Financial Data and Key Metrics Changes - The company reported operating income of $734 million for Q3 2025, with an operating return on average common equity of 28% [6][16] - Year-to-date operating income reached nearly $1.3 billion, delivering about a 17% operating return on average common equity [6][16] - Tangible book value per share plus change in accumulated dividends grew by 10% in the quarter and almost 22% year-to-date [6][16] Business Line Data and Key Metrics Changes - Underwriting income for the quarter was $770 million, nearly double from Q3 2024 [16] - Retained net investment income increased to $305 million, up 4% [16] - Fee income rose to $102 million, a 24% increase [16] - The adjusted combined ratio for underwriting was 67%, reflecting disciplined underwriting and low catastrophic losses [20] Market Data and Key Metrics Changes - The property catastrophe portfolio grew from $2 billion in gross written premium in 2022 to around $3.3 billion [7][8] - Gross premiums written in casualty and specialty were roughly flat compared to the previous quarter, with general casualty premiums down 7% [22] - In credit, gross premiums written increased by 19%, driven by additional premium on seasoned mortgage deals [22] Company Strategy and Development Direction - The company aims to prioritize margin over growth, focusing on strong underwriting practices [10][11] - It plans to continue growing tangible book value per share at an attractive pace, leveraging its strong underwriting and investment management capabilities [7][39] - The company is cautious about the anticipated decrease in property catastrophe rates and falling short-term interest rates but believes it can navigate these challenges [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to construct an attractive property portfolio despite expected market reductions [10][12] - The company anticipates continued demand growth in property catastrophe, although at a slower rate than in previous years [10][12] - Management highlighted the importance of maintaining strong customer relationships to capitalize on future growth opportunities [11][12] Other Important Information - The company returned over $1 billion in capital to shareholders year-to-date through share repurchases [9][19] - It has generated $3.2 billion in operating cash flow, facilitating growth in its property catastrophe portfolio [14][19] - The company expects to continue generating profits and cash at an attractive rate, with share repurchases viewed as a highly accretive use of capital [15][19] Q&A Session Summary Question: What are the normal expectations for fee income and net investment income contributions to return in 2026? - Management expects around 11-12% from investment income and over 3% from fees as a starting point for 2026 [42][43] Question: What is the expected ROE on cat business written in 2026? - Management indicated that while rates may decline, the business remains above rate adequacy, and they expect to construct an attractive portfolio [46][48] Question: How is third-party capital influencing pricing in 2026? - Management noted that third-party capital is not the primary driver of pricing; rather, it is about comfort with return levels within property cat [53][54] Question: What is the outlook for casualty and specialty pricing? - Management observed that pricing increases have primarily occurred at the insurer level, benefiting their reinsurance business [65] Question: How does favorable reserve development impact pricing models? - Management stated that favorable reserve development informs both pricing and reserving strategies, contributing to future expectations [88][89]