Delphi Financial Group Inc. (DFG, Financial) filed Quarterly Report for the period ended 2009-06-30.
Delphi Financial Group Inc. is a holding company whose subsidiariesprovide integrated employee benefit services. The Company manages all aspects of employee absence to enhance the productivity of its clients and provides the related insurance coverages: long-term and short-term disability excess and primary workers\' compensation group life and travel accident. The Company\'s asset accumulation business emphasizes individual annuity products. Delphi Financial Group Inc. has a market cap of $1.22 billion; its shares were traded at around $24.41 with a P/E ratio of 9.7 and P/S ratio of 0.9. The dividend yield of Delphi Financial Group Inc. stocks is 1.6%. Delphi Financial Group Inc. had an annual average earning growth of 8.9% over the past 10 years.
Premium and Fee Income. Premium and fee income in the first half of 2009 was $710.2 million as compared to $683.1 million in the first half of 2008, an increase of 4%. Premiums from core group employee benefit products, which include disability, group life, excess workers compensation, travel accident and dental insurance, increased 3% to $668.5 million in the first half of 2009 from $648.3 million in the first half of 2008. Premiums from excess workers compensation insurance for self-insured employers were $136.8 million in the first half of 2009 as compared to $130.7 million in the first half of 2008, an increase of 5%. Excess workers compensation new business production, which represents the amount of new annualized premium sold, increased 216% to $25.3 million in the first half of 2009 from $8.0 million in the first half of 2008. In its important July 2009 renewal season, the results of which are not reflected in the Companys results for the first half of 2009, SNCCs rates declined modestly and SIRs were on average up modestly on new and renewal policies. SNCCs retention of its existing customers in the first half of 2009 remained strong.
Premiums from the Companys other core group employee benefit products increased 3% to $531.7 million in the first half of 2009 from $517.6 million in the first half of 2008, primarily reflecting modest increases in premiums from the Companys group life and group disability products and new business production. During the first half of 2009 and 2008, premiums from the Companys group life products were $204.3 million and $201.0 million, respectively, and premiums from the Companys group disability products were $287.2 million and $282.8 million, respectively. In the first half of 2009, premiums from the Companys turnkey disability business increased 16% to $28.0 million from $24.1 million in the first half of 2008. New business production for the Companys other core group employee benefit products was $88.3 million and $111.7 million in the first half of 2009 and 2008, respectively. New business production includes only directly written business, and does not include premiums from the Companys turnkey disability business. The level of production achieved from these products reflects the Companys focus on the small case niche (insured groups of 10 to 500 individuals), which resulted in a 3% increase in production based on the number of cases sold as compared to the first half of 2009. The Company continues to implement price increases for certain existing group disability and group life insurance customers.
Summary of Results. Net income was $37.0 million, or $0.74 per diluted share, for the second quarter of 2009 as compared to $26.9 million, or $0.55 per diluted share, for the second quarter of 2008. Net income in the second quarter of 2009 and 2008 included realized investment losses (net of the related income tax benefit) of $17.9 million, or $0.35 per diluted share, and $12.7 million, or $0.26 per diluted share, respectively. Net income in the second quarter of 2009 benefited from a significant increase in net investment income, including increased investment spreads on the Companys asset accumulation products, and was adversely impacted by realized investment losses due to the continuing effects of the adverse market conditions discussed above. See Introduction. Net investment income in the second quarter of 2009, which increased 51% from the second quarter of 2008, reflects an increase in the tax equivalent weighted average annualized yield to 7.9% from 5.4%. Investment losses in the second quarter of 2009 and 2008 included losses, net of the related income tax benefit, of $16.2 million, or $0.32 per diluted share, and $11.8 million, or $0.24 per diluted share, respectively, due to the other than temporary declines in the market values of certain fixed maturity securities and other investments.
Premiums from the Companys other core group employee benefit products were $261.9 million and $260.0 million in the second quarters of 2009 and 2008, respectively. During the second quarter of 2009 and 2008 premiums from the Companys group life products were $100.7 million and $101.5 million, respectively, and premiums from the Companys group disability products were $140.8 million and $141.1 million, respectively. Premiums from the Companys turnkey disability business were $12.8 million during the second quarter of 2009 compared to $11.9 million during the second quarter of 2008. New business production for the Companys other core group employee benefit products was $43.8 million and $50.6 million in the second quarters of 2009 and 2008, respectively. New business production includes only directly written business, and does not include premiums from the Companys turnkey disability business. The level of production achieved from these products reflects the Companys focus on the small case niche (insured groups of 10 to 500 individuals). The Company continued to implement price increases for certain existing disability and group life customers.
Reinsurance. The Company cedes portions of the risks relating to its group employee benefit products and variable life insurance products under indemnity reinsurance agreements with various unaffiliated reinsurers. The Company pays reinsurance premiums which are generally based upon specified percentages of the Companys premiums on the business reinsured. These agreements expire at various intervals as to new risks, and replacement agreements are negotiated on terms believed appropriate in light of then-current market conditions. The Company currently cedes through indemnity reinsurance 100% of its excess workers compensation risks between $10.0 million and $50.0 million per occurrence, 85% of its excess workers compensation risks between $50.0 million and $100.0 million per occurrence, 100% of its excess workers compensation risks between $100.0 million and $150.0 million per occurrence. Effective July 1, 2009, the Company entered into a reinsurance agreement under which it cedes 50% (compared to 30% previously) of its excess workers compensation risks between $150.0 million and $200.0 million, per occurrence. In addition, effective July 1, 2009, the Company entered into a new reinsurance agreement under which it cedes 15% of its excess workers compensation risks between $200.0 million and $250.0 million, per occurrence. The Company also currently cedes through indemnity reinsurance up to $10 million of coverage with respect to workers compensation losses resulting from certain naturally occurring catastrophic events.
Read the The complete ReportDFG is in the portfolios of Richard Pzena of Pzena Investment Management LLC.
Delphi Financial Group Inc. is a holding company whose subsidiariesprovide integrated employee benefit services. The Company manages all aspects of employee absence to enhance the productivity of its clients and provides the related insurance coverages: long-term and short-term disability excess and primary workers\' compensation group life and travel accident. The Company\'s asset accumulation business emphasizes individual annuity products. Delphi Financial Group Inc. has a market cap of $1.22 billion; its shares were traded at around $24.41 with a P/E ratio of 9.7 and P/S ratio of 0.9. The dividend yield of Delphi Financial Group Inc. stocks is 1.6%. Delphi Financial Group Inc. had an annual average earning growth of 8.9% over the past 10 years.
Highlight of Business Operations:
Summary of Results. Net income was $61.5 million, or $1.25 per diluted share, in the first half of 2009 as compared to $48.0 million, or $0.97 per diluted share, in the first half of 2008. Net income in the first half of 2009 and 2008 included realized investment losses (net of the related income tax benefit) of $32.2 million, or $0.65 per diluted share, and $16.9 million, or $0.34 per diluted share, respectively. Net income in the first half of 2009 benefited from a significant increase in net investment income, including increased investment spreads on the Companys asset accumulation products, and was adversely impacted by an increased level of realized investment losses due to the adverse market conditions discussed above. See Introduction. Net investment income in the first half of 2009, which increased 66% from the first half of 2008, reflects an increase in the tax equivalent weighted average annualized yield to 6.9% from 4.2%. Realized investment losses in the first six months of 2009 and 2008 included losses, net of the related income tax benefit, of $27.6 million, or $0.56 per diluted share, and $15.8 million, or $0.32 per diluted share, respectively, due to the other than temporary declines in the market values of certain fixed maturity securities and other investments.Premium and Fee Income. Premium and fee income in the first half of 2009 was $710.2 million as compared to $683.1 million in the first half of 2008, an increase of 4%. Premiums from core group employee benefit products, which include disability, group life, excess workers compensation, travel accident and dental insurance, increased 3% to $668.5 million in the first half of 2009 from $648.3 million in the first half of 2008. Premiums from excess workers compensation insurance for self-insured employers were $136.8 million in the first half of 2009 as compared to $130.7 million in the first half of 2008, an increase of 5%. Excess workers compensation new business production, which represents the amount of new annualized premium sold, increased 216% to $25.3 million in the first half of 2009 from $8.0 million in the first half of 2008. In its important July 2009 renewal season, the results of which are not reflected in the Companys results for the first half of 2009, SNCCs rates declined modestly and SIRs were on average up modestly on new and renewal policies. SNCCs retention of its existing customers in the first half of 2009 remained strong.
