美國再保險集團 (RGA) 2018 Q3 法說會逐字稿

Good day, and welcome to the Reinsurance Group of America Third Quarter 2018 Results Conference Call.

Today's call is being recorded.

At this time, I would 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 third quarter 2018 conference call.

With me this morning in St.

Louis is Anna Manning, RGA's President and Chief Executive Officer.

Anna 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 your questions.

To help you better understand RGA's business, we'll make certain statements and discuss certain subjects during this call that will contain forward-looking information including, among other things, investment performance, statements relating to projections of revenues, 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'll 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.

And now I'll turn the call over to Anna for her comments.

Thank you, Todd, and good morning, everyone.

As indicated in the press release last night, we reported adjusted operating earnings per share of $4.03 compared to $3.44 a year ago.

This was a very strong quarter offsetting some softness in the first half of the year.

Highlights this quarter include favorable claims in our U.S. Individual Mortality business, favorable experience in our EMEA segment and strong performance in our Asia segment.

Reported premium growth was 3% and 4% in constant currency and adjusting for lumpy items, organic growth was a strong 7%.

We continue to see good overall momentum in our organic business.

We had a very active quarter in terms of capital deployment, both on in-force transactions and on share repurchases.

We closed several transactions in the quarter and deployed a total of $190 million of capital into those transactions.

The transactions in the quarter included one large U.S. asset intensive longevity deal of approximately $2.8 billion in assets, demonstrating that we continue to be successful in the closed block market despite considerable competition.

We also repurchased 109 million of shares in the quarter.

This brings our year-to-date capital deployment on in-force transactions, share repurchases and shareholder dividend to $640 million, well above our 5-year average and putting us on pace for the second most active annual period for capital deployment since 2012.

To summarize, this is a very strong quarter in many respects.

While we continue to see some volatility of our results in the short term, the volatility goes in both directions and tends to even out over longer periods of time.

Our business is in good shape, we are well positioned in our markets and we continue the disciplined focus on growing profitable business and effectively managing capital over time.

Our transaction pipeline continues to be very active and we remain optimistic about our ability to win our share of transactions over time.

And with that, let me hand it back to Todd to provide more detail on our results.

Thanks, Anna.

I'll provide a brief financial overview.

Our adjusted operating return on equity for the trailing 12 months was 10%, which is at the lower end of our intermediate guidance of 10% to 12%.

While depending on actual results for the fourth quarter, we feel confident that we will perform within our expected range for the full year.

Our excess capital position of $1.1 billion combined with excess capital generation supports our ability to continue to fund strong organic growth, execute on attractive in-force transactions and return capital to shareholders through dividends and share repurchases.

The average investment yield excluding our spread business was 4.57%, down 24 basis points compared to the third quarter of 2017, as variable investment income was above average in both periods but especially strong in the year-ago period.

The average investment yield was up 25 basis points versus the second quarter of 2018, reflecting the higher level of variable investment income in the current quarter.

Our new money rate was 4.52%, up from 4.44% in the second quarter of this year, a reflection of higher interest rates and some mix of investments.

The effective tax rate on pretax adjusted operating income of 24.5% was slightly higher-than-expected range of 21% to 24%, primarily due to the annual geographic mix of our earnings.

On a year-to-date basis, our effective tax rate was 23.1% on pretax adjusted operating income.

It's difficult to predict the timing of certain items, but we expect the full year tax rate to be within our expected range perhaps towards the higher end.

Now turning to our business segment results.

The U.S. and Latin America Traditional business reported pretax adjusted operating income of $116.4 million versus $162 million a year ago.

The year-ago period was particularly strong, individual mortality experience was favorable this quarter and variable investment income was above average.

However, our U.S. group business reported a loss again this quarter.

In the year-ago quarter, U.S. Individual Mortality experience was very favorable, variable investment income was very strong and the group business was profitable.

There was sequential improvement in the underperforming group business lines that we discussed in the second quarter, and we continue to expect that our corrective actions will lead to improvement in the future.

Premium growth was 3%, but after adjusting for the effects of the modification of an existing health treaty that we have mentioned late last year, organic premium growth was 5%.

Our Asset-Intensive business reported pretax adjusted operating income of $63.8 million this quarter, down from a strong result a year ago of $72.6 million.

