OMB APPROVAL

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

OMB Number: 3235-0060

Expires: February 28, 2013

Estimated average burden

hours per response........5.68

 

 


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):    November 7,  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 November 7, 2011, Presidential Life Corporation (the “Company”) issued a press release announcing the Company’s financial results for its fiscal third quarter ended September 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 Corporation Announces Third Quarter 2011 Results” issued by Presidential Life Corporation on November 7, 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:  November 7, 2011

 

By:

/s/ Donald L. Barnes

 

 

 

 

Name:

Donald L. Barnes

 

 

 

Title:

Chief Executive Officer

 

 

 

 

 

 

 

 

 








































EXHIBIT INDEX


Exhibit


99.1

Press Release entitled “Presidential Life Corporation Announces Third Quarter 2011 Results” issued by Presidential Life Corporation on November 7, 2011.
































Presidential Life Corporation Announces Third Quarter 2011 Results


- Reports third quarter 2011 EPS of $0.10 compared to $0.06 EPS for the third quarter 2010 and

EPS for the nine months ended September 30, 2011 and 2010 of $0.82 and $0.23 respectively –


Nyack, N.Y. (November 7, 2011) — Presidential Life Corporation (“Presidential Life” or the “Company”) (NASDAQ: PLFE) today announced results for the third quarter ended September 30, 2011.  Presidential Life, through its wholly owned subsidiary Presidential Life Insurance Company, is engaged in the sale of individual fixed deferred and immediate annuities, life insurance and accident & health insurance products.


Third quarter 2011 net income was $2.9 million or $0.10 per share, compared with net income of $1.7 million or $0.06 per share for the comparable three-month period in 2010.  Net income for the first nine months of 2011 was $24.2 million or $0.82 per share, compared with a net income of $6.9 million or $0.23 per share for the comparable nine month period in 2010.


Total revenues in the third quarter of 2011 were $54.7 million, a decrease of 29.7% or $23.1 million from $77.8 million in the third quarter of 2010.  Total revenues for the first nine months totaled $193.8 million, a decrease of 6.9% or $14.4 million from $208.2 million for the comparable nine month period in 2010.  These decreases were largely attributable to a decline in individual fixed annuity sales given the low interest rate environment, partially offset by an increase in earnings from our limited partnership portfolio in the first nine months of 2011 relative to 2010.


“Bottom-line results have improved throughout 2011, along with our book value per share, which is at $19.68 per share (excluding other comprehensive income), as of the end of the third quarter.  However, management remains focused on the longer term execution of its core business strategy to expand the individual fixed annuity business.  To that end, progress was made in the current quarter by signing agreements with two major software vendors to supply new systems for policy administration and customer communication. Also, in our continuing efforts to broaden annuity product offerings, product development initiatives began during the current quarter to design a new series of indexed annuities.” said Donald Barnes, Vice Chairman of the Board, CEO and President.


Key Items for the Third Quarter Results

·

Basis point spread1 totaled 148 basis points in the first nine months of 2011 compared to 28 basis points for the first nine months of 2010.

·

Total annuity sales2 of $12.9 million in the third quarter, a decrease of 69% over 2010 levels due to the continued low interest rate environment.

·

Deferred annuity surrenders were $24.2 million in the third quarter of 2011 compared to $26.6 million for the same period in 2010 (a 9.0% decrease) representing average surrender rates for these periods of 1.3% and 1.4%, respectively.

·

Strong capital base with our NAIC Company Action Level Risk-Based Capital (“RBC”) ratio increasing to 526% at the end of the third quarter 2011 versus 449% at year-end 2010.


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


As previously discussed, total revenues were $54.7 million and $77.8 million in the third quarter of 2011 and 2010, respectively, a decrease of $23.1 million or 29.7%, and were $193.8 million and $208.2 million for the first nine months of 2011





and 2010, respectively, a decrease of $14.4 million or 6.9%.  The decreases from the prior year were largely attributable to a decline in individual fixed annuity sales given the low interest rate environment partially reduced by an increase in earnings from our limited partnership portfolio.


Total insurance revenues were $6.2 million and $25.4 million in the third quarter of 2011 and 2010, respectively, a decrease of $19.2 million or 75.6%, and were $19.5 million and $53.3 million for the first nine months of 2011 and 2010, respectively, a decrease of $33.8 million or 63.4%.  Immediate annuity considerations with life contingencies were $1.6 million and $21.1 million in the third quarter of 2011 and 2010, respectively, a decrease of $19.5 million or 92.4%, and were $6.0 million and $40.3 million for the first nine months of 2011 and 2010, respectively, a decrease of $34.3 million or 85.1%.  Life insurance and accident & health premiums were $4.6 million and $4.3 million in the third quarter of 2011 and 2010, respectively, an increase of $0.3 million or 7.0%, and were $13.5 million and $13.0 million for the first nine months of 2011 and 2010, respectively, an increase of $0.5 million or 3.8%.


