AXIS Capital Holdings Limited (AXS) Earnings Call Transcript & Summary

Good morning, everyone. Welcome to AXIS' Investor Day. I'm Cliff Gallant, Head of Investor Relations. Today, you're going to hear from leaders across our organization. They're excited to tell you about their businesses and their outlooks. You're also going to see a number of videos -- video interviews with some of our business partners who will tell you a little bit about what it's like to do business with AXIS. In addition, I do ask you to please silence your phones and I'm sure there's going to be a lot of good questions but we're asking you to please save them till the end. You'll see we've got plenty of time saved at the end for a lively Q&A. As a preliminary matter, I'd like to remind everyone that the statements made today during today's presentation, including the Q&A section, which are not historical facts, may be forward-looking statements. Forward-looking statements involve risks, uncertainties and assumptions. Actual events or results may differ materially from those projected in the forward-looking statements due to a variety of factors, including the risk factors set forth in the company's most recent report on the Form 10-K or our quarterly report on Form 10-Q and other reports the company files with the SEC. This includes the additional risks identified in the cautionary note regarding forward-looking statements in today's presentation. We undertake no obligation to publicly update or revise any forward-looking statements. In addition, non-GAAP financial measures may be discussed during today's session. Reconciliations are included in the presentation. It's my pleasure to bring up Mr. Marty Becker, our Chairman. Marty is one of the most respected leaders in the insurance business. I'm sure someone -- many of you have worked with before when he was CEO of public companies like Alterra and Trenwick. And we were very fortunate that Marty took on the role of Chairman just this past April for AXIS. Marty?

Thank you very much, Cliff, and good morning to everyone. We really appreciate you taking the time to be here today. Not only do we have a great crowd in New York, but we have a number of people who have signed up virtually to watch today's presentation. So that's terrific. This is AXIS' first Investor Day since 2013. It's 11 years later, and AXIS is a very different company today than what we were in 2013. Over the course of the morning, we'll have the pleasure of sharing with you a deeper look at AXIS, the AXIS of today and the AXIS of tomorrow, and we look forward to having your questions towards the end of the presentations. Earlier this month, as Cliff mentioned, I was honored to have the opportunity to become the nonexecutive chair of the AXIS Board of Directors. I succeeded Henry Smith. Henry's leadership was pivotal for AXIS as we largely refreshed our Board, 9 new members over the past few years. We changed our strategic direction, and we recruited a new CEO who is very fit for purpose for the strategy that AXIS has today. I really feel privileged to be chair at a time when AXIS is making remarkable progress. We're transforming the company into a leading specialty underwriter, a company with significant potential to drive consistent profitable growth in revenue, earnings and book value per share. That's our mantra. AXIS is in great hands with President and CEO, Vince Tizzio, who just completed his first year and what a great year it was. Vince is a real pro in the specialty arena, and most of you know him well. During this time, he has navigated a successive set of changes within the company that has delivered immediate, tangible, positive results while placing AXIS on a very strong path forward. Today, Vince and his management team are prepared to share exciting details with you that relate to how the company has and will continue to elevate all aspects of how it operates while ultimately driving shareholder value. On behalf of the Board of Directors, we couldn't be more pleased with AXIS' performance, more pleased with our leadership team and the direction that the company is headed. Again, thank you so much for taking your time to attend. We're proud of our story. We want to be able to share it with you. And it's now my pleasure to welcome Vince Tizzio.

All right. Let's get started. Welcome. Thank you, Chair. It's an honor to have you with us today. We're really excited to be with all of you. Before we get into comments, I want to thank the Ex-Co for their leadership. I want to thank all the teammates that made this presentation possible. There's a lot of work involved with putting an Investor Day together. So thank you to all of our team. And thank you to our virtual audience as well. As Marty said, this is our first Investor Day in some time. And we hope today to reveal who AXIS is, the strategy that we're embarked on, the commitments that we're making to one another and importantly, our shareholders and the journey in its path. We're going to unpack all of that for you shortly. Okay. Let's start with our aspiration. Our aspiration is pretty straightforward. We want to be the leading specialty underwriter over the next several years. The word leading has varied meaning and definition to us. First, to our brokers and customers. We want to deliver consistent, value-added capabilities and service that meets the expectations of our buyers. We want to provide products in times of need and be responsive to those gaps in coverage that are often found in the primary dislocated markets. In terms of our shareholders, we want to deliver mid-teens book value per share growth of 15% annually. We want to do this all consistently. And to our employees, we want to continue to provide an environment that is safe, welcoming and provides advancement and opportunity, and we're excited about the beginning of our journey together. AXIS at a glance. Today, the AXIS organization is a scaled organization that has 2 underwriting businesses, its insurance business, and its repositioned specialty reinsurance business. We are positioned in the best global markets for specialty lines in the world. We have resources in each of these locations. We have strong financial representation and rankings, and we also, importantly, have a number of notable financial positions in the lines of business that we go to market in. My business leaders will chronicle some of those rewards and recognitions that we've received over the recent past. And also, importantly, we remain an employer of choice. And in specialty lines, critically important to have these recognitions by Forbes as one mere example. Let's turn to the portfolio. The AXIS portfolio is broad, it's diverse and enables us to meet the customer needs in varied ways, sizes, complexity across the globe. No one line of business is deciding on our financial outcome. And this business today is underwriting led with strong governance, strong ability to be agile and responsive to market opportunities, administered through our newly created COO office. We'll detail some of the component, roles of that job over the course of Dan's presentation. As we've mentioned, we've begun a new chapter in our journey at AXIS to become the leading specialty underwriter. And there's a number of component parts that we'll unpack and we encourage any question later on. First, we think we're being very clear-spoken to all of our stakeholders around our ambition, our aspiration. It's to be the leading specialty underwriter. We've unpacked what leading means for us. We're giving you some sense of the time it will take, it will be multiyear. We've got a very balanced portfolio that results from a number of years of rebalancing our go-to-market products, controlling volatility and being a consistent earnings' generator, and we're really proud of the progress that we're making. We're improving the ways that we work inside the house as we refer to it, changing our target operating models and a number of functions. I'm so pleased by the progress taken by Megan Watt and Celeste Cook, 2 new executive leaders that are on the Ex-Co and run claims and operations as just 2 examples. We've embarked on a campaign that will be multiyear that, yes, will be expense rationalization and yes, investment, under the banner of How We Work, led by Ann Haugh for the organization and supported by all of us, all 2,000 of us around the world. I've mentioned this notion of being underwriting-led. And this is not a phraseology that tries to draw a contrast. More importantly, it tries to evidence that we believe we're an underwriting company that the business we're engaging is the art of underwriting. We're in the specialty lines arena. And that requires a lot of individual practition skill, aided by data and analytics, supported by a distribution channel and a distribution know-how in order to be responsive as you'll hear later on from one of the brokers to "get deals done." I can't do this without supporting capital. AXIS' balance sheet, its position of capital is very strong. We'll unpack that and I trust elaborate detail. There are 4 pillars that will underpin our financial aspiration and aid our journey toward our ambition. Through our underwriting businesses, we will make smart choices about where we operate, what products we bring to the markets and through what underwriting division. You've seen this agility in recent earnings calls, evidenced by our discussion surrounding cyber. As we've pulled back in the small insurance segment of cyber, we've also leaned into our reinsurance cyber position. One example. We acknowledge and are excited about our How We Work program, enabling us to create more contemporary workflows, target operating models, ultimately translating into the progress that you saw in the first quarter on the GA ratio, some 0.6 percentage point improvement. It's not by coincidence, it's not by mistake, it will continue. And all the while, we're integrating new teammates, integrating them into new processes, allowing us to execute and meet our brokers' expectations more consistently. Now we have to invest in our company and through How We Work, Pete will detail in order of magnitude of investment that we'll make. And that investment obviously will be all-encompassing. It will cover, yes, continued talent acquisition. We've had a fair amount of new teammates join our organization. It will include investments in data, analytics, digital, some AI as we continue our advancement in those technical capabilities. And we're going to manage our capital with efficiency, agility and durability, something we've worked hard on over the last several years and are, as I said before, in a very strong position. I've mentioned, a portfolio that's balanced. This portfolio has been rebalanced over a successive set of years. And today, through the first quarter, you saw 70-odd percent of our revenue was generated through our insurance business, the remaining through our specialty reinsurance business, delivering strong results. And I might note, within our reinsurance business, a demonstration of the durability, the resiliency that we've created by being able to absorb the bridge loss in Baltimore. But as most of you know, specialty is also about responding to dislocations in the marketplace, either from the standard line markets or by other specialists. And so we've demonstrated an ability to lean in to favorable market conditions, being responsive and growing profitably. We've illustrated just 2 lines led under our wholesale business with Mike McKenna, AXIS Casualty & Property. And we've grown our E&S Property business several hundreds of millions of dollars year-over-year. And at the same time, as evidenced by these -- excuse me, PML, we've been able to maintain strict discipline around our tolerance of PMLs. And we'll give you elaborate detail of how we've managed perils, geographic dispersion, limit profiles, just to name a few underwriting dynamics that we bring to market and safeguard our portfolio. This has translated into consistent improved underwriting performance. And we're proud of this continued journey that we've embarked on and acknowledge we have much more to do and much more to evidence. It's also delivered some strong RORAC results. We're doing this against a backdrop of a lot of substantial shifts, whether it be climate, the transition to energy resilience, the structural shift in my judgment in the E&S channel that has emerged and the inclusion of an ever increase in use of data and analytics to support risk selection judgments and sustainability around financial consistency. AXIS firmly believes it is well positioned to seize not only on these opportunities, but to support our existing franchise and capabilities. We have sufficient legal entities. We have sufficient writing papers. We have a multi-variant set of different distribution relationships. They allow us to make meaningful shifts when necessary to pivot in our underwriting model, something that we think is resonantly important for a specialist to be able to be agile to move quickly into opportunities. Our E&S business over the last several years has grown substantially on a compounded basis, evidencing one form of agility. We still believe the market holds a great number of opportunities, sufficient headroom for us to grow in our chosen products and markets. And we believe we're effectively capitalizing on favorable market conditions with a premium adequate insurance portfolio to be sure, but in a disciplined way. And transparently communicating where we are receiving. We've announced in the past public D&O. We've announced small cyber as 2 examples. We also announced new sources of revenue potential for our firm, new initiatives. Indeed, in our 24 operating plan, we have nearly $0.5 billion of new revenue sources coming into our franchise. Some of the initiatives that will support that are listed in the middle chart. Mike McKenna, who leads North America, has a number of investments that are going on right now. Seeds are being planted for future harvest, it will take time. They're responsive, they'll meet the market opportunity that we see and they'll be calibrated through a strong governance with our CEO office. And the partnership between Mark Gregory, who runs Global Markets and Mike McKenna is essential as we leverage those capabilities from our Global Markets platform into North America. My colleagues will make that clearer to you in terms of what those products are in specific form and how they coordinate that. We've made major investments in our talent, yes, to propel our strategy to bring new skills and capabilities that run contemporary to how we're running the company. All of these executives have signed on to this journey with a lot of passion, a lot of conviction to bring to bear their skills. Many of these colleagues come from companies with notable pasts. They're in support of our existing AXIS colleagues like myself. And so we're pleased with the partnership of our team, supporting these leaders or a number of other new teammates in a number of our operating businesses. And so we like the mix and our employee base. We still value our culture. We'll talk more about that later. And we're very proud of our turnover ratios, our employee feedback loops. We're not trying to have an entire new population of colleagues. So we're really proud about our mix here. I've mentioned How We Work. What I really want to pull out on this is really a couple of observations, I made one already. You've seen just an early beginning of us moving toward our aspiration by '26 of a sub-11 GA ratio, an aspiration. You've seen Pete and I referenced often what How We Work means. We've spoken to its expectation of enhancing our speed and agility, our ability to leverage data and analytics differently than we have in the past, simplifying our operating structures and delivering efficiencies. But equally, we have heard the voice of our customer, our brokers and our employees. We have a company-wide mailbox that allows all of our employees to make suggestions in the context of How We Work. It's run by Ann through the How We Work initiative. As you can appreciate, enlisting the voice of your team comes with, be ready to read what you hear. And so we have thoroughly enjoyed the commentary because it ranges from system-related opportunities to coordination opportunities to deepen our integration, a whole range of examples. We're a transparent organization. We encourage the best from our people. After all, specialty is about people. We do this, though, however, to generate shareholder value. We've declared already an aspiration of book value -- diluted book value per share. We've shown increasing flexibility in our capital. Our Board ascended to a second authorization request made by management. We've exhausted the first $100 million authorization. Pete will detail the exact timing. But I think more important than those factoids is, in the '24 performance year, management has aligned itself to shareholders more meaningfully as evidenced in our proxy, our long-term compensation, which previously was held at the Ex-Co level, in partnership with Conrad, our Chief Administrative Officer and the support of our HCC Board, we expanded that group of leaders, so that their long-term composition has the duality of restricted stock units and performance shares. And this at-risk income ties between 30 and is high as mine -- 30-odd percent, excuse me, as high as mine. And so we're trying to align interest more meaningfully. We've enhanced our performance management processes inside the organization, bringing much more data and much more specific employee objectives. That has resulted in a more rigorous process inside our organization. And yes, there's instances of zero short-term bonuses and as high as 200%. We're a performance management-based organization. Pete will go into specific detail. It's a wonderful explanation of how we're unpacking this walk. But this really is fundamental to how we believe we can achieve the book value aspiration that we've shared with you today, the multiple levers that we're going to be drawing upon to enable that objective. You'll hear about that at the end because we want to share with you first the businesses, their ambition, their excitement of contribution to this objective, and some specificity around how they're going to do it, and why they believe they can. Let me conclude with where I began. AXIS has a very clear aspiration is to be the leading underwriter. We have a very clear strategy to deliver on this aspiration. We're making investments that we'll detail for you. We'll size it for you. It's ambitious. Our How We Work program will be a critical foundational lever for us to draw upon as a company to affect the change that we want to change. You know our commitment in the book value per share category. But we want to do this together as an organization committed to a very straightforward set of objectives, with the recognition that we're a known brand in all of the markets we compete with strong specialist skills, an ever-improving service delivery capability, earning us more opportunities. One of our teammates is, oftentimes, using the phraseology of we punch above our [ fight ] weight. We're going to continue to do that. And you'll hear the capabilities that we're bringing to support that ambition. When we get to the Q&A, we invite any questions. I hope that these takeaways are felt by all of you as you leave. But equally, I hope you feel that you're working with an organization or you're observing an organization that has a common passion to build shareholder value, that believes passionately about the specialty line space, that believes that their practitioners that can walk and chew gum. We can cycle manage and can speak transparently and effectively about what we're setting out to achieve and why. And again, as Marty said, thank you for taking the time virtually and in our presence today. We appreciate your interest and we look forward to you hearing the rest of the presentations. Thank you very much.

