Conduit Holdings Limited

Good morning and good afternoon, everyone. Welcome to the Conduitree first half of 2022 results call. Please note the disclaimer on page two. Today, after a brief introduction by our chairman, Neil Eckert, our CEO, Trevor Carvey, will present the first half of 2022 highlights, followed by Greg Robert, CEO, providing an update on the underwriting side of the business. Elaine Whelan, our CFO, will then cover our key financials before some final key remarks from Neil.

Thanks, Antonio. Yeah, before the rest of the team is going to tell you about our results for the first six months, I'd like to spend a couple of minutes giving you some thoughts. Conduit is now beyond the startup phase. That's visible from the maturity of the operation we've built, the skills in our team, and most of all, the support that we've received from brokers and clients. Since we started in December 2020, we have now passed the billion-dollar mark of ultimate written premiums. As they now increasingly earn through, the quality of our results will start to surface. Beyond this excellent start to our journey, I'm pleased with the way that we've handled the Ukraine numbers. We've been transparent in that and disclosed the full loss including, and I would stress including, our aviation. The beauty of our business is the simplicity. We're a pure play reinsurer, low policy count, which enables us to assess exposures to events such as this. With that, I'll pass on to Trevor.

Thanks very much Neil. Yes, so the first six months of 2022 demonstrated I think that the business we've put together has become a real engine for growth. You know, it's our commitment to produce a portfolio that's got lower volatility but within it and when we blend and write the overall portfolio we're not over reliant on any one specific class or category of business i think we view that as a significant strength and it's something that we're firmly wedded to so year on year our gross premiums written have increased by more than 70 percent and gross premiums written of 359 million dollars On an ultimate basis, we've written almost $500 million of premiums, which is up 49% on the first year, half year 2021. And it's actually pretty close to the total figure for the whole of last year. So real commendation, I think, to the team there and the work that they've done. Greg Roberts will talk more shortly on makeup of the portfolio generally, but it remains broadly 70-30 in terms of non-CAT versus CAT. And I think that's a clue to where it's wise to be skewed towards in this market. And the industry, just as a general comment, is really offering up great value, really good value in that space. And it's something that we can take advantage of as pricing continues to improve. As regards to CAT, though, the first half of 2022 has been reasonably active. And the frequency of CAT losses around the globe ranging from LATAM crop losses to Australian floods, has been prevalent. But we're pleased to report that we had generally minimal exposure to those NatCat events in the first half year. Moving on to page four, which is the next slide. The slide here, just a few words around the operating expense and the trend that, you know, is in place in a startup business such as ourself. From a premium growth standpoint, I think it shows the tremendous work, which, as I mentioned, the team has done over the last 18 months and has generated almost $750 million of cumulative written premiums. This, of course, means now that we're seeing the benefits from an expense viewpoint. An operating expense ratio, as expected, has been solidly trending downwards quarter by quarter to around currently the 8% mark. The operating expense generally is a key advantage to what I call the Bermuda-based treaty model and was part of the design process when we put the plan together originally. The start-up and build-up costs were a big feature in year one and creating the new brand entity and bringing that to the market. It's now great to see the more normalised state of the business emerging through. On that I pass to Greg and he can talk through more detail some of the underlying divisional and segmental business in the overall market.

Thanks, Trevor. Moving on to slide five. So across the portfolio, we're showing a 70% growth, which has been built on our reputation for underwriting discipline, as well as focus and great service. I'm not going to read all the comments here, but as you can see, we've seen significant growth in each of the segments. all driven by specific characteristics, especially from the perils and territories in which we target and operate in. Capacity certainly remains a constraint in the current market and we're seeing opportunities driven by some of our peers reducing their reinsurance supply and interest and ability to deploy in some of these sectors. Additionally, the current inflationary environment impact on casualty and the discipline which leads specialty risk to be unbundled is leading to better price risks, again, starting to meet our target.

Next slide.

