Endurance's CEO Presents at BAML 2012 Insurance Conference (Transcript)

| About: Endurance Specialty (ENH)

Call Start: 17:15

Call End: 17:44

Endurance Specialty Holdings Ltd. (NYSE:ENH)

Bank of America Merrill Lynch 2012 Insurance Conference

February 15, 2012 - 5:15 p.m. ET

Executives

David Cash – Chief Executive Officer

Analysts

Jay A. Cohen – Bank of America Merrill Lynch

Jay A. Cohen – Bank of America Merrill Lynch

Very pleased to have with us from Endurance, David Cash, CEO. Endurance is a company that seems to be, let's say, constantly changing. But if you look -- and I'm sure they have a graph of their business mix over the years. They've been very nimble. And I think it very much distinguishes this company. And they really act as they talk, and so keep that in mind. We'll have David here to really give us an update on what's been happening and a look forward as well. David?

David Cash

Thank you, Jay. Am I live? No, I can hear myself. Thank you and thank you for being here. I appreciate. Someone's got to be the last, and it's me. Number 17 of 17. I'm sure you had more than your fill today of market conditions and sort of company stories. And so, what I will do is I'll walk you through the Endurance story sort of reasonably quickly, and then I', prepared to answer questions either on our strategies or our market conditions and the way we're positioning that marketplace.

I appreciate the fact you've been willing to stay this late, so I'm not going to abuse that generosity on your part. So maybe just a start, talk a little bit about the company today. Endurance was formed at the end of 2001. We just had our 10th anniversary. I had a chance to ring the bell at the New York Stock Exchange. So long 10 years. I feel very tired but I'm pleased to have made it here. We were created in Bermuda originally at the very end of 2001.

We currently have operations through the United States, Bermuda, London, Zurich, Singapore. We operate sort of what I'll call a Bermuda insurance and reinsurance company [indiscernible]. We have today currently about $2.6 million worth of shareholder equity and $3 billion plus worth of resources to pay claims. We rated A by A.M. Best, A by Standard & Poor's. And we have an excellent rating for risk management from Standard & Poor's; one of four companies in North America that hold that rating.

We went public in 2003 in the nuclear winter of IPOs. Since that date, we've generated little north of 100% return for our shareholders, even in what would have to be described as sort of an equity-bare market. So it's not a number that necessarily I want it to be, but I think it's a very credible number in terms of the environment we've come through. Let me just talk a little bit about our company. We operate both as an insurance company and a reinsurance company.

This slide shows our premium mix across our two businesses. We generated still north of $1.9 billion of premium last year in written premium, closer to $2.5 billion of premium on a gross basis. And our business is split roughly 50/50, reinsurance and insurance. On the reinsurance side, starting in Bermuda, opened a small operation in the U.S. in 2002, and in 2002 bought the Hartford Re book of business. Towards the middle of 2003 grew that book of business significantly.

More recently, we've cycle managed that down, just given the market conditions. And then additionally, we have an operation in London. So reinsurance business, it's all brokered. It's brokered by the same kinds of brokers. We deal with different clients, but we sell roughly speaking the same kinds of process, be that in Bermuda, the U.S. or internationally. We're organized and managed geographically. We have a team in Bermuda. They're really a cat team.

The team in the U.S. is like a working layer treaty business. This tends to be less cat exposed, little more cycle exposed, little more exposed to the pricing cycle. And then the last part of our business is our international business, primarily based in Zurich. We have a small operation in London and a small operation in Singapore. This business tends to be a little more relationship oriented. It tends to sell sort of a collection of different covers to clients at the same time.

And what you tend to find is this business is less cyclical. You don't just jump into this business and jump out of it. You have to build it overtime. So it's one of those businesses that I expect to keep growing overtime. The last year has obviously been more than interesting from an international perspective. We've had no end of catastrophes. But even with that, I think our performance is sound and I would expect to see that part of our business grow going forward.

Turning to our insurance book business, this started as a Bermuda book of business. And on the slide here, this would be the business we refer to as our ERS, Endurance Risk Solutions Fortune 1000 business in Bermuda. That was started in 2002. We write excess casualty business. We write professional lines business. We write healthcare business. We tend to insure the largest corporate clients. These are Fortune 1000 clients.

These are companies that buy anywhere from $100 million to $1 billion in insurance capacity. Very cyclical. This is sort of the original Bermuda insurance business. It was first started in Bermuda in the early-90s, actually the late 80s by ACE and EXEL. It's now a large market. There are a number of players in the Bermuda market that write this business. Turning to the United States, we have two different kind of collections of business.

We have a specialty insurance business. That is what we refer to as our middle market business and our program business. This was started in 2005, 2006, after Katrina, Rita, Wilma. This is really what I call excess and surplus lines business. We tend to write it on smaller accounts, sort of average premium size, ranges from $50,000 to $100,000 per policy. And the mix of business is sort of what I call classic excess and surplus lines business. It's the tougher casualty lines.

We have professional lines that is sort of what I'll call miscellaneous E&O, covers -- it would range from financial advisors, all the way through to the less challenging hairdressers. And we have property book of business that is very much a cat-focused book of business. It's an earthquake book of business. It's based in California. We write predominantly earthquake on the West Coast. It's a nice complimentary reinsurance book of business.

You find it's relatively easy to get wind risk on the reinsurance side, though hard to get good quake business. And so it's natural to have this in our insurance book of business. The last piece of our insurance book of business then is the green portion of the pie. This is our crop insurance business. This is what they call multi-peril crop insurance. This is a federally-sponsored insurance product that provides protection to farmers in the United States from yields failure, which you might experience if you had a drought, and also what we call a price volatility.

So if you had a collapse in commodity prices, the price of corn or wheat or soy, this product would cover farmers there. There are roughly 2 million farmers in the United States that buy this product. The federal government encourages farmers to buy it. If you want to be eligible for disaster relief, you have to buy NPCI crop insurance. This business is one that we bought in 2007. It started its life in 2000 as a small software company.

It sold software into crop insurance companies. Over time it grew. It acquired an agency, became a small MGA. When they got the balance, they became a small insurance company. When we bought it in 2007, it was a relatively small book of business, about $300 million or $400 million of premium. Since that day, that's grown into an $800 million gross premium book, and is around $500 million net written premium book of business.

So if you have a very broad range of businesses within an organization, the way I think it is we have an international reinsurance platform that allows us to sell reinsurance in the Bermuda market, the U.S. market, the European market and the Asian market. We don't have a presence in Latin America. I probably wouldn't expect to have a presence in Latin America for the near-term. We think we're covering the major segments.

We cover the markets where we have large clients that have significant risk management needs. The kind of key product what's historically sold there is cat. Over time, we expect to sell increasing amounts of what I call non-cat working layer cover. On the insurance side, we cover a range of what we call a distribution channels in the United States. We started in Bermuda in the kind of what we call a larger space, which is really driven by the retailers, Marsh and Willis.

We moved to the United States, where we both had business, both in the wholesale channel. Hence, the excess in surplus lines business; Swett & Crawford's, the Crump's, the AmWins, the other companies that you would consider to be kind of wholesale markets. And then more recently, we built out our business in the small risk space, partly through MGA's, that would be the program business at the bottom on the left. And partly in the independent agent channel, which is what our crop insurance business is.

And so, we have an insurance platform in the U.S. that allows us to sell product across a range of different distribution channels, full license in the U.S. We sell casualty, property, professional lines products. As the market improves, as the market changes, we have the ability to dial up or dial down these different parts of our book of business. What I'd like to do with the next two slides is spend a bit of time on our reinsurance segment and insurance segment, and talk a little bit about our cycle management strategy.

Sorry, before I get there, the end products that makes the businesses were roughly split; a third casualty, a third property, and a third specialty. And it was not sort of by design, but what it does mean is we're sort of we'll call it somewhat uniformly exposed to the cat market, the property market, the casualty market, which is sort of the dominant insurance market in the United States, and then some of the different specialty classes. And this is sort of a blessing and a curse.

The blessing is, we see a full range of business where opportunity presents itself, we can move towards it. The curse is, if you pick up the newspaper, you're almost guaranteed to read about a loss in one of your businesses. And I remember sitting on a plan one day, I opened the newspaper, got to the first page. They had a little article on the earthquake in Japan. We had losses from that. We were exposed to that event. There was a little bit of discussion about the Air France plane that crashed a number of years ago.

They just recovered the black box. And then, there was a final -- the final article in that page was about flooding in the Midwest. It sort of breached some of the levies. There were floods that were going to have an impact on the crop insurance space. So, each one of those articles had an impact on us. It felt kind of negative to read that page, I can say. But the benefit of this is just as you have losses from different parts of the marketplace, you also get premium from different parts of the marketplace.

And the real challenge is balancing your book of business. You have a spread of risk. You're not sort of unduly spread. You're not writing in sort of segments you don't know or perhaps shouldn't be in. Are you getting paid fairly for taking that risk? And in the main, if you look at our results over the last five to six years, I'd say we have been paid properly for taking the risk. Now, just jumping to our reinsurance book of business.

When I look at the reinsurance business, I tend of think of it as being -- it tends to have a few different kind of products, or a few different personalities. When you think of companies like Endurance, we're a Bermuda company, and Bermuda companies tend to be very strongly associated with the cat business. So, one of the largest portions of our book of business are cat reinsurance business in Bermuda. Started that in 2002. It's been a very profitable book for us. It's obviously a volatile book of business for us.

The second largest piece of our portfolio is then additionally our property reinsurance book of business. And it is in the same sense as cat's property business, property's property business. The different here is we're writing working layer treaties. There tends to be a little more emphasis on we'll call it technical price. It tends to be slightly more cyclical. But at the end of the day, this book of business tends to response the same way the cat book of business does.

It tends to be -- when you're in a hard property market, both of these books of business will go up. And here's sort of the underlying premise. When I look at the overall insurance and reinsurance marketplace, there are some places where I think of reinsurers having power in the market. They're able to sort of essentially force pricing changes or changes in terms and conditions. And really the place where I think that is cat reinsurance and property reinsurance. The cat and property reinsurers drive market terms.

There are moments where they experience losses, where they historically just correct those losses quite quickly. And so, insurance companies, historically we've seen, at least over the last five, six years since Katrina, Rita, Wilma, the price they charge is very much driven -- the price they charge for their product is very much driven by the price that reinsurers charge of them. And so, I like the idea of being a property reinsurer; when you go beyond property reinsurance, in some casualty lines and some specialty lines.

And the way I tend to look at this is in the casualty space, we really need to be writing lines of business that are less cyclical. And so, kind of the typical example of the casualty contract would be a non-standard auto quota share. The margins are relatively low. The premium volumes are relatively high. But the chances of having a significant loss are low. And in many ways, our challenge there is to manage this cycle, to find ways to be in the classes of businesses that are performing well, to do good quality analysis, good quality auditing, due diligence.

And in that way I think we can benefit from sort of the shifts in the underlying casualty cycle. But what you have to be is you have to be very prepared to step out of those lines of business if the markets moved against you. And what we can see is that book of business has shrunk significantly from 2004, 2005 when it was at its largest. It's grown a little bit in recent years, and that growth has come from what I'll call some of the sort of smaller standard lines casualty areas.

What we try not to do as a casualty reinsurer is compete with ourselves as an insurer. And so, our core casualty reinsurance client tends to be a standard lines writer of casualty. Our core insurance casualty product tends to be excess and surplus lines business. So we don't have a conflict. We think we manage the cycle sensibly here. And the last part of the book of our business would be some of the specialty classes, the surety and other specialty in some of the aerospace and marine.

And these tend to be shorter tail lines of business. They tend to have a little bit of volatility to them. We write the business in the U.S. We write the business in London. We see some of the business in Bermuda. And we tend to be opportunistic in those spaces. In the aviation side, our book of business was very large in 2002,'03 and '04. And what we've seen since that time is pricing has come down steadily in those markets. We have reduced the size of that book accordingly.

If we see market conditions improve, we would obviously scale up our business. Switching to our insurance book of business, the counterintuitive property is sort of reinsurance strategies. When I think about casualty insurance, particularly some of the kind of more challenging lines of business, I'd really rather write that as an insurance company. And so, the bulk of our casualty risks still come to us, to our insurance business. And you'll see most of the lines of business here are casualty or their crop insurance.

So what we have seen is the casualty book has grown. We've started the book sort of in Bermuda. That became a large book of business in 2003, '04. That's dominated by the yellow in the professional liability. Healthcare and professional liability, we've been historically Bermuda businesses. What we've seen since then is market, conditions have worsened. At the same time, we've grown our U.S. insurance business. And what we've done is we've shifted our book of business to being, particularly in the profession liability side, a little more focused on smaller risks.

And so clearly, we see and others see, the professional liability marketplace has seen fairly steady price erosion over the last four or five years. The business has been surprisingly profitable. And it really has been as a result of very impressive claim performance. But when you look at the way the pricing cycle has performed, we have to be relatively careful there. And so, we have dialed back casualty over the last few years.

What you're seeing growing this place has been our crop insurance business. We bought the business in 2007. It's performed way beyond anything we had expected. And this business, it's interesting to note, it's crop insurance business, the pricing is actuarially-driven and is established by the federal government. There is no pricing cycle in this marketplace. Crop insurance doesn't have a pricing competition element to it. Companies compete on the basis of service, technology, claims service.

And so, what we've tried to do in our insurance book of business is we want to have a strong insurance footprint. As market conditions improve in the U.S., and we’re seeing and hearing about market condition improvement at the moment, we'd expect to grow the casualty portion of our book of business here. In the meantime, while we don't see the strongest pricing in that marketplace, it's great to have a large crop insurance business that's done so well.

The only challenge we've had, and I'll come on to that a little bit later, is in the last year we've had challenging weather in Texas. So the only fly in the ointment there is last year in Texas, we had really almost an apocalyptic drought. And given just how dry it was in Texas, literally a one in fifty-year drought, we'd be forgiven for thinking that our crop insurance book of business might have had a loss last year. It didn't. It was break even, which is nice to say.

That said, it would have been great last year if the crop insurance business had performed like it did the year before when we made about $80 million of profit in that book of business. So now, just talking a little bit about our business model. We write a diversified book of business. We tend to write volatile classes of business. Given our roots in Bermuda, we're thought of as being something of a cat company. And so, I use this slide to help people understand just sort of how exposed to cats we are.

And so, what we've done here is since 2008 we've captured each catastrophe event that occurred in the marketplace. In 2008, we had hurricanes Gustav and Ike. Gustav hit Louisiana. Ike hit Texas. 2009 was essentially kind of a clean year in terms of catastrophes. 2010 we had the events in Chile. We had the events in New Zealand. Some events in Australia, followed in 2011 by additional earthquakes in New Zealand and Japan, storms in the U.S., tornadoes in the U.S. More recently, Hurricane Irene, and then finally the floods in Thailand.

And as a cat writer, you would expect that we would have pretty serious cat losses from that sequence of events. And last year, there was something like $100 billion worth of international cat events. What we've done here is for each of those events, we've plotted our loss as reported in disclosing, including average development that might have occurred, the positive development that might have occurred against the equity base we held at the time of that loss.

And so, you can see our exposure to cats, we certainly have an exposure to cats. We're not sort of cat-free company, but it's very much into proportion to our capital base. And it is sort of consistent with being a writer evenly of casualty, property and specialty lines of business. And I think it's this sort of ability to manage our exposure in different regions caused Standard & Poor's to give us an excellent rating for the risk management.

Now when you look at the different events and totally add up, the results have been very strong. When I look at the last year, I would say one of the challenges that we faced as a company is we have a slightly more diverse portfolio than some others in Bermuda. We have international operations that give us exposure in Asia. So we certainly picked up losses in Australia, absolutely picked up losses in Japan, and more recently in Thailand. I'd say unbalanced, those losses are consistent with our strategy of being a global cat reinsurer.

There are one or two places where I was unhappy with the losses, and something I said in the earnings call last week. I would have frankly expected lower losses in Thailand than we had. And when I took a look at it, it's clear there are some changes we need to make to that book of business. I was in Japan early this year and the predominant source of the loss in that book of business came from Japanese clients with corporate interest abroad; so Japanese clients writing Japanese companies.

Some of those companies had operations overseas, particularly in Thailand. In my communication with clients, I've said, we support you. We've enjoyed doing business with you. We've made money in Japan over the years. Unfortunately, this is something that we will be changing. I do expect the clients to make changes to those covers in 2012.

I'm not sure they'll make all the changes that we need them to make, so I'd expect the tight portion of our book of business, the overseas interest portion of our book of business to get smaller. Anyway, if you look at the last four or five years, 2008 forward, I think the record speaks for itself. Our results have been quite in line with the book of business we have. And when you look at some of the financial results we've generated, particularly growth in book value per share, I think you'll see they've very strong.

Turning to just that metric; for the company, since formation in 2001, we have grown book value per share, adding back dividends, which is what this bar chart shows, from a base of around 20 to today, we stand at about $60. That includes the dividends added back in. If we take the dividends out, our book value per share is just a little over $50. If you look at the last year, where we had all those cat events, we had roughly about $470 million worth of cats run through our income statement.

And if you look, our book value per share is not that different from at the end of 2010. When you add back in dividends, our book value per share drops just a little under 2% for the year. It was truly an exceptional year, I'd say. So I'm happy with the result. I didn't enjoy 2011, very happy to be in 2012. Hopefully, we won't have another year like that in a long time. But when you look over the long period, growing $20 per share to $60, when you add back dividends, it's a pretty strong performance.

And what has been just a pronounced long bear market. I mean, a very tough environment to make money in. Shifting to our peers. What I've captured on this slide is the same metric. Growth in book value per share, with dividends added back in over the period of time from the end of 2006 to today. So '07, '08, '09, '10, well so five years. Over that five-year period, we are at the top quartile in terms of growing book value per share.

If you look at the individual events we talked about earlier in terms of cat events, they add up. But at the same time, just as the cats add up where the Air France aviation loss adds up, so too does the premium. And so clearly, you see the benefits of diversification. Sure, you see the benefits of our crop insurance business. Texas was tough last year. Year before it was spectacular. We added up over a medium length period of time the growth in shareholder value is there to be seen.

So it's just plain as the nose on my face. Just looking at our balance sheet over time, what you see is the growth in the balance sheet. We have been an active manager of capital over the last 10 years, really since the formation of the company. We started the company with roughly $1 billion of equity, $1.1 billion of equity. We did an IPO in 2003. We raised a little bit more. But in the main, what we have done is we have returned capital to our shareholders.

On the right-hand side you'll see the cumulative share repurchases over time and the dividends paid over time. And so, starting with $1.1 billion of capital, today we have $2.2 billion of capital. We have some additional kind of capital resources to pay losses with. But then additionally, we have returned $1.9 billion of capital to shareholders. What I can say is over the lasts 10 years, we've been in an environment where companies have generated growth in capital almost more rapidly than they can put it to work.

And so, for me, it's been very natural to kind of repurchase shares, give capital back as rapidly as we have. Looking forward, I would expect us to get back capital a little more slowly. We certainly will be a manager of capital. If we look at the next two quarters, I'm expecting the quarters to be strong quarters, unless we have what we call cat events. If we get to a 7/1 and we see that we haven't seen the kind of pricing we'd like to see at 7/1 and 6/1, I think we'll be back in the market and looking at share repurchases.

But what I can say is I would not expect us as a company to be as aggressive about repurchasing stock going forward, as we have been to-date. And the reason for it is simple. We've built a strong international reinsurance platform that allows us to sell reinsurance products everywhere. We have a sound U.S. insurance platform that allows us to sell insurance products across different classes of business into different distribution channels. I'd like to put that to work.

And part of that is making sure you have the capital to support the business. I think final but one slide before we get to questions. As interesting as the property and cat space was over the last year, the world of finance has also been interesting. And just to give you a sense as to what the assets out of our balance sheet looks like. We have an investment portfolio of about $6 billion. We are predominantly in, we call it, high-rated, fixed income securities.

We have a modest amount of our portfolio in non-U.S. dollar denominated assets. I think we're something like $400 million of non-U.S. denominated fixed income. That represents our balance sheet in the United Kingdom. It also represents our reserve base in our international reinsurance business. And so, but for that, we would be essentially a U.S. dollar denominated company. The ratings of our assets would be AA, AAA, AA+. Our duration of our asset portfolio is a little -- it's around 2.5 years.

And so, we're positioned quite defensively. The downside of that is it's very hard to generate income in this environment. The upside of that is when Greece goes down on a hand basket, we're not as exposed with it as perhaps a European company would be. I don't see this changing particularly going forward. The one area that we are looking to do make changes would be, we've been steadily diversifying our portfolio when it comes to the alternates.

So roughly about 10% of our portfolio would be in alternates. We invest in hedge funds, private equity funds, other kinds of we call it actively managed funds. What we sought to do overtime is just to make sure that we are sort of appropriately positioned with respect to the different kind of betas that we can access in that marketplace. Final slide before I go to questions and answers. We have built a strong sound business.

We have the footprint I talked about earlier. We are managing our book of business carefully in the market we're in today. I'm happy to take questions on market conditions. The short answer is we're seeing improving terms and conditions in the reinsurance space, particularly cat exposed business, both U.S. and internationally.

And we're beginning to see signs of price improvement in the insurance side, particularly the casualty U.S. insurance marketplace. And those pricing turns, those pricing improvements are clearly a step in the right direction. They don't represent a full, hard market turn, but they absolutely are sign that the marketplace we're in is moving to the right spot. Time will tell.

Certainly over the next year, we'll provide investors with more detail in terms of our own price monitoring, so you can see where we're getting price increase, where we're not getting price increase. The short version of the story is for smaller insurance risks, we've been seeing price increases for about six months. For larger insurance risks, we're starting to see price increases now. I'd like to think as we get through into the middle of 2012, we'll see price increases in some of our larger risk insurance business.

Looking at our crop insurance business, there is no pricing cycle there. It's all about the weather. If you look at our reinsurance business, the property lines have been pricing up. So we think we're in a good market. I have no reason to believe that 2011 will repeat itself, either in terms of events or in terms of some of other financial challenges that are out there. We think we're well positioned to succeed going forward.

And with that, that's about as fast as I've ever done this. So thank you for being patient. I'm prepared to take questions. I'm prepared to watch people head for home. I'm happy to do either of those things. You're allowed to be shy.

Question-and-Answer Session

Jay A. Cohen – Bank of America Merrill Lynch

Just one question from me. You have been acquisitive historically. You mentioned the reinsurance deals; obviously, the crop deal. Is there any opportunity -- two questions, really. One, do you see the need to make an acquisition? And then secondly, are you seeing more opportunities? In other words, are bankers bringing in -- are more people looking to see either the business or parts of the business?

David Cash

When I look at M&A, I kind of look to a few different marketplaces. And so, starting in the U.S., where one of clearly the most positive things we did as a company was the acquisition of our crop insurance business in Texas. And where we're able to buy perhaps a small [indiscernible] physician company, I'd be interested in that. Where we see opportunities in some of the other classes, we call it small, specialized U.S. insurance classes, we'd be open to acquisitions.

And where would you do an acquisition there? We'd be willing to tolerate some goodwill. We'd be willing to pay over tangible book value to do it. Those properties don't come very often. We see them here or there. We found our crop insurance business through being a reinsurer. We were a crop reinsurance company, and we found it sort of privately. And we continue to patrol that space to see if there are other opportunities that come our way.

If I turn to the international reinsurance marketplace, I would like to achieve greater scale there. If you look at the pie chart back on of the earlier slides, we see that's clearly the smallest part of our international reinsurance business. It's relatively hard to find acquisition candidates there. The last sort of significant acquisition that was done there was by Partner, when they Paris Re. The more recent acquisition that was done there, [QB] bought a small Belgium reinsurance company that was originally maybe $150 million of premiums.

So there's just not a lot of opportunities to do acquisitions internationally on the reinsurance side. The last thing that gets talked about is the potential or consolidation in the primitive marketplace. And I certainly -- I think there are companies today operating in the market that may not be in the market at the end of the year, or at least will be operating as part of a different organization. And I think that's national. I don't think there are many of them and that's very kind of situational.

But those are the three places where I see activity. The area that I've been most interested in finding ways to grow would be to find a way to sort of replicate what we call the crop insurance purchase. And I think there are opportunities out there, but they're not there every day and they're not being -- you have to find them yourself, is what I'd say.

Jay A. Cohen – Bank of America Merrill Lynch

Are you seeing more now?

David Cash

In the excess and surplus lines insurance marketplace, we saw some small companies that I felt were small to the point that they were being marginalized and they were being shown to companies for acquisitions. And so, there have been some opportunities there we've looked at. I wouldn't say more. We've seen one or two MGAs come to the market that sort of came increasingly over the last year or so.

And what a number of them are saying is, we don't have scale. And frankly, if you want to be the size we'd like to be, we need to do M&A. And some of them are really talking about being acquired, so they then with their new parent company could go and do other acquisitions. And so, one of three of those have taken place. They're not that many of them right is what I'd say.

Jay A. Cohen – Bank of America Merrill Lynch

Any last minute questions? Great. Well, thanks for sitting it out. David, thank you for the presentation.

David Cash

Thank you.

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