RELIANCE GROUP HOLDINGS REPORTS 1991 RESULTS
RELIANCE GROUP HOLDINGS REPORTS 1991 RESULTS NEW YORK, March 23 /PRNewswire/ -- Reliance Group Holdings, Inc.
(NYSE: REL) today reported income from continuing operations of $10.6 million, or $.14 per share, in the fourth quarter of 1991, compared with a loss from continuing operations of $70.7 million, or $.96 per share, in the fourth quarter of 1990. Revenues for the 1991 fourth quarter totaled $944.5 million, versus $738.8 million in the 1990 period.
For the full-year 1991, Reliance reported a loss from continuing operations of $118.3 million, or $1.60 per share, versus income from continuing operations of $81.8 million, or $1.10 per share, in 1990. Revenues totaled $3.40 billion in 1991, versus $3.66 billion in 1990. Including the results of discontinued operations and extraordinary gains from early retirement of debt, Reliance reported a net loss of $10.0 million, or $.14 per share, in the fourth quarter of 1991, versus a net loss of $53.9 million, or $.73 per share, in the fourth quarter of 1990; and a net loss of $145.6 million, or $1.97 per share, for full- year 1991, versus net income of $104.5 million, or $1.40 per share, for full-year 1990. Reliance said it has adopted the equity method of accounting for certain significant investments. Accordingly, the results from continuing operations in 1991 and 1990 include Reliance's equity in the results of Zenith National Insurance Corp., as well as Telemundo Group Inc., which has been written off. In addition, Reliance has consolidated the results of Frank B. Hall & Co. Inc. and, reflecting its decision to sell its stake in the company, has classified Hall as a discontinued operation. Previously, Reliance's investments in the three companies were carried at quoted market value, with any unrealized gains and losses included in Reliance's shareholders' equity. Reliance and its independent auditors believe that the company's previous method appropriately accounted for these significant investments, given the company's investment intent, which is to buy and sell equities to generate capital gains. However, Reliance said the company adopted the new treatment at the request of the accounting staff of the Securities and Exchange Commission, and results for both years have been restated to conform to the current presentation. One impact of the change was to reduce the carrying value of Reliance's investment in Hall, which resulted in a $166 million reduction in shareholders' equity to $219 million at year-end 1991. Commenting on Reliance's decision to sell its investment in Hall, Reliance's chairman and chief executive officer, Saul P. Steinberg, said, "The restructuring of Hall has been completed and the company is well positioned for the future. Hall should be a very attractive property for a strategic buyer seeking entree or expansion in the insurance brokerage industry in anticipation of a turn in the underwriting cycle." Steinberg indicated that Hall has retained an investment banking firm to seek a buyer for the entire company. Reliance said its operating results for 1991 were affected by continued cyclical weakness in its largest business, property and casualty insurance, as well as an after-tax charge of $103 million to strengthen property and casualty loss reserves. "This was a difficult year for Reliance but we nonetheless made substantial progress in several important areas," Steinberg said. "We took advantage of the improved market for non-investment grade securities during the year, reducing our holdings of such securities by about $800 million and significantly upgrading the quality of our fixed- income investment portfolio. "In addition, we continued our expansion into specialty commercial lines of insurance, where we see greater opportunities for long-term profits when the pricing environment improves. Statutory policyholders' surplus of our property and casualty operations was $841 million at year-end, about even with the year-earlier level. We have ample capacity to pursue our business strategies and I am quite confident in the long-term outlook for the company," Steinberg said. Reliance Group Holdings, Inc., headquartered in New York City, has major property and casualty, life, title and mortgage insurance operations and provides consulting and technical services. Reliance had 1991 revenues of $3.40 billion and assets at year-end of $11.25 billion. RELIANCE GROUP HOLDINGS, INC. & SUBSIDIARIES Consolidated Statement of Operations (unaudited) (In thousands, except per-share amounts) Periods ended Quarter Year Dec. 31 1991 1990 1991 1990 Revenues: Premiums earned $667,865 $576,115 $2,456,021 $2,530,508 Net investment income 178,398 203,939 761,743 804,238 Gain (loss) on sales of investments 67,155 (71,731) 51,458 (172,928) Gain on sale of subsidiary -- -- -- 380,500 Other 31,057 30,523 122,654 115,344 Total 944,475 738,846 3,391,876 3,657,662 Claims and Expenses: Policy claims and settlement expenses 360,756 315,858 1,482,945 1,362,113 Policyholders' benefits 162,242 186,150 688,029 769,812 Policy acquisition costs and other insurance expenses 313,596 255,115 1,129,777 1,071,587 Interest 28,642 33,558 117,753 137,254 Other operating expenses 41,297 55,832 155,404 178,213 Total 906,533 846,513 3,573,908 3,518,979 Income (loss) from continuing operations before income taxes, minority interest and equity in investee companies 37,942 (107,667) (182,032) 138,683 Income tax (provision) benefit (14,418) 49,541 84,494 (35,137) Minority interest (1,028) (1,135) (4,198) (4,602) Equity in investee companies: Zenith National Insurance Corp 2,284 (11,203) 13,511 (4,352) Telemundo Group, Inc. (14,142) (239) (30,085) (12,840) Income (loss) from cont. opers. 10,638 (70,703) (118,310) 81,752 Income (loss) from discontinued insurance brokerage operations (less applicable income taxes) (20,818) 1,459 (29,913) (73) Income (loss) before extraordinary items (10,180) (69,244) (148,223) 81,679 Extraord. item - early extinguishment of debt -- 8,983 1,715 15,310 Extraordinary item of investee companies 224 6,408 894 7,461 Net income (loss) (9,956) (53,853) (145,614) 104,450 Per-share information: Income (loss) from cont. opers. .14 (.96) (1.60) 1.10 Income (loss) from discontinued insurance brokerage operations (.28) .02 (.40) -- Income (loss) before extraordinary item (.14) (.94) (2.00) 1.10 Extraordinary items -- .21 .03 .30 Net income (loss) (.14) (.73) (1.97) 1.40 Average number of common and common equivalent shares outstanding 73,587 74,000 73,918 74,530 -0- 3/23/92 /CONTACT: Brian T. Martin of Reliance Group Holdings, 212-909-1247/ (REL) CO: Reliance Group Holdings, Inc. ST: New York IN: INS SU: ERN
KD-SM -- NY066 -- 0752 03/23/92 16:52 EST
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|Date:||Mar 23, 1992|
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