G`ood day, ladies and gentlemen, and welcome to the Q4 2024 Arch Capital Earnings Conference Call. At this time, all participants are in the listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. As a reminder, this conference call is being recorded. Before the company gets started with its updates, management wants to first remind everyone that certain statements in today's press release and discussed on this call may constitute forward-looking statements under the federal securities laws. These statements are based upon management's current assessments and assumptions and are subject to a number of risks and uncertainties. Consequently, actual results may differ materially from those expressed or implied. For more information on the risks and other factors that may affect future performance, investors should review periodic reports that are filed by the company with the SEC from time to time, including our Annual Report on Form 10-K for the 2023 fiscal year. Additionally, certain statements contained in the call that are not based on historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The company intends the forward-looking statements in the call to be subject to the safe harbor created thereby. Management also will make reference to certain non-GAAP measures of financial performance. The reconciliations to GAAP for each non-GAAP financial measure can be found in the company's current report on Form 8-K furnished to the SEC yesterday, which contains the company's earnings press release and is available on the company's website at www.archgroup.com and on the SEC's website at www.sec.gov. I now would like to introduce your hosts for today's conference, Mr. Nicolas Papadopoulo and Monsieur François Morin. Please go ahead. Good morning and welcome to our fourth quarter earnings call. I begin by offering our thoughts and sympathies to all of those affected by the California wildfires. This is a terrible event that will require the efforts of many, including insurance companies, to help the affected communities recover and rebuild. At Arch, we will, of course, fulfill our role in these efforts. As noted in yesterday's press release, we expect the wildfires to result in a net loss between $450 and $550 million based on an industry loss estimate of $35-$45 billion. Turning now to our results, Arch had a solid fourth quarter, providing $3.8 billion of net premium, which is a 17% increase over the same quarter last year. The $625 million of underwriting income in the quarter is down 13% from last year, primarily due to losses related to cat activities in the second half of 2024. Our full year results were excellent, with $3.5 billion of after-tax operating income and an operating return on average common equity of 18.9%, despite an increased level of natural catastrophes. Book value per share, our preferred measure of value creation, ended 2024 at $53.11, representing a 13% increase for the year and nearly a 24% increase after adjusting for the impact of the $5 per share special dividend we paid in December. The decision to pay a special dividend was a result of Arch's strong financial performance and excellent capital position, and represented an effective means of returning excess capital to our shareholders. We also repurchased shares worth $24 million in the fourth quarter. Both the dividend and the share repurchase reflect our ongoing commitment to effective and active capital management. Market conditions within our segments remain favorable, with a number of select growth opportunities ahead of us. As you may have heard from our peers this quarter, rate and loss trends vary by line of business and broadly offset each other. All hands do not point to the same hour on the underwriting clock. For example, we are selectively deploying capital to the area producing attractive risk-adjusted returns, such as insurance and reinsurance liability lines, specialty business at Lloyd's, and property cat reinsurance. Alternatively, in lines of business where competitive pressures have eroded margins to levels below adequate, our underwriting teams are focused on improving our business mix within each of those lines to ensure our minimum profitability targets are met. Effective cycle management, the key to Arch's strategy, requires empowering underwriters to execute on both sourcing and retaining attractive business without the constraints of reduction targets. In classes and subclasses where returns do not meet our minimum threshold, we have the agility and the incentives to reallocate capital to more profitable opportunities across our diversified platform, and as we have demonstrated throughout our history, we will not hesitate to return excess capital to our shareholders when appropriate. Now, I will offer a few highlights about the performance of our underwriting segments, starting with reinsurance, which finished the year with a strong fourth quarter, delivering $328 million of underwriting income. The full year results for the reinsurance group were excellent. The segment delivered a record $1.2 billion of underwriting income while writing over $7.7 billion of net premium. At the January first annual, we grew the reinsurance business by selectively increasing our writings in property liability and specialty lines. Arch's status as a leading global reinsurer is a result of its focus on addressing broker and client's needs, combined with its underwriting vigilance and high degree of scrutiny on the performance of its business. Throughout the hard market, our teams have had the conviction to increase its support and relevance with brokers and clients, making Arch a more valuable collaborative partner when other reinsurers wavered and, in some cases, even withdrew capacity. Now moving to insurance, which also seized on strong growth opportunities in 2024, although Hurricane Helene and Milton limited fourth quarter underwriting income to $30 million. For the full year, the insurance group put $6.9 billion of net premium, a 17% increase from 2023, and delivered $345 million of underwriting income. Growth was enhanced by our acquisition of the U.S. MidCorp and Entertainment business. Although it's still early, the performance and integration of the MidCorp and Entertainment business are consistent with our expectations and objectives. Organic growth in North America came from our casualty business units, which more than offset premium decrease in professional