Good morning. My name is Jessa, and I will be your conference operator today. At this time, I would like to welcome everyone to The Hartford’s Fourth Quarter 2015 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. Sabra Purtill, Head of Investor Relations, you may begin your conference.

Thank you. Good morning and welcome to The Hartford’s webcast for 2015 financial results and 2016 outlook. The news release, investor financial supplement and fourth quarter slides were all released yesterday afternoon and are posted on our website. In addition, there is a slide deck for today’s webcast that was posted this morning. I would note that we expect to file the 2015 10-K on February 26th. 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 those risks and uncertainties can be found in our SEC filings, available on our website. Our presentation today also includes several non-GAAP financial measures. Explanations and reconciliations of these measures to the 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.

Thanks, Sabra. Good morning, everyone, and thank you for joining the call. 2015 was a successful year for The Hartford. Core earnings per diluted share increased 15% over 2014. Core earnings ROE rose to 9.2% from 8.4%. Book value per diluted share, excluding AOCI, grew by 7%. We reduced debt by $750 million and we returned $1.6 billion of capital to our shareholders. Doug and Beth will go into further details of our 2015 performance but I’d like to touch on a few highlights. First, Property and Casualty had a very strong year. The underlying combined ratio improved a half a point to 91 and top line growth continued, reflecting an increase in new business and the benefit of pricing and underwriting actions we have made over the past few years. Group Benefits had a very strong year. The business generated a 5.6% core earnings margin, exceeding our plan and pivoted to growth with a 2% increase in fully insured ongoing premiums. We continue to execute on our strategy at Talcott Resolution. The business is running off steadily, returning capital to the holding company and our hedge programs are working effectively. Our mutual funds business generated $1.5 billion of positive net flows in 2015, increased sales by 15% and delivered solid relative fund performance. And our ratings were upgraded by A.M. Best, Moody’s and S&P, an affirmation of our improved balance sheet, operating performance and financial flexibility. We delivered these strong financial results and increased our top line momentum while investing in the capabilities and talent that are making us a broader and deeper risk player in a more efficient, customer-focused company that can deliver sustainable, profitable growth. For example, the strong talent we attracted to the organization, particularly in underwriting, sales, data and technology is enabling us to judiciously…

Thank you, Chris, and good morning, everyone. I’ll provide an overview of our 2015 results and Property and Casualty and Group Benefits, and then share some thoughts as we look forward to 2016. 2015 was another year of strong financial performance with improved results in Commercial Lines and Group Benefits. In Personal Lines, results were below our expectations but we remain pleased with the trends of our AARP Direct business and the progress we’ve made to reposition Agency. Let me get right into our financial results. In Commercial Lines, we delivered over $1 billion of core earnings for the full year on an all-in combined ratio of 92.6, eight-tenths of a point better than 2014. The underlying combined ratio excluding CATs and prior year development was 90 for the year, representing 1.5 points of margin improvement. Recall that 2014 included a $49 million pre-tax benefit from New York assessments. Normalizing for this, the underlying combined ratio improved 2.3 points. This was driven primarily by improved results in workers’ compensation, general liability and non-CAT property losses. Renewal written pricing and standard Commercial Lines was 2% for both the full year and the fourth quarter. In workers’ compensation, our largest and most profitable line of business, loss trends continue to emerge favorably and as a result, pricing has flattened relative to the prior period. Conversely, commercial auto pricing was in the high single digits, reflecting adverse loss experience throughout the year. On the top line, written premium of $6.6 billion was up 4% from 2014 with growth across Small Commercial, Middle Market and Specialty Commercial. Let me provide some details on each of our commercial business units. In Small Commercial, the underlying combined ratio of 86.6 was four times of a point better than 2014. Written premium grew by 4%, driven by…

Thank you, Doug. Today, I’m going to cover Talcott Resolution, the investment portfolio and full year results before turning to our 2016 outlook and financial goals. Talcott’s full year core earnings summarized on Slide 19 rose 9% from the prior year to $472 million, much higher than our original outlook due to a tax reserve release, increased limited partnership income and non-routine investment income such as make-whole payments. Excluding these items, Talcott’s results were largely in line with the February 2015 outlook of $340 million to $370 million. On a statutory basis, Talcott’s surplus during 2015 increased by approximately $375 million before dividend to the holding company. Year-end surplus was $5 billion which correspond to an RBC of approximately 550%. In mid January of this year, the Connecticut department approved our $500 million dividend request and it was paid to the holding company last week. This payment completed Talcott’s $1.5 billion capital return program that we announced in February last year. In addition, we expect to request a dividend of approximately $250 million in the second half of 2016. For 2016, we expect Talcott quarter earnings in the range of $320 million to $340 million. This outlook is based on the continued runoff of the VA in fixed books and does not include items like tax reserve releases or significant non-routine investment income that we had in 2015. I would note that our outlook does assume market value appreciation from year-end 2015 on VA accounts; and therefore, there is some sensitivity to market levels. Statutory results for 2016 will depend on many factors, such as the level of admitted deferred tax assets, cash flow testing reserves, limited partnership and non-routine investment income and other items that may create volatility. Based on the underlying assumptions in our outlook, we expect statutory…

Thank you, Beth. Just a reminder that we have about 30 minutes for Q&A which means we might run a little past the 10 AM deadline when some other calls begin. If you have to drop off or we don’t have time to get to your questions, please email or call the IR team and we’ll follow up with you as soon as possible today. Jessa, could you please repeat the instructions for Q&A?

Certainly. [Operator Instructions] And your first question comes from the line of Jay Gelb from Barclays. Please go ahead.

Thanks and good morning. And thanks for the additional disclosure on return on equity. With regard to however you want to look at on overall basis or core basis, do you think Hartford has the ability to maintain or even potentially exceed a bit that 9% outcome on return on equity that’s delivered this year?

Jay, it’s Chris. 9.2% is what we delivered this year on a core basis. And thanks for acknowledging the expanded disclosures that Beth and the team have put out there. We think it’s important that you really continue to see the progress that we can make going forward. So as I really sit here today, the 10.9% core earnings ex-Talcott, as Beth described, really does exceed our cost of equity capital today which we judge probably on a 9% to 9.5% range. And if we look forward in ‘16, I do think we could improve that 10.9%. So when I say that, really what I mean is if you look at the plan that we outlined, including normal CATs, we achieve our NII outlook, we maintain in the margins that Doug and his team are focused on and we execute the capital management plan, I think that core earnings ROE ex-Talcott could increase by 50% by the end of ‘16 - basis points, excuse me, 50 basis points.

That’s great, thank you. And I just have one question on the guidance. In the P&C and other operations which includes a drag from legacy liabilities like asbestos, it’s been negative for the past few years and I’m just wondering why Hartford isn’t including any impact of that in 2016 in the guidance.

Yes, this is Beth. I’ll take that question. So we make our best call each year on what we anticipate for our A&E reserves. And to put a bogey out there as far as what we could expect for prior development, we don’t really have a basis for doing that. The last several years, obviously we have seen charges. Years before that, we didn’t. And we’ll continue to evaluate any reserves in the second quarter like we’ve done before. Also note, we don’t actually estimate any prior year development except for the accretion of workers comp discount, so it’s very consistent with how we look at things overall. But it is something that we obviously take into consideration and thin about as we think about our expectations for 2016 and we’ll make the call on what the reserves need to be at the time we do the study.

Right. For our own models, if we were to put something in for prior year development on issues like a asbestos south [ph], that would detract from the -

Yes, yes. We have not included an estimate for prior year development in our outlook.

And Jay, the 50 basis point improvement I talked about obviously does not include that either. So like Beth said, we don’t really outlook favorable or unfavorable development at this point.

I understand. Thanks again.

Just one thing before you take another question, Sabra, I just did want to clarify that in my remarks, I call that our impairments for the quarter were 107 million. That was actually a full year number, not the quarter.

Your next question comes from the line of Cliff Gallant from Nomura. Please go ahead.

Thank you for taking my question. I just want to talk a little bit about workers comp and what kind of loss trends you’ve been seeing there over the last year. And then in terms of your guidance, what are you assuming going forward?

Cliff, good morning, this is Doug. Our indications across our frequency and severity triangles, these last several years have been very favorable. 2015, our frequency still is small single digits negative across all our markets. Severity is a bit too early to predict on that tail line, but we’re seeing favorable symptoms even at 12 months on the 2015 actually. And so very pleased about the last three to four action year. Indicators inside our loss triangles and it has been a driver of our improvement and profitability for sure. In 2016 moving forward, we don’t see a major change in the environment, but we’re still predicting that we’re going to see medical inflation and indemnity severity based on wage and medical as we expect over the lifetime of these workers comp claims. And frequency, I think it’s a pretty flattish scenario in the frequency world.

Okay, all right. So when we think about the guidance in the 80, 90, 91, I mean obviously those are very good numbers, but you could be painted as somewhat conservative in terms of your outlook as well.

Yes, I’ll let you pick the word. What I would say is that we’re pleased with the progress. Particularly in middle market, this line has gone from at the bottom of our profitability curve to near the top. And we’re trying to do everything we can to maintain that level of profitability in our book.

Okay. Thank you.

Your next question comes from the line of John Nadel from Piper Jaffray. Please go ahead.

Thanks. Good morning, everybody. One on personal lines. I guess, Doug, you had mentioned in your prepared remarks that in auto that you believe the pattern of higher frequency is a new norm. I guess the question I have in response to that comment by you is the 6% level of renewal rate increases, does that appear sufficient as you look forward now based on this expectation that the higher frequency is the new norm?

So John, thanks. I guess I would say this first about 2015. First, the first six months of 2015 really were very quiet vis-à-vis frequency and then obviously very different patterns back after the year. As we move forward, we’re reflecting kind of the increased economic activity which has got a lot of features to it as you know. We weren’t quite sure and we certainly didn’t have that tenant [ph] when we’re with you in October when we talked about the third quarter. But it’s more than a blip. We think it’s going to be with us and therefore, we’re building those patterns into our longer-term framework. And I would say there’s upward bias on our pricing actions moving forward, yes.

Got it. Thank you. And then just one quick one on Talcott, Beth, I think you had mentioned that if we had normalized 2015 for some of the unusual items that earnings would have been in the range that you guys had originally provided, if you compare that against the 2016, it looks like you’re calling for sort of a core or normalized high single digit piece of earnings declined. Should we think about that as a longer-term trend as well in that is there really anything that should change around the case of the runoff of the underlying blocks of business within Talcott?

Yes, I would say over the near-term that is a reasonable estimation of the decline. So again, a large portion of the income that comes in on Talcott is from the VA book and fees there so that continues to surrender activity there, you’d continue to see decreases in those earnings. So in the near term, I think that’s a reasonable expectation.

Thanks very much. Have a good day.

Your next question comes from the line of Michael Nannizzi from Goldman Sachs. Please go ahead.

Thanks so much. Just a couple of questions on personal lines, again, but this time on the homeowners side. I mean clearly when we look at the whole P&C operations, middle markets and homeowners were areas for improvement, for harvesting some improvement at the beginning of the year, you’ve clearly done that in middle markets, where are we in homeowners? And it would just seem that like now is probably a pretty good time to be fixing that business. Can you just sort of give us an update of where you are? And what sort of margin improvement are you anticipating in your outlook for 2016? Thanks.

Good morning, Mike, this is Doug.

Hi, Doug.

We’re working. We are working hard and you know that across both auto and home. I would say this on the homeowners book, number one, our ability to price parallel and properly underwrite through all those parallels is going through a vigorous review. We’re looking at our underwriting and risk characteristics. We’re looking at agency management actions. So really for both lines, we’ve made quite a few changes in the past 12 months. We’re down about 2,200 agencies that have underperformed for us over a longer period of time. We’re going to continue to look at agency actions in the AARP agency world. We have deauthorized over 2,300 contracts in the last six months. So we’re looking at every lever available to us both on the home and auto side encouraged by progress on both. But it’s going to take time for those actions to earn their way in to the book of business which is why I think we’re trying to be subtle and conservative as we play 2016 out.

Got it. And do you have a notion of for the year you ran at 77 give or take for homeowners to kind of square up with that guidance you provided for personal lines? Is that where you’re assuming some of that margin expansion comes in?

Yes, we have hopes for improvement on both auto and home. I would say that if you look at our cat performance over a longer than one year period, we think that we can be a more thoughtful cat underwriter in the homeowners arena. Again, we’re looking at pearls inside our product. So yes, between agency actions and underwriting actions on our own part, we do expect to see improvement in home over the next year to two.

Got it. And then just back in middle markets for just a minute, that the gap there between middle and small is now 400 basis points or under 400 basis points. Do you feel like now kind of taking a step back and looking at the work you’ve done and sort of what you’ve achieved, I mean is there anything sort of one timing in the fourth quarter? Do you feel like this is a good starting point for you and/or looking at that sort of differential to small commercial? Has that kind of dragged what you would expect and potentially, could we see that gap close further? Thanks.

Mike, I’d love to see that gap close a bit further, but let me just offer a couple of comments. Number one, very pleased with the outstanding performance in small commercial. I think across the marketplace and historically against our own book of business, we’re in a very solid spot and would like to grow and maintain that margin going forward. So that’s a thought around small commercial. In the middle arena, a bit more duration matched here. So this is a book of business that has improved mightily over the past four years. We’re watching the yield curve because duration does matter. Workers comp is a key line here as it is in small. It’s been a while since I’ve reported a quarter with 89 execs in the middle in my career. So please with progress. I would say that between the pricing environment that we continue to compete in and the yield environment that affects our portfolio, we’re going to stay close to those dynamics and be thoughtful in terms of our choices, risk by risk as we move through time. And also, as Chris has shared with you, we have geography goals. And we think there are other places in the country that we can find and build new relationships and be able to leverage our products that are really very solid at the marketplace. So like the progress. I think we can be a much bigger, broader player over time in middle.

Great. Thanks so much.

You next question comes from the line of Jay Cohen. Please go ahead.

Yes, a couple of questions. One, you had mentioned I pretty notable reduction on the number of agents. Should we be factoring that as having an impact on your top line growth and personal lines?

If you look at fourth quarter performance, Jay, you can see some of that playing out because one of the lines is down. It’s down most substantially relative to the other personal lines. It’s not 50% of our agency book, but it has disproportionally impacted our profit inside the book of business, Jay. So I don’t think you have to make major top line modifications. I think you’re going to probably see more quarters moving forward like what you saw in the fourth quarter. But we do expect to see some positive development inside our triangles from some of these actions.

Got it. Secondly, on the small commercial side, one potential major competitor is planning to form a kind of direct distribution platform with small commercial. Two questions on this. One, do you think this has a chance of succeeding? Secondly, if yes, is Hartford well-positioned to essentially explore that channel if in fact people want to buy that way.

Jay, it’s Chris. We’re very aware of market developments and activities whether it be from traditional players of new players in the marketplace. And ultimately you’re probably not going to like this answer, but time will tell. But if you look at what it’s going to take to be successful, product, service, brand, reputation, claims, I mean it’s, I call it an entire business model you have to be good at to keep customers for a long term which we’ve been particularly very pleased and proud of our retention. So with $3.5 billion of premium and upstarts, they’re going to try and we’ll have to have a response which we’ll be prepared for at the right time to counteract any of their measures in the marketplace. But I like our beginning point. But we’re also very watchful as far as developments in the marketplace.

Got it. Thanks, Chris.

Your next question comes from the line of Meyer Shields from KBW. Please go ahead.

Thanks. I have two personal lines questions if I can. One, Doug, can you take us through the mechanics of the policies that are served by the agents that have been terminated? I’m asking really whether that impact systems ratios going forward.

So we have contracts with individual agencies both personal lines and commercial contracts, Meyer. And we obviously have to buy better provisions so there are extended contract periods. So some of them having six-month, twelve-month provision that we will continue to be partners. And then at some point in the future, that business will move elsewhere. They do shift and are not exactly the same throughout the country, but we’re adhering to them. On the expense side, I think we’re working hard to manage our expenses appropriately given what may happen to the top line. So I don’t think you have to do any different to your models on the expense side. Chris.

I would just offer, Meyer, just a context here. So agents across our platform are very vital to our success. So when we talk about shrinking agents, particularly in the independent agency side, I think it’s important you have a context of market segment. So our strategy here is to have meaningful relationships with our independent agents defined as being a top three carrier in their agency plan because that will dictate, I’ll call it, long-term success with retention growth and profitability. Those agencies particularly in personal lines that we don’t have that type of relationship with is the targeted area here for shrinking. On the other side, particularly given our AARP relationship and the importance of agents to certain AARP members that want advice and counsel, if we want to continue to support those independent agents that have the ability to attract and retain AARP customers for the long term. So it’s very targeted here, our actions. So I don’t want you to have the impression that - or getting out of independent agency channel and personal line or fine-tuning the definition of success ultimately from a growth and profitability side.

And Meyer, I would say two other points that I would like to have. Number one, our research which we’ve worked on now this past couple of years shows us that many of those AARP members do indeed prefer to work with an agent. So we’re excited about the progress we’ve made there. And secondly, my comment about the number of agents that have been deauthorized for AARP, those were essentially relationships that had leveraged the value of what we thought we brought to the table with this enhanced offering. So in the case that they haven’t leveraged that, we’d rather be contracted with those that are using it. And we think there’s great value there. And working like crazy to build a very, very positive profile of customers that value our brand and our AARP members.

Okay. That’s very helpful. Thank you. Second question, when you look at the different channels that you’ve got, AARP, AARP agents, et cetera, is there a difference in terms of frequency shifts by channel? Are you seeing, I would expect, less uptick in AARP? Is that panning out?

As we look at our trends across 2015, they’re essentially very consistent across the channel. So our frequency uptick in third quarter and also fourth quarter as well as the very flat profile for the first half of the year, were essentially consistent across the channel. I think that leads down a path toward this economic dynamic with weather in the fourth quarter and a summer month vacation schedule in July and August that we felt the impact of as did many others.

Okay, great. Thank you very much.

Your next question comes from the line of Randy Binner from FBR Capital Markets. Please go ahead.

Thanks. I got a couple more on personal lines. I guess the first question is there was a notion earlier, recently as last conference call that the AARP book was a more mature group of individuals who were safer drivers. And so I just want to check in on that dynamic. Is that overtaken by the, I guess, the miles driven argument that’s going on here. And if you quantify this - I missed it, I apologize - but are you getting on auto pricing price increase-wise, is the 4%, 5%, 6% bip? It would nice to hear that quantification because we are getting those numbers from other carriers.

Randy, it’s Chris. Let me just take just a step back and then Doug and I will partner on this one here. I think your point on AARP is still generally true, but if you look at sort of the progression of activity over the last 12 months, Doug said is earlier. First half of the year is relatively benign from a frequency side and we’re seeing normal severity trends in the 2% to 3%. I think what happened in July and August is we saw a little bit of a pop in frequency. Then September, October, it went back to sort of normal in that 1% range. And Beth and I then had an opportunity to speak at a conference in early December where then we gave an indication that we thought November would be in that 1% range also and sort of smooth out the year. But as we got into December, we had another sort of blip in frequency. And that impacted our quals on how we thought ultimately November frequency would develop. So there’s a little bit of a lag factor that you have to put on this frequency trend. So when you put the third and fourth quarters together as Doug said, we’re in that 3.5% to 4% range. I think our thesis still is that economic activity defined by low employment, miles driven up due to lower gasoline prices coupled with particularly in November then December, some weather in the Southwest, Midwest and West whether it be rain, sort of torrential rains at California experienced - and California is our largest personal line state - or other weather activity. All that contributed to, I’ll call it, the increase in frequency incidences. That said, over a longer period of time, the AARP book still outperforms a mass market book so that when we’re talking about 3.5%, 4% frequency increases, wish they’ll think that is a lot lower than a broad mass market increase in frequency. So as Doug said, we are beginning and have particularly with a fourth quarter filing and a couple of our - one of our large states, we have, in essence, we reflected this new level of activity in our filings. And we’ll continue to do that in 2016 and earn that out and manage actions such as underwriting or agency management actions as Doug described. I think that is the context that I just would have you to keep in mind. So Doug, would you follow up?

Chris, I think you hit most of the major points. I think maybe a few to add. One is I would not underestimate our view of how much the non-rate activity should improve our performance over time, Randy. So these agency actions and really becoming a better underwriter. I’m thinking about selection and undisclosed drivers and appetite management and geography. Those are all meaningful priorities for us and we expect over the next year to two years. That’s point one. Point two is I don’t think that dramatic change in our numbers were quite as dramatic as some of the other carriers we compete with. So yes, our frequency was not flat for the second half of the year. But it was mid-single, three-ish, three to four. So that’s not 8, 10, 12. It’s having an impact on our filings, it will be proportional to state. But we wanted to send the message today that we’re not just at a point where we’re thinking it was a blip on the radar and we’re not going to adjust our patterns going forward.

Okay. Thank you for all that. So your price would be something like 2% to 3%, is that the right was to think of it?

Our price filings are still in that mid-single digit range and probably will increase from there on auto going into 2016.

Got. Okay. Thank you.

And Randy, it’s Chris. All I said is I mentioned, severity is not zero either, right? So I mean there are still more expensive cars and bumpers and devices to fix in cars when there are accidents. So I just want to be clear that severity is in that 2%, 3% range also.

Great. Thank you.

Your next question comes from the line of Erik Bass from Citigroup. Please go ahead.

Good morning. Thank you. Can you remind us about the composition of your alternative investment portfolio? And in your guidance, I think you assumed a 6% return for the year. But do you have early read on the first quarter results just given the market decline that we’ve seen year-to-date and the lag in reporting for some of the funds?

Erik, I could get that to you. But I would just ensure focus on first quarter. First quarter is going to start out soft here just given market activities and the lag.

Yes. So a couple of things. And we do provide a breakout of our partnership investments and our 10-Qs and Ks so you can see the update. Obviously, we file the K at the end of the month. But when you think about our total partnerships where we ended 2015 at about $2.9 billion of assets, about $1.8 billion of that is in private equity and real estate funds and the rest would be in hedge funds. And when we think about our returns in total, we plan for a blended sort of 6% return. We anticipate higher returns in the private equity funds and a bit lower in the hedge funds. And as Chris just said, as we think about first quarter, a couple of things to keep in mind. For the private equity fund, those are on a quarter lag. So what we report in first quarter will really be where they ended 2015. And for the hedge funds, they are at about a one month lag. And looking at what we expect to see for January results, we expect to see a little bit of downtick in the hedge fund performance and we’ll just have to see how February comes in to see where we actually close the quarter.

Got it. Thank you. And then Beth, could you just clarify one thing on Talcott? I for your guidance, I think you mentioned that it’s as of on the market at 12-31. Can you just give us a sense of how much impact the equity market movements have on earnings for Talcott now given obviously the shrinking of the VA book?

Yes. So a couple of things. So the rule of thumb, what we typically look at is that for every 1% change and sort of an annualized look at S&P, that’s about $2 million to $3 million of quarter earnings. So when you think about how markets have declined since yearend and sort of extrapolate that, right now looking at it you’d probably say about 15 million after tax sort of pressure on the quarter earnings number.

Got it. Thank you very much.

Your next question comes from the line of Thomas Gallagher from Credit Suisse. Please go ahead.

Good morning. Few questions. First is just in terms of your energy exposure, if you could start with that. It looks to me like you’ve been one of the more proactive companies in terms of derisking from a credit standpoint on energy. Would you say you’re pretty much done with the significant reduction for that portfolio? And also related to that, how much of a gain did you book on the derivatives that were short oil as an offset against some of these impairments?

It’s Chris. I appreciate the observation of our proactivity regarding risk. So yes, we had been very proactive with our Hemco investment management professionals, our Chief Risk Officer, Beth, myself, so we did make some early moves that turned out to be good and wise. Beth could give you the details on the exact percentage decline. But we took out approximately $1 billion of oil holdings in our portfolio. When we did that, we also decided to put on a more of catastrophic hedge on oil prices if it crashed for a long period of time. But Beth, would you just comment about some of the details?

Yes. So a couple of things. So as I said, we ended the year with our portfolio at about $2.6 billion. About 91% of that is in investment grade securities. And then a little, obviously, the rest in below investment grade with 745 of that at a BB rating. So as I said here today, we feel very good about our holdings. And as always, we’ll continue to monitor it. And so if there are other actions we need to take, we would take them. But right now, we felt very well-positioned with all of the actions that we took over the course of 2015. As it relates to the oil hedges, as Chris said, we put that on in early 2015 because as we looked at our portfolio, we knew that we did want to reduce our exposure there and we wanted some protection so that if prices were to decline significantly before we’re able to do that, we had some offset. So actually, the hedge position we unwound mid-December because we’re basically done with our activities and we were put at a modest loss of about $9 million on it before tax. But again, overall, very, very happy with the actions that we took and the position that we find ourselves in today.

Okay, thanks. And then next question is just on the group benefits side. Doug, can you comment on - results are softer this quarter. It looks like you’re assuming margins consistent with the full year. Should we take that to mean the fluctuation you saw on 4Q were just on the adverse side, you don’t see any change there? Or do you need some rate there to get to the results that you’re predicting for 2016 or you’re forecasting for 2016?

Yes, good question Tom. I think that our full year results are more reflective of how we deal about group. There was some fine-tuning at yearend. We had a little adverse mortality and severity in our life block. And a little bit of activity in LTD, not anything major. And as I look at the full year, I still feel very good about the health of our overall book of business and our ability to compete in the marketplace. So we move ahead into 2016 feeling good about the progress made.

So Doug, no material rate needed in that business from where you’re sitting?

We still want to stay ahead of trend. So we’ve got medical and other trends in that book of business that will impact our future plans and activities. But I don’t see anything out of the ordinary difference than how we would have thought about pricing over the last 12 to 18 months.

Okay.

Tom, this is Chris. Our interest rates obviously are - I think if you look at our discount rates of how we’re going to discount our implied discount and our liabilities are appropriate. But as Doug said, I mean it’s a great business for us. It’s a major contributor of our growth orientation and our strategies. It’s integral. And I’m glad you’re recognizing its potential.

Okay. Thanks, Chris. And then just one last one on Talcott. And this is sort of a bigger picture question to think about not so much specific numbers related to beyond 2016. But I just want to understand conceptually how you’re thinking about this. So you’ve obviously taken out a combination of extraordinary dividends plus the earnings generation at that business for last few years here or at least in 2015 and then the plan in 2016. But if I think about the shrinkage of that block, it looks like it is slowing a bit on the VA side. And now the majority of capital is non-VA related and those liabilities seem to be stickier. So as we think about our path over the next two, three years, is it fair to say more of the dividends coming out will just be earnings or do you still think there’s a lot of latitude for taking out the bigger extraordinary dividends as well.

Tom, Beth can comment on her views. But I think generally you’re right with the view if you look at the capital allocation. We’ve got a lot of capital tied up in, I call it, the fixed annuities. But again, the amount of derisking that the book has gone through, the hedge protection, the sensitivities that Beth gave you on capital margins, it still says that we have the ability to extract some excess capital out as the block shrinks and as we produce earning. Math-wise it’s hard for us to predict right now, but that’s what I would say. Beth.

Yes, I agree with that. I mean again you go back, we took out $1 billion of dividends last year and we anticipate taking $750 million out this year. What I think about 2017 and 2018 to your point, I first think about the capital that we generate, $200 million to $300 million range which I would point out still requires extraordinary dividend approval even though its earnings. It’s a capital position of Talcott. And then I do see there being the potential for excess capital beyond that. But when I think about going into 2017, I don’t anticipate the dividends being higher than what they were in 2016. And as we go through the course of the year, we’ll obviously continue to update that, but you’re right, it would be on a downward trajectory, not increasing when we think about the excess capital.

That’s helpful. Thanks.

Thank you. And Jessa, I think we have one more question in the queue.

We certainly do. Your last question comes from the line of Bob Glasspiegel from Janney. Please go ahead.

Good morning. Doug, just a quick question on personal. Your outlook midpoint of the range is a one point improvement for personal lines. And in light of the fact that you’re just trying to sort of address personal lines, auto pricing for the changed frequency environment and you’re growing [indiscernible] in the second half, does that suggest that homeowners can offset sort of auto being in the fix mode or are there some things you can do on the expense side it gives you confidence that you can show an improvement?

So Bob, you now have the sense that we’re working numerous levers on both home and auto. And I do think that the first half of the year in auto will be a tough compare relative to frequency because basically they had none in the first half of last year. But they’re underwriting actions. And these agency actions I described we think will improve our results over time. It’s not going to be easy. And as you know, it takes a while for these actions to earn their way in. Both Chris and I are committed to making those changes and we believe we can hit the targets that we have out there. But we’ve got a lot of work to do in front of us, no question. And I look at headwinds into 2016, personal lines is probably just at the top of that list for the need for us to work through change to get these books in a better financial state.

Okay. You don’t think having to put on the gas pedal in the second half contributed all to the deterioration. It’s more macro trends.

We believe so. We’ve been very selective about where we put the gas pedal on. We’ve talked to you about the fact that we’ve got a new class plan that have went in two years ago. And it’s been rolling in over time. But Ray Sprague and his team have been very analytical about how we’ve built in our marketing plans, where we’re advertising. AARP obviously is at the core of that, Bob. We look at it by state, so we’re very targeted in terms of within those states, what we’re doing. But I will also say to you that the overall answer is still not working. So we have more work to be done and confident that we’re on the right path with the renewed team, actively engaged to get it done in 2016 and 2017 as we move forward.

Well, awesome. Thanks, Doug.

Thank you everyone for joining us today and for your interest in the Hartford. Please note for your calendars that Chris Swift and Beth Bombara will be at the Merrill Lynch conference on February 10th. And in addition, Beth and Brion Johnson, our Chief Investment Officer and Head of Talcott will be at the AFA conference in Florida at the end of February and early March. We hope to see you at either or both of those events. Again, we thank you for your interest in the Hartford and please do not hesitate to follow up with the investor relations team if you have any other questions. Thank you.

This concludes today’s conference call. You may now disconnect.