Amerisafe Inc (AMSF) 2011 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Amerisafe Incorporated Third Quarter Earnings Call. At this time all participants are in a listen-only mode. Later we will conduct a question and answer session and instructions on how to participate will be given at time. (Operator Instructions). And as a reminder, today's conference call is being recorded.

Now it is my pleasure to turn the conference over to your host, Janelle Frost.

Good morning. Welcome to the Amerisafe third quarter 2011 investor call. If you have not received the earnings release it is available on our website at amerisafe.com. This call is being recorded. A replay of today's call will be available and the details on how to access the replay are in the earnings release.

During this call, we will be making forward-looking statements. These statements are based on current expectations and assumptions that are subject to various risks and uncertainties. Actual results could materially differ because of factors discussed in today's release and comments made during this call and in the risk factors section of our Form 10-K, 10-Q and other reports and filings with the Securities and Exchange Commission. We do not undertake any duty to update any forward-looking statements.

I will now turn the call over to Allen Bradley, Amerisafe's Chairman and CEO.

Thanks, Janelle. Good morning, ladies and gentlemen. Thank you for joining us for our third quarter conference call. As usual I'm going to make a few comments about the quarter before turning it over to Geoff Banta, our President and Chief Operating Officer, who in turn will re-introduce Janelle Frost, our Chief Financial Officer, for additional details.

The significant increases in gross premiums written during 2011 continued at an accelerated pace during the third quarter. Continuing improvement in audit adjustments on policies written in prior periods coupled with an increase in premiums on policies written during the quarter combined to push our gross premiums written up 25.9%.

Relative to pricing, our effective LCM for voluntary Worker's Compensation in the quarter matched the highest effective LCM we have seen since the third quarter of 2007.

There was welcome news on the loss front as well, as both frequency and severity moved favorably during the quarter. Geoff will provide more information on pricing and claims following my comments.

Finally, there are noticeable changes in the competitive landscape as a number of carriers are adjusting pricing and reevaluating their appetite for Worker's Compensation risk. While this change is not universal, the evidence of the change is far more than anecdotal. While the market is not hard, I would say that it is firming.

Now let me pass the microphone over to Geoff for more on our business operations. Geoff.

Thank you, Allen, and good morning everyone. I'll make a few comments myself about our operational performance and trends before turning the presentation over to Janelle to present details on our financial performance.

I'll begin by discussing our top line. As Allen mentioned, our gross premiums written were up strongly in the third quarter by 25.9% year-over-year. Year-to-date our top line is up 19.1%. The third quarter increase in top line was due mainly to year-over-year increases in payroll audits and related premium adjustments. These adjustments have now improved for four straight quarters year-over-year.

Also contributing to our growth in the third quarter was a 7.8% increase for premium on policies written during the quarter, what we term deck-sheet premium. This was our largest year-over-year increase since the first quarter of 2007 and was especially good news for us because we experienced this organic growth while also increasing our pricing.

We also benefitted from markedly higher retention, renewal retention, and higher average premium on our new business. Relative to our renewal business, our third quarter premium retention was 97.6% versus 76.5% in the third quarter of 2010. Our 2011 third quarter premium retention rate is the highest we've experienced since 2002 and we believe it is evidence of increased payrolls of our insured's and overall firming of prices in our high-hazard niche.

Our policy retention meanwhile was 92.2% in the 2011 third quarter, just slightly lower than the third quarter of 2010, which was 93.2%. As mentioned above, our average premium also increased in the third quarter from $25,600 to an average of $30,800. The increase was due to several large new business accounts we were successful in writing to a substantial increase in average payroll for renewal business and to increased pricing for both new and renewal business.

Relative to pricing, our effective LCM for voluntary Work Comp in the second quarter was 1.50 or 150% of the approved loss costs of the states that used that mechanism for pricing. This compared to 1.42 in the third quarter of 2010. We have now had year-over-year pricing increases in all three quarters of 2011 and our year-to-date ELCM at a 1.48 is the highest since year-to-date 2007.

In terms of losses, our third quarter results revealed a welcome slowing of gross case incurred loss development. I will review our results by three accident year groupings, 2009 and prior, 2010 and 2011.

For accident years 2009 and prior the news continues to be positive as we experienced substantial favorable case development for those years, especially in accident years 2007, '08, and '09. The fact that these more recent accident years developed favorably is evidence of our conservative approach to setting case reserves and bodes well for the future. We have now experienced favorable development for 2009 and prior for four consecutive quarters.