lines. International insurance remained a bright spot, writing over $2 billion of net premium in 2024, primarily in specialty lines out of our Lloyd's platform. Overall, rate increases remained slightly above last trend, keeping return margins relatively flat in the fourth quarter. The outlook for both North America and international insurance growth is favorable for 2025. Looking ahead, we expect primary market conditions to remain competitive, given the attractive underlying margins. However, we have experienced a slowdown in new business volumes as competition for premium volumes has increased. The mortgage segment contributed $267 million of underwriting income in the fourth quarter, resulting in the third consecutive year of delivering over $1 billion of underwriting income. Fundamentals remain positive, including strong persistency of our $500 billion-plus insurance-in-force portfolio, while the overall credit quality of the book remains excellent. The delinquency rates in our US MI business increased modestly to just over 2% at the end of December, but remained near historic lows. Increased delinquency can be attributed to expected defaults in areas hit by natural catastrophes and the seasoning of the insurance in force. Overall, the US mortgage insurance industry remained disciplined despite suppressed mortgage origination due to low housing supply and high mortgage rates. Finally, to the investment group, which delivered nearly $1.5 billion of annual net investment income from an asset base that increased to over $40 billion after accounting for the special dividend. Rising investment yields and the growth of our investable asset from strong operating cash flows provide additional tailwinds for our earnings and book value growth. Overall, 2024 was another excellent year for Arch. Looking ahead, our primary goal is to maintain attractive margins despite expected heightened competition. Our strong underwriting culture, proven track record of cycle management, dynamic capital management capabilities, and progress to date in becoming a data-driven enterprise give me confidence in our ability to navigate ever-changing market dynamics with a clear objective of maximizing shareholder return over the long term. As we officially turn the page to 2025, I want to recognize the hard work and dedication of Arch's nearly 7,000 employees who share in our entrepreneurial culture that demands and rewards excellence to the benefit of our clients and stakeholders. Now, I will turn it to François to provide more detail on the financials before returning to answer your questions. François. Thank you, Nicolas, and good morning to all. As you know by now, we closed 2024 with fourth quarter after-tax operating income of $2.26 per share for an annualized operating return on average common equity of 16.7%. For the year, our net income return on average common equity was an excellent 22.8%. Once again, our three business segments delivered excellent underlying results with an overall ex-cat/accident year combined ratio of 79% for the quarter and 78.6% for the year. Current accident year catastrophe losses were $393 million for the group in the quarter, split roughly 60% and 40% between the reinsurance and insurance segments, respectively. Most of our catastrophe losses this quarter are due to Hurricane Milton, a fourth quarter event, with an additional contribution from Hurricane Helene, where we saw some delayed emergence of claims given the late occurrence date in the third quarter. As of January 1, our peak zone natural cat probable maximum loss for a single event, one in 250-year return level on a net basis, increased slightly and now stands at 9.2% of tangible shareholders' equity. Our PML remains well below our internal limits. As we look forward to 2025, with the recent addition of the MidCorp and entertainment business and current market conditions in property, we expect our cat load to represent approximately 7%-8% of our full year group-wide net earned premium. Our underwriting income in the quarter included $146 million of favorable prior development on a pre-tax basis, or 3.5 points on the combined ratio across our three segments. We recognize favorable development across many lines of business, but primarily in short tail lines in our reinsurance segment and in mortgage due to strong cure activity. As we discussed last quarter, the acquisition of the MidCorp and Entertainment insurance businesses has impacted some key performance metrics for our insurance segment. First, the net written premium coming from the acquired businesses was $393 million for the quarter, contributing 27.1 points to the reported quarter-over-quarter premium growth for our insurance segment. Second, the acquired business lowered the insurance segment's accident year ex-cat combined ratio by 1.6 points this quarter. This result was due to the current quarter's acquisition expense ratio that was lowered by 2.1 points due to the write-off of deferred acquisition costs for the acquired business at closing under Purchase GAAP, and an operating expense ratio that was lowered by 0.8 points as our MidCorp operations aren't fully ramped up yet. Partially offsetting these benefits was an increase in the accident year ex-cat loss ratio of 1.2 points, reflecting the underlying results of the acquired business. On a related note, we expensed $99 million this quarter through intangible amortization, more than 75% of which was for the MidCorp and Entertainment acquisition. This expense was in line with our expectations as we communicated last quarter. On the investment front, we earned a combined $548 million pre-tax from net investment income and income from funds accounted using the equity method, or $1.43 per share. Our net investment income this quarter was partially impacted by our $1.9 billion dividend paid in December, which entailed that we liquidate a portion of our investment portfolio. Cash flow from operations remained strong and was approximately $6.7 billion for the full year, up 16% from 2023. Our effective tax rate on pre-tax operating income was an expense of 6.7% for the quarter and 8.2% for the full year. As we look ahead, we would expect our annualized effective tax rate to be in the 16%-18% range for the full year 2025, reflecting the introduction of a 15% corporate income tax in Bermuda. On a cash basis, we will start recognizing next quarter some of the benefit we accrued with the establishment of the $1.2 billion deferred tax asset at the end of 2023. As you may have heard on other calls, the recent OECD guidance may partially impact the realizable value of this DTA. We will keep you apprised as additional information becomes available. In closing, our balance sheet remains extremely strong with common shareholders' equity of $20 billion after recognition of the $1.9 billion common dividend that was paid in December. Our debt plus preferred to capital ratio remains low at 15.1%. With these introductory comments, we are now prepared to take your questions. Sylvie? Thank you, Monsieur Morin. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please lift the handset and make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question, and we'll pause for just a moment to allow everyone an opportunity to signal for questions. And your first question will be from Elyse Greenspan at Wells Fargo. Please go ahead. Hi, thanks. Good morning. My first question is on the insurance underlying loss ratio. I mean, I recognize, right, François, you highlighted some of the impact from the Allianz deal coming in a little bit over 1%. I calculated kind of Arch standalone running at just under 57%, which is close to the Q3. Is it the right way to think about it that that's about where Arch is and then kind of blend in this a little bit over 1% for MidCorp so that insurance underlying is somewhere in the range of 58% on an ongoing basis, something like that? Yeah, that's about right. I think the impact of MCE is, call it, on the loss ratio, about one point. So whatever the assumption you have around the pre-MCE kind of run rate loss ratio, which is pretty stable, has been pretty stable. There's some movements up and down from quarter to quarter, but generally speaking, it's been stable, and introducing the MCE maybe adds about one point to that. Then my second question is on reinsurance. You guys pulled back a little bit at mid-year 2024. Now, the PML went back up, but it's flat, 11.25 with 11.24. Did you see conditions get incrementally better at January 1? I'm just trying to understand the thought process around bringing the PMLs back up a little bit. No, I think what's happening is that we like the business. So I think absent the competitive nature and other people liking the business too, I think we're looking to write more of this business. We think the returns are quite attractive. And I think at 11, we had some opportunity to do so based on our positioning. So I think we were pleased by that, I think. Then I guess the follow-up to that is the California fires, pretty big loss. Do you see that being able to impact other cat renewal seasons in 2025? Some of it, I guess, might bleed to 2026. How do you see the market impact from the California fires? And is this something where you guys would expect your PML and cat writings to go up during the year? I think, as I mentioned in my remarks, I mean, this is a significant loss for the market. I mean, we pitch it between $35 billion and $45 billion. We believe that a significant part of that losses will go to the reinsurance market. I think most reinsurers, including ourselves, will start the year with a loss ratio in the 20s or the 30s, or depending on your luck, maybe higher than that. I think it should dampen the enthusiasm of many markets trying to be heroes and writing the business. I would think that it will have an effect on the rates for the rest of the year, so. Thank you. And that's. Thank you. Next question will be from Mike Zaremski at BMO Capital Markets. Please go ahead. Hey, thanks. I guess first question, I'll just go back to the catastrophe load guidance, 7%-8%. So probably just obvious. So that includes, right, it's higher than the historical 6%-8%, mostly because of the 1Q California losses. Is that correct? A little bit, but also the MCE acquisition adds, on a relative basis, kind of adds a little bit of load to increase the cat load. Because it's a heavier property book than people realize. It didn't really impact our PMLs because it's in different zones. It's more distributed. But when we think about the contribution to the cat load throughout the year, it has a meaningful impact. Okay. I would have actually plugged in the Cali losses. I actually would have thought the load would have been a little bit higher. But okay, good color. Switching gears just to the, I guess, one of the elephants in the rooms for lots of insurers, just going back to the kind of the casualty GL umbrella environment. In some of the prepared remarks, it was said that overall rate increases remain slightly above loss trend. I think that was the primary insurance marketplace. Any comments on whether what you're seeing in your GL book? I know that you guys are one of the more honest ones, in my humble opinion. At the investor day, you said you'd probably be adding small amounts to your GL reserves, but nothing that's really too out of trend line with what you've been doing for a while now and better than the industry. Any updated commentary on what you're seeing there? Yeah, and I think I'll answer in two parts. One, on the reserve position, we didn't add to our reserves. We're very comfortable with the reserve position, both in insurance and reinsurance. Our actual versus expected analyses or year-end analyses are supporting that view that our reserves for prior accident years are very adequate. So no concern there. But as we look at the second half of 2024 and into 2025, yes, we are seeing rate changes keeping up with loss trends. So we're not, and even exceeding in some places. So we're comfortable with the environment there. But we also recognize that there's a lot of uncertainty there. So we are being cautious, prudent. We are in some specific very targeted areas, increased our initial loss picks. But I think I want to make it clear here. It's not a reflection of adverse development or signals or data telling us that we missed the mark on the old years. It's very much a function of the current rate environment and how we perceive the risk around our initial loss picks, and for that reason, we're choosing to be a bit more prudent. Okay, got it. And just lastly, real quick, thanks for the tax rate guidance. Is the DTA that was established, I think some peers have said that there could be tweaks to the DTA due to guidance from Bermuda? Is that something that's in flux or any way you could kind of handicap