Hello, and welcome to the Second Quarter 2021 Hartford Financial Results Webinar. My name is Harry, and I'll be coordinating your call today. I'll now hand over to your host, Ms. Susan Spivak, Senior Vice President, Investor Relations to begin. Ms. Susan Spivak, please go ahead..

Thank you, Harry. Good morning, and thanks for joining us today for our call and webcast on second quarter 2021 earnings. Last night, we reported results and posted all of the earnings-related materials on our website.

For the call today our speakers are Chris Swift, Chairman and CEO of The Hartford; Beth Costello, Chief Financial Officer and Doug Elliot, President..

Thank you for joining us this morning. Last quarter, I shared that I had never been more excited about the future of The Hartford. Our second quarter results support that optimism. All the components of our strategy are coming together to deliver growth, margin expansion and operating efficiencies.

In the second quarter, we reported core earnings of $836 million or $2.33 per diluted share, 8% growth in year-over-year diluted book value per share, excluding AOCI and a trailing 12-month core earnings ROE of 13.1%. In addition, we returned $694 million to shareholders in the quarter from share repurchases and common dividends.

The outstanding financial performance of The Hartford reflects strong execution and success of our strategy to focus on high return businesses where we have market leadership and sustainable competitive advantages. Economic growth, as measured by GDP, reached a record level in the second quarter.

And while moderation is expected, the overall trend will remain elevated through 2021. This economic expansion will grow the premium base of our employment-centric businesses and other lines as they benefit from job creation and new business formations.

Meanwhile, we are closely monitoring the recent elevated inflation data and remain confident that our loss ratio assumptions are sufficient against this backdrop in 2021. At the same time, we are considering pricing actions as we gauge inflation trends going forward..

Thank you, Chris. Overall, we are very pleased with the results for the quarter and our progress on our priorities to enhance value creation for shareholders. Second quarter core earnings were $836 million or $2.33 per diluted share and up 91% from last year.

We had strong performance across all our businesses, excellent investment results and significantly lower COVID losses, as compared to the prior year period. In P&C, the combined ratio of 88.5 improved 8.4 points from the second quarter of 2020, including improvements in both the loss and expense ratios.

The expense ratio in the quarter improved by 220 basis points to 31%, reflecting earned premium growth as well as cost savings from Hartford Next and a lower provision for doubtful accounts.

In Commercial Lines, we produced an excellent underlying combined ratio of 89.4, which included ex-COVID loss ratio improvement in Middle & Large Commercial and in Global Specialty and expense ratio improvement across all businesses..

Thanks, Beth, and good morning, everyone. Six months into the year, I couldn't be prouder of our performance. Within Property and Casualty, we're meeting or exceeding expectations on nearly all our key financial metrics. In the second quarter, Property and Casualty produced an outstanding underlying combined ratio of 89.2.

Premium growth accelerated in commercial. Pricing remains strong and ahead of loss trends for most product lines and early results from the lunch of our new personal lines product were encoring.

As Beth mentioned commercial lines produced a stealer underwriting combined ratio of $89.4 with year-over-year improvement in the both loss and expense ratios, before providing more color on commercial pricing and loss trends let me spend a few minutes on top line performance.

Small commercial written premium increased 11%, as anticipated we are benefiting from an improving economy with increases in payroll and wages contributing to the quarter's top line results. New business of a 170 million was up 44% as we had our second consecutive exceptional quarter.

Our top products spectrum continuous to drive our new business success, this industry leading contemporary offering achieved record new business of 75 million or 52% growth over prior year. In addition small commercial achieved important underwriting efficiency milestones during the quarter.

In June, 75% of quotes were bind the bill with little or no touch underwriting a material increase over just two years ago. This is a key driver of growth as the yield on bindable business is particularly strong, and the efficiency leverage is equally important.

The sophistication of our proprietary pricing model gives us confidence in the quality of our bindable business and is reflected in Small Commercial's underlying profitability. Middle & Large Commercial accelerated into the second quarter, producing superior written premium growth of 20%.

Middle Market new business of $147 million, up 48%, was at its highest level in two years. I'm particularly pleased we achieved this result while maintaining underwriting discipline, as measured by our pricing metrics and risk scores.

Policy retention in Middle Market increased four points to 82%, while maintaining disciplined risk by risk underwriting decisions using our increasingly refined segmentation tools. Like Small Commercial, increased payroll and rising wages contributed to the second quarter Middle & Large Commercial premium growth of 20%.

Global Specialty produced another strong quarter with written premium growth of 16%. New business growth of 27% was equally impressive and retention is up significantly from prior year. In the quarter, the breadth of our written premium growth was led by 25% in wholesale and 18% in U.S. Financial Lines.

Global Reinsurance also had an excellent quarter with written premium growth of 26%. As I've mentioned previously, cross-sell activities are an important component of our growth strategy. During the quarter, cross-sell new business premium between Global Specialty and middle market was 28 mill or 11% of related new business sold by these segments.

Since the navigators acquisition this effort has delivered 185 million in new business and is on pace to eclipse. Our initial goal of 200 million a year early. We now have close to 2,500 accounts with policies that record premium in both metal market and global specially.

We're also particularly encouraged by the success of our industry specialization strategy built both organically and through the navigators acquisition, for example the acquired retail access and U.S. Financial Lines are significant contributors to our cross sell execution.

The combined new business growth from these two lines has increased more than 50% since the acquisition. After years of development, we view our product breadth as a competitive strength. Let's move on to pricing metrics. U.S. standard lines and Global Specialty commercial pricing, excluding workers' compensation, was 9.2% of market.

Middle Market compensation price change of 8.2, although down 1.1 points, continue to see loss trend and then reflect improved profitability performance. In the workers' compensation, renewal re-pricing was 1% in the quarter, a key indicator to future pricing include the impact of the 2020 pandemic trends on 2022 loss cost filings.

We will be closely monitoring these filings in the coming months on a state-by-state basis. Global Specialty renewal written price remained strong in the U.S. at 11% and international at 24%. All in, I'm very pleased with our pricing this quarter. Turning to commercial loss trends.

The second quarter current accident year loss ratio was largely in line with expectations. We are intensely watching inflation and have been particularly dialed in to recent building repair costs and rising wage trends. Within large commercial property, small commercial recorded a few large fire losses in the quarter.

And in Global Specialty international, we incurred a large offshore energy loss. Both were within a normal range of expected volatility. Overall, Middle Market property loss ratios were slightly favorable to expectations in the quarter. Favorable claim frequency was partially offset by an increase in severity related to labor and material costs.

While we believe property severity trends may be slightly elevated for the rest of the year-on-year.ar, we remain confident in our initial full year Middle Market property loss ratio expectation. Shifting to workers' compensation. The economic recovery is driving wage growth for our worker population.

This wage growth translates into higher premiums and wage replacement benefits. Generally speaking, the net impact is a minor improvement in the workers' compensation loss ratio. Combining earned pricing and loss trends. I'm pleased with the continued strong current accident year performance.

In the quarter, the Commercial Lines underlying x COVID loss ratio was 57%, 1.3 points better than Q2 of last year. Let's now turn to Personal Lines. As expected, the second quarter underlying combined ratio rose 7.5 points to 88.2.

Auto frequency is elevating with increasing vehicle trips and miles traveled, but our book is still favorable to pre-pandemic levels. As expected, home losses were higher versus a very strong prior year.

Overall, we had favorable claims frequency in the quarter, which was offset by higher claim severity driven by modestly higher-than-expected large x-CAT fire losses and a provision for elevated building material and labor costs.

Written premium declined 5% after adjusting for both the second quarter 2020 extended billing grace period and the $80 - $81 million refund. According to J.D. Power, auto shopping rates amongst the 50-plus age segment are down approximately 5% from third quarter 2020 when they first initiated the survey.

Persistency of the shopping trend may continue to pressure new business growth for our customer base. However, increased marketing spend in the quarter drove June new business premium above expectations, and policy retention was up one point as compared to prior year.

We're also encouraged by the early results from the launch of our new contemporary Personal Lines auto and home product prevail. Through the second quarter, yield, average issued premium and policy counts all met or exceeded expectations. Both products are now available in Arizona and Illinois.

Seven additional states, along with advanced capabilities will be online by year-end, and we remain confident in our long-term growth plan for personal lines. Before turning the call back to Susan for questions and answers, let me conclude. Property and Casualty achieved another outstanding quarter.

Our top line outperformed, providing confidence we will achieve our commercial lines 4% to 5% multi-year CAGR guidance. Strong pricing is earning into the book driving lower current accident loss ratios, and the expense ratio continues to benefit from our ongoing Hartford Next initiatives.

