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

 HARLEYSVILLE, Pa., Feb. 24 /PRNewswire/ -- Harleysville Group Inc. (NASDAQ: HGIC), a regional insurance holding company, today reported results for the fourth quarter and for the year 1992.
 For the year, net income per share increased 4 percent to $2.14 in 1992 from $2.05 in 1991. Included in 1992 net income are realized capital gains of $0.45 per share that reflect the sale of high coupon Government National Mortgage Association (GNMA) pass-through securities. "Due to the anticipated lower interest rate environment, we decided to sell these bonds at a premium in advance of their being prepaid at par value," explained Bradford W. Mitchell, chairman of the board and chief executive officer of Harleysville Group. "This strategy protected the market value of the bond portfolio, maintained investment income levels and resulted in the highest level of realized gains in our company's history."
 Operating earnings for the year -- which exclude realized gains -- were $1.69 per share in 1992, compared with $2.02 per share in 1991. This decline resulted primarily from three major catastrophes (Hurricane Andrew, a December winter storm and a hailstorm in New York State) that occurred during 1992. After reinsurance, pooling and taxes, year-end earnings were reduced $0.53 per share in 1992 by these major catastrophes, compared with a catastrophe charge (Hurricane Bob) of $0.15 per share in 1991. Excluding these major catastrophes, operating income would have been $2.22 per share in 1992, compared with $2.17 per share in 1991.
 Fourth quarter net income per share was $0.28, compared with $0.54 per share in the fourth quarter of 1991. Operating earnings (excluding realized gains) were $0.24 per share in the fourth quarter of 1992, compared with $0.53 per share in the fourth quarter of 1991. These declines resulted from the December winter storm that reduced earnings by $0.18 per share, after reinsurance, pooling and taxes. Further claims from Hurricane Andrew also reduced fourth quarter earnings by $0.06 per share.
 Harleysville Group's statutory combined ratio for the year was 108.8 percent in 1992 (106.0 excluding the major catastrophes), compared with 106.4 percent in 1991 (105.6 excluding the catastrophe). For the fourth quarter, the combined ratio was 112.4 percent (107.4 excluding the major catastrophes), compared with 106.7 percent for the fourth quarter of 1991 (106.5 excluding the catastrophe).
 "While Harleysville Group was unable to escape Hurricane Andrew and the other catastrophes in 1992, our combined ratio was 6 points better than the estimated industry figure," commented Mitchell. "At the same time, our underwriting results reflect the difficult commercial lines environment in which we operate, especially in the workers compensation line. The modest overall decline in commercial lines profitability we experienced in 1992, however, was partially offset by improved personal auto results, which continue to benefit from the removal of Pennsylvania and New Jersey business from the underwriting pool."
 Total revenues in the fourth quarter were virtually unchanged at $107.0 million, compared with $106.6 million in the fourth quarter of 1991. For the year, total revenues increased 1 percent to $427.2 million in 1992 from $421.9 million in 1991.
 Earned premiums in the fourth quarter were $91.3 million, compared with $91.6 million during the same quarter a year ago. For the twelve- month periods, earned premiums declined 1 percent to $359.2 million in 1992, from $363.9 million in 1991. The declines in earned premiums continue to reflect the ongoing removal of Pennsylvania and New Jersey personal auto insurance business from the intercompany pooling arrangement. "While this strategy has reduced cash flow in the short term, it has also removed the long-term potential negative impact of this line on Harleysville Group's results," Mitchell said.
 After-tax investment income increased 1 percent in the fourth quarter of 1992 to $11.0 million compared with $10.9 million in 1991. For the full year, after-tax investment income was up 4 percent to $43.4 million in 1992, compared with $41.8 million in 1991. The increase in after-tax investment income is due to a higher proportion of tax-exempt investments.
