MGIC Investment Corp (MTG) 2012 Q1 法說會逐字稿

Good day, ladies and gentlemen and welcome to the MGIC first-quarter earnings conference call. At this time, all lines are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions). As a reminder, today's conference call is being recorded.

I would now like to turn the conference over to your host, Mike Zimmerman, Senior Vice President, Investor Relations. Please begin.

Thanks, Sean. Good morning, and thank you for joining us this morning and for your interest in MGIC Investment Corporation. Joining me on the call today to discuss the results for the first quarter of 2012 are Chairman and CEO, Curt Culver; Executive Vice President and CFO, Mike Lauer; and Executive Vice President of Risk Management, Larry Pierzchalski.

I want to remind all participants that our earnings release of this morning, which may be accessed on MGIC's website which is located at mtg.mjit.com under Investor Information, includes additional information about the Company's quarterly results that we will refer to during the call and includes certain non-GAAP financial measures.

As we have indicated in this morning's press release, we have posted on our website the supplemental information containing characteristics of our primary risk in force and new flow insurance written.

During the course of this call, we may make comments about our expectations of the future. Actual results could differ materially from those contained in these forward-looking statements. Additional information about those factors that could cause actual results to differ materially from those discussed on the call are contained in the quarterly earnings release. If the Company makes any forward-looking statements, we are not undertaking an obligation to update those statements in the future in light of subsequent developments.

Further, no interested parties should rely on the fact that such guidance or forward-looking statements are current at any time other than the time of this call or the issuance of the press release.

Now, with that, let me turn the call over to Curt.

Thanks, Mike. Good morning. As reflected by the net loss for the first quarter of $19.6 million or $0.10 a share, our Company's capital position and financial results continue to be adversely affected by the lackluster economic recovery the country is experiencing; in particular, the lack of a meaningful decline in the number of unemployed people.

We continue to monitor the macroeconomic environment, but we spend most of our time focusing on those things we can control; namely, underwriting quality, returns on our new business, loss mitigation, and operating expenses. Our main objective is, and has been for some time now, to continue to serve the housing market on an uninterrupted basis. To that end, our strategy, which has the support of the OCI, Fannie Mae and Freddie Mac, allows new business to be written through a combination of MGIC and its subsidiary, MIC.

As a result of the actions we have taken, we have not yet needed to implement this strategy, which has been in place for over two years, because MGIC has been compliant with all regulatory capital requirements. However, as I've said in the past, we expect to begin to use MIC -- which as of March 31 had approximately $430 million of capital -- sometime in the second half of 2012 in states where MGIC would not be able to obtain a waiver of regulatory capital requirements. The exact timing of when is difficult to predict due to a variety of well-discussed factors.

Regarding the business, new insurance written in the quarter was $4.2 billion compared to $3 billion in the first quarter of last year, reflecting the changes in HARP. An additional $1.3 billion of HARP-refinance transactions were also completed during the quarter, which was up 60% from last year.

The new business written since mid-2008, which accounts for approximately 25% of our risk in force, is of very high quality, and based on the credit performance to date, should be some of the best business we have ever insured. This benefits existing policyholders, as the capital that is created supplements our claims paying resources. The profitability of the new business is perhaps best captured by the fact that after three years of seasoning, the 2009 book of business has an incurred loss ratio less than 11%. And the 2010 book of business, after two years of seasoning, has an incurred loss ratio of less than 4%. These results were achieved despite the weak economy of the past few years.

Our industry continues to regain market share from the FHA. However, the pace of that recovery is slower than we would like, given the continued differences in underwriting guidelines; loan level price adjustments charged by the GSEs; and the secondary market gains associated with government-insured loans versus loans insured by the private sector.

It is difficult to get a good handle on our industry's market share on a monthly basis, as two companies within our industry only report this data quarterly. But we estimate the Private MI industry's market share at approximately 6% to 6.5%. Within our industry, we believe that MGIC's market share has steadied at approximately 20% after declining toward the end of 2011 due to our decision to not lower our underwriting standards or return thresholds.

Losses incurred in the first quarter were $337 million versus $310 million last year. The increase was primarily a result of the elevated number of delinquent notices received, and a decrease in the cure rate on loans that are 12 months or more delinquent. And while the notices continue to trend lower, we would like to see that pace increase. Currently, when we establish loss reserves for recently-reported delinquencies, we assume about one out of four will result in a paid claim.

Paid claims declined modestly in the quarter to $673 million from $704 million last quarter and $687 million one year ago. The average claim payment was approximately $49,000, which is in line with the last several quarters. Assuming the current claim filing patterns we are experiencing continue, and given the relatively lower level of unpaid claims inventory, we believe that despite some volatility on a monthly basis, paid losses will continue to trend lower in 2012.

Rescissions and denials continue to slow, due to the natural slowdown that has been occurring for some time now. And as we have previously discussed, another reason that rescissions have been trending lower in recent months was due to a substantial increase in the pipeline of pre-rescission rebuttals received from Countrywide over the last several quarters. We have been able to work through this pipeline, however, and we are in mediation with Countrywide in an attempt to resolve this dispute. Any resolution that may result from this will be subject to various conditions before it is implemented.

In connection with the mediation, we have voluntarily suspended rescissions related to loans that we believe could be covered by a potential resolution. As of March 31, approximately 860 rescissions remained in our delinquent inventory, due to our decision to suspend such rescissions. We have not established an accrual, because we have not determined that a loss is both probable and can be reasonably estimated at this time.

Since we are in mediation, our comments will be limited on this matter to the information we have discussed in today's press release.

During the quarter, we continued to realize gains that were embedded in the investment portfolio, resulting in approximately $77 million of gains. At quarter-end, the portfolio had approximately $73 million of net unrealized gains.

Cash and investments totaled $6.4 billion as of the end of the quarter, including $490 million at the holding company. At March 31, the combined insurance companies' risk-to-capital ratio remained below the 25-to-one threshold at 22.2 to 1. And MGIC and MIC remain eligible with both Fannie Mae and Freddie Mac. As we have said in the past, we believe MGIC has sufficient excess claims paying resources to meet all of its policy obligations, even under stress loss scenarios.

So, to summarize, while we expect the effect of the sluggish economy to continue to challenge the Company's financial results and capital this year, we are encouraged by the approval of our capital strategy by the OCI, Fannie Mae, and Freddie Mac; the continued outstanding quality of the new insurance written; and the growing opportunity to regain share from the FHA.

Regarding Washington, the consensus seems to have evolved that a QRM definition that had a 20% down payment requirement is both bad housing policy and overly restrictive. In fact, the National Association of Realtors surveys indicate that approximately six out of 10 homebuyers that take out a mortgage put less than 20% down. So it appears regulators are back to the drawing boards, and, in a change from the past, will coordinate the timing of QRM with QM. We applaud this coordination, as there should be a single standard.

Recently there has been increased attention paid to the principal reduction. And while rhetoric has slowed, political pressure and increased financial incentives are being applied to the FHFA to include principal reductions as part of the GSE modification choices. The FHFA is expected to update their position soon on this topic. And, clearly, any additional prudent loan modification effort would be beneficial to all involved.

Finally, regarding the future of the GSEs and FHA, it has been reported that Treasury officials in the next few weeks will be issuing their recommendation about the GSEs' role in the mortgage market and continued federal backing for lower income -- for FHA for lower-income borrowers. I believe these recommendations should be positive for our industry.

So, in closing, our Company and our industry will continue to deal with the difficult but slowly stabilizing housing market, a less than robust economy, and emerging housing policy regulations. We will continue to actively engage policymakers regarding the benefits of private capital and the operating efficiency of the private sector. And, as I said up front, we will also keep focus on those areas we can control; namely, underwriting criteria and quality; returns on our new business; loss mitigation; and operating expenses. We believe that the capital and operating strategy that we have put in place positions our Company well for a better future.

With that, operator, let's take questions.

(Operator Instructions). Douglas Harter, Credit Suisse.

A little bit about the comment you made, that you're seeing a slowdown in the cures out of the 12-plus bucket. Just give any more detail around whether that was mix-related or something bigger you're seeing.

I think -- this is Larry Pierzchalski. I think the primary reason for the slowdown in the late-stage cures has to do with mods. Mods in the latest quarter, by our accounting, was about $147 million in the quarter; a year ago, $250 million. And if you think about HAMP, it was implemented, what, mid-2009. And so it had an impact.

