Everest Group Ltd (EG) 2002 Q1 法說會逐字稿

Please stand by. Good day, everyone and welcome to the 2002 first-quarter earnings release call of Everest reinsurance. Today's conference is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Mr. James Foster, Sr. vice president of investor relations. Please go ahead, sir.

Thank you. Good morning, everyone, and welcome to the call. With me this morning are Joe Taranto, our CEO, and Steve Limauro, our CFO. Before I turn the call over to Steve for a review of the numbers, I'll preface our comments by noting that our SEC filings include extensive disclosures with respect to forward-looking statements. In that regard, I note that statements made during today's call which are forward-looking in nature, such as statements about projections, estimates, expectations and the like, are subject to various risks. As you know, actual results could differ materially from current projections or expectations. Our SEC filings have a full recitation of the risks that investors need to consider in connection with such statements. The company undertakes no obligation to update or revise any forward-looking statements. Now let me turn the call over to Steve Limauro.

Thanks, Jim, and good morning. I'll briefly highlight our results and then Joe and I will take questions you may have. We're very pleased to report another strong quarter of earnings with operating income after taxes of 66 million, or $1.35 per diluted share. This reflects a 23.6% increase over the 53.4 million or 1 dollar and 14 cents per diluted share earned in the first quarter of 2001.

These excellent results stem from continued execution of our business plan, with an assist from strong conditions across our markets. While the strength of the conditions varies by segment, class, and market, and they remaining pockets where we believe further improvement is needed, the breadth and department of the improvement to date is very encouraging and has offered us many more profitable business opportunities. We believe that the drivers of the hardening market, on balance, remain in place and should lead to continued strong tenderness at least through 2003.

We've capitalized on these conditions, focusing our growth (inaudible) to 596 million. Our worldwide reinsurance operations were up 36% to 397 million, while our insurance operations were up 56.3% to 199 million. Our U.S. reinsurance operations are up 50.3% from the first quarter of 2001, with the increase reflecting strong pricing across the property and casualty spectrum.

Our U.S. specialty reinsurance operations were up 22.7%, reflecting continued growth in our medical stop loss reinsurance business which we continue to see as a solid opportunity as well as improving markets in marine, aviation, and surety, all of which are coming off a difficult 2001. International reinsurance operations were up 26.2%, largely reflecting improving market conditions in most markets, and particularly for our Latin America, London, and Canadian operations.

Our Bermuda operations produced 3.5 million of premium. As we've noted before, because of its strategies, premium for this unit is expected to vary quarter to quarter. Still, we are pleased with the increasing deal flow we see through this operation. The 56.3% growth in our insurance operations reflects moderating but continued growth in California workers' compensation writings, together with growing, if still modest use of our excess and surplus lines capabilities.

We typically caution against putting too much weight on one quarter's result, and we do so again this quarter. Importantly, across all of our operations, we have and will continue to exercise disciplined underwriting. Our combined ratio for the quarter was 99.3% compared to 103.0% in the first quarter of 2000, principally reflecting the lower level of catastrophe losses incurred in 2002. Pretax investment income of 85.5 million was down seven-tenths of a percent against 2001's 86.2 million, reflecting the impact of lower interest rates, partially offset by strengthening cash flow from operations. After-tax investment income was 70.3 million, up 1.8% from 2001.

The imbedded pretax and after-tax yields of our quarter-end portfolio at 6% and 5% respectively were unchanged from December 2001, and duration is down slightly to 5.1 years. As we've noted before, realized capital gain/loss will vary quarter to quarter depending upon investment and tax variables. Cash from operations for the quarter was 1,106,000,000, compared to 63 million for the first quarter of 2001, including 39 million of catastrophe and unusual loss payments in 2002 versus 4 million in 2001. Cash and invested assets stand at 6.2 billion and are up 369 million from December 2001. The change mainly reflects the proceeds from our 346 million-dollar secondary offering, our 67 million-dollar decrease in the market value of our investments, and 106 million of cash flow from operations. The investment portfolio remains focused on fixed income investments, which comprise 97% of the portfolio. The average credit quality of the fixed income investments remains in the AA range.

Total assets stand at 8.4 billion, with 1.9 billion of these held in our Bermuda entities, Everest reinsurance Bermuda and Everest Re Group limited. Shareholders equity at 2.1 billion or $40 and 9 cents from outstanding share is up from 1.7 bun and 37.19 per share at December 2001 reflecting first-quarter results as well as the secondary offering completed in February.

