美國再保險集團 (RGA) 2006 Q2 法說會逐字稿

Good day and welcome to the Reinsurance Group of America's Second Quarter Conference Call.

Today's call is being recorded.

At this time, I would like to introduce the President and Chief Executive Officer Mr. Greig Woodring and Executive Vice President and Chief Financial Officer Mr. Jack Lay.

Please go ahead, Mr. Lay.

Okay, thank you.

Good morning to everyone.

Thank you for joining us this morning.

Both Greig Woodring, our CEO, and David Atkinson, our Chief Operating Officer, are here this morning.

Greig will comment on the results we released yesterday, and then we will respond to any questions from our participants.

As a reminder, during this call, we plan to make certain statements and discuss certain subjects that will contain forward-looking information including, among others, statements relating to projections of revenue and earnings and future financial performance and growth potential of RGA and its subsidiaries.

You are cautioned that actual results could differ materially from expected results.

A list of important factors that could cause those results to differ materially from expected results is included in the earnings release issued yesterday.

In addition, during the course of the call, we will make comments about our results based upon operating income, both on a pre-tax and after-tax basis.

Under SEC regulations, operating income is considered a non-GAAP financial measure.

We believe this measure better reflects the ongoing profitability and underlying trends of our continuing operations.

Please refer to the tables in the press release for more information on this measure and a reconciliation of operating income to net income for our various business segments.

With that, I'll turn it over to Greig for his comments on the second quarter.

Good morning and thank you for taking the time to join us on this call.

I'll make a few brief comments, and then we'll open the line for questions.

Overall, results for the second quarter were good, following a good first quarter.

On a consolidated basis, operating income for the quarter totaled $69.1 million, well ahead of the prior year total of $20.1 million, which was affected, as you may remember, by poor mortality in the US and UK.

On a per share basis, our reported operating income for the quarter was $1.10 per diluted share, compared to $0.32 per share a year ago.

Reported net income for the quarter totaled $63.6 million, or $1.02 per share, well ahead of the prior year amount of $0.34.

Premium flow during the quarter was quite strong, increasing 16%, to nearly $1.1 billion.

The year-to-date rate of increase is 13%, which is within our range of expectations.

Net investment income totaled $168.6 million, down from the first quarter total of $186.9 million.

That sequential decrease is associated with our funds withheld portfolios in the US asset intensive segment.

Investment income can bounce around, due, in large part, to the treatment of realized gains and losses, and you'll see a corresponding decrease in the interest credited expense within that segment.

Our general account portfolio yield was essentially flat compared to the first quarter.

Turning to our operating segments.

First, in the US, pre-tax operating income totaling $78.5 million compared with $37.8 million last year, when we were hurt by large claims.

Our mortality experience was within the expected range, probably a little bit on the high end of that range.

Premiums were strong, increasing 15% for the quarter, a significant pickup from the rate we saw in the first quarter.

Year-to-date premiums are now up 12% for the US.

The rate of increase will moderate during the second half of the year, given the strong premium flow in the second half of last year.

In other words, comparison gets tougher as we go forward here.

Our US asset intensive business contributed $4.8 million in pre-tax operating income for the quarter.

On a year-to-date basis, pre-tax operating income earnings -- pre-tax operating earnings are well ahead of the prior year, at $13 million versus $8.2 million.

That operation continues to be a steady performer and to provide a meaningful amount of earnings diversification for us.

Turning to Canada.

We had unfavorable mortality experience involving primarily large claims.

That hurt the results in this quarter.

Over the last several years, mortality has been very good.

We anticipate normal claims flow to re-emerge in future periods.

Pre-tax operating income totaled $8.9 million, down only slightly from the prior year total of $9.1 million.

A strong Canadian dollar did help the current quarter result by about $900,000.

Premium flow was good, up 26% in US dollar terms and 14% in Canadian dollars.

New business opportunities in Canada continue to be good with stable pricing dynamics.

Regarding our international operations -- in total, it was a strong quarter, driven especially by the results in the Europe and South Africa operations.

Pre-tax operating income totaled $25.3 million vs. $4.6 million last year.

Good mortality experience in the UK this quarter vs. poor mortality experience last year were the highlights here.

Asia-Pacific was slightly off expectations, but nothing extreme.

Foreign currency translation adversely affected pre-tax operating earnings for the entire international segment by about $600,000.

Premium flow was about what we would expect on a year-to-date basis.

