Hello, and welcome to the Horace Mann Educators Q2 2023 Investor Call. All participants will be in the listen-only mode. Should you need assistance, please signal a conference specialist, followed by the star key, followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touchtone phone. To withdraw your question, please press star, then two. Please note, today's event is being recorded. Now I'd like to turn the conference over to Heather Wietzel, Vice President, Investor Relations. Please go ahead, ma'am. Thank you, and good morning, everyone. Welcome to Horace Mann's discussion of our Q2 results. Yesterday, we issued our earnings release, investor supplement, and investor presentation. Copies are available on the investor page of our website. Marita Zuraitis, President and Chief Executive Officer, and Bret Conklin, Executive Vice President and Chief Financial Officer, will give today's formal remarks. With us for Q&A, we have Matt Sharp, Mark Desrochers, Mike Weckenbrock, Ryan Greiner, and Steve McInerney. Before turning it over to Marita, I want to note that our presentation today includes forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. The company cautions investors that any forward-looking statements include risks and uncertainties and are not guarantees of future performance. The forward-looking statements are based on management's current expectations, and we assume no obligation to update them. Actual results may differ materially due to a variety of factors, which are described in our news release and SEC filings. In our prepared remarks, we use some non-GAAP measures. Reconciliations of these measures to the most comparable GAAP measures are available in our investor supplement. I'll now turn the call over to Marita. Thanks, Heather. Hello, everyone. Last night, we reported Q2 core earnings of $0.03 per share, in line with our pre-announcement. Despite the severe weather losses, Horace Mann continues to see the benefits of the earnings and revenue diversification efforts we've completed over the past five years. Both the supplemental and group benefits in the life and retirement segments provided solid core earnings contributions again this quarter. Before we start, I want to welcome our new Chief Operating Officer, Steve McInerney, to the call. Steve joined us in May, bringing his more than 25 years of experience overseeing large personal lines, financial services, and worksite businesses to Horace Mann. In his first months with us, he has already been an asset to the team as we look to build on our growing momentum in household acquisition and market share expansion. Back to the quarter. As Bret will discuss in more detail later in the call, we now expect full year core EPS of $1.20-$1.45, primarily due to higher catastrophe losses. Our confidence in our long-term business strategy and the results Horace Mann can deliver remains unchanged. We continue to expect 2024 core ROE near 10%. We believe educators deserve a partner who is looking out for their financial wellness, one that will help them protect what they have today and prepare for a successful tomorrow. We believe educators want a partner that has solutions tailored to educators' needs, delivered through knowledgeable distribution and built on customer-friendly infrastructure. Our multi-line approach sets us apart not only for customers, but as a business as well. Our business diversification allows us more flexibility as a larger entity when challenges arise in one of the segments. Before I talk about the actions we are taking to address external factors facing the property and casualty industry, I would like to talk about how our multi-line approach is enabling us to serve more educator households with more products through more channels. Our worksite division, which encompasses our employer-sponsored products as well as our worksite direct products, allows us to reach educators through their school district employers. We're expanding on the infrastructure that we gained with the NTA Life and Madison National acquisitions to support accelerated growth, including a unified product platform we introduced this year. In our employer-sponsored lines alone, we offer coverage to more than 750,000 employees. The division continues to perform above our expectations. In the H1 of the year, worksite direct product sales doubled, while employer-sponsored product sales increased by 50%. We are actively introducing an enhanced group supplemental product line this fall, bringing to bear the strengths of both acquired businesses. The products are chosen by the employer and underwritten at the group level to provide employees options for purchase. Employers appreciate our long-standing reputation in the educator niche, and educators value our solutions orientation. To accelerate the pace of growth in this segment, we are also investing in expanding our distribution reach, recruiting agents to support the worksite direct business, and expanding our relationships with benefit brokers that bring solutions to employers. We're making strides in both fronts and continue to build brand recognition in this space. Turning to the retail side of the business, we're also seeing