U.S. Financial Services Conference. If you're listening to this podcast, you're in this room, you're in the insurance suite, and we have the session with W. R. Berkley Corporation beginning now. Really pleased to have Rob Berkley, CEO and President of the company, and the time of the Berkley management in general, in breakout meetings. Thank you for being here.
Pleasure. Thank you for the invitation.
You know, as I was coming in, someone said that Rob will actually tell you what's really going on, so we're gonna find out in terms of where the-
I certainly will tell you what I think. It may not be spot on, but it's not for a lack of effort.
Oh, I'll start with a harder question then.
Oh, good.
So, you know, one thing that's dogged you a little bit over the... Maybe about two years ago, you said that you thought that normalized growth is a 10%-15% situation, and obviously we're coming to low single digits right now. Does that mean there's a bunch of 30% years as well? Is 10%-15% a gauge for normalized over the long term, or how do you think about that sort of predictive sort of view of what the growth rate is of this business in this industry based on the latest experience?
A couple of comments, Josh. I think that one thing that is worth noting, at least from my perspective, is without a doubt, you know, we all appreciate the world is moving faster, changes abound and coming at us more quickly, and that includes even the sleepy insurance industry. And I would tell you that the softening of some product lines that we have seen over the past 12 months has been far more rapid than we would've anticipated. I was chatting with a colleague just the other day and talking about the property cat market as an example, even though we're not a big player, and just taking note of how what would have been a softening over a two or three year period felt like it happened in less than a year.
So what do I think that we as an organization should be able to grow at? I think we should be able to grow at, throughout a cycle, give or take, at about 10%. I think the math that I had done once upon a time, that you were referring to, was I said that: "You know what? I don't see social inflation going away anytime soon, so it means you're gonna need rate of more than 5%, less than 10%." And then I said: "What do I think, you know, all things being equal, that we should be able to grow at above and beyond that?" And that's what led me to the numbers that I had shared. But per the comment a few moments ago, I think there are parts of the market that got much more competitive, much more quickly.
There's good news and bad news with that. The bad news is that it creates a bit of discomfort sooner than you had anticipated. The good news is that it means we will likely get to an unpalatable place more quickly and will create opportunity. So we... That, that's, that's how I think about it. More specifically, do I think that we will be able to grow as an organization going forward? Yes, I do. Do I think that we will be able to grow at the same rate that we've been able to grow at over the past couple of years? Probably not, and that's just a reflection of market conditions. I know that you alluded to the notion, you know, will you be able to grow at all, in some conversations that we've had.
My view is, I think the breadth of our offering and how product lines have decoupled from one another, and where they are in the cycle, will allow us to maintain some level of growth. That having been said, for companies, some of our peers, that are more of a monoline play, I think that when they have a tailwind, they will definitely benefit from that. But when they have a headwind, and if they do appropriate cycle management, they will have no choice but to shrink. And if you look at us as an organization, and you unpack us, we have 60 different businesses. At any moment in time, there's some part of that bouquet that is shrinking, and then some part of that that's growing.
Two items. If anyone in the crowd wants to ask a question, you can just interrupt me at any time, raise your hand, and happy to do that. To the guys over here, I think that one of the mics might be a little too sensitive, if you can.
Is that me?
A bit of a rumble.
Getting a little too much of me?
A little rumbling, so just to make a note. All right, so one other item which, you... So, you know, when you try and pin things down into a single number, you wind up getting too obtuse in terms of it being as a tool, and you're-- Berkley's been kind enough to give us a renewal pricing number every quarter for everything in aggregate, which doesn't really tell us what anything independently is going on. But when you look at the, you know, pricing up for you guys, 7%-8% at a period of time when you-
Ex workers' compensation.
Ex workers' compensation, which is above the growth rate of the premium volume of the company. It may seem to be the case that that is means that the company is in a state of shrinking.
I think-
I think there's some nuance here, and I think it might be worth sort of clarifying.
