Lincoln National Corporation (NYSE:LNC)
Q2 2017 Results Earnings Conference Call
August 3, 2017 10:00 a.m. ET
Chris Giovanni - SVP, IR
Dennis Glass - President and Chief Executive Officer
Randy Freitag - Chief Financial Officer
Suneet Kamath - Citi
Erik Bass - Autonomous Research
Tom Gallagher - Evercore ISI
John Barnidge - Sandler O'Neill
Sean Dargan - Wells Fargo
Humphrey Lee - Dowling & Partners
Good morning, and thank you for joining Lincoln Financial Group's Second Quarter 2017 Earnings Conference Call. [Operator Instructions] Now I would like to turn the conference over to the Senior Vice President of Investor Relations, Chris Giovanni. Please go ahead, sir.
Thank you, Brigitte. Good morning, and welcome to Lincoln Financial's second quarter earnings call.
Before we begin, I have an important reminder. Any comments made during the call regarding future expectations, trends and market conditions, including comments about sales and deposits, expenses, income from operations, share repurchases and liquidity and capital resources are forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from current expectations. These risks and uncertainties are described in the cautionary statement disclosures in our earnings release issued yesterday and our reports on Forms 8-K and 10-Q filed with the SEC. We appreciate your participation today and invite you to visit Lincoln's Web site, www.lincolnfinancial.com, where you can find our press release and statistical supplement, which include a full reconciliation of the non-GAAP measures used in the call, including income from operations and return on equity, to the most comparable GAAP measures.
Before beginning, I would also like to remind you that we will be hosting our Investor Day on November 16 at Lincoln Financial Field in Philadelphia. We will be sending out invitations this quarter and hope many of you would join us in person.
Presenting on today's call are Dennis Glass, President and Chief Executive Officer; and Randy Freitag, Chief Financial Officer. After their prepared remarks, we will move to the question-and-answer portion of the call.
I would now like to turn things over to Dennis.
Thank you, Chris. Good morning, everyone. The positive momentum at the start of the year carried into the second quarter, delivering outstanding results, notably operating earnings per share growth of 19%. Several factors contributed to our results. First, sales remained strong as most of our businesses reported double-digit growth compared to the prior year. We continue to focus on restoring variable annuity sales and saw sequential growth accelerate during the quarter.
Across the enterprise, new business returns are attractive. We are clearly benefiting from our multichannel distribution model, industry leading shelf space and a broad set of customer solutions, which when combined, differentiate us from competitors and support further growth. Next, the quarter's strength was broad based, as all four businesses delivered revenue and earnings growth. Additionally, the percentage of earnings coming from mortality and morbidity businesses continue to trend higher, which leads to further diversification in our sources of earnings.
Lastly, as we have demonstrated for years, our balance sheet is high quality and the businesses generate significant free cash flow, allowing active capital management. This continued in the second quarter with $265 million returned to our shareholders. Capital deployment will remain an important part of the Lincoln story. Looking beyond the quarter, as you know, we have a couple of initiative in place focused on supporting long term growth and profitability. First, an enterprise-wide digital initiative that will improve the customer experience while providing cost savings as well as the potential for revenue enhancements. Also, we have a rigorous focus on in-force, renewal and new business pricing across all the businesses. Importantly, both are progressing as planned and will support our strong track record of financial success.
Now turning to the business segments, starting with annuities. Earnings were strong as our high quality in-force business was further strengthened by equity market performance. We saw good sales momentum in our variable annuity business as sales grew sequentially for the second straight quarter. Importantly, growth also accelerated, increasing 11% in the second quarter compared to 4% in the first quarter. VA sales without living benefits increased sequentially and year-over-year as the value propositions for tax deferral and legacy planning are resonating with customers. VA sales with guaranteed living benefits also increased sequentially, benefiting from product enhancements made earlier in the year.
Our portfolio of customer solutions once again expanded late in the second quarter with the addition of a new living benefit rider, which offers customers a higher withdrawal rate than most guaranteed income products, but adjusts if the account value is depleted, providing attractive features for both customers and Lincoln. So while in the early stages, sales momentum is growing in our variable annuity business as product portfolio expansion enables us to take market share now while fee-based products, such as core income, will build over time and help support long-term growth.
Shifting to fixed annuities. Sales in the quarter were affected by the decline in interest rates because our approach to product pricing remains disciplined. However, similar to the variable annuity strategies, we are actively looking for ways to expand our customer base and distribution reach. We recently entered into a reinsurance agreement with Athene that will improve our value proposition by leveraging each other's competitive advantages. We expect this transaction to affect sales immediately and grow over time driven by better penetration into the bank and broker/dealer channels. Furthermore, I see this relationship as another example of Lincoln's distribution franchise and broad product portfolio being in demand.
Before moving into retirement plan services, I want to highlight that Barron's recently published its list of the 50 best annuities and Lincoln was recognized in six categories, more than any other carrier. This speaks to the breadth of our commission and fee-based annuity product offerings and the valuable solutions provided to our customers. When combined with leading distribution capabilities, we are in a strong position in the marketplace and are optimistic that sales momentum will continue.
In retirement plan services, the strategy and franchise continue to drive positive results as this quarter marked a second consecutive quarter of double-digit growth in deposits, net flows and earnings. Total deposits in the quarter of $2 billion were up 19% from a year ago, driven by first year sales increasing 71% to $737 million as both small and mid-large markets delivered strong results while recurring deposits continue to increase. Net flows totaled $395 million compared to $400 million in the prior year quarter. Over the past 12 months, flows have reached nearly $1 billion and have been positive for six straight quarters.
Our momentum is being driven by the following. Sales growth is benefiting from product enhancements that focused on simple and transparent pricing, this combined with a more tenured wholesaling force is increasing productivity. Next, employee contributions are growing, driven by an improved customer experience that combines face-to-face service with digital and data analytics that motivate and empower them to save more for retirement. Lastly, retention remains strong as a result of better aligning and expanding client facing teams along with continuous improvement in our service center. Bottom line, we remained confident in growth opportunities for RPS business and our strategy positions us well to sustain earnings growth.
Turning to life insurance. Earnings increased double digits, helped by solid variable investment income and growth of our in-force business. Total life insurance sales in the quarter of $197 million were strong, up 14% from the prior year, benefiting from a broad product portfolio and industry-leading distribution. MoneyGuard sales were exceptionally strong, driven by our leadership position in the fast growing linked benefit marketplace and a multichannel distribution approach. Sales did accelerate somewhat ahead of pricing adjustments made during the quarter. As a result, MoneyGuard sales in subsequent periods are likely to be more consistent with prior quarters. VUL sales increased 22%, benefiting from a shift away from interest rate sensitive life insurance products, which have seen significant price increases. To this point, GUL sales were down nearly 50% in the quarter and represented just 6% of total life sales.
Lastly on term insurance. Sales were down 7%, though policy count was up 18% as we leverage digital technology to expand distribution and reach a new customer base through TermAccel, which targets a younger demographic. We continue to focus on sales diversification, risk management and disciplined product pricing to achieve appropriate returns on capital. This resulted in expected new business returns being near the top end of our targeted range of 12% to 15%. Given product breadth, strength of distribution and ability to effectively meet the needs of key consumer segments, I'm excited about future growth in the life business.
Turning to group protection. Earnings increased significantly over the prior year period as loss ratios were favorable. After seeing year-over-year premium growth for the first time in nearly three years last quarter, premiums grew 3% in the second quarter. During the quarter, sales increased 24%, driven by growth in all product lines. Year-to-date, sales have increased 12% and block persistency is up about 4 percentage points compared to the prior year. Importantly, our outlook for these key premium growth drivers remain positive as the sales pipeline and quote activity are strong in our target markets and persistency continues to improve in core life and disability products. Bottom line, we are very pleased with this quarter's results and increases our confidence in achieving and sustaining the 5% to 7% margin target. While volatility can be expected quarter-to-quarter, underlying trends are positive and the top line is improving, all of which support solid future earnings growth.
Shifting to investment results. The alternative investment portfolio had a very good quarter, as both private equity and hedge fund investments contributed to a 17% pretax annualized return. In terms of new money, we invested over $2.4 billion in the quarter at an average yield of 4.1%, down a little from the first quarter. Lower treasury rates and tighter spreads were largely offset by the purchases in private placement and commercial mortgage loans that provided a pickup in spread over comparable public fixed income. Overall, the investment portfolio remains very well diversified and a very high quality. The fixed income portfolio yield declined 3 basis points to 4.76% consistent with expectations. It is also worth noting that the spread between our portfolio yield and the new money rates stands at approximately 65 basis points compared to 110 basis points in the prior year quarter, which highlights how spread compression continues to abate.
So in closing, we're very pleased with the quarter, which included strong momentum in both top and bottom line results, combined with effective capital management. We remain confident in the ability to drive earnings growth, leveraging attractive growth opportunities, in-force margin improvement and our strong balance sheet. I remain convinced our simple, clear and straightforward business model is underappreciated, particularly relative to the competition, given our track record of financial success and earning stability. We, therefore, look forward to continuing our solid results and further closing the valuation gap to reward our shareholders. With that, let me turn the call over to Randy.
Thank you, Dennis. Last night, we reported income from operations of $419 million or $1.85 per share for the second quarter, a 19% increase from the prior year. This quarter's results were very strong, highlighted by record normalized EPS. Underlying trends were solid and all four businesses posted earnings growth. It is also worth noting that while variable investment income was $0.08 better than long-term experience, this was largely offset by higher variable expenses, mainly driven by strong sales production and earnings during the quarter.
Now shifting to key performance metrics. Operating revenue increased 7% in the quarter, driven by an 8% increase in average account values and the positive sales trends Dennis noted. Expense discipline continues to be a good story as net G&A expenses, excluding the variable related expenses I just noted, were up less than 1%, providing positive operating leverage. Book value per share excluding AOCI, grew 9% to nearly $60, an all time high. Operating ROE was strong at 12.7%. And year-to-date, normalized ROE is 40 basis points above 2016.
Finally, balance sheet strength and solid capital generation enabled us to return $265 million to shareholders or 63% of operating earnings, consistent with guidance for 2017. Net income of $411 million further highlights the strength of the quarter as both credit experience and hedge program performance were excellent with net income representing 98% of operating earnings consistent with last quarter.
Now I will turn to segment results starting with annuities. Reported earnings for the quarter were $251 million, up 7% from the prior year quarter. Earnings growth was driven by higher fee income from a 6% increase in average account values as equity market strength over the past year has more than offset negative net flows. Total operating revenue increased 9% as every revenue line showed growth compared to the prior year. Return metrics remained strong as ROE came in at 21% and ROA was 77 basis points, both consistent with recent quarters. Our high quality book of business continues to differentiate us relative to our competitors and is further enhanced by an extremely successful hedge program, which had solid performance with a $9 million gain in the quarter. The quality of the variable annuity book can be seen by looking at net amount at risk, which further improved during the quarter to less than seven-tenths of 1% of account value for both living and death benefits. So great quarter for the annuity business, which positions us well for strong earnings and returns to continue.
In retirement plan services, earnings of $37 million were up 19% from the prior year quarter. The earnings increase is attributable to growth in fee income and variable investment income combined with expense management. Positive net flows of $994 million over the trailing 12-months and favorable equity markets resulted in a 12% increase in average account values, while end-of-period balances reached a record $63 billion. Operating revenue grew 7% compared to the prior year while G&A expenses, net of amounts capitalized, increased just 3%, resulting in an approximate 100 basis point decrease in the expense ratio. Base spreads excluding variable investment income, compressed 12 basis points versus the prior year, consistent with expectations. For the quarter, ROA remains stable at 24 basis points. So a strong result for the retirement business, highlighted by the highest quarter of net flows in nearly a decade and continued momentum with back-to-back quarters of double-digit growth in deposits, net flows, assets and earnings.
Turning to the life insurance segment. Earnings of $133 million were up 11% from the prior year quarter, primarily attributable to 8% growth in operating revenues. Earnings drivers remain solid in the quarter with life insurance in-force up 4% and average account values up 6%. Revenues were up more than driver growth, driven by the stronger variable investment income I noted upfront. Mortality experience was consistent with expectations as better-than-expected frequency was offset by slightly higher severity. G&A expenses and commissions were somewhat elevated this quarter, primarily due to strong sales production. Base spreads, excluding variable investment income, were down seven basis points year-over-year, consistent with expectations. So a solid quarter for the life business.
With mortality typically more favorable in the second half of the year and steady driver growth in the mid-single digit range, we are well positioned for near and long-term earnings growth in the life business. Group protection earned $35 million compared to $15 million in the prior year quarter. The significant increase in earnings was primarily due to favorable risk experience. The non-medical loss ratio was 66.1% in the quarter, a 640 basis point improvement compared to the prior year as loss ratios were favorable across all product lines. While we wouldn't regularly expect loss ratios to be this strong, this quarter's result clearly speaks to successfully repricing our book of business and continued underwriting discipline on renewals and the new business.
DAC amortization returned to more normal levels in the quarter as expected. The re-emergence of premium growth is also aiding our group business with premiums up 3% from the prior year quarter and leading indicators such as sales and persistency, trending in a positive direction. Bottom line, it was a very strong quarter for the group with a reported margin of 7%. We remain confident that annual margin improvement will continue working towards consistently achieving a 5% to 7% margin
Before moving to Q&A, let me briefly comment on a few other items of note. First, on capital. Both capital and capital generation remain strong, providing significant financial flexibility and an ability to commit capital to new business opportunities, which drive long-term earnings growth and also return capital to shareholders. As I noted upfront, this quarter we returned $265 million, including $200 million in share repurchases, with the remainder through shareholder dividends. Statutory surplus stands at nearly $9 billion, and I estimate the RBC ratio ended the quarter at approximately 495%. Holding company cash came in above our $500 million target.
So wrapping things up, another excellent quarter for Lincoln. Strong earnings highlighted by record normalized EPS, high quality results as all four businesses delivered revenue and earnings growth while net income represented 98% of operating earnings. Other key shareholder metrics were also strong with book value per share up 9% and an ROE of 12.7%. Finally, capital generation and deployment remain important and consistent parts of our story. With that, let me turn the call back over to Chris.
Thank you, Dennis and Randy. We will now begin the question-and-answer portion of the call. As a reminder, we ask that you please limit yourself to one question and only one follow-up and then re-queue if you have additional questions. With that, let me turn it over to Brigitte to begin Q&A.
[Operator Instructions] Our first question comes from the line of Suneet Kamath with Citi. Your line is open.
I was wondering if you could drill into the Athene reinsurance agreement a little bit more. Just specifically what products are included there and then how are the returns given the effect of the reinsurance compared to the in-force block.
Yes, Suneet, it's Dennis. We think this is a very significant relationship that we have just developed with Athene, and it will help both organizations building off of what each of us have to contribute to the relationship. It's predominantly fixed indexed annuity and a fixed indexed annuity accumulation product. And it's predominantly, as I said in my remarks, to help us in the broker/dealer and bank channel.
Got it. And then in terms of some of the newer products that you're offering, I think the Max 6 Select as well as the iShares product, can you just talk a little bit about traction and if you're still confident that flows will be positive in 2018?
Let me answer the second question first. Our expectations are, and we're taking a lot of actions, to produce positive flows in 2018. Stepping back, I think the most important parts of your question are, we are focusing both on making enhancements to products that can give us near- term traction, as well as products that can help in the medium and long term sales growth picture. I think the fee-based products in core income would fall into the latter, which is medium to long term and the enhancements that we're making in product, excuse me, this rider that you just talked about, the MAX 6 rider, are going to help immediately and over the near-term.
And just a follow-up on my earlier question on the reinsurance deal. I mean, so we should think about this as helping you in the bank and broker/dealer channel as you mentioned, but no significant impact on returns of the business in terms of what's reinsured?
We expect to get good returns as we are throughout our entire portfolio of products these days, and we'll price accordingly.
Our next question comes from the line of Erik Bass with Autonomous Research. Your line is open.
First question on Group where you had a very strong quarter and you sound confident that the momentum will continue. Does this change the timetable at all for when you expect to get to the 5% to 7% margin target?
Erik, it doesn't really change our overall thesis, which is that this business is a 5% to 7% business. We expect to hit that regularly as we look forward. We hit 7% this quarter. That's obviously at the upper end of that range, so it's a good quarter. But at the end of the day, it's a quarter that is inside of that range. So I don't consider it to be a quarter that's outside of the potential for this business. I think as you look forward and you look at the underlying drivers of the business, we wouldn't expect that 66% or 66.1% as the long-term loss ratio for this business. So that may move up a little bit. But on the other hand, as premiums start to grow, we would expect that the expense ratio would come down a little bit. So all in, I think this quarter was within our normal range and our expectations for what we would expect in the future haven't really changed. And that is we expect to continue to get, and I said this in my script, improvement in the annual margin that we earn in this business.
Got it. Thank you. And can you talk a little bit more about the demand you're seeing for annuities in the marketplace, and whether the June 9 implementation date for DOL had any material impact on sales volumes? I think related, you've grown VA sales on a sequential basis the last two quarters. Do you think this is more market dynamics or share gains?
The enhancements that we've made to our products, the new products that we're adding, are specific to Lincoln and are driving our momentum increase and, again, not only in the near-term, but we think in the long-term with the other products that I mentioned. With respect to the DOL, the June 9 implementation date was very positive in the respect that people had to come forward, our distribution partners came forward with their plans. And in this respect, we're very delighted. 90% of our distribution partners offered at least one, if not more, options for commissions, and that's very helpful. I guess the second thing I would say is coming back to the DOL, as we know there has been more requests or comment. And as we've said all along, we think that the idea, of course doing what's in the best interest of the customer is what's kept us in business for 100 years and it's a good idea. But we've been critical of some of the components of the regulation and based on our interactions with the administration we think there is opportunity to improve the regulation, both for the benefit of the consumer and also to providers like ourselves, who are trying to help people grow their savings and live comfortable in their retirement.
And our next question comes from the line of Tom Gallagher with Evercore ISI. Your line is open.
Just a follow-up on this Athene deal. Can you provide a little more color on what exactly this is? Is Athene just a reinsurance partner for you? So they're really a capital provider? What kind of sales do you plan on reinsuring to them, a little more the way this is going to work and if this does anything for freeing up capital for you in that aspect as well?
Yes, let me come back to my first comment. We would not have entered into the transaction unless we thought it was significant in the sense of both helping earnings growth, ROE improvement and sales growth. And so we think it is significant. I mentioned in my remarks that it takes advantage of some of the benefits that Athene has from their structure, but it also takes advantage of the tremendous product breadth that we have as well as our distribution. So I think this is one of those programs that will be beneficial to both parties. But we're not going to get into the details other than say that we wouldn't have gone into it if we didn't think it was a significant amount of opportunity.
But Dennis, can I at least ask, is this really a capital efficiency aspect for you? Is it actually helping you expand your sales opportunities, or is it some of both?
It's very clearly some of both. Yes.
Got you. Okay. And then my follow-up is, you've had a few large peers take both a life insurance charge from an actuarial review this quarter, as well as a variable annuity reserve strengthening for another one. And I know your review, I believe is still in 3Q, Randy. It's been pretty benign over the last few years. Is there any reason to believe that things have changed a bit in the environment that we should be focused on for your review this year?
Tom, at this point, I like you am going to speak very much to the environmental factors. I'm not going to front run this process. I say that every year. In fact, I would imagine if I looked out of my calendar, I would start to see the meetings associated with the DAC unlocking occurring a few weeks from now. So I've had zero meetings. But there are some informational points that I'm going to bring into those meetings and really around the environment that this year's unlocking will occur in. So when I think about the major assumptions that have really driven results in the past, I'd start with the interest rate environment. And when we set our assumption last year, we set an assumption that assumes that interest rates would increase over time. And if you look at what's happened over the last year, underlying treasuries are up probably about 60 basis points from where they were at 9.30 of last year, while spreads have come in a little bit. But net-net, rates have increased in line with our assumption we set last year.
So that's not the final answer but at least environmentally, I know things have moved somewhat how we thought they would last year. When I think about mortality, we set an assumption last year. And if I think about our discussions over the past year, mortality has largely performed in line with our expectations. So once again, environmentally, there isn't anything that I'm going to go into those meetings worried about. And lastly, I'd point out that when you think about the other big drivers, especially on the VA side, you're talking about policyholder behavior. And as we've talked about, there haven't been any big changes in policyholder behavior relative to the experience we've had over many, many years. So we'll come up to a series of meetings with an understanding that the environment, that the unlocking we'll exist in, seems to be pretty good.
[Operator Instructions] Our next question comes from the line of John Barnidge with Sandler O'Neill. Your line is open.
Maybe just a housekeeping question as my model not occurred at this level in a really long time. But when was the last time RPS net inflows were as high as they were in 2Q '17?
We'll have to get back to you on that. It's been a little while.
Okay. And then SEC Commissioner Piwowar put out a comment letter last week. What are your view of efforts by the DOL and SEC to work together on a joint fiduciary standard?
What was the question? What's our view? Excuse me, our view is absolutely we think harmonizing a fiduciary rule across all the regulators, including the life Insurance regulators by the way, is the best thing in the world for the consumer. It's the best thing in the world for all the companies. Again, we're trying to help consumers build for retirement and live comfortably in retirement.
And our next question comes from the line of Sean Dargan with Wells Fargo.
I don't mean to beat a dead horse with Athene, but what does the reinsurance agreement allow you to do in the bank and broker/dealer channels that you couldn't do on your own? Is it just grow faster because of the capital efficiency?
Everybody knows what Athene's model is and it's slightly different than ours in terms of the location of their entity and the benefits they get from that. They have a little different investment philosophy than we do. On the other hand, I think generally not just as compared to Athene but as compared to all of our competitors, we have a much stronger distribution capability, again not just compared to Athene but across the industry. So it's trying to take advantage of what each of us brings to the table and I'll come back to it and say that it's a good outcome for both of us and we're excited about it.
Okay. Thanks. Then in the past, I think you've said that a goal is to reach 30% to 35% of total enterprise earnings coming from mortality and morbidity businesses. If the group margins kind of hit your target range, will you be able to do that organically? Or is reaching that goal something that would require an acquisition?
Sean, we've been pretty consistent on this that organically, we can grow the contribution. As the group earnings were depressed over the last couple of years, that contribution had fallen to the low-20's for mortality, morbidity. But just organically as group earnings recover, as life earnings continue to grow, that we could grow that into the mid-20's range, so 25%, 27% or so. But to fill that gap between there and the 30% to 33% long-term strategic target we would like to hit, would take some level of inorganic activity.
All right. And can you give us an update on what your capacity for inorganic activity is? Has anything changed in the last quarter?
No, nothing has changed. Last quarter, we spiked out the potential to get up as high as $2 billion. That was a mixture of capital on our balance sheet, $500 million to $750 million, some capacity to issue some debt supporting a strategic acquisition, and then the ability and the knowledge that we have been allocating a significant amount of capital to things like buybacks. So as you announced and then go through the process of waiting for a transaction to close, you have the ability to build up some capital that way also.
And our last question comes from the line of Humphrey Lee with Dowling & Partners. Your line is open.
Just staying on group protection. So if I were to think about getting to that 5% to 7% after-tax margin, do you feel like you can kind of do that with a loss ratio kind of at the, maybe low-70s or maybe kind of high 60s to low 70s, without materially growing the base of your premiums? Or does the 5% to 7% margin target would contemplate some kind of mix shift or better underwriting kind of trending below the high 60%, but maybe a little bit above the 66% this quarter?
Humphrey, we have seen a shift in the mix of our business. There's more of a voluntary component than there was four, five years ago. Four, five years ago, our targeted range around loss ratios would have been 70% to 74%. So you have seen some mix and I would say that the target has moved down somewhat. So once again, 66.1% is below our long-term expectations, but I don't think that when you look at a long-term that we would expect a long-term target to be above 70%. I think it's, as you mentioned, it's more in the high-60s, 68%, 69%, somewhere in there. And then offsetting that, as I mentioned, we would expect our expense ratio tick down over time as that business continues to grow its premium base.
Okay, understood. And then in terms of capital deployment. So it seems like variable annuity sales are starting to kind of pick up back a little bit and I think at the beginning of the year, you talked about the capital return would probably be kind of similar to your last year level or at least somewhat elevated because of a slowdown in sales. But if we were to continue to see VA sales continue to pick up, how should we think about the pace of buyback in the balance of the year?
Humphrey, we said for this year that we would be 60% to 65%. This quarter we were at 63%. Year-to-date, we're at 62%. You couldn't be much closer to the middle of that target range we gave. So the implication for that is that the expectation latter half of the year isn't too different than it was in the first half of the year. We fully expect to end the year between 60% to 65% of operating earnings.
I'm not showing any further questions, so I'll now turn the call back over to Chris Giovanni for closing remarks.
Thank you, Brigitte. Just following up on John Barnidge's question, as Randy noted in the script, that's quarter of net flows in the earlier decade, first quarter of 2009 for RPS. So thank you all for joining us this morning. As always, we will take your questions on our investor relations line at 800-237-2920 or via email at firstname.lastname@example.org. Thank you all, and have a good day.
Ladies and gentlemen, this does conclude the program. You may now disconnect. Speakers, please standby.
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