Symons International Group Inc. Reports Q2 1998 Results
28 July 1998
Symons International Group Inc. Reports Second Quarter 1998 Results
INDIANAPOLIS--July 27, 1998--Symons International Group Inc. , a leading provider of crop and nonstandard automobile insurance, today announces the results for the second quarter ended June 30, 1998.The Company is pleased to report growth in earnings in its key product lines (crop and nonstandard automobile insurance). Gross premiums increased 16% from $149,175,000 for the second quarter in 1997 to $173,094,000 for the quarter ended June 30, 1998 and increased 26% from $279,065,000 for the same six month period in 1997 to $351,490,000 for the six months in 1998.
Consolidated net earnings were $5,668,000 or $0.55 per share for the second quarter and $10,592,000 or $1.02 per share for the six months ended June 30, 1998. This compares with $3,677,000 or $0.35 per share and $9,586,000 or $0.92 per share for the corresponding periods in 1997. Operating earnings per share (net earnings per share excluding the effect of realized gains) were $0.48 for the second quarter and $0.82 for the year to date in 1998 compared to $0.32 and $0.85 in 1997.
Pre-tax operating earnings for the nonstandard automobile segment were $6,001,000 in the second quarter compared to $76,000 in 1997 (pre-tax earnings in the second quarter of 1997 included a pre-tax charge of $5,300,000 to increase reserves). The loss ratio for the second quarter improved to 75.9% compared to 77.8% in the first quarter. The expense ratio improved significantly from 22.1% for the first six months in 1997 to 20.2% for the corresponding period in 1998.
Gross written premiums for crop operations were $92,020,000 for second quarter 1998 and $178,195,000 for the first six months in 1998 compared to $56,647,000 for second quarter 1997 and $108,356,000 for six months in 1997. Growth in volume results from the integration of the CNA business and continued market share penetration. Pre-tax earnings for the crop segment were $6,466,000 for the second quarter and $12,417,000 for the six months ended June 30, 1998 as compared to $6,227,000 for the second quarter and $13,180,000 for the corresponding periods in 1997. The crop results for 1998 have been impacted by the costs of the CNA transaction and its integration with our existing book of business.
While there are certain parts of the country where we have exposure to loss, such as Texas and North Carolina, the majority of our crop states are well ahead of averages with excellent crops. We are comfortable with our projected underwriting results and believe there is still good potential for upside development in MPCI. We have diversified our book of business on both a geographic and diverse crop basis. Our results for both the crop hail and MPCI segments of our business remain subject to various factors over the remaining part of the growing season and results will become more solidified in the third and fourth quarters.
We recently announced the acquisition of NACU, a crop insurance producer. This acquisition provides IGF with a significant presence in the upper Midwest, which is showing great crops this year. This area also will assist our expansion of AgPI(R) and Geo AgPLUS(TM) products.
The U.S. government has now provided permanent five year funding to the crop insurance industry with reimbursement rates reduced for 1999 and subsequent crop years. While there is no guarantee, we believe this is the end of the reimbursement reductions. IGF has been planning for this scenario for some time. Introduction of new products, which were previously announced, such as AgPI and GeoAg Plus, should provide the necessary nonsubsidized revenues to offset these reimbursement reductions and provide even further revenue growth as IGF moves towards a more full service company to the farmer. IGF has also recently undergone a substantial review of its workflow and operations similar to that undertaken by our nonstandard automobile operations. We expect this to yield cost reductions in the way we do business in the future. Finally, we believe more opportunities, such as that with NACU, will present themselves as smaller crop insurers can no longer efficiently compete, which will allow IGF to further expand its market penetration.
Conference call: The conference call this quarter is at 4:00 p.m. Eastern Daylight Time on Tuesday, July 28, 1998; dial 1-800-275-3210 and ask for the "SIG Conference Call." A digital replay of this call will be available immediately after the call and anyone who missed the call can call 1-888-814- 5955 and listen to the replay. The replay will be available until midnight, August 3, 1998.
