Presidential Life Corp. (PLFE, Financial) filed Quarterly Report for the period ended 2009-09-30.
Presidential Life Corp is an insurance holding company that, through its wholly-owned subsidiary Presidential Life Insurance Company , operates principally in a single business segment with two primary lines ofbusiness-individual annuities and individual life insurance. The Company currently emphasizes the sale of a variety of annual and single premium life insurance products, as well as single premium and flexible premium annuity products (including those written in connection with funding agreements for certain state lotteries, group annuities and other structured settlements). Presidential Life Corp. has a market cap of $276.82 million; its shares were traded at around $9.36 with a P/E ratio of 14.86 and P/S ratio of 1.04. The dividend yield of Presidential Life Corp. stocks is 2.67%.
Total annuity considerations and life insurance premiums decreased from approximately $37.5 million for the nine months ended September 30, 2008 to approximately $36.9 million for the nine months ended September 30, 2009. Of this amount, annuity considerations were approximately $26.4 million for the nine months ended September 30, 2009 as compared to approximately $26.2 million for the nine months ended September 30, 2008. The decrease is primarily due to decreased sales in our ordinary life policies. In accordance with GAAP, sales of single premium deferred annuities and single premium immediate income annuities without life contingencies are not reported as insurance revenues, but rather as additions to policyholder account balances. Based on statutory accounting, revenue from sales of single premium annuities were approximately $170.4 million and approximately $132.6 million during the nine months ended September 30, 2009 and September 30, 2008, respectively, an increase of approximately $37.8 million or approximately 28.5% due to increased sales in deferred annuities.
Net investment income totaled approximately $126.0 million during the first nine months of 2009, as compared to approximately $210.3 million during the first nine months of 2008. This represents a decrease of approximately $84.3 million. This decrease is primarily due to a decrease in income from limited partnerships of $67.4 million, a decrease in income from short-term investments of $7.2 million and a decrease in income from fixed maturities of $7.6 million. The decrease in investment income from the limited partnerships is largely reflective of the global economic recession and the inherent volatility in the Companys limited partnership portfolio. The decrease in income from short-term investments was due to lower short-term interest rates. The Company's ratios of net investment income to average cash and invested assets (based on book value) for the nine month periods ended September 30, 2009 and September 30, 2008 were 4.75% and 7.56%, respectively.
Realized investment losses amounted to approximately $6.7 million during the first nine months of 2009, as compared to investment losses of approximately $29.6 million during the first nine months of 2008. The increase of approximately $22.9 million was primarily due to an increase on fixed maturities of approximately $14.1 million in the first three quarters of 2009 that was supplemented by increases on common stocks and the payor swaptions of approximately $5.1 million and $3.6 million, respectively. The realized loss on fixed maturities was primarily due to write downs in the bond portfolio. The change in the fair value of the derivative instruments is reflected in the income statement as a realized loss or gain.
The change in net DAC is attributable to the costs associated with product sales, which have been deferred, (accounting for a credit of approximately $8.0 million in the first nine months of 2009 and $6.1 million in the first nine months of 2008). Another portion of such change is due to net amortization of the DAC of deferred annuity business. Such changes accounted for charges of approximately $2.3 million in the first nine months of 2009 as compared to approximately $6.7 million in the first nine months of 2008. The balance of the change in net DAC is due to the net amortization of the DAC for the remainder of the business including traditional life, universal life and immediate annuities (accounting for charges of approximately $3.7 million for the first nine months 2009 and approximately $4.2 million for the first nine months of 2008).
As of September 30, 2009, the carrying value of the Companys limited partnerships was approximately $193.2 million or 5.3% of the Company's total invested assets. Pursuant to NYSID regulations, the Company's investments in equity securities, including limited partnership interests, may not exceed 20% of the Company's total invested assets. At September 30, 2009, the Companys investments in equity securities, including limited partnership interests, were approximately 5.4% of the Companys total invested assets. Such investments are included in the Company's consolidated balance sheet under the heading "Other long-term investments." The Company is committed, if called upon during a specified period, to contribute an aggregate of approximately $99.2 million of additional capital to certain of these limited partnerships. However, management does not expect the entire amount to be drawn down, as certain of these limited partnerships are nearing the end of the period during which investors are required to make contributions. Commitments of $5.9 million, $4.5 million, $38.0 million, $45.7 million and $5.1 million will expire in 2009, 2010, 2011, 2012 and 2013 respectively. The commitment expirations are estimates based upon the commitment periods of each of the partnerships. Certain partnerships provide, however, that in the event capital from the investments are returned to the limited partners prior to the end of the commitment period (generally 3-5 years) the capital may be recalled. The Company may make selective investments in additional limited partnerships as opportunities arise. In general, risks associated with such limited partnerships include those related to their underlying investments (i.e., equity securities, debt securities and real estate), plus a level of illiquidity, which is mitigated by the ability of the Company to typically take quarterly distributions (to the extent that distributions are available) of partnership earnings, except for hedge fund limited partnerships. There can be no assurance that the Company will continue to achieve the same level of returns on its investments in limited partnerships as it has historically or that the Company will achieve any returns on such investments at all. Further, there can be no assurance that the Company will receive a return of all or any portion of its current or future capital investments in limited partnerships. The failure of the Company to receive the return of a material portion of its capital investments in limited partnerships, or to achieve historic levels of return on such investments, could have a material adverse effect on the Company's financial condition and results of operations.
Read the The complete ReportPLFE is in the portfolios of Michael Price of MFP Investors LLC.
