Good morning. My name is Sean. I’ll be your conference operator today. At this time, I would like to welcome everyone to The Hartford's First Quarter 2015 Financial Results Conference Call. [Operator Instructions] Thank you. Head of Investor Relations, Sabra Purtill, you may begin your conference.

Thank you, Sean. Good morning and welcome, everyone, to The Hartford's first-quarter 2015 financial results webcast. Our news release, investor financial supplement, first-quarter financial results presentation, and Form 10-Q were all filed yesterday afternoon and they are available on our website. Our speakers today include Chris Swift, Chairman and CEO of The Hartford; Doug Elliot, President; and Beth Bombara, CFO. Following their prepared remarks, we will have about 30 minutes for Q&A. Just a few notes before Chris begins. Today's call includes forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance and actual results could be materially different. We do not assume any obligation to update forward-looking statements and investors should consider the risks and uncertainties that could cause actual results to differ from these statements. A detailed description of these risks and uncertainties can be found in our SEC filings, which are available on our website. Our presentation today also includes several non-GAAP financial measures. Explanations and reconciliations of these measures to the most comparable GAAP measure, are included in our SEC filings, as well as in the news release and the financial supplement. I’ll now turn the call over to Chris.

Thank you, Sabra. Good morning, everyone, and thank you for joining the call. Last night, we reported financial results for the first quarter. Our results show that we’re off to a good start for the year, and that we are managing the increasing challenges in the marketplace. We continued to execute on our strategy and make progress across all of our businesses. Compared to the same period last year, core earnings per share for the first quarter 2015 rose 11%, adjusted for net favorable items in both periods, and book value per share, excluding AOCI, increased 3%. In addition, we delivered a 12 month core earnings ROE of 8.1%. Our operating businesses performed well, despite low interest rates in an increasingly competitive pricing environment. Let me share a few highlights from the quarter. In PMC, our combined ratio of 91.7 is essentially flat compared to prior year when adjusted for CATs, prior-year development, and the New York assessments. This is a good result, given the weather conditions, and Doug will discuss more about each line of business in a few moments. In group benefits, core earnings margin increased eight tenths of a point to 5.9%, with outstanding first quarter sales that increased 67%. These results reflect our focus on pricing and underwriting, as well as superior service and claims handling. Our mutual fund businesses generated 28% growth in sales and more than $500 million in positive net flows in the quarter. In addition, we continued to successfully manage the runoff of Talcott, with a $500 million return of capital during the quarter, and year-over-year declines in variable and fixed annuity contract counts. In addition, we are pleased with the upgrades to our ratings from S&P and Moody's, which we received last week. These upgrades represent a notable milestone for us…

Thank you, Chris, and good morning, everyone. Our property and casualty and group benefits businesses started 2015 with solid results for the first quarter. Retentions continue to be strong, helping to post modest top-line growth. Loss trend in our major lines of business remain benign and within our pricing targets. And in general, our operating performance was very steady, an outcome we are pleased with. We are locked in our core metrics and performance indicators, as we continue to balance margins and growth amid increasing competition. We’re focused on new business risk selection, retention of our best performing accounts, and overall rate adequacy. The marketplace has grown more competitive over the last quarter. We’re beginning to find that there are fewer new business opportunities transacting at our target return levels. We’re also seeing more pressure on our renewals, as the rate adequacy of our book has clearly improved in recent years. We are going to compete aggressively, however, we’re not going to chase business outside of our underwriting and profitability parameters. Our intense operating focus over the last several years, as well as the investments we’ve been making in product, underwriting and technology, position us on a solid foundation to compete effectively under various market dynamics. I’ll share a bit more about this as I recap the first quarter performance for our business units. In commercial lines, we delivered core earnings of $234 million with a combined ratio of 95.9. This was an earnings decrease of $30 million from first quarter 2014, largely driven by last year's one-time expense benefit from changes in New York Workers' Compensation Board assessments. Adjusting for this item, our combined ratio improved four tenths of a point. Renewal written pricing in standard commercial lines was 3% for the quarter. This is actually down about half…

