Conduit Holdings Limited

Good day, everyone. Welcome to the Conduit Re-Trading Update call for Q3 2024. Joining me on the call today are Trevor Carvey, CEO, Elaine Whalen, CFO, and Greg Roberts, CEO. Please note our disclaimer language on slide two. I will now turn the call over to our CEO, Trevor Carvey.

Thanks, Brett.

So, turning to premium volume first, for the nine-month period, our gross premiums written were £957 million, which is an increase of 25.2% year-on-year. Solid business opportunities continue to present to us with good technical margins, and this growth level we are showing for the nine months year-to-date is broadly in line with our 2024 expectations. As regards to the split of business, as we have stated previously in these calls, we currently see the greater margin opportunities within the property and specialty classes. And as you can see, that's where we have again been focusing our attention. In particular, the property non-CAT space, including the non-admitted and E&S arena, continues to deliver up areas for continued growth The underwriting team have been able to develop here again with specific client types and classes that we've been targeting. Casualty too plays an important part in our overall offering and the general portfolio balance more broadly. Although as can be seen from the more modest 2% growth year over year, we continue to exercise significant patience and discipline here in choosing where and when to deploy capacity into the market. Risks presented to us vary considerably in the margin adequacy being offered, and the underwriting team have done a great job of risk selection in building the Cashti book in its current shape and style. Turning to loss events, general industry loss activity has picked up during the third quarter, with the occurrence of what we would refer to as a higher frequency of smaller to mid-sized NATCAT losses, and also several large man-made risk events. As regards the natural peril losses, these would include Hurricanes Beryl, Hurricane Elaine, and also the Canadian hail flooding and wildfire events which occurred through the third quarter. In the aggregate and on an undiscounted basis, we've recorded approximately $50 million of net losses after reinsurance recoverables and reinstatement premiums related to these events in Q3 2024. And whilst we don't report full financials at the third quarter, we can report that at this level of large-size activity, it has shifted up our year-to-date underscanned combined ratio into the mid-90s. Moving past Q3, Hurricane Milton made landfall in October, and whilst still at a relatively early stage, with a very wide range of industry loss estimates out there we currently estimate a range of net losses from this event to be between 30 million and 50 million dollars and that's after reinsurance recoverables and any reinstatement premiums more detailed loss information from clients has started to flow to us in recent days and particularly on the quota share side we will be updating our estimate of net losses in the fourth quarter there's more details level of claims emerge. Turning to pricing, Greg Roberts will go into this in more detail for each division. But as an overall commentary here, we continue to see a positive uptick on a risk-adjusted basis. And through the end of September, we saw a plus 1% risk-adjusted increase across the whole portfolio, with property and specialty running positively and casualty turning marginally below the line at negative 1%. As a general comment, it is worth reflecting again that rating levels generally have trended upwards over recent years, and our underwriters continue to see technical pricing currently at attractive levels. And whilst rates in individual classes, of course, rise and fall to varying degrees, in our view, the recent heightened loss activity, along with the longer term industry legacy trends, still serve to support a generally stable outlook going forward. A slide showing the progression of gross written premium since 2021 and the relative split between the three divisions. The overall portfolio balance is always important and how the business profile develops over time. Given our approach is to allocate and skew capacity where returns are best at different points in the cycle, property and specialty lead here in 2024 with the highest growth rates. The current balance in the portfolio at 56% property, 23% casualty and 21% specialty gives us a great blend and diversification. Also, as an additional commentary here and across the entire business specs, we continue to write approximately two thirds of all premium at Conduit in the non-CAT related classes. Overall this year, we've continued to add scale with nearly $200 million of premium growth year to date, and our cumulative basis since our inception in 2021, gross written premiums are now approaching $3 billion in total. On that, I will hand over to Greg, who can talk more around the class specifics and the rate environment within each division.

Thanks, Trevor.