Our annualized ROE stands at 14.7%, up from 7.3% for the year ended December 31st, 2001.

The first quarter was strong and continued to reinforce our view of our business markets and opportunities. Our results continue to track with the 5-dollar and 60 cents to 6-dollar range (inaudible) absent unusual loss activity that we commented upon in February.

As we've seen in another quarter (inaudible) to refine this further and also discontinue discussing 2003.

Overall, we are very pleased with the way 2002 is shaping up. The infrastructure and franchise building we concentrated on over the past few years has positioned us superbly and we are strongly focused on putting our capabilities to effective use.

Now, Joe and I will take questions you may have.

Thank you. Today's question and answer session will be conducted electronically. If you do have a question, please touch star 1 on your touch town keypad. We'll take as many questions as time permits and proceed in the order that you signal us. Once again that is star 1 to ask a question. We'll take our first question from Dave Shusseyfrom J. P. Morgan.

Good morning, everyone. Hello, can you hear me?

Yeah. Good morning, Dave.

Good. Just a couple quick questions. I mean, you mentioned that the operating environment is very strong, you know, terms and conditions as we see it are different than they were a year ago, and, you know, taking a look at the numbers, excluding catastrophes, it looks like, you know, the loss activity is consistent with the prior year. And you also mentioned that in the quarter we saw some unusual loss payment patterns. Could you just explore that a little bit more and I guess talk about the balance sheet and the reserving side a little bit?

Sure, Dave. The -- I think one of the things you have to remember about the first quarter is, you know, we -- say between first-quarter 2001 and first-quarter 2002 is not totally off the charts. The unusual loss payments or unusual payment activity really reflected the unusual losses we saw in the third and fourth quarter last year. We basically had $39 million of outflows, if you will, with respect to World Trade Center, Enron, as well as cats that occurred earlier in the year. In particular, the tropical storm Allison. That compares to 4 million that we saw in catastrophe loss payments in the first quarter last year.

You know, our view of the balance sheet at this point is that we're seeing paid losses behave themselves. We're seeing reserves grow. We're seeing assets grow. We're very comfortable that, you know, the results that we're putting out continue to have a very strong balance sheet as a component of them.

Okay. That's -- you know, that's fair.

I guess the second part you had mentioned the E and S market. We haven't heard too much about that strategy on that side of the business. You know, is that a line that is picking up for you? Is it growing in importance? And what's kind of the outlook on that side?

Well, the -- you know, the E&S market is improving quite nicely, both at the insurance level and at the reinsurance level, so on the reinsurance side, we certainly are finding ourselves doing more reinsurance with E&S companies. A lot of that is general liability. Some of that is medical malpractice. Some of it, on the E&O side. But mean while, our insurance operation -- and we took the time a few years ago to basically put together an E&S company, so we do have an active E&S company that's authorized to do business in most states. And there again, we're seeing some selective opportunities in the E&S market where we're doing it through our insurance operations. Again, same lines: General liability, medical malpractice.

The market today in its turmoil is just offering some selective opportunities where we can do some cherry-picking.

On the insurance side, it's still small in the grand scheme of things. We may have done 20-ish or 30-ish million dollars for the quarter, but that is something new for us. The E&S market was not as healthy a year ago, and so we really weren't tapping into those opportunities at that point in time.

Great. Thank you. I'm going to give someone else a chance here.

Okay. Moving on, we will take a question from Peter Street from UBS Warburg.

Good morning. I just had a question concerning the Wall Street Journal article today on asbestos litigation that would, in effect, speed up the claims process on asbestos claims. I was just wondering what impact that might have on your Mt. McKinley operation and the impact of the reinsurance that you have on that business. Thank you.

Peter, I'll take that. I confess I haven't read the article yet. I was getting ready for the call to you folks so I'll read it later on. So I can't comment on the specifics of the article. There have been a number of pieces in the general press recently about the asbestos phenomenon and, you know, is it speeding up, is it -- is it slowing down, speeding up, broadening, et cetera. There are a number of things going on simultaneously. inaudible) have the impact tending to speed up (inaudible) other of those have the impact of slowing down payments. The net effect I wouldn't (inaudible) tend to lower the. inaudible) will all of those play out? We don't know. Many of those (inaudible) so I will read the article and if you want to (inaudible) later, we can. But there are (inaudible) I'm not sure where they're going to point out.

