Conning Corporation Reports First Quarter Earnings of $0.27 Per Share, Increases 35 Percent.

ST. LOUIS--(BUSINESS WIRE)--April 22, 1999--

Conning Corporation (NASDAQ:CNNG) today reported financial and operating results for the first quarter ended March 31, 1999.

Conning provides asset management services primarily to insurance companies and institutional investors, manages private equity funds investing in insurance and insurance-related companies, and conducts in-depth research on the insurance industry.

First-Quarter Results

Diluted earnings per share increased 35 percent to $0.27 compared to $0.20 per share in the first quarter of 1998. Net income rose 33 percent to $3.8 million from $2.8 million in the prior year, due to contributions from all aspects of the Company's businesses.

Revenues for the first quarter increased 17 percent to $23.0 million from $19.7 million during the first quarter of 1998. Operating income for the quarter increased almost 28 percent to over $6.4 million from $5.0 million a year earlier. Net income plus amortization and depreciation increased 24 percent to $4.6 million for the quarter from $3.7 million during 1998.

Leonard M. Rubenstein, Conning Corporation's Chairman, President, and Chief Executive Officer, stated, "Our company has achieved sound results during the quarter as we continue our momentum from our outstanding year in 1998. This quarter's results demonstrate Conning's ability to continue to generate recurring revenues from our strong diversified lines of business serving the insurance and financial services industries, and our management team's ability to remain focused on growing profitability."

Assets Under Management 

Assets under discretionary management grew almost 7 percent over the twelve-month period ended March 31, 1999, increasing to $29.4 billion. Total assets serviced increased almost 6 percent over the past twelve months to $90.6 billion as of March 31, 1999, resulting from growth in all asset classes serviced.

Total asset management and related fees increased 24 percent totaling $18.2 million in the first quarter compared to $14.7 million a year ago.

Asset Management

The Asset Management group continued to experience strong growth, increasing revenues almost 20 percent during the three-month period ended March 31, 1999 compared to a year ago. Core investment management revenues from the Company's insurance and financial services clients increased 22 percent during the first quarter ended March 31, 1999 compared to the same period in 1998. The asset management results reflect the operations of the recently acquired Noddings Group.

The Private Equity division of Asset Management remained strong as revenues increased almost 10 percent during the first quarter of 1999 compared to a year ago. These results reflect normal recurring management fees from the family of Conning Private Equity Funds, positive investment return activity within the Fund portfolios and the wind-down of the Conning Private Equity Fund II in January 1999.

Mortgage Loan and Real Estate

The Company's Mortgage Loan and Real Estate Group continued its strong growth during the first quarter 1999 increasing revenues 33 percent to $6.3 million compared to $4.8 million during the same period in 1998. This is primarily due to the group's continued strong field office origination capabilities and increasing demand for commercial loans by new and existing clients. As of March 31, 1999, the Company now services over $3.8 billion in commercial mortgage assets, a 30 percent increase from a year ago.

Research Services

Conning's research division generated solid growth as total revenues increased approximately 6 percent to $4.4 million from $4.2 million during the same period in 1998. This revenue increase reflects continued strong growth in its core research business of 24 percent, partially offset by the recent insurance industry declines in underwriting activity.

Acquisitions

As announced on March 26, 1999, Conning signed a definitive agreement to purchase the insurance company high-grade fixed income management business from The TCW Group, Inc. ("TCW"). This will result in acquiring a known client base having approximately $2.5 billion in unaffiliated discretionary assets and assets serviced. The transaction is expected to close during the second quarter and to be accretive to earnings during the first full year of operations.

Rubenstein stated, "This transaction continues our strategy of creating size and scale efficiencies by increasing the amount of assets we manage, and complementing our business. We continue to put our capital resources to work identifying opportunities that will strengthen our ability to deliver quality and service to our customer base and enhance our franchise value to our shareholders."

In addition to the acquisition, Conning and TCW formed a global alliance in which each party will refer its clients to or obtain sub-advisory services from the other party for services it does not currently provide. This alliance is already generating opportunities as the organization is in the final stages of negotiating an investment accounting and reporting agreement with TCW for approximately $1.0 billion in assets.

Rubenstein added, "We will remain very active in evaluating future acquisitions and alliances that would complement our existing business and result in shareholder value."

