Employers Holdings Inc

Good day and welcome to the Q1 2024 Employers Holding Sync Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, please call R11. As a reminder, this call may be recorded. I would like to call over to Lori Brown, General Counsel. Please go ahead.

Lori Brown Thank you, Michelle. Good morning and welcome everyone to the first quarter 2024 earnings call for employers. Today's call is being recorded in webcast from the investor section of our website, where a replay will be available following the call. Presenting today are Kathy Antonello, our Chief Executive Officer, and Mike Paquette, our Chief Financial Officer. Statements made during this conference call that are not based on historical facts are considered forward-looking statements. These statements are made in reliance on the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Although we believe the expectations expressed in our forward-looking statements are reasonable, risks and uncertainties could cause actual results to be materially different from our expectations, including the risks set forth in our filings with the Securities and Exchange Commission. All remarks made during the call are current only at the time of the call and will not be updated to reflect subsequent developments. The company also uses its website as a means of disclosing material non-public information and for complying with the disclosure obligations under the SEC's Regulation FD. Such disclosures will be included in the investor section of our website. Accordingly, investors should monitor that portion of our website in addition to following our press releases, SEC filings, public conference calls, and webcasts In our earnings press release and in our remarks or responses to questions, we may use non-GAAP financial measures. Reconciliations of these non-GAAP measures to our GAAP results are included in our financial supplement as an attachment to our earnings press release, our investor presentation, and any other materials available in the investor section on our website. And now I'll turn the call over to Kathy.

Thank you, Lori. Good morning to everyone and welcome to our first quarter 2024 earnings call. Today we will follow our typical agenda where I'll begin by providing some highlights of our first quarter 2024 results. I'll then hand it over to Mike for more details on our financials and prior to Q&A, I'll discuss the continued improvement we expect to see during the balance of 2024. Higher new and renewal premiums. Strong net investment income and investment gains drove an 8% increase in our first quarter revenue year over year. Our steady growth in written premium resulted from a 38% increase in new business, a 6% increase in renewal business, and continued solid audit premium recognition. Excluding adjustments for audit premium, our gross written premium increased 14% for the quarter, with all major distribution channels contributing to the growth. Our investment performance was also a boost to revenue with continued strong net investment income and net unrealized gains from our common stock and other investments. We recorded our current accident year loss in LAE ratio on voluntary business at 64%, slightly above the 63.3% we maintained throughout 2023 and consistent with that of 2022. We believe the accident year 2024 loss ratio we've recorded, along with our existing provision for a potential increase in medical inflation, positions us well from a reserving standpoint. As was the case in the first quarter of 2023, we did not recognize any prior year loss reserve development on our voluntary business. Because the full actuarial study was not performed and the amount of indicated net prior year loss reserve development was consistent with our expectations. We will evaluate our prior year reserves in more detail at mid-year when we routinely perform a full reserve study. Our commission expense ratio was 13.8% up from 13.5% a year ago. The increase was due to our strong new business premium growth which is typically subject to a higher initial commission rate, and anticipated 2024 agency incentives, which are contingent on profitable growth. Our underwriting and general and administrative expense ratio was 24.8%, down from 25.7% a year ago. The expense ratio improvement primarily resulted from our recent CERITY integration and we expect further expense ratio improvement throughout 2024. While our net income and adjusted net income per diluted share rose sharply by 29% and 12% respectively, our first quarter 2024 GAAP combined ratio of 101.6% was similar to our first quarter 2023 results. Our combined ratio does not yet fully reflect the underlying enhancements efficiencies, and economies of scale that we have recently achieved, and we expect meaningful improvements in our combined ratio for the balance of the year. With that, Mike will now provide a deeper dive into our financial results, and then I'll return to provide my closing remark. Mike?

