Good morning and welcome to Markel Corporation Third Quarter 2020 Conference Call. All participants will be in a listen-only mode. [Operator Instructions]. After today’s presentation there will be an opportunity to ask questions. [Operator Instructions]. During the call today, we may make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. They are based on current assumptions and opinions concerning a variety of known and unknown risks. Actual results may differ materially from those contained in or suggested by such forward-looking statements. Additional information about factors that could cause actual results to differ materially from those projected in the forward-looking statement is included under the captions Risk Factors and Safe Harbor and Cautionary Statement in our most recent annual report on Form 10-K and quarterly report on Form 10-Q. We may also discuss certain non-GAAP financial measures in the call today. You may find the most directly comparable GAAP measures and a reconciliation to GAAP for these measures in our most recent Form 10-Q, which can be found on our website at www.markel.com in the Investor Relations section. Please note, this event is being recorded. I would now like to turn the conference over to Tom Gayner, Co-Chief Executive Officer. Please go ahead.

Thank you Emily. Good morning and welcome. We apologize for the delay in starting the call this morning. We understand that one of the numbers that was distributed was incorrect and connected you to the replay which of course has not happened yet. This is the actual call. We have sent out an email with the correct number and we see a roster has been assembled and something of a slowed fashion. We apologize for that error on our part. We hope others are able to join us in process and that the replay will work as functioned and we are grateful that you are here this morning. So, good morning and welcome. As is stated this is Tom Gayner, I am here today with our Co-CEO, Richie Whitt and our CFO, Jeremy Noble. We are glad you have joined us and we look forward to briefing you on current conditions as well as answering your questions. I'm not telling you anything you don't know when I say that 2020 remains unlike any other year. The systemic challenges of the COVID-19 pandemic and all that follow in its wake remain immense and unrelenting. That said, I could not be more proud of the efforts of everyone in this organization to truly serve our customers, our associates, and our shareholders in the face of adversity. We've provided for claims and financial assistance to our policyholder customers to cover substantial losses and economic costs. Those losses stem not just from the things you see in the headlines regarding the pandemic, but also a spate of natural catastrophes such as more hurricanes than hurricane memes, wildfires, a major derecho, and ongoing and recurring events and circumstances that we see regularly in our insurance operations. We continue to provide necessary and desirable products and…

Thank you, Tom and good morning everyone. Our underwriting, investing in Markel Ventures results continue to be heavily influenced by the effects of the COVID-19 pandemic. But fortunately we saw positive contributions from each of our three engines during the third quarter. Our insurance operations produced an underwriting profit despite elevated levels of natural catastrophe losses, as well as increases to reserves related to the pandemic reflecting the strong underlying performance of our business. Our Markel Ventures operations delivered meaningful profits demonstrating their resilience despite economic uncertainty and our investment portfolio also saw gains in mid-volatile market conditions. Looking at our underwriting results, gross written premiums were $5.4 billion for the first nine months of 2020, compared to $4.9 billion in 2019, an increase of 10%. This increase was attributable to our insurance segment, which reported gross written premiums of $4.5 billion, an increase of 13% compared to the 2019 period. This premium growth is attributable to both our growth in our -- and more favorable rates within our professional liability and general liability product lines, as well as growth in our personal product lines. Gross written premiums within our reinsurance segment were consistent with the 2019 period at roughly $960 million. Year-to-date retention of gross written premiums was 83% in 2020, which is down 1 point from 84% in 2019, and our premiums for the first nine months increased 10% to 4.1 billion in 2020, primarily due to higher written premium volume in our insurance segment. Our consolidated combined ratio for the first nine months of 2020 was a 101 compared to a 95 in 2019. For the third quarter of 2020 we reported a 97 combined ratio compared to a 94 a year ago. Our 2020 combined ratio included nine points of underwriting losses attributed to COVID-19 for…