Our 2010 accident year has been a more difficult one in terms of gross case incurred development since the inception of that accident year, due mainly to an increase in the frequency of loss time claims. However, third quarter development for 2010 for the 2010 accident year was minimal was actually developed favorably in the month of September.

For our current accident year, 2011, the news was also encouraging in the third quarter, as we experienced year-over-year decreases in reported claims and claim frequency. While we remain cautiously optimistic about our 2011 year, it is entirely too early to make a confident call on where the year will end up, especially since our loss experience is sensitive to large losses.

Finally, for all accident years we continue to live in a difficult environment for claims management, one characterized by medical cost inflation, increased medical and pharmaceutical utilization and decreasing opportunities for injured employees to return to work, all of which have caused our overall claims duration to lengthen. We believe these factors will continue to challenge our claims operations and put pressure on claims costs into the foreseeable future. In response we are continuing to push our pricing, tighten our underwriting criteria and aggressively manage our claims toward expedient settlement and closure.

With that I will turn the presentation over to Janelle to present details on our financials.

Thank you, Geoff. For the third quarter of 2011 Amerisafe reported net income of $6.7 million or $0.36 per share compared to $4.4 million or $0.23 per share in the third quarter of 2010.

Our gross premiums written grew 25.9%, not only with less negative audit and related adjustments, but with 7.8% growth in premiums for policies written in the quarter.

Net premiums earned increased 18.5% from the year-ago quarter.

Our net investment income totaled $6.5 million in the third quarter, down 1.1% from the year-ago quarter.

Average invested assets were $830 million compared to an average of $804 million in the third quarter of 2010.

The tax equivalent yield on our investment portfolio was 4.6% for the third quarters of 2011 and 2010.

In total, revenue for the third quarter of 2011 was $71.7 million, up 18.5% from the year-ago period.

Our current accident year loss ratio was 78.2% for 2011 compared to 95.5% for the third quarter of 2010 and 81.8% for the full year of 2010.

Our incurred loss and loss adjustment expenses totaled $49.3 million for the quarter, which included $1.1 million of favorable prior year development.

Accident years 2009 and prior experienced favorable development of $2.5 million, offset by $1.4 million of unfavorable development for accident year 2010. This compares to loss and loss adjustment expenses of $46.7 million in the last year's third quarter, which included $5.3 million of favorable prior year development.

In total, our net loss ratio for the third quarter of 2011 was 76.5% compared to 85.8% for the third quarter of 2010.

Total underwriting and other expenses increased to $13.6 million in the third quarter of 2011 from $8.4 million in the third quarter of 2010.

The 2011 third quarter expense components included $4.8 million of salaries and benefits, $4.8 million of commissions and $4 million of underwriting and other costs.

The expense ratio increased to 21.1% from 15.4% in the same quarter a year ago. In the third quarter of 2011 assessment expense was favorably impacted by a $2.7 million change in estimated premium based assessments. In 2010 we experienced large rate reduction in certain loss base assessments.

In addition, the expense ratio was impacted by lower experience rated commission related to our 2011 first layer reinsurance. As you may recall, these commissions act as an offset to our expenses and in the third quarter of 2011 experience rated commission offset our underwriting expense ratio by 2.0 percentage points compared to 4.3 percentage points in the third quarter of 2010.

In total our combined ratio was 98% for the third quarter versus 101.7% for the same period in 2010.

Return on average equity for the third quarter of 2011 was 7.9% and book value per share at September 30th was $18.74, an increase of 8.6% from September 30th of 2010.

Finally, our statutory surplus was $305 million after paying a $10 million dividend in the third quarter to the holding company. Cash at the holding company is held for our share repurchase program, retiring debt and future acquisitions.

As previously announced, we retired $10 million of our $36 million of debt in the third quarter. Also, the Board of Directors renewed our share repurchase program through December 31st, 2012 with an authorized limit up to $25 million effective October 1st, 2011.

In the third quarter we repurchased nearly 358,000 shares at an average price of $18.99 including commissions. Since the plan's inception we have repurchased 1.2 million shares at an average price of $17.75 including commissions.

That concludes my prepared remarks on the financials. We'll now turn the call back to Allen.

Thanks, Janelle. Over the past three years of conference calls we have commented on three factors that have impacted the Worker's Compensation market. Those factors are loss cost, demand for our product and competition.

