Intact Financial (IFC:TSX) Q2 2026 earnings call transcript

Thank you, Sylvie. Hello, everyone, and thank you for joining the call to discuss our second quarter financial results. A link to our live webcast and materials for this call have been posted on our website at intactfc. com under the Investors tab. Before we start, please refer to slide two for a disclaimer regarding the use of forward-looking statements, which form part of this morning's remarks and slide three for a note on the use of non-GAAP financial measures and other terms used in this presentation. To discuss our results today, I have with me our CEO, Charles Brindamore, our CFO, Ken Anderson, Patrick Barbeau, our Chief, our Senior Vice President, Personal Alliance. We will begin with prepared remarks, followed by Q&A, and with that, I will turn the call over to Charles.

Thanks, Jeff. Welcome, Ashraf. It's your first earnings call. And good morning, everyone, and thanks for joining us. Last night, we released our second quarter results. We generated net operating income per share of $3.17, driven by a combined ratio of 94.9, which included approximately four points of excess catastrophes and large losses. Our top line grew 4% in the quarter, driven by continued strength in personal lines.

Our ROE was in the upper teens at 17%. Our book value per share grew 13% year over year to $111.73. And our balance sheet is very strong with $3.7 billion of excess capital. and that positions us well in an attractive M&A environment. Now, this quarter was marked by a higher level of large losses than we've experienced historically and than we expected.

Given that we conducted a detailed and thorough review, we did not find any common driver or systemic pattern. We view what happened in Q2 as an anomaly, and we're confident that the underlying performance and the fundamentals of our business is very strong.

Let me now provide some color on each of our segments, beginning with Canada. In personal auto, premiums grew 9% in the quarter, including 1% of unit growth. This reflects sustained hard market conditions supported by our investments in marketing and in the digital channel. With the industry remaining unprofitable still at the end of Q1 2026, we expect industry premium growth to remain in the high single digits over the next 12 months. Our combined ratio in personal auto improved 1.5 points year over year to 88.8%, a strong result in a seasonally favorable quarter.

This performance was driven by an improvement in the current accident year of more than two points. On the reform front, we're encouraged by developments in both Ontario and Alberta. In Ontario, while early, customers are choosing the optional protection, which should help support growth. In Alberta, we like the direction being set for 2027. We'll provide an update later this fall as the reform package is finalized. But in both cases, we think these reforms are excellent for consumers and support a healthy and competitive automobile industry. They should also contribute to bring the industry closer to a more sustainable performance level.

In personal property, premiums grew 7%, including a 1% increase in units. We see continued strength in this segment. We expect industry premium growth to be in the upper single to low double-digit range over the next 12 months. A combined ratio of 103 included 22 points of cat losses in the quarter. This is a reminder of the impact on industry profitability from severe weather events.

We believe this will contribute to sustaining hard market conditions. Despite the elevated level of catastrophes in Q2, our year-to-date combined ratio of 93.9% shows our personal property business is positioned to deliver a sub-95 performance, even with severe weather. We view this segment as very attractive and a solid source of growth. Our track record of close to 90% combined ratio over 5 and 10 years is quite strong and gives us confidence in our growth strategy in that segment. In commercial lines, premium growth was 1% in the quarter.

We see continued traction for our growth initiatives, which drove roughly three points of growth. This was partially upset by two points of mixed shift towards smaller account sizes as we remain selective in the competitive large account space. I'm encouraged not only by the strength of the SME portfolio, but also by sequential improvements in production stats in the mid-market space. We expect industry growth in the low to mid-single digits over the next 12 months.

The combined ratio was strong at 85.7% in commercial. This result reflects our continued discipline in applying pricing sophistication and advanced risk selection techniques to retain higher quality accounts. We continue to expect a combined ratio in the low 90s or better.

Moving now to our UK and I segment, our top line decreased by 1% in the quarter. While growth was solid in specialty lines, our domestic UK commercial lines business saw pressure driven by the consolidation of products following the NIG acquisition into one impact value proposition.

We continue to expect top line to improve in 2026 as we complete this exercise. And we expect the industry premium growth in the low to mid single digit range over the next 12 months.

The combined ratio of 112% included 15 points of excess cap and large losses. And we're committed and confident in bringing the combined ratio towards 90%. We're making good progress and expect further improvements as we continue to roll out our pricing sophistication tools, but also improve the expense ratio over time.

In the U. S. , premiums increased by 4%, driven by solid new business and strong growth in some of our most profitable verticals. Our top-line growth is benefiting from the wider product lineup and continued gains in expanding and deepening broker relationships. At the industry level, we expect premium growth to be in the mid-single digit over the next 12 months. The combined ratio of 85% in the U. S. this quarter improved nearly three points year over year, reflecting the benefits of our strategy of focusing on profitable growth.

This marks our 12th consecutive quarter with a combined ratio below 90%. As we look ahead across all of our lines of business, we're operating in an environment that plays to our strengths, where pricing, sophistication, and risk selection are paramount. We significantly expanded our ROI outperformance in 2025 to 740 basis points as we continue to execute on our strategic roadmap. That includes investments in data and AI, as well as leveraging our scale to build an extensive supply chain network that allows us to internalize over 95% of our claims globally. On the AI front, for instance, this includes realizing recurring benefit from investments faster than expected. Indeed, while our initiatives generate north of 220 million recurring benefits today, we now expect to achieve 500 million dollars in benefits in 2028, roughly two years earlier than we previously announced.

On the claims side, the recent catastrophes in Canada illustrated our competitive advantage. In June, there were five catastrophes. Our advanced claims and Altex capabilities and in-house restoration business on site were instrumental in helping us close 47% of the almost 9,000 claims from June cap. An impressive result. It demonstrates how we're able to get our customers back on track faster while building a loss ratio advantage.

We also remain focused on helping build more resilient communities. Initiatives like the Keep It Intact prevention ecosystems are driving proactive risk mitigation. Since the launch of the initiative last year, our customers have recorded over 140,000 prevention actions in our apps. which help them better protect their homes. These actions also enhance the resilience of our personal property portfolio.

And on top of that, Jiffy, Canada's number one home maintenance hat, and only owned by Intact, is well positioned to benefit from increased prevention activity by homeowners. Jiffy's revenues increased 24% year over year. So in closing, although Q2 was a difficult quarter for many of our customers, our teams continue to do outstanding work, getting impacted customers back on track as fast as possible.

I want to thank all our employees for their dedication to living our values and delivering for our customers. Our track record demonstrates that external factors, such as natural disasters and industry pricing cycles, didn't impact our ability to consistently deliver on our two financial objectives. With our net operating income per share growing at a compounded growth rate of 16% over the last three years and 12% over the last 10 years, we've exceeded our goal of at least 10% growth annually over time, both near and long term.

Our average ROE outperformance has been 600 basis points over the last three years and almost 700 basis points over the last 10 years, well above our objective of at least 500 basis points outperformance. Given the environment in which we operate, our focus on outperformance, and our commitment to profitable growth, there's no doubt in my mind that we'll exceed our financial objectives in the next decade as we have in the last decade.

Thank you, and now I'll turn the call over to our CFO, Ken Anderson.

Thanks, Charles, and good morning, everyone. While the second quarter was active from a catastrophe and large loss perspective, our results demonstrate the resilience of our platform. Net operating income per share for the second quarter was $3.17, while operating ROE was strong at 17%, driving a 13% year-over-year increase in our book value per share to $111.73. Let me add some colour on second quarter results.

The underlying current accident year loss ratio, 59.1%, included three points of excess large losses. The large losses primarily occurred in our UK&I segment, with several large property fires occurring across different segments of commercial and specialty lines. Canadian commercial and personal property also experienced increased frequency of large losses, primarily driven by property fires. Importantly we view these losses as discrete in nature Our underlying performance remains strong Catastrophe losses in the quarter were million driven mostly by storms related to water damage in Alberta Ontario and Quebec as well as property-related fires in the UK and I. On a year-to-date basis, CAP losses remain consistent with our expectations and our annual CAP guidance remains unchanged at $1.2 billion.

Quarterly cat activity can create variability, but we manage the business with this in mind, and our overall view of long-term climate trends remains unchanged.

Our prudent current year reserving practices over time means prior year development remains strong, and we posted favorable PYD of 6.1 points in the second quarter. As always, any assessment of underwriting performance should combine the current accident year and prior year development.

But our PYD track record is consistently strong, averaging 4.8%, 3.5%, and 4.1% over the last 5, 10, and 15 years. Of note, the introduction of IFRS 17 in 2022 increased PYD by roughly one to two points, with an offset corresponding increase in the current accident year loss ratio. Given our strong long-term track record, the impact of IFRS 17, and the stability of our PYD, we believe recent PYD experience provides the most relevant reference point in assessing near-term PYD levels.

Moving to expenses, the consolidated expense ratio was 34.9% for the quarter, an increase of roughly half a point, mainly coming from a non-recurring premium tax item. We expect our 2026 consolidated expense ratio to be in line with our annual guidance of 33 to 34%. Operating net investment income increased to $405 million in the quarter, driven by growth in our investment portfolio from strong capital generation. Our expectation for $1.7 billion of investment income in 2026 is unchanged.

Distribution income increased 4% to $172 million, supported by robust organic and inorganic growth, somewhat tempered by our investments to support service levels ahead of the Ontario auto reform. This represents a targeted near-term expense with no change to our expectation for distribution income growth of at least 10% annually over time. The operating effective tax rate of 22.9% was in line with our guidance of 22 to 23%. Non-operating gains increased by $274 million year over year, supported by favorable capital market movements, as well as lower acquisition and integration costs as these expenses continue to decline.

Moving to our balance sheet, we continue to operate with significant financial flexibility, with $3.8 billion of total capital margin, well in excess of what is required to manage volatility. Our adjusted debt-to-capital ratio improved again to 16.2%. Overall, our balance sheet strength, low leverage, and strong capital generation provides significant financial flexibility to capitalize on attractive M&A opportunities, and that landscape continues to improve. Share buybacks also remain an important tool when our shares are undervalued, and we completed over $180 million in share buybacks in the second quarter, bringing the year-to-date total to approximately $350 million. We continue to view our shares as undervalued. We calibrate the pace of buybacks based on excess capital levels, the outlook for inorganic growth opportunities, and our view of the size of the discount to fair value.

With our strong track record of delivering significant value, M&A remains our preferred choice for capital deployment. We are well positioned to continue to deliver on our financial objectives. Over the last decade, we've exceeded our 500 basis point ROE outperformance target by delivering an average of 670 basis points of annual outperformance. We've also surpassed our 10% NOITS growth objective by delivering compounded annual growth of 12% over the same period. Our discipline and focus has shifted operating ROE into an upper team zone while we maintain one of the lowest levels of ROE volatility amongst our global peers. These results reflect the durability of our competitive advantages and the strength of our platform. We are positioned to continue creating significant value over time.

With that, I'll turn it back to Jeff.

Thank you, Ken. In order to give everyone a chance to participate in the Q&A, we would ask that you limit yourself to two questions per person. You can certainly re-queue for follow-ups, and we'll do our best to accommodate if there's time at the end. So, Sylvie, we're ready to take some questions now.

Thanks, John. Yes, I think it's a favorable M&A environment. There are, in my mind, three vectors that you ought to pay attention to when you qualify the M&A environment. From our perspective, the first vector is strategic fit. So in our case, very keen on North American global specialty lines. Second vector is the economics. Does the target on its own generate an internal rate of return in excess of 15% first and foremost?

And second, does it increase your earnings power per share once integrated? And third, actionability. And I would say, sitting here today, John, I think there are more options that tick all those boxes today than a year ago. And that's why I think it is a favorable M&A environment. And one point I would add is you need operational readiness when you tackle these things, because it's in the integration that the value gets created. And I would say from a GSL and North American point of view, The operational readiness is definitely there.

Lastly, I think the balance sheet is very supportive of strong economics, but acquisitions need to stand on their own. So what's holding us back?

First, you want to see options that hit those three vectors. and then it's discipline, prudence, and making sure you pace yourself. But we like the environment in which we operate.

You're through.

Thanks for your question, Alex. We're not banking on underwriting cycles to improve the performance in the UK. We're aiming to get towards 90% in the midterms. There are a number of levers that we are pulling.

Pricing and risk selection would be at the top of the list. deploying science and deploying tools and governance. We're making really good progress there. Second, we're replatforming from a technology point of view that environment. That is a multi-year process. It impacts the speed of the transition, but we want to build a great PNC business, and that requires a modernization effort, which is reflected in the performance.

Third, we're focused on making sure that the service for brokers in the UK commercial line space is second to none, making excellent progress there. We're seeing broker advocacy being up meaningfully for it. we're bringing the various products that were on the shelves in the UK into what we think is a top market product, now branded, intact insurance.

And I would say, lastly, it's about improving the expense base as well. My perspective is this is a midterm effort, I think, 24 to 36 months. but I'm pleased with the progress we're making. It's heavy lifting, Alex. I mean, I'll be very clear. It's heavy lifting. And when you do such transformation, there are bumps in the roads from time to time, but I'm very confident with the trajectory we're on.

Thanks, Alex. I'll first say I love the U. S. market. You know, our platform is really strong. And if you look at industry results today, we're outperforming from a combined ratio our specialty lines tiers by close to eight points. and we're outperforming from a top line point of view by about a bit less than a point at this stage.

And so our approach in, first, our U. S. business is specialty lines only. It's 12 vertical. So the first order of business is you double down on the lines of business that are very profitable. And so if I'm to frame this for you, Alex, about two-thirds of our portfolio operates in the 70s to low 80s combined ratio.

And that's the book that we're growing north of 5%. A reminder of the portfolio operates in the mid-90s, and that was largely flat. this quarter. So you don't need to be a rocket scientist here to see that because you have optionality across 12 verticals, the growth is coming from the low combined ratio verticals. Then it is about distribution management. It is about going deeper in the relationships that we have. It's about distributing our 12 verticals to the brokers where we have relationships, and it is about expanding the number of brokers we operate with in the U. S. One thing we do on the distribution side is we're also buying MGAs in extensions of segments in which we operate.

And lastly, we're bringing global capabilities to our offer in the U. S. market. Now, following the RSA acquisition, as you know, we have not only strong cross-border capabilities with Canada, a major trading partner of the U but also global capabilities with our global network And I would say these are the levers we are pulling Now, when a vertical goes off the rail for some reason or another, we put the brakes and put remediation in place. With pro-verticals, you can expect you always have one or two that needs more work.

And in aggregate, that's our approach in the U. S. We really like what we see. We like the outperformance. We like the optionality. And if I could deploy capital there in the near term, we would have no hesitation to do so.

Thanks, Tom. Good observation. that segment run rate 93, 94-ish as we've seen in the past couple of years. I'll let Ken share a bit of perspective on trajectory. Then Patrick and I will pick up the market observation question. So Ken.

Thanks, Tom. I guess maybe the first thing, I wouldn't use one quarter to sort of anchor on the overall run rate performance beyond the cats and large losses you'll have a bit of volatility in other things. I think, for example, in the second quarter, in the first half of the year, indeed, the expense ratio is a little higher.

But I would go back to the 24 and 25 combined ratio, which overall for those two years was about a 94. You know, that's our view of the most relevant reference point to start from. And clearly, as Charles has laid out, the focus is to drive performance towards the 90% pricing sophistication. Firstly, the expense improvements from modernizing technology. And then over time, top line benefits from the improved broker service proposition and the specialty product expansion, which will also improve the expense base and the expense ratio. And those are really the elements that over time will drive towards 90%. The team in the UK are very focused on what they can control and are executing on it.

market conditions can slow down or speed up that timeline, but I wouldn't anchor on a specific quarterly roadmap here, but we certainly should see progress and visible progress year over year.

Patrick, do you want to provide a bit of color on the marketplace to Tom's question?

Yeah, I don't think we're seeing from a rates perspective a ton of difference compared to the observations we communicated in the past couple of quarters. Like, we've seen more competition in the larger size of accounts. From a top-line perspective, we're having good momentum from a specialty lines perspective. and it's really an offset in the regular commercial that's really driven by the significant transformation we're doing in the field with the systems and some of the other points that Charles mentioned earlier. Overall, by the way, on top line, the remaining remediation we're applying on the books plus the drag from the consolidation of the NIG and RSA offer is a drag of about three points on the overall UK and IQ2 top line, and we expect that we'll see sequential improvements going forward.

There's mix in that as well, given pricing sophistication and the fact that we are prudent in the large accounts. I wouldn't see the 97 once you remove 15 points of excess cats and large losses as a new starting point or deterioration from prior years. But it can be bumpy from one point.

Yeah, I think the specialty line is growing really well. It's the UKCL franchise that is shrinking a bit. And the connection between the market and the transformation, I view it as follows, Tom. When you integrate products, that creates dislocation from a price point of view.

Second, we're deploying science on top of that change. So the amount of dislocation that is taking place on the portfolio is meaningful. and in a competitive environment, the more competitive environment, you know, the bigger the hit when you've got that dislocation. And I think that's the three points that Patrick is talking about. But, you know, we're focused on the mid to long term, and we think bringing science and integrating products is more important than status quo just to avoid dislocation. and I think bumping the road here and there, trajectory I'm comfortable with.

Okay, and then one quick one on the year down year over year in terms of top line in the UK, constant currency. You had some momentum maybe in the first quarter, but now you're talking about the rebranding initiative as contributing to that slowdown. I thought the rebranding initiative is actually going to be helpful in terms of a better service proposition to the brokers.

I mean, was this expected, and how long would this slow down in top line as a result of the rebranding initiative play out? Yeah, I don't think it's the rebranding initiative. It's the migration towards one product that creates a bit of dislocation, to which you add the pricing sophistication initiatives that we're deploying in the field in a marketplace that is competitive, I think, in the upper-mid space in particular.

And so timeline, I think that the heavy lifting in my mind has probably a 12-month horizon in terms of the amount of dislocation, we will likely see. And so near term, in my mind.

And the trajectory, I think 24, 36 months. I'd maybe add, Tom, if you look at the growth in 2025, you were in the minus 3, minus 4, minus 5 zone. You know, we certainly made a move in the early part of 26 into, you know, more of a flat growth position. So progress there and looking ahead, you should see improvement over time.

Yeah, thanks, Jim. I'll ask Ken to share his perspective on the balance sheet.

Yeah, so as I said earlier, you know, financial position very strong and continues to improve and provides a lot of flexibility. The capital margin, $3.8 billion. Debt to capital improved at $16.2. And capital generation outlook moving forward is very strong. So ample capacity on the M&A front. And to your point, today we could deploy $6 billion without issuing new shares on M&A. So the outlook is very good and continues to improve. Obviously, with the track record IRR north of 20% on the $10 billion plus that we've deployed over the last decade, that's the priority.

Ashraf, why don't you take this one?

Sure. Thanks, Charles. So, James, maybe back just to the Q1 that you referred to. you're right looking back at Q1 personal property growth was negatively impacted by a one time impact from our travel business and when we adjust for that one time impact from travel we were in the upper single digit range in Q1 and that was the range that we were expecting to be at for the remainder of 2026. Now when you look at Q2 growth was strong at plus 7% with one point of unit retention remained high and stable so is our new business competitiveness. And from a pricing perspective, we are maintaining our strong rate action.

And when you zoom out, from an industry perspective, industry needs to price for inflation severity in addition to the long-term climate run. And in June, we just saw multiple CAT events that have brought the west and east of the country, and these are a reminder of the volatility of the product, and we expect we'll continue to support the current hard market condition. So all things considered, we remain comfortable with our growth profile in the upper single-digit range and maintain a positive outlook from the industry perspective. Yeah, I don't think we'll be far from the industry if you look at it quarter by quarter.

Obviously, 2-1 at this one-time travel thing, but we're in the zone and big bottom line outperformance as well. We want to grow this segment performing really well.

Mario, you're talking about the UK domestic commercial lines business, correct?

Does it play a bigger role for this company or is it just a standalone It lives on its own merits So I think first of all the UK commercial lines market is a big market It's bigger than Canada. It's an attractive market. And the competitive set and the type of business the domestic UK business is doing is very consistent with what we do in Canada and our skill set in Canada. So we view this as a business opportunity where we're capable to win because we know that space. So that's the first point.

Is it existential to in fact pursue that business opportunity? No, but it's a business opportunity where we think we can win, And therefore, that's what we're working on. Second, that footprint in the UK, that regional business in the UK, opens up hundreds of distribution relationships that otherwise would not be available to distribute some of our specialty lines product. embedded in the UK commercial lines' domestic business is a number of local specialties, like regional marine, as well as regional, what we call profin, or call that management liability.

So I think, Mario, this is a business opportunity where we think we've got the skills to outperform. it is an extension of our ability to distribute our specialty lines product. It makes sense to be there.

Lastly, I think if people had to pick a business profile to operate P&C Insurance in the UK and you ask them to design from a white page what they'd like their business to look like, they would design the business we're building now. And therefore, we have capital, we have competencies. This is a business opportunity. We're investing and trying to make the most out of it, and I think we will outperform. It's not existential.

But it's a very good business opportunity, and it complements nicely our specialty lines operation. I think that's clear.

Thank you, Mario.

I think that's a great question, Paul. You know, we're psycho-agnostic when we look at acquisitions. And why are we psycho-agnostic when we look at acquisitions acquisitions, because it all depends of the price, first and foremost.

And second, if you outperform, which we do in the segments where we want to deploy capital, bear in mind, Canada, eight points of combined ratio of performance, U. S. , eight points of combined ratio of performance. You can absorb pressure with that sort of outperformance, because it takes a short period of time when you already have a footprint, which we do, to generate that outperformance across the larger platform.

And so what are the practical realities of being in a competitive marketplace when you look at M&A? You might take a slightly different stance on top line in the near term as you integrate, just as we've shown in the case of the UK.

Dislocation can be a bit higher. You bake that in your DCF up front. You model a couple of years worth of disruption that might be greater in a softer market than in a hard market. And then you sit back and you look at the IRR first.

Then you look at the accretion, earnings power accretion. You look at what it does to your book value. You look at what it does to ROE. And if things hang together, you can pull the trigger. And so we've done very good transactions in hard markets. We've done very good transactions in software markets. And in aggregate, you really need the outperformance to make a difference. And that's why we're really keen on the North American sort of landscape to deploy capital. But for me, I mean, it's a little bit like you. We look at DCF. we bake in the near to mid-term conditions in which we operate, and if the numbers work, we pull the trigger. And I would say in my framework, as described earlier, of strategic fit economic threshold and availability, in this environment we think there are more options that ticked the tree boxes than a year ago.

Yeah, I think, first of all, you have to look at the fact that we have bought NIG to double down on the space we like, and then we've exited purse lines. And we're conducting a disposal and an integration at the same time.

While we're investing in modern system and in pricing and risk selection environment. It's heavy lifting. It's taking time. Is it taking a bit longer than what we thought? Maybe.

But directionally speaking, I don't view the UK as materially different than I did 12, 24 months ago. Lots has happened in the past 24 months. As I said, broker advocacy is up. Experience is up. Engagement is up. I like the trajectory. It's heavy lifting. I mean, that's for sure. It's a material transformation.

Dan, maybe you want to add a bit of color. One other point, and just going back to where we're starting from in 2024-25, average combined ratio at 94. With the capital we have deployed in the UK, that 94 combined is a mid-teens operating ROE on the capital that's at work in the UK. So the starting point, obviously we're aiming to get to 90, make no mistake, but with a run rate performance in the mid-90s, the operating ROE is not a significant drag on our overall performance.

I think you should see a migration towards 90% over that period. That's the first point. As Ken said, you know, if this business is running then in the ROE in the upper teens, and it has oxygen from an operational point of view, we would deploy capital even if it's not at 90. but my the most important thing for me right now is I don't doubt the trajectory I doubt the team's ability to absorb another acquisition in the near term and that's the element that would lead me to say ideally you don't add inorganic opportunities in the near term in that space. But we would deploy capital if operationally the team is ready to handle it, and that could be before 24 to 36 months.

Why? Because this would be, are we accretive likely?

Thanks, Charles.

Yeah, so, Mark, the Q2 distribution income growth was about 4%. It was tempered by investments that BrokerLink made to improve service levels somewhat related to the Ontario reforms. But we certainly expect the growth to return to at least the 10% level in the coming quarters. Why do we say that? Well, firstly, that impact from the volume on the Ontario reform was not as high as we anticipated. anticipated, so expenses should normalize in the second half of this year. The growth pipeline continues to be strong at BrokerLink, so there's opportunities to grow both organically and inorganically. And also in the context of broader distribution income, MGAs remain an attractive avenue for growth. Recall since 2020, we've put over 600 million to work in MGAs.

They collectively are writing a billion and a half premium today, and we're continuing to deploy capital in that space. And maybe lastly, Onside, which is counter-cyclical restoration business, you know, that will benefit in the coming quarters from that elevated level of cap losses that we've seen in the second quarter. So, you know, over the past five and ten years, we've compounded distribution income in the mid-teens.

So we very much expect to get back to at least a 10% rate in the coming quarters.

Thank you everyone for joining us today. Following the call, a telephone replay will be available for one week and the webcast will be archived on our website for one year. A transcript will also be available on our website in the financial report section. Of Of note, our 2026 third quarter results are scheduled to be released after market close on Tuesday, November the 3rd, 2026, with the earnings call at 11 a. m. Eastern the following day.

Thank you again, and this concludes our call. Thank you, sir.