Okay, we're going to move along in hopes of keeping us on schedule. I'd like to welcome Bill Berkley and Rob Berkley of W. R. Berkley Corporation, which I think also covers both of you. I'm going to ask Bill to make some introductory comments, then jump into Q&A. I'll roll out a couple of quick questions, please, if you have anything that you want to make sure we cover, raise your hand, and we'll make sure that we're getting those questions answered. The industry is one that on the outside looks like it doesn't change. On the inside, changes at an incredibly rapid pace. The biggest change is it's no longer a uniform industry. All lines don't change in the same way because we have such better data, so much more information. Decision-making can take place on an individual line basis on much more narrowly defined underwriting concerns. Totally changes what we have known as the cyclical nature of the property casualty business. Whether it's workers' compensation or long-haul trucking, it doesn't all move in the same way. Therefore, choosing your markets, focusing your efforts, has become more rewarding than ever. It also means the broad brush that investors have in the past used to say property casualty business is no longer the most effective way to invest. It's selecting the companies that are nimble, that can find the places to be. Not that they'll dramatically get in and out of markets, but that they'll move to emphasize places that offer opportunities. We think from the start of our company right through today, we've been nimble and even without all the data, we've reached for the opportunities that offer the highest returns. With that, I'm going to let Rob take over and talk about the business. This has been a well-planned succession. I'm Executive Chairman. I'm active in the business. I'm there more than, or I work more than 40 hours a week at Berkley Corp. That's going to phase out, and no one should think there'll be any issue or any surprise. It won't be. It'll continue to smoothly move along as it has today. I'll just go right to you. Rob? I think we're just going to move on to Mary, you had some prepared questions, correct? I did. I'm going to play off one of the points that you made, which is with regard to agility, because this is verifiable. We can find commentary on social inflation on Berkley's transcripts well before it entered most of the industry's parlance. I was hoping you could talk about the tools that you use to identify this sort of inflection, maybe to anticipate this sort of inflection going forward. Let me start with that, and I'm going to have a follow-up on medical inflation as it relates to that. We, as it was suggested earlier, for those that are less familiar with our organization, we are effectively a collection of 57 different operations that each focus on a particular niche within the property and casualty space. We have that model. We've had that model for decades and decades at this stage, really since inception. It's that focus which we believe allows us to bring more value to market, customers, distribution, but in addition to that, be able to bring more value to shareholders as well. It is that focus that allows us to understand the business more effectively and generate better returns. As far as reading the tea leaves and trying to anticipate what's going on, I think it starts with a reality that you can't control the marketplace. What you can control is how you choose to operate and behave. We have an appreciation for that. When we are paying attention to the data, when we are seeing specifically if we want to focus on social inflation signs, how do those pop up on our radar screen? It's called paying attention to claims activity. Yes, it certainly is. You want to pay attention to what's going on in the broader environment, but the signs are there. It is as clear as day. It's just whether you choose to see them, whether you're paying attention so you see them in a timely manner. As you see those signs in your claims activity, whether that then transitions or translates into how you think about that exposure, how you price, how you select. Again, our model is one where we are able to pivot more quickly. We are able to get into the details in a timely manner. There is a recognition that we are in business to make good risk-adjusted returns, and we need to be able to read those tea leaves and adjust appropriately. How do you communicate that between the 50 units? In other words, is that identification of a worsening trend, so somebody notices that, how does that get propagated throughout the company? Well, it starts with a shared understanding that our goal is to make good risk-adjusted returns. We are not in business to issue insurance policies. We're in business to make a return for shareholders. That is a concept that we push regularly through the organization to ensure that everyone on the team has that shared understanding. We are encouraging people to pay attention to the details. We are encouraging people to make sure that they are focused on new trends. We are encouraging people to understand that if they see something that looks a little bit different, they don't need to wait to raise their hand till there's clear evidence. We actually want to have an awareness early on as to what is being seen so we can begin to grapple with