Good day, and welcome to the Fourth Quarter 2018 AXIS Capital Earnings Conference Call and Webcast. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Matt Rohrmann, Investor Relations. Please go ahead.

Thank you, Operator. Good morning, ladies and gentlemen. I’m happy to welcome you to our conference call to discuss the financial results for AXIS Capital for the fourth quarter and the period and year ended at December 31, 2018. 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 at axiscapital.com. We set aside an hour for today's call, which is also available as an audio webcast to the investor information section of our website. A replay of the teleconference will be available by dialing 877-344-7529 in United States, and the international number 412-317-0088. The conference code for both replay dial-in numbers is 10127972. With me today on today’s call are Albert Benchimol our President and CEO; and Pete Vogt, our 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, may be 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 factor set forth in AXIS' most recent report on Form 10-K, as well as the additional risk identified in the cautionary note regarding forward-looking statements in our earnings press release issued yesterday evening. 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, which is located at axiscapital.com. With that, I’d like to turn the call over to Albert.

Thank you, Matt, and good morning, everyone and thank you for joining us to review our fourth quarter and year-end results. I'll begin by saying that this was a tough quarter. However, notwithstanding fourth quarter results that were clearly unsatisfactory, our overall performance for the year has continued to show progress on a multi-year trend of lower ex-PGAAP combined ratios even as we've changed the mix of business to include less cat exposure as in a declining market. Overall 2018 was undeniably a year where we took steps forward both in terms of underwriting profitability and organizational progress. Let's first discuss our performance. As noted in our earnings announcement, our fourth quarter results were negatively impacted by high attritional property loss and cat activity. Based on our research and conversations with our clients and brokers, we do believe that the higher property loss frequency is broadly based across our industry and that the fourth quarter experience is more of an unusual quarter than it is a trend. Separately, if you step back and look at our results over the past year, you'll see that AXIS delivered an improvement in full-year underwriting performance both with and without cats. We feel the best way to review progress from period-to-period is on ex-PGAAP basis and also on an ex-cat basis. So, on that basis ex-PGAAP, ex-cat for the full year calendar year combined ratio improved to 97.6% in 2018 from 98.5% in 2017 with a full two point reduction in the ex-cat loss ratio. We also looked at the pro forma combined results as if the merger were effective on January 1, 2017 to do two full years of comparison. And on that basis, the full year ex-PGAAP, ex-cat calendar year combined ratio improved from a pro forma of 99.5% in 2017 to…

Thank you, Albert, and good morning everyone. During the quarter we incurred a net loss of $198 million and an operating loss of $148 million. The loss was largely attributable to cat losses associated with Hurricane Michael and the California Wildfires, as well as an increase in our ex-cat and weather loss ratio. These negative factors were partially offset by continued favorable prior year reserve development and strong investment income. Looking at the consolidated income statement for the quarter, the current combined ratio was 117.3, an increase of 16.6 points from the fourth quarter of 2017. The year-over-year increase in the combined ratio is essentially driven by two areas. First, an 11 point increase in the cat and weather related losses, primarily impacted by Hurricane Michael and the California Wildfires, and in over 2.5 point higher ex-cat whether loss ratio substantially caused by the Reinsurance segment, we had both higher property per risk losses and a continuing change in mix of the reinsurance book to less cap business and more casualty business combining to increase loss ratio. The cat and weather related losses in the quarter total $269 million, net of reinsurance and reinstatement premiums. The Insurance segment totaled $92 million in cat and weather related losses, and the Insurance segment totaled $177 million. The losses from Michael and the Wildfires combined to come in at the midpoint of our previously provided guidance. The quarterly G&A ratio was 11.3%. This was a decrease of seven-tenths of a point compared to the same period in the prior year. The decline was driven by ongoing actions that we’ve previously communicated to you. Notably in the quarter, the Novae integration generated run rate savings of $10 million and our transformation initiative produced an additional $7 million of savings. There were some one-time expense…

