Ladies and gentlemen, good day and welcome to W. R. Berkley Corporation's second quarter 2025 earnings conference call. Today's conference 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, beliefs, expects, or estimates. We caution you 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, 2024, 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. Abby, thank you very much, and thank you to all participants for your time today and your interest in the company. In addition to myself, you also have our Executive Chairman, Will Berkley, on the call, as well as Rich Baio, our Chief Financial Officer. We're going to follow our typical agenda where momentarily I'll be handing it over to Rich. He'll run us through some highlights from the quarter. He'll then pass it back to me. I'll offer a few more sound bites, and then we look forward to taking people's questions and, for that matter, taking the conversation in any direction participants wish to take it. Before I do hand it over to Rich, perhaps just stating the obvious, it is very much an interesting moment in the property and casualty space. We are reminded of the complications of this industry, an industry where you make a sale before you ultimately truly know your costs of goods sold. We have been grappling with this reality as an industry forever, but there are moments in time when it comes into sharper focus than others. We certainly, over the past several years, have had to grapple with financial or economic inflation, and that was combined with social inflation, which we have talked about and I suspect will continue to talk about. While on the heels of COVID, financial or economic inflation seems to be brought far more under control, there are some real threats to that. Certainly, tariffs are top of mind for all of us. In addition to that, one should not lose sight of what's going on in the labor market and what that may mean for wage inflation over time, particularly around some of the administration policies that they are in the process of putting into place. Finally, there's the big question around deficits and what that will ultimately mean for the economy. Lastly, to what extent can we expect the U.S. consumer to continue to be the driver and allow the economy to remain as resilient as it's been? These are amongst some of the macro questions that we are grappling with. Obviously, there's applicability to both our underwriting activities and how we think about selecting and pricing risk. Furthermore, I think it goes without saying there's meaningful applicability to the investment portfolio and how we think about positioning that. As always, lots of moving pieces. Trying to not just interpret what they all mean for today, but also how we think about positioning the business going forward. Let me pause there and hand it over to Rich, and I will follow him with a few more sound bites. Rich, over to you, please. Great. Thanks, Rob. The second quarter marked a continuation of strong performance in both underwriting income and net investment income. Net income per diluted share increased 8.7% over the prior year to $1 per share, or $401 million, with an annualized return on beginning-of-year equity of 19.1%. The definition of operating earnings, commencing with this quarter, has been changed to exclude after-tax foreign currency gains and losses. Accordingly, operating earnings were $420 million, or $1.05 per share, yielding an annualized return on beginning-of-year equity of 20%. Starting with underwriting performance, our current accident-year combined ratio before CAT losses of 3.2 loss ratio points was 88.4%, comprised of an accident-year loss ratio excluding CATs of 59.9% and an expense ratio of 28.5%. The calendar-year combined ratio was 91.6%, resulting in $261 million of underwriting income. CAT losses were $99 million in the second quarter of 2025, compared with $90 million, or 3.2 loss ratio points, in the prior year's quarter. While the industry saw an above-average frequency of severe storms, the point impact of CAT losses on our combined ratio remained flat, even as the dollar amount of losses marginally increased with the growth in our property book of business over the prior year. Drilling down further, the insurance segment's quarterly accident-year loss ratio, ex-CATs, was relatively flat year-over-year and sequentially at 60.7%, bringing the accident-year combined ratio before CATs to 89%. The reinsurance and monoline excess segment's accident-year loss ratio, ex-CATs, increased to 54.1%, with a strong accident-year combined ratio before CATs of 83.8%. The expense ratio overall was flat at 28.5% and continued to benefit from the growth in net premiums earned, which was a quarterly record of $3.1 billion. In addition, net premiums written increased to a record $3.4 billion in the quarter, with growth in all lines of business in both segments. Record net investment income of $379 million benefited from the ongoing growth in the invested assets from strong operating cash flow and new money rates on fixed maturity securities that remain comfortably above our average book yield. Investment income from fixed maturity securities, excluding Argentine inflation-linked securities, improved 16.5% year-over-year, with an increase in book yield of 20 basis points to 4.7%. Our investment funds performed above our expected quarterly range of $10 million-$20 million, with strong results of $27 million, driven by transportation, infrastructure, and financial services sectors. The quality of our portfolio remains very strong at a AA-, with the duration on our fixed maturity portfolio, including cash and cash equivalents, increasing from the fourth quarter of 2.6 years to the current quarter of 2.8 years. Foreign currency losses in the quarter of $55 million related to the weakening U.S. dollar relative to most other currencies. Offsetting this income statement loss is an improvement in the currency translation loss in stockholders' equity of $69 million. The effective tax rate was 23.2% in the quarter, which is in line with our expectations for the full year of 2025. The rate exceeds the U.S. statutory rate of 21% due to taxes on foreign earnings at higher rates and state income taxes. Stockholders' equity increased by more than $380 million, or 4.3%, over the first quarter of 2025 to a record $9.3 billion. After-tax unrealized investment losses improved by $120 million to a balance of $249 million as of June 30, 2025. From a capital management perspective, we paid ordinary and special dividends of $224 million in the quarter, bringing our growth in book value per share before dividends to 6.8% in the quarter and 14.3% on a year-to-date basis. Our balance sheet remains strong with cash and cash equivalents of more than $2 billion. Historically low financial leverage of 23.4%. In summary, another great quarter with exceptional risk-adjusted returns and excellent underwriting and investment performance. Rob, with that, I'll turn it back to you. Great. Rich, thank you very much. Maybe just to follow on Rich's comments, a couple of additional thoughts. First, I think, as everyone on the call is acutely aware, this is still very much a cyclical industry. As we have discussed in the past, though, one of the changes that has happened over the past, I do not know, sort of 5 to 10 years is a decoupling of product lines as to where they are in the cycle. The cyclical nature still exists, but where different major product lines are in the cycle, they are certainly no longer in lockstep. To that end, a couple of thoughts on the insurance marketplace. One, the property market. Clearly, that marketplace is becoming more competitive, as we have discussed for a couple of quarters now. Probably two drivers there. One would be a reinsurance marketplace that is becoming more competitive and is willing to provide capacity at a lower rate. The second piece is, as discussed by some, the MGA market, which is becoming clearly more active. I will offer a few thoughts on the MGA market a little bit later in my comments. I would tell you that the property market, there is a notable bifurcation. While the general direction is more competitive, the larger accounts, particularly shared and layered, as we have discussed in the past couple of quarters, is where greater competition is. The smaller accounts, it is not that there is not competition, but it pales in comparison to the larger end of town. As far as commercial transportation, again, another product line where there is a fair amount of activity coming from MGAs. That marketplace, we continue to, and others seem to be pushing for rate, but without a doubt, the MGA participants are creating at least a short-term headwind for that market truly going hard. My expectation is that that is a bit of a kink in the hose, if you will, and consequently, it is going to build up pressure and ultimately will inure to the benefit of responsible long-term participants when that snaps and the market shifts. Professional liability, again, a bit of a mixed bag, as we all have a shared appreciation. A very broad space. Just a couple of highlights on D&O. It would seem as though the public D&O market is beginning to find some sense of bottom. Private and non-for-profit D&O remains particularly competitive, as does some of what I would define as miscellaneous E&O. There is, again, an MGA component to it since people seem to be very fixated on the topic. I thought I would flag that as well. As far as the casualty lines, clearly there is opportunity to get the rate that the product line needs. It is pronounced both in the primary casualty as well as the umbrella and excess. Finally, as far as workers' compensation goes, presumably all had an opportunity to take note of the action coming out of California. I think some time ago we had flagged for those that were willing to listen that it seemed as though California, as opposed to in the more distant past, this time around is out in front of the rest of the market as far as firming. I think the action taken by the commissioner approving 8.7% effective 9/1 is certainly a strong message that was well received by us, and we look forward to more coming behind that. I think one other comment I would make would be around the consumer space, particularly P&C personal lines. As you all know, we have a meaningful participation in the private client space, which is a very different business from what I would define as mass market. It is a part of the market that is built or driven by knowledge and expertise, and we have a business that is really coming into its own in that space and has been a great contributor, not just to the top line, but to the bottom line as well. Those market conditions remain ripe, and we are pleased to have that opportunity. I mentioned reinsurance earlier as far as the reinsurance marketplace providing capacity within the property lines, perhaps the discipline, I think, eroding. I think we've talked about that in the past. It continues to erode. We'll have to see how quickly it remains and how steep the trajectory is, I should say. Finally, we've expressed our disappointment with the discipline, particularly on the casualty lines within the reinsurance space. I offered a couple of sound bites about MGAs just as a broad category earlier. Within the industry, people tend to oftentimes use some terminology, perhaps somewhat casually and almost interchangeably, around MGA, MGU, and ultimately really falls under the category, if you like, of delegated authority. There is no doubt that inherently, in many of the delegated authority models, there is a mismatch or a lack of alignment of interest between those with the pen and those with the capital. It is not that all of these relationships are bad. Some of them are quite good. One just needs to have their eyes wide open and understand that there is not a perfect alignment of interests and make sure that it is controlled appropriately. That having been said, there has been extraordinary growth in the MGA space. A lot of it has been generated by new entrants that lack expertise. A lot of it has been supported by reinsurance capacity that seems to have an