successful agent recruiting, with new agents reaching key milestones at a pace we haven't seen since before the pandemic. Sales growth in our life and retirement segment remains encouraging, with net annuity contract deposits increasing 8% for the quarter and life sales up year to date. We continue to see a nice contribution to life sales from the worksite direct agents, an early indicator of the cross-sell potential across divisions. The value of our diversification is clear. Horace Mann can remain profitable in 2023, despite the unprecedented pressure on the personal lines P&C industry. Our life and retirement earnings continue to be solid, and we are benefiting from growing contributions from the worksite business. With that context, let me give you an update on the actions we're taking to address the challenging loss cost environment affecting the property and casualty industry. In auto, the rate plan we have been implementing since the beginning of 2022 to address inflation and the return to pre-pandemic levels of frequency, is proceeding as we planned, with up to 25 points of cumulative rate expected by year-end 2023. As a result, the underlying loss ratio is approaching the inflection point we anticipated, and based on this trajectory, we will generate an underwriting profit during 2024 on our path to a long-term combined ratio target of 97%-98%. We have filed and are continuing to file for rate as needed to address anticipated loss cost trends. For example, we have filed for a California auto rate increase of 20%, reflecting our loss experience in that state for the past 3 years. We are hopeful that we'll be able to put that rate into use in the H1 of 2024. We are pleased that retention is holding across our auto and property books. We also know that pricing changes can have an impact on our customers. We will continue to be thoughtful about balancing customer impact with the reality of current loss cost trends. We have equipped our agents with the data and resources for discussions with policyholders. For property, the increase in adverse weather frequency, intensity, and geographic reach means we need to take a multifaceted approach. We are addressing the increased loss costs associated with the more severe weather events in three ways: additional filed rate, product changes, and enhanced modeling. First, rate. We expect to meet our rate plan of 12%-15% increases nationwide by the end of the year. In addition, we continue to implement inflation guard increases that allow us to make adjustments for higher home coverage values at renewal. The impact on average renewal premium through year-end is closer to a 17%-20% increase. As we evaluate the impact of continued elevated weather losses, we've already doubled our planned rate increases for property for 2024. We now expect the impact on average written premiums next year will be approaching this year's levels. One important example is the property rate increase of about 25% we have pending in California. We'll work closely with the department to bring that filing to resolution, with the impact expected on renewals in 2024. Second, we are looking to modify policy terms and conditions to mitigate the cost of damages. For example, in several key states, we are implementing an age of roof loss settlement process that will result in significant savings to offset higher loss costs and catastrophe volatility in those states. Lastly, we are continually updating and enhancing our modeling sophistication. We have brought in new tools specifically to help us better understand the impact of severe convective storms, and we will integrate that data into our future rate and underwriting actions. These actions to further address severe weather will start to contribute in 2024, but the full benefit can be expected in 2025. As Bret will discuss, these actions keep us on track to our combined ratio targets and will respond with further actions if external factors require. As our business grows more diversified, the property and casualty segment becomes a smaller part of the larger business, but retains its strategic importance. For example, as the most broadly purchased personal lines product, auto remains a key entry point to educator households. Turning to the current financial concerns facing educators, student loan repayments will resume this fall after a three-year federal pause. This milestone disproportionately affects teachers, who often have higher educational requirements for their jobs and lower salaries than workers in the private sector. While some borrowers may have counted on $10,000 or $20,000 one-time loan forgiveness assistance, that isn't likely to be broadly available anytime soon. To be clear, the Biden administration's plan that was blocked by the Supreme Court is completely separate from the Public Service Loan Forgiveness program that is the bedrock of our student loan solutions program. We're in the midst of an awareness campaign to encourage educators who may have been counting on one-time forgiveness to engage with us instead. Our free online accounts connect educators with resources and support to navigate the often confusing process of obtaining the Public Service