Next up, we have Mr. Dan Draper. He is our Group Chief Underwriting Officer. This is actually Dan second stick with AXIS. Previously, he has been our Chief Actuary and Chief Analytics Officer. He's in charge of underwriting across our organization, including underwriting capital allocation. Welcome, Dan.

Thank you, Cliff, and good morning, everyone. Nice to meet you. So I rejoined the company in March 2020. And I'm overseeing -- or have been overseeing the build-out of the CEO office. So the CEO office has consolidated governance, data and analytics into one global team. So by that, we mean global product underwriting, underwriting governance, data and analytics, exposure management, pricing and portfolio management, reserving and capital and outwards reinsurance and retrocession. So why create a CEO office? My team is here to increase underwriting profitability and reduce underwriting volatility. Prior to 2020, AXIS had siloed businesses. Underwriting coordination across our platforms needed to be strengthened. And we've implemented a global framework to manage a single underwriting portfolio across AXIS and optimize the return on our underwriting capital. This has been enabled by 3 core principles: One AXIS optimized portfolio, One AXIS portfolio and product strategy or One AXIS governance. Starting with the portfolio, allocating underwriting capital, it's a lines of business based on returns to support our portfolio and cycle management ambitions, portfolio and product strategies designed to deliver complementary rather than competing portfolios. And finally, governance. Underwriting governance and performance management for timely and coordinated portfolio steering. The One AXIS portfolio mentality is the foundation of our underwriting approach. So we look at our portfolio, as you can imagine, through multiple lenses. But at the macro level, we think about the portfolio in terms of global products. So what I mean by global products, one property portfolio, one professional lines portfolio, one liability portfolio, one A&H portfolio, et cetera. And that's because through our platforms, we can access the same types of risk through multiple channels, multiple markets, multiple distribution. And we need to access that risk in a way that gives us a single product portfolio that ultimately diversifies and enhances our risk profile. This slide is an overview of the enterprise portfolio, and it's being positioned through successive actions over the last few years to improve the stability of our underwriting result. The graphic showed the mix of gross written premium over the last 12 months, and this is how my team simulates it by product, and you can also see it from each of our businesses. And it demonstrates the breadth of the specialty capabilities that we have. The chart. So if we go through this, you can see the 3 largest product groups are professional lines, liability and property. They each make up about 20% of the portfolio. The remaining 40% is split again in similar proportions between our other specialty offerings. To the right, you see how these products are then allocated to each of our 3 businesses. Mike and Mark for North American Global Markets will each talk in more detail about how they compete in markets and segments where our underwriting acumen, the franchises. Ann will talk about a refocused AXIS Re that's focused on profitability and to be a complement to the larger insurance portfolio. Disciplined portfolio management allocates capital to those businesses providing the best returns. Common assessment and ranking of all lines of business. We view our portfolio in a very granular way, hundreds of classes of business. Consistent evaluation of each class is the foundation on which portfolio management is built. It's all about ranking lines of business. We want to allocate more capital to the best-performing businesses, subject, of course, to portfolio management and our appetite constraints. To assess a line of business, we look at profitability, volatility, historic performance and market outlook. Profitability, the current profitability of a portfolio on a stand-alone and a marginal basis. Volatility. The propensity of a line of business to give us a large loss, and earnings loss or a capital event. Historic performance, the ability we've shown historically to be able to compete in markets and generate required profitability. And finally, market outlook, deployment of tools. It's not helpful to our underwriters if all of our metrics only exist centrally. Consistent evaluation of each class is critical. We want to support our underwriters at the point of underwriting to help them navigate the market. And we use data and analytics to make our underwriting more efficient, more accurate and more informed, more efficient, submission ingestion and triage processes, renewal efficiency, more accurate third-party data to augment our internal data, more informed risk-by-risk premium adequacy. Partnerships with each of our businesses. So my office is not a policeman to the business. It's an integrated operating model. We work with the business. We hold regular trading performance reviews. We discussed that with management and how they can manage their portfolio against our group underwriting appetite framework. Finally, review of market and peer portfolio data. We assess our own performance against the market and identify new and emerging trends, which may support profitable growth in the future. So my team coordinates and leads the cycle management activities in our company. These are some of the capabilities that we use, underwriting risk appetite framework, granular risk appetite frameworks across one global portfolio, supported by a consistent view of risk. Line size management, consistent line size management strategies built around managing our volatility. Product reviews, single management forums to review a class or group of classes in detail, support cycle management and strategy resetting. Premium adequacy and portfolio profitability. Premium adequacy is measured on each individual risk. It's monitored both ground up and top down and it enables detailed portfolio steering. Claims monitoring. Regular monitoring of claims KPIs with feedback into underwriting and portfolio management. Outwards reinsurance and retrocession, centralized reinsurance and retrocession, purchasing strategies in conjunction with the global underwriting appetite framework. This slide and the next slide demonstrates the impact of our efforts, excuse me, and the ability we have to reduce volatility and increase profitability. On the left, we show the reduction in average gross limit across 3 of our North American portfolios. You can see that the average limit has reduced materially and also to a consistent level. So the average gross limit for these portfolios is now mid-single-digit millions or below. On a net basis, this is low single-digit millions or below. We've also reduced the dispersion of our line sizes, which means through portfolio hygiene, we've removed large or outsized limits to minimize shock or unwanted losses. So what does that mean? It means we have portfolios with higher policy counts and lower average limit, and that's giving us the stability in our loss ratio that you're seeing through our results. And that's demonstrated by the graph on the right. So these charts describe the total loss ratio, the cat and the ex-cat loss ratio in the more recent years. On the top is the reported numbers, on the bottom is the normalized. When I say normalized, I mean we've removed reinsurance property cat, which we exited in June 2022. You'll see there's a marked shift in the stability of the loss ratio between the recent 3 years and the 3 years before it. So if we look on a normalized basis in the bottom right, you can see that the total loss ratio just has a range of 2.4% over those years, and the ex-cat loss ratio just 0.5%. We've also continued to allocate capital away from peak cat exposures as to reduce volatility and the impact of nat cat losses on both our quarterly and our annual income. Our property portfolio has reduced from 31% of the portfolio to 20%. And on the left, I show the modeled annual aggregate net loss from all natural catastrophe perils globally. And you can see it's reduced steadily across the curve through all years. So these graphs show the expected loss all the way through to the 1 in 250. And the impact of this is not just coming through our modeled numbers. So our market share of nat cat loss has reduced every year since 2018. It peaked in 2018. Our loss was about 1% of the market share. In 2023, it was below 0.2%, about 0.17% actually. Now for the quicker math in the room, you'll notice the PMLs are reducing at a much quicker rate than the premium volume. In fact, the premium volume increased between 22% and 23%. That's really for 3 reasons. As the property portfolio has shifted from a hybrid of reinsurance and insurance, to insurance only, our policies move away from heavy cat-exposed policies to all-risk property policies. And therefore, the property premium growth now doesn't translate to the same growth in peak cat PML. In fact, about 1/3 of the property premium we now write has no critical cat exposure at all and less than half has any hurricane or earthquake exposure. We're also very, very careful in how we deploy our limits. So I've just described on the previous slide, our average limits are very low, and we manage deployment of the limit in an incredibly granular way. We manage it by county, and we have caps by peril to prevent outsized losses. Finally, we have strong reinsurance support, which demonstrates the confidence that our reinsurance partners have in our underwriters and our portfolio management. On this slide, I'm demonstrating how we've used the concepts that I've just been talking about to deliver improved outcomes for our property portfolio. We've invested heavily in building a global property underwriting platform. So all of our property underwriters, no matter what office they are based in, no matter what distribution channel they use, will all access this platform. This is global portfolio underwriting. This platform is supported by granular and global underwriting risk framework, and it manages the capital we deploy as I mentioned at a county level, that manages both our absolute size of loss and our market share of loss. And the capabilities we've developed achieved 3 core aims. Wherever underwriter is based, they're always writing against the group portfolio. So when they make their underwriting decision, they make their underwriting decision based on the contribution that, that risk makes to our global portfolio, not just their individual portfolio. Also, the way the risk is assessed is always consistent, no matter what underwriter writes it, through which line or which office. It's always assessed according to the One AXIS view of risk. And finally, we empower our underwriters with data and analytics to be more efficient, more accurate and more informed. And we're reaping the benefits of this investment in innovation and analytics. So you'll see the statistics on the right. Our insurance property portfolio has increased gross written premium by 66%, but our market share of loss has reduced by 70% and our net loss ratio has improved by 29 points. For cyber, it's a similar picture with the same underwriting performance outcomes. Our premium base has grown, the aggregate limit deployed has reduced. We've pushed rates where required, and our net loss ratio has improved by 17 points. Again, we have a global cyber platform. We assess risk consistently across our global cyber portfolio according to One view of risk. We have a global underwriting cyber appetite framework, and this works for -- wouldn't have mattered where the risk is written. So to summarize, my core objective is to increase underwriting profitability and reduce volatility. We have a granular approach to portfolio steering and cycle management, and we're delivering steady loss ratios through a diversified portfolio that is much less susceptible to natural catastrophe risk. We've enhanced capabilities through global platforms, and of course, we are continuing to do so. With that, I'd like to thank you all for your time and your attention. And Cliff, I'll hand back to you.

