Centris Group Reports First-Quarter Results; Implements Strategy of Reducing its Underwriting Exposure by Half; Continues Discussions That Could Lead to the Sale of the Company.COSTA MESA Costa Mesa (kŏs`tə mā`sə), city (1990 pop. 96,357), Orange co., S Calif., on the Pacific south of Santa Ana; inc. 1953. It is a transportation, residential, and light industrial center. , Calif.--(BUSINESS WIRE)--May 12, 1999-- The Centris
The genus Centris contains over 110 species of large apid bees occurring from Kansas to Argentina). Group Inc. (NYSE NYSE See: New York Stock Exchange :CGE CGE Computable General Equilibrium CGE Conference des Grandes Ecoles (French) CGE Carrier Grade Edition (COTS Linux platform) CGE Classic Gaming Expo (game) ), a leading provider of domestic and international medical and specialty insurance lines, Wednesday Wednesday: see week. reported its financial results for the first quarter of 1999. The company also reported that it continues with discussions that could lead to a sale of the company. The first-quarter results reflect the new direction of the company to concentrate its resources in medical lines, where the company is a market leader. In the first quarter, the company reduced its 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. exposure while maintaining commission and fee income at historical levels. First-quarter results were unaffected by the property/casualty 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. lines, which the company is reporting as discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. in connection with the previously announced sale of its USF USF University of South Florida USF Universal Service Fund (often part of phone bill in US) USF University of San Francisco USF University of Sioux Falls USF University of St. RE INSURANCE CO. unit. The sale is expected to close during the second quarter. Due to the company's decision to reduce by half its net retained liability on its medical lines business beginning in 1999, consolidated revenue from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the (excluding the "managed and withdrawal lines" business of Seaboard Life Insurance Co. and VASA Vasa (vä`zə), Pol. Waza, royal dynasty of Sweden (1523–1654) and Poland (1587–1668). Gustavus I, founder of the dynasty in Sweden, was succeeded by his sons Eric XIV (reigned 1560–68) and John III (reigned North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. Inc. acquired in December 1998, and for which the company is protected from loss under the stock purchase agreement) decreased 14.4 percent for first quarter to $32.5 million, while net income from continuing operations decreased 52.6 percent to $1.2 million, or 11 cents per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share. Centris' chairman and chief executive officer, David L. Cargile, commented on the quarter: "While we made significant progress in our long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. strategic objectives this quarter, including meeting our plans to increase the percentage of fee income to total revenues, our financial results did not meet our expectations. "Our ability to achieve average rate increases of 14 percent in the medical stop loss area, combined with other underwriting actions we have implemented, gives us confidence that our performance will return to expected levels for the balance of the year." Cargile continued: "The sale of USF RE remains on track, and is expected to close during the current quarter. As stated previously, the sale will complete the transformation of our company into a specialty company focused on medical and related niche markets A niche market also known as a target market is a focused, targetable portion (subset) of a market sector. By definition, then, a business that focuses on a niche market is addressing a need for a product or service that is not being addressed by mainstream providers. . Due to the provision for discontinued operations recorded in our 1998 year-end results, USF RE had no effect on the financial results for the quarter." Cargile also noted that Centris is continuing discussions with interested parties regarding the potential sale of the company, but cautioned that it is still not possible to predict the outcome of these discussions. Financial Results Financial results for the first quarter incorporate the company's strategic initiative to reduce its medical lines net retained liability by half beginning in 1999. Total revenues from continuing operations for the first quarter (excluding the "managed and withdrawal lines" business) declined by 14.4 percent, to $32.5 million from $38.0 million for the first quarter of 1998. Net income from continuing operations decreased by 52.6 percent to $1.2 million from $2.6 million, while diluted operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before per share fell to 11 cents, a 38.9 percent decline over the 18 cents reported for the first quarter of 1998. Investment income for the quarter rose 47 percent as a result of the 25 percent increase in the investment portfolio arising from the Seaboard Life/VASA acquisition. Interest expense for the period rose to $1.1 million, or 97 percent, from $0.6 million, due to higher borrowing levels to finance the Seaboard Life/VASA acquisition. The lower amount of shares outstanding compared with the prior year's first quarter is due to the repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. of shares under the company's stock buyback Stock buyback A corporation's purchase of its own outstanding stock, usually in order to raise the company's earnings per share. stock buyback See buyback. program during the fourth quarter of 1998. -0-
Medical Lines Segment
Three Months Ended
March 31,
1999 1998 Change
Premium production $54,873 $51,680 6%
Premiums earned $20,964 $25,840 -19%
Commissions and fees $ 8,488 $ 8,538 -1%
Pre-tax income $ 3,574 $ 4,784 -25%
Medical lines coverages are written by the company's USBenefits subsidiary, which earns commissions and fees 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. . USBenefits is the nation's largest provider of medical stop-loss stop-loss, n a general term referring to that category of coverage that provides insurance protection (reinsurance) to an employer for a self-funded plan. coverage for self-funded employers, and is becoming one of the leading sources of provider excess coverage. Also contributing to this segment is INTERRA, the company's risk management, reinsurance underwriting and reinsurance broking Bro´king a. 1. Of or pertaining to a broker or brokers, or to brokerage. Redeem from broking pawn the blemished crown. - Shak. subsidiary. Total business production for the segment was 6 percent ahead of the prior year. The decline in premiums earned in the 1999 first quarter from the 1998 quarter is the result of the company reducing its net retained liability on business written by USBenefits to 25 percent from 50 percent in prior periods. Pre-tax income was impacted by unanticipated loss development on policies written in 1997. -0-
Specialty Lines Segment
Three Months Ended
March 31,
1999 1998 Change
Premiums earned $ 1,089 $ 1,628 -33%
Pre-tax income $ 110 $ 176 -38%
The specialty lines segment includes the results of USF Insurance Co., the company's excess and surplus lines subsidiary. Prior year's figures include the results of intercompany pooling under which USFIC shared premiums earned, losses incurred and acquisition expenses with USF RE. That arrangement was canceled with effect from Jan. 1, 1999. Financial Position At March 31, 1999, total assets were $647.6 million, a $1.1 million increase from year end. The investment portfolio reflects an allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as of approximately 95 percent fixed-income investments, primarily taxable, with an "AA" average fixed income portfolio rating, and 5 percent in equities. The portfolio does not contain any real estate investments, derivatives derivatives In finance, contracts whose value is derived from another asset, which can include stocks, bonds, currencies, interest rates, commodities, and related indexes. Purchasers of derivatives are essentially wagering on the future performance of that asset. , high-yield bonds High-yield bond See: Junk bond high-yield bond See junk bond. , private placements or mortgage loans. Notes payable remained constant at $72.6 million, while 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. decreased to $88.8 million, 2.5 percent below year-end 1998, due primarily to a $3.1 million unrealized investment loss in the company's bond portfolio. The Centris Group operates complementary businesses based on its expertise in the handling of 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. risk. It is a market leader in medical stop-loss coverages that produce revenues from both premiums and fees. Centris is also a provider of special risk accident and health insurance products and reinsurance intermediary Intermediary See: Financial intermediary intermediary See financial intermediary. services, excess and surplus lines insurance and property/casualty reinsurance. Other specialized risk operations include claim review, premium and claim auditing, medical technology and treatment assessment, and runoff Runoff The procedure of printing the end-of-day prices for every stock on an exchange onto ticker tape. Notes: If the "tape is late" then it can take a long time to print off all the closing prices. management. Among the most highly rated companies in its markets, The Centris Group conducts business both nationally and internationally through USBenefits Insurance Services Inc., INTERRA Inc., Centris Life Insurance Co. (formerly known as Seaboard Life Insurance Co. (USA)), VASA North America Inc. and its subsidiaries, USF Insurance Co. and USF RE INSURANCE CO. Centris' insurance operations are rated "A-" and "A" (Excellent) by A.M. Best Co. and USF RE is assigned as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. a claims paying ability rating of Aq (Good) by Standard & Poor's. 