W.R. Berkley Corporation

Good day and welcome to WR Berkeley Corporation's first quarter 2020 earnings conference call. Today's conference call is being recorded. The speaker's remarks may contain forward-looking statements. Some of the forward-looking statements can be identified by the use of forward-looking words including, without limitation, beliefs, expects, or estimates. We caution you that such forward-looking statements should not be regarded as representation by us that the future plans, estimates, or expectations contemplated by us will in fact be achieved. Please refer to our annual report on Form 10-K for the year ended December 31, 2019, and our other filings made with the SEC for a description of the business environment in which we operate and the important factors that may materially affect our results. W.R. Berkeley Corporation is not under any obligation and expressly disclaims any such obligation to update or alter its formal linking statements, whether as a result of new information, future events, or otherwise. I would now like to turn the call over to Mr. Rob Berkeley. Please go ahead, sir.

Thank you, Jenny, and good afternoon, everyone. Thank you for joining us on our first quarter call. In addition to me on this end, you also have Bill Berkley, our executive chairman, and Rich Baio, CFO. We're gonna follow a similar agenda to what we've used in the past. In short order, I'm gonna be handing it off to Rich. He's gonna walk through some highlights of the quarter. Then I'll be offering a few comments And then we'll be opening it up for Q&A, and we'll be happy to take the conversation anywhere that participants would like to take it. But before I hand it over to Rich, let me just offer one or two quick thoughts. We have been living through a period of time and continue to live through a moment in time which I think could be described as unimaginable. And I am not going to consume any of your valuable time by reciting what you read in the newspaper or whatever your source of news and information is. But I did not want the opportunity to pass without on behalf of my colleagues and myself expressing our heartfelt concern for all those that have been affected by this horrific situation stemming from COVID-19. In particular, it's worth noting the first responders and the medical workers who are giving of themselves in a manner that few of us could even imagine. And in some cases, they are actually giving in a way that is the ultimate sacrifice. Beyond that, obviously, there are many members of society that are trying to do their part to get our lives back on their feet and to move things forward. Included in that would be the 6,560 colleagues of ours that have the same challenges every day in their personal lives and managing through the situations that we're all managing through. But in spite of those challenges, they are still doing their part to ensure that this business continues to function and function well. We are issuing policies. We are paying claims. We are doing our part to ensure that society moves forward. And I wanted to thank them as well. So with that, I'm going to hand it over to Rich. And Rich, if you would walk us through your thoughts on the quarter.