that. As we see certain signs in particular pockets of the organization, then we will cross-pollinate that information and make sure that we are appropriately sharing those observations and make a concerted effort to see if we're finding similar data in other pockets of the organization, which ultimately allows us to triangulate and form a view as to how we see the broader marketplace. I think there's one really important thing. When you have all these units, they look at what happens every day. They don't wait to judge how they're doing and what decisions they make by looking at financial statements. That's real issue. When Rob talks to every operating unit, he doesn't end with the financial statements. He starts with them, then he goes to what's going on with the business. I think that's the real fine line. Because of our structure, we talk about the operating units, not about the financial statements, which by their very nature are looking in the rear-view mirror. It's a huge difference how he runs the business. Yeah. No, that's helpful. One of the windmills at which I'm currently tilting is medical inflation, anticipating at least a risk of it getting worse over time, sort of lagging broader inflation. I was hoping to get the Berkley view on medical inflation. Do we expect it to get worse? How is that being incorporated in underwriting and reserving the relevant lines? The short answer from our general perspective is yes, we expect medical inflation is likely going to tick up. I think when you're looking at medical inflation, you really need to bifurcate that, if you will, between pharma and everything else. Domestically here, there's been a lot of chatter, we have not really seen much coming out of Washington that's tangible that looks to curtail pharma inflation or pharma costs. On the other hand, as far as the balance of the medical piece, I don't think you need to look very long or hard to see the challenges that the healthcare system in this country faces. There are many health systems across the nation that are suffering, to say the least, financially. Ultimately, while there is a lag, that issue is going to have to be addressed. Certainly, part of the solution is likely going to be costs are going to go up. From our perspective, we think that we've been through somewhat of a benign period when it comes to medical costs. Probably a couple of reasons for that, COVID being a big piece of that puzzle. At this stage, when we're looking out, we expect that medical inflation is going to be trending up, it has lagged broader inflation, that's likely to change. We are considering that and how we think about pricing our product. It's certainly something we think that the broader industry needs to be actively grappling with as well. Okay. As always, there are questions. Jamie, please. I want to ask you two a question. Not that I don't think you guys necessarily follow you two guys, you two guys more than all the other companies you care about. You said that you have better data today than you've ever had, and everybody else does, therefore, you should be able to underwrite it more effectively. People have history. Every year, data's gotten better, and that hasn't stopped the industry from having cycles up and down. Why would now be different than any one of the other cycles? I don't think I said you can underwrite better. I said you can choose what segments of the market are doing better. It doesn't necessarily tell you exactly what to do, but you can see which segments are doing better and which segments are doing less well. I don't think that necessarily means everyone follows it because financial statements rule for many companies. The way we run our business, the way Rob runs it, because he runs the insurance business really totally now, is you look at the operating statements. You want to talk about it, Rob? Yeah. Yes, I do. I'd also like to add to your comment and maybe, Jamie, going back to the point that you're raising. I think the idea is that once upon a time, at least in the commercial market, you saw product lines marching through the cycle somewhat in lockstep. One of the points that was being suggested earlier was that we are not seeing all product lines in the commercial line space marching in lockstep. By example, workers' compensation, which is an easy target these days. We've seen in almost every other component of the commercial lines marketplace over the past several years, a degree of firming. For several years now, workers' comp, largest component of the commercial market, has continued to erode. Staying on that point. I think it's pretty clear at this stage that it's pointed in a wrong direction. Workers' compensation, there's a reasonable chance over the next probably more than 12, less than 36 months, it's going to end in tears for some people. To your point, we've kind of seen the movie. It's different actors this time around, but we've seen the movie. The industry overall, I think in our shared view, is still a cyclical one, and yes, it does have better data. Yes, maybe people piece the puzzle together a bit sooner than they had historically. Fundamentally, the cycle is still driven by human emotion, that being fear and greed. When the margins are there and they are attractive, the natural reaction is, "I want more," and they chase the market