EXHIBIT 99.1
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STANCORP FINANCIAL GROUP REPORTS FIRST QUARTER 1999 EARNINGS
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Media Contact: John Mangan For Immediate Release:
(503) 321-8541 May 5, 1999
Investor Contact: Don Bowler Investor Conference Call
(503) 321-7529 12 pm EDT 800-638-5976
Portland, Oregon--StanCorp Financial Group, Inc. ("StanCorp") (NYSE: SFG) today
reported operating income for the first quarter of 1999, which excludes after-
tax realized investment gains and an extraordinary item, of $20.6 million,
compared to $14.5 million for the first quarter of the prior year. Total
premiums for the first quarter of 1999 were $238.6 million, an 8.3 percent
increase over $220.4 million for the first quarter of 1998.
This quarter's results were driven by a 10.5 percent growth in Group Insurance
premiums, predominantly Group long term disability, and improved Group
underwriting margins. The Group Insurance benefit ratio was 83.9 percent for the
first quarter of 1999, compared to the 1998 annual ratio of 85.0 percent.
Net income for the first quarter of 1999 was $19.0 million compared to $14.3
million for the same period in 1998. For these same periods, StanCorp incurred
charges, net of tax, for an extraordinary item of $2.3 million and $0.3 million,
respectively. The extraordinary item consists of expenses incurred in
conjunction with the recent demutualization of Standard Insurance Company,
StanCorp's wholly owned subsidiary ("Standard").
"We are pleased with our first quarter earnings," said Ronald E. Timpe,
Chairman, President and Chief Executive Officer. "Continued favorable Group
Insurance results contributed to better than expected first quarter earnings.
Expenses for the quarter were slightly less than expected, due mostly to the
timing of costs associated with the expansion of the sales capacity of the Group
Insurance and Retirement Plans segments." Timpe went on to note that, "We are
eager to continue providing excellent service to policyholders, while at the
same time providing value to our shareholders."
StanCorp also reported that on April 26, 1999, Standard received notice from the
San Francisco office of the U.S. Department of Labor ("the Department") that it
was conducting an investigation with respect to Standard's employee benefit plan
clients pursuant to Section 504(a)(1) of the Employee Retirement Income Security
Act of 1974 ("ERISA"), to determine whether any person has violated or is about
to violate any provision of Title I of ERISA. Standard and certain of its
employee benefit plan clients are subject to ERISA in connection with, among
other things, certain policies sold by Standard's Group Insurance segment. The
notice included a subpoena requesting that certain documents and records be
provided to the Department. Standard intends to cooperate fully with the
Department.
To date no claims or charges have been asserted against Standard as a result of
the investigation and the Department states that its investigation should not be
construed as an indication that any violations of ERISA have occurred or as a
reflection upon any person involved. Management believes that Standard's
business practices comply in all material respects with ERISA and that the
investigation will not have a material adverse effect on its business, financial
condition or results of operations.
Pre-tax Operating Income by Segment (excluding realized gains and losses)
StanCorp's Group Insurance segment reported pre-tax operating income of $24.4
million for the first quarter of 1999, compared to $12.5 million for the first
quarter of 1998. Group Insurance premiums for the first quarter of 1999 were
$211.5 million, an increase of 10.5 percent from Group Insurance premiums of
$191.4 million for the first quarter of 1998. Group Insurance benefits and
expenses increased 4.9 percent. Group Insurance segment sales based on
annualized new premiums were $67.7 million for the first quarter of 1999, up
21.1 percent from $55.9 million for the same period of the prior year. During
1999, management intends to pursue growth opportunities in this segment through
the addition of five new sales offices, one of which has already been opened.
Twelve of an anticipated nineteen new sales representatives have also been
hired.
The Retirement Plans segment reported pre-tax operating income of $0.4 million
for the first quarter of 1999, compared to $0.1 million for the same period in
1998. Management believes that meaningful growth opportunities exist for the
segment, because StanCorp's target client base of small- to medium-sized
businesses is experiencing strong growth. During 1999, StanCorp plans to open
five additional Retirement Plans sales offices, one of which has already been
opened, and pursue cross-selling opportunities with its Group Insurance segment.
Assets managed by the segment totaled $1.34 billion at March 31, 1999, an
increase of 11.1 percent over assets managed at March 31, 1998.
StanCorp's Individual Insurance segment reported pre-tax operating income of
$3.8 million in the first quarter of 1999, compared to an unusually favorable
$8.6 million in the first quarter of 1998. Premiums were $22.4 million in the
first quarter of 1999, compared to $25.0 million in the first quarter of 1998.
The segment's products include traditional and universal life insurance,
disability income insurance and annuities for individuals.
Operating income from Standard Mortgage Investors, L.L.C. ("SMI, LLC") increased
from $0.8 million during the first quarter of 1998 to $1.4 million during the
same period in 1999. This increase was driven by new mortgage originations which
increased from $96.6 million during the first quarter of 1998 to $122.8 million
during the first quarter of 1999. Net income for SMI, LLC is reported in other
pre-tax operating income.
At March 31, 1999, StanCorp's assets were $5.35 billion, compared to $4.90
billion at March 31, 1998.
StanCorp Financial Group, Inc. completed its initial public offering in April
1999. Upon completion of the initial public offering, StanCorp had 32,638,015
shares of common stock outstanding. If this had been outstanding at March 31,
1999 and March 31, 1998, pro forma operating income per common share for the
first quarters of 1999 and 1998 would have been $0.63 and $0.44, respectively.
StanCorp is the parent of Standard Insurance Company, a leading provider of
group life and disability insurance products, serving nearly 29,000 employer
groups representing more than four million employees. Standard also provides
products to fund retirement plans and other insurance products to employers and
groups as well as life insurance, disability insurance and retirement products
to individuals.
Certain statements contained in this press release, including statements
regarding the anticipated development and expansion of StanCorp's business, the
effect of regulatory actions, the intent, belief, or current expectations of
StanCorp's management, the future operating performance of StanCorp, and other
statements contained herein regarding matters that are not historical facts, are
"forward-looking" statements (as such term is defined in the Private Securities
Litigation Reform Act of 1995). Because such statements are subject to risks and
uncertainties, actual results may differ materially from those expressed or
implied by such forward-looking statements. Factors that could cause actual
results to differ materially from those expressed or implied by such forward-
looking statements include, but are not limited to, uncertainties regarding
those risks and uncertainties disclosed in the StanCorp's Registration Statement
(Registration No. 333-72521) and Prospectus filed with the Securities and
Exchange Commission.
STANCORP FINANCIAL GROUP
FIRST QUARTER 1999 EARNINGS
(In thousands)
1999 1998
1st Qtr 1st Qtr 1998 1997
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Revenues: (unaudited)
Premiums:
Group Insurance $ 211,488 $ 191,391 $ 784,515 $ 717,136
Retirement Plans 4,750 4,016 13,970 11,178
Individual Insurance 22,362 25,030 94,279 99,260
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Total premiums 238,600 220,437 892,764 827,574
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Net investment income:
Group Insurance 35,998 34,165 143,682 131,415
Retirement Plans 12,336 13,670 54,032 54,266
Individual Insurance 29,683 30,448 123,983 119,825
Other 2,380 1,139 1,423 (2,353)
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Total net investment income 80,397 79,422 323,120 303,153
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Other:
Group Insurance 773 419 2,427 2,384
Retirement Plans 5 (5) (21) (329)
Individual Insurance 30 26 958 415
Other 1 42 15 163
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Total other 809 482 3,379 2,633
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Total operating revenues 319,806 300,341 1,219,263 1,133,360
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Benefits and expenses:
Group Insurance 223,882 213,503 849,484 787,478
Retirement Plans 16,703 17,543 68,722 64,916
Individual Insurance 48,277 46,926 201,670 196,827
Other 371 342 2,244 528
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Total operating benefits and expenses 289,233 278,314 1,122,120 1,049,749
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Pre-tax operating income:
Group Insurance 24,377 12,472 81,140 63,457
Retirement Plans 388 138 (741) 199
Individual Insurance 3,798 8,578 17,550 22,673
Other 2,010 839 (806) (2,718)
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Total pre-tax operating income 30,573 22,027 97,143 83,611
Taxes on pre-tax operating income 9,973 7,557 28,974 27,351
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Operating income 20,600 14,470 68,169 56,260
Special items, net of tax (2,337) (296) (6,102) -
Realized capital gains, net of tax 689 114 7,429 7,588
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Net income $ 18,952 $ 14,288 $ 69,496 $ 63,848
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