DOW JONES NEWSWIRES
Financial-services concern Phoenix Cos. (PNX) swung to a
fourth-quarter loss, reflecting costs tied to its spinoff of its
asset-management business and the crumbling equity markets.
The company, which helps affluent customers build wealth with a
portfolio of life insurance and annuity products and services, also
said it would eliminate its annual dividend this year and will cut
250 jobs, or 25% of its work force, within six months. It also will
expand alternative retirement product offerings and develop new
distribution channels for core products.
The quarter's loss reflects "a brutal economy in which all
businesses have had to operate in uncharted territory," said
Chairman and Chief Executive Dona D. Young. "The volatile markets
affected many aspects of our business."
Two weeks ago, Moody's Investors Services cut Phoenix' credit
ratings to junk status while also downgrading the company's
life-insurance units. The industry has been dealing in recent
months with rising investment-portfolio losses amid the slumping
equities market. Concerns have also emerged about life insurers'
commercial real-estate and annuities portfolios and whether they
may force the companies to raise new capital.
Phoenix had delayed the release of its fourth-quarter results
earlier this month to allow more time to complete an analysis of
its investment portfolio and resolve accounting treatment related
to its asset-management spinoff in December.
The company swung to a net loss of $424.3 million, or $3.71 a
share, from year-earlier net income of $3.1 million, or 3 cents a
share. The latest quarter included a $193.2 million loss from
discontinued operations, largely a goodwill write-down and $142.5
million in costs largely related to Phoenix's spinoff at the end of
last year of the struggling Virtus Investment Partners (VRTS).
Excluding those and other items, the latest quarter's earnings
would have been 10 cents a share.
Revenue skidded 32% to $399.7 million as life-insurance sales
tumbled 71%.
In spite of its loss, Phoenix said it remains "well
capitalized," with strong liquidity as the company has no debt
maturing until 2032. Late last year, it announced a deal with a
unit of Swiss Reinsurance Co. (SWCEY) that Young said would help
improve its capital position. The deal with the Swiss Re
subsidiary, Reassure America Life Insurance Co., was for a group of
in-force term life insurance policies. Terms were undisclosed.
In November, Phoenix confirmed it filed to become a savings and
loan holding company to meet the U.S. Treasury Department's
requirements to participate in the Capital Purchase Program, but
said it "made no final decision to participate in the program." The
company said Friday it will seek to retain its options to
participate "if it is available to life insurance companies and
advantageous" to shareholders.
Phoenix shares closed Thursday at 70 cents and were inactive
premarket. Publicly traded life insurers such as Phoenix - which
serve both shareholders and policyholders - have seen their stocks
get whacked in the ongoing market carnage. Phoenix is down more
than 90% since September.
-By Mike Barris, Dow Jones Newswires; 201-938-5658;
mike.barris@dowjones.com