The Phoenix Companies, Inc. Reports Fourth Quarter and Full-Year 2005 Earnings; Affirms Guidance for 2006.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 2005 HIGHLIGHTS --Net income was $50.2 million, or $0.48 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, a 4 percent rise from $48.3 million, or $0.48 per share, in the 2004 fourth quarter. --Total segment income was $27.6 million, or $0.27 per diluted share, a 6 percent rise from $26.0 million, or $0.26 per share, in the 2004 fourth quarter. --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 was $44.8 million, a 6 percent rise from $42.3 million in the 2004 fourth quarter. --Asset Management reported 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 and EBITDA are non-GAAP financial measures that are presented in a manner consistent with the way management evaluates operating results. A reconciliation of non-GAAP financial measures to GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). is provided in the tables at the end of this release.
FOURTH QUARTER 2005 RESULTS
Earnings Summary Fourth Fourth
(millions except per share data) Quarter Quarter
2005 2004 Change
--------- --------- ---------
Life and Annuity Segment 44.8 42.3 2.5
Asset Management Segment 1.2 (0.1) 1.3
--------- --------- ---------
Operating Segment Income 46.0 42.2 3.8
Venture Capital Segment 1.6 7.2 (5.6)
Corporate and Other Segment (18.2) (14.4) (3.8)
--------- --------- ---------
Total Segment Income, Before Income Taxes 29.4 35.0 (5.6)
Applicable Income Taxes 1.8 9.0 (7.2)
--------- --------- ---------
Total Segment Income 27.6 26.0 1.6
Realized Investment Gains , Net 23.9 51.4 (27.5)
Restructuring Costs and Other
Nonrecurring Items, Net (1.3) (29.1) 27.8
--------- --------- ---------
Net Income 50.2 48.3 1.9
========= ========= =========
Earnings Per Share Summary
Total Segment Income Per Share
Basic .29 .27 .02
Diluted .27 .26 .01
Net Income Per Share
Basic .53 .51 .02
Diluted .48 .48 --
Weighted Average Shares Outstanding
Basic 95.1 94.8 .3
Diluted 103.5 100.3 3.2
"The fourth quarter was pivotal for Phoenix, because it marked the end of the refocusing Noun 1. refocusing - focusing again focalisation, focalization, focusing - the act of bringing into focus phase of our turnaround Turnaround A situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. and the start of our growth phase. We concluded the venture capital sale and Asset Management restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). , while our growth strategy took hold with sales improvement in both life insurance and asset management. Total segment income was up 6 percent, capping a year of significant improvement in earnings and return on equity," said Dona Do·ña n. Used as a courtesy title before the name of a woman in a Spanish-speaking area. [Spanish, from Latin domina, feminine of dominus, lord; see don1. D. Young, chairman, president and chief executive officer. "Life and Annuity earnings grew substantially in the year, with continued strong fundamentals in both lines. Total life sales doubled in the fourth quarter and grew by 33 percent for the year -underscoring the strength of our franchise at the high end of the market. Annuity sales disappointed in 2005, but, with a much stronger product line-up line-up Noun 1. people or things assembled for a particular purpose: Christmas TV line-up 2. , we expect significant improvement in 2006. "We completed the restructuring of our Asset Management business in 2005, which puts us in a stronger position for earnings growth in this segment. While overall flows were still negative, sales successes throughout the year bode bode 1 v. bod·ed, bod·ing, bodes v.tr. 1. To be an omen of: heavy seas that boded trouble for small craft. 2. well for the future. In 2005, mutual fund sales grew by 21 percent, and, in institutional asset management, we won 32 new mandates mandates, system of trusteeships established by Article 22 of the Covenant of the League of Nations for the administration of former Turkish territories and of former German colonies. and closed on a $1 billion collateralized debt obligation Collateralized Debt Obligation (CDO) A general inclusive term which covers Collateralized Bond Obligations, Collateralized Loan Obligations, and Collateralized Mortgage Obligations, ," Mrs. Young said. "Looking at 2005 in the context of our turnaround, we progressed from a $272 million net loss and a negative segment ROE A fictitious surname used for an unknown or anonymous person or for a hypothetical person in an illustration. A lawsuit is generally named for the persons who are parties to it. in 2002 to more than $108 million in net income and a 5 percent segment ROE in 2005. Our record in achieving our turnaround objectives to-date gives me confidence as we focus on executing our growth strategy in 2006," she said. FULL-YEAR 2005 HIGHLIGHTS --Net income was $108.4 million, or $1.06 per diluted share, a 25 percent rise from net income of $86.4 million, or $0.86 per share, in 2004. --Total segment income of $101.7 million, or $0.99 per diluted share, rose 26 percent from $80.6 million, or $0.80 per share, in 2004. --Life and Annuity pre-tax segment income of $192.5 million was up 35 percent from $142.8 million in 2004. --The Asset Management segment reported EBITDA of $35.0 million in 2005, compared with $36.0 million in the prior year, and posted a pre-tax segment loss of $10.5 million, including a $10.6 million impairment Impairment 1. 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. , compared with a pre-tax gain of $0.1 million in 2004.