We're actually going to take a short break, and we'll be back in a few minutes to talk about our business segments. Thanks. [Break]

Welcome back, everyone. Next up, we have Mr. Mike McKenna, Head of North America Insurance. Mike has had various roles and positions throughout his career, including Chief Underwriting Officer for the Global Specialty unit at the Hartford and Navigators Group U.S. Insurance segment. Welcome, Mike.

Thank you, Cliff. Good morning, everyone, and happy to be here today to talk in depth about the North America business, and I plan to focus on 4 themes during this time, leaning into the title that you see there, expanding our specialty franchise from the North American perspective. The first one is to demonstrate that we're positioned to profitably expand and build resiliency in this portfolio; secondly, talk about the market opportunity that exists to grow from our currently very strong base; third, how we're integrating strategies and winning strategies to support those aspirations; and then lastly, how we're utilizing the depth and breadth of the organization to support that growth. As mentioned earlier, and as we dive a little deeper, I just want to thank all of my colleagues in North America and across the globe for supporting this effort. Without them, obviously, this can't be done. There are a lot of talented people working very hard to help us meet these goals. With that, let's look at North America briefly. We're a $2.7 billion business with a diversified product offering across our property, casualty, financial lines as well as other specialty lines, including but not limited to marine, construction and environmental. We have a strong presence throughout the U.S. in our branch structure with major offices in Atlanta, Chicago, New York and Red Bank to name a few and we have a strong presence in Canada through our Toronto branch. Our product set targets specific risk types by underwriting appetite and also customer segments, measured in terms of revenue and/or premium spend. We're predominantly wholesale-driven with a smaller share currently distributed through the retail sector. We also have a complementary MGA division. We own leadership positions in our chosen markets, and we have a complementary set of industry specialists on the underwriting side, supported by a wide risk appetite as laid out by Dan. We're focusing on growing this market share by leveraging these deep distribution relationships across both the wholesale and retail channel. And lastly, we're making major investments across the business to meet the opportunity and the goals. Some of the aspirations to grow the North American franchise more substantially lends me to the next slide. We are participating in growing markets. As we operate in a more risk -- complex risk environment, the need for strong underwriting continues to grow to meet a rising demand. Our opportunity to increase our market share is depicted on this slide. We have a 2% market share in both the U.S. E&S marketplace as well as the broader specialty marketplace, gives us some opportunities. Some examples of opportunities for us, I'll point to the property market. It's a business, Dan detailed, has scale, but I see opportunity. We have a strong national footprint, we have history in the class. Market dynamics support our profitable growth aspirations. Changing weather patterns as a result of global warming are contributing to this rise in demand. We also see other market dislocations pushing historically retail-based commercial risk into the E&S market. And as always, we continue to see traditional Tier 1 cat-exposed business making its way into this marketplace. We are experiencing double-digit submission growth year-over-year, and we expect that to continue in the intermediate term. On the casualty side and specifically on the AXIS Casualty side, we see the casualty market reacting similar in dynamics supporting our growth aspirations, things like escalating litigation funding, fueling social inflation, which in turn is pushing out more nuclear verdicts is driving up the ultimate cost of goods sold for the market. Other factors as well are continued loss emergence from our peer group which is pushing additional market opportunity from the admitted market into the E&S. This obviously creates opportunities. Our strategy across our AXIS book is to continuously generate rate in excess of trend, continue on our shortening of limit strategy, which has been employed and is heavily enforced at the moment. And we're also looking at additional diversity on both types of risks accepted as well as geography within the U.S. Primary Casualty is a different story. We've experienced prolonged poor financial results. And as part of our commitment to steer, we have taken a different approach. We are reconstituting this portfolio by focusing on lighter classes, looking again at geography to bring this business back into balance and profitability. This has resulted in lost business, but we are okay with that as part of our portfolio steering. Another area we're leaning in is E&S lower middle market. We have set up a dedicated unit to handle lower premium volume accounts across the E&S property and casualty classes. These risks remain E&S and exposure, but tend to fall on the lower premium side due to their risk complexion. We're working hard with our partners to create avenues, to create transactional efficiencies and improve our SLA or our service level agreement standards that are industry-competitive currently, but we're working hard to continue to improve. Environmental is another area I'll talk about. We have new leadership. We're rewriting policy forms, and we're focused on our 3 main products and transacting in both the wholesale as well as retail marketplace. Financial Lines is another area. We're currently focused on the private company side and you see a deemphasis, as noted by Vince, on the public company side. We see opportunities to lean into certain sectors of the professional line space, including our design professional. We've also started some new businesses in the United States as well as North America over the last year. Inland Marine, we started in August 2023. We have 5 underwriters currently. It is a substantial marketplace with market opportunity for us in this specialty arena. We've also started a U.S. -- sorry, a North American construction as well as Ocean Marine segment in the first quarter of 2024. Lots of opportunity there for specialists to come in and really try to execute on our strategy. Speaking of execution on strategies. There are 3 dimensions depicted on this slide, picking attractive marketplaces to deploy capital, both new and existing, lean in when the market allows and continue to look at opportunities in displaced markets or also markets that are currently devoid of specialists, where we think we can add value and win. We will also continue to invest in the capabilities to support the existing and new business. That includes adding industry-leading talent to support our aspirations as well as leaning into the organizational structure to support new and existing businesses. We will continue to improve our underwriting rigor and our risk selection capabilities and we're going to work hard at maximizing productivity in order to keep our expenses in line. We do believe these are winning strategies that support our growth aspirations. Just looking at our current trajectory of premium, our business has grown. We see opportunities to lean in further and operate where consistent profitable growth is achievable. We touched on this, but I'll reiterate. Market share is there. We see areas of displacement where we can come in and make a difference, and we're operating in an improved organizational structure that support these plans. This will continue to drive profitable growth in the future. I'd like to now talk a little bit about our How We Work program, which is -- Vince detailed very eloquently in the opening, but I want to reiterate How We Work is foundational, all corners of the organization are focused on its principles. Simplification of processes across the underwriting network will enhance and enable additional growth with expense leverage in view. One example is working with Celeste and the operations leadership team to standardize things like workflows, submission ingestion and the way underwriters operate each and every day. Dan talked a bit about augmenting decision-making processes. This is a big endeavor for the specialty organization. We plan to continue to merge first and third-party data together to allow our underwriters to make better, more informed decisions at the time of the submission entry to get to market quick. Speed to market is important. Quite often, first to quote is the only market to quote and the only market to bind. It's incredibly important that we continue down this path as we move into different market segments and products. Capitalizing on productivity, I mentioned earlier, triaging of risks as well as prioritization of risks is incredibly important. So our underwriters and our teammates are only working on accounts that we think will convert. This will improve the overall leverage ratio. We're working hard with our partners on digital capabilities to work with the trading partners in order to support that. And with respect to trading partners, I thought maybe I'd show a quick video with some examples of how they like to hear about us. [Presentation]

