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Table of Contents
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 10-Q
 
 
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For quarterly period ended June 30, 2002
 
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from              to             
 
Commission file number: 1-14603
 
THE MONY GROUP INC.
(Exact name of Registrant as specified in its charter)
 
Delaware
  
13-3976138
(State or other jurisdiction of
incorporation or organization)
  
(I.R.S. Employer
Identification No.)
 
1740 Broadway
New York, New York 10019
(212) 708-2000
(Address, including zip code, and telephone number, including area code,
of Registrant’s principal executive offices)
 
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes    x  No    ¨
 
As of August 6, 2002 there were 47,700,528 shares of the Registrant’s common stock, par value $0.01, outstanding.
 
 

Table of Contents
THE MONY GROUP INC. AND SUBSIDIARIES
INDEX TO UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
 
TABLE OF CONTENTS
 
         
Page
PART I    FINANCIAL INFORMATION
     
Item 1:
      
3
       
4
       
5
       
6
       
7
       
8
Item 2:
      
21
Item 3:
      
49
PART II    OTHER INFORMATION
     
Item 1:
      
50
Item 4:
      
50
Item 6:
      
51
  
52

1

Table of Contents
FORWARD-LOOKING STATEMENTS
 
The Company’s management has made in this report, and from time to time may make in its public filings and press releases as well as in oral presentations and discussions, forward-looking statements concerning the Company’s operations, economic performance, prospects and financial condition. Forward-looking statements include, among other things, discussions concerning the Company’s potential exposure to market risks, as well as statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions, as indicated by words such as “believes,” “estimates,” “intends,” “anticipates,” “expects,” “projects,” “should,” “probably,” “risk,” “target,” “goals,” “objectives,” or similar expressions. The Company claims the protection afforded by the safe harbor for forward-looking statements as set forth in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to many risks and uncertainties. Actual results could differ materially from those anticipated by forward-looking statements due to a number of important factors including those discussed elsewhere in this report and in the Company’s other public filings, press releases, oral presentations and discussions and the following: venture capital gains or losses could differ significantly from the Company’s assumptions because of further significant changes in equity values; fees from assets under management could be significantly higher or lower than the Company has assumed and there could be significant write-offs of intangible assets if there are further major movements in the equity markets; the value of the Company’s overall investment portfolio could fluctuate significantly as a result of major changes in the equity and debt markets generally; actual death claims experience could differ significantly from the Company’s mortality assumptions; the Company may not achieve anticipated levels of operational efficiency and cost-saving initiatives; the Company may have as-yet unascertained tax liabilities; sales of variable products, mutual funds and equity securities could differ materially from assumptions because of further unexpected developments in the equity markets and changes in demand for such products; major changes in interest rates could affect the Company’s earnings; the Company could have liability from as-yet unknown or unquantified litigation and claims; pending or known litigation or claims could result in larger settlements or judgments than the Company anticipates; the Company may have higher operating expenses than anticipated; changes in law or regulation, including tax laws, could materially affect the demand for the Company’s products and the Company’s net income after tax; and the Company may not achieve the assumed economic benefits of consolidating acquired enterprises. The Company undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

2

Table of Contents
ITEM 1: FINANCIAL STATEMENTS
 
THE MONY GROUP INC. AND SUBSIDIARIES
 
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
As of June 30, 2002 and December 31, 2001
 
    
June 30,
2002
     
December 31,
2001
  
    
($ in millions)
  
ASSETS
                  
Investments:
                  
Fixed maturity securities available-for-sale, at fair value
   
$
7,406.3
 
   
$
6,976.0
 
Fixed maturity securities held to maturity, at amortized cost
   
 
0.1
 
   
 
0.1
 
Trading account securities, at market value
   
 
793.2
 
   
 
378.5
 
Securities pledged as collateral
   
 
—  
 
   
 
345.5
 
Equity securities available-for-sale, at fair value
   
 
288.1
 
   
 
299.2
 
Mortgage loans on real estate
   
 
1,757.8
 
   
 
1,809.7
 
Policy loans
   
 
1,212.0
 
   
 
1,229.0
 
Other invested assets
   
 
363.4
 
   
 
347.5
 
    
  
    
 
11,820.9
 
   
 
11,385.5
 
    
  
Cash and cash equivalents
   
 
494.3
 
   
 
441.0
 
Accrued investment income
   
 
213.7
 
   
 
192.9
 
Amounts due from reinsurers
   
 
567.6
 
   
 
595.8
 
Premiums receivable
   
 
8.7
 
   
 
11.1
 
Deferred policy acquisition costs
   
 
1,237.6
 
   
 
1,233.8
 
Securities borrowed
   
 
0.3
 
   
 
601.0
 
Receivable from brokerage customers, net
   
 
—  
 
   
 
452.1
 
Other assets
   
 
910.1
 
   
 
893.5
 
Assets transferred in Group Pension Transaction (Note 4)
   
 
4,581.9
 
   
 
4,650.4
 
Separate account assets
   
 
4,672.4
 
   
 
5,195.2
 
    
  
Total assets
   
$
24,507.5
 
   
$
25,652.3
 
    
  
LIABILITIES AND SHAREHOLDERS’ EQUITY
                  
Future policy benefits
   
$
7,916.3
 
   
$
7,870.0
 
Policyholders’ account balances
   
 
2,424.9
 
   
 
2,337.1
 
Other policyholders’ liabilities
   
 
271.5
 
   
 
281.1
 
Amounts due to reinsurers
   
 
77.0
 
   
 
74.6
 
Securities loaned
   
 
—  
 
   
 
392.4
 
Securities sold, not yet purchased, at market value
   
 
578.1
 
   
 
539.2
 
Payable to brokerage customers
   
 
0.1
 
   
 
374.4
 
Accounts payable and other liabilities
   
 
870.0
 
   
 
867.8
 
Short term debt
   
 
7.0
 
   
 
320.0
 
Long term debt
   
 
879.0
 
   
 
578.8
 
Current federal income taxes payable
   
 
79.0
 
   
 
81.6
 
Deferred federal income taxes
   
 
126.7
 
   
 
104.3
 
Liabilities transferred in Group Pension Transaction (Note 4)
   
 
4,513.2
 
   
 
4,586.5
 
Separate account liabilities
   
 
4,669.5
 
   
 
5,192.3
 
    
  
Total liabilities
   
$
22,412.3
 
   
$
23,600.1
 
    
  
Commitments and contingencies (Note 5)
                  
Common stock, $0.01 par value; 400 million shares authorized; 51.3 and 51.2 million shares issued at
June 30, 2002 and December 31, 2001, respectively; 48.0 and 48.1 million shares outstanding at
June 30, 2002 and December 31, 2001, respectively
   
 
0.5
 
   
 
0.5
 
Capital in excess of par
   
 
1,761.5
 
   
 
1,760.3
 
Treasury stock at cost: 3.3 million and 3.1 million shares at June 30, 2002, and December 31, 2001, respectively
   
 
(112.4
)
   
 
(104.7
)
Retained earnings
   
 
362.6
 
   
 
359.3
 
Accumulated other comprehensive income
   
 
84.0
 
   
 
38.1
 
Unamortized restricted stock compensation
   
 
(1.0
)
   
 
(1.3
)
    
  
Total shareholders’ equity
   
 
2,095.2
 
   
 
2,052.2
 
    
  
Total liabilities and shareholders’ equity
   
$
24,507.5
 
   
$
25,652.3
 
    
  
 
See accompanying notes to unaudited interim condensed consolidated financial statements.

3

Table of Contents
THE MONY GROUP INC. AND SUBSIDIARIES
 
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
For the Three-month Periods Ended June 30, 2002 and 2001
 
    
2002
     
2001
  
    
($ in millions, except share data
and per share amounts)
  
Revenues:
                  
Premiums
   
$
169.9
 
   
$
173.4
 
Universal life and investment-type product policy fees
   
 
52.5
 
   
 
52.3
 
Net investment income
   
 
181.9
 
   
 
189.5
 
Net realized (losses) gains on investments
   
 
(25.5
)
   
 
3.0
 
Group Pension Profits (Note 4)
   
 
7.5
 
   
 
9.3
 
Retail Brokerage and Investment Banking revenues
   
 
97.6
 
   
 
99.8
 
Other income
   
 
29.3
 
   
 
41.7
 
    
  
    
 
513.2
 
   
 
569.0
 
    
  
Benefits and Expenses:
                  
Benefits to policyholders
   
 
199.5
 
   
 
194.5
 
Interest credited to policyholders’ account balances
   
 
27.9
 
   
 
27.0
 
Amortization of deferred policy acquisition costs
   
 
38.0
 
   
 
28.3
 
Dividends to policyholders
   
 
56.8
 
   
 
60.6
 
Other operating costs and expenses
   
 
207.1
 
   
 
226.8
 
    
  
    
 
529.3
 
   
 
537.2
 
    
  
(Loss)/Income before income taxes
   
 
(16.1
)
   
 
31.8
 
Income tax (benefit)/expense
   
 
(5.1
)
   
 
9.5
 
    
  
Net (loss)/income
   
 
(11.0
)
   
 
22.3
 
Other comprehensive income/(loss), net
   
 
62.2
 
   
 
(23.2
)
    
  
Comprehensive income/(loss)
   
$
51.2
 
   
$
(0.9
)
    
  
Net (loss)/income per share data:
                  
Basic (loss)/earnings per share
   
$
(0.23
)
   
$
0.45
 
    
  
Diluted (loss)/earnings per share
   
$
(0.23
)
   
$
0.44
 
    
  
Share Data:
                  
Weighted-average shares used in basic per share calculation
   
 
47,994,628
 
   
 
49,363,512
 
Plus: incremental shares from assumed conversion of dilutive securities
   
 
—  
 
   
 
1,549,587
 
    
  
Weighted-average shares used in diluted per share calculations
   
 
47,994,628
 
   
 
50,913,099
 
    
  
 
See accompanying notes to unaudited interim condensed consolidated financial statements.

4

Table of Contents
THE MONY GROUP INC. AND SUBSIDIARIES
 
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
For the Six-month Periods Ended June 30, 2002 and 2001
 
    
2002
     
2001
  
    
($ in millions, except share data
and per share amounts)
  
Revenues:
                  
Premiums
   
$
334.3
 
   
$
338.5
 
Universal life and investment-type product policy fees
   
 
101.5
 
   
 
102.0
 
Net investment income
   
 
371.6
 
   
 
373.2
 
Net realized (losses) gains on investments
   
 
(27.9
)
   
 
5.5
 
Group Pension Profits (Note 4)
   
 
15.2
 
   
 
19.2
 
Retail Brokerage and Investment Banking revenues
   
 
188.4
 
   
 
170.9
 
Other income
   
 
67.5
 
   
 
72.0
 
    
  
    
 
1,050.6
 
   
 
1,081.3
 
    
  
Benefits and Expenses:
                  
Benefits to policyholders
   
 
390.2
 
   
 
392.2
 
Interest credited to policyholders’ account balances
   
 
55.8
 
   
 
55.3
 
Amortization of deferred policy acquisition costs
   
 
70.8
 
   
 
65.5
 
Dividends to policyholders