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CAPITAL HOLDING REPORTS SECOND QUARTER OPERATING EARNINGS OF $.86 PER SHARE, UP 13.2 PERCENT

 LOUISVILLE, Ky., July 28 /PRNewswire/ -- Capital Holding Corporation (NYSE: CPH) today reported second quarter operating earnings, excluding realized investment gains and losses and related amortization, of $88.2 million, or $.86 per share. This represents a 13.2 percent increase over the $.76 per share, or $77.4 million, reported for last year's second quarter. Year-to-date operating earnings were $172.1 million, bringing the six months' per share results to $1.67, up 12.8 percent.
 Second quarter net income, including net realized investment gains and losses and related amortization, was $.89 per share, up 18.7 percent compared to the same period last year. Net income for the first six months was $1.53 per share, up 10.1 percent from the first half of 1992. Six months' net income of $157.4 million included $2.3 million in net realized investment and securities gains, offset by $19.8 million in mortgage loan write-downs and reserve additions.
 "We've had another good quarter. There was positive ratings activity regarding two of our operating companies in the quarter, First Deposit Corporation (FDC) and Worldwide Underwriters. FDC was issued a ratings upgrade by Thomson BankWatch Inc., to A/B from B, and Worldwide received a first-time A- (Excellent) rating from A.M. Best Company," said Irving W. Bailey II, Capital Holding's chairman, president and chief executive officer.
 Revenues for the second quarter, excluding realized investment gains and losses, were $731.2 million, up 2.7 percent over last year. Quarterly premium income was down 5.0 percent from the same period last year, reflecting the disposition of Durham Corporation's credit life and group business in the second half of last year. Net investment income for the quarter was $377.0 million, up 3.0 percent from the same period last year, reflecting growth in invested assets partially offset by lower yields in the current interest rate environment.
 Each of the company's four business groups reported higher earnings over the corresponding quarter of last year.
 Agency Group's pretax earnings for the second quarter were $48.9 million, up 2.9 percent over the second quarter of 1992. Six months' pretax earnings were $95.0 million, a 3.4 percent increase compared to the first six months of last year. Year-to-date life and health premium income was up 4.3 percent, partly as a result of strong gains in both direct agent business and marketing partnership results. Combined life and health termination rates, excluding marketing partnerships, improved to 15.7 percent, compared to 16.5 percent at the end of last year, reflecting continued emphasis on customer persistency.
 The new Customer Service Units within Agency Group continue start-up operations on schedule. Each unit is a partnership of home office and field associates combining individuals who provide direct customer sales with those who deliver service and support.
 The Direct Response Group (DRG) reported pretax earnings for the quarter of $22.6 million, up 12.5 percent from the same period last year, primarily due to the Academy Insurance Group acquisition. For the first six months, pretax earnings were $45.5 million, up 21.8 percent. Sales in the second quarter were up 44.2 percent, including the Academy Group acquisition. Current customer management sales programs continue to meet expectations, while several new customer acquisition programs are off to a slower than expected start.
 Life and health premiums in the second quarter, including Academy Life, were up 23.4 percent. Life premiums, without Academy, were up 8.0 percent, and health premiums continued below last year's level, reflecting DRG's decision to not actively market Medicare supplement products in the first half of this year. During the second quarter, DRG sold a third-party administrator business that no longer fit with its customer relationship marketing approach. The sale resulted in $5.9 million of related write-offs through June 30.
 Property and casualty earnings were up 25.0 percent through six months, but were down during the second quarter as a result of losses related to storms on the east coast and in the midwest. Underlying basic auto experience continues to meet expectations.
 First Deposit Corporation's (FDC) pretax earnings were $29.4 million for the second quarter, up 25.1 percent over second quarter 1992. This brings six months' earnings to $56.5 million, up 24.4 percent over the same period a year earlier. Earnings growth reflects higher average loan balances, and continued prudent management of funding costs through the current interest rate environment. Total loans under management were $3.6 billion, up 6.9 percent from the same period last year. Revenues from new product offerings continue to add to assets and earnings. Total receivables for both First Gold and Select Equity increased during the quarter. First Gold, now serving more than 100,000 customers, reached $120.5 million in receivables while Select Equity receivables grew by $46.1 million in the first half, to $263.4 million.
 In June, First Deposit completed its first issuance of two separate securities through a newly created Master Trust. This brought total securitizations outstanding to $2.0 billion. This new securitization will enable First Deposit to more easily access the securitization market.
 Year-to-date net loan chargeoffs on total unsecured product balances were 5.8 percent, versus 5.9 percent for the comparable period last year. Delinquent loan balances for the same portfolio for the second quarter were 2.5 percent, compared to 2.6 percent at year-end, and improved from 2.8 percent in the first quarter.
 As of July 1, the company will adopt new accounting provisions requiring that acquisition costs for credit cards be expensed over a period of one year. This accounting change is not expected to have any material impact on earnings.
 Pretax earnings for the Accumulation and Investment Group in the second quarter were $33.1 million, up 9.5 percent, bringing six months' earnings to $66.1 million, a 9.3 percent increase over 1992. Profit margins on total deposits, including spread products and retail variable annuities, were 115 basis points, compared with 117 basis points in the first quarter.
 Institutional spread deposits, including TRAC, increased $209.4 million in the quarter. Retail spread deposits were up $100.2 million. Also during the second quarter, fee-based Trust GIC account balances increased $694.3 million, while variable annuity sales increased $95.9 million.
 Asset quality performance remains strong. Problem commercial loans, including delinquencies, restructured loans and real estate owned, increased to 6.80 percent of the total portfolio. The increase reflects the ongoing softness of the real estate market. However, Capital Holding continues to compare very favorably to the industry, which has an average problem loan rate of 19.66 percent, according to industry data released for March 1993.
 Capital Holding Corporation, with $21.9 billion in assets, is a leading provider of consumer financial services including insurance, consumer loan and annuity and pension products. The corporation offers these and other financial services and products primarily through agents, direct-marketing media and investment professionals. Its common stock is listed on the New York and Pacific Stock Exchanges under the ticker symbol CPH; its preferred stock is listed on the New York Stock Exchange under the symbol CPHF.


