Exhibit 99.1
1105 North Market Street
Suite 1230
Wilmington, Delaware 19801
www.delphifin.com
[DELPHI FINANCIAL GROUP, INC. LOGO]
PRESS RELEASE
Contact: Bernard J. Kilkelly FOR IMMEDIATE RELEASE
Vice President, Investor Relations 7-27-2004
Phone: 212-303-4349
E-mail: bernie-kilkelly@dlfi.com
DELPHI FINANCIAL ANNOUNCES SECOND QUARTER 2004 OPERATING EPS OF $0.79
AND NET INCOME PER SHARE OF $0.82
Wilmington, Delaware - July 27, 2004 - Delphi Financial Group, Inc. (NYSE: DFG)
announced today that net income in the second quarter of 2004 was $27.1 million,
or $0.82 per share, which included after-tax realized investment gains of $1.3
million, or $0.03 per share. This compared with net income in the second quarter
of 2003 of $24.7 million, or $0.77 per share, which included after-tax realized
investment gains of $2.3 million, or $0.07 per share. For the first half of
2004, net income was $57.8 million, or $1.76 per share, which included after-tax
realized investment gains of $4.7 million, or $0.14 per share. This compared
with net income in the first half of 2003 of $47.2 million, or $1.48 per share,
which included after-tax realized investment gains of $3.0 million, or $0.09 per
share. All per share amounts for 2003 have been adjusted to reflect the 3-for-2
common stock split effected on December 22, 2003.
Operating earnings (1) in the second quarter of 2004 were $25.9 million, or
$0.79 per share, an increase of 15% from second quarter 2003 operating earnings
of $22.4 million, or $0.70 per share. Operating earnings for the first half of
2004 were $53.1 million, or $1.62 per share, an increase of 20% from $44.1
million, or $1.39 per share, in the first half of 2003.
Core group employee benefit premiums in the second quarter of 2004 grew 17% from
the second quarter a year ago, reaching $190.0 million. This growth was driven
by a 32% increase in premiums from excess workers' compensation insurance for
self-insured employers, the leading product of Delphi's Safety National
subsidiary. Safety National continued to capitalize on the hard market for
excess workers' compensation, achieving average price increases of 12% on
first-half 2004 renewals along with average increases of 8% on self-insured
retention levels. Delphi's premium growth in the second quarter of 2004 also
benefited from 22% growth in group disability premiums at Delphi's Reliance
Standard Life subsidiary. The combined ratio in group employee benefits
insurance in the second quarter of 2004 was 94.4%, compared with 95.3% in the
second quarter of 2003.
Robert Rosenkranz, Chairman and Chief Executive Officer, commented, "Delphi's
excellent results in the second quarter were driven by strong top line growth
and improved margins in our insurance operations. We are reaping the benefits of
the continued hard market at Safety National that began in 2001, which has
enabled us to take in substantially more premium for less risk. Reliance
Standard is successfully expanding our presence in the attractive smaller case
market for group employee benefits while maintaining our strong focus on pricing
and underwriting discipline."
Exhibit 99.1
DELPHI REPORTS SECOND QUARTER 2004 OPERATING EPS OF $0.79 PAGE 2
Delphi Financial's net investment income in the second quarter of 2004 was $48.7
million compared with $49.4 million in the second quarter of 2003. Invested
assets at June 30, 2004 were $3.3 billion compared to $3.1 billion at June 30,
2003. The pre-tax equivalent yield on the Company's investment portfolio in the
second quarter of 2004 was 6.1%, compared to 6.8% for the second quarter of
2003. Book value per share at June 30, 2004 increased to $26.48 from $25.49 at
December 31, 2003.
On July 28, 2004 at 11:00 AM (Eastern time), Delphi Financial will broadcast the
Company's second quarter 2004 earnings teleconference live on the Internet,
hosted by Robert Rosenkranz, Chairman and Chief Executive Officer. Investors can
access the broadcast at www.delphifin.com by clicking on the webcast icon on the
home page. It is advisable to register at least 15 minutes prior to the call to
download and install any necessary audio software. The online replay will be
available on Delphi's website for one week beginning at approximately 1:00 PM
(Eastern time) on July 28, 2004.
In connection with, and because it desires to take advantage of, the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995,
Delphi cautions readers regarding certain forward-looking statements in the
foregoing discussion and in any other statement made by, or on behalf of,
Delphi, whether in future filings with the Securities and Exchange Commission or
otherwise. Forward-looking statements are statements not based on historical
information and which relate to future operations, strategies, financial
results, prospects, outlooks or other developments. Some forward-looking
statements may be identified by the use of terms such as "expect," "believe,"
"plan," "outlook," "goal" or other similar expressions. Forward-looking
statements are necessarily based upon estimates and assumptions that are
inherently subject to significant business, economic, competitive and other
uncertainties and contingencies, many of which are beyond Delphi's control and
many of which, with respect to future business decisions, are subject to change.