Thanks Jeremy and good morning everyone. As Tom's already said, the year has -- and we saw the continuation of the unpredictable rollercoaster year that is 2020 in the third quarter. Despite all that our insurance operations continued to grow nicely and we obtained meaningful rate increases in almost all our lines. Our third quarter was also impacted by a series of small and medium sized cats as Jeremy mentioned, for which we recorded an aggregate 101 million of underwriting losses in the quarter and those were related to multiple hurricanes Laura, Sally, Isaias, the derecho, and the Western wildfires. As regards COVID-19 losses in the third quarter of 2020 we increased that provision to 374 million, that was up from our original 325 million provision that we established in the first quarter. While we have revised many of our original assumptions with the availability of additional information and some of those have been positive, some of those have been negative, the largest driver for the increase in our direct estimates this quarter related to the UK High Court ruling on the FCA business interruption test case that the impact of that ruling impacted our estimates within our reinsurance segment. There were also some increases required, as we now expect the impact of COVID-19 to be felt into the first half of 2021 that specifically impacts event cancellation business. As part of the third quarter 2000 -- of COVID-19 provision we also recorded 15 million of estimated losses in our trade credit product line within our insurance operations, and those claims were related to indirect economic impact from COVID-19. We're not a but for company at Markel. Cat losses over the past four years, including 2020 COVID-19 losses have significantly impacted all of our insurance, reinsurance, and ILS businesses. As…

Thank you, Richard. In our investing operations we earned 0.8% on our equity portfolio and 5.4% on our fixed income holdings for a total return of 3.8% after all allocated expenses and FX effects. I am pleased with positive returns in the current environment. Strategically, I believe that the most important role for investments at this point is to preserve and protect the balance sheet of Markel. Given our views about the general level of trade-offs between risk and return on offer today, we believe that our current focus on high quality and liquidity preserve options to make different investment decisions in a different environment. The opportunity cost of our stance seems very low to me. We don't think that we would get paid appropriately for taking meaningful credit, duration, or many other types of risk right now. As such will stay relatively liquid and ready and able to deploy cash more aggressively when we see the opportunity to earn appropriate returns and compensation for doing so. In our ventures operations I want to be clear, the news is excellent. The managers and teams of the ventures businesses continue to respond superbly to rapidly changing and disrupted business conditions. I am grateful and amazed at their skills, professionalism and dedication to their associates and their customers. For the first nine months, revenues of ventures grew 28% to just over 2 billion, compared to 1.56 billion a year ago. EBITDA for the nine months increased 29% to 284 million, compared to 219 million a year ago. This record setting financial performance was broad based. While this is the first full quarter of results from our most recent acquisition of Lansing Building Products, the entire group demonstrated resiliency and the value of diversification. We operate an array of different industrial and service…

[Operator Instructions]. The first question comes from Phil Stefano from Deutsche Bank. Please go ahead.

Yeah, thanks and good morning. Just going back to the insurance business and the premium volume, I guess I was surprised that the growth had decelerated from the second quarter and it feels like part of the explanation is that we're taking the opportunity in the market to remix some lines of business. Maybe you can help us think about the extent to which this pressured top line growth, how long may this remixing take and look just given the opportunity in the market and the extent of pricing what are your early thoughts on 2021, why would we not see double-digit growth next year?

Sure. Thanks, Bill. Yeah, third quarter there were a lot of different things impacting the third quarter, but one in particular was I mean, we are taking the opportunity to remix and really focus on growing what we call our green classes, the most profitable classes. So we've become -- we've been very aggressive I think this year in terms of moving away from business that wasn't meeting our profitability goals, closing some of those down, closing down programs that we didn't see meeting our goals. And some of that's starting to add up and that impacted the third quarter. Also in the third quarter, July 1 is a big date for us and we had a really good July 1. August, September, they tend to be less busy months for us and that sort of continued this year. So all in all, I'm very pleased with the growth we showed in the third quarter, given all the moving parts and all the things we are doing. Also, it's fair to say, the economic struggles have impacted, I think, small business to a greater extent than maybe larger businesses. And we saw the massive amount of stimulus that was put into the economy in the first six months, that wasn't there in the third quarter. And I think some of that had been used to pay premiums in the first two quarters by some businesses. So we saw a little bit of that in the third quarter, but I'm not particularly concerned about it. We've seen a few of our numbers so far for October and I would tell you, they're very strong. So, you say why wouldn't we grow double-digits in 2021, that's certainly going to be our goal to grow double-digits in 2021.

Okay, got it. And sticking with insurance and understand and appreciate that you're not a but for company. But when I look at the underlying loss ratio, but for cat losses in COVID, there was a pretty good improvement in that attritional performance. Can you help us thinking about the potential contributions of rate versus trend, any COVID frequency benefit from a lack of economic development, and the remix in the business, presumably that's going to have a benefit as well. So, if you can just kind of bifurcate all these moving pieces to help us understand what's going on here?