down the drain. All of a sudden, that greed gets overshadowed by fear, as we are seeing today in the property catastrophe-exposed marketplace, where people say, "Oh my goodness, this has completely come unhinged. We can't afford to do this anymore." You see people running from the product line, which then allows those that remain to make appropriate returns, potentially. I think from our perspective, data helps. Data perhaps shortens the distance, or if you will, between the peaks and the valleys. The cyclical nature of the industry remains alive and well and will likely continue to be as long as you have the cast of characters that we have running businesses in this industry. David. Can you talk about your thoughts on interest rates? I think you've had a relatively short duration coming into the recent rise. Do you think we have more to go, opportunities in investment portfolio? The impact it has on ROEs. I think it might be a little bit not recognized by some of the analyst community about just how powerful that impact is on return equity. I know it depends on the book yield, old versus new, but if you could just talk about that a bit, please. Maybe I'll offer a quick soundbite or two. I expect you'll have a view on this as well. We have been through an extraordinarily extended period of time where interest rates, as you point out, have been historically low. As a result of that, I think those that observe the industry and those that are in the industry have become appropriately preoccupied with underwriting results, because that's where you made your money. While I do not believe, I don't think we believe we are going to go back to a place where the mindset is, if you will, cash flow underwriting. I think that many, as you suggest, and I agree with your observation, underestimate the earnings power of a business like the one that we work for when it comes to where interest rates can take investment income and where it is likely to go naturally, and how quickly we can get there. I think we have a shared view as to where interest rates are going with that. Do you want to- Sure. We, for an extended period of time, felt you had to get returns on underwriting. You had to shorten the duration. Interest rates were too low to sustain profitability based on investment income. It's when we expanded the kinds of things we owned, from private equity to real estate to natural gas pipelines, where we could get returns, a little more lumpy on some occasions, but better returns than 2.5% available for fixed income securities. As we started to see that changing, we started to look out, as we started to have an inverted yield curve and opportunities arose to invest in the, let's say, three-year period with a 3.5 or 4% return, we started to move a little more in that direction. It's just the beginning. This quarter is probably the beginning, we are at about a 2.3-year duration, that will move up closer to our four-year duration of our liabilities as we get more and more confident interest rates reflect a stable status. We don't think they're there yet. We think they're going to continue going up. We are putting out new money at 4% plus, between 4 and 5%. Yep. We're continuing with the quality level of AA minus and duration being probably in the four-year area. We're extending slightly longer than our current portfolio, getting a substantial increase in the yield. We do think rates are going to move higher. Much higher than 5%? I don't know. Certainly higher. The one uncertainty is in this global world, it's hard to see a place where you can sit back and feel comfortable. Lots of uncertainty, we're also being rewarded for the quality of our portfolio. We didn't give up on the quality to get yield in the past few years. Maintaining that double A minus quality in the portfolio is going to show as we go into the next period of time. We're pretty comfortable with where we are. We'll probably start to move our duration from 2.3 years to 2.5 or 6 years, assuming rates continue moving up. It will give a substantial increase in our ROE. Just to belabor the point a little bit, was chatting with someone just yesterday afternoon. The question was put, what is it that you think the world doesn't get about the organization you work for? I think you are hitting on the point that I think hasn't come into focus for much of the world, and that is the investment leverage, if you will, that exists in our economic model. It hasn't been, quite frankly, particularly noteworthy for the past years and years and years. Yeah, it'll come through now and then through a gain. As far as just operating income, I think that the earnings power coming from the investment portfolio has not been considered given as it should be going forward. All you have to do is say $20 billion, 150, 200 basis point increase in yield. Pretty big numbers. Okay. I wanted to talk a little bit about reinsurance. One, when you talked about the property catastrophe market, I was curious about Berkley's appetite for underwriting property catastrophe reinsurance, in the current market or more broadly. Then second, in a different direction, the reinsurance purchasing strategy. I won't start every question with the reference to the decentralization of the underwriting units, but it does seem to play a role in terms of whether your net to gross written