W. R. Berkley Corporation (WRB) Earnings Call Transcript & Summary

All right. Fantastic. Thanks for our next presentation. I'm Brian Meredith. I am the insurance analyst here at UBS. With me, Rob Berkley, President and CEO of W.R. Berkley. We will -- I'm going to start off with a bunch of questions. And then I think you've been in these presentations, on your tables, there's a little bar code that you can submit a question. And hopefully, we'll see it on this iPad, and I'm happy to ask it for you. Also, there will be a microphone going around a little bit later. I'll kind of open it up for questions.

So Rob, I figured the way we start off this kind of big picture here. Talk a little bit about kind of strategic priorities for 2024. And then maybe even longer, like the next couple of years, what's going on at W.R. Berkley?

So I'd break that out into a couple of pieces. One for starters, obviously, as we always have been, we're very focused on trying to maximize whatever the market opportunity is before us. We're conscious of the fact that we can't control the market, but we can very much control our own actions. And when we look out at the marketplace today, there are clearly parts of the marketplace that are offering very good opportunity. And those areas, we are trying to lean into it. That having been said, the commercial lines marketplace is different from what it once was. All product lines do not march together in lockstep. So where the opportunities are, we're leaning into it and where they aren't, we're taking more of a defensive posture. In addition to that, we, as an organization, are very focused as presumably others are, on the use of technology and data and the opportunity to be making better, more thoughtful decisions internally in a more timely way. And also thinking about how we can bring solutions to customers and meeting customers where they wish to be met and ensure that we are offering a value proposition that is beyond just capacity.

Excellent. So what I thought maybe we'd start off is a little bit on kind of the growth part of your business, right? So 2023, you had a couple of headwinds with some programs that were kind of running off. Things are picking up nicely from a premium growth perspective. Maybe talk a little bit about what you see in '24 with respect to growth opportunities in your business?

So as far as '23 goes, Brian, as you have flagged, particularly in the earlier part of the year, there were a couple of things that provided particular challenge on the top line front and we've been -- made every effort to be very transparent and clear about that. One of them was there were a couple of large relationships where our partners, we saw the world in a different way, and our underwriting discipline led us to a conclusion where we agreed to disagree, and we went our separate ways. In addition to that, we are in somewhat of a defensive posture when it comes to parts of the professional liability market, in particular, the D&O market where we saw rates move up dramatically some number of years ago and now, they are eroding very quickly. And for us, we are just not going to follow that down a path that does not make sense. Again, back to this idea of underwriting discipline. Another area that, again, I think you saw the discipline coming through would be in the workers' comp space where, again, we have a view that there's likely some challenges for that product line on the horizon. Fortunately, that having been said, we are seeing great opportunity in other parts of the marketplace, E&S, in particular. We're one of the largest E&S players in the industry, and that's really been driving the growth and the growth that you would have seen in the fourth quarter and how we see things unfolding, we believe that the momentum is still there and actually probably growing at this stage. So when we look out on '24, my expectation is that the business should be able to grow between 12, 10 -- excuse me, 10% and 15% and barring the unforeseen event. And I think one of the differentiating factors for the organization that I work for is the breadth of the offering that we have. The insurance industry has, is and in all likelihood, continued to be a cyclical industry driven by 2 human emotions, fear and greed. And it's just a matter of, at any moment in time, what is overshadowing -- which one is overshadowing the other. This is a moment in time in my perspective -- from my perspective, where there is discipline, particularly around some of the liability lines due to social inflation. But we can get into that a little bit later if you so desire. My point is that we, as an organization, likely will be able to continue to grow at a pretty healthy clip because of the breadth of our offering. And even some of the product lines that are offering a better opportunity today, as they become more competitive in the future, other product lines will be offering a more attractive opportunity, and we'll be leaning into those.

Got you. And actually, on that, maybe it would be helpful for everybody. Talk a little bit about the structure of W.R. Berkley. I think it's somewhat unique for the industry and kind of I always think you guys is like 30-some-odd different companies, right? And that's why you can pivot so well.

Yes. So most insurance companies have very much of a centralized command-and-control model where the decisions are made from the center, at the home office, and then they are provided or given to the field to follow the direction. We, as an organization, a, we're a specialty player. So we're not trying to be all things to all people. And we are effectively a collection of specialty businesses. And at this stage, it's actually 60 of them. Each one of them is, for the most part, self-contained, focused on a particular niche within the industry with people that have great expertise within that niche. We have this model ultimately because we think it gets us better outcomes. We think having people with knowledge and expertise closer to the marketplace allows them to respond more quickly and ultimately offer a more competitive value proposition to a customer and distribution.

That's great. Maybe a little bit just on your view of the kind of casualty kind of pricing environment, pricing cycle here. You talked about some good pricing, good opportunities for growth. We've seen some pressure on reserves and some social inflation issues kind of kicking up and we'll hit on that here in a second here. What I'm more interested in is this cycle's kind of unique, right? It almost felt like we had a cycle turn in '19 and all of a sudden, now we're seeing a little bit again. Give us your perspective on kind of what the casualty cycle looks like right now? How long we're going to last? Is it [ 2002, 2020 -- 2004 ] again?

I think that it's yet to be seen. I think we all need to start from a place that -- and recognize that the industry is challenged by this reality that we don't know our costs of goods sold until oftentimes some number of years after the sale already occurred. That timing mismatch creates real challenge, particularly when you go through a period of time of great change. The great change that I think we're both referring to is social inflation. And clearly, there's been a price paid for sort of the change in social inflation in the '16 through '19 year. When I look at where we are today, I think the industry is going to have to continue to push on rate to keep up with that loss cost trend. That having been said, I think the industry is going to have to start to pivot and be more forward-looking in how it thinks about loss costs. We historically have been an industry that spends a lot of time looking in the rearview mirror, the actuaries look at the data and they come up with an analysis. The problem is by the time they do that analysis and it actually gets fed into the pricing, that target has already moved. So the loss cost trend is moving quickly at a pretty steep trajectory and long story short, Brian, I think that the industry is going to have to continue to keep the pressure on rate to make sure we keep up with that trend. And that will ultimately continue until we see some kind of change in loss cost.

Great. That's helpful. So you talk about rate continuing to be in excess of loss in your insurance business. I guess my question then is, does that mean we're going to start seeing underlying loss ratios continue to improve here going forward? Or is it -- is this comp going to offset that? Kind of what's kind of the outlook for underlying margins?

I think that as you just referenced and I had touched on as well, different product lines are in different places. Product lines have decoupled in how they make their way through the cycle. That having been said, in my opinion, and I think that for some market participants, there's likely more pain to come. You saw that some market participants acknowledged some challenges in their fourth quarter results. We, as an organization, we take a slightly different approach where we are constantly trying to revisit, with great regularity, our numbers and are they where they need to be, and we are constantly tweaking them and addressing that. Others, in my opinion, choose to ignore that until it cannot be ignored any longer and then all of a sudden, they are in a position where they're taking a meaningful charge. So when I think about where are we, I think that there are many other market participants that still have some work to do. I think they have some work to do around reserving. I think their extension have some work to do around rate. And ultimately, given what's going on with the loss cost activity, I think the pressure will remain.

Good. Maybe just talk a little bit on the whole social inflation topic. We're talking about obviously calling pressures. You've actually been highlighting it for a long time. Give you credit on that one. And maybe talk a little bit about what's driving this social inflation and some of these elevated trends? Maybe go through that.

Sure. Social inflation is -- it's become a bit of a buzzword in the industry. And I think just to level set it, all it is, is a reflection of a shift in society and, by extension, a shift in the legal system and what's coming out of the legal system. The awards today are a multiple of what they once were. Beyond that, are there other things that are driving it? Sure, you have things such as litigation funding along with other bits and pieces. But the big driver is just the social environment and how once upon a time, when damage was done, the legal system was there and, by extension, the insurance industry, to help make people whole for those damages. Today, it's a different environment where it's not just about making people whole for damages, it's also about punishing when in the eyes of a jury or sometimes a judge that there was a wrong done. So that shift, I think, is having a great impact on loss cost in general. And there's nothing that I see as far as that really slowing in any way, shape or form. Ultimately, when the day is all done, I think there's a bit of a misperception in the eyes of much of society. And that is who pays the bill in the end? When it's a defendant paying the bill, they really don't pay the bill. It's the insurance carrier. And actually, the insurance carrier in the short run will pay the bill, but ultimately, it's society that pays the bill because everyone's insurance costs go up as we are seeing that today. When the day is all done, I don't really see that changing until ultimately, we have enough pain where you will have a shift in the legal environment or some type of tort reform, and that requires pain.