So I think to unpack that a little bit, Josh, the answer is yes, that is very much the case in some parts of the organization.... I don't know. Are we good?
No, I think it's good now. I think it's good now. I don't hear the rumbling anymore.
Oh, okay. Okay.
Okay, okay.
Apologies. I guess-
Thank you very much, by the way.
I need to stick with insurance. Thank you. So, long story short, you know, back to the point I was making earlier, Josh, there are parts of our business that are taking meaningful rate. Let's just, for purposes of articulation, let's pick on commercial auto as an example, if we could, 'cause it's a, at least to me, a very obvious one. That is an example of a product line where, I mean, it is, in my opinion, from an economic model, it's a complete shit show. And some people may try and put... Am I allowed to say that? Well, I guess-
I said keister in the last section-
Okay.
So I don't know.
We took it one more step. So, a lot of folks are trying to put lipstick on the pig. When the day's all done, that's just not reality. And if you look at us and commercial auto, yeah, you'll look at what we publish on a quarterly basis in our earnings release and other stuff we put out there, that looks like that product line's growing, but the truth is, it's all rate. So when the day is all done, yes, Josh, if you look at it in the aggregate, your point is correct. But if one were to unpack it, there are certain parts of our portfolio where we say, "You know what? We like the margin a whole lot," and, you know, to articulate a point, we don't need to generate a 23%.
If we can generate a 20% return and grow the portfolio by a meaningful amount, we're very happy to do that. There are other places where we say, "You know what? Come hell or high water, we would rather not write the business unless we can get this amount of additional rate." So I appreciate your, your point. I think at a macro level, it very much holds water. And yeah, we do provide this as a macro data point as far as rate goes, because we want to give people like yourself and others a little bit of visibility. Could we unpack every product line? Yeah, I guess we could, but at some point, you just end up going down too many rabbit holes.
So look, no 2x are gonna be the same. Just I'm gonna throw out some numbers here. In 2006, Berkley hit a premium volume peak at $4.9 billion, and three years later, a firm-wide premium volume was down 25% to $3.7 billion. It's a cycle. Sometimes you don't pay your underwriters to grow, you pay them to deliver profits for you. But it does seem like that the cycle, the main. In my mind, may work since there's periods of growth and periods of stagnation. Do businesses shrink in size?
Some of our businesses absolutely shrink in size in response to, you know, market conditions and our view about cycle management. You know, we are not in business to issue insurance policies. We're in business to make good risk-adjusted returns, and we are entirely unapologetic when it comes to that. So when we think about this, I know that you are a student of history, and I am too, and I very much appreciate the notion of what you can learn from history. And I also appreciate the comment that, you know, no two cycles are the same at the same time. In some ways, they're all the same. They're all the same in the sense that what really drives the cycle remains consistent, that being human emotion, fear, and greed.
But the reality is that when we look back on history and we try and learn from that, extrapolate and apply to the present and the future, one needs to also take into account what some of the differences are. So once upon a time, back, to use your point, in 2006, the organization that I work for, as you pointed out, was not just a fraction of the size, but it was a fraction in the number of operating units that make up the group. Our businesses that we had back then were much more concentrated around a more limited number of components of the marketplace.
So going to this notion of how product lines have decoupled as to where they are in the cycle relative to how it once was, the breadth and the diversity of our offering today, which is 60 businesses as opposed to approximately 30 back then, and how many different parts of the market we play in, whether it be accident and health, whether it be private client on the personal lines, front, whether it be our footprint outside of the United States, we are a far more diverse organization. So yes, we will absolutely, 100%, continue to focus on cycle management, but the decoupling of product lines, combined with the breadth of our offering today compared to 2006, I think puts us in a materially different place.
For more stability around-
For more stability in the top line. But what you will see throughout the cycle is the way we get to a place will be radically different. Because of the 60 businesses that make up the group, some businesses, at a moment in time, are growing, some businesses are shrinking. And that's just a reality, as opposed to once upon a time when we didn't have that diversity.
