Oct 27, 2026 earnings call — Underwriting results and AI investments
Net income was $459 million in Q3, and non-GAAP operating income was $443 million for the quarter.
Revenue $3.0B (est $2.6B) · EPS $2.86 (est $2.05)
Key quotes
"Our insurance operations produced excellent underwriting results, even as the property-casualty combined ratio increased from last year's exceptional level."
"Premium growth moderated as expected, reflecting our commitment to pricing discipline, careful risk selection, and segmentation on a policy-by-policy basis."
"More specifically, we are using these capabilities to process new business submissions received by email, enabling us to accelerate quote delivery by more than 30% across our commercial lines and excess and surplus lines businesses."
Analyst Q&A 7
commercial casualty and expenses
Q (Michael Phillips · Oppenheimer): The analyst asked if recent claims support keeping the commercial casualty loss pick elevated or if management is just being conservative. He also asked if there is a ceiling for the commercial lines expense ratio given top-line pressure.
A: Management said the reserve pick is prudent, not conservative, and they have not seen anything that would reverse the casualty trends. They noted uncertainty around legal system issues and third-party litigation funding, and that the accident year pick through nine months is consistent with the end of 2025. On expenses, they said they worked to get the expense ratio under 30% and will work to keep it under 30% while investing in the business.
"I think I have not seen, I don't think we've seen anything out there on the casualty front that would be a reversal from a lot of the legal system abuse, the challenges that we face, third-party litigation funding, just increased activity there." — Steve Spray (CEO)
commercial growth and 3-year policies
Q (Gregory Peters · Raymond James): He asked where future commercial growth will come from: exposure with existing clients or new business, and where competition is strongest. He also asked for an update on the use and performance of multi-year (three-year) policies.
A: Management said most pressure is in larger premium accounts while small to mid-size business remains more rational, and that new business dollars remain strong as growth normalizes rather than reverses. They explained the three-year policy has outperformed one-year policies and that a majority of commercial package policies are on a three-year basis; they are committed to that approach and may use one-year when pricing is too thin or losses require it.
"Right now, it's over 50%, or it's a majority of our policies in commercial lines, package policies are on a three-year basis, and we're committed to it." — Steve Spray (CEO)
reserves, IBNR, and VCR
Q (Mike Zaremski · BMO): He asked whether high IBNR levels should stay high and whether lowering IBNR could be used to reach the value creation ratio goal, or if the company has been too conservative on reserves.
A: Management said they do not set or release reserves based on the VCR; reserving is an actuarial, independent process. They noted quarter reserve development was 3.6 points versus a five-year average of 3.1 points, full year-to-date 2.8 points, and that most IBNR additions are in commercial casualty; they will stay prudent and target the upper half of the actuarial range.
"I would say absolutely, we do not release reserves, set up reserves based on VCR or where that might end up." — Mike Sewell (CFO)
workers' comp reserving and loss ratio
Q (Josh Shanker · BofA): He asked about a seeming change in how workers' compensation is being reserved and what the shift in the accident year loss ratio implies about the business and underwriting appetite.
A: Management said there has been no change in the consistency of their reserving process and they review frequency, severity, and pure premium for each major line. They said workers' compensation is long-tail, they have been deliberate about underwriting, pricing, loss control and claims, that comp is now a little less than 5% of commercial net written premium, and they stated the accident year is currently 95.8%.
"Our accident year right now is at 95.8%." — Steve Spray (CEO)
personal lines competition and mix
Q (Mike Zaremski · BMO): He asked for more detail on the personal lines competitive environment given recent growth and how to think about the trend going forward.
A: Management said recent growth is a normalization from an unusually hard market, not a reversal, and that middle market personal lines are very competitive and require sophisticated, segmented pricing and analytics. They added that about 60% of their personal lines are now high net worth, that high net worth has fewer participants and higher service needs, and that their book is moving more toward ultra-high net worth while maintaining middle market commitment.
"About 60% of our personal lines business now is high net worth." — Steve Spray (CEO)
commercial auto loss improvement
Q (Meyer Shields · KBW): He asked whether the steady improvement in commercial auto loss ratios this year is a recalibration of earlier quarters.
A: Management said it is not a recalibration and that their insured fleet is more predictable and consistent. They said they do not write large trucking or transportation risks, have worked on auto since 2016 and 2017, acted quickly during inflation, see auto follows legal system trends, and feel good about the auto book while remaining prudent.
"I think our fleet that we insure is a little more predictable, a little more consistent." — Steve Spray (CEO)
investment mix: fixed income vs equities
Q (Fred Nelson): The investor asked why the company seems to emphasize fixed income over equities and dividends in the investment portfolio.
A: Management said they play both sides but are taking advantage of higher interest rates to lock in longer-term rates. They said they have trimmed some well-performing equities and redeployed proceeds into fixed income, taking profits and building a cash flow–driven portfolio.
"Some of the equity markets, it's traded very well over the last few years, and we've trimmed around some really well-performing stocks and redeployed some of that into the fixed income market." — Steve Spray (CEO)