Earnings Call Transcript - CNA Q4 2021

Operator, Operator

Good morning and welcome to CNA’s discussion of its 2021 Fourth Quarter Financial Results. CNA’s fourth quarter earnings release, presentation and financial supplements were released this morning and are available via its website, www.cna.com. Speaking today will be Dino Robusto, CNA’s Chairman and Chief Executive Officer, and Larry Haefner, CNA’s Interim Chief Financial Officer. Following their prepared remarks, we will open the line for questions. Today’s call may include forward-looking statements and reference to non-GAAP financial measures. Any forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from the statements made during the call. Information concerning those risks is contained in the earnings release and in CNA’s most recent SEC filings. In addition, the forward-looking statements speak only as of today, Monday, February 07, 2022. CNA expressly disclaims any obligation to update or revise any forward-looking statements made during the call. Regarding non-GAAP measures, reconciliations to the most comparable GAAP measures and other information have been provided in the financial supplement. This call is being recorded and webcast. During the next week, the call may be accessed on CNA’s website. If you are reading a transcript of this call, please note that the transcript may not be reviewed for accuracy, thus it may contain transcription errors that could materially alter the intent or meaning of the statements. With that, I will turn the call over to CNA’s Chairman and CEO, Dino Robusto.

Dino Robusto, Chairman and CEO

Thank you Tracy and good morning. In the fourth quarter, we continue to effectively leverage the favorable market conditions and achieved strong quarterly results which topped off a great year with record core income. Before I provide details, let me offer a few highlights on both periods. Our gross written premiums excluding our captive business grew by 16% in the fourth quarter and 10% for the full year. Importantly, the overall P&C rate increase remained at 8% in the fourth quarter consistent with the third quarter, leading to a full year rate increase of 9% which was well above long run loss cost trends. The all in combined ratio was 92.9% for the quarter and 96.2% for the year, each representing the best ratios in five years. Our underlying combined ratio was 91.2% for the quarter, and a record low of 91.4% for the full year. All of this led to record core income of just over $1.1 billion for the year, up 50% in core EPS of $4.06 per share. Drilling down on the details starting with the fourth quarter, our P&C operations produced core income of $353 million, or $1.29 per share. Our Life & Group segment produced core income of $6 million, and our Corporate & Other segment produced a core loss of $94 million, mainly impacted by a non-economic charge related to asbestos and environmental. As usual, Larry will provide more details on Life & Group and the corporate segments. In the fourth quarter, the all in combined ratio was 92.9%, a half a point lower than the fourth quarter of 2020, and the lowest all in quarterly combined ratio since 2016. Pretax catastrophe losses in the quarter were $40 million or two points of the combined ratio, compared to $14 million in the prior year period. The P&C underlying combined ratio of 91.2%, 1.4 point improvement over last year's fourth quarter result. The underlying loss ratio in the fourth quarter of 2021 was 60.1%, which is down 0.3 points compared to the fourth quarter of 2020. Excluding the impacts of COVID in the prior year quarter, the underlying loss ratio improved by 0.8 points as we continue to recognize some of the margin build in the current accident year from the earned rate increases as we did last quarter. For P&C overall, prior period development was favorable by 0.3 points on the combined ratio. Turning to production, gross written premium, excluding our captive business grew by 16% in the fourth quarter, which was twice as high as the first half of the year. Net written premium grew by 11% for the quarter, an increase of 6 points from the third quarter. New business grew by 28% in the quarter, and the overall written rate increase was 8% while earned rate in the quarter was 10%. In addition, retention of 83% was higher than it's been all year. And the strong production results were broad based across all the operating segments. In terms of the business units, the all in combined ratio for specialty was 89.9% and the underlying combined ratio was 90.1%, a 0.5 improvement compared to last year. The underlying loss ratio improved by 0.9 points to 59.1%. The expense ratio increased by 0.5 points to 30.9 from a one-time true up and Larry will provide more detail in the discussion on expenses. Gross written premium ex-captives grew 15% in the fourth quarter with 58% growth in new business. This is the sixth consecutive quarter of double digit growth in specialty. We also achieved an overall rate increase of 11%, up one point from the third quarter. We achieved higher rate in management liability and our affinity programs and stable rate in our health care business. In addition, retention improved three points to 83%. Turning to commercial, the all in combined ratio was 94.9% in the quarter, including 2.9 points of Cat. This was the lowest all in combined ratio in four years. Down the line, combined ratio was 92.2% this quarter, which was the lowest on record, and was 1.4 points lower than the fourth quarter of 2020, and 2.4 points lower excluding the COVID frequency impacts, and lower the loss ratio in 2020. The underlying loss ratio of 661.4% improved by 0.3 points, compared to the fourth quarter 2020, excluding the COVID frequency effects. As we referenced last quarter, the underlying loss ratio for commercial was higher in the latter half of 2021 resulting from mixed change between property and casualty net earned premium due to the new property quarter share treaty we purchased in June. Expense ratio improved 2.3 points to 30.4% this quarter. Commercial achieved that 19% growth in gross written premiums ex-captives with 16% growth in new business. Rate at 5% was only slightly below the third quarter, and excluding work comp, the rate change was plus 7% in the quarter, which was consistent with the third quarter. Retention was up two points to 84%, which was the highest of any quarter this year. Retentions were strong in all of our commercial business units, and middle market retention improved to 85%, just the highest level since prior to the pandemic. Exposure change was plus 2% in commercial this quarter as a result of increases in payrolls and sales volumes as the economy continues to improve, this is the highest exposure increase since the first half of 2019. For International, the all in combined ratio was 94.8% in the quarter. The underlying combined ratio improved by 4.2 points to another record low of 90.9% this quarter. The expense ratio improved to 2.6 points, to 32.4% and the underlying loss ratio improved 1.6 points to 58.5%. We are very pleased with the improvement in our international results, which highlights our disciplined approach to the re-underwriting and catastrophe exposure reduction we executed. International achieved a 9% growth in gross written premium and new business growth of 15%. Rates were up 13% this quarter, achieving double-digit rate for the seventh consecutive quarter and nine of the last 10 quarters. In addition, retention at 82% was the strongest quarterly retention in over three years. Now, let me provide some perspectives on the full year performance. As I mentioned before, core income was a record for the year increasing 50% to a little over 1.1 billion or $4.06 per share. And net income for the year was just over $1.2 billion or $4.41 per share, this compares to 735 million and 690 million in 2020 respectively. The increase from the prior year is attributed to significantly improved underlying underwriting gain. And while still substantial, a lower level of Cat loss compared to 2020 as well as higher net investment income driven by limited partnership returns. The all in combined ratio was 96.2% with 5.1 points of catastrophe loss and 0.3 points of favorable prior period development. This is the lowest calendar year combined ratio in five years, and a significant accomplishment considering that heavy levels of catastrophe loss again this for this year. Cat losses were $397 million pretax in 2021 compared to $550 million last year, but catastrophe losses in 2021 are actually higher than the $355 million catastrophe result in 2020 when you account for the COVID Cat charge we incurred in 2020. Our P&C underlying underwriting profit for the full year increased 31% to $667 million as the underlying combined ratio improved to 1.7 points to 91.4%. It's the fifth consecutive year of improvement in the underlying combined ratio. The underlying loss ratio in 2021 was 60%, down 0.2 points compared to 2020 excluding the effects of COVID in the prior year, the underlying loss ratio improved by 0.6 points. The expense ratio improved to 1.5 points for the full year. All three operating segments produced strong underlying results in 2021. For Specialty, the underlying combined ratio of 89.7% was the best on record and 1.6 points lower than 2020. Commercial produced an underlying combined ratio of 92.6% in 2021, which is also a record and 1.3 points lower than 2020. Multiple years of re-underwriting initiatives in our international portfolio have paid off with underlying combined ratio of 92.1% in 2021, 3.5 points lower than 2020. Turning to production for the full year, gross written premium growth ex-captives was 10% this year. We achieved strong new business growth of 19% and a full year rate increase of 9%. Retention was 82% for the full year. Net written premium grew by 5% for the year. In terms of the wider spread between gross and net written premium for the year compared to 2020, this is a function of the new property quarter share treaty agreement, which was on a risk attaching basis, causing the spread to widen. Before I turn it over to Larry, I'd like to acknowledge Scott Lindquist is also on our call. He'll be transitioning with Larry through the first quarter and will be handling the earnings calls after the first quarter. We are excited to have Scott on board. And with that, I'll turn it over to Larry.

Larry Haefner, Interim Chief Financial Officer

Good morning, everyone. I will provide some additional information on the results as Dino indicated. Starting with core income for the fourth quarter, our P&C operations produced a core income of $353 million, and a key contributor to this strong result was our pretax underlying underwriting income of $167 million, which is a 22% increase from the fourth quarter of 2020. Additionally, our catastrophe losses were relatively modest at $40 million pretax, despite the industry's estimated catastrophe losses being significantly above the 10-year median for fourth-quarter events. For the full year 2021, we achieved record core income of $1.106 billion, resulting in a return on equity of 9.1%, a substantial increase from 2020's 6.1%. Our Q4 expense ratio was a significant factor contributing to our higher underlying underwriting profits, standing at 30.8% for the fourth quarter of 2021, which is 1.2 points lower than the fourth quarter of 2020. In the Specialty segment, the expense ratio slightly rose by half a point compared to last year, mainly due to recognition of higher profit-sharing in one of our profitable programs. In the commercial segment, the expense ratio improved by 2.3 points this quarter, primarily due to growth in net earned premium. The International segment also showed a notable year-over-year improvement of 2.6 points, driven by net earned premium growth and reduced acquisition costs. Annually, the expense ratio was 31.1% in 2021, which is 1.5 points lower than in 2020. We anticipate that a 31% expense ratio is a reasonable run rate going forward as we continue investing in talent, technology, and analytics. The expense ratio improved across each segment, with specialty improving from 31.3% to 30.5%, commercial improving from 33% in 2020 to 31.1% in 2021, and international improving from 35.5% in 2020 to 33.1% in 2021. Moving on to prior period development, in Q4, the overall property and casualty net prior period development positively impacted the combined ratios by 0.3 points compared to no impact in the prior year quarter. This favorable development was primarily driven by Surety in the specialty segment, somewhat offset by management and professional liability. In the commercial segment, favorable development in workers' compensation was offset by unfavorable developments in auto and general liability, while in the international segment, favorable development in commercial classes was countered by unfavorable developments in specialty classes. Regarding our COVID reserves, we made no changes to our overall COVID catastrophe loss estimates during the quarter and continue to believe that our previously established estimates of ultimate losses in incurred but not reported remain appropriate, with most of the loss estimate still in IBNR. For the full year 2021, overall development was favorable by three-tenths of a point, compared to 0.7 points favorable in 2020. The pay-to-incur ratio of 0.89 was elevated compared to the first three quarters of 2021, largely due to payouts from catastrophes that occurred in prior quarters. However, this ratio remains at the lower end of our pre-pandemic range and has consistently been lower over the past two years, driven by factors such as growth in our underlying underwriting profits and reduced non-catastrophe paid losses in several product lines, where we have implemented significant underwriting actions. The slowdown in court proceedings has also contributed to lower paid losses. For the full year, the paid-to-incurred ratio was 0.78. Transitioning to our non-Property & Casualty segments, our corporate segment recorded a core loss of $94 million in Q4, compared to a $49 million core loss in Q4 2020. This loss was predominantly due to our annual asbestos and environmental reserve review. The review resulted in a non-economic after-tax charge of $48 million linked to strengthening reserves associated with increased defense and indemnity costs on existing accounts, compared to last year's non-economic after-tax charge of $39 million. From a core income perspective, the impact of the fourth quarter 2021 charge was a reduction of about $0.18 per share, compared to an approximate reduction of $0.14 per share in the fourth quarter of 2020. Following this year's review, we have incurred cumulative losses of $3.4 billion, which is well within the $4 billion limit of our loss portfolio transfer cover purchased in 2010. Importantly, paid losses amount to $2.2 billion. You may recall from previous years’ reviews that there is a timing difference in recognizing the benefit of the cover relative to incurred losses, as we can only do so in proportion to the paid losses recovered under the treaty. The loss recognized will be recaptured over time through the amortization of a deferred accounting gain as paid losses ultimately align with incurred losses. At year-end 2021, we had $429 million of deferred gain that will be recaptured over time. Besides the impact from our annual investment, asbestos and environmental reserve review, net investment income attributed to our core corporate segment in Q4 was down $13 million after tax year-over-year because of the loss portfolio transfer agreement entered into at the end of last year related to legacy excess workers' compensation reserves. Additionally, we strengthened our legacy mass tort IBNR reserves this quarter by $16 million on an after-tax basis. For Life & Group, we recorded core income of $6 million for Q4 2021, which is $20 million less than last year's fourth quarter, as last year's results benefited from favorable morbidity experience stemming from the pandemic. I wanted to comment on the forthcoming change in GAAP accounting methodology related to long duration targeted improvements or LDTI, which will impact our Life & Group businesses. We will adopt this new accounting guidance effective January 1, 2023, applying it retroactively as of January 1, 2021. We are diligently working on this implementation and plan to discuss its impacts on our first-quarter call. We expect this change to materially decrease accumulated other comprehensive income, primarily due to the difference between the expected interest rates from our investment strategy and the liability discount rate assumptions that are required under this accounting change. This accounting pronouncement only affects GAAP basis financial statements and does not impact statutory accounting or cash flows for the businesses. Therefore, this accounting change is regarded by us and the industry as non-economic, as none of the underlying business fundamentals are altered by it. Regarding investments, total pretax net investment income was $551 million in Q4, virtually unchanged from last year's fourth quarter. This includes income of $108 million from our limited partnership and common stock portfolios, compared to $114 million from these investments in the prior year quarter. The strong returns from our limited partnerships for the quarter across both the P&C and Life & Group segments were significantly driven by private equity bonds and reflect the lagged results reported from the third quarter. As a reminder, our private equity funds, which comprise about two-thirds of our LP portfolio, primarily report results on a three-month lag basis, while our hedge funds report in real-time. Our fixed income portfolio has continued to provide consistent net investment income, stable relative to the last few quarters and the prior year quarter. Although the current low-interest-rate environment continues to pose challenges, its impact on our net investment income has been alleviated by our strong operating cash flows, which have been driven by growth in premium volume, strong underwriting profitability, and the slower payout of losses previously discussed. For the full year 2021, pretax net investment income was $2.2 billion, compared to $1.9 billion in 2020. This increase was largely driven by our LP and common stock investments, which yielded pretax returns of $402 million for 2021 compared to $144 million in 2020. The returns from our fixed income securities portfolio remained essentially the same for 2021 as in 2020, with our higher asset base offsetting lower average portfolio yields. Our average book value has increased by $1.4 billion from year-end 2020, while the pretax effective income yield decreased by 20 basis points. To highlight the strength of our operating cash flow, in Q4 it was robust once again at $643 million, and for the full year, it rose approximately $860 million from 2020 after adjusting for the payment to purchase our excess workers' compensation loss portfolio transfer agreement. From a balance sheet standpoint, the unrealized gain position of our fixed income portfolio stood at $4.4 billion at year-end, down from $4.8 billion at the end of Q3, due to a slightly higher interest rate environment. Fixed income invested assets supporting our P&C liabilities and Life and Group liabilities had effective durations of 4.9 years and 9.2 years, respectively, at year-end. Our balance sheet remains very strong. At year-end, shareholders' equity was $12.8 billion or $47.20 per share. Shareholders' equity, excluding accumulated other comprehensive income, was $12.5 billion or $46.02 per share, reflecting a 10% increase from year-end 2020 after adjusting for dividends. We maintain a conservative capital structure with a leverage ratio of 18% and continue to hold capital above target levels to support our ratings. We are still assessing potential changes to the S&P capital model and do not foresee any immediate impacts. The final version of the model has yet to be determined, and S&P has set a deadline for companies to provide feedback. We continue to engage with them to fully understand the potential implications of the proposed changes. Finally, we are pleased to announce a 5% increase in our regular quarterly dividend to $0.40 per share, payable on March 10 to shareholders of record on February 22. Additionally, we are declaring a special dividend of $2 per share, also payable on March 10 to shareholders of record on February 22.

Dino Robusto, Chairman and CEO

Before opening the call to the Q&A session, I'd like to offer a few comments about how we perceive the marketplace dynamics might involve, might evolve in 2022. Most importantly, we see pricing remaining favorable with overall rate increases persisting above long run loss cost trends for most of 2022 in light of the oft-quoted headwinds, like social inflation and economic inflation and elevated cat activity, all of the headwinds are still present; there have been no significant changes since last quarter. The uncertainty these factors create a loss cost trends have only been exacerbated by the Omicron variant, which has slowed the full return of court activity and docket logs to a pre-pandemic level, just why we have continued to prudently recognize margin improvement in our current accident year loss ratio. And although written rate increases in the last 8 to 10 quarters have allowed us to make up most of the lost ground from 2015 when the rate versus loss cost trend started to become a headwind, it can easily become insufficient if loss costs trends increase further. And this is why we are focused on pushing for more rate and where needed additional improvements in terms and conditions. As I mentioned earlier, our pricing remained stable for the third quarter at eight points while retention increased two points. So even though rates have moderated from their high watermark in the fourth quarter of 2020, we believe the pace down will be slower than the pace rates increased. Finally, as seen by our increasing overall growth as well as our growth in new business as the year progressed, we are bullish about our continued prospects and meaningful levels of quality business to our portfolio in 2022. And with that, we will take your questions.

Operator, Operator

Thank you. We will now take our first question from Josh Shanker from Bank of America. Please go ahead.

Joshua Shanker, Analyst

Yes, thank you. So listening on prior calls and this one to you spoke about the need to perhaps increase the loss cost trend assumptions based on what you're seeing in the marketplace. But of course, we all talked about the risk from dockets opening up and accruing more losses. At the time that the courts were closed and the dockets were thin, what data was coming in that said that we need to increase our loss trend? Was it more or less a hunch? Or did you actually see underlying court data saying that court decisions are getting more generous to the plaintiffs?

Dino Robusto, Chairman and CEO

Josh, the way I would answer it is based on some of the information we talked to you about originally, with lines like medical malpractice, and some of the auto liability, as we have a portion of the portfolio in construction, which wasn't as impacted by the COVID benefits, and also just umbrella and what we were seeing at the time, even before the pandemic, and then it continued in those lines through the pandemic, in particular professional liability. You saw things like a little bit higher attorney representation on cases, which also might have led to some additional frequency of cases potentially interested in being litigated. You saw higher settlement demands, even when the facts of the case didn't warrant it. And so, those are the kinds of things that, despite the dockets being lower, it's got implications on settlement values. And we saw that, and we continued to move our long run loss cost trends. In the last quarter, you also recall, we increased our property long run loss cost trends by about two points that had less to do, obviously, with dockets, and had to do with our view that economic inflation and supply chain issues would probably continue. So, there's a dynamic in particular in lines like medical malpractice that started before the pandemic and continued through it in terms of settlements that we saw.

Joshua Shanker, Analyst

And if I try and think about that, in terms of the stock at issue and paid to incurred ratio. I mean, nobody really knows. But do you have any advice for us in thinking about how to think about pay to incurred ratio in 22 and 23, given that the courts will presumably reopen?

Dino Robusto, Chairman and CEO

Yes, I will hand it over to Josh, and let Larry add his insights. He spends a significant amount of time analyzing the fees related to incurred ratios.

Larry Haefner, Interim Chief Financial Officer

Yes, Josh, we spend a lot of time thinking about that as well. I can assure you of that. And it really is difficult to parse between them right now, which is why we have been prudent about it. But as we look at it, as I mentioned in my remarks, where we have seen lower non-cat paid ratios and paid loss dollars actually, is in product lines, where we have taken pretty significant underwriting action, like medical malpractice in some of our excess liability lines, particularly with auto exposures. So it's really hard for us to try and separate what the difference is between those. But we do know that the paid to incurred loss ratio was down significantly from pre-pandemic days. And, we're just being cautious about recognizing any of that potential improvement if it exists until we know more about what's happening as those dockets open back up.

Joshua Shanker, Analyst

Alright, well, we will certainly find out more. Thank you for the color.

Operator, Operator

We will now take our next question from Gary Ransom from Dowling & Partners. Please go ahead.

Gary Ransom, Analyst

Yes. Good morning, I wanted to focus on the areas where the rates are moving up. More noticeably that would be financial lines in the specialty segment and small commercial in the commercial segment. Is there something particular going on that's making those move up and accelerate compared to some of the other segments or lines?

Dino Robusto, Chairman and CEO

Yes, there’s a little bit on each. I mean, clearly, on the financial lines, which includes our cyber, cyber has been accelerating, the rate increase. And if you look at it in the fourth quarter, we actually got triple digit rate increases. And, and the other lines had some more stable sort of behavior. On the small business, Gary, we filed for a few points of rate increases, we also got three points of exposure change and our retentions also up. So, it's all sticking. So it's really just filings in the BOP policy on small business.

Gary Ransom, Analyst

Thank you. And if I look at the growth, I think you did mention in commercial about the exposure increases, but just across the whole business - can you somehow parse out the amount of exposure increase we're seeing versus rate or other factors?

