Good day, and welcome to the W. R. Berkley Corporation's Q1 2022 Earnings Conference Call. Today's conference call is being recorded. The speaker's remarks may contain forward-looking statements. Some of the forward-looking statements can be identified by the use of forward-looking words, including, without limitation, believes, expects, or estimates. We caution that such forward-looking statements should not be regarded as a representation by us that the future plans, estimates, or expectations contemplated by us will in fact be achieved. Please refer to our annual report on Form 10-K for the year ended December 31, 2021, and our other filings made with the SEC for a description of the business environment in which we operate and the important factors that may materially affect our results. W. R. Berkley Corporation is not under any obligation and expressly disclaims any such obligation to update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise. I would now like to turn the call over to Mr. Rob Berkley. Please go ahead, sir. Emma, thank you very much, and good afternoon, all, thank you for finding time to join us for our Q1 call. On this end of the call, in addition to myself, you also have Bill Berkley, Executive Chairman, as well as Rich Baio, our Group CFO. We're gonna follow the usual agenda, where I'm in short order gonna hand it over to Rich. He's gonna walk through the highlights of the quarter. Then once he's completed his comments, I'll tag along with a few of my own observations. Shortly thereafter, we'll be opening it up for Q&A. Happy to take the conversation in any direction participants would like to do so. That having been said, but before I do hand it over to Rich, because I always like to steal at least a little bit of his thunder, though I don't think the comments will come as a surprise to anyone that's had an opportunity to review the release. It was a terrific quarter for the organization, really by any metric, to say the least. Quite frankly, we were able to achieve these results because of the efforts of the full team across the country and around the world, all working together to achieve these types of outcomes. I think what's important to that point is to just remind ourselves, remind each other that this effort, this is a team sport, as I've commented in the past. It's not an individual sport. Quite frankly, this isn't rocket science, what we're doing. Yes, we are very fortunate that we have a lot of very intelligent people on the team working very hard, but a lot of our success comes about because of discipline, because we focus on blocking and tackling in a thoughtful and consistent way every day, because we are not only consumed by what's in the rearview mirror, but we are paying close attention to what we see out the front windshield. It seems like common sense, but quite frankly, it requires great effort every day. Again, I think we're achieving these types of results because of the efforts of the full team. Congratulations to all. I think beyond just the results, which again, I think speak for themselves, I would suggest that perhaps what's as if not more exciting is quite frankly how the table has been set for what is likely gonna be a very strong balance of 2022. Additionally, how things are being set up for what should be a very strong 2023. With every passing day, there are more pieces being put into place that would suggest that it's more likely than not that 2024 will also be very promising as well. We as an organization continue to be very focused on building book value. We have an obsession around the concept of risk-adjusted return. I think that came into focus not just in this quarter, but in our ability to generate good returns regardless of what may have happened on the cat front in any quarter. It's the consistency of strong results that differentiate us in the marketplace. With that, let me hand it over to Rich to walk us through some of the highlights, and I will be back on the heels of his comments. Rich, if you would please. Thanks, Rob. Appreciate it. The company continues to operate extremely well, as Rob had pointed out, reporting record quarterly underwriting income and net investment gains, both of which led to 157% growth to record quarterly net income of $591 million, or $2.12 per share on a common stock split-adjusted basis. Operating earnings also improved 52% to $307 million, or $1.10 per share on a common stock split-adjusted basis. The primary contributors were improvement in underwriting results by 2.3 points to a calendar year combined ratio of 87.8% and growth in net investment income of almost 9.5%. Going more into the details with our top line first, gross premiums written grew 15.1% to a quarterly record of approximately $2.9 billion. Net premiums written also grew 17.7% to a record of more than $2.4 billion. The higher growth in net premiums written is driven by our decision to retain more business, which is evident by the lower cession rate. In the insurance segment, all lines of business grew, generating a combined 19.2% increase to total net premiums written of almost $2.1 billion. The reinsurance and monoline excess segment also increased 9.6% to more than $300 million, driven by growth in casualty reinsurance and monoline excess. This represents the fifth consecutive quarter of double-digit growth in premium, which we'll continue to earn through the income statement and can be seen by the higher growth rate in net premiums earned compared with net premiums written. Record pre-tax quarterly underwriting income of $274 million surpassed multiple quarterly records last year. The quarter improved $92 million or more than 50% over the prior year. Catastrophe losses were well within expectations at $29 million or 1.3 loss ratio points. This compares with $36 million or 1.9 loss ratio points in the Q1 of 2021. The current accident year loss ratio, excluding catastrophes, improved 0.6 loss ratio points to 58.3%, primarily driven by rate improvement. Prior year loss reserves developed favorably by almost $1 million in the current quarter, bringing our calendar year loss ratio to 59.5%. The expense ratio was in line with expectations at 28.3%, reflecting an improvement of 1.2 points over the prior year's quarter. As previously mentioned, the growth in net premiums earned continues to benefit the expense ratio, even with higher fixed costs coming from compensation, a new operating unit, and increasing travel and entertainment. In summary, these components contributed to our current accident year combined ratio excluding catastrophes of 86.5% for the quarter, compared with 88.4% for the Q1 of 2021. Net investment income increased almost 9.5% to $174 million for the quarter. The growth is primarily related to an improvement in investment funds of 33.6% and the core portfolio of 11.7%. Investment funds