CII FINANCIAL REPORTS RESULTS
CII FINANCIAL REPORTS RESULTS PLEASANTON, Calif., Nov. 10 /PRNewswire/ -- CII Financial Inc.
(AMEX: CII) continued to narrow its loss in the third quarter, compared to the prior three quarters, as the company pursued its strategy of shifting its business away from the deteriorating Southern California market to the other areas of California and other states, Joseph G. Havlick, chairman and president announced today.
The loss reflected the poor operating environment that persists in Southern California, as well as incidental costs associated with the company's headquarters relocation to Northern California and the start of operations in Colorado. For the three months ended Sept. 30, 1992, revenues increased to $30,513,000, from $28,664,000 in the year-ago quarter. A net loss of $4,167,000, or 59 cents per share, was incurred for the current quarter, compared to net income of $3,097,000, or 41 cents per share, in last year's third quarter. Weighted average shares outstanding on a fully diluted basis were 7,114,623 for the latest quarter, and 7,618,130 for the prior-year quarter. For the first nine months of 1992, revenues rose to $89,175,000, from $79,596,000 in the comparable prior-year period. The net loss for the nine months was $41,573,000, or $5.78 per share, which included an extraordinary gain of $457,000, or six cents per share, resulting from the repurchase of the company's convertible subordinated debentures. Last year, for the nine months, net income was $8,983,000, or $1.20 per share. Weighted average shares outstanding on a fully diluted basis were 7,191,731 for the nine months this year, and 7,516,777 for the prior-year's first nine months. Net investment income for the third quarter totaled $2,854,000, an increase of 27.2 percent from $2,244,000 in the corresponding period a year ago. For the nine months, net investment income grew 37.5 percent to $9,028,000 from $6,566,000 for the same period a year ago. Havlick commented: "Our key strategy of reducing our exposure in the six counties of Southern California is beginning to have a positive impact on our business. We have lowered premiums written in this problem-ridden area while substantially expanding our writings in other parts of the state. As we entered 1992, the Southern California Basin accounted for 66 percent of our inforce premiums. At Sept. 30, 1992, this area represented 46.5 percent of total inforce vs. 48.6 percent at the end of June and 56.9 percent at the March 31, 1992 close of the first quarter. We expect to make further significant progress in this respect in the fourth quarter. "During the third quarter, no further loss development was experienced on prior accident years. Also, both the number and size of 'stress and strain' claims decreased from the previous quarter. However, the continuing recession, high unemployment, inadequate rate relief and the fraud and abuse plaguing the workers' compensation system, particularly in Southern California, continue to present us with a difficult environment. We urgently need adequate rates and timely, effective reform measures to curb the abuses, and misuses, of the system. "The California Workers' Insurance Compensation Rating Bureau has recommended an 11.9 percent rate increase to be effective Jan. 1, 1993. As of July 1, a 6.7 percent increase was granted, far less than the 23.1 percent increase originally proposed by the bureau last April. Moreover, it appears that, unfortunately, there will be no workers' compensation reform this year due to the continuing political deadlock over one of the state's most pressing problems." Commenting further on the company's strategies, Havlick said: "Part of our strategy is to broaden our base of operations into additional states, but we intend to do so on a prudent and cautious basis. We began writing workers' compensation in Colorado, a market that we believe affords considerable potential. After three months of start-up operations, we had nearly $1 million in inforce premiums in the state as of Sept. 30, 1992. As our marketing programs gather momentum, we expect to substantially increase that figure by the end of the year. "We've been licensed in Wisconsin and are carefully analyzing the situation there, particularly anticipated expenses, to make certain that we can operate successfully in the state. We may defer writing business there until 1993. At the same time we continue to investigate other states, primarily in the west, as possible expansion opportunities for our company. "To summarize, the company's strategies appear to be working, and we look forward to further steady improvement in the fourth quarter and in 1993. In view of the problems that I've mentioned, our strategic focus remains on further reducing our involvement in the six counties of Southern California. While it's difficult near term to replace these writings on a dollar-for-dollar basis, we will continue our expansion in the other areas of California and Colorado, as well as looking for additional areas of opportunity in order to re-establish the company on a sound, profitable basis." 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 Bernardino, Calif., as well as Denver. Policies are sold through a network of approximately 380 independent agents and brokers. CII FINANCIAL, INC. & SUBSIDIARIES Summary Financial Information Income Statement Data Three Months Ended Sept. 30, 1992 1991 Total revenues $30,513,000 $28,664,000 Income (loss) before federal income tax ($4,167,000) $3,964,000 Federal income tax $0 $867,000 Net income (loss) ($4,167,000) $3,097,000 Earnings (loss) per share: Primary earnings (loss) per share ($.59) $.41 Primary weighted shares outstanding 7,114,623 7,477,342 Fully diluted earnings (loss) per share ($.59) $.41 Fully diluted weighted shares outstanding 7,114,623 7,618,130 Nine Months Ended Sept. 30, 1992 1991 Total revenues $89,175,000 $79,596,000 Income (loss) before federal income tax and extraordinary gain ($42,030,000) $11,734,000 Federal income tax $0 $2,751,000 Extraordinary gain on debenture repurchase net of federal income tax $457,000 $0 Net income (loss) ($41,573,000) $8,983,000 Earnings (loss) Per Share: Primary Earnings (loss) per share Income before extraordinary item ($5.84) $1.20 Extraordinary item $.06 $0 Primary earnings (loss) per share ($5.78) $1.20 Primary weighted shares outstanding 7,191,731 7,471,498 Fully diluted earnings (loss) per share Income before extraordinary item ($5.84) $1.20 Extraordinary item $.06 $0 Fully diluted earnings (loss) per share ($5.78) $1.20 Fully diluted weighted shares outstanding 7,191,731 7,516,777 CII FINANCIAL INC. & SUBSIDIARIES Balance Sheet Data Sept. 30, Dec. 31, 1992 1991 Total assets $246,279,000 $248,187,000 Total liabilities $233,975,000 $193,825,000 Total shareholders' equity $12,304,000 $54,362,000 -0- 11/10/92 /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: FIN SU: ERN
BP-EH -- LA002 -- 9223 11/10/92 11:04 EST
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|Date:||Nov 10, 1992|
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