And at this point (inaudible) in the payments.

And if you've just talked about the reinsurance that you have in place on that business. Thank you.

inaudible) mount McKinley (inaudible) 200 million-dollar reinsurance protection. We have (inaudible) approximately 5 million of that, including 9 or 10 million (inaudible) this quarter, our business of 2 million. But basically -- and that's just coming from (inaudible) that's just reserve. You know, that 45 million is (inaudible) two million if you -- we've got to covered for--(inaudible) coinsurance.

Okay.

Thanks very much.

Quick question.

Right.

Nothing from today (inaudible) 2002.

I think that (inaudible) achieve.

Well, the (inaudible) those areas (inaudible) in the past (inaudible) also in the up swing.

Okay. Tom, with respect to the (inaudible) driving other assets and other liabilities. We had a number of unsettled trades at the end of the quarter, but, you know, I would say that, you know, over the course of March, we got probably 60 to 75 percent fully invested, and then into early April, just cleaning up.

So it didn't quite get a full long-term portfolio rate on it, you know, for the one month we had it. But we're certainly up and running as we head into the second quarter.

So with the shift, the absolute level of the income in the second quarter should be improved?

Absolutely, absolutely.

Okay.

As far as July renewals, Tom, obviously it's too early. We're not working on anything. So we just have to have speculate. Especially if you're asking me my opinion of the new capital. I think to a degree, not a big degree but to some degree, we will increase and we feel the presence of the new capital. You know, it's a lot of money has been raised and certainly there's an eagerness to put that capital to use and to write business, and some of them will be a bit better set up in July than they were in January.

So, you know, realistically, there is more supply there to meet the demand.

Now, having said that, their focus still at this point in time tends to be cat business. They are branching out to some degree from that, but slowly, I would say. A little bit marine, a little bit in aviation. But clearly when you start to look at our operation where we have a large facultative operation, that's something that they just won't be into. Where we have a very, very extensive international operation we won't see new capital on that front. Where we have an insurance operation, we won't see the new capital for the most part at all on that front.

So my sense is logically there will be more felt July 1, but probably mostly in the cat side and on the treaty side.

Okay. Thank you.

We'll now go to Paul Newsome with Lehman Brothers.

Thanks. Just a quick question.

There are concerns by a number of the primary companies, workers' compensation insurance in particular is seeing some deteriorating claims costs and inflation. Have you seen that in your book as well, and, you know, could you -- how might you be affected by something like that?

I would say since we've entered the market, really the last year and a half or so, our tracking of changes in severity, at least in the states that we're in -- we're really only in three states at this point -- we've not seen any change in severity that's beyond what we expected. You know, there's still a growth in claims costs, some of it driven by cost of drugs, but nothing beyond what we kind of contemplated in terms of the changes that we thought would happen.

I would say prior to that, you know -- '96, '7, '8, and '9, there was a real spike in workers' comp claim costs. I think it caught a lot of people off guard. I think some are still kind of trying to figure out how there was such a jump. But we weren't in the market at that point in time, and I think our own people, when we did get into the market, did a good job of recognizing where costs were at. So we're quite pleased with our book. We're achieving some very, very nice rate increases. We're still growing quite nicely in the three states where we write workers' compensation.

On the reinsurance side, we had not written workers' compensation reinsurance up until essentially this year. We thought the reinsurance was really much too cheap. And much of that severity did go to the reinsurance market in the past years.

This year, our rates have changed dramatically. Some of it was under way before September 11th. After September 11th, it picked up even more so. So we have written some workers' comp reinsurance in 2002 at very, very different terms than what was the case in 2001.

Separately, could you perhaps talk a little bit more about the sectors in markets where the pricing is still at its worst and in theory, that we should see prices improve?

Well, I think there are parts of the casualty world where if you took a look at the whole sector, you would still find good portions of some of it underpriced. I'm still cautious, to some degree, about the D&O market. We have not touched the accountants' E&O market. Still concerned in the lawyers' E&O. Architects are still not quite where we'd like it to be.

Medical malpractice, even though it's undergoing some very severe changes, there's still, I would say, only a small portion of the market that we'd be willing to write.

