Good day and welcome to AIG's Fourth Quarter Financial Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Liz Werne, Head of Investor Relations. Please go ahead Ma’am.

Good morning, everyone. Before we get started I’d like to remind you that today’s presentation may contain certain forward-looking statements which are based on management’s current expectations and are subject to uncertainty and changes and circumstances. Any forward-looking statements are not guarantees of future performance or events, actual performance or events may differ possibly materially from such forward-looking statements. Factors that could cause this include the factors described in our first, second and third quarter 2014 Form 10-Q and our 2013 Form 10-K under management’s discussion and analysis of financial conditions and results of operations under risk factors. AIG is not under any obligation and expressly disclaims their obligation to update any forward-looking statements whether as a results of new information, future events or otherwise. Today's presentation may contain non-GAAP financial measures. The reconciliation of such measures to the most comparable GAAP figures is included in our financial supplement, which is available on our website, www.aig.com. This morning in the room we have our CEO, Peter Hancock, David Herzog, our CFO; and the heads of our business segments. John Doyle, Head of Commercial; and Kevin Hogan, Head of Consumer. So with that, I’d like to turn the call over to Peter Hancock.

Thanks Liz, and thank you all for joining us this morning. I’d like to discuss the quarter’s results, our priorities, financial objectives and our view of economic forces impacting our businesses. As we look back over the full year, the earnings growth of our core insurance business, our DTA utilization and accretive share repurchases resulted in 12% growth in book value per share excluding AOCI and DTA. Our fourth quarter and 2014 full year accomplishments reflect our commitment to value based management and focus on growth, profitability and risk. As just one example of executing on value based metrics, I’d like to highlight our execution of debt retirement that spreads exceeding those of our debt issuance. This strategy resulted in over $0.5 billion of incremental economic value for shareholders despite an approximate $800 million GAAP charge to net income. This quarter you will also see that our re-segmentation highlights are focussed on customers. Our customers look to us as their lead insurer rather than just another source of capacity and you’ll hear more on our commercial and consumer customer focus from John and Kevin. Our fourth quarter included both accomplishments and challenges. We saw the early signs of expenses moving in the right direction, both the commercial and consumer P&C businesses delivering accident year loss ratio improvement from the same period last year. We executed on a number of positive capital management actions and yesterday we announced a new $2.5 billion share repurchase authorization. Our fourth quarter results also included evidence of our risk management discipline across the company, specifically accident years 2005 and later continued to develop favourably. We continue to accelerate the DIB unwind with a focus on maximising economic value and we moved access capital from our life insurance companies to the parent. We also recognize the…

Thank you, Peter, and good morning, everyone. This morning, I will review the highlights for this quarter's results, our recent capital management actions and balance sheet strength and our outlook for 2015 capital management. Turning to Slide 4, you can see our total insurance operating income was up slightly versus a year ago. After tax operating income for the quarter was $1.4 billion or $0.97 per diluted share. In the fourth quarter, our operating return on equity adjusted for AOCI and DTA was 6.8% and as Peter mentioned 8.4% for the full year. Reported net income was $655 million and included the charge for retirement of debt of $824 million associated with our liability management actions. Book value per share excluding AOCI and DTA grew to just over $58 a share 12% higher than a year ago, driven by our earnings, our DTA utilization and accretive share repurchases. I will highlight a few noteworthy items for the quarter and John and Kevin will provide more details on the commercial and consumer operating results. Turning to slide 5 we summarize prior year development in our property casualty results. Net adverse prior year development for the quarter was just under $300 million including premium adjustments of about $50 million and relates primarily to accident years 2004 and prior. Commercial insurance reported prior year development of about $197 million including those premium refunds. There were four classes of business that contribute almost equally to the adverse emergence and those include primary workers compensation, healthcare, pollution products and certain financial lines. Consumer insurance had a modest favourable prior year development of about $35 million principally from our private client group business. The runoff segment now reported in corporate reported net adverse prior year development of about $135 million driven primarily by pollution products within…