Thanks Pete. And now it's been a few minutes discussing market trends and then we'll open the call for questions. The bottom line is that the fourth quarter exhibited an acceleration of the positive pricing trends we observed during the year and everything we see points to a continuation of market discipline in 2019. Within our Insurance segment, the fourth quarter was the strongest of the year with an average rate increase of 5% this compared to average increases of 4% in the prior three quarters, bringing the average for the full year to about 4.3%. December was even stronger with average increases in excess of 6%. From what we observe, we believe our average rate increases are ahead of the market, a belief that is supported by our retention rates that are almost 10 points lower than last year. In our U.S. division average rate increases were plus 7% for the quarter rising to nearly 9% in December. Rate was led by U.S. AXIS casualty and E&S property which both finished the year at about 11% for the quarter and the year-to-date. U.S. programs generated rate increases at 3% for the quarter and 4% for the year, while our primary casualty book rate was up 3% in the quarter and 5% for the year. Within our North American professional lines division, average rate was relatively stable at about 1% for the quarter and year, although here too we observe an acceleration in December. Within that average, there is a fair amount of variance. Primary business was strongest at about 4% while excess layers averaged over 2 %. A profitable small E&O portfolio was essentially flat for the year. In our London-based international insurance division pricing was strong in the fourth quarter with average rates up 8% bringing the full…

[Operator Instructions] The first question is from Elyse Greenspan of Wells Fargo. Please go ahead.

My first question is going back to some of your comments on the property losses in particular in the Insurance book. So I think you guys made a comment in introductory remarks pointing to margin improvement in that book in 2019. Can you just say if that's going to be loss and expense ratio driven or I'm assuming both? And then as we think about the programs running off, what type of drag should we think about that we could potentially see at these property losses remain somewhat elevated in 2019?

Right, so let me start with the background and then Pete please walk us through the specific numbers. I think that it's important to state that with - in the insurance book in particular, notwithstanding property losses that did not meet our expectations the overall results were insurance actually did not deteriorate meaningfully. So most of the deterioration that you saw with us in the quarter really related to the elevated losses that we saw in the reinsurance book and I believe Pete walked us through those in specific. And with regards to the improvements that we expect to see next year, it's our expectation that you should see improvement both in the loss ratios as well as our G&A ratios, as we continue to achieve efficiency. But Pete, you want to walk us through some of those specific numbers on the improvement?

Yes, so Elyse, we should see improvements in both areas. As I said, right now we know that there was 2 points of pressure associated directly with business that's already been canceled and that was just in the quarter. With regard to that we’ve taken serious actions year-over-year with regard to what we did in 2018. So I would expect to see an overall improvement just on an ex-PGAAP basis or and an ex-cat combined ratio on the loss side about over, about a point associated on the entire company just from what we already canceled on the insurance book. And that does not take into account, I'd say other underwriting actions as well it doesn't take into account the expected higher rates that we got in 2018 starting to earn in 2019. In addition to that we do expect the G&A ratio, while I think this quarter was as I said it was artificially low. I do expect the G&A ratio for insurance to continue to improve as we continue to get more synergies associated with Novae. As I noted there was $38 million actually experienced in 2018 but by the time we got to the end of the year, we expect next year to be more like a $45 million, so an additional $7 million there just on Novae and our transformation initiatives too will continue to kick in next year, as we go towards our goal of saving, a net $100 million by 2020.

Just looking back to that and to the point that, Peter talked about a point of improvement that’s essentially baked in from the business that’s been cancelled, and we have on that non-renewed or cancelled business probably less than $50 billion all in a VPR. So there of course we'll have some possible drag on that, but fundamentally you know that book will be off the books and we should see that go away. I really do want to emphasize however, that we continue to expect that the other changes that we are making on our book both in terms of pricing, portfolio construction, and selection should also drive additional improvements, that’s why to be clearly is that it's over 2 points on the Insurance segment alone and right about a 1 point for the entire company year-over-year.