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. Some of the statements included within this release that are not historical facts may be considered to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and are intended to be covered by the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions created in such Acts. Investors are cautioned that all such forward-looking statements are subject to certain risks and uncertainties that could cause the actual results to differ materially from those suggested by such statements. Such risks and uncertainties include, but are not limited to, the following: natural disasters or other catastrophic losses or a material aggregation of such losses in the company's insurance lines; changes in federal or state law affecting an employer's ability to self-insure or other adverse regulatory changes; the adequacy of the company's reinsurance program; general economic conditions in this country or abroad; adverse developments in the securities markets and their impact on the company's investment portfolio; the effects of competitive market pressures within the medical lines or property/casualty marketplaces; the effect of changes required by generally accepted accounting practices or statutory accounting practices; and other risks that are described from time to time in the company's filings with the Securities and Exchange Commission. The words "believes," "anticipates," "expects" and similar expressions are intended to identify forward-looking statements. Although the company believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could prove to be inaccurate and, therefore there can be no assurance that such forward-looking statements will themselves prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements, the inclusion of such information should not be regarded as a representation by the company or by any other person that the objective and plans of the company will be achieved. For more information on The Centris Group via facsimile at no cost, call 800/PRO-INFO and dial client code "CGE" or visit the company's Web site at www.thecentrisgroup.com. -0-
The Centris Group Inc.
Consolidated Income Statements
(Amounts in thousands, except per share data)
(Unaudited)
Quarter ended
March 31,
1999 1998
Revenues:
Premiums earned $ 22,053 $ 27,468
Managed and withdrawal lines 13,912 --
Commissions and fees 8,515 8,538
Net investment income 1,936 1,314
Realized investment gain (13) 641
Total revenues 46,403 37,961
Expenses:
Losses and loss adjustment expenses 18,236 19,487
Managed and withdrawal lines 13,912 --
Policy acquisition expenses 6,705 9,422
General and administrative expenses 4,486 4,196
Interest 1,098 556
Total expenses 44,437 33,661
Income from continuing operations
before income taxes 1,966 4,300
Income tax expense 723 1,677
Net Income from continuing operations $ 1,243 $ 2,623
Income (loss) from discontinued
operations, net $ -- $ 1,611
Net income $ 1,243 $ 4,234
Basic Income per share:
Income from continuing operations $ 0.11 $ 0.22
Discontinued operations -- 0.13
Net income $ 0.11 $ 0.35
Diluted income per share:
Income from continuing operations $ 0.11 $ 0.21
Discontinued operations -- 0.13
Net income $ 0.11 $ 0.34
Shares outstanding:
Weighted average number of shares for
basic earnings per share 11,596 12,167
Weighted average number of shares for
diluted earnings per share 11,792 12,445
The Centris Group Inc.
Condensed Consolidated Balance Sheets
Dollars in Thousands
3/31/99 12/31/98
ASSETS
Investments at market (amortized cost
$283,185 March 31, 1999,
$292,433 December 31, 1998) 287,769 292,714
Restricted cash and short-term investments 35,143 29,796
Cash and invested cash 2,849 15,542
Reinsurance and premiums receivable 176,869 173,546
Accrued investment income 4,321 3,119
Assets Held for Resale 97,751 99,369
Other assets 42,884 32,359
TOTAL ASSETS $647,584 $646,446
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Amounts due insurance companies $ 96,867 $100,270
Loss & LAE reserves 211,122 200,908
Unearned Premium 31,096 32,274
Notes payable 72,550 72,550
Other liabilities 147,186 149,412
Total liabilities 558,821 555,413
Stockholders' equity 88,763 91,033
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 647,584 646,446
Total Outstanding Shares 11,597 11,591
Book Value per Share 7.65 7.85
|
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion