Primerica Inc (PRI) 2014 Q2 法說會逐字稿

Presentation

Good morning and welcome to the Primerica second quarter 2014 financial results conference call and webcast. All participants will be in listen only mode. (Operator Instructions) Please note this event is being recorded.

I would now like to turn the conference over to Ms. Kathryn Kieser, Executive Vice President, Investor Relations. Please go ahead.

Thank you Gary. Good morning, everyone. Thank you for joining us today as we discuss Primerica's results for the second quarter of 2014. Yesterday afternoon, we issued our press release reporting financial results for the quarter ended June 30, 2014. A copy of the press release is available on the investor relations section of our website at Investors.Primerica.com.

With us on the call this morning are Rick Williams, our Chairman and Co-CEO, John Addison, Chairman of Primerica Distribution and Co-CEO, and Alison Rand, our CFO.

We reference certain non-GAAP financial measures in our press release and on this call. These non-GAAP measures are provided because management uses them in making financial, operating, and planning decisions, and in evaluating the Company's performance. We believe these measures will assist you in assessing the Company's underlying performance for the periods being reported. These non-GAAP measures have limitations and reconciliations between non-GAAP and GAAP financial measures are attached to our press release. You can see our GAAP results on page three of the presentation.

On today's call, we will make forward-looking statements in accordance with the Safe Harbor Provision of the Securities Litigation Reform Act of 1995. Forward-looking statements include any statements that may project, indicate or imply future results, events, performance or achievements, and may contain words such as expect, intend, plan, anticipate, estimate and believe, or similar words derived from those words. They are not guarantees and such statements involve risks and uncertainties that could cause actual results to differ materially from these statements. For a discussion of these risks, please see our risk factors contained in our Form 10-K for the year-ended December 31, 2013.

This morning's call is being recorded and webcast live on the Internet. The webcast and corresponding slides will be available on the Investor Relations section of our website for at least 30 days after the presentation. After the prepared remarks, we will open the call to questions from our dial-in participants.

Now, I'll turn the call over to Rick.

Thank you, Kathryn and good morning everyone. As you can see on page 4, during the second quarter of 2014, our operating revenues grew 10%, net operating income increased 18%$, and net operating income per diluted share was up 25% to $0.88 compared with the prior year period. These results were driven by strong investment and savings products performance and higher term life net premiums in the quarter. Net investment income continues to experience downward pressure from lower yield on invested assets in the low interest rate environment, although the second quarter was enhanced by favorable market value changes on our deposit asset in the corporate and other distributed products segment.

Year-over-year expenses declined, largely reflecting our settlement of the Florida Retirement System matter early this year. Solid earnings in the second quarter drove net operating income return on adjusted stockholder's equity to increase to 16.3% in the second quarter. Over the course of the next 12 to 18 months, ROE should remain in the 15% to 16% range as our recurring income accumulates and stockholder equity builds until capital is deployed.

During the quarter, we retired $22 million of Primerica's common stock for a total of $35 million of stock repurchased year to date. In July, we completed a redundant reserve financing transaction with [Hanover] ROAE, which should enable the execution of our multiyear capital strategy. Alison will walk you through more details in a minute, but near term, we anticipate returning approximately $150 million of capital to shareholders annually through 2016.

Now, turning to production results. In the second quarter, term life insurance policies issued increased 3%from the year ago period and grew 21% from a seasonably lower first quarter. Average annualized issued premium per policy remains fairly constant with both the second quarter of last year and the first quarter of 2014. Productivity in this second quarter of 0.21 policies issued per licensed representative per month returned to the historical range of productivity that was consistent with the prior year period. On a sequential quarter basis, productivity increased from the seasonably lower first quarter.

Year-over-year, our investment savings product sales increased 9%. Retail mutual funds grew 14%, driven by market performance and the rotation from fixed income to equity based investments. Variable annuity sales benefit from recent product additions increased 16% from the second quarter of last year, and managed account sales increased 14%, while managed account client assets grew 52% in second quarter 2013.

Total client asset values at the end of the second quarter reached another all-time high of $48.01 billion, up 20% from June 30, 2013. Sequentially, investment savings product sales increased 2% from the strong sales in the first quarter during IRA and Canadian RRSP season. Total client asset values were up 5% from the end of the first quarter.

During the second quarter, we were pleased to elect Beatriz Perez to the Company's Board of Directors. As the Chief Sustainability Officer of the Coca-Cola Company and former Chief Marketing Officer for the North American division of the Coca-Cola Company, Beatriz brings extensive marketing experience and a clear understanding of consumer behavior that will be very valuable to our board and management team.

Now, John will discuss distribution results.

Thanks, Rick. Good morning everybody. We feel good about the positive distribution results in the quarter. As you can see on slide 5, the size of our life licensed insurance -- life insurance licensed salesforce grew 5% to 96,596 in the second quarter compared with the year ago period and was up 1% from the first quarter of 2014. Salesforce growth partially reflected growth in new license representatives, which increased 2% from the second quarter a year ago and grew 22% compared with the seasonably lower licensing in the first quarter.

Recruiting in the second quarter remained consistent with the second quarter of a year ago and increased 4% from the first quarter of 2014. The ratio of new representatives obtaining a life insurance license remains consistent on a year-over-year basis and increased sequentially from the first quarter with seasonally typical -- which -- with seasonality typical for the second quarter. The ratio of representatives not renewing their life insurance license was consistent with both the prior period, the prior year and the prior quarter period.

As we look into the third quarter, last year's post-convention recruiting levels and associated new licenses generated by convention incentives will create challenging year-over-year comparisons. On a sequential quarter basis, we anticipate the size of the licensed sales force to increase slightly from the end of the second quarter 2014. I've mentioned before that we are continuously evaluating and adjusting messaging and incentive programs to produce positive results. At our contest trip to the La Costa Resort in California this month, our focus will be building on recent salesforce momentum by creating a sense of urgency to help more families in the vastly underserved middle income market become properly protected with term life insurance.

We'll also be launching technology initiatives at this meeting, including new point of sale presentations and we'll be promoting our current incentive trip competition to take 1,400 qualifying representatives to Puerto Rico in February.

Now, I'll turn it over to Alison to walk through our financial results.

Thank you, John. Good morning everyone. My remarks today will begin with a discussion of segment operating results, highlighting changes that we've made in our presentation of the term life segment, followed by a review of companywide operating expenses and invested assets. I will conclude with a discussion of distributable capital from the recently approved redundant reserve financing transaction.

Starting with term life on slide 6, year-over-year operating revenues increased by 9% driven by an 11% increase in net premiums, compared with the second quarter a year ago. Allocated net investment income remained consistent with the prior year period, as lower portfolio yield was offset by growth in the assets required to support the segment.

These revenue trends, combined with higher DAC amortization year-over-year from the shifts in our incentives towards more deferrable programs in recent years resulted in a 6% growth in term life operating income versus the year ago period. During the quarter, benefits and claims grew in line with net premium.

On a sequential quarter basis, operating income before income taxes increased 17%, primarily reflecting seasonably favorable persistency, which reduced DAC amortization from levels experienced in the first quarter. The seasonably favorable second quarter persistency also enhanced the sequential quarter direct premium growth.

Looking at the term life sub-segment, new term pre-tax operating income as a percentage of direct premiums improved versus the prior year period due to the continued leveraging of fixed costs, partially offset by higher DAC amortization in the second quarter of 2014 from increased commission deferrals. In legacy, pre-tax operating income as a percentage of direct premium declined to 6.1%, reflecting downward pressure on allocated net investment income due to the low rate environment, as well as higher benefits and claims than in the prior year period.

Providing financial results for term life on a new term and legacy basis was valuable at the time of our IPO, given the relative size of the legacy block in relation to new term. Today, new term direct premiums are about 25% of total direct premiums and are growing each quarter. We believe this is an appropriate time to collapse the new term and legacy sub-segment.

Given the development of the business, we do not believe that [quitting] these key drivers by sub-segment provides greater transparency or better insights into the performance of the business. For ease of transition, we will continue to show net new term and legacy sub-segment results in our financial supplement through year-end.

On slide 7, you can see term life results presented in the format we plan to use going forward. Results in this format have been added to our financial supplement on a quarterly basis back to 2011 to assist you in understanding the development of the numbers over the past few years. For purposes of our new presentation, we have divided net premiums into non-GAAP measures that we believe our more descriptive drivers of the business. A new non-GAAP measure called adjusted direct premiums has been added, which is equal to total direct premiums less the premiums needed to Citi, which as the name implies, are premiums needed to Citi under the 2010 reinsurance transaction.

