Q2 2023 Assured Guaranty Ltd Earnings Call
Okay.
[music].
Right.
Good morning, and welcome to the assured Guaranty limited second quarter earnings Conference call. My name is Glenn and I'll be the operator for today's call.
Participants will be in a listen only mode. So you need assistance or any signal a conference specialist by pressing Star then zero on the telephone keypad.
After today's presentation there'll be an opportunity to ask question.
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Note that this event is being recorded.
Now I'd like to turn the conference call over to our host Robert Tucker Senior.
Senior managing director Investor Relations and corporate Communications. Please go ahead.
Thank you operator, and thank you all for joining assured guaranty for our second quarter 2023 financial results Conference call. Today's presentation is made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1095.
The presentation may contain forward looking statements about our new business and credit outlooks market conditions credit spreads financial ratings loss reserves financial results or other items that may affect our future results. These statements are subject to change due to new information or future events. Therefore, you should not place undue reliance on them.
As we do not undertake any obligation to publicly update or revise them, except as required by law.
If you are listening to a replay of this call or if you're reading the transcript of the call. Please note that our statements made today may have been updated census call. Please refer to the Investor information section of our website for our most recent presentations and SEC filings.
Current financial filings and for the risk factors.
This presentation also includes references to non-GAAP financial measures, we present, the GAAP financial measures most directly comparable to the non-GAAP financial measures referenced in this presentation, along with a reconciliation between such GAAP and non-GAAP financial measures and our current financial supplement and equity investor.
<unk>, which are on our website at assured guaranty dot com.
Turning to the presentation. Our speakers today are Dominic Frederico, President and Chief Executive Officer of assured Guaranty Ltd, and Rob Bailenson, Our Chief Financial Officer. After their remarks, we will open the call to your questions. As the webcast is not enabled for Q&A. Please dial into the call if you'd like to ask a question I will now turn the.
Call over to Dominic.
Thank you Robert and welcome to everyone joining today's call.
Hey, Mark of 2023 assured guaranty's adjusted operating shareholders' equity per share and adjusted book value per share for the highest levels in our history.
$95.64 and $144, 21% respectively.
Production for the quarter remained strong.
With recent Years' results was diversified across U S public finance international infrastructure and global structured finance.
First Darren Pvp of $203 million is the second largest amount of total first half Pvp since 2009, and the second time that first half pvp exceeded $200 million during that time period.
In July we completed our transaction with sound point capital management.
Involving assure I am.
We sold assured health care partners I will discuss both transactions in a few minutes.
Okay.
For the first half of 2023 assured share of the insured primarily municipal bond market was 63% up 56% up from 56% in the first half of 2022.
We guarantee 290, new issues totaling $9 8 billion.
Our primary insured par sold this format was fairly consistent with the first half of 2022.
The total market bar being down by approximately 14% in the first half of 2023 compared with the first half of 2022.
Our secondary market par written for the first half of the year was $280 million, bringing our total insured par sold to $10 1 billion in the primary and secondary markets.
We continue to see higher demand for bond insurance than we did before the pandemic first half 2023 insured market penetration of 9% was higher than the eight 8% in the first half of 2022 and significantly higher than the five 9% of 2019 as first half.
Total insured penetration for the second quarter was 10, 1% with the highest penetration rate since 2009.
Additionally market demand for bond insurance increased significantly in the second quarter of 2023 up 72% from the first quarter of 2023.
Okay.
Okay.
Assured guaranty saw an 86% increasingly short course sold in the second quarter of 2023 compared to the first quarter of 2023.
Ensuring $6 $1 billion in the second quarter of 2023, 28% higher than the same period last year.
During the second quarter, we also continued to benefit from institutional investor demand for our insurance.
We guarantee for $1 billion of par from 13 transactions that each utilize 100 million or more of assured guaranty's insurance.
The total number so transactions during the first half of 2023 to 21 transactions for a total of $5 5 billion.
International Public finance produced $36 million of Pvp during the first half of 2023 up from 30 million in the first half of 2022 second quarter activity includes the guarantee on a UK regulated utility.
And our pipeline of potential international public finance transactions includes a significant number of transactions that we consider are likely to close later in 2020.
Global structured finance Directv.
With the largest first half amount since 2009, producing $68 million of Pvp.
We continue to see opportunities with banks insurance companies pension funds it adds back to investor clients across sectors, including corporate and fund finance.
In July .
S&P reaffirmed our <unk> financial strength rating with stable outlook.
Our financial guarantee companies. So I think both are very strong financial risk profile, a very strong business risk profile and its annual review of assured guaranty.
Its report describes many strengths supporting our doubly ratings, including S&P's view that we have excellent capital and earnings with a meaningful capital adequacy buffer you can read the retired you can read the entire report on our website at assured guaranty Dot com.
In July we completed the transaction with sound point capital management in which we contributed substantially all of assured I am and we engage them as the sole alternative credit manager for AGM and AGC and returned for a 30% interest in the combined entity. As we have said we are highly optimistic about this new venture with sound point capital management and believe it will be immediately accretive to our book.
Some lines.
In July of assured Guaranty sold all of its equity interest in insured health care partners LLC.
Assured guaranty will remain a strategic investor concern HP managed funds, while retaining its carried interest in existing HB managed funds and that's received other consideration.
Regarding the Puerto Rico Electric power Authority PREPA is our last remaining non bank, Puerto Rico exposure as we have said all along we remain committed to negotiating a fair and reasonable settlement, who will protect and enforce our legal rights of bondholders litigation of the title III planned confirmation and appeal processes necessary.
Given the uncertainty in the global economic environment, It's Goodyear correct, when the proven resiliency of our company and.
In the first year that the pandemic, we saw investor appetite for bond insurance increase that heightened interest has been maintained and developments. So far this year continue to remind investors that the future is often volatile they've succeeded through decades of economic cycles by delivering on our own commitments to reduce garnering close for issuers and protecting against shortfalls and investors principal and interest payments.
While provoked proving our resilience through disciplined risk management and responsible stewardship of capital.
This resilience has positioned us to thrive as business and market conditions are creating more incentives for the use of financial guarantees.
We believe that we have never been better prepared to serve our clients protect our policyholders and create value for our shareholders I will now call turn the call over to Rob.
Thank you Dominic and good morning to everyone on the call.
I'm pleased to report second quarter 2023, adjusted operating income increased to $36 million or <unk> 60 per share from $30 million or <unk> 46 per share in the second quarter of 2022.
In the second quarter of 2023 of the largest components of adjusted operating income for the insurance segment, which contributed $106 million of adjusted operating income in the corporate division, which had a net loss of $50 million.
In the comparable prior year period, the insurance segment generated income of $55 million, which was partially offset by the corporate division's net loss of $35 million.
Higher investment income and fair value gains were the most significant contributors to the increase in insurance segment.
Adjusted operating income.
Net investment income increased by $24 million, which was driven mainly by higher short term interest rates and average balances.
We also had fair value gains on Puerto Rico contingent value instruments of $40 million in the second quarter of 2023, compared with losses of $18 million in the prior year.
And lastly, we had a fair value gain of $5 million on our alternative investments in the second quarter of 2023, compared with a loss of $34 million in the second quarter of 2022.
As of June 32023, the fair value of investments in short I am funds was $350 million.
And to date the annualized return on the assured I am funds was 10, 1%, which is in line with our long term expectation for these investments.
These assured I am funds will now be managed by standpoint, or a short health care partners.
We will remain strategic investors in these funds and we will commit additional amount to sampling as the alternative investment manager for our U S insurance subsidiaries.
Net earned premiums and credit derivative revenues increased to $88 million in the second quarter of 2023 from $86 million in the second quarter of 2020 to the.
Premium revenue remained steady at approximately $3 7 billion.
Accelerations were under $10 billion in second quarter of 2003, and 2022 as refunding activity remains muted due to the higher interest rate environment.
Loss expense in the second quarter of 2023 was $44 million and economic loss development was $49 million, mainly due to increases in reserves for certain Puerto Rico exposures.
On the insurance regulatory front I'm happy to report that in New York, and Maryland successfully completed their five year joint examinations of AGM and AGC, our two U S insurers and issued clean examination reports with no adverse findings or adjustments.
The AGM and AGC examination reports are publicly available on the New York and Maryland regulators websites.
The result of assured I am reported in the asset management segment.
And we're about breakeven in the second quarters of both 2023 and 2022.
In July 2023 assured I am excluding HP was contributor to standpoint in exchange for an equity interest in the combined Sandpoint short I am Anthony and our entire equity interest in HP was sold to an entity owned by its managing partner.
The transformation of our asset management business from fully integrated subsidiaries to a minority stake in a larger sound point of short I am combined entity is expected to be accretive to future earnings and provide a stream of income based on asset management fees.
Also provide a wider array of alternative investment opportunities.
Going forward our investment it sounds like it will be accounted for under the equity method.
Which will simplify the presentation of the asset management results were also in the process of evaluating all the consolidation conclusions for the assured I am close end funds as a result of the sandpoint and HP transactions and we expect and we will be able to deconsolidation some of these entities.
The resulting changes will be reflected in the third quarter financial statements.
Expenses associated with the sound point in HP transactions were $24 million in the second quarter of 2023.
This was the primary driver of the increase in corporate Division adjusted operating loss, which is where most of these expenses were reflected.
Adjusted operating income includes the effect of consolidating <unk>, which was a loss of $18 million in the second quarter of 2023, compared with a gain of $10 million in the second quarter of 2022, and net effect of VII consolidations is primarily a function of changes in fair value of these entities and insurance loss.
And benefits associated with the <unk>, including the Puerto Rico trusts.
In addition to advancing our key objectives in asset management and alternative investments with some HP transactions. We continue to focus on our other long term strategic initiatives to grow the company and enhance shareholder value.
In the insurance segment, we have had diversified sources of new and assume business, which are accretive to key book value metrics.
And on the loss mitigation front, we continue to maximize our economic benefit by strategically selling the recovery bonds. We received last year as part of the resolution of the majority of our Puerto Rico insured exposures.
As of the end of last week, we had sold approximately 99% of the recovery bonds in the investment portfolio and 34% of the contingent of the Cvs.
Based on our fair value.
We have approximately $40 million in recovery bonds and $340 million in CVI is remaining in our investment portfolio.
With respect to our capital management strategic initiative, we resumed the share repurchase program in the second quarter.
Currently have a $158 million of remaining authorization in.
In addition, our UK subsidiary paid a dividend of 100 million pounds or $127 million.
So AGM and we have a capital plan to distribute additional excess capital from our U K subsidiaries over the next two years.
This year, its UK dividend provided a $100 million.
In additional AGM dividend capacity in 2023.
At the holding company level, we currently have cash and investments of approximately $90 million.
Of which $43 million resides in AGL. These funds are available for debt service and corporate operating expenses for the use in the pursuit of our strategic initiatives, including potentially redeeming debt and repurchasing shares to manage our capital.
Adjusted operating shareholders' equity and adjusted book value per share reached new records of over $95 and $145 respectively.
Positive adjusted operating income and strong new business production results for the quarter, demonstrating the value of all of our initiatives.
Now turn the call over to the operator to give you the instructions for the Q&A period.
Yeah.
Yes.
Thank you we will now.
Now begin the question and answer session to ask a question you May Press Star then one on path on keypad.
Joel Your question. Please press Star then two.
Speaker phone please pick up the handset before pressing the keys.
At this time, we will pause momentarily to assemble a list.
We have our first question comes from Tommy Moll join.
<unk> you tell me your line is now open.
Hey, good morning, guys. Thanks for taking my questions.
So I'll start off.
With the Big question now that New York, and Maryland audits are complete with clean bills.
Can you talk about the next steps toward requesting a special dividends that have been mentioned before and are there kind of any process plans to sort of seek out specials from various subsidiaries or are you just targeting just AGM or just a AGC and can you just kind of walk through how that works.
So with the clean audits now Tom you were able to proceed with these requests for special dividends, which you plan on doing we'll do it to any company that has excess capital as you've seen we pay dividend.
<unk>.
AG U K subsidiaries. So we have the same plan.
So there is as we look at their capital positions and now with the audit behind US for now for you to do that.
We plan to do that within this next this next second half of the year.
Okay got it and when we think about the <unk>.
Residual amount of capital Thats.
Flowing that might be available for buybacks or potentially the debt redemption.
Just coming out of the insurance subsidiaries what are the annualized cash expenses at the Holdco level.
I guess interest dividends corporate expenses, and then it's kind of like a minimum liquidity buffer that you'd like.
Yes, that's exactly right. If you look at page 10.
The presentation, Robert and the equity for us.
Presentation, a short it is assured guaranty overview Tommy.
Hum.
We say that we have.
Sure.
We have annual net expenses of $50 million.
Annual dividend distributions of $66 million.
And annual debt service of $82 million.
So that all that up those are the those are the.
Uses of funds for the holding company.
And then any minimum liquidity buffer if you talked about having 90 on hand right now.
Yeah, we generally keep that.
That's generally what we keep as our liquidity buffers generally six months worth of debt service.
Okay got it.
And then just lastly, the.
Some debt due next year that you guys have.
Talks about potentially redeeming.
Can you walk through some of the puts and takes about what or how youre thinking about Europe .
<unk> debt to capital leverage right now how comfortable you are rating agencies are with at that threshold and kind of why you might consider redeeming.
We're actually constantly evaluating whether or not we should we deem it whether or not we should refinance it.
And.
It all depends on whether or not.
We feel that it's appropriate if you want to go and refinance it it's all about price execution.
If we want if we think it's more appropriate to redeem.
Then we'll go redeem but right now.
If we could refinance at appropriate rates, then that we would want to do that but we have we have.
A number of quarters before we have to evaluate that.
Got it thank you.
Thank you.
Our next question comes from.
Brian Meredith of UBS.
Yes. Thanks, I am wondering if you could dive a little bit into the Puerto Rico loss development kind of what happened there and maybe if you can just kind of frame.
Whats the potential additional Puerto Rico, Washington, Theres going to be a cap, obviously to what's your Dutch services Unproper and stuff.
So Brian like we've always said in the past we have to react to any new information on any exposure that we've got because we believe the probability of a claim so obviously theres been some new information on PREPA.
To date, our scenarios, then adjust our probabilities and look at what the reserve change is going to be obviously PREPA.
The offer is currently on the table or consulting to say, but we are obviously our view is litigation.
And we're going to take and Theres been nothing that changes my mind, but I've seen so far in the marketplace.
We just go along with the information provided to us and we adjust our models accordingly.
My view is that this is the litigation situation anyway.
Is the loss solely just the additional reserves solely PREPA related.
Predominantly PREPA predominantly.
Okay, Great and then a second question I'm, just curious how read through the S&P report and maybe I just missed it but is there.
Capital buffer over and above the AAA level that you all have now.
Of course, if none of them is actually a good capital buffer above the AAA.
The number we gave you of about 1.6 or $8 billion number one.
Eight.
$1 88.
Yeah, but remember recipe nuts, those down even though we're at one point excess capital with AAA with growing close to double a company which has been.
Consulting as well.
Gotcha, Alright, thanks, Paul I appreciate it.
Thank you Brian .
Yes.
Thank you.
Our next question comes from Jeffrey Tom Sanzone Partners. Jeffrey Your line is now open.
Okay.
Thanks, Good morning.
Good morning, Jeff.
As Rob I think you mentioned Dominic that you would request special dividends from any company with excess capital.
How do you think about true excess capital.
Now that the business is growing again.
And the fact that you are.
You are being held to a AAA capital standard is a double a company.
I have to imagine that that $1 8 billion buffer is not necessarily all access.
I want to say go back 20 years ago AAA companies might have retained five to 800 million cushion.
Is that the right way to think of what is true excess capital across the companies or is there a different framework to consider.
Remember, we've got a lot of regulators on our business. So not only do you look at S&P, but you also have to look at the states.
Look at the other agencies, but I think the excess capital position of the S&P number is a fairly good number and growth by and large itself will not significantly impact that.
Remember as we write business, we get the benefit of the unearned premium reserve as part of the capital calculation. So the business is not that dilutive.
Dilutive capital excess.
We would lose about maybe.
12% to 20% of the Pvp would be or the business written in terms of additional capital. So it's not a big number so the excess capital like I said to go through all the measurements by all the entities. There are different hurdles would you have to meet the different buckets that get counted.
So we will get all companies go through the entire process for evaluating those criteria to see what excess capital.
We have and therefore can be dividend out to help us do the capital management program that we've been implementing and that will be part of the discussion with the regulator. So we start with Jeff with the one eight we want to keep a cushion.
Number.
Upon what we believe is appropriate.
And.
In years past the number would have been higher because of the volatility in Puerto Rico now, maybe we can lower that buffer such that you never want to be in a situation where you actually.
Jeopardize ever.
Downgrade can put you in a situation where you you drop all that AAA level. So our cushion is we're going to always keep a conservative cushion.
Okay, and then obviously the excess capital has been a challenge to the ROE.
And I'm wondering your previous target for buyback was $500 million annually supported by specials and that was <unk>.
Picking away at that excess capital issue does the clearing of the five year audit allow you to consider being more aggressive with trying to correct. The size of the company and rightsize that Roe.
Or is it a more of a long measured race.
No I think it's kind of a combination of both Jeff We will continue to evaluate what's the best course of action was taken if we see the opportunity to accelerate we can still meet all the requirements that we have relative to the regulation and rating agency will do that obviously, where the stock trades, where the book value or is a huge advantage for us in terms of accretion to the bottom line accretion to the book value numbers et.
So we look for every opportunity to accelerate if we can.
<unk> been following that process for a lot of years, we've gotten to where we've gotten we see what the results have been now it's time to really put the rest of the strategic plan together and really correct. The company has now cleared the audit Puerto Rico basically behind it is in the rearview mirror, we've got good growth opportunities across all of our business units, we've got an asset management that announced functioning profitably.
So I think we're in a great position to do exactly that.
Okay, Okay, and then my last one.
So I just wanted to emphasize that Dominic you said at the end.
Hey, everyone.
Thoughts on the fact that we had an asset manager that was basically zero breakeven around that and now we've combined with sampling.
Profitable it will be accretive.
Dave one so.
That's a significant part of our growth opportunity.
Okay and then my last question is you had some migration on <unk>. It looks like one credit in particular went from one to two.
Can you elaborate on what is occurring with that.
Health care exposure.
We've talked about we've seen some stress in the healthcare marketplace and therefore, we've looked at our health care credits and take appropriate actions will result.
Remember most of those credits are still highly protected there.
We've got opportunities from workouts other measures that we take to save the credits very few result in the payment, but we've got to be mindful of how we look at our internal ratings.
Yeah.
Okay.
Thank you.
Our next question comes from Jonathan Ho Hum.
Management, Jonathan Your line is now open.
Hey, guys a couple of different questions.
On page 38.
For a lot of the past decade has been the story that HBO is a melting ice cube.
In page 30. This is the first time that the.
Pvp has actually increased have you seen a statically at this point that declines will have stopped given the strong production in the company is growing again.
Well, we think the opportunity for growth is as good as it's been over the last number of years and we are optimistic about what the year looks like and what next year looks like so on a premium reserve as growing Pvp is getting higher so as you pointed out.
Absolutely.
Okay.
Or that Crystal ball at the end of the day, we're as optimistic as we've ever been relative to the market opportunities that we see across all of our business units.
Rob mentioned, we also have amount of functioning as a management.
<unk> as well, but it will create opportunities for both the insurance and investment side.
And Jordan, we're seeing on financial Guaranty.
Great pipelines in U S public finance global structured infrastructure global structured finance and international infrastructure all of us.
Three legs and financial Guaranty business, we have very strong pipelines.
And in addition are growing again after years of shrinking to flat. If you look at page 48, Youre below investment, 8% below investment grade percentage is the lowest level.
Ben in over a decade at this point, so not only are growing and with better credit quality that alone should give the regulators more confidence.
Last covenants to approve a buyback or special dividend is that a reasonable way to think about that.
I think as though everything is reasonable in todays marketplace, including below investment grade, Puerto Rico growth opportunities.
The other noise in the company.
Basically dealt with the auditor was et cetera, However, I'm getting a little sensitive to the melting ice cube, where the continued rundown of the business remember we were one company that bought four five other companies. So we have cloud any of other companies, earning business through a highly redemptive market for.
Clearly redeemed.
Cause the earnings despite we've been running consistently good business over a number of years, but because we've had other companies in our unearned premium reserve. It looks like we were declining, but we couldnt Brendan business any faster than we did and that offset a plethora of companies, earning a one company writing the depressed market, which caused the drop in the volumes in terms of earned premium was down in prime.
And reserve, but I think as you've said you've kind of corrected the ship now and now that most of that is run off we've been redeemed with marathon for casino and growth across all of our business units.
And final question is.
Given the delayed or backend part of the buyback you Werent sure. If you hit the 300 base.