Loan Forgiveness that they deserve. To date, we've helped educators identify more than $600 million of loan forgiveness, solidifying our value as a true partner to the education community. Back to school preparations are underway across the company. We are engaging with our agents, both in person and online, to prepare for the school year. Last month, I traveled to South Carolina to meet with many of our worksite agents, and I was encouraged by the amount of enthusiasm from veteran and new agents alike. Before I turn the call over to Bret, I want to take a step back to reiterate our confidence in our long-term strategy to gain market share and achieve a sustained double-digit return on equity. On occasion, external challenges may slow our progress. We are clearly building a more resilient company with a more diversified earnings profile. This has clear benefits for investors, employees, agents, and most importantly, our educator customers. With that, I'll turn the call over to Bret. Thanks, everyone, for joining our call today. Marita provided a solid overview of the value of our diversification, as well as the ways we are addressing the unprecedented pressures on the P&C personal lines industry. Let me turn to the details of the segment performance, starting with P&C. Catastrophe losses in the quarter were in line with our pre-announcement at $41.5 million, leading to the segment's quarterly loss. Segment net investment income was approximately 40% above the prior year, with limited partnership portfolio returns at targeted levels compared with declines last year. Although there were 19 catastrophe events in this year's Q2, including multiple severe convective storms across the Midwest and Texas in June, the impact of catastrophe losses on our results was actually 4.2 points lower than last year. As we continue to address post-pandemic loss trends, our analysis confirms that we took the appropriate reserve actions throughout 2022. Turning to the results, total written premiums rose again this quarter by 8.2%, reflecting the accelerating impact of the rate actions that we have implemented to date. With the rate environment rising across the industry, we're pleased to see very stable retention. The sales growth we're seeing is coming largely from states where we're most confident in the outlook for pricing. Marita covered the rate and non-rate underwriting actions we are taking in both auto and property. Let me add a few details on each business. For auto, the rate we've implemented translated into a year-over-year increase in average written premiums of 11.4%, up from 8.1% in the Q1 and 4.8% in the Q4. Largely due to weather-related frequency, the auto combined ratio for the full year is now expected to be above the 107 we had originally targeted, but we expect to return to an underwriting profit in 2024. We continue to take rate actions that are designed to get us to our long-term target level of 97%-98%. Turning to property, Q2 average written premiums were also up 11.4% year-over-year. Rate increases countrywide continue to be bolstered by inflation adjustments to coverage values. The property underlying loss ratio was 49.8%, in line with the Q1. Due to the severe weather, we've doubled our rate plan for 2024. The additional contributions from those actions keep us on track to achieve our long-term combined ratio target of a 92%-93% in this business. Taking into account the impact of cat losses, the P&C segment core loss is now expected to be between $27 million and $32 million for the full year. We adjusted our full-year cat loss contribution to $95 million-$100 million, or about 15.5 points to the combined ratio, acknowledging the potential for continued outsized weather losses through the H2. The longer-term combined ratio target for the segment remains at 95%-96%. Turning to Life and Retirement, the segment performed largely as expected, with adjusted core earnings at $17.5 million. Net investment income was negatively impacted by lower limited partnership portfolio returns. The annualized net interest spread on our fixed annuity business was 203 bps for the Q2, down from 303 bps last year. Year-over-year, the net contribution from our FHLB funding agreements remained stable, although net investment income reflected higher earnings from the floating rate investments backing the program. Interest credited similarly reflected offsetting higher interest expense. For the segment, total benefit expenses, the total of mortality costs and change in reserves, declined again this quarter as favorable market risk benefit adjustments for retirement more than offset a marginal increase in life mortality experience. For the retirement business, net annuity contract deposits were up 8.3% to $113 million for the Q2. Cash value persistency was down a bit to 92.2%, largely outside of our core 403(b) accounts. We had another good quarter for Retirement Advantage, the fee-based mutual fund platform that we believe creates long-term opportunity for this business segment. Life annualized sales were flat for the quarter, up 10% year to date, with persistency remaining strong. We continue to look for life sales as a way to initiate and solidify