Arch Capital Group (ACGL) Q2 2026 earnings call transcript

Good morning, and welcome to Archer's second-quarter earnings call. We reported strong earnings with quarter with solid underwriting performance from each of our three segments.

After tax operating income in the quarter was $893 million or $2.56 of earnings per share. Slowing, top-line growth, and strong earnings freed up capital for additional share repurchases in the quarter, bringing the total for the first half of the year to $1.95 billion. Book value per share grew by 2.8% in the quarter and has increased by 4.5% in the first half of the year.

While the underwriting environment is increasingly competitive, it is important to note that we are still in the early stages of the softening market. Overall, fundamentals are attractive with some line experiencing increased competition, while others continue to see rate increases. Archer's diversified business model ensures that we can find opportunities to deploy capital that generate appropriate risk-adjusted returns.

Our position as an industry leader in specialty insurance, reinsurance, and mortgage insurance provides us with a meaningful competitive advantage. Clients come to us not only for capacity, but also for our underwriting expertise, claim capabilities, and valuable perspectives that help them better manage risk. Our commitment to cycle management is embedded in our culture and guide our underwriting approach.

This is reinforced by compensation structure that incentivizes quality underwriting by aligning performance with long-term profitability and shareholder returns. Let us now turn to our segment performance. Starting with insurance, we are negatively affected by catastrophe losses related to the Iran conflict. Art is a leading rider of political violence, terrorism, and marine war in the London market. So, while losses affected these quarters results, we are seeing ongoing opportunities to support clients with assets in the region.

Underwriting income of $27 million does not reflect the good underlying performance of the segment, which delivered a current accidenture combined ratio XCAD of 91.6%.

As reported by others and consistent with our comment last quarter, competition is increasing particularly in property and short-term lines. That said, the middle market commercial business and casualty oriented lines continue to experience rate increases.

Additionally, pricing in directors and officers is rebounding slowly, where I read declines in cyber insurance have moderated. Our gross and net premium return, we are negatively impacted by the non-renewal of certain program business, as discussed in prior calls. And we are also impacted by reduced writing of our excess and surplus property business. We continue to see premium growth in casualty oriented lines in North America, including excess and surplus casualty, construction, and national accounts.

And we also saw positive trends in certain specialty London market lines, including war and terrorism. Looking ahead, our diversified platform provides us with the flexibility to grow in those areas where pricing supports our return objectives.

Our insurance underwriting results were excellent, added by relatively like catastrophe losses, resulting in $410 million of underwriting income in the quarter. The current quarter accidenture XCAD combined ratio was 79.9%, a 270 business point increase from last year due to changes in mix and lower pricing in property lines. Net premiums return, we are down 10% from the same quarter last year, as some of our clients opted to retain more risk, and increasing competition lower rates, particularly in property.

We increase our session to traditional reinsurance and third-party capital, which impacted our net to gross ratio. Our ability to leverage with capabilities enables us to provide solutions to our brokers and citizens, while maintaining flexibility to manage our net risk portfolio.

Similar to insurance, casualty reinsurance is an area where we see attractive business. Opportunities remain, though competition is elevated due to a burden to insurance capacity.

Within a reinsurance business, our focus is on maintaining opposition as a leading reinsurance partner for discipline, underwriting, and by consistently delivering business expertise across market cycles.

The mortgage segment continued to provide strong stable result, delivering $220 million of underwriting income in the quarter. Our mortgage portfolio performed well, driven by resilient economy and high-quality risk-enforce. Our US MI portfolio dedicrancy rate remained flat at 2.1%. Favourable result development continued, although slower than in prior quarters. While affordability and housing supply constraints limit new mortgage origination, mortgage insurance remains a consistent contributor to earnings, as the strengths of the in-force portfolio and favorable credit characteristic continue to support steady profitability.

Investment contributed $417 million, or $1.20 of net investment income per share in the quarter. We see supported by our conservatively managed portfolio, which maintains an average credit quality of double A minus. We continue to benefit from an asset base that has grown to $49.5 billion, supported by strong cash flows. Investment accounted for using equity method, which are excluded from operating earnings performed well, adding an additional $196 million of 56 cents per share to net income, reflecting strong returns across the portfolio.

Over the last five years, we have enjoyed favorable market conditions in property and short-term lines, and consequently, we now face the early stages of a competitive market driven by an influx of capacity. This part of the cycle is to be expected. Importantly, a more competitive environment doesn't mean a lack of opportunity. It simply requires greater discipline in where and how capital is deployed.

