Greenlight Capital Re Ltd (GLRE) 2018 Q1 法說會逐字稿

Thank you for joining the Greenlight Re Conference Call for First Quarter 2018 Earnings.

Joining us on the call this morning are David Einhorn, Chairman; Simon Burton, Chief Executive Officer; Tim Courtis, Chief Financial Officer; and Mike Belfatti, Chief Operating Officer.

The company reminds you that forward-looking statements that may be made in this call are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical fact, but rather reflect the company's current expectations, estimates and predictions about future results and events, and are subject to risks, uncertainties and assumptions, including those enumerated in the company's Form 10-K dated February 20, 2018, and other documents filed by the company with the SEC. If one or more risks or uncertainties materialize, or if the company's underlying assumptions prove to be incorrect, actual results may vary materially from what the company projects. The company undertakes no obligation to update publically or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Please note, this event is being recorded. I would now like to turn the conference over to Greenlight's CEO, Mr. Simon Burton. Please go ahead, sir.

Thanks, Denise. Good morning, everyone, and thank you for joining us today. During the first quarter of 2018, we experienced a capital drawdown of 17%, driven by negative investment results. We all well capitalized and our underwriting portfolio has a volatility profile that compares favorably to many of our peers, as we demonstrated in our resilience to recent hurricanes, wildfires, mudslides and winter storms. This low volatility allows us to absorb occasional and sizable investment losses. Though the loss of capital in the first quarter was certainly impactful, our interactions with external stakeholders have been proactive and consistent through periods of volatility focused on managing risk and building long-term value. Across many years of working with regulators and rating agencies, it's my experience that profitable and sustainable underwriting results are a necessary condition for a rated company.

We agree with this perspective and our day-to-day efforts are focused on the quality of our underwriting pipeline and underwriting decisions. We have made deliberate changes in the areas of personnel processes, risk appetite and business mix that has had a positive impact. As I said, I'm pleased this quarter to report the combination of a small prior period reserve release and the current year underwriting profit. A combined ratio for the quarter was 98.3%.

I'd like to comment on the U.S. tax law changes of last year that impact the reinsurance industry. We have concluded that the rules determining passive foreign investment company status have the greatest potential to impact our operations and shareholders. To be clear, the dominance of our day-to-day reinsurance activities and risk profile do not support the PFIC designation, but the law change has put more emphasis on balance sheet arithmetic than the qualitative assessments.

We have reviewed the new rules and the various options available and are working on plans to ensure we will not be deemed a PFIC.

In March, we launched Greenlight Re Innovations with a mandate to partner with technology and risk enterprises with insurance applications. Mike and his team have generated a long list of opportunities from which we have identified a combination of the best ideas and most talented teams, to progress partnership discussions with. We expect to build on our progress through 2018 and estimate that in 2019, we will start to see meaningful business flow from the unit.

Exactly a year ago today, I met with the Greenlight Re Board of Directors to describe my vision of how relatively small reinsurance company can compete with peers with larger balance sheets and greater reach. It's all boiled down to a simple conclusion and that's an attempt to fight the battle of scale to grow, and by which expenses would be right with unnecessary execution risk. And that we should instead focus on operational excellence and innovation. At the time, it was unclear how long that it would take for disruptive forces to emerge and validate the direction, but today it is evident that changes close within the industry is prepared for. We are busy equipping ourselves for the future and I look forward to the changes ahead. Now I'd like to turn the call over to David.

Thanks, Simon. And good morning, everyone. The Greenlight Re investment portfolio declined 11.8% in the first quarter. Our longs detracted 5.2% and our shorts detracted 6%.

Despite a good earnings season for our portfolio, in which most of our largest positions reported fundamentals that were consistent with our investment thesis, we managed to lose a bit of money on most positions with no material winners to offset the losses. Perhaps, some of this can be explained by growth stocks continuing their historical outperformance over value stocks in the first quarter. Regardless, the quarterly results was one of our worst.

