Update: Phoenix Cos. Posts Fourth-Quarter Loss on Unfavorable Mortality in Universal Life
March 17, 2016 by Dennis Gorski, managing editor-online, BestWeek: Dennis.Gorski@ambest.com
HARTFORD, Conn. – (Clarifies terms in sixth paragraph) Unfavorable fourth-quarter mortality, impairment losses and external financial reporting expenses resulted in Phoenix Cos. Inc. posting a loss and contributed to a full-year deficit as well, the company said in its earnings report.
For the full year, Phoenix narrowed its loss to $133.7 million from a loss of $213.2 million loss in 2014. The 2015 loss resulted from persistent unfavorable mortality, particularly in universal life; external financial reporting expenses of $51.9 million; and a $48.5 million charge to settle class-action litigation over cost of living rate adjustments, among other causes, the company said. The loss came despite a $34.3 million tax benefit in 2015, Phoenix noted.
The net loss for the quarter amounted to $21.4 million, an improvement over the previous year’s loss of $140.3 million. Total quarterly revenue dipped to $430.3 million from last year’s $440.4 million, the company said.
Premium rose to $98 million from $91.2 million, but fee income of $139.5 million stayed flat from a year ago and investment income dropped to $195.8 million from $223 million, according to the earnings report.
Phoenix will go private upon closing its acquisition by Nassau Reinsurance Group Holdings in the second quarter of this year. The companies are awaiting regulatory approvals, particularly from New York and Connecticut, according to Phoenix.
The $217.2 million transaction received 98% shareholder approval just before Christmas (Best’s News Service, Dec. 21, 2015). All Phoenix stockholders who own shares when the deal closes will receive a cash payment of $37.50 per share.
Nassau will also inject $100 million in new equity capital into Phoenix to stabilize Phoenix’s balance sheet and provide growth capital, according to a Sept. 29, 2015 letter to shareholders from Phoenix’s president, James Wehr.
Due to the impending close, Phoenix management did not hold a conference call with investors.
New York-based Nassau Re, which formed last year, is a privately held group whose mission is “to acquire and operate onshore and offshore platforms with long tail liabilities focused on the life, annuity and long-term care sectors,” according to its website.
Phoenix Inc.’s operating units have a current Best’s Financial Strength Rating of B (Fair).
In morning trading March 16, shares of Phoenix Cos. Inc. (NYSE: PNX) were $36.05, down 2.92% from their previous close.
