Everest Group Ltd (EG) 2011 Q4 法說會逐字稿

Good day, everyone, and welcome to the Everest Re Group Limited fourth-quarter 2011 earnings release call.

Today's conference is being recorded.

At this time for opening remarks and introductions I'd like to turn the conference over to Beth Farrell.

Please go ahead.

Thank you, Tim.

Good morning and welcome to the Everest Re Group's fourth-quarter 2011 earnings conference call.

With me today are Joe Taranto, the Company's Chairman and Chief Executive Officer, and Dom Addesso, our President and Chief Financial Officer.

Before we begin I will 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 listing of the risks that investors should consider in connection with such statements.

Now let me turn the call over to Joe.

Thanks, Beth.

Good morning.

There's never been a year end where I've been so pleased to see the prior year over with and the new year begin.

That is to have the losses behind us so we can move into the opportunities that those losses have created going forward.

Despite dealing with historic highs for industry catastrophe losses, our balance sheet remained strong, with capital in excess of $6 billion.

This strength will serve us well as we move into 2012.

I'm optimistic about our prospects for 2012.

Let me tell you why.

First, our reinsurance portfolio will be much improved from the changes in our property catastrophe reinsurance portfolio.

Property catastrophe rates, terms and conditions have improved throughout 2011, continued to improve at January 1, 2012, and I believe will continue to improve into April Japanese business.

Property reinsurance has become an increasingly important part of our operation as we've moved towards the best opportunities in the marketplace.

At January 1, we saw rate increases on the order of 15% for retro business, 5% to 10% for catastrophe clients around the world if they didn't have losses, and much greater increases if they did.

Terms improved, as well.

As a consequence, we have meaningfully increased our expected margin on this business and yet not increased our PMLs in any peak zones.

Second, we have a significant transformation going on in our insurance operation that I believe will lead to much improved results in 2012.

Roughly 20% of our 2012 insurance book will be written by Heartland, our crop insurance company.

This book has made a profit the vast majority of years it has been in business and weather permitting should do so again in 2012.

About 30% of our 2012 business will be Workers Compensation, primarily in California.

Our year-end reserve review led to increased reserves, which revised our view of 2011 profitability.

We have achieved roughly 15% rate increases throughout 2011 and continued to get increases of that magnitude in January.

I expect we will continue to achieve increases throughout the rest of 2012, as other companies top up reserves.

We project 2012 to generate an underwriting profit on the back of these increases.

About 15% of our business is written by our professional liability unit.

This unit has produced an underwriting profit for the past three years and I expect another good year in 2012.

The remainder of our insurance book includes our medical stop loss business, which has been running to an underwriting profit and our general liability and property business, where we are achieving our targeted rate increases.

Put it all together and the expectation is for a good year ahead.

Whereas I would not characterize the current market as a hard market, the positive changes in the property catastrophe reinsurance market, coupled with the improvements we anticipate in our insurance segment, should make for a meaningful positive change for Everest.

If you project catastrophes at a more normalized level, it should produce very solid earnings, much of which could be used for stock buyback.

Dom?

Thank you, Joe.

Good morning.

I will begin my comments this morning by outlining the major events that have impacted our earnings for the quarter and year-to-date.

At this point we are all familiar with the events that have affected our industry, which in total were in excess of $100 billion.

For the year, our cat losses pretax were $1.3 billion, which is less than 1.5% of the projected industry losses.

Given the size of these industry events, our share of losses were within modeled outcomes and as reflected in our various risk management scenarios, our capital position remained intact as these events, despite their significance, were largely absorbed through earnings.

The details on the events for the year, which highlights how unusual the year was, are as follows.

Japan Earthquake, $532 million; New Zealand earthquake, $306 million; Thailand floods, $225 million; US tornadoes, $61 million; Brisbane floods, $56 million; hurricane Irene, $38 million; Cyclone Yasi, $20 million; Canadian fires, $13 million; and a cat IBNR of $50 million.

In the fourth quarter the pretax losses were $380 million.

The largest event was Thailand at $225 million.

The other impacts were from events earlier in the year, most notably Japan at $52 million and New Zealand at $37 million.

Due to the complexity of these losses, the industry has seen continued development.

In recognition of this, our reserves include IBNR of $50 million for potential development relating to all 2011 cat events.

Overall, the impact of cat losses in the quarter after tax and reinstatement premium was $246 million and on a year-to-date basis was approximately $960 million.