The biggest winners for the quarter include our long position in Micron Technology and our short position in Tesla, though neither was particularly material. We did not have any very large losses either. The biggest, however, were our short in Netflix and our long in General Motors. Netflix advanced 54% in the first quarter, the company added 2 million more subscribers than expected, but the cost to acquire each marginal customer rose as the company increased spending on content, marketing, technology and development. As a result, free cash flow is deteriorating, after burning $2 billion in cash in 2017, Netflix has guided to $3 billion to $4 billion cash burn in 2018 and expected to be free cash flow negative for several more years. In our view, Netflix has demonstrated inability to turn cash into subscribers, but not the ability to turn subscribers into cash.

It is difficult to explain why General Motors declined 10% in the quarter. GM reported a very strong fourth quarter and gave guidance far ahead of consensus for both 2018 and 2019, which ordinarily would lead to a good stock performance, especially given GM's undemanding valuation. Our experience with GM extended to a number of our other core long positions, which offered strong results and poor stock price performance. While we maintain conviction in our investment thesis, we were focused on reducing our gross exposure through the first quarter.

The investment portfolio is currently 93% gross long by 65% gross short and began the year at 100.1% long by 67% short.

We recently disclosed a hedge position, where we are long Puerto Rican debt and short the stock of Assured Guaranty, a bond insurer with significant exposure to municipal bonds that are now rated below investment grade, including a heavy concentration in Puerto Rico.

We think AGO's proprietary rating system does not adequately reflect the credit deterioration. We believe actual losses will be higher than management's accounting for. The company's aggressive capital return plan might be good for shareholders in the short term, but negative for both them and policyholders in the long term.

We exited a handful positions during the quarter, including General Motors and Uniper with profits and a couple of industrial shorts with small losses.

The investment portfolio returned minus 0.5% in April, in what was a nondescript month. Simon, Mike and the rest of the team have done a phenomenal job revamping our underwriting and reserving processes in a short time period. While I'm glad we showed a positive underwriting result during the quarter, I am even more excited about the long-term prospects for Greenlight Re as the team continues to reassess and improve in every operating area.

Now I'd like to turn the call over to Tim to discuss the financial results.

Thanks, David. For the first quarter of 2018, Greenlight Re reported a net loss of $142.8 million compared to a net profit of $8.4 million for the comparable period in 2017. The net loss per share was $3.85 for the first quarter 2018 compared to fully diluted net income per share of $0.22 for the same period in 2017.

Gross premiums written in the first quarter 2018 were $175.1 million, which is a reduction of 11.2% from the prior year period and net earned premiums decreased by approximately 4%. Decrease in both premiums written and earned was primarily due to the nonrenewal of the Florida Homeowners contract during the fourth quarter 2017 as well as the nonrenewal of certain professional liability contracts.

The composite ratio for the first quarter of 2018 was 96% compared to a composite ratio of 97.4% during the comparable period in 2017. This quarter's composite ratio benefited from favorable reserve development on property business from reduced claims estimates from 2017 hurricanes and favorable claims experienced on mortgage insurance contracts. This favorable development was partially offset by adverse development on solicitor's professional indemnity contracts.

Overall, we realized favorable prior period reserve development of $2.7 million during the quarter.

General and administrative expenses incurred during the first quarter of 2018 decreased slightly to $6 million compared to $6.7 million incurred during the prior year period. Underwriting expenses of $3.5 million for the first quarter were slightly lower compared to $4.1 million incurred in 2017, primarily as a result of slightly lower accruals for quantitative bonuses.

Underwriting expense ratio for the first 3 months of 2018 was 2.3%, resulting in a combined ratio of 98.3% for the quarter. Our corporate expenses of $2.5 million for the first quarter were basically flat when compared to the prior year period. We reported a net investment loss of $145.2 million during the first quarter of 2018, representing a return of minus 11.8% on our investment portfolio managed by DME Advisors.

The fully diluted adjusted book value per share as of March 31, 2018, was $18.35, a decrease of 22.1% from the $23.57 per share reported at March 31, 2017.

At a recently held board of directors meeting, the board approved the renewal of the company's current share repurchase plan, which expires on June 30 of this year. The plan provides for a repurchase authorization of 2.5 million shares and will expire on June 30, 2019. There were no shares repurchased during the first quarter of 2018.

Greenlight Re held its annual general meeting on April 25. I am pleased to report that all 7 proposals contained in the proxy were approved by shareholders, including the reelection of all directors for additional 1-year term.

And finally, we would welcome everyone to join us on November 15 for our Sixth Biannual Investor Day, which will be held at the French Institute in New York City. Further information and notices will be provided closer to the event. I would like to turn the call back to the operator and open it up for questions.