And then maybe following up on Albert's comments in terms of pointing to price. So you know it seems like you guys are expecting you know some more price increases in reinsurance as we get to you know April and mid-year. As you think about the reinsurance environment some of the mix shifts that you guys pointed to a bit more casualty in the fourth quarter had an impact. How do we - should we think about the underlying loss ratio within reinsurance trending in 2019?

So I have two comments that I would make is everything that I tell you with regards to what we're seeing on the primary insurance rate changes to the extent that we're participating in quarter shares, and as I mentioned by and large, we're not seeing major changes in the seeding commissions, a lot of those improvements will drive through into the reinsurance book also. And in the XLO lines we know we're also responding to losses with pricing increases were necessary, so we also expect positive trends in the underlying books and the reinsurance part. The second comment is to your point, with regard to the mix of business. And it’s interesting that the way that this industry captures you know the ex-cat combined ratio is interesting because it gives full credit to the premium that you collect on the cat line, but it excludes the cat losses. So the more cat business you're right, the more attractive your ex-cat loss ratio is. And that's really what's affecting the mix. We are writing less cat on a net basis through this year, my guess is that there will not be a major change of that into 2019. So I would hope that the full mix impact that we saw through the fourth quarter of 2018 is the bigger piece of it, there will continue to be some small impact in 2019. But Elyse I think is too small and you know it'll be lost in the rounding. So I wouldn't model that. I would just know that we expect some, but too small to really stick out as a driving factor.

And one last quick question you guys had said after I believe after January 1 renewals when you had a sense of the market they would re-evaluate whether you guys would have return to buying back some of your stock you know kind of personnel by integration et cetera you know given where your stock is trading today, I’d assume share repurchase a bit more attractive. Can you just provide us an update on your views on repurchases for 2019?

I think that's fair. So we've got two countervailing positions that we will be discussing on our upcoming board meeting. The first is that obviously this was a disappointing quarter and our equity is down given the cat losses, and that's something that we need to build back up. On the other hand we’ve recognized that the price of the stock is very attractive, and that is something that we'll need to consider. So we will be considering both issues as we sit down with our board and go through it. But I think given where we are given the recent losses in the capital whatever action we would do if any would be limited.

The next question is from Brian Meredith of UBS. Please go ahead.

Couple of quick questions for you. First one, I'm just curious Pete, the G&A ratio that was lower this quarter or lower expenses. Is there going to be any kind of reversal of that actually if you look into the next couple of quarters?

Yes, it definitely will Brian. As I noticed, it was normalized, it was low on a normalized basis, it was closer to 13%. And I'd say that, you'll see it kind of rise to those levels over the next couple of quarters. It's not going to stay down of where it was this particular quarter.

I guess what you meant would be maybe a little bit higher than usual in the next couple of quarters to offset that. It was a timing issue on kind of G&A expense recognition.

As I've said through the year, I do think that right now where we are running a little bit low that I would trend the expense ratio, the G&A ratio more to that, I'll call it, 13.4%, 13.5% level right around there.

As you might imagine, Brian as you might imagine, there were a number of adjustments including certainly incentive comp reductions that came in at the quarter. But the thing that is relevant in my mind is that we look at both the reported number and then we look at the normalized number. And the progress in the normalized number I think is quite strong, because last year we also had a low fourth quarter G&A ratio. But if you look at the normalized for last year's fourth quarter and the normalized for this year's fourth quarter, the 12.8% that Pete referred to would have been a 14.1% in the fourth quarter of 2017. So, we are - the improvement is consistent, and it's across the board. It’s just that obviously, we hope to deliver results next year that will allow for a fuller incentive comp budget.

And then, I’m just curious. Obviously some fairly positive commentary about the rate environment at Lloyd’s, you guys could have a pretty big exposure there now. Are you in a position now given some of the underwriting actions that are going on with your existing book to actually see some solid growth at Lloyd’s?

