Arch Capital Group Ltd. (ACGL) Earnings Call Transcript

Good day, ladies and gentlemen, and welcome to the 3Q 2026 Arch Capital Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. Before the company gets started with its update, management wants to first remind everyone that certain statements in yesterday's press release and discussed on this call may constitute forward-looking statements under the federal securities laws. These statements are based upon management's current assessments and assumptions and are subject to a number of risks and uncertainties. Consequently, actual results may differ materially from those expressed or implied. For more information on the risks and other factors that may affect future performance, investors should review periodic reports that are filed by the company with the SEC from time to time including our annual report on Form 10-K for the 2025 fiscal year. Additionally, certain statements contained in the call that are not based on historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The company intends the forward-looking statements in the call to be subject to the safe harbor created thereby. Management will also make reference to certain non-GAAP measures of financial performance. The reconciliations to GAAP for each non-GAAP financial measure can be found in the company's current report on Form 8-K furnished to the SEC yesterday, which contains the company's earnings press release and is available on the company's website at www.archgroup.com and on the SEC's website at www.sec.gov. I would now like to introduce your host for today's conference, Mr. Nicolas Papadopoulo, and Mr. Francois Morin. Sirs, you may begin.

Good morning, and welcome to Arch's Third Quarter Earnings Call. Arch delivered very strong results this quarter, reflecting excellent underwriting performance across each of our businesses, and a relatively low level of catastrophe activity. After-tax operating income was $910 million or $2.67 per share resulting in an annualized operating return on average common equity of 16%. Strong returns from our equity method investment contributed to an annualized net income return on average common equity of 18.1%. Despite increasingly competitive market conditions, we continue to generate strong returns, reflecting our ability to proactively shift capital to optimize long-term returns. This is the essence of cycle management and given this dynamic, we were able to return approximately $1.4 billion to our common shareholders through buybacks in the quarter. Book value per share was essentially flat in the quarter. However, it's worth noting that tangible book value per share, excluding AOCI, increased approximately 15% from a year ago. Arch's brand, underwriting expertise and relationships, combined with our diversified platform, give us broad access to business across insurance and reinsurance. In addition, continuing investments in data and analytics, enhance our risk selection and provide deeper insight into our portfolios. Each of these elements allows us to be highly selective about where and how we deploy capital. Importantly, we are led by returns. Therefore, premium growth is not the ultimate objective. We continue to act on what we see growing where returns remain attractive, and exercising restraint where they do not. Let me now turn to our segment performance, starting with insurance. Insurance generated $108 million of underwriting income in the quarter with a combined ratio of 94.4%, and a current accident year combined ratio, excluding catastrophes, of 89.2%. Gross premiums written increased 7.8% and net premiums return increased 2.7% compared to the same quarter last year. Premium growth in the quarter benefited from a new captive program in alternative markets and increased writings of marine worldwide coverage related to the Iran conflict. The premium growth we saw this quarter was stronger than the underlying trend for the year. Year-to-date, adjusting for the planned reduction in middle market commercial program business, gross premiums written increased 4.2% and net premiums written increased 1.6% and compared to the first 9 months of last year. This low single-digit underlying growth is consistent with our expectations given current market condition. In North America, we continue to see opportunities across excess and surplus casualty construction and national account casualty where rate and market conditions remain attractive. Internationally, we continue to benefit from our position as a lead market across many classes at Lloyd's. At the same time, property and short-tail markets remain more competitive while rate increases have moderated in some of our casualty lines. We continue to believe that adverse development emerging across the industry for more recent accident years, reinforces the need for casualty pricing to remain at or above loss cost trend. Moving to reinsurance, which delivered $393 million of underwriting income in the quarter with a combined ratio of 78.3%, aided by light catastrophe activity. Gross premiums written declined approximately 8% compared with the same quarter last year, reflecting abundant reinsurance capacity, particularly in property and short-tail lines. Consistent with our cycle management approach, we are reducing participation where retailers no longer meet our objectives and increasingly leveraging third-party capital to manage net exposure and optimize returns on our own capital. While casualty generally remains attractive, additional capacity continues to enter the market. We will not chase growth for the sake of growth. We will remain patient and deploy capital where pricing and terms and conditions appropriately reflect the underlying risk. Our objective is not to become an index of the overall market. Our global reach, underwriting expertise and third-party capital platform allow us to take advantage of opportunities as they emerge and to construct a portfolio that delivers a require risk-adjusted returns. Our mortgage segment generated $201 million of underwriting income in the quarter and continues to be a valuable contributor to our results. New origination volume remains constrained primarily due to mortgage interest rates currently above 7%, limiting near-term growth opportunities. Importantly, the underlying quality of our in-force portfolio remains strong. In USMI, favorable reserve development has moderated from prior years, while positive hormone credit condition continued to support a low delinquency rate of 2.2% at September 30. Higher mortgage rates also support persistency by reducing voluntary refinancing activity. Our business outside of primary U.S. mortgage insurance wrote $66 million of net premium in the quarter, and we continue to see opportunities in these businesses, providing diversification from our U.S. MI business. As always, the mortgage team remains focused on disciplined execution, optimizing the platform and managing expenses in line with the market environment. Finally, investment contributed $451 million of pretax net investment income in the quarter. Our equity method investment also performed very well contributing $224 million to pretax net income. With $49.2 billion of investable assets Investment income is expected to remain an important contributor to Arch's overall earnings. Last Friday, Arch celebrated its 25th anniversary. I want to recognize this milestone and thank our employees for what we have built together, a global franchise, a strong brand and perhaps, most importantly, a unique culture anchored in our values. I also want to thank our investors for the confidence they have placed in Arch over the past 25 years. As I reflect on my 25 years at Arch, one thing has remained consistent. Our ability to adapt and generate attractive returns across very different market environments. That has been our legacy for our first 25 years, and it remains our focus for the next 25. Today, we are operating in a transitioning market where conditions are becoming increasingly uneven. And as this quarter's results demonstrate, we are prepared for that environment, and we welcome the challenge. The market will continue to evolve, but our core principles will not. We will remain disciplined on the rider and thoughtful stewards of capital always focused on producing superior risk-adjusted returns over the long term. That gives me confidence in Arch's position today and the opportunities ahead over the next 25 years. With that, I will turn the call over to Francois.

