon the book. Natalie made the statement that obviously our guidance remains the same. The mix you see in Q1 is different to what you'll see in the remainder of the year. In terms of growth expectations for Q2 and beyond. Along the same lines, obviously the business mix is a little different than it is in Q1, with more specialty insurance renewing as a percentage of the portfolio in Q2 and beyond. That said, we certainly expect to grow our premiums ahead of rates. As we always say, we never enter any renewals with preconceived growth plans. Our decisions are going to be driven by the opportunity that's in front of us. As I've just said, conditions in a lot of these lines still remain favorable. We're seeing good rate adequacy, particularly in things like Property D&F, Downstream Energy and power, where there's a lot of business renewed in Q2. You would definitely expect us to grow there. As I mentioned in my opening remarks, we had a very good Japanese renewal season. We were very happy with the rates that we saw on our portfolio and the growth we delivered. We've got Florida coming up. We'll see how that plays out. Again, if we get pricing adequacy, we would be more than happy to grow our portfolio there. As I said, we'll always be driven by the opportunity. At the moment, the rate momentum still looks good. Great. Thanks very much, Paul. Thank you. Our next question comes from the line of Ming Zhu for Panmure Gordon. Please go ahead. Your line is open. Oh, hi. Good afternoon. Just two questions from me, please. First is, in terms of Suez Canal, could you just give a little bit color on. It's probably still early days. What sort of exposure you're likely to get on that event? My second question is around the rate environment. Obviously we've seen strong rates. Based on your experience, what's your outlook in terms of the sustainability of the current rate environment? Thank you. Okay. I'll take two. Obviously, we don't like to comment on particular individual losses, what we can say is obviously it's an incident that's very well known and been covered a lot in the press, and clearly going to create economic losses of some sort. What is very difficult at this stage, given it's very early, as you noted, is how that could indeed transfer into possible insurance or reinsurance losses. It's just we're not at the stage yet where anyone can put any kind of numbers around that. It's an incident in the marine market that potentially could give rise to claims, and it's something that we'll monitor as the second quarter progresses. I think on rate change, we are confident that rate change continues through 2021, and maybe beyond now. We still believe that there are a number of hurdles for the industry to tackle. Obviously, COVID will be one. When the U.S. court system opens again, when the world gets back to some form of normality, I think, the gap that the investment returns we're currently seeing. I think there's enough pressure in the system and enough need for returns for investors that keep underwriters honest and rates improving through at least 2021. Thank you. Thank you. Our next question comes from the line of Iain Pearce from Credit Suisse. Hi. Thanks for taking my questions. The first one was just on retro spend. I'm wondering if you can sort of run us through the moving parts on retro spend. At one point you sort of talked about renewal of the core program at higher rates and then being able to renew some of those peripheral programs. A lot of the growth has come in property, which I don't think is the line of business that have those quota share programs on them. I'm just wondering sort of how we're expecting retro spend to move this year and how it's going to affect retention rates. The second one is you talked about acquisition costs falling on some of the new lines of business that you're entering into. I'm just wondering whether that fall in acquisition cost is sufficient to offset the sort of mood in the attritional loss ratio guidance that you've given. Sort of from a combined ratio perspective, a net positive or not? Iain, I'll take the first question on reinsurance spend. I think in dollar terms, we might have noted this actually last quarter. In dollar terms, because we're growing and we've got more lines of business, and we're writing proportionately more business on the inwards book on a dollar basis, our total reinsurance spend will go up, but as a proportion of inwards income, that% is going to go down. That's for a number of reasons. In the CAT lines, as I noted earlier, we are taking more risk onto our own balance sheet, whether that be retaining a little bit more at the bottom of core programs, whether that be buying less Quota Share on some of those areas of the portfolio, which is therefore ultimately going to bring down our% and obviously the inwards books growing. On the specialty lines, the protections we've bought are broadly in line with what we had last year. There are a couple of protections coming up later in the year on certain classes of business where we're seeing positive rating improvement on the front end, which may lead us to decide to take more risk and retain more risk. We haven't yet made those decisions. At a high