Attached files
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| 8-K - CURRENT REPORT - PHOENIX COMPANIES INC/DE | pnx_8k.htm |
Exhibit 99.1
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N E W S R E L E A SE
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For Immediate Release
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One American Row
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PO Box 5056
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Hartford CT 06102-5056
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www.phoenixwm.com
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Contacts:
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Media Relations
Alice S. Ericson, 860-403-5946
alice.ericson@phoenixwm.com
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Investor Relations
Naomi Baline Kleinman, 860-403-7100
pnx.ir@phoenixwm.com
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The Phoenix Companies, Inc. (NYSE:PNX) Files First Quarter 2014 Form 10-Q
$33.3 million First Quarter 2014 Net Loss Attributable to The Phoenix Companies, Inc., Driven by Restatement Expenses
Hartford, Conn., Oct. 17, 2014 – The Phoenix Companies, Inc. (NYSE:PNX) today announced the filing of its Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 with the U.S. Securities and Exchange Commission (“SEC”).
“We remain on schedule for completing our delayed SEC filings and expect to file our second quarter 2014 Form 10-Q with the SEC next week,” said James D. Wehr, president and chief executive officer.
FIRST QUARTER 2014 EARNINGS SUMMARY
First quarter 2014 net loss attributable to The Phoenix Companies, Inc. was $33.3 million compared with a net loss attributable to The Phoenix Companies, Inc. of $68.7 million for the first quarter of 2013. Significant first quarter 2014 drivers include:
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Restatement expenses of $32.9 million incurred and 2014 audit fees of $6.3 million accrued during the first quarter of 2014.
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Net realized investment losses, primarily in derivatives that hedge the fixed indexed annuity block, that were largely the result of interest rate declines and partially offset by decreases in certain reserves and deferred acquisition cost (DAC) amortization.
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Strong net investment income from alternative investments and minimal impairments partially offset the negative performance.
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($ in millions, except per share data)
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First Quarter 2014
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First Quarter 2013
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Net loss
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$ | (32.3 | ) | $ | (68.8 | ) | ||
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Less: Net income (loss) attributable to noncontrolling interests
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1.0 | (0.1 | ) | |||||
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Net loss attributable to The Phoenix Companies, Inc.
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$ | (33.3 | ) | $ | (68.7 | ) | ||
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EARNINGS PER SHARE SUMMARY:
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Net loss attributable to The Phoenix Companies, Inc.
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Basic
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$ | (5.80 | ) | $ | (12.02 | ) | ||
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Diluted
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$ | (5.80 | ) | $ | (12.02 | ) | ||
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Net loss
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Basic
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$ | (5.47 | ) | $ | (11.72 | ) | ||
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Diluted
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$ | (5.47 | ) | $ | (11.72 | ) | ||
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Weighted average shares outstanding (in thousands)
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Basic
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5,742 | 5,715 | ||||||
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Diluted
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5,742 | 5,715 | ||||||
FIRST QUARTER 2014 OPERATING METRICS
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($ in millions, unless noted otherwise)
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As of or for the Qtr Ended Mar. 31, 2014
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As of or for the Qtr Ended Dec. 31, 2013
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As of or for the Qtr Ended
Mar. 31, 2013
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Annuity deposits
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$ | 170.4 | $ | 168.7 | $ | 173.7 | ||||||
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Net annuity flows (deposits less surrenders)
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$ | (2.3 | ) | $ | 9.3 | $ | 40.0 | |||||
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Annuity funds under management ($ in billions)
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$ | 5.5 | $ | 5.5 | $ | 5.2 | ||||||
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Life insurance annualized premium
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$ | 0.5 | $ | 0.5 | $ | 0.4 | ||||||
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Gross life insurance in force ($ in billions)
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$ | 102.4 | $ | 104.2 | $ | 110.9 | ||||||
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Total individual life surrenders (annualized)
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4.8 | % | 4.8 | % | 5.1 | % | ||||||
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Total closed block life surrenders (annualized)
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4.7 | % | 4.3 | % | 4.6 | % | ||||||
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Total annuity surrenders (annualized)
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12.5 | % | 11.7 | % | 10.4 | % | ||||||
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Holding company cash and non-affiliated securities
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$ | 175.6 | $ | 181.5 | $ | 190.0 | ||||||
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Saybrus Partners EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization)
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$ | 0.4 | $ | 1.9 | $ | - | ||||||
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Saybrus Partners revenue
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$ | 7.3 | $ | 8.4 | $ | 5.8 | ||||||
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First quarter 2014 mortality was favorable compared with expectations, driven by universal life results in the open block. Closed block mortality experience also was favorable.