So first of all, I just need to stress that our pricing figures are all net of inflation here. That's how these represent in excess of inflationary loads. And these are obviously the reference points that flow through our pricing models. So year to date, portfolios seen a risk adjusted rate change net of inflation weighted across the portfolio of 4%, with particularly strong increases on the property side. Now, during the January renewals, we executed the approach we told you we would do from the Q1 trading update, and thus took advantage of the existing capacity crunch, primarily on the property market. And as for the rest of the year, we continue to execute our plans to build a well-balanced and highly diversified portfolio, with opportunistically provide capacity geographies and perils which may experience further supply shortage and or as a consequence of Cedars first half loss experiences. So slide six is a quick and familiar reminder of a strong pricing environment in which we're operating in. The chart here is from Marsh and provides an aggregated view at a global level. It shows that albeit the pace of the price of increases slowed down since 2020 at the global pricing levels is still increasing by a healthy 9% in the last quarter measure. So I stress here that this is a global level index and bear in mind the rates here have been rising on a compound basis over the last three years. Our information is interesting in that some pockets are starting to re-accelerate As for example, specialty corrections, sensibly post-Ukraine, and capacity withdrawing from areas such as the property cap market. Moving to page eight. We remain cognizant of inflation through our pricing and risk selection. And most appropriately, the impact on company profitability is a hot topic today. We believe it's important to distinguish between the effects of inflation on prior years and reserves, and also how inflation is taken into account into forward-looking pricing for current and future businesses. With regards to prior years and reserves, Conduit benefits from being a young company which started writing business in January 2021. We clearly benefit from not having multiple back years of reserves, which must be viewed through the lens of at times a significantly different inflationary environment as to the point in which risks were written. As we've been operating for only 18 months, we've built our portfolio in a relatively high inflationary environment, which is embedded in our pricing tools and our approach to risk selection. As for pricing, our approach is to build inflation into our pricing estimates on a very detailed basis, case by case basis and class by class basis. As an example, county treaty portfolio, we have the lowest hit ratio here amongst our classes of business. And one of the main reasons we find it difficult to accept risks is some of the presented industry assumptions on inflation. We do find that generally we run higher. I'd also like to repeat that as a strategic choice from the start, Conduit doesn't write auto trade credit or mortgage products often thought about significantly in these inflationary environments. So with this, I'll pass to the Minister of Financial Highlights.

Thanks, Greg. Hi, everyone. I'd like to take a run through a few of our half-year numbers on this slide. As you've heard, we've had significant growth in our gross premiums written for the half-year compared to the prior year, although that growth is entirely in line with our plan. Also, with the biases we currently have to quota share, this premium from the 2021 underwriting year writing and earning through into this financial year Around 95% of the 2021 underwriting year ultimate premium is now written, about 80% of that earned in line with our previous guidance on that. We expect 2021 ultimate premium to be almost fully written by the end of this year and about 95% earned. For the 2022 underwriting year, we've continued to see more opportunities in quota share versus Excel, so we currently expect it will follow a similar writing and earning pattern but that's obviously impacted by how much business we put on the books in the second half of the year. Our earned to written percentage is also increasing relative to the same time last year as our book matures. That's also bringing down our other operating expense ratio. We expect that to come down further as we grow the book and as earnings continue to mature. Our net loss ratio was 67.8% for the half year, 56% excluding the impact of our bookings for Ukraine. loss estimates for 2021 loss events remain relatively stable. As I mentioned, a bit more quota share than initially expected this year. That's meant our acquisition cost ratio has remained at a similar level to the prior year. We do expect potentially more XL opportunities in the second half of this year, but given the timing of that, our acquisition cost ratio will likely remain at these higher levels for the rest of this year. We've declared an interim dividend for the 2022 financial year of 18 cents per share The same amount as last year and in line with our dividend policy to provide between five and 6% of IPO capital raised. I'll flip to the next slide to talk about investments. No real changes in strategy. We're keeping duration fairly low relative to our liabilities in the current environment. Duration is currently 2.4 years versus around three years now on our reserves. We're comfortable with that for now, although may look to increase duration a little bit, a bit further down the line. Our unrealized loss of $54.3 million for the half year is clearly mostly driven by rising rates and rising rate expectations, but it's aided by being low duration and we also don't have any risk assets in our portfolio. Our portfolio remains high quality and again no risk assets, so we don't have any concerns about defaults or impairments.