The current period results were attributable to favorable overall experience in terms of spread and equity market impact, while the prior year results reflected favorable experience on payout annuities and above-average variable investment income.

Our financial reinsurance line reported pretax adjusted operating income of $21.6 million this quarter relatively flat compared to $22 million a year ago.

Our Canada Traditional segment reported pretax adjusted operating income of $20 million, down from $27.4 million in the prior year period.

This quarter, we had unfavorable individual mortality experience due to a greater number than expected of large claims, which we view as normal volatility.

Premiums were up 8%, reflecting new business and the execution of an in-force transaction that we mentioned in the first quarter.

Canada's financial solutions business, which includes longevity and fee-based transactions reported pretax adjusted operating income of $1.6 million compared to $4.5 million a year ago, with the current period results relatively in line in the prior year period reflecting favorable longevity experience.

Switching to Europe, Middle East and Africa.

Our traditional business reported pretax adjusted operating income of $18.4 million compared to $15.4 million last year, reflecting modestly favorable underwriting experience across most markets.

Reported premiums were down 1% with the prior year period reflecting strong new business across the segment, including some single premium business.

Adjusting for the prior year single premium business and the effects of foreign currency, premium growth in the EMEA region would have been up 8%.

EMEA's financial solutions business, which includes asset-intensive longevity and fee-based transactions reported pretax adjusted operating income of $56.4 million compared to last year's $29.7 million.

We view this quarter as a strong result reflecting favorable longevity experience.

Our Asia-Pacific traditional business pretax operating -- adjusted operating income totaled $62 million compared to $26.6 million in the prior year period.

Our results this quarter in Asia, which excludes Australia, experienced favorable underwriting margin in most countries across the region.

Australia experienced a loss in the quarter, reflecting unfavorable experience in the group and individual disability lines.

Reported Asia-Pacific traditional premiums were up 3%.

Premium growth in Asia, which excludes Australia adjusting for the effects of some catch-up premiums was 13% and 18% in constant currencies.

Australia premiums were down 18%, reflecting the effects of treaties we captured late last year.

Our Asia-Pacific financial solutions business reported a pretax adjusted operating income of $1.3 million versus pretax adjusted operating loss of $0.2 million in the year-ago quarter.

Both periods reflect the negative effects of a treaty in runoff, but to a lesser extent in the current period.

The Corporate segment reported pretax adjusted operating loss of $18.1 million compared with $21.7 million a year ago.

Results for the quarter benefited from higher variable investment income.

In conclusion, this was a very strong quarter for us and we are confident that we will continue to achieve our financial goals and objectives over time, maintaining RGA as an attractive investment opportunity.

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

(Operator Instructions) And we'll take our first question from Kenneth Lee from RBC Capital Markets.

Just one on the U.S., LatAm traditional business.

In terms of the favorable individual mortality, would you be able to give a little bit more detail what's driven mainly by severity and frequency?

And also in terms of favorable variable investment income, any way to quantify the impact in the quarter?

Ken, it's Anna.

We had favorable experience from large claims, both lower number of large claims and lower average size, and the favorable experience was also across most areas in Asia.

So with no significant outliers, I would call this just a broad-based period, normal volatility in a positive direction.

Yes.

And then, Ken, I'll take the variable investment income.

If you look at our run rate for the variable investment income for the total company, we were probably above the run rate by about $11 million or $12 million, which is about $0.14 a share, and I would attribute probably about half of that to the traditional U.S. line.

Okay.

Great.

And just one more follow-up.

In terms of the repricing initiatives on the underperforming group block, maybe just give us an update on the progress there and just wondering whether you could just -- I think, last time you gave a time frame about like 1.5 years or so, just wondering whether that's changed?

On the U.S. group business?

Yes.

That's the U.S., LatAm group business, yes.

Yes.

For the group business, yes, we have talked about last quarter that excess DI line and the excess healthcare or medical line performed unfavorably.

And yes, we are actively in the process of repricing that business.

We're probably about a quarter of the way through of repricing that business and then a large amount of the renewals come up January 1. So we're actively, actually, looking at those blocks of business right now and working with our clients, and those will be repriced as we turn into next year.

And we'll take our next question from Erik Bass from Autonomous Research.

Couple of things on just the block acquisition front.

I guess, first, could you provide any additional color on the transactions in terms of product or geography outside of the large asset-intensive deal on the U.S.?

