管理層發言
Good morning, and welcome to American Financial Group's Second Quarter 2025 Earnings Results Conference Call. We released our results yesterday afternoon. Our press release, investor supplement, and webcast presentation are posted on AFG's website under the Investor Relations section. These materials will be referenced during portions of today's call. I'm joined this morning by Carl Lindner III and Craig Lindner, Co-CEOs of American Financial Group; and Brian Hertzman, AFG's CFO. Before I turn the discussion over to Carl, I would like to draw your attention to the notes on Slide 2 of our webcast. Some of the matters to be discussed today are forward-looking. These forward-looking statements involve certain risks and uncertainties that could cause our actual results and/or financial condition to differ materially from these statements. A detailed description of these risks and uncertainties can be found in AFG's filings with the Securities and Exchange Commission, which are also available on our website.
We may include references to core net operating earnings, a non-GAAP financial measure, in our remarks or in responses to questions. A reconciliation of net earnings to core net operating earnings is included in our earnings release. And finally, if you're reading a transcript of this call, please note that it may not be authorized or reviewed for accuracy. And as a result, it may contain factual or transcription errors that could materially alter the intent or meaning of our statements. Now I'm pleased to turn the call over to Carl Lindner III to discuss our results.
Good morning. I'll begin by sharing a few highlights of AFG's 2025 second quarter results, after which Craig and I will walk through more details. We'll then open it up for Q&A, where Craig, Brian, and I will be happy to respond to your questions. We're pleased to report an annualized core operating return on equity of 15.5% despite quarterly returns from alternative investments that tempered overall results. Underwriting margins in our Specialty Property & Casualty insurance businesses were strong, and higher interest rates increased net investment income, excluding alternatives, by 10% year-over-year. In addition, we returned over $100 million to our shareholders during the second quarter of 2025 through a combination of regular dividends and share repurchases. Our compelling mix of specialty insurance businesses, entrepreneurial culture, disciplined operating philosophy and an astute team of in-house investment professionals continue to serve us well in environments such as these and position us for long-term success. Craig and I thank God, our talented management team, and our great employees for helping us to achieve these results. I'll now turn the discussion over to Craig to walk us through some of these details.
Thanks, Carl. Please turn to Slides 3 and 4 for second-quarter highlights. AFG reported core net operating earnings of $2.14 per share compared to $2.56 per share in the prior year-end period. Our 2025 results reflect a year-over-year decrease in underwriting profit and lower returns on alternative investments. I'll begin with an overview of AFG's investment performance and share a few comments about AFG's financial position, capital, and liquidity. The detail of surrounding our $16 billion portfolio was presented on Slides 5 and 6. Excluding the impact of alternative investments, net investment income at our property and casualty insurance operations for the 3 months ended June 30, 2025, increased 10% year-over-year as a result of higher interest rates and higher balances of invested assets. As you'll see on Slide 6, approximately two-thirds of our portfolio is invested in fixed maturities.
In the current interest rate environment, we're able to invest in fixed maturity securities at yields of approximately 5.75%, which compare favorably to the 5.2% yield earned on fixed maturities at our P&C portfolio during the second quarter of 2025. The duration of our P&C fixed maturity portfolio, including cash and cash equivalents, was 2.8 years at June 30, 2025. The annualized return on alternative investments in our P&C portfolio was approximately 1.2% for the 2025 second quarter compared to 5.1% for the prior year quarter. As a result, overall P&C net investment income was approximately 5% lower than the comparable 2024 period. The impact on rental rates and occupancy from a surge in new apartment supply in certain otherwise strong markets reduced the fair value of some multifamily investments. This tempered the performance of our alternative investment portfolio in the second quarter of 2025 by nearly $30 million.
Although substantial supply persists, new construction starts have plummeted. We expect current inventory to be absorbed over the next 12 months. Notably, multifamily starts were down approximately 20% year-over-year and down nearly 50% from their 2022 peaks. The combination of tightening supply and a significantly reduced development pipeline is forecast to drive higher rental and occupancy rates over the next several years and should result in stronger returns on our multifamily investments. Longer-term, we continue to remain optimistic regarding the prospects of attractive returns from our overall alternative investment portfolio with an expectation of annual returns averaging 10% or better. Please turn to Slide 7, where you'll find a summary of AFG's financial position at June 30, 2025. During the quarter, we returned over $100 million to our shareholders, including $39 million in share repurchases and our $0.80 per share regular quarterly dividend.
We expect our operations to continue to generate significant excess capital throughout the remainder of 2025, which provides ample opportunity for acquisitions, special dividends, or share repurchases. We evaluate the best alternatives for capital deployment on a regular basis. We continue to view total value creation as measured by growth in book value plus dividends as an important measure of performance over the long term. For the 6 months ended June 30, 2025, AFG's growth in book value per share, excluding AOCI plus dividends, was 6%. Our strong operating results, coupled with effective capital management at our entrepreneurial opportunistic culture and disciplined operating philosophy enable us to continue to create value for our shareholders. I'll now turn the call over to Carl to discuss the results of our P&C operations.
Thank you, Craig. Please turn to Slides 8 and 9 of the webcast, which include an overview of our second quarter results. Overall, underwriting profitability was strong in our Specialty P&C businesses in the second quarter of 2025, and we remain confident about the strength of our reserves. A continued favorable pricing environment, increased exposures, and new business opportunities enabled us to grow our Specialty Property & Casualty businesses, and we continue to expect premium growth for the full year in 2025. Looking at a few details, you'll see on Slide 8 that our Specialty Property & Casualty Insurance businesses generated a 93.1% combined ratio in the second quarter of 2025, 2.6 points higher than the 90.5% reported in the second quarter of last year. Results for the 2025 second quarter include 2.3 points related to catastrophe losses consistent with results in the 2024 second quarter.
Second quarter 2025 results benefited from 0.7 points of favorable prior year reserve development compared to 2.3 points in the second quarter of 2024. Second quarter 2025 gross and net written premiums were up 10% and 7%, respectively, when compared to the second quarter of 2024. Earlier reporting of crop acreage by insureds impacted the timing of the recording of crop premiums and contributed to the year-over-year increase, particularly when compared to later reporting of acreage the previous year. So if you exclude the crop business, our gross and net written premiums grew 6% and 5%, respectively. Average renewal pricing across our Property & Casualty Group, excluding our workers' comp businesses, was up approximately 7% in the second quarter, consistent with pricing increases achieved in the first quarter, including workers' compensation, renewal rates were up approximately 6% overall, about 1 point higher than in the previous quarter.
We reported overall renewal rate increases for 36 consecutive quarters, and we believe we're achieving overall renewal rate increases in excess of prospective loss ratio trends to meet or exceed our targeted returns. Now I'd like to turn to Slide 9 to review a few highlights from each of our Specialty Property & Casualty business groups. Details are included in our earnings release, so I'll focus on summary results here. The businesses in the Property & Transportation Group achieved a 95.2% calendar year combined ratio overall in the second quarter of 2025, 2.5 points higher than the 92.7% reported in the comparable 2024 period. The second quarter 2025 combined ratio benefited from 2.2 points of favorable prior year reserve development compared to 6.3 points in the 2024 second quarter, particularly reflecting especially strong results for our crop business in the prior year period. Second quarter 2025 gross and net written premiums in this group were up 15% and 10% higher, respectively, than the comparable prior year.
As mentioned before, earlier reporting of crop acreage compared to 2024, which impacts the timing of crop premiums, contributed to higher second quarter premiums in this group. Again, when you exclude the crop business, gross and net written premiums in this group grew by 6% and 5%, respectively. Increased exposures, new business opportunities, and a favorable rate environment contributed to our growth in our transportation businesses. Overall renewal rates in this group increased approximately 8% in the second quarter of 2025, a point higher than the pricing achieved in this group for the first quarter of 2025. We continue to remain focused on rate adequacy, particularly in our commercial auto liability line of business, where rates were up approximately 15% in the second quarter. In terms of our crop business, commodity futures pricing remains in acceptable ranges relative to spring discovery prices.
Based on the most recent crop progress reports, overall corn and soybean conditions are slightly better than last year at this time. We believe that there's been adequate moisture to date in those areas so that the excessive heat in recent weeks shouldn't be problematic. However, moisture levels through August and early September remain important. Now the businesses in our Specialty Casualty Group achieved a solid 93.9% calendar year combined ratio overall in the second quarter, 4.8 points higher than the very strong 89.1% reported in the comparable period in 2024. Second quarter 2025 gross and net written premiums increased 4% and 2%, respectively when compared to the same prior year period. Higher year-over-year premiums in our mergers and acquisitions business and growth across a variety of other businesses in the group, resulting from new business opportunities, higher rates, and strong policy retention were partially offset by lower premiums due to a challenging market in our Directors and Officers Liability business.