So, you know, clearly there are still pockets of the casualty market that one has to be cautious about. Even on the workers' comp side, there's many states -- we're only in three. There's 47 that we've chosen not to go into. So even though rates are on the rise and we hope in all of those areas that I just mentioned rates will continue to rise and conditions will continue to improve, but, yeah, there's still a good portion of the U.S. casualty market, there's still the Continental European property market and the Asian property market which we see as needing more change.

Thank you very much.

You're welcome.

Our next question will come from Susan Sebachwith Wachovia securities.

Good morning, Joe and Steve. I've got a couple questions. First of all, I understand why you don't want to give guidance yet going into the second quarter which is the highest cat quarter, but what I was wondering is if cat losses are really the swing factor and not really market conditions. Because it would seem that you are way ahead of -- way ahead of budget with these growth numbers and with the cash flow numbers, et cetera. That's my first question.

And my second question is: If you do keep up with these growth rates, will you need more capital to meet your budget for 2003?

And then third question is: How is the (inaudible) of your business changing and what is sort of the hurdle rate on that workers' comp business as that grows (inaudible) on the insurance side?

Let me try and tackle -- tackle the first one. I think certainly what's going on in the first quarter results, we certainly had better cat experience. When you don't consider cat, though, certainly one of the things that's still affecting us is, you know, it is early in the year. We still are seeing a lot of 2001 exposure run off, if you will. And as we get through the year, you'll see more of a clear picture of 2002.

In addition, there's certainly changes in our mix of business, and, you know, our mix can vary significantly quarter to quarter. But, you know, on balance, we certainly are seeing, you know, more opportunities in the casualty area that would perhaps have a little bit higher combined ratio. And so, you know, as you look at the mix, I would say that in the first quarter you've got, you know, some of the results, you know, really reflecting positive cat experience, some really reflecting the changing market conditions as you go through the year, you'll certainly see more and more emerging with respect to the 2002 underwriting year.

Actually, that brings up, how is the tail of your business changing? Are you getting into longer tail?

We are, Susan, but I would say not in a dramatic way. At least just yet. So I would say the tail probably 2002 versus 2001 is lengthened, but modestly so far.

With regard to your question on might we need more capital, the answer is: Maybe.

I would say that at the growth rate that you're seeing in the first quarter, there's a good chance that we would want more capital. And again, we're talking about without an acquisition, which would only add to the -- to the usage.\{S:SUSAN}\{S:SUSAN SEBACH}Joe, also, I was wondering, could you -- you know, you talked a lot about how much better the market is, and I wanted to follow up on -- I forgot whose question, but having to do with the new entrants in the market.

It would seem to me that you're still seeing this huge length of quality and that these new entrants just won't be able to come in and take the business away, even in the cat market, when you -- when we look at renaissance's results.

Well, I would very much agree with that, Susan. I think we are seeing, more than we ever have seen, people really looking to quality and looking to the established players, and looking to one's ratings. And so clearly, we have a higher rating with all the agencies than -- by a good margin versus the new capital, and you're absolutely right that when somebody puts together their program today, they want the highest quality.

Right.

And if the deal is oversubscribed, the people that they lop off are the lower quality.

Your last question was on --\{S:SUSAN}\{S:SUSAN SEBACH}Well, if you were to take us around selected lines of your business, where are you seeing -- I think Paul Newsome asked the question about where you're seeing the greatest, you know, not rate decrease or rates not going up as much as you like. Where are the rates going up, you know, more than you anticipated and what gets you excited about this market?

Well, I think it's the areas that we've kind of been mentioning to you that we're growing in. The -- we're still very pleased with the property cat business.

And what are the rate increases there?

Well, they're probably, you know -- I'd call it 15-ish percent in 2002 versus 2001. But that was a market that I think was starting from a pretty good starting point to begin with, and when you go up 15% in rate, you've probably just doubled your profit -- expected profit margin. Workers' comp, you know, we're -- we put through another 20% rate increase in our California book. We're increasing rates in Alabama and Florida. We're obviously very pleased about that.

The trucking business, for the first time we're able to write -- we're seeing rate increases in that. 40-ish, 50-ish percent, over what it was written at that last year, keeping in mind that we didn't write it.

Medical malpractice, again just to survey, extreme rate increases, again that's starting from a 2001 that was not particularly in good shape, so sometimes those extreme rate increases bring you to a very good spot. Sometimes they don't.

Our medical stop loss business, we're still getting some very nice rate increases there. 30-ish plus percent. And we like where that business is at.

