Question-and-Answer Session
Operator
(Operator instructions). We’ll pause for just a moment to compile the Q&A roster. And your first question comes from the line of Amit Kumar with Fox-Pitt, Kelton.
Amit Kumar – Fox-Pitt, Kelton
Strong results. I guess, just going back on your color on the rates, Bill Berkley in his comments this morning talked about the industry where he suggested that '09 accident year would be 108 to 110 and 2010 will be 110 to 112 and he forecasted that this would eventually lead the price increases of roughly 8% to 10% for 2010 and perhaps even more for 2011. Based on your business segments and what you are seeing out there, would you sort of directionally agree with this forecast or are you seeing something different in your business lines?
Carl Lindner III
Well, first of all, let me speak to the industry – Bill’s comments about the industry. It’s hard to put a precise time on when things are going to happen, but the rubber has to hit the road here with regards to increasing accident year combined ratios and the need for additional price for the industry. Clearly, we think we are operating on a – with better underwriting results than the industry.
So – that said, we feel our accident years today for '09 still give us in the mid-teens kind of ROE’s, but on California comp, clearly we need weight. We got 6% in the quarter, but we probably need another 10% to 12% on top of that to assure us that we can produce the accident year underwriting profitability in that business that we need long term.
In property and transportation – those are kind of unique businesses. The crop business is in a class of its own and is really – doesn't really correlate to allow the other businesses in the industry, which I think is probably a strength for us and that doesn't really correlate to hurricane and cat-exposed property or other businesses. So that business is clearly a lot different and kind of stands on its own, as well as maybe some businesses like equine mortality or financial institutions or financial institutions’ book in our specialty financial part that really is kind of a contra-core economy kind of a business, where it’s actually growing pretty good.
That said, in our many of our property and transportation and casualty businesses, we need to achieve some rate. I think our 2010 guidance clearly reflects my opinion about prices and we are trying to reflect a very reasonable realistic viewpoint of where accident year combines are going for us and for the industry in that guidance.
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