Good day, and welcome to Selective Insurance Group Third Quarter 2025 Earnings Call. Please be advised that today's conference is being recorded. I would now like to turn the conference over to Brad Wilson, Senior Vice President, Investor Relations and Treasurer. Please go ahead.

Good morning. Thank you for joining Selective's Third Quarter 2025 Earnings Conference Call. Yesterday, we posted our earnings press release, financial supplement, and investor presentation on selective.com's Investors section. A replay of the webcast will be available there shortly after this call. John Marchioni, our Chairman of the Board, President and Chief Executive Officer; and Patrick Brennan, Executive Vice President and Chief Financial Officer, will discuss third quarter results and take your questions. We will reference non-GAAP measures that insurance and investment professionals use to evaluate operational and financial performance. These non-GAAP measures include operating income, operating return on common equity, and adjusted book value per common share. The financial supplements on our website include GAAP reconciliations to any referenced non-GAAP financial measures. We will also make statements and projections about our future performance. These are forward-looking statements under the Private Securities Litigation Reform Act of 1995, not guarantees of future performance. These statements are subject to risks and uncertainties that we disclose in our annual, quarterly, and current reports filed with the SEC. We undertake no obligation to update or revise any forward-looking statements. Now I'll turn the call over to John.

Thanks, Brad, and good morning. This quarter, we delivered an operating return on equity of 13.2%, driven by strong investment income, which increased 18% year-over-year. We are on track to deliver full-year operating ROE in the 14% range. However, our combined ratio guidance of 97% to 98% exceeds our 95% long-term target. To address this, we are prioritizing profit improvement and moderating premium growth. Risk selection, granular and accurate risk pricing, and prompt, fair claims adjudication are foundational capabilities we have built over many decades. We have a solid foundation but are continuing to strengthen these core competencies to compete effectively in this dynamic environment. Across the company, we are sharpening our focus on a set of key priorities. First, relentlessly improving on the fundamentals across risk selection, individual policy pricing, and claim outcomes; second, diversifying revenue and income within and across our three insurance segments; and third, further leveraging our use of data, analytics, and technology, including artificial intelligence, to drive operational efficiency and improved underwriting and claim outcomes. Turning to results. We recorded unfavorable prior year casualty reserve development of $40 million or 3.3 points in the quarter. $35 million relates to commercial auto and $5 million to personal auto. Unfavorable prior year development in both lines is attributed to the 2024 accident year and is primarily driven by the state of New Jersey. With recent prior accident year reserve strengthening in each of the last two quarters, we refined our view of the current accident year for commercial auto. This adjustment added just under 5 points to the current year casualty loss cost for the lines year-to-date combined ratio. For the quarter, the pressure in casualty lines was offset by light property catastrophe activity and favorable non-catastrophe property results. In total, our combined ratio for the quarter was 98.6%. As you know, we book our best estimate each quarter, incorporating new and emerging information as it becomes available. Consistent with our long-standing practice, we continue to engage an independent party to conduct semiannual reserve reviews and sign our actuarial statement of opinions. Over the past 15 months, we have supplemented these external reviews by engaging other independent third parties to evaluate our reserving, planning, and claims processes. Through their reviews, the outside firms have provided us with additional industry perspective on current loss trends and best practices. Their reviews confirm that our actuarial processes are reasonable and consistent with best practices for methodology, data, and approach. Most recently, we had an independent review of our overall casualty reserve adequacy completed. It indicated that our booked reserves were in a reasonable range and importantly, above the third-party central estimate. The third-party review confirmed that our approach was somewhat more responsive to recent elevated trends they are seeing industry-wide. Consequently, we have greater confidence in our overall reserves, and we maintained our actuarial approach and management processes to determine our best estimate for the quarter. The claims reviews include evaluations of samples from both open and closed claim files. The findings on open claims indicate that our claims management and reserving practices are consistent with internal guidelines, aligned with industry best practices, and that valuations have been reasonable. The review of closed claims is ongoing. We will continue to incorporate enhancement recommendations from these reviews, augmenting our other ongoing claims handling and litigation management processes and system improvements. Last quarter, we took reserving action in commercial auto liability responding to increasing paid severities. This quarter, these trends escalated in specific jurisdictions, most notably New Jersey. Otherwise, auto liability loss ratios have been in line with our expectations with improving accident year loss ratios driven by consistent rate increases. While rate increases continue to be an important lever, rate alone will not be sufficient to drive and maintain long-term profitability in this line, particularly in certain jurisdictions. The legislative, regulatory, and judicial environments in these jurisdictions present specific challenges, and we intend to take significant targeted underwriting actions. Specifically for commercial auto, several actions are underway. In early September, we deployed an updated rating plan and predictive modeling to provide more granular pricing segmentation for the auto line, incorporating several enhanced variables, including additional vehicle and driver-specific criteria. We've implemented tighter underwriting guidelines on fleet exposures, supported by state-level tactics and analytics to better identify and target risks. We are targeting certain segments and states for higher penetration of Compass, our telematics solution. And in further support of our risk management specialist engagement on fleet safety with our insurers, we are actively promoting increased use of commercial auto self-assessments in our risk management center, which provides customers online risk management guidance and expertise. We continue to invest in processes and tools to further elevate our underwriting, pricing, and claims sophistication. While this is not a new initiative, there are opportunities to sharpen fundamental disciplines, including risk selection, individual risk pricing, and claims adjudication. Maintaining our focus and sense of urgency is critical to improving underwriting margins and supporting long-term profitable growth. We continue to diversify our portfolio by expanding our Standard Commercial Lines footprint. Since 2017, we have strategically added 14 states with two more planned in 2026. Geographic expansion has significantly increased our addressable market, and we have advanced our stated goal of operating our Standard Commercial Lines business with a near national footprint. Going forward, we will continue to pursue opportunities to further diversify our business within and across our three insurance segments. Before I turn the call over to Patrick, I want to reinforce three foundational points shaping our performance and long-term strategy. First, we firmly believe that insurance requires a long-term perspective, particularly with long-tail casualty lines. To that end, we will trade short-term impacts for long-term sustainable success. By reacting quickly to current claim trends, we are better positioned to ensure our pricing indications are appropriately positioned to achieve our long-term underwriting margin targets. Second, we believe that prudent decisions made now with the best information available are the surest way to deliver value over time. Analyzing new information requires us to constantly refine our views of the market and take appropriate and sometimes difficult actions. This ongoing process reinforces the importance of maintaining a long-term perspective. Third, we continue to invest to deliver long-term profitable growth even as the market is increasingly competitive. Growth levers include achieving greater market share and segment diversification in Standard Commercial Lines, potential geographic expansion in Personal Lines, and increasing our product and distribution capabilities in E&S and other specialty lines. We also prioritize returning approximately 20% to 25% of earnings through our shareholder dividend. In addition, guided by our capital strength and the valuation of our stock, we will opportunistically repurchase shares as we did this quarter. The $36 million of repurchases in the quarter, the new $200 million repurchase authorization, and a 13% dividend increase reflect our confidence in the path forward and the value we perceive in our stock. Our full-year guidance implies an underlying combined ratio of 91% to 92%, up 1 point from our expectation at the beginning of the year, driven by our actions to strengthen the current accident year. We remain committed to taking a longer-term perspective, making tough decisions when necessary, and investing in profitable growth to deliver long-term value to shareholders. Now I will turn it over to Patrick, who will provide more details about our financial results.

Thanks, John, and good morning, everyone. For the quarter, fully diluted EPS was $1.85, up 26% from a year ago. Non-GAAP operating EPS was $1.75, up 25%. Our return on equity was 14%, and our operating return on equity was 13.2%, with continued strong performance from the investment portfolio. The GAAP combined ratio was 98.6%, elevated primarily due to 3.3 points of unfavorable prior year casualty reserve development and 6.2 points of higher current year casualty loss costs. Catastrophe losses were 2.1 points, significantly better than anticipated and 11.3 points better than the prior year period. Our full-year guidance now includes a 4-point catastrophe load, reflecting lower-than-expected catastrophe losses through the first nine months. The overall underlying combined ratio for the quarter was 93.2%, up from 86.1% in the third quarter of 2024, reflecting higher current year casualty loss costs. Non-catastrophe property losses, although better than expected, were 0.9 points higher than last year. Year-to-date, the underlying combined ratio was 91.6%, 2.6 points higher than the first nine months of 2024. Non-catastrophe property losses were 14.7 points year-to-date. This was an 80 basis point improvement year-over-year and reflected the continued benefits from property lines earned rate and the tightening of terms and conditions over the past few years. Year-to-date, these benefits were eclipsed by a 3.1-point increase in current year casualty loss costs. The expense ratio increased by 40 basis points, primarily driven by higher expected employee compensation compared to last year's lower profit-based payouts. We remain disciplined in managing expenses but continue to invest across our business to support scale, enhance decision-making, and improve operational efficiency. In Standard Commercial Lines, we reported a 101.1% combined ratio this quarter, which included 3.7 points of unfavorable prior year casualty development and 6.6 points of higher current year casualty loss costs. As John described, the current environment demands strong underwriting and pricing discipline. Consequently, premium growth in the quarter slowed to 4%. Renewal pure price increased 8.9% or 10%, excluding workers' compensation. The biggest increases were in general liability at 11.4% and commercial auto at 10%. Renewal premium change for property was 15.5%, including 5.1 points of exposure increase. Retention for the quarter was 82%, down 4 points from a year ago and 1 point from last quarter. The decrease reflects our pricing and underwriting actions as well as an increasingly competitive environment. Excess and surplus lines grew 14% in the quarter, driven by average renewal pure price increases of 8.3%. The combined ratio was 76.2%. We see continued growth opportunities in this segment despite an increasingly competitive market. Our deliberate E&S strategies include introducing new products, expanding our brokerage business, and investing in operational efficiency and piloting expanded distribution by giving retail agents access to our E&S offerings. We are excited about this segment's forward growth prospects. The Personal Lines combined ratio was 110.1% this quarter, 12 points better than a year ago. However, our New Jersey personal auto reserving actions added 4.9 points of unfavorable prior year casualty development from the 2024 accident year. It also drove the 7.2-point increase in current year casualty loss cost this quarter. Personal Lines net premiums written declined 6%. However, target business grew 12% in the quarter, with nearly all new business being in our target mass affluent market. Renewal pure price for the quarter was 16.9%. Third-quarter after-tax net investment income was $110 million, up 18% from a year ago. This income generated 13.6 points of return on equity, up 50 basis points from the third quarter of 2024. Our investment portfolio continues to be positioned conservatively, and we have not significantly changed our investment strategy with an average credit quality of A+ and duration of 4.1 years. We delivered strong operating cash flow in the quarter, supporting continued portfolio growth. The average new purchase yield was an attractive 5.8% pretax, exceeding the quarter-end average pretax book yield of 5.1%. We expect this embedded book yield to provide a durable source of future investment income even if interest rates decline. Turning to capital management. As John mentioned, we continue to prioritize profitable growth within our insurance business and aim to return 20% to 25% of our earnings through dividends. We also opportunistically repurchased shares. These actions reflect our commitment to delivering long-term value to shareholders. We are pleased to announce a 13% increase in our quarterly dividend, our 12th consecutive annual increase. We also repurchased $36 million of common stock during the quarter with year-to-date repurchases through September totaling $56 million. Given the increased level of share repurchases in 2025, our Board of Directors authorized a new $200 million share repurchase program. This replaces the previous authorization, and we expect to deploy it opportunistically. We ended the quarter with $3.5 billion of GAAP equity and $3.4 billion of statutory surplus. Book value per share increased 13% in the first nine months of the year, driven by our profitability to the $2.77 per share reduction in after-tax net unrealized losses. Debt to total capital declined modestly to 20.5%, below our internal threshold of 25%. In light of results through the first nine months of the year, we have revised our 2025 guidance as follows. First, we expect our 2025 GAAP combined ratio to be between 97% and 98%, in line with our prior guidance. Our guidance now includes 4 points of catastrophe losses, lower than our previous 6-point estimate, reflecting favorable results through the first nine months of the year. Guidance also includes the impact of prior year casualty reserve development reported through the third quarter, which equals approximately 2 points on the full-year combined ratio. It also assumes no additional prior year casualty reserve development and no further change in loss cost estimates. We do not make assumptions about future reserve development as we book our best estimate each quarter. Second, we also expect after-tax net investment income of $420 million, up from prior guidance of $415 million. We also expect an overall effective tax rate of 21.5% and an estimated 61.1 million fully diluted weighted average shares, reflecting repurchases in the first nine months of the year, and we assume no additional repurchases under our share repurchase authorization. With that, I'll now turn it over to Q&A. Operator, please start our question-and-answer session.

The first question comes from Michael Phillips with Oppenheimer.

John, I appreciate your comments about the commercial auto segment. It seems this quarter's issues were tied to one accident year in New Jersey. Reflecting on last year when you faced some GL charges, I remember there were concerns about whether this could affect commercial auto, and you seemed confident it wouldn't. However, we've now seen two consecutive quarters with a total of $60 million in losses, which, while not huge, is still notable. Is my understanding correct? If so, what has changed? It seems like commercial auto is becoming a problem area now. If that wasn’t the case before, what’s different?

Yes, Mike, thank you for your question. Revisiting the earlier statements about commercial auto, I've indicated that we are seeing the first signs of increased severity trends and the impact of social inflation. This observation remains valid. Historically, we've been assuming a higher loss trend in commercial auto compared to general liability since 2021. In fact, we raised our commercial auto liability trend assumption to 8.5% last year and have maintained that level. Recently, we've observed a resurgence in the severity trend, specifically in New Jersey, which is significant for us because it accounts for about 15% of our national commercial auto premium. We've noticed an increase in severity there. New Jersey has always had high severity across all casualty lines, but this has notably affected us in the past few quarters. Although we didn’t highlight it last quarter, it was the main cause of the emergence we experienced then. That's the shift we've recognized. On a more positive note, outside of New Jersey, our commercial auto liability performance has remained relatively stable compared to our expectations, despite some pressures.

Okay. Yes, we can discuss the details of New Jersey and another venue if anyone is interested. I appreciate that. My second question relates to the external reviews of your reserves. I want to clarify something I heard; it seemed like, as they assessed your reserves in comparison to industry trends, there might be concerns about some deficiencies in the industry that haven't been acknowledged yet. Did I understand that correctly? Is that what you're observing?

Yes, I won't speculate on whether there will be industry challenges ahead. However, I want to emphasize the confirmation from multiple external actuarial experts, who have a broader perspective on the industry, regarding the elevated trends we are addressing from recent accident years, which are apparent across the industry. This message has been consistently communicated to us by our reinsurance partners, most of whom we met with earlier this month at the CIAB meeting. While it doesn't alter our current results, it suggests that this is a more widespread issue. I encourage you to review both commercial auto liability and general liability over a longer time frame, including the last decade and the more recent years. Our long-term performance for both lines remains strong compared to the industry. Although these lines are under pressure from increased social inflationary trends, we are responding appropriately and in a timely manner. I am confident that as we reflect on these recent accident years post-pandemic, our history as a strong underwriting company will continue to be validated. I understand it may not appear that way now, but that is how we conduct our business and will continue to do so.

And our next question will come from Michael Zaremski with BMO Capital Markets.

Maybe you could explain more of the thought process behind continuing to buy back shares if this reserve review has been leading to the loss ratio profit margin pressure. And you said there's still an ongoing review of closed claims that will or could impact ongoing claims and ultimately reserves. So I guess why not wait until the coast is clear?

Well, just to clarify a point, the open – the open and closed claim reviews were designed to evaluate whether or not there was something happening in the claims organization that might be driving some of this. There’s no evidence of that. And based on the early indications we’ve had because the closed claim review is actually 2/3 complete, there’s nothing there that would suggest any issues. With regard to reserving, we book our best estimates, and we continue to book our best estimates, and we have high conviction in those estimates, and that conviction has only been reinforced by the external reviews. I think the challenge right now is our results on an absolute basis are not the issue. It’s our results on a relative to industry basis that is causing the pressure. And with a 6% top line growth rate and as we said, an expectation for the full year of a 14% ROE, we are building book value per share. We’re building capital and surplus. And as a result of that, that is the Board’s way of expressing confidence in our forward earnings.

Got it. Okay. As a follow-up, on commercial auto, you took up the pick, I think, 5-ish points. How much of that was influenced by the study that you commissioned versus just things you're seeing? Or is it all commingled?

Yes. That's a result of our internal analysis. Again, the point we made about the outcome of the third-party review of adequacy was that we are above their central estimate in total. And the reaction continues to be the case is based on our internal evaluation. And again, with regard to commercial auto, that continues to be predominantly driven by the state of New Jersey. And based on what we see because we have good insight into other company filings and other companies' indications, frequency and severity trends in New Jersey over the last couple of years have accelerated. And that's what we're reacting to, and we're seeing that in actual claim emergence on the paid and incurred side in the state of New Jersey.

Got it. And my last follow-up, though I believe you said 8.5% is your trend assumption of commercial auto. Is that correct?

Yes. So it's been sitting in that range dating back to 2022. And again, those were our assumed loss trends that we incorporated into our expected loss ratios.

Yes. And so if we look at the 8.5%, is it a correct statement for me to say that if we look at your historical loss ratio development for commercial auto specifically in vintages that are more seasoned, so let's say, '18, '19, I'm going to exclude '20 because of the pandemic year in '21. So if I look at those vintages that are more seasoned and see how the loss ratio has trended, is it correct to say that loss inflation on those vintages has been higher than 8.5%?

No, we're discussing the post-pandemic accident years. The pre-pandemic years for commercial auto liability are quite mature now, and the recent pressures have not been influenced by those earlier years. In fact, there's been no change regarding them. We're primarily responding to more recent accident years. It's also worth noting that our average commercial auto bodily injury rate over the last four to five years is slightly above 10%. Although trends have been heightened, the earned rate level has mostly balanced out that effect when considering loss ratios and comparing the pre-pandemic years to the current ones.

And the next question will come from Meyer Shields with KBW.

This is Dan asking on behalf of Meyer. My first question is about the general liability reserves. I see that you have reported no reserve development. I'm just wondering if there has been any change among individual accident years.

No, there's nothing notable with regard to any accident year movement within GL. Those are stable overall.

Got it. My second question is about your expansion into the new state. You mentioned that you're entering Montana this quarter and Wyoming next year. I'm just curious about what you're observing in these markets, how initial agent reception has been, and what feedback you have.

Yes. I would say our expansion has been ongoing since 2017, and the results and agency reactions have been favorable. Performance has aligned with our expectations, and I believe that will continue. As I mentioned in my prepared remarks, one of our organizational priorities is to diversify our business. This diversification includes geographic aspects, different lines of business and products, as well as the three main business segments of commercial, personal, and E&S. Geographic expansion plays a significant role in that diversification, particularly in standard commercial lines, and we have focused a lot on New Jersey this morning. It’s a state where we have historically performed well across all lines, but we are managing a concentration issue. Over the past decade, our market share in New Jersey has decreased from over 20% to about 16%. We anticipate this trend will continue as we expand. Looking ahead, our long-term approach is to foster greater diversification in both revenue and income.

Got it. Just a follow-up on that. Are there any lines or customer segments you’re seeing especially strong interest fund distribution component?

I would say our performance in our expansion states over the last 8 years, the mix of business is generally reflective of the mix we see in our existing footprint on a line and a segment basis.

And the next question will come from Paul Newsome with Piper Sandler.

So the first question would be any thoughts on how we should consider premium growth? I believe we can determine the size of your commercial auto business in New Jersey. However, the follow-up question is if that business tends to decline as you adopt a more conservative approach, does that impact the package business? I see your company primarily as a package provider. Any insights that might guide us in the right direction would be appreciated.

Certainly. I can provide some overarching thoughts on this issue. First and foremost, we view growth as an outcome rather than a target. Our focus is on achieving our target margins, with growth influenced by market dynamics and whether the market aligns with our indicated rate or adequate rate levels for specific states and lines of business. It's clear from industry pricing surveys that our actual pricing in general liability and commercial auto liability is exceeding the current market pricing. This situation is likely to exert some pressure on our conversion rates. However, this is a trade-off we are prepared to accept. The quarter's results reflect that approach. For context, New Jersey represents about 15% of our national commercial auto premium, and overall, it mirrors our footprint. Therefore, when we encounter underperforming segments, such as the New Jersey commercial auto business, we are ready to take decisive actions to address the situation, which will, without a doubt, impact growth, and we are okay with that trade-off.

That sounds good. Another question would be any additional help on thinking about the level of the forward accident year, maybe excluding catastrophe losses. Obviously, you bumped up in this quarter because of the commercial auto issues in New Jersey and other places. But I don't know if that’s a good run rate for the future or if we should think about maybe the run rate on your day results is a better run rate. Any thoughts you have there in terms of what might be a higher accident year loss ratio prospectively? And I realize some of this has to do with pricing and perhaps even the lag between getting the pricing and actually bringing in over time.

Yes. Paul, I think the key focus should be on the nine months and the full-year guidance. The full-year guidance of 97% to 98%, combined with our four-point assumption regarding cats, points to an underlying combined ratio on an accident year basis of 91% to 92%. This includes about two points of prior year development in the current year and adjustments to the current year casualty loss cost, which adds another two points. There are also non-cat and expense favorable factors to consider. So, when assessing the run rate, I suggest concentrating on that 91% to 92% which supports our full-year guidance of 97% to 98%. I'm open to discussing those details further; I understand there are adjustments needed for the current year loss cost changes as well as the PYD impact.

And the next question will come from Bob Huang with Morgan Stanley.

The first question is about the developments in 2025. Last quarter, you mentioned that 2025 remained favorable compared to expectations. Can you confirm if that is still true when comparing the 2025 projections to those from 2024 and earlier?

Yes. Just I'll clarify one point. So what we’ve said and we’ll continue to say is that claim frequencies in the current year have been running in line with or better than expected, and we pointed particularly to workers’ comp as the line that was driving the better-than-expected claim counts. In casualty lines, you never want to react that quickly to favorable claim counts, but those claim counts have continued to come in better than expected. That’s what we said last quarter, and that’s what I’ll repeat again. And that’s different from the decision that we made in the quarter to book additional loss ratio impact in the commercial auto line of business specifically and specifically driven or largely driven by the state of New Jersey.

Okay, that's helpful. For my second question, I apologize as this is somewhat hypothetical. Does it make sense to explore ways to significantly increase the balance sheet through various approaches as we move forward? Would that potentially reduce reserve volatility? And could it also help better absorb reserve fluctuations? Is there a way for Selective to investigate opportunities for a much larger balance sheet?

In our view, this business is still focused on getting the fundamentals right and achieving target loss ratios. There are certainly challenges in the current uncertain loss trend environment, and we are somewhat overweight in commercial auto liability and general liability, which has led to some immediate issues. However, when you consider the long-term perspective, we have optimized the balance sheet, maximized shareholder returns, and delivered consistent strong underwriting performance. We are confident in our strategy and operating model, and that will continue to be our primary focus.

And the next question comes from Michael Zaremski with BMO Capital Markets.

I appreciate you allowing me to join after follow-ups. One thing that stood out to me was your mention of RPC for property that seems to be accelerating into the 15s. I believe we have been observing a slowdown across the industry. What is driving that?

We have noticed a slight slowdown in the property sector. However, we believe that despite the improved results and strong rates, property is a line where it's important to consider the long-term variability and volatility, both for non-catastrophe and catastrophe risks. Therefore, our target for the risk-adjusted combined ratio for this line is lower, and we will continue to aim for improved margins. The changes in exposure have been relatively stable, and the renewal premium change is just under 10%. While this rate has remained strong, it has dipped slightly. Based on market trends, we anticipate that commercial property pricing may decrease a bit further, although it should still remain robust in light of the relatively low loss trends in this line of business.

Got it. Lastly, looking at the corrective actions you're implementing to enhance profitability, I understand that Selective aims to capture a substantial share of wallet with your agency partners. You've mentioned that the market is becoming increasingly competitive. In your opinion, will these corrective measures need to be sustained over several quarters to prevent retention rates from potentially dropping into the 70s? Are you navigating this challenge carefully?

Yes. It’s a great question. First thing I’ll say is I think the benefit of the depth of relationship that we have and size of relationship we have agency by agency is beneficial because the renewal negotiation ensures that we have good communication back and forth. What I will say is, and I mentioned this, and this was sort of underlies our discussion about improving the fundamentals. It’s important that in an environment like this, you execute your pricing and underwriting strategies in as granular a fashion as possible by account, by class, by state, by line of business. And our ability to continue to do that and do that effectively should mitigate some of the downward impact on retention overall. Now again, we are willing to make that trade that push comes to show. But the granularity of our execution will ultimately determine how agents respond to that and how the overall retention rate responds to that. And I’ll put that in the category, one of the areas that we’ll continue to focus on from a continuous improvement perspective is the granularity of execution. I think we have the tools to do that. We want to make sure we’re effectively executing with those tools.

And the next question will come from Michael Phillips with Oppenheimer.

I have two follow-ups also. John, I think you said Jersey frequency severity kind of rising over the last couple of years. If I heard that correctly, does that mean that we should be worried in the future about accident year '23?

No, I would suggest that we continue to book our best estimate across all accident years. Our response this quarter was driven by the '24 accident year, but the actions taken last quarter were related to the '22 through '24 accident years. I would say that we’re discussing the commercial auto reserve position concerning the recent accident years and are responding accordingly.

Given the third parties have kind of confirmed and give you some confidence in what you’re booking, have you ruled out or have you considered maybe an LPT for your reserves on the casualty side to help give some confidence in what you’re booking?

Yes. I would say that reinsurance opportunities, including some sort of a cover like that are things that we routinely evaluate but at the same time, these are very recent accident years. We’re confident in how we’re booking those accident years and the economics on that would not be favorable from our perspective because these are immature years. And anybody who’s going to come in on the reinsurance side is going to command a lot of the economics, and that’s just not something we think is all that attractive, but we’ll continue to evaluate it. We just don’t think it makes sense for us at this point.

I am showing no further questions at this time in the queue. I would now like to turn the call back over to John for closing remarks.

Well, thank you for joining us. We appreciate the questions and the interest. And as always, please feel free to follow up with Brad with any additional questions you might have. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.