educator relationships, and we are very pleased with the progress. We updated our core earnings guidance for this segment to $63 million-$65 million, to reflect the lower than anticipated fixed annuity spread in the H1. The longer-term targeted range for the spread remains at 220-230 bps. Now let me turn to the supplemental and group benefits segment, where we are reaping the rewards of the investments we have made and will continue to make in diversifying into this higher growth, higher ROE, and less capital-intensive business. For the segment, Q2 core earnings were $11.8 million, with the blended benefit ratio at 40.9%, remaining ahead of our long-term target of 43%. The benefit ratio for the worksite direct product line again moved toward our target for that business, although utilization remains below historical levels. The benefit ratio for the employer-sponsored product line, which has normal seasonal fluctuations, increased from last year's relatively low results for this period and remains in line with expectations. Q2 premiums and contract charges earned were $66 million, with segment sales at $4.4 million. Sales levels in our worksite direct business, the supplemental products acquired in the NTA transaction in 2019, have reached the pre-pandemic run rate. We're looking forward to growing from here. Sales of employer-sponsored products are seasonal, typically highest in the first and Q3s when benefit years begin. We continue to gain traction with our distribution partners and are pleased with the momentum we are seeing. As we noted last quarter, seasonal fluctuations in sales patterns and the benefit ratio are anticipated in our full year guidance for Worksite. Based on the strong H1, we again raised our guidance for this segment to the range of $47 million-$50 million. We continue to expect the segment will represent about 25% of total premiums and contract charges earned for the year. Total net investment income on the managed portfolio rose 3.9% to $82.5 million, as floating rate investments benefit from the higher rate environment, including our commercial mortgage loan funds. Pre-tax investment yield on the portfolio, excluding limited partnership interests, was 4.52%, with new money yields continuing to exceed portfolio yields in the core fixed maturity securities portfolio. The A-plus rated core portfolio remains concentrated in investment-grade corporates, municipals, and highly liquid agency and agency MBS securities, positioning us well for a potential recessionary environment later in 2023. In fact, we've recently seen opportunities to buy double A-plus-rated agency securities at yields above 5%. Following the valuation adjustments taken last year, the higher rate environment is also benefiting from commercial mortgage loan fund returns. This is offsetting lower limited partnership portfolio returns compared with the last year's Q2. Due to the elevated interest rate environment, the net unrealized investment loss position of the fixed maturity securities portfolio rose to $501 million pre-tax at quarter end, compared to $453 million at the end of the Q1. As you'll recall, unlike a peer play P&C peer, nearly 90% of our asset portfolio supports longer-term liabilities in the L&R and S&GB segments, with asset durations around 7 years. We don't expect to realize many of those unrealized losses, as the portfolio is high quality, we have steady cash flow, and our liability profile doesn't typically require us to monetize those positions from either a claim or surrender activity standpoint. As a corollary, this is the primary reason we focus more on adjusted book value, the metric that adjusts for both unrealized investment losses and net reserve remeasurements, attributable discount rates. At June 30th, adjusted book value per share was $35.55. This is the book value we use when we talk about core return on equity. We also had $17 million in net investment losses in the Q2, as we again took opportunities to reposition the portfolio to improve book yield. Our net investment income guidance is unchanged, as we continue to expect full-year net investment income from the managed portfolio to be between $325 million and $335 million, and approximately $26 million quarterly from the deposit asset on reinsurance. In closing, despite the challenges facing the P&C industry, I want to reiterate how clearly H1 results demonstrate the progress we are making to leverage the stronger and more diverse organization that Horace Mann has become. We remain confident in our path to sustainable double-digit ROEs. Our Life & Retirement and Supplemental and Group Benefit segments provide earnings and capital to mitigate volatility in P&C. The growth we anticipate over the next several years will lead to an increasing share of the education market. We see a clear path to our longer-term profitability targets in P&C. As a result, we believe 2024 core ROE will be near 10%, which is now the equivalent of about $3.50 in core EPS. We continue to target 10% average annual EPS growth in 2025 and beyond. Our targeted profitability across the segments, we know Horace Mann is capable of generating approximately $50 million in excess capital above what