Good day ladies and gentlemen, and welcome to the Fourth Quarter 2007 American Financial Group Earnings Conference Call. My name Shiquana and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will facilitate a question-and-answer session towards the end of this conference. [Operator Instructions]. I would now like to turn the presentation over to your host for today's call, Mr. Keith Jensen, Senior Vice President. Please proceed sir.

Thank you very much. I'm joined by Craig Lindner and Carl Lindner III the Co-CEOs of American Financial Group. I'm pleased to welcome to American Financial Group's fourth quarter and full year earnings results conference call. If you're viewing this webcast from our website, you can follow along with slide presentation if you would like. Certain statements made during this call are not historical facts and may be considered forward-looking statements, are based on estimates, assumptions, and projections which management believes are reasonable, but by their nature are subject to risks and uncertainty. The factors which could cause actual results to differ materially from those suggested by such forward-looking statements include, but are not limited to, those discussed or identified from time to time in AFG's filings with the Securities and Exchange Commission, including the annual report on Form 10-K and the quarterly report on Form 10-Q. We do not undertake to update such forward-looking statements to reflect the actual results or changes in assumptions or other factors that could affect these statements. Core net operating earnings is a non-GAAP financial measure which sets aside items that are not considered to be part of ongoing operations, such as net realized gains or losses on investments, the effects of accounting changes, discontinued operations, significant asbestos and environmental charges and certain other significant non-recurring items. AFG believes it to be a useful tool for investors and analysts in analyzing ongoing operating trends and will be discussed for various periods during this call. A reconciliation of net earnings to core net operating earnings is included in our press release. Now I'm pleased to turn the call over to Carl Lindner III, Co-Chief Executive of American Financial Group.

Good afternoon and thank you for joining us. We released our 2007 fourth quarter and full year results this morning. I'd like to start by covering some highlights from last year on slides 3 and 4 of the webcast. 2007 was another record operating year for American Financial Group with core net operating earnings of 28% over our 2006 record results. Our 2007 core net operating earnings generated a return on equity of 16%. Our outstanding results reflect continuing execution of our long-term strategy and our consistent focus on financial and pricing discipline and profitable growth. Craig and I want to thank our talented management team and employees for their efforts and contributions and we want to thank god for blessing AFG this past year. Our 2007 net earnings were dampened by second quarter charges to strengthen our A&E reserves and fourth quarter write-downs in our equity portfolio. Our 2006 net earnings included major gains from real estate sales which did not occur last year. I would like to note that AFG's 2007 net earnings generated a return on equity of about 13%. And over the last five years that has averaged 14%. Our Specialty, property and casualty group's underwriting profit reached another all time high, benefiting from very favorable reserve development, unusually strong crop results and a benign cat year. During 2007 favorable development was nearly $100 million or 4 points, including a major A&E charge, compared to $57 million or about 2 points in 2006. As a result of our favorable operating results, we have generated significant amounts of excess capital. One of our important strategic objectives is to deploy our excess capital in a way that enhances shareholder value. To that end, in 2007, we completed the buy-in of the minority shares of Great American Financial Resources.…

Thank you. [Operator Instructions]. Your first question comes from the line of John Gwynn with Morgan Keegan. Please proceed.

Thank you. Keith or Carl, the drop in the expense ratio in property and transportation, is that a function of the crop business or it's a drop in the fourth quarter?

It is a function of crop business. John, the way that works with a reinsurance arrangement, some profit sharing features as we have strong profit years that will be charged against expense.

Okay. But it's not a change in the ceding commission or anything?

No, it's not.

Okay, great. On GAFRI the acquisition of the minority interest, did that have an impact on statutory surplus?

No, that didn't.

Okay. Is GAFRI still stacked under Great American?

No, it's not. It's been dividend out from n Great American is directly under American Financial Group. What that has done is enabled us to have a smoother capital flow without having to take two steps through regulated entities.

Right. And is s that also the reason that stat surplus was well... stat surplus is a consolidated number, right? On your supplement?

Yes, it is.

Why was that down?

That would be down because you wouldn't have the double count from the statutory surplus of GAFRI under GAI.

Okay. And Keith, as I keep wondering on crop insurance, it looks like the expense reimbursement adjustment contained in the whatever bill is going to come out of this, this committee is really not very a material item. Is that a correct interpretation?

That's where the... there are two proposals as a Senate version and a House version. The Senate version is proposing a 2% reduction in the administrative and overhead expense allowance. The House version is proposing players [ph]. And for the larger players that really is not a significant amount. I think what it tends to be is a barrier for people getting into the business on the small end because they don't have the economies of scale.

Okay right. Thanks a lot.

[Operator Instructions]. At this time there are further questions, I would now like to turn the call back over to Mr. Keith Jensen for closing remarks.

Thank you very much and we'd express our appreciation to all of you for joining us today. And we look forward to reporting to you at the end of the next quarter. Thank you. Have a good day.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect and have a good day.