Friday, June 29, 2012

(No.204) Van Gogh: an exhibition of "the least bad I can do"


The Van Gogh Exhibition in Ottawa: "the least bad I can do"

by   Alastair Rickard


To the extent that people have a particular impression of the Dutch painter Vincent Van Gogh (1853-90) it may have been formed or influenced from seeing the 1956 Hollywood movie "Lust For Life" based on American novelist Irving Stone's 1934 potboiler. The movie starred Kirk Douglas as Vincent and was directed by Vincente Minelli. It still turns up on television occasionally.

Van Gogh suffered from mental illness and in 1890 shot himself. His cutting off of his own ear (actually his left earlobe) following an argument with French painter Paul Gaugin certainly caught the imagination of generations to come.

In any case Van Gogh, who declared himself to be an artist only in 1880 at age 27 and just 10 years before his death. was in the opinion of some people as great a writer as he was a painter.

This opinion is based on hundreds of letters he wrote, the bulk of them to his younger brother Theo whose wife, Johanne Bonger, was responsible for their being available in English. A six volume 'complete' compilation of Van Gogh's letters (819 of them, 658 to Theo) was published in 2009. The letters are available to read on line without charge at www.vangoghletters.org

Major public art galleries like Canada's National Gallery in Ottawa seek to serve the public as well as attract their attention and support by mounting major special exhibitions, especially during peak tourist seasons. In Ottawa this summer its "Van Gogh Up Close" organized by the National Gallery working with the Philadelphia Museum of Art. It runs in Ottawa until Sept 3, 2012."

Anyone attending this Van Gogh exhibition in Ottawa expecting to see famous works like "The Night Cafe, Place Lamartine, Arles" (1888) will not. This exhibition has a tight focus, one that makes it particularly interesting: Van Gogh's works from nature painted during the last four years of his life (1886-90) including the year he spent at an asylum in Saint-Remy.

For some people "Up Close" may imply only a still life here or a bouquet of flowers there or a tuft of grass over there. It is so much more. The exhibition embraces numerous large scale subjects like fields of wheat or rows of plane trees. It also offers a variety of Van Gogh's styles from realistic to impressionistic.

Indeed the exhibition refers to Van Gogh's admiration of the impressionists. He liked Monet's work as a landscape painter and this is reflected in Van Gogh's own "Poppy Field" (1890). This work is in the exhibition.

Within the paintings on display in the Ottawa exhibition the viewer can contrast his paintings such as "The Large Plane Trees (1889, at Saint-Remy) or "Park of the Asylum at Saint-Remy" (1889)  with the more obviously impressionistic influence evident in "Undergrowth with Two Figures" (1890), "Sheaves of Wheat"(1890) or "Garden In Auvers" (1890).

It is an impressive exhibition of Van Gogh's work, the paintings of an artist who many regard as a great painter and some as very nearly a great writer. It is heart-breaking to read of his struggles to come to grips with his art and his life.

"I do not say that my work is good," wrote Van Gogh, "but it's the least bad I can do. All the rest, relations with people, is very secondary, because I have no talent for that. I can't help it."

This exhibition of paintings from the final years of Vincent Van Gogh's short life is powerful and provides a truly rewarding experience. Both one's pleasure and the value of the experience can be enhanced by use of the splendid audio guide to the exhibition. It includes Van Gogh's words as part of the narrative.

Congratulations to the National Gallery of Canada and its partner in this exhibition, the Philadelphia Museum of Art.

The exhibition "Van Gogh Up Close" is at the National Gallery of Canada in Ottawa until Sept. 3, 2012.

For information visit www.gallery.ca

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There are several major special art exhibitions on currently in Canada or forthcoming, including:

Toronto:  The Art Gallery of Ontario (Toronto) visit www.ago.net

                 1. "Picasso Masterpieces from the Musee National Picasso, Paris"
                     until Aug. 26, 2012 (see the review of this exhibition on RickardsRead.com, column No
                     197 posted May 7, 2012).

                 2. "Frida and Diego: Passion, Politics and Painting" from Oct. 20, 2012 to Jan.20, 2013
                       (75 paintings by the Mexican artists most famous internationally, Frida Kahlo and Diego          
                        Rivera)

                  3. "Revealing the Renaissance: Art in Early Florence", from March 18,2012 to June 16,
                        2013 (100 paintings,sculptures, stained glass and manuscripts)

Vancouver Art Gallery:  visit www.vanartgallery.bc.ca

                   "Collecting Matisse and Modern Masters: The Cone Sisters of Baltimore", until Sept. 3,
                    2012 (45 paintings, sculptures and drawings from a leading collection of early European
                      Modernism)

Montreal Museum of Fine Arts: visit www.mbam.qc.ca

                     "A History of Impressionism: Great French Paintings from the Clark", from Oct.13, 2012              
                       to Jan. 20, 2012  (74 paintings of French Impressionism from the Clark Art Institute in
                       Mass.)

Quebec City: Musee National Des beaux-Arts Du Quebec; visit www.mnba.gc.ca

                       " In Wonderland: The Surrealist Adventures of Women Artists in Mexico and the United
                          States", running until Sept. 3, 2012 (179 works from 75 collections)

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email: Alastair.Rickard@sympatico.ca

blog: www.RickardsRead.com

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Tuesday, June 26, 2012

(No.203) Life insurers: investment cos. with small insurance depts?


"Life insurance companies: 
are they investment companies with 
small insurance departments just for the sake of appearances?"

by

Alastair Rickard


My column on "What's been wrong with the Canadian life insurance business?" (No. 202, posted June 21, 2012) prompted a number of interesting emails to RickardsRead.com. A few excerpts follow.

One correspondent passed on an article I had not seen from London's Financial Times (June 19). In it the CEO of the Dutch insurer AEGON, Alex Wynaendts, identified a life insurance industry mistake my column did not mention (and there were many I did not mention).

He said that life insurers have boosted their profits by selling complex policies which "created a sense of a lack of credibility" by consumers about the life insurance business. "...Customers need more simple and transparent products ... nobody knows exactly what's going on."

I would agree but it has not been just life insurance consumers who don't understand what's going on. As the experience of Manulife senior management highlights in their chasing of vast amounts of variable but guaranteed product sales, management apparently had trouble understanding the product and financial implications of what they were selling, q.v., the billions of dollars in resulting company losses.

A reinsurance executive responded to the column and my remarks on the role of reinsurance in the mistakes I identified in the Canadian life insurance business [italicized words are mine]:

"Always great to read your blog on the wonders of our life insurance industry and the supreme beings that "run" the enterprises. If only Captain Kirk was at the helm to take us where no one else has gone!

"I agree with all your comments but would add to your reinsurance remarks by saying that for a decade plus insurers have relied, almost to the point of addiction, on the price reinsurers charge [and do so] to the point: are they still [life] insurers? If you are reinsuring 74% of all your life business, are you really an insurer? If you rarely if ever use your your board-approved retention [limit] of millions per life, are you a life insurer or an investment company with a small insurance department for appearances' sake?

"The [big international] reinsurers have made tremendous amounts of profits and grown like McGuinty dandelions in downtown Toronto as they gobble up all the [life insurance] risk you can throw at them because they know you make money at risk taking, be it mortality or morbidity.

"Would there be a pricing actuary out there comfortable with taking real insurance risk if they had to retain up to $5 or $10 million of risk [on a life] like they used to? Like many things in life, if you do not use it you lose it!

"Like you I just wish we had more writers in the press who understood insurance and then maybe the warts that surround us could be exposed.

"The industry is in turmoil: [policy] prices going up, commissions going down, RBC Insurance withdrawing all permanent [life insurance] plans since they cannot make money or afford the reserves ....

He concluded: "You and I knew this had to happen long ago but reality was a hard item to accept [by company managements] when lowering [policy] price was easier, so execs glared ahead into the abyss."

An American, a longtime life insurance MGA in the north-east, emailed to say that the column "is superb. Everyone with a serious interest in the life insurance business, in Canada or the U.S., should read your article. How would you feel about my sending it on to members of some of the study groups that I belong to?"

A Canadian with years of field and executive experience in the agency system reacted with some enthusiasm to the "Mistakes" column. He thought it was "Abso-tively, posi-lutely ACCURATE. The business is killing itself to save the high compensation of the few who run it. I couldn't agree with you more."

In response to the 200th RickardsRead "Media myths & RickardsRead" (column No. 200, posted May 30, 2012) a number of comments were received. For example:

A longtime Canadian career agent wrote to say "Congratulations! I have enjoyed RickardsRead and I am so glad you found this outlet as I missed your Journal [i.e., The Canadian Journal of Life Insurance]. Your comments on the industry are much needed and appreciated by those of us who have suffered under all sorts of misguided changes. ... I look forward to your publications and hope that you have the energy to continue for a long time."

From a distinguished member of the Canadian financial planning community came this comment: "And I still remember the days of 'Dear Dr. Insurance' [ a regular feature in The Canadian Journal of Life Insurance] and the ratings of each [life insurance] company's annual report. All of which makes me glad that you continue to carry the flame."

And finally a former Canadian life insurance company executive was among those who sent "congratulations on publication of number 200 of RickardsRead. Your musings and insights delivered either as part of your input to Mutual Life/Clarica Life/Sun Life leaders or from various editorial platforms ... have consistently provided much needed wisdom. Keep up the good work."

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email: Alastair.Rickard@sympatico.ca

blog: www.RickardsRead.com

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Thursday, June 21, 2012

(No.202) "What's been wrong with the life insurance business?"



"What's been wrong with the Canadian life insurance business?

                                  Some views"

by Alastair Rickard


Recently I was called by a journalist interested in some of my views on the Canadian life insurance industry's past, present and future. After that conversation it occurred to me that I might as well share a few with readers of RickardsRead.com. 

What follows is far from comprehensive in terms either of our lengthy conversation or what could be said on the subject. These few points are presented in no particular order.

My views on the life insurance business and about particular life insurance companies have been the subject of numerous columns among the last 200; all can be accessed month by month and year by year via the links to my blog's archive appearing beside this column.

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My experience over the years with senior executives in the life insurance companies for which I worked and executives I encountered from other companies was that without genuine agency experience the majority of them knew little and understood less about the reality of the industry's distribution of its core individual products and in particular about the agency system in its various brokerage and career agency forms.

Indeed, some I have known steadfastly resisted acknowledging the fundamental role of 'selling stuff' to the success of the business their companies were in. Some poor decision-making was an inevitable by-product.

Similarly such executives tend to be partial to the convenient but false argument that life insurance is a 'mature market' in Canada. Hence they had to buy other companies in order to grow and/or must now pursue the wealth/investment market. [To paraphrase Sarah Palin, one might ask the current and former CEOs of Manulife, for example: 'How has that wealth product strategy worked out for you?'].

The 'mature market' for individual life insurance in Canada argument has been and is nonsense. It won't withstand close examination based on the industry's own in force and new sales numbers of individual insurance coverage vis-a-vis population data. However the argument has long provided handy camouflage for the results of inferior management.

As the result of years of life insurance company consolidation and market withdrawal the Canadian life insurance industry today offers less choice than it once did. In terms of taking the product to the public and creating meaningful opportunities to buy from a wide range of both Canadian and foreign issuing companies, the past was not prologue. Buyer choices are much reduced compared to what they formerly were in Canada.

Today the business in Canada is dominated by three huge players: Manulife, Power Corp. (embracing the brands Great-West, London, Canada) and Sun Life. They tend to act and think alike much of the time whether, for example, it is in unwisely chasing variable but 'guaranteed return' business or dropping the sale of participating policies as quickly as possible following company demutualization.

Since the demutualizations of big Canadian life insurance companies more than a decade ago (Sun, Manu, Canada and Mutual/Clarica) the interests of millions of policyholders run a distinct second to those of the companies' shareholders. Demutualization, especially for Mutual Life of Canada -- the only one of the quartet founded and operated as anything approximating a real mutual, was both unnecessary and mistaken and not in the interests of its par policyholder owners. Virtually all Mutual Life policyholders had this status, even those with Universal Life policies.

Those who argue that growth through takeover required demutualization and the raising of capital though a share structure are always happy to ignore various inconvenient facts. For example: Mutual Life bought the Canadian operations of both Prudential Assurance and Metropolitan Life before it became a stock company. Also, federal legislation had been changed permitting mutual companies to issue preferred shares. Of course company boards and senior managements were not in the least interested in the use of that device to avoid demutualizing. Mutual company structure simply did not permit the sort of inflated levels and forms of executives' financial reward so easily available after the mutual becomes a stock company.

The current fashion among some life insurance companies and executives seems to be to emphasize that there is 'no money to be made' from life insurance or at least not enough profit. This is codswallop. It carries a patina of credibility only because of the way in which too many companies and their senior executives have been operating for several decades: e.g., giving up reliance on their own proprietary career agency distribution systems in favour of chasing what was erroneously perceived to be cheaper and easier 'brokerage' business, relying on competitiveness based on under-priced and over-compensated life insurance products. Manulife did it; so did Canada and Sun among others.

Sun gave up in the U.S. first on having its own career agency distribution system, replacing it with a PPGA system, the one that Sun's new CEO has just recently -- and wisely -- shut down along with the individual life insurance products it sold.

In Canada Sun Life gradually, through poor management and inferior decision-making, degraded its own career agency distribution system until it was replaced entirely by a brokerage system which ultimately saw Sun's sales and market share decline. Its CEO Donald Stewart had the good sense to acquire the Canadian industry's leading career agency system when it bought Clarica Life, the demutualized Mutual Life of Canada.

There was a rocky period when direction of Sun's Canadian agency distribution system (career and brokerage) was handed to an American who had been involved with Sun's PPGA operation in the U.S. He knew almost nothing worth knowing about Canada or the career agency system. The logic of successfully managing a Mutual Life-style career agency system is at last reasserting itself in Sun's Canadian operation but as the Duke of Wellington said about his victory at Waterloo, it was a near run thing.

In terms of Canadian life insurance profitability, consider this: for a male non-smoker age 42 the cost of insurance declined between 1975 and 2010 by more than 80%. While that period saw the introduction of smoker/non-smoker rates, that pricing change accounted for only a minority of the reduction.

For the most  important reasons for this  sustained industry race to the bottom in policy pricing, one needs to look to factors like companies chasing top line sales volume, to unwise forms of competition for brokerage business. to pursuit of inflated market share and top line sales growth to impress media and analysts -- all of this and more comprising a pattern of activity anchored in the sale of under-priced and over-compensated policies.

This pattern was actually supported financially in part ( and for years and years, at least until fairly recently) by the big international reinsurance companies which fought among themselves a sustained war for market share and whose allowances to policy issuing 'retail' companies were, for some smaller brokerage companies, essentially the key source of their revenue.

Lest the non-industry reader find this steep and financially harmful decline in the cost of life insurance incredible in an industry where one could find (and still can) executives willing at the drop of a hat to piss and moan about insufficient profitability from life insurance, or the reader who may think it may be merely RickardsRead's editorial take on the subject, consider this:

  for 25 years or so the Munich Reinsurance company has conducted a survey of life insurance actuaries in Canada. A critical point is that the survey is anonymous so that the responding actuaries can freely express their opinions. One of the continuing areas the survey has queried involves whether or not the respondents consider life insurance pricing in the industry to be sound. The percentage who think the pricing is right declined for years and in 2001 only 30% believed the price was right for level cost of insurance; by 2010 this was down to 10%.

Recently -- and belatedly -- we have seen announcements by several life insurance companies in Canada about the repricing [upward] of some life insurance policies or the withdrawal of certain policies from sale or even the absenting of the company from the individual life insurance market in this country.

But please spare us the bleating about poor insurance profitability by those who have been running companies and yet cannot or will not price their products to make the appropriate return and instead prefer to pursue pie in the sky by and by -- whether by hiring still more of the consultants who arrive with answers to questions they don't understand, by chasing asset/wealth product sales misunderstood in design and risk, or by fantasizing a level of real profit from non-Canadian operations based to a significant extent (thus far) upon what amounts to little more than a Dickensian outlook: i.e., great expectations.

Over the years I have observed various CEOs and other senior executives who think they are visonary and have discovered, rather like Malcolm Muggeridge rediscovering Jesus, the silver key to unlock the future of distribution of individual life insurance: i.e., direct non-agent sales.

This is based on what is actually a fantasy except for certain speciality life companies and niche products: e.g., burial insurance AKA 'final expenses'; guaranteed issue/non-medical coverage (expensive and inferior); accidental death, the most useless form of coverage around and the industry's own form of lottery ticket; products distributed via 'the incidental sale of insurance' by travel agents, car dealers and other non-professionals). The truth behind this fantasy has been demonstrated over and over again by the marketplace reality of actual buyer-initiated sale of ordinary life insurance.

Ordinary individual life insurance is, as it has long been, a socially significant product but one that most consumers will not take the initiative to buy either at all or in appropriate quantity and type unless they are sought out, the need demonstrated and a sale made. Perhaps the oldest axiom in the business is still the one relevant to the sale of the bulk of individual life insurance: life insurance is not bought it is sold.

Many thousands of words have been written on each of these and many other topics involving mistakes in the life insurance business, words written by many people including me. I will not rehearse further in this particular column any more of mine.


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email: Alastair.Rickard@sympatico.ca

blog: www.RickardsRead.com

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Tuesday, June 5, 2012

(No.201) Part 2 of media myths & RickardsRead.com: 200 columns & counting


"Part 2 of media myths and RickardsRead.com:

200 columns and counting"

by Alastair Rickard

In the first part of this column (No.200 on RickardsRead.com, posted May 30, 2012) I marked the 200th of these columns by talking about the origin of this blog and the background which produced it. This column continues those reflections.

Part of my motivation to continue writing after leaving Sun Life Financial was based on my experience with the media. For some years, because of my profile as editor of the Canadian Journal of Life Insurance while simultaneously working at a life company head office, I was frequently called by journalists looking for help with articles and opinion pieces.

I usually agreed, in the interests of upgrading accuracy, to talk to them and my comments were most often used as background or in the form of quotes from an unnamed source. I soon came to understand that the majority of the journalists who contacted me did not really understand all that much about the reality of the business about which they were writing (happily, there were exceptions).

In this context a particular memory is my becoming, within a single newspaper article, three different people. I had been called by a business reporter working with a short deadline plus pressure from his editor. When his article appeared I was in it alright  but as a trifecta: as a "company executive", an "industry insider" and an "informed observer".

On another occasion I was involved with a consumer-oriented Canadian television program. I was called by a segment producer who knew of my public criticism of an American named Charles Givens who had also become active in Canada. He was a hustler as well as an indefatigable self-promoter, the author of a best seller entitled "Wealth Without Risk"and, of course, a media darling.

Part of his act as a self-proclaimed consumer advocate involved attacking the life insurance business and misrepresenting its core product. Givens was so full of it that, to borrow a line from the late Christopher Hitchens, if you gave him an enema you could afterwards fit him into a shoe box.

I helped this television producer with sources and information and put him in touch with experts in the U.S. like Alan Press. Time passed, work on the program proceeded and then I received a call from a very unhappy producer.

His series segment exposing Givens had been killed by the program's chief executive when the latter realized that a program exposing the falsity of Givens' views and approach to life insurance (among other financial matters) would actually also serve as an indictment of the views of certain Canadian critics of the life insurance industry to whom the program had been in the habit of providing a friendly platform for similar nonsense.

Givens was eventually sued left and right by unhappy consumers who had suffered financially from acting on the basis of his unsound and self-interested views. There was never really an appropriate sort of revisiting of the Givens story by those media whose publicity had so materially aided his rise.

I also still see interview articles these days with senior corporate executives about whom I know more than a little. The articles often owe far more to the initiative, skill, imagination and manipulation of corporate public affairs staffers than to the cause of accuracy.

Many talking heads from the world of journalism love to blather on about the challenges confronting today's traditional media. One is declining credibility with the public, a subject overloaded with myth and short on reality.

For example: many people are (because of their own experience, training, employment or special interest) knowledgeable on a particular subject(s). However they frequently read or hear media material in their own area of expertise they know is misleading or factually incorrect or conceptually flawed. Inevitably this reality tends to undermine media credibility on other subjects and issues.

Nor is media credibility with the public helped by the fact that too often newspaper 'reviewers' of subjects with which many readers are familiar (e.g., movies, restaurants, travel and even theatre) are engaged in writing what amounts to little more than promotion of their subjects masquerading as journalism.

Is the blogosphere in which I participate through RickardsRead.com an improvement? In some respects at least it is worse because unrestricted participation, while it contributes to ease of access for alternative voices, is a negative as well as a positive. The blogosphere is populated not only by those who contribute useful facts and thoughtful opinion ignored by or shut out of the mainstream media but also by the ignorant and the looney whose contributions are ghost milk.

In his recent (Toronto) Globe and Mail "media" column (May 22, 2012), "Lament for a national blogosphere", Simon Houpt argues that in comparison with the U.S. the Canadian "blogosphere is tame and ignorable." That is arguable but the more significant issue involves another current media myth: that people are not just reading more news in a non-traditional digital format and less in traditional hard copy form but are actually accessing more news.

The reality is that newspaper readership began declining before the rise of the internet and digital news and has been in recession for years because more and more people were not prepared to invest the time, effort and money to keep themselves well informed. Walter Cronkite, the legendary CBS television news anchor, famously worried years ago about the number of Americans who relied for their news on a half hour of television per day and they thought themselves informed.

The supposed migration to digital media that is ongoing is also misleading in terms of how much actual news is being read. Yes, many millions of people are on the internet and using social media like Twitter and Facebook. I would not go quite as far as Conrad Black did recently in the Huffington Post (May 23, 2012) when he wrote that Facebook "is essentially the recording and transmission of utterly mindless reflections, mainly between boring and under-occupied people." But the idea that today more people than a decade ago are actually reading more news is simply an expression of internet utopianism, a product of thinking that is typical of digital media groupies.

In fact it is rooted in yet another media myth. The reality is that to get one's news by reading a newspaper via the internet, a computer screen or  digital device is to read less news, not more coverage than one does in a hard copy newspaper. That reality is self-evident to anyone who reads, say, the New York Times in hard copy and then tries to gain the same breadth and depth of news experience from the NYT online edition.

I am reminded of some of the business executives I knew who seemed to consider themselves as well informed from scanning bite-sized news capsules selected and prepared for them daily by company staff as those among their colleagues who took the time to actually read even one good newspaper each day.

Another reality is that among many younger people there is decreasing interest in and attention span for reading  real news and current affairs regardless of its delivery format, a reality reflected also in their steadily lower voter turnout. It's hardly a puzzle that the 'social media' attract far greater time and attention from this demographic group. The digital 'social media' are for many people both an avenue and a rationale for the understanding of less and less about more and more.

It may be argued that much or most of the mainstream corporate media are too flawed in terms of delivering the news to warrant as much attention as they have been accustomed to receiving from the public. This is indeed a cogent argument given so much media blindness to subjects that concern many Canadians on an ongoing basis (one example: the hollowing out of Canadian control of the Canadian economy).

Combine this with an increased media commitment to the publication of organized irrelevance through the devoting of wildly disproportionate space and resources to the sensational and insubstantial (e.g., details from the trials of child murderers; or the grisly murder and dissection of a single victim of just one of Canada's 500+ annual homicides; or the endless trivia involving celebrities' lives). It is difficult to take seriously the defence of the media by custodians of such shallow editorial judgments.

To the extent that this sort of stuff undermines credibility with readers it is partially offset by access to opinion columnists of quality and insight who avoid group think and the herd mentality that so frequently support various media myths. I refer to people such as Rick Salutin of The Toronto Star, Jeffrey Simpson and Eric Reguly of The Globe and Mail (Toronto) and Robert Fulford and Christie Blatchford of The National Post.

They routinely offer cogent opinion while avoiding the familiar traps of today's mainstream media opinion: sycophancy or disdain and the expression of opinions that leave no straw man standing.

All in all there is ample motivation for me to continue making for awhile yet a modest contribution to public conversation through RickardsRead.com.


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email: Alastair.Rickard@sympatico.ca

blog: www.RickardsRead.com

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