Teleconferencia de resultados del T3 fiscal de 2026 de Ategrity (ASIC): ratio combinado récord del 84,7 %

Conclusiones principales

• Ategrity Specialty Insurance Company (ASIC) registró un resultado técnico de 19,5 millones de dólares, un 83,7% más en comparación con el mismo periodo del año anterior, ya que su ratio combinado mejoró 4,0 puntos hasta el 84,7%, un récord para la compañía.
• Las primas brutas emitidas aumentaron un 14,7%, incluyendo un crecimiento del 25% en daños materiales y del 10% en responsabilidad civil. Las solicitudes aumentaron un 30%, mientras que las primas netas devengadas crecieron un 35,7%.
• El beneficio neto ajustado fue de 14,7 millones de dólares, o 0,29 dólares por acción diluida, en comparación con los 22,7 millones de dólares del año anterior. Las ganancias del resultado técnico y de los ingresos por inversiones se vieron compensadas por las pérdidas de inversión realizadas y no realizadas.
• El ratio de siniestralidad mejoró 2,5 puntos hasta el 57,5%, incluyendo 1,6 puntos de desarrollo favorable de ejercicios anteriores. El ratio de gastos disminuyó 1,5 puntos hasta el 27,2%.
• Ategrity lanzó productos para Ciencias de la Vida, Energía, Medioambiente y Deportes y Entretenimiento. La IA ayudó a reducir el tiempo total de desarrollo a cuatro semanas frente a las 12 semanas presupuestadas originalmente.
• Para el cuarto trimestre fiscal de 2026, la directiva prevé que el crecimiento de las primas brutas emitidas supere al crecimiento del mercado E&S entre 15 y 20 puntos porcentuales y que el ratio combinado se mantenga por debajo del 87%.

Datos financieros principales

Rendimiento operativo y del negocio

El crecimiento de las primas de Ategrity superó lo que la directiva calificó de mercado E&S relativamente plano. El volumen de solicitudes aumentó un 30%, respaldado por una distribución más amplia, la expansión regional y nuevos productos especializados.

Las estrategias regionales siguieron generando más del 50% del crecimiento, según la directiva. La empresa destacó la continua expansión en Nueva Inglaterra, Texas y el Medio Oeste, donde el nombramiento de nuevos corredores y la actividad comercial respaldaron un mayor número de solicitudes.

En responsabilidad civil, Ategrity amplió la cobertura en respuesta a las cambiantes exigencias de clientes, prestamistas, reguladores y contrapartes contractuales. La empresa incrementó los precios del nuevo negocio para reflejar el mayor coste de la cobertura. La directiva señaló que esto redujo las tasas de conversión en el trimestre, pero tenía como objetivo preservar la adecuación de las tarifas a medida que evolucionan las tendencias de siniestralidad en responsabilidad civil.

La empresa también desplegó su plataforma de suscripción de última generación en sus negocios de correduría consolidados. La adopción redujo temporalmente la productividad, pero la directiva indicó que la implantación llegó al cuarto trimestre fiscal con una mejora en el rendimiento, tiempos de respuesta más rápidos y mayor capacidad de suscripción.

El giro de Ategrity hacia el canal de correduría redujo los costes de adquisición. El aumento de las primas devengadas, los ingresos por comisiones y el apalancamiento operativo centralizado también contribuyeron a la disminución del ratio de gastos.

Previsiones de la directiva

La directiva prevé que el crecimiento de las primas brutas emitidas en el cuarto trimestre fiscal de 2026 supere al crecimiento del mercado E&S entre 15 y 20 puntos porcentuales. La empresa también espera que su ratio combinado se mantenga por debajo del 87%.

Ategrity no ofreció perspectivas de crecimiento para el ejercicio fiscal 2027. La directiva afirmó que la trayectoria del negocio no ha cambiado, pero señaló que los datos mensuales de sellado del mercado E&S siguieron siendo volátiles.

En cuanto a la asignación de capital, la empresa tiene la intención de aumentar las inversiones en renta fija hacia el 90% de la cartera total, frente a aproximadamente el 80%. Continúa utilizando un supuesto de rentabilidad anualizada a largo plazo del 5,5% para las inversiones en servicios públicos e infraestructuras.

La directiva también declaró que intentará recomprar acciones adicionales en el cuarto trimestre fiscal a través de operaciones en el mercado abierto. La autorización de recompra contaba con 47 millones de dólares restantes al cierre del trimestre, aunque su ejecución dependerá de las condiciones del mercado.

Riesgos y aspectos a vigilar

• Las pérdidas de inversión realizadas y no realizadas sumaron 17,2 millones de dólares en el trimestre, lo que compensó el crecimiento del resultado técnico y de los ingresos netos por inversiones.
• El aumento de los rendimientos de los bonos del Tesoro de EE. UU. redujo el otro resultado integral acumulado y contribuyó a una caída secuencial del valor contable.
• La ampliación de la cobertura de responsabilidad civil exige precios más altos. Los competidores que ofrezcan coberturas similares sin cargos adicionales podrían presionar las tasas de conversión a corto plazo.
• El despliegue de la plataforma de suscripción y el retraso en las fechas de incorporación de nuevas contrataciones limitaron la productividad durante el tercer trimestre fiscal, aunque la directiva señaló que la adopción avanzó más rápido de lo esperado.
• Las pérdidas por catástrofes aumentaron al 4,2% de las primas netas devengadas, frente al 4,0% del año anterior.
• La directiva citó una volatilidad mensual significativa en los datos de sellado del mercado, lo que genera incertidumbre sobre las comparaciones a corto plazo con el crecimiento del mercado E&S.

Puntos destacados de las preguntas y respuestas con analistas

Los analistas se centraron en gran medida en los cambios en los productos de responsabilidad civil y su efecto sobre el crecimiento. La directiva explicó que algunas coberturas anteriormente opcionales están ganando importancia debido a novedades regulatorias, municipales, políticas y de los prestamistas. Ategrity está añadiendo coberturas donde se requiere, pero cobrando explícitamente por el aumento del riesgo, en lugar de asumir la exposición adicional sin subir los precios.

En cuanto al impulso del crecimiento, la directiva señaló el aumento del 30% en las solicitudes, la ampliación de la distribución regional, la mejora de la capacidad de cotización y el lanzamiento de cuatro productos especializados. La empresa afirmó que sus perspectivas de crecimiento para el cuarto trimestre fiscal no asumían un beneficio potencial sustancial derivado de los nuevos productos, a pesar de la buena recepción inicial por parte de los corredores.

En relación con el apalancamiento operativo, la directiva indicó que el modelo centralizado ofrece margen para un mayor escalado, pero no cuantificó un objetivo de ratio de gastos a largo plazo. La empresa prevé que la IA y su plataforma de suscripción reduzcan el trabajo de recopilación de datos, los tiempos de respuesta de las cotizaciones, los gastos legales y los costes de lanzamiento de productos.

La directiva comparó el proceso de Ategrity con la suscripción tradicional en ramos complejos como Ciencias de la Vida. Se indicó que una aseguradora tradicional puede requerir un suscriptor por cada 750.000 dólares aproximadamente de prima de nuevo negocio, mientras que Ategrity prevé que incluso las cotizaciones complejas no lleven más de unas pocas horas. La empresa no facilitó su propia referencia de prima por suscriptor.

En cuanto a las inversiones, la directiva afirmó que la estrategia en servicios públicos consiste en activos líquidos, gestionados de forma activa y de mercado neutral, y no presenta el tipo de exposición a préstamos para infraestructuras digitales señalado por un analista.

Transcripción completa de la llamada de resultados

Transcripción completa de la conferencia de resultados

Comentarios de la dirección

Operator

Good afternoon, everyone, and thank you for joining us today for Ategrity's Third Quarter Fiscal Year 2026 Earnings Results Conference Call.

Speaking today are Justin Cohen, Chief Executive Officer; Chris Schenk, President and Chief Underwriting Officer; and Neil Adler, Chief Financial Officer. After Justin, Chris and Neil have made their formal remarks, we will open the call to questions. [Operator Instructions]

Before we begin, I would like to mention that certain matters discussed in today's conference call are forward-looking statements, relating to future events, management's plans and objectives for the business and the future financial performance of the company that are subject to risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements. The risk factors that may affect results are referred to in our press release issued today. Our final prospectus and other filings filed with the SEC.

We do not undertake any obligation to update the forward-looking statements made today. Finally, the speakers may refer to certain adjusted or non-GAAP financial measures on this call. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is also available in our press release issued today, a copy of which may be obtained by visiting the Investor Relations website at investors.ategrity.com.

I will now turn the call over to Justin Cohen.

Justin Cohen

Good evening, and thank you all for joining Ategrity's third quarter earnings call. This is Justin Cohen, and I'm joined today by Chris Schenk, our President and Chief Underwriting Officer; and Neil Adler, our Chief Financial Officer.

Ategrity delivered an exceptional underwriting quarter, achieving our lowest ever combined ratio of 84.7% and underwriting income growth of 83.7% year-over-year. These results demonstrate the strength of our underwriting strategy and the compounding benefits of our productionized platform.

Our rigorous technical underwriting and centralized operating model are driving lower loss and expense ratios, while our differentiated products and solutions are generating strong business momentum and market share gains. Submissions grew 30% in the quarter, reflecting exceptional demand for our offerings, that give our distribution partners a competitive edge. Gross written premiums grew approximately 15% year-over-year, substantially outpacing a relatively flat E&S market.