whether if the DTA was in flux, would it change materially or just a little bit? Yeah, I mean, the guidance right now, and that's an important thing. It's guidance. It's not the law, which we do follow, obviously, Bermuda law, which allows us or instructs us really to carry the DTA. The recent guidance from the OECD suggests that we may only be able to realize up to 20% of that amount. That is still, again, that's the latest guidance. I mean, things change pretty quick when we start talking about taxes. But I'd say from your perspective, maybe worst case, that's kind of what may happen is that we end up only realizing 20% of this amount, and the rest we might have to write off at some point in 2026 or late 2026 or 2027. But for the time being, Bermuda law has not changed, and that's what we're following. Appreciate the color. Yep. Thank you. Next question will be from Jimmy Bhullar at JP Morgan. Please go ahead. Hey, good morning. So just had a question on a different topic. On MI reserve releases, can you go through the details on what's driving those and how much of that is from the last one to two years versus maybe a few years back? And just your overall expectations for margins in that business. Yeah. I mean, the reserve releases come from both, I mean, from all three of our segments, right? There's a meaningful amount from USMI. Again, that's a little bit of the same story that we've been talking about the last few quarters where we, based on conditions at the time, I want to say in 2022 and 2023, we had set up initial reserves on the delinquencies that were reported at the time. And it turns out that people have been curing, and severity has not been to the level that we thought. So that's just a normal, I'd say, kind of process that the reserving we go through with our reserves at USMI. I'd say for the other pieces, a little bit of the same, I'd say, in the CRT business where it's a slightly different methodology, but we have initial loss picks on that business, and that has proven out to be a little bit kind of in excess of what we need today. So there's been some releases there. And finally, the international book, a little bit of the same too, where there's different methodologies in place. But the long story or the short of it maybe is that all three books or all three pieces of our mortgage segments are performing really, really well. So we like the margins. We think the margins are healthy. We don't see any deterioration in how we think about the business and the returns we're writing today. So we're very, very excited about it. And then on share buybacks, I'm assuming part of the reason you did a little bit of buybacks this quarter versus none before was just the decline in the stock price. So assuming the stock stays around here, reasonable to assume that you'd be active throughout 2025 as well? For sure. I mean, it's something we look at regularly, I mean, all the time. I mean, in this particular situation, yes, there's a little kind of opportunity late in the fourth quarter. but our capital position remains strong even with the California wildfires. I mean, that's part of the volatility we may see from time to time. but whether, again, we will not sit on a level of excess capital that we don't think we can deploy in the business. So if we don't, we still think we can grow. We are bullish about 2025. The market conditions are still really good. but can we deploy all the capital we have or that we generate? Maybe not. and at that point, we'll return it. and if the price is right, we think share buybacks are a great way to do that. Yeah. I think the order of play is that we want to look at where we can deploy capital attractively in the business. So, I think that we do that all the time, I think. And yeah, after a while, when periodically we assess our capital position, and if we see that the opportunities may not be there to deploy all the excess capital, that's when we consider the most effective way, I would say, at the time to return capital to our shareholders, so. Thank you. Thank you. Next question will be from Wes Carmichael at Autonomous. Please go ahead. Hey, good morning. Thank you. A question on favorable development in the quarter, particularly in reinsurance. Can you just give us a little bit of color on what drove most of that release and maybe if you had any strengthening? I think you mentioned short tail lines in prepared remarks, but any more color would be helpful. Yeah. The vast, vast majority is on property cat and property other than cat. So that's what we consider to be short tail. We were flat on casualty. So across the reinsurance segment, so no development on casualty and a couple of moves up and down, marine, other small lines, other small items. But that's the bulk of it. It's really property. Some is, I'd say, prior cats, meaning kind of large events that we had reserved for that are developing a bit favorably. Some of it is just the IBNR we hold for miscellaneous kind of attritional losses that has proven out to be in excess of what we needed. So that's kind of how we recognize it this quarter through those lines of business. Got it. Thanks. In prepared remarks, I think maybe a broader comment, but you mentioned some competitive pressure where that's eroded margins in certain lines of business. Can you just talk a little bit about where that might be more pronounced? Yeah. So I think I was thinking this question was going to come up. So I think it's mainly in two areas, I would say. The most visible one is, I would say, public D&O, where I think we've seen significant rate decrease in the last two years and double digits. That seems to be tempering, but it's reached a level that you really have to ask yourself, account by account, is the overall line still profitable? And the second area that we're watching is the cyber area where also on the excess side, we've seen double-digit rating decreases and the supply of capacity in both public D&O and cyber that don't seem to be wanting to reduce, I think. Thank you. Did you have any further questions, Mr. Carmichael? Yeah. I guess I'll follow up with one more, but just on MI and the delinquency tick up. I think you mentioned that it can be impacted by cat-exposed areas, and we obviously had a couple of sizable storms last year, but just hoping you could unpack a little bit with what you saw in the tick up there. Yeah. I mean, it's very much part of the natural