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HARLEYSVILLE GROUP INC. REPORTS FOURTH QUARTER AND YEAR-END EARNINGS

HARLEYSVILLE GROUP INC. REPORTS FOURTH QUARTER AND YEAR-END EARNINGS
 HARLEYSVILLE, Pa., Feb. 26 /PRNewswire/ -- Harleysville Group Inc. (NASDAQ: HGIC), a regional insurance holding company, today reported revenues and earnings for the fourth quarter and for the year 1991.
 Net income for the fourth quarter declined 8 percent to $6.6 million, compared with $7.2 million in the fourth quarter of 1990. For the full year, net income totalled $25 million, 3 percent lower than the $25.9 million reported for 1990. Net income per share decreased 10 percent to $0.54 in the fourth quarter, versus $0.60 in the same period of 1990. For the year, net income was $2.05 per share compared with the $2.18 per share reported in 1990. Excluding both a $0.15 per share charge from Hurricane Bob in 1991 and a $0.10 per share non- recurring fresh start tax benefit in 1990, earnings per share would have otherwise increased 6 percent in 1991. All per share amounts have been adjusted to reflect the three-for-two stock split effective Nov. 4, 1991.
 "In 1991, Harleysville Group turned in its second-best earnings performance since going public in 1986," commented Bradford W. Mitchell, chairman of the board, president and chief executive officer of Harleysville Group. "Our results are especially significant in light of the industry's continuing soft market, a sluggish economy, ongoing rate suppression by regulators and the industry's second-worst year for natural disasters.
 "We experienced dramatic increases in our investment income, earned premiums and revenues due primarily to the acquisition of New York Casualty Insurance Company and Connecticut Union Insurance Company, and the related increase in Harleysville Group's participation in the intercompany underwriting pool from 50 percent to 60 percent," Mitchell explained.
 Fourth quarter investment income rose 26 percent to $14.6 million, compared with $11.6 million in the fourth quarter of 1990. For the 12 months, investment income was up 29 percent to $56.5 million in 1991 from $43.7 million in 1990. In addition to the higher levels of invested assets resulting from Harleysville Group's acquisition and increased share of the intercompany pool with Harleysville Mutual, Harleysville Group continued to enjoy strong cash flow from operations.
 "Much of our success in the investment area has been accomplished by moderately extending the average life of our bond portfolio and by reinvesting part of our portfolio of mortgage-backed securities into collateralized mortgage obligations with a longer duration," Mitchell said. "At the same time, the average quality of our bond portfolio is rated Aa by both Standard and Poor's and Moody's bond rating services, and our invested assets do not include any non-investment grade bonds or real estate investments."
 Earned premiums in the fourth quarter increased 16 percent to $91.6 million, compared with $79.2 million during the same quarter one year ago. For the 12-month periods, earned premiums grew by 22 percent to $363.9 million in 1991, from $298.4 million in 1990.
 Total revenues were up 17 percent to $106.6 million, compared with $91.4 million in the fourth quarter of 1990. For the year, total revenues were 23 percent higher, rising to $421.9 million in 1991 from $344.2 million in 1990.
 Stockholders' equity rose 14 percent to $211.3 million ($16.98 per share) at Dec. 31, 1991, compared with $184.7 million ($15.33 per share) at Dec. 31, 1990, while return on average stockholders' equity was 12.6 percent in 1991.
 Harleysville Group's statutory combined ratio for the fourth quarter of 1991 was 106.7 percent, compared with 105.6 percent for the same period of 1990. For the year, the combined ratio was 106.4 percent in 1991, compared with 104.4 percent in 1990.
 "While our combined ratio increased over 1990, 0.8 points of that increase was attributable to Hurricane Bob," Mitchell said. "Even so, we beat the industry's estimated combined ratio of 109.1 percent by 2.7 points.
 "Looking ahead, we view the upcoming year as pivotal for Harleysville Group and the entire property/casualty insurance industry," he concluded. "However, with top-of-the-line people and products and a strong balance sheet, we are well positioned both financially and operationally to continue our outstanding record of profitability."