While we expected to outperform the market by even more this quarter, we made 2 deliberate choices to prioritize long-term growth and profitability. First, we implemented meaningful rate increases on new Casualty business, to reflect the cost of expanded coverage and strengthen underwriting margins. Second, we rolled out our next-generation underwriting technology, temporarily reducing productivity in exchange for substantially greater underwriting throughput and efficiency going forward. Chris will discuss these decisions and our new growth initiatives in greater detail later in the call.

We entered the fourth quarter with 4 new specialty products, an expanded underwriting team and distribution network and a more powerful underwriting system. Together, these capabilities expand our capacity to serve growing demand, capture additional market share and profitably compound growth.

With that, I'll turn it over to Neil Adler to review our financial results.

Neil Adler

Thank you, Justin. We produced adjusted net income of $14.7 million, compared to $22.8 million a (sic) [ $22.7million ] a year ago. Underwriting income grew 83.7% and net investment income increased 19.1% with those gains offset by realized and unrealized investment losses. Gross written premiums were up 14.7% with property premiums up 25% and casualty premiums up 10%. Net written premiums increased 25.8%, which reflects higher retention year-over-year, while net earned premiums were up 35.7%. Fee income was $2.6 million, compared to $2.2 million a year ago, with growth coming from standard policy fees introduced over the course of 2025.

Our underwriting income for the quarter was $19.5 million, producing a combined ratio of 84.7%, compared to 88.7% last year, driven primarily by a reduction in both our loss and expense ratios. Our loss ratio came in at 57.5%, which was down 2.5 points year-over-year, reflecting favorable underwriting performance across both property and casualty, including 1.6 points of favorable development. Catastrophe losses were 4.2% of net earned premiums, up from 4% last year. On expenses, the overall expense ratio improved 1.5 points to 27.2%.

Our operating expense ratio declined 0.8 points year-over-year to 10% of net earned premiums. The improvement reflected earned premiums growing faster than operating expenses, together with higher fee income. Policy acquisition costs as a percentage of net earned premiums also declined in the third quarter to 17.2% from 17.9%. The continued shift in our business mix towards the brokerage channel reduced policy acquisition costs and benefited underwriting margins.

Moving on to investment results. Net investment income was $13.1 million, up from $11 million last year, reflecting a larger investment portfolio and higher interest rates. Realized and unrealized losses were $17.2 million or $13.7 million net of noncontrolling interest, primarily reflecting a normalization of the substantial gains recorded earlier this year in our utility and infrastructure investments, which have been running well ahead of long-term Street expectations of 5.5% annually. As of the end of the third quarter, year-to-date returns remained above that annual expectation. Our effective tax rate was 24%, bringing net income to stockholders to $14.6 million. Adjusted net income was $14.7 million or $0.29 per diluted share.

Turning briefly to the balance sheet. Cash and investments increased by $33.5 million from the second quarter to $1.24 billion, reflecting strong operating cash flow. Book value decreased by $6.7 million from the second quarter as an increase in retained earnings was offset by a decline in AOCI, due to the material move in U.S. Treasury yields in the third quarter. We did not repurchase any shares during the quarter. Our book value per share ended the quarter at $13.72, up 30% since our IPO.

With that, I'll turn it over to Chris to discuss underwriting and operating performance.

Chris Schenk

Thanks, Neil. Our third quarter results demonstrate the power of our productionized underwriting strategy. We delivered our strongest combined ratio in the company's near decade history and grew submissions by 30%. Both our property and casualty businesses grew at rates we believe outpaced their respective markets. This happened as we continue to take market share. In addition, our current policy year loss ratio indications continue to trend favorably, while prior year results developed better than expected.

Our property business grew strongly, this is counter to the prevailing market trends. During the quarter, we continued to expand our distribution network, generated value through our regional strategies and launched 4 new specialty products in record time. We also developed and deployed the next generation of our underwriting platform across our established brokerage businesses, while improving our unit economics.

I would like to highlight 4 areas that illustrate how we are expanding our business, while strengthening underwriting performance. First, coverage certainty is becoming a key differentiator in the casualty market and an important consideration for brokers and insurers. We have studied our clients' businesses and emerging insurance requirements they face from customers, lenders, regulators and their contractual counterparties. During the quarter, we redesigned several of our core casualty offerings to address this demand for expanded coverage. In parallel, we launched a marketing campaign, called We Cover What Matters, to drive home the guiding principle of our product strategy. Consistent with our technical approach to pricing, we effectively implemented rate increases on new casualty business to cover the higher cost of product, resulting from this expanded coverage. This enables continued price adequacy as casualty loss trends evolve.