I think there are some opportunities, but I want to be very clear to everybody. Growth is secondary to profitability right now. And so you know, if we get offered five or six points of pricing and we think we need 10. We’re not going to take that growth. So I think, there are opportunities, I think this is probably the best market at Lloyd's in a number of years. And I think, there are opportunities for growth and where there are those opportunities, we will take advantage of them, but profitability is our number one priority.

I was just wondering given that there are a number of incentive that are having to shut business that was whether you were able to take that type?

Yes, both the opportunities are absolutely there.

And then I guess another question here for you, when we think about Seeded Reinsurance Program here going forward, and I understand most of the large loss activity this year was – were some business that was kind running off, but any kind of thoughts are but changing in the ceded reinsurance program, maybe that protect a little bit against some of the volatility in attritional or other things, which you’re thinking about as far as you know cat protection, et cetera?

Absolutely and to be fair, we’re always looking to improve our risk funding and our ceded program, and it’s probably a good time to identify that we have made many improvements in 2018 and that we will continue to make some more So I’ll just give you a couple of quick examples. You've all heard about how difficult the third-party capital market was at the renewal. We think that we should take pride that we're one of the very few companies that actually was able to increase the amount of third-party capital support that we achieved at January 1. We have more third-party capital. We have more diversified group of investors in our third-party capital. And we continue to expand the number of lines that we share with third-party capital. And to your point, Brian, one of the new facilities that we created at January 1 in Alturas is a property sidecar for our insurance book. And that obviously increased quota share participation will serve to reduce or mitigate the volatility in that property book as we look through that. We've also done a number of additions including buying some aggregate excess of loss to which prevents a tail-end exposure and by the way would have been almost fully utilized in an HIM scenario. So these are in the working layers, if you would - if you know what I mean. And we are going to be renewing our various property programs in May and again we will be looking for opportunities to enhance that. So net-net, our ceded protection package is a better package at January 1, 2019 than it was last year.

And then one last question, I’m just curious Albert, your thoughts on the kind of California fire and availability of kind of commercial coverage there of pricing, and is it a spot that there could be opportunities here or do you kind of to re-evaluate it?

I think that one of the things that we spoke about during the year and accentuated in the fourth quarter is I think that the industry in general has a bit of an issue with property, in some parts of the property cat. So I think it deserves more study before we jump in at the slightest offer of rates. I can tell you that we already got out of some of the most exposed liability lines in California last year. That turned out to have been a good decision. I think again, right now caution is probably the right order. We're doing more studies. We think that we need to continue to make changes in the book that's exposed the California wildfire. In fact some of the non-renewed business that Pete spoke about had some of that exposure. There are a lot of changes. I think climate change is driving different patterns, different frequencies. And I believe that caution and analysis is probably the first order. And then if we can figure out good ways of taking that risk in a profitable way, we will do so. But I would caution before jumping in.

The next question is from Yaron Kinar of Goldman Sachs. Please go ahead.

Albert, in your pricing commentary, it sounds like you are taking more aggressive pricing action than the market, and it is somewhat reflected in lower retention rates. So, how should we think about the premium growth opportunity into 2019 and potentially it impact on the expense ratio if growth maybe is impacted by these pricing actions.

Well, the good news is that in delivering our plan and of course we don’t share our plan but I can tell you that in delivering our plan, we already took into account the fact that our pricing actions may result in lower retention ratios. And we still believe that we can deliver improvements in our core G&A ratio. So my view is that it's still there. There's still more efficiencies to be a change achieved through the Novae and the transformation program. And I do expect that we will have some growth in some areas. So net-net, we're still optimistic as we mentioned earlier that the results in 2019 will include improvements both in the loss ratio and in the G&A ratio.

And then with regards to the elevated frequency of non-cat severity and property, you had mentioned that it's an industry phenomenon. So is that something that's addressed through pricing or is that also addressed through the reinsurance programs that you were talking about?