As mentioned, on a pretax basis, these losses were $380 million for the quarter and $1.3 billion year-to-date, which brings to light the fact that the underlying attritional results are improving year-over-year as a result of portfolio changes and rate increases.

Excluding cat and related reinstatement premium the underwriting gain was $480 million for the year compared to $435 million in 2010.

This is reflected in the current year-to-date attritional loss ratio, which stood at 60% for 2011 compared with 61.2% in the prior year.

This improvement is solely due to the reinsurance segments, which improved just over 2 points [through] an attritional combined ratio, ex cats and reinstates, of 83.5% as a result of the rate increases and the portfolio shift from pro rata to excess of loss contracts.

This is expected to carry over into 2012 as certain pro rata contracts continue to run off.

The attritional results for insurance showed little change year-over-year.

This was a result of the crop book having an underwriting loss due to drought conditions and acquisition-related costs, as well as higher accident year loss selections on other lines based on the year-end reserve studies.

These studies indicated a need for reserve strengthening, mainly in Workers' Compensation and excess casualty, resulting in adjustments to prior years, as well as the current year.

However, rate increases in California workers comp of 15% in 2011, which was over and above the 9% achieved in 2010, in addition to more normalized crop results and the discontinuation of a select number of underperforming programs should result in meaningful improvements in the 2012 loss ratios.

It is expected that these changes alone could lead to a seven-to-eight point improvement in accident year results.

Offsetting the reserve developments in the insurance segment was continued favorable emergence in the reinsurance segments overall.

To complete the discussion on underwriting operations both net premiums written and net premiums earned were up approximately 4% for the year.

This increase is primarily being driven by the new business in our insurance segment, namely crop insurance and primary accident and health.

Offsetting this was a decline in reinsurance premium, primarily driven by the shift from pro rata to excess.

In the fourth quarter the reinsurance net premium written shows an 11% increase with no corresponding increase in earned premiums due to an account written at the end of the quarter, as well as a cancellation of a large program in 2010.

Finally, regarding overall operations, I will note that the expense ratio year-over-year is down slightly.

This is mainly driven by a 2-point reduction in commission expense in the insurance segment due to a change in the mix of business.

Turning to the other key elements of operating results, investment income was down on both the yearly and quarterly comparisons.

The primary driver of this is the difference in income from limited partnerships.

Nevertheless, after adjusting for these impacts, net investment income is still down slightly as a result of declining reinvestment rates.

However, cash flow remains positive at $660 million for the year, which has helped to offset declining interest rates.

Realized gains were positive, in particular for the fourth quarter, and when combined with the underwriting results, investment income, and tax benefits it resulted in net income for the quarter of $41 million and a loss for the year of $80 million.

Other comprehensive income was a loss for the quarter of $36 million but a gain for the year of $35 million.

Essentially there were unrealized gains for the year and quarter offset by translation losses and a pension liability adjustment, which hit mainly in the fourth quarter.

The net effect was a slight comprehensive loss for the year and a slight gain for the quarter, which means that the decline in shareholders equity for the quarter and year primarily a result of dividends and share buybacks.

This leaves our capital position in excess of $6 billion and therefore well positioned for market opportunities and potential future share repurchases.

Thank you, and now I'll turn it back to Beth for Q&A.

Yes, Tim, we are open for questions and answers.

(Operator Instructions).

We'll take our first question from Matthew Heimermann with JPMorgan.

Hi, good morning.

I just wanted to follow up on the underlying loss ratio.

I think you sufficiently addressed the insurance side in terms of suggesting [a 700-to-800] basis points of improvement there potentially in 2012 versus 2011.

But just curious, is that -- when you make that comment, is that where you think the book will be on a written basis or an earned basis in 2012?

That would be on an earned basis.

Okay.

And then you also -- it also looked like there was some noise in the US reinsurance segment and I don't think you addressed that in the opening comment.

Could you touch on that, as well?

Noise in what respect, Matt?

Relative to our expectations, the underlying loss ratio is a little higher so, given we also saw adverse there, I was wondering if it was maybe -- it may be impacted by either a change to the current year -- current accident year loss ratio in the fourth quarter, or if there were attritional losses that didn't qualify as cats in the quarter or anything like that?

Okay.

I guess the first thing I'll point out is the attritional loss ratio for the US reinsurance, all -- I'm sorry, for all reinsurance segments year-over-year was positive.