And then you talked about still seeing an attractive pipeline for deals, are you getting a sense that activity levels are starting to pick up more broadly across the industry?

Erik, it's Anna again.

So we did 2 material asset-intensive deals both in the U.S. One was an individual annuities and payouts and the other was a fixed deferred annuity block.

We also -- competition is strong and was strong on those deals.

We also did a few smaller financial reinsurance deals in both Europe and the U.S. in this quarter.

In terms of the pipeline, I would characterize it as strong and the market is very active.

We're seeing a continuation of good deal flow, again, in both in North America and in Europe.

And I would say that with interest rates moving up, we feel that, that flow will not only continue but may, in fact, pick up over the course of the rest of this year and into 2019.

And then it's a very strong quarter for both EMEA and Asia.

Can you just provide a sense of how much better results were than your typical expectation and how you think about the run rate earnings power for those businesses?

Sure.

Yes, let's start with EMEA.

As I mentioned in my comments, traditional had a -- favorable result on the traditional side and very favorable result on the financial solutions side, mainly attributable to the longevity business.

I think if you combine those 2 -- both the traditional and financial solutions businesses, our best estimate for our run rate right now, on average, is about $50 million to $55 million pretax.

And then turning to Asia, excluding Australia, again there's -- as we've mentioned, there's a little bit of noise in there from client reporting time and et cetera, but we would still view the run rate there for pretax income, again, on average, of about $35 million to $40 million in the near term.

And we'll take our next question from Ryan Krueger with KBW.

Could you provide some more detail on the expected earnings contribution from the import deals you did during the quarter and the time period it may ramp up?

We don't provide specific financial details on a specific deal.

In general, you've heard us indicate that our pricing targets are 13%.

We would expect that to, over time, earn those returns.

Some deals may be up a little, some down a little but, overall, we're very confident in making our returns.

In terms of ramping up, we're repositioning some assets and expect that, that will continue through the rest of this year and into parts of next year.

Okay.

And then, actually, just related -- I mean given that there is significant competition for asset-intensive deals in the U.S., could you give a little perspective on how you are able to -- and the drivers of winning those deals?

Yes.

The reasons that we feel we win, I would point to a few factors.

One is the strength of our client relationships and also the strength of relationships with regulators.

We are a strong and well-known counterparty.

We have demonstrated risk and structuring expertise.

We have a proven track record of execution certainty, and that's important for some sellers.

And in some cases, that's providing us with the last look on deals.

So it's a -- those are the factors that are aiding us and winning some deals.

And we'll take our next question from Humphrey Lee with Dowling & Partners.

Just to follow on Ryan's question about the U.S. asset intensive.

I fully understand that you won't -- that you don't share deal-specific terms, but maybe just to think about in terms of capital allocation for these 2 transactions, like how much did these 2 transactions in U.S. asset-intensive consume of the $190 million of capital deployment?

It was a vast majority of the $190 million deployed in the quarter.

Okay.

Got it.

And then more of a kind of housekeeping question.

Like looking at your interest expense in Corporate this quarter, it looks very low.

I was just wondering if there's something kind of some interesting dynamic that took place in the quarter.

Yes.

Humphrey, one thing that comes to mind is the way the accounting works for some of the FIN 48, which are some tax reserves for some uncertain tax positions.

When we close out some tax years, we released some of the interest accrual that we have on some of our tax positions, and I think there was a release of the interest in the third quarter on a tax position for some tax returns that were closed out.

Okay.

So you should go back to kind of roughly $37 million a quarter?

Yes.

And we'll move on to our next question from John Nadel with UBS.

The first question is just how to think about free cash flow when you're -- I think, you were sort of indicating that when you remove some of the noise and foreign currency shifts, that premium growth in the quarter, I think, if I caught it right was about 7% year-over-year.

And at or around that level, if you maintain it, how can we think about -- before you get into other forms of capital deployment, how do we think about free cash flow as a percentage of your earnings?

Yes.

John, I think the best way to characterize it is, we're still -- and it fluctuates around as you can appreciate just given the mix of business and so on, but we're still before deploying it back -- capital back into the in-force transactions.

We still feel that sort of that $300 million to $500 million range on an annual basis, and that's after normal dividends, is still the right range.

And again, it's going to be a little bit fluctuating over time, but that's still our best estimate at this point.

