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ProAssurance Corp. (NYSE:PRA)

Q4 2008 Earnings Call

February 25, 2009 9:30 am ET

Executives

Frank O'Neil – SVP of Corporate Communications & Investor Relations

Stancil Starnes – Chairman & Chief Executive Officer

Edward Rand – Chief Financial Officer

Howard Friedman – Chief Underwriting Officer, Chief Actuary, SVP & Co-President of Professional Liability Group

Darryl Thomas – Senior Vice President & Chief Claims Officer, Co-President of Professional Liability Group

Victor Adamo – President

Analysts

Mark Hughes – SunTrust Robinson Humphrey

Mike Grasher – Piper Jaffray

David Lewis – Raymond James

Michael Nannizzi – Oppenheimer & Co.

Operator

Good day everyone and welcome to the ProAssurance 2008 year end conference call. As a reminder this call is being recorded. Now I would like to turn the call over to Mr. Frank O'Neil. Please go ahead.

Frank O'Neil

Thank you, [Jennifer], and thanks everyone for joining us. The news release we issued yesterday afternoon and our SEC filings, including this morning's 10-K filing, included disclosures with respect to forward-looking statements. In that regard please understand that many of the statements we make today will deal with projections, estimates, expectations and are thus explicitly identified as forward-looking statements subject to various risks. Our actual results could differ materially from current projections or expectations.

Our SEC filings have a listing of risks you should understand about ProAssurance. We will not undertake, and we expressly disclaim, any obligation to update or alter forward-looking statements whether it is a result of new information or future events except as required by law or regulation. The content of this call is accurate only on Wednesday, February 25, 2009, the date of first broadcast. If you happen to be reading a transcript of this call, please note that we did not authorize it, nor have we reviewed it for accuracy. Thus, it may contain errors that could alter the intent or meaning of our statements.

On the call today is our Chairman and CEO, Stan Starnes; our President Vic Adamo; Chief Financial Officer Ned Rand; Chief Underwriting Officer Howard Friedman; and our Chief Claims Officer Darryl Thomas. All will have a part today, but Stan will open our remarks.

Stancil Starnes

I wanted to open the call because I want to highlight our very strong results in a very, very difficult market. By many measurements, 2008 was the strongest year we've ever had. In a year where losses reduced the stockholders' equity of many companies by double digit amounts, we grew stockholders' equity by 13% and increased book value by 10%.

In a year where companies' investment portfolios suffered significant losses, our prudent investment management limited the damage to our investments. The number of cases against our insureds declined as loss trends remained moderate.

And those moderate loss trends were a factor in modest premium declines during the year. We maintained our historic level of reserving because nothing, not even the current malpractice climate, lasts forever and we want to be ready.

Importantly we introduced Treated Fairly in the fourth quarter as the standard by which everything we do will be guided. And I am confident that the applications of the principles embodied by Treated Fairly will result in a continued strengthening of our performance as an organization.

I am emphasizing Treated Fairly because I want everyone our organization touches, and everyone within our organization, to understand how committed we are to the notion that everyone we encounter will be treated with fairness and respect.

Treated Fairly is becoming a way of life at ProAssurance and is gaining traction with our insureds and with our agents. Physicians tell us that they are frustrated with being treated as pawns in today's medical legal system and really welcome our commitment to giving them an explicit voice in the decisions that have such a direct effect on their future.

In 2008 we applied the same sound insurance management that has characterized our operations since our founding. Those principles are the heart of our operations today and set the foundation for success in the years to come.

I've said before and I say again, as excited as I am about our business today, I'm even more excited about the future given our operational discipline and the M&A success we had in 2008. Frank?

Frank O'Neil

Thank you, Stan. Ned, will you walk us through the financial results?

Edward Rand

Happy to, Frank. Thanks. Stan highlighted our operational success and I'll start there before recapping our investment results. Because the operational trends for the fourth quarter of 2008 largely mirror those for the year, my comments will focus on the quarter and comparisons to the same period last year. I'll touch on a few year-to-date comparisons, but for the most part I'll refer you to this morning's 10-K filing for the majority of our yearly numbers.

As with last quarter, we are reporting our results on an operating income and net income basis. We believe operating income results, which exclude the effects of realized gains and losses and the gain from the retirement of our debt, provide a clearer picture of what our core operational strategy accomplishes.

On an operating basis, our bottom line was up 47%, and operating earnings per diluted share of $2.36 was up 53% over last year, a direct result of our operational success in a challenging insurance market and difficult financial environment. The top line was down 11% in the quarter due to the expected decline in premiums. The insurance market continues to be challenging which Howard will address next.

Our net loss ratio was a negative 1% in the quarter. Let me briefly explain why. We recognized net favorable reserve development of $104 million in the quarter. Howard will go into more detail, but in general, this development simply reflects our improving loss experience and that effect it has on our expectations for future pay outs.

As in previous quarters this year, our variable expenses such as commissions and premium taxes decreased in line with the premium decline while our fixed costs remained relatively flat. Declining premium resulted in an increase in the expense ratio, up 1.4 points over last year's fourth quarter. The combined ratio and operating ratio both benefit from the net favorable reserve development and we believe both reflect the strength of our overall operations.

A few other successes I want to highlight. First, we grew book value per share 10% in 2008, and stockholders' equity grew 13% in the year. In spite of remaining under-leveraged from an operational perspective, we earned a return on equity of 13% based on net income which is in line with our long-term goals. We're proud of these accomplishments, especially in a difficult year. We feel our results demonstrate our commitment to building shareholder value and financial stability, insuring we are a long-term source of insurance for our customers.

The financial markets did affect our investment portfolio in the quarter, but our net realized investment losses were lower than in the prior quarter. Here I'll mention the losses in the year and the quarter. In Q4, investment losses were $10 million and for the year $51 million.

While a $51 million loss is certainly not desirable, these realized losses represent less than 2% of our portfolio and we view it as manageable given the size and quality of our portfolio. Included in our $10 million of realized losses in the quarter, were $10.9 million in other than temporary impairments, the largest being a $2.9 million impairment of a non-agency mortgage-backed security, and a $1.8 million impairment for our distressed debt portfolio.

For the year, other than temporary impairments were $47 million. We also had a loss of $3.5 million on our trading securities in the quarter and all of these losses were offset by $4.5 million in gains from our available for sale securities. Let me remind you that the majority of our equity portfolio is classified as trading, with fluctuations in fair value recognized as realized gains and losses from period to period.

We continue to be conservative in the deployment of cash and in new investments, accumulating more cash and short-term investments than we have historically held. We are being very cautious about any money we put to work long-term.

For those of you who may not know, our entire investment portfolio updated through year end and enhanced to include additional descriptions and categorizations is available in the Investor Relations section of our website. The vast majority of our holdings continue to be in government and agency securities, and the overall rating remains AA.

Turning to capital management, in the fourth quarter we acquired $23 million of our trust preferred debt. We paid $18.4 million for those securities, and thus realized a pre-tax gain of approximately $4.6 million. We did buy back shares in the quarter, acquiring 164,544 shares of our common stock at a cost of approximately $7.2 million. For the year, we repurchased 1.8 million shares at a total cost of $87.6 million using funds from our August 2008 and April 2007 authorizations. Right now we have approximately $74 million remaining in our authorization to repurchase shares and debt.

Frank?

Frank O'Neil

Thanks, Ned. Howard, can you give us a review of reserves and talk to us about overall trends at year end and maybe then follow up with some insight into 2009?

Howard Friedman

As Ned said, there was $104 million of net favorable reserve development in the quarter which makes net favorable development for the year $185 million. This is primarily from accident years 2004, 2005 and 2006.

Let's be clear that this net favorable reserve development results from a consistently applied evaluation process and represents the result of disciplined pricing and operations at a time when the loss costs indications were dramatically different than today.

While the improved loss climate is reflected in our current pricing, we have not changed our historical reserving discipline. We are not deviating from what's worked in the past. We understand that volatility, in some cases extreme volatility, will always be a part of medical professional liability and we are doing what it takes to insure that ProAssurance is prepared for it.

Our policyholders and shareholders both benefit from our long-term view and success. You can see that long-term conservative view in our 2008 loss [pick] of 86.4%, and the current accident loss year ratio of 94% in the fourth quarter. The increase in the loss ratio to 94% in the fourth quarter is primarily the result of $10 million of additional expected loss costs.

Five-point-eight million dollars is attributable to an increase in the reserve for the death, disability and retirement benefits under our claims and [aid] coverage based on a periodic re-evaluation of the expected cost of those benefits. Four-point-two million dollars is attributable to an increase in the reserve for internal claims handling expenses. Or ULAE as it's known which is also re-evaluated on a periodic basis.

Neither of these items is attributable to a change in the current claims environment. Let me say that again for clarity, neither of these items is attributable to a change in the current claims environment. Without these two adjustments the loss ratio for the quarter would have been 84.9% quite comparable to the 83.9% both for the third quarter of the year and the 84% loss [picked] for the first three quarters of 2008.

Although it's been nine years we still remember the painful lessons that 1999 and 2000 taught our industry and its investors. Rate levels have come down primarily in response to reduced claim frequency. However, we're determined not to repeat those hard lessons based on our belief that today's lower loss environment will ultimately revert to historic levels so we are being as conservative today as we were in the years past.

Now turning to the state of the insurance market, we're encouraged by our ability to retain 88% of our business in 2008. Our overall premium level on renewing policies was down just 6%. That decline is based on our actuarially-driven pricing models which ensure that we charge an adequate rate for each risk that we write. That helps us maintain the margins needed to help us emerge from the soft market in a strong financial position.

Along those lines I can report that claim frequency per unit of exposure was essentially flat for the year. The quarters bounced around a bit, up one, down the next, but overall it looks like frequency is no longer dropping. Severity continues to move upward as well but in a manageable and expected rate and is lower than the historical levels upon which we based our projections when initially setting reserves.

As for the marketplace overall it's still very competitive but we're holding our own and we have been seeing more opportunities to write new business at rates we believe will meet our profitability objectives.

In summary we have taken a careful approach to underwriting and pricing for the past few years as the market softened and we're seeing the benefits of that strategy. We might have been able to write more premium volume but we don’t think that we would have produced results that are better than this. Growth in the top line by writing more policies at lower rates would have done nothing to enhance our profitability. It would have only increased our risk profile without increasing the long-term financial strength that is vital for our policy holders.

Frank O'Neil

Now let's turn to Darryl Thomas to get a comment on claims.

Darryl Thomas

I believe it goes without saying that lower frequency means lower lawsuits for us to manage. Reported claims are down and they have been declining for a few years. In today's environment there are just not as many cases to try due to lower claims inventory but we're just as diligent as ever preparing for trial. With the number of reported claims down we have the ability to bring significant resources to bear on each case and we continue to have success in the courtroom.

In 2008 the open claims declined significantly from 2007. The number of claims tried to a jury verdict went from 723 in 2007 to 481 in 2008. This continues to be especially meaningful in our key states where the number of claims we tried to a jury verdict again exceeded our competition and again demonstrates our desire to stand by our insureds.

Frankly our number of trials each year may mean little or nothing to you, because no competitor that we know of is willing to share their trial numbers with you. I am confident that they would be much lower than ours.

You are aware that our defense posture is the key point of differentiation for us and it's in keeping with our Treated Fairly philosophy. However, our relationship with our insureds is more than a number of trials each year although that's a good barometer of our willingness to going the distance with them in those venues where circumstances permit.

It says that we are willing to listen to our insureds most of whom want and expect a strong defense of their claims. It also says that we are ready to use our balance sheet wisely to stand with them even when the stakes are high.

Frank?

Frank O'Neil

Good stuff, guys, and Vic, we're going to ask you now for a operational update, especially if you could touch on PICA, Mid-Continent and Georgia Lawyers.

Victor Adamo

Let me start with PICA since it's still in progress, PICA or more formerly Podiatry Insurance Company of America is the nation's leading writer of professional liability insurance for podiatric physicians and the second largest writer for chiropractors.

In 2008 PICA had a strong year with almost $96 million direct written premium and policy holder retention in the mid 90s. As we announced in January, all the regulatory approvals have been granted in connection with our sponsored demutualization of PICA. PICA has mailed the required documents to its policy holders and a special meeting to record the final vote will be held on March 31st. We anticipate closing early in the second quarter.

Mid-Continent is a general agency that focuses on professional liability insurance for ancillary healthcare professionals and facilities. It also provides some other miscellaneous liability coverages. Mid-Continent will continue to operate from its home office in Houston and will work with its existing marketing channels.

Mid-Continent produced about $26 million in total premium in 2008; about $20 million of that was in the healthcare arena. Although we did have we did write some of that existing business we only wrote $2.5 million of that premium. We are looking for good premium growth during 2009 as the majority of Mid-Continent's healthcare business will be written by ProAssurance.

There are some parts of the Mid-Continent business that aren’t healthcare related and will not be written on ProAssurance paper. Mid-Continent will continue to place this business with other markets and earn commission and fee-based income for ProAssurance.

When PICA and Mid-Continent are viewed together they represent a major expansion in the scope of our underwriting and marketing effort to a broader healthcare clientele. We're quite excited about this expansion which positions ProAssurance very well for the future.

We also have been working to grow our lawyer's professional liability book. In early February Georgia Lawyers Insurance Company became a part of ProAssurance. Key personnel remain in place in Atlanta to serve Georgia customers and solicit new business. Early reports indicate good acceptance of ProAssurance among the small to medium-sized law firms in Georgia that are our target market.

We're also seeing premiums begin to flow from the two underwriting agencies we signed to bring us legal professional liability business from the Mid-Atlantic and the far West. It's too early to know how much premium they will generate, but we're confident they will also contribute to a solid book of profitable lawyer's professional liability business.

One final operational note, last fall we announced that we would be renaming our insurance subsidiaries to reinforce the ProAssurance brand. As you saw on the final pages of our earnings release all of our major subsidiaries now proudly bear the name ProAssurance. We believe that operating under one brand will enhance ProAssurance's recognition in the marketplace.

Frank?

Frank O'Neil

Stan, we're going to come back to you for a wrap up. I know you wanted to mention Treated Fairly one more time.

Stancil Starnes

We talked earlier about Treated Fairly and our insureds, but Treated Fairly is also about what our investors should expect. We think it's fair to align our incentives with shareholders to ensure that we have a significant financial stake with you and we do.

We think it's fair to ensure that we manage the business to produce a profitable return, this year and into the future. We think it's fair that you know exactly what's in our investment portfolio, so as to remove any doubt in your mind about the stability and conservative nature of the portfolio. So we post it on our website.

I want to emphasize again the pride we take in our company and its results. Everyone in this room is well invested in ProAssurance and brings to the table every day a dedication to ensure that we will not be outworked by any one in any facet of our business. If you can think of something we should be doing better or different, please share it with me or one of our senior management team.

Frank?

Frank O'Neil

Thank you, Stan. [Jennifer], I think we're open for questions if you will open the line and tell everybody how to ask that question.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from Mark Hughes - SunTrust Robinson Humphrey

Mark Hughes - SunTrust Robinson Humphrey

Could you talk about sequential pricing trends? You talked about down 6% year-over-year, what are you seeing more recently?

Howard Friedman

Yes, in the fourth quarter we did have about a 6% reduction in price on renewing business. I would expect that and this is my personal opinion, I would expect that we would see somewhat of a moderation of that as we go into 2009. Just the sense of the market, the feel of the market right now is a little less price focused and I think policy holders are a little bit more concerned about company that they're insured with, not as inclined to look around in the marketplace.

So my sense is that 2009 as we move through the year we'll see a lower rate of decrease. I think pricing will still be down for the year on renewing versus expiring policies, but my sense is that it will be less than the 6%. I don't want to put a number on that right now.

Mark Hughes - SunTrust Robinson Humphrey

Right and then the uptake in current year loss you described the $10 million. Is that a little bit higher level of spending or losses expect to be sustained? Should we think about the 86.4% or I think you described maybe an 84.9% loss without the $10 million. What should we think going forward?

Howard Friedman

I'd say the – what I tried to describe there in the presentation was that the $10 million addition really does not relate to the current loss environment. It relates to two things that are categorized as losses certainly but not related to the frequency or severity that we're experiencing in the environment.

The death disability and retirement reserves relates more to the age distribution of our insureds and the interest rates that are expected to be earned in the future for that particular policy benefit and the unallocated loss adjustment expense adjustment really relates to the relative cost of running off the claims as a reserve that all assurance companies are required to carry and it's a reserve that looks at the internal operating costs related to claims run off it.

The company was – decided to stop writing business. So again, they're more expense. It's more of an expense-oriented reserve not a loss cost environment reserve, so I would say that the number excluding that $10 million is much more like the run rate that we're looking at.

Operator

Our next question is from Mark Grasher - Piper Jaffray.

Mark Grasher - Piper Jaffray

Wanted to follow up on Mark's question just in terms of the states that you're seeing more firming than others, if you could comment on that?

Stancil Starnes

You know we have historically treated our book of business as a unified book and have really not mapped out a road map for our competitors by singling out any one state, so if you'll accept our willingness to say no comment, but just it's our general business. We'd like to give you that answer.

Mark Grasher - Piper Jaffray

Okay, fair enough and if you could now I think you mentioned some write-down on the distressed debt in the portfolio. Does that take into account the high yield? Is that the same category or are we talking about the same investments?

Howard Friedman

No. We have two I guess kind of alternative investments on the debt side. We've got a high yield debt portfolio and then we have a distressed debt portfolio that's a limited partnership in which we're invested in.

Mark Grasher - Piper Jaffray

Okay, and then on the high yield are any concerns there, just looking through the K and seeing the unrealized position in that, any comments on that?

Howard Friedman

Well the high yield debt portfolio we carry as an investment in a sub basically and so it's mark-to-market through the income statement every quarter.

Mark Grasher - Piper Jaffray

Okay, fair enough and then just a question for Vic, you brought up the cross sell opportunities. What are you doing in advance in terms of prior to the close, or not close but hitting the ground running here on the deal, with regard to your field in terms of trying to bring in the podiatry for the full organization?

Victor Adamo

Well PICA will continue to run as it has. It has the lion's share of the podiatric business and will continue to operate out of Nashville doing that. The other parts of PICA though that work with other healthcare providers, they do some miscellaneous E&O, is very complementary to what Mid-Continent does although Mid-Continent writes on an excess of surplus lines basis.

And as an example just this afternoon we're having a meeting that includes Mid-Continent, PICA, the core ProAssurance to sit down and talk about how we can expand some of these opportunities, look at ways to work together. So we're very conscious if it and working on it. Obviously PICA hasn't closed yet but we look at the combination of Mid-Continent and PICA as a great opportunity for ProAssurance to expand further into liability areas that traditionally it has not written.

Mark Grasher - Piper Jaffray

And you're saying second quarter is the close?

Victor Adamo

Early in the second quarter PICA will close, yes.

Stancil Starnes

And Mark, just to supplement and emphasize one thing for our future podiatric physicians, after the close the core insurance activities relating to our podiatric insurers that is risk management claims, underwriting, all the things that touch podiatrists will continue to be handled by PICA out of Nashville.

Operator

Your next question comes from David Lewis - Raymond James.

David Lewis - Raymond James

Ned, I got on a little bit late but can you go through kind of what your current portfolio yield is, what your new investments are? I guess what I am trying to get to is there anything unusual other than short-term rates that have continued to put pressure on the net investment income line?

Edward Rand

Two different questions. One, where are we putting money? We are holding more cash and more in short-term investments than we have historically held, so as money's rolling off the portfolio we're pretty slow to reinvest it and that's one thing that's bringing down investment income; it's just that we don’t have as much invested in longer term investments. And that gets compounded by the 300 basis point decline in short-term rates.

We are putting money to work very cautiously. We've purchased some FDIC insured paper. We bought some pre-refunded municipal bond. Very selectively we are buying corporate notes, but it's – we're very cautious in what we're doing given the current environment.

One of the other items that drove a decline in investment income in the quarter is we have an allocation to TIPS and they actually produce given the deflation concerns actually produced a negative return for the quarter and brought investment income down by about $1 million.

David Lewis - Raymond James

And if we look at the TIPS going in the first quarter then that should be leveled out because the impact already occurred in the fourth quarter is that correct?

Edward Rand

We believe that should be our expectation, yes.

David Lewis - Raymond James

So if we take something in the $36 million, $37 million range going forward and assuming nothing changes in short-term rates that's maybe a good starting point?

Edward Rand

That's what you guys get paid the big money for David.

David Lewis - Raymond James

But your allocation probably is not going to change materially.

Edward Rand

No we don't expect the asset allocation to change. Be mindful of the fact that we're holding a lot in cash in short term and the return on that cash in short term is very small if anything.

David Lewis - Raymond James

Okay, and do you have a sense of the alternative investment values so far for the first two months and I think you actually report that on a month lag, so maybe actually over the past three months?

Edward Rand

Sure there's only one investment that we report on a one month lag and it doesn’t really represent a material portion of that alternative portfolio. Everything else is reported on a current basis and I don’t know that we've gotten any strong indications one way or the other for the first quarter yet.

David Lewis - Raymond James

All right and then since you retired some debt, what's probably a good quarterly interest expense run rate here?

Edward Rand

That again, give us a second and we'll come up with it, basically what remains of the debt about half of it is fixed and half of it floats at 385 over LIBOR. There's some more detail – the easiest probably way to get that is in our K which we filed last night; should have posted this morning, has a breakdown of the debt.

David Lewis - Raymond James

Okay, that'll be helpful. I can do that. And Stan do you want to just comment on any changes in M&A activity that you see out there in the marketplace and I don’t know if all the kind of mutual companies have reported but I guess I'm wondering whether there have been any significant deterioration in capital levels that might create opportunities?

Stencil Starnes

No, they haven’t reported yet so we're not able to answer that question with any specificity. Given the levels of equity investments in some companies one would expect that to be a possibility. Overall I would say that the M&A chatter as we call it, is probably not quite as crisp as it was a year ago and I think that's principally a result of the uncertainty that's in the world right now and the dislocations that have occurred in the credit markets.

One thing that I do think is that as capital is king today and there's nothing more important for a company to have going forward than capital and that puts us in a position to take advantage of these opportunities as they occur.

Operator

Your next question comes from Michael Nannizzi – Oppenheimer & Co.

Michael Nannizzi – Oppenheimer & Co.

Just a quick question, Howard, on PICA if I might. Given ProAssurance's reserve approach, have you kind of looked at how when you bring the PICA book in and kind of pull it together with Pro's book, is there going to be, I mean was their reserving philosophy similar to Pro Assurance in terms of its conservatism? Is there going to be a period of adjustment or kind of how do you see that working out? Thanks.

Howard Friedman

Sure. We look very carefully at PICA's reserving as we would any acquisition and we were very comfortable with what we saw. PICA has historically utilized [inaudible] has their independent actuarial consultant just as we do. They also have an actuary on staff so I would not foresee any significant adjustments once PICA becomes part of ProAssurance.

Michael Nannizzi – Oppenheimer & Co.

And then in terms of the reserving as you go forward, I mean I know that Pro's typically reserved a little bit more to account for the uncertainty on a I think it was eight points roughly on an action year basis. Is that same approach going to follow with business booked out the PICA platform?

Howard Friedman

I would say yes in general, but the one thing I would say about PICA when you look at the profile of the book of business that PICA has it's a generally much more predictable, less volatile book of business in terms of claim severity. So I would say yes, PICA is going to be part of ProAssurance and we have one overall reserving philosophy, but in terms of the, if you will, the risk margin that might be attributable to PICA's reserves, I'd say that would be less than the physician and hospital lines of business that predominate in the existing ProAssurance reserves.

Operator

We'll now take a follow-up from Mark Hughes – SunTrust Robinson Humphrey.

Mark Hughes - SunTrust Robinson Humphrey

Thank you. The premiums seeded were a little higher in the quarter. Should we expect that to continue?

Howard Friedman

There really have been no significant changes in the reinsurance program. I think that probably the seeded premium change is more due to mix of business than anything else. There's always going to be some adjustments particularly at year end when we look at the retrospective rating, or retrospectively rated insurance contracts that have to be trued up with respect to loss experience. But I don't – I wouldn't attribute that to anything unusual.

Mark Hughes - SunTrust Robinson Humphrey

Okay, and then can you share your success rate when you took cases to trial this year versus last year?

Darryl Thomas

Yes, we did better this year, or we did better in 2008 than we did in 2007. However, we didn't try as many cases as I indicated simply because we don't have the inventory that we've had in previous years due to lower claims frequency.

Stancil Starnes

Mark, this is Stan, and I would also add to that that a so called success rate is utterly meaningless unless you know how many cases a company tried. So it would be possible to have a success rate of 100% if you picked out one case during the year to try. So I think we need to be very careful when we talk about success rates. A far more significant figure in my view and one that's a far better barometer of a company's commitment to its insureds, are the number of cases it's willing to take to trial. And nobody else in the country, so far as I know, is willing to give you that number.

Mark Hughes - SunTrust Robinson Humphrey

Understood. The 2008 open claims count you suggested was down. Are there any specific numbers you can share?

Darryl Thomas

Yes, we're not going to share specific claims numbers on our claims counts.

Howard

Mark, we'll file our statutory statements within end of next – end of this week, early next week. And you can dig into Schedule P and there are some claim count information in there.

Mark Hughes - SunTrust Robinson Humphrey

Right. Exactly. Thank you.

Operator

There are no other questions in the queue at this point. And Mr. O'Neil it appears that we have no further questions.

Frank O'Neil

Very good. We will speak to everyone when we discuss our first quarter 2009 results if not sooner. Thank you.

Operator

That does conclude our conference for today. Thank you all for your participation and have a great day.

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