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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):    August 8, 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 August 8, 2011, Presidential Life Corporation (the “Company”) issued a press release announcing the Company’s financial results for its fiscal second quarter ended June 30, 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 Second Quarter 2011 Results” issued by Presidential Life Corporation on August 8, 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:  August 8, 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 Second Quarter 2011 Results” issued by Presidential Life Corporation on August 8, 2011.


































Presidential Life Announces Second Quarter 2011 Results


- Reports second quarter 2011 EPS of $0.47 compared to $0.24 EPS for the second quarter 2010 –



Nyack, N.Y. (August 8, 2011) — Presidential Life Corporation (“Presidential Life” or the “Company”) (Nasdaq: PLFE) today announced results for the second quarter ended June 30, 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.


Second quarter 2011 net income was $13.8 million or $0.47 per share, compared with net income of $7.1 million or $0.24 per share for the comparable three-month period in 2010.  Net income for the first six months of 2011 was $21.3 million or $0.72 per share, compared with a net income of $5.2 million or $0.18 per share for the comparable six month period in 2010.


Total revenues in the second quarter of 2011 were $74.3 million, an increase of 5.5% or $3.9 million from $70.4 million in the second quarter of 2010.  Total revenues for the first six months totaled $139.2 million, an increase of 6.7% or $8.8 million from $130.4 million for the comparable six month period in 2010.  These increases were largely attributable to net realized investment gains generated from our limited partnership portfolio in the first two quarters of 2011.


“Despite the continued uncertain economic environment, during the quarter A.M. Best Company upgraded Presidential Life Insurance Company to a B++ (Good) with a Stable Outlook.  This upgrade acknowledged the Company’s strong capital profile and positive operating results, giving recognition to our strategic growth initiatives currently underway.  Further evidence of our capital strength is illustrated by reaching our highest RBC1 ratio in over a decade at an estimated 553% at the second quarter ended June 30, 2011; the RBC ratio at year-end 2010 was 449%,” said Donald Barnes, Vice Chairman of the Board, CEO and President.


Key Items for the Second Quarter Results

·

Basis point spread2 totaled 202 basis points in the first half of 2011 compared to 17 basis points for the first half of 2010.

·

Total annuity sales3 of $20.2 million in the second quarter, a decrease of 67% over 2010 levels due to the continued low interest rate environment.

·

Deferred annuity surrenders were $27.2 million in the second quarter of 2011 compared to $31.1 million for the same period in 2010 (a 12.5% decrease) representing average surrender rates for these periods of 1.5% and 1.6%, respectively.

__________________________

1 NAIC Company Action Level Risk-Based Capital (“RBC”) ratio.

2 Defined as the yield on invested assets over the cost of money on annuity liabilities.  Yield is inclusive of realized capital gains/ (losses), other-than-temporary-impairments and equity in earnings/(losses) on limited partnerships.

3 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.





Discussion of Second Quarter 2011 and Year-to-Date Financial and Operating Results


As previously discussed, total revenues in the second quarter of 2011 were $74.3 million, an increase of 5.5% or $3.9 million from $70.4 million in the second quarter of 2010.  Total revenues for the first six months totaled $139.2 million, an increase of 6.7% or $8.8 million from $130.4 million in the first half of 2010.  As discussed below, the increase from the prior year was largely attributable to an increase in net realized investment gains.


Total annuity considerations with life contingencies, life insurance and accident & health premiums were $7.5 million in the second quarter and $13.4 million for the first six months of 2011, a decrease of $5.7 million or 43.2% and $14.5 million or 52.0% from the same respective periods in 2010.  Immediate annuity considerations with life contingencies decreased $6.0 million in the second quarter and $14.8 million in the first six months of 2011 when compared to the same respective periods in 2010.  Life insurance and accident & health premiums totaled $4.4 million in the second quarter and $9.0 million in the first six months of 2011. These amounts represent an increase of $0.3 million and $0.2 million or 6.4% and 2.3% from the same respective periods in 2010.  


Sales of deferred annuities and immediate annuities without life contingencies were $17.1 million in the second quarter of 2011 and $29.5 million in the first six months, a decrease of $4.4 million or 20.5% and $16.2 million or 35.5% from the same respective periods in 2010.  The decrease was primarily due to the low interest rate environment that continued throughout the first six months of 2011.


