美國再保險集團 (RGA) 2014 Q3 法說會逐字稿

Good day, everyone, and welcome to today's Reinsurance Group of America third-quarter 2014 results conference call. Today's call is being recorded. At this time, I'd 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 to everyone, and welcome to RGA's third-quarter 2014 conference call. Joining me in St. Louis this morning is Greig Woodring, RGA's Chief Executive Officer. Greig and I will discuss the third-quarter results after a quick reminder about forward-looking information and non-GAAP financial measures.

Following our prepared remarks, we'll be happy to take some questions. To help you better understand RGA's business, we will make certain statements and discuss certain subjects during this call that will contain forward-looking information, including among other things investment performance, statements related to projections of revenue or earnings, and future financial performance and growth potential of RGA and its subsidiaries. Keep in mind that actual results could differ materially from expected results. A list of important factors that could cause actual results to differ materially from expected results is included in the earnings release we issued yesterday.

In addition, during the course of this call, we will make comments on a pretax and after -- or on pretax and after tax operating income, which is considered a non-GAAP financial measure under SEC regulations. We believe this measure better reflects the ongoing profitability and underlying trends of our business.

Please refer to the tables in our press release and quarterly financial supplement for more information on this measure and reconciliations of operating income to net income for our various business segments. These documents and additional financial information may be found on our Investor Relations website at rgare.com.

With that, I'll turn the call over to Greig.

Thank you, Jack. Good morning, everyone, and thanks for joining us this morning. I will provide some general overview comments on the quarter, Jack will go over the financial results, and then we'll open it up for Q&A.

Our third-quarter results were strong and were in many ways consistent with that of the year-to-date results in the sense that our global diversified model is working well as our international segments and global financial solutions businesses performed at a high level and were a complement to our traditional North American businesses that have faced a period of higher claims.

Operating EPS were at $2.31 per share, and ROE exceeded 12%. Premium growth was a solid 7% in both the current quarter and year to date, and our new business activity remains solid.

Underwriting experience on a global basis was moderately negative as both our Asia and EMEA regions had broadly favorable results, providing an offset to the weaker North American results. Jack will give some further details, but suffice it to say that our extensive analysis of the higher claims in North America did not reveal anything indicative of a systemic trend.

Global Financial Solutions had strong results across products and geographies. New business momentum there continues to be vibrant.

Our Australian operation had another quarter where the bottom line results were modestly positive, and the conditions there continue to show signs of improvement -- gradual improvement. We continue to be active and disciplined in our management of deployable capital, and with the announcement of the Aurora transaction last week, we have announced three significant transactions and a smaller one this year that we have closed or will close by early 2015.

We've talked about the potential for block transactions and M&A opportunities for a few years now given regulatory changes and other issues driving change in the global industry, and we are now pleased to be able to execute on transactions that match well with our known skills, and we are expected to meet or exceed our targeted returns.

Thus, 2014 has been a very successful year to date in both terms of putting excess capital to work in attractive transactions and returning capital to shareholders in an effective and balanced way. Going forward we continue to see good demand for our solutions on a global basis, recognizing that we have a robust product suite. We are leveraging our capabilities across our global platform, and we have strong positions in our key markets. We have good balance across our range of businesses and geographies as more developed markets provide us with solid profit streams and excess capital generation, while other markets offer more opportunities due to market growth, regulatory changes or demographic influences.

We are seeing a more obvious benefit from the build out of our global platform and product suite that has occurred over the past 15 years. These operations have reached significant size and have good momentum.

Finally, let me make a brief comment on Ebola as I know that there is likely some interest in this issue from our perspective and any potential impacts going forward. We have access to leading authorities on the topic from both internal and external experts. In the case of Ebola, we have no direct policy exposure to the West African countries where the disease is centered, and our only exposure on that continent is in South Africa where there have been no cases to date. RGA has implemented and continues to update our underwriting guidelines and manual for Ebola and travel risk to endemic countries.

The collective opinion of all of our RGA international doctors is that the Ebola outbreak is a tragedy in Western Africa and will likely worsen before it gets better. But we conclude that a widespread worldwide Ebola pandemic is not likely and not a major concern for us in the markets we serve.

With that, I will turn it back over to Jack to discuss financial and segment results.

