Oksana Y. Lukasheva - VP, IR Joseph M. Zubretsky - President and CEO Jeffrey M. Farber - CFO Richard W. Lavey - Chief Growth Innovation Officer John Fowle - CEO, Chaucer John C. Roche - President, Hanover Agency Markets.

Matt Carletti - JMP Securities Paul Newsome - Sandler O’Neill Larry Greenberg - Janney Montgomery Scott Meyer Shields - Keefe Bruyette & Woods.

Hello and welcome to The Hanover Insurance Group First Quarter Earnings Conference Call. My name is Brandon and I'll be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session.

Please note this conference is being recorded, and I will now turn it over to Oksana Lukasheva, Vice President of Investor Relations. Oksana, you may begin..

Thank you, operator. Good morning and thank you for joining us for our first quarter conference call. We will begin today's call with prepared remarks from Joe Zubretsky, our President and Chief Executive Officer, and Chief Financial Officer, Jeff Farber.

Available to answer your questions after our prepared remarks are; Jack Roche, President of Agency Markets; Dick Lavey, Chief Growth Innovation Officer; and John Fowle, Chief Executive Officer of Chaucer.

Before I turn the call over to Joe, let me note that our earnings press release, financial supplement, and a complete slide presentation for today's call are available in the Investors section of our Web-site at www.hanover.com. After the presentation, we will answer questions in the Q&A session.

Our prepared remarks and responses to your questions today, other than statements of historical fact, include forward-looking statements. There are certain factors that could cause actual results to differ materially from those anticipated by this press release, slide presentation, and conference call.

We caution you with respect to reliance on forward-looking statements, and in this respect refer you to the Forward-Looking Statements section in our press release, Slide 2 of the presentation deck, and our filings with the SEC.

Today's discussion will also reference certain non-GAAP financial measures, such as operating income and accident year loss and combined ratios excluding catastrophes, among others.

A reconciliation of these non-GAAP financial measures to the closest GAAP measure on a historical basis can be found in the press release, the slide presentation, or the financial supplement, which are posted on our Web-site, as I mentioned earlier. With those comments, I will turn the call over to Joe..

Thank you, Oksana. Welcome everyone and thank you for joining us today. This morning, I will provide an overview of our first quarter results and business performance, Jeff will review our financials in detail, and then we will open the line for questions. Overall, we are pleased with our performance in the quarter.

While higher than expected catastrophe losses in our domestic business impacted our quarterly results, each of our core lines of business generated strong underlying performance.

Our continued strong performance provides a firm foundation for us to deliver on our Hanover 2021 strategy, providing exceptional insurance solutions for our distribution partners and policyholders, while delivering superior returns for our shareholders.

For the quarter, we delivered operating income of $40.8 million, or $0.95 per fully diluted share; a consolidated combined ratio of 99.5%; a combined ratio excluding catastrophes of 92.4%; and an operating return on equity of 6.1%, approximately 9.2% normalizing for catastrophe losses in the quarter.

Several aspects of our first quarter results are worth noting. First, we produced a solid top line consolidated growth of 3.7%. Adjusted for a 2016 reinsurance-to-close transaction at Chaucer, top line consolidated growth was 5.3%. We continued to grow responsibly during the quarter, maintaining stable underlying loss ratios.

We selected areas for growth carefully, growing in markets where we could effectively leverage our distribution strengths and competitive position. Second, our catastrophe losses in the quarter were $84 million, $32 million greater than our first quarter catastrophe budget, mostly due to severe weather in the Midwest in the month of March.

While higher than expected, our catastrophe losses in the quarter were not outsized relative to the industry experience, our market share and appetite for risk. Third, catastrophes aside, our bottom line results in our domestic and international segments are in line with our overall expectations.

In fact, our ex-catastrophe operating earnings increased slightly quarter-over-quarter despite more normal winter weather and large loss activity in our numbers this year compared to unusually low large loss activity in mild winter weather last year.

In addition, this profitability improvement reflects our growing earnings base, improved business mix and expense leverage. Both domestic and Chaucer ex-cat combined ratios in the quarter were in line with the first quarter of last year.

Finally, the reserves in our domestic business on prior accident years held steady, as expected, and did not generate unfavorable development in the quarter.

Based on the loss experience we observed in the quarter, we continue to believe the reserve actions taken at the end of 2016 position us to more likely produce favorable rather than unfavorable development.

Considering our first quarter performance, we believe we are on track to deliver on the 2017 outlook we presented at our Investor Day in February, assuming catastrophe losses are in line with our original full year expectation. I will now take a few minutes to review individual segment performance.

In Personal Lines, we delivered an overall combined ratio of 101.6%, and 91% excluding catastrophes. Our first quarter ex-cat results were impacted by normal weather related seasonality in the Northeast and in the Midwest. This seasonality had been factored into our plan assumptions and is in line with historical experience.

The underlying trends in our personal auto business were favorable. Current rate increases continued to keep pace with increasing loss severity trends and claim frequency remained flat due to favorable geographic and quality mix.

We continued to build on our strong growth momentum in Personal Lines during the quarter, with net premiums written increasing by 7.4%. This strong growth is a function of continued rate increases, new business momentum and improved retention.

Retention now is nearly at an all-time high at 84.8%, due in part to the growth of our Platinum product in the portfolio. Personal Lines policies in force grew 2% from the prior year quarter. We are very pleased with the quality of the new business we are writing.

Account business, which tends to be characterized by higher coverage values, greater umbrella penetration and higher retention, represents 88% of our new business writings. We are also pleased with the geographic spread of our growth, as we continue to improve agency penetration in states where we have smaller market share.

Our Commercial Lines business generated strong underlying results as well. Our performance in the quarter reflects our focus on maintaining solid margins and thoughtfully growing our business in the current competitive environment. We have reported a combined ratio of 100.2%, which included higher than planned catastrophe losses.

Excluding catastrophes, we delivered a 94% combined ratio, in line with our first quarter performance expectations which take into account first quarter seasonality and property losses. Commercial Lines net written premium increased by 3.5%.

We continued to generate strong new business growth and improved retention in markets where conditions are favorable, in particular in small commercial and our highest margin specialty businesses. Small commercial grew 7%, due largely to strong retention and solid new business growth.

Core commercial price increases at 3.2% in the quarter matched those of the fourth quarter of 2016 and were higher than industry averages in many of our competitors. These rate increases are marginally below our long-term loss cost assumptions.

However, our recent underwriting actions, mix shift toward more profitable segments, and our ability to work in partnership with our agents, should enable us to continue to produce a stable loss ratio. Our domestic specialty businesses also generated strong results in the quarter, with upper single-digit growth in our most profitable segments.

We leverage our sophisticated product solutions to increase penetration with our agent partners. As we have articulated in our strategy, specialty growth with our agency plan is expected to be an important contributor to our overall growth.

Moving to Chaucer, our team turned in another solid performance in the face of continued challenging London market conditions. Chaucer delivered a combined ratio of 93.5% in the quarter, which is consistent with our long-term target of a mid-90s combined ratio. Chaucer produced an excellent accident year loss ratio excluding catastrophes of 51%.

This reflects fewer than normal large losses in the quarter, which has been consistent with other London market players. Our favorable current year experience was offset somewhat by an increase in reserve provision on prior accident year large claims. Chaucer reported a solid top line performance in the quarter.

Adjusting for the impact of the reinsurance-to-close transaction in the first quarter of last year, net written premiums increased by 7.6%. Newer business initiatives, including our partnership with AXA in Africa and our focus on adding treaty exposure where margins are attractive, contributed to this growth.

We continued to use reinsurance capital effectively, limiting our risk appetite in more challenging classes and in market segments with heightened competition. Our Chaucer team also continues to work with the Central Bank of Ireland to advance our application to establish an EU-based subsidiary with its headquarters in Dublin.

Once approved, this entity will provide clients with greater platform flexibility and help us access European regional markets while managing the uncertainty surrounding Brexit. In summary, we are pleased with our performance in the quarter, putting aside higher than planned but not outsized domestic catastrophe losses.

We delivered strong underlying results, maintained our balance sheet strength, and achieved solid prudent growth in markets where we are able to produce target returns on capital. As we advance our Hanover 2021 strategy, we are intently focused on execution and we are excited about our prospects.

I will now turn the call over to Jeff to review the highlights of our financial performance.

Jeff?.

Thank you, Joe, and good morning everyone. For the quarter we reported net income of $45.2 million or $1.05 per diluted share, compared to $78.2 million or $1.80 per diluted share in 2016. After-tax operating income was $40.8 million or $0.95 per diluted share, compared to $71.5 million or $1.64 per diluted share in the prior year quarter.

