Personal Lines Outlook
Michael Nannizzi – Goldman Sachs & Co.: I had one question, Brian. You talked about Personal lines, you talked about the rate gains you are getting, both on the homeowners and the auto side. I think in the Q, the outlook you mentioned that you expected profitability to be roughly in line with what you saw in 2012, just trying to square those two items and just one follow-up?
Brian W. MacLean – President & COO: So, specifically I just want to make sure that’s a homeowners…
Michael Nannizzi – Goldman Sachs & Co.: I think you said – in the Q I think you said the outlook for Personal lines overall was that profitability should be in line with 2012 or you would expected to be in line with 2012. Just given you are taking mid to high single digit, I think double digit rate gains. I am just trying to understand why that number shouldn’t be better next year than this year?
Jay S. Benet – VC & CFO: This is Jay Benet. What we tried to say in the Q was what we had last year were various quarters that had favorable weather, favorable fire losses and as you can easily understand in the homeowners, it’s very difficult to predict what a normal level of these things are. So thinking about what the outlook for the year was in homeowners, our view was well, they were favorable last year, so whatever normal is this year, sounds like it should be a little higher. So despite having this underlying concept of rate exceeding some view of loss trend, and that’s a pretty difficult concept when you get into a business that has so much of its losses tied up in weather and fire-type events, we do feel that there’s an improvement in profitability coming about through pricing versus this concept of loss trend, but that improvement will be offset if these other levels of losses go back to whatever ‘normal’ is. So it’s a very difficult equation, if you will, to try to come up with an outlook for that business but that was our best shot as it relates to homeowners. And then on the auto side, the view was a little marginal improvement based upon pricing, where it is today versus in that business a much better view as to what loss trend looks like. So…
Jay S. Fishman – Chairman & CEO: A better meaning, more accurate, more predictable. Yes.
Jay S. Benet – VC & CFO: Yes, yes. So looking at the two combined, one getting better, one if things go back to normal in homeowners, who knows whether they will, getting a little less margin, the two of them should kind of offset and the profitability should be roughly at the same level.
Michael Nannizzi – Goldman Sachs & Co.: And then just in Business Insurance, we certainly saw exposures kind of pick up in some of the reporting that you provided us with. Just trying to understand, so you’ve got — so you’ve — you’re taking rate, you’re expecting to continue to do that, your retention is not falling and you’re seeing exposures lift. Is that exposures on the business that you had or is that potentially being impacted by new business or new endorsements on old business?
Brian W. MacLean – President & COO: Michael, this is Brian. So, the exposure numbers we show are all on our renewal book, for starters, driven by a whole bunch of things. In property, for example, there’s been a lot of movement to improve insurance-to-value, so that would – we could have the exact same building, but getting a different insurance-to-value on it and that would be driving exposure up. It can be more employees in workers’ comp, it could be more vehicles, more receipts on a GL ratings, so it can be all of those different things. As I mentioned in my comments too, I would also point out that the granular nature of the exposure data in particular on Commercial Accounts moves around a bit as premium audits come in et cetera. So, there is a lift there, but maybe not as dramatically as some of that data shows, it moves around.
Michael Nannizzi – Goldman Sachs & Co.: The premium audits have been trending in which direction recently?
Brian W. MacLean – President & COO: For the last several quarters they have been pretty flat. They rose dramatically as we came out of 2008, 2009 time period, but for the – and clearly it’s positive, premium audits are returned to the traditional your couple of points positive on average.
Joshua Stirling – Sanford Bernstein: So, this is obviously a great quarter and as we work through results we are starting to see some players get more comfortable with margins. Obviously, Travelers has been the leader thus far in raising pricing and talking about sort of accident years being not a target. I’m curious to get a sense of how far you think we may have to go on pricing. You’re guiding to continued pricing in ’13 in your outlook in the Q and would love to get a sense of how much further accident year sort of margin expansion you think that the industry needs to get back to target?
Jay S. Fishman – Chairman & CEO: Josh, it’s Jay Fishman. I can’t speak to the industry or any other company. I can tell you what we’re doing. We’re going to continue, and it’s driven by two factors. First, the weather remains unpredictable and just more uncertain than it has in many years, and that’s been the case for the last several years and that’s been driving much of our action. But the other part is that as our investment portfolio continues to mature, the effect of reduced interest rates will continue to push the fixed portion of net investment income down over the next several years. We’ve provided those projections to you previously with – actually they’re more than projections. They’re almost the actual numbers, such as the bonds as they mature will be reinvested. So, I would refer you back to that schedule to get some sense of that impact. So that net investment income will continue to decline for the next several years at least, unless interest rates change. The weather remains very unpredictable and uncertain, so we’re going to keep going.
Joshua Stirling – Sanford Bernstein: The other thing that’s surprising about this just is a follow-up. A couple of years back it was clear that it was easier to maintain margins and maintain pricing in a soft market in the smaller areas and Personal lines, but it sounds like I am interpreting what you guys are saying correctly that I think that there is more pricing momentum to continue in sort of the larger mid-market commercial accounts, National Accounts businesses as opposed to the smaller businesses in Personal lines? I’m wondering if you can talk about one, I want to guess, if that’s right but then also just sort of underlying what that – sort of how those two different markets have diverged and what we all ought to understand about how they operate differently?
Jay S. Fishman – Chairman & CEO: No worries. We tend to think of those markets really in three segments, and even that’s an understatement of what the real environment is, but we tend to think of small middle market individually underwritten accounts and then the National Accounts business. Certainly, over a long period of time, the competitive dynamics in the National Accounts arena particularly, has been more dramatic than the level of competition in the smallest accounts. In fact, if I recall correctly, I don’t think that renewal price change in our Select business actually ever went negative. We should check that but that’s my recollection. I don’t believe it ever did, and obviously, it did in middle markets. For those who engage in the real National Accounts business and I would observe that our participation in that segment is actually relatively modest, that’s been the most competitive. So that’s a historical framework, I think, around which to think of pricing. For what’s happened over the last several years, we have been successful at passing along price increases, both in our small commercial business, as well as our middle market individually underwritten businesses. I’m not sure that the differences in the ability to pass or at least as measured by rate gains or renewal price change in the small business, I don’t think that there’s been a significant difference in the ability to be successful in those two segments. The dynamics are quite different on the individually underwritten business, it’s account-by-account, it is in many cases loss driven. It’s the experience of the individual account. In Select, you are dealing with class underwriting and so you are dealing with – think of it as one with personal lines price established for class of business. So, the nature of the underwriting decisions are different, but the results are interesting and that we’ve been successful at getting rate gains in that small as well as the individually underwritten business, that are largely in the aggregate the same. Do you want to talk about National Accounts or – I’m looking at Brian.
Brian W. MacLean – President & COO: I mean National Accounts is a little bit more of a service model, a lot of what we do there. The majority of what we do on the casualty side is all loss responsive and the market conditions have been such that our service capabilities have been viewed very favorably and so the pricings improved there pretty dramatically and we’ve done really well there. So, we feel good about – we’re not a large casualty risk taker in that space.
Jay S. Fishman – Chairman & CEO: And that is an important distinction. Even our National Accounts business, we’ll write National Property on a guaranteed cost basis, we’ll do that. Our casualty business both in terms of liability as well as in particular workers’ compensation is largely, in one fashion or another, a fee-for-service business where we are managing a claim on behalf of the client. So we are not as one would think of a guaranteed cost risk taker in the larger end of…
Brian W. MacLean – President & COO: The risk we would take there would be excess.
Jay S. Fishman – Chairman & CEO: Yeah, exactly right. I hope that’s helpful.
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