In addition, we continued to nonrenew certain housing and daycare accounts in our social services businesses. Excluding our workers' comp businesses, renewal rates for this group were up 8% in the second quarter. Pricing in this group, including workers' comp was up about 6%. I'm pleased that we achieved renewal rate increases in the mid-teens in our most social inflation exposed businesses, including our social services and excess liability businesses. The Specialty Financial group continued to achieve excellent underwriting margins and reported a combined ratio of 86.1% for the second quarter of 2025, 3.6 points better than the 89.7% reported in the comparable period in 2024. These results reflect higher year-over-year underwriting profitability in our financial institutions and surety businesses. Second quarter 2025 gross and written net premiums in this group were up 15%, 12%, respectively, when compared to the prior year period, due primarily to growth in our financial institutions business.
Renewal pricing in this group was flat in the second quarter. Craig and I are proud of our history of long-term value creation. We have years of experience navigating economic and insurance cycles. Our insurance professionals continue to exercise their Specialty Property and Casualty knowledge and expertise to successfully compete in a dynamic marketplace. Our in-house investment team has been both strategic and opportunistic in the management of our $16 billion investment portfolio. One of our greatest strengths is finding opportunities in times of uncertainty. We feel we're well positioned to continue to build long-term value for our shareholders for the remainder of 2025 and beyond. I will now open the lines for the Q&A portion of today's call. Craig, Brian, and I would be happy to respond to your questions.
分析師問答
Our first question comes from Michael Zaremski at BMO Capital Markets.
My first question is about the lender-placed business within Specialty Financial. It seems that this might be a factor contributing to the continued healthy growth this quarter. Can you help us understand how to think about the growth of that market? Does it correlate with mortgage delinquencies or is it influenced by hard market versus soft market dynamics? Additionally, can you provide more insight into how it appears that you may have gained market share in that business, if you agree?
Thank you. The lender-placed property business has relatively few competitors. Last year, it generated approximately $700 million in gross written premiums, making it a significant part of our operations. This sector tends to present greater opportunities during economic downturns. When individuals struggle to keep up with their payments and fail to pay for insurance, that primarily drives this business cycle. It relies heavily on strong relationships with major financial institutions. Recent market disruptions, which have affected some competitors, have presented us with additional opportunities and contributed to our growth in this area over the past couple of years. Additionally, this year we, along with others in the property sector, implemented substantial rate increases. Another factor benefiting our business has been the shift in our portfolio from insuring unpaid mortgage balances to focusing on replacement cost values, which aligns with what many in the industry are adopting. As more of our significant clients transition to this approach, it helps us achieve more accurate values for our business.
Carl, would the lender-placed also have excellent margins in the segment? Is that also what's driving the pricing power kind of to decelerate?
Yes. I think this business is very profitable for us, again, made up of large accounts. I think pricing is in this business through 6 months is prices are up about 1%. The loss ratio trends are very low single digit in this business. And I think, again, the last thing I mentioned as far as a move from unpaid mortgage balance as a basis for premiums to move to replacement cost values. I think that helps offset the difference between the price increase and the loss ratio trend, if that makes sense.
Yes, that's helpful. My follow-up relates to what I believe are some more social inflationary lines of business. You continue to mention nonrenewals in certain areas. I assume there are always nonrenewals occurring, but you're highlighting it because it seems to be at a higher than normal level or what AFG would expect. I know the situation regarding loss cost inflation is always evolving, but could you provide a broad overview or discuss how AFG is managing remediation actions, particularly in commercial auto compared to housing and day care accounts? Additionally, could you share your perspective on pricing versus loss trends that you feel comfortable with? That's my final question.
Yes, it's a complex issue when you're involved in multiple businesses. In our nonprofit Specialty Human Services sector, which includes both housing and daycare, we have mostly finalized our efforts to discontinue housing accounts. This effort accounted for around $20 million of the previously mentioned $50 million. We no longer offer property or liability insurance for low-income or affordable housing accounts. On the daycare side, we estimate we have about $9 million or $10 million remaining that will be phased out by the end of the year. We initiated this process earlier this year, and we're on track to complete it by year-end. We still actively underwrite YMCAs, which provide daycare services, and there are agents with solid business in that area. Our focus remains on writing daycare coverage with specific risks, while we've phased out most of the unprofitable daycare business by year-end.