Premiums from the Companys other core group employee benefit products increased 3% to $531.7 million in the first half of 2009 from $517.6 million in the first half of 2008, primarily reflecting modest increases in premiums from the Companys group life and group disability products and new business production. During the first half of 2009 and 2008, premiums from the Companys group life products were $204.3 million and $201.0 million, respectively, and premiums from the Companys group disability products were $287.2 million and $282.8 million, respectively. In the first half of 2009, premiums from the Companys turnkey disability business increased 16% to $28.0 million from $24.1 million in the first half of 2008. New business production for the Companys other core group employee benefit products was $88.3 million and $111.7 million in the first half of 2009 and 2008, respectively. New business production includes only directly written business, and does not include premiums from the Companys turnkey disability business. The level of production achieved from these products reflects the Companys focus on the small case niche (insured groups of 10 to 500 individuals), which resulted in a 3% increase in production based on the number of cases sold as compared to the first half of 2009. The Company continues to implement price increases for certain existing group disability and group life insurance customers.
Summary of Results. Net income was $37.0 million, or $0.74 per diluted share, for the second quarter of 2009 as compared to $26.9 million, or $0.55 per diluted share, for the second quarter of 2008. Net income in the second quarter of 2009 and 2008 included realized investment losses (net of the related income tax benefit) of $17.9 million, or $0.35 per diluted share, and $12.7 million, or $0.26 per diluted share, respectively. Net income in the second quarter of 2009 benefited from a significant increase in net investment income, including increased investment spreads on the Companys asset accumulation products, and was adversely impacted by realized investment losses due to the continuing effects of the adverse market conditions discussed above. See Introduction. Net investment income in the second quarter of 2009, which increased 51% from the second quarter of 2008, reflects an increase in the tax equivalent weighted average annualized yield to 7.9% from 5.4%. Investment losses in the second quarter of 2009 and 2008 included losses, net of the related income tax benefit, of $16.2 million, or $0.32 per diluted share, and $11.8 million, or $0.24 per diluted share, respectively, due to the other than temporary declines in the market values of certain fixed maturity securities and other investments.
Premiums from the Companys other core group employee benefit products were $261.9 million and $260.0 million in the second quarters of 2009 and 2008, respectively. During the second quarter of 2009 and 2008 premiums from the Companys group life products were $100.7 million and $101.5 million, respectively, and premiums from the Companys group disability products were $140.8 million and $141.1 million, respectively. Premiums from the Companys turnkey disability business were $12.8 million during the second quarter of 2009 compared to $11.9 million during the second quarter of 2008. New business production for the Companys other core group employee benefit products was $43.8 million and $50.6 million in the second quarters of 2009 and 2008, respectively. New business production includes only directly written business, and does not include premiums from the Companys turnkey disability business. The level of production achieved from these products reflects the Companys focus on the small case niche (insured groups of 10 to 500 individuals). The Company continued to implement price increases for certain existing disability and group life customers.
Reinsurance. The Company cedes portions of the risks relating to its group employee benefit products and variable life insurance products under indemnity reinsurance agreements with various unaffiliated reinsurers. The Company pays reinsurance premiums which are generally based upon specified percentages of the Companys premiums on the business reinsured. These agreements expire at various intervals as to new risks, and replacement agreements are negotiated on terms believed appropriate in light of then-current market conditions. The Company currently cedes through indemnity reinsurance 100% of its excess workers compensation risks between $10.0 million and $50.0 million per occurrence, 85% of its excess workers compensation risks between $50.0 million and $100.0 million per occurrence, 100% of its excess workers compensation risks between $100.0 million and $150.0 million per occurrence. Effective July 1, 2009, the Company entered into a reinsurance agreement under which it cedes 50% (compared to 30% previously) of its excess workers compensation risks between $150.0 million and $200.0 million, per occurrence. In addition, effective July 1, 2009, the Company entered into a new reinsurance agreement under which it cedes 15% of its excess workers compensation risks between $200.0 million and $250.0 million, per occurrence. The Company also currently cedes through indemnity reinsurance up to $10 million of coverage with respect to workers compensation losses resulting from certain naturally occurring catastrophic events.
Read the The complete ReportDFG is in the portfolios of Richard Pzena of Pzena Investment Management LLC.
