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•	Commercial lines insurance

•	Personal lines insurance

•	Excess and surplus lines insurance

•	Life insurance

•	Investments

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•	Unusually high levels of catastrophe losses due to risk concentrations, changes in weather patterns, environmental events, terrorism incidents or other causes

•	Increased frequency and/or severity of claims or development of claims that are unforeseen at the time of policy issuance

•	Inadequate estimates or assumptions used for critical accounting estimates

•	Declines in overall stock market values negatively affecting the company’s equity portfolio and book value

•	Domestic and global events resulting in capital market or credit market uncertainty, followed by prolonged periods of economic instability or recession, that lead to:

◦	Significant or prolonged decline in the value of a particular security or group of securities and impairment of the asset(s)

◦	Significant decline in investment income due to reduced or eliminated dividend payouts from a particular security or group of securities

◦	Significant rise in losses from surety and director and officer policies written for financial institutions or other insured entities

•	Prolonged low interest rate environment or other factors that limit the company’s ability to generate growth in investment income or interest rate fluctuations that result in declining values of fixed-maturity investments, including declines in accounts in which we hold bank-owned life insurance contract assets

•	Recession or other economic conditions resulting in lower demand for insurance products or increased payment delinquencies

•	Difficulties with technology or data security breaches, including cyberattacks, that could negatively affect our ability to conduct business and our relationships with agents, policyholders and others

•	Disruption of the insurance market caused by technology innovations, such as driverless cars, that could decrease consumer demand for insurance products

•	Delays or performance inadequacies from ongoing development and implementation of underwriting and pricing methods, including telematics and other usage-based insurance methods, or technology projects and enhancements expected to increase our pricing accuracy, underwriting profit and competitiveness

•	Increased competition that could result in a significant reduction in the company’s premium volume

•	Changing consumer insurance-buying habits and consolidation of independent insurance agencies that could alter our competitive advantages

•	Inability to obtain adequate reinsurance on acceptable terms, amount of reinsurance purchased, financial strength of reinsurers and the potential for nonpayment or delay in payment by reinsurers

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•	Inability to defer policy acquisition costs for any business segment if pricing and loss trends would lead management to conclude that segment could not achieve sustainable profitability

•	Inability of our subsidiaries to pay dividends consistent with current or past levels

•	Events or conditions that could weaken or harm the company’s relationships with its independent agencies and hamper opportunities to add new agencies, resulting in limitations on the company’s opportunities for growth, such as:

◦	Downgrades of the company’s financial strength ratings

◦	Concerns that doing business with the company is too difficult

◦	Perceptions that the company’s level of service, particularly claims service, is no longer a distinguishing characteristic in the marketplace

◦	Inability or unwillingness to nimbly develop and introduce coverage product updates and innovations that our competitors offer and consumers expect to find in the marketplace

•	Actions of insurance departments, state attorneys general or other regulatory agencies, including a change to a federal system of regulation from a state-based system, that:

◦	Impose new obligations on us that increase our expenses or change the assumptions underlying our critical accounting estimates

◦	Place the insurance industry under greater regulatory scrutiny or result in new statutes, rules and regulations

◦	Restrict our ability to exit or reduce writings of unprofitable coverages or lines of business

◦	Add assessments for guaranty funds, other insurance related assessments or mandatory reinsurance arrangements; or that impair our ability to recover such assessments through future surcharges or other rate changes

◦	Increase our provision for federal income taxes due to changes in tax law

◦	Increase our other expenses

◦	Limit our ability to set fair, adequate and reasonable rates

◦	Place us at a disadvantage in the marketplace

◦	Restrict our ability to execute our business model, including the way we compensate agents

•	Adverse outcomes from litigation or administrative proceedings

•	Events or actions, including unauthorized intentional circumvention of controls, that reduce the company’s future ability to maintain effective internal control over financial reporting under the Sarbanes-Oxley Act of 2002

•	Unforeseen departure of certain executive officers or other key employees due to retirement, health or other causes that could interrupt progress toward important strategic goals or diminish the effectiveness of certain longstanding relationships with insurance agents and others

•	Events, such as an epidemic, natural catastrophe or terrorism, that could hamper our ability to assemble our workforce at our headquarters location

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Premium growth – We believe our agency relationships and initiatives can lead to a property casualty written premium growth rate over any five-year period that exceeds the industry average. For the first nine months of 2015, our total property casualty net written premium year-over-year growth was 6 percent, comparing favorably with the industry’s 4 percent growth rate reported by A.M. Best for the first six months of 2015. For the five-year period 2010 through 2014, our growth rate was approximately double that of the industry. The industry's growth rate excludes its mortgage and financial guaranty lines of business. Our premium growth initiatives are discussed below in Highlights of Our Strategies and Supporting Initiatives.

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Combined ratio – We believe our underwriting philosophy and initiatives can generate a GAAP combined ratio over any five-year period that is consistently within the range of 95 percent to 100 percent. For the first nine months of 2015, our GAAP combined ratio was 92.5 percent and our statutory combined ratio was 91.3 percent, both including 5.1 percentage points of current accident year catastrophe losses partially offset by 4.4 percentage points of favorable loss reserve development on prior accident years. Our nine-month

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Investment contribution – We believe our investment philosophy and initiatives can drive investment income growth and lead to a total return on our equity investment portfolio over a five-year period that exceeds the five-year return of the Standard & Poor’s 500 Index. For the first nine months of 2015, pretax investment income was $422 million, up 3 percent compared with the same period in 2014. We believe our investment portfolio mix provides an appropriate balance of income stability and growth with capital appreciation potential.

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Improve insurance profitability – Implementation of these initiatives is intended to enhance underwriting expertise and knowledge, thereby increasing our ability to manage our business and to gain efficiencies. Better profit margins can arise from additional information and more focused action on underperforming product lines, as well as pricing capabilities, which we are expanding through the use of technology and analytics. Refining internal processes and tracking additional performance metrics can help us be more efficient and effective. These initiatives also support the ability of the independent agencies that represent us to grow profitably by allowing them to serve clients faster and to more efficiently manage agency expenses.

•	Drive premium growth – Implementation of these initiatives is intended to further penetrate each market we serve through our independent agencies. Strategies aimed at specific market opportunities, along with service enhancements, can help our agencies grow and increase our share of their business. Diversified growth also may reduce variability of losses from weather-related catastrophes.

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Enhance underwriting expertise and knowledge – We continue to increase our use of information and to develop our skills for improved underwriting performance. Expanded capabilities include streamlining and optimizing data to improve accuracy, timeliness and ease of use, which leads to more granular, segmented pricing. We also continue using predictive analytics and developing other business tools, such as building out the data warehouse used in our property casualty and life insurance operations.

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Improve internal processes – Refining our processes reduces internal costs and allows us to focus more resources on serving our agencies. We continue to improve our workflow tools, increasing our efficiency, providing additional operational reporting metrics and making it easier for agencies to do business with us. We also seek other ways to improve the satisfaction of our agencies' clients through deployment of user-friendly services for policyholders.

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Expansion of our marketing and service capabilities – We continue to enhance our generalist approach to allow our appointed agencies to better compete in the marketplace by expanding on the availability of services their clients want. Expansion initiatives include ongoing development and coordination of targeted marketing programs, including those focused on franchises, professional and trade associations and risk purchasing groups. We also plan to continue adding field marketing representatives for increased agency support in targeted areas. We expanded our excess and surplus lines field underwriting and marketing presence by adding two field associates during the first nine months of 2015. Similarly, we added a personal lines field marketing representative to better support agencies that market our personal lines policies. Expanding our customer care center also enhances our service and support for agencies.

•	New agency appointments – We continue to appoint new agencies to develop additional points of distribution, focusing on areas where our property casualty insurance market share is less than 1 percent while also considering economic and catastrophe risk factors. In 2015, we plan to appoint approximately 100 additional

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•	Commercial lines property casualty insurance

•	Personal lines property casualty insurance

•	Excess and surplus lines property casualty insurance

•	Life insurance

•	Investments

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Premiums – Earned premiums and net written premiums for the commercial lines segment grew during the third quarter and first nine months of 2015, largely due to renewal premium growth that continued to reflect price increases and a higher level of insured exposures. Higher new business written premiums for the third quarter of 2015 also contributed to growth, while lower nine-month new business written premiums partially offset growth for that period. The table below analyzes the primary components of premiums. We continue using predictive analytics tools to improve pricing precision and segmentation while also leveraging our local relationships with agents through the efforts of our teams that work closely with them. We seek to maintain appropriate pricing discipline for both new and renewal business as our agents and underwriters assess account quality to make careful decisions on a case-by-case basis whether to write or renew a policy.

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Combined ratio – The commercial lines combined ratio improved for the three and nine months ended September 30, 2015, compared with the same periods of 2014, largely due to lower ratios for current accident year losses and loss expenses before catastrophe losses. The nine-month 2015 period also benefited from weather-related natural catastrophe losses and loss expenses that were 2.2 percentage points lower, and included a decrease of 0.9 percentage points for noncatastrophe weather-related losses. The three-month and nine-month 2015 periods both benefited from overall more favorable reserve development on prior accident years.

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•	Premiums – Personal lines earned premiums and net written premiums for the third quarter and first nine months of 2015 continued to grow, primarily due to rising renewal and new business written premiums. Price increases and a steady, high level of policy retention contributed to premium growth. The table below analyzes the primary components of premiums.

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Combined ratio – Our personal lines combined ratio rose for the three months ended September 30, 2015, compared with the same period of 2014, primarily due to weather-related natural catastrophe losses and loss expenses that were 3.6 percentage points higher. The third-quarter 2015 combined ratio included a lower amount of unfavorable reserve development on prior accident years, compared with the same quarter of 2014. For the first nine months of 2015, we experienced a small amount of unfavorable reserve development on prior accident years, while our experience for the same period of 2014 resulted in favorable development.

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•	Premiums – Excess and surplus lines net written premiums continued to grow during the third quarter and first nine months of 2015. Growth in renewal written premiums was the key contributor to the increase.

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•	Combined ratio – The excess and surplus lines combined ratio improved for the third quarter and first nine months of 2015 by 0.3 and 2.0 percentage points compared with the same periods of 2014, largely due to lower ratios for current accident year losses and loss expenses before catastrophe losses.

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Revenues – Revenues increased for the three and nine months ended September 30, 2015, primarily due to higher earned premiums from term and universal life insurance products. The unlocking of interest rate and other actuarial assumptions for our universal life contracts slowed the amortization of unearned front-end loads, decreasing universal life earned premiums for the first nine months of both 2015 and 2014. That decreasing effect was greater for 2014, driving the increase in universal life earned premiums for both the third quarter and first nine months of 2015, compared with the same periods of 2014.

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Profitability – Our life insurance segment typically reports a small profit or loss on a GAAP basis because profits from investment income spreads are included in our investment segment results. We include only investment income credited to contract holders (including interest assumed in life insurance policy reserve calculations) in our life insurance segment results. A loss of $1 million for our life insurance segment in the first nine months of 2015, compared with a loss of $5 million for the same period of 2014, is largely due to more favorable mortality experience in 2015.

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•	Commissions – Commissions paid were $625 million in the first nine months of 2015. Commission payments generally track with written premiums, except for annual profit-sharing commissions typically paid during the first quarter of the year.

•	Other underwriting expenses – Many of our underwriting expenses are not contractual obligations, but reflect the ongoing expenses of our business. Noncommission underwriting expenses paid were $387 million in the first nine months of 2015.

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Technology costs – In addition to contractual obligations for hardware and software, we anticipate capitalizing approximately $6 million in spending for key technology initiatives in 2015. Capitalized development costs related to key technology initiatives were $5 million in the first nine months of 2015. These activities are conducted at our discretion, and we have no material contractual obligations for activities planned as part of these projects.

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380 of the 425 holdings had fair value between 90 percent and 100 percent of amortized cost at September 30, 2015. Fourteen of these 380 holdings are equity securities that may be subject to OTTI charges taken through earnings should they not recover by the recovery dates we determined. The fair value of these 14 equity securities was $411 million, and they accounted for $15 million in unrealized losses. The remaining 366 securities primarily consist of fixed-maturity securities whose current valuation is largely the result of interest rate factors. The fair value of these 366 securities was $1.232 billion, and they accounted for $28 million in unrealized losses.

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Forty of the 425 holdings had fair value between 70 percent and 90 percent of amortized cost at September 30, 2015. Ten of these 40 holdings were equity securities that may be subject to OTTI charges taken through earnings should they not recover by the dates we determined. The fair value of these equity securities was $91 million and they accounted for $16 million in unrealized losses. We believe the remaining 30 fixed-maturity securities will continue to pay interest and ultimately pay principal upon maturity. The issuers of these 30 securities have strong cash flow to service their debt and meet their contractual obligation to make principal payments. The fair value of these securities was $140 million, and they accounted for $28 million in unrealized losses.

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Five of the 425 holdings had fair value below 70 percent of amortized cost at September 30, 2015. Four of these five holdings were equity securities that may be subject to OTTI charges taken through earnings should they not recover by the dates we determined. The fair value of these equity securities was $52 million and they accounted for $26 million in unrealized losses. We believe the one remaining fixed-maturity security will continue to pay interest and ultimately pay principal upon maturity. The issuer of this security has strong cash flow to service its debt and meet its contractual obligation to make principal payments. The fair value of this security was $2 million, and it accounted for $1 million in unrealized losses.

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•	that information required to be disclosed in the company’s reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and

•	that such information is accumulated and communicated to the company’s management, including its chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosures.

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