Well, you know, those that can't do, teach, and they usually sit in the cheap seats. At the risk of being completely wrong, I'm gonna say that had you not renewed that business when you were at a 4.9 peak, three years later, if you kept it going, probably that a lot of that business that you thought you needed to not renew, turned out to actually be profitable for somebody else.
... Josh, I think what you're highlighting is one of the great challenges of this industry, and it is a component of what drives the cycle. It is, without a doubt, the timing mismatch that exists in this industry between when you make the sale and when you know your costs of goods sold. And there are, without a doubt, the longer the tail, the more susceptible you are to that. And without a doubt, you know, we have a history of, quite frankly, erring on the side of caution more often than not. And what, you know, thank you for ripping open the scab, though it's an old one. But, yeah, we erred on the side of caution, and we probably shrank too early.
It's one of the great questions that we are grappling with right now today with some of our product lines, where we have taken a huge amount of rate in response to inflation, both economic as well as social inflation. How well do we understand our loss costs? Are we having the right posture? Should we be, quite frankly, more offensive than we are? Are we gonna look back on this time 10 years from now, 15 years from now, are you gonna be sitting here politely telling me: "Geez, you really blew that. You tapped the brake too early." You know what? I think there's probably a better than average chance the answer will be yes.
We are desperately trying to get the porridge not too hot and not too cold, and I promise you, we will not succeed perfectly, but we are doing our best to try and optimize that in our quest to understand loss costs. But it's hard.
And are you of the mind that you will be reflecting on this time 10 years from now, thinking that we were too cautious, or do you think that you've gotten better at trying to measure that caution more appropriately?
I think we're better at it than we once were, but I think there's still plenty of room for improvement, and I think that more likely than not, in my opinion, it may possibly prove to be that our more recent years are more comfortable than is fully appreciated.
So students of history, if we go back 20 years ago, I think that the 1997-2001 period was so traumatic for people that you went about 10 years where everybody said they wanted to be a property writer. And Berkley said, "Well, we like the long tails. We like the float. We like understanding our losses." It's only really recently that you've sort of found more property your mix of business become more property oriented now than probably any time in the history of the company. Maybe I'm wrong about that. It's a long history, but there's a higher property component now. Should we expect that the business is permanently more volatile when it comes to cat exposure, or is that will that change over time?
I think actually the business today, on a relative basis, is no more volatile than it was back then. You need to please keep in mind how much larger the business is today overall. Now, the other piece is we've been through a period. Let's bifurcate it between commercial lines, insurance and reinsurance and other, if we can. So we are not blind, we are not deaf, and we do our best to try and pay attention. We understand what's gone on in the past couple of years within the property market as far as rate adequacy. Both through reinsurance as well as certain aspects of the insurance market, we leaned into it. You should expect, as that market erodes, there will be a moment in time where that portfolio starts to shrink, and it will shrink considerably.
When the day is all done, no different than many of your guests here today at your conference, we view ourselves as capital managers. We are gonna expose the capital when we think we can make a good risk-adjusted return, and we will have no qualms about dialing that down when we think the window shrinks. I think the other piece, pivoting over to the non-commercial, if you will, is our efforts to build out our private client business, which certainly has a meaningful property component to that. We spend a lot of time focused on that portfolio and looking at it through the lens of ERM and cat management.
We have some great partners on the reinsurance front, and again, if you look at our history of managing volatility, including the recent events that have plagued the personal lines marketplace, you know, I think that we've demonstrated again how we manage volatility. It is true also over the past couple of years, that the reinsurance market had a bit more discipline, hence why we leaned into it as a writer. But as a cedent, you know, we have enough capital and enough flexibility that we can dial up and dial down our net, depending on the value that we think we're getting and buying reinsurance. So do I think that you or others should view us as though we've gone through some type of sea change as far as our appetite for volatility and specifically cat? Absolutely not.
