THG
#No.
I think we have the investment capacity to do what we need to do from a channel perspective, a product perspective, et cetera.
There is still a tremendous amount of expense leverage as we grow the Business, across our agency plant, which, as you know, is largely a fixed cost and pretty expensive to run.
But there's a lot of headroom there in leveraging our fixed expense base.
So, no, I don't view any upward pressure on the expense ratio here in the US.
I'll kick it to <UNK>, and maybe let the Chaucer guys interject here.
Basically with the account profile that they write, we sort of target roughly 10% of premium on an annual basis for catastrophes.
And this year it came in at less than 1%.
The target combined ratio for the business is 95%.
We have always said that; we expect to deliver that or better.
And as you know, cumulatively since we've owned the property, it has produced cumulatively a 90% combined ratio.
We are happy with the profitably of the business.
The cat environment certainly helped this year.
The business has inherent volatility, and quarter to quarter it will produce that volatility.
<UNK> or <UNK>, I don't know if you have anything to add to that.
As we have spoken about before, the previous five years were really low attritional and large losses in the business of Chaucer.
And this year in particular we had some higher losses and it just sort of is a reversion for the mean kind of a concept.
And the cats will come when they come.
But somewhere south of 95% I think is a good overall combined ratio.
It was 90% this year; it's been 90% or lower in other years.
I think it's going to move around a little bit, but it provides for a nice model.
<UNK>.
I'll just add that there's no correlation between the cat risks and the large loss accounts.
We do write risk towards the catastrophe line.
So the fact that we have had very low activity on that side but yet a higher number of large losses.
Just to point out that the actual number or the quantum of large losses paid out in the fourth quarter, or reserved in the fourth quarter, is almost the exact same number as what our 12 running quarter average is.
It's not that much higher than our history shows.
I will kick that to <UNK>, he can talk about ---+ go ahead, <UNK>.
So, <UNK>, you're right in the fact that the higher the reinsurance purchasing is, the lower the net premium will be, and that would put pressure on the expense ratio itself.
We have in 2016 actually reduced our expenses, but you could probably expect, which we normally targeted the 45% expense ratio, but that's going to be subject to volatility in the foreign exchange rate.
I'm going to kick it to <UNK> <UNK> for the answer.
As you know, we've been really thoughtful and measured on our rate strategy, and frankly, have been ahead of the market by 1 point or 2, varying by line.
We're going to continue that strategy.
And we do see, as our competition takes more rate, that we may become more competitive on a relative basis.
Of course, that varies state by state, but generally speaking we also will take some additional rate opportunistically in certain states.
So you have headwinds here and there, but generally the net of it will be that you should expect mid-single-digit growth on a go-forward basis.
Thank you very much for your participation on the call today.
We are looking forward to speaking with you next quarter.
