Kinsale Capital Group, Inc. Q3 FY2023 Earnings Call

Ladies and gentlemen, thank you for your patience. My name is Brent, and I will be your conference operator today. I would like to welcome everyone to the Third Quarter 2023 Kinsale Capital Group, Inc. Earnings Conference Call. Before we begin, I want to remind everyone that Kinsale's management may share comments during this teleconference that reflect their intentions, beliefs, and expectations for the future. These forward-looking statements are subject to certain risk factors that could lead to actual results differing significantly. These risk factors are detailed in the company's SEC filings, including the 2022 Annual Report on Form 10-K, which should be reviewed carefully. The company has also submitted a Form 8-K to the Securities and Exchange Commission that includes the press release announcing its third quarter results. Kinsale's management may reference some non-GAAP financial measures during the call. You can find a reconciliation of GAAP to these measures in the press release available on the company's website at www.kinsalecapitalgroup.com. I will now hand the conference over to Kinsale's President and CEO, Mr. Michael Kehoe. Please proceed, sir.

Thank you, operator, and good morning, everyone. Bryan Petrucelli, our CFO; and Brian Haney, our COO; and I will each make a few comments and then move on to any questions that you may have. In the third quarter of 2023, Kinsale's operating earnings per share increased by 103.6% and gross written premium grew by 33% over the third quarter of 2022. For the quarter, the company posted a combined ratio of 74.8% and it posted an operating ROE of 32.1% for 9 months. The company's strategy of disciplined E&S underwriting and technology-enabled low costs drive these results and allows us to generate attractive returns and take market share from competitors at the same time. We believe these advantages have real durability to them, and consequently, we're optimistic about future prospects for both profitability and growth. The E&S market continues to benefit from the inflow of business from standard companies and from rate increases driven by inflation and tighter underwriting conditions. Brian Haney will offer some commentary on underwriting conditions in a moment, but on the topic of top line premium growth, I'll note that the fluctuation in our growth rate from the second to the third quarter this year was due to normal quarterly variability and also due to a change in the flow of Southeastern wind-driven property accounts from the second to the third quarter. Our growth rate through 9 months of almost 46% this year is largely consistent with what we've experienced for the last 5 years, plus or minus 40% growth year-over-year. Our near-term view of the E&S market continues to be bullish. Of course, we also like to remind investors that extraordinary growth rates that we've experienced for the last 5 years are an anomaly in a mature industry like property casualty insurance. Although we are optimistic about E&S market conditions for the balance of 2023 and heading into 2024, we believe the longer-term growth rate for Kinsale will moderate to the 10% to 20% range as market competition returns to normal in the years ahead. Inflation should always be a concern for investors in a P&C insurance company. And as we have stated in the past, at Kinsale, we strive to set reserves for future claims in a conservative fashion so that we are more likely to have set aside more than enough and are likely to see a steady flow of reserve redundancy as claims are resolved over the years ahead. This focus on conservative reserving is especially important in a time of high inflation which can stress prior year reserve adequacy, as we've experienced a bit in our 2016 to 2018 accident years on some of our longer tail lines of business. We believe Kinsale's reserves are more conservatively positioned now than at any time in our company's history, and investors should have a high level of confidence in the Kinsale balance sheet. Finally, a quick update on our real estate project. As you recall, we purchased 2 office buildings and vacant land adjacent to our existing headquarters building for $77.5 million in December of 2022. We closed on the sale of 1 of those 2 buildings in the third quarter for $62 million, realizing a small gain in the process. We will begin renovations on the other largely vacant building soon and expect to occupy that within 2 years. Additionally, we expect to sell other development sites on the adjacent property over the next several years, generating additional return on our investment. And with that, I'll turn the call over to Bryan Petrucelli.