unquenchable thirst for growth without necessarily their finger fully on the pulse. We'll have to see how this plays out. I think for many of us that have been around for at least a little while, and particularly those that have been around for a long while, have seen some version of this movie. In some ways, it's the same. In other ways, it's different. Perhaps the only difference is that it's a different cast of characters. One final anecdote on the MGA front, I would tell you that over the last 60-90 days, it's been a startling number of inbound calls that we have gotten from investment bankers suggesting that MGAs that they have to sell, would we be interested in buying them? And typically, they are capitalized or owned by private equity. So oftentimes, perhaps a leading indicator that the music is slowing, and we'll see who has a seat at the end, though oftentimes that does take some time. Rich, as always, did a really thorough job as it relates to the quarter and the numbers. I would just call out the rate at the 7.6 ex comp. Continues to be meaningful and puts us in a comfortable place. Rich talked about the loss ratio. Again, I'm not going to go into a chapter and verse. The 3.2 points of CAT was really frequency of, by industry standards, modest severity. And then lastly, it's worth noting the duration of the investment portfolio edging out to 2.8 years. Again, I think this is exactly what we suggested we would be doing if the story unfolded the way it has. We continue to believe that our strategy is the right one, making sure that we are getting an appropriate risk-adjusted return. I think, as Rich alluded to, the cash flow of the organization remains very healthy. The growth in the investment portfolio remains quite significant. And if you think about a new money rate for us today is running about, give or take, 5.25%, and the book yield on the portfolio ex Argentina is 4.7%, that certainly bodes well for where investment income is going for the foreseeable. Long story short, we can't control the environment, but we can control our actions. We remain very focused on making good risk-adjusted returns. The decoupling of product lines and how they make their way through the cycle, combined with the breadth of our offering, allows us to continue to grow when others perhaps are experiencing more of a headwind. In our opinion, you certainly are seeing different product lines at different points of transition. We have historically and continue to be more of a liability market, and we think that much of the liability market is where the opportunity will likely be over the next 12-36 months. Again, we think we're well positioned on the underwriting side. We think we're well positioned on the investment side, and it is our expectation that we will be able to continue to grow earnings in a very thoughtful and controlled manner. With that, Abby, I will take a pause, and we're very pleased to open it up for questions. Thank you. Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one a second time. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, it is star one if you would like to join the queue. Our first question comes from the line of Rob Cox with Goldman Sachs. Your line is open. Hey, Rob. Good afternoon. Good afternoon. Yeah, just first question on growth, just thinking about the growth potential here. I know it was a tougher quarter with the property pricing deceleration. Just curious if you all still view this as sort of a 10%-15% growth environment, or has the last few quarters changed that? Look, I think we had come out with that band, if you will, probably, I do not know if call it 18 months ago, maybe 24 months ago. If you are asking my best guesstimate at this stage, in spite of the number that we saw in this quarter, my view is that it is probably somewhere between 8% and 12% would be my guess, as opposed to 10%-15%. Okay. Got it. That's helpful. Just curious on the underlying loss ratio. I think last quarter, you all mentioned that the impact of the outward reinsurance program was a business mix-related headwind. This quarter, the underlying loss ratio, at least in insurance, seems pretty flat. Anything else unusual to call out there? Is that just normal dynamics? I think it continues to primarily be mixed as far as the loss ratio. Got it. Thank you. Thank you. Our next question comes from the line of Alex Scott with Barclays. Your line is open. Hi, Alex. Good afternoon. Hey, good afternoon. You mentioned tariffs and labor costs in your opening remarks, and I just wanted to understand if you're actually seeing anything coming through, if that's more of a forward-looking statement. Obviously, there's a wide range out there. It is a forward-looking statement. We are not seeing it in any noteworthy way in our loss activity right now. At the same time, we are conscious of the fact of that concept of timing that I referenced in conjunction with the point that you're flagging. We want to make sure that we're not caught flat-footed. I think at this stage, given what we're seeing coming out of the administration, it's hard to imagine that tariffs are going to prove just to be something that goes away. We'll see. As far as the labor piece goes, from our perspective, ultimately, when the day is all done, just given the position around immigration and related activities and the actions that the administration are putting into place, there is no doubt that there are certain jobs that are going to need to be filled at a different payroll point than they have been. Ultimately, that presumably will drive labor costs. That makes sense. The second one I have is on the trajectory of margins from here. I mean, pricing still remaining pretty firm. Seems like you guys are being disciplined and still getting pretty good rate in there. Just wanted to understand. Is it still about the loss cost trend? Can margins still improve from here or remain flat? Would you expect sort of the mix shift with casualty being the bigger opportunity maybe to affect it one way or the other? I think when the day is all done, we feel comfortable