With that, I'd like to turn the call over to Michael.Michael H. Lee Thank you, Bill, and good morning, everyone. I like to thank all of you for joining us on this conference call to discuss our first quarter 2012 operating results and our recent transaction with Canopius Group that we announced on April 25. Let me start on Page 3 by giving everyone a brief snapshot of our first quarter results. We had operating income of $21.9 million during the first quarter, which was in line with our expectations. We achieved 20% top line growth driven by our organic growth initiatives and continue to see positive market and pricing trends. We expect our growth rate for the year to be lower, close to the upper end of our 5% to 10% target. Finally, we were successful in initiating the rollout of our Personal lines system this quarter after developing this system for more than 2 years, which should improve our efficiency and gradually lower our expense ratio. As previously announced on April 25, we also agreed to make an investment in Canopius Group, a privately held international specialty, insurance and reinsurance company, underwriting primarily through its Lloyd's managing general agency and syndicates. We committed to make an investment of $75 million in Canopius representing a 10.7% interest in this company. In addition to the investment, this transaction allows us to potentially establish a presence at Lloyd's subject to the approval of Lloyd's and the Financial Services Authority. It also provides us with the opportunity to potentially merge with Canopius' Bermuda reinsurance operation. As shown on Page 4, our operating income for the first quarter was $21.9 million or $0.56 per diluted share compared to operating income of $20.3 million in the same period last year or $0.49 per diluted share. The first quarter 2012 results include an aftertax charge of $8.4 million associated with prior year reserve strengthening and also reflect lower-than-expected property losses, as unseasonably warm weather on the East Coast of the United States resulted in lower property claims.
Operating income in the first quarter of 2011 was impacted by claims related to unusually severe weather. Our stockholders' equity increased by 2% to $1.058 billion from $1.043 billion after taking into account $77 million of share repurchases and dividend payments since the first quarter of last year.Our book value per share increased by 6% to $26.83 per share at March 31, 2012, from $25.24 per share at March 31, 2011. As shown on Page 5, our combined ratio net of reciprocals during the quarter was 99.2% compared to 97.6% for the same period last year. Our ROE was 8.4% for the quarter compared to 7.8% in the first quarter of 2011. We expect our ROE to gradually improve throughout the year and for us to be close to our 10% to 12% target beginning in the second half of 2012 and into 2013. Due to the organic growth initiative that we implemented last year, our premiums written and managed for this quarter increased by 12% to $467 million from $390 million that we achieved during the same period last year. Page 6 provides further details on our organic growth initiative, which helped us to achieve our strong top line growth this quarter. Through our organic growth initiative, we are developing new products, creating more entrepreneurial business units and improving the various functions related to generating organic growth. This quarter, we expanded into commercial property, inland marine and surety products. The surety product offers a unique and innovative program aimed at the small and midsized contractor. This program supports contractors throughout the construction process by providing bonding, working capital and other support services. We're also in the process of enhancing our Personal package policies to appeal to more affluent clients. Read the rest of this transcript for free on seekingalpha.com