Q4 2018 Earnings Call
Withdraw your question press the pound key thank you.
Nicole Russell Senior Vice President of Investor Relations you May begin your conference.
Thank you, Chris and good morning, everyone welcome to Pry Americas fourth quarter earnings call a copy of the press release, along with materials relevant to today's call are posted on our Investor Relations section of our website at investors <unk> primary care Dot com.
Joining our call today, our Chief Executive Officer, Glenn Williams, and our Chief Financial Officer, Alison Rand, Glenn and Alison will deliver prepared remarks, and then we'll open the call for questions.
During our call some of our comments may contain forward looking statements in accordance with the Safe Harbor provisions of the Securities Litigation Reform Act. The company does not assume any duty to update or revise these statements to reflect new information. We reference you to our most recent Form 10-K filing.
As modified by subsequent Form 10-Q filings for a list of risks and uncertainties that could cause actual results to materially differ from those expressed or implied.
We also reference certain non-GAAP measures, which we believe will provide additional insight into the company's operations.
<unk> reconciling non-GAAP measures to their respective GAAP numbers are included on our earnings press release and available on our Investor Relations website.
I would now like to turn the call over to Glenn.
Thanks before we get started with today's prepared remarks, I'd like to formally introduce Nicole Russell, who joined the primary care team in December and will be responsible for leading all aspects of our Investor Relations program Nikola sprinter entire professional career in the financial services industry and brings 20 years of experience in the field of Investor Relations.
I'd also like to recognize and thank Kathryn kieser for leading our Investor Relations program since our IPO Catherine has done an exceptional job and we know she will continue to be successful as she assumes other responsibilities here at primarily.
Today I'll share performance highlights and accomplishments that position Primerica for continued growth then Alison will review our financial results.
Their primary we constantly strive to create long term value for all our stakeholders by executing our strategy and effectively using our capital our strategy remains unchanged first maximizing sales force growth and productivity second broadening and strengthening protection product offerings next expanding client.
Investment options and finally, developing digital capabilities to deepen client relationships our market middle income families across North America continues to grow and along with it the need for protection and savings solutions. The size of our sales force and our unique educational approach are key strengths and dip.
<unk> factors compared to our competitors.
On slide three you can see that we achieved several important milestones in 2018.
First we surpassed the goal we set when I became CEO four years ago, which was to grow the size of our life insurance license sales force from 98000 to over 130000 Representatives.
Our term life face amount issued exceeded $95 billion for the second year in a row, placing us among the top term life insurance issuers in North America.
Finally, we delivered strong performance in our investments and savings business, including a record $7 billion in sales led by strong demand for variable annuities and the success of our lifetime investment platform.
We've leveraged the powerful combination of people and technology by enhancing our reps digital experience starting from their first exposure to primary Erica through the licensing and training process and beyond.
We've also launched EZ key that investment and savings products tool with model portfolios that creates an easy to use efficient method for our sales force to better serve clients.
We believe this high touch high Tech approach will drive long term productivity and make the ISP business more accessible to representatives, who are considering obtaining a mutual fund license.
Let's turn now to our fourth quarter performance, we had strong financial results for the quarter with adjusted operating revenues growing 11% and adjusted net operating income increasing 21% compared to the prior year period.
Adjusted operating EPS increased 26% year over year and ROE for the quarter was 24%.
On slide four you can see a summary of our distribution results, our recruiting and licensing results were somewhat lower than the fourth quarter of the prior year, but we continue to attract a large number of people to our business was 62000 recruits in the quarter. We ended the year with a total of 130736 <unk>.
Life insurance license sales representatives, which represents an increase of 4% year over year.
This growth rate is lower than that experienced from 2014 to 2017, but consistent with the 4% compounded annual growth we've seen in the size of the sales force since our IPO.
While we will have periods of both faster and slower pace growth, we believe over a longer period, the natural compounded growth rate for our sales forces in the mid single digit range achieving.
Achieving this longer term growth rate will drive meaningful distribution results for the company and we expect the sales force to see growth in this range during 2019.
Turning to slide five during the fourth quarter, we issued 72000 term life insurance policies compared to 80000 policies during the fourth quarter of 2017 Broda.
Productivity remained within our historical range at one eight policies per life insurance license represented per month, but below the point to one experienced in the prior year life.
Like the sales force productivity and in turn issued life insurance policies will experience periods of faster and slower pace growth.
Since the IPO of the compounded annual growth rate in issued life insurance policies has been 4%.
We expect term life policies issued to increase approximately 3% in 2019 in line with this longer term growth rate.
We always strive to accelerate growth by driving engagement and creating opportunities for our sales force. We continually monitor the momentum of our business and make regular adjustments to short term incentives accordingly.
This summer, we will host our biennial convention and the Mercedes Benz Stadium right here in Atlanta, We anticipate one of our largest audiences ever and expected attendees will leave with a renewed sense of energy.
Moving next to our investment and savings products segment performance during the quarter was driven by both sales and average client asset growth.
Total ISP revenue generating sales increased 10% compared to the fourth quarter of 2017, the largest contribution to growth was variable annuity sales, which increased 44% compared to the same quarter in 2017, reflecting recent product enhancements by our product partners that offer more attractive client benefits.
Demand for our managed accounts remained high reflecting the success of the lifetime investment platform.
Average client assets were impacted as financial markets corrected at year end, but still increased 2% compared to the prior year largely due to positive net client flows of $360 million.
While we are not immune to market downturns. The long term retirement focus of our clients and the principles of systematic investing that we teach help protect us during short periods of volatility volatility as a result, our redemption rate is generally better than industry averages.
We've had great success driving organic growth over the past few years and as we enter 2019, we're actively assessing new opportunities to accelerate that growth.
Our robust distribution capabilities allow us to offer a range of products and services that meet our clients' needs.
We are proud of our success, serving the protection needs of the middle market and we believe that this opportunity will continue to grow at an exceptional rate.
We plan to meet these needs by developing a new generation of term insurance products. We're currently working on incorporating the latest advancements in underwriting and issuing policies into a process that will be both faster and more convenient for our clients and our representatives.
We're also assessing opportunities to partner with a third party to provide a mortgage lending solution that would help our clients consolidate and eliminate that we.
We recognize that the debt load in the middle market is at record levels.
And it is often the financial need that creates the greatest concern among families. We.
We had a successful lending program, while we were part of Citi under the regulations in place at the time.
During 2019, we will pilot our new lending program to confirm that we can succeed under current regulations and assess the business opportunity in this area.
Finally, we continue to make investments in technology to enhance our business. We're building a digital platform that will seamlessly connect the client the rep and primary care.
And support our mission of creating financially independent families. We will strive to deepen our relationship with clients and extend the reach of our representatives in the market.
Our platform will provide a personalized experience that shows clients what products they have.
<unk> progress towards their financial goals encourages their best next step and helps them accomplish at all with the involvement of the primary representative in the company.
We also remain committed to increasing stockholder value by actively deploying capital.
Or a combination of share repurchases and dividends, we returned 78% of our 2018 operating earnings to stockholders and reduced our share count by 5%, we have confidence in our business model and growth opportunities and expect to accelerate capital deployment by increasing our share repurchases to around two.
$225 million in 2019, we've.
We've also raised the stockholder dividend by 36% for the first quarter of 2019.
We expect our strong earnings and continued active capital deployment to drive an industry, leading our OE in the 22% to 23% range for 2019.
Now I'll turn it over to Alison.
Thank you Glenn and good morning, everyone.
I'll share with you the key drivers from the fourth quarter and provide some insight into 2019.
Starting on slide six our term life business continues to perform well generating a pretax margin of 18, 7% in the fourth quarter.
The segment operating revenues increased 11% driven by a 12% growth in adjusted direct premiums compared to the last year's fourth quarter.
Persistency in incurred claims were generally in line with the prior year period, while neither period experienced notable claims volatility.
Benefits and claims and DAC amortization ratio with 57, 5% and 17, 1%, respectively and remained consistent with the prior year.
The net insurance expense ratio for the quarter was seven 8% or $7 9 million higher than the same quarter last year.
$3 3 million of this increase was due to a full year premium and retaliatory tax benefit reported in the fourth quarter of 2017, when primerica life changed its state of domicile.
The remainder was attributable to supporting business growth.
On a full year basis, the benefits and claims ratio was 58% down from the 58, 5% in 2017 indicative of normal claims volatility.
In 2019, we expect the benefits and claims ratio to stay in the 58 to 58, 5% range.
The DAC amortization ratio was 16% for 2018 in line with both 2017 and our expectations for 2019.
The pre tax margin was 18, 9% for 2018, and we expect margins to be at a similar range for 2019.
We continue to see good momentum in adjusted direct premiums and expect them to grow around 11% in 2019.
The top chart on slide seven which has been revised slightly from the chart presented last quarter.
The various drivers and how they contribute to adjusted direct premium growth.
The IPO coinsurance continues to positively impact well, although as anticipated the benefit has been diminishing of closed and the post IPO block is coupled with runoff of the pre IPO block it.
The chart on the bottom of slide seven depicts this dynamic.
The retention of policies that continue beyond their initial policy term provided additional glass in 2017 and 2018. It has now reached steady state and future incremental growth should be modest.
On the bottom line of the chart you can see net changes in the value of the Canadian dollar also impact.
Over time, the level of life insurance policies issued will increasingly drive adjusted direct premium growth.
The step up in life insurance policies issued in 2015, 16, and 17 as provided ongoing value as earnings emerge over the life of the policy.
Earlier in the call Glenn discussed that we are targeting growth in issued policies of around five 8% for 2019.
If issued policies continue to grow at this rate in the near term, we would expect the adjusted direct premium growth rate to decline by about one 5% per year over the next few years.
Moving now to our investment and savings products segment on slide eight we continue to achieve strong topline growth with ISP operating revenues, increasing 11% over the prior year period.
Sales based revenues increased 15% driven by 10% growth in revenue generating product sales and a shift in sales mix towards annuities, which generally have higher sales base scheme.
Asset based revenues grew two 8% outpacing the growth in average client asset values from continued success in our lifetime investment platform, which provides strong asset based revenues.
Account based revenues increased 39% compared to the fourth quarter of 2017, largely due to revisions to our record keeping platform contract, which resulted in an account based revenues and other operating expenses, both increasing by around $6 million in the quarter.
ISP pretax.
Pre tax operating income declined 3% versus the prior year period.
Sales and asset based commission expenses generally in line with the related revenue and operating expenses grew $7 7 million about $6 million of which was from the record keeping contract position I just mentioned.
Segregated fund DAC amortization in Canada increased to $6 million year over year as Canadian markets were under pressure during the fourth quarter of 2018 in contrast to more favorable market conditions experienced in the fourth quarter of 2017.
Financial markets experienced significant fluctuations in December and January .
We believe our diversified earnings which include sales assets and account based sources help lessen the impact of market volatility.
Glenn described the nature of our business, which is heavily weighted towards retirement savings also mitigate exposure.
To help frame our market exposure, our financial supplement shows that on a net revenue basis. After deducting expenses and sales commissions that move directly with asset levels are.
Our 2018 full year asset based net revenue as a percentage of average client asset values with 2% or approximately $120 million of pre tax earnings on average client asset values at 50 T. A.
A 10% variance in average client asset values would therefore result in about a $12 million change in pre tax earnings.
Switching gears to our invested asset portfolio on slide nine net investment income increased $2 $3 million or 12% year over year split between the termite and corporate and other distributed products segment.
The increase in net investment income reflects growth in the invested asset portfolio, partially offset by the continued impact of lower reinvestment yields.
Net unrealized losses on our invested asset portfolio increased to $9 2 million at year end due to widening spreads during the quarter.
The average book yield of our fixed income portfolio at quarter end was $3 eight 9%.
While rising rates should continue to provide us with better yielding investment opportunities.
Expect to see pressure from higher yielding investments maturing in 2019.
Over the next 12 months, approximately 13% or $273 million of our portfolio will mature with an average yield of approximately four 5% in comparison to the 4.02% long term purchase rate achieved in the fourth quarter.
Offsetting this yield headwind, we expect to see continued growth in the size of the invested asset portfolio as our business grows.
Now I'll move to a discussion of the company's insurance and other operating expenses on slide 10.
Fourth quarter expenses of $98 3 million or $17 4 million higher than the fourth quarter of 2017 and were in line with expectations, we shared last quarter.
Key drivers of the increase were the change to our ISP recordkeeping contracts, which increased expenses by around $6 million eight.
$8 million of additional cost to support growth in the business and key initiatives and the $3 3 million premium and retaliatory tax benefit recognized during the fourth quarter of 2017 from Primerica life change its state of domicile.
As we look to 2019, we anticipate insurance and other operating expenses will increase between six and 8%, reflecting both growth and normal business operations as well as additional cost to explore new business initiatives and further enhanced technology.
As a reminder, first quarter expenses are generally about $10 million higher than other quarters due to the annual grant of management equity Awards.
Slide 11 shows the main drivers of the expected full year increase in expenses.
Salaries and other other employee related costs, excluding technology related employee costs, which I'll discuss in a moment.
<unk> to grow by about $5 million to $6 million of our 2018 levels, reflecting typical year over year Merit increases in addition to SaaS.
Expenses that are tied directly to a revenue source such as premium taxes and asset based fees are expected to grow by $6 million to $7 million based on anticipated growth in premiums mine asset values and so forth.
We also expect to spend an additional $3 million to $4 million in 2019 to support the mortgage pilot and term life product advancement at Glen discussed earlier.
In 2019 technology will continue to be a driver of expense growth and we expect to increase spending by $10 million to $14 million in 2019.
Four main components to which we attribute this growth.
The first component is cyber and information security, which is largely related to managing risk throughout our IP infrastructure and keeping our confidential information stake you.
We have budgeted an increase of $3 million to $4 million in 2019 and believe our overall spend is in line with industry trends.
The second component is technology management and investments in infrastructure.
This includes areas that are essential to running the business such as the mainframe distributed systems networking telecom.
It also includes the management teams necessary to ensure our technology operations and projects run effectively with.
Back to the related expenses to grow between two and $3 million in 2019.
The third component is tied to modernization initiatives launched in 2018.
These include efforts to make information contained in our operating systems more accessible and consumable and deliver new technology solutions to the businesses more efficiently.
A key area of focus will be on term life client data as we begin to evaluate a new generation of term insurance products.
We expect to spend an incremental $3 million to $4 million on modernization efforts in 2019.
Finally, we expect to spend an additional $2 million to $3 million.
<unk> expand our digital platforms as Glenn discussed earlier.
Moving now to other topics on slide 12, the effective income tax rate for the fourth quarter was 19, 8%.
During the quarter the full year tax expense related to the global intangible low taxed income or guilty component of tax reform was reduced from $4 million to $2 7 million based on regulations released by the department of Treasury in November 2018, a benefit of seven cents per diluted share.
Sure.
The full year 2019 operating effective income tax rate is expected to be relatively consistent with 2018 at about 23%.
As I wrap up let me say that we remain committed to maintaining a strong balance sheet and continue to demonstrate a strong capital position with primerica life's statutory risk based capital ratio estimated to be around 440% and holding company liquidity of $152 million at the end.
End of 2018.
We will continue to take out ordinary dividends from Primerica life to the extent available with the goal of maintaining our near term RBC ratio in the low to mid 400% range now lets open the lineup for questions.
At this time I would like to remind everyone in order to ask a question for Star then the number one on your telephone keypad.
Your first question comes from Ryan Krueger of <unk>.
Your line is open.
Hi, Thanks, good morning.
It looks like the percentage of annuity sales as a percentage of total revenue generating sales were basically flat with the third and the fourth quarter, but.
Revenue yield picked up by a fair amount.
Pat I was wondering if you could give some more color there.
I think it might be on a year over year basis that it had move we have seen throughout 2018, obviously a shift toward not.
It's variable needs. We also saw in the fourth quarter strong fixed indexed annuities as well.
So really what we were describing in the ratio as youre looking at might be more on a year over year basis.
Okay.
And then.
In term life.
<unk> growth you've talked about in issued policies do you expect.
I guess should we expect that to come through fairly evenly throughout the euro or would you think it would be more backend loaded following the convention.
Yeah, Hey, Ryan it's Glenn.
Yes, it's probably not going to be smooth I think you will see it.
More pronounced after the convention just when you look at the comparisons year over year as well as the convention mid year this year.
That's more likely.
A little hard to predict of course, but I think that your intuition is probably correct on that.
Thanks, and then just last one on the expense guidance can you give us a sense.
How much of the increase you would anticipate through the corporate segment.
I don't think we shared at that way I can certainly go back and look and try to show it to you Accordingly, I'd say the one thing that is.
Without giving you exactly because I quite frankly off the top my head don't recall the numbers.
When you look at what I've said in the past I had indicated until we figured out what these expenses were we didn't know how it's going to impact that term life margins, what what I can reiterate at this point is our term life margins and quite good quite consistently the expense ratio for term life given that I said, both the DAC and the claims rate.
Sure they are going to be consistent given that the margins are consistent you can also conclude that the expense ratio would be consistent. So I think when we sort of looked at things it ended up being fairly evenly weighted amongst the segments.
What would be applied and I'd say really the pick up year over year is both in term life and incorporate other into a much lesser degree would be an ISP.
Okay, Great I'll go back and look at those numbers too and we can look to try to gauge that for you in the future.
Thank you.
Yeah.
Your next question comes from Andrew <unk> of Credit Suisse. Your line.
Good morning, Andrew.
Hey, good morning.
The first question I'd like to touch on is sales and the sustainability your indexed and variable annuity sales were up.
51% and 29% respectively in the quarter.
How sustainable do you think that is and then on the flip side mutual.
Mutual funds were one 2% up in the quarter.
And maybe that was just a really bad environment I don't know, but.
Where do you think that goes as well.
Well, Andrew I mean of course, those those growth rates are.
Our unusual or exceptional and so we would not think they're sustainable at that rate. However, we do believe there is good momentum the volatility in the market plays into the guarantee profile of those products and works against mutual fund products. So the more volatility you have the more likely you're going to add momentum to VA and fixed index annuity sales in the mall.
<unk> headwind youre going to create on the mutual fund side.
If the market continues to perform well and some of the concern the volatility the high profile news and discussion about trade and all of those things that have.
Big type on the headlines if some of that will subside I think you'd see mix kind of normalized to a certain extent, but were optimistic about as long as returns stay positive.
That all of that has growth potential in it which youre going to see the mix shift and it's mostly going to be driven by the level of concern in the marketplace toward or away from the guaranteed products.
I see that makes a lot of sense and then just on productivity in the term area. So you came in in the quarter.
Four.
For months and you typically guide to 0.182 <unk> on the low end could you talk about your thinking going forward into 2019, and what you might be doing to to get that productivity towards the higher end.
Sure absolutely Great question I mean, it's very natural in our business to see the increases and decreases in momentum and growth.
And you see a period of strong growth is going to be followed by a period of regrouping and refocusing and we've enjoyed about three five years of exceptional growth, which is I think at the long end of our historical patterns and in general Youll see recruiting and life momentum more or less traveled together and then ISP has a different and sometimes inverse.
Cycle.
But we do feel like the fundamentals are favorable there is nothing fundamentally different in the marketplace that we see and so our plan is to use our levers which are messaging, which were great communicators at all times, where particularly when we have an event like our convention coming.
Or incentives and then many of the improvements that we touched on in today's discussion.
The game plan is to try to go through that regrouping and refocusing period as quickly as possible and so we do have the opportunities of the convention.
We look constantly and have some positive improvements in our recruiting licensing and field training processes on tap for 2019.
So it's a it's a combination of trying to move that which all play into that productivity ratio that you asked about is moving that up as high in the quarter as possible as quickly as possible and so that's the process that we're always engaged in that but at a time when momentum ebbs you focus harder on that.
And that's exactly what we're doing for 2019, and we've got some good opportunities and some good fundamentals to make that happen.
Great and one last one.
<unk> key sales tool any any any read throughs any color on how that's coming along.
It's still early so we certainly don't want to make a final declaration on our opinion on it but the early returns are very positive as I attempted to describe in my prepared remarks. The first purpose for that is to give.
Level of ease and confidence to the newest mutual fund salesperson. So that they can enter that business more quickly and more confidently. The term insurance business I would say is not a very risky business. There's not a lot that can go wrong and helping people with their need for term insurance, but when you start dealing with People's investments, it's something that.
New salespeople tend to have a little bit slower uptake. They proceed a little more cautiously which is good.
Anything we can do to give them a track to run on and more confidence is certainly helpful. And that's what <unk> is all about and its also an amazing piece of technology, which is very attractive on that front and it's very simple, but what it does is it brings those new people into the business faster and I'd say the early returns on it is that's exactly where we're seeing the usage.
We're pretty close so I don't expect to see the ratio that you're pointing out to change very much into the future.
So this sort of fourth quarter level, we might want to model that.
On a go forward basis.
I think that would be reason why quite frankly, I've looked at it a little bit more associated with what it does on a net basis, but the only thing that would drive a change there is either if we had some very very large change in persistency on a very old stable block, which I.
Can't see as being particularly likely.
Or if we had periods, where we had more business, reaching the end of the level premium paying period that had formally been associated with that contract I will say you know and I think I said this on the last call. What comes to end of term has to do with what we sold 10 years ago 20 years ago and so forth.
So to the extent, we were going through a period of growth in one of those corresponding periods you might see that number kick up a little bit or Conversely come down if we were in a slower growth period, but relatively speaking it should stay in the general This general range.
And then how meaningful was the mortgage product you had mentioned the Beck with Citi you.
