Amwest announces expected 1996 loss and reallocation of contract bond underwriting resources.WOODLAND HILLS, Calif.--(BUSINESS WIRE)--Jan. 30, 1997--Amwest Insurance Group Inc. (ASE/PSE:AMW AMW America's Most Wanted (TV show) AMW Air Mobility Wing AMW Amphibious Warfare AMW Ask Me Why (Beatles song) AMW Angewandte Medienwissenschaft (German: Applied Media Studies) ) Thursday announced an expected loss for the year ended Dec. 31, 1996, in the range of 80 cents to 90 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. . The expected loss is due primarily to continued poor loss experience with its contract performance and payment bond product line, which experienced an overall loss and loss-adjustment expense ratio of 53 percent for the year ended Dec. 31, 1996. In commenting on the expected results, John E. Savage, president and co-chief executive officer, said: ``The results for our contract bond book of business are unacceptable. ``Although changes were made during the year to improve 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. effectiveness, our contract bond loss experience during 1996 did not immediately benefit from these changes. This is due to the time lag between writing a bond and having a loss reported by a loss claimant CLAIMANT. In the courts of admiralty, when the suit is in rem, the cause is entitled in the Dame of the libellant against the thing libelled, as A B v. Ten cases of calico and it preserves that title through the whole progress of the suit. . ``The poor underwriting results for 1996 were primarily attributable to a number of large contract bond losses on claims initially reported during 1996,'' said Savage. ``We believe that our 1997 performance will be improved because of the changes made during 1996 and by a number of steps we are now taking.'' Throughout 1996, Amwest made several changes to improve its underwriting performance. The company strengthened the underwriting expertise in a number of its branches, required a higher level of contractor visits by underwriting personnel and adjusted its underwriting guidelines guidelines, n.pl a set of standards, criteria, or specifications to be used or followed in the performance of certain tasks. for certain specialty construction programs. Savage explained: ``While we believe these measures will improve our contract performance and payment bond product line experience during 1997, they are only the first steps. For Amwest to stay responsive and competitive in the surety An individual who undertakes an obligation to pay a sum of money or to perform some duty or promise for another in the event that person fails to act. surety n. marketplace, we have made the commitment to place our decision-making underwriters closer to our customers.'' To meet this goal, the company announced a reorganization of its contract surety underwriting operations. With more responsibility being placed on its field underwriters, the company has expanded the number of regions from three to five and has provided greater underwriting expertise at the regional level. The regional offices will be located in current Amwest branches in Albany, N.Y.; Charlotte, N.C.; Dallas; Denver; and Woodland Hills, Calif. Each office will be staffed with experienced contract bond underwriters to allow the company to respond quickly with sound underwriting decisions. In addition, the company announced the promotions of Ralph Pulver to vice president, contract surety underwriting; Douglas Paterson to senior vice president, commercial surety; and Jeff Shonka to senior vice president, court. ``With these changes, Amwest now has a clearer focus and a structural ability to serve the marketplace more effectively, which should have a positive impact during the coming year,'' said Savage. Amwest also announced a major change in its 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. arrangements for surety bonds surety bond An insurance fee required before a duplicate security is issued to replace one that has been lost. The fee is approximately 4% of the market value of the security to be replaced. . Effective Jan. 1, 1997, in addition to its excess-of-loss reinsurance for large bond programs, the company has purchased an aggregate stop-loss treaty for all of its surety bond business from a subsidiary of its lead reinsurer re·in·sure tr.v. re·in·sured, re·in·sur·ing, re·in·sures To insure again, especially by transferring all or part of the risk in a contract to a new contract with another insurance company. . ``This treaty protects the company from loss experience similar to that suffered in 1996 and should result in more predictable net results during 1997,'' said Savage. ``It also shows the confidence of our reinsurers in the changes we have made in the underwriting of our contract product line, and the excellent prospects we continue to have for our commercial surety and court bond products. ``In summary,'' said Savage, ``the structural changes to our contract bond underwriting process; our new reinsurance arrangements; our previously announced cost savings relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the consolidation of our subsidiary, Condor Insurance Co.; and the move to our new corporate headquarters in June 1997 should significantly improve our results for 1997.'' Certain statements contained in this news release regard matters that are not historical facts and are 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. . Because such forward-looking statements include risks and uncertainties, actual results may differ materially from those expressed in or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to: a decline in demand for contract bonds, the ineffectiveness of the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. changes, a deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in results of the company's other products, or a general economic decline. The company undertakes no obligation to release publicly the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" or to reflect the occurrence of unanticipated events. Amwest is a Woodland Hills-based insurance holding company underwriting specialty property and casualty insurance through Amwest Surety Insurance Co., Condor Insurance Co. and Far West Insurance Co. CONTACT: Amwest Insurance Group Inc., Woodland Hills Steven R. Kay, 818/592-3200 amwestpr@aol.com (e-mail) |
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