"We experienced another quarter of solid underwriting performance, as evidenced by our 89% combined ratio," stated Jay Fishman, Chairman and Chief Executive Officer, "which included 9.8 points of net favorable prior year reserve development and 6.6 points of catastrophe losses. Our diversified, high quality investment portfolio continued to deliver impressive results, although at a lower level than in the prior year quarter. In addition, impairments continued to be negligible. While the marketplace remains competitive, it is consistent with the expectations we had coming into the year. The continuation of historically high retention rates in each of our business segments, particularly given the marketplace, is an indication that our competitive advantages make a difference. Our year over year 14% growth in book value per share, after giving effect to $4.1 billion of share repurchases and dividends, along with our operating return on equity in excess of 14%, demonstrate our ability to write business profitability and actively manage our capital.
"Looking forward, we will remain attentive to changes in general economic conditions, particularly to a potential increase in inflation trends. We have been acting prudently in our pricing and risk selection and will continue to do so. We are fortunate to have a highly experienced underwriting organization which has previously navigated challenging economic times. In addition, our balance sheet and liquidity continue to be extremely strong, as demonstrated by the recent upgrade by Moody's of both our debt and insurance financial strength ratings," concluded Mr. Fishman.