Stewart: Inflation is a double-edged sword for insurance companies. It causes the value of the liabilities to go up in the value of the bond portfolio to go down. So that is worthy of some discussion, and fortunately, we're here with a Michael Ashton of Enduring Investments. Mike, welcome.
Michael: Hi, glad to be here.
Stewart: My name's Stewart Foley. This is the Insurance AUM Journal podcast. First question on the table, Mike, what is inflation? How do you define it?
Michael: Well, we always seem to start with that, and you would think it would be a very easy answer. I think that what we're always told in school is that it's a generalized rise in prices, but some people like to think about it as a decline in the value of what your money will buy. So you can think about it as a weakening of the value of your currency or an increase in prices. Those are flip sides of the same thing.
Stewart: I am an opinionated human being, with regard to inflation, with nearly zero data. So get ready.
Michael: All right.
Stewart: There's going to be some screwball questions, so just wait. Question is-
Michael: I've heard them.
Stewart: Okay, fine. It's fine. You came on this thing voluntarily, so fair warning. So is there inflation today?
Michael: Absolutely. And I think that anybody who goes out and goes to a restaurant these days, or buys a used car, or buys a refrigerator, you see prices going up. And of course, the question is, and here's where you get your first big dichotomy, big disagreement among people who watch inflation is, are those anecdotal price increases that are caused by COVID and went off and they're going to go away? Or is that inflation? And clearly we see those prices going up. And I don't think anybody disputes that they're going up. You can have a bunch of people who agree that those prices are going up and they disagree about whether or not there's inflation, because the question is, is there an underlying process that's causing that to happen? Or are these sort of one-off anecdotes? The plural of anecdote is not data, they say.
Stewart: Okay, so here I go, here goes the wacky questions. Are you ready? I have-
Stewart: ... a huge bone to pick in the way that inflation is calculated, because this is how I always explain it to my students. Baseball, batting average, in the '80s, a guy hit .300. In the '90s, a guy hit .300. Last week, a guy was hitting .300. I can compare those, but inflation, it changes how they calculate it over time, and yet they still compare it over time. Now there's this guy, I don't even know who it is, and I've got no ax to grind on this deal, at all.
Stewart: There's a guy that runs something called ShadowStats. I don't know how many people follow this guy, but my username was Stewart. And he attempts to apply a 1980s methodology, and a 1990s methodology to current levels and says, "Hey, it's not two percent, three percent, it's five percent, six percent. And if I do the '80s, it's nine percent, 10%." Where are we missing? What is the reality of it? Because I know that this is your jam. This is what you do. You advise people for a living on inflation. So tell me what have I got right, and what do I got wrong?
Michael: Sure. Well, let me start by pushing back a little bit on the baseball metaphor. It's actually a very good metaphor here, because .300, 20 years ago, isn't the same as .300 today. The rules of baseball do change. And so, whether juicing is allowed, it changes, or whether it's caught, it changes. And so, what Babe Ruth faced is different from what Albert Pujols faced. I mean, it is a different game. Now, maybe it changes more slowly than the definition of inflation, than of our consumption basket, but it does change. And so, you really can't compare old era baseball players with new era baseball players. And it's sort of similar, what you consume over time does change, especially over long periods of time, so you need to change the consumption basket. And furthermore, you're trying to capture changes in the cost of a standard, an unchanging cost of living. So where you're not actually improving your lot.
Stewart: Okay. So let me just... I'm with you because people have stopped buying sorghum, generally. And in my mind, and I'm not a baseball guy at all, I'm a race car guy, but Albert Pujols, since you brought it up, will always be a St. Louis Cardinal, to me. I may be wrong. I may be wrong-
Michael: Yeah, sure -
Stewart: ... but to me, I see that guy in a Cardinal uniform.
Michael: I do too. Look, we're going to go off the rails here. I mean, this is not where we thought this conversation was going to go. But let's go back to the ShadowStats guy and some of the claims. And I don't know how many people follow him, but I hear that all the time, and I spend a lot of time debunking what he has to say. And his claim is that the methodology that the BLS follows has changed so dramatically over time, that there are these massive differences in measured inflation. And so, inflation is really, three or four percent higher now, and has been since the early '80s, if we'd had a constant measurement.
