Question-and-Answer Session
Operator
(Operator instructions) Your first question comes from the line of David Lewis with Raymond James. Please proceed, sir.
David Lewis – Raymond James
Thank you and good morning. Congratulations on a solid quarter. Couple of questions, first, Heritage appeared to have a very strong June period in terms of both gross premiums written and the combined ratio. One, I think you only incorporated one month in there in your financials, is that correct? And second, can you give us any kind of guidance of what we might anticipate in the second half? Is that higher one-month type period, et cetera?
Mark Watson
David, you have to keep in mind that most Lloyd's operations, particularly those that have a property focus, the majority of the premium written during the year haven’t in the first six months. So, probably 70% to – sorry, if you include July 01, we’ve probably written 85% of the premium at Heritage that we will write for the year. For the first six months, that was probably 65% to 70%. Earned premium will be a little bit less lumpy than that. But I don’t think you should multiply the P&L for one month by 12 and get an annualized number. Jay, you want to add anything for the second half of the year?
Jay Bullock
Just two things. I think that operating run rate plus or minus 90% on Heritage is in line with our expectations. David, there was a pro forma filed last week where you would have seen the first quarter earned premium out of Heritage. So that gives you a quarter to look at. And I think it’s reasonable to assume that that’s a representative quarter for Heritage.
David Lewis – Raymond James
The first quarter going to the second half or you’re just saying a traditional first quarter?
Jay Bullock
I am sorry. A traditional quarter for Heritage, and that’s at the March point that the earned premium is slightly less lumpy than the written premium is. So, that first quarter number was $80 million. That’s a pretty representative earned premium quarter for Heritage.
David Lewis – Raymond James
Okay. And second can you talk a little bit about retention in your different operations and any pricing trends you can speak to in each of the individual segments?
Mark Watson
Well, our retentions really haven’t changed too much with the exception of our Commercial Specialty segment. We increased our property retention from 500, 000 to 1 million, and of course every time you do that you then have a frequency of losses that you haven’t seen in the past. Murphy's Law always seems to come in. As far as pricing go – sorry, having said that David, most of the losses that we’ve had in Commercial Specialty from the spring storms were hundreds of thousands of dollars and so that hasn’t changed much. Jay was suggesting by note here you might have been – were talking about business retention, our renewal rates haven’t changed much. They tend to still run in the 50s and 60s on our E&S business and the high 70s to high 90s on our Commercial Specialty business. Rockwood (inaudible) runs in the high 90s, for example, and our Grocers and Great Central programs tend to run in the high 70s to low 80s.
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