FULL-YEAR 2005 RESULTS
Earnings Summary For the Year
(millions) Ended
December 31,
--------------------
2005 2004 Change
------ ------ ------
Life and Annuity Segment 192.5 142.8 49.7
Asset Management Segment (10.5) 0.1 (10.6)
------ ------ ------
Operating Segment Income 182.0 142.9 39.1
Venture Capital Segment 14.8 19.3 (4.5)
Corporate and Other Segment (69.6) (59.1) (10.5)
------ ------ ------
Total Segment Income, Before Income Taxes 127.2 103.1 24.1
Applicable Income Taxes 25.5 22.5 3.0
------ ------ ------
Total Segment Income 101.7 80.6 21.1
Realized Investment Gains, Net 18.5 61.6 (43.1)
Restructuring Costs and Other Nonrecurring Items,
Net (11.8) (55.8) 44.0
------ ------ ------
Net Income 108.4 86.4 22.0
====== ====== ======
Earnings Per Share Summary
Total Segment Income Per Share
Basic 1.07 .85 .22
Diluted .99 .80 .19
Net Income Per Share
Basic 1.14 .91 .23
Diluted 1.06 .86 .20
Weighted Average Shares Outstanding
Basic 95.0 94.7 .3
Diluted 102.4 100.8 1.6
YEAR-END year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 2005 STATUTORY RESULTS FOR PHOENIX LIFE INSURANCE COMPANY --Statutory surplus and asset valuation reserve increased by more than $71.1 million during 2005, ending the year at $1.1 billion. --Risk-based capital continued to grow throughout 2005 and ended the year well over 350 percent. --Full-year statutory net gain from operations was $106.2 million, compared with $35.1 million in 2004.
SUMMARY OF SEGMENT RESULTS
Life and Annuity
Fourth Quarter 2005 Summary Fourth Fourth Change
(millions) Quarter Quarter
2005 2004
--------- -------- --------
Life Insurance Income (pre-tax) 36.1 41.2 (5.1)
Annuity Income (pre-tax) 8.7 1.1 7.6
--------- -------- --------
Life and Annuity Segment Income (pre-tax) 44.8 42.3 2.5
========= ======== ========
Life Insurance Sales (Annualized + Single
Premium) 85.1 41.3 43.8
Annuity Deposits 83.4 94.0 (10.6)
Annuity Net Withdrawals (212.9) (106.3) (106.6)
Full-Year 2005 Summary For the Year
(millions) Ended
December 31,
-----------------------
2005 2004 Change
------- ------- -------
Life Insurance Income (pre-tax) 180.5 130.1 50.4
Annuity Income (pre-tax) 12.0 12.7 (0.7)
------- ------- -------
Life and Annuity Segment Income (pre-tax) 192.5 142.8 49.7
======= ======= =======
Life Insurance Sales (Annualized + Single
Premium) 192.5 145.0 47.5
Annuity Deposits 339.1 517.6 (178.5)
Annuity Net Withdrawals (654.6) (254.5) (400.1)
--Life and Annuity segment income improvement for the quarter and full year reflects strong investment margins in both the life and annuity lines and continued favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. mortality and persistency. --Segment income rose 6 percent quarter-over-quarter, tempered by higher amortization of deferred acquisition costs (DAC See D/A converter and discretionary access control. DAC - Digital to Analog Converter ), an ongoing effect of the second quarter 2005 DAC unlocking. --Full-year segment income rose 35 percent from the prior year, 18 percent excluding the impact of the second quarter DAC unlocking. Higher earnings in variable universal life, universal life and open block traditional life products, as well as lower expenses, drove the increase. --Fourth quarter total life 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) of $85.1 million more than doubled from the prior year's quarter. Annualized premium nearly tripled, from $23.2 million in the prior year's fourth quarter to $65.0 million. --For the full year, total life sales grew 33 percent, to $192.5, including a 69 percent rise in annualized premium, from $81.0 million to $136.9 million, reflecting a significant increase in large estate and business planning cases. The improvement is consistent with the company's life sales growth trajectory Trajectory The curve described by a body moving through space, as of a meteor through the atmosphere, a planet around the Sun, a projectile fired from a gun, or a rocket in flight. of 2002 and 2003 and is well within guidance of double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. growth in 2005. --Quarterly and full-year decreases in annuity deposits reflect lower-than-anticipated sales from new product introductions. Balances in lower-return 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 continued to decline, with lower follow-on fol·low-on adj. Following as a related or consequent aspect or development: "Such contracts involve follow-on sales of maintenance services" Christian Science Monitor. deposits and increased surrenders, contributing to negative flows for the quarter and year. --Life sales and annuity deposits exclude private placement deposits. Total private placement life and annuity deposits were $281.9 million in the fourth quarter of 2005, compared with $37.1 million in the prior year's fourth quarter. Full-year private placement deposits totaled $820.3 million, nearly four times the 2004 deposits of $212.7 million. Total private placement 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. were $2.8 billion on December December: see month. 31, 2005, up 46 percent from $1.9 billion on December 31, 2004.
