Brookfield Business Partners L.P.

Welcome to the Brookfield Business Partners second quarter 2022 results conference call and webcast. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, simply press star and one on your touchtone phone. Now I'd like to turn the conference over to Alan Fleming, Senior Vice President of Investor Relations. Please go ahead, Mr. Fleming. Please go ahead.

Thank you, operator, and good morning. Before we begin, I'd like to remind you that in responding to questions and talking about our growth initiatives and our financial operating performance, we may make forward-looking statements. These statements are subject to known and unknown risks, and future results may differ materially. For further information on known risk factors, I encourage you to review our filings with the securities regulators in Canada and the U.S., which are available on our website. On the call with me today is Cyrus Madden, Chief Executive Officer, Dennis Turcotte, Chief Operating Officer, and Jaspreet Dal, Chief Financial Officer. We're also joined today by Stuart Levings, Chief Executive Officer of Sajan, our Canadian residential mortgage insurer. I'll turn the call over first to Cyrus to provide an update on our business, and then Stuart will talk about recent developments at Sajan. Jaspreet will finish with a discussion on our financial results. We'll then all be available to take your questions. And with that, I'll pass the call over to Cyrus.

Thanks, Alan. Good morning, everyone. Thanks for joining us today. We had a great quarter. We generated over $540 million of adjusted EBITDA and continue to be very pleased with the resilience of our operations. We're well positioned, heading into the second half of the year, and we're progressing initiatives to crystallize significant value. I thought I'd start with a few comments on the operating environment before turning to an update on our initiatives. Like most, we're facing headwinds around inflation and supply chain challenges across our businesses, but the durability of our earnings has been a significant advantage for us. With a few exceptions, volumes are holding up well across our operations. We continue to make progress to either pass through higher costs or increase prices to support margins. In fact, on a same store basis, our EBITDA is up 10% over last year. It's too soon to predict when these inflation headwinds will ease, and some may not for a while, but we continue to work with our management teams to take appropriate action to support performance if the environment worsens. Since our last update, we've posted three of our recently announced acquisitions, including the $8.5 billion acquisition of CDK Global, our technology services and software solutions provider to the automotive dealer, This is a high-quality business with recurring contracted revenues, low ongoing capital requirements, and high margin potential. Even with the recent widening of credit spreads, we were able to finance the transaction at favorable rates. We're now implementing our value creation plans to grow margins and cash flows. We also completed the acquisition of an Australian residential mortgage lender and a slate roofing products provider. Apart from growth, we've turned our attention to initiatives that should generate significant proceeds and crystallize value for our business. In May, we launched a process to sell Westinghouse, our nuclear technology services operation, which generated good interest from prospective buyers. Diligence is ongoing and we're optimistic this will result in us reaching an agreement to sell the business. We were able to complete a dividend recapitalization from this business that generated about $800 million in proceeds, of which BBU's share was $315 million. We look forward to providing you an update as the sales process unfolds. There are other businesses we own today that could be candidates for monetization. The timing of any sale will depend on many factors, including market conditions. Our water and wastewater operation in Brazil is one example. Since our acquisition five years ago, we've made significant progress to build value in the business. We're now exploring options to monetize our investment. Like many of you, we're disappointed in the trading price of our units and shares. We're confident, though, that as we execute on our plans and continue to build long-term value in our business, the trading discount will close over time. We've continued to repurchase our units, given that they trade at levels materially below our view of intrinsic value. With that, I'm going to turn it over to Stuart. But I first wanted to just express our thanks to Stuart and his team at Sajan, who have done a wonderful job for us. And I hope you take this opportunity to ask Stuart any questions you might have about the business he's running. Thank you, Stuart.