Our playbook is built upon our enduring strengths, a diversified platform based in class cycle management, a strong brand that enhances our relationship with clients and distribution partners, as well as discipline capital management. In some, we remain well positioned to consistently deliver superior results for our shareholders. As art approaches its 25th anniversary, one thing is clear. While the company has evolved, the principal and playbook will rely upon create long-term shareholder value.

With that, I will turn the call over to Francois.

Thank you, Nicholas, and good morning to all. Before I provide some additional color on our results, I wanted to walk you through our capital allocation and management actions this quarter. Capital management is an essential tool to help us to manage our business through the insurance cycle. The latest hard market provided arch the opportunity to generate significant excess capital that, as the market transitions, cannot be fully deployed into our business.

Our preferred option has first been to return excess capital to our shareholders through share repurchases and secondly through special dividends.

After considering the opportunities available to us to deploy capital in the business, both existing and new, we determined that share buybacks remain an accretive use of excess capital in enhancing shareholder returns at current prices.

As a result, we repurchased 12.4 million shares at an aggregate cost of $1.2 billion in the quarter. Through the first half of the year, we have repurchased approximately 94% of our net income in our own shares.

As you know, we also accessed a debt market in May, raising $2 billion in a combination of 10 year and 30 year senior notes. The proceeds from this issue once will be used to 1, redeem the $500 million of 10 year senior notes maturing later this year. 2 purchase $418 million of our 2043 and 2046 senior notes through a recently completed tender offer with the remainder for general corporate purposes.

The tender offer was designed to replace debt that no longer meets updated regulatory capital requirements with fully compliant capital instruments.

As a result of the debt raise, we expect our interest expense to be approximately $60 to $63 million for each of the next two quarters.

As of the end of the second quarter, our debt plus preferred to capital leverage ratio stands at a conservative 18.1%.

Turning back to our operating performance for the quarter, our three business segments delivered excellent underlying results with an overall ex-cat accident year combined ratio of 82.5%, up 160 basis points from the same quarter last year.

Our unwriting income included $165 million of favorable private development on a pre-tax basis in the quarter or 4.1 points on the overall combined ratio. We recognize favorable development in all three of our segments and in many of our lines of business, but mainly in short tail lines in our PNC segments and in mortgage due to strong cure activity.

Current year catastrophe losses were $201 million, net of reinsurance and reinstatement premiums, and were a combination of losses from the Iran conflict and severe conductive storms in the U. S. The insurance segments net premiums written decline 5.1% year over year due, in part, to the non-renewal of certain program business.

The ex-cat accident year loss ratio, net of reinstatement premiums, improved by 90 basis points to 56.4% compared to the same quarter one year ago, due primarily to strong performance in our international operations.

The acquisition expense ratio for the current accident year increased by 30 basis points as the benefit we observed from the right off of deferred acquisition costs for the MCE acquired business rolled off.

Our operating expense ratio was higher this quarter due to the transition of our middle market business to ARCH systems.

As mentioned last quarter, we would expect our operating expense ratio to revert back to historical levels during the second half of the year. Turning to the reinsurance segment, net premiums written were down 10.4% from the same quarter one year ago, reflecting reduced ratings from lower rates in a higher level of retrocession purchases, primarily in the specialty and property catastrophe lines.

Overall, our ex-catastrophe accident year combined ratio of 79.9% is up from last year due to the shift in line of business mix and a more competitive rate environment for certain subsegments.

Our mortgage segment produced another very strong quarter with underwriting income of $220 million. Net premiums earned were flat from last quarter with a reduction in our USMI business, mostly offset by higher levels of earned premium in Australia.

On the investment front, we earned a combined $613 million from net investment income and income from funds accounted for using the equity method per $1.76 per share pre-tax up from the $1.57 per share we earned last quarter. We note that the returns of equity method funds contributed 340 basis points to our annualized net income return on average common equity in the quarter.

Cash flow from operations remained very strong at $1.3 billion for the quarter. Income from operating affiliates was $46 million for the quarter, slightly higher than the $40 million from the same quarter one year ago. Our effective tax rate on pre-tax operating income was 15.1%, reflecting the mix of income by tax jurisdiction.

As of July 1, our peak zone natural cap probable maximum loss for a single event at a 1 in 250 year return level on a net basis is down slightly to $1.8 billion and now stands at 8% of tangible shareholders' equity. With these introductory comments, we are now prepared to take your questions.