Asset Management
Fourth Quarter 2005 Summary Fourth Fourth Change
(millions) Quarter Quarter
2005 2004
--------- --------- ---------
Asset Management EBITDA 9.8 9.1 0.7
Asset Management Segment Income (Loss)
(pre-tax) 1.2 (0.1) 1.3
Asset Management Inflows 2,391.4 1,243.4 1,148.0
Asset Management Net Flows (1,779.0) (2,590.9) 811.9
Assets Under Management (end of period) 37,422.9 42,908.5 (5,485.6)
Full-Year 2005 Summary For the Year
(millions) Ended
December 31,
-----------------------------
2005 2004 Change
--------- --------- ---------
Asset Management EBITDA 35.0 36.0 (1.0)
Asset Management Segment Income (Loss)
(pre-tax) (10.5) 0.1 (10.6)
Asset Management Inflows 10,338.0 6,669.8 3,668.2
Asset Management Net Flows (5,585.7) (6,586.0) 1,000.3
Assets Under Management (end of period) 37,422.9 42,908.5 (5,485.6)
--Asset Management EBITDA for the fourth quarter and full year reflect lower revenues from declines in assets under management and lower performance fees. Lower expenses offset these in the fourth quarter and partially offset them for the year. --Segment income increased quarter-over-quarter due to the elimination of the minority interest relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc its now-wholly-owned asset managers and expense reductions. The year-over-year decline in the segment results reflects lower operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. and a third quarter 2005 impairment of $10.6 million. --Open-end mutual fund sales declined quarter-over-quarter, from $461.9 in the 2004 fourth quarter to $420.7 million, after growing in the first three quarters. For the full year, mutual fund sales rose 21 percent, from $1.7 billion to $2.0 billion, reflecting an increased emphasis on mutual fund sales and expansion of relationships with advisors. --Inflows nearly doubled for the quarter and rose 55 percent for the full year, driven by mutual funds and institutional products. Institutional inflows nearly quadrupled from the 2004 fourth quarter to $1.7 billion, including the funding of a $1 billion collateralized debt obligation (CDO (Collaborative Data Objects) A programming interface from Microsoft for accessing MAPI-based e-mail, calendaring and scheduling servers. Originally called "OLE Messaging" and "Active Messaging," CDO wraps the Enhanced MAPI library into a COM object that provides the ). For the full year, institutional inflows more than doubled to $6.5 billion. --Net outflows in the fourth quarter and for the full year were driven by continued redemptions in managed accounts and institutional products, primarily related to certain underperforming equity strategies. --For the five-year period ended December 31, 2005, 60 percent of assets under management out-performed their respective benchmarks, driven, in part, by newly introduced sub-advised products. --Pre-tax operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: , before intangible amortization and minority interest, was 17.1 percent for the quarter and 16.6 percent for the full year, slightly short of the company's guidance of 17 percent. Expense discipline largely offset significantly lower revenue. Venture Capital Segment The Venture Capital segment had pre-tax earnings of $1.6 million in the 2005 fourth quarter, compared with $7.2 million in the prior year's fourth quarter. For full-year 2005, this segment had pre-tax income of $14.8 million, compared with income of $19.3 million in 2004. In the fourth quarter, the company secured an agreement to sell $138.5 million of venture capital assets capital assets n. equipment, property, and funds owned by a business. (See: capital, capital account) , approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. three-quarters Noun 1. three-quarters - three of four equal parts; "three-fourths of a pound" three-fourths common fraction, simple fraction - the quotient of two integers three-quarters npl → of this segment. As a result of the transaction, the Venture Capital segment will be eliminated, effective January January: see month. 