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ENHANCE FINANCIAL SERVICES GROUP REPORTS FIRST QUARTER EARNINGS

 ENHANCE FINANCIAL SERVICES GROUP REPORTS FIRST QUARTER EARNINGS
 NEW YORK, May 14 /PRNewswire/ -- Enhance Financial Services Group Inc. (NYSE: EFS) today reported net income for the first quarter of 1992 of $8.1 million, a 12.2 percent increase over first-quarter 1991 net income of $7.2 million. Earnings per share for the first quarter grew 9.8 percent to $0.45 from $0.41. Book value per share at March 31, 1992, increased to $16.83 from $16.46 at Dec. 31, 1991.
 Wallace O. Sellers, president and chief executive officer, said, "Enhance Group's first-quarter performance benefited from the year-over- year growth in new-issue municipal volume, greater demand for bond insurance, and increased refundings due to continued low interest rates. These factors, combined with increases in Enhance Group's direct insurance activities, contributed to a sharp year-over-year increase in gross premiums written."
 Total 1992 first-quarter revenues increased 26.2 percent to $19.3 million, up from $15.3 million in first-quarter 1991. Total revenues comprise premiums earned, investment income, realized gains, and other income. Enhance Group gross premiums written were $12.1 million, up 147 percent from $4.9 million in the first quarter of 1991.
 Enhance Group net premiums written increased 132 percent to $11.1 million in the first quarter, compared to $4.8 million in first- quarter 1991. Of the 1992 first-quarter net premiums written, $5.8 million was attributable to reinsurance of municipal bonds, $2 million to reinsurance of asset-backed debt obligations, and $3.3 million to Enhance Group's specialty activities. These results compare to $2.4 million, $1.7 million, and $0.6 million, respectively, during the same period in 1991.
 Enhance Group premiums earned increased 38.5 percent to $10.2 million in first-quarter 1992, up from $7.4 million in the same 1991 period. The increase reflects the higher level of refundings, which accounted for an estimated $1 million of first-quarter 1992 earned premiums, as well as the increased amortization of premiums into earnings from the growth in unearned premiums from business written in prior years.
 Enhance Group net investment income, exclusive of net realized gains on the sales of investments, increased 7.7 percent to $7.1 million in the first quarter, compared to $6.6 million in first-quarter 1991. Realized gains on sales of investments were $1.8 million in the first quarter of 1992 compared to $1.2 million during the same period in 1991.
 First-quarter 1992 earnings benefited from certain non-recurring items. These included the adoption of FAS 109, a new accounting standard for the measurement and recognition of deferred income taxes, which resulted in a tax benefit of $0.9 million, and realization of capital gains in Enhance Group's investment portfolio, resulting in a pre-tax gain of $1.8 million.
 Total operating expenses for the first quarter of 1992 were $6.2 million compared to $4.7 million for first-quarter 1991, an increase of 32.8 percent which compares with the 38.5 percent increase in earned premiums. Enhance Group's expense ratio declined to 60.6 percent in the first quarter of 1992 from 63.2 percent during the same period in 1991. This decline was due primarily to the lower costs associated with the company's direct writings which represented 13.6 percent of net premiums written in the first three months of 1992 compared with zero percent in the first quarter of 1991.
 As previously reported, the first-quarter earnings reflect establishment of a loss reserve of approximately $3.8 million for a financial guaranty Enhance Group provided as a reinsurer of a commercial real estate project. Due to savings on profit commissions associated with this transaction, and other unrelated favorable developments in its loss reserve funds, the total pre-tax impact of loss reserve changes on earnings for the quarter was $3.0 million.
 Enhance Financial Services Group Inc. is engaged in financial guaranty reinsurance and related activities, and has three wholly owned subsidiaries: Enhance Reinsurance Company, a financial guaranty reinsurer rated "AAA" by Standard & Poor's and Duff & Phelps; Asset Guaranty Reinsurance Company, a financial guaranty insurance company rated "AAA" by Duff & Phelps; and Guaranty Risk Services, an adviser on credit-enhanced securitized real estate transactions.
 ENHANCE FINANCIAL SERVICES GROUP INC. AND SUBSIDIARIES
 Condensed Balance Sheets
 (Dollars in thousands except per share amounts)
 3/31/92 12/31/91
 (Unaudited)
 ASSETS
 Investments:
 Fixed maturities $412,309 $395,497
 Cash and short-term 49,304 37,200
 Other 631 707
 Total investments 462,244 433,404
 Deferred acquisition costs 48,966 48,390
 Other assets 22,570 26,836
 Total assets 533,780 508,630
 LIABILITIES
 Losses and LAE 10,934 7,782
 Unearned premiums 167,005 166,112
 Senior notes 9,000 9,000
 Other liabilities 39,772 37,661
 Total liabilities 226,711 220,555
 SHAREHOLDERS' EQUITY
 Common stock 1,827 1,752
 Additional paid-in capital 192,256 180,450
 Retained earnings 114,238 107,217
 Other (1,252) (1,344)
 Total shareholders' equity 307,069 288,075
 Total liabilities and
 shareholders' equity $533,780 $508,630
 Book value per share $16.83 $16.46
 Total shares outstanding
 (in thousands) 18,248 17,498
 ENHANCE FINANCIAL SERVICES GROUP INC. AND SUBSIDIARIES
 Condensed Statements of Income
 (Unaudited -- dollars in thousands except per share amounts)
 Three months ended March 31 1992 1991
 Revenues:
 Gross premiums written $12,119 $ 4,900
 Net premiums written 11,081 4,777
 Premiums earned 10,190 7,355
 Net investment income 7,074 6,568
 Realized gains 1,825 1,196
 Other income 183 151
 Total revenues 19,272 15,270
 Expenses:
 Loss and LAE 3,202 929
 Policy acquisition costs 3,337 2,298
 Profit commissions 109 146
 Other operating expenses 2,731 2,206
 Total expenses 9,379 5,579
 Income from operations 9,893 9,691
 Equity in affiliates (228) (52)
 Income before taxes 9,665 9,639
 Income taxes 1,549 2,408
 Net income $ 8,116 $ 7,231
 Earnings per share $0.45 $0.41
 Weighted average shares
 (in thousands) 17,873 17,514
 ENHANCE FINANCIAL SERVICES GROUP INC.
 Selected Statutory Data (A)
 (Unaudited -- dollars in thousands)
 3/31/92 12/31/91
 Balance Sheet
 Contingency reserve $ 45,977 $ 43,269
 Capital and surplus 214,825 200,221
 Qualified statutory capital 260,802 243,490
 Unearned premium reserve 193,649 190,724
 Losses and loss adjustment
 expense reserve 11,147 7,883
 Policyholders' reserves 465,598 442,097
 Net insurance in force $32,907,691 $32,591,947
 Leverage ratio (B) 126:1 134:1
 (A) -- Represents the combined statutory financial position of Enhance Reinsurance Company and Asset Guaranty Reinsurance Company.
 (B) -- Leverage ratio is net insurance in force divided by qualified statutory capital.
 -0- 5/14/92
 /CONTACT: Sheila Brody of Enhance Group, 212-983-3100/
 (EFS) CO: Enhance Financial Services Group Inc. ST: New York IN: FIN SU: ERN


GK-ST -- NY012 -- 0064 05/14/92 09:20 EDT
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Date:May 14, 1992
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