As with Specialty, we are encouraged by Commercial's rate increases and premium growth. Commercial rates increased 5% with renewal retention down 1 point to 78%. The rate gains were broad-based with some lines achieving substantially higher rate gains. As we have said on previous calls, we are willing to accept lower retention to improve our margins and are pleased with the trade-off as well as the differentiated mix.

We have now had positive rate increases for 6 consecutive quarters in Commercial. In addition, rate increases accelerated over the course of the first quarter. Excluding the impact of the sale of First Insurance Company of Hawaii in last year's fourth quarter, Commercial net written premiums grew 6%. Commercial new business was strong with a new to loss ratio of 1.3:1, our pricing on new business is consistent with our renewal pricing. Commercial's first quarter submission activity increased 13%. Hit ratios increased 1% overall in Commercial. We believe this is indicative of improved appetite clarity with our agents and brokers.

Last week we were delighted when the shareholders of Hardy Underwriting Bermuda approved our proposed acquisition of Hardy. We expect the transaction to close by the end of the second quarter, subject to regulatory approvals. Acquiring Hardy brings us deep expertise in specialized markets. We will also be gaining a proven management team whose underwriting philosophy is similar to ours. We are very pleased that Hardy's senior leadership will continue to manage Hardy's operations. Craig will have a few more comments about Hardy in his remarks.

With that, I will turn it over to Craig.

D. Craig Mense

Thanks, Tom. Good morning, everyone. We had a solid first quarter from a financial and operating perspective. Earnings improved, our core P&C business demonstrated steady progress and we moved ahead on important acquisitions.

First quarter net operating income was $226 million, an operating return on equity of 8.1%. Operating income available to common shareholders was $0.84 per share. Period-over-period comparisons were favorable primarily as a result of lower catastrophe losses and increased investment income.

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