Aviation is on the upswing. So really, the areas that we've grown in as you might expect are the areas that we're highest on.

Let me just complete it on the -- your question on the workers' comp hurdle rate.

You know, essentially we're looking to write that business in today's market at an underwriting profit. Now, so far we've booked it to a bit of an underwriting loss. There is a decent tail on that business, and I -- it would generate an ROE well in excess of 15% if we do achieve the underwriting profit. So we're very high on that business at this point.\{S:SUSAN}\{S:SUSAN SEBACH}Okay. Great. Thanks, Joe.

You're welcome.

Looking forward to the next quarter.

And moving on, we'll take a question from Brian Wright with Bear Stearns.

I understand you're not giving specific items for 2003 yet, but given the improving market conditions, isn't it reasonable to assume that the combined ratio won't deteriorate, assuming normal losses and even including the change in the tail?

Yeah, I would say that it would be our expectation that the combined ratio in 2003 would be better than the combined ratio in 2002. And of course we're hoping for some very good numbers in 2002, and we did publish in the first quarter the best combined ratio that we at Everest have ever published.

Of course that's all things being equal, you know. An equal number of cats and an equal number of unexpected and expected losses, 2003 versus 2002. But, yes, given the (inaudible) that would be my expectation.

So in 2003, earnings should probably grow over 20%, given net premium (inaudible) up over 30%.

Well, as you said, we didn't give estimates for 2003. Good try, though.

And thank you. And the next question will come from cliff gallant with KBW. Mr. Gallant, just one moment, please.

Mr. Gallant, your line is now open.

Hello.

Yeah.

Cliff yes, can you hear me.

Yes, we can.

Okay. Sorry about that.

That's okay.

Great quarter. I wanted to sort of ask you about how you view the earnings power of the company going forward in terms of, you know, what do you -- how do you view the -- sort of the return or the net present value of the business you wrote here in the first quarter?

And I ask that sort of in -- sort of in the light of what we saw coming out of re in their first quarter. You know, they blew away the street estimates but, you know, being a very short-tail cat oriented business, we saw that -- sort of the benefit of rate increases immediately in their book and you guys being longer tail, I just wonder how you think about what the real return is on the business you wrote.

Well, let me just answer that generally, cliff. And we like the business. That's why we grew it. And we do expect it to basically run out to combined ratios better than what we'd been running at in -- prior to 2002. Some of that's long tail. You're -- you know, there is some cat business in there as well. But at the end of the day, you know, we're not (inaudible) that's a really small component to the overall. But at the same time, that means that losses, I think, for us won't be as up and down as if you were into the pure cat side of things.

So as I kind of indicated, we booked a -- the best combined ratio we have, and we do expect, you know, barring unusual activity, extreme loss activity, a general improvement into 2002 and into 2003. On the investment income side as Steve kind of indicated w he do expect the investment income component to grow and tax-wise our expectation is probably the effective tax rate, if anything, would be modestly lower than what it was in the first quarter. So you start putting all those things together and give us a continued good marketplace and maybe a few other opportunities, possibly something on the acquisitions side, I think it makes for good earnings power.

Thank you.

Thank you.

And our next question will come from Mark (inaudible) with Solomon Smith Barney.

A couple quick questions. Number one, can you quantify the amount of cat business that you actually wrote in the first quarter. And secondly, can you tell us whether -- can you tell us if you had any reserve -- any development on prior-year loss reserves in the quarter, and can you remind us what that was in the first quarter of last year?

Just on the reserve development, first quarter of last year was minimal. First quarter of this year, minimal. I did mention that, you know, we did put up a little bit on the mount McKinley asbestos area. Just minor movements. But really, not a great deal of development in either quarter, Mark.

The cat business is -- it's a difficult question because some of our book is -- does have pure cat exposure, some has indirect or modest cat exposure. So it's very hard for me to give you an exact number. But I will rough out that perhaps 15% of our overall book has some form of a cat element to it.

Okay. Great. Thank you.

Just to come in on the development with respect to the trade center and reiterate, you know, both the World Trade Center exposures we booked last year and the Enron exposures all are holding firm, so no change at all in those numbers, Mark.

Okay. Great.

Yes. Let me just add a little bit on the acquisitions. You mentioned it a couple of times. Where might you look? Is this broadening the international side, be it primary or reinsurance?

