Good day, and welcome to W.R. Berkley Corporation's Third Quarter 2020 Earnings Conference Call. Today's conference call is being recorded. The speakers' remarks may contain forward-looking statements.

Some of the forward-looking statements can be identified by the use of forward-looking words, including, without limitation, believes, except or estimates. We caution you that such forward-looking statements should not be regarded as a representation by us that the future plans, estimates or expectations contemplated by us will in fact be achieved.

Please refer to our annual report on Form 10-K for the year ended December 31, 2019, and our other filings made with the SEC for a description of the business environment in which we operate and the important factors that may materially affect our results. W.R.

Berkley Corporation is not under any obligation and expressly disclaims any such obligation to update or alter its forward-looking statements whether as a result of new information, future events or otherwise. I would now like to turn the call over to Mr. Rob Berkley. Please go ahead, sir..

David, thank you very much and thank you all for dialing into our third quarter call. Similar to the past, we also have Bill Berkley, Executive Chairman, on the call on our end; as well as Rich Baio, CFO and Executive Vice President. We're going to follow a similar agenda to what we've done in the past.

We're going to ask Rich to start off with some of his thoughts and highlights from the quarter. And then I will follow with a few comments and then we will be opening it up for Q&A. Rich, if you could please..

the reduced annual pre-tax interest expense of about $3 million and a non-recurring debt extinguishment cost in the fourth quarter of approximately $8.5 million pre-tax. With that, I'll turn it back to Rob. Thank you..

Rich, thank you very much. Obviously a lot there, and we can get into that in the Q&A more detail if people so desire. A couple of thoughts from me.

First off, I think it goes without saying, but I'll say it anyways, 2020 clearly a year that the world, the industry, and all of us will not forget anytime soon, and additionally in many respects, a year that hopefully will not be repeated.

If COVID-19 wasn't enough, then frequency of severity around cat activity, I certainly think is really testing society. If there is any silver lining in this, from my perspective, perhaps it provides an opportunity for the insurance industry to demonstrate the value that it brings to society.

And I would just finish this by saying that, certainly our thoughts are very much with all of those that are directly and indirectly impacted by these circumstances. Turning to a couple of comments about the marketplace. Clearly remains in a time of transition, I would suggest that it is accelerating every day.

I would also suggest that it would appear as though there is a significant amount of runway in front of us. We can see this in a variety of different data points that we monitor.

We can see it in our submission flow, particularly in our specialty businesses and the extreme would be in our E&S businesses and that flow continues to build significant momentum. Additionally, we can see it in the rates that we are achieving. As referenced in the release, ex workers' comp, we got 14.5 points of rate increase on our renewal book.

I can give you a couple of historical data points that we've shared with you in the past, but no sense in having to go back and dig them up. If you go back to Q3 2016, we got 70 basis points of rate increase. If you go to Q3 2017, we got 1.8% rate increase.

If you go to Q3 2018, we got 4.1 points of rate increase, Q3 2019, 6.6, and then again as mentioned a moment ago in our release 14.5 in Q3 of 2020.

When we look at what is driving this, what is driving the firming of the marketplace with the exception of workers' compensation, those catalysts, from our perspective, if anything, are becoming more acute.

As far as workers' compensation goes, as we've discussed over the past few quarters, it is our expectation that that marketplace is more likely than not to begin to firm as we make our way into 2021 or I would suggest some time next year. Turning to some of the underwriting activities for the Group during the period, clearly lots of moving pieces.

Rich covered them all in some detail and we can take the conversation wherever folks would like to in the Q&A. I would just flag that the big drivers here is the growth in earned premium. And if you look at our net written, there is good reason to believe that that momentum will build.

Hopefully, the world will open up and you will see the short-term benefit that we're getting on the T&E front that will return to a more normalized number, but again that momentum on the expense side stemming from higher earned premium we expect to still have more opportunity as we remain focused on our controllable expenses.

Rich gave you a good background on the loss ratio, just a couple of points that I would add on there. Number one is clearly there is an impact stemming from COVID-19 and the shutdown and what that has meant for frequency.

It is unclear to what extent that impact is temporary and we will see a surge in claims and a catch-up or whether that is a permanent shift though we expect things will ultimately return to a more normal level.

For purposes of our income statement, we have not assumed anything other than we continue to carry things by and large at the loss ratio we used at the beginning of the year. To that end, point number two that I would like to flag.