Well, honestly I think it ultimately has to be a ground of pricing issue, because I mean there's only so much that the seating companies can stuff the reinsurers with and not expect that at some point reinsurers they stop. The job of the reinsurance industry is not to subsidize the profits of the primary insurance company, it's the sharing risk. But the pricing has to be right, both at the primary level and at the reinsurance level.

And then maybe one quick conceptual question on casualty lines. So, it sounds like at the end of the day, pricing there has been relatively stable, maybe a little better in specialty lines. But as we think of possible inflationary charges plus the social inflation, how does that impact the overall profitability and adequacy of those lines? How are you thinking of that into 2019? It’s actually - some of the pricing actions that you are getting, tend to be in those lines that have struggled a bit more to begin with?

That's an excellent question but I think, there's both an industry comments and an AXIS’ comment. So, I will tell you that our primary casualty and our excess casualty, we only play in the excess and surplus world. That's number one. And so they tend to be you know highly structured and analyzed. We are actually quite satisfied with the profitability that we see in both our casualty and or excess casualty books. We’ve achieved an average price increase of 5% on the primary casualty, which is certainly ahead of loss trends. I mean there's always the risk if you would, of runoff inflation. But I can tell you that when we price them, when we reserve. We don't reserve to the most recent inflationary trends, we reserve at what we assume to be the longer term trend. And frankly one of the things that is driving our reserve releases is that these longer term loss trends that we reserve with haven't – haven't developed. So that's why we're getting reserve releases. But we will continue to reserve at what we believe is a reasonable, prudent long-term trend. And the 5% for the moment on the on the primary casualty, we feel very good about. The issue that we have on the excess casualty where I believe, we've got one of the best E&S excess in umbrella casualty books out there. And we have very low exposure, net exposure to the auto liability which has been one of the worst drivers of losses. We're achieving 11%, 12% pricing increase. The issue for us is that we believe that the definition of AXIS needs to change. 20 years ago AXIS was above $2 million. Well, $2 million is a working layer today. And we think that where we're pushing is that AXIS needs to attached you know closer to $5 million to really be considered AXIS. And I think that speaks to your point you're on of inflation, but where we insure where we participate we're comfortable that we've got these issues of inflation and frequency covered, but we believe the industry needs to change the definition of AXIS to something closer to $5 million.

The next question is from Kia Pan of Morgan Stanley. Please go ahead.

First question and Pete you mentioned that the quarter was impacted by 2.5 points of large losses. If you take this out the underlying combined ratio about 96% in the fourth quarter is still higher than the average about 94% previous three quarters. So just wonder what's the sort of base to starting with running into the next four quarters?

Yes, so Kai, probably a better way to look at it. As I said in the quarter you had some noise especially on the reinsurance property book and in that with the down loss. So I would probably tell you if you’re steering towards next year you know maybe a little more towards how our full year 2018 numbers were. And then as we mentioned earlier we do think that even when you look at the full year given some of the portfolio actions we’ve taken you should be improvement, so you should be able to see the combined ratio coming down from there, not only on the AXIS cat and loss ratio, but also on the G&A ratio.

Yes, the point of runoff business that you go away, but also you know as we've noted in the quarter we had just in the quarter on the reinsurance side we had almost a point hit due to moving up the damn loss for the year or so. So I think when you start to normalize some of those things, I would say started a full year look of 2018 and then with the actions we've taken we think that you should be able to see improvement as we get into 2019.

Just on that, besides the runoff business, what exactly you are doing try to reduce some of the volatility and improve the results?

I'd say a couple of things building on what Albert said. One is we have seen a positive rate and trend in 2018 - rate over trend in 2018 and that's now going to start to earn in as we go into 2019. We have seen better terms and conditions for our underwriters on the primary side as they've seen you know what's going on with losses there and moving up on layers to get out of some working layers. And on the reinsurance side they continue to restructure the book you know to actually get pricing improvements which we've definitely seen in broader that will continue as we go in the next year. And then probably lastly you know on the volatility side as Albert mentioned we've actually put more seeded and retro programs in place on both the insurance and reinsurance books that we go into 2019.