Yeah, two things or a few points on that, Elise. First international, as you know, it's more of a short-tailed book. So it's been running very well and there's always potential volatility that we have to think about. So it's hard for us to know how that's going to play out, but the business is doing extremely well, so we're happy with that. On the North American side, I mean, what's also helped a little bit is the non-renewal of some of the programs that, you know, started out earlier this year. So as those kind of earn in, right, the premium earns in or the lack of premium, I think that'll, that has brought down the loss ratio a little bit.

So, I mean, where did they go from here? I think, I mean, at a high level, we think we're comfortable with the levels where we're at. And, you know, I think there's a good chance or there's a possibility that we, you know, we stay at levels that are around this number.

No movement in specific loss picks. I mean, it's really, I mean, absent just the normal adjustment of rate over trend that we go through each of our lines of business, but that we haven't like systematically decided to move down the loss ratio pick for one line in particular or another. So, nothing new there. And you just remember in insurance, you can actually adjust the mix of the book. So we, you know, every, most of our books today are split in what we call quartile or quintile, where some of the book is running at the lower expanse. A lower loss ratio and the other size running at a higher loss ratio. So the work of the underwriter is really to get pricing or manage a higher loss ratio out.

So we have more propensity to keep, you know, the loss ratio where it is.

Yes, we don't certainly don't have targets or plans to buy back a certain number or dollars of shares. We certainly thought that in the second quarter, the price of the stock was very attractive to us. So that's why we were able to certainly buyback more than we had done in the past. Does that stay at this level? I don't know. And the current prices, we like the stock still, we think it's very attractive.

And, you know, we have capacity to buy back more. So we'll see if that plays out. Yeah, wind season is always something that's a little bit in the back of our minds that we have to think about. But, you know, going forward, I think we're in a position where, again, the growth is going to be harder to come, we think.

And, you know, share buybacks will remain part of the arsenal that we have to manage our returns.

You're welcome.

So can you repeat the question?

Your retention has been going down, right? You've been essentially heating less, just net over growth, right? And I think in the soft market, yep, yep. Yeah, so again, it's a function of really the market we are in. So I think in reinsurance, we've seen it a little more because I think we, if I remember, we placed a little bit more on the shorter lines. Because as the rate was going down and we also increase our capacity. As we increase our limits, we buy more insurance. So there's many factors that influence the net to growth.

But the market is certainly a factor we look at as well. I said it, we're here to solve the problem for insured and for our bulkier. So the reinsurance is a good tool to stay in front of the clients and ultimately figure out what we want to keep after it.

I'm sorry, the line is really bad. So on the insurance, I probably gave you the answer. On the reinsurance, I think we are much more active, I would say, on the buying, especially because the property cat business specifically we think is quite stressed. So we have to manage, you know, the net portfolio and the tool we've used is, you know, relying on the capacity out there that has a lower cost of capital to help again solve the problem for the clients or distribution partners.

Yes. First, I think we, you know, I truly believe that the market that we are trading in is a favorable market. So there are business that our teams can on the insurance side and into a large action from the reinsurance side, there's new business that we can write. So we, we were made to trade in this type of environment. So specific to, to, to property.

Yeah, it's a big heavy wind, you know, okay, you know, rates have been, you know, coming down. And, and there, I think we, we, we tried, we tried quite carefully and you saw both on the insurance and reinsurance on that premium going down. We are much more optimistic on the, on the casualty side. I think the, there's more competition there.

But the market is remaining disciplined, especially on the insurance side. We haven't seen any, you know, we've seen management of limit, which is a critical aspect of what we track. The, the, the, our competition stays very disciplined.

Yeah, and I'd say to one, I mean, property, I mean, the cat activity will have an impact.

That's, it's still early in the season. So far it's been quiet, but things could change depending on, you know, as we look into 2027.

In casualty at a high level is, is kind of neutral. I mean, so, you know, then there's some, you know, by year by subline, there's some, some, some up, some down. In total, it's about neutral.

So, yes, the short answer is like most of the favorable is in the short tail lines in the last two to three accidents slash underwriting years.

You're asking me if we have the first of all, which we don't, but let's just say that we've got again, we are very confident in our ability to generate strong earnings. Through all phases of the start at the cycle. We got three kind of pillars to our operations, three likes of the stool. They're all performing well. So we believe strongly that we have an ability to generate earnings for the, you know, for the.

