Ҵý

Ҵý Financial Announces Second Quarter 2015 Results

CHICAGO, Aug. 3, 2015 /PRNewswire/ -- Ҵý Financial Corporation (NYSE: Ҵý) today announced second quarter 2015 net operating income of $132 million, or $0.49 per share, and net income of $138 million, or $0.51 per share. Property & Casualty Operations' combined ratio for the second quarter was 98.4%, or 95.3% excluding catastrophes and development.

Ҵý Financial also declared a quarterly dividend of $0.25 per share, payable September 2, 2015 to stockholders of record on August 17, 2015.


                                                                                     Results for the Three Months                 Results for the Six Months Ended
                                                                                             Ended June 30                                    June 30
                                                                                     ----------------------------               --------------------------------

    ($ millions, except per share data)                                                  2015                  2014                      2015                  2014
                                                                                         ----                  ----                      ----                  ----

    Net operating income (a)                                                                      $132                                           $272                                           $357                                         $462

    Net realized investment gains (losses)                                                  6                              (11)                                14                                 19

    Income (loss) from discontinued operations, net of tax                                  -                                6                                  -                             (201)

    Net income                                                                                    $138                                           $267                                           $371                                         $280
                                                                                                  ====                                           ====                                           ====                                         ====


    Net operating income per diluted share                                                       $0.49                                          $1.00                                          $1.32                                        $1.71

    Net income per diluted share                                                         0.51                              0.98                               1.37                               1.03




                                                                                          June 30, 2015                           December 31, 2014
                                                                                          -------------                           -----------------

    Book value per share                                                                                             $45.27                                                    $47.39

    Book value per share excluding AOCI                                                                   44.73                                                   45.91


    (a)    Management utilizes the net operating income financial measure to monitor the Ҵý's operations.  Please refer to Note P in the  Consolidated Financial Statements within Ҵý's Annual Report on Form 10-K for the year ended
     December 31, 2014 for further discussion of this measure.

Property & Casualty Operations' net operating income was $237 million for the second quarter of 2015 as compared with $236 million in the prior year quarter. Improved underwriting results were offset by lower net investment income. Catastrophe losses for the second quarter of 2015 were $39 million after tax, primarily due to U.S. weather-related events, as compared with $37 million after tax in the prior year quarter.

Net operating results for our non-core segments decreased $141 million from the prior year quarter driven by significant items in our Corporate and Other Non-core segment. Results in the current year quarter were negatively affected by a $54 million after-tax charge related to the application of retroactive reinsurance accounting to adverse reserve development ceded under the 2010 Asbestos and Environmental Pollution Loss Portfolio Transfer. The prior year quarter benefited from a $56 million after-tax curtailment gain related to a change in postretirement benefits.

After-tax net investment income decreased to $356 million for the second quarter of 2015 as compared with $391 million in the prior year quarter. This decrease was driven by limited partnerships, which returned 1.6% as compared with 3.5% in the prior year quarter.

Property & Casualty Operations

"Our combined ratio continues to improve as a result of disciplined underwriting," said Thomas F. Motamed, Chairman and Chief Executive Officer of Ҵý Financial Corporation. "We are pleased with our sustained progress and remain confident in our strategy despite challenging market conditions."


                                                            Results for the Three Months Ended June             Results for the Six Months Ended June
                                                                              30                                                30
                                                          ---------------------------------------           --------------------------------------

    ($ millions)                                                      2015                       2014         2015                       2014
                                                                      ----                       ----         ----                       ----

    Net written premiums                                              $1,638                                   $1,654                                     $3,307            $3,421

    NWP change (% year over year)                              (1)             %                       (4)   %                             (3)        %          (2)    %

    Net operating income                                                $237                                     $236                                       $501              $455

    Net income                                                 241                                      226                                  510                    461


    Loss ratio excluding catastrophes and development         61.7              %                      62.8    %                            62.0        %          63.4   %

    Effect of catastrophe impacts                              3.8                                      3.4                                  2.8                    3.9

    Effect of development-related items                      (0.7)                                     1.6                                (0.1)                   0.7
                                                              ----                                      ---                                 ----

    Loss ratio                                                64.8              %                      67.8    %                            64.7        %          68.0   %
                                                              ====                                     ====                                 ====                   ====


    Combined ratio                                            98.4              %                     101.3    %                            98.6        %         101.4   %