We believe adjusted direct premiums is a useful measure for analyzing business trends, as several critical components of the income statement, including benefits and claims and amortization of DAC are already shown net of Citi reinsurance on a GAAP presentation basis. The new format also shows a non-GAAP measure called other ceded premiums, which primarily consists of [YRT] ceded premiums that we paid third party reinsurers to reduce our claims volatility.

Other ceded premiums are net of applicable reimbursements we received from Citi on reinsurance contracts already in existence at the time of the Citi reinsurance transaction. On a year-over-year basis, other ceded premiums should increase slightly more than direct -- than adjusted direct premiums because unlike direct premiums, which are mostly level, YRT premiums increase each year as the policyholders age.

There's also sequential quarter seasonality in this item, as YRT ceded premiums are paid annually on a policy's anniversary. So high production quarters will likewise have higher annual YRT premium payments. For analytical purposes, we continue to we continue to treat other ceded premiums as a component of benefits and claims rather than a contract revenue item.

So now, let's look at term life results using the financial ratios and metrics we've added to our financial supplements. Similar to information provided in the past, we have put total direct premiums between legacy direct premiums, which are those that are subject to the Citi reinsurance transaction, and the newly named primary direct premiums, which are those that are not. Total direct premiums grew 1.6% year-over-year with a 22% increase in primary direct premiums and a 4% decline in legacy direct premiums.

For the second quarter, adjusted direct premiums increased by 11% versus the prior year period. Primary direct premiums will continue to grow as we layer on new business, albeit at a somewhat decreasing rate as the block matures. Legacy direct premiums, as well as premiums ceded to Citi should continue to decline approximately 4% on a year-over-year basis. Persistency, and to a lesser extent, production volumes in the case of primary direct premiums, will create fluctuations on a sequential quarter basis.

We expect total benefits and claims net of other ceded premiums to remain a stable percentage of adjusted direct premiums, generally ranging from 58% to 59%, with quarterly fluctuations due to claims and persistency. We expect DAC amortization and insurance commissions to be at a range between 15% and 16% of adjusted direct premiums on an annualized year-over-year basis, with sequential quarter fluctuations due to persistency.

The higher commission deferrals in recent years will continue to put pressure on this ratio. For the second quarter, seasonably favorable persistency, second quarter persistency reduced DAC amortization, resulting in a low ratio of 13.7% for the quarter.

Now, let's move to investment and savings product segment on slide 8. Operating revenues increased 13% in the second quarter, driven by a 16% growth in sales-based revenue and a 13% growth in asset-based revenue compared with the prior year period. Strong mutual funds and variable annuity sales drove an 11% increase in revenue generating product sales. Variable annuities, which provide higher point of sales based revenue relative to other products, grew 15% and resulted in revenue growth outpacing the growth in product sales year-over-year.

The increase in asset-based revenue primarily reflects Canadian and US market conditions and is consistent with the growth in average client asset value. Year-over-year, DAC amortization declined as market returns on the invested assets underlying our Canadian segregated funds showed improvement from the market loss it experienced in the prior year.

These results, combined with significantly lower FRS related expenses of $0.3 million versus $3.1 million in the prior year period drove the 30% increase in operating income before income taxes. In comparison to the first quarter, IFP revenues increased 4% and operating income before income taxes was 6%, reflecting sequential quarter growth in revenue operating product sales -- in revenue generating, excuse me, product sales and average client asset values, as well as slightly lower Canadian segregated funds DAC amortization in the second quarter.

On slide 9, you can see that corporate and other distributed products, operating revenues, and the operating loss before income taxes were relatively flat year-over-year. Results reflect higher claims in the non-term insurance products underwritten by our New York subsidiary, partially offset by higher net investment income. Allocated net investment income in this segment increased due to mark to market adjustments on the deposit asset backing a reinsurance agreement, which were positive this year and negative in the prior year. Otherwise, allocated net investment income continues to decline with a higher allocation of assets to the term life segment and a run-off of assets with book yields higher than those currently available in the market. As we continue to optimize our balance sheet, invested assets allocated to the corporate and other segments should decline along with the corresponding net investment income.