Michael: Well, the first thing is he's kind of wrong. So the main thing that changed in the early 1980s is that we moved to a rental equivalence method of accounting for housing inflation. We separated the value of a house, really kind of notionally, into an asset value and a service value. You live in a house, you own an asset, but you also own the housing services.
Stewart: Yeah. There's a debt service and it's akin to renting, right?
Stewart: It just depends on where the check is deposited.
Michael: Well, that's right. Except that in renting, you don't own the asset value. But in both cases, they're clearly substitutes and they move together. So the bigger picture problem is, that if you do divorce those two things and you say, "Okay, well, we're just going to add three percent to inflation, that's the real level of inflation." It simply doesn't work over a long period of time. And I think one of the most compelling arguments about why ShadowStats can't possibly be right, is given by compounding. And I love this audience because this audience would totally get this argument.
Michael: If the claim is- so we sort of know, we have a good visceral feel for what wages have done since the early '80s. I mean, if I say that the wages have roughly tripled, you'd think back to what people were getting coming out of college in the early 1980s, and what they're getting coming out of college now, and you'd go, "Yeah, that doesn't sound wildly off." And so you know it's not 10 times. You know it's not half.
Stewart: That's a pretty good number. I actually sit on the Risk Management and Insurance Board at University of Missouri, which is an emerging risk management and insurance school. And the Dean of the business school, I believe it was the Dean, said, "The average outbound salary of a graduate is 53600." When I was at Lake Forest College, that number's not very far off. And when I started at the fed in December of '06, yeah, right, '86, thanks, I was 22 grand. So when you do that math, that's about right. I mean, it's about, it's a little less, but in my case, but I was maybe underperforming, so that sounds like the right number.
Michael: Well, that's right. So you've got an available heuristic for getting that general idea. And the BLS says that the cost of living over the same time frame has done roughly the same thing, it's roughly tripled. And so, the person coming out of college now has a lifestyle that's not terribly dissimilar to the kid who was coming out of college back then. It's somewhat different, but it's vaguely close.
Michael: Now if, instead of compounding two and a half percent per annum, which has been the average over that time period, that 40 year timeframe, if, instead, it's at two and a half, you compound six and a half, you get a dramatically different number.
Stewart: Right, yeah.
Michael: Right? And it is something we would not fail to notice, a new graduate coming out, instead of having one roommate would have to have 10 roommates, instead of two people going in to share a car, you'd have to have 20 people going in to share a car. You can't not notice those things. And so, while the calculation clearly has some problems, measuring medical care is a really hard thing to do-
Stewart: Tough one.
Michael: And so there's -
Stewart: And the insurance companies are massively exposed to it, many depending upon the line, but massively exposed to that.
Stewart: I mean, work comp carriers have a hell of a time with that. I mean, obviously health insurance, but comp carriers, long tail lines of business, and medical inflation has historically been substantially higher than core inflation, right?
Michael: Absolutely. Absolutely. And by the way, what does a constant standard of living mean when you talk about medical care? I mean, we don't even have the same treatments now that we did 30 years ago, so it's a very hard thing to measure. So the BLS has issues measuring those things, and so it may be off. It may be a little high, a little low, people debate that, but if it was wildly off like the ShadowStats guy claims, we just couldn't possibly miss it.
Michael: And there are other competing price statistics. There's one called PriceStats, actually, that used to be called the Billion Prices Project out of MIT, where they basically go and create their own price index by scraping all these prices from the web. And they get an answer that's very close to what the BLS says. So I think that the BLS might be off, but they're not crazy off. Now, we can talk about the individual components and what happens, but overall they seem to get the broad answer close to right.
Stewart: So, man, I got questions whirling around-
Michael: I know.
Stewart: ... and I'm going to derail us. I'm going to screw it up. I'm just telling you. I used to work for a guy named Bill Rotatori at NEAM, and he always said, "Core inflation's great, as long as you don't eat or drive." So we can debate that later. The other one I've always heard is, "Oh, if you think inflation is two and a half percent, then go ahead and eat your iPad," because the technology component pulls it down. And there's arguments about, hey-
Michael: You got to make adjustments.
Stewart: ... it's better for the government if the COLA's low-
Stewart: ... blah, blah." And just to kind of make the audience aware, when you say BLS, that's the Bureau of Labor Statistics, right?
Michael: Yes. Right, sorry about that.
Stewart: And those things are... No, not at all. And you can go out there on their site and you can look at all the ways that they do what they do. So keep me on track here, because I'm a lunatic about this, is inflation something to be concerned about right now?
Michael: We're getting back to the question of the inflation process. So again, we all sort of agree that you can go and you can see used car prices are higher. You can go and see restaurant prices are higher. Is that inflation? Is that what we have to worry about? Or are these one-off anecdotes? And that is the state of the debate right now.
Michael: But the funny thing is, we've just sort of forgotten, it's been a quarter century since we've seen any inflation and we've forgotten what it looks like. You think of inflation as being this steady thing that affects all prices, but that's not the way prices change. The guy doesn't charge you an extra nickel for the burger every week, it stays the same and then it jumps. And each of those jumps is an anecdote, and that does aggregate into data.
Michael: So the analogy I like to use is microwave popping corn. If you put a bag of microwave popping corn in the microwave, and you set the microwave going, after a couple of seconds, you'll hear a pop. Well, that's an anecdote. That kernel and only that kernel popped, and there's specific physics that cause that kernel to pop. And you wait another couple seconds and another kernel pops, that's also an anecdote. You wait a little longer and more and more of these anecdotes start to happen. And eventually, you open up the door and the bag is full.
Michael: Well, that's what inflation is, it's a series of anecdotes. Each price change is a supply and demand intersection and something is changing. It's just, how quickly are these anecdotes... What's the underlying process here? And are those anecdotes happening more frequently? And I think that there's some evidence that the microwave is getting hotter and that's one of the reasons we're getting more of those anecdotes.
Michael :I do think, by the way, that we're changing something that has been an anchor for a long time. And I've only recently sort of noticed this, but in some of the folks that I advise, for example, financial companies, but industrial concerns in particular, they used to have this attitude that they could not raise prices. That if their costs went up, they'd try to absorb the margin compression as long as they could, because they believed if they raised prices, everyone would go away. I go to a restaurant that printed up menus five years ago that had hard-coded the prices in there, and the prices have never changed. And during the pandemic, they put little stickies and covered up all the prices and put new prices there.
Michael: But what happened was... And so all of these people, all these suppliers, all these vendors, believed that if they raised prices, they would lose all their business. And now what they've discovered is, you can raise prices and people will still buy your product, and that's shocking to a lot of them. And so everyone keeps telling me that restaurant prices are going to go back down, when the pandemic is over, and I don't know why they would. Everyone who walks into the restaurant has a government check. They got more money in their pocket. They're clearly paying higher prices. Why would you lower prices again? You're doing just fine.
Michael: So we're training people, we've conditioned people over the prior quarter century to not raise prices. And now, we've reminded them that as business owners, preserving margin, you can raise prices, even in a competitive industry and maintain your margins. And that's the unanchoring of inflation expectations that the fed worries about. And I think it's really changing. And once it changes, it's very hard to change it back.
Stewart: Some anecdotal stuff, there are shortages in semiconductor chips, there are shortages in shipping containers, and on top of that, we managed to wedge a gigantic ship in the Suez Canal forever, which sent shipping rates through the roof. I tend to look at car prices and I noticed that the price of a particular truck, the used prices are so strong that people are asking nearly new prices for trucks that have been... they're a year old, they got miles on them, whatever. Now, the Bureau of Labor Statistics makes adjustments, although we've never seen a global pandemic like this, so do we get a bump, and then everybody goes, "Well, it's because of COVID"? Or does BLS try and smooth that in some manner? How do you see them dealing with this, what I think is going to be temporary?
Michael: The BLS has a handbook of methods that tells them how to do this stuff. And they're really anal about sticking to those methods. I asked them recently... So one of the things that when they collect rents, which right now their measured rent is too low, because of the way they collect it. When they go around and they ask a landlord, "What's the rent on this unit? What proportion of the rent have you collected?" And then, if it's not a 100%, "What percent do you expect to eventually collect?" And if you're not sure, then you get a lower number. And if they don't think they're ever going to collect the rent, then it's a zero for that unit, even if there's somebody living there.
Michael: So I asked the BLS, and so there's this rent moratorium, this eviction moratorium that has caused landlords to not collect as much rent. And so those measured rent inflation numbers are lower than the asking rent numbers by quite a bit. And the BLS says, it's reasonable, they say, "Well, look, if the guy doesn't pay rent, that lowers his cost of living." And they're correct, it is definitely lowering the average cost of living that people aren't paying as much rent. But here's the question I asked, I said, "Okay, well, let's suppose that the government declared a rent holiday and said, 'Nobody has to pay rent next month.' What would you do?" And the answer was, and this is the actual answer back from the BLS, "If nobody paid rent, that component of the CPI would go to zero...minus 100%."
Michael: Well, not quite, they never put a zero in, because it causes problems with the math, but minus 99%. And that's 40% of the CPI, so that month you would have an insane year on year change. And when it came back, presumably you'd have a bounce. But that's what their method says. And so they occasionally intercede and make changes, but they tend to be very small. So the answer is, there may be an effect in the seasonal adjustment, the way that they do it, but they're not adjusting used car prices down because it's a one-off effect. They don't make judgements like that.
Stewart: So when we see... No, bad. So COVID happens, I mean, really hit hard a year ago-ish, the Fed dumps liquidity in, just dumps it in. And then there's this round of stimulus checks. Most recently, there's a trillion nine, which is a staggering number of stimulus. This is not a political statement. It's just a lot.
Michael: An actual statement.
Stewart: It’s just true. Then what I keep hearing from people is that there's a lot of pent up demand for people to go out to do anything, concert, movie restaurants, whatever, family vacation, and that there's pent up demand. And the question I guess I have is, what impact... I mean, I think the bond market is telling you, "Hey, we expect inflation and not a little bit." When you've seen the long bond go from well below a 100 basis points to backing up dramatically. And forget about the nominal number of basis points, look at it in percentage terms. Those yields have more than doubled. I mean, the lower the inflation rate, the longer duration, when you get that backup in rates, you've got a huge... If one percent on an eight duration bond is a decline of eight percent-ish on the price. So, I mean, are you worried about the amount of fuel that is in the market today-
Stewart: ... dry powder or what, however you want to phrase it?
Michael: The actual inflation debate is a super long discussion. So the question of monetary velocity, how fast are people spending those dollars? Why is it so depressed? And part of the answer to that is, that there's a precautionary demand for money when you're afraid, you save, and when things go back to normal, you spend. And so there are a bunch of those things that are moving in amounts that we've just never seen. We've had a 26% rise in the M2 money supply. That's literally unprecedented. I mean, maybe in the California Gold Rush, you saw something like that. But we literally have never seen anything like that.
Michael: And you've got spastic fiscal policy, again, something we've never seen. So regardless of whether you think that it's going to lead to inflation or deflation, because we have too much debt, and there's a lot of debate going on, what I think it means for investors, and especially insurance companies, is that you're going to have a lot of inflation volatility. You're going to have volatility in all of these metrics that we've gotten used to a placid investing environment for. And so the level of volatility of the data and probably the volatility of market instruments is almost certainly going to go up, and we have a great increase in the probability of a long tail event.
Michael: So let's bring it into the P&C world. And it's like, there are certain times a year that a hurricane is more likely. A hurricane can hit in January, it's very, very unlikely, but there's nothing that stops it from happening. But we are in an environment, and for a long time, we've been in this low inflation environment, very placid inflation environment. And some of that was luck, but some of it was policy. But now we're moving into the summer months for hurricanes. And so that doesn't mean you're going to get hit by a hurricane, but the potential for a big long tail outcome is much higher than it has been in a very, very long time.
Stewart: So how are insurance companies exposed to inflation?
Michael: Well, I think you said early on, you're exposed on both sides. On the asset side, the assets that a typical insurance company owns are like everyone else in the world, stocks and bonds, that tend to move in opposite directions when growth changes. High growth is good for stocks, bad for bonds and vice versa. And so, you get this diversification effect, and it's a wonderful thing. But they tend to move together when inflation factor rears its ugly head. And so you end up getting correlated assets going in the wrong direction, when you have inflation going up. So that's sort of on the asset side where you've got the exposure.
Michael: And then on the liability side, obviously, there are lots of long-term lines. You don't worry too much about auto, any policy you're going to rerate every couple of years isn't a big issue. Inflation isn't really the question of what happens to building materials when the hurricane hits. That's not really an inflation issue, per se. But the long tail lines, like worker's comp, med mal, long-term care-
Stewart: Yeah. long-term care, for sure.
Michael: Long-term care is a classic one. And what happens in that market is always sort of interesting, since so much of it is inflation. You'll see periods where basically no one's offering long-term care, because everyone's sort of full on the risk. That's really part of the issue here is that, if all of your lines have some sort of inflation risk in them, then you don't really have the ability to stop offering any sort of P&C, because you've got full on the risk.
Stewart: I think too, the other thing, and I used to work for a monoline workers' comp carrier and the pricing of that product has an inflation component in it, either explicit or implicit, it's got to be in there. And the thing that's tough about comp, if you get the pricing wrong, it's going to hurt for a long time. It's not like you're going to be at a 102 for a minute, you're going to be at a 104, then you're at a 108, then you're at a 114. And it's like, man, you not only do you not want any more of it, and if you're a monoline carrier, you got to keep writing business, right?
Stewart: There's no doubt about it. And the other thing that's kind of odd about where rates are, is the faster that the insurance company writes business, the more exacerbated the problem is, as they keep plowing money in, at low rates. And the risk of a fixed income security is greater when the coupon, when the current yield, is lower. It's just not the same. The volatility isn't the same, which is one of the measures of risk in finance. I mean, it just is. So the big question, I guess, is what do you do about it?
Stewart: There's not, at least not that I'm aware of, a silver bullet hedge on inflation. So what can insurers do?
Michael: Sure. It's interesting. The inflation looks a lot like the sort of risk that we would reinsure in other contexts. So going back to the hurricane, so you've got a low probability, long tail event and you can't really diversify your way to a good outcome. And if you price your worker's comp appropriately, it still doesn't mean that you don't have that long tail. I mean, it's not floating with inflation. And one of the answers, one of the long-term answers is that if we redefine the reinsurance treaty in real sort of adjusted terms, and separate out that long tail financial risk, which is inflation, from the long tail, insurance risk, then you can get a lower price from the reinsurer.
Michael: If we were able to take a healthcare, medical care claims, and discount them by some medical cost index and reinsure that piece, and then separately hedge the medical care cost index, that's sort of the holy grail, you'll be able to get a lower price on the reinsurance for the true property casualty risk. And then you're left with this financial risk that we can do something that looks like reinsurance on.
Michael: Now, what does that look like? And right now you would have to do some sort of structured finance thing, rather than define the treaty a different way. But what looks like reinsurance in the financial world? And the answer is an option. We don't have... The market for inflation options is horrible. It's illiquid. It's a difficult market. There aren't a whole lot of dealers who do very much of it and they do caps rather than swaptions and so on.
Michael: But you can do synthetic things. So you can do a synthetic inflation option in a structured finance type approach, get much better capital treatment for it, and essentially, you've reinsured a financial risk in a reasonably low cost way, or at least... Or for that matter, if it's a particular basis, inflation basis, you're interested in, it's medical care costs, as opposed to headline, there is no medical care TIPS out there. But TIPS have medical care inflation in them, because it all aggregates up to headline inflation. And so in principle, and I've worked with folks on this solution in the past, you can take TIPS and put them in a trust and tranche out the medical care portion of it, and pay that out as a coupon.
Stewart: It's interesting though, because I mean, insurance companies, at least in my experience, those hedges cost money, which effectively, they eat. They eat you. I mean, so we were on with Mitch He at Chesapeake Insurance, and they're a comp carrier. And he said, "Yeah, we bought biotech stocks as a hedge on medical inflation." And it worked, they were very happy with it. But there's a lot of basis risk in there, right?
Stewart: There's no silver bullet. I mean, and to your point about the options market, the inflation options market being terrible, I suspect that everybody wants to be on the same side of the trade. That doesn't make a market.
Michael: Well, that's actually the real problem with the inflation options market is, is the dealers end up having to sell all the vol, and just like an insurance company, eventually, you sold all the volatility, you sold all the options you want to sell, and there's no way for the dealer to reinsure that risk.
Stewart: Right. Absolutely.
Michael: So that's what happens, they offer that... And by the way, then they get picked off by the hedge funds, because the dealers don't price it right, and then they decide they never want to do it again. So all sorts of issues with that. And by the way, that's one of the reasons that inflation options, why the hedge costs so much as opposed to doing it yourself synthetically, and actually paying realized volatility as opposed to implied volatility.
Michael: But go back to that biotech example, one of the things that you could do that would improve that hedge is, again, you take that, put it in a trust, and that trust pays out two coupons. One coupon is the actual medical care index that you're interested in. And the other pays the total return of those stocks minus the medical care index. So you get sort of the real biotech equity exposure, and maybe you can lever it and do something clever on the other side.
Michael: So the interesting thing about medical care inflation in TIPS, and I think that this went back a number of years, I worked with Bob Shiller and his company when I was on Wall Street at a firm called Natixis. And we went around working on a security that you could trade medical care inflation through, and you could trade on the New York Stock Exchange. I'm not going into a lot of detail, but one of the things we had to go figure out was, who was going to be the other side? Who was going to be the seller of medical care inflation?
Michael: And the answer turned out to be that there are big portfolios of TIPS out there where there may be a big asset manager that owns $50 billion worth of TIPS. Well, that means they've got billions of dollars of exposure to medical care inflation and at the right price, they'll underweight that and pay you medical care inflation. And so there is another side, we just have to dis-aggregate these risks that are all bundled up in TIPS. And that's where the market will eventually go, but right now you've got to do it in a structured finance kind of way.
Stewart: Man, I love this. I love this. I got to have you back on. We're like way over time. And I got a 1,000 more questions. I am thrilled to have you on. I just think it's really interesting. I can't thank you enough for your expertise. And I mean, this is your jam. This is-
Michael: They call me the inflation nerd.
Stewart: But I mean, you advise companies, you advise insurance companies as well?
Stewart: What's your typical... How do you apply your knowledge to the-
Michael: Well, look, I mean, we'll talk to anybody who'll let us talk about inflation. We think about ourselves as inflation plumbers. If you've got a little minor leak... If you have something generally wrong with your house, maybe you call the handyman. But when you have a leak and it's coming through your ceiling, you call the plumber. And so we talk to people who have inflation leaks and need a diagnosis and a solution. And sometimes we explain the solution to them, and sometimes we provide the solution, or we'll work with them to find the solution. So think about us as inflation plumbers, and that's probably close to the best thing. And again, sometimes it's a conversation and other times it's a product.
Stewart: All right. So this is the portion of the program called, ask me anything, and you're not prepared for this in any way.
Michael: Oh, I thought I was going to ask you anything.
Stewart: No, no, no.
Michael: Oh, this is-
Stewart: We can talk about that... That'll be our next podcast, because our audience could care less about me. So it's your graduation day of undergraduate education, regardless of what may have happened the evening before, whatever the festivities may have been, you are looking bright-eyed and bushy-tailed in your cap-
Stewart: ... and gown. You're waiting, waiting, but Ashton starts with an A, so you're up pretty early, and you go up the stairs, you wait, there's a person that's waiting, then they read your name, you go blazing across the stage. The crowd goes bananas. You get your diploma. There's a quick handshake, and a quick photo op and down the stairs you go. At the bottom of the stairs, you run into Mike Ashton today, what do you tell your 21 year old self?
Michael: Oh, my goodness. Boy, that was a long lead-up. I had no idea where you were going. I thought you were going to ask why they're cheering, which would be a good question. What I would tell the 22 year old Ashton is, what the 22 year old Ashton already had learned in driver's ed, but didn't understand the context that it applies to lots of other contexts, and that is "aim high in steering."
Michael: One of the things they teach you when you're driving is don't try to micro adjust as you're going around a curve or going straight, aim at the horizon and make infrequent adjustments to get to that horizon. I would say the same thing applies in life, begin with the end in mind. Think about where you're going to be in five years or 10 years and aim for it. And don't get too worried about all the little microgyrations that happen, because most of them don't matter. And when I get upset, occasionally, these days at something that's happening in my business or whatever, I sit down and I think to myself, in 10 years, am I going to care about what just happened? And the answer is almost always, no. And that calms me down. Focus on what's actually going on, aim high in steering. That's what I would tell myself.
Stewart: Very, very good advice. Mike Ashton, Managing Principal at Enduring Investments, thanks for being on.
Michael: Thank you.
Stewart: It's great to have you. Thanks for listening. If you like us, please like us on all the major platforms. Follow us, we appreciate that. If you have ideas for podcasts, please email us at email@example.com. My name is Stewart Foley, and this is The Insurance AUM Journal podcast.