that the rate that we are achieving is positioning us well, not just for today, but for tomorrow as well. Can things improve here? Yeah, I think things can improve from here. At the same time, we are all regularly reminded that there is no reward for declaring victory prematurely. In addition to that, we are also regularly reminded of all of the significantly leveraged variables that one should not reach a conclusion about prematurely. Understood. Thank you. Thank you. Our next question comes from the line of Elyse Greenspan with Wells Fargo. Your line is open. Hi, thanks. Good evening. My first question is actually on capital. You guys did not buy back any shares in the quarter. Just wondering. What drove that decision? Look, ultimately, Elyse, when the day is all done, as we've shared with you and others in the past. We have a view as to how much capital we have and what type of surplus we have at any moment in time. We have a view as to what we see as opportunities potentially before us and want to make sure that we have a surplus of gas in the tank. In addition to that, ultimately, there's a judgment made around to the extent there's an above and beyond, what is the most efficient way to return that to shareholders? As Rich flagged in his notes, it's not that we weren't returning capital to shareholders. We returned a few hundred million dollars to shareholders. It just seemed at that moment in time that the most efficient and effective way to return the money to the people it belonged was through a special dividend. I would strongly encourage you and others not to leap to the assumption that we are out of the repurchase market because that is not the case. We evaluate that tool along with other tools every day. Again, what we think is the most practical answer to the surplus of capital question. Obviously, we can do our own math, as others can do their math, as to what we believe real book value is, as opposed to this cockamamie accountant version of math. We also have a view on the earnings power of the business going forward, which I would add we are quite optimistic about. Again, I would encourage you not to count us out of the repurchase activity. Thanks. Then my second question. You guys gave the underlying loss ratios right by segment. I back into around, I guess, $6 million adverse in insurance, and I think just around $8 million favorable in reinsurance. Within that $6 million in insurance, is there anything? Obviously a large amount of reserves, but anything to call out that particularly moved relative to your reserves in the quarter? Nothing particularly noteworthy. It's just us, as we've shared with you and others in the past. We look at it every 90 days. We're looking at it every day, but every 90 days, we're looking at it at a pretty granular level and a couple of bits and pieces moving around. That's all. Thank you. Thank you. Our next question comes from the line of Mike Zaremski with BMO Capital Markets. Your line is open. Hello, Mike. Good afternoon. Hey. Good afternoon, Rob. On the 15% Mitsui stake, any update on the timeframe and timeline there? I know no more than anybody else, or at least anybody else who bothered to read the SEC filings. Again, I think as we—I do not know if we shared or not. If we did not, I should have—that we, by design, have not been privy to sort of where they stand in their process because in no way, shape, or form, perhaps back to one of Elyse's points, we do not want to be encumbered or restricted in any way in our ability to repurchase stock. The short answer is I have no idea. Understood. We should see disclosure once it gets over 5%. Is that correct? I have a high degree of confidence that they will fully comply with any regulation from the SEC from a filing perspective. My understanding is that I think to comply with the SEC, they're going to need to do a filing once they reach 4.99% or call it 5%. As far as I'm aware, they have not done that yet. Got it. Understood. Maybe pivoting, Rob, to the medical inflation environment as it pertains to your work comp and I believe also stop-loss portfolio. We are obviously seeing all the headlines that you've been seeing. Any updates to—and you mentioned California as well, obviously, earlier—any kind of updates on a macro level to the Berkley's views on medical inflation potentially making their way into the comp and/or A&H arena? I think it has been and continues to be something that our colleagues and, by extension, Rich, the Chairman, and I are focused on. As we've discussed, it's a very leveraged assumption. Maybe the only other wild card that I would layer on top, Mike, is the commentary that has come out of the administration regarding its desire to onshore pharmaceutical, in particular, manufacturing. I think it was just a couple of weeks ago that there was a comment that came from the President that suggested he was entertaining the possibility of a 200% tariff on all pharmaceuticals that are imported. That having been said, I just read earlier today that the discussions with the EU would suggest there would be no tariffs on pharmaceuticals or medical devices. I think for all of us, the message perhaps is just stay tuned. Without a doubt, if we saw a levy to the tune of 200% on pharmaceuticals, that's something that would have an impact. Perhaps to jump ahead and anticipate your question, yes, we have done quite a bit of sensitivity analysis as to what that would mean for us. At the moment, we feel comfortable that we can manage through that. Okay. That's helpful. Lastly, Rich, I believe I heard you talk about the new operating earnings non-GAAP definition. Just we'll go back and check, but does that change historicals by very low single digits? Any reasoning we should be aware of on why the change? I think it's really a couple of things. One, what we've noticed, and we've had some conversations with some of the equity analysts over the last few quarters in terms of some of the volatility that's been coming about as a result of some of the changes that Rob has alluded to since the new administration. With