Virtus Investments lifted its product sales and improved its operating margins in the second quarter, but neither was enough to avoid a net loss for the Hartford asset manager.
Meantime, Virtus says it has taken recent steps to maintain liquidity and preserve capital.
In the three months ended June 30, Virtus lost $500,000, or 8 cents a share, narrower than the $3.1 million, or 54 cents a share, lost in the same period last year.
Operating income was $1.2 million in the second quarter, compared to a loss of $2.8 million in the second a year earlier. Operating margin was 3 percent in the second quarter, compared to negative 10 percent last year.
Virtus ended the second quarter with $25.1 billion in assets under management, up from $22.4 billion a year earlier.  Excluding shorter term money market funds, Virtus’ long-term holdings totaled  $22.3 billion at June 30, 2010, up from $18.4 billion a year ago.
Virtus was spun off from Hartford insurer The Phoenix Cos. in January 2009.
To aid liquidity, Virtus said it extended its line of credit another two years with lenders Bank of New York Mellon and PNC Bank of Pittsburg. It carries a more favorable variable interest rate and a higher credit ceiling of $30 million, of which half that amount is outstanding, the company said. The previous credit line would have cut the borrowing limit to $18 million on Sept. 1.
In addition, Virtus is exercising its right to call a portion of its convertible preferred shares held by shareholder Bank of Montreal. Cutting the preferred shares outstanding trims reduces the dividends Virtus must pay on those shares, thus preserving capital.
Under the terms of the investment agreement, Virtus can call 9,783 of the 45,000 shares of outstanding preferred stock at a call price of $1,000 per share, plus any unpaid accrued dividends.
Bank of Montreal, holding Virtus’ preferred through its U.S.-based Harris Bankcorp Inc. unit, has the option to convert the preferred shares into approximately 375,000 shares of common stock at $26.10 a share.
