Group 1: Gold Prices - Gold prices reached a record high of $4,445.8 per ounce, with spot gold trading at $4,414.99, marking an increase of nearly 70% since the beginning of the year [1] - The surge in gold prices is attributed to the decline of risk assets, reinforcing gold's status as a safe haven during economic or geopolitical uncertainty [1] Group 2: Silver Prices - Silver prices also hit a record high of $68.96 per ounce, with spot silver at $68.98, reflecting a 128% increase since the start of the year [2] Group 3: Economic Context - The Federal Reserve's interest rate cut on December 10 has led to a return of optimism in AI stocks, but economic speculation for the upcoming year has made global investors cautious [4] - Significant fiscal deficits in the U.S., U.K., Europe, Japan, and China have contributed to the resurgence of gold's monetary value, as noted by Matthew McLennan from First Eagle Investments [5] Group 4: Gold as a Hedge - McLennan emphasized that gold's value as a potential hedge has become more rationally valued, leading to a rise in other precious metals as well [6] - The long-term fiscal credibility of the United States is crucial for maintaining an independent Federal Reserve and a rational chair, according to McLennan [8] Group 5: Labor Market Insights - McLennan is monitoring wage inflation and its relationship with job openings and corporate earnings, which have recently shown an upward trend [9]

Look, I I think when you step back at a macro basis, uh you know, our small business job index uh really has remained relatively stable in 2025. Uh really with we also see continued moderation in wage inflation. When what we reported today is our same store workforce levels for our clients.Now that's more broadly across our entire base, not just the small market, which is 50 employees and less. That's essentially flat for the quarter. Um what we see is continued challenges particularly in the small end of t ...

What were the larger forces that kept inflation down and have they gone away. >> Well, a very important force that was keeping inflation down was globalization. It was the case after China entered the WTO 25 years ago that goods were coming out of China and was holding goods prices down.At the same time, immigration globally also went up. That also messed that the cost of labor and wage inflation was also held down. So those forces were weighing on inflation for literally two decades after 2000 because we s ...

Do you think that this really changes the needle in any way. Well, Lisa, you stole my opening line. I was going to do a little hat tip to our friend and colleague, Jonathan Ferro.He always says the first reaction is not always the right reaction. And you said that at the top of the hour there at the top of the segment. You know, the headline was what the markets were reacting to, the little bit higher than expected unemployment rate.I think you guys in the earlier segment decomposed that pretty well the lab ...

Take a much closer look at the alternative data sources, the private data sources, the alternative data that I mentioning there. We've had a lot of success scraping the wage inflation data or the wage posting data and extracting from it wage inflation measures. And one of the most important stories that I think everyone is aware of it when you came out of Covid, it was the bottom and that led the wage gains and that shifted.And we've been in a period where, you know, you guys have talked about it, the K-sha ...

Europe's private equity-owned recruitment firms are getting squeezed by a hiring slowdown, wage inflation and the impact of AI. Big debt stacks are making things worse. Read it here on The Brink. https://t.co/nhUkOXdgtf ...

Core Insights - The article emphasizes the investment philosophy focused on small cap companies, highlighting the importance of identifying mispriced securities through understanding financial drivers and utilizing DCF model valuation [1] Group 1: Investment Philosophy - The investment approach is not confined to traditional categories such as value, dividend, or growth investing, but rather considers all prospects of a stock to assess risk-to-reward [1] Group 2: Market Focus - The investment strategy encompasses markets in the US, Canada, and Europe, indicating a broad geographical focus for potential investment opportunities [1]

Labor Market & Wage Deflation - The labor market is experiencing wage deflation, which will become more apparent soon [14] - Companies are hesitant to hire due to the high cost of labor and are exploring digitization and automation ("agentics") as alternatives [4][3] - AI is expected to contribute to wage deflation in law firms, accounting firms, and advertising firms, as these organizations are reluctant to hire due to the potential for AI to replace jobs [10][11][12] - Layoffs are anticipated in host banks due to mergers and acquisitions, specifically Capital One's acquisition of Discover [8] Company Specifics & Industry Trends - Intel's balance sheet is weak and may require government intervention [2] - Amazon is expanding same-day grocery delivery to 2,300 cities, potentially impacting DoorDash, Instacart, Kroger, and Target [6][7] - FedEx and Amazon are utilizing robots in warehouses, reducing the need for human labor and lowering delivery costs [5] - Mergers and acquisitions are expected to increase, leading to layoffs, especially with the Biden administration's de facto ban on M&A activity ending [9] Inflation & Producer Price Index (PPI) - The focus should be on wage deflation rather than outliers in the PPI, such as trucking prices and diesel, which are expected to reverse [8] - Tariffs may force companies to raise prices, but wage deflation will ultimately be more significant [13][14]

