Argo Group International Holdings Ltd (ARGO) 2004 Q3 法說會逐字稿

Good day, and welcome, everyone, to the PXRE Group Third Quarter 2004 Earnings Conference Call. Today’s call is being recorded.

At this time, I would like to turn the call over to Mr. [Mike Gallo] [ph]. Please go ahead, sir.

Thanks, Carol. And, again, welcome to PXRE’s Third Quarter 2004 Conference Call. Representing the Company today are Jeff Radke, President and Chief Executive Officer, and John Modin, the Company’s Chief Financial Officer.

Before I turn the call over to Jeff for opening remarks I will read the following Safe Harbor Statement.

Statements made during the conference call that are not based on historical facts are forward-looking statements. These statements are made in reliance on the Safe Harbor Provision of the Private Securities Reform Act of 1995 and are subject to uncertainties and risks. It should be noted that PXRE’s future results may differ materially from those anticipated and discussed in forward-looking statements. Some of the factors that could cause or contribute such differences have been described in the news release today, in PXRE’s Annual Report on Form 10-K and in other filings with the SEC. We refer you to those sources for additional information.

Lastly, I would like to point out that remarks made during the conference call are based on information and understandings that are believed to be accurate as of today’s date, November 4th.

Because f the time sensitive nature of this information it is PXRE’s policy to limit the archive replay of the conference call to a period of 30 days. This call is the property of PXRE. Any distribution, transmissions, broadcast, or rebroadcast in any form without the express written consent of the Company is prohibited.

With those announcements complete, I give you Jeff Radke.

Thank you. And welcome to PXRE’s Third Quarter 2004 Earnings Conference Call. Today, I will review our third quarter results and provide insight into key operating metrics and market conditions. I’ll turn the call over to our Chief Financial Officer, John Modin, for a review of our financial and operating results. Then, I’ll address out outlook on the reinsurance market and comment on the 100m common share offering that was announced this morning. Finally, we’ll open the call to questions.

For the quarter the industry and PXRE’s primary focus was the four major hurricanes that hit the United States and the Caribbean in August and September. While the final losses from these events are still being tallied total industry losses are expected to be greater than any other year in history.

For PXRE the events validated our underwriting. Losses associated with the hurricanes were limited to approximately 40 percent of our CAT and risk excess premium. This compares very favorably to other reinsurers.

We believe these results reflect a combination of strong underwriting discipline, active use of modeling technology, and overall experience. They also reflect a broad geographic spread and an unwillingness to be overexposed in any one zone.

We believe that our ultimate net loss from the storms will fall within our previously announced $80m to $105m range. Given the inherent uncertainties that reserving for multiple catastrophes, we have recorded the high end of our loss estimate of $105m. By reserving to the high end of our range for these events we feel we are well positioned until our clients’ actual losses become clear.

During the quarter we also made significant progress in removing residual items on our balance sheet. As disclosed in our recent 8-K we booked the maximum exposure under a lawsuit following a judge’s unfavorable ruling. We believe the ruling was incorrect, and we are filing a motion for reconsideration.

PXRE does not litigate frivolously. In fact, this is our only pending litigation. We continue to believe in the merits of our case, but by booking our maximum exposure shareholders can only have favorable developments in this matter.

We were also able to commute several assumed and seeded contracts during the quarter. Most notably, we were able to commute one of the largest general liability programs. You will recall, general liability is the line of business that has produced approximately 90 percent of the adverse development in our exited line segment.

These actions had a significant impact on our balance sheet. Collectively, they reduced or insulated from risk approximately 23 percent of the gross general liability reserves, 50 percent of the gross finite risk reserves, and 42 percent of the reinsurance recoverable.

These aggressive actions resulted in an after-tax loss of 3.9m from exited lines other than the lawsuit charge. We feel the net cost of 3.9m is well worth the certainty achieved. We are continuing this aggressive drive for finality, and will be seeking to commute, novate, reinsure, or restructure as many of the exited lines contracts as possible as quickly as possible.

During the quarter net premiums written in our CAT and risk excess segment increased 54 percent compared to the comparable year period. Without the reinstatement premiums associated with the hurricanes we would have experienced net growth of 22 percent. This is largely because of the anticipated restructuring of our seeded reinsurance program.

This quarter’s growth rate is higher than we expect going forward. For the year we expect our growth rate absent the hurricanes to approximately match our previously announced expectations for low single-digit growth.

