普登 (UNM) 2002 Q1 法說會逐字稿

Good day, everyone. And welcome to this UnumProvident Corporation first quarter 2002 earnings conference call. This call is being recorded. At this time for opening remarks and introduction I would like to turn the call over to the chairman and president and CEO, Mr. Harold Chandler. Please go ahead, sir.

Thank you. And good morning. And welcome to UnumProvident Corporation's first quarter 2002 analyst and investor conference call. With us is Tom Watjen and Tom White, who along with me will be providing prepared comments on yesterday's first quarter release. In addition, other members of senior management will be available to respond to your questions during this call.

Before we get started let me read the typical Safe Harbor statement. A safe harbor is provided for forward-looking statements under the Private Securities Litigation Reform Act of 1995. Statements in this conference call regarding the business of UnumProvident Corporation which are not historical facts are forward-looking statements that involve risk and uncertainty that could cause actual results to differ materially from those contained in the forward-looking statements. These forward-looking statements are made based upon management's current expectations and beliefs as of the date of this conference call but there can be no assurance that future developments affecting the company will be those anticipated by management. For a discussion of these risks and uncertainties that could actually affect future results, see the section entitled "Cautionary Statements Regarding Forward-Looking Statements" and "Risk Factors" in the Company's Form 10-K for the fiscal year ended December 31, 2001. The Company expressly disclaims any duty to update any forward-looking statements.

Thank you again. And yesterday afternoon we reported first quarter operating earnings of 62 cents per share compared with 61 cents last year. This was at the lower end of the range of first quarter estimates which was, as you know 61 to 65 cents. Overall, we are pleased to produce earnings at this level at this level in a quarter in which we experience as did most North American based businesses the combined impact of a soft economy and a difficult credit market. Not unexpected, we had pressure on claim incidents in our core Ltd. and individual disability businesses with somewhat higher than traditional seasonal volatility in our group life operations. Lastly, credit market conditions led to a higher level of realized investment losses in the quarter. We will discuss each of these issues in greater detail later in our prepared comments.

Despite these challenges, there are several important positive trends that I'd like to highlight. First, we reported strong improvement in our STD results in the quarter. As you know, we have made several strategic changes in this line, particularly in larger cases where we are emphasizing more ASO and self-insured arrangements in order to gain more experience on those cases before we underwrite them on a fully insured basis. You will notice that we have also enhanced our sales reporting to split the ASO premium equivalent from the fully insured premium so that you can more closely track these activities over time.

As most of you are aware, a properly structured STD program is fundamental to the strategy of early intervention which impacts Ltd. recoveries and the resulting financials of the Ltd. line of business. Second, we experienced improved persistency in our and STD lines and as a result, reported a lower level of accelerated amortization of and importantly reported continued growth and earned premium of 6.2 percent in our continued business segments. Group life persistency was relatively flat with last year as we continue to rework this book of business.

And then thirdly, we produced strong overall new sales, with corporate wide sales increasing 19 percent relative to a year ago. Let me digress for a moment before I further comment on sales by pointing out that effective January 1, 2002 we began reporting the sales premium associated with our ASO short term disability separate from our fully insured business. This was done to align UnumProvident with industry survey and recording norms and in addition, clearly shows the progress we are making on our corporate strategy to write more ASO or self-insured business in the large STD market. In addition, our group life sales in the U.K. are now being reported with our North American sales. This quarter's statistical supplement contains a page devoted to the restatement of past three years' sales numbers.

As I mentioned earlier, total Company sales, including ASO premium equivalents were up 19 percent, with all three reporting segments experiencing year over year growth. Sales and employee benefits were up 21 percent, individual up one percent and the voluntary segment up 23 percent. Let me provide some additional context around these growth numbers first in employee benefits where sales were up 24 percent in group disability including ASO premium equivalents and up 19 percent on fully insured sales. Group life was up 17 percent, driven by strong sales in the U.K. In fact, North American brokerage sales were up only eight percent, compared to one year ago, a rate of growth we are more comfortable with given our goal to reduce the volatility in this line. We are beating our internal goal of achieving a more balanced mix of current sales, that is, higher growth in the small and middle market and this quarter, only a three percent rate of growth in the large case market. However, in all case sizes group life only serves as a complimentary product to our disability core competency. We do not and we will not lead our integrated sales strategy with group life insurance. Group long term care sales continue to grow nicely, up 74 percent over one year ago.

Let me make a few comments about the flat sales in our individual segments. The first quarter is usually not robust in terms of sales, plus coming off of a period of strong 30 plus percent sales growth in each of the prior three quarters. The pipeline looks good for future quarters and the risk characteristics of our sales remain positive, so we do not consider this an area of concern other than to produce as much as possible, more quarter to quarter consistency.

Multi-life business continues to be strong, representing 68 percent of new sales premiums. And sales of our individual long term care products, also sold through our integrated sales channel were up 19 percent compared to one year ago.

And then thirdly, moving on to our voluntary segment, sales growth was driven by strong sales again in the integrated brokerage channel by being up 73 percent with a more modest 8.4 percent growth being recorded. Fee revenue in our managed disability segment continues to be strong, up 20 percent this quarter versus one year ago. As I have stated on prior calls, this operation is an integral part of our claims or as we refer to it, our customer care program. And it's also an important part of our middle market and large case value propositions and therefore is embedded in our marketing strategy. I am referring here primarily to our subsidiary. However, I should also note that we also had strong performance from our U.K. and our Canadian operations overall during the first quarter.

Now I'd like to ask that Tom White review more specifically our first quarter results, followed then by Tom Watjen who will highlight the key operational trends. After that we will take your questions. Tom?

Thank you, Harold. And good morning, everyone. Yesterday afternoon UnumProvident reported first quarter 2002 after-tax operating income. This is before special items and net realize investment losses of 62 cents per deluded common share, which is up slightly from the 61 cents reported in the first quarter of 2001. Earned premium in the first quarter was $1.83 billion, up 4.5 percent from year ago levels. For our ongoing business segments, which are the employed benefits individual and voluntary benefits, earned premium grew by 6.2 percent over the year ago levels. First quarter net investment income of $499.8 million represents a 1.1 percent increase from last year. Again excluding the runoff and discontinued lines of business, the ongoing business segments produced net investment income growth of 3.6 percent compared to last year's first quarter. We did experience higher realized investment losses in the quarter, and Tom Watjen will cover this in more detail in his comments.