Additionally, we've been reducing umbrella capacity from $15 million to $5 million. Currently, we have around $20 million in force for umbrellas over $5 million, but that should drop to zero by year-end. Our nonprofit business has faced significant social inflation risks compared to some of our other sectors. Regarding the public sector, we've been working on increasing our retentions and taking rate adjustments, and I believe there are new opportunities emerging as we move through that cycle. In the excess liability business, we're still seeing mid double-digit price increases in several units. We've adjusted limits downward, increased some limits, and non-renewed accounts with high commercial auto liability exposure. In our Fortune 1000 segment, we've almost completed our book adjustments, particularly in our Great American custom book. We anticipate growth opportunities as we finish these adjustments.
Regarding commercial auto, while it hasn’t been a significant part of our Specialty Casualty business, we've experienced strong growth and are outperforming the industry by about 8 points. We're working to make the commercial auto liability segment profitable, and with the 15% price increase, we see more opportunities arising. Additionally, we've heard about one MGA possibly exiting a specific segment of the commercial auto market, which could present an opportunity in the next six months. I hope that addresses your questions.
Our next question comes from Gregory Peters at Raymond James.
I would like to focus on the Inland Marine and Ocean Marine businesses, and possibly the trade credit business as well. From what I'm hearing from other specialty players, there seem to be growth opportunities in that area. My question is about how you are positioned for growth there. Additionally, considering that marine cargo is related to the trade credit business, with both export and domestic trade involved, I'm curious about how the current volatility and tariffs might impact that business until the situation stabilizes.
Yes, Greg, we have a solid Ocean Marine business, both in the U.S. and through our Singapore office. We maintain a strong focus on Ocean Marine, and our Inland Marine property book is also performing well. We're shifting our emphasis toward more Inland Marine builder coverage instead of simply large property placements. Both segments have been beneficial for us, with Ocean Marine providing growth opportunities over the past couple of years, which we are pleased with. On the property and Inland Marine side, opportunities for builders' risk haven't been as abundant, possibly due to current economic conditions, including tariff activities. This situation may have moderated our property Inland Marine business, as builders' risk and traditional Inland Marine products are our main focus, and both have historically been profitable for us. It's challenging to predict the exact impact of tariffs, but as I mentioned at the S&P conference, Ocean and Inland Marine could face challenges due to reduced shipping and cargo transport volumes. Currently, we aren’t seeing significant effects, but the larger question is what will happen as tariffs are addressed country by country. That's my perspective at this moment.
Would you say the same thing about the trade credit business too as it relates to tariffs?
Actually, our trade credit business is growing. I think there's been a little bit of hardening in that market. It's a very, very small specialty business for us. But yes, I do think, depending on who gets what tariff and what country it could have some impact, probably more on the premium side at some point. But right now, if anything, we're seeing some growth there.
Perfect. I want to revisit some of your opening comments, particularly regarding M&A. I'm wondering if there has been a change in market conditions or if you're observing a larger pipeline now compared to a year or two ago. It feels like you're consistently active in the market, so when you brought it up during the call, it made me think there might be some opportunities developing. I'm interested in hearing your thoughts on the M&A front since you highlighted it.
Sure. M&A is a $100 million business for us. It tends to be somewhat volatile depending on the M&A environment in this country. This year, there appears to be considerable activity, whereas last year had less. Thus, last year’s business was smaller. However, this year we’ve observed significant activity, and we have a skilled team of underwriters in this sector. It has been a very profitable division for us. Many competitors have ventured into higher-risk areas of this business, which we have not done as much. We focus primarily on representations and warranties, tax indemnity, and credit insurance aspects. Our reputation is strong; we are well-regarded for our expertise and specialization in this field.
Our next question comes from Andrew Andersen at Jefferies.
Yes. A crop peer indicated that 2025 could be very good for crop profitability. It seems there are some positive indicators in your prepared remarks. Should we view this year as average, or is it too early to tell?
I think it's still too early for us to categorize this year as below average, above average, or average. However, looking at the current commodity futures pricing, they stay within acceptable ranges compared to the spring discovery prices. Although I didn’t see the final numbers yesterday, I believe corn is down about 14% and soybeans are down just under 6%. The average deductible among farmers in our business, excluding rainfall products, is projected to be about 20.5% this year. Therefore, losses or a combination of commodity price declines and losses need to exceed that initial deductible chosen by farmers. Recent crop progress reports indicate that the overall conditions for corn and soybeans are slightly better than they were at this time last year. While there have been concerns regarding excessive heat, the moisture levels so far have been adequate, so we don’t consider it a problem at the moment.
It’s crucial to maintain good moisture levels through August and early September. Additionally, as part of the Big Beautiful Bill, there has been an increase in the loss adjustment expense payment for states with a loss ratio over 120%. The LAE payment has improved to 6% from the previous 1.5%. While there are always minor adjustments that may be slightly negative, over time, more positive changes typically occur, and this is one of those recent improvements. The Farm Bill has also been extended through September of this year.
Okay. And then just pivoting, I think your workers' comp book is slightly skewed to specialty workers' comp. So just curious how the pricing environment is in that end of the market. And if you expect any positive momentum on the workers' comp front? And also I think California is the largest state for workers' comp for you. So just curious if you're seeing any different loss experience there.
California represents approximately 15% of our workers' compensation business, likely less than Florida, which probably has a larger share. Workers' compensation accounts for around 13.5% of our total gross written premium. Overall, our results for the second quarter and first half of the year remain excellent, even though the combined rate for the six-month period is slightly up compared to last year. Our National Interstate, transportation-related workers' comp, and Southeast-focused Summit, along with our strategic large deductible comp, have all shown strong underwriting results this year. However, Republic, our California workers' comp entity, experienced an underwriting loss in the second quarter. We believe our reserve position is solid. Regarding pricing, I think that was the essence of your inquiry. I am encouraged to see a moderating price trend in workers' comp. Overall pricing in the second quarter was down about 1%, and similarly for the first half of the year.
In Florida, where we have a significant presence, the 1% decrease implemented in January is the smallest reduction in seven years. Meanwhile, in California, we achieved about a 5% price increase in the second quarter, which results in a 1% increase year-to-date. Importantly, California has approved an 8.7% increase effective September 1, 2025, marking the first hike in a decade, which is necessary given the industry's combined ratio in the 120s. We have a more moderate underwriting loss and have historically performed better than the industry. I am optimistic about the pricing environment for workers' comp, which remains competitive, but it definitely seems that a firmer market is emerging in California.
Our next question comes from Meyer Shields at Keefe, Bruyette, & Woods.
Carl, I was hoping if you could dig a little bit deeper into what you're seeing in terms of pricing and rate adequacy and professional lines. I'm asking because you sounded somewhat cautious, and we've heard a couple of other carriers talk about maybe green shoots are bottoming. And I just want to get your perspective on that, please.
Sure. From an overall macro perspective, we have achieved good results in the second quarter and the first six months for our Directors and Officers (D&O) business and our banking-related D&O product business, ABIS. This segment is significant for us, with $400 million in D&O and ABIS. If we account for our other professional liability business, the total exceeds $500 million. Net written premiums have decreased in the second quarter and over the past six months. We continue to notice that the public company business remains competitive. However, I'm optimistic because the price on that business only declined by 1.6% in the second quarter. In terms of our overall D&O executive liability businesses, our rates were flat in the second quarter and year-to-date in 2025, which is what we anticipated for the entire year. It's encouraging to see public company pricing stabilizing. It's important to note that public D&O represents only 15% of our D&O premium, making us more opportunistic in that segment. For our ABIS and related D&O products, pricing has increased by about 4% over the first six months of this year. While public D&O remains competitive, there are clear signs of stabilization, especially on primary policies. I hope that's helpful.
It is very much so. And I just want to confirm because I'm trying to get my head around the impact of the earlier crop reporting. Should we think of some portion of the premium losses and related expenses that showed up last year in the third quarter as moving to the second quarter this year? Is that how that plays out?
Brian here. Starting with the premium side, we expect crop premiums for the full year to be slightly lower than last year due to lower commodity prices during the discovery period this year. However, in the second quarter, the earlier planting and early reporting of acreage are offsetting that trend. We estimate that this shift in premiums amounts to about $100 million gross and $40 million net when comparing quarter-over-quarter. This reflects the premium that was originally supposed to be reported in the third quarter but was reported in the second quarter due to early reporting. To think about the quarterly shift in top line figures, $40 million in net written premium represents that change. Regarding profitability in our crop business, we tend to report nearly zero profits in the second quarter. Any profits reported would stem from previous periods, as most of our crops are still being grown. Most profitability actually appears in the fourth quarter, with a little in the third, and it may also extend into the next year. Therefore, when looking at our numbers, you can view our combined ratio in crop as being close to $100 million in the second quarter. If profitable, that helps improve our combined ratio in the fourth quarter, assuming all else remains constant. So, while there isn't a direct impact on profits, there is an impact on the written premiums.