 Harleysville Group Inc. is a regional holding company for six property and casualty insurers whose marketing territory encompasses the entire East Coast. The companies include: Atlantic Insurance Company of Savannah, Connecticut Union Insurance Company, Harleysville Insurance Company of New Jersey, Huron Insurance Company, New York Casualty Insurance Company and Worcester Insurance Company. Harleysville Group also manages the operations of Berkshire Mutual Insurance Group, the financial results of which are not consolidated into Harleysville Group. Harleysville Group's property/casualty subsidiaries are rated A+ (Superior) by the A.M. Best Company, an independent financial analyst of the insurance industry. Harleysville Group plans to make its 1991 Annual Report available March 19, 1992.
 HARLEYSVILLE GROUP INC. AND SUBSIDIARIES
 (Unaudited; in thousands, except per-share data)
 Periods ended Quarter Year
 Dec. 31 1991 1990 1991 1990
 Operating results:
 Premiums earned $91,639 $79,158 $363,853 $298,396
 Investment income,
 net of investment
 expenses 14,672 11,633 56,484 43,707
 Net income 6,647 7,200 25,027 25,888
 Per common share:
 Net income $.54 $.60 $2.05 $2.18
 Cash dividends .12 .11 .45 .40
 Financial condition at Dec. 31 1991 1990
 Assets $846,970 $650,314
 Stockholders' equity 211,275 184,717
 Per common share $16.98 $15.33
 Consolidated Statements of Income
 (Unaudited; in thousands, except per-share data)
 Periods ended Quarter Year
 Dec. 31 1991 1990 1991 1990
 Revenues:
 Premiums earned $91,639 $79,158 $363,853 $298,396
 Investment income,
 net of investment
 expenses 14,672 11,633 56,484 43,707
 Realized investment
 gains (losses) 52 53 437 17
 Other income 274 508 1,097 2,043
 Total revenues 106,637 91,352 421,871 344,163
 Losses and expenses:
 Losses and loss settlement
 expenses 66,731 56,398 262,708 210,315
 Amortization of deferred
 policy acquisition
 costs 24,504 21,294 97,294 79,523
 Other underwriting
 expenses 6,325 5,568 27,545 21,261
 Interest expense 419 86 1,406 346
 Other expenses 478 582 2,231 1,891
 Total expenses 98,457 83,928 391,184 313,336
 Income before income
 taxes 8,180 7,424 30,687 30,827
 Income taxes 1,533 224 5,660 4,939
 Net income 6,647 7,200 25,027 25,888
 Weighted average number of
 shares outstanding 12,381,899 11,991,596 12,226,997 11,877,141
 Earnings per common
 share $.54 $.60 $2.05 $2.18
 Cash dividends per common
 share .12 .11 .45 .40
 The per-share data and the weighted average number of shares outstanding have been retroactively adjusted to reflect the 3-for-2 stock split effective Nov. 4, 1991.
 Supplementary Financial Analysts' Data
 (Unaudited; in thousands, except per-share data)
 Periods ended Quarter Year
 Dec. 31 1991 1990 1991 1990
 Pre-tax investment
 income $14,672 $11,633 $56,484 $43,707
 Related federal
 income taxes 3,819 2,932 14,722 10,916
 After-tax investment
 income 10,853 8,701 41,762 32,791
 Net premiums written 85,427 77,377 385,438 305,417
 Fresh start benefit
 per share $.01 $.10 $.03 $.12
 Earnings per common share:
 Operating income .53 .60 2.02 2.18
 Net income .54 .60 2.05 2.18
 /delval/
 -0- 2/26/92
 /CONTACT: Frederick W. Baker, 215-256-5287, or Bruce J. Magee, vice president-controller, 215-256-5011, Robert Simpson Jr., chief investment officer, 215-256-5392, all of Harleysville Group/
 (HGIC) CO: Harleysville Group Inc. ST: Pennsylvania IN: INS SU: ERN


MP-MC -- PH007 -- 2758 02/26/92 11:23 EST
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