Latest MONY Life Insurance Company News
Feb 12, 2015
($1.6) Total net outflows of $1.6 billion compared to the prior quarter's net inflows of $2.8 billion and the prior-year period's net outflows of $10.3 billion, which included $6.8 billion of AXA related Institutional fixed income redemptions due to its sale of MONY Life Insurance Company ("MONY") to an unaffiliated third party. Net outflows from the Institutions channel were $0.3 billion, compared to net inflows of $2.8 billion in the third quarter of 2014. Institutions gross sales of $4.7 billion decreased 19% sequentially from the prior quarter's $5.8 billion. The pipeline of awarded but unfunded Institutional mandates increased sequentially from $6.6 billion to $16.0 billion at December 31, 2014, as a $10 billion Customized Retirement Strategies ("CRS") mandate was added to the pipeline during the quarter. Excluding CRS and passive, the active pipeline finished the year higher. The Retail channel experienced fourth quarter 2014 net outflows of $1.2 billion, compared to the prior quarter's net outflows of $0.1 billion. Retail gross sales of $9.2 billion decreased 21% sequentially from the third quarter's $11.6 billion, with the greatest decline in the Asia ex Japan region. In the Private Wealth Management channel, net outflows of $0.1 billion compared to net inflows of $0.1 billion in the previous quarter. Private Wealth Management gross sales decreased 7% sequentially to $1.3 billion from the prior quarter's $1.4 billion. Fourth Quarter Financial Results Revenues: Net revenues of $787 million were up 3% compared to the fourth quarter of 2013. Higher base fees and Bernstein Research Services revenues were partly offset by lower performance-based fees and investment losses compared to investment gains in the prior-year period. Sequentially, net revenues increased 5%, as a result of higher performance-based fees and Bernstein Research Services revenues and lower investment losses versus the prior period, which were partly offset by lower distribution revenues primarily from US retail products. Bernstein Research Services revenues increased 13% from the fourth quarter of 2013 and 14% from the third quarter of 2014 due to increased trading activity compared to both prior periods. Adjusted net revenues of $655 million were up 3% compared to the fourth quarter of 2013, driven by higher base fees and Bernstein Research Services revenues, partly offset by lower performance-based fees, net distribution expense, the result of current quarter distribution payments and amortization of deferred sales commissions that exceeded distribution revenues, and investment losses compared to investment gains in the prior-year period. Sequentially, adjusted net revenues were up 5%, driven by higher performance-based fees and Bernstein Research Services revenues, partly offset by investment losses. Expenses: Operating expenses were $596 million for the fourth quarter, up 5% year-over-year, as higher employee compensation and benefits and promotion and servicing expenses were partly offset by lower general and administrative ("G&A") expense. Employee compensation and benefits expense increased from the prior-year period due to higher base and incentive compensation and higher commissions. Promotion and servicing expense increased from the prior-year period due to higher trade execution fees, distribution plan payments in non-US retail markets, amortization of deferred sales commissions and marketing expense. Within G&A, occupancy expense and professional fees were lower compared to the prior-year period. The Company recorded a $0.4 million non-cash real estate credit during the fourth quarter of 2014 as part of its ongoing global real estate consolidation plan compared to a $1.7 million non-cash real estate charge in the fourth quarter of 2013. In addition, in the fourth quarter of 2014, the Company recorded a $4.4 million credit to operating expenses compared to a $10.8 million credit in the fourth quarter of 2013. These credits reflect changes in estimates for the contingent consideration payable relating to the acquisition of Sun America's alternative investment group. On a sequential basis, operating expenses were down 1% as lower employee compensation and benefit and G&A expenses were partly offset by higher promotion and servicing expense. Employee compensation and benefits expense decreased due to lower commissions and incentive compensation, partially offset by higher fringes. Within G&A, the decline was driven by increased corporate credit card rebates and lower foreign exchange expenses. Promotion and servicing expense increased sequentially as a result of higher travel and entertainment and marketing expenses, partially offset by lower distribution plan payments primarily in non-US retail markets. The Company's $0.4 million non-cash real estate credit in the current quarter compares to a $1.0 million non-cash real estate credit in the third quarter of 2014. In addition, the Company recorded a $4.4 million credit to operating expenses in the fourth quarter of 2014 to reflect changes in estimates for the contingent consideration payable relating to the acquisition of Sun America's alternative investment group. Adjusted operating expenses were $472 million for the fourth quarter, up 5% compared to the prior-year period, driven by higher total compensation and benefits and promotion and servicing expenses, partly offset by lower G&A expense. The year-over-year increase in total compensation and benefits expense was a result of higher incentive and base compensation and higher commissions. The increase in promotion and servicing expense was due primarily to higher trade execution and marketing expenses. Within G&A, the decrease was due to lower occupancy expense. Sequentially, adjusted operating expenses were down 1%, driven by lower total compensation and benefits and G&A expenses, partly offset by higher promotion and servicing expense. The sequential decrease in total compensation and benefits expense was driven by lower incentive compensation and commissions. The decline in G&A expense was due to increased corporate credit card rebates and lower foreign exchange expenses. The increase in promotion and servicing was primarily due to seasonally higher travel and entertainment. Operating income and margin: Operating income of $191 million for the fourth quarter of 2014 decreased 2% compared to $195 million for the fourth quarter of 2013 and increased 32% compared to $145 million in the third quarter of 2014. Adjusted operating income of $183 million decreased 1% compared to the fourth quarter of 2013, and the adjusted operating margin decreased to 27.9% from 29.1%. On a sequential basis, adjusted operating income increased 23% from $149 million, and the adjusted operating margin increased from 23.8%. Net income per Unit: Diluted net income per Unit for the fourth quarter of 2014 was $0.59 compared to $0.62 for the fourth quarter of 2013 and $0.45 for the third quarter of 2014. Adjusted diluted net income per Unit was $0.57 compared to $0.60 in the fourth quarter of 2013 and $0.45 in the third quarter of 2014. Unit Repurchases