Let me add a little to that because I think you raise a very important point. We're not going to improve the numbers simply by cancelling business. And there are a number of areas that we are focusing for improvement and let's speak to property first. You know one of the issues with properties is that we can always take a look at a number of programs that just are not working for us, some honestly we knew early on is that we would want to non-renewed but January 1, 2018, excuse me was just too late to act on some of them. So we took some opportunities to deal with that. That will have two factors. One in terms of the profitability, but also the truth is that a number of these programs also had significant impact on volatility. So they will have that issue. But more importantly we're doing more work around geospatial modeling to make sure that we are looking at our microtonal concentrations. We've taken significant actions around especially tornado Hail the kinds of occupancies that we're looking at the kinds of rules or the kinds of deductibles that we're looking into. So this is not just - this is not just canceling business and saying everything you know stays the same. Every part of our business is being reviewed and print property is job number one for us right now. And there are significant changes both in the risk appetite, in the structures, in deductibles and in the distribution of that portfolio on top of price. And so we obviously don't want to make any promises, but we're working hard to make sure that we see significant improvements in that book. With regards to other books of business, the truth is that if you look at professional lines you know what I think we were early. I mean you know we spoke to you but some of our concerns professional lines in 2013 and 2014 we acted aggressively on that. We've taken a significant number of loss ratio points off that book. Our exposure to class actions is much lower than it's been in the past, and we continue to be releasing reserves because we realize that you know last year or the year before the year before that we're actually better than we reserved. So from our perspective you know we're always cautious. I think that's an area where we've got proof positive that we can identify portfolios and we can fix them. So that's working well. casualty as you know we’re being very cautious. We're looking to elevate attachment points. With regards to reinsurance, we're making sure that we're supporting only those customers who have good long-term relationships with us. So we're taking actions across the entire book to ensure that the continuing book is improving, not simply through the removal of bad programs. I hope that it helps, you understand what I’m referring to.

But if you're putting everything together - my last question is that, you've been getting close or above 10% ROE in the first three quarters of the year. And so if you consider normalized environment, consider all the improvements you're making in your business, do you think in the normalized cat environment in 2019 you could get to 10%?

Absolutely. I thought we were going to get it in 2018 and it's a real disappointment to us that it isn't. And one of the reasons that the incentive comp is down is because we didn't achieve our target. It's that simple. And I fully expect that everything that we're doing will deliver double-digit ROE assuming reasonable cat activity next year.

That's great. I always - I’m now assuming your internal target is 10%?

No, you should not assume that my internal target is 10%.

The next question is from Meyer Shields of KBW. Please go ahead.

Albert, you've talked I think a fair amount about reducing volatility and we're seeing lower P&Ls in most zones. Does that imply the potential for investment portfolio duration lengthening?

That's a very good question. So there are two things that this will address. One, believe it or not longer term is that you're prepared to take a little bit more equity volatility risk, since you've got less volatility risk around the cat. But the two factors that will affect our duration is both our liability duration but also our view with regard to interest rates and spreads. And so right now we're cautious. I don't know if I forget as Peter mentioned it, but we were about 2.8 is our average duration. And I think certainly the pressure in the near-term is to slow the rate increases, but our view is that longer term we're probably still in an increasing rate environment. So we are currently below our liability duration, and in the near term I expect that we will remain below our liability duration, but there is opportunity to extend at the right time.

And second question just in terms of I guess trying to forecast reserve development. Clearly your picks have been very conservative, in light of the accelerating loss cost inflation that we're seeing are you sticking with the same level of picks or are you actually dialing them up so that the delta is constant?

It’s not the picks that stay the same, it’s the underlying assumption that stays the same. So by definition you're working with different - have an issue of loss ratios. You're reflecting the trends for the mix of business, but when it comes to long-term inflation and long-term trends we're keeping those at the higher levels that we've used in the past.

