Q4 2020 Amerisafe Inc Earnings Call
Good day, everyone and welcome to day, Amerisafe, 'twenty, and 'twenty fourth quarter and full year earnings conference call.
Today's conference is being recorded at this time I would like to turn the conference over to Kathryn Shirley Chief Administrative officer. Please go ahead.
Good morning, welcome to the Amerisafe 2024th quarter Investor call if.
If you have not received and the earnings release. It is available on our website at Www Dot Amerisafe Dot com.
This call is being recorded a replay of today's call will be available details on how to access the replay are in the earnings release.
During this call we will be making forward looking statements. These statements are based on current expectations and assumptions that are subject to various risks and uncertainties.
Actual results may differ materially from the results expressed or implied in these statements if the underlying assumptions prove to be incorrect or as a result of risks uncertainties and other factors, including the impact of the COVID-19 pandemic on the business and operations of the company and our policyholders and the market value of the six.
<unk> and our investment portfolio and other.
Other factors that may affect our results are discussed in today's earnings release and the comments made during this call and and the risk factors section of our form 10-K form 10, Qs and other reports and filings with the Securities and Exchange Commission, we do not undertake any duty to update any forward looking statements I will now turn the call.
And all over to GNL Frost, Amerisafe, President and CEO.
Thank you Catherine and good morning, everyone. It is my pleasure during this call to use the words looking back and I emphasis on back at 2020 for you.
And your presented us with a global health crisis, social unrest political divisions are competitive workers' compensation market natural disasters and and economic shutdown.
And the strength of the human Spirit was tested as we were forced to interact and work differently.
Looking back at 'twenty and 'twenty for the industry approved loss cost continued to decline.
The industry experienced a decline of insured payrolls as unemployment and certain sectors dramatically increase at.
At the same time, there was significant drop and non COVID-19 reported claims.
The analysis of the impact of COVID-19 on the industry has only just begun.
Taking into account the many factors of 'twenty and 'twenty and G. I anticipated a one percentage point deterioration in the industry's combined ratio through the third quarter.
If the estimate is accurate and workers compensation will remain profitable and profitable property and casualty line.
This will continue keep competition robust in 'twenty and 'twenty one.
Looking back at 'twenty and 'twenty for Amerisafe, we successfully met and the year's challenges through our employees' dedication to service and the strong foundation built over years of disciplined in underwriting and claims management.
The sectors, we focus on are less impacted were less impacted during the pandemic with our insurers high hazard work deemed essential and much of the work taking place outdoors.
As a result, the and back to the industry due to unemployment was less impactful to our book.
For Amerisafe audit premium and the quarter remained positive and this included positive periods impacted by the pandemic.
However, audit premium in the fourth quarter of 'twenty, when he was less robust than prior years fourth quarter.
For us auto premium combined with other adjustments decreased top line 2.8 million by comparison.
Looking forward into 'twenty and 'twenty, one the economic recovery and sectors. We ensure it will be impactful to this compounded at a premium.
And also premium for policies written in the quarter was down seven 9%. This decrease a line with loss cost decreases averaging at 7.4 per cent.
Our LCM for the quarter was a one and 57 down from 159 and the fourth quarter of 2019.
I believe this drop and E. L. P M illustrates our commitment to remain competitive while remaining disciplined and a declining rate environment.
Policy Count was relatively flat with strong retention of $94 four per cent for those policies for which we offered renewal.
We continue to work with our agent network as pandemic related disruptions hampered new business prospecting and policy count growth.
During 'twenty and 'twenty, we implemented some county expansion and followed for additional pricing tiers and states to help achieve our goal of policy growth.
Altogether. These various elements of premium resulted in gross premiums written decreasing 10.8% from the prior year quarter.
Continuing to looking back at 'twenty and 'twenty Amerisafe liked the industry also saw fewer reported claims.
However, our niche tends toward low frequency high severity claims.
The ultimate impact to claims severity due to the pandemic and the strain on the health care system is far from being known as a result, we did not change our current accident year loss ratio of 72.5% in the fourth quarter.
We also had significant favorable case development from accident years, 2014, three 2018, which resulted in $17 9 million or 24 basis points of favorable prior year losses incurred.
We continue to positive it'll be surprised by the amount of favorable case reserve development, we see across our accident years, including the more recent accident years.
