Selective Insurance Group Inc Q4 FY2025 Earnings Call

Good day, and welcome to Selective Insurance Group Fourth 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 Fourth Quarter and Full Year 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 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. We are well positioned to build on recent momentum. In 2025, we delivered an ROE of 14.4% and an operating ROE of 14.2%. This exceeds our 10-year average operating ROE of 12.1% and our 5-year average of 12.5%. We are proud of our long-term track record and are taking clear steps to drive future margin improvement. In 2025, we grew book value per share by 18% and returned $182 million to shareholders through our common dividends and share repurchases at attractive valuations. With our strong capital position, we can deploy capital in several ways that are accretive to long-term value, including continued investments to grow and diversify our business, along with opportunistic share repurchases. We have a strong foundation with opportunities to drive improvement across our organization. We delivered a 93.8% combined ratio in the quarter, reducing our full year combined ratio to 97.2%, just outside the 96% to 97% guidance we provided at the beginning of the year and at the low end of the 97% to 98% guidance provided last quarter. Net premiums written growth was 5% for the year as we executed deliberate actions to improve underwriting profitability. This remains our primary focus. However, we are also executing strategies to support future growth opportunities, including expanding our geographic footprint and broadening E&S distribution capabilities with retail access. We believe we have the capabilities and strategy to further diversify our premium and outpace industry growth in the coming years. In the fourth quarter, favorable workers' compensation development offset unfavorable prior year emergence in the commercial and personal auto lines and E&S casualty. There are also several smaller adjustments across multiple lines of business, including umbrella, which was driven by auto. In 2024 and 2025, we took meaningful actions to strengthen reserves. Our picks for older accident years have held up well, and our actions have been increasingly weighted to more recent accident years. We are comfortable with our overall carried reserve position. We firmly believe our disciplined approach responds promptly and appropriately to emerging trends and ensures pricing targets keep pace with an evolving external environment, even though it can create short-term volatility. We will stick to our process, continuing to assess emerging information, considering risk factors and booking our best reserve estimates each quarter. We expected 2025 accident year margins to improve for commercial automobile as we have earned double-digit rate increases over multiple years that exceeded our assumed loss trend of roughly 8%. As 2025 progressed, we ultimately increased commercial auto casualty loss cost by nearly 6 points. We also increased our expected severity trend for commercial auto liability to approximately 10%. This assumption is reflected in our book results and incorporated into our 2026 guidance. In total, we strengthened commercial auto reserves by approximately $190 million in 2025. The majority is attributable to the 2024 and 2025 accident years with 2025 representing the largest share. We are addressing commercial auto with both underwriting and claims actions. For example, we have implemented tighter underwriting guidelines for fleet exposures, supported by state-specific tactics and focused our commercial auto telematics rollout in specific segments and states. In general liability, we've discussed our actions to manage limits in challenging jurisdictions and trim underperforming classes. We are also prioritizing new business in better performing segments and have strengthened new business pricing. Standard Commercial Lines is our largest segment and our earnings engine. We have the sophisticated pricing and risk selection tools in the hands of our talented underwriters that are necessary for taking granular action across the portfolio. We are improving mix by achieving stronger rate and retention differentiation based on expected profitability while continuing to focus on overall rate adequacy. This is not new, but we expect the amount of differentiation to increase. We are leveraging our tools, granular insights, and differentiated operating model to drive higher renewal retention on our best-performing business and meaningfully lower retention on our poorer performing business through appropriate rating actions. While overall rate increases could moderate in the short term, we expect these mix improvement actions will deliver improved profitability. Our guidance reflects the benefits we expect in 2026 from the various actions we have taken and our multiyear plan points to continued margin improvement in 2027. Now I'll turn the call over to Patrick.

Thanks, John, and good morning, everyone. For the quarter, fully diluted EPS was $2.52, up 66% from a year ago. Non-GAAP operating EPS was $2.57, up 59%. Our return on equity was 18.3%, and our non-GAAP operating return on equity was 18.7%, reflecting continued strong investment performance. The GAAP combined ratio was 93.8%, a 4.7 point improvement from fourth quarter 2024, mainly because this quarter had no net prior year reserve development. For the quarter, the overall underlying combined ratio was 92.1%, 1.5 points higher than the 90.6% a year ago. The increase is attributable to the reserving actions we took to address the 2025 accident year, primarily in commercial auto. This quarter's Standard Commercial Lines combined ratio was 92.9%, which included 1.6 points of favorable prior year casualty development and 3.2 points of higher current year casualty loss costs. As John noted, the current environment demands strong underwriting and pricing discipline. Standard Commercial Lines premium growth in the quarter was 5%, driven by renewal pure price increase of 7.5% or 8.5% excluding workers' compensation. General liability pricing increased by 9.8% and commercial auto pricing increased by 8.6%. While there was some deceleration in commercial auto pricing for physical damage, liability price increases continue to exceed 10%. For property, renewal premium change was 12.2%, including 4 points of exposure growth. Retention for the quarter was 82%, stable with recent periods, but down 3 points from a year ago. Excess and surplus lines premium grew 4% this quarter with average renewal pure price increases of 7.8%. We continue to push higher rate levels in E&S casualty based on our view of general liability loss trends. The E&S combined ratio for the quarter was 93.1% and a very strong 87.8% for the year. Turning to Personal Lines. The combined ratio for the quarter was 103%, up from 91.7% in the fourth quarter 2024. There were 2 reasons for the deterioration: catastrophe losses, which were 6.2 points higher this quarter, and current year casualty loss costs, which increased by 8.1 points. Current year adjustments were driven by New Jersey Personal Auto. For the year, the Personal Lines combined ratio was 100.6%, improved from 109.3% in 2024. Results are even more favorable for the portfolio outside of New Jersey, and we are positioned for profitable growth in those states. For the quarter, personal lines net premiums written declined 8%, with target business up 5%. Nearly all our new business was in our target mass affluent market. Renewal pure price for the quarter was 15.1%. Across all our segments, the combined ratio was 97.2% in 2025, a significant improvement from 2024's 103%, primarily because of lower prior year casualty reserve development and catastrophe losses. Last quarter, we discussed our third-party claims review, which was ongoing at that time. The review is now complete, and the findings were consistent with what we had previously discussed. Turning to investments. Fourth quarter after-tax net investment income was $114 million, up 17% from a year ago and generated 13.6 points of return on equity. Our investment portfolio remains conservatively positioned, and our investment strategy is consistent with average credit quality of A+ and a duration of 4.1 years. We expect the portfolio's strong embedded book yield to continue to provide a durable source of future investment income even if interest rates decline. We successfully renewed our property catastrophe reinsurance program effective January 1. Our retention remains $100 million, and we increased our coverage exhaustion point to $1.5 billion from $1.4 billion. Property market conditions are attractive, and we completed the renewal with meaningful risk-adjusted pricing decreases and improved terms and conditions. We continue to supplement our main tower with a personal lines-only buydown layer. Our peak peril U.S. hurricane is well within our risk tolerance at 5% of GAAP equity for a 1-in-250-year net probable maximum loss. Our capital management strategies continue to prioritize profitable growth within our insurance business and aim to return 20% to 25% of our earnings to shareholders through dividends. We also expect to opportunistically repurchase shares. These actions reflect our commitment to delivering long-term value to shareholders. During the quarter, we repurchased $30 million of common stock, bringing our total repurchases for the year to $86 million. We believe these repurchases are completed at attractive valuations. At year-end, $170 million remained on our authorization. Book value per share increased 18%, and we reported $3.6 billion of both GAAP equity and statutory surplus. We ended the year with a strong capital position, and we are proud that A.M. Best recently affirmed our A+ financial strength rating. For 2026, we expect a GAAP combined ratio between 96.5% and 97.5%. Our guidance assumes 6 points of catastrophe losses. We do not make assumptions about future reserve development as we book our best estimate each quarter. We expect after-tax net investment income to be $465 million. This is up 10% from 2025, reflecting growth in our invested assets. Our guidance includes an overall effective tax rate of approximately 21.5%. Weighted average shares are estimated to be approximately 61 million on a fully diluted basis without assumptions about share repurchases under our existing authorization. As a reminder, our first quarter underlying combined ratios tend to be higher than the rest of the year due to normal seasonality. Corporate expenses also tend to be higher in the first quarter due to holding company expenses related to stock compensation. Now I'll turn the call back to John.