That's helpful. And maybe a little bit about how does the economic environment kind of impact your business, right? All sorts of different opinions as far as what's going to happen to the economy here going forward. How do we think about that with respect to your business?

We obviously -- we, as an organization, the industry, we are not insulated from the economy. On the underwriting side, the health and well-being of our insureds is relevant to us. Much of what we do is priced off of payrolls and receipts. On the other side of the coin or the other component of our economic model, we also have the investment portfolio. And clearly, we have benefited from the interest rate environment, as others have. We perhaps more than many, and we'll have to see how that unfolds.

Great. Thinking about the E&S markets, right, big player in the E&S markets. Have you noticed any shift yet from standard market carriers kind of trying to encroach on the E&S market at this point? Client fatigue, maybe also can talk about a little bit of that. I mean, some of these clients have been seeing massive price increases for a number of years.

Look, I think the flow of business, if you will, to the E&S market continues. There is nothing at this moment that we're seeing that leads us to believe that's going to erode anytime soon. I think as long as the standard market continues to remain disciplined as a result of the pain that they are feeling in certain pockets of their business, that will bode well for the specialty market in the E&S market, in particular. So the momentum continues, at least for the foreseeable future. And will it go on forever? No. Will it likely go on for some extended period of time? Yes. But even once the -- that party plays out and the music begins to slow, fortunately for us, again, going back to this idea of product lines decoupling, there will be other parts of what we do that will pick up and -- sorry. And pick up the slack and provide growth opportunity.

That's great. I thought maybe we'd hit a little bit on reserves. Your 10-K came out this weekend. Took a look at the triangles and I guess what we're seeing and not unusual for any company, is a little adverse development on the '16 through '19 accident years. You've talked about -- a little bit about how you think we're getting kind of to the end of that development because you're getting better visibility. Maybe kind of walk through that a little bit with people.

Sure. At a macro level, I think one needs to keep in mind that the average life of our reserves is just shy of 4 years. So that, as a data point, probably should lead you to understand how far along they are in maturing. In addition to that, if you look at the development in some of the years, particularly '16, '17 and '18, that curve is beginning to bend, '19 is still moving up. So I think there are a lot of signs that would suggest that a lot of the pain is behind us. And I think the benefits that you're going to see in the more recent years is going to becoming more and more visible.

That's good. Yes, I mean, that was kind of the next thing I wanted to ask was 2020 through 2022. You've seen some favorable development already there. Maybe kind of talk about taking down some of those reserves, where they were specifically? And how do you think those years are going to develop out? And we've actually seen some companies with a little adverse here and there on casualty in 2020, 2021.

I think if you look at our numbers, you're going to see that the development that you may be referring to in the more recent years and action we took is really coming from the workers' comp line, where, if you bifurcate that between frequency and severity, the benefit that we're seeing on the frequency front is -- quite frankly, it comes into focus pretty quickly. There is either a claim or there isn't a claim. And to the extent that's the case, then we're able to recognize where that ultimately comes out. As far as professional liability, which is another area of opportunity for us to have recognized some positive development, that's due to the fact that it's on a claims-made basis. And as a result of that, once the policy period has lapsed, we are able to reach a conclusion that if we haven't been noticed on a claim that we're in a good place.

Great. That's helpful. As a reminder, if you want to ask a question, feel free to do it on your table. I've got one here actually, why don't I go to one of the audience questions. Earlier, you mentioned the importance of technology data. Where do you see the biggest opportunity to expand the use of technology and data over the next few years in your business?

I think the biggest opportunity to use data is probably going to be not just in structured, but in unstructured utilization and quite frankly, using nontraditional data or data that's not necessarily historically something that we as an industry would look at where, I mean, there's just vast amounts of data that one can incorporate into one's analysis and decision-making that is outside of the traditional swim lane, which is very meaningful as well.

Got you. And on that topic, it's something, I think, that a lot of people have been asking about is are you all using generative AI? What are the applications there? Do you think about that obviously becoming a hot topic?

We are in the early stages of experimenting with it. At the same time, we have a healthy respect for it and understand that when we use these tools, we need to be very mindful that we have tested them thoroughly because you can easily get false positives and false negatives. And if we incorporate that prematurely into our business, that could be very expensive. So are we experimenting and learning? Yes. Is it actively implemented? Not at this stage.

Great. Let's hit on workers' comp a little bit here. What is your kind of view on comp? I mean, I don't know if you want to make any predictions here on when the competitive environmental ends. It's been a challenge.