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Fourth quarter 2013 mortality was favorable compared with expectations, driven by universal life results in the open block. Closed block experience was modestly unfavorable.
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First quarter 2013 mortality was in line with expectations, with favorable experience in the open block, driven by universal life results, and slightly unfavorable experience in the closed block.
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REALIZED AND UNREALIZED INVESTMENT GAINS AND LOSSES
Net realized investment losses were $25.7 million for first quarter 2014, compared with net realized investment losses of $15.9 million for first quarter 2013. Net other-than-temporary impairment losses remained below long-term averages at $0.2 million for first quarter 2014, compared with $2.6 million for first quarter 2013. Derivative losses were $35.5 million for the first quarter 2014, compared with $24.4 million for the first quarter 2013. This change was driven primarily by the decrease in interest rates in 2014.
Net unrealized gains on available-for-sale debt securities increased by $168.2 million to $558.8 million at March 31, 2014 from $390.6 million at December 31, 2013, due primarily to lower interest rates in 2014.
BALANCE SHEET
The quality of the investment portfolio remained strong during the first quarter of 2014 with the proportion of below investment grade bonds as a percentage of total available-for-sale debt securities at 7.4% at March 31, 2014, compared with 7.3% at Dec. 31, 2013.
Phoenix has no debt maturities until 2032.
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Balance Sheet ($ in millions)
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Mar. 31, 2014
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Dec. 31, 2013
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Change
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Total Assets
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$ | 21,732.8 | $ | 21,624.6 | $ | 108.2 | ||||||
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Total Liabilities
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$ | 21,191.5 | $ | 21,040.9 | $ | 150.6 | ||||||
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Indebtedness
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$ | 378.8 | $ | 378.8 | -- | |||||||
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Total Stockholders’ Equity
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$ | 541.3 | $ | 583.7 | $ | (42.4 | ) | |||||
TIMETABLES FOR REMAINING DELAYED SEC FILINGS
Consistent with the timetables announced on Aug. 1, 2014, Phoenix expects to complete remaining delayed SEC filings for itself and its subsidiary, PHL Variable Insurance Company, by the following dates:
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Phoenix expects to file its second quarter 2014 Form 10-Q with the SEC no later than Oct. 24, 2014 and return to current SEC filer status with the filing of its third quarter 2014 Form 10-Q with the SEC no later than Dec. 5, 2014.
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PHL Variable expects to file its first and second quarter 2014 Forms 10-Q with the SEC no later than Oct. 21 and 28, 2014, respectively, and return to current SEC filer status with its third quarter 2014 Form 10-Q with the SEC no later than Dec. 12, 2014.
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ABOUT PHOENIX
The Phoenix Companies, Inc. (NYSE:PNX) helps financial professionals provide solutions, including income strategies and insurance protection, to families and individuals planning for or living in retirement. Founded as a life insurance company in 1851, Phoenix offers products and services designed to meet financial needs in the middle income and mass affluent markets. Its distribution subsidiary, Saybrus Partners, Inc. offers solutions-based sales support to financial professionals and represents Phoenix’s products among key distributors, including independent marketing organizations and brokerage general agencies. Phoenix is headquartered in Hartford, Connecticut, and its principal operating subsidiary, Phoenix Life Insurance Company, has its statutory home office in East Greenbush, New York. PHL Variable Insurance Company has its statutory home in Hartford, Connecticut, and files annual and other periodic reports under the Securities Exchange Act of 1934. For more information, visit www.phoenixwm.com.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
The foregoing contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. We intend for these forward-looking statements to be covered by the safe harbor provisions of the federal securities laws relating to forward-looking statements. These forward-looking statements include statements relating to, or representing management’s beliefs about, future events, transactions, strategies, operations and financial results, including, without limitation, our expectation to provide information within anticipated timeframes and in accordance with the amended administrative order entered by the SEC with respect to the Company and its wholly owned subsidiary, PHL Variable Insurance Company (“PHL Variable”), and otherwise in accordance with law, the outcome of litigation and claims as well as regulatory examinations, investigations, proceedings and orders arising out of the restatement and the failure by the Company and PHL Variable to file SEC reports on a timely basis, potential penalties that may result from failure to timely file statutory financial statements with state insurance regulators, and the Company’s ability to satisfy its requirements under, and maintain the listing of its shares on, the NYSE. Such forward-looking statements often contain words such as “will,” “anticipate,” “believe,” “plan,” “estimate,” “expect,” “intend,” “is targeting,” “may,” “should” and other similar words or expressions. Forward-looking statements are made based upon management’s current expectations and beliefs and are not guarantees of future performance. Our ability to resume a timely filing schedule with respect to our SEC filings is subject to a number of contingencies, including but not limited to, whether existing systems and processes can be timely updated, supplemented or replaced, and whether additional filings may be necessary in connection with the restatement. Our actual business, financial condition or results of operations may differ materially from those suggested by forward-looking statements as a result of risks and uncertainties which include, among others, those risks and uncertainties described in any of our other filings with the SEC. Certain other factors which may impact our business, financial condition or results of operations or which may cause actual results to differ from such forward-looking statements are discussed or included in our periodic reports filed with the SEC and are available on our website at www.phoenixwm.com under “Investor Relations.” You are urged to carefully consider all such factors. We do not undertake or plan to update or revise forward-looking statements to reflect actual results, changes in plans, assumptions, estimates or projections, or other circumstances occurring after the date of this news release, even if such results, changes or circumstances make it clear that any forward-looking information will not be realized. If we make any future public statements or disclosures which modify or impact any of the forward-looking statements contained in or accompanying this news release, such statements or disclosures will be deemed to modify or supersede such statements in this news release.
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Consolidated Unaudited Balance Sheets
($ in millions, except share data)
March 31, 2014 and December 31, 2013
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March 31, 2014
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December 31, 2013
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ASSETS:
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Available-for-sale debt securities, at fair value (amortized cost of $11,443.3 and $11,418.0)
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$ | 12,002.1 | $ | 11,808.6 | ||||
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Available-for-sale equity securities, at fair value (cost of $40.8 and $40.4)
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64.1 | 61.8 | ||||||
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Short-term investments
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571.0 | 361.6 | ||||||
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Limited partnerships and other investments
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569.5 | 561.9 | ||||||
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Policy loans, at unpaid principal balances
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2,353.7 | 2,350.3 | ||||||
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Derivative instruments
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172.7 | 243.1 | ||||||
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Fair value investments
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215.2 | 210.8 | ||||||
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Total investments
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15,948.3 | 15,598.1 | ||||||
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Cash and cash equivalents
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424.5 | 496.4 | ||||||
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Accrued investment income
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176.0 | 170.4 | ||||||
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Reinsurance recoverable
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616.0 | 603.3 | ||||||
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Deferred policy acquisition costs
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892.4 | 940.6 | ||||||
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Deferred income taxes, net
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47.4 | 70.0 | ||||||
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Other assets
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278.8 | 299.9 | ||||||
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Discontinued operations assets
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41.4 | 43.6 | ||||||
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Separate account assets
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3,308.0 | 3,402.3 | ||||||
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Total assets
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$ | 21,732.8 | $ | 21,624.6 | ||||
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LIABILITIES:
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Policy liabilities and accruals
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$ | 12,425.8 | $ | 12,437.6 | ||||
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Policyholder deposit funds
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3,540.0 | 3,429.7 | ||||||
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Dividend obligations
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819.8 | 705.9 | ||||||
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Indebtedness
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378.8 | 378.8 | ||||||
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Pension and postretirement liabilities
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309.4 | 315.9 | ||||||
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Other liabilities
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373.0 | 333.0 | ||||||
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Discontinued operations liabilities
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36.7 | 37.7 | ||||||
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Separate account liabilities
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3,308.0 | 3,402.3 | ||||||
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Total liabilities
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$ | 21,191.5 | $ | $21,040.9 | ||||
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CONTINGENCIES AND COMMITMENTS (Notes 20 & 21)
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STOCKHOLDERS’ EQUITY:
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Common stock, $.01 par value: 5.7 million and 5.7 million shares outstanding
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0.1 | 0.1 | ||||||
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Additional paid-in capital
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2,633.1 | 2,633.1 | ||||||
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Accumulated other comprehensive income (loss)
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(195.4 | ) | (185.2 | ) | ||||
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Accumulated deficit
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(1,725.4 | ) | (1,692.1 | ) | ||||
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Treasury stock, at cost: 0.7 million and 0.7 million shares
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(182.9 | ) | (182.9 | ) | ||||
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Total The Phoenix Companies, Inc. stockholders’ equity
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529.5 | 573.0 | ||||||
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Noncontrolling interests
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11.8 | 10.7 | ||||||
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Total stockholders’ equity
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541.3 | 583.7 | ||||||
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Total liabilities and stockholders’ equity
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$ | 21,732.8 | $ | 21,624.6 | ||||
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Consolidated Interim Unaudited Statements of Income and Comprehensive Income
($ in millions, except per share data)
Three Months Ended March 31, 2014 and 2013
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Three Months Ended
March 31,
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2014
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2013
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REVENUES:
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Premiums
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$ | 79.6 | $ | 82.7 | ||||
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Fee income
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134.8 | 136.3 | ||||||
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Net investment income
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213.5 | 191.1 | ||||||
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Net realized investment gains (losses):
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Total other-than-temporary impairment (“OTTI”) losses
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— | (0.9 | ) | |||||
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Portion of OTTI gains (losses) recognized in other comprehensive income (“OCI”)
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(0.2 | ) | (1.7 | ) | ||||
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Net OTTI losses recognized in earnings
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(0.2 | ) | (2.6 | ) | ||||
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Net realized investment gains (losses), excluding OTTI losses
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(25.5 | ) | (13.3 | ) | ||||
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Net realized investment gains (losses)
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(25.7 | ) | (15.9 | ) | ||||
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Total revenues
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402.2 | 394.2 | ||||||
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BENEFITS AND EXPENSES:
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Policy benefits
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236.0 | 318.8 | ||||||
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Policyholder dividends
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73.8 | 4.4 | ||||||
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Policy acquisition cost amortization
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22.4 | 45.3 | ||||||
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Interest expense on indebtedness
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7.1 | 7.7 | ||||||
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Other operating expenses
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97.9 | 80.8 | ||||||
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Total benefits and expenses
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437.2 | 457.0 | ||||||
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Income (loss) from continuing operations before income taxes
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(35.0 | ) | (62.8 | ) | ||||
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Income tax expense (benefit)
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(3.6 | ) | 4.2 | |||||
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Income (loss) from continuing operations
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(31.4 | ) | (67.0 | ) | ||||
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Income (loss) from discontinued operations, net of income taxes
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(0.9 | ) | (1.8 | ) | ||||
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Net income (loss)
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(32.3 | ) | (68.8 | ) | ||||
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Less: Net income (loss) attributable to noncontrolling interests
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1.0 | (0.1 | ) | |||||
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Net income (loss) attributable to The Phoenix Companies, Inc.
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$ | (33.3 | ) | $ | (68.7 | ) | ||
(Continued on next page)
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THE PHOENIX COMPANIES, INC.
Consolidated Interim Unaudited Statements of Income and Comprehensive Income
($ in millions, except per share data)
Three Months Ended March 31, 2014 and 2013
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(Continued from previous page)
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Three Months Ended
March 31,
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2014
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2013
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COMPREHENSIVE INCOME (LOSS):
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Net income (loss) attributable to The Phoenix Companies, Inc.
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$ | (33.3 | ) | $ | (68.7 | ) | ||
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Net income (loss) attributable to noncontrolling interests
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1.0 | (0.1 | ) | |||||
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Net income (loss)
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(32.3 | ) | (68.8 | ) | ||||
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Other comprehensive income (loss) before income taxes:
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Unrealized investment gains (losses), net of related offsets
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16.9 | (7.5 | ) | |||||
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Net pension liability adjustment
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1.6 | 3.8 | ||||||
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Other comprehensive income (loss) before income taxes
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18.5 | (3.7 | ) | |||||
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Less: Income tax expense (benefit) related to:
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Unrealized investment gains (losses), net of related offsets
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28.7 | 7.8 | ||||||
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Net pension liability adjustment
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— | — | ||||||
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Total income tax expense (benefit)
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28.7 | 7.8 | ||||||
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Other comprehensive income (loss), net of income taxes
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(10.2 | ) | (11.5 | ) | ||||
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Comprehensive income (loss)
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(42.5 | ) | (80.3 | ) | ||||
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Less: Comprehensive income (loss) attributable to noncontrolling interests
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1.0 | (0.1 | ) | |||||
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Comprehensive income (loss) attributable to The Phoenix Companies, Inc.
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$ | (43.5 | ) | $ | (80.2 | ) | ||
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EARNINGS (LOSS) PER SHARE:
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Income (loss) from continuing operations – basic
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$ | (5.47 | ) | $ | (11.72 | ) | ||
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Income (loss) from continuing operations – diluted
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$ | (5.47 | ) | $ | (11.72 | ) | ||
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Income (loss) from discontinued operations – basic
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$ | (0.16 | ) | $ | (0.31 | ) | ||
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Income (loss) from discontinued operations – diluted
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$ | (0.16 | ) | $ | (0.31 | ) | ||
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Net income (loss) attributable to The Phoenix Companies, Inc.– basic
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$ | (5.80 | ) | $ | (12.02 | ) | ||
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Net income (loss) attributable to The Phoenix Companies, Inc. – diluted
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$ | (5.80 | ) | $ | (12.02 | ) | ||
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Basic weighted-average common shares outstanding (in thousands)
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5,742 | 5,715 | ||||||
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Diluted weighted-average common shares outstanding (in thousands)
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5,742 | 5,715 | ||||||
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