Question-and-Answer Session
Operator
(Operator Instructions) The first question comes from the line of Jay Cohen – BAS/MIL.
Jay Cohen – BAS/MIL
I have a couple of questions. First, you mentioned I guess in the specialty business credit crisis claims being less than what you had seen last year. I’m wondering if you can expand on that. What are the trends you are seeing?
Thomas Motamed
I think if you look at the credit crisis and the decline in the stock market last year we believe that a lot of the litigation or the lawsuits occurred in 2008. The fact is, the market has rebounded to a degree and clearly when stock prices go down you do see shareholder lawsuits. The stock market goes up and there is less to sue about. I think that is what we are seeing and I think if you go back to some of the other conference calls some of our competitors would have suggested the same thing. They are not seeing a lot of activity in 2009 and that the worst of it is probably behind us when those suits were filed contemporaneous with the credit crisis.
Jay Cohen – BAS/MIL
I guess the other assumption is you are booking because of that for that business a lower action year loss ratio because of the lower claims?
Thomas Motamed
We are taking that into consideration.
Jay Cohen – BAS/MIL
When you talk about rate, premium rates and renewal rates is it pure rate or does exposure play a role there?
Thomas Motamed
Rate only. Not exposure. For us, rate and exposure equals price. So we only talk about rate.
Jay Cohen – BAS/MIL
At least one other company that I can recall, Travelers, talked about their average renewal rates being up modestly in the second quarter. I know you don’t have access to all their data but what would be a reasonable explanation for why they would be seeing somewhat of a different trend than you?
Thomas Motamed
I don’t know their numbers and I am not going to refer to anybody else’s numbers but our rates have been improving but we are not over flat yet. We are slightly under flat. I think what you are seeing with some of the other markets is they might be a little bit ahead of us in pushing rate. Therefore if they say they are positive you would have to go back and look at some of their prior quarters to really look at their rate trend line. I think they are probably in positive territory because they started pushing rates a little harder, a little sooner.
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