We are seeing the positive results of our multi-year road map with deeper and broader products, improved risk selection and outstanding execution. I'm thrilled with our continued progress and look forward to updating you in 90 days. Let me now turn the call back over to Susan..

Thanks, Doug. Operator, we'll take questions now..

Thank you. Susan. Our first question comes from Greg Peters from Raymond James. Greg, your line up. You’re open now if you would like to ask your question..

The first question is the outlook for growth in commercial lines. You provided a lot of detail around pricing and retention and the new business successes you've had in the different areas of commercial lines. But Chris, I think in your comments, you said growth - you said moderation is expected.

So I guess I'm trying to reconcile what was a really strong second quarter and a positive outlook with those comments..

Yes. I think the context of that, Greg, was in relation to GDP. So I was speaking that GDP is running, what, 8%, 9%, probably 9% here. And then I do expect some moderation in, I'll call it, the macro numbers.

But as Doug said in his comments, and I'll let him also comment here, is that we're still very bullish on our ability to grow in that 4% to 5% compounded written premium growth over the outlook period through 2022. So, we're not backing off from that. In fact, we're probably even a little bit more bullish as we sit here today than we were 90 days ago.

But Doug, what would you add?.

I would just add Greg that, when you look at small, and I'll do small and middle separate, we had nice TIF growth in the small segments, so 2.5 to 3 points of TIF growth quarter-to-quarter. We've been on a positive pricing trend for a couple of months.

What we had the benefit of in the quarter is a little extra win behind us relative to auto premium so that's driving inside the 11, several extra points of boost, but I don't want to minimize at all the tests and the pricing movement and the new business success we're seeing in small.

And then on the middle front, probably have a little bit more boost from auto premiums, so the 20 is a bit outsized relative to longer term expectations, but still terrific new business quarter, pricing is strong. We expect pricing trends to remain solid and strong, and so I'm bullish about where we're headed going forward.

I just would point out that we had a compare to second quarter 2020 that probably won't repeat itself in Q3 and Q4..

That makes sense. I guess my follow-up question would be, in the personalized business. Obviously inflation is high on everyone's list. The courts are reopening. There's cost pressure, and then there's the added pressure from increasing miles frequency.

And I was just wondering if you could comment in the context of your second quarter results would you seeing sequential deterioration in some of these markets as you move through the quarter, so that when we get to the third quarter, we might see some continuous erosion as a result of some of the factors I mentioned..

So specifically the personalized, what I shared on my comments and I can I elaborate a little bit more here is that, our auto book is seeing increased miles driven, but not yet had pre-COVID, pre-pandemic levels, right.

So we're still slightly better than we were in 2019 as we look through the COVID period, we are conscious of repair costs, we're conscious of all of the dynamics that go into our cost of goods sold, and we think we've made appropriate provisions in our recording of our reserves for second quarter.

But yes, we are watching that intensely relative to inflation pressures. Relative to homeowners, I did comment that we also made applicable provisions for labor and material costs. We saw some of those spikes earlier in the year, particularly in the early part of the second quarter, into the mid-second quarter.

As we listen to the inflationary expectations, we expect some of those trends will be with us into the third quarter, fourth quarter, but I think that given our trends, our expectations that you're having changed materially and we're on top of our selections and I think we're in good shape as we move into Q3..

Just as a follow-up on that Doug. When we talk about homeowners, a lot of the premium levels are set off of replacement costs. Is this - do the inflationary pressures, are they causing any go back and reset what the replacement costs are for your existing enforcer. Maybe you can walk me through how you approach that..

Yes. We have an estimator that deals with replacement costs and we now on a state by state basis are going back resetting that, building that into our pricing going forward. So the book does work 60, 90 days in advance, but we have been working on those discussions since earlier part of the summer as these spikes were not going to go away.

So yes, we are moving insurance value adjustments across our homeowners' base and policies..

Our next question comes from David Motemaden from Evercore ISI. David, your line will be open now, if you'd like to proceed with your question..

I just had a question for Doug on the commercial lines underlying loss ratio ex-CAT. Solid improvement in the quarter.

The 1.3 points kind of slowed a bit versus the level of improvement we saw last quarter, which was over two points, I guess, could you sort of walk through why, you know obviously still impressive margin improvement but why it decelerated, and how you're feeling about reaching the two points of underlying loss ratio improvement target for 2021?.