Sales of deferred annuities and immediate annuities without life contingencies were $11.3 million and $20.5 million in the third quarter of 2011 and 2010, respectively, a decrease of $9.2 million or 44.9%, and were $40.8 million and $66.3 million for the first nine months of 2011 and 2010, respectively, a decrease of $25.5 million or 38.5%. The decreases were primarily due to the low interest rate environment that continued throughout the first nine months of 2011.


Net investment income was $48.2 million and $49.8 in the third quarter of 2011 and 2010, respectively, a decrease of $1.6 million or 3.2%, and was $146.6 million and $147.7 million for the first nine months of 2011 and 2010, respectively, a decrease of $1.1 million or 0.7%.   Net realized investment gains (losses), including other-than-temporary impairments (“OTTI”), were $(0.9) million and $1.8 million in the third quarter of 2011 and 2010, respectively, a reduction of $2.7 million, and were $20.9 million and $7.9 million in the first nine months of 2011 and 2010, respectively, an increase of $13.0 million.  The year-to-date increase was largely due to gains related to distributions from limited partnerships (accounted for under the fair value method).  These gains included the liquidation of one hedge fund which was held in the Company’s limited partnership portfolio that resulted in a realized investment gain of approximately $10.6 million.   These gains were partially offset by a decrease in the fair value of payor swaptions of $5.0 million due to lower interest rates.  The Company’s investment yield for the first nine months of 2011 was 6.47 % versus 5.29% for the same period in 2010.


Interest credited and benefits paid and accrued to policyholders were $43.8 million and $66.7 million in the third quarter of 2011 and 2010, respectively, a decrease of $22.9 million or 34.3%, and were $131.8 million and $173.6 million for the first nine months of 2011 and 2010, respectively, a decrease of $41.8 million or 24.1%.  The decrease is principally due to the decline in sales of immediate annuities with life contingencies in 2011 relative to 2010.  General expenses and commissions to agents were $5.2 million and $7.4 million in the third quarter of 2011 and 2010, respectively, a decrease of $2.2 million or 29.7%, and were $20.6 million and $19.5 million for the first nine months of 2011 and 2010, respectively,  an increase of $1.1 million or 5.6% from the same respective periods in 2010.   The third quarter decline is principally due to lower sales and a related decrease in commissions.  The year-to-date increase was primarily due to an increase in general expenses including severance costs, the New York State triennial examination and legal/accounting expenses associated with Company’s financial restatements partially offset by lower commissions.  


The Company recorded an income tax expense of $1.5 million and $0.9 million in the third quarter of 2011 and 2010, respectively, an increase of $0.6 million.  Income tax expense was $12.7 million and $3.7 million for the first nine months of 2011 and 2010, respectively, an increase of $9.0 million.  The increase in income tax expense for 2011 relative to 2010 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, has a proud and distinguished history as a provider of individual 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







PRESIDENTIAL LIFE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

 

 

2011

 

2010

 

 

 

(Unaudited)

 

(Audited)

ASSETS:

 

 

 

 

Investments:

 

 

 

 

 

 

    Fixed maturities:

 

 

 

 

 

 

 

     Available for sale at market (Amortized cost

 

 

 

 

 

 

 

     of $3,198,134 and $3,209,803 respectively)

$

 3,521,326

 

$

 3,391,998

 

    Common stocks (Cost of $748 and

 

 

 

 

 

 

 

     $472, respectively)

 

 1,229

 

 

 1,279

 

    Derivative instruments, at fair value

 

 4,051

 

 

 9,402

 

    Real estate

 

 415

 

 

 415

 

    Policy loans

 

 18,336

 

 

 19,607

 

    Short-term investments

 

 145,537

 

 

 107,958

 

    Limited Partnerships

 

 208,252

 

 

 195,501

 

 

             Total Investments

 

 3,899,146

 

 

 3,726,160

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 3,687

 

 

 5,924

Accrued investment income

 

 46,063

 

 

 42,757

Deferred policy acquisition costs

 

 41,709

 

 

 57,298

Furniture and equipment, net

 

 497

 

 

 376

Amounts due from reinsurers

 

 18,315

 

 

 16,644

Amounts due from investments transactions

 

 1,319

 

 

 49,005

Federal income taxes recoverable

 

 - 

 

 

 2,627

Other assets

 

 1,391

 

 

 1,495

TOTAL ASSETS

$

 4,012,127

 

$

 3,902,286

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY:

 

 

 

 

 

Liabilities:

 

 

 

 

 

Policy Liabilities:

 

 

 

 

 

 

   Policyholders' account balances

$

 2,349,930

 

$

 2,401,482

 

    Annuity

 

 640,911

 

 

 663,456

 

    Life and accident and health

 

 83,632

 

 

 81,081

 

   Other policy liabilities

 

 16,089

 

 

 11,718

 

 

              Total Policy Liabilities

 

 3,090,562

 

 