Thanks Elaine.

So a few final thoughts before the Q&A session. After 18 months of activity, Conduit remains on a positive trajectory for growth, profitability, and we enjoy good support from our clients and brokers, and we think that is to some extent due to our pure play reinsurance status. We've built a quality underwriting operation, which in July passed the $1 billion mark of ultimate premiums written since the IPO, so that's sort of landmark for us. We're perfectly positioned at the where there is a shortage of reassurance capacity. We are still in a phase of significant growth, and as our business is normalizing, our combined ratio will trend towards our target of mid 80s in steady state. Our first half results have been affected by the Ukraine conflict, but the forthright approach we've taken to assess and communicate our exposure is part of what Conduit stands for, transparent and data-driven. Last but not least, the continuing hardening of the market providing us with a substantial opportunity for possible growth and to build out our pure play reinsurance business. So that ends the presentation. So let's go to Q&A with analysts and investors asking questions.

Thanks, Neil. Please raise your hand for a question. You have to go onto the reactions at the top of the screen. Raise your hand. And then once I notify you, you will need to unmute your mic.

Thank you. Ben, do you want to ask the question? One second, Ben. Yeah, you need to.

Yeah, got it right. Thanks very much. Now I can unmute. Good afternoon everyone. Thanks very much. I had two questions. Firstly, I was wondering if you unpick the sort of mid 80s combined ratio that you're targeting in a steady state, maybe with a particular focus on where you see the sort of the cat loss load going. And the second question I had was, could you give us an update as to the moving parts in your capital position in the first half, how that has evolved, maybe also allowing for the dividend, the uncovered dividend that you've paid? Thanks very much.

I think, hi Ben, I think if you look at where we are for a half year in terms of what we've produced as a combined ratio, that 105 there, there's just under 12 points of that is based on, is from the Ukraine losses. And then we had a little bit in there of CAT losses, which I'd say are a bit above average. So you can knock off a few points for that as well. And then I think when we get to more of a steady state, there's also a couple of points which come off the expense ratio too. Business mix is kind of the last part of that. The acquisition costs that we see coming through on the quota shares, once we get into more of a steady state, we'd expect that to come down two or three points as well. And that gets us into that kind of mid-80s underlying trend of the book that we're seeing coming through. So that's kind of where we're heading to. On the capsule position, what was it specifically that you were looking for?

Well, just how available capital against required capital has developed from the point of view, I guess, of any binding constraints that you might have as the business has grown and obviously as you've incurred a loss in the first half.

I think then the binding constraint is, I'll call it self-inflicted in terms of how we look at where we want to keep our PMLs relative to capital. The business plan was put together with a five-year time horizon and we're clearly building into that so that we're in a position of significant excess capital at the moment.

OK, sorry, could I just come back on on the sort of on the cap load as you see it? How significant you see that would be? Because obviously you know the exact amount of catastrophe business that you're that you're writing. I think you've indicated that that's probably a little bit below where it was against the original plan.

Thank you.

Yeah,

Yeah, so yeah, in terms of, you know, the way that loss ratio is made up, Ben, which you, you know, we discussed this before, it's a combination of attrition and large and then CAT. For us, because we are very broadly 70% non-CAT business, majority of our loss ratio is non-CAT, so it's in the attrition and large component. So, you know, that kind of 70-30 blend is not a bad guide to the way that we think about CAT versus attrition on large than the component. The interesting thing for us obviously is we're merging through the first two quarters and it really is a story of two quarters for us. Q2 has been a great position for us to be in. Absent, you know, significant CAT involvement in our own portfolio and obviously absent Ukraine. We can see the underlying portfolio emerging through and that's Really, we feel now in Q2, it's really validating the approach that we've taken, which is about putting a portfolio together that has reduced volatility. We position ourselves in the value chain where we believe the risk value is, and that's really coming through now in Q2. We're very pleased with that.

Okay, thanks very much. Riff, do you want to ask a question?

