Eric Durant John Robert Strangfeld - Chairman, Chief Executive Officer, President and Member of Executive Committee Richard J. Carbone - Chief Financial Officer, Executive Vice President, Chief Financial Officer of Prudential Insurance and Senior Vice President-Prudential Insurance Mark B. Grier - Vice Chairman Edward P. Baird - Chief Operating Officer and Executive Vice President of International Businesses Charles Frederick Lowrey - Head of Asset Management Business, Executive Vice President, Chief Operating Officer of Us Businesses, Chief Executive Officer of Prudential Investment Management, President of of Prudential Investment Management and Executive Vice President of Prudential Financial & Prudential Insurance

Christopher Giovanni - Goldman Sachs Group Inc., Research Division A. Mark Finkelstein - Evercore Partners Inc., Research Division Nigel P. Dally - Morgan Stanley, Research Division Steven D. Schwartz - Raymond James & Associates, Inc., Research Division Edward A. Spehar - BofA Merrill Lynch, Research Division John M. Nadel - Sterne Agee & Leach Inc., Research Division

Ladies and gentlemen, thank you for standing by. Welcome to the Second Quarter 2012 Earnings Teleconference. [Operator Instructions] As a reminder, today's conference call is being recorded. And I'd now like to turn the conference over to the Senior Vice President of Investor Relations, Mr. Eric Durant. Please go ahead.

Thank you, Leah. Good morning. On behalf of my Prudential colleagues, John Strangfeld, CEO; Mark Grier, Vice Chairman; Rich Carbone, Chief Financial Officer; Charlie Lowrey, Head of U.S. Businesses; Ed Baird, Head of International Businesses; and Peter Sayre, Controller and Principal Accounting Officer, we thank you for joining our call. We'll start today with prepared comments from John, Rich, and Mark, and then we'll have at your questions. Before we begin, in order to help you to understand Prudential Financial, we will make some forward-looking statements in the following presentation. It is possible that actual results may differ materially from the predictions we make today. Additional information regarding factors that could cause such a difference appears in the section titled, Forward-Looking Statements and Non-GAAP Measures, of our earnings press release for the second quarter of 2012, which can be found on our website at www.investor.prudential.com. In addition, in managing our businesses, we use a non-GAAP measurement we call, adjusted operating income, to measure the performance of our Financial Services businesses. Adjusted operating income excludes net investment gains and losses as adjusted and related charges and adjustments, as well as results from divested businesses. Adjusted operating income also excludes recorded changes in asset values that are expected to ultimately accrue to contract holders and recorded changes in contract holder liabilities resulting from changes in related asset values. Our earnings press release contains information about our definition of adjusted operating income. The comparable GAAP presentation and the reconciliation between the 2 for the quarter are set out in our earnings press release on our website. Additional historical information relating to the company's financial performance is also located on our website. Now let's get started. Here is John Strangfeld, CEO.

Good morning, everyone, and thank you for joining us. I'll begin by headlining what Rich and Mark will be describing to you more specifically regarding our second quarter. Our drivers continued strong, and in fact, in some cases, very strong, and our underlying financial performance improved from the first quarter. Rich will take you through the market driven and discrete items included in this quarter's earnings. Stripping these items from each second quarter, our earnings per share amount to $1.67 this year versus $1.64 in the second quarter of 2011. This quarter's results includes the effect of significant improvement in the benefit ratios of our group life business, confirming, we believe, that last quarter's elevated ratio was an aberration. On the other hand, this quarter's result also includes a drag of significantly worse-than-expected mortality in Individual Life, stemming from several large claims on seasoned policies. This unfavorable result, the largest in relation to our expectations since the fourth quarter of 2003, is also in our judgment, a random event. ROE this quarter amounts to an annualized return over 11%, again, based on adjusted operating income, excluding the small number of market driven and discrete items that Rich will describe in a moment. Keep in mind that this 11% return -- 11-plus percent return, reflects the earnings drag from significant capital capacity, and that we intend to deploy approximately $3 billion of this capacity in the next 4 quarters. A portion of that deployment is slated for the GM pension buyout transaction we expect to close by year end. And in addition our board has authorized $1 billion in share repurchases in the 12 months ending June 30, 2013. Through business expansion, synergy realization and capital deployment, we expect our ROE to improve. And we continue to believe our stated ROE…

Thanks, John, and good morning, everyone. Last night, we recorded common stock earnings per share of $1.34 for the second quarter, and that's based on adjusted operating income for the Financial Services businesses. This compares to $1.57 per share in the year ago quarter. We have a short, but not insignificant list of items related to markets and other discrete items, events, affecting the quarter's results. In the Annuities business, the equity market dropped in the quarter, causing us to strengthen reserves to guaranteed minimum debt and income benefits and at an increase in amortization of deferred policy acquisition costs, resulting in charges totaling $0.17 per share. In the Asset Management business, we recorded a charge of $0.10 per share for an impairment related to our investments in our real estate funds. In International Insurance, Gibraltar absorbed integration costs of $0.05 per share relating to the Star/Edison acquisition. And in Retirement, we recorded a charge of about $0.01 a share on the transfer of bank deposits to third parties, in connection with our decision to convert our savings and loan association to a trust-only organization. In total, the items I just mentioned had an unfavorable impact of about $0.33 per share on the quarter. Our results in the year ago quarter included net charges of about $0.07 per share for a number of items, including claims costs and expenses from the earthquake and tsunami disaster in Japan, and again, on the partial sale of a seed investment in the asset management business. Taking these items out of both the current and year ago quarters, the EPS comparison would be $1.67 for the current quarter versus $1.64 a year ago. Now this comparison reflects an adverse fluctuation in Individual Life mortality for the current quarter and higher expenses in our U.S.…

Thank you, John and Rich. And good morning, good afternoon, good evening or good night, depending on where you are. Thanks for joining us. I'll start with our U.S. businesses. Our annuity business reported adjusted operating income of $107 million for the second quarter compared to $207 million a year ago. The reserve true-ups and DAC unlocking that Rich mentioned had a net unfavorable impact of $124 million on current quarter results. This included a charge of $90 million to strengthen our reserves for guaranteed minimum debt and income benefits and a charge of $34 million from increased amortization of deferred policy acquisition and other costs; in both cases, reflecting unfavorable market performance in the quarter in comparison to our assumptions. Results for the year ago quarter included a net charge of $35 million from an unfavorable DAC unlocking and reserve true-ups, also largely driven by market performance. Stripping out the unlockings and true-ups, annuity results were $231 million for the current quarter compared to $242 million a year ago or an $11 million decline. This decrease reflects the impact of a higher level of base DAC amortization and higher expenses in the current quarter, which together, more than offset the benefit of growth in our fees. Policy charges and fee income in the quarter increased $31 million from a year ago reflecting an increase of $7.5 billion in average variable annuity separate account values. The increase was driven by $11.6 billion in net flows over the past 12 months. While we have benefited from improvements in our amortization factors since our negative unlocking in the third quarter of last year, we are still amortizing DAC at a more rapid pace than a year ago. As a result, our base level of DAC amortization increased more than proportionally with the…

[Operator Instructions] First, we'll go to the line of Chris Giovanni with Goldman Sachs.

I guess, first question just on the VA pricing and product feature changes. And I guess we should prepare for an acceleration of sales here in 3Q ahead of the changes. But once the new product is in force, what sort of a pace of VA sales you'd be comfortable with on a quarterly basis given the refinement in the product?

Okay, well, I think, Chris, there are a couple of questions there. First, let me deal with flows. I think this quarter what we'd say is, flows were slightly higher than we wanted, but not higher than we expected. I think, as Mark said, we -- we're nothing if not consistent. And if you look at last year, we had flows of about $20 billion. So we've averaged about $5 billion a quarter. This quarter, they were slightly higher, I think because of the new product launch that's being made. But we try to manage any acceleration in sales as carefully as we can. Having said that, I think we'd expect sales to trend down somewhat over time, and that's what we hope for.

Okay. And then, I guess trying to think a little bit about Mark's comments in Investor Day about expectations to deploy more than $3 billion of capital over the course of the next 4 quarters. So -- and I guess with the GM transaction, the $1 billion buyback authorization and your common stock dividend, you get pretty close to $3 billion. So you kind of have that earmarked already. So I guess, how much more is more? And then how do we think about the outsized growth opportunities, like GM, as potentially more of those could be layered on as we go forward?

Chris, it's Mark. You can hear from the portrayal of the capital position that we still have capacity, and we still have the theme of being opportunistic with respect to finding things that make sense for us strategically and financially. And making sense financially right now, by the way, is very heavily influenced by the contribution that any capital deployment can make to the realization of our ROE objective. In terms of pension risk transfer, those deals will be lumpy. They're hard to forecast. The market has certainly taken notice of the transaction that we're doing with General Motors, and there is interest. And we believe that over time, this can be a very attractive deployment of capital for us, but it's hard to predict the timing. So I guess the net headline is that we have capacity, we'll be careful with respect to the way in which that capacity's used, we do see both business opportunities with respect to things like pension transfer, as well as other deployment opportunities, and we're going to do everything that's pointed in the direction of the realization of the ROE target.

And just as a quick follow-up on that. If there is another large transaction, would that offset the buyback authorization, so you wouldn't move ahead with the buyback? Or are you fully committed to deploying the $1 billion to share repurchases?

I wouldn't make an unqualified statement about the commitment to share repurchases. We'll be making the right economic decision. Having said that, pension risk transfer deals are very capital friendly. And so even a fairly substantial pension risk transfer deal may not put a lot of pressure on the availability of capital for share repurchases. We like the picture that's in front of us in terms of capital friendly deployment opportunities.

And keep in mind, Chris, that capital deployment means capital deployment of the non-monetizable capital that's in PICA. And these pension risk transfer businesses are done within PICA. That's a noncash requirement, right? It's a noncash use of capital.

And next we go to the line of Mark Finkelstein with Evercore Partners.

I actually want to go back to Chris's question for just one clarification. I think we've all been, kind of been operating under the assumption that the $3 billion between the dividend, between the buyback and the GM transaction is -- kind of gets you at or near that $3 billion. I just want to confirm that. Is that the right assumption to be making, or are there any other transactions that we should be thinking about that actually get us to that $3 billion or above, if there's upside?

We haven't parsed it with too sharp a pencil in terms of the pension risk transfer deal. But having said that, the answer to your question, is yes, that's the ballpark.

Okay, great. I wanted to talk a little bit about Gibraltar earnings. And I understand that there was kind of an anomaly that hopefully recurs at this quarter annually relating to the cancer whole life sales. And when you kind of put a margin on that, I mean, should we really be thinking of a normalized earning closer to that $310 million level? Or how should we think about that $340 million plus, if you back off the Star/Edison integration costs?

Sure, let me talk a little -- this is Ed Baird speaking. Let me talk a little bit about the product profitability and the sales and the factors that are driving them. As you observed correctly, the -- one of the drivers for the bump in earnings in Gibraltar was the increased sales in the cancer whole life product. And as Mark explained, there is a particular accounting treatment of that, such that you recognize it in the quarter in which the annual premium is received. That's not particularly unique, that's part of the seasonality that influences certain sales. So yes, you will see that in this quarter. You'll see it recur in the same quarter next year and the years thereafter. What you can't be able to predict, however, is what these other sales are going to do to earnings. Let me give you a few examples of this. There are elements this quarter that are advancing, as Mark accurately described them, future sales. So, for instance, the change in the tax treatment from the cancer, the change in the crediting rates on the dollar-denominated products. So those things are advancing some future sales. The flip side of that, however, is that we're just starting to see the emergence of factors that will strengthen sales. What I have in mind here, for example, within Gibraltar specifically, is the growth in the number of banks. We're up to about 60 banks that we're now active with. As you know, we've reported that we inherited almost 100 in total when we combined what we got from Star and Edison with what we had. And we've just been slowly going through those relationships to see which ones we want to add and how much we want to commit to it. So there's a positive trend there that is yet still emerging. Another factor is that one of the things we have done in the independent agent channel, which again gets reported through Gibraltar, is we have just introduced in this past quarter what has long been our leading product in Japan. And that is the very profitable dollar-denominated retirement income product. That's just been introduced during the second quarter. So there are some aspects of the sales in this quarter, and thus, in the profitability that are advancing future things, but on the other -- and those should not be sort of linearly extrapolated into the future. But on the other hand, there are still some emerging very strong positive trends that will net against that. So consequently, it makes it very difficult to say exactly how you should normalize the quarter.

Next we go to the line of Nigel Dally with Morgan Stanley.

Firstly with interest rates. 10 years, clearly meaningfully below where it was when you provided guidance. So hoping to get some color as to how this may impact fundamentals if rates remain unchanged at the current level? On a related topic, rates have also declined since you announced the GM transaction. Does that change your return expectation for that transaction? Then lastly with international, clearly very strong sales. But given a significant portion was kind of buy or sell in nature, ahead of the crediting rate reductions, can you discuss the profitability of those sales?