Over the last three years, we've commented on the fact that lower loss cost in rates in virtually every jurisdiction has suppressed premiums written. We have also bemoaned the fact that there was a lack of demand for our product driven by issues in our national economy.

We have also been facing aggressive pricing from numerous competitors, as the market place for Worker's Compensation has shrunk because of the other two factors.

The impact of these three factors is clearly changing. First, loss cost and rates are beginning to rise in several jurisdictions. While it's not uniform across all states and while the rate of increase is less than what we believe is warranted, the trend is clearly upward. If past experience is reliable, there will be several years of loss cost and rate increases to follow.

Second, demand, while the demand of our product is not robust and the employment figures are not particularly encouraging, we do see larger audited payrolls than anticipated from expiring policies and have reason to believe that current policies will enjoy greater payrolls than experienced over the last few years.

Finally and most importantly, the competitive landscape is indeed changing. Multiple years of irrational competition on ever diminishing loss cost has resulted in very poor performance in the Worker's Compensation line across the nation. These poor results are causing many underwriters to re-examine their approach to Worker's Compensation appetite and pricing.

High severity risks are usually the starting points for these examinations, re-examinations I should say. And I will tell you I believe at this point that those re-examinations have apparently reached an action level.

I would be remiss if I didn't point out to you that an exacerbating factor in these underwriting results is the marked decline in net investment income, even as investment assets -- invested assets are climbing.

For several quarters now we have suggested that market improvement was occurring in the high hazard segment of the worker's compensation line. Nothing that occurred in the third quarter altered our opinion at all on that subject. As president Nixon was oft quoted at saying, Let me be perfectly clear, first Worker's Compensation rates are not at levels that we would characterize as fully adequate.

Second, there is still some irrational competition in the marketplace and thirdly, the demand for Worker's Compensation is not as I would character robust. However, we do believe that the opportunity to expand our business profitably exists now and hopefully that will improve in the future.

Operator, if you would, please open the call for questions.

(Operator Instructions). And our first question comes from Mike Grasher of Piper Jaffray.

Geoff, question around your commentary, did you mention what the volume of new submissions were or how much higher they were sort of year-over-year or year-to-date?

I did not and our submissions are up. Now the conversion of those submissions continues to be a challenge as we're raising rates but our submissions are very healthy.

Would you say they're up sort of 10%, 20%, 5%, any perspective there?

5% to 10%, Mike.

Okay that's helpful. And then the unfavorable development that occurred in 2010, was this more or less a one-time severity event or was it more to do with lost time where it would be open claims, the duration of the open claim is out there a little bit longer or something we should be concerned about going forward?

Well, no I would say 2010 was a combination of quite an uptick in frequency from 2009 and then some pretty severe losses of a frequency of severity. Those two combined to make that a very tough year. And from a ratio standpoint, Mike, that was exacerbated from the fact that we were -- that our premiums were lower.

Sure.

Many of those, much of the premium we're enjoying now was from audits that should have -- I mean, on a true earned basis would have applied to the 2010 policy year and increased the denominator and made the ratio better than it was but there's no doubt 2010 had unusual frequency and especially frequency of severity, over $500,000 claims.

Okay appreciate that and then just a final question here, Allen, you mentioned sort of three areas or three reasons why it's getting better. Just to comment on a fourth maybe and talk about the change in reform that's going on in numerous states, how does that sort of change your appetite in terms of if not entering new territories going back into old ones?

Good question, Mike. There are states that have been problematic because of the structure or the Worker's Compensation claims process and otherwise and Illinois is an example. Oklahoma is an example. Kansas is an example and all three of those states have passed major reforms. I am not sure that Illinois has made enough of a change to change our appetite with respect to that state. Kansas and Oklahoma would bear a more stringent review I would have to say.

As you know, the combined ratio for the industry last year was about 118 and that's a Worker's Compensation line nationally. That will force even more consideration and we're seeing that through some of the data we've received from the PCI on the early proposals for changes in 2012 in states. We will look at those to see whether or not they make sense for us to reenter or maybe reallocate premium.

And I'll give you a perfect example. There have been some reforms maintained in Florida and they just raised their rates for 2012 by 8.9% but they have not removed the excess profits tax or dividend and limiting your underwriting upside to 5% while not limiting your underwriting downside still is not overly attractive to us.

So stay tuned for more.