1, 2006, and earnings from the approximately $40 million of remaining assets will be allocated to the Life and Annuity segment. Corporate and Other Segment The Corporate and Other segment had a pre-tax loss of $18.2 million in the 2005 fourth quarter, compared with a $14.4 million loss in the prior year's fourth quarter. For the full-year 2005, this segment had a $69.6 million pre-tax loss, compared with a $59.1 million loss for full-year 2004. The 2004 quarterly result reflects higher earnings from the company's international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. , which did not repeat in 2005. The change for the full year reflects a reallocation Noun 1. reallocation - a share that has been allocated again allocation, allotment - a share set aside for a specific purpose 2. reallocation of overhead and higher interest expense. 2006 GUIDANCE Phoenix affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. the 2006 baseline The horizontal line to which the bottoms of lowercase characters (without descenders) are aligned. See typeface. baseline - released version guidance announced at its December 13 investor meeting. --Double-digit segment earnings growth, driven by improved sales, translating to a segment return on equity of 5.0 to 5.5 percent. This ROE target does not reflect the impact of a potential transaction involving the closed block, which the company is pursuing. --Double-digit growth in total life insurance sales. --Positive net flows in asset management and variable annuities Variable annuities Investment contracts whose issuer pays a periodic amount linked to the investment performance of an underlying portfolio. . These targets are based on a number of market assumptions and other factors, including: --Equity returns (dividends and market appreciation) of 10 percent for the year. --Yield of 4.5 percent on 5-year treasury bonds by year-end. --$153.7 million of equity issued in February February: see month. 2006 when the company's equity units convert. These targets represent 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. and are subject to the risks and uncertainties outlined at the end of this news release. Specifically, to the extent that actual interest rates or equity returns differ from the assumptions outlined above, the company's performance could differ materially from the targeted levels. Total segment return on equity is a non-GAAP financial measure and is further described in the tables above and in the reconciliation table at the end of this news release. NET REALIZED INVESTMENT GAINS Fourth quarter 2005 net realized investment gains, after taxes, were $23.9 million. They include: --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 Hobbs, city (1990 pop. 29,115), Lea co., SE N.Mex.; inc. 1929. With the discovery (c.1928) of oil and natural gas in the area, Hobbs became one of the last great oil boomtowns in the United States. It remains a major shipping and trading center for oil-well supplies. (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 the stock purchase contracts Phoenix issued in 2002. --Net impairments of $1.8 million after offsets for taxes, DAC, and the policyholder Policyholder An individual who owns an insurance policy. dividend obligation. Net impairments include gross impairments of $8.5 million. --A $9.0 million realized capital loss related to both the completed and pending closings of the sale of Venture Capital segment assets. As of February 1, 2006, 95 percent of the transaction had closed, and the remaining portion will close by March 31, 2006. For full-year 2005, the company reported net realized investment gains of $18.5 million. OTHER ITEMS --In November November: see month. , the company successfully re-marketed the notes associated with its $153.7 million equity unit offering in 2002. The expected issuance of 17.4 million shares in February 2006, in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the settlement of the purchase contracts associated with the equity units, will add another 12.4 million shares to the diluted share count. --Restructuring charges for the 2005 fourth quarter of $2.5 million after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. relate principally to Asset Management. CONFERENCE CALL The Phoenix Companies, Inc. will host a conference call today at 11 a.m. Eastern time to discuss with the investment community Phoenix's fourth quarter 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.PhoenixWealthManagement.