ProAssurance Corp (PRA) 2016 Q3 法說會逐字稿

Good morning everyone and welcome to the conference call to discuss ProAssurance's results for the third quarter of 2016. These results are reported in the news release issued on November 2. These results were reported in a news release issued on November 2, 2016 and also in the Company's quarterly report on Form 10-Q, also filed on November 2.

These documents are intended to provide you with important information about the significant risks, uncertainties that, 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 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 November 3, 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'Neill, I would like to remind you that the call is being recorded and there will be a time for questions after the conclusion of prepared remarks.

Thank you very much Dino. Our apologies to everyone on the call for the delay.

On our call today 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 Eastern All Workers Compensation and Subsidiary. Stan, will you please kick off the call with some opening thoughts?

Thanks Frank. And my thanks to everyone participating for taking time to be with us today. When we announced preliminary earnings last week, we emphasized our confidence in our business and our strategic vision.

You'll hear in this call about successes that convinced us that we are succeeding by delivering a level of service and innovation that is winning in the marketplace. And helping us deliver real value to our investors. In our announcement, we called out a few key items that affected the quarter. I'm going to ask Howard, Ned, and Mike to explain those in greater detail to begin the call. Howard, will go over the development for us?

Sure. Thanks.

First, I want to underscore that the we did have favorable development this quarter of $29 million. Breaking that down, we recognized $30 million of favorable development in specialty PNC and $1.8 million of favorable development in Workers Compensation. This was slightly offset by a reduction to previously recorded favorable prior-year development in our Lloyd's segment, due a change in methodology.

The syndicate's business is generally reinsurance or primary insurance, written through entities with bonding authority, which means initial loss estimates are based on estimated exposures and are trued up as the actual exposure and premium information as received.

Prior to this quarter, we have been taking those premium estimates and applying an expected loss ratio, as we do on our other lines of business. Thus, as actual premiums were reported and earned, the application of that initial loss ratio could produce what is it essentially artificial loss development on an accident year basis, either positive or negative.

This methodology works well at Lloyd's, where results are reported on a underwriting year basis. But when converting the underwriting either results to an accident year basis, the question of how to consider these changes, with respect to current year versus prior year losses becomes an issue. In part, that is what is occurred last quarter.

When we recognized approximately $2.8 million of favorable reserve development from the syndicate. Much of that however, was due to a reduction in exposure estimates rather than a reduction in loss estimates on actual incurred losses.

ProAssurance needs to report these results on an accident year basis, so we have separated the two calculations. Changes in losses a result of from revised exposure estimates will be reported in the current period as premium is earned. Changes in losses that result from revised exposure estimates will be reported in the current period as premium is earned. Changes in losses that result from revised estimates on previously incurred losses, will be reported in the accident year of the lost itself.

The result of applying that methodology to the syndicate's reserves essentially reverse the favorable development from last quarter in the Lloyd's segment. The takeaway from this, is that overall losses do not change. Just the categorization into current and prior period.

We are confident in the adequacy of then reserves within syndicate 1729 and we believe this will be a more transparent way of reporting to the investing community. The final comment here, the reduction to previously recorded favorable prior-year development is one of the primary factors, along with taxes, in the Lloyd segment's operating results this quarter.

The second item we mentioned was the loss in our investment and unconsolidated subsidiaries, related to the accelerated recognition of our estimate of partnership operating losses related to our tax credit investments. Remember, the amortization of the credits has a negative effect on our investment result, but benefits us by reducing our tax liability.

We make a good faith estimate of the amortization schedule, and book accordingly. In this quarter we received new information on two credits and booked the catch up number, which accelerated our amortization by $3.6 million. Importantly, these adjustments are timing related and do not indicate any change in the expected tax benefits we will receive from the related credit.

Thank you Ned. The third item we mentioned related to an increase of $530,000 in state assessments, driven primarily by three states which based those assessments on reported and or paid claims. These assessments were one of the primary drivers in the increased Worker's Compensation segment expenses in the quarter.

You may recall that we had higher severity claims in prior periods in those states, which contributed to the increase in the assessments incurred this quarter. The other states in our core operating platform base assessments on premiums, which result in a more predictable methodology for estimated costs. Frank.

