HMN - NYSE

Good day, and welcome to the Horace Mann Educators 2024 Fourth Quarter Investor call. All participants will be in listen-only mode. Please note today's event is being recorded. I would now like to turn the conference over to Brendan Dawal, Vice President of Investor Relations. Please go ahead, sir.

Thank you. Welcome to Horace Mann's discussion of our fourth quarter and full year 2024 results. Yesterday, we issued our earnings release, investor supplement, and investor presentation. Copies are available on the investors page of our website. Marita

Thanks, Brendan, and good morning, everyone. Horace Mann delivered a record fourth quarter with very strong results that showcase the earnings power of all of our businesses. Before we dive further into the details, I want to comment on the recent wildfires in Southern California. Our thoughts are with those affected by these devastating events. Our claims team is working with our affected policyholders to provide quick and compassionate assistance delivering on our promise of distinctive service. As a partner to the firefighting community, we deeply appreciate the heroic efforts of the first responders serving their communities. Ryan will provide more details later in the call. But our current estimate of direct policyholder losses is in the conservative range of $5 to $10 million. Turning to this quarter's results, yesterday, Horace Mann reported record fourth quarter core earnings of $1.62 per share, a 93% increase over the prior year. Full-year 2024 core EPS of $3.18 more than doubled our 2023 earnings and core return on equity of 8.8%. In 2024, we did exactly what we set out to do: restore P&C profitability while positioning Horace Mann for sustained profitable household growth. Specifically, from a bottom line perspective, in property and casualty, we reported a full-year combined ratio of 98%, a 15-point improvement over the prior year. In addition, roof rating schedules have been implemented in our most wind and hail-prone states with the new terms and conditions taking effect at renewal. These include required minimum wind and hail deductibles. From a top line perspective, premiums and contract deposits increased 8% over the prior year. P&C net premiums earned increased 14%. In addition, we grew sales by double-digit percentages in auto, individual supplemental, and lifelines by investing in our agency force, and lead generation capabilities. Net investment income increased over the prior year due to strong core fixed income returns, a benefit of the continued higher interest rate environment. While underperforming in the first half of the year, the commercial mortgage loan fund portfolio contributed $17 million in the second half, exceeding our mid-year estimate of $10 to $12 million. These results clearly illustrate the significant efforts taken to restore P&C profitability as well as the strength of our multiline business model through various business cycles. This strong foundation enables us to now concentrate our focus on driving sustained profitable growth and continue to increase shareholder value. We are guiding 2025 core earnings within the range of $3.60 to $3.90 per share with a shareholder return on equity of at least 10%. With more sustained profitable growth, we have the opportunity to drive return on equity even further into the double-digit range. Our strategy to accomplish this is twofold: maintain business profitability while strategically investing in driving profitable growth. Let me start by talking about target profitability by segment. In property and casualty, our focus is to reach a mid-90s combined ratio while mitigating earnings volatility in the property line. For both auto and property, we will continue to take rate as needed to keep pace with anticipated loss trends likely in the mid-single digits for 2025 on a blended basis. We continue to leverage industry-leading tools to better model severe weather risk, to better manage property exposure. In life and retirement, we expect the steady earnings contribution from the segment to continue, bolstered by the very strong investment yields we have achieved in our core fixed income portfolio. The 2025 outlook for our commercial mortgage loan funds and limited partnerships portfolios remains conservative but represents an improvement over 2024. In supplemental and group benefits, our pretax profit margin remains above our profitability targets due to lower policyholder utilization. Our expectation is that utilization will continue to trend back towards more typical levels with time, as we continue to grow this business. Our initiatives to improve Horace Mann's product distribution and infrastructure continually evolve to better meet the needs of our market. With profit restoration complete, our product focus will turn to operational efficiencies and product enhancements. Later this year, we will introduce our next-generation cancer product in our individual supplemental line, which will build upon that flagship product and include new benefits that reflect the advancements in cancer treatments. In addition, we continue to make investments to modernize our P&C pricing processes to reduce cycle time and give our business the flexibility to respond even faster to changes and trends. To further our distribution effectiveness, we are continuing to invest in our agency force and successful lead generation strategies. Recently, we rolled out our state-of-the-art customer relationship management platform, Catalyst, to our exclusive agency force and internal teams. This tool leverages advanced technology and AI to drastically simplify workflows and enhance customer interactions with features like predictive analytics, digital documentation integration, and streamlined marketing capabilities. This investment equips agents with more sophisticated tools to focus on building customer relationships and their agencies in 2025 and beyond. Our agency force remains strong. In 2024, we grew our points of distribution, and across the board, our agents are more productive. Over the past year, agency production is up 10% and average agent income is up 20%. Many of us spent last week with agents at our annual sales conference, and morale is strong. On the infrastructure front, we continue to make investments in technology to enhance the operational effectiveness of our business. For example, in the individual supplemental line, we are nearing completion of straight-through processing capabilities, which will automate and accelerate many elements of the sales cycle. To close, our 2024 performance was very strong and illustrated what our multiline niche market business model can achieve with solid profitability across the enterprise. By executing on our strategic and scalable growth strategy, we will achieve our 2025 goals of a larger share of the market, record core earnings, and a sustainable double-digit shareholder return on equity. Thanks. I'll now turn the call over to Ryan.

