Assurant Inc (AIZ) 2011 Q1 法說會逐字稿

Welcome to the Assurant first quarter 2011 financial results conference call.

All participants for today's call will be in a listen-only mode during the presentation.

It is now my pleasure to turn the conference over to Ms.

Melissa Kivett, Senior Vice President of Investor Relations.

Please go ahead.

Thanks, Nicole.

Welcome to Assurant's first quarter 2011 earnings conference call.

Joining me with prepared remarks are Rob Pollock, President and Chief Executive Officer of Assurant and Mike Peninger, our Chief Financial Officer.

Prepared remarks will last about 20 minutes and then we'll open the call to questions.

Chris Pagano, our Chief Investment Officer and Treasurer, is also here for questions.

Yesterday we issued a news release announcing our first quarter 2011 financial results.

The news release, as well as corresponding supplemental financial information is available on our website at Assurant.com.

Some of the statements we make during today's calls may contain forward-looking information.

Our actual results may differ materially from those projected in the forward-looking statements.

Additional information concerning factors that can cause actual results to differ materially from those projected in any forward-looking statements can be found in our 2010 Form 10K which can be accessed from our website.

The Company undertakes no obligation to update or revise any forward-looking statements.

Additionally the presentation will contain non-GAAP financial measures which we believe are meaningful in evaluating the Company's performance.

For more detailed disclosures on these non-GAAP measures, the most comparable GAAP measures, and a reconciliation of the two, please refer to yesterday's earnings release and the supplementary financial information that's posted on our website at assurant.com.

Now I'll turn the call over to Rob.

Thanks, Melissa, and good morning everyone.

Our first quarter results are consistent with our commitments made during our Investor Day last month.

Though overall growth remains a challenge, we were encouraged by sales results in several of our targeted areas.

We continue to provide products and services that offer value to our customers.

For the quarter, our annualized operating return on equity was 12.5% and our diluted book value per share, excluding accumulated other comprehensive income, increased 3% since year end.

Turning toward the businesses, I'll begin with Assurant Solutions which is off to a good start this year with profits up by $9 million versus the first quarter of last year.

We are starting to see the payback from Solutions Risk Management improvements implemented during the past few years.

The addition of new clients sets the stage for longer-term revenue growth at Solutions.

However 2011 revenues will be similar to 2010 levels because of the runoff of Circuit City business and the continued decline in the US credit insurance business.

Pre-need had another good quarter in both sales and profitability as our partnership with SCI continues to help grow this business.

Assurant Solutions' products and services revolve around asset protection, piece of mind, and ease of doing business, a winning value proposition.

Looking ahead, we believe Solutions is on track to produce a sustainable double-digit return on equity in 2012.

Let's turn next to Assurant Specialty Property which had another strong quarter.

We continue to see market contraction in the number of mortgage loans outstanding.

Our results were essentially flat compared to last year after adjusting both periods for disclosed items.

New clients added in 2010 help to sustain the number of loans we track which helped maintain gross earned premiums.

Process Improvements are controlling expenses even as the business adds new clients and tracks more loans.

Adjacent products, including renters insurance, contributed nicely to overall results.

This is an area we are targeting for growth and we are encouraged by the results.

Net earned premiums in our other product categories were up 5% from the prior year.

We realize there are many changes being contemplated for the lending and mortgage servicing industries.

Assurant Specialty Property complies with the regulations applicable to our business and will continue to do so.

We believe lender-placed insurance which provides required coverage without any underwriting of individual properties remains an important backstop for homeowners and lenders.

Assurant Specialty Property is well-positioned to serve this market by providing great customer service supported by a sophisticated tracking platform.

During 2011 we expect continued good performance at Specialty Property.

Weather activity will be the major variable impacting earnings.

The recent April storm activity has created hardships for individuals we insure.

I am proud to say our employees have responded quickly and we are making claim payments to policyholders in their time of need.

Longer-term, we anticipate placement rates for our lender-placed products will return to lower levels and we are managing our business accordingly.

We believe this transition will take several years.

Next I'll turn to Assurant Health.

First quarter sales results and expense reductions demonstrate early progress in adapting to the new healthcare landscape.

Both are key to transforming this business.

We recognize, however, we are in the early innings and must remain vigilant to achieve success.

This quarter we accrued a new obligation for premium rebates in our financial statements to comply with the minimum loss ratio requirements of healthcare reform.

The sales of our new product portfolio increased sequentially.

Our products were designed through extensive consumer research.

