Operator: Good afternoon. My name is Tracy, and I'll be your conference operator today. At this time, I would like to welcome everyone to Mercury General Quarterly Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session.
This conference call may contain comments and forward-looking statements based on current plans, expectations, events, and financial and industry trends, which may affect Mercury General's future operating results and financial position. Such statements involve risks and uncertainties, which cannot be predicted or quantified and which may cause future activities and results of operations to differ materially from those discussed here today.
Thank you. I'll now introduce and turn the call over to Gabriel Tirador, President and CEO. You may begin your conference, sir.
Gabriel Tirador - President and CEO: Thank you very much. I would like to welcome everyone to Mercury's first quarter conference call. I’m Gabe Tirador, President and CEO. In the room with me is Mr. George Joseph, Chairman; Ted Stalick, Vice President and CFO; Robert Houlihan, Vice President and Chief Product Officer; John Sutton, Senior Vice President in Customer Service; and Chris Graves, Vice President and Chief Investment Officer.
Before we take questions, we will make a few comments regarding the quarter. I’m pleased to report we started 2013 much better than we ended 2012. Our first quarter 2013 combined ratio was 97.7% compared to 97.6% in the first quarter of 2012. Our first quarter results were negatively impacted by $10 million of pre-tax charges related to our previously announced consolidation of our operations outside of California and $1 million in catastrophe losses, related to weather-related events in Georgia.
This was partially offset by $3 million of favorable reserve development, coming primarily from operations outside of California. Our California auto loss frequency trend is essentially flat compared to the first quarter of 2012.
In addition, our results in the quarter were helped by the continued improvement of our financial results outside of California.
Last quarter, we reported on our decision to increase our estimates for California bodily injury severity as the more recent accident years are developing at a higher rate than historical averages.
Our first quarter 2013 losses were consistent with the recent development trends we have observed. We believe the increase in severity we are seeing is impart due to more severe accidents and increases in medical procedures.
In California, we increased our private passenger auto rates approximately 4% effective October 26, 2012. Although the 4% rate increase will aid our results in 2013, we don't believe it is sufficient for us to reach our profitability target. Accordingly, we filed for a 6.9% rate increase in our non-standard California company and 6% in our preferred auto California company. The filings are currently being reviewed by the California Department of Insurance.