Certainly. Thank you, Rob. Starting with our premium production, which was favorable in the quarter, was growth in gross and net written premiums of 9% and 8%, respectively. Overall net premiums written was $1.85 billion in the current quarter. The insurance segment was about $1.6 billion, representing an increase of 5.7%. Growth in the quarter was led by other liability of 14.7%. followed by 11.5% in professional liability and 10.4% in short-tail lines. The workers' compensation and commercial auto liability lines decreased 7.6% and 3.5% respectively. The reinsurance and monoline excess segment grew 23.7% to $263 million, led by an increase in casualty reinsurance of 37.3%, Monoline excess of 11%, and property reinsurance of 9.7%. Pre-tax underwriting income of $52 million was adversely impacted in the quarter due to a provision of $66.5 million for COVID-19-related losses. This compares with $90 million for the prior year underwriting income. The reported combined ratio was 96.9%. in 2020 compared with 94.3% in 2019. Catastrophe losses contributed largely to this increase with 5.2 and 0.8 loss ratio points in comparable periods. COVID-19 contributed 3.9 loss ratio points to the first quarter 2020 catastrophe losses. Finally, prior year loss reserves developed favorably by $4 million representing approximately 0.2 loss ratio points. Accordingly, our current accident year loss ratio excluding catastrophes was 60.5% in the current quarter compared with 61.7% in the prior year. The expense ratio was 31.4%, reflecting a decrease of 0.9% from a year ago and relatively flat to the 2019 full year. As the growth in net premiums written earns through the income statement, our expense ratio benefits from higher net earned premium. In addition, efficiencies from our operations allowed us to grow the business without increasing our compensation costs at the same pace of growth and premium. Other underwriting costs also decreased in the quarter due to lower professional fees and less travel. As we've indicated on prior earnings calls, our expense ratio may experience some variability as we continue to make investments in the business. In addition, the uncertainty surrounding the COVID pandemic could impact our 2020 expected expense ratio of 31% to 32% referenced on our last earnings call. The accident year combined ratio excluding catastrophes and COVID-19 for 2020 was 91.9% compared with 94% for the prior period. Net investment income increased 10.4% to $175 million. Income from the core portfolio was largely unchanged from the prior year, despite a lower interest rate environment. Our book yield for the quarter for the fixed maturity portfolio was 3.4%. Investment funds reported an above-average quarterly result of $41 million compared with $11 million in the prior year. Please remember that we report our investment funds on a quarterly lag, and accordingly, the results in the first quarter are reflecting the fund's performance from fourth quarter 2019. To that end, it's important to note that the effects of the market downturn during the first quarter of 2020 will be reflected in our second quarter results. We do anticipate a meaningful decline in energy and transportation funds in next quarter's results. The investment portfolio is well positioned to deal with market downturns that we've seen in the first quarter of 2020 due to the high credit quality of AA- and the average duration of 2.7 years for fixed maturity securities, including cash and cash equivalents. Foreign currency gains were $22 million in the quarter compared with $7 million in the prior year. The U.S. dollar strengthened relative to the U.K. sterling and Argentine peso, which contributed to these gains in the quarter. This brings our operating earnings to approximately $133 million or 69 cents per share, compared with $129 million or 67 cents per share in the prior year. Pre-tax income was impacted by pre-tax net investment losses in the quarter of $177 million, comprised of three components, including Realized gains of $11 million, largely due to the sale of a private equity investment. A reduction in unrealized gains in equity securities of $154 million, primarily driven by Fannie and Freddie preferred stock. And an increase in allowance for credit loss of $34 million. You may recall effective January 1, 2020, new accounting rules applied. addressing current expected credit losses, otherwise known as CECL, on financial instruments. As a result, we've established an initial cumulative effect adjustment to opening stockholders' equity with the change in allowance for credit loss to be reflected in net investment losses. The change from adoption is the $34 million I just referenced a moment ago. Finally, our net loss for the quarter after reflecting the impact of the net investment losses is approximately $4 million. Stockholders' equity was approximately $5.5 billion, or $30.55 per share. The company repurchased approximately 3.7 million shares for $203 million in the quarter and returned capital to shareholders through an ordinary dividend of approximately $20 million. We had cash flow from operations in the quarter of $153 million, and maintain strong liquidity throughout the organization, including more than $1.3 billion in cash and liquid investments at the holding company. Thanks, Rob. Liz, thank you very much.

So before I offer a couple of sound bites on the quarter, maybe just a quick macro observation that I think is worth noting, at least in my opinion. We all understand that these are extraordinary times and there are tremendous challenges and there is quite frankly a great deal of pain that society is grappling with. A natural reaction is to try and eliminate or at a minimum reduce that pain. Many people are looking to the insurance industry for a solution. And unfortunately, they're looking for the solution even when the product they purchased does not provide one. Much of the plaintiff bar, with the support of the litigation funding vehicles that are out there, seem to subscribe to the unfortunate idea of never letting a crisis go to waste. Some seem to be unencumbered by what the words in a policy says and are very skilled at at managing the media. While I think it is unlikely that these groups will achieve broad success, it is important to note, it is important to recognize that any success that they achieve will ultimately come at a price to society overall. Insurance is fundamentally nothing more than a tool or a mechanism, if you like, to spread risk. If lost costs go up, insurance pricing ultimately goes up. If politicians and courts allow much of the plaintiff bar to get what they are seeking and disregard the words in the contract or the policy, then it is very likely that society will pay a dear price because Ultimately, the cost of insurance will be going up. The parts of the plaintiff bar and those that provide litigation funding will win, and the rest of us as a society will lose. In the past, we have talked about social inflation. We've referenced things such as the MedMal crisis. We've talked about how we see this unfolding in past quarters. If this unfolds the way the plaintiff bar would like it to, though I think it is highly unlikely, we will see a level of social inflation that the industry is trying to keep up with like we have not seen in generations. Ultimately, society is going to have to make a choice whether contracts matter, whether wordings and policies matter, or not, and how much of a price is society willing to pay. Hopefully they have the foresight to understand the circumstance. Turning to the quarter, as always, Rich did a great job covering it, but a couple of observations from me. Obviously the growth was reasonably healthy, both on the gross and the net. As always, a bunch of moving pieces. One of the headlines that clearly you picked up on from the press release was the rate increases that continue to progress, which is really just our response to past conversations around social inflation and keeping up with lost costs. One of the things that we have also mentioned in the past is while you all catch the headlines, there are a lot of moving pieces under the surface. So, by example, if we were to pick on commercial auto, In January, we have a large book of commercial auto in Germany and we effectively non-renewed, if you will, approximately $30 million of business or that book of German commercial auto. I draw your attention to that because it just helps you hopefully understand that we have a lot of different moving pieces and it's not solely just looking at rate. There are other aspects of it. Renewal retention ratio continues to hang in at 80%, which gives us the confidence and the comfort that the rate increases are coming about in a healthy and constructive way. Rich obviously talked about the loss ratio clearly impacted by our allowance for or provisional allowance for COVID-19-related losses. The vast majority of what we put up is IV&R. We are of the view that one cannot just sit and take a completely wait and see attitude. Given what we see out on the horizon, we felt as though it's our job to be proactive and to be thoughtful. So undoubtedly, the various analysis that we went through to come up with this number will not prove to be spot on. but we felt as though we needed to do something, and that is how we came up with this number. Based on the information we have, I can't tell you whether we got the pour too hot or too cold, but it is our best estimate. And, again, most of that is IDNR. On the expense ratio, again, Rich touched on that. We continue to be pleased with the improvement. But as Rich referenced, we're going to have to see how the story unfolds from here. And while we have a lot of earned premium that is coming through and the business continues to grow, given the instability in the broader economy, we'll have to see what that means for us. One comment just going back to the losses. I think it's important that people not misconstrue the provision that we put up. Our policy wordings, from my perspective, are very thoughtful. We have the appropriate exclusions in place when it comes to things such as viruses, and, of course, we have the additional triggers that are in place to make sure physical damage is required in order to trigger business interruption. But nevertheless, there's still a lot unknown. The investment portfolio, again, Rich touched on this, so I'm not going to add much other than obviously we have been relatively rewarded for the fact that we keep a very high-quality portfolio as well as keeping the duration short. Rich touched on liquidity, which again, I think bodes well for the position that we're in, the liquidity at this stage. While it comes at a bit of a cost, we think it is a cost worth bearing. So I'm going to pause there, and we will turn it over for questions, but I think we all are very comfortable in spite of the challenges ahead that we are very well positioned. Jimmy, could we open it up for questions, please?

Certainly. As a reminder, to ask a question, you will need to press star then 1 on your touch-tone telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from Mike Zarevsky with Credit Suisse. Your line is now open.

Good afternoon, Mike. Hey, good afternoon. First question, can you provide more details on the IV&R, mostly IV&R-related provision you put up for COVID. Maybe I missed it, but any color on, you know, what lines of business, reinsurance versus primary, any texture there so we can kind of get a better sense of whether we should expect more to potentially come as this unfolds.

Yeah, I think... I don't mean to kick the can down the road, but you'll probably see some disclosure in the queue around this on such a sensitive topic and being mindful of the SEC. I don't want to get ahead of that document, but I can assure you that we did the best we could to look at our whole portfolio and assess where our exposures are and to the extent that we will be Utilizing reinsurance, of course, we took into account our reinstatement costs as well.

Okay. All right. So I'll look out for the queue. Next, I was a little surprised to hear that you talked about the 31% to 32% expense ratio guidance. It probably might not be likely. Can you kind of talk about, given a big percentage of your book is workers' comp, which is tied to payrolls, if I'm correct, should we be expecting a considerable decline in the top line in 2Q to the extent this terrible situation persists for another, you know, through the rest of the quarter? And Or are there levers you're pulling, such as kind of cutting some fixed expenses to be able to weather the storm, per se?

Mike, first, I don't think we meant to leave you with the impression that the idea that the expense ratio is going to rapidly erode is our expectation. It is not our expectation whatsoever. When we look out on the horizon, we are not naive or blind to the challenges that both the domestic and the international economies are facing. And while we have not seen any evidence so far that our customers will be shrinking dramatically or going out of business in the broad sense, we are, again, mindful of those realities. I would remind you that a large component of our expense ratio is commissions. And obviously, that will float along with some other aspects of our expense ratio. But I think what Rich and I were trying to message is that we understand that the world is facing a very challenging moment. And we as an organization are not completely and totally insulated from the health and well-being of our insureds. And as a result of that and our discipline and our responding to those realities, there is a possibility that the expense ratio could tick up modestly. Do we see it exploding? No. Do we continue to have initiatives internally? to help try and drive that down from here? Yes, but there are certain things that are out of our control and it would be wrong for us to pretend those do not exist.

That's helpful. Lastly, and then I'll cut back in the queue, I know this is a rapidly evolving environment and one of your competitors earlier today kind of mentioned specifically certain states expanding the compensability of the workers' comp. Is this a major issue for workers' comp writers, or is this more likely to have a minor impact to the extent insurers are willing to accept some of the decisions that are being made?

I think ultimately it depends on, as perhaps it was suggested, sounds like from your comments it was suggested by others, it depends on the state and it depends on how much they broadly want to expand it. I would tell you that there has been some analysis done by many organizations, including NCCI and others, that I would encourage you to look into and certainly is being brought to the attention of both regulators and politicians to make sure that they understand the situation fully and the costs by broadening who would be covered for COVID-19. So we'll have to see how it unfolds. I think it is meaningful, but at this stage, I don't think we expect it to be problematic or overwhelming for us as an organization, but I do think it could be very challenging for some people if governors and other politicians choose to broaden this in a very wide manner.

Thank you very much.

I would encourage you to get hold of some of those studies that have been done by NCCI and others. I think you would find it to be time well spent and hopefully the people that are making these decisions are investing the time to make sure that they are informed decisions. One other comment on that, that, you know, the world, when it comes to these type of issues and other issues, has sort of tried to pit itself against the insurance industry. And I think that that is very short-sighted, which is one of the reasons why, putting the insurance industry aside, you have seen many other small business and large business trade associations trying to express their concern around some of the potential actions that some of these states will take because they understand very clearly that some of these actions could have a dramatic impact on their costs of workers' compensation, whether it be that they buy first dollar or even in cases where they self-insure to an extent.

Thank you.

Thank you. And our next question comes from Yaron Kinnar with Goldman Sachs. Your line is now open.

Hi. Good afternoon. Robin, in your opening statements, you talked about some of the language that you have in business interruption policies, namely the viral exclusion and physical damage trigger. One thing that we've been struggling with, I think, as outside of it, is to try and peg kind of the difference between standard policies and more of the EMFs or specialty policies. Can you maybe help us understand or think about your overall portfolio, roughly what portion of that portfolio would have that explicit viral exclusion language in it?

So I don't have specific numbers in front of me, but I would tell you virtually, I hate to say all because it's so definitive. To the best of my knowledge, virtually all of our property policies require physical damage in order for there to be business interruption. Beyond that, the vast, vast majority of our property policies, in addition to that trigger I just referenced, also have a virus exclusion.

Okay, that's helpful. And of your commercial property portfolio, roughly how many accounts or how much agreements actually purchase business interruption?

No, I don't have that number for you. Okay. off the top of my head, but if you'd like... Okay, I can follow up. We'll do the best we can to answer your question.

Okay. Another question I had, you know, clearly we're seeing a continuation and acceleration of the rate improvement story. Do you think that in the context of the current economy and the struggles that your accounts are going through, that this will be sustainable, or would you expect to see some pressure on rate coming through the rest of the year?

I think it's a little bit early to even try to speculate. I would tell you obviously this circumstance in this country really started to get momentum in March and really towards the end of March and we have a little bit of data in April but I don't think that we can reach a conclusion. But something that I think it's important to mention here is that we have a view as to what an adequate rate is. And we think that if we cannot achieve that rate, then we will not sell the policy. And it's simply because we feel an obligation to a variety of stakeholders and we need to run a healthy and sound business to ensure that we can live up to our obligations to many, including policyholders. and it needs to be a sound, thoughtful business, and an important component of that is adequate pricing.

That makes sense. I appreciate that. And if I could speak one last quick one. Can you maybe talk about the decision to classify the COVID losses as catastrophe losses as opposed to underlying?