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 #6844357). A replay of the call will be available through February 15, 2006 by telephone at 973-341-3080 (pin code #6844357) and on Phoenix's Web site, www.PhoenixWealthManagement.com in the Investor Relations section. ABOUT PHOENIX The Phoenix Companies, Inc. is a leading provider of life insurance, annuity and asset management products for the accumulation Accumulation 1) In the context of individual investing, it is the process of contributing cash to invest in securities over a period of time in order to build a portfolio of desired value. Dividends and capital gains are also reinvested during this process. , preservation and transfer of wealth. With a history dating to 1851, The Phoenix Companies, Inc. has two principal operating subsidiaries An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. , Phoenix Life Insurance Company and Phoenix Investment Partners, Ltd. Through a variety of advisors and financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. firms, the company provides products and services to affluent and high-net-worth individuals and to institutions. Phoenix has corporate offices in Hartford, Connecticut “Hartford” redirects here. For other uses, see Hartford (disambiguation). Hartford is the capital of the State of Connecticut. It is located in Hartford County on the Connecticut River, north of the center of the state. . FORWARD-LOOKING STATEMENT This release 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 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 COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. 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 reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. 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 venture capital, 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 BROKERAGE, contracts. The trade or occupation of a broker; the commissions paid to a broker for his services. operations; and (x) other risks and uncertainties described in any of the companies 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.
Financial Highlights
Three and Twelve Months Ended December 31, 2005 and 2004
(Unaudited)
Three Months Twelve Months
--------------------- -------------------
2005 2004 2005 2004
---------- ---------- --------- ---------
Income Statement Summary
($ in millions)
Revenues $714.2 $743.3 $2,608.9 $2,743.2
Total Segment Income (1) 27.6 26.0 101.7 80.6
Net Income $50.2 $48.3 $108.4 $86.4
----------------------------
Earnings Per Share
Weighted Average Shares
Outstanding (in thousands)
Basic 95,112 94,830 95,045 94,676
Diluted 103,541 100,265 102,438 100,775
========== ========== ========= =========
Total Segment Income Per
Share (1)
Basic $0.29 $0.27 $1.07 $0.85
Diluted $0.27 $0.26 $0.99 $0.80
========== ========== ========= =========
Net Income Per Share
Basic $0.53 $0.51 $1.14 $0.91
Diluted $0.48 $0.48 $1.06 $0.86
========== ========== ========= =========
----------------------------
Balance Sheet Summary December December
($ in millions, except
share and per share data) 2005 2004
---------- ----------
Invested Assets $16,717.2 $17,334.6
Separate Account Assets 7,722.2 6,950.3
Total Assets 27,716.2 28,362.6
Indebtedness 751.9 690.8
Total Stockholders' Equity $2,007.1 $2,022.4
Average Equity, excluding
Accumulated OCI, FIN 46-R
and Discontinued operations
(2) $2,028.6
Common Shares outstanding
(in thousands) 95,116 94,878
---------- ----------
Book Value Per Share $21.10 $21.32
Book Value Per Share,
excluding Accumulated OCI
and FIN 46-R 22.28 21.27
Third Party Assets Under
Management $37,422.9 $42,908.5
(1) In addition to net income presented in accordance with Generally
Accepted Accounting Principles ("GAAP"), Phoenix considers total
segment income in evaluating its financial performance. A
reconciliation of these measures is provided at the end of this
release. Total segment income is an internal performance measure
used by Phoenix in the management of its operations, including its
compensation plans and planning processes. Management believes
that segment income provides additional insight into the
underlying trends in Phoenix's operations.