As we look forward to 'twenty 'twenty, one our initial pick for 'twenty and 'twenty, one will be 72% down a half percentage point from accident year 'twenty and 'twenty.
I'll now turn the call over to Neil to discuss expenses investments capital and other financial metrics.
Thank you Gino.
Good morning, everyone for the fourth quarter of 2020, Amerisafe reported net income of $28 5 million for dollar 47 per diluted share compared with $34 million or $1 76 per diluted share and last year's fourth quarter operating.
Operating net income was $23 6 million for the quarter or $1 22 per share for.
For the full year 2020, Amerisafe produced net income of $86 6 million or $4 47 per share.
Operating net income for the full year, 'twenty and 'twenty was $82 4 million or for dollars and 25 per share down just $6 6 million from last year. Despite the considerable and unique challenges of 'twenty and 'twenty.
Revenues in the quarter were down 4% to $88 2 million compared with the fourth quarter of 2019.
Net premiums earned decreased nine 2% to 74.7 million when compared to last year's fourth quarter for.
For the full year net premiums earned were lower by 8.5% totaling some 300 and for <unk> 4 million. These.
These premium trends were driven by the continued decline and workers' compensation loss costs in 2019 and 2020.
Turning to investments we saw a continuation of the impact of lower short term yields with net investment income down 10% in the fourth quarter to $7 2 million compared with <unk> 8 million in the fourth quarter of 2019.
Net investment income for the full year was down nine 6% to $29 4 million compared with $32 5 billion in 2019 again due to the lower interest rate environment.
The tax equivalent yield on our investment portfolio was 2.85% at year and the pretax yield on the portfolio at year end was 2.53%.
These rates are almost identical to the rates on the portfolio at the end of 2017 before the federal reserve began raising rates.
There were no significant credit losses on any of the securities held in the portfolio during the quarter or for the full year of 'twenty and 'twenty.
There were no significant realized gains or losses during the quarter or full year.
Unrealized gains on our equity Securities contributed $6 5 million to net income in the quarter and $4 2 million for the full year 'twenty and 'twenty.
The investment portfolio is high quality caring and average double a rating with a current duration of 396 and the portfolio is composed of 68% and municipal bonds, including 15% and taxable municipal bonds, and 14% and corporate bonds and 9% and you.
S treasuries and agencies, 4% and equities and 5% and cash and short term investments.
Approximately 60% of our bond portfolio is comprised of held to maturity securities, which were in and overall net unrealized gain position of 36.5 million at year and these gains are not reflected in our year and book value as the bonds are carried at amortized cost.
And <unk>.
Moving now to operating expenses, our total underwriting and other expenses were $15 6 million and the quarter compared with $14 7 million and the fourth quarter of 2019.
The increase in operating expenses was primarily due to last year's 3.5 million expense benefit and the fourth quarter due to the end of a multiple injury fund assessment.
By category, the 2024th quarter expenses included $6 4 million of salaries and benefits $5 7 million of commissions and $3 5 million of underwriting and other costs.
Our expense ratio for the quarter was 29% compared with 17.8 per cent for the fourth quarter of 2019.
For the full year, 'twenty and 'twenty operating expenses decreased $2 4 million or three 3%.
Recall that in the third quarter, we recognized a $5 6 million expense benefit as the result of a termination of a subsequent injury fund assessment.
Our expense ratio for the full year as a result was 23, 6%.
Without the expense benefit mentioned previously our expense ratio for the full year would've been 25, 5%.
Our tax rate for the fourth quarter was 20% and 19% for the full year, both lower than in 2019 as a result of a higher proportion of tax exempt interest income on our investment portfolio.
Return on average equity for the fourth quarter of 'twenty and 'twenty was 24.8 per cent compared to 33% for the fourth quarter of 2019 for.
For the full year ROE was 19.9% compared with 22, 1% last year.
Operating ROE for the quarter was 21, 4% and for the full year was $19 seven per cent.
And now to capital management during the fourth quarter. The company paid its regular quarterly cash dividend of 27 cents per share as well as an extraordinary dividend of $3.50 per share.
This quarter the board of directors declared a quarterly cash dividend of 29 cents per share per.
Payable on March 26, 2021 to shareholders of record as of March 12th 'twenty 'twenty, one and this represents a 7.4% increase and the regular quarterly dividend.
And finally, just a few other items book value per share at December 31st 2020 was $22.70 up slightly compared with last year's $22.29 per share and we paid out $4.58 per share and dividends to shareholders during the year.
And our statutory surplus was 366 million at December 31, 'twenty, and 'twenty compared with $360 million at the end of 'twenty and 19.
And finally, we will be filing our form 10-K with the SEC tomorrow after market close.
That concludes my remarks, and we would now like to open the call up for the question and answer session operator.
Thank you.
And to ask a question please signal by pressing star one on your telephone keypad.
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Okay and press Star one to ask a question.
We can go ahead and take our first question for Matt.
Please go ahead.
Hey, Thanks, good morning.
Good morning appointment.
Okay.
And I was hoping you could maybe.
Maybe just jumping a little bit deeper into what you're seeing and and the competitive landscape.
And we look at some of the numbers out there whether it be surveys and otherwise it well, while it's still certainly competitive and it looks like things are maybe normalizing a little bit and comp what.
And what what are you seeing and kind of your landscape.
I mean, and obviously keeping in mind that that was it.
Very happy to see that the guidance for the for the accident year loss ratio.
We supply to me that it's not getting too out of hand or at least.
Consistent with favorable frequency and severity trends youre, saying.
Yeah, Yeah, I think I think your terminology of not getting too out of hand is probably a good weighted to summarize them out yet competition is hasn't really changed that much it's still very competitive.
But we're not seeing I would not say, we're seeing irrational competition, either I I read I read the same things you've been reading about there there's people hopeful or maybe have seen some rate increases you know I can say the amerisafe is not seeing that and I do think it's very state focused I think it's very it depends.
On the hazard groups that you're underwriting if you're seeing more elasticity or less elasticity, but and for Amerisafe. It's still the same level of competition, we've been experiencing for over a year.
Okay, Great and then.
The other area I wanted to focus on was just the NAV.
If you could peel back the onion, a little bit on the 8% decline and in voluntary premiums and and really I. Appreciate your comments about hope.
Hopefully as things the economy reopens and you should get a little bit of tailwind for Matt can you help us understand and kind of as we think about that that top line, whether it be through payrolls or pricing or otherwise like is there any way that you can.
<unk> or even just throw a dart at what the kind of COVID-19.
Covid related exposure headwind impact might've been in 2020, I'm thinking of that as something that could come back and 'twenty, one 'twenty two as things normalize versus what might be more of a kind.
And a competitive pricing impact on that number.
Yeah, Yeah, so economic speculation by Gino I love it.
Wonderful.
Yeah and that.
And that's it's true that yeah, there's something we think about it and so it's a great question, Matt when you think about our major industries all I'll start with construction for example.
And we were pleased early on and the pandemic that our insurers were working day, we're reporting payrolls to us.
But if you look at the construction industry as a whole and and as part of the economy.
Certainly commercial construction hasn't met with delays in 'twenty and 'twenty.
I still hear the word delay not postpone and so that gives me some hope that there could be some I think your term was bounce back some bounce back and that line no question.
Residential construction, we are and we are we all see residential construction is booming and and met while that might not impact my construction, but in and of itself I do ensure happened to ensure logging and lumber.
So we saw positive trends and 'twenty and 'twenty.
From the logging and lumber industry and modified them. When the 10-K published you'll see that actually grew as a percentage of our book from let.
Let me see from seven 8% to nine 3%. So that that's strictly based on things that were happening in the economy and 19 and 20. So that's those are positives positives for us and.
Oil and gas, we all know what's happening there. So I imagine that will continue to shrink as a percentage of our book Agriculture, I think will have some bounce back and certainly there was some delays and the pandemic are related to the agricultural sales.
And you think of another trucking is another Great example, you know theres a lot of speculation about trucking because obviously there were a lot of goods being moved across this country and 'twenty 'twenty and we it's funny, our trucks and that doesn't seem to fluctuate as much as the other lines, maybe and in some regards and to be and I have to remind myself of who we ensure smooth.
For the midsize employers. So these national carriers that are moving these goods across the country and yes. They are.
Probably did see more of a boom and.
And 2020 than we probably would've seen and our book.
And so again if it's.
If the economy picks up I would expect I would hope to see and increase and even our trucking payrolls because I don't think they were as resilient and 'twenty 'twenty as say national carriers are larger truckload carriers.
And does that address your question.
Yes, no that helps I mean I.
Yes in terms of where that would away.
No. It's a very rough kind of way to think about it but numbers wise I mean, if we think about.
And kind of some of the change and audit premium full year 'twenty versus full year 19, I mean is that does that.
Do you have those numbers I know you've given them by quarter I, just don't have them all in front of me for that.
Full year.
And is that a reasonable way to think about the kind of and maybe the magnitude of.
The impact.
Yeah, I think it is Matt it'll be interesting to see as we start comparing everything to twin 19 to 'twenty and 'twenty to 'twenty. One because 20 is just such an unusual year for a number of reasons right alright, and so it'll be this thing to see.
And here's the point is our audit premiums even in 'twenty and 'twenty remain positive so in other words.
The premium that from what we originally estimated at the beginning of the policy period to what it was at the end of deposits pause here. It was positive so that was tremendous.
Sign for US it was not as robust as it was in 19. So we saw declines in as you can imagine we saw declines in construction, but we saw year over year increases in farm logging lumber.
And even in the subset of our roofing, even though that was no non in roofing, but we saw declines and trucking we saw declines and construction.
And I guess, that's why I was pointing to.
And again economic outlooks, according to gel and pointing to we do think there's a capacity for some bounce back in those in those lines.
Hey, Matt This is Neil for just to be those full year numbers, but this is audit and other adjustments.
Were positive $6 4 million in 'twenty, and 'twenty positive 12.3 million and 2019 and positive $7 3.002 million 18.
Okay, Great. That's very helpful wonderful well, thank you for all the economic outlook.
Color.
Congrats on a really nice bottom.
Bottom line results and what I think for everybody and be very tough year.
Great. Thank you Matt.
Alright, again that is star one to ask a question. If you find your question has been answered Humira move yourself from the queue by pressing star two.
Go ahead and take our next question for Mark Hughes.
Please go ahead.
Yeah, Thanks, and good morning.
Good morning, Mark for me.
Joe when you think about the <unk>.
Accident year, Toni Toni I think historically, you said you want to have about 36 months.
In the books before you start evaluating whether or not to take our development.
With Tony.
<unk>.
And I understand that.
Question of frequency frequency is down meaningfully and.
And so if you don't have the K.
<unk> reserves, if you're sitting on a lot of ideas are presumably.
Will you not know little bit more.
And whether or not you.
The losses are going to develop as you.
<unk> reserved for.
You know mark.
We write our tower industry type low frequency high severity. So I don't want to say frequency is not important obviously frequency is important and there is no denying that we had fewer reported client reported claims in 'twenty and 'twenty severity is where the question Mark comes for us with 'twenty and 'twenty and in particular because.
And all of the things that happened and in calendar year, 'twenty and 'twenty with the pandemic and what that can mean on a go forward basis you know.
We had 18 severe claim what we yeah. We on these calls have been calling and severe claims claims over a million dollars. Yet we had 16 and night and at the end of 19 for accident year and 19, so from a severity standpoint, twenty-twenty severity was slightly up as as we would've expected severity to be slightly up.
So I don't know.
The unknown the question Mark for me and and to your point do what do we know the sooner because of everything that happened in 'twenty and 'twenty is what ultimately happens to the outcome of those claims and because I do think yeah. There was a strain on the health care industry, and how that's going to impact our <unk>.
Claims experience going forward.
I think we ended the year with 40 per cent or so of the claims for 2020, we're close though the other 60 per cent still remaining open and how those are going to be impacted on a go forward basis. Because these are severe claims they're not Ah yeah, one and dones couple of Dodge claim as a procedure and I'm over with these are the ones that have a.
Lasting effects over many years.
I I I am.
And I'm cautious to say that yeah, we would be able to know sooner than in our prior experience based on the severity of our claims.
Understood is it.
Possible.
More likely for 2020 that after 12 months, you may be able to look at it and draw some conclusions.
I assume that's possible well, yeah, Eddie as any accident year age as we know more and more right.
Sure.
Okay.
And then Neil on the expense ratio and seem pretty low this quarter and my.
And if I'm missing something as the full year was 25, five excluding one timers and this quarter was well good growth.
For the one.
Where there any unusual items here or is this the new a new normal.
No I would I would say there were some unusual items you may recall that our typically our fourth quarter expense ratio is little bit lower than other quarters, just because we accrue for assessments throughout the year and then if the states are not going to assesses those typically come down and the fourth quarter.
But we did also see decreases in compensation expense commission expense and and professional fees in the quarter, but I would look to that run rate.
Of 25, five for the full year as a guide going forward because most of these were onetime in nature. The twenty-five five obviously, we also expect that although we'll try to hold our expenses in line with the decline in premiums we would expect that the expense ratio would tend to trend upwards.
And then the dividends and they've been running at about a point and sorry, I don't have that right and currently.
Yeah, the dividends have been running about a point they've they've reached a high of 1.5 and the third quarter of 19, so they've been between a point and 1.3 points over the last five quarters.
Yes.
And then.
Thank you for the O seven.
Seven 4% and quite a little loss costs, we get are the ones you got and Q4 what was that.
For the year as a whole and in any case could you comment on the kind of what you've been seeing lately in terms of those loss cost numbers.
They have been coming out from it and CTO.
Yeah. Good question Yeah. The for the seven point for I quoted you was fourth quarter and the impact of fourth quarter, 'twenty and 'twenty. So to recap first quarter was eight nine and 8.378 and seven point for.
And we've been the the loss costs that we've been seeing come through the approval and possibly Vincent coming through is sort of mid single digit ish.
And so as.
As we I think we talked about this on the last call, we anticipated and we were and it looks like we're seeing a slowing of the decline, which we're happy to see.
And.
I think he pointed out that the debt.
And that's.
In the face of frequency, which was down meaningfully.
And you and through the hole.
And you'd have to be interesting to see how that works its way or if it works and its way into rates and this anomaly that happened in 'twenty and 'twenty with frequency.
And.
It's gonna be it's again and give me a great case study for someone [laughter] remember properly and they said they weren't going to pay much attention and Tony for me.
And my understanding and that's my understanding but yeah, I think theres just so many still things we don't know yet right.
And we haven't had to think about all the different impacts of the pandemic yet, but you are right a word where it is the initial numbers that we're seeing it it doesn't seem to be they're just going to throw it out and not really having that debt influential.
And if this kind of a notional infrastructure spending ramps up.
I think thats always over the horizon and tons past, where you have had.
Infrastructure pushes as debt.
Been meaningful for your business.
Yeah. It can be if it's particularly if it's like roads bridges, and those sort of things and.
We believe it when we see it because it seems to come around every election cycle.
Yeah exactly.
Okay, and then I'll just ask you I think you've addressed this but you've used a formulation about.
Your construction exposure that.
The next job is important I think you said there hasn't been cancellations.
What do I feel about.
The next job.
Yeah.
You know it all hinges on does the economy bounce back you know the closer we get to vaccines being out there and people feeling better about the economic outlook.
And willing to commit those capital dollars to projects and the better.
So, but I I I think Pete I think theres and overall optimism about.
People want and feel like we should be able to bounce back because we were on the precipice right pre pandemic. So I don't know if we go back to that level, but I think the opportunities.
I think we're all hoping the opportunities are going to be there.
Yeah, the precipice being the good precipice thing for yeah, Yeah, you're exactly right I should have clarified good point Mike.
Okay. Thank you.
Thank you.
All right. We'll go ahead and take our next question from Randy Binner.
And Andy Please go ahead.
Oh, Hey, good morning, Thanks, I a handy.
And Andy.
Morning morning I.
And I guess my question is and I apologize for that accumulate that one day.
<unk> question, which is if you did share the LCM and then.
Yeah.
And just kind of putting together what.
Matt and Mark are talking about and if you look at some of the other.
You know the bigger writers of work comp earlier this earnings season, and everyone's kind of saying there isn't.
And maybe this inflection and work comp.
Pricing and right because commercial lines has been firm, but workers' comp has been soft and that's kind of.
Reflected and the valuation and the performance and Amerisafe.
Net.
Frankly, what I when I listen to this whole conversation and I don't really see why I would think the rate environment is going to switch. So E. L. C. I was just kind of a numbers question, but any commentary on this notion of a price turn I would love to hear from you all because frankly I just thought it just doesn't seem like there's it ought to happen and I guess, but there's no.
A real evidence [laughter].
Yeah, that's that's a nice way to look at it and to answer your Yeltsin question and $1 57.