I'll do the best I can. We've gotten to a point where our year-to-date rate increases are double digit, low double digits at this point. So, rate is certainly a part of it. The remixing is also a part of it. We are growing the most in the lines of business that we again call our green classes, which are our most profitable classes. We are shrinking classes and you saw that some in the third quarter that we haven't seen the profitability that we would like to see. So, all those things are at play. And yes, we saw a very nice decrease in the attritional loss ratio so far in the year. And the goal is to make sure but for events, don't stop that from being, you know, what the result looks like as we go into 2021. So, unfortunately for the last four years, there's been a lot of cat events that have prevented what has been some pretty nice underlying performance, has prevented that from showing up in our combined ratio. And so, we've been taking a lot of steps to mitigate and hopefully reduce the number of those but for events.

Okay, and last one for me and then I will re-queue. I was just hoping you could provide a little context on your appetite to grow reinsurance in the potential outlook for 411 [ph]?

Well, obviously now Markel’s global reach is going to be focused on casualty and specialty lines, and we do think there is an opportunity in the casualty and specialty lines to grow. We're seeing rate increases. I talked about we're seeing increases in our general liability reinsurance programs. And some of that or some of that is obviously new business. We're riding, but some of that increase is also just underlying rate increases in the primary business. We're going to be cautious then. We haven't seen the profitability we have wanted to see in those two areas over the last couple of years. So first and foremost is making sure it's profitable and once we're convinced it's profitable, we'll look to grow it in this environment.

Got it. Thank you.

Our next speaker is Jeff Schmitt from William Blair. Please go ahead.

Hi, good morning. Could you speak to the M&A environment for Markel Ventures, I guess I'm wondering if the tough economic conditions are just sort of creating opportunities where some targets may be temporarily impaired, looking for a partner, I don't know if you're -- if you do those types of situations or other opportunities popping up here in this environment?

Thanks, Jeff. This is Tom. I would say there's a lot of M&A being done, but not at prices that we're going to do it. Frankly, over the last three or four years, we've not made a lot of outgoing calls or solicited things, but some businesses have been attracted to the long term nature of Markel so, we have grown almost in spite of ourselves. We observe a lot of transactions and we're rubbing hair off our head, scratching our head, looking at the valuation. So I think the circumstances you lay out will probably happen someday but we're kind of watching the parade go by.

Okay, and then on the Lansing acquisition, obviously revenue is up a ton from that deal, but profits in Markel Ventures were up a lot too, is that from Lansing I guess it was building products or is that struggling now so we could see profitability pick up?

No, yeah, I want to reiterate that that profitability is across the board. So, yeah, everybody's feeling COVID in one way or another but again, I just take my hats off to the managers and people at the Markel Ventures operations. They've done a -- just grateful and amazed are the two words that accurately describe the circumstance. So that's not concentrated in any one place. Obviously, the revenue pick-up is pretty big for Lansing because that is a business where I mean, it's distribution kind of business. So revenues are disproportionately high compared to EBITDA relative to the rest of the Markel Venture set of businesses. The returns on capital would be similar, but it's across the board. The group is doing very well.

Okay, and just one more on the insurance segment, I guess the [indiscernible] I think you referenced in the Q that a program was put in to run off there I think affected the retention amount. What program was that, what was the size of that program?

Well, we put a handful of programs and lines of business into runoff that were not performing. The particular one that I think that was mentioned there was being referred to was a program. It was a program for municipals and it had a heavy property exposure in it that had really not performed well. And so we chose to walk away from that. I think the impact in the quarter was $20 million, $30 million if I am not mistaken.

Not so much to gross yet. I mean, I think for a period of time so that program transitions we're sort of serving in the front end capacity. So it influences the net retention versus what we've seen so far on the gross written premium.

Yeah, Jeremy's right. We're still fronting that for the next carrier at this moment. So it hasn't impacted our growth that much at this point, but we're not retaining it net. So over time that will come through as well.

And that's a good example where I think we will find the opportunity to kind of make up for that premium reduction by focusing on the profitable classes that we're seeing opportunities.

Right, okay. Thank you for the color.

Our next question comes from Mark Dwelle from RBC Capital Markets. Please go ahead.

Good morning. A couple of questions, the reorganization or change in the property reinsurance business that's going to Nephila, just talk about that in a little more detail in particular I guess what I'm curious about is, is that effective for one-one, is it effective immediately and in general terms about how many millions of premiums are impacted, kind of maybe using this year, year-to-date as a run rate or something like that?