Incredibly kind words from our trading partners and I thank each and everyone of them for taking the time to do that. Just as takeaways, I'd just like to leave you with a couple of thoughts, which are somewhat sort of repetitive from what you've heard from Vince and Dan, and I think you'll hear from others. We're positioning ourselves for this journey of growth and profitable growth. We're focused on how we work and the principles associated with that concept to not only leverage our cost, but also just give our underwriters a better experience as they're working in the organization. We're disciplined in our approach. We're led by underwriters. And we are -- we believe that we have the right team, we have the right initiatives, we have the right leadership and we have the right go-to-market approach in order to make this happen. So thank you all.

Thank you. Next up, we have Mr. Mark Gregory, Head of our Global Markets Insurance business. Mark has actually been with AXIS since 2010, where he's built our international presence through our Lloyd's and London Market business. Prior to coming to AXIS, Mark was CEO of Marsh Global Markets and Founding CEO of Bowring Marsh. Welcome, Mark.

Thank you, Cliff, and good morning, everybody. It's my pleasure to be here today to talk to you about AXIS Global Markets. I want to pick out really the overarching theme that Vince began this meeting with, which is that AXIS will be the leading specialty underwriter as defined very eloquently by him. And I'd like to pick out 3 themes as to why global markets can underpin that statement. First of all, we've already earned the right to be a leader in the London Specialty Insurance market. Secondly, we have a successful track record and a highly respected team in our marketplace. And thirdly, we punch above our weight in the specialty marketplace. So Global Markets is a glance. You can see this is a predominantly short-tail business written out of the London company market as well as out of our Lloyd's platforms. And last year or over the last 12 months, we wrote $3.6 billion of gross written premium. We operate in a subscription marketplace, which means that we effectively coinsure with the other carriers in the market. And for this to work, brokers rely on a few leaders who are able to price programs and come up with the right terms and conditions to satisfy the deal. It's crucial and it relies on the confidence of other carriers to follow those leaders. The leader requires deep underwriting expertise, and as I said, a good, strong following. And I'm pleased to say that at AXIS Global Markets, we are a leader across 8 major lines of business, which represent roughly 2/3 of our income, roughly $2.3 billion of leadership lines. Those lines include renewable energy, cyber, construction, credit and political risks, marine liabilities and FI. So why is that important? Well, we're not a price-taker. By being a leader, we control what we write, we control the pricing of what we write. We control how we set terms and conditions for the business that we bring into the company. As you can see from the other pie chart, we have a flexible specialty platform. We benefit from the huge diverse flow of business that comes in from all over the world, particularly from the U.S. into Lloyd's. We also have a crucial platform in Europe headquartered out of Dublin. We have our own specialty insurance company as well. And that brings us something absolutely critical, especially post Brexit where through freedom of services, we're able to trade openly and freely into the European marketplaces. We deploy our business strategically across these platforms. They tend to ebb and flow. We're always looking for efficiencies, but most crucially, we're able to satisfy client demand and broker demand for their preference, whether it be a Lloyd's deal or a company deal. As I said before, Lloyd's accounts for roughly half of our business. And I'm proud to say that over the past few years, we've built up a business that is a top 10 carrier by size and capacity at Lloyd's. That's crucial because it gives us relevance. Lloyd's also categorizes each of the syndicates into various categorizations based across a range of criteria. The top categorization is outperformer, and we were awarded that by Lloyd's some time ago. So we are in very good auspices with Lloyd's as well. You'll see from this slide that the London market has grown roughly 13% annually over the past few years. And we have purposefully grown ahead of the marketplace. We've built a market share of over 4% of the addressable market. And we've also focused on building critical mass across the core of products that we have. We're happy with our product range. And crucially, for us, to have an average premium of roughly $120 million and above across that product range, again, provides us with relevance in the marketplace. So we have a highly relevant share of the market, which we've achieved through deep underwriting expertise and, frankly, the depth of our relationships with our brokers as well. We know that we've outpaced market growth because we can see our share of wallet develop with our strategic broker partners. And we know that we've outpaced the growth with all of them, including Marsh, including Willis Towers Watson, including Aon and significant outpaced with Harden, which in itself is very much a growing business. Our focus is on value-creation for brokers, value-creation for clients through our products, through our platform, and I want to emphasize the point through our ability to lead the marketplace. You've heard a little bit about Syndicate 2050, and I think that's a very good example of how we're innovating and leading in the marketplace. We saw that the new social trend towards net zero is a huge opportunity for us. We could see that energy transition per se was driving increased demand for product, for capacity from the insurance marketplace. And that demand wasn't really being met adequately. We thought this through, we realized or we knew perfectly well that we are a leader in the lines of business that companies going through energy transition require, whether that's construction, renewable energy, marine cargo, credit and political risks. So we decided to seize the opportunity and take the market leadership to support those clients and their brokers on that energy transition journey. Our focus is specifically on solutions for replacement and displacement of assets, and we thought that London was a natural home for the business. Why? Because the Lloyd's ecosystem is a hub for expertise and capacity. And also because of the nature of that marketplace. By working with other carriers, we will be able to build our consortia on behalf of the whole market which AXIS will lead to be able to provide the required product solution and capacities to those customers. We launched the Syndicate 2050 on April 1. And I have to acknowledge that Lloyd's were extremely helpful in doing this. We actually got that business standing in 5 months. We were leasing -- I'm heavily stayed very closely with the brokers. And we started writing business from day one. There's a huge amount of interest in that syndicate. We're very happy with the business that we're developing. And we're also looking strategically with our broker partners at what comes next, whether it's carbon capture right through to already participating in the early signs of doing some green hydrogen energy facilities. So turning to how we execute on our strategy. I think I've already covered the first section. We are decisive, you can see that. We put our money where our mouth is. We have a flexible platform. We work closely with our brokers, and that gives us access to the attractive marketplaces that we wish to go to. We've got strong capabilities. We're a market leader, adding value. And I want to point out that we have very, very seasoned underwriting heads. Across all of our lines of business, we worked it out before coming here. All of our leaders have had an average of 25 years of experience in the marketplace and on average, 10 years experience at AXIS. I didn't include myself because I would have pushed it up a bit too high. So how we operate? Well, we're going to talk about How We Work. I'm going to talk about How We Work shortly, but that's fundamental to how we grow our business, as Mike has already pointed out. And I would also iterate some of the points that Dan made earlier, the key to executing our strategy is our close partnership with the CEO office, whether that's on performance oversight, and he went through a few examples of how that functions. And I have to say that, that performance oversight is ingrained in the culture and his team is not a policing team. It is a partnership team, but also data and insights that help us fix our appetite to manage and get through the market cycles effectively and really to be able to identify opportunities that are real. So our strategy enables continued GWP growth. We're going to continue to generate growth and how we're going to do that? We're happy with our core lines. We're happy with the business that we're invested in already. But there are always adjacencies. And we can see 2 big emerging opportunities through adjacencies right now. We've worked with Mike to build out the cargo and construction teams that he cited earlier. We're bringing global market specialty capabilities into the U.S. retail channel and capitalizing on Mike's capabilities on this continent, but we can also see an emerging protection gap in Europe. And we believe there's ample opportunity for us to working with our brokers and our distribution partners to distribute some of those products into that space, into the European space, be that cyber, renewable energy, construction, areas that we already lead. We can also see a huge opportunity. It's not emerging, it's already happening with the flow of broker business into the broker facility channel. This has to do with market efficiency. We already have an established brand and a capability in that space, but we see more and more of that business flowing in. And where we're able to adopt adequate controls, we can see that as a huge opportunity for growth for us with a low-touch, low-cost model. I referenced before that How We Work is fundamental to what we do. And I'll give you some quick examples so as not to drain this slide. It gave us rapid and efficient creation of new business. That new syndicate at Lloyd's, we stood it up in 5 months. Thanks to Lloyd's, thanks to the How We Work program at AXIS. Crucially now, as the London market digitizes and you're all aware of Blueprint Two and what's coming down the track, it gives us enhanced connectivity with our broker platforms in that digital environment. How We Work has also helped to create an enabler for us to pursue that low-touch, fast follow underwriting model that I've referenced already. We also rationalized our geographic footprint. We have come away from some low-scale markets. We've managed to retain the business as we've moved away and re-diversified. And we've been able to refocus our energy on areas and our funds on areas that have effectively creates -- give us an opportunity to create better value. So we're going to hear from our brokers again. Please play the video. [Presentation]

Well, my thanks to all of those guys especially to the inimitable David Harrington. I recommend a breakfast with him many day, we'll lift your -- the rest of the day for you. But I want to go back to that statement that Vince opened up with, which is that we want to be where our aspiration is to be the leading specialty underwriter. And I hope that, in the last few minutes, I've given you some indications as to why we are already earning that moniker. We have a highly respected team and a successful track record of profitable growth in global markets. I believe we punch above our weight in the specialty marketplace. We invest in our talent and our capabilities. We're vigilant to market opportunities. And frankly, we have the courage to pursue those opportunities with the support of a very, very strong leadership team in this firm. We've already committed to earning the right to be a leader in the specialty insurance market, committed to delivering consistent growth. And I think I'll leave it at that. But thank you very much indeed for your attention.

