Good day, and welcome to the ACE Limited First Quarter 2015 Earnings Conference Call. Today’s call is being recorded. [Operator Instructions]. For opening remarks and introductions, I would like to turn the call over to Helen Wilson, Investor Relations. Please go ahead, ma’am.

Thank you, and welcome to the ACE Limited March 31, 2015 first quarter earnings conference call. Our report today will contain forward-looking statements, including statements relating to company and investment portfolio performance, pricing and business mix, economic and insurance market conditions including foreign exchange and integration of acquisitions, all of which are subject to risks and uncertainties. Actual results may differ materially. Please refer to our most recent SEC filings as well as our earnings press release and financial supplement, which are available on our Web site, for more information on factors that could affect these matters. This call is being webcast live and the webcast replay will be available for one month. All remarks made during the call are current at the time of the call and will not be updated to reflect subsequent material developments. Now, I’d like to introduce our speakers. First, we have Evan Greenberg, Chairman and Chief Executive Officer, followed by Phil Bancroft, our Chief Financial Officer. Then we’ll take your questions. Also with us to assist with your questions are several members of our management team. Now, it’s my pleasure to turn the call over to Evan.

Good morning. ACE had a reasonably good start to the year with earnings per share essentially flat with the prior year. It was a difficult quarter for U.S. dollar-based multinationals. Foreign exchange impacted our revenue, earnings and book value growth in the quarter. And beyond that, we also overcame a couple of favorable items that benefited first quarter '14. After-tax operating income for the quarter was 745 million or $2.25 per share. We overcame about $0.18 of headwinds, $0.06 from FX, $0.12 from the items that benefited '14 and didn’t repeat. We produced an operating return on equity of nearly 11%. Book value per share growth was up 1% in the quarter and stands at $90.81. Underlying book value per share grew 2.4%. If the dollar does not strengthen in any material way from here, we don’t expect any further foreign exchange impact to book value. Our P&C combined ratio was 88.4% in the quarter, down about a half a point from prior year with total underwriting income up over 3% pre-tax. It’s worth noting simply for underlying trend purposes that the positive items in '14 that I mentioned benefited the global P&C current accident year combined ratio in that year by half a point. Remember, global P&C excludes agriculture. Adjusting for those items, the global P&C current accident year combined ratio for the first quarter was essentially flat year-on-year. Phil will have more to say about the one-time items. We benefited this quarter from the '14 crop year runoff by 33 million bringing the '14 year ultimate result to an 86.5 combined ratio, a very good year. In essence, the positive crop insurance development versus last year’s first quarter offset the impact of foreign exchange and the positive items in '14 to generate flat earnings per share year-on-year. We…

Thank you, Evan. Book value per share grew 1% and tangible book value per share grew 1.8% in the quarter. Both were impacted by foreign exchange losses of 441 million, 268 million of which impacted tangible net assets. As a reminder, these losses represent a point in time mark-to-market valuation adjustment and do not affect the capital position of our foreign operating units. We match our assets and liabilities in each jurisdiction and we keep our required capital in local currencies. If and when the dollar weakens, the book value impact would be positive. Excluding unfavorable foreign currency movements, book value per share increased 2.4% and tangible book value per share increased 3%. We had a very strong operating cash flow of 1.75 billion for the quarter that benefited our investment income and contributed to the growth in our cash and invested assets, which are now 65 billion. Investment income of 551 million was about what we expected and was impacted negatively by 7 million of foreign exchange when compared with the prior year. Our strong cash flow will continue to benefit our estimated quarterly investment income run rate of approximately 550 million even with current new money rates of 2.6% versus our current book yield of 3.6%. The estimated investment income run rate is subject to variability and portfolio rates, call activity, private equity distributions and foreign exchange. During the quarter, we had pre-tax realized and unrealized gains of 455 million relating to the investment portfolio and a mark-to-market loss on our VA reinsurance portfolio of 57 million. Both of these were primarily due to decreasing interest rates. Our net loss reserves were up 247 million for the quarter or 1% after adjusting for foreign exchange and crop activity. The paid to incurred ratio was 109% for the quarter…

Thank you. At this point, we will be happy to take your questions.