the equity analysts not really including it because it's not modeled in, we felt it was a more straightforward approach with regards to having foreign currency gains and losses excluded. You would see if you were to go back over time, there has been some volatility from period to period, but in particular, over the last couple of quarters, we've seen quite a bit. Thank you. You're welcome. Our next question comes from the line of Andrew Kligerman with TD Cowen. Your line is open. Good afternoon. How are you? Rob, you mentioned in the write-up. Rate increases were 7.6% ex-workers' comp. I know that you're kind of writing a more specialized higher risk line. I was just kind of curious. How is the workers' comp pricing doing in that arena? Any other color on the workers' comp in addition to your prepared remarks you might call out? Thanks for the question, Andrew. The answer is that I think what you perhaps are referring to is some of the higher hazard stuff where we see growth opportunities from time to time. We saw particularly in the first quarter, it was still there in the second quarter, but perhaps not to the same degree. That having been said, we do like the pricing there, and that is why we are leaning into it. While we maintain a little bit more of a defensive posture with the Main Street stuff, what I would define as the higher hazard, more specialty in nature, we are very pleased with the opportunities that we see there. Got it. Rob, you mentioned in your remarks some disappointment with commercial auto. As I look at the numbers in your release, net written premium looked up. It looked like it was up roughly 10%. Is that all just rate? Are you feeling confident in the book that you have? Yes, we're confident in the book. Is it rate? The answer is yes and then some. I see. Okay. Thanks a lot. Sure. Thanks for the question. Our next question comes from the line of Mark Hughes with Truist. Your line is open. Hello, Mark. Good afternoon. Yeah, thank you. Hello, Rob. Hello, Rich. On the other liability line, the growth was just a little bit slower this quarter. You expressed some kind of continuing optimism about primary and excess. At the same time, you kind of dialed back your growth outlook just a little bit. Are you seeing any kind of inflection in that core GL or excess market, or is that still consistent with the prior couple of quarters? Yeah, we're still encouraged by the opportunity that we see there. My recalibrating, if you will, as far as the growth opportunity is really a couple of fold. One, on the commercial property opportunity, I think that there's going to be a bit more of a headwind. I think the casualty piece that you just referred to, I think that opportunity very much remains there. I also think just going back to the commercial auto piece, I think that that will prove to be a terrific opportunity, but it's going to take a little bit longer to get there. On the other hand, I think that on the reinsurance front, property in particular has probably seen its best day for some time. For the life of me, I don't understand why the casualty marketplace isn't getting a little more backbone. Yeah. On the MGAs that are knocking on your door. Is that always a hard no, or is that something you might consider if the valuation was right, or are they just their expectations are above and beyond what you'd ever consider paying? Ultimately, when the day is all done, we evaluate every opportunity as you'd expect on its own merit. That having been said, we take the expertise and the responsibility to capital, both of those things, very seriously. While we're always open to conversations, it's a pretty high hurdle to truly get us to want to engage. Thank you. Thank you. Our next question comes from the line of David Motemaden with Evercore ISI. Your line is open. Hi, David. Good afternoon. Hey, Rob. Good afternoon. Just a follow-up question maybe there to Mark's question. You had mentioned the bifurcated property market between large and small, or large and small and middle, maybe we'll call it SMID. Do you see that dynamic going in the opposite direction in some of the other markets, like casualty, where maybe large accounts are seeing some rate increase acceleration, and that's yet to really seep down and play out in the small and middle market, or just hoping to get some color there in terms of how you're thinking about the opportunity? Look, I think taking a half a step back, focusing on the casualty stuff, both primary and excess, I think the reality is that social inflation impacts the full spectrum. That having been said, without a doubt, plaintiff attorneys tend to view limits as candy. The bigger the limits that are available, the more focused they get. That has been the case for some number of years at this stage. Do I think that we have seen an effort amongst the plaintiff attorney to go a little bit down market? Yeah, I do. Not dramatically. When the day is all done, I think my expectation is that you're going to continue to see opportunity in some of the larger end of town, and that will continue to really waterfall through the whole casualty marketplace. The good news is for the smaller accounts, they tend to be a little bit more insulated, and the rate environment tends to be a little bit more sticky. Similar to perhaps one of the points you were making, the property market, the larger accounts are the ones that get targeted, and you get the greatest feeding frenzy around early on. That applies to casualty too. The rates are going up on the larger accounts in casualty. The smaller and middle market is following, and it tends to be stickier. Got it. Thanks. Maybe just to follow up here, just on the tariffs. At least on the insurance side, did not really look like there was anything going on in terms of the loss pick reinsurance. The underlying loss ratio did tick up. It does not look like you guys have embedded that into your view of the loss trend. Maybe just, how are you thinking about that? Is that something you guys are considering doing? It's certainly something that we're grappling with. We