Frank O'Neil - SVP, Corporate Communication and IR Stan Starnes - Chairman and CEO Ned Rand - EVP and CFO Howard Friedman - President-Healthcare Professional Liability Group Mike Boguski - President-Eastern Insurance Alliance.

Matt Carletti - JMP Securities Mark Hughes - SunTrust Amit Kumar - Macquarie Capital Bob Farnam - Boenning & Scattergood.

Good morning everyone, welcome to the conference call to discuss ProAssurance's Results for the Quarter Ending March 31, 2017. These results were reported in the news release issued on May 04, 2017 and also in the Company's quarterly report on Form 10-Q which was also filed on May 04.

These documents are intended to provide you with important information about the significant risks, uncertainties and other factors that are out of the Company's control, and could affect ProAssurance's business and alter expected results.

Further, we caution you that Management expects to make statements on this call dealing with projections, estimates and expectations, and explicitly identifies these as forward-looking statements within the meaning of the U.S. Federal Securities laws and subject to applicable Safe Harbor Protections.

The content of this call is accurate only on May 05, 2017. And except as required by law, or regulation ProAssurance will not undertake and expressly disclaims any obligation to update or alter information disclosed as part of these forward-looking statements. The Management Team of ProAssurance expects to reference non-GAAP items during today's call.

The Company's recent news release provides a reconciliation of these non-GAAP numbers to their GAAP counterparts. Now, as I turn the call over to Mr. Frank O'Neil, I would like to remind you all that this call is being recorded and that there will be a time for questions after the conclusion of prepared remarks. Please Mr. O'Neil, go ahead..

Thank you, Anita. Thanks everybody for joining us. On our call today are Chairman and CEO, Stan Starnes; Howard Friedman, the President of our Healthcare Professional Liability Group; Chief Financial Officer and Executive Vice President, Ned Rand and Mike Boguski, the President of Eastern, our Workers' Compensation Subsidiary.

As is our customary, we are going to lead off with Stan..

Thank you, Frank. I want to welcome everyone to our call to discuss a strong though uneventful quarter. We achieved solid profitability, retention of existing business was good and we rose significant new business in both our Specialty P&C segment and Worker's Compensation segments.

Given the straight-forward nature of the quarter, our remarks will be brief and will look forward to questions at the end.

Ned, will you please lead us off?.

Thanks Stan. Gross premiums rose almost 5% year-over-year driven primarily by growth in our Lloyd's Syndicate and Worker's Compensation segment up 84% and 8% respectively compared to prior year. We rose $10.2 million of new business in our Specialty P&C segment and $14 million of new business and Worker's Compensation.

Our coordinated sales and marketing efforts produced $7.7 million of business in the quarter. The consolidated current accident year net loss ratio was 80.9%, an increase of 2.3 points over the prior year and attributable almost entirely to the growth in our Lloyd segment. So that's a flipside of Lloyd's growth coin.

The consolidated calendar year net loss ratio was 65.1% which is 2.6 points higher than last year, again primarily the result of the growth in the Lloyd's Syndicate segment. We realized $28.8 million of net favorable development with all segments contributing. That has essentially leveled with the first quarter of 2016.

We continue to pay close attention to our expenses which is important given the competitive nature of the market, no limits we place on growth by being disciplined in our pricing and underwriting.

We saw a 21.6 million swing in net realized investment gains which were $13.3 million in the first quarter of this year versus a loss of $8.4 million in the first quarter of last year. Our net investment result was $3.2 million higher year-over-year.

This was due to a sizable change in the earnings of consolidated subsidiaries which were $1.8 million compared to a loss of $3.6 million in Q1 2016. Offsetting those gains was a $2.3 million decline in net investment income which continues to suffer from the low interest rate environment that is affecting the entire insurance industry.

