Delphi Financial Group, Inc. (NYSE:DFG) announced today that its
operating earnings (1) in the third quarter of 2009 were $53.6
million or $1.00 per share, compared to $12.5 million or $0.26 per
share in the third quarter of 2008. Operating earnings for the
first nine months of 2009 were $147.3 million or $2.91 per share,
compared to $77.4 million or $1.57 per share in the first nine
months of 2008. Annualized operating return on beginning equity (2)
in the third quarter of 2009 was 20.4%, compared to 4.8% in the
third quarter of 2008.
Delphi’s net income in the third quarter of 2009 was $20.8
million or $0.39 per share, compared to a net loss in the third
quarter of 2008 of $(9.8) million or $(0.20) per share. Net income
in the third quarter of 2009 included after-tax realized investment
losses of $(32.8) million or $(0.61) per share, including
other-than-temporary impairments (OTTI) of $(33.8) million or
$(0.63) per share. Net income in the third quarter of 2008 included
after-tax realized investment losses of $(21.9) million or $(0.45)
per share, including OTTI of $(18.3) million or $(0.38) per share,
and an after-tax loss of $(0.4) million or $(0.01) per share from
the redemption of junior subordinated deferrable interest
debentures.
For the first nine months of 2009, Delphi’s net income was $82.3
million or $1.63 per share, compared to net income of $38.2 million
or $0.78 per share for the first nine months of 2008. Net income
for the first nine months of 2009 included after-tax realized
investment losses of $(65.0) million or $(1.28) per share,
including OTTI of $(61.5) million or $(1.21) per share. Net income
for the first nine months of 2008 included after-tax realized
investment losses of $(38.8) million or $(0.78) per share,
including OTTI of $(34.1) million or $(0.69) per share, and an
after-tax loss of $(0.4) million or $(0.01) per share from the
redemption of junior subordinated deferrable interest
debentures.
Robert Rosenkranz, Chairman and Chief Executive Officer,
commented, “Delphi’s improved investment performance and
underwriting profit margins drove our robust growth in operating
earnings. Excess workers’ compensation production was up 37 percent
at Safety National as we continued to capitalize on our market
leadership position and ongoing market firmness. Market conditions
were more challenging for Reliance Standard, where we maintained
pricing and underwriting discipline and accepted the consequences
of lower production.”
Mr. Rosenkranz added, “We achieved excellent investment results
in the third quarter due to improved yields in our fixed income
portfolio and better performance from our sharply reduced
alternative asset portfolio. We were able to put more cash to work
longer-term, but our short-term investment balance remained high at
$573 million at the end of the quarter. The improved market
environment for fixed income securities drove Delphi’s book value
per share to an all-time high of $23.99 at the end of the quarter.
Shareholders’ equity was also at a record level, boosted by our
$69.9 million raised in a common stock offering in the
quarter.”
Delphi’s core group employee benefit premiums in the third
quarter of 2009 were $329.8 million compared to $333.1 million in
the third quarter of 2008, reflecting the impact of lower
production at Reliance Standard in the first nine months of 2009.
Excess workers’ compensation premiums at Delphi’s Safety National
subsidiary rose 4% from the third quarter last year, boosted by a
37% increase in production. Assumed workers’ compensation and
casualty reinsurance premiums, which were included in core premiums
for the first time in the third quarter of 2009, rose 72% from the
third quarter of 2008. Delphi’s group employee benefit combined
ratio in the third quarter of 2009 was 93.7%, compared with 92.3%
for the third quarter of 2008 and 92.2% for full-year 2008. The
loss ratio for the group employee benefits segment declined in the
third quarter of 2009 to 68.2% from 68.8% for the third quarter of
2008 and 69.5% for full-year 2008.
Delphi’s asset accumulation segment, which is primarily focused
on individual fixed annuities, had new sales of $57.5 million in
the third quarter of 2009, up from $44.0 million in last year’s
third quarter. New annuity sales in the first nine months of 2009
were $232.2 million, up from $195.8 million in the first nine
months of 2008. Funds under management at September 30, 2009 rose
to $1.4 billion from $1.3 billion at September 30, 2008.
Delphi’s net investment income in the third quarter of 2009 was
$88.7 million compared to $19.4 million in the third quarter of
2008. Invested assets at September 30, 2009 were $5.7 billion
compared to $4.8 billion at September 30, 2008. The tax equivalent
yield on the Company’s investment portfolio in the third quarter of
2009 was 7.0%, compared to 2.0% in the third quarter of 2008.
Diluted book value per share increased to $23.99 at September 30,
2009, compared with $17.05 at December 31, 2008 and $18.69 at
September 30, 2008.
Conference Call
On October 28, 2009 at 11:00 AM (Eastern time), Delphi will
broadcast the Company’s third quarter 2009 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 12:00 PM (Eastern time) on October 28, 2009.