    Combined ratio excluding catastrophes and development     95.3              %                      96.3    %                            95.9        %          96.8   %


    Business Operating Highlights

    Specialty


                                                          Results for the Three Months Ended                Results for the Six Months Ended June
                                                                      June 30                                             30
                                                          ----------------------------------             --------------------------------------

    ($ millions)                                                      2015                   2014                2015                       2014
                                                                      ----                   ----                ----                       ----

    Net written premiums                                                $672                                        $701                                $1,370              $1,414

    NWP change (% year over year)                               (4)            %                    (1)          %                            (3)   %            (1)    %

    Net operating income                                                $137                                        $167                                  $272                $296

    Net income                                                  137                                  163                                        275                 300


    Loss ratio excluding catastrophes and development          61.7             %                   62.3           %                           62.0   %            62.7   %

    Effect of catastrophe impacts                               0.7                                  0.6                                        0.9                 1.2

    Effect of development-related items                       (2.1)                               (5.9)                                     (1.2)              (3.5)
                                                               ----                                 ----                                       ----                ----

    Loss ratio                                                 60.3             %                   57.0           %                           61.7   %            60.4   %
                                                               ====                                 ====                                       ====                ====


    Combined ratio                                             91.2             %                   87.5           %                           92.9   %            90.8   %

    Combined ratio excluding catastrophes and development      92.6             %                   92.8           %                           93.2   %            93.1   %

    --  Net operating income decreased $30 million for the second quarter of
        2015 as compared with the prior year quarter, driven by less favorable
        net prior year development and lower net investment income.
    --  The combined ratio increased 3.7 points for the second quarter of 2015
        as compared with the prior year quarter.  The loss ratio increased 3.3
        points due to less favorable net prior year development, which more than
        offset an improved current accident year loss ratio.  Catastrophe losses
        were $5 million, or 0.7 points of the loss ratio, for the second quarter
        of 2015 as compared with $5 million, or 0.6 points of the loss ratio for
        the prior year quarter.  The expense ratio increased 0.4 points for the
        second quarter of 2015 as compared with the prior year quarter due to
        the unfavorable effect of lower net earned premiums.
    --  Net written premiums for the second quarter of 2015 decreased $29
        million as compared with the prior year period, primarily due to
        slightly lower retention and new business.  Average rate increased 1%
        for the policies that renewed in the second quarter of 2015 while
        achieving retention of 85%.


    Commercial


                                                          Results for the Three Months Ended               Results for the Six Months Ended June
                                                                      June 30                                            30
                                                          ----------------------------------            --------------------------------------

    ($ millions)                                                      2015                   2014               2015                       2014
                                                                      ----                   ----               ----                       ----

    Net written premiums                                                $717                                       $692                                $1,476           $1,499

    NWP change (% year over year)                                 4             %                   (5)          %                            (2)  %          (4)   %

    Net operating income                                                 $78                                        $49                                  $198             $123

    Net income                                                   82                                  42                                        203              124


    Loss ratio excluding catastrophes and development          62.6             %                  64.9           %                           63.3   %         66.1   %

    Effect of catastrophe impacts                               7.7                                 6.4                                        5.3              7.4

    Effect of development-related items                         1.8                                12.4                                        1.0              6.9
                                                                ---                                ----                                        ---              ---

    Loss ratio                                                 72.1             %                  83.7           %                           69.6   %         80.4   %
                                                               ====                                ====                                       ====             ====


    Combined ratio                                            107.2             %                 118.1           %                          105.3   %        114.7   %

    Combined ratio excluding catastrophes and development      97.7             %                  99.3           %                           99.0   %        100.4   %

    --  Net operating income increased $29 million for the second quarter of
        2015 as compared with the prior year quarter, due to improved
        underwriting results, partially offset by lower net investment income.
    --  The combined ratio improved 10.9 points for the second quarter of 2015
        as compared with the prior year quarter.  The loss ratio improved 11.6
        points, due to less unfavorable net prior year development coupled with
        an improved current accident year loss ratio.  Catastrophe losses were
        $54 million, or 7.7 points of the loss ratio, for the second quarter of
        2015, as compared with $47 million, or 6.4 points of the loss ratio, for
        the prior year quarter.  The expense ratio increased 0.8 points for the
        second quarter of 2015 as compared with the prior year quarter, driven
        by the unfavorable effect of lower net earned premiums.
    --  Net written premiums increased $25 million for the second quarter of
        2015 as compared with the prior year quarter.  This increase was driven
        by higher retention and new business, partially offset by underwriting
        actions taken in certain business classes.  Average rate increased 2%
        for the policies that renewed in the second quarter of 2015 while
        achieving a retention of 79%.


