Essent Group Ltd (ESNT) 2021 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the Essent Group Ltd. Third Quarter 2021 Earnings Call. (Operator Instructions)

I would now like to turn the call over to Chris Curran, Senior Vice President of Investor Relations. Please go ahead, sir.

Thank you, Paula. Good morning, everyone, and welcome to our call. Joining me today are Mark Casale, Chairman and CEO; and Larry McAlee, Chief Financial Officer.

Our press release, which contains Essent's financial results for the third quarter 2021 was issued earlier today and is available on our website at essentgroup.com. Prior to getting started, I would like to remind participants that today's discussions are being recorded and will include the use of forward-looking statements. These statements are based on current expectations, estimates, projections and assumptions that are subject to risks and uncertainties, which may cause actual results to differ materially.

For a discussion of these risks and uncertainties, please review the cautionary language regarding forward-looking statements in today's press release, the risk factors included in our Form 10-K filed with the SEC on February 26, 2021, and any other reports and registration statements filed with the SEC, which are also available on our website.

Now let me turn the call over to Mark.

Thanks, Chris, and Good morning, everyone. Earlier today, we released our third quarter earnings, which continue to demonstrate the strengths of our buy, manage and distribute operating model in generating high-quality earnings, robust returns and excess capital. Combined with investing capital back into the business and redistribution to shareholders through dividends and buybacks, our business is operating on all fronts.

For the third quarter we reported net income of $205 million as compared to $160 million last quarter. Income for the third quarter includes $41 million of earnings associated with some of our strategic investments and limited partnerships. On a diluted per share basis we are $1.84 for the third quarter compared to $1.42 last quarter while our annualized return on average equity for the third quarter was 20%.

At September 30, our insurance in force was $208 billion, a 9% increase compared to $191 billion as of the third quarter a year ago. The credit quality of our insurance in force remain strong, with an average weighted FICO of 745 and an average LTV of 92%. Also, we have reinsurance covers on 75% of the portfolio as of September 30.

On the business front, we formally rolled out the next generation of EssentEDGE in October. The latest iteration of our risk-based engine offers more refined pricing as we continue to optimize our unit economics. With EDGE technology sitting in the cloud, we're able to analyze large amounts of data with machine learning and seamlessly deliver price to customers. Given the commoditized nature of mortgage insurance, we believe that collecting and evaluating more data of the price mortgage risk is a long-term competitive advantage.

As of September 30, we are in a position of strength with $4.2 billion in GAAP equity, access to $2.4 billion in excess of loss reinsurance and over $800 million of available liquidity. With the year-to-date operating margin of 78% and operating cash flow of $580 million, our operating engine continues to drive our balance sheet strength. As evidence of this, Essent Guaranty remains the highest-rated monoline in our industry at A by Invest, and AAA and BBB+ by Moody's and S&P respectively.

While our preference has been to retain excess capital and reinvest back in the business, the strength of our model enables a measured approach to access capital as evidenced by our dividend and share repurchase program. However, it's important to remind everyone that a current event can quickly change the needs of our business or why capital distribution can quickly pivot a capital shortage. While reinsurance had helped soften headwinds from credit cycles, we remain committed to managing capital for the long term and maintaining a fortress balance sheet.

At September 30, our book value per share was $37.58. We believe that success in our type of business is measured by growth in book value per share. Since going public in 2013, our annualized growth in book value per share is 21%, which we believe is a meaningful demonstration of our ability to invest capital and build long-term shareholder value.

Finally, given our financial performance during the third quarter, I am pleased to announce that our Board has approved $0.01 per share increase in our dividend in $0.19. This represents a 19% increase from the dividend that we paid in the fourth quarter of 2020.

Now let me turn the call over to Larry.

Thanks, Mark, and Good morning, everyone. I will now discuss the results for the quarter in more detail. For the third quarter we earned $1.84 per diluted share including $0.28 per diluted share associated with net unrealized gains on other invested assets compared to $1.42 last quarter and $1.11 in the third quarter a year ago.

As Mark noted, income on other invested assets in the third quarter was $41 million, including $39.5 million of net unrealized gains. Through June 30, 2021, unrealized gains and losses reported on these investments were recorded in shareholders' equity through other comprehensive income. In the third quarter, management determined that the unrealized gains and losses on these investments should be reflected in earnings rather than other comprehensive income.