Do I think you should view us as an organization that's focused on risk and return, and when the margin is there and the rates are attractive, we'll lean into it? Yeah. At the same time, when it's not, we will dial it down, because volatility is a component of risk when we think about risk and return.
As I mentioned, before we started talking, I'm aware of a friend of mine who has a claim with Berkley One, and I only know, like, 45 people, and, like, four of them have insurance claims this winter.
Good.
I've asked this at a couple of these things, and I actually is 1Q-26 a large claim quarter for the industry?
I think it's a little bit early to reach a conclusion on that. I think there... And quite frankly, until things thaw out, there can be a bit of a latency to it, relatively speaking. Do I think that there will be claims activity? Yeah, I think that there will be. Do I think it is gonna be something that is overwhelming? No, not likely. Do I think it is just going to be an insurance event as opposed to a reinsurance event? I think more likely than not, you're gonna see reinsurers maybe not get hit hard, but I think at a minimum, it's gonna tickle them.
All right. As I said, if anyone has a question, please ask. You know, one thing that I argue, when you are an owner of, Berkley stock, you're not just getting a company with a long history of, underwriting track record, you're also getting a long investment track record as well. And you've done very different things in your investment portfolio than a number of your competitors. One of them was in taking, private fund risk through private equity and other investments. And the market, you know, is, Dow hit all-time high just the other day, and, the, the Berkley fund investments, which have been a huge generator of return for investors for a very long time, it's been a couple of years where they've lagged the market more or less. And, what, what's been going on in that portfolio?
Is the mix changing in response, and are there some lessons learned?
Yeah, I think a couple of things there, Josh. First off, as far as what are we doing today, the vast majority of where we're putting new money is into the fixed income market. From our perspective, if you go back in time, what invited us, or the invitation to the alternatives, was really when interest rates were so low and people needed, including ourselves, had to explore the alternatives. I think what we have put some money with some third parties. Some of that has proven to be rewarding, some of it less rewarding.
But I think the other piece under the broader banner of alternatives for us is, and real estate being an example of that, is where we will, and we do some other things as well, where we will invest money, and we don't get the same marks on it that you would see from, like, a third-party fund. So I think that can skew the picture a little bit. But in the end, aside from a disappointment experience with one third party, I think that it tends to be lumpy, and you should, you know, I don't know what kind of forward-looking stuff I can say, but the punchline is, I think that that continues to be an opportunity, and I would expect over the next couple of years, you're gonna see yet another harvesting of some of those rewards.
Well, you know, like, with somebody who's often viewed as part of the insurance ecosystem is Mr. Buffett, who I guess is retiring, and he's sitting on-
Yeah
... $400 billion of cash and can't seem to do anything with it. You know, you guys also have cash and you're investing in fixed income, but is this a signal from the chairman that right now the markets are frothy?
I think that I'm just to be mentioned in the same sentence as Mr. Buffett is overly generous. That having been said, our view is that the equity markets, by and large, though it's somewhat concentrated, are priced. That's somewhat concentrated. When the day is all done, when we think about, again, risk and return, and we think about the overall returns that we as an organization are able to generate, we think about where, again, interest rates are. And we think for us to be pushing our money into double A minus, flirting with double A, average quality, and the duration, you know, is sitting at, give or take, about three years, you know, we're still generating high teens, low 20 returns.
There is not a lot of broad incentive for us to introduce more risk, unless we're confident we're gonna get paid for that risk. When we look out on the market, you know, we're not in a rush to take more risk.
Does, perhaps in May, I guess, Mr. Powell will step down, and we'll see. There'll be a new Fed chairman, maybe some new ideas. Does that cause you to want to lengthen the duration of the portfolio or maybe take it down one notch in terms of credit, to lock in some higher rates here?
Oh, it's certainly something that we're looking at, but compromising on quality is not something that you should expect us to do anytime soon. We certainly without a doubt have room to play with the duration, whether we take it shorter or whether we take it longer. Just as a reminder, the average life of our loss reserves is, give or take, four years. So we certainly, at some point, if we wish to, can take it out longer. But we tend to be not opportunistic on the credit quality. We tend to be much more opportunistic on the duration.
Speaking of reserves, I think that you're not the only one, but certainly people associate the discussion of social inflation.
Mm.
If you entertain the topic a great deal. I think we've been duly warned, and so if something happens, we'll know that we got the signal. Are you seeing currently anything new in the market? We're gonna look at your triangles in a couple of weeks, I guess, and we'll make our own determinations. Has something happened? We know in this state, for example, obviously, the tort reforms come in and tamp things down a little bit. Is the social inflation continuing to advance in your regular sort of way, or has the change been moderating?
I think it varies by state, and the position one finds themselves in varies by company. There are some companies that got cued into this social inflation issue earlier, and there's some companies that even once they were cued into it, responded earlier. There are others that saw it and responded later. So where people are in getting caught up and then staying on top of it, I think it varies by market participant. As far as the broader legal environment goes, I think there is a lot of chatter. We certainly have seen quite a bit of discussion around litigation funding, which has turbocharged a challenging environment. We're seeing some action taken in certain states around this. So what's the punchline? The punchline is, I think the trend continues upward. I think by and large, the industry has...
is either catching up or has caught up. And do we see it abating? Not as much as we would like, and certainly in some product lines, it continues to be remarkably challenging. I mentioned auto liability earlier. I would say under that creeps into excess and umbrella in some respects. In addition to that, I would tell you, interestingly, medical professional has also been very challenged under the banner of social inflation. So I think for us as an organization, we are in a good position having caught up, and we just need to calibrate whether we're more than caught up, a little bit less than caught up, or what the rate need will be going forward.
There may be some product lines that we're more than caught up, and we'll be willing to maybe be a little bit more, adjust our approach, I should say, to rate increases.
The one thing I've never really understood. Let's just say that social inflation, jury judgments, and litigation facts is out of control, and therefore, you need a margin of safety in your pricing in order to account for that. And the more out of control, the more margin of safety you need, which I think has may separate the wheat from the chaff in terms of who the good underwriters are and aren't, and two, might ultimately increase your margins because you've had to pack a higher margin of safety. To what extent is the difficulty in forecasting claims outcomes positive versus negative for a great underwriting organization? And that we'd like it to be unpredictable because that's where we really excel. Or is there a wrong way to think about things?
Well, I think, Josh, when, if I'm understanding your question correctly, you're getting towards, is it an advantage for there to be unknown, if you will. Is that correct?
That's correct.
So, yeah, I think that ultimately that does create an opportunity, but even too much of something can give you a bit of a bellyache. So when the day is all done, I think that, you know, for us as an organization with expertise, certainly on the underwriting side and on the claims side as well, and in many activities between those two, yeah, the expertise, and if we have better expertise than someone else, you know, that certainly helps. That having been said, I think one of the challenges that the marketplace has faced is... The challenges with social inflation have been that this is not a stationary target, this is a moving target.
And you look at an outcome, and that will instruct you to think a certain way, or a series of outcomes, and that will instruct you to think a certain way. And you can take that information and do that math, and we'll say, as opposed to charging X, you need to charge 1.25X. But the problem is, that's the information you had at that moment in time, but when trend continues to go and it's not a stationary target, it's a moving target, that's when it becomes more complicated. And trying to calibrate how steep that trend is, trying to interpret the social mindset, that pervades society is a hard thing to do. Trying to anticipate how juries will act is proven to be complicated.
So long story short, Josh, I think we have, as an industry and certainly us as a company, learned a lot over the past several years. I think that one of the reasons why I think some of our more recent years, in my opinion, may prove to be more comfortable than recognized, is because I think that we've gotten on top of it. I think how we think about certain things has evolved in response to this environment.
