Jay Fishman - Chairman & Chief Executive Officer Jay Benet - Chief Financial Officer Brian MacLean - President & Chief Operating Officer Gabriella Nawi - Senior Vice President of Investor Relations

Jay Gelb - Barclays Capital Brian Meredith - UBS Keith Walsh - Citi Larry Greenburg - Langen McAlenney Michael Nannizzi - Oppenheimer Ninea Mesquite - Credit Swiss Matthew Heimermann - JP Morgan Jay Cohen - Bank of America/Merrill Lynch Josh Shanker - Deutsche Bank Ian Gutterman - Adage Capital Robin Bobbin - Capital Returns

Good morning ladies and gentlemen, and welcome to the first quarter earnings review for Travelers. We ask that you hold all questions until the completion of formal remarks, at which time you’ll be given instructions for the question-and-answer session. As a reminder, this conference is being recorded on Friday, April 23, 2010. At this time, I would like to turn the call over to Ms. Gabriella Nawi, Senior Vice President of Investor Relations. Ms. Nawi, you may begin.

Thank you. Good morning and welcome to the Travelers discussion of our first quarter 2010 results. Hopefully all of you have seen our press release, financial supplements and webcast presentation released earlier this morning. All of these materials can be found on our website at www.travelers.com under the investor section. Speaking today will be Jay Fishman, Chairman and CEO; Jay Benet, Chief Financial Officer; and Brian MacLean, President and Chief Operating Officer. Other members of senior management are also in the room available for the question-and-answer period. They will discuss the financial results of our business and the current market environment. They will refer to the webcast presentation as they go through prepared remarks, and then we will open it up for questions. Before I turn it over to Jay, I’d like to draw your attention to the following on page one of the webcast. Our presentation today includes certain forward-looking information as defined in the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts maybe forward-looking statements. Specifically, our earnings guidance is forward-looking and we may make other forward-looking statements about the company’s results of operations, financial condition and liquidity, the sufficiency of the company’s reserves and other topics. The company cautions investors that any forward-looking statement involves risks and uncertainties and is not a guarantee of future performance. Actual results may differ materially from our current expectations due to a variety of factors. These factors are described in our earnings press release, and in our most recent 10-Q and 10-K filed with the SEC. We do not undertake any obligation to update forward-looking statements. Also in our remarks or responses to questions, we may mention Travelers operating income, which we use as a measure of profit and other measures that maybe non-GAAP financial measures. Reconciliations are included in our recent earnings press release, financial supplement and other materials that are available in the investor section on our website. With that out of the way, here is a Jay Fishman.

Thank you, Gabby. Good morning everyone and thank you for joining us today. All in, given the magnitude of catastrophes we experienced this quarter, we were quite pleased with our performance, reporting net income of $1.25 per diluted share, an increase of 13% from last year’s quarter and a return on equity of nearly 10%. Included in this number was $0.61 a share in catastrophes, arising out of the multiple storms in the Eastern United States as well as the earthquake in Chile. Just to put this number in context, the estimate for catastrophes for the first quarter included in our previously provided guidance was about $0.13 a share. Offsetting the cats we benefited from favorable prior year development, and our underlying performance from both underwriting and net investment income was a bit better than our expectations. The net result was operating income, which was in line with our expectations going into the quarter, allowing us to reaffirm our previously issued fully year 2010 operating earnings per share guidance. Also it’s reflective of our continuing strong earnings power. In an environment which remains similar to last quarter in terms of both economic and insurance market conditions, our business dynamics from a solid and we are generally consistent with recent operating experience. Renewal rate gains remained positive in each of our business segments, retention was strong and the business in total remained on par with last year’s quarter. We repurchased $1.4 billion of our common stock in the quarter, and announced the increase in our regularly quarterly dividend by 9% to $0.36 per share. As these actions demonstrate, we continue to execute successfully in the marketplace, generate solid earnings and return excess capital to our shareholders. Given that our operating dynamics this quarter were generally consistent with recent quarters, our call this morning is going to be somewhat different than in the past. We are still providing all of the same information in our presentation as we have previously, but we will not be going page by page with you, so as to have more time for questions. Before turning over to Jay, I want to take just a minute to acknowledge and thank our claim department for all of their exceptional work, not only this quarter but over the last couple of years. In 2008, we had Ike Gustav in Dally, and while there were no major storms in 2009 it was still a quite active cat year. Of course, in the first quarter of 2010 we were again faced with an exceptional number of claims due to the multiple storms on the East Coast. [Inaudible] and her entire claim team have been remarkably busy providing industry meeting customer service to our insureds, and again demonstrating our commitment to providing high quality service to all of our insureds during their greatest time of need. With that, let me turn it over to Jay.

Thanks Jay. There are several points that I’d like to highlight relating to pages zero to seven, many of which you’ve heard me say repeatedly over many quarters. First, our balance sheet remained extremely strong. All capital leverage and liquidity measures were half or better than target level. Even after repurchasing $1.4 billion of our stock and paying dividends of $168 million in the quarter, holding company liquidity increased to over $3 billion, almost three times on a target level due to the timing of dividends from our operating companies to our parent company. Holding company liquidity is expected to move towards its target level during the remainder of the year as we continue our share repurchases. Book value for share increased once again, and on an as reported basis operating income for the quarter did meet our expectations; that is operating performance ex the caps and ex the non-cap weather, and also adjusting for the favorable reserve development, but including net investment income, all of that was inline with our expectations going into the quarter. Despite the high cap losses and the relatively low yield on short term and non fixed income investments, we recorded a double digit operating ROE, and finally our results included one time tax charge of just under $12 million or approximately $0.02 per share, related to the recently and acted federal health care legislation that eliminated the tax benefit associated with Medicare Part D subsidies. Brian is now going to provide some color about our operating performance.

