Chubb Ltd Q2 FY2024 Earnings Call

Good morning. My name is Eric, and I will be your conference operator today. At this time, I would like to welcome everyone to the Chubb Limited Second Quarter 2024 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. I would now like to turn the call over to Karen Beyer, Senior Vice President, Investor Relations. Please go ahead.

Thank you, and good morning, everyone. Welcome to our June 30, 2024, second-quarter earnings conference call. Our report today will contain forward-looking statements, including statements relating to company performance, pricing and business mix, growth opportunities and economic and market conditions, which are subject to risks and uncertainties, and actual results may differ materially. Please see our recent SEC filings, earnings release, and financial supplement, which are available on our website at investors.chubb.com for more information on factors that could affect these matters. We will also refer today to non-GAAP financial measures, reconciliations of which to the most direct comparable GAAP measures and related details are provided in our earnings press release and financial supplement. Now, I'd like to introduce our speakers. First, we have Evan Greenberg, Chairman and Chief Executive Officer, followed by Peter Enns, our Chief Financial Officer. Then, we'll take your questions. Also with us to assist with your questions are several members of our management team. And now, it's my pleasure to turn the call over to Evan.

Good morning. As you saw from the numbers, we had another great quarter. We produced core operating EPS of $5.38, up 9.3%. Premium revenue growth reflects strong results in our businesses around the world. North America P&C, International P&C, and Life Insurance demonstrate the broad-based diversified strength of our company. Our underwriting results were excellent. We published a combined ratio of 86.8%. We grew investment income more than 25%. Life segment income was up 8.7%, with International Life increasing in double digits. Core operating income for the quarter was $2.2 billion, bringing year-to-date operating earnings to $4.4 billion, an increase of 13.5% and a record for a six-month period. P&C underwriting income for the quarter was $1.4 billion, which remained essentially flat due to higher cat losses globally. As you know, it was an active quarter for the industry. Our losses of $580 million compared to $400 million the previous year, aligning with our modeled expectations, while last year's second-quarter losses were light. On an ex-cat current accident year basis, underwriting income of $1.8 billion was up over 11%, with a combined ratio of 83.2%, both representing record underwriting results. Investment income exceeded $1.5 billion, an increase of nearly 26% and also a record. As of June 30, our reinvestment rate averaged 5.9% and our fixed income portfolio yield was 4.9%, up from 4.5% a year ago. Our liquidity remains strong, and investment income will continue to grow as we reinvest cash flows at higher rates. Our invested assets currently total $141 billion, and we expect this to continue to grow. Life segment income of $276 million met our expectations. Our annualized core operating ROE for the quarter was 13.3%, with a return on tangible equity exceeding 21%. Peter will elaborate on financial items. Now, regarding growth, pricing, and the rate environment. Consolidated net premiums for the company increased by 11.8% in the quarter or 12.3% in constant dollars. As a large diversified global insurer, our growth this quarter reflects our identity. Growth was widespread geographically and across product and customer segments, including commercial and consumer lines from North America to international markets, particularly in Asia and Latin America. In the commercial P&C rate environment, overall conditions are still favorable in both property, which is becoming more competitive, and casualty, which is firming in areas that require rate. Loss-cost inflation remains steady within our pricing and reserving assumptions. Property has become more competitive with the influx of capital. Our book is well priced, and terms and conditions are stable. Casualty is strengthening in necessary areas, and we anticipate this trend will continue, with more detailed insights by division to follow. Starting with North America, premiums excluding agriculture rose by 8%, reflecting 12.3% growth in personal lines and 6.7% growth in commercial lines, with all P&C lines up 8.7%, while financial lines dipped around 3%. We secured over $1.3 billion in new business, a record, and our renewal retention by policy count was 90%, reflecting a disciplined market and our strong operating performance. Premiums in our major accounts and specialty division grew by 6.5%, with P&C up approximately 8% and financial lines down 2.5%. Our E&S business expanded by around 8.5%. Premium growth in our middle market division was about 7.5%, with P&C lines up nearly 11% and financial lines down 4.5%. Overall, the underwriting environment in North America remains favorable and rational, except for financial lines. P&C pricing, excluding financial lines and comp, was up 8.3%, with rates increasing by 5.5% and exposure growing by 2.7%. Financial lines pricing fell by 3.2%, as rates decreased about 3.5% and exposure rose by 0.3%. In workers' comp, including both primary and large account risk management comp, pricing increased by 4.2%, with rates up 1.6% and exposure up 2.6%. Breaking down P&C pricing further, property pricing grew by 5.3%, with rates up about 1.1% and exposure up 4.2%. Large accounts and layered E&S property pricing remained flat to down, while in the middle market, rates continue to rise at about 7%. We are significant in all three areas, and all are adequately priced. Casualty pricing in North America increased by 11.7%, with rates up 9.9% and exposure up 1.6%. Loss-costs in North America remain stable and align with our assumptions. Loss-costs for P&C, excluding financial lines and comp, are trending at 7.3%, with short-tail classes up 5.3%, and casualty, excluding comp, at 8.6%. We are trending our first-dollar work comp book at 4.6%. Regarding financial lines, the underwriting environment in several classes is not favorable. We are prioritizing growth for reasonable underwriting margins and are trending financial lines loss-costs a little over 5%. In the consumer sector of North America, our high net-worth personal lines performed outstandingly again, with premium growth exceeding 12%, including new business growth of 30%. Premium growth for our true high net-worth segment, which seeks our brand's differentiated coverage and service, was 17%. These figures are particularly impressive, considering our high net-worth personal lines division is nearly a $7 billion business. Our homeowners pricing rose by 14.6% in the quarter, while loss-cost trends hold steady at 10.5%. Turning to our International General Insurance operations, net premiums increased over 16.5% in constant currency. Our International commercial business grew nearly 14%, while consumer premium rose almost 21%. Asia Pacific led the growth with premiums up 36%, and excluding China's contribution, premiums increased by over 9%. Latin America also had a robust quarter with premiums up about 12%, and Europe retail grew over 9%, with the continent up 11%. 41% of our Overseas General division's premium comes from consumer segments, both A&H and personal lines, and this is growing significantly. In the quarter, premiums in our International A&H business grew over 10.5%, led by Asia Pacific and Europe. Our International personal lines business also had an excellent quarter, growing by 32%, with Asia Pacific and Latin America as leaders. We continue to achieve positive rate-to-exposure across our International commercial portfolio, with retail, property, and casualty lines pricing up 6.1%, and financial lines pricing down 4.1%. Loss-cost inflation in our International retail commercial portfolio is trending at 5.8%, with P&C lines at 6.1% and financial lines at 4.8%. In our International Life Insurance segment, mainly in Asia, premiums were up 31.7% in constant currency. Excluding China, life premiums increased by nearly 10%. Growth is driven by various distribution channels, including tied agency, brokerage, bank assurance, and direct marketing. International Life earnings increased over 15% in the quarter in constant currency. Lastly, Global Re had a strong quarter with premium growth exceeding 40% and a combined ratio of 72.7%. Growth was primarily property-driven, encompassing both risk and cat. During the quarter, we executed more one-off structured transactions, contributing to our growth. In summary, as illustrated, we had a remarkable quarter, reflecting the strength, breadth, and global depth of our company. We are confident in our ability to continue expanding our operating earnings at a superior rate through P&C revenue growth and underwriting margins, investment income, and life income. I will now hand the call over to Peter, and we will return to address your questions.

Good morning. As you know, our balance sheet and overall financial position are very strong and just got stronger, benefiting from our first-half results. Our underwriting and investment results continue to generate substantial capital and significant positive cash flow. Our book value reached over $61 billion or $151 per share, and adjusted operating cash flow for the quarter and through six months were $3.6 billion and a record $7.2 billion, respectively. We returned $939 million of capital to shareholders this quarter, including $570 million in share repurchases and $369 million in dividends, and $1.6 billion in total through six months. Our tangible book value per share excluding AOCI increased 2.6% and 3.1%, respectively, for the quarter, and 4.9% and 6.1%, respectively, year-to-date, benefiting from core operating income partially offset by capital return to shareholders noted earlier. In addition, we closed on two small acquisitions this quarter: Healthy Paws, a pet insurance business, and Catalyst Aviation, which together diluted tangible book value by about $300 million. Core operating ROE and return on tangible equity were 13.3% and 21.1%, respectively for the quarter, and 13.6% and a record 21.6%, respectively year-to-date. Turning to investments, our A-rated portfolio produced adjusted net investment income of $1.56 billion, which included approximately $30 million of higher-than-normal income from private equity and other areas. We expect our quarterly adjusted net investment income to average approximately $1.57 billion to $1.63 billion for the remainder of the year. Regarding underwriting results, the quarter included pre-tax catastrophe losses of $580 million, which were principally from weather-related events, with 75% in the U.S. and 25% internationally. Prior-period development in the quarter in our active companies was a positive $285 million pre-tax, with $144 million in North America Commercial, $64 million in North America Personal, $61 million in Overseas General and $16 million in Global Retail. The $285 million was split 35% long-tail lines predominantly in North America Commercial and 65% in short-tail lines. Our corporate run-off portfolio had adverse development of $93 million, mostly coming from molestations-related claims development. Our paid-to-incurred ratio for the quarter was 71% and 77% year-to-date. Our core effective tax rate was 18.8% for the quarter, which is within our guided range. We continue to expect our core effective tax rate to be within 18.75% to 19.25% for the remainder of this year. I'll now turn the call back over to Karen.

Thank you. We'll be happy to take your questions.

Good morning, everyone. Most of the discussion has centered on loss-cost trends, and Evan provided insightful commentary as always. I’m doing my best to reference the live transcript to clarify some of the quarter-over-quarter comparisons, but I believe you mentioned that the loss-cost trend in North America is stable and aligns with your expectations, although excluding comp, it was in the 8% range this quarter compared to 7% last quarter. I’m just wondering if the loss-cost trend is changing slightly regarding the trend line.

No, there wasn't a change of loss-cost, and frankly, it was 7.3%, is what I said for P&C lines, which excludes financial lines and comp. I think that's the way to look at it. And the 8% was pricing, was up 8.3%. Pricing exceeded loss-costs P&C lines.

Got it. Thanks for the clarification. So, just to follow up, there are several indices indicating that pricing in certain areas of the market, even outside of financial lines, is below 6% and even below 5%. Would you say that Chubb is currently more selective in accepting business that is not priced adequately? Are you turning down more business than usual to ensure that your pricing remains above the loss-cost trend, while it seems like others may not be taking the same approach based on their loss ratio trends?

I believe I understood your question. Let me respond. We generated $1.3 billion in new business, which is a record. Our Property & Casualty business grew by around 8%, and we provided separate comparisons for financial lines. Overall, these figures reflect a positive market tone. We reported a combined ratio of 86.8% despite higher catastrophe losses, with a current accident year combined ratio of 83.2%. I'm not overly concerned. Our results demonstrate excellent underwriting performance. The market pricing is generally rational, with the exception of financial lines. We are only pursuing business where we can achieve underwriting profitability and aim for a good return on the capital we invest in each line of business. In certain classes, prices are well-aligned with loss costs, which is ideal. In others, pricing is below loss costs due to relatively strong margins. For casualty-related classes, we are writing business because the rates we’re receiving exceed loss costs as these lines approach adequacy. I hope this clarifies your inquiry.

Okay. It does. Appreciate it.

Then, if you look at something like financial lines, there is a glaring example hiding in plain sight that demonstrates we are shrinking when we can't earn an adequate return, which is what we have done consistently for 20 years.

Good morning, Paul.

Thank you. Evan, I'm just curious...

Good morning, Brian.

Hey, good morning. Given the good pricing you're still seeing in casualty lines right now, I'm just a little surprised that we aren't seeing more growth in that area from y'all. And actually, if you just look at your pricing versus where the kind of premium growth was, it almost looks like you're shrinking a little bit on an absolute unit basis. Maybe correct me if there's something else going on that I'm just not seeing in the numbers.

No, we're expanding our property and the unit count is increasing nicely. So, I don't understand what you mean regarding unit count. You're referring to property, correct?

No. My apologies, I said casualty. I'm just looking at your commercial casualty numbers that you gave us. Apologies.

Casualty is increasing, particularly in areas where we expect growth. We are undergoing restructuring in large accounts and troubled classes, which has contributed to an increase in retentions. We have also lost some accounts due to changes in terms, which accounted for around $50 million in the quarter. This primarily relates to auto liability. Other than that, certain classes have grown, some remained stable, but overall, casualty is up.

Makes sense. Thank you. And then, Evan, just second question, and I appreciate all the color on loss trend and stuff, but given some of the uncertainty that others in the industry are talking about on what's going on in the social inflation environment, are you all kind of thinking about maybe or are adding some additional IBNR to perhaps loss picks and stuff, or are we not at that point of this right now?

That's an unusual way for me to look at it. You're either increasing your loss pick, which refers to IBNR, particularly in casualty. If it's from a recent year, it tends to be all IBNR. If it's due to case reserves from recent years, then you should be prepared for some volatility. In contrast, for older years, raising your loss pick could be based on actual incurred claims. To me, it's essentially asking whether you are increasing your loss picks for more recent years. We have already increased our loss picks, which is already reflected in our business, and we have adjusted our loss-cost trends accordingly. We take rate against loss-cost on a written basis, and we have been selecting higher loss ratios in recent years consistently. We haven’t changed our loss picks this year based on the loss-cost trends we have observed. Those trends remain stable with what we anticipated. When conducting reserve studies, specific classes may require a reserve charge, which inherently means you are increasing loss picks, including IBNR for a range of years. Sometimes, this increase might stem from developments observed in older years, which could influence your perspective on more recent years to prompt an increase, but this is analyzed on a case-by-case basis. I hope this clarifies your question.

Yeah. It was very helpful. Thank you.

You're welcome.

Hi, good morning.

Good morning.

Yeah. Good morning. Just want to shift gears a little bit to personal line. You grew in pretty incredible 42% premium year-to-date. Can you maybe talk about the driver of this growth in North America personal? And also, how should we think about just the growth trajectory of this line going forward? I understand, obviously, homeowner and auto is going to be very different, but just curious your thoughts going forward.

We did not grow North America personal lines by 42% year-to-date, but we have achieved double-digit growth. The line is growing at a healthy rate for several reasons. We are experiencing broad-based growth, not just in catastrophe-exposed areas but also where high-net-worth customers reside. Our growth spans various geographies across the United States. We are receiving improved rates relative to exposure. Our pricing capabilities, developed over years, are now more sophisticated, and our by-peril pricing is quite advanced. The services we offer and the quality of coverage appeal to customers whose profiles align with our product. We are well recognized for the richness of our coverage and the way we deliver it. There is a noticeable increase in demand for Chubb. We are not the lowest-priced option available, and I will personally recommend other insurance companies to those who prioritize price. However, customers prefer Chubb, as evidenced by our strong renewal retention rates and growth in new business, which is very encouraging. We are continually enhancing our services and the way we engage with our customers. We see opportunities for further improvement, positively impacting our competitive profile in this product area. In catastrophe-exposed regions, we are being compensated appropriately for the business we are writing. We have been reshaping our portfolio in these areas to ensure it is healthier in terms of risk quality, whether we are solely receiving catastrophe business or a more diverse range beyond it. We are strategically managing our portfolio to ensure we are reasonably priced and securing enough protection to safeguard our balance sheet as we grow our accumulations. Overall, our personal lines business is in an excellent position.

Thank you. I misspoke regarding the 42% in personal auto. Regarding your second question, in the press release, you mentioned that there are a wide range of opportunities in accident and health as well as personal lines globally. Could you elaborate on where you see these opportunities? It seems your business in Europe is performing well, and your operations in Asia are also doing well. Are you referring to broader global opportunities, or is it more focused on Southeast Asia and South Asia? Can you provide more details on this, including whether these opportunities are primarily organic or inorganic?

Thank you for the question. Let's discuss accident and health. The combined insurance company in North America is growing at double-digit rates. It focuses on worksite voluntary benefits and is seeing healthy growth, especially for small, medium, and large accounts through both brokerage and agency channels. Our accident and health business in the Asia Pacific region has also expanded, as we are the largest direct marketers of insurance in Asia, possibly even globally, with a portfolio exceeding $4.5 billion. The direct marketed accident and health business in Korea and Southeast Asia contributes significantly. Our digital distributed consumer lines, including accident and health and personal lines through over 200 digital platforms from Southeast Asia to Latin America, are experiencing strong double-digit growth. Travel insurance in Asia is performing well, and in Europe, both employer-employee and direct marketed accident and health segments are thriving. This provides a glimpse into our global performance.

Really appreciate that. So, I think we'll look forward to more commentary down the road about this. Thank you.

You got it. Thanks for the questions.

Good morning, Evan.

Good morning, David.

Good morning, Evan. I had a follow-up just on the North America P&C long-tail ex-comp loss trend. It sounds like that increased about 1 point sequentially. Just wondering what you saw in the quarter.

No, it did not. I'm going to cut you. It did not.

I think last quarter, we had given casualty number, which was 8.6% in comparison, that's standalone casualty number. The number you just cited was P&C ex-financial lines and ex-workers' comp, it didn't change that quarter.

Did you hear that explanation? Did it help you? David?

Yeah. I did. It was a little faint, but I think I got most of it. So it just sounds...

No, let's repeat that. Paul, go ahead.

The numbers didn't change sequentially. It might have been a different mix or different combination of product lines. So, the 7.3% that we cited was total ex-financial lines and ex-workers' compensation.

Which we believe is the clearest way for you to understand casualty. And then, we gave casualty separately, right? And the casualty separately hasn't changed.

Got it. Okay. That's helpful clarification on that front. I guess we've obviously heard a lot of noise this quarter from just across the industry on more recent accident year casualty reserves. Doesn't sound like there's been any big shifts in the claims environment just based on what you guys have done, but I'm wondering if you might just give some of your observations in terms of how we should be thinking about just the loss environment as the claims environment sort of normalizes following COVID.

On the loss side, we have been discussing the inflation in the casualty loss-cost environment for several quarters, if not years. I won't delve into all the reasons, but litigation is one factor among others, whether it's related to excess casualty or auto liability. This isn't new information; we have been addressing these issues for quite some time. We've noted that inflation in this area has been accelerating over time and discussed how the closure of the court system required caution not to misinterpret trends. Companies deal with these challenges in different ways, with some reacting more quickly to recognize developments in reserves and loss picks than others. Everyone is attempting to stay on top of this situation. We have also mentioned that reinsurers are often late to adjust, particularly those with less reliable data or who aren't as proactive in using and interpreting data for management purposes. All these factors contribute to the current concerns regarding casualty. For Chubb specifically, we maintain nearly $65 billion in loss reserves, which we review annually and monitor monthly and quarterly. There are always aspects developing positively and negatively. Overall, our reserves are strong, and as we stated in December, I can confirm that as of June 30, our loss reserves are even stronger than they were then. This assessment takes into account the favorable developments in casualty, such as workers' compensation, alongside the negative trends in areas like auto liability and excess umbrella coverage.

I really appreciate it. Thanks, Evan.

You got it.

Thank you. Good morning. I want to maybe take a broader view here, specifically on North America commercial. So, I think you've been running at a low 80%s underlying, combined mid-80%s reported in recent years, including year-to-date. That's a whopping improvement relative to where it's been historically, right, 5 points to 10 points better I think. So, how do you think about the balance of protecting these margins and risk-adjusted returns on the one hand and pursuing growth on the other in the context of maybe elevated market uncertainty, but these terrific margins?

I believe the results speak for themselves. We saw strong growth overall. Our middle market P&C business increased by 11%, while our E&S business rose by 8.7%. The growth in our large-account business was slower, and our financial line decreased, even as P&C grew. We are focused on achieving a risk-adjusted return in our growth, aiming to expand quickly in areas where we see potential for profitability, and scaling back where we cannot achieve this. We have the necessary capital, a robust balance sheet, and the expertise to grow strategically in our targeted areas. Sometimes we will prioritize rate over growth and other times the reverse, and we are actively doing both. Regarding the current accident year combined ratio, it's interesting to note that the property segment is becoming a larger part of our business, influenced by changes in the reinsurance market and associated rates and terms. By excluding catastrophic losses from the numerator but including all premiums in the denominator, our current accident year combined ratio is reduced, reflecting our mix of business. I view this as integral to understanding our overall published combined ratio. Our reported combined ratio of 86.8%, which reflects higher catastrophic losses than the same quarter last year, is, in my opinion, an impressive figure given the current volatility in the property sector. This illustrates our ambition to grow while ensuring we earn a reasonable return.

Got it. And maybe to follow up, please continue.

No, I'm done.

So, to follow up on that, in sectors where you are seeing rates exceed the trend, is it reasonable to expect an acceleration in growth in premium in those areas? Essentially, are the policies in force increasing or accelerating at a faster pace?

There is something we cannot disclose, but it is clear to us that we generated $1.3 billion in new business, which is a record. Additionally, we achieved a renewal retention rate cap of 90%.

Thank you. Good morning. I was wondering about the prior-period development. I don't think this has been asked, but could you break down the $144 million in North America commercial? I'm curious if there were any notable movements within that, including long-tail casualty versus workers' comp.

Yeah, sure. We studied large-account comp this quarter, and we studied auto liability across the organization, large, medium, small, all added together. Among other casualty lines, that we studied a variety of GL, general liability-related ones, comp produced about $287 million release and the auto liability studies produced about $116 million of charge and not concentrated in any one year, spread out. And that was the major piece.

Okay. That's really helpful. Thank you, Evan. And then maybe kind of on a similar theme, but I saw some media sort of reporting on, an executive that you hired specifically to handle inflated jury verdicts. Just wondering if you could expand on that role and how you expect the industry to actually...

He's not going to manage inflated jury verdicts. It seems like I hired someone out of the mafia, as I can't think of another method aside from using a mask and a gun. Our focus is on the litigation environment and finding ways to lead and unify corporate America to combine our influence and resources to shape that environment. This will involve political and regulatory efforts to change laws on critical issues, whether they relate to mass torts, large individual awards, or litigation funding. We're committed to working with corporate America, which is becoming more aware and proactive about these issues. I anticipate having more to share on this in the future, but for now, we will get to work on it.

Thank you.

You're welcome.

Good morning, everyone. So, you started to touch upon this in the last question, but I wanted to step back. In the last 90 days, it seems like there's been a flurry of announcements from the company on management changes and promotions. And I'm curious, Evan, if you could just step back, give us a snapshot of what's going on behind the curtain.

Sure. There’s no secret here. This is an exciting time for our organization. We have a highly effective succession management and key employee process in place, which has been developed over the past 18 years. At my level, this involves monitoring around 500 individuals throughout the company. The recent promotions and changes in responsibilities are a direct result of this succession management process, which we planned for 18 months ago. Individuals like John Keogh and John Lupica were part of this plan. It was all very structured, focusing on people with longstanding connections to the company who embody our culture and possess the skills and capability to take on more. Given the company's size and growth, the structure must evolve, and the talent we place must align with the available opportunities and the various management dynamics we need to handle simultaneously. We face significant strategic challenges, including litigation, and Chubb, as a leader, has both the responsibility and the opportunity to engage with these issues. Managing our business on a day-to-day basis is becoming more intricate and diverse. Thus, part of my role is to consider all these factors and utilize our succession process to build a strong, varied pool of talent to address these challenges. It’s worth noting that everyone involved in the recent announcements has a strong rapport and has worked together for a long time, which only strengthens the team.

Great. For my follow-up question, I’m going to shift from the North American commercial liability reserve and focus on the agricultural business. I was watching and I think I checked...

I think we dug all for the sand out of that box. So, I'm like, I'm done, but go ahead.

I figured. It's exhausting.

I'm so known for my patients.

I checked the spot rate of a bushel of corn and it appears to be down about 30% year-over-year. While this may not be a definitive indicator of the outlook for your agricultural business, could you provide an update on how this year is shaping up? I understand that the harvest season is still unfolding, but any additional insight would be appreciated.

I'm going to be cautious because I don't want to jinx anything in the middle of the game. However, we have a significant concentration of exposure, and so far, it has been a very good growing season, particularly for corn and soybean. Our portfolio is well-diversified, with a stronger presence west of the Mississippi, especially in the Midwest and upper Midwest. The growing conditions are looking very promising. Currently, the spot markets reflect what people expect, which is largely speculative based on government forecasts for crops and assessments of stock levels. This speculation is driving the current prices. We'll have to see how it all turns out, but things are looking positive at the moment.

Got it. Thanks for the answers.

John, you wanted to say something about base price?

Yeah. Just you noted a spot price below last year, but I think the more important number is what the base price was and it's only off 10% from base price, which is a good spot for us right now.

Yeah, which was within a lot of the deductible. Frankly, it is a little outside deductible averages, but we'll see how it turns out.

Thank you. We'll be happy to take your questions.

Ladies and gentlemen, this concludes today's call. Thank you all for joining, and you may now disconnect.