The mods programs have a bigger impact in the late-stage cures. And now that HAMP has been in place for a while, those cures -- instead of happening 12 months later, are happening sooner. And because the program has been in place a while, the number of starts over time has declined. So given all that, it's largely due to the decline in mod activity.

So, is -- given that commentary, was that decline something that you guys had been anticipating?

Well, it's hard to tell how many new trials keep coming in the door. So we knew that trend was trending down. Exactly the timing of the HAMP cures is hard to predict.

Great. Thank you.

Chris Gamaitoni, Compass Point.

Can you give us some thoughts around what is the composition of the new notices, by vintage? And when you look at your book, can you tell -- burn out -- what percentage of loans have never been delinquent? And what your view of seasonality versus cyclicality is, going forward?

This is Mike Lauer. Just the first cut, I would say, on the new notices -- as I said on the last couple of calls, there was about 37,000 new notices in the first quarter. And although the trends on those have been coming down, the percentages, for the most part, have been pretty steady; 30% of them coming out of the 2007 book and then another 30% coming out of the 2004 and prior books.

And I think this is a comment we had, probably the last two years, is that notwithstanding the fact that these books, these mortgages have been on 2004 and longer books, that they are still continuing -- each of those older books are continuing to generate new notices, probably 30% of the quarterly notices a quarter.

So not only the 2007 book -- which we know was a large book and had weaker underwriting -- but notwithstanding that, even the 2004 and prior books are kicking off 30% of the new notices. And that trend, unfortunately, has continued. Even though the number in quarter to quarter has declined, the percent has remained about the same, 30%.

So obviously, 2006, 2007 books contributing to the delinquencies, and 2004 and prior books.

With respect to the actual year, the 2007 book at year-end was about 50,000 -- it's down to 46,000. 2006, 23,000 down to 21,000. 2005, 15,000 down to 14,000. And then 2002 and prior was 12,000 and is approximately 11,000. So another factor there when you think of it.

And then with respect to geography, not much has changed. The number one, the highest number of delinquencies, is still Florida at about 26,000 units. And that is down from 27,000 at year-end, and 31,000 a year ago. So Florida being the highest; California is not as much -- 8600 at quarter-end versus 9500 at year-end and 12,700 a year ago.

So there hasn't been much change with respect to the overall level of notices, other than the decline quarter to quarter. But, seasonally, we've seen the same trends continue with respect to the 2007, 2006 books and 2004 and prior books.

One other statistic you may find useful -- 75% of our new notices over the past, almost a year now, 75% of them have been repeat offenders. Meaning that they've been here before as a delinquent; cured; performed a while; came back, and so on and so forth. So a large portion, 75%, are these repeat offenders. And to be a repeat offender, you have got to have some propensity to cure. And then for some reason they go delinquent again, and then they cure. So they just keep churning through the inventory.

And then on the rescissions and denials, can you just give us a sense of what percentage of -- are rescissions versus denials?

Chris, this is Mike Zimmerman. I don't have the exact rate. I will get it for you on through the call. But I'd say it is 90/10 rescissions over denials. And so continuing the vast majority of our practice is rescissions versus denials. Again, remembering our practice of the denials -- it takes a longer process for us, up to a year, before a denial is actually moved off the books and records. And they usually come back to us at that time.

Okay. And then just on the claims paid, have you seen any -- since the end of the robo-signing settlement with the servicers -- have you seen any markable change in foreclosure timelines? I think Florida, obviously, is the most important to you. But just some broad base?

I would say just a slight quickening. Nothing major, and I think that's probably due more to staffing and whatnot. But, yes, a slight move towards where things were prior to the downturn, but far away from it. I just think that, although it has recovered a bit, it will not return to that old timeline, just because people are going to be very cautious before they put somebody out of a home.

Okay. Thank you very so much.

Matthew Howlett, Macquarie.

Thanks for taking my question. Just first on HARP, I know there's been a nice pickup sequentially in HARP originations. It's my understanding that not all of the servicers have signed up for HARP, specifically Bank of America and a few others. Do you expect that number to increase in the second quarter when HARP reaches its apex? And then do you think that will have any change on the rate of net new notices declining?

Matt, it is Mike Zimmerman. As far as the HARP activity, clearly if there is large players that aren't fully participating, and they do, that is going to increase the level. But I'd say most parties are participating. They are prioritizing differently within different companies. But I would say yes, so far, as far as we can see, the HARP applications are continuing to run high. And we should still see them elevated.

