Market conditions did not change materially in the fourth quarter of 2021 from the previous quarter. We continue to see stabilization in many sectors of the commercial lines market and cyber continues to be a concern for insurers as ransomware losses are not slowing down. Cyber buyers are feeling the pain and premiums continue to increase. We are cautiously optimistic that insurance buyers will experience premium stabilization in many parts of their insurance program in 2022, but there are some issues that could impact this cautious optimism.

One of the issues we are monitoring is the impact of the unseasonal catastrophes in December. Specifically, the December 10th tornado outbreak that covered multiple states and the December 30th Colorado wildfire. Both events were driven by unseasonably warm weather, and both were catastrophic in terms of property damage. The prospect of extended or maybe even year-round catastrophe seasons would have a chilling effect on the property market. The other area of concern is inflation. If this inflationary environment persists, insurer loss costs will increase. More expensive building materials and auto parts will impact property and auto rates.