Total segment income represents income from continuing operations
(which is a GAAP measure) before realized investment gains and
losses and certain other items.
-- Net realized investment gains and losses are excluded from
total segment income because their size and timing are
frequently subject to our discretion.
-- Certain other items are excluded from total segment income
because we believe they are (i) not indicative of overall
operating trends; and (ii) infrequent and material and result
from a business restructuring, a change in regulatory
requirements, or other unusual circumstances.
Because certain of these items are excluded based on our
discretion and involve judgments by management,
inconsistencies in their determination may exist and total
segment income may differ from similarly titled measures of
other companies.
(2) This average equity is used for the calculation of segment return
on equity and represents the average of the monthly average of
equity, excluding Accumulated OCI, the effects of FIN 46-R and the
equity of discontinued operations.
Consolidated Balance Sheet
December 31, 2005 (Preliminary) and December 31, 2004
(in millions, except share data)
2005 2004
---------- ----------
ASSETS:
Available-for-sale debt securities, at fair
value $13,404.6 $13,476.3
Available-for-sale equity securities, at fair
value 181.8 304.3
Trading equity securities, at fair value - 87.3
Mortgage loans, at unpaid principal balances 128.6 207.9
Venture capital partnerships, at equity in net
assets 145.1 255.3
Policy loans, at unpaid principal balances 2,245.0 2,196.7
Other investments 310.6 371.8
---------- ----------
16,415.7 16,899.6
Available-for-sale debt and equity securities
pledged as collateral, at fair value 304.4 1,278.8
---------- ----------
Total investments 16,720.1 18,178.4
Cash and cash equivalents 301.5 435.0
Accrued investment income 225.8 222.3
Receivables 146.9 135.8
Deferred policy acquisition costs 1,556.0 1,429.9
Deferred income taxes 56.0 30.7
Intangible assets 295.9 308.4
Goodwill 467.7 427.2
Other assets 224.1 244.6
Separate account assets 7,722.2 6,950.3
---------- ----------
Total assets $27,716.2 $28,362.6
========== ==========
LIABILITIES:
Policy liabilities and accruals $13,246.2 $13,132.3
Policyholder deposit funds 3,060.7 3,492.4
Stock purchase contracts - 131.9
Indebtedness 751.9 690.8
Other liabilities 534.3 546.3
Non-recourse collateralized obligations 389.9 1,355.2
Separate account liabilities 7,722.2 6,950.3
---------- ----------
Total liabilities 25,705.2 26,299.2
---------- ----------
MINORITY INTEREST:
Minority interest in net assets of subsidiaries 3.9 41.0
---------- ----------
STOCKHOLDERS' EQUITY:
Common stock, $0.01 par value, 106,429,147 and
106,394,959 shares issued 1.1 1.0
Additional paid-in capital 2,439.7 2,435.2
Deferred compensation on restricted stock units (2.7) (3.6)
Accumulated deficit (193.1) (285.6)
Accumulated other comprehensive income (59.0) 58.0
Treasury stock, at cost: 11,313,564 and
11,517,387 shares (178.9) (182.6)
---------- ----------
Total stockholders' equity 2,007.1 2,022.4
---------- ----------
Total liabilities, minority interest and
stockholders' equity $27,716.2 $28,362.6
========== ==========
Certain reclassifications have been made to the 2004 financial
statements to conform with the 2005 presentation.
Consolidated Statement of Income (Unaudited)
Three and Twelve Months Ended December 31, 2005 and 2004
(in millions)
Three Months Twelve Months
--------------- -----------------
2005 2004 2005 2004
------- ------- -------- --------
REVENUES:
Premiums $236.2 $250.9 $928.7 $990.6
Insurance and investment product
fees 131.3 134.7 514.7 534.9
Broker-dealer commission and
distribution fees 7.3 6.7 28.7 56.9
Investment income, net of expenses 281.7 273.7 1,102.6 1,075.7
Unrealized gain on trading equity
securities - 85.9 - 85.9
Net realized investment gains
(losses) 57.7 (8.6) 34.2 (0.8)
------- ------- -------- --------
Total revenues 714.2 743.3 2,608.9 2,743.2
------- ------- -------- --------
BENEFITS AND EXPENSES:
Policy benefits, excluding
policyholder dividends 349.0 362.0 1,376.7 1,422.2
Policyholder dividends 98.6 94.9 364.4 404.7
Policy acquisition cost amortization 65.0 33.9 132.1 110.2
Intangible asset amortization 8.2 8.7 33.8 33.8
Intangible asset impairments - - 10.6 -
Interest expense on indebtedness 12.4 11.0 46.6 40.8
Interest expense on non-recourse
collateralized obligations 4.7 8.1 29.4 33.6
Other operating expenses 113.6 137.5 477.9 560.7
------- ------- -------- --------
Total benefits and expenses 651.5 656.1 2,471.5 2,606.0
------- ------- -------- --------
Income from continuing operations
before income taxes, minority
interest and equity in earnings of
affiliates 62.7 87.2 137.4 137.2
Applicable income taxes 12.5 27.8 27.7 40.5
------- ------- -------- --------
Income from continuing operations
before income taxes, minority
interest and equity in earnings of
affiliates 50.2 59.4 109.7 96.7
Minority interest in net income of
subsidiaries - - (0.6) -
Equity in undistributed earnings
(losses) of affiliates - (11.1) - (10.4)
------- ------- -------- --------
Income from continuing operations 50.2 48.3 109.1 86.3
Income (loss) from discontinued
operations - - (0.7) 0.1
------- ------- -------- --------
Net income $50.2 $48.3 $108.4 $86.4
======= ======= ======== ========
Reconciliation of Income Measures (Unaudited)
Three and Twelve Months Ended December 31, 2005 and 2004
(in millions)
Three Months Twelve Months
------------- ---------------
Reconciliation of Segment Income to Net
Income 2005 2004 2005 2004
------ ------ ------- -------
Segment Income (loss)
Life insurance $36.1 $41.2 $180.5 $130.1
Annuities 8.7 1.1 12.0 12.7
------ ------ ------- -------
Life and annuity segment 44.8 42.3 192.5 142.8
Asset management segment 1.2 (0.1) (10.5) 0.1
Venture capital segment 1.6 7.2 14.8 19.3
Corporate and other segment (18.2) (14.4) (69.6) (59.1)
------ ------ ------- -------
Total segment income, before income
taxes 29.4 35.0 127.2 103.1
Applicable income taxes 1.8 9.0 25.5 22.5
------ ------ ------- -------
Total segment income 27.6 26.0 101.7 80.6
Realized investment gains, after
income taxes and other offsets 23.9 51.4 18.5 61.6
Realized gain (losses) from
collateralized debt obligations 1.2 - 1.3 (12.9)
Income (loss) from discontinued
operations, net of income taxes - - (0.7) 0.1
Restructuring charges and other non-
recurring items, net of income
taxes (2.5) (29.1) (12.4) (43.0)
------ ------ ------- -------
Net income $50.2 $48.3 $108.4 $86.4
====== ====== ======= =======
Reconciliation of Asset Management
Segment Income to Earnings Before
Income Taxes, Depreciation and
Amortization (EBITDA)
Asset Management Segment Income $1.2 $(0.1) $(10.5) $0.1
Adjustments for:
Intangible asset amortization and
impairments 8.1 8.7 43.8 33.8
Depreciation 0.5 0.5 1.7 2.1
------ ------ ------- -------
EBITDA $9.8 $9.1 $35.0 $36.0
====== ====== ======= =======
Note: For additional information, see our financial supplement at
PhoenixWealthManagement.com.
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