    International


                                                          Results for the Three Months Ended              Results for the Six Months Ended
                                                                      June 30                                     June 30
                                                          ----------------------------------             --------------------------------

    ($ millions)                                                      2015                   2014                 2015                     2014
                                                                      ----                   ----                 ----                     ----

    Net written premiums                                                $249                                         $261                              $461              $508

    NWP change (% year over year)                               (5)            %                   (10)           %                          (9)   %            1    %

    Net operating income                                                 $22                                          $20                               $31               $36

    Net income                                                   22                                   21                                        32                37


    Loss ratio excluding catastrophes and development          58.6             %                   58.2            %                         57.7   %          57.0   %

    Effect of catastrophe impacts                               0.8                                  1.8                                       1.0               1.6

    Effect of development-related items                       (4.4)                               (9.2)                                    (1.0)            (6.1)
                                                               ----                                 ----                                      ----              ----

    Loss ratio                                                 55.0             %                   50.8            %                         57.7   %          52.5   %
                                                               ====                                 ====                                      ====              ====


    Combined ratio                                             92.2             %                   89.9            %                         95.1   %          91.7   %

    Combined ratio excluding catastrophes and development      95.8             %                   97.3            %                         95.1   %          96.2   %

    --  Net operating income increased $2 million for the second quarter of 2015
        as compared with the prior year quarter.
    --  The combined ratio increased 2.3 points for the second quarter of 2015
        as compared with the prior year quarter.  The loss ratio increased 4.2
        points, primarily due to less favorable net prior year development. The
        expense ratio improved 1.9 points due to decreased expenses, partially
        offset by the unfavorable effect of lower net earned premiums.
    --  Net written premiums decreased $12 million for the second quarter of
        2015 as compared with the prior year quarter.  The decrease was driven
        by the unfavorable effect of foreign currency exchange rates.  Excluding
        the effect of foreign currency exchange rates, net written premiums
        increased 5% for the second quarter of 2015 as compared with the prior
        year quarter.  Average rate decreased 1% for the policies that renewed
        in the second quarter of 2015 while achieving a retention of 71%.


    Life & Group Non-Core


                               Results for the Three                Results for the Six
                               Months Ended June 30                 Months Ended June 30
                               --------------------                 --------------------

     ($
     millions)                   2015                2014   2015                   2014
                                 ----                ----   ----                   ----

     Total
     operating
     revenues                      $316                        $320                       $642    $635

     Net
     operating
     income
     (loss)               (24)                            9                          (41)       7

     Net
     income
     (loss)               (23)                            6                          (37)      14

    --  Net operating results decreased $33 million for the second quarter of
        2015 as compared with the prior year quarter.  The prior year quarter
        benefited from unusually favorable morbidity and persistency experience
        in our long term care business as compared to modestly unfavorable
        morbidity experience in the current year quarter.


    Corporate & Other Non-Core


                                   Results for the Three         Results for the Six
                                    Months Ended June 30         Months Ended June 30
                                    --------------------         --------------------

     ($
     millions)                       2015                2014      2015               2014
                                     ----                ----      ----               ----

     Interest
     expense                            $39                            $46                   $78   $90

     Net
     operating
     income
     (loss)                    (81)                           27                       (103)     -

     Net
     income
     (loss)                    (80)                           29                       (102)     6

About the Ҵý

Serving businesses and professionals since 1897, Ҵý is the country's eighth largest commercial insurance writer and the 13(th) largest property and casualty company. Ҵý's insurance products include standard commercial lines, specialty lines, surety, marine and other property and casualty coverages. Ҵý's services include risk management, information services, underwriting, risk control and claims administration. For more information, please visit Ҵý at . "Ҵý" is a service mark registered by Ҵý Financial Corporation with the United States Patent and Trademark Office. Certain Ҵý Financial Corporation subsidiaries use the "Ҵý" service mark in connection with insurance underwriting and claims activities.

Conference Call and Webcast/Presentation Information

A conference call for investors and the professional investment community will be held at 10:00 a.m. (ET) today. On the conference call will be Thomas F. Motamed, Chairman and Chief Executive Officer of Ҵý Financial Corporation, and other members of senior management. Participants can access the call by dialing (888) 397-5352, or for international callers, (719) 457-2727. The call will also be broadcast live on the internet at or you may go to the investor relations pages of the Ҵý website () for further details. A presentation will be posted and available on the Ҵý website and will provide additional insight into the results.