500.
Back without commenting on what you will or won't do it do you think you have with the special dividend from the U K the capacity to at least two of the $300 million this year.
We can't comment on that but remember everything is predicated on special dividends and we're one down two to go.
Yeah.
But it was the one down you have the capacity to do the $300 million.
Like I said do the math, we won't publicly state that or not.
I mean, we did obviously.
We got the 100 million I said in my commentary.
It helped and increased our dividend capacity by $100 million.
So.
We are and we are going to look for a special dividend.
Okay.
Okay. Thank you.
Thank you Sharon.
Thank you.
With our last question comes from Jamie Giuliano.
On Compass point Giuliano you're line is now open.
Yeah.
Thank you congrats on the.
Great performance again, one thing I'd be curious about is maybe following up on.
Jordan.
It looks like you're right there are under capacity in the back half of the year.
The balance of 'twenty three came up.
770.
75 million ballpark GM and there was also an increase right. So you are up about $100 million.
There for the back half of the year versus where you were last quarter and you also had kind of a back half weighted schedule is it fair to think about.
You are deploying.
A little bit more in the back half plus about $100 million.
Getting before thinking about special dividends from essentially a GM or did you see.
About right.
Thinking about your buyback capacity or how does it scale.
Scale up based on what we know today.
It's a way to think about it Giuliano and obviously, we said it was back end weighted and we've got a lot of other plans and especially special dividend request from the U S regulators that will significantly enhance that but remember you also the volume issue in terms of how much stock you can buyback on any given day, so we might actually run out of.
We can buyback relative to the trading days volume that could be a problem, but we expect.
Significant funds to be able to look at capital management as one of our key strategic objectives, and when we were saying it backend loaded we would take into account that we were expecting to get this dividend from the UK subsidiary. That's why it was backend loaded and domenick pointed out really important point you get this towards the end of the year based on you can only buy back of certain based on your volume.
Would you trade during the day. So the good news is if we get it can help us going forward with our with our capital management program.
It just might bleed into the next year.
Got it that's very helpful. When thinking about special dividends I realize.
No.
Perfect timeline to think about but I am curious if you think about now.
Making requests for special dividends is that usually yes.
Yes.
Turnaround in terms of like weeks or few months or kind of stretch out over a few quarters.
Well timed because yesterday, so we're going to try to put as much pressure as we possibly can and as you said as we've said during the audit was the real pre criteria and Theyre getting good clean audit opinion with no adjustments for Clinton's I think gives us an opportunity to really take advantage of that strong result.
The excess capital position and the company's position with the regulators anyway, I think we're in good shape relative to getting a special request and obviously tons of the essence and getting into the states.
And remember we're going to do our best to put a plan in place hopefully you do have to deal with the regulator.
And their schedules so.
We can only control what we put in front of them.
That's very helpful and then one last one.
Around new business, yes, it looks like you're going to be some reinsurance transaction in the quarter I'd be curious about two things.
Good pipeline of reinsurance opportunities similar to that or.
Well that reinsurance transaction out there and also I'm just curious about thinking about the cadence of new business. It seems like it's picking up and I'd be curious in your.
It's all about the pipeline continuing.
Turning to show off our reality is that going to be perfectly linear on a quarter to quarter basis.
Sure.
But we continue to look for opportunities across all of our markets, both direct and reinsurance business and that doesn't change obviously go through are.
Underwriting standards before we accept the piece of business.
And that's the philosophy and we will continue to follow that if there is business out there on both ends of the reinsurance side of the direct side, we're more than happy to entertain it but as we've talked about our direct business pipelines are very very strong. So we're very optimistic about the rest of the year in terms of what we're able to achieve Pvp point of view driving that unearned premium reserve higher and higher.
That's great I really appreciate the time.
Good questions and I will jump back into queue. Thank you.
Thank you Julianna.
Thank you.
This concludes our question and answer session I would now like to turn the conference back to over to our host Robert Tucker for closing remarks.
Thank you operator, I'd like to thank everyone for joining us on today's call. If you have additional questions. Please feel free to give us a call. Thank you very much.
Yeah.
Thank you. This concludes today's conference call. Thank you all for attending you may now disconnect your lines have a great day.
[music].
This concludes today's conference call. Thank you all for attending you may now disconnect the line.