Thank you, Doug. I am going to briefly cover first quarter results for the other businesses, and then provide an update on the investment portfolio and our capital management activities. Mutual funds core earnings rose 5% in the first quarter, primarily due to an increase in fees from higher average assets under management, excluding Talcott variable annuity funds. As expected, Talcott-related AUM continued to run off, which reduced the segment's total AUM compared with a year ago. Fund performance remained solid this quarter, with 70% of funds outperforming their peers over the last 5 years. Our strong performance track record has helped drive strong mutual fund sales, resulting in net positive flows of $529 million. Talcott posted good results this quarter, with core earnings of $111 million, about $20 million above our expectation because of higher investment returns, including limited partnership returns. We model limited partnership income at a 6% annualized return. Assuming that return, Talcott's quarterly core earnings for the balance of the year would be in the $85 million to $90 million range. As Chris mentioned, Talcott's annuity contract counts continue to decline. Our ISV and ESV programs added slightly to the variable and fixed annuity runoff. And we will continue to look at contract holder initiatives and other programs that can help accelerate the decline in these books of business. Since we put Talcott into runoff, variable and fixed annuity contract counts have dropped by almost one-third, down 32% and 29% respectively, since June 30, 2012. During the quarter, Talcott paid a $500 million dividend to the holding company, which contributed to the decline in statutory surplus to $5.1 billion from $5.6 billion. We generated about $63 million of net statutory surplus this quarter, in line with our prior outlook of $200 million to $300 million of…

Thank you, Beth. As I noted earlier, we have about 30 minutes for Q&A. In order to get through the queue and allow everyone to have time to ask their question, we would request that you limit yourself to one question and a follow-up and then re-queue if you have additional questions. Sean, could you please give the Q&A instructions?

[Operator Instructions] Your first question comes from the line of Michael Nannizzi from Goldman Sachs, your line is open.

Couple questions. Is there any way we could quantify, Doug, the technology investments and higher commissions based on business profitability on 1Q results?

Mike, we don't share the details to allow you to do that. I would say this, that Chris and I have shared that our technology invest plan over this three year period is a $1 billion-plus plan. That’s putting a little bit more than half of the - about half of the expense pressure, namely inside small commercial, as I called out this morning?

Right.

And as I mentioned, we obviously are seeing a very solid, profitable run through our loss ratio. So we’re feeling a little expense pressure in our supplementals because we’ve got a three year trigger for loss ratios with many of our agents and brokers.

Okay. Got it. Okay. So I mean, as that continues, then, we could expect to see - I guess we’ll continue to see the expense pressure from supplementals. And then as you work through your technology spend, then we should probably see that normalize at some point?

Yeah, I would say that. And clearly, as we replace ‘12 with ‘15 - ‘15 starts out in a good spot from a loss ratio standpoint. The three year run with ‘15 will be ‘13, ‘14, ‘15, which will be three good years. ‘15 clearly is in a better place than ‘12 would have been. So I think now we get to a normalized level as we approach ‘15.

Mike, I would just add on the expense side, we are harvesting gains today. So you should not think that we’re not trying to be efficient today and improve our existing processes, particularly as we spend money on new technology, which will continue. We do capitalize some of those investments that will be amortized over a five to seven year period, depending on the project. But we ultimately expect the payback through increased - I'll call it productivity, reduced unit cost and ultimately, faster growth. So that’s how Doug and I have been thinking about it.

On the upgrades this last week, Beth, thinking about those, where do those fall in your expectation? I mean, clearly, you’re working towards this type of recognition. Is this earlier than you expected? Earlier affirmation than you expected? And does this change in any way how you're thinking about your capital management plan as you start penciling the second half of the year? Thanks.

Thanks, Mike. So obviously we're very pleased with the actions that both S&P and Moody's have taken. Obviously, over the last several years, we’ve been working with them closely to share with them our plans, and we plan to continue to work for continued improvement. So I don't see it changing our views relative to our capital management plans. Again, it’s nice to get the recognition for the improvements that we have made.

Your next question comes from the line of Brian Meredith from UBS, your line is open.

Couple questions here for you. Doug, just curious, on the increase that we saw and some of the severity on the personal auto, would you attribute that to kind of industry what’s going on? Or is anything - any of that related to maybe some selection issues with the big rapid growth you're getting in the AARP agency business?

We’re looking at every component of that. And we do feel like there are some things happening here that we need to kind of lean into and we have some work programs around. We’re clearly looking at vehicle year and making sure that our new open road product is appropriately pricing those. In the quarter, it looked like our subrogation was a little light. So we’re leaning into subrogation. And as you understand that, that’s something we can catch back up with. So we’ve got a number of things that we’re looking at internally, but we understand there’s probably been a little bit of physical damage pressure across the industry as well.

Great. And then staying on the P&C topic, I’ll let you keep going here, Doug. Commercial auto. What exactly are the issues with your book that you’re dealing with right now? Seems like some other companies are actually saying they’re finally getting to the right profitability level on commercial auto?

Yeah, I would start by saying the pressure we’re feeling today in commercial auto is very different than some of the programs and captives we had several years back. So those are in our history, and I feel good about the way we’ve moved away from those programs. This is more organic middle market and to a lesser extent, small pressure just across severity. We’re seeing severity trends in those books of business. We’re pricing for them. We’re looking at vehicle weights against our price per pound. We're looking at driver experience. I would say that we’re leaning probably a little bit more aggressively into driver experience this year than we had in the past. So we’re working across that auto book. We're going to get this book performing much better as soon as possible. And I would say right now, we’re leaving no stone unturned.

The next question comes from the line of Vincent DeAugustino from KBW, your line is open.

Just a quick follow-up on a previous question on the auto loss cost side. Just with this hitting the physical damage severity side. I’m curious if this is the result of just greater actual damage to vehicles, or if there's any inflation in the repair cost? And the reason I ask here is, if it’s on the actual damage levels to the vehicles, I’m wondering if there’s any type of correlation on the bodily injury side, just maybe to a lesser magnitude?

Vince, this is Doug again. We are looking at year of vehicle. So obviously, the newer vehicles will have more technology in the bumpers on both sides. So that’s something that’s got our full attention. We obviously feel great about our claim process, but we’re going back. As you know, we have a new claim system that is rolling out as we speak. So we’re looking at the work streams that now revolve around that new system, and looking at similar type and year to make sure we’re on top of all those trends.

Okay. So your driver base isn't as sensitive to gas prices, but any notable shifts on the frequency side?

A general up-shift, but not dramatically, we've watched this carefully over the last 10 months, 12 months and so not that I think this is inside our patterns relative to loss at the moment.

Okay. And if I can squeeze another one on just pricing on the workers' comp side. Workers' comp is a generalization of a lot of smaller micro markets and geographies and injury class codes. I'm curious, based on your comment this morning, within those aggregate numbers, if there are any pockets of really favorable or destructive pricing that you’ve got to watch out for?

I think you probably have a great sense of the marketplace. In general, there’s been a downward pressure across the filings in workers' comp. So some of the major states are looking at moves in the pricing realm that now are flat to down. I would say, across the middle market, I don't see major swings from the geographic standpoint. I think we’re competing well, I think the tools are in place; the books are very adequately priced. So the improvements we’ve made over the last three years, I think do position a bit more competition, which is what we’re seeing. But we’re going to keep our discipline, and I’m very comfortable that we’re going to be thoughtful as we play this out.

The next question comes from the line of Jay Gelb from Barclays, your line is open.

First, on Talcott, I just want to get a bit of a better understanding why you feel the quarterly run rate of earnings would be $85 million to $95 million, given the strong - or much stronger performance was on the first quarter. Was that just all simply due to excess limited partnership income?

Yeah. That’s exactly what drove the out performance for the quarter. So when we look at just normalizing the run rate for investment income, it gets back down within the range that we previously gave.

Okay. And then on the capital structure, Beth. I'm looking at page 5 of the supplement. I think this lays it out pretty clearly. Could you remind us where you feel a target range should be for the dollar amount of debt, and also debt to capital? My guess is you’re focused on rating agency adjusted debt to capital? If you could remind us your targets there, that would be helpful for modeling purposes.

Yes, absolutely. So we do focus on the last line that you see on that schedule, which is the rating agency adjusted debt to capitalization. So ended the quarter at 27.3%. When we look forward to the year and anticipate the debt reduction that I covered in my remarks, all things else being equal, we’d expect that 27.3% to be on a slightly under 25%. And we stated all along, our goal has been marching down to the low 20%s.

Okay. So even after the Company finishes up its debt reduction for this year, that seems to imply there could be more to come in the years ahead to get that ratio lower?

Yes. So as we look forward and we think about capital management actions in the future, debt reduction was something we’ll always consider. As we said in the past, we don't need to get to that target immediately. So we intend to continue to be balanced in how we approach that. But obviously, as you do equity repurchases, that also puts pressure on the ratio. So we’re really just looking to balance all of that. And I would call it a steady march down to the low 20%s.

Your next question comes from the line of John Nadel from Piper Jaffray, your line is open.

A question for Doug on the commercial lines side, and maybe it’s sort of wrapping up a couple of the earlier questions, maybe in one maybe easier fashion for us to understand. I think for 2015 you had targeted a combined ratio ex-CATs in prior year between 89.5 and 91.5. 1Q was definitely a bit above that range, but obviously tough weather. But also on the expense side, it sounds like things are going to be a little bit higher. Can you give us a sense - do you still feel good about that range for 2015? Or could this expense component push you modestly above the upper end of that?

John, I would say that we still feel like that range is achievable. A couple of thoughts. One is, I do think the first quarter on the expense side is a tough compare, because of the one-timers that were achieved last year. But we’re conscious of that, and as Chris said before, we’re driving efficiencies inside this operation. So although we’re driving some of the dollars back inside the invest part of our business, we are looking to become a more streamlined efficient company over time. And I do think, obviously, we’ve got to wait and see how weather plays out second and third quarter. But I look at this as a solid start to the year ,and those targets definitely achievable.

Okay. Thank you. Then separately, maybe a question for Beth on the runoff annuity block. The variable annuity surrender rate remains high, although I guess it’s coming down modestly, but can't stay in the 20%s forever, I suppose. But the fixed annuity surrender rate this quarter dropped pretty significantly. Was there any specific thing that happened there?

Yes. So I will remind you, John, we had a program in place in 2014 that increased that surrender rate, our ISV program. So that obviously impacted those surrender rates that we saw in ‘14 and then going into ‘15. And as I said in my remarks, we will continue to look at ways that we can target specific portions of the book, as we have in the past. And obviously, that can make the surrender rates sort of ebb and flow.

Okay. So ex-some sort of modified program, we should expect probably something more in the low to mid single digits on the fixed annuity block?

Yes. It does tend to bounce around a bit, too. But I think on average, I would say that that would make sense. But quarter-to-quarter, depending on just where various contracts stand relative to choices that they have to make, you can sometimes see the numbers bounce. But on average, I think that’s a good place to be.

Okay. Thanks. And then I'm going to sneak one last one in, unless Sabra wants to beat me up. But as we look forward to an updated capital management outlook in the back half of the year, can you just remind us what the ongoing cash needs of the parent company? How much cash do you want to hold back relative to interest expense and dividend payments, etcetera?

Sure. So as we’ve talked about in the past, when we think about holding company cash and levels that we'd feel comfortable at, we typically target around 1.5 times interest and dividend requirements. And when you look at where we are with interest and dividends, you can think about that as being in like the $650 million range.

Your next question comes from the line of Jay Cohen from Bank of America Merrill Lynch, your line is open.

A couple of questions. First is, Doug, I think you mentioned that you had planned to adjust your ad campaign for the AARP business. What specifically will you be doing, and how do you think that will affect the revenues?

What we’ve done in the ad campaign is, we’ve adjusted slightly to be a little bit more value-based, tied in with the AARP membership. So as we’ve made some tweaks over the past 90 days, our response rate has risen positively. And our close rate on those responses also has seen some favorable reactions. So more to come as we work out the rest of 2015, but very encouraged by the early start.

Great. And then sticking with personal lines, the agency - non-AARP agency business, you had said it’s getting pretty competitive with comparative raters. Was there a change in the quarter, or is this just a gradual continuation of what you’ve seen over the past several years?

I would say from the industry side, no change that we can tell. We have made some adjustments in our own strategy, really around classes in vehicles and geographies, just normal tuning that goes on day-to-day. And so the combined actions of competitive pressures on our own actions contributed to the quarter.

Got it.

Let me just add just a perspective, too, because I called it out, particularly in my prepared remarks, that we are - I mean, personal lines is an important strategy for The Hartford and complementary, obviously, with our strong commercial capabilities. So that’s why we appointed one of our seasoned leaders, Ray Sprague, to really lead this and help us continue to improve it, because we have a wonderful 30-plus year relationship with AARP that we want to continue to leverage and serve their customers. Specifically on your ad question, if you haven't seen them, I’ll get Sabra sent to send you a clip. But they’re really powerful connections - emotional connections, Doug, I would say. They’re strong testimonial-based, hearing directly from AARP members themselves and explaining the value proposition that we offer. As opposed to just competing on price and just a minimum, I'll call it, features and capabilities in the products. So we offer a rich product that we’re proud of from a coverage side. And I think we're going to try to do a better job in explaining why those coverages are needed to insure for the unforeseen. So those are just a couple thoughts I just share with you.

Your next question comes from the line of Tom Gallagher from Credit Suisse, your line is open.

I’ll have a question and then I’ll turn it over to [Ryan Tunis] for a follow-up P&C question. Beth, just coming back as a follow-up to what John Nadel asked about on the capital management front. So if I understood your answer correctly, that should leave the full, we’ll call it, $500 million dividend that you expect to get out of Talcott in the back half, plus the $700 million of operating dividends or $1.2 billion. It should leave all of that for incremental capital management or other, over and above your existing capital plan. Is that right, or is it some fraction of the $1.2 billion that would not have been accounted for yet?

Yes. So the way I would have you think about that, Tom, if you recall, back in February, we provided you with an update on our projections of holding company cash and where we expected the holding company to end the year at. And that was at about $1.8 billion, and that remains unchanged. That took into consideration all the dividends that we just talked about. So when I was answering John's question on the holding company requirements, and if you think about $650 millionish being the annual interest and dividends that the holding company pays, and our target to hold 1.5 times that, I think that gives you a little bit of map as how we think about yearend ‘15. And then again, as we said, going into ‘16, we have the additional $500 million dividend that we anticipate taking out of Talcott as well as just our normal dividends that we would take out of the other businesses.

Got you. So that would leave a little under $1 billion, then, if I’m solving - in response to that - with that response in mind, it would leave a little under $1 billion in terms of incremental capital management? Is that the right number to think about? And then obviously, it’s a determination of what do you use for buybacks versus debt management, but is that the right figure?

Yes. So Tom, I don't really want to get into a specific number. As we said, we are going to look to update our plans in the second half, once we’re going to see how the first half of ‘15 goes and our views of the remainder of ‘15 going into ‘16. There’s nothing hidden in the math that I’m giving you - so you can draw your own conclusion. But again, when we talk about updating our plans, it would be ‘15 through ‘16.

Got you. And I’ll turn it over to Ryan on P&C. So I guess my question is –

Ryan, let me just follow up on Tom and - I appreciate your reconciliation and trying to pinpoint it. But I think Beth said it well, is that we will get into the second half of ‘15, go through our regular forward-looking planning process, and see the - and just make some final decisions. I think, from my perspective, I take great comfort in the fact that the agencies have seen the improvements that we’re making. We are sitting on excess capital that we intend to deploy in accretive ways. You’ve heard our penchant to keeping things in balance between debt and equity, so I don't think there is anything really changed. And if you could just continue to be just a little patient with us in that we want to be a regular company, and sort of look at these things in a normal cycle and rhythm, and we’ll communicate our views to you at the appropriate time. But thank you for your interest.

Thanks, Chris.

So yeah, I guess my question on the ongoing businesses, a little bit higher level on personal lines, it’s for either Ray or Doug. But I guess just looking at auto, 7% renewal rate increases this quarter. Should we expect margin improvement in that business this year, given the magnitude of those rate increases? Or would you say those rate increases are necessary just to keep up, based on some of the elevated physical damage severity you mentioned? Thanks

As we start the year, loss trend is certainly eating into our pricing equation. We hope that that will change. We have got a number of work streams to try to bring incremental margin back inside that book. I would remind you that overall, our auto book is in actually pretty reasonable shape. And clearly, on the AARP side, very solid shape. We have some work to do in the agency channel and we’ve chatted about that in the past. So I hope that we can turn that pricing into a benefit inside the ratio. That’s the goal.

Your next question comes from the line of Erik Bas from Citigroup, your line is open.

Just wanted to touch on the group benefits business. Obviously, it was a very strong quarter for sales and you cited the benefit from the win-backs. Can you also talk about the contribution from new products? And maybe, also, just discuss the competitive trends that you’re seeing in the group benefits market?

I’ll try to cover a few of those items in the question, which was a good one. Very pleased with the quarter, obviously, a strong sales quarter - our strongest sales quarter in several years. Although I would remind you that we’ve had quarters like that in the past, when this business was really running well for us back in the late 2000s and even into 2010, so pleased with our start to 2015. You can also see that a bit more success has been on the life side. So as we look at the long-term duration contracts in LTD, strong start, but not as strong, probably, as we had seen on the life contract side, so just something in terms of marketplace. Yes, we’re excited about the new product development over the past several years, and we’ve got two new voluntary products in market, including a new disability flex product. We have sold several of those deals. I will also tell you that we‘re looking to populate them with employees of the contracts that we’ve written them on, but I think off to a good start. They're recognized by many of our policyholders, and I think we’re going to begin to see that success play out in 2015. So very pleased with our group benefit start.

Got it. Thank you. And just any comment on the overall competition? I guess when you’ve talked about - your comments around competition picking up generally, it seems it was more related to P&C. But anything similar that you’re seeing on the group benefits side, or is it still a relatively benign environment?

I would say it’s a relatively consistent environment, so we see competition there. Maybe a bit more on the LTD side than what we had experienced in the past. And again, what’s so interesting about the group benefit world is that, particularly in the national accounts, we’re working six months, nine months in advance. So some of the successes we had in the first quarter were really the result of actions and proposals that went on last summer. But we’re feeling good about our ability to be successful in the middle market. That will be an increasingly important part of our group benefit strategy. But I do think rational competition really across in a consistent manner.

I would just add a couple of themes that Doug explained. One, if you look at sales, the life TI piece is interesting, so shorter duration versus longer duration. We’re having a little bit more success, particularly in the lower stream environment. Two, it’s obviously a heavy national account season, the 1-1. But equally, there’s a lot of good contribution that Doug and the team have been focused on in middle market in the small side. So our balance of sales is spread amongst the different segments. And then thirdly, the channel, I would say exchanges are beginning to contribute in a way that we anticipated, but is a positive development, too. So we rely on our existing agents and brokers. But there are a number of exchanges that we’re participating in that are contributing nicely to our increase in sales.

Your next question comes from the line of Randy Binner from FBR, your line is open.

A lot of good stuff, so mostly answered. But I want to actually jump back to the commercial auto discussion, and then some comments in the opening script, that D&O and E&O claim activity has been favorable. So it’s a reserve question in that the net reserve release in the quarter for commercial lines was relatively flat. And it was relatively flat overall. So the question is was there adverse POID in commercial auto that offset the more favorable D&O and E&O activity, or was there not POID in those items this quarter?

I think you can see in the sup that, yes, we had some adverse auto liability actions taken on our reserve position, for sure. Mostly middle market, I might comment. And then the financial product good news essentially did offset that. Just a thought about the financial product, D&O, E&O, book. We were heavier in the financial institution block back during the recessionary period, so we made appropriate reserve position judgments back in that period. We've watched them play out as the last five or six years have played out. This quarter, we came to the decision that we had - it was time to make some of those adjustments. So the netting of those two is what’s playing out in our reserve position on the prior, and I think it is well laid out in the sup for you.

Thank you. And then the follow-up is just on thinking of more recent accident years. So if - especially with D&O and E&O, with the economy continuing to be good and loss cost relatively benign, especially in ‘12 and ‘13, there’s been a pricing. Is there an early read you have on some of those - the casualty lines written in those more recent accident years and how they may develop?

I think it’s too early for us to comment on that. We have a well-balanced book of business across sector, geography, etcetera. But I think it would be early for me to make a call on ‘14 or ‘13.

All right, fair enough. Thanks.

Your next question comes from the line of Jimmy Bhullar from JPMorgan, your line is open.

Many of my questions were actually answered, but on the personal lines side, can you discuss just what’s going on in the non-AARP agency channel premiums? They have been down for a while. Is it competition or are you being more selective in what you’re choosing to underwrite? And then, Beth had mentioned in her remarks on Talcott surplus being sensitive to interest rates. Maybe if you could quantify or give us some color on just how sensitive it would be to make 20 basis points, 30 basis points, 50 basis points of a change in rates?

I’ll start and take the first half and then we’ll flip to Beth. I would say that with Ray's leadership - and he and I now have been engaged heavily with the group over the past nine months - it’s a great chance for us to do a refresh. We’ve mentioned that we are rolling out a new auto class plan that always encourages tuning, as these things roll into market. So I would consider what we’re doing in the marketplace kind of normal for a competitive product adjustment strategy that we will continue to evolve as we move forward. Yes, it’s a competitive channel, but I think our returns are really in very solid shape. We would like them to be a bit better, but I’m satisfied with where we are and I think we will continue to do tuning as we move forward.

And Jimmy, on the question on interest rates, I don't have an exact sensitivity that I can give you - a basis point change and what that might mean. What I would tell you is that when we look at the overall book in Talcott, we feel very good about the cash flow generation that we see coming from the VA book. And as we get closer to the end of the year, low rates could just put pressure on that previous range that we gave. But overall, still feel very good about the balance sheet strength and feel very comfortable with the dividend plans that we've put out there. And as we get to the end of ‘15, we will evaluate surplus levels to determine what, if any, additional dividends we would see in 2016, besides what we have already announced.

And just lastly, is there a minimum level of surplus you would want to leave in Talcott, assuming a normal decline in the size of the block?

I don't have a specific target in mind. Over time obviously, we focus on RBC ratios. We look at the overall surplus, especially in stress situations and then also balancing liquidity. So again, the plan that we have announced and the dividends that we expect to take out put us well within all of those thresholds that we monitor. And again, as the book gets smaller, we will evaluate absolute surplus levels.

And those amounts you are comfortable with, even with rates where they are, right?

Yes. The items that we have already disclosed, we feel very comfortable with.

Your next question comes from the line of Ian Gutterman from Balyasny, your line is open.

I wanted to follow up on Randy's question about the reserves in the recent accident years. Doug, I specifically focused on workers' comp. Obviously, that is your biggest area of reserves. And when I look at the recent accident years, they are reported to incur - the initial reported to incur is so much better than has been historically that I can't draw any other conclusion that you seem to be reserving a lot more conservatively. The only possible exception to that is maybe there has been some meaningful shift in the book, where reports would be coming in later than it used to because of mix or some other underwriting change. Is there anything like that going on? Or should I be encouraged by seeing the early reported to incurred ratios looking so much better than historic?

First, I am pleased that you are encouraged. We are encouraged by our book profile over the past few years. Not only on the pricing side, but really very pleased about the mix changes and how they've played out inside our earnings and reserve profile. So I think 2013 and 2014 are still early to call, but we are very pleased as to how they look and we hope they continue to look as solid as they are today. But you know, we call them as we see them. We feel good about progress, but these are long tail lines that take awhile to mature.

Of course I was thinking more how they play out over time than expecting it this year. But that's okay and then just a follow-up on the agency auto business, then, for you and or Chris. Just strategically and I - you obviously talked a lot about some of the changes you are making, but as sort of Jimmy alluded to, that book shrunk for a long time. And again, I am specifically talking about the non-AARP here. Are the actions you are taking enough that you can compete where you need to at the scale you are at? Or are you going to have to face a decision eventually of either you need to get bigger in then non-AARP business or maybe get out of the non-AARP business?

Ian, I think you ask very solid questions. As Chris had suggested, we are totally committed to this space. This is been a real solid complement to not only our personal lines agency franchise, but also to the commercial as well. But we have been challenged and we have got to get those hit challenges head on from a financial standpoint. We are doing so as we speak today. I am optimistic about what the next couple years will bring, but I also know that challenge in the channel, based on how competition competes and the comparative rates, etcetera. So I think we will be talking about this as time plays out. And know it has our full attention. And we are on it and we are pulling levers to drive a better financial outcome.

Ian, I think Doug said it well. But I think when you think about it also strategically, we still believe in advice that the independent agents provide, provided that we have a good competitive home and auto product. So I think when you speak of auto, don't forget about home in making sure that we have a total solution for our independent agents and our customers. So as Doug said it and he said it well. We are committed to figuring this out and how we can continue to add value in this segment.

Thank you. Sean, we are coming up the hour, so we have time for one more question, please.

Your next question comes from the line of Scott Frost from Bank of America Merrill Lynch your line is open.

Without getting into any predictions of ratings - credit rating trajectory, can you give us an idea of where you think your targeted metrics map in terms of NRSRO quantitative ratings? And I have a follow-up.

I'm sorry, Scott. The tail end of your question got a little garbled. The metrics relative to --

Yes. In terms of just the quantitative ratings that NRSROs have out there, you have targeted metrics. Where do you - what do you think they map?

Right, like the 22% to 23%, for instance, on the debt to total capital.

Yes. I would say just slightly higher.

Okay. And can you also remind us a couple things I want to ask about the Glen Meadows and the eight and eight junior subs. What Moody's basket treatment do they get and are they within S&P's equity bucket for you? And how would you characterize the attractiveness of those two instruments in your capital structure?

For Moody's , it is 25% and for S&P, 100%. The way I think about it, we looked at our debt stack in total in trying to manage to the targets that I said. So those obviously weigh into that as we look at really focusing on the rating agency adjusted targets. So right now, they fit very nicely. And as we continue to manage the debt stack, we really are looking at it more from the perspective of managing to those targets.

So are you saying that both of those instruments are attractive to you now?

Right now, yes, they are attractive. They do help us achieve the targets that we have. Over time, that could change, but for where we sit today, we do see them as attractive.

There are no further questions.

Thank you, Sean. We would like to thank you all for joining us today and for your interest in The Hartford. If anyone has any remaining questions, please feel free to contact Sean or myself by phone or e-mail and we will be happy to help you. Thank you and have a great day.