Good day and welcome to the AXIS Capital Third Quarter 2017 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Linda Ventresca, Head of Investor Relations. Please go ahead.

Thank you and good morning, ladies and gentlemen. I am happy to welcome you to our conference call to discuss the financial results for AXIS Capital for the third quarter ended September 30, 2017. Our earnings press release and financial supplement were issued yesterday evening after the market closed. If you would like copies, please visit the Investor Information section of our website, www.axiscapital.com. We set aside an hour for today’s call, which is also available as an audio webcast through the Investor Information section of our website. A replay of the teleconference will be available by dialing 877-344-7529 in the United States and the international number 412-317-0088. The conference code for both replay dial-in numbers is 10112955. With me on today’s call are Albert Benchimol, our President and CEO; Joe Henry, our CFO; and Pete Vogt, our Deputy CFO. Before I turn the call over to Albert, I will remind everyone that the statements made during this call, including the question-and-answer session, which are not historical facts, maybe forward-looking statements. Forward-looking statements involve risks, uncertainties and assumptions. Actual events or results may differ materially from those projected in the forward-looking statements due to a variety of factors, including the risk factors set forth in AXIS’ most recent report on Form 10-K and Form 10-Q filed with the SEC on February 27, 2017 and August 18, 2017 as well as the additional risks identified in the cautionary note regarding forward-looking statements in our earnings press release issued on October 25, 2017. We undertake no obligation to update or revise publicly any forward-looking statements. In addition, this presentation may contain non-GAAP financial measures. Reconciliations are included in our earnings press release and financial supplement, which can be found on the Investor Information section of our website. With that, I would like to turn the call over to Albert.

Thank you, Linda and good morning ladies and gentlemen. Thank you for joining us today. I am happy to welcome Peter Vogt, our Deputy CFO and CFO designate when Joe will retire at the end of the year. Last night, AXIS reported third quarter results that were negatively impacted by several major catastrophic events, including Hurricanes Harvey, Irma and Maria, along with two earthquakes in Mexico. These events are tragic human consequences and have created significant hardship for people across multiple locations. The economic effects are also significant and continue to develop as families and businesses cope with the aftermath and attempts to move forward. AXIS is actively working with the insureds to provide security and timely support to aid in their recovery. We reported a third quarter operating loss of $446 million or $5.35 per diluted share and for the 9 months ending September 30, an operating loss of $284 million or $3.34 per diluted share. Diluted book value per common share was $55.33, a decrease of 8% from the prior quarter. There is a lot of noise in the quarterly results. So I’d like to address our catastrophe experience and ex-cat results separately to highlight our performance and progress along our various initiatives. Let me start by putting our catastrophe loss experience in historical context. We estimate the industry’s year-to-date cat losses to be close to $110 billion. This puts the year ahead of 2005 with approximately $106 billion of industry cat losses and a bit behind 2011, the largest industry loss year on record with $127 billion of industry losses. All figures are in 2016 dollars and exclude the NFIP losses other than the NFIP losses ceded to the reinsurance market. To put things in perspective for us, I want to share some statistics. AXIS incurred approximately…

Thank you, Albert and good morning everyone. During the quarter, we generated a net loss of $468 million, mainly attributable to an elevated level of catastrophe losses associated with Hurricanes Harvey, Irma and Maria, and the two earthquakes in Mexico. Our net loss this quarter was further impacted by a number of items, which adversely impacted performance, including an increase in our reinsurance current accident year loss ratio, ex-cat and weather, attributable to midsized claim experience in our credit and surety lines and the ongoing impact of the Ogden rate change on our motor lines. The negative other insurance income, due to a decrease in profit commissions associated with retrocessional agreements with our strategic capital partners, related to the third quarter catastrophes. Transaction-related expenses of $6 million recognized in the quarter associated with the completion of our acquisition of Novae, a diversified specialty reinsurer and insurer that operates through Lloyd’s of London on October 2. These expenses are excluded from non-GAAP operating income. These negative factors were partially offset by strong investment income, albeit lower than prior year, and net realized gains from investments. The decline in book value per share in the quarter to $55.33 was principally driven by the net loss generated in the quarter and common dividends declared, partially offset by an increase in net unrealized gains on our investment portfolio, which primarily reflected the strengthening of the pound sterling and the euro against the U.S. dollar, together with strong equity market performance. Before I get into specifics of our income statement, I’d like to provide some context to the premium growth in our reinsurance segment in the quarter. First, there were some significant transactions, which I will explain shortly. The more moderate growth adjusting for these transactions reflects good organic growth and attractive targeted lines, largely…