Symons International Group Inc. is the 10th largest nonstandard automobile insurer in the USA and its crop subsidiary is the 4th largest insurer of crops. IGF Insurance Company is the crop operation and writes business in 40 states plus Canada. Pafco General Insurance Company and Superior Insurance Company are the nonstandard automobile insurance operations and write business in 21 states.
Anyone wishing further information may contact:
Alan G. Symons
Chief Executive Officer
Indianapolis (317) 259-6302
Websites: SIG www.sigins.com
IGF www.igfinsurance.com
SYMONS INTERNATIONAL GROUP, INC.
Consolidated Financial Highlights
(unaudited)
For The Three Months
Ended June 30,
STATEMENT OF EARNINGS 1998 1997
$ $
REVENUE
Gross premiums written 173,094,000 149,175,000
___________ ___________
___________ ___________
Net premiums written 104,714,000 83,734,000
___________ ___________
___________ ___________
Premiums earned 98,958,000 72,897,000
Fee income 4,901,000 5,753,000
Net investment income 3,306,000 2,838,000
Net realized capital gain/(loss) 843,000 742,000
___________ ___________
108,008,000 82,230,000
___________ ___________
EXPENSES
Claims expenses 72,181,000 58,025,000
Operating expenses 23,088,000 17,514,000
Amortization of intangibles 510,000 164,000
Interest expense 49,000 1,080,000
___________ ___________
95,828,000 76,783,000
___________ ___________
Income before income taxes,
minority interest and
distributions on preferred
securities 12,180,000 5,447,000
___________ ___________
Provision for income taxes 4,416,000 1,897,000
Minority interest 0 (127,000)
Distributions on Pref Sec,
net of tax 2,096,000 0
___________ ___________
NET EARNINGS 5,668,000 3,677,000
___________ ___________
___________ ___________
Earnings per share-basic $0.55 $0.35
Earnings per share-fully
diluted $0.53 $0.35
Operating EPS $0.48 $0.32
Wtd avg shares o/s-basic 10,392,000 10,450,000
Wtd avg shares o/s-fully
diluted 10,704,000 10,631,000
For The Six Months
Ended June 30,
STATEMENT OF EARNINGS 1998 1997
$ $
REVENUE
Gross premiums written 351,490,000 279,065,000
___________ ___________
___________ ___________
Net premiums written 204,275,000 150,524,000
___________ ___________
___________ ___________
Premiums earned 167,442,000 136,012,000
Fee income 11,390,000 10,791,000
Net investment income 6,264,000 5,276,000
Net realized capital
gain/(loss) 2,811,000 1,684,000
___________ ___________
187,907,000 153,763,000
___________ ___________
EXPENSES
Claims expenses 125,386,000 103,293,000
Operating expenses 38,012,000 30,397,000
Amortization of intangibles 1,021,000 293,000
Interest expense 232,000 2,451,000
___________ ___________
164,651,000 136,434,000
___________ ___________
Income before income taxes,
minority interest and
distributions on preferred
securities 23,256,000 17,329,000
___________ ___________
Provision for income taxes 8,438,000 6,183,000
Minority interest 0 1,560,000
Distributions on Pref Sec,
net of tax 4,226,000 0
___________ ___________
NET EARNINGS 10,592,000 9,586,000
___________ ___________
___________ ___________
Earnings per share-basic $1.02 $0.92
Earnings per share-fully
diluted $0.99 $0.90
Operating EPS $0.82 $0.85
Wtd avg shares o/s-basic 10,419,000 10,450,000
Wtd avg shares o/s-fully
diluted 10,715,000 10,636,000
June 30, December 31,
BALANCE SHEETS 1998 1997
$ $
ASSETS
Cash and investments 255,629,000 227,794,000
Due from insureds and
reinsurers 344,765,000 185,562,000
Other receivables 115,913,000 37,445,000
Property and equipment 17,302,000 12,051,000
Deferred acquisition costs 17,618,000 10,740,000
Deferred income taxes 2,565,000 4,722,000
Intangible assets 42,742,000 43,756,000
Other assets 6,657,000 7,805,000
___________ ___________
803,191,000 529,875,000
___________ ___________
___________ ___________
LIABILITIES
Outstanding claims 171,557,000 136,772,000
Unearned premiums 226,388,000 114,635,000
Notes payable 35,000 4,182,000
Other payables 180,362,000 60,923,000
___________ ___________
578,342,000 316,512,000
Preferred securities 135,000,000 135,000,000
SHAREHOLDERS' EQUITY 89,849,000 78,363,000