Thank you, Cyrus, and good morning, everybody. Sajan had another strong quarter as it continues to produce solid operating results in a favorable economic environment. While interest rates are rising and housing markets are slowing, our proven business model, disciplined risk management, and high-quality insurance portfolio position us well to manage through economic headwinds over the coming months. Sajan is a market leader operating in a concentrated, highly regulated industry with natural barriers to entry. We provide insurance to mortgage lenders against homeowner default in exchange for an upfront non-refundable premium. Our business model produces an attractive financial profile, generating strong margins, earnings, and cash flows that have proven to be resilient through prior housing and economic cycles. In Canada, mortgage insurance is mandatory for home purchases with a down payment of less than 20%. Our product is limited to owner-occupied homes under $1 million Canadian with a maximum loan-to-value of 95% and amortization of 25 years. We insure predominantly first-time homebuyers with strong income and credit profiles who tend to purchase entry-level homes with an average price of approximately $420,000 Canadian dollars. These buyers are often double-income families, 25 to 45 years old, with growing household incomes. Our portfolio includes mortgages originated across the country concentrated around large urban areas, leading to a regionally diversified mortgage insurance book, which limits exposure to correlated economic risks. Our business has performed exceptionally well over the last few years, benefiting from record levels of new underwriting activity, strong home price appreciation, and low mortgage default rates. Today, we have around $2.8 billion Canadian of unowned premium reserves, representing cash premiums already collected but not yet recognized into earnings. These premiums will be amortized into earnings over the next five years, providing the business with predictable revenue and the ability to absorb higher default rates as the housing market and economy slow. Over the past two and a half years, we've worked together with the Brookfield team to execute on a value creation plan, including growing our market share, improving our expense ratio, enhancing the yield on our investment portfolio, and optimizing our balance sheet and capital efficiency. These enhancements have improved our return on equity to 20%, allowing the business to provide meaningful distributions to shareholders, including BBU. Looking ahead, we expect to see a more challenging environment with reduced levels of housing sales and some price softening. Rising interest rates, high consumer inflation, and the expectation of slowing economic activity have led to a growing consensus for home prices in Canada to fall by 10% to 15% from their peak in the first quarter of 2022. This represents a modest pullback from the approximately 50% gain in home prices seen through the pandemic. And we believe that several factors, including continued undersupplied housing and positive immigration trends, including the target to welcome over 400,000 new immigrants per year to Canada, will act as a flaw to home prices. The quality of our insurance portfolio is the strongest it has ever been. Increasingly stringent underwriting criteria have contributed to higher quality borrowers and an average credit score in excess of 750 across the portfolio. Approximately 80% of the insurance portfolio is backed by fixed rate mortgages, providing borrowers with payment stability in a rising mortgage rate environment. The majority of the remaining variable rate mortgages have constant payments, where only the mix between principal and interest is impacted by fluctuations in rates. thereby providing a similar degree of payment stability. In addition to the quality of our insurance portfolio, strong oversight and regulation, including mandatory loan amortization, full borrower recourse, and debt service stress tests for all insured borrowers serve to mitigate the risk of borrower default. For example, all insured borrowers in Canada are subject to a stress test that builds in a cushion for affordability in a rising rate environment. Borrowers must qualify for a mortgage at the minimum qualifying rate. which is the higher of the benchmark rate, currently 5.25%, or the rate offered by their lender plus 200 basis points. This means that all insured mortgages over the past few years have been qualified and approved at an interest rate of at least 5%. Furthermore, insured borrowers facing financial hardship as a result of significantly higher payments at mortgage renewal can extend their amortizations under our loan modification program. Consequently, rising rates are not typically a driver of mortgage delinquencies. Unemployment, which sits at historical lows with a consensus forecast for moderate increases over the next few years, typically has a more pronounced impact on mortgage delinquencies. While unemployment drives the frequency of delinquencies, changes in house prices influence the likelihood of claims and degree of loss given default. That said, due to the significant level of house price appreciation over the past few years, our portfolio has an average loan-to-value of 60%, which means many borrowers today have significant embedded equity in their homes. This enables them to absorb a material correction in home prices and still sell their property without suffering a loss in the event of default. For example, even if house prices declined by 40% and unemployment reached 10%, both of which would be well beyond current consensus forecast, the business would continue to generate positive net operating income and cash flows. With that, I will hand it over to Jaspreet.