Examples of such uncertainties and contingencies include, among other important
factors, those affecting the insurance industry generally, such as the economic
and interest rate environment, federal and state legislative and regulatory
developments, including but not limited to changes in financial services and tax
laws and regulations, market pricing and competitive trends relating to
insurance products and services, acts of terrorism or war, and the availability
and cost of reinsurance, and those relating specifically to Delphi's business,
such as the level of its insurance premiums and fee income, the claims
experience, persistency and other factors affecting the profitability of its
insurance products, the performance of its investment portfolio and changes in
Delphi's investment strategy, acquisitions of companies or blocks of business,
and ratings by major rating organizations of its insurance subsidiaries. These
uncertainties and contingencies can affect actual results and could cause actual
results to differ materially from those expressed in any forward-looking
statements made by, or on behalf of, Delphi. Delphi disclaims any obligation to
update forward-looking information.
Exhibit 99.1
DELPHI REPORTS SECOND QUARTER 2004 OPERATING EPS OF $0.79 PAGE 3
Delphi Financial Group, Inc. is an integrated employee benefit services company.
Delphi is a leader in managing all aspects of employee absence to enhance the
productivity of its clients and provides the related insurance coverages: group
life, long-term and short-term disability, excess workers' compensation for
self-insured employers, travel accident and dental. Delphi's asset accumulation
business emphasizes individual fixed annuity products. Delphi's common stock is
listed on the New York Stock Exchange under the symbol DFG and its corporate
website address is www.delphifin.com.
(1) Operating earnings, which is a non-GAAP financial measure, consist of net
income excluding after-tax realized investment gains and losses, as applicable.
After-tax net realized investment gains were $1.3 million and $2.3 million, or
$0.03 per share and $0.07 per share, for the second quarter of 2004 and 2003,
respectively, and $4.7 million and $3.0 million, or $0.14 per share and
$0.09 per share for the first half of 2004 and 2003, respectively. The Company
believes that because realized investment gains and losses arise from events
that, to a significant extent, are within management's discretion and can
fluctuate significantly, thus distorting comparisons between periods, a measure
excluding their impact is useful in analyzing the Company's operating trends.
Investment gains and losses may be realized based on management's decision to
dispose of an investment or management's judgment that a decline in the market
value of an investment is other than temporary. Thus, realized investment gains
and losses are not reflective of the Company's ongoing earnings capacity, and
trends in the earnings of the Company's underlying insurance operations can be
more clearly identified without the effects of these gains and losses. For these
reasons, management uses the measure of operating earnings to assess performance
and make operating plans and decisions, and analysts and investors typically
utilize measures of this type when evaluating the financial performance of
insurers. However, investment gains and losses are likely to occur periodically
and should not be considered as nonrecurring items. Further, operating earnings
should not be considered a substitute for net income, the most directly
comparable GAAP measure, as an indication of the Company's overall performance
and may not be calculated in the same manner as similarly titled captions in
other companies' financial statements. As to forward-looking statements
contained in this press release regarding operating earnings, net income is
unavailable for the referenced future periods, since the amounts of any future
realized investment gains and losses are subject to future market and other
conditions that cannot presently be predicted. All per share amounts are on a
diluted basis.
-tables attached-
DELPHI FINANCIAL GROUP, INC.
NON-GAAP FINANCIAL MEASURES
RECONCILIATION TO GAAP
(UNAUDITED; IN THOUSANDS, EXCEPT PER SHARE DATA)
Three Months Ended Six Months Ended
------------------ ----------------
06/30/04 06/30/03 06/30/04 06/30/03
-------- -------- -------- --------
INCOME STATEMENT DATA
OPERATING EARNINGS (NON-GAAP MEASURE) ............. $25,872 $22,441 $53,099 $44,147
Net realized investment gains, net of taxes ..... 1,261 2,251 4,655 3,041
------- ------- ------- -------
NET INCOME (GAAP MEASURE) ......................... $27,133 $24,692 $57,754 $47,188
======= ======= ======= =======
DILUTED RESULTS PER SHARE OF COMMON STOCK:
OPERATING EARNINGS (NON-GAAP MEASURE) ........... $ 0.79 $ 0.70 $ 1.62 $ 1.39
Net realized investment gains, net of taxes ... 0.03 0.07 0.14 0.09
------- ------- ------- -------
NET INCOME (GAAP MEASURE) ....................... $ 0.82 $ 0.77 $ 1.76 $ 1.48
======= ======= ======= =======
BALANCE SHEET DATA 06/30/04 12/31/03
- ------------------ -------- --------
Shareholders' equity, excluding accumulated other
comprehensive income .................................................... $815,328 $746,012
Add: Accumulated other comprehensive income ............................. 19,697 52,428
-------- --------
Shareholders' equity (GAAP measure) ....................................... $835,025 $798,440
======== ========
DILUTED BOOK VALUE PER SHARE OF COMMON STOCK, EXCLUDING
ACCUMULATED OTHER COMPREHENSIVE INCOME (NON-GAAP MEASURE) ............... $ 25.92 $ 24.00
Add: Accumulated other comprehensive income ............................. 0.56 1.49
-------- --------
DILUTED BOOK VALUE PER SHARE OF COMMON STOCK (GAAP MEASURE) ............... $ 26.48 $ 25.49
======== ========
Please see note 1 of the press release for a discussion regarding the usefulness
of the non-GAAP financial measure "operating earnings." The Company believes
that the non-GAAP financial measure "diluted book value per share excluding
accumulated other comprehensive income" provides useful supplemental information
because accumulated other comprehensive income fluctuates from period to period
primarily due to changes in the value of its assets resulting from variations in
market interest rates, while the values of its liabilities are not similarly
marked to market under GAAP.
The June 30, 2003 per share amounts have been adjusted to reflect the 3-for-2
common stock split effected on December 22, 2003.
DELPHI FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED; IN THOUSANDS, EXCEPT PER SHARE DATA)
Three Months Ended Six Months Ended
------------------ ----------------
06/30/04 06/30/03 06/30/04 06/30/03
-------- -------- -------- --------
Revenue:
Premium and fee income ................................... $207,049 $174,920 $407,759 $346,681
Net investment income .................................... 48,705 49,354 101,248 95,059
Net realized investment gains ............................ 1,941 3,464 7,162 4,679
-------- -------- -------- --------
257,695 227,738 516,169 446,419
-------- -------- -------- --------
Benefits and expenses:
Benefits, claims and interest credited to policyholders .. 153,570 130,213 303,672 260,627
Commissions and expenses ................................. 60,853 57,505 120,628 110,537
-------- -------- -------- --------
214,423 187,718 424,300 371,164
-------- -------- -------- --------
Operating income ....................................... 43,272 40,020 91,869 75,255
Interest expense:
Corporate debt ........................................... 3,475 3,535 6,911 5,804
Junior subordinated deferrable interest debentures ....... 1,106 977 2,211 1,816
Income tax expense ......................................... 11,558 10,816 24,993 20,447
-------- -------- -------- --------
Net income ............................................. $ 27,133 $ 24,692 $ 57,754 $ 47,188
======== ======== ======== ========
Basic results per share of common stock:
Net income ............................................ $ 0.85 $ 0.80 $ 1.82 $ 1.52
Weighted average shares outstanding ...................... 31,931 31,053 31,811 31,145
Diluted results per share of common stock:
Net income ............................................. $ 0.82 $ 0.77 $ 1.76 $ 1.48
Weighted average shares outstanding ...................... 32,930 31,869 32,818 31,845
Dividends paid per share of common stock ................... $ 0.08 $ 0.05 $ 0.16 $ 0.10
The 2003 results per share and shares outstanding have been restated to reflect
the 3-for-2 common stock split effected on December 22, 2003.
DELPHI FINANCIAL GROUP, INC.
SUMMARIZED CONSOLIDATED BALANCE SHEETS
(UNAUDITED; IN THOUSANDS, EXCEPT PER SHARE DATA)
06/30/04 12/31/03
---------- ----------
Assets:
Investments:
Fixed maturity securities, available for sale ................ $2,899,675 $2,862,045
Short-term investments ....................................... 103,713 114,752
Other investments ............................................ 327,169 225,957
---------- ----------
3,330,557 3,202,754
Cash ........................................................... 28,932 18,733
Cost of business acquired ...................................... 216,477 183,665
Reinsurance receivables ........................................ 409,629 409,620
Goodwill ....................................................... 93,929 93,929
Securities lending collateral .................................. 222,338 --
Other assets ................................................... 206,969 176,170
Assets held in separate account ................................ 85,500 92,661
---------- ----------
Total assets ............................................... $4,594,331 $4,177,532
========== ==========
Liabilities and Shareholders' Equity:
Policy liabilities and accruals ................................ $1,563,982 $1,495,617
Policyholder account balances .................................. 995,421 961,356
Corporate debt ................................................. 165,750 143,750
Junior subordinated deferrable interest debentures underlying
company-obligated mandatorily redeemable capital securities
issued by unconsolidated subsidiaries ........................ 59,762 --
Securities lending payable ..................................... 222,338 --
Other liabilities and policyholder funds ....................... 666,553 642,906
Liabilities related to separate account ........................ 85,500 79,413
---------- ----------
Total liabilities .......................................... 3,759,306 3,323,042
Company-obligated mandatorily redeemable capital securities
of subsidiaries ................................................ -- 56,050
Shareholders' equity ............................................. 835,025 798,440
---------- ----------
Total liabilities and shareholders' equity ................. $4,594,331 $4,177,532
========== ==========