Allied World Assurance Company Holdings' CEO Discusses Q1 2014 Results - Earnings Call Transcript

Apr.24.14 | About: Allied World (AWH)

Allied World Assurance Company Holdings, AG (NYSE:AWH)

Q1 2014 Earnings Conference Call

April 24, 2014, 9:00 AM ET

Executives

Sarah Doran - Senior Vice President, Investor Relations and Treasurer

Scott Carmilani - President and Chief Executive Officer

Tom Bradley - Chief Financial Officer

Grossack - Chief Actuary

John Gauthier - Chief Investment Officer

Analysts

Matt Carletti - JMP Securities

Charles Sebaski - BMO Capital Markets

Mike Nannizzi - Goldman Sachs

Dan Farrell - Sterne Agee

Amit Kumar - Macquarie

Ian Gutterman - Balyasny Asset Management

Operator

Good day and welcome to the Allied World Assurance Company First Quarter of 2014 Earnings Conference Call and Webcast. (Operator Instructions) Please note this event is being recorded. I would now like to turn the conference over to Sarah Doran, Senior Vice President, Investor Relations and Treasurer. Please go ahead.

Sarah Doran

Thank you and good morning. Our press release and financial supplements were issued last night after the market close. If you'd like copies of either, please visit the Investor Relations section of our website at www.awac.com. Today's call will also be available through May 9th on our website as a teleconference replay. The dial-in information for this replay is included in our earnings press release.

Our speakers this morning are Scott Carmilani, Allied World's President and Chief Executive Officer; Tom Bradley, the company's Chief Financial Officer; Marshall Grossack, our Chief Actuary; and John Gauthier, our Chief Investment Officer.

Before we begin, I will note that statements made during the call may include forward-looking statements within the meaning of the US federal securities laws. Forward-looking statements are subject to a number of uncertainties and risks that could significantly affect the company's current plans, anticipated actions and its future financial condition and results. These uncertainties and risks include, but are not limited to, those disclosed in the company's filings with the SEC. Forward-looking statements speak only as of the date on which they are made, and the company assumes no obligation to update or revise any forward-looking statements in light of new information, future events or otherwise.

Additionally, during the call, management will discuss certain non-GAAP measures within the meaning of US federal securities laws. For more information and a reconciliation of these measures to their most directly comparable GAAP financial measures, please refer to our earnings press release.

With that, let me now turn the call over to Scott.

Scott Carmilani

Okay. Thanks, Sarah, and good morning, everyone, and thanks for joining our call. Allied World had an excellent quarter for the start of 2014, driven by record underwriting income and strong investment performance. The company generated a combined ratio of below 80% for the quarter, over 5 points lower than prior year's quarter and a net income of $177 million or $5.23 per diluted share.

We grew diluted book value per share over 4% this quarter. Our investment results continued to benefit from meaningful contributions from both our non-core portfolio and other private securities in the Allied World Financial Services investment portfolio. We generated total investment return of 1.2% for the quarter, which amounts to just over $100 million. Our Chief Investment Officer, John Gauthier, will give you more details of our investment results in just a few minutes.

Our first quarter results also benefited from $49 million of net favorable reserves development, majority of which came from our international insurance and reinsurance segments, positively impacting our combined ratio by 9 points. Marshall Grossack, our Chief Actuary, will give you more details on that a little bit later.

Turning to our operating performance and production, we grew our topline more selectively this quarter, generating $901 million of gross written premium compared to $837 million for the first quarter of 2013. This was driven by growth in all three of our business segments, with 5% growth in both our US insurance and international insurance operations and 10% growth in our reinsurance operations.

On average, rates in our insurance portfolio were up a modest 1.4% for the quarter with casually driving the upside by 3.4% and property down just under 7% for the quarter. To remind you that our casualties are much bigger percentage of our portfolio and that's why these numbers reflect the way they do.

In our US insurance segment, gross premiums increased 5% from the prior quarter attributable to growth in excess casualty and our programs unit. This was partially offset by non-renewal business in some of the PL line portfolios. As we continue to focus on making structural changes to those portfolios, that business has experienced a lower retention rate. Overall rates were up by 5% for the segment for this quarter, with our casualty rates up a little bit higher at 5.8%, property rates are down modestly to just under 2%. Our overall rate retention, as I just mentioned, was 68% for the quarter, mostly driven by our corrective actions in an attempt to push through rate.

In the international segment, we also saw a 5% increase to gross premiums for the quarter to $134 million, driven by our European platform. We had contributions from some of our newer lines of business like aviation and marine cargo, as well as growth from our existing businesses. Overall, the rate changes in our international insurance segment were down 4% for the quarter, with casualty down 1.5% and property down 9.8%. Our overall retention rate in the international insurance segment was 85% for the quarter, as we continue to see good margin in that business and retaining as much of the business as we can.

As you likely saw, we recently announced that Allied World was approved to launch its own Lloyd's Managing Agency effective April 1, 2014. This is an exciting milestone for us, as we continue to grow out of Lloyd's in European businesses, and we create some more efficiency in that platform, because heretofore we'd been renting that agency from a third party, we now own and control it for ourselves.

Finally for the quarter, our reinsurance segment's gross premiums were 10% than they were in the first quarter of 2013 at $497 million. With the increase driven in part by our participation in the Aeolus quota share business and a large growth in our crop book, notably the segment generated $61 million in underwriting income, one of its most profitable quarters on record.

Now let me turn it over the call to Tom Bradley, our CFO. Thank you.

Tom Bradley

Thanks, Scott. The first quarter generated outstanding results with net income of $177 million, operating income of $130 million and record underwriting income of $107 million. This was driven by a 15% growth in net premiums earned, a combined ratio of below 80%, continued favorable prior-year development and no catastrophe losses.

The company booked $49 million of favorable prior-year reserve development, consisting of $29 million and $20 million favorable in our international insurance and reinsurance segments respectively. Reserve development in the US insurance segment stabilized with less than $1 million of adverse development in the quarter. Marshall will speak further to this in a few minutes.

Our expense ratio was 28% compared to the prior-year quarter of 30%, driven by a lower G&A ratio largely the result of lower compensation related expenses. Recall that much of our stock-based compensation is cash delivered. So movements in the share price directly impact G&A. The share price dropped 9% in the first quarter of '14, while it rose 18% in the first quarter of '13. This accounted for most of the improvement in the ratio. We continue to target a full year expense ratio of 29.5% to 30%.

Total investment return is $102 million for the quarter, consisting of $48 million of net investment income and net realized gains of $54 million. As mentioned, this was driven by fixed income portfolio returns as well as increasing contributions from our non-core and Allied World Financial Services portfolios. John will speak to this also a little bit later in the call.

We had record operating cash flow of $303 million for the quarter compared to $14 million in the prior year. This increase largely relates to our participating in the collateralized property catastrophe program with Aeolus Re. During the first quarter, we received contributions over $200 million from Aeolus for prior underwriting years. We received distributions of over $200 million.

Also during the first quarter of 2014, we continued the share buyback strategy, utilizing our 10b5-1 plan. For the quarter, we repurchased 670,732 of our common shares in the open market at an average price of $102.36 per share and a total cost of $68.7 million. As of last night, we had also repurchased 175,000 shares since the beginning of the quarter for $18.1 million, leaving our remaining current authorization at $149 million.

With our continued focus on capital management, we were pleased to announce in early March that the company has proposed an annual dividend increase of 35%, a new $500 million two-year share repurchase plan and a 3-for-1 stock split. These proposals are subject to shareholder approval at the annual shareholder meeting next week on May 1st. We ended the quarter with diluted book value per share of $107.05, which is up 4.4% from December. We had shareholders' equity of $3.6 billion, up $97 million from year-end. Our total capitalization was $4.4 billion with financial leverage of 18.1% and net premium leverage of 0.6 times as of March 31st.

I'll now turn the call over to our Chief Actuary, Marshall Grossack, to provide some commentary on the losses for the quarter.

Marshall Grossack

Thanks, Tom. Our product loss ratio for the first quarter 2014 was 51.9%. This includes 9.2 points or $48.9 million net benefit from reserve releases for the quarter. The accident year loss ratio excluding prior-year adjustments were 61.1% for the first quarter of 2014, which compares to 64.6% in the first quarter of 2013.

Drilling down by segment, in the first quarter of 2014, the international reinsurance segment had net favorable development of approximately $29.4 million and $20.3 million respectively, while the US insurance segment had slight adverse development of approximately $800,000. This was concentrated in healthcare and was due in part to three large claims in managed care E&O and in part to higher than expected loss activity in medical malpractice.

We had reserve takedowns in most other lines in the US segment for the quarter, including E&D where we had recently put up additional reserves. As of the end of the quarter, our reserve position sits at 4.2% over the midpoint of our actuarial range. This is largely consistent with the year-end 2013 (inaudible) our reserve position 4.3% over the midpoint. Available loss reserve development at the end of the quarter continues to be a function of overall actual losses merging better than expected.

As Tom mentioned, we did not record any catastrophe losses in the quarter.

Let me now turn the call over to John Gauthier, our Chief Investment Officer, who will discuss our investment highlights for the quarter. John?

John Gauthier

Thank you, Marshall. Good morning everyone. Allied World investment portfolio returned to 120 basis points or $102 million for the quarter. While the entire portfolio performed well amid volatile capital market, our non-core allocation in the Allied World Financial Services portfolio were meaningful contributors to the 42% increase in net investment income. As of the last several quarters, our non-core portfolio continues to drive the overall total portfolio return, further exemplifying the benefits of our investment diversification strategy.

Of the $102 million of total portfolio return, $48 million came from net investment income and $54 million from net realized gains. All sectors and assets classes made positive contributions in the quarter. Through the slightly lower interest rates and tighter bond spreads, our core fixed income portfolio generated $36 million of total returns. Bank loans effectively grouped their coupon for the quarter, while spreads again tightened on non-agency mortgage portfolio, contributing $17 million of total return between them.

Equities [ph] entered the quarter in positive territory, providing $18 million of return. And our non-affiliated hedge fund in private equity portfolio returned almost $27 million. Investment expenses were down approximately 12% versus the same quarter last year.

Regarding portfolio positioned, we made several tactical shifts during the period. We decreased our government bond holdings and increased corporate and asset-backed exposures. And our non-agency portfolio, we continued to shift from residential to commercial collateral. We increased our hedge fund allocation and we had $20 million of drawdowns in our private equity portfolio. Maybe the biggest change was in the size and composition of our public equity portfolio. We added $135 million of equities during the quarter and repositioned the portfolio from predominantly dividend-tilted strategy to a more diversified global portfolio of assets and passive equity risk.

Lastly, turning back to Allied World Financial Services, our equity stakes generated $7.4 million of income for the quarter or approximately a 5% return. Added to the three quarter return of $14.7 million generated in 2013, the Allied World Financial Services first full year return was $22.1 million or 17% of original cost. Recall that equity income from AWFS is recorded with a one-quarter lag, so any share of our affiliate year-end performances would be included in our first quarter results.

Given the nature of partnered businesses, this income can and will be lumpy. However, given the 17% return on investments to date in addition to all the other benefits we receive, we remain quite pleased with the success of Allied World Financial Services strategy to date.

And with that, I'll hand it back to Scott.

Scott Carmilani

Thanks, John. In closing, let me end our remarks by saying that I'm thrilled with our results for the quarter, a very strong start to 2014. Our goal has always been to deliver consistent returns and strong growth in book value, SUPPORTED by strong underwriting, profitability and investment performance. And we saw that all this quarter. Furthermore, we continue to selectively build on our operating segments, while delivering meaningful value creation to our shareholders. We remain optimistic about the company's prospects moving forward.

With that, I'm going to open it up for questions from the group. Thank you very much.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question will come from Matt Carletti of JMP Securities.

Matt Carletti - JMP Securities

Obviously overall the sales development was quite strong. But could you give a little more color just on the two healthcare lines, the one international and US? They look kind of two different issues. In international, it seems to be driven by one modest number in 2013 accident year. So any color you can give there on what happened in the recent accident year would help. And then secondly, the US segment, we had noise there for several quarters. And I think any color you can give around kind of where we are and expectations going forward would be helpful.

Marshall Grossack

Regarding the international healthcare development in 2013, that is due to a single large claim that as a process is usually to pump our expected loss ratio when we get that claim in on an immature accident year. So that's pretty much what we've done.

On the US side, as I mentioned, we have had three largest claims that hit the 2009 and 2011 years on managed care, E&O that drove more than half of our overall increase on the healthcare line there. Then the rest of it is just due to a little bit higher bit loss activity on the 2011 and 2012 years in medical malpractice.

Scott Carmilani

I just wanted to add a little more color on that. The healthcare space remains a little bit tricky. And we've had half a dozen scenarios that were unplanned for and it is just a factor of the (inaudible) being a little bit unusually aggressive and been successful in getting much higher settlement from demand than what otherwise be reasonably expected. We continue to tighten our responses to that and everything from the underwriting to strengthening our claims process around that. So you see some of our retention rates going down in that healthcare business. But we're also driving rate where we can and making terms and changes in trying to help educate our clients, so they can be better prepared to come back what would look like almost frivolous lot to getting unusually high settlement amounts to avoid court appearances and jury rewards.

Marshall Grossack

You know that the US healthcare premium is down almost 40% from a year ago.

Matt Carletti - JMP Securities

And then there is one quick other one and, Tom, it's probably for you just on capital management. I mean about 70 million of share repurchase in the quarter. I mean is that kind of a comfortable kind of run rate for you guys, understanding the market as it is today, obviously things can change or is there anything in the quarter that made that larger or smaller than you had anticipated?

Tom Bradley

That's the highest amount we've done since the first quarter of '12. The normal run rate more around 50, but given the weakness in the stock during the quarter, the algorithm we have in the 10b5 responded to that and bought a little bit more. So it's on the high end of the range, but not too outlandish.

Operator

Our next question will come from Charles Sebaski of BMO Capital Markets.

Charles Sebaski - BMO Capital Markets

Just one quick follow-up on the healthcare reserves. Are those large limits, are they limit losses? There is three individual and one in 2013. I mean are they capped? Is there a possible more upside to development from them?

Marshall Grossack

No, these are the numbers. One of them is a limit loss. The other two are larger than what we would have otherwise normally expected. But they're not (inaudible) vis-à-vis insurance treaty.

Charles Sebaski - BMO Capital Markets

And then I guess on the reinsurance side, obviously the growth was very strong and a pickup. But I guess conceptually, how are you thinking about that business, given the softness in reinsurance pricing and the increase in PMLs, and there is some press about potential time river. Is there a limit on how bit the reinsurance business can get, or on the PML side or percentage of capital, et cetera?

Marshall Grossack

We have self-imposed PML limits from our own capital management and structural comfort level of risk in the organization. We're up near our comfort level on that. The growth in US portfolio, which is cat-driven, and you're right, we analyze the landscape for 2014 and really 2013 going to '14 and the pricing looks better for the first half of the year than the second half of the year. So we put our eggs into US basket for the first part of the year and we're more than likely and we feel pretty strongly about that that we'd get in a better rate per risk and per unit of risk on that portfolio than what it looks like for the rest of 2014. So you saw a modest increase in our cat writing for the first quarter, where 60%-plus of what we do for the year in a cat market is done in the first quarter anyway on a normal basis. So I think answers that question.

In relation to the other question, I don't really think I have a comment.

Scott Carmilani

And, Charlie, just one more thing on the reinsurance PML. When we entered into our relationship with Aeolus, we didn't increase our corporate PML appetite. We just reallocated from other businesses, other reinsurance treaty business to the Aeolus platform all within the same kind of corporate PML limits.

John Gauthier

The fact that it's a little higher than last year is still percentage-wise proportional to how much bigger the company is.

Charles Sebaski - BMO Capital Markets

I guess one quick numbers question on the expense improvement, and I think it was said that it was due to stock comp. I know there were some work on the expense ratio overall. So we just think if the stock price rises, that's not a run through than sort of where we are on the expense improvement. The stock price runs up over the remainder of the year, we'll sort of see that revert back to where we were last year?

Scott Carmilani

Yeah, I think last year where the stock had a nice run up, the full year expense ratio was just right around 30, in the short term, it's a non-cash expense that we accrue the value of the cash delivered comp. So I think again, our targets that I mentioned are the right kind of long-term run rates.

Operator

Our next question will come from Mike Nannizzi of Goldman Sachs.

Mike Nannizzi - Goldman Sachs

Marshall, actually one question just on the loss pick. So in the international, it looks like the loss pick was down like 10 points. I was trying to understand kind of what drove that? It sounds like obviously that's not an entirely a property book, but property rates were down, casualty rates were modestly higher. So just trying to understand, was there non-cat weather was something in there that drove the underwriting loss takedown so much?

Marshall Grossack

Yeah, that's really actually kind of a one-time thing from what we did back in the first quarter of 2013. We actually had a bit of an (inaudible) in the first quarter of 2013 that probably drove most of that differential that you're seeing.

Mike Nannizzi - Goldman Sachs

And then I guess on the buyback, Tom, the 500, do you expect to exhaust that over a two-year period and is the $149 million that remains outstanding from the current, would that be replaced by the 500 or do you expect it to be in addition?

Tom Bradley

No, we'll replace whatever is remaining on the current authorization at that time with this new 500. And the expectation is we'd like to use it over the two-year period. Obviously the market conditions will have an impact on that, but that's the expectation.

Mike Nannizzi - Goldman Sachs

And then just one back to Marshall real quick, so looks like you got about 3 points of cat losses in '13 in the reinsurance segment, but you released about $14 million in development for property in the quarter. Was that $14 million related to cat or to underlying non-cat weather?

Marshall Grossack

It's really mostly just underlying.

Mike Nannizzi - Goldman Sachs

So how should we think about that, I mean, there are years when you have non-cat weather, should we be thinking about those periods where there's elevated weather as potential reserve building periods, or should we assume that your booking will come through?

Marshall Grossack

I mean on the cat reinsurance business, we book an attritional loss ratio each quarter, expecting some level of the routine kind of cat activity. And if they don't happen, then we would take that down later.

Tom Bradley

Yeah, we'll typically take that down within three to six months after that.

Mike Nannizzi - Goldman Sachs

And that level is based on what your historical levels of attritional losses have been, I take it?

Tom Bradley

That's right.

Operator

Our next question will come from Dan Farrell of Sterne Agee.

Dan Farrell - Sterne Agee

Just first question is around your other sort of strategic investments that you have, which have been contributing nicely to earnings. Now that we have a little bit of history, I'm wondering is there any seasonality to be thinking about in those numbers as they come through and any particular investments that might contribute more versus others within any particular quarters. And I'd also like to get your thoughts on potentially your view of the underlying growth of those investments and your thoughts on any potential to add new acquisitions in that area.

John Gauthier

There will be some seasonality. I think we're comfortable with the kind of 12 month run rate. And if you went back and looked at quarterly aspects through 2013 and this quarter, that's probably not a bad proxy to what you'd see in the subsequent years. We'll have some lumpiness around our fourth quarter and our first quarter positive with a little lower expected earnings in our second quarter and our third quarter. On the other question, we continue to look for opportunities in this space. And if we find the right one, we'll be moving forward.

Scott Carmilani

The third part of that question was do we see growth potential with our existing investments. The answer is absolutely, that's why we did it.

Dan Farrell - Sterne Agee

And then one question regarding your own reinsurance purchases within your insurance business. It looks like sort of net to gross in the US insurance stayed roughly the same and down a little bit in the international. Presumably you're getting some benefit from the declining reinsurance cost there. Are you buying more protection? How do you think about your reinsurance purchases for the rest of the year?

John Gauthier

Yeah, there is a lot of shifting going on in that side of the house, if you will. Some of the newer businesses we've structured, where capacity is needed such as aviation in order to be a meaningful competitor, initially requires reinsurance on some cases we have new reinsurance. And other more longer experienced business that we've had for quite a while, where we've been traditionally lots of reinsurance that we might not have needed, given our current situation, capital and terms and conditions in the market, we've paused and buying less. So it's moved around a bit. And net-net, it's down slightly. You mentioned that and I think that's right. And we continue to evaluate both looking through our economic capital models, our own internal judgment and the underwriters' view of the market, the actuarial view of loss ratios and the current environment as well as terms and conditions that the reinsurance market is offering. And you're right, there has been lot of movement in that as well. So we are judiciously managing that part of the business as best we can. And I wouldn't say we're trying to take advantage of everybody, but we're certainly maximizing our opportunities.

Operator

Our next question will come from Amit Kumar of Macquarie.

Amit Kumar - Macquarie

Just two quick follow-up questions. The first question is there has been a lot of chatter regarding consolidation in Bermuda. You currently have the relationship with Aeolus. Would you consider sort of expanding beyond that? And I guess in conjunction, would you evaluate other smaller publicly-traded Bermuda companies at this juncture?

Scott Carmilani

Let's say that's a lot of chatter. There's always a lot of chatter. Bermuda is a small place. That's what I'm going to say.

Amit Kumar - Macquarie

I'm zero for two today. I guess the only other question I have is and I apologize if you mentioned this in your opening comments. Did you talk about the crop book? I noticed there was a comment, I think, about selective growth in crop in the press release. Can you just talk about that a bit more?

Scott Carmilani

That's right. I said in my remarks as well. Our crop book is fully reinsurance portfolio and is pretty well spread. It's a combination of the major market players and some of the more sort of mutual agency players that are out there in the Midwest. What we had done is grew with a couple of seasons and completely dropped for a couple of others. So the net-net was that it ended up being slightly larger by premium volume, but not markedly different from the portfolio structure.

John Gauthier

Yeah, Amit, one way to think about the reinsurance growth for the quarter is a third of it was Aeolus, about a third was crop and the other third was kind of all other.

Operator

(Operator Instructions) Our next question will come from Ian Gutterman of Balyasny Asset Management.

Ian Gutterman - Balyasny Asset Management

I guess first, Marshall, can you explain again the comment, I think it was maybe from Mike earlier about the (inaudible) and international, what exactly happened there, I didn't follow?

Marshall Grossack

Yeah, last year in the first quarter, we added $8.6 million to (inaudible) in our international segment, which added about 10 points to our first quarter accident year loss ratio in 2013. When you compare that against this year, it's a little better, 10.

Ian Gutterman - Balyasny Asset Management

Okay. But it didn't benefit this quarter though?

Marshall Grossack

Right.

Ian Gutterman - Balyasny Asset Management

And just when I'm looking at international, last year was mid to high-90s every quarter, and this quarter it was 87 accident year. So it seems like something else got better too.

Marshall Grossack

I'm just talking loss ratio. Maybe there is an expense ratio.

Ian Gutterman - Balyasny Asset Management

It looks like it's a loss ratio to my math. To me, (inaudible) Q2 or Q3 last year, it's a good 5 points lower maybe. Where there any mix or anything else that may contribute?

Marshall Grossack

Wouldn't be a mix shift.

Ian Gutterman - Balyasny Asset Management

John, on the equity portfolio moves, can you just give a little bit more color just given the choppiness in the market and how you fared in that? I guess I heard dividends and seems to me that wasn't perfect timing, but I don't know if I wasn't necessarily shifting to growth relating to other areas that were less important.

John Gauthier

Yeah, it's a movement out of predominantly US to a little more global focus. It's a little more balanced and that there is some growth versus just the predominantly dividend strategy. And then we've kind of mixed up the active versus passive. So we've taken a portfolio that was predominantly dividend. So we've added some ETFs around the edges. And we've had some concentrated equity portfolio, so much more diversified.

If you look at last year, we suffered an equity relative performance, given that dividend focused versus the overall return. And while we certainly don't expect the 30% increase in equities returns this year, we do want to have some more offensive parts of the portfolio, because we are still modestly bullish about the equity market.

Ian Gutterman - Balyasny Asset Management

And then, Scott, if I can maybe ask him this question in a way that maybe you can talk about a little bit better, going back to Trans-Atlantic, obviously part of the rationale for that was you wanted to get bigger in reinsurance. And I know that wasn't Bermuda-focused. It was more about Europe. Can you just talk about your interesting in expanding your reinsurance portfolio and then in what parts of the world that would be if the right opportunity came up?

Scott Carmilani

We're always open for the right opportunity. We're interested in growing our firm organically and if we can get assets at an attractive value where we can make one plus one more than two, we're certainly agreeable to have those conversations as well. The trouble with any kind of merger or acquisition is you need to have willing parties. And so there seems to be less of them than you might otherwise think there should be or could be. And as the market opens up for that and our multiple changes in our stock price, we can have a different view. We're not sitting and waiting for that to fall in our lap. As you can see, we're running the company and growing our book value and doing the best we can. And if some falls in front of us, we'll judge when it does.

Ian Gutterman - Balyasny Asset Management

And then just my last quick one. Aviation, any exposure to that Malaysian loss?

Scott Carmilani

No.

Operator

And ladies and gentlemen, this will conclude our question-and-answer session. I would like to turn the conference back over to Scott Carmilani for any closing remarks.

Scott Carmilani

I just want to say thanks for participating in the call and thanks for all the questions. And have a great day.

Operator

Ladies and gentlemen, the conference has now concluded. We thank you for attending today's presentation. You may now disconnect your lines.

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