Thank you, Joe. While I usually spend some time going into detail on recent price changes, there is likely little information value in reporting on these today. And I want to spend a bit more time speaking of expected market conditions. Third quarter market conditions were still deteriorating, albeit at a lesser rate than prior quarters. Our insurance average price change in the quarter was minus 1%, but about 57% of renewals were flat to up, while 43% were down. So we were already beginning to see some resistance to further market declines, following many years of price cuts. The record third quarter catastrophes have highlighted the need for appropriate risk-based pricing in our industry and will accelerate what was previously a slow-moving market transition. Insurers, reinsurers and brokers are still feeling out how much and how to increase pricing where necessary. There’s not been a lot of price discovery yet. Most of the quotes for October renewals were already out at the time of the hurricanes, but we are now observing varying levels of increases imposed on property and cat-exposed policies. That move is strongest in London, but we are also seeing double-digit increases in the U.S. E&S market. Primary property writers absorbed a large part of the third quarter losses, and this highlighted the inadequacy of property pricing in most markets. We would expect to see price increases beyond just cat-exposed territories. We also expect to see meaningful price increases in the property and property cat reinsurance renewals coming up at January 1. There is much talk of potential reductions in capacity and increases in the cost of retro. Our expectation is that supply should be there but at substantially higher cost than last year. This should drive up increases in property and property cat reinsurers and further…

Thank you. [Operator Instructions] And our first question comes from Kai Pan with Morgan Stanley. Please go ahead.

Thanks. Good morning, everybody. Actually, it’s Mike Phillips here at Morgan Stanley. A question on your comments on the insurance segment and the accident year loss ratio ex-cat and how that’s kind of moving up, because of negative impact of rate and trends. We have heard some other companies already in the calls that they are seeing some rising loss trends in some of the casualty lines. And I guess I want to hear your thoughts on those lines, in particular the casualty insurance lines and what you are seeing for now? Thanks.

So, Mike, it’s Joe. Let me just clarify for insurance overall. We had, again, 0.5 point deterioration in the current accident year loss ratio. It’s actually down 0.6% on the year. One thing that we didn’t mention in our prepared remarks is that we have included unallocated loss adjustment expenses from the cat losses in attritional losses this quarter, and that’s industry practice to do that. Excluding that, though, the loss ratio is actually down in the quarter. And on a year-to-date basis, it’s actually even more down. So what we feel we are doing is we are absorbing the impact of adverse rate and trend. It’s not material as far as the casualty lines are concerned. There’s uptick in rate and trend on casualty as well as other lines. But the sound bite is that we’re absorbing that with the actions that we’re taking from an underwriting perspective.

Yes. If I may add, Mike, my comments were more about the industry per se and no need to be specific about a couple of areas. There is no doubt that we have been seeing increased loss trends, particularly in the auto liability area and that’s affected the industry. We are not a large writer of auto liability and we see most of that anyway. So in terms of our own reserve development, we feel very good about where we are. Likewise, on D&O, in particular primary D&O, there has been a significant increase in class actions and frankly, defense costs are going up. So, we are seeing a lot more of the primary layers being burnt. We are not a primary player. As you know, we have changed our positioning with regard to D&O. We are more of a low and high excess player. And in those layers, performance has been reasonably good. So, my reference was really to industry trends and more so than our trends. And as Joe pointed out, our various portfolio actions have actually offset all of the negative rate and trend that is in the industry and still delivering some improvements in our mind.

And Mike, you didn’t ask the question about reinsurance, but let me just add one other fact as well. As you know, there has been some positive news with respect to the Ogden rate change. So, it looks like that discount rate is going to be between 0% and 1% in 2018. And while the legislation hasn’t been finalized, we are not reflecting the impact of that positive rate change in our results at all. So, that’s something to look forward to in terms of 2018, because we are continuing to use the 0.75% discount rate instead of the new rate that’s in the process of being adopted.

And by the way, even if it goes up to somewhere between 0% and 1%, that’s still a deterioration from where it was before at 2.5%. So, there still needs to be some adjustment to the pricing of the various contracts. Hope that helps, Mike.

Yes, it does. Thank you very much. One more if I could on the less moving parts on your expense ratio and you talked about the acquisition expense ratio. I kind of want to hone in on that a little bit, is how it moved up in insurance and you talked about mix changes. Would – around 15%, I think we are seeing in this quarter. It’s up a bit in prior quarters. Like, I was trying to think about what a good run-rate is going forward from there?