I've been predicting it. I've been predicting it wrong. But when it comes to comp, my view is that frequency trend has been a friend, not just during COVID, but even before and after that. That having been said, I think medical -- I think severity trend is going to be a problem, in particular. I think medical costs, which are about $0.50 on every dollar of claim cost within the comp space. I think if you take half a step back and a few of us were talking about it earlier and you look at the situation that the providers, health systems, et cetera, find themselves with, their economic model is broken. They have had to endure inflation, particularly around labor for the same -- some number of years now just as the rest of the economy has. But when it comes to their revenue or their deal with payers, those tend to be multiyear in nature. And ultimately, I think you're going to see that the payers are going to have to start playing ball and allow the providers to fix their economic model. Otherwise, they're bust. And that includes workers' compensation. And I believe that there may be a lag, but it's going to have to catch up because the status quo is not sustainable.

Commercial auto. You've seen some pretty good growth. Why do you find this line of business attractive given what challenging loss trend environment typically in that business and kind of where you're growing there?

So Brian, I agree with the observation about the challenges with commercial auto. Honestly, when you think about social inflation, I don't think there's a product line that has a bigger bull's-eye on its chest than commercial auto. That having been said, if you look at our commercial auto book, I think that your perception may be -- while accurate, I think you need to look at it more carefully and really, much of our growth is driven by rate as opposed to exposure.

Okay. That makes sense. Anybody in the audience got a question before I keep going with mine? One of them, then I'll play.

Nobody.

Okay.

No one's going to save me from you.

Huh?

No one's going to save me from you.

So just another thing I thought would be good to address that I don't think people focus on enough as far as the profitability of the commercial lines business, and that's terms and conditions, right? And everybody always wants to talk rate, rate, rate, but terms and conditions can clearly have a very favorable long-term impact on profitability. Can you talk a little bit about kind of what you're seeing with terms and conditions? What's happened the last couple of years? Is that why you're more confident with '20 through '22 -- '23?

Yes, absolutely. Look, people tend to look at rate because that's -- it's easier to do the math. Terms and conditions are -- it's a much more complicated analysis for actuaries and, for that matter, the rest of us to do. And it's not just terms and conditions, it's also attachment point as well. When we look at where the market is, and you can see it in the loss picks that we're carrying for the more recent years, we think the impact of terms, conditions, attachment point and so on is having a dramatic impact along with the rate on what the ultimate outcome will be, and we feel pretty good about that. I think in addition to that, if you look at our reserves and some data points around that, it would support that optimism even with the numbers that we're booking it to. If you look at our paid loss ratio, if you look at our IBNR to case, if you look at our IBNR relative to total reserves, if you look at our IBNR relative to net premiums earned, it tells a pretty good story to say the least. So I think that there is clearly an impact on rate. But my sort of back-of-the-envelope math is for every benefit, for every point of rate, if you will, there's probably 2 points of benefit in the E&S space on terms and conditions.

Got you. And maybe just for the audience, just kind of explain what it's like, what that would be, what is terms and conditions, tighter coverages...

It's tighter coverages. It's different deductibles. It's just a whole host of different things. So just hypothetically speaking, perhaps, there's a policy written on a contractor in the standard market and maybe the premium is $10,000 and there's a $5,000 deductible. And maybe all of a sudden, the standard market decide that they don't have an appetite for it, so then it goes into the E&S market and perhaps it will get written at whatever, with a $50,000 deductible and the price will be $25,000. So it's day and night, and that's why oftentimes when someone falls out of the standard market and it is forced to deal with semi market of last resort, that being E&S, it's a very painful experience from an economic perspective. But the reality is probably they weren't paying enough to begin with.

Great. That's helpful. And another question just came in kind of as addendum to that. So you think that beyond the cycle, E&S is structurally growing with more complex risks and maybe taking some business away from the London market question?

Well, the London market, by and large, or specifically Lloyd's, obviously, is an E&S or a non-admitted solution for the most part. I think London, generally speaking, it ebbs and flows. But overall, directionally, its role within the marketplace is less significant today than it was yesterday. And more likely than not, I think it's going to continue to have a market position that will remain important, but gradually less and less important over the coming decades. I think their value proposition is challenged. I think global licensing continues to be a plus that they have. But since Brexit, that competitive advantage is diminished and I think others have come up with solutions. And I think as far as the subscription market, in a digital age, you don't need people all in one room in order to build capacity.

