美國再保險集團 (RGA) 2008 Q1 法說會逐字稿

Good day and welcome to the Reinsurance Group of America first-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 Senior Executive Vice President and Chief Financial Officer, Mr. Jack Lay. Please go ahead, Mr. Lay.

Okay, thank you. Good morning and welcome to RGA's first-quarter 2008 conference call. I will turn the call over to Greig Woodring, our CEO, in just a minute. David Atkinson, our Chief Operating Officer, is also with us this morning.

We are sorry for the short notice on this call. We accelerated the schedule for releasing our results since we experienced unusually high claims flow for the quarter and wanted to get those results out. Greig will comment on those results shortly, and then we will respond to any questions from the 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 related to projections of revenue or 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 actual results to differ 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 on both a pretax 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 our press release for more information on this measure and reconciliations of operating income to net income for our various operating segments.

With that, I will turn it over to Greig for his comments on the first quarter.

Good morning, and thanks for joining the call. Appreciate your adjusting your schedule to participate this morning on short notice.

As indicated in yesterday's release, our first-quarter results were significantly affected by a high claims level in the US, South Africa, and the UK. As usual, I will go through all the results; and as part of that discussion we will elaborate on the claims experience by operating segment.

First of all, on a consolidated basis, net premiums increased 15% over the prior year. Foreign currency exchange helped to a tune of about 4%, led by a very strong Canadian dollar in particular. The first-quarter level of operating earnings is about 75% of the expected level of earnings. Operating earnings per share totaled $1.10 per diluted share compared to $1.28 last year. Operating earnings totaled $71 million, down from $82.1 million last year.

Reported net income for the quarter totaled $31.5 million or $0.49 per share compared to $76.3 million or $1.19 per diluted share last year. Net income in the current quarter was approximately $29 million in unrealized losses after DAC and after tax, due to the decline in embedded derivatives primarily associated with our equity-indexed annuity funds withheld treaties.

That loss primarily is a result of the impact of wider credit spreads on the underlying investments held in the ceding company's books and a decrease in the risk-free rates used in discounting embedded derivatives for equity-indexed annuities. These are non-cash unrealized losses that do not affect treaty flows, cash flows, or profit spread performance and we expect to reverse over time; and as a result we don't include the unrealized effects in operating income.

Additionally, we recognized $5.2 million pretax in realized losses associated with other than temporary impairments on investment securities.

Overall, our investment portfolio continues to hold up well in the current environment. Our subprime exposure remains modest at $255 million with over 77% in the AAA and AA categories. All of these holdings are investment grade.

Net income for the quarter also includes about a $5.1 million loss associated with our discontinued accident and health business. The good news here is that we settled the remaining largest disputed claims situation during the quarter. We are now faced with no arbitrations or claims disputes for the first time in years.

Turning to our operating segments, first, in the US pretax operating income totaled $64.4 million compared to $93.5 million last year. We did experience high claims flow in terms of the number of claims, as well as the volume of large claims; that's both severity and frequency here.

The large claims were approximately $35 million higher than we would normally expect in the quarter. The frequency of smaller claims was about $15 million adverse. So in other words about 70% severity, 30% frequency, I guess you would call it.

Based on our analysis of the current quarter claims, we don't believe there is any long-term trend or that we have any pricing issues whatsoever. When something like this happens, we analyze claims experience based on many attributes including underwriting era, risk class, client, facultative versus automatic, and gender mix.

The mix of claims in the first quarter is consistent with prior periods, implying no obvious weakness in any particular segment. We conclude we're seeing random volatility rather than a systemic problem.

Our experience shows that mortality trends do not fundamentally change in a quarter. However, quarterly volatility is a reality. For example, we experienced similar poor experience in the second quarter of 2005, which was then followed by 10 quarters of expected or, more often, better-than-expected mortality experience.

Also, you will recall that the US recently reported very favorable claims experience in the fourth quarter of 2007 on the same block of business. Even with our large spread of risk, we expect we will continue to see some quarterly volatility, but this does not change our long-term profit expectations.

Premiums for the quarter were up 8%. That is about what we expect on a full-year basis. Our asset-intensive business contributed $5.5 million in pretax operating earnings, up from $4.5 million last year.

