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CITATION INSURANCE GROUP REPORTS 18 PERCENT GROWTH IN REVENUES; RETURN TO PROFITABILITY FOR FIRST QUARTER; INITIATES STOCK REPURCHASE

CITATION INSURANCE GROUP REPORTS 18 PERCENT GROWTH IN REVENUES; RETURN TO PROFITABILITY FOR FIRST QUARTER; INITIATES STOCK REPURCHASE
 SAN JOSE, Calif., April 28 /PRNewswire/ -- Citation Insurance Group (NASDAQ-NMS: CITN), a leading California workers' compensation specialist, today announced total revenue for the quarter ended March 31, 1992, rose 18 percent compared to the first quarter a year earlier. While profitable, net income for the quarter dropped 36 percent compared to the first quarter last year due to increased loss and loss adjustment expenses reflecting the effect of the ongoing California recession.
 Don Young, president and chief executive officer, said, "In the fourth quarter of last year, we recorded significant increases in our reserves for loss and loss adjustment expenses in order to account for a larger number of disability claims being reported during 1991. This resulted in an operating loss for the year. While loss and loss adjustment expenses are still running ahead of normal, and state approved rate levels for 1992 do not reflect these additional costs, it is gratifying to be able to once again report profitable results. More importantly, while 1992 is not going to be an easy year for California workers' compensation insurers, we believe that if the economy improves during the year, Citation can remain profitable in 1992." Stock Repurchase Program
 Citation also announced its board of directors has authorized management to repurchase up to $2 million of Citation's common shares. At current market prices this would represent approximately 500,000 shares, or 12 percent of total shares outstanding. Young said, "We plan to repurchase shares from time to time as the market price warrants. At current levels, we believe our shares, which are currently trading below book value, offer an attractive investment opportunity. We will finance such purchases through currently available funds." First Quarter Financial Performance
 For the quarter, workers' compensation net premiums earned increased almost 12 percent to $16.1 million, up from $14.4 million as Citation expanded its marketing network. The number of independent insurance brokers through which its workers' compensation policies are sold increased from approximately 150 at March 31, 1991 to approximately 210 at March 31, 1992. In addition, the company's efforts to develop new business in various parts of the state other than the Los Angeles basin have been successful. Property and casualty premiums jumped by 65 percent during the quarter to $2.1 million in 1992 versus $1.2 million in 1991 as a result of management's increased marketing efforts.
 Increases in net premiums earned and a 39 percent increase in net investment income contributed to the 18 percent rise in total revenue. The increase in net investment income, to $2.3 million in the quarter just ended, compared with $1.6 million in the same period a year ago, reflects an increase in the average investment portfolio resulting from operating cash flow and proceeds from the company's 1991 stock offering completed in March, 1991.
 Loss and loss adjustment expenses increased 34 percent to $15.4 million, up from $11.4 million in the first quarter of 1991, reflecting both the increase in premiums earned and increased reserves to cover higher value disability claims resulting from recession- related layoffs, particularly in the Los Angeles area. The company also increased its loss reserves to $85 million, a 5.5 percent increase from $80.6 million at Dec. 31, 1991. The loss ratio, loss and loss adjustment expenses as a percentage of net premiums earned, increased to 85 percent from 73.3 percent in the same quarter a year ago, although it was slightly better than the 88.5 percent loss ratio for the year ended Dec. 31, 1991.
 Young explained, "The increase in the loss ratio reflects our belief that the pattern of claim reporting is directly affected by the health of the economy. We expect that as the economy recovers and the state cracks down on workers' compensation fraud we should see a decline in the reporting of questionable claims."
 Underwriting expenses increased by 16 percent to $3.7 million in the first quarter, up from $3.2 million in the same quarter of 1991 reflecting the increase in net premiums earned. As a percent of net premiums earned, underwriting expenses were 20.5 percent for the first quarter compared with 20.6 percent in the same quarter of 1991.
 Responding to the increase in loss experience, policyholder dividends dropped to 3.7 percent of net premiums written, or $662,000, down from 7.9 percent, or $1.2 million in the first quarter of 1991.
 The combined ratio for the quarter was 109.2 percent, up from 101.8 percent in the same quarter a year ago, but down from 114.1 percent for the full 1991 year.
 Income before taxes and an extraordinary item was $641,000, down from $1 million in the first quarter of 1991. Net income was $630,000, or 15 cents per share, down from $978,000, or 43 cents per share in the quarter a year ago.
 Net cash provided by operating activities for the quarter rose to $6.1 million, almost three times the $2.1 million generated in the first three months of 1991, generally as a result of increased premiums, which was used to increase the company's investment portfolio. At March 31, 1992 invested assets, including cash and cash equivalents, total $113 million, or $27.01 per share, up 5.5 percent from $107.2 million, or $25.66 per share, at the beginning of the year. Stockholders' equity was $32.1 million, or $7.66 per share, up from $31.8 million, or $7.62 per share.
 Headquartered in San Jose, Citation Insurance Group specializes in writing workers' compensation and commercial property and casualty insurance in California through its subsidiary, Citation Insurance Co. Citation's 4.2 million common shares are traded on NASDAQ's National Market System, symbol CITN. Citation has approximately 150 employees at offices in San Jose, San Francisco, Sacramento, Fresno, Tustin, and San Diego.
 -0- 4/28/92
 /CONTACT: Dennis Pastirik of Citation Insurance Group, 408-292-0222; or Lise Needham of the Financial Relations Board Inc., 415-986-1591, for Citation Insurance Group/
 (CITN) CO: Citation Insurance Group ST: California IN: INS SU: ERN


MM-DG -- SF003 -- 3616 04/28/92 09:32 EDT
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Date:Apr 28, 1992
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