Good afternoon. My name is Valerie, and I will be your conference operator today. At this time, I would like to welcome everyone to the 2014 Outlook. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you, Mr. Helding. You may begin your conference.
Good afternoon. Thank you for joining us on CNO Financial Group's 2014 Outlook conference call. Today's presentation will include remarks from Ed Bonach, Chief Executive Officer, Scott Perry, Chief Business Officer, and Fred Crawford, Chief Financial Officer. Following the presentation, we will also have several other business leaders available for the question and answer period. During this conference call, we will be referring to information contained in this morning's press release. You can obtain the release by visiting the media section of our website at www.cnoinc.com. This afternoon's presentation is also available in the investors section of our website and was filed in a Form 8-K earlier today. Let me remind you that any forward-looking statements we make today are subject to a number of factors which may cause actual results to be materially different than those contemplated by the forward-looking statements.
Today's presentation contains a number of non-GAAP measures, which should not be considered as substitutes for the most directly comparable GAAP measures. You'll find a reconciliation of the non-GAAP measure to the corresponding GAAP measure in the appendix. I'll now turn the call over to Ed Bonach, Chief Executive Officer. Ed?
Thanks, Erik. Good afternoon, everyone. 2013 is shaping up to be another year of significant accomplishments for CNO. We expect to record increased sales, collected premiums, risk-based capital, and return on equity, along with having received multiple upgrades from the rating agencies. As we look ahead to 2014, our strategy remains largely the same. We'll build long-term shareholder value by continuing to invest in our business platform, remaining focused on sustainable and profitable growth, improving the effectiveness of our back-office operations, continuing to enhance the customer experience, and tactically deploying our excess capital, including strategic fit acquisitions. With class action litigation in our OCB segment now behind us, we will also look to accelerate the runoff of these closed blocks of business. Turning to slide six.
Before we get into our outlook around sales and key financial metrics, let me briefly comment on some general trends and market dynamics that are likely to impact our business. CNO serves the needs of middle-income Americans that are at or near retirement. This segment of our population is underserved and growing rapidly. As we have seen in studies conducted by our Center for Secure Retirement and Institute for Wellness Solutions, there are significant opportunities for growth in the middle-income market. First, middle-income retirees are generally unprepared for retirement and are likely will have difficulty managing longevity risk and healthcare costs. Second, as the population continues to shift from defined benefit plans to defined contribution plans, there has been a tremendous increase in the value of retirement assets in the control of plan participants. There are now over $21 trillion of retirement assets in motion.
Third, the Affordable Care Act and insurance marketplaces have expanded opportunities in the individual market. Lastly, we are seeing growing use of technology by our agents and our customers and expect that trend to continue. CNO takes a proactive approach to understand its customers, and many of the initiatives that we will discuss in this call are built around serving our target market and customers. Before I move on to the next slide, let me briefly comment on our long-term care strategy. Long-term care insurance plays an important role in the retirement care and security of Americans. Middle-income retirees significantly underestimate the likelihood of one day needing long-term care, and more than 75% of middle-income boomers incorrectly think that Medicare will pay for ongoing long-term care. It is important to understand that having private long-term care insurance options will reduce the future burden on already strapped state Medicaid programs.
While CNO has been successful in managing its long-term care business, margins are still vulnerable. We continue to balance offering affordable products that meet the needs of our market while also providing for adequate risk-adjusted returns. While we have been successful in achieving several rounds of rate increases in the past, we recognize that rate actions are becoming increasingly more difficult in the current regulatory environment. The LTC products that CNO has sold over the past several years are mostly short-term care, and this is slowly and favorably shifting the risk profile of our in-force over time. On a longer-range basis, we are focused on working with regulators, legislators, and the industry to reshape industry dynamics that address this important need. Turning to slide seven, let me briefly touch on some of the key initiatives that we will be investing in over the next year.
As previously mentioned, we see significant opportunities for growth in the middle-income marketplace, and the initiatives that we will be investing in are geared towards capitalizing on those opportunities. We expect to invest $45 million-$55 million next year in four major categories. We will make significant investments to drive increased operating effectiveness in our back office and to enhance the customer experience. We will continue to invest in agent growth and expansion. Lastly, we will continue to introduce new products and expand our market reach. We expect these investments to drive accelerated sales growth in each of our core business segments. Let me now turn it over to Scott, who will discuss some of these initiatives in more detail, as well as the sales outlook for each of our businesses. Scott?
