ProAssurance Corp (PRA) 2012 Q3 法說會逐字稿

Good day, and welcome to the ProAssurance third-quarter 2012 earnings conference call. Today's conference is being recorded. For opening remarks and introductions, I will now turn the call over to Mr. Frank O'Neil. Please go ahead, sir.

Thank you, Toya, and good morning, everyone. Thank you for your interest and participation in our call to discuss the third-quarter 2012 results of ProAssurance. Please bear with me for a second while I handle some of the important legal matters.

On Tuesday, November 6, 2012, we issued a news release reporting our results for the quarter and nine months ended September 30, 2012. Subsequently filed an 8-K and our third-quarter 2012 10-Q with the SEC. These documents and our other SEC filings provide important information about our Company and our industry, as they discuss in detail many 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 today dealing with projections, estimates, expectations and such 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 a part of these forward-looking statements. The content of this call is accurate only on Wednesday, November 7, 2012. We don't authorize or review any transcripts you may obtain, so please note that those transcripts may contain factual or transcription errors that could materially alter the intent or meaning of this call.

Final item, we are going to reference today non-GAAP items in our call. Please refer to our recent filing on Form 10-Q and our recent news release for a reconciliation of these non-GAAP numbers to their GAAP counterparts.

Participating in today's call are our Chairman and CEO, Stan Starnes; Chief Financial Officer, Ned Rand; Howard Friedman, our Chief Underwriting Officer and Actuary; Darryl Thomas, our Chief Claims Officer; and Vic Adamo, our Vice Chairman. Stan, we will look to you for some opening remarks.

Thanks, Frank. Before we begin, I want to mention the difficulties visited by Hurricane Sandy on many of our insureds in the Northeast, as well as upon so many of the people we are privileged to deal with on the investor, banking and reinsurance side of our business. Many of you were kind enough to reach out to us after the severe tornado outbreak in Alabama in 2011, and we want you to know that our thoughts are with you today.

We are already reaching out to assist our insureds who may have suffered damage to their practice by helping them deal with lost or compromised records and other consequences of the disaster. If any of our effective policyholders or their agents are participating in today's call, let me urge you to call our underwriting and risk management departments as soon as you can so that we may be of assistance in your recovery.

Our results in the third quarter were strong and solid. We believe our ability to operate profitably in a challenging market is the result of the long-term approach we take to this business. We continue to demonstrate the wisdom of maintaining underwriting and pricing discipline and ensuring that we effectively differentiate our product. With that combination, we are maintaining our profitability and delivering value to both our insureds and our investors. We are pleased to talk with you about our result, so Frank, let's get started.

Thanks, Stan. We are going to start today with Howard, since underwriting and reserving questions have been high on the list of investor interest. Howard.

Thanks, Frank. I'll start with the general state of the market. We are finding profitable business to write and renew at rates we believe will maintain our margins. The market remains quite competitive, but as we have been saying all year, the degree of competition varies from state to state and is not at the overall level we have seen in previous soft markets.

We continue to see rates firming a bit in some lines, such as podiatry, where changes in the scope of treatment is driving pricing. We also see firming continue in our lawyers professional liability line of business. But the bottom line is that the core physician and hospital markets are going to remain competitive, given the ongoing favorable loss environment.

Average renewal pricing in our physician book was up 2% in the third quarter compared to the same quarter a year ago. There are a number of factors in play, but this is primarily due to higher rates in the podiatric line, in which renewals are concentrated in the third quarter.

Premium retention in the third quarter was 89% in our physician book of business, unchanged from the same quarter in 2011. Premium retention for the year is 90%, up a point from the first three quarters of 2011.

I do want to echo Stan's opening remarks by emphasizing our dedication to writing only the business that supports our profitability targets and to walking away from business that would not appear to meet those targets. As we've said, you can have all the top-line growth you want if you are willing to pay the price down the line, and we are confident that our path to continuing profitability does not point in that direction.

I can also touch on reserve development. Net favorable loss reserve development was $50 million in the quarter. For the year, net favorable development was $157.5 million, which is about $15 million higher than the nine-month period of 2011.

As in prior quarters, our favorable development is being driven by the continuation of loss severity levels that have proved to be better than our expectations. Right now, severity is increasing 3% to 4% a year, and there has been no change in frequency, which has been flat for the past few years. In analyzing the loss environment, we therefore see nothing representing a major change in overall loss trends. And we note that losses are not unduly concentrated in any one specialty or location. As a result, our 2012 accident year loss ratio selection remains consistent, adjusted for changes in the mix of business. Frank.

Thanks, Howard. With that background, let's look to Ned to see how that played out in the results.

Thank you, Frank. I will be focusing on the quarter and mentioning the nine-month period ended September 30 where it helps to put the quarter into context.

Gross premiums written were $157 million, a decline of $18 million over last year's third quarter. We continue to see the effects of the competitive market Howard mentioned, and for the nine months, the impact of the two-year policies we detailed last quarter. In the quarter, net premiums earned were $127 million versus $135 million in the year-ago quarter. The difference there is 6%.

Our net investment result increased this quarter compared to last year's third quarter and the first two quarters of this year. This was the result of a substantial increase in unrealized gains in our unconsolidated subsidiaries. Net investment income is the primary component of our net investment result and is essentially flat compared to this time last year. This is reflective of our decision to put more of our capital to work in investments outside our core fixed income allocation, and is an indication that we've been able to slow the rate of decline in our portfolio as we face a continuing low interest rate environment.

In the quarter, we added additional dividend-paying equities and increased our high-yield investment allocation. As a reminder, anything other than investment-grade fixed income is considered other for our portfolio, and that allocation, although higher now than in past quarters, is still less than 15% of our $4 billion portfolio.

Underwriting, policy acquisition and operating expenses declined 5% quarter over quarter. I mention that because it ticked up last quarter due to higher employee and benefit costs, and I wanted to be sure you noted that it was back down this quarter. So our total expenses for the quarter were down 7%, but due to the decline in net earned premium, our expense ratio did not show a similar decline.

Our cash flows were affected by the timing of several large loss payments relating to claims that have been in the pipeline for a number of years. The timing of loss payments is highly variable and we do not feel this represents an emerging trend. It is also worth noting that a meaningful percentage of these large payments will ultimately be recovered from reinsurers.

The bottom line for the quarter was solid, as Stan mentioned. Net income was $60 million or $1.94 per diluted share and operating income was $53 million or $1.71 per diluted share. Return on equity, which we calculate by dividing annualized net income by the average of beginning and ending shareholders' equity, was 10.4%, 1.5 points higher than the third quarter 2011. For the year, our ROE is 10.3%, essentially equal to last year's nine-month number.

Our focus on the bottom line goes hand-in-hand with our dedication to building book value, which stands at $76.47 at September 30, up 8% so far this year. Tangible book value is $69.64 per share.

I briefly mentioned capital management earlier in discussing investments. Allocating greater capital to investments other than investment-grade fixed income is just one of the ways we are putting our capital to work. In the third quarter, we used $53 million to pay off all of our long-term debt. We recognized a book loss of $2.2 million as a part of the debt retirement, something we mentioned last quarter.

Our management team and the Board are constantly reviewing our capital position to ensure that we are being good stewards of the money entrusted to us. We continue to identify M&A as the preferred use for that capital, but I can assure you nothing is off the table and our Board is considering all options. Frank.

Thanks, Ned. Vic, please update us on the status of the transactions involving Medmarc and Independent Nevada Doctors Insurance Exchange.

Happy to, Frank. Both transactions are on track. On October 29, the subscribers of Independent Nevada Doctors Insurance Exchange overwhelmingly approved the merger into ProAssurance. The next step is a regulatory hearing scheduled on November 27 in front of the Nevada Insurance Department. At that hearing, we hope to gain final approval and then close the Nevada transaction shortly thereafter during 2012.

At Medmarc, the merger approval documents have been mailed to policyholders for their vote at a special meeting to be held on December 4. The required regulatory hearing will be held tomorrow in Vermont. Assuming all goes as planned, we plan to close the Medmarc transaction effective January 1 of 2013.

Working on transition and integration is somewhat limited by the law at this point in time, but we are confident that the integration will go smooth. Medmarc will remain a distinct business unit, given its unique line of business, and the Nevada company will be part of our core physician search operations, and we will look to our new Nevada staff to take the lead in serving the doctors of that state.

Thanks, Vic. Let me give everybody a general tort update. In last quarter's call, we mentioned the Missouri Supreme Court's ruling striking down the $350,000 limit on non-economic damages there. Just a few weeks after that Missouri decision, the Supreme Court in Kansas, next door to Missouri, upheld the $250,000 non-economic damage cap there. This is a great reminder that this is a state-by-state business, where local presence is just as important as financial strength and geographic reach.

Stan, we will now look to you for final questions before -- or final comments before we take questions.

Thanks, Frank. As I've said to many of you many times, ProAssurance is not a quarter-to-quarter company. In many ways, we are not even a year-to-year company. By that, I mean we are focused more on our bottom line and how that strengthens us for the future than we are on achieving certain results each quarter, though good quarterly results often flow from a sound long-term strategy. After all the solid results we report to you today were formed in part by actions we took years in the past.

We understand the discipline needed to build a company such as ProAssurance, one that has the balance sheet strength to protect its policyholders and the knowledge and experience to evolve to meet the changing needs, while at the same time achieving the results that create long-term value for our shareholders. There is simply no substitute for that discipline, and we are not going to waver from it.

I will admit it would be easy to lower our prices and build market share so we could say that we are the largest. One could write all of the premium you want, but in this environment, it would ultimately put the Company at risk. After all, in this business, lasting strength comes from capital, not premium. We remain convinced that the market will turn, as it always has. And when that day comes, the companies that are competing today on price alone will have a day of reckoning and, unfortunately, so will their insureds.

We do not intend to let that happen to ProAssurance or our insureds or our investors. The course we are following has been successful across the insurance cycles since our founding as a mutual company in the '70s, and it will continue to serve us and you quite well. Frank?

Thank you, Stan. Toya, we are done with our prepared remarks and ready for questions.

(Operator Instructions) Matt Carletti.

Good morning. Before I -- first things first, Stan. Congrats on the big win in Baton Rouge last weekend, and wish you luck this weekend.

It was a great time, wasn't it?

And just a couple questions. First is, following up on Ned's comments on excess capital. Could you just give a little more color on, one, what your views are on special dividends, given that your stock trades at a premium to book value and the operating leverage is low? And two, if the results of the election last evening impacts that view or the timing of that view.

I'll let Ned respond in just a second, Matt, but let me just mention this. Our Board looks at our capital situation, without exception, at every meeting. And Ned can sort of talk through with you the ways we think about capital and the ways that we strive to make the best use of our capital for our shareholders.

I can say this to you, that the Board will look at everything, everything is on the table, and the Board will make a decision based on the long-term best interest of our shareholders and the long-term execution of our business plan.

With that, let me let Ned give you some of the parameters that we look at in terms of share buybacks and that sort of thing.

Just to follow up on a couple of Stan's comments, when we are thinking about the capital that we have available to deploy in our business, we really kind of think about it in a number of places. And certainly our preferred way to put that capital to work is in M&A and in organic growth in our operations, and you see that in the transactions that Dick mentioned with Medmarc and [INDEX].

We did pay down our debt this quarter, which we think was a good use of some of the excess capital that we hold. And as I mentioned in my prepared comments, we are taking some additional measures in our investment portfolio to put some of that capital to work.

But we do believe that it is prudent at the right time to return capital to shareholders, and historically we have done that in share buybacks. As we've stated in the past, when we see our share price fall below our stated book value, we will be aggressive buyers of that stock. Above book value, we have bought stock, but we tend to be a little more cautious in doing so.

To your specific question about a special dividend, I guess first off, I don't think the election changes anything from our perspective on the way we manage capital. So in answer to that question, no, there is really no impact. Special dividend we see as one of the potential tools we have available to us and certainly is one of the things that our Board does consider when they discuss capital and what we need to do with that capital.

Great, thanks. And just one other, if I can, related to competition. As you look at what is occurring currently in the market and maybe contrasting it with the earlier part of this year, is it pretty steady competition? Is it easing any? Is it getting any worse? O is it just kind of state-by-state, market by market?

I think that the competition is pretty steady and generally consistent. It can vary from state to state, but that also -- you have to look at the renewal cycles in different states in order to judge that, because some states have heavy renewal activity in January 1 and other states are more spread out during the year, or focused more to July, August, when physicians historically began their practice after medical school or residency.

So I think if you take those factors out of it and look at what is happening in the marketplace on just the accounts that are renewing and the competitors that we run against -- run up against, I don't think we are really seeing much different right now.

Okay. Thanks very much for the comments, and congrats on the quarter.

Matt Rohrmann.

Gentlemen, good morning. First question, is I guess kind of going along with the competition as well. Howard, has much changed in terms of the competition, not necessarily by state, but by specialty?

No, I wouldn't say so. I think, as mentioned in the earlier remarks, in a few lines of business we are seeing rate increases, both our own and from competitors, in the podiatry line and the lawyers professional line. But if you look at the M.D. physicians, not really much different by specialty that I would say. And the hospital business is still quite competitive all over. I think the hospital professional liability is the area where historically and still we see the most activity from the multiline, larger commercial carriers, who have historically been in and out of the hospital business.

Got you. And then I guess any comments on any of the moving parts down in Florida? And I know Frank sent out stuff regarding Amendment 5 there. Any thoughts on that?

That's the Supreme Court amendment. I think it is too soon to say what change or what effect that could have.

Generally speaking, we are reluctant to ascribe potential impacts to legislation or constitutional efforts until we see what the courts have to say about them. Because there is a wide variety of legislative efforts over the years that look very different after the courts deal with them than they looked before the courts had that opportunity.

Got you. Lastly, Ned, I know everybody loves to talk about the special dividends. But I guess any comments around perhaps bringing an increase of any size to the regular dividend that you guys have been doing over the past year.

That is something else that our Board looks at on a quarter to quarter basis. It's certainly something that our Board has given and will give consideration to.

All right. Thank you, gentlemen.

Mark Hughes.

Thank you. Good morning. The equity in unconsolidated sub line was better this quarter. What is the outlook there? Should we assume this is the new level, or --?

No, you shouldn't. Thanks for that question, Mark, because I think it is important to note. A couple of things there. There is really -- if you look at it, there are kind of three pieces, and you can see some details in the Q of it.

But for the quarter in particular, the tax credit limited partnerships that we have, those amortize over time and we get, during the third quarter, essentially audited financials from each one of those limited partnerships. And as a result of those audits -- up until that point, we are making estimates of what that amortization should be. And based upon those audited financials that we get in the third quarter, we make an adjustment to the amortization. So you saw that this quarter, and that really is the biggest driver in the quarter.

Our investments in other limited partnerships did show a positive result this quarter as compared to a loss in the third quarter of last year. But that is -- those returns are volatile. So I think really the most meaningful component is just this amortization adjustment that we've got related to the tax credit limited partnerships, and next quarter we will return to probably what is more of a run rate on those.

That is about page 51 in the 10-Q.

Okay. And then how about pricing for the -- you've certainly touched on it, but at least as reported in the press release for the core doctor business, up 1% through nine months, as compared to flat through six months. Was it a little bit better in 3Q?

It was a little bit, and as mentioned earlier, some of this is affected by the pattern of renewals in different states, and also mention that the podiatric business is seeing some rate increases and there is a concentration -- a greater concentration of podiatric renewals in the third quarter than in the other quarters of the year.

So I think once you adjust for mix of business, it may have been slightly better in this quarter, but nothing dramatic.

Finally, any update on the consolidation trend of the smaller doctor practices?

You know, I think it varies from geographical region to geographical region around the country. To the extent it was ever an issue, last night's election, I think assures that there is going to be no repeal or significant revision to the core tenets of the Affordable Care Act. So my guess is, and it's just a guess, that physician integration will continue around the country.

Now, it won't be a straight line. There will be some ins and out in that sort of thing. But I think there is every indication that that integration will continue apace.

And it is our firm intent to be here, not only for the historically small-group, solo physician, but for the physicians who have chosen to align themselves with larger organizations. And I think we are one of the few companies on the competitive landscape that have a unique opportunity there. And we will sort all that out as time goes along.

(Operator Instructions) Raymond Iardella.

Thanks and good morning. A couple quick questions. I think, Ned, you had mentioned a few things about the Board potentially meeting to discuss potential capital management action issues going forward. When is the next time the Board is scheduled to meet?

Our Board meets on a quarterly basis, but we don't publish the dates of our Board meetings.

Okay, fair enough. And maybe let me approach sort of the capital question a little bit differently. It looks like you guys dividended up $160 million of capital in October from the insurance subsidiaries. Based on my math roughly, $600 million right now at the holding company. Then obviously the two transactions scheduled to close potentially later this year and early next year. But still $400 million roughly at the holding company.

Can you just maybe comment on what you guys feel is acceptable to hold in terms of expenses and, you know, potential dividend payments, or is that not the right way to think about it?

I think what we've been really looking to do is manage the capital in our insurance subsidiaries. Given the fact that we are in an extremely competitive marketplace and the top line is not growing in our organic business, we're trying to manage the capital in those insurance subsidiaries, pull it out when we can. We always have the ability to push it back down if the opportunities for organic growth presents itself. In the meantime, we've got a war chest available to us for M&A and other capital management activities.

Okay, that's helpful. And then I think, Ned, you had also mentioned about an increase in some loss payments in the quarter that kind of drove operating cash flow a little bit lower. Just kind of curious -- is there anything else in the pipeline, sort of claims that you see, that would that trend continue? And I know you mentioned some reinsurance recoverables. That should offset over the next couple of quarters, I'm assuming, right?

Yes, the reinsurance recoveries will come in over the next couple of quarters. The group that does our reinsurance collections does a fabulous job on it. We tend to see those recoveries within the next quarter. So I think the bulk of that, we will hopefully see in the fourth quarter.

As far as your other question on trends, it is just -- it is too hard to predict when claim payments, especially these larger payments that might be out there or larger losses that are in the appeal process, as to kind of the timing of those and the resolution of those, it is just too hard to predict.

Okay. I can appreciate that. And last one, if I can sneak this one, just for Howard. Any development in terms of the lawyers professional liability book? I know it is pretty small, but anything you can point out there?

At this point -- are you talking about the book of business and how it is developing in the market or are you talking about lost development (multiple speakers)?

Loss development, historical prior-year development.

We did not recognize any loss development on the LPL at this point. We will be looking at that again when we get to year end.

Okay, thanks again.

Howard Flinker.

Hi, everybody. Are you guys -- Stan and the rest of you, are you thinking of testing out some additional new lines for ProAssurance? You have plenty of capital, you have real discipline in underwriting, and most of the property-casualty companies in the rest of the industry are not so eager to expand, other than to raise rates. Do you have any thoughts along those lines, besides insurance for lawyers?

Thanks, Howie, and I hope you survived last week's storms.

Yes, thanks for the heads up. I got very lucky. Not a second of discomfort. I was extremely lucky.

Great. You know, we look at everything, we worry about everything, we think about everything, and we try to be very deliberate and very intentional. I am not a big believer in saying we'll never do something, because we don't know what tomorrow brings. I'm not a big believer in saying we will always do something, because again, we don't know what tomorrow brings.

The only thing that is nonnegotiable is our integrity. Everything else, we will look at from the standpoint of what is in the best long-term interest of our shareholders. And as we think about the evolving world of healthcare, we clearly have decided that we are going to be a major player in that world from a medical liability standpoint, regardless of whether it is a solo practitioner or a physician or a home healthcare worker or anyone else along the entire spectrum of healthcare.

Agreed. As long as there are doctors, they are going to need you.

That's exactly right. And as other opportunities present themselves, and they do on a fairly regular basis, we look at those and analyze them in terms of whether it is something that is in the best interest of our shareholders and whether it is something that will accommodate or complement our traditional business. And so nothing is off the table.

I was thinking more on the line of something that doesn't complement your business. Let's say -- I don't know -- XYZ insurer has a really good underwriting record, and you say, oh, yes, we know those guys in Albuquerque -- I'm just using a place. Let's talk to them and see if we can do something additional. Anything along those lines?

I've never been to Albuquerque, so I can't say about that.

All right, so make it Seattle.

I'll repeat what I said a moment ago. We will consider everything. And you know, I think something complements our business as long as it doesn't detract from our business.

Right, agreed.

So that's sort of the basis for that.

Okay. Fair enough. Thanks, guys.

Mark Hughes.

Ned, what is the right tax rate, do you think, for next year?

For next year?

He didn't get elected last night.

The only thing I would say is what drives our tax rate is the municipal bonds that we hold and the tax credits that we hold. Those are the two most influential impacts to our statutory rate, and we don't foresee any significant changes in those allocations.

So it's been kind of high 20%s through the first nine months. Is that likely to be sustained?

Again, it is really driven by those allocations in municipal bonds and tax credits, and what those numbers are on those relative to what overall earnings are. So it is very hard to predict. It is impacted by our ongoing operations, it is impacted by favorable development. So it is hard to say exactly what the run rate is going to be.

But from a modeling standpoint, you can model the impact of the municipal bonds, you can model the impact of the tax credits, I think on a fairly consistent run rate. And then everything else is going to get taxed at 35%, except for the dividend received deduction on our equities.

Thank you.

[Sam Hoffman.]

Good morning. I had a question on the med-mal insurance industry and the trends that you are seeing. Across the insurance industry, it has been predicted and actually observed that the cycle has been less pronounced this time around than it was in the 1997 to 2001 period. The companies are more disciplined, they remember the mistakes that they made before, and obviously have better analytics and are more focused on profitability over growth. And you commented earlier on the call that you felt that some companies this time around are currently making a fix that would likely put them out of business.

And my question is can you, given your overall commentary on the med-mal industry in terms of the amount of increased competition that you are seeing, is it just enough to prevent you from growing? And do you think it is less likely to be harmful to you guys and others who were disciplined this time around?

Thank you for the question. You know, I didn't say anybody was going to go out of business. I said there would be a day of reckoning. We are in this business where we take a risk for a price. In other words, you are potential insured, you want to transfer a risk to us, we quote you a price.

The difficulty in the long-tailed business is we quote you that price years before we know what that policy is going to cost us. So there is always a degree of uncertainty. And it is easy to delude yourself in this business that you are getting the proper pricing for your product. We think it is key for our policyholders and our shareholders that we price the product with discipline. Now, if one chooses not to price it with discipline, then there will be a day of reckoning, just as there always has been.

You know, there is a great desire on the part of many to say about whatever is happening in the world that this time it is different. And you know, nothing is ever precisely the same as it was before. But the insurance cycle, in my view, is very much alive and well. And while it may develop at a different rate or different speed, it will continue to be a cyclical business, simply because there is no precise way of knowing of what you ought to price your product at and what risks really carry in terms of potential losses.

So what you have to do is act in a very disciplined way and protect your balance sheet, protect your financial statement and continue to differentiate your product. We very strongly believe here that when you buy a policy of medical professional liability insurance from ProAssurance, you're getting a product that is very different from the product offered by others. And we go to great lengths to explain that to our customers, and to this point in time, we have been successful at it.

But underlying all of that has to be the conviction that if you can't get what you regard as the proper pricing for the product, you have to walk away. Sometimes in this business, you make the most money on the business you do not write, and we have to be mindful of that as we go forward. We can't predict the cycle, we don't know when it will turn. We don't know the pace or the velocity of the turn.

What we do know is that we've had a lot of experience in this business, and we will utilize that experience in a way that best serves our shareholders.

Terrific. Thank you.

Raymond Iardella.

Thanks for taking the follow-up. Just maybe a quick question for Stan or Vic. Can you maybe talk about the M&A environment, where it stands today relative to last quarter's. What is the pipeline looking like, and are you seeing any change in sort of the demand or supply out there in the market in terms of medical professional liability properties?

I'll let Vic give you his view of the world, and he spends a lot of time on that for us. But I would say this to you. It is -- the opportunities are episodic. You cannot make them happen. You cannot predict them. You just have to be in a position to take advantage of them when they come along. And by in a position, I mean financially and organizationally.

We think there will be plenty of opportunities in the future, but you can't begin to predict them on a year-to-year basis much less a quarter-to-quarter basis.

I definitely agree with that. Let me give a little color around it. Two things are going on that are a little bit contradictory to each other in the M&A space. Property and casualty insurance companies generally are well-capitalized now because of the decrease in frequency over the last number of years, so there is not immediate pressure.

On the other hand, as I interface -- and we all interface with other companies in our business -- everybody is looking down the road and saying, can my company -- and this is even more so for smaller organizations -- survive in a world of larger medical groups and consolidation? And I think there is a lot of talk around tables, board tables at companies, about what their future is.

So it is a little bit going both directions. There is discussion, as there always is. We are just in this -- as Stan says, it is a long-term process it that we remain very active in as opportunities permit.

Okay. I appreciate the additional color.

There are no further questions in queue at this time.

Very good, Toya. We thank everybody. Wish you a happy holiday season. We will speak to you after the first of the year.

This concludes today's conference. You may disconnect at this time, and enjoy the rest of your day.