outperformed in the real estate, financial services, and transportation funds, and the core portfolio benefited from rising interest rates and dividends received on equity securities. The investment portfolio also maintained the same duration of 2.4 years and credit quality of AA-. In addition, our strong operating cash flow has enabled us to put more money to work despite retaining a significant position in cash and cash equivalents of approximately $2.1 billion. Record pre-tax net investment gains in the quarter of $366 million is primarily made up of net realized gains on investments of $277 million and the change in unrealized gains on equity securities of $93 million. The key contributor to the realized gains was the sale of the real estate investment in London of $317 million gross or $251 million net of transaction expenses and the foreign currency impact, including the reversal of the currency translation adjustment. Corporate expenses increased primarily due to performance-based compensation arising in connection with the record level of earnings. The effective tax rate was 19% in the quarter, reflecting a one-time benefit from the release of a valuation allowance arising from the utilization of tax attributes, as well as investments in tax-exempt securities and dividend-paying equity securities. Stockholders' equity increased to almost $6.9 billion as of the end of the Q1, representing an increase of 3.2% over the prior year-end. Book value per share before dividends increased 3.5% in the quarter and would have marginally increased even without the gain from the sale of the real estate investment in London. The annualized return on beginning of year equity was 35.5% for the quarter and 18.5% on an operating earnings basis. Rob, I'll turn it back to you for further comments. Okay. Rich, thank you very much. That was great. Let me keep this somewhat brief because I'm sure people have their own topics and questions that they'd like to get onto. But maybe just through my lens, a couple of sound bites. The top line, obviously just shy of 18%, from my perspective, by any measure is very healthy. If we unpack that a little bit, a couple of other data points for folks. As far as the rate increase that component in there, ex-comp, it came in at 8.3%. Let me give you a couple other numbers, and then I want to dig into this a little bit more. The new business relativity, which is a metric that we've shared with some of you in the past, is how we measure our new business pricing relative to our renewal pricing. From our perspective, when you look at new business, one needs to recognize that there oftentimes, not always, but oftentimes could be more risk associated with it. Your renewal book you know more about, new business you know less about. To make a long story short, our new business relativity for the quarter came in at 1.018%. What does that mean? That means based on our macro measurements, we're charging just shy of 2% more for new business relative to renewal business. Another relevant data point is our renewal retention ratio came in at 82% and change. Why is that important? Because it tells you that to get the growth, we're not churning the book. We are keeping the portfolio intact, and from our perspective, that is a very healthy number. And certainly, from our perspective also is an invitation, if you will, to keep pursuing additional rate. I think that when you look at the 8.3%, it's also important that people understand that there's several dimensions that we're able to see that perhaps those from the outside looking in can't see. We look at this business by operating unit, by product line, and are constantly assessing the margin that we believe exists in the business. There is a constant balance or rebalancing that we are doing on a daily basis as to what type of rate we need, what margin we think is in the business, and at what point in time when we see the margin that is available, is growth of exposure the priority, or is rate the priority? Between those two components, which one is more of a priority? At this stage, we feel very good about the available margin, and as a result, in many product lines, we're willing to allow exposure growth to be the priority over rate, though not across the board. I also wanna spend a couple of moments talking about just staying on that topic of exposure, because obviously for some number of years, we've been beating the drum about social inflation. I think we were on the earlier side compared to many of our peers. Some folks may have labeled us Chicken Little, but nevertheless, I'm grateful that our colleagues had the insight and we took the action that we did. That having been said, obviously as of late, this concept of economic or financial inflation seems to be getting all the headlines with good reason. It's important, I think, for observers to understand, to take into account that in our organization's case, I can't speak to others, but in this organization's case, the majority of the policies that we write are based on or priced off of, if you will, exposure. What do I mean by that? I mean, we price our policies off of payroll, off of receipts or revenue or off of appraised value, which is done in a very timely manner at the time when we are underwriting the policy. I mention this because as people are grappling with what is the impact of economic inflation on our business model, certainly it—we are not insulated from it. We will, in a couple of moments, potentially get into the discussion around what does it mean for the investment portfolio. From an underwriting perspective, while we are not completely insulated, the majority of our business activities, the pricing, if you will, feeds off of exposure. i.e., in other words, if you own a deli and you are charging a dollar more a sandwich and we are pricing your GL, we are pricing it off of your revenue and your receipts. Consequently, the premium is going up as your revenue and receipts are going up. That is separate and distinct from rate. Rate is a separate activity, if you will, and how one thinks about it from exposure growth. Again, obviously, economic inflation to a great extent is contemplated in exposure growth. Couple of quick sound bites on the loss ratio. Continued improvement. From there, as Rich mentioned, we did have some CAT activity. Really the two pieces that are most noteworthy would be one, the European storms during the quarter as well as the Australian floods. To the extent people want more detail, we can certainly get into that in the Q&A, or probably best just to pick it up in the Q. The other piece I wanted to flag on the loss ratio, and I may have touched on this last quarter, I can't remember, and I didn't go back and look at the transcript, but it's something I look at and perhaps it's of interest to others, and that is the paid loss ratio. I'm just gonna, which came in in the quarter at 45.3%. Now, I'd like to give you a couple of historical data points, which you could always dig up on your own, but let me save you the work. The numbers I'm gonna read off are over the past couple of years for the Q1, what the paid loss ratio was. I wanna give it to you for the corresponding periods because that way, we're getting as close to apples to apples as possible, though it's not a perfect comparison because of mix of business, et cetera. If we, again, 2022 for the quarter, it came in at 45.3%. Let's go back to 2017. If you go back to 2017, Q1 paid loss ratio, 55.5%. 