Good day, and welcome to the W. R. Berkley Corporation's Fourth Quarter and Full Year 2023 Earnings Call. Today's conference call is being recorded. The speakers' remarks may contain forward-looking statements. Some of the forward-looking statements can be identified by the use of forward-looking words, including, without limitation, beliefs, expects or estimates. We caution you that such forward-looking statements should not be regarded as a representation by us that the future plans, estimates or expectations contemplated by us will, in fact, be achieved. Please refer to our annual report on Form 10-K for the year ended December 31, 2022 and our other filings made with the SEC for a description of the business environment in which we operate and the important factors that may materially affect our results. W. R. Berkley Corporation is not under any obligation and expressly disclaims any such obligation to update or alter its forward-looking statements, whether as a result of the new information, future events or otherwise. I would now like to turn the call over to Mr. Rob Berkley. Please go ahead, sir.

Sarah, thank you very much, and good afternoon all and welcome to our fourth quarter call, and for that matter full year '23 call. In addition to me, you also have Bill Berkley, Executive Chairman, on the call as well as Rich Baio, Chief Financial Officer of the Company. We're going to follow our usual agenda where very shortly I'm going to hand it over to Rich. He's going to walk us through some highlights from the quarter. Once he's completed his comments, I'll offer a couple of thoughts of my own and then we'll be pleased to open it up for Q&A. Before I hand it over to Rich, I did just want to offer a thought or two and for some participants this will probably not be new to a discussion that we've had in the past. For our organization, there is without a doubt amongst all of our colleagues, a shared recognition that the goal of the exercise is value creation. We approach this through a lens that we've again touched on in the past, but I'll flag it again. A lens that we refer to as risk-adjusted return. All returns are not created equal. One needs to consider the type of risk that you're taking on in order to achieve that return. And in contemplating that risk, one needs to consider volatility as a component of that. One has to ask oneself the question: Am I getting paid enough for that risk? And of course in considering that, what role does volatility play. In the fourth quarter of '23, there will be many market participants that report good numbers. But I think that one needs to look beyond just a quarter. One needs to look at the year. One needs to look at the past several years. When it comes to value creation, it's not just about a step forward. It's about consistently taking steps forward and avoiding taking steps backward. When you look at the results of our quarter, without a doubt, they are very strong, very robust by any measure. But I would encourage people to look at the full year and look at the past many years and our ability to create value, taking into account the risk that we are accepting in order to achieve those returns, is really the cornerstone of why we've been able to build value for shareholders so successfully over many years. This quarter and this year are no exception. So to that end, before I hand it over to Rich, I would like to thank and congratulate my colleagues throughout the organization on a really outstanding quarter, outstanding year, and yet another year of a job very well done. Also, on behalf of my colleagues, I would like to thank our shareholders for allowing us the opportunity and the privilege of managing capital on their behalf. I will pause there and Rich, over to you. What do you have for us?

Thanks, Rob. Appreciate it, and good afternoon, everyone. The Company continued to report record-setting financial results in the quarter, leading to an outstanding full year. Net income increased to $397 million or $1.47 per share compared with $382 million or $1.37 per share in the prior year quarter. Annualized return on beginning-of-year equity was 23.6%. Record operating income increased more than 21% to $392 million or $1.45 per share with an annualized return on beginning-of-year equity of 23.2%. Our extreme ownership in maximizing risk-adjusted return and everything we do contributed to our record full year underwriting income, net investment income, operating income, and net income. Our top-line growth accelerated throughout the year with the fourth quarter reflecting a 12% increase in net premiums written to more than $2.7 billion, bringing the full year to a record of almost $11 billion. On a constant foreign currency exchange rate basis, the quarterly and full year growth was adversely impacted by approximately 50 basis points due to the weakening U.S. dollar. On a segment basis, insurance grew 12.3% to more than $2.4 billion in the quarter from rate improvement and exposure growth. The Reinsurance & Monoline Excess segment increased 10.2% to more than $300 million. This marks a record level for full year gross and net premiums written for each segment. Turning to underwriting performance, record quarterly pre-tax underwriting income increased 8.2% to $316 million, representing a calendar year combined ratio of 88.4%. Current accident year catastrophe losses were flat at 1.2 loss ratio points for the comparable quarters with $32 million and $30 million reported in the fourth quarter of 2023 and 2022 respectively. Prior year development was favorable by $1 million, bringing our current accident year loss ratio ex-cats to 58.8%. The improvement over the prior year's quarter of 50 basis points was primarily due to business mix and lower attritional property losses. The expense ratio increased 60 basis points to 28.4% in the current quarter, flat to the 2023 full year. The increase from the prior year's quarter is consistent with our prior communication regarding being lower ceding commissions resulting from business mix and reinsurance structure changes over the past year. In addition, increased compensation costs and startup operating unit expenses have also contributed to the small increase. We expect our 2024 full year expense ratio should be comfortably below 30%, taking into consideration investments in technology, data and analytics, as well as new startup operating unit expenses. So in summary, our current accident year combined ratio, excluding catastrophes of the quarter was 87.2%. Record quarterly pre-tax net investment income increased more than 35% to $313 million, bringing the full year to more than $1 billion for the first time in the Company's history. The combination of our short-duration and record level operating cash flow of more than $2.9 billion in the full year has positioned us well to invest in securities with higher interest rates. The book yield on the fixed maturity portfolio continued to advance throughout the year to 4.4% on a 12-month basis. Our net invested assets increased approximately 10% in the past year to almost $27 billion. The credit quality of the portfolio remains very strong at AA-minus with a duration on our fixed maturity portfolio including cash and cash equivalents of 2.4 years. The investment funds improved from the consecutive quarter to $11 million although declined from the prior year in large part due to market value adjustments in the real estate fund area. As a reminder, the investment funds are generally reported on a one-quarter lag. Foreign currency losses in the quarter related to the U.S. dollar weakening relative to most other currencies. It's worth noting, however, that the net effect to stockholders' equity is negligible since the improvement in our currency translation adjustment more than offset the amount reflected in the income statement. Stockholders' equity increased to a record of almost $7.5 billion. Careful capital management throughout the year resulted in three special dividends of $0.50 each per share plus regular quarterly dividends totaling $501 million. In addition, share repurchases in the quarter of almost 1.6 million shares contributed to a total of more than 8.7 million shares repurchased during the year, amounting to $537 million or $61.69 per share. So our capital management during 2023 aggregated to more than $1 billion, the most we've returned to shareholders in one year while growing shareholders' equity more than 10% and maintaining more than adequate capital to support ongoing growth in the business. Book value per share increased to 11.6% and 25.5% in the quarter and full year before dividends and share repurchases. And Rob, with that, I'll turn it back to you.

Rich, thank you very much. Pretty attractive picture, and even a conservative CPA couldn't make it sound anything other than encouraging. So, a couple of observations on my end. Obviously, the top-line growth, we're pleased with the progress that we're making relative to the past few quarters. I think this is unfolding exactly as we suggested. Just calling out a few pieces of that puzzle, clearly some of the things that we had talked about as far as portfolios that we were separating from, much of that has gone through the process. The specialty market in general continues to be particularly attractive. I would highlight E&S especially; furthermore, I don't think that party is over. When we're looking at the submission flow, we continue to be quite encouraged. On the other hand, certainly, within the professional liability space, and I'll call out public D&O as perhaps one of the extreme examples, I think it is delicate and treacherous, and as you can see in the numbers in our release, we are treading thoughtfully, as you'd expect. Rich touched on the rate coming in at 8%, which based on our assessment is pretty clear that we are comfortably exceeding any reasonable assumption around loss cost trend. And we are encouraged by that. I know that there are a couple of pessimists out there that are sort of hanging on the rate number that we share on a quarterly basis, and some might say, well, geez, this is down below where it was in the third quarter, and that is a factually correct statement. That having been said, I would caution people to please understand that is really driven by the mix of business and not just product line, but we have more than 60 different businesses under the Group umbrella, and at any moment in time, some are growing more than others and rate opportunity is not equal amongst all the businesses in the Group, and obviously our product lines as well. And just as a point of reference, you'll recall this time last year, we got 6.9 points of rate excluding compensation. So again, we are comfortably above where we were a year ago, and we are confident again that we are exceeding trend by a meaningful margin. Again, Rich talked about the losses. I'm not going to get into that. The only thing that I will flag is that the paid loss ratio for the quarter came in at 48 and change, and for - I don't know how many quarters it is at this stage, it's just sort of floating between 46 and 49, which I think is really just a reflection of the rate action along with the underwriting discipline and focus of our colleagues that are allowing us to write business at a pretty healthy margin, to say the least. Again, Rich touched on the expense piece, so I'm not going to rehash that other than I will make the one comment that for purposes of '24, we have some businesses that we started prior. And those are going to be impacting our expense ratio, though, even with those coming into the expense ratio, as they are in business for a full year. The fact of the matter is, that's going to be a relatively modest drag. Going the other way as far as benefit goes, you'll see what happened with our written premium in Q3 and certainly in Q4, and we all know how that's going to travel through and impact the earned in '24, which will clearly be a positive. Last comment on the investment portfolio. Rich touched on that. As far as the book yield, as far as we're concerned, the new money rate for us still today, even with all the speculation about where interest rates are going, we can still put money to work at 5% or higher. So we think there's opportunity there. As Rich mentioned, the duration is at 2.4 years. We are looking for the window of opportunity to extend that. We are not in a rush. We have a slightly different view than much of the world as to where interest rates are going. When the window of opportunity presents itself, you will likely see that 2.4 moving out from here. So again, I think it's exciting that we had a good quarter. It's rewarding and encouraging that we had a good year, and top of - a good year in '22 and so on, but I think the most encouraging thing is when you look at how the table is set for '24 and beyond, we are in a very good place and not only on the underwriting side but on the investment side. So I believe in '24 and likely beyond, you are going to continue to see this economic model firing on all cylinders. So that probably wasn't as brief as I promised, but it was relatively brief for me, and I'm going to pause there and Sarah, we would be very pleased to open it up for questions. Thank you.

Your first question comes from the line of Elyse Greenspan with Wells Fargo. Your line is open.

Hi, Elyse.

Hi.

Good afternoon.

Hi, thanks. Good afternoon as well. My first question, Rob, probably picking up kind of where you were ending with your comments. Premium growth picked up right in the third and the fourth quarter ending at 12%. So as you think out to '24. Is that kind of the baseline you would expect the quarters of '24 to all be 12% or greater, just given the momentum that you've been highlighting on the call?

Yes, no, Elyse, I appreciate that you and other colleagues are trying to build models and making certain assumptions. But the truth of the matter is that, tell me what market conditions are going to be. And I can give you a thoughtful answer to your question. There is nothing that I see today that leads me to believe that there isn't meaningful opportunity before us. And again, do I think the 12% number is a reasonable number to use? Yes. Do I think it's possible to be better than that? It certainly is possible. But again, tell me what the market conditions will be and then I can give you a more thoughtful answer as opposed to fumbling around on this end.

Maybe sticking with that market thought, right? We've heard a lot of conjecture about whether we start to see a broader strengthening of the casualty market. And so where are you on that? Do you think we'll start to see more broad-based pricing momentum within casualty lines as we go through 2024?

I think you should. From our perspective, obviously, one of the big drivers there is social inflation and, as far as we're concerned, it's alive and well. In addition to that, as far as another pressure point, I think you're starting to see the reinsurance marketplace, particularly on the treaty side, but across the board starting to wake up and really recognize some of the challenges that the liability market faces. The kind of pressure that you saw, the reinsurance marketplace, but on the property lines, I think, while it may not be to the same extent, I think you're going to see them start to really focus on some of the liability lines and I think that will perhaps introduce further discipline into the casualty market. Quite frankly, if you go back in time, we've sort of been standing on our heads and jumping up and down, talking about social inflation for many years. And we started pushing on rate pretty early and it's been good to see more recently people showing up to the party and recognizing what that loss trend is, recognizing what that means for loss cost and taking action. So long story short, I think that there is some more legs to the liability market, particularly umbrella, auto liability, GL, and there's a lot of excess market overall.

And then one more. You guys said $1 million. I think a favorable development in the quarter. I know we typically get more color when the K is filed. But any movements within lines or accident years that were more significant in the fourth quarter?

Nothing that's particularly earth-shattering. I would say it's kind of more of the same. But if you're looking for more detail, I'd encourage you just to give Karen or Rich a call, and if you can't get one of them, just give me a buzz.

Okay, thank you.

Thanks.

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

Hi, Mark, good afternoon.

Hello, Rob, good afternoon to you. Hello, Rich. How - what are you seeing in terms of loss development on some of those older accident years, particularly in the casualty lines, any change in trajectory this year compared to prior years?

I would suggest that some of the older years are beginning to show signs of petering out, and I think some of the more recent years that look particularly encouraging. As they season out more, we will be more inclined to recognize the good news. But I think at this stage, if you look at the average duration of our loss reserves or average life of our loss reserve, which is 3.5 plus years, just shy of four years at this stage, we have our arms around, I think a lot of the years that were particularly frustrating where I think the industry may have gotten caught a little flat-footed, and ourselves are not completely insulated from that with social inflation. I think we may have gotten on top of it a little quicker than some. But nevertheless, '16 through '19 is not without its challenges. That having been said, I think some of the more recent years are encouraging, but I think '16 through '19 are slowing considerably and certainly the earlier years of that group, I think have - maybe not fully played out but are pretty darn close.

Yes, very good. How about on workers comp, you had some growth in premiums written this quarter. How are you thinking about that?

Yes, that was primarily due to payroll, if you will. Just wage or - wage inflation, if you like.

Yes. Anything, any update on....

We still have reservations about the product line. We're pleased that we participate in the market. We think our colleagues that are in this space have exceptional expertise and are managing the capital well. But by and large if there is a little bit more of a certainly neutral to defensive posture at this stage, I think as we've talked about in the past, we think that the medical trend is going to prove to be challenging. As far as obviously the U.S. comp market is both broad and deep. And from what I hear from my colleagues that are far more knowledgeable than I, I would keep an eye on California for leading the charge as far as market bottoming out.

Appreciate it. Thank you.

Thanks for the question. Good evening.

Your next question comes from the line of Mike Zaremski of BMO Capital Markets. Your line is open.

Hi, Mike. Good evening.

Hi, good evening. I guess just if we wanted to reflect on the past 12 to 18 months, you've discussed it a bit, but there was kind of a pivot downwards in growth for a bit. Did the - was the pivot more the marketplace changed in terms of competition, or was it more so a reflection of what you've been talking about? Hi, loss costs are - we need to do a bit of a true-up and - you've gotten that picture of the process and kind of now it's kind of smoother sailing from here. Just kind of curious how much was kind of more, you think, Berkeley-specific versus just market forces and the competitors doing their thing.

So the way I characterize it, Mike, is I think that the market is changing every day. And if you go back, call it two years ago, professional liability, D&O, as an example, was in a different place than it is today. So you have that force. On the other hand, clearly, two years ago, property was in a different place than it is today. So you have all these pieces, at any moment in time some things are firming, some things are softening, and obviously, that instructs how we feel and how strong or not our appetite is. In addition to that, I think, as we may have flagged in some earlier calls, there were a couple of what I would describe as meaty relationships scale-wise, that we came to a shared understanding that we agreed to disagree as to what an appropriate rate need is and what action was required. As a result of that, we wished each other well, or at least we wished them well, and that played a role in it as - in addition to the earlier comments. So do I think that the 12% is this like phenomenal number? That's one-off. The answer is no. I think that there were some things in the first half of the year that served as somewhat of an extreme drag, and what you're seeing now is a lot of that shift away has been processed.

Okay, that's helpful context. Clearly, the ROE for the year ended up being excellent. So I guess just switching gears a little bit, I think you mentioned the reinsurers. Anything we should be thinking about maybe within your expense ratio guidance or just as the year progresses, in terms of if the reinsurers are able to successfully garner higher pricing, seating commissions or whatnot, on what they charge their counterparties, such as Berkley for casualty reinsurance. I know you guys have a reinsurance arm, obviously too, so there's an offset. But just curious if there's something —

Yes, obviously, we take it from one pocket and hopefully, we're getting it back and then some in the other pocket. I think one of the things that - so do I think it's possible that you're going to see some of the reinsurance marketplace trying to take action, for example, with seating commissions? Yes, I do. The good news for our organization, as we've discussed, because of our limits profile and how the business is operated with approximately 90% of our policies, that are legally allowed to have limits, having a limit of $2 million or less, that makes us less reinsurance dependent. So consequently, we have the ability to pivot and think about what we buy, perhaps differently than some of our peers, and we also can shift structurally. So as Rich mentioned earlier, around the seed, part of the reason why the — excuse me, around the expense ratio partly has to do with seed, where people wanted to cut seating commissions. So maybe we switched to an XoL structure that made sense to us, given the rate environment, and that worked out. So the punchline is this, Mike, a hardening reinsurance market when it comes to the casualty lines, net-net will be very good for us as an organization because it will force further discipline and consequently pricing power for the primary market. And in addition to that, my colleagues on the reinsurance side, I'm sure will be right in there seizing the opportunity.

Okay, that's helpful. And maybe if I can sneak one last one in, if Bill thinks it's a question worthy of his wisdom. Presidential election year, to the extent the outcome is for a change of the guard, is there anything market-wise, investment portfolio-wise, or just interest rate-wise you guys are thinking of in terms of hard or dry or pivot? If that is an outcome late this year.

Before he answers that, I think we may need to read the Safe Harbor again.

So, I think the bottom line is, we've got a $2 trillion deficit. 92% of the world's countries have deficits. There is going to be an enormous demand for money. Number two, we are the only significant democratic country that doesn't have any kind of national sales tax. We have some flexibility. However, you have to look at every time there's been a need to come to a conclusion, Democrat or Republican, the conclusion has been both parties spend more money. So what that tells you is spending money and not having taxes go up are a cornerstone of the policies both parties have chosen to follow. At some point, we're going to have to decide someone is going to have to pay for all we're doing. And whether that's a value-added tax or increasing income taxes or whatever, we are going to have to do something, and it's going to happen during the next presidential period, or Social Security and Medicare, Medicaid are going to be in jeopardy. So I don't think it matters who's elected. That's a problem that we're going to face. It won't happen till after the election. Whomever is elected won't matter. And I think that's going to mean is we're going to have some pressure on inflation, pressure on government spending, and I don't think that means good things for interest rates coming down. I would expect interest rates at best will be flat. I think people are biased by the fact that we had an extended period with extraordinarily low interest rates. I don't think interest rates are going to go crazy, but I don't think we're going to see them consequentially lower than they are now and probably a little higher.

Appreciate it.

Thank you, Mike.

Your next question comes from the line of David Motemaden of Evercore ISI. Your line is open.

Hi, David. Good evening.

Hi, Rob. Good evening. So I just had a question on the rates that you guys are seeing now in liability lines. If we exclude comp and exclude financial lines, I'm wondering if you started to see evidence of those rates accelerate in the fourth quarter. I'm just trying to get a sense for if we were to adjust for the mixed dynamics that you had just mentioned in your opening remarks if we are actually starting to see those rates move higher in response to the environment.

So generally speaking, we don't break the rate data out by product line, but I guess to give you a little bit of color, I would tell you that we are very happy with the rate increases that we are achieving in much of the liability market, to say the least. We are comfortable that, putting aside some challenges within the professional liability space, the rest of it, we think that we are keeping up with trend and then some, or clearing trend by a meaningful margin. So, are things better in Q4 than they were in Q3? I don't really have the specific numbers in front of me at the moment, but just from having my finger somewhat on the pulse, I am very comfortable that the underwriting environment for the lines that you're referring to is every bit as healthy in Q4 as it was earlier in the year, possibly better. And there's nothing that leads me to believe that that momentum is going to diminish. And quite frankly, it's just simply being driven by loss costs and the environment, which, appropriately, I think, is making people focus on it more and more. So we feel like we're in a good place.

Okay, great. Thanks. That's encouraging. And then maybe if I could just move to the accident year loss ratio ex-cat. So if I look at the improvement year-over-year, I was wondering, and I know this is getting a little bit granular, but I think the prior period had some fire losses in there. Was the improvement really just the absence of those fire losses? And are we sort of at a clean baseline here going forward?

Rich, do you want to speak to that?

Sure, Rob. I would say yes. It is certainly part of the reason for the change. Quarter-over-quarters, we certainly, over the last few quarters, as Rob has alluded to on some of the earlier calls, been making some changes with regards to re-underwriting some of the property risk side of things. And so, yes, there has been an improvement. Certainly much progress has been made. Can't say that it's completely completed, but certainly do I anticipate a better position going forward.

Understood. Thank you.

Thank you, David.

Your next question comes from the line of Ryan Tunis with Autonomous Research. Your line is open.

Hi, Ryan, good evening.

All right. Just a couple from me on - from an insurance growth standpoint. First one just on professional lines. I guess I was kind of hoping that as we started lapping some of those comps from when this first started a year ago, maybe we'd see a little bit better growth. But it looked like growth was down again even after being down last year in the fourth quarter. Is that not the right way to think about it? Is this a line that based on where market conditions are…

Are you speaking specifically about professional? Sorry, Ryan. Trying to make sure....

Professional lines, yes, I'm just trying to understand like....

Yes. The skinny on that, at least through, in my opinion, is the D&O market, particularly the public D&O market has been, from a pricing perspective, in somewhat of free fall, and rates went up considerably, and now they're coming back down. And then we have a view as to what rate adequacy is. And ultimately, while we're sorry to see it go, if it goes, it goes. We're not going to chase it down the drain. In addition to D&O, a couple of other product lines that I would call out would be medical professional, specifically hospital professional liability, where the lack of discipline in that product line over the past, quite frankly, a couple of years, I think has given reason to pause. To our colleagues' credit, they have been operating with the discipline. So that's quite frankly having an impact on the top line as well. Other areas that I would flag, maybe one other would be architects and engineers with some of the larger accounts where again, we have found that the market is willing to do things we don't think make sense, and the pricing has come off. So professional liability is an extraordinarily broad category, just trying to give you a little bit of a flavor with some of the bigger pieces of that puzzle. But yes, there are some areas within the professional space that we still find notably attractive, particularly nonstandard. And then there are some big chunks of the professional line, some of which I just referenced, that I think should be giving anyone who's responsible and disciplined real reason to pause.

Got it. And then I guess just to follow up on the short tail lines.

Please.

Growth for the full year was like around 20%. Just trying to understand how much is the composition - how much - from a composition standpoint, did that change this past year? Was it more than normal because of the rate environment, or was most of that growth exposure and rate action on stuff you'd already been writing in 2022?

So it's a combination of both. As you'd expect, we're pushing pretty hard on the rate front and it's sticking. In addition to that, as we see rate adequacy more and more attractive, then we're going to lean into that. And you would take note of the growth, for example, in short tail lines or specifically property in the reinsurance business during the '23 year. And of course, we had meaningful growth on the property front and the E&S space as well, both through our domestic businesses as well as through our London operation.

Got it, So I guess, how has your outlook for the type of cat exposure you have? Has that changed at all?

Not meaningfully, when the day is all done. I mean, as I said a few moments ago, the majority of our growth is driven by rate. So there's a lot of things where our exposure hasn't changed, but we're charging considerably more. But also, that has led to an opportunity to write some additional business as well. But I don't have a specific breakout on the 20% what's rate versus exposure. But if you'd like, you're welcome to follow up with us tomorrow and we can give you some more context. Thanks for the question.

Your next question comes from the line of Meyer Shields with KBW. Your line is open.

Hi, Meyer. Good afternoon. Good evening, rather.

Hi Rob, how are you?

Good, how are you?

I'm doing well, thanks. Sorry, I don't mean to talk over you. Follow up Ryan's question. We've seen growth in commercial auto accelerate over the last two quarters, and I was wondering, is something changing in rates there, or is that a change in exposure?

I think primarily what's driving it is we're just charging a lot more. We're insisting on a lot more rates. That's the big driver, no pun intended.

No, taken. No, that's helpful. Second, I know that you've talked about sort of waiting for, let's say, accident years 2020 and subsequent to mature a little bit. I hope we can get a little bit of a peek in terms of what you're seeing even before you take any reserve actions on those years.

Well, I would suggest you look at the paid loss ratios. I'd also sit because that's a reality. In addition to that, I would encourage you to have a look at how much IBNR we are carrying relative to case for some of those years. And further, I would encourage you to look at how much IBNR we're carrying relative to our total reserves.

Okay.

For those years.

Helpful, And...

And I think that directionally should give you something to hang your hat on.

Perfect. And if I can throw in one other question really quickly.

Sure.

When you look back at the experience you had as you sort of expanded modestly into property cat in 2023, does that leave you wanting more or less exposure in 2024?

The answer is that I think that 2024, at least so far, based on what we saw at 1/1, is likely to continue to provide a very good opportunity. Is it going to be quite as attractive as 23? Perhaps not, but I think that even if it isn't, that doesn't mean it's no longer an attractive opportunity. So we, as far as property cat goes in a very measured way, continue to be bullish on the opportunity. But as I said earlier, we are doing a bit more, but if the growth is really driven by the rate, I don't think you would see a dramatic shift in our risk profile.

Okay, understood. Thank you so much.

Your next question comes from the line of Brian Meredith with UBS. Your line is open.

Hi, good evening, Rob.

Hi, good evening.

A couple things here. First one just on that, just some clarity here. So obviously, big growth in property reinsurance. What did you all do at 1/1? I'm assuming we won't see the same type of growth in 2024 that we saw in 2023 in that area. I know you were pretty opportunistic in '23. I'm sorry. As far as our property writings?

Property re. Property re. Reinsurance.

Reinsurance starting. Brian, I think that I'm happy to share that with you, but I want to check with our General Counsel to make sure that I'm allowed to share that with you. But what I know I can share with you is that our general view on the property cat market at 1/1 was that it was still very attractive, maybe not quite as attractive as it was at 1/1/23, or said differently, I think the market is still very attractive, but I also believe it has peaked, at least for the moment.

Okay, interesting. And then I guess my next question. Rob, and we talked a little bit about this earlier. The ceded reinsurance program and your flexibility there. I'm just curious, is this kind of the time in the market that maybe you do want to retain more of that business just because rates are quite adequate, your operating leverage is still relatively low compared to history? Why wouldn't you kind of just lean in here and retain more of it?

And - there are parts of the business that we are grappling with exactly those questions. Ultimately, the reinsurance marketplace, from our perspective, is that there are some people that are our partners through thick and thin, and there are some people where it's much more of a transactional relationship. Those that are our partners through thick and thin, we are not likely going to cut them off, if you will. Those that are more transactional in nature, we come to the table recognizing we are renting their capital, and we have a choice whether we're going to use our own or whether we're going to rent theirs. And my colleagues are pretty good at doing the math, and we try and figure out what makes sense. So are there parts of the business where if the reinsurance marketplace were to push us, we might exercise that option of keeping more for exactly the reasons that you're flagging?

Got you. Thanks. And then can I ask one big picture question? I'm just curious. If I look at the industry and the commercial lines and the combined ratios and margins that companies have been reporting, and you've been pretty consistent the last couple of years, but they're about as good as they've ever been, right? I mean, at least in 25 years. So I guess my question then is with the client pushback there, with the broker pushback, when you're kind of trying to push for incremental rate, and I get it that loss cost inflation is improving a little bit here, but the returns the industry is generating right now are incredibly attractive.

I'm not close enough to it, but I think we're using a pretty broad brush. I think that if you look back at some of the personal lines players or even some of the commercial line folks that write property books, it hasn't been necessarily a wonderful five years for them. Maybe it's better today. But when the day is all done, I think one needs to use a bit of a finer brush and really look at it at product line by product line. I think, as I suggested earlier, I think Q4 is going to be a really attractive quarter for many market participants. But I don't think 2023 proved to be this remarkable experience for all carriers. So again, do I think that the industry is in a better place today, certainly for many product lines, than it's been at other moments in time? Yes, I agree with that comment. But I think if you look at the total results for a lot of insurance companies for the '23 year, not everyone is hanging their hat on a return that starts with a two.

Makes sense. Thank you.

Thanks for the question, Brian. Have a good night.

Your next question comes from the line of Josh Shanker with Bank of America. Your line is open.

Hi, Josh. Good evening.

Hi. Good evening, everybody. Thanks for taking my call at the end. There's probably a Rich question here. I'm looking at the traditional investment income and stepped up materially $249 million in the third quarter, and you're about $288 million, I think, change for this quarter. That's a pretty large step up and the implied yield stepped up a lot. Is there any one-time type of coupons or one-time dividends in that number, or is that a good approximation of where the yield on the book was through the fourth quarter?

So we have seen a - an increase, Josh, in the overall book yield, I'd say from a fixed maturity perspective, we certainly have been able to deploy capital and reinvest at higher rates, as Rob was alluding to earlier in some of his remarks in terms of where the new money rate is and where the roll-off is. So certainly that's been a big contributor to it. We did have a little bit of an uptick, if you will, with regards to some securities that we own in Argentina that are inflation-adjusted as well. So that did create a little bit of an uptick. But I would tell you that the book yield in the quarter, I would say, core would be around 4.7%, which is certainly up from where we were at the end of the third quarter.

Thank you. And you spoke, Rob, about the new money yield being in excess of 5% right now.

Yes.

And given all the chatter and whatnot about rates and everything, a lot may have even happened since the new year began. Is there any desire or action going on at the company? Duration is still 2.4 years. Is there intention to crystallize some of the yield at these higher yields available in the market right now?

So, Josh, our goal is, if the opportunity presents itself, to move that duration out a bit from here, if that is your question, I want to make sure I'm understanding it.

Yes, I mean, or -

We're going to move it out —

Yes, same way. Different way of putting it.

Yes. So our desire is to move it out, but we're going to move it out when we see the window of opportunity. So would we like to see that move out to '25, '26, '27 over time? Yes, we would. But we're going to do that in a way that makes sense. So I would encourage you to stay tuned. And we're - there's a lot of volatility in the world, and when we see the things working with us, we're going to try and lean into that window, but we're just trying to roll with the punches. And again, it's remarkable volatility.

And one last investment-oriented question. Given the macro outlook for things at this point in time, does it make sense to lean in and perhaps contribute more of the portfolio to the investment fund type of investments?

Actually, I think at this stage, quite the contrary. We're very pleased with what this traditional fixed income portfolio is offering us. And I think, just as a general mix, while we - I don't see us exiting alternatives, I don't think that there's the same level of encouragement or it's not as compelling to look in the alternative directions as it once was given where fixed income rates still are.

Thank you for all the answers. Good luck to the new year.

Thank you, sir. You too.

Your next question comes from the line of Yaron Kinar with Jefferies. Your line is open.

Good evening.

Thanks for taking my questions. Just first question, just looking at the property market, so sounds like maybe a seat, but still pretty attractive returns there. I think you guys have gone through some remediation efforts on the property book as well. I guess with that in mind as we look at '24, if your costs correctly, you're still thinking of growing that book more through rate than through exposures, is that correct? Why not lean more into exposure?

I want to draw a distinction. First off, as far as things peaking, that comment was suggested that they may be peaking in the property cat market. And I'd like to draw a distinction between the primary or insurance market versus the reinsurance market. And in addition to that, I would suggest that it's important to draw a distinction between the property cat market versus the property risk reinsurance market because they are clearly not one in the same in our opinion. As far as our desire to grow the business, look, if we like the margin, we are going to lean into it. And I think that at the moment, generally speaking, we like the opportunity that continues to exist in the reinsurance marketplace when it comes to property. And we are certainly paying attention to a lot of the opportunity that exists in the primary property insurance space, particularly as it relates to E&S in the commercial lines. And of course, not to be forgotten, our colleagues at Berkeley, one on the high-net-worth front, the opportunity for rate, both on the admitted basis as well as, just as a reminder, they are using non-admitted paper as well, is creating meaningful opportunity also.

That's helpful. Thank you. And then my second question, and I'm not sure if you'd be willing to answer this at this stage, but...

When in doubt, ask.

I'll try. The - when we see the 10-K and maybe even the scheduled P later on in the year and we look at the results from this quarter, would we see a similar trend to what we've seen so far year to date? Namely, maybe some strengthening in liability reserves of older vintages offset by favorable releases in 2020 through '22?

I think directionally, yes, you will see that. Do I think that we are very far or well on our way to having '15 through '19 behind us? Yes, I do. Do I think that it's done? Probably not. Look, we take a different approach than some other organizations when it comes to monitoring our reserves and trying to make sure that we're getting it right. There are some folks that just ignore it for quarter after quarter, year after year, and then all of a sudden they have this giant problem that they need to deal with and they take this massive charge. We take a different approach. Our view is we're looking at it every 90 days or more frequently and we're tweaking it to where we think it needs to be, and we think that that's the more sensible approach. So again, you'll see the information, but I think that we continue to be very optimistic about the more recent years and how that's going to play out. Do I - clearly, some of that good news has been used along the way as we've had some challenges coming out of the older years. I think, again, those challenges are in the rearview mirror and shrinking by the minute. And I think there continues to be a lot of encouraging signs, as I referenced earlier, around the amount of IBNR we continue to carry in some of the more recent years.

Thank you.

Thanks for the questions. Have a good evening.

We do have two more questions.

Okay.

Would you like to continue?

Yes, why don't we go ahead and get to those two, if we could, please, Sarah? Thank you so much.

Perfect. Thank you. So your next question comes from the line of Alex Scott with Goldman Sachs. Your line is open.

Alex, good evening.

Hi. Thanks for taking - hi, thanks, and good evening to you. I just have one quick one for you.

Please.

You guys have been very good real estate investors over time. So I thought I'd sort of ask a similar question to what Mike asked you before. So just - what kind of opportunities are in real estate? Obviously, fixed income is a lot more attractive right now at higher yields. But are you seeing any stabilizing trends in the real estate market?

As far as real estate goes, clearly, there's been a lot of opportunity. Residential has been reasonably stable and has been a good place to be. Particularly commercial on the office front has been more challenging. Fortunately for us, we own some very high-quality assets and feel like we're in a very good place there, both with the quality of the assets as well as the occupancy, et cetera, et cetera. Are there going to be opportunities? We're paying close attention, but when you look at where the fixed income market is, the hurdle, if you will, for alternatives, including direct or indirect real estate is that much higher. So are we paying attention? If there was a great opportunity, are we prepared to step forward? Yes, but that hurdle is considerably higher when you look at what we can do with new money on the fixed income portfolio, which gives us good yield, good liquidity, and this risk-adjusted, we like it.

Understood. Thank you.

Thanks for the question. Have a good night.

And your final question comes from the line of Scott Heleniak with RBC Capital Markets. Your line is open.

Hi, Scott. Good evening.

Hi, thanks. Yes. Just had two quick questions here. Just E&S, you talked about to be an attractive market here. The submission count sounds like it's pretty encouraging still. Can you just - can you comment more on the submission count for the - for Q4 versus the past few quarters, how that's trended and where you're kind of seeing the most opportunity there, if there's any particular lines or areas where it's changed much?

So the answer is that it remains as give or take, as robust as ever, and we remain very encouraged. As far as where the most encouraging opportunities are, that's not something that we're going to be broadcasting. I would tell you that products liability has been an area that the standard market seems to continue to have an unquenchable thirst for.

Okay, I appreciate that. And then just the last one is, you mentioned some startups that you had during the year. How many of those did you have in particular, and are you able to talk about what the premium is on those? Just - if you don't have it now, I can get it later. I don't know if you give that out, but is there anything more you can comment on that?

Scott, what I recommend, if it's accessible to you, is that you follow up with Karen and Rich, and they'll have a better sense as to what we can share and what we can't. I don't want to get all of us in trouble with the SEC.

Sure.

Thanks for dialing in. Have a good evening.

I will turn the call over to Mr. Rob Berkeley for closing remarks.

Okay, Sarah, thank you very much. And thank you to all of the participants. We appreciate your time. I think the quarter speaks for itself. The year speaks for itself. The organization continues to perform at a high level, and as suggested earlier, perhaps the most exciting news is how well-positioned we are for not just '24, but likely '25 and beyond. We thank you again for your time, and we look forward to speaking with you in April. Have a good evening.

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