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Symetra Reports Third Quarter 2012 Results

Among the factors that could drive actual results toward the upper end, middle or lower end of the guidance range are:

  • changes in the interest rate environment;
  • Benefits Division loss ratio relative to long-term target;
  • timing and success of product launches;
  • amount of issuance and yields on commercial mortgage loans;
  • increases or decreases in the amount of prepayments in the investment portfolio;
  • returns on alternative investment portfolio;
  • mortality experience;
  • life and annuity sales levels; and
  • achievement of target cash balances.

Additional Financial Information

This press release, the third quarter 2012 financial supplement and financial review slides are posted on the company's website at http://investors.symetra.com. Investors are encouraged to review all of these materials.

Management to Review Results on Conference Call and Webcast

Symetra’s senior management team will discuss the company’s third quarter 2012 performance with investors and analysts on Thursday, Oct. 25, 2012 at 10 a.m., Eastern Time (7 a.m., Pacific Time). To listen by phone, dial 1-888-713-4205. For international callers, dial 617-213-4862. The passcode is 27318818. Participants may pre-register for the call at www.symetra.com/earnings. Pre-registrants will be issued a PIN to use when dialing into the live call, which will provide quick access to the conference by bypassing the operator.

To listen to a live webcast of the conference call, go to http://investors.symetra.com. Listeners should go to the website at least 15 minutes before the call and test the compatibility of their computer. Links will be available to download any necessary audio software.

A replay of the call can be accessed by phone at approximately 1 p.m., Eastern Time (10 a.m., Pacific Time) on Oct. 25, 2012 by dialing 1-888-286-8010. For international callers, dial 617-801-6888. The passcode is 33023803. The replay will be available by phone through Nov. 2, 2012. To access a replay of the conference call over the Internet, visit http://investors.symetra.com.

Use of Non-GAAP Measures

1 Symetra uses both U.S. generally accepted accounting principles (GAAP) and non-GAAP financial measures to track the performance of its operations and financial condition. Definitions of each non-GAAP measure are provided below, and reconciliations to the most directly comparable GAAP measures are included in the tables at the end of this press release and in the quarterly financial supplement. These measures are not substitutes for GAAP financial measures. For more information about these non-GAAP measures, please see Symetra’s 2011 Annual Report on Form 10-K.

This press release references the following non-GAAP financial measures:

  • Adjusted operating income is defined by the company as net income, excluding after-tax net investment gains (losses) and including after-tax net realized gains (losses) related to Symetra’s fixed indexed annuity (FIA) products.
  • Adjusted operating income per diluted share is defined as adjusted operating income divided by diluted common shares outstanding.
  • Adjusted book value is defined as stockholders’ equity, less accumulated other comprehensive income (loss), or AOCI.
  • Adjusted book value, as converted, is defined as stockholders’ equity, less AOCI plus the assumed proceeds from exercising the outstanding warrants.
  • Adjusted book value per share, as converted, is calculated as adjusted book value, as converted, divided by the sum of outstanding common shares and shares subject to outstanding warrants.

About Symetra

Symetra Financial Corporation (NYSE: SYA) is a diversified financial services company based in Bellevue, Wash. In business since 1957, Symetra provides employee benefits, annuities and life insurance through a national network of benefit consultants, financial institutions, and independent agents and advisors. For more information, visit www.symetra.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

This press release may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of current or historical facts included or referenced in this release that address activities, events or developments that we expect or anticipate will or may occur in the future, are forward-looking statements. The words “will,” “believe,” “intend,” “plan,” “expect,” “anticipate,” “project,” “estimate,” “predict,” “potential” and similar expressions also are intended to identify forward-looking statements. These forward-looking statements include, among others, statements with respect to Symetra's:

  • estimates or projections of revenues, net income (loss), net income (loss) per share, adjusted operating income (loss), adjusted operating income (loss) per share, market share or other financial forecasts;
  • trends in operations, financial performance and financial condition;
  • financial and operating targets or plans; and
  • business and growth strategy, including prospective products, services and distribution partners.

These statements are based on certain assumptions and analyses made by Symetra in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors believed to be appropriate under the circumstances. Whether actual results and developments will conform to Symetra's expectations and predictions is subject to a number of risks, uncertainties and contingencies that could cause actual results to differ materially from expectations, including, among others:

  • the effects of fluctuations in interest rates and a prolonged low interest rate environment;
  • general economic, market or business conditions, including further economic downturns or other adverse conditions in the global and domestic capital and credit markets;
  • the effects of changes in monetary and fiscal policy;
  • the effects of changes in government programs to stimulate mortgage refinancing and significant increases in corporate refinance activity;
  • the performance of Symetra’s investment portfolio;
  • The continued availability of quality commercial mortgage loan investments and Symetra’s continued capacity to invest in commercial mortgage loans;
  • Symetra’s ability to successfully execute on its “Grow & Diversify” strategy;
  • recorded reserves for future policy benefits and claims subsequently proving to be inadequate or inaccurate;
  • deviations from assumptions used in setting prices for insurance and annuity products or establishing cash-flow testing reserves;
  • continued viability of certain products under various economic, regulatory and other conditions;
  • market pricing and competitive trends related to insurance products and services;
  • changes in amortization of deferred policy acquisition costs and deferred sales inducements;
  • financial strength or credit ratings changes;
  • the availability and cost of capital and financing;
  • the continued availability and cost of reinsurance coverage;
  • changes in laws or regulations, or their interpretation, including those that could increase Symetra's business costs, reserve levels and required capital levels;
  • the ability of subsidiaries to pay dividends to Symetra;
  • the effects of implementation of the Patient Protection and Affordable Care Act;
  • the effects of implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010; and
  • the risks that are described from time to time in Symetra's filings with the U.S. Securities and Exchange Commission, including those in Symetra's 2011 Annual Report on Form 10-K and 2012 quarterly reports on Form 10-Q.

Consequently, all of the forward-looking statements made in this press release are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by Symetra will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, Symetra or its business or operations. Symetra assumes no obligation to update publicly any such forward-looking statements, whether as a result of new information, future events or otherwise.

 

Symetra Financial Corporation

Consolidated Income Statement Data
(in millions, except per share data)
(unaudited)
     
Three Months Ended Nine Months Ended
September 30 September 30
  2012     2011     2012     2011  
Revenues As Adjusted* As Adjusted*
Premiums $ 154.1 $ 150.5 $ 451.2 $ 390.8
Net investment income 312.3 315.5 952.0 937.7
Policy fees, contract charges and other 47.1 45.5 142.2 136.1
Net realized investment gains (losses):
Total other-than-temporary impairment losses on securities (16.0 ) (5.0 ) (30.7 ) (9.0 )
Less: portion recognized in other comprehensive income   2.7     0.1     5.5     0.4  
Net impairment losses recognized in earnings (13.3 ) (4.9 ) (25.2 ) (8.6 )
Other net realized investment gains (losses)   28.8     (51.7 )   60.2     (18.3 )
Total net realized investment gains (losses)   15.5     (56.6 )   35.0     (26.9 )
Total revenues   529.0     454.9     1,580.4     1,437.7  
 
Benefits and expenses
Policyholder benefits and claims 111.1 109.4 320.8 285.4
Interest credited 235.4 229.3 695.2 682.7
Other underwriting and operating expenses 88.9 82.6 264.5 230.6
Interest expense 8.2 8.0 24.6 24.0
Amortization of deferred policy acquisition costs   17.9     15.0     49.1     47.7  
Total benefits and expenses   461.5     444.3     1,354.2     1,270.4  
 
Income from operations before income taxes 67.5 10.6 226.2 167.3
 
Provision (benefit) for income taxes
Current (0.3 ) 26.0 12.0 68.3
Deferred   12.6     (25.9 )   39.8     (23.1 )
Total provision for income taxes   12.3     0.1     51.8     45.2  
 
Net income $ 55.2   $ 10.5   $ 174.4   $ 122.1  
 
Net income per common share
Basic $ 0.40 $ 0.08 $ 1.26 $ 0.89
Diluted $ 0.40 $ 0.08 $ 1.26 $ 0.89
 
Weighted-average number of common shares outstanding
Basic 138.091 137.559 137.986 137.459
Diluted 138.094 137.571 137.990 137.470
 
Cash dividends declared per common share $ 0.07 $ 0.06 $ 0.21 $ 0.17
 
Non-GAAP financial measures
Adjusted operating income $ 45.9   $ 46.9   $ 152.4   $ 139.1  
 
Reconciliation to net income
Net income $ 55.2 $ 10.5 $ 174.4 $ 122.1
Less: Net realized investment gains (losses) (net of taxes)** 10.1 (36.8 ) 22.8 (17.5 )
Add: Net realized gains (losses) - FIA (net of taxes)***   0.8     (0.4 )   0.8     (0.5 )
Adjusted operating income $ 45.9   $ 46.9   $ 152.4   $ 139.1  
 
*Historical financial information has been restated to reflect retrospective adoption of a new accounting standard for deferred acquisition costs on January 1, 2012.
 
**Net realized investment gains (losses) are reported net of taxes of $5.4, $(19.8), $12.2, and $(9.4) for the three and nine months ended September 30, 2012 and 2011, respectively.
 
***Net realized gains (losses) - FIA are reported net of taxes of $0.3, $(0.2), $0.3 and $(0.2) for the three and nine months ended September 30, 2012 and 2011, respectively.
 
 
Symetra Financial Corporation
Consolidated Balance Sheet Data
(in millions, except per share data)
(unaudited)
     
September 30 December 31
  2012   2011
Assets As Adjusted*
Total investments $ 27,492.3 $ 26,171.7
Other assets 1,185.6 1,215.8
Separate account assets   819.8   795.8
Total assets $ 29,497.7 $ 28,183.3
 
Liabilities and stockholders' equity
Policyholder liabilities $ 23,625.3 $ 23,140.6
Notes payable 449.3 449.2
Other liabilities 962.1 682.8
Separate account liabilities   819.8   795.8
Total liabilities 25,856.5 25,068.4
 
Common stock and additional paid-in capital 1,459.7 1,455.8
Retained earnings 777.2 631.8
Accumulated other comprehensive income, net of taxes   1,404.3   1,027.3
Total stockholders' equity 3,641.2 3,114.9
   
Total liabilities and stockholders' equity $ 29,497.7 $ 28,183.3
 
 
Book value per share** $ 26.37 $ 22.64
 
Non-GAAP financial measures
Adjusted book value $ 2,236.9 $ 2,087.6
 
Reconciliation to stockholders' equity
Total stockholders' equity $ 3,641.2 $ 3,114.9
Less: AOCI   1,404.3   1,027.3
Adjusted book value 2,236.9 2,087.6
Add: Assumed proceeds from exercise of warrants   218.1   218.1
Adjusted book value, as converted $ 2,455.0 $ 2,305.7
Adjusted book value per share, as converted*** $ 17.78 $ 16.75
 

*Historical financial information has been restated to reflect retrospective adoption of a new accounting standard for deferred acquisition costs on January 1, 2012.

 

**Book value per share is calculated based on stockholders' equity divided by outstanding common shares plus shares subject to outstanding warrants, totaling 138.096 and 137.613 as of September 30, 2012 and December 31, 2011, respectively.

 

***Adjusted book value per share, as converted, is calculated based on adjusted book value, as converted, divided by outstanding common shares plus shares subject to outstanding warrants, totaling 138.096 and 137.613 as of September 30, 2012 and December 31, 2011, respectively.

 
 
Symetra Financial Corporation
Reconciliation of Segment Pretax Adjusted Operating Income, Operating Revenues and Operating ROAE
(in millions)
(unaudited)
             
Three Months Ended Nine Months Ended
September 30 September 30
  2012     2011     2012     2011  
Segment pretax adjusted operating income (loss) As Adjusted* As Adjusted*
Benefits $ 16.7 $ 21.9 $ 58.1 $ 54.9
Deferred Annuities 24.0 26.5 73.6 68.3
Income Annuities 8.6 7.1 39.9 28.6
Individual Life 13.8 12.8 41.5 47.2
Other   (10.0 )   (1.7 )   (20.8 )   (5.5 )
Subtotal 53.1 66.6 192.3 193.5
Add: Net realized investment gains (losses) 15.5 (56.6 ) 35.0 (26.9 )
Less: Net realized gains (losses) - FIA   1.1     (0.6 )   1.1     (0.7 )
Income from operations before income taxes $ 67.5   $ 10.6   $ 226.2   $ 167.3  
 
 
Reconciliation of revenues to operating revenues
Revenues $ 529.0 $ 454.9 $ 1,580.4 $ 1,437.7
Less: Net realized investment gains (losses) 15.5 (56.6 ) 35.0 (26.9 )
Add: Net realized gains (losses) - FIA   1.1     (0.6 )   1.1     (0.7 )
Operating revenues $ 514.6   $ 510.9   $ 1,546.5   $ 1,463.9  
 
 
Twelve Months Ended
September 30
  2012     2011  
As Adjusted*
ROE

7.6%

 

7.0%

 

Average stockholders' equity** $ 3,266.3 $ 2,625.6
Non-GAAP financial measures
Operating ROAE

9.5%

 

9.5%

 

Average adjusted book value***

$

2138.1

$

1957.7

 

*Historical financial information has been restated to reflect retrospective adoption of a new accounting standard for deferred acquisition costs on January 1, 2012.

 

**Average stockholders' equity is derived by averaging ending stockholders' equity for the most recent five quarters.

 

***Average adjusted book value is derived by averaging ending adjusted book value for the most recent five quarters.





Stock quotes in this article: SYA 

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