level, yes, dollar spend will be up, but as a percentage, the proportion will come down. Hi, Iain. It's Natalie. On your second question, on the acquisition costs, yes, there are benefits from business mix. For example, the property lines tend to have lower acquisition costs than other lines. This quarter, we've obviously written a lot of property business, which gives us a benefit on the acquisition cost ratio. You also tend to see as underwriting conditions improve, that impact on terms and conditions is that commissions also reduce on other lines of business, which is beneficial. Also just to note that higher premium volumes also give us a positive impact to G&A ratio. Although we expect the dollar amount of expenses to increase as we continue recruiting new underwriting teams, the actual percentage, as we said before, we'd anticipate to come down to around 2016, 2017 levels. To the overall impact on the combined ratio, I would say very much depends on the business mix and the amount of business we're able to write this year. Okay, perfect. Thank you. Thank you. Our next question comes from the line of Farzan Nakani from HSBC. Please go ahead. Your line is open. Hi there. Congratulations on the good set of results. Most questions have been answered, but I just wanted to follow up on Kamran's question on business mix. It's a very detailed answer, but what I don't quite get to grips with is it still feels like you've set to grow quicker in lower attritional lines this year. Is that fair? Does that mean we should be aiming for the bottom end of your attritional loss ratio guidance? Question two, it's a general market question. It appears that in Florida, we continue to see high frequency of litigations in the Florida homeowners market. Also, there's talk about it being a very heavy hurricane season this year. Can you provide your views on this, and how does that shape your 1/6, 1/7 renewal strategy? The final question is a very basic question. You talk about growth rates and premium growth. How did that stack up on a net basis in Q1? Thank you. Okay. I'll take the first question on business mix. We're very happy with where our guidance is at the moment, and we do expect to be within the 35%-40% range. That's where we came in, as we said in our earnings update for Q1. We're happy with that guidance. With regards to Florida, I think you're absolutely right. I think since Hurricane Irma, a lot of lessons have been learned. We've seen a lot of claims inflation come through. Things like litigation that you mentioned. It's certainly something when we're looking at that risk, we try and price in as best we can and apply loads to our pricing for that. In terms of listening to weather experts in terms of how many hurricanes there are going to be, in all honesty, that's not necessarily something that we factor into our underwriting. There can be 100 hurricanes, but if none of them make landfall, then it's obviously just up the scores. That's something historically we've never really done. We look at pricing on an expected basis. If we think we're being paid for the risk that we're taking on, then we're prepared to write that risk. On the litigation point, absolutely, that's something that the whole market, in fairness, has taken on board since Hurricane Irma. Sorry, one more question. Yeah. On the next question, I think as Paul, I think said last quarter, we would expect our net premiums written to increase more than our gross premiums written this year, although the dollar amounts that we spend may still be higher than last year. Did that happen in Q1? Yeah. If it's a 4% growth rate and premium growth in short, should we expect that to be a higher amount than net premium basis for this data point? Hi, it's Elena. Just to reiterate what Paul and Natalie have already said, we look at our business on a full year basis. Just looking at the quarter in isolation doesn't really help anyone. If you look at it through the full year, as both Paul and Natalie have said, our reinsurance spend overall might go up a little bit, but the percentage of net versus growth should go up. All right. Thank you very much. Thank you. Our next question comes from the line of Ben Cohen from Investec. Please go ahead. Your line is open. Hi there. Thank you. Most of my questions have been asked. I just wanted to ask in terms of how Lancashire Capital Management had started the year and whether you would expect the URI loss to have any implications in terms of the sort of returns that it would generate? Secondly, just a boring numbers question. What is the cost of retiring the non-qualifying debts going to be? Thank you. Hi, Ben. It's Darren. I'll take the question on LCM. How the year started, very pleased. We would say our portfolio is the best we've had since inception in potential yield to investors, which we've all talked about the rating environment. Regarding URI, little to no impact on the LCM portfolio due to the levels that we attach with our clients' customers. Thank you. Okay. Hi, Ben. On your debt question, we're going to retire all our old historical debt this quarter. It should be gone by the Q2 releases. None of the subordinated debt that we've got has got any penalties associated