Sure, sure, Mark. It's effective 4011 [ph] so no 11 business will be renewed on Markle's books. And if those clients are interested, Nephila will offer renewal quotes on that business. It's about 200 million of premium. It's obviously cat driven premium that to the extent it is renewed, it will renew within the Nephila funds. Obviously, what that does for us in terms of Markle's balance sheet is it removes that volatility from Markle's balance sheet and as we go forward to the extent we want to take cat risk, it's a cleaner option, I think, to do it within the Nephila funds, to invest in the Nephila funds. It shows alignment with our investors, it's very easy to calculate how much capital I'm allocating to cat, whatever the investment is, makes that that math simple. And then obviously Nephila with its management of roughly 10 billion of AUM, they have market presence, market clout that we just were never going to be able to achieve at Markel Re. So, the logic just made too much sense in terms of making that move.

Thanks for that and the logic did seem to make quite a bit of sense. On that same topic or generally in that same topic, with the legal settlement you've now achieved in cat code does that accelerate or change any of the timeline on finalizing the run off there?

No, the run-off is really dictated by the settlement of the contracts with the cedes and the team there has made terrific progress settling the ceding. I think we're down to about 1.2 billion of AUM which I think is, I don't know, 1.2 billion or so down from the beginning of the year. So they've made great progress. As is always the case, you know, that last bit takes a while. So they're working really hard to do it but that settlement really is unrelated to how long it will take to return all assets to the investors.

Okay, and then the other question that I had, you provided a very helpful table in the Q related to the various COVID related charges that you took. There are a few items within that table though, where it showed effectively a negative charge. Were those just reclassifications between the insurance and reinsurance segments or was there some actual release of reserves or takedown of reserves associated?

Hey Mark, it is Jeremy. There were a few pockets actually where we reduced our reserves from initial expectation. Some of that we saw in our U.S. property relative to our initial sort of reserves. Also within our international book in the UK relative to business interruption, we kind of commented about the sort of the contrast between putting some reserves up in our reinsurance line associated with the FCA test case. But we really haven't seen the frequency of claims reporting for some of the business interruption relative to our initial expectations there. So there were a couple of situations where we reduced reserves netting against those increases.

And Mark, I tried to kind of allude to that in my comments. I mean, obviously we took our best shot back in the first quarter coming up with reserves for COVID. Obviously, since then, we've learned a lot more and my guess is we'll continue to learn as we get through this because we've never seen this situation before. As a result of those learnings in some areas, we felt the reserves could come down. In other areas, we felt reserves needed to go up. And my guess is that that will probably continue as we go forward. We'll continue to adjust as we learn.

Of the total bucket of sort of $375ish million, is most of that still in IB&R at this point or has there been significant pay downs relative to that for certainly some of the event claims, I would think I have paid at this point?

Yeah, certainly Mark, I don't know if you're right there, but I think more than half of that is still in IB&R. So we've seen -- certainly we've seen increased claims reporting from the encourage standpoint and we've had some settlement activity, but there's still a significant amount of that that's sitting in IB&R. And it's a good example of the amounts that have been put up in the third quarter, that's principally all in IB&R.

Understood. Thanks for all the answers. Appreciate it.

Our next question comes from John Fox from Fenimore Asset Management. Please go ahead.

Thank you. Good morning, everyone. Richie, I'm curious what your expectation is for State National. You mentioned some new programs coming out. When do you expect that would start growing again?

You know, I think it will. Those were big programs that came off in the first quarter. And it's -- we talked enough about it. One of those programs was very much an opportunistic program. And when that company received their upgrade of their ratings, they no longer needed State Nationals program services running capabilities. So if you do that it is going to go away. The other one was a little surprising to us, not so much that it went away, but how it went away that on a cut off basis and that premium all just moving to the new carrier. But we've seen a number of new programs coming on. Unfortunately, none of those have been quite as large as the two that went away. But we'll start to see premium ramp up from those new programs and more importantly, we really like the activity we're seeing. And I think it's just, what's happening in the market it's a very interesting, exciting time in the market right now. There's a number of new players trying to get themselves set up to hopefully take advantage, I guess, of the conditions and running services is a very attractive way to get going quickly. So we're receiving a lot of inquiries.

Okay, great. And you mentioned probably not a quote, but you have not met your underwriting goals over the last few years due to the cat losses and that you're remixing the business. So I'm assuming you're aspiring to a higher underwriting profit, can you share like what you were thinking about in terms of when you're mixing the business and what type of combined ratio, or is it premature for that?

You know, John, given the rate increases we are seeing, given the interest rate environment that Tom and the team are having to contend with, we need to be around the 90 combined. And I'd love to see it lower. But I think it's got to be something around the 90 because we just can't put the pressure on Tom and team to generate returns in this low to no interest rate environment.

Right. Okay, great, thank you. And then I understand there was a settlement in the lawsuit, so maybe you can't talk about some of this, but to the extent that you can what is the run rate expenses of profitability at ILS investment management side?

Well, I'm going to -- it's not going to be an exact quote from Mr. Noble. Mr. Noble and I were talking the other day, and unfortunately, I don't think I've seen a run rate quarter yet. You know, there's just been a lot of noise, unfortunately. But here's where we are, John, I think we have had success in attracting new AUM for January 1. So that will be coming on board for 2021. So the two things that impact our ability to make -- to create a return in ILS are the amount of AUM and how many losses we have. Well, we can't do much about the number of losses, although I would tell you the last four years have been brutal. But rates are going up substantially, so I think that business is going to be better priced. I know that business is better priced going forward, giving us a better opportunity to earn on that for our investors and thus earn fees. So, there really, really hasn't been a good run rate quarter yet. But I think going into 2021 we've got some momentum, both in terms of rate increases we're receiving and so the profitability of the business were riding and investors signing up to invest in the funds.

And John, if I could tag on to Richard's answer, because there's one very, very important nuance that I think often gets lost in the communication of how this business works and its newness to Markel. So when Richard talked about the losses that occur in the old days, when we were writing that business on our balance sheet, that would be dollar for dollar our capital that would have a loss and would show up in the combined ratio, the business we write. This is where we're managing other people's capital. So the loss ratio really has a profound but indirect effect on the management and performance fees. So there's exponential returns on our capital when industry losses come in more at a lower level than would have been the last couple of years. And to Richie's point about we haven't seen a normal run rate, we've not been in an environment where you start to see kind of what your normalized expectation of management and performance fees that Nephila has indeed earned over many years and we would expect to normally describe the business.

Okay, well let me -- this prompts another question. So if I think about traditional asset management, whichever one the call is familiar with, you would take average value in terms of fee and if I do that, I get about 140 basis points on Nephila revenue annualized and that would be my revenue and then expense, profit margins and investment margin about 30% on average. So, but it sounds like there's a third dimension, which is the amount of loss, cat losses also?

Well, here's the thing. So like traditional asset management, if you were talking about a company that manages mutual funds where performance fees have historically not been part of it, your math is exactly that. It's assets under management times the management fee minus the expenses doing shakalaka [ph]. There's your profitability. In the 2.0 version of investment managers and there's plenty of them out there that's only part of the equation. Then there's another variable of performance fees based on how well you did for your investors. And that's the aspect that I'm just highlighting here.

Yeah, okay, so it's three dimensions, not two.

Correct. So John, obviously, given the last four years there hasn't been a lot of performance fees earned because there's been pretty above normal or above previous normal cat activity. So that's impacted it. And also, there is this business is highly leverageable. At 10 billion of assets under management, it would look very different under 12 billion or 13 billion or 14 billion of assets under management, because we really don't need to add a lot of additional cost to manage that. We can scale the business pretty substantially.

Right, okay, thank you. That's good clarification.

Our next question comes from Phil Stefano at Deutsche Bank. Please go ahead.

Yeah, thanks for the follow-up. Richie on the 90% combined ratio goal that you had talked about, I assume that that's a reported number that includes cats and all the but for?

Yes, it has to include cats and but for. Yeah, we need we need to get to that sort of level I think, given the interest rate environment.

And how do you think about the dynamics of pricing versus where you stand today and getting there over the next couple of years?

You know, I feel very bullish about that. I think we talked with the first set of questions about the improvement in the underlying attritional. So, I think there's more room for that to improve. And we've obviously been working very hard to reduce volatility from cat losses. So, I'm bullish as we go into 2021.

Okay, and the last one is a numbers question on ventures, can you help us frame the contribution that Lansing could have over the next couple of quarters or what we could expect maybe there's some seasonality to the business as we think about the revenue growth into mid-2021?

