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HARLEYSVILLE GROUP REPORTS FIRST QUARTER EARNINGS

 HARLEYSVILLE, Pa., April 28 /PRNewswire/ -- Harleysville Group Inc. (NASDAQ: HGIC), a regional insurance holding company, today reported first quarter results.
 As reported earlier this month, the "Blizzard of '93" reduced operating earnings in the first quarter of 1993 by $0.25 per share. Reflecting this loss, first quarter operating earnings were $0.32 per share, compared with $0.52 per share in the same period of 1992. Excluding the catastrophe, Harleysville Group's first quarter operating income would have been $0.57 per share, or 10 percent higher than the same period of 1992.
 "We are seeing some encouraging signs in the marketplace that the commercial lines underwriting cycle may be turning upward," commented Bradford W. Mitchell, chairman of the board and chief executive officer of Harleysville Group. "At the same time, we have been more successful in achieving premium growth in proportion to loss cost growth. Throughout 1993 we will continue to focus our efforts on the geographic territories and lines of business that provide the greatest contribution to our bottom line."
 Reflecting the impact of the Blizzard of '93 and unusually high realized gains in the first quarter of 1992, net income for the first quarter of 1993 declined to $0.35 per share, compared with $0.77 per share in the same period a year ago. Net income includes $0.05 per share of after-tax realized capital gains in the latest quarter, compared with $0.25 per share of after-tax realized gains in the first quarter of 1992. The realized gains in both quarters were primarily the result of the sales of high coupon Government National Mortgage Association (GNMA) pass-through securities and other mortgage-backed securities. In addition, there was a one-time charge to 1993 first quarter net income of $0.02 per share for the cumulative effect of adopting three new accounting principles related to the treatment of post-retirement benefits, post-employment benefits and income taxes.
 Total revenues rose 2 percent to $111.0 million, compared with $108.8 million in the first quarter of 1992. Earned premiums in the first quarter grew by 5 percent to $93.7 million, compared with $89.4 million during the same quarter one year ago.
 First quarter investment income increased 1 percent to $14.7 million. At the same time, after-tax investment income rose 3 percent in the first quarter to $11.0 million. The greater increase in after-tax investment income is due to a higher level of tax-exempt investments.
 Stockholders' equity rose 9 percent to $241.8 million ($18.80 per share) at March 31, 1993, compared with $221.3 million ($17.63 per share) at March 31, 1992.
 Harleysville Group's statutory combined ratio for the first quarter of 1993 was 111.9 percent (106.7 percent excluding the blizzard), compared with 106.5 percent in the first quarter of 1992.
 "Operating in a competitive underwriting environment, we have been able to achieve growth in net premiums written of 10 percent during the first quarter, while carrying out our strategy to maintain adequate pricing and responsible underwriting. And we are optimistic this


strategy will continue to bring success throughout 1993," Mitchell concluded.
 Harleysville Group Inc. is a regional holding company for six property and casualty insurance companies 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 Harleysville Mutual Insurance Company and its wholly owned subsidiaries, as well as Berkshire Mutual Insurance Group. The financial results of these managed companies are not consolidated into Harleysville Group. Harleysville Group's property/casualty subsidiaries are rated A+ (Superior) by the A.M. Best Company.
 HARLEYSVILLE GROUP INC. AND SUBSIDIARIES
 Financial Highlights
 (Unaudited; in thousands except per-share data)
 Quarter ended March 31 1993 1992
 Operating results:
 Premiums earned $93,700 $89,411
 Investment income,
 net of investment expenses 14,651 14,442
 Net income 4,516 9,606
 Per common share:
 Net income $.35 $.77
 Cash dividend .14 .12
 Financial condition March 31, 1993 Dec. 31, 1992
 Assets $922,659 $904,627
 Stockholders' equity 241,828 237,388
 Per common share $18.80 $18.57
 Consolidated Statements of Income
 (Unaudited; dollars in thousands, except per-share data)
 Quarter ended March 31 1993 1992
 Revenues:
 Premiums earned $93,700 $89,411
 Investment income,
 net of investment expenses 14,651 14,442
 Realized investment gains 1,047 4,668
 Other income 1,564 256
 Total revenues 110,962 108,777
 Losses and expenses:
 Losses and loss settlement expenses 73,381 64,113
 Amortization of deferred
 policy acquisition costs 25,149 23,916
 Other underwriting expenses 6,287 7,300
 Interest expense 309 341
 Other expenses 623 522
 Total expenses 105,749 96,192
 Income before income taxes and cumulative
 effect of accounting changes 5,213 12,585
 Income taxes 416 2,979
 Income before cumulative
 effect of accounting changes 4,797 9,606
 Cumulative effect of accounting
 changes, net of tax (281) ---
 Net income 4,516 9,606
 Weighted average number of
 shares outstanding 12,816,002 12,483,758
 Earnings per common share:
 Income before cumulative
 effect of accounting changes $.37 $.77
 Cumulative effect of accounting
 changes, net of tax (.02) ---
 Net income .35 .77
 Cash dividend per common share .14 .12
 Supplementary Financial Analysts' Data
 (Unaudited; in thousands, except per-share data)
 Quarter ended March 31 1993 1992
 Pre-tax investment income $14,651 $14,442
 Related federal income taxes 3,607 3,680
 After-tax investment income 11,044 10,762
 Net premiums written 97,692 89,114
 Fresh start benefit per share --- $.01
 Earnings per common share:
 Operating income .32 .52
 Realized gains, net of tax .05 .25
 Cumulative effect of accounting
 changes, net of tax (.02) ---
 Net income .35 .77
 /delval/
 -0- 4/28/93
 /CONTACT: Frederick W. Baker (media) 215-256-5287, or Randy Buckwalter (media), 215-256-5288, or Mark R. Cummins (investors), 215-256-5025, Bruce J. Magee (investors), 215-256-5011, all of Harleysville Group/
 (HGIC)


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

MP-CC -- PH002 -- 1680 04/28/93 07:40 EDT
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Date:Apr 28, 1993
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