UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

DELPHI FINANCIAL GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware		001-11462		13-3427277
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

1105 North Market Street, Suite 1230, P.O. Box 8985, Wilmington, DE		19899
(Address of principal executive offices)		(ZIP Code)

Registrant’s telephone number, including area code 302-478-5142

Not Applicable
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 2.02. Results of Operations and Financial Condition

The information contained in this Current Report on Form 8-K is being filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

DELPHI FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited; in thousands, except per share data)

		Three Months Ended
		03/31/2009				03/31/2008
Revenue:
Premium and fee income		$	357,721			$	342,290
Net investment income			62,855				32,337
Net realized investment losses			(21,999	)			(6,436	)
			398,577				368,191
Benefits and expenses:
Benefits, claims and interest credited to policyholders			255,598				242,912
Commissions and expenses			106,134				89,893
			361,732				332,805
Operating income			36,845				35,386
Interest expense:
Corporate debt			3,985				4,224
Junior subordinated debentures			3,240				3,240
Junior subordinated deferrable interest debentures underlying company-obligated mandatorily redeemable capital securities issued by unconsolidated subsidiaries			—				404
Income tax expense			5,136				6,374
Net income		$	24,484			$	21,144
Basic results per share of common stock:
Net income		$	0.51			$	0.43
Weighted average shares outstanding			48,034				49,055
Diluted results per share of common stock:
Net income		$	0.51			$	0.42
Weighted average shares outstanding			48,123				50,153
Dividends paid per share of common stock		$	0.10			$	0.09

DELPHI FINANCIAL GROUP, INC.
SUMMARIZED CONSOLIDATED BALANCE SHEETS
(Unaudited; in thousands)

		03/31/2009				12/31/2008
Assets:
Investments:
Fixed maturity securities, available for sale		$	3,633,294			$	3,773,382
Short-term investments			609,588				401,620
Other investments			542,029				479,921
			4,784,911				4,654,923
Cash			84,289				63,837
Cost of business acquired			286,281				264,777
Reinsurance receivables			379,822				376,731
Goodwill			93,929				93,929
Other assets			433,265				409,103
Assets held in separate account			90,363				90,573
Total assets		$	6,152,860			$	5,953,873
Liabilities and Equity:
Policy liabilities and accruals		$	2,640,367			$	2,574,050
Policyholder account balances			1,347,382				1,356,932
Corporate debt			365,750				350,750
Junior subordinated debentures			175,000				175,000
Other liabilities and policyholder funds			670,651				581,954
Liabilities related to separate account			90,363				90,573
Total liabilities			5,289,513				5,129,259
Equity:
Class A Common Stock			490				489
Class B Common Stock			60				60
Additional paid-in capital			526,177				522,596
Accumulated other comprehensive loss			(335,643	)			(351,710	)
Retained earnings			865,572				846,390
Treasury stock, at cost			(197,246	)			(197,246	)
Total shareholders’ equity			859,410				820,579
Noncontrolling interest			3,937				4,035
Total equity			863,347				824,614
Total liabilities and equity		$	6,152,860			$	5,953,873

DELPHI FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in thousands)

		Three Months Ended
		03/31/2009				03/31/2008
Operating activities:
Net income		$	24,484			$	21,144
Adjustments to reconcile net income to net cash provided by operating activities:
Change in policy liabilities and policyholder accounts			99,523				92,314
Net change in reinsurance receivables and payables			(7,086	)			10,184
Amortization, principally the cost of business acquired and investments			13,543				15,238
Deferred costs of business acquired			(34,392	)			(33,115	)
Net realized losses on investments			21,999				6,437
Net change in federal income tax liability			4,114				(16,573	)
Other			(30,969	)			1,899
Net cash provided by operating activities			91,216				97,528
Investing activities:
Purchases of investments and loans made			(207,901	)			(298,167	)
Sales of investments and receipts from repayment of loans			77,696				254,129
Maturities of investments			261,307				54,442
Net change in short-term investments			(207,968	)			(150,914	)
Change in deposit in separate account			4,845				790
Net cash used by investing activities			(72,021	)			(139,720	)
Financing activities:
Deposits to policyholder accounts			61,681				53,843
Withdrawals from policyholder accounts			(70,938	)			(27,698	)
Borrowings under revolving credit facility			17,000				29,000
Principal payments under revolving credit facility			(2,000	)			(3,000	)
Acquisition of treasury stock			—				(17,040	)
Other financing activities			(4,486	)			(2,724	)
Net cash provided by financing activities			1,257				32,381
Increase (decrease) in cash			20,452				(9,811	)
Cash at beginning of period			63,837				51,240
Cash at end of period		$	84,289			$	41,429

Delphi Financial Group, Inc. (the “Company”) had net income in the first quarter of 2009 of $24.5 million or $0.51 per share, compared to $21.1 million or $0.42 per share in the first quarter of 2008. Net income in the first quarter of 2009 included after-tax realized investment losses of $(14.3) million or $(0.30) per share, including other-than-temporary impairments of $(11.4) million or ($0.24) per share. Net income in the first quarter of 2008 included after-tax realized investment losses of $(4.2) million or $(0.09) per share, including other-than-temporary impairments of $(4.0) million or $(0.08) per share.

Premiums from the Company’s core group employee benefit products in the first quarter of 2009 increased 4% from the first quarter of 2008, reaching $338.0 million. Excess workers’ compensation premiums increased 2%, and premiums from the Company’s other core group employee benefit products increased 5%, as

compared with the first quarter of 2008. The combined ratio (loss ratio plus expense ratio) for the Company’s group employee benefits products in the first quarter of 2009 was 93.2% compared to 91.3% in the first quarter of 2008, reflecting stable loss ratios and higher expense ratios for the first quarter of 2009 resulting in part from increased spending on new product development at SNCC.

Deposits from the Company’s asset accumulation products, consisting of annuity sales, totaled $59.7 million in the first quarter of 2009, an increase of 14% from the first quarter of 2008. Funds under management for the Company’s asset accumulation products were $1.3 billion at March 31, 2009, which was unchanged from December 31, 2008, as growth in annuity deposits was offset by the scheduled repayment of $35.0 million of institutional funding agreements at maturity.

The Company’s net investment income increased 95% to $62.9 million in the first quarter of 2009 from $32.3 million in the first quarter of 2008. This increase reflects an increase in the tax equivalent weighted average annualized yield on invested assets to 5.8% in the first quarter of 2009 from 2.9% in the first quarter of 2008.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: April 24, 2009