Goran Capital Inc. Reports Third Quarter Results
13 November 2000
Goran Capital Inc. Reports Third Quarter Results
TORONTO, Nov. 10 Goran Capital Inc.
, a major crop and automobile insurance carrier reported third
quarter results as of September 30, 2000.
The Company's gross written premiums were $355,658,000 at September 30,
2000 compared to $393,577,000 for the same period last year. The pre-tax loss
through September 30, 2000 was $25,050,000 compared to a pre-tax loss of
$34,685,000 for the same period in 1999. The Company has not taken credit for
tax recoveries in the nine-months ended September 30, 2000 compared to
$14,940,000 of credits taken in the corresponding period last year. The loss
per share fully diluted was ($5.94) compared to a loss of ($3.34) in the
corresponding period of 1999.
The Company continues to make significant strides to reduce expenses. The
total number of employees including temporary staff has reduced from 941 at
December 31, 1999 to 802 at September 30, 2000. Highlights of the Company's
two divisions are as follows:
Nonstandard Automobile Insurance Operations
The nonstandard automobile insurance operations continue to improve.
Year-to-date rate increases of approximately 14% have resulted in the writing
of more profitable business. The loss ratio reduced from 92.7% at
December 31, 1999 to 82.7% for the nine-month period ending September 30,
2000. Operating expenses through the third quarter have reduced from
$69,929,000 at September 30, 1999 to $51,864,000 for the corresponding period
ending September 30, 2000. This is facilitated through a reduction in staff
overhead and operating costs. The continuation of this reduction will result
in significant improvement of the expense ratio for 2001.
Crop Insurance Operations
The crop operations reported a net loss year-to-date of $5,231,000
compared to a net loss of $4,636,000 for the corresponding period last year.
The results for the full year are adjusted in the fourth quarter after all
harvests are completed.
The Hail ratio escalated in the third quarter to 77%. With all crops now
harvested this should be the final result for the year. The residual
outstanding exposure to the crop Company is crop revenue protection for which
the Company wrote approximately $30,000,000 of business. Crop revenue is
dependent on the final pricing of soybeans, corn and other commodities during
the fourth quarter. To date soybeans have been priced and the Company appears
to have a solid gain in respects to this product line. Corn will be
determined on November 30, 2000. At present the price points indicate there
will be a profit on this line of business as well. The harvest in the major
exposure areas has been good.
The Company will host a conference call on November 10, 2000 at 3:30 p.m.
eastern time. The conference call may be accessed by calling 800-370-0898 in
the United States or 973-321-2004 internationally. A replay of the conference
call will be available for 30 days by calling 888-463-6619 in the United
States or 402-220-9949 internationally.
GORAN CAPITAL INC.
Consolidated Financial Highlights
(unaudited)
(Stated in US$)
STATEMENT OF EARNINGS
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2000 1999 2000 1999
$ $ $ $
REVENUE
Gross premiums
written 80,299,000 67,685,000 355,658,000 393,577,000
Net premiums
written 41,122,000 53,449,000 111,093,000 199,870,000
Premiums earned 48,331,000 68,164,000 140,715,000 211,815,000
Fee income 3,667,000 3,161,000 11,313,000 10,778,000
Net investment
income 2,685,000 3,197,000 8,583,000 10,212,000
Net realized
capital loss (2,632,000) (250,000) (3,948,000) (1,206,000)
Total 52,051,000 74,272,000 156,663,000 231,599,000
EXPENSES
Claims expenses 49,838,000 68,560,000 124,332,000 197,380,000
Operating expenses 24,507,000 31,528,000 55,137,000 66,641,000
Amortization of
intangibles 655,000 197,000 1,921,000 1,887,000
Interest expense 97,000 631,000 323,000 376,000
Total 75,097,000 100,916,000 181,713,000 266,284,000
Income before
income taxes,
minority
Net income before
the following (23,046,000) (26,644,000) (25,050,000) (34,685,000)
Provision (Benefit)
for income taxes -- (9,745,000) 487,000 (14,940,000)
Minority interest -- (6,224,000) -- (9,740,000)
Distributions on
Preferred
Securities 2,865,000 3,232,000 9,112,000 9,618,000
NET LOSS (25,911,000) (13,907,000) (34,649,000) (19,623,000)
Net Earnings per
share - Basic ($4.49) ($2.37) ($5.94) ($3.34)
Net earnings per
share - Fully diluted ($4.49) ($2.37) ($5.94) ($3.34)
Net earnings per
share - Operating ($4.03) ($2.33) ($5.26) ($3.21)
September 30, December 31,
BALANCE SHEET (US$) 2000 1999
$ $
ASSETS
Cash and investments 192,702,000 231,424,000
Due from insureds and reinsurers 379,756,000 190,998,000
Other receivables 1,864,000 8,466,000
Property and equipment 18,945,000 21,967,000
Deferred acquisition costs 8,291,000 13,920,000
Intangibles 43,196,000 43,812,000
Other assets 9,809,000 9,335,000
Total 654,563,000 519,922,000
LIABILITIES
Outstanding claims 248,277,000 219,918,000
Unearned premiums 99,433,000 90,007,000
Bank debt 3,676,000 16,929,000
Other payables 217,467,000 70,955,000
Total 568,853,000 397,809,000
MINORITY INTEREST
Preferred securities 112,000,000 135,000,000
Equity in net assets of subsidiary -- --
SHAREHOLDERS' EQUITY DEFICIT (26,290,000) (12,887,000)
Total 654,563,000 519,922,000
Outstanding shares at period end 5,776,398 5,876,398
Net Book Value per share ($4.55) ($2.19)
September 30, September 30,
STATEMENT OF CASH FLOWS (US$) 2000 1999
$ $
OPERATING ACTIVITIES
From operations (34,649,000) (19,623,000)
Change in net assets 11,417,000 33,372,000
Cash used in operations (16,565,000) (7,013,000)
INVESTING ACTIVITIES
Net sales of investments 44,575,000 4,292,000
Net purchases of fixed assets (1,457,000) (970,000)
Redemption of share capital & min int (3,000,000) --
Cash provided by investing 40,118,000 3,322,000
FINANCING ACTIVITIES
Decrease in notes payable (13,253,000) (6,155,000)
Cash used in financing (13,253,000) (6,155,000)
Change in cash resources 10,300,000 (9,846,000)
Cash resources beginning of period 35,807,000 42,759,000
Cash resources end of period 46,107,000 32,913,000
Cash resources are comprised of cash and short-term investments
GORAN CAPITAL INC.
Consolidated Financial Highlights
(Stated in US$)
Three Months Ended September 30, 2000
OTHER AND
AUTO CROP CORPORATE TOTAL
Gross premiums written 45,450,000 34,447,000 402,000 80,299,000
Net premiums written 28,086,000 8,942,000 4,094,000 41,122,000
Premiums earned 30,857,000 14,155,000 3,319,000 48,331,000
Fee income 3,356,000 281,000 30,000 3,667,000
Net investment income 2,393,000 91,000 201,000 2,685,000
Net realized
capital loss (2,632,000) 0 0 (2,632,000)
Total revenue 33,974,000 14,527,000 3,550,000 52,051,000
Claims expenses 25,629,000 20,803,000 3,406,000 49,838,000
Operating expenses 16,251,000 5,813,000 2,443,000 24,507,000
Amortization of
intangibles -- 165,000 490,000 655,000
Interest expense -- 134,000 (37,000) 97,000
Total expenses 41,880,000 26,915,000 6,302,000 75,097,000
Loss before income
taxes, minority
interest and
distributions on
preferred securities (7,906,000) (12,388,000) (2,752,000) (23,046,000)
Income taxes
Minority interest
Distributions on
preferred securities -- -- -- 2,865,000
Net loss -- -- -- (25,911,000)
Loss ratio 83.1% -- -- --
Expense ratio, net of
billing fees 41.8% -- -- --
Combined ratio 124.9% -- -- --
Three Months Ended September 30, 1999
OTHER AND
AUTO CROP CORPORATE TOTAL
Gross premiums written 57,416,000 10,201,000 68,000 67,685,000
Net premiums written 56,079,000 (824,000) (1,806,000) 53,449,000
Premiums earned 59,238,000 7,316,000 1,610,000 68,164,000
Fee income 2,994,000 110,000 57,000 3,161,000
Net investment income 2,961,000 22,000 214,000 3,197,000
Net realized capital
gain (loss) (407,000) -- 157,000 (250,000)
Total revenue 64,786,000 7,448,000 2,038,000 74,272,000
Claims expenses 54,899,000 11,889,000 1,772,000 68,560,000
Operating expenses 26,725,000 3,244,000 1,559,000 31,528,000
Amortization of
intangibles -- 122,000 75,000 197,000
Interest expense -- 196,000 435,000 631,000
Total expenses 81,624,000 15,451,000 3,841,000 100,916,000
Loss before income
taxes, minority
interest and
distributions on
preferred
securities (16,838,000) (8,003,000) (1,803,000) (26,644,000)
Income taxes -- -- -- (9,745,000)
Minority interest -- -- -- (6,224,000)
Distributions on
preferred securities -- -- -- 3,232,000
Net loss -- -- -- (13,907,000)
Loss ratio 92.7% -- -- --
Expense ratio, net of
billing fees 40.1% -- -- --
Combined ratio 132.7% -- -- --
GORAN CAPITAL INC.
Consolidated Financial Highlights
(Stated in US$)
Year-to-date September 30, 2000
AUTO CROP CORPORATE TOTAL
Gross premiums
written 134,887,000 219,915,000 856,000 355,658,000
Net premiums
written 77,901,000 26,891,000 6,301,000 111,093,000
Premiums earned 111,275,000 23,589,000 5,851,000 140,715,000
Fee income 10,921,000 316,000 76,000 11,313,000
Net investment
income 7,706,000 177,000 700,000 8,583,000
Net realized
capital gain
(loss) (3,949,000) 1,000 0 (3,948,000)
Total
revenue 125,953,000 24,083,000 6,627,000 156,663,000
Claims expenses 92,032,000 31,137,000 1,163,000 124,332,000
Operating expenses 51,864,000 (2,634,000) 5,907,000 55,137,000
Amortization of
intangibles -- 451,000 1,470,000 1,921,000
Interest expense -- 360,000 (37,000) 323,000
Total
expenses 143,896,000 29,314,000 8,503,000 181,713,000
Loss before income
taxes, minority
interest, and
distributions on
preferred
securities (17,943,000) (5,231,000) (1,876,000) (25,050,000)
Income taxes -- -- -- 487,000
Minority interest -- -- -- --
Distributions on
preferred
securities -- -- -- 9,112,000
Net loss -- -- -- (34,649,000)
Loss ratio 82.7% -- -- --
Expense ratio, net
of billing fees 36.8% -- -- --
Combined ratio 119.5% -- -- --
Year-to-date September 30, 1999
AUTO CROP CORPORATE TOTAL
Gross premiums
written 184,659,000 208,448,000 470,000 393,577,000
Net premiums
written 193,918,000 12,422,000 (6,470,000) 199,870,000
Premiums earned 191,472,000 12,330,000 8,013,000 211,815,000
Fee income 10,412,000 247,000 119,000 10,778,000
Net investment
income 9,421,000 61,000 730,000 10,212,000
Net realized capital
gain (loss) (1,423,000) -- 217,000 (1,206,000)
Total
revenue 209,882,000 12,638,000 9,079,000 231,599,000
Claims expenses 167,843,000 23,489,000 6,048,000 197,380,000
Operating
expenses 69,929,000 (6,950,000) 3,662,000 66,641,000
Amortization of
intangibles -- 359,000 1,528,000 1,887,000
Interest expense -- 376,000 0 376,000
Total
expenses 237,772,000 17,274,000 11,238,000 266,284,000
Loss before income
taxes, minority
interest, and
distributions on
preferred
securities (27,890,000) (4,636,000) (2,159,000) (34,685,000)
Provision for income
taxes -- -- -- (14,940,000)
Minority interest -- -- -- (9,740,000)
Distributions on
preferred
securities -- -- -- 9,618,000
Net loss -- -- -- (19,623,000)
Loss ratio 87.7% -- -- --
Expense ratio, net
of billing fees 31.1% -- -- --
Combined ratio 118.8% -- -- --