Declaration of Quarterly Cash Dividend

Conning's board of directors declared its quarterly dividend of $0.05 per share on the Company's common stock, payable June 11, 1999 to shareholders of record on May 21, 1999. This represents the sixth consecutive quarterly dividend to be paid by the Company since it completed its initial public offering in December 1997.

The preceding discussions of expected future results may constitute forward-looking statements. Actual results could differ from expected results due to various factors, including whether final costs exceed estimates and other factors discussed in company filings with the Securities and Exchange Commission. -0-

                          CONNING CORPORATION

                   (in 000s, except for per share data)
                               unaudited

                                       Three Months Ended March 31,
                                       1999       1998     Increase

Total revenues                      $ 23,046   $ 19,680       17%

Operating income                       6,400      5,018       28%

Income before income taxes             6,341      4,952       28%

Net income                             3,766      2,832       33%

Net income plus amortization
  and depreciation                     4,594      3,727       23%

Average dilutive shares               14,037     14,175        -

Basic earnings per share            $   0.28   $   0.21        -

Diluted earnings per share          $   0.27   $   0.20       35%


                          Assets Serviced by the Company
                                  (in billions)

                                        As of     As of       As of
                                       3/31/99   12/31/98    3/31/98
Assets under discretionary management:
    Unaffiliated                        $12.3      $12.4      $12.2
    Affiliated                           17.1       17.2       15.3
      Total                              29.4       29.6       27.5

Investment advisory                      28.8       29.3       27.9
Investment accounting &
  reporting                              32.4       31.5       30.1

    Total assets serviced               $90.6      $90.4      $85.5


                          CONNING CORPORATION
                       Consolidated Statements of Income
                        (in 000s, except per share data)

                                       Three months ended March 31,
                                             1999         1998
                                                (unaudited)

Revenues:
  Asset management and related fees      $ 18,174     $ 14,685
  Research services                         4,401        4,168
  Other income                                471          827
    Total revenues                         23,046       19,680

Expenses:
  Employee compensation & benefits         10,617        9,632
  Occupancy and equipment costs             1,520        1,145
  Marketing and production costs            1,845        1,558
  Professional services                       670          552
  Amortization of goodwill and other          649          708
  Other operating expenses                  1,345        1,067
    Total expenses                         16,646       14,662

  Operating income                          6,400        5,018

  Interest expense                             59           66

  Income before provision for
     income taxes                           6,341        4,952
  Provision for income taxes                2,575        2,120
  Net income                             $  3,766     $  2,832

  Average diluted shares outstanding       14,037       14,175

  Earnings per share:

    Basic                                $   0.28      $  0.21

    Diluted                              $   0.27      $  0.20


                          CONNING CORPORATION
                   Consolidated Balance Sheet Information
                           (amounts in 000s)

                                      March 31,         December 31,
                                        1999                1998
                                              (unaudited)
Assets:
 Current assets:
  Cash and cash equivalents          $ 34,169            $ 31,343
  Short-term investments               19,845              28,288
  Accounts receivable,net              10,541              11,165
  Marketable equity securities            725                 278
  Prepaid expenses and other
   current assets                         438                 482
    Total current assets               65,718              71,556

 Non-marketable investments at value     3,538               2,737
 Equipment and leasehold
  improvements, less accumulated
   amortization                          1,387               1,452
 Deferred income taxes                   2,951               3,200
 Goodwill                               40,142              40,706
 Other assets                            4,721               2,827
    Total assets                      $118,457            $122,478

Liabilities and Shareholders' Equity
 Current liabilities:
  Compensation payable                  2,880               12,795
  Deferred revenue                      3,926                3,793
  Due to affiliates                     4,698                2,339
  Income tax payable                    2,296                  284
  Accounts payable and other
   accrued expenses                    16,857               19,555
    Total current liabilities          30,657               38,766

 Accrued rent liability                 3,137                3,216
 Other payables                           280                  320
    Total liabilities                  34,074               42,302

Common stock                              137                  136
Additional paid in capital             76,083               74,975
Retained earnings                      14,560               11,462
Treasury stock                         (6,397)              (6,397)
 Total common shareholders' equity     84,383               80,176

  Total liabilities and
   shareholders' equity              $118,457             $122,478