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Executives

Bob Cubbin - President & Chief Executive Officer

Karen Spaun - Chief Financial Officer

Analysts

Randy Binner - FBR Capital Markets

Douglas Ruth - Lenox Financial Services

Mark Dwelle - RBC Capital Markets

Ron Baldan - Capital Returns

Meadowbrook Insurance Group, Inc. (MIG) Q4 2012 Earnings Conference Call February 13, 2013 9:00 AM ET

Operator

Greetings and welcome to the Meadowbrook Insurance Group, fourth quarter 2012 earnings conference call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions).

It is now my pleasure to introduce your host, Ms. Karen Spaun, Chief Financial Officer. Thank you Karen. You may begin.

Karen Spaun

Thank you and welcome to Meadowbrook Insurance Group’s, fourth quarter 2012 earnings conference call. I will lead off today’s call with a review of our financial results. Bob Cubbin, our President and CEO will then follow with a review of our 2013 outlook and overall capital position. The call will conclude with a question-and-answer session.

During this call, we may make certain statements relating to the future results and expectations. These statements constitute forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995.

We therefore must state that actual results may differ materially from those projected and may involve risk and uncertainties that are outlined in our Forms 10-K and 10-Q that are filed with the SEC. Please note, Meadowbrook undertakes no obligation to update or revise any forward-looking statement.

If you have not received a copy of our earnings release, it is currently available on our website meadowbrook.com, or you may give me a call and I’ll be happy to email a copy to you.

Now, with the results. For the fourth quarter we had a net operating income of $47,000 or break-even. During the fourth quarter we terminated the Public Entity Excess Liability program and accordingly wrote-off a related intangible. The after tax impact of this write-off was a non-cash expense of $0.02 per share. In addition we have losses associated with Super Storm Sandy of $0.09 per share.

Excluding these unusual items, net operating income would have been $5.8 million or $0.12 per share. This compares the net operating income of $8.5 million or $0.17 per share in the fourth quarter of 2011. The remaining difference in the quarter reflects a $1.3 million lower investment income on an after tax basis and an increase in our current accident year combined ratio.

Our GAAP combined ratio was 104.5; Super Storm Sandy added 3.1 percentage points to the combined ratio in the quarter. Excluding the impact of Super Strom Sandy the combined ration would have been 101.4. This compares to 101.3 in the fourth quarter of 2011.

Our accident year combined ratio for the full year 2012 was 101.4 or 100.6 if you exclude the impact of Sandy. The prior accident year reserves showed very little movement in the quarter and they returned to a more normal level. This leveling off of prior year reserves reflects lower level of incurred loss activity and a return to a more stable historic patter in the claims data.

Our expense ration for the quarter was 31.1% compared to 32.1% in the fourth quarter of 2011. This improvement reflects a lower level of technology expenses and our ability to leverage internal expenses over a larger earned premium base.

Net investment income was $11.9 million in the fourth quarter of 2012 compared to $13.7 million in the fourth quarter of 2011. This decrease reflects a reduction in the pre-tax book yield and was partially offset by the increase in average invested assets.

As part of an effort to enhance our statutory surplus, we initiated a security sales program. We generated in excess of $500 million in proceeds and realized after tax gains of approximately $37.9 million in the quarter. We feel this is an extremely efficient and relatively low cost option to achieve the target surplus enhancement.

Comparing the present value of the realized gain benefit to the income reduction over the period of time shows favorable results from an economic value standpoint. We have maintained our disciplined investment approach and it’s with regard to reinvestment. There’s a no-material change with respect to the overall portfolio mix.

The allocation to all the portfolio sectors changed slightly with adding $50 million of an allocation to a high quality, high definite equity portion. Additionally we have about $80 million invested in short term securities and our investment managers are working on getting these dollars primarily invested in occurrence with our investment policy.

As expected, the impact of the surplus enhancement effort during the quarter has reduced our net investment income. Pretax and after tax book yields are lower as a result of acceleration in the income into 2012. The average pre tax book yield was reduced by 75 basis points from 3.8% to 3.05% during the quarter. The after tax book yield was reduced by 50 basis points from 2.9% to 2.4%.

We expect 2013 net investment income to be between $44 million and $45 million. The yields are subject to change and are based on the relatively trust business of taxable and tax exempt securities at the time of purchase.