Second, we launched 4 new specialty products: Life Sciences, Energy, Environmental and Sports & Entertainment. These offerings were already on our product road map, but we used AI to accelerate their launch in order to meet growing demand from our partners. All in, total development was 4 weeks, down from our originally budgeted 12 weeks, which included technology, product design, form development and pricing. These launches demonstrate the productivity gains, AI is delivering across our business, both in development costs and speed to market. What is most exciting about these new growth opportunities is that we are bringing to the market predictability, speed and simplicity in lines of business that others have deemed to be highly complex and bespoke. Using our micro-segmentation and risk modeling methodologies, we have built a repeatable process for underwriting this business.

Third, we deployed our next-generation underwriting platform during the quarter. This adds to the analytical depth of our underwriting. It enhances the value of our micro-segmentation and risk selection, while reducing the work time per quote. Productivity temporarily declined this quarter as our underwriting teams adopted the system. As we enter the fourth quarter, this implementation is starting to produce greater throughput, faster response times and more competitive quotes.

Finally, our loss ratio performance continued to validate our underwriting approach. Our results this quarter, including favorable prior year development, reflect our commitment to technical underwriting, which includes strategic deployment of coverage, rigorous risk selection and pricing that anticipates a higher cost of product.

In sum, we believe our product strategy, technology, operational capabilities and differentiated distribution strategies, positions us to grow profitably in the current environment. Our priority is to translate those advantages into further loss ratio improvements and durable underwriting income.

With that, I'll turn it back to Justin.

Justin Cohen

Thanks, Chris. We see significant opportunities to gain market share, while driving strong underwriting profitability. For our fourth quarter guidance, we expect gross written premium growth to exceed E&S market growth by 15 to 20 percentage points, sustaining our strong business momentum, while retaining the flexibility to drive further underwriting margin improvement. Accordingly, we expect our combined ratio to again be below 87% in Q4. On investments, we have produced $8.9 million of year-to-date realized and unrealized gains, net of noncontrolling interests.

In line with Street assumptions, we are using a long-term annualized return assumption of 5.5% for our utility and infrastructure investments. We believe that our differentiated access to these strategies creates meaningful value for shareholders, supported by a nearly 3-decade track record of strong annualized returns without a calendar year loss. At the same time, given the higher interest rate environment, it is our intention to increase our allocation to fixed income investments toward 90% of our total investment portfolio, from the current level of approximately 80%.

Finally, on our share repurchase program. While we were able to make stock purchases in the high teens during the second quarter, the stock moved up meaningfully in the third quarter, making it more difficult to execute open market purchases. We will endeavor to buy more shares in Q4 in the open market using the $47 million outstanding in our buyback program. And we note that our excess capital far exceeds our remaining buyback capacity.

To sum it up, we believe Ategrity is just getting started. Our new products, expanded coverage, next-generation technology and implementation of AI are creating an expanding opportunity set and a runway for further profitable market share gains.

With that, we thank you for your time. And operator, please open the line for questions.

Operator

[Operator Instructions] Your first question comes from the line of Pablo Singzon with JPMorgan.

Preguntas y respuestas

Pablo Singzon

Can you unpack what additional coverages you're providing in casualty? And I guess, how your offering compares to what's widely available in the market?

Chris Schenk

We're not disclosing on this call what additional coverages and new product designs, that we have rolled out are effectively for competitive reasons. What I will say is that due to a number of municipal level changes, things like residential real estate putting up habitability coverage is now in scope. There's a new market norm, that is evolving. There are obscure coverages, such as human trafficking that are also evolving in terms of a market requirement. In terms of what we have done on our specific products, those are being made clear to the market with our new, We Cover What Matters campaign.

Some of it -- some of the need for more coverage has to do with fear around what might be happening at a municipal level, fear around how entanglement with immigration and sort of ICE raids and such might affect landlords. Some of it is a genuine need for a coverage adequacy, which could come from a lender or it could come from the insured clients themselves. But some of it is having to do with responsiveness around political trends. So where we are drawing the line, that is being made clear to our trading partners through our new campaign, but we're not disclosing it on this call for competitive reasons.

Pablo Singzon

Understood. And I guess for the second question, do you expect to return to normal productivity in 4Q, just given the rollout of the new underwriting system? Or should we expect some maybe continued disruption into the next quarter here?

Chris Schenk

Yes. So our technology rollout have performed better, in terms of stabilization with our employees and training and all of that. We've been able to make meaningful improvements in this rollout via the last time -- compared to the last time we rolled out technology and a lot of that has to do with delivery of training. So we have moved faster than expected, when it comes to adoption. One of the things we did anticipate going into the quarter was the need for additional capacity, underwriting capacity in order to absorb some of the inefficiencies, that typically follow a rollout of any type, there will always be inefficiency. We planned for that.

