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To execute superbly we must:

Demand and maintain strong financial discipline, building for good times and bad

Financial discipline is a bedrock of great companies, particularly financial companies. Financial discipline – including sound accounting standards, transparent public report- ing and great management information systems – leads to high-quality earnings that are recurring and predictable in nature; yields high returns on capital; produces good margins; and provides reasonable risk relative to the capital deployed.

Financial discipline must be matched with superior–not just average–risk manage- ment. If we properly manage risk, we should get a good return through the cycle, not just during the good times. We must consider walking away from business where we cannot see a fair return over the cycle. This may slow short-term growth, but it under- scores our commitment to grow in a sustainable way. It is a trade-off we will always be prepared to make.

Create and maintain a fortress balance sheet

An unquestionably strong – or fortress – balance sheet is critical to managing business. Having appropriate reserves, strong capital ratios and strong credit ratings allows us to withstand diÓÄ™cult events while giving us the flexibility to deploy our capital as we see fit – such as increasing our dividends, buying back stock, investing in our businesses, making acquisitions or simply doing nothing. We will deploy our capital wisely and in the shareholders’ best interest. This is one of our most important goals.

To build a fortress balance sheet, we must thoroughly understand all our assets and liabilities; make sure that someone is accountable for them; use sound, economically appropriate accounting; and have strong controls.

Innovate, test and learn

Profitable companies consistently build the best infrastructure. The best systems and operations give them the ability to meet the needs of customers and exceed their expec- tations for service. To that end, we must be a lean and efficient producer. It is not just

about cutting costs. Great performance requires spending more and getting more from every dollar we spend. It is irresponsible to waste our critical resources on expenditures that have nothing to do with better serving our clients.

We also must relentlessly focus on integrating and upgrading technology, and on ag- gressively consolidating, streamlining and standardizing our operations, all of which help to push decision-making and authority to the field. We believe that technology


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