The call is available to the media, but questions will be restricted to investors and the professional investment community. An online replay will be available on Ҵý's website following the call. Financial supplement information related to the results is available on the investor relations pages of the Ҵý website or by contacting Robert Tardella at 312-822-4387.

Definition of Reported Segments

Specialty provides management and professional liability and other coverages through property and casualty products and services using a network of brokers, independent agencies and managing general underwriters.

Commercial works with an independent agency distribution system and a network of brokers to market a broad range of property and casualty insurance products and services to small, middle-market and large businesses and organizations.

International provides property and casualty insurance and specialty coverages in Canada, the United Kingdom and Continental Europe as well as globally through its operations at Lloyd's of London.

Life & Group Non-Core primarily includes the results of the individual and group long term care businesses that are in run off.

Corporate & Other Non-Core primarily includes certain corporate expenses, including interest on corporate debt, and the results of certain property and casualty business in run-off, including Ҵý Re and asbestos and environmental pollution.

Financial Measures

In the evaluation of the results of Specialty, Commercial and International, management utilizes the loss ratio, the expense ratio, the dividend ratio and the combined ratio. These ratios are calculated using financial results prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The loss ratio is the percentage of net incurred claim and claim adjustment expenses to net earned premiums. The expense ratio is the percentage of insurance underwriting and acquisition expenses, including the amortization of deferred acquisition costs, to net earned premiums. The dividend ratio is the ratio of policyholders' dividends incurred to net earned premiums. The combined ratio is the sum of the loss, expense and dividend ratios.

This press release may also reference or contain financial measures that are not in accordance with GAAP. For reconciliations of non-GAAP measures to the most comparable GAAP measures, please refer herein and/or to Ҵý's most recent 10-K on file with the Securities and Exchange Commission available at .

Forward-Looking Statement

This press release may include statements which relate to anticipated future events (forward-looking statements) rather than actual present conditions or historical events. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and generally include words such as "believes", "expects", "intends", "anticipates", "estimates" and similar expressions. Forward-looking statements, by their nature, are subject to a variety of inherent risks and uncertainties that could cause actual results to differ materially from the results projected. Many of these risks and uncertainties cannot be controlled by Ҵý. For a detailed description of these risks and uncertainties affecting Ҵý, please refer to Ҵý's most recent 10-K on file with the Securities and Exchange Commission available at .

Any forward-looking statements made in this press release are made by Ҵý as of the date of this press release. Further, Ҵý does not have any obligation to update or revise any forward-looking statement contained in this press release, even if Ҵý's expectations or any related events, conditions or circumstances change.


    MEDIA:                               ANALYSTS:

    Brandon Davis,
     312-822-5167                        James Anderson, 312-822-7757

    Sarah Pang,
     312-822-6394                        Derek G. Smith, 312-822-6612

                                         Robert Tardella, 312-822-4387

SOURCE Ҵý Financial Corporation

SOURCE: Ҵý Financial Corporation

Ҵý

Ҵý Financial Announces Second Quarter 2015 Results

- NOI OF $132 MILLION, INCLUDING $54 MILLION RETRO REINSURANCE CHARGE

- NOI OF $0.49 PER SHARE; $0.69 ADJUSTED FOR RETRO REINSURANCE CHARGE

- P&C COMBINED RATIO EX CATASTROPHES AND DEVELOPMENT OF 95.3%; 95.9% YTD

- BOOK VALUE PER SHARE EXCLUDING AOCI OF $44.73

- QUARTERLY DIVIDEND OF $0.25 PER SHARE

PR Newswire

CHICAGO, Aug. 3, 2015 /PRNewswire/ -- Ҵý Financial Corporation (NYSE: Ҵý) today announced second quarter 2015 net operating income of $132 million, or $0.49 per share, and net income of $138 million, or $0.51 per share. Property & Casualty Operations' combined ratio for the second quarter was 98.4%, or 95.3% excluding catastrophes and development.

Ҵý Financial also declared a quarterly dividend of $0.25 per share, payable September2, 2015 to stockholders of record on August 17, 2015.