Thank you, David. This morning I will discuss our commercial results which include the operating segments, property casualty, mortgage guarantee and institutional market. You will see that we have moved our insurance run off business which have been part of the PC other, to corporate. This is consistent with our focus on managing runoff lines to capture the greatest economic value for AIG. Certain expenses and investment income that were previously reported as part of PC other have been allocated to commercial and consumer to be consistent with how we manage the business. The total commercial segment pre-tax operating income was $1.2 billion in the quarter, driven by improved property casualty and favorable mortgage insurance results, offset by weaker returns in our institutional market business. Beginning on slide 12 with property casualty results, the quarter benefited from lower CAT and severe losses and improved operating efficiency. Net premiums written excluding the effects of foreign exchange and return premiums on loss sensitive business decline 1% compared to the prior quarter, primarily due to our continue underwriting discipline in U.S. casualty. This was partially offset by new business growth in financial lines and property. Financial lines grew in all regions and importantly in targeted growth areas such as multinationals, small business and M&A. Property grew in all regions and segments outside of the U.S. particularly in middle market property and highly engineered risk. Our intense focus on enhancing customer services in these lines, for example, engineering and loss control services has increasingly becoming a differentiator for AIG. Overall, rate change from the prior year quarter was essential flat. Rate change in U.S. financial lines was just over 2%, while on U.S. specialty it was up about 2% as well. U.S. property rates were down nearly 6% in the quarter. Outside of the…

Thank you, John, and good morning everyone. As you can see from our revised financial presentation, our consumer results now bring together all of AIGs insurance products and services for consumers whether individual or group based contracts that were previously reported in the life and retirement and property casualty segments. We’ve created this global consumer platform with the broad distribution reach under a common leadership team and remain focus on executing against our strategic priorities including our targeted growth strategy. In the fourth quarter we closed on the acquisition of Ageas Protect Limited, a leading provider of life protection products in the U.K. and entered into an agreement to acquire a Laya Healthcare, an Ireland-based healthcare company, which we expect to close in the second quarter of 2015. These acquisitions will help drive continued expansion of our consumer portfolio of insurance solutions design to meet consumer needs for financial, health and retirement security. We believe Ageas will help strengthen our capability in the U.K. where we already offer personal accident, health and travel insurance coverage to consumers, as well as customized insurance solutions for high network individuals through AIG private client group. Laya Healthcare service more than 23% of the Irish private health market offering life, dental and travel insurance as well as health and wellness coverage which nicely rounds out our available products in Ireland and provides a platform for expansion into health insurance in select additional markets around the globe. Combined our consumer businesses delivered $923 million of operating earnings during the quarter. I will cover highlights for each of our three operating segments and share some views on 2015. Before discussing results for the quarter for our retirement businesses which begins on slide 16, I wanted to remind you that as part of our resegmentation, we revised…

Thank you. Operator, can we open up the lines of questions, please?

Certainly. [Operator Instructions] And we’ll take our first question from Mike Nannizzi from Goldman Sachs

Thank you. So Kevin, just following up on something you just said now, on the consumer loss ratio, the full year being more indicative than the fourth quarter, the expense ratio was higher in the fourth quarter than the full year. So if you juxtapose those two, that would imply that, in personal lines, you would be running over 100. Is that where you expect to be running that business, or is there something on the expense side that we should be considering where 4Q may not be a good starting point? Thanks.

No. We’re anticipating running this business over a 100. We anticipate overall continuing improvements in the expenses in personal insurance associated with the efficiencies that we have gained. And in terms of loss ratio, there was better than expected experience this year particularly with respect to Japan automobile. And so it’s that particular anomaly that we don’t anticipate to repeat in 2015.

