辛辛納提金融 (CINF) 2015 Q1 法說會逐字稿

Good morning. My name is Erica, and I will be your conference operator today. At this time, I would like to welcome everyone to the first-quarter 2015 earnings conference call. (Operator Instructions). Thank you. Dennis McDaniel, Investor Relations Officer for Cincinnati Financial, you may begin your conference.

Hello. This is Dennis McDaniel from Cincinnati Financial. Thank you for joining us for our first-quarter 2015 earnings conference call. Late yesterday we issued a news release on our results, along with our supplemental financial package, including our quarter-end investment portfolio. To find copies of any of these documents, please visit our investor website, cinfin.com/investors. The shortest route to the information is the quarterly results link and the navigation menu on the far left.

On this call, you'll first hear from Steve Johnston, President and Chief Executive Officer, and then from Chief Financial Officer Mike Sewell. After their prepared remarks, investors participating on the call may ask questions.

At that time, some responses may be made by others in the room with us, including Cincinnati Insurance Company's Executive Committee Chairman, Jack Schiff, Jr.; Chairman of the Board, Ken Stecher; Chief Insurance Officer for The Cincinnati Insurance Company, J.F. Scherer; Principal Accounting Officer, Eric Mathews; Chief Investment Officer, Marty Hollenbeck; and Chief Claims Officer for Cincinnati insurance, Marty Mullen.

First please note that some of the matters to be discussed today are forward-looking. These forward-looking statements involve certain risks and uncertainties. With respect to these risks and uncertainties, we direct your attention to our news release and to our various filings with the SEC.

Also, a reconciliation of non-GAAP measures was provided with the news release. Statutory accounting data is prepared in accordance with statutory accounting rules and, therefore, is not reconciled to GAAP.

And with that, I will turn the call over to Steve.

Thank you, Dennis. Good morning and thank you for joining us today to hear more about our first-quarter results. The quarter included several areas of good performance, including enhancing our balance sheet strength. We see incremental progress as we steadily execute our underwriting and pricing strategies, and our investment strategy and successful portfolio management produced our seventh consecutive quarter of investment income growth.

Careful underwriting and disciplined pricing, along with more favorable weather than the first three months of last year, led to a first-quarter 2015 consolidated property-casualty combined ratio of 97.5%. While that ratio improved by 2.8 points compared with the year ago, it did not meet our expectations.

Every major line in our property-casualty segments, except for commercial and personal auto, had loss ratios that translated into estimated combined ratios near or within the 90% to 95% range. We strengthened reserves for those auto lines of business, causing our overall combined ratio to rise above the sub-95% we are seeking for year 2015, and we believe our balance sheet is now stronger than it was at year end.

We continue to further segment our business using pricing precision and risk selection decisions that combine data models and informed underwriting judgment on a policy-by-policy basis.

In the first quarter, we experienced strong retention and satisfactory renewal pricing, although premium growth continues to slow as we exercise pricing and underwriting discipline. As noted in the past, we tend to avoid drawing conclusions about trends based on a single quarter of data for certain measures, including premium growth.

We continue to earn quality new business from our agencies, and we experienced a healthy pace of new business premium growth in our personal lines and excess and surplus lines segments.

In addition to continuing to develop new products and services through our target markets department, we continue to make progress on expanding our current products and services aimed at high net worth policyholders offered through our personal lines insurance segment.

We believe we are on track to begin offering a new suite of high net worth insurance products in the second half of this year through agents in the state of New York. Those products will include higher coverage limits than we offer today along with other new options.

In addition to growth opportunities with our agencies on a direct written premium basis, we see long-term opportunities in assumed reinsurance. Last night, we announced with a separate news release an important initial step for realizing future opportunities, hiring Jamie Hole as Managing Director, Head of Reinsurance Assumed, to lead this initiative.

We recognize the current challenges in the reinsurance market and won't be trying to grow that business quickly. Instead, we will take our time and maintain underwriting discipline as we develop relationships and expertise that we believe will benefit the Company and shareholders over the long term.

Looking forward toward 2020, we are in the early phases of establishing a vision of what is to come. As always, that vision will include continuing to profitably grow the Company with our successful agency-centered model and focusing on our value creation ratio to measure long-term value for shareholders. Over time, we expect to develop more specific objectives and plans, and we will communicate them at appropriate times.

For the first quarter, average renewal price increases for commercial lines continued at percentages near the middle of the low single digit range, very similar to the fourth quarter. That average includes the muting effect of three-year policies that were not yet subject to renewal pricing during the first quarter.

