Alabama’s Alfa Corp. reported financial results for the 2007 fiscal year, showing a decrease in earnings, mainly due to merger activities.
Operating income for the year was $94,225,423, compared with operating income of $103,676,787 in 2006, a decrease of 9.6 percent on a per share basis.
Net income, which includes net realized investment gains, was $93,508,467 in 2007, compared with $105,888,237 in 2006, while premiums and policy charges increased 4 percent to $714,838,275 for 2007.
Operating income for the fourth quarter of 2007 was $20,905,197 compared with fourth quarter 2006 operating income of $32,321,887.
Alfa’s results for the fourth quarter were affected by expenses associated with the previously announced definitive merger agreement with Alfa Mutual Insurance Co. and Alfa Mutual Fire Insurance Co., (referred to collectively as the Alfa Mutual Group).
The transaction will result in Alfa Corp. being delisted with NASDAQ and becoming a privately held corporation owned jointly by the Alfa Mutual Group. Costs associated with this transaction added approximately $6 million of additional expense in the fourth quarter of 2007, resulting in an earnings decline during the quarter.
Full-year 2007 results were also affected when MidCountry Financial Corp. experienced a loss in its mortgage portfolio on loans originated by a company headquartered in Florida and primarily concentrated in Florida. According to Alfa, this same company defrauded MidCountry in the amount of $7.9 million by misappropriating large principal payments on construction loans being serviced for MidCountry. The impact of this extraordinary loss on Alfa Corp., resulting from its 41percent ownership, was approximately $3.15 million after-tax, Alfa reported.
Source: Alfa Corp.
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