<unk> had some success with that.
Give us some sense of the scale there.
Yeah. It was it was an important product for us at the time that we again, we are in partnership with our sister company. So.
Until you get to largely the technology and one of the reasons. It's number does grow more than sort of your average three or 4% is because you do have a lot of expenses in here that are really tied to our revenue. So the thing that's actually growing the fastest besides technology.
Are things that if they're not growing unfortunately, the top line is not growing out of there either so you know I would just keep that in the back of your mind, which is one of the reasons why we tried to break this down into some individual components. So you said you could get better.
Transparency into that you know I think if you break the components down what we're looking at with salary employee related you know that's largely in that 3% ish range I'd say, that's very normal and typical I would expect that to always be happening as the business grows and.
We continue to support our day to day operations.
The ones that as I mentioned tied to revenue sources are directly correlated to that so a couple of things that are let me go through the other on technology, I think cyber and information security.
Hum.
I think you saw a pretty large impact this year, we're expecting to push forward our spend and quite frankly, we've been push for in pushing forward. Our spend every year for the last few years, but you know I don't have to remind anybody about the headlines from 2018 and at the end of the day. This is a big area of Ah.
The attention for both management and the board and.
We need to just continue to do what's necessary to maintain security around our information in our system.
I don't know whether that will grow as much in the future I think we're sort of taking a little bit of an extra week. This year.
I would say when we looked around at what was going on in the industry and industries not just insurance just in general we do believe that our spend in this area as a percentage of our total.
Spend is pretty much in line with the industry, it's about 10%.
So I think we've gotten it to the right level and hopefully we won't have to see quite as extensive increases.
As we go into the future that being said there will definitely be some increase year over year.
Looking at some other ones technology management infrastructure, I think that one is going to be a little bit more stable.
Can you see $2 million to $3 million increase I'm, hoping that will not continue to grow all that much in the future.
Covid activity for the group that becomes mutual fund licensed yeah don't they sell more term life products isn't their productivity higher than your than your typical agent.
I'm just curious if that's been trending how that's been trending.
That is true of <unk>.
The age group of people over time.
We think it's a very healthy thing for people to have both licenses.
We think it creates a more stable opportunity for them and increases retention all those things are good.
At the point you have new people going through the licensing process. It probably works against their life productivity to a certain extent because they are studying testing.
Doing all those things so.
We wouldn't see any results or any benefit from that group getting licensed right away, but I do think it's a great foundational preparation for maybe a year from now.
Retention is better and overall productivity is higher when people have two licenses.
It's way too early for us to be able to measure any of that that wave that went through to get licensed was probably a little less productive in the fourth quarter than they would be a year or two from now.
Right and I was just thinking broadly that group and whatever 24000.
Productivity termite.
Policies per agent in that group I was just kind of curious how that had been trending but yes.
You're exactly right. That's the group that has our most active most committed I remember so many of our people are part time and those people that have two licenses are either full time or spend more time and just that additional dedication means that their productivity is better so youre reading that correctly.
But there is there is no change to really report on that as a result of that growth.
Okay.
And then one last one just looking at <unk>.
<unk>.
I was surprised to see net flows.
He is high as its been.
Probably eight quarters, despite the market dropping any any sense on why that may have been.
Well, you've got strong sales.
We're kind of <unk>.
Certainly an outlier compared to the rest of the industry and again that goes to the things that we mentioned.
A little bit of extra distance from Wall Street on main street that gives us a buffer but also remember that our the vast majority of our clients are saving long term for retirement Theyre also saving systematically their dollar cost averaging and so they recognize that a certain amount of market volatility is actually positive because it gives them an opportunity to buy at a lower price.
And so I think that's.
Evidence of one of the strengths of our business model is that.
We actually had a strong kind of net quarter that was unusual in the industry and I think that's just kind of a testament to how different we are.
Okay. Thank you.
Certainly.
Your next question comes from Mark Hughes of Suntrust. Your line is open.
Glenn you had alluded in your opening comments.
Exactly I think the difference would be we want to make this accessible to all clients, but unlike our last program, where all reps had access to the bromine it'll probably be a narrower group of reps and there will be some kind of referral mechanism or handoff mechanism to be able to do it and that's exactly what we need to pilot and see exactly how that work.
Works in what.
What the points of friction are in that model and.
And so that's what we hope to accomplish this year.
Thank you.
Very good.
Yeah.
That was our final question and this concludes today's webcast. Thank you for participating you may now disconnect.