Vicki Mills - Vice President, IR Doug Dirks - Chief Executive Officer Terry Eleftheriou - Chief Financial Officer Steve Festa - Chief Operating Officer.

Mark Hughes - SunTrust Amit Kumar - Macquarie Matt Carletti - JMP Securities Brian Rohman - Boston Partners.

Good day, ladies and gentlemen, and welcome to the Employers Holdings Fourth Quarter 2015 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to introduce your host for today’s conference, Ms. Vicki Mills, Vice President - Investor Relations. Ma’am, you may begin..

Thank you, Casey. And welcome everyone to the fourth quarter and full year 2015 earnings call for Employers. This morning, we announced our earnings results and later this week we expect to file our Form 10-K with the Securities and Exchange Commission.

These materials may be accessed on the Company’s website at employers.com and are accessible through the Investors link. Today’s call is being recorded and webcast from the Investor Relations section of our website, where a replay will be available following the call.

With me today on the call are Doug Dirks, our Chief Executive Officer; Terry Eleftheriou, our Chief Financial Officer; and Steve Festa, our Chief Operating 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 at the time of the call and will not be updated to reflect subsequent developments. We use certain non-GAAP metrics that exclude the impact of the 1999 Loss Portfolio Transfer, or LPT and other items.

These metric focused on operating income and operating equity and are defined in our earnings press release available on our website. Now, I will turn the call over to Doug..

Thank you, Vicki and thank you all for joining us for our fourth quarter and full year 2015 call. Today, we reported one of our strongest quarters and our most successful year since 2007.

Given our strong financial position and improved underwriting results and our continued confidence in the operating performance of the Company, we announced this morning a 50% increase in the first quarter cash dividend and a two-year $50 million stock repurchase program.

As I’ve mentioned in the past, we periodically reassess our capital needs to ensure an optimal use of capital, consistent with our goal to create shareholder value over the longer term.

Our capital strategy remains focused on first supporting our business operations by maintaining capital levels commensurate with our desired A minus excellent rating from A.M. Best and to satisfy other regulatory legal requirements.

And second, to sustain a level of financial flexibility to prudently manage our business through insurance and economic cycles while allowing us to take advantage of investment opportunities including mergers and acquisitions, as and when they arrive.

We expect to return capital not needed for these purposes to our shareholders in the form of dividends and stock repurchases. And our announced capital actions are consistent with that strategy. Again, our recent performance has been strong.

Our annualized operating return on equity was 16.1% that is an increase of 9.4 percentage points year-over-year and 6.2 points or 63% over the third quarter of 2015. We achieved an underwriting income before the LPT of $12.7 million, compared with an underwriting loss in the fourth quarter of 2014.

Our combined ratio before the LPT of 93% improved 9.2 points year-over-year in the quarter and 2.6 points over the third quarter. We lowered loss reserves by $9 million due to favorable development in our voluntary business. Reserve releases net of required contributions to the assigned risk pools were $8.5 million in the quarter.

For the calendar year 2015 our actuarial analysis indicated that we had favorable reverse development for each accident year from 2008 through 2014 with the exception of 2012 where we observed adverse development of less than $160,000. Our accident year combined ratio, which excludes impact of the LPT and favorable development was 97.7.

We reallocated reserves from pre-tax to taxable years, which created a tax benefit in the quarter. We believe these adjustments encompass the known redundancies remaining in the pre-tax Non-LPT accident years. Our book value per share was $29.50 at year-end.

Our adjusted book value per share excluding unrealized gains was $26.90 at year-end, an increase of 8% since the end of 2014. Our strong financial and operating results reflect our continuing focus on our pricing and data driven underwriting strategy, early claim settlement and our success in targeting profitable classes of business nationally.

By successfully implementing our operating strategies, we have delivered increased profitability in the fourth quarter and the full year.

In the full year and less so in the fourth quarter, our growth in import policies and premium was negatively impacted by our initiative to either non-renew or increased pricing for a higher or loss business, particularly in Southern California.

Significantly, another result of our action was that we were able to reduce our premium concentration in California by more than 3 percentage points and our policy concentration in California by nearly 5%, since we began our pricing and underwriting initiatives in Southern California.

While the impact of the initiatives on our California premium is lessening, we expect that current market condition including competitive pressures and softening rates, will challenge organic growth throughout 2016.

And while we expect these conditions to persist throughout this year, we are encouraged by the stronger than expected renewal and new business production than we observed in January, which is historically one of the industry’s highest production month.