are paying close attention to it. We are already factoring it into how we think about required rate or rate need. We are going to see how it unfolds from here. Obviously, the impact of tariffs, while it may have applied to a broader cross-section of product, it is heavily weighted towards the shorter tail lines, so APD or property. At least that's how it would appear today, barring pharma, etc., that we referred to earlier. That is where we're focused, and we'll see how it unfolds. Yes, it is top of mind, and action is being taken from a pricing perspective. Understood. Thank you. Thanks for the questions. Our next question comes from the line of Wes Carmichael with Autonomous Research. Your line is open. Hey, thank you. Good evening. Good afternoon. On the investment portfolio, I think, Rob, in your prepared remarks, you mentioned some moving pieces in terms of what you may do going forward. In all, I heard you extended duration a little bit, but is there anything else that you might be thinking about in terms of potential repositioning or other actions on the portfolio? I think we generally are of the view that the fixed income portfolio is particularly well positioned. I think that our expectation is certainly, given what you hear coming out of Washington, the yield curve may steepen a little bit from here, and that may be a catalyst or an opportunity where we'll choose to take the duration out a little bit further. Perhaps answering the question with a slightly different bent, consistent with messaging in the past, while we have not completely turned our back to the alternative space going forward from a new money perspective, given the opportunities in the fixed income market, it's a pretty high hurdle. We are pretty pleased with how things are positioned today, and we think we have a lot of flexibility regardless of what tomorrow will bring. Got it. Understood. Maybe my follow-up, just to come back to property. Rob, you talked about larger shared and layered property being more competitive. When you kind of look at the market today, obviously, there's a little bit more rate pressure there in property. Any color you can share on your view of rate adequacy of the market at this point? I think, generally speaking, it really took off to the moon. I think it's still in a good place, and we're happy to write it, but we are being forced to be very, very selective and careful. I think it's not just about where it is today. It's also where you see it going tomorrow. Our colleagues are, yes, writing business today, but they're also trying to position the portfolio in anticipation of what tomorrow's conditions will be. Yes, I think the larger accounts, the shared and layered accounts, you're seeing more competition there. You're seeing a bit more of a feeding frenzy. By and large, we're still happy with the pricing, but that will not be indefinite. We have no problem when we don't think that the rate is adequate to walk away. We will be there when the opportunity presents itself again, as we have been in the past. Thank you. I should add those comments around market conditions again are very much focused on the commercial lines marketplace. On the private client stuff, we continue to be pleased with, by and large, the opportunities before us. Our next question comes from the line of Ryan Tunis with Cantor Fitzgerald. Your line is open. Evening, guys. I guess just keeping it on the property discussion, Rob. It's kind of a broad question, but why are we still seeing better growth in the property lines and the other liability, given your assessment of things? I think a lot of the property growth is really coming from, as I said a moment ago, we still think that there's opportunity there. Just because rates are down does not mean you do not want to write the business. I think the other piece that is worth noting is our private client business that I referred to before, or said differently, our net worth personal lines business. That is a contributor there as well. Got it. I guess, maybe a more detailed one, maybe for Rich, but the corporate costs or the, I do not know what you guys call them, other costs and expenses. That ticked up this quarter. Are we in a new type of run rate there, or were there some new launches? Just curious what is going on with that. Yeah, it's up really, Ryan, for a couple of reasons. One is with regards to the special dividend that we paid in the second quarter. As it relates to that dividend, it comes through on vested mandatorily deferred RSUs. So effectively, it's characterized as compensation. That is a meaningful contributor in the current quarter. That would obviously move around depending on future timing of special dividends or not. The second is you might have seen that we had announced a few quarters ago two new operations, our embedded solutions and our India branch. Similar to what we've done in the past, those expenses, when they're in the incubation stage, are reflected in our corporate expenses. When they get to some relative size in terms of generation of premium, we'll move that out of corporate expense on a prospective basis, and that would be reflected in our underwriting results. Understood. Thanks. You're welcome. Our next question comes from the line of Josh Shanker with Bank of America. Your line is open. Hey, good evening, everybody. Good evening. Hello. Rob, in your prepared remarks, it was almost like a throwaway. The last thing you mentioned was being really displeased with the direction of trend in casualty reinsurance markets. From my perspective, a lot of casualty reinsurance is just quota share that the underlying risk sets the pricing, and then you have some question about what's going to be the ceding commission. Obviously, there's XOL and some facultative and other types of business that obviously has a set price. Can you go a little into what you meant about being disappointed in the trends on the casualty insurance direction? Yeah, absolutely, Josh. Thanks for flagging that. Long story short, and I should have been more specific about it, the thorn in the side