2018, Q1 paid loss ratio, 58.8%. 2019 paid loss ratio, 54.2%. 2020 paid loss ratio, 56.1%. 2021 paid loss ratio for the Q1, 48.2%. I flag it because it's one of the first things that my father taught me about the insurance business. The paid loss ratio, there's really not much room for gray. It's a black and white number. It's a real number. Again, I think that it is one data point which people can interpret any way they want, but I think it's, in my opinion, a helpful indicator or trend as to where things are going. Rich talked about the expenses. Obviously, there are three things that we're experiencing there. An earned premium continues to grow. We're getting a benefit there. Going the other way, T&E is starting to pick up again as, fortunately, knock on wood, COVID is hopefully in the rearview mirror and shrinking. Lastly, we have one new operation, which now is feeding into the reported expense ratio, and it takes time for it to scale as we've discussed in the past, and we're confident it will be accretive over time. Let me offer a couple of quick sound bites on the investment portfolio, and then I promise I'll be finishing up, and it'll be the participants' turn. The investment portfolio, I think, is a great example of some of the comments that I offered earlier around a focus towards discipline, a focus out the front windshield, not just the rear-view mirror. Quite frankly, I think we started to see some benefit really towards the end of last year, and that benefit is really starting to crystallize and likely more to come. As Rich mentioned, duration for the portfolio at the end of the quarter was 2.4 years. Another data point, the book yield on the portfolio was 2.2%. Given where interest rates have gone, our new money rate in the quarter is approximately 100 basis points above that. As they say, you know, you can do the math and figure out what does a 100 basis points benefit mean for our investment income given the movement in rates that we're seeing on the fixed income portfolio. When we talk about the table being set for the future and the opportunities coming our way and what this means for our economic model and the earnings power of the business, I think that's an important data point for people to be considering, again, in my opinion. Another point that I'd like to make, and quite frankly, it's a little bit of a pet peeve around here, and that has to do with gains. Certainly, we've noticed that people have a tendency to back gains out of our results. You know, quite frankly, you know, people can look at the numbers any way they want. From our perspective, we think that that's just not appropriate. We give up a fair amount of operating income, if you will, to invest in alternatives, particularly some of the activities that have a focus towards gain. We are focused on total return, and we think that is what is in the best interest of the shareholders. Again, obviously, we take an approach very focused on risk-adjusted return. I think that we are already benefiting from the discipline that we have exercised over the past several years, keeping that duration short. I think that benefit is going to be coming more and more into focus over the coming quarters and years. You know, quite frankly, I think it was a few quarters ago, we talked about how, quite frankly, if rates move up, we didn't think that we were getting paid enough by taking the duration out. I think that reality has come into focus, and I think in part that was demonstrated as Rich referenced a few moments ago, that if you look at our book value, and even if you chose, which I do not agree with, but even if you chose to back out the gain from the building that we sold in London, our book value, in spite of what happened with interest rates, still went up, which I think given what has happened in the bond market is pretty outstanding. Again, congratulations. Job well done to my colleagues on the investment side. That was probably a lot more than anyone was looking for or bargained for. Thank you for your patience in listening to me. Emma, why don't I pause there, and let's open it up for questions. Thank you. If you would like to ask a question at this time, press star, then the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one. Your first question today comes from Elyse Greenspan with Wells Fargo. Your line is now open. Hi, Elyse. Good afternoon. Hi. Thanks. Good evening. My first question, I was hoping to get just more color on what you guys are, you know, broadly seeing within the E&S market. You know, it seems, you know, from the growth and the commentary, right, that you're not seeing competition pick up there. Just any color there. You know, Rob, when you think out over the balance of this year, you know, how do you expect the underlying dynamics between, you know, the standard and the E&S market to play out? Well, first, thanks for the question. Second of all, when we look at the submission flow that's coming into our specialty businesses in general, in particular the E&S businesses, but the specialty businesses in general, it was very strong in the quarter. My observation from a distance, and again, we are much more a specialty player than not, but it would seem again from a distance that the standard market, you know, they have a very firm view as to what is in their appetite and what isn't in their appetite. If it's out of their appetite, they weed it out of there very quickly and very abruptly. If it's staying in their appetite, they seem to be apparently very aggressive. It's almost as if they don't understand the inflationary environment that we're operating in. You know, we're a specialty player more than not, so maybe I'm mistaken. Long story short, flow of submissions remains very encouraging. You know, quite frankly, in particular, noticed March was particularly strong. There's really nothing that we're seeing that would suggest that the momentum is getting derailed in the specialty, specifically E&S space, I think was your question, but across the board. Okay, thanks. You know, you guys, you know, seem still pretty positive on pricing. How should we think about the rate, you know, versus loss trend dynamic, you know, as we think about that what can be earned in over the balance of the year? Would you expect within range of, I guess, the 60 basis points that we, you know, saw this quarter within the last few- Well, you know, there's a limit as to how far I can go without the room I'm in getting stormed by lawyers. What I would tell you is this. I think that at this stage, based on how we think about loss cost trend and the rate that we are achieving, there is reasonably compelling evidence that the rate we are achieving is in excess of loss cost trend by something that would be measured in hundreds of basis points. How quickly we recognize that, you know, It's not lost on us how leveraged, you know, some of these assumptions are. I think, as Elyse we've discussed in the past on calls like this, you know, we're just not gonna push it. It's a, you know, it's a complicated environment with a lot of unknowns. The business is running from our perspective quite well. We think we're on a good trajectory. Again, when we do the math, we think that it's a pretty healthy delta. Okay, great. Thanks for the color. Thank you. Your next question comes from Mark Hughes with Truist. Your line is now open. Good evening, Mark. Yeah. Thank you. Good evening. How much of the improvement in paid loss ratio do you think comes from claims dynamics, frequency or severity? How much are they bouncing back relative to kind of pre-COVID, or is that all a rate dynamic? Look, I think we will not have clarity around that other than through the passage of time. That having been said, you know, clearly there was a pinch point, if you will, in the claims activity due to COVID, though we think it's gradually catching up. You know, from my perspective, I think we are in a pretty good place, and to my many colleagues' credit, I think much of the improvement you're seeing is as a result of their efforts and their performance. That having been said, we'll have greater clarity to your question with time, and I would be reluctant to try and answer it in a definitive way, but certainly there are a lot of encouraging signs. That having been said, that's why, you know, we are carrying the loss picks in a what I would define as a thoughtful and measured manner and not wanting to declare victory prematurely. Even with that, taking a measured approach, obviously the business continues to perform at a very healthy return, with or without gains. Understood. Thank you for that. Rich, the reserve development in the quarter, what was it again overall? Then do you have it by segment, by any chance? In total, it was about $1 million of favorable development, and we don't typically provide the split between segments. We disclose that information in the 10-Q. Thank you. Your next question comes from Michael Phillips with Morgan Stanley. Your line is now open. Good evening, Michael. Hey, thanks. Good evening. Rob, I guess more on the loss trend topic. You talked last couple quarters about kind of the picture's pretty foggy, and I imagine it's. I'm gonna ask, is it more or less foggy today than it was, say, three quarters ago? Is it harder to put numbers around that today than it was three quarters ago, is kind of the question. The reason I ask is 'cause when you talk about that rate versus loss trend in excess of hundreds of basis points, you know, I think it's pretty close to what you said, like, the last couple quarters as well. I'm just curious how you look at that differential if the foggy picture is perhaps even foggier than it was three quarters ago. Well, I think actually with every passing day, as you know, the underwriting years become more seasoned or the policy years, I should say, become more seasoned, you know, we have greater clarity as to what the ultimate outcome will be. You know, obviously during COVID, there was a bit of a pinch point in the legal system and how quickly things were getting resolved. From our perspective, you know, with every passing day, we have more clarity around the 2020 and 2021 year, and we are refining our views. Even as I said, with what I would define as a thoughtful and measured loss pick, we are still comfortably clearing that hurdle by what would be measured in hundreds of basis points. Thanks, Rob. That's helpful. Second question is just kind of more general, higher level. You clearly are a specialty player, one of the best out there. That word specialty is getting more overused today than probably social inflation was prior to COVID. And I ask if you feel the competitive nature in your business has changed any in, say, I'm not talking last three months or the next three months, but more in like the last five years. Are there more players that are interested in that space than you thought were the case, again, a longer-term horizon? 'Cause it's a term that just everybody's kind of talking about. Well, everybody wants to be special. I guess we all are special, right? But putting that aside. Look, we certainly have peripheral vision, but we spend a lot of time just trying to focus on what we need to be doing, what our goals are, how we need to execute. You know, one of the things at least I think is important to keep in mind, and you may want to consider, is that as opposed to past cycles, what's becoming more and more the case is that different product lines are marching through the cycle on their own. They are not all in perfect lockstep. As a result of that, different product lines are in different places. There are certain product lines where we're watching the competition increase. There are certain product lines where we're watching the competition diminish. Overall, in the specialty space, you know, the competitors that we view as real competitors, the ones that we respect, they're basically the same names today as they were two years ago. You know, we've been doing the specialty business, if you will. It's been a focus of ours since 1979. It's not that the world is stagnant. It's not that any of us live in a vacuum. Obviously, it's continuing to change. We have a lot of expertise. We got a lot of data. We got a lot of intellectual capital and, quite frankly, tribal knowledge and relationships that exist within the organization. I think that bodes well for us. That all having been said, in spite of a lot of the chatter, you know, the competitors that we respect today tend to be by and large the same list that existed, you know, two, three, four, five years ago. Yep. Okay, sir. Thank you for your time. I appreciate your comments. Thank you for your question. Appreciate your engagement. Your next question comes from the line of Yaron Kinar with Jefferies. Your line is now open. Hi. Good afternoon. Thanks for taking my questions. Good afternoon. I guess I'll continue beating this beat, I guess, on loss trends. You say that you have several hundred basis points in excess of trend here in rate. I think you've made