Thanks Jay. We have included on pages eight through 16, all of the segment performance statistics that we traditionally discussed with you. As Jay mentioned we are not going to go through each slide, but instead speaks more broadly about the significant drivers for the quarter leaving more time for question. Obviously weather had a big impact on our results and will be the headline for the quarter. We had six domestic cat events, the two largest being the February snow storm in the Mid Atlantic that paralyzed Washington DC for several days; and then Easter in mid March that impacted New York, New Jersey and Southern New England. In addition there were several international events, the largest being the earthquake in Chile, so all-and-all a very active catastrophe quarter. But looking beyond the near term impact of weather, our production in core underwriting results continue to perform very well. In business insurance, the tensions remain strong and were up slightly across the business, renewal pricing improved modestly, with pure rate continuing to be positive for the segment, exposure change on renewed accounts were still down, but the rate of decline moderated slightly from last quarter. On the new business side, we feel good about the continued flow of new opportunities, particularly in middle market and the small end of select. New business writings in the quarter were down from prior year, primarily due to the pricing discipline we are maintaining in the larger end of the select business. This segment of the market has been particularly competitive and reduced writings here reflect that position. On a written basis premiums are down, a direct result of the impact of the challenging economy on our customers. Some of that impact is seen in renewal premium statistics, but the majority comes from reduced audit premiums, and increased cancellations and endorsements. These impacts either emerge over the life of the policy or in the case of audits, aren’t reflected until the end of the policy period. Since we are generally auditing the accounts we wrote a full year ago, we expect this drag may continue to the next few quarters. As the economy stabilizes and eventually improves, we believe that based on our historical experience the audit premium will rebound. There are a lot of weather and prior year impacts in the combined ratio. Excluding these we are experiencing the modest deterioration we had expected. Frequency remains while claims severity is relatively benign, and pure loss trend is marginally outpacing our modest rate gains. This deterioration is somewhat larger than the 30 basis point change in the adjusted combined ratio on the slide, because the first quarter of 2009 does not include the positive impact of the adjustment we made to the full year ’09 combined ratio in the second half of last year. Moving to the financial professional and international segment, net written premiums after adjusting for the impact of changes and foreign exchange rates, were up significantly for the quarter. The primary driver of this increase was less seated premium year-over-year, resulting mainly from changes in the structure of our reinsurance, that directionally aligned retentions in our international business, with the company’s US retention practices, and to a lesser extent lower reinsurance costs. For the second consecutive quarter, we did see quarter over quarter growth in our construction surety book of business due to activity in our large national accounts market. In our international business, new business is up compared to the prior year quarter, primarily due to growth in marine and accident and special risk products and the like. Operating earnings in the quarter were down from the prior year quarter, as a result of our exposure to multiple international named events, primarily the Chilean earthquake. The losses we experienced were consistent with the fact the Chilean earthquake was the seventh largest recorded, and was 500 times stronger than the earthquake in Heidi. Turning to personal auto, agency retention remains strong and the renewal premium change continued to be positive. New business improved significantly, and it was at the highest level in the last five quarters. We believe that the new business declines that we saw in the previous quarters were due to the fact that we were ahead of the market in seeking increased rate. You can see from the change in agency autos quarter-over-quarter combined ratio, that profitability has improved as rate gains are now outpacing the lost cost. Approximately one point of this improvement was attributable to lower frequency, which we believe was a result of the winter storms impact on miles driven. After normalizing for the quarter’s frequency, core auto margins are improving and well within company targets. Within agency property the story this quarter was clearly the weather. Adjusting for the weather the combined ratio for the quarter was modestly higher compared to the prior year quarter, a portion of which is the expected slight margin compression. This compression continues to be driven by year-over-year increases in the cost of materials, primarily asphalt shingles. Agency property production results for the quarter continued to be strong in spite of the difficult housing market. It continues to steadily grow with strong retention and continued positive renewal premium change, and new business is up significantly compared to the same quarter last year. So even with an extraordinary number of catastrophic events in the quarter, we posted solid results. Core combined ratios remain within company targets, new business remains robust despite the challenging macro economic conditions; rate overall remains positive and retentions continue to be strong. We believe that these results are direct outcome of long-term capability and competitive advantages we have built, as exemplified by our claim response this quarter. These capabilities are sustainable and will continue to differentiate Travelers with independent agents, customers and brokers. Now before I turn it back to Jay Benet, let me touch on an issue that’s gotten a good bit of press. On page 17, we’ve outlined why we believe our exposure to Chinese drywall will not be problematic. First, from a business profile prospective, we have no direct liability exposure to Chinese drywall manufacturers, and have virtually no general liability exposure to US residential contractors. In fact, we have no general liability exposure to 37 of the 38 US residential contractors identified in Bloomberg, and the one we do right has in SAR and our limits above that are minimal. On the homeowner side, we are disproportionately under represented in the states with significant impacts. So we do not expect the significant number of claims, but given our policy structure limits profile, we believe any losses should be contained. Additionally, the fact that there is very strong product ID here its helpful. That is, we know where it is, where it came from, and when it got here, and all of this should help limit this claim activity. To date we’ve gotten 52 claims and we are comfortable our overall exposure is not problematic. Now with that, let me turn it back to Jay Benet.

