CNO Financial Group Inc (CNO) 2003 Q4 法說會逐字稿

Thank you for holding and welcome to the Conseco teleconference. We'll begin with an address by Tammy Hill, Senior Vice President of Investor Relations. During the presentation, all teleconference participants will be in a listen-only mode. A question and answer session will follow the presentation. If you need operator assistance, at any time during the call, please press star followed by zero and an operator will help you. Thank you for your attention and here's Tammy Hill.

Good morning and thanks for joining us for Conseco's Fourth Quarter 2003 Conference Call. Before I turn it over to Bill and Gene, just a couple of reminders.

We'll be referring in the call today to information contained in our fourth quarter earnings release. You can obtain the earnings release by visiting the news center section of our web site at www.conseco.com. We expect to file our form 10-K on Monday, March 15. The 10-K will also be available through links contained on our web site.

The forward-looking statements being made today are subject to a number of factors which may cause actual results to be materially different than those contemplated by the forward-looking statements. Please refer to today's earnings release and to our latest forms 10-K and 10-Q for additional information concerning the forward-looking statements and related factors.

Also, as you know, we have filed a registration statement with the SEC for a public offering of common equity and mandatorily convertible preferred securities. Because we are in registration, we are unable to answer questions about the offering, the use of proceeds or the financing plans. So our discussion on this call today will be limited to the results that we released this morning.

Now I'll turn it over to Bill Shea, our CEO.

Thanks, Tammy. Good morning and thank you for joining us. It's certainly good to report that we are back to being a real insurance company and to get a full quarter under our belts since our emergence from bankruptcy. We are generally very pleased with our results for the fourth quarter. I will let Gene Bullis, our CFO, go over a few details about the results but first I'd like to make a few comments.

As you must expect, our number one priority continues to be improving the fundamentals of the company in order to get our ratings back. And that is something that we think about and try to take action on every single day. Our GAAP and statutory earnings were in line with our expectations, and we are pleased with the recent trends in our profitability. We are also very happy with the capital levels at our insurance companies, and you know we've been working on our capital levels very actively over the last year or more.

Our 4,000 career agents at Bankers Life represent an institution serving the senior marketplace with 125-year tradition of excellence and we just celebrated our 125-year anniversary. I’ve spent a lot of time on the road over the past few months talking with our career agency organization, and I have been very impressed with the quality of the people I have met and their enthusiasm for the Bankers strategy going forward. Not surprisingly, the major stuff that gets talked about is all about ratings upgrades. Bankers' career agency's ability to maintain their overall sales between 2002 and 2003 has been critical to Conseco's ability to maintain a solid core of profitable in force insurance business and we are very proud of the group's efforts on that end, and to be in a position to say that our distribution is in place and growing, it's something we're very proud of.

Bankers has a very strong senior management team and we believe a powerful franchise. And we have put together a sound strategy for growing our business in 2004 and beyond. And we're very optimistic about making sure that happens.

Our Conseco Insurance Group, which markets to independent agents, has been able to maintain relatively stable levels of collected premiums in spite of our ratings downgrades in supplemental health product, which we are continuing to focus on. And it was no small feat to keep our IMO's attracted to this company. We lost some, as you know, but overall, we're all pleased that we are where we are.

Also, we've made a lot of progress but are still working very hard on policyholder service improvements and systems integration at Conseco Insurance. And I believe that that's going to be a real differentiator of service at Conseco Insurance going forward.

As we told you on our third quarter call, we have a management team fully dedicated to the acquired blocks of long-term care business and as time passes, we are becoming much more comfortable in our ability to manage through the runoff of that business. We're almost finished running off major med. That ran off according to plan and actually was better than planned, and the long-term care business is much better understood and I think we really have a handle on it.

A couple of other items I wanted to mention that have received some attention recently in the press, and ones we have received questions about. As we disclosed in our recent Form S-1, we were served with subpoenas last fall by the New York Attorney General's office and the SEC relating to activities of the variable annuity insurance company, which we've previously owned. We sold the variable annuity business in the fall of 2002. We would refer you to the more detailed description of the subpoenas and the proceedings in the S-1 and in our form 10-K to be filed in a couple of days. As noted in those filings, we believe that our Conseco variable insurance company did not violate any federal or state law while we owned it. The investigations are in a preliminary stage so their outcome cannot be predicted with any certainty, but we are certainly fully cooperating with the Attorney General and the SEC.

As you are probably aware, from several articles, which appeared recently in the press, Ed Berube, who has served as our President of our Bankers Life and Casualty subsidiary, resigned several weeks ago. We are very pleased with the progress which Bankers Life has made to date and we do not expect Ed's resignation to have any significant effect on Bankers current or future operations or strategy.

As you are most likely aware, the Florida Insurance Department held a public hearing last Friday regarding proposed changes to some of Conseco's Senior Health Insurance Company's home healthcare policies in the state of Florida. While the overall process is taking a little longer than we originally expected, we believe we are making significant progress in working with the Florida department to seek a solution that is reasonable and fair for both Conseco Senior Health and its policyholders.

Also, we announced last night that we entered into a settlement with the SEC on its investigation into the Pharma Finance Company's accounting. There were no fines or monetary penalties involved in the settlement, and we are certainly glad to have the matter resolved.

And with that, I will now turn the presentation over to Gene Bullis, our CFO, to go over some financial highlights for the quarter before we take your questions.

Thanks, Bill. Good morning, everyone.

In terms of our financial results for the quarter, our net income for the fourth quarter totaled $49.6 million or 49 cents per share. Fourth quarter net income included .8 million or 1 cent per share of realized investment gains on an after-tax basis.

Net income for the four months ended December 31st, 2003, our first four months after emergence from Chapter 11 totaled $68.5 million or 67 cents per share. The four-month net income included 3.4 million or 2 cents per share of realized gains net of tax.

Our book value per share at December 31, 2003 was $19.28 per share or $17.10 per share excluding the accumulated other comprehensive income from FAS 115.

We were generally very pleased with our fourth quarter results which were within our expectations. We were also pleased with our statutory results for the year. Loss ratios on our supplemental health products were generally within our expectations.

Our combined statutory net income before realized gains or losses totaled $253 million for 2003 compared to $51 million for 2002. The 2003 stat results include some unusual items both positive and negative, but even excluding such impacts, stat earnings in most of our subsidiaries are showing positive trends. We still expect total cash flow capacity from our insurance companies, including fees and interest paid to the parent company to be over $250 million per year. As Bill noted earlier, our consolidated risk-based capital ratio was 287% at December 31, up from 166% one year ago.

A couple of items which you will note when reviewing our form 10-K which we expect to file on Monday, we made a few minor adjustments to our opening Fresh Start balance sheet as of August 31st, based on additional information from the fourth quarter. All of the various balance sheet adjustments have the affect of adjusting our opening goodwill balance. The net increase in our opening goodwill balance was approximately $54 million. The larger change to the goodwill asset was a reduction of $189 million relating to our net deferred tax assets. Of the $191 million reduction in goodwill, approximately 66 million was for utilization of our deferred tax asset on our fourth month earnings, and another 123 million relates to our FAS 115 unrealized depreciation on our investment portfolio.

And now we'll open it for questions.

Ladies and gentlemen, we'll now begin the question and answer session. If you have a question, you may now press star followed by one on your phone. If your question has been answered, and you wish to withdraw your question, please press star followed by 2. One moment, please, for the first question . And your first question of the day comes from Jukka Lipponen. Please proceed.

Good morning. A couple of questions. First of all, can we just walk through the exact EPS calculation? The net income was 49 cents and if you just take out of that the realized gains before taking out the AT&T wireless on an after-tax basis, what's the number?

Well, the realized gains of 800,000 after tax includes the AT&T wireless amount which on a net of tax basis is, I guess, a loss of somewhere at around a million and a half. So I'm not quite sure how you want to walk that math, but the net gain is 800,000, which rounds to about a penny a share. So our earnings without those realized gains are 48 cents.

Okay. And then how was the mortality in the quarter, because if you look at the just adding up all of the policy benefits and taking that as a percent of the policy income, it looked like that number ticked up, but it looks like the loss ratios in your supplemental health lines were more or less in line or better than what you had in the one-month period.

Jukka, when you say it ticked up, this is Tammy. Are you trying to compare it to the eight months numbers?

Comparing just through the one-month number.

The September number.

The ratio.

I don't think it ticked up very much. I don't think there were any unusual mortality results in the quarter.

No, our actual expected mortality was right in line for the quarter.

Okay.

It may have been some slight anomaly in the first month.

And can you give us a little more color then in terms of the loss ratios in the supplemental health business and what kind of development you see -- you saw there?

Well, the table in the earnings release gives you the -- reflects the information. We are experiencing actual to expected claims experience very much in line. We did have a slight adjustment to our loss experience in med sup and Bankers that was favorable. $5 million or so. Not a very big number. Everything else was very much consistent with our expectations. There really weren't any negative developments or exceptionally unexpected positive developments.

