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FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934


Date of Report (Date of earliest event reported):    May 16, 2011


Presidential Life Corporation


(Exact name of registrant as specified in its charter)


               Delaware                                            000-05486                                                13-2652144


(State or other jurisdiction

(Commission

(IRS Employer

of incorporation)

File Number)

Identification No.)


69 Lydecker Street

Nyack, New York 10960


(Address of principal executive offices)

(Zip Code)

                                                                                           

(845) 358-2300

Registrant’s telephone number, including area code


(Former name or former address, if changed since last report.)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):


[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))






Item 2.02

Results of Operations and Financial Condition


On May 16, 2011, Presidential Life Corporation (the “Company”) issued a press release announcing the Company’s financial results for its fiscal first quarter ended March 31, 2011.  A copy of this press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.


The information included in this Current Report on Form 8-K (including Exhibit 99.1 hereto) that is furnished pursuant to this Item 2.02 shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section or Sections 11 and 12(a)(2)  of the Securities Act of 1933, as amended.  In addition, the information included in this Current Report on Form 8-K (including Exhibit 99.1 hereto) that is furnished pursuant to this Item 2.02 shall not be incorporated by reference into any filing of the Registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference into such filing.


Item 9.01  Financial Statements and Exhibits


         (d)      Exhibits:


       99.1   Press Release entitled “Presidential Life Announces First Quarter 2011 Results” issued by Presidential Life Corporation on May 16, 2011.








SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

PRESIDENTIAL LIFE CORPORATION

 

 

 

 

 

 

Date:  May 16, 2011

 

By:

/s/ Donald L. Barnes

 

 

 

 

Name:

Donald L. Barnes

 

 

 

Title:

Chief Executive Officer

 

 

 

 

 

 

 

 

 









































EXHIBIT INDEX


Exhibit


99.1

Press Release entitled “Presidential Life Announces First Quarter 2011 Results” issued by Presidential Life Corporation on May 16, 2011.















































Presidential Life Announces First Quarter 2011 Results


- Reports first quarter 2011 EPS of $0.25 compared to ($0.06) for the first quarter of 2010 -



Nyack, N.Y. (May 16, 2011) — Presidential Life Corporation (“we,” “our,” “Presidential Life” or the “Company”) (Nasdaq: PLFE) today announced results for the first quarter ended March 31, 2011.  Presidential Life, through its wholly owned subsidiary Presidential Life Insurance Company, is engaged in the sale of fixed deferred and immediate annuities, life insurance and accident & health insurance products.


Total revenues in the first quarter of 2011 were $64.9 million, an increase of $4.9 million or 8.2% compared with $60.0 million in the first quarter of 2010.  First quarter 2011 net income increased to $7.5 million or $0.25 per share, compared to a loss of $1.9 million or ($0.06) per share for the comparable three-month period in 2010.  


“Despite the ongoing low interest rate environment, which continues to impact the life insurance/annuity industry, we are pleased to report solid earnings driven by strong returns in our investment portfolio from our fixed maturities and equity in limited partnerships holdings.  In addition, we continue to increase the strength of our NAIC risk-based capital ratio,” said Donald Barnes, Presidential Life’s Vice Chairman, Chief Executive Officer and President.  “As we move further into 2011, we will continue to execute on our core strategy of developing a national operating platform, through the planned addition of a separate life insurance operating company, and expected broadening of our individual annuity product offerings to include fixed indexed annuities.”

 

Key Items for the First Quarter Results


·

Investment spread1 totaled 100 basis points in 2011 compared to 74 basis points for 2010.

·

Our capital base continues to strengthen with our NAIC action level risk-based capital (“RBC”) ratio increasing to 515% in 2011 from 449% in 2010.

·

Total annuity sales2 of $13.7 million in the first quarter, a decrease of 60% compared to 2010 levels due to the continued low interest rate environment.

·

Annuity surrenders amounted to $32.0 million in the first quarter of 2011 compared to $28.9 million for the same period in 2010, an 11% increase.



Discussion of First Quarter 2011 Financial and Operating Results


Total annuity considerations with life contingencies, life insurance and accident & health premiums were $5.9 million in the first quarter of 2011 versus $14.7 million for the same periods in 2010.  Life insurance and accident & health premiums totaled $4.5 million in the first quarter of 2011.  This amount represents a decrease of $0.1 million or 1.4% from the same period in 2010.  Immediate annuity considerations with life contingencies decreased $8.8 million in the first quarter of 2011 when compared to the same period in 2010.


