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Executives

Alicia Charity – Head, IR

James Cracchiolo – Chairman and CEO

Walter Berman – EVP and CFO

Analysts

Suneet Kamath – Sanford Bernstein

John Nadel – Sterne Agee

John Hall – Wells Fargo

Ameriprise Financial, Inc. (AMP) Q3 2011 Earnings Call October 27, 2011 9:00 AM ET

Operator

Welcome to the Third Quarter 2011 Earnings Call. My name is Sandra and I will be your operator for today’s call. (Operator Instructions) I will now turn the call over to Ms. Alicia Charity. Ms. Charity, you may begin.

Alicia Charity

Thank you, and welcome to the Ameriprise Financial Third Quarter Earnings Call. With me on the call today are Jim Cracchiolo, Chairman and CEO, and Walter Berman, Chief Financial Officer. Following their remarks, we’ll be happy to take your questions.

During the call, you will hear references to various non-GAAP financial measures which we believe provide insight into the underlying performance of the company’s operations. Reconciliations of the non-GAAP numbers to the respective GAAP numbers can be found in today’s materials available on our website.

Some of the statements that we make on this call may be forward-looking statements, reflecting management’s expectations about future events and operating plans and performance. These forward-looking statements speak only as of today’s date and involve a number of risks and uncertainties.

A sample list of factors and risks that could cause actual results to be materially different from forward-looking statements can be found in today’s earnings release, our 2010 annual report to shareholders or our 2010 10-K report. We undertake no obligation to update publicly or revise these forward-looking statements.

And with that, I’d like to turn the call over to Jim.

James Cracchiolo

Good morning. Thanks for joining us for our third quarter earnings discussion. I’ll begin with an overview of our performance and then Walter will discuss our financial results in more detail.

Overall, we generated another solid quarter despite very challenging market conditions and we continue to demonstrate the strength of our diversified business model. In our Advisory business, earnings were up nicely and our advisors remained highly productive. In Asset Management, our net outflows increased primarily due to the equity market weakness and volatility. However, the business still produced solid earnings.

At the same time, our Insurance and Annuity businesses generated solid underlying performance despite significant market impacts, the related DAC unlocking and some catastrophic losses in Auto and Home. Our strong financial foundation continues to serve us well. We’re maintaining more than $2 billion in excess capital. We’re continuing our investments for future growth and we’ve accelerated our share repurchases.

During the quarter, we bought back nearly 10 million shares, returning $447 million to shareholders. In fact, so far this year we returned $1.4 billion or nearly 150% of our operating earnings through buybacks and dividends.

I’d like to briefly discuss the markets and their effect on our business and then I’ll provide some commentary on our underlying performance. Both the equity markets and the interest rate environment worked against us in the quarter. As you know, the S&P 500 was down 14% and the markets were quite volatile. The drop in equities affected our DAC muni reversion and the market conditions also drove an industry-wide pull back in equity investing which affected our flows in Asset Management and wrap accounts. Our overall assets were down as well which reduced our fees.

At the same time, long-term rates fell substantially because of the Fed’s Twist action and shorter rates remained near zero. The interest rate movements impacted our DAC unlocking and had a continuing effect on our spread revenue which Walter will discuss in more detail.

Even with the fairly severe headwinds we’re facing, the business generated good results and I feel confident about our ability to navigate the markets. Our diversified mix of businesses along with our strong capital position and flexibility gives us the ability to manage through this near-term disruption and accelerate our growth when conditions improve. In fact, I believe we’re in a stronger position today than ever before.

To illustrate, I’ll talk about each of our businesses and help you understand their performance apart from the market impacts. First, our Advice & Wealth Management segments generated another strong quarter. In fact, despite market conditions and despite the fact that our third quarter is typically slower for us, the segment delivered record pre-tax operating earnings of $116 million. Adviser productivity remained near all-time highs at $97,000 in operating net revenue per advisor for the quarter. We generated retail inflows, however, overall wrap inflows of $800 million were down from previous quarters as advisors held more cash in their clients’ accounts.

We’re continuing our long-term investments in our advisor force and they are providing important benefits. Our experienced advisor recruiting effort delivered its best quarter since the financial crisis in 2009 with 88 recruits during the quarter and 37 in September alone. Advisors across the industry are seeing the benefits of our model. As a result, our pipeline of potential advisor recruits is quite full. In addition, our new national advertising campaign featuring the Academy Award winner, Tommy Lee Jones, has been very well-received by both by advisors and consumers. You can expect to see more of our ads as we move into 2012.

