Eric Durant John Robert Strangfeld - Chairman, Chief Executive Officer, President and Member of Executive Committee Richard J. Carbone - Chief Financial Officer, Executive Vice President, Chief Financial Officer of Prudential Insurance and Senior Vice President-Prudential Insurance Mark B. Grier - Vice Chairman Edward P. Baird - Chief Operating Officer and Executive Vice President of International Businesses Charles Frederick Lowrey - Head of Asset Management Business, Executive Vice President, Chief Operating Officer of Us Businesses, Chief Executive Officer of Prudential Investment Management, President of of Prudential Investment Management and Executive Vice President of Prudential Financial & Prudential Insurance

Erik James Bass - Citigroup Inc, Research Division Nigel P. Dally - Morgan Stanley, Research Division A. Mark Finkelstein - Evercore Partners Inc., Research Division Jay Gelb - Barclays Capital, Research Division Joanne A. Smith - Scotiabank Global Banking and Markets, Research Division Randy Binner - FBR Capital Markets & Co., Research Division Sean Dargan - Macquarie Research Jeffrey R. Schuman - Keefe, Bruyette, & Woods, Inc., Research Division

Ladies and gentlemen, thank you for standing by, and welcome to the Fourth Quarter 2012 Earnings Teleconference. [Operator Instructions] And as a reminder, today's conference call is being recorded. I would now like to turn the conference over to Mr. Eric Durant. Please go ahead.

Thank you, Cynthia. Good morning. Thank you for joining our call. Representing Prudential this morning are John Strangfeld, Chief Executive; Mark Grier, Vice Chairman; Rich Carbone, Chief Financial Officer; Ed Baird, Head of International Operations; Charlie Lowrey, Head of International -- Head of Domestic Operations; and Peter Sayre, Controller and Principal Accounting Officer. Before we get started, In order to help you to understand Prudential Financial, we will make some forward-looking statements in the following presentation. It is possible that actual results may differ materially from the predictions we make today. Additional information regarding factors that could cause such a difference appears in the section titled Forward-Looking Statements and Non-GAAP Measures of our earnings press release for the fourth quarter of 2012, which can be found on our website at www.investor.prudential.com. In addition, in managing our businesses, we use a non-GAAP measure we call Adjusted Operating Income to measure the performance of our Financial Services businesses. Adjusted operating income excludes net investment gains and losses, as adjusted, and related charges and adjustments, as well as results from divested businesses. Adjusted operating income also excludes recorded changes in asset values that are expected to ultimately accrue to contract holders and recorded changes in contract holder liabilities, resulting from changes in related asset values. Our earnings press release contains information about our definition of adjusted operating income. The comparable GAAP presentation and the reconciliation between the 2 for the quarter are set out in our earnings press release on our website. Additional historical information relating to the company's financial performance is also located on our website. John?

Thank you, Eric. Good morning, everyone. Thank you for joining us. Now that we've closed the books on 2012, I'll kick things off with some high-level comments on the year as a whole. First, earnings. Earnings per share, based on adjusted operating income of the Financial Services businesses, were $6.27 compared to $5.83 a year ago. This is an increase of about 8%. If you remove the market-driven and discrete items in business integration costs we've disclosed each quarter, which Rich and Mark will review with you for the fourth quarter, the EPS increase will still be about 8%. This is because these items reduced pretax adjusted operating income by roughly $200 million in 2011 and again in 2012. Second, financial strengths. In capital positions of our U.S. and Japanese insurance companies continue to meet the high standards, we believe AA, we've managed them to, as you will hear from Rich shortly. We have capacity to remain strongly capitalized even in stressed environments. We've improved our ratio of capital debt to total capitalization, it is under 25% at year end, and the quality of our investment portfolio has never been better. With this strong financial position, we're able to consider potential deals, but we will do so with great care and selectivity. We believe our acquisition of the Hartford's Individual Life business, which closed in January, offers attractive financial returns, strategic benefits, talent enhancements and manageable execution risk. We like our prospects with this, yet we know we need to prove it out. We also remain in the market for opportunities to add outsized organic growth, particularly in the area of pension risk transfer. We closed our transactions with GM and Verizon in the fourth quarter, and we will consider additional transactions on a case-by-case basis. At the same time,…