Thank you, Mike. Let's go back to Ned now for review of financials from the quarter.

Thanks Frank. Gross premiums written declined $3.9 million about 1.6%. Gross premiums written in our large segment were up $2.6 million an increase of almost 16%. That increase was offset by declines of approximately 3%, in both the specialty PNC in Workers Compensation segments.

We will flesh out the detail of those in later remarks. Net earned premiums were fractionally higher, primarily driven by the Lloyd's segment. Our coordinated sales and marketing efforts continue to bear fruit, producing about $1.9 million of new premium in the quarter, and $9.6 million year to date.

More than triple the results through three quarters in 2015. I've already mentioned much of the detail in our tax credits. The other investments that we hold is investment in unconsolidated subsidiaries performed well in the quarter, with the results for need investments up $1.8 million over Q3 2015. We continue to see pressure on net investment income that is a result of lower investment balances due to our capital return efforts over the past several years. And the sustained low interest rate environment affecting the insurance industry in general.

Finally, in the quarter we had $15.7 million of net realized investment gains, which represents a $52 million swing from the $36.6 million loss last year. The consolidated current accident year net loss ratio was 79.4%, essentially unchanged quarter over quarter, as we saw a decrease of 14.9 points in our Lloyd's segment and 1.8 points and our Worker's Compensation segment.

[May's] declines were almost entirely offset by a 2.5 point increase in the larger specialty PNC segment. That increase in the specialty PNC segment is primarily due to changes in the mix of business, and changes in our exposure base, with the addition of complex risks such as healthcare facilities. The consolidated calendar year net loss ratio was 63.7%, as compared to 59.8% in the third quarter of last year, primarily due to the lower level of net favorable development.

Our expense ratio was 30.1%, a point higher than last year's third quarter. This is probably due to an increase in Workers Compensation operating expenses, resulting from the state assessments and higher compensation and related benefit expenses. Our tax expense for the quarter was $9.7 million, and effective tax rate of 22.2%, which is higher than in the first two quarters of the year.

There were two primary drivers of the increased effective tax rate. As previously mentioned, we recognized realized gains of $15.7 million in the quarter. And the tax impact of these gains was approximately $4.3 million. This quarter also includes $1.4 million of tax expense related to the Lloyd's segment, due in large part to UK taxation of unrealized investments gains and implied foreign currency gains on our funds on deposit at Lloyd's.

That account is denominated in dollars, and is translated to sterling for tax purposes. And the strengthening of the dollar against the pound during the year is a significant root cause. And finally we filed our 2015 tax return this quarter, there was some true up amounts from prior projections, which had a tax effect of approximately $300,000.

Adjusting out these items the taxes on our pretax operating income are $3.7 million. And the effective tax rate becomes 13.2% for the quarter. Net income was $33.8 million, or $0.63 per diluted share. Operating income was $24.4 million, or $0.46 per diluted share. ROE improved to 6.6% for the quarter.

Book valuing creates the $38.38 an increase of $1.50, or 4.1% since year end. At September 30, we held $251 million in unpledged cash and liquid investments outside our insurance subsidiaries and available for use by the holding company.

There were no shares repurchased in the quarter, given our share price and the payback time frame we have discussed in the past. We do understand expectations with regard to managing our capital. And we believe we been responsible stewards of the capital entrusted to us. Over the past three years we have returned to our shareholders an amount equal to or exceeding our earnings. And we continue to evaluate strategies for deploying our capital.

Frank?

Takes Ned. Howard Friedman will now circle back and we will ask him to discuss results in specialty PNC. Howard?

Thanks Frank. I keep trying to come up with a new adjective to describe the state of the market. But fiercely competitive seems to fit best. I do not want to minimize the $4.7 million quarter over quarter decline in the top line, but I am encouraged by several things. First, let's acknowledge that physician premiums declined $8 million quarter over quarter. Largely due to competitive pressure and the effect of 24-month policies, which produce a normal decline in premium in even numbered years because of their renewal patterns.

Offsetting the decline, was a quarter over quarter gain of $3.3 million in healthcare facility premiums. As we have focused increase energy on penetrating the facility and complex risk market, we're seeing increased success. I would note that we wrote $10.1 million of new business in the specialty PNC segment in the quarter.