Thanks, Marita. Today, I will add some color to the fourth quarter and full-year results, as well as discuss our 2025 guidance. At the corporate level, full-year 2024 core earnings of $132 million or $3.18 per diluted share, with core return on equity of 8.8%, was a 4.5-point improvement over 2023. Record fourth-quarter core EPS of $1.62, a 93% increase over the prior year, reflected both the profitability restoration we completed in the property casualty segment as well as each segment performing at or above our expectations. For 2025, we are streamlining our corporate guidance to focus on a more holistic view of the earnings power of the total enterprise, along with the long-term profitability targets for the individual businesses. You can see the guidance details in our investor presentation on page twelve. As Marita mentioned, we expect a core EPS in the range of $3.60 to $3.90 and a double-digit return on equity. Guidance includes total net investment income in the range of $470 million to $480 million. For our managed portfolio, we expect net investment income between $370 million to $380 million, which reflects the continued benefit of the higher interest rate environment, as well as conservative expectations for commercial mortgage loan and limited partnership returns that are an improvement over 2024 but remain below historic averages. Full-year 2024 reported commercial mortgage loan limited partnership returns and 4.65% compared to full-year 2025 forecasted returns of 6.25% and 7.25%. We are assuming catastrophe losses of $90 million, or about 11% of the net earned premium for the full year. This estimate is in line with our five-year historical average on an exposure-weighted basis and reflects the expected benefits of the underwriting actions we've taken to reduce earnings volatility in property. As a reminder, our catastrophe losses tend to be weighted to the second quarter, which typically represents about half of our annual cat losses. The California wildfires will be a first quarter 2025 event. As Marita mentioned, our current estimate of direct policyholder losses is in the range of $5 million to $10 million, as we are underrepresented in the LA area relative to our statewide market share. Turning to 2024 results by segment, in property casualty, we clearly see the success of our multiyear profitability restoration strategy of rate and non-rate underwriting actions reflected in the results. Full-year core earnings for the segment were $49.1 million, an $85 million improvement over the prior year. Annual net written premiums of $779.3 million increased 13.9% over the prior year, primarily on higher average written premiums. The reported combined ratio of 97.9% improved 15.4 points over the prior year, primarily reflecting improved underlying results, as well as favorable prior year development and slightly lower catastrophe losses. We released $29.5 million in prior year development in 2024. Auto releases were $15.2 million; property was $14.3 million, of which $10.3 million was in the fourth quarter. It was related to favorable severity from accident years '23 and prior. For the full year, the majority of release and property, where we're seeing the benefit of lower severities and improved claims processes. Full-year catastrophe losses were $94.9 million compared to $97.6 million a year ago. This represents a 12.8-point impact on the combined ratio. More than 25% of the full-year catastrophe losses were related to Hurricane Helene. The P&C underlying loss ratio of 61.9% improved 9.3 points over the prior year, reflecting both higher average premium and lower non-catastrophe weather losses. Full-year segment sales were strong at $100.9 million, a 29% increase over the prior year. In auto, net written premiums of $490.7 million increased 11.8% over the prior year. The combined ratio of 98.4% improved 13.3 points, primarily due to higher average premiums. Despite substantial rate increases, policyholder retention declined only 1 percentage point to 85.3%. In property, net written premiums were $288.6 million, a 17.7% increase over the prior year. The combined ratio of 96.4% improved 19.7 points, reflecting improved underwriting results, largely due to favorable weather and favorable prior year development. Household retention remained steady at 89.6%. As Marita mentioned, our profitability target for the P&C segment is a combined ratio in the mid-90s, which we expect to achieve in 2025 as rate and non-rate underwriting actions fully earn in across the book. If you break the combined ratio down by product line, we're underwriting auto to the mid-90s and property to 90 or below. Also, in the investor presentation appendix, we provide details on our 2025 reinsurance program that renewed in January. We were very pleased with the renewal process this year and risk-adjusted reinsurance costs declined over 10% for 2025, reflecting our prudent approach to exposure management. In life and retirement, core earnings of $56.3 million were below prior year, primarily due to lower net interest margins. The net interest spread on our fixed annuity business declined to 172 basis points compared to 218 in 2023. This reflected lower commercial mortgage loan fund returns. Our longer-term target for net interest spread on our fixed annuity business remains in the range of 220 to 230 basis points. Net written premiums and contract deposits of $573.9 million, or a slight increase over the prior year. And in the retirement business, deposits in our core 403 products remained strong, and persistency was steady at 91.4%. Eleven point eight percent over prior year, and persistency improved slightly ending the year above 96%. Moving to supplemental and group benefits, the segment contributed $60.4 million to core earnings, a 10% increase over the prior year. Q4 benefits and changes in reserves reflect a favorable impact from the annual reserve assumption review, primarily related to favorable morbidity in our group long-term disability book. As a result, the combined benefits ratio. We continue to expect the benefit ratio to tick up with more normal utilization trends and as we continue to grow this business. In individual supplemental, net written premiums and contract deposits of $121.3 million were a slight increase over the prior year. The pre-tax profit margin of 35.7% was down a percentage point from prior year, but remains above our profitability target. We continue to see very strong customer demand for these products and had record sales of $5.5 million in the fourth quarter. Full-year sales of $17 million were a twelve point six percent increase over the prior year, and persistency remained strong at ninety point five percent. In group benefits, net written premiums and contract deposits of $133.2 million were slightly below the prior year. The pre-tax profit margin of 17.4% was very strong, and covered lives grew to 838,000 with strong persistency. I also want to comment on a one-time item we've noted in our materials as non-core legacy commercial exposures. As noted in our ten Ks last year, we were named as a defendant in a litigation and presented with claims related to legacy commercial policies. These commercial policies were issued as early as the 1960s under our previous ownership structure in business lines which we no longer operate. In the fourth quarter, we recorded $18 million of reserves and $2 million of expenses pretax related to these matters. We believe the reserve selected is prudent, conservative, and appropriate to cover a wide range of possible outcomes. Turning to investments, full-year net investment income on the managed portfolio of $357.6 million was slightly above prior year. Let me break the results down into our three distinct portfolios. In our core fixed maturities portfolio, which represents about eighty percent of our total investments, income of $287 million was up 6.6% over the prior year. Our core fixed income new money yield in the fourth quarter was 5.38%, which exceeded the portfolio book yield by over 100 basis points. In commercial mortgage loan funds, income of $21.5 million was below prior year due to unfavorable valuation adjustments on the portfolio during the first half of the year as required by the equity method of accounting. We believe we have reached the inflection point with significantly improved returns in the second half of the year. For perspective, commercial mortgage loan investment income in the first half of the year was about $4 million compared to $17 million in the second half. In limited partnerships, income of $23.3 million was a 7.9% increase over the prior year with strong results from private credit, infrastructure-related funds, private and private equity, partially offset by lower returns in real estate equity. At year-end 2024, adjusted book value was $37.54. Adjusted book value better shows the intrinsic value of our business by adjusting for both unrealized investment losses and net reserve remeasurements attributable to discount rates. We use adjusted book value when we talk about our core return on equity. The ratio of debt to capital on a similarly adjusted basis was 26.3% at year-end, an appropriate level for our current financial strength. Ratings. We remain committed to driving shareholder value creation through an annual dividend with a compelling yield, and we will continue to opportunistically buy back shares when market conditions are favorable. For the full year, 56,000 shares at a total cost of $8.5 million at an average price of $33.31. We have about $26 million remaining on our current share repurchase authorization. As we have stated before, our first priority in the most accretive use of excess capital is to fund profitable growth. In 2025, we are well-positioned to strategically deploy funds on marketing technologies and tactics in a thoughtful way while maintaining our disciplined approach to expense management. In closing, 2024's core earnings were among the highest in the company's history, including a record fourth-quarter result. And we expect 2025 to be even better. By capitalizing on the profitability improvements made to the business and fully leveraging our growth strategies and market knowledge, we will meet our long-term goal of a sustainable double-digit shareholder return on equity in 2025. We are proud of our progress and excited for this next chapter for Horace Mann. Before we turn to Q&A, I want to mention that Horace Mann is planning to host an Investor Day in May at the New York Stock Exchange, where we will present a deep dive into our strategic initiatives to drive sustained profitable growth with more detail on our go-forward plans at the corporate level and by individual business lines. We'll be providing more information on that soon. Thank you.