So I think you're sitting on, probably more excess capital than you have any time in the company's history. Maybe. Certainly numerically, that's correct. The question is on percentages, I don't know. You have a unique capital return model, a combination of regular, special dividends as well, and you do buy back stock. Also, you have a new, friend and partner in the company who owns 15% stake in the company, and if you buy back stock, their stake will go up in value. Does their presence, ownership and in terms of assuming how much they can own, restrict your appetite for one of your three main channels for returning capital to shareholders?
No.
No.
Would you like me to expand on that, or is that enough?
Please do.
Okay. The answer is, it does not. Ultimately, our focus is on, to the extent we feel that we have excess capital above and beyond what we need, plus a cushion, plus anything we may want to do from a strategic perspective, then we are gonna look to return that to the people that it belongs to. The two obvious levers for us are share repurchase as well as, dividend activity. Your point about MSI and their shares, they, either in the process or have reached, exactly their 15%. In the agreement, there was headroom built in, that as a result of share repurchase, they are able to go up to 17.5%.
Once they reach 17.5, that is a hard cap, regardless of repurchase, and if they were in a position where the company bought back enough stock, where they would be going through that 17.5, then there is a mechanism for them to dispose of whatever that surplus is. Which is articulated over 75 pages that have been filed with the SEC. The Reader's Digest version is that their partner, that being my family, has an option to buy the surplus. If they don't, the company has the option to buy the surplus, and if we get to step 3, then it would be offered in an orderly way in the marketplace.
The only thing I would add to that in terms of complexity is that from the end of 2006 through the end of 2010, you bought back more than a quarter, not quite a third of the stock in the company. Is the lever to do something as dramatic as that's probably no longer available to the company? Is that wrong? Is that right? Or anything's possible?
I think anything's possible. I think we got a, we got a lot of excess capital right now, and putting that aside for a moment, as much as we would like to be able to put more capital to use, we're generating capital more quickly than we can consume it, which is, again, not our first choice. We would rather be able to find ways to grow, but at the moment, we have not found those. So yeah, I mean, the business is earning something to shy at $2 billion a year, give or take, barring the unforeseen event, and, you know, gotta go somewhere.
Sorry about that. In terms of thinking about, you know, I think I've asked this question and never quite get a perfectly satisfactory answer.
Sorry.
Maybe-
Sorry to disappoint you, Josh.
Maybe there's a buybacks versus special dividends.
Yep.
I understand you don't want to signal when you're gonna buy back the stock, but in terms of a rule of thumb that we can understand how you think about-
So my friend Mr. Baio in the back, who's trying to keep a low profile, but it's not working, at least not at the moment. He and colleagues, we have all kinds of complicated sausage maker models. And I think the punchline is, Josh, it would be appropriate to expect us to continue to consider both of those levers.
And do you have... Of course, the answer is yes, to this question, but, and is there any indication as about how much equity there is on the balance sheet due to the conventions of accounting that investors cannot see?
Meaningful.
Meaningful. Is that, are you saying that's in terms of unrealized gains on illiquid investments or in terms of a potential, a margin of safety on the reserves, which probably I would not include the latter, but I would include the former?
So, Josh, I, I think that from my perspective, as far as the illiquid assets that you're referring to, yes, and as far as the reserves go, I think people have a tendency to, quite frankly, do the best they can when they crack open a K, and they try and look at triangles and piece it together. But our organization and the industry have a long, distinguished history of looking at the data at a moment in time, and then you leap forward, and you realize that view proved to be very mistaken.
Now, if you sort of 2007, 2008, sort of somewhere in there, you know, people had a view about our reserves, and you roll the movie forward a bit, it proved that our reserves were more than $1 billion redundant at that moment in time. Nobody thought that was the case. You'll have perhaps some recollection, certainly I do, that we had much discussion over time regarding excess workers' comp, and how, you know, that is a very different product in many respects than primary comp.