Sales of deferred annuities and immediate annuities without life contingencies were $12.4 million in the first quarter of 2011, a decrease of $11.8 million or 48.8% from the same period in 2010.  The decrease was primarily due to the continued low interest rate environment that persisted through the first quarter of 2011.







Net investment income was $49.5 million in the first quarter of 2011, an increase of $1.2 million or 2.6% from the same period in 2010.  The principal driver was the continued reinvestment of cash balances into longer-dated, higher-yielding fixed income instruments.  Excluding the return on the Company’s limited partnership investments in both periods, the investment yield for the first quarter of 2011 would have been 5.97% versus 5.82% for the same period in 2010.  


Net realized investment gain was $4.8 million in the first quarter of 2011 versus a net realized gain of $0.2 million for the same period in 2010.  The increase of approximately $4.6 million was primarily due to an increase in realized gains on fixed maturities of approximately $1.0 million and $3.2 million, attributable to limited partnership distributions received in the first quarter of 2011, offset by limited partnership OTTI losses of $0.9 million.


Interest credited and benefits paid and accrued to policyholders were $45.0 million in the first quarter of 2011, a decrease of $8.8 million or 16.3% from the same period in 2010.  The primary reason for the decrease was the reduction in sales of the immediate annuity considerations with life contingencies.  General expenses and commissions to agents were $7.4 million in the first quarter of 2011, an increase of $0.3 million or 4.1% from the same period in 2010.  The majority of the increase in the first quarter was due to an increase in salary and legal expenses.  


The Company recorded an income tax expense of $3.9 million in the first quarter of 2011 compared to a tax benefit of $1.0 million for the same period in 2010.  The principal driver of the increased tax expense was higher pre-tax income.


Restatement


This press release reflects the restatement of the Company's unaudited consolidated financial statements for the period ended March 31, 2010 and December 31, 2010 as discussed in note 9 to the unaudited consolidated financial statements included in the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2011, filed with the SEC on May 16, 2011


Cautionary statement regarding forward-looking statements


This press release contains forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995.  These statements reflect management’s current expectations of future events, trends or results and include any statement that does not directly relate to any historical or current fact.  Forward-looking statements can be identified by such words as “anticipates,” “believes,” “expects,” “intends,” “plans,” and similar terms and include without limitations, statements relating to our geographic expansion plans and plans to expand our product offerings, statements generally about our future plans and business strategy, and expected or anticipated future events or performance.


These forward-looking statements involve risks and uncertainties including our ability to successfully expand our operations beyond our current regional format, our ability to increase our product offerings and other risks that are discussed in our Annual Report on Form 10-K filed with the SEC.  Accordingly, there is no assurance that our plans, strategy and expectations will be realized.  Actual future events and results may differ materially from those expressed or implied in forward-looking statements.


About Presidential Life


Presidential Life Corporation, through its wholly owned subsidiary Presidential Life Insurance Company, is a leading provider of fixed deferred and immediate annuities, life insurance and accident & health insurance products to financial service professionals and their clients.  Headquartered in Nyack, New York, the Company was founded in 1969 and markets its products in 50 states and the District of Columbia.  For more information, visit our website www.presidentiallife.com.


Contacts

Presidential Life Corporation

Donald Barnes

President and Chief Executive Officer

(845) 358-2300 ext. 250

Presidential Life Corporation

P.B. (Pete) Pheffer

Senior Vice President and Chief Financial Officer

(845) 358-2300 ext. 205


 










PRESIDENTIAL LIFE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except share data)

 

 

 

 

 

 

Three Months Ended March 31

 

 

(Unaudited)

 

 

2011

 

2010

 

REVENUES:

 

 

(As Restated)

 

Insurance revenues:

 

 

 

 

   Premiums

 $            4,518

 

 $               4,583

 

   Annuity considerations

               1,364

 

                10,135

 

   Universal life and investment type policy fee income

                  931

 

                     525

 

Equity in earnings (losses) on limited partnerships

               2,140

 

                (4,730)

 

Net investment income

             49,458

 

                48,222

 

Net realized investment gains

               5,781

 

                     231

 

Other than temporary impairment losses recognized in earnings

            (940)

 

                         -

 

Other income

               1,639

 

                     990

 

    TOTAL REVENUES

             64,891

 

                59,956

 

 

 

 

 

 

BENEFITS AND EXPENSES:

 

 

 

 

Death and other life insurance benefits

               4,484

 

                  4,460

 

Annuity benefits

             21,428

 

                20,397

 

Interest credited to policyholders’ account balances

             25,475

 

                26,590

 

Other interest and other charges

                  260

 

                     339

 

Increase (decrease) in liability for future policy benefits

            (6,650)

 

                  1,982

 

Commissions to agents, net

               1,153

 