Presidential Life Corp is an insurance holding company that, through its wholly-owned subsidiary Presidential Life Insurance Company , operates principally in a single business segment with two primary lines ofbusiness-individual annuities and individual life insurance. The Company currently emphasizes the sale of a variety of annual and single premium life insurance products, as well as single premium and flexible premium annuity products (including those written in connection with funding agreements for certain state lotteries, group annuities and other structured settlements). Presidential Life Corp. has a market cap of $276.82 million; its shares were traded at around $9.36 with a P/E ratio of 14.86 and P/S ratio of 1.04. The dividend yield of Presidential Life Corp. stocks is 2.67%.
Highlight of Business Operations:
Basic earnings (loss) per share were $(.34) and $.72 for the nine-month periods ended September 30, 2009 and 2008, respectively. Our total revenues in the first nine months of 2009 and 2008 were approximately $160.6 million and approximately $222.1 million, respectively. The decrease from 2008 to 2009 was primarily due to a decrease in net investment income from $210.3 million in 2008 to $126.0 million in 2009, a decrease of approximately $84.3 million.Total annuity considerations and life insurance premiums decreased from approximately $37.5 million for the nine months ended September 30, 2008 to approximately $36.9 million for the nine months ended September 30, 2009. Of this amount, annuity considerations were approximately $26.4 million for the nine months ended September 30, 2009 as compared to approximately $26.2 million for the nine months ended September 30, 2008. The decrease is primarily due to decreased sales in our ordinary life policies. In accordance with GAAP, sales of single premium deferred annuities and single premium immediate income annuities without life contingencies are not reported as insurance revenues, but rather as additions to policyholder account balances. Based on statutory accounting, revenue from sales of single premium annuities were approximately $170.4 million and approximately $132.6 million during the nine months ended September 30, 2009 and September 30, 2008, respectively, an increase of approximately $37.8 million or approximately 28.5% due to increased sales in deferred annuities.
Net investment income totaled approximately $126.0 million during the first nine months of 2009, as compared to approximately $210.3 million during the first nine months of 2008. This represents a decrease of approximately $84.3 million. This decrease is primarily due to a decrease in income from limited partnerships of $67.4 million, a decrease in income from short-term investments of $7.2 million and a decrease in income from fixed maturities of $7.6 million. The decrease in investment income from the limited partnerships is largely reflective of the global economic recession and the inherent volatility in the Companys limited partnership portfolio. The decrease in income from short-term investments was due to lower short-term interest rates. The Company's ratios of net investment income to average cash and invested assets (based on book value) for the nine month periods ended September 30, 2009 and September 30, 2008 were 4.75% and 7.56%, respectively.
Realized investment losses amounted to approximately $6.7 million during the first nine months of 2009, as compared to investment losses of approximately $29.6 million during the first nine months of 2008. The increase of approximately $22.9 million was primarily due to an increase on fixed maturities of approximately $14.1 million in the first three quarters of 2009 that was supplemented by increases on common stocks and the payor swaptions of approximately $5.1 million and $3.6 million, respectively. The realized loss on fixed maturities was primarily due to write downs in the bond portfolio. The change in the fair value of the derivative instruments is reflected in the income statement as a realized loss or gain.
The change in net DAC is attributable to the costs associated with product sales, which have been deferred, (accounting for a credit of approximately $8.0 million in the first nine months of 2009 and $6.1 million in the first nine months of 2008). Another portion of such change is due to net amortization of the DAC of deferred annuity business. Such changes accounted for charges of approximately $2.3 million in the first nine months of 2009 as compared to approximately $6.7 million in the first nine months of 2008. The balance of the change in net DAC is due to the net amortization of the DAC for the remainder of the business including traditional life, universal life and immediate annuities (accounting for charges of approximately $3.7 million for the first nine months 2009 and approximately $4.2 million for the first nine months of 2008).
As of September 30, 2009, the carrying value of the Companys limited partnerships was approximately $193.2 million or 5.3% of the Company's total invested assets. Pursuant to NYSID regulations, the Company's investments in equity securities, including limited partnership interests, may not exceed 20% of the Company's total invested assets. At September 30, 2009, the Companys investments in equity securities, including limited partnership interests, were approximately 5.4% of the Companys total invested assets. Such investments are included in the Company's consolidated balance sheet under the heading "Other long-term investments." The Company is committed, if called upon during a specified period, to contribute an aggregate of approximately $99.2 million of additional capital to certain of these limited partnerships. However, management does not expect the entire amount to be drawn down, as certain of these limited partnerships are nearing the end of the period during which investors are required to make contributions. Commitments of $5.9 million, $4.5 million, $38.0 million, $45.7 million and $5.1 million will expire in 2009, 2010, 2011, 2012 and 2013 respectively. The commitment expirations are estimates based upon the commitment periods of each of the partnerships. Certain partnerships provide, however, that in the event capital from the investments are returned to the limited partners prior to the end of the commitment period (generally 3-5 years) the capital may be recalled. The Company may make selective investments in additional limited partnerships as opportunities arise. In general, risks associated with such limited partnerships include those related to their underlying investments (i.e., equity securities, debt securities and real estate), plus a level of illiquidity, which is mitigated by the ability of the Company to typically take quarterly distributions (to the extent that distributions are available) of partnership earnings, except for hedge fund limited partnerships. There can be no assurance that the Company will continue to achieve the same level of returns on its investments in limited partnerships as it has historically or that the Company will achieve any returns on such investments at all. Further, there can be no assurance that the Company will receive a return of all or any portion of its current or future capital investments in limited partnerships. The failure of the Company to receive the return of a material portion of its capital investments in limited partnerships, or to achieve historic levels of return on such investments, could have a material adverse effect on the Company's financial condition and results of operations.
Read the The complete ReportPLFE is in the portfolios of Michael Price of MFP Investors LLC.