Stay tuned for more. It's an ever changing environment but the direction is positive. Whether it be rate increases that make up for bad structure or they change the structure, one of those two has to occur in a number of jurisdictions.

And, Mike, one more thing and I think you understand this very well. If a state, if we feel a state is still on the way to decreasing their rate, their loss costs, we can still quote in a state like that but our effective LCM, our ability to schedule debit is going to be much more aggressive to get to the price we want in states like that.

It's a good point, Geoff.

Understood, thank you.

Mark Hughes, SunTrust.

The gross profit growth, very nice in the quarter, any sense of how to distribute it in terms of end markets, your high risk versus low risk, construction versus transportation, that sort of thing?

Yes that's a good question, Mark and we are seeing the greatest increase in farm, construction and oil and gas. And I can tell you I usually don't single out certain states, but it is I think an important point that one of the largest states that -- one of the largest levels of growth was in Nebraska, which is a big agribusiness state, and if you remember Nebraska was the home state of Coop Mutual, with whom we did the deal last year. And so that's starting to gain some traction for us in the farm area, but otherwise oil and gas is pretty healthy and construction is healthy.

Oil and gas, does that tend to be smaller firms?

It tends to be oil field service, the business, not 6235 over the whole drilling. They're not large firms but you have a lot of trucking associated with the oil and gas. You have companies that pump, gauge, site preparation, those sort of things, as well as a lot of related businesses and drilling wells, oil or water wells and laying pipeline and the like.

Right. The audit premium trends, can you give us a sense of kind of the year-over-year impact on the business as you might anticipate it next quarter or two versus what we've seen lately?

I can tell you, Mark, that -- and we've said this for several quarters, it's going to begin to diminish over some period of time. I would look for a continued improvement for the next one to two quarters. Beyond that it gets to be speculation. There is clearly -- you know, the audit adjustments are made up of three component parts; premium audits, cancelations and endorsements and the premium audit side of it is the one with the largest gain, indicating that payrolls are up. And that I am not so sure is going to change a whole lot but I do think it's going to start to normalize over the next quarter or two.

Got you, and then the final question, just claims frequency, I don't know whether you touched on this earlier. I got on just a little bit late but moderation in frequency this quarter or this year versus what you'd seen in prior quarters or last year, any more detail you can provide? Is it the underlying economy? Is it some sort of a -- well, I'll leave it at that.

Frequency has declined at a very gradual level and we've seen marked frequency decreases, at least this year in large losses, especially in the third quarter. Payroll, as you heard, is robust and going up so payroll frequency has been aided by the increase in that denominator. Premium is increasing. Claim counts, which -- pure claim counts the numerator, which increased substantially in 2010, have leveled off in 2011. So as we -- in 2011 as we level off on claim counts and increase in earned premium and payroll, we're seeing a decrease in frequency, just not -- I wouldn't say a huge decrease yet but a consistent slowing down, a consistent decrease in our frequency, both premium and payroll.

How much of that might be underwriting decisions you've made?

Well, I might take a swing at that one, Mark. We think a lot of it is. If you recall, in the second and third quarter of last year we talked about initiatives we were launching that were designed to lower the frequencies. We were concerned about that on an absolute basis as well as on a relative basis on claims per $1 million of premium. We do see improvement from those initiatives and it's kind of been helped that the market is changing because then you can still write business and the retention of those accounts that you want to write has gone up. And remained high on a policy count basis and gone up on a premium basis as the economy has recovered.

One other point I want to make relative to your earlier question, if you recall in the third quarter of 2010 we had to remark about the increase in severity where we had 11 claims in that quarter, over $0.5 million. To change in that and our business can be lumpy in this regard so I want to make sure that we don't declare victory right now for the entire year, but we only experienced five claims in the third quarter over $1 million -- over $500,000, I'm sorry, over $500,000 -- as opposed to 11 over $500,000 in the same period last year. So a certain part of that is the lumpiness of our business but that is -- I mean, you drop that 50% that's encouraging. Now, if we can just hold on to that in the fourth quarter and we'll have to talk to you in February about that.

Great thank you.

Matt Carletti, JMP Securities.

Allen, my first question just relates to M&A. It just seems to me that we're probably at the point, at least for a lot of peers, of we'll call it peak pain in the cycle and if you're a little smaller and don't have a big premium base to you know you might have an expense issue in addition to a loss issue. Can you comment just on your outlook as you see it, M&A broadly within workers comp and then specifically Amerisafe's appetite to participate in it?

Okay, broadly we have had two years of 110 combined ratio in 2009 and then 118 in 2010. On combined ratios with the drop in investment income, it has put -- and the shrinkage of the overall market, as you know, on a net premiums written basis from 2005 to 2010 the market shrank from $47.8 billion to $33.8 billion. And for smaller carriers, in particularly on rated carriers or single-state writers, they have certain fixed cost structures, which has put -- that decline alone has put pressure on the expense ratio. The decline and the loss cost and the competitive environment have pushed up the loss ratio as well so that the combined ratios for many of those companies has soared into the 130 and 140 range and will cause stress. It will cause, in my opinion, some small companies to fail or to have to seek other alternatives to continue in existence or to move forward.

Then you have other companies that write it as an ancillary line and, as you know from the NCCI data they were making profits in commercial auto, in commercial property, commercial multi-peril and some of the opportunities to make money in those lines has now subsided and they are having to reevaluate whether they want to write business at 118 to subsidize that. So we're seeing a lot of retrenching there. We're seeing people trying to off load books of business involving workers comp. So I do think there will be a lot of opportunity. It's not unusual for this time in the cycle. We're in the pain cycle. The cheating phase is past. You can no longer pass it on on loss ratios. It's beginning to show up in the losses themselves so the opportunity will be there.

As far as Amerisafe's appetite, we do have an appetite for that. We like the opportunity to acquire books of business on the renewal rights transactions and also perhaps on a corpus transaction if the situation is right. Our filters, however, and our approach to our business is not one that leads us away from the severity nature of the business. We're not ready to get into some lines that we don't understand.

We would prefer existing jurisdictions because it allows us to maximize our existing infrastructure, although we're not opposed to a geographical expansion. It's just got to be the right situation to do that. It also causes us to reflect carefully on opportunities that we have to make sure that they allow us to give the right returns to our shareholders so we do have an appetite for that. There is a lot of interest in it now. Most of the companies we monitor on that, which is about 34, 35 companies now, are very small ones you're not familiar with I wouldn't think, certainly not publicly traded companies but we see a great deal of stress in the market and that stress indicates it's going to be an opportunity for Amerisafe.

All right thanks. That's really helpful. And then if I could get those two quick numbers questions either for I guess Geoff or Janelle probably, one is the 2010, the minimal amount of adverse development, can you quantify that?

$1.4 million.

$1.4 million, and then last one is I apologize for missing it. The LCM in the quarter, I caught the nine months but not the quarter.

The quarter was 1.50.

It was the same as the second quarter, Matt.

Great and congrats on a great quarter.

(Operator Instructions). Randy Binner, FBR Capital Markets.

Just want to follow up on I think it was Mark Hughes who was asking about kind of both premium and payroll audit trends by state and product line and I think he mentioned Nebraska and Florida but the core states that you operate in were not mentioned so just interested how those both kind of premium trend and payroll audits developing in your core states of Louisiana, Georgia, North Carolina and also what product types were invested those states.

Randy, this is Allen. Good morning. The audit adjustments are by definition on expired policies so you could pretty much follow where we wrote our premium and that's where the audit adjustments have followed and as would be Louisiana, Georgia, Pennsylvania, North Carolina, Virginia, those states. As far as industries, I think that's the same as what Geoff indicated our opportunities were writing forward construction, trucking, oil and gas and agriculture because those are more robust areas or at least construction is coming off of an incredibly low number so you run into that. But it is a -- it will follow basically where we wrote premium in 2010 and 2009 because that's where our policies are.

And, Randy, you mentioned our sort of core states and most of those, as you know, are in the Southeast. And again, the Southeast typifies what we're seeing around the whole country, which is that for most of our states we're seeing very healthy growth while we're increasing pricing and even in our large states and that really is a good sign for our future.

Great that's helpful. And then just to jump over on investment yield, did you -- if you provided it I guess I missed it but did you provide the new money yield in the quarter? And I guess any thoughts on how to deal with the low reinvestment environment, if at all, I mean if you're going to stick with the same strategy or think about different potential investment strategies?

This is Janelle. I'd say our new money yield is somewhere around 3%, somewhere like that. As far as change in our portfolio, you've had -- you'll notice as you've been following our filings and our municipal exposure has decreased slightly, not that we are opposed to municipals. We've just been de-emphasizing those and our corporate exposure has gone up. We have started, as you recall a few quarters back started, an available for sale portfolio and that has grown as well as the Company still has a large amount of cash and short-terms.

One other one there and just to kind of get a sense of it, Allen, in your comments you had mentioned that lower investment yields were pressuring insurers, which is obviously true. How much do you and how much do you think some of your smaller competitors actively incorporate the low current yield environment into their underwriting, if at all?

Oh I think it is incorporated into their decisions. For smaller carriers sometimes it's hard to maybe see a great large picture because you're only writing in one state or maybe two states or three states. But the overall impact is when the combined ratio comes up and then your investment income won't cover it and you get into capital destruction and we're seeing that among small carriers. And so if it doesn't change your attitude toward underwriting, you won't be with us for long.

That's fair. I mean I guess in talking with smaller insurance companies it seems that there's kind of a split between people who -- you know, when it comes down to pricing a policy on an account that they say we just underwrite it for what its combined ratio will be versus what the potential investment income will be. So it sounds like you're saying that you're seeing more of that yield expectation work its way into actual underwriting.

I think their expectations of what it would produce in terms of underwriting have been flawed and that the actual underwriting results do not reach their expectation. I will also tell you I don't think underwriters, as a general rule, the line underwriters that make day-to-day decisions on accounts every consider investment income and I think some of their assumptions about expense ratios may be flawed. If you drop $14 billion out of the market out of a $47 billion-$48 billion market, you're going to have to make pretty radical expense reductions or there's going to be a serious impact on your combined ratio.

That's all helpful. Thanks for the color.

Mark Hughes, SunTrust.

The expense ratio is pretty low this quarter. I don't know if you touched on this earlier but this 21.5 is lower than what has been the recent norm. Anything to that and what might we expect going forward?

Yes what happened in the third quarter and of course this happens continually throughout the year. We had a change in the estimate on our premium base assessments, which as I said was $2.7 million in the quarter. We continually have change in estimates so however when it's significant to a quarter though it's appropriate to bring it to light. If you recall in the third quarter of last year, we had a similar change but it was on loss base assessment.

This year to a lesser degree I suppose, which is why when you compare the two ratios your quarter-over-quarter, 2011 is still higher but lower than, as you point out, our run rate. So that is a little bit of an anomaly in the third quarter, which is why we point it out. We don't want anyone to think that that was a factoring in. But I will say also at the same time we've kept our fixed costs flat to actually they were a little bit lower year-to-date over 2010 so any change we have is minimal.

And a part of that, Mark, too is greater premium.

That's right.

Exactly. The persistence in the quarter, either on a policy or a premium basis I think you provided those numbers but I am not sure that I got them.

Let me--

Here I've got them right here.

97.6 on a premium basis versus 76.5, and on a count basis 92.2 in 2011, 93.2 in 2010. That's quite a -- you're probably thinking that's a heck of an increase on a premium retention rate but that speaks to our increased payrolls and increased pricing.

Now is that on the basis of the ones you want to keep or does that include folks that you kick out the door?

That includes the ones we want to keep.

All right and then you paid down some debt this quarter with a stock price released today maybe like 1.3 times book. What's your thoughts going forward in terms of capital use? Pay down more debt, continue to buy back shares?

Our attitude -- I don't know that we'll buy back any debt or pay back off any more debt. We may. It's $26.1 million, the leverage --the debt to capital ratios are very low. The stock repurchase program, our philosophy toward that is not really changed. We look a couple of quarters out and try not to dilute our shareholders. So we'll continue to follow that same opportunity and when there's an opportunistic chance to buy stock back, we'll do so.

With the expanding premium base, that does improve the leverage issue somewhat and we -- as long as M&A is in our horizon and something we're considering, we want to be sure that we have dollars at the holding company and access to additional dollars in order to make those acquisitions.

Right, yes, okay, thank you.

Mike Grasher, Piper Jaffray.

No, my question was addressed. Thank you very much.

Thank you. In that case, I would like to turn the program back to Allen for any concluding remarks.

Well, thank you, ladies and gentlemen, for joining us this morning. We appreciate your time. On a personal note I want to take one opportunity. My father is here as always for the calls and Saturday he'll be 92. Happy birthday, dad. Thank you, ladies and gentlemen.

Ladies and gentlemen, thank you for joining today's conference. This does conclude the program and you may now disconnect.