AB engages in open-market purchases of Holding Units to help fund anticipated obligations under its incentive compensation award program and for other corporate purposes under a plan pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. The amount of Holding Units AB buys each quarter is subject to SEC regulations, the terms of the 10b5-1 plan and the trading volume of Holding Units on the New York Stock Exchange. In addition, AB purchases Holding Units from employees to allow them to fulfill statutory tax requirements at the time of distribution of long-term incentive compensation awards. During the fourth quarter and full year 2014, AB purchased approximately 3.3 million Holding Units and 3.6 million Holding Units for $87.4 million and $92.8 million, respectively. These amounts reflect AB's open-market purchases of 0.3 million Holding Units for $7.2 million in the fourth quarter as AB did not execute any open market purchases of Holding Units under its 10b5-1 plans in existence during the first nine months of 2014. AB purchased the rest of these Holding Units from employees to allow them to fulfill statutory tax withholding requirements at the time of distribution of long-term incentive compensation awards. Fourth Quarter 2014 Earnings Conference Call Information Management will review fourth quarter 2014 financial and operating results during a conference call beginning at 8:00 a.m. (ET) on Thursday, February 12, 2015. The conference call will be hosted by Peter S. Kraus, Chairman and Chief Executive Officer, and John C. Weisenseel, Chief Financial Officer. Parties may access the conference call by either webcast or telephone: 1. To listen by webcast, please visit AB's Investor Relations website at http://abglobal.com/corporate/investor-relations/home.htm at least 15 minutes prior to the call to download and install any necessary audio software. 2. To listen by telephone, please dial (866) 556-2265 in the U.S. or (973) 935-8521 outside the U.S. 10 minutes before the scheduled start time. The conference ID# is 69566937. The presentation that will be reviewed during the conference call will be available on AB's Investor Relations website shortly after the release of fourth quarter 2014 financial and operating results on February 12, 2015. AB will be providing live updates via Twitter during the conference call. To access the tweets, follow AB on Twitter: @AB_insights. Also, in the future, AB may provide public disclosures to investors via Twitter and other appropriate internet-based social media. A replay of the webcast will be made available beginning approximately one hour after the conclusion of the conference call and will be available on AB's website for one week. An audio replay of the conference call will also be available for one week. To access the audio replay, please call (855) 859-2056 in the U.S., or (404) 537-3406 outside the U.S., and provide the conference ID #: 69566937. Availability of 2014 Form 10-K Unitholders may obtain a copy of our Form 10-K for the year ended December 31, 2014 in either electronic format or hard copy on www.abglobal.com : Download Electronic Copy: Unitholders can download an electronic version of the report by visiting the "Investor & Media Relations" page of our website at www.abglobal.com/investorrelations and clicking on the "Reports & SEC Filings" section. Order Hard Copy Electronically or by Phone: Unitholders may also order a hard copy of the report, which is expected to be available for mailing in approximately eight weeks, free of charge. Unitholders with internet access can follow the above instructions to order a hard copy electronically. Unitholders without internet access, or who would prefer to order by phone, can call 800-227-4618. Cautions Regarding Forward-Looking Statements Certain statements provided by management in this news release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. The most significant of these factors include, but are not limited to, the following: the performance of financial markets, the investment performance of sponsored investment products and separately-managed accounts, general economic conditions, industry trends, future acquisitions, competitive conditions, and current and proposed government regulations, including changes in tax regulations and rates and the manner in which the earnings of publicly-traded partnerships are taxed. AB cautions readers to carefully consider such factors. Further, such forward-looking statements speak only as of the date on which such statements are made; AB undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements. For further information regarding these forward-looking statements and the factors that could cause actual results to differ, see "Risk Factors" and "Cautions Regarding Forward-Looking Statements" in AB's Form 10-K for the year ended December 31, 2014. Any or all of the forward-looking statements made in this news release, Form 10-K, Form 10-Q, other documents AB files with or furnishes to the SEC, and any other public statements issued by AB, may turn out to be wrong. It is important to remember that other factors besides those listed in "Risk Factors" and "Cautions Regarding Forward-Looking Statements", and those listed below, could also adversely affect AB's financial condition, results of operations and business prospects. The forward-looking statements referred to in the preceding paragraph include statements regarding: The possibility that AB will engage in open market purchases of Holding Units to help fund anticipated obligations under our incentive compensation award program: The number of Holding Units AB may decide to buy in future periods, if any, to help fund incentive compensation awards is dependent upon various factors, some of which are beyond our control, including the fluctuation in the price of a Holding Unit and the availability of cash to make these purchases. The pipeline of new institutional mandates not yet funded: Before they are funded, institutional mandates do not represent legally binding commitments to fund and, accordingly, the possibility exists that not all mandates will be funded in the amounts and at the times currently anticipated. Qualified Tax Notice This announcement is intended to be a qualified notice under Treasury Regulation §1.1446-4(b). Please note that 100% of AB Holding's distributions to foreign investors is attributable to income that is effectively connected with a United States trade or business. Accordingly, AB Holding's distributions to foreign investors are subject to federal income tax withholding at the highest applicable tax rate, currently 39.6%. About AB AB is a leading global investment management firm that offers high-quality research and diversified investment services to institutional investors, individuals and private wealth clients in major world markets. As of December 31, 2014, AB Holding owned approximately 36.9% of the issued and outstanding AB Units and AXA, one of the largest global financial services organizations, owned an approximate 62.7% economic interest in AB. Additional information about AB may be found on our internet site, www.abglobal.com .