Investors can also download Delphi’s third quarter 2009 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, such as
earnings per share guidance, 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 or interpretation, 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. Forward-looking statements contained in the
foregoing discussion are made as of the date of this press release
and Delphi disclaims any obligation to update these or any other
forward-looking statements.
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 group insurance coverages: long-term and
short-term disability, life, excess workers’ compensation for
self-insured employers, large deductible workers’ compensation,
assumed workers’ compensation and casualty reinsurance, travel
accident, dental and limited benefit health insurance. Delphi’s
asset accumulation business emphasizes individual 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.
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. For reconciliations of the respective
operating earnings amounts to the corresponding net income amounts
for the indicated periods, see the table captioned “Non-GAAP
Financial Measures – Reconciliation to GAAP” which follows. 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 the preceding footnote (1) (rather than the most
directly comparable GAAP measure, net income), divided by beginning
shareholders’ equity. For the reasons that the Company believes
that the calculation of this non-GAAP measure based upon operating
earnings is useful, see such footnote. For reconciliations of the
respective annualized operating return on equity amounts to the
corresponding annualized net income return on equity amounts for
the indicated periods, see the table captioned “Non-GAAP Financial
Measures – Reconciliation to GAAP” which follows.
DELPHI FINANCIAL GROUP, INC. Non-GAAP Financial
Measures Reconciliation to GAAP (Unaudited; in
thousands, except per share data) Three
Months Ended Nine Months Ended 9/30/2009 9/30/2008
9/30/2009 9/30/2008
Income Statement Data
Operating earnings (Non-GAAP measure) $ 53,621 $
12,510 $ 147,268 $ 77,387 Net realized investment losses, net of
taxes (32,798 ) (21,931 ) (64,954 ) (38,789 )
Loss on redemption of junior
subordinated deferrable interest debentures underlying
company-obligated mandatorily redeemable capital securities issued
by unconsolidated subsidiaries, net of taxes
- (389 ) - (389 )
Net income (loss) (GAAP measure) $ 20,823 $ (9,810 )
$ 82,314 $ 38,209
Diluted results per share
of common stock: Operating earnings (Non-GAAP measure) $
1.00 $ 0.26 $ 2.91 $ 1.57 Net realized investment losses, net of
taxes (0.61 ) (0.45 ) (1.28 ) (0.78 )
Loss on redemption of junior
subordinated deferrable interest debentures underlying
company-obligated mandatorily redeemable capital securities issued
by unconsolidated subsidiaries, net of taxes
- (0.01 ) - (0.01 )
Net income (loss) (GAAP measure) $ 0.39 $
(0.20 ) $ 1.63 $ 0.78
Annualized
operating return on beginning shareholders' equity 20.4 % 4.8 %
23.9 % 9.0 %
Annualized net income return on beginning
shareholders' equity (GAAP measure) 7.9 % -3.8 % 13.4 % 4.5 %
Balance Sheet Data
9/30/2009 12/31/2008
Shareholders' equity, excluding
accumulated other comprehensive loss
$ 1,379,365 $ 1,172,289 Add: Accumulated other comprehensive loss
(46,303 ) (351,710 )
Shareholders' equity
(GAAP measure) $ 1,333,062 $ 820,579
Diluted book value per share of
common stock, excluding accumulated other comprehensive loss
(Non-GAAP measure)
$ 24.80 $ 24.27 Add: Accumulated other comprehensive loss
(0.81 ) (7.22 )
Diluted book value per share of
common stock (GAAP measure) $ 23.99 $ 17.05
Please see footnotes 1 and 2 of
the press release to which this table is attached for important
information regarding these non-GAAP financial measures.
DELPHI FINANCIAL GROUP, INC. CONSOLIDATED
STATEMENTS OF INCOME (Unaudited; in thousands, except per
share data) Three Months Ended Nine
Months Ended 9/30/2009
9/30/2008
9/30/2009
9/30/2008
Revenue: Premium and fee income $ 342,610 $ 345,028 $ 1,052,776 $
1,028,092 Net investment income 88,682 19,407 243,560 112,494 Net
realized investment losses: Total other than temporary impairment
losses (73,771 ) (28,173 ) (137,007 ) (52,479 )
Less: Portion of other than
temporary impairment losses recognized in other comprehensive
income
21,748 - 42,467 -
Net impairment losses recognized in earnings (52,023 )
(28,173 ) (94,540 ) (52,479 ) Other net realized investment gains
(losses) 1,564 (5,567 ) (5,389 )
(7,196 ) (50,459 ) (33,740 ) (99,929 ) (59,675 )
Loss on redemption of junior
subordinated deferrable interest debentures underlying
company-obligated mandatorily redeemable capital securities issued
by unconsolidated subsidiaries
- (598 ) - (598 )
380,833 330,097 1,196,407
1,080,313 Benefits and expenses: Benefits, claims and
interest credited to policyholders 240,956 244,042 748,361 730,709
Commissions and expenses 109,680 99,824
325,076 284,400 350,636
343,866 1,073,437 1,015,109
Operating income (loss) 30,197 (13,769 ) 122,970
65,204 Interest expense: Corporate debt 3,806 4,427 11,667
12,940 Junior subordinated debentures 3,247 3,240 9,728 9,726
Junior subordinated deferrable
interest debentures underlying company-obligated mandatorily
redeemable capital securities issued by unconsolidated
subsidiaries
- 177 - 934 Income tax expense (benefit) 2,321
(11,803 ) 19,261 3,395 Net
income (loss) $ 20,823 $ (9,810 ) $ 82,314 $ 38,209
Basic results per share of common stock: Net
income (loss) $ 0.39 $ (0.20 ) $ 1.63 $ 0.79 Weighted
average shares outstanding 52,947 47,936 50,376 48,379
Diluted results per share of common stock: Net income (loss) $ 0.39
$ (0.20 ) $ 1.63 $ 0.78 Weighted average shares outstanding
53,385 47,936 50,617 49,259 Dividends paid per share of
common stock $ 0.10 $ 0.10 $ 0.30 $ 0.29
DELPHI FINANCIAL
GROUP, INC. SUMMARIZED CONSOLIDATED BALANCE SHEETS
(Unaudited; in thousands) 9/30/2009
12/31/2008 Assets: Investments: Fixed maturity securities,
available for sale $ 4,608,184 $ 3,773,382 Short-term investments
572,802 401,620 Other investments 542,047
479,921 5,723,033 4,654,923 Cash 82,269 63,837 Cost
of business acquired 244,930 264,777 Reinsurance receivables
378,277 376,731 Goodwill 93,929 93,929 Other assets 320,428 409,103
Assets held in separate account 109,016 90,573
Total assets $ 6,951,882 $ 5,953,873
Liabilities and Shareholders' Equity: Policy liabilities and
accruals $ 2,771,885 $ 2,574,050 Policyholder account balances
1,452,332 1,356,932 Corporate debt 365,750 350,750 Junior
subordinated debentures 175,000 175,000 Other liabilities and
policyholder funds 740,539 581,954 Liabilities related to separate
account 109,016 90,573 Total
liabilities 5,614,522 5,129,259
Shareholders' equity: Class A Common Stock 559 489 Class B Common
Stock 60 60 Additional paid-in capital 659,683 522,596 Accumulated
other comprehensive loss (46,303 ) (351,710 ) Retained earnings
916,309 846,390 Treasury stock, at cost (197,246 )
(197,246 ) Total shareholders' equity 1,333,062 820,579
Noncontrolling interest 4,298 4,035
Total equity 1,337,360 824,614 Total
liabilities and equity $ 6,951,882 $ 5,953,873
DELPHI FINANCIAL GROUP, INC. CONSOLIDATED STATEMENTS OF
CASH FLOWS (Unaudited; in thousands)
Nine Months Ended 9/30/2009 9/30/2008 Operating
activities: Net income $ 82,314 $ 38,209
Adjustments to reconcile net
income to net cash provided by operating activities:
Change in policy liabilities and policyholder accounts 225,538
194,967 Net change in reinsurance receivables and payables (4,613 )
18,901 Amortization, principally the cost of business acquired and
investments 38,295 46,601 Deferred costs of business acquired
(97,936 ) (94,043 ) Net realized losses on investments 99,929
59,675 Net change in federal income tax liability 6,632 (53,654 )
Other (14,101 ) 56,828 Net cash provided by
operating activities 336,058 267,484
Investing activities: Purchases of investments and loans
made (1,206,214 ) (1,012,307 ) Sales of investments and receipts
from repayment of loans 177,957 348,569 Maturities of investments
637,166 311,840 Net change in short-term investments (171,162 )
(158,961 ) Change in deposit in separate account 4,845
10,547 Net cash used by investing activities
(557,408 ) (500,312 ) Financing activities:
Deposits to policyholder accounts 242,614 335,082 Withdrawals from
policyholder accounts (131,337 ) (83,382 ) Borrowings under
revolving credit facility 17,000 79,000 Principal payments under
revolving credit facility (2,000 ) (6,000 )
Redemption of junior subordinated
deferrable interest debentures underlying company-obligated
mandatorily redeemable capital securities issued by unconsolidated
subsidiaries
- (20,619 ) Proceeds from issuance of common stock 121,121 -
Acquisition of treasury stock - (42,729 ) Cash dividends paid on
Common Stock (14,767 ) (13,715 ) Other financing activities
7,151 3,200 Net cash provided by financing
activities 239,782 250,837
Increase in cash 18,432 18,009 Cash at beginning of period
63,837 51,240 Cash at end of period $ 82,269
$ 69,249
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