that comment in the prior year or two as well. I guess with that, when do we start seeing some of that develop more fully in the P&Cs themselves? I mean, how many years of maturation do you need in the portfolio? I guess what I tie it to is your comment around 2024. I guess you're becoming more confident in how that will play out. Is that essentially gonna come through reserve releases as you start gaining more and more confidence in the maturity of that portfolio? Well, look, I think to your point, it takes time for this to come through, and we'll have to see how it develops. The assumption that I'm making or a statement or that I was suggesting or that I was alluding to around the balance of this year, 2023 and 2024, first off, obviously, we all know the timing difference between written versus earned. Second of all, as far as next year goes, clearly, some of the business that we write on the reinsurance side, that positions us well. I think the other piece is that we understand what new money rates are, and we know what that's gonna mean for our economic model as well. Again, with every passing day, as I suggested, the table is being set for tomorrow. Are we banking on positive reserve developments in the statement I made? No, sir, we are not doing that. Do I think that we are being measured in our picks and there is certainly a chance that things could work out better than what we are carrying the reserves at? Yes, I do. Will that come into focus over time as we have more clarity? That is the expectation. In part, as I think we've discussed as a group in the past, COVID perhaps has created a delay in how quickly things are coming into focus. I think there are some people that would suggest that there's a year, maybe 18 months of a delay in aspects of the legal system. You know, we're just not going to declare victory prematurely. It's gonna take some time. We're gonna see how things play out over the coming quarters and into next year. As we have more clarity, you'll see us, you know, taking the action that we think is appropriate with the loss picks that we're currently carrying. Okay. My second question goes to premium growth. Yep. You had 19% net premiums written growth in insurance. I think at a conference a month or two ago, you talked about maybe 15%-25% growth for 2022. Seems like you're kind of in the middle of that range. 1Q 2021 seems to be a little bit of an easier comp than the rest of the year. Can you help us think through that 15%-25% growth number for- You know, ultimately from our perspective, as I suggested earlier, there's certainly evidence that would suggest there continues to be great opportunity for specialty players. You know, I can't promise to anyone, including myself, what tomorrow will bring, but I can share with you my interpretation of the available data. When we look at the strength of the submission flow, particularly in the specialty space and including the E& S space in the quarter, including what we saw later in the quarter, we're feeling pretty good about it. Could May or June or something, could it turn out to be something very different? Absolutely. Do I see that as the likely outcome? No, sir, I do not. Thank you. Your next question comes from the line of Ryan Tunis with Autonomous Research. Your line is now open. Hi, Ryan. Ryan, good afternoon. Hey, good afternoon. First question on the expense ratio. Noticed in the past couple years it was a little bit elevated in the Q1 relative to the remainder of the year. Is there something seasonal to that, and is there a reason to think that might be true this year as well? Rich, I don't know, is there anything around remuneration? I don't know. I was going to say, I think it might be attributed to the incentive compensation, 'cause we obviously accrue throughout the year based on our best views of what the year is going to play out for. But then ultimately, you know, we wait until the year ends, and then make any adjustments with regards to, you know, bonus accruals that are gonna get paid out, profit sharing, long-term incentive comp and the like. Understood. But just- And then- Ryan, just to be clear. Go ahead. That would be. That's not an overwhelming sum. I mean Correct that would be, you know, whatever, 10, 20 basis points, something like that. Right, Rich? Yes, that's right. Understood. So yeah, Rob, in your prepared remarks, the comment on not feeling good about just 2023, but also some confidence in 2024. But you said you're not. It's not based on you banking on reserve releases. Maybe just go a little bit more into the specifics about, you know, what's giving you that level of visibility. Was that a comment about growth, pricing or just, you know, visibility into solid underlying trends? You know, from my perspective. Well, a couple of things, Ryan. First off, I think we need to, and I think you have, but I'm not sure if others have, give an appropriate consideration to what this change in interest rate environment means for our economic model, and I tried to flag that when you think about what our book yield is today versus what our new money rate is and, you know, where that's likely to go. Let's put the investments to the side for a moment. The other piece is, you know, every day that we're writing business in 2022 that goes by and we're earning it in over 12 months, and we're achieving rate that we believe is comfortably above trend, you know, that bodes well for what the outcome is likely to be. You know, number three, I just don't see things going, you know. It's not like an on/off switch. The market doesn't, you know, be on a great trajectory, and then all of a sudden the bottom falls out. I guess the last comment, and I apologize for being a bit repetitive, but I think that you're gonna see certain product lines that have been doing particularly well over the recent past. At some point they're gonna peak out. I think simultaneously some of the product lines that perhaps haven't been as robust, at some point you're gonna see them start to tick up. Let's use workers' compensation as an example. Workers' comp for the past several years, it's been a very competitive market state. Rating bureaus have been taking the action they've been taking. Ultimately, if history is any indicator for what we should all be expecting, eventually it will end in tears for the industry. Commercial workers' comp is one of the largest components of the commercial lines marketplace. When that turns, you know, that is going to be offsetting other product lines that may have peaked and are going the other way. That is what I'm suggesting. You know, again, I think that there is a lot of momentum out there today. I think that there are a lot of pieces in place that will bode well for tomorrow. I think that there's argument that you're gonna be seeing as the cycle has changed and all product lines