Now I'd like to turn to a review of our operating segment, starting with the employee benefit segment. The employee benefit segment reported income before net realized investment losses in federal income taxes of $132.5 million in the first quarter 2002, down slightly from the $135.8 million in the year ago quarter. Within the employee benefits segment, the group disability line reported income of $87 million in the first quarter, compared $86.6 million a year ago. These results were driven by a slight deterioration in our LTD results, which was caused by continued increase in claim incidence in the first quarter, but were offset by improved performance in our STD operation, driven by improved risk results. The benefit ratio in this line was 83.3 percent in the first quarter 2002 and 83.1 percent in the first quarter 2001. Premium income in this line grew by eight percent year over year, reflecting our recent successes in sales growth, renewal activity and improvement in persistency.

In the group like and group long term care line, we had income of $41.3 million in the first quarter compared to $45.9 million a year ago. The decline is attributable to lower group life results which offset improvement in the line of business.

And finally, within employee benefits, the managed disability line of business started 2002 with a strong first quarter with income of $4.2 million compared to $3.3 million one year ago.

Moving to the individual segment, income totaled $68.8 million in the first quarter 2002, compared to $84.9 million in the year ago quarter. Both the individual disability and long term care lines produced lower results. In individual disability, income decline to $68.4 million in the first quarter, from a strong $84 million a year ago. The benefit ratio in the first quarter 2002 was 105 percent compared to 103 percent last year. The interest adjusted loss ratio was 62.4 percent in the first quarter, compared to 61.8 percent in the year ago. You'll also notice that we experience generally higher incidence in the first quarter on the pre-1995 business and lower miscellaneous income or other income reflecting poorer performance in the center reblock.

In individual long-term care, income declined to $400,000 in the first quarter 2002 from $900,000 in the first quarter 2001. The decline reflects lower claim resolutions, while claim incidence was in line with seasonal expectations. In the voluntary benefit segment income was $39.6 million in the first quarter of 2002 compared to $40.4 million in the first quarter of 2001. The benefit ratio was stable at 60.6 percent and premium income grew by five percent in the first quarter. The other segment reported income of $9.5 million in the first quarter, compared to $10.6 million in the year ago quarter, reflection the wind down of these lines of business. And finally, the corporate segment had a loss of $29 million in the first quarter, reflecting a decrease in net investment income due to higher allocations of investment income, lower interest expense and lower operating expenses relative to a year ago. A few additional items to note, book value was $23.61 at the end of the first quarter 2002 compared to $24.09 a year ago, excluding the net unrealized gains and losses, book value was $23.04, compared to $22.83 a year ago. total capital was 29.7 percent at quarter end and allotting partial equity credit for our $300 million trust preferred issue, the debts to total capital ratio was 27.9 percent. And both of these measures are a one-tenth of a percentage point lower than year end 2001.

Finally, return on equity was 10.4 percent in the quarter and 10.6 for the full 2001. And Tom Watjen will cover some key operational trends.

Thank you Tom and good morning. As Harold and Tom described, the first quarter presented a tough business environment for us. And while we're not pleased with quarterly earnings one cent below consensus estimates, we are pleased that we are inline with our internal plans and within the range of street estimates. We've taken many actions over the past two years to strengthen our financial and operational platform, and these actions have positioned us well for this environment. In addition to the positive sales picture and subsidiary performance that Harold outlined, there are a few other important highlights I'd like to note for the quarter, including generally continued improvement in our persistence and renewal results, and I'll come back and talk about that a little further in a moment; improved profitability in our STD line of business, which follows a number of significant actions we took in 2001, and generally favorable expense management trends throughout the quarter.

We did, however, continue to see the effect of the current weaker economy on our business. Incidence levels in our LTD and individual disability lines of business moved higher than the seasonally high first quarter trend. The heightened incidence continued to come from the issue eras industries and geographies we have seen in the past. The weaker economic and financial environment also continues to have an adverse impact on our investment results, which were somewhat behind our expectations for the quarter. We, however, continued to maintain comfortable margins between the yield on our portfolios and our pricing and reserving discount rates. Separately, we are disappointed, by obviously by the level and consistency in our group-wide profitability. This remains a difficult business as the combination of the competitive nature of this market and mortality trends had a negative impact on this line. I'll now take a few minutes to explore a few of these thoughts a bit further.

Let me start with a review of our claim trend. Beginning with LTD, we have continued to see gradual upward trends and incidence rates across all market segments, both large and small. This trend, which began over a year ago, continues to put pressure on our LTD results. The pricing and underwriting adjustments we have made have tended to neutralize this upward trend in incidence, but have inhibited our growth and profitability. Our premium for life increased six percent over the last year, which is at the high end of the industry, and we should continue to see that freedom for life increase as we move through 2002.

As I noted earlier, the increases in premium rates are essentially being offset by the general underlying weakness in the business environment. Results in our STD line improved in the quarter, reflecting the pricing actions we took in mid-2001. Incidence is up slightly over the fourth quarter of last year, but inline with seasonal expectations, and well below the level seen in the first three quarters of 2001. Duration date decreased in premium for life has grown, helping to bring the benefit ratio down from the fourth quarter and first quarter of last year. We expect the actions we have taken, especially around our large case business, to have a favorable impact on future results. This includes pricing changes, and moving more of this business, as Harold said, to a self-insured or service-based plan design. STD will always be a somewhat volatile line, but the actions we have taken should minimize future volatility.

Over the long term, the loss ratio for group disability, which includes our results for STD and LTD, should be in the low 80 percent range. This quarter, the loss ratio for group disability was 83.3 percent, down from 84.8 percent in the fourth quarter and almost flat compared to one year ago. Our new business pricing actions along with the continued favorable renewal actions should help us maintain, and hopefully improve, profitability levels in our group disability line. An improvement in the overall economic development would certainly help as well.

As noted earlier, we're still not pleased with the level and consistency of our resolves in the group life line. This reflects, as much as anything, the nature of this business and today's competitive environment. This product is as close to a commodity as any we have within the UnumProvident portfolio. In the quarter, a mortality incidence was worse in the fourth quarter of 2001, as seasonal expected, and although slightly better than last year, was still below our expectations. We continue to refine our strategy for this product line to focus on those areas that can be priced to generate adequate returns, even if it comes at the expense of future sales growth.

Turning now to our innovative individual disability business, we continue to see an upward trend in systems in the quarter. Paid was higher than the same quarter one year ago, and slightly lower than the fourth quarter. As we expect, with heightened levels of new claims the past few quarters, we have seen increased pressure on our results. Our recovery rate from the quarter was below fourth quarter and first quarter last year. We believe it was timing issue, and we are cautiously optimistic the recovery is going to improve throughout the year.

