ProAssurance Corp (PRA) 2015 Q4 法說會逐字稿

Good morning, everyone. Welcome to the conference call to discuss ProAssurance's results for the fourth-quarter and year-end 2015. These results were reported in a news release on February 23, 2016, alongside the Company's filing of its yearly report on Form 10-K.

These documents are intended to provide you with important information about the significant risks, uncertainties, and other factors that are out of the Company's control and could affect ProAssurance's business and alter expected results. Further, we caution you that management expects to make statements on this call dealing with projections, estimates, and the expectations, and explicitly identifies these as forward-looking statements within the meaning of the US federal securities laws and subject to applicable Safe Harbor protections. The content of this call is accurate only on February 24, 2016 and except as required by law or regulation, ProAssurance will not undertake and expressly disclaims any obligation to update or alter information disclosed as part of these forward-looking statements.

The Management team of ProAssurance expects to reference non-GAAP items during today's call. The Company's recent news release provides a reconciliation of these non-GAAP numbers to their GAAP counterparts.

Now as I turn the call over to Mr. Frank O'Neil, I would like to remind you this call is being recorded and there will be time for questions after the conclusion of prepared remarks. Mr. O'Neil, please go ahead.

Thank you, Vicki, and welcome to everybody on the call. Participating with us today are our Chairman and CEO, Stan Starnes; Howard Friedman, the President of our Healthcare Professional Liability Group; our Chief Financial Officer and Executive Vice President, Ned Rand; and Mike Boguski, the President of our Workers' Compensation business. As is our custom, we're going to begin with remarks from Stan to set the stage for our presentation. Stan?

Thanks, Frank, and thanks to those who are joining us today to hear more about our fourth-quarter and full-year 2015 results. We produced solid results despite operating in a fiercely competitive environment and facing a very difficult investment climate. We also remained focused on creating value for our shareholders, returning $290 million in capital through dividends and the fiscally responsible repurchase of our shares. As strong as our results were in the quarter and for the year, adjustments in the fourth quarter did reduce our profitability. Today, we want to peel back the layers and help you understand those adjustments. We also want you to understand why we are so optimistic about the opportunities ahead of us in 2016 and beyond. Since so much of what Ned will discuss in his financial review is predicated on understanding the reserve adjustments, I think it might be helpful to hear from Howard first. Howard?

Thank you, Stan. Let me reiterate something from the news release as a preface to my discussion. We do not see any change in the underlying loss trends in our medical professional liability business and prior-year favorable loss reserve development was quite strong. However, there were a few items that had an effect on the current accident year loss ratio which deserves some discussion.

I'll start with loss reserves for mass tort events. These events have unfortunately become a fact of life for healthcare professional liability. In short, they are collections of medical liability lawsuits that stem from common or related causes. An example would be a headline grabbing billing investigation such as a physician who is accused of performing unnecessary procedures. The headline attracts dozens or even hundreds of civil claims that parallel any regulatory or criminal proceedings. While these professional liability claims may not result in indemnity payments, they require defense and can be complex. That said, they are a limited portion of our overall open case inventory and a correspondingly small part of our reserves, a bit less than 2%.

As we have explained in the past, however, even a small change in reserves on a percentage basis can have an outsized effect on our results because of the size of our overall reserve balance. In our actuarial evaluation at year end, we added $12 million to our current accident year reserves for these mass tort events. Again, a small number relative to the size of our reserve balance but enough to affect the current year loss ratio. Also in the quarter are reserve for death, disability, and retirement, DDR, developed favorably but not as favorably as last year when we made a more significant adjustment to the retirement and lapse rate assumptions that drive this reserve. That too affected the current year loss ratio when compared to the prior year since changes to this perspective reserve are always reported in the current accident year. The favorable DDR reserve development this year was $4.8 million versus $17.9 million a year ago.

Now let's shift gears to address the factors behind the increase in ceded premiums compared to last year's fourth quarter, which also contributed to the higher current accident year loss ratio in this quarter. In our news release, we mentioned that there was a $13 million difference in ceded premiums from fourth quarter last year to fourth quarter 2015 related to the retrospective rating provisions of our older reinsurance treaties. In the fourth quarter of 2015, we increased gross case reserves by approximately $6 million on three specific cases from 2008 resulting from trial verdicts. At this time, these cases remain open and unresolved. We expect one to be resolved soon and the other two are in the process of being appealed or retried. Any or all of them may ultimately be resolved for less than the current reserves. Because these cases are tied to retrospectively rated treaties, the change in case reserves had a direct effect on the retrospective reinsurance premium accrual in the current period.

Our retrospectively rated reinsurance continues to be profitable for us allowing us the benefit from better than expected loss experience as well as our claims handling success. In a given quarter, however, the premium adjustments may move up or down depending on loss activity. Claims activity in the fourth quarter of last year resulted in a reduction of $5.6 million, almost the opposite of the current quarter, thus the $13 million period-over-period effect. For the year, the overall movement in ceded premiums related to these swing provisions was an increase of $15 million.

Not to steal all of Ned's thunder but I should probably mention here that in addition to those adjustments, two other positive factors are at work in the ceded premium increase. First, the Certitude program with Ascension continues to expand and we do see premium and share risk with Ascension. For the year, we wrote $30.8 million of Ascension premium and our net premiums written were $14.5 million. The second reason centers around our session of podiatric reinsurance premium to Syndicate 1729, which had four quarters of operation this year but only three quarters last year. So there was an extra quarter of premiums ceded in 2015. Frank?

Thanks, Howard. Now we're going to get some follow-up on specialty P&C segment in a minute but Ned, with Howard's background, will you walk us through the financials?

Sure, Frank. I will echo Stan's comments. This was a successful profitable year for ProAssurance, and I'll focus my comments on the year's results except for quarter-specific events that require additional color.

Net income for 2015 was $116 million or $2.11 per diluted share. 2015 operating income was $143 million or $2.61 per diluted share. Both results were affected by the fourth-quarter adjustments Howard just explained. Our net investment result for the year declined by $17 million compared to last year as the current investment climate dampened our results as it has for almost every other insurance company.

For the year, we recorded a $3.7 million gain from our equity and earnings of unconsolidated subsidiaries, about $300,000 less than in 2014. Net investment income for the year was $109 million, a 13.5% year-over-year decline, primarily due to lower average investment balances resulting from our continuing capital management programs as well as a lower interest rate environment. Investment impairments totaled $15.3 million in 2015, $9.2 million in the quarter, primarily in energy related investments.

Stan mentioned our optimism about 2016 and our operational results in 2015 and in the fourth quarter are part of the reason we feel that excitement. For the year, consolidated gross premiums were up 4.2% over last year, and in the fourth quarter the increase over 2014's final quarter was 9%. In the fourth quarter, all our operating segments upped premium growth over the fourth quarter of 2014 building momentum into 2016. This was especially true in workers' compensation and in our Lloyd's syndicate segments, which have increased premium in every quarter this year as compared to 2014.

Cross-selling and cross-licensing of agents and brokers is continuing to add premium. In 2015, we were able to generate approximately $5.5 million of new business from targeted accounts within our healthcare, professional liability, life sciences, and workers' compensation lines of business, up from $1 million in 2014. As we have described to you before, this is generally a once a year sales cycle and it can take several cycles to move from being a credible competitor to being the carrier that's selected for the risk. This year will be our second and third time in front of many of these risks presenting our broad variety of insurance solutions.

For the year, our current accident year loss ratio was 4.5 points higher than in 2014 due to the swing in the fourth quarter that Howard explained at the start of the call. We recognized $161 million of net favorable reserve development in 2015, $159 million from specially P&C, and $2 million from workers' compensation. While significant and positive, this is 11.5% lower than in 2014. [Invest] in net loss ratio was up 7.3 points compared to 2014. The consolidated expense ratio for 2015 was 31.3%, 1 point higher than in 2014, and our combined ratio for the year was 90.5% with the bulk of the increase directly attributable to the higher net loss ratio.

Our effective tax rate in 2015 was 9.8%, a significant reduction from 2014 when our effective tax rate was 25%. The lower effective tax rate is driven in part by the $41.6 million in realized losses which caused the effect of our tax preference investments, mainly muni bonds and low income housing tax credit, to be amplified. We anticipate seeing a low-teens effective tax rate in 2016 as we recently invested in historic tax credit investments that are expected to provide a significant amount of credits this year.

Through the fourth quarter, we repurchased approximately 94,700 shares of our stock at a cost of approximately $4.6 million. That brought our purchases for the year to 3.7 million shares at a cost of approximately $170 million. Since the start of this year, we have repurchased approximately 27,700 shares at a cost of $1.3 million leaving $110 million in the current Board authorization.

I want to circle back on the fourth quarter repurchase activity as it was lower than in prior quarters. We have said all along that our buyback strategy is sensitive to the price of our stock relative to book value, and although we were buying above book value throughout 2015, our share price escalated in the fourth quarter of the year and our repurchase activity tapered off. I'll remind you that we target a payback period of around three years when buying above book value. Given that we wanted to maintain our capital management initiatives and did not feel that buying shares in the fourth quarter was the most effective use of capital, we elected to pay a $1 per share special dividend which brought total capital return in the fourth quarter back into line with the prior three quarters.

As Stan mentioned, between buybacks and dividends declared in 2015, we returned almost $290 million to shareholders last year which reduced book value per share by $2.88. December 31 book value per share was $36.88. And tangible book value per share at year end was $31.17. And finally, at the end of 2015, we held $261 million in unpledged cash and liquid investments outside our insurance subsidiaries and available for use by the holding company. However, we did use $70 million of that total to pay dividends in January. Frank?

Thanks, Ned. Next, let's go back to Howard for comments on specialty P&C.

Thanks, Frank. Specialty P&C gross premiums written were down a little more than 1% year over year but were up 6.6% in the fourth quarter compared to last year. For the year, physician premiums, the largest component within specialty, were down a little less than 2% although they were up 6.4% in the fourth quarter. We added $23 million of new physician business for the year. We noted a 9.9% increase in healthcare facility premiums for the year with much of that coming in the fourth quarter. This is another reason for our optimism about 2016 given that facilities are playing an ever-increasing role in the delivery of healthcare in the US. We think that this shows that we are making progress in this area.

Physician premium retention was 91% in the quarter, a 1 point improvement over last year, and we clawed our way back to 89% for the year, unchanged from last year but a significant accomplishment if you recall our 85% premium retention in the first quarter of 2015. Pricing on our renewing physician business improved 1 point year over year.

I said this before but I will say it again, despite some isolated adjustments and reserves, we do not see a change in the underlying loss trends across our insurance lines in the specialty P&C segment. In healthcare professional liability, the largest portion of the segment, our frequency remains essentially flat and severity continues to increase at the same manageable 2% to 3% per year.

Thanks, Howard. We will go now to Mike Boguski for comments about the workers' compensation segment. Welcome, Mike.

Thank you, Frank. The workers' compensation segment operating results for the year-end 2015 increased 28.5% over 2014, driven by growth in earned premium, prudent expense management, and partially offset by an increase in losses. Our 2015 fourth-quarter results decreased compared to the same period in the prior year driven by an increase in severity related claims activity both in our traditional book of business and alternative market programs. Our net premiums written increased 8% year over year driving a 9.5% increase in total revenue. Premiums were higher across all of our operating territories, and we wrote $38 million of new business.

Our audit premium was $6.8 million, a gain of approximately 79% year over year driven by improved economic conditions and strong financial underwriting. Renewal pricing increased 1% in the quarter and 1.5% for the year. Premium retention was 83% for the year and roughly the same in the fourth quarter reflecting the intense competition in our operating territories and the conversion of two guaranteed cost accounts to large deductibles which carry a lower premium. We renewed all the available alternative market programs during 2015 and successfully added three new programs during the year, two of which were produced in the healthcare market segment, including our first combined medical professional liability and workers' compensation segregated portfolio cell program.

I previously mentioned the severity increase in the fourth quarter, much of which relates to injuries to newly hired workers from policyholders adding employees to keep pace with sectors of the growing economy. There were 10 reinsured claims for all of 2015, including five in the fourth quarter compared to three reinsured claims for all of 2014 with one such occurrence in the fourth quarter. The hazard level of our book of business remained consistent year over year and claims frequency declined 5.9% in the traditional book of business in 2015. We recorded $2.2 million of favorable reserve development in 2015 compared to $1.3 million in 2014. For both years, this includes $1.6 million relating to the amortization of purchase accounting fair value adjustments.

We successfully closed 64.5% of 2014 and prior claims during the year compared to 59.7% in 2014, representing one of the best claim closure years in our Company history. Importantly, as of year-end 2015, we had just 11 non-reinsured claims open in our traditional book of business from 2007 and prior. And in the alternative markets book, there was only one open non-reinsured claim from 2007 and prior. These results highlight the unique short-tail nature of our business compared to competitors in this line.

The 1 point decrease in the 2015 expense ratio is primarily attributable to close attention to expense management coupled with the growth in premiums and reduced reinsurance rates. Also, we had mentioned throughout the year, the implementation of a corporate management fee in 2015 had no counterpart in 2014 and thus limited the decrease in the 2015 underwriting expense ratio. The 2015 combined ratio was 95.9% including 2.4 percentage points of intangible asset amortization and the initiation of the corporate management fee. Frank?

Thank you, Mike. We are going to bounce back to Howard now to get an update on Lloyd's.

Thanks, Frank. Two points to stress. Remember, we are reporting on a one quarter lag with the exception of certain US-based administrative expenses and investment results associated with our funds at Lloyd's, which are held as an investment. And we are reporting on four quarters of operations in this call whereas last year due to the lag, we reported only on three quarters.

Our 58% participation in Syndicate 1729 resulted in $57 million of gross premiums written in the 12 months we are reporting, almost 69% higher than last year. While a portion of the increase can be traced to the difference in the number of operational quarters, natural growth of the Syndicate's operations and the increase in staff in 2015 are paving the way for solid growth.

Underwriting expenses are also higher due to the extra quarter and the additional staffing and were fully expected as we staffed up to attract and underwrite a wider range of risks. We are encouraged to see the underwriting expense ratio continue to decline, down 27 points for the full reporting period and a direct result of the increase in premiums. Also to be expected as a business expands is an increase in claims activity with net losses and LAE at $25.2 million for the 12 months compared to $8.4 million in the comparable period of 2014. With the Syndicate's business not yet mature, we are continuing to rely on Lloyd's historical data for similar risks to establish our expected loss ratios which are little changed from the same periods last year. It will likely be sometime in 2017 before we are comfortable using the syndicate's own loss experience.

The Syndicate's mix of premiums remains dominated by casualty coverages at approximately 47% of the premiums. Catastrophe reinsurance accounts for approximately 19%. Direct property coverage is approximately 29%. And property reinsurance comprises the remaining 5%. The majority of the syndicate's business remains US based. We have had representatives in London within the last three weeks meeting with Duncan Dale and other reinsurers. Duncan tells us that he and his underwriting team are still seeing a strong flow of submissions but given the pricing pressure in the market, Duncan is remaining cautious about the business he writes, which is consistent with our own long-standing business philosophy and our expectations for Syndicate 1729. Frank?

Thank you, Howard. Stan, we will come back to you for final thoughts and then we will be ready to take questions.

Thanks, Frank. If you think about it, this has been a tumultuous year for insurance stocks, and ProAssurance stands out for the return of capital to shareholders and the total return on our stock, which outperformed all comparative indexes and for our ability to adapt to the changing healthcare landscape. We added facility business and we grew through cross-selling. While the challenges we face in our business are significant, I am pleased that we are successfully rising to meet those challenges. We have built a solid platform which will assure our future success.

We are now seeing the first fruits of our vision for a healthcare-centric insurer which can meet a wide range of insurance needs for our customers in those markets and geographies that are advantageous to our business models. Finally, let me note that Medmarc is an important part of that platform, and as we have previously announced, Medmarc's President, Mary Todd Peterson, is retiring prior to our next call.

So I want to end my remarks by publicly thanking and acknowledging Mary Todd for all of her many contributions to the success of Medmarc and ProAssurance. Mary Todd, we are very grateful. Thank you. Frank?

Thank you, Stan. Vicki, if you will open the line back up, we'll stand by to take questions.

(Operator Instructions)

Paul Newsome, Sandler O'Neill.

Good morning. Thanks for the call. I just wanted to see if you had any more details you could give us about the outlook for investment income over the next year or two. With the cross currents of investment returns plus the mix shift, I guess you are doing more tax benefit type businesses plus your stock buybacks.

Ned.

Paul, it's a great question. A couple of things. So assuming that we kind of keep repurchases and dividends at a comparable level to the last year, we would expect to see the portfolio continue to shrink which will have a declining impact on investment income. You point out the tax credits. We have been invested in low income housing tax credits for a number of years dating back to 2009 and 2010 when we saw some significant opportunities there. The historic tax credit that I referenced, we began investing in this year and the tax benefits will turn around next year.

The unique thing about those investments is that while they provide a substantial tax benefit to us, they also reduce investment income and so it's shifting kind of where the benefit goes and so when you just look at that investment income line, it reduces that. And then with the other investments that we have made, private equity investments and the like, we are very confident in the long-term nature of those investments and the returns they'll generate, they just do add volatility on a quarter-to-quarter basis. For the low income housing tax credits, we would expect something similar to the amortization we saw this year, and you can get into the details of that within our 10-K. The historic tax credits will add another $4 million or so and amortization expense against investment income.

Great. And then my second question is also sort of an outlook perspective that you had a number of adjustments that ran through the income statement that affected premiums. Given the growth of the Lloyd's business and I think there is some other adjustments, how should we see sort of the relationships of net and earned premium and gross premiums perpectively change given the business mix shifting?

Howard.

I think there is a few parts to that, Paul. We had the adjustment in the ceded premium that was due to the retrospective reinsurance premium accruals that I went through. That is loss driven, and as you saw it can go up in one quarter or year and down in the next, so that one is a little tougher to predict. The Lloyd's business, we expect to continue to see growth. And with growth you have written premium leading earned premium, so there should be a little bit of a gap opening up as a result of that. On the specialty P&C side, premiums are flat to slightly down so written and earned on a gross basis would stay about the same but we are ceding more, as I also mentioned in the remarks regarding our shared risk programs with Ascension. So that could distort it just a bit there.

Workers' comp continues to grow so you'll have a little bit of a leading effect on written versus earned there. Back on Lloyd's, there is a earnings pattern difference between the portions of the Lloyd's business, the reinsurance business versus the direct business, that you know, sometimes works on a lag. So I think it's actually a pretty difficult thing to predict and it's a good question. The further you break it down into the pieces, you can start to get a little bit of an idea but I think it's a tough one from my perspective to say just what we're going to see as the different mix of business changes.

Ned, anything to add?

No. I would echo Howard's comments. And just point out that what he mentioned on the Lloyd's business, typically on the reinsurance business, that business as we write it, is going to earn over more like a 24-month period so you do get some distortions there in earnings patterns on our Lloyd's business.

Thank you.

(Operator Instructions)

Amit Kumar, Macquarie.

Thanks, and good morning, and thanks for taking my questions. Stan, I agree with you that you guys rank as one of the top value creators in the P&C space. Often that fact is lost just based on the gyrations of the stock market. Two quick questions, and I have some static on my line. Just going back to the discussion on those three cases, and I apologize if I missed this. Did you go into detail what gives you comfort that there wouldn't be any other cases like that lurking in the book which could result in adjustments down the road?

Howard, and then I'll add something to it.

Sure. First, I didn't really say anything about other cases because as we look at those three cases, they are from the 2008 coverage year so obviously, they are claims that have been, or lawsuits that have been around for a good while. They were tried eventually, two verdicts and now two of them at least are going to be retried in some manner, one on appeal and one with an actual new trial that was ordered. So that can happen. We are vigorous in terms of defending our insureds. We take a high number of cases to trial relative to other companies in the industry, and when you do that you have verdicts from time to time.

Oftentimes even a plaintiff's verdict has appealability in terms of us being able to go back and try to remand it or get a reversal. But when you do get the verdict and particularly if the verdict is more than what you had expected from a liability perspective, and what your reserve was, you can have an increase in reserves. Oftentimes that increase in reserves is in the reinsured layers if it's a large case so you get the premium adjustment that goes with it. So, I really think it's a fact -- it's just a matter of course of doing business type of thing.

So nothing unusual per se in terms of these specific cases in terms of terms and conditions or the coverage that was written or the insured. So what you are saying net-net is there was nothing unusual, this is just business as usual. It's the nature of the business, hence investors should not start worrying that there could be -- this could balloon into something bigger. Is that correct?

That's correct. That is what I was saying. These were physician liability cases and just another point before Stan goes. Even though we have this up and down sometimes, we're up sometimes, we're down. The overall profitability and trends that we are seeing in trials are very much the same as what we had seen before. Stan.

Amit, the only thing I would add to that is that the confluence of these three cases all from the 2008 year is what makes this a little bit unusual. I mean, we take a lot of cases to trial. They come from a lot of different policy years. You get a lot of different results. You had three unrelated cases that just happened to come to trial at the same time all from the same year.

So that gives you a confluence that makes it a little bit unusual. The other thing to emphasize is that all of this is part of our normal reserving process and the normal course of business in terms of how we deal with adverse verdicts. They don't occur frequently but when they occur, we deal with them in a very consistent fashion. One of them has already been sitting back for a new trial so we prevailed in the post trial effort there, and we'll see what happens down the road, and the other two remain very much as part of the litigation process.

Got it. That's actually very helpful. The only other question and I will re-queue, maybe Stan was talking about the capital discussion regarding when you were talking about the buyback and why the buyback was a bit lighter and you talked about a special dividend. Now clearly if you look at the Company, if you look at R versus E, the ROE is somewhat depressed based on the level of capital at the Company. Right? And that is something investors clearly look at and probably not everyone is plugging in the leverage factors for the entire P&C space. I am curious as you look out toward 2016, just putting those comments regarding buyback on the same page. What other things could you do to optimize the capital structure which could lead to a higher ROE down the road?

I will let Ned answer the specifics of that Amit, but I would say this. Our Board at every meeting reviews capital management. Our senior management group reviews it every week virtually. We make very deliberate intentional decisions on capital management based on an entire host of factors which we think are in the best interest of the organization and therefore in the best interest of our shareholders. I think the best indication of how we intend to be responsible with respect to capital management can be seen through the lens of the years that have passed since the present senior management team came together in July 2007.

Since that time, we have virtually doubled the shareholders' equity by returning, and at the same time, returning over $1 billion to the shareholders and putting over $750 million to use in strategic acquisitions. And I think that's the best indication of how we intend to handle capital management. Now to the specific financial aspects of your question, I will let Ned add his views.

Thanks, Stan. I think Stan actually covered it quite well. As we look out to 2016 and beyond, our preference is to take the capital that we have available and to put it to work in the business either through organic opportunities, growth opportunities that we see within the business or through M&A activity, which you know has long been a part of how we have grown the organization. Barring that, we will seek to be prudent in returning capital to shareholders. I don't know if you're drifting into the area of kind of financial engineering. There are things you can do, essentially swapping out common for preferreds and other things like that, that might [produce] our ROE. I'd say we're very unlikely to do anything like that.

That's actually helpful. Let me ask just as a final related question. Based on where we are in the market cycle, and Stan was talking about the challenges in the industry, what would you put as your expectation broadly for sort of a normalized ROE going forward?

Ned.

Amit, we don't give out any guidance. I'm sorry about that. We continue to price our business and I'm gearing that toward a 13% return on deployed capital. And beyond that, we really don't give out any additional guidance.

Do you think you will hit that number?

I think within pieces of our lines of business. Again, these are long-term objectives. There will be areas in our business from a pricing perspective that we believe we are achieving that 13% return. Yes.

Amit, that's based on the assumption of 1 to 1 capital to premium. Pricing units.

1 to 1 on kind of the specialty P&C lines, more like $1.25 of premium to $1 of surplus for the comp business.

Got it. These are very helpful points. Thank you so much and good luck for the future.

Ryan Byrnes, Janney.

Good morning, guys. I just had a question on the pricing outlook in kind of the specialty line. Some of the larger players have seen some issues in long-tail casualty. Obviously, one of the biggest players in the world, and another Bermuda player had some reserving issues there. Just wanted to get your thoughts there if that could have any impact on pricing going forward.

Howard.

I think it's certainly something that has potential, I guess is the way that I would say it. There are plenty of competitors. But to see the two that you mentioned, who particularly participate in the hospitals and larger facilities, larger in some cases -- larger physician groups being at least concerned about the pricing, concerned about their results, maybe modifying the approach that they are taking to the market. I think maybe an early sign that there could be some movement, and I don't know how many times you can caveat that because early, and lots of competitors, and potential and all that -- but it's the first evidence of that we've really seen in quite a number of years.

And in the past and going back to the prior cycles of early 2000s and late 1980s, it was the commercial market that moved it -- started to move their approach, move the underwriting, moved the pricing first. So who knows, I guess is the best answer. But it's certainly something that we are watching pretty carefully as the accounts, various accounts, come in for submissions and up for renewal.

I was just trying to figure out, has there been any influx in submissions because of, I guess, those issues?

Yes. We have seen submissions from at least one of those submissions that are currently written by at least one of those two carriers.

Okay. My last one. I realize this is kind of an awkward question, but there seemed to be a bounce back in the seasonality of reserve releases in the specialty segment. That had been -- we had, had a lot of seasonality in the past and then the last couple years, we had less and then this year it came back. Were they one-timers in the fourth quarter this year or was that just the way that the cards came out, I guess?

Howard.

I think the latter. It's again the matter of we do try to, and we have tried, and continue to try to be as proactive and current in our evaluations as we can be. And then at the same time after we looked at the fourth quarter and looked at the results of the year as a whole with respect to the prior-year reserve development, we just saw things looking better than we had as we went through the year. With the perspective of a full 12 months of results relative to last year's analysis, it was just indicated that we had more redundancy in some of those prior years than we had seen through the nine-month period. It's not a change in approach. We're still trying to be more current and we'll continue to do so.

Okay. Great. Thanks. That is all I got.

Thank you.

(Operator Instructions)

Mr. O'Neil, it appears there are no other questions. I will turn the call back over to you.

Thank you very much, Vicki, and thanks to everyone who participated today. We will speak to you next, we believe, in the first part of May. Thank you.

And thank you very much. That does conclude our conference for today. I'd like to thank everyone for your participation.