Maybe not forever right, but you know, for the foreseeable future at a minimum. So you're asking me, are we able to return if we're not growing? Can we return all those earnings in back and in back to the shareholders? The answer is yes, we could. Could we do something else again? That's like, I don't want to speculate what we're going to do in a year or two years because there are other things that we where we need the capital before what we deployed differently. But again, the quarter, second quarter was again, hopefully a good demonstration that we are active and like the stock and think it's, you know, it's an action. An interactive way to.

We did a return to shareholders and we'll keep doing the same as long as, you know, unless things change material.

So the PML that you look at, I think, is Florida. Try country. So it's one of the 50 zones that we monitor. So I mean, Florida business is a big zone. So it's a big zone for most of the. Insurance in the field. So that is historically as at the highest margin. So that's why I think, you know, the red reduction pretty much across the board, you know, on the property. So we would expect that the PML could reduce, but think of Florida as the highest margin business, you know, in our property.

But the percentage percentage of children's equity, you know, we were at 8%. You know, we've been in the soft market, the last off market. We were at 4%. So we're a different animal. We're much more relevant. We're much more, I mean, bigger partner to many of our clients and brokers.

So yes, could our PML come down? Absolutely. Does it go down to the same level back that we said we don't know.

As we think about the deceleration in casualty reinsurance growth year to date, is that reflective of those outperforming sedents choosing to retain more risk? Or has arch changed its view on casualty re returns?

No, I don't think we've changed our view. I think I mentioned in my prepared remark, we stay, you know, I think it's an attractive line of business. We like the fundamental of the underlying business in the specialty casualty area. The issue it's not new is, you know, too much capacity, reinsurance capacity chasing too little business. And the way we see it is hit or miss on the terms and conditions. So there's certain terms and conditions that works.

And for others, we think that sometimes it's mostly could share the contract that the same commission is too high. So I think we're still looking for the right opportunity to add, you know, reinsurance casualty to our books in the right lines of business and with the right sitting companies.

And I just want to follow up on, you know, the Middle East, some losses this quarter from a cap perspective. It also seems like there's some incremental opportunities to write new business. Could you just give us some sense of what the strategy is to write new business and, you know, how you go about managing that and determining, you know, what's a good risk?

Yeah, so obviously, you know, following the losses in the iron regions that we're all aware about, you know, prices that are adjusted. And for us, we, you know, prices at some point were multiple of what they were before the before the conflict. And so we decided to deploy a bit of capacity and stay with our insured, you know, some of our insured.

You know, there's a, you know, we made you want a business. Now they suddenly figure out that, you know, the war, which was excluded from their property policy, they'd like to buy, you know, some coverage. And so selectively, we've deployed more capacity in the region, you know, making sure that we avoid concentration. So we have a careful approach to continuing to service our discussion partner and our clients in the region.

Well, I mean, the majority of the insurance cat losses come from Iran. Yeah. Catload going forward. I mean, we quoted the 68% kind of, you know, for the, you know, on an annual basis for, you know, the group that hasn't changed. I think the losses that we, you know, the run conflict is more is actual refineries, it's actual claims. So case reserves have been set up. It's not a hypothetical IBM R, you know, we'll put it up in case something happens. And those are, you know, large refineries, et cetera, that, you know, people are well aware of. They've been kind of hit and they, you know, there's damage associated with them. There's always questions around business eruption and, you know, so we don't know the magnitude of the magnitude of the outcome, but, you know, the claims are real and tangible.

So that's how we think about it.

I mean, it's, again, we, we, Nicholas mentioned it, we are out of London at Lloyd's. We are leaders in the, you know, political violence, terrorism kind of market. And that's, you know, that the losses when they, they happen, you know, we expect them. And, you know, we think the pricing is, it supports it. And that's why we've been in that space in a more meaningful way the last few years.

And we're, you know, we're, we're still in it.

Yeah. Yeah, as we said before, David, I think we, I mean, our view is we look at trailing 12 months as first of all like that to our kind of. The lens we like to put at our other results specifically on reinsurance because there's going to be more. A little bit more volatility in the ex cat loss ratio, no matter, you know, no matter what. So that's the first thing we would say to your right. I think the mix, you know, has changed a little bit less short tail, which.

You know, is reflected in that increase in the loss ratio. Three, yeah, the market, you know, a little bit more kind of competition about the rates are down a little bit more that hasn't fully earned in. So that may earn in kind of overtime. So you put it all together like the last kind of quarter. If you focus on the quarter, we'd say it's probably a little bit higher than we would, you know, that would think the run rate is or kind of reflecting all these moving parts. But, you know, we're not surprised by it or think it's a get to your point. That's very kind of very much within our expectations. But, you know, we'll see how things play out going forward.

