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CAPITAL HOLDING REPORTS THIRD QUARTER OPERATING EARNINGS OF $.75 PER SHARE; FOR NINE MONTHS, $2.42 PER SHARE, UP 5.2 PERCENT

 LOUISVILLE, Ky., Oct. 27 /PRNewswire/ -- Capital Holding Corporation (NYSE: CPH) today reported third quarter operating earnings, excluding realized investment gains and losses and related deferred acquisition cost amortization, of $77.5 million or $.75 per share. Third quarter results reflect the federal tax rate change resulting from new tax legislation. The effect of the change reduced reported earnings by $15.5 million, or $.15 per share, relating to both the current year and deferred tax liability. As a result, operating earnings for the quarter were down 8.5 percent from $.82 per share in the year-earlier period. Through nine months, operating earnings were $249.6 million, or $2.42 per share, up 5.2 percent. Excluding the tax increase, operating earnings through nine months were $2.57 per share, up 11.7 percent and $.90 per share, up 9.8 percent for the quarter.
 Net income for the third quarter, including the impact of the new tax legislation and realized investment gains and losses, was $.71 per share, down 18.4 percent compared to the same period last year. Net income for the first nine months was $2.24 per share, down .9 percent from the first nine months last year. Nine months' net income of $231.1 million included $4.6 million in net realized investment and securities gains, offset by $29.2 million in mortgage loan write-downs and reserve additions.
 "This past quarter has been a very active one. Our individual business groups each reported higher earnings for the quarter. In addition, we've taken several strides towards achieving our strategic objectives," said Irving W. Bailey II, Capital Holding's chairman, president and chief executive officer (CEO).
 Revenues for the third quarter, excluding realized investment gains and losses, were $713.7 million, up 2.9 percent over last year. Net investment income for the quarter was $359.5 million, up 1.4 percent over third quarter of 1992, reflecting higher invested assets. Investment income was partially offset by lower yields primarily on the company's floating-rate asset portfolios, which back floating-rate liabilities.
 During the third quarter, the company announced several business group management changes. Shailesh Mehta, president and CEO of the Banking Group, was named executive vice president of Capital Holding. He now has responsibility for both the Banking and Direct Response groups. Lee Adrean, formerly Capital Holding's senior vice president for planning and finance and chief financial officer (CFO), was named Agency Group president and CEO. Robert L. Walker, formerly Capital Holding's vice president and general counsel, was appointed senior vice president for finance and CFO.
 Agency Group pretax earnings for the third quarter were $49.6 million, up 1.9 percent over the third quarter of 1992. Pretax earnings through the nine months were $144.6 million, a 2.9 percent increase compared to the same period last year. The increase is a combination of modest premium growth, continuing improvement in policy termination rates and cost reductions. Agency Group gains for the quarter were offset by lower investment yields, unfavorable overall claims experience, and a one-time charge for an early retirement program offered to eligible home office staff.
 Life and health premium income was up 3.6 percent for the nine months and combined life and health termination rates were 16.1 percent, down from 16.7 percent last year. Sales for the nine months were down 10.1 percent from last year reflecting account consolidation associated with Durham Life field integration, and lower third party distributor production.
 The Direct Response Group (DRG) reported pretax earnings of $27.3 million for the quarter, up 28.9 percent from the same period last year. For the nine months, pretax earnings were $72.8 million, up 24.4 percent. Earnings growth was largely a result of the Academy Insurance Group acquisition. Including Academy, annualized sales through nine months were up 15.8 percent. Sales, excluding Academy, for the nine months were down 3.2 percent reflecting decreased health premium due to lower sales and persistency in these product lines.
 DRG property and casualty earnings were $2.8 million in the third quarter, which brought nine months' earnings to $6.5 million, up 46.8 percent from the comparable period last year. Premiums increased 2.6 percent through the nine months.
 First Deposit Corporation's (FDC) third quarter pretax earnings were $29.6 million, up 23.4 percent over the third quarter last year, bringing nine months' earnings to $86.1 million, up 24.0 percent over the same period a year earlier. Total receivables under management were up 6.5 percent through nine months to $3.8 billion. Both new products, including the First Gold(R) credit card, and existing products, including the Select Equity(R) home equity line of credit, contributed to earnings growth. Revenues from fee-oriented products, including credit protection offerings, and transaction fees from merchants also added to increased earnings. These positives more than offset recent accounting changes requiring a faster write-off of acquisition costs related to credit card receivables.
 Net loan chargeoffs on total average unsecured receivables were 5.5 percent through the nine months, compared to 5.7 percent for the same period in 1992. Delinquent loan balances were 2.8 percent in the third quarter versus 2.5 percent in the same quarter last year.
 Through September, FDC securitized $669.2 million in receivables, bringing total securitized assets to more than $2.0 billion.
 First Deposit National Bank (FDNB) was ranked number one among the top 100 Earners in Banking for return on equity and ranked second for return on assets (ROA) in rankings compiled by American Banker, an industry publication. FDNB was also ranked first among its peer group (banks with less than $5 billion in assets) for ROA. Additionally, the Office of the Comptroller of the Currency rated FDNB's Community Reinvestment Act performance as "outstanding" for a second year.
 Pretax earnings for the Accumulation and Investment Group in the third quarter were $34.6 million, up 15.8 percent over the same period last year. Through nine months, earnings were $100.7 million, up 11.4 percent from the first nine months of 1992. Business improvements during the quarter were led by retail spread deposit growth of $92.9 million and fee-based Trust GIC balance growth of $707.7 million, bringing the total Trust GIC customer balances to $4.0 billion. Variable annuity deposits grew by $114.9 million during the quarter while deposits for Bond TRAC and Equity TRAC, used by pension plans to replicate the performance of selected indices, grew by $189.7 million.
 Asset quality remains high and investment results continued above expectations for the quarter. The group increased its holding of below-investment grade securities to 4.5 percent of total insurance invested assets. The mortgage loan portfolio continues to perform well. Problem commercial loans, including delinquencies over 60 days, restructured loans and real estate owned, improved to 5.30 percent for the third quarter versus 6.80 percent at the end of the second quarter of this year. This compares to an industry average problem loan performance of 19.65 percent as of June 1993.
 Capital Holding Corporation, with $23.2 billion in assets, is a leading provider of consumer financial services including insurance, consumer loan and annuity and pension products. The corporation offers these and other financial services and products primarily through agents, direct-marketing media and investment professionals. Its common stock is listed on the New York and Pacific stock exchanges under the ticker symbol CPH; its Series F preferred stock is listed on the New York Stock Exchange as CPHF.
 CAPITAL HOLDING CORPORATION
 THREE- AND NINE-MONTH FINANCIAL HIGHLIGHTS
 Percent
 Increase
 Three Months Ended September 30 1993 1992 (Decrease)
 Operations:
 Total revenues $ 706,673,000 $ 707,665,000 (.1)
 Operating earnings(AA) 77,494,000 84,160,000 (7.9)
 Realized investment gain (loss),
 net of related amortization,
 net of tax (3,731,000) 4,692,000 ---
 Net income 73,763,000 88,852,000 ---
 Per common and common equivalent share(A):
 Operating earnings(AA) $ .75 $ .82 (8.5)
 Realized investment gain (loss),
 net of related amortization,
 net of tax (.04) .05
 Net income .71 .87 ---
 Percent
 Increase
 Nine Months Ended September 30 1993 1992 (Decrease)
 Operations:
 Total revenues $2,156,514,000 $2,134,428,000 1.0
 Operating earnings(AA) 249,610,000 235,697,000 5.9
 Realized investment loss,
 net of related amortization,
 net of tax (18,481,000) (3,548,000) ---
 Net income 231,129,000 232,149,000 ---
 Per common and common equivalent share(A):
 Operating earnings(AA) $ 2.42 $ 2.30 5.2
 Realized investment loss,
 net of related amortization,
 net of tax (.18) (.04) ---
 Net income 2.24 2.26 ---
 (A)Per common and common equivalent share amounts have been retroactively adjusted for a two-for-one split in the form of a dividend, effective April 30, 1993.
 (AA)Excludes realized investment gains and losses, net of related deferred amortization costs and tax. 1993 earnings have been reduced by $15,453,000, or $.15 per share to reflect the impact of the Omnibus Budget Reconciliation Act of 1993, enacted August 10, 1993.
 -0- 10/27/93
 /CONTACT: Michael Bateman, 502-560-2723, or Bonnie Otto, 502-560-3019, both of Capital Holding Corporation/
 (CPH)


CO: Capital Holding Corporation ST: Kentucky IN: INS SU: ERN

CM -- CH010 -- 7553 10/27/93 17:26 EDT
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Date:Oct 27, 1993
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