Now, turning to insurance and operating expenses on slide 10. Insurance and operating expenses were $70.5 million for the quarter, down slightly from the prior year period. The year-over-year decline primarily reflects higher prior period FRS related legal fees and expenses, as well as one-time costs associated with the move to our new corporate offices last year. Offsetting the decline are expenses related to growth in our term life and ISP businesses, the runoff of Citi reinsurance expense allowances, and other general operating expense growth.

On a sequential quarter basis, insurance and operating expenses were up a modest $1.2 million due to business volumes and other initiatives. We expect our third quarter insurance and other operating expenses to be roughly consistent with second quarter levels.

On slide 11, you can see that investments in cash totaled $2.04 billion as of June 30, 2014, up from $2.01 billion at March 31. The average book yield of investment, excluding cash, at quarter end was 4.76%, down slightly from 4.87% at March 31 as the yields on new purchases were lower than the assets that matured. During the quarter, the new money rate on purchased was 2.55%, down from 3.61% in the first quarter. This rate was negatively impacted by the purchase of some short duration, high quality, asset backed securities in Primerica Life, in anticipation of ordinary dividend payments to the holding company from Primerica Life, upon the successful completion of a reserve financing transaction.

Excluding the purchases of these asset backed securities, the average yield on purchased for the quarter was 3.54%, which is more in line with recent periods. The liquidity profile of our holding company continues to be very good. As of June 30, the holding company had invested assets in cash of $49 million, more than ample to cover its modest cash needs.

As Rick mentioned earlier, the completion of the reserve financing transaction on July 31 puts us in a strong position to execute our stated capital deployment plan of returning approximately $150 million of capital to stockholders annually through 2016. We believe the transaction has attractive economics with related costs expected to be in the $0.3 million to $0.5 million range per quarter in the near term. The periodic costs will change over time on the amount of reserves -- based on the amount of reserves financed and will be reflected in interest expenses beginning in the third quarter.

In simple terms, the reserve financing transaction allows us to accelerate the distribution of statutory profits from Primerica Life to the holding company that would have otherwise been distributable over the life of the policy subject to the reserve financing. About $110 million of the $150 million annual return of capital to stockholders through 2016 will be funded by our US life business. But the pace at which we will move capital from Primerica Life to the holding company will be governed by our ordinary dividend capacity pursuant to Massachusetts statutes.

While our general expectation is to return capital to stockholders ratably throughout the year, we anticipate moving about $68 million of capital from Primerica Life to the holding company in the third quarter and about $140 million in the fourth quarter. As a result, there will be some buildup of capital at the holding company by year-end, which will support capital deployment in 2015. Based on the nuances of statutory accounting, the amount of ordinary dividend capacity will not be consistent from period to period. That said, we are confident that we will be able to distribute sufficient capital from Primerica Life to support our stated capital deployment plan through 2016 and be well stationed to support the ongoing needs of the business.

I'll now turn it back over to Rick.

Thanks, Alison. Primerica's second quarter results reflect our focus on driving long-term organic growth. Our recurring life insurance revenues, coupled with positive investment savings, products, performance reflects the strong market position of our core businesses. Our ability to generate significant distributable earnings on an annual basis should drive expansion of operating earnings per share and return on equity longer term. Currently, we are working to build on the momentum generated in the first half of 2014 in order to generate organic growth that will positively impact future earnings and enhance shareholder value.

And now we'll open it up for questions.

(Operator Instructions) And the first question comes from Steven Schwartz with Raymond James. Please go ahead.

Just a few. First, John, you were talking about third quarter licensed agents, the salesforce growing slightly vis-a-vis the second quarter and you cited the Georgia Dome thing a year ago. Are you implying here that you're going to get greater lapsation? Is that the deal? These people signed up a year and --

No. Coming out of the Dome, which we'll be doing our last Dome event next year because they're going to be tearing the Dome down after that and putting up the new one, but after a Dome event we always -- that's when we have everybody there and we put out great incentives and everybody hears them. And so we always have significant increase in recruiting and production coming out of the Dome. What I was saying is we're going up -- we don't have that this year. We're going to -- I'm going to do some exciting things in La Costa, but it will be with 1,400 couples not with 40,000.

And so last year, we had the -- in this quarter coming up, we had the Dome incentives and the Dome event, the post-Dome kind of jump, and we won't have that this year. So that's what's going to make the comparisons from that standpoint difficult this year.

Will there be any new products for the remainder of this year or does that wait again until next year's convention?

No, there won't be any significant new product changes this year. And at this point, when you're moving this army and trying to marshal things, in truth, right now we're in the process of getting things lined up for the announcements at the Dome next year. Because that really is your opportunity to significantly, move things and introduce new and improved things. And get -- and make sure that you get it in front of the maximum number of people.

Okay. Great. And then for Alison, Alison you were talking about the new presentation, which I get. I understand. Hopefully, you'll still split out at least direct premiums between the two so we can do the Citi reinsurance thing. That would be helpful. But what I'm asking is, you seem to imply that the direct benefit ratio would be consistent over time in the 58% to 59% range. Shouldn't that go up since -- for the same reason that the YRT goes up?

Two things. First of all, if you look at our financial supplement, we do continue to show what we're now calling primary direct premium and Citi direct premium. Each quarter, we've given you that information historically. So that detail has not gone away.

The ratio that I'm describing actually nets, and this is something I mentioned in my prepared comments, specifically for YRT, why GAAP presentation has you treat that as a contra-revenue, we look at that as a direct offset to mortality costs. So from an analytical perspective, we actually apply or net out the ceded premiums from the benefit costs in order to come up with that 58% to 59%.

No, no, no. I get that. In fact, I do that in my own model. But my understanding would be that the -- I thought that ratio, because it's related to premiums and not to premiums and investment income that that ratio goes up slowly over time. Is that not accurate?

It does not. It goes up in relation to direct premium, but based on how you would account for any reinsurance under GAAP accounting, we basically lock in the cost, if you will. And again, because we do 90% of our YRT exposure, we pretty much it as a fixed cost all along. So GAAP will have you levelize that out as a percentage of premium over time.

Okay. And then just on the financing transaction, as you've done the transaction does that increase RBC since the money is still at the -- the cash is still at the life insurance companies and then that comes down over time as it's moved to the holding company?

That is correct. In the third quarter, you will see a jump in RBC because we've essentially created free capital, free surplus in excess of what we will be extracting. There are quite a few nuances about what you can extract. So it doesn?t necessarily correlate dollar for dollar with what we would have otherwise said has been freed up. So you will see an increase in RBC in the third quarter. As we take out the capital in the third and fourth quarter, it will come back down. The important thing to note is by no means do we expect it to get anywhere near the [350] that we said our targeted longer-term range.

Okay. All right. That's what I had. Thanks guys.

Thank you.

The next question comes from Mark Hughes with SunTrust. Please go ahead.

Thank you. Good morning. With the collapsed presentation in the life business, is there any change in the expense allowance structure in the legacy block? Is that going to continue essentially, as it was?

That does continue. It is now just being applied to our total term segment, but it is the exact same expense allowance that we had in the past. That's contractual, a contractual relationship with Citi.

Right, and the 6.1% profit relative to direct premiums, how do you think that will trend going forward? Is that going to come back up a little bit, stay about the same?

Are you referring to the legacy ratio?

Yes, and I know it's not going to be as relevant, but just for --

It definitely will fluctuate from period to period. It is pretty close to where we thought it would be. We had indicated in the last call it would be the low to mid sixes. What really drives this number more so than anything is the fact that we have not been able to increase our investment yields. And so you keep having these downward pressure from -- as assets roll off. There's a lot of assets backing that segment. So that's one component.

This particular quarter, we did have some slightly negative mortality experience in the legacy block, but on the new term block it was actually more than offset. And as we, this is a good example of when we start to go and think about how we want to be describing the business and how you should look at the business, what's really important is our mortality experience on the portfolio, not necessarily how it broke out between the two buckets because both buckets reflect whatever co-insurance or YRT you have in place.

So we feel it's more appropriate for us to be talking about the aggregate trends, which is actually one of the drivers as to why we decided to go ahead and collapse the sub-segments.

Right, the --

I will say, Mark, and again we are not going to continue to show legacy after this year, but as we said all along, we do expect that ratio to continue to climb, one, because we don't see on the horizon any immediate rise in interest rates, and two, because we've got this end of term block that obviously, when the business comes to the end of its level term period, the mortality gains that you'd been recognizing because the business had been priced so long ago, go away.

Right. In the new term business, the insurance expenses, you got it looked like very good leverage. Did you say there's anything unusual or one time in nature in that? Or is that just a -- just leverage really kicking in?

It's a combination of things. Our expenses in and of themselves in the term life segment, again, I'll talk about it in the aggregate, were up a little bit. But really, because they were growth related type items, so from a leveraging perspective wouldn't have caused a problem. The reason you actually had quite a bit of hiccup this quarter was more a function of the premium line in direct -- in new term.

So a combination of the fact that one, the second quarter has always been a seasonally strong persistency quarter. So it helps your premium level. And two, the fact that we did have some growth in our issued business year-over-year and we've seen a little bit sequentially as well, which did help to bolster the premium levels. So it's a combination of those two items, basically holding our expenses pretty consistent and growth in the denominator.

And then one final question. Your asset based revenue, the commissions and fees as a percentage of asset value, up a little bit sequentially this quarter. Do you think it's stabilized here at this level?

Yes, I think that if you look at the metrics we show in the supplement, it's really stayed in a pretty consistent range. Specifically, what happened this quarter is we had very strong performance in our variable annuity block and that block tends to provide higher returns in that regard. So I think it is sustainable. As we said last quarter, we do see from period to period mix in what we're selling. And while it will create noise on a quarter-to-quarter basis, the important thing is in the aggregate and over the long-term, sale of one product versus sale of the other is equally valuable to us. So it creates some timing types of bumps, but economically we're happy with whatever production we have.

Okay. Thank you.

You're welcome.

(Operator Instructions) The next question comes from Dan Bergman with UBS. Please go ahead.

You indicated that the recent redundant reserve financing should support about $150 million of annual capital deployment through I think you said 2016. I just want to get a little more color on the potential for capital generation and deployment longer term. I guess, I mean should we think of that $150 million annual level as kind of an ongoing run rate? In other words, would you expect to have enough new term policies on the books to do an additional similarly sized reserve deal in another two to three year's time?

yes, so specifically this deal covers three years of issue and we do have the ability to add another year of issue if we would like to. So I do not see a need to do another transaction for quite some time. That said, this transaction we do believe will fully fund the life component of that $150 million through 2016 and to the extent we decided to add another issue year, even potentially beyond that.

The reason we're sort of gauging 2016, I'll say somewhere between 2016 and 2017 is the thought that PBR will come into play sometime near that point, at which time the level of redundant reserves that we will need to carry will go down significantly and the need to do additional financing type of transactions will go down as well.

So our theory here is that we've now put us in a position to get what through what we stated as 2016. We have not made any decisions for 2017, although this transaction, especially with the ability to add in another year, does give us some ammunition, if you will, into 2017. But really, we want to wait and see what happens with PBR, with the hopes that it would do away with the need for these in the future.

Got you. That's very helpful. Thanks. And I just wanted to switch gears a little bit to the salesforce where it looked like the growth on kind a year-over-year basis has improved to about a 5% pace the past couple quarters. I just wanted to see if you could give any perspective on what have been the main drivers of this improvement, how much is due to the favorable macro environment versus more Company specific factors. And then do you think this current salesforce growth rate is something that's sustainable going forward?

Rick, you go first and then I'll jump in.

One of the dynamics that we've talked about on several of the past calls is the non-renewal rate on the salesforce and by that what I mean is the percentage of agents who don't renew during a quarter as a beginning balance.

If you go back to the second quarter of 2013, that number has ranged around 8.3%, 7.9%, 7.9%, 8%, and 8.2% this quarter. At that lower non-renewal rate, that is generated -- help generate positive momentum in growing the salesforce. That coupled with the improvements that we've made in licensing percentages over the last couple of years have generated that growth.

We have said really since coming out of the IPO that we believe a mid-single digits growth rate for the size of the sales force makes sense and we are running at about that rate right now, and still believe long-term that's the right appropriate measure to be looking at.

Again, it will vary from quarter -- from quarter-to-quarter due to seasonality and doing -- due to items like John mentioned relative to the promotions after the convention last year.

As you mentioned, 5% is mid-single digits and that is our goal to have that be the long-term growth in the salesforce. And as Rick said very well, other than seasonality or in a quarter where you're going against a convention the previous year, and not one this year, and stuff like that, taking those kind of things out, that is our goal and we believe that is what we can achieve.

Great. Thank you.

As there are no further questions, this concludes the question and answer session. This also concludes today's conference. Thank you for attending today's presentation. You may now disconnect.

Thank you, everybody.

Thank you.