Thanks, John, and good morning, everyone. Last night we reported common stock earnings per share of $1.69 for the fourth quarter. And that's based on adjusted operating income for the Financial Services business. This compares to $1.78 per share in the year-ago quarter, and that's also on a reported basis. And as you -- we saw from your reports, there was a lot of activity during the quarter. Market driven and discrete items were as follows: In the Annuities business, market performance relative to our assumptions caused us to release a portion of our reserves for guaranteed minimum debt to income benefits and led to a favorable DAC unlocking. These items are partially offset by a write-down of capitalized software costs for a net benefit of $0.06 per share; in Retirement, the favorable legal settlement related to previous losses on client investments managed by a third party produced a benefit of $0.11 per share; in Asset Management, we recorded a gain on a sale of a previously impaired investment that was partially offset by a write-down of capitalized software cost and net benefit of $0.05 per share; in Individual Life, we incurred costs relating to the Hartford's Life acquisition that closed in January, resulting in a charge of $0.02 per share; in Group Insurance, we increased legal reserves, resulting in a charge of $0.03 per share; in International Insurance, Gibraltar Life absorbed integration cost of $0.01 per share relating to the Star/Edison acquisition; in Corporate and Other results included costs of $0.08 per share charge reflecting a catch-up adjustment for accrued employee benefit liabilities, in addition, we recorded a $0.02 per share charge to write off bond issuance costs on high coupon debts we redeemed prior to maturity. In total, the items I just mentioned have a net favorable impact…

Thank you, John; and thank you, Rich. I'll start with our U.S. businesses. Our annuity business reported adjusted operating income of $304 million for the fourth quarter, compared to $373 million a year ago. The reserve true-ups, DAC unlocking that Rich mentioned, had a net favorable impact of $57 million on current quarter results. The benefit to current quarter results was mainly driven by market performance in relation to our assumptions, which reflect the lower assumed long-term rates of return that we implemented in connection with our annual actuarial review in the third quarter. The market performance we consider reflects both the fixed income and equity elements of the particular funds underlying our customer accounts. This benefit was partly offset by a $9 million charge for impairment of capitalized software costs. Results for the year-ago quarter included a net benefit of $176 million from a favorable DAC unlocking and reserve true-ups, largely driven by strong equity markets in that quarter. Stripping out the unlockings and true-ups and the current quarter software impairment, annuity results were $256 million for the current quarter, compared to $197 million a year ago or a $59 million increase. This increase reflects higher fees driven by account value growth, with average separate account values for variable annuities up by $23 billion from a year ago. Higher expenses were a partial offset to a benefit from our growing base of fees. Current quarter results include costs of $17 million that we estimate to be in excess of a baseline level for our current business volume. This is for items including business process improvements in areas such as technology and back-office functions that are intended to give us a more efficient cost structure going forward. As Rich mentioned, these types of costs affect the current quarter results of…

Thanks, Mark. Before we move on to your questions, I'd like to make a few final remarks on our results and our strategic progress. As we have discussed, despite what was admittedly a noisy quarter for us, you've heard numerous indicators of very sound fundamentals. And by many measures, we've had a strong year, both in terms of current year results and at future positioning. We've managed pricing discipline, expense and product initiatives and capital deployment to position us well going forward. Our view of earnings power and our potential to achieve and sustain a meaningfully differentiated return in our sector is reinforced by the actions that we took in 2012. The improvement in organic performance, the impact of substantial business flows, beneficial new deals and initiatives, coupled with the core strengths of our company give us confidence in the future. Realistically speaking, there will continue to be some noise. And going forward, as in the past, we will continue to ensure that our underlying performance is clear to you, as we report to discuss our results, which leads me to one other point. When we gave you our guidance for 2013 earnings and ROE last November, we had in mind the impact of FX remeasurement on retained earnings, as of September. We will not consider ourselves to have achieved our ROE goal to the extent that it was made possible by reductions in equity from currency remeasurement. We will make the apples-to-apples comparisons for you. And similarly, our compensation plans will also reflect this alignment. In other words, we won't be declaring victory based on the impact of things like the FX revaluation, rather, as we have said often, we will get there the right way or not there at all, and we believe that we are on a good track. So with that, we'd like to open it up to questions.