aren't marching in lockstep, you're gonna see other things that will come along and perhaps lift certain portfolios for certain carriers. Thank you. Thank you. Your next question comes from Alex Scott with Goldman Sachs. Your line is now open. Hey, thanks for taking the question. So I wanted to ask about this balance between growth and rate taking. You know, just listening to your comments, it sounds like maybe in more products you know, or a growing number of products, you're letting exposure growth be the priority. When we think about that, which is sort of separate from what you were saying on exposure growth from inflation, where that directly feeds the premiums, and then it's also separate from rate. I mean, because of that decision to maybe lean a little more into growth in certain product lines, should we expect to see maybe even more of an inflection in terms of the amount of growth that you can get despite, you know, rate decelerating a little bit? Well, a couple of things there just to make sure we're on the same page. I think clearly as we're seeing inflation in the economy and we are seeing prices go up on goods and services, we're seeing wage inflation, which has an impact on payrolls, that is impacting exposure growth. As we write the business, we price the business off of exposure to a great extent. That is, as you pointed out, separate and distinct from rate. So when we think about rate going up and rate going up in excess of our view on trend, in other words, that could suggest that you will see further margin expansion on a policy or basis. Furthermore, again, as I said, in the aggregate, our rate increases are outpacing what we believe our loss cost trend is. That is the case in aggregate, and that is the case in the majority of the product lines we write. Did I answer your question? Yeah. I think you did. Yeah, I think you got it. Maybe just for follow-up. Sure Separately on net investment income, do you mind giving an update on just how you're feeling about the duration at this point? You know, at what point would you consider lengthening out the duration? I mean, I think the EPS sensitivity to you lengthening it out to where liabilities are is, you know, reasonably material. I'm just trying to understand over what time period you'd consider looking to do that. It's something that we're looking at every day. At this stage, starting to buy bonds out in the five- and 10-year range, we don't think you're really at the moment getting paid for it. It's certainly something that we're paying attention to. From our perspective, we are paying close attention to it, but taking out the duration is an option that we have, but we're gonna exercise that option when we think it makes economic sense, again, through a lens of risk-adjusted return. I don't know. Do you want to add more? I would only say that we think that the uncertainty of inflation, when it is going to end and how quickly it ends, as well as issues about flow of funds, as well as investments of the Fed in non-government securities altogether make us want to be a little hesitant. For now, if you said you want your duration to go from 2.4 years to 2.5 years, yeah, that would be great. If you want your duration to go to three years, no, I don't think so. We're happy where we are, going out a little bit maybe, but we're not yet comfortable that this is where we should start to move it out. Just as a reminder, we have a lot of runway ahead of us because the average duration of our liabilities is. Richie, I believe it's about four years. Yeah. That's correct. Thank you. Thanks for the question. Your next question comes from the line of Meyer Shields with KBW. Your line is now open. Hi, Meyer. Good afternoon. Great. Hi, Rob. How are you? Good. How are you? Good, thanks. Great. First question, I guess. It looks like growth in the reinsurance segment slowed more quickly than in the insurance segment, and I'm wondering if there's anything meaningful in that. Not really. You know, quite frankly, I think what does it mean? Obviously, on the surface, it means we wrote less reinsurance business than insurance business or reinsurance and excess business. I would suggest that people not leap to any conclusions on that. We obviously are paying attention to it, but we're not really bothered by it at all, and we'll see what the balance of the year holds. Again, I would encourage you not to read too deeply into that. We'll see what unfolds from here. Okay. That's helpful. You also mentioned on the insurance segment lower cessions, and I was wondering if there's any profile of that that you could provide. Are you retaining more lower level risk or is there some other component of reinsurance buying that seems less necessary? Look, we look at everything we buy, and we think about, is it something that we think makes sense? How do we think about the risk and the return? How do we think about the volatility? How do we think about the rate that we're paying? And ultimately, we also have a panel of reinsurers. Some are our partners, some are people that are just people that we trade with. Long story short, we have the luxury of buying reinsurance when we think it makes economic sense for the company to a great extent because, again, we as an organization are not a big limits player for the most part. Approximately 90% or so of our policies have a limit of $2 million or less. At the same time, we buy when we think it makes sense for the shareholders and at the same time, of course, we're conscious of our long-term relationships with our partners on the reinsurance side. Long story short, we're happy with how we are, and we look at what makes sense for the company. Okay. Understood. One last question, if I can throw it in. You talked about that 1.8% premium on new businesses versus renewal, and we've generally One point, 1.1%, 8%. Call it 2%, Oh 2%. Historically, we've looked at that as sort of a reflection of competition in the industry where it's below one, maybe the industry is being more competitive. I was wondering if you could talk about that delta. How well does it represent the lack of knowledge in newer business? Is that enough of a premium? Should it be bigger? Could it be smaller? Look, the long story short, number one, you need to understand that's an aggregation of 57 different operating units. Please keep that in mind. Number two, is it enough, if you will, cushion or are we appropriately taking into account the risk? I guess the short answer is that, yeah, I think so. My colleagues that are selecting and pricing risk are, I think, very skilled, very thoughtful, and generally speaking, very experienced. It's not like it's just, you know, whatever being thrown over the transom or spaghetti being thrown against the wall, and we see what sticks. These people are experts in their field. They understand the