The Phoenix Cos. reported a net loss that the company attributes to fixed-indexed annuity hedges, a $7 million charge related to its discontinued group-accident and health-reinsurance business and a higher tax rate on income.
The company had a net loss of $13.2 million during the three-month period ending June 30, or 11 cents per share, compared with a net gain of $15.2 million, or 13 cents per share, during the same period last year.
The Hartford-based boutique insurer and annuity company reported second-quarter operating income of $1 million, or 1 cent per share, compared with $7.9 million, or 7 cents per share, in the same period a year ago. Analysts, on average, were expecting 10 cents per share.
"This quarter, fundamentals, especially investment performance, mortality and persistency, remained solid as demonstrated by the strength of our statutory earnings and continued capital generation," said CEO and president James D. Wehr. "At the same time, lower fee income, the weak equity market and a continued high tax provision drove down operating income."
Revenue during the quarter declined to $451.2 million compared with $478.2 million during the second quarter of 2011, due partly to lower premium revenue on closed-block policies sold before the 2001 demutualization, lower fee income, surrender charges and asset-based fees.
Annuity deposits were $196.4 million for the quarter, compared with $191.3 million during the second quarter of 2011. The company did have a decline in annuity deposits from the first quarter — which were $227.3 million — because Phoenix raised prices earlier this year.
Life insurance in-force, the value of all accounts, was $119 billion as of June 30, down from $130 billion a year before.
"The operating results reflected the challenges of legacies and an operating structure highly dependent upon macro trends which are challenging," Analyst Robert Glasspiegel of Langen McAlenney in Hartford wrote in a research note. "While the capital issues dominate the operating issues for now, over time management needs to begin reporting more meaningful operating earnings to generate significant interest from new shareholders. We continue to rate Phoenix shares 'neutral.'"
The company employed 360 people in Connecticut as of Dec. 31, 2011, compared with 375 on Dec. 31, 2010.
Shares of The Phoenix Cos. were down 20 cents, to $1.43 per share, at close.