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Presidential Life Corporation Announces Full Year And Fourth Quarter 2011 Results

Stocks in this article: PLFE

Presidential Life Corporation (“Presidential Life” or the “Company”) (NASDAQ: PLFE) today announced results for the fourth quarter and year ended December 31, 2011. Presidential Life, through its wholly owned subsidiary Presidential Life Insurance Company, is engaged in the sale of individual fixed deferred and immediate annuities, life insurance and accident and health insurance products.

Fourth quarter 2011 net income was $14.8 million or $0.50 per share, compared with net income of $14.6 million or $0.50 per share for the comparable quarter in 2010. Net income for the year ended December 31, 2011 was $38.9 million or $1.32 per share, compared with net income of $21.5 million or $0.73 per share for the year ended December 31, 2010. The increase in net income of $17.4 million for the full year 2011 compared to 2010 is principally due to an increase in realized gains, net of other-than-temporary impairments (“OTTI”), of $8.4 million; an increase in equity in earnings on limited partnerships accounted for under the equity method of $7.7 million; and the favorable effect of a decrease in the effective tax rate from 38.1% in 2010 to 30.3% in 2011.

Total revenues in the fourth quarter of 2011 were $73.6 million, a decrease of 17.1% or $15.2 million from $88.8 million in the fourth quarter 2010. Total revenues for the year ended December 31, 2011 were $267.4 million, a decrease of 10.0% or $29.6 million from $297.0 million for the year ended December 31, 2010. The decrease in revenues was largely attributable to a decline in individual fixed annuity sales given the low interest rate environment, partially offset by the increase in realized gains from our limited partnership portfolio for the full year of 2011 compared to the full year of 2010.

“In 2011, we made substantial improvements in our financial strength while also commencing the execution of key initiatives to grow the business. From a financial strength standpoint, we significantly improved our Risk-Based Capital ratio 1 to 556% by the end of 2011, which is up from 449% a year ago. In 2011, we began forming the foundation for our national distribution platform and annuity product line expansion. The initial product launch of our much anticipated fixed indexed annuity product is planned for the third quarter of 2012,” said Donald Barnes, Vice Chairman of the Board, CEO and President.

Key Items for the Fourth Quarter and Full Year Results

  • Our investment spread margin 2 totaled 1.69% for the year ended December 31, 2011 compared to 1.16% for the year ended December 31, 2010.
  • Total annuity sales 3 were $16.3 million in the fourth quarter 2011, a decrease of 39% compared to 2010 levels due to the continued low interest rate environment.
  • Deferred annuity surrenders were $31.5 million in the fourth quarter of 2011 compared to $32.5 million for the same period in 2010, a 3.1% decrease, representing average surrender rates for both periods of 1.6%.
  • Our capital base significantly strengthened during 2011 with our RBC ratio increasing to 556% at year end 2011 from 449% at year-end 2010.
  • As of December 31, 2011, book value per share, excluding other comprehensive income, increased to $20.12 at December 31, 2011, from $19.05 at December 31, 2010.

Discussion of Fourth Quarter 2011 and Full Year Financial and Operating Results

As previously discussed, total revenues were $73.6 million and $88.8 million in the fourth quarters of 2011 and 2010, respectively, a period-over-period decrease of $15.2 million or 17.1%, and were $267.4 million and $297.0 million for the years ended December 31, 2011 and 2010, respectively, a decrease of $29.6 million or 10.0%. The decreases from the prior periods were largely attributable to a decline in individual fixed annuity sales given the low interest rate environment partially reduced by an increase in realized gains from our limited partnership portfolio.

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