Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Bob Glasspiegel – Langen McAlenney
Bob Glasspiegel – Langen McAlenney
Your press release indicates that you’ve had some further hits in the fourth quarter with respect to bonds. Anything you could quantify?
Paul McDonough
I’ll give you some context for it, the S&P 500 portfolio through yesterday in the quarter was down about 18%. Our portfolio of common stock and convertible bonds was roughly in line with the S&P through yesterday.
Bob Glasspiegel – Langen McAlenney
And bonds any specific hits?
Paul McDonough
Not specific hits, but certainly we’ve experienced some additional spread widening in the quarter.
Bob Glasspiegel – Langen McAlenney
That would suggest your debt-to-capital ratio will be higher at year-end, unless there’s some other offsets that I’m missing. Is there an upper bound range that you would get nervous about the dividends?
Paul McDonough
I would say that our leverage at 34.8 is approaching an upper bound. I think that we could, strictly looking at the leverage, I think we could manage with maybe a couple of points higher. But certainly our objective is to manage the leverage ratio down and we’ll continue to look for and evaluate opportunities to do that, along the lines of the debt repurchase that we did in the third quarter.
With respect to the dividend which is I think the second part of your question, the leverage ratio and the dividend certainly are somewhat tied. I think ultimately any decision that we make with respect to the dividend will have other considerations to it as well.
In November when we meet with the board as we do every quarter, we will again consider whether the dividend level is appropriate in the context of our capital position and also in the context of the yield bonded dividend relative to our peers. And that is something that we look at every quarter.
Bob Glasspiegel – Langen McAlenney
Mike you’re an esteemed veteran of the industry and some of your fellow experienced CEO’s have offered some sort of crystal ball commentary of more clarity, sort of on what they expect the third quarter hostile environment might do to the market going forward. Your comments seem to be a little bit more soft cycle strategy than highlighting a sizeable change in the environment. I was wondering if you could clarify, sort of where you stand and where you think things are going?
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