Allcity Insurance Company Announces First Quarter 2000 Results.Business Editors BROOKLYN, N.Y.--(BUSINESS WIRE)--May 16, 2000 Allcity Insurance Company (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : ALCI ALCI Appliance Leakage Circuit Interrupter ALCI American Council of Life Insurers ALCI Airlines Line Control Interface ) announced its operating results for the quarter ended March 31, 2000. Net income was $287,000 or $0.04 per share for the three month period ended March 31, 2000 compared to $87,000 or $0.01 per share for the three month period ended March 31, 1999. Results for the three months ended March 31, 2000 and 1999 included $221,000 and $208,000 of net securities losses, respectively. Net earned premium Earned premium is the portion of an insurance written premium which is considered "earned" by the insurer, based on the part of the policy period that the insurance has been in effect, and during which the insurer has been exposed to loss. revenues were $8.1 million and $13.7 million for the three month periods ended March 31, 2000 and 1999, respectively. While earned premiums declined in almost all lines of business, the most significant reductions were in assigned risk A danger or hazard of loss or injury that an insurer will not normally accept for coverage under a policy issued by the insurer, but that the insurance company is required by state law to offer protection against by participating in a pool of insurers who are also compelled to provide automobile, voluntary private passenger automobile, commercial package policies and homeowners. The Company is no longer entering into new assigned risk contracts. Effective January 1, 2000, all policy renewal obligations have been assigned as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. to another insurance company. However, the Company remains liable for the claim settlement costs for assigned risk claims that occurred during the policy term. The decline in voluntary private passenger automobile resulted from tighter underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. standards, increased competition and the Company's decision to no longer accept new policies from those agents who historically have had poor underwriting results. The Company's termination of certain unprofitable agents has also adversely affected premium volume in other lines of business. On a SAP (statutory accounting principle) and GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). (generally accepted accounting principle) basis, the Company's combined ratios for the three month period ended March 31, 2000 were 132.1% and 140.1%, respectively, compared to 119.4% and 121.3%, respectively, for the three month period ended March 31, 1999. During the first quarter of 2000, the Company experienced unfavorable development principally in assigned risk and private passenger automobile lines of business and reserves were strengthened by $0.9 million. While the dollar amount of reserve strengthening was the same in each period, the reduction in earned premiums in 2000 resulted in a higher loss ratio on a percentage basis. The current accident year loss ratios declined slightly from the prior year. Expense ratios increased due to higher allocated loss adjustment expense payments, reduced service fees and overhead costs overhead costs see fixed costs. which, although lower, have not declined proportionally pro·por·tion·al adj. 1. Forming a relationship with other parts or quantities; being in proportion. 2. Properly related in size, degree, or other measurable characteristics; corresponding: with premiums. The Empire Group ("Group"), which includes the Company and its parent Empire Insurance Company, has begun to implement an expense reduction program to more closely align align (  līn),v to move the teeth into their proper positions to conform to the line of occlusion. its expenses with its current volume of business. Through May 1, 2000, staff reductions have resulted in the elimination of 122 job positions, representing approximately 23% of the Group's December 31, 1999 workforce. In certain instances, particularly in the claims department, the cost savings from the reductions will be partially offset by increased outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. expenses. The Group will continue to examine its overhead costs and additional staff reductions are likely to occur in 2000. Income taxes for 2000 reflect a benefit of $0.4 million for a change in the Company's estimated prior year's federal tax liability. Results of operations for the three month periods ended on March 31, 2000 and 1999 are as follows (in thousands, except per share amounts):
Three Months Ended March 31,
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2000 1999
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(Unaudited) (Unaudited)
Total Revenues $ 11,299 $ 17,390
Net Securities
Losses $ (221) $ (208)
Net Income $ 287 $ 87
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Per Share Data:
Basic and Fully
Diluted Earnings $ 0.04 $ 0.01
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