Yes, hi, good afternoon everybody. I just have two questions. The first one is on premiums. Obviously these have grown nicely year on year. I was just hoping to get a sense for what is the growth you would anticipate for the second half. Maybe as a rough guide you can give us sort of some expectations how much the second half premiums will be as percentage of the total maybe. Another question is on the specialty lines. and premiums seem to be sort of flat for just the second quarter. Any comments as to why you haven't grown here? And I was wondering, this is mainly due to the renewals across special lines coming up in the second half. And I guess more broadly, in what areas are you getting the most excited about when we look forward to 2023? Thank you.

Hi there. Second half guidance, I think, fair to say that we would expect to see growth, but at a lower rate than we've seen in the first half. On an ultimate premium basis, we expect to be ahead of the ultimate premium that was in the IPO plan. I think on a written basis, we expect to be kind of in and around that level, you know, plus or minus, wherever we end up on that, depending on what opportunities are there. But I think in and around that kind of level of quantum.

So on the specialty piece in particular, so that second quarter is quite an interesting period in the specialty arena, particularly classes of subclasses that we target. So we certainly saw opportunity or greater opportunity coming on the back of renewals of contracts that were starting to be affected for some of the loss activity. We don't think that's fully materialised yet. So we expect some of those contracts to provide opportunity perhaps later on in the year as well. So you're in the kind of world of here of backups and other sort of interesting processes that go on there. So we think that's some of the experience we'd expect to see in Q2. We think that's still going to come later on in the year as well.

Yeah, just tried a couple of points to that. It's been reported sort of in the press and the word unbundling has been mentioned quite a bit with specialty. You know, this is a feature which We're all aware of, you know, several years ago that the specialty market started to bundle and become less transparent. And I think what we see emerging and the early signs are certainly for the renewals in 1-1-23 is that that transparency has got to improve. You know, we're comfortable looking at the underlying classes, providing we can price them. And the issue is that we've seen in the last few years as that's been bundled, In our view, it hasn't been possible to get a clear line of sight through to the underlying risk and the underlying loss expectancy. So especially generally for us, I think is a is one that will improve at an increasing rate in the market. Really, the key for that is I'd say probably Q1 next next year when that largely renews through.

I think three for the last question about which areas are most excited about 2023. Crystal Bournemouth.

So I mean, you know, obviously we have a plan to to continue to build our diversified portfolio out and it is progressive across all lines of business. But pockets of interest. I mean, Trevor just mentioned again specialty. You know we you know we we associate sort of the unbundling concept with better discipline, frankly, and you know from. The risk taking side we're always you know, it's our DNA to allocate premium to risk. And so the concept of unbundling starts to allow us to do that, where we can isolate premium for the underlying risks and allocate it accordingly. And that's effectively describing how a portfolio is built. So, you know, specialty, certainly we're interested in seeing how that develops. And, you know, the obvious one is property. And property spans a broad range of you know, subclasses, CAT being one of them, you know, we have built and we execute a plan of diversified risk taking, and that means we don't run and don't intend to run any new peaks or accumulations that otherwise were in our original plan. But obviously, as we grow our business, we're able to take more risk in line with our plan. And frankly, those markets are coming towards us. There's certainly opportunity there. And, you know, as we've talked about in prior presentations, we're very keen to see that market continue to trend towards a point where if you think of property cap, you can sell, for example, capacity on a named peril or regionalized basis. And that's quite exciting for us, again, with that concept of being able to build a portfolio.

It's very helpful, thank you. Thank you, Sriv. Barry, do you want to go ahead with your questions?

Yes, apologies. Thank you. I just have a couple of questions, if I may. First of all, I think the proportion of quota share excessive loss has fallen whilst you've increased the proportion of just normal excessive loss. I wondered if you could give perhaps the background to that. And the second question I had was a more general one. You talk about the business emerging if you like from a startup phase now i get that in terms of the financials as the proportion of expenses start um lowering compared to to revenue but what other benefits are you starting to see as a result of the maturing of the business thank you uh hi barry so um on the question versus excessive loss um you know as we've sort of um

Talk through this and sort of walk through this concept is you know previously we we you know we we still see. Greater advantage in the primary markets and as a pure play reinsurer. The quota share is a. Mechanism for us to get closer to that primary market. And to you know, to to absorb the sort of repricing of risk at those levels. But we also notice that, you know, we do know, you know, volatility is starting to price better. And, you know, by definition, that is the product of excess or loss. So as our quote share develops, you know, the earned premium is coming through our base and our exposures are broadening still. We're able to write more volatile products like the excess or loss product into our portfolio as planned. And it's a simple function of just the development of the portfolio. There's an element of cyclical behavior to that as well. When you think of the reinsurance market, at which point treaties are typically incepted. If you take US casualty, for example, for us, that's a quote share dominated portfolio, which is quite consistent through the year, whereas the property account,

is more quarterly.