At this time, I’d like to turn the call over to John Modin.

Thank you, Jack. Good morning, everyone, and welcome to our third quarter conference call. I will discuss several items including the third quarter hurricanes, our results excluding these storms, the investment portfolio, and net investment income, and finally wrap up with some commentary on the balance sheet.

We reported a net loss of 73.2m for the quarter compared to net income of 23.7m in the third quarter of 2003. The loss this quarter was primarily driven by the $105m net loss from the hurricanes. We are very comfortable with our estimate of the net loss and that is disclosed recorded in an amount equal to our previously announced high end of the range. We do not believe our net loss estimate will be highly sensitive to variations in the industry loss estimate.

Based on our 20 plus year database of claim payouts, hurricanes have the lowest cash flow duration, and so we expect to pay claims fairly quickly. We expect to pay about 23 percent of the gross claims by yearend and over 80 percent by the end of next year. Operating cash flow will provide adequate liquidity to pay these claims, but we always maintain a relatively short investment duration, one reason for positioning such is to have liquidity for these large losses.

The commission and brokerage ratio for the quarter was 18.3 percent. The hurricanes also impacted expense ratio as a $25m in reinstatement premiums come with very little brokerage expense. The commission and brokerage ratio excluding the reinstatement premiums associated with the storms would have been approximately 13 percent, and the operating expense ratio would also have been approximately 13 percent. This 26 percent more closely approximates our expected expense ratio than the reported 18. Last year we also had a lower expense ratio in the third quarter compared to the nine-month period, but this was due to business mix as commissions from finite net earned premium served to increase the overall YTD ratio.

We made an adjustment to the operating EPS reflected in the press release. The adjustment was to add the dilutive affect of the convertible preferred shares to the common in the EPS denominator. Under GAAP these shares are excluded due to their anti-dilutive nature. Our actual EPS loss of 548 was reduced to 267, and a reconciliation of such is included in the unaudited financial highlights in the press release.

We disclosed this non-GAAP measure since all shareholders both common and convertible preferred were negatively impact it by the quarterly loss and it more closely approximates the reduction in the book value per share during the quarter.

As Jeff discussed, we recorded a loss equal to the full contract limit, and the litigated contract originally disclosed in our second quarter 2003 10-Q. Our after-tax loss related to this contract was 9.6m. In addition, we are attempting to achieve finality in our Legacy non-core assets and liabilities. We commuted several reinsurance contracts seeded and assumed included in our exited line segment, and we will continue our effort to final resolution in future quarters to commutations, novations, and reinsurance arrangements.

To give a sense of the underlying performance of our business the CAT and risk excess loss ratio for the YTD period excluding the impact of the hurricanes is 16 percent which is better than anticipated. Our net earned and net written premium from exited lines are immaterial. As stated before, we only expect premium adjustments in the future, and even these should be very insignificant.

We released prior period CAT and risk excess reserves of approximately 15m during the quarter, split relatively evenly to prior year reserves and reserves recorded earlier in 2004. Our operating costs were 8.3m during the quarter. A reduction in the variable compensation accrual due to the hurricane losses accounted for most of the declines from the previous quarter’s 9.9m.

Net investment income for the period was 5.2m compared to 6m in the same period last year. The decline is due to the hedge fund return of 70 basis points during this quarter as compared to 210 in the third quarter of 2003. The hedge fund return for the YTD is approximately 420 basis point positive, still ahead of most hedge fund equity and fixed income indices.

Interest income on the fixed income portfolio increased slightly from the prior quarter due to cash flow from operations offset by a decline in book yields. Total return on the fixed income and short-term investment portfolio was about 1.8 percent, comprised of about 80 basis points of book yield and 100 basis points of unrealized capital gains.

The portfolio continues to maintain a defensive posture. Duration is 2.2 years. Average credit quality is AA+ and hedge funds remain at a 12 percent allocation.

I will wrap-up with some commentary on other balance sheet items. Reinsurance receivables have declined significantly during the year. From the beginning of the year the asset is down 52 percent from 152.4m to 78.8m. From the prior quarter end it is down 44 percent. The primary reason for the decrease is the commutations mentioned above. The quality of these assets remain strong, and we expect the recoverables to continue to decline over time.

The increase in premium receivables from June 30th to September 30th is largely related to the reinstatement premium assets which we will offset upon the underlying claim settlement. The increase in other assets reflect the reclass of the commutive reinsurance receivable balances mentioned above.

The September 30th net loss reserve balance of 455m is comprised of 193m of exited line reserves, and 262m of CAT and risk excess reserves. Due to the restructuring efforts during the quarter we have eliminated insurance risk on 25 percent of the total exited line reserves. This ratio understates the success of our finalization efforts to some degree because it does not include balances that were completely removed from the balance sheet during the quarter.

Finally, I just want to remind people that two-thirds of our outstanding convertible preferred shares automatically convert on April 4th, 2005. This will significantly reduce the complexity of our capital structure. In addition, we will start paying cash dividends on the remaining one-third at that juncture, which will add to some degree to the dilutive affect of the current paid in kind dividends.

To wrap it up from a capital perspective, our balance sheet remains strong despite the large losses during the quarter. We have more shareholders equity and more capital at September 30th than we did at the beginning of the year, and as discussed above, a significant portion of assets and liabilities embedded with insurance and credit risks were either frozen or removed from the balance sheet completely.

This concludes my prepared remarks, so I will turn the call over to Jeff for some closing comments.

Earlier in the year we gave 2004 guidance of $4.45 to $4.85 per fully diluted share. Absent the third quarter storms our guidance today would be affirmed as the better than anticipated results in our core property business have largely offset the impact of the unfavorable judgment in the lawsuit and the modest remaining exited lines loss.

Assuming no further material catastrophes we are comfortable that our full year 2004 operating earning will be 70 to 90 cents per fully diluted share. This figure is consistent with the quarterly earnings assumed in our initial 2004 guidance.

Looking forward to 2005 PXRE has already experienced significant opportunities in our core lines of business, with increased rates in many areas. In total, we expect a rate increase of 5 to 15 percent on our book to business. Obviously, this means we expect the rate environment in 2005 to be more favorable than the already attractive 2004 environment.

By line of business we expect rate increases of 10 to 15 percent in our worldwide retrocessional business, stable to single digit rate increases in our North American property catastrophe business. Catastrophe activity in Japan and the Caribbean has mitigated previously expected rate increases in our international catastrophe business. In 2005 additives to the higher rates, we expect additional demands from our retrocessional and catastrophe customers. Accordingly, in 2005 we would expect meaningful improvement relative to our original 2004 guidance.

As we’ve stated, PXRE’s primary focus is to compound book value at an attractive risk adjusted rate. As of September 30th we have more capital than at the beginning of the year. Nevertheless, we are confident that the opportunities in our core lines of business will continue and increase, which will allow us to employee additional capital. Given the high expected return for this business at rate levels we are enjoying we are confident that raising additional capital is compatible with our focus on maximizing book value per share growth.

We would only do an offering that we expected to be accretive to shareholders within 12 months in the Company’s current situation. As a result, we filed a press release this morning announcing a $100m public offering of common shares, with 85 percent to be offered by the Company and 15 percent to be sold by certain of our preferred shareholders.

The proceeds from the common shares offered by the Company will be contributed to our Bermuda Reinsurance subsidiary in order to allow us to take maximum advantage of the underwriting opportunities that will exist in 2005.

The Company will not receive any of the proceeds from the sale of the common shares by the preferred shareholders. The offering is expected to take place over the next few weeks. Unfortunately, under SEC rules I am very restricted in what I can say about the offering. Please keep that in mind during your q and a.

Finally, I’d like to thank you for your time and consideration. At this time, Operator, could we please open the call to questions.

Certainly. We will now begin the question and answer segment of the conference.

[Caller instructions.]

The first question is from Charles Gates from CSFB.

Hi, good morning.

Good morning, Charlie.

Hi, Charlie.

My first question, with regard to the commentary in the third paragraph of your news release concerning this adjustment for the 23 percent of your loss reserves, could you elaborate on that? And to what extent is there risk of further such adjustment?

I guess the way I’d address that, Charlie, is I’ll try and cover the concept and then you can come back to me if I’ve left details unanswered.

Essentially, what we’re saying is that we are aggressively seeking to put the exited lines fully and finally behind us on a, not on an estimate basis but on a completely settled basis. In the quarter we commuted, which is full and final, several transactions, several reinsurance contracts, both seeded and assumed. The net affect, or a part of the net affect of those commutations was to reduce or remove from insurance risk 23 percent of the general liability reserves.

