WRB
#I'll give you what clarity I can.
So our expectation is by the end of the first quarter where we will be in 2 more states.
Some of that is a little bit out of our control, quite frankly, because we are at the mercy of insurance departments and their approvals.
So we haven't come out and said exactly what those states are.
But the gang that's running that business they have a few in the hopper, and I think there are 2 at the top of the list.
But I don't know how much we've communicated it.
What I would tell you is, we are going to markets that you expect we would go to markets, markets that are not as rich, if you will, and our target market are probably not markets that we are making as much of a priority.
I'm going to stick to my answer before.
And we will make sure that when we announce it, you're on the distribution.
The new money rate on that we are seeing now is at about 3%.
Yes, that's correct.
And it's shorter duration, also don't forget.
So <UNK>, I would suggest that that's a conversation for you to have with them.
I can't square it, so if they connect the dots for you, maybe you could pass it on to me particularly to my father, he would be very interested.
But again, I just look at the macro and I look at their economic model.
I look at economic model that others have similar to ours.
I look at what's changing.
And if people want to be able to remain where they are, it just doesn't work.
So maybe there's something that I'm missing.
And again, I certainly don't want to be rude or disrespectful to any of our competitors outside of the United States.
We have a lot of time for them.
But when I look at the situation as a case study, I don't understand how they would reach that conclusion.
So maybe you can figure it out and let us know.
So as far as that marketplace goes, I think that the #1 barrier to entry is expertise.
Unfortunately, that barrier is not always recognized by pools of capital and they just step in and oftentimes, it takes a little while but that ends in tears and then they respond accordingly.
So ---+ and we've seen that happen.
The good news about this line of business is it's relatively short tail, so people who zig when they should zag it, it comes into focus pretty quickly.
As it relates to the marketplace overall, I think one obviously needs to be very cognizant of what's going on with loss trend.
But generally speaking, from our perspective, we've been in the business for many years now.
We're very pleased with our participation.
And while it's competitive market like every market we operate in, we are not particularly put off at the moment by the level of competition.
The answer is that any time an account moves from one place to another, there is a bit of friction, if you will.
But I wouldn't want to lead you to the belief that, that is a significant barrier.
Ultimately, it really varies very much by state and by regulator.
Clearly, there are some insurance departments and state rating bureaus that are very focused on the idea of a healthy and sound workers comp marketplace for their state, and understand the implications on their economy in their state.
I think there are others that may take a shorter-term view.
When the day is all done, we look at a marketplace, we look at exposure, we think about what an appropriate rate is.
If we can get that rate, we'll write the business.
If not, we're not going to write it.
The answer is that we are in a position to provide continuity to a marketplace that we think make sense.
Ultimately, if the marketplace moves away from what we think is an appropriate rate, customers are certainly able to find an alternative perhaps at a different rate.
But our goal, as we have explained and demonstrated to stakeholders, is to provide a continuity for customers and ultimately we think that's part of our value proposition.
I just had a quick follow-up.
I wanted to make sure I understood the comment on the energy portfolio.
Could you just repeat it one more times.
Sure.
Let me make sure this is what you think you heard.
We may have made a couple of comments on the energy portfolio.
Long story short, we bumped the energy portfolio on a quarterly lag.
As a result of that, what you saw come through in the fourth quarter was actually the results from the energy portfolio in the third quarter.
So when you look to the first quarter results, those will actually be a reflection of what happened in the fourth quarter.
So to the extent that you want to try and anticipate what will happen in the quarter, if you look at the prior quarter, that will give you a sense.
Okay.
And maybe just one for Rich real quick on the accounting change you had mentioned.
I think that's just the mark-to-market changes that you're talking about.
And if so, will that just cause a bit more volatility in the numbers.
Yes, they will.
So as you know right now we mark-to-market the equities as well as our fixed income portfolio for the most parts through equity.
And so this accounting change is going to apply to the ---+ obviously, to everyone.
So equities will now go through P&L and we'll weigh up that variability.
But it is only as it relates to certain equities, just to be clear.
So ---+ and that's been fund and so our equity accounted for, so those would not be mark-to-market other than if the underlying fund to market is positioned to market.
Right, right.
And will you just lump these mark-to-market changes into your capital gains line or will it have a separate line item.
There are special disclosures that we'll need to follow under the accounting rules, so there will be change with regards to that.
But you'll see the delineation.
Okay.
Well, thank you all for calling in.
Couple of quick sound bites before you run off and start checking out other releases.
From our perspective, our strategy around risk-adjusted return and focusing on volatility, we were able to execute that, again, second quarter in a row.
I think that was demonstrated in the results.
In addition to that, we are optimistic quite frankly about market conditions for parts of the market that we are meaningfully players in.
I think we touched on that as far as rate as well as some of the underwriting actions that we have taken.
In addition to that, we continue to be very enthusiastic about what has happened on the tax front and ultimately, what that means for our economic model.
And finally, of course, the comments earlier about a rising interest rate environment and the leverage for us and our economic model, in particular, given the significance of investment income as a result of our large reserve base.
So by and large, we are very enthusiastic about '18.
We think '18 is going to be good year for us.
And quite frankly, it is going to be an opportunity for us to set the table for what will be a good '19 as well.
Thank you all for calling in and we will speak with you next quarter.
Good night.
