美國再保險集團 (RGA) 2017 Q4 法說會逐字稿

Good day, and welcome to the Reinsurance Group of America Fourth Quarter 2017 Results Conference Call. Today's call is being recorded.

At this time, I'd like to introduce Mr. Todd Larson, Senior Executive Vice President and Chief Financial Officer; and Ms. Anna Manning, President and Chief Executive Officer. Please go ahead, Mr. Larson.

Thank you. Good morning, everyone, and welcome to RGA's Fourth Quarter 2017 Conference Call.

Joining me in St. Louis this morning is Anna Manning, RGA's President and Chief Executive Officer. Anna and I will discuss the fourth 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 your 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, premiums 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 pretax and after-tax adjusted 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 the press release and quarterly financial supplement for more information on this measure and reconciliations of net income to adjusted operating income for our various business segments. These documents and additional information may be found on our Investor Relations website at rgare.com.

With that, I'll turn it over to Anna for her comments.

Thank you, Todd, and good morning.

As indicated in the earnings release last night, we reported adjusted operating EPS of $2.60 compared to $2.63 a year ago while net income, including the tax reform benefit, was $18.49. For the full year, our adjusted operating EPS was $10.84 versus $9.73 last year, an increase of over 11%. Now this was admittedly a noisy quarter for us with a lot of moving parts. But if you strip away the noise, it was a solid quarter capping off an excellent year. Our geographic segment earnings collectively were in line with expectations as we continue to benefit from earnings diversity. Strong results from EMEA and Canada offset modest shortfalls in U.S. Traditional and Asia.

Our reported premium number was up slightly in the quarter. This reflected several treaty recaptures in Australia and the modification to a health treaty in the U.S. and Latin America Traditional segment. The recaptures were the results of our continuing repricing efforts of our business in Australia. These recaptures have reduced the concentration of individual disability business going forward, and we expect this will result in improved profitability in that operation in the future.

On a comparative basis, including adjustments for the recaptures and treaty modification and on a constant currency basis, premium growth was in the 3% to 4% range for the quarter and 7.5% on a full year basis. Momentum in terms of organic premium growth remained strong in 2017. We expect this momentum to continue with Asia and EMEA leading the way through ongoing product development efforts and solutions, which combine the broad range of our capabilities to meet the risks and capital needs of our clients.

We were fairly active in the quarter in terms of transactions and for the full year, we deployed over $225 million into in-force transactions. The pipeline for our transactions business is active, and we believe the passage of tax reform and the possibility of higher interest rates may spur further activity. We are excited about the formation of Langhorne, which will be complementary to our efforts and will increase our capacity in reach, particularly in terms of larger transactions. We view tax reform as a positive development to us in multiple ways. It was a significant boost to our balance sheet and capital position in the quarter. Our future tax rate will drop materially, increasing our earnings power. And in addition, we believe tax reform will help level the playing field with our global competitors.

In conclusion, we had another very successful year, and we remain optimistic about our business prospects. RGA is well positioned in its markets. We have a proven strategy and a long track record of successful execution. We anticipate ongoing change in the life insurance industry, and RGA continues to innovate and add to its capabilities in order to help our clients successfully address their industry challenges and opportunities.

And with that, let me turn it back over to Todd.

Thank you, Anna.

I'll provide a brief financial overview as well as further information on our capital management, investment results and segment level results. This was a successful year from a financial standpoint. Our adjusted operating earnings per share increased by 11.4% and our adjusted operating return on equity before the impact of tax reform remains strong, proudly within our 10% to 12% range.

Our book value per share, excluding AOCI, increased by 13% on a total return basis before the impact of tax reform. Including tax reform, our reported book value per share, excluding AOCI, was up 30% on a total return basis. By virtue of our strong earnings and with the boost from tax reform, our overall financial position and excess capital position continues to be strong.

Our total leverage ratio decreased from 34% down to 27%, and we ended the year with excess (inaudible) billion. Our excess capital number includes the net positive effect from tax reform. We, like others, are still working through all the details of tax reform and its various impacts. Also, I'll remind you that we do have a share of buyback authorization that remains in place with approximately $370 million of capacity.