For smaller commercial property and commercial auto policies that renewed during the first quarter, we continue to obtain meaningful price increases. Those commercial property policies experienced percentage increases averaging in the high single-digit range, and commercial auto averaged increases in the mid-single-digit range.

For our personal auto policies, renewal price percentage increases averaged near the low-end of the mid-single-digit range. Homeowner policies were a little higher in the same range.

For our excess and surplus lines segment, the first-quarter 2015 average renewal price increases were also near the low-end of the mid-single-digit range. That segment of our business turned in another outstanding quarter with a combined ratio below 90% and net written premiums up 20%.

Our life insurance subsidiary, including income from its investment portfolio, again contributed nicely to earnings and again grew premiums in its largest product line, term life insurance.

In conclusion, our primary measure of long-term financial performance, the value creation ratio was 1.3% for the first quarter with operating income leading the way. We feel we are well-positioned for good overall financial performance for the remainder of 2015.

I will now ask our Chief Financial Officer, Mike Sewell, to add his insights about our recent financial performance.

Great. Thank you, Steve, and thanks to all of you for joining us today. I'll start with some analysis of investment results. Investment income grew in the first quarter, mainly from the boost by stock portfolio dividends that rose 13% for the quarter. Yields continued to slowly decline for our bond portfolio. We generated a 1% increase in interest income over the first quarter of 2014 as our net purchases of bonds during the last four quarters totaled $375 million. The bond portfolio's first-quarter 2015 pretax average yield reported at 4.7% was 12 basis points lower than a year ago, but only 2 basis points lower than what we reported for the fourth quarter of 2014. We now report in our 10-Q the yields for new bonds purchased during the quarter, and we added a table for yields of bonds expected to be redeemed by year for the next two to three years.

You can see that taxable bonds purchased during the first quarter had an average pretax yield of 4.34%, while tax-exempt bond purchases averaged 3.13%. Our bond portfolio's effective duration remained the same level as last year end at 4.4 years.

Cash flow from operating activities continues to help our investment income grow. Funds generated from net operating cash flows for the first quarter of 2015 rose 67% to $215 million, contributing to $93 million of net purchases of securities for our investment portfolio. Paying $38 million less for catastrophe losses was part of the reason for the increase in operating cash flow for the first quarter of this year compared with a year ago.

We are still carefully managing expenses, and the 2/10 of a point ratio increase for the property casualty underwriting expense ratio was also explained in our 10-Q.

As noted on our fourth-quarter earnings call, we think investing in our business in areas such as enhancing pricing and underwriting expertise is a good trade-off over time. A short-term increase in expense can create long-term value for investors.

As an example, since the first quarter of last year, we strategically invested in the personal lines' staff additions to support high net worth market expansion, and we anticipate a good return on that investment.

Loss reserves are the next subject of my comments. Our approach to setting overall reserves remains consistent with the past as we aim for net amounts well into the upper half of the actuarially estimated range of net loss and loss expense reserves.

In the first quarter, we strengthened reserves for our auto lines of business. For our other lines in total, the best estimate by our actuaries of ultimate loss and loss expense ratios for all accident years in aggregate was similar to our year-end estimate. The ratio for our total property casualty net favorable reserve development on prior accident years was similar to the full-year 2014, benefiting the combined ratio by a little more than 2 points.

Overall, our first-quarter 2015 net favorable development was, as usual, spread over several accident years, including 30% for accident year 2014, 22% for accident year 2013, 39% for accident year 2012, and 9% for all older accident years in aggregate.

Steve noted that we enhanced the strength of our balance sheet this quarter. There are many ways to assess capital strength, and we think it's an important aspect as our liquidity and financial flexibility.

Cash and marketable securities for our parent company rose 2% from year end, topping $1.8 billion at the end of the first quarter. Our strong capital also positions us well to continue to grow our insurance operations.

I will end my prepared remarks as usual, by summarizing the contributions during the first quarter to book value per share. They represent the main drivers of our value creation ratio. Property casualty underwriting increased book value by $0.11. Life insurance operations added $0.05. Investment income, other than life insurance and reduced by noninsurance items, contributed $0.37. The change in unrealized gains at March 31 for the fixed income portfolio, net of realized gains and losses, increased book value per share by $0.19. The change in unrealized gains of March 31 for the equity portfolio, net of realized gains and losses, decreased book value by $0.18, and we declared $0.46 per share in dividends to shareholders. The net effect was a book value increase of $0.08 during the first quarter to another record high of $40.22 per share.

And now, I'll turn the call back over to Steve.

Thanks, Mike. In closing our prepared remarks, I would like to mention a few other events of the quarter that show the commitment of all our associates to keep getting a little bit better every day, keeping us on track to deliver shareholder value far into the future.

First, we've made outstanding strides in improving our real-time download capabilities, which make it easier for our agency customers to do business with us. At their recent conference, NetVU recognized those efforts by presenting us with their Quantum Award for offering superior workflow productivity. NetVU is the agent-based user group of Vertafore's agency management system.

Second, we are working to be good stewards of all our resources, including our natural ones. Our headquarters facility recently earned the silver-level certification for LEED for Existing Buildings, Operations and Maintenance. We are one of only 40 buildings with more than one million square feet to earn certification in this LEED category nationally.

We appreciate this opportunity to respond to your questions and also look forward to meeting in person with many of you during the remainder of the year.

As a reminder with Mike and me today, are Jack Schiff, Jr.; Ken Stecher; J.F. Scherer; Eric Matthews; Marty Mullen; and Marty Hollenbeck. Erica, please open the call for questions.

(Operator Instructions) Josh Shanker, Deutsche Bank.

I know you guys don't like to make a forecast based on one quarter, but there's a real trend if we look at the homeowners line. You guys were growing double digits as recently as a year ago. Fourth quarter was light. So there's no growth this quarter in it, and I know you are making a drive in that high net worth product, I guess. What's happening there? Can you talk about that a bit?

Josh, this is J.F. Scherer. A couple things happening there. We were taking some pretty significant increases in homeowner rates over the last several years that have moderated now. That drove a lot of the growth. We think we've reached great adequacy in a lot of the states, and so we are doing a fair amount of tweaking, but nothing as drastic as we had been.

We're also in the process of running off our Florida-originated personal lines book of business. That started last July. And so that's contributing to an absence -- it's diluting growth in the homeowner line as well. So that will finish up. We will have one more quarter of that, and then beginning in the third quarter, the comparisons will be without the effect of Florida.

New business in homeowners was up 16%. The initiative we have with the high net worth is really starting to take effect right now. So we are seeing a bit more business generated in the higher net worth area in both homeowner and auto for that matter. So I think what you'll see, without making any predictions of it, is a rebound in the growth rate in the homeowners line.

And just philosophically, why leave Florida now? Three years ago, five years ago, eight years ago, any of these times, someone could of made the decision to leave Florida. Currently, reinsurance in Florida is probably more affordable than it's been in a long time. What was the mathematics about why leave Florida now?

Well, we spent the period of time that you just described trying to negotiate with the Department of Insurance for rate adequacy in our homeowner book of business. It was woefully inactive -- inadequate and had gotten it that way over a period of time.

For really matters related to legislative reasons where the legislator had passed limitations, they could not raise rates for our book of business -- for our rates to the level we had to have. It took us a lot of time to exhaust all those options, and when it was finally concluded that we were not going to be able to get adequate rate increases, we chose to leave.

There wasn't going to be enough relief -- not even close to enough relief in reinsurance costs in Florida to cause us to believe that the risks we were taking at the rates that we were being allowed to charge were worth it.

So in the commercial lines area, there is more rate flexibility. Obviously, the Department of Insurance is interested in protecting the personal lines client, whereas business clients can -- or big boys can make their own decisions about what they pay for insurance.

So we're still there in commercial lines. We still monitor what goes on within the state. It could very well be that based on more flexibility in the state of Florida that we could someday write more business down there. But, as it is right now, the only personal lines business that we are writing in Florida is business that is collateralized. By that, I mean it's originated from states outside Florida with business that we believe warrants us to take whatever risk we might take on a secondary residence in Florida.

Understood. Thank you for all the clarity, and look, I've asked this question several ways every conference call, at least somebody has. I will ask it a different way. It does seem that your loss picking is more accurate now than it was maybe five years ago, and some people might view that as a pejorative statement because usually you had a thick cap of favorable development. And now you're getting the numbers closer to right. I don't know how you view all that. Do you feel that you have a better grasp on loss picking now? Do you think the attitude has changed about getting numbers right versus getting them overestimated has changed? It feels palpably different, and maybe in two years, we will look back at this time and laugh at it as a cycle moment. But it does seem with all the inflationary pressure over the last three years, I'm surprised there's not more reserve releases.

Good point, Josh. I think over time we have been consistent in our approach. I think we always go with the actuarial people's best estimate of the ultimate losses. I think I would think that with every area of our Company, I would agree that I think over time, there's been improvement, and they have gotten better at picking the ultimates.

But I also agree too you that there is a tremendous amount -- agree with you that there is a tremendous amount of uncertainty. It will be interesting to look back in a few years and see how accurate, in fact, everything has turned out to be. But I just always try to stress that it's a very consistent approach. We go with the actuaries' best estimates, and we do feel in every area of the Company that we're trying to get a little bit better, a little bit precise all the time.

All right. Well, there's nothing wrong with being precise. Thank you for all the answers.

Vincent DeAugustino, KBW.

Just to start off, on the assumed reinsurance discussion here, I know it's fairly preliminary, but I'm curious of any lines that you might target? And then it sounds like this may be more of a direct effort, but there's some mention of JLT. Maybe it was implied, but will JLT play a fairly big part here? Just trying to understand the distribution nature of that effort.

Sure, Vince. Good questions. I guess one thing I would like to make -- one point is assumed reinsurance is not entirely new to us here at Cincinnati. Over the past year, -- I guess over the past 20 years or so, voluntary assumed reinsurance has been as high as about 2.4% of our net writings. This has largely been done through the various pools, retro cessions that we have been involved with with reinsurers and companies that we've had long relationships with. But we have been very passive participants. In my opinion, we've kind of lacked expertise, and recognizing that it's a tough market right now, we're down to just one contract that we're involved with.

So we feel here we've got the opportunity to bring in really some excellent talent. In Jamie Hole, we know we have a known quantity. We've had a long successful relationship with both Jamie and, as you mentioned, with JLT. We've worked together for a long time, and we are -- as you mentioned, we are confident that we will get good deal flow from JLT over time, as well as other entities that we will work with.

We think Jamie is going to bring with him -- maybe not -- bring with him is probably not the right word, but he will establish a small team of experts as part of Cincinnati Insurance. We're going to do this without establishing a new legal entity, a new company, and we are going to execute what we described as an allocated capital model.

We're going to do our best just contract by contract to estimate the capital that would be needed for that individual policy and only move forward if we feel that we can get a fair risk-adjusted return on that policy.

We recognize it's a really tough market right now, and we're going to be very judicious. Just look at everything kind of to your other point policy by policy. We don't have a specific line of business strategy or anything like that. It's going to be very much technically based on a policy by policy basis.

We're only going to look at diversifying opportunities, so obviously nothing in the Midwestern convective storms area, and we think the diversification that we may be able to achieve over time should really be helpful to us in driving up our overall risk-adjusted returns. Again, we're going to very much walk before we run and be very, very disciplined in putting our capital to work here.

Okay. Thanks for the color there. I guess one thing I'd say is that among some of the other companies we cover, I think Cincinnati has a very good reputation among your peers, and I don't think there's any doubt about your capital adequacy. So that said, I'm wondering if there would be a target for US regional business outside of the Midwest or to your point on diversification if you would look outside of the US to kind of get you some of that diversification benefit?

We're going to be very flexible. Certainly not in the Midwest, but beyond that, we're going to be very flexible, and again, just kind of policy by policy, contract by contract, look at them very closely one by one.

Okay. All right. I guess bringing it a little bit closer to home here, so on the paid to incurred ratio, I noticed that that dropped pretty decently in the quarter, and so I just wanted to check in and see if that's the result of maybe a little bit lower weather losses or obviously, the development in some of the lines plays a part there. But just curious if any of this is stemming from a little bit higher initial accident year pick or just any color there would be helpful.

Yes, good point. I do think that again, we go with our actuarial best estimates. I think they've been very prudent in the way they have gone about things. I think with a couple of the lines, the auto lines -- while we've had favorable development overall and, again, building on 26 years or so in a row of favorable development, we have had a couple lines, the auto lines, have had some adverse development. And I think particularly here in the first quarter, it is a situation where when you have seen some adverse development -- and now you are making the initial pick on just one quarter -- the first quarter of a new accident year, you certainly don't want to step into the same situation that we were in before, and so I think they are being prudent in the picks that they are making for the current accident quarter, particularly in those auto lines given what we've seen.

Okay. Would it be fair to say on the auto lines that you are kind of responding to some of the same trends and to your point trying to make sure that it doesn't reemerge here this year? Or is there anything incremental that has emerged since the year-end review where from a loss cost side, you have to maybe take another step back?

I think it will be more the former.

Okay. Great. And then just one last -- I wonder if I can sneak it in. So the press release noted the $5 billion goal. I think there's been some conversation about a 2020 plan, looking a little bit further out. So I'm curious if you guys would be prepared to talk about growth plans looking further out and reconciling that to the pace of the 2015 goal and just sort of expectations where we are today, and thank you.

No, thank you. We set that 2015 goal several years ago. And I think it was a really good goal and that it's really spurred us forward. I think one thing that we've always made perfectly clear is that we are only going to do it if we can do it profitably. So I think it really has been a beneficial goal to us, and that if we look back about, just recently, the A.M. Best, in one of their "BestWeek's" in March, put out the new rankings of companies with US net written premium and we moved up to 22nd. So kind of over this period of time, we started at year-end 2010 as the 26th largest writer based on United States net written premium. Each year we have moved up one position from 26th to 25th to 24th to 23rd to the end of 2014 22nd.

So I think setting and the work that goes into setting these plans is very important. We have stressed that we're only going to do it if we can do it profitably, and we are glad to say that over that period of time, other than the really cat-riddled 2011, we have been able to put in sub-100 combineds, and I think we're looking pretty good about that again here for 2015.

So it's been a good goal. I think it's going to come down to the wire. So we are hedging a little bit here as we make our disclosures, but I think it's really good to set out the ambitious challenging goals there that are achievable. But always keeping our focus that it needs to be profitable growth, and we will do the same thing as we move into our planning for the 2020 goal. And at this point, I might ask J.F. if he has any other color he would like to add to that.

Vincent, I think Steve summed it up pretty well. We still think we have tremendous potential. So when we get around to setting a projection for 2020, it will certainly be ambitious. We're still in 39 states. Our penetration rate in those states is still relatively low. The number of agencies we have still relatively low, sub-1500 agencies. We think we have tremendous opportunity within those agencies. They write over $30 billion in premiums within those agencies that we don't write. But really, as Steve said, we've done so much in the area of fortifying our profitability between the analytics modeling, loss control inspections, special services, specialization, and underwriting in target markets. Notwithstanding the fact that the $5 billion -- we might be a little short of that this year. We're certainly not pessimistic about how we can look at 2020 and beyond. We're feeling actually pretty good about that.

All right. Great. Appreciate all the color and best of luck. Thanks.

Scott Heleniak, RBC Capital Markets.

Just wondered if you could touch on the expense ratio. I don't know if you had any kind of estimation. Is this a good kind of quarterly run rate to use as far as what it might be for the full year? It might be up a little bit. I know you mentioned some of the initiatives. So is that your expectation, and is most of the increase -- you talked about strategic investments. Is that mostly personal lines and technology, or is there anything else I'm missing?

Yes. This is Mike. There's really a lot of different strategic investments that we are making. And so for kind of a run rate for the rest of the year, it's going to be a combination obviously of our investments, how much we're spending and then the growth of the premiums. Some of the investments that are in there I mentioned was related to our high net worth, homeowners and so forth, but we are investing probably more, and we've got more inspectors. We started our customer care center, and that's going to be really increasing and ramping up this year. Our target markets, the focus that we have there, IT, as you mentioned, and we've been adding more actuaries to be able to really help how we segment the business, price it or price adequacy ratio, etc.

So you have really got a combination of a lot of investments. We've been watching our existing costs and really just trying to control those. And so we're still controlling those, but while you can only squeeze so much out, and so with the investments that we are making, and then as you look here at the first quarter compared to -- the first quarter prior year with our combined ratio being a little bit better, our profitability there, there is also just a slight uptick that's going to be in there also related to our profit sharing or contingent commissions and so forth for agents.

So kind of a combination of all that. You saw a little bit of an uptick. Let's wait to see how the rest of the year pans out, but we're not really changing our direction on increasing expenses overall. Still controlling them, strategic investments, grow premiums.

Okay. That's a good answer. And then just polling on that a little bit, you guys rolled out the national advertising campaign during the quarter. So what are your expectations as far as where this might be as far as that part of the business as you roll out increased high net worth rollout in 2015/2016?

Scott, this is J.F.. Have you seen it? Have you seen the ad?

I have not.

Have not. Well, maybe we need to run it more often or something. Actually, this is the first time we've done any national TV ads. The ad is being run two weeks on, two weeks off and will run through September. It's being seen on CNN and Fox News -- a variety of shows on Fox News, so that could run the gamut from Bill O'Reilly to Anderson Cooper. There's a demographic on those cable channels that we like in terms of being a slightly higher net worth audience that we are interested in, but also business owners.

So we're not trying -- I guess the point I would make, we're certainly not trying to compete with the major advertisers out there.

What we're wanting to do is, as we have in the past, is to showcase the value of an agent and the role the agent plays in their relationship with our Company. And simultaneously with that, we have ramped up a lot our digital advertising. So obviously the TV ad is -- will play a part in all this, but digital advertising will play a major part. As much is the public is an audience for this ad, we want our agents to be an audience for it as well.

And as a result of seeing Cincinnati Insurance Company on a national level, that creates confidence in them. Certainly with our expansion out west into some areas where Cincinnati Insurance Company had not been active, it is valuable for our name to be out there so that they can make reference to it. And for that matter, we're going to be writing personal lines business in New York City. So to be seen by potential customers there would be of value.

So it's part of a very large initiative that we have both internal with our agencies digitally as well as nationally. So I would expect you'll see a consistency in this, but certainly not a drastic expansion there.

And we have been -- we are measuring both qualitatively and quantitatively the effects of it, and we are seeing on our website more activity on the weeks that are on and most notably the find an agent tab that is clicked by visitors has gone up significantly as a result -- during the times that this ad is playing. So we think it is paying off already.

Okay. Next question was just on -- I think Vince talked about this a little bit just on the commercial and personal auto reserve strengthening, so there is no real change in the first quarter as far as severity or frequency of the claims that were coming in? Was there anything you can comment specifically on that that might have drove that?

I think I would reiterate the -- just what we've already said is that we have seen -- I think it's more you look over long-term the trends and paid losses that have caused us to want to strengthen those reserves for those auto lines for the -- all prior years, and I think that, as well as what we're seeing, is influencing the actuaries to be pretty prudent with their initial pick here for the first quarter -- first accident quarter here in 2015.

All right. Fair enough. Thanks.

Paul Newsome, Sandler O'Neill.

Good morning and congratulations on the quarter.

Thanks, Paul.

I was hoping you could talk about the continued distribution expansion in a little bit more detail? Just to kind to give us an update.

Paul, we've been appointing agencies -- about 100 new relationships a year over the last five or six years, and we will probably continue expanding at that particular pace. As you know, there still continues to be a lot of M&A activity, consolidation of agencies. In some cases, it works to our benefit where the combined agencies creates more opportunity for us in a community, and in some cases, it creates disruption. And it -- and our premium activities go down a little bit.

So we continued to take a look at new appointments, whether they be in Ohio or new states. I don't think you're going to see much of an increase beyond the 100 or so new agency appointments. You will see some personal lines only appointments that are most associated with high net worth specialists. So it will see a few more of those.

But I think as you look out into the horizon, we could end up appointing 500 agencies over the next five years, and with the kind of consolidation that's occurring, maybe only net out 150 or 200 increase. But it is our plan to continue to appoint more agencies.

Great. Thanks.

Does that give you the detail you're looking for?

Yes, that's good enough. Thank you. I appreciate it.

(Operator Instructions). Mike Zaremski, Balyasny.

Follow-up. If I understood correctly from one of the previous questions, it sounded like the increases in the accident year ex catastrophe loss ratios in personal and commercial were primarily due to what you are seeing in both commercial and personal auto. And if that's correct, along the same lines, I know you guys talked about non-catastrophe weather-related losses being lower than year ago levels. I was just curious if there were other items which may have been unusually elevated, maybe such as personal auto losses between $1 million to $5 million or maybe other items?

I don't think there are a whole lot of other items. I think you touched on them with the personal and the commercial auto. I think there was a bit of an elevation in the commercial casualty, but I think you pretty much hit on what we are seeing in the quarter.

Okay. And so then if I think about what pricing is in personal auto and in commercial lines, is there -- are you guys getting enough price to get margin improvement on a go-forward basis?

I think we are, Mike. Time will only tell, but I think from what I see, not only in pricing, but what we are doing on the underwriting side of things -- when we really team up with it with the claims -- we've got every area of the Company contributing towards improvement, and I think we're still on a trajectory of improvement here.

Got it. Best of luck and look forward to seeing you guys soon.

There are no further questions at this time. I turn the call over to Steve Johnston.

Thank you, Erica, and thanks to all of you for joining us today. We hope to see some of you this Saturday at our annual shareholders meeting at the Cincinnati Art Museum. If you can't make it, please listen to our webcast of the meeting. It's available at cinfin.com/investors. And if not, we look forward to seeing you again at the second-quarter call if not before.

Thank you. Have a great day.

This concludes today's conference call. You may now disconnect.