process. As you'd expect, some people were affected by these events. And once they missed two consecutive mortgage payments, they turned delinquent, and that's what we fully expected would happen in the fourth quarter. About half of the increase in the delinquency rate is directly attributable to these cat-affected areas. I mean, that's our best estimate at this point. The historical cure rate on these types of delinquencies driven by natural events is extremely high. So that's why we think the financial impact ultimately will be minimal. But currently, that's how the process works. They show up in the delinquency rate, and we reserve for those. But typically, those get resolved or cured at a high level over time. Thank you. Just quickly, I'll add. I mean, just I'll add quickly on the California wildfires, slightly different type of exposures. We expect minimal, again, very early, too early to know. But given the types of mortgages that exist in these areas, we would not expect to be impacted at all or, I mean, certainly not significantly at all due to the California wildfires. Yep. Understood. Thank you. Yep. Thank you. Next question will be from David Motemaden at Evercore. Please go ahead. Hey, thanks. Good morning. I had a question, and I saw the solid casualty reinsurance growth in the fourth quarter as well as 2024, and it sounded like that continued at 11.25. Yeah. I guess I'm wondering if you could just talk a little bit about the rate adequacy specifically within the casualty reinsurance line. I know that's a broad line, but a little surprising to see you guys lean in there. It sounds like others have been more critical on just the rate adequacy there. So I wonder if you could elaborate a little bit on that. Yes. I think we started from a position that we were really, I think, underweight on the casualty treaty or insurance. And I think our view, and it's true, by the way, on the insurance side is that we've tried over the years to get into programs that are more, I would say, specialty casualty. Think of it as more with an E&S flavor. So similar to what we would be writing or growing on the insurance side. So I think it's been a while, but I think based on the additional clout that's, or the value of the brand on the reinsurance side, I think we've been, and our ceding companies forecasting some wavering from maybe some of the reinsurers or less appetite for the casualty, I think we've been able to finally get onto programs or reinsurance programs that we think are backing the right people to take advantage of the opportunity. So that has been really the engine behind the growth. It's not, we're not underwriting the market. We're just underwriting selective underwriters that we think have the know-how and the expertise to be able to deliver attractive returns for us, so. Great. Yep. Understood. Yep. Definitely, you guys are underweight there, so that makes sense. And so maybe just switching gears to the insurance segment and just wanted to get a little bit more color on the current accident year loss pick increases that you noted. Sounded like it was minor, but wanted to just get a little bit more detail on what lines it was. And it didn't sound like that had any impact on the prior year reserve, any prior year reserve impact. But just wanted to understand how that happened. Yeah. I mean, again, roughly, if we break it down, call it a third of the increase is due to the MidCorp and Entertainment inclusion or addition to the segment. Another third, I'd say it's lines of business where we just are reacting to the rate environment. An example of that would be Professional Lines like both cyber and D&O where you guys have seen it, we've seen it, you've heard it. I mean, rates have been coming down over the last couple of years pretty significantly. And that's a big part of our book. So naturally, I think you'd expect us, and we are booking a higher loss ratio this year than we did a year ago. And that's just a function of the rate environment. So that's an example. Another example is some of our auto warranty product, our GAP product, where due to the different market conditions, different economic realities with the value of used cars and what we insure and what we cover, loss ratio inched up a little bit there. So nothing that was surprising to us, but again, we're reflecting or reacting to the data. And that's, and obviously, there's always mixed a little bit at the end. But those, I'd say, are some examples of kind of minor, kind of small adjustments that contributed to the overall increase. Got it. Okay. Yeah. So it doesn't sound like that was any GL or umbrella-related price increases. It was more in other lines. Correct. Great. Thank you. You're welcome. Next question will be from Andrew Kligerman at TD Securities. Please go ahead. Hey, thanks a lot. First question, maybe you could drill down a little more into the casualty lines, the E&S areas of casualty where you'd like to grow or where you are growing in both insurance and reinsurance respectively, and then with that, could you give us a sense of the rate changes in those areas in both reinsurance and insurance respectively? Yeah. So those are, I would say, for the large part, similar book of business. So it's really E&S, what I would call E&S liability, and it's more middle to high excess layers where we've seen the market reacting to the propensity of larger losses in the last few years. So what's happening in that market is people used to have on the retail side first big limits. So once the admitted market decides that they're not going to be able to offer those limits anymore, by definition, if you had a $200 million program with maybe five or seven players, now that the admitted players decide to reduce their limit to $10 million, you're going to need 20 people to. The way the market works is, and that has been going on for a while, a lot of that business now is getting repriced into the E&S market, not only on the pricing side, but also on the terms and conditions. You're able to get exclusions that you would not be able to get on the admitted retail side. We like that business. We've been writing that business. We've been underweight in that business for years. We have experience. We've been writing the business for over 20 years, and we have really specific line of business. I'm not going to go over it on the call, but that we actually have experience in it. We know the venues where