How long that lasts, I don't know. That will be a question for what we see. And, yes, theoretically we should see over time a decline in new notice activity with these borrowers. But that is going to be economically dependent as well. They are certainly going to be in a better position to make their payments. But whether they are able to make their payments or not will be dependent upon the economy.

Right. Any re-performance -- I know HARP is early in terms of the 2.0, but in terms of --?

For HARP? No, nothing I would say that is definitive, or that you could draw any conclusions from.

Got you. And then, Curt, you mentioned the Treasury is going to come up with updated plans on the GSEs. You mentioned that is going to be positive, potentially positive for the MI industry. Are you referring to the -- I think it was the option three on the white papers last year, that they may go with this private sector -- private co-op structure with the government in a last loss piece catastrophic reinsurance-type position, wherein mortgage insurance stands in between that co-op and the government?

It would be an option three scenario, I believe. That is what the Treasury secretary has been talking about recently. And as a result of that, I think there will be a role of mortgage insurance in that charter, if you will. So yes, I do think it will be under that scenario.

And, again, this is just what they are going to propose from those options. And who knows, in this political climate, how you ever get anything done? But I think the way things are working, that it would be positive for our industry because we would be part of that process.

And that takes me into the next question -- and it's going to take, I think, quite some time before the GSEs are fully privatized. DeMarco has talked about possibly increasing MI in the next stage of conservatorship. What conversations have you had with the FHFA in terms of having the financial capabilities to actually increase MI concentration and penetration? Is that possible with the industry today?

It is possible. They are very interested in that concept. And we have a number of companies. We have new entrants to the industry, also, which I think is very positive for the industry, as we are in this climate of political posturing relative to the long-term capital viability of the industry. So I think the combination of new entrants as well as the existing companies, given the profitability of what they are writing, also puts them in a good position for surplus to write deeper coverage.

Now, where they set that deeper coverage is yet to be determined. So if it was a significantly deeper coverage, that may be a different story. But from everything I've heard, it would be very achievable by our industry.

Great. Thanks, guys.

Bose George, KBW.

I just wanted to make sure I understand it. As capital is moved from MGIC to MIC, what does that do to the statutory capital levels at MGIC?

It remains the same, because it is a subsidiary underneath MGIC. So MGIC gets credit for MIC's capital.

Okay. And then, do you have a target statutory capital level at which you are going to run MIC, once they start writing business over there?

Well, we're limited under the agreements with Freddie and Fannie approvals. I want to say 20-to-one, but I'd have to check the last disclosure on that.

Yes, but if the limit is 20-to-one, do you -- should we just assume it can go up -- you'll run it at that level? Or something lower, or --?

Yes -- at that lower level. Effectively the regulatory threshold would be another way to think about that. Even though Freddie and Fannie aren't the regulator.

Okay, but it's something around that level makes sense, as opposed to running it at 10-to-one or something that is a much lower level.

Right, yes. We could run it up to that level. Again, Bose, just to be clear, for one thing, that's the optimal level, but it could go to those levels. Clearly you'd want to have something below the maximum risk-to-capital threshold to operate under.

Okay, great. Thanks a lot, guys.

Steve Stelmach, FBR Capital Markets.

Just to go back to the foreclosure timeline now, post-settlement, I think there's a fear that foreclosure activity is going to really pick up. But it also seems, at least anecdotally, that the services are much more likely now, pro-settlement, to conduct deed in lieu of.

Can you just give us an idea of if there is a difference in claim experience or severity for deed in lieu of, versus a foreclosure for you guys. And whether that is beneficial, that the servicers may adopt this program more so than straight foreclosure activity?

Steve, this is Mike. Basically, you're talking about time compression of the claims. So, the severity as far as our coverage, for the most part we're hitting the max there. So you are talking about, does it take two years or six months. And so there would be a benefit to us. But it would be on less coverage of interest and other expenses. So, I wouldn't call that a benefit. But I won't call it material.

The key is, we get to determine which works best for MGIC and implement it accordingly. So if it's advantageous to do a deed in lieu, we're all over that.

Okay, so an incremental positive, but not hugely material.

The overall market, obviously, keeps the property off the real estate market, so there's other benefits, but --.

Okay, great. Thank you very much.

Eric Friel, Stone Lion Capital.

Thank you, good morning, guys. Just a quick follow-up on Steve's question, last question -- that would accelerate the pace at which paid claims come in, though, is that correct? A deed in lieu, instead of a foreclosure itself?

Yes, that is correct.

Okay, all right. And in today's press release, you reiterated that you expect risk-to-capital to exceed 25-to-1 this year. Is there a level that you will attempt to keep it below, and, therefore downstream more capital? And what goes behind the thought process to downstream further capital from holdco to opco?

Well, I think the way we're set up right now is we have a strategy that has been approved by our regulator and the agencies that, in the event we exceed 25-to-1, and in the event we can't get a waiver to write in certain states, we can use MIC. And MIC has over $400 million of capital in it. So it is well-capitalized and could sustain writings for several years without any significant impairment with respect to any additional capital.

So if you follow that strategy, if we are able to continue to write some business in MGIC and incremental business in MIC, that is the core strategy. And, therefore, we wouldn't need to interject any additional capital.

I mean, the real key is to write quality business, which we've been doing, to generate surplus for the books of business that we have. And to the extent that that happens, the regulators look at that and say, they can run at excess of 25-to-1 because that all is positive to the actual surplus of the Company. So those rules, I think, are somewhat dependent on the quality of the company -- the business they are writing. And to that end, as I discussed in my comments, with the incurred loss ratios that we have, we're demonstrating it makes great sense for MGIC to continue writing, even above 25-to-1.

Okay. So the press release stated that certain reinsurance subs may require additional capital contributions, as risk-to-capital ratios increase in late 2012. Is the strategy just to shift to MIC? Or is the strategy to potentially downstream more capital to the other subs? Or a combo of both?

The initial strategy would be to get waivers where we can and to write in MIC. To the extent that we would need to get additional capital downstream, that would be a different issue. And it would be determinable on what the levels got to, and what business results were, as we go farther down the line. But our core strategy is to not downstream capital at this time but, rather, use waivers at MGIC -- and where we can't, write in MIC, which has $430 million of capital.

But if regulators required you to downstream capital in order to get a waiver would you consider that? And under what circumstances?

Well, those would be the circumstances we'd have to look at it. And that would be what are the conditions and why wouldn't this current strategy work? And would we have the capability of dropping additional capital down from the holding company? All of those things are out in the future, and different issues that you would have to cross.

But yes, that in fact, would be an issue that you'd have to look at -- what has changed? And if, in fact, we for some reason would need additional capital, could it come out of the holding company? Has the holding company got sufficient capital for that at that time? And what are the conditions at that time?

Okay, thank you.

(Operator Instructions). [Ron Vureisen], Marathon Asset Management.

Just in regards to your comment that 75% of the new notices have been repeat offenders, how should we -- I'd just love some history on how that has trended over the years.

And then how should we extrapolate that out to the cure rate? Because if you have repeat offenders, I would assume that's likely to lead -- more likely to lead to a paid claim. And as I'm trying to a model out cure rates going forward, just would love to understand that a little bit better.

Okay. So like I said, almost for the past year now, the new notices coming in the door, about 75% of them have been repeat offenders. When the downturn hit, end of 2007, we were running probably about half and half; so half new, half repeats. So over the past four years instead of 50/50 now we are at 75/25 repeats.

And it is the repeat offenders that have a higher cure rate versus the first timer. I guess if it's a first timer some of those obviously go to claim. But the repeats, to become a repeat, you have to have the propensity to go delinquent and come current; go delinquent and come current. And so they in fact, do have a higher cure rate than a first timer.

Okay. Thank you.

Scott Frost, Bank of America Merrill Lynch.

Just to make sure I understand, what we're assuming is that if you break through regulatory maximums on the 25-to-1, regulators won't move to -- won't take any court action to stop you from writing business. They will allow you to write business in the new company. And you don't think that is going to cause any -- they may stop you from writing new business in legacy, but you'll be able to write new business out of the newco.

Well first, let me correct you some. The first line would be that we could get waivers from various states. Our existing commissioner, regulator, has given us a waiver to write excess of 25-to-1. In other states we can get that also. In those states where we wouldn't or can't get it, for various reasons we can't get it; then we would issue, if you will, the new policy in MIC. So that's the strategy. The going-in strategy is where we can get waivers and continue to write in MGIC, where we can't use MIC.

