Reports Second Quarter 2009 Operating Loss of $5.9 million and Net Loss of $4.1 Million.
WASHINGTON, DC, August 13, 2009 — ULLICO Inc. (“the Company”), the labor owned multi-line holding company offering insurance and financial products and services, today reported a pre-tax operating loss of $5.9 million for the current quarter ended June 30, 2009, compared to pre-tax operating income of $3.7 million in the prior year's quarter. The net loss for the current quarter was $4.1 million, compared to net income of $2.4 million in the prior year’s quarter.
Highlights for the quarter:
- The Property and Casualty business unit contributed pre-tax earnings of $0.6 million, compared to $3.4 million for the same period last year. Core earnings on the Fiduciary and Union Liability lines of business remain strong, however higher loss ratios in the Workers’ Compensation and Surety lines of business contributed to the lower earnings. Revenue from continuing lines was $22.4 million, an increase of 78% over the same quarter in 2008, driven primarily by the continued successful expansion of the Workers’ Compensation, Commercial and Surety lines of business.
- The Life and Health business unit incurred a pre-tax loss of $1.8 million, compared to pre-tax earnings of $0.8 million for the same period last year. The loss in the quarter was driven by higher loss ratios in the Medical Stop Loss line of business as well as $0.8 million in start-up expenses related to the launch of a new product line. Revenue from continuing lines was $37.5 million, an increase of 10% over the same quarter in 2008, led by the core Medical Stop Loss line of business.
- The Retirement Services business unit contributed pre-tax earnings of $3.9 million, compared to $5.6 million for the same period last year. The results were impacted by a decrease in assets under management, which decreased from $5.5 billion at June 30, 2008 to $5.2 billion at June 30, 2009. Assets under management within the Company’s flagship Separate Account J (J for Jobs Fund) remained unchanged at $3.5 billion. In addition, in the current quarter, the Company’s residual limited partnership investments held at the holding company generated a gain of $0.2 million, compared to a gain of $0.5 million for the same period last year.
Overall consolidated operating income was impacted by an increase in general expenses resulting from investments in new product and marketing initiatives, related support infrastructure and legal expenses related to legacy litigation.
The current quarter included a net non-recurring loss of $0.1 million relating to the settlement of several legacy litigation cases.
Total premium and fee revenue for the quarter was $70.8 million compared to $64.7 million in the prior year’s quarter. Revenue on the Company’s continuing lines was $69.4 million compared to $56.5 million last year, an increase of 23%. Revenue from the exited lines decreased to $1.5 million from $8.3 million in the prior year’s quarter due to the continued run-off of the Company’s fully insured group health business following the decision in late 2006 to no longer actively market these products.
Year-to-Date Consolidated Results
The year-to-date consolidated operating loss was $8.4 million compared to operating income of $7.7 million in the prior year. The year-to-date variance resulted from higher loss ratios in the Medical Stop Loss, Workers’ Compensation and Surety lines of business, increased expenses related to our investment in growth initiatives, the legal expenses discussed above, and lower net investment income. The lower net investment income, which was primarily due to the negative results of our limited partnership investments as well as the lower interest rate environment that currently exists, affected each of the Company’s business units.
The year-to-date consolidated net loss was $5.7 million compared to net income of $5.0 million in the prior year.
Premium and fee revenue for the first six months was $139.8 million compared to $129.3 million in 2008. Revenue on the Company’s continuing lines of business increased 22% to $136.4 million when compared to prior year.
Ed McElroy, ULLICO CEO stated, “Our strategy of investing in the development of a broad and diversified product portfolio and expanding our markets is clearly paying dividends as evidenced by our continued strong revenue growth. Several of our product lines generated higher loss ratios than we expected this quarter, which contributed to our operating loss, however, we are confident our strategy will lead to sustained growth and improved profitability for ULLICO over the long term.”
Chairman Joseph Hunt stated, “Although our operating results for the first half of this year were below expectations, 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 organized labor.”
Quarterly Financial Results at a Glance
| (In Millions) | 2nd Quarter 2009 | 2nd Quarter 2008 | Variance |
| Total Income | $78.0 | $72.4 | $5.6 |
| Total Benefits & Expenses | 83.9 | 68.7 | (15.2) |
| Pre-Tax Operating Income/(Loss) before Non-Recurring Transactions | ($5.9) | $3.7 | ($9.6) |
| Non-Recurring Transactions | (0.1) | - | (0.1) |
| Pre-Tax Operating Income/(Loss) after Non-Recurring Transactions | ($6.0) | $3.7 | ($9.7) |
| Tax Expense/(Benefit) | (1.9) | 1.3 | 3.2 |
| Net Income/(Loss) | ($4.1) | $2.4 | ($6.5) |
2009 Year-To-Date Results at a Glance
| (In Millions) | As of June 30, 2009 YTD | As of June 30, 2008 YTD | Variance |
| Total Income | $150.8 | $144.4 | $6.4 |
| Total Benefits & Expenses | 159.2 | 136.7 | (22.5) |
| Pre-Tax Operating Income/(Loss) before Non-Recurring Transactions | ($8.4) | $7.7 | ($16.1) |
| Non-Recurring Transactions | (0.1) | - | (0.1) |
| Pre-Tax Operating Income/(Loss) after Non-Recurring Transactions | ($8.5) | $7.7 | ($16.2) |
| Tax Expense/(Benefit) | (2.8) | 2.7 | 5.5 |
| Net Income/(Loss) | ($5.7) | $5.0 | ($10.7) |
About ULLICO Inc.
ULLICO Inc. is a $5.2 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 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.
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