And in terms of your operating expenses, were those developing better than what you expected or sort of in line with your expectations?

They were on plan.

Okay, thank you.

And your next question comes from Craig Picorello. Please proceed, sir.

Hi there. You guys had a nice quarter.

Thank you.

Could you kind of go over the run rate in the investment income for the policyholder and reinsurance counts? It looks like compared to, I mean, one month is not a great comparison period but it was a negative two point something million, 2.1 million in the one-month period and that went up for the four-month period was over $50 million. Can you explain the dynamics of that and what’s recurring and what's not and how we should look at that in the future?

Yes. This is John Kline, the Chief Accounting Officer. What we have tried to do in our investment presentation is separate out items that have volatility that offset volatility in other accounts. And the policyholder and reinsurance accounts represent some trading accounts that we've segregated, which offset volatility in the insurance policy benefits account. And as a result, you are going to see volatility there, what that represents is the change in fair market value of pools of assets that back reinsurance accounts for Modco reinsurance agreements. And under GAAP accounting, we're required to recognize the change in those values as income and then we recognize the change in the derivatives that's passed on to the assuming company as a derivative expense and they both offset each other.

Okay. So that's not generally necessarily a run rate number that's going to bounce around?

There's a component of that that's not just yield.

Yep.

So it is going to bounce around.

Okay.

But it's bouncing around also in the benefits section of the income statement as well.

Oh, so there is a benefit? Where did that show up in what category does that show up in the benefits section?

The piece would be the insurance policy benefits.

Okay. So that was higher than it would have normally been because it would go kind of in the same direction as the investment income does?

That's correct.

To the same magnitude?

Yes.

Okay. All right. Thanks very much.

And your next question of the day comes from Tom Purcell. Please proceed, sir.

It was the question that was just asked. Thank you.

And your next question of the day comes from Rosemary Mirabella. Please proceed, ma'am.

Yes, good morning. Gene, I'm not sure that, and maybe what you alluded to on the Bankers Life segment, but I'm looking at the Medicare supplement ratios. And I noticed that at least the trends for the four months 2003 seem to be different. Bankers Life is decreasing. The loss ratios were as Conseco Insurance segment is increasing. Could you just comment on that, that may be related to something that you alluded to earlier on an adjustment?

Yeah. There was one small amount of reserve release in Bankers for a redundancy that developed through actual experience in the fourth quarter.

Okay. And then looking at the balance sheet when I see the -- I noticed that the VOBA has increased by 179 million. Can you comment on that, please?

Yeah, sure. I'll ask John Kline to give you that information.

That relates to the Fresh Start adjustments that we made. We went back and had certain blocks of business where the split between reserves and PBT was trued up so it had a modest effect on goodwill but had a larger effect on value of policies in force. The total adjustment to value policies in force related to Fresh Start true-up adjustments in the fourth quarter was $265.7 million.

Okay. Is it expected that these Fresh Start adjustments may continue on to the future as you sort of true up experiences or is this another volatility factor that may be present on an ongoing basis or is this one-time only?

We really had one window and this is it.

Okay. Thank you.

Again, ladies and gentlemen, I'd like to remind you if you'd like to ask a question, please key star then one on your touch-tone phone. And your next question comes from Joan Ziff. Please proceed.

Thank you. I just have a few questions. The first one is when looking at your loss ratios, I know you said you had a true up of reserves in the Medicare supplement business of Bankers. Do you have any issues here with meeting the minimum loss ratio guarantees? Are you below that in the med-supp area now and do we expect that loss ratio having to go up so that you stay above the minimum? And also, the same question in the long-term care area. When there are minimum rate -- minimum loss ratios, do they look at the minimum loss ratios on an interest adjusted loss ratio as you give here in Bankers having dropped down to 60% or are they looking at the gross loss ratio, which I guess is well above the minimum? So that's my first question. The second question I was hoping you could address is the impact of these very low interest rates.

As for your first question, these are GAAP loss ratios, not statutory loss ratios with the minimum loss ratio standards applied to those. And so, no, in med-supp we don't expect any minimum loss ratio issues. Second question was --

The second question related to interest rates. And I'm not sure we got it.

Just the impact of the very low interest rates we're at right now. Does it affect the discount rates that you're using on setting up some of your maybe long-term care reserves or, you know, any issues with the products you sell at Bankers? Is there any pressure on margins because interest rates are very low?