we pay in shareholder dividends. We remain committed to maintaining our financial leverage and capital ratios at levels appropriate for our current financial strength ratings, but continue to expect to use excess capital in line with our priorities. First, to support growth; second, for shareholder dividends, and third, for opportunistic share repurchases. We continue to expect our progress toward our objectives will accelerate over the coming quarters as we remain focused on providing strong returns to shareholders. Thank you. With that, I'll turn it back to Heather. Thank you. Op erator, we 're ready for questions. Yes, thank you. At this time, we will begin the question-and-answer session. To ask a question, you may press star, then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble the roster. The first question comes from Matt Carletti with JMP. Hey, good morning. Morning. Morning. Marita and Bret, you both touched on a bit about market share growth and kind of, you know, picking up share as we go forward. I was hoping you could expand on that a little bit. Just, you, you've spent a good chunk of the last several years, you know, really growing your product set. When you think about that and the kind of the geographies you're in and what you're doing with distribution, can you give us a little bit of an idea as you look forward, like a reasonable investable time frame, 3-5 years, maybe something like that? You know, where you think that, I think, 15-ish% market share today of the 7.5 million K-12 educators, you know, where, where you think that could be, what the current kind of, you know, strategy of Horace Mann supports longer term? You know, Matt, I really appreciate you asking the question because this quarter for us really wasn't anything new other than I think it solidifies the strategy that we've laid out. This was a weather quarter that the entire P&C industry saw, not only cats, but underlying weather as well. Really nothing new or nothing in the numbers that take us away from that strategy that we've had now for a very, very long period of time. You know, we built the products relevant to our educator space. We feel really good about the distribution momentum that we have. Recruiting is back on track. Our agents are excited about the future, and feel really good about a lot of the modernization efforts we've put into place in our infrastructure. We're more confident than ever on our ability to build market share in the educator space and also thinking about others who serve that community. In the script, we talked about how many individual supplemental and group benefits customers that we gained with Madison National and NTA, and certainly new business since that point in time, and building on the cross-sell momentum, you know, that we started. You know, when you think about Madison National and NTA, certainly was about earnings diversification. We saw that in this quarter. You know, we're not a model line P&C carrier. We're an educator company, and we've built a resilient multiline company that helps us in times like this. We talk a lot about insulated, but not immune. You know, we're not immune from the P&C industry trends that are out there. I think we manage them well, we also have other businesses that are working really well for us and provide that ballast. Product expansion in the K-12 niche, which we did with the acquisitions and continue to do as we expand, what we can bring to that educator niche, not only products, but the solution orientation. We said it in the script, how many student loan conversations we have had that drove that $600 million of student loan, you know, forgiveness for those educators, that solidifies that relationship, and I think we're seeing that work. I mean, think about the trends in P&C right now. Any actuary would expect with those kind of trends, with that much rate, we would see our retention going down. We're not. You know, obviously, here and there, you know, you'll see it. These are big numbers. We don't assume that will hold exactly the way it is, during, you know, these types of times, our, our retention in P&C, in our retirement deposits, it's pretty sticky. Our customers stick with us because of the types of things that we do, you know, for them and with them. I am very confident in our strategy and where we're going and feel good about that market expansion. You know, you say 15%, you know, you say how we think about that growth. I think we're just scratching the surface of what we can do with educators, then how we expand that to other groups that look very similar to our educator niche. That's super helpful. Then kind of just digging into one of the numbers a little bit. I'm looking at slide 18 in the, the presentation, and you, you break down, you know, some industry numbers, you know, 7.5 million K-12 educators, and how many are, you know, teachers versus kind of instructional and support staff. It's kind of even, a little more teachers, but pretty even split. I'm curious, Horace, would Horace Mann's current book of business look similar to that split, or do you lean more heavily to a, a teacher versus a, a support, support staff or an administrator, or does your