This is Mark, I'll start with the interest rate question, and then Charlie can discuss the GM question, and Ed can discuss the international question. But with respect to interest rates, I think the low rate scenario that we had contemplated when we were responding to questions 2 years ago about low rate scenarios is coming through. And the impact on us is unfolding pretty much as we had described at that time. If you look at GAAP earnings, we do see a negative impact from lower reinvestment rates either because absolute returns on some of our assets are lower or because there is spread compression with respect to some of the particular products that we sell. But as we have reinforced our belief in the earnings power of the company and the achievability of our ROE target, obviously now, we're in the middle of the low-rate scenario. And we still believe that, that ROE objective is a fair representation of our earnings power in a range of outcomes that includes continued low rates.

Okay, Nigel, in terms of the GM transaction -- this is Charlie. We can't say too much about it because obviously it hasn't closed yet, it's supposed to close in the fourth quarter, but I'll make a couple of comments here. One, we think GM did a very good job in terms of managing its pension fund. So we started the process from a very good place. In particular, it's not surprisingly that the -- but not surprising, the assets and the liabilities were relatively well matched, so that helps. More to your point, there's a true-up mechanism at the end of the process that takes into account a variety of different market factors. That's built in. But I'd conclude by saying that we and GM tried to put together, what I call, a very durable agreement that contemplated a lot of market movements. So I think we're feeling very good about our partner, and we're feeling very good about the business itself.

Regarding our product profitability, Nigel, let me offer you a couple of comments. First, I would bring your attention to the fact that the biggest increase in product was actually in the cancer-related products. And as you know, both for us and for others, those are among some of the highest margin products out there. Secondly, the single premium whole life, probably that's at the lower end of our targeted range of profitability given the current interest rate environment. But again, that represented only about 13% of our sales. Quite a bit higher is the increase taking place in our dollar-denominated retirement income. So if you actually look at our product breakdown, what you see is our #1 product is retirement income. Again, that's been our lead product for half a dozen years. Number 2, for this quarter, which is unusually high, would be the cancer product. Number 3, is our normal whole life. And you only get to single premium with sort of the number 4 product in our portfolio for this particular quarter. So when you look at the total mix, we're actually very comfortable with the profitability of the portfolio that was sold during this quarter.

Next we move to the line of Steven Schwartz with Raymond James. Steven D. Schwartz - Raymond James & Associates, Inc., Research Division: Nigel -- the Japanese question's the one that I want to go over. But I do want to address kind of a throw-away line from Mark. Mark, you mentioned the start-up costs in asset management. I believe you guys did quite a large closed-end fund during the quarter. I was wondering if that's what you were referring to. And maybe you could put a number on those costs?

Yes. Charlie can answer that.

Sure. Well, we did do a closed-end fund. It was a very successful fund. It was about $700 million for a high yield strategy. And obviously, with closed in funds, you have an initial kind of IPO cost, if you will, and that was roughly $12 million. So that was a big part of the expense gain for the quarter. But we're really pleased with, obviously, the execution of this business and the start of a new sort of strategic direction for us. Steven D. Schwartz - Raymond James & Associates, Inc., Research Division: Okay, Charlie, while I have you, the mention of outflows in equities, would you term that to be the program related? Maybe your clients changing what they want to do, going from something to something else? Or would you equate that more to performance related?

No, I think it's very much the former. It's not performance related. We actually had good performance across all the asset classes this quarter. I'll divide the flows into a couple of ways. But if you look at the institutional flows, as John said, they were reasonably balanced between, obviously, the inflows and the outflows. We've had very good inflows in the fixed income. The outflows were from equity. About half of it was from our quantitative side, QMA, and about half of it was from Jennison. But within the QMA, the interesting thing is there was one passive mandate for which we virtually got very, very little fees. And that was just a client moving out of that particular strategy. The others were more rebalancing, either from equities into fixed income or from domestic into global. So it was not performance related; it was really rebalancing of client assets.

Next we go to the line of Ed Spehar with Bank of America Merrill Lynch.

Two questions. First, a follow-up on the single premium whole life product in Japan. Ed, should we interpret your comments to mean that perhaps there will be some price increases in that product line and some impact on sales? Because I think we're all thinking about the AFLAC commentary on -- and I don't know if it's the same product, but I'm wondering if we should be expecting some changes there? And then, Mark, question on your comments about closeouts being capital light. I think after the GM deal was announced, there was at least one rating agency that came out with maybe less favorable commentary on the risk profile of that business -- or perhaps, you could just sort of discuss how the agencies -- with your interaction with the agencies, how they think about this stuff?

I'll let Ed go first, and then I'll talk about the capital issue.

Sure, Ed. Let me talk a little bit about some of the marketplace dynamics. I wouldn't want to reference any one competitor, but I will talk a little bit about the performance of some of the competitors, both foreign and domestic and the influence it had on our sales and the relative profitability that you could expect. You will have noted that some of the companies who were very strong in their sales over the past year in some of these heavily investment oriented products have indeed retrenched, either by putting in place some kind of cap, lowering crediting rates, redesigning their product, or in the case of some of them, actually withdrawing the product. You will note that we've not done those things, because our view, frankly, is that if it is necessary to do that, that means that one was overreaching probably to begin with. So we have abstained from that kind of approach because we put less emphasis, as you know, on chasing market share that we do on chasing profitability. Secondly, the single premium product that we sell is Yen-based, and that, of course, is a currency that has been living at the low end of returns for a very long time, although in fairness even there, the JGBs have dropped as well. So even Yen-based products need to be evaluated as we continue to evaluate all products, but not with the urgency that the dollar-based products have had to be because they've not experienced that same degree of precipitous drop. So we're actually pretty comfortable with the range of these products, and we will continue to monitor. And if we think the returns don't hit ours, then we will make adjustments. But in general, the reason you saw the sales go up here on this product had not to do with the actions we took but rather the actions that the competitors took in pulling back to a position more comparable to ours. I would cite just one very simplistic example. In some cases, some of the competitors have pulled back the discount they were giving for advanced premium from 1% to say, 50 basis points. We were already at 50 basis points. So you could go through a whole litany of product features and find that there's a comparable movement that has made our product more attractive, not because of actions we have taken, but because of the relative rebalancing that some of the competitors have.

So, Ed, would it be fair to say that, prior to this quarter, over the past 12 months -- let's say, the prior 12 months, that you had lost some share in that type of product relative to these other players and now you're regaining it back? Is that reasonable?

I don't think -- I think it's very interesting; I don't know that we could say we lost it because we didn't have it to begin with. Could we have had more, had they not taken those actions? Possibly. As you know, we're still in the early growth mode with this channel. So that even though sales are up 80%, I believe, yes, in the bank channel for the quarter, and that's over a comparative quarter that was up 60%. So I can't complain that we're not getting growth. It's really just a matter of what's available on the shelf. And at the moment, I think we're seeing that our position on the shelf is looking relatively more attractive, because obviously, I think, both because of the pressure of the solvency margin rules, the new rules that I think are forcing some competitors to maybe take a more cautious approach, more conservative approach to their investment portfolio, and therefore, not be able to support maybe some of the higher yields they were providing on these kinds of products. So I think the trends there are to our favor.

All right, and then on the capital question. The expression that I've used on this is "capital friendly", and not necessarily "capital light". But this is a very efficient deal because of the way in which it goes on the statutory books. This is a good home for this kind of a transaction because of the way in which we recognize the liabilities and because of the way in which we can manage the cash flows on the asset and liability sides of our balance sheet. In terms of issues, the concentration question is the one that's been raised and it has sort of 2 branches to it. One branch is around the notion of a very large deal going on the books all at once. And as you might imagine, we have very carefully considered the impact on our balance sheet of this transaction, very carefully understanding the assets that we'll be receiving as part of the payment of the premium, as well as the investments that we'll have to make ourselves to properly manage against this liability. We believe also in the context, by the way, of total Prudential that although this General Motors transaction is large, it's not out of proportion. When you look at the kind of risk that we want to take and the skill sets that we have in both sides of the balance sheet managing this liability as well as managing the asset. The other branch of the concentration question relates to having all of the underlying lives covered by this annuity coming from 1 employer. And I guess you'd have to argue that there may be some unusual correlation or some unusual longevity outcome related to that population. We haven't seen it, so I think net, we are very comfortable with the capital efficiency, with the skill sets that we have to manage this asset liability and with the fit of this deal in the context of the risk we want to take and the things that we're good at.

Next we go to the line of John Nadel from Sterne Agee. John M. Nadel - Sterne Agee & Leach Inc., Research Division: So I've got 2 questions. One, I wanted to ask a little bit about the regulatory environment. In particular, more recent commentary in Washington around SIFI, around insurance companies versus banks as it relates to Prudential standards. And then the second question that I had was a bit more, well, I guess it's -- I hate to ask a question that focuses on the corporate segment. But the volatility in the results in that segment are so significant that I think it would be really helpful if you could give us some sense of how to think about your outlook for that segment for the remainder of the year and maybe as part of your 2013 ROE objective as well. I mean, I feel like we have all kinds of data and information to make some informed modeling assumptions for your other business segments. But for this one, I feel like in any given quarter, it could come in $100 million above or below the previous quarter and I'm not sure exactly why.

Yes, so we'll start with the regulatory environment, Mark?

Yes, I think your references to recent both published, as well as oral comments about Prudential standards and the capital and solvency regime view of companies that are thrift-holding companies, but also predominantly engaged in insurance and other aspects, so the consideration of capital and solvency standards for insurance companies has kind of been on the front burner. I guess I'd start off by saying the same thing we've been saying for a long time around the SIFI issue, which is, it's a lot more important than we get it right than which label we wind up stuck with. And I think that gets right at the point you're making, which is, are the capital and solvency standards that are being contemplated appropriately consistent with our business models in the way in which risk is realized by a company like Prudential. And then from there you would go to the SIFI question and think about how to apply the right framework. But with respect to SIFI designation, it's very, very much up in the air. The process is underway. I would say it's uncertain with respect to how or where we may come out of that. With respect to the contemplation of capital and solvency standards for us, we're actively engaged in discussions around our interpretation of what's been put out there. We'll be considering either an individual or collective comment letter for the Fed on the solvency standards proposed for thrift holding companies. And we'll be making many of the same points that we've made for a long time, which is that the bank framework doesn't work very well. And that it's appropriate to think very differently about volatility and the way in which risk is realized and the cash consequences of different environments for insurance companies versus banks. And that's an ongoing process in which we're actively engaged. John M. Nadel - Sterne Agee & Leach Inc., Research Division: And, Mark, just as a quick follow-up to that. Have you guys internally attempted to conduct your own stress test using the bank, C Card [ph] standards?

We look at a lot of implications of different solvency regimes. The Basel frameworks that have come out, as well as other things that we do internally with our own capital management processes. I'm not going to comment on the specific outcomes related to any particular stress tests, except to tell you that we turn it over a lot of different ways and pay a lot of attention to what these things might mean for us. And that it informs us as we comment on the way in which the framework is shaping up.

And, John, this is Rich. We share your frustration on the corporate account. But let me give you a little bit of background on what's in there. There are legacy businesses in there that react to markets up and down. There are employee benefit plans, and there are many of them, several of them that react to the markets going up and down. And there's a whole bunch of corporate activities. So to go through each one of the activities and try to model what they're going to do, we're all going to be precisely wrong. What I should -- the way I think you can think about this is, we had about $40 million or $50 million worth of things that came out of those -- that stuff, that were bad guys in the first quarter. We had $40 million or $50 million that came out of that stuff that were good guys in the second quarter. If you average them out, or if you took them out, you'd probably come up with 310. 310 is more likely the run rate, typical run rate in 2012. And if you use that to model 2013, you won't get too much indigestion.

And this is John, I'd like to add a point. But I wanted to add a point, partly to something, John, you raised and something that Nigel raised a little bit earlier, which is related to both the environment and our conviction around our achieving a 13% goal. And just a couple of thoughts about that. Obviously, from our figures here, you can see a run rate of a bit more than 11%. And our -- so the real question is, how do we get from the 11% plus to the 13%? And from our point of view, what we're thinking about is the things that most principally are going to affect that, that are going to drive us from where we are to obtaining it, is the continuing momentum of the international businesses, which you're hearing a lot about, which you're seeing tangible evidence of; the realizations, number 2, the realization of the Star/Edison synergies -- and you heard comments about being on track with that; the improvement we expect to see from our U.S. businesses, the run rate impact; the GM transaction and active capital management. Those are really the 5 things that are the big drivers that take us from the mid-11% range to the 13%. And frankly, based on where we are and what it takes, we like our prospects for achieving it.

Ladies and gentlemen, we have run out of time for questions on today's call. With that, that does conclude today's teleconference. If you wish to access the AT&T replay service, you may do so at any time by dialing 1 (800) 475-6701 and enter the access code of 225937. International participants may dial (320) 365-3844 and use the same access code, 225937. Once again, that replay will be available after 1:30 p.m. Eastern time today through August 9 at midnight. That does conclude your conference for today. Thank you for using AT&T Executive Teleconference service. You may now disconnect.