So when we look at our reserves, and obviously we have visibility that, in fairness to you and others, you don't have, you know, we feel like, as I suggested, I'm not gonna go too far with this because I'll get in all kinds of trouble, but in my opinion, I believe that we're in a pretty comfortable place.
I'll just close on talking about Monday. Although the entire insurance sector was down, it was really concentrating insurance distributors. And this idea that ChatGPT in Spain came out with a direct consumer homeowner, I don't know exactly what the thing was.
It was kind of weird. I thought the whole situation was weird.
But to the extent, I would frame it in two ways. One is the last 20 years, in my mind, have been a one-way pendulum swing in favor of distribution over underwriters. Maybe you disagree with that formulation. But two, what is your view on how future tech might be changing insurance distribution as a intermediary in the marketplace?
So, maybe to at least attempt to take them in the order that you put them forth. I think as far as distribution goes, there have been a couple of really helpful drivers there. A, I think through thick and thin, closer to the customer is always a better place to be, all things being equal. Number two, I think on the distribution, front as well, we have seen a remarkable level of consolidation and a noteworthy arbitrage that existed oftentimes between what the multiple is that some of these consolidators were trading at, relative to what their targets were being valued at. And the folks that they were buying, they thought that, you know, they hit the jackpot, but relative to the multiples in this natural, somewhat arbitrage that was created, I think that worked really well for them.
I also think that they caught the wave of commissions being fixed, or in some cases, maybe going up a little bit as rates were going up, in keeping up with inflation, both economic and social. You know, that proved to be a windfall for, for them as well. So, you know, maybe turning our attention more specifically to your point, regarding this announcement coming out of Spain, blah, blah, blah. You know, I found the whole situation, as I mentioned a moment ago, to be a bit bizarre. Bizarre for a couple of reasons, because, you know, it's not really this new, you know, such a remarkable thing other than, you know, it got tagged with AI.
But when the day is all done, these are very simple, straightforward exposures that, you know, yesterday or the day before, or the day before that, you know, there are a lot of folks running things through an algorithm, and you layer on some kind of, you know, chatbot on top of that, and boom, you kinda have the same thing. In my opinion, also, it was bizarre, the reaction that the world had, because as I mentioned to somebody yesterday, it was almost like all of a sudden, somebody in Spain, like, discovered fire or something like that. It was just weird, because we've been on this journey for some number of years, where you can just see data analytics technology playing more and more of a role.
Simultaneously, with all due respect to our partners on the distribution side, in some of the consumer space, and even in some of the small business end of town, you know, the value proposition of a retail agent, I think, is coming under greater and greater pressure. Even if they're getting paid on a small business policy, call it, you know, $3,000 premium, they get 10%, $300, they can't afford to invest the time to really generate a value proposition. So I think what I'm suggesting is that... I think AI is a remarkable, not step, but leap in what we as a society, we as an industry, and quite frankly, the organization I work for, and what we can do with, data analytics and tools from a, you know, an operational perspective.
I think that that applies to distribution as well. But this notion that this, all of a sudden, was this remarkable finding that came out of nowhere, I respectfully think about it differently, in that I think that we've been on this path for a while, and because there's so much attention around AI and ChatGPT and so on, that it got people to think about it and focus on what's been under their nose for what's been measured in years.
Well, what I was told is that in Spain, they have a siesta, and they woke up, and just it was boom. So it was fast there. Might not have been for you, you were here the whole time, but for them, it was all right, well, you know, that-
Change is good.
I think change is good. All right, with that, we'll bring it to an end. And we really appreciate Rob's time, Rich's time, Karen's time, thank you for being here. And there's still more to come in this exciting US Financial Services Conference, so stay tuned. Thank you.
Thank you all for your time. Josh?