We are continuing to see attractive opportunities to grow our property portfolio, maintaining the texture of balancing catastrophe and non-catastrophe exposure. Gross written premium has grown 33% or $133 million year to date. The overall risk adjusted rate change is plus 3% on a year to date basis. Multi-year improvements in pricing has put our portfolio in a good position to generate margin and absorb some volatility. The E&S market continues to be an important end position for our portfolio, representing some of our larger partnerships. Inflation continues to generate growth of well-rated exposure, and this leads to higher subject premium bases for many of our treaties. According to a recent AMBEST analysis, the E&S market continues to represent a growing share of US premium, reaching $115 billion in 2023, with it being its sixth consecutive year of double-digit growth. Insurance conditions remain stable at a healthy level with some additional capacity entering the market due to the strong profitability expectations. Contract wordings and policy coverage are very important here and we carefully review CEDA's approach to language to maintain appropriate exposure evaluation in real terms such as margin clauses. This is particularly relevant for DNF and more generally in S markets. We're already engaged in renewal conversations with clients It is early days, but the frequency of small and mid-sized events and the significant near-miss of a major Milton is a healthy reminder for the industry to maintain underwriting discipline. Our casualty portfolio continues to show a stable top line with premium growth of plus 2%, and we are in a maintaining discipline phase here as there are less observations of improving risk-adjusted prices in our target sectors. We are renewing forward and in certain cases expanding our share with partners whom we believe are taking appropriate underwriting actions in this environment. Careful watch on limits, attachment points and rate change of the underlying policies is supported by our continual examination of our clients' border road data to which they share with us. The overall cumulative risk adjusted rate change was minus 1% through September and this is roughly keeping up with our view of inflation. The primary market dynamics vary widely by class of business, reflecting performance of the business and also the legacy reserve experiences. We believe this should provide support for pricing levels to be maintained in real terms. But note, where there is a reversal of higher commissions, combined ratios would indeed look more attractive again. We continue to report strong growth in specialty with an increase of 39% or $56 million on a year to date basis. Our portfolio remains diversified across our target sectors with limited correlation to catastrophe accumulations within our property book. Overall, our risk adjusted rate change was plus 1% on a year to date basis. And this pricing is class specific with coverage and wording stable and expected to hold. 2024 has been an active loss year for certain specialty classes, with industry losses exampled by the Baltimore Bridge claim for the marine liability market and civil unrest in certain jurisdictions. There are signs of new capacity and increased risk limits being offered in select classes. This is best exampled by increased risk capacity in both the aviation and offshore platform sectors, being created by both new insurance carriers' appetite and indeed from the reinsurance market's support. And we expect lost expected classes to respond positively at the upcoming renewals. And with this, hand over to Elaine.

Thanks, Greg. Gross premiums written of $957.3 million are up 25.2% on the prior year. As we mentioned at the half year, we had front-loaded our book more this year given the opportunities we saw. So our growth year-to-date, while still very strong, is lower than it was at the half year. We have reinsurance revenue of $588.2 million versus $451.3 million in the prior year, a 30.3% increase year on year. A reminder again that our reinsurance revenue is essentially gross premiums earned, less seeding commission, and a smaller adjustment for non-distinct investment components. It therefore tracks the same pattern as our gross premiums earned would have, just a lower number after the seeding commission deduction. Following an active first half year for losses for the industry, while there were no major events in the third quarter, there were a number of small and mid-sized catastrophe events in Canada, plus a few North American hurricanes and other risk events. While none of these were individually significant to conduit, the aggregate undiscounted amount we recorded for these losses was approximately $50 million after reinsurance and reinstatement premiums. While we don't disclose full financial statements and KPIs in the third quarter, suffice to say that, as Trevor has noted, this level of loss activity has pushed our year-to-date undiscounted combined ratio into the mid-90s. On the investment side, with the reduction in yields in the quarter, plus a generally higher yielding portfolio, we generated a return of 3.4%, bringing us to 4.9% for the year-to-date. Book yield is 4.2% versus 3.5% at September 30th last year. We remain relatively short duration and our focus is on maintaining a high quality, highly liquid portfolio. Duration is currently 2.5 years versus three years on our net reserves. We will increase our duration very slightly as the rate hiking cycle begins to reverse and to better match the duration of our liabilities, or at least to keep that within a reasonable range. Average credit quality is AA, and you can see the usual pie chart here with our asset allocation and no real changes from prior quarters in that order strategy. I'll now hand back to Trevor for closing comments.