Moving on to investments. The average investment yield, excluding spread business, was 4.38%, down 31 basis points compared to the fourth quarter of 2016, reflecting lower yields on new money and reinvested assets as well as lower variable investment income. The average investment yield was 43 basis points lower than this year's third quarter yield due primarily to a lower level of variable investment income.

The effective tax rate on pre-tax adjusted operating income of 30.4% was lower than the expected 33% to 34% due to the recognition of income tax benefits associated with adjustments to prior period tax accruals as well as the tax treatment of uncertain tax positions related to foreign jurisdictions.

Turning to our segment results. The U.S. and Latin America Traditional business reported pre-tax adjusted operating income of $93.8 million versus $129.3 million a year ago. This comparison reflects modestly unfavorable individual mortality experience and poor performance of certain lines within our group business this year versus favorable claims in individual mortality and higher variable investment income in the year-ago period. For the year, we had some quarterly volatility. But for the full year, individual mortality experience is right in line with our expectations.

Premiums decreased by 3% in the quarter due to the effects of a modification of an existing health treaty, which resulted in a reduction in premiums of approximately $55 million. For the year, premiums adjusted for this treaty would have been up 3.1% towards the lower end of our expected range.

Our Asset-Intensive business reported pre-tax adjusted operating income of $55.3 million this quarter, up from $46.7 million in the year-ago period, helped by income from the large transactions completed in the second quarter, higher variable income and favorable equity markets.

Our Financial Reinsurance line reported pre-tax adjusted operating income of $21.1 million this period, an increase versus $14.4 million a year ago due to the strong new business activity this year.

Our Canada Traditional segment reported pre-tax adjusted operating income of $38.6 million, up from $34.8 million in the prior year period. This quarter we had favorable mortality experience. Premiums were slightly lower from a year ago due to the ongoing effects of the loss of a creditor treaty that we've previously referenced to. For the year, premiums are up 4.2% in constant currencies and adjusted for the creditor treaty loss.

Canada's Financial Solutions business, which includes longevity and fee-based transactions, reported pre-tax adjusted operating income that was flat with the year-ago period, both periods reflecting favorable longevity experience.

Switching to EMEA, Middle East and Africa. Our Traditional business reported pre-tax adjusted operating income of $29.7 million, up from $15.8 million last year. Mortality and critical illness experience was favorable this quarter, primarily in the U.K. For the year, premium growth on a constant currency basis was 14.9%, reflecting good momentum across our business units. In addition, this segment had a very strong year in terms of adjusted operating earnings. EMEA's Financial Solutions business, which includes asset-intensive, longevity and fee-based transactions, reported pre-tax adjusted operating income of $34.5 million compared to last year's $36.7 million. Longevity experience continues to be favorable with last year's result also reflecting favorable asset-intensive experience.

Turning to our Asia Pacific Traditional business. Pre-tax operating income totaled $27.2 million compared to $18.5 million in the prior year period. Our results this quarter in Asia, which excludes Australia, was slightly below expectations with modestly unfavorable experience versus particularly favorable experience in the year-ago period. In Australia, we reported a modest profit compared to a loss in the year-ago period. Reported Asia Pacific Traditional premiums were up 11%, reflecting continued strong growth in Asia where premiums were up 24%, offset by 13% reduction in Australia, which was due to the previously mentioned treaty recaptures.

Our Asia Pacific Financial Solutions business reported pre-tax adjusted operating income of $0.7 million versus a pre-tax adjusted operating loss of $6.1 million in the year-ago quarter. This quarter reflects better-than-expected experience from a runoff treaty mentioned in previous quarters.

The Corporate segment reported a pre-tax adjusted operating loss of $59.6 million compared with $26.3 million a year ago. The results for the current quarter reflect higher general expenses mainly due to the write-off of capitalized project costs and unusually high pension experience, which together totaled $30 million. We also had higher incentive-based compensation expenses along with some other miscellaneous items.

With tax reform, we estimate our future effective tax rate will fall in the range of 21% to 24%. We caution that there remain some uncertainty and further analysis required related to the full effective tax reform, so there could be some changes to these estimates as we move forward.

As you know, we have historically provided intermediate term guidance at this time of year. With that in mind, we expect over the intermediate term, growth in adjusted operating income per share to be in the range of 5% to 8% and adjusted operating return on equity of 10% to 12%. For 2018 and thereafter, we expect our effective tax rate to fall within the range of 21% to 24%. Our guidance is based on normalized EPS with 2017 reflecting the 21% to 24% effective tax rate on a pro forma basis. Against this positive backdrop, we expect to see some continued headwinds from relatively low interest rates, though we have shown an ability to overcome such challenges over time. The recent rise in interest rates is encouraging, and we are hopeful that this trend will be maintained.

In conclusion, we are very pleased with our financial results for this year as our global platform and diversified earnings sources continue to be an important component to our success, and the RGA team continues to execute on opportunities before us. Given our strong balance sheet and proven strategy, we are confident that we can continue to achieve our financial goals and objectives.

We thank you and appreciate your support and interest in RGA. And we'll open the call for questions.

(Operator Instructions) And we'll go first to Jimmy Bhullar from JPMorgan.

First on the mortality trends in the U.S. market. Wondering if you saw any pattern in terms of the type of business groups or individual or vintage or like displaying trends in the '99 to 2004 block that drove the majority of the weakness. So just if you could provide color on the weak margins in the quarter.

Jimmy, claims were modestly off on our individual business in the quarter. Now all of that came from higher average size of the non-large claims. However, the number were right in line with our expectations. So we view this as just regular quarterly volatility. There is also nothing of note when we look at the individual pieces, that is the eras, et cetera. Some pluses, some minuses, small differences, it's really what you'd expect to see when you look at smaller and smaller pieces in a short period of time like a quarter. So again, regular volatility. Stepping back, if you look at full year claims, they fell nicely in line with expectations. And this is another year following 2016 where this business developed very much in line with what we expected. So that's on the individual side. On the group side, our poor experience was really reflecting large claims, and they were limited to a handful of treaties. Again, we consider that regular volatility. And over the course of the year or more, expect that, that will even out.

Okay. And then on your ROE guidance, your capital is unchanged, that's a pretty wide range. But -- and I guess, your earnings do go up a decent amount if the book value goes up also. So as you think about your new business, are you expecting the ROE on that to be better than on the in-force? Or do you think that most of the benefit of lower taxes is going to be passed on to consumers or to your clients in the form of lower prices?

Yes. Well, let me take that first in 2 chunks. One, to talk about the in-force transactions; and two, to talk about organic new business. I think on organic new business, likely the benefits of tax reform will be passed to the consumer in the form of lower prices. Now I think that can be viewed on a net positive basis to the extent that it helps support further growth in the life insurance market. Add to that interest rates, which appear to be heading in the right direction, we think that, that may, in fact, help to increase the growth in the underlying market. Still early days, but we'll keep our eye on it. With respect to in-force blocks, they are so competitive, Jimmy, that I would expect that margins would not be -- and returns would not vary widely from where they have been in the past.

And we'll go next to Erik Bass with Autonomous Research.

Can you talk more about the mechanics of the increase in your excess capital this quarter? And do you view all of the $1.4 billion as potentially deployable for transactions?

Hi, Erik. This is Todd. Yes. So the -- we've ended the third quarter around about $1 billion of excess capital. And so we had the DTL released in the fourth quarter related to tax reform of about $1 billion. But all of that really does not flow through, at least, the way we view our excess -- our capital model, the excess capital there. There's going to be this -- reclass just from retained earnings -- out of retained earnings back into AOCI that this way we look at it will reduce some of what added to stockholders' equity ex-AOCI. And then as well -- just the way some of the tax rates run through the capital models, there are some offsets to the headline number DTL release. So now if you'd look at all that together, just from tax reform, maybe we added about $600 million or so to our capital. But then there's also some moving parts related to what happened in the fourth quarter activity as well as some refinements to our capital model. So that if you just add it all up, we ended up adding about $400 million to the excess capital number. So we ended the year at $1.4 billion.

Got it. I guess you would view that similar to how you viewed excess capital in the past, that it is excess and potentially available for transactions.

That's right. Yes.

Okay. And can you discuss the opportunity you see for Langhorne Re? I guess just what types of deals it will pursue? How those may differ from what RGA would look at? And how the economics will work for you over time?

Great. Erik, it's Anna. We view the opportunities for Langhorne to be very consistent with the risks that RGA has been successfully writing over the last decade or more. They will not be new risks to us. So if I can just step back for a minute and set some context. Langhorne really is about an opportunity for us to participate fully in all of the in-force opportunities, including these larger opportunities. In the past, we did so by supporting other bidders on these larger deals either by taking parts of the business that didn't fit their business models or by taking a share. Our experience with that approach, 3 parties to a deal, it made things a lot more difficult and sellers tend to prefer cleaner options. So we partnered with RenRe to launch Langhorne, allowing us to really pursue these larger deals independently without having to partner with another buyer. So it's really a combination of RGA's expertise in the life and annuity market and then RenRe's expertise in managing these vehicles. We are targeting Langhorne to the larger life and asset-intensive deals in U.S. and Europe. They're targeted, as I said earlier, on risks that we're very familiar with, that we have been successfully writing. And it provides us opportunity to turn both risk-based profit as well as fee profits or fee income from originating and managing the business.

That's helpful. And Anna, I guess on that last point. I guess how are you earning the sort of underwriting piece? I'm guessing you get the fee revenue as advising on deals and for being a general partner. But do you share in some of the underlying risks as well?

Yes. We are -- we will be equity participants in the vehicle. We're co-general partners with RenRe, and we have a material but not controlling interest in that vehicle.

Yes, Erik. The risk profits come through our ownership of -- partial ownership of the vehicle.

Got it. So through the equity stake? Got it.

Right.

And we'll go next to Dan Bergman from Citi.

The $225 million of capital deployed in 2017 seemed may be a little bit below the typical range, but it does seem like there's been some increase in new stories in your life, potential life annuity blocks that could be up for bid. I was just hoping you could provide some commentary on the pipeline and outlook for future block deal. And any additional commentary on kind of the level of competition in that market and how tax reform should impact how you're positioned there?

Sure. So the pipeline -- well, first the market was reasonably active in 2017. And as you've just indicated, we deployed $225 million. So we executed on a number of those transactions. Competition was strong and we expect competition to remain strong for those blocks. We're not seeing a whole lot of change in competition. However, tax reform, we think, directionally helps us because it helps to level the playing field with some of our global competitors. We see, potentially, tax reform also, as we said in our prepared remarks, spring further activity, especially when you combine that with some of the trends in interest rates. Look, our approach has been to look for deals in the past where we feel that we have a strength that provides us an edge. That approach has been successful. That's the approach we're going to continue to use going forward. We're going to look for those deals that fit risk appetites, fit expertise. And we'll continue to go into this market in a very consistent way.

Great. That's very helpful. And then maybe just switching gears a little bit. In terms of the EPS growth outlook. Is there any guidance you can give in terms of what we should be thinking about in terms of the kind of normalized 2017 EPS base that we should be applying kind of your growth outlook to either, I guess, before adjusting for tax reform or afterwards?

Yes. Hi, Dan. Yes, so -- yes, looking at 2017, we look back on that and there were some positives and negatives throughout the year. But when we add it all up, we'd say that reported result was sort of normalized year, if you will, albeit a very -- overall, a very strong year from a performance perspective. But there's not a lot we would sort of pick and choose from as far as normalization for '17.

Okay. Great. Let me just ask a follow-up there really quick. In terms of that 5% to 8% EPS growth guidance. I mean, is there any color you can give in terms of the -- kind of factors or component, I mean, with premium growth kind of in the high single-digit rate recently? Or should we just -- or does that kind of left some headwind from FX and interest rates? Is there anything else you think about there?

Well, FX and interest rates always come into play but also -- you see the premium growth rates. But a good portion of our business doesn't really have much in the way of premiums attached to it, for example, the asset-intensive business and some of the other Financial Solutions businesses. So we still feel all over the intermediate period of time given business prospects, we see not only on the Traditional side, but also within the global Financial Solutions space that, that 5% to 8% as of now is still sort of the right range for us.

And we'll go next to Alex Scott from Goldman Sachs.

I had one on the tax rate, I guess. You mentioned there's still some uncertainties around where the tax rate shakes out. Was interested in like some of the specific items that are still uncertainties. And if any of that's related to the way excise tax is applied, that would be helpful to understand.

Yes. So right now, our best estimate, as we stated, is between that 21% and 24%. Now if you look at RGA in our business model, even though a good portion of our earnings are sourced from outside of the U.S., the way our business flows work, a lot of the actual business ends up into a U.S. taxpayer in some of our offshore companies. So that's a good thing from how we're looking at all these. So I think part of it will just be how some of this -- how some of the sort of detailed items related to some of the provisions are interpreted by either the industry and so on. Right now, we would not expect any significant deviation from the range that we provided. So we think that's a pretty good estimate.

And a follow-up on repatriation tax. I mean, with some of that allowing for less issues with the geography of excess, does it change sort of the regions that you would prioritize for deploying capital?

No. So there was -- the onetime deemed repatriation, which -- for us, again, just given our business profile was a nonevent. We really don't have any impact from the deemed repatriation. And then -- now beyond that world, we feel that we can continue to execute on where we have operations established. And we don't think that new tax reform regime will have any material negative benefit at all to us going forward. It's more how we view it as positive developments as Anna had mentioned earlier.

And we'll go next to Ryan Krueger from KBW.

On excess capital, does -- a potential change to the NAIC factors, tax factors and the denominator. Would that have any effect on your view of excess capital that occurs going forward?

Ryan, so if you remember RGA, we've got operations globally. So the NAIC RBC impacts the U.S. regulated company, which houses some of our business, but certainly not all of our business. So certainly, we need to look at the impact on the RBC form well due to the tax reform. That being said, we don't think it will impact RGA any more than everyone else. And we think it'll be manageable as we go forward. So no material -- at this point, I would say, no material impact on the way we view excess capital.

And then shifting to Australia. Could you -- given all the recaptures that occurred in the quarter, can you give an update on what's going on in that market? And I guess what RGA's role in that market will likely be going forward?

Ryan, it's Anna. The -- with respect to the individual market in particular, I think we've noted that we have not won new business treaty in that market for a number of years, and we still see that environment. However, I think there are some positive developments, I think, with the recent ownership changes in the life insurance industry, consider that almost all of the banks have sold their insurance operations to global insurers, and I'd suggest respectfully that insurance companies tend to have longer-term horizons, and they want long-term sustainable market. So we view that as a potential positive catalyst. And so net positive but it will take, I think, some time for that market to move.

And we'll go next to Sean Dargan from Wells Fargo.

If I could just come back to Langhorne and thinking about why you're doing this. You're the company that has the mortality expertise and the experience in the asset-intensive deals. But why do you need RenRe in what I think sounds like a -- the pension plan to help you? I mean, why don't you just come to the public market and say, this is the opportunity and, therefore, you wouldn't have to share the returns that you think you're going to be able to generate?

Well, it's really a matter of size. So larger opportunities are outside of the stretch of how comfortable we are in terms of the amount of capital that we will deploy, and this vehicle allows us to work with other third-party capital providers. So this is not just a partnership with RenRe. The committed capital has been contributed by generally large financial institutions that have very similar view in terms of long-term business. It's really much a permanent capital vehicle. So I would say that, again, we had approached the larger opportunities in the past through a partnership with a buyer. We think this is going to be a more successful approach than that.

Okay. And an unrelated question. Just thinking about tax reform and BEAT tax. I believe you made use of a Bermuda sub. I'm just wondering what your strategy around that going forward will be.

Sean, this is Todd. Yes. So the BEAT tax, if you look at it, it's really designed to capture sort of a U.S. comp -- a U.S. taxpayer sending business to an offshore affiliate that's a non-U.S. taxpayer. Our business model predominantly -- if we send business from a U.S. company to an offshore affiliate -- usually, the offshore affiliate is a U.S. taxpayer. So it doesn't -- we don't see it as significantly impacting our past approach.

Okay. So just to be clear, you were using Bermuda for unaffiliated reinsurance transactions from non-U.S. [feeding] companies?

And we have affiliated reinsurance that goes into the -- our Bermuda company.

Okay. And you think you're going to continue to do that?

Yes. Our Bermuda company is still a U.S. taxpayer. Yes. So it was more from our overall capital management perspective than it was a tax play historically.

(Operator Instructions) And we'll go next to Kenneth Lee from RBC Capital Markets.

Just a follow-up on Langhorne Re. What's RGA's minimum capital commitment to Langhorne? And in terms of -- think about excess capital outside these commitments, is there still expectation of holding from sort of capital buffer? I just want to get a sense sort of like a deployed or excess capital outside of Langhorne Re.

Ken, it's Anna. As I stated earlier, we have a material but noncontrolling interest with our co-general partner RenRe. We're not disclosing, at this time, the level of capital commitment. We will provide more on this as capital is actually deployed into the vehicle.

Yes. And to clarify too, Ken. The $1.4 billion excess capital that we'd mentioned as of the end of the year, that's before we made any contribution into Langhorne. So anything deployed into Langhorne, it would come from that number.

Got you. And then one -- just one follow-up. In terms of Solvency II opportunities, just wanted to get any kind of updates there in terms of working with the regulators and what's the progress there?

Yes. Ken, the low-risk Solvency II deals in Europe are still slow to transact. So I don't have much more of an update for you than I did during the last call. However, there are other opportunities in other parts of the world, and we are executing on those. For example, in Asia, where deals are more full risk and more on new business, and I would suggest that, that's contributing to some of our growth that you're seeing in that region. And we had a strong new business year in the U.S. on our financial reline. And finally, I would also offer that a couple of the in-force blocks outside of Europe that we completed in 2017, they were in large part motivated by capital benefits around Solvency II. So all in, although we are disappointed with those, it continues to be slow, the low-risk Solvency II type of deals, we do see a continuation through 2018 broadly across, as I said, the globe and the various forms.

And we'll go next to Humphrey Lee from Dowling & Partners.

Just a question related to tax reform and the impacts on your excess capital generation. I think in the past, you talked about the annual cash flow generation is roughly $300 million range. Now with the tax reform, how should we think about your kind of annual capital generation on a go-forward basis?

Yes. Maybe just sitting here today in a very high level, if you think in terms that we'll generate in excess of $1 billion of pre-tax income, if you take 10% lower tax rate on that, that's $100 million. That does not necessarily translate specifically into cash flow and capital generation but -- again, sitting here today, that's not a bad proxy.

Okay. So some of the -- I guess, some of the potential pay force by industry doesn't necessarily affect you in a big way. So that's why your -- the change in tax rate would largely fall through to you, to your bottom line in terms of cash flow. Is that the right way to think about that?

Yes. And like I said, it's a high-level proxy. That's right.

Okay. And then on the U.S. mortality. The current flu season is definitely a forecast at least on media side. But at least -- I guess, from your perspective, especially the information that you're seeing, like how would you compare this flu season to the flu season in 2015 where you had unfavorable mortality in the first quarter?

Yes. That's a tough question because we are so early in the flu season. It's really too early to tell. Look, we're watching this very closely as you'd expect. We don't have anything new to tell you right now about the flu and how that's shaping up that you haven't already or that hasn't already been reported in the press. We didn't see anything in the fourth quarter, but that's not surprising because we wouldn't have expected to see anything because generally that impact is going to -- the impact of both winter and flu is going to be felt in Q1. So it may not be satisfying to you, but I really don't have anything that I can provide at this point.

(Operator Instructions) And we'll go to Marc Cohen from Guggenheim Partners.

Does the new debt-to-capital dynamic for the company changed the perception of the company's capital structure going forward?

No. Not really, no. We have delevered a little bit as we mentioned in the prepared remarks. But if you look back at our history, we've, for the most part, maintained the leverage within sort of this level. So I -- we don't see it as moving our overall capital mix at this point. We think our capital structure and capital mix has served us pretty well and see no reason to change it that this time.

Great. And just one more follow-up question on Langhorne. Does RGA have any insight, I guess, with the structure in terms of risk-adjusted returns in terms of bidding for business? Or is there eventuality that Langhorne may be competing with RGA in the future on transactions that -- or come about in the market?

No. We view Langhorne to be complementary to RGA, not in conflict to what RGA is pursuing. So we would not be in a position of competing against Langhorne from RGA.

(Operator Instructions) There are no further questions in the queue at this time.

Okay. Well, this is Todd. I would like to thank everyone for joining our fourth quarter 2017 conference call and appreciate your continued support. Thank you very much.

That does conclude today's conference. Thank you for your participation.