ALLMERICA PROPERTY & CASUALTY ANNOUNCES FIRST QUARTER EARNINGS
WORCESTER, Mass., April 27 /PRNewswire/ -- Allmerica Property & Casualty Companies, Inc. (Allmerica P & C) (NYSE: APY), a national property and casualty insurance holding company whose most significant business holdings are The Hanover Insurance Company (Hanover) and Citizens Corporation (Citizens), today reported first quarter 1993 net income of $120.7 million, or $5.85 per share compared to $36.5 million, or $1.77 per share in the first quarter of 1992. Results in 1993 include realized gains from both the sale of our Ohio subsidiaries and the issuance of common stock of our Michigan subsidiary.
Allmerica P & C's net income for the first three months included a gain o ?million, net of tax, on the sale of its investment in Beacon Insurance Company of America (Beacon) and its wholly-owned subsidiary American Select Insurance Company, a gain of $51.0 million from the initial public offering ofomon stock, and income of $4.1 million from the cumulative effect of changes in accounting principles including the implementation of SFAS 106, "Employers' Accounting for Postretirement Benefits other than Pensions," and SFAS 109, "Accounting for Income Taxes." "Allmerica P & C, during the first quarter, continued to produce strong profits. Operating profits combined with gains from the sale of our Ohio subsidiaries and the successful initial public offering of Citizens Corporation stock generated substantial earnings," according to John F. O'Brien, chairman of the board at Allmerica P & C. "Our primary operating units each reported strong profits in spite of aggregate losses of $6.5 million, net of tax, for catastrophes in the first quarter of 1993, compared to $0.6 million, net of tax, for the same period last year. "Our strong operational results continue to earn high marks. A.M. Best Company recently upgraded Hanover's financial strength rating to "A" (Excellent) from "A-" (Excellent), and reaffirmed Citizens Insurance's "A+" (Superior) rating," O'Brien said. "We believe these ratings reflect Best's favorable assessment of the renewed focus at our companies for consistent, profitable growth." Allmerica P & C's consolidated net premiums written decreased 2.6 percent to $419.7 million in 1993 from $430.7 million in 1992, primarily as a result of the sale of Beacon. Citizens' net premiums written increased 3.2 percent to $171.5 million in 1993 from $166.1 million in 1992, primarily as a result of price increases in both commercial and personal lines as well as continued growth in policies in force in certain personal lines products. Hanover's net premiums written decreased 1.5 percent to $248.2 million in 1993 from $252.0 million in 1992 primarily from a decline in premiums written in its involuntary automobile and workers' compensation markets. Consolidated net income from operations, excluding net realized capital gains and the cumulative effect of changes in accounting principles, was $31.6 million, or $1.53 per share for 1993 compared to $36.2 million, or $1.76 per share for 1992. The first quarter of 1992 was favorably impacted by exceptionally mild weather in Michigan which resulted in higher than expected earnings for Citizens. Citizens contributed net income from operations of $14.1 million compared to $25.3 million in 1992. Hanover contributed net income from operations of $17.6 million compared to $10.0 million in 1992. Improved results at Hanover are due to a combination of increased after tax investment income and improved underwriting results. Consolidated net investment income before taxes for Allmerica P & C decreased 3.6 percent to $50.6 million in 1993 from $52.5 million in 1992. Net investment income was impacted by our increased investment in lower yielding tax-exempt securities and the sale of Beacon. Net investment income after taxes and adjusted for the sale of Beacon increased 5.6 percent. Net realized gains, net of tax, were $13.3 million in 1993 compared with $0.3 million in 1992. The increase to net realized gains is due to a continued shift towards a higher level of tax-exempt investments in the portfolio in accordance with our current tax strategy. Allmerica P & C's statutory combined ratio, including policyholders' dividends, was 102.4 percent in the first quarter of 1993 compared to 109.5 percent in the fourth quarter of 1992 and 99.5 percent in the first quarter of 1992. Net weather related catastrophes represented 2.5 points and 0.2 points of the combined ratios in the first quarters of 1993 and 1992, respectively. The unusually mild Michigan weather in the first quarter of 1992 which significantly impacted Citizens' 1992 results did not persist throughout 1992 and into the first quarter of 1993. Citizens' statutory combined ratio, including policyholders' dividends, was 99.8 percent in the first quarter of 1993 compared to 89.8 percent in the same period in 1992, reflecting the return of normal weather conditions in Michigan. Hanover's statutory combined ratio, including policyholders' dividends, for the quarter, improved to 104.1 percent in 1993 from 105.7 percent in 1992 in spite of increased catastrophe activity. The improvement at Hanover resulted from a combination of favorable development in the automobile lines, rate increases in the workers' compensation line and improvement in involuntary pool results.
A Review of the Balance Sheet
Consolidated fixed maturity investments represented 94 percent of total invested assets of $3.1 billion at March 31, 1993. Investment grade or above investments represent 99 percent of the fixed maturity portfolio. There are no investments in real estate or mortgages secured by real estate. Although not included in the first quarter's results, on April 19, 1993, the underwriters for the Citizens' initial public offering exercised their "over allotment" option, purchasing another 731,600 shares of Citizens' stock which provided an additional $16.5 million in proceeds. All quarterly figures are unaudited, and all results are reported in accordance with generally accepted accounting principles (GAAP) with the exception of the combined ratio and underwriting exhibits which are reported on a statutory basis. Allmerica P & C is a member of Allmerica Financial, a diversified group of insurance and financial services companies based in Worcester, Mass. Allmerica Property & Casualty Companies, Inc. (0) Quarter March 31: 1993 1992 Net income $120,732,000 $36,486,000 Earnings per share(a) $5.85 $1.77 Average no. shares 20,632,000 20,632,000 /NOTE: All figures are reported in accordance with generally accepted accounting principles (GAAP) NOTE (a): Includes net realized gain on investments, realized gain on issuance of subsidiary common stock, realized gain on the sale of subsidiary, and the cumulative effect of accounting changes, net of federal income taxes at the statutory rate of 34 percent without regard for alternative minimum tax (AMT) in 1993 and 1992, as follows: 1993 1992 Net realized gain on investments, net of applicable federal income taxes 64 cents 1 cent Realized gain on issuance of subsidiary common stock $2.48 --- Realized gain on sale of subsidiary, net of applicable federal income tax $1.00 --- Cumulative effect of accounting changes, net of applicable federal income taxes 20 cents --- -0- 4/27/93 /CONTACT: Edward J. Parry III, vice president & treasurer of Allmerica Property & Casualty Companies, Inc., 508-855-4600; or Mark McGivney, investor relations of Allmerica, 508-855-4019; or Michael F. Buckley, director, public information of Allmerica, 508-855-3099/ (APY CZC)
CO: Allmerica Property & Casualty Companies, Inc. ST: Massachusetts IN: INS SU: ERN
DH -- NE013 -- 1340 04/27/93 11:54 EDT
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|Date:||Apr 27, 1993|
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