Got it. Thanks. And then maybe, Peter, the $650 million, maybe David, $650 million that you -- or so that you talked about in investment in 2014, could we get an idea of what that was in the prior year and what have been the returns that you have seen, so the expense saves that you have generated from the investment so far, just to get an idea of sort of how that process is tracking?

We didn’t discussed 2013, because it’s a bit of – the comparison is not really one for one, because there were many projects and initiatives that we’re doing in 2014 that were not in existence in 2013, so it’s a bit of apples and oranges so to speak. So, the returns that are coming out of – again, they are in varying stages. So for example, the biggest items in there are for example our movement to shared services, the Japan initiative and certain the shared services and some of the finance functions, those are the biggest ticket item. So we’re beginning to see payback in each one of those at various stages against some come sooner than others. The finance centers have more immediate payback. It’s closer to a near within one year of the spent you’re seeing the initiatives. So, we haven’t quantify the exact benefit yet, but again its going to varied by each one of those projects.

I think the important theme is that we’ve set expense targets that we just disclosed on a net basis. So effectively we are maintaining and increasing the level of investments while reducing the net number by 3% to 5%, so the business as usual expense declining faster than 3% to 5% as we step up the level of investment on return – on projects where we feel comfortable that we have a good expected return above our hurdle rate. So we’re not sacrificing long-term growth and efficiency in order to get this net expense reduction.

Great. And then just connecting, David, your comments on deployment this year, the $6 billion to $7 billion, just trying to square that to the buyback authorization of $2.5 billion. So is the expectation that you put the buyback authorization out, you exhaust it at some point this year and then continue increasing or putting up new authorizations as you go through?

Well, the expectation for the full year is 6% to 7% both in total for share repurchase in shareholder dividends. And again, I’ve made reference to more dynamic approach so we wanted to reflect the very robust distributions to the holding company and importantly the reduction in risk in our P&C business and so we increase the amount of authorization or asked for authorization – the amount of authorization we ask for to the first quarter. So, we will deploy as appropriate and then again based on facts and circumstances seek additional approvals throughout the year.

Great. And last quick one, any impact from energy related investments on either private equity returns, book value that we should think about just given the three months lag in private equity?

Nothing material.

Thank you.

We’ll now take our next question from Jay Cohen with Bank of America-Merrill Lynch.

Yes. Thank you. Couple of questions. One is in the U.S. consumer business, and I know the acquisition expense ratio was up because of these profit-sharing commissions, but the loss ratio relative to the past couple of quarter actually didn’t get better and so is there some sort of catch up with that number, what kind of acquisition ratio should we expect going forward? Is it bit different than what you have been running?

Yes. Jay, thanks. The sequence of loss ratio improvement is not substantive, but year-over-year it is substantive and the profit share is of course a look back mechanism. And so – I think where we are right, we’ve restructured the underlying programs in the U.S. warranty business essentially instituting deductible and other risk management, arrangements which would change the profile of the loss ratio and acquisition ratio overtime.

Got it. And then secondly, the comment about a 1 to 2 point accident year loss ratio improvement I guess on the commercial side for 2015 -- and I guess it was John that said that -- can you discuss the drivers of that improvement?

Sure, Jay its mix of business really being the primary lever. It’s also increased confidence in some of the risk selection and pricing tools we’ve implemented over the course of the last several years. It’s from improved claim service outside of primarily outside of the United States made big investments in our claims team and claim technology to improve how we run off the results outside of U.S. And then lastly we expect the short-tail losses which you know as I mentioned were slightly elevated this year, the attritional short-tail losses to move back to a more normal state. So it’s a combination of those things, but you know as I also noted given the amount of short-tail business we have it can be lumpy from quarter to quarter.

Got it.

Thanks, Jay.

Moving on we’ll take our next question from Jay Gelb from Barclays.

Thank you and good morning. First, for David, the lockup of the AerCap shares begins to expire this month and I heard that you've made a mention of that $6 billion to $7 billion of share repurchase and dividend in 2015 didn't include monetization of non-core assets. So I was hoping you can update us on your view in terms of when or if you can start to sell down that AerCap stake of $4 billion? Thanks.

Sure. The -- if part is pretty easy, its further contractual lock ups which the first one third expire actually next week. That’s the how we could. We haven’t commented on the monetization of this non-core asset I’ll maybe ask Peter to share his views and perspective on it. As we have done before – as I said before it doesn’t change our view of this as a non-core asset but we want to, will be very thoughtful as we think about maximizing value for our shareholders. So Peter, anything you want to add to that.

I think that we’ve had a good track record over the last five years of making very thoughtful disposal decisions in the light of the value that we can realize and a patient approach to disposing of this non-core asset is what we think makes sense. It’s quite accretive to our coverage ratio from a raisings perspective and in our stress test while as an equity, a concentrated equity position on the face of it, it was seen like a hot potato. I would not describe it that way because we have extremely comfortable capital accretions from a stress testing perspective. So I think we have time on our side, but we recognize it’s a non-core asset and if we receive a favourable offer for it, of course we will dispose a bit and then redeploy that capital to our core operations.

All right that makes sense. Then on the ROE expectation, if I think about 50 basis points of improvement starting at a 7.4% level for this year normalized, I’m just trying to get a qualitative perspective of why Peter you and the board feel that that’s adequate to potentially not get to 9% before even 2017.

Well we have a long term goal of getting north of 10% as I stated, and most importantly getting it above our cost of capital and so we look at the interaction of what we’re doing to reduce our cost of capital in particular de-risking the company and focussing the quality of earnings on really repeatable sources. So, sure we could get to the target quicker, but we’d probably be at the expense of sustainability of earnings, quality of earnings, and we have judged that this is an appropriate pace that continues to demonstrate our commitment improving returns while doing so in a sustainable way. And so we’ve made careful tradeoffs to improve the returns and it would be very transparent about that process.

All right. And then last one, on the life risk-based capital ratio currently at 490% when we hear from other large life insurers like Met and Prudential, they are targeting more in the 400% to 450% range. So I'm wondering if you still might have more room to bring down that RBC in the life business.

Thank you, Jay. As we have said I think in the past, our range, target range is somewhere in that business between 425 and 470, that’s a range. So we’re at 490. We’ve taken very substantial amounts of capital out of those companies, so the short answer is yes, we still have more room to reduce that but again we’re pretty clear and we’re clear with all our stake holders what that range is and we’re going to be very methodical and measured about how we do that. But, we’ve made clear what our range is, we’ve obviously taken very substantial steps to get close to that, remember last year we were north of 560 or 568 a year ago. So we’ve taken meaningful steps, so I think those actions should give you some sense of how we are thinking about it.

Thank you.

Moving now we’ll take our next question that will come from Adam Klauber from William Blair.

Well thanks, good morning. The retirement and life generally -- it was a weaker quarter; our income was lower than it has been really over the last five or seven. Should we think about this as more of a typical quarter, or should we think about it, look at the context of those segments more on an annual basis versus the fourth quarter?

Yes thanks Adam. Look I think in part of the difference in the income came from the performance and the alternatives and partnerships which you know I think is kind of a normal course of business. We have seen a little bit of deals compression but nothing unusual in this quarter. We did have the IBNR reserve, the ongoing activities from 2011 associated with the identification of policy holders and beneficiaries, which is a process involving a third party vendor provides us information we have to engage in the matches and you know as that process comes to near a conclusion you know we have to respond to the matches that are occurring and the identification of those policy holders. A lot of these are very small face amount policies, a lot of them go back a number of years and matching you know is not an automated process. And those are some of the anomalies, you know as I mentioned that the current rate environment and by that assuming a 10-year key around 180 this is where we expect a drift of four to six basis points per quarter in the base yields. That’s a trend that will depend upon what the future rate environment is.

Okay. And then in group retirement you mentioned a couple large accounts left or were consolidated. Do you think there will be more of those or are they one-off and do that have any impact on their quarterly financials?

So we don’t, first of all I think it’s important to note we don’t anticipate a substantial impact on earnings from these larger cases and with respect to the larger cases they don’t always come up for revisitation, we see nothing on the horizon at this juncture, of course you can’t anticipate where consolidations may occur. And as you know there are consolidations in a number of industries especially healthcare associated with the recent developments in those industries. So we do see them as part of a normal aspect of the environments and they are essentially one off items.

Okay. And then in the commercial insurance, on the P&C side, we saw good progress on the expense ratio. You mentioned you are going to continue to work towards that but in investments. So again, is this year -- is the progress we have seen this year better than we can expect going forward, or is it possible to see that type of progress going forward on the expense ratio?

As I mentioned in my opening comments Adam, we’ll see some GOE improvement next year, I don’t anticipate that it will get the same dollar amount dollar that we improved earning 2014 you know and of course the ratio will depend on other factors, but we do expect to continue to get more efficient.

Okay. Thanks a lot.

We’ll now take our next question; will be from Josh Stirling from Sanford Bernstein.

Hi, good morning. So Peter, thank you. I think we all appreciate the clarity in your goals. I wanted to spend just a minute or two talking about them. Like Jay, I guess I am kind of surprised about the pace of recovery that is implied by the bridge to 10% and I wonder – obviously, first of all, make sure we understand that, but I also wonder more fundamentally, why is AIG's long-term goal only at 10%? If I try to put this simply, many of your monoline peers in life and P&C all consistently generate solid mid-teens ROEs. Why shouldn't something higher be the long-term inspirational target? Is there something about the business mix or infrastructure challenges or capital requirements that’s really going to be a permanent headwind for the Company, or is this something we just need to be patient and we are going to see upside to these goals over time?

Well, I think given where we’re starting from to speculate beyond three years is challenging. The 10% in an environment if we have persistent deflationary pressures, low inflation and low investment yield. In our view is actually quite comfortably above what the cost of capital is likely to be at that point. So our goal as we say in overall terms is have to sustainable ROE above our cost to capital, which is also a function of our risk levels. And so if others are running at much higher ROEs I suspect it is – because they choose to run their balance sheets with more leverage and are willing to take more risk. And we think that we would like to position the company as a very balance portfolio of diversified risk so that that we can whether swings in these pricing cycles, swings in the economic cycles and be opportunistic in times of crisis where we think that there are tremendous one-off opportunities to add value. And I think that maximizing ROE inhibits that financial flexibility but making sure that their ROE is comfortable above the cost of equity of the company and from sustainable sources as oppose to short term risk taking of any kind. So we are very committed to improving the quality as well as the quantity of earnings and been transparent about that shift of mix.

Okay. I'm wondering if we could just briefly, similar sort of concept in a way, thinking about focus on returns and the environment. I think you guys disclosed pricing was down relatively notably in property. In commercial business I think overall you guys were flattish. How do we think about you guys maintaining your pricing discipline in the context of everything else you are trying to do when you are also still trying to grow? How do we know that you are going to focus on margins first and sort of long-term health of the franchise second?

Well, I wanted to signal that very much in the $2.5 billion buyback, because we talk about one of the factor that let us to step up the pace of buyback was the fact that we had reduced risk in the business and in particular in commercial. And that’s because we walked away from certain property renewals where we felt we were not getting adequately return rewarded for risk. And so what we’re really saying is that the pricing discipline comes with it a sense that the capital we have is precious and we will not deploy it if we’re not getting an adequate return on it. So, prompt return of capital that’s not deployed at adequate ROEs is our way of demonstrating to you and internally that we’re not about volume or about value.

That’s great. Thanks for the clear signal.

And we’ll now take our question that will come from Josh Shanker from Deutsche Bank

Yes. Good morning everyone. I just had some questions about the early debt retirement and when it occurred. Was there some debt that you retired in the quarter that already paid a coupon during the quarter, or more succinctly can we look at the 4Q run rate of interest expense as, at this point, a benchmark for looking into 2015?

Josh, its David, as I’ve said in my opening remarks we expect based on full year expectation to have interest expense of around or just inside of $1.1 billion. So again, you can look at the fourth quarter as a reasonable proxy.

For 1Q and then go down.

Again, that’s why I’m trying to give you a level of insight. I think it’s important to note that our leverage ratios are very much inside our target area, our target zone and that effect on the low side of that, so I think we’ve got plenty of financial flexibility, but we are obviously focused on balancing leverage and our coverage. So I think those are critical points you should take away.

Great. And on the incurred but not reported death claims, there were related charges taken both in 2Q, 2011 and 4Q, 2011. What solace should investors take that we are getting close to getting this – as an issue that is behind them?

Well, yes, that’s true, I mean, this has been an ongoing process of working with new process for identifying deceased policyholders and their beneficiaries. We have much experience now with the vendor and with the matching process and we went through an extensive analysis. We’re getting down to the last – I think process is with the vendor and we have some insight into what we believe is going to be coming in the matching process in the future. So right now this is our best estimate of what we think will bring us to the conclusion of this process. But until we get the files from the vendor and engage in a physical matching we can’t provide 100% guarantee.

And that charge includes the interest on unpaid claims as accrued since that time?

Yes. It does, in fact that was an aspect of one of the reserve increases that you noted before and so we do fully incorporate interest in the reserve.

Okay. Thank you.

Thank you.

We’ll now take our question from Larry Greenberg, Janney Capital.

Good morning and thank you. I'm wondering if you could just elaborate a little bit more on what’s going on at VALIC. I understand the large cases that were lost, but I guess, in particular, it appears you have been pretty aggressive in managing crediting rates and I'm wondering if maybe that is having an impact on the business, just recognizing the flow of surrender activity and overall flows? And it also seems like the ROA has been trending down as well, so maybe just an update on the health of that business?

Actually we consider the health of the group retirement business actually quite strong. We continue recruit advisors. We have had I think good success with the process of expanding some of the product portfolio that we’re able to represents in that business. And while it is true we are and we continue to be disciplined in our new business pricing. We don’t see the loss of these large cases as relevant to that. We continue to invest in this business. We invest in our record-keeping capabilities and also our advisory capabilities and we’re also introducing a kind of a retirement’s information center to help educate our customers there. The most important part of the margins in this business or in the smaller and medium size cases and in the ongoing contributions, so we do not get necessarily distracted by some of the consolations that occurred in the large case area.

So other than the large case activity, its pretty much business as usual there?

It’s certainly a competitive environment and we are monitoring very carefully the developments in that business, but like I said we continue to invest in that business and we are comfortable where we are. Clearly yield environment is something that impacts that business as well. And we are investing in substantial technology to improve our position.

Great. And then just finally, on the life RBC ratio, was the decline for the year driven entirely by dividends up to the parent, or were there any adjustments made for low interest rates as well?

[Indiscernible] the short answer is no. That’s a substantially all of the decrease in the RBC was related to the dividend close. We did provide additional reserves for cash flow testing, but those were insignificant relative to the rest of the decline from distributions.

Great. Thank you very much.

Hey operator, I think we only have time for one more question, please.

Certainly. We’ll take in our final question from Tom Gallagher from Credit Suisse.

Good morning. Peter, I just wanted to ask you a few questions about your 9% ROE goal for 2017. Should we view that as a – is that a goal, is that a plan? What are you contemplating for interest rates, now does that assume rising interest rates, flat can you just give a little color there?

So first of all I wouldn’t describe it as a goal. Our goal is – our broadest goal is to have a sustainable ROE comfortably above our cost of equity and secondly we’ve restated our long term goal of 10%. The full cost which is what I have provided over the next three years of 50 basis point improvement per year is premised on an interest rate environment that reflects the forward curve in the market. So whether the market is right or wrong your guess is as good as mine. We tend to run at fairly carefully match duration book of the company, don’t speculate on interest rates but I think that the interest rate assumption that we’ve used in our financial planning is based on the forward curve.

Okay. This is just an editorial comment by me but I think one thing being lost here is the fact that you also mentioned you are expecting 10% book value growth. So I would just comment that 50 basis points of improvement per year with 10% book value growth is actually a pretty solid level of earnings growth implied, for whatever that is worth. David, and just to clarify, if I understood your comments correctly the $2.5 billion buyback authorization is expected to be the pace in 1Q and then should we then expect a falloff? I assume that is funded by the de-access that was taken out of the life company and then should we expect a falloff to get to that, I guess, $6 billion to $7 billion of total capital return, including dividends for the balance of the year? Is that the right pace to think about?

Tom’s its Peter. I think that the concept of the buyback being funded is I think combining solvency risk with liquidity risk in a way that I wouldn’t. As you noticed in the last quarter we issued a substantial amount of very long term debt at a very effective level so we have comfortable liquidity in the holding company. And so as we look at this scale of buyback it’s not really constrained by liquidity, it’s really driven by risk. And so as we look at how the risk profile of the company changes, the RBC levels and dividends up from the subsidiaries is simply one indicator of enterprise risk, but the more we the rating agencies and the Fed look at the company as one combined enterprise we start to see that we have substantial capacity to cope with the risk level of the company because the company has been substantially derisked over the last five year and we continue to de-risk the company. And as I mentioned earlier, as we exercise discipline in terms of new business writing we may find if the pricing environment in the P&C side is softer further capacity because of less risk. That may not be reflected in the short term and RBC ratios. So I just want to make sure that we recognize this is not literally dollar for dollar funding its separating the liquidity management which is comfortable with a view towards managing enterprise risk well within our risk appetite.

Understood Peter on their sources and uses comment. Am I right about their pace though that you all expect?

So I think that the pace you can incur [ph] from David’s 6 to 7 for the full year which would suggest it’s somewhat accelerated pace in the first quarter, but reminding yourself that it excludes any non-core asset disposals or accelerated unwind of a dip.

Okay, thanks. And then one last one, Kevin, one thing that stood out in your businesses was pretty strong improvement in international. There was a drop off in revenues but then margins also picked up, can you explain what was happening there?

Well you know Tom an important part of the improvement does come from Japan and we have been working on the overall rate adequacy in that environment in addition to enjoying an unusual year with respect to the automobile loss ratio that was a feature of and the change in the way non claim discount bonuses that actually driven down frequency to the entire market and then the fuel prices which ironically were high at the time you know also reduced the amount of driving and that led to a substantial improvement there. I think in terms of revenue, there is an underlying improvement in our growth, but it is not as dramatic as the improvements in both loss ratios as we’ve instituted many of similar underwriting tools as to what commercial has successfully used over the last couple of years.

Okay and so it’s Japan auto driving the improvement – so is this do you think this is a good new run rate would you expect continued margin improvement from here?

The Japan auto was unusual in that the prices of fuel were high they are not anticipated to stay high, so we do not expect frequency to stay that low, but Tom the improvement in the underwriting actually comes across the board, it’s not limited to Japan. The implementation of the tools that I mentioned are having an impact on rate adequacy and portfolio quality across the board, as we actively manage the portfolio. So don’t anticipate the loss ratio as a fourth quarter as a run rate there’s a number of anomalies we had a very benign CAT environment, severe losses below our expectations and also the unusual situation in Japan.

Okay, thanks.

Thank you everyone and we will be sure to follow up with everybody who’s still in queue.

And thank you everyone. That will conclude today’s conference. We do thank you for your participation.