If you're referencing the fourth quarter, the fourth quarter had a little bit of a tick up because we did have some late reported -- from a number of contracts, (inaudible) reported in the fourth quarter with an increase in current year losses.

This came through our loss reserve metrics that we -- outside of our reserve studies and we booked those events in the fourth quarter, so it really is a current year event.

There was some movement depending on the buckets prior-year reserves but overall was positive development in the reinsurance segments on our for loss reserves.

Okay.

As far as the current year is concerned, year-over-year, which is a much better metric to look at, is improving and we would expect that trend to continue.

That's fair.

Do you have the -- can you quantify the 4Q noise related to the late report, even just ballpark it?

It was in the range of $30 million, I believe.

Okay, that's helpful.

Was there anything that affected your ability to buy back stock in the fourth quarter, because when I listen to you talk about capital, it sounds like you've got more than enough capital to support the growth opportunities, especially given that you're talking about seeing growth in premium without seeing growth in PML, so just curious on that?

Sure, Matt.

First of all, you're right.

We have plenty of capital to buy back and we certainly plan to buy back going forward.

We'll be in this coming quarter buying back.

Yes, what affected things in the fourth quarter was -- for the most part was the Thai floods.

Once they happened and we had to get our arms around them and we clearly had information that others on the outside didn't have as we were trying to put together the sums.

If there's anything big and important that's going on that we have more information than the outside world, we just don't buy back and that really is what affected us as we went through the fourth quarter.

Okay, that's helpful.

Matt, early in the quarter recognized that we're basically out of the market until we come out with third-quarter earnings and then soon thereafter, of course, is when Thailand happened.

Yes.

And we did buy back shares in the fourth quarter; a modest amount, but we did.

Okay.

And they just --

We bought those back before the Thai floods happened, yes.

You had a couple days, I guess.

The last question just -- sorry for the numbers questions, but I just wanted to make sure that I'm thinking about the taxes correctly, specifically the net investment income.

I was just hoping you could give us a sense of what the tax rate was on the recurring investment income, because the tax rate ended up being a lot lower and I wasn't sure if there was a shield on the alternatives, or what was happening there in terms of mix of tax rates?

The tax rate has not bounced around all that much.

We disclosed the effective tax rate in our supplemental information.

For the year it was 13.7%; that contrasts with 12.7% a year ago.

The only volatility -- there's two things that drive that.

One would be our mix of tax exempts to taxables, which we did have some shift last year in that.

And secondly, the income from limited partnerships can be a driver in that.

Some of that income is offshore, so it depends on where the income from limited partnerships is coming from.

Okay.

But I'm not sure that the volatility around that number is all that great in terms of being able to use it as a basis for [predicting].

All right, much appreciated.

Thank you.

Okay, thank you, Matt.

We'll take our next question from Vinay Misquith with Evercore Partners.

Hi, good morning.

Could you add some color to your exposure to the Thai flood losses and whether you have some uncapped quarter shares there and what is the possibility of reserve development should the industry loss rise in that area?

Well, I'll start, Dom, and we'll see if you want to add anything.

I think a few points to make with regard to the Thai losses.

First, I think it's important to note that the insurance policies in Thailand sub limits both flood coverage and business interruption, which meaningfully contains the loss.

Second point that I would like to make is that we have posted reserves at the high end of any industry estimates that we have seen.

And of course, I would add third, that we've also established a $50 million reserve for additional IBNR for the 2011 cats.

So I think when you take those things into consideration, we're in good shape.

Dom?

No, I think that states it.

We do have quarter shares in Thailand, but as Joe says, those coverages that are affected here are sub limited, as well as there's not 100% take-up rates on that book of business, as well.

Vinay, does that answer your questions?

Yes, that's helpful.

Thank you.

The second part is on the fixed majority securities.

We saw the investment had declined about $7 million sequentially, so were there some one-time items in that, or do you expect that to continue in the future?

Well, there's clearly a headwind as it relates to investment income given reinvestment rates, which we're all familiar with.

I guess I would -- to maybe help us think through this, we've estimated that our maturities and calls -- and that's why I say it's an estimate because we have to also consider potential calls and paydowns on mortgage backs -- will be about $1 billion for 2012.

So the average -- if you take the average of that, of course, throughout the year, that's $500 million and the differential in reinvestment rates, call it 250 basis points to 300 basis points, but if you just use the high end of that number, 300 basis points, that's essentially $15 million headwind on the investment income side.

Offsetting that, of course, will be positive cash flow that we anticipate, as well, that will not make up that full $15 million, of course, if that in fact turns outs to be what reinvestment rates are for 2012.

So that'll give you a window on the fixed income side.

On the -- I know that you didn't ask this but to complete the picture on investment income, on the limited partnership side we have about $500 million of limited partnership investments.

Our long-term return to date has been around 8% -- 7% to 8%, so you can think about that number in that context, so that would give you a $40 million estimate on limited partnerships.

Having said that, in more recent years those results have been ticking up slightly better, so I think that's a relatively conservative number.

There will be volatility around that, of course, given the fact that we do have the marks based on what's happening in the overall equity markets, but directionally I think that might give you some guidance on the investment income.

Is that helpful, Vinay?

Yes, it's very helpful.

Thank you.

One last thing, if I may.

The earned premiums in the US Insurance segment were lower this quarter.

Were there some timing issues regarding the ag premiums this quarter?

I don't believe so.

I think we had some adjustments in the third quarter on the ag book, but I can't -- I don't have the specifics of that with me right now.

But I think --

Thank you.

Just look at the annual premium and I think that'll give you a fix on what the quarterly impact should be.

Sure, fair enough.

Thank you.

And we'll take our next question from Amit Kumar with Macquarie.

Thanks and good morning.

Going back to the last question, if I understand this correctly, if the flooding loss continues to go up for the industry, what you're saying is that your number will not increase proportionately because of the sub limits, and I guess Dom indicated IBNR should take care of any additional development.

Did I understand that correctly?

I think that's a fair way to characterize it.

Our numbers that we've put up, excluding the IBNR that was referenced, would translate into approximately a $17 billion industry event.

And then, of course, we have an IBNR number that is available for that event, as well as any other events that occurred during 2011.

So given the fact that we reserved at a very high industry loss level, therefore our expectation is that we will not have any development on that number.

I think that's probably the more accurate way to say it.

Got it, that's helpful.

The other question I have is, in the opening remarks you mentioned that your PMLs were flat.

I wanted to reconfirm that number.

The [1 and 250], is that close to 11% or 12%, or has that number changed?

No, that's still a good estimate on our PMLs and we are still finalizing our 1/1 bookings so we don't have a precise number on that, but generally the trend has been down relative to a year ago.

Got it.

And -- sorry, go ahead.

In other words, our expectation for 1/1 comparison to 1/1.

It's not a statement about what that might look like at 4/1 or 6/1, et cetera.

Okay, just one last question.

On the California comp markets, I think you mentioned that you expect an underwriting profit.

I know you talked about the rate increases.

I wanted to get some color on the other side, the loss cost trends and your expectations going forward on the margins?

Thanks.

Well, when we do our reserves -- our reserve position at the end of the year, contemplate general industry loss cost trends, as well as exposure trends, which for California work comp are in excess of 6% on frequency severity trends and in excess of 4% for exposure trend.

And those would be what we would use in our anticipated results and pricing needs for 2012.

And we've been getting 15% rate increases, including through January of 2012.

So we're outstripping that and then another 5%-ish on top of that, which should move the loss ratio and the combined ratio down for 2012, and I think to put it into a modest underwriting position.

That's our current projection.

I'm sorry, what about that 5% you mentioned?

Well, I guess Dom was saying you can put in medical inflation and you can come up with 10%-ish, but if you have rate increases of 15% you've taken care of the 10% and have 5% to the good.

Yes, you have a 5% exposure trend is what you're -- what could be coming in, as well.

Got it.

And that 15%, that is the -- I guess that is the actual net rate, which is being asked from the consumers, right?

That's correct and that's what we achieved throughout 2011 and so far, what we've achieved in the early part of 2012.

Well, that's pretty good.

Okay, that's all I have for now.

Thanks.

And we'll take our next question from Michael Nannizzi from Goldman Sachs.

Thanks.

I just had one general question as you think about capital and some of your comments up front.

If you had to pick one, what's more important to you, ROE or book value?

I don't know that I would -- I don't know that there's an answer to that question.

I think they're both very important to us and they both really tie together.

We do look at the ultimate test as -- for us is growth in book value per share.

Plus dividends.

Plus dividends, yes.

Right.

I guess just thinking, if my math is right every -- at this price every 1% reduction in share count is worth about $0.25 a share in book.

As you look out at the business that you like, which sounds like it's more property cat, how do you balance the tradeoff of potentially absorbing more capital there versus the buyback?

And I'm sure this is something you think about all the time, but just to understand where you think about the edge given that choice.

I would appreciate it if that's possible.

And just one follow up, thanks.

Sure.

I think I'd first say that given the losses and dislocations in the cat market, there are some very good opportunities this year that we certainly want to avail ourselves to.

And we're doing it in such a way where our mantra, if you will, is more premium, tighter terms, less PML.

So in that sense, it's going to consume a lot less capital and hopefully generate some very good profit and so it's a terrific opportunity.

At the same time, it's also a very good opportunity, in our opinion, to buy back stock and that's why we intend to pursue both.

And it's a little bit of a balancing act, but both provide some very good opportunity and we'll proceed along both fronts.

All right.

And have -- I'm sorry, Dom.

Let me add to that.

Our growth in book value per share up through 2011 has been approximately 13%, book value per share plus dividend growth.

Of course, prior to 2011, it was close to 14%.

And any new transactions that we're obviously contemplating or changes to the portfolio are with an eye towards putting those transactions on at levels that would increase, or come in above, those types of returns.

And I know that's not precisely getting to your question, but I think it does give you some view as to how we're looking at it.

In addition, keep in mind, again relative to share buybacks, there are other factors.

Those other factors are rating agencies and maintaining a strong rating in the marketplace and having some amount of capital available for market opportunities.

So it isn't just the pure excel spreadsheet numbers.

That's right.

This year, 2011, demonstrates that.

I think it served us very well to have a very strong capital position in 2011.

I'd like to add to Dom's comment that that record of 13% compounded, including 2011, is what we've achieved over the last 16 years and our plan is to beat that record going forward.

We think we have the opportunities and the resources to do that.

Great.

And then just one follow up if I could.

On the book kind of tilting more towards property cap than it has in the past, can you talk about what sort of business you're focused on?

Is it still your low-layer preference, is it more US versus outside the US?

And generally, are you seeing -- do you feel like you're seeing better rate in the book you're [binding] versus the market overall?

Thanks.

Clearly, the market's seeing increases but I think we're in a position where we clearly want to achieve those rate increases, terms, improvements, otherwise we just will move elsewhere.

There's a lot of good opportunities at this point.

I think they'll continue to develop, as I said, as we go forth, including Japan and even into the Florida business in June and the other business in July.

So there are opportunities, both internationally and in the US, and when you say the US, different parts of the US.

January 1 wasn't so much Florida business, that's the middle of the year, but I think with RMS-11 and what's going on in the world, I think that will continue to climb when we get into that.

We're just in a position where we're picking and choosing the best opportunities that come to us and at the same time, being very conscious of the PML.

As I said, I think we'll have a much bigger margin on that business.

I'd expect that we probably will write $100 million to $150 million of additional premium, in cat premium, in 2012 versus 2011 and with that, our overall worldwide exposures will actually be down and the PMLs in peak zones will be down.

And also, we do not look at the marketplace and say we're tilting towards the US or any other particular market.

It's where the opportunities presents itself.

So for example, Europe, wind we feel is relatively underpriced so in that particular area going into 2012, that's an area that we're managing down.

We wrote more business this year in the Midwest given where pricing is going.

But it's really looking at what the market -- what opportunities the marketplace is giving you as opposed to tilting towards any particular geography.

Great, thank you very much.

And we'll take our next question from Ian Gutterman with Adage Capital Management.

Hi, guys, just a couple clarifications.

On the US reinsurance, did I hear what the prior period adverse event what was for?

I know you talked about the accident year but I'm not quite sure you touched on where the adverse was from?

That was primarily excess casualty (inaudible).

And what years on that?

Recent years or older years?

It's a variety of years.

Okay, got it.

(multiple speakers), Ian.

No, that's okay.

And you obviously commented on expected improvement in the cat reinsurance and insurance accident years.

What about the other books of reinsurance business?

The Bermuda book, International book, are those expected to improve, as well?

Let me slice that a little differently for you, Ian.

You're right, when we talk about the insurance book and cat book we're probably, roughly talking about half of our worldwide premium and I didn't comment a whole lot on the other half.

Now the other half is probably -- 25% of the worldwide business is in our non-cat property business, US and international.

And I'd say 20% of our worldwide business is casualty reinsurance and then another 5% might be surety and A&H and other lines of business.

Now the reason I didn't comment on that is nothing dramatic is happening in that half like it is happening in the cat world, or is happening in the insurance transformation that we have going on.

We do expect to achieve an underwriting profit, a modest one, in all of that 50%, both of those pieces.

But again, in the non-cat property world, we've made some improvements in selection and our clients have been able to get some modest rate increases.

But there's nothing to report to you that is particularly different.

On the casualty side, I would say the same.

We've shrunk that down as we've gone to core clients with casualty rates, particularly in the US, going down for the last number of years.

We're seeing some flattening and some uptick in pockets there.

I know many are getting more optimistic about that space.

I'm probably in a less optimistic category there, so I would say that other half of our book, we expect it to do reasonably well, but it's not changing dramatically from 2012 versus 2011.

Okay, got it.

Dom, just to clarify to make sure we're using the right number on the insurance.

The 7 or 8 points of improvement you were talking about, that was for the full year, so that gets it to about a breakeven for 2012?

Yes, and I guess to some degree being a little bit conservative and I was just really referencing those changes, right?

There will be other things that will be impacting positively the insurance book that Joe referenced that could, in fact, lead to a better result than that.

Okay, great, and then just last one.

Joe, you talked about 1/1 renewal for cat, can you talk about outside of cat?

Did you grow your book, keep it the same, shrink it and maybe what lines jumped up or down?

Well, I think I was just giving you that, Ian.

In the non-cat property and in the casualty it really wasn't a dramatic change for us, it was pretty much the same.

So the areas that are really changing for us are the cat side in terms of additional margin and I think the insurance side, where we are -- with the comp getting increases, although that's not going to be anything like what we achieved in terms of combines in 2003, 2004, and 2005, but we do think it'll be in the black.

We are hopeful for bigger margins in the crop business and in our A&H business and some of the other parts of the insurance business.

Put it all together and again, I just think it'll make for better margins, less volatility.

I don't think it'll make for a dramatic top line worldwide increases in premiums, although I do expect them to be up.

Sounds good, thank you very much.

Thank you very much.

(Operator Instructions) We'll take our next question from Sarah DeWitt with Barclays Capital.

Hi, good morning.

Could you give us some more color on what drove the reserve strengthening in US insurance and how should we think about that going forward?

Certainly, at the end of the third quarter, based on some interim testing that we were doing and we saw weakness in our California work comp, or work comp in general, and our excess casualty portfolio and we did put up additional reserves in the third quarter.

That, of course, was subject to reserve review in the fourth quarter, which clearly, the third quarter trends were certainly indicative of what we needed to do in the fourth quarter.

At this point we certainly anticipate that that reserve is appropriately booked.

In fact, we booked above our midpoint estimate in both of those areas.

Also keep in mind that, whether it's California comp or excess casualty, those are just a couple of reserve buckets relative to our overall $10 billion of reserves and 200-plus reserve categories that we monitor.

And from time to time, we're going to get pluses and minuses in any one of those 200-plus reserve buckets.

And, of course, this has been something that has been -- that we've seen for the last two years here, but we do think, obviously, that we've captured that.

And again, I'll point to the fact that if you look back at our core reserves overall, they've developed positively for us over the last few years in total, and that's what's most important to us, is the overall reserve adequacy of the enterprise.

Okay, thanks.

And on the premium growth, it's been a bit lumpy and it was very strong this quarter.

How should we be thinking about the pace of that going forward?

Well, again, as I mentioned, I think we will grow top line, 2012 versus 2011.

I do not think it will be dramatic, I would not put out a number, if you will.

In the cat space, as I said, we'll do more premium.

But in cat property there are some switches where we're going from pro rata to excess of loss and the same may be true in some other parts of our book.

When you put it all together I think it'll be modest top-line growth, but more margin and hopefully a better loss ratio combined.

Some of that that you see there is currency fluctuations.

If you take out some of the currency impacts, it's not quite as lumpy as one might assume from just looking at the numbers.

Great, thanks for the answers.

And at this time there are no other questions in queue.

I'll turn it back to our presenters for any closing remarks.

Thank you for the participating on the call.

I would also like, before we end the call, to point to our new website and invite you to take a look at it.

If you have any further questions, please don't hesitate to call me.

Thank you, again.

That concludes today's conference call.

We appreciate your participation.