Question-and-Answer Session
Operator
Thank you. Ladies and gentlemen we will now conduct the question-and-answer session. (Operator instructions) One moment please for our first question. And our first question comes from Doug Young of TD Newcrest. Please go ahead.
Doug Young – TD Newcrest
I have three questions. I guess one, I'm trying to understand why it's taking so long to deal with the Pennsylvania Insurance Commission because I thought this was something that was being addressed post – the last conference call. Two, the $120 million of annual run rate expense reductions, where is that – what is the starting point? What I’m trying to get at is what should we be expecting from an actual absolute expense level going forward once you've fully removed that $120 million? And three, in terms of the – your intent to buy back debt, I'm just curious how much capital capacity you think you have to buy back debt at currently?
Colin Simpson
Scott, you want to take the first question?
Scott Woolney
Sure. I think the straightforward answer Doug, is the plan itself is a very lengthy document which includes detailed budgeting and liquidity projections going out for 12 or 13 years. So we've had a very active dialogue with the Department since the last conference call and a lot of progress has been made. Yesterday was the date that the formal plan itself was submitted for their consideration. So it's been underway through out the last three months or so. It' s really just the case that the final plan was submitted in its formal context yesterday.
Colin Simpson
I'll take the second question. The $120 million savings on expenses, going back last year to our investor day, we made it clear that our objective was to get our expense levels at 30% or below. That is generally split into a general and administration expense target of about 12% with commissions sitting right about 18%. So our objective going forward, as we strengthen the business and continue to strengthen the business and focus on the excellence of execution, is to get in to 12% ratio by the end of next year.
Shelly Gobin
Hey, Doug. And then the final question was an insurance of the capacity. The Board has authorized up to $40 million. So that is effectively the capacity that we feel comfortable with. There are certain conditions that the capital committee will assess in deploying that, but that is the capacity.
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