We now have a new suite of products which offer customers affordable choices.

We are encouraged by the early positive sales trends which indicate that customers and distribution partners are seeing value in the products we offer.

The other key to transformation is reducing expenses.

We have made progress in the quarter on both the sequential and year-over-year comparison basis.

While our goals are simple the task remains challenging.

We must continue to generate new sales and drive expense efficiencies throughout 2011 and beyond.

A better customer experience and a simplified business model will help us achieve these goals.

We continue to expect breakeven results for full year 2011.

Over the long-term, we remain confident in our commitment to achieving a 4% after-tax margin.

For Assurant Employee Benefits results for the quarter were disappointing.

As we mentioned at Investor Day, in the first quarter disability claim recovery rates slowed and we lowered the reserve discount rate for new claims.

In addition, we also experienced higher group life mortality.

Our dental results continue to improve and our sales activity picked up during the first quarter.

We experienced meaningful sales growth in our voluntary and supplemental products which are important drivers of long-term growth.

We expect the remaining quarterly results in 2011 will have better earnings than the first quarter despite a lower discount rate for LTD reserves and lower reinvestment yields.

Now I will turn to our capital management activities.

We ended the quarter with $585 million of capital without taking dividends from our operating companies.

For the full year, we still anticipate that dividends will be equal to operating earnings.

In the first quarter, we returned nearly $190 million to shareholders.

We paid our quarterly dividend and we repurchased stock at a discount to book value.

We continue to see buybacks as an appropriate use of our capital.

We will remain disciplined in deploying our capital per long-term profitable growth.

Now Mike will walk you through the operating results for each business.

Mike.

Thanks, Rob.

I'll start with Assurant Solutions for first quarter 2011 net operating income increased by 32% versus the first quarter of 2010.

Underwriting improvement in the UK and good performance from our pre-need life insurance operations contributed to the increase in net operating income.

Domestically net earned premiums declined for the quarter due primarily due to the continued runoff of Circuit City and domestic credit insurance.

Premiums from these key sources were approximately $50 million lower compared to the first quarter of 2010 and in line with our expectations.

As we mentioned in our fourth quarter earnings call, full-year Circuit City and credit premiums are expected to decline by about $170 million compared to 2010.

Domestic service contract premiums increased in the wireless, retail and automotive channels during the quarter.

The domestic combined ratio was 96.1% for the quarter.

We expect it to move higher during the year as Circuit City winds down but our long term target remains at 98%.

As we mentioned at Investor Day we expect to achieve approximately $10 million of expense reductions this year that will help mitigate the impact of the runoff lines of business over time.

Internationally we saw an increase of approximately 5% in net earned premiums versus the first quarter of 2010 driven primarily by clients in Latin America.

Sales momentum continued as gross written premiums rose 3% due to both existing and new client sales growth.

The international combined ratio decreased 260 basis points from the first quarter of 2010 driven by better European loss experience.

Sequentially the international combined ratio grew by [76] basis points as increased expenditures were necessary to support the growth in Latin America.

Remember that in the service contract business there's a lag effect.

We generally incur expenses to establish new clients before we benefit from the resulting production.

We remain on track for a 200 to 600 basis point improvement over the course of 2011 in the international combined ratio compared to the fourth quarter of 2010.

As was the case last year, the pace of the improvement will vary by quarter.

Our long term target for this ratio remains at 95%.

Preneed life insurance net operating income increased by $3 million versus the first quarter of 2010.

Approximately $2 million of the increase was due to the relative change in value of the CPI cap versus last year.

We have a strong business model in preneed and are pleased with the 12% increase in sales during the first quarter.

Turning now to Assurant Specialty Property, net operating income was approximately $103 million including just over $7 million of after-tax adverse claim reserve development from the previously reported Arizona hailstorms in the fourth quarter of 2010.

We had no reportable catastrophes in the first quarter of last year.

The addition of new clients and loan portfolios during 2010 and an increase in the overall placement rates to 2.35% continue to sustain revenue in our lender placed business.

First quarter net earned premiums, however, decline primarily due to additional seating activity to clients and increased catastrophe reinsurance premiums.

The drop was partially offset by a 5% increase in other premiums, primarily driven by growth in our renters insurance products.

Operational improvements along with reduced commissions caused by increases in client-seated premiums lowered the expense ratio for the quarter.

On an adjusted basis we were pleased with the year-over-year combined ratio comparison.

The current period includes $11.4 million of catastrophe-related losses versus none in 2010.