(Operator Instructions) Your first question will come from Bob Glasspiegel of Janney Montgomery Scott.

A couple of data questions on the quarter. I saw that you had some favorable development and catastrophes from 2017. Was there any other catastrophes in the quarter?

Bob, this is Simon. There was no meaningful activity this quarter, specifically we didn't have anything from winter storms.

Well, okay. I was encouraged to see overall favorable development, maybe a little bit more color on the surety and professional liability that wiggled?

All right, sure. Bob. I'll ask Mike to jump in there.

Bob. The surety was a handful of larger claims. Two new reports were transected here, but movements on about 2 or 3 other claims in prior. Not too much to say about that, see we've taken a close enough look to feel that it's -- that those were idiosyncratic in nature, obviously we're keeping a close eye on it, but currently it just seems like idiosyncratic adverse development in -- on legacy surety deal in particular.

The solicitors, we've -- you've seen this before. It's something we've been actively monitoring and doing aggressive claim oversight on, certainly for some time now.

The -- I think the progress on getting our arms all the way around it is, I think, has been pretty substantial. So -- but we did see enough movement and still want to go a little bit higher this quarter.

Again, as with the surety, it's something we are closely watching. Both of the books are legacy, meaning they're not things we are currently writing, but nonetheless, obviously we're closely monitoring both books.

Great. A little bit more color on the A&H growth?

The A&H book is, I think, reasonably static, Bob. Something we're not expecting. There may be some sort of year-on-year movement, but we are not expecting to grow that book materially. It's not a class of business that we are on an upwards trajectory on, for sure.

Got it. One question for David. First quarter tested your risk controls given the turbulence in some of your positions. You mentioned bringing down your gross exposure, were there any other tools that came into play?

Yes, there was some reconfiguration of parts of this short portfolio to emphasize some more options.

Okay. And does that tie at all into the bright line test?

No. That's just an investment choice.

Okay, because I thought I understood that using the options instead of shorts would be one way to help with the arithmetic calculations.

It's quite possible we will be making changes to deal with the bright line tests in the coming periods. But the changes within the portfolio this quarter were not, with one eye on that.

And the next question will be from Brian Meredith of UBS.

Couple ones here. First one, I'm just curious, Simon, can you talk a little bit about what you perceive capital cushion is now? And how much more potential equity could lose here, given potential more adverse investment results without rating agency actions?

Yes, Brian. And so we -- there are different ways to look at capital, obviously. Our internal view is that as we examine risk in every direction, on all sides of the balance sheet and accumulations to triggers of exposures, whether it's capital investment risk or sort of financially connected risk, let's say. We consider ourselves to be very well capitalized. We run a relatively low volatile insurance portfolio and we internally would consider our buffer to be substantial.

Rate agency models are different, of course, and as you know, AM Best has been in particular -- are going through a change, have recently implemented a change in that model. We are working through that process with them and it's all being constructive so far. But, of course, that's for them to indicate as they move through the process of running their models.

Great. And then another just quick one here. As far as market conditions, Simon. It seems like one of the chatter coming out is that the Lloyd's marketplace continues to be more disappointing from a pricing perspective. Does that change your view at all on kind of what your potential strategy here is going forward with the portfolio?

We've been very clear on our strategy, at least internally, Brian. We consider the market at large to be permanently in some difficulty, given its current structure. Now the structure is important. We do feel that expenses -- the expense drain through the chain of placing insurance or reinsurance programs is a problem and needs to be dealt with. It's not a problem that we have in Greenlight Re. Our expenses are very manageable and will always be so. So to the extent that we are expecting the industry at large to make some interesting changes over the next few years, we are positioning ourselves for that eventuality in part that transacting business efficiently, quickly and sensibly here, traditionally. And in part, it is the strides we are taking to develop innovative products and building partnership on technology-driven products there.

I'd be happy for Mike to give you some more color on our progress there, if that's helpful to you. But this is very much a direction of the company that will be increasingly important to us over the next year or 2. Mike, you want to add some color?