Thank you, Nicolas, and good morning to all. As you saw last night, our third quarter results were highlighted by strong underwriting performance and solid investment results. Capital management and capital returns also remain very much at the forefront of our initiatives this quarter as we took advantage of an attractive share price to repurchase 14.8 million of our common shares at an aggregate cost of $1.4 billion in the quarter. Through 9 months of 2026, we have repurchased approximately 109% of our net income in our own shares. While our first choice will always be to invest our capital in the business, a transitioning business environment presents an avenue to return excess capital to our shareholders. Turning to our operating performance for the quarter. Our 3 business segments delivered excellent underlying results with an overall ex-cat accident year combined ratio of 81.2% and up 70 basis points from the same quarter last year. Our underwriting income included $179 million of favorable prior redevelopment on a pretax basis in the third quarter, or 4.5 points on the overall combined ratio. We recognized favorable development in all 3 of our segments and in many of our lines of business, but mainly in short tail lines in our P&C segments and in mortgage due to ongoing strong cure activity. Current year catastrophe losses were $234 million in the quarter, net of reinsurance and reinstatement premiums. These catastrophe losses originated from a variety of events across the globe and include losses associated with the Iran conflict. The Insurance segment's net premiums written increased 2.7% year-over-year as we were able to grow in select areas where expected returns met our underwriting criteria primarily in our international operations. These opportunities more than offset the headwinds from the nonrenewal of certain program business discussed on prior calls. The [ ex-cat ] accident year loss ratio, net of reinstatement premiums improved by 170 basis points to 55.8% compared to the same quarter 1 year ago. Most of the improvement was due to the benefit of incremental marine war breach earned premium. Our insurance expense ratio was lower this quarter compared to the same quarter 1 year ago. reflecting the introduction of the Bermuda Q RTCs. Turning to our reinsurance segment. Net premiums written were down 9.3% from the same quarter 1 year ago. reflecting reduced writings from lower rates and reduced participations across many lines of business with the notable exception of casualty, where we were able to find growth opportunities. Overall, our ex-cat accident year combined ratio of 78.4% increased 160 basis points from last year. due to the shift in line of business mix towards longer tail lines and a more competitive rate environment. As I mentioned earlier, favorable prior year reserve development in the quarter was primarily from short-tail lines, with nominal movements in casualty and longer tail lines of business. Our mortgage segment produced another very strong quarter with underwriting income of $201 million. The decrease in underwriting income reflects lower net premiums earned from last quarter, with the reduction occurring in our U.S. MI business due to lower monthly premiums and higher ceded premiums and in our international operations, where last quarter was favorably impacted by single premium terminations. Overall, the credit quality of our in-force portfolio remains very strong as reflected by a low delinquency rate and favorable cure activity. Persistency of our in-force portfolio remains at around 80%, is an important factor in the sustainability of future premium flows. On the investment front, we earned a combined $675 million from net investment income and income from funds accounted for using the equity method or $1.98 per share pretax up from the $1.76 per share we earned last quarter. We note that the returns on equity method funds contributed 340 basis points to our annualized net income return on average common equity on a year-to-date basis and represents an important part though variable of our book value growth over time. Cash flow from operations remained very strong at $1.8 billion for the quarter, given the strong underwriting results of our operations. The recent increase in interest rates is also expected to provide a tailwind to net investment income, given the short duration of our fixed income portfolio and new money yields outpacing our book yield by approximately 65 to 70 basis points. Income from operating affiliates was $33 million for the quarter, down from $62 million from the same quarter 1 year ago. Our effective tax rate on pretax operating income was 15.8%, reflecting the mix of income by tax jurisdiction. As of October 1, our peak zone natural cap PML for a single event 1-in-250-year return period on a net basis is up slightly to $1.9 billion and now stands at 8.6% of tangible shareholders' equity. With these introductory comments, we are now prepared to take your questions.

