National Financial Partners
reported a 2.4% decline in third-quarter profit, as the firm said it continues to incur legal expenses associated with an ongoing investigation into the so-called life settlements business.
In the quarter, NFP earned $16.5 million, or 41 cents a share, compared to $16.9 million, or 44 cents a share, in the year ago period. Revenue at the firm, which specializes in buying-up insurance companies and other financial-services firms, rose 13% to $267 million.
Operating earnings, which strips out amortization and depreciation expenses, were unchanged from a year ago at $26.7 million, or 66 cents a share.
On that basis, NFP, exceeded the Thomson Financial consensus estimate of 64 cents a share. Revenue also beat the consensus forecast of $260 million.
In the third quarter, the company said it completed seven transactions, which added $7.5 million to earnings.
The company also said it spent $500,000 in the quarter on legal fees related to New York Attorney General Eliot Spitzer's investigation into the life settlement business. To date, the company has spent at least $1 million in legal expenses on the investigation.
NFP's subsidiary Advanced Settlements is one of the nation's biggest life settlement brokers. Advanced is in the business of finding buyers for unused life insurance policies taken out by wealthy individuals, or companies with insurance policies for their executives.
Last week Spitzer's office filed a lawsuit against Coventry First, one of the largest buyers of life settlements. The civil complaint charged Coventry with cheating consumers out of getting the best price for their unused insurance policies.
Spitzer accused Coventry of rigging the bidding process for these policies by making "secret payments'' to brokers supposedly representing the sellers' interests. The secret payments allegedly dampened competition for these policies and gave the brokers an incentive to steer the business to Coventry.
NFP and Advanced weren't named as defendants in the litigation. But the complaint identifies several Advanced brokers as being on the receiving end of these payments.
A source close to Spitzer's office says the investigation is continuing and it's likely that additional action will be taken against others players in the $10 billion a year life settlements business.
Shares of NFP fell $1.25, or 2.3% on Wednesday to close at $38.14.