Yes, Brian, I would just sort of echo the pervasively difficult conditions for traditional products and traditional markets. With Lloyd's in particular, for example, Lloyd is and we believe pretty much always will be an interesting place to transact business. But the conditions are still difficult and so short growth in traditional products of almost any variety would be, I think, somewhat difficult to foresee or even justify.

We are doing a lot of work in the innovation space as we announced recently. It's generally aimed at new products and services at higher margins had better revenue opportunities, obviously the connecting topic throughout, what we are looking at is technology and as you probably know in tracking the space, technology in our industry is going to have really a multivariant impact. Operational expense efficiency is an obvious one, improved customer experience is something that the industry hasn't been super great at and is -- but is getting better at and will continue to. Technology for risk and underwriting is something that a lot of people are focusing on and then the other thing that we emphasized is some of our public statements is, physical technology is to actually improve hazard of outcomes and make individuals and businesses have better experiences with respect to hazard of insult together, prevention, mitigation, safety, security. All of these elements are creating sort of a wide range of interesting opportunities and we are, through our Greenlight Re Innovation unit, we are sort of actively pursuing this.

We do think that, as Simon mentioned, we do think that lien expense base is part of the equation here, because the pervasive difficulty in the traditional market require expense efficiency full stop. At the same time, the deployment of effort toward new directions, we think, is a firm likes ours sort of a chance to punch above our weight perhaps more than people who immediately realize that. So that's what we are working on.

The next question will be from Jason Stankowski of Clayton Partners.

I was curious if you could comment on why no buybacks during the quarter.

Tim, would you like to comment?

Yes. Go ahead, David?

You can go, it's fine. I'll go after you, if you like.

Yes. So Jason, obviously we are constantly monitoring our capital position and obviously where the share price is trading relative to our book value. As you can appreciate with a 17% drawdown in capital, we do need to be aware of the amount of capital we have and we made decision during the quarter that it just wasn't the right time to be buying back shares. As I mentioned, the board did renew the buyback program and we will continue to monitor it and certainly when the capital and the price is right, we would consider it.

Okay. I guess, the gist of that is, with the portfolio being down 11.8%, you said a drawdown of, you say, 17% was year-on-year. If I look at our tangible book value just coming into the year, I thought it was around 22% in the quarter and that was $18.35. So that's, in my math, that's about an 18.5% drawdown from the end of the years, am I looking at that wrong?

No.

Yes, your calculation would be on -- go ahead, David.

You're fine, Tim.

Yes, I guess the calculation is different on just pure capital, the capital we report on the balance sheet versus the book value per share. Obviously, the calculation of what is the denominator and the numerator in that would affect the percentage. Obviously, the difference between the 11% in the investment return, the effect of float causes either a benefit or negative, depending upon your investment return.

Right. Right. Okay, so we lost an additional 5.5% beyond the portfolio returns during the quarter through operations and write-downs and just the effect of running the business essentially?

No, that's not correct.

No, that's not okay.

The difference is the leverage in the portfolio created by the flow. So for every dollar equity in the book, there is around $1.60 invested in the portfolio. So you multiply out the return on the portfolio times the leverage to get the change. Operation in the business were actually outside of the investment, were actually profitable during the quarter.

Okay, that's super helpful. And then I guess, lastly, maybe for the whole team as you look at "new products" to get kind of get outside of what doesn't seem to be a very good traditional market, how do you look at sort of the tail you're willing to take? When I hear new products in insurance, I always wonder how do you underwrite new things? One of the benefits usually of looking back at actuarial and other assumptions and trying to understand the past? And just curious what types of new products, if you're able to talk about them competitively or just conceptually, would you -- we expect to see in the insurance book going forward? And how do you think about them, I guess, most importantly?

Okay, Jason. It is Simon here. So we think about this in a few different ways. Firstly, we've entered some classes of business that are new to Greenlight Re at January 1 -- around January 1. And particularly in the London Market Specialty Business, these are very traditional classes. They're classes where management has a great deal of prior experience and contacts. We do this in a very cost-effective way, which makes the entry point economic for us, in terms of the tail exposure, as I said, there is a great deal of experience in understanding and managing the exposures from these specialty classes. They are typically quite short tail in any case. So that's the first category.

The second category is, really what we expect to get through and outs of our innovations work over the next couple of years. And keep in mind that a lot of this effort will produce products, which will seem quite new, but in many cases, they're new because of particular customer experience, or because of a particular way of transacting the business that seems extremely efficient compared to the traditional markets today. So some of it might purely be expense savings, as opposed to a new and strange or unusual particular exposure that we don't have any experience of. We all -- we would expect to be deeply experienced in any of the classes that we write, but the product itself could be an interesting and new twist on it. I think that's helpful.

The next question will be from Mikel Abasolo of Solo Capital Management.

And the first one is on the recent approval for increased share repurchases and also for increasing the number of shares available for issuance for the stock incentive plan. If you could comment on the rationale behind the increase, that would be helpful. The other question is, I see and you comment on the 10-Q your exposure in gold from physical to futures, if you could comment on that?

And lastly, I was curious and perhaps due to regulations or some other constraint, or this is impossible, but I was curious if the portfolio could be repositioned to even go net short in case this bubble, we are on, finally explodes or bursts and you feel like there is -- that the EBITDA for the short's arise? And for the record, I think that going forward, you're going to make money in the long position, you're going to make money in the short book and I think you're going to win money into gold exposure as well. So that going net short is a separate condition for doing well, in my view?

Michael, it's Simon here. Say, shall I -- let me take the first part and I'll direct it back to you, if that's okay. The share buyback approval is simply to give us the flexibility we need to operate the business and make the right decisions for our shareholders at the right time. It doesn't signal any particular direction over the next 12 months. David, perhaps you would like to add to that or the other questions Michael had?

Yes. No, I think that covers the buyback correctly. Relating to the gold, sometimes we own physical and sometimes we own futures and sometimes we balance it between them. And I don't believe that there's substance to the change in the economic exposure that comes from those variations over time. There is sometimes a little bit of a liquidity that comes into the thinking or some other types of financial calculations.

Relating to the positioning of the portfolio is net short. We've never been net short before, I would not anticipate that we would be net short at any time in the future.

Our general view is that the market does go up over time and we prefer to have a net long position. That being said, we are rather conservatively positioned and we are on somewhere at the lower end of the band, in terms of our net exposure right now, align our thinking with some of the views that you just expressed and we would be excited to make money on our longs or short. In our gold position, it feels at the moment the opposite is what's happening, and we look forward to you being proven right in your prophecy there.

The next question will come from [Monal Minta] of [Sinensis].

Two questions. The first question, can you please tell us more about your investment agreement with the Greenlight fund? Do they have to recoup losses to earn the 20% incentive fees?

And with the heavy concentration in your investment portfolio, and I believe over 90% is invested in equities, how do you ensure Greenlight doesn't take imprudent risk at the expense of policyholders, to start reearning performance fees? Just tell us more about balancing the conflict of interest between Greenlight's desire to maximize performance fees and having adequate capital for policyholders?

[Monal], this is Simon. Let me ask Tim to describe the first part of your question and the agreement we have with DME, I'll take it up from there.

Yes, certainly, [Monal], the investment advisory agreement provides that in the event that there is a loss of the portfolio, there is a high watermark in terms of performances fees going forward, thereafter. The performance fee drops from the 20% down to 10%. Until such time as the loss that was incurred is recouped, plus about 150% of the loss.

So yes, there is a 10% fee going forward, but they really have to recoup 2.5x the loss in order to get back to the 20%. So that's how that is structured.

And on the second part of your question, as I mentioned earlier, we think carefully about risk management in all directions under the liability and the asset side of the balance sheet, our liability side of balance sheet is run contemplating all directions of risk. So you would -- when you compare us to many of our peers in the reinsurance industry, we run considerably low-risk leverage than many others on accumulating exposures, like catastrophe or financially connected exposures. That's 2 examples of largest accumulating sources of risk. And that's because we are mindful that there is some volatility on the investment side of our business. We -- furthermore as you've heard earlier the comments around the relatively challenging marketplace, we believe -- we firmly believe in the model and the value that a dual engine brings to our shareholders. So that's both the ability to deploy our asset in David's strategy and to deploy them into interesting opportunities in the reinsurance market.

We do overlay a holistic, let's say, view of a risk for both sides of the balance sheet. We are very comfortable with where we are and it is given deep thought at all times.