Thanks, Elaine.

So in summary, we've seen broad momentum again within our portfolio during the year, particularly in the property and specialty space. And we see that picture generally continuing as we look through to 2025. Our multi-line approach is critical as to how we manage the portfolio across cycles, where different classes are subject to their own unique conditions specific to the risks at hand. The broad addressable market that we see from clients and brokers allows us to proactively select the classes and the risks we ride as market conditions change And as we've said before, our operating model supports this with underwriting, actuarial and risk teams all sitting in one location to quickly execute on decisions related to the business. The industry will have noted the elevated loss activity during 2024, including the frequency of secondary perils and man-made events. And whilst there is still some debate about the impact of recent hurricanes on the market at upcoming renewals, Ultimately, the frequency of events serves as a reminder for reinsurers that discipline is needed and that the terms and conditions offered are often as important as the pure rate being charged. These pure rates of premium increases have generally slowed through 2024, but we continue to maintain a very strong focus on the terms and conditions that we offer on our contracts year over year. This is a feature which helps to maintain the portfolio at levels where it is able to generate attractive returns and as to the technical margin by solid terms and conditions can be significant. As regards the upcoming January renewals, and I'm not sure this is necessarily an indicator of how the renewal season will play out, but we have seen an early start to renewal conversations with a keenness from our client partners and brokers to share data and engage early. We will be heavily focused on these renewals as we move through the fourth quarter, and indeed a significant portion of our own retrocession programme is due to renew in January, and initial discussions have commenced in that area already. In closing, our balance sheet remains strong with over $1 billion of shareholders' equity, and we certainly benefit from no exposure to the pre-2021 underwriting years. We remain firmly an underwriting focused and led organisation and have plenty of headroom to continue to deploy capacity broadly across the portfolio and importantly in our targeted classes. Finally, and on the subject of industry capacity, we do expect to see some supply increase across the property cap space. But broadly speaking, our plant base continues to exhibit an increasing demand for reinsurance solutions and products across the broader spectrum. And in turn, that feeds into our view that the outlook and landscape remain a fundamentally positive space in which to be deploying both our capital and our underwriting expertise. So that concludes the presentation. Thanks for your time. And we can now move to the Q&A.

Thank you. Participants can submit questions in written format via the webcast page by clicking the ask a question button. If you are dialed into the call and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, that is star 1 to ask a question. And your first question comes from the line of Daryl Goh from RBC. Please go ahead.

Hey, everyone. I've got three questions. So can you just confirm what is the industry loss estimate that you've based your Hurricane Milton loss on? And then just to clarify, you made a comment saying that you might be updating your losses to fall. Can you maybe also just confirm that this is fully contained within the $30 to $50 million range that you've given today? Question two, I guess with the level of losses you're reporting today, it feels as though you probably have a bit more exposure than you'd like in the frequency layers. So on the back of experience this year, will you be making any adjustments to your property portfolio in 2025 or not? And the third question, it's just in the growth. I hear what you said about growth being a bit more front-loaded this year, but I still would have expected some growth in Q3. So were there any other... factors to consider that explains the pullback in Q3? And if you could also confirm, should we be expecting growth in Q4 or not? Thank you.

Hi there, Daryl. I'll start with your last question first. I think in terms of, we did try and message that we've unloaded things a little bit more this year. And also within that, there's still new business that we're picking up. So we do end up with some large quota shares that do have different profiles. So that can lead to different writing and earning patterns. So that can defer some of that into subsequent periods. So there's an impact of that as well. We also... saw some students moving their inception dates from Q3 to Q2. So that was kind of part of that front-loading exercise as well. So I think all of those things factor in.

Sorry, just quickly clarify for Q4 then. Can you say that should we be expecting growth or not?

So I think you can look to what we've done in prior years on that aspect. We don't tend to write an awful lot more business in Q4, so it's really just the writing and the earning out of the book that we already have.