There were some timing delays around hiring and start dates and such that led into the quarter. And that -- so effectively where we are, we are on the other side of a very meaningful change for the organization. And we effectively have some additional capacity to cushion, because we are an organization that, we are doing, I believe we're doing interesting things. We are on the leading edge and what we have planned for that, because over my career and I think it's just widely known in the industry, any technology change will have a lag in terms of productivity. But where this -- what this sets us up for is breakthrough productivity, as we go into this quarter and we have some cushion in terms of capacity.

Operator

Your next question comes from the line of Elyse Greenspan with Wells Fargo.

Elyse Greenspan

I guess my first question also probably touches on some of the new products, that you were talking about on the casualty side. So you said that you increased rate. So I guess, can you give us a sense of like the price differential, I guess, between the new offerings and the old offerings that you guys are writing?

Chris Schenk

Yes. So just for clarity, we have launched a set of new products and for our existing casualty verticals, we have -- and micro-segments rather, we have designed a new offering. So as you may know, our product strategy has to do with predesigning coverage. So we studied the insured needs before they effectively come in the door. That allows us to be explicit to the market about what we are willing to cover and not cover. And complementary with that is a technical pricing approach where we charge for optional coverage in a very explicit and a very mathematical and economically sound way.

So the rate increases that you mentioned have to do with adding coverages to our base product in, for several casualty lines. We are not going to disclose those specifics here either for competitive reasons. But it is -- what it allows us to do is provide what the market needs, while charging adequate rates. This is the same approach we have used consistently over the last 5 years, as we became solidly committed to technical underwriting. We have deployed the same approach whenever we have made product adjustments, we charge for the additional coverage.

Now, that is very different than what many do in the industry. They will put on a lot of trickier potential high volatility type of coverages and not charge for them. And in my view, if you think about the pitfalls of our casualty performance and going back to pre-2020, if you think about what led to that, it was this kind of -- erratic kind of talk, enhance the product, but do not raise the rates kind of approach. We have continuously been disciplined about it from day 1. When we started engaging with you all as a public company, we have talked about technical pricing being sacred to us. That is exactly what we have done here.

We -- so where we are right now is, we are providing what the market needs and we are charging for it. Where the rest of the market is, is they're either struggling to figure out what the market needs or they are providing it and not charging for it. If they're providing it and not charging for it, the natural evolution of that will be a deterioration in results. And what we have learned over multiple cycles of doing this again is that we tend to be a beneficiary of that.

So while this first mover -- being a first mover on rates, did have the effect of a lower conversion ratio, and we had planned for that, and we had a plan to hire more because, frankly, our move on a lower conversion is to simply produce more quotes. We can do that very efficiently and very cost effectively. So that has been our consistent approach, and that's just what we did here. We had high conviction in the rates. We wanted to meet the needs of the market, and we accordingly put together a plan to do so, while maintaining a level of production that would lead to the growth.

Elyse Greenspan

And then I guess my second question, right? So you guys are talking right about 15% growth in the fourth quarter, right, that's 15% to 20% above the E&S market. And it sounds like you went into the quarter with the new next-gen like rolled out. So would you expect, I guess, going into '27, is that kind of the new run rate range expected to be like in the 15% to 20% range versus the market?

Justin Cohen

So Elyse, we haven't -- we're not going to disclose our 2027 view, but we'd say the trajectory hasn't changed. Part of this guidance around 15% to 20% is the fact that when we used the stamping data as an adjusted stamping data as a source of what is the market. And we saw the market that ourselves being down 0% to 5% this quarter. But the stamping data, as you know well, was negative 2%, then 19%, then negative 5% in the quarter across the months. And so this adjustment is really to reflect that there's more variability in those numbers and to give room for that dynamic.

Operator

Your next question comes from the line of Andrew Kligerman with TD Cowen.

Andrew Kligerman

So a follow-up on the gross written premium growth and Justin, you've been very clear 15% to 20%. But when I'm hearing you and Chris talk about coverage certainty, which includes higher rate, kind of a mixed bag, right? People want the coverage certainty, but they don't like the higher rate. But then you've got 4 new specialty products rolled out. You were talking a little bit about some pressure as you rolled out the technology, but that's all done. You've got a couple of big time pluses. And so I know your guidance is 15% to 20%, but it would strike me that you might feel extra good about that 15% to 20%, given all that you accomplished during the quarter, meaning maybe the higher end, maybe better, but it feels like there's some real momentum there. And I want to get your read on that?

Justin Cohen

Andrew, the momentum in the business is outstanding. With the 30% submission growth, this business is really resonating in the market. And even on the coverage point, we had, our soft market playbook is to quote more in a soft market. So we had this temporary hiring gap, that was filled by the end of the quarter, which Chris alluded to. So we feel very strong about where the business is going.