is primarily the ceding commissions, where we just think that the reinsurance marketplace, when we're playing the assumed game, should be looking for better terms. Obviously, we have a different view when we're seating the business. That is what I was referring to. In addition to that, less consequential as far as percent of the marketplace or, for that matter, percent of our portfolio, we've found that the [CASFAC market is one where we would have hoped to have seen a bit more discipline at this stage. By the way, mapping back to some of the other comments, particularly around the commercial auto space. I'm just saying, on the ceding commissions, you're talking about that the ceding commissions are too low in your primary book when you're trying to seed, or they're too high because your reinsurance book? The ceding commissions are too low when we're assuming the business. I'm saying, from a self-serving perspective, we'd like them to be lower when we're ceding the business or an insurance company. Oh, yeah. Okay. That makes sense. Then. Yes. We would like our cake and to eat it too, Josh. Yep. I get it. I get it. If I go back three years ago when the 10-year was sub 2%, and now we're at when it's trying to get above 5%. There may be some griping about where prices are in various markets. I assume in an efficient market, the price of yield on investment should have some impact on the underwriter's ability to make money on the underwriting. When we say we do not like the direction of pricing, is pricing much worse? Because there is definitely, for the market and certainly you as well, you are making a whole lot more money on the investment income. To what extent is it reflective of just a different investment paradigm? Josh, I very much appreciate the point. Clearly, there is an economic model here, and there is a relationship between investment income and underwriting profit and how it all comes together to deliver an outcome. That having been said, let's understand that perhaps the most competitive part of the market is in some of the shorter tail lines, i.e., property, where investment income is making the most modest contribution. Do I think that there is an impact? Yes. Do I think that that is going to take us back to the world of cash flow underwriting? No, sir, I do not. Okay. Thank you very much for all the answers. Thank you, Josh. Have a good evening. You too. Our next question comes from the line of Brian Meredith with UBS. Your line is open. Hey, Brian. Good evening. Hey, thanks. Hey, Rob. Evening. Rob, I wonder if you could talk a little bit about what the competitive dynamics are like right now in the Private Client business. Are there more opportunities there because maybe some players are pulling back, or are we seeing any more competition at marketplace? I think that certainly there are some. The obvious names participating in the space. I think each organization or competitor has their own approach to the business. I think there are some that are primarily riding the coattails of a brand that they have. I think there are others like ourselves that are really through the expertise of people and our team bringing value that's very visible to both distribution and insured. When the day is all done, why are we getting the traction we are? Because we certainly are not the cheapest, but I would argue we're the best value. Makes sense. Thanks. Second question, just curious, the underlying combined ratio mentioned in the reinsurance, it looked like it's kind of elevated relative to where it's been the last couple of years. Is there anything unusual going on in the quarter catch-up or something that happened? Not particular. I think it's really two things, just tying in with the comments earlier. Partly, it ties in with my bitching about ceding commissions. It also ties in with the comments around property rates and where they are. The fact is that the reinsurance market's not charging as much for property or, for that matter, property cat in particular today as it did yesterday. On both of those fronts, when we think about the changes, our colleagues are reacting to that in what we believe is a very thoughtful manner. Great. Thanks. Thank you. Our next question comes from the line of Meyer Shields with KBW. Your line is open. Hi, Meyer. Good afternoon or evening, rather. Hi, Rob. Yep. Excuse me. I'm sorry. Two, I think, quick questions. First of all, among your clients, are you seeing increasing demand for higher limits on the various casualty lines policies? Are we seeing increasing demand from our clients? I think that ultimately, are we talking about larger or smaller accounts? Just to make sure I'm following there. Sorry. I was thinking the smaller ones. You were thinking of the smaller ones. Yes. Not consequentially. They are still looking to buy the typical primary, and oftentimes, if they're looking to buy the same umbrella. So said differently, I'm not sure that the insureds or for that matter, their distribution is directing them to think about their exposure in a materially different manner than they did yesterday in spite of social inflation. It's just not something that the smaller accounts are thinking about as much as the larger accounts are. I think. Given the rate increases that have come about in response to social inflation, amongst other things, I think you have a lot of insureds out there trying to think about not just what do they need, but also what can they afford. And I know you were talking about just sort of Main Street casualty, but I would suggest to you that that is perhaps particularly visible in the commercial auto space, where a product line where you've seen perhaps or arguably the greatest level of social inflation, consequently, significant rate need being pushed and more probably to come. And you have insureds sitting there saying, "I don't know if I can afford this. I don't know how I make my economic model work." And sometimes you have insureds that are sitting there saying, "I'll buy the primary, but the excess that I used to buy, maybe I'll buy less, or maybe I'll have