CITIZENS CORPORATION ANNOUNCES FIRST QUARTER EARNINGS
WORCESTER, Mass., April 27 /PRNewswire/ -- Citizens Corporation (Citizens)(NYSE: CZC), which through its wholly-owned subsidiary, Citizens Insurance Company of America, is one of the leading underwriters of personal and commercial property and casualty insurance in Michigan, today reported first quarter 1993 net income of $15.3 million, or 48 cents proforma per share compared to $25 million, or 82 cents proforma per share in the first quarter of 1992. Proforma per share data includes adjustments to reflect the reorganization and new capital structure of Citizens Corporation on a comparable basis for 1992. The lower earnings for the first quarter of 1993 were anticipated, since we experienced unusually mild winter weather in 1992 in Michigan, where most of our business is written. Results in 1993 reflect a return to more typical weather, as well as a one-time charge of $5 million due to the cumulative effect of changes in accounting principles. The most significant accounting change was the implementation of Statement of Financial Accounting Standards (SFAS) No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," which resulted in a charge to earnings of $7 million, net of taxes. Citizens also implemented SFAS No. 109, "Accounting for Income Taxes," adding $1 million to earnings, and changed its method of calculating deferred acquisition costs, resulting in an addition to earnings of $1 million. "The first quarter was one of significant positive developments for Citizens Corporation and Citizens Insurance. Citizens Corporation completed a successful public offering that substantially improved its capital position, Citizens Insurance continued its historically solid profit performance, and A.M. Best Company reaffirmed Citizens Insurance's "A+" (Superior) rating," said John F. O'Brien, chief executive officer at Citizens. "As we move into the second quarter, we look forward to another year of strong financial results."
Citizens' net premiums written increased 3.2 percent to $171.5 million in 1993 from $166.1 million in 1992, primarily as a result of price increases in both commercial and personal lines as well as continued growth in policies in force in certain personal lines products. Net income from operations for Citizens was $14.1 million, or 43 cents proforma per share, for 1993, excluding net realized capital gains and the cumulative effect of changes in accounting principles, compared to $25.3 million, or 83 cents proforma per share for 1992. The first quarter 1993 results tracked well with expectations given the return to more normal winter weather in our major markets and the implementation of changes in accounting principles. Net investment income before taxes for Citizens was $18.5 million in 1993 and 1992. Net investment income growth before taxes was affected by an@!ncrease in the level of tax-exempt securities in the portfolio, as well as a continuing decline in interest rates. Realized gains, net of tax, were $6.2 million in 1993. Realized losses, net of tax, were $0.3 million in 1992. The increase to net realized gains is due to a continued shift toward a higher level of tax-exempt investments in the portfolio in accordance with our current tax strategy. Citizens' statutory combined ratio, including policyholders' dividends, was 99.8 percent in 1993, compared to 89.8 percent in 1992.
A Review of the Balance Sheet
Fixed maturity investments represented 95.8 percent of total invested assets of $1,163.7 million at March 31, 1993. Of the total fixed maturity investments, 97.1 percent were rated investment grade or above. There are no investments in real estate or mortgages secured by real estate. The initial public offering of common stock on March 19, 1993 resulted in net proceeds of $139.7 million. On April 19, 1993 the underwriters for the offering exercised their "over-allotment" option, purchasing another 731,600 shares of the stock, providing an additional $16.5 million in capital. All quarterly figures are unaudited, and all results are reported in accordance with generally accepted accounting principles (GAAP) with the exception of the combined ratio and underwriting exhibits which are reported on a statutory basis. All per share amounts are computed on a proforma basis reflecting, for all periods presented, the reorganization and exchange of common and preferred shares between Citizens Corporation, its parent, The Hanover Insurance Company, and Citizens Insurance which occurred in February of 1993. Actual earnings per share for the first quarter were 45 cents per share, reflecting the reorganization and exchange occurring in February 1993 and are not comparable to 1992 actual due to the change in capital structure. Citizens is a member of Allmerica Financial, a diversified group of insurance and financial services companies based in Worcester, Mass. CITIZENS CORPORATION (0) Quarter March 31: 1993 1992 Net income $15,256,000 $24,976,000 Proforma Earnings Per Share (a) 48 cents 82 cents Average No. Shares 29,996,000 29,094,000 All figures are reported in accordance with generally accepted accounting principles (GAAP) after giving retroactive effect of issuance of Citizens Insurance Series A preferred stock. /NOTE (a): Includes net realized gain (loss) on investments, net of federal income taxes at the statutory rate of 34 percent, without regard for alternative minimum tax (AMT) in 1993 and 1992, as follows: 1993 1992 Net realized gain (loss) on investments, net of applicable federal income taxes 21 cents (1 cent) Cumulative effect of accounting changes, net of applicable federal income taxes (16 cents) --- -0- 4/27/93 /CONTACT: Edward J. Parry, III, vice president and treasurer, 508-855-4600, Mark C. McGivney, investor relations, 508-855-4019, Michael F. Buckley, director of public information, 508-855-3099, all of Allmerica for Citizens Corp./ (CZC)
CO: Citizens Corporation ST: Massachusetts IN: FIN SU: ERN
DJ-CH -- NE015 -- 1325 04/27/93 11:42 EDT
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|Date:||Apr 27, 1993|
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