辛辛納提金融 (CINF) 2012 Q4 法說會逐字稿

Good morning, my name is Stephanie and I will be your conference operator today. At this time I would like to welcome everyone to the Cincinnati Financial fourth-quarter 2012 results conference call. All lines have been placed on mute to avoid any background noise. After the speakers' remarks there will be a question-and-answer session. (Operator Instructions). Thank you. Dennis McDaniel, you may begin your conference.

Hello, this is Dennis McDaniel, Investor Relations Officer for Cincinnati Financial. Thank you for joining us for our fourth-quarter and full-year 2012 earnings conference call. Late yesterday we issued a news release on our results along with a supplemental financial package including our quarter-end investment portfolio.

To find copies of any of these documents please visit our investor website, www.cinfin.com/investors. The shortest route to the information is the quarterly results link in the navigation menu on the far left.

On this call you'll hear from Steve Johnston, President and Chief Executive Officer, and from Chief Financial Officer, Mike Sewell. After their prepared remarks investors participating on the call may ask questions. At that time some responses may be made by others in the room with us including Executive Committee Chairman, Jack Schiff Jr.; Chairman of the Board, Ken Stecher; Chief Insurance Officer, J.F. Scherer; Principal Accounting Officer, Eric Mathews; Chief Investment Officer, Marty Hollenbeck; and Chief Claims Officer, Marty Mullen.

First please note that some of the matters to be discussed today are forward-looking. These forward-looking statements may involve certain risks and uncertainties. With respect to these risks and uncertainties, we direct your attention to our news release and our various filings with the SEC. Also a reconciliation of non-GAAP measures was provided with the news release. Statutory accounting data is prepared in accordance with statutory accounting rules and therefore is not reconciled to GAAP. With that I will turn the call over to Steve.

Good morning. It's a pleasure to speak with you today from Murfreesboro, Tennessee, the fourth stop on our 20-plus-state tour of sales meetings with our independent agents. Our senior leadership team gets out and visits agents in the first half of each year.

Meeting with our agents is always energizing. I'm also looking forward to talking with all of you about our very strong fourth-quarter earnings and operating performance.

Our fourth-quarter results reflect the steadily growing benefits of initiatives designed to improve insurance profitability, drive premium growth over time and create shareholder value. The contribution by our agents of premiums producing an underwriting profit was one of the keys to a successful year. And we sincerely thank them for trusting us to protect and serve their clients.

Our fourth-quarter Property Casualty Insurance combined ratio at 81.9% was the best we have had in years. We are also encouraged by the consistency of improvement across the Company. For instance, all three Property casualty segments had a combined ratio lower than the fourth quarter of last year.

For the full year 2012, our 96.1% combined ratio improved by over 10 percentage points from a year ago on both a current accident year and calendar year basis. Lower catastrophe losses drove only about one quarter of the improvement.

Turning to premium growth, each of our property casualty segments continued to experience steady growth in renewal premiums. In total, net written premiums for the fourth quarter rose by 10%. Both profitability and premium growth once again benefited from greater pricing precision and higher overall pricing.

Commercial policies that renewed during the fourth quarter continued to average a mid-single-digit price increase although down slightly from the third quarter. Increases on our smaller Commercial Property policies reached the double-digit range. For the full year pricing averaged an increase in the mid-single-digit range for our Commercial Lines segment.

Our Excess & Surplus lines segment experienced higher renewal prices for the 28th consecutive month. The fourth-quarter average price increase remained in the high-single-digit range and annual written premiums exceeded the $100 million mark.

Policies in our Personal Lines segment renewed in the fourth quarter with an average price increase in the mid-single-digit range. Price increases specific to homeowners policy approached double-digits. Higher renewal pricing contributed to a slight decrease in our Commercial Lines policy retention as it moved to the mid-80% range. Personal Lines policy retention has remained fairly steady and continues to be in the low- to mid-90% range.

New business written premiums for the fourth quarter and full year 2012 continue to grow at a nice pace for both our Commercial and Personal Lines segments. The increase reflected higher pricing and the cumulative effect of growth initiatives including new agency appointments.

Just over half of the $64 million full-year increase in new business written premiums came from agencies appointed since the beginning of 2011. Our pricing analytics and modeling tools once again indicated that our new business pricing is adequate, providing confidence to compete for good accounts and to avoid underpriced ones.

As we emphasized on this call last year, we are not interested in growing premiums without doing so profitably and we are satisfied with our progress so far. We are well positioned to continue growing earnings, dividends and book value, adding value for shareholders over time.