Yes, I would say consistent, favorable direction moves on loss ratio.

I did mention a couple areas we had volatility and property, so if you think about small commercial and international global specially, a little bit in the quarter volatility that was working against that improvement, but yes, I'm still confident in the long term trend and feel like our experts are all over our reserve pics..

And then maybe just a follow up question on personal lines. So, good to see some of the initiatives here. I'm just kind of looking at the TIF growth and I don't think you know we've seen TIF growth in the last five or six years.

I guess I'm wondering if you can share with us some milestones you have for growth and things that we can track and maybe how you're thinking about potential alternatives for that business if some of the growth initiatives don't translate to higher growth..

So why don't I start and then Chris and Beth however you want to come over the top. I’ll start by saying that we had concluded several years back that we had to go through a major upgrade of our contemporary product right, so that is now just dropping into the marketplace. The early signs are positive as expected.

The reason we move to two states is we wanted to test heavily two states before we drop the next one. So, in terms of major milestones by year end, an additional seven states as I talked about, and then by the end of '22 will be an all-state, so pretty aggressive next 15 months rollout program.

We will watch state by state to make corrections as we go forward but, you know, we're very excited about the components. We have basically rebuilt every bit of this chassis from the product to the way it's delivered to the digital capabilities to be serviced. We think we've listened hard to our customers, which primarily are in that plus 50 set.

They have helped us design that. Again the early reaction and results are positive, so long way to go, but we think this leads us to attract a profitable growth. We've shared those expectations and I sit here today and don't feel any different about our long term path.

Beth or Chris?.

I think you summarized it well. David, I think strategically, we're giving ourselves at least a couple of years after we were fully rolled out in all 50 states to really make an assessment, can we compete with our differentiated product offerings. Our hypothesis going in is yes, we have a strong brand in personal lines.

We have a wonderful endorsement from AARP. We have unique features in how we serve this market segment. It's a demographic that's growing. As I said in my commentary, we have a new 10-year contract with the AARP that really modernizes the whole relationship and how we go to market. So I think it's an investment worth making.

Obviously, that's why we did what we did. But I think the - post 2022 when we're really more proactive, Doug, in all 50 states would be the ultimate time period to watch our PIF count start to grow..

Our next question comes from Gary Ransom from Dowling & Partners. Gary, your line will be open now, if you would love to proceed with your question..

Regarding the gap between rate and loss trend.

I wanted to ask not so much about the size of the gap, but where we are in the cycle of that gap? And looking at small middle specialty separately how many years do you think we're into the period where rates have been ahead of loss trend? I realize it might be a better answer by line, but I was kind of thinking about the three segments that you have as well?.

Gary, I actually do think about the answer by segment, I think that small commercial pricing curve is very different, at least it is different in our book of business. We've had an extended period of outstanding returns. So the rate need has not been as clear there. We basically have been rate adequate for an extended period.

I want trend, but Gary, a much more moderated cycle and small. The other side of the coin will be to flip into some of these specialty areas that have had significant rate need. And I would call that we're entering to me, Q9, Q10 of that. This really started picking up pace in the second quarter of 2019. And it had some positivity before that.

But really eight very strong quarters, from my opinion, in areas that drastically needed that. And we've talked quite at length about some of those drivers of that. And then in the middle, our Middle Market, where you have the cross-section of auto GL property, each of those lines has their own story.

We've had, as an industry, very disappointing property results over an extended period, and weather has been a part of it and so have other dynamics. We've had a commercial auto loss ratio and the industry that's been very stubborn. So those lines also have been on seven, eight quarters of positive rate movement.

I think there's still more work to be done in that Middle Market area, and I don't think that's a hate comment. I think that's a market comment. I can only see what I can see. But - so I answered your question in three ways. I still think this market has some legs.

And as we look at our book, yes, we are much more rate adequate in general across segments of our book, but we also have smaller segments that need some work, and we intend to get after that work as we move through the latter half of 2021..

Gary, you of all people know, given your views in writings, the impact, particularly in casualty lines of social inflation is real.

So as we talk internally, the need to continue to push for more rate, just knowing that the long-term trends have not been in our favor, whether it be in courts, whether it be in financial lines, whether it be in other casualty related exposures. And then you can't forget that the 10 years at 1.3% these days.

So clearly, we've been talking about it for a long time. We're in a lower for longer period of time. We just need a greater contribution from our underwriting component to fuel our returns, and that's what we intend to do..