[Operator Instructions] Our first question comes from the line of Elyse Greenspan with Wells Fargo.

I guess my first question is just on capital. You guys have been leaning into buyback of late -- so I was just hoping to get an update on how you're kind of balancing buyback and how you guys see some inorganic opportunities that are out there today? And then can you let us know -- provide an update on buybacks in the fourth quarter to date in October?

Yes, sure. On the -- yes, through last night, we bought back just about another $100 million of buybacks in October. And again, our strategy has not changed over time. We look carefully at capital, we're best to deploy it. Last quarter was really -- and I mentioned it earlier, is really we thought the stock price was particularly attractive, and we have the opportunity to buy back a meaningful amount of shares in that period. So we're we seize the opportunity. How do we think about the rest of the year in 2027? I mean we're in a good position. Obviously, our capital base is very strong. We're generating very strong earnings. And the challenge for us right now is growing. So in an environment where growth is a bit more difficult than -- we still generate very strong earnings. We'll be in a position to probably most likely return back even more capital as we move forward.

Yes. To answer your question, we don't think of inorganic growth as a capital management. I think for us, we think more M&A as strategic as...

Okay. And then my second question, you guys said right, the underlying insurance growth is kind of in the low single digits right now. Just as you guys think about the market evolving, not only like for the fourth quarter, I'm really more interested in 2017. How do you see the and underlying growth trending within the insurance business over the next 15 months or so?

So our view as a change is, I think we believe that we're trading in a pretty good market overall. And we see attractive opportunities in insurance, especially in the casualty lines of business and some of the specialty we write in London to be able to grow. I mean there is headwinds, continued headwinds on the property side that we are aware of. But overall, we feel good about markets we trade in.

Yes. If you compare '26 to what we -- what could happen in '27, and compare really to '25. And we -- the decrease -- we had some headwinds in '26. We talked about, right, the nonrenewals of MC programs the property, cyber, there are some lines that were we shrunk because the market wasn't attractive to us. So now if you compare like '27 versus '26, like the reset, we think there's a good opportunity for us to grow at some level in '26, our middle market business in the U.S. We think we'll has an opportunity to grow. So there's a lot -- there's a number of areas where you compare like on a relative like '27 versus '26, we think we'll be in an environment that attractive in some places and we'll find a way to go get some of that business.

Your next question comes from the line of Pablo Singzon with JPMorgan.

First question is on the expense ratio -- operating expense ratio. I was hoping you could frame that as we go into next year, it seems like there's going to be some pressure on your premium base -- but at the same time, you're getting a step-up in Bermuda tax credits and then, of course, the normal course expense management initiatives that you'll be implementing anyway. So just any perspective on how that might trend from here?