Financial Data and Key Metrics Changes - Net income per diluted share increased by 8.7% year-over-year to $1 per share, with an annualized return on beginning of year equity of 19.1% [11] - Operating earnings were $420 million or $1.05 per share, yielding an annualized return on beginning of year equity of 20% [11] - Stockholders' equity increased by more than $380 million or 4.3% to a record $9.3 billion [15] Business Line Data and Key Metrics Changes - The Insurance segment's accident year loss ratio excluding catastrophes was relatively flat year-over-year at 60.7%, with a combined ratio before catastrophes of 89% [13] - The Reinsurance and Monoline Excess segment's accident year loss ratio excluding catastrophes increased to 54.1%, with a strong combined ratio before catastrophes of 83.8% [13] - Net premiums earned reached a record of $3.1 billion, while net premiums written increased to a record $3.4 billion, showing growth across all lines of business [13] Market Data and Key Metrics Changes - The property market is becoming more competitive, particularly for larger accounts, while smaller accounts face less competition [19][20] - The commercial transportation market continues to see activity from Managing General Agents (MGAs), pushing for rate increases [20] - The professional liability market is mixed, with public Directors and Officers (D&O) insurance beginning to stabilize, while private and non-profit D&O remains competitive [21] Company Strategy and Development Direction - The company is focused on achieving appropriate risk-adjusted returns and is optimistic about growth opportunities in the liability market over the next 12 to 36 months [32] - The company is maintaining a defensive posture in certain areas while leaning into higher hazard, more specialized lines of business [70] - The company is cautious about the competitive dynamics in the reinsurance market, particularly regarding ceding commissions and discipline in casualty lines [25][114] Management's Comments on Operating Environment and Future Outlook - Management highlighted concerns about economic inflation, labor market dynamics, and the resilience of U.S. consumer spending as macroeconomic factors impacting the business [7][9] - The company is optimistic about its ability to manage through potential challenges related to tariffs and labor costs, while also focusing on pricing strategies [45][88] - Management expressed confidence in the investment portfolio's positioning and the potential for improved investment income [31][94] Other Important Information - The company paid ordinary and special dividends totaling $224 million in the quarter, contributing to a growth in book value per share of 6.8% for the quarter and 14.3% year-to-date [16] - The effective tax rate for the quarter was 23.2%, exceeding the U.S. statutory rate due to taxes on foreign earnings and state income taxes [15] Q&A Session Summary Question: Growth potential in the current environment - Management adjusted growth expectations to a range of 8% to 12% from the previous 10% to 15% due to recent market conditions [38] Question: Underlying loss ratio dynamics - The underlying loss ratio remains primarily influenced by business mix, with no unusual factors noted [39] Question: Impact of tariffs and labor costs - Management indicated that current loss activity does not reflect significant impacts from tariffs or labor costs, but they are monitoring the situation closely [45] Question: Trajectory of margins - Management believes that current rates are positioning the company well for future improvements, but cautioned against premature conclusions [47] Question: Capital management and share buybacks - The decision not to repurchase shares was based on maintaining surplus capital for future opportunities, with a focus on special dividends as a more efficient return method [52] Question: Medical inflation and its impact - Management is closely monitoring medical inflation and its potential effects on workers' compensation and stop-loss portfolios, with sensitivity analyses conducted [65] Question: Competitive dynamics in the private client business - The company is experiencing traction in the private client space due to its expertise and value proposition, despite not being the cheapest option [126]

Financial Data and Key Metrics Changes - Net income per diluted share increased by 8.7% year-over-year to $1 per share, with an annualized return on beginning of year equity of 19.1% [9] - Operating earnings were $420 million or $1.05 per share, yielding an annualized return on beginning of year equity of 20% [10] - Stockholders' equity increased by more than $380 million or 4.3% over the year to a record $9.3 billion [13] Business Line Data and Key Metrics Changes - The Insurance segment's accident year loss ratio excluding catastrophes was relatively flat year-over-year at 60.7%, with a combined ratio before catastrophes of 89% [11] - The Reinsurance and Monoline Excess segment's accident year loss ratio excluding catastrophes increased to 54.1%, with a strong combined ratio before catastrophes of 83.8% [11] - Net premiums earned reached a record of $3.1 billion, while net premiums written increased to a record $3.4 billion in the quarter [11] Market Data and Key Metrics Changes - The property market is becoming more competitive, particularly for larger accounts, while smaller accounts face less competition [16][17] - The commercial transportation market is experiencing significant activity from Managing General Agents (MGAs), pushing for rate increases [18] - The professional liability market shows mixed results, with public Directors and Officers (D&O) insurance beginning to stabilize [20] Company Strategy and Development Direction - The company is focused on achieving appropriate risk-adjusted returns and is optimistic about growth opportunities in the liability market over the next 12 to 36 months [30] - The company is maintaining a selective approach to underwriting in the competitive property market, ensuring pricing adequacy [93] - The company is evaluating opportunities in the MGA space but remains cautious about valuations [75] Management's Comments on Operating Environment and Future Outlook - Management highlighted concerns about macroeconomic factors such as inflation, labor market dynamics, and consumer spending, which could impact underwriting and investment strategies [6][7] - The company is optimistic about its ability to manage through potential challenges related to tariffs and labor costs, while also focusing on maintaining strong cash flow [42][60] - Management expressed disappointment with the discipline in the casualty reinsurance market, particularly regarding ceding commissions [108] Other Important Information - The effective tax rate for the quarter was 23.2%, exceeding the U.S. statutory rate due to taxes on foreign earnings and state income taxes [13] - The company paid ordinary and special dividends totaling $224 million in the quarter, contributing to a growth in book value per share of 6.8% for the quarter [14] Q&A Session Summary Question: Growth potential in a tougher quarter - Management revised growth expectations to a range of 8% to 12% instead of the previously stated 10% to 15% [34] Question: Underlying loss ratio dynamics - The underlying loss ratio remains primarily affected by business mix dynamics [36] Question: Impact of tariffs and labor costs - Management indicated that current loss activity is not significantly impacted, but they are monitoring future implications [42] Question: Trajectory of margins - Management believes that current rates are positioning the company well for future improvements, but cautioned against premature conclusions [44] Question: Capital management and share buybacks - Management clarified that the decision not to buy back shares was based on maintaining surplus capital for future opportunities [47] Question: Updates on the Mitsui stake - Management indicated no new information on the Mitsui stake and compliance with SEC regulations will be followed [56] Question: Medical inflation impact - Management is closely monitoring medical inflation and its potential effects on workers' compensation and stop-loss portfolios [60] Question: Competitive dynamics in private client business - Management noted that they are gaining traction in the private client space due to their expertise and value proposition [118]