Good morning, ladies and gentlemen. Welcome to the Fourth Quarter Results Teleconference for Travelers. We ask that you hold all questions until the completion of formal remarks, at which time you will be given instructions for the question-and-answer session. As a reminder, this conference is being recorded, January 22, 2015. At this time, I would like to turn the conference over to Ms. Gabriella Nawi, Senior Vice President of Investor Relations. Ms. Nawi, you may begin.

Thank you, Tina. Good morning, all, and welcome to Travelers’ discussion of our fourth quarter and full year 2014 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, Vice Chairman and Chief Financial Officer; Brian MacLean, President and Chief Operating Officer; Alan Schnitzer, Vice Chairman, Chief Executive Officer of Business and International Insurance; and Doreen Spadorcia, Vice Chairman, Chief Executive Officer of Claim, Personal Insurance and Bond and Specialty Insurance. 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 take questions. Before I turn it over to Jay, I would like to draw your attention to the explanatory note included at the end of the webcast. Our presentation today includes forward-looking statements. The company cautions investors that any forward-looking statement involves risks and uncertainties and is not a guarantee of future performance. Actual results may differ materially from those projected in the forward-looking statements due to a variety of factors. These factors are described in our earnings press release and in our most recent 10-Q 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 some non-GAAP financial measures. Reconciliations are included in our recent earnings press release, financial supplement and other materials that are available in the Investors section on our website, travelers.com. With that, Jay Fishman.

Thank you, Gabi. Good morning everyone and thank you for joining us today. As you have already seen from our release this morning, we closed out this year with record results. We achieved record levels of net income per diluted share for both, the quarter and the full year of $3.11 and $10.70, respectively. Our return on equity and operating return on equity were also very strong quarter, bringing our full year return on equity to 14.6% and operating return on equity to 15.5%. Just as important is what's behind those numbers. Across the organization, we couldn't be more pleased with how we have executed on our business strategies, including our approach to the marketplace in domestic business insurance, the introduction of Quantum 12.0 and moving our personal insurance business to be better positioned, the continuing evolution of our international footprint and our exceptional positioning in Bond & Specialty Insurance. Just as important is our capital management strategy. In 2014, we returned over $4 billion in capital to our shareholders through dividends and buybacks, while still maintaining our significant balance sheet strength. Reflecting on our performance over the last 10 years, now a decade since the merger, a few things stand out. When we introduced our long-term financial strategy in 2006, that is creating shareholder value by producing superior returns, driven by building meaningful and sustainable competitive advantages, generating top-tier earnings and capital substantially in excess of our growth needs and maintaining a balanced approach to rightsizing capital and growing book value per share over time, we were confident that it has been successful in the broadest sense beyond our expectations. Over these 10 years, our cumulative operating income has been approximately $31.6 billion and we have reduced our share count by more than 61%, returning $30.7 billion to shareholders…

Thank you, Jay. By any measure, our fourth quarter results, record net income per diluted share of $3.11, record operating income per diluted share of $3.07, operating ROE of 17.7% and a combined ratio of 85%, were very strong. As has been the case all year, these strong results were built on very solid investment and underwriting performance. Within underwriting, we continue to earn rate increases in excess of loss cost trends, which was the driver of 100-basis point improvement in our underlying combined ratio this quarter versus the prior year quarter, while experiencing only a modest level of cap losses and very strong net favorable prior-year reserve development. Pre-tax cap losses were $41 million in the quarter, down $12 million from last year's fourth quarter and pre-tax net favorable PYD was $351 million, up $92 million. While each of our business segments contributed to the favorable reserve development, it was primarily driven by Bond & Specialty Insurance's as contract surety business for accident years 2012 and prior. By business and international insurances, general liability product line for accident years 2008 through 2012. As I have been doing in recent period, I would like to provide you with a preliminary view of what our combined 2014 Schedule P is expected to look like when filed on May 1st. On a combined stat basis, for all of our U.S. subs all accident years developed favorably. Looking at the data on a product line, rather than on an accident year basis, all of our major product lines developed favorably in the aggregate across all accident years, except for relatively small amounts of unfavorable development in CMP and in personal auto liability. CMP developed unfavorably by approximately $68 million pre-tax on a reserve base of approximately $3.5 billion, spread out over several recent…

Thanks, Jay. Alan and Doreen are going to go over the individual segment results. Before they do, I want to make a few comments about our business and I will start with a significant progress we have made in personal lines. Three years ago, we discussed with you that we would be aggressively pursuing improvements in our financial returns in both, auto and homeowners primarily due to weather and auto severity trends. As we close out 2014, we couldn't be more pleased with the progress that we have made. We have taken necessary rate in both, our home and auto products while maintaining strong retention levels and we have tightened underwriting guidelines and made changes to terms and conditions in our homeowners' book. We also discussed that the increased utilization comparative raters by independent agent had resulted in a need to improve our competitive position in the auto market. To that end, we announced our production initiatives that would support the rollout of our new more competitive auto product Quantum Auto 2.0. We have now achieved our expense reduction goal and Quantum 2.0 is live in virtually all Quantum states. The impact from these bold actions on our results has been significant. Our homeowners' returns are in line with our target range and our top-line trends are improving. In auto, our returns are operating in a range that is acceptable to us given current market conditions. Importantly, our auto business is growing again and the higher new businesses creating long-term value, so overall, great progress in the independent agent channel. In the direct-to-consumer business, our decision to enter that channel reflected our belief that a large segment of the personal insurance market empowered by increased transparency of product and pricing information, would choose to buy insurance via the direct channel.…

Thank you, Brian, and good morning. For business in international insurance, our fourth quarter performance capped off a very good year, with operating income of $630 million in the quarter and more than $2.3 billion for the full-year. In terms of production results, in the U.S. retention rates increased throughout the year, stable renewal premium change reflecting gradual declines in renewal rate regain and improving exposure. We are very pleased with our execution in the field and I will comment more on that in a minute. For the full-year, the underlying combined ratio was strong 92.8%, a half-point improvement from the prior year. While earned pricing in excess of loss trend contributed favorably to year 2014 results, there was also negative impact of about 1.5 for non-catastrophe weather and large losses relative to the prior year. The underlying combined ratio for the quarter was 93.9%, up 40 basis points from the prior year. The underlying loss ratio improved 40 basis points driven by the earned impact of price increases exceeding loss trend, partially offset by large losses in non cat weather. Impact of large losses was about a 0.1 in the quarter, arising out of our international business. We see this as a normal level of large loss volatility. Expense ratio was a little higher year-over-year, due to the effects of some favorable expense items in the prior year quarter. Turning to production, we had a very strong quarter in PII with net written premiums up over 6% from the prior quarter, driven by our middle market business and inclusion of Dominion for the full quarter. In domestic BI retention increased to 83%, while renewal premium change increased somewhat from recent quarters and new business was up about 6%. These production results reflect what you have been hearing from us…

Thank you, Alan. Good morning to all. Bond & Specialty Insurance had a great quarter, rounding out a strong 2014. Both, the fourth quarter and full-year results, are record earnings for the business and we are very pleased with the financial returns in this segment. For the fourth quarter, operating income was $216 million, 24% higher than the fourth quarter of 2013, while full-year income of $727 million was 27% higher than 2013. The increases from prior year were predominantly driven by the higher levels of favorable prior year reserve development that Jay Benet referenced earlier. The underlying combined ratio for both, the quarter and full year were strong at 84.1% and 82.2%, respectively. The quarter was slightly higher than 2013, due to a modest re-estimation of prior quarter losses. The full-year result was 2.5 points better than 2013, due primarily to benefits from existing our management liability excess of loss treaty. While there will always be some ups and downs in the year-over-year variances. I cannot emphasize enough how terrifically feel about the results, in particular the underlying fundamentals of how we achieved them. As with all of our businesses at Travelers, we remain committed to superior underwriting performance of our portfolios through aggressive management of risk and limits, including enhanced segmentation, underwriting analytics and claims management. Turning to production, net written premium for the quarter was $525 million, a decrease of 5% compared to the prior year, due to the exit of our management liability excess of loss treaty in the fourth quarter of 2013, which increased that period in net written premium. The non-renewal of this treaty in 2014, together with higher surety volume, drove 4% increase in net written premium for the full-year. Across our management liability businesses, retention of 84% was consistent with recent period…

Thank you. Tina, we are now ready for Q&A. I would ask you all to please limit yourselves to one question and one follow. Thank you.

Thank you. [Operator Instructions] Thank you. Our first question is from Randy Binner of FBR. Please go ahead.

Great. Good morning. Thank you. I wanted to touch on the commentary around rate increases now moving below the increase in exposures. I appreciate the commentary that, I think you think you feel like you are getting rate ahead of loss cost and you are more focused on retention there, but a couple of questions. One, I assume there is going to be competitive profits to keep retention, so any new initiatives there or any more color on how you plan to keep retention higher. Then, as far as the absolute rate increase number we all watch so closely, I guess, I mean, is by definition we have to see that continue to moderate if you are achieving the rate adequacy.

Hi. This is Jay. Alan and I, I think, we will tag team this. First, just to be clear about rate gains, first, I assume you are speaking about our business insurance segment. I think, what Alan said was in our best-performing segments of that business, talking really about the middle-market predominantly, but it goes even beyond that. In our best-performing business, we continue to experience, let's call it, flat to upper point in terms of rate. Now, relative obviously an overall loss trend for that segment, it is not keeping pace with it. I would tell you that we are not attempting to. That is not our principal focus. Alan also said that in the poorer performing classes that rate gains there continue to exceed loss trends, so that's where we are. The reason I said we are not uniquely focused on that is that we are a return-driven organization and we ask of folks who have managed this just excellently to remember its agency relationships, its customer relationships and it is how you manage your business over time that matters. We start off with returns over time, that translates to account management over time, so if an account has had, and I am speaking very, very broadly here, but if account has had three years of increases and they have been a good account and we value them, we tell our people that there's nothing wrong with renewing that flat. It doesn't mean that if there's an opportunity to do a little better because circumstances suggest it, claim activity rising or otherwise, but they should attempt to do it, but that we manage our relationships and returns on accounts over time, so I suspect report, I part that if we are right about the cycle dynamics that you…

Randy, it is Alan Schnitzer. Let me also address both of those quickly. Industry observers tend to focus very narrowly on rate change and the long-term estimated loss trend we give you, and I would remind of comments during the quarter, which is there is a component of price change, which includes exposure that from a return perspective and from margins acts like rate, so we don't look at the narrow GAAP between rate and loss trend may be quite as precisely as industry observers do, and there is always variations quarter-to-quarter in weather and large losses and all those sorts of things that create volatility plus or minus within an expected range, so we are really in a pretty tight band. In terms of retention, I would have given you the same comments Jay did about our efforts, and I would highlight a real competitive advantage that we have. This is not us needing to do anything else. We have got an extraordinary deal capability, we have got great presence in the field, great tenure in the field, we have got great relationships, we have got great related services like our risk control and it is those sorts of things not developed this month or this quarter, but over many years that give us the ability to manage retention in a way that we think is most productive from a profitability perspective.

I would add. Again, that is exactly right. It is not uniquely a price discussion. It is important; it is only one element of long-term relationships and management. Lastly, at least through the third quarter, obviously with the first one out in the PC business this quarter retention is what I would consider all the quality companies they are all high. It is not that we are describing a set of circumstances that are unique for us. We think we manage it better than anybody else and maybe that is sort of our own pride in it, but the fact is that it is not our business that has been stable. It is broadly speaking, the industry's that has been stable and that is what so important.

Very helpful. Just one quick follow-up and that is for Jay Fishman on stair step comment on rate. I didn't quite follow how that fit in a conversation, but I think you are saying is the good part of the book becomes more rate adequate. The places where you are trying to seek rate increases may have kind of a bigger impact on a quarterly basis on what we see for rate change. Is that what you meant by the stair step versus the trend?

Yes. I did, but the second part of that is that at the account level you may see a year, two years where in an account renew is flat, and then there is an attempt to recover, if you will, some of that loss margin relative to loss trend on that account. We are not a company. We have not issued an edict to the field that says get trend on every account. That would be a dumb thing to do. We say to them manage the long-term return given everything you know about the agent, the account, profile of that account and manage it thoughtfully and if that means that account is going to renew flat for a year or two, that is okay, so that is really the comment about stair step that I was speaking to.

All right. Very good. Thank you.

Thank you. Next question please?

Thank you. Our next question comes from Jay Gelb of Barclays. Please go ahead.

Thank you and good morning. Jay, I know this is somewhat of a sensitive topic and I hope you are feeling well, most importantly. If you could update us on the health condition that was disclosed several months ago, along with any update in succession plans, that would be helpful initially. Thank you.

Sure. I appreciate the question. I have no sensitivity about it by the way, none at all, so first, thank you. I do continue to feel okay. I am here, I am on the job, I am still mobile. It's a little clunkier than it was and everybody here is helpful above and the call of duty and making sure that not only I can continue to do my job, but everybody here can continue to do theirs. As I disclosed, and someone asked me why did I disclose it, and the answer is because I needed to, to continue to do the job effectively. It was becoming apparent for those who were around me a lot that something was amiss and it was prior leave people in confusion and doubt or provide some clarity with respect to my circumstance. I have chosen not to be specific about the ailment really in respect of my privacy and my family's privacy and just do not think that it really matters a whole lot. Its relevance is I am 62, there isn't anything about my circumstance that causes me to change my view of my ability to continue work here as I did, I have something else to say, so the horizon is unchanged in that regard. We have been an active succession planning company for a long time and pretty transparently. If you look and see what we have done and what we have announced, it doesn't take a real genius to see what we are doing and what the next generation of leadership here is. I chuckled where 62 is kind of a magic number here Brian 62, I am 62, Jay Benet,62 Bill Heyman is 60-plus, so it is just that responsibility falls on us to make sure that we do this seamlessly, seamlessly. I would tell you that a board knows virtually everything. I have been completely transparent to them, and to the extent anyone really is interested, I have already begun to cut back fairly meaningfully on my non-travelers commitments and I will continue to do that, so that I can focus exclusively maybe, but there [ph] things are not going to give up, but to focus relentlessly on what matters here, so that's the news of the day.

I appreciate that. Thank you. Switching gears for Jay Benet, the capital return in 2014 for Travelers was 112% operating income, including dividends and buybacks. How should we think about that for the years going forward?

There is really no change in the philosophy, there is no change in what we have said in the 10-Ks and Qs, earnings are going to drive what we are able to return subject to the number of items that we list and contributions being one of them. When you look at a particular quarter, you are going to see the ebbs and flows of what has taken place in terms of earnings from prior quarters, making the determination as to how much in particular in that quarter we will be able to return to shareholders, so there is no change in philosophy, no change in the kind of basis upon which it is done, all we were seeing is some excess capital actually that we ended the prior year with, working its way into the share repurchases in 2014.

Okay. Thank you.

Thank you. Next question please?

Thank you. Our next question comes from Michael Nannizzi of Goldman Sachs. Please go ahead.

Thanks. Jay Benet, I was wondering if you could follow-up a little bit on the development, maybe give us a little bit more color, maybe the breakdown between surety and GL. I am more interested in GL but on the surety piece how much is the non-renewal of that management liability treaty. How much of the impact of that has already come through. Then on GL, just trying to some idea on that '08 to '12 accident years, where are the most recent alternates on those books of business as compared to where you are looking in that business today. Thanks.

I think some of that is a level of granularity. You will probably see when we file the Schedule P. You know we are in the process of summarizing all that data, so to give a very detailed information at this point in time, I think, would be a bit of a mistake. What we are trying to do is, give the overall picture as to how things have developed and in terms of the individual products, the individual accident years, so what we are trying to communicate was yes there was major shift in anything that affected PYD. As far as your specific question on the surety reinsurance, that has no effect on development. That's a contract that was in place that was looked at in terms of its cost benefit and we decided that it was not really something that was achieving the objectives and from a profitability standpoint and a risk standpoint, we would be better off not having it, but that really had nothing to do with PYD.

Okay. Thanks. Then just on expenses, the ratio in BI kind of dropped in the back half of last year and kind of stayed at that level first part of this year and now we have risen now to 32.5-ish range. Where should we expect to see that? I mean, is that where, you know, I am thinking about whether it is Dominion or something else? I mean, is there an opportunity to kind of bring that back down to what we were seeing over the trailing 12 months in the second quarter or is that where you expect to efficiently run? Thanks.

It is Alan again. If you look at the full year expense ratio, I think it was 30, 31.5 and that had a benefit in it from the first quarter that we disclosed then. That was on the year worth about half a point. If you adjust that first quarter event and have that half point again, round numbers that sort of what we feel like would be a fair run rate.

Sorry. The benefit, remind you also workers' compensation state assessment liability that we talked about…

We had a reduction in estimated liability that we announced in the first quarter and we quantified it, so you will see it in our press release and 10-Q for the first quarter, so that really was the anomaly this year, so if you add that back in and look at the full year, round numbers I would say, it is always going to be up or down a little bit for one thing or another, but that will give you sort of a ballpark.

Got it. Great. Then last one for Jay Fishman. Is there anything that you think could happen in the reinsurance market as far as evolution or innovation that would allow you or how you to consider pursuing more growth in catastrophe exposed areas utilizing reinsurance or is that something at this point that is still not something that you foresee. Thanks again.

Sure. It is irrelevant question of course. First, we are engaged, involved and looking at lots of different things. The specific question you asked is, are you prepared to build primarily exposure and rely on a reinsurance profile that may or may not be permanent to produce an effective loss profile and there is the potential of mismatches there are substantial. Meaning, on the primary side very difficult to non-renew. Reinsurance, obviously, to be non-renewed instantly, when that happens, even if you pursue a primary non-renewable strategy, that 12 months where you had to think where the primary exposure sits and the reinsurance is simply not there anymore, so that is an arbitrage that I think as a potential mismatch to it that's concerning. Now, if reinsurance pricing were to drift low enough, in my judgment it is not there yet, you might sit there and contemplate doing that, but I would say that the mismatch risk there has real shareholder value attachment to it as well as regulatory. I mean, imagine trying to non-renew a significant enough book of business, where you would actually do this as a strategy as opposed to an operate tactic. It would be very disruptive, so I think not in that regard, but it doesn't mean that there might not be other opportunities and we are sure pushing it around. It is not obvious to us yet. Pluses and minuses, these things will have certain complexities to them, but it is not obvious to us yet that there is some magic, a dynamic there that has happened, the changes, the fundamental underlying economics of being the primary business. Now, maybe it keep going in that direction, but - not yet.

Great. Thank you so much, Jay.

Thank you. Next question please.

Thank you. Our next question is from Josh Stirling of Bernstein. Please go ahead.

Good morning, Jay. Glad you brought up the St. Paul Travelers' deal. I think it is really interesting topic for us to talk about today. Going back 10 years, people were not sure about the deal, but it has obviously been a fantastic success. As we are seeing a new wave of consolidation, I am curious to hear your perspective on the M&A we are seeing in the market today? When you think about the opportunities you guys are presenting, I am sure you have had a lot of opportunities to consider and debate this, and I am wondering more specifically, you have made a couple of smaller investments in the past couple of years. Should we expect you to do more of these as stock buybacks become more expensive in your multiple runs or alternatively should we expect you potentially to be more of a material consolidator in the small and mid-cap consolidation rate that seems to be starting? Just would love to get a sense how you think about capital priorities here.

It is a really good question, so let us break it into a couple of component parts. First, on the international horizon, to the extent and the Columbia situation was a pretty good one, I think, Dominion even though it was a $1 billion trade, to the extent there are opportunities to do things of that nature, where a business is either relatively new or underperforming and we think that collectively locally and what we bring ourselves, we can improve it, we will continue to look for those opportunities. It is they are increasingly harder to find, driven in some measure by the economics. Much of the economic environment outside the U.S., as well as the general competitive environment that exists outside the U.S. There are lot of areas where you would say kind of the last thing you want to do is, be competing there, and that was just not been in significant list, but nonetheless to the extent that opportunities present themselves in international front, we will we will most certainly look at them. I would not contemplate, by the way I could be completely wrong here. Meaning, you are asking me for an outlook, I am giving it to you today, that doesn't mean that we could change, but I would not contemplate that those would be large transactions. I do not know how one would look at Dominion. I do not think of it as a large transaction, meaningful, but I would not contemplate that international front, what would be that. We really have no interest in the reinsurance business in the broadest sense, so to the extent that there are the things happening in the arena Bermuda or otherwise, we largely do not pay attention to it and I do not really have a view…

That is helpful, Jay. Thank You. If I could sneak in a quick one on pricing, so look I get that it used to be very cyclical industry and you have become much more data-driven and the company is more disciplined. If you are in the trenches in you are an actuary and underwriter, should we be expecting that generally a good - be able to cover their cost over the next couple of years, raising pricing you know 2%, 3%, whenever that entails or is that just kind of unrealistic, but it is still competition and capacity still matters and basically the market price is going to be driven by the more aggressive guys who probably do not do as good a job managing their business and they cut the market price to reduce margins, and sales and shift top-line growth?

I am always hesitant to speak for any other company, because I can only from the outside in proceed how you are manage their business, but I can speak to what we do and how we run our business. Underwriters will do, good ones, will do with precision what you ask them to do, so you better be really good at knowing what you are asking of them. We have taken the view, when I might - from the outside looking in is that we are not unique in this regard others too. If you tell an underwriter grow, they will. We don't tell them that, we tell them to find thoughtful ways to deploy capital. If they cannot, it is okay. It's okay. No one will ever be asking you why they did not meet their volume budget, because first time you asked them that they will meet at the next quarter and all of us understand that you would never speak to loan officer that way at the back. You would not say to a loan officer here is your volume goal and the torpedo is full speed ahead. If we do not perceive that there is a lot of difference between that risk profile and speaking to field underwriter, so we value their judgment and their insight and the data and analytics that we have in front of them to make thoughtful decisions to own the account, to think about do I want that account in my portfolio for the long-term, and what will it do to the return of my portfolio in a collaborative environment of the type that we have here. Really I cannot underestimate, I cannot overstate rather, I am sorry. I can't overstate how different that is than it was 20 years ago.…

Thank you, Jay.

Tina, next question, please?

Thank you. Our next question comes from Jay Cohen of Bank of America Merrill Lynch. Please go ahead.

Yes. Two quick questions. Maybe the other one a little bit last, quick. Since we have had a notable drop in interest rates, if you can give us a sense of what the new money yields look like for your portfolio versus the portfolio yield today?

Well, Jay Benet has given you an idea of what our expectations would be over the next two or three years due to the drop in interest rates. We did that in the back of the envelope last night that is already, but last night the new money rates were about 50 basis points lower than the rates Jay was using in making his calculation which would equate to about $20 million after taxes of lower earnings, $20 million a year, the delta. This morning the tenure rate is up a little bit, but that $20 million is $15 million or $16 million, but there is no question that these rates are lower. Last year, as we look at our investment results, which including 2013 much to our surprise, they did so notwithstanding the fact that their rates were lower than our projections at the beginning of the year. We made for this year a new set of projections, which already looks 22 days in, but we are not [ph] in yet, but nonetheless about $20 million a year different.

That’s was Bill Heyman speaking.

Right. The tenure is actually down a little bit today, but at the end of the call - who knows. Second question, if we could get more color on international price change. We saw the premium change, but obviously I think exposure, but what's happening from a pricing standpoint in your major international markets?

I do not have this slide in front of me right now, but I think it is in the webcast. You are talking about rate internationals?

Yes.

I would say what is there in RPC is split probably pretty evenly between rate and exposure.

Okay. You are still getting overall increased internationally?

We still have an overall positive renewal rate change in international, yes. The other thing I would tell you about our international relative to U.S. is our outlook for loss trend in outside the U.S. it is lower in the U.S., because we do not have the same level of exposure to the medical inflation.

Got it. Is that being helped by Canada, the rate change?

Yes. I would say the rate in Canada is a higher end of the spectrum.

Got it. Thanks Alan.

Great. Tina next question please?

Thank you. Our next question comes from Larry Greenberg of Janney Capital. Please go ahead.

Good morning. Thank you. I am just wondering if you can characterize how non-cat weather and large losses came in for the full year 2014, relative to what would be viewed as normal?

It's Alan Schnitzer. I do not know if you are talking about business insurance, but I will started in and turn it over to Jay maybe for a - if we grew cats, did you say cats…

Non-cat

The stuff that would flow into underlying...

Yes. Certainly above expectation and above the prior year.

Yes. I think when you look at the entire company, because this is going to be yes, it is like what you are asking if that large losses non-cat weather, they are going to be episodic, there are going to be dependent upon geography and things of that sort. When you look at the entire company, I do not think that this year 2014 was all that unusual a year as it relates to weather. I am talking non-cat weather now. When you look at BI, when you look at, I am talking non-cat weather now. You know when you look at PI and BI combined, it was probably pretty normal although BI was a little higher and PI was probably a little lower in terms of what they might consider to be normal. I think when you make the contrast to last year, which gets you away from an expectation and gets you into the weather and large loss activity of last year, meaning 2013 versus 2014, now there are I think 2014 was a little worse than 2013, but still a good year. Hopefully that is helpful.

Yes.

What we tried to do in the press release was to provide you not with the data, because it is difficult to measure these things but to adopt the phrase of normal variability in loss activity from quarter-to-quarter try to accommodate the sort of thought process and get away from the - Now, is it good is it bad, it is going to vary. Hopefully, when you get to a full year, some of the variances is less pronounced.

It's a challenge for us to estimate normal non-cat weather. It is easier for us to speak about non-cat weather this year compared to last, this quarter compared to last year's quarter, but it has been exceptionally difficult for us to come to what would be a normal non-cat weather numbers, so we have a hard time speaking to it that way.

If I could just add, an example of what makes it difficult, you have times when given the granularity of what we look at, you will be looking an information and say well large losses activities is up somewhere. Then you get into and why is it up, well because slips and walls [ph] are taken, but the slips and walls, because of the weather. Yes. It is a very difficult bucketing process to end up summarizing all of this data and what we try to do is give you the concepts of what taking place.

Great. Now, that is helpful. Then on direct, I listened to what you had said earlier about continuing to invest in that business. The last couple of years, you have generated statutory underwriting losses of about $100 million from the businesses growing top-line a bit, you are getting a little bit of scale economics probably. I mean, when we think about that over the next few years, is that sort of the normal run rate of what expectations should be? I mean, is there going to be a drop in investment spending somewhere out there?

Well, this is Jay Fishman. I do not have a better number if I were looking out and one we are experiencing now and. To the extent markets change, certainly have not changed, obviously our strategy will, but if we start off with the premise that - when we started this investment, we said it. We said we were less concerned than some industry observers if a typical Travelers customer would go to buying direct, but we were not ready to bet the trumpet [ph] and therefore ignore the trends, so the development has been important. It is not apparent to us yet that there are enough Travelers-type customers who choose to buy direct or a direct business is scalable on it owned. It is not that we don't know how to get people to respond or how to quote and had issue, we would become really, really good at that that. It is that the number of people that we would think of as the customer that we seek are not choosing to respond that way, now that may change three or four or five years from now. It is a trend. I don't think it is appropriate to ignore it, so we will continue to develop the expertise and the skill, so that if in fact things change and there is a market opportunity for us, we are in a position to respond and we are not… The other point I would make and I do not know how to quantify it for you, but I would tell you that the benefit to the agency business, the investment, the technology and the underlying customer reach attributes, the ways customer connects to us, our ability to respond as and as a, I will call it an electronic company, for lack of a better term that has just been invaluable. I don’t know how any dollars it meant in the agency business, but I do know it is important. As I would remind everyone, I am not so unhappy that, that the Travelers' customer has not turned away from the agency channel as quickly as some people though. That is good for us. We have got a very big agency based business that is very profitable. If that change continues to occur more slowly, that is just fine with us, so this is a kind of a hedge your position investment that is necessary, because it is just not clear that it will continue this way, but I would say, yes. That is what I would certainly included if was..

Great. Thanks for your comments.

Great. Thank you. Tina, this will be our last and final question please.

Thank you. Our question comes from Brian Meredith of UBS. Please go ahead.

Yes. Thanks. Just two quick ones here. First, one for Alan and Jay, if I look at the business insurance business right now, and we look at the returns that are generating, they are pretty attractive right now. Is there any consideration or thought about having underwriters expand their risk profile right now kind of looking maybe into the E&S market a little bit, I know there are kind of ebbs and flows with the cycles. Also loss trend continues to be pretty favorable, so I think that is an area for growth?

Yes. Brain it is Alan. I guess the way we would think about that is, we are always challenging ourselves to think about whether there are new marketplace opportunities, but I would distinguish that from changing our risk profile to do it. If we could find opportunities whether it is in energy or whether it is in E&S or any other market, we would certainly look at it, but that would not involve any change in our return thresholds or our risk appetite.

Got you. Okay. Then the second one is for Doreen. Just looking at the homeowners, continued to see the declines in PIF, any thoughts on when that could start to stabilize or maybe start to trend upwards and what impact do you think the decline in PIF in the homeowners business is having on your auto insurance growth here?

Brian. Good morning. I will answer that with a couple of different comments. We put some, as Brian referenced in his comments, due to some of the weather that we were seeing coming through the book and just where the levels of deductibles were and roof issues, we took some pretty strong actions in the homeowners' book. Some of our declines there were deliberate, whether it might be some concentration in some areas, so it was not unexpected to us that we would see some shrinkage. That being said, we feel really great of that we have come through the other side of that where our deductibles are, where the PIF is. The rest of the market probably was not as aggressive as we were in addressing property, but from where we are today and launching forward, we are very excited about that. We feel like we have got just a great launch point on that, because we look at account underwriting, there is no question that when there is pressure on one product, there might be some impact to the other product around either new business or retention. We have seen with QA 2 as we have become more competitive there, that we think that has allowed us to start growing the home line again. We are still in a negative position, but I can tell you that for 2015 and beyond that is going to be a very strong focus of ours, whether it is going to be how we do digital marketing, leading with some of our home capabilities, because we think they are industry-leading, whether it is to look at some different kind of practices in the quote process or an overall customer view, so we can utilize the strength in the property line to actually get not just more homeowners business, but more customer business for the Travelers. We knew that homeowners was going to be, the recovery was going to follow auto, so we are in the spot that we thought we would be and there is a lot of focus on that.

Great. Thanks for answers.

Thank you. At this time, I would like to turn the call back over to our speakers for any closing remarks.

Great. Thank you all for joining us today. As always, I will be available for further follow-up. Thank you and have a great day.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect all lines. Thank you and have a good day.