Yes. If we focus on -- I mean, I'm assuming the question is more for insurance -- the way we think about it, and we always go back to trailing 12 months, like what's the run rate? Certainly, as you know, there's seasonality in some of our expenses and all that. But no question that the permit CRTCs is not a onetime event, right? So it's sustainable. So yes, in Q3 specific, we didn't have a Q3 '25, we had at Q3 '26. Yes, that's what we're trying to certainly communicate in the earnings release, and that will be there going forward. And as you know, and you mentioned it, the credits are expected to go up in on a percentage basis based on what the permit government is committed to -- and then we had a couple of things that kind of we had to absorb this year, right? We had some -- a little bit of duplication of expenses around the integration of our middle market business. That is, for the most part, if not completely behind us in terms of the double counting or double expense. So that will be a benefit. And normal, call it, inflationary cost on expenses, we think should kind of track generally closely to the premium growth. So premium expense ratio, you put it all together, we think has a chance to kind of be -- come down a little bit from the current levels. But -- and you mentioned it, we'll be working aggressively manage our expense base. There's potential improvements and efficiencies, et cetera, that we'll realize over time. But that's kind of how we think about it.

And then the second question on the MI business and not specifically about the quarter, but I just wanted to get your thoughts on changes on the regulatory side there where there's a recent pilot announced best, think it's meant to streamline cancellation upon reaching some real LTVs, right, based on the home market values. So how do you see that affecting your business?

Yes. So the way we think about it is we don't see any near-term impact. I think the pilot is really for new mortgages and it's going to take some time to implement. So as far as we are concerned, I think we think mortgage remains a terrific business for us.

Right. I think the pilot what's been identified, right, is to -- I think that there's the vision or this acknowledgment that there's some inertia in terms of -- because it's not a change, right, per se, like the current rules have always been in place, people have the ability to cancel their MI if they reach certain LTV levels, et cetera. So that's nothing new there. I think they're trying to have people realize that there's this optionality. They want to encourage it. They want to encourage home affordability we were fully supportive of that. But I'd say where we -- where the MI product has been truly a massive benefit to promoting homeownership and home affordability is when we have the staff, we ran the SaaS recently. Last year, we through MI, we were able to support 75,000 first-time homebuyers in the U.S. So we think that's a very positive thing to promote homeownership and promote home affordability. So I think the consensus within the housing market is that there's definitely room and MI is a big part of that ecosystem. But obviously, having people get beyond a little bit the inertia of cancellation, et cetera. I think they're trying to develop a mechanism to make that a bit more efficient.

Your next question comes from the line of Alex Scott with Barclays.

Wonder if you could dig a little bit more into the international growth for us, specifically kind of risk you're taking the kind of loss experience you've seen on that business, in particular, if it's Middle East and related?

Yes. So I think we are a leader in the London market and whether it's online or [indiscernible] breach. Those are coverage where we've with others, we provide, and we've been providing for a while. So I think we -- when we look at what's happening today in the Middle East, I think we look at our market share on those losses and the premium we get paid. And I think we see it more as an opportunity than anything else. So I think we trade carefully in that region, but we also want to support the insured we've been ensuring for a while in that region. So we take it seriously, and I think we trade carefully, but we see this as is doing our job in helping those insured at the time where they really need the insurance.

Got it. That's helpful. Could you talk also about just what you're seeing in terms of private capital emergence and the reinsurance landscape and property as well, and just how Arch can take advantage of that, but also maybe some of the risks associated with the pricing environment that come along with it, your high-level perspective on some of that capital?

Yes. So third-party capital, it's a helpful tool for us, I think, for the industry in general. And I think it's -- and as pricing goes down, I think a capacity that has a lower cost of capital and the industry has been using it to provide solution to brokers and [indiscernible] and Arch is doing that. So on the property side, I think it's been there for a while. I think supply comes and goes. So I think as a carrier, we have to be able to manage that. But I think it's an interesting and valuable tool to have. On the casualty side, I think it's on the reinsurance side, it's a little newer and untested. And it doesn't look that the product provides as much tail risk. So the question is who has the terror risk in the structure and that's still a question.

Your next question comes from the line of Cave Montazeri with Deutsche Bank.

The first question is on the Marine Bridge premiums. As we think about your run rate -- underlying loss ratio, could you maybe help us quantify the impact had on -- during the quarter? How much did that kind of boost your action cat loss ratio this quarter?

