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Unum Group (NYSE:UNM)

Q3 2012 Earnings Call

November 01, 2012 9:00 am ET

Executives

Thomas White

Thomas R. Watjen - Chief Executive Officer, President and Director

Richard P. McKenney - Chief Financial Officer, Executive Vice President and Principal Accounting Officer

Kevin P. McCarthy - Chief Operating Officer, Executive Vice President, President of Unum Us and Chief Executive Officer of Unum Us

Randall C. Horn - Executive Vice President, President and Chief Executive Officer of Colonial Life and Colonial life & Accident Insurance Company

Analysts

Jamminder S. Bhullar - JP Morgan Chase & Co, Research Division

Suneet L. Kamath - UBS Investment Bank, Research Division

Daniel K. Altscher - FBR Capital Markets & Co., Research Division

Sean Dargan - Macquarie Research

Jeffrey R. Schuman - Keefe, Bruyette, & Woods, Inc., Research Division

Christopher Giovanni - Goldman Sachs Group Inc., Research Division

John M. Nadel - Sterne Agee & Leach Inc., Research Division

Steven D. Schwartz - Raymond James & Associates, Inc., Research Division

A. Mark Finkelstein - Evercore Partners Inc., Research Division

Operator

Good day, and welcome to the Unum Group Third Quarter 2012 Earnings Results Conference Call. Today's conference is being recorded. At this time, for opening remarks and introductions, I would like to turn the conference over to Senior Vice President Investor Relations, Mr. Tom White. Please go ahead, sir.

Thomas White

Great. Thank you. Good morning, everyone, and welcome to the third quarter 2012 analyst and investor conference call for Unum.

Our remarks this morning will include forward-looking statements, which are statements that are not of current or historical fact. As a result, actual results might differ materially from results suggested by these forward-looking statements. Information concerning factors that could cause results to differ appears in our filings with the SEC and are also located in the sections titled Cautionary Statement Regarding Forward-Looking Statements and Risk Factors in our annual report on Form 10-K for the fiscal year ended December 31, 2011, as well as our subsequently filed Forms 10-Q. Our SEC filings can be found in the Investors section of our website at unum.com.

I remind you that statements in today's call speak only as of the date they are made, and we undertake no obligation to publicly update or revise any forward-looking statements. A presentation of the most directly comparable GAAP measures and reconciliations of any non-GAAP financial measures included in today's presentation can be found on our website, also in the Investors section.

So participating in this morning's conference call are Tom Watjen, President and CEO; and Rick McKenney, Executive Vice President and CFO; and also Kevin McCarthy for Unum US and Unum UK; and Randy Horn for Colonial Life.

So now I'll turn the call over to Tom Watjen.

Thomas R. Watjen

Thank you, Tom, and good morning. Overall, the third quarter was a solid one for the company, with operating earnings per share growing by 6.7% and I'm generally pleased with the results around the company and let me touch on a few of those here just to start the call.

First, we continue to generate solid results in our 2 largest operating businesses, Unum US and Colonial Life. In both business segments, we again experienced positive year-over-year growth in premium income and operating income.

The Unum US premium income grew 3.5% this quarter as we can continue to see positive sales momentum in our target markets and strong persistency across our major product lines. Rich results also remain generally stable, helping to produce a 3.4% increase in operating income for the third quarter.

At Colonial Life, we saw similar results this quarter with 5.5% premium growth and operating income growth of 3%. While Colonial sales results were down somewhat, which is an area of focus for our team, we continue to enjoy strong persistency across most of our market segments.

The return on equity for both of these businesses is very strong, in the 13% to 14% range for Unum US and in the 16% to 17% range for Colonial Life, and I'm very pleased with the consistency of performance of these 2 businesses.

Results of our Unum UK operations continue to underperform our expectations in the quarter. The business in general remains very profitable, and has produced a 12% return in equity so far in 2012, with our Group Disability business continuing to generally meet our expectations.

Our Group Life results though are disappointing, and we are taking aggressive pricing actions and repositioning our Life Block to address this issue.

We've done this before, and I'm confident that we will see gradual improvement here as well, as we execute on this plan. Rick will touch on this further in his comments.

Next, the results of our Closed Block segment were in line with our expectations, as the more favorable result from our Individual Disability line offset the somewhat weaker results in our long-term care line, which not surprisingly continues to somewhat -- be somewhat more volatile quarter-to-quarter. Rick will cover the performance of our Closed Block in his comments.

Now moving to our investment results. We continue to generate very solid investment performance this quarter. Today's low-interest rates though continue to put pressure on our net investment income and on those products which are more interest rate sensitive.

Since we are not expecting the rate environment to improve anytime soon, nor willing to sacrifice investment quality in order to stretch for yield, we are taking the actions needed to maintain our solid profit and reserve margins, particularly in our Unum US and LTD business.

This includes adjusting our discount rate and increasing our pricing in the market. You'll hear more about this in Rick's comments.

And finally, our capital position remains in very good shape. Our quarter end risk-based capital level of approximately 407% remains above our target range of 375% to 400%, and our holding company cash position is $762 million, providing us with significant financial flexibility.

We continue to balance maintaining a strong capital position with our goal of returning capital to shareholders.

In the third quarter, we repurchased $100 million of stock, which keeps us on pace to complete our plan of $500 million of repurchases for full year 2012.

When completed, we will have repurchased over $2 billion of our common stock, or almost 25% of our shares over the past 5 years.

While operating earnings growth in this environment remains challenging, we remain committed to maintaining our consistent, steady program of returning capital to our shareholders.

So in summary, I continue to feel good about our company's position in what remains a tough environment. We have been able to maintain a strong investment portfolio and capital position, grow our businesses in several strategically important areas and generate consistent, solid profitability across the majority of our businesses.

We've also continued to consistently return capital to our shareholders through our share repurchases and dividend increases, while maintaining a solid credit rating, and I would note that 2 of our rating agencies recently upgraded the company's ratings.

I'll now turn things over to Tom White for a review of our operating results this quarter. Tom?

Thomas White

Great, thank you, Tom. As you can see from our press release yesterday afternoon, we reported net income of $230.2 million for the third quarter of 2012, or $0.83 per diluted common share, compared to net income in the year-ago quarter of $202 million or $0.68 per diluted common share.

Included in net income for the third quarter of 2012 are after-tax nonoperating retirement related losses of $7.6 million and an after-tax net realized investment gain of $13.8 million.

Included in last year's third quarter, our nonoperating retirement related losses of $5.2 million and a net realized investment loss of $15.9 million.

So excluding these items, after-tax operating income was $224 million for this quarter or $0.80 per common share, compared to $223.1 million or $0.75 per diluted common share in the year-ago quarter.

Turning to the business segments, operating income for the Unum US segment increased 3.4% to $216.3 million in the third quarter, with premium income increasing by 3.5%.

The expense ratio improved on a year-over-year basis and risk experience was generally stable with the benefit ratio for the segment at 73% this quarter, compared to 72.8% in the year-ago quarter.

Operating income in the Unum US group disability line was $74.5 million in the third quarter, compared to $72.7 million last year.

Premium income increased 7/10 of 1% over last year, due to recent favorable sales and persistency trends, but total operating revenue declined by 9/10 of 1% as net investment income declined by 6.6%.

The benefit ratio, as we'll discuss later, was 84.9% in the quarter, down from the year-ago level of 85.5%.

In the Group Life and AD&D line, operating income increased 7.3% to $56.1 million in the quarter, benefiting from an increase of 6.9% in premium income, as well as higher net investment income and lower operating expenses, which offset an increase in the benefit ratio.

In the supplemental and voluntary line, operating income increased 1.8% to $85.7 million, with solid growth in premium income of 4.9%, offsetting a slight increase in the benefit ratio.

Moving to Unum UK, operating income in this segment declined to GBP 17.3 million from GBP 21.5 million in the year ago quarter. Results in the group Life Line of business were significantly weaker than the year ago quarter, while income in the group disability line improved over last year's third quarter results.

So concluding our core operations, Colonial Life reported an increase in operating income of 3% this quarter to $68.7 million. Premium income increased by 5.5% and the benefit ratio was slightly higher than a year ago.

Results in the Closed Block segment this quarter showed a decline in operating income to $25.6 million, from $30.8 million in the year-ago quarter.

For the Corporate segment, we reported an operating loss of $27.4 million for the third quarter, compared to a loss of $20.8 million in the year ago third quarter.

Net investment income is lower due to lower asset levels, a lower proportion of assets invested at long-term interest rates and a decrease in investment income attributable to tax credit partnerships.

Interest in debt expense was higher at $33.9 million in the quarter, compared to $32.2 million in the year ago quarter, reflecting our issuance of $250 million of 30-year senior notes during the third quarter.

It's important to remember that the negative impact on net investment income from the tax credit partnerships is offset by a lower income tax rate due to the tax benefits recognized as a result of the tax credit partnerships.

And finally, the tax rate in the third quarter is also lower due to a reduction of $9.3 million in our income tax expense in the third quarter to reflect the impact of the U.K. tax rate reduction on our net tax liability related to our U.K. operations.

The reduction in our tax expense from a similar rate reduction was $6.8 million in the year-ago quarter.

These were driven by reductions in U.K. income tax rates that were enacted in both the third quarter of 2012 and 2011.

So with that, I'll turn things over to Rick McKenney for a further analysis of this quarter's results.

Richard P. McKenney

Great. Thank you, Tom. This morning, I'll cover the profit trends we experienced in our business segments this quarter, a little more detail on our sales and growth trends, and I'll also update you on our investment results and capital position.

First on the operating results of the third quarter, I'll begin with Unum US, where we had another strong quarter for the overall segment.

Operating earnings growth was 3.4% and risk experience was generally solid across the segment.

Focusing on risk results, for group disability, the benefit ratio remained generally stable at just under 85% for the quarter, compared to 85.5% in the year ago quarter and 84.7% in the second quarter.

In the third quarter, we lowered the discount rate for new claim incurrals on the Group Long-term Disability by 50 basis points.

While our interest reserve margin remained at a very healthy level of 86 basis points, we continued our measured pace of new claim discount rate adjustments, given the extraordinarily low interest rate environment. This is particularly true for 10-year public and private bonds, our primary assets backing this line.

As we've outlined in the past, a discount rate reduction of this magnitude reduces quarterly earnings by about $6.5 million.

The impact of the discount rate change was largely negated by several factors related to risk trends this quarter, namely stable paid incidence trends, a lower average size of new claims and continued very good claim recovery experience, as well as our ongoing price discipline on new sales and renewals.

Our profit margins continue to remain at healthy levels for the Group Disability business. The Group Life and AD&D line was also a strong earnings contributor this quarter at $56 million, up 7.5% from last year.

The benefit ratio was 72.3% in the third quarter, higher than the 70.2% in the year ago quarter due to an increased volume of large claims in the quarter.

Margins also remained very strong in our Group Life and AD&D line.

The supplemental and voluntary line within Unum US continues to produce a very strong level of earnings for us, with earnings of $85.7 million for the quarter. Risk experience remained generally stable with a benefit ratio of 51.5%, compared to 51% in the year-ago quarter. These lines of business continue to be attractive growth opportunities for us, with strong margins and consistent performance.

Colonial Life also continued to produce solid results with third quarter earnings of $68.7 million, an increase of 3% from a year ago.

The benefit ratio remained relatively stable at 52.9% this quarter, compared to 52.6% in the year ago quarter, with higher mortality in the Life Line of business, but favorable experience in the cancer and critical illness and accident, sickness and disability lines.

Solid, consistent results once again, generating ROE in the 16% to 17% range.

Moving to Unum UK, results continue to be challenging with third quarter operating earnings at GBP 17.3 million, compared to a year ago quarter of GBP 21.5 million.

Results in the Group Life Line of business were negatively impacted by higher claim volumes and higher average claim sizes.

On the other hand, results from the Group Disability Line improved on a year-over-year basis due to favorable claim incidents and claim recovery rates. As we have discussed with you in recent quarters, results in Unum UK can be inherently more volatile than most of our other lines of business because of the size of the policies we write, and the relative size of this block of business.

In order to restore the profitability of this business, we'll need to aggressively raise prices, particularly with our Group Life policies. We're working to do so with double-digit rate increases and expect to see improved results looking out over the next several quarters.

Concluding my comments on margin, overall results in our Closed Block were in line with our expectations at $25.6 million this quarter. Results in the Individual Disability line of business were stronger than normal, with favorable risk experience as indicated by the interest adjusted loss ratio at 82.5% this quarter, compared to 84% -- almost 85% in the year-ago quarter.

Long-term care results were slightly under our expectations, with the interest adjusted benefit ratio at 91.3%.

Our year-to-date results of 90% are slightly above our expected range. We experienced higher claim volatility this quarter, with higher new claim incidence and a higher average claim size.

We continue to watch this closely, but our experience to date has not changed our longer-term views.

As we look to our growth trajectory in Unum US, we continue to see positive momentum in our sales results again this quarter, with 4% overall sales growth, driven by 10% growth in our Group Disability Line and 5% growth in our Supplemental and Voluntary Lines.

The sales mix was also encouraging, with over 80% of this quarter's group product sales coming from the core market segments.

Premium persistency remains at a strong level for Unum US at 90.7% for group long-term disability, and 91% for Group Life on a year-to-date basis. With these positive trends, we continue to produce good Premium growth of about 3.5% in our Unum US segment, a good result given today's competitive market conditions and continued weak employment trends.

In the U.K. sales results for the quarter were down about 20% in local currency, with a sharp drop in Group Life Sales, which are down 39%, offsetting a 6.6% increase in the Group Disability Line. We're aggressively pushing price increases into the market, and clearly this is having a negative impact on group life sales. You'll also note that the persistency for our major group lines in the U.K. have declined this year, with the Group Life persistency declining to 80% for 2012 today from 88% in the first 9 months of 2011, and we're pleased with the rate of increases that we're beginning to realize in the Group Life Line, but as we've previously, it will take several quarters to improve the profitability in this line.

Finally, premium income increased 5.5% in Colonial Life in the third quarter, in line with the premium growth trends we've seen in recent quarters. New sales in total were down this quarter by 5.8%, while new sales in our core commercial market segment were down less than 2%. We experienced large declines in the large commercial market and in the public sector market. We didn't see any dramatic changes in the market in the quarter, just a continuation of decent sales trends within existing accounts, but challenging trends with new account sales.

Moving on to the balance sheet and the investment portfolio, this is very much a story similar to what we've experienced in the past several quarters. A very good credit quality experience, but a very challenging environment for new money yields due to the low level of interest rates, as well as the tight corporate bond spreads available in the market.

Briefly on credit quality, the net unrealized gain position on our fixed maturity securities portfolio stands at $7.3 billion at quarter end. And our watch list of potential problem credits remains very low.

The net realized after-tax investment gain from our portfolio was slightly positive on the quarter. The low interest rate environment continues to present a challenge though, and the overall portfolio at the end of the quarter was 6.54%, a reduction of 5 basis points from the prior quarter.

Our strategy for managing through this environment is centered on being selective in our asset purchases. With tighter spreads in our core asset category of investment grade corporate bonds, we've found better value and yield in other asset categories such as private placements, commercial mortgage loans and below investment grade bonds.

We also continue to benefit from the hedges we have in place for our long-duration LTC portfolio that cover about 1/3 of our cash flows.

With selectivity comes a higher level of uninvested cash in our product portfolios. We did make progress in the third quarter by reducing the amount of uninvested cash to less than $300 million at quarter end from over $400 million for much of the first half of the year.

The other important element of our strategy for dealing with low interest rates is to make adjustments to our discount rate assumptions, such as we did with our Group Long-term Disability line this quarter, and look to offset that higher cost by adjusting pricing on new sales, as well as renewal business.

Moving onto our capital position, we continue to be very pleased with the company's overall capital. Statutory net income was $138 million for our traditional U.S. Life insurance companies this quarter, consistent with the year ago quarterly results, and our run rate continues to support our capital model that generates above $500 million of free cash flow per year.

The weighted average risk-based capital for our traditional U.S. Life insurance companies is approximately 407%, remaining slightly above our 2012 target range of 375% to 400%.

Cash and marketable securities in our holding companies totaled $762 million at the end of the third quarter, and we benefited from the debt issuance we completed in the quarter.

We issued $250 million of 30-year debt at a coupon of 5.75%, taking advantage of today's low interest rates, strong investor demand for corporate bonds and our own recent rating upgrades.

With this issue, our leverage remains a very comfortable 25%, and our coverage ratios are very healthy. Our share repurchase activity in the third quarter totaled $100 million, which brings us to $400 million for 2012 to date.

We expect to complete our planned $500 million of repurchases for the year in the fourth quarter.

Closing with a comment on our outlook, we believe that growth in operating earnings per share for 2012 will be in the range of 3% to 6%, based on full year 2011 operating earnings per share of $2.98.

We plan to discuss our 2013 outlook for operating results and capital management plans on December 17 when we'll host a meeting in New York.

Details of that meeting will be released soon, but I'd ask you mark it on your calendars and join us that afternoon.

Now let me turn the call back to Tom for his closing comments. Tom?

Thomas R. Watjen

Thanks, Rick. I'll close by saying again that we're generally pleased with our third quarter results. Unum US and Colonial Life continue to generate solid premium growth and margins, and we have continued to maintain a solid investment portfolio and strong capital position.

This certainly remains a very challenging interest rate environment, but we are taking the actions necessary to effectively manage through a sustained period of low interest rates and the one area not meeting our expectations, Unum UK, I feel good about the plan we have in place to gradually improve our performance in this business.

While we remain focused on generating strong operating results, we are fortunate that our cash flow and capital position remains strong, allowing us to supplement our operating results with a consistent return of capital to our shareholders.

And operator, this will complete our prepared remarks and please, let's move to the question-and-answer session.

Question-and-Answer Session

Operator

[Operator Instructions] We'll take our first question from Jimmy Bhullar with JPMorgan.

Jamminder S. Bhullar - JP Morgan Chase & Co, Research Division

I had a question first on long term care. Obviously, you took up a pretty large charge last year, and part of that was related to low interest rates. Given the decline in rates and just corporate bond yields being lower, what's your comfort with overall long-term care reserves, and at what point would you need to consider taking another charge? And then secondly, just on -- if you could talk about some of the things that you're doing in the U.K. market, as you mentioned you were raising prices, but your persistency has declined and then I'm assuming it's because of that, but does that imply that competitors are not following suit, or maybe if you could talk about the competitive environment in the U.K. market as well?

Thomas R. Watjen

Well this, Rick, you want to pick up on Jimmy's first question on long term care?

Richard P. McKenney

Yes, Jimmy had a specific question on long-term care around interest rates and the impact on that line. If I take you back to the year-end process we went through, we adjusted our reserves and based that on an outlook that we had at that point in time of a difficult environment, of a very low rate environment looking out in the 3 to 5-year range and adjusted our interest rate assumptions and our discount assumptions accordingly. The world has gotten a little bit tougher in the investment grade market, but what I would tell you as opposed to changing that outlook over the 3 to 5-year range, it probably has brought it in at the current moment to the shorter end of that range, and we'll have to continue to look on that, but I would also caution there's a lot of other elements you have to look at though when you look at that line of business, we isolated that element at year end last year, but you also have to think about the things that we're doing in terms of price increases that we're taking, actions that we're taking in line, and continuing to do that. So for that particular element, we still feel fine with that assumption that we made at year end. We did look out over the horizon, just a short bit, and doing that and it continues to be the case, but it is a broader line that we'll continue to watch and go through and measure and manage.

Thomas R. Watjen

I may, Rick, to that point, I think since you mentioned that we are actively managing that business even though it's in a closed block, it might be because I know it's on the people's minds as well. Kevin, if you could just take a minute to talk about just some of the actions that we have underway, because we have really put quite a few resources behind being sure that, even though it's closed, that we're actively managing that business.

Kevin P. McCarthy

Thanks, Tom. Good morning, Jimmy. In long term care, maybe the most important thing is our rate increase process. That process is proceeding as we've mentioned in prior quarters, it's not a one-time event, it's kind of a dynamic renewal process. We've filed to nearly every state at this point, and we're so far, at least, achieving our objectives with approvals. Some of those are full approvals, some are phased in approvals, and some are partial approvals. It was a fairly wide range, I guess, of rate increases, but ranging from the teens to upwards of 50%. In total though, those increases are very consistent. The assumptions that we rolled into our models at the end of last year and into the first quarter, when we took the charge and closed the block, we'd expect those premiums to emerge in 2013 and into 2014. Beyond the rate increased actions, we have made a number actions in terms of shoring up management further, increasing our claim management control processes, quite similar to what we do in long-term disability. So I think, from an actively managed standpoint, we have the right things in place.

Thomas R. Watjen

Thanks, Kevin. Jimmy, the other question was on the U.K., and before I ask Kevin to pick a bit, let me just again, just come back to a couple of comments I made. As you know, that business continues to be very profitable, it continues to generate over 12% return, and frankly, the LTD business in that market continues to perform reasonably well. I think it's come out this morning very clearly, the issue there is Group Life. And you may recall when we made some changes, actually a bit ago in terms of who's -- the leadership team and the structure of how we're running that business, we did talk that under Kevin's response, broad shoulders actually, because some of the issues were confronted with in the U.K., we find are very similar to ones that we went through in the U.S., and I'm specifically talking about the actions we had to take around repricing and repositioning the Group Life business. So when you talk about persistency and the cause and effect between pricing actions and persistency, I say Kevin, we're very familiar with how to sort of keep a good eye on how to balance those different things and maybe just speak to a little bit about what we're doing now in that marketplace.

Kevin P. McCarthy

Thanks, Tom. And I think this is kind of a straightforward problem, and a straightforward solution. We've got some issues in Group Life Line of business, primarily driven by some previous underpricing, some deterioration in mortality, reflecting increased levels of incidence and higher average-sized claims. What we're doing is putting in place an aggressive renewal program, double-digit rate increases, on average, with some rate increases upwards of 30%, depending upon the segment or the account. In that process, I would say it's still early in the game. It'll take us a renewal cycle to get all the way through that. I would expect some pressure on persistency, both from customers who don't want to accept the rate increases and/or from some purging of the block that we'll do, similar to what we did in the United States, back several years ago. As far as competitors go, I would expect in general that they will follow, but also in these kind of environments, just as it happens in the United States, sometimes companies take steps to back off of their renewal increases if they think that they're under persistency pressure, or too great an amount of persistency pressure. And so I would expect there to be a follow on from competitors, but I wouldn't accept -- expect it to be sort of wholesale. The other things that we're doing there, in addition to rate increases, are we are changing our mix of business, much again like what we experienced in the United States. Our larger case Group Life business has not performed nearly as well as our core market Group life business, and so we'll be changing our mix of business and we're also tightening up some underwriting guidelines by segments, and also reducing or eliminating some richer product features, so all in all, I think it's the same process we went through in the United States, where we had significant success.

Operator

We'll go next to Suneet Kamath with UBS.

Suneet L. Kamath - UBS Investment Bank, Research Division

My first question is on long term care. I guess, Rick, in response to Jimmy's question, you spent some time talking about the interest rate exposure and the underlying assumptions there. I guess, I wanted to ask the same question as it relates to the claims experienced. I think in your prepared comments you said the loss ratio kind of just north of 90 was a bit higher than your expectations, so I was just wondering, first, what are your expectations in terms of loss ratios in that business, and then, how many quarters of north of 90% would we need to see before you might have to think about taking a reserve charge, not necessarily for interest rates but for higher claims?

Thomas R. Watjen

Rick, you want to take that one?

Richard P. McKenney

Okay, Suneet. It is a broader question, so I appreciate you bringing that back. What I would say what happened in the quarter, and what's happened year-to-date really is much more about what's happening in the short-term and volatility in claims experience. We do not see that necessarily is a trend today, and what's reflected in our reserves are much longer term trends. So when you talk about -- this isn't about quarters we're looking at it, it's about years in terms of looking at those trend lines. And so I think it's hard to extrapolate off of anything in the quarter. You've mentioned the expectations, I -- we would expect actually, the loss ratios in this line to be more in the high 80s, than in the low 90s, and so that's really where that's predicated from, but it's one we continue to watch. It is a line that we've been focused on and continue to focus on as Kevin's comments, it's about actively managing that block as well, as we go through that, and so when you think about all our broader range of assumptions, we'll go through a process as we are now, at year end of looking across all of our lines of business, not just long term care, and looking at all the assumptions we have driven there, but this is a much longer term process when you think about it, and the claims experience that we have seen year-to-date, a little higher than we'd expect, but we don't necessarily see a trend there that would need to be reflected throughout the longer tail of the reserves.

Suneet L. Kamath - UBS Investment Bank, Research Division

Got it. So high 80s versus low 90s, it doesn't seem like it's wildly out of your expectations, just slightly kind of at the higher end?

Richard P. McKenney

That's right, and this is a line which will see volatility, so I don't think we're overly concerned. We don't -- we obviously don't like when results come in lower than our expectations, but it's nothing that causes us necessarily longer-term concern. I think your calibration about how far it's off is appropriate as well.

Suneet L. Kamath - UBS Investment Bank, Research Division

And my second question relates to the capital generation model. That's a slide that you typically use in your presentations. So I'm just kind of wondering where we sit today with this, because it looks to me, like, the U.K., the last time you did this slide, you're talking somewhere, the order of magnitude, $100 million to $150 million of statutory net income. Yes, I'm not sure where we're running year-to-date, but my guess is that we're a bit below that. And then, in terms of capital required to support growth, your slide shows plus or minus 50, given the growth that you're seeing in the U.S., my guess is that it might have some upward pressure. So I guess, my question is, as we start to think about next year, and I acknowledge that you're going to give us more guidance on this, but should we expect that $500 million number, given kind of these moving parts that I just mentioned, to possibly have some downward pressure?

Richard P. McKenney

Sure, and let me answer that in some of the detail you had there, because I think it's a good question, and we will address that more as we get through the year-end process. I'll tell you that capital model is very much intact, even when you look at the U.K., which you specifically asked, we had $100 million to $150 million, in dollars that we had there, so if you look at the after-tax earnings on a U.S. GAAP basis, you're just slightly below that range and when you think from a statutory perspective, it runs a little bit differently than that, then so, I think we'd probably be at the lower end of that range today, where as we were probably at the upper end of that range, as you look at it last year, but it still hasn't broke through that. And so we'll actually be looking for, as we've seen over the last several halves, I guess, dividends coming out of our U.K. companies, which we've continued to take. So that piece of the model's still intact. We talk about our U.S. statutory earnings continuing to be very good across the line, and then in terms of capital consumption of the business, we are certain to see the business grow. We're happy about that, and in terms of the Premium line, break it to you, the capital, if you think about our product lines and that -- those that are growing are not heavily capital-consumptive. So when you think about that, that 50 is probably -- still much intact, even though we're starting to see growth in the lines which do require a lower amount of capital. So we think about the model a lot, I'm glad you're focused on that, and I'd say it's still very much are -- on track and we'll give you some more detail to that as we get to our Investor Day in December.

Operator

We'll go next to Randy Binner with FBR.

Daniel K. Altscher - FBR Capital Markets & Co., Research Division

This is Dan Altscher on for Randy. Particularly as it relates to the sales environment, the sale trends in Colonial kind of slowed down a little bit, and then also in U.S. in Group Life. So can you talk a little bit about, if anything in the competitive environment's changed or maybe just some tough comps or one-off sales from last quarter that slowed the trajectory down?

Richard P. McKenney

Sure. Actually, maybe I'll ask -- we'll break it 2 pieces, actually. Maybe Kevin, you want to talk a little about the Unum US sales trends again, I think we feel pretty good actually about where things stand and the sustainability of that.

Kevin P. McCarthy

Yes, I mean -- good morning. Group Life sales, this third quarter in general is the smallest quarter of the year in terms of sales, so you're going get a little bit of volatility. Also, it's -- particularly in the larger case end of the market place in the quarter, we didn't see anything particularly attractive, at least in terms of the way in which we approach disciplined pricing core. Core sales were still up, so no, I don't see anything really going on, unusual in the Group Life marketplace. I just think you can get a little bit of that kind of volatility in the third quarter because it's the smallest one.

Thomas R. Watjen

And I say too, Kevin, your year-to-date sales are up about 9%, actually, across all lines and so I think the beauty of our Unum US platform is we have a whole breadth of offerings in the marketplace, and the places actually we have targeted for strategic growth, we are seeing a fair amount of strategic growth. Lot of that is just because we happen to be, we've got a good offering, and we're -- we got a good connection with the marketplace.

Kevin P. McCarthy

And year-to-date, Group Life sales are up 7% and into the core market, they're up 8%. So like I said, I think it's more just quarterly patterns, more than anything else, and maybe a little bit the lack of attractive large case.

Thomas R. Watjen

And then Randy, maybe you can speak a little bit about to the Colonial sales results. I mean, I think it, as everyone knows, we really had 2 entrées into the voluntary marketplace. One is through the MUS offering, which is primarily our brokerage model. That's kind of the marketplace where, that gives us a different sort of, more diverse way to come to the market with a more integrated offering, the Colonial offering is a more limited offering, but yet one that gets certainly to wide, a certain -- very important segments of the marketplace. And Randy, you may just want to talk about some of the dynamics you're seeing there, and again, I would add, as I mentioned in my earlier comments, frankly, I'm very pleased with the 5.5% premium growth we saw in the quarter and the continued ability to maintain very strong margins and returns, actually. And the one place we do recognize we're a little behind, perhaps where we'd like to be is in sales. I think, Randy, you can talk to some of the things we've got underway to try to improve those results.

Randall C. Horn

Sure, Tom, thanks. Yes, overall, we continue to see the primary pressure in our sales on the large case side of things, as Rick pointed out, and also sales to new accounts. We are pleased, on a year-to-date basis with our sales to existing accounts, and very, very pleased with our strong persistency of our business that help generate that 5.5% premium growth. We still are experiencing some economic headwinds in our core markets. Things have been well-documented in terms of continued high unemployment, and just general level of uncertainty for businesses, but we're not seeing any fundamental gaps in our capabilities and we believe very strongly that we can overcome the market pressures with disciplined execution of our sales strategy. We're taking a number of actions to improve our sales results, we've recently combined our sales and marketing areas under new leadership. We feel that's going to enhance synergies and our speed to market, we're continuing to stay focused on growing our agency distribution system and enhancing their overall capabilities. We've rolled out a number of new products and services over the last few months, and through those combined actions we feel very confident we can regain sales momentum going forward.

Daniel K. Altscher - FBR Capital Markets & Co., Research Division

And just a quick housekeeping item. With the U.K. tax change going into effect, is this kind of a -- that 28% kind of effective tax rate number kind of the right way to be thinking about it across the entire complex, going forward?

Richard P. McKenney

No, actually those are one time, and they, so because of the tax legislation that went in, in the U.K., that actually accelerates some of the tax benefits by releasing deferred tax liability. So you'd have to take the overall entity would be just up over 30% on a going-forward basis.

Operator

We'll go next to Sean Dargan with Macquarie.

Sean Dargan - Macquarie Research

I'm just wondering about the interplay between the macroenvironment and unemployment and perhaps the better claim recovery you've seen in U.S. group disability. I mean is that a function of people finding work, or feeling more secure that there's a job for them?

Thomas R. Watjen

Kevin, you want to pick up on this?

Kevin P. McCarthy

It's awful hard to pinpoint it to anything sort of related to the economy. I haven't -- I don't think the employment picture in general has gotten all that much better. I do think it's a difficult economic environment to be on a fixed income, and so I think there's probably motivation to recover. But I also think the diligence and hard work and efforts of our claims management people in establishing customer relationships, working with claimants, employers and physicians and working to accommodate them and help them get back to work are all factors as well, and we've had consistent strong claim recovery performance, over the last off number of years, and it just continues.

Sean Dargan - Macquarie Research

And I have one follow-up question about the investment portfolio. Given the NAI actually taking a different view of capital charges around mortgage-backed securities, I'm wondering if you think that would have any impact on your RBC?

Kevin P. McCarthy

Yes, so no, I'll take that. Our mortgage-backed securities, they're actually very highly-rated, government backed, so a lot of the things that they've been talking about were more to the structured securities that they've looked at and we actually don't have any of those in the portfolio, so we don't see any impact from that.

Operator

We'll go next to Jeff Schuman with KBW.

Jeffrey R. Schuman - Keefe, Bruyette, & Woods, Inc., Research Division

Wanted to come back to the U.K. and try to get a little bit better perspective on what's happening now, and kind of what -- how we got to this point. I think Kevin said this morning that you're still fairly early in this process of implementing rate increases, but if you go back 2010, couple of things happen. Margins slipped a lot, and yet Group Life pings are up 18%. You made a management change, I think one of the issues you mentioned was maybe taking a closer look at Group Life. 2011, Group Life, it pings up another 15%, local currency margins slipped some more, there was some talk about taking rate. 2012, it pings up another 11%, and we're kind of hearing about starting a process of taking rates. So have you been taking rates the last couple of years? Or is this a more recent phenomenon? And then I'm wondering, how we get comfort kind of looking at U.S. Group Life, where you have this very strong growth of 7%, and wanting to get some comfort that that's quality growth.

Thomas R. Watjen

Yes, let me start that up and then maybe just ask Kevin to pick up. I think you certainly, Jeff, you raised a very valid point. As you look back over a couple of years, you can -- and with the benefit of hindsight, I must say we probably would have gone and approached the Group Life business a little differently. I can assure you though, that I think as Kevin said, actually the rate increase actions probably began more on the first of the year, I think. So we're into this rate action pretty substantially at this point. Could we have started that more aggressively maybe a year before that? I think, let's think again, it's always an interesting -- the benefit of hindsight, look back as you can probably conclude that. Part of what you struggle with, when you're going through a period of time like that is trying to ascertain what's volatility, and what's real results. And I think at times with a smaller business you tend to think that's a little more around volatility, and therefore a little more hesitant to do the aggressive things with rate increases. I think again, when you look back you realize that wasn't volatility, maybe there's a more fundamental issue with the margins there. So I would certainly state it, as we look back, maybe we could have been more aggressive sooner. Having said that, now that we are aggressive, we are being very aggressive, and we're using a very consistent model to what we used in the U.S. to go through the same kind of issue a number of years back, and as you may recall, we were very, very disciplined about doing what had to be done to get the right rate, and let the business leave if fact we can't go those kinds of rates. I think Kevin, that's what you talked about in your comments actually, and so I think again, looking back, maybe we could have done that sooner, but I think we're on a very rigorous, -- so we have a very rigorous plan in place to make up for lost time, if you will.

Kevin P. McCarthy

Yes. I think that's right on the money, Tom. I think probably we were slow in adjusting to the fact that mortality was deteriorating, and moving our prices up, but at this point in time, we're moving prices up more aggressively, in greater volume as well across our renewal programs. The other thing that I think affected results was that we had a somewhat substantial swing in mix of business towards larger Case Group Life in 2009, 2010, 2011, and what we're doing now is basically peering back on that, reshifting our focus, so when we compare, Jeff, to the U.S., the growth we have in the U.S. is, almost completely, sort of core market growth. That's where it's coming from. A lot of our Group Life Sales are successful in across-the-board, but especially in the core marketplace, and I think that's the shift that we'll make in the U.K., both raising prices and shifting to the core.

Operator

We'll go next to Chris Giovanni with Goldman Sachs.

Christopher Giovanni - Goldman Sachs Group Inc., Research Division

A question maybe for Kevin. Can you talk some about kind of the process right now for getting rate increases through on the LTC block? Because many of your competitors have talked recently about having a more difficult time getting rate increases through, as insurance departments are now, sort of inundated with rate increases, given sort of the of mass exodus of this product line?

Kevin P. McCarthy

I think this line of business, it's natural that you're going to have some give-and-take process with regulators. I mean, you are talking about our product line that at least, from an image standpoint, focuses on the elderly. It's not actually the case when you look at our book of business, a substantial part of our book of business is actually below the age of 60. So that said, we're going to work through the process state-by-state. We've filed in virtually in every state. There's a moratorium with approvals right now in New York, but the rest of the states, we're sort of moving forward and we're either getting a full increase or we're getting a partial rate increase or we're getting a sort of a compromise process around being able to phase it in over a multiyear period, but I think it's a difficult problem for regulators in the sense that they know that the interest rate environment is low. They know that the industry is under pressure, they know that the rate increases are needed for effective liability management so at the same time, they want to be careful about pushing prices too high based on assumptions. And so you just go through that process, and I think we're doing very well right now.

Christopher Giovanni - Goldman Sachs Group Inc., Research Division

Okay. So no real change over the course of the past 6 to 12 months in terms of approval process?

Kevin P. McCarthy

No.

Christopher Giovanni - Goldman Sachs Group Inc., Research Division

And then maybe following up on Jeff's question, kind of on the U.K. So I guess, with Peter now running the business over there, I mean what's going to change versus what kind of Jack was focused on, because again, I thought his main focus was taking kind of the practices that were done on the disability line in the U.S. and kind of bringing those over to the U.K. to improve the profitability?

Thomas R. Watjen

Chris, let me -- in fact, we can. Let me start and remind everybody, when we made the changes, actually, Jack had been over there for a couple of years, and we again, it was, we had -- sort of sort have an understanding that sort of bringing him back at a certain point, and I think as we look forward, just to set the stone for why the changes were made is, is that we were on a good pathway with Jack, but on the other hand, we wanted to get some stability at the CEO level as we thought about this, this is a couple of year process to rehabilitate that block of business, Chris, and so at the same time, as you know, we also had a significant need as we talked about earlier, to really bolster our resources supporting our Closed Block. So all things pointed to making a change at the time, so I want to be sure we put that in the right perspective because some of those seeds were already sown, with some price increases and things before Jack actually came back. Now, again as I mentioned in my comments, actually at the time we made that change we did recognize, at least I recognized that, maybe getting just a little closer to Kevin's organization, because that would help accelerate the ability to make some of those changes and implement some of the things that have been done in the U.S., in the U.K., that was done more effectively by tucking it under Kevin's wing, which was another piece to what we did at that point. I'd say, Kevin, we're already beginning to see some of the benefits of having done that, in terms of being able to bring greater resources to bear on what's obviously a challenge, but also one that frankly, we've successfully navigated through in the past.

Kevin P. McCarthy

I wouldn't expect in general you're going to see a significant amount of change in what we did in the U.K. now versus, previously under Jack, other than that because the Group Life results continue to deteriorate during the middle and second half of this year, we've had to ramp up our focus there, around mix of business and renewal pricing actions and new business pricing actions. I think probably we've ramped up a little bit the number of actions and type of actions that we need to take in Group Life, but all of the activities that Jack was leading and involved in, in terms of driving, increased capabilities in terms of group income protection claims management, under writing management, those continue. And I do think as Tom said, we just have put it in a place where we can provide maybe a greater volume of supporting resources, whether it be in Group Income Protection or Group Life or actuarial resources or whatever, from the U.S. to the U.K.

Christopher Giovanni - Goldman Sachs Group Inc., Research Division

Okay. And then lastly just quickly on the buybacks. I think 4Q, you've typically been pretty light in terms of share repurchase activity, and I believe some of that has been due, maybe to the timing of the analyst meeting. So, I guess, with the push back now at December, are you comfortable that there's enough liquidity and open periods that you can get that done? And then this $500 million, still sort of the run rate that we should be thinking about going forward in terms of the free cash flow and then, i.e., the buyback opportunity?

Thomas R. Watjen

Rick?

Richard P. McKenney

Yes. So actually, Chris, when you think about the buybacks fourth quarter, I think you're absolutely right. If you look back over the last several years, our Investor Day was kind of a mid-February, so it's a couple weeks from now, so our windows were really -- oh, I'm sorry, mid-November, and so actually our windows were actually quite short and it was difficult to buy back a fair bit of stock, at least in an open window-type time frame. We don't have that constraint this year. I mentioned December 17 will be the date, put it on your calendars, and we actually have plenty of opportunity to buy back stock through the fourth quarter. The $500 million they talked about, with another $100 million in the fourth quarter will be on track for that. We'll talk about more next year, and the capital plans in December, but I think, as I've reiterated talking on the capital model with Suneet as well, we still see the free cash flow in the company of around $500 million. And in the current environment, given opportunities that we have out there, we still think that buying back stock, particularly at these prices, is very opportunistic for the company. So I think everything you said is correct.

Operator

We'll take our next question from John Nadel with Sterne Agee.

John M. Nadel - Sterne Agee & Leach Inc., Research Division

So a couple of questions. Maybe just going back to U.S. Group Disability for a moment. I think it was mentioned that the 50 basis point discount rate reduction would typically impact quarterly results by about $6.5 million. I just wanted to make sure that's pretax number correct?

Richard P. McKenney

That is pretax, yes.

John M. Nadel - Sterne Agee & Leach Inc., Research Division

Okay, and so if I think about the results this quarter, if everything had been sort of constant, right, which -- it never is, of course, but if it remained constant versus the second quarter, that 50 basis point reduction in the discount rate, that would've -- that would typically cost, what the benefit ratio, about 120, 130 basis points?

Richard P. McKenney

Something like that, yes.

John M. Nadel - Sterne Agee & Leach Inc., Research Division

Okay, so claim recovery is really the primary quarter-over-quarter improvement and I guess, the question is, or it sounds like that was the case anyway, and maybe you can just confirm that and just help us understand how sustainable you think that might be?

Richard P. McKenney

Sure. The different pieces of that, so actually Paid Incidence was quite flat, and has been, so if you're looking on a sequential basis, Claim Recoveries are quite good, as you mentioned, sequentially. And also the average claim size was down a little bit. And so in terms of how that persists, we'll have to -- we'll continue to watch that. And so I think what you saw this quarter was a very good quarter, although there's nothing really in there that we'd say won't -- doesn't have the opportunity to continue to persist as we look out into further sequential quarters, and so we'll have to continue to watch that loss ratio. So I think what you saw is a -- it's a very good quarter, we took -- have some good actions, I think to reduce our claims discount rate by 50 basis points to reflect the environment, and we'll have to see how that plays out.

John M. Nadel - Sterne Agee & Leach Inc., Research Division

And then just back to the U.K., just thinking about it for more of 50,000-foot perspective. I think last quarter, maybe the quarter before, you were characterizing your expectations over the near-term as being sort of a GBP 20 million to GBP 25 million of quarterly earnings. Obviously, this quarter little bit light to that. It sounds like mostly on the Group Life side. How quickly do you think you'll recover to that range? Do you feel like results in the U.K. have found the trough?

Richard P. McKenney

John, I'll actually say we're still in that range. I think what we said last quarter was GBP 20 million to GBP 25 million, but we might see volatility around that. That's what we saw this quarter, and unfortunately, to the downside, but I'd say GBP 20 million is still probably a pretty good anchor number, when you look at it. And as we look to take price, we'll look to watch it price in and block management, so it's not just about price, it's about risk selection and customers that we're continuing to work with. As we take that forward, we look to see it improve from there.

John M. Nadel - Sterne Agee & Leach Inc., Research Division

Okay, and then the last question I have is just on the investment portfolio on the residential mortgage-backed security allocation. It looks like over the last couple of quarters that the actual level of holdings there has been sort of consistently declining, maybe $100 million, $200 million a quarter. I'm wondering if that's a proactive move on your part, or if that's more a function of prepayment activity, and if it's the latter, can you give us some sense for how much that's contributing to current net investment income, but perhaps some incremental pressure we have to think about as we look out to 2013?

Richard P. McKenney

Certainly. I'd like to think that everything we're doing is proactive, but in reality, in that block is, what we're doing is we're not buying more residential mortgage-backed securities. We just don't see the value in terms of what we'd be taking in there, and these are actually ones that we've initiated a number of years ago, that actually had good rates. I can't give you a good number offhand in terms of how much deterioration that has caused, because it then effectively rotation out of those assets into others, but when you think about the general investment income pressure, we will -- we'll feel we've grown our front.

Thomas White

Yes, John, this is Tom white. Just on the prepayments, what to the extent we get prepayments, we include that in our definition of miscellaneous investment income. And actually, miscellaneous investment income for this quarter was very consistent with what we saw in the second quarter and actually down, probably $2 million or $3 million from a year ago, but we just haven't bought a mortgage-backed security in years, and so you've seen a gradual decline in that exposure for several years, as a matter of fact.

Operator

We'll take our next question from Steven Schwartz with Raymond James and Associates.

Steven D. Schwartz - Raymond James & Associates, Inc., Research Division

Just a few, I think, follow-ups from some comments. There was a mention that vis-à-vis the U.K., the need to get through a renewals cycle. If you could remind us how long your renewal cycle is in the U.K.?

Thomas R. Watjen

Kevin?

Kevin P. McCarthy

Given where we are, it'll now be about another 1.5 year.

Steven D. Schwartz - Raymond James & Associates, Inc., Research Division

Another year and a -- but generally speaking, are we talking 2, 3 years?

Thomas R. Watjen

Two years, I would say would be typical.

Steven D. Schwartz - Raymond James & Associates, Inc., Research Division

Okay. All right, good. And then, just a follow up on the LTC expected ratio discussion. Ricky indicated that high 80s, presumably what you're referring to is kind of today with today's rate on line, as rate increases pile through, I assume that you would think that would come down over time?

Richard P. McKenney

That would be an expectation over time, yes.

Steven D. Schwartz - Raymond James & Associates, Inc., Research Division

Okay, just wanted to make sure on that. And then, kind of a theoretical question, I guess. There's -- you didn't discuss it in your script, at least I didn't catch it, but it was in the release, a discussion of improvement in the loss ratio in the U.K., which is counterintuitive given the fact that earnings in the U.K. went down. I guess, what I want to ask you is, how meaningful are those numbers that were in the press release, given the fact that you also have this issue in investment income with regards to the inflation adjustment factor, which can really screw up the ratios if that's not accounted for?

Richard P. McKenney

It is a challenge. Tom, why don't you go walk him through that.

Thomas R. Watjen

Steve, I think you described it well -- but, essentially what happens is, we've got an RPI adjustment and inflation adjustment on roughly 1/3 of our Group Disability business over there, and so when we have swings and inflation, that will flow through, and I think in this quarter, the RPI came down a little bit. So -- and we buy index link gilts in the investment portfolio, so as inflation comes down, you'll see a drop in investment income that we report, but also a drop in the benefit ratio and they offset each other. So there's really no impact in the quarter. So you're right, when you look at just kind of the pure benefit ratio in that business, it can distort things a little bit, and there's probably some additional disclosure that we can look at to kind of help you see the underlying risk trends. But I think as we've tried to describe on the call, the underlying risk trends and group disability business actually got a little better, so that benefit ratio improved and on the Group Life side, it was deteriorated. Now the adjustments that we look at internally would have had our benefit ratio at about 76% in both the second and the third quarter, so the underlying benefit ratio, stripping out the RPI adjustment again, was pretty stable again, a little bit of improvement on the Disability side, but a little bit of deterioration on the Group Life side.

Steven D. Schwartz - Raymond James & Associates, Inc., Research Division

Okay, that's good. And then maybe something can be worked out for the December 17, I think it was, Investor Day.

Operator

We'll take our next question from Mark Finkelstein with Evercore Partners.

A. Mark Finkelstein - Evercore Partners Inc., Research Division

A couple of follow-ups, actually. One is, what is the dollar value of Premium that you expect to get between 2013 and 2014 in LTC, relative to the current annualized premium level on rate increases?

Thomas R. Watjen

Kevin? Kevin, you want to take that one?

Kevin P. McCarthy

Yes, I mean, we have to let these, the approval process, sort of play its way out, and then we're going to let the implementation process play its way out, and then from there, as we implement it, we'll have to see what the persistency effects are, et cetera. So this is a -- I'll give you a number, but I wouldn't like, bank it. I would say right now, based on what we're seen so far, we're at about the $50 million to $60 million range in terms of annual premium effects, and then as we get more approvals and as we phase things in, that number will get bigger, but we'll just have to wait and see how it plays out in terms of persistency.

A. Mark Finkelstein - Evercore Partners Inc., Research Division

Okay, and that's an annualized number, I assume?

Kevin P. McCarthy

Yes.

A. Mark Finkelstein - Evercore Partners Inc., Research Division

Okay. I guess a broader question. If I look at operating expenses this quarter, they were fairly low and obviously the trend, if you go back a few years, has actually kind of gone down in terms of the operating expense ratio, but this quarter in particular seems awfully low. I'm just curious if there was anything that was driving that, and is -- if this level is sustainable?

Thomas R. Watjen

Rick, do you want to take one?

Richard P. McKenney

I would. Actually when you think about our operating expenses, we're a company that's -- we don't talk an awful a lot about our operating expense ratio, but our entire team, all of our associates are focused on efficiency, and how we drive business through the process. So our operating expense ratio was low in the quarter, and if you look at a number of our lines, that is action that we've taken over time to really be efficient, and as we start to see growth come back in on the Premium Line, making sure that we hold that, the overall expense level and keep there. So it is an ongoing process. It's something we spend an awful lot of time working on. I'll tell you, from quarterly perspective, there's nothing really in there that you'd highlight, that was a big adjustment, which would influence that operating expense ratio. So it's something that we'll continue to beat at as a core driver, as part of how our company operates.

Thomas R. Watjen

Operator, are there any other questioners in the queue?

Operator

We have no further questions at this time. I'll turn it back for you for any additional or closing remarks.

Thomas R. Watjen

Good, thank you. And thank you, all, for joining us today. As Rick said, we have our discussion of outlook coming up December 17, so please do put that on the calendar and more details will be coming out on that, but again, thanks for joining us for this morning's call, and this will complete our third quarter 2012 earnings call.

Operator

Thank you for your participation. That does conclude today's conference.

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