exposures, and they're able to make judgments as to what's an appropriate rate. Is it the right number? I guess we will all see with time. Do I think it's sensible and reasonable? Yes, I do. Okay. Perfect. Thanks so much. Thank you. Your next question comes from the line of David Motemaden with Evercore. Your line is now open. Good afternoon, David. Hey, good afternoon. Thanks. I guess just maybe, you know, just a question on the loss trend assumption and if you made any changes to that during the quarter, whether that be on, you know, the property side with regards to, you know, higher CPI inflation or also just on the liability side. And maybe if you could just comment on what you're seeing from a court activity standpoint, whether you're seeing it start to thaw in the legal system thus far during the year. The short answer is that we are constantly thinking about our loss picks, and we are equally conscious of what economic inflation means for our loss picks, just as we continue to be preoccupied with what we think social inflation means for our loss picks. You know, I don't think it makes sense for us to get into the nooks and crannies as to what it means for these various different product lines. But what I can tell you is, by product line, we have and continue to do in a pretty timely way, a bottom-up review around what these various components mean for loss trend and how it may impact our costs. Sorry, the second piece, I beg your pardon, sir? I guess I'm just wondering in terms of specifically this year, you know, what you're seeing from The legal system though, I guess. Yeah, yeah. Are you seeing- Yes. Well, Well, You know, Are we- Any more verdicts? Yeah You know, the size of the verdicts that you are seeing, are those notably, noticeably higher? I think social inflation. than they were in the past? Social inflation persists. Anyone who doesn't see it probably either needs to slip on their glasses or look a little closer. Anyone who doesn't appreciate, again, it's a very much a reality. It's more severe in certain regions of the country than others, but I would say just generally speaking, it's pervasive across the nation. There's probably a variety of contributing factors. Clearly, society is opening up, and that includes the legal system. Have we completely caught up? Probably not. Are we in the process of catching up? Yes, gradually would be my estimation. Got it. Okay. That's helpful. If I could just sneak one more in. You mentioned it just, you know, the standard lines players, you know, within their, you know, defined risk appetite competition appears to be picking back up. Are you seeing them expand at all into some of those higher excess layers in casualty lines or starting to- Yeah maybe expand what's in their Yeah risk appetite, or is that just still not happened yet? Yeah, not really. You know, I got a lot of colleagues that could probably answer the question better than I, but based on my engagement with them and what they've shared with me, you know, I think it is still a very good market for us, and we are looking forward to continuing to make as much hay as we can while the opportunity continues to present itself. But no. The standard market, you know. Again, based on the flow that we're seeing, they seem to continue to be in a moment where they're contracting much of their appetite. But again, from a distance, it looks like whatever is still within their strike zone, they are really leaning into. You know, it's bizarre to me, just to digress for a moment. It kind of makes me wonder, you know, do they really understand what the impacts of social inflation? Are they fully contemplating certain aspects of economic inflation and what that may mean for their portfolio that may not necessarily be being captured in the exposure component? Look, they we got enough to worry about on our end just with the business that we all work for. I'm sure they know what they're doing, so we wish them well, and we hope they wish us the best too. Got it. Thank you. Thank you. Your next question comes from the line of Josh Shanker with Bank of America. Your line is now open. Hi, Josh. Good afternoon. Hi there. Good afternoon to you. A lot of moving parts in the quarter. You guys sold this wonderful building in London and have big profit, and you grew book value. Of course, you should be very proud of that. I want to be able to compare your results apples to apples with everybody else, and obviously, you're a different kind of apple. Can you talk a little about what the mark-to-market on the bond portfolio was? You're shorter than everyone else. I assume that you're going to compare very favorably on that compared to others. Rich, do you have the number handy? Forgive me, Josh, I don't have it off the top of my head. Richie, if you don't have it, Josh, can we circle back with you? Josh, we have it disclosed in the supplemental information. I think that was page seven. I believe from memory the movement from year-end to the end of Q1 was about $425 million after tax. Okay, that's great. Thank you. In terms of thinking about your various alternative styles of investment, is this a time to be deploying into arbitrage? Is this a time to be deploying capital into the partnerships and/or maybe real estate? How are you thinking about the non-traditional aspects of the investment portfolio? You know, Josh, from my perspective, no different than on the investment side. You know, we have a lot of very capable people that understand the goal of the exercise is a good risk-adjusted return, but obviously with an eye towards total return. When we think about it, you know, we are happy to wait all day long for our pitch, and I think the teams have done a great job doing that over the years. There's a lot of challenge, and there's a lot of opportunity out there, and I expect they'll continue to do a great job separating the wheat from the chaff. I don't think we have any specifics then. I don't know, you may have additional comments. No, I think that we've over the past year reduced our exposure in real estate by a substantial amount. I think we're constantly opportunistic in looking individually at the kinds of things we do. We'll continue to do that. We have no individual particular thing that's gonna make us change our mind. I don't, at least that I can see. Josh, did you have another one? That would be reasonable. Yeah, just one quick one. This is probably maybe a little longer, but can you compare and contrast, is there anything we should take away different that's going on in the workers' comp market versus the excess workers' comp market? I think it would seem as though, at least in the recent past, the primary comp market has been notably competitive. It would be wrong to suggest that the excess comp is not competitive, but I would suggest that the primary comp is probably even