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NYACK, N.Y.--([ BUSINESS WIRE ])--Presidential Life Corporation (aPresidential Lifea or the aCompanya) (NASDAQ: PLFE) today announced first quarter 2012 net income of $3.8 million or $0.13 per share, compared with net income of $7.5 million or $0.25 per share for the comparable quarter in 2011. The decrease in net income of $3.7 million for the first quarter 2012 compared to 2011 is principally due to a decrease in net realized investment gains of $2.4 million, an increase in other-than-temporary impairment (aOTTIa) losses of $3.1 million, and a decrease in equity in earnings on limited partnerships of $1.6 million. These items were partially offset by decreases in general expenses and taxes of $0.9 million and income taxes of $2.0 million.

"As we move further into 2012, we will continue to focus on efforts already underway to expand our annuity product offerings, a key element of our business, while also prudently managing our investment portfolio."

Total revenues in the first quarter 2012 were $56.7 million, a decrease of 12.7% or $8.2 million from $64.9 million in the first quarter 2011. The decrease in revenues was principally attributable to the aforementioned revenue declines aggregating $7.1 million related to changes in net realized investment gains, equity in earnings on limited partnerships and OTTI losses.

aWe were pleased to see strong growth in insurance revenues, increasing sales of deferred annuities and immediate annuities without life contingencies, and continued strength in our capital base, which is important to efforts to further develop our business,a said Donald Barnes, Vice Chairman of the Board, CEO and President. aAs we move further into 2012, we will continue to focus on efforts already underway to expand our annuity product offerings, a key element of our business, while also prudently managing our investment portfolio.a

Key Items for the First Quarter Results

• Our investment spread margin¹ totaled 0.42% for the quarter ended March 31, 2012 compared to 1.50% for the quarter ended March 31, 2011. The decline primarily relates to the effect of lower net realized investment gains and higher OTTI losses in the first quarter of 2012 relative to 2011. Net realized investment gains and OTTI losses tend to fluctuate from period-to-period as a result of changing economic conditions.
• Total annuity sales² were $21.7 million in the first quarter 2012, an increase of $8.0 million or 58% compared to 2011 levels due primarily to an increase in sales of retirement products due to a successful sales effort with recent retirees of a targeted company in the first quarter of 2012.
• Deferred annuity surrenders were $28.4 million in the first quarter of 2012 compared to $32.0 million for the same period in 2011, an 11% decrease, representing average surrender rates of 1.41% and 1.55% for the first quarters of 2012 and 2011, respectively.
• Our capital base remains extremely strong at March 31, 2012 despite a $34.25 million upstream dividend from Presidential Life Insurance Company to our holding company during the quarter with our estimated Risk-Based Capital ratio³ at 512% compared with 556% at December 31, 2011.
• As of March 31, 2012, book value per share, excluding other comprehensive income, increased to $20.18 at March 31, 2012, from $20.12 at December 31, 2011.

Discussion of First Quarter 2012 Financial and Operating Results

As previously discussed, total revenues were $56.7 million and $64.9 million in the first quarters of 2012 and 2011, respectively, a period-over-period decrease of $8.2 million or 12.7%. The decrease from the prior period was principally attributable to revenue declines aggregating to $7.1 million related to changes in net realized investment gains, equity in earnings on limited partnerships and OTTI losses.

Total insurance revenues were $8.9 million and $5.9 million in the first quarters of 2012 and 2011, respectively, a period-over-period increase of $3.0 million or 51.2%. Immediate annuity considerations with life contingencies were $4.7 million and $1.3 million in the first quarters of 2012 and 2011, respectively, a period-over-period increase of $3.4 million or 246.1%. Life insurance and accident and health premiums were $4.2 million and $4.5 million in the first quarters of 2012 and 2011, respectively, a period-over-period decrease of $0.3 million or 7.7%.

Net investment income was $46.5 million and $49.5 million in the first quarters of 2012 and 2011, respectively, a period-over-period decrease of $3.0 million or 6.0%. Excluding the return on the Companyas limited partnership investments and other realized gains, the investment yields for the first quarters of 2012 and 2011 were 5.64% and 5.98%, respectively.

Net realized investment gains (losses), including OTTI, were $(0.7) million and $4.8 million in the first quarters of 2012 and 2011, respectively, a period-over-period reduction of $5.5 million. The decrease in net realized investment gains, including OTTI, was primarily due to an OTTI charge of $3.1 million in the first quarter of 2012 related to one limited partnership and lower realized gains on distributions from limited partnerships of $2.0 million in the first quarter of 2012 relative to 2011. Realized gains on limited partnerships tend to fluctuate from period-to-period consistent with fluctuations in distributions.

Interest credited and benefits paid and accrued to policyholders were $43.9 million and $45.0 million in the first quarters of 2012 and 2011, respectively, a period-over-period decrease of $1.1 million or 2.4%. The decrease is primarily due to the lower interest credited to policyholdersa account balances of $0.9 million due to a decline in both policyholder liabilities and the average crediting rate on policyholder liabilities from 4.97% in the first quarter of 2011 to 4.93% in the first quarter of 2012.

Commissions to agents, net were $1.4 million and $1.2 million in the first quarters of 2012 and 2011, respectively, a period-over-period increase of $0.2 million or 19.7%. Commission expense increased in the first quarter of 2012 relative to 2011 due to higher annuity sales compared to the previous year. The net expense from changes in deferred policy acquisition costs (aDACa) was $0.3 million and $1.1 million in the first quarters of 2012 and 2011, respectively, a period-over-period decrease of $0.8 million, principally related to lower amortization of DAC on annuity sales due to lower realized gains. Despite higher sales, deferred costs for the first quarters of 2012 and 2011 are stable at $1.3 million due to a reduction in deferred costs of $0.2 million during the first quarter of 2012 resulting from the prospective adoption of a new accounting principle that reduced the scope of deferrable costs to those directly linked to successful sales efforts.

General expenses and taxes were $5.3 million and $6.2 million in the first quarters of 2012 and 2011, respectively, a period-over-period decrease of $0.9 million or 15.1%. The decrease in general expenses and taxes was primarily due to non-recurring expenses incurred during the first quarter of 2011, including severance costs and legal and accounting expenses associated with a financial restatement.

The Company recorded income tax expenses of $1.9 million and $3.9 million in the first quarters of 2012 and 2011, respectively, a period-over-period decrease of $2.0 million principally due to lower pre-tax income in the first quarter of 2012 relative to 2011.

Cautionary statement regarding forward-looking statements

This press release contains forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, quotations from management, statements about our future plans and business strategy, and expected or anticipated future events or performance.

These forward-looking statements involve risks and uncertainties that are discussed in our filings with the Securities and Exchange Commission, including economic, competitive, legal and other factors. Accordingly, there is no assurance that our plans, strategy and expectations will be realized. Actual future events and results may differ materially from those expressed or implied in forward-looking statements.

About Presidential Life

Presidential Life Corporation, through its wholly owned subsidiary Presidential Life Insurance Company, is a provider of fixed deferred and immediate annuities, life insurance and accident & health insurance products to financial service professionals and their clients. Headquartered in Nyack, New York, the Company was founded in 1969 and markets its products in 50 states and the District of Columbia. For more information, visit our website [ www.presidentiallife.com ].