book look like the industry? Yeah, I would say our and we know that ou r split would lean more towards the teacher space. A lot of our research, a lot of our outreach, a lot of where our agents came from, a lot of them from the principal and superintendent ranks. I would say that when you look at our teacher base, it would be skewed towards the teachers themselves, but also the administrators. We have a fair amount of principals, a fair amount of superintendents in, you know, in our, our book. We certainly don't dissuade our agents from talking to support staff, but I think the models that we bring to bear, the financial planning, the student loan solutions, the DonorsChoose, and classroom grants, a lot of our solutions really gear more towards the teacher and the administrator vertical. T hat makes sense. Thank you very much for the color. I appreciate it. Yep. Thank you. The next question comes from John Barnidge with Piper Sandler. Thank you for the opportunity today. Question about the core EPS for 2024. I would ask, what's the run rate catastrophe loss load? I know run rates and catastrophe losses really don't seem to go hand in hand anymore, but how do you think about that as, as we look forward to next year? Thank you. Yeah, I obviously, it would probably be premature to answer that question for 2024. You saw what we did in our estimates for the H2 and how we thought about H2 catastrophes. You know, the only thing you know about this number when you put it out there, John, is it's gonna be wrong. You're either gonna be too high or too low. You gotta rely on the math, right? You take recency, you take five-year, 10-year averages, you run it out. Everybody's doing the same thing right now. This Q2 was, you know, I won't say biblical, but it was certainly historic in many, in many ways, right? We look at that and we say, it's probably prudent for us to assume in the H2 of this year that those weather patterns will continue, but we haven't said yet how we think about what we will put in our plans for 2024. It's real, so I think the real question is, what's everybody doing about it? I think we were very clear in our script that it's about rate, rate, and more rate. The days of a $700 homeowner policy are gone, right? It's about sophisticating, sophisticated models and taking advantage of every piece of science that's out there in your, in your underwriting, and it's about coverage changes. You know, this issue has become certainly an affordability issue in many places, and as you know and you read, it's becoming an availability issue in, in some of the more problematic states as well. I think the industry is very concentrated on this, and we will figure this out. We will get the right coverage, we will get the right price. Make no mistake, this is something that we are and everybody is focused on. Yeah, John, this is Bret. I, I would add, I think you've been tracking us long enough to know that over the even the past few years, you know, I, I think it's not too far looking back, that you could see a 7.5% cat load. I think we took it to 9, and this year, we guided to 10. It's something we always, you know, factor in to our year-end guidance that we'll include, like we always do, in our Q4 earnings release. Thank you. Then on a follow-up, is there a level of the expense ratio that's elevated that we should be thinking about if we do get normal cats that might go away? Or how, how should we think about expense ratios as a result? John, this is Bret again. I mean, our, our expense ratio is actually running at what we would expect, I believe, for both the quarter, and the full year. We're up about 4%, and that's consolidated. You know, we've guided to around 27%-27.5% historically, and really don't see any significant changes there. We're, you know, the, the increase we're seeing in, in the expenses, as a corporation are consistent with inflation. Thank you very much. Appreciate the answers. Thank you. The next question comes from Meyer Shields with KBW. Thanks. A similar question, and I'm not looking for a number, but more in terms of how you're thinking about this. I guess it's been less than 10 years, and we had a, the unexpected frequency spike in about 2015, and now, severity spiking. And I'm wondering how... maybe there's a question for Mark: How do you think about the profiting contingency provision in rates? Does that need to go up simply because it seems like there are more black swans out there? Yeah, I don't know if you have a specific answer to that, Mark. I think it's an interesting way to ask the question, since everything has to be factored in. I mean, on the expense side of it, and then I'll turn it over to Mark on the trends, because I think there might be a more general trend answer to that question. You know, keep in mind that we've got a fair amount of strategic growth built into our thought process going forward. We didn't do the acquisitions that we did, we didn't build the product, we didn't pay for the infrastructure, we didn't build out the distribution to not grow. Our plans clearly are around growing this place, and the expense structure reflects that. I mean, I'm very proud of the fact that we were able to hold our expenses relatively flat while we did a lot of heavy lifting and building this place, so it was ready for the growth that we're very confident will come. I'll turn it over to Mark and let him answer anything around the trend, question there. Yeah, I mean, Meyer, I, I think we I mean, we, we already do, to some extent, factor in a higher profit and contingencies load in the property side to address this. I think you, you do make a good point. It's something that we need to continue to look at as an industry, because I believe, and I think Marita believes as well, and she's said this several times, that, you know, if we look at auto, you know, auto has been clearly a severity issue. It's a short-tailed line. I think everyone's eventually going to catch up to the severity side there. On the property side, there, you know, there is this question about the long-term impact of weather, and are we taking enough rate to keep up with it? Are our, you know, profit targets high enough, high enough, you know, vis-a-vis our combined ratio targets low enough? I think that's a legitimate question that we all need to answer, you know, as an industry. I think, you know, as we said in the script, and Marita, you know, reiterated, that, you know, we will take an aggressive look at property rates. We've already doubled, you know, our expectation for next year in terms of rate. We, you know, we're looking at another year in 2024 similar to this year, because we're trying to address, I think, some of the, the issues that we're all experiencing throughout the industry with the, the continued impact of weather. Okay. No, that's very helpful. Second question, maybe this is a little bit more, yes or no, but can you talk about the tools that you have to ensure that as you're implementing these necessary rate increases in P&C, that you're able to retain customers that have policies in the other segments that are doing pretty well? Yeah, that's a. It's not just a yes or no, but if you want a yes or no, I'll give you a yes. I'll go a little bit, a little bit further. I think that's where our third-party strategy comes into play. we know that our retention is stronger when we have a multi-line customer. The majority of our customers are multi-line customers. When it makes sense for us to place a particular line of business with another carrier, we have a stable of many strong third-party relationships that we've had now for some time, and they like our educator business as much as we do. I mean, we understand that it's a little bit more difficult in a harder market because we may all be thinking the same things at the same time. But make no mistake, we have a fair amount of business with third parties, and that works out quite well for us. with or without a third party, our retention numbers, I think, speak for themselves. I said that earlier, that we're continuing to see those numbers, those numbers hold. Yeah, that was way better than a yes or no. Thanks so much. Thank you. Thank you. The next question comes from Greg Peters with Raymond James. Hey, good afternoon. This is Sid on for Greg Peters. We hear commentary on the difficult states in personal auto, but just curious, outside of the difficult states, if you could give us a sense on how you feel about where the rest of your book is, or if there's anything you can give us on how much of the book you feel is closer to the longer-term combined ratio target? Yeah, I mean, I can, I can turn that over to Mark, but, you know, we think about all the states the same way, right? You're going to price to a combined ratio target and work with the department to get the rate you need, to get there. In that respect, they're not all that different. It's just some states are more difficult to get that rate than other states. I'll, I'll see if Mark has anything to add to that. Yeah, I think a couple of points here. I, I think when, when we look at what we've been able to achieve and what we think we can achieve, we have a very high level of confidence to the path of getting the right rate level in, in just about every state. You know, California is the one that does stand out there for everybody. You know, I think we have seen very recently that the Department of Insurance has been more proactive in working with carriers on their rate need, which is why, you know, we have, both on the property side and the auto side, made recent filings that are substantially more than we have historically done. We, you know, we are, we are hopeful and, you know, somewhat confident in our ability to get that rate over the next six to nine months and, and get that into the book, which will make us feel a lot better about that particular problem state. You know, the other problem states that I hear a lot of the competitors talking about are just places that, you know, we don't have any presence or little presence. New York and New Jersey, we don't have presence there. Florida has been particularly problematic for many in the industry and is, I think driving, or at least others have commented on its impact on prior year development. Our Florida book, for all intents and purposes, is, is, is almost inconsequential at this point. It