Okay and for fourth quarter of 'twenty, and 'twenty versus $1 59, and fourth quarter 2019.
And here's what I'll say about what we're all reading about what's going to happen with the raise and is there going to be an inflection.
We've been in this very prolonged soft market and then 'twenty and 'twenty happens it adds a lot of unknowns. It adds it hasnt economic impact it has a payroll impact it has just the livelihood of some sectors impacts right.
So I think when you.
The things we've been reading you really have to think about workers comp as a whole which includes <unk>.
Main street business Hospitality services, and then working its way up to the hazard the more hazardous classes that we underwrite it is not one size fits all.
And I keep going back to and Workers' comp is very you know, it's very much state regulated so a rate environment and the pricing environment and one state does not mean a rate environment, the same rate environment pricing environment and another state. So I think when you hear when you read these articles and you and to your point I think he said.
And these larger carriers I think there it's a very wide swath of.
And there's a lot of different factors.
I can only speak to amerisafe classes of business and Amerisafe book of business and we're not seeing.
Rate increases for you know obviously the approved loss costs that are coming in are still declines, but even in the competitive environment.
Those opportunity for rate increases or not there is still very very competitive and the and the types of things that we underwrite that.
That yeah I can.
Certainly see where our net carrier, whose businesses as hospitality may be feeling differently about that.
Because because there's not one low for yeah.
Yeah.
Hi, Ryan.
And as Mary Winn.
Yes, you're right a business that is.
Very frequency oriented and that's where you're a lot yet and that's where your your probably your profit margins coming from and that's where your losses incurred are coming from and that's a totally different animal than what happens at Amerisafe right.
And so and and they had this tremendous drop in frequency and 'twenty and 'twenty granite hopefully it was an anomaly and it's going to bounce back and that's wonderful for them, but I think they think about the rate differently than.
I think about that rate does that make sense to you and yeah no. It does but I guess, what I am.
Across that whole spectrum workers' comp there just seems to be a lack of pain on claims yeah. You know, that's what turns cycles and so.
You know if it.
You all have so much excess capital and and is the special dividends are great but.
I mean will you ever.
Would you ever take another look at how you're and you're waiting you're kind of waiting for and opportunity with all your capital that just.
Keeps that happening and workers comp if you don't have and me and right I mean, you'd love to use the capital for a distressed book or buying the right business the right price.
But it keeps not happening and is there is there any other way to kind of deploy more and more of your franchise from a capital perspective.
Yeah, you know I do think we are working diligently to and I have said this and our opening comments working diligently with our agent network to find ways because I can tell you. They took a hit in 2020 as well.
So find ways to get policy count growth.
And that's sort of been my our mantra throughout the soft market in terms of okay loss costs are what loss costs are we we feel like we're disciplined underwriting we can write profitable business, but really trying to maintain and grow that policy count I think is important for us and I do think there are.
Ways that we can.
To make that happen even in this tough market because of course, we have the ability now of hindsight you look back the industry has been profitable and Amerisafe has been profitable. So there the opportunity is there I agree with you about the we have the industry hasn't seen the pain, yet I think 'twenty and 'twenty and.
I'd be interested and see what the impact for 2020 is like are we are we going to see that pain going forward and and I assume by pain, when I think of paying for the industry I think of adverse development I assume that's what you were talking to others as well.
And CCI has already indicated based on what we what they see incrementally the combined ratio is going up for Virginia pinch point, that's been happening and over the last couple of years right. So it is well it's not coming in the Wow factor, yet and it is incrementally getting there so.
I can see where theres some optimism.
Alright, I really appreciate the comments thanks, great quarter.
Thank you Randy thank.
Thank you Randy.
Alright. It appears there are no further questions at this time, Mr. Roth I'd like to turn the conference back to you for any additional or closing remarks.
Thank you.
I recognize some of the challenges from 'twenty and 'twenty continued into 'twenty and 'twenty, one, but the pandemic is not over we're still and our software for his compensation margin. The economy has not recovered. Nevertheless, we are looking forward in 2021 I can do so because I'm part of an organization with the foundation supported by remark.
Cool people strong financials and now the lessons learned over unimpressed and did and year.
You for joining us today.
This does conclude today's conference. Thank you all for your participation you may now disconnect.
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Okay.
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