You know, I guess it was just for a lack of any other way to label it. I mean, honestly – You know, there's tornadoes and hail every year, and every couple of years we have, you know, a hurricane and an occasional earthquake. Hopefully, this type of pandemic will happen far less frequently than any of those. Consequently, I think if there was ever sort of a one-off cap, this would probably belong under that category. We tried to in both our release as well as in Rich's comments specifically, break it out for people so you had the clarity around what is, I guess, traditional cat, if you will, versus what is, you know, again, hopefully just truly the extraordinary circumstance. So, you know, we've never really been big believers in the but-for, if you will, and how the industry tends to back out cats. But, you know, from our perspective, This is truly an extraordinary circumstance. It's our responsibility. We own it, but we did want to provide the clarity.

Understood. Thank you.

Thank you. And our next question comes from Meyer Shields of KBW. Your line is now open.

How are you, Rob? Good. How are you? I'm doing well, thanks. I was hoping you could give us an update on new money reinvestment rates. I'm just trying to get a sense in terms of whether we should expect pressure or other opportunities like President Biden's.

So, you know, at this stage, is there pressure? There's probably as much pressure today as there was yesterday. I think the only difference is there's as we were chatting internally recently, there's just more risk. So if you think about, you know, where the available rates are, it's probably not dissimilar to what we saw not that long ago. But if you think about the risk adjusted return, it's probably even lousier. So at this stage, our general default is to something that would be more of a defensive nature. though I think it's important to flag that we certainly are willing to be thoughtful and opportunistic if we see an attractive opportunity present itself. It's one of the benefits that we have of the significant liquidity that we maintain both in the insurance companies as well as at the holding company.

Okay, that's helpful. Was there anything unusual in the reinsurance segment? I'm asking in the context of the expense ratio improvements there on a year-to-year basis.

On the expense ratio, it's really, as I was alluding to in my opening comments, attributable to some of those reduced professional fees, so things like consulting and legal costs. And then our salary expense is pretty much flat quarter over quarter. And with the increase in net earned premium from the first quarter of last year, that helps the expense ratio as well.

And we would expect that trend to continue because you can see the growth in the written, and obviously that will trickle through to the earned over time.

Perfect. Okay. Thank you so much. Thank you.

Thank you. Our next question comes from Brian Meredith at WBS. Your line is now open.

Hi, Brian. Good afternoon.

Good afternoon. So, Rob, just two questions here. First, I'm just curious, you provided us the COVID-19, you know, IBNR estimate. What is your exposure? What do you think about some of the more economically sensitive lines like sureties? Is that going to create some additional loss activity and And kind of where is your book of business as we kind of look forward here over the next, you know, 12 months as we get a pretty weak economy? And then maybe even on the energy surety side, do you have exposure there?

Yeah, so on the surety front, we feel very good about our book. It's a combination of both commercial and contract, though it's weighted towards the contract side. You know, when we look at the health of our clients, when we look at the financial strength of them, when we look at the type of collateral that we have, we are very comfortable. You know, to my colleagues, our colleagues' credit that are running that business, they, first of all, are good, sound operators to begin with who happen to also have pretty good foresight. So they had everything battened down. well in advance of this coming to a head. So I think we all have things that are on our mind or that we worry about, and that is certainly not at the top of my list.

Great. Thanks. And then second, Rob, there's been some discussion on this whole business eruption just as far as the policy forms and whether the policy forms kind of broader internationally than it is domestically. What do you see? Is there any kind of differentiation there that there could potentially be more issues in the international broader policy form versus the U.S.?

So we, by and large, are not a large property market outside of the United States. And with the modest amount of business that we write, even outside of the United States, most of that is U.S. business. So we have looked at our policy forms, and based on everything that I have been advised and what has been reviewed by people that know far more about this than I do, we are in a pretty good place. I certainly have heard some of the commentary about others, particularly in the U.K., that perhaps their policy form, it has been suggested by some, may prove to be problematic. I have not reviewed their policy form in detail. I spend the vast majority of my time worrying about this organization, not other people's organizations.

Makes sense. Thanks. And then one, this last just quick numbers question. Is it possible to give us a sense of what is your kind of acquisition cost ratio, commission ratio, so when we can take a look at what the kind of variability, you know, in your expenses based upon what could happen here with premiums.

