WASHINGTON,DC, - ULLICO Inc.,the labor owned multi-line holding company offering insurance and investment products and services,today reported a net loss of $19.4 million for the quarter ended September 30,2007,compared to net income of $4.2 million in the same quarter of the prior year. Pre-tax operating income for the current quarter excluding non-recurring transactions was $1.9 million,compared to $2.1 million in the prior year's quarter.
Highlights for the quarter:
- The Life and Health Business Unit contributed pre-tax earnings of $1.4 million with premium growth in the Medical Stop Loss and Group Life lines of business and favorable mortality in our Direct Marketing line of business.
- The Property and Casualty Business Unit generated solid earnings of $2.0 million due to strong sales and favorable claims activity in its Fiduciary,Union Liability,and Workers Compensation lines of business.
- Investment Services earnings rose to $6.2 million due to continued growth in assets under management within Separate Account J and strong profit distributions on the Company's residual limited partnership investment portfolio.
- The Company recognized a $20.0 million one-time charge to resolve a 5-year old Department of Labor (DOL) investigation regarding technical ERISA requirements.
The Life and Health Business Unit continued its positive momentum as revenue increased 5% over the third quarter of 2006 led by strong Stop Loss and Direct Marketing sales. Loss results were mixed among the various lines of business,however the overall loss ratio for the business unit was in line with expectations and consistent with the same period last year.
ULLICO's Property and Casualty Business Unit produced operating income of $2.0 million as compared to $1.9 million for the same period last year. Net earned premium increased a stellar 35% to $9.3 million compared to $6.9 million over the same period last year with strong growth in the Workers' Compensation,Fiduciary and Union Liability lines of business. Strong underwriting continues to drive the Casualty operations profitability in all lines of business resulting in continued strong return on revenues.
Our Investment Services Business Unit,which includes the management of the flagship Separate Account J ("J for Jobs") fund,Separate Account U ("USA Realty Fund") and our investment advisor,Trust Fund Advisors,produced earnings of $6.2 million as compared to $5.9 million in the same period last year. Fee revenue increased 16% over the same period last year primarily due to significant growth in assets under management within Separate Account J which reached an all time high of $3.3 billion. In addition,the Company received a net $1.6 million in profit distributions on its residual limited partnership investment portfolio.
Year to Date Consolidated Results
Year-to-date consolidated operating income before non-recurring transactions was $10.9 million compared to $5.7 million in the prior year representing an increase of 91.2%. Contributing to the positive year-to date variance was the continued improvement in reducing corporate overhead and general expenses,favorable claims experience in the insurance lines and continued growth in our assets under management.
Year-to-date consolidated net loss was $10.8 million as of September 30,2007 compared to net income of $9.8 million over the same period last year reflecting the $20.0 million one-time charge to resolve the 5-year old Department of Labor (DOL) investigation regarding technical ERISA requirements.
Premium and fee revenue for the first nine months declined from $217.5 million in 2006 to $201.7 million in 2007. The decline is due to the run-off of the group health line of business following the Company's decision in late 2006 to no longer actively market group health insurance. Core revenue on the Company's continuing lines of business has produced growth of $10.4 million or 7% despite soft market conditions for much of the year.
Mark Singleton,ULLICO President and CEO stated," I am very pleased with our 15th consecutive quarter of operating profit and the strong core revenue growth we have achieved this year,Despite the one-time earnings charge,ULLICO is well positioned for continued growth in our core businesses as our capital and liquidity ratios remain very strong."
"I am pleased with the continued momentum in producing sound operating earnings for ULLICO. We will continue to remain focused in providing financial and retirement security for the working men and women across this country. We appreciate all who actively support ULLICO by continuing to invest in the products and services that we provide to organized labor" stated Chairman Joseph Hunt.
| Quarterly Financial Results at a Glance (In Millions) | |||
|---|---|---|---|
| 3rd Quarter 2007 | 3rd Quarter 2006 | Variance | |
| Total Income | $75.5 | $79.0 | ($3.5) |
| Total Benefits & Expenses | 73.6 | 76.9 | 3.3 |
| Pre-Tax Operating Income before Non-Recurring Transactions | $1.9 | $2.1 | ($0.2) |
| Tax Expense (benefit) | (1.0) | - | 1.0 |
| Net Income before Non-Recurring Transactions | $2.9 | $2.1 | $0.8 |
| Non-Recurring Transactions | (22.3) | 2.1 | (24.4) |
| Net Income | ($19.4) | $4.2 | ($23.6) |
| 2007 Year-To-Date Results at a Glance (In Millions) | |||
|---|---|---|---|
| as of September 30,2007 YTD | as of September 30,2006 YTD | Variance | |
| Total Income | $226.3 | $240.0 | ($13.7) |
| Total Benefits & Expenses | 215.4 | 243.3 | 18.9 |
| Pre-Tax Operating Income before Non-Recurring Transactions | $10.9 | $5.7 | $5.2 |
| Tax Expense (benefit) | (0.9) | - | 0.9 |
| Net Income before Non-Recurring Transactions | $11.8 | $5.7 | $6.1 |
| Non-Recurring Transactions | (22.6) | 4.1 | (26.7) |
| Net Income | ($10.8) | $9.8 | ($20.6) |