Delphi Financial Group, Inc. (NYSE:DFG) announced today that its
net income in the second quarter of 2007 was $42.9 million or $0.83
per share, compared to $32.9 million or $0.65 per share in the
second quarter of 2006. Net income for the first half of 2007 was
$82.1 million or $1.59 per share, compared with net income in the
first half of 2006 of $65.7 million or $1.29 per share. Operating
earnings (1) in the second quarter of 2007 increased 18% to $42.3
million from $36.0 million in the second quarter of 2006, while
operating earnings per share rose 15% to $0.82 from $0.71.
Operating earnings for the first half of 2007 increased 19% to
$83.2 million from $69.7 million in the first half of 2006, while
operating earnings per share grew 18% to $1.61 from $1.37.
Annualized operating return on beginning equity (2) in the second
quarter of 2007 was 14.8%, up from 13.9% in the second quarter of
2006. Core group employee benefit premiums in the second quarter of
2007 rose 16% over the prior year quarter to a record $310 million.
This growth was driven by a 20% increase in group disability
premiums and a 17% increase in group life premiums at Delphi�s
Reliance Standard Life subsidiary. The group employee benefit
combined ratio in the second quarter of 2007 was 92.4%, unchanged
from the second quarter of 2006 and down from 93.2% for the full
year 2006. Robert Rosenkranz, Chairman and Chief Executive Officer,
commented, �Delphi Financial achieved strong growth in the second
quarter both in premiums and, more importantly, on the bottom line.
Our underwriting margins continue to improve as we benefit from
Reliance Standard�s pricing discipline and the continuing firm
market for Safety National�s excess workers� compensation
insurance. We achieved sharply higher new production at Reliance
Standard in part due to continued growth in sales of voluntary
products, including RSL BasicCare, our new limited benefit health
insurance product.� Mr. Rosenkranz continued, �We remain confident
about our growth prospects for the remainder of 2007 and beyond
based on the positive outlook for our insurance businesses and our
strong financial position, which gives us excellent financial
flexibility to capitalize on attractive growth opportunities.
Delphi�s solid balance sheet and conservative capital structure
continued to receive increased recognition in the second quarter
from the rating agencies. This recognition helped us successfully
execute a $175 million hybrid securities offering in May.� Delphi�s
net investment income in the second quarter of 2007 rose 14% to
$69.1 million, driven by 15% growth in invested assets, which
reached $4.7 billion at June 30, 2007. The tax equivalent yield on
the Company�s investment portfolio in the second quarter of 2007
was 6.3%, unchanged from the second quarter of 2006. Delphi�s book
value per share before accumulated other comprehensive income or
loss(3) was $23.46 at June 30, 2007, compared with $23.35 at June
30, 2006. Conference Call On July 25, 2007 at 11:00 AM (Eastern
time), Delphi will broadcast the Company�s second quarter 2007
earnings teleconference live on the Internet, hosted by Robert
Rosenkranz, Chairman and Chief Executive Officer. Investors can
access the broadcast at www.delphifin.com by clicking on the
webcast icon on the home page. It is advisable to register at least
15 minutes prior to the call to download and install any necessary
audio software. The online replay will be available on Delphi�s
website for one week beginning at approximately 1:00 PM (Eastern
time) on July 25, 2007. Investors can also download Delphi�s second
quarter 2007 statistical supplement from the Company�s website at
www.delphifin.com. In connection with, and because it desires to
take advantage of, the �safe harbor� provisions of the Private
Securities Litigation Reform Act of 1995, Delphi cautions readers
regarding certain forward-looking statements in the foregoing
discussion and in any other statements made by, or on behalf of,
Delphi, whether in future filings with the Securities and Exchange
Commission or otherwise. Forward-looking statements are statements
not based on historical information and which relate to future
operations, strategies, financial results, prospects, outlooks or
other developments. Some forward-looking statements may be
identified by the use of terms such as �expects,� �believes,�
�anticipates,� �intends,� �judgment,� �outlook� or other similar
expressions. Forward-looking statements are necessarily based upon
estimates and assumptions that are inherently subject to
significant business, economic, competitive and other uncertainties
and contingencies, many of which are beyond Delphi�s control and
many of which, with respect to future business decisions, are
subject to change. Examples of such uncertainties and contingencies
include, among other important factors, those affecting the
insurance industry generally, such as the economic and interest
rate environment, federal and state legislative and regulatory
developments, including but not limited to changes in financial
services, employee benefit and tax laws and regulations, changes in
accounting rules and interpretations thereof, market pricing and
competitive trends relating to insurance products and services,
acts of terrorism or war, and the availability and cost of
reinsurance, and those relating specifically to Delphi�s business,
such as the level of its insurance premiums and fee income, the
claims experience, persistency and other factors affecting the
profitability of its insurance products, the performance of its
investment portfolio and changes in Delphi�s investment strategy,
acquisitions of companies or blocks of business, and ratings by
major rating organizations of Delphi and its insurance
subsidiaries. These uncertainties and contingencies can affect
actual results and could cause actual results to differ materially
from those expressed in any forward-looking statements made by, or
on behalf of, Delphi. Delphi disclaims any obligation to update
forward-looking information. Delphi Financial Group, Inc. is an
integrated employee benefit services company. Delphi is a leader in
managing all aspects of employee absence to enhance the
productivity of its clients and provides the related insurance
coverages: group life, long-term and short-term disability, excess
workers� compensation for self-insured employers, travel accident,
dental and limited benefit health insurance. Delphi�s asset
accumulation business emphasizes individual fixed annuity products.