Because interest rates were low, we were able to take that into account on Fresh Start in setting the reserves levels. So we don't expect that to have an impact.

Is that the true up that you just took related to, I mean, interest rates when you took the Fresh Start was -- were coming back up, so it's just been a collapse in interest rates recently. Were you able to adjust your balance sheet to reflect the current levels now? Is that what we saw?

No, we didn't change the Fresh Start balance sheet or changes since the Fresh Start date in interest rates.

And so you had took into account these types of low levels of interest rates lasting for a while?

Yes, and of course you know, we have the most of the adjustments relate to the portfolio, that exists in the investment portfolio. That doesn't fluctuate. It only fluctuates in unrealized gains or losses. It really doesn't affect yield when interest rates vary.

I guess my last question is you talked about the adjustment to the goodwill asset. Could you just go through that again? I didn't get all of the numbers. What was the gross adjustment and then you said netted against that were the impact of the taxes.

Yeah, Joan, this is Tammy. If we just walk through from where original goodwill started out at on the opening balance sheet date, the original goodwill, if you go back to our third quarter Q on August 31 was a billion 103. Then the Fresh Start adjustment that Gene mentioned bumped that number up by 54 million, but we also had a decrease to goodwill during the four-month period of about 189 million in total related to deferred taxes. Part of that is on the unrealized gain in portfolio but the core of it is about 52 million on -- for the actual fourth quarter deferred provision. Because if you recall, when we talked on the third quarter call, the tax expense that we were going to have in the income statement was basically going to be at the full 35 plus percent federal income tax rate but we'll be paying taxes at a lower rate than that because of the N.O.L.s we have available and in this case a lot of it is the capital loss carryforwards we have available so the deferred tax provision piece was about -- was over $50 million for the fourth quarter and that reduced the goodwill. So there's several ups and downs going on in goodwill. The only up in goodwill was the miscellaneous Fresh Start adjustments, which increased it by 54 million. Everything else is deferred tax related.

Okay. Thank you.

And your next question of the day comes from Richard Ogden. Please proceed.

Was that Richard Hayden?

Sir, the question is yours.

It's Richard Hayden.

I do apologize.

That's okay. It's fine. I joined the call very late. Did you cover the timeline and the refinancing, number one? And did you discuss the net operating loss size and the usage of it in your comments?

No. Richard, this is Tammy. Up front on the call, we reminded people that because we're in registration, we're not allowed to comment on the offering, including an expected timeline. And I'm sorry, what was your question on the net operating loss?

The size of it and the usage?

Well, --

Cash taxes as opposed to GAAP taxes.

The 50 million that I just talked about in answer to Joan's question was really how much of it we utilized if you will during the quarter.

Okay. I'm sorry.

(multiple speakers) Reduction to goodwill.

Thank you.

Sure.

You want a long-term question?

Sure.

When do you think the company will be in a position, and I understand there is a time gap here, will be in a position to pay a common dividend?

Boy, that is a long-term question.

Oh, you know.

You know, I have to say that the company is certainly making the kind of progress that we all hoped for when we looked at it well before it came out of bankruptcy. I think there’s going to be a lot of opportunities to grow the company and grow it in a way that is going to provide decent returns. I would think that, you know, the day that we can pay a common dividend will be a great day for this company. Right now, I like the question, but I don't have an answer for you other than we're going to work as hard as we can to make sure we're in a position to do that as soon as possible. Other than that, you know, I think we continue to fix the company. We're certainly going to strengthen the balance sheet and our main goal, and because you weren't on the call at the very beginning, is we're intensely focused on getting our ratings back as soon as possible. That's going to drive the bottom line of this company because we're positioned for growth right now and getting our ratings back is job one and it will be a nice problem down the road to be determining what kind of dividend we can give back to our shareholders who we more than appreciate given what this company has been through.

Okay. Just food for you to think about because we're thinking about it.

Thank you.

Good luck.

Thanks.

And your next question comes from the line of Ernest Jacob. Please proceed.

Yes, thank you. I, too, wanted to ask you about the N.O.L. and whether there is any update since your last regulatory filing on your thinking with regard to the size of the N.O.L. and any potential limitations on its use?