In addition, final audit premium has been strong, generally reflecting improvements in our insured payrolls. Throughout 2016, we will work to retain our best business and seek new business opportunities that meet our desired return objectives by continuing to focus on disciplined risk selection and pricing across all of our markets.

With that I’ll turn the call over to our Chief Operating Officer, Steve Festa..

Thank you, Doug. Our results in the fourth quarter and particularly improving bottom line results continued the trends exhibited over the past several quarters. These outcomes are reflective of initiatives described in previous calls and they have led to the desired results, most recently a combined ratio before the LPT of 93% for the quarter.

The substantial amount of our success can be attributed to our actions taken in Southern California over the past several quarters, which included rate increases and reducing our exposures in this part of the state.

Since June of 2014, we have non-renewed 10.7% of our premium available to renew in this market because of poor individual risk characteristics. In addition, over the same period of time, we walked away from an additional 15.8% of our renewal book in this market because we were unable to achieve the appropriate price, based on our profit expectation.

We will continue to execute this disciplined pricing and risk selection strategy to new business acquisition and we expect the impact on non-renewals to stabilize over time. Outside California, we had success in growing revenue, in particular in classes of business with historically low ultimate loss ratios.

Despite a declining rate environment in many states, our new business growth in our eastern region has increased 11.1%. In addition in states outside of California, we have increased policy count 5.8% in-force premium by 4% and payroll exposure 6% on a year-over-year basis.

This growth coupled with our results in California has reduced our percentage of in-force premium in California. We have spoken previously about our diversification strategy of growing revenue outside of California and lessening our dependence on the Southern California market.

These results speak to the success we are having, achieving this objective. Despite the impacts our initiatives within the Southern California market are having on retention rate in that market, we are recognizing improved retention rates overall.

Our policy unit retention rate for our book of business across all states has improved more than 7 points on a year-over-year basis, with an acceleration of that trend in the second half of last year.

We believe that this improvement coupled with some of the information shared earlier speaks to the success we’re having on culling underperforming business from our books but at the same time maximizing our influence on retaining the profitable business that has positively impacted our bottom line results.

Consistent with our geographic diversification strategy, in 2015, we entered Michigan, and most recently we started writing business in New York. We expect to enter several additional states in 2016. We are taking a prudent approach to entering new states.

For example, in New York, we are currently writing business with existing long-term distribution partners to include national payroll partners as well as independent agents in border states that have New York opportunities. Our distribution channel will broaden later this year, as we start appointing New York domiciled agents.

Now, I will turn the call over to Terry Eleftheriou, our Chief Financial Officer, for a more detailed discussion of our financial results..

Thank you, Steve. We again delivered solid operating earnings in the current quarter, in line with our expectations. Net written premium increased 8.9% and net earned premium increased 5.3% year-over-year in the quarter. These increases were driven by higher final audit premium compared to the fourth quarter of 2014.

Consistent with our experience in the third quarter, our insured payrolls have continued to grow in recent months, driven by increases in hours worked and the number of employees. Fourth quarter net investment income increased $500,000 year-over-year, reflecting an increase in our invested assets.

Yields were unchanged with an average pre-tax book yield on invested assets of 3.2%, and the tax equivalent yields of 3.8% at year-end. Our underwriting and other operating expenses for the quarter were $37.6 million, an increase of $6.7 million relative to the fourth quarter of 2014.

This represents a 2.8 percentage-point increase to the underwriting expense ratio for the quarter year-over-year. Of the increase, approximately $3 million is considered to be of a non-recurring nature, representing 1.7 percentage points on the underwriting expense ratio for the quarter.

Our full year underwriting expense ratio of 19.5% was in line with our expectation.

Our fourth quarter loss ratio before the LPT improved 12.7 percentage points over the prior year, driven largely by our lower current accident year loss provision rate of 64.5%, a decline of 7.7 percentage points year-over-year and 1.85 percentage points relative to the third quarter.

Consistent with our expense in recent quarters, our indemnity claims frequency decreased year-over-year and this is reflected in the current accident year loss estimate.

The loss pick also reflects a number of other factors including rate changes, loss trends, changes of business mix by territory and class, our strategic underwriting initiatives and the non-renewal of high loss business in Southern California.

The fourth quarter loss pick was primarily the result of three factors, including the shift in business mix by state and territory, improved pricing in Southern California and to a lesser degree than in past quarters, the non-renewal of underperforming business in Southern California.

Over the past three years, we have made significant investment in our internal actuarial capabilities and reserving practices. Our internal chief actuary has been named the appointed actuary effective for the 2015 statutory financial statements.

Although we continue to use an outside consulting actuary as an external data point in selecting our loss reserve estimate, we now rely more heavily on our own internal reverse assessments than we have in the past.

Overall, our current loss reserves were reduced in the fourth quarter by $9 million of favorable prior accident year loss development for adjusting other reserves or AO on our voluntary risk business, partially offset by $500,000 of unfavorable loss development related to the assigned risk business.

The resulting net prior year reserve release reduced our combined ratio by 4.7 percentage points in the quarter and increased operating income by $5.2 million net of tax of $0.16 per diluted share.

In the fourth quarter, we reallocated reserves by accident year to address observed loss trends and align accident year carried reserve with our internal reserve estimate. These reallocations included $36.9 million of reserves from non-taxable to more recent taxable year.

The impact of reserve reallocations during 2015 reduced our effective tax rate by 65.3 percentage points in the quarter resulting in an increased operating income of $11.5 million or $0.35 per diluted share. The adjustments to the loss and DCC reserves will be reflected in Schedule P of our year-end 2015 statutory report.

We reiterate our prior comments regarding the challenges in using Schedule P for estimating our reserves, due to our previously announced initiatives that is case reserve strengthening and claims settlements affecting certain accident years and now the reserve reallocation.

However, we do expect our accident year carried reserves reflected in Schedule P to show far more stability going forward. We continue to actively manage our capital and our balance sheet remains strong. At the end of the fourth quarter, the market value of our investment portfolio was $2.5 billion, an increase of 1.6% since December 31, 2014.

The average credit quality -- income portfolio was unchanged at AA with the duration of 4.3. Equity securities represented 8% of our investment portfolio. In the quarter, we recognized $17 million of other than temporary impairments of equity securities as a result over the continued downturn in the energy and commodity sectors.

We believe in the long-term benefits of investing in these sectors. However, we anticipate that the unprecedented volatility experienced over the past six months will continue and we remain vigilant to the domestic and global developments impacting energy and other commodities.

In the fourth quarter, we repaid the $60 million remaining on the Wells Fargo amended credit facility and chose not to enter into a new facility.

Instead, in January, each of our insurance subsidiaries became members of the Federal Home Loan Bank of San Francisco which allows then access to collateralized advances to enhance liquidity management as needed. Currently, none of our insurance subsidiaries have advances outstanding under these credit facilities.

At the holding company, we had approximately $95 million in unrestricted cash and securities at December 31st. And now, I’ll turn the call back over to Doug..

Thank you, Terry. Once again, we are pleased to have announced two new capital actions today which provide the means to supplement our return to shareholders, a 50% increase in the cash dividend in the first quarter of this year and $50 million share repurchase program through February 22, 2018.

Throughout 2016, we will continue to remain focused on creating value for our customers and for our shareholders. And with that operator, we will now take questions..

[Operator Instructions] Our first question comes from the line of Mark Hughes with SunTrust. Your line is open..

Thank you very much.

The strength that you’re seeing in January of 2016, you’ve touched on a number of different topics; what is principally driving that?.

It comes from both strong renewal rate and improved new business production overall we were seeing 2015..

And why would that be emerging now? It seems like the market is probably getting a little more competitive; why are you seeing it differently?.

What we’re seeing on retentions is given rate stability across most markets, we suspect producers are feeling less demand to market policies at renewal, particularly that’s the case on the smaller account. Certainly there as accounts get larger, then we’re likely to be marketed. So, I think that’s what’s driving higher retention rate.

On new business, we’ve just been very active in building relationships with our agents and getting more looks at business that are within our appetite..

You had also mentioned some -- current market conditions will challenge organic growth in 2016. If I take the weight of your comments, it seems like you’re speaking more optimistically about the top line..

When you look at market, it’s a very competitive environment. We had a strong January.

So that’s encouraging for the balance of the year but I don’t wanted to lose sight of the fact that every market we’re in is extremely competitive right now and that’s why we are somewhat of -- I don’t want to say pessimistic but we’re cautious about what all of 2016 to look like given the continued high levels of competition..

How should we think about the reserve or the potential for further favorable development? It seems like historically with you and with other companies, these things tend to go in cycles that once you start to see some favorable emergence, then it may be sustained over multiple periods given that Q4, you had your first meaningful gain in quite a while, should we assume or would it be reasonable to assume that maybe not at this level but that you would continue to benefit from favorable trends in future quarters?.

Mark, this is Terry. Couple of comments on that one. First of all, I think we can’t predict The future. We may actuarial reserve assessments at a given point in time. And I think when we look at the year-end, we were very comfortable with our carried reserve position at that time.

And in particular, when we looked at the components of our reserve, and I mentioned we reduced adjusting another reserve, which is really a ratio that’s applied to the losses on each accident year, we felt that there was a level of redundancy there that we needed to acknowledge. So, predicting the future, I really couldn’t do that.

I would say just to reiterate a couple of the comments that Doug made in his prepared remarks, we are seeing some favorable development in the last experience.

And some of the initiatives that we have taken, particularly with regards to accelerated claims settlement, which are given rise to fairly substantial levels of case reserve salvage, really haven’t worked their way through the actuarial reserve estimates yet. It’s just a matter of time before they appear as part of the development factors.

So, we’ve seen some positive trends I would say. In terms of how they manifest themselves, in terms of future releases, I really couldn’t comment on..

Then on the operating expense line, the $3 million non-recurring; what was that?.

So, the $3 million non-recurring was essentially incentive compensation at both the officer level and the employee level. It included an adjustment to medical benefit accruals for the quarter, which we don’t expect to recur and there were some professional fees that were one-offs that we don’t expect to recur as well..

How should we think about the California pricing? It was -- I think you’ve been kind of mid-single-digits in Q3 than low-single-digits, kind of flattish in Q4.

Should we assume it will stay at that level; is that a equilibrium level for you?.

Mark, this is Steve, I’ll take that question. When we look at California, we actually don’t look at the state as a whole, we break it down into several territories. And when we look at LA specifically, some of the trends that you’ve seen in terms of rate increases, we would expect that to continue.

We’re seeing very favorable progress in other parts of the state, particular the Bay area as well as other parts. And in those particular areas, we don’t see the need to continue to raise rates. We look at those parts of California as potentially being a bit redundant from a pricing standpoint..

So net-net, flat?.

I would say that’s probably close..

Thank you very much..

You’re welcome..

Our next question comes from the line of Amit Kumar with Macquarie. Your line is open..

Thanks for the questions. First one, just going back to the discussion on capital management. Can you talk about the pace of capital management? I know you mentioned 2018.

Is it more front-end loaded? How should we think about the timing of the capital management?.

Amit, this is Terry. In terms of the share repurchase program, the $50 million, it’s a two-year program. We expect to execute [Technical Difficulty] repurchase program and be opportunistic. I think our expectation is it should take two years..

The second question I had was on -- is a follow-up on the growth discussion. Obviously you’re talking about growth in the new states and obviously we’ve seen what the impact can be of growth during different times of the cycle.

Can you talk about how different does your ort of reserving or actuarial and underwriting department look versus let’s say if we go back in 2009? Have you made meaningful more hires or has there been a lot of obviously investments in the infrastructure and technology? Just talk about that so that we can have me comfort on that front..

I’ll take that one, Amit. We’ve made substantial investments, both in talent and in capability. And so, we have far more insight today than I think we’d ever had in terms of the book of business and our loss experience. As we go into new markets, we treat each one differently. Obviously, writing in New York is different than writing in Michigan.

And so, we have a tailored approach as to how we enter those markets. Our expectations in terms of new premium production in new states is very modest. We are not using these as an opportunity to aggressively grow the top-line. We will do it very cautiously, very methodically, and we expect to have fairly modest results..

Got it, that’s helpful. And final question, this goes back to the discussion on the underperforming business that you mentioned initially. When you look at the book of business, do you get the sense that you’re closed to sort of end of the culling of underperforming business or is there more stuff which needs to be hacked away..

This is Steve, I’ll answer that question. As you know, we started that culling process, for lack of a better description, more than a year ago. And based on the renewal cycle, we’re past the 12-month period of time.

And I want to emphasize too that the number of policies within California that impacted the negative results that we’re trying to correct, were very small percentage of our overall policies within California but they had a disproportionate impact on our overall bottom line results. We have worked through those -- that 12-month cycle.

And so, as we said earlier on the prepared remarks, we expect the impact on a go forward basis to be very minimal relative to what it’s been in the past year and a half..

Our next question comes from the line of Matt Carletti of JMP Securities. Your line is open..

I just had a few, mostly numbers questions. The first, on the top-line growth. I think Terry, you might have mentioned that a contributor was the audit premiums in the quarter.

What were the audit premiums; what was the benefit from them this quarter versus year ago, so I can size up what in the growth exhibited?.

Yes, it was $12.4 million to both written and earned premiums for the quarter. The $12.4 million is the quarter-over-quarter, year-over-year improvement. So, it’s $12.4 million..

Okay, so that’s a change year-over-year?.

Yes..

And then, you also mentioned that indemnity claims frequency you continue to see improvement, I was wondering if you could put at least what your view is currently of how sizable those improvements are and then likewise on the severity front, what’s your best estimate of what you’re seeing in your book for indemnity and medical severity change?.

I think, just broadly across the book, frequency declines are modest but they are declines. In terms of severity, again I would characterize that it’s fairly modest increases in severity that are reflective of just general inflationary trends, nothing outside of the ordinary there..

Would you make an assumption that maybe the overall loss trend, both those considered is roundabout neutral in the ballpark?.

I don’t know that I could give you that number. That’s probably close to right. I mean, if you think of that what’s happening in terms of rate filings around the country, for the most part, states are and the bureaus are filing rate decreases, which I think should tell us that net-net of frequency and severity, we’re seeing a decline..

And then last couple of questions.

Doug, I think you said in -- if I caught it in your opening comments, I think you said that the development we saw in the quarter was spread across ‘10 to ‘14 with the exception of ‘12, did I hear that right?.

‘08 to ‘14..

‘08 to ‘14? Could you -- it doesn’t need to be hard numbers but kind of how’s that spread; was there any material amount in ‘13 and ‘14 or is it mostly from of ‘08, ‘09, ‘10 was it earlier weighted?.

It’s spread across the years from fairly -- none of them I would characterize as significant changes. The one exception there would be ‘14. We saw some pretty meaningful improvement in ‘14. The other years I’d characterize as -- they’re not immaterial but they’re relatively small..

And then, I guess following on question on ‘14 to be the meaningful improvement, and given it’s such a young accident year, I mean is that mostly just cases that you’ve closed at this point and so there is finality to them or is it something else; is it IBNR or otherwise?.

Yes, I don’t think it has to do with the accelerated claims settlement as much as it has to do with a more conservative pick at the beginning of ‘14. And ultimately what we’ve seen is as a result of the various initiatives, we’ve described today, they had a more powerful impact than we expected..

Okay, and then last question, I am guessing for Terry is on tax rate.

What’s your best guidance as to what we should anticipate for tax rate going forward? I know we’ve had a lot of moving pieces over this year with some of the non-taxable years’ reserve releases; something low 20s in the ballpark or is that not where we should be thinking?.

Yes, I think that’s exactly right, Matt. I’d say our expectation would be in the 22 to 23 percent effective tax rate. The thing that -- I will just refer you to Note 8 of our consolidated financial statements, which you will see in the 10-K that we file. And there we provide a full effective tax rate reconciliation.

The components of it that really have been the items that we cannot predict or obviously the pre-privatization reserve adjustments and LPT reserve adjustments, those two things we can’t predict.

Again, just to reiterate my comments in my prepared remarks, I think with regards to pre-privatization reserve adjustments, our expectations are that we wouldn’t see significant movements there going forward but again I can’t guarantee that..

Right, great. Well, thanks for the answers. Congrats on a nice quarter and best of luck in 2016..

Thank you. [Operator Instructions] Our next question comes from the line of Brian Rohman with Boston Partners. Your line is open..

Good afternoon. Thanks for taking my questions. Couple of questions, first of all, about the share repurchase, which we’ve talked about in the past. Did you have to run this by A.M.

Best? Did they you have to approve, disapprove; do they have to -- I mean were they aware of this before you announced it because rating issues have been part of why you haven’t been more aggressive on share repurchase in the past?.

Brain, this is Terry. No, we did not seek approval from A.M. Best. We believe we have a very strong capital adequacy position from a rating perspective, more than sufficient to sustain a current A minus rating. So yes, we did not seek or obtain approval from A.M. Best on this. The capital that’s been deployed is at the holding company levels.

So, we’re really not addressing any operating company capital adequacy....

Have you moved any capital from the operating companies to the holding company?.

No. No dividends have been upstreamed at this point in time..

Do you have the capacity to upstream dividends?.

Yes..

How much?.

Do I have the numbers? It’s in our financial statements. As a matter of fact, it will be filed with the 10-K. So, why don’t we move on to your next one, we will get that....

Okay. So, we will get the number but generally that is for A.M. Best the more relevant issue at this point is....

It’s half of 50 million..

50 million, okay. And I think it was Amit who asked whether you would actually started the share repurchase program. I don’t remember the answer.

Had you actually started it or you are waiting?.

Yes. Our Board of Directors approved it yesterday, there is a waiting period before share repurchase can become operational; we’re currently in close window..

Okay, great. Thanks. And then, on the investment portfolio, you took a write-down against your energy exposure. I’m sorry I must have missed it.

How big is the energy exposure, maybe you could characterize what are the things that you took charges against; what were the precipitants there? I mean I could figure it out but maybe you could elaborate a bit?.

Sure. So, this is Terry again. So, we took a $17 million impairment charge for other than temporary impairments as required on under GAAP. Those impairments were really driven by considerations around the severity of the declines in market values of specific holding.

The holdings are largely equity holdings in the energy sector, particularly within our master limited partnership, MLP strategy. And that is largely it.

I think what’s the only additional comments I’d make which is to reiterate my prepared remarks is we see tremendous volatility in the marketplace in the capital markets, as I’m sure everybody is experiencing..

So, these are MLPs, so these are really efforts to enhance cash flow and yield of the investment portfolio, have any of these experienced cuts in the dividends yet?.

No, none..

But it’s possible. That’s for sure..

It’s always possible but at this juncture none of our holding -- our holdings -- MLP strategy is actually focused, just to give you a little bit more color on it, it’s focused on transportation and storage name. So, they are very much midstream companies and they are largely gas as opposed to crude oil oriented names.

And so, the whole sector I think -- the entire market has shown at least strong correlation to crude over the past six months. And I guess I don’t need to comment further on that matter..

How big is the rest of the -- at market, how big is the rest of the energy exposure in your portfolio?.

So, we have energy exposure beyond our equity strategy. We obviously had it as part of our corporate bond portfolio. Energy, we maintain a benchmark rating for energy at 8% and that’s lastly where we are within that fixed income portfolio. Basic material is 3% and that’s where we are.

So, the energy exposure within the dividend -- sorry, within the equity portfolio that includes both the MLP and the high dividend equity strategy is about 27% of the market value of the equity securities which were about $200 million at the end of the year..

Our next question comes from the line of Mark Hughes of SunTrust. Your line is open. If your phone is on mute, please unmute. And we have a follow-up from the line of Amit Kumar with Macquarie. Your line is open..

Thanks. Just one quick follow-up on I guess Brian’s question, regarding the ratings agency. Obviously the review came out -- their listings came out and the ratings -- the review was not taken off, a negative outlook was maintained.

Can you talk about that; are you disappointed; are you expecting that and what did they tell you; why was the negative outlook not removed, it was a bit puzzling to us?.

Let me reference you to the press release issued by A.M. Best. They indicated two areas of concern, one was continuing adverse development in more recent years. And as I indicated in my comments earlier, in fact in 2015, we had no actuarial adverse developments in any of the years since 2008 to 2014. The second reason A.M.

Best cited as a concern for our forward outlook has to do with our business concentration in California. As we’ve indicated multiple times in the call day, in fact our exposure to California has decreased meaningfully over the last 18 months.

So, I can only reference you to the two items that they identified in their press release as to why they need to keep us on a negative outlook. Obviously we’d disagree with both of those points..

Do you get the sense when is sort of the next cycle, i.e. -- I know when the last time it happened, I think we were waiting for two, three years.

I mean are we -- is that sort of the next sort of time period when this thing could change or could this be a 2016 event where they could take you off?.

A.M. Best indicated to us that they reassess the outlook annually. So, considerably they could do a review and later ‘16, which would be our normal rating cycle or they could continue indefinitely. All I can point to you is the two areas that they’ve identified that were concern to them. And in fact we believe that actually that’s incorrect.

I think it’s important to note that although we’d certainly like to have an A minus stable outlook, the negative outlook has had no impact on our business whatsoever..

Thank you. [Operator Instructions] And I’m showing no further questions at this time. I’d like to turn the call back to Mr. Doug Dirks for closing remarks..

Thank you. Thank you, everyone for joining us on the call today. We appreciate your interest and your participation. We look forward to speaking with you again, as we report our first quarter 2016 results. Thank you and have a great day..

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program and you may all disconnect. Everyone, have a wonderful day..