American Bankers Insurance Group, Inc. Reports Fourth Quarter 1998 Results.MIAMI--(BUSINESS WIRE)--Feb. 4, 1999--American Bankers Insurance Group, Inc. (NYSE NYSE See: New York Stock Exchange :ABI Abi (ā`bī) [short for Abijah], in the Bible, King Hezekiah's mother. (Application Binary Interface) A specification for a specific hardware platform combined with the operating system. ) today announced Fourth quarter 1998 net operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of $29.9 million or $.64 per share on a diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis, compared to $29.2 million or $.62 per share for the same period in 1997. Fourth quarter net operating income excludes the following one time non-recurring revenues and expenses: The Merger termination fee termination fee The one-time charge for terminating or transferring an individual retirement account. If a financial institution charges a termination fee, the fee must be spelled out in the original agreement that is signed when the account is opened. received from Cendant Corporation (NYSE:CD) of $259.1 million, net of tax (previously reported on October 13, 1998), the charge for $15 million, from the resolution of the Multi-State examination (previously reported on November 23, 1998) and other charges of approximately $13.8 million, net of tax, primarily relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc strengthening of reserves on lines of business no longer written by the Company. Including these non-recurring revenues and expenses, net operating income was $260.2 million or $5.54 per share on a diluted basis in the fourth quarter of 1998. Results in the fourth quarter were positively affected by the continued growth in investment income of approximately $5.1 million or 14.6%. The growth in investment income resulted from the increase in the overall investment portfolio during the quarter of approximately $306.7 million, primarily due to the funds received in mid-October from the termination of the merger. The ratio of claims and commission expenses to net earned premiums 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. was 79.8% in the fourth quarter. This ratio includes the overall strengthening of reserves during the quarter of approximately $8.9 million, net of tax, on lines of business no longer written by the Company. Operating results also reflected a slowdown in gross collected premiums and an overall increase in expenses. However, the operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. include non-recurring charges of $15 million from the resolution of the multi-state examination and approximately $4.9 million, net of tax, relating to merger expenses and other charges. Gross collected premiums for the fourth quarter of 1998 were $708.8 million compared with $720.2 million for the same period in 1997. Gross collected premiums for 1998 were $2.799 billion versus $2.740 billion for 1997. This represents an increase of 2.2% in 1998 over 1997. 1998 premium production has not met the Company's overall expectations. The Company attributes a large part of this slowdown in sales momentum to the disruption disruption /dis·rup·tion/ (dis-rup´shun) a morphologic defect resulting from the extrinsic breakdown of, or interference with, a developmental process. caused by the lengthy merger process that was finally terminated in mid-October. The Company anticipates premium growth returning to expected levels in the second half of 1999. Net income for the fourth quarter of 1998 was $263.2 million or $5.60 per share on a diluted basis, compared to $30.0 million or $.64 per share for the same period in 1997. Fourth quarter net income results include all one-time non-recurring revenue and expenses as discussed above. Fourth quarter net income also includes realized investment gains, net of tax, of $3.0 million or $.06 per share compared to realized investment gains, net of tax, of $.8 million or $.02 per share for the same period in 1997. Weighted average shares outstanding on a diluted basis for the quarter were 47 million compared to 47.1 million for the same period in 1997. Net operating income for the year ended December 31, 1998 was $111.2 million or $2.38 per share on a diluted basis, compared to net operating income of $108.3 million or $2.31 per share in 1997. Net operating income in 1998 excludes all merger related revenues and expenses and all other non-recurring charges as previously discussed or reported in prior quarters. Including all non-recurring items and merger related revenues and expenses, net operating income for the year ended December 31, 1998 was $254.1 million or $5.41 per share. Net income for the year ended December 31, 1998 was $267.0 million or $5.68 per share on a diluted basis, compared to net income of $115.1 million or $2.45 per share for 1997. Stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. was $961.8 million (excluding $99 million of preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. ) and book value per common share Book Value Per Common Share A measure used by owners of common shares in a firm to determine the level of safety associated with each individual share after all debts are paid accordingly. Formula: was $22.52 at December 31, 1998. American Bankers American Banker is a daily newspaper covering the financial services industry. Founded in 1835 and based in New York, American Banker's 70 reporters and editors in six cities monitor developments and breaking news affecting banks. Insurance Group, Inc. (ABI) concentrates on marketing affordable, specialty insurance products and services through financial institutions, retailers and other entities offering consumer financing as a regular part of their business. ABI, through its insurance subsidiaries, operates in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , Canada, Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. , the Caribbean and the United Kingdom. -0-
The comparative consolidated results are as follows:
(in thousands) Quarter Ended Year Ended
December 31 December 31
----------- -----------
1998 1997 1998 1997
---- ---- ---- ----
Income before realized
investment gains and
income taxes $ 405,081 $ 39,180 $ 381,898 $ 149,201
Realized investment gains 4,623 1,295 19,828 10,394
Income before
income taxes 409,704 40,475 401,726 159,595
Income tax expense 146,520 10,488 134,766 44,732
Net income $ 263,184 $ 29,987 $ 266,960 $ 114,863
The following is a breakdown of operating income and realized
investment gains, net of taxes:
(in thousands except per common share data.)
K:\NR\3Q98ER.SAM
Quarter Ended Year Ended
7 6,449 7,188
Net Income as reporte $ 6.04 $ 0.66 $ 5.82 $ 2
42,554
Diluted:
Net operating 266,975 115,095
Interest on convertible
5.41
Net Income $ 5.60 $ 0.64 $ 5.68 $ 2.45
Weighted average
share outstanding 46,958 47,050 46,960 46,999
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