Matthew Heimermann (JP Morgan): A lot of people have opined that the situation in Florida maybe is unfolding a bit less bad than people had thought. Can you share your views on what you’re seeing happening there more from a market perspective, given that you effectively covered it with respect to XL last quarter?

The company is not overweight in Florida. The management always felt that the impact on the firm would be minor. The actual impact on the overall market is less than it was originally going to be expected. But the firm is also very encouraged by its renewal discussions already for June 1 and July 1 Florida exposed business. The firm believes that there will be substantial capacity bought, particularly by larger clients. The company is optimistic that it will be in a position to deploy a fairly substantial capacity to that marketplace.

JF Trimble (HSBC Investment): You mentioned about greater use of long-term agreements with your clients, especially in Europe. In the past, multi-year contracts have been seen as a sign of major weakening in the reinsurance market. What’s exactly guiding your strategy there?

In the past, long-term agreements in the reinsurance market have been a real problem and it’s something we avoid in the reinsurance business market even at this stage of the cycle. The management was referring to long-term agreements in the insurance segment. The firm has done these for a period of time, and where market conditions are attractive, which they broadly are, they’re a very good client retention tool. The firm has seen good client retention in Europe both on a per policy basis and on a premium basis. In fact better on a premium basis because of the larger client retention. Clive Tobin’s insurance unit was voted business insurer of the year. This is a vindication of the firm’s strategy because it’s taken from a poll of about 3,500 risk managers. It is reflective of the strong market position and these LTAs are done with those selected clients.

Brian Meredith (UBS): On the share buy back program, you’ve guided for the full year to have shares outstanding being roughly the same as they were in 2006, because you’re going to use the proceeds to buy back the stock. Whould we expect some significant buy back in this second quarter as the Florida contracts come due?

The firm has to work with the rating agencies to go beyond anything that it announced previously.

Joshua Shanker (CitiGroup): A lot of time has passed since the unfortunate decision with CSB. the actuaries were commenting that your reserves were overadequate for the years in question. Do you have any thoughts on the view of those actuaries who reviewed those reserves at that time and how that relates to your overall book?

The firm has seen modest adjustments on that portfolio. It’s a very long tail book. It has a lot of high access attachments. It will take some time for the maturation to reveal whether those reserves are adequate or indeed redundant. It will be a while.

Bob Glasspiegel (Langen McAlenney): You said you’re not going to update the guidance figures. Your income investment affiliate has blown through the lower end of the full year and moving towards the upper end. Are you not going to adjust that? Should we take a quarter of what that was and add it to the excess this full year?

Sara Street: We’re obviously very pleased with our first quarter performance. Our managers were able to capitalize on opportunities in both for the good markets and also the difficult markets in February. These returns are not earned evenly throughout the year and as our three and five-year annualized performance is in line with our 2007 guidance. At this point we’re not changing our guidance.

David Small (Bear Stearns): On the long-term agreements that you mentioned, can you talk about the type of discount if any that the clients are getting for signing these agreements?

There are no discounts. The firm does these because they box in a very stable rate for a period of several years. That’s the motivation. On the other side, customers have had a lot of volatility in the marketplace over the years, and they want a stable provider. They’re willing to commit to a longer term than one year to make sure they have a stable provider.

David Small (Bear Stearns): You talked about opportunities for growth in the insurance business. Could you help us understand by geography or by line where those opportunities are?

Clive Tobin: By geography, the U.S. is our number one focus. Certainly we’ve seen growth in Europe the past few years as a result of the acquisition. We see huge opportunities now in the U.S. Our E and S operation will be an important part of the story over the next five years in terms of growth in the U.S. Similarly, our private D&O initiative in the U.S., which will parallel the success we’ve had in public D&O in the last five years in the U.S., will be an important opportunity. We also believe our energy business and our construction business will see growth over future years with demand for capacity. In Europe we continue to think that we will build out based on the huge credibility we’ve established in that market and the distribution of more raw specialty product that we have in the U.S. to go through the European community. D&O for example has been very successful for us in recent years and will continue to grow.

Alain Karaoglan (Deutsche Banc): On the reserve releases in insurance reinsurance, in insurance you have $20 million net reserve releases. Is that a net impact of some adverse reserve development and reserve releases or is it some reserve releases? Have you released much on your casualty reserves?

Favorable development the majority of the $70 million was coming out of reinsurance and that predominantly is short-term, short tail lines, property and short tail lines. The firm does have a little bit of favorable development in its casualty book in insurance and that’s primarily in some primary casualty and some European primary casualty business.

Alain Karaoglan (Deutsche Banc): The expense kicked up a little bit this quarter. How should we think about it going forward? Are you looking still to make more investments? Will compensation be related to performance, how should we think about it?

The firm believes that expenses are in line with its expectations. However there’s a couple of things going on. The firm does have some higher compensation costs which are associated both with a good quarter where it is recognizing that in its performance-related compensation, and some timing of awards where there was a timing adjustment. In total that’s about $6 million. You’ll also see as we look at our expenses across the whole organization some higher SCA expenses that are coming through, and that’s associated with them now being a stand-alone public entity. That’s probably about another six million. New business initiatives, whether that’s in private D&O or E and S operations, that adjusts for a few of the million there, about another six. The firm has had the Essex impact of the weaker dollar versus non-U.S. dollar exposures. Net net, with offset from lower legal fees, that brings you down to about the $19 million.

The paid incurred ratio which is around 96%. Why is it so high and how is it being affected by probably the catastrophes of 2004 and 2005?

The firm had fairly strong catastrophes payments in the quarter $220 million of that is clearly impacting the number and the prior year releases.