Thank you, Mark. Next up, we have Ms. Ann Haugh, and is Head of -- CEO of AXIS Reinsurance. She has served in several leadership roles at AXIS, including President of Global Property and President of Global Markets Reinsurance and joined AXIS from Thomas Miller, where she was COO and prior to that, held executive insurance leadership positions at underwriting operations and strategy at Aspen, Zurich and Arch. Welcome, Ann.

Good morning. Thank you, Cliff, and thank you all for taking the time to join us here today. I'm really pleased to be able to talk to you about AXIS Re. And as I take you through our business, I'd like to highlight 3 key messages: first, AXIS Re is a global strategic diversifier for AXIS, focused on consistent bottom line results; second, our deep market-leading expertise, broad specialty product set, distinct value proposition and integrated operating model enable us to proactively cycle manage and steer our portfolio. And through our relentless focus on underwriting and service excellence and our continued investments in our talent and our capabilities, we are committed to delivering a low 90s combined ratio across the cycle. So let's take a look at AXIS at a glance. AXIS Re has been moving from strength to strength over the last few years and has cemented its position as a specialist reinsurer and as an integral complement to the AXIS hybrid value proposition. We've continued to progress our global leadership as specialists and our strategy, as you can see from the left pie chart where we are -- 65% of our $2.3 billion in premium written over the rolling 12-month period is from our specialty lines. You'll also see we define casualty as general liability and professional liability. And then you can see the definition of our specialty lines. I'll draw out a few, accident and health, credit and surety, cyber and A&H. We operate on a global basis with more of a weighting toward the mature lines. So in North America, we're 66% and in Europe, Middle East and Africa, 25%. And you can also see we're growing with the overall global market with 3% in Latin America and 6% in Asia and continuing to grow, bringing our products and solutions to those markets. As has been mentioned earlier, and we've seen some videos of our key trading partners, relationships are one of the key cornerstones of success in our industry, and we are proud and grateful to continue to grow our business alongside our long-term partners. Our broad and deep client relationships across multiple lines of business are key differentiator for AXIS Re. We have over 1,100 treaties with 680 distinct clients. 76% of our business is written with clients, we have more than a 10-year relationship with. And in a broker survey conducted just 1 year after our property exit in August of 2023, we were recognized with a 51-point improvement in our broker satisfaction Net Promoter Score. Also in that survey, we were ranked in the top 2 quartiles defined as best in the market or better than most in the following categories: responsiveness, speed of decision-making, clarity of underwriting appetite, and knowledge and expertise of the markets and products in which we operate. These results, combined with our execution excellence, are driven by our talent. You've heard a lot today about talent. And I'm equally as proud and pleased by the talent within AXIS Re. We couldn't achieve what we've achieved so far in the last few years without them. They're seasoned, they're diverse and they're market-leading experts. So like our client tenure that I'm incredibly proud of, I'm also proud of our underwriting and global team here at AXIS. Long-standing colleagues complemented with industry experts and newer talent that has joined our team. So let's talk a bit about our specialty focused portfolio. Our strategic shift to advance our global leadership in specialty lines, to reduce the volatility, but also deliver a high-quality portfolio is evidenced by the progress we've achieved over the last few years. Here we show 2021 through 2023, utilizing 3 levers. First, proactive cycle management; second, specialty growth; and third, third-party capital. So let me break those down for you. First, proactive cycle management. For us, that took a few forms. First, we optimized the portfolio by exiting nonperforming lines of business. We exited engineering in 2019. We exited property and property cat in June of 2022, and we exited the aviation line in December of 2022. As you can see, these lines now make up at the end of '23, just 3% of our portfolio from 25% back in 2021. Then we strengthened the foundation of our portfolio. We raised the bar on technical margin hurdle rates across all our lines of business, and we reduced the lower-margin business in our portfolio by over 50%. Specific example is in motor quota share, we reduced by 48%. Now on casualty, while GL and PL are clearly a very important part of our portfolio, our view of the market environment there remains more cautious due to trends, social inflation, ceding commission levels, some of those characteristics highlighted by my colleagues earlier this morning. So we did 3 things. First, we reduced our U.S. exposures in our international casualty book by 25% to 30% through April 1 of 2024. Second, in North America PL, we reduced the premium from 24% in 2021 to 2023 in areas such as public D&O, another area referenced earlier this morning. And across North America GL and PL, we executed a very tight limits management strategy with average limits reducing by 22% over the period. The second lever is we grew specialty. So how did we do this? We maximize the market conditions, and we grew the hurdle rates and the metrics met or exceeded our expectations. We also diversified the underlying portfolio with new cedents, with new products, a mix of business. So for example, from 2021 to 2023, we delivered 21% compound annual growth rate in agriculture, 15% in mortgage and 42% in credit maturity. We also grew specialty by attracting new talent. This talent opened new doors in terms of their product and geographical backgrounds, but also their different expertise and relationships within the market. I'll touch on a few examples. North America Surety, our colleague, Mike Gregory joined us in September of 2022. Our portfolio was about $27 million in premium. By the end of '24, that will double and actually with a lower risk, better balanced portfolio with fewer national surety writers and a better balance of middle market and smaller surety writers as well. In marine, we brought in a new leader, and we brought in a new lead underwriter. And they've generated from January through May this year, an increase in submission flow of 19% and contributed growth to our portfolio. We also created a global credit business in the summer of 2022 under the leadership of Michael Silas, driving all our reinsurance credit knowledge under one team, one to drive efficiency, but I would say even more importantly, to maximize our expertise in our expansion efforts, which you can see is bearing fruit in the numbers I just shared with you. The third lever is we selectively utilize retro and third-party capital investment, such as Monarch, which has been mentioned in previous earnings calls, and this really gave us the capital flexibility to be able to accelerate the growth of our specialty strategy while managing our volatility. So in summary, these efforts have resulted in a mix shift in the portfolio, as you can see across the pie charts from 40% to 49% to 60% aligned to our specialty strategy. This mix shift has and will continue to deliver the diversification, the reduced volatility and will ensure resilience in our results which is critical to achieving the core profit contribution and the consistency we've committed to. So let's move to the market opportunity. It's a vibrant market opportunity in the reinsurance space and the industry growth trajectory indicates that will continue. AXIS Re is a small but very meaningful player with significant momentum to continue to increase our relevance, our footprint and our market position, particularly in the specialty lines. Two examples to highlight. The credit and surety global market has grown 22% per annum over this period. With a current market share of just 2%, we have strong profit runway ahead. In agriculture, the global market growth has been at 10% per annum and will continue to grow driven by food and security and by the need to close the protection gap. With a market share of just 1.7%, we have ample opportunity to continue to grow and diversify our portfolio geographically. So we continue to increase our relevance by growing shares with existing cedents, by growing existing products and new geographies, by new products such as structured credit and political risk and our credit maturity team and by investing in new talent. Our distinct value proposition and service-orientated approach are key differentiators for us in AXIS Re. First, we're strategic risk-taking experts, providing innovative solutions and thought leadership capabilities that enable us to be a quoting market that structures and leads complex specialty transactions. We're selective when we lean in to our client and broker evolving needs to deploy meaningful capacity and to provide alternatives and bespoke solutions. Through our market engagement and our visibility out with our clients and brokers and in the media, we highlight our market trends, and we shared some of those thought leadership pieces. We most recently put out a paper on cell and gene therapy claims in the accident and health space written by our Global Head of Claims, Nicole Guerin. Second, our deep market expertise and access along with our global reach allows us to target agile in an agile way, our expansion. One of the areas that Dan highlighted earlier was cyber. We saw a growing market opportunity in the cyber reinsurance space. It's complementary to our strategy and aligned to and complementary to our insurance portfolio and with strong economic hurdles. So we worked with Dan, we pivoted nimbly and quickly to capitalize on that market opportunity. And so from a very small base, we grew by year-end 2023 to $96 million in cyber, and continuing to grow that portfolio in 2024. Third is our strong franchise value with our clients and brokers. Through our clear risk appetite, consistent reliable execution, we reinforce the deep knowledge we have of each of our individual clients, and we're known for the ease of doing business and for that deep expertise. And fourth, but no less important, our highly efficient and integrated operating model. We operate as one global team around the world. And everything from underwriting to pricing, to claims to operations, we utilize the same integrated systems, and that allows us to remain lean and agile as we adapt to the ever-changing market environment. So as highlighted, we've been executing on our specialty strategy over the last few years, and we continue to elevate our relevance across multiple platforms as we are a global business, and we do that through proactive engagement. We lean into our core strengths and capabilities to leverage our competitive advantage. Key to our competitive advantage is our focus, is our clarity, our responsiveness and our consistency and execution. We're not trying to be all things to all clients at AXIS Re. We strive for excellence in our chosen products and markets and to bring value to our partners. Our core strengths and capabilities are our talent, our integrated service model and a rigorous performance management culture. And in collaboration with our CEO office, the rigorous performance management culture really comes to life through our global teams with KPIs that provide confidence in the health of the business. We use leading and lagging indicators to inform our selection to analyze transactions, to price our business so that we can dynamically construct a portfolio while monitoring actual performance versus expected. That culture, combined with our global service capabilities and the talent we've brought into our organization and that we've had deeply within our organization over the last few years that leading expertise is what brings it all together for us and allows us to be that value-added partner. I'll touch on a few other levers before I go into How We Work that we do lean in to accelerate our efficient cost structure. Within AXIS Re, that allows us to pivot swiftly with marginal incremental cost. I talked about our third-party capital partner, Monarch, but we continue to look to attract additional partners. That provides us the flexibility to grow our growth portfolio while managing our net. It also generates substantial fee income, which also benefits our financial results. How We Work. As mentioned by my colleagues, it's one of the key enablers that will help us elevate who we are and what we do, how we go to the market. It will enable us to increase our speed and our agility. And it's just a critical part of how we operate every day at AXIS. I'll touch on reinsurance first. For us, it means 3 things I'll highlight here. One is simplification and prioritization. We continue to innovate, simplify and enhance our front-end tools, the processes and the management information that we utilize to ensure robust steering of our book at the front lines at the fingertips of our underwriters. We enhanced the claims handling process with added emphasis on faster and accurate claims assessment and settlement. We talked a lot about data and analytics today. We leverage data and analytics to triage deals so that we can decide what pricing approach is most appropriate, be it fast track, be it complex to ensure that we're quoting to the market in a timely manner and to be able to actively offer alternatives or solutions that might be appropriate with a given client. We invest in enhanced portfolio management tools. They allow us to leverage insights into the portfolio into risk selection and into the market. We have a great example in marine, where we use a tool that captures aggregations, and that enables us to evaluate the risk contribution to mix and sizing prior to signing on to the deal. And it's about efficiencies and productivities as well. We are laser-focused within reinsurance on achieving an efficient expense ratio below 4% and with a keen focus on continuing to enhance our client and broker experience, increasing that efficiency, productivity and accuracy through our end-to-end process is simply critical to continuing to raise the bar on our service. As Vince mentioned, I am the Ex-Co leader for How We Work at AXIS, a true privilege alongside my colleagues. And we're working collaboratively together to focus on increasing our competitive advantage and differentiation as well as to strengthen our execution in the market. Investments such as AI, digital, data and analytics, new technology and talent and through building new capabilities such as digitally enhanced processes that will drive efficiencies and productivity gains throughout our business and enable the scale and growth that my insurance colleagues have shared with you today. I thought I would then show a brief video as we have with our other teams to highlight a bit more about how the market, the broker market sees AXIS Re. [Presentation]

So in summary, I'd like to bring us back to the 3 key messages that I started with. AXIS Re is a global strategic diversifier for AXIS focused on the bottom line and delivering that bottom line and financial results consistently. Our deep market-leading expertise through our talent, our broad specialty product set, the distinct value proposition that I highlighted in our integrated operating model globally enables us to continue to proactively cycle manage and steer our portfolio, which I think our results have proven over the last few years is really starting to bear fruit. And through a relentless focus on underwriting and service excellence combined with continuing to invest in our talent, training, development and our capabilities across the organization, we're committed to delivering the low 90s combined ratio across the cycle. Thank you. Cliff, over to you.

All right. Batting cleanup today, we've got Pete Vogt, our CFO. They beat someone that you all know pretty well. He's been our CFO since 2018. He actually joined AXIS in 2010 as COO of AXIS Insurance. Prior to coming to AXIS, he was CFO at Penn Mutual and also CFO at Cigna's Group Insurance business. Pete?

Thank you, Cliff. Good morning, everyone. First, thank you for coming. Very excited to be here in front of you today to talk a lot about where our strong financial position is as well as talk to you about how all the work that our business leaders are doing are going to translate into our goals over the next few years. Let me take you back to where Vince started. Our aspiration over the next few years is to grow book value -- diluted book value per share adjusted for dividends in the mid-teens. As Vince noted, actually, in our proxy, you'll see that long-term incentive plan for the executives has that goal set at 15% for the next few years. So how do we do this? I'm going to walk through some building blocks here that Vince actually laid out, but I'm going to go into a little bit more detail for you to go through each of these building blocks. As you can see from 2018 to 2023, compounded for growth was only about 3%. So how do we get to 15%? It's really built on a number of items. First and foremost, lower volatility in our loss ratio. Dan spoke about this and showed you some of the dynamics that we're looking at and the data and the analytics we're looking at to make that happen. From 2018 to 2022, our average cat loss ratio was 10.3%. That double-digit cat loss ratio very much cut into our underwriting profitability. We made the decision to rightsize our property book. As Dan showed, property was 31% of our book in 2018. We made that decision. And as of today, property is 20% of our portfolio. So much more reduced volatility that should allow underwriting profits to come through. But more importantly, we decided to make that change by focusing on the insurance business. And as Dan focused on it and told you what we've been able to do there is reduced our average limits so that today, our average net limits in our E&S portfolio, for example, is less than $2 million. It's actually $1.7 million as of the end of the first quarter. And we've been able to grow that portfolio with the analytics that we have at the underwriters' fingertips to control aggregations all the way down to a county level. And we've also, given the market, been able to actually grow that portfolio by not adding as much peak cat risk as you would have expected, and you can see that through the results of the PML that we have out there. And lastly, I'll say what's very important to us then on the insurance side is our outwards reinsurance purchasing. And as many of you know, our property program for the insurance book renews mid-May. We usually talk about this on the second quarter call, but let me tell you a little bit about how it renewed. We renewed our property program in insurance with the same event limit that we had last year and the year before, and that's a $100 million event limit. We also renewed our E&S property quota share at 40% with improved ceding commissions and improved terms and the same with global property. We renewed that at the same terms and actually some better terms and conditions. So as we enter wind season, we feel very good about how we've been able to structure our property PMLs and our property book to handle volatility going forward. But it's not just property on the loss ratio volatility. It's risk management on the rest of the book. And where does that come from? As Dan showed you, we've been able to cut our net limit size across the book over the last 5 years. So today, we're much more less impacted by shock losses. I would also tell you that the book has grown. So we've seen the growth while the limits have reduced. That has made the portfolio overall much more resilient. And we can give you a data point as we stand here today on how we think about that and how you can see it because in the first quarter of this year, there was the unfortunate tragedy of the Baltimore bridge collapse, an outlier event, you can call it, it's expected to now be probably the biggest marine loss in the industry, yet we were still able to report a 91.1% all-in combined ratio for the company and an 86.6% for our Insurance segment. That shows the resiliency of how we're managing the book today to be able to handle some of those losses as they come along. Second, as we think about enhanced GPW growth, as we grow the book, you've heard from our business leaders today, one, they're leaning into what is still a very favorable market and very price-adequate. But beyond that, we're planting seeds for future growth in various areas. We heard about Syndicate 2050. We've heard about lower middle market in North America, bringing capabilities from London to the U.S. in construction and Ocean Marine as well as new leadership in environmental products and E&O products. These are all seeds we're planting today to allow for future growth. Third, expenses, something that we can control and that we're committed to. As Vince mentioned, our aspiration is to get our G&A ratio, which was 13.5% last year, down to below 11% by 2026. Next, capital management. As a team, we look at where we deploy capital into our products on a very consistent basis, very much run centrally through Dan's organization and the CEO, and we look at all the business units and major product lines on an expected return on risk-adjusted capital. We rank and stack all the product lines and all the business units. And we push capital and drive capital talking with our business leaders about the market opportunities to those products that are producing the best returns. We look at the products that are producing the worst returns and ask ourselves, what are we doing to improve those? Is it pricing? Is it terms and conditions? Or is it size? Is it an expense problem and we need to get more scale in some of these businesses. But that process happens consistently. We look at it on a detailed level every quarter to make sure that we're moving capital to the best return we can on the underwriting side. And then lastly, the investment portfolio. As we saw at the end of the first quarter, our overall portfolio yield was 4.3%, and the market yield was 5.6%. That's 130 basis points of potential tailwind for us. I don't have a crystal ball. I don't know where interest rates are going to go. As a matter of fact, most of the experts are telling me they're not sure whether they're going to go up or down. But we do know that right now, there is an opportunity to drive our investment income higher given the spread between our book yield and the current market yield. A matter of fact, as we sit here just 2 days ago to update those numbers, our current book yield is 4.4% and the current market yield is 5.8%. So we've got about 140 basis points delta still between those 2 numbers. And I would point out that we've got some investment leverage. Our investments to shareholder equity is a ratio of about 3.4%. So for every 100 basis points we can gather of additional yield that should be able to yield an additional 340 basis points in approximate ROE. That is how we plan to walk from what has been a very low single-digit growth in diluted book value per share adjusted for dividends to a double-digit mid-teens growth in that number. So let me go into just a little bit more of the particulars. You've heard a lot about How We Work. I will tell you that How We Work is a very integrated and robust framework for us to review actually how we work each and every day. It is not just an expense initiative. It is very much looked at as 3 aspects. The first aspect, how are we redesigning processes and approaching the market to grow better, to be able to put more business on the books. So it's about growth. Second, it's about data and analytics. How are we changing processes and how we operate to get more information quicker to the underwriters on the front line to the claims people as claims come in to actually make decisions quicker, better and faster. And then lastly, the third part is reductions in G&A. How can we actually bring our expenses down while we're delivering the first 2. Over the last year in time, we've had over 200 initiatives. It sounds like a lot, as I think Ann mentioned, we've got a mailbox where employees are allowed to send ideas. So those 200 initiatives range from very small to large. On the large side, one thing we did last year is we rationalized all of our BPO partners. We consolidated them down. So not only do we get better processes and redesign processes that are better and faster, we got better expense outcomes because now we've got scale with fewer BPO partners. It's one example of how we can get better at working while also saving money. But what else are we doing? One of the things we've been able to do to grow in the E&S property market is we've redesigned the E&S property process on the front end. So now we've got automated clearance. As Dan mentioned, as we look at property, the property underwriters globally, so in London, in Alpharetta, in New York, get to see what they're doing to our portfolio together so that we don't risk putting a line down on the same property in London as we see it in Alpharetta. Because as you all know, these quotes tend to go to multiple locations from our broker friends. That is allowing us to be quicker with responsiveness to our brokers with the confidence of the pricing that we're putting out there. In our claims department, Megan Watt under her new leadership, we've set up a new specialty complex claims unit that is allowing us to handle those complex claims in a more focused manner, which is going to produce better outcomes in the long term. And we continue to modernize our core systems. On the insurance side, we have 2 very much core systems. As you heard from Mark, we will participate with Blueprint Two in London. And in the U.S., our core system is Duck Creek. We are continuing to enhance and invest in that system to give our underwriters and our claims folks, all the best information as well as being able to do their tasks in a much more efficient manner. Let me move on to our reserving philosophy. Our reserving philosophy remains the same. We will be quick to recognize any negative trends that we see, and we will be slow and require a high level of confidence before we take any action on positive trends that we see. The new integrated framework that we have is very much an underwriting foundation framework, where we actually have our claims department, our pricing and reserving actuaries and our underwriting leaders, all participating in the process with senior management as we review all the information available to us every quarter. This just doesn't happen on the quarter, especially with the new focus on it with our claims department with Megan Watt, they're interacting with the underwriters all quarter to let them know what they're seeing, what's impacting terms and conditions and what they're seeing in the markets with regard to claims outcomes. But on a quarterly basis, we are actually in an integrated fashion, running this from an underwriting lens. And the reason I say that is it does not only impact what our loss picks are for our reserves. It goes right through and impacts what our thinking is with regard to premium adequacy at a line of business level. And therefore, what we think about pricing at a line of business level. So that what we're learning as we're setting reserves is what we're impacting on the front lines as we're continuing to quote business. We've also continued to invest in this process. Last year, we implemented a new system in our reserving area to help our actuaries be more efficient and actually have more data and analytics to look at. And we'll continue to evolve these processes and enhance them because they're so important to our outcomes. And lastly, I'd say, as we think about year-end, the process that we went through was very robust and full process, and we feel confident about the reserve actions that we took at year-end. When we took those actions, we took into account a full study that we did with our claims department. And we also acknowledged and took account of what we're seeing for social inflation across the industry as well as the longer development patterns. As we closed the first quarter, we looked at all those assumptions with all the data that we had in front of us and information. And based upon that data and information, we saw no reason to change our ultimate loss picks on those casualty and liability lines at the end of the first quarter. Capital management. I'll talk about this slide, I'll call the left side and the right side. On the left side is what is our toolbox for generating capital. I've talked about this on calls before, but we do look at it as a toolbox. The first and most important generator of capital is obviously our net income. And right now, we're generating solid net income to actually grow our capital base. But we've also been very, I'll call it, adept at other ways of generating capital to support the growth in our business. And we've done this through a variety of ways. First and foremost, we were actually very active in the ILS market with some very solid partnerships where we use their capital to augment our capital to support the business. We do this very much on the reinsurance business, and that has allowed our reinsurance underwriters to put out larger limits and provide more capacity to their brokers and clients with us being able to share that risk with some of our ILS partners. We have a variety of vehicles, and we've been very agile at being able to set these up. Secondly, we've used property cat bonds in the past. And most recently, in the fourth quarter of last year, we launched a cyber cat bond. We've also used loss portfolio transfers in the past. We look at these as a real tool to help not only reserve risk management, but a way of actually utilizing it for capital management because they free up capital that would otherwise be locked in older term reserves. These are various ways that we've actually completed, but we think about what our capital stack is. And then obviously, last would be our debt and preferreds. Today, our debt is below 20% of our total capital and debt plus preferred is in that mid-20s range, and that is much better than where it was in prior years. So we feel very confident about that. It's much more fun to talk about is what are the uses of capital. Well, the uses of capital, first and foremost, are into our business, cycle managing our business and driving it into profitable growth. I won't reiterate everything that my colleagues spoke about. But right now, we have lots of opportunity to actually invest our capital in the business. We're still continuing to see good opportunities in the E&S property space. Our London business continues to grow and is very price-adequate. We have the new syndicate with 2050. And we continue to expand new lines that everyone's talked about, I just talked about a few minutes ago, and those seeds are planted, and they will use capital as they continue to grow. We continue to invest in our capabilities. This is important because we're using our capital to actually grow ourselves. Our capabilities are getting better. Part of that is talent. So we brought new talent into the organization. And part of that is capabilities and data and analytics. And some of that is what Dan showed you on his 2 pages of what's available at the front end for the underwriters. As we look over the next couple of years, I can tell you that we'll be spending over $100 million in the next couple of years investing in capabilities that includes people and technology and analytics. Lastly, capital returns. We have a very solid and stable dividend that we provide to all our shareholders. But in addition to the dividend, management requested and the Board authorized a $100 million share repurchase program in December of 2023. As I told you on the first quarter call, we used $62 million of that authorization in the first quarter. I can tell you today, we have exhausted that authorization and have bought back the full complement of $100 million from April 1 until today. Again, management went back to the Board and requested authorization for another $300 million, and the Board authorized that 2 weeks ago. What I'll tell you is the $300 million is open-ended. It does not have an end date on it. Management's first focus is continue to grow the business, and so we look to put capital to use in the business first and foremost. Therefore, we look at this new authorization as being very opportunistic. And our use of it will be very much dependent upon a variety of factors, including our results of operations, our market conditions, economic conditions as well as others. And then lastly, we could use capital for inorganic opportunities. What I'll tell you today is we see lots of opportunities organically, and so the bar for any inorganic opportunity is very high. Our investment portfolio continues to be very well positioned and supports our underwriting strategy. It is a high-quality portfolio. It has an overall A+ rating. It's got a 3-year duration. As I mentioned, the current book yield is 4.4% and the current market yield is 5.8%. So we've got about 140 basis points there. Our expectation today is we're at about 16% risk assets. Our range is between 15% and 20%. As we look at risk assets today, spreads are awfully tight. So we're not necessarily leaning into them, but we do have dry powder for when we see dislocations in the market as they may occur over the next few years. And we would expect to be able to use that dry powder when we see those dislocations. Let me summarize what we've talked about on how we are going to create value for our shareholders. One, what we can control, the aspiration of driving our G&A ratio down to below 11%. We were going to do this through not only efficiencies and productivity, but again, How We Work, so we will deliver growth as well as expense reductions. And as I mentioned to you on the first quarter call, we do expect our total G&A dollars in 2024 to be lower than what they were in 2023 based upon many of the actions we've already initiated and implemented. Our tailored investment strategy will continue to support our underwriting platform, and we expect investment income to continue to grow. As we saw in the first quarter, investment income was 25% higher than the first quarter of 2023. The stability in our underwriting margin should be vastly improved from where it was from 2018 to 2022, for example. We continue to see real progress in being able to bring that down, as Dan said and showed you on his chart, when we reframe exiting the reinsurance property and cat business, it does get much less volatile. We continue to drive a disciplined growth in our underwriting areas. This is very much a collaborative effort between the business leaders, the office of the Chief Underwriting Officer, Vince and myself working together to make sure we're investing capital in those areas where we believe we can get above our long-term expected return in the business. And lastly, this is all supported by a very strong and healthy capital position that will allow us to take advantage of the opportunities we see, which is why we feel very positive about the growth ambitions that we have in the business and the seeds that we're planning. Me finish by going back to where Vince started and reiterate what he mentioned. AXIS today has a real aspiration to be the specialty underwriter with unique capabilities and a global platform. We plan to do this with the business strategies that we've laid out for you today, while also continuing to invest in our future. And we believe that this will drive profitable growth and sustained share creation for our shareholders. So with that, I'll pass it back to Cliff, and thank you for your time.

We're just going to take a very short break. We're going to just restate here for Q&A. So we'll be back just a few minutes. [Break]

Welcome back. Now is Q&A. [Operator Instructions] I just want to let you know if there are really difficult questions, we have rest of our AXIS team to help us up. We have Celeste Cook, our Chief Operating Officer; David Phillips, our Chief Investment Officer; Megan Watt, our Chief Claims Officer; and Stephen Lord, our Chief Information Officer. Thank you. Yaron.

Yaron Kinar with Jefferies. I want to start with a question on PMLs, just catastrophe risk management and whatnot. So clearly see a very significant reduction in peak zone PMLs. But how are you thinking about to see the secondary risks and particularly, I guess, the severe convective storms, as you're growing in property and insurance, doesn't it ultimately add to some of that maybe lower. Well, I don't know that I shouldn't necessarily call it lower risk anymore, but maybe not the peak zone risk. How do you think about that? How do you manage that?

I'll start and ask Dan to cover it as well. I think in the presentation that Dan conveyed, he showed you sort of the tools that we're using to examine where we're placing our capacity, the limits that we're attributing it to, all of that is contemplative of the difference between pure hurricane risk and SCS risk, secondary risks. And so if you look at how we're dispersing our capital, where we're writing in zones, we gain a lot of comfort. Dan can tell you with some level of specificity what that looks like today.

Thanks, Vince. Yes. So we -- although I spoke about the peak payrolls, we have exactly the same amount of rigor across all payroll regions. So I understand you're thinking -- if you thinking out of that, are you moving into other secondary peril-prone areas, is not that case at all. So we're still as judicious with the way we're deploying limits. Our grander appetite framework means we're not -- we don't have undue concentration. And we have exactly the same rigor around severe convective storm as we do hurricane, et cetera. So I have a very good team in Zurich with academic backgrounds in weather in these systems and they set our own view of risk to manage those accumulations.

And then my follow-up for Pete, probably. So you're targeting an 11% or lower G&A ratio by 2026. You said that you have about $100 million of investments in platform and systems the next couple of years. Can you maybe talk about how much of that is in the G&A ratio today? And whether there's any lingering impact of that $100 million that is still in 2026? And you believe that you'll achieve that 11% or lower G&A ratio, even with some of those investments, is that the case?

Yes. So I'll take this, Vince. When I think about it, Yaron, the $100 million is over the 3 calendar years. And so some of it is already in 2024 in what we're doing. But then some of it is a ramp-up of new capabilities in '25 and '26. And we expect that, that will be paid for by what we're doing on the other side, where we're actually redesigning our processes and running more effectively. So it's not just a matter of bringing down expenses. We'll bring down expenses more to be able to invest in those new teams and new capabilities as we go along.

Brian?

Brian Meredith with UBS. I want to talk about another line of business, some of us think about is cat almost, right? that is cyber, right? You're reducing your exposure to the small middle market, but you're growing on the reinsurance side. Maybe you can talk a little bit about how you manage aggregation in that line of business? Is there like a metric like a PML we can think of, something I know going to the annual meeting at Berkshire Hathaway Buffet talked about, right, as being a big concern of his. How do we get comfortable that, that's not the big cat for you all coming forward? .

So we have the same catastrophe modeling capabilities across our credit products, cyber products and property. And when we think about cyber, while we haven't revealed or publicly stated what those P&Ls look like, I can assure you that the measurement of them is certainly known by us, the degree to which we're willing to tolerate that peril as a risk in our overall portfolio is quite measured. And Dan, you may want to speak additionally to some of the tools that you're using to help quantify that?

Yes. Thanks, Vince. So again, very rigorous approach. So you've heard Ann talk about how they're growing from a low base, some of their cyber but it's a hybrid portfolio. This really demonstrates our hybrid capabilities. So we have the same data standards across the platform. We have a global accumulation system, a PML model. We spent a very long time going through a detailed threat framework that we use. The key is the discipline around data and in insight before we write risk. So we have very strict requirements on data and our ability to understand the risk before we put pen to paper.

And Brian, not dissimilar from the answer to Yaron, around why we feel we're on top of the changing catastrophe profile of property losses with secondary storms and other complexions of change in terms of how those are coming about. Ann mentioned loss caps. She mentioned a collateral relationship with the COO's office around aggregation making sure that we don't have concentration risk. And so that's fairly well understood, fairly well differentiated and underwriting appetite, all centrally managed under the CEO's office and routinely, looked at. Now this isn't sort of an episodic analysis. And so we have comfort in how we're bringing cyber to market, property to market, managing our volatility. And I think we've shown over a successive set of quarters, market improvement as a proof point to that belief.

And then I have a follow-up question. One follow-up. So you've reduced volatility a lot, PMLs that ever properties down, et cetera, et cetera. Curious if you could talk a little bit about operating leverage? And what do you think kind of a good operating leverage to think about premium to, call it, equity to think about for AXIS going forward? Do you think you're going to be able to grow that, which may be helpful in generating better ROEs as well?

Short answer is yes. Pete, why don't you expand on it? It is on our profile of writings?

Yes, for sure. And I would say, actually, as we just think about the changes we've made over the last few years, Brian, you've seen our operating leverage go from the low 80s, all the way up to around 100. So it's actually already up about 15 points when we look at it from 2021 to 2023. And that's reflective of the changes that were going on through that period. I would expect that on an ongoing basis, we will be able to be around that $100 million to $110 million, and I have to go back to that 80-ish, which is where we were prior to being able to lower the volatility.

I thought I could just add to that, actually, Pete. So I think that's one of the keys. So when you talk about underwriting appetite, a well-structured underwriting appetite framework doesn't constrain the amount of risk you can write, it actually maximizes the bound of risk you can write in a safe way. And that's what you're seeing come through the numbers at the moment.

Josh.

Josh Shanker from Bank of America. So 15% or I should say, mid-teens diluted book value per share growth over the long term is basically what the goal is. And in fact, I think if we went back about 19, 20 years ago to many of several AXIS conference calls or maybe there was an investor meeting, the goal was 15% ROE across the cycle. If I look back over the past 20 years, I think there's one company out there who's done a 15% compounded book value per share growth over the last 20 years. Companies with well-regarded track records have achieved about 10% to 12% compounded book value growth over the past 20 years. It's an ambitious goal, and it's okay to set ambitious goals. But arguably, if there's something different about the next 20 years and the cycle that, that might have that it's easier to achieve a 15 -- maybe a 15% ROE isn't really achievable over the long term, except through some great execution, maybe it is great execution. The second part, I guess, would be to what -- how many basis points, 100, 200, 300 basis points, should a great run AXIS be exceeding the market in terms of returns. If you guys can do a mid-teens ROE across the cycle, does that mean everyone else is doing a low teens, which I guess is 13% because 12% is not teens, I don't know. What kind of market return is everyone else achieving if you guys are doing a 15% return.

Josh, I think we're grounded in reasoned beliefs around how we're going to achieve our ambition. I think that Pete's walk demonstrates certainly the component parts of how we think we're going to realize the 15%. In terms of others, I won't comment on others. I know what the AXIS strategy is. I know how we believe we will attain that result and the progression of how we're aiming toward it. I don't know, Pete, if you want to add anything to that?

I think it's an aspiration, Josh, over the long term. Obviously, it gets impacted by not only underwriting margin, but investment margin and as you noted in the last 10 to 20 years, we've had very low interest rates, especially over the last decade, and that's impacted people's thoughts. So for us, it's an aspiration to be at that 15%, but we'll have to go through both with market cycles as well as economic cycles to make it happen for ourselves.

And then I guess, change direction to reinsurance. Obviously, for well-articulated reasons, AXIS moved out of property markets in the reinsurance, but -- also in the runoff is engineering and aviation. What is it about those lines of business that also caused AXIS to want to put them to runoff? And if you had the underwriting talent, would you want to be in those lines? Are we merely turning lines on and off relative to where the talent is at the company? Or is there something about engineering and aviation that would suggest that they're not the right fit for the AXIS model?

So it's a combination, right? Firstly, we didn't view them as core to our definition of being a specialist reinsurer. Second, we saw greater opportunity in what Ann detailed as the emphasis subclasses that we're pursuing and have pursued. And then lastly, as a specialist, part of the toolbox of being a specialist is to provide a value proposition that you think is advantageous to you and also to recede at times you don't think it is. In the case of the 2 classes that you mentioned in reinsurance, it had more to do about what we wanted to consider as specialized reinsurance capabilities. Ann, I don't know if you want to add to that? .

No, I agree with what you said, Vince. Certainly, it wasn't about talent. Some of it was about scale to be perfectly honest as well. But to Vince's point, I think we saw better returns and better opportunity set to grow our portfolio in other areas, and they became noncore.

And Josh realized we have an aviation portfolio out of our insurance business that is suitably performing where we have market knowledge, market reputation, scale and profitability.

I was going to add to that, actually, Vince, if that's, okay. Aviation was one of the first lines of business we entered into as AXIS. We went into the -- at the time, the burgeoning AV52 terrorism marketplace, and we're still an important player in that sector. But as far as construction is concerned, we focus mainly on single risk projects, and we are a market leader. In fact, Marsh recently conducted a survey called Leading Edge to assess across 400 brokers the impact of each of our lines of business. And out of 55 carriers, we actually ranked #1 with Marsh across construction. So I think it's another good example of where we're ebbing and flowing to see to pick up a place in the marketplace.

This is where I was going with that. Are those permanent cutting -- I don't expect AXIS is returning to the property reinsurance market. But at a different time and place, our aviation engineering lines of business that you would be embracing under different market conditions? Or is that similar to the property REIT, it's a hard exit?

I think it's something that is certainly not contemplated in our next 3 years of business plan.

I pass back to Elyse.

Elyse Greenspan, Wells Fargo. In our presentation, Ann had mentioned targeting a low 90s combined ratio and reinsurance through the cycle. So when you say that, you guys mean better during harder markets. And then which we've seen over the past couple of years and then higher during soft markets. And can you just give us a sense when you guys define a cycle, is that a 5- to 7-year period or something longer?

Go ahead, Peter.

Yes. I would say as we think about it, and I'll let Ann jump in on there. A cycle can be different depending on the product set and the product in particular. But it is a longer term. It's probably more over 5 to 7 years, Elyse, as we look at it. As we think over the next 3 years, where we are with the businesses that we're in today, we do think a low 90s combined, even a 90 is possible on the reinsurance side, it's going to take a focused strategy in the lines that we're in today.

I would just add we are bottom line focused. We don't feel pressure to grow. We're growing into the lines where the market opportunity or hurdles are met. And we -- I articulated a number of those specific areas today. But for us, it's certainly that focus first, definitely looking for opportunities to grow, but I agree with you, the cycle is longer, but our first priority would be the profit. So I'll give an example. If we look at Q1. And I think it was Vince's slide that highlighted the combined ratio for reinsurance circa 95%, which is on the higher end of what we are striving for, obviously, and that was driven by an exceptional loss, the Baltimore Bridge Loss and a little other loss activity. And in light of that, that was about 5 points on that combined ratio. Secondly, we had some loss sensitive features swings, which impacted the acquisition ratio. And again, some of those created some noise in the system. But the marine loss, we are in the marine business, that is a normal volatility we would expect for an exceptional event such as that in the tail, which is where we're writing on the reinsurance side. We wouldn't expect dramatic beyond that, but I don't know how far swing the low is going to go either. But I mean, I think we're very, very comfortable that the underlying portfolio, the core portfolio and the volatility level within the book is going to enable us to achieve that low 90s combined across the cycle.

My second question, for incentive compensation in your proxy, the target for '23 was a 16% ROE. So directionally, is the ROE target for this year for '24 higher or lower? And what are the main drivers of the change versus last year?

Market outlook, footing us to a long-term target that we think is achievable, are 2 of the drivers. My recollection is it's 15% in the proxy. It's not 16%.

16% was for '23. I guess question was more on '24.

Yes, Actually, that's the ROE target.

Yes, yes. We have -- for our long-term incentive comp, it's 15% growth in diluted book value per share adjusted for dividend, is kind of the new for the LTI. For the short term, the ROE my recollection is it's very consistent with 2023.

Yes.