But the claim trend we are seeing in this line follow generally the same pattern we've seen past quarters. That is the business issue in 1995 and in prior years is performing below expectations about business after 1995 is meeting or exceeding our expectations. The overall interest-adjusted loss ratio in this line was 62.4 percent, which was lower than the 65.6 percent we experienced in the fourth quarter, but slightly higher than the 61.8 percent for the first quarter for 2001.

That's persistency, in general we continue to be - continue to experience improving results for all of our group benefit lines. In our ITP line, persistency is 86.6 percent compared 83.7 percent one year ago and 84.9 percent for the year 2001. Persistency in our FTD line is 83.4 percent versus 81.5 percent one year ago and 82.1 percent for the full year 2001. At 81.4 percent, group life persistency actually decreased compared to the 84.6 percent in 2001 and was essentially unchanged compared to one year ago.

The positive trend in our FTD and LTD persistency reflects the more stable nature of those lines of business and our unique competitive position in those markets. The relatively lower level of persistency is indicative of the more challenging conditions in that market. We do however continue to see our terminations for all business generally coming from our more clearly performing sectors and we do expect it to look forward at our overall persistency to run ahead of 2001 levels, particularly for LTD and FTD, while our group life persistency results are also expected lag a bit as a result of the market conditions and our overall renewal actions.

Now on renewal, we continue to be generating curves by our overall renewal results. At this point in the year, we are slightly ahead of our internal renewal plan. Over the past three years, we have actually placed over $300 million of renewals in the LTD, FTD, and group life lines of business. We believe by starting this more focused effort in 1999, we are generally ahead of others in the market with our renewal actions. This is especially true in the group disability lines, they were - they were in the earlier stages of this renewal process for group life. Looking forward, we have incorporated our renewal actions more seamlessly into our business practices to minimize the impact on our customers and producers.

There going to be no discussion of persistency and renewal results will be completed without a discussion of the implications of these actions and . In our first quarter results included $9.5 million of additional back amortization against the $20.3 million dollars set at least year with obviously we were very pleased with.

After , a few comments on our investment results. It's no surprise that with the continued current unsettled financial market, we have seen a slowing the growth of our investment in - investment results. I am actually very, very pleased that in this environment we actually were able generate - generate a 3.6 percent gain in net investment income in our own growing business segments.

Now I'll spend a couple minutes actually talking about the more detailed aspects of our results for the quarter. Then we start with our portfolio yield, which was 7.4 percent in quarter, which was a decline of 8 basis points from the fourth quarter. The change in yield is the result of several factors, all of which were relate to the actions associated the present - with the present market conditions. Given the current interest rate environment, the fact that we continue to see some pressure in the portfolio yield as we put on new investments at today's lower interest rate. We are very confident that our current projected portfolio yields are adequate to support our business and financial objectives. As we have said in the past, we are - we have - we very tightly manage our interest and discount rate assumptions. The emphasis is on managing the margins between our portfolio yield and the various discount rate assumptions and better reserves and pricing models.

Today, we have a healthy interest rate margin, the result of our disciplined lowering of our pricing and discount rate assumptions over the several quarters to near the declining new money rate. These margins fluctuate by a few basis points from quarter to quarter, but our margins today are roughly equivalent to the average of the past two years.

As Tom noted, we recorded net realized investment loss for the first quarter of $77.3 million, which was higher than in prior quarters. Although we said we did not expect losses like this in any quarter, frankly it's not unexpected in today's fragile credit environment. Our credit-loss experiences remain very good relative to our peers and others in the market as a whole. A portion of this quarter's loss incorporates a more pessimistic outlook for the credit market in general, but it also very specifically for certain industries such as telecom. Even problems remains well positioned in today's new credit and financial environment.

I'll quote these comments by saying that we're very confident that the investment strategy we're pursuing here at Provident is the right one for our company. But, in fact, actions that manage interest rate risk, and actually credit risk, will continue to serve us well in the long-term.

Now, I'll quote my comments with a few summary thoughts as well providing some guidance for the balance of 2002. Clearly, in this environment, it is a challenge to generate consistent, predictable growth without some recovery in the economic and financial environment. Although we are not completely satisfied with our results, we are pleased that we have been able to strengthen our position in the market and maintain whole growth profitability in many of our businesses. Now I will go through with three related points.

First, we have clearly restored here at Provident the product for the market leader. Recent industry studies have validated what we've seen throughout 2001: customers and producers are responding to our offering. Our sales result, persistency improvements, and renewal successes are clear indications of our market presence.

Second, we are investing heavily in our future, positioning our company to respond to the changing needs in the marketplace. This investment is clearly setting us up as the long-term partner for our customers and producers and consultants. We believe that we are setting the standard by which others will be measured in our business.

Lastly, though, we are not satisfied that we have leveraged our leadership position into earnings and returns appropriate for this business. Improving profitability and returns remains a key area of focus for us in 2002. We will continue to focus on operational improvements, assess alternatives for underperforming blocks of business, and manage our capital position in a manner which maximizes shareholder value.

Now with comments, and anticipating a question that might come up, I wanted to just make a few comments about the IDI business. As we have said in the past, now that we are operating from positional strength in our four markets, we have become much more focused on enhancing the returns of all of our businesses. Certainly one of our areas of focus is our IDI business. As another area, the block of business continues to perform below expectations while our new business performs at or better than expectations.

During the past quarter we continued to evaluate alternatives to enhance the value of this business. We are quite comfortable with maintaining things as they are and focusing on operational improvements in this line, however, we are also open to any reporting or transactional activity that might help investors better see the value of our ongoing franchise. In other words, we have not imposed any specific time schedule, I can assure you it is a clear priority of our management team. So let me reiterate that we do not feel any pressure do something that does not create obvious value for our shareholders.

Finally, we spoke in our recent calls that we will likely continue to see operating earnings growth remain in the 1 to 3 cents per quarter, going forward. While this lower than our desired rate of growth, it is appropriate in this environment. In the near term, we are more comfortable with the lower end of that range. Now just one housekeeping matter, as you know, last year we began the practice of holding a full day analyst meeting and we continue that again this year with the event scheduled for New York on May 30. I hope many of you will be available to join us, if you would, to give us a chance to see us do things to our business and our strategy and our financial - the financial aspects of our business, and please contact for any separate details. Thank you for your attention this morning, and that concludes my prepared comments, now operator, we'd like to move to the question and answer session.

