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 LOUISVILLE, Ky., Aug. 2 /PRNewswire/ -- Kentucky Medical Insurance Company (NASDAQ-NMS: KYMDA) today reported a decrease in net income for the quarter and six months ended June 30, 1993. The decline can be attributed primarily to increased claims costs and a reduction in investment income.
 Net income was $310,583, or $0.16 per share, for the second quarter ended June 30, 1993. These results reflect a 59 percent decrease from the $766,404, or $0.42 per share, earned for the second quarter of 1992.
 Net income was $665,791, or $0.35 per share, for the six-month period ended June 30, 1993. This represents a 58 percent decrease from the $1.6 million, or $0.86 per share, reported for the same period of 1992. Shareholders' equity per share increased to $13.07 at June 30, 1993, from $12.66 at Dec. 31, 1992.
 During the second quarter of 1993, total claims costs and related expenses increased by 10 percent to $2.3 million as the trend of increased frequency and severity of claims continued. For the six months ended June 30, these expenses climbed 15 percent to $4.7 million, vs. $4.1 million for the same period last year.
 "I see no patterns or trends developing that indicate that claims severity or frequency will improve by the end of the year," said Kentucky Medical President and Chief Executive Officer Steven L. Salman. "But we anticipated this harsh claims cycle and we are prepared to manage the company through this difficult claims environment."
 To counter the worsening claims outlook, Kentucky Medical has stepped up its efforts in claims management to reduce legal expenses and settlements. Salman noted that when the claims cycle returns to a favorable level the company will be well positioned for increased profitability.
 Additionally, Kentucky Medical incurred significant declines in investment income. The company's investment return has decreased due to overall interest rate reductions and the implementation of a strategy of increasing investments in tax-preferred municipal bonds and preferred stocks to increase after-tax income. Investment income was also adversely affected by reductions in the total investment portfolio due to an increase in claims payments. Salman said he expects investment income to level off for the remainder of the year.
 On a positive note, Salman also indicated an increase in net premiums written which rose to $749,463 for the second quarter, vs. $586,663 for the same period last year. There were also improvements in premiums earned, increasing to $2.6 million during the second quarter ended June 30, 1993, compared with $2.5 million for the second quarter of last year.
 The company is also experiencing a positive trend in reduced underwriting expenses. For the second quarter, underwriting expenses decreased to $911,835 from $973,408 for the same period last year.
 To offset the decline in earnings, Kentucky Medical is actively pursuing geographic expansion and diversification. Salman added that the company will continue to focus on financial strength, including the maintenance of their A- (Excellent) rating from A.M. Best.
 Founded in 1978 by the Kentucky Medical Association, Kentucky Medical Insurance Company is Kentucky's leading provider of medical professional liability insurance. The company also insures other health care professionals, hospitals and medical facilities in Kentucky, Indiana, Tennessee and Ohio.
 Financial Highlights
 Consolidated Balance Sheets
 6/30/93 12/31/92
 Total investments $56,789,411 $59,457,240
 Total assets 74,990,509 74,214,145
 Unpaid losses and loss adjustment expenses 33,341,158 34,085,574
 Total liabilities 50,248,219 50,326,889
 Total shareholders' equity $24,742,290 $23,887,256
 Shareholders' equity per share $13.07 $12.66
 Consolidated Statements of Income
 Six months ended June 30 1993 1992
 Total revenues $ 8,003,995 $ 8,772,731
 Total losses and expenses 7,294,988 6,551,271
 Income tax expense 43,216 635,482
 Net income $ 665,791 $ 1,585,978
 Net income per common share $0.35 $0.86
 Three months ended June 30 1993 1992
 Total revenues $ 3,906,098 $ 4,407,676
 Total losses and expenses 3,585,687 3,336,160
 Income tax expense 9,828 305,112
 Net income $ 310,583 $ 766,404
 Net income per common share $0.16 $0.42
 -0- 8/2/93
 /CONTACT: Thomas W. Mueller of Kentucky Medical, 502-339-5700; or Edmund R. Belak Jr. of Georgeson & Company, 212-440-9801, for Kentucky Medical/

CO: Kentucky Medical Insurance Company ST: Kentucky IN: INS SU: ERN

SM-GK -- NY076 -- 8412 08/02/93 13:44 EDT
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Publication:PR Newswire
Date:Aug 2, 1993

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