ProAssurance Corp (PRA) 2011 Q4 法說會逐字稿

Good day, everyone, and welcome to today's ProAssurance Fourth Quarter 2011 Earnings Conference Call. As a reminder, today's conference is being recorded. For opening remarks and introductions I'll now turn the call over to Mr. Frank O'Neil. Please go ahead, sir.

Thank, you Lauren. Good morning, everyone. Thanks for joining us to discuss our fourth Quarter and Full-Year 2011 results. Please bear with me for a minute while I handle some important legal matters. On Wednesday, February 22, 2012, we issued a news release and filed an AK reporting our results for the year and quarter ended December 31, 2011 along with our SEC filings, including the 10-K we filed Wednesday afternoon. These documents provide you with important, detailed information about our company and our industry.

These documents also discuss in detail many of the important factors that could affect the outcome of future events, and thus cause our actual results to differ materially from current projections or expectations. Please read and understand these cautions and be aware that statements we make on this call dealing with projections, estimates and expectations are explicitly identified as forward looking statements, subject to these and other risks.

Except as required by law or regulation, we will not undertake and expressly disclaim any obligation to update or alter information disclosed as part of these forward looking statements. The content of this call is accurate only on Thursday, February 23, 2012. We do not authorize or review transcripts you obtain so please know that transcripts may contain factual or transcription errors that could materially alter the meaning or intent of our statements.

As a final reminder, we are going to reference non-GAAP items in our call today. Please refer to our recent filing on Form 10-K and our recent news release for our reconciliation of these non-GAAP numbers to their gap counterparts. Participating in today's call are our Chairman and CEO, Stan Starnes, our President, Vic Adamo, and Chief Financial Officer, Ned Rand, and Howard Friedman, our Chief Underwriting Officer and Actuary. Stan, some remarks from you, please.

Thanks, Frank. To sum it up, we had a terrific year. We maintained our unparalleled record of protection of, and advocacy for our policyholders. We delivered impressive gains in shareholder value and we continued to build financial strength. We are also pleased to note that we added to our 20-year string in which we have increased book value per share. For 2011, book value per share increased 17% over year end 2010. Our success in 2011 builds on the solid foundation we have laid in prior years but I am most excited about what this means for our future. We have hundreds of dedicated, effective employees and a senior management team who each understand that we learn from the past so we can excel going forward.

For example, the favorable development we have seen is a result of not just the effect of an improvement in industry loss trends, it is meaningfully affected by the rigorous way in which we manage claims today. We reserve our current business at prudent levels. We underwrite our business with the knowledge that it may be many years before associated claims are resolved, and we manage our claims process with an eye not just on today's claims, but on the claims to come. We also manage our investments cautiously and prudently to ensure our ability to meet our commitments both today and in the future. To that end, we remain focused on doing those things necessary for continuing success in the future, confident that such foresight leads to year, to year, to year success as well. Frank.

Thanks, Stan. We're going to start with Howard this morning. Howard.

Thanks, Frank. Drawing on Stan's statements, let me address our significant net favorable reserve development in the fourth quarter, which amounted to $184 million, bringing in a net favorable reserve development for the year to $326 million. The bulk of the development is from accident years 2004 through 2008, with smaller amounts in 2009. In short, this is the result of the prudent nature of our reserving over time given the extreme volatility in medical professional liability during the 35 years that NPL has been broken out from other liability. It was not that long ago when our industry saw loss ratios above 100% and while we do not believe we are headed to that level of losses any time soon, this knowledge certainly informs our actions.

Volatility exists in both directions, however. During this phase of the cycle, loss severity continues to develop at levels below those we considered when we established our initial reserves. Further, the decline in claim frequency experienced through the middle of the last decade has only resulted in marginally higher average loss payments despite expectations of more significant increases. During the 2004 through 2008 timeframe we established reserves reflecting the then current loss environment, plus assumptions based on knowledge that the industry has seen periods of rapidly escalating loss trends like those we observed in the late 1990s and early 2000s. Trends evolved differently than expected but we are being just as careful to consider the evolving loss environment that exists today and we expect to apply that same careful analysis as trends evolve in the future.

Given the size of the reserve development in this quarter, I want to remind you about our reserve evaluation process, which will help explain why fourth quarter can vary so much from the preceding quarters in a given year. As we've always said, this is a long tail business and there is only so much that can be discerned on a quarter-to-quarter basis. We use the perspective of the full year to form our conclusions at year end.

Our independent consulting actuaries conduct two major studies each year and those complement the work that our in-house actuaries have been doing throughout the year. As we get more data with each passing quarter we get a better picture of what another full year of loss data looks like. For the past four years that analysis has led to significant development in the fourth quarter, but remember, it could just as easily go the other way if loss trends changes. Also, remember that the analysis we perform each year is consistent with prior years analyses but with an expanding pool of data.

Just a couple of other comments on trends. The overall frequency trend is generally flat, just as it has been for the past three years or so, and the rise in severity is about 3% to 4% per year, which is slightly less than we've seen for the past several years. That means we expect flat rates this year unless loss trends change, or investment yields decline further. Average renewal pricing was down 1% comparing 2011 to 2010. However, average renewal pricing was up 2% year-over-year in the fourth quarter. Retention was 89% for the year in our physician business compared to 90% in 2010, so no significant change there. Business acquired from APS is included in both years. Frank.

Thank you, Howard. Ned, will you go through the financials with us?

Happy to, Frank. For the year, gross written premium was $566 million, a 6% increase over 2010. This was driving principally by premium from our acquisition of American Physicians. Our gross written premium of $115 million in the fourth quarter was down 3% from the fourth quarter of last year, reflecting current market conditions. We are pleased with the increase in our top line for the year. It demonstrates why we think growing by disciplined M&A is often the best route in a market such as we are experiencing right now.

You will notice that net earned premium is up for the quarter. This increase is not only the result of the inclusion of American Physicians; it was also affected by favorable development in our seated losses. This reduces the premium expected to be seated under certain of our reinsurance treaties.

I should also take a minute to discuss our net investment result. We continue to acknowledge the painful reality of the persistent low interest rate environment in which we find ourselves. Again in this quarter it has resulted in a decline in our net investment income, which was $34 million in the first quarter, down $2 million compared to the year ago quarter. For the full year 2011, net investment income was $141 million compared to $146 million in 2010. As you will recall, net investment income is just one component of our net investment result and primarily includes interest on our fixed-income securities and dividends on our equity investments.

The other component is our earnings or losses from unconsolidated subsidiaries. We experienced a loss of $3 million in the fourth quarter and $9 million for the year in our unconsolidated subsidiaries, due in large part to the expected amortization of tax credit limited partnerships. With those declines, our net investment result was $31 million in the fourth quarter, a decline of $3 million from 2010's fourth quarter, and for full-year 2011 our net investment result was $132 million versus $148 million for the prior year.

On the expense side, underwriting expenses were down 18% quarter over quarter, mostly due to one-time charges in Q4 of 2010. Remember, in the fourth quarter of last year we recognized significant costs attributable to the American Physicians transaction as well as one-time costs associated with the termination of a captive reinsurance arrangement. For the full year, underwriting expenses were up 1%, driving principally by the inclusion of API's expenses for a full year.

Operating income for the year was $279 million, or $9.03 per diluted share, a 32% increase over operating income per diluted share in 2010. In the fourth quarter, operating income was $132 million, equal to $4.27 per diluted share, a 38% increase over operating income per diluted share in the fourth quarter of 2010. For the year net income was $287 million, or $9.31 per diluted share, and for the fourth quarter net income was $141 million or $4.56 per diluted share. Return on equity, which we calculate by dividing net income for the year by the average with beginning and ending shareholders equity, was 14.3% in 2011, compared to 13% for 2010.

Book value per share is now over $70 for the first time in our history, reaching $70.84 at year end, a 17% increase for the year, one point above our historical compound annual growth rate of book value per share. If there is a silver lining to be found in the declining interest rate environment, it's found in the increase in the value of our fixed income investments which helped boost book value per share. Tangible book value per share is $63.26, a 20% increase during 2011. While we did not repurchase any shares during the quarter we were pleased to pay our first shareholder dividends. Frank.

Thanks, Ned. Good summary. Vic, Darryl Thomas can't be with us today. Can you update us on yearly claim stats and fill us in on industry and regulatory matters of interest?

Yes, Frank. Thank you. We noted nothing significant in the way of new claim trends during 2011. For the year, our claims inventory and the number of claims opened and claims closed were all essentially unchanged over 2010. Trial numbers, which like claims numbers, also continued to reflect the trends Howard cited. In 2011, we tried 293 individual claims and Darryl wanted me to stress that we continue to try the same percentage of claims as in recent years. Now, with fewer claims in our inventory we are able to bring more intensity to our handling of each claim. Our trial win ratio this year was about 4%, to 78%. Given the significant number of claims we take to trial, including the tough claims that other companies typically settle, this is a great result and one that benefits our insureds as well as our shareholders.

On the tort reform front, Florida is a center of attention right now. The Florida Supreme Court heard arguments on the validity of that state's tort reform about 10 days ago so a ruling should come down some time later this year. At the same time, the Florida legislature is considering further restrictions on medical professional liability lawsuits, although these are aimed at procedural changes rather than damage limits. Frank, still no word from the Supreme Courts in Missouri or Mississippi, which heard arguments on their tort reforms in late October of 2011. We'll get a ruling hopefully sometime this year, I guess.

Thanks. Stan, can we get something to close from you?

Thanks, Frank. You know, we have said repeatedly that we are not a quarter-to-quarter company. We remain very focused on the long term, on providing disciplined underwriting, on providing an unparalleled claim experience for our policyholders, providing a great environment for our employees in which to carry out the mission we received from our shareholders. We remain focused on the long term. It's that long-term vision that sets up apart, I think, from others in this space. We are pleased to have been able to delivery for our shareholders in 2011, and we have the very same determination and momentum to succeed in the future. Thanks, Frank.

Thanks. Lauren, we're ready for questions, if you'll queue them up for us.

Thank you, sir.

(Operator Instructions)

Our first question comes from Matt Rohrmann with KBW.

Good morning, Matt.

Gentlemen, good morning. Obviously the quarter was phenomenal. First, Stan, I just want to get your thoughts as we're well into 2012 now on how the Certitude program is rolling out.

Matt, we continue to be excited about Certitude. We introduced it, as we said, in Michigan. We're working with Ascension to deepen the Certitude engagement in Michigan and we are moving it into other states within the Ascension footprint. We'll make public announcements of that as we actually move the product out. We are very excited with our relationship with Ascension.

As you know, they're the largest Catholic healthcare provider in the United States, the largest non-profit provider of healthcare in the United States, and they clearly are going to be a very major participant in the changes that are going to come to healthcare in this country over the coming years so Certitude represents one sort of response to what we anticipate will be the changes in the healthcare system. It's not the only response, but it's an important response and we look forward to working with Ascension to continue to implement it.

Is it - Stan, is it possible that given the changes that are occurring in medical mal - that programs like Certitude would become the primary growth driver as opposed to M & A as it has been in the past?

You know, we think it's important to respond with nimbleness to whatever the environment presents. There are occasions in the cycle where you have to rely on M&A. There are other occasions in the cycle where you have to rely on organic growth. Frankly, I think that the Certitude program is a program that will, over time, flourish in any cycle because it's not a response to the insurance cycle, it's a response to the very fundamental changes that are occurring in healthcare in this country, so I think it does present a great opportunity for us for organic growth but I think it presents that very same opportunity whether it's a hard market or a soft market because the changes that are coming in health care are not dependent on the insurance cycle. They're going to overtake the insurance cycle.

Okay. Great. And then just this last question. For all the press and moves that you guys mentioned earlier on Florida, is there really anything that we haven't seen before, to one degree or another, from other states?

You know, you see a lot - tort reform remains essentially a state by state battle and you see lots of publicity surrounding it. The important thing is to step back and wait and see what actually is passed. You know, as an organization we very much support those legislative enhancements that improve access to care and that protect physicians and other healthcare providers from frivolous claims against them. But, you have to step back and see what legislation actually passes as opposed to what is merely publicized and then you have to see what the state supreme court in that particular state does with it. It's not like turning a light switch. It requires lots of time and attention before it all finally sorts itself out.

Okay. Great. Thanks, guys. Great quarter.

Our next question comes from Mark Hughes with SunTrust.

Thank you very much. The pricing in the quarter, up 2% - a little bit better than the full year but then your outlook for a steady pricing. Was there any particular reason why this better trend wouldn't be sustained into 2012?

Mark, it's Howard. It's partially a function of the mix of business in a given quarter depending on the state, or states, that have heavier renewals in any quarter versus other states and what we're doing either with rates or what the competitive environment is in those states, even in that mix of physician hospitals by specialty. So, I think on the whole, a point or two variation from quarter to quarter is not unexpected from our perspective and we're still looking at it as a year that we expect to be relatively flat. If we have the opportunities to do more than that, we will, but right now we're not predicting any continuation necessarily of a plus 2, or anything else like that.

Right. How about retention in the fourth quarter? How was it?

Looking at the numbers now. Hang on.

While you're looking, I'll ask another question which was the APS acquisition. How much did it contribute in terms of gross premium this quarter, and then I know it contributed for the month of December last year. How was that - how did those numbers compare versus last year?

Okay. I'll answer the retention question while they're working on that one. Retention for the quarter was 87%.

How does that compare to fourth quarter last year?

Fourth quarter last year was a touch higher. I have that here actually. Well, actually for the year last year we were flat. Let's see, retention was 90% in the fourth quarter of 2010, I believe.

Okay. All right. Great. Thank you.

Do we got the API premium number?

Yes, we're working on the API premium number. The API premium number in the fourth quarter of 2010 was $5 million and in the fourth quarter of 2011, just under $3 million.

Is that gross premium?

That's gross.

Mark Hughes. Okay. All right. Thank you.

Our next question comes from Ray Iardella with Macquarie.

Hey, good morning. Just a couple quick ones from me. I guess the first one - just, maybe could you touch on the reaction from maybe some of your employees to the centralization of the claims and underwriting process centers, and the other things I just wondered if you can comment on - the employee count as of last year was 739 and I guess at the end of 2011 was 652. Just - is that the natural progress of the AMPH transaction, or could you comment on that further?

Yes, the API transaction is largely responsible for those differing numbers that you see there and that was what was anticipated from the point in time we started negotiating the transaction as we implemented and integrated the two organizations. In terms of the employee reaction to the consolidated customer service centers that will be opened over the next 18 months. We've had a very positive response from our employees. We are all very committed to making that successful and to bringing to that effort the necessary expertise and professionalism, and enthusiasm that we think will enhance even further what we regard as the gold standard for customer service in this space, so we're excited about that. You know, change always brings its challenges but you can't leave change to chance and we're not leaving that to chance, and our employees - all of us working together - will make certain that it works, and works in a very effective and efficient way.

Thank you. I agree 100% with that thought process. Then, I guess for Ned - maybe how do you guys think about cash and investments at the holding company, now that you guys have the dividend in place. I know it's roughly maybe $30 million a year but does that change how you think about how much capital you have at the holding company?

Not significantly, Ray. I think where the biggest challenge that we face right now with the cash that we hold at the holding company is that we'd like that to be fairly liquid and it's just a challenge to find any short term investments that provide any yield at all and so that's probably the greatest challenge we find with the capital that we hold a the holding company but the $30 million of anticipated dividends does not really change our approach at all.

Okay. That's helpful. And then, I guess last, sort of longer term, I guess going back to the growth question - do you guys still consider the medical professional liability line of business a long-term growth business. I know you're putting through the Certitude program and I think moving a little more towards the hospital risk, but longer term, do you see that as a good growth business over time?

The health care system in this country accounts presently for about 17% of the gross domestic product of the United States. Unfortunately that's growing. In our space within that we think will continue to be a place where folks who know what they're doing, and who bring discipline to underwriting and disciplined claims resolution will be able to grow their businesses. So, we like the space. We liked our position in the space and we anticipate that we will continue to be a very professional, liability centric organization.

Great. Thanks, Stan.

Our next question comes from Seth Bienstock with TimesSquare Capital.

Hey, guys, good morning.

Good morning, Seth.

You know, I'm not exactly sure which is a more impressive achievement - the Tide having shut out LSU or you guys posting a negative combined ratio, but either way, congratulations on a great quarter and continuing to build long term value. Just had one quick question. I appreciated the color that you shared on the favorable development earlier but was curious if you could share, perhaps, where the developed acts in your loss ratios for 2004 and 2005 now sit versus where the initial picks were?

I'm not sure if I have the loss ratios in front of me right now. In fact, I don't think I do. We have the amount of development by year.

Right.

As you saw in the K, but I think we'd have to come back to you with that.

Okay.

At another time.

No worries. I'll wait for the stat statement.

Yes, and then we'll have those posted on our website, Seth, shortly after they're filed.

Okay. Fair enough. Thanks again, guys.

Our next question come from Meyer Shields with Stifel Nicolaus.

Good morning, Meyer.

Good morning, everyone. How are you? Two quick questions on the expense ratio. One, was there any impact from the favorable development with the strong operating income on the expenses incurred in the quarter?

Not on expenses, but what you will see is an impact earned premium.

There's no incentive comp or anything that gets - ?

No. No. It had no impact on expenses themselves but it does impact the earned premium component of the ratio.

Okay. No, that's fair. Second unrelated issue - we saw the expense ratio decline, not just year over year but sequentially - should we expect that sort of seasonality going forward as well?

I don't know if I'd refer to it as seasonality. It's more event driven. So, this quarter we had both - when you're kind of looking at - I guess, sequentially it's the earned premium that's most significant but we have just event driven items like we did in the fourth quarter last year that impact the expense ratio. I wouldn't call it seasonal.

Okay. That's great. Thank you very much.

And our next question comes from Ron Bobman from Cap Returns.

Hi, thanks a lot. Both of you guys should be nicknamed the mailmen given all these great results consistently. I had a couple of questions. Ned, you characterized the favorable development largely concentrated - I think 2004 through 2009, if I remember your prepared remarks correctly. Generally speaking, or roughly - the current rate levels that you're charging for early 2012 business, or 2011 business - how would you compare those? How different are they than the rate levels in 2004 and 2005, let's say? Could you sort of give us a ballpark of the delta?

Ron, it's Howard. We actually look at that and we have some charts on that, which are not in front of us right now, but I would say at this point, probably down about 15-20%. I remember when we had a number about a year ago, it was down 14% over that rough period of time, maybe from 2004 at the peak of the cycle - the pricing cycle and it's moved down a little bit since then, so it may be 15-16% at this point =

Thanks.

Decrease.

Thanks.

[From the peak].

You didn't comment - I don't believe you commented - I'm sorry. Did I interrupt you?

No, no. Go ahead.

Okay. I don't believe I heard any comments about the reinsurance program but I guess sort of a naïve listener - which I consider myself but hopefully not foolish - but a naïve listener would sort of look at these outstanding results and possibly suggest or conclude that you missed a fair bit of opportunity in the 2004 through 2009 timeframe because of a degree of conservatism. And I recognize there would a lot of peril to at some point in time - now, last year, next year - to say, hey, we can be more aggressive and take on more - take on some more risk that we might have otherwise passed on under sort of the existing underwriting regime. But, I'm wondering if reinsurance and modify the reinsurance program even modestly provides you a way to sort of adjust that dial a bit or is that all so sort of - in some respect, sort of deemed a foolish endeavor from where you sit? Thanks.

Sure. Thanks. We do look at the reinsurance structure annually and we have made some modifications in the sense of obtaining better pricing in certain areas, certain states, certain lines of business as well as making modifications -- slight modifications that we've mentioned over the past couple of years in some of the terms.

For example, we no longer look to our reinsurers for recovery of proportional defense costs, which is typical in most reinsurance agreements. We've decided that we don't need to reinsure that exposure; we do quite well on our own managing defense and we don't need to trade dollars with reinsurers [on up].

At different points [in these] kind of several years, we've retained a portion of the risks that we would otherwise see it on a percentage basis. So in other words, we've participated, if you will, in our own reinsurance, depending on what our perception was of the reinsurance pricing.

So without making a wholesale change in the structure, we have modified it and enhanced it over a period of time. We look to the reinsurance structure that we have to protect us from the volatile, unexpected losses. So anytime that we consider increasing our retention -- in other words, using [less] reinsurance -- we have to consider the volatility effect that it would have on us. And we think we have a pretty good structure now, but we're going to look at it again this year.

Thank you very much.

(Operator Instructions)

Our next question comes from Howard Flinker with Flinker & Company.

Good morning, Howie.

[Hello, everybody]. Hello, everybody. Rick Scott in Florida is surely changing the market for insurance down there. He's making it more commercially-friendly. Have you seen any effect yet in medical malpractice, or is his initial focus on potentially massive hurricane losses?

The answer is we've seen no effect on medical malpractice. I've read about what Governor Scott is doing, and obviously he's got a significant task in front of him with respect to Florida personal lines markets in both home owners and otherwise. But we have not seen any effect on medical malpractice down there.

We like our book in Florida very much. It's a small book. It's deliberately small, but it's a core group of physicians that we are very, very pleased with. But to answer your question, Howie, is no, we haven't seen any impact on the Governor's activities yet in our space.

Before he was elected, did the previous insurance commissioner have a say in your rates or was it file-and-use?

Florida has been essentially file-and-use for quite a while, over a decade. But with a fairly active review process by the Office of Insurance regulation there, we and most other companies generally treat it as prior approval. We can file and use the rates, but at our own risk of the Insurance Office coming back and making us change.

So if Rick Scott's policy spreads, it may affect you positively?

Yes, depending on what it ultimately turns out to be, yes.

Yes. It would probably be commercially-friendly. Okay. Thanks, guys. Nice job.

Thank you.

And we have a follow-up question from Mark Hughes with SunTrust.

Just curious, the bottom-line impact of that favorable development in the ceded losses still had current year losses 90% or better. What did that do to the bottom line?

I'm sorry, Mark, I don't know that I followed your question.

The question was, you got the bump in earned premium because of that favorable development in the ceded losses.

Right.

How much of that actually flowed through to the bottom line? And the point I made there was just your losses --

I believe that the impact -- and I don't have it right in front of me -- let's say it was in the $10 million range pre-tax, which would put us at $6.5 million after-tax impact. I think that's -- I need to verify that. It may be slightly higher than that.

Yes. And if I had my numbers right, I was just point out that the current accident year losses were still 90% of earned premium, which included that extra amount. And so, again, assuming I'm looking at this correctly, I was wondering whether it really had much of a bottom-line impact at all.

This is Howard. Current accident year loss ratio was somewhat higher than normal because we've made adjustments to the death, disability, or retirement reserve to reflect the ever-aging [physician] population and the longer horizon, I guess I could say, that they have. Physicians are retiring later than they used to.

And I would add that the impact on the ceded earn did not have an impact on our valuation of current year losses. That earned premium from kind of associated loss gets -- would be pushed back into prior periods that it pertains to.

Right. So the loss associated with that would be negligible?

That ceded earned premium impact is associated with prior accident years.

Right, exactly.

It would not book any loss in the current period on that earned premium.

Right. So then your losses in the current accident year on premiums, aside from that favorable development in ceded losses, was fairly healthy, fairly high. Is that --?

And that is because principally of the DDR adjustment that we made in the fourth quarter, which is an outcome of our actuarial review process.

Right, exactly.

And you'll see a similar trend in Q4 of last year.

Right. Got you. Okay, thank you.

And we have a follow-up question from Ray Iardella with Macquarie.

Yes. Just on the ceded premium, I wonder, could you guys maybe comment on how we should think about that line item going forward, I guess, here in 2012? Just been a lot of volatility here, moving pieces in that line item. That would be helpful. Thanks.

Yes, I think it is a challenge, Ray. This year, more than in prior years, we saw a reduction in our ceded losses when we did our actuarial review. A lot of the actuarial review that we've done -- the results of our actuarial review in this past years has been within our net retained layer, and this is the first time we've had a significant decline in ceded losses during the period.

It's a little difficult to predict going forward how that's going to be impacted. So I don't know that I have a good answer. I think on a normalized basis, that ceded expense is around 8% of premium, so we cede about 8% of our premium. But it is going to vary based on ultimately what losses get ceded under the treaties.

Our primary reinsurance arrangement has a swing provision in it where the premiums that we pay under the treaty are determined in part by the losses incurred on the treaty. And to the extent that we cede less losses to the treaty, we cede less premium. But it's kind of hard to predict.

I guess I'll --

Okay

Ray, I'll add to that in that we go back and we talk about being in a volatile line of business. And then when we look at the excess layer, you're adding another layer of volatility on top of that, so that the variability there is even tougher for us to make any projections about.

Okay. No, that's helpful. Thanks.

It appears there are no further questions at this time, Mr. O'Neil. I'd like to turn the conference back to you for any additional or closing remarks.

Lauren, thank you, and thank everyone on the call. We appreciate your attention and we will join you next in May. Thank you.

This concludes today's conference. Thank you for your participation.