to write it. We know the type of severity of claims. We know the exposure to commercial auto that's embedded in those risks. And so we're able to selectively, and good companies do that, selectively pick a subset of the market, and we're still getting very decent rate increases, I think, double digits, and I think the rate increase has been going on for a while. Back in the '20s, they were in the double digit, then they went to the single digit, then we're back in the double digit of late, and so we think we're getting a rate of a trend, so I think we think the business, underwritten properly with the right limits, I think, could be very attractive, but you have to pick and choose. It's not, again, an across-the-board bet that we make. And that's very, very helpful answers. I guess as I think about it, a lot of your competitors are running scared on the high layer excess of loss casualty just given the inflationary environment. So maybe just a little color on, and you kind of gave some of it just in terms of your experience in the market, but maybe a little color why you don't fear that that could get out of hand and we could wake up one day and just see Arch get hit with a lot of these things kind of jumping into the high layers. So this is not. This is what markets do. When you have a lot of severity losses, whether it's property or whether it's liability, the reaction of the market is to cut limits. So I think if you think of it, if you have a, let's say, $50 million limit, you're writing a $100 million portfolio, too short loss, and your loss ratio is 100%. I think what we've seen is people cutting their limit dramatically to 5s and 10s. So now when we get the full tower losses, the contribution to your portfolio is $5 or $10 million. So it makes the beauty of diversification. It makes your loss ratio a lot more stable. And I think when this happens, because what I said earlier, before to do like a $200 million tower for a program, you needed 5 to 7 markets. Because now you need 20, by definition, it costs a lot more. And so the price adequacy is a lot better. So that's what we're seeing. Got it. Thanks a lot. Thank you. Next question will be from Cave Montazeri at Deutsche Bank. Please go ahead. Thank you. Another question on casualty since. That's where you see good growth opportunities. We're seeing good rate increases on the primary side, which is also helping quota share reinsurance. But ceding commissions didn't change much at 11% despite the adverse development that carriers con tinue to face. So my question is, was the incremental supply of casualty reinsurance at 11% higher than what you would have expected? And I know you're writing both, and yes, it would depend on the specific clients, but is it currently more attractive to write new casualty business on the primary side rather than on the reinsurance side? Yeah. So first, I'll answer the first question. I think the supply of casualty treaty reinsurance. I think we're hearing a bunch of people on the call saying that they don't think it's attractive. So hopefully, they withdraw. But right now, I think there's plenty of people willing to write the business. So I think it's a lot of the supply and demand. I mean, ceding commission will go down the day where people are putting their foot down and say, "Listen, I'm not going to write it unless the ceding commission is down 2% or 3%." So we haven't seen that. Even on the business that we place ourselves, we haven't seen that. So I think that so for sure, I think the math for the reinsurer, they get the rate increase, they get a lower ceding commission. It helps justifying why you would write those business. But I think for us, I think we, yeah, I think we are more bullish on the primary side today, on the E&S side, because I think that we have a true expertise there. We underwrite the business one by one. And I think we have, I would say that's, putting on the list, I would say that goes number one. Being able to, there's good competitors of ours, people we admire or we hire underwriters from. I mean, being able to support those people through our reinsurance team, I think it makes sense to me. So I think, yeah, I think the commission may be a little high, but I think if you pick people that can outperform on the loss ratio, you may still be all right. Good. And my second question, still on growth on the primary side this time. Early days, but can you give us an update on how the integration of MidCorp is going and if the growth prospects, how that's evolving versus your expectations prior to the deal? Yeah, so I think we're pretty much on plan, to be honest. I think the integration is. It's a big lift, but I think we're pretty comfortable so far that things are pretty much on plan. In terms of the business itself, it's early to tell, but the business is pretty much what we expected, and I think it's better or worse. I think it's pretty much what we had planned for, so. Thank you. And I think the good news for us on the MidCorp aspect is that we're seeing some double-digit rate increases on the property side and also the liability side. So I think on the property side, it's really driven by the secondary periods that have not only for us, but for others on the market side have been a problem in the past. So people are. We're underwriting around it, but also getting rate increase. And we're seeing some of the same rate increase on the total liability and the GL. Thanks. Thank you. Next question will be from Alex Scott at Barclays. Please go ahead. Hi, good morning. First, what I have is on the PMLs. I just wanted to understand to what degree your exposure to aggregate reinsurance treaties. Just when we think about a pro forma for some of the wildfire losses, would that cause any upward pressure of note to the PMLs as we think about heading into wind season? So, we do some, but we have very limited exposure to aggregate treaties. I think as a general underwriting philosophy, it's hard enough to price the severity. The frequency is really, really hard to price. So I think we do it, but when we really feel that we have, because of the line of business and the exposure, we could have a good grasp on the frequency or we get enough away from the frequency that maybe providing an aggregate cover may make sense. So very limited exposure to aggregate covers. In terms of the PML, can you repeat the second question? I just forgot. It was long as it was. I