Net earned premium for the third quarter of 2021 was $219 million and includes $11.6 million of premiums earned by Essent Re on our third-party business. The average net premium rate for just the U.S. mortgage insurance business in the third quarter was 40 basis points, down from 41 basis points in the second quarter. Persistency increased during the quarter to 62.2% at September 30, 2021, compared to 58.3% at June 30, 2021, and 56.1% at March 31, 2021. Our provision for losses and loss adjustment expenses was a benefit of $7 million in the third quarter of 2021 compared to a provision of $10 million last quarter.

The benefit for losses in the third quarter was impacted by the continued cure activity on existing defaults. The decrease in the provision was due primarily to the makeup of the default portfolio as older more seasoned defaults with higher case reserves cured during the current quarter while new defaults reported with lower case reserves were added. During the third quarter, we received 5,132 new default notices, which is up 4% compared to 4,934 defaults reported in the second quarter. We had 8,862 defaults cured during the third quarter compared to 10,453 cures in the second quarter of 2021.

At September 30, our default rate decreased to 2.47% from 2.96% at June 30. Since the fourth quarter of 2020, we have reserved for new defaults using our pre-COVID-19 reserve methodology. As a reminder, for new defaults reported in the second and third quarters of 2020, we provided reserves using a 7% claim rate assumption. This assumption was based on expectation that programs such as the federal stimulus for closure moratoriums and mortgage forbearance may extend traditional default-to-claim time lines and result in claim rates lower than our historical experience.

We have not adjusted these reserves previously recorded in the second and third quarters of 2020, which totaled $243 million as they continue to represent our best estimate of the ultimate losses associated with these defaults. Other underwriting and operating expenses in the third quarter were $42 million compared to $41 million in the second quarter. We now estimate that other underwriting and operating expenses for the full year 2021 will be in the range of $170 million. Our updated estimate of the annualized effective tax rate for the full year 2021 is 16% before consideration of discrete items. The tax rate for the third quarter was 16.8%.

During the quarter, Essent Group Limited paid a cash dividend totaling $19.9 million to shareholders in September and repurchased $70.9 million of stock during the quarter. As of September 30, we have bought back approximately 2 million shares for a total of $89 million. During the third quarter, Essent Guaranty completed a dividend of $47 million to its U.S. holding company.

From a PMIERs perspective, after applying the 0.3 factor for COVID-19 defaults, Essent Guaranty's PMIER sufficiency ratio was strong at 162%, with $1.2 billion in excess available assets. Excluding the 0.3 factor, our PMIER efficiency ratio remained strong at 152% with $1.1 billion in excess available assets.

Now let me turn the call back over to Mark.

Thanks, Larry. In closing, our third quarter performance was solid as we produced strong earnings and continue to generate excess capital. Our buy, manage and distribute operating model is driving robust returns and confidence in our economic engine is high. We remain positive in continuing to leverage EssentEDGE in optimizing our unit economics in a competitive market as we continue to utilize technology to leverage more predictive pricing variables. We believe that combining AI with large quantities of data is where the financial services industry is moving. And we believe Essent is at the forefront of this.

The strength in our MI results affords us flexibility in allocating excess capital across the core business, potential strategic investments, and redistribution to shareholders. While considering and executing on each of these levers, we are taking a measured approach around capital allocation. We believe long-term investors will be rewarded with this patience.

Now let's get to your questions. Operator?

(Operator Instructions) Your first question comes from Rick Shane of JPMorgan.

Mark, one of the big changes that's occurred with the amount of refinance activity and the amount of NIW over the last 18 months is a significant shift in vintage of the portfolio. If you could just talk about any difference in characteristic of the new vintage, or how we should think about seasoning of that over the next couple of years, that would be really helpful.

Sure, Rick. The fundamental kind of characteristics of the new business versus the old hasn't really changed that much. We've been -- think about an average FICO of 745, kind of an LTV of 92-ish percent, that's been consistent. What we saw a little bit in 2020 was more refinancing versus purchase this year.

But I would say the portfolio continues to be strong, so I wouldn't look at any big differences. It's relatively young again versus where it was given the amount of refinancings. But we've also had a lot of the embedded HPA already in that young portfolio, our mark-to-market LTV on the portfolio, it's right around 80%. So it's a pretty strong portfolio, Rick. So again, I wouldn't -- and I wouldn't look to see too many differences. And again, I think we're pretty pleased with the portfolio as it stands today.