And 2010 premiums included a $13.6 million benefit from an unearned premium reserve review.

Turning to catastrophe reinsurance, we have already placed about 75% of the 2011 program.

We expect the pricing for the remaining 25% to be in line with last year.

We'll issue a comprehensive update in June detailing our complete 2011 reinsurance program.

Several regions of the country have experienced very high storm activity in April.

While still very early, our preliminary estimate is that reportable catastrophe losses from these events will be at least $15 million pretax which will be reflected in our second-quarter results.

We'll update this estimate as necessary as new information becomes available.

I'll now turn to Assurant Health.

It's important to note that prior results for Health are not directly comparable to current results due to changes associated with healthcare reform, most notably the required accruals for premium rebates.

First quarter net operating income was $7 million.

Results include a reimbursement of approximately $4.8 million after-tax from a pharmacy services provider related to 2009 and 2010 activity.

The higher tax rate for the quarter resulted from changes in allowable deductions under healthcare reforms.

Net earned premiums for the quarter were $426.2 million net of a rebate liability of $22.4 million.

We estimate that the full year rebate liability will be in the $80 million to $90 million range.

We reduced expenses by 15%, or $21 million from a year ago and the business continues to drive expenses down further.

At Assurant Employee Benefits net operating income decreased to $6.5 million.

The drop was primarily due to less favorable life and disability experience versus prior quarters and the impact of lowering the reserve interest rate.

Improved dental results partially offset the decline.

Disability experience reflected lower claimant recovery rates over most of our block.

Incident rates remain relatively stable overall but we did see increases in a block of assumed reinsurance business.

We will be closely watching future experience as it unfolds and will take corrective action as needed.

As we mentioned at our Investor Day, we lowered the reserve interest rate assumption to 4.75% for new long-term disability claims as of January 1, 2011.

The interest rate for claims incurred prior to 2011 remains at 5.25%.

The 50 basis point reduction had a $1.3 million after tax on first-quarter income and is expected to have a $5 million after-tax impact for the year.

First quarter net earned premiums were down compared to first quarter 2010 and are expected to be down for all of 2011.

Premium persistency is being adversely impacted by the pricing actions on the disability reinsurance business I mentioned earlier.

Premiums are also adversely impacted by lower sales last year.

Sequentially, net earned premium is down less than 1%.

While earnings were disappointing at Employee Benefits, growth initiatives to expand the product suite and improved persistency are gaining traction.

Sales for the quarter improved 12% including a 22% increase in voluntary sales.

Turning to the corporate segment, losses improved versus the prior year primarily due to changes in tax liabilities.

Corporate results vary from quarter to quarter but we expect the full-year loss to be approximately $55 million after-tax.

In the first quarter we repurchased 4.4 million shares for about $173 million representing more than 4% of the shares outstanding at year-end 2010.

In the second quarter through April 21 we repurchased an additional 1.1 million shares for approximately $42 million.

The number of shares we brought back last quarter and last year clearly indicate our willingness to return capital to shareholders.

In the current environment we believe further buybacks are appropriate.

However the pace at which we will repurchase shares during the next 2 quarters could moderate due to the storm seasons and timing of dividends from the operating companies.

In addition rating agency views on capital requirements are always a factor we consider.

And with that I'll turn the call back to Rob

Thanks, Mike.

Our specialty businesses continue to demonstrate their ability to adapt to changing market conditions.

Before we take questions, let me summarize our 2011 priorities.

One, create new revenue streams.

Second, find additional operating efficiencies and develop enhanced products and services valued by our customers.

Third, leverage our risk management expertise in all we do.

And, fourth, continue to manage our capital in a disciplined manner.

We believe this will lead to long-term profitable growth and value for our shareholders.

Now I would like to open the call for questions.

Operator, first question please.

Thank you.

Ladies and gentlemen, our first question comes from Mark Finkelstein with Macquarie.

Good morning.

Good morning.

I've got a couple of things.

One, I'd guess just international solutions combined ratios as you alluded to ticked up 70 bits sequentially.

I think you qualified it as higher expenses in Latin America, I guess.

Two questions.

One, can you just discuss how you think the combined ratios are going to trend for the year?

I mean, this has been an area where, you know, with improvements in the UK you've expected it to trend down and it has trended down.

How should we think about that?

And I guess, two, maybe just talk about what actually happened in the quarter.

Was it kind of an up-front payment on Telefonica that's more one-time in nature or was that just general putting money into the unit?

Sure, couple things.

If we start with how it will come, we wish it came just linearly, Mark, but it didn't.