 3,157,737

Deposits on policies to be issued

 

 836

 

 

 1,166

General expenses and taxes accrued

 

 1,883

 

 

 1,573

Federal income taxes payable

 

 5,988

 

 

 - 

Deferred federal income taxes, net

 

 92,166

 

 

 45,157

Amounts due for security transactions

 

 8,476

 

 

 - 

Other liabilities

 

 13,723

 

 

 14,745

 

 

              Total Liabilities

$

 3,213,634

 

$

 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

 

 7,362

 

 

 7,123

 

    Accumulated other comprehensive gain

 

 216,320

 

 

 118,609

 

    Retained earnings

 

 574,515

 

 

 555,880

 

 

               Total Shareholders’ Equity

 

 798,493

 

 

 681,908

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

 4,012,127

 

$

 3,902,286

 

 

 

 

 

 

 

 









PRESIDENTIAL LIFE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   THREE MONTHS ENDED

 

   NINE MONTHS ENDED

 

 

 

 

September 30,

 

September 30,

 

 

 

 

    (UNAUDITED)

 

    (UNAUDITED)

REVENUES:

2011

 

2010

 

2011

 

2010

 

 Insurance Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

     Premiums

$

 4,572

 

$

 4,274

 

$

 13,533

 

$

 13,031

 

 

     Annuity considerations

 

 1,586

 

 

 21,114

 

 

 5,983

 

 

 40,267

 

 

     Universal life and investment type policy fee income

 

 849

 

 

 528

 

 

 2,647

 

 

 1,587

 

  Equity in earnings (losses) on limited partnerships

 

 103

 

 

 (845)

 

 

 2,067

 

 

 (6,036)

 

  Net investment income

 

 48,212

 

 

 49,830

 

 

 146,555

 

 

 147,682

 

  Net realized investment gains (losses):

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Other-than-temporary impairment ("OTTI") losses

 

 (3,971)

 

 

 - 

 

 

 (10,687)

 

 

 - 

 

 

OTTI losses recognized in other comprehensive income

 

 836

 

 

 - 

 

 

 3,924

 

 

 - 

 

 

Net OTTI losses recognized in earnings

 

 (3,135)

 

 

 - 

 

 

 (6,763)

 

 

 - 

 

 

Net realized capital gains, excluding OTTI losses

 

 2,215

 

 

 1,807

 

 

 27,626

 

 

 7,921

 

  Other income

 

 257

 

 

 1,124

 

 

 2,201

 

 

 3,739

 

 

 

TOTAL REVENUES

 

 54,659

 

 

 77,832

 

 

 193,849

 

 

 208,191

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BENEFITS AND EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

Death and other life insurance benefits

 

 4,519

 

 

 4,408

 

 

 13,435

 

 

 13,549

 

Annuity benefits

 

 20,426

 

 

 19,991

 

 

 62,284

 

 

 60,670

 

Interest credited to policyholders' account balances

 

 25,428

 

 

 26,677

 

 

 76,454

 

 

 79,996

 

Other interest and other charges

 

 243

 

 

 319

 

 

 950

 

 

 877

 

Increase (decrease) in liability for future policy benefits

 

 (6,836)

 

 

 15,344

 

 

 (21,293)

 

 

 18,540

 

Commissions to agents, net

 

 700

 

 

 2,117

 

 

 3,064

 

 

 5,578

 

Costs related to consent revocation solicitation and related matters

 

 - 

 

 

 297

 

 

 - 

 

 

 1,470

 

General expenses and taxes

 

 4,460

 

 

 5,237

 

 

 17,583

 

 

 13,966

 

Change in deferred policy acquisition costs

 

 1,295

 

 

 881

 

 

 4,457

 

 

 2,989

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL BENEFITS AND EXPENSES

 

 50,235

 

 

 75,271

 

 

 156,934

 

 

 197,635

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 4,424

 

 

 2,561

 

 

 36,915

 

 

 10,556

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision (benefit) for income taxes:

 

 

 

 

 

 

 

 

 

 

 

 

 

Current

 

 16,051

 

 

 181

 

 

 18,341

 

 

 6,565

 

 

Deferred

 

 (14,525)

 

 

 710

 

 

 (5,605)

 

 

 (2,906)

 

 

 

 

 

 1,526

 

 

 891

 

 

 12,736

 

 

 3,659

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

$

 2,898

 

$

 1,670

 

$

 24,179

 

$

 6,897

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share, basic

$

 0.10

 

$

 0.06

 

$

 0.82

 

$

 0.23

 

Earnings per common share, diluted

$

 0.10

 

$

 0.06

 

$

 0.82

 

$

 0.23

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 29,574,697

 

 

 29,574,697

 

 

 29,574,697

 

 

 29,574,697

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

Footnotes

1 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.

2 In accordance with Generally Accepted Accounting Principles (“GAAP”), sales of deferred annuities and immediate annuities without life contingencies ($11.3 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 $1.6 million.