We’re also continuing the rollout of our new brokerage technology platform, which combined with all our other advisor support is enabling advisors to be more productive and grow their client bases. All these improvements have led to a remarkably strong advisor retention and satisfaction rates. The retention of our most productive franchisee advisors is up to an all-time high of 97% and as we’re completing the transformation of our employee channel, our employee advisor retention rose to 91%. That’s an increase of 13 percentage points in just one year and it’s up 30 percentage points over three years ago.

Now I’ll move onto Asset Management where the fundamentals also remain solid. In the U.S., Columbia Management was in net outflows in the quarter, which was consistent with a very tough quarter for the industry. In the retail business, our net outflows increased to $1.9 billion, however, we did make some progress. We drove net inflows in some categories that are in outflows for the industry as a whole and our market share improved in key distribution channels. In the domestic institutional business, we reported net outflows of $2 billion, about half of which came from a single expected Bank of America Balboa insurance redemption. We have won several good institutional mandates recently and our new mandates are generally producing higher fees than the business we’re losing, so the revenue impact of the net outflows is relatively muted.

Given the extremely volatile conditions in Europe, the regular move to net outflows of $1.2 billion in retail funds; however, institutional flows were quite strong and new wins more than offset continued Zurich outflows resulting in net institutional inflows of $414 million.

We’re particularly pleased that Threadneedle won several new mandates including several in the Middle East, which demonstrates the expanding global reach of our Asset Management distribution. While the flows picture was challenging in the quarter, both for us and for the rest of the industry, I feel good about our ability to improve flows over time for a number of reasons. First, investment performance remains strong both in the U.S. and at Threadneedle. Columbia Management increased its number of four and five-star funds from 52 to 54, which is among the most in the industry and Threadneedle’s performance remains excellent.

Second, we’re making good progress reestablishing wholesaling relationships now that our teams have been in place for several quarters. Third, our institutional pipeline is quite strong and continues to grow. Fourth, we’re dealing effectively with former parent-related outflows that we expected as part of the acquisition and we’re generating good revenue offsets for the outflows. Fifth, Threadneedle is making good inroads as it expands its distribution to Asia and the Middle East. And finally, Columbia integration is essentially complete with only final technology work remaining.

Now I’ll move on to Annuities and Insurance. The Annuity business performed in line with our expectations despite the market driven DAC impacts. Net inflows continue to be impacted by our decision to exit outside distribution of variable annuities and by the expected lack of fixed annuity sales given low rates. That said, we feel very good about our decision to exit outside the distribution of variable annuities. It has given us a stronger risk profile while reducing the capital required by the business. We’ve also been able to focus all of our wholesaling efforts on Ameriprise advisors and sales remain quite strong. In the quarter, variable annuity net inflows in our advisor channel were about $400 million as advisors and clients continue to find our relatively new annuity product attractive.

In the Insurance business, Life & Health sales remain challenging. Clients continue to be reluctant to commit cash to long-term investments especially in products like variable universal life which has been one of one of our strongest products, but we are seeing some pickup in part because of the introduction of our new equity indexed universal life product. We also benefited from good claims experience in the quarter. In the Auto & Home business, catastrophic claims were higher than usual, primarily because of Hurricane Irene, but the catastrophic losses remain very manageable for a business of our size. Sales in Auto & Home continue their steady upward trend with policy counts increasing 8% over a year ago. In addition, we are in the process of raising auto insurance rates, which should help improve the earnings for that business.

To summarize, we certainly are feeling the impacts of the market environment, but the conditions are very manageable for us and I feel very good about our positioning. We’re driving strong improvements in earnings and profitability in our Advisory business. The Asset Management business is holding up well despite very tough conditions and we have a strong foundation to build on in that business. Insurance & Annuities remain solid contributors outside of the quarter’s DAC expenses and catastrophic losses. And our foundation is as strong as ever. Our balance sheet is in excellent condition and we are returning significant capital to shareholders while investing for growth. I continue to believe we have the right strategy, the right market positions and the right foundation to navigate this period in the markets and emerge stronger just as we’ve done before.

Now I’ll turn it over to Walter.

Walter Berman

Thank you, Jim. Our reported earnings in the third quarter clearly reflected the challenging environment we’ve been operating in. The S&P was down 14% sequentially, point to point and 7% on average. The 10-year Treasury declined 125 basis points to about 1.9% and corporate spreads widened. And we had some pretty severe weather which impacted Auto & Home claims. The most pronounced impact on our earnings was in the annual and quarterly changes in DAC amortization which resulted from negative market movements.

With this as a backdrop, core business trends were solid with earnings growth in Advice & Wealth Management. Underlying results in Asset Management, Annuities & Protection were all within our expectations. Our balance sheet remained very strong and we will continue to shift to low capital-intensive businesses.

On slide 4, you’ll see a break out of the different items that impacted results in the quarter, particularly given some of the large year-over-year changes. First, there were two different DAC impacts in the quarter, one from our regular mean reversion that captures equity market movements. The other is our annual DAC unlocking which factors in our other assumptions like interest spreads and policyholder behavior.

As you can see, the combined impact of the DAC items reduced year-over-year earnings by $0.42. The mean reversion in the quarter was a negative $0.17 compared to a positive $0.10 last year, reflecting declines in the equity markets. The DAC unlocking was a negative $0.10 compared to a positive $0.05 last year. The annual DAC unlocking was primarily driven by lower interest spreads offset partially by continued strong persistency. Excluding DAC impacts, there were a few unusual items in the quarter that were largely offset and aggregate to about $0.01 per share benefit.

Now let’s look more deeply at the drivers for Ameriprise in each segment. We generated 8% revenue growth and are driving a hard contribution from our less capital demanding businesses. Management and distribution fees had a double-digit growth while we had a 1% growth in net investment income reflecting lower portfolio yields. Overall, we continue to shift our revenue base to our less capital-intensive businesses of Advice & Wealth Management and Asset Management which represented 58% of the revenues in the quarter.

Turning to Capital on the next slide. During the quarter, we repurchased 9.9 million shares for $447 million. Between both share repurchase and dividends, we have returned more than $2.1 billion to investors since we began our repurchase program in the second quarter of 2010. This represents about 110% of our operating earnings. At our Life companies, the estimated risk based capital ratio is over 600%, well in excess of the required amount. We are planning to take a fourth quarter dividend of around $850 million and intend to manage RiverSource Life over the long term at an RBC ratio below 500%.

Our hedge program is effective and the quality of our balance sheet is strong. The investment portfolio is high quality and had $2 billion of net unrealized gains at the end of the quarter. We have no sovereign debt in Greece, Ireland, Italy, Portugal and Spain and only $50 million of holdings in the U.S. subsidiary of a financial institution in Spain. We are very confident with our holdings in Europe and you can find additional detail on these holdings in the Appendix of this presentation.

Before I move into the segment results I want to touch on two special topics, the adoption of EITF 09-G and the impact of a prolonged low interest rate environment. Let’s start with the DAC accounting changes that will be effective in January. We will adopt EITF 09 on a retrospective basis. We estimate that this will result in a reduction to our DAC asset of between $2 billion to $2.2 billion which represents about 45% to 50% of the current DAC asset.

On an after-tax basis, this is estimated to reduce book value between $1.3 billion to $1.4 billion. It is expected to have a slight favorable impact on earnings in 2012 and the reduction in book value will increase our return on equity going forward. The amount of DAC that we are writing off is primarily a result of our distribution model and not due to having an aggressive deferral policy. We have sold the vast majority of our products to our advisor versus using a third-party distribution channel. Since this is an affiliated distribution model, there are sales-related expenses that we can no longer capitalize since they are not linked directly to a successful sale.

Examples of these selling costs include certain compensation and benefits of employee advisors, field leadership and wholesalers, as well as some branch office selling costs and support staff. This change has no impact on our statutory accounting and therefore will have no impact on our excess capital position. Importantly, the reduction in the size of the DAC assets should reduce equity market-related quarterly earnings volatility.

Now let’s move to the potential impact from low interest rates on the next slide. Clearly the current rate environment is not the best for our business. The biggest impact is in the Fixed Annuity business. However, the pressure we would expect to see on earnings if the 10-Year Treasury remained low is very manageable. We estimate that in 2011, low rates will reduce earnings by an estimated $30 million. If rates remained where they are now, it would impact us by an incremental $35 million in both 2012 and 2013. This evaluation is based upon a static view of the business currently on our books and does not project new business growth. We do not anticipate low rates to have an impact on reserves or our excess capital during this period, and like I said, we view this impact as very manageable.

Now let’s take a closer look at our operating performance starting with Advice & Wealth Management on the next slide. Earnings in Advice & Wealth Management increased 30% and margins increased to 12.4%, up from 10.7% last year. We continue to improve Ameriprise advisor productivity and grow client assets. Client wrap assets net flows were over $800 million despite the weak equity markets during the quarter. We saw a 10% increase in the brokerage cash to $14.1 billion and these balances currently earn only about forty basis points.

Turning to Asset Management, Asset Management earnings include about $10 million of project-related expenses at Threadneedle relating to a change of transfer agents. While this resulted in additional expense now, it does reduce expense over time. Excluding these items, earnings in the segment increased 7%. Adjusted net operating margins were 32.7%. If you exclude the higher expense at Threadneedle, margins increased to 35.1%. The Columbia integration is progressing well, with all the fund mergers completed and net synergies on track for our target of $130 million for 2011. The technological integration is taking a bit longer than we anticipated and we are now targeting a complete separation in early 2012.

Turning to Annuities, operating pre-tax income was down year-over-year. As you can see, most of that was related to the $183 million swing we saw in DAC. In addition, earnings benefited from about $33 million in higher investment income. This was associated with an adjustment we made to the recognition of prepayment income on some structured securities. Adjusting for these impacts, earnings decreased by about 16% primarily from lower fixed annuity earnings reflecting spread compression and lower account values. The fixed annuity book continues to experience net outflows reflecting low client demand in the current interest rate environment.

From a sales perspective, the Ameriprise channel continued to generate strong sales of our RAVA 5 variable annuity product. As Jim said, net flows in this channel were about $400 million. Overall, variable annuity deposits are down 10% given our decision to exit outside distribution last year. During the quarter, we also announced plans to increase the fees on our living benefit riders and variable annuities to reflect current market realities.

Let’s move onto Protection. Operating pre-tax income in the Protection segment was also impacted by DAC as well as $23 million of higher weather-related losses in the Auto & Home business. If you exclude these items, earnings increased 3% year-over-year as underlying results in both Life & Health, and Auto & Home were good. Auto & Home revenues increased 5% over last year, primarily driven by growth in the sales through our partnership with Progressive and we have seen improving trends in the auto bodily injury claims. In the Life & Health businesses, earnings were consistent with our expectations given improvement in the overall claims levels.

Turning to the trends in the firm’s return on equity, returns in the quarter declined to 13.4% from a high of 14.5% last quarter. Since we calculate the return on equity on a trailing four-quarter basis, this does reflect the year-over-year swing in DAC unlocking as well as higher catastrophic claims in the Auto & Home. Given the challenging market environment, returns are holding up well.

In conclusion, our underlying business performance this quarter was solid. Earnings were affected by the markets and we continue to invest in our businesses so we are well positioned for growth when the equity markets come back. We are facing some headwind from low rates yet as we look ahead, the impact of prolonged low interest rates on earnings is quite manageable. Our risk management discipline is paying off under these conditions and we continue to prudently run our business. We have an effective hedging program against our variable annuities liabilities and our balance sheet is strong. The business mix continues to shift to lower capital businesses, which provide a strong source of excess capital.

As we have demonstrated, we are prudent capital managers and will continue to return capital to shareholders as appropriate.

Now we’ll take your questions.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) The first question is from Suneet Kamath from Sanford Bernstein. Please go ahead.

Suneet Kamath – Sanford Bernstein

Thank you and good morning. I guess I have a couple of questions. First on the RBC ratio and the excess capital of $2 billion, and the RBC ratio of over 600%, my understanding is some of the improvement from last quarter came from the increase in value of the hedges that you have on the books, for your variable annuity business. So if that’s the case, and markets rise, obviously, in the fourth quarter then some of that benefit will unwind. So I guess what I’m trying to get at is how much of this excess capital that you’re talking about is really sort of redeployable or cash that you’re comfortable taking out of the life subs to support redeployment going forward? Thanks.

Walter Berman

It’s actually totally because the hedges actually just offset the basic liability that we had and so they act in unison with it so it actually provided the protection we needed and so it is totally available for distribution.

Suneet Kamath – Sanford Bernstein

Okay. So just to be clear, the increase in the RBC ratio from last quarter to this quarter was not driven by the change in value of the hedges because that change in value is offset by something else?

Walter Berman

That’s correct. They go in lockstep.

Suneet Kamath – Sanford Bernstein

Okay. Got it. And then moving onto the share repurchases, obviously, you were more opportunistic in the third quarter. How are you thinking about the pace of buybacks going forward? And does this 09-G impact which obviously is not a statutory event but it will change things like debt-to-capital on a GAAP basis, will that influence the pace of redeployment?

Walter Berman

I do not believe it will. We have discussed this and reviewed this with the rating agencies and as again, it is a non-cash event and on that basis they’ve viewed it and they feel that we’re within the ranges that could allow us to continue on the repurchasing.

Suneet Kamath – Sanford Bernstein

And would you say that kind of current pace is about what you’re thinking?

Walter Berman

Suneet, we’ll continue to review the opportunity for repurchase as well as other forms of redeployment. What we would say is that we’re trading way below our intrinsic value so we saw it is a good opportunity in the third quarter and we’ll continue to review it appropriately as we move forward.

Suneet Kamath – Sanford Bernstein

Okay. Great. And then my last question is just on interest rates. I appreciate the earnings discussion in Walter’s presentation but I was a little curious that the equity allocated to long-term care, as one example, actually fell in the quarter by a fair amount. So I was curious about some details in terms of that especially given the low long-term rate environment. But I guess the bigger question is, how are you guys thinking about when the rate environment, if it persists, sort of moves from an earnings drag issue, which you sort of quantified, to something that might be a little bit more serious in terms of either statutory reserves or DAC or anything like that. That would be helpful. Thanks.

James Cracchiolo

On the long-term care, that was a reserve adjustment based upon actuaries evaluating it, they made a statutory reserve adjustment and that was something that has been evaluated and was implemented in the third quarter. On the interest, we are continuing evaluating that, and obviously, we do not see it having a significant impact as the schedules indicated and we will then have to evaluate it if it does continue beyond the two years that we discussed, ‘12 and ‘13. But we certainly feel our capital and our earnings capacity, we’ll be able to deal with it in the near-term and then we’ll have to evaluate what changes have to be post that.

Suneet Kamath – Sanford Bernstein

Okay. Just quick follow-up on the long-term care statutory reserve release, was there a GAAP earnings benefit from that in the quarter?

Walter Berman

No, there was not. It was strictly statutory.

Suneet Kamath – Sanford Bernstein

Okay. All right. Terrific. Thank you.

Walter Berman

Thank you, Suneet.

Operator

(Operator Instructions) The next question is from John Nadel from Sterne Agee. Please go ahead.

John Nadel – Sterne Agee

Hey, good morning. Two questions for you, if I could. In Asset Management, can you help me with the distribution fees and distribution expenses? If I look at distribution fees, they fell 12% quarter-over-quarter, I’m looking at 3Q versus 2Q and that’s about what I was expecting, but distribution expenses remained flat and I thought there was supposed to be a relationship there where there was almost a direct function of distribution fees. But that clearly wasn’t the case. Can you help me understand what happened there?

Walter Berman

I think it is that while certain of the parts certainly fluctuate with it, there are elements that don’t as it relates to some are tied to account fees, some are tied to wholesaling and other factors. So it will eventually, you get the timing differentials so we anticipate that timing differential will adjust itself, and as you saw, the net change was about $13 million when you take the distribution revenue minus the distribution expense, we had an additional $13 million. We don’t see an issue with that; it will adjust itself.

John Nadel – Sterne Agee

So that will come back to you and how quickly does that happen, Walter?

Walter Berman

It will come back in next – it depends on what happens to the markets and other things of that nature, but it will – it’s more of a timing – I don’t have the exact elements of it, but certainly it will be driven by the market and it will happen obviously depending on how markets move, because it’s not a perfect correlation.

John Nadel – Sterne Agee

Okay. Maybe I’ll just follow up off-line on that one.

Walter Berman

No problem.

John Nadel – Sterne Agee

And then just thinking about the asset – again on Asset Management, just where you guys are on integration, gross and net saves. I think you made the comment about $130 million on target for that for this year. Can you just reset for us where you guys were coming out of this quarter, how much you have incrementally and what we should be expecting in 2012?

Walter Berman

Yeah, as I indicated, the bulk of the synergies will hit the $130 million range as we talked about for 2011. With the delay on the reengineering, that will carry over into 2012 as we implement the one-time charge activities and we do complete the final integration and we are on track to be through 2012 in the $140 million range on our synergies.

John Nadel – Sterne Agee

Are they one-time costs? I forget what that was originally expected to be, but given the timing and the push out on the system side, are you expecting that the one-time costs related to the integration process are going to be a bit higher?

Walter Berman

Yes, they are. Obviously, take a look through the third quarters, about $182 million and they will be higher and we are assessing that right now.

John Nadel – Sterne Agee

Okay. Thank you very much.

Walter Berman

You’re quite welcome.

Operator

Thank you. The next question is from John Hall from Wells Fargo. Please go ahead.

John Hall – Wells Fargo

Good morning, everyone. I have a few different questions. The first one has to do with the dividend that you indicated you’re going to pay out of the Life companies in the fourth quarter, that $850 million. Is that encumbered in any fashion or is that free and available?

James Cracchiolo

Well, I think we get – the majority of it is not encumbered. We will get permission from the Superintendent of Insurance and we are in the process of doing that. We do not see an issue with that.

John Hall – Wells Fargo

Okay. On the DAC write-off, just wondering if you could comment because we’ve been seeing a number of other companies report similar types of things, and at this juncture the size of your write-off relative to your DAC balances on the higher-end of things, I was just wondering if you could comment on what it is about either your book of business or perhaps your DAC policies that would lead to that result?

James Cracchiolo

Sure. First and foremost, it is totally appropriate the level that we’re doing, write down from that standpoint and it primarily focuses on the nature of the business and written through the inside channel, and certainly if you look at the components, if you look at the comp component and then the selling rate as it relates to the DAC that you would have in those two components, the impact relates to an inside channel. Those elements under the new rules of being a successful sale are more subject to reversal from that standpoint of the policy that was in effect prior. So since we have the bulk of our activity through the inside channel, that’s where the impact is coming on the reversal of that DAC; whereas if you sold in an outside channel, most of that is absorbed through the comp rate and which is again tied to a successful sale, so therefore it does not get reversed. So we’ve been through this, we’ve reviewed it, we’ve reviewed it with our auditors and certainly have been evaluated it and we feel it’s totally appropriate based upon the type of business and the focus in the channel that it evolved from.

John Hall – Wells Fargo

Great. And then just moving on to fund flows, Jim, I was wondering if you could just comment on the momentum that Threadneedle is showing in the Middle East. Is that – what’s all of a sudden driving that or is it not that sudden and is there sustainability around it?

James Cracchiolo

Yes. As you are aware, we had mentioned over the last few quarters that we’ve been expanding our distribution with Threadneedle to the other regions of the world and one of the ones that we started to really develop last year was the Middle East, and over the course of the year we’ve been winning mandates coming from the Middle East. We’ve also expanded recently to Asia and we think that, that will start also come to bear some fruit as we move to the next number of quarters as well. So we do believe that it is something sustainable. Threadneedle has excellent product. As you know, based on what we’ve experienced in Europe and the sovereign debt crisis, we experienced some lumpiness in redemptions et cetera, because of what has occurred, but that come back quickly again as we saw previously when that picked up again as an issue in Europe earlier in the year.

So we do feel like the pipeline for Threadneedle is good, it’s strong, and we can continue to win good mandates. Their investment performance over the cycle has been quite good and they have really good product. And so we think that that will continue.

John Hall – Wells Fargo

Great. Thank you very much.

Operator

At this time we have no further questions. Mr. Cracchiolo, I will turn the call back over to you for closing remarks.

James Cracchiolo

Thank you. We appreciate you listening in this morning. As I opened the call, even though we’ve experienced another impact from the market environment, stock market being down a lot in the quarter, we do feel like the fundamentals of our business remain quite solid. And as we look across the businesses, we feel very comfortable with the position and the hand that we have. We feel good that if this environment continues, we can navigate even stronger than we did the first time out and in addition to that, we do believe that as markets continue to repair and stabilize, the foundation we have in place, the investments we continue to make and the traction we’re gaining including with the Asset Management businesses as we have really integrated and stabilized them, will bear fruit as we move forward.

We have derisked the business, we feel very good about our capital position, volatility is lower, we really have an excellent book in our Annuity business and we have, even though there are the normal exposures from market declines et cetera, on a relative size and scale, it’s very manageable for the size and scope of our business and the diversity of our business and the capital position.

So we will update you even further as we talk at our financial community meeting which is November 16 at 8:00 a.m. at the New York Stock Exchange and we look forward to having a very good conversation with you and outlining how we’ll continue to make progress as we move forward and also to discuss any of what you might think as issues or concerns in the environment so that we can actually quantify that for you and qualitatively give you how we think about it so that you can make informed decisions.

So we appreciate your time, and thank you very much, and look forward to speaking to you further.

Operator

Thank you, ladies and gentlemen. This concludes today’s conference. Thank you for participating. You may now disconnect.

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