Question-and-Answer Session
Operator
(Operator Instructions) We'll take our first question from Josh Shanker from Citi.
Joshua Shanker - Citi
I'm trying to understand, simplify something in a way that I shouldn't, but you'll correct me I am sure. If I look at the premium volume, net premium written in 1Q '09, the top-line was down 11% and that's compared to being down 8% 1Q '08 compared to 1Q '07.
Now in that slide on-page 3 that you put together, which I really appreciate, it shows that premium rates are down, rated down about 1.5% to 2% in 1Q '09 compared to a year ago and back in 1Q '08 it was down 6% compared to the year before that.
William Berkley
Yes.
Joshua Shanker - Citi
The conclusion I would draw is that in 1Q '08 almost all your premium decline was due to rates, and the conclusion that I would draw now is that your premium is declining from things that you can't really control potentially. And I would sort of want to rectify that misunderstanding that I have.
William Berkley
No, you don't have a misunderstanding. It was very insightful and succinct. So why is that happening?
Joshua Shanker - Citi
One might ask.
William Berkley
I think it's happening for a few reasons. First of all, construction is not an insignificant amount of the insurance pot, and in our Specialty area especially our construction business has been adversely impacted. And so that's not only hitting construction but in workers' compensation in California and all that's related to that. In addition, long haul trucking has been hit.
So, both of those two areas have been impacted by the economy. And we were just talking, I’m not sure we have been nimble enough, but we are getting a lot more nimble, I might add, to respond to those things. But in industries, where there is a special economic pressure, there is also more price pressure. So, for example, in commercial transportation, to survive truckers need to push, especially the marginal truckers, the hardest on pricing, which means we're going to lose more business because they have to buy from the cheapest.
So, when you go to talk to a customer about, don't you want to worry about having your claim paid, their answer is, we have to be on the road to have a claim. We can't be on the road without insurance, we'll tell our drivers to drive carefully. It sounds trite, but it isn't trite in these difficult economic times.
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