Thank you. We will now begin the question and answer session.

And today's first question comes from Wilma Burdis with Raymond James. Please go ahead.

Hey, good morning. Could you talk a little bit about what gives you confidence in the CML returns improving? And then could you help us think about maybe quantifying the potential drag on the 2025 EPS guide based on those lower returns? Thanks.

Morning, Wilma. It's Ryan. On CMLs, as I said in prepared remarks, we do think we are at an inflection point and we're confident about the direction that portfolio is going for us as well as the broader sector. You're always going to have property-specific idiosyncratic risk. It's just the nature of the asset class. But overall, what we're seeing is the broad-based valuation adjustments that impacted our returns in the first half of 2024 largely abate. The economy remains strong. Values are actually going up for industrial properties and in many areas, many geographies, the multifamily story is quite good. So, we loaded a 6.25% assumption in 2025. This is about a $600 million asset class for us. And if you think about it, our cash returns that we disclosed in the investor presentation for you are in the low eight's at this point. So, you could put 200 basis points on that. But remember, we're not out of the woods yet. So, I feel pretty confident we're moving in the right direction. And it's gonna be a better year. But I still don't think we'll recover, you know, all of that adjustment in 2025.

Thank you. Just one on cats, and then hopefully I can sneak in another question really quick. But, sure. Ninety million for twenty-five versus kinda eighty-ish in 2024. Understand there's the California wildfires in there. It seems pretty manageable, but maybe just talk about how much that changed from business growth versus some of the cat mitigation efforts you put in place? Thanks.

So, the cat losses are actually down a little bit. They were closer to ninety-five in 2024, Wilma. So our pick on a dollar basis is a little lower than actual performance, but I don't know if

And you have to remember those numbers are exposure-adjusted and they would include the usual math that we would do every year when we think about five-and-ten-year averages. I don't know if you have anything to add to that, Mark.

No. I think you've got it exactly right, Marita. I mean, we generally look at our five-and-ten-year averages, make adjustments for changes in exposures and planned actions that we have around any aggregation mitigation that we're doing as well as the impact of the brew schedule. And that all plays in. And so, I think you are seeing that number come down even as you know, the overall exposure and maybe it's not rooftop count, but the exposure is going up just because the replacement costs are rising each year.

Yeah. And we feel very confident about the property underwriting and mitigation efforts we have underway, whether it's underwriting, whether it's coverage, whether it's pricing, whether it's the models that we're bringing to bear in a pretty modern way. We feel good about those efforts, and we think they are reflected in the numbers we've put forward for 2025 and feel even more confident past 2025.

Thank you. Yeah. And then, if you have a few more minutes, maybe just give us some updates on how you're thinking about growth, just more specifically on how you plan to execute on growing the different lines of businesses. Thank you.

Yeah. You know, one of the things Ryan mentioned in his script about our investor day in May, and we're quite excited to be able to unpack with a little more specificity the growth plans that we have for the business. Obviously, it was really important for us to show the Street the earnings power of our company, and I believe this quarter is clearly showing that. Building a multiline model, a well-diversified earnings stream, we knew that we needed to work hard like the rest of the industry on P&C profit restorations so that you could see the true earnings power of the company. And I believe this quarter demonstrates that. So, for us, it's really exciting to be able to sit down with you in May and show you all the work we've been doing behind the scenes in really laying out the capabilities required to drive that growth agenda. Strong growth numbers in 2024, strong growth numbers in the quarter. We are not paying attention to the competitive landscape, we understand it, and we still feel very strongly that we can continue to grow this business. The tools, the capabilities we're building are for the long haul, but we're really excited about showing you how we think about that growth agenda in 2025 and certainly beyond.

Thank you. And our next question today comes from John Barnidge with Piper Sandler. Please go ahead.

Good morning. Thanks for the opportunity. My question, the first one, with industry pricing kind of approaching rate adequacy, personal lines, does this put more options on the table, particularly on the property side where results are left less differentiated versus auto, where there the educator base is more of a differentiator. With the strategic focus of the organization really being on reducing earnings volatility.

Yeah. I mean, John, one of the things that's interesting for us is we have been insuring educators for eighty years through every cycle. The amount of data we have on these educators, our intimate understanding of this group of folks, really helps us navigate through cycles, continue to grow. Our strong retention in this business, I think, speaks for itself. And at the end of the day, if we don't give an educator a reason not to be with us, they probably would prefer to be with the educator company, and that's been our strategy all along. It's never been about providing the lowest price. Our strategy isn't to sell on price, and yet we understand the competitive dynamics of the marketplace and we know that it matters. So, I'm really not sure how to give you anything else other than the fact that we've been doing it for a long time. We've navigated many cycles quite well. I think the last one was quite different. It was different for us. It was different for the industry. And we feel like we are back to a more historic level of profitability in that business and feel strong that we all learned a lot through this. And we may be conservative, but we feel really good about our dynamics going forward. I don't know if you have anything to add to that, Mark.

No, I think you said it well, Marita. I mean, I do think obviously, for us and our educator clients, the bundling of products is important to us. Property goes along with auto, but we want to be thoughtful about it. From a property perspective, clearly that's a place to differentiate. But we also have to be cognizant of the volatility and the aggregation issues. So, for us, it is about offering the total product suite, but at the same time, filling in with what we might need with other third-party partners, where we can't do it because either we don't have the product or we don't feel great about our pricing or we have potential concerns with how our aggregation may be filling up, and we want to manage that volatility. So, I think it is a holistic approach, and I think it does help us differentiate a little bit from maybe folks that are focused primarily on the commodity auto product.

And, John, I'll just add. This is Ryan. You know, we're targeting a ninety combined ratio or lower for that line, and we feel that does provide an appropriate return for the business.

Thank you for those answers. My follow-up question, any updates on changes to deductibles and roof schedules and impact you're starting to see on the business there? Can't help but notice the meaningful prior-year reserve development the last couple of quarters.

Yeah. I mean, I love that question, John, because we're actually seeing that hard work come through. Do you want to take that, Mark?

Sure. No. I think we are both in what you're seeing with the prior year reserve development, but also if you look at the fourth quarter, I think it was a really good quarter. I think there were a number of factors. I'd say you know, we are seeing the impact of both shifts in wind deductible wind and hail deductibles, as well as the impact of the roof schedule. The roof schedule is not yet countrywide, but it's in the most meaningful states. We're talking seventy-five, eighty percent of our roof losses come in those states, and we're certainly seeing that impact. As well as we certainly experienced lighter weather like everyone in the fourth quarter. We've also seen to some extent, some tempering of the inflationary impact, so claims are settling at a lower rate than we might have expected coming into the year. And lastly, I'd highlight some of the work that our claims team has done to get on top of claim severity, especially notably in non-weather water, which makes up a pretty good-sized chunk of our ex-cat losses. We put a lot of effort into water mitigation, and we're seeing that pay off not only in our current quarter results, but I think that's also part of what's driving prior year development that is our ability to get on top of those claims, settle them, not see the same kind of reopening activity on them, has helped. You know, give us some confidence that our reserve position was probably somewhat conservative. And now that it's become clear, we've released those reserves.

Great. Thank you so much. So two, I guess, frequency related questions. The first one is in supplemental. Is the fact that there's less utilization than you'd model having any impact on demand?

So, Meyer, I think you bring up an important point or a good question around the utilization. Because we got a couple of questions on some of the supplemental reserve arms, I should say, benefit ratios. The way we report them in the supplement, they reflect in the fourth quarter our annual reserve review for supplemental and group business. And I will say that the reserve release is very similar to PNC. They are reflecting the improved underlying business trends that we're seeing in the business. So, if I step back and if I look at the know, the pretty sizable nine point eight million dollars reserve release in supplemental group and combine that with what we saw in PNC, that's about thirty five cents on a net basis of reserve releases in the fourth quarter. So, in the supplemental and group business, primarily in group, we are seeing more favorable morbidity experience. Now, if you step back, we purchased MNL a little over two years ago and we took a pretty conservative and cautious approach to reserving methodology. That type of business was new to us. And so over the past two years, we've seen utilization trends be favorable to our pick, but you've also seen macro trends be pretty favorable compared to historic averages. So, you know, longer term, I think you will see a normalization, may not go all the way back, but we're targeting a high forties benefit ratio for group and a low thirties for individual supplemental. And as you can see, you know, the demand remains really strong. Sales are good.

