American Country Holdings Reports 3rd Quarter Loss.Business Editors CHICAGO--(BUSINESS WIRE)--Nov. 14, 2001 American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Country Holdings Inc. (Nasdaq:ACHI ACHI Arkansas Center for Health Improvement ACHI International Conference on Advances in Computer-Human Interaction ) - The Board of Directors, after review of independent actuarial ac·tu·ar·y n. pl. ac·tu·ar·ies A statistician who computes insurance risks and premiums. [Latin studies performed in the third quarter, and after consultation with the Company's actuary actuary One who calculates insurance risks and premiums. Actuaries compute the probability of the occurrence of such events as birth, marriage, illness, accidents, and death. and management, has determined that reserves must be substantially increased to meet the developing losses from prior years. The Company has typically conducted these studies using third quarter data in preparation for year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. . The actuarial studies revealed that the losses in several lines of business are developing at a much higher rate than originally projected. The bulk of the development is in the 1999 and 2000 accident years, and is concentrated in the contractor book, the non-Illinois hospitality book, and to a lesser extent, certain areas of the non-Illinois transportation book. In order to bring our reserves to the actuarial best point estimate, prior year reserves were increased by $15.0 million in the current quarter, which directly impacts earnings. The directors and management have been reviewing the lines of business American Country writes for the last several years. The contractor book was re-underwritten and re-priced beginning in 1999 and through the first quarter of 2001. Although substantial rate increases occurred as a result of the re-underwriting program, this book could not be written at acceptable margins, and effective April 1, 2001, this book was non-renewed. The non-Illinois hospitality book was also reviewed by management during 2000. This book was re-underwritten throughout 2000 and early 2001. Due to unsatisfactory loss ratios, this book was non-renewed in June June: see month. 2001. Due to lack of historical Company data for the non-Illinois transportation book, the actuarial projections were based on the Company's Illinois Illinois, river, United States Illinois, river, 273 mi (439 km) long, formed by the confluence of the Des Plaines and Kankakee rivers, NE Ill., and flowing SW to the Mississippi at Grafton, Ill. It is an important commercial and recreational waterway. book, which has historically been very profitable. Due to differences in policy limits, types of coverage and legal climates in these areas, actual results were substantially different than expected. Our staff actuary is in the process of preparing rate studies for all non-Illinois business, and management is confident that this business can be written profitably in the future. As a result of the substantial reserve increase, American Country Holdings Inc. today reported a net loss of $12.7 million equal to $1.33 per share, for its third quarter ended September September: see month. 30, 2001. The company reported a net loss of $878,000, or $0.11 per share, a year ago. Operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. for the third quarter amounted to $16.6 million, compared with $1.0 million for the corresponding prior year period. Total revenues for the 2001 third quarter declined 13.1% to $18.5 million from $21.2 million a year ago, due to actions by the Company to reduce premiums in the unprofitable lines and to purchases of additional reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. . Total net premiums earned decreased 14.3% to $17.0 million from $19.8 million for the third quarter of 2001. Due to a recalculation re·cal·cu·late tr.v. re·cal·cu·lat·ed, re·cal·cu·lat·ing, re·cal·cu·lates To calculate again, especially in order to eliminate errors or to incorporate additional factors or data. of year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. interest, net investment income, before realized gains Realized Gain A gain resulting from selling an asset at a price higher than the original purchase price. Notes: There may be tax consequences for a realized profit. , decreased 13.1% in the third quarter. In the first nine months, net investment income, before realized gains, increased 4.2%. In the third quarter, 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. for American Country's core business, its transportation insurance lines, decreased to $13.0 million from $13.3 million last year. Net premiums earned for the commercial lines, including hospitality lines, decreased over 38.2%, to $4.0 million, compared with $6.5 million a year ago. The company's loss and loss adjustment expense for the quarter was $30.5 million, compared with $18.5 million a year ago. The expense ratio for the quarter was 27.0%, compared with 19.5% in 2000. This is due to a reduction in ceding cede tr.v. ced·ed, ced·ing, cedes 1. To surrender possession of, especially by treaty. See Synonyms at relinquish. 2. commission on the Company's quota share For This article is about quota shares (shares of the quota). For other usages of quota, see, see . A quota share is a specified number or percentage of the allotment as a whole (quota), that is prescribed to each individual entity (see Non-tariff barriers to trade). program. These factors resulted in an increase in the combined ratio for the 2001 third quarter to 207.1% from 112.8% last year. The increase in the loss ratio for the current quarter is the result of reserve strengthening for prior accident years of approximately $15.0 million in the third quarter. With respect to our ongoing business, we expect the loss ratios to improve over the course of 2001and in future years as rate increases take effect, and we benefit from the elimination of the unprofitable lines of business. The net loss for the first nine months of 2001 amounted to $13.6 million, equal to $1.53 per share, compared with $69,000, or $0.01 per share, a year ago. The operating loss was $17.4 million versus 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 $350,000 for the corresponding prior year period. Revenues for the nine-month period declined 10.0% to $57.61 million from $64.0 million in the prior year period. Net premiums earned decreased 11.7% to $51.0 million from $57.8 million for the comparable period in 2000. Net premiums earned for the Company's transportation and commercial lines business were $38.7 million and $12.4 million, respectively, for the current nine-month period, compared with $37.4 million and $20.4 million last year. The loss and loss adjustment expense for the nine-month period was $64.1 million, versus $51.9 million a year earlier. The expense ratio was 21.3% for the nine months, compared with 20.2% for the comparable period in 2000. The combined ratio for the first nine months of 2001 was 146.9%, versus 110.0% last year. John A. Dore, chairman, president and chief executive officer commented: "American Country was not showing improving results in calendar year 2001 in line with our expectations. Based on the actuarial studies completed in December 2000, we believed our reserves were adequate. However, our staff actuary and a third party actuary independently reviewed our loss development patterns as of 9/30/01, and both concluded American Country needed substantial reserve strengthening. Management is determined to put the loss development of prior years behind us. American Country plans to build its future business around its core transportation business in Illinois and other jurisdictions where American Country can write profitably. Secondarily, we will continue to build our profitable hospitality insurance business in Illinois. Management is excited about turning the focus from dealing with past problems to finding new opportunities to develop our specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. business. We believe that concentrating on our core business will return the Company to sustained profitability. " Conference Call November 16, 2001 A conference call to discuss third quarter results is scheduled for November 16, 2001 at 3:00 p.m. Central Standard Time. Please dial (888) 867-5803 (for international dial (847) 619-6054) to participate. A webcast of the call will take place simultaneously and can be accessed by visiting ACHI's website at www.amctry.com. American Country Holdings Inc. is the holding company for American Country Insurance Company, American Country Financial Services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. Corp., American Country Professional Services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. Corp and American Country 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. Agency Inc. American Country Insurance is a leading insurer An individual or company who, through a contractual agreement, undertakes to compensate specified losses, liability, or damages incurred by another individual. An insurer is frequently an insurance company and is also known as an underwriter. of taxicabs and limousines. American Country Insurance also offers commercial lines coverage for restaurants. American Country Financial Services operates as a premium finance company. American Country Professional Services operates as a finance company, providing collateralized loans to certain of the Company's larger customers, and is licensed as a third-party claims administrator. American Country Underwriting Agency Inc. is licensed as a managing general underwriter underwriter n. a company or person which/who underwrites an insurance policy, issue of corporate securities, business, or project. (See: underwrite) UNDERWRITER, insurances. One who signs a policy of insurance, by which he becomes an insurer. . This news release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that are based upon the company's expectations and are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. Such expectations include, but are not limited to, the company's ability to retain its current insureds, reduce its exposure to certain business lines and expand others, along with future economic, competitive and market conditions, the potential impact on consumer confidence of the September 11 attacks September 11 attacks Series of airline hijackings and suicide bombings against U.S. targets perpetrated by 19 militants associated with the Islamic extremist group al-Qaeda. , and future business decisions, all of which are difficult or impossible to predict accurately, and many of which are beyond the company's control.
AMERICAN COUNTRY HOLDINGS INC.
Consolidated Statements of Income
(Unaudited)
(In thousands except per share data)
For the Nine Months ended For the Three Months ended
September 30, September 30,
2001 2000 2001 2000
---- ---- ---- ----
REVENUES:
Premiums earned $51,040 $57,828 $16,957 $19,778
Net investment
income 6,499 6,240 1,861 2,141
Net realized gains
(losses) on investments (70) (319) (380) (79)
Other income 109 222 40 (586)
----- ----- ----- -----
Total revenues 57,578 63,971 18,478 21,254
------ ------ ------ ------
LOSSES AND EXPENSES:
Losses and loss
adjustment expenses 64,103 51,914 30,535 18,446
Amortization of
deferred policy
acquisition costs 8,841 8,976 4,409 2,956
Administrative and
general expenses 2,031 2,733 172 901
----- ----- ----- -----
Total expenses 74,975 63,623 35,116 22,303
------ ------ ------ ------
Operating income (17,397) 348 (16,638) (1,049)
Interest expense 452 617 124 207
------ ------ ------ ------
Income before taxes (17,849) (269) (16,762) (1,256)
Provision for taxes (4,284) (198) (4,067) (376)
------ ----- ------ -----
Net Income after
taxes ($13,565) ($71) ($12,695) ($880)
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Basic and dilutive
earnings per share: ($1.53) ($0.01) ($1.33) ($0.11)
Average common and
common equivalent
shares outstanding:
Basic and dilutive 9,007 8,041 9,582 8,035
Ratios:
Loss Ratio 125.6% 89.8% 180.1% 93.3%
Expense Ratio 21.3% 20.2% 27.0% 19.5%
Total combined 146.9% 110.0% 207.1% 112.8%
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