Chris Schenk

So you can check every box, that led to our growth numbers in the prior quarter. You can check those and you can actually give some extra marks to some of them, because they are still trending in that direction. That is, if you consider those the leading indicator or the consistent indicator that has led to our growth, those are unchanged. So let me take you through a couple of those. So first, the regional strategies. They continue to contribute upwards of 50% of our growth. Second, our distribution strategy and our distribution reach. That continues to grow exponentially at higher clicks higher than prior quarters, as we have onboarded new partners to complement the New England strategy and the Texas strategy, that we launched as well as continue to appoint partners in the Midwest.

We have also invested to entrench ourselves in the Midwest strategy, which is now leading to a new wave of growth. So we had marketing campaigns, sponsoring events across the Midwest over the summer. That has really cemented our commitment to that region, and it's really resonating well with our partners. So we're seeing submission growth boom there again. So all of those raw materials to production are there. In addition, we are able to produce quotes faster with less burden on our partners, because of the current system. That is one of the biggest improvements here. So not only do we have a growing submission funnel and more engagement with our partners, we are able to increase our level of service as well as the rigor around the quotes we're providing. So that is all very positive.

Now on the new products, we are particularly proud of this because we consider ourselves to be a very execution-oriented company. We believe that the key to winning is to look for opportunities in the market and move fast to build solutions around them and move intelligently. That is exactly what we did for these 4 new products. So they are in market. We are not -- we have not modeled too much into our plans for these. So there is -- the reception has been tremendous. I will -- we just came back from one of the big industry conferences. This was -- that was our key focus in conversations with partners and the reception for those 4 new lines have been tremendous. There's a lot of dislocation in those lines in the current market and we saw an opportunity.

And in 4 weeks, which is I -- no one on our team who have been in insurance have ever done that. Frankly, we -- until these products have never done that. Insurance just does not move that fast. And we were able to do it, and we were able to do it with a high level of sophistication. What we're doing with these products is not just -- we're not just entering as a participant in Life Sciences, for example. We are introducing a brand-new way to underwrite Life Sciences, that will remove all the back and forth and the hassle, that tends to accompany that line.

Everyone thinks that just because it has science in the name, that it needs to be complex or there's a mystique around it, right? We have demystified it. We have used our segmentation approach, our pricing approach, our form design approach, all of that is in place. And when someone looks at our appetite guide, it's a digital appetite guide, where they can literally open up their phone and describe what they're trying to write and see exactly what we're trying to put up. So when I'm saying like we did something in 4 weeks, that's a giant leap. And in our numbers right now, we are not even accounting for any upside from that. So yes, to put a finer point on it and agree with you effectively, we have a lot of positives here and a lot of momentum in the business. The fundamentals are strong. And yes, so I'd say that is a comfortable number.

Andrew Kligerman

Yes. That sounds compelling. And maybe shifting to the other part of the income statement. The expense ratio moving from 28.7% to 27.2%, year-over-year is a nice move and with a 10% operating expense ratio, as you scale up, and as the mix changes a little bit more and more toward brokers, how do you see that expense ratio not necessarily trending next year, but over the next 2, 3, 4 years? I mean, are there a few points of expense ratio reduction that might be in the cards?

Justin Cohen

Andrew, there are significant opportunities for scale in this business. We have built a centralized business, where there is meaningful headcount and expenses that are ready to scale as we grow. So we see a lot of opportunity. We won't quantify it here, but that is the way we envision it rolling out, and that's part of the opportunity and that's how we continue to become more effective in a competitive market.

Chris Schenk

Yes. So we are able to take our efficiency level -- sorry, competitiveness here, but to the next level. It is a -- that is what our new platform or this version of our platform does. We had described previously that we already have a very efficient quote process and a very intelligent quote process. We have amplified both of those elements. In addition to that, the products that we are launching right now carries 0 upfront investment. It is -- there is no additional cost that we need to recoup as we go to market with those products. There is not a fixed cost.

We are already very good at that, at managing down fixed costs, right? But these are -- we're now -- nothing is ever truly 0, but this is as 0 upfront -- 0 fixed cost, as you could get. The technology, the forms, the pricing, it's all Ategrity's framework, but it is being applied with the help of AI. And if you can think about some of the cost that goes into launching a product, it will give you an idea of what the upside in future years could be, as those products ramp up.

So one, forms. For these products, we had to write over 400 forms. Those would go through a month-long process in a parallel work stream that involves lawyers and coverage counsel review, right? So the back and forth will have a high cost. What we have done is we have used AI for the first draft of very sophisticated forms and then we simply send them for a quick review by coverage counsel, cutting out the back and forth, like going to coverage counsel with a first draft versus trying to explain what you want the form to be 400 times.