Thanks, Stuart, and good morning, everyone. As Cyrus mentioned, we had an excellent second quarter, generating adjusted EBITDA of $543 million compared to $381 million last year, with strong results across all three operating segments. In infrastructure services, we generated adjusted EBITDA of $205 million compared to $125 million last year. Adjusted EFO increased to 124 million. Our nuclear technology services operations had a good quarter. Adjusted EBITDA of 58 million was in line with expected seasonality. The business is managing through disruption caused by the conflict in Ukraine and remains on track to generate strong full-year results. In May, the business completed the acquisition of BHI Energy, to enhance its outage and maintenance service capability. It funded the transaction with a combination of committed desk financing and existing liquidity on hand. In April, we completed the acquisition of our lottery services and technology operations, which contributed $25 million to adjusted EBITDA during the quarter. The business is benefiting from resilient demand, despite some impacts from higher input costs and supply chain delays. We've also secured a few new customer wins since closing our acquisition, including a 10-year contract to provide products and services to the operator of the UK National Lottery. Modular building leasing services contributed adjusted EBITDA of $41 million. The overall demand environment remains stable, and we're continuing to benefit from high utilization levels on existing units on rent. We're also making progress on increasing the penetration of value-added products and services, which is helping to enhance margins. Moving on to our industrial segment, second quarter adjusted EBITDA increased to 204 million, and adjusted EFO was 101 million, compared to $216 million in the prior year. Adjusted ESOs in the prior period included $148 million after-tax gains on the partial sale of our investment in common shares of our graphite electrode operation. Advanced energy storage operations generated adjusted EBITDA of $105 million. Pricing in a favorable mix of increased margin on advanced battery sales contributed to results despite the impact of higher labor, commodity, and transportation costs. Overall, battery volumes continue to be impacted by the ongoing production challenges at auto manufacturers. Also, just as a reminder, prior results benefited from very strong aftermarket demand as global lockdowns and travel restrictions is eased. Our engineering components manufacturer generated adjusted EBITDA of $44 million. Strong performance was driven by commercial pricing actions and contributions from recent acquisitions. We're working closely with the management team on taking appropriate pricing and cost actions to support volumes and margins through the balance of the year. And finally, our business services segment generated second quarter adjusted EBITDA of $166 million compared to $145 million last year and adjusted EFO of $151 million for the current quarter. While Australian healthcare services generated improved adjusted EBITDA of $21 million this quarter, the operating environment remains challenging. Elevated labor costs and high COVID-19 infection rates of patients and staff are resulting in cancellations of planned surgical procedures, which are having an impact on overall performance. We're hopeful that activity levels in the business will improve as COVID-19 infection rates in Australia decline. Lastly, our Brazil fleet management operations continue to perform well, and in June, agreed to acquire Unidas, a leading full-service rent-a-car platform in Brazil. This platform became available because local regulators were demanding its sale for antitrust purposes. We were able to acquire the business for value, which will double the size of our existing fleet management platform in Brazil and support our growth plan. Moving on to liquidity, we ended the quarter with $3.1 billion of corporate liquidity. As Cyrus mentioned, during the quarter, we generated a dividend from a nuclear technology services operation that was paid to all shareholders. This effectively accelerates some of the proceeds we would generate from any potential sale. Our share of the $800 million dividend was approximately $315 million. Pro forma liquidity is approximately $1.1 billion. after we account for all of the announced and recently closed transactions. With that, I'd like to close our comments and turn the call back over to the operator for questions.

As a reminder, if you'd like to ask a question at this time, please press star 1 on your telephone. Please stand by while we compile the Q&A roster. Our first question comes from the line of Jeff Kwan with RBC Capital Markets. Your line is now open.

Hi, good morning. First question was on Westinghouse. So if you are able to come to an agreement on a deal, like who would be the key entities that would have to approve it? And would any of them have any more, call it specific criteria that might influence, I'd say the preference or the type of buyer for Westinghouse?

Hi, Jeff. Thanks for joining us today. Yeah, Jeff, there's nuclear regulatory bodies that would have to approve it. If it's a foreign buyer, you'll have to go through a U.S. CFIUS process. And then there would be a number of regulatory approvals required outside the U.S. as well. So the typical range of what we would deal with in any such type of transaction. But on top of that, U.S., regulators would have to approve it as well.

Okay. And then on the BRK ambiental, you made reference and then there was that filing potentially taking it public, but is a sale also a possibility or is an IPO the more likely option?

Look, it's possible. We just want it to be ready for when the capital markets are open. They will open at some point in time. We want it to be ready to turn it into a public company because we think this type of business will garner a strong following for all sorts of reasons. So we think it's just a good alternative to have and be ready. A private sale is possible.

Okay. And just if I can ask one last question for Stuart. You know, Sajan, when you take a look at, you know, going back to the 1990s housing downturn, I think your combined ratio peaked around 90%. Today, we're still at extremely low combined ratios. I mean, in Q2, you had a negative loss ratio. But, you know, if we have, you know, this housing downturn that some people think that we're going to have – Like, what kind of, do you think, like, the ballpark range do you think, like, the combined ratio could look to get to? And what would be the key reasons that you would say it would differ from what was experienced back in the 1990s?

Yeah, Jeff, thanks for that question. You know, I think our expectation is that we see our performance head back towards our long-range expectations. So, as you heard us say before, in that 15% to 25% loss ratio range, which would imply sort of a 35% to 45% combined ratio range, which is still very, very profitable. You know, the differences primarily are that our premium rates are much higher now. And that's because we hold more capital. But we get a lot more pricing power and a lot more margin because the premium rate has gone up so much since that prior downturn back in the 90s and certainly in even the global financial crisis. And that's the main difference. The other differences, of course, are the portfolio quality. As you know, we had a lot of products back then that We're risky. I drove a lot of our losses, and we just don't underwrite those these days because we can't. We're not allowed to, and we certainly appreciate that because our portfolio quality is much better.

Okay, great. Thank you.

Our next question comes from the line of Devin Dodge with BMO. Your line is now open.

All right, thanks. Good morning, everybody. Saras, how should we reconcile the confidence in the Westinghouse sale process, you know, with the... Devin, you cut out.

We can't hear you.

Can you hear me now?

Devin? You're back now.

Yeah, you did cut out for a bit. Devin?

Operator, maybe we move to the next question and then come back to Devin.

Our next question comes from the line of Nick Preby with CIBC.

Yeah, okay, thanks. Good morning, everyone. You know, because you incorporated a healthy discussion around Sajan, I wanted to ask a pair of questions about the end game for that investment. I guess the first just being, you know, after three years of ownership, how far along do you feel you are with respect to the value creation plans there?

I think our plan is – Stuart, I should let you answer it, but I should say from a PPU perspective, it's well in place. Yes.

Yes, I mean, the value creation is very much entrenched now. We've improved our ROE from 13% as a public company to consistently around 20% now, and our expectation is to be able to maintain that. In terms of the sort of value over time, we're now generating strong distributable cash with a 20% ROE, and we should be able to maintain that given the leverage we have in place and some of the other changes we made with Brookfield being on board as owners. As far as any further plans, I think that would be back to Cyrus. Yeah.

Yeah, so for Sajan specifically, this business is generating 20% cash return to us. There are very few investments we make that actually generate a 20% annual return to us, so we're delighted to keep it. So obviously the things that would go through our mind are, what can we sell it for if we wanted to sell it for? You know, if we can get a very large premium to our entry price, then it might become attractive. What are alternative uses of capital? You know, all the things we think about in capital allocation. It is a great company. The team's done a phenomenal job. And We think that these sort of returns should be sustainable over a cycle. There will be bumps in the road for sure because it is exposed to housing, portability, industry, and all that stuff. But otherwise, that's the sort of thing we would think about.

Yeah, okay. No, fair enough. And it might be a little premature to be having this discussion anyways, but I always felt like public market investors... when staging was public, struggled to price in the left-tail risk, kind of associated with an adverse housing shock. And that's why it really never attracted the multiple you might otherwise have expected it to, just based on the level of underwriting margins it was able to achieve in a buoyant housing market environment. I guess as you think about this a few years down the line, do you feel an outright sale to a sponsor or a strategic is more likely than kind of an IPO route? And Again, this might be a little bit premature to be having this discussion, but I just wanted to feel that out a little bit.

I think if we can continue to demonstrate the high returns we've demonstrated, it's possible this could be re-rated in the public markets compared to where it was trading. You also need to reflect upon the fact that its previous controlling shareholder was in some form of, I'm gonna say financial stress, if not distress. And I think that probably weighed quite heavily on the share price of Sajan. So I do think all options are on the table if and when we get to that point.

Yeah, yeah, that's a good point. Okay, and then just last one for me. I noticed the equity check written for CDK was a little bit higher than initially expected. Just, you know, given the crowded fundraising environment that we're seeing in private equity, are you finding it more difficult at all to source co-investments to syndicate some of these deals?

Hi, Nick. It's just great. Maybe I'll start and then Cyrus can add. Look, our decision on CDK was really based on the fact that it's a great business. We really like the business. We've We closed the transaction at the beginning of July, so we've had a chance to really get into the guts we're doing on boarding. And everything that we're seeing is supporting kind of our initial due diligence and assessment. And as we did, we talked about the fact that we did a dividend recap at Westinghouse, and that allowed us to free up some cash. You know, from, again, capital allocation perspective, we made the decision that it was a good idea to allocate a little bit more capital from BBU to CDK. I'd say kind of more broadly on your question on co-investment and syndication. You know, so far, we've done a few deals this year, and the conversations have been constructive. So we're continuing to have people engaged, have people looking at the deals. And so the co-investment interest is still there. Maybe it's taking a little bit longer, but we haven't seen any kind of significant deterioration in that interest from LC.

And I'll just add that in the institutional world, co-investment, sort of the holy grail of what institutions want. So there's a lot of interest in co-investment. Yes, some institutions may have slowed down a little bit, but broadly speaking, there's a very high level of interest for their co-investment.

Yeah. Okay. All right. That's very helpful. Thanks very much. I'll pass the line.

Our next question comes from Devin Dodge with BMO.

Your line is now open.

All right. Let's try this again. Apologies for the technical difficulties. So I wanted to start with, you know, Cyrus, you know, how we should reconcile the confidence in that Westinghouse sale process with the broader challenges in financial markets and that slowdown in private market transactions that was referenced in the letter.

Look, that's a great question. You know, we on the one hand are seeing a significant slowdown in financing for private equity transactions. Certainly in North America and in Europe, the banks have just slowed down. The banks made a bunch of commitments. They need to work through those commitments over time before they can free up capacity to do a set of new deals. And they're not through that yet. And as a result of that, to do a set of new deals, and they're not through that yet. And as a result of that, I'd say generally transaction activity for private equity for financial sponsors has slowed generally across the board. On the other hand, for high-quality credits, for investment-grade borrowers, for infrastructure buyers, there's lots of financing available. So it really depends on what you're buying and what kind of buyer you are and what level of financing you're putting on.

Okay, that's good color. Thanks for that. After that, the dividend recap at Westinghouse and the recent Bolton acquisition, can you remind us where leverage stands after those two transactions?

Yeah, so at the Westinghouse level, we've got about 3.7, $3.6 billion of leverage, and then plus the $800 million dividend recap that we've got.

Okay, okay. And then maybe a question for Stuart. Can you speak to the competitive environment for mortgage insurers in Canada? I think we saw CMHC lose some market share over the last few years, and I wonder if you've seen them become a bit more aggressive in an attempt to recapture at least some of that lost market share.

Yeah, thanks, Devin. It's very apparent that CMHC have decided to reverse course a little bit in terms of the underwriting changes that they made, and they are intent on recovering some market share. What they're finding and admitting publicly is that it's not at all easy. You know, we are a very competitive market. As Sage, we're very confident in our position and our offering in terms of customer service and differentiation. And the fact that they pulled back has allowed us to really move in and to demonstrate even more the value we can bring to our customers. Right now, what they're hearing, what the CMSC are hearing is that, you know, we're not just going to revert back to levels of share we had with you before. So I think they are trying. They certainly are keen, but they're not finding it as easy. And frankly, we don't think that they'll ever go back to where they were. I think the landscape has changed now from a competitive dynamic, and we are confident that we can maintain our market share in that 36% to 38% range.

Okay.

I'll turn it over.

Our next question comes from the line of Jamie Groen with National Bank. Your line is now open.

Yeah, thanks, and good morning, and Stuart, good to hear from you again. I'll start with you, actually. Thinking about the ROE outlook, you mentioned 20% as being sustainable, normalized periods. I'm just trying to square that, actually, with loss ratios that recently have been flat, like 0% to negative, that are driving 20% ROEs to a more normalized loss ratio environment of 15% to 25%, I would assume that the ROE would dip a little bit from there. Maybe just sort of talk through what other factors are driving the sustainable 20% ROE in the business.

Yeah, James, absolutely, and great to be talking with you again, too. You know, the reality is that I say we've achieved 20% consistently now, 20% plus, but in actual fact, in a year like this, And in last year's environment, we were probably printing more like a 23%, 24% ROE. So there is some room for that to come down and still be in around 20 as loss ratios normalize. The other factor is that on capital efficiency, we've got some room to go, right? Obviously, coming through the pandemic, you know us. We put in some moratoriums on dividends. They've moved past that. We've been able to get more dividends out. But at the same time, there's some room on that in terms of being a bit more capital efficient, and that will help to offset some of that increase in loss ratio as well.

Okay, understood. As we're thinking about the SageGen business and Brookfield's recent acquisition of La Trobe, are there any longer-term potential synergies for these two businesses tied to mortgage markets in different countries?

We haven't got any plans to tie those two together.

Okay. And then last one on, on Sage and Stuart, some of the, the headlines reading today is around trigger rates on variable rate mortgages. What's your, what's your assessment of variable rate mortgages within the, within the gen or Sage portfolio? How close would borrowers be to triggers? How is that process implemented from the banks and, Do the mortgage insurers have a say in how that is processed and managed?

Yeah, so, James, first of all, you know, majority of our portfolio is still fixed rate. We're probably about 80% fixed rate. Of the remaining 20%, the lion's share is uncapped variable, but payments don't change right as the rate goes up until they hit a trigger rate or term renewal. We've done some analysis. We think that we're probably a good 100, 150 basis points out still before we start to hit some trigger rates. And even at that time, if those lenders have to reset payment, the fact of the matter is, as you know perhaps from prior discussions, we are able to deploy some of our loan modification tools to address any payment shock, such as the extension, et cetera. So we don't really view that as being a pressure point or a driver of near-term delinquencies.

Okay, that's very clear.

That's it for me. Thank you.

Our next question comes from the line of Gary Ho with Desjardins.

Your line is now open.

Thanks, and good morning. The first question for Cyrus, you chatted a bit about Westinghouse and BRK. Maybe you can give us an update on Clarios and how that monetization initiative is progressing.

So, look, Clarios, it's early days. We have filed a registration statement with securities regulators, and we intend to keep that, I'll say, fresh and alive. in case market conditions become positive. That's not going to be a near-term event for us, as we said on our last call, simply because we want to get the leverage down in the company before we can think about a monetization. But we're going to be ready for it for when the time comes.

Okay, perfect. And the second, maybe for Stuart, can you provide a bit more information I guess, great perspective in the hotter housing markets last few years, you know, the GTA, Vancouver area, et cetera. Any concerns there? And do you have kind of LTV specific for those regions?

Yeah. So, you know, look, the markets have been hot pretty much everywhere. Oddly enough, some of the more urban and suburban markets were even hotter than call centers like Toronto, Vancouver, as the pandemic effect played out and people moved outwards. But ultimately, we've always played in the bottom end of that range, given our million dollar cap. So price sensitivity drives some of the softening housing markets. The more expensive homes are seeing bigger corrections or drops in prices now. Lower end properties in terms of price range, there's always enough sideline demand that there's a bit of a floor for those. So we are seeing prices soften, absolutely. We still have tremendous amounts of embedded equity in the portfolio. So these will likely mean borrowers don't have 50% of equity. Now they have 30% of equity, still enough to get them out of trouble and having to sell. And our outlook is that that is going to remain the case even as we go through the rest of this year and into next year. That is our base case.

And then I want to talk a little bit about scientific games. So my understanding of the business is that the government contracts are fairly kind of long dated and predominantly fixed rate. So I want to get a bit of more color on that kind of business being squeezed on the margin side, maybe whether you've been able to replace some of those contracts just given the spike in inflation.

Maybe we'll get Dennis to answer that.

Yeah, sorry, I'm just getting off mute. Dennis Turcotte here. There's no question we're seeing a little bit of inflation, paper and ink being the primary drivers in this case. But frankly, in both those situations, they're cyclical in nature and we expect that will come off naturally. But we are also addressing with all our customers where we can to pass through those increases. So it's early stages in this situation because we're only three months into it. But our 100-day plan has been executed exactly as expected. We're working with the management team and starting to drive those value creation levers. So at this point, we're actually optimistic and we've committed to Cyrus. We're going to beat our underwriting in this case.

Okay, that's great. And then maybe if I can sneak in one more for just a brief. Just on BRK, can you give us a bit more details on how much debt there is in that investment, maybe in total or your proportionate share?

I'm going to go off of memory, and then we can circle back and give you a more precise, but I think we've got about $3 billion of debt within BRK. And that's on a total basis, not on a proportionate basis.

Okay. Got it. Okay. That's it. Thanks very much.

That concludes today's question and answer session. I'd like to turn the call back to Cyrus Madden for closing remarks.

Thanks, everyone, for joining us, and I look forward to speaking to you next quarter. Thank you.

This concludes today's call. Thank you for participating. You may now disconnect. The conference will begin shortly. To raise your hand during Q&A, you can dial star 11.