Turning to Canada, the Canadian operation continued its string of strong quarters, helped by a strong Canadian dollar. Pretax operating income more than doubled to $28.2 million from $12.5 million. Currency translation helped the current quarter by about $4.7 million.

Mortality experience was favorable. Premiums increased 40% measured in US dollars and 20% in Canadian dollars. Those rates are substantially ahead of our full-year growth expectation.

That operation continues to perform very well. We were the leading reinsurer of new individual business in Canada in 2007, based on the recently-released Society of Actuaries survey.

Regarding our international operations, Asia-Pacific reported a good quarter with pretax operating income of $18 million, compared with $10.4 million last year. Segment-wide mortality was slightly favorable; good results coming in from Japan and Australia, New Zealand. Premiums increased 29% as reported, 17% on an original currency basis. Australia, Japan, and South Korea continue to be our key markets in this region, producing over 80% of the premiums for the segment.

Our other international operation, Europe and South Africa, had a more difficult quarter. Pretax operating income totaled $5.3 million compared to $21.3 million last year, which if you recall was a very strong quarter for them. Claims flow from the UK and South Africa was higher than expected.

This block of business is still relatively small, relatively new, and concentrated in large treaties. Particularly in the UK, some fluctuations like this are not totally unexpected. The prior-year quarter reflected very favorable mortality experience on these blocks; and when evaluated on an inception to date basis, the business is performing within our pricing expectations. Net premiums increased 13% on a US dollar basis and 10% in original currency.

So in conclusion, the quarter's results were disappointing. However, our long-term performance expectation and the fundamentals are unchanged. We will continue to monitor claims trends.

The pricing environment in the North American market remains stable. We continue to be a recognized leader in that market for life reinsurance, based on several independent industrywide client surveys.

The recent Society of Actuaries survey confirmed our expectation that overall reinsured amounts are down; however, RGA was once again the leader in the North American market for new business reinsured. We once again increased our overall market share.

Our international operations continue to grow substantially; and in fact, more of our new business now comes from outside of North America or outside of the US than inside of the US. They provide meaningful profits internationally and continue to be an engine for our growth in the future.

We appreciate your support and interest in RGA and are now ready to take any questions you may have.

(OPERATOR INSTRUCTIONS) Jimmy Bhullar at JPMorgan.

Thank you. I just have a few questions. The first one is on your guidance. You had given guidance for 2008 earnings, I think, $6.50 previously; and there wasn't a number this time, and you didn't mention one on your call. So if you could address the earnings expectation for the rest of the year.

The second one is, on David Atkinson's announcement. Was this planned in advance? If you can just give us some comfort that the earnings release and David's announcement are not related.

Then finally if you could talk about a little bit more detail on the negative mortality this quarter. Was this more of a number of claims issue, or you just had more high ticket claims? Or just give us some more color on what really happened.

Okay, Jimmy, we don't like to get in the habit of really doing quarterly updates of our guidance. You know, clearly, we are in the hole. We will we hit in that $6 to $6.50 range? There is a possibility we will. We are not ruling that out. We would need to have some good experience the rest of the way.

But clearly, these things tend to smooth out, and usually they smooth out relatively quickly when we have a down quarter like this. That has been our past experience. But that is not any knowledge about what is really going to happen this year.

But our earnings power as embedded in the book of business is still running on a 12-month forward-looking basis at something like $6 to $6.50, and we would stand by that from this point forward. But clearly, we've got to recover about $0.30 with better-than-expected experience to make that up in the current given year.

David's retirement has been something that we have been working on for a year. I should probably let him talk about since he is here today. But he is not completely leaving the Company. He will still do some work for us and we expect to see him contribute to RGA over the future years, although he is relinquishing a lot of his management responsibilities because of the change in status. Dave, you want to say --?

Yes, this is something I've been working with Greig on for a couple years, really. Probably about a year ago we reached a meeting of the minds. So it has nothing to do with this quarter.

In terms of the claims, I was trying to give you earlier, Jimmy, a little flavor for the severity and frequency. It looks -- we did have a lot of large claims, and that is usually the case when we have a bad quarter. The number of large claims -- that is, $1 million and over -- is 300 and something in the quarter.