[Operator Instructions] And our first question will come from the line of Erik Bass from Citigroup.

I guess if we could just talk a little bit about the International business. And you outlined some of the higher expenses that affected earnings this quarter. Just hoping you could give a little bit more color on what these costs were, and what, if any, of these expenses are likely to continue. And then as we think about modeling this business, what type of seasonality should we expect in earnings in 2013?

Yes. Erik, this is Ed Baird. There were, in this quarter, the kinds of seasonal factors, as well as normal fluctuations that, frankly, you're going to find in almost every quarter. How while some of these have a certain regularity to them, others do not. So, for example, on the IT, it was lumpier in this quarter, but the totality for the year of the IT expenses was still well within the budget. So I would just caution on taking the result of this quarter, or any 1 quarter, and trying to do a straight linear extrapolation from there. I think you'll find it more fruitful if you look at the totality of it for the year. And if you do that, I think you'll find something more reliable that's particularly true on the earnings, but it's even true if get over on to the sales side.

Okay. That's helpful. And then, within the businesses, are there seasonal trends in terms of whether it's investment income or dividend payments or other things that we should expect to recur?

Yes. Just to drill down on that. If you think in simplistic terms, as the money coming in and the money going out, it's sort of 2 channels on each of them. On the money coming inside of it, there is certain seasonality or other causes of fluctuations. So for instance, on the premium, particularly these days, where there's more of a shift away from recurring premium to Single Premium or to advance pay, so that can start to cause, on a quarter-on-quarter, some fluctuation on the incoming premium. Secondly, as your question touches a point, you can get the same on investments beyond a normal shift that can take place naturally from quarter-to-quarter. You do get, for example, in the third quarter, you tend to get more dividends. So if you're doing a third to fourth quarter sequential comparison, you're going to see some downward pressure there, that is actually completely natural, and not indicative of any broader story. And the same's going to be true, on sort of 2 channels with the outflow, and you already raised one of them, one would be around expenses, you're going to see quarter-to-quarter, certain natural fluctuations that can be caused simply by scheduling. That's particularly true when you've got major projects going on, such as the Star/Edison integration, with those kinds of expenses, are naturally going to have a certain lumpiness to them. And you can even get it in the mortality, with a book this big, quarter-to-quarter, you're going to see certain fluctuations in mortality, but I would observe that this quarter, as, frankly, with all the others we have seen during the year, it's well within standard deviation. And so, if you're comparing 1 quarter to a prior quarter, one could be at the high-end, one that's a lower end, but there is no underlying trend there that I would know or bring attention to.

Our next question comes from the line of Nigel Dally from Morgan Stanley.

First, just with the $100 million of expense that's above your baseline, should we read those as onetime in nature, impacting any fourth quarter results? Or will some of those expenditures continue through 2013?

Sure, Nigel, this is Charlie. I think the former is true. We did take about $100 million, as you said, above the baseline charges. But I think we wouldn't have lined those off if we didn't think they were onetimers. And to give you some examples of what they were, and Mark gave a couple, but one would be the final formation fees that we had for $19 million in the fourth quarter, the $33 million for the year. A second would be increased costs and Retirement. That should make the Full Service business more competitive, we're always looking to do that. And third are some technology and back-office expenses in annuities that will improve both expense management, and I think the product itself over time. So these are just 3 examples of the kinds of things that we think were nonrecurring, and that's why we lined them off.