Okay. Morning. So I think it was Milton, was it? You were asking about the data that's out there for, I guess, reinsurers and insurers to build their loss estimates. So you can, I mean, this is public information, but AIR, for example, one of the major vendors from the modeling perspective supporting the industry, I think their post-landfall event set, which is all approximate, they were using, I think, roughly 30 billion out to about 48, 50 billion, for example. So I guess, For a reinsurer and insurer to start building loss estimates, obviously they're starting with their own awareness of exposure. The severity piece is influenced clearly by that model information and the process is to take that alongside seeding information as it's presented. So it's still quite early days for those events. So not all seedings have returned estimates in at this point. And in fact, some seedings are using estimates based on that same modeling data of that industry loss range. So it is an exercise in pulling together the most appropriate and relevant information. But it is fair to say that model estimates has a big influence in a lot of the picks that the sedents and in fact we would use as well.

Hi Del, Trevor here. I think the last or the middle question was around property and the frequency losses. Just a few comments around that. Yeah, for us, you know, the way we write the portfolio, the business footprint, the style of what we've done, through this year, this quarter, hasn't changed. The underlying kind of footprint of the business, the run rate, the way that pricing fits within our hurdles is still in a really good space, really good space. And what we've written through this quarter, this year, and indeed through last year, essentially is unchanged. So for us, the business is a really good space. From a property standpoint, frequency of loss, That's really what you've seen in this quarter. You know, I've been doing this for four decades and the large loss, unpredictability, if you like, large loss in CAT and also large risk losses, they fall at different times. And for us in this quarter, it's a very widespread and geography of losses. So it's not a concentration in any one place. Driving losses for us in the quarter, it's a series of, as we refer to them, smaller and mid-size events. that have just occurred in the quarter. You know, Q1 and Q2 for us was sort of an opposite story, and the loss frequency on those events in Q1 and Q2 was pretty much within our expectations. So it's just one of those things in the way that they've formed in the quarter, so no change to our approach in the way that we are writing the book and keeping it in balance. Hopefully, does that help?

Yep, yep, thank you.

Your next question comes from the line of Abid Hussain from Panmure Librem. Please go ahead.

Hi. Morning and afternoon, everyone. Three questions, if I can, please. The first one is on the business mix. Can you just remind us what proportion of your total book is quota share versus excess of loss? And then please just remind us of the rationale of writing quota share over excess of loss. So that's the first question. And then the second one is on your insured losses. Were you surprised by the level of Q3 losses or would you say they're in line with expectations given the elevated industry-wide insured losses and the increased frequency of events that you're seeing? So given those, would you say that the losses were in line with expectations? And then the final question is on growth. Do you still anticipate growing in the property book in 2025 if prices are stable at the current levels? Thank you.

Morning, Abbott. If I start backwards, yes, in property, we see that as a healthy market, I think, Our own reported observations on risk-adjusted rate change identify that as a healthy market. Recent loss activity is widespread and fundamentally underlines the underwriting discipline in that market. Inflation has not gone away, exposures are growing, premium bases are growing. So we see that as a very healthy market and are very comfortable and pleased with the partnerships we have and the footprint we have in that space. So I'm very positive about that. Our business mix on quote share versus XOL remains very static as it has over the last few years. where we are sort of 70 to 75% quote share based versus excessive loss. And as Trevor outlined, you know, good reminder that gives us a broad footprint of exposure, which is why we see the rate and premium flows coming in. Now, the structure of the book is very deliberate on quote share. So not only is it attractive because of the health of the primary market and the rating environment, and our speed of access to that as a reinsurer by supporting quota share, as we've demonstrated over the last few years. But of course, our very disciplined approach to tail risk management, the structure, the capping, the structuring of these quota shares allows us to control the tail and protect our balance sheet. So that remains a very attractive way for us to deploy our capital. and no change there, and we continue to do that as before.

Abid, I think your question was around the loss expectations and rationale around the pricing, was that right?

Yes, just at a high level, given the increased frequency of events, would you say that your share of losses were your fair share, I guess?

