Question-and-Answer Session
Operator
Thank you, sir. The question and answer session will being at this time. (Operator Instructions). And we will go first to Doug Mewhirter with RBC Capital Markets.
Doug Mewhirter - RBC Capital Markets
Hi, good morning. The first question was about tax rate and relating you investment mix. If you back out of your tax benefit or credit from your realized losses and then also back out your realized losses, so, you just have an operating tax rate, it appear to be ... although my calculations maybe incorrect, it appear to be less than 20%. Is it because your municipal mix, is that high or did you have some other ... was there a favorable geographic mix to your profits or I guess, to take it off the chest, what was you operating tax rate for the first quarter?
R. Scott Donovan
Hey, Doug, it's Scott. Our operating tax rate was approximately 18%, and let me speak as to why it's 18%. You've got three things that are going on. First, you got a large composition of tax exempt securities which is generating tax preferred income. We also have a large component of dividends received on our equity portfolio, that too is tax preference. So we are receiving preferences on both of those components, and then offsetting that would be on the underwriting results, Doug, which would be at a flat 35%. So there's no geographic issue within the underwriting performance.
Doug Mewhirter - RBC Capital Markets
Okay, so it sounds like ... if it's a function investment mix then that would be a rough, very rough proxy for maybe the next couple quarters what your operating tax would be holding underwriting ... the proportion of underwriting profits is you investment income equal (ph)?
R. Scott Donovan
Doug, it think that's a fair representation of what would we expect to see going forward.
Doug Mewhirter - RBC Capital Markets
Okay, thanks for that. The other question is also related to investments. Obviously, your effective yield has ticked up as in handling losses put (ph) some of that excess cash to work; is there still an ongoing asset allocation where there might be a slightly more upward trajectory to your effective yield, so went from 2.7 to about 3.5. But if there have been more activity, that may tick it up in the next quarter again including everything else equal.
- To read the full transcript on Seeking Alpha, click here »