Results for the Three Months Ended June 30


Results for the Six Months Ended June 30

($ millions, except per share data)

2015


2014


2015


2014

Net operating income (a)

$

132



$

272



$

357



$

462


Net realized investment gains (losses)

6



(11)



14



19


Income (loss) from discontinued operations, net of tax



6





(201)


Net income

$

138



$

267



$

371



$

280










Net operating income per diluted share

$

0.49



$

1.00



$

1.32



$

1.71


Net income per diluted share

0.51



0.98



1.37



1.03







































June 30, 2015


December 31, 2014

Book value per share

$

45.27



$

47.39


Book value per share excluding AOCI

44.73



45.91








(a) Management utilizes the net operating income financial measure to monitor the Ҵý's operations. Please refer to Note P in the Consolidated Financial Statements within Ҵý's Annual Report on Form 10-K for the year ended December 31, 2014 for further discussion of this measure.

Property & Casualty Operations' net operating income was $237 million for the second quarter of 2015 as compared with $236 million in the prior year quarter. Improved underwriting results were offset by lower net investment income. Catastrophe losses for the second quarter of 2015 were $39 million after tax, primarily due to U.S. weather-related events, as compared with $37 million after tax in the prior year quarter.

Net operating results for our non-core segments decreased $141 million from the prior year quarter driven by significant items in our Corporate and Other Non-core segment. Results in the current year quarter were negatively affected by a $54 million after-tax charge related to the application of retroactive reinsurance accounting to adverse reserve development ceded under the 2010 Asbestos and Environmental Pollution Loss Portfolio Transfer. The prior year quarter benefited from a $56 million after-tax curtailment gain related to a change in postretirement benefits.

After-tax net investment income decreased to $356 million for the second quarter of 2015 as compared with $391 million in the prior year quarter. This decrease was driven by limited partnerships, which returned 1.6% as compared with 3.5% in the prior year quarter.

Property & Casualty Operations

"Our combined ratio continues to improve as a result of disciplined underwriting," said Thomas F. Motamed, Chairman and Chief Executive Officer of Ҵý Financial Corporation. "We are pleased with our sustained progress and remain confident in our strategy despite challenging market conditions."


Results for the Three Months Ended June 30



Results for the Six Months Ended June 30


($ millions)

2015


2014


2015


2014

Net written premiums

$

1,638




$

1,654




$

3,307




$

3,421



NWP change (% year over year)

(1)


%


(4)


%


(3)


%


(2)


%

Net operating income

$

237




$

236




$

501




$

455



Net income

241




226




510




461















Loss ratio excluding catastrophes and development

61.7


%


62.8


%


62.0


%


63.4


%

Effect of catastrophe impacts

3.8




3.4




2.8




3.9



Effect of development-related items

(0.7)




1.6




(0.1)




0.7



Loss ratio

64.8


%


67.8


%


64.7


%


68.0


%













Combined ratio

98.4


%


101.3


%


98.6


%


101.4


%

Combined ratio excluding catastrophes and development

95.3


%


96.3


%


95.9


%


96.8


%

Business Operating Highlights





Specialty












Results for the Three Months Ended June 30



Results for the Six Months Ended June 30


($ millions)

2015


2014


2015


2014

Net written premiums

$

672




$

701




$

1,370




$

1,414



NWP change (% year over year)

(4)


%


(1)


%


(3)


%


(1)


%

Net operating income

$

137




$

167




$

272




$

296



Net income

137




163




275




300















Loss ratio excluding catastrophes and development

61.7


%


62.3


%


62.0


%


62.7


%

Effect of catastrophe impacts

0.7




0.6




0.9




1.2



Effect of development-related items

(2.1)




(5.9)




(1.2)




(3.5)



Loss ratio

60.3


%


57.0


%


61.7


%


60.4


%













Combined ratio

91.2


%


87.5


%


92.9


%


90.8


%

Combined ratio excluding catastrophes and development

92.6


%


92.8


%


93.2


%


93.1


%

  • Net operating income decreased $30 million for the second quarter of 2015 as compared with the prior year quarter, driven by less favorable net prior year development and lower net investment income.
  • The combined ratio increased 3.7 points for the second quarter of 2015 as compared with the prior year quarter. The loss ratio increased 3.3 points due to less favorable net prior year development, which more than offset an improved current accident year loss ratio. Catastrophe losses were $5 million, or 0.7 points of the loss ratio, for the second quarter of 2015 as compared with $5 million, or 0.6 points of the loss ratio for the prior year quarter. The expense ratio increased 0.4 points for the second quarter of 2015 as compared with the prior year quarter due to the unfavorable effect of lower net earned premiums.
  • Net written premiums for the second quarter of 2015 decreased $29 million as compared with the prior year period, primarily due to slightly lower retention and new business. Average rate increased 1% for the policies that renewed in the second quarter of 2015 while achieving retention of 85%.