Yes. I mean I touched on my comments. I think it was most of the improvement. So you compare year-over-year, that was pretty much -- there's always gives and takes here and there, but try to make it clear or easy for you guys to think about it. There was most of the improvement. So you can see the premium flows through. Our international short tail and property specialty line of business in the supplement. And so it was definitely noticeable, so that's why we highlighted it.

Got it. And thanks for the color on the insurance OpEx. I guess I'll maybe ask about that on the reinsurance side. Obviously, earned premium is coming down. But year-to-date, your OpEx ratio also improved, went down. So can you unpack what's driving that improvement? And is there anything we should keep in mind as we try to run rate that improvement going forward?

I mean the nuance or maybe the slight -- the difference for reinsurance is there's certainly some profit commissions on third-party capital that come into play here, and it's been a relatively benign cat environment the last couple of years. So are we earning or is that a run rate? I mean that's for you guys to decide whether on a more normalized cat year, we would probably have slightly less in terms of profit commissions. But the rest, I mean, it's again, our teams are working hard to manage the expense base and kind of have that lined up with the growth in the premium, but that's, again, just back on the profit commissions that may be the one thing on reinsurance that is something to think about.

Your next question comes from the line of Andrew Kligerman with TD Cohen.

I'll skip my follow-up and ask this question as a couple of pieces to it. So I heard Nicolas say that casualty is attracting much more capital now. And at the same time, I think, Nicolas, you also said that you're seeing a lot of growth opportunities in insurance, casualty. And then later, I think Francois was saying he sees opportunities in casualty and reinsurance for growth. So it seems like that's the growth area. So what I'm hoping to hear is a, where in both segments do you see the growth opportunities? And b, maybe that's -- maybe I should reverse the order. And the second part of it is in both segments what are rates terms and conditions doing? I hear in reinsurance, it's getting a little softer in terms of ceding commissions and maybe terms. So that's it.

Yes, I think you're right in a sense that the opportunity and the casualty probably more clear on the insurance than it is on the reinsurance side. And the insurance, you mentioned -- we mentioned in my comments, the lines of business that we've been growing. I think we have a decent value proposition, lots of data and historical data on the on the segments we're writing in. So we're not writing the entire market in casualty on the insurance side. We are writing -- we're not targeting the large account excess towers, which we think is still challenging. But the rest, I mean, the E&S casualty and some of the other specialty we write like construction, we feel very good about our brand and our expertise and the solutions we're solving clients in the current market environment. On the reinsurance side, it's a little different. I think the underlying business that our guys target is very similar to what we do on the insurance side, but the terms and conditions are probably not where we'd want them to be. So I think to -- for them to be able like a piece of business, you need both the underlying to be attractive and the term condition to be attractive. And there is despite the fact that some of the major players have withdrawn, there is still an abundance of smaller players that are providing enough capacity to keep those terms and conditions in our view, too high. So it makes -- we find opportunities, but they are not as likely as in the insurance group. And the role of third-party capital it's hard. It adds another dimension to the supply on the reinsurance side. So I think it's -- it contributes to more supply, which makes it more difficult to find growth.

That was helpful. Maybe anything you could say on rates and casualty just in general?

So primary casualty rates have been decelerating, but there's still about loss trend. So I think we still think it's adequate overall.

Your next question comes from the line of Josh Shanker with Bank of America.

So over the past year, you've returned 100% of your earnings to shareholders. And if you look at comprehensive income, you've returned more than 100%. So it's question you might be pushing into excess capital here. How big is that excess capital cushion that you hat you could be returning 100% of your capital or more for a while? And where does the Bermuda tax credit sit in that sort of capital availability?

