Washington, DC (PRWEB) April 6, 2009
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 $1.1 million for the quarter ended December 31, 2008, compared to pre-tax operating income of $1.1 million in the same quarter of the prior year. The current quarter generated a net loss of $1.1 million, compared to net income of $8.4 million in the prior year's quarter.
Highlights for the quarter:
- The Life and Health Business Unit contributed pre-tax earnings of $3.0 million from continuing operations, compared to $1.2 million for the same period last year. Earnings in the quarter were driven by favorable Direct Marketing and Specialty Health results. Revenue from continuing operations was $35.1 million in the current quarter and the same quarter in 2007.
- The Property and Casualty Business Unit contributed pre-tax earnings of $1.3 million, compared to $1.1 million for the same period last year. Core earnings of the Fiduciary and Union Liability lines continue to exceed expectations due to sound underwriting. Revenue from continuing lines was $16.0 million, an increase of 67% over the same quarter in 2007. The increase was the result of continued strong sales in Fiduciary, Union Liability and Workers' Compensation business, and continued successful expansion of the Commercial and Surety lines of business.
- Retirement Services, which includes our Real Estate Investment Group, contributed pre-tax earnings of $3.7 million, compared to $4.3 million for the same period last year. The reduction in earnings was due primarily to lower assets under management, which declined slightly from $5.3 billion at December 31, 2007 to $5.2 billion at December 31, 2008. The decrease in assets under management was due primarily to the downturn in the equity markets in 2008, offset by continued growth in our flagship Separate Account J, which grew from $3.4 billion at December 31, 2007 to $3.7 billion at December 31, 2008.
The net loss for the quarter included a pre-tax charge of $1.6 million from the final settlement of tax charges related to the third quarter 2007 Department of Labor settlement, which have been classified as non-recurring. The Company recognized a 4th quarter 2007 tax benefit in the amount of $7.7 million of which $6.9 million was related to the release of a valuation allowance held with respect to deferred tax assets.
Total premium and fee revenue for the quarter was $62.5 million compared to $70.3 million in the prior year's quarter. Revenue on the Company's continuing lines was $60.7 million compared to $54.7 million last year, an increase of 11%. Revenue from the exited lines, which primarily includes the Company's no longer actively marketed, fully insured Group Health business, declined to $1.9 million from $15.3 million in the prior year's quarter.
Year to Date Consolidated Results
The Company's consolidated operating income for the year was $13.4 million compared to $12.0 million in the prior year Contributing to the increase in operating earnings in 2008 compared to 2007 was strong underwriting results in our core Property and Casualty and Life and Health lines of business and increased investment income from the Company's residual limited partnership investments.
Consolidated net income for 2008 was $6.1 million as compared to a net loss of $2.4 million for 2007. The results for 2008 include the $1.6 million tax settlement discussed above, as well as a pre-tax charge of $1.7 million related to the restructuring of our fully insured Group Health business which has not been actively marketed since late 2006. The results for 2007 include a $20.0 million one-time charge to resolve a 5-year old Department of Labor investigation regarding technical ERISA requirements and $3.0 million charge related to the restructuring of our fully insured Group Health business, offset by a $6.9 million release of the valuation allowance held with respect to deferred tax assets discussed above.
Total premium and fee revenue for the year declined to $253.0 million in 2008 from $272.0 million in 2007. Revenue on the Company's continuing lines of business was $231.5 million, an increase of 13% over the prior year despite softening market conditions through much of the year. The overall decline in revenue, which was expected, is attributable to the Company's decision in late 2006 to no longer actively market fully insured group health insurance to the Taft-Hartley marketplace. As a result, virtually all of our group health insurance customers have transitioned to self-insured programs with ULLICO Stop Loss coverage or to other providers.
Despite the global financial crisis which has seen numerous companies report significant write-downs of investment securities, the Company's balance sheet remains strong and debt free. The portfolio remains conservatively positioned with investments primarily in high quality treasuries, government agency and mortgage backed securities with no sub prime or Alt-A mortgage exposure. Additionally, our capital position remains strong with our regulated insurance companies maintaining risk-based capital levels far exceeding regulatory requirements.
Mark Singleton, ULLICO President and CEO stated, "While the events of 2008 severely tested the financial services industry and led to major losses at many well-known companies, ULLICO's 'Build with Vision' strategy again resulted in growth in core revenue, growth in operating profit, and growth in embedded shareholder value. I am proud that this strategy of financial and risk management discipline, best-practice corporate governance and transparency, and a passionate focus on building a diversified portfolio of financial solutions tailored to the specific needs of our core Labor markets continue to be validated as the right approach for the Company, our shareholders, and our customers."
Commenting on the results Chairman Joseph Hunt said, "I am very pleased with ULLICO's results this year. By maintaining our dedication and focus on our core Labor markets, we have continued to grow and succeed in the most difficult of economic climates. These results and our continued momentum demonstrate organized Labor's commitment to building ULLICO in the best way to serve Labor, its employers, and the working men and women of North America."
Quarterly Financial Results at a Glance
(In Millions) 4th Quarter
2008 4th Quarter
Total Income $71.2 $78.0 ($6.8)
Total Benefits & Expenses 70.1 76.9 6.8
Pre-Tax Operating Income before Non-Recurring Transactions
- Tax Expense/(Benefit) (0.2) (7.7) (7.5)
Net Income before Non-Recurring Transactions
Non-Recurring Transactions (2.4) (0.4) (1.8)
Net Income/(Loss) ($1.1) $8.4 ($9.3)
2008 Year-To-Date Results at a Glance
(In Millions) As of December 31, 2008 YTD As of December 31, 2007 YTD Variance
Total Income $284.7 $304.3 ($19.6)
Total Benefits & Expenses 271.3 292.3 21.0
Pre-Tax Operating Income before Non-Recurring Transactions $13.4 $12.0 $1.4
Tax Expense/(Benefit) 3.6 (8.6) (12.2)
Net Income before Non-Recurring Transactions $9.8 $20.6 ($10.8)
Non-Recurring Transactions (3.7)
Net Income/(Loss) $6.1 ($2.4) $8.5
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. (formerly Trust Fund Advisors, Inc.), ULLICO Casualty Company (formerly Ulico Casualty Company), and ULLICO Casualty Group (formerly Ulico Insurance Group). The ULLICO Inc. family of companies offers insurance and investment products and services. For additional information, visit http://www.ullico.com
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.