ULLICO Posts A Third Quarter Profit

Washington, D.C.-based ULLICO Inc. said a focus on growing diversified products allowed it to post third quarter net income of $2.1 million reversing a $19.4 million loss for the period last year.

The labor owned multi-line holding company had reported non-recurring losses of $22.3 million in the third quarter of 2007. It said this year's pre-tax operating income was $4.6 million compared to $1.9 million in the prior year's quarter.

"The focus and discipline we have established in recent years has allowed ULLICO to substantially avoid the problems paralyzing much of the industry at this time. We have been able to continue to build our diversified portfolio of Labor-focused products without distraction, which in turn is driving accelerated growth in core revenue and profit," said a statement from Mark Singleton, ULLICO, chief executive officer.

ULLICO said its operation was led by its property and casualty unit which generated strong pre-tax earnings of $2.9 million, compared to $2 million for the same period last year.

Core earnings on fiduciary and union liability lines continued to exceed expectations due to sound underwriting, ULLICO reported.

Revenue from continuing lines was $13.9 million, an increase of 50 percent over the same quarter in 2007. The increase, the company said, was a result of continued strong sales in fiduciary liability, union liability, and workers' compensation business, and the continued successful expansion of its commercial lines business.

Driving the revenue increase, ULLICO said is strong sales for the stop loss business which, through Sept. 30, achieved the level attained for the full year of 2007.

The results included a pre-tax charge for the write down of an investment in Fannie Mae preferred stock in the amount of $3.3 million ($2.2 million for retirement services; $1.1 million for property-casualty).

ULLICO said it has no investment in sub prime or Alt-A mortgage-backed securities and minimal exposure to the commercial financial institutions struggling to meet their obligations.

Consolidated operating income, the company reported, was impacted by an increase in general expenses resulting from continuing investments in new product and marketing initiatives and related support infrastructure.

Total premium and fee revenue for the quarter was $61.3 million compared to $66.4 million in the prior year's quarter. Revenue on the Company's continuing lines was $59.4 million compared to $51.1 million last year, an increase of 16 percent. Revenue from the exited lines, which primarily includes the company's fully insured group health business, declined to $1.9 million from $15.3 million in the prior year's quarter.

Year-to-date consolidated operating income was $12.4 million compared to $10.9 million in the prior year.

Year-to-date consolidated net income was $7.1 million compared to a net loss of $10.8 million in the prior year, primarily due to non-recurring losses of $22.6 million through Sept. 30, 2007. The current year results include federal income tax expense of $3.7 million, whereas, there was a $1 million federal income tax benefit recorded for the period ending Sept. 30, 2007.

Premium and fee revenue for the nine months declined from $201.7 million in 2007 to $190.6 million in 2008. Revenue on the company's continuing lines of business increased 14 percent to $170.8 million, despite softening market conditions.