Thank you. [Operator Instructions]. We’ll take the first question from Michael Nannizzi of Goldman Sachs.

Thank you. I have one question, I guess, about capital deployment. It looks like you know you’ve stepped up pretty consistently and are buying back 350 million to 400 million a quarter, deploying about 70% of earnings. Should we be thinking about that approaching 100% of earnings at some point or do you expect that you still want to keep some capital there for M&A? Not that you don’t have plenty to do that anyway, but how should we be thinking about your propensity to potentially lift that back up to 100% of earnings?

I think the way you should be thinking about it, Michael, is not to speculate. We gave some guidance in essence by our intention of share repurchases for the year and that is there’s an authorization to repurchase up to 1.5 billion, but that was our stated intention, that’s what we’re doing. Our dividend – you see what our dividend is, so in total it shows that we’re returning – our intention is to return roughly this year in that range, that 70% range. And as things go along, as we see the environment, assess the environment versus our strategy and add both together speaking to our needs for capital, we’ll make future decisions and you’ll know about those.

Okay. And then one question, I guess, Phil, on the debt that you guys issued. I’m guessing you mentioned prefunding some debt that’s coming later this year. Should we assume that the 450 in May and the 700 or so in November that you’ll just pay those off and not reissue any debt at that point? I’m just trying to think about --

Yes, that is our plan.

Great. And then last question just on crop, it sounds like there should be no kind of catch-up impact in the second quarter from what happened here that this was just related to the settlement of a prior crop year. Is there anything other – whatever we were thinking about for the rest of the year on crop, it sounds like that shouldn’t change based on what we saw in the first quarter, is that fair?

That is very fair. The first quarter is a – first of all is a small percentage of the total premium.

Right.

And so you get that. You have this messiness depending on your profit and loss in the prior year, you have the true-up with the government. And also last year, the winter wheat season, which is a 13, 14 season, this year is the 14, 15-year season, but winter wheat across these years. We booked more the winter wheat premium last year in the 13 fourth quarter and this year we booked more in the first quarter of – and this year more of it was in the fourth quarter. So, you have the timing difference. And as we go forward, the way our accounting works, we should not have that. We should be consistent with how we did it this year.

Great. Perfect. And then just one bigger picture question on cyber. As a topic and as an area of focus for ACE, is that an area that you see as an opportunity to have a pretty substantial impact on kind of the way that that product and vertical evolves or is it still a little too early to start really setting up a big presence there as liability start to come into focus? Thank you.

That’s a good question. Look, in order for insurance to remain relevant in society, you can’t simply hold onto the past. Perils are emerging as society matures and develops from science, regulation, legal, all kinds of areas that impact a globalization. As economy digitizes, as society digitizes, there are more exposures that are going to emerge and cyber risk security is one of them. And this is something that the industry to be relevant has to come to grips with and meet the needs of these exposures for clients. ACE is one of the major insurers of cyber insurance as it is today. It’s a nascent area, it’s small and most of the product demand is in the United States. It’s not in other countries yet. We keep probing it for other places that there would be more demand for the risk, more demand for insurance for the risk. And we’re committed to the line. We see lots of opportunity for it, but it’s still small. Overall, the premiums globally are about $1.5 billion to $2 billion and we estimate our market share at 8% or 9% of that. So we’re quite active. We’re mindful of the risk environment around it and so it’s kind of category of client and size of client related. You got to be mindful of that. You got to get paid properly for the risk. But with all that said, this is an area of growth for ACE.

Thank you, Evan.

The next question is from Cliff Gallant with Nomura.

Good morning. Congrats on the quarter. The question I had was just in regard to ABR Re and your investment in that and I was wondering if – we’re now at a point where you can comment on what you think the opportunity might be there?

Well, the opportunity, it doesn’t do third-party business. You’ve seen all the material on it that’s out there and it is in essence the only reinsurance business it will be accepting is ACE’s business.

Will that change over time or what is the long-term plan?

No, that’s not our intention. The Board of the company, we own 10% or 11% of it and we’re one Board member. The Board and the management of the company may decide differently in the future but from everything I can see right now in the next number of years, that will not be the case.

Okay. Thank you, Evan.

You’re welcome.

The next question is from Ryan Tunis with Credit Suisse.

Thanks. Good morning. So I guess my first question, I guess just drilling down into the life results a little bit. Obviously 66 million reported this quarter. That compares to 76 million in the fourth. I think the press release referenced the runoff of the VA reinsurance markets as contributing to that. I guess just breaking it down a little further, how much of that sequential decline was related to reinsurance maybe versus something else in international life or U.S. A&H?

As we said, there was a $6 million item reserve release in the fourth quarter of last year. We also had the runoff of the VA and we also have had FX and the three of those together combined to be the impact of the change.

Okay, understood. And then also on the supplement, I guess you guys disclosed personal A&H operating earnings and I’m guessing that’s mostly U.S. combined. But this quarter, I think there was 113 million that looked in line with the year ago but it was kind of down from what looks to be kind of a low 120s run rate over the past few quarters. I’m just wondering what’s kind of going on there? Is there seasonality around that? Anything you can add would be helpful.

We’re sitting here a little perplexed by your question and I’m not sure exactly what you’re focusing on. But I’ll tell you what, how about if we take that offline and Phil – we don’t see a sequential weakness, but Phil and Helen will take it offline with you.

No problem. I guess just one for Evan. Your comments on the smaller end of the market I think remaining somewhat less competitive than the larger and I guess we saw that this quarter, another strong growth quarter in commercial risk services. I think you said, up 30% there. I guess over the past few quarters, how has the competitive environment been evolving? Growth looks like it continues to remain robust. Thanks.

Yes. First of all, it benefits from its size. It’s not a huge business. It’s in the hundreds of millions of dollars is a business for us not in the billions. It is specialty oriented more than traditional package business. In the traditional package area we’re really focused only in the micro market, and that is very small companies where we see good opportunity. We’ve invested more and more in this space in terms of product, in terms of I should say begin with talent. We have really in the last two years beefed up the talent in that area though we’ve been investing in it with people for five or six years. And we’ve expanded product significantly over the last 18 months and we’ve expanded cohort of customer focus in addition to midmarket on the very smaller end of midmarket, we went right down at the micro. So those efforts – that leads to distribution and the technology we’ve put in place to help facilitate that. So a lot of investment and we’re benefiting from the result of that. I don’t expect these kinds of growth rates will continue forever but we’re getting – they are in line with our plans and they’re not a surprise to us. Did I answer your question, Ryan?

I think you did, Evan. Thanks.

We’ll go next to Jay Gelb with Barclays.

Good morning, Jay.

Good morning. I just want to touch base on a couple of items. Phil, I believe you mentioned that even if the dollar doesn’t strengthen further, there should be no further impact on book value from foreign exchange. Is that the same case for earnings per share as well?

No, not on a comparative basis. So the run rate you saw in this quarter might get mildly worse in the second and third quarter, just mildly. It’s a reasonable run rate to use and in the fourth quarter should better, because we’ve had the deterioration in the fourth quarter. I mean, we’ve already experienced the deterioration in last year’s fourth quarter.

4Q better meaning less of a drag than 2Q and 3Q?

Yes.

Okay.

2Q and 3Q will be right in – they’re right in the range of first Q.

Okay, that’s helpful. Thanks. On the Agriculture business, Evan I know you mentioned that directionally premiums could be lower for the rest of the year not as much of a decline as in the first quarter. I believe Agriculture premiums for all of 2014 for net written premiums were 1.6 billion. Do you have a sense where that may shake out for the full year '15?

I think you should imagine that commodity prices are going to have a low double-digit impact; 10%, 11% range.

For the full year?

Correct.

And then we would take into account volume as well?

Yes, but I just took that into account to give you the impact on premium.

Perfect. Thank you. The final question I had is given the severe winter weather in 1Q particularly in the northeast, I was just wondering if that was a factor at all in ACE’s result and also noting that your catastrophe impact for 1Q was a lot lower than what we saw, for example, out of chub, which also has the high net worth business. Just want to get your perspective there.

Look, last year we had cat losses were a little bit elevated and this quarter, there were right in line roughly with that, a bit elevated but nothing terrible.

Excellent. Thank you.

We’ll go next to Kai Pan with Morgan Stanley.

Good morning. Thank you for taking my call. First question on the – thanks for the color on the total premium growth for the addition of the acquisitions. Do you also see any sort of combined ratio impact from these acquisitions?

Combined ratio impact from these acquisitions, sure. Every acquisition is – Kai, every acquisition is going to have – if it has anything of size in terms of premium, it’s going to produce a certain run rate of its business, it’s going to have a combined ratio, it’s going to mix into our total. So mathematically, you get that. If you’re looking for how much it will be, well, buddy, that’s another question and I’m not going there.

But directionally, are those two acquisitions Itaú and Fireman's Fund, do they have the higher combined or lower combined ratio relative to your existing book?

In total, they will be beneficial.

Okay. Thanks. And then a second question, if you step back, Evan, if you look at the past three years, you produced operating ROE around 10% to 11% while P&C pricing was generally right and the cat losses have been relatively benign. So going forward, if you squeeze in the P&C pricing is decelerating, do you think the ROE going forward will decline or there are any other drivers you can pull to maintain or even improve that ROE?

Kai, you know and I said this earlier in the commentary, it’s about more than placing. We are quite diversified by product area. A lot of our business is not commercial P&C and our commercial P&C is spread very well across the globe and spread around a lot of products. And our data analytics and our portfolio management and capabilities continue to improve and so our risk selection and ability to focus in areas where we see better margins with the current rate levels and our ability to shift mix that way improves. And then we have acquisitions that just are another way of contributing to that in terms of mix be it product or geography that help ameliorate movements in price. And so I think we have a lot of handles to pull and we’re pulling all that we can that help to ameliorate the impact of pricing.

Okay, that’s great. Lastly, if I may, is on the – you’ve seen the recent wave in the merger acquisition in the reinsurance space. Do you think the current environment is also right for more opportunities in the industry conservation on the primary side and where ACE sit in that space? Do you see more opportunities for future acquisitions? Thanks.

Well, there’s a constant flow of deals. We’ve said before many [Technical Difficulty] 100 deals a year globally, pull the trigger very selectively. It’s got to meet our strategy and meet our standards and that kind of flow activity continues. It’s driven by many things. It’s driven by the P&C cycle on one hand, it’s driven by economic conditions in various territories, it’s driven by owner strategies of where they – what kinds of businesses they want to be in, in the future. So there are many things that drive the motivation. Of course, when you have just as you look narrowly at the P&C industry whenever you have pricing pressures and growth pressures and now you got low interest rate pressures, so earnings pressures and growth pressures, that will drive many who don’t have a view of earnability [ph] to move beyond that. It has them assess the opportunities for merger acquisitions. And so you typically will see it at this kind of point in cycle and see it pick up. It wouldn’t surprise me.

Thank you so much.

The next question is from Brian Meredith with UBS.

Just a first one, is it possible to give us some color on the impact of Itaú acquisition in the overseas segment? And particularly, a little surprised that your actually premium retentions went up in the quarter given that was kind of part of the consolidated results now as well as admin expenses actually going up given the favorable impact of FX on expenses?

Yes. So Brian, what’s the question?

The question is what’s the --

Yes, I’ll try to just break it down.

Sorry, it’s a long convoluted one. So the impact is why are retentions up in the overseas – premium retention up in overseas on a year-over-year basis with Itaú coming in, did that have much of an impact on it?

Yes, so on premium retention, no, that’s a mix of business question. There wasn’t a change of reinsurance and yes, Itaú came in but it’s a big organization and there were growth in a lot of other areas. You saw personal lines growth, A&H growth and there is a lot of other small commercial in Asia and other places. So the mix of – that will bring it down. That’s why you shouldn’t simply imagine Itaú. And then also remember, however Itaú reinsured in the past that was based somewhat on their own net retention appetite. Now they have a different appetite.

Okay. And then also just quickly, Petrobras, obviously a lot going on down there with respect to Petrobras. What’s ACE’s exposure to what’s going on down in Brazil in Petrobras?

I was trying to get John Keogh to answer it and tell you that we’re not going to comment on [indiscernible] line, our exposure but he doesn’t want to. Brian, we’re not going to comment on an individual situation. We’re mindful of Petrobras’ circumstances and obviously the impact on both growth and the construction business as well as surety exposures both their own and generally within the construction industry, and we’re not – while we’re alert we’re not concerned.

Okay. Thanks, Evan.

You’re welcome.

The next question is from Thomas Mitchell with Miller Tabak.

I was wondering if you might have sort of an equivalent of year-over-year premium growth on what might be called the same-store basis that is without acquisitions.

Yes, we’re not breaking that out right here. As you know our policy, once something becomes a part of the company, fundamentally we just don’t start breaking down all the parts and pieces of each part of the company. And so these fold in and there you go.

I wasn’t asking about the individual pieces, I was just wondering about the impact of acquisitions on the overall total.

There are acquisitions that we’ve made over the last 8 or 9 or 10 years and so are you asking me pull all those out.

That would be very nice.

We got you, buddy. That’s like I don’t see the value. I know you will. Likely you’re a data junkie, but we’re not pulling those out.

Okay. Separately, what either has happened or hasn’t happened with the Terrorism Insurance Act?

Well, we have renewed and therefore the market is stable and it’s kind of business as usual because the TRIA stock is in place, Tom.

Okay. Thank you.

You’re welcome.

The next question is from Jay Cohen with Bank of America.

Good morning, Jay.

Good morning. The question is on ABR Re. Will ACE be ceding additional business to ABR Re or you simply transfer stuff you have ceding to others now and move it into ABR Re?

The latter is more correct, is correct. ABR Re will simply be a following participant on our treaties – our existing pool of treaties and the intention is, is they will take a share across the board. And they will not be a leading market. We’re going to maintain the discipline of the third-party reinsurers establishing terms. The marketplace establishes terms for reinsurance and ABR Re will be a capacity player.

Got it. And do you pay a brokerage commission when you cede to ABR Re?

Well, we never pay a brokerage commission. The reinsurer pays a brokerage commission by the way.

Got it. Is there any economic benefit for the market to having ABR there?

Is there any economic benefit to the market, not that I know of.

Okay.

You mean the market generally outside of ACE, is there a benefit to them that ABR Re is there. I see a benefit to ACE’s investors and I see a benefit to the investors in ABR Re and I see a benefit to ACE. I don’t see a benefit to the general market. We did not create it with that in mind.

Got it. Thanks, Evan.

You’re welcome.

The next question is from Charles Sebaski with Bank of Montreal.

Good morning.

Good morning.

First question is on the ACE 4D that there was a press release that went out yesterday on the data analytics and kind of how that will be incorporated in your business and how that’s different from how you have been doing business up until this new system or new offering on reselection has gone out?

Okay. Yes, please. John Lupica can answer that question for you.

Great. Thanks for noticing me. The 4D is a tag-on we’re using for our data analytics tool for loss predictive modeling. We view it as a great win-win, housed inside of our claim operation mainly in ESIS. ESIS is our third-party administrator and we can use these claims as well. And what it is, is in essence, as we look at claims that didn’t take three months, six months and 12 months, we can identify the high risk claims for our insurers and ourselves. Again, we say it’s a benefit because it has a third-party administrator benefiting our insurers in the deductible and then certainly benefiting ACE if we manage those large severe claims better into smaller numbers that avoid detaching into our layers. So we view it as a claims product for ourselves and the market, i.e. a win-win there. Does that help you?

Okay. And so for the mark, will you only be using this internally or this will be available for sort of outsourced?

This is for clients. We’re doing this as a service to clients. We used data analytics to benefit ourselves in portfolio management and risk selection and in claims management, but we do a lot of risk management business where our clients have skin in the game and this is to help them.

Okay. I guess I have another question on the cyber risk in general and I guess the question I have is for the market to kind of mature and scale, how do you guys view risk aggregation in that product, because it would seem to fall more along the lines of a war risk than a more traditional insurance risk on how aggregations could be in that product. I’m just curious on how you guys think about that?

We don’t particularly think of it as war risk, which is very extreme, but we think of it a little more akin to cat risk only it has different geographic boundaries. And so we do in our enterprise risk management, we do go through as we do with many of our businesses, we are mindful of aggregations. We do event planning scenarios where we imagine different kinds of events and the impact they could have on our concentrations of exposure. Therefore, what you call the PMLs with maximum losses that it could occur from a portfolio. Now admittedly, as anybody would say, it’s kind of a crude exercise. We use the best brains and the best data and technology available you can find to help you with that, but there’s a lot of basis risk and that therefore informs how much aggregation we’re willing to take, understanding that the number is wrong. And if that helps you with it, we go through that exercise.

I guess in the thought on the enterprise risk management and the aggregation, I guess my thought is conceptually you could have a rogue hacker data breach that could theoretically hit every insurer in a portfolio regardless of the geographic circumstances. And so how do you – do you aggregate it just from a total product purposes that total cyber ag exposure will be x regardless of geographic or industry --?

No, you didn’t exactly listen to me. So no, we don’t see 100% PML. And you’re using the word rogue hacker and rogue hacker typically will hit one or two or three. You’re more concerned about something like wild virus and that will have more of a systemic to it, or bringing down of the Internet which wouldn’t be a rogue hacker and that would have a systemic nature to it in terms of denial of service. So how you sell cover and then how you PML those exposures because the notion of 100% loss, no, we don’t see that. There are many other factors that come into play.

I appreciate the insight. Thank you.

Charles, if you want to become a cyber underwriter, we welcome you. Come on in, because you’re thinking about it and you know what, we’re hiring.

Thank you very much.

The next question is from Al Copersino with Columbia Management.

Hi. Good morning. Thank you. I don’t know if this is a particularly easy question to answer but thinking about U.S. commercial underwriting versus overseas commercial underwriting, we on the buy and sell side obviously focus perhaps too much, we focus a lot on pricing and maybe we focus a little bit less on loss cost trends and how expenses LAE is and things like that. But I was wondering if you could tell us what is the combined ratio where ROE or margin differential for a U.S. large case commercial business versus a overseas large case commercial business? Are the two roughly similar, because you chose where to play overseas?

God, it is such a difficult question in the sense that and I’m not going to abate it, I’m going to see if I can help you with it. But in the first instance, when you get to commercial P&C, the accounts are so different. So comparing one account to another but if I try to do that very crudely and I look coverage and we take similar coverage because ROEs and combined ratios will vary by type of coverage, the terms and conditions adjust to the local marketplace as well. And so for instance, we might have much tighter conditions around casualty in the United States to get to the same result than we do on the continent of Europe or in Mexico if I – just picking examples for you. And so the marketplace adjust that way. Number two, it will depend also to a degree so you get a sense of how messy it is. Once the access, there are some markets where the combined ratio on commercial P&C will be lower because the market is just a more stable marketplace. That may be cultural. They have tax of renewals. It may be that there is less influence from major global players in the reinsurance markets in that marketplace. It may be the dominance of local players – of a couple of local insurers and sort of business community in total protecting their own. There’s all kinds of things that drive and affect us. So you can’t really kind of put it in a neat box I think the way you’re struggling to do it and I understand the question. Hopefully, I helped you a little bit.

You did. That’s helpful. And the only reason I ask is that you all are focusing and rightly so on reminding us of the geographic and product diversification, almost 40% is non-large cave [ph] that sort of thing, so I was just curious if you could point us in that direction in terms of the relative profitability, but that was helpful. I appreciate that.

You’re welcome.

Our next question is from Ian Gutterman with Balyasny.

Ian, hello?

Can you hear me?

He got bored with the last answer and went away.

Evan?

Yes, I’m here.

Okay. I’ve been here when most of my handsets are not working, so I switch to speaker. My first question is just a follow up on the --

Take mobile.

Yes, I know. It might be a lose cord, who knows. The overseas growth of 11% ex-currency, this is kind of a follow up to the earlier question. Is there seasonality in the Brazil business, because if I took sort of my estimate of Brazilian premium divided by 4 and subtract that from the 11%, it looks like the core overseas low is pretty flattish. I’m I close there or is there seasonality that skews that analysis?

I’m going to let John Keogh answer it because we’re both shaking our head violent. In fact, there was actually very good growth.

When I look at Latin America actually without the premium that we had this quarter, we had good solid double-digit growth in Latin America [indiscernible], I’ll say that. I’ll also say in terms of any seasonality, there’s nothing in first quarter that would suggest that.

Perfect. Okay. Can you just talk a little bit about – you talked a lot about pricing in various parts of the market. Can you talk about terms and conditions and just quality of underwriting in general? Are we getting to that point in the cycle where underwriters are not wanting to give more price, so they start changing language or giving it on supplements and things like that, that tend to lead to that outcomes a few years later or are we not there yet?

Ian, we’re seeing it but we’re seeing it more on the margin. It’s not back to the late '90s that way. But we are seeing more of things that would cause us to shake our heads and we’ll see a broadening of terms and conditions in property, we’re seeing marginally a broadening of terms and conditions at times in casualty and it’s related. In particular, new business of any size comes to market and people have been really hungry, but we’re not seeing the stupidity we’ve seen in the past.

Okay, good. And then last --

Not yet.

Not yet, exactly. Then lastly, just a little more on the M&A question from earlier --

By the way, that’s more of a U.S., UK, Australia comment.

That makes sense.

Anywhere else in the world, okay, when we talk about terms and conditions.

That makes sense, okay. And then lastly on M&A, I’m just curious if you can spend a little bit more on your thoughts on what we’re seeing in the industry elsewhere? I mean I see a lot of it so far has been in reinsurance and that’s probably less interest to ACE, but what do you see when you look at the chessboard of what the next moves are? Do you think it remains a reinsurance gain where scale is needed there or do you think this spreads and we start to see major primary deals as well, because there’s a need for more scale at this point in the cycle?

Ian, I don’t see any major primary on the horizon but you know how that goes. And then tomorrow morning I get on the train and I pick up the newspaper and there it is. I’m not a savant at this. But I don’t see that on the horizon at the moment. I mean there are a couple of situations that pretty well known out there of larger primary that wouldn’t surprise any of us including you. And that’s just a question of – probably a little more of a question of when than if.

Got it. All right. Thank you all. I’ll have a new phone for you for next quarter.

It may have been cyber.

Charles is hacking my phone.

Exactly. I’m with you, Charles.

The next question is from Meyer Shields with KBW.

Thank you. Good morning.

Good morning.

My impression of --

Hello. Meyer, I lost you on my impression of. This is not these guys. This is something in the service. Meyer, are you there? Paul Newsome, are you there or did we just lose the call altogether.

If the callers that were in the queue would please re-queue.

The last one, operator, that we were supposed to have was Meyer Shields.

We have a question from Meyer Shields with KBW.

Okay. You saved Phil from having to sing a song.

Okay. Can you hear me?

Yes.

Fantastic, sorry about that. My impression of the high net worth market, first lines market in the U.S. has been it’s fairly concentrated and now more so with the acquisition of Fireman’s Fund. Did that have any implications for pricing or profitability the fact that one of the relatively small group of companies is now subdued [ph] within ACE?

I don’t think so, Meyer. We don’t view our opportunity as simply three or four players trading business back and forth. The high net worth personal lines potential marketplace is a much larger marketplace than it is today. It’s being served by good companies but the traditional lines companies who don’t really meet the needs both coverage and service of high net worth client base and customers. And so our real opportunity is to migrate more of those customers from where they are today to ACE and not simply chasing someone else’s business.

Okay, that’s helpful. And Phil, quick question. If we adjust net investment income for foreign exchange, you came in ahead of the sort of $550 million quarterly run rate --

Yes, I think the run rate was 555 million.

So it’s just the FX --

Right.

Okay, great. Thanks so much.

You’re welcome.

Operator, is there anyone left in the queue please?

At this time, we have no further questions. I’d like to turn the conference back to Helen Wilson for any additional or closing remarks.

Okay. Thank you everyone for your time and attention this morning. We look forward to speaking with you again at the end of next quarter. Thank you and good day.

This concludes today’s call. Thank you for your participation.