NU Online News Service, Oct. 23, 2003, 3:16 p.m. EDT – Clark Inc., Barrington, Ill., increased its third quarter profits 58% in spite of the effects of legislative uncertainty on its sales of corporate-owned life insurance and bank-owned life insurance.
The executive benefits and compensation consulting company is reporting $2.8 million in net income for the quarter on $78 million in revenue, up from $1.7 million in net income on $63 million in revenue for the third quarter of 2002.
The executive benefits unit, which sets up COLI and BOLI arrangements, generated $50,000 in operating income for the latest quarter on $17 million in revenue, up from a net loss of $2.6 million on $15 million in revenue.
Renewal revenue increased 27%, to $12 million, but revenue from new sales fell 12%, to $4.9 million.
The acquisition of a firm that provides portfolio services for COLI and BOLI programs helped boost growth in renewal revenue, but sales revenue was down because of concerns that Congress will wipe out the tax advantages that now encourage employers to insure executives through COLI programs.
The Senate Finance Committee considered a COLI amendment in September that would have reduced COLI tax advantages for life policies purchased after Sept. 17. A provision now under consideration would move the effect to policies purchased on or after the “date of enactment,” and it now seems possible that Congress might wait until 2004, or even later, before changing the laws that govern COLI arrangements, Clark says.
Thanks to the delays in enactment of a change in COLI rules, “we feel we have been able to resume business as usual,” Clark Chairman Tom Wamberg says in a statement accompanying his company’s latest earnings release.