Saying all that, we continue to see improvement in our loss experience in Europe, and it's tracking as we plan so we felt quite good about that.

And we think it will continue to improve over the course of the year.

We're quite confident in that.

That's what's going to lead to the improvement.

Second, as we look to the expenses we're talking about, actually we have landed a number of new clients in Latin America over the last several years.

And I think, as Mike pointed out, service contract revenue in particular you've got put people on, you've got to help make sure that the contracts are sold in the stores and you get written premium before you get earned premium.

And that's what's going on there.

It's all in the course of how we do things so that's kind of what contributed to things.

Yes.

No, I think that's right.

I think that's -- it's just difficult to have a smooth quarterly pattern in this business, so we still are focused on the 200 basis point to 600 basis point drop over the course of the year.

Okay.

And then I guess, secondly, on Specialty Property, gross premium levels declined sequentially.

Loans tracked was kind of flattish but placement rates were up.

Insured values up.

I guess can you just discuss what drove the sequential change?

Was it geography?

What drove that decrease and how should we think about it?

So I just want to make sure -- you talked about the gross written or were you on the net earned part?

Gross written.

No, gross earned.

Sorry.

Gross earned.

Yes, on the gross earned you've got a couple of different things going on within the gross earned category.

One just relates to clients and how they're brought on over time and how cancellations are worked through when you bring a new client on.

We have seen a shift away from REO properties but I think that largely takes the place last year.

And we've had -- changed the -- with some new clients coming on that have slightly different characteristics perhaps than some of the ones that were with us before.

But all in all the placement rate up, I think the average insured value up just a little bit there.

And getting production from several of the new clients that we wrote last year is also starting to roll through our earned revenue too.

All right, thank you.

(Operator instructions)Our next question comes from Ed Spehar with Bank of America Merrill Lynch

Good morning, Ed.

Thank you.

Good morning, everyone.

I guess the question on share buyback.

Understanding that the pace could slow during storm season, should we view this sort of high levels of repurchases this quarter as sort of an indication of how you're going to think about buying stock as long as it's below book value?

Or should we think about it more in terms of just the amount of excess capital and free cash flow that you're generating over the next couple of years?

How much of it is opportunistic and how much of it is just because you have a lot of money that you could potentially spend?

Okay.

On the capital management side, first, I'll let Chris go through some of the detail, Ed, but obviously we see the share is attractively priced.

We've continued to be in the market as we can be.

The big thing is having the free cash flow coming out of the businesses and the businesses have generated that free cash for extended periods of time.

Chris, are there other things you want to add?

Yes, sure.

Hi, Ed.

Yes, a couple things.

Keep in mind, dividends are a function of earnings, earnings are a function of storm season.

And, again, storm season is defined as CAT wind and some of the things that we've seen already in the first and now into the second quarter.

The share price is attractive and I think your comment around the level of repurchase activity through April 21st is an indication of what we think about the share price and our willingness to return capital if we don't see any other opportunities on the growth side.

So a combination of things.

And the other thing to keep in mind, in terms of the activity through April 21st, compared to last year, for example.

You know, last year we had identified early in the year some capital initiatives that we were going to deploy to get more capital out of the business beyond earnings.

So we took back -- we took earnings in excess of operating income -- excuse me, dividends in excess of operating earnings of about $200 million last year.

We don't see that sort of number this year.

We will always try to be as capital efficient as we can at the operating segment level.

But, you know, earnings and dividends are going to be much more closely related this year which is why we're going to continue to be disciplined, as we have been every year about timing the repurchase activity loosely with the dividend -- the dividend plan for the individual segments.

Chris, just a follow-up.

I think last -- last year in the third quarter obviously you did slow down the buyback but you did have something -- $45 million, I think, of buyback.

Is that kind of the -- is the pattern that we saw last year what we should potentially think about for this year?

Not the amount, but just the pattern?

Sure.

I think again, first quarter was -- we were more aggressive than we were first quarter last year.

Again we are going to calibrate what we're going to do in the second and third quarters.

But the slowdown in the repurchase activity in the storm season on a relative basis I think is, if you want to put a pattern in, I think is appropriate.

And then at the end of the year whether the wind blows or not, what the earnings pattern is going to look like will affect what we take in the fourth quarter and will give us a greater deal of comfort around repurchase Keep in mind, unlike last year, we've already had some significant storms and going into hurricane season.

So we've got to keep that in mind as you start to calibrate.

But, again, that's back to dividends will be a function of earnings.

Earnings will be a function of storm season.

One last run on this topic.

Mike, you mentioned something about rating agency capital models or consideration of rating agencies.

Is that just a standard comment or is there something we should read into anything going on with the changing rating agency views.

No, don't read anything into it other than we talk to the rating agencies, obviously, every year.

I think we're in the -- kind of the process of those discussions now.

And we just want to point out that, that's always a factor because we need to keep the Company as capitalized to invest requirements.

Okay, thank you.

Our next question comes from John Nadel with Sterne, Agee.

Good morning everyone.

Couple quick ones on Health and then one on Corporate.

In the Health division, I'm looking at the membership levels.

They were up really nicely quarter over quarter.

I mean, they were up in individual but really much more so in small group.

Can you give us a sense for what's driving that?

Was that some pent-up demand or agents figuring out the new products?

Like can you just give us a little bit more color there.

Yes , I think that we're

Because that seemed promising.

So we're including all of our supplemental products [at the count] on those members so remember these people are -- excuse me, the premiums on these products are smaller.

There's actually a -- we've included the supplemental products now, John, and we hadn't in the past, so there's a footnote in the supplement that talks about the difference, so you're seeing a bit of an apples and oranges there.

Got it.

Missed the footnote, okay.

And then also on Health, if I adjust for the Pharmacy reimbursement it looks like the Medical loss ratio or the loss ratio was about 74.5% in the quarter.

I know you mentioned couple of weeks back at your Investor Day that maybe a mid 70s on a GAAP basis would roughly equate to that 80% requirement.

Is that consistent with where you are this quarter?

I think that's how you should think about it, John.

I haven't done the calculations so I don't know exactly.

I think Adam said a little bit north of -- well, I guess mid 76%, 77%.

The other side of that, obviously, is that we've got to be able to operate all the expenses within what's left, correct?

Yes.

And we're working on that side of things.

And we're working to have -- get closing to pricing better, as I think Adam outlined at Investor Day.

We want to price as close as we can so there are no rebates, okay?

And we need to get expenses down.

And I think we're seeing progress on both sides of things.

And when we think about the full year rebate, Rob, of -- I think the comment was $80 million to $90 million, is that -- that's really more of a function of over-earning, I guess you could call it, on the loss ratio last year?

How do we think about that?

The rebates, John, are a function of this year's loss experience, you know, starting with 2011.

I think it's also really important to make the point that these rebate calculations are very complicated.

We do literally a couple of hundred of these, if you think about all of the states we operate in.

Then you've got individual and group.

You got credibility adjustments, you know, there's just numerous estimates that we're making here.

And then we're also projecting out estimated loss experience and trying to think about pricing actions we are going to make.

So over the course of the year that estimate will get better.

Right now it's based on a whole lot of assumptions.

And does the tax rate stay -- does the tax rate going to continue to look like this as well, or --?

Yes, the tax rate is being driven by -- there are certain compensated related expenses that are no longer allowed to be deductible under healthcare reform.

So essentially you have -- if you think about having a deduction -- that deduction gets smaller and it makes a big difference in the calculation of the tax rate when health's earnings are small like they are now.

If health were earning a lot more, the effect of that disallowed deduction would be a lot less noticeable.

Understood.

Then final real quick one on --

Just one other comment on that, that I'd just bring up, John.

If you think about how we've adapted this business, old model was we wanted the lowest combined ratio, right?

Now what we have to do is operate within the constraints of things here.

And remember, you know, the reform kind of came around and got published midyear last year, but we already had a bunch of policies on the books under the old rules.

So that in essence is what's leading to a lot of the rebates, right?

Now when those policies come up for renewal, we're going to refine the pricing on things to be closer to that target loss ratio.

Okay.

And most of these products, right, are 12- month products or is that not right?

That's correct

Okay.

Last one, just real quick.

On corporate, I think, Mike, you mentioned $55 million loss expected for the full year.

I just want to make sure that I'm clear.

Is that Corporate including interest expense and the amortization of the deferred gain?

Interested is there, yes.

Okay, so that's an all-in number.

Got it.

It's an all-in.

Thank you.

(Operator instructions) Our next question comes from Mark Hughes with SunTrust.

Yes, thank you.

On the Benefits side, could you talk about the pricing and competition for New Group business?

How is that this quarter compared to, say, fourth quarter late 2010

I don't think we've seen a big change in the competitive landscape for pricing so much, Mark.

I do think we see some of the impacts of just Healthcare reform working through .

So we know that Healthcare purchase decisions drive other decisions.

And I think as there's been more clarity on what's going on with healthcare itself it's provided -- or it's gotten people to think about shopping or considering their coverage's.

Last thing I'd just add, in the small market employer market, is -- you know, I just think their -- we're seeing a few positive signs that there may be some employment growth, et cetera, which is just causing them to feel a little better about

Right, because you had more RFP activity and more opportunities on the Benefit side?

Yes, I think that's probably the best way to look at it because, you know, we certainly, you know, have -- when, for instance, we've been taking action to improve our Dental results.

We'd already adjusted LTD pricing to reflect lower new money rate environment.

And so we think we're in good position in that and maybe there's others who are making adjustments to reflect that.

But that's just a speculation.

Right.

Now on the Voluntary business, how much of the success there is attributable to things that you're doing internally?

How much might be more pulled from distribution, trying to compensate for maybe compressed commissions on the Healthcare side?

Yes, we are seeing a lot more interest in the voluntary products from brokers that traditionally haven't been there.

There used to be in the business -- you had sort of our regular brokers that we work with that concentrated on the traditional true group products.

And those brokers are increasingly focused on now on voluntary products and they're becoming an important source of distribution for us.

And I think they see the same trends we do, that small employers can't afford the traditional plans and so voluntary is a real viable option.

Then I think if you think about some of the things we're doing -- we're adding group reps that are focused specifically on voluntary.

So that's where we're putting some growth efforts into that.

And then we have a number of things going on in the way we are designing our products and our systems capabilities that we think is giving us a boost in this marketplace too.

So we've got a product category here that's got some nice market growth potential.

And then we think that what we're doing gives us a bit of an additional boost.

That's helpful, thank you.

Our next question comes from Jeffrey Schuman with KBW research

Good morning, Jeff.

Good morning, thank you.

Just kind of a fine point on the tax rate in health.

Make sure I understand this.

If you don't -- if you have things that aren't fully deductible, does that suggest that in some of these quarters in the future where earnings may be negative, that taxes actually go the other way and the after-tax loss will be bigger than the pre-tax loss?

Is that the right way to think about it?

Could.

It's just the way that works.

You know, you've got sort of pre-tax income.

You take your deductions, calculate your taxes, kind of -- or your GAAP reported income, and you adjust it to a taxable income.

So you're thinking about it correctly.

Is there kind of a ballpark amount of non-deductible expenses that we can kind of think about or not?

I don't have that off the top of my head, Jeff.

That's something we can look about.

Right now, the disallowed deductions relate to compensation that's going to be paid out several years from now.

So mostly it tends to be focused on deferred compensation which you're making a variety of estimates.

We can certainly give some thought to whether we can firm that up.

I hate to -- I'd like it to be a reasonably firm number if we're going to cover that for you.

Okay, all right, thank you.

Another thing, you spoke about share repurchase.

I don't believe I heard you speak about M&A.

Mr.

Colberg has been in place for a couple months now and I think he has a number of mandates, but one of them is to look for M&A opportunities.

Any update there on whether the pipeline seems encouraging or not?

We have talked for a long time about M&A as one of the pillars to helping us grow.

You know, Chris is responsible for that area and I'll let him make a few comments.

But obviously Chris and Alan have just been sitting down and getting their heads together in how to think about things.

But I think the bigger one to take note of is -- we probably looked at quite a few things and, Chris, why don't you just comment on that.

Sure.

Hi, Jeff.

I think -- obviously we don't talk about specific deals.

We do -- we are in the market sourcing deals.

That means looking at them, comparing them to our requirements, whether it has strategic -- a strategic fit, whether it meets our financial requirements.

I think the key here is when you think about M&A and growth, you have got to also put the two words -- the words disciplined and profitable in the mix there.

And that's what our focus is.

And right now what you're seeing is our discipline and our search for profitable growth is not producing opportunities that meet our requirements.

And as a result we're using the deployable capital to repurchase shares which has been a very attractive opportunity for us recently.

So again continuing to source, it feels like we've got analytic rigor and discipline that allows us to outlook at opportunities both within existing business lines and in lines where we aren't currently participating.

And we'll continue to keep you posted as that process involves.

Okay.

Thanks a lot.

Okay.

I want to thank everyone for joining us today and we look forward to updating you on our progress on our next call.

Thank you.

This does conclude Assurant's first quarter call.

The replay of this call will be available at 11 AM central time.

Thank you all for your participation.

You may now disconnect.