As usual, I have to start with giving our lawyers their fair amount of time on the screen, but I'm sure you're all familiar with the safe harbor disclosures. In any case, I refer you to our 10-K for the full text of the safe harbor disclosure. This being a financial services industry and a diversified financial services industry, what I'd like to do today is, for those of you who are not familiar with the P&C industry, is to convince you that the P&C sector is, in fact, a very attractive sector today, diversifying risk-reducing sector in your portfolios as compared to other financials, especially in light of the macroeconomic environment and the financial crisis that we've been dealing with on the one hand, and some of the regulatory reforms that are coming forward.
First and foremost is that the P&C sector is a very resilient business model that has been tested through time literally going back over 400 years. We've seen wars, we've seen depressions, we've seen recessions, we've seen catastrophes, including obviously the worst financial crisis of our lives. Yet this is a business segment that works, that honors its promises, that does not require any kind of bailout by the government, certainly looks very well and compares very well with regard to the banks and the life companies. One of the nice things about our business is that we tend to have a broad spread of risk so we can absorb large losses, and it's self-sustaining and self-correcting.
If ever we have a significant negative event that hurts our capital, we very quickly tend to respond in terms of pricing increases, in terms of changing terms and conditions, so that we self-correct within a very short period of time. What's also very good about our business is that it's a non-discretionary purchase. We could not be in this hotel today. This hotel could not open its doors if it didn't have fire insurance, liability insurance, workers' comp insurance for its employees. No business can operate without insurance. Obviously, over the last couple of years, we've seen unusual, severe, and frequent catastrophes, and we've also had the financial crisis.
Nevertheless, the P&C segment has not only sustained its strength but actually increased its financial strength, and if you look back, has returned a significant amount of capital back to its shareholders through share repurchases and increased dividends. It has served its shareholders well, even in these difficult times. Especially important today when there is so much uncertainty with regard to the economy, with regard to sovereign risk, and so on and so forth. Most of our business portfolios, most of our investment portfolios and risk portfolios are significantly underweight the exposures that are cursing the world today. In addition, you can actually buy the P&C sector at a very significant discount to book value. This is an industry that's on sale right now notwithstanding the fact that it's had a consistent record of book value growth.
Also importantly, is that the relative strength of the P&C sector of the insurers is improving as we are finally seeing, after several years, an improvement in pricing. Many of you might say, "Well, yes, but the P&C sector historically has delivered very low ROEs." To that argument, I would say you're only partially right, and that is that the sector may have, on the whole, average a mid to high single-digit return over the last 10 years. It is in fact the industry sector that has one of the widest spreads between the lowest quartile of performance and the highest quartile of performance. In fact, the top two quartiles of the publicly available companies have, in fact, averaged over the last 10 years an ROE in excess of 14%. Certainly compares very well to other industries.
Within this sector, obviously, my job here is to convince you that AXIS is a compelling opportunity. For those of you who don't know us, we are a Bermuda-based insurance and reinsurance company. We were the first company to be founded after September 11th. We did have our IPO in 2003. Today, we have a stock market valuation of approximately $4.1 billion and a dividend that's been growing every year, and that today is approximately 3.1% yield. We write about $4.1 billion worth of gross premium, and we have about $360 million worth of investment income. We're quite proud that we have one of the strongest balance sheets in the business. We're rated A+ by S&P, A2 by Moody's, and A with a positive outlook by AM Best, $6.4 billion of capital, and a very high-quality portfolio, which I will discuss with you in a while.
We have risk-bearing platforms in the U.S., Bermuda, and Europe. We have branches across the world. We, in fact, have 30 offices on five continents and have approximately 1,100 employees. One of our attributes is that we actually have a very good mix, very well-balanced mix of business, almost 50/50 between the insurance and the reinsurance segments. Within that, as you can see on the bottom right-hand side, the majority of our business is short-tail business, which means that we very quickly are aware of the results of our risk-taking, and by having very low percentage of long-tail business, this reduces balance sheet risk. Let's get into some detail with a quick overview. This slide addresses our insurance business, and as you can see on the top left-hand side, the volume.
You can see that the volume and the proportion of that volume changes every year, and that speaks to our ability to modify and change our mix of business to respond to the opportunities that are available out there. When the opportunities are attractive, we are happy to grow the business, we are happy, and we have the ability to access the business. On the other hand, when there are times when the business is less attractive, we have the willingness and the capacity to significantly reduce that volume to make sure that our portfolio is optimized at all times. As you can see on the right-hand side in our insurance business, over 50% of our business is in the short tail specialty lines, approximately a little more than a third in professional lines, and only about 10% or so on longer tail lines.
I'm especially proud of the box on the bottom left-hand side. That speaks to the results both for 2011, which was a very difficult year for the industry, as well as for the 10 years. In 2011, our primary insurance business wrote gross premiums of $2.1 billion, net premiums of $1.5 billion. That's because we do purchase reinsurance protection on our insurance business. We reported a combined ratio of 98. By the way, we never reported a combined ratio in excess of 100 in our 10 years in our business. I cannot tell you how proud I am of the results for the 10 years. We've written $18 billion of gross premium, $12 billion net, and delivered a 10-year average combined ratio of 81%. That is unmatched in this industry. We generated $2 billion of underwriting profit in our insurance business.
Same profile for our reinsurance business, same concept. You can see the growing top line. You can see the change in the mix of business. Today, that mix of business is approximately 42% property and property cat, 30 or so percent mid tail lines, such as professional liability and credit and bonds, approximately 25% in longer tail lines. 2011 was our most difficult year for our reinsurance business. We wrote approximately $2 billion of premiums gross and net. We tend to keep our reinsurance risks net. We had 119 combined ratio with a $360 million underwriting loss. Over that same 10-year period, we wrote almost $14 billion of premium and had an average combined ratio, including a disastrous 2011, a difficult 2008 with Hurricane Ike, obviously a very difficult 2005. All of that included, we still delivered an 89 combined for the 10 years.
On a consolidated basis, if you take a look at all of that over this last decade, which was a very difficult decade, as I've just mentioned, we still were able to deliver an average operating ROE of 14.2%, grew our book value almost 12%. Adjusted for dividends, grew our book value 13.7%, all the while every year increasing the dividends on our common stock. We attribute this superior performance to really providing our clients and distribution partners with excellent products, value, and service. We do have a very wide range of products across lines and geographies. We have the ability to access and profitably underwrite complex and volatile risks. We offer meaningful capacity underpinned by superior financial strength and excellent claims management. We are fair. We pay quickly.
We were founded by an underwriter. One of his dreams was to create an environment where other underwriters could succeed and perform their craft. In fact, it succeeded. We have in fact recruited and retained some of the best underwriters in the business with expert knowledge, professional service, excellent relationships. Since the announcement of our management transition, I've had the opportunity to travel and meet with literally the head of every single major intermediary in the world. On an unsolicited basis, I cannot tell you how consistently I hear positive feedback about the quality of our underwriters and the nature and improving nature of our relationships.
Finally, in recent years, we've made significant investments in improving our ERM, making sure that we have appropriate limits, that we actually learn from the losses that we've incurred, and make sure that we have the right balance and diversification. Of course, conservative reserving is a hallmark of our company. It's one thing to talk with lots of words and claim to be the best. I think it's also very important to try and demonstrate it. What you have in this chart is a graphic that compares the underwriting profitability of every company in the P&C sector to the average volatility, annual volatility of that result. Obviously, volatility is a function, is a measure of risk, and the underwriting profitability is one minus the combined ratio. The premiums we earn less our losses, acquisition expense, and overhead.
We have taken for this chart all of the major sectors of the industry, including U.S. specialty, U.S. scale, the Bermuda hybrid model, which includes AXIS, reinsurance companies, as well as property cat companies. You can see the spread in underwriting profitability and volatility, and you can see how AXIS ranks among the most profitable companies in terms of underwriting profits with approximately average industry volatility. That's one way of looking at it. Another way of looking at it is to essentially take all of these company and put them on a chart by quintile and percentile of performance. As you might imagine, the profitability is on the vertical axis, the top box is the top quintile of performance. Bottom box is the bottom quintile of performance.
The left column is the lowest quintile of volatility, the most stable, the right column is the most volatile results. Two or three things really come through here. The first is that it's not the strategy that matters because each color is a different strategy in terms of scale or hybrid or cat or whatever. It's not a matter of strategy to achieve performance It is a matter of strategy in terms of volatility. You'll find that different strategies tend to be more or less volatile, and they're consistent. What it shows is that no matter what strategy you have, you still have the opportunity to achieve superior performance. It's not a matter of strategy, it's a matter of execution. As you can see here again, the fact that AXIS has delivered top performance with only above-average industry volatility.
In addition to our disciplined underwriting culture, we are willing to invest in, we have, in fact, over the last several years, invested in new lines, new markets, and new initiatives to fuel our profitable growth. In terms of geography, in the most recent years, we've opened up in Canada, we've opened up in Australia, and just yesterday, I celebrated the opening of our São Paulo office in Brazil. Obviously, over the next few years, you can expect us to make some additional investments in Latin America and Asia. In terms of product lines, we've had what I would call concentric diversification. Originally, we started off as a large accounts E&S writer, what we've done is we've taken some of our products and tailored them to appeal to more of a middle market and smaller accounts clientele.
We've also gone from more of a wholesale and E&S book towards more admitted and retail products. What we're doing here is taking lines of business risk that we understand, and we're selling them to a broader range of clients. Finally, in terms of significant new initiatives, we are willing to invest and have invested significantly in new businesses, the most visible of which recently is our new Accident and Health initiative. We are willing to spend the time and spend the money to build a business. In our A&H initiative, over a two-year period, we spent in excess of $50 million recruiting staff, opening offices, lawyers, getting the licenses necessary, literally before we saw a single dollar of premium. We started writing in 2010. In the fourth quarter of 2010, we wrote $7 million in premium. In 2011, we wrote $127 million in premium.
Our goal has been, and we are on schedule to be, a $300 million-$500 million business within a three-to-five-year period, generating substantial contribution to our bottom line. This business is supported by one of the stronger balance sheets in the business. We have total assets of approximating $18 billion, invested assets and cash approximating $13.5 billion, and total reserves approximating $7 billion. As you can see on the bottom, a conservative capitalization with only 15% debt to capital, an additional 8% in perpetual preferred stock, which we consider a permanent form of equity, and a growing and well-managed base of common equity. This chart shows you the composition of our investment portfolio. On the right-hand side, you can see how it breaks out. Investment-grade fixed income, cash, and short-term securities make up approximately 87% of our portfolio.
You can see on the box on the right the distribution of our investment portfolio by ratings. We have a little under 5% of our portfolio in equities, a little over 4% in high yield, and a little under 5% in alternatives. We are ideally positioned in our investment portfolio for the macroeconomic risks that are worrying the world right now. We have eliminated from our portfolio, we never had, but we have eliminated from our portfolio not only the PIGS, the GIIPS, or the peripheral countries, but also some of the lower-rated sovereigns, and currently own very little of European sovereigns, and what we do tend to be the very highest-rated Germany, Netherlands, U.K. We also own Canada and stuff like that. We sold last year all of our European financial institutions.
Not because we were making a call on Europe, but because that's not what we want to spend our time worrying about. Finally, because we are concerned about the low interest rate environment right now and the concern that at some point it will increase, we've maintained the duration of our portfolio at 2.8 years, and we use, if you would, the alternatives and the equities as a form of diversification against interest rate risk. As I mentioned to you earlier, conservative reserving is a hallmark of our organization, and you can see on this chart that we have approximately $6.7 billion of reserves. I think one of the things that's relevant here is the composition of those reserves. Less than 30% of those reserves are long-tail reserves. In other words, such as excess casualty, excess motor, umbrella, and so on and so forth.
Whereas the majority of our reserves are for short tail or mid tail line. Why is that relevant? It's relevant, of course, because the reserving risk tends to be higher for longer tail lines, and so the fact that our reserves tend to have a lesser proportion of long tail lines is helpful. On top of that, you can see that fully 63% of our reserves are IBNR, Incurred But Not Reported, which means that we haven't yet been reported 63% of the amount that we have for reserves. There's a substantial amount of reserves here prepared to receive reports that will come to us over time. Now, our underwriting philosophy is to generally reserve prudently for the year at risk, then over time, if those reserves prove to be too high or redundant, we will then release those reserves into earnings.
That's what you see on the bottom of the chart, a very consistent pattern of favorable reserve development, in fact, aggregating in excess of $2.5 billion over the last 10 years. Finally, in terms of chart, very efficient capital management. What this chart shows you is essentially the construct of our cash flows between ourselves and our shareholders in the capital markets. By year, the blue bars below the line reflect capital raised by the company, and obviously the biggest one is the initial capital raise. Above the line, you have in gray The dividends that we've paid, and in dark blue are the common stocks that we've repurchased. If you look at the box there, it'll show you that we have raised over the last 10 years, $2.1 billion of capital through our initial stock offering and follow-on offerings.
However, with dividends and stock repurchases, we've returned to the market in excess of two and three-quarter billion dollars, which is 30% more than we actually raised in the first place. Our investors are playing with the house money, if you would, and that value is $4.15 billion. That's an IRR of 15.9%, which I believe if you compare with others, you will find compares very favorably. Where do we go from here? Well, given a very difficult series of years of pricing declines, very difficult experience with catastrophes, and low interest rates, the market are finally at an inflection point. In fact, we have seen throughout 2011 and continuing into 2012, a mixed level of improvement in various lines of business. We're comfortable in saying that in just about every line of business, it is not getting worse.
In some cases it is getting meaningfully better, and in some cases modestly better. We are of the belief that over the next months and years that we will have slow but consistent increase in pricing and profitability for the P&C sector. Obviously, if there were to be a large catastrophe, we feel that that would significantly accelerate the improvement in market conditions. Given the strength of the industry today, we believe that this improvement will be gradual over time. How will we react in this environment? Well, I think what you can do is you can expect us to maintain a disciplined and opportunistic underwriting stance. We will manage our risk appetite to make sure that we only write those lines of business in those markets that we believe provide the best opportunity.
You can count on us not to jump on the first pricing increase made available because in many cases, the first pricing increase will not be sufficient to bring those lines of business to attractive levels for us. Nevertheless, we have the resources and the capacity to wait and be prepared to pounce on opportunities when they arrive. At some point, this market is going to become very attractive, we will be ready to take advantage of that when it happens. Of course, we will continue to invest in new lines and new markets, as I've indicated earlier, such as our A&H initiative or geographic expansion. We will continue to maintain a conservative approach to our portfolio. We do not believe that we're being compensated for taking risk currently in our portfolio, and you can expect that our portfolio will remain in high-quality fixed income securities, short duration.
We've almost reached the level of diversification that we want to have in terms of equities and alternatives. Pretty much consistent and conservative with regard to the portfolio. We will continue to manage capital. We want to make sure that we have all the capital that we need such that our clients are never concerned about our ability to honor our obligations. We want to have enough capital to make sure that we can grow at whatever pace is appropriate with regard to market conditions, but also that we rightsize our capital such that we don't end up with more capital than we need. Generally, what we've been saying recently is that we are very, very comfortable with the amount of capital that we have. In fact, every $1 of capital that we are generating is excess capital.
As we are generating incremental capital in 2012 on a quarterly basis, we are looking at this capital and determining whether or not it is best utilized in writing new business and potentially keeping the capital aside for opportunities that we believe will be coming shortly. If not, it really doesn't take a lot of brains to buy back your equity at book value, we are very willing to do that to grow the book value per share. Of course, over time, our goal is to continue to grow the dividend. Over the next few years, you should expect us to maintain a diversified range of products across markets and geographies. We already do that. We will continue to invest in that.
You can expect that we will continue to provide best-in-class service and effective risk management solutions for our clients and our partners in distribution. We have a portfolio with a significant component of complex and volatile risks. We do have the ability to access those risks, to underwrite those risks, but we will also make sure that through risk management diversification limits, we will make sure that we reduce the volatility or manage the volatility of our results. We will modulate our risk appetite and our capital to commensurate with the business opportunities. As I've mentioned, we will grow or shrink appropriately, we will keep our capital or buy back stock to ensure that we do the best activities for our shareholder.
We will maintain industry-leading financial strength characterized by financial conservatism and transparency. We will continue to cultivate an ethical, risk-aware, achievement-oriented culture that promotes discipline, entrepreneurialism, and professionalism. We are confident that our capabilities, our balance sheet strength, and our culture will allow for greater than industry growth in favorable markets and less than industry revenue reduction in difficult markets. We are one of the larger hybrid companies out there. We provide sufficient and scale to provide large limits, which is, of course, a competitive advantage. We are certainly not so large as to lose our agility. We still have a significant runway in our ability to choose what market to grow in and grow there.
What we also will do is make sure that we continue to deliver the kinds of results that we have in the past in terms of industry-leading combined ratios, industry-leading ROEs, and industry-leading book value growth, as I said, with volatility more or less equal to that of the industry. To conclude, I hope that I've convinced you that we have a global insurance and reinsurance platform, a diversified book of business by product and geography, an excellent market reputation, deep relationships, the ability to access and profitably underwrite complex risk, a strong entrepreneurial and underwriting culture, strong balance sheet capital and ratings, and successful track record. We can, we have, and we will continue to deliver value for our shareholders. On that, I thank you for your attention, and I would be prepared to take some questions. A glass of water.