So just the larger point I'm trying to get to is, you sound like you're pretty comfortable regulators aren't going to move on you due to any kind of capital issue -- risk-to-capital issue at legacy MIC. Is that a fair statement?

Yes, I mean, obviously they've agreed to this plan we've had in place a number of years. We keep getting it updated for new activities, et cetera. But they have signed off on our strategy and our operating plan.

Okay, that's it. All right, thank you.

Edwin Groshans, Height.

Thank you for taking my call. Curt, during your comments, you mentioned QRM, the 20% down payment. And I guess the NAR talking about six out of 10 borrowers being affected. Could you just give a little more color on what they're looking at there?

And then you also tried to tie that into some coordination between QM and QRM. And any additional color you can give around that coordination would be appreciated also.

Yes, from what's going on now, it sounds like the QM definition will come out first, rather than the other way. I don't know when we all got into this -- two years ago or so, when QRM was going to lead off. And the QM should set, if you will, the standard under which QRM should operate. QM as you know, sets the liability requirements for lenders within a box, and from that limits liability when you're in it and increases those when you're outside it, relative to QRM. So I think that is going to come out this summer; the definition, or the thoughts on QM. And that probably next year, early next year, the QRM definition would follow.

What has really come to light, both through the pressure of just about everyone that's involved with both mortgage lending -- from the selling side or the companies as well as the consumer groups -- are saying an overly restrictive QM or QRM will raise the cost of lending to borrowers significantly, and for no good reason, particularly the down payment. Because if you look at a well-underwritten loan, the reality is the down payment doesn't matter that significantly. So why put a requirement on that? Because the loss scenarios under a well-underwritten loan aren't that different from 5% down to 30% down. So that's not the key criteria -- that is a well-underwritten loan with defined standards that both, I think, QM and QRM would have.

And so there's been a real movement relative to just removing down payment as a requirement. Because the reality is, is it is not that indicative of the ultimate success of the loan if you have a borrower that is well-qualified. And those two standards are to set that requirement.

So I think there is a -- unknown to government, they return to common sense as they are looking at these requirements, and a coordination of activities as they pursue it.

I really wish we had a national housing bazaar that would look at the GSEs, FHA, QM, and QRM all in conjunction in laying out how we move forward as a housing industry. But to date, that doesn't seem like it's possible given the political climate.

But I really do applaud the fact that we are going to lead off with QM and follow with QRM, and that there is a return to some common sense relative to the impact. And also the fact that to put unnecessary requirements really would raise the cost of borrowing to consumers for no good reason.

Excellent. I appreciate that.

And then the other question I have is, lately I've been getting some questions on -- Ed DeMarco did his presentation on forbearance versus forgiveness. And it does appear that if -- once we take into account the tripling of the payment from Treasury to now include a payment to the GSEs, that forgiveness may be the path that they go on some of their modifications. But now there is some chatter out there saying that the GSEs, if they do go down principal forgiveness route, that they would at first address mortgages without MI, versus looking at mortgages with MI. Have you heard anything along those lines?

No, we haven't. I mean, where it would have the biggest impact would be in our space rather than the others. So I really -- there's been so much rhetoric on this topic over the past month or so anyway that lots of rumors fly. But I think there is a general consensus that something will be done in that area. And how they do it is yet to be seen.

Okay. Because, to your comments, to MGIC's comments about 75% of some of the new notices are repeat offenders -- if that is an industry theme that is being experienced, to go and modify mortgages without MI would seem not to lessen risk for the GSEs.

Yes, it wouldn't be --

Not that you want to keep the risk. But you already have it, you know what I'm saying? So --.

Yes. No, it would be -- the real meat to that program would be in our space relative to the GSEs. So again, I would think that that would be addressed as part of it. But there is, as I said, a lot of rhetoric on this right now.

Right. Thank you very much for the time, Curt. You have a good day.

Yes, you too.

I'm not showing any other questions in the queue. I'd like to turn it back over for closing comments.

Well, as always, we appreciate your interest in the Company. And have a wonderful day. Thank you.

Thank you. Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the conference. You may now disconnect. Good day.