Acquisition costs, Mike, have leveled off, particularly in the reinsurance segment. Ceding commissions, which have been going up in prior years, have actually come down. So we see it leveling off, particularly in reinsurance. There is pressure on the insurance side, but again, our mix of business on insurance is changing a bit as well. We are writing more program business and that bears a higher acquisition cost ratio, but actually a lower G&A ratio and you actually see the lower G&A ratio flowing through our results.

Okay, good. Thank you very much.

Our next question comes from Elyse Greenspan with Wells Fargo. Please go ahead.

Hi, good morning. I guess my first question, you did just hit on the acquisition cost side of things. But on the G&A ratio came down in the quarter. I know you mentioned some lower performance comp. What was the dollar impact there and is there anyway you could – just so we could think about the right G&A ratio to kind of think about to use on a go-forward basis?

Yes. So, Elyse, let me answer your question a little bit differently than you answered it. So, our actual expense ratio, as you can see in the quarter, was 12.3%, which is down 3 points. If you normalize for the bonus adjustment, which was about $20 million – to answer your question, the normalized expense ratio is 13.9% versus 15.1% in the prior year. So, I think the normalized expense ratio would be more indicative of what our run-rate going forward would be like.

So there was nothing else other than that $20 million adjustment that even when we look at the Q2 was 15.1% to 13.9%. That was just kind of just some expense improvements from some initiatives that you guys have been working on?

That’s correct. There were some small other items besides the bonus in the normalized ratio I gave you, but it’s really not meaningful. Looking at the year-to-date ratio of 14.7% normalized versus 15.6% a year ago again I think, if you included something between our normalized ratio in the quarter and that normalized ratio on a year-to-date basis, that would probably be indicative of where we are. I also want to point out that we are getting significant benefit from fee income, which is offsetting our G&A ratio, and that had an impact of a point in the quarter and 0.8 of a point on a year-to-date basis.

Okay, that’s great. And then just maybe a little bit more color on the market. Albert, you made a comment that you said rates have no way to go but up. And at the start of the call, you did point out, obviously, there is a pretty decent delta between the level of reported losses so far and the level of potential insured losses. Do you think rates – if it turns out that the losses are lower than what the modeling agencies are calling for, if we don’t kind of fill the gap with losses, can rates go up as material as if we end up with a delta about $50 billion in the level of insured losses?

So now we are in the field of opinion, Elyse and I am happy to give you mine. I think what I said was that the third quarter was really a wake-up call for things that are already in the market. I think if you ask any market participant, they’ll tell you that the current year business, whether it’s D&O, general casualty, property, whatever, is priced currently in the low single digits. We have had a lot of fat in there for any kind of unusual loss experience. And so – and even before these losses I was mentioning we were already in a trend of seeing resistance to further price cuts and so in my mind, the third quarter losses are an accelerant, not necessarily a driver. And even if the losses were to be lower by $10 billion or $15 billion or $20 billion, I still think that we are now facing the reality that current year business is not priced properly. It does not reflect increasing loss trends. It doesn’t reflect reduced reserve strength in the industry. It does not adequately reflect the low interest rates. And so for all of those reasons, we believe that there is still a very strong case to be made for increasing pricing.

Okay, great. And then in terms of – now that you guys have completed the Novae acquisition and obviously following on the high level of losses this year, what would you view as your annual cat load for 2018?

Well, first of all, as you know, we don’t necessarily give guidance. But let me give you a little sense of how we approach it and perhaps some context around that. So first of all, internally, we don’t necessarily use a cat load per se because of all the faults that, that number has. Our plans recognize the inherent volatility of our business. So normally, do we look at the mean and the median expectations around results? We also look at the potential upside and downside volatility of our results based on the 1 in 10, 1 in 20, 1 in 50 and so on. We look at zonal PMLs. And we also look at aggregate annual property cat loss curves, which really take into consideration the totality of the events that you have in the year, more than just individual regional PMLs. And so as I mentioned, I think most of what we’ve seen in this third quarter was consistent with the various models that we run both on a per event basis and a cat basis. But back to your point, in terms of publicly available information, in our 16 years, our annual cat loss ratio has ranged from 0 to well over 40%. Our average is about 10% and the median is about 5%. So those are kind of the inputs. But as you think about how you would model it going forward, please consider the statistics that I shared with you in my prepared remarks. Our sensitivity to cat losses have decreased significantly over the past 5 years. And so I would hope that our rolling 5-year and 10-year averages would also decline over time.