The loss ratios that we selected at the beginning of the year assume that we would not be outpacing loss cost trend by the level that we are. The rate increases that we have been getting throughout the year by and large are above and beyond what we had anticipated.

But again, given the uncertainty around loss cost trend and specifically social inflation, we have deliberately decided to take a wait and see attitude. Switching over to the investment front, as we have discussed in the past, it's no different than what we do on the underwriting side. We start with a view towards risk adjusted return.

As Rich mentioned, our duration is relatively short at the 2.3 years and that is a conscious decision. That decision clearly comes at a cost, but we think it is appropriate and manageable cost. It is our view at some point in the not too distant future, though not tomorrow, you will see likely interest rates begin to move up.

And at that moment in time those that reach too far out on the yield curve, you will likely see a reduction in book value because of the leverage that exists in the slight movements and interest rates moving up on the value of those bonds. No different than what we've done with the alternative portfolio.

There are certain investments that we have made that have not given us great investment returns from an operating perspective.

But it is our view that we are focused on total risk adjusted return for shareholders and because of our long-term view, we are willing to forego some ordinary regular investment income in order to create that additional value. When we look out at the marketplace, again from our perspective, there is a lot of runway once again in front of us.

We are encouraged by where the market is, and even more so where it is going. And from our perspective, the circumstance that we see today and expect tomorrow will only benefit more with a recovering economy, which we anticipate will hopefully be the case over the coming quarters.

So let me pause there, and David, if we could please open it up for questions..

[Operator Instructions].

Thank you..

Your first question comes from the line of Mike Zaremski with Credit Suisse. Your line is open..

Mike, good afternoon. Thanks for calling in..

Hi, of course, good afternoon.

I guess the first question is going to be on expense ratio, which I know, I think, sometimes I speak to investors, I think it's kind of boring, but I was kind of looking back at the last year or so at underwriting income versus consensus expectations, and it seems like most of that would be – a good amount of that has been on the expense ratio, especially this quarter.

How much of the improvement do you feel is kind of structural directionally and kind of more sustainable versus somewhat cyclical and could it kind of ebb and flow during the next soft market whenever that is probably not for a while clearly.

Directionally, do you think that you can build upon the current below the 30% threshold like, I guess, I'm trying to figure out?.

Well, it certainly is our goal to be able to push through 30%, but I think that the big opportunity there is yes, efficiency, but even more so scale.

One of the things that you need to remember is that or keep in mind is that the vast majority of the businesses in this group are businesses that have started from scratch and oftentimes because they operate with such outstanding underwriting discipline, once they get started, they may not be able to achieve scale.

But as you come into market conditions that allow you to scale, that allows you to leverage those fixed expenses.

So long story short, I think the improvements that we are seeing on the expense ratio putting aside those that are related to COVID on the T&E front, I think those are real and we are very focused on not just maintaining them but continuing to build upon them..

Okay. I guess, next question, Rob, I think last quarter and this quarter, you talked about there being some benefit as a result of slow down, I believe in claims activity during COVID. I think you keep reminding us here that you are not -- short-tail lines are taking some of the credit, but not for the long-tail lines.

Any quantification or color you wanted to kind of give us and try to think about how much of the loss ratio improvement might be driven by temporary factors and understanding that there might be more benefit if you are being – if your assumptions prove conservative?.

Well, I think the position that we're taking is that it would be premature to reach a conclusion. There may be, if you look at our mix of business, the vast majority of what we do has some tail to it. So, again it's a very modest amount of our short-tail business, very short-tail business that we would be willing to reach a conclusion on.

So from our perspective, we need to take a wait and see attitude to make sure that this is not just a temporary phenomenon where things will swing back and then some. And as we've been talking about even pre-COVID, we're sensitive to social inflation. So, I think we are being thoughtful and measured.

And I think over time, we will get more clarity and obviously once that becomes available, that will be shared with you and others..

Okay, great. Last question is on investment income. You've been clear that you're willing to take some pain in the expectation of interest rates eventually moving higher. Berkley clearly has one of the best track record in the entire industry from an investment income perspective.

So, I'm just curious, is this a stance you've taken in the past in terms of it seems kind of somewhat of above that or is there, is there kind of a line in the sand where you can only take so much of a bet in terms of rates moving higher and thanks you are going to put some more of the money to work.

So just curious if it is causing our estimates to kind of move lower pretty materially as the whole industry is, but even more so on the investment income front?.

Yes, well we’ll share the observation, and I would tell you that it is a deliberate decision. We do have a view as to what the threshold is of short-term pain that we are prepared to live with in order to make sure that we preserve the long-term optionality.

And at this stage, it's something that we grapple with every day, but from our perspective, if you think about specifically the fixed income portfolio, the price that we are paying to maintain the position we are in is not inconsequential, but it pales in comparison to the cost if you see rates move up a relatively modest sum and what that would mean for book value..

And as a follow-up, is there any – do you feel that there’s more opportunities or better harvesting or is it a tougher environment on the alternative side, maybe there is things going on the alternative side that we should be thinking about in terms of your view in the current situation we're in?.

I think that the world is awash in capital, and there is a lot of money chasing a certain number of opportunities, and I think you see that in virtually every asset class.

Fortunately, for us as an organization, we have some very capable people that manage the investment portfolio and in spite of how challenging the environment is we continue to find opportunities for the shareholders.

That having been said, sometimes it's lumpy; and that having been said, sometimes maybe you look a little bit foolish today, but maybe you don't look so foolish down the road. And that is a reality that we've had to accept both on the underwriting side, and we're prepared to accept on the investment side of the business too.

Again, we are focused on risk adjusted return and we do not run the business just for the next quarter..

Thank you..

Thank you..

Your next question comes from the line of Yaron Kinar with Goldman Sachs. Your line is open..

Good afternoon..

Hi, good afternoon. Good afternoon, everybody. Thanks for taking my questions. I guess my first question, Bob goes to your comment about, I'm seeing great swelling in excessive loss trends today but figuring cautiously on the timing of the release, just given the uncertainty in the landscape.

I guess my question to some degree there is always some uncertainty out there and I realize that today, there may be elevated uncertainty.

But can you maybe talk through kind of your thoughts of what level of uncertainty is acceptable, at what point you feel more confident in releasing this rate over trend as opposed to where we are today? Not that I'm looking for a specific date, but just want to conceptually understand that level of uncertainty that is comfortable?.

So, I don't have a scale or a perfect barometer to be able to point you towards. What I can tell you is that we look at a very granular level by operating in the group, by product line, by year on a very regular basis, and we think about the risks, we think about the visibility, and we think about how we view the margins.

So, I would tell you that with every passing day, we have more visibility. But we are not going to declare victory prematurely. We still need to see these things seasonally.

The average duration of our reserves is give or take, around four years and there is a lot of distance between the time that you cite the policy and the time where you have clarity around the outcome.

So in addition to that, there is a lot of uncertainty as you pointed out, and I agree with in the world and again, we are just taking it one step at a time.

At the same time, as I suggested it in, I think you picked up on, if things play out as they would appear to at first blush at this stage it is there is a possibility that there is more margin in the business and is coming through in our financial statements at this time, but again there is a lot of distance between here and when we have clarity.

But every day we have a bit more..

Okay.

And with this slow increase in clarity over time, should one think of the release of that pent-up margin has a slow relief as you get more and more comfortable or do you think that one day you cross a certain threshold and we just see a step down in the loss picks?.

No, I don't think you should expect that one day there will all of a sudden be a dam that breaks. We respond to the information incrementally as it becomes available. So from my perspective, there is a growing amount of evidence that you will see our picks coming down both in the prior year and the current year, possibly in the future.

But again, we are not going to go too early..

Okay and then my second question on COVID.

Can you maybe talk about any puts and takes that you saw in the loss ratio, this quarter whether good or bad?.

Generally speaking, the number that we put up for COVID, we remain comfortable with. But just as a reminder, we contemplated that things would be getting resolved, give or take by the end of the year to the extent that things are not getting resolved. Then we'll have to see what actions we may need to take along those lines.

But as far as specifics, there are certain pockets where things have proven to be more challenging and there are certain pockets where they've proven to be less challenging..

Okay, thank you..

You are welcome. Thank you for calling in..

Your next question comes from the line of Ryan Tunis with Autonomous Research. Your line is open..

Hey, thanks. I want to go back to what I heard Rich say about mix. So clearly loss ratios are improving year-over-year, they have been for the past couple of quarters. Again, you're being conservative.

Is there a mixture, I mean you mentioned that mix was one of the contributors there? Would there have been less margin expansion if we weren't talking about mix..

Well, I think that we have a view that we are not in business – issue insurance policies as my boss says we're in business to make money.

And you can see from Rich's comments which highlighted the byline growth or not there are certain parts of the portfolio that are growing and growing considerably and there is one part of the portfolio that being workers' compensation that is shrinking notably.

We look to deploy capital where we think the margins are and we are prepared to shrink the business where we think we can make an appropriate risk adjusted return. So workers' compensation rates have been coming down for a few years and at some point, they get to a level where we say we're done.

And as you can see that our workers' comp product line has been shrinking considerably, both for the quarter and year-to-date. So there are other parts of the business where we like the margins a lot and we are benefiting from available rate increases in the marketplace and we are growing that part of the business considerably.

And I think you should expect us to continue to do that and if the economy opens up a bit, you're going to see the growth rate go from high single digits to something considerably above that..

Understood. And just an observation of Berkley initial annuities Rob, I think relative to the other underwriters’ consensus is assuming relatively flat accident year loss ratios 2021 versus 2020.

In your view what would need to go wrong or what would need to happen for that consensus view to turn out to be correct, no margin improvement next year?.

Look, I think if it turns out that we grossly mis-assessed our loss cost, then it would prove that maybe we have an issue, but as I suggested from my perspective and again, I don't have perfect clarity, but the data points that I look at would suggest that there is good reason to believe given the rates that we are achieving that margins are improving and will continue to because you got to remember the rate increases that are coming through on an earned basis continue to trail the higher rate increases that we are getting on a written basis.

And I think by anyone's measure, the rate increases that we are and have been getting for an extended period of time in all likelihood will prove to outpace almost anyone's assumption of loss cost trend..

Understood. I think the last one I wanted to ask about was, I saw the press report on the London building and I know you guys own a lot of buildings.

But could you give us some sense of where that property is held on the books? And if there is a potentially a broader strategy, you guys are considering in terms of monetizing some of those real estate assets held for sale on?.

So as far as the value that we carried out, if you want to give Karen or Rich a call, they can point you toward our statutory statements and where that is public information.

As far as just our view about really any particular piece of real estate, the real estate portfolio in general, the alternative portfolio and the portfolio overall, we have a pretty good size investment portfolio and that's the vast majority of what's in it is something that is available to be purchased if the price is right.

So again, from our perspective that's really how we think about all of the assets that belongs to the shareholders..

What do you think that real estate portfolio might be worth?.

A lot..

I know you guys have talked about this in the past.

So it's marked like $2.2 billion twice that?.

I think as we've commented in the past, we think that the Group's stated book value is understated and a lot of that we can thank the accountant for, but the fact of the matter is that our view is that we have a lot of assets that are on the book that are worth more than they are carried at.

And just generally speaking, we don't get into specific conversations about a specific asset as to what it's worth or anything else around it..

Thanks for the answers..

Your next question comes from the line of Meyer Shields with Keefe, Bruyette & Woods. Your line is open..

Great, thanks. So there are two small questions, first if I can and then bigger pictures last. I guess the question first, talk about the tax rate in the quarter.

Are they on net pre-tax or operating?.

Yes, I am absolutely. So the effective tax rate is elevated from where we have seen that historically in the quarter. It was about little over 26%. And that really was attributable to where the losses that are emerging with regards to COVID-19 and to that extent, our ability to utilize the losses currently or not.

And at this point in time, we've taken a conservative position with regards to not recognizing a tax benefit with regards to those losses in the foreign jurisdiction. But we do plan to recognize though is, at some point even if we need to put in place some planning strategies..

Okay, that's very helpful.

I was hoping you could talk through the, I guess negative catastrophe losses in the Reinsurance & Monoline Excess segment?.

Sorry, could you repeat that?.

Yes, I'm sorry.

The negative catastrophe losses reported in Monoline Excess & Reinsurance?.

Richie, you want to cover this?.

Sure. Absolutely.

So when we established our COVID-19 reserves, we had established IBNR as you can imagine and anticipated where we thought that IBNR would emerge as a result of further information coming through in the third quarter, we concluded that that some of the IBNR that we had allocated to the Reinsurance & Monoline Excess segment would need to be reclassified to the Insurance segment.

And as a result of that that's what's giving rise to a small amount of negative catastrophe losses in the third quarter..

Okay, perfect. And then....

If I can just – sorry, just to add onto Richard's comments so as he just highlighted. So the aggregate number didn't change at this stage we just shifted from one bucket to another..

Correct. No, that's helpful. We've talked a lot about the accident year 2020 picks in light of lower claims frequency.

Can you talk about the application of trend to prior years? In other words, do we see the same directional conservatism in the reserve reviews that are ongoing now? Is there any change in the observed development of past year losses?.

From our perspective, we are seeing – from our perspective we are taking a wait and see attitude, both on the current year and the prior years as well by and large..

Okay. Understood..

We are very sensitive to the – as we've discussed social inflation and the legal environment and we think that there is a lot of uncertainty around that. So the more recent past that we've seen these rate increases that are significantly outpacing loss cost trend in our market..

Great. Thank you very much..

Thank you..

The next question comes from the line of Phil Stefano with Deutsche Bank. Your line is open..

Yes, thanks, good afternoon. There has been a clear focus on the pricing side of the house and the impact to the underlying margins. I guess can you refresh us on your outlook for loss cost, has this changed over the past three, six, 12 months.

I mean, understood, there is a level of conservatism in this and not trying to take forward the frequency or the pricing momentum we've seen as of late but has anything in the loss cost tea leaves changed?.

Not from our perspective, I think for many quarters at this stage it – we think it is more likely than not that we are outpacing loss cost trend by several hundred basis points..

Okay..

We can prove it. Yes..

No, understood, understood. And when I look at the line like commercial auto, I mean clearly, it feels like there has been an inflection in the appetite for this business. And you had talked about in the earlier question about workers' compensation and then and it's fallen below the line.

I mean, is there a line in the sand where these businesses are viewed as profitably or unprofitably that you ratchet up or ratchet down significantly? Or is there a trend that you think about the slowing the business or growing the business, as you approach that line?.

So the answer is both. And what I mean by that is we have a view as to what is an acceptable loss ratio, which really stems from an acceptable risk adjusted return. And obviously that that the market doesn't just flip one to another overnight. It's a gradual erosion or a gradual acceleration typically, that is sometimes faster than others.

So but when we will look at the workers comp market, we've observed it getting more and more competitive for not just some number of quarters, a few years now. And at some point that reaches the point that you say, I'm not willing to pay anymore. Same thing has happened with other product lines.

There was a moment in time I think just going back a couple of years where we took that position with commercial auto. And again, that's why you see comp shrinking the way it has been this year.

I expect that it is likely and certainly hoping that next year, you will start to see the workers' comp market generally speaking bottom out and start to move back in the other direction.

So one of the things that has changed at least over the time that I've been working in the industry is once upon a time, by and large, at least in the commercial line space the marketplace across product lines marched somewhat in lockstep.

I think the fundamentals of a cyclical business is still alive and well in the commercial lines marketplace but major product lines do not march in lockstep anymore and I would suggest that workers comp would be perhaps an example of that today..

Okay. And the last one and I don't want to get into a political conversation but any thoughts around the potential for a change in the corporate tax rate in the U.S.

and the extent to which maybe that it serves as another boost to pricing or at least the competitive impacts that might have for you?.

Well, the good news is that our lead political expertise in the Group is on the call as well. So I'm going to turn it over to him for that..

You know when you get old enough they turn you over to politics; we could see that in the candidates.

But I think that the reality of tax rates clearly, our tax rate is going to change if we have a Democratic President and Democratic Legislature and I think that's just part of part of the life is, no different than we will likely to see some inflation of higher interest rates, which has both benefits and detriments.

I think it's just part of this where we are in and we have to adjust to it. Fortunately, we do our best when we look at our risk-adjusted return to keep as much flexibility as we can, and it will be more on municipal bonds as will other creative securities try to optimize returns given those changes..

Is there anything else?.

[Operator Instructions] Your next question comes from the line of Brian Meredith with UBS. Your line is open..

Hi, Brian. Good afternoon..

Afternoon. A couple of quick ones here.

First, just a quick one; any impact of FX on topline in this quarter?.

Richie, do you have that?.

Yes, I do. It was a little over 1% impact..

So net positive?.

No, it was a negative. The U.S. dollar – yes, the U.S. dollar weakened on a relative basis to a number of currencies in the quarter..

Got you. Great. And the second question, Rob, just curious if I take a look at your insurance written premium growth in the quarter and let's trip out workers' comp, given the implied rate that you're getting right now it appear that you're either cutting back on business still or exposures are still a headwind.

Is that true, and by how much is that happening right now and that's hurting growth?.

So clearly, we continue to be impacted Brian, the broader economic circumstances both we faced domestically, as well as outside of the U.S., so I would tell you, the third quarter was a lot easier than the second quarter by quite a margin.

Policy count is less where the story is and it's more about insurance businesses just see they are having shrunk and we can see that in the initial premium estimates as well as the other premiums. So is there an impact on policy count? Yes, but it's very, very modest.

It's more just about the scale and as a reminder, putting comp aside on the payroll, a lot of what we insurer is off of receipts or revenue..

Okay, great. So that's a potential other kind of tailwind here we could see going into next year as the economy....

Yes. Absolutely. I mean, my expectation is, assuming that the economy is able to open up even at a gradual pace; you are going to see that have a meaningful impact on our topline..

Great.

And then my last one, I know you briefly touched upon it in the beginning on the expense side, but I'm just curious with this reduction in T&E, are you finding that some of this could be kind of permit I mean, I heard from other companies that productivity is actually up quite a bit without some of the T&E that's going on right now, how much of this do you think is potentially sustainable and how you're thinking about that?.

So the answer is that we are actively discussing it internally and our colleagues that run the operating units are very focused on it.

And at the same time, from our perspective while we are pleased with the savings over the 50 basis points to 60 basis points in the scheme of how we are going to capitalize on the opportunities in front of us, we care about that, but that's not where the leverage is..

Makes sense. Thank you. Appreciate it..

Thank you..

Your next question comes from the line of Joshua Shanker with Bank of America. Your line is open..

Yes, good evening, everyone.

How are you all?.

Hi, Josh, good afternoon. Good evening..

Thanks for taking my question..

Sure..

So I'd like to talk about the states in two regards. One is, you talked about, you're not willing to take too much rate cuts in workers' comp before it comes unattractive.

Can you talk about how it's different depending on which state you're in and the regulatory regimes and whether or not you have the flexibility to dictate your own future in some states, while other states, the regulatory regime makes it harder for you to want to stick around?.

Well look, clearly each state has its own rating bureaus by and large, and in some cases you have insurance commissioners that are more involved and in other states insurance commissioners that are less involved.

From our perspective, the workers' comp marketplace is not sort of one and the same, to your point, as shared with you that it varies quite a bit by region and undoubtedly, there are certain parts of the market where we've gotten to the point where we are not satisfied with the margins.

And we are prepared to let the business go away, and there are other parts of the marketplace or other territories where in spite of the reduction in rate, we still think that the margins are acceptable. But clearly, it does to your point vary by territory and even within a certain territory; it varies by exposure within that territory..

And so you could stick around some states and other states, you might leave depending on what the rate environment is I guess?.

We don't leave any states just to be clear, Josh, I'm sorry, I should have been more clear before. We are in the market every day at a rate that we think is appropriate for the risk that we're taking on.

And the market moves away from us and sometimes not sometimes and then oftentimes as people change their appetite, the market will move back to us, the cyclical nature of the business.

But I wouldn't want you to think for a second that we would drop from markets, we actually are focused on being responsible, so we can offer continuity to the marketplace, as opposed to being irresponsible and then having to respond in a irrational manner..

Appreciate it. And then the Chief Political Scientist made a comment about tax rates and the willingness to buy more munis, by means of helping the task condition of the company.

Can you talk a little bit about, you know the federal budget, the lack of sort of progress on us and then aid for the states and whether or not we need to be concerned about the municipal budgets for pensions and whatnot in the purchasing of munis?.

Well, that advisor is still here and I think he has strong views on the topic. So I'm not going to get in the way of that..

I mean in anything we do, having to do with politics at the moment is highly uncertain and unpredictable, but for the most part, the vast majority of governments have behaved responsibly in municipal bonds.

And I think that there certainly are some states that one we concerned about – for the most part of municipal bonds have proved to be a good investments and one can rely on that is not the world we're living in now.

So we sit and look at it, every day is a new game, you look and you measure and you are trying to care for, we've been a cautious investor for an extended period of time..

Thank you for the answers. Appreciate it..

Thank you..

There are no further questions at this time. I will turn the call back over to Mr. Rob Berkley..

Okay, David, thank you very much for hosting us and thank you all for calling in. Hopefully you come away from the call recognizing at least what we were suggesting that when we look out ahead, it's very encouraging. We think there is opportunity for margins to improve from here. We think there is opportunity for growth.

And I think there is a clear line from where we are to that happening. So thank you again, and we will talk to you in 90 days..

Ladies and gentlemen this concludes today's conference call. Thank you for participating. You may now disconnect..