Capital Re Corporation reports record net income of $12.8 million or $0.84 per share.NEW YORK--(BUSINESS WIRE)--April 23, 1996--Capital Re Corporation (NYSE NYSE See: New York Stock Exchange :KRE KRE Kauffman Racing Equipment KRE Kuwait Real Estate (bank) KRE Keffalas Real Estate, Inc KRE Key Results Expected KRE Karl Real Estate KRE Kernel Rules Enforcement KRE Korea Research Environment ) today reported a 15.3% increase in net income to $12.8 million or $0.84 per share for the first quarter ended March 31, 1996, compared to $11.1 million or $0.75 per share in the first quarter of 1995. Gross premiums written When a non-life insurance company closes a contract to provide insurance against loss, the revenues (premiums) expected to be received over the life of the contract are called gross premiums written. for the quarter increased to $34.3 million from $24.2 million for the first quarter ended March 31, 1995. This 41.7% increase is due primarily to premiums written in the mortgage guaranty As a verb, to agree to be responsible for the payment of another's debt or the performance of another's duty, liability, or obligation if that person does not perform as he or she is legally obligated to do; to assume the responsibility of a guarantor; to warrant. 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. , credit reinsurance and non-municipal reinsurance lines, exhibiting the strength of the company's diversification efforts and further positioning it as a specialty 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. . Michael E. Satz, chairman and chief executive officer, commented that "Continued implementation of Capital Re's strategy for product diversification was evidenced by the licensing in the first quarter of 1996 of Capital Title Reinsurance Company. Capital Title Reinsurance is the first title reinsurer 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. . Capital Title was capitalized in part as the result of the Company's successful $25.9 million new money equity offering in February 1996. In this context, Capital Re has continued to exhibit strong growth, with earnings per share increasing 12% quarter over quarter. The company remains quite comfortable with current equity market earnings estimates for the 1996 year." Financial Results For the first three months of 1996, total revenues increased 27% to $32.5 million from $25.6 million in the first quarter of 1995. Total revenues are comprised primarily of net premiums earned, net investment income and net 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. . Net premiums earned for the first quarter of 1996 increased 44.6% to $20.1 million from $13.9 million in the prior year. Refundings contributed $1.9 million to earned premium 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 the quarter ended March 31, 1996 compared to $0.8 million in the first quarter of 1995. Net premiums written declined to $18.1 million in the first quarter of 1996 from $21.7 million in 1995. This decline was related to a significant increase in ceded premiums partially offset by an increase in gross premiums written. Ceded premiums for the first quarter increased to $16.2 million from $2.4 million in the first quarter of 1995. Of the $16.2 million in premiums ceded in the first quarter, $13.6 million represents a non-recurring upfront premium cession The act of relinquishing one's right. A surrender, relinquishment, or assignment of territory by one state or government to another. The territory of a foreign government gained by the transfer of sovereignty. CESSION, contracts. associated with a single mortgage guaranty reinsurance transaction. Premiums under the corresponding assumed contract are payable to the Corporation in annual installments and, therefore, to date, although 100% of ceded premiums have been paid, the Corporation has only collected approximately 30% of all premiums expected under the assumed contract. As a result of the non-recurring ceded premium transaction, the majority of the Corporation's 1996 ceded premium budget has been realized in the first quarter of the year. Total expenses increased to $15.3 million in the first quarter of 1996 from $11.2 million in the first quarter of 1995. Included in total expenses are loss and loss adjustment expenses, which increased to $1.4 million in the first quarter of 1996 from ($.1) million in 1995. This increase is principally due to losses incurred in the mortgage guaranty and trade credit lines of business. These losses remain within expected loss development parameters for these lines of business. The rise in total expenses is also attributable to increased acquisition expenses incurred, primarily commissions, related to new business. For the three months ended March 31, 1996, the combined ratio was 60.4% as compared to 58.0% in the same period in 1995. On Feb. 12, 1996, the Corporation completed a public offering of approximately 3.5 million shares of common stock, increasing outstanding shares at the end of the first quarter to 15.7 million. Of the 3.5 million shares, an institutional shareholder sold 2.6 million shares for approximately $78.8 million and the Corporation sold 853,120 shares for approximately $25.9 million. The company received no proceeds from the institutional shareholders' sale of shares. Total 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. increased to $436.5 million from $411.9 million at year end 1995. Total assets exceeded $1 billion at March 31, 1996 from $981.9 million at year end 1995. Despite dilusion associated with the issuance of additional shares, book value increased to $27.86 per share from $27.82 per share at the end of 1995. After-tax intrinsic book value was $37.53 at March 31, 1996. Intrinsic book value is defined as book value which includes unrealized capital gains and losses on the investment portfolio, the discounted present value of installment premiums and deferred premium revenue, net of expenses. Capital Re Corporation, headquartered in New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. , is the holding company for several specialized professional reinsurance companies, Capital Reinsurance Company, Capital Mortgage Reinsurance Company, Capital Credit Reinsurance Company, Ltd. and Capital Title Reinsurance Company. Capital Reinsurance Company, rated triple-A by Standard & Poor's Corporation and Moody's Investors Service Moody's Investors Service A leading global credit rating, research and risk analysis firm. Moody's Investors Service A leading firm engaged in credit rating, risk analysis, and research of fixed-income securities and their issuers. , is the leading reinsurer of financial guarantees of investment-grade debt obligations. Capital Mortgage Reinsurance Company, rated AA by Standard & Poor's Corporation and Fitch Investors Service Fitch Investors Service A financial services company best known for the bond ratings it provides investors. , Inc., is a professional reinsurer dedicated exclusively to serving the mortgage guaranty insurance industry. Capital Credit Reinsurance Company, Ltd. specializes in providing reinsurance capacity to the trade credit insurance market and to other credit-related insurance lines. Capital Title Reinsurance Company, rated AA- by Duff & Phelps, Inc., is the first professional reinsurer dedicated exclusively to the title insurance industry. -0-
