Kinsale Capital Group, Inc. (NYSE:KNSL) Q1 2025 Earnings Call Transcript

Kinsale Capital Group, Inc. (NYSE:KNSL) Q1 2025 Earnings Call Transcript April 25, 2025

Operator: Thank you for standing by, and welcome to the Kinsale Capital Group First Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. Before we get started, let me remind everyone that through the course of the teleconference, Kinsale’s management may make comments that reflect their intentions, beliefs and expectations for the future. As always, these forward-looking statements are subject to certain risk factors, which could cause actual results to differ materially. These risk factors are listed in the company’s various SEC filings, including the 2024 annual report on Form 10-K, which should be reviewed carefully. The company has furnished a Form 8-K with the Securities and Exchange Commission that contains the press release announcing its first quarter results.

Kinsale’s management may also reference certain non-GAAP financial measures in the call today. A reconciliation of GAAP to these measures can be found in the press release, which is available at the company’s website at www.kinsalecapitalgroup.com. I will now turn the conference over to Kinsale’s Chairman and CEO, Mr. Michael Kehoe. Please go ahead, sir.

Michael Kehoe: Thank you, operator and good morning everyone. Bryan Petrucelli, our CFO and Brian Haney, our President and COO, are both joining me this morning for the call. We will each make a few comments and then take any questions you may have. In the first quarter of 2025, Kinsale’s operating earnings per share increased by 6% and gross written premium grew by 8% over the first quarter of 2024. For the quarter, the company posted a combined ratio of 82% and an annualized operating return on equity of 22.5%. These results reflect strong profitability in our business generated from our disciplined underwriting and low-cost model even with the significant catastrophe event occurring in the quarter. The Palisades wildfire loss that we estimated in February at $45 million is now estimated to be about $41 million gross and $22 million net of reinsurance.

All these numbers are pre-tax. As a reminder, Kinsale has a considerable presence in the natural catastrophe market, but we operate with a conservative risk management approach to balance the margin in the business with its inherent volatility. We use a disciplined underwriting model, a robust reinsurance program, regular cat modeling and strict limits on concentration of business to limit the volatility of our financial results. We view the outcome of the Palisades wildfire as consistent with this strategy. Growth in premium in the quarter was 8%, slightly below our expectations of 10% to 20% across the cycle. This growth rate was mostly driven by the 18% decrease in our Commercial Property division, which was our largest underwriting unit last year.

Note this underwriting division grew twenty-fold over the prior 5 years, and has produced compelling profits, but now we are seeing more intense competition, including from some standard companies and rate declines from the peak of about 20%. The margins in this business are still strong, but we do expect to write less premium compared to the prior year for the near term. If you exclude the Commercial Property division from the calculation, Kinsale’s direct written premium for the quarter grew by 16.7%. Also, since the Commercial Property division premium in 2024 is disproportionately concentrated in the first half of the calendar year, we expect this to be a headwind to overall growth in the second quarter as well, but less so in the second half of 2025.

It’s also worth mentioning that our personal lines and small commercial property teams continue to grow at double-digit rates. Overall, the E&S market in the first quarter remained steady, but with a continued increase in competition. And with that, I’m going to turn the call over to Bryan Petrucelli.

Bryan Petrucelli: Thanks Mike. Another nice quarter with net operating earnings increasing by 6%, even with the impact of the California wildfires. The 82.1% combined ratio for the quarter included 3.9 points from net favorable prior year loss reserve development compared to 2.7 points last year with 6 points in cat losses this year, primarily again from the California wildfires compared to less than 0.5 point in first quarter last year. We produced a 20% expense ratio in the first quarter and comparable to the 20.7% last year. As we’ve noted in previous quarters, the expense ratio will fluctuate from quarter-to-quarter, and we’ll just continue to point you to the full year expense ratio as a good measure. On the investment side, net investment income increased by 33.1% this quarter over last year as a result of continued growth in the investment portfolio generated from strong operating cash flows.

The annualized gross return was 4.3% and consistent with last year. New money yields continue to average in the low 5% range with book yields around 4.5%, so we should see some continued investment income benefit from these higher rates as we move forward. Diluted operating earnings per share continues to improve and was $3.71 per share for the quarter compared to $3.50 per share for the first quarter of 2024. As respect to capital management, we repurchased $10 million in shares during the first quarter. I would expect similar modest levels of repurchases each quarter on a routine basis with larger purchases made opportunistically from time to time. With that, I’ll pass it over to Brian Haney.