premium ratio is in the low 80s or the upper 80s, and how you should think about that or how we should think about that in the current market. Okay. If we start with our view on property cat, if you will, as a product line, we think that it is a line of business that the industry, by and large. Maybe I take a half a step back. We approach the business with a view that we've defined as risk-adjusted return. We think about that on the underwriting side, we think about it on the investment side, we think about it in everything we do. That's sort of the cornerstone for how we operate the business. When it comes to that, the principle or the idea that all returns are not created equally, you need to consider the type of risk that you're taking on, obviously. When we look at property cat, we think the industry has a long history of not appropriately considering the risk that it is taking on. In particular, we don't think that it appropriately grapples with the component of volatility as a piece of the risk that needs to be contemplated. When we think about property cat, we have no problem with the product line. We are very happy to write it. From our perspective, given how the industry buys the product, we are going to write it in what I would define is a disciplined way. We are not opportunistic. We are in the market for property cat, where we will write the business, we will accept the exposure at a rate that we believe is appropriate. That rate, and when we think about that rate, is in part determined by volatility, and we want to get paid for that volatility. We are in the early stages of a property cat market where there is a better than average chance that you will see us expand our presence because we think we'll get paid for it. We're going to sort of sitting back and watching. We got plenty of dry powder. We're going to see what things look like as we lead up to one-one, and we will participate if we think it is a good use of our shareholders' capital. Again, we will participate with an eye towards risk-adjusted return. What do we think an adequate rate is considering volatility included in that risk analysis? By and large, we're able to participate in a meaningful way, three out of every 10 or 12 years. The problem is for those that it is a cornerstone of what they do day in and day out, they end up playing it every day through the cycle. That's just not something we do. Looks like the planets and stars are lining up, maybe we'll play for the next couple of years. We'll see. As far as the other side of the coin, how we think about purchasing reinsurance, and for that matter, retro as well. From our perspective, maybe there are a couple of dimensions to it. Number one, we think about our reinsurance partners basically in two buckets. There are those that are our partners, then there are those that we trade with. Those that are our partners, they tend to be our partners through thick and thin. We will ride out a cycle together. Then there are those that are more of a transactional nature. We will buy from them, and they will sell to us when each one thinks that it makes sense. As far as how do we think about buying, we look at it at a very granular level. We will look at it by product line, by operating unit, and then, of course, we will look at it at the aggregate as well. We have the benefit that because of the nature of our business, we are not nearly as dependent on the reinsurance market as many of our peers. If you look at our limits profile or the type of business that we write, approximately 90% of our policies that have limits of $2 million or less. We are not, quite frankly, stuck, and we are not as easily leveraged by the reinsurance marketplace. Long story short, when it comes to buying, we look at it at a very granular level. We will look at the overall, we will look at what do we think the return is, and we think about the usage of our capital versus renting somebody else's capital, and how much rent we are prepared to pay, and whether we think that's a good trade or not for the owners of the business we work for. Okay, thank you. I am going to look around just to make sure I am not missing any questions. One of the themes that's emerged in the industry, really over second quarter conference calls, was now that we are in a period of inflation boosting exposure units, its consideration in terms of absorbing loss trend or exposure that acts like rate is a common phrase. How should we think about that in the context of the book of business that Berkley writes? From my perspective, there's perhaps been a little bit of confusion around the topic that you are raising, and perhaps different companies define things differently. By and large, we don't have fancy charts on our quarterly call. Let me just try and provide a bit of a definition. In our mind, there is a bright line between a rate increase versus a change in exposure. Exposure rated policies change the amount of premium you collect based on that exposure changing. If you think about workers' compensation based on payrolls, if you think about a GL policy or general liability policy, oftentimes based on revenue. If you think about a property policy, oftentimes based on an appraised value. Let's assume for just purposes of illustration, you have a building that's worth $1 million. You have some inflation going on, so on and so forth. The renewal comes up, all of a sudden the building's worth 10% more, so it's now worth $1.1 million. The rate that you collect on that, based on our definition of rate increase, if you get a 10% rate increase, just keeping the math simple, all other things being equal, that's not a rate increase. That's just you keeping up with the change in the value. There are some people in the industry that would view that as a rate increase. We don't. From our perspective, a rate increase is anything above and beyond what you are collecting in addition to any adjustment for change in exposure. I think that that's something that one needs to be very clear on, because that cuts both ways, and it's one of the concerns that we have for the industry. We think there are many, particularly in the property line, during this extraordinarily high inflationary market or environment that we've been living through, they have fallen behind on appraised values. Ultimately, they may be suggesting that they're getting a rate increase, but if their appraised value hasn't kept up, they may actually not be getting a rate increase. They may be getting a rate decrease. For us, long story short, when we think about rate increases, it's all about what are you getting above and beyond adjustment for exposure change. Keeping up with exposure change, that allows you to tread water. Rate increases above that which allows you to advance and enhance your margins further. Obviously, that is more driven by economic inflation. Social inflation, which is something that has gotten more focus appropriately over the past few years, that is not contemplated in exposure. That needs to be addressed through true rate increases. When we have a line of business like commercial auto where there doesn't seem to be any automatic feed through on the exposure side, even if there is inflation, we saw this, maybe personal auto is a great example. With used vehicle prices skyrocketing and you don't get any more premium for that. Is there an opportunity or what is the opportunity for a company like Berkley to say, "Let's change how we price or underwrite this line of business so that there is more of a natural hedge"? Look, from my perspective, I think that auto in general certainly had a short-term benefit during COVID, and then it had a whole lot of pain that came about as a result of supply chain issues, amongst other things. In addition to that, simultaneously, you continue to see an emboldened plaintiffs' bar, which is driving social inflation and clearly on the liability side for auto, creating further challenge. Commercial auto, clearly very behind private passenger auto when it comes to trying to appropriately measure exposure. Whether it's any of the household names in the private passenger auto space, they are far more advanced in trying to capture data and understanding the exposure and making sure that the pricing is concomitant with the exposure. Commercial auto, we're light years behind. We still price based on number of power units, and we sort of try and figure out where the vehicles go. That is in the early stages of evolving. Is there an opportunity for us to keep pushing on that and doing more? Yes, without a doubt. Is the technology there with telematics and GPS and so on to see where the vehicles are going and how they're being operated? Without a doubt, but the industry has not gotten to that point. Is it coming? Yes. Is it coming quickly enough? No. Okay. Thank you. Again, looking around just to make sure I'm not overlooking any questions. I want to spend a little bit of time on accident year reserve development, and one maybe underappreciated component of the underwriting strategy at Berkley is premium development. That, in many cases, is a natural hedge, and I was hoping you could talk us through the dynamics you're seeing in individual lines, individual accident years on both of those fronts. Sure. As far as maybe starting off with the premium piece of it, to make a long story short, of our domestic activities, approximately, and again, this is a rough number, two-thirds of our policies have some type of audit function where we're able to go back in after the fact and look to see how much revenue was there, what were the payrolls, so on and so forth. In an economy that is growing and there's a fair amount of economic activity, and you're seeing receipts grow and you're seeing payrolls grow, we effectively have a catch-up or a look back. That is really the big driver for what we label as audit premiums, where we go back, we audit, and we have the opportunity to collect more premium. It's something that we're always focused on, but we are particularly focused on given the environment that we've been through, where we're seeing inflation at a pretty healthy pace, wage inflation or even just inflation that you experience if you go to the grocery store. We want to make sure that we are capturing the full amount of premium dollars that we should be getting on that front. That's really how we think about audits. As far as development goes, I think we have been appropriately accused of being, my words, measured in how we think about reserving and how we think about carrying loss reserves. It is not lost on us as an organization that we operate in an industry which is unique for many reasons, including the fact that we don't know our cost of goods sold until oftentimes many years after the transaction has occurred. That is a challenge in any environment, but in a fluid environment that is inflationary, exposed to inflation in a meaningful way, both economic and social, we are not going to declare victory prematurely. We are not going to count chicks before they hatch, and we are going to be very thoughtful and measured as to how we observe and manage the seasoning of our reserves. That starts with our initial picks, and that will continue through how we see things unfold. When you talk about reserve development, do I think we are being thoughtful and measured? Yes. Is it by design? Without a doubt. Will things come into focus more and more over time as those reserves season out? Clearly. Thank you. I want to shift gears a little bit and talk about technology, in terms of the main priorities for technologically related investment and for those of us on the outside, where are we going to see that manifest itself? For our purposes, technology is an ever more key component of what we do. It impacts how we transact internally. It impacts how we analyze and assess and make decisions internally, it impacts how we serve our customers, both agents, brokers, intermediaries, as well as direct to customer as well. One of the things that we have had to address, and we are well on our way to, is once upon a time, we had maybe not quite 31 different flavors, but we had a lot of different approaches to technology, trying to address the needs of each one of the operations in the group. Each one of them seemed to feel as though they needed a highly customized solution to their technology needs. The days of us doing that, those are long gone, we are convening, if you will, all of these operations onto a very limited or narrow, if you will, technology platform, which fortunately allows a fair amount of flexibility so they can continue to operate. This is very important for us so we're able to be more nimble going forward, more responsive going forward. The technology allows for the appropriate level of customization, but at the same time, it allows us to be nimble locally, but to have the benefits of scale, both in investment and operation, and quite frankly, in how we think about data and analytics, where we want to have data at a local level at each one of our operations, but we want to make sure that we're able to also benefit from the scale of the group when it comes to data. We are well on our way going down that path. I think there's a lot of good news to be had. One is efficiency, and two is it's going to allow us to be more nimble and make better decisions in a more timely manner. Great. Thank you. We've got time for maybe one or two more questions. I just want to make sure I'm not overlooking anyone. I did want to spend a little bit of time talking about Berkley One. Overall, it's a question that comes up an awful lot. Second, my suspicion is that this exposes you to maybe a little bit more overt regulation, and I'm thinking of states like Florida and California as I say that, and how that's manifesting itself as a challenge as the book builds. Berkley One, for those that aren't aware, that is our operation that participates in the high-net-worth personal lines space. It was a business that we started, Richie, five years ago? Yeah. It was created and it's run by really an outstanding team of people that are very experienced in the space. We are very pleased with the business that they're building. It is getting great traction. I think it's getting great traction for two reasons. One is, again, we have a great team of people that have built a great business, and they have a great offering, both product and even more so, or equally, their service offering. I think number two, there is a need in the marketplace. I'm not going to refer to any competitors by name, but there's been consolidation, there's been reorganization, there's been acquisitions, there's been all kinds of things going on amongst major participants in this niche within the personal lines space. As a result of that, it has created dislocation in the market. It has created discomfort amongst the distribution. It has created frustration amongst the insureds, and the timing has been great, and we have been very well-received, and there's nothing that leads me to believe that we will not continue on that trajectory. We're very pleased with it. As far as the regulatory environment, there is no doubt that insurance departments take a keen interest in all that they regulate. Personal lines certainly is high on the list. From our perspective, we are very focused on being a responsible participant in every market that we operate in. We do not participate at this stage in California. Know that it's not by accident. That is by design. Maybe someday we will, but it's not today. As far as Florida goes, it is a state that we are in, and we participate, again, in what I would define as a very thoughtful manner. We're very pleased to be in the business. We think it is going to prove to be, it already has and will continue to prove to be an evermore valuable asset for the shareholders. Okay, with that, please join me in thanking Bill and Rob Berkley for the, as usual, phenomenally informative session. Thank you so much.