Our combined ratio was 99.5% compared to 95% in the prior year quarter, reflecting much higher than planned natural catastrophes for our domestic business. Catastrophe events generated losses of $84 million before taxes or 7.1 points of our consolidated combined ratio, compared to $31 million or 2.7 points in the first quarter of last year.

In our domestic business, catastrophe losses totaled $77 million or 7.9% of earned premium. Most of the cat activity occurred in the month of March, including a Midwest windstorm in the beginning of the month which alone resulted in losses of $37 million before taxes. For the most part, these losses impacted our Personal Lines business.

Chaucer catastrophe losses were relatively low at 3.5% of earned premium. These losses were largely driven by Australian weather events, which produced $6 million of losses. Excluding catastrophes, we generated a combined ratio of 92.4%, in line with the prior year quarter.

Our strong overall underlying performance in the quarter shouldn't be overlooked by comparing it to the unusually low non-cat weather and low large losses in the first quarter of 2016. We expect our domestic property lines to incur higher losses in the first quarter of the year, and first quarter 2017 activity was right in line with our expectations.

In Personal Lines, our accident year loss ratio excluding catastrophes for the quarter was slightly better than expected at 62.2%. Our personal auto loss ratio was slightly lower than the prior year quarter, driven by favorable indemnity experience, which can vary from quarter to quarter.

We continued to see slightly elevated severity in bodily injury and physical damage coverages. However, the combination of rate increases and stable frequency in our book suggests that the personal auto line will continue to perform well. Our homeowners loss ratio in the first quarter was 49%, up from 41.2% a year ago.

Given our significant market presence in the Northeast and Midwest, we expect our property loss ratios to be elevated during the first quarter of each year, as it was in the current quarter. Our loss ratio in the prior year quarter, however, was unusually low as a result of mild weather and low large loss activity.

Our expense ratio in Personal Lines was up 0.7 points over the prior year quarter, given the timing of certain incremental investments, but in line with our plan for the quarter. We expect our expense ratio to come down modestly as the year progresses and we gain leverage from the prior written premium growth.

More importantly, the quality of our business mix along with our ability to obtain rate increases in line with loss trends provide confidence that we can deliver on our original guidance, subject to the uncertainty of catastrophes throughout the year.

Turning to Commercial Lines, following the extensive reserve analysis we conducted during the fourth quarter of last year, prior accident year performance was as expected. We continue to believe that our reserves are appropriate and reflect our view of prior year loss trends, which generally remained unchanged from three months ago.

Our Commercial Lines current accident year loss ratio excluding catastrophes was 57.6%, compared to 56.2% in the first quarter of last year, driven by commercial multiple peril. Our CMP property results in the first quarter of this year were in line with our expectations and reflect typical seasonality for this business.

The increase in our loss ratio quarter-over-quarter, however, was unfavorably impacted by the unusually low CMP property losses sustained in the first quarter of last year. Our higher CMP liability loss ratio is in line with historical performance, which is above the reported first quarter 2016 result.

We continue to take a cautious approach, re-underwriting and re-pricing portions of the book impacted by higher liability trends. Aside from CMP, all other commercial lines exhibited improved performance quarter-over-quarter. Although the commercial auto loss ratio improved, it is still at a level which is below targeted profitability.

We continue to actively manage the business mix and achieve mid single-digit pricing increases to bring commercial auto to target profitability. We also improved our accident year loss ratio in other commercial lines compared to the prior year period.

We are encouraged by the current performance of AIX and surety, which validates the actions previously taken. Chaucer delivered another solid performance in the quarter, reporting a combined ratio of 93.5%, with some variability between current and prior year results.

Catastrophe losses in the current quarter were for the most part in line with our expectations. We also reduced our estimates on certain prior year catastrophe losses, which together brought the overall catastrophe loss ratio to 3.5 points of the combined ratio. Excluding catastrophes, our combined ratio of 90% was in line with the prior year quarter.

Current year attritional losses in the quarter were as expected. Large losses were unusually low, bringing the overall accident year loss ratio excluding catastrophes to 51%. This is one of the lowest quarterly loss ratios since we acquired this business in 2011. Chaucer's prior year development was favorable but lower than usual at $2.3 million.

Attritional losses, which lend themselves to more precise actuarial reserving methodologies, produced $26 million of favorable development. However, the increase in reserves for large prior year claims served to offset what otherwise was a normal level of favorable loss runoff in the quarter.

Given the nature and complexity of this business and the inherent high levels of uncertainty over settlement amounts, we expect movement in ultimate loss estimates for certain claims as they mature. Chaucer's reserve strategy is prudently conservative and our balance sheet remains strong.

While we fully expect prior period development at Chaucer to fluctuate from quarter to quarter, we continue to believe that it will be a meaningful contributor to Chaucer's earnings throughout the year.

The Ogden discount rate change had a minimal impact on our first quarter results, increasing prior year reserves by $2.5 million in our casualty reinsurance business, where we write some assumed U.K. motor risks. The sale of our direct U.K.

motor book in 2015 included prior year reserves, and therefore we do not have any lingering insurance exposure from that business. Our Chaucer expense ratio for the quarter was 40.1% compared to 38.9% in the prior year quarter.

In the first quarter of 2016, Chaucer recognized $17.7 million of premium and an equal amount of loss reserves related to a reinsurance-to-close transaction or RITC, which had no effect on underlying earnings.

However, this transaction increased our overall loss ratio by approximately 4 points and reduced our expense ratio by a similar amount last year. Excluding the impact of RITC in 2016, our expense ratio was 2 points lower in the first quarter of 2017 than in the prior year quarter, driven by business mix and growth leverage.

Although market conditions in most of Chaucer's business classes are challenging, we remain focused on maintaining the size, quality and margins of our current portfolio. We feel good about the continued contribution from Chaucer and we believe we are in a position to deliver underwriting results in line with our guidance of a mid-90s combined ratio.

Briefly on top line results, firm-wide, net written premium growth was 3.7%, or 5.3% excluding the impact of the Chaucer RITC transaction in the first quarter of last year. This was driven by increasing momentum in Personal Lines with growth at 7.4%, Commercial Lines at 3.5% and Chaucer at 7.6% excluding the RITC transaction.

Market conditions remained competitive in many of our segments. However, our deep agency and broker relationships coupled with our strong product capabilities continue to create opportunities for us to write high quality business at stable margins.

Moving on to investments, net investment income increased by 4% in the quarter to $71 million, compared to $68 million in the prior year quarter, as we continued to reinvest higher operating cash flows from underwriting activity.

Cash and invested assets were $8.8 billion at the end of the quarter, with fixed income securities and cash representing 87% of the total. Our fixed maturity investment portfolio has a duration of 4.4 years and is 94% investment-grade. The portfolio remains high quality and well-laddered.

The operating effective tax rate for the quarter was 28.5%, compared to 32.4% in the first quarter of last year, due to the impact of tax deductions taken in connection with vested or exercised stock compensation. We expect the 2017 full year rate to be approximately 32% to 32.5%.

I'll finish with a few comments on the strength of our balance sheet and capital position. Our book value per share grew 1.5% to $68.44 in the first quarter. Book value per share excluding net unrealized gains on investments increased 1%.

From a capital management perspective, we returned $14.6 million to shareholders through stock repurchases as of May 1st of this year. We have a total of $169 million available for purchase under our current share buyback authorization. We also returned $21.4 million through our regular quarterly dividend.

Despite elevated catastrophe losses in our domestic business, we are pleased with the underlying performance in the quarter. Our strategic focus, unique competitive position, strong agent partnerships, high-quality products and services, and disciplined underwriting and financial management practices, once again served us well.

With a quarter of strong underlying results to our credit, we are confident we can deliver on the targets we identified in our full year 2017 guidance of 95% combined ratio, provided catastrophe activity for the full year reverts to our original annual assumption. With that, we will now open the line for your questions.

Operator?.

[Operator Instructions] From JMP Securities, we have Matt Carletti. Please go ahead..

Just have a few questions, maybe start on Chaucer, can you give us any more color on the – kind of sounds like a small handful of large claims that developed a little bit, on the nature of those claims? There's been some claims out in the market. Just curious if they were energy related, political risk related or otherwise..

Sure, Matt. This is Joe. The large loss claim activity at Chaucer actually in total came in on plan, and the large loss activity as we said was very low in the current accident year quarter. But obviously it was offset by a handful of newly reported claims on prior accident years and an update to a handful of cases there is on existing claims.

Our analysis demonstrated that these claims were largely uncorrelated. They were not claims you see in the headline news of major industry events, but are just a function of the randomness of operating the casualty book.

So, we are confident that although it was an unusual emergence, the way the claims emerged in the quarter, but we have our arms around this business, it's profitable and probably won't recur again in the near future..

Okay, great. And then another question on just, it's been a few months since Investor Day and a couple of things you pointed to were the rollout of your Platinum product in new states in Personal Lines as well as kind of the buildout of domestic specialty capabilities.

I know it's only been a few months, but any updates there you can provide in these states that you've stepped into or new products that you've launched?.

I think I'll kick it over to Dick in a moment, but the Personal Lines story continues to be very favorable. As you know that our entire business was repositioned over the past five years, we had policies in force declines since we repositioned the book, and now we're growing again, policies in force are up 2%.

We have gotten 4 to 5 points of rate in each of the past four to five years, and the mix of that business has changed considerably. There was a higher monoline component to that years ago, and now as we said, 88% of our new business is account based, 30% of the entire book is Platinum.

So, not only are we growing at 7.4%, but the mix shift and the quality of the book is very, very high. I'll now turn it over to Dick to talk about Pennsylvania and some of the other growth initiatives that we have, including our foray into the emerging affluent markets..

So Matt, really pleased with the way our implementation is going from a system rollout perspective. As you know, entering Pennsylvania was an important milestone for us to roll out the new capabilities.

This new system has some terrific features, ease of doing business features and pre-fill automated umbrella quotes, will have an automated dwelling fire product.

And then importantly, as Joe just said, it launches us into the emerging affluent capabilities that we've been building and allows us to create these trim packages to move upstream in our coveraging appetite. So really pleased with the way it's going. We have modest expectations on the business impact in 2017 from that, frankly.

We have appointed about 15 agents or so. So it's kind of a slow ramp. But generally speaking, it was just important for us to get the system in place and test its capabilities. So, thumbs up for that..

You mentioned specialty?.

I did, yes. I know you talked about sort of expanding capabilities there a little bit. I didn't know if anything has been put in place..

It actually has and it actually performed very well in the first quarter. So, if you remember, we said we're going to leverage Chaucer globally and internationally, leverage the domestic IAA focused business and develop a wholesale channel. The first area of growth will come from increasing penetration with our existing agency plan.

And while total specialty grew 2.5% in the quarter, if you adjust for the pullback in surety, which was entirely appropriate given the issues in that business, every line of business in the specialty book grew at mid to high single-digit rates, and it's a function of agency support.

Agents would rather give us the specialty business as a companion product in the package rather than give it to a pure play specialty player since we have the entire relationship. So we are pretty pleased with not only the profitability of the book, but the growth in many of the lines of business in the quarter..

Great. And then just one last quick one on the cat, given particularly the Midwest exposure and your market share there, that makes a lot of sense how the number fell out.

But the question is, how do you view whether or not you make a preannouncement for a quarter? Because I do think just if you look where consensus was as a view of where the public is viewing it, it did catch us a little by surprise, the magnitude of it.

Is there a hard dollar threshold or how do you think about whether or not you make a pronouncement?.

I'll just comment, look, our historical practice has been to make announcements on what I call the industry headline events. This certainly wasn't one of them. But Michigan itself and Illinois, the storm that actually was the most costly to us, was a $1.1 billion event.

Look, we are going to revisit the policy, if it's helpful to you, a few weeks before our earnings release to have the cat number out there so you can adjust your models. Jeff and Oksana and the team are going to relook at the policy and we're going to consider altering it..

Great. I would vote in favor of that, just in quarters where you have an outsized number like this, I went back to my model, I think it's the biggest number in a quarter since mid-2014, and like you said, without a headline event. So, great, wonderful. Thank you for the answers and continued best of luck..

From Sandler O’Neill, we have Paul Newsome. Please go ahead..

I just have some actually modeling kind of questions. One, on the tax rate, the last several years the tax rate has been sort of in the mid-20s. I assume that's mainly an investment portfolio structure reasoning. If I heard right, you're looking for that tax rate to go up a fair amount.

What's going behind that, is there a change in the portfolio or other issues?.

Jeff?.

Just be careful, you may be looking at the net income rate versus the operating rate. So, what I gave in my remarks was the operating income tax rate. The operating income tax rate in the current quarter is a little bit lower than we expect for the year. So we expect 32% to 32.5%.

The net income rate will continue to be lower because we have a tax position that we call an identified mixed straddle which makes use of some older capital loss carryforwards.

And so, that essentially is associated with some older investments which have been dealt with long ago, but they roll through net income over time, and they will continue to do that over the next few years. What's important I think is really the operating rate.

It was lower this particular quarter because of a change in accounting from stock compensation, whether it would be units or options. When those appreciate, it used to be that the increased tax deduction went through your equity section. Starting January 1, it went through your income. So that goes through operating..

And then my other modeling question is the other operating expenses, could you talk about sort of the outlook for that? It is a little bit higher than I anticipated, not a lot, but a little bit higher than I expected this quarter..

I think it fluctuates a little bit from time to time. We had some investments in the Personal Line book that are sort of rolling through to the first quarter and we had planned those. So our expenses are really right on our plan for the quarter.

As we roll through the remainder of the year, we expect to get leverage on our fixed expenses as the earned premium increases. So, I think you'll see it come down marginally over the year. You may be comparing it to last year and there were some unusual items that were reducing expenses in the first quarter of last year temporarily..

Okay, great. Thank you..

From Janney, we have Larry Greenberg. Please go ahead..

Just a quick housekeeping and then a more general question. The housekeeping, I think you mentioned that you had some favorable cat development in Chaucer.

Just wondering if you can give what the gross accident year cats were and then what the favorable development offset was? And then the more general question, I'm just wondering if you've done anything, I think at Investor Day you talked about leveraging the relationship between domestic and Chaucer, and just looking for any color on whether anything has gone, going on there yet?.

I'll kick it to Jeff and John to address the cat question on Chaucer..

Sure. So in the first quarter, our cats were $7.3 million.

John, any color on the cats overall for Chaucer?.

So we've got $6 million on the current year, which is really the Cyclone Debbie hitting Australia. And then we've got a $3 million coming back that we just allowed in for the U.S. tornado losses, but nothing too material..

Okay.

So then there was $1.7 million or so of favorable development against that?.

That's correct..

Okay..

In terms of leveraging Chaucer's capability domestically, we're at the beginning stages of that. I think one of the things we've recognized is that Chaucer has built some cyber capability.

One of the first areas we will explore in Chaucer building a global product that will also be used domestically will be in the area of cyber, but too early to report anything more dramatic than that, Larry..

Fair enough. Thank you..

From KBW, we have Meyer Shields on line. Please go ahead..

Just, Jeff, two questions, I'm a little confused, when you talk about the full year cat load and the full year tax rate being in line with prior guidance, is that what you expect for – do you expect future quarters to be in line or do you think the full year is? In other words, are we lowering the expectation for cat load for the following three quarters and raising expectation for taxes?.

The answer is, no, we are not. As you know, we sort of provide on an annual average loss basis, and obviously we can't predict that the storms in the last three quarters of the year will be $32 million better than we planned. So the statement we made is, all of the non-cat metrics are on plan to hit our 2017 guidance for the year.

Obviously the wildcard would be cats coming in as planned or better than planned to beat the $32 million overage in the first quarter.

Jeff, anything to add?.

I don't think so, other than cats are obviously variable, and we'll see what happens in the remainder of the year. I can't revise the plan and hopefully we'll be lucky to make it up..

Okay, that helps. Sorry for my confusion. And also, I think Jeff, you touched on liability or litigation loss trends, and I was hoping you could elaborate on what you've seen..

So maybe I'll pass to Jack because we're seeing that in CMP, but we're not – unlike others in some of our commercial multi peril business in the liability side, we are seeing some involvement of lawyers. And we continue to see on the Personal Lines side, we are seeing some bodily injuries varying. We attribute some of that to lawyers.

But Jack and Dick?.

This is Jack. What I would say, this quarter is really no new news. What we've been experiencing is an uptick in bodily injury vary in the auto lines, and then most recently slip, trip and falls, for the most part seen in major metropolitan areas.

There is – had been a progressive uptick in attorney involvement, which kind of manifests itself in a variety of different ways, including higher medical run-ups occasionally, higher awards, but in terms of the quarter, we haven't really witnessed anything that changes our view on last year's picks and how we dealt with that and the reserves as-well-as as we went into the first quarter..

Okay. Thank you very much. That's helpful..

And we have no further questions at this time. We will now turn it back to Oksana for closing remarks..

Thank you very much for your participation today and we are looking forward to speaking to you next quarter..

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for joining. You may now disconnect..