Thanks, Mike. Another solid quarter with 33% growth in written premiums, very low cat activity, and net income and net operating earnings increasing by 130.8% and 103.6%, respectively. Mike commented on the 32.1% operating return on equity for the 9 months. We do have around $155 million in unrealized losses net of taxes on a fixed income portfolio generated from the higher interest rate environment, and that temporarily reduces our capital equity. Operating return on equity is 27.4% for the 9 months when holding our fixed income investments at cost. Again, as we stated in the past, we intend to and have the ability to hold our fixed income investments to maturity. The 74.8% combined ratio for the quarter included 3.2 points from net favorable prior year loss reserve development compared to 5.1 points last year, with less than 0.5 point coming from cat losses this quarter compared to 12.2 points in the third quarter of last year, primarily from Hurricane Ian. The 20.9% quarterly expense ratio continues to benefit from higher ceding commissions from the company's casualty and commercial property proportional reinsurance agreements as a result in growth in both of those areas. This benefit was offset slightly by higher variable compensation accruals during the quarter. To support the continued strong top line growth, we secured an additional $50 million in fixed-rate debt during the quarter. That will be used as capital at the insurance company level. This should put us in a good capital position for the remainder of 2023 and into 2024. Additionally, we used the proceeds from the real estate sale that Mike previously mentioned to pay down a good portion of our revolving credit facility. As a result, our debt to total capital ratio decreased to approximately 17.8% from approximately 21% at the end of 2022. On the investment side, net investment income increased by 95.5% over the third quarter last year as a result of continued growth in the investment portfolio and higher interest rates, with a gross return of 3.9% for the year to date so far compared to 2.7% last year. We're continuing to invest new money in shorter duration securities, with new money yields averaging between 5.5% and 6%, and duration decreasing slightly to 2.9 years, down from 3.5 years at the end of 2022. And lastly, diluted operating earnings per share continues to improve, and was $3.31 per share for the quarter compared to $1.64 per share last year. And with that, I'll pass it over to Brian Haney.

Thanks, Bryan. As Mike mentioned earlier, premium grew 33% in the third quarter and 46% year-to-date. Also, the growth rate for the quarter was affected by seasonality in the market for hurricane-exposed property. Insurers tend to avoid effective dates during wind season if they're major exposures to hurricanes. That being said, the E&S market remains favorable with strong growth across much of our product line. In addition to our Commercial Property division, we are seeing strong growth in our Entertainment, General Casualty, Excess Casualty, and Commercial Auto divisions. Products liability and management liability lagged somewhat partly due to more intense competition, particularly from MGAs and partly due to the effects of the economy and higher interest rates. Submission growth continues to be strong, again in the low 20% range, slightly higher than the first and second quarters. We've used submissions as a leading indicator of growth, so we see that submission growth rate as a positive signal. We sell a wide array of products, and the rates on those products don't move in lockstep, but if we boil it down to one number, we see real rates being up around 6%. The property market is still boosting the overall number. The rate changes for property would be well higher than average. Rate changes for the casualty divisions vary, but overall, would be above flat. It's important to stress that rate adequacy and rate change are two different things. As our results demonstrate, our rates are more than adequate. We are continually reviewing our rates and adjusting them based on a number of considerations such as our target return on equity, the market opportunity, and shifts in the competition. In any event, we feel the business we're putting on the books today is the most accurately priced business we've seen in our history. Inflation has moderated somewhat, which has good and bad side effects. Good in that lower inflation makes it easier to achieve a goal of conservative reserves that are more likely to develop favorably than adversely, the bad in that it reduces the tailwinds we get from higher underlying exposures and higher audit premiums. We feel good about the market conditions through the end of the year and into 2024. After that, we expect at some point, the market will revert more to normal. However, we believe our unique model will continue to drive superior returns in any market, hard, soft, or in between. Overall, a good quarter, and we are happy with the results. And with that, I'll hand it back to Mike.

Thanks, Brian. Operator, we're now ready for any questions in the queue.

Your first question comes from Bill Carcache with Wolfe Research.

I wanted to follow up on the decline in your loss ratio. Do you see room for favorable development tailwinds relating to the 2021, '22 accident years to persist? Just wondering how much benefit is left if those lower loss emergence trends continue?

Yes. Bill, this is Mike. I think the big shift in loss ratio from this quarter to the third quarter of last year was the absence of a major catastrophe. I think in general, we booked a slightly higher loss ratio if you look at it on an ex-cat basis, and I think that's just a little bit of perspective additional conservatism, especially thinking about inflation in the economy and its unpredictability. But yes, we are very confident in terms of future redundancy that should come out over the years ahead as we incrementally adjust losses on these accident years.

Understood. That's helpful. And separately, can you give us a little bit more color on your view of pricing adequacy in the industry versus the loss cost trends that we're seeing? I think you previously suggested that the combination of inflationary pressures and the historical underpricing in standard lines could potentially extend the hard market as some carriers seek to course correct their pricing. Just your updated thoughts around those dynamics would be helpful.

Yes. I think we've talked in the past about there's a lot of conversation, especially among reinsurers, that tend to see a broad array of ceding company business that there's a reserve adequacy issue for the industry on the casualty side, right? So we're just kind of repeating commentary we get from others. We're very confident in our own reserve position, and in terms of pricing adequacy across the industry, I would just note that it's a very large industry. There are a lot of players in it. We see some competitors that are very disciplined and smart about how they manage their businesses, and we see a lot that are quite reckless.

I would echo those comments. I would say, I don't think we've seen all the pain there is for the industry, and it would shock me if there weren't a few more competitors that were going to run into some sort of difficulty with their reserves at some point. But like Mike said, we feel great about ours.

That's helpful. If I could squeeze in 1 last one. There's been some chatter surrounding unfavorable experiences that some carriers have had recently with delegated underwriting authority. Without citing anything specific, can you speak to what you're seeing in the marketplace and whether you expect any kind of changes in the proliferation of MGAs based on some of what we're seeing?

Yes. I would just say, I think our investors understand that we're a bit contrarian on that topic. We think underwriting should be a core competency of an insurance company, and so we're not believers in outsourcing that to external parties. As we've said in the past, there are some delegated arrangements that have been around for decades that are well-managed and quite profitable. But there's been an unusual explosion, if you will, in the number of delegated authorities, the number of fronting companies that have been created in the last 5 to 7 years. And invariably, some of that new capacity is probably not well managed, and there could be issues with profitability on that. I mean we see a lot of bad behavior in the marketplace, I would just say anecdotally, on a regular basis.

Your next question is from the line of Mark Hughes with Truist Securities.

Yes. Thank you very much. Brian Haney, you had mentioned that one impact of lower inflation is the less exposure growth. Do you think that had any impact in the quarter? What's the magnitude of that effect?

A little bit, but the reason we kind of focus on the property seasonality component was that was the big driver. But yes, it had a little effect.

And then the ceded premium ratio, 22% this quarter. Is that a good number on a go-forward basis?

Mark, I say, I think it's as good as any. It varies a little bit depending on the mix of business. We ceded off 50% of our commercial property business, so as that business grows, you'll see the ceding ratio go up. If that scales back relative to other lines, then it could go the other way. But I think what you're seeing right now is as good a guess as I can give you.

And then the reserve development in the quarter, it's still healthy. Down a little bit from last year. And Mike, you mentioned reserve development in '16 through '18. I don't know whether that was a more timely comment or whether you're just referring generally to older accident years that have been more problematic, I think, across the whole space. Are those 2 connected, a little lower reserve development '16 through '18?

Well, our 2016 to '18 years have all developed favorably on an inception-to-date basis, but we've made the comment in the past that inflation has impacted the level of conservatism on the longer tail lines. I mean those years are getting to be a little bit older so a lot of the claims have already been closed out, but inflation does have an impact. And so I think it reinforces the wisdom of trying to take a cautious or conservative position upfront because it allows for things like inflation to happen. It was unanticipated, and yet, those years have still developed favorably for Kinsale. So the fact that there's a little bit less favorable development, that's the comment I made on an earlier question, is it was just a little bit of prospective additional conservatism that just offsets the environment we're in, right? There's a lot more uncertainty today around inflation and where it may be in the next year or 2. As Brian Haney mentioned, it's definitely come down considerably from a year ago, but there's all sorts of economic commentary out there that maybe it could either come down further or could tick back up. Nobody really knows definitively. So as we always do, we take a conservative position and then we're well prepared for whatever comes down the road. I think the net takeaway for our investors should be, they should have a lot of confidence in the Kinsale balance sheet.

And then finally, any way to characterize the trend in the casualty book? You said that property is certainly in some of the trajectory from 2Q growth, the 3Q growth. How would you say the casualty book progressed across Q2 to 3Q?

It's been up in the 20% range all year. It bounces around quarter-to-quarter, but as Brian Haney mentioned, we've got some divisions like products liability and management liability that are kind of flat. We've got other divisions that are growing at a really phenomenal rate. But overall, it's kind of in that 20% to mid-20% range through 9 months.

Your next question is from the line of Casey Alexander with Compass Point.

My first question is, in your discussion of the reversion of the long-term growth rate to 10%, 20% range, how much do interest rates factor into that kind of general forecast? And by that, I mean that historically, in the insurance business, when rates sort of go to a higher for longer base, you find folks who are willing to underwrite at higher loss ratios in order to get premiums on the books that they can invest at higher interest rates. Does that have any impact on your forecast?

Yes, Casey, this is Mike Kehoe. I would say it's not really a forecast; it's more of a general observation that in a large, mature industry like property casualty insurance, 40% growth is unusual. Eventually, there will be a mean reversion where we grow at a more modest rate. We're strong believers in our business model and operate a very disciplined underwriting operation. We're targeting the smaller E&S market, which historically has grown faster than the broader P&C industry. We provide the best customer service in terms of quote ratios and response times to our brokers. Our business model is more efficient than anyone we compete with, and our expense ratio is significantly lower than the competition. For all these reasons, we're very optimistic about growth. However, I think we are up 46% year-to-date, which will likely give way to something more modest. But it is a good point that interest rates are a significant driver of our business in terms of investment returns, and eventually, that will have a bigger impact on the market. Keep in mind that it takes some time for those higher rates to play into portfolios. We've seen our interest rate go up from about 2.5%.

3.9%.

3.9% this quarter, but it does take a couple of years for that to have its full impact.

Okay. Great. My second question is actually related to the portfolio because you’ve actually, during the course of this year, while rates have gone up, you’ve pulled the duration in. Is there a point in time where you extend that duration in order to capture the rise in interest rates for a longer period of time, considering the fact that it’s usually likely at some point in time that the yield curve normalizes?

Yes. Right now, the yield curve is still inverted slightly, not as much as it was a couple of months ago. Where it goes from here, obviously, is uncertain with fiscal policy a little bit out of control at the government level, all sorts of geopolitical uncertainty? Where oil prices go? Is there a recession in the immediate future? So we're comfortable focusing on that 2-year duration with new money at the moment, but absolutely at some point, we'll probably extend that back. We were about 4.5-year duration prior to making the shift about 1.5 years or 2 years ago.

Okay. And lastly, when you say it changes in flow in Southeast property accounts, can you give a little more granularity on what that actually means?

Yes, this is Brian Haney. If your primary exposure is to Southeast hurricanes, it's difficult to secure coverage with an effective date during the wind season because if a storm develops and poses a threat, insurers may not provide a quote or will exclude that specific event, leaving you vulnerable to potential uncovered losses. To mitigate this, significant accounts in those regions typically purchase coverage during the second quarter, which is why we experienced substantial growth then and it's a peak property quarter for us rather than in the third quarter.

Then you would then, therefore, expect that to pick up in the fourth quarter post the cat season?

I would say that the third quarter is inarguably the lowest. I don't know off the top of my head which the other 3 quarters is the biggest. I get the sense that the first and second quarters are the biggest.

Your next question comes from the line of Andrew Andersen with Jefferies.

Recognizing that industry stamping office data isn't perfect, but I was surprised to hear submission growth rate increase quarter-over-quarter. Has the company's product offering suite increased, and these are newer lines? Or is the appetite and willingness to compete on price changing in the same lines?

We do expand our product line, but that's not what's driving it. The submission growth has just been pretty steady all year, and it's been very gradually accelerating. I'm not sure why we would be at variance with what the stamping offices are sitting, but that's pretty stable.

Okay. And maybe if we could just get a bit more color on the type of property that has been being underwritten this year, just given industry cat losses year-to-date are pretty high but for Kinsale, it's been 0.5 percentage point? And maybe with that, is there a cat load target or AAL we should be thinking about?

Andrew, this is Mike Kehoe. We don't have a catastrophe load to offer. You could look back over the years to determine an average, I suppose. Our property book consists of a good mix of fire-driven business, challenging excess and surplus occupancies, manufacturers, recyclers, and others, where fire is the primary risk being underwritten. We also write a significant amount in the Southeast. Many of our commercial properties are written on an excess basis, so we don't experience a steady stream of attritional losses. Generally, a major event is needed to trigger coverage. We had a few policies in Hawaii that were exposed to the wildfire, but none reached our attachment point, so we did not have any claims from that. Idalia impacted a rural part of Florida, where we also had a few claims, but nothing significant. Looking back at our strategy, Hurricane Ian was a powerful storm in a densely populated area where we operate extensively. Despite that, our loss after reinsurance and tax was in the low to mid 20s, and we maintained a mid-80s combined ratio in the third quarter of 2022. We have confidence in our property strategy and are leaning into this area because the margins are excellent. While the market is experiencing some challenges, we approach underwriting prudently. We purchase substantial reinsurance to mitigate risk, and we believe this is yielding positive results.

Your next question is from the line of Scott Heleniak with RBC Capital Markets.

The accident year loss ratio for the third quarter was lower than the first half, and that was true last year. And I'm just wondering if there's anything behind that? Anything seasonal or anything to kind of call out behind that?

In most years, it's developed down slightly as we go through the accident year. I think it's just starting a little bit more conservative, and then as the year unfolds, we have a little bit more visibility into the performance of the book.

Okay. Nothing specific then. And you mentioned that the E&S market conditions are favorable and there's a lot of quote activity. I'm curious if you could provide an update on the competition. You talked a bit about MGAs before, but are there any new players that have emerged over the past year? Or is it pretty steady with not much change from last year?

I'd say it's pretty steady. I mean, we do see people come and go, but it's fairly similar to how it's been all year. There's no major significant, either new competitors we're seeing making a huge grab for market share.

But it's good to keep in mind, too, there are hundreds and hundreds of MGAs with delegated underwriting, and they come and go on a regular basis in addition to all the risk-bearing entities we compete with. So I mean there are a lot of individual entities competing in the market.

I have one last question. I'm curious about Aspera and your personal lines business. We haven't heard any updates on it for a while. Can you provide some insight into the growth of that business and your interest in expanding it? Additionally, how has profitability been in the last few quarters?

In reverse order, I would say the profitability this year has been quite positive. As you recall, we had a loss that was larger than expected in Hurricane Ian last year, and so we've been repositioning and basically derisking certain areas to make sure that when the wind does blow, the size of our loss is consistent with our expectations. So we're kind of taking a step back. We're also working on some technological changes to that business to allow for direct bill payment plans for the customers. And probably in the next several quarters, we would expect to pivot from reducing the premium volume to increasing it, getting a better geographic spread, et cetera. We're committed to the personal line space, the homeowner space, we're just kind of revamping that strategy as we speak.

Your next question comes from Pablo Singzon with JPMorgan.

First question is, could you discuss the conditions across different segments of the excess and surplus casualty market? Many have identified specific products as being competitive today, but could you share your insights on your own lines and perhaps other significant areas in excess and surplus casualty where the competition varies?

Well, management liability and products liability are quite competitive. The construction sector also tends to be competitive, particularly since it's a long tail line where we've repeatedly raised rates over the last few years. Given our pricing strategy, we may be somewhat less competitive, yet we are still experiencing growth in that area at a steady pace, though it’s not dramatic. Additionally, you've mentioned several areas with very strong growth.

Yes. Our Access Casualty is doing well. Our Entertainment, which is a relatively newer division, is doing well. Commercial Auto is a newer division, doing well, so.

Okay. The second question was about the loss ratio. The sales loss ratio has been around 60%. This mainly reflects your approach to casualty lines, which you've indicated has been conservative. However, as you expand in property, I wanted to get your thoughts on how that loss ratio might evolve. Property coverage generally has lower loss ratios, and you mentioned that you write access, which suggests an even lower loss ratio. So I’m trying to understand how the mix might impact the consistent 60% run rate you’ve maintained.

Yes, it's difficult to provide a specific number. We conservatively reserve for all our lines of business at the beginning. Long-tail lines see the Incurred But Not Reported (IBNR) position decline gradually over the years as claims are reported, resolved, and negotiated. In contrast, properties are shorter-tail lines, so the IBNR we set aside decreases more quickly. However, I cannot provide an exact figure. We continually adjust IBNR based on various factors, including our experience, inflation rates, and changes in the marketplace.

My next question is about development. It seems clear now that you have strong underwriting margins included in the accident years from 2020 onwards. For instance, looking at the 2020 accident year for casualty occurrence, your incurred losses from the 2022 10-K are approximately 15% below your initial estimate. I'm trying to gauge the potential benefit still present in your balance sheet. A couple of questions: First, how long will it take for your casualty books from that season to mature? The 2020 year is about three years in, so it's approaching the end. Also, would you say that the pricing spread for the business you wrote in 2021, 2022, and possibly this year is better than what you experienced in 2020?

Yes. I think this year is probably the best ever, but the last several years have also offered very attractive pricing for Kinsale as a risk-bearing entity. We are being well compensated for the risk we assume. In terms of the reserves, could you repeat how you characterized them?

No, I was just confirming what you said, Mike. Yes, I was asking when these books will fully season. It's not 3 years, maybe closer to 5 or 6, but I just wanted to get an answer from you.

I would just remind you, we write a lot of different lines of business, short, medium, and long tail. And so the property is where you know pretty definitively within a year or 2 or 3. The excess casualty, some of the construction business related to construction defect claims can drag on for quite some time, which is great from an investment standpoint. We get to invest those reserves at higher interest rates. But you are more exposed to things like inflation. Brian is a former actuary in his career, I assume.

I would say that for the average of the book, we have a pretty good idea within 3 or 4 years. Even for the longest tail, by year 6 or 7, we have a very good understanding.

When you get 4 or 5 years out, most of the claims have been closed, right? So you’re with a dwindling number of claims, but they happen to be the more complicated ones.

Yes. That's helpful. And this is my last question. It will be the simplest one. Just for the reinsurance, so with updated program, you were gaining less premiums, but I was wondering if there is a benefit on the ceding commissions that you earned from the higher quota shares?

The benefit is that we receive a 27.5% ceding commission on our property quota share for the business we cede away. This means we don’t take on much underwriting risk for the premiums we cede and require very little capital for that business, while still earning a 27.5% commission. We usually pay our brokers a direct commission of about 14% to 15%. So, netting this out, it's a positive contribution to our bottom line with minimal risk. For casualty, the situation is somewhat different. We cede a variable quota share, so it varies based on the limits, but generally, we cede around 60% of excess casualty. For the higher limit casualty business, we also cede about 60% and earn a commission of 35%. After paying our brokers 14% or 15% commissions, we net approximately 19% or 20% pretax on the business we cede with little underwriting risk and minimal capital requirements. This approach nicely complements our business and allows us to write higher limits than we might otherwise prefer to retain ourselves. There’s no profit contingency included in this business; it’s simply a straightforward economic split that’s negotiated from the start.

Your next question comes from the line of Mike Zaremski with BMO.

I'm following up on some of Pablo's initial questions regarding reserving, and I apologize for joining the queue late, so please keep it brief if you've already covered this. If we examine the reserve release levels year-to-date, they are extremely healthy, but have significantly decreased compared to last year. This isn't just about the Kinsale issue; it appears to be a trend across the industry. I'm curious if you have any insights on whether this is related to a changing business mix or if there are slight shifts in the loss trends that have resulted in fewer reserve releases. Any additional information would be appreciated.

Yes, Mike, this is Mike. I would say, as we mentioned earlier in the call, the decline in redundancy should be viewed as an additional measure of conservatism. We're reporting excellent results in profitability, but we are also aware that we are in a period of uncertainty regarding inflation and its potential trajectory in the coming years. Our portfolio consists of short, medium, and long-tail businesses. The long-tail business is more susceptible to inflation, so we are following our usual quantitative process for setting reserves. However, we also apply some judgment, always aiming to set aside more funds today than we anticipate needing to cover claims in the future. This approach ensures we do not need to revisit our reserves for large charges. We intend to maintain that redundancy over the years, which I believe contributes to the strength of our business and our ability to generate wealth consistently. We are just incrementally setting aside a bit more while still reporting strong results.

Okay, that's helpful. Lastly, you explained the arbitrage related to your ceding, particularly in regard to your casualty book concerning your expense ratio versus the commissions you receive. However, a couple of reinsurers have recently discussed the evolving dynamics in the reinsurance market, which may allow them to adjust the ceding commission ratio more in their favor. I assume your reinsurers are doing well financially, but should we expect this dynamic to potentially impact Kinsale in the coming year if reinsurers can move in that direction?

I would say that would be highly unlikely for Kinsale mostly because of the reason you touched on, which is our book of business has been very profitable for us, certainly, but for our reinsurers as well. And so we think that Kinsale is a very attractive account for the reinsurance market. We're a ceding company that's always put a high value on continuity in that reinsurance program, so a lot of the carriers that share with us the risk, they've been on our accounts since we opened the business back in March of 2010. And so we've got, I think, very positive relationships with our reinsurers. I think in general, we've produced very attractive business for them over the years, and we think it will be a steady process going forward. It's not to say that rates and prices can't fluctuate a little bit year by year, but in general, it should be relatively steady.

As there are no further questions at this time, I will now turn the call back over to Mr. Michael Kehoe.

Okay. Well, I just want to thank everybody for participating this morning, and we look forward to sharing some more good news after the fourth quarter in a couple of months. Have a great day.