Yeah, okay. Yeah, in a word, yes. If you look at where the loss events have fallen for us and the clients that they're from and the geographies they're from, if you look at it on a broader picture, you know, outside the quarter, certainly on an annual basis, The lost expectation that we have around those geographies for large events of this type is pretty much within our window. So there's no trends or emerging patterns that we're seeing there within the portfolio, which cause us to materially change direction. It's about looking over a longer time frame over the year rather than just on the intra quarter. basically within our pricing windows, within our loss expectations. Does that help?

Yep, perfect. Thank you. Your next question comes from the line of Joseph Toons from Autonomous. Please go ahead.

Hi, good morning to you guys. Can you hear me okay? Yes, fine, thanks. Great. So my first question is, is based on the updated undiscounted combined ratio guidance, they have sort of mid 90s. And based on where we were at the first half of sort of, you know, low 80s emerging, the delta of that is about sort of, you know, say, 10 to 12 points. But the, you know, three Q cat load that you've reported today is, you know, if I had to back of the envelopes about seven points, So can you sort of give some color on where the difference is in terms of the increase in the guidance that you've given relative to what you've reported through 3Q? And my second question then is that kind of off the back of this, which is if we're at the mid-90s as a Q3 for the combined ratio, And then factoring in the losses related to Milton, is it kind of fair to extrapolate that four-year guidance might actually be closer to 100% on the combined ratio at this stage? Again, any sort of commentary on where you see things going from here would be great. And that's all to me right now. Thank you.

Hi, Jo. I'll take those, I guess. I think in terms of the gap that you're looking at, I guess what we've highlighted in terms of our disclosure is stuff around specific events that are kind of... smaller non-specific events that would cause some of that difference in that you're seeing in the numbers to have the bridge there. And also just point out our reserving process when we talk about kind of, you know, emerging guidance and the combined ratio, we do still have the risk adjustment that we add on to our reserves to bear that in mind as well. And In terms of full year, we're not giving any specific guidance. We've given quite a bit of disclosure this quarter that we normally wouldn't. So that was to try and help you get a good basis for your numbers. I think that when you layer on what we've given you there, disclosure, you should come out with a reasonable estimate based on your underlying model. Obviously, it depends what else happens in the remaining two months of the year.

Okay, so... Quickly following off your response to the first question, the delta there between the gap of the difference in the changing guidance relative to what you've put through. Can we then understand that that's all contained within the property book? There was no deterioration in the underwriting result in casualty or in specialty. It was just basically all frequency in properties is what I'm getting from your response there.

And yeah, although we did have some risky events within those numbers that we provided as well. So you need to bear that mind too. But I guess in the bit that's not disclosed, then yes.

Okay. Thanks for confirming. As a reminder, if you would like to submit a written question via the webcast, please do so via the ask a question button. For those on the phone, please press star one to join the queue. And your next question comes from the line of Andreas Van Empten from Peel Hunt. Please go ahead.

Yes, thank you very much. Good afternoon. Two questions, please. First, on your diversification strategy in your quarter share book, I just want to explore, if I look at the ability to absorb this high frequency or aggregation of loss events in the third quarter, do you feel you've got enough diversified portfolio in the modern non-CAT lines to be able to absorb this effectively in the future? Or do you feel you have to grow more in the non-CAT space in this hard market to bring better balance and better loss absorption in your quarter share book in particular? And the second question is one for Elaine. Back to your combined ratio guidance of 95%. Obviously, this is an all-in number. I'm discounted. Would you be able to disclose or describe how the attritional underlying combined ratio has developed, particularly in the third quarter or over the nine months, just stripping out, you know, capital losses for large plan made losses in any reserve movements? Are you seeing an improvement or a deterioration in your attritional combined ratio as you've gone through the year? Thank you.

Hi, Andreas. I'll take that second question first. We don't disclose our traditional loss ratio, but I think to put it in context for you, there's nothing out of line with what we're seeing in there in terms of how that's looking. It's relatively stable within a reasonable range.