Thanks, Patrick. Our 2026 guidance implies an underlying combined ratio in the 90.5% to 91.5% range compared to the 91.8% we reported in 2025. Our guidance does not provide segment level combined ratios. However, directionally, we expect underlying combined ratio improvement in Personal Lines and Commercial Lines and continuing strong performance in E&S. Our 2026 guidance considers reserving actions for recent accident years and embeds an overall expected loss trend of approximately 7.5%, up from the 7% we assumed a year ago. Our loss trend assumptions are 3.5% for property and 9% for casualty. The casualty trend would be closer to 10%, excluding workers' compensation. We expect our 2026 expense ratio to increase by about 0.5 points as we make strategic technology investments to support scale, enhance decision-making, and improve operational efficiency. With expected strong investment income, our 2026 guidance implies an operating ROE in the 14% range. Before turning to your questions, I want to remind everyone that Selective is celebrating its 100th anniversary in 2026. We are proud of our history, the work of our employees, and the value we deliver to our policyholders, distribution partners, and shareholders. We are excited to build on our legacy of success. To drive this, we remain focused on a set of key priorities across the company, including relentlessly improving on the fundamentals across risk selection, individual policy pricing, and claim outcomes, diversifying revenue and income within and across our three insurance segments, and further leveraging our use of data, analytics, and technology, including artificial intelligence, to drive operational efficiency and improved underwriting and claim outcomes. I'll now ask the operator to begin our question-and-answer session.

Our first question comes from Michael Phillips with Oppenheimer.

John, my first question is around your last comments regarding the guidance. As you said, the core underlying combined ratio implies a bit of improvement from last year in 2025. And you said you kind of expect commercial to improve, personal to improve, and some strong performance from E&S. I guess if we focus on commercial for a second, there you're seeing price deceleration, it seems like in line with peers, elevated casualty loss picks that kind of start to pick up in 3Q and 4Q. And then you still got some noise on PYD and commercial auto and GL. I guess given all that, can you just talk about the confidence you have in maintaining or maybe even improving the commercial line margins from here?

Yes, thank you, Mike. As I mentioned, we provide detailed guidance, but we do not offer individual combined ratio guidance by segment. However, we did give some directional guidance, which seems to be your main concern. We have consistently raised rates in the casualty lines of business, and while there has been deceleration, it's not as significant as what might be expected for larger accounts on the property side. We anticipate continued strong pricing in the casualty segment, including auto liability and general liability. Additionally, we have the opportunity to enhance our pricing and risk selection to significantly improve our business mix in both renewal portfolios and new business selections, contributing to the benefits we are discussing. Regarding your question about confidence, we feel assured in our process and the guidance we are offering. Specifically, the underlying combined ratio improvement of 80 basis points, when focusing on the midpoint, seems reasonable, although we should keep in mind that there's about a 50 basis point increase in the expense ratio, meaning the underlying loss ratio improvement is slightly greater than that.

Yes, I appreciate that. That's helpful. For my second question, we have briefly discussed this before, but I'd like to revisit it. Many of your comments regarding reserves relate to higher paid severities in recent accident years for your casualty business. I'm curious about the implications for general liability and commercial auto, particularly concerning case reserves for those same accident years. Some companies experience a mismatch between paid activity and their initial case reserve setting due to automated processes, leading to discrepancies when they observe higher paid activity. I don't believe this is true for you, but what is your situation? We will be reviewing your case reserves for these two lines in detail in a couple of months with the new data. Could you explain any changes in your initial case reserve settings in light of the increased paid activity?

Yes, I would say that we've observed a shift from an incurred basis similar to what we've seen on the paid side. I believe this reflects your point regarding case reserves and their movement. I'll also refer back to the point we made last quarter about the external studies we conducted on both the actuarial reserving and planning process as well as the claims process. This was our method of assessing any changes in underlying case reserve adequacy, whether favorable or unfavorable. We are pleased with the results of those surveys on both fronts. While there are opportunities for us to make further improvements in our claims organization, the performance there is very strong. We examine both paid and incurred methods and project them to ultimate, which remains our process. We believe this approach provides the best insight into the status of more recent prior accident years and, more importantly, where run rate profitability stands.

Our next question comes from Paul Newsome with Piper Sandler.

Could you provide more detail on the reserve development of the personalized business and how it may fundamentally differ from the commercial lines business, including aspects like size and geography, or anything else that would indicate differences beyond similarities and a delay in the overall liability claim trend?

Yes, thank you for the question, Paul. We've discussed this in previous quarters as well as this one. In personal auto, the previous year's development is solely attributed to the state of New Jersey, which constitutes about 30% of our portfolio. This development is primarily from the 2024 accident year and was consistent in the last quarter and the one before that. For the full year, this prior year's development impacted the overall combined ratio of Personal Lines by about 3.7 points, all from New Jersey. This is significant, and I know Patrick mentioned it in his comments. When considering the improvement in personal lines, the combined ratio of 100.6% reflects almost a 4-point impact from prior development specific to New Jersey, which obscures the strong performance we're seeing in personal lines outside of that state. We're actively taking measures to better manage the New Jersey portfolio to lessen its impact going forward. Additionally, some of the issues we face in personal lines in New Jersey are also relevant to commercial lines. New Jersey has historically had a high litigation rate for both sectors. Recent legislative changes have further amplified this, fostering an environment conducive to litigation and social inflation. For instance, changes mandating pre-suit disclosure of policy limits, raising minimum coverage requirements for private passenger auto and commercial autos, and a lowering of the bad faith standard for certain claims have all increased the interest from plaintiff lawyers. These factors have led to an aggressive litigation climate, and unfortunately, the regulatory landscape hasn't allowed for rate adjustments to cover these costs in personal lines, which remains a persistent challenge. The same dynamics are also affecting commercial auto lines in New Jersey.

Okay. Yes, it seems that all the lawyers are relocating back to New Jersey from Florida. My second question is about the operating leverage from a capital perspective. Historically, due to the firm's consistent underwriting, it has been able to maintain slightly higher premiums to surplus ratios compared to some peers. I would like to know if there are any considerations regarding that change, especially in light of capital buybacks and the current stock value. If you could discuss this, it would be appreciated.

Yes, there's no change in our target operating leverage. We aim to operate within a range of 1.35x to 1.55x. Over the past few years, we have fluctuated between the upper and lower ends of this range. Historically, our operating leverage has been slightly higher compared to our peers, but over the past decade, their operating leverage has generally aligned more closely with ours. Therefore, it is not necessarily a distinguishing factor at this stage. Our target operating leverage range continues to be effective for us.

Yes. And I think I would just add that operating leverage is one of many capital metrics that we use to evaluate where we are relative to what we think we need to run the business, and we continue to on a regular basis, look at our own internal models and calibrate those versus external models as well to ensure that we have sufficient capital to absorb any unforeseen consequences, but still operate with an efficient balance sheet.

Our next question comes from Jing Li with KBW.

I'll stay on reserves for a second. Just curious about E&S casualty reserves. Can you kind of unpack some drivers behind the reserve charge? Is it concentrated in specific accident year geography coverage types similar to the commercial lines that's mostly from commercial auto? And how does this impact your appetite for growing the E&S platform going forward?

Yes. Thank you for the question. Just let me make sure we're talking about this in the proper context, which is our full year E&S combined ratio was an 87.8%, so strong profitability. The reserve action we took in E&S in the quarter, and we hadn't taken any on a year-to-date basis was $10 million, so de minimis in total, but spread across the 2020 through 2023 accident years. So four accident years and $10 million are very de minimis movements on an annual basis for each of those accident years. So there's nothing noteworthy there. We disclose a great deal of detail with regard to reserve adjustments. We true up lines at the end of the year, and there's nothing there that's noteworthy from an accident year or a geography or a segment perspective. And again, this is all in the context of extremely strong operating margins in E&S over the last few years, and we expect that to continue going forward.

Got it. That's very helpful. My second question is on kind of your geographic expansion. You've been investing a lot on geographic expansion, new state build-outs for several years. Are these newer territories as they mature, what contribution are they making to the top line growth versus the margin profile?

Yes. The top line growth, if you just look at it on average over the last several years. And remember, we started geo expansion again in earnest in the 2017 to 2018 kind of time frame. And I would say over that time, as states have come on and some of those states have matured while new states are coming on, it's contributed between 1 and 2 points of growth overall on average over that time period. I would expect that to continue to temper going forward. But that's what the contribution has been to this point. With regard to profitability, as we've talked about in the past, for the first few years in a new state, we plan and incorporate into our planning guidance and expected loss ratios that newer states run at worse profitability than our legacy book runs. But I would say our experience over the last 8 or so years has been that those states have consistently performed within our expectations and have improved as they've matured. So there's nothing we're seeing there that is a different profitability profile than what we talk about in terms of the overall portfolio we have.

And our next question comes from Rowland Mayor with RBC Capital Markets.

I guess congrats on 100 years, even though I know you all weren't there the whole time. I wanted to ask just on the workers' comp releases and what accident years those pertain to?

Yes, there are two main factors to consider. First, we conduct our annual tail study for workers' compensation in the fourth quarter each year. This study assesses the development to ultimate for accident years and maturities that extend beyond our traditional reserving triangles, which cover 20 years. This analysis helps us get an accurate picture of reserves for long-term chronic and permanent injuries that may remain open for decades. The development assumption derived from this study is applied to all accident years, reflecting our long-term view of medical inflation. This accounted for about half of the favorable results we recognized in the quarter. It's important to understand that since we are looking at decades of accident years, the individual impact from any single accident year is minimal, roughly about 0.5 points per year over that extended period. The remaining favorable booking activity during the quarter came from accident years 2022 and earlier. Throughout the year, we've observed better-than-expected frequency emergence in the workers' compensation line, which continued through the full year. However, as is our standard practice, we don't respond too quickly to changes in frequency for a long-term line. Therefore, the actions taken were related to years 2022 and prior, along with findings from the workers' compensation tail study.

That's helpful. And then I wanted to ask on the GL charge. I know this year, I think it's all been umbrella, but in '24, I think a lot of it was primary GL. Was there any movement on the 2024 charges this year?

For the 2024 charge, there wasn't any change. To emphasize the point you made earlier, for both the quarter and the entire year, the general liability adjustments we made and recorded were mostly umbrella-related, and this umbrella is mainly influenced by the auto lines of business. The core general liability lines and our recorded levels for these lines from previous years have remained stable throughout the year.

That's great. And then I wanted to see if I could sneak one more in. You talked about the 14% ROE for next year in the guidance. And I think this year, the NII was about 13%. Given all the movement, like do you have an idea of what the long-term target should be at this interest rate level in your portfolio?

With regard to investments in particular?

No, regarding the overall consolidated return on equity, there is a lot of fluctuation in the underwriting margins at the moment. I'm curious if you have a target for a few years down the line.

Yes, we have established our ROE target to be something we aim to achieve consistently over time. This target is based on our expectations for long-term returns on our investment portfolio. Currently, we're seeing an after-tax book yield on the portfolio around 4%, which is higher than what we expect for the long term. Historically, a figure closer to 3% after tax seems more realistic as a long-term expectation. With our invested asset leverage exceeding 3x, we anticipate a 9% to 9.5% after-tax ROE from investments. This is why we maintain our 95% combined ratio target, as it positions us to meet or exceed our 12% ROE target over time. We hold this target because we recognize the durability of these returns, as highlighted in the guidance Patrick provided. We are confident in these book yields for the next few years, but we also acknowledge that this stability should hold in the long run.

And I would say the 12% target is intended to provide a spread over what we estimate to be our cost of capital. We want to make sure that we're earning our economic freight. So that's how we ground ourselves in that bogey.

Our next question comes from Michael Zaremski with BMO Capital Markets.

Thank you for the insight on workers' compensation. It's clearly a great result for this quarter as well. In the past, there may have been some concerns, but there were indications that loss trends might have been worsening. I’m curious about the underlying loss ratio for compensation, as it still seems elevated. How is that affecting the combined ratio guidance for next year? That's my first question.

Yes. I guess we don't provide individual line guidance. You'll see our reported results, and we give you a lot of detail on the reported results by line. So you'll see that in Q1. But as we talked about in prior years, generally speaking, we've maintained our severity assumptions, our medical severity assumptions and have seen a little bit of upward pressure that we've talked about with regard to utilization and maybe seeing your average medical severities come in a little bit higher than they had been running over the last few years. But we've also continued to see improving frequency trends, and that's held up through 2025. So you have to put those pieces together alongside of the rate level that continues to be slightly negative, and that will all come through in how we set our planned loss ratios for that line of business. And I think you'll see something similar to what you saw in 2025.

