This Annual Report includes the non-GAAP financial measure entitled “net operating income.” Our chief operating decision maker evaluates segment performance and allocates resources on the basis of “net operating income.” We define net operating income (loss) as income (loss) from continuing operations excluding after-tax net investment gains (losses) and other adjustments and infrequent or unusual non-operating items. We exclude net investment gains (losses) and infrequent or unusual non-operating items because we do not consider them to be related to the operating performance of our segments and Corporate and Other activities. A significant component of our net investment gains (losses) are the result of credit-related impairments and credit-related gains and losses, the timing of which can vary significantly depending on market credit cycles. In addition, the size and timing of other investment gains (losses) are often subject to our discretion and are influenced by market opportunities, as well as asset-liability matching considerations. Infrequent or unusual non-operating items are also excluded from net operating income if, in our opinion, they are not indicative of overall operating trends. While some of these items may be significant components of net income in accordance with U.S. GAAP, we believe that net operating income, and measures that are derived from or incorporate net operating income, are appropriate measures that are useful to investors because they identify the income attributable to the ongoing operations of the business. However, net operating income (loss) is not a substitute for net income determined in accordance with U.S. GAAP. In addition, our definition of net operating income may differ from the definitions used by other companies. For the years ended December 31, 2007, 2006 and 2005, net investment gains (losses), net of taxes and other adjustments, were $(205) million, $(34) million and $(1) million, respectively. There were no infrequent or unusual non-operating items excluded from net operating income for the periods presented other than a $14 million after-tax expense recorded in the first quarter of 2007 related to reorganization costs. See our 2007 Annual Report on Form 10-K, included herein, for additional information.

In this Annual Report, we also reference the non-GAAP financial measure entitled “operating return on equity” or “operating ROE.” We define operating ROE as net operating income divided by average ending stockholders’ equity, excluding accumulated other comprehensive income (AOCI) in average ending stockholders’ equity. Average stockholders’ equity, excluding AOCI, was $12.4 billion, $12.0 billion and $11.4 billion for the years ended December 31, 2007, 2006 and 2005, respectively. Management believes that analysis of operating ROE enhances understanding of the efficiency with which the company deploys its capital. However, operating ROE as defined by the company should not be viewed as a substitute for GAAP net income divided by average ending stockholders’ equity. Due to the unpredictable nature of net income and average ending stockholders’ equity excluding AOCI, we are unable to reconcile our outlook for operating ROE to GAAP net income divided by average ending stockholders’ equity. See our Current Report on Form 8-K furnished on February 7, 2008 for additional information.