Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Michael Phillips, Stifel Nicolaus. Your line is open.
Michael Phillips - Stifel Nicolaus
Thank you. Good morning everybody.
Ken Stecher
Good morning, Michael.
Michael Phillips - Stifel Nicolaus
Questions, I guess first on just the underwriting profitability. If we back out things like the cats and the prior period development, we are still pretty far north of 100% on both commercial and personal lines part of that is probably conservatism in your current period reserves, but hard to think that it's worth seven or eight or nine points, which is where I think we are once we back that stuff out?
Your comments sound like for both personal and commercial, you described the rate environment is still challenging. So with all that together, how do we get back to where we probably need to be on a current accident basis for both commercial and personal lines?
Ken Stecher
First of all, I think we need to be looking long term, which is what we try to do and we think that by developing the relationships with our independent agencies and helping them with their important customers, we are positioning ourselves for the future growth.
That being said, the current pricing does produce the numbers. I haven't done the math exactly, Steve may have, but you are in the general area, where the accident year combined ratios are. I think that we just need to continue to build our book along with the technology we are developing. It really put us in a position to take advantage of the hard market.
Our long term goal has always been that we want to outperform the industry. The combined ratio getting to where it is at, I think we are still able to do that. But the profitability is not quite there like it has been historically. To some extent, I think, getting us there is going to take some rate hardening of the market. But I would like to see if Steve or J.F. will have any additional comments to that question.
Steve Johnston
In regards to the reserves, Michael, actually that the number you were getting; you were doing the third quarter, right?
Michael Phillips - Stifel Nicolaus
That’s correct, yes.
Steve Johnston
It's a lower than that for the year-to-date. I guess, I have been talking about the reserves; you made a very good point there that when you go through that exercise of removing cats and the impact of favorable development, you do arrive at an estimate of the current accident year that I think, you made the good point, but that is very immature. It's very volatile. In this case we are talking about nine months of accident year 2008 at nine months of development.
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