Well, you know, we'll look at any opportunities but reinsurance becomes less likely unless it's something that's complementary where we really just don't have an operation. That could mean that it's, you know, a life operation or it's -- in a country or in a product that we're just not in right now. But more likely might be an U.S. insurance or an agency in the U.S. that would add to our insurance operation.

Would you consider like an agency and kind of book roll it in and take the business.

Yeah, we've done that before in the building of our insurance operation and if we could find the right situation, we'd be happy to do it again.

Looking at workers' compensation, what were your hit ratios there?

We probably hit on about 20 or 25 percent of the business that we quote on.

And what's the comparable number 12 months ago?

It probably wasn't -- wasn't too different than that. I don't believe that that's changed too much.

And just one more question. The -- when you stress-test your overall book to a large catastrophe, and with reinsurance, the purchase of reinsurance having diminished, more cat is in there. By what percentage has your PML increased now by?

Relative to surplus in earnings, I would say it probably hasn't increased at all because surplus in earnings are obviously -- obviously have gone up quite nicely. We have in the past, as a general rule, tried to keep the expected largest loss or the one in a hundred cat to something that would still be less than half of one year's earnings.

Great. Thanks a lot.

And we'll take our final question from Charlie Gates with CS first Boston.

All right. I actually have two questions.

What's -- of your insurance ratings or workers' compensation roughly?

I would say about 70% of our insurance writings are workers' comp.

That's absolutely ballpark.

Yeah. That gets you pretty close.

Okay. That was my first question.

Going back to I believe your second question on your call from the fellow at UBS Warburg, he said that the article in the journal which you hadn't had an opportunity to read, it focused on basically claims being paid for asbestos or reserves being put up for asbestos faster than might have been true in the past and you said there were forces going in both directions. Or one of you said that.

Yeah.

What are some of the forces in the other direction?

A couple things, Charlie. There are -- by other direction, I assume you mean things that may tend to ameliorate the liabilities.

Yeah. Or prolong it. Yes, sir.

There are a number of things going on and as I also said, we can't predict exactly where they're going to go. One thing is that there is a substantial effort being made to get in front of Congress a piece of legislation that would be designed to have the effect of taking out of the system the substantial volume of claimants who are not injured.

There is a substantial majority of the people in the system that have no identifiable injury, and there is a very, very broad-based movement afoot to try to take those claims and not pay them now, as has been happening in the past, but simply defer them, to see if they actually develop any injury.

That is -- there's no real secret about that. That is something that is being worked on now. There are, in fact, a number of major plaintiffs' lawyers who are also supporting that effort.

There are also a number of judges in charge of some of the asbestos bankruptcies that are looking at similar issues in the sense that they understand that the past practice of simply paying anybody that had a name and a Social Security number, you know, is something that just does nothing but suck the money out of all the bankruptcy trusts. So there are a number of cases now where there are serious discussions going on about whether or not a similar approach to the legislation should be put in place. Namely, take the people who are not injured and put them on a sidetrack to see if they do, in fact, become ill later on.

That's also going on in individual cases as we speak. So a lot of these things are going on very heavily oriented towards taking people who are not sick and saying, "We're not going to deny you the possibility of bringing a claim, but we're going to actually wait until you develop an injury, if ever."

That would, from what we have seen, take a significant amount of the current payments out of the system and either defer them until people get injured or, you know, we'll never see them again. I mean, because the reality is that many of the people who have been getting compensated have, at most, very minor abnormalities on a chest x-ray and frankly, most of those people will never develop any injury.

So all of those things are going on on a number of fronts, and any one or multiples of them would have the effect of slowing down payments.

The fact that many of the major payers are in bankruptcy now has obviously put some distortions into the system in the sense that remaining companies that haven't gone into bankruptcy have been paying more than has been true in the past. One of the things, frankly, that's driving the legislative push is to try to prevent more and more of these companies going into bankruptcy.

As these companies that are in bankruptcy look at how they're going to come out, the whole question of preserving their assets and therefore slowing down the payment stream is also a significant part of the picture.

Thank you.

Sure.

And that is all the time that we have for questions today. Mr. Foster, I'd like to turn the call back to you for closing remarks.

Okay. Thank you. Once again, we appreciate all of you taking the time to join us. We're here if you have any follow-up questions, and have a good day, everyone.

Once again, thank you everyone for joining us today. That does conclude today's presentation.