Question-and-Answer Session
Operator
(Operator Instructions). We will now take our first question from Edward Spehar - Bank of America.
Edward Spehar - Bank of America
I have three questions; the first is, the description that you’ve given of the business and the results this quarter I think suggest that you don’t feel that the environment is having nearly as much of an impact on your business as it is for some of the other companies we covered. So, I guess I am just curious, could you remind us again why you are no longer providing any guidance on earnings, and then I have two quick followups.
Eric E. Parsons
Ed, I’ll start and I’ll turn it over to Floyd. I think it would be probably incorrect to say that we’re not feeling the effect of the economy; certainly we are, but I think you’re right, I don’t think we’re feeling it to the same degree that maybe some of our competitors are. There probably are a number of reasons for that; I think that we’ve chosen to be in businesses that work reasonably well during many cycles of the economy. I think we have paid attention through previous learning experiences on how to diversify our business so that we don’t feel the effects. We pride ourselves on quality underwriting, both in the insurance side and the investment side; I think that makes a big big difference for us, and so while we certainly are aware of the economy and then feel it for example of the top line very much in the insurance services group and even more in the asset management side, I would say that we think we’ve done a pretty good job of diversifying ourselves away from the really difficult part. With regard to guidance, I’ll turn that one over to Floyd.
Dr. Floyd Chadee
I think it’s quite correct to say that we’re not feeling the way our competitors are feeling it and it does reflect what we’ve talked about in previous calls which is the conservative way the business is underwritten. So, if we go through the list of the ways that we are feeling it, our top line in the insurance services group is somewhat muted in this environment as we would have expected, not reflecting the normal growth that we’ve seen in previous years, but perhaps reflecting the continued discipline that we would continue with during this difficult time. In our asset management group, we have been affected by the equity markets, and then if you look on the other side of the balance sheet, you see on our bond portfolio we have taken realized losses on the order of $50 million for the previous two quarters, but you can see some tapering off there reflecting both the long-term conservative management of that portfolio, but also some of the cleaning out that we did during the economic last year. Then, on the mortgage side you can see very consistent with what we’ve been seeing. We continue to perform very well there reflecting that very conservative underwriting of those loans. So, in terms of guidance we’re not really looking to change our expectations from the beginning of this year. We gave some indication of guidance in terms of relatively flat top line and expectation of ROEs for the year being in the range of 14% to 15%. I would say the first quarter we’ve been tracking very well in terms of our expectations for the year.
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