Okay.

All right.

That's helpful.

And then maybe a question for Anna.

I mean just -- we've seen one long-term care transactions take place with one of your competitors taking on a pretty sizable block.

There's been -- obviously, there's been some other sort of financial motivated kinds of players who have thought more openly and willingly about trying to get into that market and do some deals.

Is your attitude changing at all as you see some of the charges being taken as you see in some of the underlying assumptions supporting current reserves changing and maybe getting a bit more conservative?

Is your attitude changing at all toward that?

John, no, no.

There's been -- there's little change in our position.

We're not actively looking at legacy LTC blocks.

Look, we just don't think that we're the best buyers for the legacy blocks in the market, and so they remain low on our priority list.

Fine answer.

And then last one is just to think about Langhorne and any activity or opportunities that you feel are getting closer to the finish line?

Any update there?

Well, we're certainly active.

Langhorne is pursuing the larger deals and we are seeing a good pipeline for those larger deals.

And as I mentioned earlier with rates moving up, we feel that, that will continue, if not potentially improved.

Now the larger deals are generally more complex and they do take time.

And we need that time to spend -- an appropriate amount of time on analyzing and doing our due diligence on both assets and liabilities.

So -- and Langhorne investors can expect the same level of diligence on those deals as we do on the RGA deals, so it means that they're going to be lumpy.

Remember, we only stood up Langhorne in the first quarter.

So speed here is not the goal.

The goal here is finding the right opportunity and then working hard to win that transaction.

Definitely appreciate those comments.

And maybe one way to help us understand where a line of demarcation might be if -- I think you mentioned that one of the annuity deals you did was the $2.8 billion, I think, was the size of the block you mentioned?

Yes.

How high would that -- how high in size would that need to be where RGA would say probably too big for us, but maybe we think about using Langhorne as the facilitator for that.

Is that a -- is there a reasonable way to think about that?

Yes.

Well, not only is there a reasonable way, we've established guidelines as to what constitutes the Langhorne deal and what constitutes an RGA deal, and the greatest factor would be size.

There would be other factors as well because we wanted to address any potential conflicts between RGA and Langhorne in advance.

I can give you a sense that $2.8 billion is very comfortably within our RGA's balance sheet capacity, et cetera.

Double that deal, it's starting to push.

I would say anything north of that would indicate that, that's more a Langhorne deal -- a better fit for Langhorne than it is for us.

And we'll move on to our next question from Andrew Kligerman from Crédit Suisse.

Nice quarter.

You're only the stock on my screen that's up today.

So I thought...

We didn't notice that, Andrew.

And up significantly.

So on that topic, you did a $109 million of buybacks this quarter that compares with $150 million last and $29 million in the year-ago period.

How are you thinking about share repurchases now in the scope of deal activity that you just discussed extensively with John?

Where do you see share repurchase going?

Andrew, we -- as you know we continually look at the transaction opportunities, our capital generation, we -- as well as we also like to keep a buffer of $300 million to $500 million although we will dip into that in appropriate circumstances or if we see attractive transactions.

I will comment that -- and you mentioned that last year and even the year before, we were a little bit light on our repurchase activity.

So we did come into the year hoping to be more active on the repurchase front, which we have been.

And -- but we still -- it's certainly not a reflection of the active transaction pipeline that Anna commented on, it's just really as we look at our capital generation, our stock did trade-off a little bit in the second half for the year and so we're quite pleased with the shares that we've repurchased.

Okay.

So a lot of moving parts that you can't really give...

Yes.

It's not formulary.

Okay.

Okay.

And as I think about your global premium growth, you backed out some currency and what happened with EMEA, it seems like it's 7% this quarter.

Is that kind of a run rate that you'd like to see over the next several years?

Is upper single digit where you think RGA can continue to go?

Over the intermediate term, we think mid- to high single digits is the place that we should be able to achieve, and we'd be very happy with that.

And again, a lot of our businesses don't generate premiums.

A lot of the financial solutions businesses add nicely to our profitability, but don't necessarily add to premium.

So the combination of growing the traditional business at that mid- to high-single digits combined with our -- some of our financial solutions growth equates to some nice business growth overall.

(Operator Instructions) We'll move on to our next question from Dan Bergman from Citi.

I guess, to some weakness in the Australia disability result.

I just wanted to see if you could provide some more color on what you saw on Australia in the quarter.

And any sense of how unfavorable the results were relative to your expectations?

And then I guess, just stepping back, wanted to see if there's any update on the Royal Commission process or your general outlook in the country?

Yes.

So we did see some modestly unfavorable experience in both the group and in individual DI portfolios.

We continue to look closely to see if there's any underlying trends emerging on that type of thing.

We did see some reopened claims and -- which we don't like to see, but there is some reopened claims.

To maybe size it, we would've -- we would plan to be profitable for the quarter, and we had.

If I'm thinking about it correctly, a pretax loss of about $8 million for the overall Australia segment.

And then on the Royal Commission, yes, we continue to monitor what's going on with the Royal Commission.

It's scheduled to be completed by the end of this year.

So it's -- right now, I'd say we don't see any direct impact on claims activity and how clients are adjudicating and managing claims, although we're going to keep a very close eye on it.

And as we get into the beginning part of the year, we'll be able to assess a little bit more.

But clearly, there could be some indirect impact but, again, it's too early to give you definitive information on that.

Okay.

Great.

And then I was just hoping you could provide a little more color on some of the moving pieces in the Corporate segment in the quarter.

I just wanted to see if there's any spillover of some of the onetime project to regulatory cost that you saw in the first half of the year and kind of how much if any variable investment income benefit hit the segment.

Just big picture going forward, are we still kind of in that $20 million to $25 million range for quarterly loss?

Yes.

So for the quarter, we had a little bit of spillover on the project cost, but nothing as significant as we saw in the first half of the year.

Some of the cost dynamics in this quarter was some compensation and long-term incentive accruals as we true-up our accruals for some of the sort of multi-year payout plans, and we normally do that about this time of the year.

As far as the variable investment income, I think I mentioned the run -- compared to the run rate for the -- normal run rate for the quarter, we're about $11 million or $12 million over that.

And I would say about half of that would be in the Corporate segment.

For the fourth quarter, I don't think we would dramatically change our sort of expected run rate of that $20 million to $25 million loss in the corporate segment, but we'll be looking at it closely as we go into next year and we provide no guidance late in January.

Because as you mentioned, Dan, there are some moving parts there as some of the things -- some of our newer initiatives are in the Corporate segment.

And we'll take our next question from Alex Scott from Goldman Sachs.

First question was just on the FASB changes U.S. GAAP accounting.

I guess, just high level, any commentary you can provide on any impact it could have on your business?

And then I guess, also, just any impact do you think it will have on the pipeline for opportunities to deploy capital?

Yes.

So yes, the targeted improvements -- it's early days.

The statement was issued back, I think it was back in August.

We, certainly, have resources and a project underway to look at the adoption of this standard.

Given that a large part of our business will be subject to the standard, it will have an impact, but it's still too early days to give you anything definitive of what that will look like.

But certainly, as time goes on, we'll have better information and again, it's something that we're -- have a quite a bit of resources starting to look at.

Yes.

And with respect to potential impacts on pipelines, I would say that, again, that's also too early to tell.

All our clients are probably at similar stages to RGA which is really to, first and foremost, really understand what those changes will do to earnings, profiles and capital, et cetera.

So I would say too early to tell, but we're certainly very focused on it.

Maybe if I could just do a quick follow-up on, I guess, RGAx.

Any update you can provide on some of the investments you've done there?

Any kind of developments?

Any anticipation to expand that platform?

That would be great.

Yes.

Yes.

So we have a number of active projects underway in several markets.

The way we're approaching this is we're working very closely with our clients and entrepreneurs to jointly codevelop solutions.

So solutions around 4 pillars -- our 4 pillars anyway, technology, distribution -- digital distribution, data and customer engagement.

Still early, but a lot of interest from our clients and we're particularly happy with the approach we're following and the structure because it's been quite agile.

So we move quite quickly, learn, adjust and we're looking forward to developments in good time.

And we'll take our next question from Jimmy Bhullar with JPMorgan.

Some of my questions were answered, but I had a couple more.

On the Asia business, your earnings have been pretty high the last couple of quarters.

To what extent is it just normal sort of volatility in the business going in a favorable direction as opposed to a sustainable number?

Yes.

So part of its volatility is just relating to client reporting, and some of it is good experience on the underlying business.

But I'd go back to -- if you look at, for Asia and excluding the Australia business, our best estimate right now for the average run rate would be that $35 million to $40 million pretax.

Okay.

And then on share buybacks, and there was a question on this before as well, to what extent were you motivated by just the low stock price versus maybe you having extra capital coming into the year?

I'm just trying to get a sense of like the -- your stock did decline a lot in the beginning of the third quarter as well, so should we assume that you would have been active at that point also?

Or have you exhausted most of your buyback for this year?

Well, at the end of the third quarter, we still have about $114 million of our existing authorization in place.

Now as I mentioned earlier, we did want to take some shares out given we have been a bit of light the previous -- a couple of years and our capital generation has been fairly, fairly good.

So the price has a factor, but it's certainly not the only factor when we're looking at the share repurchases.

So would you rule out additional share buybacks this year or is that still likely?

Well, that's something we'll be -- Jimmy, that's something we'll be evaluating as we go forward here.

And then on the capital that you put to work on block deals, what are like the typical sort of financial metrics that you're looking at to get from -- or the return that you're looking at to get from that?

And how soon would you get to that, like is there initial build up?

Or should we assume that the 190 will generate whatever ROE you're targeting next year?

Again, on average, I think we've been pretty consistent that we target overall about a 13% return, over time, on deployment of the capital.

That's certainly -- I guess, the way the deals work and as well as the accounting works.

That does ramp-up over time.

You can take several quarters to get to the peak return.

(Operator Instructions) We'll move on to our next question from Tom Gallagher from Evercore.

A number of primary companies have been calling out increased reinsurance rates that are being pushed through, some are recapturing, some are paying the higher prices.

Have you been doing much of this?

And what impact is that broadly having on the business do you think or session rates moving down or any thoughts on that broader trend?

Yes.

So we are aware that some competitors -- and they've been public, about broad-based rate increases and also some situations where they've ended up having to make recapture payments to their clients.

This isn't a strategy that we're pursuing.

We monitor the business quite closely.

We're not seeing a deterioration in performance since we last updated our expectations back at the tail end of 2015.

The way that we think about our in-force management is really consistent with how we think about client relationships, so that is -- we're going to take a look at long-term view and look at the overall balance of the relationship with each client.

And with that lens, if we do see that it's not imbalanced, then our approach is to sit down, have conversations, discussions with those clients to see if we can find ways to reestablish that balance.

So I would say to you, yes, we're aware of the activities that you described, but we're not following that approach.

And Anna, would you say based on the performance and the experience that you're seeing, and obviously competitors must be seeing different performance, can you -- when you look or try and triangulate and understand why your book is holding up better, are you able to trace it back to sizing different decisions that were made at different points in market?

Does it go back to that late '90s to mid-2000s?

Like was your pricing or market share very different back then?

Yes.

All of those things.

So if you take a look at market share during that era, we were losing market share.

And our prices -- we were losing market share because our prices were generally higher than the competition.

We also have grown our business organically as opposed to acquisitions.

So again, if you look at some competitors, they were active in acquiring blocks during that period.

So I would say, it's a combination of the distribution of the underlying business.

We have a nice block before that era.

A nice block subsequent to that era.

We weren't -- I can't remember -- I'm pretty sure, we weren't in the top 3 reinsurance of market share back then, and we kept price discipline.

Got it.

And then just one last question.

We, at least last year, there was definitely a heavy correlation we saw about the Australian flu season kind of being a good leading indicator of the U.S. flu season which, last year, was obviously quite severe.

And if you extrapolate that this year, it looks like it's far more benign, it's far more favorable.

Is that something you guys have paid attention to and think as a decent leading indicator or have you not seen that connection or correlation?

Yes.

No, so we pay attention.

And it's really nice to see that the flu in Australia is the H1N1 strain, which is generally a more benign strain.

So that's a good sign.

However, there's no guarantee that, that will also be the strain that comes across to North America and there really isn't really, in our view, a direct correlation.

So it would be a good thing if that were the strain, but there's no absolute certainty that that's what we'll be facing in the coming winter.

And there are no further questions at this time.

I would like to turn the conference back to our speakers for any additional or closing remarks.

Well, thank you, everyone, for joining us on our third quarter call this morning, and we look forward to talking going forward.

Thank you.

This concludes today's presentation.

We thank you for your participation.

You may now disconnect.