Question-and-Answer Session
Operator
Thank you sir. The question and answer session will begin at this time. (Operator instructions). Please stand by for our first question. And the first question will come from DeForest Hinman with Walthausen & Co.
DeForest Hinman – Walthausen & Co.
Hi. I had a few different questions. With all the headlines around CIT, can you talk about your fixed income exposure there?
John Robison
We do not have any exposure to CIT from a fixed income or an equity standpoint at this time. We sold our CIT investment earlier in the second quarter.
DeForest Hinman – Walthausen & Co.
All right. And with realized gains we booked in the second quarter 2009, what part of the asset portfolio did those gains come from?
John Robison
The majority came from the – on the equity side, and we also during the quarter, took advantage of an opportunity to rid ourselves of some of the lower quality municipals securities. So we took some gains on the muni bond side but the majority of the gains came on equity side.
DeForest Hinman – Walthausen & Co.
Okay. And it was interesting to hear you talk about your thoughts on inflation given the budgetary deficits in the United States. And then we have disclosed our duration that we have for asset portfolio and then at the same time we talk about coming back into the market and looking for high liquid short-term fixed income products. Can you talk about where we see the portfolio duration moving to as we go forward and maybe have some of that asset portfolio roll off and then we have to look for re-investment opportunities, because it sounds a little bit like we're going to move more towards shorter term, which could also entail some more reduced level of interest income on that portfolio in the near term. Can you help me think about that going forward how you are thinking about that?
Jon Michael
When we think about duration, we do it in terms of matching with our liabilities in the portfolio. What is not included in that that five-year duration number is the cash or the short-term investments. If we were going to include that number, we would be about 4.4, 4.5. We typically targeted a range based on the liabilities of the things in our portfolio somewhere around four years to five years. As we deploy those assets I would expect it to stay within that range.
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