___________ ___________
803,191,000 529,875,000
___________ ___________
___________ ___________
End of period shares o/s 10,387,732 10,450,000
Book value per share $8.65 $7.50
June 30, June 30,
STATEMENT OF CASH FLOWS 1998 1997
$ $
OPERATING ACTIVITIES
From operations 11,321,000 9,586,000
Change in net assets 26,124,000 16,924,000
___________ ___________
Cash provided by operations 37,445,000 26,510,000
___________ ___________
INVESTING ACTIVITIES
Net purchase of investments (10,906,000) (16,576,000)
Net purchase of fixed assets (6,545,000) (2,294,000)
___________ ___________
Cash used in investing (17,451,000) (18,870,000)
___________ ___________
FINANCING ACTIVITIES
Proceeds from minority interest 0 2,304,000
Decrease in notes payable (4,147,000) (3,128,000)
Loans to related parties (3,548,000) (1,582,000)
Purchase of common stock (1,132,000) 0
Other 21,000 0
___________ ___________
Cash used in financing (8,806,000) (2,406,000)
___________ ___________
Change in cash resources 11,188,000 5,234,000
Cash resources beginning of
period 11,276,000 13,095,000
___________ ___________
Cash resources end of period 22,464,000 18,329,000
___________ ___________
___________ ___________
SYMONS INTERNATIONAL GROUP, INC.
Consolidated Financial Highlights
(unaudited)
Three Months Ended June 30, 1998
AUTO CROP CORPORATE TOTAL
Gross premiums written 79,530,000 92,020,000 1,544,000 173,094,000
__________ __________ __________ ___________
__________ __________ __________ ___________
Net premiums written 69,154,000 35,560,000 0 104,714,000
__________ __________ __________ ___________
__________ __________ __________ ___________
Premiums earned 70,498,000 28,460,000 0 98,958,000
Fee income 4,553,000 350,000 (2,000) 4,901,000
Net investment income 3,133,000 112,000 61,000 3,306,000
Net realized capital
gain 673,000 170,000 0 843,000
__________ __________ __________ ___________
Total revenue 78,857,000 29,092,000 59,000 108,008,000
__________ __________ __________ ___________
Claims expenses 53,502,000 18,679,000 0 72,181,000
Operating expenses 18,681,000 3,897,000 510,000 23,088,000
Amortization of
intangibles 0 1,000 509,000 510,000
Interest expense 0 49,000 0 49,000
__________ __________ __________ ___________
Total expenses 72,183,000 22,626,000 1,019,000 95,828,000
__________ __________ __________ ___________
Income (loss) before
income taxes and
distributions on
preferred securities 6,674,000 6,466,000 (960,000) 12,180,000
Income taxes 4,416,000
Distributions on
preferred securities,
net of tax 2,096,000
___________
Net earnings 5,668,000
___________
___________
Loss ratio 75.89%
Expense ratio, net of
billing fees 20.04%
_____
Combined ratio 95.93%
_____
_____
Three Months Ended June 30, 1997
AUTO CROP CORPORATE TOTAL
Gross premiums written 90,481,000 56,647,000 2,047,000 149,175,000
__________ __________ __________ ___________
__________ __________ __________ ___________
Net premiums written 74,255,000 9,479,000 0 83,734,000
__________ __________ __________ ___________
__________ __________ __________ ___________
Premiums earned 65,139,000 7,758,000 0 72,897,000
Fee income 4,305,000 1,448,000 0 5,753,000
Net investment income 2,756,000 43,000 39,000 2,838,000
Net realized capital gain 742,000 0 0 742,000
__________ __________ __________ ___________
Total revenue 72,942,000 9,249,000 39,000 82,230,000
__________ __________ __________ ___________
Claims expenses 53,756,000 4,269,000 0 58,025,000
Operating expenses 18,368,000 (1,260,000) 406,000 17,514,000
Amortization of
intangibles 0 0 164,000 164,000
Interest expense 0 13,000 1,067,000 1,080,000
__________ __________ __________ ___________
Total expenses 72,124,000 3,022,000 1,637,000 76,783,000
__________ __________ __________ ___________
Income (loss) before
income taxes and
minority interest 818,000 6,227,000 (1,598,000) 5,447,000
Income taxes 1,897,000
Minority interest (127,000)
___________
Net earnings 3,677,000
___________
___________
Loss ratio 82.53%
Expense ratio, net of
billing fees 21.59%
_____
Combined ratio 104.12%
_____
_____
SYMONS INTERNATIONAL GROUP, INC.
Consolidated Financial Highlights
(unaudited)
Year-to-date June 30, 1998
AUTO CROP CORPORATE TOTAL
Gross premiums written 169,506,000 178,195,000 3,789,000 351,490,000
___________ ___________ __________ ___________
___________ ___________ __________ ___________
Net premiums written 151,421,000 52,854,000 0 204,275,000
___________ ___________ __________ ___________
___________ ___________ __________ ___________
Premiums earned 138,821,000 28,621,000 0 167,442,000
Fee income 8,708,000 2,682,000 0 11,390,000
Net investment income 5,934,000 165,000 165,000 6,264,000
Net realized capital
gain 2,641,000 170,000 0 2,811,000
___________ ___________ __________ ___________
Total revenue 156,104,000 31,638,000 165,000 187,907,000
___________ ___________ __________ ___________
Claims expenses 106,648,000 18,738,000 0 125,386,000
Operating expenses 36,804,000 250,000 958,000 38,012,000
Amortization of
intangibles 0 1,000 1,020,000 1,021,000
Interest expense 0 232,000 0 232,000
___________ ___________ __________ ___________
Total expenses 143,452,000 19,221,000 1,978,000 164,651,000
___________ ___________ __________ ___________
Income (loss) before
income taxes and
distributions on
preferred securities 12,652,000 12,417,000 (1,813,000) 23,256,000
Income taxes 8,438,000
Distributions on
preferred securities,
net of tax 4,226,000
___________
Net earnings 10,592,000
___________
___________
Loss ratio 76.82%
Expense ratio, net of
billing fees 20.24%
______
Combined ratio 97.06%
______
______
Year-to-date June 30, 1997
AUTO CROP CORPORATE TOTAL
Gross premiums written 165,547,000 108,356,000 5,162,000 279,065,000
___________ ___________ __________ ___________
___________ ___________ __________ ___________
Net premiums written 133,844,000 16,680,000 0 150,524,000
___________ ___________ __________ ___________
___________ ___________ __________ ___________
Premiums earned 128,244,000 7,768,000 0 136,012,000
Fee income 7,204,000 3,587,000 0 10,791,000
Net investment income 5,094,000 92,000 90,000 5,276,000
Net realized capital
gain 1,684,000 0 0 1,684,000
___________ ___________ __________ ___________
Total revenue 142,226,000 11,447,000 90,000 153,763,000
___________ ___________ __________ ___________
Claims expenses 99,024,000 4,269,000 0 103,293,000
Operating expenses 35,492,000 (6,026,000) 931,000 30,397,000
Amortization of
intangibles 0 0 293,000 293,000
Interest expense 0 24,000 2,427,000 2,451,000
___________ ___________ __________ ___________
Total expenses 134,516,000 (1,733,000) 3,651,000 136,434,000
___________ ___________ __________ ___________
Income (loss) before
income taxes and
minority interest 7,710,000 13,180,000 (3,561,000) 17,329,000
Income taxes 6,183,000
Minority interest 1,560,000
___________
Net earnings 9,586,000
___________
___________
Loss ratio 77.22%
Expense ratio, net
of billing fees 22.06%
______
Combined ratio 99.28%
______
______