The question will be answered by a number of people. This is Bill Shea. I'll start off. One of the things I know everyone in this call probably appreciates is because we can't set up deferred taxes, we have goodwill. It's certainly our belief and expectation that we're going to be able to earn the appropriate kinds of money and reduce that goodwill as fast as possible. It's all deferred taxes, and I think we've explained that thoroughly in our earnings reports and in our filings. Having said that, there certainly is a lot of interesting tax complications, and we believe that we're well positioned to make sure that we're going to keep most if not all of the N.O.L.s that we believe have been properly set up. With that, I'll turn it over to John Kline to talk a little bit more about the N.O.L.s and give you a little more flavor for how we see that whole process proceeding, including with the IRS.

We'll be filing our 10-K on Monday where you'll see an update on the components of our deferred tax asset and in that analysis, you'll see that the deferred tax position and the N.O.L. position will be presented very similarly to the way it was presented at September 30. And that presentation, you know, will show a value of about $1.1 billion for our N.O.L.s and then another billion dollars for growth deferred tax items and giving us a net deferred tax of 3.4, which is fully reserved through evaluation allowance.

In terms of the process we have been accepted into the program for that the IRS calls the prefiling review, and we would expect to have some determination on our filing position for our '03 return before we file it in September.

You have to file the return by September?

Yes, that's --

And you think you are going to get an opinion before then?

We've requested the -- according to the Internal Revenue Service procedures that we get consideration before we file on basically the CFC status and timing.

And we are taking a tax return position utilizing those N.O.L.s and because of being accepted into the Fast Track program that Gene Bullis just mentioned, we want to get a ruling from the IRS as fast as we possibly can and not wait several years for an IRS audit. So we're pushing the decision process as fast as we can. We believe we have a very strong case and we hope the IRS sees it that way and right now and in the foreseeable future, our cash taxes paid are going to be quite low.

Thank you.

And your next question of the day comes from Brian Rothman. Please proceed.

Well, you got my name wrong, too, but that's okay. Brian Roman. A couple of questions. Regarding Bankers Life and the management change, I guess it’s a question you are going to have to answer at some point why the, I guess, what was his position, President, CEO, the gentleman who left?

Yes, he was President of Bankers.

Okay. Some people are going to ask you on the road show why did he leave? And you can sort of dance over the question, but people are going to be asking you directly. So how are you going to answer that question?

Well, he resigned for personal reasons, and that's what was said. I'm going to say that Bankers is a company that has been around for 125 years. It's been a very successful company. It's had several owners over the past 10 to 15 years and through it all, they've not only survived but they've thrived. What Bankers needs more than anything else to execute this strategy is strong capital, which we now have and an A-rating, which we certainly hope to get in the near term.

So your saying for personal reasons is the expression that you're going to go forward with?

Yes.

Okay.

And we have a management team. I don't want to leave it at that because I want you to understand that the management team at Bankers over the past several years has been strengthened by bringing in people from the outside promoting from within. We believe we have a very strong career distribution force. Several people, several, you know, very experienced people from the insurance industry have been hired to take significant positions in the field for us. And this management team believes that our field force has never been stronger, and we believe that as we move forward here, our branch expansion plans are just replications of what Bankers has done over a long period of time and we're very confident that this management team can, in fact, grow the business profitably and we're very pleased and looking forward to it.

Are you going to fill the President position?

That's an interesting question. I think we probably will over some period of time and whether that's done internally or externally is really under discussion, but in the near term, we believe we have the management team to move the company forward. And right now, I'm spending more time at Bankers and I believe we have the team to move forward.

Okay.

I'm very happy to discuss it on the road show.

Sure. Because I think people will have questions about that.

Yep.

With regards to earnings guidance, you earned 49 cents this quarter and yet in the release, you make reference to a range of earning I believe 175 to 200 million for the 12 months beginning October 1, 2003 and conveniently with 100 million shares outstanding makes it easy to figure EPS. And so would you be willing to say over the next nine months that you're going to be earning at the higher end of that 175 to 200 or is the run rate going to drop down so -- you follow the logic of the question? Or are we in registration so you can't discuss it? I'll give you that out.

Well, we were very pleased with the quarter. This is for insurance companies reporting quarterly results, it's always very rigorous activity. And we had most things were right on expectation to sit here now and tell anyone that for the next three quarters everything in our business will be exactly on expectation is really not a reasonable position for anybody to take whether you are in registration or not.

But you are putting out guidance?

Yes, and we think that the guidance is consistent with where we are comfortable providing guidance.

Okay. On the loss ratios that I think Joan was actually asking some questions about, you are looking at four-month numbers and eight-month numbers successor and predecessor companies here. Are these apples to apples comparisons? And the reason I ask you is because you have sort of a catch-all phrase here. What do you call it? Runoff segment. And so when you're comparing some of these lines here, page 6 and you see long-term care in the ongoing businesses, was there stuff in the ongoing businesses that you didn't like that got dropped into runoff such that we’re not making apples to apples comparisons for these loss ratios or are these just lines that you're not in anymore?