Page 18 sets forth our guidance for full year 2010’s fully diluted operating income per share, which is a range from $5.20 to $5.55, unchanged from what we previously provided, which in round numbers should translate into an operating return on equity of approximately 11%. We are now assuming cat losses of $640 million after tax or $1.30 per diluted share, which incorporates our actual cat losses for the first quarter and our original estimates for quarters two through four. No further estimates of prior year reserved development either favorable or unfavorable; a low single digit decrease in average invested assets ex-unrealized gains and losses, resulting from a reduction of holding company liquidity due to share repurchases; full year share repurchases that are still in the range of $3.50 to $4.0 billion; and a weighted average diluted share count after share repurchases and employee equity awards in the range of $490 million to $495 million shares, which is a bit higher than we what we had previously assumed through the impact of the recent increase in the price of our shares. Before I close, let me explain in response to several questions we have been asked, why we did not prerelease this quarter’s cat losses? We write cat exposures as part of the ordinary course of our business, and cat losses are just one of the number of items that could impact the quarter’s results. We think it is more informative generally to release all of our results together so that the information is presented in context. This is particularly true in a quarter like this, when the cat losses came from a number of relatively smaller events and we have losses from seven cats in the quarter as Brian said, some of which occurred very late in the quarter. It’s also our strong preference to take the time to acquire regular quarterly closing process to our result before we announce. This approach makes more sense for a company of the size that we are now, especially in a quarter when we had a number of moving pieces and our performance on an overall basis was generally consistent with our expectations. Finally this approach is also consistent with the overtime nature of the company’s stated financial objective, and our previously disclosed intention to stop giving guidance beyond this year. So with that, I believe Jay has a closing comment he would like to make.

Thanks Jay, just one more comment before we open it up to questions. You may have noticed that a number of our senior executives have over the last year or so, sold some of their shares and I wanted to take the opportunity to clarify our views. Our senior executives receive a meaningful portion of their compensation in the form of performance-based equity. As a result of that, as well as our recent performance, all of our named executive officers and substantially all of our senior executives, have equity positions that are well in excess of the company’s ownership requirements. This actually has been the case for quite some time. The recent financial crisis underscored for all of us the importance of prudent personal financial planning and diversification. Given this and our significant executive ownership, we don’t discourage executive sales driven by personal financial decisions, as long as the minimum share ownership requirements continue to be met. With that operator, we’ll open it up for questions.

(Operator Instructions) Our first question comes from the line of Jay Gelb from Barclays Capital. Please proceed. Jay Gelb - Barclays Capital: Thanks. Jay can you talk about the expectation for continued improvement in the accident year of combined ratios, ex caps. We saw that in the first quarter, and just given the kind of environment, I’m trying to get a sense of whether you anticipate that continuing through the year?

This is Jay Benet. I think when we look at each one of the segments, there is probably a bit of a different story. We had talked about some rate gains in the BI segments that had been in our written premium back in the second half of last year, and of course that’ll get earned in along with the rate gains that we have seen in the first quarter. Relative to lost trend, I think as Brian said earlier, the loss trend, it’s running at a benign levels. So probably running a little bit ahead of where the rate gains has been so. We would expect in terms of just the underlying trends in our business, if you see some margin compression of a modest amount in the BI segment. Now if you flip to the other extreme and look at Pi, Pi is in a different position. Pi has been experiencing rate gains for a period of time, and as those earn in and the loss costs remained pretty benign in that business, I think we’d see some margin expansion there, again all things being equal. All of this is going to be dependent upon the weather and loss activity that you heard of talk about from quarter to quarter, but I think just overall slight expansion. Brian do you want to add something there?

Yes, and Jay’s comments there in PI is auto. As I said in my comments, on the home owner’s side, there is a little bit of a margin compression on the auto side; we definitely got to experience it.

Jay if you go back to the previously issue guidance that we were referring this morning, what we said at that time was that we expected for the organization overall total consolidated, that we expected modest -- I think was the word we used, deterioration in the loss and LAE ratio for the organization overall, and that’s still our underlying premise imbedded in the guidance.

The other segment that we should comment on is the FTII segment. Of course there is a very diverse mix of business there, but you can say like BI, perhaps there is a slight level of margin compression as well. Jay Gelb - Barclays Capital: Okay, and then my follow-up is on the expense ratio. Now having told its 33%, are you comfortable with that level of expense ratio, and if so maybe you can talk about what investments are driving that?

Yes, Jay this is Brian. Yes the exact ratio is going to bounce around quarter- to-quarter as premium volumes move and there are other miscellaneous things going through on the expense side. But we have been making significant investments in our platforms across a lot of our businesses, probably the most obvious are in small commercial and in the personal arena where the product and platform are a significant part of our market place proposition. But even the cross middle market we’ve been doing a lot of different things to connect with capabilities that we have in the market place. So that is another area of investment.

We also get a little reluctant in answering with respect to specific elements of the cost structure. Lost hours are mitigated or generated by investments, so expense and loss ratio which just can’t be looked at, we don’t think in separate pieces so we get back to returns on equity and are we satisfied with our overall returns in our business current returns as well as long term prospects? The answer is yes, we very much are. Jay Gelb - Barclays Capital: Thanks.

Our next question comes from the line of Brian Meredith from UBS, please proceed. Brian Meredith – UBS: Good morning everybody. Two quick questions here for you. First one, Brian can you talk about trends in personal auto insurance and given that your combined ratios now are down to a more than acceptable level? Should we expect to start seeing you guys, that number stabilized and maybe give us some of the dynamics right now in the personal auto insurance market where there are some competitors with really high combined ratios, and then perhaps maybe picking up some share here going forward?

Yes, we definitely do feel that way. Greg Toczydlowski is sitting here by my throat, have him talk about that a little bit.

Yes Brian. As he indicated we are feeling comfortable with the margins. We watched two primary factors, that the whole of our quote information, and we can clearly see that our quote flow is off and then we look at the competitiveness of our core activities, specifically in comparative raters and we can see that our closed ratio is also up this quarter. If you look at the stat supplement, you can see the output of that, that we do have sequential gain in TIF from the fourth quarter to the first quarter. So as we’ve got those margins right in the middle of the target to where we want them to be, we are going to continue driving that growth and you can see that in some of the data that we reported this quarter. Brian Meredith – UBS: Great, and then my second question Jay is, I noticed as you said that you took an extraordinary dividend out of the operating companies this quarter. I am curious, why did you take the extraordinary dividend? Does that also mean that you still have your regular dividend capacity available to you this year, to the holding company?

Well this is Jay Benet. We ended up in a very very strong position in our operating companies at the end of the year. Profitability in the fourth quarter was extremely strong and we do an analysis of what the capital levels are and decided that we were just over capitalized based on that profitability. So, rather than leaving it there to take out in the normal quarters, we went to the various fixed regulators and show them what our capital levels were and what we wanted to do, and then just asked if we could take it out sooner than later and we did. So it’s just the holding company, so we have the flexibility now going forward, to just execute on our share repurchases and we just think it’s pure management to do that when the operation need to have the excess capital. Brian Meredith – UBS: That’s great, and what is your kind of regular dividend capacity available for this year?

We had about $3.5 billion that we could take out without regulatory approval. I should say though that that becomes, without getting overly complex about it, this is a rolling calculation. To the extent you get regulatory approval and increase the amount that you take out in a quarter, it will change for the reminder of the year, how much you could take out without regulatory approval, but we are confident that whatever we would like to take out of the operating companies, barring the unforeseen catastrophe or whatever, we will be able to do this year. Brian Meredith – UBS: Great, thank you.

Our next question comes from the line of Keith Walsh from Citi; please proceed. Keith Walsh – Citi: Hey good morning everybody, how are you? First question, just with respect to the guidance. You’ve maintained your projection for the year despite the incremental $0.50 a share in cats, a slightly higher share account, and even if we net out the benefit of the reserved release, is this guidance or better guidance driven by business trends or is it the jump in non-investment income?

It’s actually kind of more simpler than that, which is that when you look at the results for the first quarter, the $1.25, $1.22 was absolutely consistent with what we had incorporated in our original full year guidance of 520 to 555. So the all in first quarter results were very much consistent with our own number for the first quarter in the annual guidance, and so it’s just a reaffirmation of the same underlying trends.

As you would expect for a company of our size and sophistication, I mean we are constantly looking at what our plans are for the future and in this particular case as Jay said, we’ve incorporated the actual for the first quarter into our revised local investment income, looking at margins going forward and based on hitting what we had expected to be the operating income or thereabouts in the first quarter. We haven’t seen anything that would change the overall look for the rest of the year. Keith Walsh – Citi: And then just regards to the non fixed income part of the portfolio, if you can talk a little bit about the volatility, and I know you try to give maybe a normalized rates of return for that, but what is sort of a long term expected rate of return for that part of the portfolio?

Hi this, the Bill Heyman. I guess it begs the question what is long term. We make privately fund investment to the expectation that our capital would be out for an average of seven or eight years, and I don’t think we would make those investments if we didn’t think there was a reasonable chance of low double digit returns, although our estimates are more conservative than that, given their current climate. With respect to hedge funds, which are now only $500 million in a portfolio of $70 billion, the same hurdle is used, but for estimating purposes we’re in the mid high single digits, but over the long term we would require 12% of these asset classes in any size. Keith Walsh – Citi: Okay, thanks a lot.

Our next question comes from the line of Larry Greenberg from Langen McAlenney; please proceed. Larry Greenburg - Langen McAlenney: Thank you. Good morning everyone. First I had just a quick clean up question. The tax charge in the quarter, was that in the interest in other line?

Yes, it was Larry. Larry Greenburg - Langen McAlenney: Okay thanks; and then and reserved development, in the SPI line, it appears in the last two quarters, favorable reserved development has jumped up a bit from where it had been running, and I am wondering if there is anything that you might be able to isolate to explain that. Then more generally on reserve development, can you talk about the complexion and the favorable development and whether the balance between reserve releases associated with case or IBNR reserves has changed over the last six quarters or so.

I will take a shot at it. As it relates to the first part of the question, looking at FDII -- now FDII goes through the same processes as the rest of our businesses. Each quarter we are looking at changes in actuarial views associated with very granular levels of our reserves, and whether it’s in international business or whether it’s in the bond in financial products business we’ll take positive of their reserve development or negative reserve development when see or need to do that. I don’t think there is anything in particular that’s been driving the reserve development in FDII, but it has been depending upon the quarter partly bond and financial products and partly international. The longer the tail associated with the business the more we wait. So I think in the bond and financial products business it’s probably been more of the early 2000 type events that have been reserved for, and we have seen claim activities just doubling out a little lower than what our expectations were. As it relates to just the rest of the businesses, I am not sure I can really answer your question as to whether it’s development on case reserves versus rethinking of the IBNR, because as you know, as times go on, there is less and less IBNR and more cases. So we tend to look at it in its totality, but it’s the same phenomena. Whether it’s looked at by an individual business line or particular accident year, what we are seeing is that time has developed and on some of the longer tail lines we are seeing certainly favorable reserve development dealing with less payments of claims than we anticipated. Some of the development is the roll forward from older accident years to more current accident years, if in fact the reserve analysis is indicating that the original loss text were higher than what they would seem to be, but that’s not the major driver of it. The major driver is just looking at the claim exiting. I hope that responsive to your question. Larry Greenburg - Langen McAlenney: Yes, that’s helpful thank you.

Can I interrupt for a second. I want to go back and just actually clarify an answer that we gave previously in response to the question about the expense ratio, just as I have been reflecting on it, and I said “were the returns in our business generally consistent with our expectations to produce long term mid-teens return on equity” that was the sort of shorthand that I was giving you, and I said “yes, they were, we always have lines of business” The returns are not at levels that we want them to be, and we have been consistently public about seeking rate gains where we need them. So I didn’t mean to imply by that answer, that every product that we have met hurdles in every specific way. In a very general sense in responding to the question about the expense ratio overall, we feel pretty good about the overall returns that our portfolio products generate. It certainly doesn’t mean that we don’t have products where a competitive environment is such that strategically we are seeking rate, so that we can bring those products either into the range of acceptability and there is a number of those that are not further up into the range of acceptability to meet our long term hurdles. I hope that’s clarifying, but it is really a complex question asked in a very simple way. We can go back to the questions operator thank you.

Our next question comes from the line of Michael Nannizzi from Oppenheimer; please proceed. Michael Nannizzi - Oppenheimer: Thank you. Just a question on the liability business if I could. For recent books, has there been any loss emergence outside your expectation either in 2009 or so far in 2010 and could you talk specifically about the community bank portfolio, thanks.

Sure, in the more recent years, I think the loss experience in generally as a portfolio across all the management liability business are within expectation. So there is nothing there I would say that a trend surprise. Michael Nannizzi - Oppenheimer: Okay great, and then just a question on the commercial business. So if we get a map on renewal plus new business on the commercial segment, it doesn’t quite match up, is that because that renewal rate is calculating based on policy count, and I guess to follow that, does that mean you are getting more growth at the small end of commercial rather than the large end?

I am trying to make sure I have got the question straight so when we.

This is Jay Benet. The statistics you are referencing aren’t based on policy count, they are based on dollars, premium dollars. If I understand the question, what you are trying to do is look at the sum of the business retains, plus your rates. What your missing is what we had disclosed in the fourth quarter in a bar graph that we presented, what’s the impact of exposure, changes, cancellations, endorsements and audit premium, and that’s what gets you to the dollar amount of the premiums in the first quarter. So if you were to do that with business insurance, what you’d see is about 82% net retain business, another 19% new business, approximately 1% of rate, all of which would have been a 2% increase in net written premium, and what’s taking place is that a negative 6% but waiting to exposure, cancellations, endorsements and audit premiums that translates into the negative 4% overall.

Great, thank you very much. And just one last question if I could on leverage, how important is operating near that one to one premium to surplus. Is that a target or is that more just a result of other things that you are doing thanks.

It’s absolutely the result. What I have indicated before is that we have the various rating agency models that we apply along with risk based capital, and whether it’s the car ratio or the S&P or Moody’s model or Fitch models, we evaluate what the operating company capital requirements should be for a strong double A company as we are. From that, we then look at the leverage of the holding company the holding company cash to come up with the actual capital position, and the fact that premium to surplus is approximately one to one. It’s not something we look at; it is absolutely the result of that process.

Let me add a comment and Bryan make sure I am right on this, because we tend to lump them together this exposure, audit premium and it’s the function of the way that our arithmetic is done. There are several different dynamics operating there, but the two principle ones are audit premiums which one should think of as retrospective in nature. Clients make estimates of what their ratable factors at the inceptions of the policy, at the end of the policy we come in and we do an audit. It turns out that the ratable factors that might be payroll, it might be sales, it might be trucks on the road, but it turned out to be less than they had originally anticipated because of the speedy depth of decline in the economy, and so we have an audit premium return of previously written premium to us. We think of that as almost a retrospective adjustment. Then there is imbedded in our renewal business, change in exposure on a renewal basis, which is not always entirely factual, because once again clients make estimates of what their ratable factors will be, and it wouldn’t surprise any of us, if in fact given the economy that there is a tendency at the moment to continue to overestimate if you like, the impact of the economy and so it becomes, and under state the exposure which is something we believe is happening today, but we can’t prove it and we can’t obviously find it in the numbers. It will be interesting as the economy levels out and ultimately returns to what our sense is, that the retrospective audit premium dynamic will be the first to change, because in fact the catch up will occur, and then we will begin to see the renewal dynamic of exposure a little slower and a little bit longer, but those are two very different dynamics of the economy that just tend, given our arithmetic to be lump together, and maybe that’s helpful.

One of the other interesting thoughts here as you look at our data, and probably broadly across much of our business, but certainly in the business insurance side we are growing our customer base it’s hard to see in the premium, because our typical and I am not just talking about writing a whole bunch of small ones so the number are larger. We are in the aggregate growing our customer base. The premium is struggling because our typical customer might need a less insurance than they do in normally robust times, and that typically comes through on the AP side, audit premium side. So it’s an important note though that we feel good about this grow.

It’s a bit forward looking and obviously may not happen, but if in fact we come out of this with more customers than we had coming into it, when the economy does recover, we think we will be reasonably well positioned to anticipate a growth in premium, but a lot of factors that happened obviously for the economy to recover has to continue to stabilize first, but at the very basic core of it, we think we are going to be coming out of this with more business insurance customers than we went coming into it. Michael Nannizzi - Oppenheimer: Thanks, very helpful. Thank you so much for the answers.

(Operator Instructions) Our next question comes from the line of Ninea Mesquite from Credit Swiss; please proceed. Ninea Mesquite - Credit Swiss: Good morning. On the personal audit front you had sequential fiscal quarter-over-quarter. Could you give us a sense for what the competitive dynamic is within the industry and how you are managing to grow the business the now versus the last three quarters?

Ninea, this is Greg Toczydlowski. I think in Bryan’s comments he talked about us being in front of some of the rate cycle in late 2008 into 2009, and you can see that in our RPC statistics. We spend quite a bit of time really looking at filing activity across the country and understanding what the competitors are doing in terms of simple metrics like the ratio increases of filings to decreases. We seen an environment where increases are still outpacing decreases, and quite a bit closer to four to one right now. So as we moderate some of our rate; as the market moves with of those, probably to the levels that we were at in 2009, again as I talked about our “enclosed ratios” we can see we are becoming more competitive in the market place and feeling very good about our margins underneath that, and that’s driving some of the sequential growth.

We just said becoming more competitive. It’s easy to come to the conclusions from that statement that we are low in price. What you really mean is that the pricing that we have established is that the market seems to be catching up to it, that’s an important clarification. Ninea Mesquite - Credit Swiss: Sure, fair enough. Margins have also improved this year versus last year. Could you give us a sense of whether this is purely because of late or do you think that there is some elements in the lost constraint, either sequence of severity that’s also helping you.

It’s a combination of both. We have been very disciplined in our pricing in a very segmented level and you can see that in the RPC trends. The lost trend we are watching very closely and some of the mileage driven data and information that’s out there is showing that there has been slight improvement in frequency in the first quarter, and the lost trend is right where our expectations are and we are going to continue with our very focused and disciplined pricing. Ninea Mesquite - Credit Swiss: That’s great, and one last question if I may. On some of the excess surplus lines players have said that the competition among the standard of players is growing. Could you give us a sense how Travelers is ensuring that they are not ridding business that is normally been written by the excess in surplus lines.

Yes, we look we watch very closely, who we are taking business from, where its coming from and are very confident that we are not out there writing any significant number of accounts that belong in the E&S market. The one place that I’ll comment; sometimes some competitors who are in that space will talk about people taking account. Sometimes there are accounts that are in that market place, because the agent, that is the only way in the small commercial side they can access markets. So one of the other reasons why business moves out of excess and surplus lines, wholesales businesses into traditional distribution, is the agents hopefully for all appropriate reasons get appointed and come directly to us. But that’s not I think the issue you are talking about, which is there are accounts that belong in that market place because they are complex risks and it shouldn’t be written in standard markets and we are very comfortable but we are not taking that business.

And from time to time we will have a program, because we talked about these before, where its written both in expense and surplus markets, as well as in admitted markets and standard markets. So we do have an amount of business that we have had for long time, that’s been around here, programs in particular that are also written in the E&S market, but again to Bryan’s answer, there has been no effort on our part to aggressively move business that is historically been in the E&S market and move it over to us. Ninea Mesquite - Credit Swiss: Okay, that’s great. Thank you.

Our next question comes from the line of Matthew Heimermann from JP Morgan please proceed Matthew Heimermann – JP Morgan: Hi, good morning everybody. I was curious if you can just comment on the reinsurance changes you made internationally, and I guess specifically just clarify whether when you say your changing the retention, the retentions is at a similar level to like the US excessive loss treaty, which I think is 500, or relative to capital. You scaled the attachment point similar to where it is in the US.

Yes, it’s neither actually. This is on a pro risk basis; we have been keeping lower net retentions internationally than we have in the US, so really just confirming that up a little bit, and then we’ve got some individual cap treaties related to our business at much lower levels. We moved those up a little bit, but from 35 to 70, nowhere near the numbers that you are relating from the US. Matthew Heimermann – JP Morgan: And on the per risk, I mean I guess the order magnitude and I guess I am anecdotally -- I mean is that you are moving from the 40 to 50 on your per risk or I guess can you give some color there?

This is taking net per risk from 10 to 15 in one case, and 10 to 12 in another. Matthew Heimermann – JP Morgan: Okay, got you, so nothing huge.

That’s dollars. That’s $10 million to $15 million per risk or $10 million to $12 millions. Matthew Heimermann – JP Morgan: Okay I guess if you translate in that relative to the gross line that was put on the contract, how does the percentage change? How does that translate into percentage I guess?

You got to do the math quickly. I mean it varies literally transaction by transaction. If we have a $20 million exposure; instead of having a net pretext 10, we will now have a net pretext 12. If we have a $15 million exposure, instead of having a net pretext 10, we will have a net pretext 12, so it’s specific to the individual loss. Matthew Heimermann – JP Morgan: Okay I just wanted to make sure that you weren’t expanding your gross appetite in concert with this or whether it was truly just a net without the gross line changing. That was the only reason I was asking the question.

It’s worth just given how accounting works that this change is disproportionate between gross and net in this quarter.

Yes, in this segment we got a significant portion of the reinsurance that renews, and obviously the premium gets posted in the quarter that it renews, so it’s got a significant impact in the quarter and we’re earning over the year.

There tends to be a presumption that these things happen ratably, and actually it’s not how it works. The requirement is to actually see the entire amount from the gross at inception, not over the policy period so this impact is written, that’s correct. You are looking at it in an annual effect, all being evidenced in one quarter. Matthew Heimermann – JP Morgan: Okay, that makes sense, just wanted to make sure. With respect to the industry focused underwriting segment, are there any particular segments that you would highlight as being disproportionate drivers of the pressure in that segment.

What do you say pressure? Matthew Heimermann – JP Morgan: Well I guess you have seen it looks like the economy is having a bit bigger impact given the rate trends that don’t look dramatically different from the rest of BI segment. That it just looks like it’s suffering a little bit more. So I was just curious if there was any industry classes or segments that you would highlight as disproportionately driving or if it’s just kind of consistent across everything in that segment.

This is Bill Cunningham. The two that comes to mind are constructions and oil and gas. The amount of construction activity on the commercial side is down fairly dramatically, so we are seeing that impact both payroll and revenues for a contractor, and its obviously less drilling on the oil and gas side. So those two classes are certainly disproportionate. Matthew Heimermann – JP Morgan: I appreciate it, thanks

Our next question comes from the line of Jay Cohen from Bank of America/Merrill Lynch; please proceed. Jay Cohen - Bank of America/Merrill Lynch: Thank you. Good morning. Two questions; the first is, if you could talk more about the new business environment, new business is up year-over-year and commercial accounts down. You made some comments; I am wondering if you can flush that out a little but as far as competitive environment for new business. Then secondly, one topic we haven’t talked about in a long time is asbestos. I hate to just cross it off my list with something to worry about. I am wondering if you can give us an update on what’s happening there.

Hi Jay, this is Brian. I’ll tag team a little bit with Phill Cunningham on the new business side. I assume you’re talking specifically the business insurance there. A couple of different stories; I think the broad one is, we’ve been doing a ton of things in the market place over the last three plus years, to drive more flow and more opportunities, and a bunch of different funds, we have talked about them in the past. That has continued. We feel great about the amount of business that we are seeing in the marketplace, and all we need to do is go through that in a pretty sophisticated way and find opportunities. So broadly middle market, we feel great about it. On the small commercial side, on the small end, the platform that we rolled out in select and our travelers, our express platform there have driven a lot of volume as we would have hoped and we are seeing a lot of opportunity there. The challenge is the GAAP between those and by that I mean what we typically call the higher end of small commercial, where the marketplace is more competitive, and that’s the area where we are taking some pricing actions and seeing lower volumes; pricing actions upward. Jay Cohen - Bank of America/Merrill Lynch: Right. On the commercial insurance business, what’s happening to your hit ratios, just to follow up on that.

The hit ratios are down. I mean the overall comment would be the new business environment remains competitive as Brian mentioned. Our flow of opportunities is up and continues to be up year-over-year, month this year compared to month last year. There has been a consistent increase, each month, each quarter. We’ve worked through more opportunities. Our quote ratio is about consistent, an increase in quotes, so go through the pieces. Flow to date just to give you some perspective is up two folds compared to what it was three years ago. So we are seeing that business volume in terms of number of [Inaudible]. We are maintaining about the same quote ratio. So the number of accounts that we are quoting is about double compared to what it was two years ago. The percentage that we are actually getting on order is down. Jay Cohen - Bank of America/Merrill Lynch: Got it. And then any comments in asbestos?

The environment that we’ve seen in the first quarter has been very much the same environment that we’ve seen in recent quarters. There’s literally been no change. I mean we always welcome the day when we could watch a sporting event and not see an advertisement from a plaintiffs attorney talking about asbestos. So that continues in the marketplace, but there really haven’t been any major new developments. Jay Cohen - Bank of America/Merrill Lynch: Okay, I’ll put it down on my list then. Thanks.

Our next question comes from the line of Josh Shanker from Deutsche Bank. Please proceed. Josh Shanker - Deutsche Bank: Thank you. He asked my question, but I didn’t know how to get of the queue, but I’ll ask another one. The advertising spend; how do you guys think about the payback in advertising spend and is it meeting your objectives?

The advertising spend, you can look at it in two separate pieces. There is an element of it that’s pure brand, and the spending that we’ve done in that over the last several years has been long term investment oriented, not action driven. The ramp up that we had in advertising has been very specifically behind our direct to consumer business where we are doing a lot more. The short story on our direct to consumer personal initiative is that it is a long term program. We said that we would loose money on the way; we’ve continued to have loosed money on it. In terms of driving customers from India to a coding process that’s been actually pretty encouraging. So in the context of the effectiveness of the advertising, if the measure of it is the response that people have to it, that’s actually been pretty good. Then the mix of earnings that we’ve had and we’ve spoken about it -- mix earnings we have to take on in learning how to convert that response into higher numbers of quotes and ultimately into higher number of sales, and in that arena we still have, about consistent with our expectations, we have a long way to go before this becomes a successful business venture. Josh Shanker - Deutsche Bank: Some of your competitors, very few of them say that they have a brand advantage in the commercial line. Do you think that the advertising can help with that for travelers? Do you see any indication from your customers that they are identifying with the brand on the commercial side.

I think the best way that we can answer that, and of course this is all anecdotal and could be wrong, but if you sit with the group of agents, particularly those in our business insurance arena, they all are aware of the advertising efforts that we’ve undertaken, they are comment on it, and they all say that it makes the job easier. Now they could be just talking that, just telling us that and not have it de-substantive, but it is pretty clear to us that the agents do indeed see it, they appreciate it, and at least as they described to us, its helpful to them. I don’t know if is the specific answer with respect to customers. If you do watch branch record data and we do but again this is a very long term venture for us and I don’t want to over react to either good news or bad news in that regard. But branch record data would suggest that our advertising is being effective in terms of customer recognition. Now that’s predominantly in the personal side, but again these are all long term efforts to accomplish something overtime. Josh Shanker - Deutsche Bank: Well, good luck for that and congratulation on the quarter.

Thank you.

Our next question comes from the line of Ian Gutterman from Adage Capital, please proceed. Ian Gutterman - Adage Capital: Hi, I guess two questions. First one is can you talk a little bit about the decline in non-cat. Well I guess that surprised me. You know [Inaudible] 50 seats at the same time and not on 50 of those states were cat. I would have thought non-cat and cat weather would be up this quarter, but even we both were saying that non-cat was down so is it a categorization thing or last year things were just below the cap threshold and this year they do a lot of events just above or…?

Yes, this is Brian. I think the fundamental dynamic is the last point you are making, which is this quarter -- the little tiny silver lining around the big dark clouds was the events were so bad that they all flipped into the getting categorized as a cat event. So our normal first quarter flow of weather events is always there, because there is always no storms and there is always a little bit of wind and there is always some of that, most of that got lumped into a cat and therefore we’ve got our offsetting benefit. Ian Gutterman - Adage Capital: Got it, okay.

And that was the primary reason why we try to be very transparent on the fact that there was favorable non-cat weather. We think it’s important that you understand what the underlying dynamics are in the business and be able to look at combined ratios with that in line. Ian Gutterman - Adage Capital: No, exactly. That’s why I just wanted to make sure that that one we are looking at are ex-cat, but there is a little bit of moving pieces in there so I appreciate that. My other question is on auto. I guess, can you help me get more comfortable that the 95 this quarter is a sort of that you are sustainable back below 96, and the reason I ask it that way is, each of the last couple of years you’ve been that 98, 99 and there has been a quarter in there that’s below 96 then you go right back up. To be honest, when I look at your reserve triangles for auto ,you’ve had development in the last couple of years, your paid and our trends frankly look a little weaker than your peers, but on the other hand obviously you’ve got price incoming through. I mean sort of where are we are, are we comfortable below 96 or is it we are hopeful and we need a couple of more quarters to see.

So a couple of couple pieces Ian, and Greg you can chime in. As I said in my comment we got about a point of good news running through there because of the weather impact on frequency. So the 95 and change is we think from a run rate perspective a little bit understated. We have been taking some right actions as we’ve talked about and we are seeing now that that rate is exceeding loss costs, so we are expanding our margins there and we feel good about it. There also is seasonality in how the ratios come through and that’s one of the reasons why they do bounce around a bit. Greg if you want to...

No just to comment on that seasonality, we typically see in the first quarter a little lower relativity and we certainly talking about the fourth quarter about a much higher relativity. So when you consider all that in the Brian’s comment on the rate offsetting some of the loss trend and Jay’s comment about we have target ranges of return on capital for this line, based on all that we feel like the product is right in the middle of where we want to of those targets that we feel comfortable with it. Ian Gutterman - Adage Capital: Okay. So as may be a fair way to say that it may not be below 96 every quarter but hopefully its 96 for the year end price keeps coming through?

We certainly price the product on a longer intuitive basis, yes. It’s very difficult to do it at a quarterly level, and the ranges that we look at overall in terms of profit targets for the product line is closer to the 96 to 99 range. So when we consider all of that, we feel like we are right in inside those targets. Ian Gutterman - Adage Capital: I guess the one thing that surprises me is, even if I take Brian’s comment and it’s just 95 back to 96, I guess and some seasonality. We’re just seeing a big drop from where the four ’09 year was and I would have though the earned pricing would have come in more gradually unless there are some other benefits you are seeing.

Yes, I think we might have started that if you are looking at it on a quarter-to-quarter basis, particularly sequentially you have the fourth quarter which has the higher loss contents associated with it, and then you slip into the first quarter which has by its nature and the seasonality factors the lower loss contents. You have to see it develop over few more quarters I think.

Yes, and its a little bit of pattern stated when you are looking at quarter over quarter of this year. For the 2009 period we did have some adverse activity in the first quarter of 2009 for the fourth quarter of 2008. So when you adjust some of that which we really look at more in and actually here the help of the business, the trend certainly come from.

I think the bottom line here Ian without giving you a precise number for what we think the full year auto is going to be, we feel better about the auto line. There were some unusual seasonal things going through, but we feel good about the rate we are getting in the lost cost or controls and relative to where we’ve been, we see some real improvement here. Ian Gutterman - Adage Capital: Great. That’s great. Thank you.

Our last question comes from the line of Rob Bobbin from Capital Returns. Please proceed. Robin Bobbin – Capital Returns: Hi. I’ve got a question with your large business is and I was wondering how much hard and soft capital supports your large business is and explicitly how much in the way of LLC do you use to make up that those amounts?

This is Jay Benet. There is a fair amount of LLC supporting the Lloyds business. I think proportionally its probably about 80% LLC are relative to hard capital. Robin Bobbin – Capital Returns: And where are the actual dollar numbers?

I am struggling with the number. I think it’s in our tag. $500 million is what I was remember. A little less than that but it’s about $500 million. It will go up and down based upon the instructed writing with Lloyds. Robin Bobbin – Capital Returns: What’s the capital approximately, what’s the LLC number?

It’s the LLC number. Robin Bobbin – Capital Returns: Okay.

474, $474 millions on page 117 of the cat. Robin Bobbin – Capital Returns: Approximately, Thanks a lot.

Ms. Nawi there are no further questions at this time. Please continue with your presentation or closing remarks.

We are all finished. We thank you all for your attention. We hope that this format was more responsive to your need. Let us know if its not. We can do it differently to be helpful to you, and thank you all for your time and attention.

Ladies and gentlemen that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines. Have a great day everybody.