Okay, perfect. Thanks so much.

Yes. And Meyer I’ll just build on that for a second. One thing that I did not mentioned in my remarks that impacted the prior period development in the quarter was on the reinsurance side. We have acknowledged that the quarter was on reinsurance side. We have acknowledged that the ad knocked loss that occurred in 2017 that very tragic event. The industry loss estimates now up to $2 billion. And so we've moved our reserve up expecting it to be a $2 billion event. I don't know if everybody else in the industry has done that yet but we felt that that was very prudent to do it and that kind of weight on some of the prior period development for the reinsurance segment.

That's fair, anyway can you quantify that?

Yes. I’d call it - yes, probably about a little over - 30% increase for the industry. So far it’s about the same, yes. Dollar wise, it was about $8 million, but $6 million to $7 billion.

The next question is from Josh Shanker of Deutsche Bank. Please go ahead.

Excluding the commentary about them - by the way thank you very much. How are we looking at past year cats and other manmade losses? And how does that impact the reinsurance net prior period developed numbers?

So the prior year losses on the cats of the prior - overall have been very solid. We've done very well on that. I think the last time we had some really bad surprises was in New Zealand. I won't say this about our HIM losses is that we cut the total number right. We were a little bit high on the insurance number, we were a little bit low on the reinsurance number. Net-net those reserves actually developed favorably for AXIS. And so our reinsurance book as you might imagined was not, was not immune to some of the adverse development that we saw in Irma. was not immune to some of the adverse development that we saw in IRMA. And so we had some modest deterioration in the reinsurance book, but that was more than offset by favorable development in the insurance book.

And so - and when we look at the - I mean, look you did have favorable development in reinsurance here in the fourth quarter that was lower than it usually is. And obviously HIM aren't all the losses. There were some manmade events too. Can we sort of go through a catalog of what's whether there were offsets whether it was a quarter like previous others with some one-offs or whatnot?

Look I think to Peter's point I mean if you look at the favorable development in the fourth quarter, the bulk of the reduction over longer term trends really related to both the ad knock that we've just discussed. And the thing that was a little bit surprising is we've got some adverse development for non-cat property which we thought was a bit late in terms of the reporting in the fourth quarter of 2018 for losses that apparently occurred in 2017. So we're digging into that. But those are the two reasons why the favorable development in the fourth quarter for reinsurance is lower. Anything you want to add to that Peter?

No, those are the two major drivers both on the property line one is the increase in the manmade loss as we mentioned earlier as well as some late reporting on 2017 property per risk losses.

And just to put a bow on this the previous cat picks, have they been accurate or they've been redundant?

For the most part Josh we've been redundant. We tend to - I believe do a conservative view as to what we do for the cats. Overall we've been - overall our history other than New Zealand and the specific event of Irma but when you look at HIM altogether it's been redundant. We’ve been pretty conservative as we've put our initial estimates up. And as you know, with regard to the fourth quarter we've, you know, we do announce the large losses. We had two press releases in the quarter one for Michael and then one for the Wildfires which updated Michael and net-net our final number came in within the range that we reported in those press releases.

This concludes our question-and-answer session. I would like to turn the conference back over to Albert Benchimol for closing remarks.

Thank you, Operator, and thank you to everyone on the call this morning. So as I said at the beginning of the call, 2018 was a year where we took steps forward both in terms of underwriting profitability and organizational progress. Look we're not happy with the fourth quarter results, but we do remain confident that we have the right strategy and that our pace of progress will continue as we execute that strategy. Before we conclude, I'd like to take a moment to express my appreciation to our employees. We have a great team and they've expanded it in some really substantial amount of work and delivered strong progress in 2018 for which we expect to see some tangible results in 2019. And to everyone, we look forward to reporting to you on that progress in future calls in the year. Thank you very much.

The conference is now concluded. Thank you for attending today’s presentation, you may now disconnect.