Okay. That's helpful. But just take it one step for this. That means that whatever the earned premium component of that $40 million that's producing a higher combined ratio than the rest of Property and Transportation, that's moved from the third quarter to the second quarter. So there's a little bit less of that 100% combined ratio earned premium in the third quarter. That's what I'm trying to get at like...
That's a bit complicated because, in some of our earlier seasonal products that generated more earnings in the first half of the year, we experienced growth and adjustments in how much we've ceded. Therefore, the earned premium is still higher for several reasons in the second quarter. I would say the key factor for profit recognition will depend on the weather in the coming months and whether it results in above-average or average conditions. As Carl mentioned, the outlook is positive, but we don't want to jump to conclusions too early.
Our next question comes from Bob Farnam at Janney Montgomery Scott.
I have a follow-up question regarding workers' compensation. I've received inquiries about undocumented workers and how it might affect the types of classes you write. Specifically, have you noticed or do you anticipate any shifts in claim patterns as undocumented workers are replaced by citizens or documented workers? The assumption is that undocumented workers tend to avoid filing workers' compensation claims due to concerns about their immigration status.
This is Brian. When we insure companies, we cover all their workers, whether they are undocumented or not, and we will pay any claims that come through. If the question is whether the replacement of undocumented workers with documented ones will have any impact, we haven't observed any changes so far. We will continue to fulfill all our claims and charge the appropriate premiums based on the payrolls in place, regardless of the workers' documentation status.
Yes, the question was whether undocumented workers don't file claims because they're concerned about their status. Are you anticipating an increase in reported claims as undocumented workers are replaced by documented ones? That was the question.
Yes. At the moment, we're not expecting that, but it's obviously something we'll keep an eye on as we price our business and set reserves going forward.
Okay. And so I also have some questions on the excess liability business. You've had modest adverse development over the last several quarters. Is that related to any particular accident years or particular lines of business or classes of business? I'm just kind of curious if what you saw this quarter? Is it similar to what you saw in for most of last year and in the first quarter of this year?
This is Brian. First, it's important to note that our reserves are continuing to develop positively, with $11 million in net favorable development this quarter. However, in the Casualty Group, we experienced $10 million of adverse development due to increased severity in some of our businesses exposed to social inflation, especially in the excess and surplus lines and our nonprofit social services sectors. In those areas, we noticed an increase in settlements, prompting us to adjust our case reserves for known claims and raise our incurred but not reported (IBNR) reserves for similar potential liabilities. Claims in the sectors affected by social inflation can be unpredictable. When we analyze the adverse development by accident year, it's evident that the impact is spread across multiple years rather than being concentrated in one specific area. Consequently, you may observe that in our current accident year assessments, we've prudently boosted some figures for similar reasons. We're consistently learning from our observations and making adjustments to both our loss assessments and pricing in real-time to maintain or enhance our favorable results.
Right. Okay. Do you write the primary layers on that excess liability book? Or is that third parties that write the primary layers?
Where we're seeing the adverse development is mostly coming out of the ones where we are writing the excess layers. No.
My question is on the previous $10.50 '25 guide. Obviously, the Street is lower due partially to the first quarter investment returns. I guess my question is focused on the maybe the year-to-date reserve releases of about 1 point down 65% approximately year-over-year. Still obviously a very good guide, releases, great to see. Would you be able to share whether that reserve release ratio is better or worse in line with what you had contemplated when putting that guide together, the $10.50 guide?
With so many different lines of business and products, it's really hard to say. I think if you remember, we talked about when we gave our business plan assumptions at the beginning of the year, we did talk about an expectation of lower levels of favorable development. Now all the reasons behind that ended up not necessarily being exactly what we thought in the beginning. But we did anticipate and I think, hopefully did share that we thought that some of the favorable development we would have been seeing would diminish a bit, and that we're optimistic about improvements in the accident year ex-cat loss ratio, which we did see improvements other than where we were more prudent on some of the social inflation exposed businesses. So I think overall, it's pretty much in line with what we were expecting, but not necessarily business unit by business unit, but within a range, I'd say, yes.
This concludes the question-and-answer session. I would now like to turn it back to Diane for closing remarks.
Thank you all for joining us this morning and for the great discussion and good questions. We look forward to talking with you all next quarter when we share results for the third quarter. I hope you have a great day.
Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.