Okay, that’s great. Do you guys have any color on potential losses from the California wildfires?

Elyse, neither Nate nor the California wildfires are expected to be significant for us at this point.

Okay. And then just one last question you guys mentioned that you are going to be giving some additional disclosure on Novae following the deal closing. Is that something we are going to get prior to you guys reporting Q4 or that’s going to come with the Q4 numbers?

It will be prior to the Q4 numbers.

Okay, great. Thank you very much.

You’re welcome.

Our next question comes from Brian Meredith with UBS. Please go ahead.

Yes, good morning. A couple of questions here for you. First, I am just curious just on your kind of thoughts on the pricing environment going back, the times that we did see significant price increases going on across the board, there was clearly a change in risk perception. How do think about that this time around? Has been there a change in kind of the perception of risk out there? Do you think it will kind of drive pricing?

So, the first thing I would say is that you are absolutely correct in terms of change in risk perception and we are not forecasting a kind of market change that we saw in 2002. But I would say that probably many people in the industry, if you would tell them they would have three $100 billion years in a 12-year period, they might find that surprising. So I think the frequency and severity is an issue. And I think that, as I said, we’ve been lulled into a level of comfort by the fact that there’s been a lot of close calls, but they haven’t happened. At about this time last year, we were all signing a big sign of relief because Matthew was 30 miles west of Miami, but it followed a path that was very parallel to Irma. And again, we were lucky that Irma was 30 – I’m sorry, Matthew was 30 miles east of Miami, and we were very lucky that Irma was 50 miles west of Miami. And just as we were seeing Irma approach Florida, people were thinking about potentially $100 billion event right there. And I think that we have too often ignored the potential losses that are very real in our industry. And our pricing needs to reflect both the increased frequency and severity that we are observing. We can get into a very long conversation about the impact of climate change, the impact of development, the property development, draining of swamps and so on and so forth into the impact of additional severity of flood damage in the future. I think we are seeing what’s happening right now in Texas, Florida and Puerto Rico about the demand surge that could occur when you have large events happening within a short period of time. It’s one thing to have all the models. It’s another thing to be paying out the claims.

Makes sense. Thanks. And then my second question is when you combine Novae with your portfolio – I guess the first part is how much does your kind of PML increase as a percentage of equity? And then just kind of as an add-on to that, what’s your kind of appetite here or what’s your – what would you be willing to take that up to as a percent of equity, given potential opportunities in the marketplace or if not, what other avenues are there for you to increase your exposure to somewhere the cat-exposed line to pricing maybe a little more attractive without doing that?

Good question, Brian. Thank you. Look, across the board where the pricing is right, we have an appetite for growth. I think with regard to cat, obviously, the pricing will have to change materially for us to substantially change our net appetite, because as you know, pricing has been down over 40% over the last 5 years and we don’t expect that that’s going to be recovering across the boards immediately. So, we are going to follow that, but where we feel that it’s properly priced, we will write more. But with regard to cat in particular, as you know and many other lines of business, we have significantly expanded our third-party capital available to us to support our customers and our brokers and we fully expect that if it makes sense into the market conditions, we would write much more on a gross basis and share that risk with our capital providers without necessarily having in the near-term a meaningful increase in our net cat exposures.

Got it. So I guess what you are saying is that if the opportunity permits, you would be willing to increase your – the amount of capital at Harrington or is it in maybe another potential facility?

That’s right. So first of all, Harrington is mostly long tail. They prepare much more in long tail. But yes, we are working right now on additional third-party capital that we can make available on the January 1 and we have that already. And depending on how attractive cat gets, we may actually choose to increase our own appetite. But for the moment, given our expectations of where the market will be in 2018, I expect that our net appetite will be broadly in line with what it was in 2017, but that we would write more on a gross basis and we are talking about risk here, not premium, right. So if premium goes up, obviously, we will keep more premium net, but on a risk basis, we would say that our net appetite is probably going to be generally consistent with ‘17, maybe a little bit up with better terms.

Great. Thanks.

Our next question comes from Christopher Campbell with KBW. Please go ahead.

Yes, good morning.

Good morning.

So now that you are a month in, how would you categorize the work required to bring Novae’s book more in line with your expectations?