Our premium retention and the physician line, the largest component of the segment, was 89% unchanged from prior quarters. Pricing on renewing physician business, a key benchmark for us was 1% higher than last year's third quarter. Our current year net loss ratio was 88.1%, 2.5 points higher than last year's third quarter.

This is primarily due to our decision to book quarterly legal defense costs and ULAE at levels more representative of what we expect at year end, and due in part to the increasing amount of facility business that we are writing. As Ned mentioned, we book a higher initial loss ratio for that business.

The calendar year net loss ratio was 62.2%. And was effected by marginally lower amount of favorable development I mentioned at the start of the call. That had a corresponding effect on the combined ratio for the second. With regard to the loss climate, we don't see any change in overall loss trends.

Frank.

Thank you Howard. Now let's bring back Mike Boguski for comments about workers compensation. Mike?

Thank you, Frank.

Worker's Compensation segment 2016 third-quarter operating results decreased compared to the same period in the prior year, driven by a decrease in net premiums earned in our traditional Workers Compensation business, and an increase in underwriting expenses. Partially offset by an increase in the operating results of our equity-owned segregated portfolio cell business.

Gross premiums written decreased to $59.9 million for the three months ended September 30, 2016, compared to $61.8 million for the same period in 2015, a decrease of 3%. This reflects an increased level of competitive market pressure across all operating territories. Premium retention was 83% for the quarter compared to 79% in the third quarter 2015. Renewal pricing decreased 3% during the quarter as a result of competitive market conditions. New business writings were $6.8 million during the quarter compared to $10.5 million in the third quarter of 2015. Order premium was $1.5 million for the quarter.

We successfully renewed both of the available alternative market programs during the quarter. Alternative market premium retention was 88% for the three months ended September 30, 2016. The decrease in the action at year loss ratio for the three months ended September 30, 2016 is driven by improved loss experience in our alternative markets business, partially offset by a 1 percentage point increase in our traditional accident year loss ratio.

Favorable reserve development was $1.8 million in the quarter, compared to $1.2 million for the third quarter of 2015. Primarily related to alternative markets business, but also improves $400,000 in both periods, related to the amortization of purchase accounting fair value adjustments.

Closing patterns continued to be consistent with prior periods. We successfully closed 46% of 2015 and prior claims during the first nine months of 2016. The increase in the underwriting expense ratio for the three months ended September 30, 2016, compared to the same period in 2015, reflects increases in compensation and related benefits, as well as the previously mentioned state assessments. The 2016 combined ratio of 96.9%, includes 2.4 percentage points of purchase accounting adjustments and 0.8 points of a corporate management fee.

Frank.

Thank you Mike. We will go back now to Howard for a discussion of our Lloyd's syndicate. Howard.

Thanks again Frank.

There's a lot of positive momentum from the syndicate. I'll remind you that our participation is 58% and results are reported on a one quarter lag. As mentioned earlier, gross premiums written grew 16% to $19 million in the quarter. Of note, the international healthcare professional liability team that joined in the first quarter has hit the ground running, and is writing business in many of its former markets using the syndicate's pricing and underwriting guidelines. Net earned premiums were up 22% at $14.6 million, which reflects the continuing maturation of the syndicate.

The rate of growth and underwriting expenses within the syndicate continues to moderate as the need to make major staff additions has declined, and the business has matured. With the increase in premium and the moderation of expenses, the underwriting expense ratio is also moving lower at an encouraging rate. The net loss ratio was up 4.5 points in the quarter, as syndicate's 1729's results were effected by specific events in the second quarter, such as the Canadian wildfires and storms in Texas and South Carolina.

Incurred losses remain within the expected range. And a syndicate is retaining an appropriate amount of reserves to deal with feature uncertainties. But, the fact remains, that it's fair to expect a variation in results in our Lloyd's segment given the nature of the business being written.

The majority of the business remains US-based. And a broad mix of premium written year-to-date continues to be dominated by casualty coverage, which is a 53% of the syndicate's premium. Property coverage accounts for 26%, catastrophe reinsurance is 17% and property reinsurance comprises the remaining 4%. On a forward looking note, I can tell you that preliminary estimates of losses from the recent storms lead us to believe they were not have a material effect on the results of syndicate 1729 net of reinsurance.

Frank.

Thanks everyone for that summary. Stan some final thoughts from you?

Thanks Frank.

I continue to see evidence that the broad strokes of our strategy are succeeding, despite operating in an intensely competitive environment. While no one can predict what the road ahead has in store, I can promise that we will continue to meet that role with our customary underwriting and pricing discipline and our commitment to operating effectiveness. And we will do all of this while continuing to enhance an unmatched record of capital return and value creation for our shareholders.

Frank?

Think you Stan. Dino, we are ready to open the line for questions please.

(Operator Instructions)

Mark Hughes, SunTrust.

Thank you very much good morning.

Good morning, Mark.

How much impact did that renewal effect have the policies renewing in the odd years rather than even? Your physician premiums were down. What proportion of that pressure came from that effect.

It is Howard. It is $2.2 million this quarter.

And that as you think about the physician business, you have said that it is fiercely competitive, the renewals up 1%. That's it pretty good. You had some good success in Q2. How should we think about the prospects there? You are seeing the increased success in the hospital. I assume you have some visibility in pipeline there, at least volume of the pipeline. Do we look for positive growth again in gross written premiums?

Howard again. Our major objective is to try to maintain the quality and the profitability of this business. Each quarter is a separate set of challenges, both the mix of the business that is renewing and the opportunities that are out there for new business.

Right now, we're more or less offsetting our renewal -- the loss of business that we have as a result of the renewal retention, the marketplace competition, and so forth, with new business. And it varies; certainly some quarters are better than others. With the increased emphasis on the facility business, and the consolidation in healthcare that results in larger accounts on the physician side, the impact of individual accounts has a much greater effect. And you probably have the best in prior quarters when we talked about retention, and when we have talked about new business.

So in a way I think it is probably a little more difficult to predict now than in the past. In terms of whether a given larger count renewal will effect retention in the quarter, favorably or unfavorably, and the ability to write or not write a particular new business accounts can have an outsized effect. I think it is tough to say. I think I would say that the run rate of that we've been seeing recently is probably representative.

And market, I would add to that that we remain very focused on securing an adequate price for the risk we are asked to take. So we don't look at it from a top-down standpoint. That is from the gross premium.

The gross premium would be whatever it is, as a result of us writing business at an adequate price. If that means the gross premium falls, so be it. It means that we experienced increases in gross premiums, so be it. But that is not the driver. Underwriting remains the driver.

Howard, you talked about setting a higher loss pick for the hospital business. Do you expect losses to be higher there, or are you being conservative? And can you talk about the early loss emergence on the facility business?

Sure. Let me first say that we've been writing hospital business since the mid-1980s. This is not new to us. What is newer in a way is just the emphasis on the larger account and facility business as a result of what has happened in healthcare.

The loss pics on that business tend to be higher because the business is more volatile. A lot of it is written excess of significant deductibles, or self-insured retentions. And as a result, you can have -- the loss ratio volatility tends to be greater from year to year. Overall, it is also a smaller book of business than our physician book.

So there is that aspect of it just being less predictable. And historically, we have reserved initially at a higher loss pick on that business. Not necessarily representative of profitability at all. Really just more representative of the volatility and the loss ratios that have been experienced.

You had a peer who described rising severity and professional liability and they highlighted the corrections industry and contract physician staffing. Any exposure there? Any like experience?

Yes. We saw that yesterday.

I think actually they talked a little bit more about frequency than severity. But nevertheless, we write both of those classes, the correctional facilities and physician staffing. They've never been a large portion of our business. We've always been rather cautious from an underwriting perspective on that business. Because both of those classes have risk profiles that are a good bit different than the traditional physician business, physician medical professional liability.

Any type of business that involves staffing physicians at multiple locations creates a different underwriting profile. Since, as an insurer, we are not usually able to evaluate the individual physicians. We have to rely on the credential and the oversight of the entity itself. And as a result we lease a great deal of emphasis on evaluating the internal processes, and the credentialing, and review processes of the organization. So we've always done that.

We also believe that one of the keys to writing that business is to have significant deductibles or self-insured retentions so that the group has a vested interest in the outcome of the results. And over the past few years, we've seen those in the marketplace. We've seen low deductibles, or even no deductibles become available in more common on that type. Both of these classes of business and we really didn't participate in that.

So, like any other account, that we look at, the pricing and the terms are really key for us. On a correctional business, higher frequency is not unexpected, at least from our perspective, since a lot of inmates tend to look for opportunities for variety, if you will, in their daily lives, and a lot of these claims are deemed frivolous, but they do cost money to defend. And it again speaks to the need for deductibles. We're have not seen that type of experience in these accounts, nor really across our book of business. But we certainly are very attuned to it.

Thank you.

Amit Kumar,Macquarie.

Thanks. Good morning and thanks for taking my questions. Just a few quick questions.

The first of all goes back to specialty, and the increase in the underlying loss ratio in terms of the facility business and the business mix shift. Howard, is that the new trend line you are thinking of, or is there a possibility that number would continue to tick up in the near future?

Really what I was trying to say it is not a new trend or not anything different -- we are not doing things differently than we have historically. I think we've seen an increase in the facilities business. And that caused a small movement in the loss ratio that we were trying to explain.

But underlying that, we are still reserving it the way we have reserved it. And, the overall mix of our loss ratio is really a mix of probably 100 different components that we break the business down into state, by class of business, and some have higher initial loss ratios than others. So, in the past we have talked about mix of business. I think here we just got a little bit more specific about it in terms of pointing out that as the facility business has grown, the initial loss ratio and that is somewhat higher. It doesn't mean anything different in terms of what we ultimately expect for profitability of the business.

Got it. The second question was, on the changing methodology in the Lloyd's piece, should we use the Q3 as a run rate instead of going forward? Or is a nine-month number a better trend line?

The nine-month number is the better trend line.

Got it. That is helpful.

The final question I have for now is, just the broader discussion on capital. And I know that usually you guys do a special, a month from now and in the past, the number has varied from a buck to, I think, $2.00 plus in the past. How are we broadly thinking about capital position here, and how are we thinking about the special dividend? Thanks.

Thanks Amit.

First off we don't you special and usual in the same sentence. We do an evaluation of capital on a continual basis. It is a topic that we discuss with our board every time we sit down with them. So, we will evaluate it; we will look at the opportunity set that is out before us. The opportunities to support our ongoing dividend, the opportunities to support our buyback initiatives. And then the opportunities in the marketplace and make decisions based on those factors as to other ways we might return capital.

What I was asking was, has the thought process changed on capital versus where you were in 2015?

No. I think the thing that is important to understand that the factors that run around that, all those things I just mentioned can change. But the thought process has not changed.

We should expect a special in December.

That is not what I said. There are a lot of factors involved; topics that we discuss with our board. There are a lot of external environmental factors that could impact that.

And that decision will be made by our Board of Directors and only one of them is here. So nobody could make that decision today.

What is your decision. No. I will let it go. Thanks for the answers and good luck for the future.

Thanks Amit.

(Operator Instructions)

Paul Newsome, Sandler O'Neill.

Good morning, everyone. Thanks for the call. I was hoping you could walk through, just with a little bit extra detail, the tax credit. Just the mechanics of what we saw in the quarter with the amortization. My sense, and maybe I am just wrong, is that the way they typically work is there is in amortization that runs your net investment income line. But there's hopefully more than that benefit below. And that those are tied to each other, so that you would see basically the same impact and the same quarter.

It seems like this quarter you didn't have an offsetting benefit in the tax from whatever accelerated amortization you had. So just talk about why you might have accelerated amortization that doesn't get offset someplace.

The couple of things. I think, in general, that assumption about some level of matching has some basis, but not completely. The tax credits are somewhat decoupled from the operating losses of the underlying properties. And those operating losses, we bucket that all and call it amortization. But is actually up amortization and operating losses. Those operating losses in particular can fluctuate in timing.

So, the expected yield on investments have not changed. What we had in this quarter was a couple of tax credits where they have now filed their, in this case, in one case, it is 2014 and 2015 tax return. And based on the information we received from the tax returns, we recognized more operating losses in the period. That doesn't necessarily mean that in the period you're going to get more tax credit.

The tax credits are more scheduled out based on when the properties were placed into service and became occupied. So there can be some of differences in the timing. I think a good point to understand that the recognition of the tax credits does occur in some part ahead of the ultimate losses that you're going to see on the properties.

So, as the tax credits run out, what you will see is a decline in the tax credits and an increase in these operating losses in amortization. When you look at the life of each of these credits, they will have had a very positive return on the Company.

If you look back in the last couple of investor presentations that we have put out there, there's a chart that comment demonstrates some of that to give you some better detail. But there's operating losses are unfortunately a little less predictable than the core amortization. And that is what caused the fluctuation in the quarter.

And we will be updating that chart, Ned, referenced when we file our third-quarter investor update. And it will include all of the new information and that will be sometime early next week. Or week after next.

So it sounds like, we should expect some volatility around those operating losses perspectively. And what we saw was maybe a little bit bigger than normal, but not structurally unusual.

I think that is right. And I think important to note that there's nothing in that acceleration that pretends larger ultimate losses on these investments than we would've anticipated. And as I mentioned, this was a two-year catch-up on one credit in particular.

I think that's part of the reason the we saw such a big change. But there will be some volatility around the recognition of those operating losses as we get information from the individual credits and the properties associate with those credits, and there's always a lag in that timing.

That clears things up for me. Thank you.

Ryan Byrnes, Janney.

Great. Thanks. Good morning everybody.

Just want to focus a little bit more on the capital management going forward. Historically, you guys have done a fair amount of acquisitions, but you've been pretty quiet over the last couple of years, excluding Eastern. I just want to get your thoughts there on the pipeline and where sellers are right now with -- especially in the medical malpractice area. As the top line or the pie continues to shrink there a little bit.

It is Stan, Ron. The answer to the question is that we remain open to rational opportunities that present themselves. The difficulty today is, that unlike in past decades, so many people in this industry regard themselves as acquirers.

There is a long runway in which we were one of the only or few people who could legitimately seek to provide consolidation within the industry. The results of the last number of years had been very well received by the industry and successfully so. This has left many of our mutual brethren in a position where they too can be acquirers. So you see a much larger universe of potential acquirers in this space than has historically been true.

This has led to what we regard as irrationally high pricing expectations on the part of the people that might be acquired. And a willingness to offer or pay irrational prices on the part of the people doing the acquiring. There was a long period of time in which we needed to make acquisitions, either to fill out our strategy or fill out our geography. As I have said before in these calls, we no longer have to make any acquisitions. We will be open to doing so on terms that make sense for our shareholders, and for our overall business strategy. But we will steadfastly avoid paying sums which we don't think can be justified.

We see some acquisition opportunities, but we see that they tend to lean toward prices that we just can't make sense of. And we're not going to participate in that type of market. The short answer to your question is, we will be open to doing acquisitions that make sense. But we will not chase deals that simply cost too much money in our judgment.

Okay great. Thanks for the color and my last one. Would be on the flipside of the M& A environment.

It seems like there have been a bunch of Asian buyers looking to get access to the US market. I just want to see, your thoughts on that. And is there anything structural that the medical malpractice that your clients with a US company, is there any structural issues in there that would preclude an Asian buyer looking at you guys?

Just as an overarching principle, I will say to you that our board has a very strong level of confidence in the strategy we're pursuing. And the board regards our future as compelling. That being said, we're not a management team, or a board that's around worried about somebody buying us. If somebody comes forward with something that's more compelling for our shareholders, our Board will take all appropriate action.

Without regard to ProAssurance, but just looking at some of the Asian acquisitions that you have mentioned, it seems to us that the Asian acquirers are looking for platforms and they are not looking into the specialty business. And so that means that ProAssurance is not an organization that would fit that platform descriptive.

I would also mention to you that medical professional liability insurance is not an area that is well-known to large segments of the world geography. So we are probably not a familiar to a lot of people. And as I say, we have not been the recipient of any overtures from any of those organizations.

Thanks. That was great. Thank you so much.

This concludes our question and answer session. I would like to turn the conference back over to Mr. Frank O'Neil for any closing remarks.

Want to thank everybody for being with us on the call today. Our next call is planned to discuss fourth-quarter results. And that will be in 2017. We will wish everybody a Happy Holiday Season and a great New Year. Speak you sometime after the first of the year.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.