In 2012 we appointed 140 new agencies in areas we consider underserved, about 10 more than we planned at the beginning of the year. During 2013 we plan to appoint around 65 agencies, that is lower than in recent years and is based on our latest assessment of potential for our current agencies given our premium volume targets by territory. When we believe we can reach our goals in a given community with the currently appointed agencies we refrain from new appointments.

It's also important to remember that it takes several years for a new agency to develop the double-digit market share we tend to earn with agencies appointed for 10 years or longer. Because of the pace of appointments in recent years, plus our commitment to serving all of our agencies and their clients, we expect to achieve $5 billion of consolidated annual direct written premiums by the end of 2015.

Appointing new agencies is just one of several strategic initiatives for 2013 that I will highlight today. We are working to enhance our underwriting expertise and knowledge by expanding our use of data and analytics for more precise pricing.

We are improving results in our property oriented lines of business with several initiatives -- first, we are increasing the use of property inspections; second, using more robust deductible features in our policies; and third, increasing specialization among associates in our operating areas that handle various property insurance functions.

A multi-department task force has been leading our property initiatives and we are confident in its ability to drive improvement because that approach is similar to what led to improvement for our worker's compensation business. We are also using that approach to improve results for our Commercial Auto business.

Finally, in 2013 we are continuing to develop new programs that target specific markets featuring enhanced products and service for promising classes of business. Our Life Insurance business will also work to increase opportunities to cross sell products and services as we seek another year of steady profits and growth from that segment. For the full year 2012 our Life Insurance business grew earned premiums by 8% and generated a 6% increase in operating profits.

January 1 marked the renewal of our reinsurance program. We were able to add coverage and efficiency while keeping overall costs basically flat. We also further diversified credit risk associated with reinsurance while preserving the strong relationships we have with our quality reinsurers.

Our per risk treaties remain substantially the same as in 2012, we increased our retention by $1 million to $7 million per loss and used the cost savings to purchase $10 million of additional property per risk coverage.

Our property catastrophe treaty has coverage and pricing similar to 2012 and we added a $100 million layer with our share of covered losses in that layer at 28% through collateralized reinsurance in the form of a catastrophe bond. The coverage applies to severe convective storm losses in selected areas, particularly in the Midwest, as well as supplemental coverage in the event of an earthquake occurring along the New Madrid fault line.

The storm aggregate coverage applies to the 75 counties with our highest amount of total insured property values. Loss recovery under the treaty terms occurs when storm losses for all events in aggregate exceed $125 million after a $5 million deductible per event. The earthquake coverage applies once insured losses for an earthquake event exceed $600 million.

Reinsurance is an important part of our enterprise risk management effort helping to protect capital and remove some of the earnings volatility caused by natural catastrophes. We finished the year with a great quarter producing a healthy increase in investment income.

It's important to recognize that our primary financial performance measure, the value creation ratio, reached our target range for the year. With that I will turn the call over to Chief Financial Officer, Mike Sewell, to discuss it further along with other financial items.

Thank you, Steve. And thanks to all of you for joining us today. Our fourth-quarter value creation ratio was 2.8% and we finished the year at 12.6%. That included a 5.2% contribution from our dividend to shareholders and 7.4% from the change in book value per share.

The fourth-quarter again demonstrated the benefits of our equity investing strategy during periods when investment income is pressured by the low interest rate environment. We received special or accelerated dividends of approximately $5 million during the fourth quarter contributing to a $7 million or 26% increase in total dividend income.

While that dividend income pace is unlikely to continue in 2013, individual common stocks in our portfolio have a propensity for dividend growth over time. Plus, we invest new money in that portfolio and that helps offset declining bond portfolio yields.

For full year 2012 we added new money to both our equity and fixed maturity portfolios, as indicated by the annual increase in our cost basis rising 10% and 2% respectively. Yields of our bond portfolio continued to move lower as its fourth-quarter 2012 pre-tax yield of 5.01% fell 16 basis points from a year ago.

Our bond portfolio's effective duration measured 4.2 years at year-end 2012, down from 4.4 one year ago and 4.3 one quarter ago. Strong cash flow continues to enhance investment income. Consolidated net cash flow from operating activities for full year 2012 at $638 million exceeded the full year 2011 by $391 million and exceeded 2010 by $107 million.

Our stock and bond portfolios each experienced changes in fair value of less than 1% during the fourth quarter. The stock portfolio's unrealized gains remain at over $1 billion before taxes and its fair value represents just over one quarter of invested assets.

Moving to liabilities and reserve development, we continue to take a steady, consistent approach to loss reserving. We aim to remain well into the upper half of the actuarially estimated range of net loss and loss experienced reserves.

For full year 2012 our property casualty combined ratio benefited from 10.7 percentage points of net favorable reserve development on prior accident years before catastrophe losses, up somewhat from 9.3 points in 2011 and 9.8 points in 2010.

Every major line of business contributed to the 2012 favorable development that totaled $396 million including catastrophe losses. 45% of the development occurred in our largest line of business, Commercial Casualty, similar to 46% in 2011. That favorable development occurred for several accident years including 39% for accident year 2011, 17% for accident year 2010, 23% for accident year 2009 and 21% for all older accident years.

We continue to carefully manage expenses and our property casualty underwriting expense ratio fell slightly despite a 0.8% point increase in the component for profit-sharing commissions to agents.

At year end our financial strength and liquidity remain stellar. We had nearly $1.2 billion in cash and marketable securities at the parent company level, up 10% from a year ago. Our premiums to surplus ratio at 0.9 to 1 indicates our capacity to support continued premium growth in our insurance segments as well as provide for other capital needs.

I will conclude my prepared comments by summarizing the contributions during the fourth quarter to book value per share. Property casualty underwriting increased book value by $0.62; life insurance operations added 5%; investment income, other than Life Insurance and reduced my non-insurance items, contributed $0.40.

The change in unrealized gains at December 31 for the fixed income portfolio net of realized gains and losses decreased book value per share by $0.04. The change in unrealized gains at December 31 for the equity portfolio net of realized gains and losses lowered book value by $0.09 and we paid $0.4075 per share in dividends to shareholders. The net effect was a book value increase of $0.53 during the fourth quarter to $33.48 per share. With that I will turn the call back over to Steve.

Thanks, Mike. While completing another quarter with improved underwriting performance adds to our optimism about the Company's future, we realize that our efforts must continue to build on that progress. I want to thank every associate of the Cincinnati Insurance Companies for their good work and encourage them to keep getting a little better every day at what they do to serve our agents and policyholders.

The operating environment for property casualty insurers still has plenty of challenges. We will continually seek to improve our performance while still fulfilling our insurance promise to policyholders and providing outstanding service to agents.

We appreciate this opportunity to respond to investor questions and also look forward to meeting in person with many of you throughout this year. With Mike and me today are Jack Schiff Jr., Ken Stecher, J.F. Scherer, Eric Mathews, Marty Mullen and Marty Hollenbeck. Stephanie, we are ready for you to open the call for questions.

(Operator Instructions). Mike Zaremski, Credit Suisse.

So very impressive margin improvements. One segment that really stood out was Commercial Property. If I'm calculating this correctly I'm getting an accident year excluding cat combined ratio of 27%. If that is correct is there a nonrecurring element benefiting that ratio?

Mike, let's -- we've got some numbers here I want to check will quick before we answer that. You are looking at Commercial Property? That loss ratio is -- it is a current accident year loss ratio of 28.1% improved from 31.1% and that is before catastrophe losses.

28.1 for catastrophe losses versus 31.1% fourth quarter a year ago. And then for the full year, which I think really for all of our lines is one to look at as well, it is 46.1% and 69.7% for the full year 2012 compared to 2011. And that's current accident year before catastrophe losses.

So I guess the moral of the story is I need to kind of take for you guys a last 12 months average more so than looking at the absolute level this quarter versus -- I guess it's just that ratio -- that looks like a very, very good ratio.

That is a good point, Mike, we look at all the numbers obviously. But we do tend to focus on these full-year numbers.

Okay, and I guess then kind of asking the question another way then. In terms of the overall margin improvements on a consolidated basis is there a way to break down the drivers of the margin improvement? For example maybe pricing versus I know technology driven underwriting initiatives, et cetera?

Yes, it's a great question and, again, it's something we think about a lot. And we do feel that we are getting improvement across the board from every area of the Company, pricing -- and maybe I will let J.F. comment on this a bit. But I would say in general terms with the mid-single-digit rate increases that we have been getting, we have been seeing about half come from rate and about half from other areas.

What I would add on the property side, we are actually up close to 10% net rate increases on property -- Commercial Property increases. So that is driving the improvement in property. We are also doing a lot more loss control inspections as Steve mentioned in his prepared remarks. Modeling has helped us across the board but also in the property lines as well. So as Steve said, it is an across-the-board contribution.

Okay, that's helpful. And lastly I guess, can you comment on the competitive environment as it pertains to rate increases that it seems like everyone in the industry, including you guys, have been taking?

Well, no question that everyone is raising rates, some more than others. Agencies right now, what we are finding particularly this week when we are out traveling is that there are some companies that are taking some fairly sizable increases and in some cases we are too.

What we are finding, at least in terms of market conditions, that it is driving quite a bit of business into the market for competition. A lot of our agencies report that because they perceive that some of the increase is a little more than policyholders can tolerate that there is a lot of preempting -- preemptive shopping of accounts that are perhaps the type of thing that a carrier would want to keep, driving it in the marketplace.

So there is a lot going on out there. New business, we are not seeing the rogue -- if you will, the rogue carriers. And I guess everybody gets credit for being a rogue carrier from time to time. But we are not seeing any one carrier driving a new business overly aggressively.

So mid-single-digits to upper single digits from our standpoint is what we are seeing on improvements on renewals. And I would say just by way of commentary, obviously property, cat prone property, awful lot of aggressive action being taken there.

Okay, thank you.

Vincent DeAugustino, Stifel Nicolaus.

First I would just like to say I'm glad that you are guys are finally getting a few quarters where it is not so much of an uphill battle with the weather, it is just good to see.

My first question would be, if I remember correctly, in 4Q 2011 there was an 11 point adjustment that needed to be made to the reported core loss ratio for Workers' Comp. But even if I back that adjustment out the core loss ratio picked up in 4Q 2012. So I just wanted to see if there was anything notable in Workers' Comp in terms of one-offs just in light of the recent progress that you guys have been making in Workers' Comp?

Vincent this is Steve. And I think again, I would focus a little bit more on the year especially with the line as volatile and has been, as you know, as volatile for us as Workers' Compensation. We still feel very confident with the progress that we are making and it is just that most recent accident quarter for Workers' Comp is going to be pretty volatile in any year.

And so we are looking more to the long-term trends, the full-year improvement and feel good about the improvement that we are making. But given the volatility that can occur, your point is well taken, that it is a line that always has to have a close eye kept on it.

Okay, that's good. And then just with you guys writing some of your accounts on a three-year basis, how do you feel about the increases that you are getting on the three-year accounts that are renewing now I guess just versus what the one-year accounts have been getting as far as rate increases in the last few years?

And then thinking about it in that way, what would the implied forward rate increase be that you are assuming I guess in the go-forward next three years on those accounts?

Vincent, this is J.F. The way I'd characterize the three-year policy right now is that we probably more than at any point in time previously are strengthening the difference between what we would offer as a one-year renewal price increase and a three-year policy price increase.

The take-up rate has been a little bit less. Agencies have renewed policies on a one-year policy rather than three and that is all right, because we would be very happy with the kind of increases we are asking for. And then next year we will have the opportunity to revisit the policy.

So I say very committed to the three-year policy, it's still a very stabilizing mechanism for us. So all in all good progress there, but once again strengthening the kind of increases we are looking for on a three-year policy.

Okay. The comments you made about renewals going to one-year versus three in some cases, that to me is really interesting. And I am curious if I should maybe -- the take-away that I should make from that. Would it be that agents maybe don't think that the current rate environment is going to persist for the next couple years and insureds would be better off taking a one year renewal? Or should my take-away be that you guys are just being very conservative in the rate increase that you are asking for on the three-year?

Yes, the latter. I think we are pressing for higher rate increases on the three-year policy. I think the bottom line, the economy is not as robust as some businesses would like for it to be. And they can't tolerate quite the increase that we may ask for on the three-year policy.

Okay, perfect. And then the last one for me. In terms of the 65 agency appointment goal, is that just because of reaching saturation? And I think that is what you had mentioned. Or just I guess the other question would be was there any volume of agency owner complaints regarding the last few years' pace that would have impacted that lower target?

Yes, there have been some volume of agency complaints, but I don't think it is anything drastic. Obviously when you add agencies, as we have, and we have been so careful throughout our history to make certain we don't over saturate an area, you can get into a lot of discussions with agencies about that or debates.

But the 65 level for this year I think is a reflection of the fact that over the last three years we have increased the agency force in a lot of areas. A lot of opportunities; we appointed about $2.7 billion in property and casualty premium this year, which was probably double our best year previously or certainly a significant increase over previous years.

So having had a lot of conversations over the last year and a half with agencies about our long-term aspirations for growth, number of agencies we have in an area, examining the agencies that have plateaued as far as their activity level is concerned, we think we have done a real good job and we have a lot more critical mass to work with right now.

Having said that, there are always going to be opportunities for new appointments, those 65 agencies that we are projecting for this year will reflect that.

All right, perfect. Looking forward to talking to you guys again real soon.

Ray Iardella, Macquarie.

Just maybe wanted to touch on the year-over-year improvement and the accidental loss ratio not looking on a quarter basis but just the full year. I think it is somewhere around 8.5 points. Just I know, Steve, you had talked about maybe rate being half of it.

But maybe you can give a little bit more color of what the other half of the improvement is. And then maybe just talk about your overall position in terms of how you guys are setting loss pics and whether or not it has changed that over the past 12 months or 24 months?

Maybe I will defer to JF to talk about the improvement because he really has been spearheading along with Marty Mullen in claims and a true team approach here. And then maybe I will touch a little bit on the second part of your question.

Yes, as far as initiatives to improve the loss ratios, as Steve mentioned, inspection protocols for us both in Personal Lines and in Commercial Lines, we are literally inspecting or reinspecting hundreds of thousands of structures both in Personal Lines and Commercial Lines to give us a more confirmed view of the quality of the property that we are insuring, the age of the roofs, the condition of the roofs.

Obviously with the weather being as bad as it has been roof claims is a very significant part of what we have been battling. Our loss control division has expanded significantly, the specialization within our loss control division has expanded a lot, that has manifested itself in a lot more attention in the area of Workers' Comp, but also in the casualty and property lines as well.

Marty could touch a little bit on some of the initiatives they have been involved in in the claims area. But that has been a significant driver of improved results.

Yes, thanks, J.F. This is Marty. We really have seen some great efficiencies garnered from expansion of our Workers' Compensation call center and direct call center and expediting those types of claims and having an impact on our overall results.

We're also focusing on our overall spend, especially in Workers' Compensation, focusing on best practices within the repricing issues and addressing a new nurse case management and pharmacy bill strategy. So we've got a lot of balls in the air, a lot of progress being made, still much to be done but we are very happy with the progress we are making.

I guess I might add of course in as much as we have done a lot more in loss control and just overall inspections, it is really just kicking in to a full gear right now. So we are pretty optimistic that in 2013 and 2014 we are going to get a lot of payback from that as well.

And I would just add, Ray, the thing that is kind of hard to quantify the quality independent agents that represent Cincinnati, we have had the high privilege the last three nights to really spend a lot of time with agencies and the enthusiasm they have really is contagious. And they are doing a great job out in their communities in terms of really servicing their clients and helping manage risk.

All of that added up does allow us to be optimistic about the future in terms of our loss pics and so forth, but it is still very much a bottoms up one risk at a time granular approach that really is driven by great independent agents and great people, at the field rep and underwriting level across our Company. So I think the credit goes to them.

That is helpful. And then, I'd just to follow-up I guess on the agencies you guys have appointed more recently. I mean, if you look back over the past year or two or even three years, has that level of premium that you guys have gotten from these newer agencies exceeded your initial expectations? Meaning is the premium coming on quicker or is it kind of as expected?

I would judge it as expected. We don't appoint an agency and expect that over a very long period of time we eventually gear up. We go through a fairly extensive interviewing process that deals with everything from financial statements of the agencies to having members of different disciplines of our Company go interview the agency about what they may be doing in Personal Lines, Commercial Lines, their Excess & Surplus Lines area, Life Insurance.

And so, we tend to hit the ground running. And we have historically always done that. And so, I would say it has gone as expected.

Okay, one more if I can squeeze it in. I mean I know you guys have expanded I believe on the Personal Lines side more recently I believe in New York and Oregon. I mean any sort of thought process on expanding into new states in 2013?

Connecticut is a state that we will be expanding into. As we have mentioned on previous calls, we are very interested in diversifying our property exposures into these new states, many of which, Oregon -- of course Sandy would have proved us wrong in Connecticut, but certainly Upstate New York is less cat prone. We don't have anything on the drawing boards right now to go beyond adding Connecticut.

Okay, thank you very much.

Paul Newsome, Sandler O'Neill.

I guess I was hoping you could talk a little bit more about cat exposure and how that has changed for you with recent expansion? Obviously you try to do something there with the cat bond, but could you talk a little bit more about how you now show up with the models and whether or not we should think of you as having more or less cat risk than you had say a year or two ago?

Paul, maybe we can tag team on this, this is Steve and just getting it started. It is kind of a two-pronged attack there in that we are growing more in areas that are less cat prone, so overall that is going to have a favorable effect.

But I think importantly in the areas where we have been historically, by managing the book and carefully underwriting, from what we are seeing from the models the expected losses are actually moving in a favorable direction as well.

And so, we have had action in Florida and various coastal areas as well as actions that we have taken in earthquake prone areas and those that are susceptible to Midwestern convective storm activity. A lot of the things that we are doing just every day to manage the risk profile overall are working to improve our position vis-a-vis the cat exposure.

And, Paul, moving forward I think we are strengthening some of our underwriting actions, as Steve mentioned, in more cat prone areas. In homeowners, for example, in new business for asphalt shingled roofs, anything older than 15 years we are going to -- we had already announced that we are going to an ACV loss method of payment on those particular risks. In Commercial Lines much higher deductibles per building deductibles rather than per occurrence deductibles.

The homeowner's initiative that I mentioned is on new business. Percentage deductibles are starting to be used in the Midwest for habitational risk. So there is a lot going on that we think can mitigate losses.

I wouldn't want to underestimate the fact that the inspection protocol that we have, we are inspecting a lot of property to determine its susceptibility to withstanding weather. So it is not just so much deductible, I would expect that we will probably have a fair amount more non-renewals of certain properties that we find to be in poor repair.

Cool. Thanks, guys, nice quarter.

(Operator Instructions). Josh Shanker, Deutsche Bank.

I want to talk a little about the dividend. Have you thought about increasing it a little bit? It's a change of story a little bit, but you guys have been just inching it up very, very slowly. Obviously there is a return to profitability. What can an investor expect is a normal run rate of dividend growth for the Company?

Good question. And in fact -- this is Steve. We do discuss that dividend all the time. I mean it's an important capital management activity for us, so every time the Board gets together there is a lively discussion.

I think we have this history of 52 years now in a row of increasing dividends. So I think that sets a good precedent that shareholders can latch onto. But beyond that, in terms of where we are in terms of specific future guidance, I just don't think that we are in a position to give that.

Other than to point to our history and to point that the payout ratio is much improved and has been improving over the years. And that puts us in a pretty good position in just knowing that the dividend is a very important part of our capital management strategy with shareholders.

Can we speak of a quarter of a cent increase as a suppressed increase?

You know, it's an increase. And again, everything is done meeting by meeting looking at all of the information that we have. I have to think that with what you have seen in terms of the improvement that certainly we are going to have more positive discussions.

But again, this is a Board action and I am telling you it is a lively discussion with the Board and I really can't commit one way or the other, other than to say the dividend is and has been a very important part of what we do for shareholders in terms of capital management.

Well, then along those lines can you talk about how you think of excess capital here and now?

Well, we see various ways to deploy our capital, certainly the dividend is a big part of it. When we're growing the way we are at the underwriting profit that we are growing at we see a capital strategy of investing in the business is a big part of our capital deployment.

And so, in addition to dividends, repurchases when appropriate, investing in equities which has been a very successful strategy and I think a way of deploying excess capital. We are really looking at investing in the business, doing what we can to support our field people who are the strength of the Company, to allow them to be out in agents' offices more frequently and to really service that agent.

So we just -- we look at things over the long pull. We think we have a very strong and winning business model that has survived every cycle for over 60 years, not just survived but thrived. And we are going to invest in the businesses as well.

Okay, thank you for your answers and congratulations on all the good news.

Thank you, Josh.

Fred Nelson, Crowell, Weedon.

You know, I have been on these conference calls for almost 20 years and the key to your success is how you treat people. And I am always in awe of the benefits you do with people, both women and men, to build this business for all of us.

But I wanted to say thank you to Ken Stecher. I heard he got a very nice award and he led this Company under some very difficult times. And I just wanted to personally say on this call, thank you, Ken.

Well, thank you, Fred. It is really an honor, it is something I never expected to receive. There were a lot of great graduate candidates and to be selected for that is really humbling. But thank you very much.

You deserve it, buddy.

Well, thank you. I am glad that we are past those three or four years and things have turned the corner, all the hard work that we have done and put in -- the team put in is now starting to pay some fruit and benefits. So we are glad to see that.

Couldn't support you more, congratulations.

Well, thank you.

Stephanie, do we have any further questions in the queue?

There are no further questions at this time.

Thank you, Stephanie, for presiding over the call. And thanks to all of you for calling in, participating with us and we look forward to getting together with you in the future. Thank you.

Thank you. This concludes today's conference call. You may now disconnect.