Well, we are still very early on. As you know, day 1 for us was October 18, but we have been working for the last 3 months subject to the limitations opposed on us by the takeover rules in the UK to work through it. But we are very pleased that we have clear visibility with our underwriting people in terms of the leadership of who’s in charge of what, the organizational structure and, as I mentioned earlier, very keen, both with the market reaction to our union as well as the underwriters being energized about what they can do in this market. So we feel very good about that. We still have to work on the integration of the backrooms, and, obviously, that is something that we are working on. But there is – given where things are, I would say that the work and the planning and execution that we need to go through is not materially different than our expectations. I think where the expectations also haven’t changed right now was what it will cost us to achieve the savings that we expect to receive. Where we have the positive surprise if you would is that we expected that we would be integrating these operations within a flattish market and now we are doing so in a firming market. And so my hope is that the book that we have acquired is going to be more profitable than we thought it was going to be.

Right, okay. That’s very helpful. And then just – I think Joe had mentioned it in his script about capital management, maybe you guys wouldn’t return to buyback until maybe later 2018. Can we get some extra color on how you are thinking about potentially reinitiating your buybacks? And are there any specific metrics that you are looking at like maybe like the tangible book value you have to recover or something like that?

Yes. We really look at this in a holistic manner. We look at market opportunities. We look at strategic initiatives. We look at alternative uses and forms of capital. And it’s really a subset of our broader planning process that we are actually going through right now. So, I would just say that we – for 2018, as I said, we decided to suspend our share repurchases. We’ll re-look at that at the end of 2018 and decide what we are going to do for 2019.

I would like to add some comments to that, because I believe we have been excellent stewards of capital, right. So, over the last 5 years, we have shifted our mix of business for more capital efficiency. We grew our top line and we still return to our shareholders over a 100% of operating earnings. However, that was in an environment of declining rates where we felt the best use of our capital was to give it back to our shareholders. But our primary task is to put capital to use where and when we find attractive opportunities to generate good returns. If we cannot find those opportunities, then the return of capital is indeed the best course of action. But we now believe that with the Novae acquisition expected firming in the market, we may have those opportunities to use our capital for solid and profitable growth. And in that kind of environment, share buybacks are unlikely to feature us prominently in our capital management as it was in the past. Of course, if conditions develop differently than we currently expect, then yes, our attitude towards capital management would be realigned. But we really have to look at the capital management in the context of our overall strategy, our execution on the opportunities we have to use that capital for profitable growth.

Okay. And so would that change your dividend strategy in any way if you are returning less in terms of the buybacks? And then presumably with the firming market, your operating income would increase relative to prior years. So, would that change your approach on your dividend strategy?

We have always felt that dividends are an important part of the returns to our shareholders. They actually enforced a little bit of discipline on management to make sure that they pay the rent on the capital. And so our dividend strategy does not change. I was referring to buyback.

Okay. And then just one – I am sorry, go ahead.

My comments were referring to buybacks.

Okay, got it. And then just one question on the core loss ratios which were higher in both segments, is there a way – and it sounds like the book is shifting a little bit as well in each segment. Is there a way to get that year-over-year increase broken out between what’s mix versus what’s just underlying margin compression?

Yes. I can give you that if you want it by segment. Let me give it to you. So, in terms of insurance – and again, this is 0.5 point change in the quarter. The rate and trend impact was 0.3% in the quarter. The mix impact was 1%. Our experience, what we call – really our loss experience was 2.7 points. And then in terms of improvements and initial expected loss ratio that was a positive impact of 1.5 points. So, that’s on insurance. On reinsurance – so as I said, it was 3.6 points overall. The adverse impact of rate and trend was 0.3 point in the quarter. The mix really had no impact. Our experience adjustment was 2.8 points and again that related to two large claims in our credit and surety book and the other impact – and this is primarily the Ogden rate change – was 0.5 point.

Got it. Very helpful. Thanks for all the answers and good luck throughout the 2017.

Thank you.

And our next question comes from Ian Gutterman with Balyasny. Please go ahead.

Hi, thank you. So first off I want to go back to your comments about how this compares to ‘05 and ‘11 and so forth. And I guess to be honest, this feels a lot more like ‘11 to me where there was a lot of talk at this time of the year about how much pricing was going to be up and then we ended up with a big disappointment, because – outside of Japan, because essentially as sort of Brian was asking, there weren’t really any surprises and no one needed capital. So, I mean, I get that industry ROEs are lower and that’s a big point. But on the other hand, we didn’t have alternative capital back then and isn’t that the elephant in the room, is that there is so much capacity from these guys that, that makes it a lot harder actually to get pricing for events now versus 5 or 10 years ago?

