Question-and-Answer Session
Operator
Thank you. (Operator Instruction). We will go first to Bob Glasspiegel with Langen McAlenney.
Bob Glasspiegel
Good morning. As I calculate your pro forma debt to capital for the 100 million of debt, it looks like you are 43%. Is there an upward bound where we start to get nervous? Any constituencies?
James Brannen
Hi good morning Bob, this is Jim Brannen.
Bob Glasspiegel
Hi, Jim.
James Brannen
Yes, I am not sure how you are calculating and I mean, I am assuming those debts with securities in market and no equity credit whatsoever for the?.
Bob Glasspiegel
Great. Just a simple thing debt to capital ratio it might look relative to the covenants?
James Brannen
Yeah, well. The only comment we have on that capital with the securities cost and certainly wouldn’t include everything that you are including. So we are long away from the issue with regards to at any evidence on leverage ratio.
Bob Glasspiegel
Okay. The third quarter was sort of a walk in the park compared to the fourth quarter to date, you gave us a few comments on hedging, which I think you seemed to be relatively comfortable both in the sales trends, anything on attacking or sort of bond portfolio to market from interim basis that would helpful to let us know what happened this quarter. And is there any sort of shocks that we hopefully work the way out of that we can be nervous.
James Brannen
I guess the only thing I will mention with regards kind of the broad category through out there. One of the process if you are on a October 31st pricing and I think most people when they thought about how bond portfolios were being priced at 9:30 on the wake of the news of Lehman and how widespread were seen at – there hasn’t been much new issues and spread continue to wide out during October. So I think the most companies you will see on October 31st markets are bit higher and more difficult and the 9:30s that’s what the only observation there. The first part of your question with regards to the equity impacts as well?
Bob Glasspiegel
Yes.
James Brannen
Okay, you know that I – the same thing that occurred in the third quarter with regards the back amortization on the variable block if, obviously we are balanced of September 30. So that same situation would occur again does effect current again.
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