Helpful. Short tail lines. It's been your fastest-growing line of business over the last couple of years. It's clearly been a really hard market for property. Maybe you can discuss a little bit what makes up your short tail lines? Kind of what areas have kind of been the most attractive for you in the short tail lines area?

Yes. The biggest components are clearly property, followed by A&H, and we've just liked the opportunity. We are -- we are an opportunistic player when the day is all done. We are not in business to issue insurance policies. We are in business to make money. And when the opportunity is there, we're going to lean into it, and there's been recently an opportunity in the property space, for example, and we are trying to make the most of it. But when that opportunity begins to erode and the window begins to close, we will not be shy about tapping the brakes.

Got you. And is the outlook for property market still pretty good, do you think?

For the moment, yes, but people have short memories, and we'll see how long the discipline lasts. Obviously, in the property cat market, we've seen pricing peak, at least for the moment and that is part of what has driven the firming prop, underlying our primary insurance market, particularly cat exposed. So we're going to ride it as long as we can. And then -- but we won't be shy to get off.

Got you. So it sounds like that's an area that we could still see some growth in '24 for you guys?

That is the expectation.

Got you. Got you. Have you had -- another one come thoughts here. Have you had to restructure at all your ceded reinsurance program at all to kind of accommodate that property growth? How should we think about that going forward? And maybe also is it worthwhile taking -- retaining more of the business yourself here going forward, given the profitability?

So we've made certain adjustments to our reinsurance buy, as you would expect. We have the luxury of being less captive to the reinsurance market than some of our peers because of our limits profile where we tend to be a smaller limits market. Our average limit -- or I should say, 90% of our policies have a limit of $2.5 million or less, very different from any of our peers. So that introduces a bit of optionality for us. As far as how we think about buying going forward, we -- do we have the ability to be more opportunistic? Yes. But we'll see how things unfold.

Another one just came in. Given we're in Florida, what do you think about the adequacy of rates here in Florida?

I think that Florida is a better place to write reinsurance than insurance at the moment, but that can flip flop.

Got you. Just the price environment's not quite there.

I think there's more discipline still in the reinsurance market than there is in the insurance market, but I think that's beginning to change a little bit. I think the insurance market is disciplined, but not as disciplined.

Do you think the legislative actions that happened last year will have a positive effect here in the industry? You're seeing any of that come through?

I think there's hope, but we'll see, and we'll see how long it sticks. There's already a lot of noise about that eroding.

Got you. Interesting. Another interesting kind of longer-term one. EPS was roughly flat for over a decade before tripling in the last 5 years. Has the business structurally changed?

I think the answer is yes on a couple of fronts. One, I think that -- let's take it one -- bifurcate it between the 2 parts of our economic model. I think on the underwriting side, we've had a bunch of businesses that we started that were -- because of underwriting discipline, they remain subscale. We've seen market conditions get to a point that allowed them to scale and now we're able to -- with the growth in the earned premium, we're able to leverage the fixed expenses, and that's proven to be a real plus for us. I think if we pivot over to the investment portfolio, we went through this extended period of time of very low interest rates to the point that I think a lot of people forgot about how meaningful the investment portfolio can be for an insurance company's economic model. It would seem as though rates are likely not to return to where they were for an extended period of time. As a result of that, we think that we are in a pretty good place, and we don't see that changing. So ultimately, I think our ability to generate really solid returns for the foreseeable future is very, very much in place.

I guess on that topic of higher investment yields, is there a point at which the industry starts taking that into account into pricing decisions?

I don't see us getting to the point of, just to pick an ugly phrase, cash flow underwriting, certainly not anytime soon, Brian. I mean, when you saw that, rates were -- interest rates were at a very different level.

Great. Another one here. I thought maybe talk a little bit about professional lines. It's an area, obviously, that is a big line for you all. It's been very challenging. Do you think we're getting close to a bottom here in professional lines? And what's it going to take for that market to kind of flip the other way?

Well, I think professional liability is a very broad space. So we need to be careful and maybe use a finer brush. Clearly, what's been getting a lot of the attention is D&O, which is -- took off like a rocket ship, and it has been falling like a stone for some period of time. And as much as I'd like to sit here and say that we are in that close to the bottom or at the bottom, I just don't believe that's the case. I think it's going to continue to be challenging at least through '24.

Got you. That's helpful. Another thing, too, that you talk a lot about, you guys are constantly starting businesses, right, which is great. It's a great part about your model. Maybe talk a little bit about what businesses you're starting recently. What's kind of been interesting for you all?

So we spend a lot of time on one hand, trying to capitalize on the opportunity that's before us today, but also to try and be setting the table for where we see the market tomorrow. So as far as where things are today, we've started a couple of businesses within the E&S space, both one in the excess space and one in the primary space that dovetail very well with our existing offering. And speaking of dovetailing with existing offering, we also set up a, what I would define as large account comp writer, primarily focused on California. And again, that would very much fall into the category of setting the table for tomorrow. It's relatively modest in size. It's a business that was set up by a group of very capable and talented people, and we have great expectations for where that will be when market conditions line up, and that will be a tremendous contributor to the group.

It might be actually interesting if you're talking about that. How do you incent your kind of leaders, right, to kind of be disciplined through the cycle and not write -- not be aggressive when they shouldn't be and be aggressive on things they should be. How does that kind of all work?

Well, I think that, first off, it starts with the people that join the organization and do they have a shared set of values and priorities that dovetail with the priorities of the organization overall. In addition to that, maybe more specifically to your point, we have people that are remunerated in a way where a meaningful percentage of their compensation is longer term in nature. And as far as the senior leadership, quite frankly, much of their compensation is earned over a 5-year period, and we do that deliberately because the average duration of our reserves is about 4 years. So we want to make sure that the timing is aligned and that no one is declaring victory before we have clarity for the shareholders.

Great. Look to the audience. Anything?

Two questions. One, running 60 business units. I mean the complexity, I'm sure your company is different than it was 10 years ago. I'd be interested in how you're handling that. And then just on the $2.5 million limit, I don't think that's really changed much in the last 10 or 20 years. I remember $2 million at one point. But why that number? If it was $3 million or $5 million, could you increase your business 50% realizing there are risk offsets?

So as far as the scale of the business and how it's managed, we have a lot of colleagues that do a lot of great things to make sure that while we have a decentralized model, we have to provide a fair amount of autonomy. We want to make sure that we have our finger on the pulse. So in addition to the financial reporting and the actuarial and a variety of other things, I also have 10 colleagues that basically are responsible for the 60 businesses. So we divide the 60 business up amongst those 10 colleagues, and there, each one is overseeing and working with a suite of those or a subset of those. As far as the limits profile goes, that's an average. There are some parts of the business where we're offering more, some parts that perhaps we're offering less. That's just where the average comes out to. But generally speaking, we prefer low limits. When you get it wrong, you're getting it wrong by less and quite frankly, it allows us not to necessarily develop -- it's one way to limit the amount of concentration, if you will, so yes. And lastly, in the marketplace, there tends to be more competition around larger accounts. There's this concept of a large account discount, which makes zero sense to me.

All right. Given the kind of current growth opportunities you're seeing and the stock's valuation, I'm just curious what your appetite is right now for share buyback. And then what factors kind of drive your decision between increasing kind of share repurchases and special dividends as far as excess capital on the balance sheet?

So look, when we look at the business, our expectation, as we touched on earlier, is there's meaningful growth on the top line and equally, if not more meaningful growth opportunity on the bottom line. And we think that that's the case for the foreseeable future. So long story short, Brian, we have a view as to what book value is and it may not necessarily be the same as what the accountants would say. In addition to that, we have a view as to what the earnings power of the business is for some period of time and that leads us to one view. In addition to that, we are analyzing the business and trying to look out the front windshield to think about what are our capital needs going to be today, tomorrow and what type of cushion do we want on top of that. To the extent there's more than we need, then we're going to return it to shareholders to who it belongs to. But as to are we going to go with a share repurchase? Or are we going to go with a special dividend? Again, a lot of that depends on how we think about the value of the business and where the stock price is at any moment in time. I know that much of the industry is valued as a multiple of book. And from our perspective, while we're conscious that, that is a view shared by many, for what it's worth, when it comes to our business, we don't share that view. We think the multiple of book makes sense when you have great volatility in your business. But we, as an organization, have demonstrated for not just years but decades our ability to manage volatility in a different way than our peer group does. So again, I think that when we look at the business, we think it's more appropriate to look at a multiple of earnings or a multiple of cash flow because of the consistency of the results.

Great. Well, I think that's all the time we have, Rob. Thank you for your time.

Thank you.

It was helpful.

Nice to be here. Thank you.