CII FINANCIAL REPORTS RESULTS
CII FINANCIAL REPORTS RESULTS PLEASANTON, Calif., Aug. 14 /PRNewswire/ -- CII Financial Inc.
(AMEX: CII) reported a smaller loss in the second quarter, as compared to the last two quarters. The loss was attributed to increases in loss reserves, reflecting the deteriorating workers' compensation environment in Southern California. The company said that it is reserving on a conservative basis by establishing its loss reserves at the higher end of the ranges recommended by its independent actuaries.
The company has recently moved its home office from Southern to Northern California as part of a strategic plan to shift its business from the deteriorating Southern California area to Northern California and other states. As part of this strategy, the company has commenced doing business in Colorado and expects to begin writing workers' compensation insurance in Wisconsin by the end of the year. The company believes that this shift in strategy, while benefiting the bottom line, may result in a decrease in written premium for the current year as the company shifts its business away from Southern California. For the three months ended June 30, 1992, the net loss was $11,033,000, equal to $1.53 per share, compared with net income of $3,239,000, or $0.43 per share, in the same period a year ago. Weighted average shares outstanding on a fully diluted basis were 7,214,858 for the current quarter and 7,508,927 for the prior-year quarter. The net loss for the first six months of 1992 totaled $37,406,000, equal to $5.18 per share, which includes an extraordinary gain of $457,000 or $0.06 per share, from the repurchase of the company's convertible subordinated debentures, compared with net income of $5,886,000 or $0.79 per share, in the same period a year ago. Weighted average shares outstanding on a fully diluted basis for the first six months were 7,217,219 and 7,508,064 for the same period in 1991. Revenues for the three months ended June 30, 1992 were $28,755,000, a 13.2 percent increase from the same period in 1991, when revenues were $25,395,000. For the six months ended June 30, 1992, revenues increased 15.2 percent to $58,662,000 from the same period in 1991 when revenues were $50,932,000. Revenue growth was primarily attributed to an increase in the average net written premium per policy and to a lesser extent, an increase in investment income. Net investment income increased 47.7 percent to $3,119,000 for the three months ended June 30, 1992 from $2,111,000 for the corresponding period in 1991. For the six months ended June 30, 1992, net investment income increased 42.9 percent to $6,174,000 from $4,322,000 for the same period in 1991. Joseph G. Havlick, chairman and president, said, "I believe that the company's strategic programs to improve business are beginning to take hold. Since Dec. 31, 1991, we have reduced our inforce book of business in the six-county area of Southern California by 34 percent. Our agency force in that area has been cut significantly. Marginal and unprofitable accounts have been canceled or non-renewed, and we are continuing efforts to apply surcharges where warranted. "We are also working to broaden our base of operations by expanding into other states. In the latter part of June, we opened our full-service Denver office. To date, we have written approximately $600,000 of new business in Colorado, with a target of $5 million by year-end. We have obtained a license in Wisconsin and hope to begin writing business there by year-end. Additionally, we are currently seeking licenses in several other states and may possibly begin writing business in Idaho and Utah within the next 12 months. "As previously announced, the company's board of directors authorized the repurchase of up to $10 million of its own securities. During the second quarter and to date, a total of 115,000 common shares were repurchased on the open market at an average cost of $3.52 per share. In addition, the company repurchased $1,450,000 of its convertible subordinated debentures in the first quarter. "In late June, the California State Insurance Commissioner approved a 6.7 percent rate increase effective July 1, 1992. This action followed the recommendation in April by the California Workers' Compensation Insurance Rating Bureau of a 23.1 percent rate increase. Clearly, the approved rate increase falls far short of adequacy. If the California workers' compensation insurance industry is to continue functioning in an effective manner, significant changes must be made on an urgent basis in the regulatory and rate environment, particularly with a view to rate adequacy and to cracking down on fraudulent claims and enacting meaningful legislative solutions to deal with other rampant abuses of the system." CII Financial is a financial services holding company. Its two operating insurance subsidiaries are California Indemnity Insurance Co. and Commercial Casualty Insurance Co. CII also has an operating premium finance subsidiary, CII Premium Finance Co. Through its insurance subsidiaries, the company is engaged in writing workers' compensation insurance in California and Colorado. These insurance companies service workers' compensation accounts of all sizes but concentrate on small- to medium-size companies. Now based in Pleasanton, the company also has offices in Burbank, Sacramento and San Bernadino, Calif. as well as Denver. Policies are sold through a network of approximately 380 independent agents and brokers. CII FINANCIAL INC. & SUBSIDIARIES Summary Financial Insurance Three months ended June 30, 1992 1991 Income statement data: Total revenues $28,755,000 $25,395,000 Income before federal income tax ($11,033,000) $4,337,000 Federal income taxes $0 $1,098,000 Net income (loss) ($11,033,000) $3,239,000 Earnings (loss) per share: Primary earnings (loss) per share ($1.53) $0.43 Weighted shares outstanding 7,214,858 7,497,665 Fully diluted earnings (loss) per share ($1.53) $0.43 Weighted shares oustanding 7,214,858 7,508,927 Six months ended June 30, 1992 1991 Total revenues $58,662,000 $50,932,000 Income before federal income tax and extraordinary gain ($37,863,000) $7,770,000 Federal income taxes $0 $1,884,000 Extraordinary gain on debenture repurchase net of federal income tax $457,000 $0 Net income (loss) ($37,406,000) $5,886,000 Earnings (loss) per share Primary earnings (loss) per share income before extraordinary item ($5.24) $0.79 Extraordinary item $0.06 $0.00 Primary earnings (loss) per share $5.18 $0.79 Weighted shares outstanding 7,217,219 7,476,501 Fully diluted earnings (loss) per share Income before extraordinary item ($5.24) $0.78 Extraordinary item $0.06 $0.00 Fully diluted earnings (loss) per share ($5.18) $0.78 Weighted shares outstanding 7,217,219 7,508,064 June 30, Dec. 31, 1992 1991 Balance sheet data: Total assets $247,823,000 $248,187,000 Total liabilities $231,192,000 $193,825,000 Total shareholders' equity $16,631,000 $54,362,000 -0- 8/14/92 /CONTACT: Joseph G. Havlick, chairman of the board, president, and CEO of CII Financial, 510-416-8700/ (CII) CO: CII Financial Inc. ST: California IN: INS SU: ERN
BP-LS -- LA005 -- 9985 08/14/92 11:56 EDT
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|Date:||Aug 14, 1992|
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