PRA
#Good morning, <UNK>.
<UNK>, I will let <UNK> answer that question specifically for healthcare, but I would just remind everybody that the uncertainty in the healthcare arena continues.
If anything, it has increased in recent months.
Frankly, my guess is choppiness will be the order of the day but, <UNK>.
I would very much agree.
Choppy, I think, is a good word.
While the submissions are up and we were very pleased and I think pleased not only with the rate of submissions, but also with the ability that we had to respond to them and the pricing and underwriting that we were able to do, there is a wide variety.
And in any given quarter, certainly over the course of the year, I think we will see many submissions that we either pass on that we are not successful when writing because of our underwriting or terms and conditions.
Particularly with the larger accounts, as I mentioned earlier, I think you're going to see a fair amount of variation.
On our existing or legacy book of business that we have been very consistent in terms of being able to retain that business, both in terms of retention rate and pricing, and the flow of new business in that portion of our business is more predictable.
Yes, there is.
There are quite a few opportunities that come along.
I guess I would remind you that it has been a long time that we have been talking about this unit, which we are very optimistic about and pleased with, and they looked at many opportunities before this one was actually put on the books.
Again because of the nature of the business, the competition that is out there, and just some of the transactions that were reviewed that either didn't make sense for because of the pricing and terms that we put on them, they went elsewhere.
There is also a lot of uncertainty from the nature of these transactions, because sometimes the underlying transaction itself, as in this case, the sale of a hospital, may be proposed but not go through, so we might be all lined up to do something and still not get it.
I think there is always some noise in it.
A year ago, mass torts was a little bit of noise; this year it wasn't so much.
Sometimes we have, on the current accident year loss ratio, the effect of changes in our death, disability and retirement reserves or the internal claims handling costs of ULAE, but I think on the basic loss and allocated loss adjustment expenses that we established, I'd say that we're pretty stable.
We have been, and I don't expect that to change anytime soon or anything dramatically.
It is a direct reflection of the rate environment in that we see through our rate analysis things being pretty stable in the marketplace as well generally what we are seeing in the overall frequency and severity environment.
It all is somewhat circular and related and right now we just don't see many significant changes out there.
Thanks, <UNK>.
Thank you.
It would vary for both healthcare and workers comp, but <UNK> can start with the healthcare.
I'm happy to.
On the healthcare side, I think there's several things.
Sometimes other companies have reported charges and looking back at it, many of those companies were relatively the price competitors in the marketplace so if the initial reserving was based on the same assumptions as the pricing and the pricing analysis was not sufficient, I think that often is the driver of some of the charges that you see.
The loss environment never has been easy on healthcare.
We're always subject to volatility, both in terms of verdicts on cases that are tried and how those drive settlements, as well as potentially changes in frequency.
In our business, we have not seen the changes in frequency and I think we have done a really good job in terms of, in our claims area, in controlling the verdicts but that potential is always there.
When that does happen, particularly for companies that retain a significant amount on a net basis, either with very limited reinsurance or no reinsurance, it can create a lot of volatility for their results.
<UNK>, what would you say.
As we look across our workers compensation operating platform, first of all, it has been stable on the regulatory side of the equation.
We have been able to control our medical inflation with our excellent claims closing patterns.
Claims frequency continues to decrease.
We had about a 9.5% claims frequency decrease this year and that has occurred in the industry really over the last 16, 17 years.
You end up ---+ at the end of the day you end up with was fairly stable severity trends, medical inflation seems to be under control overall and the frequency continues to come down, putting rate pressure on the book of business.
That is kind of where we are at as an environment.
It does vary state by state.
I would just say the 2016 to 2017 core operating states that we are in today, we are really pleased with our overall results and they have been good states to deploy our capital.
<UNK>, nobody has any idea how it's going to play out.
I go to a variety of meetings in a variety of environments and a variety of settings and the common theme is great uncertainty.
I think it is just too soon for us to know.
Given that uncertainty, we are going to be very cautious about making any changes that we think would be at risk because of the uncertainty.
Now, having said that, I think it remains clear that the provision of more and more healthcare by larger and larger organizations will continue to accelerate and I think it is clear that more and more healthcare will be delivered at lower and lower provider levels.
Those two things have been sort of the foundation of the strategy that we have employed for now well over seven years and I don't see anything that will change that.
The system is not going back the way it used to be.
In terms of what legislation may ultimately be enacted by Congress, I think it would be utter folly to make any big bets on what that would ultimately look like.
We will continue the strategy we have in place, we will continue to be attentive and responsive to a variety of different customers from the very, very large healthcare systems to the still-remaining solo practitioners.
The uncertainty that is faced by the system has probably never been greater.
I read constantly about the blurring of lines between, for example, providers and payers and I think that is going to continue and probably accelerate.
We think we have ---+ whatever the ultimate answer is, we think we have a vital role to play in the market, but we are not going to get ahead of ourselves.
I will let <UNK> delve into the specifics of it with you, but it is not that we set a capital management strategy and put it in concrete.
It is a very fluid strategy and it depends upon the environment in which we are living.
The Board discusses strategy, capital management strategy, at every meeting.
Our first desire is to put the capital to work in our businesses.
If we can't do that, our second desire would be to buy our shares back at an attractive price.
If we can't do that, our third goal would be to pay the special or regular dividends.
Acquisitions remain very much in our target, but we no longer have to do the acquisitions and we are not going to do them at what we regard as unreasonable and irrational prices.
We are in a very fortunate position.
We do not have to do them.
But I don't think our Board will ever say, this is going to be the capital management strategy we will follow forever and ever.
I think they will continue to look at it at every meeting, and I think that will continue to assess the opportunities that are in front of us and the best use of our capital to the benefit of our shareholders and our customers.
<UNK>.
I don't think I have anything to add, <UNK>.
Thanks, though.
Thank you, <UNK>.
Hey, <UNK>.
First, everyone of these is a little different and the reinsurance program that we have can optionally support it, but it is not required to.
Just as a bit of background, this transaction in particular sort of came with its own reinsurance in that we are ---+ as I mentioned, we are actually becoming or have become the carrier of the original policies through this novation, so we are the insurer and the reinsurers that were in place over the hospital captives are still in place over our novated policy, the policies that we have issued.
In this particular situation, we did not have to utilize our existing reinsurance program.
In other transactions, there may be some that have limits or features that are large enough for us to be interested in doing so on a net basis, to limit our net exposure, and then we always have the option to go out and arrange for facultative or individual reinsurance on any transaction.
I think Alabama finished the year very strongly.
When we go off-line, I'm going to send you Coach Saban's cell phone and you can call and ask him.
<UNK>, that is a really good observation.
We are seeing competitive pressure from both the regional and the national stock carriers that write multi lines, and it's being viewed, as the industry combined ratios come down in the last five, six years from kind of a [115% to a 95%], it's been viewed as a more attractive line of business and I think strategically as a growth line of business for the multi-line carriers.
We really see, at the end of the day, we see ---+ and it is regional, the competition is different on a regional basis, but we really see competition in three areas, the multi-line carriers that I just described, on the small business side we see the technology players play hard in that marketplace and then we see the regional specialty workers' comp carriers.
Those are kind of our three ---+ the three types of competitors that are out there in the marketplace and it is a competitive space right now.
<UNK>, consistent with prior cycles, correct.
Absolutely.
Thank you, Chad and thanks to everybody who joined us.
We will speak to you again in May when we report first-quarter results.