For the quarter, the rate of increase was 13% measured in US dollars and about 15% on an original currency basis.

These operations continue to develop nicely and are more prone to mortality volatility due to the varying size and maturity of the individual locations throughout the world.

We completed an $850-million Triple-X Securitization at the end of June.

The structure is similar to some of the other securitizations that have taken place in recent years.

The securitization does not significantly change our near-term operating earnings but is a long-term positive to us since it eliminates refinancing risk over the next 30 years or so for this block of business.

We have now permanently financed our Triple-X reserves on all business written prior to 2005.

We are currently evaluating longer-term financing solutions for 2005 and 2006 business, but we'll wait for that business to be fully reported before we execute any other transactions.

The industry saw additional consolidations this quarter. [Of course its] announcement about its acquisitions with Revios.

We don't expect this announcement will change our own business outlook or growth plans.

It continues, however, the consolidation trend of the recent past where the industry, [alas], is into fewer and stronger participants.

We were pleased with the quarter in conclusion.

We view our position in the marketplace as very solid.

And we appreciate your supported interest in RGA, and we’ll continue to operate in the way that builds long-term value for the RGA Enterprise.

With that, we'll now be open to taking any of your questions.

Jimmy Bhullar with JP Morgan.

Hi.

Thank you.

I just have a couple of items.

First, if you can just talk about your premium growth outlook, the premiums in the US specifically.

I think your target is 8% to 10%.

Do you see yourself coming in at the high end of that now, given strong growth in the second quarter, or are you going to see a slowdown where you going to comment at the lower end also?

And then second just based on your current growth outlook, what do you think your capital needs are for 2006 and for the next year?

That's it.

Jimmy, we really can't predict with that degree of precision whether it’s going to be in the high end or low end of an 8% to 10% rang, but we'll be in that range we believe.

We did see last year, for example, slightly lower growth rates in premium in the first half of the year and very strong in the second half of the year.

So when we look at comparisons, we’re actually comparing this year to a weaker quarter last year reported-wise.

But we do expect to be in that 8% to 10% range is all I can say.

Jimmy, this is Jack.

In terms of your question on capital needs, we would not expect [essence on] unusual opportunity in terms of the block or M&A transaction.

We would not expect to add to the equity capital base this year.

Okay.

And what about the first half of next year?

Do you see a need for something or do you think you're fine?

At the current growth rate and considering the level of retained earnings each quarter, we would not plan, currently, any capital transactions early part of next year either.

In fact, we may very well get through the entire year based on current growth rates without any need.

Okay.

Thank you.

And we'll take our next question from Ken Zerbe with Morgan Stanley.

Great, thanks.

Are you seeing any trends in the market -- and again, it could be much longer-term in nature-- that would indicate that longer-term premium growth might be different than the 8% to 10% target in the US, whether it's still primary companies increasing retention, so it would be lower or could it be higher?

Ken, in the US, certainly, there is going to come a time when the reinsurance market doesn't grow any faster than the rate of growth of mortality risk in the overall insurance market, so we'll settle down to that.

Those things happen over a long period of time, but we would expect we’ll be a little bit higher than the primary industry for some period of time still, I would reckon, but diminishing as companies will retain more in the near term.

I suspect some of those waves will move back in the other direction at some point in the future as well.

But right now, I'm expecting that we're going to be seeing ever-gradually-declining rates of growth in the US market.

Okay.

And then, the second question I had was can you help us understand what was behind the strong premium growth in Europe and South Africa?

How much of it was from the UK, and, I guess, what sort of a more reasonable growth rate from that market that we should expect over the next couple of years?

Well, the UK dominates that segment.

It is 80% or something of that segment.

And so, any growth you see is basically coming mostly from the UK.

We are actually looking at a reasonably slower growth rate in the UK than we've experienced in the last several years, as that market has gotten more competitive for us.

And we've actually toned down our growth rate in that marketplace and our expectations there.

So, I'm not expecting that that's going to be growing at the rate that we've seen it in the last several years.

The growth rate internationally is more pronounced in Asia right now than it is in Europe and South Africa.

Yes.

Just didn’t know if there was anything unusual in terms of this quarter’s premium growth rate at 10%?

No.

No.

Okay.

Great.

Thank you very much.

John Nadel with Fox-Pitt.

Hey, good morning.

Good morning.

Good morning.

Couple of quick questions for you one, just a modeling, sort of, question with securitization, if we look at the corporate segments, the collateral expense, collateral finance expense, you know, clearly is not at a run rate, what do you think the right run rate is there, and is there some sort of offset in investment income line?

John, I think you can look at the securitization as having very little impact on our current cost structure incorporate as well as any amounts that we allocate into the lines.

I would look at that more as we’re able to term out and lock in a long-term cost that’s attractive to us, but it’s not materially different than a short-term cost that we were incurring with lenders of credit.

Okay.

So it’s not even really a geography issue between one of the segments incorporate?

That is correct.

Okay.

Second question would just be with respect to going back to that premium growth and maybe thinking about premium growth relative to the growth in the gross life reinsurance written.

If I look at your North American business, it looks like in the second quarter, gross life reinsurance written was down, maybe, 4.5%, maybe close to 5% in the second quarter, and that was essentially an about-face from what we’ve seen in the last couple of quarters.

Where do you expect the gross life reinsurance written to trend for North America and for international and how come we think about reconciling that to premium growth?

The US markets -- last year, we had a very strong performance we wrote about $180 billion of new business.

That reporting of new business is always a little bit lumpy, we would have expected that normalized run rate to be in the $150 billion range, $155 billion range, and we expect about the same this year.

So new business will actually be down this year.

But first of all, we are getting probably a little bit higher premium mix on some of that business, and in addition, you have increases in forced premiums.

So in balance, we get to our 8% - 10% number.

Okay.

And then $150 billion, $155 billion number, is that a US number or North American number?

That’s a US number.

That’s a US number.

That’s a US number.

Our Canadian production is actually quiet strong this year up quiet a bit over last year.

We’re a little bit unsure as to where it’s going to come in based on the strength of the first six months, but we’ll probably be up in Canada by, I don’t know, $10 billion even.

Okay.

Okay.

And then the last question for you is maybe more -- just thinking about mortality, especially in the US.

You know, last couple of quarters now, maybe trending toward the upper-end of your expected range.

I'm just wondering if given you know some of the more aggressive sales practices that we've seen over the last couple of years, especially in the older age market, if it's not something that we should expect, that maybe mortality for the next couple of years, given all the older age business written at relatively aggressive prices, you know -- if we shouldn’t expect US mortality to maybe be more toward the upper-end of your expected range sort of consistently now for the next couple of years.

Well, John, we don't actually.

The first couple quarters this year were slightly worse than expected perhaps coming off of two quarters that were better than expected in the second half of last year.

I think that you blend all those things together -- you have to look at mortality over longer periods of time to sort of get a read on where it is.

We're not really seeing anything unusual in the US other than the normal sort of ups and downs, with the exception of the second quarter last year which was a big departure from expected.

The rest of the mortality has been pretty good.

It's hard to draw any conclusions.

In Canada, we've had a top first six months of the year compared to what we would have expected over, coming off of almost eight quarters in a row of extremely strong mortality results in Canada, and you could almost expect some regression to normal.

Are price increases effectively done at this point or is there selective places where you're still continuing to reach for additional rates?

Price increases are essentially done.

We continually look at mortality and continually look at our scales and are always tweaking and adjusting, but in terms of any major rate reviews or changes up, we're done.

Okay.

Thank you very much.

John, this is David Atkinson.

I would add some insight on that though.

The effect of the price increases that we've seen in the US market the last couple of years is only beginning to show up on our books.

As our new business grows over time, our in-force shrinks in comparison, you'll see a bigger and bigger effect, But it's a very slow long-term in our process.

Okay.

And maybe just, taking that back to the commentary earlier that over some lengthy-period of time, Life Reinsurance premium growth will start to track more in line with new business growth from the primary carriers.

I suppose that the rate increases is something that can expand that period out a little bit.

Yes.

That's certainly true.

Okay.

Thank you.

Jeff Schuman with KBW.

Good morning, Greig.

Good morning.

I’d like to actually follow-up on few of the earlier questions.

One point of clarification -- in the US traditional market, are you anticipating that second half growth refers to the 8% to 10% range or that growth in the second half is such that you get to that range for the year?

The latter.

Okay.

Okay, [because it's a] difficult comparison the second half.

Okay.

And then, hoping to understand Canada just a little better -- you're having great production there -- is that current production, has that been a market phenomenon or just a share issue for you?

I think it's more of a share issue than it is a market phenomenon.

And then, as we look out for the next few years in Canada, is it kind of a similar situation in the US where you would expect the reinsurance market growth to move closer to the primary market or are there any factors that would help Canadian grow?

Yes, it will certainly merge back towards the primary growth.

The reinsurance penetration rate in Canada has been at somewhere around 70% to 80% for the last several years.

And as it stabilizes and plateaus, you begin to get to a static point where the growth rates start to look alike.

Okay.

And then lastly, just a follow-up on the capital issue.

You know, Jack had said it looks like you're not going to have a need for capital for a while.

I'm wondering if with the US growth -- probably going to be in the single-digits in the future.

You talked about UK slowing, Canada is pretty mature.

I would think that we're getting to a point before too long where consolidated premium growth isn't far off from your ROE.

Is it possible you're going to get to a point where you're pretty much capital self sufficient here?

Well, yes.

We'll get to that point eventually, and we’re getting closer all the time to that.

So you're right, there's no need for capital right now.

And at the current-levels of production compared to our in-force, we're probably net users of capital still, but it's getting to be pretty modest.

What would you estimate the rate of usages at this point?

Jeff, this is Jack.

That's always hard to tell, but if I had to annualize it, it’s probably in the $100 million range.

Okay.

Terrific.

Thank you.

Andrew Kligerman with UBS.

Yes, good morning.

When I look at the various divisions, I'm understanding that you did an expense reallocation from corporate to the various segments, and so logically when I ran the ratios that I've done for the last year or two, what we see is higher DAC to net premiums.

But it seems significantly higher, and I was wondering on the DAC amortization and just generally in your operating expenses, is this where the level will remain or is there a chance that these operating expenses, both the admin and the DAC amortization -- what will they do?

Will they remain the same or could they decline a little bit?

Andrew, this is Jack.

That's always a difficult question to answer just because it's affected by the mix of business.

But I would say that if you look at our run rate for the first six months in terms of DAC -- or not just DAC amortization but all the policy acquisition costs.

It's pretty close to what we would expect in these different operations.

That is not to say that it can't change over time just because of the mix of business that we've put on.

Okay.

But the mix -- at this stage in the game, probably the ratios are indicative of a mix that we'll see for the next year or two, is that fair?

Yes, it is.

Okay great.

Thanks a lot.

Alan Gillespie with Goldman Sachs.

Hi, actually from the asset management side, just to clarify.

I am curious to follow-up on the comment near the end about the SCOR/Revios transaction, and you mentioned that it was not likely to impact your current business outlook for your growth plans.

Is that because of the size of the pro forma entity or is it because of their historical business mix in the US or perhaps they are in life and accident lines that you're less focused on?

I would say that both of those companies are smaller players in the market place.

Neither are companies we compete with typically in most of our important situations.

And when you put them together, we're not likely to see that happening.

Clearly, they're bigger size overall, and we'll have more US business on the books, but we really don't expect to see them in a major competitive situation with RGA.

It just doesn’t look like they're going to eat into any of the business that we have.

Okay.

And is it really the kind of business model where they can't really me nip around the edges, if you like, of your business or are you just in completely different universes of the competition?

Yes.

I don’t think they will be in a position to nip around the edges very much at all.

Great.

Thank you.

David Merkle with Huffy Capital.

Hi.

Another couple of questions on competition, ACE and Excel seem to be getting into the life reinsurance business.

Are you seeing them, and what do you think about competitive conditions from them?

I think we've seen them but very sparingly.

We have not seen them coming in with ridiculous or underblown prices or anything like that we would consider irresponsible. [For that,] we're happy.

And again, we really don't see the new entrants as affecting our day-to-day life at this point.

We keep our eyes out and we're always conscious of trying to monitor the situation, but, in fact, up to this point, we haven’t really seen much impact by the new entrants, except to say that they are adhering to reasonable pricing.

Okay.

Is competition differing outside the US versus inside the US?

If so, how?

Yes.

You can almost say that every market has its own dynamics at any given time, but the marketplace in Canada and the US right now shows somewhat similar characteristics in terms of the level of pricing and the nature of competition.

We find competition has heated up considerably in the UK from when we first entered the market, which, in retrospect, was the perfect time, and established ourselves and got quite a nice book of business, and now we are finding it a little bit tougher to place new deals.

We find the competition in most of the Asian markets to be scattered.

Some places you're surprised by competitive position, but most of the time, you're just trying to convince companies to reinsure business for reasons that help them with their own operations.

Okay.

My last question’s on asset intensive lines.

In the current, I'll call it, investing environment, is the flat yield curve, or tight price spreads, really having a material negative impact on your ability to get business done there.

And thanks for shareholders, by the way.

The yield curve or the level of interest rates has made it very difficult for us to do any new transactions, and that business is done when companies are writing too much and they need capital leverage and capital support.

So we haven’t really entered into a new treaty, a new major treaty, in a couple of years.

A lot of that has to do with exactly what you described.

We are clearly making our margins and making what we consider comfortable returns on that business and are happy with where it is, but we're really not seeing a lot of growth in new business there.

Got it.

It makes sense.

Thanks.

[OPERATOR INSTRUCTIONS]

Richard Sbaschnig with Oppenheimer.

Hi there.

Good morning.

Just a question -- what are you seeing in terms of trends in terms and conditions?

There's a lot more discussion than there used to be about terms and conditions, a lot more negotiation upfront.

There is a tendency these days to try to describe every possible term and condition in a contract, which has forced these contracts, as you might imagine, to get quite a bit bigger.

In our business, that's really very difficult to do because things come up ten years from now that you had no way to anticipate today.

But there certainly is a trend to make these treaties more complete and more specific.

In terms of some of the specific conditions, there's a lot of discussion about underwriting guidelines and claims, payments and all of those sorts of things, as you could imagine in today's environment.

And there have been situations where reinsurers have not been happy with the underwriting practices of a few of the direct companies, and I think the direct Companies, for their part, would say they have not been happy with the attitudes that some of the reinsurers have put out regarding their obligations to take claims and follow the fortunes of the direct companies.

So there's a bit of tension in the marketplace regarding all these terms and conditions, and we've spent a lot of time on it in the last couple of years.

Sure.

Would you say the trends, in terms of the primary market, kind of tightening its terms and conditions?

Do you think that has continued until now or has that kind of leveled off?

Well, I think it's going on.

There is still a lot of discussion to be had and a lot of evolving situations that has caused all of us to spend a lot more time upfront and a lot more time detailing the specific terms.

If you think about what that means overall -- and we've looked at a consolidating reinsurance marketplace, and, well, when we go talk to our customers from the direct side, they clearly would like to have return to more reinsurers and a lot more options in terms of price from, you know, 10 to 15 reinsurers if they could.

On the other hand, when you get to difficult negotiations to spell out contractual terms and developing a relationship with a trust between the two, you can't do with this many reinsurers, so that argues for going the other way.

And it's really unclear to us whether the future would, in balance, be one where you'd see a model of even fewer reinsurers in the marketplace today or whether we will rebound in waves in the future with new entrants to have more reinsurers in the marketplace.

It's a little bit unclear now there.

The force is going both ways.

Thanks.

Also, in your US traditional line, was there any significant difference in terms of the mortality experience for treaty vs. facultative or large vs. small?

No, we break our individual business down into a number of components, things like product development or [colly] business or facultative, automatic.

And when we look at it that way, we were really pretty much in line except for one small segment, and that had to do with a couple large deferred compensation cases where we have a few lives and there are large amounts and if we hadn’t had worse-than-expected claims -- which means a couple claims -- in those two blocks which go back 15 or 20 years, the rest of it, in balance, would be pretty much close to right on.

So we didn’t see any trends that regard anything except for, you could say, that one blockable business, and that happens when those people die, there’s very few lives there -- when those people die, we have a bad quarter.

Got it.

Okay, thanks a lot.

And we will take a follow-up question from Andrew Kligerman with UBS.

Mr. Kligerman, your line is open.

Once again, Mr. Kligerman, your line is open.

Moving on to a follow-up question from John Nadel with Fox-Pitt.

Hi, just a quick follow-up, Jack, Greig, I’m wondering if given your business and what you get to see on a day-to-day basis, if you can give us a sense for, you know -- on the first quarter and I guess even late last year from the primaries, there was a lot of talk about this non-recourse premium finance, sort of stranger own life insurance and investor own life insurance.

Can you give us a sense from what you guys have seen in the second quarter?

A lot of the primary carriers have talked a big game about putting the clamps down on that sort of business, really raising prices, raising underwriting standards, and I guess a lot of that probably is driven by reinsurers like yourselves pushing back.

But have you seen a real slowdown in that sort of business, can you tell?

The way we tell, John, is when we look at the issue ages that are actually coming in, and I actually don't have -- haven't asked that question here, haven't heard anybody saying that they're getting an unusual number of 80-year-old issue ages from any particular company in this quarter.

But we do monitor that, and our US traditional people keep their eyes on that right now.

But my guess is that it’s quieted down a little bit because we haven't heard anything unusual in the last several months now from our prospective.

So I’m sure this business is still ongoing and there is still some of it being done, but we're not seeing any standout situations right now, at least nothing has being called to my attention.

And I would add that, again, from RGA's perspective, since most of that business to us, if not all of it, comes on a YRT basis, we're pretty well protected even if those policies persist.

We're in a little bit different position than the direct writers who may be seeing secondary guaranteed UL policies being issued.

Okay.

Okay.

And then just a quick follow-up on your asset intensive.

Is there some kind of seasonality to the investment income there?

I mean, is there something you can provide in disclosure maybe on asset balances or something there because I guess I was surprised to see the first-to-second-quarter swing.

No, not really.

First of all, on Funds Withheld business, because of the way GAAP works, capital gains taken when you rebalance a portfolio by duration and so forth, [or] losses end up coming through as operating income to us.

We have a little bit of that noise all the time.

We have to smooth that out over a period of time.

But generally speaking, it's a pretty stable business, not a lot changes from one quarter to another except for that, sort of, reporting differential.

Okay, all right.

I'll follow-up with you guys offline.

Thank you very much.

Jimmy Bhullar with JP Morgan.

Hi.

I just had a follow-up on looking at the Munich Re data, you gained a lot of market share in the US and in Canada in 2005; what do you think is driving that and what's your outlook for just your share in general?

Well, first of all, Jimmy, last year, we did gain market share.

I think more of a fact that the ING sale, [since] fewer competitors in the market, you took a major competitor out, we got some of that share.

Just generally speaking, I think that we picked up some share at the expense of some of the other major players but without really changing what we were doing so much as they were changing some of the things they were doing.

We don't really expect that we're doing anything differently this year.

We expect our share, actually, to be, in the US market, to be similar to what it was last year, not growing, just pretty [stable].

Are you doing anything different than the competitors in terms of pricing that's enabled you -- because you gained -- a lot of companies did gain share from ING losing, but you gained a lot more than anybody else.

Yes.

I think that we are -- you know, in a smaller community of reinsurers, the value of having RGA's underwriting expertise involved in many of the contracts is heightened.

I think that we were able to just, with this steady course, take a lot of business.

We didn't aggressively price to get business.

We basically stuck to our basic formula for leveraging our underwriting skills and steady pricing and good knowledge.

We actually raised rates at some ages considerably, and I think that's a bit to the disappointment of some of our customers, but we’ve charted a very steady course here.

In Canadian market, I think we have been picking up share and we would expect maybe to pick some more share this year as well. [It’s just that as] the continued evolution of that market occurs where companies -- competitors get more or less competitive at any given time.

We seem to be at a good spot right now, and there’s a strong operation there.

Again, we're not changing our pricing methodology or aggressively going after business with a pricing strategy, but we are picking up market share nonetheless.

And in Canada in terms of mortality, you mentioned that there were some large claims.

Have you done any analysis to suggest that it might be trend going forward because you've had a couple of quarters of negative mortality there?

Yes, we don't believe it’s a trend.

We have done an [outlook].

We actually got about six months worth of large claims, if you define large as $1 million and over, in one month here in the second quarter for Canada.

If you go back again through the last ten quarters, you have eight much-better-than-expected quarters and then two weak quarters.

So until we get a little bit more trend, we don’t expect there is anything to be alarmed that.

We’re obviously watching it, but we’re not concerned at all about the Canadian mortality business.

Jimmy, this is David Atkinson.

When we had all those good quarters in Canada, one of the drivers was a dearth of large claims.

So we’re just kind of balancing things out at this point, I think.

Okay, thank you.

This time, it does appear we have no further questions.

Gentlemen, I’ll turn the call back over to you for additional or closing remarks.

This is Jack.

Thank you very much to everybody who joined us this morning.

To the extent any other questions come up, we would be happy to field those questions here in St. Louis.

And with that, we’ll end this second quarter conference call.

Thank you.

Once again, that does conclude today’s conference.

Thank you for your participation and have a nice day.