Good morning, ladies and gentlemen. And welcome to the Second Quarter Earnings Review for Travelers. We ask that you hold all questions until the completion of the formal remarks at which time you will be given instructions for the question and answer session. As a reminder this call is being recorded today July 30, 2009. At this time, I would like to turn the call over to Ms. Gabriella Nawi, Senior Vice President of Investor Relations. Ms Nawi, you may begin.

Thank you. Good morning, and welcome to the Traveler's discussion of our second quarter 2009 results. Hopefully, all of you seen our press release, financial supplement, and webcast presentation released earlier this morning. All of these materials can be found on our web site at www.travelers.com under the Investors section. With me today will be Jay Fishman, Chairman and CEO; Jay Benet, Chief Financial Officer and Brian MacLean, President and Chief Operating Officer. Other members of Senior Management are also in the room available for the question-and-answer period. They will discuss the financial results of our business and the current market environment. They will refer to the webcast presentation as they go through prepared remarks and then we will open it up for questions. Before I turn it over to Jay, I'd like to draw your attention to the following on page one of the webcast. Our presentation today includes certain forward-looking information as defined in the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts may be forward-looking statements. Specifically our earning's guidance is forward-looking and we may make other forward-looking statement that accompanies results of operation, financial condition and liquidity, the sufficiency of the company's reserve and other topics. The company cautions investors that any forward-looking statement involves risks and uncertainties and it is not a guarantee of future performance. Actual results may differ materially from our current expectations due to a variety of factors. These factors are described in our earnings press release and in our most recent 10-Q and 10-K filed with the SEC. We do not undertake any obligations to update forward-looking statements. Also, in our remarks or responses to questions, we may mention Travelers' operating incomes, which we view as a measure of profit and other measures that may be non-GAAP financial measures. Reconciliations are included in our recent earnings press release, financial supplement, and other materials that are available in the Investor section on our website travelers.com. With that, I'll turn it over to Jay.

Thank you, Gabby. Good morning everyone and thank you for joining us today. Pages three and four of our webcast summarize our second quarter highlights as further described in our press release. All in bottom-line performance was modestly better than we expected and we are particularly pleased with what we accomplished in written premiums. Brian will have more to say about that a bit later. The reporting today is somewhat later than usual driven simply by the way the calendar work and the fact that we build in a few extra days in our schedule due to the conversion to a new ledger system which we successfully completed in the first quarter. Interestingly, this timing has allowed us to listen to a few other calls and to observe some of the market commentary. It has been a fair amount of discussion about market trends. Is this a hard market, a stealth hard market or continuing soft market, a softly harden market, or is the industry on or off the wagon? Any of you can take your own standby. However we view the conditions, our challenges to execute in the only environment that exists and that's the environment that we face today. What you have heard from us in the past and will hear again today is a very consistent story that the Company is really well positioned to execute across our franchise and to continue to pursue and achieve our financial goals. We are executing, where we see attractive opportunities and where we don't, we pass. Having said that understand that we are seeing many of those opportunities. We've grown our premiums in both business and Personal Insurance at rate and profitability, which our metrics indicate are at levels, with which we continue to be comfortable. You won't know that…

Thanks Jay. I know this sounds a bit repetitious but I have to say and frankly I'm happy to say that our investment portfolio, our reserves, our capital and our liquidity remain in very good shape. Turning to page six. Operating company capital once again remained at or above all target levels. Our debts saw a capital ratio is at its 20% target. The mid point of our 15 to 25% AA range and that's after successfully placing $500 million of 10 year 5.9% senior notes during the quarter. Holding Company liquidity increased to over 3.3 billion or approximately 3 times our target level and that's even after $750 million of second quarter share repurchases and we got negligible amount of debt maturing. Book value per share $47.29 including 865 million of net unrealized investment gains after tax increased 5% during the quarter. While book value per share of $45.76 ex-FAS 115 increased 4% and we close the quarter with approximately $26 billion of common equity. Our $73.4 billion investment portfolio continues to be a very high quality and well diversified across industries, investment types and individual issuers. The portfolio is pre-tax net unrealized gain increased from 803 million at the end of the first quarter to almost 1.3 billion at the end of second quarter. Fixed income investments compromised 95% of the total investment portfolio although investment grade investment comprised only 2.5% of fixed maturities and the duration was 4.0. I do want to point out one thing that did impact the portfolio this quarter. The downgrading of a bond insure that caused the movement of certain of our bonds from the AAA category mostly to the AA category which was just enough to move the overall quality rating of our fixed income portfolio from AA+ to AA. I…

Thanks Jay. As Gabby said, I will speak to the results of all our business segments. John Albano, Alan Schnitzer, Doreen Spadorcia and Greg Toczydlowski are here with us and will be available to answer questions. Before I go into the individual business unit results, I will provide some broader commentary and I'll start with the rate picture on page 11. We're pleased that we were able to achieve positive rate change in each business segment. Personal Insurance rates have continued on a positive trend for quite sometime. In business insurance, the rate environment has been improving for the last year and turned positive for the first time in over four years. Similarly for Financial, Professional & International insurance, rate turned positive at year-end 2008 following two years of negative trend. The relevance of this trend to our future profitability is obvious. Otherwise in terms of the larger picture claim frequency trends are favorable, in fact negative in some of our businesses and severity is at overall normal levels resulting in improved loss trends. Given these trends, we feel good about our product margins. Although we continued to experience some margin compression on a written basis, it is at lower levels and in some businesses, margins are stable to slightly improving. Despite current economic conditions, our premium trends year-over-year have been stable. Even as individuals in businesses have become more price sensitive, our retention levels remain very strong. New business is robust and overall achieving our targeted rate of return. So all in, we feel great about our position and our results this quarter. Turning specifically to the business insurance segment on slide 12, operating earnings were down from last year primarily driven by the drop in investment income and the anticipated margin compression. Compared to the prior year, Cat…

Thanks Brian. Page 23 sets forth our guidance for 2009 which were increasing based up on second quarter performance. We're now projecting fully diluted operating income for share in the range $4.80 to $5.05 compared to our previously announced range of $4.55 to $4.95. Our guidance now assumes full year Cat losses of 410 million after tax or $0.73 per diluted share based upon actual Cats for the first half in an unchanged expectation for the second half of the year. No additional prior year reserve development either favorable or unfavorable, no significant changes in private equity and hedge fund valuations for the remainder of the year as we're assuming unchanged capital market conditions, lower real estate partnership valuations due to a continuing downward trend in commercial real estate values, additional share repurchases of 2.25 billion are bringing the assumed total for the year to $3.0 billion and no significant change in average invested assets ex-FAS 115 and a weighted average diluted share count of approximately 565 million shares. With that we would like to open it up for questions.

(Operator Instructions). Your first question comes from the line Jay Gelb with Barclays Capital. Please proceed.

Thanks very much. Jay, can you give us some insight in to what level of success you are having from attracting business away from the stress competitors and may be tie that in to new business growth and business insurance that we saw in the most recent quarter?

Sure. Well I -- first, the slide that we presented at the Investor Day conference showed my recollection is six competitors and we were showing accounts taken versus accounts lost and net and all of them were positive and I don't have that slide actually in front of me, but they were meaningfully positive. If we did that slide again for the quarter, it's actually they are all positive and they are actually I believe all somewhat more positive than they were from the slide that we presented at Investor Day. So we continue to have success in the market place not only from those competitors that perhaps are struggling but from the real solid competitors as well. It's we are -- just we are having real success in the market place day in day out. I don't know how to quantify that in a context of written premium in the growth, that's I just I'm done it, frankly but it's so I don't have a comment on that.

Okay thanks and I have two separate issues. The first is how long do you think it'll take you to complete the pace of the increased share buyback program and then finally if you could comment on the potential for Chinese drywall losses in construction claims that'll be helpful too?

Why don't we have John Albano speak to the drywall and then I'll come back for share buyback.

Jay, as far as the drywall is concerned, most of the affected buildings were built or repaired in the 2006 and 2007 timeframe. Imports of the drywall as we began a little bit before that but most of what we're seeing in terms of repairs and new building construction is those two years, so we're talking about a couple years of exposure. Our exposure to Chinese drywall situation would appear to be minimal. We are not a big rider of residential contracts; we are not a big rider of importers of foreign building materials. We have looked at the claim activity, we have looked at our loss our limit of liability for each one of those and we view it as a minimus.

And I just make an observation and obviously we have done everything one can do to analyze what is an early emerging situation. This is still from a claims and activity perspective quite early and who knows where it will go but what we have attempted to is to understand where the exposure potentially could be analyzed, our commitment to those exposed lines and feel pretty good about it. But we are watching carefully and we'll report on it periodically as quarters emerged.

Jay, as far as the pace of the buy back program I think in prior years we've said that we usually will hold back a little bit in the third quarter given that as capsize. But in this particular year given the amount of cash we've build up to the holding company, our desire is go into the market more aggressively than that. So for the purposes of thinking ahead, we're just planning on doing it pretty steadily between now and the end of the year.

Consistent with the pace you had in the second quarter?

Well I mean in terms of the dollar amounts that we're putting forth in the guidance, it would be at a higher amount than what we did in the second quarter.

Thanks for the answers.

My pleasure.

Your next question comes from the line of Josh Shanker with Citi. Please proceed.

My first question is whimsical. I'm wondering where the little dog is? I've been waiting for it on TV.

You don't watch enough TV. We have spent plenty of money on it and you haven't seen it.

Alright, alright I'll keep watching. And I'm following up on Jay's first question, one of your very large competitors who I won't name spoke earlier this morning and said that they're seeing great submission flown, winning great business in the small commercial arena. And I'm wondering if there's room for two very large competitors to be doing that and who is loosing the business?

Our data speaks for itself. The written premium in select is as presented here. So I don't know anything about anybody else's numbers. I know a lot about our own and if you go to page, where was that the new business page -- go to 15. We did $154 million in Select, up from $133 million last year, premised largely on the roll out of Travelers' Express and the success that that's having in the marketplace. So I don't know about anybody else's numbers but there is plenty of room for us to be successful.

And the final question, there is lot of people. Where are deductibles going for small commercial business? Is that a common discussion that you're having? Is that actually unusual? What are your agents experiencing in that regard?

This is John Albano. There is really little movement in terms of deductibles on smaller accounts. Smaller accounts tend to have lower deductibles obviously than larger accounts and based on their financial condition, not looking to move that up. More broadly, we are seeing in larger accounts a little bit of movement in terms of deductibles on some larger accounts but it's not a significant shift.

Okay and thanks for the answers.

Pleasure.

Your next question comes from the line of Matt Heimermann with JP Morgan Chase. Please proceed.

Hi, good morning everybody. Two questions if I may, just with respect to some of the slight moves down our retention, is this just... how tied, let me rephrase that. How important has that retention drop been to actually being able to generate deposits of rate changes across all those segments.

This is Brian. I think you got a look at it a little bit specifically business-by-business. In Personal Insurance; I think specifically on the auto side, we were ahead of a little bit of the market curve on getting some rate increases filed there. And there's probably also some economic drivers there with consumers being a little more price sensitive. So we feel real good about that trade off and so we needed to get the price moment and so their it's pretty correlated. In the small commercial world, there's probably also a little bit of economic impact there with some business failures. Again, not a dramatic number but maybe that's moving our retention of point. And so we don't think there it's been as connected to the pricing but is to some degree. And in the middle market, the numbers have bounced around a bit but at 85 levels, we continue to feel great about our retention.

And again just in the context of looking overtime, the Select retention of 80 is the same as it was in the second quarter of '08. The retention to commercial 85 is the same as that it was in the second quarter of '08 and in other business insurance were from 82 to 81? I -- hard to see anything in those numbers that would indicate any substantial change or shift. Obviously we've always said retention is an important, maybe the most important leading indicator. We'll obviously keep on watching it but this is at the moment nothing more than another quarter that I would characterize as being in sequence.

Okay. And based on that, it sounds like you're still pretty comfortable that that trend can continue through the end of the year?

Again I'm trying to resist the notion of forecasting because the market is... when is say the market, I'm really responding more globally to the issue of the economic environment in which all companies compete. But we're all competing in the same marketplace and given the recession and given the lower payrolls, lower projected sales, lower amounts of transportation, just lower amounts of economic activity which translates into premiums, it's just an awfully difficult time to look into the next two quarters and predict anything other than just being out there and banging away. And so I'm just going to refrain from it. But I don't see anything in the second quarter where any kind of alarm bells or genuine concerns are there.

Okay and then with respect to the tip decline in Personal Lines, on the autos, I believe which was auto driven, is there are any particular type of customer that's driving that retentions range?

Good morning Matt, it's Greg Toczydlowski, as Brian indicated. We are just seeing the economy generate a price sensitive consumer across a pretty broad group of a profile. So we are not seeing any shift in profile overlap business in. Right now our focus is very much on the pricing discipline. So looking at where our combined ratios are for the quarter, we feel good about the combination of the two metrics.

Okay. Thank you and then Jay just one quick follow up. Your portfolio acts the bond wraps, is that AA as well?

Yeah, it's either way, it's a AA portfolio.

Okay perfect, thank you.

Your next question comes from the line of Jay Cohen with Bank of America Merrill Lynch, please proceed.

Thanks good morning. Couple of questions. Jay, slide five was an interesting one, where you adjust for the ROE for these, I think reasonable factors. What adjustment you didn't make was the combined ratio and I guess the presumption would be that the combined ratios you guys are producing now is a normalized level and I am wondering if you can reflect on that a bit and then I will have one more question.

Yeah we thought much about it because obviously it's an important element. You got a couple of things kicking around in the there, you've got favorable reserve development and it's certainly appropriate to ask the question to the extent of which that is sustainable and you've got excess cat in the quarter relatively to what we would consider to be a normal cat exposure, normal cat loss last for the second quarter. So ultimately what we did was, we ran the same analysis, if you go the slide that shows the combined ratio XX, my recollection is let me get to it but I think it was 94.4 is my recollection for that combined

That's right.

Ratio was XX and even if one where to ramp that up for what might be considered a normal cat exposure, you get to and these are approximates. Jay I think, I'm not getting terrible precise here but even if you call it a 95 and then if you look at we make the assumption that given what's happening with rate and given what's happened with loss trend, that you can envision the circumstance we're on a inert basis looking out there that margin compression potentially could stop. You'll get to that same mid-teens level. It will a little bit lower obviously 95 versus 94.4 is six-tenths of a point in the other direction but its just arithmetic. And if you are on a 95 combined and assume a more normalized investment return environment. I think it will point you generally in the same direction. But you can ask questions like what happens if rates get much better? It will be better. Will that have an impact on investment returns because the market changes, I don't know. If rate gets really turns down as the different, its funny I was asked the question before, if rates this goes back probably by about 6 or 9 months if rates never change and if investment yields never change, how do you get to mid-teens to turn on equity and the obvious answer is we can't. It's -- there has been a cyclicality to the business and a cyclicality to investment returns and that's frankly why we talk about returns overtime. There is a presumption that theirs a mean line, a normal line within all of those cyclicalities and around that line we think a well run business still has the ability to produce that mid-teens number.

Oh that's great. I guess the second one more specific when you discussed some of the bank failures. There was a comment that the company took action ahead of time on some of these accounts and I am wondering what that means? What kind of actions did you take to reduce your risk?

Jay, its Alan Schnitzer, it's the typical underwriting action you take any time you will look at underwriting riding an account. So its limits it's A side versus B side. The whole nine yards in terms of underwriting.

But obviously you feel that it was effective enough to reduce your risk than what otherwise it would have been.

Sure it's changed the risk profile of those accounts.

Okay. Let me stop there. Thanks a lot.

Pleasure.

Your next question comes from the line of Mike Nannizzi with Oppenheimer. Please proceed.

Thanks. Just a question on guidance. When you look at the change from before to now, how much of that change is due to second quarter cat reserve development and share re-purchase activity versus how much of that change is due to a change in expectations for the latter part of the year? Thanks.

This is J. Albano, I think a lot of it is as we said just the guidance changes based on the performance as things develop. So lots of the change in the guidance was driven by the second quarter. The guidance previously didn't include any estimates of favorable development so that's fully factored in. The excess cat's going the other way of factored in as this the weather that Brian was talking about before. I think if you add up all those numbers and look at the impact of the increase in the share buybacks, and you probably end up with something close to about somewhere between $0.25 and $0.30.

Got it okay, thank you.

comes from the line of Brian Meredith with UBS. Please proceed.

Yeah, good morning. Couple of quick questions for you. First your big competitor, I guess reported this morning hasn't his best increase in the reserve. I was wondering if you can give us a status on what you are seeing with respect to investment claim activity?

Specialist? [inaudible].

We haven't talked about it a long time.

We are we review our specialist reserves on a quarterly basis and we did not make any changes to our specialist reserves in this particular quarter. I can't on comment on what somebody else is saying but at least at this point of time nothing is really changed in our view.

Great. Second question of Jay, just back of the whole ROE discussion quickly. What would you say that the long term kind of fixed income return did you would expect in your businesses, when you are kind of evaluating the -- where rate levels need to be? As obviously you have got to respect in fixed income returns to start trending upwards, right, if you got your mid teens ROE.

Yes, different strategic point, the illustration that we put forward here is making two adjustments -- is making an adjustment to short term yields which obviously generate into a portfolio quickly. You've got very short duration short yield change, sort of investment income. The alternative arena actually has a relatively quick responsive rate also. Tight evaluations, equity evaluations and such. Our real fixed income portfolio, we are running a duration of about four and so the change even to the extent that new money rates change, given the share buyback, given the way we are deploying capital, you are not going to see the fixed income investment yield change very much. Its going to continue to just crank out, what it is that crank out. And then obviously as we as the duration moves it will change slowly. We are talking about a 10 year treasury I look at yesterday I didn't look this morning. Ten year treasury at 3.6. This is an investment environment in the fixed arena that will allow us to get through the mid teens on the presumption that short rates eventually return back for an in effect zero and the alternative investment portfolio begins to return consistent with its realistic profile. I feel in fact confident about the first. If we are going to have short rates of zero, we are going to have lot of problems that we are going to be dealing with in a couple years. They are going to be quite different from the ones we are dealing with now. On the alternative investment returns, to the extent that capital where we deployed, again if the ten year treasury is 3.6, if these assets aren't going to get back to an appropriate risk adjusted level over some reasonable period of time, no one is expecting in the next quarter, if they don't get back there we'll eventually cut the allocations to that asset class. And redeployed it somewhere else when the risk adjusted returns are more appropriate. So this is the issue was really at the bell ends of our investment portfolio. The very short end and the alternative investment end and the stuff in the middle is just doing fine.

And I guess the presumption there also is an as you mentioned earlier that to stable reserve development, one has to continue here as well.

Well again I think I answered Jay's question earlier about that to the extent that one were to simply assume that there would not be any more reserve development and cats would become normal whatever that means but normal given our exposure. If you want to sit down and do the risk math at 95 combined which is about where you get to a current margins. You will actually see that the analysis holds true even in that case. It doesn't it it's still an achievable goal. So how we feel about it to the extent that rate continues to move up. We feel more bullish about it. We -- to the extent that loss trend continues to remain benign, we feel more bullish about it. So you are right there is any number of variables in this. The extremes at the moment in the context to environment that we operate in and I'm speaking now broadly about insurance and investment, the extremes are at basically zero yields per short term investments and at alternative investments effectively also being zero at the moment. Those were the two extremes. The underwriting environment that we in is just fine, its just fine I mean again its fine in the current quarter and the time in the context of looking at least where rate seem to be heading, I am going to resist for making the predictions but if you look back to the second quarter of last year, rates have been moving in the right direction and loss trend has been relatively benign, that's a pretty good scenario. I have no idea that it will continue. But that -- all the factors that go into how you think about returns in our business.

Great and then last just quickly. Any prospect from agents, with respect to the direct distribution and did that all contribute to the drop in the interest in the quarter, first quarter?

Its, Greg Toczydlowski again. We have been very closely with our agency plan and communicating with them and just educating around all our direct to consumer initiatives and including the advertising around that and the partnership has been very strong and quite frankly as they've seen the campaign out there we received many positive remarks around it. So we are going to continue with that partnership but we don't believe it had any impact on our production.

I agree with what Greg said but that's not to say that we haven't taken a call or two or three from agents who are bothered, troubled by the -- what they perceive to be a different strategic direction. But they are clearly significantly in the minority and again I'll reinforce what Greg has said, there are certainly no indication that anything as it relates to our business in any subsequent way in buying and this is attributable to that.

Okay, thank you for the answers.

Pleasure.

Your next question comes from line of Larry Greenberg with Langen, please proceed.

Thank you and good morning, Jay I want to ask you to predict what rates are going to do going forward? But if I were to assume that your business insurance rate trends were to continue, would you be at a point by the end of this year, where you weren't loosing any margin on the end premiums?

Yeah, we actually have spent a lot of time talking about that exact question and we are going to answer it. We are going to talk about written and then we are talk about both because the 2 things are different but I'll let John tackle that question. No, you want to go. Whatever?

No I think John was just hesitating to say what we -- I think given -- Hi, Larry how you're doing.

I think what's important in this is that don't perceive this to be a forecast.

Right.

We are not forecasting rate. You actually asked the question the right way which is if rate trends continue which is not to say that we're telling you that rate trends are going continue.

If rates trends continue we would believe that by the end of this year on a written basis, our business insurance segment broadly would be experiencing improving margin.

Great thanks. Second question...

It will take a while for that to show up.

Obviously it takes a while to...Yeah I got that. And on the investment side, has Bill got anymore optimistic on the capital markets environment?

Hi Larry, this is Bill.

Hey Bill.

Obviously the psychology is much better although, we don't have lot of attention to psychology what we invest. If we did, we could have invested very differently going into this crisis. On balance, it can hurt if the psychology is better because it will make it marginally easier to refinance the large amount of commercial real estate mortgage debt and private sector debt, largely high yield buy out related that has to be refinanced in the next 24 months. But we still think there will be a considerable shortfall in the amount of debt that has to be refinanced and the capacity of the market to refinance this. And we're determined that as little of that unrefinancible debt as possible be in our portfolio. So at the margin believe it or not, we're probably still reducing risk on a day to day basis. We find there is very little penalty for doing it. In fact in the case of securities, we don't hold any but we hold some that were severely marked down. The recovery in prices has been amazing. Yet in many cases, the same obstacles to ultimate payment remain and that's we focus on. We focus on getting paid because in a fixed income security which have some 95% of the portfolio, you're up side is to collect the cash close you bargain for. And do we feel better, I think we feel better with everybody else but we're looking at things as hard noses we ever have.

Great thanks. And I think in the past not too long ago, you had indicated that partnership, private equity, type of assets classes might be, some of the more interesting. Have you or are you inclined to put any new money to work in those asset classes.

We've given the message to everyone that we're opened for business but there is surprisingly little quality fund raising activity in private equity. Now there is a lot of noise been made about the secondary market and if secondary assets were trading in volume at appropriate discounts, we certainly have the capital for it but we think there's been a lot more smoke than fire there. So it's been a very quiet year.

But not lack of willingness on our part.

Not lack of willingness on our part and frankly we've been surprised by the low capital falls in our funds. The negative cash flows that is the excess of capital falls and management fees over distributions is running at a much lower rate than we had anticipated.

Great, thank you very much.

Your next question comes from the line of Paul Newsome with Sandler O'Neill. Please proceed.

Good morning and thank you for the call. What has shift investments in just a bit, could you describe may be at least qualitatively how within each segment classes as opposed to the allocation you think you're meeting or exceeding sort of industry averages, particular on the hedge front and vividly if you can give us may be an example of how you may be more conservative in your accounting for the hedge funds and if you mention something along those lines in your prepared remarks?

Let me speak to the second Paul, then I'm going to turn it over to Bill. We're not more conservative, our alternative investment income or loss is classified within operating income. And so we look at operating income for us, it includes for example the $20 million loss from alternative investments that we recorded in the quarter. I don't know if everybody else does from a conservative or aggressive perspective but many people classify the alternative investment gains income or loss below the operating income line. So operating income comparability from one company to another is really it's easy to do. Virtually everybody gives you the disclosure but the nature of the classification is quite different from one company to another is what we are looking at.

With respect to our performance obviously we do comparative to publish bench marks we can find and we try to be pretty granular by type of hedged fund and over the last couple of years we have actually done very well relative to those bench marks. But as a rule what we benchmark here is not performance but risk. We try to keep the amount of risk in the portfolio pretty constant from year-to-year and we grade ourselves at the end of the year by how much return of the return that was possible given that amount of risk we were able to capture. So we do look at the return benchmarks and we are often surprised by how well we do but our primary focus is risk.

Okay, thank you.

Thank you. Your next question comes from the line of Vinay Misquith of Credit Suisse. Please proceed.

Hi, good morning. Two questions first on the ROE, your slide mentioned a higher amount of cash at the holding company. When do you propose to invest the extra $2 billion in cash because it seems that the $1 billion that you plan you use for share repurchases that you will sort of generate in your net income, over the next two quarters?

Our guidance is already speaking to approximately $3 billion of actually not, be very specific it says approximately $3 billion of share repurchases for full year. So we obviously know what we have done for the first six months, so you have some sense of what we are anticipating to do for the last six months through the extent that market conditions and circumstances allow, we obviously have the capacity to do more. If market conditions and circumstances for whatever reason become problematic, we'll always adjust our program relative to what's going on in the market. But I -- we generally been a company that has projected out share repurchases in a way were that our tilt if you will is to probably do more than less assuming that the market continues to support the activity.

The other thing I would add is that holding company cash is the amalgamation of lots of activities that take place and one of them is getting money from the operating companies through operating company dividends up to the holding company and that's not done on a basis that says here's what the operating companies earned in the quarter let's bring that up. It's all different timing track to that. So what we do in projecting out what kinds of share buy back activities we should have as we project, because today's holding company cash here the dividend that will come out and going to come out of the operating company here the payments that we are going be making in the holding company for interest and dividends and things of that sort. And these are the amounts of cash that we will have at the end of the third quarter, at the end of the fourth quarter and with that more comprehensive analysis we then come up with. Okay, what is the amount of buy back that we should have and what will that leave us at those points in time with regard to holding company cash.

So fair enough. If I could just ask, bring a follow up on that. So when do you thing this penalty that you have because you have excess cash at the holding company when do you think that will sort of go away because you have finished due purchasing extra stock?

By putting in this guidance saying that we were going to do $3 billion of repurchases for the year that would bring the holding company cash balance down considerably from where it is. We still as Jay and Bill have talked about, you know live in this world where you know we have a recession going on. There's economic uncertainty out there. So doing the $3 billion will not bring us down to the target at the end of the year. We're still being a bit cautious but will bring us considerably lower than where we are today.

Sure. And is the $3 billion for the next 12 months or is it for six months?

The guidance is annual guidance. So you should think about it as we've done $750 million through the second quarter and the 3 billion for the year. So that would leave 2 billion 250 for the rest of the year.

One separate question if I may. I think you mentioned the frequency and severity of loss cost trends were very manageable. I was just hoping you could expand on that. Should we see sort of a stabilization or a continuation of very low frequency and severity trends. Do you think that your current profitability would remain the same over the next 12 months despite pricing being flourished?

I think again this is Brian. I think again you got to think about it a little bit across the spectrum of businesses because there's a lot of businesses here. Frequency trends in our personal, auto business for example have been running very favorably. We're constantly like everybody else trying to figure out the causes there. Some of it is economic driven as in people driving fewer miles etcetera, etcetera. But overall the frequency trends we have been seeing across personal businesses and much of our business insurance have been trends that we have been seeing for a quite of a while. So we don't think they are just short term anomalies. If I get a little of our question I think its similar to the one that are Brian asked a little while ago which is if these trends continue as they are continuing, how do we feel?

Yeah.

Again if you have got frequency levels running in some business actually negative and overall I would say better than historical in severity again this is a broad aggregate across the company; severity running pretty typical that's the positive place to be from a loss trend and then if you get some positive rate with that, margins will improve.

Obviously as long as rate change even though it was heading in the right direction as long rate change was still negative that was implying compressing margins or be at it a slower rate. Once that rate change passes above zero you are now talking about at least a possibility of expanding margins depending upon on what happens to loss trends and of course the ability to continue to sustain as positive rate gains and it was and again just a commentary about the quarter. This is a first time in a long, long time where the rate change in all three business segments was positive. So you look out you would say to the extent that continues that's a bullish indicator.

Thank you.

Thank you. I don't think we have any more questions and so with that we will close our conference call and thank you all for joining us today.

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