was at 1 point, 6, 7, 8 years ago, maybe 10+% of our, of our auto book. It's now far less than 1%. Really, outside of California, which again, I'm more optimistic about than I probably would have been 6 months ago, you know, we, we have a, a fairly high degree of confidence in our ability to get to the level we need to get at to be profitable. That was very helpful, Mark. Thank you for that. You know, I would say we're growing in the right places. We said it in the script, more states are falling into that bucket as we get to rate adequacy in those states. I think it's also important to remember that we've got control over our distribution. We have captive distribution. When we want to tighten the underwriting wheel, when we want to put underwriting changes in place, when we want to put any of those levers to drive non-rate underwriting actions, it's immediate. We can go out to our agency plant and say, "This is how we're managing this particular issue in this state," and that's what they do. We're not in an independent agent world where that timeline might be a little bit longer to control behavior, so that's helpful as well. All right. Got it. Thanks for the answers. Yep, thank you. Thank you. Once again, please press star and then one, if you would like to ask a question. We do have a follow-up question with Matt Carletti with JMP. Hey, thanks. Hello again. I just had a question probably for Ryan, maybe for Bret. You know, there's just been focus in the market, you know, kind of year to date on, on commercial real estate and so forth, and I was hoping maybe you could give us an update on, on your guys' investments there. I know you've been very thoughtful and, and have a very good view of the market. Maybe while at it, touch on the limited partnership funds as well. Sure. Thanks for the question, Matt. This is, this is Ryan. When I think about total real estate exposure in the portfolio, it's about 12%, and the vast majority of that, over 80% of it, is senior commercial mortgage loan exposure. If we wanna dive right into, you know, the asset class, the exposure to office that folks tend to be the most concerned about right now, you know, that total exposure across our entire portfolio is less than 3%, so it's under $200 million, and it's mainly senior commercial mortgage loan funds. The average LTV on those office properties is 68%. We've got a strong debt service coverage ratio, you know, on them as well. We're doing, you know, monitoring. We know what's in the portfolio. We know line by line, building by building, lease roll by lease roll, and we feel pretty confident in our exposure there. The bulk of the portfolio is skewed towards multifamily, which historically has performed very well, through various economic cycles. You know, you saw some pressure in our commercial mortgage loan funds last year, which is a function of the fact that the majority of our commercial mortgage loan exposure is equity method of accounting. It's in funds. That's a little bit different than peers. We took our valuation adjustments early. We marked that portfolio to market basically quarterly. So you can see the rebound in returns this year. This quarter's annualized return for our CML funds for Q2 alone was over 6%. You know, these are mainly floating rate securities, and they're going to serve us well, in the rate environment we're in. Stepping back and looking at the limited partnership portfolio, again, the Q2 was a nice rebound from the negative returns we saw in the Q1. LPs, by nature of what they are, will be lumpy. The quarter-to-quarter performance, you know, will be somewhat volatile, but we put up a mid, you know, high 5% return this quarter. When I dissect that, our private credit and our infrastructure strategies continue to deliver solid, steady returns. This past quarter, they were, they were low double digits, and that offsets some of the valuation pressure that you're gonna get from the more volatile equity investments. When I think about LP returns for the full year, you know, we're guiding to being under our historic 8.5% level for that portfolio, and that's really reflective of the H1 performance. To sum it up, we feel confident, we like our exposure, and we feel pretty good about the prospects as we move through this economic cycle. Thanks, Ryan. Appreciate it. Thanks, Matt. Thank you. This concludes the question and answer session. I would like to return the floor to Heather Wietzel for any closing comments. Thank you. Thank you everyone for joining us today. We realize it's a very busy day, and I will be available to arrange additional follow-up conversations as people, if there's something you want to touch base on. Just also flagging, we will be at the KBW conference in September, and we'll be in Chicago the following week for a day that Raymond James is helping us put together. Then looking out into November, there's a number of conferences and other trips with Piper JMP Dowling. Lots on the road, lots of chances to talk to people. Look forward to connecting, and I wish everyone a good day. Thank you. Thank you. The conference is now concluded. Thank you for attending today's presentation. You may all disconnect your lines.