Okay. Thank you. We reported operating income of $160 million this quarter or $2.31 per diluted share versus $2.14 per diluted share last year. Both periods were quite strong, and our diverse lines of business and geographies continue to provide a benefit to the consolidated results. Net premium growth was solid again this quarter at 7% in both US dollars and original currencies.

For the quarter, we had a very slight benefit to premiums and a slight negative to operating income from currency effects. Excluding spread business, our average investment yield was 4.8% this period, slightly higher than last year's third quarter and roughly even with the second quarter of this year. Our new money yield is about 4% and continues to trail and put downward pressure on our overall portfolio yield. But this has been somewhat offset by higher variable items such as bond and mortgage loan prepayments.

We've repurchased another 263,000 RGA common shares this quarter for roughly $21 million, continuing our balanced capital management strategy of deploying capital into the business and returning excess capital to shareholders.

As Greig indicated, we have announced some significant transactions this year, and we expect to deploy about $300 million of capital toward the transactions that have not yet closed. Our current excess capital position exceeds $600 million and, of course, should grow somewhat between now and the closing of those transactions such that we expect to be in a position going forward to execute a balanced and effective capital management strategy.

Now turning to our segment results, the US and Latin America traditional subsegment reported pretax operating income of $79 million versus $90 million last year, reflecting relatively higher claims experience in the current period. Individual mortality claims had some adverse deviation as we saw a higher frequency of claims in automatic treaties that were somewhat concentrated in the lower faced valued policies of more recent vintage. And we also had modestly higher-than-expected large claims, mostly younger issue, younger issue age policies.

The experience this quarter was in contrast to that of the first quarter when the issue was distinctly biased toward large facultative claims with many older issue ages. Again, we have done extensive analysis on this issue, and we will continue to monitor this in the future. But we don't believe that it's part of any systemic problem or trend.

Premiums grew at 4% quarter over quarter with all traditional products contributing to the growth.

Our asset intensive business in the US reported pretax operating income of $58 million, well above expected levels and reflecting over $8 million in mortgage loan prepayments, continued favorable investment spreads and overall favorable experience in the various lines.

Our financial reinsurance line continued its trend of producing strong fee income growth and reported pretax operating income of $13.8 million, a 20% increase over last year's third quarter, reflecting continued good momentum in the buildup of underlying treaties.

2014 has been a very active period of new business as companies respond to regulatory changes.

Canada had another difficult quarter and posted pretax operating income of [$]26 million compared to [$]36 million last year. Higher-than-expected large claims again contributed to the subpar results. We don't see any particular patterns that would suggest a systemic problem or trend and note that this recent period of adverse volatility follows a longer period of favorable mortality experience in Canada. Further, a weaker Canadian dollar reduced pretax operating income by about [$]2 million. Premiums were up 4% quarter over quarter, reflecting a significant adverse currency effect as premiums in Canadian dollars increased 9% over last year.

In our Europe, Middle East and Africa segment, pretax operating income totaled $44 million, up 15% over last year's third quarter with strong contributions from the Global Financial Solutions transactions and overall favorable mortality and morbidity claims experience, which was generally well spread across countries within the segment but in particular in the UK and South Africa operations.

The EMEA premium growth was 14% quarter over quarter, including foreign exchange currency tailwind of about $14 million. In original currencies, premiums were up 9%. The Royal London transaction announced in May had a full quarter effect. The Delta Lloyd transaction announced in August is relatively small and as such had a more modest impact in the quarter.

In Asia Pacific, pretax operating income totaled $27 million, well above the $14 million from a year ago. This period's results include a modest level of income in Australia and favorable claims experience across most other markets. Our operations in Hong Kong and Southeast Asia and in Japan posted particularly strong operating results this quarter, continuing a recent trend.

Net premiums totaled $399 million, up 12% in translated currencies and 11% in original currencies. These amounts reflect premiums in Australia that are roughly flat with that of a year ago. In the past quarter or so, we renewed two larger treaties with significant premium rate increases in Australia. We believe that the higher rates on these treaties are sufficient, and we continue to work with the clients and others to institute more permanent changes in terms and conditions. Thus, the market conditions are showing some improvement, but there still is work to be done going forward.

Looking at premiums outside of Australia, we saw a growth of 20% in the quarter and year to date based upon segment wide strength and notable re-acceleration in Japan and Korea as we mentioned more recently.