Thanks, Ed. As we turn to the business segment outlook, we see continued sales traction within all segments as investments we've been making in growth are beginning to take hold. At Bankers Life, the positive momentum we have seen is carrying over to the fourth quarter, and we expect to produce sales results in line with expectations. It is worth noting that during the quarter, we achieved a significant milestone with the opening of our 300th location. Additionally, along with continued strong life sales, we expect the quarter to be highlighted by a strong annual enrollment period, resulting in year-over-year growth in both Medicare Advantage policies sold and Medicare Supplement NAP. Looking forward, I'd like to highlight some of the areas we will be focused on to continue to drive growth and capitalize on the marketplace trends that Ed mentioned earlier.
Although Bankers will continue to look opportunistically to add new locations, we will begin to shift investments towards initiatives that are focused on driving increases in agent productivity. Examples include sales force automation and advanced life sales training. In addition, Bankers is planning on making investments to drive growth in agents that are also registered financial advisors. These advisors will play a more and more important role within the Bankers agency model as more and more baby boomers find themselves in a position to make investment decisions that previous middle-market retirees, whom relied on defined benefit plans, didn't have to make.
As a trusted advisor to the middle market, Bankers agents also registered as financial advisors can play an important role in assisting non-registered agents in providing a well-rounded plan that includes solutions to address the needs middle Americans worry about most, payment of healthcare expenses, adequacy of retirement income, and leaving a legacy. Taken together, we expect these initiatives to contribute to growth and agent productivity that will equal or exceed the 2% we have experienced in 2013. This increased productivity, combined with steady agent recruiting, retention, and new locations, should drive growth in sales of 6%-8% in 2014. For Washington National, we are experiencing increased momentum and expect sales results in the fourth quarter to be modestly above expectations. Sales in both the worksite and individual markets have benefited from agent recruiting and the extension of our product portfolio.
Voluntary worksite group enrollments are also expected to be strong in the quarter. Looking ahead to 2014, we will be focused on expanding worksite distribution and growing our own agency distribution. We believe the voluntary worksite space will benefit from healthcare reform and a movement toward private exchanges. Our participation in private exchange platforms is expected to contribute to increased worksite sales during the fourth quarter and will be an area of focus for us in 2014. We will also be introducing a new group underwritten supplemental health insurance product, enabling us to acquire accounts in which it is required that all employees have the opportunity to purchase coverage. In addition to our worksite expansion plans, we will drive growth in our own agency distribution, PMA, through initiatives to increase sales in the individual market.
This includes development of a new program to recruit agents experienced in marketing supplemental health insurance as their primary product line. We will also continue developing new field leaders in relocating talent to underserved areas to increase our geographic coverage. These initiatives should result in 2014 sales growth of 7%-9%. Moving to Slide 10. For Colonial Penn, we are expecting increased sales in the fourth quarter versus the prior year. Late in the third quarter and at the beginning of the fourth quarter, we increased our marketing investment. However, due to less available direct response television ad space, our cost per lead increased. In looking at full year 2013, sales growth will be modest. However, keep in mind that this comes after two consecutive years of very strong growth at Colonial Penn, and that Colonial Penn sales this year will be more than 35% higher than in 2010.
Some of the key drivers of Colonial Penn's growth next year will be the continued expansion of our new Patriot Program, growth from non-TV lead sources, expanded online response channels to increase traffic. We are also building a robust framework that supports advanced user tracking to increase conversion rates of web leads. We are planning to further expand our Hispanic marketing initiative. Lastly, we expect our telesales staff to benefit from productivity improvements due to the full deployment of our CRM system. For 2014, we are projecting sales growth between 6% and 9% and continued growth in collected premiums. In addition, we are taking steps to drive improvements in our marketing cost to NAP ratio and expect a more modest EBIT loss in 2014 of approximately $5 million. Let me now hand it over to Fred, who will discuss CNO's financial outlook. Fred?
Thanks, Scott. As we enter the final two weeks of the year, our view of the fourth quarter remains largely consistent with our outlook comments during the third quarter call. We expect our core benefit ratios and spreads to perform generally in line with our normalized results in the third quarter and throughout 2013. However, we now expect Colonial Penn will record a loss in the fourth quarter, driven by a net increase in ad spend of approximately $5 million. We expect a modest build in RBC towards 400%, leverage continuing to decline, and excess capital at the holding company of approximately $150 million. We expect share repurchase for the year to come in at approximately $250 million. We have considerable capital loss tax assets set to expire at year-end and have engaged in a measured trading strategy to generate capital gains on a tax basis only.