Why did we make that disclosure? Well, 23 percent was a significant percentage, but the line of business that has caused us the most difficulty and what we meant to imply or to show is that aggressively we’re taking steps to remove this risk from our balance sheet.

As far as the non-commuted, the still live deals, we remain confident, as I said, in the overall reserves of the Company. We’ve booked our best estimate and we believe our best estimate is more than adequate.

Having said that, every time we get a chance to get full and final certainty, finality, in this line of business which has caused us trouble over the past several quarters, we are going to take it as long as it’s at a reasonable cost. And we believe that in total the commutations this quarter were a great tradeoff, and we are really excited about it.

My second question, one of you made reference to novation. I know what a commutation is, I’m not sure what a novation is?

Well, a novation, first and foremost, is harder to actually execute. A novation is when PXRE entered into a reinsurance contract, and we convinced the original seedant and a new reinsurer to step into the shoes of PXRE as if it were from the very beginning. So PXRE no longer owes, no longer has any contractual relationship with the original seedant. That relationship moves from PXRE to this other reinsurer.

My third and last question, I know what happened in the United States and the impact of that on your basic business, you lost me to some extent when you were talking about international, Jeff?

Well, I guess what I’d say about international, the international catastrophe business, there were significant market losses both in the Caribbean and in Japan this quarter. Those losses will have direct impact, and the U.S. losses will have sort of peripheral impact on the rate levels for international business in 2005.

You will recall that in – before these hurricanes and the typhoons, we and most of the market were anticipating meaningful decreases in rates for international catastrophe, because that’s, we no longer believe that the rate decreases will be anywhere near the size that they would have been prior to the loss activity. Does that help?

It was fine. Thank you.

The next question is from Steve Shapiro from FS Investments.

Thank you. And good morning. With regards to your capital raising, were there any conversations that you had with the rating agencies that may have influenced your decision?

No, this didn’t influence our decision. We have had conversations with the main rating agencies following the Board’s decision to raise this capital. Obviously, directionally most rating agencies would take the view that this was positive, but this was not in response to any specific request or direction from the rating agency. Again, I’d go back to the fact that we’ve got more capital today than we did at the beginning of the year.

Thank you very much.

Sure.

The next question is from [Victor Kaufman] [ph], an Investor.

Hello.

Hello, Victor.

Hi.

Hi. I have just a couple of questions. When you put out that your estimates were what they would have been without the hurricanes or at the high end even for 2004 is it that you don’t, you didn’t have any hurricanes in there at all? In other words, when you do your forecasting do you forecast hurricanes? You now what I’m saying? We’re going into September in this quarter, it would seem like we’re going to have a hurricane or two, not as many as we’ve had, of course. And I’m wondering whether there was something in there for hurricanes? In your estimates?

Okay, in our guidance that we give, we have an expected level of catastrophe losses. My comments about the guidance were, I think intended to simplify things, which is when you remove the impact of the hurricanes from our P&L YTD you have much better than expected performance on our core lines of business. As you point out, that’s not surprising because we expect some level of catastrophe activity. That better than expected performance has roughly matched the loss booked under the lawsuit, and other, the other small exited line charge.

So to be clear, our guidance always contains some expected or normalized level of catastrophe losses. By removing all the losses from the hurricane, that’s what caused the ‘out performance’ or better than expected performance of the core book.

Okay. If, and this is, I am not even sure. 2005, coming up, is there anything scientific that says that these hurricanes that we just got may be more of what we’re going to get into the future? You know, the forecasting?

There’s a lot of discussion and conversation both within the reinsurance industry and within the scientific community about global climate change and sort of the frequency of ebbing and flowing when you looked at it, or when looking at past history over say decade by decade basis.

There area certainly no conclusions drawn that I am aware of. There’s no proof out there. However, I think what’d I say is the Company and our underwriters are cognizant of the fact that historically frequency tends to move in cycles, and based on our recent history we may be moving out of the period of lower than expected frequency and moving towards a period where frequency gets more, gets up to levels that you would expect over the long run and perhaps even exceed it. So I don’t think that there’s a conclusion out there, there’s a sensitivity to the shift.

Okay. And the other, the last question is pretty simple. When you said you were going to raise $100m in the offering, in other words, the amount of shares – this simple question, the amount of shares are going to be dependent on what price you’re going to sell them at? In other words, if the stock drops dramatically or substantially down to $20 a share, just for – you’re going to have to sell that many more shares? You’re going to sell 100m?