Commercial












Results for the Three Months Ended June 30



Results for the Six Months Ended June 30


($ millions)

2015


2014


2015


2014

Net written premiums

$

717




$

692




$

1,476




$

1,499



NWP change (% year over year)

4


%


(5)


%


(2)


%


(4)


%

Net operating income

$

78




$

49




$

198




$

123



Net income

82




42




203




124















Loss ratio excluding catastrophes and development

62.6


%


64.9


%


63.3


%


66.1


%

Effect of catastrophe impacts

7.7




6.4




5.3




7.4



Effect of development-related items

1.8




12.4




1.0




6.9



Loss ratio

72.1


%


83.7


%


69.6


%


80.4


%













Combined ratio

107.2


%


118.1


%


105.3


%


114.7


%

Combined ratio excluding catastrophes and development

97.7


%


99.3


%


99.0


%


100.4


%

  • Net operating income increased $29 million for the second quarter of 2015 as compared with the prior year quarter, due to improved underwriting results, partially offset by lower net investment income.
  • The combined ratio improved 10.9 points for the second quarter of 2015 as compared with the prior year quarter. The loss ratio improved 11.6 points, due to less unfavorable net prior year development coupled with an improved current accident year loss ratio. Catastrophe losses were $54 million, or 7.7 points of the loss ratio, for the second quarter of 2015, as compared with $47 million, or 6.4 points of the loss ratio, for the prior year quarter. The expense ratio increased 0.8 points for the second quarter of 2015 as compared with the prior year quarter, driven by the unfavorable effect of lower net earned premiums.
  • Net written premiums increased $25 million for the second quarter of 2015 as compared with the prior year quarter. This increase was driven by higher retention and new business, partially offset by underwriting actions taken in certain business classes. Average rate increased 2% for the policies that renewed in the second quarter of 2015 while achieving a retention of 79%.

International












Results for the Three Months Ended June 30



Results for the Six Months Ended June 30


($ millions)

2015


2014


2015


2014

Net written premiums

$

249




$

261




$

461




$

508



NWP change (% year over year)

(5)


%


(10)


%


(9)


%


1


%

Net operating income

$

22




$

20




$

31




$

36



Net income

22




21




32




37















Loss ratio excluding catastrophes and development

58.6


%


58.2


%


57.7


%


57.0


%

Effect of catastrophe impacts

0.8




1.8




1.0




1.6



Effect of development-related items

(4.4)




(9.2)




(1.0)




(6.1)



Loss ratio

55.0


%


50.8


%


57.7


%


52.5


%













Combined ratio

92.2


%


89.9


%


95.1


%


91.7


%

Combined ratio excluding catastrophes and development

95.8


%


97.3


%


95.1


%


96.2


%

  • Net operating income increased $2 million for the second quarter of 2015 as compared with the prior year quarter.
  • The combined ratio increased 2.3 points for the second quarter of 2015 as compared with the prior year quarter. The loss ratio increased 4.2 points, primarily due to less favorable net prior year development. The expense ratio improved 1.9 points due to decreased expenses, partially offset by the unfavorable effect of lower net earned premiums.
  • Net written premiums decreased $12 million for the second quarter of 2015 as compared with the prior year quarter. The decrease was driven by the unfavorable effect of foreign currency exchange rates. Excluding the effect of foreign currency exchange rates, net written premiums increased 5% for the second quarter of 2015 as compared with the prior year quarter. Average rate decreased 1% for the policies that renewed in the second quarter of 2015 while achieving a retention of 71%.

Life & Group Non-Core












Results for the Three
Months Ended June 30



Results for the Six
Months Ended June 30


($ millions)

2015


2014


2015


2014

Total operating revenues

$

316




$

320




$

642




$

635



Net operating income (loss)

(24)




9




(41)




7



Net income (loss)

(23)




6




(37)




14



  • Net operating results decreased $33 million for the second quarter of 2015 as compared with the prior year quarter. The prior year quarter benefited from unusually favorable morbidity and persistency experience in our long term care business as compared to modestly unfavorable morbidity experience in the current year quarter.

