Selective Insurance Group Inc (SIGIP) 2022 Q4 法說會逐字稿

Good day, everyone. Welcome to Selective Insurance Group's Fourth Quarter 2022 Earnings Call. At this time, for opening remarks and introductions, I would like to turn the call over to Senior Vice President, Investor Relations, and Treasurer, Rohan Pai. Sir, you may begin.

今天是個好日子。歡迎來到 Selective Insurance Group 的 2022 年第四季度收益電話會議。此時，關於開場白和介紹，我想把電話轉給負責投資者關係的高級副總裁兼財務主管 Rohan Pai。先生，您可以開始了。

Thank you and good morning, everyone. We are broadcasting this call on our website, selective.com. The replay is available until March 5. We use three measures to discuss our results and business operations. First, we use GAAP financial measures reported in our annual, quarterly, and current reports filed with the SEC. Second, we use non-GAAP operating measure which we believe make it easier for investors to evaluate our insurance business. Non-GAAP operating income is net income available to common stockholders, excluding the after-tax impact of net realized gains or losses on investments and unrealized gains or losses on equity securities. Non-GAAP operating return on common equity is non-GAAP operating income divided by average common stockholders' equity. Adjusted book value per common share defers from book value from common share by the exclusions of total after-tax unrealized gains and losses on investments included and accumulated other comprehensive income. GAAP reconciliations to any reference non-GAAP financial measures are in our supplemental investor package found in the investors page of our website.

謝謝大家，早上好。我們正在我們的網站 selective.com 上廣播此電話會議。重播將持續到 3 月 5 日。我們使用三種措施來討論我們的結果和業務運營。首先，我們使用向美國證券交易委員會提交的年度、季度和當前報告中報告的 GAAP 財務指標。其次，我們使用非 GAAP 運營指標，我們認為這可以讓投資者更容易評估我們的保險業務。非 GAAP 營業收入是普通股股東可獲得的淨收入，不包括已實現投資淨損益和股權證券未實現損益的稅後影響。非 GAAP 普通股經營回報率是非 GAAP 經營收入除以平均普通股股東權益。調整後的每股普通股賬面價值與普通股賬面價值相抵觸，因為不包括投資的稅後未實現損益總額和累計其他綜合收益。與任何參考非 GAAP 財務措施的 GAAP 對賬在我們網站投資者頁面上的補充投資者包中。

Third, we make statements and projections about our forward performance. These are forward-looking statements under the Private Securities Litigation Reform Act of 1995. They are not guarantees of future performance and are subject to risks and uncertainties. We discuss these risks and uncertainties details in our annual, quarterly and current reports filed with the SEC, and we undertake no obligation to update or revise any forward-looking statements.

第三，我們對我們的前瞻性表現做出陳述和預測。這些是根據 1995 年《私人證券訴訟改革法案》作出的前瞻性陳述。它們不是對未來業績的保證，並受風險和不確定因素的影響。我們在向美國證券交易委員會提交的年度、季度和當前報告中討論了這些風險和不確定性細節，我們不承擔更新或修改任何前瞻性陳述的義務。

Now, I'll turn the call over to John Marchioni, our Chairman of the Board, President and Chief Executive Officer, who will be followed by Mark Wilcox, our Executive Vice President and Chief Financial Officer. John?

現在，我將把電話轉給我們的董事會主席、總裁兼首席執行官 John Marchioni，接下來是我們的執行副總裁兼首席財務官 Mark Wilcox。約翰？

Thank you, Rohan and good morning. We're pleased to report strong fourth quarter results capping off another excellent year for Selective, with an operating ROE of 15.6% in the quarter and 12.4% for the full year. 2022 marks our ninth consecutive year of double-digit non-GAAP operating returns on equity. Over that timeframe, our operating ROE average approximately 12%, exceeding our weighted average cost of capital by about 400 basis points. We deliver these results along alongside discipline, net premiums written growth that average 8% annually, nearly doubling the size of the company over that timeframe. Tangible book value per share plus change and accumulated dividends which we view as the best longer-term indicator of value creation in our industry increased 10% annually over the past 9 years. And our annualized total shareholder return over that period was 15.9%. Few in our industry can match that track record of consistent growth and profitability. Although, we face several industry wide headwinds, as we look out to 2023, we expect to continue to maintain our performance level well into the future. I'll come back to this point shortly. But first I'll review a few highlights of our performance for the quarter and year.

謝謝你，Rohan，早上好。我們很高興地報告第四季度強勁的業績為 Selective 又一個出色的年度畫上了句號，本季度的運營淨資產收益率為 15.6%，全年為 12.4%。 2022 年是我們連續第九年實現兩位數的非 GAAP 運營股本回報率。在此期間，我們的運營 ROE 平均約為 12%，超過我們的加權平均資本成本約 400 個基點。我們在實現這些成果的同時，還遵守紀律，淨保費收入平均每年增長 8%，在此期間公司規模幾乎翻了一番。每股有形賬面價值加上變化和累積股息，我們認為這是我們行業價值創造的最佳長期指標，在過去 9 年中每年增長 10%。在此期間，我們的年化股東總回報率為 15.9%。在我們的行業中，很少有人能與持續增長和盈利的記錄相提並論。儘管我們面臨著幾個行業範圍內的不利因素，但展望 2023 年，我們希望在未來很長一段時間內繼續保持我們的績效水平。我很快就會回到這一點。但首先，我將回顧我們本季度和本年度業績的一些亮點。

Net premiums written were up 14% in the quarter and 12% for the full year. All three insurance operating segments contributed to this result. Growth for the year was driven by overall renewable pure price increases that averaged 5.1%. Solid renewable retentions, exposure growth and strong new business. Our 95.1% combined ratio for ‘22 included 4.3 points of net catastrophe losses, partially offset by 2.5 points of net favorable prior year catastrophe reserve development. Our net catastrophe losses for the year were only marginally above our expectation of four points despite Winter Storm Elliott being a significant loss, reflecting our catastrophe risk management efforts. The underlying combined ratio of 93.3% for 2022 reflected elevated non-catastrophe property losses from inflationary cost pressures and our property lines. Underwriting results contributed 5.4 points to our full year ROE. Net investment income after tax was $232 million for the year, we actively managed our fixed income portfolio to optimize risk adjusted returns in a rising interest rate environment. During 2022, we increased the pretax embedded book yield in the fixed income portfolio by approximately 115 basis points, while also moving up in credit quality.

本季度淨承保保費增長 14%，全年增長 12%。所有三個保險業務部門都為這一結果做出了貢獻。這一年的增長是由平均 5.1% 的整體可再生純價格上漲推動的。可靠的可再生能源保留、風險增長和強勁的新業務。我們 22 年 95.1% 的綜合比率包括 4.3 點的淨巨災損失，部分被前一年的淨有利巨災儲備開發的 2.5 點所抵消。儘管冬季風暴埃利奧特造成重大損失，但我們今年的淨巨災損失僅略高於我們 4 個百分點的預期，這反映了我們在巨災風險管理方面的努力。 2022 年的基礎綜合成本率為 93.3%，反映了通脹成本壓力和我們的財產險導致的非巨災財產損失增加。承保業績為我們的全年股本回報率貢獻了 5.4 個百分點。全年稅後淨投資收益為 2.32 億美元，我們積極管理我們的固定收益投資組合，以在利率上升的環境中優化風險調整後的回報。 2022 年，我們將固定收益投資組合的稅前嵌入式賬面收益率提高了約 115 個基點，同時提高了信貸質量。

The overall investment portfolio generated 9.4 points of ROE for 2022. In addition to delivering excellent financial results, I want to highlight some of our other key accomplishments. We have built the organizational muscle in a decade long track record of effectively managing commercial lines pricing in a dynamic loss trend environment, positioning us favorably coming into 2023. Our long history of underwriting discipline positioned our property portfolio with strong insurance to value ratios, and our underwriters have worked hard to maintain ITV against this backdrop of rapid inflation. Our top line growth was very strong in 2022, a testament to our excellent distribution partner relationships and sophisticated pricing tools. Our unique field underwriting model remains highly valued by our agency partners. Our market max tool which provides our distribution partners with insights in their overall portfolio, and identifies target accounts to grow their business with us has been instrumental in generating high quality new business opportunities.

整體投資組合在 2022 年產生了 9.4 點的股本回報率。除了提供出色的財務業績外，我還想強調我們的其他一些主要成就。在動態損失趨勢環境中有效管理商業線路定價的十年來，我們建立了組織實力，使我們在進入 2023 年時處於有利地位。我們悠久的承保紀律曆史使我們的財產投資組合具有強大的保險價值比率，並且在這種快速通貨膨脹的背景下，我們的承銷商努力維持 ITV。我們在 2022 年的收入增長非常強勁，這證明了我們出色的分銷合作夥伴關係和先進的定價工具。我們獨特的現場承保模式仍然受到我們的代理合作夥伴的高度重視。我們的市場最大化工具可為我們的分銷合作夥伴提供有關其整體投資組合的見解，並確定目標客戶以與我們一起發展業務，這有助於產生高質量的新商機。

We expanded our commercial lines footprint into three additional states in 2022, opening Vermont, Idaho and Alabama. And we remain on track to open Maine in West Virginia in early 2024. We completed the implementation of our new automation platforms for both standard commercial line small business and E&S both of which dramatically enhance ease of use for our distribution partners. And we appointed 180 new agencies during the year, bringing the total to approximately 1,500 agencies represented by 2,600 storefronts. While please with our overall performance in 2022, our team is steadfast in our focus on addressing the areas in need of improvement. Factoring in our operating leverage, invest in asset leverage and long-term investment return expectations. We target a 95% combined ratio to consistently meet or exceed a 12% operating ROE hurdle over time. Our 2023 combined ratio guidance is 96.5% or 92%, excluding catastrophe losses. Reflected in our combined ratio guidance is an overall loss trend of approximately 6.5%, which is up from 5% a year ago largely due to inflationary impacts in the property lines.

2022 年，我們將商業線路的足跡擴展到另外三個州，即佛蒙特州、愛達荷州和阿拉巴馬州。我們仍有望在 2024 年初在西弗吉尼亞州開設緬因州。我們完成了針對標準商業線小型企業和 E&S 的新自動化平台的實施，這兩個平台都大大提高了我們的分銷合作夥伴的易用性。我們在這一年中任命了 180 家新代理機構，使總數達到約 1,500 家代理機構，代表 2,600 家店面。雖然我們對 2022 年的整體表現感到滿意，但我們的團隊堅定不移地專注於解決需要改進的領域。考慮到我們的經營槓桿，投資於資產槓桿和長期投資回報預期。我們的目標是 95% 的綜合比率，以隨著時間的推移始終達到或超過 12% 的運營 ROE 障礙。我們 2023 年的綜合成本率指引為 96.5% 或 92%，不包括巨災損失。在我們的綜合比率指導中反映出整體虧損趨勢約為 6.5%，高於一年前的 5%，這主要是由於財產險的通貨膨脹影響。

For property, we are currently incorporating a loss trend projection of about 7% compared to 4% a year ago, reflecting our increased estimate of inflationary impacts on average claims (inaudible). We increased our casualty loss trend more modestly to 6% from 5.5%. The 6% trend for casualty reflects our view of economic inflation, but more importantly captures our view of social inflation impacts as well. We will continue to pursue rate changes in line with trends to support our profitability in these lines, along with claims and underwriting initiatives focused on more granular drivers of profitability. And selecting these trends we consider both frequency and severity impacts within the portfolio. Whereas 2020 to continue to benefit from favorable frequencies in certain lines, going forward we are assuming generally flat frequency. Therefore the trends I quoted can be considered largely severity driven. We remain comfortable with the quality of our portfolio and therefore review rate and inflationary exposure adjustments as the primary tools to address the higher severity churn. In 2022, the combination of pure rate and exposure generated total average renewal premium change of 12% in commercial property, 12% in commercial auto physical damage, 8% in homeowners and 9% for E&LS property. Given our recent success coupled with the state of the property marketplace, we expect this pace to continue in 2023.

對於財產，我們目前納入的損失趨勢預測約為 7%，而一年前為 4%，反映出我們增加了對通貨膨脹對平均索賠（聽不清）的影響的估計。我們將傷亡損失趨勢從 5.5% 溫和增加至 6%。 6% 的傷亡趨勢反映了我們對經濟通脹的看法，但更重要的是，它也體現了我們對社會通脹影響的看法。我們將繼續追求符合趨勢的費率變化，以支持我們在這些領域的盈利能力，以及專注於更精細的盈利能力驅動因素的索賠和承保計劃。在選擇這些趨勢時，我們考慮了投資組合中的頻率和嚴重性影響。儘管 2020 年將繼續受益於某些線路的有利頻率，但我們假設未來的頻率基本持平。因此，我引用的趨勢在很大程度上可以被認為是嚴重程度驅動的。我們仍然對我們投資組合的質量感到滿意，因此將利率和通貨膨脹敞口調整作為解決更嚴重客戶流失的主要工具進行審查。 2022 年，純利率和風險敞口相結合，使商業地產的平均續約保費總變化為 12%，商用汽車有形損壞為 12%，房主為 8%，E&LS 財產為 9%。鑑於我們最近的成功以及房地產市場的狀況，我們預計這一步伐將在 2023 年繼續。

Our casualty lines overall continue to produce combined ratio in line with our target. As such, our focus remains on achieving renewable pure rate increases that remain in line with our expected loss trend. However, within casualty, commercial and personal, auto liability is producing above target combined ratios. And we have a series of rate and underwriting actions to address these. We believe the pricing environment across all three business segments remains favorable. In standard commercial lines, we achieved strong renewal pricing throughout the year, and third and fourth quarters were strongest with real pure price increases averaging 5.8% and 5.6% respectively. We saw an acceleration of pricing in January with renewal pure rate of 6.5%, E&S pricing was also strong throughout the year with four quarter renewal pure rate at 7.9% and the full year of 7.3%.

我們的傷亡險種總體上繼續產生符合我們目標的綜合比率。因此，我們的重點仍然是實現與我們預期的損失趨勢一致的可再生純費率增長。然而，在傷亡、商業和個人事故中，汽車責任產生的綜合比率高於目標。我們有一系列利率和承保行動來解決這些問題。我們認為所有三個業務部門的定價環境仍然有利。在標準商業產品系列中，我們全年實現了強勁的續訂定價，第三和第四季度最為強勁，實際純價格分別平均增長 5.8% 和 5.6%。我們看到 1 月份的定價加速，續訂純利率為 6.5%，E&S 定價全年也很強勁，四個季度的續訂純利率為 7.9%，全年為 7.3%。

In personal lines, our ongoing transition from the mass market to the mass affluent more market caused us to fall behind the market in pricing trends. We expect to close that gap in coming quarters. In the fourth quarter, we filed rate changes in 9 of our states averaging 8.8% and plan to continue that pace over the next several months. We expect investment income to positively impact our financial results in 2023. Through active management of our fixed income portfolio, we have optimized for higher investment yields while maintaining conservative credit and duration positions. Based on the projected investment yields and our investments to equity ratio, we anticipate that investment income will contribute over 200 basis points of additional ROE in 2023. Our updated investment income expectations and combined ratio guidance for 2023 translate to an ROE above our 12% target. Our target sets a high bar for our financial performance, challenges us to perform at our best and aligns our incentive compensation structure with shareholder interest.

在個人險種方面，我們正在從大眾市場向更富裕的大眾市場過渡，導致我們在定價趨勢上落後於市場。我們預計將在未來幾個季度縮小這一差距。在第四季度，我們在我們的 9 個州提交了平均 8.8% 的利率變化，併計劃在未來幾個月繼續保持這一步伐。我們預計投資收入將對我們 2023 年的財務業績產生積極影響。通過積極管理我們的固定收益投資組合，我們優化了更高的投資收益率，同時保持保守的信用和久期頭寸。根據預計投資收益率和我們的投資股本比率，我們預計 2023 年投資收益將貢獻超過 200 個基點的額外股本回報率。我們更新的 2023 年投資收益預期和綜合比率指引轉化為股本回報率高於我們 12% 的目標.我們的目標為我們的財務業績設定了高標準，挑戰我們發揮最佳表現，並使我們的激勵薪酬結構與股東利益保持一致。

Overall, I'm pleased with our excellent execution, consistent track record of results and plans to generate consistent and profitable growth. Now I'll turn the call over to Mark to review the results for the quarter.

總的來說，我對我們出色的執行力、一貫的業績記錄以及實現持續盈利增長的計劃感到滿意。現在，我將把電話轉給馬克，讓他審查本季度的結果。

Thank you, John, and good morning, I'll review our consolidated results, discuss our segment operating performance and finish with an update on our capital position and initial guidance for 2023. For the fourth quarter, we reported a strong finish to the year with $1.38 of fully diluted EPS, a $1.46 of non-GAAP operating EPS, and a non-GAAP operating ROE of 15.6%. These results are inclusive of a full retention cat loss for Winter Storm Elliott which reduced our EPS by $0.75 and our fourth quarter ROE by full eight percentage points. Our results reflect the strong underlying earnings power of our franchise. For the full year, we reported EPS of $3.54 and non-GAAP operating EPS of $5.03. Our non-GAAP operating ROE of 12.4% for 2022 was particularly strong in light of significant industry catastrophe losses, capital markets volatility and the elevated inflationary environment and put upward pressure on loss costs.

謝謝約翰，早上好，我將回顧我們的綜合業績，討論我們的部門經營業績，並以更新我們的資本狀況和 2023 年的初步指導作為結束。第四季度，我們報告了今年的強勁表現完全稀釋後的每股收益為 1.38 美元，非 GAAP 運營每股收益為 1.46 美元，非 GAAP 運營 ROE 為 15.6%。這些結果包括 Winter Storm Elliott 的全部保留貓損失，這使我們的 EPS 減少了 0.75 美元，我們的第四季度 ROE 減少了整整八個百分點。我們的業績反映了我們特許經營權強大的潛在盈利能力。全年，我們報告的每股收益為 3.54 美元，非 GAAP 運營每股收益為 5.03 美元。鑑於重大的行業災難損失、資本市場波動和通脹環境加劇，並給損失成本帶來上行壓力，我們 2022 年的非 GAAP 運營股本回報率為 12.4%，這一點尤其強勁。

Turning to our consolidated underwriting results, for the quarter, we reported a consolidated combined ratio of 94.7% included in the combined ratio of $45.7 million of net catastrophe losses or 5.2 points and $38 million of net favorable prior-year casualty reserve development of 4.4 points. As we pre announced on January 23rd, we reported $46.1 million of pretax net catastrophe losses related to Winter Storm Elliott, $57.8 million inclusive of reinstatement premium. The winter storm produced freezing temperatures and strong winds across the majority of our commercial lines footprint. $135 million of gross losses were predominantly water related, and were driven by the sustained period of freezing temperatures. This cause considerable water damage as a result of burst pipes, largely from pressurized fire suppressant sprinkler systems within commercial properties. While the losses were spread across our footprint, much of the impact was concentrated in our southern region. The net impact of the combined ratio was 6.5 points for the quarter and 1.7 points for the year. So despite Winter Storm Elliott had been a meaningful catastrophe for us. It was manageable and an event of this size is not unexpected. Partially offsetting Winter Storm Elliott was a modest reduction in prior-quarter catastrophe loss estimates included in the reduction in our ultimate loss for Hurricane Ian from $10 million to $5 million. For the year, we reported a 95.1% combined ratio compared to our original guidance for the year of 95% combined ratio. Favorable prior-year casualty reserve development which we don't expect or budget for providing 2.5 points of benefit, but was largely offset by about two points of unfavorable non-cat property losses compared to expectations and slightly higher than expected cat losses.

談到我們的綜合承保業績，本季度，我們報告的綜合綜合比率為 94.7%，包括 4570 萬美元的淨巨災損失或 5.2 點的綜合比率和 3800 萬美元的淨有利前一年傷亡準備金發展的綜合比率 4.4 點.正如我們在 1 月 23 日預先宣布的那樣，我們報告了與冬季風暴埃利奧特相關的稅前淨巨災損失 4610 萬美元，其中包括恢復保險費 5780 萬美元。冬季風暴在我們的大部分商業線路足跡上產生了冰凍溫度和強風。 1.35 億美元的總損失主要與水有關，並且是由持續的冰凍溫度造成的。由於管道爆裂，這會造成相當大的水損害，這主要是由於商業地產內的加壓滅火噴水滅火系統造成的。雖然損失遍及我們的足跡，但大部分影響集中在我們的南部地區。本季度綜合比率的淨影響為 6.5 點，全年為 1.7 點。因此，儘管有冬季風暴，但埃利奧特對我們來說是一場有意義的災難。這是可控的，這種規模的事件並不意外。部分抵消了冬季風暴埃利奧特損失的是上一季度災難損失估計的適度減少，其中包括我們將颶風伊恩的最終損失從 1000 萬美元減少到 500 萬美元。今年，我們報告的綜合比率為 95.1%，而我們最初的綜合比率為 95%。有利的前一年傷亡準備金發展，我們不期望或預算提供 2.5 個百分點的收益，但在很大程度上被不利的非巨災財產損失與預期相比和略高於預期巨災損失的約兩個百分點所抵消。

The underlying combined ratio of 93.3% for the year was about 2.3 points above expectations, and again was largely driven by the high and non-cat property losses. Moving to expenses, our expense ratio was 32.1% for the fourth quarter and 32.3% for the year, both modestly improved relative to 2021. As previously discussed, we have several cost containment initiatives in place. But we do expect some modest upward pressure on our expense ratio in 2023 due to higher reinsurance costs, which is reflected in our 2023 combined ratio guidance. Over the medium and longer term, we remain focused on lowering the expense ratio through various initiatives, while ensuring we're investing appropriately to support our longer-term strategic objectives. Corporate expenses which principally include holding company costs and long-term stock compensation totaled $6.7 million in the quarter, and $31.1 million for the year.

全年基本綜合成本率為 93.3%，比預期高出約 2.3 個百分點，這主要也是受到高額非巨災財產損失的推動。談到費用，我們第四季度的費用率為 32.1%，全年為 32.3%，與 2021 年相比均略有改善。如前所述，我們制定了多項成本控制措施。但我們確實預計，由於再保險成本增加，2023 年我們的費用率將面臨適度的上行壓力，這反映在我們的 2023 年綜合成本率指引中。從中長期來看，我們仍然專注於通過各種舉措降低費用率，同時確保我們進行適當投資以支持我們的長期戰略目標。主要包括控股公司成本和長期股票薪酬的公司費用在本季度總計 670 萬美元，全年為 3110 萬美元。

Turning to our segments. For the fourth quarter, standard commercial lines net premiums written increased 13%, driven by renewal pure price increases averaging 5.6%, solid retention of 86% and new business growth of 22%, inclusive of exposure growth and endorsements, the renewal premium change in the quarter was a healthy 10%. The standard commercial lines combined ratio was a profitable 95.5% for the fourth quarter, and included 5.7 points of net catastrophe losses, which were partially offset by 4.7 points in favorable prior-year casualty reserve development. The impact of Winter Storm Elliott was 6.9 points on the combined ratio, inclusive of the reinstatement premium. The favorable prior-year casualty reserve development was driven by $30 million for the workers compensation line relate to accident years 2020 and prior, and $3 million for the above liability line. Partially offsetting this was a $5 million increase to the commercial auto bodily injury line for the current accident year.

轉向我們的細分市場。第四季度，標準商業險種淨承保保費增長 13%，受續保純價格平均增長 5.6%、86% 的穩定保留率和 22% 的新業務增長（包括風險增長和背書）的推動，續保保費變化該季度是健康的 10%。第四季度標準商業險種的綜合盈利率為 95.5%，其中包括 5.7 點的淨巨災損失，這部分被上年有利的傷亡準備金發展的 4.7 點所抵消。冬季風暴 Elliott 對綜合比率的影響為 6.9 點，包括恢復溢價。前一年傷亡準備金的有利發展是由與 2020 年及之前事故年度相關的工傷賠償線 3000 萬美元和上述責任線 300 萬美元推動的。部分抵消了當前事故年度商用汽車人身傷害線增加 500 萬美元。

The commercial lines underlying combined ratio was 94.5% for the quarter. For the full year, net premiums written growth was a healthy 12%. The combined ratio was a profitable 94.8% and the underlying combined ratio was 94.3%. In our personal lines segment, net premiums written increased 20% in the quarter, reflecting our initiatives to expand our presence of a mass affluent market and favorable competitive dynamics. The combined ratio of the quarter was 99.9% and included 5.3 points of net catastrophe losses. The impact of Winter Storm Elliott was 6.1 points on the combined ratio, inclusive of the reinstatement premium, the underlying combined ratio was 94.6%.

本季度商業險種基礎綜合成本率為 94.5%。全年，淨保費收入增長 12%，保持健康。綜合成本率為 94.8%，基礎綜合成本率為 94.3%。在我們的個人險種部分，本季度承保的淨保費增長了 20%，反映了我們擴大在大眾富裕市場的影響力和有利的競爭動態的舉措。本季度綜合成本率為 99.9%，包括 5.3 個淨巨災損失。冬季風暴 Elliott 對綜合比率的影響為 6.1 個百分點，包括恢復溢價在內，基礎綜合比率為 94.6%。

For the full year, NPW growth was 9%. The combined ratio was 102.4, and the underlying combined ratio was 88.8%. In our E&S segment, net premiums written grew 14% for the quarter relative to a year ago, renewal pure price increases average 7.9%. Retention remained strong relative to a year ago and new business was up 5%. The combined ratio for this segment was an extremely profitable 84.3% in the quarter, and including 1.6 points in net catastrophe losses and $5 million or 5.6 points of net favorable prior-year casualty reserve development. The impact of Winter Storm Elliott was 3.2 points on the combined ratio inclusive of reinstatement premium. The underlying combined ratio was 88.3%. For the year, NPW growth was 16%, the combined ratio was a very profitable 90.9% and the underlying combined ratio was 89.5%. Overall E&S segment has continued to build on its successes in recent years, and reported its strongest year since the platform's inception just over a decade ago.

全年 NPW 增長率為 9%。綜合成本率為102.4，基礎綜合成本率為88.8%。在我們的 E&S 部門，本季度淨保費同比增長 14%，續保純價格平均增長 7.9%。與一年前相比，保留率仍然很高，新業務增長了 5%。本季度該部門的綜合成本率為 84.3%，利潤極高，其中包括 1.6 點的淨巨災損失和 500 萬美元或 5.6 點的淨有利前一年傷亡準備金開發。冬季風暴 Elliott 對包括恢復保費在內的綜合比率的影響為 3.2 個百分點。相關綜合成本率為88.3%。這一年，NPW 增長率為 16%，綜合比率為 90.9%，非常有利可圖，基礎綜合比率為 89.5%。整體 E&S 部門近年來繼續取得成功，並報告了自該平台十多年前成立以來最強勁的一年。

Moving to investments, our portfolio remains well positioned. As of yearend 92% of our portfolio was in fixed income and short-term investments, with an average credit rating of double AA minus and an effect duration of 4.1 years. Risk assets represented approximately 9.8% of our portfolio as of yearend, down from 11% a year ago as with modestly de-risk the portfolio against a more uncertain macroeconomic backdrop. For the quarter after-tax net investment income was $65.5 million, slightly relative to $64.5 million in 2021 driven by significant growth in investment income from our fixed income portfolio and offset by a reduction in income from alternatives. Alternatives which are reported on a one quarter lag generated $100,000 about in tax gains, compared to $19.6 million of after-tax gains a year ago. The after-tax yield on the total portfolio was 3.4% for the fourth quarter, translate into a healthy 11.5 points of ROE contribution.

轉向投資，我們的投資組合仍然處於有利地位。截至年底，我們 92% 的投資組合屬於固定收益和短期投資，平均信用評級為雙 AA-，有效期限為 4.1 年。截至年底，風險資產約占我們投資組合的 9.8%，低於一年前的 11%，這是因為在更加不確定的宏觀經濟背景下適度降低了投資組合的風險。本季度稅後淨投資收益為 6,550 萬美元，略低於 2021 年的 6,450 萬美元，這是由於我們固定收益投資組合的投資收益顯著增長，但被另類投資收益的減少所抵消。報告滯後四分之一的備選方案產生了大約 100,000 美元的稅收收益，而一年前的稅後收益為 1,960 萬美元。第四季度總投資組合的稅後收益率為 3.4%，轉化為健康的 11.5 點 ROE 貢獻。

During 2022, we invested approximately $2.7 million of new money in fixed income, taken advantage of higher investment yields and simultaneously improving credit quality and liquidity. The average pretax new purchase yield for the quarter was up (inaudible) to 6.1% from 2.7% in the year ago period, and was well above the pretax yield on our existing portfolio.

2022 年，我們在固定收益方面投入了大約 270 萬美元的新資金，利用更高的投資收益率，同時提高信貸質量和流動性。本季度的平均稅前新購買收益率從去年同期的 2.7% 上升（聽不清）至 6.1%，遠高於我們現有投資組合的稅前收益率。

Approximately 10% of our fixed income portfolio remains invested in floating rate securities, although that's down from 14% at the end of the third quarter. The floating rate allocation reset at high benchmark rates throughout the year, open increased book yield and investment income. Well, this was a meaningful tailwind in 2022. More recently, we've been lowering our allocation to floating rate securities in anticipation of a potential decline in short term rates later this year. We have been opting instead to lock in current new money rates from longer period of time, we're managing our duration and credit quality targets.

我們的固定收益投資組合中約有 10% 仍投資於浮動利率證券，儘管這一比例低於第三季度末的 14%。全年浮動利率配置重置於高基準利率，公開增加賬面收益率和投資收益。好吧，這在 2022 年是一個有意義的順風。最近，我們一直在降低對浮動利率證券的配置，因為預計今年晚些時候短期利率可能會下降。相反，我們一直選擇在較長時間內鎖定當前的新貨幣利率，我們正在管理我們的持續時間和信用質量目標。

During 2022, we increase the pretax book yield of our fixed income portfolio by approximately 115 basis points, which includes approximately 34 basis points of incremental yield in the fourth quarter, every 100 basis points of high yield on our total investment portfolio translates to about 2.7 points of ROE. The total return on the investment portfolio was 1.8% of the quarter but negative 7.2% for the full year, reflecting the rapid rise in interest rates in 2022.

在 2022 年期間，我們將固定收益投資組合的稅前賬面收益率提高約 115 個基點，其中包括第四季度約 34 個基點的增量收益率，我們總投資組合的每 100 個基點的高收益轉化為約 2.7 ROE 點數。投資組合的總回報率為本季度的 1.8%，但全年為負 7.2%，反映了 2022 年利率的快速上升。

Let me turn to our reinsurance program. We successfully renewed our main property catastrophe program which covers both our standard market and E&S business effective January 1. For the 2023 underwriting year, we went to market with $915 million of limit in excess of a $60 million retention to pay it off expiring $835 million of limit in excess of $40 million retention. As a reminder our $40 million retention has been constant since 2006. While net premiums written and capital base of more than doubled in size over that period. The purchase of additional limit at the top of the program was driven by exposure growth, net of co-participation we placed $810 million of up limit for 2023 compared to $776 million in 2022.

讓我談談我們的再保險計劃。我們成功地更新了我們的主要財產災難計劃，該計劃自 1 月 1 日起生效，涵蓋我們的標準市場和 E&S 業務。在 2023 年承銷年度，我們以 9.15 億美元的限額進入市場，超過 6000 萬美元的保留金以償還到期的 8.35 億美元超過 4000 萬美元的保留限額。提醒一下，自 2006 年以來，我們的 4000 萬美元保留率一直保持不變。而在此期間，淨承保保費和資本基礎的規模翻了一番多。計劃頂部額外限額的購買是由風險增長驅動的，扣除共同參與後，我們為 2023 年設置了 8.1 億美元的上限，而 2022 年為 7.76 億美元。

As of January 1st, a one in 100 or 1% net probable maximum loss of PML for US hurricane, our peak peril is a very manageable 3% of GAAP equity, and one in 250 net PML of 0.4% probability stand at 7% of GAAP equity. These are both well within our risk tolerances. At renewal, we also eliminated our E&S only cover given the modest exposure in that portfolio and our strong capital position. Pricing on our cat program was up on a risk adjusted basis but in line with that of all three accounts in the US. In addition, terms and conditions tightened modestly for the placement. As a reminder, our reinsurance program also includes our (inaudible), which limit the impact to us from large losses to $2 million per occurrence for casualty and $3 million per risk for property. These treaties were due on July 1.

截至 1 月 1 日，美國颶風 PML 的最大淨損失概率為 100 分之一或 1%，我們的峰值風險是 GAAP 權益的 3%，非常可控，250 分之一的 0.4% 淨 PML 概率為 7%公認會計原則股權。這些都在我們的風險承受能力之內。在更新時，我們還取消了我們的 E&S 保險，因為該投資組合的風險敞口適中，而且我們的資本狀況良好。我們的巨災計劃定價在風險調整的基礎上上漲，但與美國所有三個賬戶的定價一致。此外，配售的條款和條件適度收緊。提醒一下，我們的再保險計劃還包括我們的（聽不清），它將對我們的影響從重大損失限制在每次事故 200 萬美元和每次財產風險 300 萬美元。這些條約將於 7 月 1 日到期。

Turning to capital, our capital position remains extremely strong, with $2.5 billion of GAAP equity and statutory capital and surplus as of yearend. Book value per share increased 4.4% during the quarter, but declined 16.6% for the year due to the after-tax unrealized losses for fixed income securities. Adjusted book value per share was up 5.2% for the year. Our parent company cash and investment position stand at $484 million, which is well above our longer-term target. Our net premiums written to surplus of 1.44x is in the middle of our target range. Our debt to capital ratio of 16.6% is on the conservative side. These metrics provide us with significant financial flexibility to support our growth and execute on our strategic initiatives. We did not repurchase any shares during the fourth quarter, we have $84.2 million of our remaining capacity under our share repurchase authorization, which we plan to use opportunistically in 2023.

談到資本，我們的資本狀況仍然非常強勁，截至年底，GAAP 股本和法定資本及盈餘為 25 億美元。本季度每股賬面價值增長 4.4%，但由於固定收益證券的稅後未實現虧損，全年下降 16.6%。調整後每股賬面價值全年增長 5.2%。我們的母公司現金和投資頭寸為 4.84 億美元，遠高於我們的長期目標。我們的 1.44 倍盈餘淨保費處於我們目標範圍的中間。我們 16.6% 的債務資本比率處於保守水平。這些指標為我們提供了顯著的財務靈活性，以支持我們的增長和執行我們的戰略計劃。我們在第四季度沒有回購任何股票，根據我們的股票回購授權，我們有 8420 萬美元的剩餘產能，我們計劃在 2023 年擇機使用。

Let me finish with some commentary on our initial guidance for 2023. Firstly, we expect the GAAP combined ratio of 96.5% inclusive of 4.5 of catastrophe losses. This assumes no prior accident year reserved development. On an underlying basis, both (inaudible) catastrophe losses of prior- year casualty reserve development, on 2023 combined ratio guidance implies 130 basis points of improvement relative to 2022. The higher cat low reflects the more recent trends in cat losses as well as a slightly higher retention and reinsurance co-participation on our main property cap rate insurance program. After-tax net investment income was $300 million, including $30 million in after-tax gains from alternatives, after-tax net investment income is up $68 million in total or 29% from 2022. An overall effective tax rate of approximately 21%, which includes an effective tax rate of 20% for net investment income and 21% for all other items, and weighted average shares of 61 million on a diluted basis, which does not reflect any share repurchases we may make under our authorization.

最後讓我對我們對 2023 年的初步指導進行一些評論。首先，我們預計 GAAP 綜合比率為 96.5%，其中包括 4.5% 的巨災損失。這假設沒有先前的事故年預留發展。從根本上看，根據 2023 年綜合比率指導，前一年傷亡準備金發展的（聽不清）巨災損失意味著相對於 2022 年改善 130 個基點。較高的巨災低點反映了巨災損失的近期趨勢以及我們的主要財產上限利率保險計劃的保留和再保險共同參與率略高。稅後淨投資收益為 3 億美元，其中包括 3000 萬美元的替代方案稅後收益，稅後淨投資收益總計比 2022 年增加 6800 萬美元或 29%。總體有效稅率約為 21%，包括淨投資收益 20% 的有效稅率和所有其他項目 21% 的有效稅率，以及稀釋後的 6100 萬股加權平均股份，這並不反映我們可能根據我們的授權進行的任何股份回購。

As John mentioned, this guidance implies healthy ROE output for 2023 and one that is above our 12% target for the year. With that I'd ask the operator to open up the call for questions.

正如 John 所提到的，這一指引意味著 2023 年的 ROE 產出是健康的，並且高於我們今年 12% 的目標。有了這個，我會要求接線員打開問題電話。

(Operator Instructions) Our first question comes from the line of Mike Zaremski from BMO.

（操作員說明）我們的第一個問題來自 BMO 的 Mike Zaremski。

I guess a first question is on loss inflation. You guys have been kind of very , you guys have given very good disclosure over the past year plus or really forever about kind of what you're seeing puts and takes. I'm curious, it looks like from the data you, Selective has seen an uptick in loss inflation a little sooner than some peers that are now talking about loss inflation. Just curious, do you ever analyzed whether you feel that some of the loss inflation you're seeing is just simply due to -- was it specific due to business mix. And that and maybe other the rest of the market -- some of your peers are more immune to inflationary pressures taking into account appreciating there's some different business mixes like your underweight workers comp relative to some but just curious if you feel like Selective is much more unique.

我想第一個問題是損失膨脹。你們有點非常，在過去的一年裡，你們已經提供了非常好的披露，或者真的永遠關於你們所看到的東西。我很好奇，從您的數據來看，Selective 發現損失膨脹率上升的時間比現在談論損失膨脹率的一些同行要早一些。只是好奇，你有沒有分析過你是否覺得你所看到的一些損失膨脹僅僅是由於 - 它是否特定於業務組合。而且，也許還有其他市場——考慮到一些不同的業務組合，你的一些同行對通貨膨脹壓力更免疫獨特的。

Well, so Mike, I would say we're unique in a lot of ways relative to our operating model, and how we interact with our agents and what our underwriting philosophy is. But with regard to loss trend, I would say no, you did say line of business mixes, which could differ and clearly loss trends vary based on the individual line of business. But the trends we've seen, and the trends we've incorporated on a go forward basis, are largely driven by environmental factors. And I think that's both on the frequency and the severity side. And as we've talked about in the past, I think it's always important to have a discussion around loss trends, specifically for casualty, and then for property because there you really have to think about them differently.

好吧，邁克，我想說的是，相對於我們的運營模式，我們在很多方面都是獨一無二的，我們如何與我們的代理商互動以及我們的承保理念是什麼。但關於虧損趨勢，我會說不，你確實說過業務線組合，這可能會有所不同，而且顯然虧損趨勢會因個別業務線而異。但我們所看到的趨勢，以及我們在前進的基礎上納入的趨勢，在很大程度上是由環境因素驅動的。我認為這是在頻率和嚴重性方面。正如我們過去談到的那樣，我認為圍繞損失趨勢進行討論總是很重要的，特別是傷亡，然後是財產，因為你真的必須以不同的方式思考它們。

For casualty, we have been over the last couple of years, moving up our loss trend expected. Part of that is evident in movement in historical loss trends. But remember, your historical loss trends are impacted not just by inflationary considerations impacting severity, but actual changes in frequency and severity. And as we've talked about, in the past, frequencies, generally speaking, have leveled off a little bit below where there would have been pre pandemic. And when you look at your historical loss trends, that provides a little bit of an offset to some of the severity impacts that were more inflationary driven be it economic or social inflationary.

對於傷亡，我們在過去幾年一直在提高預期的損失趨勢。部分原因在於歷史損失趨勢的變化。但請記住，您的歷史損失趨勢不僅受到影響嚴重程度的通貨膨脹因素的影響，而且受到頻率和嚴重程度的實際變化的影響。正如我們所說，在過去，一般來說，頻率已經趨於平穩，略低於大流行前的水平。當你查看你的歷史損失趨勢時，這會稍微抵消一些更嚴重的影響，這些影響是由經濟或社會通脹驅動的。

We've moved that again, and as we talked about our peer comments have increased our casualty loss trend by about 50 basis points. And we do attribute much of that to our outlook for social inflationary impacts going forward. And again, everybody seems to be talking about social inflation and return to social inflationary trends, we're actually showing you how are specifically belting it in to our loss ratio selections for casualty. But again, there's nothing different in our portfolio. For those others that write standard commercial lines, kind of small mid-market and lower end of the large commercial market. Property is a little bit of a different story property, if you look at where we are, we've got a 7% forward loss trend on property. And looking back, our historical loss trends have also had some of that benefit of lower actual frequencies, and a really high severity year in 2022. And that, along with our forward outlook for inflation going forward, we've got that set at seven. And we feel good about that. So, again, I appreciate your recognizing, we've been transparent about this for a long time. But we also think it's important that we're not just talking about social inflation, we're showing you how we incorporated into our forward view of loss trends and how that's embedded in our loss ratio selections.

我們再次改變了這一點，當我們談論我們的同行評論時，我們的傷亡損失趨勢增加了大約 50 個基點。我們確實將這在很大程度上歸因於我們對未來社會通脹影響的展望。再一次，每個人似乎都在談論社會通貨膨脹並回歸社會通貨膨脹趨勢，我們實際上是在向您展示如何將其特別納入我們的傷亡損失率選擇中。但同樣，我們的投資組合沒有什麼不同。對於那些編寫標準商業行的其他人，小型中端市場和大型商業市場的低端。財產是一個有點不同的故事財產，如果你看看我們在哪裡，我們有 7% 的財產遠期損失趨勢。回顧過去，我們的歷史損失趨勢也有一些好處，即較低的實際頻率，以及 2022 年非常嚴重的一年。而且，連同我們對未來通貨膨脹的前瞻性展望，我們將其定為 7 .我們對此感覺很好。因此，再次感謝您的認可，我們長期以來一直對此保持透明。但我們也認為重要的是，我們不僅僅是在談論社會通貨膨脹，我們還向您展示了我們如何將我們對損失趨勢的前瞻性觀點納入其中，以及如何將其納入我們的損失率選擇中。

Okay, that's helpful. My next question is on the return on equity guidance, and I'm asking it in a positive light, appreciative of the volatility of Selective ROE has been much lower than peers too, but just curious, a lot of management teams or maybe a mix of investors too expect your commercial peers to operate or many of your commercial peers to operate at usually higher ROE for thinking about '23 and ‘24 versus their historical averages for the industry. That's, it's a bit of a case for Selective, but not as much. So there was just a management team, I know you guys couldn't hear all the conference calls that lifted their ROE guidance by a full 100 basis points attributable mostly to higher interest rates. So just kind of curious, anything structurally that you think that Selective, is this something you're thinking about? Or is it just the opportunity set is to a low double digit ROE is the right way to think about things in order to kind of continue growing and at a faster pace than your peers?

好的，這很有幫助。我的下一個問題是關於股權指導的回報率，我是從積極的角度提出這個問題，因為 Selective ROE 的波動性也遠低於同行，但只是好奇，很多管理團隊或者可能是一個組合的投資者也期望您的商業同行或您的許多商業同行以通常更高的 ROE 運營，以考慮 23 和 24 年與行業歷史平均水平的對比。也就是說，它有點像 Selective，但沒那麼多。所以只有一個管理團隊，我知道你們聽不到所有將 ROE 指引提高整整 100 個基點的電話會議，這主要歸因於更高的利率。所以有點好奇，你認為選擇性的任何結構，這是你正在考慮的事情嗎？或者只是機會集是低兩位數的 ROE 是正確的思考方式，以便繼續增長並以比同行更快的速度？

Yes, so let me tackle this first, this is John. And I'm sure Mark will want to add some additional commentary. First thing I would say is, our ROE target that we set and provide you every year is not an aspirational target. It's a target we expect to consistently achieve over time. And in fact, we set that as our target for our variable compensation for all of our employees, including the executive team. So that's the important point number one. The other point I would make is, when we see years like we have coming up, where you would expect your investment income and the ROE contribution from your investment income to be higher than your long term expected return on your portfolio, we expect to generate higher than our target ROEs in those years.

是的，讓我先解決這個問題，我是約翰。我相信 Mark 會想添加一些額外的評論。我要說的第一件事是，我們每年設定和提供給您的 ROE 目標並不是一個理想的目標。這是我們希望隨著時間的推移始終如一地實現的目標。事實上，我們將其設定為我們所有員工（包括執行團隊）可變薪酬的目標。所以這是第一點。我要說的另一點是，當我們看到像我們這樣的未來幾年時，您會期望您的投資收入和投資收入的 ROE 貢獻高於您投資組合的長期預期回報，我們預計會產生高於我們當年的目標股本回報率。

And that's why this is an important point, we, in my prepared comments, I went through how we get to a target combined ratio of 95 on a long-term basis. So that assumes our operating leverage, it assumes our invested asset leverage, and it assumes a normal GAAP equity environment, essentially adjusting for the impact of either an unrealized gain or loss position, and then how we think about the expected returns on that portfolio. So in a typical year, that 95 would produce the 12% ROE. Our guidance this year of a 96.5 is obviously above that. Now, because of that higher return from our investment portfolio, as we talked about, that will produce a combined ratio in excess of our target ROE of 12% but that 96.5 is still point and a half above our combined ratio target. And therefore we would pay out lower from a variable compensation perspective. So that's how we put it all together. And we do specifically tie that combined ratio target to our compensation plans. And again, it goes into the idea that when you have outsized investment income, you should be delivering higher than average or higher than expected ROE. I am not sure, trying to black out your question here, Mike, but that's how we think about it. And that's how we structure our targets internally and compensate all of our place.

這就是為什麼這很重要，我們在準備好的評論中介紹了我們如何在長期基礎上達到 95 的目標綜合比率。因此，它假設我們的運營槓桿，它假設我們的投資資產槓桿，它假設一個正常的 GAAP 股權環境，基本上調整未實現收益或損失頭寸的影響，然後我們如何考慮該投資組合的預期回報。所以在一個典型的年份，95 將產生 12% 的股本回報率。我們今年 96.5 的指導顯然高於此。現在，由於我們的投資組合回報率更高，正如我們所說，這將產生超過我們 12% 的目標股本回報率的綜合比率，但 96.5 仍然比我們的綜合比率目標高出一個半點。因此，從可變薪酬的角度來看，我們會支付較低的費用。這就是我們將它們放在一起的方式。我們確實將該綜合比率目標與我們的薪酬計劃具體聯繫起來。再一次，它進入了這樣一個想法，即當您擁有超額投資收益時，您應該提供高於平均水平或高於預期的股本回報率。我不確定，試圖在這裡抹黑你的問題，邁克，但這就是我們的想法。這就是我們在內部構建目標並補償我們所有位置的方式。

Okay. And to your point, we can see in the proxy that some of those peers don't see their bar isn't as high as I guess where use the term aspirational. So they're not comped on that maybe higher ROE. My last question was just curious when I , when we think of one of Selective's competitive advantages, you're closer than many of your competitors to your agents, insurance brokerage agents, in terms of the your model. Now that we're a couple years of the pandemic, is anything changed, are your insurance brokers not in the office as much and you've had to kind of maybe change your kind of your strategy a bit in terms of how you are interacting with your insurance brokers, or is it mostly business as usual now?

好的。就你的觀點而言，我們可以在代理中看到，其中一些同行沒有看到他們的門檻沒有我猜的那麼高，在哪裡使用了有抱負這個詞。所以他們並沒有因為可能更高的股本回報率而競爭。當我想到 Selective 的競爭優勢之一時，我的最後一個問題只是好奇，就您的模型而言，您比許多競爭對手更接近您的代理人、保險經紀代理人。現在我們已經經歷了幾年的大流行，有什麼變化嗎，你的保險經紀人是不是不在辦公室了，你不得不在互動方式方面稍微改變一下你的策略與您的保險經紀人，還是現在大部分照常營業？

There's clearly been some change. Now, also, I'll say this, I would say the significance of agency relationships from our perspective, and from the agents perspective is no different. I think how you build and maintain those has shifted, because like much of the US, our agents have modified in office schedules, and therefore, they're in office on a less regular basis than they used to be. And that just changes the manner in which our field underwriters operate, but a balance of their time was always split between field work and office work from an underwriting perspective.

顯然有一些變化。現在，我還要說，從我們的角度來看代理關係的重要性，從代理商的角度來看也沒有什麼不同。我認為你建立和維護它們的方式已經發生了變化，因為與美國大部分地區一樣，我們的代理人已經修改了辦公時間表，因此，他們的辦公時間比以前少了。這只是改變了我們現場承銷商的運作方式，但從承保的角度來看，他們的時間總是分配在現場工作和辦公室工作之間。

And they just had to shift how they manage that balance. And then I think just the other point of this is having long standing relationships and being able to maintain those in a more heavily virtual environment. I think it's been a huge benefit for us. And I think a lot more of that in person focus, which is more limited than it used to be, is focused on building new relationships whether people within an existing agency relationship or for the newly appointed ones. So definitely a shift in how build and maintain those. But I would say there's also been a significant efficiency gain on the part of our field underwriters, because of the virtual tools, they and our agents have become a lot more comfortable using over the last couple of years.

他們只需要改變他們管理這種平衡的方式。然後我認為這的另一點是擁有長期的關係並能夠在更虛擬的環境中維持這些關係。我認為這對我們來說是一個巨大的好處。而且我認為更多的是親自關注，這比以前更有限，專注於建立新的關係，無論是現有代理關係中的人還是新任命的人。因此，構建和維護這些內容的方式肯定會發生轉變。但我要說的是，由於虛擬工具的存在，我們的現場承銷商也獲得了顯著的效率提升，他們和我們的代理人在過去幾年中使用起來更加自如。

Our next question comes from the line of Mark Dwelle of RBC.

我們的下一個問題來自 RBC 的 Mark Dwelle。

A couple of questions. With respect to the 96.5 combined ratio guide, as Mark pointed out, that's about 130 basis points of improvement relative to this year, I guess what I wanted to do was kind of drill down in terms of thinking about out of that improvement, what portion of that is loss ratio relative to expense ratio. And then similarly, just kind of what are the key levers that are driving your ability to get that improvement relative to last year.

幾個問題。關於 96.5 的綜合比率指南，正如 Mark 指出的那樣，與今年相比提高了大約 130 個基點，我想我想做的是深入思考從這一改進中得出的哪一部分其中是相對於費用率的損失率。然後類似地，推動你獲得相對於去年的改進能力的關鍵槓桿是什麼。

So this is Mark, maybe I'll start and John, I am sure will jump in, there are a couple of different ways to think about the guidance for 2023. One is 130 basis points of improvement from actual in 2022 on an underlying basis, but it is also up about 100 basis points from our expectations a year ago, we'd expected an underlying combined ratio of 91 going into 2022. And then we felt the pressure, particularly as we've talked about all year on the short tail property lines that impacted the non-cat property losses. So that's why we have a target of the 95 versus the guidance of the 96.5, we really feel like there's more work that we need to do to improve the underwriting profitability of the organization. But when you think about the 96.5, we talked about the 4.5 of catastrophe losses. That up a little bit from the four points we expected in 2022.

所以這是馬克，也許我會開始，約翰，我肯定會加入，有幾種不同的方式來考慮 2023 年的指導。一種是在基礎上比 2022 年的實際情況提高 130 個基點，但它也比我們一年前的預期高出約 100 個基點，我們預計到 2022 年基本綜合比率為 91。然後我們感受到了壓力，尤其是當我們全年都在談論空頭時影響非巨災財產損失的尾部財產線。所以這就是為什麼我們有 95 的目標而不是 96.5 的指導，我們真的覺得我們需要做更多的工作來提高組織的承保盈利能力。但是當你想到 96.5 時，我們談到了 4.5 的巨災損失。這比我們在 2022 年預期的四個點略高。

We came in a little bit above that on the back of Elliott late in the year. But when you look at the more recent trend, particularly over the last five years of catastrophe loss activity, we do think there is an elevated level of frequency and severity of catastrophes. And so we raised the cat loss element to that. When you look at the expense ratio, we came in at 32.3 for 2022, I talked a little bit about the upward pressure on that in 2023, on the back of slightly higher reinsurance costs, as well as the impact of inflation. And I would say that the expense ratio, and better than that guidance is called at 32.6, there's the dividend component, which was about 20 basis points in ‘22, we're expecting that to come down a little bit to 10 basis points in 2023.

今年年底，我們在 Elliott 的支持下略高於這一水平。但是，當您查看最近的趨勢時，尤其是在過去五年的巨災損失活動中，我們確實認為巨災的頻率和嚴重程度有所提高。因此，我們將貓損失因素提高到了這一點。當你看費用率時，我們在 2022 年達到 32.3，我談到了 2023 年的上行壓力，原因是再保險成本略高，以及通貨膨脹的影響。而且我會說費用比率，並且比該指導更好的是 32.6，還有股息部分，在 22 年大約是 20 個基點，我們預計它會下降一點到2023 年降息 10 個基點。

So that's about 30 basis points of deterioration in the overall expense ratio, including dividends. And that gets you to kind of an underlying loss ratio of about [59.3] for the full year 2023. Now when you think about that 130 basis points of improvement. Another way to look at that is about half of it is really normalizing out the unusual reinstatement premiums we had in 2022. We had the casualty exceeded reinstatement premiums in Q3, and then the Elliot driven cat reinstatement premiums in Q4 to the tune of about $20 million in total between the two and then about the other half really represents a mix of business. So I would kind of put it into those bullet strokes in terms of our consignment from 2022 to 2023.

因此，包括股息在內的總費用比率下降了大約 30 個基點。這讓你得出 2023 年全年的潛在損失率約為 [59.3]。現在，當你考慮這 130 個基點的改進時。另一種看待這個問題的方法大約是一半，實際上是將我們在 2022 年的異常恢復保費正常化。我們在第三季度的傷亡人數超過了恢復保費，然後 Elliot 在第四季度推動貓恢復保費達到約 20 美元兩者之間的總數約為 500 萬，然後大約另一半真正代表了業務組合。因此，就我們從 2022 年到 2023 年的寄售而言，我會把它放入那些項目符號中。

Truly helpful that pretty much nails it. The second question that I had was related to personal lines in the fourth quarter specifically, the accident year loss ratio was kind of the highest of the year, the expense ratio in the quarter was kind of the lowest for the year nearly, was there anything particular to either of those or is it just kind of the obvious pressure on loss trend on the former any expense saves on the latter?

真正有用，幾乎可以解決問題。我的第二個問題具體是第四季度個人險種，事故年損失率是全年最高的，該季度的費用率幾乎是全年最低的，有沒有什麼特別是對其中任何一個，還是前者的損失趨勢的明顯壓力是後者的任何費用節省？

I'd say for personal lines in the quarter, we, personal lines did absorb its share of losses from Elliott and there is the offsetting reinstatement premium and that does put a little bit of a drag on the ratios when you have a lower denominator on the back of the reinstatement premium. We did also see some pretty significant non-cat property losses within personal lines in the first quarter to the tune of 45.7 percentage points. If you look at the run rate on those, it's a meaningful increase. And it's actually if you compare it to our total expectations that's a full 10 percentage point above what we would have expected for the quarter and that was really the driver on that underlying loss ratio.

我想說的是，對於本季度的個人險種，我們個人險種確實吸收了 Elliott 的損失份額，並且有抵消性的恢復溢價，當你的分母較低時，這確實對比率造成了一點拖累恢復保費的背面。我們確實也看到第一季度個人險種的非巨災財產損失高達 45.7 個百分點。如果你看一下這些的運行率，這是一個有意義的增長。實際上，如果你將它與我們的總預期進行比較，那將比我們對本季度的預期高出整整 10 個百分點，而這確實是潛在損失率的驅動因素。

And then I think the expense benefit, there's probably a little bit more one income from claims probably related to the fourth quarter storms as a positive item in the personalized commission wise, that would be the only other offsetting item but with regard to casualty movement, either current year or prior year, there was none in personal lines.

然後我認為費用收益，可能與第四季度風暴有關的索賠收入可能更多一點，作為個性化佣金明智的積極項目，這將是唯一的其他抵消項目，但關於傷亡變動，無論是當年還是前一年，個人專線都沒有。

Our next question comes from the line of Meyer Shields of KBW.

我們的下一個問題來自 KBW 的 Meyer Shields 系列。

When you look at, I think predominantly the reasonable maybe the mutual competitors that are out there, is there a sense that they're less able to grow? Because of their exposure to the same sort of higher attachment points and higher reinsurance costs that are out there?

當你看的時候，我認為主要是合理的，也許是那裡的相互競爭者，是否有一種感覺，他們的成長能力較差？因為他們暴露於相同類型的更高附著點和更高的再保險成本？

Yes, I think it's a great question, Meyer. I think, without having full insight into what happened when everybody's one, one renewal, I do think that in many cases, those competitors will be more highly dependent on reinsurance. That's certainly assuming their loss effected. And even if they weren't likely under the same pressures as everybody else in the market to raise the attachment point and meaningfully impact the costs. So I would assume that you're seeing a more outsized impact on that group. Now, and I mentioned this, I think this is indicative of what's happening in the market. Just broadly, it was in my prepared comments, and I want to make sure it didn't get lost is that our January commercial lines pricing was 6.5% up almost a four point from Q4. And my sense is actually more than my sense, it was driven by a pretty meaningful movement in the property line. So I think that's indicative of a shift in the marketplace. And whether that's smaller versus larger or across the board. I couldn't really tell you, but I think your original point is pretty accurate in terms of whether the impact of the reinsurance renewal was felt more than others.

是的，我認為這是一個很好的問題，邁耶。我認為，在沒有充分了解每個人的一次續保時發生的情況的情況下，我確實認為在許多情況下，這些競爭對手將更加依賴再保險。這當然是假設他們的損失受到影響。即使他們不太可能承受與市場上其他所有人相同的壓力來提高附著點並顯著影響成本。所以我假設你看到了對該群體的更大影響。現在，我提到了這一點，我認為這表明了市場上正在發生的事情。總的來說，這是在我準備好的評論中，我想確保它不會丟失，因為我們 1 月份的商業線路定價比第四季度上漲了 6.5%，幾乎上漲了 4 個百分點。而我的感覺實際上不僅僅是我的感覺，它是由財產界線中一個非常有意義的運動所驅動的。所以我認為這表明市場正在發生變化。以及無論是小還是大還是全面。我真的不能告訴你，但我認為你原來的觀點非常準確，即再保險續保的影響是否比其他人更能感受到。

Okay, no, that's tremendously helpful. And that also, I guess, answers my next question, which is your willingness to add a little bit more net property risk, given pricing conditions for commercial property? Sounds like you're saying, yes.

好的，不，這非常有幫助。我想這也回答了我的下一個問題，即在給定商業地產定價條件的情況下，您是否願意增加一點淨財產風險？聽起來你在說，是的。

Yes, I, so that's really not how we manage the business in terms of opportunities. So we're looking line by line, we continue to be a package underwriter, we continue to acquire new business based on the individual risk underwriting and the individual risk pricing guidance we provide to our underwriters, I think they make, do make really good decisions. And our growth will be driven more by that individual decision making in the context of the opportunities that are presented, then it will be opportunistic around our current view of where pricing is or isn't.

是的，我，所以這真的不是我們在機會方面管理業務的方式。因此，我們逐行尋找，我們繼續作為一攬子承銷商，我們繼續根據個人風險承保和我們提供給承銷商的個人風險定價指導來獲得新業務，我認為他們確實做得很好決定。我們的增長將更多地受到在所呈現的機會的背景下做出的個人決策的推動，然後圍繞我們目前對定價在哪里或不在哪裡的看法將是機會主義的。

Okay, no, that's fair. That's more sophisticated than the way I was looking at it. And it's a quick lesson if I can. First is it reasonable to assume that your yearend ‘22 casualty reserves incorporated the 7% trend that you're looking for '23?

好吧，不，這很公平。這比我看它的方式更複雜。如果可以的話，這是一個快速的課程。首先假設你的年終 22 傷亡準備金包含你正在尋找的 23 年的 7% 趨勢是否合理？

So I now, yes, that's a question that's a little challenging to answer. I would say that our casualty reserve position at the end of the quarter continues to reflect our best estimate as it always has. And I think, and we don't plan for this, we don't budget for it. But we have a track record of favorable emergency and casualty that we're proud of. And I think it speaks to the manner in which and this was part of my response to earlier question the manner in which we actually build our forward expectation of loss trend into our casualty loss pick. But that initial casualty loss pick is influenced meaningfully by actual historical loss trends. So the actual changes in frequency severity over the last number of years is your historical loss trend that sets your starting point for a casualty loss pick. We then add that 6.5 for casualty forward loss trend. I'm sorry, 6% for casualty forward loss trend into assumes loss ratio. So it's in there on a go forward basis with the starting point is influenced by your actual historical trends.

所以我現在，是的，這是一個有點難以回答的問題。我想說的是，我們在本季度末的傷亡準備金頭寸一如既往地反映了我們的最佳估計。我認為，我們沒有為此做計劃，也沒有為此做預算。但我們有良好的緊急情況和傷亡記錄，我們為此感到自豪。我認為這說明了我們將對損失趨勢的前瞻性預期實際構建到我們的傷亡損失選擇中的方式，這是我對先前問題的回應的一部分。但最初的傷亡損失選擇受到實際歷史損失趨勢的顯著影響。因此，過去幾年頻率嚴重性的實際變化是您的歷史損失趨勢，它為您選擇傷亡損失設定了起點。然後，我們為傷亡遠期損失趨勢添加 6.5。對不起，傷亡遠期損失趨勢為 6% 假設損失率。所以它在前進的基礎上，起點受到你實際歷史趨勢的影響。

Okay, no, perfect, that helps. And then Mark, I can be tedious and get the (inaudible) by product line for the quarter?

好的，不，完美，這有幫助。然後馬克，我可以很乏味地得到本季度的（聽不清）產品線嗎？

Sure, certainly. So going through the different lines of business starting with standard commercial lines for the quarter and commercial order $0.8 million, in commercial property $29.9 million and (inaudible) $9.5 million, that should add up to $40.2 million for standard commercial lines, within personal lines, auto $0.9 million, home $3.2 million. And then property within E&S $1.4 million for a total of $45.7 million for cat losses for Q4.

當然，當然。因此，通過不同的業務線，從本季度的標準商業線和商業訂單 80 萬美元，商業地產 2990 萬美元和（聽不清）950 萬美元，標準商業線加起來應該是 4020 萬美元，在個人線內，汽車 90 萬美元，房屋 320 萬美元。然後是 E&S 內的財產 140 萬美元，總計 4570 萬美元用於第四季度的巨災損失。

Our next question comes from the line of Grace Carter with Bank of America.

我們的下一個問題來自美國銀行的 Grace Carter。

Hi, I'm going back to the loss ratio guidance on an underlying basis, a little bit over 59% for this year, I guess just looking at the non-cap property loss ratio last year trending up a little bit. What sort of expectations for that particular component are you all thinking for this year just kind of considering the expectations for loss cost trends versus the firm pricing environment? Just trying to I guess, understand how property versus casualty contributes to that improvement?

嗨，我要回到基礎上的損失率指導，今年略高於 59%，我想只是看看去年的非上限財產損失率略有上升。考慮到對損失成本趨勢與公司定價環境的預期，今年你們都在考慮對特定組件的什麼樣的期望？我想只是想了解財產與傷亡如何促進這種改善？

Yes, it's a good question, the way we disclose the non-cap property loss ratio, it's non-cap property losses divided by the total net earned premium. And if you think about ‘23 expectations versus ‘22, it's basically flat. So I believe we came in at about 18.4 for the full year across, let me just double check that number 18.3, for the full year across all segments, in 2022. And we'd expect that to be basically that, our expectation for 2023 better than the guidance is that something essentially the same.

是的，這是一個很好的問題，我們披露非上限財產損失率的方式是非上限財產損失除以淨賺保費總額。如果你考慮 23 的預期與 22 的預期，它基本上是持平的。所以我相信我們全年的收入約為 18.4，讓我再檢查一下 2022 年所有細分市場的全年收入 18.3。我們預計這基本上就是我們對 2023 年的預期比指導更好的是本質上相同的東西。

Okay. And in personal lines, there is a pretty big uptick in new business this quarter. I guess I'm just curious about what you're seeing in the shopping environment for personal lines in the target mass affluent segment of the market, and just how considering the last cost environment, how you're thinking about any potential new business penalty as you work on that pivot towards the mass affluent segment?

好的。在個人險種方面，本季度新業務出現了相當大的增長。我想我只是想知道您在目標大眾富裕人群的個人專線購物環境中看到了什麼，以及如何考慮最後的成本環境，您如何考慮任何潛在的新業務損失當你致力於轉向大眾富裕階層時？

Yes, sure. So as we do in our planning across all lines of business, but in personal lines, in particular, to your question, we do plan for a different loss ratio for new than renewal. And that's factored into our loss ratio expectations, segment by segment. And that's no different for personal lines. But I think it's important to keep this in the proper context with regard to our growth, whether a new business or total premium and personal lines. We liked the mass affluent segment, but recognize that we're relatively new into this. So our growth, while it looks big on a percentage basis, in terms of a real dollar basis, these are not big numbers, we grew the segment by $28 million in the year and for $14 million in the quarter and new business was $22 million for personal lines in the quarter. And that was compared to a very low Q4 of ‘21, where we were really just starting to transition and only wrote $10 million of new business. So I guess my point in saying that is I don't know that that's necessarily indicative of what's happening in our market. But that's a segment of business we like and we're showing some really good results relative to our ability to compete in that space.

是的，當然。因此，正如我們在所有業務線的規劃中所做的那樣，但在個人業務方面，特別是針對您的問題，我們確實為新業務和續訂計劃了不同的損失率。這被納入我們的損失率預期中，逐個細分。個人專線也不例外。但我認為，無論是新業務還是總保費和個人險種，重要的是要將這一點保持在我們增長的適當背景下。我們喜歡大眾富裕階層，但認識到我們在這方面相對較新。所以我們的增長，雖然從百分比來看看起來很大，但就實際美元而言，這些並不是很大的數字，我們在這一年增加了 2800 萬美元，在本季度增加了 1400 萬美元，新業務增加了 2200 萬美元對於本季度的個人專線。與 21 年的第四季度非常低相比，我們真的剛剛開始轉型，只寫了 1000 萬美元的新業務。所以我想我要說的意思是我不知道這必然表明我們市場上正在發生的事情。但這是我們喜歡的業務部分，並且相對於我們在該領域的競爭能力，我們展示了一些非常好的結果。

Now, the other important point here is, when you look at the loss ratio environment broadly, and you're looking at the loss ratio for us, in our personal line segment, I think we acknowledge we've got work to do. And as we've made our way through this meaningful transition from mass market to mass affluent and an update in our rating plans accordingly. That led to us falling a little bit behind the market in terms of pricing trends. And you saw in the prepared comments, and I'll reinforce this point, the impact of our filed rates in the 9 states that we took action, and in the fourth quarter was 8.8%. And that'll drive what we start to have on a written and ultimately earned basis, and I would expect that pace to continue. So more work to do from a profitability perspective. But I think the other important point is on the homeowner side, the exposure change we've kept up with. So we've always had a lot of discipline around getting exposure right in our home book. We've automatically fed through the updates in estimated replacement costs and the exposure I feel like we kept pace with it was more in the pricing that we needed to do more catch up on.

現在，這裡的另一個重要點是，當你廣泛地審視損失率環境時，你正在研究我們的損失率，在我們的個人線路部分，我認為我們承認我們有工作要做。當我們完成從大眾市場到大眾富裕的有意義的轉變並相應地更新我們的評級計劃時。這導致我們在定價趨勢方面落後於市場。你在準備好的評論中看到了，我會強調這一點，我們採取行動的 9 個州的歸檔率的影響在第四季度為 8.8%。這將推動我們開始在書面和最終獲得的基礎上擁有什麼，我希望這種步伐能夠繼續下去。因此，從盈利能力的角度來看，還有更多工作要做。但我認為另一個重要的點是在房主方面，即我們一直在關注的風險敞口變化。因此，在我們的家庭書中，我們一直有很多關於如何正確曝光的紀律。我們已經自動提供了估計重置成本的更新，我覺得我們跟上它的步伐更多是在定價方面，我們需要做更多的工作來趕上。

At this time speakers, we show no further questions. You may proceed.

此時發言者，我們沒有進一步的問題。你可以繼續。

Great. Well, thank you all for joining us. As always, free feel to follow up for any additional questions and look forward to speaking you, speaking to you in the future.

偉大的。好吧，謝謝大家加入我們。一如既往，如有任何其他問題，請隨時跟進，並期待與您交談，未來與您交談。

Thank you.

謝謝。

That conclude today's conference. Thank you everyone for participating. You may now disconnect.

今天的會議到此結束。謝謝大家的參與。您現在可以斷開連接。