Thank you for that answer. If I could ask a question on a different topic. In group, where you showed the excess mortality, and if I put back the excess mortality that you said developed from Q1, I can revise the trends to about $125 million roughly in Q1 in excess going to 88 in Q2.

And when I look at the CDC data, it looks like it's just falling off a lot more than that.

And maybe that’s apples - not apples-on-apples, but can you comment about what's going on there? Is it your decline - you're not really seeing that as much decline there?.

Yes. In the dollars, I would say you're right. I mean if you look at it from dollars, but if you are tracking deaths, which I know you are, like we are, I mean the drop is significant. It's - from its peak, I calculated down close to 75%.

What I said in my commentary, Gary, is that severity is up, so that if you look at the number of death claims, the average amounts that we're paying, it's up from the beginning of the pandemic fairly significantly, and it's up from the second quarter. I would say we probably had eight or nine large losses above $1 million this quarter.

When anyone - we probably had more than that. That was just in June. So we probably had 15 or 20 large losses when you really expect for a month. So you put it all together. And when the younger folks' mortalities increased significantly; working age, they tend to carry larger face amounts, and we're seeing that come through in the dollars.

But as I ultimately tried to foreshadow is that, and we've been talking about this consistently, is that the first half of 2021 and the second half is going to be dramatically different. So deaths - daily deaths are continuing to be down, and we do feel a lessening impact of excess mortality in the second half of the year..

The only thing I'd add to that, too, Gary, if you're looking at COVID deaths, just remind you that when we talk about excess mortality, it's all-in excess. It's not just that that have a cause of death that says COVID.

And so when we look through our numbers, part of the reason for the - a large part of the revision for first quarter is that that excess non-COVID came in much more favorably than we had anticipated. Our COVID losses came in a little bit better as well, but that was driving the revision.

And when we provided our provision for second quarter, we're assuming some of that excess mortality that we anticipated in the first quarter would be there. So when you look through it, the COVID losses that are truly coded as COVID are coming down. It's that excess piece, which, as you know, has been hard to predict. So it's not just for us..

The first, that's a great point, Beth. Thank you for the clarification. The theory could be, Gary that we just had less flu deaths than we seasonally, sort of, expected in the numbers. But clearly, there was a first quarter benefit for all other excess mortality outside of COVID..

Thank you very much for those answers..

Our next question comes from Elyse Greenspan from Wells Fargo. Elyse, your line would be open now, if you would like to proceed with your question..

My first question, I want to go back, Chris, to some of your opening comments. You mentioned recent elevated inflation data but that you also got your loss ratio assumptions sufficient against this.

But then you guys did mention considering taking pricing taking pricing actions, so if you are considering taking pricing actions wouldn't that imply that inflation might be running higher than you expected? And I know we touched on this a little bit during the call, but I'm hoping just if you could flush out like what areas of inflation you're most worried about in terms of impacting your profitability..

And Doug and I will tag team here. So yes. I think the general comment that inflation is up. You've written about it and others have too. It's fairly self-evident.

I think when we looked at our picks and our loss ratio picks, particularly in our property and the homeowners' lines, as Doug described, there's activities that are positive, and there's activities that are headwinds.

When we net out all the positives and negatives, positive as being mostly frequency, against the severity pickup, whether it be inflationary or large loss activity, it still nets out where we are picks for home and property on a full year basis, we think are going to hold.

So - and Doug, I think that the pricing actions that we've talked about are primarily in the homeowners' line, where we're trying to keep up with inflationary side, particularly on our insured values on Schedule As, and we have some programs and some new things that we've added to keep up with schedule A values..

Absolutely. And in addition, we're also looking at insured values in our Small Commercial and our Middle Market properties. So in general, Elyse, we are on top of this property issue in terms of value replacement, what it will cost to repair facilities, buildings, et cetera - with what we're feeling through the cost of goods sold..

Okay. So then on inflation, you would say this is really just property and home.

Within your other Commercial Lines, everything is still in line with your expectations?.

Yes. We're watching auto carefully because they - it's been well chronicled auto parts. The timing to get the parts, the labor to put the parts in, a little bit of pressure there. That will obviously matter to severity, and we're watching frequency and severity together.

So generally, we've had better frequency patterns that have offset some of the severity dynamics. But we are very tuned into what the inflation curve is going to look like on labor and material for all of our lines. And I think we're in a good spot, but we're - I can't sit here today and say we know exactly how the fourth quarter will drop yet.

