WASHINGTON,DC,May 31,2007 - ULLICO Inc.,the labor owned multi-line holding company offering insurance and investment products and services,today reported net income of $3.3 million for the quarter ended March 31,2007,compared to $1.6 million in the same quarter of the prior year. Pre-tax operating income for the current quarter was $3.3 million,compared to $2.0 million in the prior year's quarter.
Highlights for the quarter:
- The Life and Health Business Unit contributed strong pretax earnings of $3.7 million and a 3% reduction in its loss ratio to 75%.
- Solid Property and Casualty earnings of $0.7 million with strong sales in its Fiduciary and Union Liability lines
- Investment Services earnings remain strong at $4.4 million due to continued growth in assets under management within J for Jobs Fund and our new USA Realty Fund.
For the first time in several years the results were not impacted by non-recurring transactions. Operating and net income for the quarter were a result of favorable claims development and reduced operating expenses. The Company continues to report no federal income tax expense due to the utilization of tax benefits incurred in prior years.
Favorable claims development in the Life & Health business unit contributed $3.3 million to the bottom line compared to $1.7 million in the same period last year. Other Life and Health earnings were offset by a decline in revenue from $62.5 million in the prior year to $50.3 million. As we anticipated when we made the decision in late 2006 to no longer actively market group health insurance to new customers,our health insurance in force business is beginning to decline as customers find more cost effective solutions elsewhere.
ULLICO's Property and Casualty business unit produced earnings of $0.7 million as compared to $0.6 million for the same period last year. Net earned premium increased to $7.2 million compared to $5.5 million in the same period in the prior year. First quarter results reflect additional strengthening of claim reserves in the amount of $1.2 million primarily due to development in our legacy fiduciary claims. Loss ratios on the post-2003 book of business remain well below pricing targets. Operating expenses decreased to $1.8 million in 2007 compared to $2.0 million in the prior year. Overall,the Property and Casualty business unit continues to build momentum.
Our Investment Services Business Unit,which includes the management of the flagship J for Jobs fund,USA Realty Fund and our investment advisor,Trust Fund Advisors,produced earnings of $4.4 million as compared to $3.7 million in the same period last year. The J for Jobs product continues to provide superior performance with an increase in assets under management from $2.4 billion in 2006 to $2.9 billion in 2007.
Mark Singleton,ULLICO President and CEO stated " the revenue growth in our core lines of business from the second half of 2006,especially in our Medical Stop-Loss,Fiduciary,and Union Liability lines of business is very encouraging as are the continued strong loss ratio results. We expect these trends to continue for the balance of the year."
"I'm pleased with ULLICO's first quarter results and its continued momentum despite the challenges that face us in our various markets. We appreciate all who actively support ULLICO by continuing to invest in our products and services that we provide to organized labor",stated Chairman Joseph Hunt.
| Quarterly Financial Results at a Glance (In Millions) | |||
|---|---|---|---|
| 1st Quarter 2007 | 1st Quarter 2006 | Variance | |
| Total Income | $73.8 | $83.9 | ($10.1) |
| Total Benefits & Expenses | 70.5 | 81.9 | 11.4 |
| Pre-Tax Operating Income before Non-Recurring Transactions | $3.3 | $2.0 | $1.3 |
| Tax Expense (benefit) | - | (0.1) | (0.1) |
| Net Income before Non-Recurring Transactions | $3.3 | $2.1 | $1.2 |
| Non-Recurring Transactions | - | (0.5) | 0.5 |
| Net Income | $3.3 | $1.6 | $1.7 |