Chartwell Re Corporation Reports Third Quarter Earnings.STAMFORD Stamford, town, England Stamford, town (1991 pop. 18,127), in the Parts of Kesteven, Lincolnshire, E central England, on the Welland River. It is a market town. Products include diesel engines, electrical equipment, bricks, and tiles. , Conn.--(BUSINESS WIRE)--Nov. 4, 1998--Chartwell Re Corporation ("Chartwell") (NYSE NYSE See: New York Stock Exchange : CWL CWL Catholic Women's League CWL Campus Wide Login CWL Center for Writing and Learning CWL Concealed Weapons License CWL Cardiff, Wales, United Kingdom - Cardiff-Wales (Airport Code) CWL Congestion Window Limit CWL Crying With Laughter ) reported after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. 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. of $7,505,000 for the three months ended September September: see month. 30, 1998, excluding net realized capital gains on the sale of investments, compared with $6,914,000 for the same period in 1997. On a per share basis, after-tax operating income increased 10.1% to $0.76 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 for the three months ended September 30, 1998 compared to $0.69 per diluted share for the same period in 1997. For the nine months ended September 30, 1998, after-tax operating income amounted to $22,225,000, a 10.4% increase over the $20,138,000 reported for the same period in 1997. On a per share basis, after-tax operating income increased 9.9% to $2.23 per diluted share for the first nine months of 1998 from $2.03 per diluted share for the first nine months of 1997. Net income increased 11.0% to $22,393,000 for the nine months ended September 30, 1998 compared to $20,179,000 for the comparable period in 1997 and, on a per diluted share basis, increased 10.3% to $2.24 from $2.03 reported a year ago. Total revenues for the nine months ended September 30, 1998 decreased approximately 13.3% to $218,384,000 from $251,878,000 reported for the same period last year. The decrease in revenues is primarily attributable to a decrease in premiums earned and service and other revenue. For the nine months ended September 30, 1998, 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. decreased 13.9% to $256,535,000 from $298,040,000 for 1997 and net premiums written decreased 28.6% to $157,640,000 from $220,760,000 recorded for 1997. The decrease in both gross and net premiums written is principally attributable to the opportunistic opportunistic /op·por·tu·nis·tic/ (op?er-tldbomacn-is´tik) 1. denoting a microorganism which does not ordinarily cause disease but becomes pathogenic under certain circumstances. 2. 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. of certain 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. accounts in 1997, which did not renew for 1998, as well as the Company's response to the persistence (1) In a CRT, the time a phosphor dot remains illuminated after being energized. Long-persistence phosphors reduce flicker, but generate ghost-like images that linger on screen for a fraction of a second. of intense price competition in the reinsurance industry. On a consolidated basis, pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma for the elimination of the opportunistic accounts underwritten in 1997, gross premiums written grew by approximately 5.0% in the first nine months of 1998 compared to the same period in 1997. The decrease in premiums is offset in part by the continued growth of the Company's two dedicated corporate capital vehicles which contributed $40.5 million and $36.3 million of premiums on a gross and net basis, respectively, for the first nine months of 1998 compared to $14.5 million and $14.4 million of gross and net premiums for the first nine months of 1997. Richard Ri·chard , Joseph Henri Maurice Known as "Rocket." 1921-2000. Canadian hockey player. A right wing for the Montreal Canadiens (1942-1960), he led his team to eight Stanley Cup championships and was the first player to score 50 goals in a E. Cole, Chairman and Chief Executive Officer, said that: "Chartwell continues to report improvements in operating income resulting from the successful implementation of the Company's diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. strategy. For the nine months ended September 30, 1998, Chartwell recorded approximately $40.3 million of underwriting revenue from the Company's two Lloyd's Lloyd's, London insurance underwriting corporation of many separate syndicates; often called Lloyd's of London. Founded in the late 17th cent. by a group of merchants, shipowners, and insurance brokers at the coffeehouse of Edward Lloyd, the association is now dedicated corporate capital vehicles and an additional $10.3 million of service revenue from its London London, city, Canada London, city (1991 pop. 303,165), SE Ont., Canada, on the Thames River. The site was chosen in 1792 by Governor Simcoe to be the capital of Upper Canada, but York was made capital instead. London was settled in 1826. operations. These two sources account for more than 23% of Chartwell's total year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. revenues." The composite underwriting result (defined as premiums earned less losses incurred and acquisition expenses) more than doubled to $21,036,000 for the nine months ended September 30, 1998 compared to $9,718,000 for the same period in 1997. Losses from 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] and other catastrophes were immaterial Not essential or necessary; not important or pertinent; not decisive; of no substantial consequence; without weight; of no material significance. immaterial adj. in both periods. After-tax net investment income from underwriting operations increased 12.2% to $25,168,000 for the nine months ended September 30, 1998 compared to $22,436,000 reported a year ago. Underwriting income Underwriting income For an insurance company, the difference between the premiums earned and the costs of settling claims. before taxes increased to $40,856,000 for the nine months ended September 30, 1998 compared to $28,318,000 for the same period in 1997, an increase of 44.3%. The combined ratio, a measure of performance that excludes investment income, improved to 96.7% for the first nine months of 1998 from 101.6% reported for the same period last year. The composite ratio, which excludes overhead expenses, improved to 87.5% for the nine months ended September 30, 1998 from 95.0% reported for the same period last year. The improvement in the underwriting result is principally attributable to the changing mix of Chartwell's underwriting portfolio toward more Controlled Source Insurance business, which is exhibiting greater profit potential than reinsurance business in today's marketplace, as well as the continued purchasing of reinsurance programs at attractive terms. The overhead expense ratio for the nine months ended September 30, 1998 was 9.2% compared to 6.6% for the same period last year, reflecting the reduced level of premium volume. In addition, 1998 overhead expenses include a pro rata [Latin, Proportionately.] A phrase that describes a division made according to a certain rate, percentage, or share. In a Bankruptcy case, when the debtor is insolvent, creditors generally agree to accept a pro rata share of what is owed to them. share of expenses related to participation by the Company's dedicated corporate capital vehicles on syndicates managed by Chartwell Managing Agents Limited. Revenue from service operations decreased 45.2% to $14,054,000 for the nine months ended September 30, 1998 compared to $25,663,000 for 1997, principally reflecting a reduction in profit commissions, which amounted to $1,381,000 for the nine months ended September 30, 1998 compared to $7,757,000 for the same period last year. Income before taxes from service operations amounted to $3,170,000 for the nine months ended September 30, 1998 compared to $10,432,000 for the same period last year. Interest and amortization expense increased to $10,240,000 for the nine months ended September 30, 1998 from $9,217,000 for 1997. The increase is due principally to bank fees paid for letters of credit used to support the Company's underwriting participation on syndicates managed by Chartwell Managing Agents Limited and an increase in variable interest rates on debt denominated in pounds sterling. 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 by approximately 11.7% to $291,008,000 at September 30, 1998 from $260,497,000 at December December: see month. 31, 1997. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). book value per share increased 11.5% to $30.23 at September 30, 1998 from $27.11 at December 31, 1997. Chartwell's ratio of 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. to total capitalization Total capitalization The total long-term debt and all types of equity of a company that constitutes its capital structure. total capitalization See capitalization. was 27.3% at September 30, 1998, compared to 28.6% at December 31, 1997. The Company's Board of Directors has declared a quarterly cash dividend of $0.04 per share, payable on December 2, 1998 to stockholders of record as of November 18, 1998. Statutory policyholders' surplus of Chartwell Reinsurance Company increased to a record high of $292,849,000 at September 30, 1998 from $262,605,000 at December 31, 1997. Likewise, Chartwell Reinsurance Company's wholly-owned subsidiary, The Insurance Corporation of New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of ("INSCORP"), increased its statutory surplus to $125,932,000 at September 30, 1998 from $113,677,000 at December 31, 1997. For the nine months ended September 30, 1998, consolidated after-tax net investment income amounted to $25,687,000, an increase of 11.5% compared to $23,031,000 for the same period in 1997. The average annual tax equivalent yield on invested assets held by the Company decreased to 6.30% for the nine months ended September 30, 1998 compared to 6.54% for the same period last year, reflecting the declining interest rate environment. Chartwell realized net capital gains of $259,000 for the nine months ended September 30, 1998 compared to $63,000 for the same period in 1997. Cash used in operations for the first nine months of 1998 was $5,097,000 compared to cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses of $9,236,000 for the nine months ended September 30, 1997. The decrease is due to the decline in premiums written in the reinsurance client segment coupled with a large income tax payment made in the third quarter. Additionally, cash flow is affected by premiums written under certain new programs in the Controlled Source Insurance Accounts client segment which are collected on a monthly installment basis. Chartwell Re Corporation is an insurance holding company with global underwriting and service operations, conducting its business 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. and in the Lloyd's market through its principal 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. , Chartwell Reinsurance Company, INSCORP and Chartwell Managing Agents Limited. Chartwell Reinsurance Company underwrites treaty reinsurance through reinsurance brokers for casualty and, to a lesser extent, property risks as well as for marine and aviation risks. INSCORP writes property and casualty insurance through specialty program administrators. Chartwell Reinsurance Company and INSCORP are rated "A" (Excellent) and "A-" (Excellent), respectively, by A.M. Best Company and are 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. an A- claims paying ability rating by Standard & Poor's. Chartwell Managing Agents Limited manages nine Lloyd's syndicates with a total underwriting capacity for 1998 of approximately (pound)352 million ($580 million). All of Chartwell Managing Agents Limited's syndicates enjoy the benefit of the ratings of Lloyd's, which is rated "A" (Excellent) by A.M. Best and has an A+ claims paying ability rating from Standard & Poor's. 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. for Forward Looking Statements Certain statements that appear in this press release, which do not relate to historical financial information, may constitute 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. . Statements containing words such as: believes, anticipates, plans, expects, projects, forecasts, estimates, may or could, are forward-looking. Any forward-looking statement is subject to various risk factors, which could cause actual results to differ materially from expectations. The various risk factors that could affect Chartwell's future results are set forth in Chartwell's Securities and Exchange Commission filings. For more information on Chartwell, please visit our web site at www.chartwellre.com.
CHARTWELL RE CORPORATION
INCOME STATEMENT AND PER SHARE DATA
(Dollars in thousands, except per share amounts)
Three Month Nine Month
Periods Periods
Ended September 30, Ended September 30,
1998 1997 1998 1997
Gross premiums written $ 87,870 $104,425 $256,535 $298,040
Ceded premiums written 31,758 29,927 98,895 77,280
Net premiums written $ 56,112 $ 74,498 $157,640 $220,760
Underwriting Operations:
Premiums earned $ 59,333 $ 59,002 $168,506 $194,677
Net losses incurred 36,108 36,454 101,946 128,299
Net acquisition expenses 15,940 19,088 45,524 56,660
Composite underwriting
result 7,285 3,460 21,036 9,718
Overhead expenses 5,239 4,525 15,519 12,752
Total underwriting
result 2,046 (1,065) 5,517 (3,034)
Net investment income 11,808 10,665 35,448 31,289
Net realized capital
gains (losses) (169) 112 (109) 63
Total investment income 11,639 10,777 35,339 31,352
Income before taxes -
underwriting operations 13,685 9,712 40,856 28,318
Service Operations:
Service and other revenue 4,259 7,076 10,898 21,510
Equity in net earnings of
investees 403 1,097 2,474 3,273
Net investment income 345 236 682 880
Total revenues 5,007 8,409 14,054 25,663
Overhead expenses 3,147 4,184 9,162 13,710
Amortization of goodwill 587 476 1,722 1,521
Income before taxes -
service operations 1,273 3,749 3,170 10,432
Corporate:
Net investment income 29 42 117 186
Net realized capital
gains 368 368
General and
administrative expenses 720 448 2,025 1,258
Interest and amortization 3,553 3,211 10,240 9,217
Loss before taxes -
corporate (3,876) (3,617) (11,780) (10,289)
Consolidated income
before taxes 11,082 9,844 32,246 28,461
Income tax expense 3,448 2,857 9,853 8,282
Net income $ 7,634 $ 6,987 $ 22,393 $ 20,179
Per Share Data:
Basic earnings per share $ 0.79 $ 0.73 $ 2.33 $ 2.10
Weighted average common
shares outstanding 9,627,095 9,604,239 9,625,287 9,599,278
Diluted earnings per
share $ 0.77 $ 0.69 $ 2.24 $ 2.03
Operating income per
common share - diluted $ 0.76 $ 0.69 $ 2.23 $ 2.03
$
Weighted average common
and common equivalent
shares outstanding 9,908,957 10,071,603 9,980,134 9,926,207
Business Segment Data:
Gross premiums written
from reinsurance
operations $ 44,051 $ 66,498 $128,681 $202,604
Gross premiums written
from specialty insurance
operations 43,819 37,927 127,854 95,436
----------------
Total $ 87,870 $104,425 $256,535 $298,040
CHARTWELL RE CORPORATION
BALANCE SHEET INFORMATION
(Dollars in thousands, except per share amounts)
September 30, December 31,
1998 1997
-------------- -------------
Total investments and cash $ 782,720 $ 764,253
Total assets 1,514,507 1,375,484
Reserves for loss and loss
adjustment expenses 853,631 788,240
Long-term debt 109,252 104,126
Common stockholders' equity 291,008 260,497
Book value per common share $ 30.23 $ 27.11
Statutory policyholders' surplus:
Chartwell Reinsurance Company $ 292,849 $ 262,605
The Insurance Corporation of
New York $ 125,932 $ 113,677
SUPPLEMENTAL FINANCIAL INFORMATION
(Dollars in thousands)
Nine Month Periods
Ended September 30
1998 1997
GAAP:
Pre-tax investment income $ 36,247 $ 32,355
After-tax net investment income $ 25,687 $ 23,031
Tax equivalent yield (1) 6.30% 6.54%
Cash flow from (used in) operations $ (5,097) $ 9,236
ROE (Average equity) 11.0% 11.4%
GAAP Combined Ratios:
Loss and LAE ratio 60.5% 65.9%
Acquisition expense ratio 27.0 29.1
Overhead expense ratio 9.2 6.6
Combined ratio 96.7 101.6%
Statutory Combined ratio: (2)
Loss and LAE ratio 58.9% 66.1%
Expense ratio 37.1 35.9
Combined ratio 96.0% 102.0%
(1) Chartwell's pro rata share of investment income from Chartwell
Managing Agents Limited managed syndicates is excluded from this
calculation because the related invested assets are not included
in the Chartwell's consolidated balance sheet.
(2) Excluding Chartwell Managing Agents Limited managed syndicates.
|
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion