Delphi Financial Group, Inc. (NYSE:DFG) announced today that operating earnings⁽¹⁾ in the first quarter of 2009 were $38.8 million or $0.81 per share, compared to $25.3 million or $0.51 per share in the first quarter of 2008. Annualized operating return on beginning equity⁽²⁾ in the first quarter of 2009 was 18.9%, compared to 8.9% in the first quarter of 2008.

Delphi reported net income in the first quarter of 2009 of $24.5 million or $0.51 per share, compared to $21.1 million or $0.42 per share in the first quarter of 2008. Net income in the first quarter of 2009 included after-tax realized investment losses of $(14.3) million or $(0.30) per share, including other-than-temporary impairments of $(11.4) million or ($0.24) per share. Net income in the first quarter of 2008 included after-tax realized investment losses of $(4.2) million or $(0.09) per share, including other-than-temporary impairments of $(4.0) million or ($0.08) per share.

Core group employee benefit premiums in the first quarter of 2009 grew 4% from the first quarter of 2008, reaching $338 million. Core premiums at Delphi’s Reliance Standard Life subsidiary increased 5% while excess workers’ compensation premiums at Delphi’s Safety National subsidiary rose 2%. The combined ratio in group employee benefits insurance in the first quarter of 2009 was 93.2% compared to 91.3% in the first quarter of 2008, reflecting stable loss ratios and higher expense ratios resulting in part from increased spending on new product development at Safety National.

In its asset accumulation segment, Delphi achieved annuity sales of $60 million in the first quarter of 2009, up 14% from the first quarter of 2008. Funds under management at March 31, 2009 were $1.3 billion, which was unchanged from December 31, 2008, as annuity sales growth was offset by the scheduled repayment of $35 million of institutional funding agreements at maturity.

Delphi’s net investment income in the first quarter of 2009 was $62.9 million, compared to $32.3 million in the same quarter a year ago. Invested assets at March 31, 2009 were $4.8 billion, up from $4.7 billion at December 31, 2008 and unchanged from March 31, 2008. Short-term investments at March 31, 2009 increased to $610 million (13% of total invested assets) from $402 million (9% of total invested assets) at December 31, 2008. The tax equivalent yield on the Company’s investment portfolio in the first quarter of 2009 was 5.8%, compared to 2.9% in the first quarter of 2008. Diluted book value per share was $19.05 at March 31, 2009, compared to $18.41 at December 31, 2008.

Robert Rosenkranz, Chairman and Chief Executive Officer, said, “Delphi was solidly profitable in the first quarter due to continued strength in our insurance operations and improved investment performance. We were pleased with the growth in Safety National’s excess workers’ compensation premiums, which were boosted by sharply higher production, increased payrolls and record renewals of our customer base. In Safety National’s important January renewal season, we achieved modest increases in the important self-insured retention level with just slight declines in rates, which demonstrates ongoing market firmness. Reliance Standard continued to achieve strong growth in new cases sold in our small case niche focused on companies with less than 500 employees, but overall premiums and production levels were below our expectations due mostly to our pricing and underwriting discipline in the Integrated Employee Benefits program directed at larger employers.”

Mr. Rosenkranz added, “Delphi’s improved investment results in the first quarter reflect the success of the investment portfolio repositioning we implemented over the course of 2008. However, our portfolio yield continues to be constrained by unusually high levels of short-term investments as we have been very cautious in making new investments in the face of an uncertain outlook for the economy in general and corporate credit in particular.”

Conference Call

On April 24, 2009 at 11:00 AM (Eastern time), Delphi will broadcast the Company’s first quarter 2009 earnings teleconference live on the Internet, hosted by Robert Rosenkranz, Chairman and Chief Executive Officer. Investors can access the broadcast at www.delphifin.com by clicking on the webcast icon on the home page. It is advisable to register at least 15 minutes prior to the call to download and install any necessary audio software. The online replay will be available on Delphi’s website for one week beginning at approximately 1:00 PM (Eastern time) on April 24, 2009. Investors can also download Delphi’s first quarter 2009 financial supplement from the Company’s website at www.delphifin.com.

In connection with, and because it desires to take advantage of, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, Delphi cautions readers regarding certain forward-looking statements in the foregoing discussion and in any other statements made by, or on behalf of, Delphi, whether in future filings with the Securities and Exchange Commission or otherwise. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results, prospects, outlooks or other developments. Some forward-looking statements may be identified by the use of terms such as “expects,” “believes,” “anticipates,” “intends,” “judgment,” “outlook” or other similar expressions. Forward-looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic, competitive and other uncertainties and contingencies, many of which are beyond Delphi’s control and many of which, with respect to future business decisions, are subject to change. Examples of such uncertainties and contingencies include, among other important factors, those affecting the insurance industry generally, such as the economic and interest rate environment, federal and state legislative and regulatory developments, including but not limited to changes in financial services, employee benefit and tax laws and regulations, changes in accounting rules or interpretation, market pricing and competitive trends relating to insurance products and services, acts of terrorism or war, and the availability and cost of reinsurance, and those relating specifically to Delphi’s business, such as the level of its insurance premiums and fee income, the claims experience, persistency and other factors affecting the profitability of its insurance products, the performance of its investment portfolio and changes in Delphi’s investment strategy, acquisitions of companies or blocks of business, and ratings by major rating organizations of Delphi and its insurance subsidiaries. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, Delphi. Forward-looking statements contained in the foregoing discussion are made as of the date of this press release and Delphi disclaims any obligation to update these or any other forward-looking statements.

Delphi Financial Group, Inc. is an integrated employee benefit services company. Delphi is a leader in managing all aspects of employee absence to enhance the productivity of its clients and provides the related group insurance coverages: long-term and short-term disability, life, excess workers’ compensation for self-insured employers, travel accident, dental and limited benefit health insurance. Delphi’s asset accumulation business emphasizes individual annuity products. Delphi’s common stock is listed on the New York Stock Exchange under the symbol DFG and its corporate website address is www.delphifin.com.

Please see footnotes 1 and 2 of the press release to which this table is attached for important information regarding these non-GAAP financial measures.

Delphi Financial Group, Inc.
Bernard J. Kilkelly
Vice President, Investor Relations
212-303-4349
bernie-kilkelly@dlfi.com