Delaware
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001-16517
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06-1599088
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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One American Row, Hartford, CT
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06102 -5056
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(Address of Principal Executive Offices)
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(Zip Code)
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NOT APPLICABLE
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(Former name or former address, if changed since last report)
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o
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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o
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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o
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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o
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Exhibit No. | Description | |
99.1 | News Release of The Phoenix Companies, Inc. dated August 10, 2015. |
The Phoenix Companies, Inc.
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Date: August 10, 2015
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By:
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/s/ Bonnie J. Malley
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Name: Bonnie J. Malley
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Title: Executive Vice President, Chief Financial Officer
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N E W S R E L E A SE
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![]() |
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For Immediate Release
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One American Row
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PO Box 5056
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Hartford CT 06102-5056
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www.phoenixwm.com
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Contacts:
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Media Relations
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Investor Relations
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Alice S. Ericson, 860-403-5946 | Naomi Baline Kleinman, 860-403-7100 |
alice.ericson@phoenixwm.com | pnx.ir@phoenixwm.com |
● |
Net Loss Attributable to The Phoenix Companies, Inc. of $22.6 million
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● |
Holding Company Cash and Non-affiliated Securities at $64.5 million
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● |
Phoenix Life Insurance Company (“PLIC”) Statutory Surplus and AVR grew to $817.3 million (preliminary)
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● | Annuity deposits of $221.4 million; Saybrus Partners EBITDA of $2.7 million | |
● | Investor Conference Call scheduled for Tuesday, Aug. 11 at 11 a.m. EDT |
● | Unfavorable mortality in the open block, primarily in the universal life (“UL”) product line, that contributed approximately $35 million to the loss. | |
● | External financial reporting expenses of $13.4 million, including $4.1 million relating to remediation, $5.0 million in audit expenses, and $4.3 million in other external financial reporting support. | |
● | Positive impact of higher interest rates of approximately $18 million. |
($ in millions, except per share data)
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For the Qtr Ended
June 30,
2015
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For the Qtr Ended
Mar. 31,
2015
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For the Qtr Ended
June 30,
2014
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|||||||||
Net loss
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$ | (22.4 | ) | $ | (73.0 | ) | (22.4 | ) | ||||
Less: Net income (loss) attributable to noncontrolling interests
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0.2 | 1.0 | -- | |||||||||
Net loss attributable to The Phoenix Companies, Inc.
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(22.6 | ) | $ | (74.0 | ) | (22.4 | ) | |||||
EARNINGS PER SHARE SUMMARY:
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||||||||||||
Net loss attributable to The Phoenix Companies, Inc.
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||||||||||||
Basic
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$ | (3.93 | ) | $ | (12.87 | ) | (3.90 | ) | ||||
Diluted
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$ | (3.93 | ) | $ | (12.87 | ) | (3.90 | ) | ||||
Weighted average shares outstanding (in thousands)
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||||||||||||
Basic
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5,751 | 5,751 | 5,749 | |||||||||
Diluted
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5,751 | 5,751 | 5,749 |
● |
Net other-than-temporary fixed income impairment losses for the second quarter 2015 remained well below long-term averages.
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($ in millions)
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For the Qtr Ended
June 30,
2015
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For the Qtr Ended
Mar. 31,
2015
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For the Qtr Ended
June 30,
2014
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|||||||||
Total net realized gain (losses)
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$ | (2.1 | ) | $ | (16.1 | ) | $ | 4.2 | ||||
Net other-than-temporary impairment losses recognized in earnings
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$ | (1.1 | ) | $ | (8.4 | ) | $ | (1.0 | ) | |||
Derivative losses
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$ | (7.5 | ) | $ | (12.6 | ) | $ | (2.3 | ) |
● |
Net unrealized gains on available-for-sale debt securities decreased by $210.2 million to $491.1 million at June 30, 2015 from $701.3 million at Dec. 31, 2014, due primarily to higher interest rates. After actuarial offsets and taxes, accumulated other comprehensive income (“AOCI”) declined by $30.8 million from $234.4 million at Dec. 31, 2014.
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● |
At June 30, 2015, holding company cash and non-affiliated securities were $64.5 million, compared with $78.3 million at Dec. 31, 2014. In addition to interest payments and financial reporting expenses, the holding company made a planned tax payment of $10 million in the second quarter of 2015. These payments and expenses were partially offset by dividends paid by PLIC to Phoenix. PLIC’s 2015 dividend capacity is $59.9 million, and it paid $30.0 million to the holding company in the first half of 2015 and the remainder in July 2015. Phoenix expects holding company liquidity to remain above its $50.0 million internal threshold.
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● |
Total stockholders’ equity attributable to The Phoenix Companies, Inc. was $199.2 million at June 30, 2015, compared with $326.6 million at Dec. 31, 2014. The decline was due primarily to net losses and the effect of higher interest rates on AOCI.
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● |
Liquidity in the life companies remained strong with cash and cash equivalents, short-term investments, treasuries and agency mortgage-backed securities totaling $1.6 billion, or 12.0% of the fixed income portfolio, at June 30, 2015, compared with $1.7 billion, or 12.7% of the fixed income portfolio, at Dec. 31, 2014.
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● | The quality of the investment portfolio remained strong during the second quarter of 2015 with the proportion of below investment grade bonds as a percentage of total available-for-sale debt securities at 7.2% at June 30, 2015, within Phoenix’s target range of 6% – 10%, compared with 6.7% at Dec. 31, 2014. | |
● | Phoenix has no debt maturities until 2032. |
($ in millions)
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June 30,
2015
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Dec. 31,
2014
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Change
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|||||||||
Total Assets
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$ | 21,595.8 | $ | 21,745.9 | $ | (150.1 | ) | |||||
Total Liabilities
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$ | 21,380.7 | $ | 21,399.3 | $ | (18.6 | ) | |||||
Indebtedness
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$ | 378.9 | $ | 378.9 | $ | -- | ||||||
Accumulated Other Comprehensive Income (Loss)
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$ | (265.2 | ) | $ | (234.4 | ) | $ | (30.8 | ) | |||
Total Stockholders’ Equity Attributable to The Phoenix Companies, Inc.
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$ | 199.2 | $ | 326.6 | $ | (127.4 | ) |
● |
Annuity deposits were $221.4 million, primarily in fixed indexed annuities.
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● |
Life insurance annualized premium was $4.8 million, driven primarily by term insurance sales.
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● |
Total annualized life insurance surrender rate was 3.8%, consistent with the second quarter of 2014 and first quarter of 2015.
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Annualized annuity surrender rate was 11.1%, improved from the second quarter of 2014 and consistent with the first quarter of 2015.
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Phoenix’s distribution company, Saybrus Partners', revenue grew 16% and EBITDA grew 35% from the second quarter of 2014.
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● | Mortality was unfavorable compared with expectations, with unfavorable open block experience driven by the UL product line. Closed block experience was favorable compared with expectations. | |
● | External financial reporting expenses of $13.4 million were down from $19.2 million for the first quarter of 2015 and $24.4 million for the second quarter of 2014. Over the past five quarters, financial reporting expenses have included restatement, SEC reporting catch up, remediation and audit expenses. |
($ in millions, unless noted otherwise)
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As of or for
the Qtr Ended
June 30,
2015
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As of or for
the Qtr Ended
Mar. 31,
2015
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As of or for
the Qtr Ended
June 30,
2014
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Annuity deposits
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$ | 221.4 | $ | 189.4 | $ | 201.0 | ||||||
Net annuity flows (deposits less surrenders)
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$ | 61.2 | $ | 30.0 | $ | 30.6 | ||||||
Annuity funds under management ($ in billions)
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$ | 5.8 | $ | 5.7 | $ | 5.6 | ||||||
Life insurance annualized premium
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$ | 4.8 | $ | 4.0 | $ | 0.7 | ||||||
Total individual life surrenders (annualized)
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3.8 | % | 3.9 | % | $ | 3.9 | % | |||||
Total closed block life surrenders (annualized)
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3.7 | % | 3.4 | % | 3.6 | % | ||||||
Total annuity surrenders (annualized)
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11.1 | % | 11.2 | % | 12.2 | % | ||||||
Holding company cash and non-affiliated securities
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$ | 64.5 | $ | 83.1 | $ | 154.4 | ||||||
Saybrus Partners EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization)
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$ | 2.7 | $ | 0.8 | $ | 2.0 | ||||||
Saybrus Partners revenue
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$ | 11.1 | $ | 9.0 | $ | 9.6 | ||||||
External financial reporting expenses1
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$ | 13.4 | $ | 19.2 | $ | 24.4 |
● |
PLIC reported a statutory net gain from operations of $23.9 million and statutory net income of $22.3 million for the quarter ended June 30, 2015, compared with a statutory net loss from operations of $4.5 million and a statutory net loss of $4.1 million for the quarter ended June 30, 2014.
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PLIC’s statutory surplus and asset valuation reserve was $817.3 million at June 30, 2015, compared with $590.4 million at March 31, 2015. The $226.9 million increase reflects the $191.6 million benefit from the intercompany reinsurance treaty between PLIC and PHL Variable, partially offset by approximately $22 million for adverse mortality, and $15.0 million in dividends PLIC paid to the parent holding company. PLIC noted that statutory surplus increased $65.1 million from $752.2 million at Dec. 31, 2014, driven primarily by the intercompany reinsurance treaty.
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PLIC’s estimated risk-based capital (“RBC”) ratio was 356% at June 30, 2015, compared with 288% at March 31, 2015 and 334% at Dec. 31, 2014.
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Three Months Ended
June 30,
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Six Months Ended
June 30,
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($ in millions, except per share data)
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2015
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2014
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2015
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2014
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REVENUES:
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Premiums
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$ | 86.6 | $ | 83.2 | $ | 165.0 | $ | 162.8 | ||||||||
Fee income
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135.2 | 134.2 | 269.0 | 269.0 | ||||||||||||
Net investment income
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202.3 | 191.5 | 411.6 | 403.0 | ||||||||||||
Net realized gains (losses):
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Total other-than-temporary impairment (“OTTI”) losses
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(0.9 | ) | (1.0 | ) | (7.9 | ) | (1.0 | ) | ||||||||
Portion of OTTI losses recognized in other comprehensive income (“OCI”)
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(0.2 | ) | — | (1.6 | ) | (0.2 | ) | |||||||||
Net OTTI losses recognized in earnings
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(1.1 | ) | (1.0 | (9.5 | ) | (1.2 | ) | |||||||||
Net realized gains (losses), excluding OTTI losses
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(1.0 | ) | 5.2 | (8.7 | ) | (21.5 | ) | |||||||||
Net realized gains (losses)
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(2.1 | ) | 4.2 | (18.2 | ) | (22.7 | ) | |||||||||
Total revenues
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422.0 | 413.1 | 827.4 | 812.1 | ||||||||||||
BENEFITS AND EXPENSES:
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Policy benefits
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287.3 | 301.3 | 579.3 | 531.6 | ||||||||||||
Policyholder dividends
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55.0 | 42.6 | 95.1 | 114.8 | ||||||||||||
Policy acquisition cost amortization
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24.6 | 19.1 | 41.7 | 43.7 | ||||||||||||
Interest expense on indebtedness
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7.1 | 7.1 | 14.2 | 14.2 | ||||||||||||
Other operating expenses
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82.8 | 84.4 | 206.6 | 181.6 | ||||||||||||
Total benefits and expenses
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456.8 | 454.5 | 936.9 | 885.9 | ||||||||||||
Income (loss) from continuing operations before income taxes
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(34.8 | ) | (41.4 | ) | (109.5 | ) | (73.8 | ) | ||||||||
Income tax expense (benefit)
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(13.0 | ) | (19.6 | ) | (15.2 | ) | (24.4 | ) | ||||||||
Income (loss) from continuing operations
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(21.8 | ) | (21.8 | ) | (94.3 | ) | (49.4 | ) | ||||||||
Income (loss) from discontinued operations, net of income taxes
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(0.6 | (0.6 | ) | (1.1 | ) | (1.2 | ) | |||||||||
Net income (loss)
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(22.4 | ) | (22.4 | ) | (95.4 | ) | (50.6 | ) | ||||||||
Less: Net income (loss) attributable to noncontrolling interests
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0.2 | — | 1.2 | (0.1 | ) | |||||||||||
Net income (loss) attributable to The Phoenix Companies, Inc.
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$ | (22.6 | ) | $ | (22.4 | ) | $ | (96.6 | ) | $ | (50.5 | ) |
(Continued from previous page)
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Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
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($ in millions, except per share data)
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2015
|
2014
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2015
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2014
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COMPREHENSIVE INCOME (LOSS):
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Net income (loss) attributable to The Phoenix Companies, Inc.
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$ | (22.6 | ) | $ | (22.4 | ) | $ | (96.6 | ) | $ | (50.5 | ) | ||||
Net income (loss) attributable to noncontrolling interests
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0.2 | — | 1.2 | (0.1 | ) | |||||||||||
Net income (loss)
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(22.4 | ) | (22.4 | ) | (95.4 | ) | (50.6 | ) | ||||||||
Other comprehensive income (loss) before income taxes:
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Unrealized investment gains (losses), net of related offsets
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(54.7 | ) | 51.9 | (51.3 | ) | 75.6 | ||||||||||
Net pension liability adjustment
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1.7 | 1.7 | 3.1 | 3.4 | ||||||||||||
Other comprehensive income (loss) before income taxes
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(53.0 | ) | 53.6 | (48.2 | ) | 79.0 | ||||||||||
Less: Income tax expense (benefit) related to:
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Unrealized investment gains (losses), net of related offsets
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(24.4 | ) | 33.4 | (17.4 | ) | 66.1 | ||||||||||
Net pension liability adjustment
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— | — | — | — | ||||||||||||
Total income tax expense (benefit)
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(24.4 | ) | 33.4 | (17.4 | ) | 66.1 | ||||||||||
Other comprehensive income (loss), net of income taxes
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(28.6 | ) | 20.2 | (30.8 | ) | 12.9 | ||||||||||
Comprehensive income (loss)
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(51.0 | ) | (2.2 | ) | (126.2 | ) | (37.7 | ) | ||||||||
Less: Comprehensive income (loss) attributable to noncontrolling interests
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0.2 | — | 1.2 | (0.1 | ) | |||||||||||
Comprehensive income (loss) attributable to The Phoenix Companies, Inc.
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$ | (51.2 | ) | $ | (2.2 | ) | $ | (127.4 | ) | $ | (37.6 | ) | ||||
EARNINGS (LOSS) PER SHARE:
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Income (loss) from continuing operations – basic
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$ | (3.83 | ) | $ | (3.80 | ) | $ | (16.61 | ) | $ | (8.58 | ) | ||||
Income (loss) from continuing operations – diluted
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$ | (3.83 | ) | $ | (3.80 | ) | $ | (16.61 | ) | $ | (8.58 | ) | ||||
Income (loss) from discontinued operations – basic
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$ | (0.10 | ) | $ | (0.10 | ) | $ | (0.19 | ) | $ | (0.21 | ) | ||||
Income (loss) from discontinued operations – diluted
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$ | (0.10 | ) | $ | (0.10 | ) | $ | (0.19 | ) | $ | (0.21 | ) | ||||
Net income (loss) attributable to The Phoenix Companies, Inc. – basic
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$ | (3.93 | ) | $ | (3.90 | ) | $ | (16.80 | ) | $ | (8.79 | ) | ||||
Net income (loss) attributable to The Phoenix Companies, Inc. – diluted
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$ | (3.93 | ) | $ | (3.90 | ) | $ | (16.80 | ) | $ | (8.79 | ) | ||||
Basic weighted-average common shares outstanding (in thousands)
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5,751 | 5,749 | 5,751 | 5,745 | ||||||||||||
Diluted weighted-average common shares outstanding (in thousands)
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5,751 | 5,749 | 5,751 | 5,745 |
($ in millions, except share data)
|
June 30,
2015
|
December 31,
2014
|
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ASSETS:
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Available-for-sale debt securities, at fair value (cost of $12,056.0 and $11,978.0)
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$ | 12,547.1 | $ | 12,679.3 | ||||
Available-for-sale equity securities, at fair value (cost of $147.2 and $156.0)
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168.3 | 179.5 | ||||||
Short-term investments
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174.6 | 149.7 | ||||||
Limited partnerships and other investments
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543.7 | 542.8 | ||||||
Policy loans, at unpaid principal balances
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2,360.7 | 2,352.1 | ||||||
Derivative instruments
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104.1 | 161.3 | ||||||
Fair value investments
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213.9 | 235.4 | ||||||
Total investments
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16,112.4 | 16,300.1 | ||||||
Cash and cash equivalents
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557.3 | 450.0 | ||||||
Accrued investment income
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194.2 | 176.7 | ||||||
Reinsurance recoverable
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550.0 | 559.1 | ||||||
Deferred policy acquisition costs
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893.6 | 848.6 | ||||||
Deferred income taxes, net
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51.6 | 34.2 | ||||||
Other assets
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336.6 | 311.3 | ||||||
Discontinued operations assets
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44.9 | 45.2 | ||||||
Separate account assets
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2,855.2 | 3,020.7 | ||||||
Total assets
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$ | 21,595.8 | $ | 21,745.9 | ||||
LIABILITIES:
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Policy liabilities and accruals
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$ | 12,387.1 | $ | 12,417.6 | ||||
Policyholder deposit funds
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4,220.8 | 3,955.0 | ||||||
Dividend obligations
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827.2 | 916.8 | ||||||
Indebtedness
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378.9 | 378.9 | ||||||
Pension and post-employment liabilities
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374.1 | 380.0 | ||||||
Other liabilities
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297.5 | 289.8 | ||||||
Discontinued operations liabilities
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39.9 | 40.5 | ||||||
Separate account liabilities
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2,855.2 | 3,020.7 | ||||||
Total liabilities
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21,380.7 | 21,399.3 | ||||||
CONTINGENCIES AND COMMITMENTS
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STOCKHOLDERS’ EQUITY:
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Common stock, $.01 par value: 5.8 million and 5.8 million shares outstanding
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0.1 | 0.1 | ||||||
Additional paid-in capital
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2,632.8 | 2,632.8 | ||||||
Accumulated other comprehensive income (loss)
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(265.2 | ) | (234.4 | ) | ||||
Retained earnings (accumulated deficit)
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(1,985.6 | ) | (1,889.0 | ) | ||||
Treasury stock, at cost: 0.7 million and 0.7 million shares
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(182.9 | ) | (182.9 | ) | ||||
Total The Phoenix Companies, Inc. stockholders’ equity
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199.2 | 326.6 | ||||||
Noncontrolling interests
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15.9 | 20.0 | ||||||
Total stockholders’ equity
|
215.1 | 346.6 | ||||||
Total liabilities and stockholders’ equity
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$ | 21,595.8 | $ | 21,745.9 |