I can take the same question and then expand on that somewhat. In terms of the diversification strategy, Andreas, You know, I think you phrased it as the ability to absorb. And is there sufficient buffer in there? Absolutely. Through the longer time horizon, you know, in a quarter, you're going to get these movements and these the drags, if you like, on the underlying performance. on a quarter-by-quarter basis. But over the course of the portfolio, maybe not a longer term, certainly over a year, what we see is the margin that's sitting within the non-CAT lines, as you refer to them, and also the attritional margin that we're carrying is certainly adequate and is in a really good space. You're just getting these movements within an inter-quarter basis. Do we want to increase those lines in our exposure to the non-CAT? Yeah, absolutely. It's a lot of what we do. We're probably still in that range. Two-thirds of what we do is non-CAT related. The margins there on specialty, as we call that, and also on property risk and non-CAT are still very healthy. Their target classes for us, we kind of called that out before, get a very wide submission list that comes to us. We pick our way through those. And the book that's built there is in a good space. But yes, as we write more, we see larger volumes of certain clients. That's an area that we look to continue to grow in. So it's in a good space. It's in a good shape. But it's something we will continue probably to grow.

So just following up on that, if I look at maybe to next year or the year after, Is what happened in Q3 in terms of the concentration of small and medium sized losses is that, would you believe, would you think unusual? Very specific to the footprint you had this year and that the loss absorption would improve in a similar scenario if we projected the same you know, type of events in Q3 next year or Q3 2026, i.e. is loss absorption improving over time, which would mitigate the level of downgrade we're seeing in the underwriting margin and the 95% combined ratio.

it's tough in a crystal ball to predict exactly what are the quantums of those smaller mid-sized risk losses that come through and the impact they have. There's no doubt for us there's a very wide geographic spread of those in the quarter, so it's not a concentration risk. As the account grows, a law of large numbers, I suppose, starts to apply more, although what we're seeing is in the number of contracts we've got and the spread of it, that is largely operating already across the broader cycle. But yeah, I guess, you know, as an portfolio grows, you're going to get some benefits of the margins around that sort of low of large numbers. But at the moment, it's actually working pretty well, we think, over the longer timeframe.

All right. Thank you very much.

Okay. Thanks.

Thank you. And a final call out. If you do have a written question, please submit via the webpage using the ask a question button. And for on the phones, please press star one to raise your hand and join the queue. And we do have a follow-up question from Joseph Toons from Autonomous. Please go ahead.

Yes, hi. I just wanted to have a quick follow-up on your sort of one-one kind of expectations and thoughts. And just sort of given the level of losses in the portfolio and maybe what some of your peers have sort of commented, would you say we're pushing towards more plus 5% in terms of pricing or kind of broadly stable and flat? And then my second sort of follow-up question was on the retro renewal program. Um, I believe you said that, you know, discussion has already started, um, any sort of color on how that's gone, um, you know, how should we factor in maybe into sort of our numbers next year? Thank you.

Um, so, I mean, one, one, not to do the whole crystal ball thing, but, um, I think as a general comment, yes, as I referenced earlier on, loss activity is always a good reminder of why one must price for exposure growth. And I think that is a good example of discipline and stability that will be visible in the market through 1-1. I can't comment on our peer groups' view on risk-adjusted rate change, but we obviously factor inflation into our assessment as we report it. So, in theory, a flat risk adjusted rate change is still very good news and would be supporting appropriately priced exposure growth. So I think for us, when we think about the market ahead of us, it's one of stability and discipline and it is growing. I think that's key. So we were very happy with our footprint we have there in our existing relationships. And I'm pleased to say the early engagement is about outlook and clients see the same stability going forward, I think, generally. And just to answer on the retro piece, yeah, retro is obviously a part of our business and our partnership there is really, really important. Retro for us is about thinking about managing the larger type risks and natural catastrophe scenarios. So that is a part of the market where there's plenty of risk appetite from the retro market. Frankly, it's looking like a good year for them again. when you think of that equation for them, there's a significant appetite to retain their positions. And beyond that, the wider markets and ILS and Cat Bond, et cetera, are all looking like they're having good years as well. So I think that's a very positive sign for engagement with those markets going forward.

Great. Thank you for answering this.

And you do have a follow-up question from Andreas Van Ebden from Peel Hunt. Your line is open.