Yeah, I think when you look at the quarter, given current business conditions, that's a reasonable run rate kind of revenue thoughts that you should have. Typically, seasonality building products tend to slow down a little bit in the wintertime. We're not seeing that right now. Just things housing related are white hot, but we'll see how it goes. And we've not owned it long enough to give you any seasonal pattern other than common sense would tell you that construction tends to be more warm weather than cold weather.

I didn't see a standalone Lansing number, is that something you have at your fingertips for the benefit in the quarter?

No.

All right, thank you.

Part of Markel Ventures, Nasdaq and the whole thing.

Our next question comes from Charles Gold from Truist [ph]. Please go ahead.

Hello, gentlemen. I have a why not instead of a but for. [Technical Difficulty] facing horrific conditions whether they're fires or storms or COVID, and yet you have to maintain that equity of the company during this horrific period. Over my many decades in this business, I've seen many companies that had share repurchase plans not by when the price was low, but by when the price was high and I know you're very attuned to value when you make that decision, but the skies -- if the skies are not perfectly blue now, but it seems like you are envisioning times when they're going to get a lot bluer than they are currently. The pricing is good. Ventures is doing well. You feel good about all the insurance arms. Why not take the handcuffs off the statement that you're not open to buying shares back today, you've got cash, I believe, $4.5 billion I've never seen, if that's correct, I haven't seen that ratio to value of the company in your history. Why wait for the last cloud to clear, to have the ability to pull the trigger if you choose to do so, it doesn't mean you have to in the last quarter of the year but you would have told the market that you want to have that arrow back in your quiver and you may or may not use it?

Right. Charles this is Tom, thanks for the question. And really the long 10 in the poll from my point of view, is the regulatory and rating agency environment that we continue to need to be sensitive to. So in the environment, which we continue to be in, the current growth rate of what we're experiencing our insurance business has regulators and rating agencies being very particular about the amount of capital we have and the form in which it is held. So we continue to work with them to try to make them as comfortable as we possibly can. And that's an ongoing process. And at the point where the growth rate slows down a little bit, that will actually free up sort of the regulatory capital and rating agency capital that we need to be sensitive to for the insurance business. But other than that, I agree with everything you say.

Well, then the other signal would be insiders consider doing heavy buying since they see things going so well?

From your mouth to God's ear.

Oh, just give me the phone call I can do that.

And our next question comes from Bob Farnam at Boenning & Scattergood. Please go ahead.

Yeah, hi there. Good morning. Just maybe one more question for Ritchie on the reinsurance segment. Obviously, if you included the cat losses I think I looked at last night, you had a cumulative loss over the last 10 years or so, I suppose. But for cat and ventures it is pretty sizable. It seems to me that by consolidating the property cat business through Nephila you are going to be reducing a lot of the volatility in that segment. So my question is more, if it's going to be looking more like casualty and specialty going forward, how has that performed and how far away from that 90% combined ratio are those pieces?

Yeah, it has not performed as well as it needed to, Bob, is what I tell you, and that I can't remember whose question it was. But I've said, before we're growing, we're going to make sure we've got it at the right price, at the right level of profitability. And, we're seeing really nice rate increases on the primary side. Not all of that has flowed through to reinsurance yet. So we're going to be watching that really closely. But I am bullish on our opportunity to get back to a great -- to a good profitability level. But I think it is -- I think reinsurance is a little behind primary at the moment. And so we're going to keep working on it and once we are comfortable, you'll see us grow it.

Okay, so my point is, alright so reinsurance that we take 200 million of the property cat out, maybe take a lot of the catastrophe losses out so that is kind of a way to back into what the other pieces have obviously performed I think. Obviously the COVID, you probably consider that casualty and specialty or is that cat, how are you looking at it?

That's mostly coming out of the property policy. Not entirely, but mostly.

Okay, alright, good. So is that the right way to think about it and remove a lot of the cat exposure, the cat losses, taking the premium out, and maybe give you a run rate of the reinsurance sector going forward?

Yes. And what I would tell you is if you do that math, that combined ratio has not been good enough and the market has been softening for probably going on 8 to 10 years. So we have an increasing rate for at least the last two years and I think it's on the right track, but it's not where primary is yet. And that's why we -- you haven't seen growth there yet. Growth is available. We don't want it until we're absolutely positive that the profitability is there.

Alright, understood. Thank you.

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

Thank you very much for joining us. Thank you for your long-term support. We look forward to connecting with you again next quarter. Thank you, be well.

This conference call has now concluded. Thank you for attending today’s presentation. You may now disconnect.