Well, I know you're hoping I'm going to give you the number, and I'm not. So that's like good try on that one. But yes, no question. I mean, right, I mean, excess capital, we talk about it a lot. We certainly don't look to carry excess capital too much of it. And we were in a position a few years ago when we are -- and our results have been very strong in the last few years, and we didn't buy back a whole lot in '24. We started buying back a little bit last year and more so in the second half of the year and a lot this year. So no question that the stock price is a factor in how much we return and how quickly. But yes, we have accumulated a lot of excess capital over the years, and there's still some on the balance sheet. It's not -- as we've said before, it's not burning in our pockets. We're not going to go waste it, and we're very careful with it, and we want to be again, if there's a good opportunity where we can put it to work in the business, we'll absolutely -- that's always our top priority. But let's -- you look at our numbers, we do still have some excess capital that at the right time will be certainly absent some opportunity to deploy in the business, we'll return to shareholders. So that's part of that. And part B of your question in terms of the Bermuda tax, there's no new developments. So we have talked about this potential kind of DTA going away. Is it going to be in the fourth quarter? Is it going to be next year? Is it not going to happen? There's a lot of discussions with both Bermuda government and OECD and lots of interested parties. So we're waiting or we're just -- we'll see -- we'll hear more probably over the coming months. But right now, no news to communicate.

Well, it's probably about $900 million to $1 billion. Do you internally give yourself any capital credit for it to the rating agencies? How do you think about it when you're assessing your capital cushion?

I mean it's capital, but internally, we look at it with and without. So we take the view, and we always run analyses with and without it because it's a possibility that we lose it. It's not a certainty. So for us, it's important to run scenarios or run models both ways.

Your next question comes from the line of Rowland Mayor with RBC Capital Markets.

I wanted to go off Pablo's MI question. Could you maybe walk through the amount of capital that backs the pre-2023 loans that have significant HTA? I assume there would be a significant unlock there if there was a regulatory change or the friction with reduced the AI.

Sorry, Roland, we couldn't quite -- can you repeat the question? You didn't come through clear to us. Sorry. We're not -- I mean did we lose them?

Sorry phone issues. Going off Pablo's MI question, could you maybe walk through the amount of capital that backs pre-2023 loans that have significant HPA in case there is a regulatory change or AI reduces friction in terms of detaching those loans?

Well, again, the -- it's in the supplement that you can look at the risk in force that is for pre-'23. We have the risk in force by year. So it's call it, pre '23, it's somewhere around 25% of our risk in force is in -- again, we got a category for 2016 and prior, which goes back longer. But big picture, call it, 25% of the risk in force. Again, the executive order is very specific that it's going to be prospective. So it's a fair question you asked. But for us right now, it's not a concern. We were supportive of the initiative. But at this point, more to come in how the pilot program is going to work and what it's going to achieve.

That's helpful. And then my second question, the buyback quarter-to-date, you said was a meaningful slowdown. Is that because the stock moved when you were in a blackout period? Or should we think about 3Q as a pull forward?

Sorry, in the fourth quarter?

Yes. I believe you said $100 million through last night, and that would be a sharp slowdown?

I mean, again, it's -- there's a variety of considerations. It's -- I mean we were in a blackout period. So we put like a 10b5-1 plan in place, and there's limits on it, et cetera. So now that we'll be back in the open window starting tomorrow, we'll see what we do. But that's -- again, I don't want to kind of -- I want you guys to read too much into like what happened like on a daily basis because there's a lot of considerations that go into it.

Your next question comes from the line of David Motemaden with Evercore.

You guys have spoken a bit about how you expect low single-digit insurance growth going forward. I'm wondering if you could just share your view on the reinsurance side just -- and maybe just touch on how you're thinking about the 1/1 property cat renewals.

Yes. We really don't give guidance. So keep that in mind. Clearly, we expect some continued pressure on the short tail book, catastrophe excess of loss and other property, which is a big part of the portfolio in reinsurance, much bigger part than in insurance. So that will put pressure on the top line. But we like the market we are in. So I think we are trading well. We have a big book. We have great brands. So we're still finding opportunities. So I think -- and we also take underwriting actions as pricings are going down. So I think you have to put all of this together and figure out where we're going to end up at 1/1. The market on the property side, due to the fact that there hasn't been any -- it's been a light catastrophe year, you can expect continued pressure, I think, on the rates.

Got it. That makes sense. I thought it was worth a try to ask about. Just maybe just following up. Interesting to hear you talk about casualty pricing still being attractive, but it sounds like moderating within North America E&S casualty and large account casualty. But at the same time, the Lloyd's pricing is moderating. Is -- it sounds like you said pricing is still above loss trend on casualty just broadly in insurance. Is that -- how narrow is that now? Like has that been narrowing enough where like that could potentially get to a point where you guys are thinking about pulling back? Or do you still think there's pretty -- still a pretty good runway to continue to grow in casualty?