Yes, thanks for the follow-up. I just want to have a quick question around the casualty book. We're hearing from some of your peers about these accelerated claims inflation trends in the U.S. casualty portfolio. It's mainly general liability, excess, and the commercial auto book. But I'm just wondering, in your quarter share book, Are you seeing that acceleration in the third quarter of the claims inflation? And is this leading to perhaps greater prudency in the way you set your initial loss picks in the third quarter and plan to do in Q4 than what you were doing at the beginning of the year?

Thanks. Hi, Andreas. Yeah, Trevor here. Yeah, so just a general comment around the casualty and our book is evolving as we see it. obviously started writing for the 21 years, so we're 21 and post. Some of the areas that you mentioned there, commercial auto is not really a class that we touch to any great degree. It's very much just an incidental line in some of the larger contracts. So we're not seeing any of the industry experience in that class. In terms of where the book's going, for us, we built that book with a brand new start, 21, 22, 23, voting on there, and we're incredibly selective. And that's the point that we kind of like to make, that we were able to choose exactly where we played, which classes we deployed in, and that book is moving through. We built it with a relatively smaller number of partners and clients that we've been able to get very good access to underlying data. It's something that we track assiduously, you know, month by month, quarter by quarter. Claims inflation, social inflation. Yeah, we monitor that. We're with those clients on that. We look how they manage it, and that's factored into our picks. I'd say we still have a pretty conservative view of social claims inflation, particularly around jewelry awards and nuclear awards that you get there. That's built into our pricing. In terms of underlying trends, We don't see any of those more widely reported industry trends about adverse in the years post-21 or surprises coming through. Our book is performing there as expected, although some of the classes have longer development patterns to eight, nine years. And we'll watch those and how they evolve. The signs are that we've got at the moment in the book where we really business as usual with those clients. There's tweaks around the edges, you know, quarter to quarter, renewal to renewal, but they're really just sort of minor tweaks in the overall portfolio. In its fundamental state, it's in a really good position.

So by that sort of comment, do you mean that the attritional loss picks are remaining relatively stable year on year? When you set them up, the initial loss picks on that casualty book, is there stability there?

Yes. Our original loss picks that we made in writing those are basically held and they have held through those years. The overall portfolio has a blended change, which may change depending on the underlying nature of the business.

really comfortable with those original picks i think we made some good calls then all right thank you very much and you have a follow-up question from daryl go of rbc your line is open hey um just a quick one please so i'm just thinking about your your mid-teens roe ambition for 2024 given what what you know at the nine month at the nine month stage already How are you thinking about steering towards the mid-teens target for this year as we head into year end? Is it a case that you'll see where you land and then maybe use some reserve buffers or I don't know what other levers you have? Is that the thinking or you're just pretty much going to end the year as it is without actually pulling any levers that you might have available? Thank you.

Hi, Daryl. I guess the guidance that we've given on ROE is cross-cycle guidance. So just bear that in mind. We will have years that are not meeting that on either side of that. So we will see where we end up for this year. But we've given you some recent disclosure around the losses that have happened so far in Q4. So hopefully that gives you a fair indication of where we could end up subject to what else happens.

Okay. Thank you.

And that concludes the questions on the conference line. We do have a written question from William Regis of Peel Hunt. Do you now see some better opportunities in Europe post the severe cat weather-related events over the course of 2024? Will this market now open up better for conduit?

Okay. Yeah, thanks for that. Yeah, so Europe is an interesting sort of dynamic for us. We see enormous volumes of business we have done since we formed the business from the area, from the region. We find it quite difficult to match up, certainly in those earlier years, with clients' expectations on pricing there. Just fundamentally, we think the market has been at the lower end of, if you like, the ideal range. Recent events, as we've seen before, in those specific geographies. The series of hail flood losses that have come through various territories in the last year, 18 months even, have produced some sort of re-rating. So it's piqued our interest a bit more, but on the main approaches, to pay its share of underlying losses through the cycle. And parts of Europe, I think, have struggled to do that over recent history. So we remain alert and alive to it. We'll look at it. And if opportunity is there, I'm sure we'll deploy.

And that does conclude our Q&A session. I would like to hand back over to management for closing remarks.

Thank you for joining the call today. We look forward to speaking with you on our next update call.