Good morning. My name is Keesha, and I will be your conference operator today. At this time, I would like to welcome everyone to the Hartford Fourth Quarter 2011 Earnings Conference Call. [Operator Instructions] Thank you. Miss Purtill, you may begin your conference.

Thank you. Good morning, and welcome, everyone, to the Hartford's Fourth Quarter 2011 Financial Earnings Conference Call. The press release, financial supplement and slide presentation for today's call are posted in the investor information section of our website. Liam McGee, The Hartford's Chairman, President and CEO has some opening comments, after which, Chris Swift, our CFO, will provide a financial overview. We will then open the call for questions. Other members of our senior management team are also present for our call, including Doug Elliot, Alan Kreczko, Dave Levenson, Andy Napoli, Bob Rupp and Hugh Whelan. Please note that as discussed on Page 2 of the presentation, any statements made today concerning The Hartford's future results or actions should be considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future performance, and actual results may differ materially. We assume no obligation to update these statements. You should also consider the important risks and uncertainties that could cause actual results to differ, which are listed in our press release, our third quarter 10-Q, 2010 10-K and other filings we make with the SEC. In our presentation, we use some financial measures that are not derived from Generally Accepted Accounting Principles or GAAP. Definitions and reconciliations of these measures to the comparable GAAP measures are provided in our financial filings. I'll now turn the call over to Liam.

Thank you, Sabra. Good morning, everyone, and thank you for joining us today. Last evening, we announced fourth quarter results that were in line with what we discussed in December, with book value per diluted share up 17% over the last year. Results were improved from the third quarter, but 2011 was a challenging year with the weak macroeconomic environment and unusually bad weather. We're encouraged by some of the recent economic developments. Domestic business activity, employment data and consumption trends all suggest a return to moderate GDP growth. And the European Central Bank's additional support measures have had a positive impact in the marketplace. But we remain cautious about the operating environment for 2012. Many of the factors -- low interest rates and market volatility -- are likely to continue to have some impact in 2012. So given this environment, as we said in December, we are aggressively managing the levers within our control to increase profitability and generate shareholder value. Across the organization, as you'll hear, we are prioritizing profit over sales volume, driving greater expense efficiencies and growing where we are generating appropriate return. In Commercial Markets, we achieved accelerated rate increase across most P&C Commercial lines. As we expected, pricing crossed the inflection point and exceeded loss costs for most of our lines in the fourth quarter. As these written pricing changes earn in over 2012, we expect to see margin expansion throughout the P&C Commercial portfolio, particularly in our Middle Market book. Doug and his team have accomplished a great deal since his arrival. They're making material improvements across their business like building our property capabilities to move us to a more diversified P&C Commercial book. We now have dedicated property specialists in each of our Middle Market regions. And in addition, we've hired several…

Thank you, Liam. Good morning, everyone. I'll begin on Slide 5. As Liam mentioned, fourth quarter results were in line with the outlook we provided in December. We saw areas of good performance throughout the ongoing businesses that provide positive momentum for 2012. Fourth quarter core earnings were $339 million, including a $47 million DAC unlock benefit. On Slide 5, you'll see several items that adversely impacted core earnings this quarter. These items totaled $69 million, including several items that I estimated at our Investor Day. The principal difference was that the original estimate was for catastrophe losses, which totaled $14 million pretax. During the quarter, we had $39 million of new cat losses that were offset by $25 million of favorable development on second and third quarter cats. This compares to our fourth quarter estimate of about $50 million. In addition, we had favorable DAC unlock of $47 million. At Investor Day, we estimated fourth quarter core earnings would be between $0.80 and $0.85 per diluted share. Adjusted for the items that we just discussed, actual results were $0.83. Returns on alternative investments, which are volatile, were essentially 0 in the quarter versus $67 million pretax in the third quarter. Fund valuations were negatively impacted by third quarter equity market performance. Given the typical one quarter lag, we'd expect alternative returns to rebound in the first quarter of 2012. On Slide 6, we have broken out fourth quarter core earnings into our ongoing and Runoff divisions. These numbers exclude the Corporate division, which reflects holding company interest income and expenses. Going forward, we'll provide you with this breakout on a quarterly basis to clearly show the earnings performance of our ongoing businesses. On Slide 7, book value per diluted share rose to $47.25, an increase of 17% over the…

Thank you, Chris. [Operator Instructions] Keesha, could you please poll the call for questions?

[Operator Instructions] Your first question comes from the line of Jay Gelb with Barclays Capital.

I had 2 questions for you. Thanks for the update on the -- what you view as the challenges to separate the Life and the P&C companies. And you talked about the financial reasons why it may not make sense, but I'd like to hear your thoughts, strategically, whether you feel these 2 operations should still be together.

Thanks for the question. As we said, and I think Chris's comments were pretty complete in addition to the slide, there are significant challenges to making a split possible. We're not unaware of some of the potential benefits if it was possible in terms of greater focus, but it's, in our view, the challenges are fairly significant at the present time.

Okay. And then as a follow-up, Liam, in terms of the process, in terms of looking at which units are potentially underperforming or need to be reduced in presence, I mean, when will we get some more news on that?

Well, Jay, let's go back to -- thanks again for the follow-up. Let's go back to our December investor conference, and as you recall, in my remarks, I did break the company down into a portfolio businesses, I think, at a fairly granular fashion, then I made comments on each of the businesses in terms of, first of all, where it stood relative to its current returns and our growth, or profit maximization, strategies. And as you recall, in the top right quadrant, there were a number of businesses that have actually very current attractive returns, and we're trying to grow those because we can do so profitably. And then some of them, in the middle to bottom left, that have below optimal returns today, and we're really working hard to maximize the profitability. Since we met with you in December, I would say this team is working on that very thoroughly, very rigorously, and we have a sense of urgency about doing that. Because first of all, we're not -- we don't believe the current stock price reflects the value of the company. We're evaluating these businesses individually by their ROE, their capital generation and their future capital requirements or capital consumption, their risk profile and their growth potential. And what I'll say is we're being objective, rigorous and thorough about the types of actions that might enable us to achieve the goal of increasing shareholder value, and I think we'll keep you informed as we make those decisions.

Your next question comes from the line of Chris Giovanni with Goldman Sachs.

Wanted to draw down a bit more just on the commentary regarding the strategy that you alluded to in December. Can you maybe just put some parameters around what this may or may not include? And then how are you thinking about sort of balancing your review, sort of, with kind of the voices you've been hearing from investors in terms of their patience and in terms of generating shareholder value?

Thanks, Chris, for the question. I think I commented pretty extensively in the prior question about the process we're going through. I'd add a couple of other things. First of all, in this environment, this management team is very focused on managing the levers that we can control. I think the progress we've made on making the company more efficient in '11 and will continue to do so in '12 and '13 are appropriate and necessary in view of the current low interest rate environment and the market volatility. The balance sheet is much stronger today, starting with the investment portfolio. The progress that we've made there over the last 2 years, number one. Secondly, the transparency we gave you in October around our balance sheet. Japan, our overall VA book, our ability to withstand stress scenarios. I think our risk management, enterprise risk management, is much stronger and enables us to manage the company better. And we are seeing benefits as a result of our 3 customer-aligned businesses. Just to reiterate, the management team does not believe that the current share price reflects the value of the company. I think we've -- to your point Chris, we've heard that from shareholders, and we've heard it from some other observers, and I think that's why we're communicating very clearly that we are -- we will be objective and pragmatic about the types of actions that may best enable our goal -- to achieve our goal of realizing greater value for shareholders.

Okay, that's very helpful. And then, just wanted to follow-up on sort of Slide 17 here, I guess focusing more on the Life side of things. You point to kind of not having infinite patience on the VA business and potentially doing something. And you alluded in December that you wouldn't rule out putting that into Runoff. So I guess if you put that into runoff, you'd have a lot of the Wealth Management business in the Runoff block, so why would there be such an intense focus on preserving the single A rating if so much of the business was in Runoff? And could you look to then potentially sell some of the remaining attractive assets like the Group or Mutual Fund business?

Well, Chris, I -- Chris Swift may have some comment on this as well. I'd just remind you that -- first of all, let's talk about the VA business for a moment. We're well aware of the questions about our strategy in the U.S. VA book. I think in short, we believe we have the components we need to succeed in the business. Distribution, new products that have been out relatively short period of time and, as Chris noted, some period-over-period momentum, and we're seeing signs of that continue early on in the year. In addition, the macro environment appears to be shifting in a way to it'd be more favorable to the types of products that we're offering. However, and just to reiterate what I said in December, I think I was very clear on this, to your question, we are managing the business very closely, watching the trends. David Levenson, I think, is watching them very closely. Our timeframe, as I said in December and as Chris reiterated, is not unlimited. And we do need and I need to see meaningful progress in profitable sales in the near future. So I think that's very consistent with the tone and the statements that we made in December, and I think an appropriate position. In terms of ratings, I'll just say at high level. First of all, I think the notion that if we were to decide to put U.S. VA into Runoff, that it would create immediate material amounts of capital liberated is not true in our view, number one. And number two, remember that we have other businesses -- the Mutual Fund business, the Life business and the Retirement business -- that are very ratings sensitive, and we would -- if we were able to do that scenario, we would not want to do anything that would destroy their value. Chris, anything you'd add to that?

No, I think that's well said, particularly on the businesses. I think the only other point on allocating 1/3 of the debt to the holding company. Chris, I think you remember that we believe statutory earnings and capital generation, particularly in the near-term '12, is limited. So allocating almost 2/3 of the holding company debt is probably even aggressive on the surface. But Liam, I think your points are good as far as the impacts of other business if those decisions are taken.

Your next question comes from the line of John Nadel with Sterne Agee. John M. Nadel - Sterne Agee & Leach Inc., Research Division: Two quick ones. So just to follow-up real quick on Slide 17. I guess my question is, it seems like debt allocation or just debt levels might be an impediment here or might be one of the most meaningful impediments here. So I guess it begs the question, why not spend your excess capital, instead of on share repurchases, on debt paydown, at least to provide some optionality to you?

Yes, John, it's Chris. Thanks for the question, and -- the debt restructuring is a priority for us. I think given how we've defined deployable capital in the past, roughly about $500 million, we've targeted the share buyback as a higher priority, the most accretive to shareholders. But the debt restructuring and its associated impact on earnings and leverage is high on the list, and it's something that we think about very aggressively.

Well said, Chris and I think it's not only from a flexibility perspective, John, but also just a carrying cost perspective on some of the components of our debt that you're well aware of. So I think the management team is very focused. We're proud of the strengthening we've done on the balance sheet in the first couple of years, but your question is a very appropriate one that Chris and I and the management team are factoring in, things like share repurchase, potential warrant repurchases, etc. John M. Nadel - Sterne Agee & Leach Inc., Research Division: And then just a quick one on the Life company capital. Certainly, given strong equity markets in the quarter, I was pleased to see the $300 million improvement in the statutory capital from the VA business. Obviously, interest rates remain a pressure point. Following the moves in the Life company statutory capital and the reserves, where would you estimate the risk-based capital would come in for year end?

Yes, John, it's Chris again. I'd say thanks for noticing the decent recovery in VA. I would also just point out that as we closed out year end, particularly in the life insurance business, so we updated our cash flow testing analysis, and that created a little bit of a headwind for us. But when you put it all together, we wouldn't estimate that our main company is -- RBC is between $415 million and $420 million. Our capital at White River Re is well in excess of $125-basis-point target, and we have approximately $400 million of actual tangible surplus there. In Champlain, we did make a capital contribution to Champlain. $80 million of that was funded by the Life company. So we sent a dividend up to the holding company of $80 million contributed back to Champlain with another $20 million of holding company resources. So Champlain is above our targets and it actually has $265 million of stated surplus, and then you saw the $1.3 billion of surplus in Japan. If you put it all together, we actually feel pretty good about our statutory resources in the various entities.

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

Sort of a follow-up to John's question. Chris, you talked about statutory capital flattish sequentially, obviously, markets were up but that had a mark-to-market on the derivatives, which overwhelmed the reserve change. Not to get too technical, but -- I guess what I'm asking is, at what point in the market, if we continue to go up, would you actually see that reversal where you actually start increasing your statutory capital as the reserve changes are more meaningful than the mark-to-market on the derivatives?

Mark, it's Chris, thanks. I would say to just this context, the U.S. equity markets were up nicely. I mean, but the other markets where we are participate in with our Japanese annuity blocks, I would say, were mixed to down. I mean, if you look at interest rates, if you look at Europe, if you look at Japan, the Nikkei was substantially down. So I think the positive impacts on VA carbon reserves in the Life book were offset by the net negatives around the world. That said, I think you're really trying to -- and we've talked about it before, is measured sort of the inflection point of where things start to turn positive from a capital generation side. And I'll just go back to our comments that we do see substantial capital generation in '13 and beyond, obviously, as market levels improve. I don't think there's a precise number I'd give you, but when you're north of 13,070 and approaching those types of levels, I mean, it really does take a lot of pressure off the VA CARVM reserves. As you know, we've talked about somewhat -- those being on a lag. But there's not a precise thing. It's just, I'll call it, continued healing, but there's also, I would say, a lot of continued pressure in the low interest rate environment also. So you could have a medium impact of just looking at one equity market index, and you really got to consider all our indices that go into liability calculation.

Okay. And then just a question on the Variable Annuity business. You're launching some new products. It feels like the products are a little bit more consistent with some of the living benefit guarantees that are out there in the market, so you're kind of -- feels like you're jumping, kind of, into that, kind of, game little bit. And it's a little bit -- feels like a little bit of a different strategy than what it's been, which is kind of pick your spots, very focused on kind of lower risk but some -- obviously, value to the consumer. So I'm just curious about the product that you're selling, how you think it's positioned and, I guess ultimately, how you're making sure that the risk management around it is very robust?

So Mark, this is Dave Levenson. Thanks for the question. So as it relates to the new product filing, which is what you're referring to, we are always looking to make improvements in products as part of the normal course of business. So what you saw was clearly a filing for the Annuity business, but as we're in a quiet period with the SEC, I really don't want to comment too much as it relates to the details. Our absolute focus right now is really on growing the business with the product portfolio that we have today. As it relates to your question around profitability and risk, I would say we pay very close attention to this, as you heard Liam say in his comments, with a focus on profitability. The ROE and the product we have today is what I would say, on a fully hedged basis, very close to the cost of capital at scale. And from a risk perspective, we're -- we think the product that we sell today is more than acceptable. So 3 things to add to that. First, we hedged the product fully; second, the NAR of the business that we put on the books is less than 1% of our total sales; and third, the personal protection portfolios, which is a core part of the product, had a volatility last year that was about 1/3 of the level of the S&P. So the issue for us is really a scale issue.

Okay. Just one very quick follow up. How are you defining cost of capital in this business?

It's the weighted average cost of capital that we hold on a GAAP basis.

Your next question comes from the line of Randy Binner with FBR. Randy Binner - FBR Capital Markets & Co., Research Division: Just a follow-up on the annuity area and kind of more on the sale side. I think back in the December day, you all had talked about a $3 billion to $5 billion all-in sales goal across annuities. And so I think you also said that the fourth quarter should be somewhat of a litmus test for the new VA product. The run rate's considerably low to achieve $3 billion. So just be interested if there was something that made the fourth quarter not a good litmus test for VA and if you still think that goal is attainable and if indexed annuities might play a big part in that?

Randy, it's Dave again. Thanks for the question. So we recognize that the $258 million that we did in the quarter does not get us to our guidance. I'd say that said, we really only had a competitive product in the marketplace for the last 6 months. So we've been essentially out of the market since 2009 and back in since June. The PDF fund, which again is the secret sauce underlying the product, it's very innovative and, frankly, it needed some proof of concept, which I think took a little bit longer than we expected. But with 6 months behind our belt, I feel very good about where that is right now. As it relates to the fourth quarter specifically, as was mentioned earlier in the remarks, 2008 was the first time that we saw our sequential increase in sales, and when you start looking inter-quarter, our story gets a little bit more interesting where December was the best month we had in the year and was up 45% over October. So let me address your question about 2012 and whether or not I still feel like we can achieve it. The answer is yes. Clearly, as Liam mentioned, the market is rationalizing, competitors are raising fees, they're reducing benefits, they're getting out of the business. We think this is all good for us. Our biggest distributor in Wealth Management, added the product just recently, it was the end of October. We are in very good discussions right now to add the product to shelves at 2 of the top 20 firms. The only top 2 -- the only 2 of the 20 firms in the industry that don't carry this product today. We changed our national sales manager in September, and we have much greater discipline, focus and accountability. And as importantly, we're attracting some of the top wholesalers from many of our competitors. But with that backdrop, I think the punchline is that we really know what we have to do with respect to showing sales and sales momentum, and the management team is confident and committed to getting there.

So Randy, you can see that Dave is managing this business very closely, and I think that reflects the fact that we need to see meaningful, profitable sales progress in the near future, and I think he's doing all the right things to make that happen. Randy Binner - FBR Capital Markets & Co., Research Division: That's great. Just a quick follow-up. Indexed annuities, I mean, could those become a material part of this in 2012? Or should we really think of this is as being kind of a VA phenomenon to get to that goal?

So Randy, the FIA product that we launched in '11 was really a table sticks product. It's really going to be the offering that we bring out in the summertime that we think is very innovative combined with WealthVest, which as you know, is our third-party focused distributor on this. So I would say it will contribute, but if it -- it will contribute, but it will be more in the second half of the year where it contributes.

Your next question comes from the line of Meyer Shields with Stifel, Nicolaus. Meyer Shields - Stifel, Nicolaus & Co., Inc., Research Division: I want to applaud your candor with discussion -- with discussing the separation of Life and the P&C companies. And I don't want to contradict that with this question, but can you share your thoughts about how this disclosure is actually going to impact the unit's performance in the near term?

I'm not sure I understand the question. Meyer Shields - Stifel, Nicolaus & Co., Inc., Research Division: We'll I'm -- putting it in probably overly blunt terms, if distributors look at the Life business as being somewhat on the block, is that going to make it harder for them to actually sell the product?

I think you completely misinterpreted the nature of our discussion. So again, I don't think we said that. We did not say that. I think we commented very specifically and very precisely on questions that we've been asked by shareholders about a potential tax resplit of the P&C company. I think to your -- thank you for recognizing our candor. And I would just go back to what I've said a couple of times, which is as we -- and I, more specifically, went through and then the business leaders went in greater detail, we are managing our company as a portfolio of businesses. We intend to maximize the value of each of those businesses because we do not believe our share price accurately reflects the value of the company and of the enterprise and that we're evaluating strategy and business portfolio for opportunities as a result of that philosophy to deliver greater value for shareholders, and we'll be objective and pragmatic and thorough and rigorous about the best ways to achieve this goal. I just want to be sure that you heard me correctly. Meyer Shields - Stifel, Nicolaus & Co., Inc., Research Division: Yes. No, I think I did. If I can shift gears just a little bit. The workers' compensation rate increases that you've talked about, is that impacting retention for other product lines?

It is not. This is Doug Elliot. It is not impacting our retentions across other lines. It is impacting some of the workers' comp retentions. But at the moment, we are more than pleased with the trade-off we're seeing in that book of business and very encouraged as we finish the year with really strong pricing momentum across those workers' compensation line. Very pleased about the last 3 months. And as Chris noted, incremental progress between October to November to December as we head off into 2012.

Your next question comes from the line of Lawrence Sarly [ph] with Paulson & Co.