with it. There is a penalty on our senior debt, which is basically the current value of the interest payments on that up until October 2022. That will come in in the region of around $10 million, which will be included in next quarter's results. Okay. Thanks very much. Thank you. Once again, if you do wish to ask a question, please press zero one on your telephone keypad. Our next question comes from the line of Emmanuel Millfield from Morgan Stanley. Please go ahead. Your line is open. Hello. Hi. Thanks for taking my question. I have three questions. Two are on capital and one on prior year development. The first one, looking at slide 11, it looks like you plan to deploy out of what you deployed in January throughout the rest of the year. How should we think about growth? I know that it depends on rates and business up for renewal as well. Perhaps, if you could give us an idea about what proportion of your business renews in June, July, April, and so on. If you can give us a breakdown that maybe would help. The second question, still on the same slide. At what ECR ratio would you expect the rating from rating agencies to fall below your desired level? Lastly, on prior year developments. You released nearly $5 million in the first quarter. Would you reiterate the guidance that you've given for the full year? If you can give us also an idea about the impact of new lines on PYD. Okay. Hi, Emmanuel. On your first point, I think the first point to make is we're in a very strong capital position, so we're definitely in a good position to grow for the rest of the year. It's worth remembering, and I mentioned this earlier in answer to some of the other questions, that Q2 is more specialty insurance dominated. There are obviously still CAT renewal seasons in Q2, but we kind of move back more towards specialty. Later in the year, things like aviation, for example. They're a lot less capital intensive. As I mentioned earlier, we're still seeing really good rate momentum in a lot of our lines of business. I would fully anticipate to grow ahead of the rating environment, which is what you would expect us to do at this stage of the cycle. In terms of absolute numbers, we will underwrite the opportunity in front of us. As I said before, we won't go into any renewal season with preconceived ideas. If the market's better than we think, then we'll grow more aggressively. If it's in line, then we'll grow in line with plan. To be honest, if it's not as good as we think, then we're prepared to not grow as much. Sorry, it doesn't give you an exact answer to the level of growth, but where we see the market now, where we see the rate adequacy for a number of our lines of business, I would be expecting us to grow ahead of the rating environment for the remainder of the year. Hi, Emmanuel. It's Natalie. As I said in answer to the first question, we don't disclose our rating agency capital requirements. If you look at the slide nine, there's a chart on that slide which gives an indication of the relative capital requirements of AM Best and S&P compared to the BSCR. That may be able to give you a little bit of color onto that. On prior year developments, there's no change to our guidance of $40 million-$60 million of reserve releases for this year. As we've said previously, it's best we could view reserve releases as an annual number, as quarterly movements can be quite volatile. We do often have low releases or even what appears as adverse development in Q1, as we tend to get late reported claims coming through from the prior year. This tends to even out throughout the year. Just to note that we've never had a year of overall adverse development since our inception. I think you also had a further question on the new lines of business. Obviously, they are new lines of business, so they're not going to impact any reserve releases this year. Thank you. Our next question comes from the line of Nick Johnson from Numis. Please go ahead. Your line is open. Hi, good afternoon, everybody. Just a question on the comments around strategy to improve cross-cycle returns. With new lines of business diversification, which is accretive to return, which makes sense. Just wondered if you could say what your aspiration is in terms of how many points that might add to the cross cycle return versus the old book of business prior to when you started to move into new lines a few years ago. Thank you. I think if you think about our strategy is very simple. At this stage of the cycle, you should expect us to grow materially as we have done in Q1. I think the new lines of business are a function of two things. One, if you look at the new lines of business we've entered since 2018, that pretty much tracks when rates across most classes of business improved. As you know, during the soft market years, we constantly looked at opportunities, but we just couldn't get the numbers to work. I don't think anyone should really be confused with a material change in strategy. I think we're just finding more classes of business that make sense. Obviously, as you know, we're not really fussed on the makeup of the book, but we are fussed on improving our returns and growing. The benefit of some of the front lines