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CII FINANCIAL INC. REPORTS SHARPLY REDUCED FOURTH QUARTER LOSS

 PLEASANTON, Calif., Feb. 18 /PRNewswire/ -- CII Financial Inc. (AMEX: CII) today reported a substantial decrease in the net loss for the fourth quarter ended Dec. 31, 1992, as compared to the previous quarters of 1992.
 Joseph G. Havlick, chairman and president, said: "The company's progress in the fourth quarter reflected the ongoing implementation of our strategic program to improve results. While the company incurred a large loss for the full year of 1992, the amount of loss diminished each quarter during the year."
 For the fourth quarter, the net loss was $549,000, equal to 8 cents per share, compared with last year's fourth quarter net loss of $25,203,000, or $3.49 per share. Fourth quarter 1992 revenues totaled $27,328,000, compared with $32,643,000 for the fourth quarter of 1991. Weighted shares outstanding were 7,112,873 for the latest quarter and 7,216,066 for the prior-year quarter.
 The net loss for 1992 amounted to $42,122,000, equal to $5.88 per share, compared with a net loss of $16,220,000, or $2.25 per share in 1991. Results for 1992 included an extraordinary gain of $457,000, or 6 cents per share, from the repurchase of some of the company's outstanding convertible subordinated debentures. Weighted average shares outstanding were 7,167,501 in 1992 and 7,209,506 in 1991. Revenues for 1992 were $116,503,000, compared with $112,239,000 for 1991.
 Net investment income for the fourth quarter was $2,718,000, 5.9 percent less than $2,889,000 in the corresponding quarter of 1991. For 1992, net investment income totaled $11,746,000, an increase of 24.2 percent from $9,455,000 in 1991.
 Havlick further stated: "The loss for the year resulted principally from substantial additions to loss reserves, primarily in the first half, due to the deteriorating workers' compensation environment in Southern California. We established loss reserves at the higher end of the ranges recommended by our independent actuaries.
 "While high unemployment, inadequate rate relief, and fraud and abuse of the workers' compensation system, particularly in Southern California, remain extremely serious problems, we do see some positive signs. For example, the fourth quarter benefited from net favorable case development on 1991 and prior years.
 "In line with our strategic plan, we are continuing to reduce our involvement in the six-county area of Southern California while increasing our book of business elsewhere in the state. At year-end, the Southern California basin accounted for 39.7 percent of our inforce premiums, vs. 66 percent at the beginning of the year. The relocation of our home office from Burbank in Southern California to Pleasanton in Northern California at mid-year has played an important part in helping us achieve this redistribution.
 "Other key aspects of our strategy include expanding our workers' compensation business into additional states, and entering new insurance or related product areas that fit with our capabilities. The development of our business in Colorado has resulted in over $2 million of inforce premiums at year-end, and we look forward to solid growth there in 1993. Expanding into additional states will be undertaken with prudence and vigilant attention to the bottom line with a present focus on the west and southwest. As to allied activities, we entered premium financing two years ago, and our subsidiary has been profitable since inception. This business offers favorable returns, and our plans call for a significant expansion of our efforts in 1993.
 "As a company, we are pressing for much needed reform of the workers' compensation system. Fraud and abuse must be curtailed, and the industry urgently needs rate relief, if the system is to remain viable. Despite these problems, we have seen some modest improvement in the environment. Looking ahead, we expect to continue implementing our strategies with the central objective of returning the company to profitability at an early date."
 As previously announced, the company has been served with a Class Action lawsuit filed in Federal Court in Seattle. The lawsuit alleges that CII Financial has violated financial disclosure requirements of the Federal Securities laws. Management believes the allegations are without merit. CII Financial has retained the law firm of Gibson, Dunn & Crutcher to vigorously defend against the lawsuit.
 CII Financial is a financial services holding company. Its two operating insurance subsidiaries are California Indemnity Insurance Co. and Commercial Casualty Insurance Co. CII also has an operating premium finance subsidiary, CII Premium Finance Co. Through its insurance subsidiaries, the company is engaged in writing workers' compensation insurance in California and Colorado. These insurance companies service workers' compensation accounts of all sizes but concentrate on small- to medium-sized companies.
 Now based in Pleasanton, the company also has offices in Burbank, Sacramento, San Diego, Fresno and San Bernardino, Calif., as well as Denver. Policies are sold through a network of approximately 435 independent agents and brokers.
 CII FINANCIAL INC. & SUBSIDIARIES
 Summary Financial Information
 Three Months Ended Dec. 31,
 1992 1991
 Income Statement Data:
 Total revenues $27,328,000 $32,643,000
 Income (loss) before
 federal income tax
 and extraordinary gain $806,000 ($30,496,000)
 Federal income taxes $1,355,000 ($5,293,000)
 Extraordinary gain on
 debenture repurchase
 net of federal
 income tax $0 $0
 Net income (loss) ($549,000) ($25,203,000)
 Earnings (loss) per share:
 (Loss) before
 extraordinary gain ($0.08) ($3.49)
 Extraordinary gain $0.00 $0.00
 Earnings (loss) per share ($0.08) ($3.49)
 Weighted shares
 outstanding 7,112,873 7,216,066
 Twelve Months Ended Dec. 31,
 1992 1991
 Total revenues $116,503,000 $112,239,000
 (Loss) before federal
 income tax and
 extraordinary gain ($41,224,000) ($18,762,000)
 Federal income taxes $1,355,000 ($2,542,000)
 Extraordinary gain
 on debenture
 repurchase net of
 federal income tax $457,000 $0
 Net (loss) ($42,122,000) ($16,220,000)
 Earnings (loss) per share
 (Loss) before
 extraordinary gain ($5.94) ($2.25)
 Extraordinary gain $0.06 $0.00
 (Loss) per share ($5.88) ($2.25)
 Weighted shares
 outstanding 7,167,501 7,209,506
 Dec. 31, Dec. 31,
 1992 1991
 Balance Sheet Data:
 Total assets $265,735,000 $248,187,000
 Total liabilities $253,682,000 $193,825,000
 Total shareholders' equity $12,053,000 $54,362,000
 -0- 2/18/93
 /CONTACT: Joseph G. Havlick, chairman, president and CEO of CII Financial, 510-416-8700/
 (CII)


CO: CII Financial Inc. ST: California IN: INS FIN SU: ERN

JB-JL -- LA022 -- 7868 02/18/93 11:48 EST
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