Ullico Inc. Continues Double Digit Revenue Growth, However Reports a Net Loss for the Third Quarter of 2010

WASHINGTON, Nov. 18 , 2010 /PRNewswire/ -- Ullico Inc. ("the Company"), the Labor owned multi-line holding company offering insurance and financial products and services, today reported a pre-tax operating loss of $0.8 million for the quarter ended September 30, 2010, compared to  pre-tax operating income of $3.3 million in the prior year's quarter. The net loss for the current quarter was $0.4 million, compared to net income of $2.2 million in the prior year's quarter.  Total premium and fee revenue for the quarter was $81.8 million compared to $74.3 million in the prior year's quarter, an increase of 10%. The increase was driven primarily by the Property and Casualty Business Unit.

Highlights for the quarter:

•   The Investment Services Business Unit contributed pre-tax earnings of $3.3 million, compared to $4.1 million for the same period last year. Revenue declined as assets under management within the Company's flagship Separate Account J decreased from $3.4 billion at September 30, 2009 to $3.2 billion at September 30, 2010. In addition, effective July 1, 2010, the Company decided to temporarily waive 10 percent of the investment management fee for Separate Account J. However, total third party assets under management increased from $4.8 billion at September 30, 2009 to $4.9 billion at September 30, 2010 due to additional deposits in other managed funds and an improvement over 2009 in the equity markets.
•  The Life and Health Business Unit contributed pre-tax earnings of $1.1 million, compared to pre-tax earnings of $3.6 million for the same period last year.  Earnings in the quarter are comprised of strong product earnings of $4.6 million, less a write-off of previously capitalized software development costs ($3.5 million). Revenue was $35.6 million, a decrease of 3 percent over the same quarter in 2009. Revenue has been impacted by a decline in covered members under Group policies for existing customers as a result of recession-related job losses.
•  The Property and Casualty Business Unit incurred a pre-tax loss of $1.0 million, compared to $3.2 million in pre-tax earnings for the same period last year. The quarter's negative results were driven by additional bad debt write-offs in the Workers' Compensation line of business related to a former managing general underwriter ($1.8 million) and by an additional $4.1 million liability related to a terminated commercial self-insured client. Revenue was $36.5 million, an increase of 36 percent over the same quarter in 2009, driven primarily by the continued successful expansion of the Workers' Compensation, Commercial and Surety lines of business.  

Year-to-Date Consolidated Results  

Year-to-date consolidated pre-tax operating income was $4.4 million compared to an operating loss of $2.7 million in the prior year. The improvement resulted primarily from lower loss ratios in the Medical Stop Loss, Workers' Compensation and Surety lines of business, lower outside legal fees and increased net investment income. Net investment income earnings in the current year exceed the prior year primarily due to the impact of negative returns in the prior year from limited partnership investments. The positive results were partially offset by the bad debt write-offs and by additional commercial lines liability described above, impacting the second and third quarters of 2010 as well as the third quarter 2010 write-off of previously capitalized software development costs described above.

Year-to-date consolidated net income was $2.2 million compared to a net loss of $3.5 million in the prior year.

Premium and fee revenue for the first nine months was $237.0 million compared to $214.1 million in 2009, an increase of 11 percent.  

Ed McElroy, Ullico CEO stated, "We continued our strong revenue growth momentum, although several significant charges adversely affected overall performance in the third quarter. The fundamentals of our business units are strong, however, and we believe that the continuing tailoring of our solutions for the union workplace will lead to sustained growth and improved profitability over the long term."

Chairman Joseph Hunt added, "Our core operating results remain strong, and I am pleased with Ullico's sales momentum despite the challenges that face us in our various markets. We appreciate all who actively support Ullico by continuing to invest in the products and services we provide to the union workplace."

About Ullico Inc.

Ullico Inc. is a $5.5 billion insurance and financial services holding company whose subsidiary companies include The Union Labor Life Insurance Company; Ullico Investment Advisors, Inc.; Ullico Investment Company; Ullico Casualty Company; and Ullico Casualty Group, Inc. For additional information, visit www.ullico.com.

Forward-Looking Statements

This press release may contain certain "forward-looking statements." In particular, statements regarding growth in our business are forward-looking statements as are discussions of our product pipeline and expected performance. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of Ullico Inc. or its subsidiary companies, or the industry results, to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements.

Ullico's forward-looking statements speak only as of the date of this press release or as of the date they are made, and Ullico undertakes no obligation to update its forward-looking statements.

SOURCE Ullico Inc.