Thank you, Kathy. Gross premiums written were $211 million, an increase of 8%. The increase was primarily due to higher new and renewal premiums. Net premiums earned were $185 million, an increase of 7%. Our loss and loss adjustment expenses were $117 million, an increase of 8%. And our loss and loss adjustment expense ratio was 63% or 64% when excluding the effects of our loss portfolio transfer. As Kathy mentioned, we increased our current accident year loss and LAE ratio on voluntary business to 64% this quarter, versus 63.3% a year ago. In addition, we continued to settle claims throughout the quarter on an accelerated basis to both mitigate our overall tail risk and generate additional reserve salvage. Commission expenses were $26 million, an increase of 9%, and our commission expense ratio was 13.8% versus 13.5% a year ago. Underwriting and general and administrative expenses were $46 million, an increase of 3%. And our underwriting and general administration expense ratio was 24.8% versus 25.7% a year ago. The decrease was primarily due to savings associated with the fourth quarter 2023 full integration of Serity's operations into those of employers, partially offset by increases in payroll and benefit costs and bad debt expenses. Our net investment income was $27 million for the quarter, a decrease of 3%. The decrease was due to the unwinding of our former federal home loan bank leverage investment strategy in late 2023. When considering the more than $2 million worth of interest expense that we incurred from that former strategy in the first quarter of 2023, our net investment income was actually up 6% year over year. Our fixed maturities currently have a duration of 4.5 and an average credit quality of A+. Our weighted average book yield was 4.3% at quarter end, which was up nicely from 4.1% a year ago. Our net income this quarter was favorably impacted by $10 million of net after-tax unrealized gains from equity, securities, and other investments, which are reflected on our income statement. And our stockholders' equity was unfavorably impacted by $12 million of net after-tax unrealized losses from fixed maturity securities, which are reflected on our balance sheet. During the quarter, we repurchased $5 million of our common stock at an average price of $39.45 per share. And our remaining share repurchase authority currently stands at just over $16 million. And earlier this week, our Board of Directors declared a second quarter 2024 regular dividend of $0.30 per share, an increase of 7% from the prior quarterly dividend of $0.28 per share. This action reflects our strong balance sheet, abundant underwriting capital, and our confidence in the company's future operations. And with that, I'll now turn the call back to Kathy.

Thanks, Mike. After considering dividends declared, over the last 12 months, our book value per share, including the deferred gain, increased 13% to $44.04, and our adjusted book value per share increased by 11% to $47.86. Both the combined ratio and the change in our adjusted book value per share continue to be our preferred metrics for measuring our success. We are confident we will see further improvements in these ratios in the near term. During the first quarter of 2024, we delivered a best-in-class digital claim reporting tool, which has received exceptional user experience, feedback from both agents and policyholders. Throughout 2024, we plan to deliver more self-service options and continue our appetite expansion effort, which has led to profitable growth. Our strong capital position supports both our growth and technology initiatives, and we look forward to having a successful 2024. And with that, Michelle, we will now take questions.

Thank you. If you'd like to ask a question, please press star 1-1. If your question hasn't answered and you'd like to remove yourself from the queue, please press star 1-1 again. Our first question comes from Matt Carletti with Citizens JMP. Your line is open.

Hey, good morning.

Good morning, Matt.

I was hoping you could, it caught the 14% growth in the top line, kind of X the audit premiums. Could you break that down a level and just help us understand a little bit, you know, what builds up to that 14%, you know, TIF growth, payroll, you know, exposure growth, kind of what rates are doing overall? And then alongside that, you know, what states are you seeing the strongest growth out of and which states are a little more of a struggle?

Yeah, sure. So, you know, we're really pleased with the level of growth that we're currently seeing. And it's widespread. It's arising from all of our major distribution channels. During the first quarter, our enforced premium from our core agency segment increased. Those are our independent agents and our national partners. That premium increased by about 9%. And then our SPA segment, which is specialty, payroll, and alternative distribution, increased by 22%. A lot of that was driven by the alternative distribution channel, which is our digital book. You know, I've mentioned in the past we continue to see a big shift towards API utilization. So we're seeing major upticks in our submissions and our quotes and our binds because we put a lot of energy into providing ease to our distribution partners in terms of finding the policies. And then, you know, I'd also say our appetite expansion effort is contributing to that overall growth. that business is performing at a loss ratio similar to our other target classes. In the first quarter, our appetite expansion classes generated $38 million, or 18% of our new and renewal premium. So hopefully that gives you a little bit of color.

Yeah, that's super helpful. Thank you. One other, if I could, you talked a little bit on the expense ratio about, you know, A couple reasons why it's maybe a little high during the quarter, but continuing to expect good improvement throughout the year. Is there any one times kind of in that number in Q1? Could you point those out, what might just be in there and won't happen again, versus more of kind of pulling expenses out through the charity consolidation or leveraging growth, things like that?

Sure, Matt, I'll take that. So the charity savings were – pretty much as expected. And as we mentioned before, they nearly fully emerged in the first quarter. So no surprises there. You know, we mentioned payroll and benefit costs, and those are seasonally higher in the first quarter because all kinds of things reset. So if you look year over year, you'll see that that's kind of seasonably higher. I think what you're referring to in this quarter in a bit of a non-recurring manner is we did have about $1.5 million of incremental bad debt expense. And that related to some noncompliant policies. I say noncompliant because they never conform to their final audit. And that is behind us. So we do not expect to see anything like that in future quarters as it relates to our noncompliant premium. And that was about it. Very helpful.

Appreciate the call. Thank you.

Thank you. Thank you. As a reminder, to ask a question, please press star 1-1. Our next question comes from Mark Hughes with Truist Securities. Your line is open.

Yeah, thank you. Good morning. Good morning, Mark. You were assuming that you're making provision in your reserves for a step up in medical inflation. Could you go into more detail? What is the medical inflation as you see it now? What kind of buffer are you putting in, maybe not expectation, but in case medical inflation does pick up?

Yeah. So, you know, up to this point, and I like the fact that you said in case medical inflation does pick up, but because up to this point, medical inflation and the economic data that, you know, we review has remained relatively mild when you compare it to other sectors like energy or housing or food. And so that's really good news for workers' compensation and for us. We continue to monitor our prescription drug costs. We started doing that about a year ago. After controlling for the mix of drugs over time, we've seen that our internal index for in-network pharmacy costs are really fairly, they're generally consistent with what we've experienced prior to the pandemic. We did see a bit of an uptick in the most recent year But it was really a reversal of the decrease in drug costs that we experienced in the preceding years. So it's really back to kind of where it was before. That additional reserve that you spoke about that we're holding for the possibility of an increased inflation that's sort of over and above the implicit amount that's buried in our reserve triangles is a little over $14 million right now. And when you think about the accident-year-loss ratio that we booked and it was slightly higher, we felt when we put those two together that we're in a good place should we see an uptick in inflation.

You see competition. Clearly, you're doing pretty well on new business. Do you perceive any change in appetite on the part of other carriers as the issue goes?

Yeah, we're not really seeing too much of a change there.

For the business sectors and the premium sizes that we write, you know, we continue to characterize the environment as competitive. You know, we're having more success finding policies that are a little bit larger than our typical average policy size. So that's increased our average policy size by about 9% in Q1. but it's still very small at about 5,600. But when you look at new business, our average policy size is up about 12% to about 5,800. You know, our average rate change for the quarter was a decrease between 5% and 6%, but when you adjust that for, you know, exposure and split it out between wages and employment, changes, it's closer to what we've been seeing in the 2% to 4% range.

Is that up 2% to 4% or down 2% to 4%?

Down. Down.

Sorry. Down 2% to 4%. So the rate would be down 5% to 6% when you take into account wages, exposures, down 2% to 4%.

It's not as big of a decrease, correct.

Yeah. What's your sense on Going back to your NCCI days and carrying forward, what's your sense about the pace of industry-wide reserve gains? Where do you think we stand? Do you think the industry is past peak, or do you think it can – continue at the current level, or maybe even increase in coming periods? Just sort of, not trying to get information about your outlook on your own book, but just your sense of where the industry stands.

Yeah, you know, it's hard to say. I always look forward to AIS, which we'll be going to in a couple of weeks, and NCCI will be putting out their reserve redundancy or deficiency estimates then. You know, last year they increased the level of redundancy from the prior year. You know, I was a little surprised to see that. But, you know, it's a very healthy redundancy is what they came up with last year. So, it'll be very interesting to see what they say this year. It appears as though carriers are continuing to release reserves, including us. So I haven't seen too much of a change there when I look at the industry as a whole in terms of behaviors on reserves.

Yeah, yeah. Okay. Thank you very much.

Thanks, Mark.

Thank you. There are no further questions at this time. I'd like to turn the call back over to Kathy Antonello for closing remarks.

Thank you, Michelle, and thank you, everyone, for joining us this morning. I look forward to meeting with you again in July.

Thank you for your participation. This does conclude the program. You may now disconnect. Everyone, have a great day. you Thank you. Thank you. Bye.

music music Thank you.

Good day, and welcome to the Q1 2024 Employers Holding Sync Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, please call our 1-1. As a reminder, this call may be recorded. I would like to call over to Lori Brown, General Counsel. Please go ahead.

Thank you, Michelle. Good morning and welcome everyone to the first quarter 2024 earnings call for employers. Today's call is being recorded in webcast from the investor section of our website, where a replay will be available following the call. Presenting today are Kathy Antonello, our Chief Executive Officer, and Mike Paquette, our Chief Financial Officer. Statements made during this conference call that are not based on historical facts are considered forward-looking statements. These statements are made in reliance on the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Although we believe the expectations expressed in our forward-looking statements are reasonable, risks and uncertainties could cause actual results to be materially different from our expectations, including the risks set forth in our filings with the Securities and Exchange Commission. All remarks made during the call are current only at the time of the call and will not be updated to reflect subsequent developments. The company also uses its website as a means of disclosing material non-public information and for complying with the disclosure obligations under the SEC's Regulation FD. Such disclosures will be included in the investor section of our website. Accordingly, investors should monitor that portion of our website in addition to following our press releases, SEC filings, public conference calls, and webcasts In our earnings press release and in our remarks or responses to questions, we may use non-GAAP financial measures. Reconciliations of these non-GAAP measures to our GAAP results are included in our financial supplement as an attachment to our earnings press release, our investor presentation, and any other materials available in the investor section on our website. And now I'll turn the call over to Kathy.

Thank you, Lori. Good morning to everyone and welcome to our first quarter 2024 earnings call. Today we will follow our typical agenda where I'll begin by providing some highlights of our first quarter 2024 results. I'll then hand it over to Mike for more details on our financials and prior to Q&A, I'll discuss the continued improvement we expect to see during the balance of 2024. Higher new and renewal premiums. Strong net investment income and investment gains drove an 8% increase in our first quarter revenue year over year. Our steady growth in written premium resulted from a 38% increase in new business, a 6% increase in renewal business, and continued solid audit premium recognition. Excluding adjustments for audit premium, our gross written premium increased 14% for the quarter, with all major distribution channels contributing to the growth. Our investment performance was also a boost to revenue, with continued strong net investment income and net unrealized gains from our common stock and other investments. We recorded our current accident year loss in LAE ratio on voluntary business at 64%, slightly above the 63.3% we maintained throughout 2023, and consistent with that of 2022. We believe the accident year 2024 loss ratio we've recorded, along with our existing provision for a potential increase in medical inflation, positions us well from a reserving standpoint. As was the case in the first quarter of 2023, we did not recognize any prior year loss reserve development on our voluntary business. Because the full actuarial study was not performed and the amount of indicated net prior year loss reserve development was consistent with our expectations. We will evaluate our prior year reserves in more detail at mid-year when we routinely perform a full reserve study. Our commission expense ratio was 13.8% up from 13.5% a year ago. The increase was due to our strong new business premium growth which is typically subject to a higher initial commission rate, and anticipated 2024 agency incentives, which are contingent on profitable growth. Our underwriting and general and administrative expense ratio was 24.8%, down from 25.7% a year ago. The expense ratio improvement primarily resulted from our recent CERITY integration and we expect further expense ratio improvement throughout 2024. While our net income and adjusted net income per diluted share rose sharply by 29% and 12% respectively, our first quarter 2024 GAAP combined ratio of 101.6% was similar to our first quarter 2023 results. Our combined ratio does not yet fully reflect the underlying enhancements efficiencies, and economies of scale that we have recently achieved, and we expect meaningful improvements in our combined ratio for the balance of the year. With that, Mike will now provide a deeper dive into our financial results, and then I'll return to provide my closing remark. Mike?

Thank you, Kathy. Gross premiums written were $211 million, an increase of 8%. The increase was primarily due to higher new and renewal premiums. Net premiums earned were $185 million, an increase of 7%. Our loss and loss adjustment expenses were $117 million, an increase of 8%. And our loss and loss adjustment expense ratio was 63% or 64% when excluding the effects of our loss portfolio transfer. As Kathy mentioned, we increased our current accident year loss and LAE ratio on voluntary business to 64% this quarter, versus 63.3% a year ago. In addition, we continued to settle claims throughout the quarter on an accelerated basis to both mitigate our overall tail risk and generate additional reserve salvage. Commission expenses were $26 million, an increase of 9%, and our commission expense ratio was 13.8% versus 13.5% a year ago. Underwriting and general and administrative expenses were $46 million, an increase of 3%. And our underwriting and general administration expense ratio was 24.8% versus 25.7% a year ago. The decrease was primarily due to savings associated with the fourth quarter 2023 full integration of Serity's operations into those of employers, partially offset by increases in payroll and benefit costs and bad debt expenses. Our net investment income was $27 million for the quarter, a decrease of 3%. The decrease was due to the unwinding of our former federal home loan bank leverage investment strategy in late 2023. When considering the more than $2 million worth of interest expense that we incurred from that former strategy in the first quarter of 2023, our net investment income was actually up 6% year over year. Our fixed maturities currently have a duration of 4.5 and an average credit quality of A+. Our weighted average book yield was 4.3% at quarter end, which was up nicely from 4.1% a year ago. Our net income this quarter was favorably impacted by $10 million of net after-tax unrealized gains from equity, securities, and other investments, which are reflected on our income statements. And our stockholders' equity was unfavorably impacted by $12 million of net after-tax unrealized losses from fixed maturity securities, which are reflected on our balance sheet. During the quarter, we repurchased $5 million of our common stock at an average price of $39.45 per share. And our remaining share repurchase authority currently stands at just over $16 million. And earlier this week, our Board of Directors declared a second quarter 2024 regular dividend of $0.30 per share, an increase of 7% from the prior quarterly dividend of $0.28 per share. This action reflects our strong balance sheet, abundant underwriting capital, and our confidence in the company's future operations. And with that, I'll now turn the call back to Kathy.

Thanks, Mike. After considering dividends declared, over the last 12 months, our book value per share, including the deferred gain, increased 13% to $44.04, and our adjusted book value per share increased by 11% to $47.86. Both the combined ratio and the change in our adjusted book value per share continue to be our preferred metrics for measuring our success. We are confident we will see further improvements in these ratios in the near term. During the first quarter of 2024, we delivered a best-in-class digital claim reporting tool, which has received exceptional user experience, feedback from both agents and policyholders. Throughout 2024, we plan to deliver more self-service options and continue our appetite expansion effort, which has led to profitable growth. Our strong capital position supports both our growth and technology initiatives, and we look forward to having a successful 2024. And with that, Michelle, we will now take questions.

Thank you. If you'd like to ask a question, please press star 1-1. If your question hasn't answered and you'd like to remove yourself from the queue, please press star 1-1 again. Our first question comes from Matt Carletti with Citizens JMP. Your line is open.

Hey, good morning.

Good morning, Matt.

I was hoping you could, it caught the 14% growth in the top line, kind of X the audit premiums. Could you break that down a level and just help us understand a little bit, you know, what builds up to that 14%, you know, TIF growth, payroll, you know, exposure growth, kind of what rates are doing overall? And then alongside that, you know, what states are you seeing the strongest growth out of and which states are a little more of a struggle?

Yeah, sure. So, you know, we're really pleased with the level of growth that we're currently seeing. And it's widespread. It's arising from all of our major distribution channels. During the first quarter, our enforced premium from our core agency segment increased. Those are our independent agents and our national partners. That premium increased by about 9%. And then our SPA segment, which is specialty, payroll, and alternative distribution, increased by 22%. A lot of that was driven by the alternative distribution channel, which is our digital book. You know, I've mentioned in the past we continue to see a big shift towards API utilization. So we're seeing major upticks in our submissions and our quotes and our binds because we put a lot of energy into providing ease to our distribution partners in terms of finding the policies. And then, you know, I'd also say our appetite expansion effort is contributing to that overall growth. that business is performing at a loss ratio similar to our other target classes. In the first quarter, our appetite expansion classes generated $38 million, or 18% of our new and renewal premium. So hopefully that gives you a little bit of color.

Yeah, that's super helpful. Thank you. One other, if I could, you talked a little bit on the expense ratio about, you know, couple of reasons why it's maybe a little high during the quarter, but continuing to expect good improvement throughout the year. Is there any one times kind of in that number in Q1? Could you point those out? What might just be in there and won't happen again versus more of kind of pulling expenses out through the charity consolidation or leveraging growth, things like that?

Sure, Matt, I'll take that. So the charity savings were Pretty much as expected. And as we mentioned before, they nearly fully emerged in the first quarter. So no surprises there. We mentioned payroll and benefit costs, and those are seasonally higher in the first quarter because all kinds of things reset. So if you look year over year, you'll see that that's kind of seasonably higher. I think what you're referring to in this quarter in a bit of a non-recurring manner is we did have about $1.5 million of incremental bad debt expense. And that related to some noncompliant policies. I say noncompliant because they never conform to their final audit. And that is behind us. So we do not expect to see anything like that in future quarters as it relates to our noncompliant premium. And that was about it. Very helpful. Appreciate the call.

Thank you.

Thank you. Thank you. As a reminder, to ask a question, please press star 1-1. Our next question comes from Mark Hughes with Truist Securities. Your line is open.

Yeah, thank you. Good morning. Good morning, Mark. You were assuming that you're making provision in your reserves for a step up in medical inflation. Could you go into more detail? What is the medical inflation as you see it now? What kind of buffer are you putting in, maybe not expectation, but in case medical inflation does pick up?

Yeah. So, you know, up to this point, and I like the fact that you said in case medical inflation does pick up, but because up to this point, medical inflation and the economic data that, you know, we review has remained relatively mild when you compare it to other sectors like energy or housing or food. And so that's really good news for workers' compensation and for us. We continue to monitor our prescription drug costs. We started doing that about a year ago. After controlling for the mix of drugs over time, we've seen that our internal index for in-network pharmacy costs are really fairly, they're generally consistent with what we've experienced prior to the pandemic. We did see a bit of an uptick in the most recent year But it was really a reversal of the decrease in drug costs that we experienced in the preceding years. So it's really back to kind of where it was before. That additional reserve that you spoke about that we're holding for the possibility of an increased inflation that's sort of over and above the implicit amount that's buried in our reserve triangles is a little over $14 million right now. And when you think about the accident-year-loss ratio that we booked and it was slightly higher, we felt when we put those two together that we're in a good place should we see an uptick in inflation.

You see competition. Clearly, you're doing pretty well on new business. Do you perceive any change in appetite on the part of other carriers as the issue goes?

Yeah, we're not really seeing too much of a change there.

For the business sectors and the premium sizes that we write, you know, we continue to characterize the environment as competitive. You know, we're having more success finding policies that are a little bit larger than our typical average policy size. So that's increased our average policy size by about 9% in Q1. but it's still very small at about 5,600. But when you look at new business, our average policy size is up about 12% to about 5,800. You know, our average rate change for the quarter was a decrease between 5% and 6%, but when you adjust that for, you know, exposure and split it out between wages and employment, changes, it's closer to what we've been seeing in the 2% to 4% range.

Is that up 2% to 4% or down 2% to 4%?

Down. Down.

Sorry. Down 2% to 4%. So the rate would be down 5% to 6% when you take into account wages, exposures, down 2% to 4%.

It's not as big of a decrease, correct.

Yeah. What's your sense on... Going back to your NCCI days and carrying forward, what's your sense about the pace of industry-wide reserve gains? Where do you think we stand? Do you think the industry is past peak, or do you think it can – continue at the current level or maybe even increase in coming periods? Just sort of not trying to get information about your outlook on your own book, but just your sense of where the industry stands.

Yeah, you know, it's hard to say. I always look forward to AIS, which we'll be going to in a couple of weeks. And NCCI will be putting out their reserve redundancy or deficiency estimates then. You know, last year they increased the level of redundancy from the prior year. You know, I was a little surprised to see that. But, you know, it's a very healthy redundancy is what they came up with last year. So, it'll be very interesting to see what they say this year. It appears as though carriers are continuing to release reserves, including us. So I haven't seen too much of a change there when I look at the industry as a whole in terms of behaviors on reserves.

Yeah, yeah. Okay. Thank you very much.

Thanks, Mark.

Thank you. There are no further questions at this time. I'd like to turn the call back over to Kathy Antonello for closing remarks.

Thank you, Michelle, and thank you, everyone, for joining us this morning. I look forward to meeting with you again in July.

Thank you for your participation. This does conclude the program. You may now disconnect. Everyone, have a great day.