was just trying to understand if you had exposure to aggregate treaties, then to what extent would it potentially increase your PMLs? Just thinking through, for example, a primary this morning announced the wildfire number that when you look at their baseline cat budget, I think it would potentially cause them to pierce the aggregate. Yeah. My guess is immaterial for us. Got it. Okay. And then just as a separate follow-up on MidCorp, I just wanted to probe there. Now that you have the book, it sounds like things are going to plan, but could you talk about what portion of those premiums that you've gotten in are going through the heavier remediation and just how we should think about the trajectory of premiums considering that there's still some remediation work going on in the background? I think it's mainly around, I would say, the program book of business. When we bought MidCorp, I remember, again, I think there was a $500 million book of programs. And this is not why we bought MidCorp. And I think we have ourselves a significant, I think, something like $800 million book of business. So I think that's where we're trying to integrate their teams with our teams. And we have a very defined risk appetite for the type of underwriting manager that we do business with, the type of back office integration that we require to get the information very quickly. So I think we are going through their book of business to make sure which one qualifies and which one doesn't, so. Yeah. To add to that, I mean, we have already kind of taken action on a number of programs, but given the period of notice, I mean, it will start to show more in the second half of 2025, the impact of those actions on the top line at least, and certainly, we think the bottom line, the loss ratios will follow as well. Got you. Okay. Thank you. You're welcome. Next question will be from Andrew Andersen at Jefferies. Please go ahead. Hey, good morning. You'd mentioned deploying capital into London specialty markets. I would have thought that scenario where perhaps a bit more competition has come in and maybe rate is decelerating, but perhaps still at an adequate level. Could you just maybe talk about the growth environment there? Yes. I think I'm personally, and I think we are bullish in the London market. I think the thing that, yeah, there's more competition. I think rates have flattened in certain of our business. But I think the thing that helped us in the London market is that we've grown from being a subscale business to a business today that writes close to, in the London market, probably $1.5 billion or more of premium. And so we are one of the, and the market is consolidating around a fewer number of carriers. So we are one of the beneficiaries of that consolidation. We're not the only one, but I think we're beneficiaries. And we've built, the team has done an amazing job building leading capabilities in a number of lines of business, and that makes a huge difference. So I think we get to pick first, which in our business is a huge advantage. Thank you. And then maybe just within reinsurance, it sounds like still kind of positive on prop cat. The other specialty line, I realize there's probably a number of different businesses in here, but it declined in the quarter. Can you maybe just touch on the drivers of the decrease year over year? Yeah. So I think the first is the fourth quarter is really the smaller of the four quarters. The thing I want people to understand on reinsurance, it's true in the insurance as well, is that we are extremely dynamic. We don't, if something doesn't fit or a ceding company decides to, for instance, a ceding company decided to change from proportional to excess, premium in itself is never a target. We're not trying to replace the premium. We're actually looking for profitable premiums. Those are two different concepts. So I think in the fourth quarter, what happened is I think we're starting to have a negative bias on cyber, to be honest. I think we were a big provider of quota share on the cyber side. So a couple of our contracts, either the ceding company retained more, which I think is one, or we may have cut back on another one based on the new terms and conditions. And that explains most of it, so. Thank you. Thank you. Next question will be from Meyer Shields at KBW. Please go ahead. Great. Thank you very much. I guess one question. For 2025 on the insurance segment, can you talk about how reinsurance purchase is, your reinsurance, outwards reinsurance purchase has changed? I don't know whether that's a market question or a MidCorp question or both. So I think maybe if I understand this, how did it change or what's the outlook? I think the one change that we had to do is we had to. Allianz was buying reinsurance to cover the MidCorp portfolio, a lot of it being properties, some of it being casualty. So I think, I think on the property side, I think we had to, and they bought large limits, limits of up to $700 million or $800 million. So I think we had to, and that was one thing we bought. I mean, so we had to transfer that reinsurance onto an Arch-managed framework, so outside of the Allianz ceded department and within the Arch ceded department. So that happened at January 1. I think the team did a great job. And we kept the capacity, which is a huge part of the value proposition that the MidCorp offer. It's like, to be able to compete in the middle market, you need large capacity, up to $700, up to a billion on any one account or location. So I think by being able to do that, I think we secured a lot of the brand or a lot of the value that we bought. So I think that was a very satisfactory outcome for us. Okay. Great. Thank you. And then François, you mentioned that there's a lot of property and therefore cat risk within the MC portfolio. Right now, obviously, the underlying loss ratio is elevated. Once all of that is done, should MC have a lower attritional loss ratio than the legacy Arch side of things because of that cat exposure? So I think the cat exposure of the MidCorp business is more around the secondary peril than it is around the primary peril of a hurricane. And so I think that was something attractive for us because it was very complementary to the footprint that we had. So I think going forward, I think those secondary perils, attritional cat risk ratio, they remain. That's part of the, I mean, we underwrite the flood, we underwrite the