Okay, secondly is capital. Rich, you mentioned your capital estimates included what was necessary to satisfy the asset adequacy test. Is it possible to put some numbers around how much capital that absorbed and which business lines that related to? I'm presuming it's predominantly long-term care, but was it related to other business lines as well?

It was predominantly long-term care, it was about $1 billion that we added.

Our next question comes from the line of Mark Finkelstein with Evercore Partners.

I guess going back to some of Rich's earlier comments, and maybe just thinking out to '13 on capital generation. Obviously, there's a lot going on, you have 2 PVRT transactions that are large, good cash flow generated out of those; you have the Hartford integration, you have lower Star/Edison costs. How should we think about capital generation in '13, vis-à-vis historically giving relationships of capital generation to operating earnings?

We haven't quite fine-tuned that yet, but I think the 50% rule that we've been throwing out lately, that 50% of our cash flow is available to the holding company, and some of that's going to pay holding company expenses, but some of that is also going to emerge as excess capital during the year.

So 50% and then you pay Hold Co. costs and interest costs?

Right.

Okay. Fair enough. I guess I want to go back to be Single Premium yen-denominated whole life product. It was up sequentially, something like $100 million in production. I think the last quarter, Ed, you talked about it, the margins being in your target, but maybe at the lower end of that range. Just looking at the production levels, I guess, how do you feel about the margins on that product, kind of taking a deeper look at it? And where do you think the margins will go as you reprice and take the commissions down?

Yes, Mark, this is Ed. The character of the bank channel is different than our other channels that are captive, in that it has the capacity to produce much more dramatic growth than you can get through a captive agency system. And that's why, as we described at our Tokyo Investor Day, our strategy there's a little bit different than in our core captive agency systems. The goal is the same in all of our channels, and that is profitable growth. And in the bank channel, that requires more careful and frequent monitoring, because of the capacity to have major sales in a relatively short period of time. Now each of our products contributes to the high ROE and to that balance between growth and profitability in a different way. But we're very careful with the bank to be at the conservative side, both with product design and the pricing. And again, we try and briefly recap some of the things we got into in detail in our Tokyo Day. What we do is both on the design of the product and in pricing, we're very conservative. So on pricing side, we endeavor to be at low end, if not frankly at the bottom, in terms of crediting rate and other aspects of the design. That, in turn, allows us to be equally conservative in our investment portfolio. And I'm sure you're aware that our portfolio, compared to others, is considerably more conservative, both in terms of its ALM matching in terms of not taking a currency bet, in terms of the matching on the currency. So right across the board, we're more careful there. So when we saw in this quarter the rise, what we did was we moved very quickly to ensure that we would bring down our position from a comparative and competitive perspective, so that going into this next quarter, you will see us positioned again towards the more conservative end. So it sounds like you're already aware that we did adjust downward both the implied crediting rate, the commission rate, we also put in just as a back stop, sort of an overall maximum as to how much we would distribute during any 1 quarter, in order to address the issue that Mark raised in his opening comments, which is just to make sure we don't have any concentration of risk in any particular tranche of business that's coming in during the quarter.

Our next question comes from the line of Jay Gelb with Barclays.

I wanted to touch base on a couple of items. The first is, Mark, could you provide us your updated views on Pru potentially being designated an non-bank SIFI?

Yes, as you know, from our acknowledgments, we're in the process of being reviewed by the FSOC, ultimately leading up to the FSOC level right now at the staff level. And I would reinforce what we've said before, which is that we're engaged in a high-quality process that includes a lot of effort, a lot of work and a lot of engagement, and the opportunity for us to address issues that we think are important here has been ample. We don't believe, as you've heard us say before, that the quantitative evidence will lead to a conclusion that we're a SIFI, but we're not sure exactly what other considerations there might be in the process, so we're putting our best foot forward and working hard on where this may go. Just a reminder, before I move on to one other comment, there are other things in the arena of SIFI going on, the designation as a Global SIFI, for example, would also impact our relationship here as a domestic SIFI and with the Federal Reserve as a regulator, so that's also out there. And that process is continuing as well during the first half of this year. And at some point that you've heard me make before is that it's more important that we get this right than which label we put on it, so we're also actively engaged in discussions around solvency and capital standards and the process by which we might be assessed and measured by any group supervisor that may come out of either domestic SIFI or global SIFI or ComFrame or someplace else, as one of these other processes moves along looking at large companies like Prudential. So I don't have a specific update, and I'm not going to handicap the odds, but I would say that we're engaged in a high-quality process, and we also have the opportunity to provide our reports and our comments, and right now as well to work hard on the questions around solvency and capital standards.

Understood. And then related to that, there's, I believe, $250 million with share repurchase authorizations still existing through the first half of 2013. Prudential did not repurchase stock in the fourth quarter. Do you anticipate that Prudential will achieve that $250 million of buyback in the first half?

Yes. It's Rich.

I'm sorry? I didn't catch that.

Yes. Rich Carbone answered that.

Yes. It's Rich. I'm sorry for the short comment.

We'll go to the line of Joanne Smith with Scotia Capital.

Yes, I just wanted to cover the Life Planner business in Japan. I understand that you've had some pretty good results there for the first 3 quarters of the year, but they did stall a little bit in the fourth quarter. And I did listen to the conversation about seasonality and some of the -- the fluctuations, the natural fluctuations in that business. But I'm just wondering if you could just give us a little bit more information on where some of the weaker spots, where, I mean, you still delivered growth in earnings, but it was -- you had double-digit growth in prior quarters, and this is was about 6%, as I calculated, on an adjusted basis.

Yes, Joanne, I would go back to the earlier comment about being careful for the quarter. It has a lot to do with simply the timing. If you look at the year for the Life Planner model, you'll find that they had an extraordinarily strong year. So that both sales and earnings, up in strong double digits in the 20% range, and what's healthy about the sales, I would comment on, is the character of it. What I mean by that is, it's coming across evenly through all 3 sources of drivers. In other words, we're seeing both a growth in the headcount of about 4%, 3% to 4%; we're seeing growth in productivity; and we're also seeing growth in average premium, which is a brighter trend that we've highlighted in the past. That's also true in our Gibraltar business, and that's reflective of the fact that the retirement and gradually tapping into the higher income group of the aging population. So both the quality of the sales and the quality of earnings in POJ on an annual basis, I think you'll find to be extremely strong. I cannot find anything in the fourth quarter that's outside the normal range in which there might be embedded a story.

Okay. And just on the Gibraltar business, I know that it's probably a little bit premature to be talking about M&A at this juncture, but it seems that the Star and Edison integration has gone quite smoothly. You're realizing a lot of the synergies, the expense synergies already. I was wondering if you could just kind of give us an outline of what the M&A landscape looks like in Japan and the rest of the Asian region, if you have any interest in that?

Sure. Let me start with a broad, sort of philosophical approach to the M&A. Our general preference is to acquire companies in countries that we're already in, such as the Star/Edison acquisitions. We have a long, and I think, fairly stated successful track record in that type of acquisition. So we always look for those, Japan, Korea, those kinds of countries would be places that we would be open to for that. But in addition, we also consider the possibility of entering new markets that we would do, as Mark expressed earlier in his conversation, on a careful and selective basis. But a cautious expansion of the footprint is something that we would consider. And so, and geographically, they would be in the kind of regions you've referenced. The intrinsic growth rates that are possible in Southeast Asian and in Latin America are places that interest us. We're not really interested, in general, in the mature markets of Western Europe, where we don't have any meaningful presence unto which we could alter business. But getting back to the core part of your question of Japan, specifically. Yes, at the moment, our group is still quite actively engaged although successfully over the major hump, with the integrations of Star and Edison, we do keep an open mind, looking at a kind of companies there. It will be interesting to see, now that the new solvency margin rules are out, whether or not that puts a certain degree of pressure on some companies that, under the old measures, I had adequate solvency margins, but under these new, more stringent solvency measures, may not feel quite so comfortable. So we do continue to monitor that, having made a handful of acquisitions there over the last decade. We do have a certain degree of quiet confidence about our abilities there.

We'll continue on to the line of Randy Binner with FBR. Randy Binner - FBR Capital Markets & Co., Research Division: I wanted to ask a question about the 4 currency hedging program, and how it's running through earnings. And I think what we saw in the quarter was that the yen, kind of hedge rate of 85 on the dollar, was the reason that you saw kind of positive cash flows into the Japanese businesses. In the guidance for 2013, I think assumes the yen at 80. So that the first part of the question is, is that 80 kind of where you're hedged at for the yen for 2013?

It's Rich Carbone. Yes, we're hedged to the 80 for 2013. Randy Binner - FBR Capital Markets & Co., Research Division: And then when -- how should we think about that going forward if the yen continues to weaken? When do you, kind of restrike those hedges, and how should we think about it, the yen stays at 95, or goes to 100, what would be a reasonable expectation of where that might have to float up to, thinking about 2014?

So let me just give you a little bit of background, right? Half of our earnings that come out of Japan are in dollars, U.S. dollars and Aussie dollars; and half of our earnings that come out of Japan are in yen. We hedge 100% of the next year's earnings, the yen earnings, completely. So 2013, fully hedged at 80, no impact of the declining yen, regardless of where it goes. 2014, we are 78% hedged as of today. 2015, we are 22% hedged for 2015. And as this year progresses, we begin to leg in to '14 and '15 and '16, so by the end of 2013, we'll be 100% hedged in, for '14. Randy Binner - FBR Capital Markets & Co., Research Division: Okay. And the 78% in '14 and the 22% at '15, that's at 80, right?

That is not at 80 because, remember, you're not hedging at spot rates, you're hedging at forward rates, and so you're averaging in the forward rate, and that's going to change, dependent upon the interest rate differential between the dollar, the interest rate differential between U.S. interest rates and Japanese interest rates, that's hard to predict, where we sit here today.

And it's rolling 3 years forward, so it will not all have gone on at the same time. There's an ongoing program, so it won't match exactly the 80. As Rich said, it's a forward rates, not spot, and it's a rolling implementation. Randy Binner - FBR Capital Markets & Co., Research Division: So in my -- I guess, in layman's terms, though, it would be reasonable to expect that, that wherever your hedge, hedged, if the yen weakens materially, let's say it's goes to 100 or 105, you should be able to keep your hedging level below that because you're lagging into it over time?

That's correct. And we are using forwards rates, not spots, right? We're hedging at the forward, not the spot, which is lower than the spot. Well, having said that, just, it will run its course, at the end of the day. The hedge is rolled forward 3 years from the current year, so we'll be renewing hedges now further out into '14, for example, that are at rates that are not as attractive as 80. Randy Binner - FBR Capital Markets & Co., Research Division: No, understood. I mean, I think this, simplistically, people worry about half the business coming from Japan and what the impact is, so I just wanted to clarify kind of the structure of the yen currency hedge, so that's all.

Yes, but half the business that's coming from Japan is in dollars, so... Randy Binner - FBR Capital Markets & Co., Research Division: No, I don't -- understood. Yes, I mean, I think that -- I mean, the dollar piece is the dollar piece, but the yen piece is what would move the translation, right, so...

Absolutely. Yes.

Next, we'll go to the line of Sean Dargan with Macquarie.

This is a follow-up to Randy's question. So if half of your business in Japan is in U.S. dollars and Aussie dollars, what is the impact of demand for products denominated in those currencies, in a weakening yen environment?

The dollar products have represented, for a while, somewhere between 30% and 40% of our sales. And if you look back over, oh, probably the last 5 years, what you'll see is that there isn't a strong correlation between the currency shift, to the extent that I could find any -- and this isn't much of a trend, it tends to be that when the yen is strengthening, they'll tend to go more to the dollar. And when it's not, maybe less to it. But I'd be careful about that, I don't want to overplay that because, again, we have been selling dollar denominated retirement income product as a lead product in Japan for about 7 years now, and I've not seen material fluctuations based on what has, over that period of time, obviously, been very substantial swings in the exchange rate.

All right. And does the weakening yen impact the SMR for your Japan companies at all?

Let me think of where it would. No. I don't believe it does.

No, it doesn't. We're protected on the local books.

We'll go to the line of Jeff Schuman of KBW. Jeffrey R. Schuman - Keefe, Bruyette, & Woods, Inc., Research Division: If I understood Rich correctly, you gave us a picture of capital capacity at 12/31, which I think was $3 billion on balance sheet, $1.5 billion to $2 billion readily deployable, but I think you said that was before Hartford. So can you help us pro forma that? I mean, we know you wrote the check for the ceding commission, but we don't really know, all in, what was the impact to capital capacity. So can you help us there, please?

I think the way you ought to think about that is that, we're going to write the check, the check's going to take down, for that moment in time, the check's going take down our capital capacity. We're going to rebuild that capital capacity by only buying back the 250 of shares during the year and -- during the first quarter, excuse me, the first half, sorry, the first half. And then -- I don't want to mislead you there. And then, the retained earnings billed, will restore our capital capacity at some point throughout the year. Jeffrey R. Schuman - Keefe, Bruyette, & Woods, Inc., Research Division: So you're telling me that will rebuild, but I guess I'm -- are you going to help us understand what the pro forma view of 12/31 is?

No. I'm not going to give you a projection on total capacity, because there's a whole lot of stuff that's going happen between now and March, and now and June, and now with the rest of the year. Jeffrey R. Schuman - Keefe, Bruyette, & Woods, Inc., Research Division: Okay. And I guess, just kind of big picture, wondering if you could help us kind of reconcile the thinking a little bit. Whatever the all-in investment in the Hartford is, I mean, does leave you with some readily deployable capital, not as much as some other points in time. Mark's been very open in talking, again, about the regulatory overhangs. And yet, I was surprised that John opened up early on by talking pretty openly about considering possible transactions and pension risk transfer deals, and so forth. So it would seem like at a time, when you -- maybe you were going to have to conserve capacity a little bit, but can you help us there, please?

Yes, this is Mark. We've been asked, over the last few years, a number of times, with respect to the regulatory issues, whether or not we should be hoarding more capital in anticipation of the possible imposition of a so-called SIFI buffer, or whether or not we should be throwing capital over board, so we don't have to get permission to deploy it, if we wind up in a different regulatory regime. And what we've said all along, with respect to that issue, is that we believe we're doing the right thing. We have a lot of discipline around the deployment of capital, and a lot of discipline around the levels of capital that we believe are appropriate for us and our businesses, given our risks. And so with respect to the regulatory issue, we continue to behave on the basis that we're soundly and well capitalized and soundly and well run with respect to risk and capital discipline. So on that one, in the context of the way in which you're asking the question, we would not currently be shading as one way or the other. And as I said, we've had advice that goes both directions, we would not be shading this one way or the other because we're doing what we believe is the right thing. And remember, as Rich said, we generate a lot of capital, we have capacity, both the on-balance sheet capacity and the ability of the company to generate capital are sufficient to allow us to contemplate either outsized organic transactions, as John referenced, to support the ordinary organic growth of our businesses, and also to consider the possibility of additional deals where they fit our requirements.

And with that, we will conclude our question-and-answer session. Today's conference will be available for replay after 1:30 p.m. today until midnight, February 14. You may access the AT&T teleconference replay system by dialing (800) 475-6701 and entering the access code of 272217. International participants may dial (320) 365-3844. That does conclude your conference call for today. Thank you for your participation and for using the AT&T Executive TeleConference service. You may now disconnect.