Taxes were somewhat bright spot for us in the quarter. We realized a 3% tax benefit compared to a 6.6% tax expense in the same quarter last year due primarily to the application of revised accounting guidance which was effective January 1, 2017 and resulted in an excess tax benefit on share based compensation.

And to a lesser extent, our investment in various tax credits and tax exempt income in our bond portfolio. With higher revenues, thanks to net realized investment gains and higher premiums coupled with the tax benefit, net income for the quarter was $41.5 million, $0.77 per diluted share.

Operating income for the quarter which strips out investment gains was $33.4 million or $0.62 per diluted share. Our ROE improved to 9.1% in the quarter which keeps us much closer to our targeted seven points about a 10 year treasury rate which at April 30 was 2.29%.

Book value stood at $34.19 per share quarter at quarter end, a 1% gain in the quarter. As of May 1 we held approximately $135 million in unpledged cash and liquid investments outside our insurance subsidiaries, and available for years by the holding company.

That included approximately $18 million of subsidiary dividends paid to the Holding Company in April.

Frank?.

Thanks Ned. I’m going to turn next to Howard Friedman for detail on the Specialty P&C segment. Howard..

Thanks Frank. Despite the competition, we held our own in the Specialty P&C segment. Gross premiums were down 1% for the component spares an explanation. Physician professional liability continues to be the largest single line within the segment and premium derives from our policies with a one-year term grow little more than 1% to $89.7 million.

Most of our investors know that we also write a limited number of 24 month physician policies. Because of the renewal cycle of these policies, we expect an overall decline in odd-numbered years.

Premiums on our two-year policies were down $2.8 million to $5.9 million and that is the primary driver of the $1.4 million decline in premiums for the segment. Healthcare facilities declined 4% to $12.2 million primarily due to the timing of policy processing in the first quarter of 2016.

Premium from other healthcare providers aligned with growing importance in the healthcare evolution in America, was up $486,000 or 6%. Our premium retention on a physician line was 90% for the quarter up from 88% in Q1 of 2016. Pricing on renewing physician business a key benchmark for us was 1% higher year-over-year.

Our current accident year net loss ratio for the quarter was 88.7% essentially unchanged from the first quarter of 2016. We made a lower provision for mass tort than in the same quarter last year but there was some upward revision in the overall loss ratio due to the mix of the business.

Our favorable net loss reserve development in the segment was $25.3 million coming principally from accident years 2009 through 2014. Importantly, we do not see any change in the overall loss trends for the segment.

Frank?.

Thanks Howard. Next we’ll turn to Mike Boguski for comments about Worker's Compensation.

Mike?.

Thank you, Frank. The Workers' Compensation segment operating results increased to $2.9 million for the three months ended March 31, 2017 compared to $1.3 million for the same period in the prior year driven by an increase in earned premiums and decreases in the net loss ratio and underwriting expenses.

Gross premiums written increased 7.9% to $84.2 million for the three months ended March 31, 2017 compared to $78 million for the same period in '16. This includes new business writings of $14 million that Ned mentioned previously during the quarter compared to $9.4 million in 2016.

We also launched a new initiative each on specialty risk which I'll discuss in more detail later, that contributed $1.5 million of that new business in the quarter. Audit premium was $1.2 million in the first quarter of 2017, a slight decrease compared to the $1.5 million in 2016.

Renewal pricing decreased 3% in the quarter reflecting continued price competition in the Workers' Compensation marketplace. Premium retention was 89% for the first quarter driven by strong results in our alternative market programs business.

Premium retention for alternative markets was 96% in the first quarter of 2017 compared to 92% for the same period in 2016. We were successful in renewing all 10 of the available alternative market programs in the quarter. Overall, alternative market programs gross written premium increased 18.3% in 2017 compared to the same quarter in 2016.

The decrease in the first quarter of 2017 accident year loss ratio in our traditional business reflects lower winter weather claims activity in 2017 compared to 2016 and overall favorable trends in claim closing results.

We successfully closed 21.8% of 2016 and prior claims during the quarter, one of the best first quarter claim closing results in company history.

Favorable reserve development was $2.4 million in the quarter compared to $1.1 million in the first quarter of 2016 primarily related to alternative market business but also includes approximately $400,000 in both periods related to the amortization of purchase accounting fair value adjustments.

The decrease in the 2017 expense ratio reflects a 1.1 points reduction in intangible asset amortization, a decrease of 1.2 points related to our pension plan termination that was fully settled in 2016 and continuing prudent expense management strategies.

For 2017 combined ratio of 92.5% included 1.3 percentage points of intangible asset amortization and 1.1 percentage points of a corporate management fee. Lastly, I’m pleased to announce that we launched the Eastern Specialty risk underwriting unit there in the first quarter of 2017.

As I noted eelier earlier, we wrote $1.5 million of gross premiums in this unit in the first quarter primarily in the mid-Atlantic region. This new initiative provides an additional product and service strategy to our [indiscernible] partners that focus on employers engaged in higher industry.

These employers tend to have less frequent or more severe claims compared other industries as a result employers engage in high hazard industries pay substantially higher than average rates for Workers Compensation insurance.

We believe that our short tail claims strategy, high-quality risk management and disciplined underwriting platform will be attracted to customers in this market segment. In addition, we expect to soon will deliver value by working with customers to reduce the overall incidents, and cost of workplace injuries while promoting a safer work environment.

This strategy aligns well with our capital base position, return expectations, internal service expertise, pricing strategy and the improving economic outlook for this market segment. I also want to stress that we have the full cooperation in support of our reinsurance partners.

Our reinsurance retention on this business is the same as on our traditional business which limits our downside risk and expands our relationship with our long-term reinsurance partners by providing them with additional rate for exposure in this sector of the market.

Frank?.

Thank you, Mike. Let's go back to Howard now and hear about Lloyd's..

Thanks Frank. We continue to see growth at Lloyd's and that includes higher premiums along with the commensurate increase in expenses. As we get into specific numbers let me remind you we report net results reflecting our 58% participation in the Syndicate and we do so on a one quarter lag.

Gross premiums written were the big story up 84% quarter-over-quarter to $12.7 million due to both new business and the growth of existing accounts. Net premiums earned were $14.6 million an increase of 17% over the same quarter last year.

This reflects the increase in overall premiums and as we have explained before adjustments to premiums on policies for which initial exposures are estimates and on policies for which premiums are adjusted based on loss experience, underwriting expenses within the Syndicate continue to grow as we expect.

This quarter expenses were $6.2 million up 20.2% over the prior-year first quarter but trending down from the 23.3% growth for 2016 versus 2015. With a slowing of expense growth and a rise in premiums, the expense ratio was up only a little more than a point quarter-over-quarter.

The current accident year loss ratio increased 19.8 points compared to last year's first quarter. This is primarily the result of the unusually low loss ratio in the year ago quarter which resulted from timing differences on premiums earned for accounts that were in runoff at that time.

Also at work but to a lesser degree are small shifts in the mix of business compared to last year and the use of loss assumptions that continue to be derived from Lloyd's historical data for similar risks although the Syndicate is increasingly relying on its actual experience to modify the Lloyd better.

The factors drove an increase of 15.6 points in the net loss ratio which did benefit from the recognition of $1.1 million of favorable reserve development.

And one final note to underscore our excitement about the success of our investment in Syndicate 1729 and the degree to which we value the Syndicate's ability to grow while maintaining underwriting and pricing discipline. We can report that we had extended our $200 million capital commitment to the Syndicate through the year 2022.

Frank?.

Thanks Howard.

Stan will you wrap this up?.

Thanks Frank. As I said, this was a strong straight forward quarter with solid results. We continue to see the benefit of the dedicated execution, well reasoned strategic initiatives designed to ensure that ProAssurance meets the evolving needs of a dynamic marketplace. We remain excited about the future and look forward to answering your questions.

Frank?.

All right, thank you Stan. Anita, we are ready for questions..

[Operator Instructions] The first question comes from Matt Carletti with JMP Securities. Please go ahead..

Couple of questions, first one on, the strong new business production in the specialty segment and specifically in the physician's business.

And I guess my question is, maybe Stan or Howard if you give a little more color on, was that just kind of organic policy by policy, kind of battling on the street or was there some consolidation may be that took place and the good guys won, won, I'm just curious kind of what's driving and how you see that going forward?.

Matt, I think it’s really just a normal kind of business mix. As we talked about in several of our prior calls, we've done a lot over the past several years to develop stronger relationships with some of the larger brokers who are now dealing with the larger consolidated healthcare accounts. And we're getting many more submissions.

Submission growth continues to be a real area of concentration for us. And, yes, there are some consolidations taking place where we are on the winning side. I mean, it happens the other way as well from quarter to quarter and we’ve reported in the past account that we’ve lost, as a result of consolidation, this quarter we had one that benefited us.

So I think it’s a combination of a lot of things. Nothing really dramatic or different than we've done in the past other than getting more advanced on the submission side..

Great, thank you. And then just a numbers question probably for Ned. Just want to make sure I'm understanding the stock compensation tax benefit dynamics.

Am I right in thinking that that all largely be a Q1 event since that's I’m unassuming when a lot of year end comp takes place and that will be lesser or no impact in most of the other quarters?.

That is what we would anticipate..

Great. Thanks a lot and congrats on a very nice start to the year..

The next question comes from Mark Hughes with SunTrust. Please go ahead..

Good morning. The workers comp business, another good quarter in terms of new business production.

With pricing down though, just sort of curious, if you can expand a little bit more on where you’re seeing the opportunity and is pricing staying ahead of loss cost trends with this business?.

Good morning. Just on a new business front, it was 14 million compared to 9.5 million in the first quarter of 2016. Half of that increase was a large healthcare new business account with Inova which for us is more of a fee based revenue opportunity.

So what we saw, Matt, during the quarter was consistent production across the operating territories on a new business front. And your second part of your question on frequency, I mean, the industry is seeing a significant reductions in frequency which is driven loss costs down slightly across the operating territories.

And ours is reflective of that as well. Our claim frequencies have been down fairly consistently. It was down at about 9.5% at year-end 2016. So we feel like we’re well-positioned there..

And I’m sorry, I might have missed some portion of your commentary in the high hazard business, point you’re going to pursuing that high hazard business a bit more on the future?.

Yes, we’ve really been evaluating this strategy for several years. And Mark, as we look at the overall capabilities, our reinsurance structures, the growth of that sector, from an economic perspective, the towel level that we have in our organization are on risk management claims and underwriting perspective.

We believe that at the end of the day, it’s an underserved market where we can achieve margin over time, and achieve our return expectations. So we'll be very disciplined about it. We’ll continue with our individual account underwriting strategy, and will be conservative on the pricing. But we do think it's a very nice opportunity going forward..

Mike, you might also mention that the agent interaction you’ve had with that..

Yes, good point, Frank. One of the observations we’ve made is we’ve talked to our agents at various advisory council meetings over the last three years.

And one of the - I think sustainable competitive advantages for us there is the typical higher hazard account is written, the agent has one or two accounts with a specialist Eastern in their agency management model has a broad broker business, and a larger broker business that includes small business in Inova and middle markets workers comp.

So, the agents have been really, really receptive to the high hazard unit from the perspective of, this is a new product and service that we can expand our relationship with Eastern. We've already have an extensive relationship there, and we’re seeing those opportunities. So we think we have an agency management advantage..

What do you think the topline impact of all of that is? Is that a few points a year or is there potential that when you throw the net out, you might have a good all in the near-term?.

Just take a look at what we’ve seen in the first quarter. We wrote 1.5 million in the first quarter with no loss activity. And there is a balance there, Mark, from the perspective of you need scale for your reinsurance relationships in that business and for severity funding. However, we looked at it for the remainder.

And unless there’s a very large account or two in there, we think it’ll be less than 3% to 5% of our premium in '17. But we grow slowly at a discipline basically as we go forward..

Thank you for that. On the Lloyd’s business, what should be the normalized loss ratio? It’s the bounce around, I think you pointed out them as usually low perhaps in this quarter last year.

What’s a good trend on that?.

I think that’s going to depend a lot on how the mix of business evolves. And of course, our loss ratio, part of it is also dependent on the expense ratio.

And the reason I’m taking about the mix of business is the fact that some of the Lloyd's business being reinsurance assumed with ceding commissions have a higher expense ratio than maybe some of the binding authority business.

I think that rather than giving you are a firm number, I’d say that the loss ratio expectations are probably in the 60% or so range, with the expense ratio probably in the 35% or so range. But there's going to be a good amount of variability around that from quarter to quarter. So please don't get locked in on those. .

And final question. You've commented in the past about how in pursuing some of the larger hospital business or the big group practices, that broker relationships that are important.

Could you comment on kind of what you see, what kind of dynamic you’re seeing with that strategy outside of your core position? So what kind of progress are you seeing on the facility hospital large group product?.

Yes, I think we’re seeing good progress. A lot of our new business growth last year, and we have sort of a record amount if you will of new business last year, came from larger account physician business resulting from groups that had consolidated, and from hospital and facilities. And I’d say most of that came from the larger broker relationships.

I don’t have a precise percentage for you. But I know just thinking about it, I'd say the majority of that new business last year came from a larger broker relationship..

A couple of caveats started that, Mark. First, remember, as we’ve spoken about it before, that this business rolls around at most once a year. Sometimes once every two or three years where somebody takes a look at us and our program. So it's not like we sell any consumer product where they come in one day, look at it, come back the next day and buy.

And so that creates its own set of issues. But second, when you apply those same issues to the big relationships, that's what it costing us in the volatility into the revenue that we talked about writing you talked about at the year-end call we had three months ago. So it makes it impossible for us to predict, and even harder for you to predict.

But we’d expect to continue to see progress in that area. We're very pleased with what we've accomplished to date, and we think that activity will continue to serve us well. .

Thank you..

The next question comes from Amit Kumar with Macquarie Capital. Please go ahead..

Thanks and good morning, and congrats on the quarter. Just a few questions. The first question goes back to the discussion on capital and you didn’t repurchase any stock this quarter I know that in the past we’ve talked about a special as the more appropriate means based on what the stock is trading at relative to the book value.

Can you just remind us how you evaluate one over the other and how should we thinking about any capital repatriation down the road? Thanks..

So for stock repurchases we retry to very disciplined we try to avoid kind of taking a view on what I would call value vis-à-vis the street and look at it more how long it takes us to regroup any deletion that is caused by buying above our stated book value and as that recruit period purchase three years we begin to take ourselves out of the market and share repurchases..

Got it..

We certainly prefer share repurchases at price we find within that threshold over any sort of special dividends but I would also remind you that we are constantly evaluating kind of the capital position of the organization and looking at the opportunity set that’s out in front of us and then kind of will make decisions based upon that regarding our current dividends levels the payment at any special dividends and the repurchases stock..

Okay.

We refer to special the second question goes back to the Worker's Compensation segment and I know you talk about the growth in the alternative market business and in the press release you talked about 10 programs can you just give some broad color what these programs look like are they all alike may be just help us understand that piece a bit better?.

Yes, absolutely Amit today just to give an overall profile of our alternative market business we have 30 total programs which includes the three that we have medical professional liability in them 27 of them are active we have 23 of this programs that are came in based and we have a few in other domiciles.

From a perspective of what type of alternative market programs we have we have a significant level of healthcare related alternative market programs Association business and different segments of the marketplace. And then we also have a component of what I would call agency own captives our segregated portfolio of sales.

It’s a real balanced book of business it produce very nice fee-based revenue we produced about $3.8 million of fee-based revenue in the first quarter. And we made about $630,000 in underwriting profit on the cells that we own.

And about $820,000 and of net income on the cells that we own so we continue to believe it will be – it’s a sticky product, it’s got high program retention and it’s got high premium retention within the programs as you saw about a 96% premium retention and we expect continued opportunities there..

That’s actually quite helpful a bit of refresher. The final question I have is for Stan or anyone for that matter just going back to the Lloyd's business obviously we’ve talked about the expense ratio challenges you talking about the loss ratio sort of reaching a new normal probably remaining at these elevated levels in the near future.

And I am curious how should we think about the profitability aspect of this business because we should look at it, it’s had an operating loss on a quarterly basis so maybe just help us understand why you are writing this business, why do you need to be writing this business and how does this make money longer-term so that we can understand as outsiders what is so special about this business? Thanks..

Amit, Howard will responded to that but bear in mind Amit we don't make decisions about a business based on this quarter that quarter but it is part of our long-term strategy we view the syndicate as investments today we were quite pleased with it Howard will give you some specifics on that.

But it also is an integral part of our long-term strategy as we said the past and someday we expect Syndicate 1729 to be the platform writing additional international business.

So we think it gives us flexibility, it gives us a different arrow in the quiver and it’s one we’re very pleased with we take a very disciplined approach to it I dock in Duncan Dale and his team at Syndicate 1729 are long-term players they understand the Lloyd's market and they take advantages of the opportunities that come along with that is [indiscernible], I’ll let Howard talk about the specifics of the numbers..

Sure, and I guess I take little exception to the idea that in terms of operating loss on or long-term basis we have choppiness no question about it it’s relatively new operation.

The Syndicate actually closed its first underwriting year the 2014 year at a small profit which I think was a pretty remarkable achievement for a brand new syndicate doesn't mean that every underwriting year will and some will be better than others.

We expect the number of underwriting years will close with large profit, but we had the loss ratio up this quarter if you're comparing it to last year I think that's probably unrealistic comparison because as I mentioned last year was unusually low, but we did have a 65.3% loss ratio little bit higher than kind of that rough long-term number that I mentioned earlier 60.

Expense ratio is still elevated because of the relative youth of the syndicate and growing into its staffing part of the ability to write business has also been the attraction of underwriting talent with relationships in the marketplace.

And that has allow the syndicate to grow pretty significantly, but also at the same time has some operating expense components and that expense ratio we expect will trend down.

So I still think that over a period of time those numbers that I mentioned will prevail and will end up with an underwriting profit in the syndicate much less an operating profit..

So if I were to and maybe you can educate me here, if you were to step back and as outsider would you that this materially exceeds the cost of capital modestly exceeds the cost of capital or marginally exceeds the cost of capital over time. Again ProAssurance story was built on very strong med-mal in U.S.

and then obviously we branched into other areas.

What I'm trying to think is if you internally do exercise in terms of capital deployment what sort of goalpost in terms of return did you pick and are anywhere close to them down the road or is that again you talked about the premiums, you talked about Duncan and again completely agree with those aspects.

But just let’s help us understand how internal we should think about the profitability target and how far or close are we from that target? Thanks..

I think first thing is I think we need to look at this as a strategic initiative and only with respect to cost of capital type of analysis.

We benefit from the Lloyd's syndicate and expect to benefit by allowing us to have a international platform that is beginning to materialize with respect to international healthcare business as well as the other business that is being written in the syndicate.

In terms of a cost of capital type approach my expectation is that on an overall basis over the long period of time the syndicate will produce a return that is commensurate with our desired returns on capital on our return – in line with our return on equity expectations for the capital that we have committed to the syndicate..

Would you be able to broadly define what the time period is?.

Tell me what’s going to happen in the market for the coming years, it depends entirely we’re going to have no cat losses for the coming 12 months, are we going to have fun – it is very difficult to predict and that difficulty is why it's so important to be disciplined in what we’re doing.

We take a very long-term view of it as Howard says it’s a strategic initiative designed to provide us with additional opportunity an additional mechanism by which to take advantage of the world is evolving pretty quickly behind us.

If stop and step back for a minute given the very, very difficult times the reinsurance business around the world is faced over the last few years that think you can start a brand-new syndicate and close your first underwriting year at a profit is frankly pretty remarkable.

I haven’t looked at it but I would venture it hadn’t been done all that often. So we take a very, very long-term view of it Amit and we think over the long-term that the capital we've allocated to this now investment and over the long-term drove more strategic opportunity will be very worthwhile all of our shareholders..

I’ll stop here thanks for the answers and good luck for the future..

We have Bob Farnam with Boenning & Scattergood. Please go ahead..

Good morning. I have got question from Mike again so is our your you're on the your line again Mike.

So Eastern specialty risk piece can you just give us like an example of the types of accounts that you looking for the higher hazard accounts?.

One thing to keep in mind Bb is that this business that we've written in a higher experience modification book over time and we have proven profitability track record. So it is the next level of risk in the sense that the types of risk will be more aligned with the infrastructure growth in the United States.

We some construction regional transportation forestry those type of things but keep in mind we've written those classes of business successfully in a high my book and I know the book and others. This is more of a specialty in it design for the individual account in these particular sectors.

The other thing that’s very interesting and we look back and looked at a 20 year history of the business that we do right is. The more conservative underwriting company that we use produces is about 57% loss ratio over the last 20 years which is five or six points lower than our 20 year history at Eastern which is in that 61, 62 range.

So you do find margin in business that has less competition and where you can provide value on the risk management claims and underwriting side of the equation..

Right, I actually had a question whether you’re able to write some of the business in the alternative markets but it sounds like some of these are already in your target end market and you’re deciding to take some underwriting risk with it is that I margin reading that correctly?.

In some respects we do take it some underwriting risk in some of the Inova programs on this type of business. However I think it will be interesting to look at this way it's another product spectrum not like for example with Inova not all customers want to go into a captive program.

So they may want to be underwritten on an individual account basis was in this unit and that presents us again with another product document service offering to our agency partners that we really built over the last 10 years. I mean we started with small business we had all the product lines necessary in Worker’s Comp for middle markets.

We added Inova over that period of time and I think this will be a very attractive product and service offering as we go into the future..

Right are these account sizes similar to the ones you have in the standard traditional book or these larger or smaller?.

On average it’s a bit larger to fund for severity but just to give you some perspective on that Bob we wrote 1.5 million in the first quarter no loss activity and was five customers..

Okay good..

Yes..

That's great, thanks for that. And I guess one question may be for Ned it looks like you repaid some of your revolving credit agreement in April.

And I just want to know if you have any expected changes in the credit agreement in the second quarter?.

Bob so what we said is as you recall that roughly $300 million that we’ve borrowed under those facilities is all collateralized..

Yes..

It’s really an interest rate arbitrage and so as the underlying collateral matures we’ll pay down with that collateral as it matures. If we do have add collateral that matures in the second quarter and off top of my head, I’m not sure that we do - will pay that down but that's how that will happen.

So, just the way our collateral matures and it is pretty short dated collateral for the most part..

Okay, great. Thanks..

This concludes our question-and-answer session. I would like to turn the conference back over to Frank O'Neil for any closing remarks..

Thank you, Anita. We’ll wrap up the call. We look forward to speaking to everybody again in August when we release second quarter results. Thank you everyone..

This conference has now concluded. Thank you for attending today's presentation. You may now disconnect..