CAPITAL HOLDING CORPORATION THREE- AND SIX-MONTH FINANCIAL HIGHLIGHTS
 Percent
 Three Months Ended June 30, 1993 1992 Increase
 Operations:
 Total revenues $ 732,877,000 $ 715,756,000 2.4
 Operating earnings(A) 88,215,000 77,365,000 14.0
 Realized investment gain,
 net of related amortization,
 net of tax 3,315,000 261,000
 Net income 91,530,000 77,626,000 17.9
 Per common and common equivalent share:(A)
 Operating earnings(AA) .86 .76 13.2
 Realized investment gain (loss),
 net of related amortization,
 net of tax .03 (.01)
 Net income .89 .75 18.7
 Percent
 Six Months Ended June 30, 1993 1992 Increase
 Operations:
 Total revenues $1,449,841,000 $1,426,763,000 1.6
 Operating earnings(A) 172,116,000 151,537,000 13.6
 Realized investment loss,
 net of related amortization,
 net of tax (14,750,000) (8,240,000)
 Net income 157,366,000 143,297,000 9.8
 Per common and common equivalent share:(A)
 Operating earnings,(AA) 1.67 1.48 12.8
 Realized investment loss,
 net of related amortization,
 net of tax (.14) (.09)
 Net income 1.53 1.39 10.1
 (A) Per common and common equivalent share amounts have been retroactively adjusted for a two-for-one split in the form of a dividend, effective April 30, 1993.
 (AA) Earnings, excluding realized investment gains and losses, net of related deferred acquisition costs amoritization and tax.
 -0- 7/28/93
 /CONTACT: Michael Bateman, 502-560-2723, or Bonnie Otto, 502-560-3019, both of Capital Holding Corporation/
 (CPH)


CO: Capital Holding Corporation ST: Kentucky IN: INS SU: ERN

CM -- CH008 -- 6973 07/28/93 17:28 EDT
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Date:Jul 28, 1993
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