Yeah, so I think, you know, I concur with what other people have said. On other calls, I think the red reductions are in the mid teens, you know, that's what we saw. And I think in terms of red index, I think we are not back to, you know, the pre hurricane heen. I think we are 2022. I think we think the market trade above that. So are we in 2023? Maybe.

You know, I think it really depends on the region. So I think that's what you, you know, we, as I said earlier, we have 50 zones. So some zones are green still, you know, above and provide adequate return. And some zones are now red and some zones are in orange. I think that's why we actively manage a portfolio. But in terms of index, I think our view is that we're still above, you know, the prior hurricane in red index.

So our involvement on the, on the reinsurance regarding MGA's has been mostly on the, on the property, on the property side. So short term, I think we, we've been a significant player, you know, supported by the pricing on the primary side. It was one way our, you know, reinsurance team where I bought to access business that otherwise they, they, they, they, they could not access.

So we, we, we, again, the fact that it's short term, maybe you'll limit some of the risk we see with working with MGA, which is, you know, down, down the road, you know, who, who's going to pay the claims? And, you know, who's going to be there if the MGA is no longer there. So I think as far as a reinsurer, you, you don't have as much of an issue.

The issue is more, I think, with the, with the insure, you know, the, the insurance company under the, so it's insured, I'm sorry. The insured, you know, or the worker, you know, if you do it with an MGA, especially as, as it relates to long-tail lines, you know, five years, six years from now, you know, you don't have visibility. If the MGA no longer exists, who is going to pay your claims? And will, will the reinsurance capacity still be there? So I think it's more of an issue on the insure broker, you know, ENO than it is for the, for the reinsurer in my mind.

I mean, what makes the opportunity interesting to us is the underlying insurance casualty, which we think in certain specialty areas, is a profitable, is profitable. So I think we are trying to, you know, through reinsurance access, those companies that we think are good on the rider and do business in those specialty casualty areas.

So curious as to what you're seeing in Florida, I realize there are a lot of zones there, but maybe you can go to a little more colored detail on Southern Florida versus Northern Florida versus East.

I mean, what I can tell you, what we saw at 6-1 is the reductions of the rates were across the board. Historically, they were higher reduction at the top end of the program and lower reduction in the frequency layer. This time around, I think the appetite has been more across the board.

And, you know, the tricontia area is a big zone. So, you know, I would say usually it attracts the higher pricing. I think if you are in the Galveston area or all of the other area, you know, the pricing would be less because it's not the big zone of everyone. So, and the market is efficient, you know, the pricing, you know, reflect more the abundance of capacity and the new entrant capacity that is chasing the business. But the differentiation in the pricing between zone, I think, is efficient, you know, people are using models. I think we don't see a huge right flag there.

You know, we only, we ask a casualty on the rider to write for an underwriting profit. And we credit them with the risk-free rate. So, we require an underwriting profit. So, I think that's very clear for us.

Yeah. I mean, back in 24, we were at two times book. So it was very much a, you know, to us was very clear that buybacks did not make sense. And dividend, the special was the, was the answer. Right now we're trading in the kind of 1516 range, 145, whatever. So I think it's more still makes sense to do buybacks.

But, you know, so, you know, our preference, obviously, it's one or the other. And right now we're in the buybacks range. And we'll see how that, again, things play out, but that's kind of how we think about it. Like dividends, as long as we, again, and again, I said it earlier, I think we have were positive and, you know, or visibility in terms of forward looking earnings is very positive. So to us that supports kind of value creation and kind of strong returns for the next three years. And that's a big part of how we look at, you know, the economics of the share buybacks.

I think we've been positively surprised. I think that our goal was really to, you know, the first goal was to move the business over to ours. So we did this a year ago. And, you know, the second goal was to move the, you know, the pretty significant systems from our youngs to us. So that created some, some disruptions from the writers. I mean, you know, it made their life much more difficult. But I think we, the value of the brand and the relationship, you know, worked out for us. I think we are in a good place. I think looking ahead, I think we had now, you know, the underwriting team and the police emission system on our, using our paper towels.

And so we actively moving to the phase where we can provide them a better tool, better analytics, triage, improve the claims.

Yeah, I think it's muted compared to, to the, to the large property and ENS. I think we still see overall on the package rate increase that are positive in the mid-single digits. And I think the property itself is, is flattish, you know, used to be 5% up. But we, we don't see the, the double digit decrease that we, we see elsewhere on the existential surplus property or, or large account property.

