Hartford-Based Phoenix Cos. Posts $19 Million Net Loss For First Quarter | News

From the Hartford Courant

Hartford-Based Phoenix Cos. Posts $19 Million Net Loss For First Quarter

By DIANE LEVICK, Courant Staff Writer

May 8, 2008, 12:52 PM EDT

The Phoenix Cos. posted a $19 million net loss for the first quarter as investment writedowns, volatile equity and credit markets and unusual expenses took their toll.

The $19 million, or 17 cents-a-share loss, compares with $50.6 million, or 44 cents a share, of net income in the 2007 quarter.

Phoenix's results disappointed analysts and investors, and the company's stock price fell sharply in morning trading.

"We are very disappointed with the quarter, which reflects a confluence of negative events and factors, some specific to Phoenix and others clearly market-related," said Dona D. Young, the company's chairman, president and chief executive.

The Hartford-based company had an operating loss of $4.7 million, or 4 cents a share, in this year's quarter. The Thomson Financial analysts' consensus was for an operating profit of 25 cents a share. Operating results exclude realized investment gains and losses.

But Phoenix's results were hurt by $4.6 million of expenses to wage a proxy fight for board seats against a major shareholder, Oliver Press Partners LLC. Another $6 million of expenses from the battle will be recorded in the second quarter. Oliver Press tried to get three of its own nominees on the company's board, and in a settlement, Phoenix named one of Oliver Press's nominees to the board and one new independent director.

Operating results also were lowered by some large death claims in life insurance, writedowns of the value of investments and lower investment income. In addition, tough equity markets affect the fees Phoenix makes by managing money for high net worth individuals and institutions.

Another factor in operating results was expenses related to Phoenix's planned spinoff of its asset management business to shareholders.

Phoenix's operating income in the first quarter of 2007 was $37.4 million or 32 cents a share.