Got it. And on the second part of the question, just how should we think about the seasoning? Because historically, the portfolio has been sort of more homogenized in terms of vintage. And now you have more concentrated vintages. So we probably need to think about seasoning just a little bit more. How do we -- how should we consider that?

Yes, good question. Again, I think if rates go up, which we think they will, right, as given some of the headwinds we're seeing around inflation, I think the persistency could really go back to normal. So you're right, it could be thinking of these vintages. It's not -- it's -- you're kind of stuck then almost in these kind of '20 and '21 vintages.

I would look at this as actually a good thing, right? So we're locking in kind of the yields that we have on the premiums. And we already have the embedded HPA. I would say the wind is at our back in terms of the portfolio. So as it seasons and as we enter into a potential headwind, right, I mean the industry or the economy is not going to grow forever. It's a pretty good portfolio to go into that type of environment and remember, most of it's reinsured. 75% at the end of September, but probably we'll quickly approach 90% as we complete the latest ILN, which we're in the market with now.

So again, I think we're -- I think we're pretty well-positioned for the portfolio, probably better maybe that most investors think in terms of, again, locking into that -- those 2 years of -- 2 year vintages, I think will end up performing pretty well.

Your next question comes from Mark DeVries of Barclays.

Mark, I think you get credit for being a little bit more candid about the competitive environment than some of your competitors. We've heard this earnings season that the competition has been pretty stable around pricing. I just wanted to get a sanity check to see if that kind of aligns with what you're observing.

Yes. I would say from a competitive standpoint, just in general, taking a step back, the business is changing, Mark. It's changing from a rate card only relationship business to fee only. And I think a lot of the companies are struggling with that. I really do. Because you have -- a lot of them are still using rate cards and promoting rate cards. We were at -- we've heard feedback from lenders directly to me that some of our competitors are trying to sell them off the engine versus trying to use the card versus the engine.

One, that tells me they're behind on the technology clearly. So in terms of using a static card versus an engine, I think they're using the cards as a crutch. I think a lot of the industry, as we said, is commission-based. So people do what their incented to do. And I think -- again, I think the industry is changing. I think we took that challenge head-on. It's going from relationship to fee. We invested in a technology to make sure we could price more accurately and that's using more information.

Again, if it's all about fee, you better have more information than the next guy. And we started that process 3 years ago now, and the result is in EssentEDGE, kind of the next generation of it. So I do think -- I think they're struggling with that. In terms of -- just in terms of kind of premiums from an Essent perspective, and I know we've been asked about -- I know there's been a lot of questions around premium. They're compressing, but really the majority of that compression is coming from the decline in SEI, right, the -- and also a little bit as the reinsurance ramps up.

We see our premium levels, the gross premium level stabilizing in 2022. Where it goes after that is really a function of kind of a premium on new NIW. And Mark, our premium on new NIW has been relatively flattish to the past 8 quarters. I'm not sure everyone can say that. Again, what we see in the industry is a few guys kind of chasing the market down. They go after the bid cards, and there's 2 large lenders that bid out their product every 4 months, 6 months, and folks gravitate towards that. We have not.

And something we've been involved in those type of lenders in the past, we just refused to kind of lower our price every 4 months like clockwork. We don't think it's prudent in the long term. And again, that's why where the engine is going to be more of a long-term advantage, we can pick our spots. And again, it's all about unit economics, right? It's about optimizing the premium level with pricing which I think we're doing. And we're also in terms of investment income always looking to increase the yield there.

And then, Mark, sometimes it gets back down to old-fashioned managed expenses. So again, we took our guidance down on expenses. That's something we can control every day. We don't see that across the industry. So yes, I mean, again, I think competitively, those are the factors really driving it. But I think from an Essent perspective, again, we always feel like we're going to be kind of in the middle of the pack in terms of share and we're going to use that -- the engine and our analytics to try to optimize the premium for whatever share we do get.

Okay. That's really helpful. And then I think you mentioned reinsurance, you're up to like 75% of the portfolio is now reinsured. Where do you see that going?

Yes. I mean, generally, it's around 90%, and that's kind of a good guide for us to get where we were. We're out in the market now with another ILN. We like 90%. So again, getting back to kind of the premium levels markets, think of that like 4, 5 basis points that we are seeding to reinsurance. It's a meaningful number. I mean, you're looking at close to $100 million, if not more than $100 million, which is, again, significant.

But we think, again, from a hedging perspective, and able to hedge out that mezzanine exposure, it is money well spent. And when the COVID winds were blowing last year, I think investors and maybe not initially, but longer term, and certainly, that's -- we're very glad that we had that reinsurance. And again, that's all part of the buy, manage and distribute operating model. I think it's critical because again, when you think about housing, right, housing is very good right now, Mark. I mean you have tailwinds in terms of excess demand versus supply. HPA has grown a lot and we'll expect it to modify. GDP growth is good, but there's always clouds on the horizon, right? We talk about inflation, given housing surplus or shortage could turn into a surplus someday, we will enter into another recession, right, at some point. COVID was a scare in my view. And it turned out not to be a real credit event even though we booked a number of reserves around that.

And it's almost like the hurricane, it didn't quite happen. And people, hopefully, from an Essent perspective, you have to keep your guard up. Hence, my comment in the script around maintaining a fortress balance sheet. What does that mean? That means making sure you have, not just excess capital, but low leverage that we're prepared for every event. So we kind of have a dual approach to this with capital, right? Are we using capital to look for opportunities outside of the core business, which we're doing? We're clearly investing in a lot of those -- the venture funds, which turned out -- we had a nice gain on in this quarter and in this year, which I think is good evidence that we're pretty good at allocating capital, but that wasn't even the primary purpose of it.

The primary purpose of it was to use things to improve our core business. And now I think we're going to expand that scope to look outside the core business. Meanwhile, you still want to make sure you have the core balance sheet in case things don't go bad. So you don't want to grow and just try to run into a brick wall. So it's a balance that you have to have when you're managing a risk organization like we are.

Your next question comes from Mihir Bhatia of Bank of America.

Maybe we'll start with the -- just the ending of that last answer in terms of investing outside non-MI businesses. Valuations, have they got more interesting there anymore -- are we closer to seeing that investment actually happen?

Yes, I mean I think the valuations have not gotten more interesting as evidenced by the gain in some of our limited partnership interest. I mean those were comprised of some of our real estate funds, which have done well because of HPA. But also a number of the underlying companies have gone public or have [spacked], I would say, pretty healthy valuations . So we've been the beneficiary of that. But it's going to -- I think it hurts you, on the front end, in terms of new businesses. That doesn't stop us from continuing to look into evaluate, Mihir. So we're out, we've really started to build the infrastructure.

So we started with the funds a few years ago. We started to bring on folks who are professional investors, who are -- who have experience in looking at these types of businesses. I mean, we're operators. We're not professional investors like the folks in the audience today. But we do understand the business and we're good operators. So we think is a good -- we think a combination of investors and operators is pretty good.

So we'll continue to look at these venture-type funds and the companies that they invest in. I was out traveling a few weeks ago for 2 days, visiting a lot of these companies. I like to kind of -- I used to always pre-COVID go out and visit our customers and get a chance to know them and I'll continue to do that. Probably not at the pace I did before, again, just because of the changing nature of the business that I spoke to earlier, but I'm out a lot now looking at these young companies. And I like to sit across from them, I like to try to understand their business, see how we can add value to them, what do we bring to the table? Clearly capital.

I think we bring infrastructure around managing a business, I think we bring a lot of experience on how to scale a business from start -- from scratch. We clearly bring regulatory expertise in terms of how to manage a business, and now we're looking for a good fit, right? Is it a company that can grow? Did they have the passion that we had when we started the business? I mean, I like to see a lot of that.

We don't always see it in some of the venture companies. They're more interested sometimes in getting from Series A to Series B at a better valuation and building a great business. We want to work with the folks who want to build a great business. And I kind of know it when I see it. So we have a watch-list. We'll continue to work with these companies and we'll see what happens.

But also, Mihir, I'm not against anything big either. So we're open because we're here allocating capital for shareholders. And whatever we can do to continue to grow Essent or to make Essent a better company for shareholders, we're going to do it. It's not about what I think what I want to do, it's what we think is -- that needs to be done for shareholders. And if we don't find anything, we'll push more money back to the shareholders. It's kind of that simple.

Yes. That is good and helpful. So I did want to ask -- go back to your comments on persistency for a second. I mean I understand given the rate expectations that persistency moves up. But I was curious that given the high level of home price appreciation, could that have an impact on persistency? I mean we're hearing more -- I know historically it hasn't had a big impact. But we're hearing more and more from originators and servicers that there's potential for them to mine their portfolios to generate more refi activity or cash-outs and things like that. So I was curious if that has -- is that something you're seeing or hearing about at all from your customers?

We're not seeing it yet, but again, that certainly could be -- and again, a lot of it's going to be dependent on rate. So I mean, if they're in the money, they probably should be refinancing, whether they can leverage HPA to potentially get out of their mind, good for them, good for the borrower. Whatever is good for the borrower is good for us longer term. But remember, it's correlated. So if their level of refinancing goes up, we certainly will see that in the NIW number. But again, we haven't seen it, I think we're 90-ish percent plus purchase.

But again, I think as we go into 2022, depending where rates are, we think purchase market will -- we think it will continue to be strong. I think it's going to take a pretty big spike in rates for it to kind of dampen the demand of new home ownership. I mean, again, the millennials, which we sound like a broken record, but it's 4 million to 5 million and the new potential homeowners come into that space every year, given how they're aging. So we feel pretty confident on purchase over the next couple of years. And then refinance, I still think is just a function of rates.

Got it. And then my last question, just in terms of OpEx and we heard a lot this quarter about -- from the card companies, in particular, about it getting more expensive to hire technology talent. I assume you're seeing that too. So my question is just, does that in any way slow down your initiatives around ML and AI? And just building out that rate card more? Just -- and also maybe just comment on the availability of talent affecting that.

Yes. It's a good question. I would say, yes, the technology talent is a little different than other talent that we have in the organization in terms of attracting them. There's a lot of opportunities. We haven't -- we're pretty efficient in terms of leveraging talent. We haven't had much -- we haven't had too many issues. We're bringing in -- one of the initiatives we're doing across the company is bringing in younger folks right out of college. So we've done that. We've done it in our underwriting group where we've had a really successful junior underwriting program. We've done it in the BD group. We've done it within our corporate development area.

We're kind of on the hunt for talent, both, I would say, right out of college and also 15 years out of school. We've done a really good job building -- bringing in some really strong talent kind of in that mid-30-ish type range, which we think, again is kind of building that next core for Essent to grow to the next level.

On the IT front, we're bringing folks in out of college through training and obviously across in another level. So to answer your question, no, we haven't had net much, but we're not out hiring a lot. We're very -- in terms of who we hire and we also leverage outside resources so we can also leverage -- we're leveraging AWS, the AWS guys a lot just for our move to the cloud. They're actually bringing in a lot of their engineers to help accelerate our move to the cloud.

We thought, I think initially, our move to the cloud was going to be at the end of what, 2023. And now we believe we'll be fully on the cloud by the middle of next year. And AWS has really been -- really been a good partner in helping us accelerate that. So I want to say we have 20-plus folks of theirs working with us on-site and remote to make that happen faster. So a lot of it is just making sure you can use either people on-site or -- I mean, having them work for you here or using contractors or using third-party consultants to kind of accelerate it. So always we kind of look at it faster, cheaper and who can you use to solve the problem quicker.

Your next question comes from Ryan Gilbert of BTIG.

Wondering if you had any comments on how Essent might participate as the GSEs ramp up their CRT programs again?

Yes. Well, remember, we're participating in -- avidly out of Essent Re. So Freddie was, I think, our sole provider last year. Just Fannie kind of pulled out of the market. So we would expect the Fannie guys to -- as they're ramping that up, we'll participate in that and we participate in this twofold, right, not only of us taking principal risk, but we also do it via our MGA where we get pretty -- it's been a nicety business for us over the last few years. We also get a profit component of it. And so we see some nice potential there with Essent Re, probably on a smaller scale than Essent.

But again, as we think about strategic investments in new businesses and our ability to scale, that's a reason another good example of us starting a business post-IPO from scratch. And it's to the point now where it's -- as we said before, it's very efficient business. I mean we earn on an annualized basis, $50 million in third-party premiums. And it's pretty -- it's a pretty efficient team over there in Bermuda. So again, it's never going to drive growth at Essent. But when you think about, again, improving unit economics, it's always the little things that count. And we've been very pleased there. And again, with Fannie coming into the market, we would expect their potential maybe to grow a little bit more than they have.

