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Now, let me turn the call over to Joe.Joseph Taranto Thanks, Beth. Good morning. We are pleased with our first quarter results as we generated an annualized operating ROE of 17% and annualized net income ROE of 21% and group book value per share adjusting for dividends by 7%. Including other comprehensive income, we made over $400 million for the quarter. We bought back a $125 million of our shares, paid $26 million in dividends and still increased our surplus by $260 million. This increase adds to the already strong excess capital position we had established. Our balance sheet has never been stronger with high quality, low performing assets and reserves that continue to test well. Even though by no means of hard market, we have positioned our portfolio to take the best the market has to offer. We have continued to find opportunities in the property catastrophe market where losses in the last 18 months have driven improved rates, terms and conditions. Although our expected margins have increased, we had not materially increased our P&Ls in any of the peak zones year-over-year. Since our last call, we have completed the April 1st Japanese renewals and we were pleased with the results. Rates on earthquake excess of loss treaties had increases ranging from 20% to 60% compared to 2011 and from 40% to 150%, when compared to the pre-earthquake 2010 rates. Wins excess of loss treaties experienced rate increases of 10-ish percent following 5-ish percent increases from the year prior. Japanese interest to buy proportional covers were improved to exclude natural perils, which increased the demand for specific excess of loss coverage on these overseas risks. The next important renewal date for us will be June 1st, when we have our Florida renewals. We anticipate that that will go very well, given the following dynamic. First, the new RMS-11 model increases the need for most buyers to buy more reinsurance at higher model prices while it reduces the risks – the risk capacity of many of the sellers. Second, the state of Florida will be providing less reinsurance, which will increase the need for professional reinsurance capacity. And third, the underlying homeowners’ insurance rates have been permitted to increase allowing for a bigger healthier premium base.
Moving on to casualty reinsurance, we continue to take a conservative position, essentially keeping our book to long-term declines that we have made money with. Many insurance executives are anticipating meaningful improvements in this market and we hope they are correct, in which phase we would adjust their appetite, but for now, we will continue to hedge our best.Our insurance operation continues to show improvement, whereas it ran to a 101 combined ratio for the first quarter, we expect continued improvement for ensuing quarters as rate increases achieved last year and this year on California Workers comp business works its way into the earnings, and our crop premiums which are seasonally in nature will be much heavier in subsequent quarters. Our financial institution D&O, our medical stock loss insurance and our property insurance both continued to produce an underwriting profit. On the investment front, we continue to perform quite well despite lowering our duration to better insulators from an upward movement in interest rates. Strong cash flow continues to build our invested asset base. As previously announced, Craig Howie has joined us as Executive Vice President and will become CFO following our first quarter SEC filings. Dom and I, Andrew the large number of qualified candidates for the position, and we were delighted that we were able to attract our number one choice. Dom remains CFO for the first quarter and accordingly he will present the financial report this quarter. Craig will be on the next call presenting the second quarter financial report. Now that Craig has joined us, Dom will be able to spend most of his time on the operational side of our business. Our management team has never been stronger with Dom as President, Craig as CFO, John Doucette as Chief Underwriting Officer for Worldwide Reinsurance and our many strong executives around the world like Mark de Saram, who oversees Bermuda, Europe and Asia, and Ron Diaz, who oversees Latin America and the other international areas. Read the rest of this transcript for free on seekingalpha.com