Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Randy Binner - Friedman, Billings, Ramsey.
Randy Binner - Friedman, Billings, Ramsey
Wendy you touched on the other expenses and costs. What’s a good run rate for us to think about on that? It was up to 12.5 for the first quarter ’08.
Wendy Lee Carlson
It’s hard to predict a run rate given that we have got some various things going on during the year. It’s hard to predict when the legal expenses are going to hit, in any given quarter and we do have some significant events coming up in terms of certification hearings in those cases. So, at the level that they are now, certainly we wouldn’t expect them to increase significantly over that. So, if you look at the first quarter as an indicator of what the run rate would be for the year, that’s probably a conservative way to look at it.
Randy Binner - Friedman, Billings, Ramsey
Okay, but that would be almost $1 million higher I think than the previous run rate right.
Wendy Lee Carlson
I said it’s conservative.
Randy Binner - Friedman, Billings, Ramsey
There is some upfront spending you did on the class action stuff; did that help to offset that as we go through ’08 right?
Wendy Lee Carlson
Right.
Randy Binner - Friedman, Billings, Ramsey
The amortization of sales inducements, I mean that’s -- that level of amortization is just tied to the overall level of profitability we see in the quarter. I mean is there a way to think about that going forward beyond that.
Wendy Lee Carlson
Well that’s related to the growth and the aging of the business and so all things being equal that should follow a fairly steady trend. We evaluate that every quarter to look at the assumptions in our DAC model relative to our actual experience and from time-to-time we’re required to modify our assumption to true those up to the actual experience, but setting aside those kinds of things, the type of trends that you seen in our DAC amortization and our bonus interest amortization should remain fairly constant and that’s been in general a trend of increasing expense from quarter-to-quarter of $2 million to $3 million.
John Matovina
I mean the fact is we are continuing to sale products with fairly high acquisition costs. This the product Kevin mentioned; the Bonus Gold with a 10% bonus to the policyholder and a pretty much all-in cost of 21% represents three quarters present of our sales and has now for the last couple of years. So, as that business replaces business from 5 years or 6 years ago that didn’t have that level of acquisition costs, you’re just going to see the trend move up some to and the trade off for that is we’re looking for higher spreads in that business to cover the higher acquisition costs and from earlier product designs where they weren’t so high.
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