Net investment income was $48.9 million in the second quarter and $98.3 million for the first six months of 2011, a decrease of $0.7 million or 1.5% and an increase of $0.5 million or 0.5% from the same respective periods in 2010.

Net realized investment gains, including other than temporary impairments (“OTTI”), were $16.9 million in the second quarter and $21.8 million in the first six months of 2011, an improvement of $11.1 million and $15.7 million from the same respective periods in 2010.  The increases were largely due to the liquidation of one hedge fund in which the Company invested from our limited partnership portfolio on June 30, 2011 that resulted in a realized investment gain of approximately $10.6 million. Investment yield for the first half of 2011 was 7.01% versus 5.25% for the same period in 2010.


Interest credited and benefits paid and accrued to policyholders were $43.1 million in the second quarter and $88.0 million in the first six months of 2011, a decrease of $10.0 million or 18.8% and $18.9 million or 17.6% from the same respective periods in 2010.  General expenses and commissions to agents were $8.1 million in the second quarter and $15.5 million in the first six months of 2011, an increase of $2.8 million or 52.8% and $2.1 million or 15.9% from the same respective periods in 2010,   The majority of the increase in the second quarter was primarily due to an increase in severance costs, the New York State triennial examination and legal/accounting expenses associated with Company’s financial restatements.  


The Company recorded an income tax expense of $7.3 million in the second quarter and $11.2 million in the first six months of 2011 compared to an income tax expense of $3.8 million and $5.2 million in the comparable 2010 periods.  The increase tax expense was due to higher pre-tax income.  


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 include, but are not limited to, quotations from management, statements about our future plans and business strategy, and expected or anticipated future events or performance.


These forward-looking statements involve risks and uncertainties that are discussed in our filings with the Securities and Exchange Commission, including economic, competitive, legal and other factors.  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 Corporation was founded in 1969 and, through the Insurance Company, 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

Vice Chairman of the Board, CEO and President

(845) 358-2300 ext. 250

Presidential Life Corporation

P.B. (Pete) Pheffer

Senior Vice President, CFO and Treasurer

(845) 358-2300 ext. 205






PART 1 – FINANCIAL INFORMATION

PRESIDENTIAL LIFE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

Item 1.  Financial Statements

 

 

 

 

June 30,

 

December 31,

ASSETS:

2011

 

2010

Investments:

(Unaudited)

 

(Audited)

    Fixed maturities:

 

 

 

         Available for sale at market (Amortized cost of  $3,169,937

         and $3,209,803 respectively)


 $             3,386,758

 

 

$              3,391,998

    Common stocks (Cost of $748 and   $472, respectively)

                           1,644

 

                              1,279

    Derivative instruments, at fair value

                        8,739

 

                        9,402

    Real estate

                          415

 

                          415

    Policy loans

                      18,291

 

                      19,607

    Short-term investments

                    159,004

 

                   107,958

    Limited Partnerships

                    206,156

 

                    195,501

             Total Investments

                 3,781,007

 

                 3,726,160

 

 

 

 

Cash and cash equivalents

18,347

 

5,924

Accrued investment income

                     46,583

 

                     42,757

Deferred policy acquisition costs

                      51,042

 

                     57,298

Furniture and equipment, net

                           332

 

                           376

Amounts due from reinsurers

                      17,265

 

                      16,644

Amounts due from investments transactions

                      18,548

 

                      49,005

Federal income taxes recoverable

                      10,064

 

                        2,627

Other assets

                        1,446

 

                        1,495

TOTAL ASSETS

 $              3,944,634

 

 $              3,902,286

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY:

 

 

 

Liabilities:

 

 

 

Policy Liabilities:

 

 

 

   Policyholders' account balances

 $              2,362,623

 

$2,401,482

   Future policy benefits:

 

 

 

    Annuity

                    647,747

 

                    663,456

    Life and accident and health

                      83,260

 

                      81,081

   Other policy liabilities

                      13,112

 

                      11,718

              Total Policy Liabilities

                 3,106,742

 

                 3,157,737

 

 

 

 

Deposits on policies to be issued

                           632

 

                        1,166

General expenses and taxes accrued

                        2,704

 

                        1,573

Deferred federal income taxes, net

                      72,503

 

                      45,157

Amounts due for security transactions

                      13,602

 

                                -

Other liabilities

                      14,290

 

                      14,745

              Total Liabilities

 $              3,210,473

 

 $              3,220,378

Commitments and Contingencies

 

 

 

 

 

 

 

Shareholders’ Equity:

 

 

 

   Capital stock ($.01 par value; authorized  100,000,000 shares outstanding,

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

            

               296

 

                      

     296

    Additional paid in capital

                        7,212

 

                        7,123

    Accumulated other comprehensive gain

                    153,117

 

                    118,609

    Retained earnings

                    573,465

 

                    555,880

               Total Shareholders’ Equity

                    734,161

 

                    681,908

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

 $              3,944,634

 

 $              3,902,286




CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share data)

(Unaudited)

 

 

 

 

 

 

 

 

 

   THREE MONTHS ENDED

 

   SIX MONTHS

 ENDED

June 30,

June 30,

REVENUES:

2011

 

2010

 

2011

 

2010

 Insurance Revenues:

 

 

 

 

 

 

 

     Premiums

 $     4,443

 

 $       4,175

 

 $       8,961

 

 $   8,758

     Annuity considerations

        3,033

 

          9,018

 

          4,397

 

   19,153

     Universal life and investment type

      policy fee income

           867

 

              534

 

          1,798

 

      1,059

  Equity in earnings (losses) on limited partnerships

  (176)

 

          (461)

 

         1,964

 

   (5,191)

  Net investment income

      48,885

 

         49,630

 

        98,343

 

    97,852

  Net realized investment gains (losses):

 

 

 

 

 

 

 

    Total Other-than-temporary-impairment                                                     

     (“OTTI”) losses

     Net OTTI losses recognized in other

     comprehensive income


(5,776)


3,088

 


-


-

 


(6,712)


3,088

 


-


-

     OTTI losses recognized in earnings

     Net Realized capital gains, excluding OTTI losses

(2,688)             19,630

 

-               5,883

 

(3,628)            25,411

 

-             6,114

 

  Other income

           305

 

          1,624

 

         1,944

 

      2,614

           TOTAL REVENUES

       74,299

 

        70,403

 

     139,190

 

     130,359

 

 

 

 

 

 

 

 

BENEFITS AND EXPENSES:

 

 

 

 

 

 

 

  Death and other life insurance benefits

       4,432

 

          4,682

 

         8,916

 

      9,141

  Annuity benefits

     20,430

 

        20,281

 

        41,858

 

    40,679

  Interest credited to policyholders' account balances

     25,550

 

         26,729

 

        51,026

 

    53,319

  Other interest and other charges

           448

 

             219

 

             707

 

         558

  Increase in liability for future policy benefits

      (7,807)

 

          1,214

 

     (14,457)

 

      3,196

  Commissions to agents, net

       1,211

 

           1,649

 

          2,364

 

      3,461

  Costs related to consent revocation solicitation

   and  related matters

                       -

 

                  205

 

                      -

 

             1,173

  General expenses and taxes

       6,905

 

          3,458

 

        13,123

 

      8,729

  Change in deferred policy acquisition costs

        2,031

 

           1,093

 

          3,162

 

     2,108

           TOTAL BENEFITS AND EXPENSES

      53,200

 

        59,530

 

      106,699

 

  122,364

 

 

 

 

 

 

 

 

Income  before income taxes

     21,099

 

        10,873

 

        32,491

 

      7,995

Provision (benefit) for income taxes:

 

 

 

 

 

 

 

  Current

       3,240

 

          4,596

 

          2,290

 

      6,384

  Deferred

       4,038

 

           (804)

 

         8,919

 

   (3,616)

 

        7,278

 

           3,792

 

        11,209

 

      2,768

 

 

 

 

 

 

 

 

NET INCOME  

 $  13,821

 

 $       7,081

 

 $    21,282

 

 $   5,227

 

 

 

 

 

 

 

 

Earnings per common share, basic

 $      0.47

 

 $         0.24

 

 $         0.72

 

 $     0.18

Earnings per common share, diluted

 $       0.47

 

 $         0.24

 

 $         0.72

 

 $     0.18

Weighted average number of shares outstanding during the period, basic

      29,574,697

 

      29,574,697

 

     

29,574,697

 

    29,574,697

Weighted average number of shares outstanding during the period, diluted


29,576,541

 

  

29,574,697

 


29,574,697

 


29,574,511