Or I wonder if you could comment on that, please. Yeah. I think so the primary message that we got from our brokers incident is price. So I now think we have a little bit of a slippage in, you know, with terms and conditions or, you know, clients, you know, because they save a significant of money looking to see if they could, could add the margin by an underlying layer. So we're starting to see this, but it's, it's really at the margin right now. So it's mostly price.

Okay.

There's a decent bit of growth. So the quarter and quarter in terms of new insurance with them. It's wanting to can help just provide some color on what's driving that. And, and I guess a part B to the question also is, and the profitability has obviously been very, very strong for the last, the last few years, but growth has not really been apparent.

And I guess as we look forward and as that back book matures, and what, how should I see the trade off between, I guess, margin versus, versus growth opportunity? How should that develop as we look forward?

So on the mortgage side, I think this, this quarter, I think we, we signed up a new client in Australia. And so that benefited that new premium influx helped our growth. And the second factor was, I think we, we reduced some amount of quarter share insurance that we, that we bought. So that, that really helped the net as well. I think those are the two elements, I believe.

And in terms of the profitability effect, I think it's steady as you go, my view is that, you know, the, the, this is an interesting market where, you know, we talked about, rate decrease of 15%, you know, in property tax or, you know, in mortgage is 1%. And the market reacts. I think it's a people, people, you know, people react very quickly to maintain their market share. And I think the, the, the, the, the six, the six actors, you know, have been, you know, maintaining the pricing where it is. So I think it's the valuation there are much more.

What do you mean net loss trend? So sort of call it. Yeah, the trial attorneys are pushing for and then offset by more successful defense on the part of the insurance industry.

Yes, sir. Well, you know, I think I'd love to see more.

And then I apologize if this has been covered before. But I remember a couple of years ago, there was a little bit more caution on mid-year renewals because they were very negative forecasts for hurricane activity. And I'm wondering if the forecasts are benign. When there are below average forecasts, does that increase your appetite for property cat, obviously, given the rates that are available?

It's a factor. I think we have, you know, like most companies, we have a meteorologist on staff that give us the outlook. But we look at the coalition in the past. There are some positive coalition, but it's one of the factors we take into account. But that's not the main factor.

I mean, I think the current quarter is a good starting point. Right. Some of these agreements were, you know, effectively on the Bellomede side. I mean, they're canceled. So the benefit we got because it's like in monthly pay or monthly kind of premium. So benefit, we're getting both on the Bellomede and the quarter shares. It's, again, it will continue on. So I don't, I would not, I mean, I would expect like at this point kind of relatively flat kind of premium on the USMI side. Australia to Nicholas's point, you know, it's a new relatively large new client. So, which just started in Q1. So as we move throughout the rest of the year, we should see more and more of that business coming in.

So that when you're doing the year over year kind of growth, I think I would expect to see a bit more growth out of our international book.

Thanks. Yeah, I think there could be more. I mean, we obviously, what we saw in Q2 was a direct reflection of certain risks that we ensure that we're hit. If that kind of, you know, if we have the same in Q3 or Q4 as the war persists, yes, well, we could have more of that. But it's a right. It's more case by case. It's more property by property specific and not like an ongoing thing like COVID might have been where it was kind of more an aggregate view of the exposure. So this is more kind of case by case specific and, you know, we'll react to it. If we hear like the news that, again, there's some, some, some damage.

I think there are estimates for the industry loss since the last earnings call has no chance because I think the, the event that happened just before the earnings calls. I think we are still, I think the industry in general is still around $3 billion for the, for the Middle East, the war losses.

We think M&A has more of a strategic way of, you know, building versus buy. You know, if we, we want to be in a line of business and we don't have the scale, we, M&A could be a path to, to get us there faster and think of the audience transaction is, you know, we want it to be in the middle market. I think that property led, you know, tried to get there and ultimately this opportunity came and we paid a decent amount of money to have a franchise to be able to operate in that business.

So we're looking at M&A to for what it add to what we have more so than to gain market share and then. And my honest view on M&A in this market is it's expensive, the price is expensive and maybe the price comes down, but as the market gets more competitive, maybe the balance sheet gets weaker. So I think you, you know, there's, you have to think the timing of M&A is tricky and a successful M&A, it's difficult, you know, historically a lot of the M&A has created the issues for companies. So we, we are very careful in the way we approach it.

Thank you.

I would now like to turn the conference over to Mr. Nicklaus, pop it up below for closing remarks. Yeah, thank you for the time today and another good quarter for us and we're looking forward to talking to you next quarter.