Presidential Life Announces Third Quarter 2009 Results

- A 28.5% increase in sales of single premium annuities for the first nine months of 2009 -

- A 59% increase in new general agents for the first nine months of 2009 -

• Press Release
• Source: Presidential Life Corporation
• On 6:43 pm EST, Monday November 9, 2009

NYACK, N.Y.--(BUSINESS WIRE)--Presidential Life Corporation (“Presidential Life”) (Nasdaq: PLFE - News) today announced results for the third quarter and nine-month period ended September 30, 2009. Presidential Life, through its wholly owned subsidiary Presidential Life Insurance Company, is engaged in the sale of annuities and insurance products.

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Operating income for the third quarter of 2009 was $1.7 million ($0.06 per share), compared with $17.7 million ($0.60 per share) for the 2008 period. Third quarter 2009 net income was $63,000 ($0.00 per share), compared with $625,000 ($0.02 per share) for the three months of 2008.

Presidential Life had an operating loss for the nine months of 2009 of $5.6 million ($0.19 per share), compared with an operating gain of $40.6 million ($1.38 per share) for the 2008 period. For the nine months of 2009, Presidential Life had a net loss of $10.0 million ($0.34 per share), compared with net income of $21.3 million ($0.72 per share) for the first nine months of 2008.

Key Highlights

• Based on statutory accounting, revenue from sales of single premium annuities was approximately $170.4 million in the first nine months of 2009, an increase of $37.8 million or 28.5% from the $132.6 million in the first nine months of 2008 due to increased sales in deferred annuities
• Presidential Life has already recorded $175.1 million in new premiums through the first nine months of 2009, 90% of the 2009 goal of $200.0 million in new premiums
• A 59% increase in new general agents for the first nine months of 2009 compared to the first nine months of 2008 (91 general agents vs. 57 general agents)

“Our third quarter results demonstrate the continued growth in our core business of single premium annuity sales,” said Donald Barnes, Presidential Life’s Vice Chairman, Chief Executive Officer and President. “While our investment portfolio has faced pressure in 2009 amid difficult market conditions, we are confident that these investments will recover as the economic environment improves and we have already seen a significant improvement over the last few months. Going forward, our strategy is focused on growing our capital base, diversifying our product portfolio and enhancing our investment yield in a prudent manner. We believe these initiatives, alongside the recent enhancements to our corporate governance structure and practices, will continue to position us well to deliver shareholder value.”

Additionally, the Company acknowledges receipt on November 6, 2009, of a preliminary consent solicitation statement from Herbert Kurz, Chairman of the Board. Mr. Kurz proposes to seek stockholder consents to his proposal to remove without cause the existing directors of Presidential Life (other than Mr. Kurz), the appointment of a slate of directors chosen by Mr. Kurz, and the return of Mr. Kurz as CEO and President. The Company believes that the consent solicitation is not in the best interests of all shareholders and that the current Board of Directors and senior management team are best placed to deliver long-term shareholder value. The Company will respond to Mr. Kurz at the appropriate time. Also, at a meeting of the Board of Directors on November 6, pursuant to notice given on November 4, the by-laws of the Company were amended to provide for a mechanism for setting a record date for action by the stockholders by written consent. The record date by-law is designed to ensure that stockholders have a full and fair opportunity to consider any action proposed to be taken by written consent.

Book value per share at September 30, 2009 was $18.94, a 27% increase on the $14.88 book value per share from the prior nine months at year end 2008.

* Net of losses and tax effects.

Discussion of Financial and Operating Results

The volatility in the financial markets over the first nine months of 2009 has negatively impacted Presidential Life’s revenue and investments. Our total revenues in the first nine months of 2009 and 2008 were approximately $160.6 million and approximately $222.1 million, respectively. The decrease from 2008 to 2009 was primarily due to a decrease in net investment income from $210.3 million in 2008 to $126.0 million in 2009, a decrease of approximately $84.3 million. This decrease is primarily due to a decrease in income from limited partnerships of $67.4 million, a decrease in income from short-term investments of $7.2 million and a decrease in income from fixed maturities of $7.6 million.

The Company had net investment income of $46.6 million and $75.1 million for the three month periods ended September 30, 2009 and September 30, 2008, respectively. The variance of approximately $28.6 million is primarily due to the decrease in income from the limited partnerships discussed above.

The investment portfolio has faced pressure due to the economic crisis, in particular the limited partnership portfolio, which constitutes approximately 5.5% of the total investment portfolio. Investments in these limited partnerships were made in periods prior to the second quarter of 2009. The majority of the investment portfolio, over 90%, is comprised of cash and high-quality bonds. The limited partnership portfolio has been pressured by the inherent market volatility, which should be mitigated by the Company’s intention to hold these investments to maturity. The decrease in income from short-term investments was due to lower short-term interest rates in the low interest rate environment.

The Company's ratios of net investment income to average cash and invested assets (based on book value) for the nine month periods ended September 30, 2009 and September 30, 2008 were 4.75% and 7.56%, respectively.

Total annuity considerations and life insurance premiums decreased from approximately $37.5 million for the nine months ended September 30, 2008 to approximately $36.9 million for the nine months ended September 30, 2009. Of this amount, annuity considerations were approximately $26.4 million for the nine months ended September 30, 2009 as compared to approximately $26.2 million for the nine months ended September 30, 2008. The decrease is primarily due to decreased sales in our ordinary life policies.

As a reminder, in accordance with GAAP, sales of single premium deferred annuities and single premium immediate income annuities without life contingencies are not reported as insurance revenues, but rather as additions to policyholder account balances. Based on statutory accounting, revenue from sales of single premium annuities was approximately $170.4 million and approximately $132.6 million during the nine months ended September 30, 2009 and September 30, 2008, respectively, an increase of approximately $37.8 million or approximately 28.5% due to increased sales in deferred annuities.

Use of Non-GAAP Financial Measures

This press release and the accompanying tables include non-GAAP financial measures. For a description of these non-GAAP financial measures, including the reasons management uses each measure, and reconciliations of these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with Generally Accepted Accounting Principles, please see the section of the accompanying tables titled "About Non-GAAP Financial Measures."

About Non-GAAP Financial Measures

The Insurance Company prepares its statutory financial statements in accordance with accounting practices prescribed by the New York State Insurance Department. Prescribed Statutory Accounting Principles include state laws, regulations and general administrative rules, as well as a variety of publications from the NAIC. Accounting principles used to prepare statutory financial statements differ from financial statements prepared on the basis of GAAP.

A reconciliation of the Insurance Company’s net income (loss) as filed with regulatory authorities to net income reported in the accompanying financial statements for the nine months ended September 30, 2009 and 2008 is set forth in the following table:

Additional Information

In connection with the consent solicitation statement filed by Herbert Kurz with the SEC on November 6, 2009, Presidential Life Corporation intends to file with the SEC a Schedule 14A containing a consent revocation statement. The definitive consent revocation statement will be mailed to stockholders of Presidential Life Corporation. Before making any voting decision, Presidential Life Corporation stockholders and investors are urged to read the consent revocation statement and other documents filed with the SEC carefully and in their entirety when they become available because they will contain important information about the proposed consent solicitation. Presidential Life stockholders and other investors will be able to obtain copies of these materials (when they become available) without charge from the SEC through the SEC’s Web site at www.sec.gov. These documents (when they are available) can also be obtained free of charge from Presidential Life by directing a request to Presidential Life Corporation, 69 Lydecker Street, Nyack, New York 10960, Attention: Chief Financial Officer or accessing them on Presidential Life Corporation’s corporate Web site at www.presidentiallife.com.

Presidential Life and certain of its directors and executive officers may be deemed to be participants in the solicitation of revocations of consents from Presidential Life's stockholders in connection with the proposed consent solicitation under the rules of the SEC. Information about the directors and executive officers of Presidential Life Corporation may be found in its Annual Report on Form 10-K for the year ended December 31, 2008 filed with the SEC on March 12, 2009 and in its definitive proxy statement relating to its 2009 Annual Meeting of Shareholders filed with the SEC on April 24, 2009. These documents can be obtained free of charge from the sources indicated above. Additional information regarding the interests of these participants will also be included in the consent revocation statement regarding the proposed consent solicitation when it becomes available.

About Presidential Life

Presidential Life Corporation, through its wholly owned subsidiary Presidential Life Insurance Company, is a leading provider of fixed deferred and immediate annuities and life insurance products to financial service professionals and their clients. Headquartered in Nyack, New York, the Corporation was founded in 1969 and, through the Insurance Company, markets its product in 49 states and the District of Columbia. For more information, visit our website www.presidentiallife.com.

Presidential Life Corporation
Charles Snyder
Chief Financial Officer
845-358-2300 ext. 440
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