And now -- it's Tim, again. Just to clarify a couple of points. We are not investing in the hedge fund itself. We have our own separate accounts. We have our own separate individual shareholdings and that provides -- we have investment guidelines and liquidity requirements and certain investment restrictions, that are part of our investment guidelines, to ensure that we have the liquidity and there is not, in our opinion, the unnecessary risk-taking.

And I think one of your points was the alignment of interest. David is our largest shareholder and certainly as the economics for him, is the same with other shareholders. Certainly there is a definite alignment of interest in that respect.

With policyholders, not shareholders. So Greenlight's incentivized to maximize investment return and take risk to increase performance fees, but that comes with the expense of capital for policyholders. So if you are a rating agency and you look at a 17% drawdown coming from risky investments, how do you balance rating risk and policyholder capital versus the desire to maximize investment income?

Our desire is to maximize both the absolute and the quality of the returns to all of our shareholders and that's a very clear objective. We believe the best route to maximizing that quality of return is the present balance of exposure to both reinsurance risk in a relatively more modest way, for the reasons I described and to the investment strategy with DME.

Got it. And my second question was, in your last earnings call, you'd mentioned that a new set of eyes led to an increase in loss reserves. Can you tell us more about the internal models that you're using for estimating losses? And what controls do have in internal models?

Sure, I'd be happy to -- Mike, jump in there, please.

Sure, [Monal]. The -- so we use a number of different methodologies to estimate ultimate losses. Traditional actuarial methods is at the heart of it, frequency severity methods, loss development methods. The sort of the usual methodology that you will see across the industry, we also have certain type of exposures that require more detailed claim -- individual claim drill down and projection off of individual claim estimates for one or more claims. So we -- so the baseline is, a lot of traditional actuarial methods. Around that, we have a number of controls that are important to me and that we've installed since I came or expanded -- strengthened since I came. Greenlight Re always had external independent validation of its reserves using an external actuarial firm and we have actually expanded that process to get even more sort of sets of eyes on the reserves, externally.

That, as a control, is simply to have someone who is just outside the company and, of course, is seeing a lot of other companies weigh in on what they are seeing for us. So we continued the process from that existed from before I started, but we did expand it in terms of actually having sort of extra sets of eyes externally. That's one control. I would list 2 others in particular. We calculate a mechanical method estimate for each of our contracts that is based on, if you will, a sort of a no-human touch approach. The idea is that of course, a big risk in our industry in reserving is where you have rose-colored glasses or other sort of bias that the -- that an analyst himself might be putting onto the process. And so we have installed basically a comparative point, that I call mechanical method, to basically say every quarter, we are going to compare the selective results to a fixed reference point, if you will. The metaphor is sort of if you are drifting in the ocean and you can't see land, you actually have no idea which direction or how fast you are drifting. But it certainly there is a buoy out there, you quickly can tell whether you're moving closer or further away from that buoy. So we did install that since I started and I found that to be actually a very, very helpful reference point in my prior stops in the industry. The other thing that I'll make quick reference to as a control is tracking the changes in parameters that we do. So in effect, what you want to be able to do is as you change judgment, you want them to be transparent, you want them to be documented, you want them to have rationale behind them.

And our industry, candidly, sometimes has not necessarily the highest standards on documenting, disclosing or making visible the analytical judgments that are being made so they can be tracked over time as well. It's another way to kind of keep track of potential bias or to manage potential bias. And in property-casualty reserving, that's sort of super important. So those -- I'll stop there, those 3 things in addition to the core of traditional actuarial analysis describe some of the changes we've made to really improve the experience over time, we hope.

The next question will be from [William Arms], a private investor.

A quick question to David. With the latest losses in the investment portfolio, we are up something like 3% annually, since the IPO from the investment side. Is there any point at which we'd look at revising the comp structure for DME?

The cost structure itself reflects in a sense that in view of the losses from 2015 and carrying over here, we are operating at a reduced incentive fee and will be for quite some time until we've recouped that, plus recouping it again, plus recouping it another half of the time. The board does review the investment manager contract periodically, but for right now I wouldn't expect there to be any change.

And ladies and gentlemen, we will conclude the question-and-answer session. Should you have any follow-up questions, please direct them to Adam Prior of The Equity Group on (212) 836-9606, and he will be happy to assist you. We also remind you that a replay of this call and other pertinent information about Greenlight Re is available on our website at www.greenlightre.com. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.