Delphi�s common stock is listed on the New York Stock Exchange
under the symbol DFG and its corporate website address is
www.delphifin.com. (1) Operating earnings, which is a non-GAAP
financial measure, consist of income from continuing operations
excluding after-tax realized investment gains and losses, and the
loss on redemption of junior subordinated deferrable interest
debentures, as applicable. After-tax net realized investment gains
(losses) were $0.6 million and $(0.2) million, or $0.01 per share
and $0.00 per share, for the second quarter of 2007 and 2006,
respectively, and $0.4 million and $(1.0) million, or $0.01 per
share and $(0.02) for the first half of 2007 and 2006,
respectively. The after-tax loss on redemption of the 9.31% junior
subordinated deferrable interest debentures underlying the 9.31%
Capital Securities, Series A of Delphi Funding L.L.C., which
occurred in the first quarter of 2007, was $1.4 million or $0.03
per share for the first half of 2007. After-tax losses from
discontinued operations were $0 and $2.9 million, or $0.00 per
share and $0.06 per share, for the second quarter of 2007 and 2006,
respectively, and $0 and $2.9 million, or $0.00 and $0.06, per
share for the first half of 2007 and 2006, respectively. The
Company believes that because realized investment gains�and losses,
redemption of junior subordinated deferrable interest debentures,
and discontinued operations arise from events that, to a
significant extent, are within management�s discretion and can
fluctuate significantly, thus distorting comparisons between
periods, a measure excluding their impact is useful in analyzing
the Company's operating trends. Redemption of junior subordinated
deferrable interest debentures occur based on management�s decision
to exercise its ability to redeem the outstanding debentures.
Investment gains or losses may be realized based on management�s
decision to dispose of an investment, and investment losses may be
realized based on management�s judgment that a decline in the
market value of an investment is other than temporary. Discontinued
operations occur based on management�s decision to exit or sell a
particular business. Thus, realized investment gains and losses,
losses on redemption of junior subordinated deferrable interest
debentures and results from discontinued operations are not
reflective of the Company�s ongoing earnings capacity, and trends
in the earnings of the Company�s underlying insurance operations
can be more clearly identified without the effects of these items.
For these reasons, management uses the measure of operating
earnings to assess performance and make operating plans and
decisions, and analysts and investors typically utilize measures of
this type when evaluating the financial performance of insurers.
However, gains and losses of these types, particularly as to
investments, occur frequently and should not be considered as
nonrecurring items. Further, operating earnings should not be
considered a substitute for net income, the most directly
comparable GAAP measure, as an indication of the Company�s overall
financial performance and may not be calculated in the same manner
as similarly titled captions in other companies� financial
statements. All per share amounts are on a diluted basis. (2)
Annualized operating return on beginning equity, which is a
non-GAAP financial measure, is based on operating earnings as
defined in footnote (1) above divided by beginning shareholders�
equity. The Company believes that this non-GAAP measure is useful
in analyzing the Company�s operating trends. (3) Diluted book value
per share before accumulated other comprehensive income or loss,
which is a non-GAAP financial measure, is based on shareholders�
equity excluding the effect of accumulated other comprehensive
income or loss. The Company believes that, because accumulated
other comprehensive income or loss fluctuates from period to period
primarily due to changes in the value of its assets resulting from
variations in market interest rates, while the values of its
liabilities are not similarly marked to market under GAAP, this
non-GAAP measure is useful in analyzing the Company�s operating
trends. DELPHI FINANCIAL GROUP, INC. Non-GAAP Financial Measures
Reconciliation to GAAP (Unaudited; in thousands, except per share
data) � � Three Months Ended Six Months Ended 6/30/2007 6/30/2006
6/30/2007 6/30/2006 Income Statement Data � Operating earnings
(Non-GAAP measure) $ 42,305 $ 36,015 $ 83,172 $ 69,660 Net realized
investment gains (losses), net of taxes 609 (191 ) 361 (1,004 )
Loss on redemption of junior subordinated deferrable interest
debentures, net of taxes � - � - � � (1,425 ) � - � Income from
continuing operations 42,914 35,824 82,108 68,656 Discontinued
operations, net of taxes � - � (2,923 ) � - � � (2,933 ) � Net
income (GAAP measure) $ 42,914 $ 32,901 � $ 82,108 � $ 65,723 � �
Diluted results per share of common stock: Operating earnings
(Non-GAAP measure) $ 0.82 $ 0.71 $ 1.61 $ 1.37 Net realized
investment gains (losses), net of taxes 0.01 - 0.01 (0.02 ) Loss on
redemption of junior subordinated deferrable interest debentures,
net of taxes � - � - � � (0.03 ) � - � Income from continuing
operations 0.83 0.71 1.59 1.35 Discontinued operations, net of
taxes � - � (0.06 ) � - � � (0.06 ) � Net income (GAAP measure) $
0.83 $ 0.65 � $ 1.59 � $ 1.29 � � � Balance Sheet Data 6/30/2007
12/31/2006 � Shareholders' equity, excluding accumulated other
comprehensive (loss) income $ 1,166,837 $ 1,155,675 Add:
Accumulated other comprehensive (loss) income � (24,337 ) � 19,133
� � Shareholders' equity (GAAP measure) $ 1,142,500 � $ 1,174,808 �
� Diluted book value per share of common stock, excluding
accumulated other comprehensive (loss) income (Non-GAAP measure) $
23.46 $ 23.35 Add: Accumulated other comprehensive (loss) income �
(0.44 ) � 0.35 � � Diluted book value per share of common stock
(GAAP measure) $ 23.02 � $ 23.70 � Please see note 1 of the press
release for a discussion regarding the usefulness of the non-GAAP
financial measure "operating earnings." The Company believes that
the non-GAAP financial measure "diluted book value per share
excluding accumulated other comprehensive (loss) income" provides
useful supplemental information because accumulated other
comprehensive (loss) income fluctuates from period to period
primarily due to changes in the value of its assets resulting from
variations in market interest rates, while the values of its
liabilities are not similarly marked to market under GAAP. DELPHI
FINANCIAL GROUP, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited;
in thousands, except per share data) � � Three Months Ended Six
Months Ended 6/30/2007 6/30/2006 6/30/2007 06/30/2006 Revenue:
Premium and fee income $ 324,337 $ 280,270 $ 646,584 $ 543,229 Net
investment income 69,107 60,786 140,410 119,815 Net realized
investment gains (losses) 937 (294 ) 555 (1,545 ) Loss on
redemption of junior subordinated deferrable interest debentures
underlying company-obligated mandatorily redeemable capital
securities issued by unconsolidated subsidiaries � - � - � � (2,192
) � - � � 394,381 � 340,762 � � 785,357 � � 661,499 � Benefits and
expenses: Benefits, claims and interest credited to policyholders
235,483 204,021 473,695 395,639 Commissions and expenses � 90,814 �
78,879 � � 181,365 � � 154,640 � � 326,297 � 282,900 � � 655,060 �
� 550,279 � � Operating income 68,084 57,862 130,297 111,220 �
Interest expense: Corporate debt 4,591 5,093 9,645 9,779 Junior
subordinated debentures 1,406 - 1,406 - Junior subordinated
deferrable interest debentures underlying company-obligated
mandatorily redeemable capital securities issued by unconsolidated
subsidiaries 479 1,297 1,763 2,568 Income tax expense � 18,694 �
15,648 � � 35,375 � � 30,217 � � Income from continuing operations
42,914 35,824 82,108 68,656 � Discontinued operations, net of taxes
� - � (2,923 ) � - � � (2,933 ) � Net income $ 42,914 $ 32,901 � $
82,108 � $ 65,723 � � � Basic results per share of common stock:
Income from continuing operations $ 0.85 $ 0.72 $ 1.63 $ 1.39
Discontinued operations - (0.06 ) - (0.06 ) Net income $ 0.85 $
0.66 $ 1.63 $ 1.33 � Weighted average shares outstanding 50,441
49,462 50,309 49,471 � Diluted results per share of common stock:
Income from continuing operations $ 0.83 $ 0.71 $ 1.59 $ 1.35
Discontinued operations - (0.06 ) - (0.06 ) Net income $ 0.83 $
0.65 $ 1.59 $ 1.29 � Weighted average shares outstanding 51,734
50,722 51,601 50,773 � Dividends paid per share of common stock $
0.09 $ 0.08 $ 0.17 $ 0.15 DELPHI FINANCIAL GROUP, INC. SUMMARIZED
CONSOLIDATED BALANCE SHEETS (Unaudited; in thousands) � �
06/30/2007 12/31/2006 Assets: Investments: Fixed maturity
securities, available for sale $ 3,562,062 $ 3,377,578 Short-term
investments 226,592 400,239 Other investments � 874,517 � � 705,563
� 4,663,171 4,483,380 � Cash 53,384 48,204 Cost of business
acquired 162,194 267,920 Reinsurance receivables 417,347 410,593
Goodwill 93,929 93,929 Other assets 263,908 251,975 Assets held in
separate account � 122,320 � � 114,474 � � Total assets $ 5,776,253
� $ 5,670,475 � � Liabilities and Shareholders' Equity: Policy
liabilities and accruals $ 2,264,777 $ 2,107,644 Policyholder
account balances 1,096,835 1,119,218 Corporate debt 143,750 263,750
Junior subordinated debentures 175,000 - Junior subordinated
deferrable interest debentures underlying company-obligated
mandatorily redeemable capital securities issued by unconsolidated
subsidiaries 20,619 59,762 Other liabilities and policyholder funds
810,452 830,819 Liabilities related to separate account � 122,320 �
� 114,474 � � Total liabilities 4,633,753 4,495,667 � Shareholders'
equity: Class A Common Stock 486 480 Class B Common Stock 55 57
Additional paid-in capital 494,716 474,722 Accumulated other
comprehensive (loss) income (24,337 ) 19,133 Retained earnings
754,550 763,386 Treasury stock, at cost � (82,970 ) � (82,970 ) �
1,142,500 � � 1,174,808 � Total liabilities and shareholders'
equity $ 5,776,253 � $ 5,670,475 � DELPHI FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited; in thousands) �
Six Months Ended 6/30/2007 6/30/2006 Operating activities: Net
income $ 82,108 $ 65,723 Adjustments to reconcile net income to net
cash provided by operating activities: Change in policy liabilities
and policyholder accounts 153,073 90,667 Net change in reinsurance
receivables and payables (11,492 ) 15,233 Amortization, principally
the cost of business acquired and investments 40,549 32,861
Deferred costs of business acquired (53,659 ) (49,607 ) Net
realized losses on investments (555 ) 1,545 Net change in federal
income tax liability 9,267 11,034 Other � (38,188 ) � (18,313 ) Net
cash provided by operating activities � 181,103 � � 149,143 � �
Investing activities: Purchases of investments and loans made
(665,152 ) (711,078 ) Sales of investments and receipts from
repayment of loans 249,879 481,740 Maturities of investments 73,720
97,393 Net change in short-term investments 173,647 (109,554 )
Change in deposit in separate account � (330 ) � 217 � Net cash
used by investing activities � (168,236 ) � (241,282 ) � Financing
activities: Deposits to policyholder accounts 55,642 148,809
Withdrawals from policyholder accounts (82,476 ) (63,290 )
Borrowings under revolving credit facility 38,000 29,000 Principal
payments under revolving credit facility (158,000 ) (2,000 )
Proceeds from the issuance of junior subordinated debentures
172,309 - Redemption of junior subordinated deferrable interest
debentures underlying company-obligated mandatorily redeemable
capital securities issued by unconsolidated subsidiaries (37,728 )
- Other financing activities � 4,566 � � (13,129 ) Net cash (used)
provided by financing activities � (7,687 ) � 99,390 � � Increase
in cash 5,180 7,251 Cash at beginning of period � 48,204 � � 28,493
� Cash at end of period $ 53,384 � $ 35,744 �
Delphi A (NYSE:DFG)
Historical Stock Chart
From May 2024 to Jun 2024
Delphi A (NYSE:DFG)
Historical Stock Chart
From Jun 2023 to Jun 2024