Your next question comes from Geoffrey Dunn of Dowling & Partners.

Just a couple more number-related questions. First, Larry, can you break down the liquidity between Bermuda and U.S. HoldCo and define any of the movements from U.S. to Bermuda this quarter?

Geoff, we don't break out -- we decided to put them together because they're very fungible, the cash balance at U.S. holdings and at Essent Group Limited. We did not move any distributions that were up from the U.S. to Bermuda during the quarter. So we'll be disclosing just the combined cash and investment balances at both holding companies going forward.

And part of it, Geoff, is we're moving it out of Guaranty in the U.S. holdings. And it may sit there if we don't need it up a group just because you have the 5% withholding tax. So when you think about movement within U.S. holdings, we did form another unit this year called Essent Ventures, which is where we're holding a lot of the venture funds. We've kind of removed them from Guaranty.

We've also made small direct investments in ventures, very small. But we can use the cash for that and any potential other strategic investments. And we can always move it up to -- we can always move it up the group. Also think of Essent Re, Essent Re is another backdoor way to get cash up to the group level. So again, we just thought it was simpler to say holding company versus if they get into a lot of the ins and the outs.

Okay. And then if you look at your relative reserving, and your early-stage delinquency bucket has been running 11%, 12%. This quarter we're down to 9%. Is that just a timing mix issue with the inter-quarter cures? Or has experience prompted you to carry a lower relative reserve on the earlier delinquencies?

Yes. No, Geoff, it's mix. We made no significant changes in reserve factors, continued to use the same model. And again, just a mix between the timing of that. But yes, no all mix.

And I think to be clear, Geoff, just so everyone understands kind of the context of it. And I know Larry addressed this in the script, but we haven't touched the second or third quarter cohorts yet. They're trending very well. So we had a 93% kind of cure rate assumption for both of those quarters. We're getting close.

I mean we're 86% on the second quarter cohort, 81% on the third quarter cohort. And I think the second quarter cohort was 88% at the end of October. So we're moving close to that number. We believe, by the end of the fourth quarter, first quarter, we'll be able to make a call kind of on reserve release. So we certainly don't believe we're over-reserved at this point. We think we're adequately reserved, but we'll continue -- again, if it trends this way, always things can happen.

I think a lot of the negative provision this quarter was just a function of the model. We moved back to the model back in the fourth quarter of last year. So a COVID default in the fourth quarter got hung up at 9% expected claim rate, then kind of ran through the delinquency buckets. So build up higher reserves and because it's won all the way to 180, why not if they're in forbearance. And then a cure, there's a big reserve release.

So I think it's -- from an investor standpoint, I think it bodes well. I think it's something to look at that, the fact that we're running it through -- kind of mechanically through the model and seeing this type of performance, I think it's actually pretty good.

We have one more question. Your final question comes from Bose George of KBW.

Yes, just a couple of little things. Actually, on the expenses, so your guidance now suggests the fourth quarter is close to $45-ish million. So is that a good run rate for 2022 as well, at least as a starting point?

I wouldn't say that yet. Some of it is -- we always like to give the guidance. We're going to punt that till February. But also -- but again, yes, I mean, it's not a bad run rate, but we'll firm that up in February.

Okay. And then actually just in terms of the seating that you do to Essent Re this year, on NIW, I guess you took it up to $35 billion from $25 billion. What are the variables you look at in terms of potentially increasing that either for the back book or prospectively?

It's a -- lot of it is -- it's a good question. A lot of it's capital. A lot of it's making sure we don't trip anything around PFIC or the BTEX. So we're pretty comfortable at $35 billion. No plans right now, to be honest with you, to move it up. Certainly, something we'll look at, but let's see how all the infrastructure bills go through and see where taxes land, always a lot of movement there. So we'll wait and see the dust settles there, and then we'll reevaluate it.

This concludes the Q&A portion for today's call. I will now turn the floor back over to management for any additional or closing remarks.

No additional comments here. Just want to wish everyone a good weekend, and thank you for your participation today. Take care.

Ladies and gentlemen, this concludes today's event. You may now disconnect.