 "We are especially proud of our investment results in this declining interest rate environment," Mitchell said. "Despite prevailing low interest rates, we achieved a 7.8 percent yield on our $763.6 million investment portfolio. Additionally, the quality of our portfolio is evidenced by the fact that, at year-end, 98 percent of our investments were rated A' or better by Moody's Investor Service, and the portfolio includes no junk bonds."
 Stockholders' equity rose 12 percent to $237.4 million ($18.57 per share) at Dec. 31, 1992, compared with $211.3 million ($16.98 per share) at Dec. 31, 1991, while return on average stockholders' equity was 12.0 percent in 1992.
 "For the past several years, Harleysville Group has performed well during a demanding business environment," Mitchell concluded. "Our balance sheet is solid and our strong investment income ($3.45 per share on an after-tax basis in 1992) positions us to profit from a turn in the current industry downcycle. Our employees and agents are concentrating on the geographical areas and the lines of business that will offer us the best opportunities to continue our superior results throughout the 1990s."
 Harleysville Group Inc. is a regional holding company for six property/casualty insurers whose marketing territory encompasses the entire East Coast. The companies include Connecticut Union Insurance Company, Harleysville-Atlantic 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. Harleysville Group plans to make its 1992 Annual Report available March 26, 1993.
 HARLEYSVILLE GROUP INC. AND SUBSIDIARIES
 (Unaudited; in thousands except per-share data)
 Periods ended Quarter Year
 Dec. 31 1992 1991 1992 1991
 Operating results:
 Premiums earned $91,306 $91,639 $359,170 $363,853
 Investment income,
 net of investment
 e?xpenses 14,649 14,672 57,921 56,484
 Net income 3,542 6,647 26,927 25,027
 Per common share:
 Net income $.28 $.54 $2.14 $2.05
 Cash dividends .14 .12 .52 .45
 Financial condition Dec. 31, 1992 Dec. 31, 1991
 Assets $904,627 $846,970
 Stockholders' equity 237,388 211,275
 Per common share $18.57 $16.98
 Consolidated Statements of Income
 (Unaudited; dollars in thousands, except per-share data)
 Periods ended Quarter Year
 Dec. 31 1992 1991 1992 1991
 Revenues:
 Premiums earned $91,306 $91,639 $359,170 $363,853
 Investment income, net
 of investment expenses 14,649 14,672 57,921 56,484
 Realized investment gains 790 52 8,589 437
 Other income 256 274 1,524 1,097
 Total revenues 107,001 106,637 427,204 421,871
 Losses and expenses:
 Losses and loss settlement
 expenses 72,384 66,731 267,742 262,708
 Amortization of deferred
 policy acquisition
 costs 24,578 24,504 96,258 97,294
 Other underwriting
 expenses 5,866 6,325 27,256 27,545
 Interest expense 284 419 1,268 1,406
 Other expenses 611 478 2,174 2,231
 Total expenses 103,723 98,457 394,698 391,184
 Income before income
 taxes 3,278 8,180 32,506 30,687
 Income taxes (benefit) (264) 1,533 5,579 5,660
 Net income 3,542 6,647 26,927 25,027
 Weighted average number of
 shares outstanding 12,714,365 12,381,899 12,593,302 12,226,997
 Earnings per common share $.28 $.54 $2.14 $2.05
 Cash dividends per common
 share .14 .12 .52 .45
 Supplementary Financial Analysts' Data
 (Unaudited; in thousands, except per-share data)
 Periods ended Quarter Year
 Dec. 31 1992 1991 1992 1991
 Pre-tax investment
 income $14,649 $14,672 $57,921 $56,484
 Related federal
 income taxes 3,658 3,819 14,484 14,722
 After-tax investment
 income 10,991 10,853 43,437 41,762
 Net premiums written(A) 88,086 85,427 364,953 385,438
 Fresh start benefit
 per share $.01 $.01 $.03 $.03
 Earnings per common share:
 Operating income .24 .53 1.69 2.02
 Net income .28 .54 2.14 2.05
 (A) The net premiums written for the year ended Dec. 31, 1991, includes $19,565,799 from the Jan. 1, 1991 pooling change.
 /delval/
 -0- 2/24/93
 /CONTACT: Frederick W. Baker, 215-256-5287, or Randy Buckwalter, 215-256-5288 (both media); or Mark R. Cummins, 215-256-5025, or Bruce J. Magee, 215-256-5011 (both investors), all of Harleysville Group/
 (HGIC)


CO: Harleysville Group Inc. ST: Pennsylvania IN: INS SU: ERN

MK-CC -- PH003 -- 9865 02/24/93 11:25 EST
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