The results are not comparable, that's the first reality. There are many differences between the accounting basis that was used to produce the predecessor financials and the successor financials. And you'll probably see that most dramatically in the long-term care area because we had very little margin in our long-term care business prior to Fresh Start and in the process of producing Fresh Start results, you mark that business to market, which includes, you know, a buyer would expect margin. So you reinstate margin into your benefit ratios.

Let me --

So those emerge over time as the business runs off.

No, I'm not so much talking about the issue of Fresh Start as I am talking about actual lines of business.

Yeah, Brian, this is Tammy. The comparability between Fresh Start because of Fresh Start between the predecessor and successor, they are not comparable. Which is why we have that opening paragraph in the press release. So if your question relates to are the blocks of business the same or is it a change of geography, the answer is no. The blocks of business are the same. The required blocks of long-term care business are down in the other business and runoff for all of the periods presented and Bankers Life's long-term care business, which we have not had similar experience with and we continue to write and like is in Bankers Life's long-term care for all of the periods presented. We did not change the geography of any blocks of business.

One of the things we wanted to do was highlight as a segment the runoff long-term care business that were acquired blocks in the mid 1990s. And we had been asked lots of questions and had been thinking about how best to present that. We stopped writing long-term care business in Conseco Insurance in April of '03 and made the decision to run that business off and therefore we decided to highlight it in a separate segment. There's another component of that, which is Major Med, which is just above fully runoff that was a block of business that at one time was about 900 million in premiums. So we wanted to make sure that everyone understood the businesses we were going to continue in, the ones we were going to continue to fund and the long-term care blocks that were problematic. And therefore, we wanted to give it the most transparency we could, and we decided to have it highlighted as a separate segment and we will continue to do that.

One last question related to what several other people have asked about. With regards to Fresh Start, it sounds as if there's a grace period post coming out of bankruptcy here where you can make a few changes. Is that correct? And how long does that grace period last?

This is John Kline. Yes, GAAP accounting recognizes the fact that with a lot of assets and liabilities, it's very difficult to get true values and get all of your evaluations done in a very short period of time. We discussed the window with our auditors and basically, it closes at the time that your first audit is completed. So our Fresh Start adjustments are completed as of today.

Okay. That's helpful. Thank you. And good quarter.

Thank you.

And your next question of the day comes from Tony Davis. Please proceed.

Hi, my primary question was related to the N.O.L., which you answered, but perhaps you could comment on discussions with rating agencies in particular AM Best. Have they communicated any specific threshold financial ratios or restructuring of the balance sheet that needs to be achieved before they will upgrade you?

We have ongoing discussions with AM Best and we have for quite some time. You know, it's clear that coming out of bankruptcy and September 10th as we did, there was a need for the company to put some earnings on the table to make sure that we had, you know, everything done in terms of Fresh Start accounting. And frankly, it was important to the company and not speaking directly for the regulators but I believe it was important to them to see, you know, a full quarter and audited financial statements behind them as well as some of the things that management has keyed up over a longer period of time that we believe would have been able to execute in a positive way. I would certainly think that based on the results for the year, certainly the results in the fourth quarter and the plans for our capital that we're optimistic that we can go back to AM Best in the near term and hopefully be in a position to ask them to upgrade us. That's certainly what management is working on, and we believe that we have kept AM Best and other regulators informed of our progress step by step. And so I would say that I'm looking forward to an upgrade in the near term.

And from your perspective, Bill, do you think that your insurance companies can have an A minus rating by the end of this year?

I would love to be able to, you know, make a comment, a positive comment on that. We're going to do everything we can to make sure we get an A rating as fast as possible. Obviously, we don't control when we get upgraded but if we are asked to work on something by any one of the agencies be it AM Best, S&P, Moody's or any of the other state regulators, this management team has been committed to getting that done. And I would say that we want an A rating. We're dying for an A-category rating, and it will come as soon as we can get it. We certainly will do everything within our power to give any rating agency the opportunity to upgrade us because everything they asked for we're giving them.

Operator, I think we have time for one more question.

And that question will come from the line of Marty Murray. Please proceed.

Hi. My question was just asked and answered. Thank you.

Thanks, everybody.

Thank you very much.

Ladies and gentlemen, thank you for joining us on the call today. You may now disconnect your lines.