                  1,812

 

Costs related to consent revocation solicitation and related matters

                     -

 

                     968

 

General expenses and taxes

               6,218

 

                  5,271

 

Change in deferred policy acquisition costs

               1,131

 

                  1,015

 

    TOTAL BENEFITS AND EXPENSES

             53,499

 

                62,834

 

 

 

 

 

 

Income (loss) before income taxes

               11,392

 

                (2,878)

 

 

 

 

 

 

Provision (benefit) for income taxes:

 

 

 

 

   Current

               (950)

 

                  1,788

 

   Deferred

               4,881

 

                (2,812)

 

 

3,931

 

                (1,024)

 

 

 

 

 

 

NET INCOME (LOSS)

 $            7,461

 

 $             (1,854)

 

 

 

 

 

 

Earnings (loss) per common share, basic

 $              0.25

 

 $               (0.06)

 

Earnings (loss) per common share, diluted

 $              0.25

 

 $               (0.06)

 

 

 

 

 

 

Weighted average number of shares outstanding during the year, basic

29,574,697

 

29,574,697

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding during the year, diluted

29,574,697

 

29,574,697

 

 

 

 

 















PRESIDENTIAL LIFE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands)

 

 

 

 

 

 

 

     March 31,                    December 31,

 

 

2011

 

2010

ASSETS:

 

(Unaudited)

 

(Unaudited)

Investments:

 

 

 

(As Restated)

    Fixed maturities:

 

 

 

 

          Available for sale at market (Amortized cost

 

 

 

 

          of $3,149,267 and $3,209,803 respectively)

 

 $   3,323,714

 

 $     3,391,998

   Common stocks (Cost $2,102 and $472, respectively)

 

             2,891

 

               1,279

   Derivative instruments, at fair value

 

             9,270

 

               9,402

   Real estate

 

                415

 

                  415

   Policy loans

 

           18,582

 

             19,607

   Short-term investments

 

         204,776

 

           107,958

   Limited partnerships

 

         220,147

 

           195,501

           Total Investments

 

      3,779,795

 

        3,726,160

 

 

 

 

 

Cash and cash equivalents

 

             2,230

 

               5,924

Accrued investment income

 

           45,337

 

             42,757

Deferred policy acquisition costs

 

           57,755

 

             57,298

Furniture and equipment, net

 

                342

 

                  376

Amounts due from reinsurers

 

           17,075

 

             16,644

Amounts due from security transactions

 

             1,303

 

             49,005

Federal income tax recoverable

 

             7,304

 

               2,627

Other assets

 

             1,487

 

               1,495

         TOTAL ASSETS

 

 $   3,912,628

 

 $     3,902,286

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY:

 

 

 

 

Liabilities:

 

 

 

 

Policy Liabilities:

 

 

 

 

   Policyholders' account balances

 

 $   2,376,289

 

 $     2,401,482

   Future policy benefits:

 

 

 

 

         Annuity

 

         655,391

 

           663,456

         Life and accident and health

 

           82,873

 

             81,081

         Other policy liabilities

 

           12,188

 

             11,718

         Total policy liabilities

 

      3,126,741

 

        3,157,737

Deposits on policies to be issued

 

                896

 

               1,166

General expenses and taxes accrued

 

             2,317

 

               1,573

Deferred federal income taxes, net

 

           57,241

 

             45,157

Amounts due for security transactions

 

             8,482

 

                       -

Other liabilities

 

           15,697

 

             14,745

        Total Liabilities

 

      3,211,374

 

        3,220,378

 

 

 

 

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

 

Shareholders' Equity:

 

 

 

 

   Capital stock ($.01 par value; authorized

 

 

 

 

      100,000,000 shares; issued and outstanding

 

 

 

 

      29,574,697 and 29,574,697 shares, respectively)

 

                296

 

                  296

      Additional paid in capital

 

             7,194

 

               7,123

      Accumulated other comprehensive income (loss)

 

         132,271

 

           107,041

       Retained earnings

 

         561,493

 

           567,448

        Total Shareholders' Equity

 

         701,254

 

           681,908

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

 

 $   3,912,628

 

 $     3,902,286


Footnotes

1 Defined as the yield on invested assets (exclusive of limited partnerships) over the cost of money on annuity liabilities.


2 In accordance with Generally Accepted Accounting Principles (“GAAP”), sales of deferred annuities and immediate annuities without life contingencies ($12.4 million) are not reported as insurance revenues, but rather as additions to policyholder account balances.  In addition, sales of immediate annuities with life contingencies, which are reported as insurance revenues under GAAP, totaled $1.3 million.