to self-insure," which. Sadly is a big rolling of the dice. Okay. Yeah, that's very helpful. I just wanted to get a sense of that. Second question. You talked about the loss-cost increase that was approved in California. When you look at California's workers' compensation market, is that a good proxy or leading indicator for the country? Historically, if you look back over cycles, California has been a laggard as opposed to a leader. As we've suggested, I think for probably a while now, our view was that California was out in front as far as a firming market. Do I think it is a perfect proxy for the rest of the country? No, sir, I don't. I think California is definitely a unique animal. That having been said, I would offer the observation that if you gut a product line's rate enough, eventually, it ends badly. In addition to that, as some colleagues were flagging earlier, and I think we all have an appreciation for, is that medical trend is not working in the workers' comp market's favor. I think also, as we've discussed, in our opinion, there's a pinch point where it's been artificially held back or suppressed because of how it prices off of Medicare, I believe it is, in many states. What do I think? I think that the California response is warranted and then some. I don't think it's a perfect indicator for the rest of the country, but it is an indicator that ultimately, if you take enough rate out of it, eventually, it ends badly and response is required. That is very helpful. Thank you so much. Thank you. Our next question comes from the line of Andrew Anderson with Jefferies. Your line is open. Hi, Andrew. Good evening. Hey. Good evening. Maybe just on the D&O market, can you remind us, do you guys focus more on the public or the private end? I guess where I am going with this is does kind of a rebounding M&A and IPO market provide some upside for premium growth here? The answer is all of the above. Certainly, IPO activity would be well received. I guess all we need to do is get the SPAC market going again, and then we can have a party. Fair enough. Okay. Then short tail lines within insurance. Heard your comments on the high-net-worth homeowners, but would be interested because there's a few other lines in there, kind of what you're seeing within A&H or Inland Marine. From our perspective, A&H continues to be an attractive part of our business. We participate in that marketplace in a couple of different ways. I do not want to bore everyone on the call with it, but if you have interest, we are happy to follow up offline. As far as the Inland Marine piece, by and large, that tends to run semi—I would not say in perfect lockstep, but is on a similar course to the broader property market. Thank you. Our next question comes from the line of Jamie Inglis with Philo Smith. Your line is open. Hey, Jamie. What a pleasant surprise. How are you? Good. Good evening. Rob, I was curious about your thoughts about risk-adjusted return. You mentioned it a couple of times. You always do. The question is, how often and when. How do you change your view about risk by line? Therefore, how does that affect the return? You know what I mean? It's like, is it a monthly, daily, annual thing? The world's changing fairly rapidly today. Therefore, I would assume that the underlying risks are changing as well. The way I would articulate it, and then others on my end of the phone might have a view because this is—Rich may have a thought, but my boss may have a thought as well because this is very much a philosophical thing that goes back to day one when he rubbed two sticks together to make fire. Long story short is that we are very preoccupied with this, and colleagues throughout the organization are talking about it daily. We have a fair amount of visibility every 30 days, and we have a painfully granular discussion about it by business, by product line every 90 days. Now, just because we have the formality of monthly and quarterly, that in no way, shape, or form inhibits the discussion and, if appropriate, the taking action between those mile markers. Did you want to add to that? I would only add that one case that goes in a way you never imagined could make you change your mind about a line of business. It's a continuous process for watching how things are going and seeing. Is there something you didn't expect? Is there something that causes you to reevaluate? Otherwise, it's a continuous process of examining the risks you see. In the courtroom, in the underwriting, whatever. There was a bad malpractice case in Philadelphia that was decided last week. An obstetrician had a terribly bad decision. That makes you think about what happens about malpractice and obstetrics and all those things. It brings it to your attention. I think it's a continuous process of staying on top of what's happening, how are decisions going, and you're looking at those things on a continuous basis. Rich, anything you want to add? No, I'm set. Okay. Excellent. Great. Thanks a lot, guys. Good job. Thanks. Abby, anybody else out there? No. That will conclude our question-and-answer session. I would love to turn the conference back over to Mr. Rob Berkley for closing remarks. Abby, thanks for the help and hosting us. Again, thank you to all the participants. I think that it was a very solid quarter. Again, sort of the story continuing to unfold as promised. I think it is a reminder of the stability of the earnings of the business, whether it is a quarter like one or a quarter like two, we are able to continually and consistently create value for shareholders. Beyond that, I think there is a fair amount of visibility at this stage, not just for the balance of this year, but beyond, as to it is likely that this organization will continue for the foreseeable to be able to generate high teens, low 20s returns. We are very optimistic and confident in our ability to achieve that. Again, our thanks to all for tuning in, and we will look forward to catching up with you in about 90 days. Thank you very much. Good night. Ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.