Ullico Inc. Continues Revenue Momentum; Increase of 10% Over Prior Year
Reports Second Quarter 2010 Pre-Tax Operating Income of $1.4 million and Net Income of $ 0.2 Million.
WASHINGTON, DC, August 12, 2010 — Ullico Inc. (“the Company”), the Labor owned multi-line holding company offering insurance and financial products and services, today reported pre-tax operating income of $1.4 million for the quarter ended June 30, 2010, compared to a pre-tax operating loss of $3.5 million in the prior year's quarter. Net income for the current quarter was $0.2 million, compared to a net loss of $4.1 million in the prior year’s quarter.
Highlights for the quarter:
- The Property and Casualty Business Unit contributed pre-tax earnings of $2.4 million, compared to $0.6 million for the same period last year. Core earnings on the Fiduciary and Union Liability lines of business remain strong. Lower loss ratios in the Workers’ Compensation and Surety lines of business contributed to the higher earnings. However, the current quarter also included bad debt write-offs in the Workers’ Compensation and Commercial lines of business totaling $2.6 million. Revenue was $31.8 million, an increase of 42% over the same quarter in 2009, driven primarily by the continued successful expansion of the Workers’ Compensation, Commercial and Surety lines of business.
- The Life and Health Business Unit contributed pre-tax earnings of $1.4 million, compared to a pre-tax loss of $1.0 million for the same period last year. The improved earnings over the same period last year were driven primarily by lower loss ratios in the Medical Stop Loss line of business. Revenue was $35.7 million, a decrease of 5% over the same quarter in 2009. Members covered under Group policies for existing customers during the current quarter have declined from 2009 due to job losses from the recession contributing to the decline in revenue.
- The Investment Services Business Unit contributed pre-tax earnings of $3.1 million, compared to $3.9 million for the same period last year. Revenue declined as assets under management within the Company’s flagship Separate Account J decreased from $3.5 billion at June 30, 2009 to $3.2 billion at June 30, 2010. However, total third party assets under management increased from $4.6 billion at June 30, 2009 to $4.7 billion at June 30, 2010 due to additional deposits in our other managed funds and an improvement over 2009 in the equity markets.
An increase in general expenses resulting from investments in new product and marketing initiatives reduced overall consolidated operating income.
The current quarter included a non-recurring loss of $4.7 million related to the settlement of legacy litigation matters. The quarter also includes the impact of an agreement in principle with the IRS related to refund claims filed for previous years. The agreement in principle resulted in additional interest income of $0.9 million, which is reported in operating income and a net income tax benefit of $2.0 million. The prior quarter results included a net non-recurring loss of $2.5 million related to the settlement of several legacy litigation matters.
Total premium and fee revenue for the quarter was $78.0 million compared to $70.8 million in the prior year’s quarter, an increase of 10%. The increase was driven primarily by our Property and Casualty Business Unit as noted previously.
Year-to-Date Consolidated Results
Year-to-date consolidated pre-tax operating income was $5.1 million compared to an operating loss of $6.0 million in the prior year. The improvement resulted primarily from lower loss ratios in the Medical Stop Loss, Workers’ Compensation and Surety lines of business, and increased net investment income, partially offset by increased expenses related to our investment in growth initiatives. The higher net investment income in the current year was due primarily to the negative results of our limited partnership investments in the prior year.
Year-to-date consolidated net income was $2.6 million compared to a net loss of $5.7 million in the prior year.
Premium and fee revenue for the first six months was $155.3 million compared to $139.8 million in 2009, an increase of 11%.
Ed McElroy, Ullico CEO stated, “We continued our strong revenue growth momentum in the second quarter and remained profitable despite significant non-recurring charges. We are pleased that the focused management of our business once again generated positive earnings, and we believe that continued tailoring of our solutions for the union workplace will lead to sustained growth and improved profitability over the long term.”
Chairman Joseph Hunt stated, “Our operating results for the first half of this year were strong, and I am pleased with Ullico’s sales momentum despite the challenges that face us in our various markets. We appreciate all who actively support Ullico by continuing to invest in the products and services we provide to the union workplace.”
Quarterly Financial Results at a Glance
| (In Millions) | 2nd Quarter 2010 | 2nd Quarter 2009 | Change from Prior Period |
| Total Income | $86.0 | $78.0 | $8.0 |
| Total Benefits & Expenses | 84.6 | 81.5 | (3.1) |
| Pre-Tax Operating Income/(Loss) before Non-Recurring Transactions | $1.4 | ($3.5) | $4.9 |
| Non-Recurring Transactions | (4.7) | (2.5) | (2.2) |
| Pre-Tax Operating Income/(Loss) after Non-Recurring Transactions | ($3.3) | ($6.0) | $2.7 |
| Tax Expense/(Benefit) | (3.5) | (1.9) | 1.6 |
| Net Income/(Loss) | $0.2 | ($4.1) | $4.3 |
2009 Year-To-Date Results at a Glance
| (In Millions) | As of June 30, 2010 YTD | As of June 30, 2009 YTD | Change from Prior Period |
| Total Income | $170.3 | $150.8 | $19.5 |
| Total Benefits & Expenses | 165.2 | 156.8 | (8.4) |
| Pre-Tax Operating Income/(Loss) after Non-Recurring Transactions | $5.1 | ($6.0) | $11.1 |
| Non-Recurring Transactions | (4.7) | (2.5) | (2.2) |
| Pre-Tax Operating Income/(Loss) after Non-Recurring Transactions | $0.4 | ($8.5) | $8.9 |
| Tax Expense/(Benefits) | (2.2) | (2.8) | (0.6) |
| Net Income/(Loss) | $2.6 | ($5.7) | $8.3 |
About Ullico Inc.
Ullico Inc. is a $5.3 billion holding company whose subsidiary companies include The Union Labor Life Insurance Company, Ullico Investment Advisors, Inc., Ullico Casualty Company and Ullico Casualty Group, Inc. The Ullico Inc. family of companies offers insurance and financial products and services. For additional information, visit http://www.ullico.com [1].
Forward-Looking Statements
This press release may contain certain "forward-looking statements." In particular, statements regarding growth in our business are forward-looking statements as are discussions of our product pipeline and expected performance. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of Ullico Inc. or its subsidiary companies, or the industry results, to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements.
Ullico's forward-looking statements speak only as of the date of this press release or as of the date they are made, and Ullico undertakes no obligation to update its forward-looking statements.
Contact:
Bill Thornton
Vice President
Corporate Marketing
202.682.6670
bthornton@ullico.com [2]