As a result, we expect a valuation allowance release in the fourth quarter in the range of $50 million-$60 million. Turning to Slide 12 and switching gears to focus on 2014, I'd like to first touch on the tactical strategies driving our financial plan. As Ed Bonach noted earlier, we expect to invest approximately $45 million-$55 million in key growth in platform initiatives during 2014. From a GAAP expense standpoint, we estimate roughly 40% of this cash spend will be capitalized and amortized in future years. In addition, we have been investing in our platform and have certain investments running off as we enter 2014. We estimate that our investment in new initiatives will increase expenses by approximately $10 million in 2014. We continue our disciplined approach to in-force management with the goal of driving improved economic value over time.
We are introducing new and restructured products based on the value of new business, actively exploring OCB runoff solutions, and gradually shifting our long-term care in-force mix as new business is more concentrated in limited benefit products. We are committed to achieving investment-grade ratings, believing it is critical to unlock and defend future shareholder value. We expect to continue repurchasing our stock as an attractive risk-adjusted use of excess capital, remaining tactical as we trade closer to adjusted book value. There's a lot of data provided on slide 13. Taken as a whole, the story for 2014 is stability and consistency in our core underwriting margins and spreads. Bankers Medicare Supplement, Bankers Long-Term Care, and Washington National Supplemental Health benefit ratios are expected to perform consistent with normalized ratios reported in the third quarter.
We provide sensitivities on this slide, expect the diversity in our business lines to result in relative stability when looking at our aggregate margins. Bankers Medicare Supplement collected premium is expected to be up modestly in 2014, with strong growth in MedAdvantage, where we enjoy distribution income. Washington National Supplemental Health collected premium is expected to grow in the 6% range, reflecting investment in our distribution platform. Long-term care premium is declining 4% per annum as rating actions moderate and we sell a lower risk and lower premium per policy product. Before discussing annuity and life spreads, it's worth stepping back to reflect on our overall rate assumption. We assume new money rates modestly in excess of 5% for 2014 and a portfolio turnover rate in the 9% range. We have not adjusted our long-term rate assumptions from last year.
We assume new money rates will continue to recover in 2015, rising to 5.5% and 6% in 2016. These long-term rate expectations are generally consistent with the forward curve and our investment strategies. Asset levels overall are expected to grow modestly, offsetting declining portfolio yields, thus net investment income is expected to hold flat for 2014. We have room to manage crediting rates on indexed annuities and universal life portfolios with more limited room to maneuver on fixed interest annuities. Overall, spreads are expected to remain favorable in 2014. Focusing on our Bankers Annuity business, we expect stable spreads and assets up modestly, driven by growth and persistency in indexed annuities. Slide 14 profiles our capital plan. Our plan has built in a healthy statutory capital margin with consolidated RBC ratio held at 400% in 2014 and throughout our three-year plan.
We feel this capital margin is appropriate when considering the potential for future credit cycles and long-term care volatility. We expect leverage to continue to drop as we retain more earnings and amortize roughly $60 million of debt in 2014. We expect to maintain approximately $150 million of deployable capital at the holding company, with liquidity and investments in excess of $300 million throughout 2014. Capital generation, defined as statutory earnings prior to surplus note interest and contractual payments made to the holding company, run steady in the $500 million range annually. Subject to tactical adjustments, we continue our balanced approach to capital deployment with significant stock repurchase, debt reduction, and investment in our business. Turning to slide 15, this has been an active year for us on the tax front. We thought it important to review our current position.
During the year, we settled with the IRS regarding the reclassification of cancellation of indebtedness income. We completed our traditional review of the valuation allowance in the third quarter, supporting a sizable valuation allowance release as taxable income has improved. Finally, we have executed on a general account trading strategy to defend a portion of our tax assets otherwise set to expire. These activities in total add up to valuation allowance releases in excess of $250 million for 2013. Absent a negotiated settlement with the IRS on the treatment of our senior health disposition in 2008, we expect future valuation allowance releases to be modest. In terms of cash flow, we become a more considerable taxpayer in late 2016 and into 2017 as our current tax assets are more fully utilized.
We estimate a $50 million drag on cash flow beginning in 2016 as the effective tax rate we pay increases, but continues to benefit from our non-life NOLs through 2023. Our tax preservation efforts during 2013 have resulted in real economic value. Consistent with GAAP assumptions for taxable income used when establishing our valuation allowance, we estimate the value of our tax asset at $600 million using a 10% discount rate, with every 1% change in the discount rate equating to approximately $30 million of economic value. Turning to slide 16, a few observations on valuation. We show a conventional valuation map on this slide to illustrate how we think about driving shareholder value. The formula is simple. Invest your capital in ways that drive expanded returns while building book value and keeping risk in check. We have executed on this formula without question but have more work to do.
We are running off significant blocks of business that tie up capital at low returns. We are accelerating investment in our business model to drive growth and capitalize on trends in our markets and have built capital in support of investment-grade ratings. This balancing act makes for a more gradual but much healthier build in ROE. Our normalized operating ROE has moved from the 7% range throughout 2012 to the 8% range in 2013 and has benefited from both favorable earnings performance and significant capital actions. We have discussed our desire to drive towards investment-grade ratings. This is much more than aspiring to higher ratings. Once achieved, we are able to extend debt maturities and create more financial flexibility by eliminating forced amortization, restrictive covenants in baskets that limit the amount and timing of capital deployment.
The result is an ability to increase our use of leverage, deploy excess capital more effectively, and lower our refinancing risk. Looking ahead, we expect to operate in the mid-8% range throughout 2014, driving towards 9% as we exit 2015. Our plan does not include a leveraged recapitalization or global OCB solution and assumes considerable excess capital on hand. In short, we have the capacity to meet our 9% goal by the end of 2015 with additional levers to pull in time. With that, let me hand it back to Ed for some closing comments.
Thanks, Fred. We continue to see a lot of opportunity as we move into 2014. Our target middle income markets growth and underserved dynamics remain. The Affordable Care Act and other changes place added value on face-to-face advice from our agents. Investments in our business will continue, tilting a bit more to productivity enhancements. We expect these to result in 2014 consolidated sales growth of 6%-8%, accelerating to 8%-10% in 2015 and 2016. Simplifying and streamlining our back office to support business growth and capture efficiencies will also garner increased focus and investment. Seeking strategic acquisitions continues, as does our exploration of alternatives to accelerate the runoff of our closed block OCB business. Enhancing the customer experience is expected to improve persistency, add to sales opportunities while reducing complaints and expenses.
As part of the investment, we expect to better understand customer needs through analytics and other means. As we have said before, we have a classy problem of what to do with the considerable amount of excess capital we generate. We will remain disciplined, opportunistic, and strategic in deploying our capital as we balance profitably growing our business, risk management, and continuing our trajectory to investment-grade ratings. We expect to drive shareholder value by increasing ROE on a growing book value, producing above-average sales growth, and continuing to reduce the risk profile of the company. Let me now turn it back to the operator to open it up for questions. Valerie?
If you would like to ask a question at this time, press star then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. You have a question from the line of Mark Finkelstein with Evercore
Good afternoon. Question on the RBC level. Fred, you talked about targeting kind of a 400%. I'm trying to think about it. Is this a new level that you're going to kind of want to approximate going forward? I know we've talked about 350 and then deployable above that. Is that new number 400?
Yeah. I think certainly for the planning period, that's the number we're targeting, but I would characterize the 400% as having capital margin in it, meaning we've talked for a while about having the mix of business and the cash flow dynamics, where in time, particularly once we lower the beta or volatility of our business, we could run this company at a 350 level and feel comfortable with that being the type of RBC that still qualifies for ratings upgrades. We're running higher than that. We're running at more like 400%, as I mentioned, we targeted that. That margin over 350 is really for the following reasons. One is, we absolutely want to continue to drive continued momentum in ratings upgrades. As I mentioned earlier, I think investment grade is also a path to down the road unlocking future shareholder value.
We believe that to be important. There's also another reason, and that is, we do remain in the long-term care business. That business can be volatile, and we need to be cautious about that. We continue to have runoff businesses that have proven to be volatile in time. The OCB business is another reason to be careful about having some level of margin. Then realize we're in a fairly benign credit markets right now. I think it's wise, and I think frankly, the industry has learned a lesson, that it's probably a good idea to carry a little bit of margin when you're traveling through otherwise really favorable credit markets. All of those things contribute to that level, Mark. I think that's what we feel more comfortable managing at right now.
Our business mix over time is the type of business mix that we can drive down that RBC to a more efficient level. We've got to get the beta reduced in our name, in order to get there.
Okay. Just on the 9% ROE target by the end of 2015. When you look at kind of where you are and kind of the businesses that kind of like the earnings levels relative to when you originally set that target, is there any change in how you're getting to that 9% versus what you originally expected? I mean, we're talking a little bit about more capital now, so that I assume has some impact. Long-term care may be a little bit different. What are the ins and outs that are still giving you the confidence on achieving that level?
Yeah. I think in other words, if we pull the clock back to the investor conference last year where we initially put this target out, what sorts of dynamics have changed even though the target has not? I would say a couple things, and it's somewhat the point of our valuation slide that we've included here, and that is, as we go towards retaining more capital in our business and carrying an excess level of capital, the book value growth has really picked up pace. We're seeing our average equity ex NOL and AOCI really grow more dynamically, which means earnings have to work that much harder to keep pace in order to achieve that 9%. To me, those are the moving parts. The book value is increasing more dramatically, meaning that we're more challenged in driving the earnings to reach that ROE.
We're being a bit more tactical in the use of our excess capital. We continue to buy back stock aggressively, and you can see our guidance suggests that we still believe that to be a favored use of excess capital. Realize over the last couple of years, we enjoyed large levered recapitalization. In fact, in the plan right now, in our financial plan, we literally drive our leverage down towards 15% in 2015. We're achieving right in that territory of 9%, just as we guided last year. Indeed, it becomes a higher watermark to hit when you're enjoying healthy growth in book value.
Yeah. Mark, let me add. I think this to me really underscores the advantage of having a diversified business model. With any longer-term goal or any longer-term financial plan, we all know things aren't going to exactly play out on every aspect as the plan would have. With that diversification, you mentioned a couple of things that maybe are less than planned when we set the goal, but we've had things more favorable than planned. Annuities is a great example. The growth in the assets under management and the spreads have developed more favorably than expected. We certainly have been growing quite significantly our life insurance book, which is a good, solid, predictable profit producer. I think with a longer range goal, that's part of what management is supposed to do is manage to overcome some deficiencies with other areas to achieve that goal.
That's why we've not even thought about refining that even though some things have gone against us.
Okay. Thank you.
Your next question comes from the line of Humphrey Lee with UBS.
Good afternoon. Just a little follow-up on Mark's question about the RBC. Clearly you're definitely getting at a much healthier level for your financial planning. I understand it's part of planning for getting a rating agency upgrade at some point. While I understand the conversation with the rating agencies are confidential, to the extent that you can share, what do you think the rating agencies are waiting to see before they take any more positive actions?
Yeah. Interestingly, I believe they would agree with this statement collectively, that is that our core financial ratios, particularly as we explain them here, targeting the levels of RBC leverage and liquidity we have, are comfortably at the level that is consistent with investment-grade senior debt ratings. Therefore, what ends up being the dynamic to driving towards higher ratings? One is time, that is the rating agencies expect a level of stability and consistency in your results over time. I would say for CNO, candidly, there's a higher bar being set on that particular issue. In other words, due to our past, the agencies are particularly more careful in wanting to see a longer duration of steady performance. Obviously, we've been delivering that for the better part of three-plus years. It also goes to some of that capital margin I talked about.
The nice thing about a capital margin is you can suffer a quarter, you can suffer an issue, and not feel as if you've lost any step or any momentum with the rating agency. Whereas if you run your capital much thinner, that could be a different story. Consistency and time is one issue. The other is long-term care.
Despite our dialogue on how we are positioned relative to many in the industry and how we think about the product and the product mix, the reality is that long-term care is a very low-rated product on the scales of the rating agencies, and therefore, if there's any form of concentration that you have in it, you have to compensate for that in the other areas of your business performance-wise, compensate for that to some degree in your capital structure, until such time you've changed the mix of that business, which goes to my prepared comments. Until you've changed the mix of that business to where the volatility or potential volatility is less consequential to your capital management and your earnings story. Those would be a couple of dynamics. I would say they watch carefully our runoff blocks of business.
They have proven to be a historic level of volatility and earning surprises. They realize that the management of those runoff blocks and how we entertain strategies around that play also into their view of the forward beta of the company. Those are just a few things that I would mention as on their minds, that we need to continue to build.
Thanks. This is helpful. Let's start weighing to long-term care. For Bankers, long-term care loss ratio kind of flat for 2014. I remember you mentioned that part of it is because of this slowing down in terms of rate actions kind of affecting the loss ratios kind of going forward. You also talked about the kind of the challenges you're seeing from the industry in terms of getting more rate increases with the regulators. The way we're thinking about it, you're not taking any new kind of re-rating actions in your 2014 plan?
Very limited. We have talked about this, I think, before, Humphrey, to your question, but let me reiterate it. What we don't have contemplated in our financial plan, and for that matter, the early work we're doing on loss recognition testing and cash flow testing is what I would call broad-based rate actions, where you sort of are looking across a broad base of product and going into multiple states with a set level of rate actions that you're looking for. We've done that on a number of occasions in the past. Today is a more tactical approach, and that is where it makes a lot of sense, where, of course, it's justified and can be properly documented. There are pockets of products, certain classes of products, most notably where there's maybe more comprehensive product, and older age product that's been on our books where there's justification for rate action.
That's a little bit more our approach these days, is the tactical dynamics around it and where we can do it and feel comfortable in the probability of some level of success. That's our approach to it right now as it relates to planning. No large broad-based rate action embedded in the earnings dynamics and comments I've made about forecast.
Okay. Just one last question. You talked about Colonial Penn kind of shifting towards the non-TV ad kind of lead generation. In that sense, would it change kind of the seasonality that we typically see at Colonial Penn, which means first quarter and third quarter tends to be high expenses because of the TV ads?
Humphrey, this is Scott. I would say in 2014, we won't see a noticeable difference. We're ramping up our online activity. We'll still see the majority of the sales are coming from, and will continue in 2014 to come from TV lead gen. Over time, I'd expect to start to see the seasonality maybe become less acute.
Okay. Got it.
As a reminder, if you would like to ask a question, press star then the number one on your telephone keypad. You have a question from the line of Ryan Krueger with Dowling & Partners.
Hey, good afternoon. I had a question about the $500 million of capital generation. Is $150 million-$200 million or so still the right number to think about for uses in terms of holding company and capital retention for growth.
In terms of capital retention for growth or the amount of that $500 million that we would hold within the statutory entities to support the natural growth rate of the business. We've mentioned that has been coming down. I realize this, by the way, was by design. You can't quite take from that pie chart and understand exactly what the numbers are, by and large, we would expect from a planning perspective to retain in and around the neighborhood of $100 million, give or take, perhaps a little less, in the insurance company, to support just natural growth. What we're not in need of doing is retaining a significant amount of capital to continue to boost the RBC. We're at pretty good levels right now, it really is supportive of growth. That would be just approximately where I'd be at $7,500 million.
In terms of the free cash flow available for deployment that we generate on an annual basis, an easy way to think about that is it's by and large reflected in our share repurchase guidance. In other words, that range bound guidance gives you a good feel for the true free cash flow, meaning after moving the money up to the holding company, paying debt interest and amortization, paying out a common stock dividend and paying holding company expenses. That sort of leaves us with that amount of money to continue to think about deployment. It does not contemplate, by the way, our ability to spend down, for example, additional excess capital at the holding company. That's why I noted our plan actually continues to hold a level of $300+ million at the holding company. We've got this readily deployable capital, even after this repurchase guidance.
Got it. That's helpful. On OCB, I noticed that you did not give an earnings outlook this year for that segment. Perhaps maybe it's related to your comments about trying to accelerate the runoff, but just hoping you could provide some commentary on the type of earnings expectations in that segment in 2014.
Sure, sure. I'm happy to. We are moving away from specific guidance on OCB. Quite honestly, OCB's volatility is such that we end up giving you non-guidance guidance, meaning a wide range from which you end up scratching your head and saying, "I think I'll put in this number." That's honestly just the nature of the beast. It can be quite volatile as a platform. We moved away from guidance for that reason and recognizing that we're looking for opportunities to accelerate the runoff, and that will likely play into the forward trajectory of OCB earnings. Having said that, one thing that you could certainly do at your own risk, is take a look at the year-to-date results in OCB and how they've been traveling from quarter to quarter.
You'll notice that from a reported basis standpoint, they've tended to range between $4 million and $6 million a quarter. Realize there's quite a bit of fluctuation within those numbers. It looks like a nice steady OCB performance over the year, but there's offsetting issues, and that's what generally has led to our guidance in the past to OCB. I think last year we guided on OCB between something around, I think zero and maybe as high as $20 million in OCB, and that's by and large how we've performed. I would suggest just normalizing the results year to date in 2013 and realizing that these are runoff blocks of business, and so you can sort of string that out naturally.
Okay, thanks.
As a reminder, if you would like to ask a question, press star then the number one on your telephone keypad. There are no further questions at this time.
All right. Thank you, operator. Thanks for everyone calling in. Happy holidays.