Brian, we don't have that at our fingertips. Would it be okay if either Taryn or Rich followed up with you to give you that color?

That'd be great. I appreciate it.

Okay. Thanks.

Thank you.

Thank you. And our next question comes from Phil Stefano with Deutsche Bank. Your line is now open.

Hi, Phil. Good afternoon. Yeah, good afternoon. Thanks for taking the questions. So I just wanted to take a step back and talk about the 65 million IB&R, largely IB&R for the COVID provision that's embedded in CAC. I'm just trying to get an understanding of what exactly is this. Is this a best estimate of all future losses? that you would think be driven by the COVID environment? I understand there's a lot of volatility and uncertainty around this, but is this a kind of a one-time hit, or is there the potential for underlying pressure as we think about this forward?

So the way I would encourage you to think about this is we took a snapshot at the end of the quarter, and we looked at that snapshot and looked at everything that we knew, And based on what we knew, we did our best to come up with what an appropriate estimate we thought would be based on the available information at the time. I can't promise you that the number won't go up or the number won't go down. What I can promise you is based on the available information at that moment, we did our best to estimate what we think the cost will be for this company today. So, no, this is not just sort of claims that have come over the transom. It is not that at all. It is our best estimate, understanding the situation and understanding our portfolio, what do we see the costs associated with this circumstance being.

Got it. One of the things that I guess in my mind I'm trying to play through is the – The creativity of the plaintiff's bar and the fact that the industry is saying these losses should be minimal or at least, you know, at most manageable. But to the extent that people are putting IB&R numbers out there, is there the potential for the plaintiff's bar to say, look, this is proof that these are losses. These should be covered. The industry is putting dollars aside. I'm curious if you have any thoughts about those, you know, those competing forces and how you think about this.

Sure. So can I just make sure I understand the question? You're suggesting the fact that we're putting dollars aside is that we're basically acknowledging that there's coverage. Is that the question?

Yeah. To what extent is that the potential case?

Yeah. No, we do not think that that is the case at all. I mean, from our perspective, the money is set aside for a variety of different reasons, which We will articulate to the extent we think makes sense in the queue, but in no way, shape, or form should this be interpreted by anybody that we are acknowledging this is not a statement about coverage or anything related to that topic.

Got it. And just one more quick numbers question. For the COVID provision, do you have a breakout between insurance and reinsurance?

We have not made that available, but I'll tell you, one of two things will happen. Either you'll hear from Karen or Rich, or I expect it will be in the queue, so one of the two.

Got it. We'll stay tuned then. Thank you so much. I appreciate it. Thank you.

Thank you. And the next question comes from Ryan Tunis with Autonomous Research. Your line is now open.

Hey, thanks. Good evening. I wanted to, I guess, keep trying on this IDNR. Uh, it's, it's just, there's one number out there. So just trying to get a feel of the texture of it. Um, any context as to how much of that is sort of like casualty related stuff, whether it's workers comp, other liability broadly versus, I don't know, short tail ANH, uh, property or like event cancellation.

So, um, I'm not trying to be difficult, though I feel like I may be the one that's raining on the parade. I want to be mindful of our obligations to all interested parties. And we're going to put some detailed information in the queue. And what I would tell you is that we looked at our portfolio across the board. And we tried to make some informed judgments. And that's how we came up with this number. And again, apologies for not giving you more color at this time. It will be made available in the queue. And I think that will hopefully help you have a clearer understanding.

Understood. I guess in collecting that number, though, just trying to stress it a bit, is You know, when you got to that, where are the sensitivities? Is it, you know, if this is three months rather than one month, is it the duration of the lockdown that would make that grow in size?

What I would tell you is that we, and again, apologies if this does not answer your question as completely as you'd like. We looked at our entire portfolio. And we acknowledged the fact that we don't know when this will end. And we made some judgments. In addition to that, we made judgments around reinsurance recoveries and costs surrounding reinstatements. And that is how we came up with, I keep saying about 65, I guess it was 66 point something or other. Bayo knows how many basis points.

Got it. Yes. And the one other coverage question I had before we went on the buyback is, how does the excess work this time book respond to frequency versus severity? Is it that you need really severe single life losses to have losses, or is it that you have a huge number? I'm just trying to think about the risk to that book and some of this stuff going on at the state level.