Corporate & Other Non-Core








Results for the Three
Months Ended June 30


Results for the Six
Months Ended June 30

($ millions)

2015


2014


2015


2014

Interest expense

$

39




$

46




$

78




$

90



Net operating income (loss)

(81)




27




(103)






Net income (loss)

(80)




29




(102)




6



About the Ҵý

Serving businesses and professionals since 1897, Ҵý is the country's eighth largest commercial insurance writer and the 13th largest property andcasualtycompany. Ҵý's insurance products include standard commercial lines, specialty lines, surety, marine and other property and casualty coverages. Ҵý's services include risk management, information services, underwriting, risk control and claims administration.For more information, please visit Ҵý at . "Ҵý" is a service mark registered by Ҵý Financial Corporation with the United States Patent and Trademark Office. Certain Ҵý Financial Corporation subsidiaries use the "Ҵý" service mark in connection with insurance underwriting and claims activities.

Conference Call and Webcast/Presentation Information

A conference call for investors and the professional investment community will be held at 10:00 a.m. (ET) today. On the conference call will be Thomas F. Motamed, Chairman and Chief Executive Officer of Ҵý Financial Corporation, and other members of senior management. Participants can access the call by dialing (888) 397-5352, or for international callers, (719) 457-2727. The call will also be broadcast live on the internet at or you may go to the investor relations pages of the Ҵý website () for further details. A presentation will be posted and available on the Ҵý website and will provide additional insight into the results.

The call is available to the media, but questions will be restricted to investors and the professional investment community. An online replay will be available on Ҵý's website following the call. Financial supplement information related to the results is available on the investor relations pages of the Ҵý website or by contacting Robert Tardella at 312-822-4387.

Definition of Reported Segments

Specialty provides management and professional liability and other coverages through property and casualty products and services using a network of brokers, independent agencies and managing general underwriters.

Commercial works with an independent agency distribution system and a network of brokers to market a broad range of property and casualty insurance products and services to small, middle-market and large businesses and organizations.

International provides property and casualty insurance and specialty coverages in Canada, the United Kingdom and Continental Europe as well as globally through its operations at Lloyd's of London.

Life & Group Non-Core primarily includes the results of the individual and group long term care businesses that are in run off.

Corporate & Other Non-Core primarily includes certain corporate expenses, including interest on corporate debt, and the results of certain property and casualty business in run-off, including Ҵý Re and asbestos and environmental pollution.

Financial Measures

In the evaluation of the results of Specialty, Commercial and International, management utilizes the loss ratio, the expense ratio, the dividend ratio and the combined ratio. These ratios are calculated using financial results prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The loss ratio is the percentage of net incurred claim and claim adjustment expenses to net earned premiums. The expense ratio is the percentage of insurance underwriting and acquisition expenses, including the amortization of deferred acquisition costs, to net earned premiums. The dividend ratio is the ratio of policyholders' dividends incurred to net earned premiums. The combined ratio is the sum of the loss, expense and dividend ratios.

This press release may also reference or contain financial measures that are not in accordance with GAAP. For reconciliations of non-GAAP measures to the most comparable GAAP measures, please refer herein and/or to Ҵý's most recent 10-K on file with the Securities and Exchange Commission available at .

Forward-Looking Statement

This press release may include statements which relate to anticipated future events (forward-looking statements) rather than actual present conditions or historical events. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and generally include words such as "believes", "expects", "intends", "anticipates", "estimates" and similar expressions. Forward-looking statements, by their nature, are subject to a variety of inherent risks and uncertainties that could cause actual results to differ materially from the results projected. Many of these risks and uncertainties cannot be controlled by Ҵý. For a detailed description of these risks and uncertainties affecting Ҵý, please refer to Ҵý's most recent 10-K on file with the Securities and Exchange Commission available at .

Any forward-looking statements made in this press release are made by Ҵý as of the date of this press release. Further, Ҵý does not have any obligation to update or revise any forward-looking statement contained in this press release, even if Ҵý's expectations or any related events, conditions or circumstances change.

MEDIA:


ANALYSTS:

Brandon Davis, 312-822-5167


James Anderson, 312-822-7757

Sarah Pang, 312-822-6394


Derek G. Smith, 312-822-6612



Robert Tardella, 312-822-4387

SOURCE Ҵý Financial Corporation

Web Site: