Fidelity & Guaranty Life Reports First Quarter Results
PR Newswire Association LLC |
First Quarter Fiscal 2014 Highlights:
- Total annuity sales of
$540.6 million represented a 119% increase from$247.3 million in Q1 2013 and a 119% increase from Q4 2013. - Pretax adjusted operating income ("Pretax AOI") of
$44.1 million increased 38% compared to$31.9 million in the prior year first quarter; GAAP net income was$42.7 million in the current period. - GAAP book value per share excluding AOCI reached
$24.88 from$20.20 in the prior year first quarter, an increase of 23%. - The primary life insurance subsidiary successfully redomiciled to
Iowa onNovember 1, 2013 . - FGL successfully listed shares on the
New York Stock Exchange onDecember 13, 2013 (NYSE:FGL).
Summary Financial Results |
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Three months ended |
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(unaudited) |
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2013 |
2012 |
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(Amounts in millions, except share data) |
Total |
Per diluted share |
Total |
Per diluted share |
Annuity sales (2) |
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Net income |
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|
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Pretax adjusted operating income ("Pretax AOI") (2) |
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|
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Total shares outstanding |
58,270,822 |
47,000,000 (3) |
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Weighted average diluted shares |
49,263,675 |
47,000,000 (3) |
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Book value per share |
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Book value per share, excluding accumulated other comprehensive income ("AOCI") (2) |
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(1) |
Fidelity & Guaranty Life's fiscal year ends each year on |
(2) |
This is a financial measure not calculated based on U.S. Generally Accepted Accounting Principles (Non- |
GAAP). See the Use of Non-GAAP Measures section of this press release for additional information |
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(3) |
Common shares outstanding and per share amounts give retroactive effect to our statutory conversion on |
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2013. |
Detail on First Quarter Fiscal 2014 Results:
Total annuity sales of
FGL reported net income of
Pretax AOI was
FGL ended the first quarter with a book value per diluted share excluding AOCI of
On
In
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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(In thousands, except share data) |
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December 31, |
September 30, |
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(Unaudited) |
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ASSETS |
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Investments: |
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Fixed maturities securities, available-for-sale, at fair value |
$ |
16,327,617 |
$ |
15,541,526 |
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Equity securities, available-for-sale, at fair value |
286,922 |
271,075 |
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Derivative investments |
294,531 |
221,758 |
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Other invested assets |
316,552 |
188,180 |
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Total investments |
17,225,622 |
16,222,539 |
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Related party loans and investments |
96,442 |
119,044 |
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Cash and cash equivalents |
759,471 |
1,204,334 |
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Accrued investment income |
157,785 |
159,287 |
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Reinsurance recoverable |
3,723,693 |
3,728,632 |
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Intangibles, net |
601,444 |
563,758 |
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Deferred tax assets |
225,908 |
226,351 |
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Other assets |
155,292 |
205,230 |
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Total assets |
$ |
22,945,657 |
$ |
22,429,175 |
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LIABILITIES AND SHAREHOLDER'S EQUITY |
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Contractholder funds |
$ |
15,519,722 |
$ |
15,248,216 |
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Future policy benefits |
3,545,881 |
3,556,808 |
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Funds withheld for reinsurance liabilities |
1,381,238 |
1,407,713 |
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Liability for policy and contract claims |
60,331 |
51,456 |
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Long-term debt |
300,000 |
300,000 |
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Other liabilities |
806,662 |
700,097 |
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Total liabilities |
21,613,834 |
21,264,290 |
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Shareholder's equity: |
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Common stock ( |
583 |
— |
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Additional paid-in capital |
700,528 |
527,124 |
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Retained earnings |
524,572 |
524,871 |
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Accumulated other comprehensive income |
106,140 |
112,890 |
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Total shareholder's equity |
1,331,823 |
1,164,885 |
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Total liabilities and shareholder's equity |
$ |
22,945,657 |
$ |
22,429,175 |
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FIDELITY & GUARANTY LIFE AND SUBSIDIARIES |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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(In thousands, except share data) |
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Three months ended |
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December 31, |
December 31, |
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(Unaudited) |
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Revenues: |
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Premiums |
$ |
13,705 |
$ |
13,796 |
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Net investment income |
183,437 |
170,298 |
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Net investment gains |
123,417 |
146,475 |
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Insurance and investment product fees and other |
15,552 |
13,729 |
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Total revenues |
336,111 |
344,298 |
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Benefits and expenses: |
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Benefits and other changes in policy reserves |
216,856 |
83,644 |
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Acquisition and operating expenses, net of deferrals |
26,004 |
26,914 |
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Amortization of intangibles |
22,892 |
69,511 |
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Total benefits and expenses |
265,752 |
180,069 |
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Operating income |
70,359 |
164,229 |
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Interest expense |
(5,624) |
(34) |
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Other income |
— |
225 |
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Income before income taxes |
64,735 |
164,420 |
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Income tax expense |
22,041 |
53,815 | |||||
Net income |
$ |
42,694 |
$ |
110,605 |
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Net income per common share: |
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Basic |
$ |
0.87 |
$ |
2.35 |
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Diluted |
$ |
0.87 |
$ |
2.35 |
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Weighted average common shares used in computing net income per common share: |
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Basic |
49,142,208 |
47,000,000 |
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Diluted |
49,263,675 |
47,000,000 |
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Supplemental disclosures: |
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Total other-than-temporary impairments |
$ |
(34) |
$ |
(509) |
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Less non-credit portion of other-than-temporary impairments included in other comprehensive income |
— |
— |
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Net other-than-temporary impairments |
(34) |
(509) |
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Gains (losses) on derivative instruments |
111,538 |
(25,568) |
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Other realized investment gains |
11,913 |
172,552 |
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Total net investment gains |
$ |
123,417 |
$ |
146,475 |
PRETAX AOI ADJUSTMENTS TO NET INCOME
Pretax AOI is a non-GAAP insurance industry measure that eliminates the impact of realized investment gains (losses), the effect of interest rate changes on the fixed indexed annuities ("FIA") embedded derivative liability and the effects of transaction-related reinsurance, net of the corresponding VOBA and DAC impact related to these adjustments. Return on average assets under management ("AAUM") is a non-U.S. GAAP measure calculated by dividing Pretax AOI by AAUM. AAUM is the sum of the assets under management ("AUM") at the end of each month in the period divided by the number of months in the period.
(In millions) |
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Reconciliation to income before income taxes: |
2014 |
2013 |
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Income before taxes |
$ |
64.7 |
$ |
164.4 |
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Interest expense and other |
5.6 |
(0.2) |
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Operating income (loss) |
70.3 |
164.2 |
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Effect of investment (gains) losses, net of offsets |
(9.8) |
(125.7) |
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Effect of change in FIA embedded derivative discount rate, net of offsets |
(20.4) |
(6.6) |
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Effects of transaction-related reinsurance |
4.0 |
— |
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Pretax AOI |
$ |
44.1 |
$ |
31.9 |
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AAUM |
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|
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Return on AAUM |
0.3 |
% |
0.2 |
% |
BOOK VALUE PER SHARE, EXCLUDING AOCI, ADJUSTMENTS TO SHAREHOLDER'S EQUITY
Book value per common share, excluding AOCI, is a non-GAAP measure that eliminates the impact of accumulated other comprehensive income.
(In millions, except share data) |
As of |
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Reconciliation to total shareholder's equity: |
2013 |
2012 |
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Total shareholder's equity |
$ |
1,331.8 |
$ |
1,372.4 |
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Less: AOCI |
106.1 |
422.9 |
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Total shareholder's equity excluding AOCI |
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Total shares outstanding |
58,270,822 |
47,000,000 |
(1) |
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Weighted average shares outstanding – basic |
49,142,208 |
47,000,000 |
(1) |
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Weighted average shares outstanding – diluted |
49,263,675 |
47,000,000 |
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Book value per diluted share |
|
|
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Book value per diluted share, excluding AOCI |
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(1) |
Common shares outstanding and per share amounts give retroactive effect to our statutory conversion on |
|
|
2013. |
About Fidelity & Guaranty Life
Fidelity & Guaranty Life is the parent company of
Non-GAAP Measures
Management believes that certain non-GAAP financial measures may be useful in certain instances to provide additional meaningful comparisons between current results and results in prior operating periods. Reconciliations of such measures to the most comparable GAAP measures are included herein.
FGL uses Pretax AOI, a non-GAAP financial measure frequently used throughout the insurance industry. Pretax AOI is calculated by adjusting the reported operating income to eliminate the impact of net investment gains, excluding gains and losses on derivatives and including net other-than-temporary impairment losses recognized in operations, the effect of changes in the rates used to discount the FIA embedded derivative liability and the effects of transaction-related reinsurance transactions. While these adjustments are an integral part of the overall performance of FGL, market conditions impacting these items can overshadow the underlying performance of the business. Accordingly, we believe using a measure which excludes their impact is effective in analyzing the trends of our operations.
Annuity sales are not derived from any specific GAAP income statement accounts or line items and should not be viewed as a substitute for any financial measure determined in accordance with GAAP. For GAAP purposes annuity sales are recorded as deposit liabilities (i.e. contract holder funds).
While management believes that non-GAAP measurements are useful supplemental information, such adjusted results are not intended to replace GAAP financial results and should be read in conjunction with those GAAP results.
Forward Looking Statements
"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995: This document contains, and certain oral statements made by our representatives from time to time may contain, forward-looking statements, including those statements regarding our subsidiaries' ability to pay dividends. Such statements are subject to risks and uncertainties that could cause actual results, events and developments to differ materially from those set forth in, or implied by, such statements. These statements are based on the beliefs and assumptions of FGL's management and the management of FGL's subsidiaries (including target businesses). Generally, forward-looking statements include information concerning possible or assumed future distributions from subsidiaries, other actions, events, results, strategies and expectations and are generally identifiable by use of the words "believes," "expects," "intends," "anticipates," "plans," "seeks," "estimates," "projects," "may," "will," "could," "might," or "continues" or similar expressions. Factors that could cause actual results, events and developments to differ include, without limitation: the accuracy of FGL's assumptions and estimates; FGL's and its insurance subsidiaries' ability to maintain or improve financial strength ratings; FGL's ability to manage its business in a highly regulated industry; regulatory changes or actions; the impact of FGL's reinsurers failing to meet their assumed obligations; restrictions on FGL's ability to use captive reinsurers; the impact of interest rate fluctuations; changes in the federal income tax laws and regulations; litigation (including class action litigation), enforcement investigations or regulatory scrutiny; the performance of third parties; the loss of key personnel; telecommunication, information technology and other operational systems failures; the continued availability of capital; new accounting rules or changes to existing accounting rules; general economic conditions; FGL's ability to protect its intellectual property; the ability to maintain or obtain approval of the
All forward-looking statements described herein are qualified by these cautionary statements and there can be no assurance that the actual results, events or developments referenced herein will occur or be realized. FGL does not undertake any obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operation results.
Investor Contact:
[email protected]
410-895-0131
914-356-2138
Media Contact:
Sard Verbinnen & Co
SOURCE Fidelity & Guaranty Life
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