Yeah, you know, as far as the specifics of the excess count portfolios, again, Rich or Karen can try and get into some of that with you offline. But what I would tell you is that that is certainly a part of our book that we looked at carefully. We looked at our attachment points. We looked at the mechanics of how the policy works, and it was appropriately considered. Is it likely that there will be comp losses? Yes. When we look at our attachment point, do we think it's possible some things could touch us? Yes. Do we think that it is going to prove to be a widespread issue? No. Got it.

And then the last one is, I mean, the buyback was pretty substantial. It's the first time we've seen that turned on in a very, very long time. And I guess I'm just trying to marry that decision with, you know, what seems like a message around some uncertainty here.

Well, I guess my two cents is we still, as referenced by Rich and myself, and you could see in the release, maintain a significant amount of liquidity at the holding company. But the good news is you can have a more complete response around our philosophy around it because the head of our repurchase desk is here.

So the answer, this is Bill Berkley, the answer is we have a very, very simple process for deciding when we're buying back stock. We buy back stock when we think it's attractively priced relative to our assessment of the intrinsic value of the enterprise. And while there was a lot of noise in this quarter, while there's been a lot of noise, we liked everything that's been going on from the end of last year forward. And at the same time that was happening, people decided they didn't like our stock, and our stock traded down a lot. And therefore, it became attractive to buy. And using that capital, which we believe was substantially redundant capital, was a good use of the money. And while it was $200 million, it was sort of 15% of the capital we had at the holding company. Actually a little less than that. So we really weren't particularly concerned. And We just felt it was an attractive price, attractive value, and the intrinsic value of the enterprise, we thought, was okay. It always happens when there's a lot of noise. That's when you can find good opportunity, in our case, in buying back stock. It's when we've been able to buy back stock throughout our history. It's going back to 2000. Lots of noise.

Sorry, and you feel that the liquidity levels of the Holdco are supportive of more share repurchases here in the second quarter should the market... I didn't say anything about the future.

I didn't say anything about the future. I simply said we still have a billion free of liquidity at the holding company. I'm very comfortable with that, and I'm very happy with the intrinsic values within our enterprise... And we'll make each of those decisions at the moment.

Okay. Jimmy, any other questions?

We do have a question from Ron Bobman with Capital Returns. Your line is now open.

Hi, thanks a lot. Let's hope the chairman of the buyback desk comes into the office tomorrow. I had a question earlier. Rob, I think at the year-end call – I think we can do private sales. Rob, you commented at the year-end call, I guess a couple of months ago, about ripping the faucet off the wall and letting the opportunity sort of flow in heavy because the rate was moving in the attractive direction, the opportunities, et cetera. And I'm wondering of late, sort of most recently, in sort of the traditional – commercial insurance area, but in particular sort of ENS, how the quoting volume and the binding volume is going for Berkeley. In essence, are you having a much greater yield as far as quotes resulting in binds? Thanks.

You know, I don't have the... the April information in front of me. So I don't really have a sense of how this must look. But certainly, we saw no pause even towards the latter half of March. And if you use rate achieved as an indicator, we got more rate in March than we did in February. So again, I am I don't have the information for April in front of me, and even if I did, probably some lawyer would tell me I'm not allowed to tell you. But, you know, we're going to have to see. We're going to have to see whether the concern in the standard market continues to grow at such a pace that that continues to drive business to the nonstandard market, and whether that outpaces, quite frankly, some of the strain that exists in the broader economy and the health and well-being of some of the insureds. So I don't have an answer for you for April, but certainly we did not see that in March.

Thanks a lot. Best of luck, guys.

Thank you.

Thank you, and I'm showing no further questions in the queue at this time. I'd like to turn the call back to the speakers for any closing remarks.

Okay, Jimmy, thank you very much. Thank you all for joining us. From our perspective, in spite of the challenges, this organization remains very well positioned to navigate its way forward. It's not that we underestimate the challenges. It's more that we're acutely aware of how healthy and well positioned the company is. So, again, thank you for calling in, and we will speak with you In about 90 days.

Ladies and gentlemen, thank you for your participation on today's conference. This does conclude your program. You may now disconnect.