This is John Paulson speaking. Liam, I want to go back to the Slide 17, talking about the potential separating the Life and P&C business. And the -- I know you're doing a strategic review, but there's no slide talking about what the potential would be, just that there's challenges. Goldman Sachs came out with, I think, a very good analysis a few months ago, where they showed this is -- that they estimate the upside to doing a tax-free spinoff of P&C can be over 70% of what the current stock price is trading at. Now I agree that there's going to be challenges, but isn't your job to really overcome those challenges to achieve the maximum value for shareholders? Now I would say that Hartford needs to do something drastic because the stock is the lowest valuation relative to book value of any major insurance company. Last year, Hartford stock was down 38% while the P&C stocks were up 14% and even declined much more than the Life index, which was down 21%. So what I'd like to see you do is not merely come back and say yes, we're looking at strategic options, but there's challenges to achieving them. But what -- first of all, do you agree that you could create as much as 70% value for your shareholders by spinning off -- separating P&C? And secondly, is [indiscernible] incentive to overcome the challenges that it's going to take to spin this off? And how long is -- how long do we have to wait to hear if there's going to be a positive recommendation to separate these 2 businesses?

Thanks, John, for the question. First of all, the analysis and the intent of the comments was to acknowledge that the challenges are significant, not to say that they could not be overcome. Second of all, our analysis, including the frictional costs, if you will, that are in the third category, would suggest that a split would not create the kind of shareholder value that, that particular report suggested. And third, in addition, I think the -- your sense of urgency about realizing greater value for shareholders is shared by me and by this team. And so I hope I answered your questions succinctly and correctly.

Partially, Liam. But if it is -- if you share the interest all shareholders have at increasing shareholder value, I'm surprised that as part of the discussion, you don't talk about how much value could be created by separating the P&C business from the Life business and not the only slide you devote to it talking about that there's some obstacles to overcome. I'm talking about the upside and weighing the upside of the separation against what the obstacles are. And better yet, not just listing as obstacles, but what I'd like to see is how you will overcome those obstacles to result at a more -- a fair valuation for Hartford. Not that there's obstacles, but how are you going to overcome those obstacles? That's what I, as a shareholder, look from you as the management to do.

Thank you, John. And I -- that is our mindset. Our purpose in the slide was to identify the hurdles. You can -- if you heard our language, we did not say they were not surmountable, number one. We said there were significant costs to surmount them in a number of areas, so we felt we owed shareholders that disclosure. Number two, we do not believe that splitting them in the current environment for the reasons that we cited will create shareholder value. And third, again I'll reiterate, we have an incredible sense of urgency on looking at all ideas to create a shareholder value.

Well, I think you need to do a much better job of explaining that because Goldman's report is a very good report on a path to separate the business and create what they estimate is a 70% increase in shareholder value. And then you merely say there's some obstacles and you don't equate what the costs are to the benefit and what value you think could be created. Because right now, with the stock performing as poorly as it has relative to both P&C and Life companies, I think you need a better explanation of what you're going to do to enhance shareholder value, merely that you're working hard and you're committed, but there's obstacles. What we need you to do is overcome the obstacles to enhance the valuation for your shareholders, not merely to point out that there's obstacles.

Hey, John, thank you. I hear you loud and clear.

Our next question comes from the line of Andrew Kligerman with UBS.

Why don't I just start off with capital. It looked like you had some improvement in the Life co stat capital and that was a surprise to me. And for the Investor Day, you're going to generate about $800 million in capital a year out of the P&C company. So what I'd like to know is, when you finish up the $500 million buyback, which I think you're saying is early 2Q, it will have been about a year since your last authorization of $500 million. Could you give a little color on the flexibility that you might have to authorize another buyback? And I don't know if you -- just flexibility, amount, timing. I know you can't be overly specific, but a little flexibility commentary would help.

Andrew, it's Chris. Thanks for the comments. I think your comments are right. Again, we finished fourth quarter in decent shape, particularly at the Life company. I would say one point of clarification that we planned to take out $800 million of dividends out of the P&C company, but we do expect the P&C company to generate slightly more in statutory earnings and that the Life group, we're still calling, right now, for flat to slightly down. But a lot of that is path dependence on markets, hedging performance. But directionally, it's still -- I'd like you to take away, it's still a constrained model for 2012. So as we said and as Liam said and I said, we are going to complete the program in early second quarter. At that time, we will evaluate, call it, our deployable capital levels, our capital needs for different initiatives and then determine our future actions and communicate them at that point in time. But as we've said, we see capital and surplus increasing in 2013 at the Life company, so that gives us hope and optimism that we will continue to have flexibility in '13 and beyond, particularly.

Okay. And possibly in mid '12?

Possibly. Again, Hard to predict. We'd like to finish what we started, do the evaluation, compare, obviously, a lot of different options for our deployable capital and then come up with the best solution at that time.

Okay. And then just following up on one of the business lines. One of your rationales for being a multi-line company was aligning the Commercial Markets businesses, the Group Benefits along with the Commercial P&C. And I'd like an update on -- well, first off, it looks like AIG actually copied what you did based on some of the things I've been reading about. And secondly, I'd like to get a sense of sales volumes and some of the impact that you're having there.

Andrew, this is Doug. We talked about that at the December 8 day in quite some detail, and those discussions continue as we close 2011 and head into 2012. So we had quite a bit of success, greater than $125 million of sales working across our group and P&C space in 2011. We have challenging goals for '12. As I travel -- and 2 weeks ago, I was in Orlando. I spent several hours in the morning with our comp and group people together to talk about issues, to make sure that we're firing on all cylinders and we're looking for opportunities in the marketplace. So absolutely, on a day-to-day basis, those opportunities continue to be chased, and we're looking for more to leverage the breadth of product that we have here at The Hartford.

And you think that could result in a turnaround negative 3% sales year-over-year?

The dynamics of the sales process themselves is much more related to our need for margin improvement in group than our margin improvement needs across Middle Market. So when I think about top line, given the scale of those businesses, we're clearly driving rate change at those 2 businesses. As you looked at the bubble chart that Liam took you through in December, we have several businesses that need significant rate, and we are doing everything we can on a day-to-day basis to get that done. And that's more driver relative to top line than this other dynamic.

Thank you, Andrew. Keesha, we have time for one more question, please.

Your next question comes from the line of Bob Glasspiegel with Langen McAlenney.

I wanted to zero in on AARP. Chris, you said that you're pleased with the -- where you are and in position to grow. Liam, you sort of said that's a franchise operation, which I totally concur. I'm just confused on where it is in the sort of fixed versus grow mode. With premiums down 4% and the overall auto underwriting at 96, it seems like AARP should be in a position to grow, not being one of the fixed candidates. If it is a franchise as I think and it's in a demographic that's favorable, why is it not growing more?

Bob, this is Andy. It's a great question. So I'd kind of take you back 18 months ago, we had profit issues in the division, probably more pronounced in agency than with AARP. But nonetheless, we were taking above market rate increases across all channels and products, so when you grow, it would be impacted. But quite frankly, given the competitive environment that we -- that confronted us in 2010 and '11, it was greater than anticipated, affecting both new business and retention. So since then, we've been working really hard to achieve rate adequacy and restore growth to divisions, especially AARP. It's very much still a work in progress, but as you commented, in AARP Direct we are converging on our combined ratio pricing targets. I actually expect that to happen sometime in 2012. New business has rebounded very nicely, and that will continue to play out as 2012 plays out. The big objective for us right now is to get retention where it needs to be, and until we do that, we expect that to happen in -- throughout '12 and into '13, we'll restore total premium growth to AARP. Still a valuable franchise, extremely important to us strategically, and we're well on our way to getting that back on track.

Where does auto have to be to get your ROE objective? You don't break out AARP, so -- if you could give me AARP's targeted combined ratio to get to the ROE, that would be great. But I don't think auto, in general, would be...

Yes, auto, around 95 or so.

Okay. We're -- I mean, you're at 96 overall, and AARP is, I assume, better than agency. So why couldn't AARP be growing right now?

I think it's just a timing thing. It's the way we -- the rate increase has played out in '09 and '10. Retention was impacted more than we thought it would be. Now we're recovering it.

Thank you, Bob, and thank you, also, Keesha. We look forward to seeing and talking to you all soon. And as always, we appreciate your interest in and support of The Hartford. Have a good day.

This does conclude today's conference call. You may now disconnect.