Capital Re Corp. and Subsidiaries
Consolidated Statements of Income
(Dollars in thousands except per share amounts)
Three months ended
March 31,
(Unaudited)
1996 1995
Revenues:
Gross premiums written $34,255 $24,189
Ceded premiums 16,195 2,441
Net premuims written 18,060 21,748
Decrease(increase) in deferred
premium revenue 2,044 (7,819)
Net premiums earned 20,104 13,929
Net investment income 12,286 11,276
Net realized (loss) gain (95) 254
Other income 244 114
Total revenues 32,539 25,573
Expenses:
Loss and loss adjustment expenses 1,409 (85)
Acquisition costs 8,857 7,291
Increase in deferred acquisition
costs (2,221) (2,560)
Profit commission expense 953 329
Other operating expenses 3,147 3,107
Interest expense 1,741 1,707
Foreign exchange loss 26 ---
Minority interest in Capital Re LLC 1,434 1,434
Total expenses 15,346 11,223
Income before provision for
federal income taxes 17,193 14,350
Provision for federal income taxes
Current 2,062 1,630
Deferred 2,364 1,643
Total provision for
federal income taxes 4,426 3,273
Net income $12,767 $11,077
Earnings per common share $0.84 $0.75
Cash dividends per common share $0.06 $0.05
Weighted average number of common
shares outstanding 15,268 14,783
Capital Re Corp. and Subsidiaries Consolidated Balance Sheets consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. (Dollars in thousands except per share amounts) March 31, Dec. 31 1996 1995 (unaudited) Assets Fixed maturity securities available for sale, at market (amortized cost: $643,202 in 1996 and $652,966 in 1995) $657,880 $687,657 Short-term investments, at cost, which approximates market 142,524 84,110 Total investments 800,404 771,767 Cash 5,016 4,537 Accrued investment income 9,184 9,481 Deferred acquisition costs 104,573 102,353 Prepaid reinsurance premiums 75,345 62,133 Reinsurance recoverable on ceded losses 2,799 2,524 Funds held under reinsurance agreements 3,832 3,832 Premiums receivable 25,560 17,907 Property and equipment 1,806 1,702 Other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. 5,220 5,649 Total assets $1,033,739 $981,885 Liabilities Deferred premium revenue $325,619 $314,451 Reserve for losses and loss adjustment expenses 14,781 12,783 Profit commission liability 12,092 8,806 Ceded balances payable 23,029 8,000 Current taxes payable 1,582 -- Deferred federal income taxes payable 45,547 50,187 Subordinated notes payable 16,000 16,000 Long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. 74,753 74,744 Other liabilities other liabilities Small and relatively insignificant liabilities. For financial reporting purposes, firms often combine small liabilities into this single category rather than listing each liability separately. 8,843 9,971 Total liabilities $522,246 $494,942 Company Obligated ob·li·gate tr.v. ob·li·gat·ed, ob·li·gat·ing, ob·li·gates 1. To bind, compel, or constrain by a social, legal, or moral tie. See Synonyms at force. 2. To cause to be grateful or indebted; oblige. Mandatorily Redeemable Preferred Securities of Capital Re LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control 75,000 75,000 Stockholders' Equity 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. - $.01 par value per share; 25,000,000 shares authorized Shares authorized The maximum number of shares of stock of a company allowed in the articles of incorporation, which may be changed only by a shareholder vote. See: Issued and outstanding. shares authorized See authorized capital stock. ; no shares issued and outstanding in 1996 and 1995 --- --- Common stock - $.01 par value per share; 75,000,000 shares authorized; 15,666,325 and 14,805,055 shares issued and outstanding in 1996 and 1995, respectively 158 150 Additional paid-in capital additional paid-in capital Stockholder contributions that are in excess of a stock's stated or par value. For example, if a firm issues stock with a par value of $1 per share but sells the stock to investors at $10 per share, the firm's financial statements 217,377 191,654 Retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. 213,055 201,228 Treasury stock; 182,700 shares in 1996 and 1995 (3,638) (3,638) Net unrealized gain Unrealized Gain A profit that results from holding on to an asset rather than cashing it in and using the funds. Notes: Let's say you own a stock that has doubled, but you haven't sold it yet. This is said to be an unrealized gain. on fixed maturities securities available for sale, net of tax 9,541 22,549 Total stockholders' equity 436,493 411,943 Total liabilities, preferred securities Capital Re LLC & stockholders' equity $1,033,739 $981,885 CAPITAL RE CORP. Supplemental Line of Business Report (Dollars in thousands) Three Months Ended March 31, 1996 1995 (unaudited) Gross premiums written: Municipal $9,041 $9,791 Mortgage 17,566 10,156 Non-Municipal 4,207 1,799 Credit 3,441 2,443 34,255 24,189 Net premiums written: Municipal 6,406 7,360 Mortgage 4,006 10,146 Non-Municipal 4,207 1,799 Credit 3,441 2,443 18,060 21,748 Net premiums earned: Municipal 8,097 7,375 Mortgage 8,595 4,542 Non-Municipal 1,244 1,108 Credit 2,168 904 20,104 13,929 Refunded earned premium 1,890 792 Total earned premium less refundings 18,214 13,137 GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). operating ratios Operating Ratio A ratio that shows the efficiency of management by comparing operating expense to net sales: : Loss 7.0% -0.6% Expense 53.4% 58.6% Combined 60.4% 58.0% CONTACT: Capital Re Corporation David A. Buzen Catherine C. Bailey 212/974-0100 |
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