It's going to take us several quarters to figure that out as data comes in..

Okay. And then my second question, you guys are running ahead of pace relative to the buyback plan outlined for this year. And some of the dividend figures you provided from the subset, I think, are a little bit higher than you had expected.

So is there a chance you could come in above the 1.5 for this year? Depending upon your stock is, if you guys look to take advantage, could more of the buyback program potentially be front-loaded?.

Yes, I'm glad you noticed that, Elyse. We have been, as I said, in my comments, proactive and prudent in managing our capital. So, yes, a lot of things are possible, but we're basically six months into our two-year buyback program. I still think buying back $2.5 billion is, again, the right action to manage our excess capital.

And from any one quarter or any one period of time, there could be acceleration or deceleration depending on what we're seeing happening in the marketplace.

But Beth, what would you say?.

Yes. I think we've characterized that well, I think on the dividends, Elyse, yeah the range we tightened primarily as it relates to P&C. So we had said that we expect $900 million to $1 billion - $1.1 billion, and now we're at $1 billion to $1.1 billion. So trending on the high side but that's not a significant change there.

And I think we're on a good pace. We had said when we announced increase in the program in April that we weren't intending to do it ratably over the period. And I think that the actions we've taken have shown that. So that's all I would add..

Our next question comes from Brian Meredith from UBS. Brian your line will be open if you’d like to proceed with your question now..

Yes. Thank you. Yes, a couple of them here. First, I just want to dig a little bit on workers' comp, Chris and Doug. Doug, I know you mentioned that you're looking at loss cost filings for 2022 and that's a key determinant of what pricing look like for workers' comp.

Any early indications what those are going to look like? What's the NCCI saying with respect to that, kind of, what can we expect potentially here for workers' comp pricing going forward?.

Brian, it is extremely early, but the next 30 days, we jump into that season. So I think maybe one, maybe two states have hit in the last couple of days, but I don't have them pulled apart yet. But I do know over the next 30 to 60 days, most of the states will drop, and how this 2020 year is treated from a COVID perspective, both frequency.

And then we've been quite transparent with our workers' comp selections around COVID. The same is not true for all of our competitors. So I don't have a great lens into everybody's reporting actions, but we'll learn more through the MCCI data. And as you know, I think they handled the bureau loss cost for 47 states.

So that is a very big component of this country's workers' comp system..

And then the second question, I'm just curious, so some good growth in Small Commercial. I mean, one of the things that people talk about is that if the economy reopens, it's really more beneficial for the E&S markets because new business formation typically doesn't fall in the standard Commercial Lines market.

Is that a true statement? Or are we going to think about things in a little bit different way where you could really see some nice big growth in new businesses as we continue to see economic growth?.

Well, economic growth is a good thing for our business. And I would say that is probably partially true. I think it's true by sector. So our pricing algorithms and our underwriting decision points do look at geography. They look at class, they look at sectors of class.

So there are new business start-ups that we're interested in writing on a retail basis. And then I would also say there are probably sectors of Small Commercial that better fit E&S.

I think that it will be a good thing for our economic engine, and I'm glad you raised the point because we saw some of that in the second quarter, which is why we adjusted our audit premium going forward. But I don't feel like the real labor unlock has occurred yet, and I think that will provide a further spring in the second half..

But Doug, you would also say that historically, in Small Commercial, we do have E&S offerings that we provide and that, obviously, Navigators is going to help us expand the product sets in a class of business that our two business leaders can partner on.

So that's been part of the design to just capture more of small business needs, whether it be standard or in the E&S market?.

Absolutely, it's been a growing capability both, obviously, in our wholesale sector in Global Specialty, but also our Small Commercial business has a core strategy around working with wholesalers in that E&S space.

I would also add, Brian, to your question, leadership and the people that run these businesses, so not all new start-ups are with first-time managers, right? Some of these new start-ups are with the experienced managers that we've known, we've insured in other places. So the start-up number can be a little misleading.

And in general, we look at economic formation as a positive to our business..

That was our last question for today. So I’ll hand back to Susan to conclude..

Thank you, Harry. We appreciate you all joining us this morning. Please don't hesitate to contact us if you have any follow-up questions. Thank you..

This concludes today's call. Thank you for joining. You may now disconnect your lines..