Just that cost alone should give you a sense. And given where legal cost is, that compounds. So small kind of very, very nuanced example there. But when you think about what it takes to launch a sophisticated product in market, it's IT development, it's legal cost, it's pricing, it's analytics, it is purchasing data. It's all of these things that previously were hard to absorb during the first year of a product launch, and we were proud that we were able to do that historically. But now we have nothing to absorb in that first year launch.

Operator

Your next question comes from the line of Alex Scott with Barclays.

Taylor Scott

First one, I had is on just investment concentration in digital infrastructure and I would be interested in maybe your fixed income portfolio and if you have any of that in there. But also importantly, if there's any exposure in the Zimmer Infrastructure Fund, that we should consider as we watch those trends?

Justin Cohen

Yes. Got it. As I mentioned in the prepared remarks, we have had about an 80% allocation to fixed income during -- since we've been public. And we've talked now about how we are going to be aiming for a 90% allocation. When you think about the Zimmer investments in utilities, those are liquid assets that are not -- that are market neutral and those are not -- those types of loans that you're referring to there. So that is a very different exposure is a market-neutral exposure, that has a significant track record of never having had a down year and it is actively managed. So that is -- those are the 2 components of our portfolio, and we don't have the -- I think, the kind of exposure that you're highlighting there.

Taylor Scott

Got it. That's clear. I just wanted to make sure on the Zimmer piece. Okay. Second question, I had is just I wanted to better understand what you're saying about casualty. And I understand there's a new structure of the product and it does require rate increases relative to what you were selling and -- but I guess it was characterized as part of the reason you didn't hit the 20% growth. So I guess what is it about that switch of product? Like when I hear you talk about it, it sounds like it's going to be more appealing and maybe drive more growth, but yet it actually, it maybe constrained your growth relative to what you thought. So what was it in the older casualty product, that you had to adjust and do people, like I'm just trying to understand why was it a growth headwind, if it's like this new exciting product.

Chris Schenk

Yes. So imagine if you're buying a car and you wanted leather seats and previously, you could get leather seats for free and -- or there were enough car sellers in the market -- car dealers in the market, who would give you leather seats for free or whatever accessory you want, frankly. And then leather seats became a requirement for cars. And now one car dealer is charging for it and one is not, right? It is -- that's what the approach to coverage in this market has been. It's been the pitfall of so many carriers. We have one of the best-performing casualty books in our view in the industry. The way we have done that is we have been meticulous about understanding the cost of product.

So whether you characterize it as a true rate increase or just a charge for the enhancement to the product, it is an additional cost to the insured. It's charging for the leather seats. And there are other dealers out there who are providing the leather seats for free. So that's the dynamic that we went into this quarter adjusting for. We are willing to provide it, but we are going to charge for it, because it increases the cost of product.

We have done this over and over again, and it is so fundamental to our playbook to underwrite to a cost of product that is realistic. And we do not want to have our heads in the sand and think that offering a coverage doesn't really add to the cost of product. It very literally does. And we don't want to have our head in the sand, right? So we have been explicit. And what happens is that the rest of the market, they start to feel the pain and then that business comes back to us. It has happened over and over again.

Now we are always ahead on pricing, and this is a big part of our strategy to ensure that we are studying the cost of product and adjusting rates on a prospective basis. We have always done that. If you recall, we did that on property in response to tariffs last year. And if you look at the property growth rate and how that has trended, since we implemented those changes, it's a cycle. We have a path. We understand this pattern. And so while we recognize that would have led to a lower conversion ratio, we had more than enough submissions to compensate. And all that was required was a few additional underwriters to increase production and that is the piece that had a timing delay.

Justin Cohen

So that was -- that headwind we're referring to is doing this type of offerings and then having a delay in the headcount.

Operator

Your next question comes from the line of Matthew Heimermann with Citi.

Matthew Heimermann

I guess, I was struggling with Scott a little bit to put context to the rate change in the casualty growth, and I think you addressed most of it, in response to his question. But the only thing I would be curious about is, what was the catalyst, I guess, for charging for leather seats now? Was there some emerging claims data you're responding to? Or was this like, I'm just -- that's, because when you first described it, it didn't really sound like a rate change, but a coverage form change, but it's kind of -- but either regardless, what was the catalyst?

Chris Schenk

It's a product enhancement, that's what it is, right? It is not a...

Matthew Heimermann

But what I'm struggling with is when you describe it, say it's a product enhancement, then you say other people are going to be adversely impacted by not doing this. That change sounds like it's in response to something, either something your experience or you see on the horizon? I'm just trying to get some context.

Chris Schenk

Yes. So I'll answer your question. Let me give you a little bit of background on what we are doing. We're studying the insurance needs. So we launched a campaign to complement our product strategy to drive home our philosophy. It's called, We Cover What Matters. What we do is we study the insured needs, which could include a set of fears and a set of true requirements from their lenders, from regulators, from their clients. So we study all of that, and we made an explicit decision to not offer some coverages that were kind of more optional or nice to have. Typically, larger, more complex accounts would really want that coverage.

But what has happened over the last 18 months, I mentioned this a couple of quarters ago, that coverage certainty was coming into focus. That was being driven by political climate, which includes things like immigration and which impacts the need for human trafficking coverage or Fannie Mae, Freddie Mac, imposed requirements for real estate investment companies. They have to have assault and battery coverage. It cannot be an animal exclusion on the policy. There are a couple of other things that they must have.

Now we have avoided a number of high severity coverages, because when it was optional, the market was not willing to pay. So our base product considered that. When they became required for smaller accounts, we decided that, okay, we will respond. That's consistent with our approach. We will provide what is required. That's consistent with our approach, but we will charge for it. So it's not a -- it's a difference. It is a change for us in the risk profile. If you were to imagine not offering it and not charging for it, that will have a knock-on effect on the results.

So effectively, we executed our playbook: provide coverage, charge for it. Our peers where the adverse impact that they might see down the road is from not charging for that. If you look back, again, if you look back at the history of casualty insurance, you will see that pattern, and it typically does have to do with coverage expansion, be it the history on auto or covering auto or considering auto a -- ancillary auto an unimportant exposure that no one should even charge for. That was once the norm in this industry where auto coverage, ancillary auto, hired and non-owned auto was provided at no charge.

And then we all know how that played out as carriers saw the losses come through on that ancillary auto and excess casualty in particular, it really did burn a lot of people. And that's what I was referring to, when I say that there is another side to this sort of trend and it is the exiting of other carriers as those losses catch up. And if you think about how these things might play out, these are probably going to come in at the earliest, and they will -- in terms of, based on the new coverages that are provided, these losses are likely to come in the earliest and they're likely to be very high.

Matthew Heimermann

Okay. I wanted to follow up on, I'm spacing on names tonight, so sorry. But anyway, the whole question around what's the floor for your operating expense ratio with respect to productivity. And maybe, I know you don't want to give -- you clearly don't want to give anything, but a directional signpost on that. But I'd be curious if you maybe give us an example with these new products you're rolling out, like the number of underwriters that were required to be added to support that rollout. And as you think about the growth using -- if you think about what -- how much growth you might be able to capture in the market, how many underwriters per that market opportunity does Ategrity need versus maybe if you were thinking about in your prior life, your former firm or other contemporary firms to, or traditional firms would they need this, how many underwriters would they need to support this type of endeavor?

Chris Schenk

Yes. For these lines, if I were to ballpark it, you need about one underwriter -- you would need one underwriter for about $750,000 in new business premium in a traditional legacy carrier, that is because you could spend 2 days working on a quote for Life Sciences. It typically involves things like visiting the FDA website to look at or even calling a consulting pharmacist, which is typically on staff to find out information. So much information gathering is required. That's why the new business production level tends to be so low. I -- again, we are not -- we are just in this space, but -- so we're not going to give you a number. I don't have a benchmark number for us. But I can assure you we are not going to take more than a few hours for even these complex quotes, as we enter the market. So you can take a relative -- kind of gauge a relative difference there.

But it is a -- that is what we have done. And if you think about what the potential for AI is and how it can help you these aggregate information, compile a digital underwriting file, so that the individual can spend their brainpower assessing the data rather than compiling the data. If you think about where we're gaining the efficiencies, I think it paints a picture of a highly intelligent underwriting process that is extremely fast and efficient and actually probably more will produce a much better and more competitive quote for the best risk.

It is remarkable how many -- how inefficient some of these lines have been underwritten and that's -- if you want to -- I think we mentioned this one of the reasons we launched these lines is because of that slow turnaround time and the back and forth that has -- that so many brokers have to endure, if they're trying to write business in these spaces. We are offering everything that we have offered on our, in terms of speed, intelligence, efficiency, hassle-free process, predictability in our pricing, a predesigned product. We're offering all of that for these complex products. And it was a specific response to a huge gap in the market that has primarily been caused by other carriers refusing to modernize. It is a -- the opportunities are endless, we saw them and we leaned in very quickly.

Operator

There are no further questions at this time. I will now turn the call back to Justin for closing remarks.

Justin Cohen

Great. Well, thank you very much for taking the time with us today, and we look forward to catching up with you in the months ahead. All the best.

Operator

This concludes today's call. Thank you for attending. You may now disconnect.