Q1 2025 Globe Life Inc Earnings Call
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Ellen: Welcome to the Globe life first quarter 2025 earnings release Conference call. My name is Ellen and I'll be a coordinator for today's event. Please note. This call is being recorded and for the duration your lines will be on listen only however, like you will have the opportunity to ask questions at the end.
Ellen: This can be done by pressing star one on your telephone keypad. If you read quite a suspended at any time, Please press star zero and you'd be connected to an operator.
Speaker Change: I'll now hand, you over the host Steven motto Senior director of Investor Relations to begin today's conference. Thank you.
Speaker Change: Thank you and good morning, everyone. Joining the call today are Frank Svoboda, and Matt Darden, Our co Chief Executive officers, Tom <unk>, Our Chief Financial Officer, Mike Majors, our Chief strategy Officer, and Brian Mitchell, Our general counsel some of our comments or answers to your questions may contain forward looking statements. They are provided for general guidance purposes only.
Speaker Change: Accordingly, please refer to our earnings release, and 2024 10-K on file with the SEC. Some of our comments may also contain non-GAAP measures. Please see our earnings release and website for discussion of these terms and reconciliations to GAAP measures I'll now I'll turn the call over to Frank Thank you Steven and good morning, everyone in the <unk>.
Frank: First quarter net income was $255 million.
Frank: Or $3 <unk> per share compared to $254 million or $2 67 per share a year ago.
Frank: Net operating income for the quarter was $259 million or $3 seven per share an increase of 10% from a year ago and slightly higher than our internal projections.
Frank: On a GAAP reported basis return on equity through March 31, 19% and book value per share is $64 50.
Frank: Excluding accumulated other comprehensive income or OCI return on equity of 14, 1% and book value per share as of March 31 was $87 a nice two sets up 11% from a year ago.
Frank: In our life insurance operations premium revenue for the first quarter increased 3% from the year ago quarter to $830 million life underwriting margin was $337 million up 9% from a year ago, driven by premium growth and lower overall policy obligations for the year, we expect our life.
Frank: Premium revenue to grow around 4%.
Frank: As a percent of premium we anticipate life underwriting margin to be between 42% and 44%.
Frank: And health insurer.
Frank: Premium revenue grew 8% to $370 million, while help health underwriting margin was down 10% to $85 million due primarily to higher claim costs at United American resulting from higher utilization.
Frank: For the year, we expect health premium revenue to grow in the range of seven 5% to eight 5%.
Frank: And anticipate health underwriting margin as a percent of premiums to be between 24 and 26%.
Frank: Administrative expenses were $88 million for the quarter the increase over the year ago quarter is primarily due to higher information technology employee and legal costs for the year, we expect administrative expenses to be approximately seven 4% of premium.
Matt: I will now turn the call over to Matt for his comments on the first quarter marketing operations.
Matt: Frank at American income life life premiums were up 6% over the year ago quarter at $438 million.
Matt: Our life underwriting margin was up 5% to $196 million in the first quarter of 2025 net life sales were $99 million.
Matt: Up 1% from a year ago and as a reminder, we had a difficult comparable this quarter as American income had a 17% increase in life sales in the year ago quarter.
Matt: Average producing agent count for the first quarter was 11510 up 3% from a year ago.
Matt: The average agent count declined from the fourth quarter, but that would you attribute this to the tremendous agency growth produced over the last couple of years.
Matt: And in the fourth quarter of 2022 to the fourth quarter of 2024 average agent count grew 29%.
Matt: And it is typical for our agencies to see some contraction after periods of significant recruiting success.
Matt: We are pleased to see productivity has increased as more agents are submitting weekly and I'm confident we will see continued growth in this agency going forward.
Matt: Now Liberty National Here's a life premiums grew 6% over the year ago quarter to $96 million in.
Matt: And life underwriting margin was up 3% to $32 million.
Matt: Net life sales increased 4% to $22 million, while net health sales were $7 million down 5% from the year ago quarter.
Matt: The average producing agent count for the first quarter was 3688 and this is up 8% from a year ago.
Matt: <unk> to be excited by the agent count growth at Liberty National which is primarily driven by recruiting activity and growth in agency Middle management and as a good leading indicator for continued sales growth at this division.
Matt: At family Heritage Health premiums increased 9% over the year ago quarter to $112 million and health underwriting margin increased 10% to $39 million.
Matt: Net health sales were up 7% to $27 million and this is due primarily to an increase in agent count.
Matt: The average producing agent count for the first quarter was 1417 at 9% from a year ago and this is three consecutive quarters of strong agent count growth for this division and is driven by this agency focused on recruiting and Middle management development.
Matt: And our direct to consumer division the life premiums were down 1% over the year ago quarter to $246 million, while life underwriting margin increased 10% to $64 million.
Matt: Net life sales were $25 million down 12% from the year ago quarter and as we have previously mentioned the continued decline in sales is primarily due to lower customer inquiries as we've reduced marketing spend on certain campaigns that did not meet our profit objectives as a result of higher distribution costs.
Matt: Our focus in this area is having a positive impact on our overall margin as we will continue to focus on maximizing the underwriting margin dollars on new sales at managing the rising advertising and distribution costs associated with acquiring new business in.
Matt: And the value of our direct to consumer business is not only those sales directly attributable to this channel, but there's significant support that is provided to our agency business through brand impressions and sales leads and.
Matt: And as we mentioned last year, we expect this division to generate over 750000 leads during 2025, which will be provided to our exclusive agencies.
Matt: Now onto United American General Agency, Here's a health premiums increased 13% over the year ago quarter to $160 million driven by strong prior year sales growth.
Matt: Underwriting margin was $2 million down approximately $10 million from the year ago quarter due to higher claim costs, resulting primarily from higher utilization.
Matt: For the year, we anticipate mid single digit growth in underwriting margin due to strong sales and premium rate actions.
Matt: And as a reminder, the majority of the premium rate increases for 2025 on individual Medicare supplement business will take effect starting in the second quarter.
Matt: Net health sales were $28 million and this is up $11 million from the year ago quarter.
Matt: Now I'd like to discuss projections and based on recent trends we are seeing in our experience with our business. We expect to average producing agent count trends for the full year 2025 to be as follows.
Matt: At American income mid single digit growth.
Matt: Liberty National high single digit growth and at family Heritage low double digit growth.
Matt: And we are reaffirming the life and health sales guidance, we gave on the last earnings call.
Matt: And as a remainder of net life sales for 2025 are expected to be as follows.
Matt: <unk> income.
Matt: High single digit growth.