Pre-tax profit from net commissions and fee revenue incased $1.6 million from $1.5 million in the fourth quarter of 2011 to $3.1 million in 2012. This increase in fee revenue of $635,000 reflects an increase in fees associated with reinsurance place and growth in our Michigan agency operations. In addition, we have a decrease in expenses of $1 million.

Lastly, general corporate amortization and interest expenses increased $3.1 million to $6 million in the fourth quarter of 2012 from $2.8 million in 2011. The fourth quarter of 2011 was favorably impacted by a reduction of the accrued variable compensation, which did not recur in 2012. This increase also reflects the $1.8 million pre-tax write off of the previously mentioned intangible assets.

With that, I will turn the call over to Bob Cubbin, our President and Chief Executive Officer. Bob.

Bob Cubbin

Thanks Karen and good morning everyone. While 2012 was a very disappointing year, we are pleased with the actions taken in the third and fourth quarters of 2012, to position us to return to profitability in 2013 and enhance our capital position.

As Karen mentioned, our net operating income, excluding the impact of Super Strom Sandy and the non-cash write-off of an intangible asset relating to a terminated program was $5.9 million or $0.12 per share. We expect this improvement in profitability to continue and increase in 2013.

If you exclude the impact of the quota share reinsurance agreement, our net operating income for 2013 is expected to be between $35 million and $40 million or $0.70 to $0.80 per share. Including the impact of the quota share, net operating income for 2013 is expected to be between $27.4 million and $32.4 million or $0.55 to $0.65 per share.

In the quarter our statutory surplus increased $79 million to $426.3 million at year-end 2012. Our gross written premium to statutory surplus ratio is reduced to 2.5 to 1.0 and our net written premium to statutory surplus was down to 1.9 to 1.0 at year-end.

We believe the capital enhancement resulting from the harvesting of the realized gain and entering into the quota share reinsurance agreement provides the capital flexibility to allow us to take advantage of the firming pricing in our markets and to rebuild our historic track record of stable underwriting results in an efficient and effective manner.

Our business model focuses on product and geographic diversification and fee based revenue, which enables us to balance our revenue sources, leverage our fixed cost and more effectively manage through market cycles.

Moving forward to 2013, gross written premium is expected to decrease to $970 million from $990 million. This decrease from 2012 reflects the previously announced termination of approximately $100 million of targeted business, where we determine prices to be in adequate or results were too volatile.

We expect this reduction in business to be offset by rate increases of approximately 7% to 8% and from select growth in existing programs. As Karen mentioned, our 2012 accident year combined ratio, excluding Super Storm Sandy was 100.6 and excluding the impact of the quota share reinsurance contract, we expect the 2013 combined ratio to improve to between 98% and 99%.

This improvement comes from, number one, the lessened impact of the unprofitable terminated business, which added 1.7 points to the 2012 accident year combined ratio and added 2.5 points for the calendar year. And number two, the beneficial impact of earned rate increases that are in excess of industry loss ratio trends, which will improve the combined ratio by approximately 2.4 percentage points over 2012. Offsetting these improvements will be a slight increase in the expected expense ratio, as we de-leverage at par.

In summary, we experienced an improving loss ratio picture in the fourth quarter and we got back to where we can and need to be; significant progress has been made. We are encouraged by the improving trends in our accident year loss ratios, the stabilizing of older year reserves, rate increases being achieved and the benefit of collectively reducing premium volumes in under performing segments of the business. We are confident that the appropriate corrective action has been taken and that continued evidence of the targeted improvements will emerge in 2013 and beyond.

With that, we’ll open the call to questions. Operator.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions). Our first question comes from Randy Binner of FBR Capital Markets. Caller, please proceed with your question.

Randy Binner - FBR Capital Markets

Alright, okay, thanks. Good morning everyone. So yes, I’ve got a couple of questions about the quota share. I guess first, we appreciate the kind of the call out between the profitability with and without the quota share. But I just want to understand the flow is a little bit better and so the way we are looking at it is, your underwriting income is probably on a pre tax basis like $3 million lower than it would be otherwise.

So kind of 1.5% of combined ratio on $200 million of premium and then your NII on a pre tax basis maybe $6 million lower, kind of assuming a 3% yield on a similar amount and that that $200 million is kind from of the owner and premium transfer and then also kind of what happens go forward.

