Centris Group Reports Third Quarter Results.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)--Oct. 27, 1998--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 provider of domestic and international insurance and 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. products and services through its operating subsidiaries An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. , today reported revenue growth in each of its business segments for both the third quarter and the nine months ended September September: see month. 30, 1998. Revenues advanced 2% during the third quarter and 9% for the first nine months of 1998. However, net income declined to a loss of $1,184,000 or $0.10 per share in the third quarter and to a gain of $7,551,000 or $0.61 per share for the 1998 nine month period. Chairman and Chief Executive Officer, David L. Cargile, said, "As previously announced, our financial results were adversely impacted by Hurricane Georges This article is about Atlantic hurricane of 1998. For other storms of the same name, see Hurricane Georges (disambiguation). Hurricane Georges (IPA: [ʒɔʒ] , as well as the storms in the Midwest Midwest or Middle West, region of the United States centered on the western Great Lakes and the upper-middle Mississippi valley. It is a somewhat imprecise term that has been applied to the northern section of the land between the Appalachians and Southeast earlier in the year. For the insurance industry, this quarter has been the third costliest third quarter in history and has been the worst quarter and year of catastrophic losses for us since the Northridge earthquake The Northridge earthquake occurred on January 17, 1994 at 4:31 AM Pacific Standard Time in the city of Los Angeles, California. The earthquake had a "strong" moment magnitude of 6. in 1994." Cargile explained that although tight market conditions in medical lines have persisted, the company has seen some price firming in that line. "Our business franchise remains solid even though financial results this reporting period were affected by catastrophe Catastrophe, from the Greek Καταστροφή (katastrephein), literally means "to turn" (strephein) "downwards" (kata-). losses and challenging conditions," he added Financial Results For the three months ended September 30, 1998, revenues increased 2% to $60,388,000 from $58,939,000 for the prior year's third quarter. For the quarter, the company incurred a net loss of $1,184,000, or $0.10 per share, compared to net income of $4,026,000, or $0.33 per share, for last year's third quarter. Responding to the current volatility in the capital markets, the company realized $3,909,000 in pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta gains from its investment portfolio during the 1998 quarter. Excluding investment gains, the company had a net operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. for the third quarter of 1998 of $3,725,000 or $0.31 per share, compared with a net operating loss of $2,420,000 or $0.20 per share for the 1997 third quarter. As previously reported, the current third quarter results were severely impacted by losses from catastrophes totaling $6,637,000, or $0.38 on a per share after tax basis. For the nine months ended September 30, 1998, revenues advanced 9% to $172,499,000 compared to $158,165,000 for the nine months of 1997. Net income was $7,551,000, or $0.61 per share, versus $11,434,000, or $0.94 per share for the nine months of 1997. Net operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. for the nine months was $3,323,000, or $0.27 per share, versus $4,820,000, or $0.40 per share, in the comparable prior year period. The company realized $6,505,000 in pre-tax gains from its investment portfolio for the nine months of 1998. Catastrophic losses totaled $8,269,000, or $0.47 on a per share after tax basis for the nine months ended September 30, 1998, against no catastrophic losses in the first nine months of 1997. All per share results are reported on a 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. basis in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the provisions of Statement of Financial Accounting Standards No. 128, "Earnings Per Share". In addition, all 1997 share amounts have been adjusted to reflect the company's February February: see month. 27, 1998 two-for-one stock split.
Medical Lines Results
Three Months Ended
September 30,
% Change
1998 1997
Premiums earned $ 26,855,000 $24,076,000 12 %
Commissions and fees $ 8,792,000 $ 7,728,000 14 %
Pre-tax income $ 2,677,000 $ (4,186,000) -
Nine Months Ended
September 30,
% Change
1998 1997
Premiums earned $79,973,000 $74,646,000 7 %
Commissions and fees $26,312,000 $23,910,000 10 %
Pre-tax income $11,530,000 $ 4,045,000 185 %
For the nine-month period of 1998, premiums earned increased 7% to $79,973,000 from $74,646,000 in the comparable 1997 period, reflecting growth of 2% in the company's 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. line and 66% in the provider excess line. For the third quarter of 1998, premiums earned increased 12% to $26,855,000 from $24,076,000 in the third quarter of 1997. Pre-tax income for the 1998 nine month period was impacted by the run-off of certain business acquired as part of the company's purchase in January 1997 of Global Excess Re. "Although the current year is showing improved results, we have chosen to continue strengthening our overall reserve levels," Cargile said.
Property/Casualty Results
Three Months Ended
September 30,
% Change
1998 1997
Premiums earned $ 17,474,000 $ 14,657,000 19 %
Pre-tax income $ (7,947,000) $ 1,134,000 -
Nine Months Ended
September 30,
% Change
1998 1997
Premiums earned $ 49,629,000 $ 41,473,000 20 %
Pre-tax income $ (4,989,000) $ 4,930,000 -
Growth in the company's property/casualty premiums earned is primarily due to business from the East Coast treaty branch, acquired in September, 1997. Total revenues for the segment grew 20% for the third quarter and 21% in the nine-month period versus the comparable prior year periods. As previously mentioned, declines in pre-tax income in the 1998 periods reflect the impact of Hurricane Georges in late September, along with residual charges from Midwestern and Southeastern storms occurring earlier this year. These events together produced $6,637,000 and $8,269,000 of losses from catastrophes during the third quarter and nine-month periods, respectively. There were no losses from catastrophes in the first nine months of 1997. In addition, the company is reserving its casualty lines on a higher formula basis to more closely match expected payout pay·out n. 1. The act or an instance of paying out. 2. A percentage of corporate earnings that is paid as dividends to shareholders. patterns. Cargile said, "Although industry conditions remain intensely competitive, we are seeing some improvement in the results of our excess and surplus lines operations." Continued Cargile, "We are moving forward with our plans to divest To deprive or take away. Divest is usually used in reference to the relinquishment of authority, power, property, or title. If, for example, an individual is disinherited, he or she is divested of the right to inherit money. our property/casualty reinsurance operations. This move is intended to reposition Centris in order to maximize the use of our capital." Financial Position At September 30, 1998, total assets increased 13% to $389,492,000 and 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. improved 2% to $119,662,000 compared to the 1997 year-end. During the quarter, the company announced a $5,000,000 common stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. program. Through September 30th, the company repurchased 417,800 shares at a cost of $4,376,000. In October, the company authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: an additional $5,000,000 for 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 its stock. Investments at September 30, 1998 totaled $240,120,000 versus $223,824,000 at December 31, 1997. The investment portfolio reflects a current 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 92% in fixed-income investments, both taxable and tax preferenced, with an "AA" average rating, and 8% in equities. The portfolio does not hold 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, private placements or mortgage loans. The company's book value per share at September 30, 1998 increased to $10.15 from $9.67 at December 31, 1997. The statutory surplus of the company's insurance operations was $111,964,000 as of September 30, 1998. The statutory combined ratios of the company's insurance operations for the three-month and nine-month periods of 1998 are outlined in the following table:
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
Medical Lines
Loss and LAE 79.8 105.4 75.6 82.4
Expense 27.3 27.5 26.9 28.0
Combined 107.1 132.9 102.5 110.4
Property/Casualty
Loss and LAE 126.1 77.3 95.0 74.1
Expense 25.3 24.7 25.7 25.5
Combined 151.4 102.0 120.7 99.6
Total
Loss and LAE 98.1 94.8 83.0 79.4
Expense 26.5 26.3 26.5 27.0
Combined 124.6 121.1 109.5 106.41
Year 2000 The company believes that its mission critical computer systems will be Year 2000 compliant a. 1. (Computers) having dates fully and properly represented, and not susceptible to failure due to the year 2000 bug. by the end of 1998, well in advance of the beginning of the century. The income statement impact as a result of achieving compliance is not expected to be material. The Centris Group, Inc. operates complementary businesses based on its expertise handling 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 property/casualty reinsurance, excess and surplus lines insurance, special risk accident and health insurance products and reinsurance intermediary Intermediary See: Financial intermediary intermediary See financial intermediary. services. Other specialized risk operations include claim review, premium and claim auditing, prospective program review 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., 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 COMPANY, USF Insurance company and INTERRA, Inc. Centris' insurance operations are rated "A" (Excellent) by A.M. Best company 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 Some of the statements included within this release which are not historical facts may be considered to be 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. within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and therefore are subject to certain risks and uncertainties which 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: catastrophic losses or a material aggregate 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 which 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. For more information on The Centris Group, Inc. via facsimile at no cost, call 1-800-PRO-INFO and dial client code "CGE" or visit the company's web site at www.thecentrisgroup.com.
THE CENTRIS GROUP, INC.
Consolidated Income Statements
(Amounts in thousands, except for per share data)
(Unaudited)
Quarter Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
Revenues:
Premiums Earned $44,329 $ 38,733 $ 129,602 $ 116,119
Commissions and Fees 8,948 7,728 26,781 23,910
Net Investment Income 3,202 2,711 9,611 8,114
Realized Investment Gains 3,909 9,767 6,505 10,022
Total Revenues 60,388 58,939 172,499 158,165
Operating Expenses:
Losses and Loss Adjustment
Expenses Incurred 43,476 36,698 107,593 92,220
Policy Acquisition Expenses 13,342 10,962 37,389 33,954
General and Administrative
Expenses 5,178 4,819 15,148 13,720
Interest 524 615 1,626 1,843
Total operating expenses 62,520 53,094 161,756 141,737
Income (loss) before
income taxes (2,132) 5,845 10,743 16,428
Income tax expense (benefit) (948) 1,819 3,192 4,994
Net income (loss) $1,184 $4,026 $7,551 $11,434
Basic earnings per share $ (0.10) $ 0.33 $ 0.62 $ 0.96
Diluted earnings per share $ (0.10) $ 0.33 $ 0.61 $ 0.94
-0-
THE CENTRIS GROUP, INC.
Condensed Consolidated Balance Sheets
(Amounts in thousands)
(Unaudited)
September 30, December 31,
1998 1997
ASSETS
Investments, at market
(amortized cost $231,376
at September 30, 1998;
$214,407 at December
31, 1997) $ 240,120 $ 223,824
Restricted cash and short term
investments 31,001 27,947
Cash and invested cash 2,219 11,122
Reinsurance and premiums receivable 93,008 60,743
Accrued investment income 3,154 3,196
Other assets 19,990 16,416
TOTAL ASSETS $389,492 $343,248
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Amounts due insurance companies $ 54,935 $ 36,470
Losses and loss adjustment expenses 146,716 116,801
Unearned premiums 35,565 30,249
Notes payable 29,850 32,500
Accounts payable and accrued expenses 2,764 9,638
Total liabilities 269,830 225,658
Stockholders' equity 119,662 117,590
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 389,492 $ 343,248
Total outstanding shares 11,787 12,166
Book value per share $ 10.15 $ 9.67
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