Matt: Liberty National low double digit growth.
Matt: <unk> to consumer low to mid single digit growth.
Matt: And for Health sales, we expect Liberty National family Heritage and in United American General Agency to all have low double digit growth now.
Matt: Now before I turn the call back over to Frank for investment operations I want to note that with respect to the inquiries made by the FCC and the Doj discussed on previous calls there have been no material developments to disclose at this time.
Matt: To the extent there is further information to share on any of these items, we will update you accordingly.
Frank: I'll now turn the call back to Frank.
Frank: Thanks, Matt.
Speaker Change: Now turning to the investment operations.
Speaker Change: Excess investment income, which we define as net investment income less all the required interest was $36 million down approximately $8 million from the year ago quarter net.
Speaker Change: Net investment income was $281 million down 1% from the year ago quarter as compared to a one 3% growth in invested assets.
Speaker Change: Required interest is up a little more than 2% over the year ago quarter consistent with growth in average policy liabilities.
Speaker Change: The growth in average invested assets and average policy liabilities are lower than normal due to the impact of the annuity reinsurance transaction in the fourth quarter, which involved approximately $460 million of annuity reserves being transferred to a third party along with supporting assets.
Speaker Change: Net investment income was also negatively impacted by lower short term interest rates.
Speaker Change: For the full year of 2025, we expect net investment income to be fairly flat and required interest to grow around two 5%, resulting in excess investment income to be down 7% to 15% for the year.
Speaker Change: With regard to investment yield in the first quarter, we invested $245 million in investment grade fixed maturities, primarily in the industrial and financial sectors. These.
Speaker Change: These investments were at an average yield of six 4% and an average rating of AA minus and an average life of 43 years.
Speaker Change: We also invested approximately $51 million in commercial mortgage loans and limited partnerships with that like characteristics and an average expected cash return of approximately eight 5%.
Speaker Change: None of our direct investments and commercial mortgage loans involved office properties.
Speaker Change: These non fixed maturity investments are expected to produce additional kashyap over our fixed maturity investments, while still being in line with our conservative investment philosophy.
Speaker Change: For the entire fixed maturity portfolio. The first quarter yield was five 5% up one basis point from the first quarter of 2024.
Speaker Change: As of March 31, the portfolio yield was $5 two 6%.
Speaker Change: The investment income from our commercial mortgage loans and limited partnerships. The first quarter earned yield was five 4%.
Speaker Change: Now regarding the investment portfolio.
Speaker Change: Invested assets are $21 $4 billion, including.
Speaker Change: Including 19 billion of fixed maturities at amortized cost.
Speaker Change: Of the fixed maturities $18 5 billion are investment grade with an average rating of a minus.
Speaker Change: Overall, the total fixed maturity portfolio is rated a minus same as a year ago.
Speaker Change: Our fixed maturity investment portfolio has a net unrealized loss position of approximately $1 5 billion due.
Speaker Change: Due to the current market rates being higher than the book yield on our holdings as.
As we have historically noted we are not concerned by the unrealized loss position.
Speaker Change: It is mostly interest rate driven and currently relates to it relates entirely to bonds with maturities that extend beyond 10 years.
Speaker Change: We have the intent and more importantly, the ability to hold our investments to maturity.
Speaker Change: Bonds rated triple B comprised 45% of our fixed maturity portfolio compared to 47% from the year ago quarter. This.
Speaker Change: This percentage is at its lowest level since 2007.
Speaker Change: As we have discussed on prior calls we believe the Triple B Securities. We acquire generally provide the best risk adjusted capital adjusted returns due in part to our ability to hold securities to maturity, regardless of fluctuations in interest rate or equity markets.
Speaker Change: While the percentage of our invested assets comprised of triple b bonds might be a little higher than some of our peers.
Speaker Change: Remember that we have little or no exposure to other higher risk assets, such as derivatives equities residential mortgages clo's and other asset backed securities.
Speaker Change: Below investment grade bonds remained at historical lows at $506 million.
Speaker Change: Paired to $542 million a year ago.
Speaker Change: The percentage of below investment grade bonds. The total fixed maturities is just two 7%.
Speaker Change: Our below investment grade bonds as a percent of equity excluding OCI are at their lowest level in over 30 years.
Speaker Change: While there are clearly uncertainties as to where the U S. Economy is headed in the upcoming months, we are well positioned to withstand a significant economic downturn.
Speaker Change: Due to the long duration of our fixed policy liabilities, we invest in long dated assets as such a critical and foundational part of our investment philosophy is to invest of entities that can survive through multiple economic cycles and.
Speaker Change: In addition, we have very strong underwriting profits and long dated liabilities. So we will not be forced to sell any of our bonds in order to pay claims.
Speaker Change: With respect to our anticipated investment acquisitions for the year at the mid point of our full year guidance, we assume investment of approximately 600 million to $700 million in fixed maturities and an average yield of six to six 2%.
Speaker Change: And approximately $300 million to $500 million in commercial mortgage loans and limited partnership investments with debt like characteristics at an average expected cash return of 7% to 9%.
Speaker Change: Now I will turn the call over to Tom for his comments on capital and liquidity.
Tom: Let's spend a few minutes discussing our available liquidity its share repurchase program and capital position.
Tom: The parent began the year and ended the quarter with liquid assets of approximately $90 million we.
Tom: <unk> concluded the year with liquid assets at the higher end of our targeted range of 50 million to $60 million.
Tom: During the first quarter the company repurchased approximately one 5 million shares of Globe life common stock for a total cost of approximately $177 million at an average share price of $121 70.
Tom: Thus, including shareholder dividend payments of $20 million for the quarter. The company returned approximately $197 million to shareholders. During the first quarter of 2025.
Tom: The parents liquid assets at the end of the quarter along with the excess cash flow is expected to be generated over the last three quarters of the year will provide the parent with $375 million to $725 million to meet the <unk>, sorry, $675 million to $725 million to meet the needs of the parent.
Tom: Or that can be returned to shareholders in the form of dividends or share repurchases.
Tom: In April we used approximately $47 million to repurchase globalized common stock and for the remainder of 2025, we anticipate using approximately $65 million for shareholder dividends.
Tom: Total amount of excess cash flows in 2025% is higher than in 2024, primarily because of higher statutory earnings in 2024 and 2023.
Tom: And due to the inclusion of an extraordinary dividend of approximately $190 million approved late in 2024.
Tom: The parent company's excess cash flow as we define it primarily results from the dividends received by the parent from its subsidiaries less the interest paid on debt and is available to return to its shareholders in the form of dividends and through share repurchases.
Tom: We will continue to use our cash as efficiently as possible, we still believe that share repurchases provide the best return yield to our shareholders over other available alternatives.
Tom: Thus, we anticipate share repurchases, we will continue to be the primary use of the parent's excess cash flows after the payment of shareholder dividends.
Tom: However, we also intend to reduce outstanding commercial paper balances over the course of the year to be more in line with historical levels.
Tom: It should be noted that the cash received by the parent company from our insurance operations is after our subsidiaries have made substantial investments during the year to new.
Tom: To issue, new insurance policies implement new technologies, and enhance operational capabilities and modernize existing information technology as well as to acquire new long duration assets to fund their future cash needs.
Tom: The remaining amount is sufficient to support our targeted capital levels at our insurance operations and maintain the share repurchase program in 2025 and.
Tom: In our earnings guidance, we anticipate between $600 million to $650 million of share repurchases will occur over the over the full year.
Tom: Our goal is to maintain capital at levels necessary to support our current ratings globe life targets, a consolidated company action level RBC ratio in the range of 300% to 320%.
Tom: As of year end 2024, our consolidated RBC ratio was 316%, which provides approximately a $100 million of capital in excess of that needed to meet our minimum target capital of 300%.
Tom: As we do every quarter, we have performed stress tests and our investment portfolio under multiple economic scenarios anticipated various levels of downgrades and defaults.
Tom: If the estimated losses under a stress scenario stress tests were to occur before year end. We have concluded that we have sufficient capital to meet our target RBC ratios given the current excess capital at our subsidiaries and capital resources on the parent while maintaining our share repurchases as planned.
Tom: For 2025, we intend to maintain our consolidated RBC within the targeted range of 300% to 320%.
Tom: In addition, as mentioned on previous calls we continue to evaluate the opportunity to manage capital under an economic framework available in Bermuda, We expect to conclude this work in 2025 and intend to provide an update on the strategic decisions made on the next call.
Tom: Now with regards to policy obligations for the current quarter.
Tom: As we discussed on prior calls we are included within the supplemental financial information available on our website and exhibit that details the remeasurement gain or loss by distribution channel for the quarter life Remeasurement gain was $8 5 billion. This was favorable to management's estimates.
Tom: And resulted in lower life policy obligations than anticipated.
Tom: The health Remeasurement gain was about 400000 up $400000.
Tom: And other life distribution.
Tom: During the quarter, we completed the recapture of a reinsurance agreement that involve a small block of business associated with our military life business.
Tom: This resulted in a onetime favorable impact of life margins of approximately $14 million.
Tom: There have been no changes to our long term assumptions this quarter as we will update life and health assumptions in the third quarter of 2025.
Tom: Due to the continued favorable mortality we are experiencing we anticipate a favorable margin impact in the third quarter for life assumption updates as recent mortality lapse experience are incorporated into these new assumptions.
Tom: At this time, our guidance anticipates, a re measurement gain in the third quarter related to life assumption updates in the range of $60 million to $100 million.
Tom: Similar to third quarters life re measurement gain last year.
Tom: Sure.
Speaker Change: As Frank mentioned, we anticipated life margins as a percent of premium to be in the range of 42% to 44% for the full year. However for the first half of the year, we expect light margins as a percent of premium to be in the range of 40% to 41% and.
Speaker Change: <unk>, 43% to 46% in the second half of the year, given the anticipated favorable impact from third quarter life assumption updates.
Speaker Change: For the health segment, we anticipate health obligations will continue to be elevated given our recent claim trends outpacing premium rate increases on individual and group Medicare supplement business.
Speaker Change: This appears to be largely impacted by an increase in a select set of procedures, taking place in doctors offices and.
Speaker Change: In addition, although a portion of the premium rate increases for 'twenty type were effective late in the first quarter. The majority of our effective in April and we will reflect.
Speaker Change: In addition, we will reflect recent claim trends in our 2025 premium rate filings, which will be effective in 2026.
Speaker Change: So finally with respect to earnings guidance at 2025.
Speaker Change: For the full year 2025, we reaffirm our previous guidance and estimate net operating earnings per diluted share will be in the range of $13 45 to.
Speaker Change: <unk> to $14 <unk>.
Speaker Change: Representing a 11% 11% growth at the midpoint of our range.
Matt: Those are my comments I will now turn the call back to Matt.
Matt: Thanks, Tom those are our comments and we will now open up the call for questions.
Matt: Thank you if you'd like to ask a question will make a contribution on todays call. Please press star one on your telephone keypad to withdraw your question. Please press star two you will be at wise went to ask your question.
Speaker Change: We will take our first question from Jake Medicine.
Jake Medicine: <unk> capital markets. Your line is open. Please go ahead.
Speaker Change: Hi, Good morning, just a question on the outlook for health.
Jake Medicine: Margins.
Jake Medicine: How much of a lag usually between kind of the rate actions, you've taken and when you usually see the benefit flow into your results. I think you mentioned some of the rate increase that took effect on April one so should we see.
Jake Medicine: A significant step up in margins starting in the second quarter or is there a bit of a timing impact that we should be thinking about.
Jake Medicine: Yes, yes, no almost all the rate increases will be effective or in place.
Jake Medicine: In the beginning of the second quarter. So we'll see the full benefit of those rate increases we would expect margins for <unk> to be in the <unk>.
Jake Medicine: In the 5% to 7% range, so about 6% overall for the year.
Jake Medicine: Got it Okay and then.
Jake Medicine: I mean.
Jake Medicine: You recorded a small remeasurement gain even though if reported margins for the segment were a little bit weaker on a year over year basis. So I'm just curious what was driving that that outcome in the quarter.
Jake Medicine: Yes.
Jake Medicine: The occurrence.
Jake Medicine: GAAP accounting framework going under <unk>, there is just a little bit of volatility thats related to.
The way that operates for Medicare supplement business, where rate increases are in aggregate rate increase for the entire block and so there is some.
Jake Medicine: Cohorts of business, where that rate increase is not enough and there is some cohorts of business without rate increases more than sufficient so it creates a little bit of volatility on a quarter to quarter basis.
Jake Medicine: Yes, I would just add.
Speaker Change: Add that if you look at United American They had a slight negative remeasurement gain whereas with respect to Liberty American income and family Heritage. They all had.
Speaker Change: Small remeasurement gains and the net of those was about the $400 million.
Speaker Change: Or 400.
Speaker Change: <unk> thousand dollars.
Speaker Change: As mentioned.
Thank you.
Speaker Change: We will take our next question from Jimmy <unk> Jpmorgan. Your line is open. Please go ahead.
Speaker Change: Hi, I had a question first on your EPS guidance for the year.
Speaker Change: And do you agree with sort of in line with your guidance this quarter, but the third quarter was obviously very tough comps. So just wondering what gives you the confidence that you can achieve maybe the middle middle end of the range or should we assume given the results this quarter that you're much more comfortable with the lower end, but decided not to change the range as a result of that.
Jamie we're very comfortable with the range.
Speaker Change: Yes, I think.
Speaker Change: One of the things we've been wanted to see is actually the continued trends of favorable mortality, which would lead to a life mortality assumption update and we've seen.
Speaker Change: Really good mortality results in the third quarter and the fourth quarter and now in the in the first quarter, which gives us a bit more confidence in and as we reflect that experience in our assumption updates we will see some favorable remeasurement gains due to those upticks.
Speaker Change: Yes, then I would just say.
Speaker Change: <unk> that Jimmy that I mean, we are we are reflecting some of the negative.
Speaker Change: Utilization trends that we're seeing from the <unk> side. So we are expecting that to be a little lower.
Speaker Change: Over the course of the year and you kind of see the range of underwriting margin percentage coming down on that a little bit.
Speaker Change: And that's being offset the negatives are that are being offset.
Speaker Change: With some of the positive views that we have with respect to the underwriting margins maybe.
But Matt talk just a little bit about I think some of the views on sales and why there is some confidence there sure.
Jimmy: And Jimmy just to your point is going to also mentioned that.
Jimmy: The third quarter, the Remeasurement gain would be probably in the range of magnitude of what we had last year. So that also kind of gives us some confidence as Tom had mentioned are positive mortality experience over the last three quarters that we're seeing so.
Jimmy: That's really why we're reaffirming our guidance back to the mid point not at the lower end of the range.
Jimmy: On the sales side.
Jimmy: We're seeing good.
Jimmy: Positive trends there we normally don't.
Jimmy: Discuss.
Jimmy: Current that we're a month through the.
Jimmy: Second quarter here and so we've got.
What we're seeing is very strong recruiting and agent count growth as well as sales are in line with our expectations and so reaffirming our sales guidance for the year based on what we saw in Q1 with our expectations and then what we're seeing here early through the month of April.
Jimmy: In Q2, but.
Jimmy: Our average agent count just in the month of April is up 3% over where we were ending March and it's also higher than where we ended at the end of last year, so not uncommon for us to see a little bit of seasonality at the beginning of the year and that's what we saw little bit of.
Jimmy: Weakness frankly in January and the and that ramped up towards the latter half of Q1 and that continuing that trend is continuing on here.
Jimmy: Through the month of April.
Jimmy: And Jimmy one last thing I'll add onto that I think with some of the better trends that we anticipate for sales for the remainder of the year some of the they call it.
Jimmy: The Dragon life premium growth.
Jimmy: Rob 3% here for the first quarter a little lower.
Jimmy: Then we would like to see but so we see that really the effects of some of the new sales and as we think we anticipate lapses or at least stabilizing here over the course of the year and so as we're kind of get to the latter half of the year still.
Jimmy: Still able to see.
Jimmy: Seeing that premium growth.
Jimmy: Up a little bit in the second half of the year.
Jimmy: Being more of that four 5% to 5% range and getting that premium life premium growth for the full year to be closer to that 4%.
Jimmy: Okay.
Jimmy: And then on your life business, if we look at the non deferred deferrable commissions and policy acquisition expense.
For the life Division, it's been running up over the past couple of years and it was higher in <unk> than it's been in the previous several quarters. So I'm wondering how much of that is.
Jimmy: Economic in terms of you having to spend more money.
Jimmy: Net sales versus maybe the result of L. D D I or accounting related.
Jimmy: Items.
Jimmy: A lot of that Jimmy is really just due to some of the higher.
Jimmy: The investments that we've been making in information technology and as those systems command the depreciation from those as well as.
Jimmy: The other software from a service and what we're paying.
Jimmy: For that in the data and analytics, that's being allocated to the investor to the acquisition side net of that deferral. So.
Jimmy: We're just seeing a little bit of that tick up just because of some of that higher largely because of some of that higher technology spend.
Speaker Change: Okay and just the last one on your health margins it seems like for the Med sup product.
Speaker Change: For you guys and many of the other companies usage has gone up. So you guys have been raising prices, but it's sort of a constant catch up where usage continues and claims continue to go up and you're having to catch up to that do you feel that with the higher prices, earning and then <unk> and beyond.
Speaker Change: The margins are going to be at normal levels or is it more.
Speaker Change: Or are you going to need to raise prices more.
Speaker Change: Get into 2000, and 2006 season given yes.
Speaker Change: Claims usage and inflation.
Speaker Change: Sure.
Speaker Change: So we I think we need to see exactly what happens, but I think one of the things that gives me confidence is.
Speaker Change: I think this is a very manageable issue and we see short term increases in health trends is that we can in fact manage that through rate increases it may take us a year or two to effectively get those caught up so it may be a little bit longer than a year, but we've been very successful with the past getting those rate increases approved by.
Speaker Change: <unk> and <unk>.
Speaker Change: So I would expect.
Speaker Change: Improvement in 2026, and if we continue to see trends.
Speaker Change: Might be that we always have a little bit of a timing delay. So we may actually see a little bit of delay of actually getting back to kind of normal margins, but I think the other thing to think about is yes. This is largely around Medicare supplement business right and so for our other health lines, we're not seeing the same the same.
Speaker Change: Level of claim costs.
Speaker Change: Medicare supplement really from an under a total underwriting margin perspective is really in that 3% to 4% range of total total underwriting margins. So it's a fairly small set of just the core underwriting.
Speaker Change: Underwriting margins that we see from the business.
Speaker Change: Okay. Thank you.
Speaker Change: Okay.
We will take our next question from Elyse Greenspan Wells Fargo. Your line is open. Please go ahead.
Elyse Greenspan: Hi, Thanks. Good morning, My first question I guess is on some of the capital stuff for you guys.
Elyse Greenspan: The Q1 buyback right was I guess a bit elevated relative to what the annual guide would imply on a quarterly basis.
Elyse Greenspan: But I know you guys also said right there were some pay down some commercial paper. So how do we think about I guess capital return over the back three quarters.
Elyse Greenspan: Relative to hitting the guide or would you potentially depending upon your stock price.
Elyse Greenspan: To front run some of the buyback to earlier Q2, Q3 et cetera.
Elyse Greenspan: Generally we think.
Elyse Greenspan: Normally ratable throughout the year, but.
Elyse Greenspan: But we will take advantage of kind of market opportunity. So I could see us buying a little bit more in the first half of the year relative to the second half of the year.
Speaker Change: Thanks, and then my follow up Bob you guys you were talking about I guess, Bermuda, which you're also talking about a bit last quarter just any.
Speaker Change: Any updates there relative to what's going on this quarter and I know you guys have been talking about that more being something that's beneficial and 26% into 2027.
Speaker Change: Yeah, we're still working through it.
Speaker Change: So we'll plan to update you on the next call.
Speaker Change: Okay. Thank you.
Speaker Change: We will take our next question from Andrew Please lumen TD Securities. Your line is open. Please go ahead.
Speaker Change: Hey, good morning, everyone. We're actually good afternoon.
Speaker Change: So.
Speaker Change: Going back to the health margins.
Speaker Change: <unk>.
Speaker Change: Had been guiding to.
Speaker Change: Yes.
Speaker Change: More into 'twenty, you're guiding now to 2426 versus 25 2007.
Okay.
Speaker Change: I'm thinking.
Speaker Change: You kind of gave a timeframe where you start to see improvement in 2006.
Speaker Change: And really.
Speaker Change: Where you need to be or would like to normally be until 2007, if I understand it correctly could you give us a sense of what historically have been normal margin.
Speaker Change: And maybe work through the timeline when you actually can get the price increases it's going to be gradual.
Speaker Change: Maybe just walk through the timeline a little more granularly. We're in normal historic ratio has been yes.
Andrew: Yes, Andrew I'll start on that list.
Andrew: Tom or Matt add but you do look at kind of in a post <unk>.
Andrew: The margins on that business on the <unk> side.
Andrew: A little bit of it.
Andrew: Semi test that 10, and 11% and I think from an overall health somewhere more in the upper Twenty's.
Andrew: Overall as a margin percent of premium income.
Andrew: I think with respect to.
Andrew: And they are in the midst.
Andrew: Specifically, we would be looking into.
Andrew: Taken getting the cost of the higher utilization that we're seeing here in the last couple of quarters of 'twenty four and at least here early in 'twenty, five and working those into our third quarter.
Andrew: Premium rate adjustments that we'd be filing that would be effective in 2026, depending upon where the utilization trends kind of take.
Andrew: How those emerge over the remainder of the year will really kind of inform whether or not can we really capture all of the increase that we need in the third quarter rate filings or not or is there some of that will be but we're chasing a little bit into.
Andrew: 2020.
Andrew: 2027 as well.
We do anticipate getting the full margins for the USDA to be closer to that 5% to 7% range. So second half of the year.
Andrew: A little bit north of that because.
Andrew: At least the utilization that we're seeing here in the first quarter clearly outran the impacts of the premium increases that we had put into place we.
Andrew: We do think with the premium the majority of our premium increases coming into play.
Andrew: Here in the second quarter that will help over the course of.
Andrew: Or the remainder of the year.
Andrew: And that was very helpful.
Speaker Change: Maybe shifting over to the life insurance premium you'd been guiding to that and you mentioned it on this call you've been guiding to 455% now youre looking at.
Speaker Change: For for the year could you give a little more color on lap station why you may be seeing a little higher more elevated lapses Shin.
Speaker Change: Hi, Thanks.
Speaker Change: Going forward.
Yes, I think from <unk> perspective at.
Speaker Change: At American income, we are seeing a little bit higher lapses in the first year.
Speaker Change: Question for us is whether that's fluctuations or trend.
Speaker Change: As virtual sales kind of just driving a more.
Speaker Change: Normal higher lapse level in the first year.
Speaker Change: But I would say that renewal rates for <unk> have been fairly consistent over the past four quarters. So those seem to have.
Speaker Change: Stabilized I think DTC lapse rates.
Speaker Change: Consistent with prior quarters, and maybe slightly improved in the first year, which is a good sign and renewal lapse rates are fairly consistent with historical levels as well so that those seem to be all going very well I think it's kind of a testament to the resiliency of our customers even in times.
Speaker Change: Of economic stress, our lapse rates move just just a little bit plus.
Speaker Change: Plus or minus depending upon what the economic environment is.
Then.
Speaker Change: For Liberty.
Overall, FX had been relatively stable as well so I think we're feeling.
Speaker Change: K about lapses and we'll certainly keep an eye on it and then I do think that.
Speaker Change: Sales that emerge over the course of the second half of the year, we'll actually add to add to premium growth for both of them.
Speaker Change: First quarter sales growth and so that's kind of where we're looking at that 4%.
Speaker Change: Around 4% premium growth life premium growth for the year, Yes, Andrew what I'll add to that is that we did start seeing some of the lapses with especially in the first year.
Speaker Change: At <unk>, and maybe a little bit on DTC tick up towards the.
Speaker Change: Latter half of last year, so obviously that.
Speaker Change: Just kind of look at it is period over period as increases in lapse rates year over year take effect that has that drag on premium growth in the same year over year period.
Speaker Change: As we kind of look out over the latter half of the year and we kind of see some of the stabilizing even though there may be running a little bit higher than long term averages just because of some of the economic uncertainty, but as we look back at other periods of economic stress, where the rates that we're seeing EBIT.
Speaker Change: Especially at American income on their first year are not out of line at all.
And but as we think and look at the comparable than in the latter half of the year.
Speaker Change: We see that was really being stabilizing and so that will help with the period over period premium growth as well.
Speaker Change: Maybe just one other.
Speaker Change: Okay, maybe just one other comment.
Speaker Change: We don't see dramatic changes in lapse rates, even in periods of economic stress, they're relatively narrow changes and kind of as we've looked at this for <unk> and DTC under.
Speaker Change: Where there is spend more economic stress and the lapse rates and renewal year since have moved.
Less than 1% to a little bit over 1% depending upon.
Speaker Change: The policy duration. So again, I think really a testament of the resiliency of our in force book of business.
Speaker Change: And then just and that was very helpful. One last quick one.
Elyse Greenspan: I saw a line item for legal proceedings for $8 million maybe.
Speaker Change: And maybe this is not an answerable question, but.
Speaker Change: Would that be an indication that maybe you are coming towards the tail end of the back and forth with the regulators.
Speaker Change: Is this an indication that we do more of these type expenses I don't know.
Speaker Change: I was just kind of throwing it out there to see if there's some kind of read through on that.
Speaker Change: That number which I had seen before.
Speaker Change: Yeah, I don't know if theres anything to read.
Speaker Change: Read through that.
Speaker Change: Andrew I think from time to time, we're subject to litigation and it's common in the industry the insurance industry.
Speaker Change: So the uptick in litigation claims and expenses over the past several quarters, they've really been stemming from claims made by recent short seller. So some of that.
Speaker Change: Fully subsides and.
Speaker Change: And this quarter I believe of proceedings includes.
Speaker Change: I would estimate for settlements.
Speaker Change: Related to outstanding litigation not related to the Doj FCC matters as well as certain other legal expenses as well. So there is a number of items that can come through there but.
Speaker Change: They are usually.
Speaker Change: Not related to the normal operations of the business and not indicative of past performance and future prospects.
Speaker Change: Prospects of insurance operations, and that's why we put them below the line.
Speaker Change: Thanks very much.
Speaker Change: Yes.
Speaker Change: We will take our next question from Bill not burden Raymond James Your line is open. Please go ahead.
Speaker Change: Hey, guys.
Bill: Does the high life margin in the second half of 2025 imply a more favorable run rate in 2026 and beyond or how should we think about that thanks.
Bill: I think after you in depth.
Bill: The assumption changes.
Bill: I think from a policy obligations perspective, you would expect it to be a little bit higher a run rate.
Bill: Going forward then keep in mind that we are continuing to still see over the next couple of couple of years, but at least probably end of 'twenty six.
Bill: Some of the increases in amortization expense just because of the transition.
Bill: Two L. DTI that we've talked about in prior calls as well as kind of the renewal commissions.
Bill: So theres, probably a little bit of a tick up in the amortization that we're still going to see over the next couple of years. So I think.
Bill: Looking forward.
Bill: <unk>.
Bill: Okay.
Bill: Probably somewhat probably in the range yes.
Bill: Yes, yes.
Bill: So probably a similar range to what we've what we've seen in the first half of <unk>.
Bill: So if we wanted to stay in the first half of 'twenty five yes, yes.
Speaker Change: Okay, and then life sales were below our full year 'twenty five guys in the first quarter, but you maintained the full year outlook could you just talk about some of the dynamics in the quarter and what you're seeing over the balance of the year.
Bill: Sure.
Bill: Really January was softer than we anticipated and as we've talked before.
Bill: A little bit of recruiting and sales.
Bill: On the agency side is kind of a momentum game as they would say and so with the.
Bill: The holidays, both Christmas and new year's falling in the middle of two weeks running kind of really starting to all of our agencies off to a little bit of a slow start in January it ticked up through the remainder of the quarter and so as Ed mentioned to an answer of earlier question.
Bill: We also looked at what was going on in April and April sales are consistent with our expectations as well as our agent count growth.
Bill: In April as compared to March or is it as compared to the prior year in is higher.
Bill: It's about a 3% higher just in the month of April our agent count across all three agencies and so that.
Bill: That trend that we're seeing in the last half of Q1 is continuing now here in the first part of Q2 now I'll hand, the caveat of one quarter, one month does not a quarter make but the trends continue.
Bill: To be positive and says they gave us the confidence to re affirm our sales guidance.
Bill: For the year for all of our various distributions because we're really not seeing anything significantly different than what our expectations were.
Bill: Okay. Thank you.
Speaker Change: We will take our next question from John Barnidge Piper Sandler. Your line is open. Please go ahead.
Speaker Change: Thank you for the opportunity you talked about intention to have an opportunity to reduce commercial paper.
Speaker Change: This year, where do you intend to give it to you. Thank you.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Our commercial paper balances typically historically have been in that $300 billion range and so we're kind of looking to bring it down from where we are today right around 410 closer to that 300 $325 million range.
Speaker Change: Yes, John if you kind of look back at it.
Speaker Change: A few years back in 2022, 23, we were probably running.
Rob: Rob 3% of our total total capitalization, including the short term debt, it's about 3%.
Rob: Last year, it got ran that up a little bit more on its closer to 4% supplies looking at bringing it back closer to that level that 3% level.
John Barnidge: John were looking at that.
John Barnidge: Debt to capital ratio at the end of the year right around 25%, which is kind of in the midpoint of kind of our operating range for our normal operating range for debt to capital ratios.
Speaker Change: Thank you for that that's helpful. My follow up question.
Speaker Change: This increase in health usage more frequency or severity driven.
Speaker Change: I was reading about some human damage fraud article recently so.
Speaker Change: Curious about that.
John Barnidge: It's a great question John.
John Barnidge: Utilization is the big driver, but.
One of the.
John Barnidge: Causes of utilization increase is.
John Barnidge: Related to.
John Barnidge: Claims related to vantages, the specialty specialty vantages, which does have a higher claim cost to it so it's adding a little bit to.
John Barnidge: The average claim cost as well and Thats something that we are taking action on to mitigate the impact of Av.
John Barnidge: Of any fraud, that's apparent in that from from those.
John Barnidge: Those billings so we're taking actions there to help manage those costs, yes, I think one of the challenges on that John has given us some of those new procedures and I think the article that was out there kind of talked about that is that they tend to be higher cost until they really get.
John Barnidge: Work through and then they become kind of a more of a standard Medicare.
Reimbursement rates and that that will.
John Barnidge: <unk> tends to bring the rates down over time.
John Barnidge: But at least that is that is at least one of the drivers that we're seeing a few other procedures that are being done in the doctor's office that are also.
John Barnidge: Giving rise at least to some of our higher cost, yes, I was going to say I think thats. Some of the things that gives us confidence that we can manage through this like we've done for.
John Barnidge: The decades that we've been writing this business is that it.
John Barnidge: A lot of our trend is associated with a few specifics.
Speaker Change: Seizures in the office and so as we work through that as Frank mentioned the <unk>.
Speaker Change: Adjustments that most likely it will happen on the allowable as these new procedures get in to the CMS <unk>.
Speaker Change: And going forward, coupled with continued rate action I think we'll be able to manage through that it just may take us one more cycle as Tom mentioned this is actually one of the areas that we're really trying to spend some time in looking at how do we do.
Speaker Change: Use of artificial intelligence use our data to.
Speaker Change: To really try to identify areas of potentially fraudulent claims that are coming through working with CMS.
Speaker Change: And to try to stem some of that but really taking a look.
Speaker Change: Where we might have some of that not always can we get it done before we had to pay a claim because of our the way we are connected with CMS, but we continue to make.
Speaker Change: Advances on where we can reduce some of that upfront cost.
Speaker Change: On our side.
Speaker Change: All of those trends or industry trends, they are not unique to United American.
Speaker Change: Thank you.
We will take our next question from Tom Gallagher of Evercore. Your line is open. Please go ahead.
Tom Gallagher: Good afternoon.
Tom Gallagher: My first question is just in your guidance for 25 on health margins are you assuming that this claims frequency issue.
Tom Gallagher: Stabilizes at current level gets better gets worse.
Tom Gallagher: What is what is the trend assumption you're using it sounds like you've got your arms around the rate increase earn in but what about the on the claim side what are you assuming.
Tom Gallagher: Yes.
Tom Gallagher: Yes were estimates that stays elevated at least through the second quarter and then expect it to moderate just a little bit in the second half of the year, which.
Tom Gallagher: It tends to moderate generally is as deductibles are your stuff that we're able to.
Tom Gallagher: The trend would tend to moderate a little bit in the second half of the year.
Speaker Change: So when you say.
Speaker Change: It remains elevated so at a comparable level to Q1, yes.
Speaker Change: Yes, yes.
Speaker Change: Gotcha, and then but again just to be clear the level of Q1 from an obligation perspective doesn't reflect that premium rate increases that are coming into play for the remaining three quarters of the year.
Speaker Change: Understood.
Speaker Change: Okay.
Speaker Change: My follow up is how do we think about.
Speaker Change: What all this means for 'twenty five statutory earnings because.
Speaker Change: The reserve release that you the $60 million to $100 million.
Speaker Change: Is that GAAP only or is there any statutory impact for that because I presume.
Speaker Change: Stat earnings on the health side are going to be consistent with GAAP, meaning there'll be weaker.
Speaker Change: But life I'm, a little less clear on whether you will see some kind of benefit or is that a GAAP only and so meaning.
Speaker Change: Long winded way of asking is 25 stat earnings likely to be weaker than 'twenty four.
Speaker Change: That's a great question.
Speaker Change: The $60 million to $100 million is a gap of subsequent marketing. So it's GAAP only but when we see favorable claims trends, 100% of those that benefit comes through on the statutory side where.
Speaker Change: On the GAAP side generally theres, a smoothing mechanism that spreads good claims or bad claims over.
Speaker Change: Over the over the future so.
Speaker Change: We should see favorable mortality will impact statutory results in a favorable way as well.
Speaker Change: Yes, the one got it.
Speaker Change: Sorry go ahead.
Speaker Change: Well, let's say.
Speaker Change: Think about.
Speaker Change: 25 statutory earnings versus 2000 and for statutory earnings I think I, just wanted to make clear as well.
Tom Gallagher: I agree with Tom that the.
Tom Gallagher: The favorable experience. So we're seeing that work its way through statutory income as well remember that we did have that.
Tom Gallagher: The reserve revaluation adjustment in 2024.
Tom Gallagher: And as Tom has talked about on the last call. While we still anticipate some continuing benefits from that benefits from that in 2025.
Tom Gallagher: We don't anticipate seeing them at the same level that we had them in 2024, so there'll be a little less statutory income generated from that reserve valuation.
Tom Gallagher: Adjustment probably to the tune of roughly <unk> 75.
Tom Gallagher: Or so.
Speaker Change: Alright, thank you.
Speaker Change: We will take our next question from Ryan Krueger <unk>. Your line is open. Please go ahead.
Speaker Change: Hey, Thanks, Good morning, I had a related follow up.
Speaker Change: I think you gave the free cash flow for the rest of the year I was trying to back into I think the first quarter, but figured I would just ask.
Speaker Change: You just have that full year free cash flow expectation for this year.
Speaker Change: Yes, excess cash flow is expected to be $785 million to $835 million for the full year unchanged from from where we left.
Speaker Change: And then I guess, just kind of coming back to what you were just talking about that for when thinking about the moving pieces. Next next year are that you'll get you won't have the reinsurance benefit and then you have less of the valuation manual benefit are those the two key moving pieces, we should think about.
Speaker Change: Yes.
Speaker Change: Reinsurance benefit we won't have less of an impact on the valuation manual changes, but also a favorable impact to just growth of the business and the favorable mortality trends that we're seeing.
Speaker Change: Cutting and Mike and myself and my estimation run rates for excess cash flows will be in the 500 to 600 range kind of going forward. So I'm thinking more mid point of that range.
Speaker Change: Okay perfect. Thank you.
Speaker Change: We will take our next question from Wes Carmichael Autonomous Research. Your line is open. Please go ahead.
Speaker Change: Hey, Thank you good afternoon.
Speaker Change: Remeasurement gains and assuming $60 million to $100 million with the <unk> review.
Speaker Change: He is pretty much baked in your view or could there be some deviation I guess, it's not that small of a range of $40 million. So maybe what might drive that higher lower in the next couple of quarters.
Speaker Change: Really what.
Speaker Change: Is that the determinant of where you come in in your EPS guidance.
Speaker Change: It's definitely included in our guidance range right. So.
Part of what's what's incorporated in there.
Speaker Change: On the pluses and minuses it really is it's a very.
Speaker Change: Detailed process to go through setting the assumptions.
Speaker Change: So.
Speaker Change: Yeah.
Speaker Change: The assumptions are very.
Speaker Change: Alright.
Speaker Change: Detailed.
Speaker Change: With regards to issue years issue ages attained ages genders. So.
Speaker Change: There's a lot of pluses and minuses that go across and so until we actually put those into our evaluation systems.
Speaker Change: That will kind of determine exactly what that result will be so.
Speaker Change: <unk>.
Speaker Change: So I think until we do that that's why we have a bit of a wider range as far as where we think that estimate will be so it's really kind of the implementation of changes and the final determination and judgment around what changes are made.
Tom Gallagher: Yes, the one thing I would just add to that is I mean, thats kind of what we're what we've seen here through the first quarter as Tom kind of mentioned before we'd really like to see.
Tom Gallagher: Again, how does how does mortality and lapses.
Tom Gallagher: Really.
Tom Gallagher: Prove out in second quarter, because that will have some influence on it it's not a final determination on it but but.
Tom Gallagher: It's the ability to kind of.
Tom Gallagher: Test those final assumptions and where they kind of land so.
Tom Gallagher: And because the reserves are as big as they are.
Tom Gallagher: Minor changes in some of those.
Tom Gallagher: Assumptions.
Tom Gallagher: It can move that number around a.
Tom Gallagher: A little bit so while there is some.
Tom Gallagher: Pretty good confidence within that range that it definitely can move just a little bit of what we see here in the second quarter and how that kind of influences.
Those final decisions.
Tom Gallagher: Great. That's helpful and I guess, just a quick follow up but the rate increases that youre going to have in helping mix do you expect some elevated lapses as policyholders receive those rate increases.
Tom Gallagher: We definitely see a little bit of drop off we do rate increases but.
Tom Gallagher: In general I think the value of the coverage that they have and.
Tom Gallagher: Yes.
Tom Gallagher: Fairly persistence.
Speaker Change: I think that goes back to the comment that was made earlier that what we're saying really is not unusual.
Tom Gallagher: As far as I don't think its limited just.
Tom Gallagher: United American and so it's an industry situation. So we would anticipate.
Tom Gallagher: That other carriers would be.
Raising rates as well and then that's where maybe the med sup or excuse me in the <unk>.
Tom Gallagher: Medicare advantage dynamic comes into play a little bit that there's still some issues out there.
Tom Gallagher: Are seeing with.
Tom Gallagher: Acceptance with Medicare advantage, and where that coverage is going and dropping doctors in networks and things like that so where that's been.
Tom Gallagher: Perhaps a little bit of a tailwind this past year, and we'll have to see where that kind of.
Tom Gallagher: It's a little bit of a wildcard where that goes but.
Tom Gallagher:
Tom Gallagher: That's why we don't really anticipate that there'll be a large scale.
Tom Gallagher: Drop off or lapsed if in fact, we were the.
Tom Gallagher: Yes.
Tom Gallagher: As we put in our rate increases I think the industry is seeing trend in everybody's pricing for it accordingly.
Speaker Change: Great. Thank you.
Sunil Kumar: We will take our next question from Sunil Kumar Jefferies. Your line is open. Please go ahead.
Sunil Kumar: Great. Thanks, It sounds like some of the confidence you have in terms of maintaining the guidance for sales and such.
Sunil Kumar: April results.
Sunil Kumar: But I'm just wondering just given how quickly things sort of changed.
Sunil Kumar: In April.
Sunil Kumar: Normally when you see these shocks is there a little bit of a lag between kind of the environment changing and then when it impacts your customer behavior or does it sort of.
Catch up or does it kind of showed through pretty quickly there.
Sunil Kumar: Yeah, Let me start with it's not it's not just April it was the trend that we were seeing throughout Q1 as I mentioned January was softer than we anticipated that looked at.
Sunil Kumar: February and particularly March performed and then we've seen that trend continued through April. So it's really the result of multiple months.
Sunil Kumar: How we think about that as we look at the momentum in our agent count with recruiting and growing our overall agents that are producing in submitting.
Sunil Kumar: Business and so that is really a precursor of leading indicators to ultimate sales growth says.
Sunil Kumar: We're also seeing weak as I've mentioned before we track.
Sunil Kumar: Our <unk>.
Sunil Kumar: <unk> onboarding recruiting pipeline before they ever start producing business and so people that are in the early stages of that pipeline before they get a license and start selling we're seeing double digit growth in what we call our hires or people that are starting.
Sunil Kumar: In that process, and so that bodes well for future growth as well and on the consumer side. We generally don't we've talked about this before see significant impacts.
Speaker Change: Just on economic factors to our customers I think that really gets back to <unk>.
Speaker Change: Our customers value our products they have a need for that in more than 50% of our immigrants. It does not have our coverage in the affordability of our policies where.
Speaker Change: It's 30 or 50 or $60 a month still makes that affordable and what we really see is that as long as our customers have jobs are employed that they still find value in the biz in the products that we're offering as well as.
Speaker Change: The cost of what Theyre trying to cover from.
Speaker Change: An experienced perspective as those costs go up we see him taking out more coverage and so what I continue to be encouraged about is if I look at the trends of just the premium on a per policy basis.
Speaker Change: These trends are up in Q1 compared to last year, and so people are paying a little bit more to take out a little bit more coverage for their needs. So really not seeing any weakness there and I'd say that's consistently go back to the 2008 through 10 timeframe $2020.
Speaker Change: 'twenty, one we had double digit.
Speaker Change: Growth in our agent count, we had double digit growth in sales across those timeframes and so.
Speaker Change: I think that bodes well.
Speaker Change: One last comment I was going to make in kind of circle back to I realized I didnt completely answer well.
Wellness comment, which I think will also a question, which I think will also get to part of your question as well is that a failed dimension our direct to consumer channel.
Speaker Change: I will say that as we anticipated on our annual sales guidance that would kick in in the latter half of this year and so in Q1.
Speaker Change: Our results are not.
Speaker Change: Dissimilar from what our expectations were and that's why you see we reaffirmed our overall sales guidance for our direct to consumer channel in a lot of that is based on some of the things that we've been working on for quite some time related to.
Speaker Change: And Youre right it automation and some other tools and data that we are using in that organization. We've been testing that for quite some time and anticipate.
Speaker Change: That coming more fully online in the latter half of the year and that will really help with our.
Speaker Change: Issue right.
Speaker Change: It really helped us increase there and so that's why our guide is low low single digits overall for an annual basis for DTC as some of the good things that we're doing there and it relates to some of that technology spend.
Speaker Change: We've been talking about it further.
Speaker Change: Quite some time seeing that come into fruition.
Speaker Change: Okay that makes sense and then I just have one more thanks for going over a little bit just on the reviews. I mean, I know you said that there is nothing new to update us on and I get that sign but is your expectation still that at some point, we will get sort of a.
Speaker Change: All clear and any sense of how close we are to something like that.
Speaker Change: We do anticipate and Thats what were working through these processes of having a finalization that we can communicate so that is definitely our goal in that area.
Speaker Change: It is hard to handicap, the time frame just youre dealing with as we've mentioned before governmental agencies that don't have a lot of transparency.
Speaker Change: And where they are in the process.
Speaker Change: Venture to say that theres been a little bit of distraction and the <unk>.
Speaker Change: Government system, so to speak over the last several months.
Speaker Change: That may bode well from a long term perspective for us from a.
Speaker Change: Lower rig.
Speaker Change: Regulatory burden, but in the near term and that caused a little bit of slowdown in some processes.
Speaker Change: Hard to handicap time.
Speaker Change: But we definitely anticipate and have an opportunity to be able to.
Speaker Change: Report out conclusions on those matters.
Speaker Change: Okay. Thank you.
Speaker Change: There are no further question on the line. So I will now hand, you back to your host for closing remarks.
Speaker Change: Alright, Thank you for joining us this morning, because our comments and we'll talk to you again next quarter.
Speaker Change: Okay.
Speaker Change: Thank you for joining today's call you may now disconnect.
Speaker Change: [music].