WILMINGTON, Del.–(BUSINESS WIRE)–Delphi Financial Group, Inc. (NYSE: DFG) announced today that its operating earnings (1) in the first quarter of 2011 were $51.5 million or $0.91 per share, compared to $46.3 million or $0.84 per share in the first quarter of 2010. Annualized operating return on beginning equity (2) in the first quarter of 2011 was 13.5% compared to 14.3% in the first quarter of 2010. Diluted book value per share was $28.02 at March 31, 2011, up 3% from December 31, 2010 and up 15% from March 31, 2010.
Delphi adopted on a retrospective basis, effective January 1, 2011, new FASB guidance limiting the extent to which an insurer may capitalize costs incurred in the acquisition of an insurance contract. Accordingly, the 2010 financial information has been restated, to reduce operating earnings per share for the first quarter of 2010 by $0.02 per share and to reduce diluted book value per share at March 31, 2010 by $1.06. (3)
Delphi’s net income attributable to shareholders in the first quarter of 2011 was $50.2 million, up 38% from $36.5 million in the first quarter of 2010. On a per share basis, net income was $0.89, a 35% increase from $0.66 per share in the prior period. Net income attributable to shareholders in the first quarter of 2011 included after-tax net realized investment losses of $(1.3) million or $(0.02) per share, including other-than-temporary impairments (OTTI), net of taxes, of $(5.9) million or $(0.10) per share. Net income attributable to shareholders in the first quarter of 2010 included after-tax net realized investment losses of $(9.8) million or $(0.18) per share, including OTTI, net of taxes, of $(14.9) million or $(0.27) per share.
Robert Rosenkranz, Chairman and Chief Executive Officer, commented, “Delphi’s insurance businesses achieved strong top-line growth in the first quarter as we benefited from improving payroll trends in our small case market niche at Reliance Standard and continued market share gains for Safety National’s products. In both companies, we have been able to achieve the largest price increases of the past several years. Our group employee benefits loss ratio improved 110 basis points from the fourth quarter of 2010 as we began to see the effect of better pricing and other actions we’ve taken to address the elevated long-term disability claims incidence we experienced in the second half of 2010.”
Delphi’s core group employee benefit premiums in the first quarter of 2011 rose 8% to $359.4 million from $333.3 million in the first quarter of 2010. This premium growth was driven by a 16% increase in core premiums at Delphi’s Safety National subsidiary. Excess workers’ compensation premiums grew 10% in the quarter, boosted by a 42% increase in production, and assumed workers’ compensation reinsurance premiums rose 51%. Core premiums increased 5% at Delphi’s Reliance Standard Life subsidiary and core production was up 40%. Delphi’s group employee benefit combined ratio in the first quarter of 2011 was 95.2%, compared with 94.6% for the first quarter of 2010.
Delphi’s asset accumulation segment, which is primarily focused on individual fixed annuities, had new sales of $97.6 million in the first quarter of 2011, up from $38.8 million in last year’s first quarter. Funds under management at March 31, 2011 rose to $1.7 billion, up 20% percent over the prior year.
Delphi’s net investment income in the first quarter of 2011 rose 10% to $92.3 million from $84.1 million in the first quarter of 2010. Invested assets at March 31, 2011 were $6.7 billion compared to $6.0 billion at March 31, 2010. The tax equivalent yield on the Company’s investment portfolio in the first quarter of 2011 was 6.0%, compared to 6.2% in the first quarter of 2010.
Mr. Rosenkranz added, “We are off to a good start in 2011 from our well-diversified business mix. Delphi continues to have excellent financial flexibility to support the growth of our insurance and asset accumulation products.”
The full earnings release is available here(PDF).