tornadoes, we underwrite the, but ultimately, so I really don't expect the attritional loss ratio coming from the MidCorp to really change going forward. Yeah. Yeah. Exactly that. I mean, I think pre-closing MI after we fully integrate the business, I would not expect a significant change to the ex-cat loss ratio. Okay. Perfect. That's what I needed to know. Thank you. Next question will be from Brian Meredith at UBS. Please go ahead. Yeah. Thanks. First, Nicolas and François, I'm just curious, how are you thinking about the potential impact of tariffs on your business? Nothing significant for us at this point. As you know, I mean, the businesses are transacted locally between local carriers in each of the jurisdictions in which we operate. And so from that point of view, I don't think there's an issue there or any concern. Does it slow down trade in the broader sense? Maybe. I think I could see a potential impact on our Coface investment, for example. I mean, you could see some reductions in world trade and that might have an impact. But I think too early to tell would be our answer, but that's something obviously we're watching. Great. Thanks. And then, second question, I think you've kind of answered this around that way, but what are you assuming right now in your reserving and pricing with respect to GL, call it, loss trend? I mean, it varies by cell, but certainly for the excess business, it's double digits. It's like 12%-14% on the primary E&S kind of low limit casualties, probably around 5%. Yes. Five or six. Yeah. Five or six in the low-limit casualty. And then one other one, and then quickly switch up in here. You all have typically done a reasonable amount of structured transactions in your reinsurance. You're good at that surplus share, that kind of stuff. Are you seeing much opportunity here in 2025 and 2026 on that? We don't think so. I think there has been a few. Again, it's really we are in that business. We need the margin to make sense for us to write it. And I think for a while, we were successful because it seemed that some of the traditional players were pulling back. So we got a couple of opportunities to participate at our terms in a couple of transactions. It looks like maybe some capacity is coming back, so it's hard to tell. So it's not something we target. I think we are in that business, and when something fits, we do it. And if it doesn't, we just don't. Yeah. We're not a typical Arch thing, but a little bit more reactive on that type of business. We don't drive the demand for it. Sometimes you have a company that may have some capital issues because of caps or some other kind of result or could be reserve development, who knows? So that's where it's hard to predict whether the demand will be there for these products, but we're open for business. I think we benefit there, again, from the support we offer to some of our cedents. I think today, especially in the US, we are a multi-line reinsurer. So we just don't do the cat. We do the cat. We do the risk. We do the quota share. So when the opportunity that we got is one of those ceding companies has a problem, they think of us as one of the partners. So that's how some of those opportunities came to us. It's more like because of all the things we were doing for them, they're like, "Listen, we have this problem, Arch. Could you help us doing this?" And then we looked at it together. So I think that probably put a bit more tailwind in our ability to do this. But again, it has to be the right structure. It has to be the right price. Great. Appreciate it. Thank you. You're welcome. Next question will be from Elyse Greenspan at Wells Fargo. Please go ahead. Hi. Thanks. Just a couple of follow-ups. The first one, François was on the seven to eight point cat load. I just want to understand that correctly. That does include the fires. So then would that also be the cat load for 2026, or are you assuming in that that the fires kind of take the place of another large loss that you might have seen this year? Yeah. It does not include the fires in a direct way in the sense that this is our going in on January 1st. This is what we thought the cat losses or cat load was for the year. Now, if it turns out that the wildfires, which so far may end up being higher than what our cat load specifically for wildfires for the year would have been, then yeah, there's a chance that we exceed that total load. But by the same token, hurricanes could end up being lower. So that's truly a start of the year without any kind of additional knowledge reflected in that number. Okay. And then my second question, on MidCorp, right, when you guys announced the transaction, you said post-integration, right, it would run at a low 90s combined ratio. It sounds like from everything you're saying, it's running on track with plan. So that would still be the target. If you guys said when we might see that low 90s number, what year would be considered post-integration? You didn't say when. It's going to take some time. I think those things take always longer. I think the goal, I think from what we know today, I think I'm still very comfortable that we get there. Again, we have to finish the integration. There's limits for people. We're still operating the business on Allianz systems. So you can see that there's a limit to what we can do in terms of insights. And so we're preparing for the lift over Arch that should happen sometime next year. So I think it's going to take a bit of time. And then just one follow-up, François. I think someone asked a question, and you implied that MidCorp would maybe run at the same loss ratio once integrated. Was the point meaning run at the same loss ratio as legacy Arch? Is that what you were saying there? Yeah. I mean, I haven't done the math recently, but my expectation would be that, again, the ex-cat, ex-year loss ratio pre-MCE or legacy Arch, and that same metric once you include MCE after the integration's completed, meaning a little bit of remediation on some of the business we acquired, I don't think would be that different. So I think those would be pretty much in line. Okay. Got it. Thank you. You're welcome. Thank you. I'm not showing any further questions. I would like to turn the conference over to Mr. Nicolas Papadopoulo for closing remarks. Thank you for your time today, and yes, we'll see you next quarter. Thank you. Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines.