The Phoenix Companies, Inc. Fourth Quarter and Full Year 2006 Earnings.HARTFORD Hartford, city (1990 pop. 139,739), state capital, Hartford co., central Conn., on the west bank of the Connecticut River; settled as Newtown 1635–36 on the site of a Dutch trading post (1633; abandoned 1654), inc. 1784. , Conn. -- The Phoenix Companies, Inc. (NYSE NYSE See: New York Stock Exchange : PNX PNX can stand for:
FOURTH QUARTER 2006 HIGHLIGHTS * Net income was $44.3 million, or $0.38 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared with $50.2 million, or $0.48 per diluted share, in the fourth quarter of 2005. * Total segment income was $36.3 million, or $0.31 per diluted share, a 32 percent rise from $27.6 million, or $0.27 per diluted share, in the fourth quarter of 2005. * Life and Annuity annuity: see insurance. annuity Payment made at a fixed interval. A common example is the payment received by retirees from their pension plan. There are two main classes of annuities: annuities certain and contingent annuities. pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta segment income rose 69 percent to $75.6 million, from $44.8 million in the fourth quarter of 2005. * Asset Management earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
Total segment income, total segment income per share, pre-tax segment income, and EBITDA, among other measures presented below, are non-GAAP financial measures that are presented in a manner consistent with the way management evaluates operating results, and which management believes is useful to investors. An explanation regarding the company's use of non-GAAP financial measures and a reconciliation of non-GAAP financial measures used by the company to GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). measures is provided in the tables at the end of this release. FOURTH QUARTER 2006 RESULTS [TABLE OMITTED] "The underlying strengths of our business drove sustained progress in the fourth quarter, contributing to a 32 percent increase in total segment income, led by our life business," said Dona D. Young, chairman, president and chief executive officer. "We made enormous strides during the course of the year, enabling us to mitigate mit·i·gate v. To moderate in force or intensity. mit  i·ga tion n. the impact of the first quarter asset management impairment Impairment1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charge. The position in which we find ourselves at the conclusion of 2006 is most encouraging - fund performance significantly improved, new distribution relationships established, and strong sales growth in life, annuity and mutual funds. "Specifically, Life and Annuity segment income grew substantially in 2006, reaching its highest level in our history as a public company. The business benefited from strong persistency and mortality in life insurance, double-digit sales growth and sound expense management. Life sales had a record year, reflecting growth at key distribution partners and enhancements to our core products, and annuity sales improved throughout the year thanks to our refocused distribution strategy and a broader product portfolio. We expect our recently announced relationship with National Life Group to further accelerate sales growth in annuities," Mrs. Young said. "Asset Management earnings, excluding the first quarter impairment charge, improved as expense reductions offset revenue declines. As a result, the business showed moderate growth in EBITDA for the year," she said. "Our mutual fund sales strategy produced increasingly higher sales quarters and a record-breaking year, and assets under management Assets Under Management (AUM) is a term used by financial services companies in the mutual fund and money management or investment management business to gauge how much money they are managing. grew 20 percent through a combination of fund acquisitions, inflows and market performance. With 68 percent of assets under management outperforming their five-year benchmarks, we are increasingly optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about the outlook for net flows in 2007." FULL YEAR 2006 HIGHLIGHTS * Net income was $99.9 million, or $0.88 per diluted share, in 2006, compared with $108.4 million, or $1.06 per diluted share, in 2005. * Total segment income was $88.2 million, or $0.78 per diluted share, in 2006, compared with $101.7 million, or $0.99 per diluted share, in 2005. * Life and Annuity pre-tax segment income rose 11 percent to $213.7 million in 2006, from $192.5 million in 2005. * Asset Management EBITDA rose 5 percent to $36.9 million in 2006, from $35.0 million in 2005. The segment recorded a pre-tax segment loss of $28.6 million in 2006, compared with a $10.5 million loss in the prior year. FULL YEAR 2006 RESULTS [TABLE OMITTED] SUMMARY OF SEGMENT RESULTS Phoenix has three segments, "Life and Annuity," "Asset Management" and "Corporate and Other." The Corporate and Other segment includes unallocated capital, interest expense and other expenses, and certain businesses not of sufficient scale to report independently. In prior years, the Years, The the seven decades of Eleanor Pargiter’s life. [Br. Lit.: Benét, 1109] See : Time company maintained a Venture Capital segment. In the fourth quarter of 2005, the company entered into an agreement to sell approximately three-quarters of the assets in that segment and, as a result, eliminated the segment, effective January 1, 2006. Earnings from the remaining assets have been allocated to the Life and Annuity segment. Life and Annuity [TABLE OMITTED] * Life and Annuity pre-tax segment income for the quarter and the year benefited from stable persistency, favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. mortality, higher sales in both life and annuity, lower expenses, and favorable equity markets. The current quarter result includes a net $8.2 million pre-tax benefit resulting from a deferred acquisition cost (DAC See D/A converter and discretionary access control. DAC - Digital to Analog Converter ) unlocking and other related adjustments. * Total life insurance sales (annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. and single premium) rose 16 percent from the fourth quarter of 2005. Annualized premium of $77.2 million rose 19 percent from the prior year period. For the full year 2006, total life sales grew 71 percent, and annualized premium grew 89 percent to $258.9 million. * Annuity deposits rose 45 percent from the fourth quarter of 2005 and 24 percent in the full year. Excluding discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: products, deposits rose 49 percent quarter-over-quarter and 33 percent year-over-year. * Life insurance sales and annuity deposits exclude private placement deposits. Total private placement life and annuity deposits were $947.1 million in the fourth quarter of 2006, bringing full year 2006 private placement deposits to $1.1 billion, compared with $820.3 million in the prior year. Deposits from private placement sales can vary widely because they involve fewer, but significantly larger, cases. Private placement assets under management at December 31, 2006 exceeded $4 billion. Asset Management [TABLE OMITTED] * The Asset Management pre-tax segment loss in the fourth quarter included $3.2 million in severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when and other unusual employment-related expenses and a $1.8 million adjustment related to new mutual fund distribution and administration contracts. The full year segment loss was driven by a $32.5 million ($20.1 million, after tax) identified intangible asset Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. impairment in the first quarter. * EBITDA rose 5 percent for the full year 2006, despite lower investment management fees, reflecting disciplined expense management and the elimination of minority interest charges. EBITDA declined 38 percent quarter-over-quarter but rose 13 percent excluding the $5.0 million of items identified above. * Net flows improved significantly both quarter-over-quarter and year-over-year as redemptions subsided. Inflows were driven by mutual fund sales, which grew 86 percent in the fourth quarter and 26 percent in 2006, as well as structured finance products. * Assets under management (AUM Aum (ä·ōōmˑ), n.pr 1. in Ayurveda, the subtle, noiseless cosmic vibration in which consciousness existed in the beginning, before the elements appeared. ) increased in the quarter due to positive market performance. The 20 percent year-over-year increase in AUM also reflects the adoption of the Insight Funds in the second quarter. * Relative investment performance improved significantly over the prior year, with 68 percent of AUM out-performing their respective benchmarks for the five-year period ended December 31, 2006, compared with 60 percent a year ago. In addition, 68 and 66 percent of AUM out-performed their one- and three-year benchmarks, compared with 43 and 39 percent, respectively, in the prior year. * Pre-tax operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: , before intangible amortization, was 10.3 percent for the quarter, compared with 17.1 percent in the fourth quarter of 2005, and 16.4 percent for full year 2006, compared with 16.5 percent in 2005. Corporate and Other Segment The Corporate and Other segment had a pre-tax segment loss of $14.7 million in the fourth quarter of 2006, compared with an $18.2 million pre-tax segment loss in the fourth quarter of 2005. For the full year, the segment had a pre-tax segment loss of $60.3 million in 2006, compared with a pre-tax segment loss of $69.6 in 2005. The quarterly and full year results reflect higher investment earnings and lower expenses. YEAR END 2006 STATUTORY RESULTS FOR PHOENIX LIFE INSURANCE COMPANY * Statutory surplus and asset valuation reserve ended the year at $1.1 billion, 2 percent ahead of 2005. * Risk-based capital ended the year well over 400 percent. * Full-year statutory net gain from operations was $131.6 million, compared with $106.2 million in 2005. NET REALIZED INVESTMENT GAINS Fourth quarter of 2006 net realized investment gains, after tax, were $9.5 million, compared with $23.9 million, after tax, in the fourth quarter of 2005. The 2005 quarter included a realized gain Realized Gain A gain resulting from selling an asset at a price higher than the original purchase price. Notes: There may be tax consequences for a realized profit. of $35.1 million from the delivery of shares of Hilb Rogal Hobbs (HRH HRH abbr. Her (or His) Royal Highness HRH Her (or His) Royal Highness HRH abbr (= His (or Her) Royal Highness) → S.A.R. ) according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the terms of stock purchase contracts Phoenix issued in 2002. The results for the fourth quarter of 2006 include net impairments of $0.5 million after offsets for taxes, DAC, and the policyholder Policyholder An individual who owns an insurance policy. dividend obligation, and gross impairments of $3.0 million. The fourth quarter of 2005 had net impairments of $0.9 million and gross impairments of $8.5 million. For the full year 2006, net realized investment gains, after tax, were $21.8 million, compared with $18.5 million in 2005. The 2006 results include net impairments of $1.6 million after offsets for taxes, DAC and the policyholder dividend obligation, and gross impairments of $7.9 million. The 2005 results include net impairments of $2.9 million after offsets for taxes, DAC and the policyholder dividend obligation, and gross impairments of $34.3 million. OTHER ITEMS * On January 18, 2007, Phoenix and National Life Group announced a strategic alliance in which Phoenix and Equity Services, Inc., a member of the National Life Group, will co-market Phoenix's variable annuity Variable Annuity An insurance contract in which, at the end of the accumulation stage, the insurance company guarantees a minimum payment. The remaining income payments can vary depending on the performance of the managed portfolio. products through Equity Services' registered representatives. The alliance also includes plans to add National Life Group's affiliated Sentinel Variable Product Funds as investment options to many of Phoenix's variable annuity and life insurance products later in the year. * On January 30, 2007, Phoenix and State Farm reached an agreement to extend the existing distribution agreement by an additional five years, from 2011 to 2016. CONFERENCE CALL The Phoenix Companies, Inc. will host a conference call today at 11 a.m. Eastern time to discuss Phoenix's fourth quarter and full year 2006 financial results. The conference call will be broadcast live over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at www.phoenixwm.com in the Investor Relations Investor relations The process by which the corporation communicates with its investors. section. The call can also be accessed by telephone at 973-321-1020 (conference ID #8270260). A replay of the call will be available through February 15, 2007 by telephone at 973-341-3080 (pin code #8270260) and in the Investor Relations section of Phoenix's Web site. ABOUT PHOENIX With roots dating to 1851, The Phoenix Companies, Inc. (NYSE: PNX) helps individuals and institutions solve their often highly complex personal financial and business planning needs through its broad array of life insurance, annuities and investments. In 2006, Phoenix had annual revenues of $2.6 billion and total assets of $29.0 billion. More detailed financial information can be found in Phoenix's financial supplement for the fourth quarter of 2006, which is available on Phoenix's Web site, www.phoenixwm.com in the Investor Relations section. FORWARD-LOOKING STATEMENTS forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This presentation may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 which, by their nature, are subject to risks and uncertainties. The company intends these forward-looking statements to be covered by the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the federal securities laws relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc forward-looking statements. These include statements relating to trends in, or representing management's beliefs about, the company's future strategies, operations and financial results, as well as other statements including words such as "anticipate", "believe," "plan," "estimate," "expect," "intend," "may," "should" and other similar expressions. Forward-looking statements are made based upon management's current expectations and beliefs concerning trends and future developments and their potential effects on the company. They are not guarantees of future performance. Actual results may differ materially from those suggested by forward-looking statements as a result of risks and uncertainties which include, among others: (i) changes in general economic conditions, including changes in interest and currency exchange rates and the performance of financial markets; (ii) heightened competition, including with respect to pricing, entry of new competitors and the development of new products and services by new and existing competitors; (iii) the company's primary reliance, as a holding company, on dividends and other payments from its subsidiaries to meet debt payment obligations, particularly since the company's insurance subsidiaries' ability to pay dividends is subject to regulatory restrictions; (iv) regulatory, accounting or tax developments that may affect the company or the cost of, or demand for, its products or services; (v) downgrades in the financial strength ratings of the company's subsidiaries or in the company's credit ratings; (vi) discrepancies between actual claims or investment experience and assumptions used in setting prices for the products of insurance subsidiaries and establishing the liabilities of such subsidiaries for future policy benefits and claims relating to such products; (vii) movements in the equity markets that affect the company's investment results, including those from the fees the company earns from assets under management and the demand for the company's variable products; (viii) the relative success and timing of implementation of the company's strategies; (ix) the effects of closing the company's retail brokerage operations; and (x) other risks and uncertainties described in any of the company's filings with the Securities and Exchange Commission. The company undertakes no obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events or otherwise. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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