Brian Haney: Thanks, Bryan. First quarter saw growth in our gross written premium of 8%. Our property-related divisions as a whole shrank by 8% while the rest of the company grew 15%. The decrease in the property premiums was driven entirely by our Commercial Property division, all the other property divisions were up for the quarter, as Mike mentioned. The rates in commercial property in this space had reached all-time highs and the margins have become very significant, which is bringing in competition, including from MBAs and admitted companies. That market is now normalizing after a period of crisis pricing conditions in past years. Casualty is still seeing growth overall, particularly commercial auto and general casualty.

Professional lines remain competitive with management liability and our non-medical professional under pressure but our Professional Lines group as a whole still grew for the quarter, and we are seeing positive signs in the allied health and excess professional areas. We are also seeing growth opportunities in our personal line space, whether it be through our high-value homeowners division or in manufactured homes or in traditional site built homes, which are all products we are looking to expand and should provide a nice growth opportunity going forward. New business submission growth was 11% for the quarter, down from 17% in the fourth quarter. This number is subject to some variability, but in general, we view submissions as a leading indicator of growth.

And so we see the submission growth rate as a positive signal. Overall rates were – for the quarter were down 1%. As mentioned earlier, our Commercial Property division is seeing rates down about 20%, but our other commercial – our other property lines are still seeing modest rate increases. Casualty rates overall were up modestly, driven by construction and general casualty, and there were modest rate declines in professional and some specialty casualty lines where profitability has been exceptional. We are believers in the model of disciplined underwriting and technology-driven low cost. And over the long term, our business model has and will continue to – have continued to drive business. Our advantages, particularly in lower cost and greater efficiency are tough to replicate and we feel these give us a durable moat.

Beyond that, though, there are some recent data points that give us additional cause for optimism. A lot of the more aggressive competition we are facing and that is producing some headwind at the moment comes from fronting companies. If you look at the gross incurred loss ratios for some of these fronting companies, you see a lot of older accident years where the loss ratios are 90% or 100% or higher and continuing to develop adversely. No risk bearer is making money at 100% loss ratio, period. And while the front-end companies themselves don’t bear those loss ratios because they’re seeing a way to premium, someone is bearing those loss ratios. And that someone can’t keep doing that for long. Kinsale couldn’t make money at 100% loss ratio, even with our expense ratio advantage.

So you know a risk there that has an expense ratio of 35 or 40 or higher can’t. It’s just not sustainable. And beyond that, some of the same fronting companies showed current accident year gross loss ratios in the low 60s, that is a remarkable, you might say, incredible improvement. It seems difficult to believe a business that was producing 90% or 100% loss ratios with persistent and significant adverse development as recently as 2022, could be in the low 60s in 2024. All this data is public, by the way, so I invite the listeners to look it up for themselves. It’s – And so for all these reasons, we remain optimistic. Our results are good. Our growth prospects are good. And as the low-cost provider in our space, we have a durable competitive advantage that should allow us to continually gradually take market share from our higher-expense competitors while delivering strong results and build wealth for our investors.

And with that, I’ll hand it back over.

Michael Kehoe: Thanks, Brian. Operator, we are ready for any questions in the queue.

Q&A Session

Operator: Thank you. [Operator Instructions] Your first question comes from the line of Michael Zaremski from BMO Capital Markets. Your line is open.

Unidentified Analyst: Hey, good morning. It’s Dan on for Mike. First, I can just start with the 11% submission rate that you gave us. Could you maybe parse out how that’s trending between property and casualty lines for us?

Brian Haney: The commercial property is experiencing the biggest decline in growth rate. And Dan, I would say the rest of properties submission growth continues to be strong.

Michael Kehoe: Consistent with cash.

Unidentified Analyst: Yes. Okay, thanks. So small property is in line with casualty and the large account is materially declining, correct?

Brian Haney: Yes.

Unidentified Analyst: Okay, thanks. And then on – more back to the property slowdown this quarter, you’re mentioning the increasingly competitive environment. Does that comment mean E&S business is flowing back to the standard market or are those standard line carriers writing more business on an E&S basis?

Michael Kehoe: I think it’s, in general, a lot more competition in the large property account space, including standard companies, MGAs, E&S companies, etcetera. The returns there have been dramatically good and it makes sense, right. It’s attracting a lot more capital. And as a consequence, the opportunity is slightly more limited.

Unidentified Analyst: Thank you.

Operator: Your next question comes from the line of Bill Carcache from Wolfe Research. Your line is open.

Bill Carcache: Thank you. Good morning. Your stock is down over 10% pre-market. It seems largely on a continuation of the decelerating top line growth theme, which feels like it’s been under scrutiny for a long time. But it looks like the top line growth comparisons are going to get easier as we progress through the year, as you pointed out and that should help mitigate the growth headwinds. But what I think is notable is that many investors have called attention to is your ability to more than offset top line weakness with a lower combined ratio. Can you give a little bit more color on your confidence level in being able to sustain that kind of underwriting performance? There has been some concern that potential degradation in underwriting quality would exacerbate the sort of top line deceleration concerns? And it would be just helpful to get your thoughts.

Michael Kehoe: Yes, Bill. This is Mike. We are very confident in our business model, as Brian was just commenting on in his prepared remarks. Kinsale focuses on a high-margin segment, small E&S accounts. We control our own underwriting. We don’t outsource that to other parties. We think that drives meaningfully better accuracy. We are the low-cost leader in our space. Insurance is a good or a service where our customers care intensely about the price. I think we have built a very conservative balance sheet. I think our reserves, we are very confident are conservatively stated, so they’re much more likely to develop favorably than unfavorably. So we’re bullish on the future. I think we’ve got advantages that are compelling and dramatic.

That being said, we always prioritize profitability over growth. And so when you have a period of time where there’s intense price competition, Bryan just detailed where there’s a number of companies writing business below the burn cost, okay? We’re not going to do that. But the market ebbs and flows, and I think we’re very confident, we’re going to continue to grow, take market share and deliver best-in-class returns.

Bill Carcache: Thanks Mike. That’s helpful. Separately, Kinsale has established a strong track record since the time of our founding, but you haven’t faced a severe macro downturn outside of COVID. Could you speak to what Kinsale’s playbook is if, say, tariff policy were to push the U.S. economy into recession. Any color on maybe where you would expect to adjust what you’d expect to stay the same, where you’d expect to see the greatest opportunities?

Michael Kehoe: Insurance is a compulsory product in a modern economy. So we – if the economy were to contract, the P&C industry might contract along with it, that tends to be a couple of percentage points. I think we would continue to grow right through that. We are operating with a 20% expense ratio. Most of our competitors that like us focus on the small account space tend to be well into the 30s or even above 40. I think we are well positioned to continue to grow and take market share in all markets. I just think in a competitive market, hey, it’s going to be a little bit more slowly than in a less competitive market.

Bill Carcache: Thanks Mike. If I may squeeze in one last one sort of against the backdrop that you’ve laid out where you expect to write less premium. It seems like – and to the extent that your – we do see volatility in your stock under pressure. Maybe if you could just speak to like what it takes for you to consider more aggressively increasing repurchases perhaps even above that modest amount that you’ve mentioned, particularly if the growth environment remained weak and volatility intensified? Thanks.

Michael Kehoe: Yes. We expect to have incremental purchases. We always leave the door open to do things opportunistically. But in general, we kind of view the incremental repurchase as the best strategy for us. And it’s consistent, if you will, in the fact that we pay a small dividend as well. And we have incrementally increased that a little bit each year. That’s the way we kind of view it at least at this time.

Bill Carcache: Thanks Mike. I appreciate you taking my questions.

Michael Kehoe: Thanks Bill.

Operator: Your next question comes from the line of Andrew Andersen from Jefferies. Your line is open.

Andrew Andersen: Hey. Good morning. The 60.0 underlying loss ratio was pretty strong in the quarter. I think you called out some better results on property. But was there any change in loss trend on either the property or the casualty lines?

Michael Kehoe: Andrew, I think it was basically a decrease in reported losses and then a little bit of it is driven by the mix of business. The property, obviously is short-tail business. So – those losses are resolved much more quickly than our long-tail casualty book. So, it’s basically those two things.

Andrew Andersen: Okay. And then maybe just kind of back on macro. I guess I typically think of Kinsale is writing a lot in the small commercial end of the market. If we are to get into a tougher macro backdrop, is there an intention to move more into middle market, or do you still find the small commercial runway pretty plentiful?

Michael Kehoe: We like the small space. Our average premium since we launched the company back in 2010 has been in that mid-teens space. We are always willing to consider larger deals. There is nothing inherently wrong with them. It’s just that they tend to be priced much more aggressively from the perspective of the risk bearer. I think the margins are not quite as good. But no, I think we are very comfortable with where we have been, and that’s where we expect to be. In fact as Brian Haney mentioned, we are expanding our personal lines book, in effect, going lower, not higher.

Andrew Andersen: Thank you.

Operator: Your next question comes from the line of Michael Phillips from Oppenheimer. Your line is open.

Michael Phillips: Thank you. Good morning. I wanted to touch on your comments on the more conservative actuarial assumptions for construction liability. The question is, what are you seeing for severity there? Has that changed from, say, last quarter? And then maybe – was that what you did there? Was that a result of what you are actually seeing in the data, or is that more of a proactive stance given the impact tariffs may have on construction [ph] wins? Thanks.

Michael Kehoe: This is Mike again. We have seen a – we have seen development on the long-tail casualty business, in particular, the construction. In certain accident years where it’s developed a little bit higher and a little bit later than we originally anticipated. And so we have pushed the book loss ratios for construction specifically, that probably picks up some other long-tail lines as well up over the last several years. And we have done a lot of things to drive better margins going forward, higher prices. We have adjusted the mix of coverage that we offer, etcetera. But we have also just as a precaution, booked the 2020, ‘21, ‘22, ‘23, ‘24 construction lines in the mid-80s as well. So, we are very conservatively positioned there, but it has nothing to do with tariffs.

It really just has to do with the fact that, that’s a long-tail business. And it can be a very litigious line. And I think there was a significant impact from the spike in inflation a few years ago, but really has nothing to do with tariffs.

Michael Phillips: Okay. Thanks. So, it’s more of what you are seeing than proactive on tariffs, the other is there. Okay. Thank you. I guess a second question on your casualty treaties, I think comes up in June. I think it’s a big piece of your ceded premium. Anything we – that you can share that we would expect on changes in retention levels or anything else that might affect that the growth that maybe also help top line?

Michael Kehoe: Look, we have adjusted the retentions many, many times over the years. So, that would not be unprecedented that we would take a little bit more net. You are always balancing profitability with the business with volatility. And as we have gotten larger, we have continued to take a larger net. So, that might be a safe assumption.

Michael Phillips: Okay. And then if I could sneak in. Any chance you would share the commercial property combined ratio this quarter versus last quarter?

Michael Kehoe: No. But I mean – no, we are kind of not going to get into that. It gets very complex when you start to disaggregate losses between reported case reserves, paid and then by accident year, I am not sure that will be productive. But I would just tell you that, as you can tell from the 82% combined, the business is very profitable. And that profitability is even in the face of a very conservative approach to reserving for future claims. And it’s one of the benefits, I think of our underwriting model is driving a very positive result and combining that with a low-cost approach to the business. Again, we think it gives us a very interesting advantage long-term.

Michael Phillips: Okay. Thank you, Mike. Appreciate it.

Operator: Your next question comes from the line of Pablo Singzon from JPMorgan. Your line is open.

Pablo Singzon: Hi. Good morning. First question is about the large commercial property. I am curious to find out if the price of clients there have reached a point where your appetite is reduced, or are the lower premiums you referenced purely a function of lower prices, right? So, it sounds like you are getting less submissions, but was curious if for those submissions that you come in, if you are still actively engaging in writing those cases?

Brian Haney: Yes. I think part of it is we are. We haven’t changed our appetite. Our idea is that there is a price for everything, and it’s our job to know like the right pricing terms that are going to give us our best chance of making money. But it’s mostly a function of lines [ph] are down and submissions are down.

Pablo Singzon: Okay. And then you provided qualitative commentary about competition in large commercial. I was wondering – well, I suppose in the context that price declines there are not – you are right, that didn’t happen in just this quarter. So therefore, I was curious if the price declines there are stable, continue to accelerate, slowing from sort of peak pricing? I just want to get a sense of the shape of pricing and how that’s developing.

Michael Kehoe: Well, we said they are down 20% on average, right. We are looking at thousands of transactions. So, there is a range of what’s going on with those individual transactions. But for the three months period, that’s what we saw. The results have been very positive. We saw property cat pricing in particular, go up year-after-year-after-year. I think we are kind of – we are at about a 20-year high. And so that kind of high pricing combined with positive results, it’s attracted a lot more capital. And so I think the business is still very high margin. It’s just incrementally lower than it was this time a year ago.

Pablo Singzon: Yes. Understood. And then lastly just shifting to the casualty side, curious if you are seeing, I guess more positive signals there, right? Like if you go by what other companies you are saying, especially in excess, I know you had called out a decline in the nominal rate, but I suspect a lot of them to do with large property commercial. So, if you could provide more context of what’s happening on the casualty side of things?

Brian Haney: I think casualty is still favorable for us. I think excess casualty looks good. And I think the MGAs we were talking about earlier, seemed to write a lot of that business. And so I don’t expect that business to get like – it would not shock me if and when there is a correction in the fronting world that you would see further positive movement in the casualty market.

Pablo Singzon: Thank you.

Operator: [Operator Instructions] Your next question comes from the line of Bob Huang from Morgan Stanley. Your line is open.

Bob Huang: Hi. Good morning. Maybe just like a follow-up on some clarification side. In terms of competition, you have talked about several times on this call that there are funding companies that have high loss ratios and what they are doing is unsustainable. But if we can just think from their perspective, how long do you think they can sustain an elevated loss environment kind of erode the competitive environment, so to speak. Do you think this is more of a next 12 months thing, or do you think they can last a lot longer than that, just curious to your thoughts?

Brian Haney: Yes. We don’t know. I mean it’s just – it’s tough. It would be tough for us to know. All we do know is that it will change. Yes, the math doesn’t work out.

Bob Huang: Okay. No, that’s fair. The second question, if we think about your core loss ratio, which would be incredibly strong, it actually improved year-on-year, right? If I remember correctly, in the past, you have mentioned that you are willing to sacrifice some of this margin for growth. Just given the strong core loss ratio today, how much and how willing are you to sacrifice that margin for additional growth given that it sounds like the broader market is a lot riskier than the previous time that you mentioned this.

Michael Kehoe: Bob, maybe a better way to describe it is we are always managing profitability at a granular level. Kinsale collects a tremendous amount of statistical information at the transaction level. It’s another consequence of having very modern up-to-date systems. And we pour through that data on a regular basis to analyze profitability, not just by product line, but by class of business within the product line by state, by territory, by account size, all sorts of different ways, and we are adjusting the pricing in order to make sure we are generating low-20s ROEs or better, okay. So, that’s just a normal part of managing an insurance company. I wouldn’t really look into that as anything extraordinary. We are always managing profitability. Profit comes first, growth second. But given our model, we think even in a competitive market, we can deliver the best-in-class returns, but at the same time, we can take share away from less efficient competitors.

Bob Huang: Got it. That’s incredibly helpful. Thank you very much for that.

Operator: Your next question comes from the line of Mark Hughes from Truist Securities. Your line is open.

Mark Hughes: Yes. Thanks. Good morning.

Michael Kehoe: Good morning Mark.

Mark Hughes: How do we think about the competition in the property, the commercial property kind of is this progressed through the quarter? You talked about 2Q, which has a lot seasonally strong in terms of property renewals. And so we ought to consider that in thinking about the growth rates. Is that property market more competitive now than it was at the start of the first quarter? And so maybe you see a little bit of incremental pressure, or would you describe it as relatively steady compared to what you experienced in – throughout the first quarter?

Michael Kehoe: I think it’s steady. It’s hard to put too fine a point on it, Mark, right. I mean again, we are looking at – I think we wrote about $450 million of premium in that division last year, right. So, it’s a big division. There are thousands and thousands of transactions. Some of it’s fire-exposed business. Some of it’s wind. We write a little bit of quake. There is a lot going on there. But in general, the results certainly for Kinsale have been incredible. I think they have been quite positive for the industry. And it’s attracted a lot more capital, so.

Brian Haney: Yes, I would agree with that. I think it’s tough as Mike said, put too fine a point on it, but I would say it’s pretty stable.

Mark Hughes: So, when you think about hit rates, that sort of thing that it’s – you are at some sort of equilibrium. Is that fair?

Brian Haney: Yes. Actually, that’s a good way of looking at it. The hit rates haven’t changed much.

Mark Hughes: Okay. And then the – when you look at your mix of property versus casualty, you are a lot heavier in property now than you were 2 years ago, 4 years ago. Is there some reason to think there is a normal equilibrium? If you think about the long-term E&S market, how much should be property, how much should be casualty? Are there any rules of thumb? Do you have any sense of – or is there any reason to think it normally would return to a certain mix between the two? That’s a big question, but I wonder if you have any thoughts on it.

Michael Kehoe: I think the E&S market is one-third, two-thirds, Mark. So, that’s probably a good benchmark. Brian indicated, we are doing a lot of work to expand into the homeowners business. That’s been a sore point for the industry, with some of the volatility in that line over the last 5 years. So, we see an opportunity as an E&S company to build a more meaningfully sized homeowners book. And of course, that’s predominantly – it’s a multi-peril line, but it’s predominantly property. So, that could drive it up a little bit. But in general, I think one-third, two-thirds.

Mark Hughes: Thank you.

Operator: Your next question comes from the line of Pablo Singzon from JPMorgan. Your line is open.

Pablo Singzon: Hi. Thanks for the follow-up. Mike, you had mentioned that large commercial property tends to be concentrated in the first half. I was wondering if you could provide some sense of the split there, right, between the first half and second half? Is it like 60-40, 70-30?

Michael Kehoe: I think it was 60-40. And I think it was 35% in the second quarter.

Pablo Singzon: Alright. Thank you.

Michael Kehoe: Alright.

Operator: Your next question comes from the line of Casey Alexander from Compass Point. Your line is open.

Casey Alexander: Hi. Good morning. And forgive me if these seem a little naïve. But first of all, it seems like California, despite the fact that you had the loss in California this quarter, it started to exhibit a lot of the characteristics of what Florida had when you made a concerted move to grow in that market with a lack of capacity and carriers leaving the market. Is there a similar opportunity building in California? Is it too early to look at it, or how do you see that market as an opportunity to shift the property book and continue to grow it?

Brian Haney: I think you are absolutely right. I think the biggest opportunity there is going to be in personal, probably some on the smaller commercial, but we are taking advantage of that. I mean high-value homes division, we are growing nicely in that and a lot of it is in California, and there is a huge opportunity.

Casey Alexander: Okay. Great. Thank you. Secondly, if the tariffs do create – one of the areas that we kind of see vulnerability building and tariffs is that it could significantly increase the building materials cost. Would that have – if that were to take place, would that have some impact on your ability to release reserves, particularly against construction, things like that?

Michael Kehoe: Casey, it’s Mike. I would say this. I agree tariffs, I mean look, that’s a work in progress, right. Nobody really knows where that policy ends up. But assuming the worst, it could drive up the cost of building supplies. And certainly, that would flow through to an insurance company. What I would say is, Kinsale’s margins are really, really strong. We are in a great spot, very conservative reserves, very low-cost operating model, very strict controls over our underwriting. And so I think we are very well positioned to absorb any kind of incremental movement in prices, whether it’s building supplies or whether it’s medical inflation or anything else. I think we are in a great spot to handle that. I wouldn’t really see that as being a material exposure for us.

Casey Alexander: Okay. Great. And then lastly, I was impressed by the fact that you were able to squeeze out a profit from the equity portfolio during a quarter where there was a pretty decent negative return for the overall market. Is there some unique characteristic to the equity portfolio that permitted it to outperform the general market by such an extent?

Michael Kehoe: Well, our equity portfolio is a third passively managed through indexes that are very close to the S&P and two-thirds active. The active portfolio is very much a value orientation, larger cap, dividend paying kind of buy and hold. So, you could either – I think that’s essentially, yes. I mean we are underweight to act.

Casey Alexander: Okay. It sounds great. Alright. Thank you for taking my questions. I appreciate it.

Michael Kehoe: Thanks Casey.

Operator: And we have reached the end of our question-and-answer session. I will now turn the call back over to Mike for closing remarks.

Michael Kehoe: Okay. Well, thank you everybody for joining us and we look forward to speaking with you again here in three short months. Have a great day.

Operator: This concludes today’s conference call. Thank you for your participation. You may now disconnect.