And Tom, excuse me operator, please do that. Tom, we might want to just comment a real short time on the investment result . You covered the overall portfolio yield of being 7.94.

I'm sorry, I misread that, yes.

Right, instead of 7.4, it should be 7.94, in the first quarter of 2002. With that, operator, we're going to move to questions, please.

Today's question and answer session will be conducted electronically. If you'd like to ask a question please press star, followed by the digit one on your touch tone telephone. Again, that's star, one, if you'd like to ask a question. We'll pause a moment to assemble our roster.

We'll go first to , Banc of America Securities.

Good morning everybody. Couple of questions, Tom Watjen, perhaps you could just tell us what you think the options might be to unlock some shareholder value in the IDI segment. And then I also have a follow up.

Good morning Jason. Again, what'd I'd like to do is just make a couple of general overview comments and not even get too specific at this point because I think we're looking at a number of things, some of which range from nothing more than things that actually allow again the reporting of our results and providing a focus around different parts of our business, which again helps on some of the aspects of our business that I talked about in my comments.

On the other end of the extreme, it involves things like reassuring parts of the block of business and doing something that has a more wholesale affect in terms of moving that risk on to another part. I say as we go through that whole process of those different extremes and all those options we're going to always weigh against that the cost of those transactions, the impact on shareholder value, the impact on capital, the impact on overall business strategy, so at this point Jason, I think I'd like to leave it as a more holistic sort of view of looking at the different choices and options. And I think we have four or five different ones we're looking at but also when I come back to my comments, I say that we are taking a very disciplined approach to this because it could very easily be that if we don't anything that works that makes economic sense from a shareholder point of view other than perhaps maybe providing a little more information about how different parts of our business perform.

Would it be too extreme to think that a possibility is a sale of that piece of business?

Sure, in a reassurance form, absolutely.

OK.

I mean, again, I think that's in the -- it's in the five or six options that we're looking at at this point but again, I start with the more simpler, easier to do, lower cost which is maybe an enhanced quality of reporting around some of these aspects of our business to the more extreme which starts to look at the sale of a block of business, which is what you're referring to.

OK. And then just a more general question on the market, last quarter you were taking -- you said you were taking business from some companies that had pulled back. And you had mentioned that you saw some momentum in the mid-sized case market. And I was wondering whether or not that environment had changed for you.

Jason, I don't know that we would say that there's been a substantial change just in this quarter. However, we would confirm your notion. And that is that we had improving results in both the small and the middle market, with particular emphasis in the middle market this past quarter.

Great. Thank you very much.

We'll go next to Colin Devine, Salomon Smith Barney.

Good morning gentlemen. Why don't we talk about a couple things? First, you talked at length about the investment portfolio. And it's I guess, a rising concern, to be honest that the you know, number of non-performing assets is what, 3.6 times what it was a year ago. It's up significantly from the fourth quarter. And I'm wondering you know, are you still able to maintain your spreads? And I think that's the more sort of, relevant point, here. And maybe we can talk a bit about that. Second, Tom, at what point are you going to be able to hit an earnings number because we've gone through number after number after number? And this quarter again seems like three forward, two back or basically just tell everybody lower guidance, lower guidance again this morning? When do we get to the bottom of this? Perhaps we can talk a little bit about that. And then finally on capital, it's certainly my understanding this about the first year in some time we actually plan to you know, throw off some excess capital this year. When do we see you back in the market buying your stock?

Thank you, Colin. Good morning. And I'll start on these and maybe ask that Harold can answer this, as well. Let me start with the spread comment because again, I think as I was trying to make the point in my comments Colin, this is very much how we actually look at this whole interest rate situation. There's two aspects to it. One is the portfolio yield. The second is the discount rate. And I think as we look by portfolio, as I said in my comments we actually are pretty pleased that we've actually been able to maintain that margin, very close to the margin in the average over the last couple years.

So again, it bounces around quarter to quarter. That's really the fact that we look at most carefully each quarter to assess whether or not the linkage between portfolio strategy and investment results and setting pricing and discount rates is tightly connected. So yeah, there's no doubt that with the credit environment that certainly puts some pressure on certain aspects of the investments results which again, I think that's pretty typical for everybody in our industry but I can assure you from a margin point of view, this is an area where if we're lowering discount rates and changing pricing assumptions which we did much of last year that spread should be relatively constant as we go forward. So again, we feel pretty good about that aspect of the business.

Second piece had to do with certainly the earnings. And again, I think as Harold said in his comments and I did as well, none of us are pleased to not be able to hit the straight estimates. Having said that you know, this is obviously an environment where there are some things happening which you know, none of us had contemplated but I think we have good game plans around the business. We recognize that to get to the next valuation level we have to have a consistent set of results, hit the street target. And I think Harold, that's very much a priority of this management team, to be sure that we actually try to work to develop our business plan around the ability to generate consistent results. I don't think of it in a time frame. I just think of it in terms of a commitment to recognize that's a big part of getting ourselves to the next valuation level.

Bottom line, what do you think your earnings run rate is today?

I mean, I'm not sure how to answer that one.

You can give me a range. I think we all wouldn't mind it. I mean, I think that's what we got to get at, is given where the economy is at, given the market you're looking at, given the deterioration in the investment portfolio what is the baseline earnings run rate?

Again, I think we said I think, as far as our goal, Colin is that I mentioned the concept of that one to three cent per share sequential growth. And I think we stand behind that. I think my only comment was we look to the next quarter. There's obviously, it's not clear that you see a real glimmer of hope that the economy is going to shirt materially in the next quarter, so I think that's why we've tried to caution, to get closer to the bottom of that range. But I think that's that guidance that we've given. I think it's the guidance we stick with.

Number at the low end of 255, if I'm just adding a penny a share ...

That's in the low end. And again, as I'd hoped it be that again as we move through the year we're going to start to pick up momentum beyond that but I think at this point with facing the economy and the financial environment we face right now I think we're trying to get to a number that reflects that but again we also know well that hitting those numbers and more importantly exceeding those numbers is critically important to creating value. And so you know, hopefully you also hear that in my comment, as well. The other part of your question had to do with capital. And you're right. This is a year where we begin to generate additional capital. And I think we said the last call and I think I tried to say that again in this call, that this is a new phenomena for us. We haven't had this situation. We've been generating capital for the last several years. I think we're committed to being sure we put that capital to work well. And there's nothing you know, nothing, no tool or concept that people use when they find themselves in that position that I'd say Harold, we're not prepared to think about and look at in this environment.

