National Financial Hammered

Earnings miss estimates.
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Shares of financial services firm

National Financial Partners


got knocked around Wednesday, after first-quarter earnings fell far short of Wall Street expectations.

In morning trading, the stock was down $7.05, or 13%, to $45.10 a share. For the year, shares of National Financial are down 14%.

National Financial, which provides investment advisory work and sells life insurance products, is led by Jessica Bibliowicz, the daughter of Sanford Weill, the former founder and CEO of


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Investors were selling shares after the New York-based company posted "cash profits,'' or operating earnings, of $20.7 million, or 52 cents a share. In the year-ago quarter, operating earnings were $14.4 million, or 39 cents a share.

But analysts, as surveyed by Thomson Financial, were looking for a bigger gain, with an estimate for the quarter for 56 cents a share.

Net income, meanwhile, was $9.5 million, or 24 cents a share, compared to $5.8 million, or 16 cents a share.

The firm also disclosed that an investigation by New York Attorney General Eliot Spitzer into the life settlements business has cost it $500,000 in legal fees. The company, which received a subpoena from Spitzer's office earlier this year, says "the investigation is ongoing and we expect additional costs will be incurred in 2006.''

The life-settlement business is a fast-growing corner of the insurance market in which hedge funds and other investors buy and sell unused life insurance contracts taken out by wealthy individuals and by corporations on top executives. In this somewhat morbid area of the financial world, speculators buy up these insurance policies in the hope that the insured will die before the pricey premiums eat up too much of the final payout.

Spitzer's office has declined to discuss the investigation, which is believed to focus on the role played by insurance brokers in buying and selling unnecessary life insurance policies taken out by wealthy individuals.

One issue that has raised concern is something called "premium financing,'' in which brokers and would-be buyers of unused life insurance policies provide financing to an individuals so they can take out a policy. Some insurance industry executives say such financing is improper if a person buys a life insurance policy solely for the purpose of reselling it to a third-party buyer.

Advanced Settlements, a National Financial subsidiary, is one of the largest life-settlement brokers in the nation.