Good morning ladies and gentlemen and welcome to the third 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, October 22, 2009. At this time I would like to turn the call over to Ms. Gabriella Nawi, Senior Vice President of Investor Relations.

Thank you. Good morning gentlemen and ladies and welcome to the Travelers discussion of our third quarter 2009 results. Hopefully all of you have seen our press release, financial supplement, and webcast presentation released earlier this morning. All of these materials can be found on our website at www.Travelers.com under the Investors section. Speaking today will be Jay Fishman, Chairman and CEO, Jay Benet, Chief Financial Officer, and Brian W. 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 on Page 1 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 earnings guidance is forward-looking and we may make other forward-looking statements about upcoming results of operation, financial [inaudible] and liquidity, sufficiency of the company’s reserves, and other [inaudible]. The company cautions investors that any forward-looking statements involves risks and uncertainties, and is not a guarantee of future performance. Actual results may be [inaudible] 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 obligation to update forward-looking statements. Also in our remarks or responses to questions we may mention Travelers operating income which we use as a measure of profit and other measures that may be non-GAAP financial measures. Reconciliations are available on our recent earnings press release, financial supplement, and other materials that are available in the Investor section on our website. Thank you, and let me pass it to Jay Fishman.

Thank you, Gabi. Good morning, everyone and thank you for joining us today. We’re pleased to be with you this morning reporting another strong quarter. In addition to posting operating income of $914 million and an operating return on equity in excess of 14%, based upon our confidence in our underlying operations, we’ve increased our regular quarterly dividend by 10% to $0.33 a share. We repurchased $1 billion of our own stock in the third quarter. We raised our estimate for fourth quarter repurchases to $1.5 billion and our Board authorized an additional $6 billion for our share repurchase program. As these actions demonstrate, we continue to execute our strategy of generating solid current returns and returning excess capital to shareholders. Since the middle of 2006 when we commenced our share buyback program, we’ve repurchased nearly $8 billion of our own shares at an overall average cost of $48.67. The $8 billion represents approximately 27% of the market capitalization of the company when we commenced the program. As we’ve indicated before, this is not tactical, but rather strategic. We continue to leverage our competitive advantages to execute successfully in the marketplace, generate top tier earnings, and return excess capital to our shareholders. A lot of good things happened this quarter, evidenced by strong underwriting results as well as much improved investment performance. On the underwriting side, results continue to be quite solid and benefited from net favorable reserve development in excess of $200 million after tax, even after completing our annual asbestos review. In our ongoing businesses, loss costs remain quite benign and the third quarter also benefited from a re-estimation of 2009 loss estimates to lower levels. On the investment front, our long term fixed income portfolio continued to produce consistent returns. On the short term front, investment yields…

Thanks, Jay. Turning to Page 4, while capital leverage and liquidity measures were once again at or better than target, withholding company liquidity at $2.6 billion were more than twice its target, this after $1 billion of share repurchases and $166 million of common dividends in the quarter. Our book value per share of $51.24 increased 18% year-to-date with a little more than half of this increase coming from a very sizable change in net unrealized gains and losses which ended the quarter in a pretax gain position of $3.4 billion. These net unrealized investment gains are the primary reason that our investment portfolio increased over $76 billion as of September 30. We also reported after tax net realized investment gains of $21 million in the quarter, including impairment of only $12 million after tax. The dollar amount of investments for which fair value was continuously less than 80% of amortized cost which was only $374 million at the end of the most recent quarter is now down to only $187 million at the end of the current quarter. Since many investors and analysts are closely monitoring valuations of commercial real estate related investments, we’ve provided an update to our previous disclosures in the appendix to this webcast. Overall our investment portfolio continues to be very high quality and well diversified across industries, investment types, and individual issuers. I’d also like to point out that while not a third quarter transaction, we did sell half of our Verisk holdings, formerly known as [Isell] in connection with their fourth quarter IPO, receiving gross proceeds of $184 million and producing $103 million after tax net realized gain. It will be included in our fourth quarter results. Page 5 provides a comparative analysis of third quarter and year-to-date operating income and GAAP combined…

Jay Fishman gave a broad overview of our market and I will go through the segment’s specific results and I will start with some comments on renewal rates across the company. As Jay commented, the improvement in the renewal rate environment has been of particular importance and we are pleased that for the second consecutive quarter, all 3 business segments experienced positive rate change. You can see on slide 8 that although none of these shifts are dramatic in any 1 quarter, they are a sign of consistent improvement. This is particularly true in our commercial businesses, where we are at a very different point than we were 16 months ago. Turning to the business insurance segment on Slide 9, operating earnings were up from last year, primarily driven by reduced CAT activity and other favorable loss experience in the current year. Adjusting for catastrophes and prior year developments, the year-to-date combined ratio was 94:5, or 60 basis points higher than last year. This modest margin compression is significantly better than anticipated and reflective of a number of factors, including: better than expected pricing, better than expected loss trend primarily driven by frequency, and lower than normal non-CAT weather charges. Net written premiums are down 5% compared to the prior year. This is a result of the economic contraction, which has led to a decrease in exposures. As our insurance payrolls receipts and general business activity goes down, so does our premiums. These impacts are consistent with our expectations and have been incorporated in our guidance. Given the environment, we are extremely pleased with our top line results. Turning to the production statistics, on Slide 10, overall retentions remain strong with some modest decline in select accounts and modest improvement in commercial or middle market business. The select retention is…

Thanks Brian. Given our third quarter performance and its implications for the remainder of the year we’re increasing our guidance for fully diluted operating income per share for full year 2009 to a range $5.30 to $5.50 compared to our previously announced range of $4.80 to $5.05. As indicated on page 18 our guidance assumes fourth quarter cap losses of $83 million after tax or $0.15 per diluted share. No additional prior year reserve developments, either favorable or unfavorable. No significant changes in short term interest rates from their extremely low current levels. No significant change in private equity and hedge fund valuations for the remainder of the year as we are assuming unchanged capital market conditions. Lower real estate partnership valuations due to continuing downward trend in commercial real estate values. Fourth quarter share purchases of a $1.5 billion bringing the total assumed for the year to $3.3 billion of share purchases. No significant change in average invested assets, ex unrealized gains and losses, and finally awaited average diluted share count of approximately 570 million. With that let me turn it back to Jay.

Jay, thank you. Before we open it up to questions let me just attempt to preempt one. That is we have no investment in the Gallient Funds and we have no insurance exposure to the Gallient Funds and hopefully that will address a question that a number of you would ask. With that operator, we will open it up.

(Operator Instructions) Our first question comes from the line of Jay Gelb – Barclays Capital. Jay Gelb – Barclays Capital: My first question is on capital management with the additional $6 billion in share repurchase authorization would Travelers anticipate completing that full authorization in 2010 given the current run rate of share buy backs?

We’re reluctant Jay to make predictions of cash flow or capital needs. The world is volatile, storms come and go. The only observation that I’d make is that we repurchased $8 billion over a 3 year period. We started the program in the middle of ‘06 we’re obviously middle of ‘09 and that included at least 1 bad year in the catastrophe arena. So we’re just going to keep doing what we’ve been doing which is to produce our earnings measuring our excess capital and returning it and it will go as long as it needs to go and when we’re done if things are looking good we’ll reauthorize some more. Jay Gelb – Barclays Capital: I’ll come at it another way. Is there an upper boundary that Travelers is comfortable with in terms of debt to capital ratio if its 20% currently?

The range that we operate our debt to capital ratio in is we talked about before is a 15% to 25% range. That’s a little more complicated than that because each one of the rating agencies has their own real formula, but the proxy for all of them is about 20%. I’m sorry 15% to 25% and we’ve selected to be in the middle of the range, but we could certainly be comfortable higher but at this point we’re at the 20 and that’s where we’ve been for a while.

Yes but Jay I wouldn’t anticipate us raising our debt to capital ratios for the purpose of buying back shares. We are at a level from an operating perspective that we’re quite comfortable with and that additional debt capacity I think is the way the prudent and thoughtful financial companies manage themselves. So the answer is we would not leverage up the company that extra 5 points which would take to the edge of the rating range for the purpose of repurchasing shares. Jay Gelb – Barclays Capital: That’s helpful and then more broadly, could you talk about to what extent we might see some recovery in premium volume as the economy recovers. I guess what I’m getting at is, is insurance buying trends more of a midcycle or even late cycle reflection within a recovering economy? Jay Gelb – Barclays Capital: Well I’m not sure, I mean we are very driven by payroll numbers obviously and business receipts and so I haven’t really thought about that one very much Jay and I’d like to think about it some more. My immediate reaction to is that we’re more lagger than a leader but again it’s not something I’ve thought about a great deal. I don’t think we have and want to think about it some more. A number of these things will initially show up in audit premium in ordered adjustments so a company will make an estimate of their payroll or their receipts at the beginning of the policy period and in the event that you end up with meaningfully different economic activity and in fact payrolls changed you can end up with an adjusted reflecting additional premium down the road. Again, my guess would be more of a follower than a leader but we should think about that some more.

(Operator Instructions) Your next question comes from Michael Nannizzi - Oppenheimer & Co. Michael Nannizzi - Oppenheimer & Co.: Could you explain the re-estimation of loss estimates on the 2009 business segment? What I’m basically trying to figure out here is if the re-estimation was frequency driven, was it related to the short tailed lines mostly written at the beginning of the year that you assume will mature before next hurricane season or was it something else?

I’ll answer it by first attempting to say how we go about doing this whole thing. We start the year with an estimate of what we think our loss ratios are going to be relative to the premiums we’re going to write for each one of our lines of business and as the year progresses, we evaluate information, whether it’s frequency statistics, severity statistics, or pricing and everything else that goes into what comprises a loss ratio and evaluate whether we should be moving off of what we refer to as the initial loss [fic]. As the year progressed, we did see frequency trends in several different areas were much lower than we had expected them to be and we adjusted the loss [fic] accordingly and what happens when you adjust the loss [fic] in the third quarter, you start evaluating is it relating exclusivity to activity that’s taking place in the third quarter or is this information that’s telling you that you need it to look back to the first and second quarter and effectively have a catch up adjustment, so for the purposes of transparency, recognizing these changes in estimate are recurring elements of our business and everybody else’s business. We just want to make sure that we provide you with that information and you see that historically we provide very granular information about prior year development and this is a similar thing but it deals with prior quarters of the current year.

Mike, this is Brian. It is looking at frequency trends that have emerged over the year but not just on the short tail stuff. Comp was a decent part of this process too, so it’s frequency driven by more across all the lines of business. Michael Nannizzi - Oppenheimer & Co.: I guess the comment in the opening about inflation and talking about longer duration lines, I just wanted to understand how you’re reconciling your outlook on inflation with these longer tailed lines if maybe severity is going to potentially be a driver in those longer tailed lines.

To back up for a second, I’m not sure that we actually have an outlook on inflation meaning that’s substantively process wise different from anything that we’ve ever done, meaning we always make estimations of loss costs over the lifetime of a block of businesses that are being written, so we think about comp pays and we think about general liability pays this year, we think about it last year, we think about it 10 years ago, and we’re always making estimations of what future claim costs will be and we haven’t changed anything in particular relative to a different focus on inflation than we have before. I just want to make sure that we’re clear on this. We haven’t changed anything other than to begin to recognize that you all seem to have an interest in talking about inflation and the point that Jay made which I think is actually quite consistent with Brian’s comments is that the duration of even our long tail liabilities is shorter than most people tend to think, meaning that there is a significant amount of cash disbursement claim payment that takes place in the very early part of the cycle, the tail of the payment cycle. The tail may be quite long but significant amounts of the payments are done early and so it’s not difficult to get an early read of both frequency and severity even in long tail lines. I hope that’s clear. If it’s not let me know, we’ll try it another way.

(Operator Instructions) Your next question comes from Paul Newsome - Sandler O'Neill & Partners L.P. Paul Newsome - Sandler O'Neill & Partners L.P.: I was hoping you could touch on the asbestos charge and the comment that it came from increased defense costs. I’m specifically wondering if that is something that we should be looking at beyond asbestos and I have had a couple of companies that have mentioned something along those lines.

Paul, this is Jay. The way we evaluate asbestos reserves has many different components. Historically you’ve heard us talk about settling large cases, getting them off the books through final settlement, and that process was something that was very big in recent years and has tailed off as we’ve really gotten away from having these large exposures. So what we’re really left with we refer to more as a frequency book if you will. What we try to describe in the disclosures and hopefully it came across is we’re making projections. Those projections are going out over time. If you think about a graph with a sloping line of costs and claims and things of that sort, we’re periodically re-evaluating what the slope of that line is. We’re not seeing any major change in the environment, but what we are seeing is a little higher amount of defense costs on policy holders and our projections over the many years that relate to asbestos, we have to take that into account, it’s not related to any one policy holder or any handful of policy holders. It’s spread out over a big base. So when you apply the base and the increment, we get essentially what you’re seeing here.

I’m looking at Doreen to see in fact – I haven’t heard anything about a perception of increased defense costs around the organization in the rest of our claims. Is there anything that you’re aware of, Doreen?

No. Good morning everybody. Apart from asbestos and what Jay Benet just said, we actually don’t see any increase in defense costs and I’ll give you a couple of different categories that we watch. We watch the ratio between [inaudible] losses and claims and see whether we’re seeing more of those or less of those, so we watch that ratio. The other thing we look at is how many of the cases we can have our staff counsel defend which our in-house lawyers that are licensed around the country and those typically drive a different cost structure as well, and we’ve improved the penetration of those cases going to staff counsel so we actually don’t see that trend at all and see it probably a little bit of the other way. Paul Newsome - Sandler O'Neill & Partners L.P.: That’s great. And separately, could you maybe comment on some of the excess surplus lines business a lot of your competitors are commenting that companies like Travelers, the big standard carriers, are increasingly entering the excess and surplus lines which I guess would suggest a loosening of terms and conditions and whether or not that’s really the case, obviously whatever your thoughts are on that would be great.

The answer is no. We’re not seeing indications of terms and conditioning loosening, we’re really not. Nor are we, that I’m aware of in any way, actively engaging in broadening out our profile in the excess and surplus business in any way differently than we had before. I don’t know if you heard that anecdotally from other carriers, but we can tell you from what we’re doing, it’s not so. Paul Newsome - Sandler O'Neill & Partners L.P.: It’s a question and the excess and surplus guys are complaining about that. It’s tough to tell exactly where it’s coming from.

(Operator Instructions) Your next question comes from Matthew Heimermann - JPMorgan. Matthew Heimermann – JPMorgan: First question I guess would be could you guys quantify the exposure you have to either contractors, installers of drywall, in the southeast? I don’t know whether that’s premiums, limits, or even claims notices today, if any?

I guess I’ll come at it a couple of different ways. As far as residential contractors in particular, we’re certainly not a big player in the liability lines for residential contractors. If your question specifically is regarding the Chinese drywall situation, we talked about that a little bit on the last call and my recollection is that most of it is going back to what was it, do you remember the dates, Doreen?

Good morning again. We did speak about this. I think it was in response to a question that John answered. There really hasn't been material change to what we spoke about last quarter. We do have some claims but it's a very low volume of claims for Chinese drywall. And just as a reminder, I think John already mentioned we do not have a significant book of business with residential contractors or foreign manufacturers. And those are really the two primary targets. There's been about 700 lawsuits filed around the country. And we have really a very small number of insureds that have been brought into that and they are primarily either importers or property managers, things of that sort. And it's basically - it's like an '06 issue. There's been a lot of restrictions from the consumer protection federal organization since '08. And most of the exposure as we see it when the reports are published like about 60% of the assumptions are in Florida homes. So you start kind of whittling down the time period where the materials were used and who the targets are of the litigations. And really what we're seeing is pretty much what we expected we would see given our book of business.

And Doreen, and if you're not comfortable because we're doing this very real time, just when you look at the accounts that have had some claim activity, what would you guesstimate the average annual general liability limit to be? I'm not presuming that the [polishes] will respond. But a very natural question is what level of limits could be exposed to those sorts of claims?

They're very consistent with our usual limits, $1 million to $2 million. And the other thing I'd say is there are several home owner claims, but even that they're very, very small numbers. And generally first party contracts do not cover the kind of exposures as well.

But we'll always look at every individual claim as we always do. We make no general policy statements. We treat each claim individually as it comes in and we make determinations. So don't read this into a determination of claim handling activity. This is just early insight in information that we have to the issue you're raising.

Exactly. And if any changes occur in prior quarters we'll of course update the information.

I guess one follow-up with respect to this question is does most of your, with the exposure that you have to contractors be primarily admitted or non-admitted paper?

Most of it would be admitted.

If I can speak…

Let me come back for a second because it's important. And typically when we're asked questions we answer with data. This is just so early that it's difficult to do that. But if you go back to a matter of underwriting orientation, the kinds of accounts that over a long period of time we've written versus what we've not written is as you've described it. Residential contractors have not been in that segment of the business that we have had a significant orientation to. It's really been, and I'm doing this to some extent by memory and anecdotally, but it is largely by exception rather than as a class of business that we sought to write.

That's correct. And it's really based on some of the concerns that we had in prior years regarding construction defect issues. And so we're not a big player in that market place.

And our claims to date are not generally out of the construction book.

That's an important element as well. So more to follow on this and as we have data we think it can be - again, we will attempt to answer this quantitatively to the extent that it arises as an issue and the extent we can we will try to.

One quick one just on the professional liability book, you made comments in the press release and on the call but how is your posture appetite changing within that market?

Well, we certainly have an appetite for the market but we're just finding that mainly because of capacity in the marketplace it's just hard to get rate to offset the trend. So we're really going to focus on profitability and get rate where we can and avoid the exposures where we can.

I guess, I was just curious if there were any classes or industry categories in particular that you're feeling more or less optimistic about.

There's definitely some variability among the classes of business but I'd say overall it's a pretty consistent story.

Your next question comes from the line Jay Cohen - Bank of America.

A couple questions - first is on the Verisk transaction you talked about your expected realized gain. Is there also an unrealized gain for the portion that you haven't sold? Does that get marked up as well?

Yes, that's exactly right, Jay. In fact, as of 9/30, within the unrealized gain that I mentioned before $3.4 billion, there is an unrealized gain associated with Verisk. And what happens is in the early part of October with the sale we will adjust the unrealized gains accordingly as the markets shows us what the value of Versik is going forward. And to the piece that we sold we gave you the information as to what the realized gain is going to be.

And then separately, claims frequency, that continues to be a very positive part of the industry and certainly your story. Do you have any better insights into why we're seeing this continued favorable frequency and do you believe part of it relates to the weak economy?

Jay, this is Brian. I mean, and start with broadly, yes, we have insights but we also will readily admit that those insights are far from perfect. So we're constantly trying to figure out as best we can why. Comp frequency, the industry data out there and ours is similar to it. It's very, very favorable. Probably some of that is the economy but probably not exclusively. Auto frequency to us continues to look like all of the economics statistics would lead you to think which is as miles driven goes up then frequency should go up a little, etc. But so those all seem to be in line. But we absolutely don't have perfect insight into why. We have been looking at an extended period of positive for the industry, as in good, frequency trends and we just keep looking at it.

And it's predominantly I would say speculation on our part because we can't. There's no way to really prove this. We speculate that part of the comp story is embedded in the economy moving increasingly away from the manufacturing base and increasingly to a service and office space. Those are just things that you, that seem somewhat obvious. But there are so many lines that have been the beneficiary of decreasing frequency. It does seem to be systemic and behavioral. That doesn't mean absolute and comprehensive. That just means that it's a phenomena that is occurring. And all we have, I think, is informed insight rather than a real substantive understanding of why. But there are certainly a behavioral dynamic to it that's been suspended.

But with that said, we've been seeing frequency, positive frequency for quite a while. Have the latest economic conditions made that a little more positive? Yes.

Positive meaning good.

Good, again, good. But we don't think it's just the economic factors. There's a lot of other things going on.

Your next question comes from the line of Mark Dwell - RBC Capital Markets.

Most of my questions have been answered, but one question just in terms of where you're seeing, you're getting your rate increases. Are you able to differentiate in terms of whether you're seeing that more on property oriented risks or casualty oriented risks? Or is there really no difference?

Well, first, we absolutely have the ability to see it in a remarkably granular way, not only down to the individual line of business, the individual account and if you want to aggregate it, the individual office. So we have terrific visibility into it. I think going more granular, providing insight and information that is more granular to all of you is disclosure that goes beyond thoughtful competitive positioning. You're talking about our pricing strategy in the market. We're trying to give you some guide post direction about what's happening but really don't think it's in our shareholders' best interest to be more granular about that disclosure.

Your next question comes from the line of Vinay Misquith – Credit Suisse. Vinay Misquith– Credit Suisse: The first question was in capital. I was curious about how much of excess capital you estimate you would have by year end ‘09 after your $1.5 billion dollar share repurchase?

Everybody is looking at me. I’m not sure that we project out and disclose what our excess capital is. What we really do is try to describe a philosophy. And the philosophy has been to start with the operating company capital levels and make sure that relative to the targets we set that those operating companies are at or above target and the profitability of the company that you are seeing in the third quarter and year-to-date is providing capital in those companies that are at or above the target levels. We then look at, as we talked about earlier, taking out of the operating companies what we don’t need, bringing it up to the holding company and having a debt-to-capital ratio that is targeted at the 20%. And then managing our holding company cash to have $1.1 billion of holding company cash, which represents a year’s worth of interest and dividends. And, as you can see, at the end of the third quarter, we are sitting there with, I think, is about $2.6 billion dollars of holding company cash. So at a minimum, you can look at third quarter, and say, “Well, at the holding company cash level relative to the target, we’ve got an extra $1.5 billion.” We’ve already talked about having a $1.5 billion share repurchases in the fourth quarter, but, then, all the dynamics are going to keep working within the company in the terms of profitability and whatever. I think that’s the best answer I can give you, but overall, you go back to the statement we made that the company remains well capitalized in a great liquidity position and we like where we are and we like the ability to return the excess to the shareholders. Vinay Misquith– Credit Suisse: What I was trying to get at was for next year, would you be able to repurchase more stock than your operating earnings? I guess that was my real question.

As Jay said before, we are not projecting out what, exactly, we are going to do. We will think about that as part of any kind of guidance discussion we have for next year. But I would say it’s premature at this point in time. Vinay Misquith– Credit Suisse: Fair enough. The second question was on the investment portfolio, you had a secure and better [inaudible] portfolio than what appears. Are you now willing to take on more risk, now that the market has stabilized?

We’ve said, in the past, that, and I’ll describe it as on the margin, that we were certainly willing, if we were being appropriately compensated, to take on what you describe as greater risk/greater volatility portfolio. But, fundamentally, it would be on the margin. It wouldn’t be a substantive shift in the strategy of the company. I give enormous credit to Dave Roland, to Damien, and to Bill Hannon, in that there is never an issue. Our investment organization is there to make us an effective insurance company; not the other way around. And so our goal is to take only that level of risk that we need to, to be a successful insurance company. But, even at that, to be paid to take that risk appropriately. At the point in time we often ask about alternative investments, the fact is that what we consider the quality names in that space, continue to have a capital capacity themselves, uncalled facilities they are still working on. So the fundraising that has been going on in both the hedge fund and private equity areas has actually been quite minimal. And so the opportunity to actually commit additional dollars to the alternative investments, even if we thought we were getting appropriately paid for that, right now just isn’t there. They are not in the fundraising business. Another point, which we watch periodically, you actually take a look at spread between, say broadly, between BBB and AAA. What you’ll actually find right now is that they have tightened considerably. And, from some stuff I was just looking at this morning, you’ve got BBB spreads actually down to about 118 basis points over AAA; coming off of a position of almost 200 basis points as little as 6 to 8 weeks ago. I know Bill is chomping at the bit, and Bill, I will give you the opportunity. But, that is just not for us at the moment. Go ahead, Bill.

I wouldn’t add much to that, actually. We think in the last 3 or 4 months, risk is once again priced pretty tight. We committed a fair amount to credit in the latter part of last year and that’s worked out. But, right now, we are in a pretty conservative mode, and, if anything, we are increasing the credit quality in the portfolio. We have sold marginal names in the last 6 weeks.

And, in fact, on the margin again, shortened the portfolio a little over the last, what Bill, 3 or 4 months?

Yes. Duration has come down from the last quarter. Counting the short term, it’s probably at about 3.7, which is historically low for us and about where we like it to be.

Your next question comes from the line of Brian Meredith – UBS. Brian Meredith – UBS: Good morning everybody. A couple quick questions for you. First one, on the surety business; you talk about premiums down because of, obviously, construction activity declining, but what do you think that means for potential increase in loss activity over the next 10 to 12 months and are you reserving for any expectations of increased loss activity in that line?

The margins on those businesses continue to perform very well and we manage that book and we have managed that book going back several years very carefully. So from a historical perspective, our view of the credit scoring of those businesses is actually at a near all-time high. We feel, right now, it could deteriorate, we’ll see where that goes. But, from a historical perspective our credit outlook is very good. We certainly consider that and we take it into account as we price in reserve.

This is Brian. I mean, we’ve talked about this in the past, but our surety business, we are more involved with the ongoing operations of our accounts than in any other line of business and we understand your question and appreciate that in segments of the industry there could be concerns as contractors start to stretch and bid on jobs that they maybe normally wouldn’t do. We are really confident that that is not happening in our book and --

And to show you, actually, the level of attention it’s getting, because Alan started, Brian answered, and I’ll chime in a little bit too, here. What people often forget, particularly in a large construction surety business, is that we are dealing with partially collateralized obligations. Meaning, we have an obligation to finish a project, we have an obligation to finish a project that the contractor defaults, but we step in to the remainder of the proceeds that are obligated to the project from the owner. Which, in many cases, are governmental, state authorities, and things of that nature. And so to Brian’s point, the real core issue, the real core underwriting issue is: How good is the bidding? How aggressive has it become? And we are pretty good at being involved in the bidding process of our primary accounts. And then, being on-scene and on-site to make sure that the project doesn’t get upside down; to make sure that the payments are being made consistent with the project flow; the work is being done appropriately, because our risk stands in if it gets out of kilter; if the remainder of the proceeds can’t provide enough to finish the project. And so it is often misunderstood in the analytical community that somehow we have this enormous, uncollateralized exposure if someone defaults. That’s just not how the business really works.

For most of our surety clients, we understand their businesses and their exposures as well as they do. So we’re intimately involved. Brian Meredith – UBS: Great. Next question, can you give us your view on what you think the M&A environment is going to look like for the P&C industry for the next 12 months, and how does Travelers fit into that?

You probably have as good an insight into that as I do. Obviously, with the government stepping in, in the last 12 months, the way they have done. They have taken what would, I think, have otherwise been a more robust merger and acquisition environment and created lifelines for a number of companies to continue to do business. So again, I’ll come back to this. Our focus is just given what we’ve been able to do and how well we are performing, our focus continues to be what we can do internally. And we’re just going to keep doing this, and that doesn’t mean, as I say all the time, that we don’t look at things and we're not thoughtful about it. But we're probably the best acquirer in the business. We're certainly the most experienced. And so our view is that we have the skills to be able to do it if opportunities emerge. But on the other hand we also understand that the risk involved in those things is significant and we're always going to measure that risk against its potential return. But I don't know. It's just such a remarkable, unique, one and only environment. I'm just - obviously none of us have seen anything like this so it's very difficult to really understand what the next couple years looks like.

Your next question comes from the line of Ian Gutterman - Adage Capital.

Wanted to follow up on the retention and select accounts. I understand what you're saying that you've pushed pricing there. But pricing is up in really most of your lines and they're not seeing the same retention impact. So I'm wondering if there's a reason it's making more of a difference in Select. And to be honest, my guess is I would have thought it would have been better in Select just because you have more overlap there with Hartford and I would have thought with their troubles you would have had a lot of nervous agents approach you for book rolls and things like that that would have helped your retention in select. So can you discuss a little bit more why select had more of a retention [inaudible] than the other lines?

And there are really two separate issues to be discussed. The first is in Select Express the important element there is that the advent of that platform broadened out our underwriting orientation significantly. I don't have the statistics at hand but before we had select express the concentration of our business and what we referred to internally as the BOBS, businesses, offices, building and stores was significant. And Travelers Express broadened that out by a fair amount. And as a consequence we ended up much as we did in [Quantum]. And I do think of this as a [Quantum] like program. It's a [multivaried] program that's being applied in areas where our own expertise isn't - our own experience, expertise, good experience, not deep or unexperiences in deep. What we're seeing now is the beginning of loss patterns. And so we are getting a whole lot smarter very quickly about in some of these classes where we need price and where we can have price accommodation. And so what you're seeing on the small commercial business is a price-driven behavior based upon underlying data that we now see and can make thoughtful pricing decisions about and the impact that that's having on some renewable accounts in the marketplace. And that's to be expected. There isn't anything that's going on here that one wouldn't anticipate in the roll out of a new multivaried product that expands underwriting appetite orientation beyond historical patterns. So we're expecting it and for those who would ask if that's showing up. I would say predominantly that phenomenon is showing up predominantly in commercial multi peril in our Select Express business and nothing that we wouldn't have anticipated. The other piece of it is in the non - Select actually has two elements. There's the extraordinary flow business that flows into Express, very small accounts, not much touch. And then there's a larger end of small accounts that actually that we refer to as plus. And that business does require more of a union touch. The plus business we find ourselves and always have competing more with regional carriers, local and regional carriers who actually perceive that plus business as the equivalent of their middle market. And as the market has heated up a little bit we've seen some additional price competitiveness in the plus accounts. And as we do everywhere else, we kind of draw the line and we decide where we're going to respond and where we're not. And so the answer, Ian, is in those two elements. One being in Select Express as we drive our pricing strategy to more accurately reflect the pricing experience and one being in plus that perhaps, I'm speculating here, but it's perhaps indicative of a little more aggressive competition in that kind of regional market and middle market business.

That's absolutely correct. I guess the only other thing I would add is that while you'll see on Slide 10 the retention in Select moving down by one point, you also see the renewal premium change going up by two points, which is in fact driven in large measure by the pricing dynamic that's going on in the [inaudible] arena. So you can see both sides of the issue right there.

I guess I’m just looking year-over-year it's down from 82 to 79. Do you feel like we're towards, we're mostly through those two impacts? Or are we maybe in the middle and maybe it can tick down towards the mid 70s before it bottoms out?

I'd be reluctant to forecast what the retention would be going forward.

I guess I meant specifically the impact of the Express reunderwriting. Is that process mostly through?

I wouldn't refer to that as reunderwriting. It is clearly not reunderwriting. Actually it is much more about the same thing we do in every one of our businesses which is we get data, we incorporate it into our pricing strategy, we make pricing decisions. We do that every day. The only thing that's a bit different about Select Express, our classes of business that before the introduction of the product we didn't have the kind of in depth cost, loss experience, costing experience that we have in other lines. I don't know. I'd be speculating. We should get the answer and get back. We can have a view on that. It's now impossible. I just haven't thought about that and haven't spoken with Mark or anyone else to have a perspective.

Just the last part, the Hartford part, you haven't seen the ability or nervous agents asking you to take more business in select because of that?

I would say broadly. We've talked in the past about how we track wins, losses and how we're doing against our major competition and that is still a very, very positive picture for us. So we're seeing that activity with numerous names and continue to see it. I'd say as the economy has gotten a little less anxiety than it had three to six months ago there's probably a little less anxiety in our marketplace. But there's still a pretty strong concern with wanting to be with really solid carriers and worrying about the alternative.

The slides that we showed at investor day in terms of us being in a net gain position with really all of our major competitors…

This is Alan Schnitzer. I want to clarify a response to the question. It was a question about professional liability. And I just want to clarify that the disclosure in my response was related to a specific book of business within management liability. I wouldn't want to leave anybody with the impression that my comments related to the larger management liability business, for example, the private non-profit business, which is our largest book of business and the management liability business overall it's a much different, much more favorable profitability dynamic. So my comments were narrowly related to the professional liability book.

Operator?

Yes, ma'am? I'm sorry.

Last question from Larry Greenberg.

Mr. Greenberg, your line is open.

I know it's still very early in the initiative but can you share with us anything new, surprises relative to expectations in the direct to consumer initiative? And then secondly, it's been a little while now since the management change in personal lines and small commercial. Has there been any change in strategy or structure to that operation post that change?

Why don't I take the first and you take the second? There's nothing new to report on our director consumer initiative. We are clearly in the earliest of early days. It is an R&D program. As we promised, we continue to lose money on the program. That we're being successful in that regard. As reflected obviously in the package that you have, the long-term venture we've… Anne MacDonald is our new Chief Marketing Officer who is sitting at the end of the table and I'm now just more convinced that we're developing real insights, real perspectives on getting smarter. But there's nothing new in the initiative to report.

And on the management changes the short answer is that we're still moving along in the same direction as we were before. Greg Toczydlowski has been in PI and was managing a lot of those operations [technical difficulty] insurance group and so strategically, no, we’re just as we always have, we’re constantly tweaking things and looking to imrove what we do, but no, there hasn’t been any fundamental shift in strategy.

There are no more questions at this time so I’d like to turn the call back over to Ms. Nawi for closing remarks.

Thank you all for joining today and if you have any additional questions, please contact either myself or Andy Hersom in Investor Relations. Thanks again and have a good day.