Great. Thank you, everybody. Let me start out with the first question. You had some very interesting slides in there showing over the last decade excellent returns with well above average returns with maybe slightly above average volatility. When I think about AXIS over the next 5 to 10 years, is there a change in philosophy the way you think about the business as far as the volatility is concerned, or do you think we're going to continue to see that same pattern going forward?
I think you will. As I said, what we are targeting is industry average or modestly above average volatility. Not below, not after. We know what our strategy is. We know what our sweet spot is with regards to our market. If you're going to provide complex coverages, volatile coverages, whether it be catastrophe, aviation, professional line, various forms of energy and specialty lines, you know that you're going to have some volatility in your results. That's where we add value. That's what our underwriters can do every day. We're not going to try to provide a very steady homeowner book of business; that's not our business. Likewise, we're not going to be at the far extreme of the pure property cats. We like where we are. It's a broad range of business. It allows us really opportunities to pick and choose our spots.
The important thing here is to make sure that we and our shareholders are compensated for that volatility by delivering industry-leading results.
Any questions from the audience? Okay, I'll go on to sorry. Right there.
With interest rates coming down the investment income component of your earnings is either static or going down as well. That basically forces you to have an underwriting profit. How will this change if interest rates go up? Obviously, you're going to have much higher cash flow. Could you just go into the strategies that you would undertake during these conditions?
Your question about the impact of rates on investment income is right on point and in fact, what's fascinating is we have over the last several years averaged over $1.2 billion a year of cash flow. In the last 12 months alone, our portfolio has increased by over $1 billion, yet our investment income is down. The reason the investment income is down is because rates are actually lower year-over-year. It's clearly a challenge, but that is also one of the reasons that managements in this industry are saying we have to improve our underwriting results to make up for the lower investment results. Clearly two things will happen if interest rates go up. The first is it all depends on the pace of interest rates going up.
If they go up substantially, obviously our industry is going to be at risk of a sudden book value reduction. In fact, if you look at the duration of the industry, the leverage of the industry, 100 basis points of interest rate increase could conceivably cost this industry 10% of its surplus. That's one of the reasons that people need to be careful about keeping duration short and making sure that they have adequate capital to sustain that. Obviously, we've positioned our portfolio accordingly. If a larger proportion of our profits come from investment income, then certainly that will slow down the pace of improvement of the underwriting results because managements will say, "Well, I'm making a little bit more on investments and I'm making this up for you.
Instead of having to catch up 15 points of underwriting improvement, maybe I only need to make up 10 points of underwriting improvement." It'll slow, if you would, very likely slow the pace of pricing increases, but as long as the industry can still deliver the right net income, the right results, that should be hopefully equivalent for our shareholders because the book value growth will come from a combination of improved underwriting results and improved investment results.
Maybe I'll throw another question right there.
I ask this with the caveat, I know all cycles are extremely different, are there parts of the way this is playing out look or feel like any others in the past?
Well, I may be one of the older guys in the room, but I don't know all the cycles. I think that it does feel a lot like 1999, 2000 before the World Trade Center. In fact, in 1999, 2000 the industry had experienced several years of reduced underwriting profitability. It did not yet know just how bad the 1997 to 2000 years were. We did not have at that point the impetus of reserve deficiencies yet. At the end of 1999, the industry had also suffered from windstorms Lothar and Martin in Europe, which were also a bit of a hit to the industry. In that environment, in 2000, we started to see pricing slowly improve, which is why for those of you who were there, you'll remember that 2000 was an incredible year for stock performance in the P&C sector.
The P&C sector in 2000 was up in excess of 60%, because the Street had noticed the fact that the momentum had changed, the industry had inflected, and therefore was already pricing in, if you would, a significant amount of pricing improvement. Therefore, the 2000 improvement was a little bit like 2011, modest and grew it. 2001 started to get a little bit better, and of course, that thing got turbocharged by the tragedy of September 11th. Even without September 11th, if you go back, you will find that the industry had already started moving, but it's a slower pace. Thank you for asking the question. We really do need to distinguish between an event-driven cycle change, which is a very significant straight line up.
There's a significant imbalance between supply and demand, and people start to question all of their assumptions, and you make up all of your prior shortfalls literally in one year or two. As opposed to a more moderate cycle event where you make it up over successive renewals, a couple of points here, a couple of points here, and you ultimately get to where you need to go. That is a particularly attractive environment for a company like AXIS because you can't just write the market. You have to choose your risks. You've got to underwrite selectively. In that environment, I think that we will differentiate ourselves.
Let me throw another one out there, Albert. Just on excess capital, can you just talk a little bit about how you think about excess capital? What kind of buffer, what kind of rating you write to? What kind of buffer you want to hold above that? It seems there's a little bit of a disconnect, not with you, just in the industry in general, that maybe there's a lot of people writing a lot more cat business, and maybe the Street thinks there's a lot more excess capital out in the industry than maybe there really is. If you can talk to that a little bit.
You're actually asking two different questions. Let me address them. With regards to AXIS, like everybody else, we want to make sure that not only are we comfortable that we will honor our promises under any circumstance, but that people can actually measure that. Of course, one of the measures that we have, our solvency capital. Another measure is rating agency capital. Let's be honest about it, solvency capital is irrelevant. Nobody keeps solvency capital. We're all at a significant multiple of solvency capital. Even with regard to rating agency capital, with regard to AXIS in particular, we actually have capital well in excess, not just of our current rating, but of the next rating levels. That's where we want to be. I want to be very clear about that.
Getting capital in excess of the next rating level is how you need to maintain yourself. We could absorb a significant catastrophe and still be very comfortable with regard to our capital. There's a limit to how much excess capital you can have, which is why you also see that we have historically gone back and repurchased shares to make sure that we, quote, "right-size the capital for the opportunity." The second question that you ask is where is the industry capital? Is there so much excess capital in the industry that, in fact, we will not have a cycle turn because it's just too much capital? Here is where I would say that you really need to look at capital not just in terms of the absolute, but the capital in terms of the risk that it is supporting.
I would posit to you that the risk that the capital is supporting today is significantly larger than it has ever been in the past. Let me give you two or three examples. The first example is with regard to catastrophes. You've all heard, or you may have heard about RMS 11, which is the newest capital at-risk model for catastrophes. RMS 11, both in the U.S. wind and the European wind programs, would indicate that in some cases, expected losses are up 30%, 40%, 50%, and in some cases, believe it or not, in excess of 100% over what we originally believed. That's reflecting whatever the new science says. Some people said that this is far-fetched, that it is extreme. Let's agree with that. Let's assume it isn't 100%. Let's assume it's only 25%.
It's still more than we thought we were assuming before. The second thing that we learned in 2011 is that all of the large catastrophes in 2011 were non-modeled losses. Nobody knew there was a fault under Christchurch in New Zealand. No model currently available in the commercial market actually assumed that you would have an earthquake in excess of a 9.0 in Japan, and the Thai floods were totally unmodeled. You also have to say, no matter what the models tell you, there's also an additional level of uncertainty that you need to account for. Clearly more capital at risk with regards to catastrophes. Obviously, with regards to the economy, we have significantly more risk in the economy today. I mean, we don't have to go far.
Every article talks about the risk of sovereign risk, of Greece, of a potential double-dip, and so on and so forth. That, by definition, requires more capital. We talked just a second ago about interest rates being very low today, if rates were to increase, again, that could be putting our capital at risk. All of those things are, in my mind, proof that we have a strong capital base, but not necessarily an excess capital base. Therefore, I provide little value to that argument as an impediment to improving rates.
Any other questions, or I'll throw one more out there. With the rate seeming to get slowly better is, I think, the perception in the industry right there, with your stock trading at a significant discount to book, from AXIS's point of view, use of capital right now, where do you prefer to deploy it?
My expectation is that you will see us in 2012 taking our net income or our capital generation and allocating it between stock repurchases and preparedness for an improving market. That the range of, or how we allocate between those two is going to have to be a function of our judgment of the pace of improvement and the opportunities. We see it slow, which will tell you something about our current view with regard to stock repurchases. If it picks up, then certainly we would prefer. Every CFO prefers to use the capital to grow the business rather than buy back stock. On the other hand, it's very simple to see that if all we are being offered is a single-digit ROE opportunity on some risk, it's a much better investment to simply buy back our stock below 90% of book value.
Every underwriting opportunity has to be compared to the economic returns of buying back our stock. It's going to be a balanced approach.
Any other questions?