Dino Robusto, Chairman and CEO

Well, in commercial, we got about two points of exposure growth. And that was, I think I may have mentioned in the prepared remarks, really just, you're seeing more in the way of sales, you're also seeing payroll increases. You have underwriting actions that work against that. A little bit, it's hard to know exactly. But, our sense is we probably had a point reduction in exposure and commercial due to our underwriting actions. And, so maybe you're looking at three points in the absence of that, which I think is sort of reflective of the economic activity that's about the sort of best detail I can offer there on the exposure again.

Gary Ransom, Analyst

That's great. Thank you. And, and one other thing on more on the loss trends. I’m just thinking about your loss picks for the full year, were there any adjustments or true ups that you kind of changed your view at all, and as you look back at 2021, in any of the segments or areas?

Dino Robusto, Chairman and CEO

There was nothing particularly significant in the quarter. When we examined the long-term loss cost trends, which we continuously monitor despite being labeled long-term, we found that they remain relatively consistent with the adjustments we made in the third quarter. Therefore, there were no substantial true-ups to report.

Gary Ransom, Analyst

Okay, great. And one last little one, can you remind us what your COVID reserves actually are at this point?

Dino Robusto, Chairman and CEO

Yes, Gary, they're $195 million. That was the original. That was the original estimate. We held that.

Gary Ransom, Analyst

Right. Okay, and was some of that recognized in 2021? Or was all that in 2020?

Dino Robusto, Chairman and CEO

That was the initial estimate we put up, and we still comfortable with that. Yes, we never moved it from there. Right.

Gary Ransom, Analyst

Great. Thank you very much.

Dino Robusto, Chairman and CEO

Thanks, Gary.

Operator, Operator

We will now take our next question from Meyer Shields from KBW. Please go ahead.

Meyer Shields, Analyst

Great. Thank you. Good morning. I want to follow up on Gary’s question with the exposure unit growth. In your view, is that exposure unit growth likely to have any impact on the loss ratio?

Dino Robusto, Chairman and CEO

Meyer, we are struggling to hear you, but are you asking what the impact on the loss ratio is from the exposure growth?

Meyer Shields, Analyst

I'm asking whether you expected to have an impact on exposure unit growth. I'm sorry, I mean, it's like asking whether exposure unit growth should have an impact on the loss ratio going forward.

Dino Robusto, Chairman and CEO

It's minimal right now. I mean, certainly when you think about workers comp, and you think about payroll, what's going up? Is it is it salaries going up? And how is the salaries that you're insuring compared to average weekly wage, versus just growth in number of employees, right? Because if it's, if it's just payroll going up the average amount being paid, and you're above the average weekly wage, it would have some benefit. But we haven't really incorporated any benefit into to our loss ratios from that.

Meyer Shields, Analyst

Okay, now that's helpful. On Dino, you talked about inflation, and obviously, it's everywhere. I was hoping you could zero in maybe on whether the various forms of inflation that we're seeing now are likely to translate into above average loss trend on the Affinity business?

Dino Robusto, Chairman and CEO

And so on inflation is on the social inflation side, you're referring to Meyer?

Meyer Shields, Analyst

So I'm trying to incorporate like or just to see whether any, like, because there's so many different aspects of inflation now, and most of them seem to be getting worse, whether any of those matter to Affinity?

Dino Robusto, Chairman and CEO

Yes, on Affinity. We've talked a little bit about it before Meyer in the context of social inflation, because it's all professional liability. Our Affinity programs and as I think, I've indicated before, these programs largely comprise of single practitioners like nurses and they typically their coverage is largely supplementary to the facilities. And rarely is there any singular accountability to the practitioner and the facilities at higher limits where typically, you see the plaintiffs go after from a social inflation perspective. So, it's clearly had a lot less impact on the Affinity portfolio, even within the med mal side of it, than it did on the regular healthcare portfolio. And it's mainly there that we focus on given its professional liability.

Meyer Shields, Analyst

Okay, perfect. I'm all set. Thank you very much.

Operator, Operator

There appears to be no further questions. I now like to turn the conference back to Mr. Robusto for any additional or closing remarks.

Dino Robusto, Chairman and CEO

Okay thank you everyone. And we look forward to chatting with you next quarter.

Operator, Operator

This concludes today's call. Thank you for your participation. You may now disconnect.