Okay. Yeah. And just Barry on the second part, business emerging, you know, from a startup phase, you know, the benefits accrue a couple of areas spring to mind there. Obvious one is, is on the, literally the breadth of the contract count and classes that we see, you know, just renewing a book of business a year on. gives us the opportunity to scale into that, adjust lines and grow into it where we think the opportunities are there. And then those additional touch points with those clients, with the full team in place, means it's like an exponential add-on to that in that other opportunities arise. So, you know, what's probably surprised me, I'll be honest with that, is the number of contracts that we've seen in the course of our first 18 months. And, you know, when we relate that in conversations to clients, I think they've been surprised at the degree to which you can make an impact in the market from, you know, a relatively early phase of an early stage. So that's been good. The other one is on what I call benchmarking, just collection of data. Greg is a great one for this, a great advocate of it. And it's what we've been able to do. in collating areas like casualty triangles from vast amounts of submissions. It gives us a really good window on the emerging patterns there. It informs our view of things like inflation. I think we have a very solid and robust view around that. And then on the property side, I forget how many millions of locations have we trapped in orchestra? 1.6 billion. 1.6 billion. There we are. So within our CAT and property monitoring software and system, that's the number of locations that we are covering and trapping. So it gives us a good insight. So maturity of data, I guess, barriers is kind of one of the key things. and benefits as we grow.

Yeah, Barry, going back to your first question, the quota share XL percentage is down because the rest of the account has grown. So in effect, that part of the account is static, but we're seeing growth elsewhere in the portfolio.

OK, it's great. Thank you very much for the answers.

Thank you. Thanks, Barry. Andreas, may I ask your questions?

We can't hear you.

I think I'm live now. Hi. Good afternoon. Just two questions. One on the attritional loss ratio and one on acquisition costs. If we just strip out Ukraine, maybe a couple of points for medium-sized cats, from the first half loss ratio, I get an attritional somewhere in the mid 50s. Has there been any surge in attritional losses during the first half or is this a normal pattern? And if I break down those attritional losses, are they really coming through the property book or is it more driven by casualty attritional claims? And the second question on acquisition costs, Elaine, you mentioned these would remain high in the second half of the year, but I think you also commented that you would be expanding your Excel treaty book. How long does it take for these acquisition costs to sort of come down as you grow your Excel portfolio? And maybe could you comment on the casualty seeding commissions, whether these are coming down or not? Thank you.

OK, so breaking out the loss ratio, we backed out Ukraine for you there to get to 56. Within that 56, there is an element of cat in there, what we probably call more traditional type cat, small cat, that we do reserve for, so that there is a little bit in there. There also is an element of large losses in there, so smaller large losses that we don't strip out and disclose separately. The other thing that we're also doing is making sure that we are taking a fairly prudent approach to reserving in our early stages as well. So there's a little bit of an overlay for that.

One of the other drivers of the loss ratio in an acquisition in Q1 is the Excel costs, CD costs obviously are earned all in Q1 as well.

Yeah. Yeah. And then on the acquisition costs, And I mean, we had, we had talked about our acquisition cost ratio coming down a little bit this year, because we expected our quarter share to XL Blend to move from, you know, call it 75, 25 to 65, 35. We're probably going to be closer to 70, 30, maybe a little bit over that for this year. We have also seen some of our 2021 larger treaties exceed expectations on a premium basis that that's bumped things up a little bit too um i think in general terms on the 2022 treaties we have had some benefit from being able to negotiate on on those commissions and bring them down a little bit um on the quota share there's obviously a deferral of the benefit of that as those contracts air now and second half of this year we do expect to see a little bit more in terms of exhale opportunity and that that will bring things down as well I think we would expect it to come down a few points, but I think a lot of that will depend on what we see running into one-one renewals as well in terms of where we think that the blend of our book is going to be and how successful we are in negotiating on those commissions.

And if I might offer comments on the question around casualty seeding commissions, you know, really hot topic for us. We sort of referenced in the past that, you know, one of the sort of Ultimate sort of impacts to whether we write a risk or not has often been the fact that we can't get there on the cleaning commissions and deductions in the in the in the risk transfer chain. You know there are certainly just think looking back over first half there were certainly transactions that that were issued with increased seats. As Trevor just mentioned, you know we we make sure we're aware of what's out in the market, but that's not necessarily the same as what we're writing. So, you know, our, our experience was, um, very stable. Um, but we do know there are certainly deals out there that, um, pushed very hard on seed rates and perhaps, you know, perhaps at times got those increased seed rates, but, um, ours was very stable.

Okay. Thank you very much. Thanks Andreas. Daryl, do you want to ask your questions? Daryl, I don't know if you maybe need to unmute your mic. Can you hear me okay now?

Yeah, perfect. Thank you.

Yeah, perfect. Good afternoon. Good morning, everyone. Just a few questions, please. So the first one, I'm interested to get some high level thoughts, right? So how do you see the current cycle evolving? I mean, how is it different to what we've seen in the last three years or so? And then the second one, a bit more numerical, what is the rating level you've assumed within the mid 80s combined ratio guidance? For example, are you assuming rates to stay strong where they are until the end of 2023? Or are you assuming some changes there? And the third one, just a short one. The PML level you have to hurricanes, that's 3.3% of tangible capital at a half year. Could you remind me how has that changed from the year end level? And what is the maximum limit that you would be comfortable writing at? Thank you.

OK. Just in terms of current cycle and perhaps the rating levels, The current cycle, how does that compare now to the last three years? What are the differences within that? I think obviously what we're seeing is an increasing awareness, we say, in the market of the weaknesses of writing very large cat towers and catastrophe exposures and an over-reliance on the models. I think that's emerging now more and more. It's a consensus which seems to be building out there. We've seen obviously a number of entities who have declined to continue involvement in the CAT space by writing those types of products. To be good honest, it's not a surprise to us. We kind of had a pretty much a fixed view that the models at the tail were at best unreliable and probably, you know, unrepresentative of emerging risks within the industry, including climate change. So I think now what's happening is the way the market's evolving is we're seeing that cat space not being sufficiently supplied. There are opportunities there now for us to trade into. And we're open for cat business, providing we can get the structures that we deem fair. And I think there isn't the weight of alternative money, should we say, that's sitting there to fill the gaps that they have done in. in previous cycles. On the casualty side, obviously, inflation is the big topic. And as the world comes to realize and the insurance industry needs to price in the effect of claims inflation at an increasing rate, that is just to run through all the conversations. I'm sure you know, in boardrooms and in risk meetings with clients all the way through the industry, the presence of inflation is a key part of how reinsurance is bought and how we price it. So I think that awareness is here to stay. And in that respect, it gives a kind of robustness to rating levels. You know, it's probably often said that it's bottom up and I think is a ground up led rating change. And I think that's just an awareness that the world has changed both on a a climate standpoint and from an inflationary aspect.

Yeah, Darryl, so it's Neil here. The hard market is changing. It was a market that was technically repricing and is now, in our view, a market that is moving towards being capacity constrained. And whereas brokers could previously overplace business, some of the big placements, they are struggling to complete those placements. So we would describe it and and have described it in part of our presentations as moving towards a capacity crunch. And I think we also expect to see further hardening of the 1st of January, irrespective of of how the rest of the year pans out. The other thing I'd say is that the mid 80s combined is based on on today's pricing. But that's that. That's my comment.

So on the. topic of PMLs. So, you know, when comparing to last year, obviously we had a smaller portfolio with a different combination of property, casualty and specialty across the portfolio. So that continues to move to plan for year two. You know, our plan remains not to accumulate large buildings of collections of PML in any one territory. We remain largely under our tolerances as set in the business plans. And as Trevor just said, it's a really interesting area for us when you think about inflation and tail risk. Our plan is, as a reminder, to be very thoughtful about tail risk. And in fact, most of the way in which we deploy our risk we give back the tail risk. So it's a measure that enables us to look at risk. It's a function of pricing still as well. Most markets are still moving towards us. So I still use the phrase keeping some powder dry, which is a comment around being able to take opportunity going forward.

Great. Thanks for that, guys.

Very, very interesting. Thank you. Dan, if you want to go ahead with your question.

Yeah, hi, thanks. Thanks for the question. Just a quick one on on reinsurance. So you noted the seeded premium went up. In the half year on year, I looked ahead ahead of premium growth, so I was wondering, I mean, could you comment on on any changes in structure year on year that might be worth noting?

Thanks. I'll take that.

So, you know, our reinsurance purchasing is per plan, as per budget and design. Now, as a reminder, our portfolio is growing. So our purchase of reinsurance products to support our portfolio will flow as the business grows as well. You know, as a reminder, again, with quote share deployed versus excessive loss, we have a sort of progressive build up of exposure as opposed to, you know, a heavier excess of loss book where you sort of sit on that exposure, you know, on an enforced basis instantly. So our sort of way in which we buy reinsurance is perhaps different to that of a much heavier excessive loss price.

Yeah, probably just add a couple of other points to that. Efficiencies of scale, what we saw this year, obviously it was a a relatively tight retrocessional market at jam one on the back of some of the storms last year. But the limits that we buy are manageable. You know, we're not buying in the hundreds of hundreds of millions. You know, we're a manageable client, I think, for our partners. So we did increase our limits. We fought that through the existing partners and added a couple of new. So for us, it was just about growing into our skin, buy more limit, but getting some efficiencies of scale. So really happy with what the team achieved. And I think as a couple of our carriers described us at year end, we weren't one of their problem children. They had other problems and they seemed very happy to sort of continue the relationship. So yeah, nice. I think the team did well with that at Gen 1.

Yeah, so Stan, there's no real change in structure to the program. The program we purchased is roughly in line with what we said at the time of the IPO, and we just bought slightly more cover.

OK, great thanks. Ben, I can see you have a follow up question.

Go ahead. I need to. We can't hear you.

I don't know if you have your mic. Go ahead.

OK, thanks. Sorry. Yeah, just just to follow up, I just wondered if you could be a bit more explicit about your inflation assumptions in the second half of the year, maybe how they changed over the course of the half year. and also some colour by the three different lines and maybe also by geography to give us some sense in terms of how conservative you're being.

Thank you. I'll pick this one. So a view of inflation is a continual iteration, I suppose the best way to describe it. And as Trevor mentioned earlier, our understanding of inflation and the effect of underlying exposure aided by the amount of data we collect and the more we understand about the risk. So if you think about it, you know, we don't pick an inflation figure at the beginning of the year and kind of crystal ball it. We effectively moderate it as we collect more data. Casualty, as an example, you know, we clearly think of 7 to 9% as an inflationary impact on a book like that. property is slightly more interesting because there are techniques at the primary level to revalue the underlying risk more transparently, I suppose. And then over that, we'll then overlay our own views of claims inflationary pressures, the old adages of demand surge and disruption in supply chains, et cetera. But revaluation of original risk on a property can happen quite quickly. Specialty, much more bespoke is the best way to describe it, has subclasses of business in there that, as mentioned in the slide, when we talk about class by class and transaction by transaction, they can vary significantly. a number of factors in there, whether it be energy related and or, you know, geography related with supply chain and logistics disruption. Very important to work those through largely from a ground up basis.

So, Ben, we, I mean, I mean, to be candid on this, we don't disclose specific inflation numbers because it's part of the client contract negotiation. So, I mean, basically, you know, We know what our own inflationary assumptions are and we think we are being prudent and conservative.

Right, OK, thanks very much.

I don't see any other raised hands, so I think we can conclude the call now. Obviously, if you have any follow up questions, please get in touch and we'll try to answer them as soon as possible. Thanks everyone.