I think we agree with the various buckets that you put in place. I think that where we differ is that we don’t believe that the third-party capital is going to be accepting the same rates that they have been accepting recently. All the feedback that we are getting from third-party capital is that they expect more rates for the capital they are going to bring in. And let me give you a little bit of background as how I think about it. Most of the big money in third-party capital is really pension plans, right. And they look at cat bonds like they – essentially as less than investment grade bonds and they look at their portfolio and it adds diversification and absolutely it does. But if you are in the junk bond market, spreads gap after a period of high defaults or when risk is viewed as increased. And I would argue that in the cat world, we have just had an experience of high defaults and a perception of the risk increasing. And in the same way, you would expect to see an increase in the spread required by the investors. So, all of the feedback that we are getting is, yes, there is money, but not at the same rate.

No, I understand that. Yes.

That will drive rate. Now, nobody is saying that you are going to have a situation, which is as stark as it was in 2002, nobody is saying that, but we are saying is that we expect positive price movement.

That’s fair. So, maybe a better way to ask is, how much rate do you need on your cap book to – I mean, to your comment about being willing to grow the gross more than the net? How much price do you need to be willing to grow the gross?

If you don’t mind, I will wait until I talk to our clients and brokers when I say that.

That’s fair. That’s fair. That’s fair. I’ll move on. The other thing I want to talk about – so first, Joe had a comment in his script. I didn’t fully catch it when he was talking about capital about wanting to get back to your prior level of capital. Can you just repeat what you were talking about there?

Yes. Look, basically, the issue for us is, obviously, we have taken a large cat loss this quarter with an associated reduction of capital. But if you look at our history, in 16 years, we have actually had five quarters with reductions in book value. And in all cases, we continued to grow our top line and we returned the book value to the previous high within four quarters, right. So obviously, we are looking at this and we are thinking that we would hope to follow the same pattern again this year. So, we feel we are well-positioned for clients – to serve our clients to grow where it makes sense. And so Joe was really responding to the things that we consider with regard to shareholder buybacks, but basically, we look at our past. We look at our book of business. In the past when these kinds of quarters happened, we were able to grow and recover the book value in a reasonably short time. And so we are looking at 2018 with some confidence and optimism.

Okay. I just want to make sure you weren’t trying to say that we need to do it sooner and therefore we might be having to raise some capital.

We are just focusing on the fact that we have historically been able to grow our book value….

Okay, perfect. That’s what I want to make sure. And then related to that, just the capital being where it is – sort of the next follow-on to that is sort of how much of a constraint is that assuming you can get back to book – where the book was, let’s say, in the year, I assume that, that’s sort of a nonevent in this business as usual or is there – do you feel there is some need given the growth opportunities that maybe need to figure out a way to get some extra – to bring down the debt leverage?

So Ian, it’s Joe. I will say that we are very comfortable where our current leverage ratios are after the impact of the Q3 losses and the pro forma impact of Novae, but we did say and we did make public that in conjunction with the announcements of Novae that we might issue debt if the conditions remain favorable. So, the acquisition is already closed, obviously, but debt remains a possibility depending upon market conditions.

Got it. And just last quick one, Joe, on the Novae, is the losses they took – I assume that the way that would play out in your performance is essentially the goodwill is higher now, because your book value would be lower then if there were no cats? Is that sort of the main change?

That’s right.

Okay. So it doesn’t affect your equity. It just affects your tangible?

Correct.

Perfect. Thank you.

Alright. Since we are at the top – beyond the top of the hour, this concludes our question-and-answer session. I would like to turn the conference back over to Albert Benchimol for any closing remarks.

Thank you very much for participating in our conference call, obviously, a lot to cover today and thank you for that. I would be remiss if I did not close this quarter with some comments on Joe Henry for whom this will be his last conference call ahead of his retirement. Joe, I just need to thank you. I mean, you have been an incredibly strong CFO. You have been a leader of our company, a trusted adviser and a friend. You have earned our respect and our affection. We, here at AXIS, owe you a very, very strong debt of gratitude for all that you have done for us. As much as it breaks our hearts to see you go, we are thrilled that you and Carol will be able to enjoy your retirements and we wish you the very best in that.

Albert, thank you very much. Thank you to our investors and analysts who follow AXIS. I have to say it’s been a pleasure working here over the last 5.5 years. And I will just close by saying I think AXIS is in great hands with Pete and the finance team. Thank you.

Thank you, Joe. And so we are going back to work and we look forward to speaking with you soon. Bye-bye.

And this concludes our question and answers – this concludes our conference for today. Thank you for attending today’s presentation. You may now disconnect.