we've added is that you will get diversification, but that's, as I said, a handy by-product of the class of business, and we're just not obsessed with the makeup of that portfolio. Every single thing we do is to look to improve our long-term return. I think it's quite hard to compare it to our old book of business because the company has changed a lot, obviously we're moving Lancashire forward, but the DNA of the business and why we're doing this hasn't changed at all. Everything we're doing, we believe will improve our ROE over the long term. For me, this is all perfectly logical in the market we're in. All the time the market gets better and improves, we will grow with the opportunity. At some point, when the other part of the cycle obviously starts, we'll probably go back to being a bit more normal. That's great. Thanks very much, Alex. Thank you. Thank you. Our next question comes from the line of Will Hardcastle from UBS. Please go ahead. Your line is open. Hey, afternoon, everyone. High level, given so many granular questions, but presumably we're looking at higher return on capital year-on-year here. How should I think about the volatility shift year-on-year? We're retaining more business, so more CAP perhaps adds volatility, but then there's a mix shift within the portfolio. I guess we've got higher returns, expected returns, sorry, but is volatility higher, similar, or lower year-on-year? Obviously everything that we're doing always subject to large losses. Everything we're doing improves our expected returns. A lot of the conversation we've had about ratios, if you look at our ratios, they're improving. Our expected combined ratio is improving. I think on the volatility front as well, the benefit of the less volatile business we're writing should bring volatility down over time and therefore improve returns. Obviously, as you've seen in Q1, we are still subject to large weather events like everyone else. Over time, that should improve our returns and make them less volatile. Sorry, just to follow up on that. I guess if a lot of the other lines of business are growing through Q2, Q4, is there perhaps a view that volatility when we come to look at it across the whole year may be lower, but because a lot of the growth in Q1 has come in some of the more CAT lines, it might short term increase volatility, but net net, we're looking at higher returns, lower volatility. Is that how we should look at this? I think it obviously depends what happens in Q2. Obviously, we tend to do some of the sort of higher capital products in Q1, but obviously for things like Florida, it depends what the opportunity is. Yes. As we always say, we'll underwrite the market in front of us. None of us should be afraid of volatility. You just got to be getting paid to take the volatility. I think that's the key point. Brilliant. Thanks. Thank you. We have a follow-up question from Iain Pearce from Credit Suisse. Please go ahead. Your line is open. Hi. Yeah. Thanks for allowing me a follow-up. More of a sort of philosophical, high-level question. You've always sort of prided yourself on the underwriting core management being able to have a very good view of what's going on and sort of seeing the businesses coming into the company. I'm just wondering if with the expansion that you've had and the new lines of business that you've been entering, is that becoming a challenge now with sort of your capacity to look at all the business coming through the door getting quite challenged, or is that something where you still see you've got headroom to manage that? Hi, Iain. Yeah, I think that is a very good question. I think one point to note is the daily conference call we have is still there, but that has only ever been to the company platforms, mainly U.K. and mainly Bermuda, and within the Lloyd's platforms where we write kind of the smaller tickets, if you like. There is that kind of oversight, but on a more traditional peer review basis. A lot of the new lines we have gone into fit within that Lloyd's structure. We have actually evolved a conference call over time, and we will continue to do that. What will always remain is that daily call to look at the big ticket items that can, say, either move our capital where we run bigger to retention, more difficult renewals. As we have grown, that is something we've evolved, but with the DNA of looking at the big deals that move the dial, being on that call every day, and that will remain. As we go into more lines of business, then it will be more of the focus on the big ticket items. It will definitely remain part of our DNA. It will definitely remain part of our process. I think as well, remember that we've added a lot of really good people. We've promoted some really good people, and the business has moved on. We've got lots of buyers looking at the appropriate risks. Exactly as Paul said, where we're writing the larger line sizes or the things that move the dial, there's as much risk management on those products as there's always been, and as should be for a business such as ours. Lovely. That's great. Thanks. Thank you. We have no questions from the line. I will hand it back to our speakers. Okay. Thank you very much for your questions.