Question-and-Answer Session
Operator
Thank you. (Operator Instructions).
We will go first to Mark Lane, William Blair & Company.
Mark Lane - William Blair & Company
Good morning. I had just a question about accident year loss ratio, trends, then you mentioned excluding capacity losses that the accident year loss ratio was up roughly about 400 basis points this year, almost 8%.
Can you give any insight as to how business mix changes or the changes in the reinsurance buy may have influenced the accident year loss ratio or can you give us some idea of how much of your accident year loss ratio was up, just on product-by-product basis? It was up 4 points, or it was up less than that?
John Marazza
We don't write our product-by-product basis, but it's really to thinking about the accident year '08 versus '07. It's primarily reflective of sort of overall price decrease we have been talking about for the full year in the high single-digits on the security business and the low double-digits on the specialty business. So that really is a primary driver, more so than the mix.
Mark Lane - William Blair & Company
All the changes new reinsurance buying and that has influenced?
John Marazza
Right. Again most bilateral exposures are coming from the specialty and security business, there was price changes and as it drives the accident year loss ratio a lot more than any mix or reinsurance impact.
Mark Lane - William Blair & Company
Okay. So can you give us some idea of renewal pricing changes, or some of your businesses this quarter versus last quarter?
John Marazza
What we have been saying pretty consistent through the year as for the security business has been sort of high single-digits and then specialty business low double-digits. So if you are trying to think about accident year loss ratios going forward. They tend to increase about 10% on the loss ratio not 10%.
So, 55% loss ratio was dropped about 5.5% next year, but it doesn’t go up in the first quarter, it goes up one fourth each quarter as the business earns, so that's probably pretty good way to think of '09.
Mark Lane - William Blair & Company
Okay. So, it's safe to say then consistent with rest of the industry you saw a slight moderation in price declines by December from those kind of annual levels, what you are seeing?
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