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Presidential Life Corporation Announces First Quarter 2012 Results

Stocks in this article: PLFE

Presidential Life Corporation (“Presidential Life” or the “Company”) (NASDAQ: PLFE) today announced first quarter 2012 net income of $3.8 million or $0.13 per share, compared with net income of $7.5 million or $0.25 per share for the comparable quarter in 2011. The decrease in net income of $3.7 million for the first quarter 2012 compared to 2011 is principally due to a decrease in net realized investment gains of $2.4 million, an increase in other-than-temporary impairment (“OTTI”) losses of $3.1 million, and a decrease in equity in earnings on limited partnerships of $1.6 million. These items were partially offset by decreases in general expenses and taxes of $0.9 million and income taxes of $2.0 million.

Total revenues in the first quarter 2012 were $56.7 million, a decrease of 12.7% or $8.2 million from $64.9 million in the first quarter 2011. The decrease in revenues was principally attributable to the aforementioned revenue declines aggregating $7.1 million related to changes in net realized investment gains, equity in earnings on limited partnerships and OTTI losses.

“We were pleased to see strong growth in insurance revenues, increasing sales of deferred annuities and immediate annuities without life contingencies, and continued strength in our capital base, which is important to efforts to further develop our business,” said Donald Barnes, Vice Chairman of the Board, CEO and President. “As we move further into 2012, we will continue to focus on efforts already underway to expand our annuity product offerings, a key element of our business, while also prudently managing our investment portfolio.”

Key Items for the First Quarter Results

  • Our investment spread margin 1 totaled 0.42% for the quarter ended March 31, 2012 compared to 1.50% for the quarter ended March 31, 2011. The decline primarily relates to the effect of lower net realized investment gains and higher OTTI losses in the first quarter of 2012 relative to 2011. Net realized investment gains and OTTI losses tend to fluctuate from period-to-period as a result of changing economic conditions.
  • Total annuity sales 2 were $21.7 million in the first quarter 2012, an increase of $8.0 million or 58% compared to 2011 levels due primarily to an increase in sales of retirement products due to a successful sales effort with recent retirees of a targeted company in the first quarter of 2012.
  • Deferred annuity surrenders were $28.4 million in the first quarter of 2012 compared to $32.0 million for the same period in 2011, an 11% decrease, representing average surrender rates of 1.41% and 1.55% for the first quarters of 2012 and 2011, respectively.
  • Our capital base remains extremely strong at March 31, 2012 despite a $34.25 million upstream dividend from Presidential Life Insurance Company to our holding company during the quarter with our estimated Risk-Based Capital ratio 3 at 512% compared with 556% at December 31, 2011.
  • As of March 31, 2012, book value per share, excluding other comprehensive income, increased to $20.18 at March 31, 2012, from $20.12 at December 31, 2011.

Discussion of First Quarter 2012 Financial and Operating Results

As previously discussed, total revenues were $56.7 million and $64.9 million in the first quarters of 2012 and 2011, respectively, a period-over-period decrease of $8.2 million or 12.7%. The decrease from the prior period was principally attributable to revenue declines aggregating to $7.1 million related to changes in net realized investment gains, equity in earnings on limited partnerships and OTTI losses.

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