Exactly. And not to spend unnecessary time, I suppose on any one question, these are appropriate questions but I will go back and just emphasize time. I don't think we're trying to change the range.

Right.

I do think there's a message here that we probably need to communicate more specifically with those of you who are on the high end of that range and therefore, the impact it has on the consensus number. I think what we have tried to say is that we do think in this kind of environment seeing the low end of the range that we've spoken of in the last couple of quarters is the place to be. We don't want to change that but it would be wrong to indicate that those of you on the high end of that range in this kind of market, that that's where we find the right position to be. And Tom White and many -- all of us need to make sure we are properly chatting with those of you who might be at the high end of this range.

OK. One quick follow up. On the pre-95 block just so we've all got -- are on the same page here, am I correct in understanding we're talking about seven billion liabilities around capital tied up in this thing? And what return is it generating today, roughly?

Colin, this is Bob Greving. The GAAP net liabilities on the older block of business and we use 1995 as kind of a line of demarcation not quite as deep as just pure 1995. For example, you know, the older block of Paul Revere business actually goes through to our acquisition in 1997, as you are aware, so I just want to make that clear. The overall old block of business has net GAAP liabilities of about $7.9 billion related to it, about $1 billion of premium. I think you know, that you can kind of gather you know, the size of that block of business. It makes up about 60 percent, a little bit more than 60 percent of our total individual disability block by premium. As far as capital allocated to it, you're probably in the neighborhood of $1-1.2 billion of what we call target surplus related to that line of business.

OK. What return is it generating? I mean, because we're all talking about we're going to -- you know, you' re going to reinsure this, you're going to do -- you're going to do something to some capital transitions as they come in. All right. Let's isolate this thing. What you know, what we got to get at here is what's the ROE on the open business, if you like and what's the ROE in this closed block.

I'll answer that. I mean, the answer is it's in the low single digits, Colin but again, I think it would be premature to speculate on taking and surgically taking different pieces out and assuming different things about the proceeds. I think the point of having raised this issue back in the last quarter was the acknowledgment that for us to generate to a degree the consistency of results and the returns we expect to generate in our business we have one piece of the operation which we carry along which has obviously, an ROE which is very dilutive to the overall corporate ROE And so I think at this point we'd leave it that we're continuing to look at alternatives but understand what I just said, is that a low single digit ROE obviously becomes a big, big drag on our ability to generate growth and returns on the equivalent to what the high performing companies suggest. And I think again it will be too, a little bit speculative to carve different pieces off. I just know we're working aggressively to look at different choices and options but also you sensor my comments. Don't feel a gun to our head to do something because if where you're going is if you got a very low ROE business obviously you pay a price to do so. We want to always to be sure that we understand that price of exit relative to what it does from a shareholder value point of view.

OK, but so we're clear, on this close block, which is the old own non-cancelable IDI policies, a lot of single digit ROE is 5 percent.

Right.

Thank you. OK.

Caitlin Long, Credit Suisse First Boston

Good morning. Couple quick questions. The group life business, I know you're taking some pricing actions. Just curious, what your commitment your to maintaining that business, how integrated is it within your overall employee benefits business. Then I'll have a follow up.

, it is not terribly important, quite frankly to what we - we at . I think we have to acknowledge that - not just at UnumProvident, but the returns on group life insurance are more than likely going down in the future, and therefore like the other diluted parts of any business, you've already spoken to, we have to understand if our mission is to continue to work on improving it, we can't have an offsetting factor like a commodity product, which is what group life is, offsetting good work in LTD, STD, where we have great competency. So, I don't think that we would want to make any kind of strategic announcement today, at all, other than to say to you that we will sacrifice a growth in group life insurance because it's not material to the integrated sale that we find that we're particularly unique at providing. That is, LTD and STD, absence management wrapped around those pieces, and then how we carving out subpopulations of that workforce who need individual products. And then supplemental products being so critical as all benefits are going up. Letting the employer have an option to let employees select through payroll deduction. That's our game plan, that's driven by LTD competence. And so, when we exaggerate any result in group life insurance in any segment, we're not following our own strategy. So there's going to be continued discipline around this line of business because it's not material to the implementation of our core market strategy.

Is it possible that you might lop off that piece that's not material and reinsure it or sell it off?

I think that would be premature to say. You've heard us talk this morning about where our primary emphasis around the other part of business which is really dative, but still having an impact on ROE. The ROE's are certainly still, overall, better...

...Sure...

...in group life insurance. But we don't like directionally what the signals could be about that. So if you're coming - committing to its shareholders that we're going to work on returning better overall returns, it goes beyond the issue of IDI O-block transactions or operation improvements. We must understand the impact in the future that group life insurance could be projecting. And therefore, we leave every option on the table as , we've always done over the years.

Sure, OK. And then on the investments portfolio. The high-yield portion on a market value basis jumped up pretty significantly sequentially to 9.7 from 8.9 percent of the portfolio. What are your internal limitations and - I guess I was surprised to see how much that increased in light of the write downs that you took, which I presume were somewhat driven by potentially that high-yields portion of the portfolio hitting up against those limits. Can you just comment on that?

Yes, I'll start and ask and to . Our internal limits, are 10 percent. We're not really making any new commitments to the high-yield market. Really, that's more, I'd say, changes in other credits - falling angels and other things probably adding to that exposure, I'd say, . So again, the intent is not to continue to add to that asset class, we're very comfortable, though, as you know, with that asset class going forward, but this is not the time we're adding to that position. And again, I ask to add to that as appropriate.

Basically the only thing I'd add there is that we're doing very small amounts of new purchases of below-investment-grade bonds and again, as said, we want to keep the exposure there to less than 10 percent in this environment. You know, we do get some downgrades in there so we do have to sell off some of the high-yield exposure to keep that limitation.

So is it fair to assume then that if the credit environment continues, you'll probably continue to see some capital losses in the next couple quarters, and how might that impact your decision to repurchase stock.

Caitlin, I guess first off, in this quarter we tried very hard to be sure we actually took a little bit of a more pessimistic view going forward. As I mentioned in my comments, probably did some things from valuation point of view that maybe some others didn't do to be sure we brought those valuations down to I believe to be some fairly conservative levels. And I said, my comments specifically around some of the telecom issues. So again, I think we're always going to have a degree of exposure in this unstable credit environment, so I think none of us again want to see those kind of losses, but I think we've been realistic. I think some of that's going to continue as we go through the balance of the year. I'd be very surprised if it was anything close to the kind of levels though we saw in the first quarter. As it relates to what that implies for our capital plan and share buy-backs, again, I think our view is we certainly - this is the right - this the environment to continue to keep your balance sheets strong, continue to keep your capital position full, but that still doesn't mean we can't find ways to do some perhaps some share buybacks as part of our plan for the balance of the year.

OK, thank you.

You've mentioned purchase a number of times in your conversation here. Any reinsurance agreements on the DI business or sale of DI blocks? Would that preclude share buybacks because that would be the alternative use of the capital?

No, Vanessa, I think just - let me sort of break it into two parts, your question. First off is, absent any transaction, I think our view was we began to generate excess capital this year which even without any reinsurance transaction, I think we want to be sensitive to being sure we put that capital to work. And again, in a modest way, in some kind of a buyback.

Second thing, though, is any transaction, certainly if it's on the extreme end of my - the range of options I alluded to earlier, you know, can have a fairly significant capital implications. The part of the issue in any of those exercises is not just the cost, but I think implied in your question is also what you do with the proceeds as you free up excess capital. So I think we're certainly, you know, going to try to work down parallel paths. My guess is again we may move to the - stay the direction of looking for some modest share buybacks that have nothing to do with the IDI project, but are more just what would have been the right thing to do because of the capital position and the business position we're in right now. And then we'll look at the other one as a separate stand-alone event, but it could easily, you know, under scenarios that does create additional capital that needs to be put to work effectively.

, could you just give us a sense of, absent any transaction, what would be the level of excess capital you would have during 2002.

Yes, I think we're still - we're still adjusting our models a little bit, I think, as we shared with you and others in the last call, and there's - you know, there's some new capital formulas that have been put in place by the NAIC and I'd say and were working with the rating agents to be sure we have some clarity on how they're going to take those capital formulas and adopt them in their own rating assessments. And I don't mean to duck the question, but I'd say that's part of what we're going through right now is being sure we have a clear view of the capital outlook in light of a lot of things, including some of those changed capital standards. So I think, I look at this as set of bites, I hope that we can do a small bite of things on a share repurchase here, you know, somewhat soon, just because it's clear that there is an opportunity to do some of those things. But yet as we get some clarity around some of those capital formulas, maybe get some clarity around how the IDI product emerges, if at all, that may create another opportunity down the road.

And other the old formulas, do you have excess capital?

I think under the old formulas, assuming we're going back on all the old formulas, I think we do, yes. Because some, actually, some of the rating agencies actually gave us credit for some of the new formulas but actually added some capital charges on some of the old - on some other products I'd say, .

Yes. The treatment from the rating agency has varied by agency and some have not taken any action, some have made fairly significant positive changes in their model. So it's - we still have to sort that out and understand exactly what those implications are, but overall, you know, what we have heard has been generally positive.

And just another separate point please, on the incidence in the long term disability business, have you looked at that in terms of a mix shift of your business, as you've added large case business to the overall percentage of the mix and you've added a higher percentage of voluntary business, how much of the incidence creep could be attributed to the mixed shift to those two categories.

Vanessa, this is Bob Greving. Vanessa there has been a bit of a shift in the incidence as we expected as a result of our move to a little bit higher average case size. However, I think what we're seeing, at least over the last several quarters, has exceeded what had anticipated from a mix shift. So I think we are seeing a bit more coming from the economic environment. As far as quantification, I'm not sure we've actually gotten specific numbers on it. But like I say, it's actually exceeded what our original expectations were.

So the guidance from Tom Watjen of a low, sort of 80 percent overall loss ratio, if I have that number correct, incorporates that mix shift?

It incorporates the mix shift. It does not necessarily incorporate what we're seeing as far as what I call the economically-driven loss ratio impacts.

But it also, I'd say though Vanessa, includes that the mention of my definition of group disability also STD. So I think when we look at a combined loss ratio, we've got two themes in there. You've got the LTD piece, which we're certainly focusing on where again I think we put price increases and made underwriting adjustments that are basically being offset by a little weakness in the economy. The other parts of that obviously, which played out certainly this past quarter for us, was the improvement we saw in STD. So those two are, when I was giving guidance in giving the absolute numbers, as you know we don't break LTD and STD out separately, but it does include the expectation. We continue to see decent results on the STD side based on the actions we've already taken.

Thank you very much.

Thank you.

Thank you Vanessa.

Michelle Giordano, JP Morgan.

Good morning. I was wondering if you could give us a little bit more color on the real life lawsuit. Tom, could you tell us what the gross realized losses were and any realized gains you might have taken in the quarter? And I understand that telecom is a major portion of the losses, but could you tell us what percentage of the losses were telecom related? And what's the level of CBO's you currently have? How much were written off in the quarter? And then lastly, what's the exposure to WorldCom?

Sure Michelle, this is Tom White. On a pre-tax basis the realized investment losses were $118.3 million. That's made up of net gains of $107.5 million and losses of 225.8. So the we had in the quarter was essentially the 225.8. Now basically, half of that write-down came out of the telecom sector, the high-yield telecom sector. Some other pieces in there, you referenced the CBO's, about $30 million to the write-down were in the CBO's. I don't have the number in front of me, but I think our exposure is right around $250 million?

CBO's?

About $250 million, that reflects the write-down. I believe we were about $300 million a year ago, and so we've taken a couple of write-downs on that. Also in there, Michelle, there were a handful of smaller credits that we dealt with, a couple in the automotive sector, that we dealt with. And I think in the Enron there was a handful of millions of dollars of additional write-down there. Primarily, some of those private placements where we had a little more time to look into it. So that's kind of the composition of what we're seeing.

At WorldCom?

At WorldCom, exposure on a market value basis, on a book value basis is $78 million. I think the market value is somewhere in the low 60s right now.

OK, thank you.

Thank you Michelle.

David Lewis, Sun Trust Robinson Humphrey.

Good morning, couple of questions. Bob Greving to going back to Tom Watjen's comment about historical group disability loss ratios being in the low 80 percent range and running 83 percent. We talked about it at the last analyst meeting in 1995 that there was probably a three percentage points impact on the claims ratio, loss ratio in that period. Does that mean that we're probably close to the peak right now by your estimate and we might see some improvements if the economy's behavior over the next several quarters?

Dave, I think obviously, we would like to get some tailwind from improvement in the economy. And I think that help us to improve our overall results. As far as the peak is concerned, obviously this business does shift as our mix of business does move. I think if we could, another thing that would be an improvement on just the loss ratio results would be an increase in our mid-market and our small market sales, which we've been emphasizing here recently. And so those would give us, obviously, some tailwind to improve on where we're at.

And if we just kind of looked at pricing trends, if you could refresh our memory obviously right now the higher claims incidence being largely offset by the higher pricing, I assume your goal as we kind of look at it, is to continue a high single-digit, kind of, rate increase?

I think mid to high single digits is effectively our target. Obviously our new business is being put on at a stronger price. It does take some time for higher prices to move through the overall block of business, but I believe we're comfortable with where our current new business pricing is at and our renewal program.

Kevin, would you like to just give a little more color to David's question,

Yes, thank you . Good morning David. Our premier for life as you know is moving up in LTD, our renewal program has been pretty aggressive over a three year period of time. We've placed consistent mid to upper single digit rate increases over the last two year and our continuing to do that this year across our LTD line and our STD line. Lifeline as well. And in addition to that, I think we see remarkably solid persistency holding up for us.

Very good. Final question, can somebody count on maybe what the STAT earnings level was in the first quarter and where the current RBC stands under the new formulas? Or the old?

Yes David, on a statutory basis we had a loss of about $8 million in the first quarter. You know, typically for us the first quarter is a difficult one on a statutory basis because of the, kind of the seasonality, which, you know you don't get seasonality adjustments on a statutory basis. So we would expect those STAT earnings to ramp up throughout the year. As far as the RBC ratios, at year end we were 242?

245?

About 245 percent. You know we target something around 215, 225 percent. We have not calculated those for the quarterly number. They take some time to make the exact calculation.

OK, thank you very much.

Thanks David.

We'll go next to Joan Zief, Goldman Sachs.

Good morning. I'm here with , and we just have a few extra questions. The first was on your desire to do something with the individual disability block. Is that really, is that driven more for your need for freeing up additional capital, or for just mitigating earnings volatility? That's our first question. Our second question is, you talk about separating group life from disability in your focus and your discipline. I guess we were wondering what percentage of your new sales are written again on that packaged approach, and what do you think the industry's percentage is? The industry's percentage of how much group life is usually tacked on with the disability? We have one follow up question after that.

Joan, this Tom, I'll take the first question about the IDI issue, and please let me be very clear. This is not a capital raising effort. Again, as you know, a couple years ago we very much went through a series of initiatives that post the merger were capital related. I think we very much earmarked those as ones that were designed to strengthen the balance sheets, strengthen the capital position, and provide that stability that I think has proven to be so important when we move to an economic downturn. This is purely around the issue that we look at every alternative to create better returns and improved consistency and limit volatility as you were saying. So that's very much the focus of this initiative and again if it doesn't, if we don't find things to support that, we very much are content with just working and managing that in force block of business more effectively. Now in respect to that group life piece, Harold?

Yes, Tom, the statement I guess we were making earlier is again the big you and others probably realize that we don't lead with something that we consider a commodity. It doesn't fool the integrated sale the way we like, but the specific number, Roger Martin, I think you're on the line and you do all of our it's in the mid to high 20s percent, it has been historically, and Roger I don't know, you might want us to update it for the quarter, if there's any updates you'd like to give.

Yes Hal, thank you. The combination of group sales, LTD, STD, life combined, was 27 percent in the quarter. In LTD with life, 24 percent.

And we have a follow up question.

Yes you had given us the net reserves on the IDI block. Can you tell us what the gross reserves are? And if I remember correctly this is the business that may have re-insured. Has that re-insurance transaction worked out as you had expected? And do you know what, if you could just tell us what the statutory loss was again. We missed it when you gave it in the last question.

Let me start out with the statutory loss. The statutory loss was about $8.1 million for the period. As far as the ID block business, the ID block is about $7.9 million or billion dollars on a net basis. I don't have the gross at this point. I'd have to add back in all the dat pieces. This is not the unilaterally the former uni-block business. As a matter of fact, the former uni-block business is relatively small compared to the overall total. I think the former uni-block business is only about $370 million worth of the premium. So it's not the significant portion of this. That was the former Unum that was reinsured to back in 1996. It is a part of this block of business, but it is not the significant block of business. That is mostly Paul Revere and Provident blocks - the older Paul Revere and Provident blocks.

And I guess part of the - the last part that question was, has that transaction worked? And again, I think the intent of that transaction was probably more along the capital release part of things, and from that point of view I think it did work. But it certainly - we continue to have exposure the performance of the block, I'd say, Bob. And so, that - part of our objective going forward is again to be sure that all of these blocks - we immunize that volatility and prove the consistency of that block.

Yes Tom, on a basis, that transaction is transparent. Actually, it becomes a one-liner in our other income line in the ID line of business. And so when you take a look at the ID income statement it all shows up in the other income line as a one-liner. But it did not - it was not intended to - and did not insulate the company from the GAAP impacts of that block of business. It was really more statutorally-oriented and it was meant for capital relief.

And therefore it's the transaction that we probably wouldn't bias ourselves toward in the future, . I think we would only look at these sorts of transactions if they were somewhat risk relieving.

So when we think about your excess capital another component that we would look at is the - your current leverage. Are you happy with the 29 percent or is that - you want that to change at all?

This is Tom. I think that certainly over time we've made a commitment to try to bring that down a little bit, but again, I think - after we've moved our way through that capital-raising period a couple years ago, we got ourselves to a level which we think is quite manageable and sustainable. So it's not the most important priority of the company is to lower that leverage at this point. I'd say the rating agencies are very comfortable with that leverage given the rating that we have. We find the rating we have very adequate to support our business needs in the marketplace. And so again, we're very comfortable keeping it at those kinds of levels. Again, don't want to make a conscious effort to increase it, but again, I think very conscious - that's a very acceptable level from a business point of view.

It's less a priority I'd say. Once we've pierced...

...Yes. That's right.

...the 30 percent, we get less a priority today to move it down from that than obviously where we were at 33 and soforth.

Thank you.

Thank you.

Thanks very much and good morning, I have a couple questions - a few questions. First of all, I'm trying to understand why your old business is in trouble, and what I mean by that is, I certainly remember, very clearly, the ideal that disability insurance got into trouble in the mid-1990s writing the on professionals. The world changed for very familiar reasons for attorneys and physicians, but I thought problem went away. At least it seemed to have gone away prior to UnumProvident and Paul Revere's merging. Now, if I understand the world correctly, the issue has resurfaced. So what's - why is the business suddenly in trouble again? That's question one.

Question two is, if I understand you correctly, you're going to proceed quite cautiously in the group life area because of the competitiveness of that market, yet it's 20 percent of the company by premium. How can you be a growth company if you're not going to be growing 20 percent of your company.

And then my third and final question is, the business, which is the individual of Unum, has been very volatile in terms of its contribution. It looks like it was half as much in the current quarter as it was in the year-ago quarter. Earnings were down sharply last year versus 2000's earnings, at least the other income line. What's causing that volatility and how do those factors compare to the factors that are affecting your individual disability business that you retain.

So those are my three questions. What's happening in ID pre-1995? How are you going to grow with 20 percent of your business in group life insurance? And what is really happening with this business to cause the volatility we're seeing. Thank you.

And Eric, this is Tom. Let me start with it and ask Bob to chime in as well. But I actually would think we'd take your first and third questions - are very related actually because it's - we're talking the same issue era of business. But again, I don't think that this went away. I think the physician issues, the overinsurance issues, the nature of those products, there's a whole series of things that quite honestly have been with us throughout time. I think probably one of the things that we're just focusing on now with this group is, acknowledging that that piece of it has certainly not gotten any better and therefore, as we look at our next plateau in terms of trying to set financial performance, that we have to look at that very, very crisply.

So again, it hasn't deteriorated to that point, we just don't see it getting any better and will continue to be a drag on our ability to generate the kind of growth, consistency, and returns that we think's appropriate for a high-valued company like ourselves. So again, I would just sort of add that little caveat to your introduction of this issue. Because again, that's why when we talk about the pre-1995 - and Bob's right it's hard to be real precise - but that older business, it really represented a time when the product was different, the underwriting standards were different, the pricing characteristics were different. And again, that has changed materially since that point in time. So that's why we've focused very heavily on this right now. Now again, the piece, as we said earlier, is really that same kind of underlying risk. It just so happens that rather than as Bob said, it being sort of consolidated as part of our premium and benefits and earnings, it's actually a one line item that goes to the balance sheets. So it's volatile just like the underlying pre-1995 block of business is volatile. And Bob, if I could ask you to add a little to those comments.

Well, I think the other thing to keep in mind, Eric, as you consider this business is two of those blocks of business, the block was purchase-gapped before it was actually reinsured. And under purchase-gap accounting, effectively what you do is you establish your reserve so there's virtually no return from the business itself, so there's no actual profitability that is intended to reserve on that block of business. The only thing you're - the only thing you do post-purchase-gap accounting is get a return on your capital. So there's not much in the way of reserve margins, as far as being able to absorb any of the volatility that you normally see, so that's one of the reasons why you see the volatility in that block of business, more so than you would in another block of business where you have some adequate reserves to absorb some of the volatility. The - on the - and the other block of business was the old Provident block of business which the pre-1993, the end of 1993, when the old Provident examined that business, was also purchase gapped.

So you've got really two pieces really of that whole block of business that underwent purchase-gap accounting - or not purchase gap accounting, gross premium valuation accounting - I'm sorry, I misstated that. Gross premium valuation accounting, where basically that block of business is not intended to contribute from a profitability standpoint to the overall business. So it is much more susceptible to volatile treatment. When you asked the question about whether the old business is quote in trouble, it certainly was in trouble back in the 93-95 timeframe when we had the increase in claims in particularly the medical sector of our business. But it is contributing a low return to the company and as we continually focus on things that are what we consider underperforming relative to our long-term goals, certainly trying to get the rest of the organization up to the mid-teens as far as return on investment, and we're dragging this older block of business along with a single digit return, it makes it much more difficult.

And so I don't think it's so much that it's in trouble as it is that there's a refocusing of our efforts on trying to find some kind of an economic solution to help our shareholder value.

Let's call it, in other words, under - profitable but underperforming.

Right.

That's right Eric, and again, this is Harold. Tom, you may this, but let me emphasize, when you look at the '95 returns, we're hitting pricing expectations, so that tells that we're in the mid-teens ROE. So the difference is becoming exaggerated, which says that we really do need to put more focus with capital behind that old block. To us it's rather axiomatic, and - but we are going to do it without seeing the right timing in the marketplace for a third party for example to see this to be appropriate for them as well. We've done, Bob, and you've done over your business career many reinsurance transactions. It's good we have an expert like here at the company. And we're going to rely on experienced people to make sure that we time any transaction correctly. Now, last part of your question, Eric, dealt with group life and how could we do without it if our example says we want to be a growth company.

I would only remind you of two important points. We don't strategically - we would try to create the appearance of a growth company with a commodity product. That's just not the nature of our specialty. This quarter, as you'll remember, we had group disability sales up 24 percent, that's our specialty. We had voluntary benefits up 23 percent, that's our specialty. Group life insurance was up only 8 percent in the US and only 3 percent of that was in large case, so what you'll hear us do, then with this is a segmented kind of decision, and more than likely, if we begin to pull back we began pulling some time ago and so

I'm not trying to stand a firm decision, but it's just like, in many respects, the IDI project. We are not going to offset improvement in one part of the business with commodity type returns in others, and we don't need to do that to have the kind of appearance of being a growth company because our other lines of business can provide that. Those are our specialties, there's growth opportunity in the marketplace, and that's where we wish to concentrate.

Thank you.

Thank you, Eric. Let...

Dial one if you'd like to ask a question.

Let me, operator, indicate that we'll take one question and then we'll be available, obviously, for individual follow ups the remainder of the afternoon.

Dial one to ask a question. There appears to be no further questions at this time.

Well, let me just say again, thank you for your time and your interest, as indicated by your detailed questions this morning. We have a to review the first quarter, and in many respects, not to minimize the need for us to continue to work hard, in many respects we would suggest that there is no substantial new news in this quarter. Group life and individual disability are the two primary areas of focus for our company, as well as continuing to react to the evolving needs of the marketplace. And that's around subjects such as absence management, and overall employee productivity within our corporate clients. Our integrated solutions appear to be working from a and we think that this is sustainable traction that we're finding in the marketplace.

So we want you to know that we remain focused as well as optimistic like while American-based businesses, looking forward to a little economic tailwind in the months ahead. So again, thank you for your time and we would look forward to your individual follow ups later in the day. That will end our conference call.

That does conclude today's conference. Thank you for your participation, you may now disconnect.