Is that the right way to look at it to kind of get to that kind of $7 million or so after tax, the difference between what your planning to make in 2012 with the Swiss Re deal versus what you would make without it.

Karen Spaun

Yes, I think on the net investment income you’re a little bit high on that. Its closer to $1.5 million to $2 million. The rest of that decrease in net investment income is from the sale of the securities.

Randy Binner - FBR Capital Markets

So is the $1.5 million to $2 million pre-tax?

Karen Spaun

Yes, pre-tax of loss investment income.

Randy Binner - FBR Capital Markets

Okay. Well then, just if I may, if its okay, so that’s $1 million to $2 million pre-tax and the majority – I guess I’m having trouble getting it. If its costing 1.5% on the combined ratio and we’re looking at above these premiums of kind of roughly $200 million, I’m just having trouble getting into that math of how…

Karen Spaun

The premium on an annual basis will be more like $100 million, because you have a unknown premium that will earn out in 2013 and then you have your seated premium in 2013. So your premium numbers are a little bit higher.

Randy Binner - FBR Capital Markets

Okay. Maybe we should take it offline, but I guess I’m still, I’m not – it seems like – is there another element of the economic transfer to Swiss Re outside of the underwriting income and the net investment income?

Karen Spaun

No, no. I mean basically you’ve got $90 million in unearned premium, that we transferred at fiscal 31/2012, which we’ll earn now in 2013 and we have approximately $90 million to $100 million that we are going to see in 2013, so a portion of that is going to be earned in 2013. So this year’s a half of that, okay.

So then you have a slight in-scale commission. So between that and the loss ratio, that’s going to add approximately 1.2 to 1.5 points on the combined ratio or about $0.15 per share, and maybe I didn’t follow your number specifically.

Randy Binner - FBR Capital Markets

Well, I mean, I guess the difference here – I mean I guess maybe I should ask the question more simply. How would you confirm, analyze or breakout the piece of the delta, $7.5 million difference between what you would have made otherwise and what you plan to make, between underwriting income and net investment income.

Just to help us understand the numbers, because I guess like again we mentioned, I think we are both mentioning the same thing, the unearned premium transfer, as well as the business treated on a full basis. But if I’m 1.5, if I’m giving away 1.5 of combined ratio on that, isn’t that still only $3 million free cash or are you giving away more on that, the specificity of the business that gets to the higher pre-tax number on underwriting that’s given to Swiss Re?

Karen Spaun

Let me come back to that.

Randy Binner - FBR Capital Markets

Okay. Yes, I think that it would be helpful to kind of like understand the breakout better. We get the high level guidance, but just want to understand the flow is a little bit better.

And then on the quota share and I’ll drop back in; I’m sure there’s like questions, but could you kind of break out for us how is the capital free up from all this capital-raising program comes through.

You disclosed in the press release, you get $37 million now from selling the bonds and then there’s some seating commission, but I think most of that capital kind of frees up as the year goes on. I mean ultimately is it free of something like $150 million of capital, all these programs, between terminating business, between selling the bonds and between the quota share. Is that how we should think of kind of the capital free up from this whole program?

Bob Cubbin

Yes, that’s basically right Randy.

Randy Binner - FBR Capital Markets

Okay, got it.

Bob Cubbin

The different components you outlines and including the fact that its really on the statutory side with the unearned premium transfer at year end. That return to the seating commission that we had previously expensed on a statutory basis, it didn’t help the capital on a GAAP basis, but it improved the statutory capital by the amount of that seating commission that was returned. And then by reducing the net premium we then have basically freed up capital by lowering our leverage ratios, both at year-end and in 2013.

Randy Binner - FBR Capital Markets

Right, and so I guess now that’s the punch line, right, completing the circle. So is 1.6 doable, do you think or is 1.6 last of all, all set premium written over surplus by year end ’13, does that feel like an attainable goal?

Bob Cubbin

Yes, it does.

Randy Binner - FBR Capital Markets

Okay, I’ll leave it there.

Karen Spaun

Randy, if I can add on the quota share, the way to look at this is the one point, two point is the total consolidated combined ratio. So if we have for instance $850 million of earned premium before the quota share and $700 million after the quota share, if you took 1.2 points on $800 million that is $9.6 million tax. That plus the net loss in the net investment income is how you get to that differential. So you don’t…

Randy Binner - FBR Capital Markets

So, it’s that powerful. So on the $100 million or the $90 million of unearned premium reserves that’s transferred in on the 100 of seating, the actually – on that piece of business that’s seated, Swiss Re would capture more that 1.5.

Karen Spaun

Exactly, exactly.

Randy Binner - FBR Capital Markets

That’s what I was trying to get to.

Karen Spaun

When you laid that up the way you did, it threw me a little off, because I was thinking of it in a different way, so…

Randy Binner - FBR Capital Markets

Okay, understood. That’s a helpful clarification. Thanks.

Karen Spaun

Okay thanks.

Operator

Our next question comes from Douglas Ruth of Lenox Financial Services. Caller, please proceed.

Douglas Ruth - Lenox Financial Services

Good morning. When do you expect to hear something more from AMS?

Bob Cubbin

Well, we don’t have any specific date. We are in an ongoing dialog with AMDA and so we will continue to talk to them and share information and we don’t really have a specific date when we’ll expect any kind of action of decision.

Douglas Ruth - Lenox Financial Services

Okay, we can see the work that you’ve done. If you would really send a strong message to the investment community. If some of the officers and directors now would step off and buy some stock at this currently depressed price, I think that would really be helpful for all of us.

Bob Cubbin

We hear you and we appreciate that comment.

Douglas Ruth - Lenox Financial Services

Could you then talk about the different businesses and tell us about what parts of the businesses are working at this point.

Bob Cubbin

Sure. If you look at our accident year results for 2012, workers compensation, which is a big part of our business has been achieving significant rate increases. In 2012 our workers comp rate increases were about 9.2%. That helped to bring our combined ratio overall on that business to just above a 100. With anticipated additional eared rate and written rate increases in 2013, we expect to see that come down below a 100.

The liability line has performed pretty well. The accident year 2012 is about mid 90s combined ration and there again we are starting to see an acceleration in rate increases, particularly in the excess and surplus lines area.

As we commented in the past the auto liability line has been under-performing and has been above 110 combined ratio for that last few years. We did exit a trucking program, which was disproportionably impacting that combined ratio and coupled with the decrease in that premium buy and rate increases in other places, we expect to see that come down in 2013.

Property has been a significant problem I think for the whole industry over the last few years, and the property line has been under-performing the rest of the book. So with effect, underwriting changes and rate increases in certain geographic areas, we expect to see an improvement there.

Douglas Ruth - Lenox Financial Services

Okay, that’s very helpful. What about the fee income and then it seemed like you noted that the commission income had spiked higher.

Bob Cubbin

Yes, the fee business has been relatively flat over the last few years. We have seen a slight increase in the commissions, particularly in our Michigan agency, and we did have one acquisition, a small acquisition of a book of business that has had some modest growth.

So overall I would say that the fee-based business has been relatively flat over the last few years. But as prices firm in certain rates, we do expect to see an opportunity to growth that in the future, but we don’t really see that happening in the short term.

Douglas Ruth - Lenox Financial Services

Okay. Well, thank you for answering my questions.

Bob Cubbin

Thank you Douglas.

Operator

Our next question comes from Mark Dwelle of RBC Capital Markets. Caller, please proceed.

Mark Dwelle - RBC Capital Markets

Yes, good morning. A couple of questions, mainly related to guidance OpEx. On the gross rate and premium guidance so you did a variant $66 million for this year. You’ve commented that you shed around $100 million of premium related to the exited programs, we are looking to excess, etc. When I knock that off I get this sort of $966 million, which basically doesn’t leave any growth relative to the rate increases and the exposure units to your guidance.

So I guess what I’m asking is, is there more business that you are sort of intending to shed as an off set or do you really have few plans for new business growth. I’m just trying to kind of reconcile the two pieces together.

Bob Cubbin

Yes, that’s a good question. The way to reconcile that, is that as we go through our normal review process, we try to eliminate the bottom percentile of business in just about every class and line of business that isn’t meeting our target. So there are some targeted deceases in that termination of programs, but looking at cutting out certain geographies or classes of business within a program that may not be performing up to standards. So that’s a normal mix of business and underwriting decision making process, and it’s difficult to discern.

As you increase rates between 7% and 8% next year there is going to be certain areas that’s are going to be much higher than that and certain areas that will be lower. So we are not 100% certain as to the impact on premium volume from those rate increases. So we are expecting a little bit of additional runoff if you will by eliminating business by raising rates pass through the market will allow.

Mark Dwelle - RBC Capital Markets

Okay, that’s helpful. Same question kind of also in the sprite of guidance; you’ve commented on net investment increase, tax net investment income between $44 million and $45 million. So thinking about that purpose, that works out to around $11 million a quarter.

I realized the fourth quarter run rate is skewed by the fact that the front end of the quarter you would have had a lot of the securities that you ultimately sold later in the quarter. So is the way to think about that as kind of the first half of the year starting point going to be a run rate that’s sort of below $11 million and then it will ramp up. I’m just trying to think through how that model, kind of $11 million average per quarter.

Karen Spaun

I’d probably – there wouldn’t be that much incremental difference from quarter-to-quarter, but I would start off lower, because we don’t have all the proceeds reinvested yet. But then the differential is not going to be that substantial from quarter-to-quarter. It’s going to be a little bit of growth each quarter.

Mark Dwelle - RBC Capital Markets

Okay. Last question I had and I maybe confusing some of these, the public entity access program that you had, did you have some fee income that was associated with that as well, that would go away or am I mistaken on that line of business.

Karen Spaun

No, I think you might – we had fee income with the USSU acquisition.

Mark Dwelle - RBC Capital Markets

That could be it.

Karen Spaun

So fee income with a lot of the public entity access.

Bob Cubbin

We do have fee business where we manage public entity programs. Those are self-ensured programs and those are fee businesses in Michigan and Minnesota in particular and in Alabama. So we do have fee businesses where we manage self insured programs for municipality. That may be what you are thinking off.

Mark Dwelle - RBC Capital Markets

Probably as I think between USSU and all those other different pieces, so the bottom-line answer I guess thought is that, in terms of what you terminated will not resolve in any reduction in fee business.

Karen Spaun

That’s correct.

Bob Cubbin

That’s correct.

Mark Dwelle - RBC Capital Markets

Got it. That’s all my questions. Thanks.

Karen Spaun

Thanks Mark.

Operator

Our next question comes from Ron Baldan of Capital Returns. Caller, please proceed with your question.

Ron Baldan - Capital Returns

Thanks. Good morning Bob and Karen.

Bob Cubbin

Good morning.

Ron Baldan - Capital Returns

Hey, I have just a couple of questions and I’m sorry if I missed it, I got on late. The Swiss Re reinsurance transaction, what’s the term of that. Could you describe how much is related to the term and cancel ability please.

Karen Spaun

Sure, it’s a one-year contract and we can terminated it based on our options and we could renew it based on our options, depending on whether we need it or not. It’s all prospective reinsurance. So it’s the unearned premium that we transferred on 12-31-2012 and the premium that we will see in 2013.

We’re seated by that $90 million in that 12-31-2012 and we expect to see between $90 and $100 in 2013. It’s a cross section of our overall book of business. Again, its prospective, so none of the terminated business is included in the quota share.

Bob Cubbin

Yes, it’s very flexible Ron. We can keep it place unless we need it.

Ron Baldan - Capital Returns

And so there’s no particulate breakage cost. It can have a one year life for example and you choose that you want to non-renew it, it would…

Bob Cubbin

No, there’s no break up fees or any kind of catch; there is no termination fees.

Ron Baldan - Capital Returns

Okay, and I’m sorry if you covered this when you disclosed it originally, funds withheld or funds not withheld.

Bob Cubbin

No, it’s Swiss Re, so they’ve got a very good balance sheet.

Ron Baldan - Capital Returns

No, no, I mean are you managing the – do you enjoy the benefit of the investment returns on the…

Karen Spaun

No.

Bob Cubbin

We see the…(Multiple Speakers)

Ron Baldan - Capital Returns

Okay, thanks. And then I presume with the realized gains that you took, that naturally you’d have the biggest benefit from selling the longer dated bonds. It would have the sort of the fattest unrealized gain position. And so I’m wondering about your asset liability matching going forward or are you sort of suffering the consequences of them having to reinvest this in longer dated and unfortunately low yielding assets in order to maintain the asset liability duration.

Karen Spaun

Our duration before the sale was 4.9. After its completed its going to about 5.1, 5.2, and what every year we go through is strategic asset capital allocation study, where we match the duration of our liabilities and assets, and those studies indicate that with our liabilities we should be able to extend or we should be extending our assets up to 5.2 years.

So its right in line with what we’ve had before and the credit quality of the reinvestment is consistent with the credit quality of our existing and the duration risk or the interest rate risk is pretty much in line.

Ron Baldan - Capital Returns

Okay and my last question on the balance sheet, you got good will identified. I assume that there is some intangibles inside of other assets. Could you give me the intangibles should your, then again I presume its part of other assets.

Karen Spaun

Yes. I believe its somewhere between $25 million and $30 million, I don’t have the exact number in front of me.

Ron Baldan - Capital Returns

That’s fine, that’s close enough. That’s very good. Okay, thank you very much and best of luck.

Bob Cubbin

Thanks Ron.

Karen Spaun

Thank you.

Operator

Our next question is a follow up from Randy Binner of FBR. Caller, please proceed.

Randy Binner – FBR Capital Markets

Okay, so I wanted to talk about just kind of the California’s comp in particular, given that its 25% business. Could you kind of share some metrics with us, either kind of where your 2012 accident year loss or your combined ratio came in versus 2011? What pricing you got there in the fourth quarter and for the year? And then I guess I’ll give you everything and discuss like how you view the impact of the reforms there with the senate bill 863 going forward.

Bob Cubbin

Okay, the 2012 California work comp accident year combined ratio improved to 99.5 from 101.3 in 2011 and a lot of that is driven by the higher rates. In 2012 California work comp, we had a 13.1% achieved written rate increase, which then totaled up cumulatively over the last three years to roughly 33% increase. Loss ratio trends in California proved to be roughly 3.1, so we are hitting significantly higher rate than the industry loss ratio trends appear to be.

In terms of the 863 reforms, based on our analysis, our actual rate participate in their committee. We think it’s going to have an overall positive effect, we certainly don’t think it will be negative. How much of a positive impact will emerge in 2013 and 2014, but it should have some immediate beneficial effects into 2013. How significant those will be remain to be seen.

We remain very optimistic that the actions we’ve taken in California are helping immensely and that the market will allow us to continue to achieve additional rate increases in 2013.

Randy Binner – FBR Capital Markets

Okay, and so then I guess on looking at 2013, what’s your anticipation of kind of where your accident loss, so your claim for minor issue will be for the California comp.

Bob Cubbin

With the earned rate improvements we certainly should come down from the 99.5. So as we look at our business overall, I think 95 to 96 combined ratio should be achievable, based upon the rates that we’ve already gotten on a written basis coming through into the earned premium, coupled with the reforms and actually in certain areas we are getting even higher rate increases. So 95 to 96 on that should be achievable in 2013 on an accident year basis.

Randy Binner – FBR Capital Markets

Okay and then, obviously that’s improved and then do you think rates are going to continue to increases at a similar level. I mean you are in the double digits for 2012 and your accumulative increase indicates that double digit kind of per year. Do you think you can have another double-digit rate increase kind of outlook again for California comps in 2013?

Bob Cubbin

Yes, we think that’s feasible and we got to make sure that we continue to out pace the industry loss ratio, and then judging based on how much the 853 reforms help, but yes, I think we are pretty optimistic that the market will allow for that kind of a change. It certainly seems to be cooperating to this point and even in the fourth quarter I think we had better rate increases than we had been budgeting and anticipating.

Randy Binner – FBR Capital Markets

Right, like so WCRB said that the 863 reform would benefit loss cost trends overall by I think 2% or 3%. I know you kind of want to wait to see what happens, but does that sound right. There would be something like that on loss cost trend.

Bob Cubbin

Again, we want to be a little more conservative on that expectation, but that would probably be the upper end of the range maybe and a more conservative kick would be just slightly below that.

Randy Binner – FBR Capital Markets

All right, that’s helpful. Thanks.

Bob Cubbin

Thank you.

Operator

It appears there are no further questions at this time. I’d like to pass the call back to management for closing comments.

Rob Cubbin

Okay, thank you all very much. We look forward to an improved 2013 and we appreciate your interest and support. Thank you.

Operator

This concludes today’s teleconference. You may now disconnect your lines at this time and thank you for your participation.

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