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Symetra Reports Fourth Quarter, Full-Year 2012 Results

Symetra Financial Corporation (NYSE:SYA) today reported fourth quarter 2012 net income of $31.0 million, or $0.22 per diluted share, compared with $73.7 million, or $0.54 per diluted share, in fourth quarter 2011. Symetra’s equity investment portfolio generated $35.4 million less in returns than fourth quarter 2011, reflecting lower equity market growth. For full-year 2012, Symetra produced net income of $205.4 million, or $1.49 per diluted share, up from $195.8 million, or $1.42 per diluted share, in 2011.

Adjusted operating income was $32.9 million, or $0.24 per diluted share, in fourth quarter 2012, compared with $51.1 million, or $0.37 per diluted share, in the same period a year ago. For full-year 2012, Symetra generated adjusted operating income of $185.3 million, or $1.34 per diluted share, compared with $190.2 million, or $1.38 per diluted share, in 2011.

Symetra posted a 6.1% return on equity (ROE) for 2012, compared with 7.2% in 2011. Operating return on average equity (ROAE) 1 for 2012 was 8.5%, compared with 9.5% in 2011.
Summary Financial Results     Three Months Ended         Twelve Months Ended
(In millions, except per share data) December 31 December 31
      2012 2011*         2012   2011*
Net Income $ 31.0 $ 73.7 $ 205.4 $ 195.8
Per Diluted Share of Common Stock $ 0.22 $ 0.54 $ 1.49 $ 1.42
Adjusted Operating Income $ 32.9 $ 51.1 $ 185.3 $ 190.2
Per Diluted Share of Common Stock $ 0.24 $ 0.37 $ 1.34 $ 1.38
Return on Equity 6.1 % 7.2 %
Operating Return on Average Equity                   8.5 %   9.5 %

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

Fourth quarter 2012 results included the following pretax items of note, which decreased overall adjusted operating income by $2.2 million pretax, and $6.1 million after tax:
  • Investment income of $10.8 million, related to investment prepayments (primarily bond make-whole payments in the Deferred Annuities segment), offset by related increased amortization of $2.5 million.
  • Operating expense charges of $4.6 million, including expenses related to the exploration of an acquisition opportunity that did not come to fruition.
  • Reserve increase and higher claims, resulting in a $3.8 million decline in Benefits earnings related to the limited benefit medical business.
  • Reserve increases of $2.1 million, resulting in a charge against earnings of $1.1 million in Income Annuities, and a charge of $1.0 million in the Individual Life segment.
  • A deferred tax asset adjustment, resulting in a $4.7 million increase in income tax expense.

“It was a challenging fourth quarter, with lower earnings in three of our four business segments. The key drivers of our results included less favorable claims experience in the Benefits and Individual Life segments, and higher operating expenses from continued investments in our Grow & Diversify initiatives as well as M&A exploration. While we maintained our risk management discipline, expense growth outpaced revenue growth,” said Tom Marra, Symetra president and CEO.

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