I believe that we made an announcement about the number of shares in our offering.

Right. Is it the number, or the…

To determine the price that generated $100m. So I believe as a matter of SEC regulation what you declare is the number of shares involved in an offering.

Okay.

It’s the number of shares.

Thank you very much.

Thank you.

The next question is from [Paula Federman] [ph] from First Albany.

Hi. Could you comment on the commutations a little bit further. Was any of it driven by concern about reinsurer credit quality or was it simply a question of trying to release the reserve? And then, my second question is could you explain why the net written premiums were so high this quarter, and won’t be in the next?

I’ll do the second half. The net written premiums. We restructured our seeded reinsurance program. That caused a large move in, a large reduction in seeded premium during the quarter. We’re not, and we’re not at a 22 percent growth rate for 2004. And as to why it won’t continue, I guess what I’d say is it’s a onetime thing about, it’s a onetime thing, the deposit premium payable under this reinsurance contract was reduced dramatically. It won’t, it’s over and done with. It’s not going to continue to be reduced. John, do you want to?

Sure. Paula, on the commutation side, you know, we commuted both assumed and seeded. From the assumed, obviously, it’s not a credit risk question, it’s more of a question as to finality on the assumed loss reserves, and so that wasn’t related to credit risk. That was just our calculation that settling these obligations and are removing the uncertainty on 23 percent of the general liability reserves was a great tradeoff for PXRE. And so we did that.

On the seeded side, there is a credit risk we take when we buy reinsurance. That being said, the commutations that we entered into, there’s one I’m thinking of that was credit related that we settled very favorably, and the other one I’m thinking about was actually collateralized anyway, so it wasn’t necessarily driven by a credit risk concern.

It was driven by our desire to achieve, to remove these items from the balance sheet, and get finality again.

Right. Just like on the assumed.

Have there been any changes to your future reinsurance program as a result?

As a result of?

The commutation activity?

No.

This commutation activity was mainly on exited lines contracts.

Thank you.

The next question is from [Ron Bobman] [ph] from Capital Returns.

Hi. I have a couple of questions. I’m wondering if your participation in the retrocession market as a provider of retrocession coverage? And you sort of touched on this, but I’m wondering if as losses for these storms have sort of in an aggregate sense creeped up, you know, I think we were talking about $20b number, and now people are sort of focusing on a $30b maybe over $30b number, is there any sort of I’d say trigger, but threshold where aggregate losses get beyond a certain number, greater than a certain number, where your losses are going to, you know, be disproportionately, you know, increased to your estimates for loss is going to be increased as a result?

I’m going to engage in the dangerous practice of assuming that I think I know what motivates your question. If I get it wrong we can go back at it.

Okay.

In our reinsurance portfolio there is either no or no significant industry loss warranty coverage that’s sold in it. Therefore, there is no trigger out there where if it hits 30 or 32, or 40, or any other sort of PCS or industry loss type number, that our loss jumps just continuously.

Okay.

So that’s the first statement which is relatively simple. The more complicated statement is that John has said we don’t feel like our hurricane lawsuits are highly sensitive to industry loss fix. The reason for that is we did a detailed contract by contract analysis where we were looking at our insureds or reinsureds’ actual exposure on the ground.

So we’re kind of indifferent about what prognostications are made by the various people that pick industry losses. We didn’t put an industry loss into our risk management model to determine our reserve, but, for example, we did this contract by contract review. To be fair, I have to say that if systematically our clients are underestimating dramatically their losses I think it’s clear that we, therefore, are systematically underestimating our loss.

I don’t think that’s the case. And I don’t think that’s the case especially in a place like Florida for this type of event. It’s relatively obvious the damage, and it’s relatively easily adjusted once you can get people there to look at the damage.

Got you.

Did I address your question?

Yeah, you deciphered it fine, and you gave even a better answer.

Okay.

And another question on sort of a book value per share. Does the $20 and some odd cent book value per share, $20.34 book value per share number for the quarter end, does that include any or all of the convertible preferred shares that are going to come online in April, or no?

It does, as in the past, each quarter we included both the common shares outstanding and the convertible preferred shares if they were converted, using the latest estimate of the strike price. So the answer is yes.

Okay. And then, my last question, as part of this offering should we expect there to be sort of a road show?

Yes, we would expect the offering will take place in conjunction with the road show which, again, we expect to start in the next several weeks.

If I could, since you asked a question about the offering, an attorney, or our attorney just walked in and not surprisingly told me I was wrong. We intend to sell $100m. I thought that the SEC rules required a specific share number. I’m wrong. The share number was the estimate based on yesterday’s close. If the price changes we’ll sell more or less shares. Just to clarify a mistake I made earlier.

All right. Good luck, guys. See you soon.

Thank you.

Thanks.

The next question is from [Hardin Bathea] [ph] from [Dimperence Race and Solo] [ph].

Hey, guys. How are you?

Hey, Hardin.

Could either, Jeff or John, one of you, talk through the reserve reversal in the quarter in a little more detail?

Sure. Hardin. I mentioned that we released about $15m of CAT and risk access reserves.

Right.

It was split roughly evenly between 2003 and prior accident year reserves. And then due to the favorable activity or lack of activity maybe is better, in the first half of 2004 there was some excess reserves built-up on our June 30th balance sheet. So in total, there was a takedown of approximately [$15m] [ph].

I should say that we just, our traditional actuarial techniques were applied. This quarter we didn’t change any methodologies. It’s just a matter of, it’s just a function, our reserves are a function of primarily reported losses. And the low level of reported losses during these three quarters other than the hurricanes released that amount of reserves. In addition, there was actually some takedowns of specific case reserves that entered into that. But basically, that’s what it related to.

And Hardin, the most useful statement, if I put myself in your shoes, it would be that these releases would have taken place whether or not the hurricanes occurred. They were as, John said, baked into the actuarial techniques.

Okay. Thanks. I guess the second question is of the 3.9m after-tax exited lines underwriting loss, can you break that down a little bit, as well? How much, I guess how much is finite, how much is, you know, the previous general liability? How much is, you know?

Well, of the 3.9 I can say that all of that was associated with the commutations.

Okay.

So if you had to draw a line as to was finite the culprit or was traditional, or traditional exited lines, meaning the casualty business the culprit, it’s easy to say this quarter because the commutations focused on the casualty business. So that’s where the commutation was, that’s where the charge came from to achieve the finality.

All right. Perfect.

Hardin, you asked about the 3.9. I think it’s pretty obvious that the lawsuit was associated with the finite contract, right?

Right.

Just to make sure that you or other listeners don’t get mixed up.

No, I appreciate it. Thanks.

The next question is from [Ernest Jacobs] [ph] from [Wanda Capital] [ph].

Yes, good morning. If I understood you, 15 percent of the offering is going to consist of stock from the convertible holders, so are they going to convert 15 percent of their holdings and then be subject to mandatory conversion on the remaining 85 percent of the holdings on April 1st?

They’re going to convert the shares that they sell in the offering. I’ll adjust that part first so, yes, there going to convert those, they’re going to convert into the common that their portion of the offering represents. Of the balance you said 100 percent will convert in April, and as John said, two-thirds of their preferred share stake convert to make one-third continues for another three years. However, the pay in kind dividend goes away.

Okay. So two-thirds of what they have left will convert in April? After the offering?

Two-thirds, well.

I believe that’s correct. I believe that it’s two-thirds of what, it’s two traunches of the preferred. There’s a traunch A and a traunch B. And I believe they are going to convert the traunch A and, therefore, they’ll have less traunch A as of the conversion date.

So I would say the day after the conversion date in April of 2005, two-thirds of their stake will be converted, some of which was sold in this offering.

Right.

So now, the reason we’re a little bit twitchy about answering that is we’re making, just so everyone understands, again, we’re making a determination about what other investors convertible preferred shareholders, we’re making an estimate about what their decision will be based on what we perceive to be logical decision making. There may be other considerations that we’re not aware of. It depends which shares they choose to convert, traunch A or traunch B.

Could you tell me your latest estimate of strike price?

It’s $13.48.

Okay. Thank you.

Gentlemen, there are no more questions in queue at this time. You may continue with your presentation or closing comments.

This is Jeff Radke. I’ll make some brief closing comments. Thank you very much for your time and attention. Again, I think the third quarter proved to be a watershed quarter for PXRE. We’ve demonstrated, again, the underwriting [powers] [ph] in our core lines of business that we’ve been promising shareholders for several quarters, but now we actually have losses against which to judge that. We’re proud of how we did. We thank you for your support, and as we said in our commentary we look forward to great things in the next quarter and in 2005. Thank you very much.

Thank you.