more so. Obviously, that varies based on region or specialty, but we have noticed in the comp market, putting aside rating bureau action, we have seen certain players looking for ways to buy market share through increase in commissions. We have seen examples where it would appear as though people are miscategorizing exposures in order to justify how they can write premium. Again, Josh, my crystal ball is no clearer than anyone else's. It would probably help if I change the batteries in it. Long story short, I think comp is going to have a bumpy road over the next, I don't know, more than 12, less than 36 months, but that's just one person's personal view. That's a very reasonable view. Thank you very much for the answers. Thanks for the questions. Your next question comes from the line of Mark Hughes with Truist. Your line is now open. Yeah. Thank you. Just a quick question. The investment funds, I think many of those are priced on a one-quarter lag. Any early read on what we might expect when you report Q2? Nothing that's particularly noteworthy at this stage, and that's not leading that one way or the other. It's just for a lot of it, we don't have the information yet. A lot of the funds, you know, it takes them some time to get the marks and deliver it to us. You know, we'll see how it plays out, but we don't have clarity to share with you at this stage. We don't have technology. Thank you. You know, just one thing to the extent it's helpful. You know, we're not a heavy participant in the tech space, if you would. If that's of interest. Thank you. Thanks for the question. Your next question comes from the line of Brian Meredith with UBS. Your line is now open. Hi, Brian. Good afternoon. Afternoon, evening. A couple of questions here for you. First, I'm just curious. I noticed a kind of meaningful slowdown in the growth in professional liability and commercial auto. Anything noteworthy there? Particularly on commercial auto, just kind of given the hiring environment that we're hearing about in the trucking business, any caution there with respect to potential frequency? Look, I think maybe taking them in the opposite order, if you don't mind. Yep. As far as commercial auto, I think that there's clearly a shortage of drivers. It's been a problem. It's a bigger problem today than it was yesterday, but it was a problem yesterday. Clearly, training and experience is also something that I think one needs to recognize. What does that mean? Presumably, people take that into account. We are certainly trying to take it into account when we are looking at exposures and how we underwrite, whether it be purely in the underwriting and the data and the information that we collect on the employees and the hiring practices and so on in the training. Obviously, we're getting into that in our loss engineering or loss control as well. It's an important piece, and I share the question and quite frankly, the concern. Brian, I would suggest that one could expand that, a bit even beyond, the challenges that a commercial auto space faces to the broader. The reality is it's a very tight labor market, and I think as we've shared the observation in the past, oftentimes that will lead to people working overtime. That's when things sometimes can go wrong. In addition to that, oftentimes you'll have people that is not as well trained in positions, and that can lead to unfortunate situations as well. As far as the professional liability space, I would suggest that you not read too much into it. There is one piece of the professional liability space that I think we have an appropriate level of severe caution around, and that is large law firms, and that may be a contributing factor to what you're referring to. But generally speaking, we still see a lot of opportunity in the vast majority of the professional space. You know, it's still a cyclical business, but at the moment and for the foreseeable future, we like the opportunities. Great. My follow-up question here. If I look at your short tail line, some pretty good growth. How much of that growth is coming from your homeowner's insurance business? Also, on that, are you seeing more opportunities in that high-net-worth homeowners' business, just given the, you know, incredible increase we've seen in housing prices, in the U.S.? First off, certainly a meaningful percentage is coming from the high-net-worth operation, but it's also coming from lots of other parts of the business that are writing property. It's not all on their shoulders. It's shared amongst many. As far as your specific questions on the high-net-worth space, as far as I'm concerned, while I'm sure there are some outside of the organization that may disagree, I think by a wide margin, we have the best team in the business. It's all about knowledge, expertise, and quite frankly, how they work as a team. I think the value proposition that they bring to the marketplace is second to none. I think that is, quite frankly, reflected in how the distribution and by extension customers are responding and engaging with them. Lots of good momentum there. I think it's really just a reflection of the people. Terrific. Thank you. Thank you. Your next question today comes from the line of Alex Scott with Goldman Sachs. Your line is now open. Hey, thanks for taking the follow-up question. I just wanted to ask if you could comment at all on just the Russia-Ukraine conflict and if you have any exposure we should think about and if, you know, even if there's a small amount, if you had any claims associated with it. We have to say limited would probably be overstating it dramatically if we're closer to none than limited. During the quarter, I think we had claims associated with that. Richie, you'll correct me here if I'm wrong, but I think it was about $2.5 million. Yes. On a net basis, that's right. It's a very concerning situation. Our hearts go out to those that are affected. As far as the business and the exposure, on the underwriting side or the investment side, it's barely rounding if that. Thanks. Yep. There are no further questions at this time. Mr. Rob Berkley, I turn the call back over to you. Okay. Emma, thank you very much. We appreciate your assistance in the call. Also thank you very much to all those that dialed in. We appreciate your engagement too. I think. Again, as suggested earlier, the quarter clearly speaks for itself. I think that what is more exciting and hopefully appreciated by those that are observing the business is not just performing well today, but everything is sort of lined up, planets and stars, for us to have a very, very attractive 2022, likely 2023, and ever more increasingly likely 2024 as well. Thanks for dialing in, and we'll talk to you in 90 days or so. Take care. Good night. This concludes today's conference call. Thank you for attending. You may now disconnect.