My follow-up question is about the commentary on the expense ratio and the initiatives surrounding it. It's been intriguing in the last few quarters with some companies announcing significant improvements in their expense ratios due to the adoption of technology and AI. Conversely, there are other companies, including yours, that are forecasting increases in their expense ratios to facilitate further investments. I'm curious whether you see this as a one-time increase aimed at enhancing Selective's capabilities with new technologies, or is it more reflective of the ongoing efforts to improve the reserving and claims processes?

Yes. No, it's a great question. And I think we've seen and heard a lot of the same commentary. Clearly, we're in the camp that the investment in technology and our investment in technology has continued to ramp up as a percentage of premium over the last several years, and we expect that to continue. When you look at it at the highest level, we expect the investment in technology to continue to rise as a percentage of premium and the cost of labor, the percentage of premium that goes to labor will be coming down over time as a result of gaining the benefit of these technology investments. We're not setting aggressive targets, but we think there are real opportunities here, not just to drive operational efficiency, but to improve decision-making and improve outcomes across underwriting, pricing, decision-making, and claims outcomes. That's what we're pointing to in terms of the increase in our strategic investment dollars. If you look over the last three years, our split of strategic investment dollars in technology relative to running our technology infrastructure, 'keeping the lights on,' it's about a 50-50 split, which is a pretty significant improvement. More money is going into the strategic investments. We've more than doubled that over the last three years and have been able to manage the overall impact on the combined ratio or the expense ratio, and that will be our focus going forward. So it's not a step-up per se, but I think we expect technology investment as a percentage of premium to continue to go higher, and there will be offsetting benefits in other cost aspects and loss ratio benefit as well to be realized.

Understood. That's helpful. I have one last question that you may have addressed in your prepared remarks. Should we expect retention ratios to stay around current levels, considering the focus on reducing less profitable business in a slowing rate environment? Any additional insights on the retention ratio would be appreciated.

Yes, sure. And again, that's not an area we guide to. We don't do growth or retention. But I think generally speaking, to your point, our focus is on the granularity of our execution of our pricing strategy. We believe that by doing that, we should be able to deliver relatively stable retentions, but there's an assumption around market behavior that I think is a little bit tougher to forecast. Depending on market behavior regarding pricing discipline in the casualty lines, that will ultimately influence where that retention settles. But our focus, to your point, is on that granularity of execution, which we think does allow us to maintain more stable retentions.

Our next question comes from Daniel Lee with Morgan Stanley.

I want to shift the conversation and ask about the E&S segment. I know that growth has been strong for E&S in recent years, but it seems to be slowing down. I would like to get your thoughts on what you expect for E&S overall and your growth goals for the E&S segment.

Sure. That's a business we really like. It's a business that we would expect to continue to become a bigger part of our overall premium in the coming years, but it's also a business where it's important that you maintain consistent discipline from a pricing and underwriting perspective over time. I think there's been a fair amount of industry commentary around some more aggressive pricing behavior there, not just on the property side, but I think leading into the casualty side as well. We're going to maintain our discipline there. That might create some downward pressure on growth in the near term. But in the longer term, I would put that segment in the category of business that we like, and we expect to be able to continue to grow as a percentage of our overall premium. We've got meaningful potential to expand our capabilities there from a product and an underwriting perspective, but also having recently opened up a retail access channel for our strong retail partnerships on the standard line side. We think that's also a real growth avenue for us in the coming years.

Awesome. Yes. For my follow-up, I wanted to ask about E&S Casualty and the overall loss cost trends. Can you explain the differences between standard commercial loss cost trends and E&S Casualty? What are some nuances we should consider regarding E&S Casualty in terms of loss cost trends?

I would say the main difference is in the E&S market, where we see lower retention ratios. This market tends to be more transient, enabling quicker portfolio turnover and significant mix improvements. Over the past few years, these actions have led to a more noticeable decline in frequency for E&S compared to standard general liability. While we have observed frequency improvements in our standard lines, the benefits have been greater in E&S. Regarding severity trends and social inflation, the general dynamics remain consistent across both admitted and non-admitted business, with the most notable difference being on the frequency side. Additionally, we have been incorporating higher severity increase assumptions into our expected loss ratios, partly due to the more transient nature of E&S casualty portfolios.

There are no further questions at this time. I'd like to turn the call back over to John for closing remarks.

Great. Well, thank you all for joining us. We always appreciate the engagement. If you have any additional questions, please feel free to follow up with Brad.

Thank you for your participation. You may now disconnect. Everyone, have a great day.