Our corporate segment reported pretax operating loss of $13 million this period compared to $3 million last year. The current period includes about $5 million of additional interest expense associated with the senior note offering late last September and an increase in other expenses for our incentive accruals. We expect a run rate on pretax losses to be around $10 million to $12 million per quarter, although it can be somewhat lumpy.

The Company's effective tax rate on operating income was about 32% this quarter, in line with last year's 32%. Our best estimate of the effective rate going forward on operating income is approximately 33% to 34%.

In summary, we are pleased with the strong results this quarter and with our recently announced transactions. We continue to benefit from the balanced and diverse nature of our operations and solid execution across many markets. We are excited about our ability to execute on effective capital -- on an effective capital management strategy with a balanced approach to deploying this into the business and returning excess capital as evidenced by our recent actions, and we continue to -- we expect to continue this strategy in the future.

As we begin the fourth quarter, macro influences are a bit challenging, particularly lower interest rates. But given our otherwise strong business momentum and effective capital management, we expect to be able to manage through this environment and make overall progress.

We thank you and appreciate your support and interest in RGA. And with that, we will open for questions.

(Operator Instructions). Colin Devine, Jefferies.

Greig, I was wondering if you could speak a little bit about where you're seeing the greatest opportunities right now going forward in terms of potential transactions.

Colin, in terms of potential transactions, we are seeing the biggest opportunities in Europe, which is a market adjusting to the advent of Solvency II in 2016. We did a Solvency II-friendly transaction with Delta Lloyd, which was, as far as I know, one of the first -- if not the first of those sorts of transactions, and we think there's a lot of interest in those transactions going forward.

So, of all the places in the world, that's probably the place with the biggest transactions, if you put it that way. In terms of organic growth, of course, Asia is where the momentum is right now, and we have a lot of strong momentum in that marketplace as the middle class grows and insurance is a growth industry there.

Following up on the Solvency II question, is there the possibility of some spillover into the US from European companies, like to rebalance the US operations?

Yes, Solvency II is a capital regime that has a global perspective. And so whether they are -- the operations are located in Europe or America or Asia or any other market, it doesn't matter. They still have a capital charge associated with them that is Solvency II based. So it could well be that there are some US blocks of business that would come to market or would be good possibilities for some transaction of some sort.

Okay. Thank you.

Ryan Krueger, KBW.

I was hoping you could talk a little bit about your earnings expectations for the Voya term life block and the Aurora National deal and also if you expect any sort of ramp up period or if the earnings would emerge right away?

Ryan, this is Jack. We don't typically get into specific discussions of earnings expectations. But I can direct you towards relative returns that we expect over time, and I'll remind you that Voya, we deployed roughly $100 million of capital, and Aurora, we will deploy about $100 million of capital, and Aurora we expect to deploy about $200 million of capital. And in terms of returns, you can think of those in the 14% to 15% roughly expected range. That's kind of a run rate. There's a little bit of buildup to get there but not much. So hopefully that helps in terms of what to expect from those two transactions.

Okay. So 14% to 15% kind of total in the two combined?

That's right. That's right.

Thanks. And then I guess given your statements that you don't see any kind of underlying trends in the issues you've seen in North American mortality, I was hoping you could give us maybe some sense of how mortality has been so far in October.

Mortality has been okay in October, Ryan, but I can caution you that that doesn't mean very much with respect to the quarter. You know, the mortality can swing in a three- or four-day period very strongly because of large claims, and we just have to ride it out to the end.

You are right. The mortality experience has been disappointing. It's been real choppy this year. Bad first quarter with a lot of large claims and a lot of facultative business. The third quarter -- second quarter was fine, and the third quarter has been almost the flip of that for more frequency than it is severity and the smaller policies very little facultative excess.

So, we are unfortunately in a period where we've had two quarters that are not good this year. But we've always had situation mortality smooth out over time, and we expect this to be the same thing. That if you look at it over a two- or three-year period, we'll find mortality to be a nice steady haul.

All right. Got it. Thanks, guys.

Sean Dargan, Macquarie.

Just following up on Ryan's question about mortality, it seems for primary carriers, mortality has been less favorable in recent quarters, and they've typically chalked it up to severity and volatility. But is there anything you've identified in underwriting in certain vintages that may be causing this kind of industrywide backtracking in mortality?

Yes, Sean, no, we haven't. We've looked at it very carefully. I'm talking about the US now, and I think the same thing would apply to Canada as well. But talking about the US for example, our block issued from 1999 to 2004, which is the most difficult return block for us, actually had a pretty good third quarter. It is the prior and the after that had all the fluctuations in this particular case.

So things just have been very choppy, as I said. There's really no pattern to it that persists.

Okay. Thank you. And then I'm just thinking about the returns you are going to generate on the acquired blocks. 14% to 15% implies something higher than the sellers were able to generate. I'm just wondering why you are able to generate higher returns than the prior owners.

This is Jack. Let me take a stab at that. I guess when you talk about returns, oftentimes some organizations will comment on returns on a statutory basis in terms of the statutory capital. When we talk about returns, we are talking about our own GAAP capital that we feel we need to put behind these businesses. So, that's one reason that the returns can differ from buyer to seller.

We also have to come up with new assumptions on all the underlying issues. And certainly our assumptions would be different perhaps than some of the assumptions used in terms of developing the return by the selling company.

So I think that is the best way to say you shouldn't necessarily expect the returns to be identical, particularly as it relates to the underlying capital that is required to back the business.

But are your capital requirements -- your GAAP capital requirements different than the sellers?

It could be. Our overall mix of business is different. The limiting capital may be a little bit different. Generally speaking, we have the ability to recharacterize the transaction when we make an acquisition, and we are pretty confident in our delivery of this sort of return.

Thank you.

Jimmy Bhullar, JPMorgan.

First, on just your expectation for share buybacks given recent deals that you've done, should we assume the buyback activity will slow relative to the last few quarters? And then I have another follow-up as well.

Jimmy, I think you saw it slow in the third quarter compared to the first half of the year, and I think you should presume that you will see a continuation there.

Now, that could -- what would cause that to change? If the stock traded off dramatically so that we thought it was a terrific buy opportunity or if some of the ongoing discussions in terms of deals on the pipeline dissipated for a variety of reasons. But, you know, those sorts of discussions continue, and we've already announced a couple of deals. So you shouldn't expect any sort of an acceleration of buybacks in the fourth quarter.

So you will be active, but maybe not as much as you've been doing, right, or are you ruling out buybacks completely?

Well, we could be active. I'll stop short of saying we will be active, but we could be active. But even if we are active, it would probably be at a diminished level.

Okay. And then on the Australia business, could you just discuss like how much of the business has lapsed from maybe two years ago? And the treaties, you mentioned you have renewed a couple of large treaties. Have you gotten the full price hikes, and what type of returns do you expect on those, or do you think you'll need to go through another round of price hikes down the road?

Jimmy, we've lapped off some of the big transactions, and others we have reserved through large rate increases, and they are substantial rate increases. Because that was needed and recognized by everybody in the marketplace. And so while there wasn't enough time to go through full negotiations and negotiate all terms and conditions between the super funds, the direct writers and the reinsurers that we would've liked to see and will ultimately expect, we did see rate increases of a very large character flowing through. And we got comfortable enough that we expect regular returns on that business with those sort of premium increases, and so we did renew or we extended -- renewed or extended those contracts. Not necessarily for a new full three-year period, but we have basically taken these as one-off decisions as they've come to us.

And then as you think about your reserves in Australia, obviously you took the large charge last year. Is it reasonable to assume that like I'm assuming that you're comfortable with your reserves already, but the trends seem like they've been better the last few quarters than what we would have expected. So is there a possibility of a reserve release down the road or you need to see a lot more data before you get comfortable?

Jimmy, this is Jack. We would need to see a lot more data because there is a longer tail than you'd expect on that business. So, it's pretty much playing out roughly as we expected. We have no reason to believe that we need additional reserves there. We are comfortable where we are at this point. But, it will have to play out over several years.

Okay. Thank you.

Humphrey Lee, UBS.

Just want to follow-up on the mortality in Canada. So, there seems to be a elevated number of large claims, but can you talk about how the number of claims has trended since the first quarter?

Humphrey, we are talking about large claims in the range of 14% to 18% today, instead of maybe an expected 10%. So it's very difficult to see -- there's no pattern to speak of. Sometimes it's up and sometimes it's down. But with those kinds of limited numbers, you are really not expecting to see a pattern like that, except over a long period of time.

Canada has had a very rough string of experience this year. I will remind everybody that follows a long stretch, many many years of exceedingly good mortality, in some cases more than a standard deviation away from expected on the good side. So we are a little bit puzzled by the persistence of this current string on the negative side, but we bet it's going to turn around pretty soon. And we expect that over the long course things in Canada are just fine.

Okay. And then on asset intensive, even when excluding the prepayment income, this quarter is still very strong when you look at how equity markets and interest rates are performing in the quarter. So you mentioned favorable experience, and perhaps in the quarter can you kind of elaborate the impact of some of these drivers, and how should we think about on a run rate basis going forward assuming without the Aurora deal?

Humphrey, this is Jack. Let me take a crack at that. First of all, in terms of the run rate going forward, you know we had kind of guided towards roughly $40 million pretax per quarter. As we continue to build that business and it has performed pretty well, I certainly would be disappointed if we didn't hit that $40 million. So we think that's -- that's probably a good benchmark and with some opportunity to exceed it.

Now, this past quarter we exceeded it fairly substantially. Everything seemed to kind of fall our way in that business. We already mentioned the prepayments of commercial loans kind of added -- even though we have that phenomenon every quarter, it was a little more dramatic. In particular, we had a fairly large loan payoff that contributed there. So that went our way. Our equity indexed annuity spreads widened a little bit, and the fixed annuity spreads widened. It was really pretty much across the board. So everything kind of fell our way, which kind of is a testament to the earnings power of that business.

I guess I'm just a little bit surprised with widening credit spreads for fixed annuities and the invested annuities, like being such a huge impact in the quarter. Is there something kind of different that you guys are doing or how much of additional leverage that you can pull for these two blocks?

Yes, I'd say there's nothing dramatic that we are doing. We continue to look at the investment portfolio and try to take advantage of opportunities we see there, and we've been able to pick up the spread a little bit in that respect, but it hasn't been dramatic. It's just been a little bit around the edges, and virtually all of the businesses within that adds an intensive group. So --.

I'll remind you, Humphrey, most of that business is closed block. So we can manage it effectively and lock in essentially the spreads for duration of those contracts if we were good with our modeling. And so, we don't have a situation where we are open for new business and getting new flows a lot of times. We take them in chunks.

Okay. All right. Thanks.

(Operator Instructions). Steven Schwartz, Raymond James.

First, a couple of follow-ups. Jack, just on Humphrey's questions with regard to spread, my assumption has always been when you show these big gains in asset intensive that what we are really looking at here to some extent is the different GAAP accounting for indexed annuities with regards to both the hedged asset and then how you account for the liability that's being hedged. Is that the case this quarter?

No. I wouldn't look at it that way. Because most of that hedging comes out of operating income. So, that's not the way I'd look at it. I think you can think of it more as around the edges, just adding to the spread through some of the investment repositioning that we've been able to do and so on.

Okay. And then a follow-up to Jimmy's question with regards to share repurchase activity. Was your commentary with regards to fourth quarter or going into 2015 as well?

Well, my comment was really related to the fourth quarter. But, you know, if you wanted to look beyond that into 2015, a lot would depend on what the pipeline looks like in terms of other ways to deploy capital. (multiple speakers) So -- I'm sorry. Go ahead.

Well, I was saying I guess I was asking to what extent the capital can be replenished. Absolutely you've got $600 million -- north of $600 million, and you are using $300 million for these two deals. Can capital be replenished?

Yes, well, you can think that ordinarily we would in terms of redundant capital would add $300 million to $350 million kind of a run rate per year. So, yes, certainly we expect it to be replenished, and it's fairly predictable in that respect. So, we think we will have the capital available to continue to deploy as we've done this year.

Okay. And then one for Greig, maybe two for Greig. The -- on US traditional, the assumed reinsurance business in the quarter went down to $16 billion. It had been kind of steady in that $21 billion, $22 billion range. What's the take away there?

We are seeing business drop off a bit. Some of that is reduced market share, just depending on certain specific situations. Not overall increase in competition in the marketplace. And some of it is some companies retaining a little bit more business. We do expect that business flow in the US market will continue to go downward next year. There is some disagreement among reinsurers whether that's really the case or not. But I think that that's kind of what we believe.

Okay. So you are thinking penetration is going to continue to drop?

Yes. Yes.

Okay. And then one more if I can. The adverse experience in the group business, was that health insurance again like it was in the second quarter?

Yes, it was, but it was different. We have four lines in the group business. We have the life and accident, we have excess medical, and we have quota share medical, and we have disability. It was a different -- it was the other medical line this time. It was the excess line that had the problem.

What was it in the first quarter or in the second quarter? Excuse me. This excess?

It was the quota share medical.

It was the quota share medical. Okay. All right. Thank you, guys.

John Nadel, Sterne, Agee.

This is Mike Ward on for John Nadel. Just a question on FX. It looks like foreign exchange did not have a meaningful impact overall on third-quarter results. But based on where things stand currently, it seems it might be more pronounced in the fourth quarter and into next year. I'm just wondering if you would agree with that assessment.

This is Jack. I would agree with that. If you just look at the translation rates now, it would have had a -- not a dramatic effect, but a more significant effect then we saw in the first quarter. I think it was a $0.02 or so -- I'm sorry, in the third quarter. I think it was $0.02 or so, and it would be probably 3 times that or more if we use current spot rates.

Great. Thanks. That's all I had.

Edward Williams, Capital Returns Management.

Not to spend too much more time on Q4 buyback expectations, but in your response to Jimmy's question, it sounded like you haven't repurchased any shares post-quarter close Q4 to date. Is that a safe assumption? And also, could you just remind me how you think about utilizing 10b-5 plans if applicable? Not just surrounding quarterly blackout periods, but also negotiating potential acquisitions? Thanks, guys.

We have not been in the market since the end of -- since September 30. And we do use 10b-5 plans in terms of really just to have a plan in place and not end up in a position where we are tripped up by blackout periods and that sort of thing. So we have certainly used that sort of plan in the past, and to the extent we are back in the market, we would likely use that sort of plan in the future.

Thanks very much.

Steven Schwartz, Raymond James.

One more, guys. Jack, with regards to the returns expected, particularly on Aurora, now you paid I guess $200 million. There was, I believe, statutory capital of about $350 million. How does that work in generating the returns that you're expecting to get?

Yes, Steven, the returns that I mentioned are based on the underlying capital that we feel we need to back that business. We don't really want to comment on the purchase price on that deal. But in terms of the capital, we need to back the business, what we expect in that range of 14% to 15% in terms of return.

To the extent that that differs from a statutory capital level, we can finance that in some respects to be comfortable that we are getting and will be able to continue to get the return based on the GAAP capital that we have backing the transaction.

So, the $200 million would be over and above what you paid. Is that correct?

No, no. Think of it as once that risk is on the books, how much capital do we need to back that -- do we need to back that business?

Okay. All right. I'll think about it. Thanks.

Ryan Krueger, KBW.

Just a quick one. If interest rates stay at around current levels, can you give us a sense of what type of earnings headwind that would present as we go into 2015?

Ryan, this is Jack. I think our best estimate is, if rates were around the level at the end of Q3, it would likely present about $0.10 per share in terms of headwind on operating earnings.

Okay. Great. That's all I had.

(Operator Instructions). Sean Dargan, Macquarie.

Thanks. Just I guess continuing Steven's question, can you maybe just break out for us how you have $600 million of excess capital here? I'm just trying to tie this to what you presented at your Investor Day in May. So you ended 2013 with $600 million. You bought back $200 million of your stock. Can you just remind us how much capital you are deploying for each of these block acquisitions that you've made?

Yes. Well, let's start with the two acquisitions that we haven't closed yet. We would plan to deploy roughly $300 million into those between the two of them. We announced a transaction earlier this year where we deploy roughly $75 million. As you stated, you already know what we've done in terms of buybacks and dividends and so on and so forth.

What's I think more difficult for an investor or an analyst to have a view is kind of what additional capital we have backing the business versus the earnings power of the Company. But, the easiest way to look at that, as I stated earlier, is we probably generated about $300 million to $350 million of excess that is redundant capital above and beyond what we need, just for the generic business.

Okay. So you -- I guess the capital generation that you were talking about at Investor Day, you are still in that ballpark for what you think you're going to do this year?

Definitely. And as we add transactions, that additional generation would tend to grow a little bit.

Okay. And just one related question. Where will the earnings from these acquisitions sit on your income statement? What segments will they reside in?

And they'll affect both the US and the EMEA, the Europe and Middle East and Africa segments.

Okay thank you.

There are no further questions at this time. So I'd like to turn it back over to our speakers for any additional remarks.

Nothing other than thanks to everyone who joined us here this morning, and to the extent any other questions come up, feel free to give us a call here in St. Louis. And with that, we'll end the call.

And that does conclude today's conference. We thank everyone again for their participation.