Michael Zaremski : Okay. Great. Yes. And definitely was just a drop in the bucket. Okay. Lastly, you gave us a lot of great data points on how you’re thinking about the comprehensive reevaluation of your catastrophe profile and just gave us a lot of good data points. But just curious, is — the reason to the way to give us the catastrophe load guidance till later, even though you’ve started this deep dive months ago, is it — is there anything to do with just you need to see how your agent partners kind of react to everything you’re doing? Or is it just more — this is just a comprehensive study and you just need more time?
Jack Roche : Yes. I would tell you that the agent reaction is not unimportant, but it is not an area that we’re most concerned about. I think we have the appropriate level of humility based on the way catastrophes have impacted our book of business this year. And so what we’re trying to do in addition to our normal rigorous drill that, frankly, has served us well on particularly hurricane exposures and other catastrophe management areas, we’re spending more time reevaluating and getting the updated RMS and air models, particularly for secondary perils and convective storms and seeking some outside input to figure out how much we should consider climate influence versus cyclical weather patterns. So I would think of it as more as we understand this is a really important issue for investors to believe that we know how to set those CAT loads going forward, and importantly, how we know how to reduce our CAT vulnerability into the future based on what we’ve learned this year.
That’s really the primary reason for our time line.
Operator: Our next question comes from Bob Farnam with Janney.
Robert Farnam : Yes. Just to continue that conversation with the agency reaction. So how are they reacting to the rate increases? Because that’s kind of a big ask especially in the homeowners business, when you’re looking at 28% rate increases. So are you getting pushback from the agency force just on their ability to push those off to customers?
Jack Roche : Yes, Bob, this is Jack. I want to say a couple of things and then let Dick give you some reaction because he’s been on the road pretty regularly, making sure that we have those conversations in person and make sure we really handle this appropriately. But I think the headline I would tell you is that just about everybody understands that the inflationary effects, combined with the type of weather that we’ve experienced, requires pretty dramatic action. And the competitive landscape is as firm as I’ve seen in my entire career, at least on the Personal Lines side. So I think the landscape is pretty firm. And we’re not really seeing a lot of pushback. Is there anxiety? Is there challenges in terms of delivering these messages to consumers and explaining it? Absolutely. But I can’t tell you that we’ve experienced any material pushback at this point.
Dick Lavey : Jack, well said. Yes, generally, very supportive. I’ve been out in 6 states in the last 4 weeks, including Michigan. We feel strongly to be right out in front of this. We think more so than any other market, frankly, being transparent, explaining, giving good rationale. There’s anxiety, no doubt. They’re working really hard and their customers are asking for choices. We’ve done a great job with talking points, videos that sort of help explain the environment. They’re just — they’re happy, frankly, that we’re going to remain as available capacity. So they accept the changes because as they go to market that many — there are — in every state, there’s actions being taken by a mutual or regional where they’re withdrawing or asking to stop all new business entirely. So the fact that we remain under different conditions and with higher prices, frankly, they’re quite pleased with that.
Robert Farnam : Okay. And just to set expectations on the Personal Lines book. You’re saying you’re going to get back to target profitability on a written basis by year-end 2024. That kind of means on an earned basis, you’re looking at — you’re going through 2025 as it hits the bottom line? So in reality, if you’re looking at achieving your targeted ROE overall, you’re probably looking more like 2026. Is that the right way to think about it?
Jeff Farber : No, I don’t think so. We can hit our target ROE for the whole firm without getting to target profitability fully in Personal Lines. Bob, I think you’ll see very rapid, steady, substantial improvement in Personal Lines over the course of ’24 on an earned basis, of course. And when you couple that with where Core is performing and some potential improvement and where Specialty is performing on a year-to-date basis, where the NII sits and where it goes for next year, I think you’re going to see a very, very strong 2024. And I don’t want to give guidance for ’25 but I think you’ll see an even stronger 2025.
Robert Farnam : Okay. All right. And I guess a question for Bryan on the Specialty segment. So you’re targeting a 50% loss ratio. Is that — first off, is that before CAT or after CAT, or is that accident year? I’m trying to figure out what that 50% loss ratio target is? And then I wanted to talk about the competitive environment there based on you’re trying to grow that business by every single digits next year. Are you seeing increased competition from E&S writers or admitted carriers? Just trying to get a feel for the competitive environment there and your ability to grow.
Bryan Salvatore : Yes, sure. Thanks, Bob. So yes, starting with the targeted loss ratio and I think that is an accident year ex-CAT loss ratio. And if you look at really the last 2 years, right, quarter-over-quarter, you’ll see that we’re pretty much in that lower 50 level. This quarter, we had some very, very good results overall but especially in our marine and our HSI book that just pushed that number lower but we feel very good about that low or lower accident year loss ratio. And you’ll see for 2 years, ’22 and here today ’23, that’s where we are.
Robert Farnam : Yes. So there’s really low accident year loss ratio in the third quarter, and that’s not kind of — that’s kind of an abnormal in other words. So I’m not going to look at that as it go forward, that’s more the 50% that you’re looking for going forward.
Bryan Salvatore : Yes. I’d like not to call it abnormal but I’d like to call it just particularly good. But yes, I just think the thing to focus in on is lower-50 type loss ratio for Specialty overall.
Jack Roche : So let’s — Bob, let’s try to address the competitive landscape question. I’ll just say 1 quick thing. This is Jack, and then Bryan, you can elaborate on it. I think — I always remind myself and our investors that we are very much excited about the Specialty place — the Specialty sector but we play in very specific areas within the Specialty business across a number of products and sectors and lines but still a small to first-tier middle market player, which impacts kind of price sensitivity and also accessibility. And it clearly affects who we compete against in that marketplace. So with that backdrop, Bryan, maybe you can give your view of how the competitive landscape is affecting our…