The total number of claims -- I'm just talking about the US now -- was about 12,000. So, that 12,000 is a little bit higher than we would have expected. That probably contributed about 30% to the excess. The 300 and something volume of those claims contributed about 70% to the overage. So you could sort of say that it's a 70% severity and 30% frequency phenomenon for this particular quarter.

Thank you.

Nigel Dally at Morgan Stanley.

Great, thank you. Good morning. First on the UK operations, they have been disappointing for several quarters in a row. It seems like the statistical probability of having several quarters in a row of adverse mortality is pretty low. So what gives you confidence that the results don't include some underwriting issues as well?

Second, on the adverse mortality, are delays in receiving claims from the primary insurers also a factor and [anyway] that you got that far into the second quarter? Thanks.

I will take the second one first, Nigel. There was no change in the reporting for claims. In other words, we had a good fourth quarter; it wasn't that people didn't send us claims in the fourth quarter that should have come in the first quarter to any great extent. When we look at the time period of when we got the claims reported compared to the date of death, it's virtually identical. So there is no really no effect on reporting.

In terms of the UK, I will remind you that if you take a look at Canada, in 2006 they had four quarters in a row of worse-than-expected mortality; and since that time have had five not only good quarters, but very good quarters. So these things do happen in streaks.

If we look at our UK experience, we've had two very good quarters in the first half of last year and then two worse-than-expected quarters in the last half of last year and the first one this year. So that make sort of three quarters in a row.

This particular quarter was a little bit better in my opinion than the prior one was. But that is neither here nor there, in some ways.

We look at the experience on inception to date basis for all the business in the UK. The total claims and benefits are pretty much right on our pricing levels. It's pretty much right at 100% give or take 1% at any given time.

So we are pretty much right on. We don't see any reason at point to readjust pricing or underwriting guidelines, although we continue to look at it. Obviously, it's a newer block of business in the UK, and we continue to do a lot of analysis on trends and try to get our hands around what we can expect for the future. But we're not really thinking that there is anything other than a bad string right now.

Okay. Any read into what you are seeing thus far this quarter?

In terms of the first part of the (multiple speakers) of the second quarter?

Yes.

Yes, so far, so far so good. I mean, you don't read anything into that in terms of how the quarter is going to end up. We're still pretty early days. But both the US and the UK seem to be fine for the quarter to date.

Okay, thanks a lot. Thank you.

Andrew Kligerman at UBS.

Great, thanks a lot. I have three questions. First, could you give us the math around the reporting for that derivative loss of $32.6 million where you had the modified coinsurance and the funds withheld treaty structures? Could you just tell us how that was accounted for on each side of the balance sheet? Were there any variable annuity products involved?

Then let me ask my next two questions afterwards.

Andrew, this is Jack. Let me take a shot at that. The accounting gets pretty involved. But in terms of our embedded derivatives, the lion's share of what is going through the P&L relates to treaty structure issues. That is, treaties that are structured on a mod-co basis rather than on a coinsurance basis.

Okay.

So that is what gives rise to the embedded derivative. There is also a portfolio of equity-indexed annuities that likewise, when we value any embedded derivative, give rise to some P&L impact.

So I guess fortunately all of this noise, so to speak, that goes through the Asset Intensive line. If you take a look at that reconciliation that is in the middle of the press release, you will see that it is roughly $65 million pretax in terms of net downward pressure or expense associated with the valuation of those embedded derivatives.

Unfortunately, they affect a number of lines on the P&L. They affect -- the more obvious one is the investment related gains and losses where you see about $155 million or so loss. About $148 million of that gross relates to embedded derivatives.

But other lines are affected as well, and it gets difficult in a call like this to dissect it completely. But interest credited is affected; I mentioned investment related gains and losses; also the DAC line.

Is there any offsetting liability item that might wash it on an economic basis, or is this an economic loss in your view?

No, there is an offsetting loss. You will see it; it's referred to as a DAC offset in the P&L. But that mitigates a great deal.

I mentioned $148 million of loss associated with the revaluation of the change in the value of the embedded derivative. Most of that is washed, so to speak, in the DAC offset.

So when you combine it all, after tax it is about $29 million or $30 million, despite the larger gross numbers.

As Greig had commented earlier, we expect all of that to reverse over time. Those are unrealized losses that through anomalies and financial reporting, we run through the P&L. If those were coinsurance treaties, we would be running through those through a FAS 115 adjustment straight to equity.

(multiple speakers) say that the same treaty on a coinsured basis would not have these effects. Unfortunately, these changes in reporting came after these treaties were already in place.

For those of you who are not experts on reinsurance, when we talk about coinsurance, or mod-co, the difference is mod-co assets are held on our clients' books; coinsurance assets are held on our books. In either case we have the same exact risk. That difference, though, in where the assets are held drives different accounting, which is hard to understand sometimes.

It creates a lot of temporary noise, and big noise in this case.

Got it, okay. Now, I'm sorry to follow up again with David. David, just maybe a little further clarity. You know, the reinsurance markets seem very strong. The environment is good. Why would you -- why the interest in moving on at this point, if you don't mind?

Well, to be [flip], I'm buying a sailboat and I want to have some time to spend on it. So.

Okay.

Responsibilities that tie me down to the office 12 months out of the year is counter to that.

Okay. Just lastly then, on that analysis you did with risk class, gender, etc., I think that, Greig, you were implying that the losses kind of fell within the normal classes that you would expect.

But why would that give you comfort in your pricing? You know, is it possible that you may have mispriced this business, given the higher severity in the mortality? Why does that analysis give you comfort?

Well, for example, if you try to pick what is a worse cell, there is always a worse cell. If you have claims, you always have a worse cell by definition.

In particular, say the worst cell this time looks like policies issued 11 to 20 years ago. Well, those same policies, if you look over not just this quarter but, say, the last eight quarters are performing better than expected. So -- including the current quarter. So, take the last eight quarters, last two years' worth of experience, and it's fine.

So, we don't really expect that mortality is going to be well behaved all the time. It will be volatile. It will go up and down.

We don't normally see much correlation between population mortality and our mortality, simply because population mortality is a lot of -- is affected a lot by very old people; and that doesn't always have the same impact to us.

But in this case, there was a surge in 41- to 60-year-old claims or deaths in the US population in this quarter, and we had a little bit of a bump there as well.

So, you know, you can pick your cells and say, yes, there are worse cells. But every quarter you're going to have a different cell appearing in the worse category. So it doesn't really tell you much to just look at those in a very isolated, short period of time. If you look at it over a longer period of time, you develop a level of comfort that we have in this block of business.

Andrew, this is Jack. Maybe another way to look at it is, we go through a lot of analysis to try to determine if there is a particular cohort or a particular client or anything like that, that is generating a significant amount of unexpected losses.

If you go through various analyses and you don't confine the losses to one or two particular categories, then by default you are concluding that this is normal -- to the extent any volatility is normal -- that it is normal volatility, because you can't identify anything other than that sort of an aspect.

Got it.

So that is kind of the output of all the analysis. We take a look, try to confine the losses to a particular reason. And if you don't come up with something that implies you have got a pricing issue, then it's considered to be normal volatility.

Just for that first question, variable annuity reinsurance, no impact there?

Yes, not in the [feed] 36 adjustments. We have done some variable annuity coinsurance since last year sometime, a little before that perhaps. We made money on that in the course of the first quarter. Not as much money as we would have liked, but it was performing reasonably well.

Thanks a lot.

Al Copersino at Madoff Investments.

Thanks very much. I had a couple quick questions. We had this winter probably the worst flu season in the last five or six years. I'm curious if you saw that to have a specific effect on the results this quarter.

You know, we actually don't get cause of death rolled up as quickly. People send in death claims with just a notification that so and so has died. It is usually a couple months later that we can start rolling in cause of death information. So we really don't have that.

Based on what I know about where the patterns of claim spikes were in the quarter, I would tend to doubt it, that that was a major effect for us this quarter. But I can't say yet.

Okay. As you said, you have had 10 quarter since -- it's been 10 quarter since the last mortality spike. I'm assuming that both the size of RGA within particular countries, and the addition of new regions over time happens, then that 10-quarter period of good results, we certainly can't promise that.

But I assume that the likelihood of mortality spikes lessens over time as you continue to grow. Is that a fair assessment, or am I being overly optimistic?

Well, as you get bigger, it does get more stable. As the business ages, it gets a little bit more stable. However, we keep -- the amount of large cases or the average policy size continues to expand. So the number of large cases compared to the overall base of smaller claims is another ingredient to throw in there.

I am not sure that we should say that things will dampen over time to any great extent. We will still have these kind of quarters happening from time to time.

If you do the mathematics, will see that our standard deviation as a percentage of claims does shrink as we grow, but the absolute variations actually grow.

Okay, so the Law of Large Numbers does help you, but you are increasing the size of large policies. And as you say, as you're growing you will for a certain period of time have a larger bunch of new business on the books as well.

Right.

Okay, great. Thanks very much. I appreciate it.

Daniel Baransky at Fox-Pitt Kelton.

Yes, I had a few quick questions, mostly on the book of business. One, the gross written in the US was down year-over-year sequentially. I wonder if you can provide any details around what was going on there this quarter.

I think the amount that we wrote in the quarter was pretty much what we had expected. The reporting in any given quarter can be a little bit of a factor here, because companies sometimes will bunch up several months. You might get four months or five months reporting, or even six or seven months sometimes, reporting in a given quarter from a given treaty. And other times you might get less, obviously.

I think again you need to sort of see how that pipeline works out. We feel that our run rate is in the $140 billion a year range, which -- last couple of years we've issued about $160 billion. But there is always some catch-up in those numbers of some companies that are sending a surge of business through. We can't predict that always as accurately as we'd like.

But the current run rate of organic new business is on the order of $140 billion in the US, and we thought the first quarter was actually pretty good.

Okay, thanks. If I look at the in-force book for Asia, it seemed like there was fairly large growth sequentially from the fourth quarter. Is there any issues around that that we should know about?

Yes, Dan, this is Jack. I will take that. A lot of that relates -- I would say a significant amount of that relates to clean-up on the part of reported information on the part of our clients. We got a couple clients in particular cleaned up some of their reporting.

It didn't affect the P&L because it is easier for us to -- it has been easier for us previously to do a good job estimating what to expect there. But it did affect the amount of in-force, and as a result we had an adjustment to the in-force number.

Okay. I have just two other questions. Do you have the monetary impact from the higher level of claims in Europe this quarter, or an assessment of what you think the impact was?

Yes, I guess if you took the three biggest operations, the US was about $0.40 a share over in claims; the UK was about $0.10 over; and Canada was about $0.10 better. So, if mortality was as expected we would have probably been about $0.40 a share better.

Okay, thanks.

(multiple speakers) rough numbers, but close.

And the last one, can you just give me some, a little bit more detail around what you are seeing in the US cession rates and Canadian cession rates?

The US cession rates showed a sequential decrease again in 2007 over 2006. It appears that companies are still slowly retaining more business and ceding less business.

Most of our clients we really didn't see that change last year, in fact. RGA's business was pretty flat, which meant a little bit of a market share increase last year.

We really haven't seen on our books and our clients a lot of movement towards increasing retentions, and the cession rates are holding pretty much where they were. But overall when you look at the market, some of the treaties we're not on I suspect there is a little bit more of a retention pickup by ceding companies. But it seems to be the end of that line. We seem to be holding pretty firmly in most accounts.

In Canada, the pressure is also for companies to retain a little bit more. There's some movement and momentum starting to pick up in that direction. Cession rates in Canada are still quite high, and we do expect them to sort of follow the US lead and began to moderate a bit. So we wouldn't be surprised to see cession rates in Canada start to come backwards.

All right, great. That is all I had. Thank you very much.

(OPERATOR INSTRUCTIONS) Steven Schwartz at Raymond James.

Hey, good morning, everybody. David, good for you. Jack, could we quickly just follow up on the last question on the Asia-Pacific in-force? You said there was a cleanup. Do you know how much that added to the number?

It was in the neighborhood of $30 billion.

Okay, great. Then on to some -- a couple of other numbers if we can before bigger issues. Interest expense coming from the collateral finance obligation dropped a lot in the quarter. Anything there? Is that a run rate or did something happen there?

Well, that is variable, and it really kind of follows what is happening with LIBOR, so that we got some benefit from short-term rates in that respect.

Okay. Okay, that's good. Could you touch on policy acquisition costs and other insurance expenses in both US traditional, in Europe and South Africa? They looked awfully low.

Yes, the US was lower than a run rate. I think if you looked historically a run rate of 14% to 15% is what we would expect now. I always caution people when they are looking at loss rates to look at both claims flow -- that is, benefits as well as changes in the allowance line, the DAC line, so to speak.

It is a little bit lower. Part of that relates to reporting. Part of that simply relates to DAC adjustments that are a normal part of our business. But I don't expect that ratio to stay at 10% to 11%. I always caution to look at the historical rates, and I would still advise 14% to 15% is what we would expect going forward.

How about Europe and South Africa?

That is a little bit more difficult to call in terms of what to expect. You know, I would suggest take a look at the historical rates, which are typically -- they tend to bounce around, but low to midteens. I would say that is what to expect.

I think it is about 9% or so this quarter. If I had to pick a number -- or a range, I should say -- I'd say 12% to 13% is more likely.

Okay. Then just on to a bigger picture. Obviously we talked about mortality; that is very important. But you had I think some extraordinary growth in your new business assumed internationally. Even as I have tried to back you down on a functional currency basis, I think Canada might have been up some 50%, Europe and South Africa might have been up north of 100%. Asia maybe 160%, something like that, if you try to back out to currency effects.

Maybe you could talk about what is going on there, because unfortunately that seems to get hidden by what is going on.

Yes, well, we often direct people -- in terms of new business volume and particularly in-force numbers, because they tend to bounce around a little bit relative to client reporting we advise not to draw too many conclusions there.

But we do consider it to be a very strong quarter in terms of new business production in the international operations as well as in Canada. You mentioned FX impact, that certainly helped; but even culling that out, it was very strong.

But Steven, I think you point out something quite interesting. We have been the leading reinsurer of new individual reinsurance in Asia-Pacific-wide the last several years, according to the consulting firm NMG, who has done some research into this.

Our numbers show that, for example, the first quarter grew I think 29% in revenue premium in Asia. Last year we were in the upper 20s; and the year before that we were in the mid to upper 20s. That is the part of the world where insurance is growing as an industry.

Reinsurance is growing along with it, and we're well positioned and certainly taking our share of developing the reinsurance markets in those countries.

That provides a very good storyline for us as we look forward. The future profitability that we can expect out of the very nice business development coming out of Asia for us is an important part of our story these days.

Okay, but just follow up on that, Greig, I think you mentioned last quarter that you thought that you had a reinsurance product in Japan that could maybe break open that market finally for you. But I guess it kind of got stopped up by the FSA. Any new news on that?

Well, I think the FSA has clarified their rulings. Now we haven't actually reopened that reinsurance; we have to renegotiate if we want to get that. But I think that the Japanese market -- we've been growing nicely in Japan, but waiting for the big breakthrough where the Japanese would begin to use reinsurance more effectively and in bigger amounts. We thought that maybe 2007 would be the first year that really opened up.

But it will happen, and we keep pushing hard in Japan. There is a lot of opportunities in the Japanese market for reinsurers to help the ceding companies develop their business and to increase their overall performance. So we think that the Japanese market is going to be a really strong one for us in the future.

Okay, thanks, guys.

Daniel Baransky, Fox-Pitt Kelton.

I just had one follow-up question. I'm curious in the continental Europe; what sort of traction or growth are you seeing there this year?

On a percentage basis, very high, probably 100%, more than 100%.

The business is still small, but growing nicely. Since we are growing from a zero base, you're going to see some nice percentage increases there. But it is not a real big number yet.

Out of continental Europe, not counting Spain and the UK where we have had operations established for some time, we expect something like $40 million of premium this year. So, it is not a real big number, but it is more than double last year.

Okay, great. Thank you.

At this time we have no further questions. I will turn the conference back to management for any closing remarks.

Okay, well, thanks to everyone for adjusting their schedules and joining us this morning for the first-quarter conference call.

With that, we will end the call, and we're certainly available for any questions that come up if you would like to call us here in St. Louis. Thank you very much.

That does conclude today's conference call. Again, thank you for your participation.