As Ryan said in the script, we have record sales in the fourth quarter, and five point five million in the fourth quarter was strong for us. Twelve point six over the prior year for the full year, with persistency in that ninety to ninety five ish range. So, I would say the demand remains strong. It's a smaller business for us. But we are very optimistic about not only continued growth in the individual line but another way to bring new educators and others who serve the community to Horace Mann and start their relationship with an individual supplemental. So, we feel good about it's a good entre.

No. That's perfect. I pulled it together very helpfully. Second, I guess and I think you touched on this before, but we keep on hearing about lower auto frequency, maybe associated with big rate increases where people are worried about getting canceled if they file small claims. And I'm hoping for a little bit more color on what you're seeing and how your pricing is set, if it proves to be temporary.

Yeah. Sure, Marita. Thanks, Meyer. I don't know if I'm seeing that phenomenon of less smaller claims because people are worried about pricing. We have certainly seen lower frequency of, you know, frequency in the fourth quarter was down about one point over where it was in the fourth quarter of 2023. You know, however, some of that you know, I would suspect is related to the aforementioned kind of that I've mentioned on property with the lighter weather in the quarter, that's certainly playing an impact. So, our thought process on pricing on the auto side right now is, we are expecting the aggregate loss trends for frequency and severity blended together move down more towards the low to mid-single digits, closer to the long-term average. And that's how we are planning our pricing at this point. We will watch it very closely. And if it emerges and these frequency trends linger at a lower level, then, we may adjust that pricing level down a little bit, but we'll, like we always do, wait and see how that plays out. Rather than necessarily being, you know, overreactive and trying to drive market share just through price decreases. Our focus on driving growth is gonna all be about how do we get more at-bats while maintaining, you know, what we think is a fair and competitive price.

Okay. Perfect. Thank you so much.

Thank you. And our next question comes from Matt Carletti with JMP. Go ahead.

Hey, thanks. Good morning. Good morning. You guys have spent a bit of time. We've talked about kind of profitability restoration in PNC and Ryan, you talked a bit about kinda commercial real estate and a little better there. Feels like we're in a much better spot today than the past couple of years. I guess, if we zoom out and we think about kind of the guidance of the $3.60 to $3.90 EPS for 2025, can you talk a bit about your confidence level in getting to that number versus 2024 and 2023, which felt like there was a lot more variability, both in the industry and kind of what's going on at Horace Mann. And alongside that, as we think about kind of that range of thirty cents or so, what the bigger driver or biggest driver of variance?

You know, Matt, I think you when you ask your questions, you usually embed the answer in there, and I think you did it again. I think that we are very confident in our guidance for 2025. You know that we are conservative in our planning and in our assumptions, and that remains. I am very excited to get a lot of the variability behind us. PNC restoration, profit restoration in PNC was a big nut for the whole industry and certainly for us as well. With that, all the various moving parts, we feel really good about where we are in that business. And again, it's a sum of parts for us. With profit restoration in PNC and more predictability in that line, added to the life and retirement ballast that is always there. You can go back for as long as we've been doing life and retirement as a company, look at the earnings power of that company, and it is not cyclical or as cyclical as what you see in the industry trends in PNC. So, we feel very confident in our ability to estimate and predict that earning stream from a life and retirement perspective. You saw a little impact from an investment income perspective, and that is beginning to work its way through, as Ryan has said as well. And then you look at the strong earnings power of individual supplemental and group supplemental businesses, especially the way we do it in our targeted areas of focus, and that is a good earnings producer, very predictable for us. So I don't see a lot of variability in our earnings projections as we look at 2025. I would say we're very confident in that range. You mentioned cats, and you know, the science is better. We all know that predicting hurricanes has been something that the industry has gotten better at over time. I feel the industry is getting better with new tools. In predicting convective storm activity. So everyone feels a little bit better about their cat estimates, but make no mistake about it. If you didn't notice it, December was pretty benign from a weather perspective, and a big part of many companies' outperformance in PNC was an unprecedented, relatively benign weather month in the month of December. We tend to have a fair amount of ice and snow and other things that drive, you know, at least underlying performance in the month. So weather and CAT do remain something that the only thing you know when you put a number out there is gonna be wrong. But I feel pretty good about that science getting better and better over time. Long answer to a short question, but I'd say we feel confident in that range.

Great. Thank you very much.

Thank you. And this concludes today's question and answer session. I'd like to turn the conference back over to Brendan Dawal for any closing remarks.

Thank you. I want to also mention that we will be attending the AFA conference in March. Let us know if you'd like to meet. Thanks, and have a great day.