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ENHANCE FINANCIAL SERVICES GROUP REPORTS RECORD EARNINGS

 ENHANCE FINANCIAL SERVICES GROUP REPORTS RECORD EARNINGS
 NEW YORK, March 10 /PRNewswire/ -- Enhance Financial Services Group


Inc. (NYSE: EFS) today reported record earnings in 1991 of $32.4 million, a 29.4 percent increase over 1990 net income of $25.1 million. Enhance Group's fourth quarter net income increased 35.6 percent to $9.0 million, compared to $6.6 million for the same period a year ago.
 Earnings per share for the year 1991 grew 15.6 percent to $1.85 from $1.60 in 1990. Fourth quarter earnings per share increased 34.2 percent to 51 cents compared to 38 cents in the prior year. Year-end book value per share increased 13.8 percent to $16.46 from $14.46 at year end 1990.
 Wallace O. Sellers, president and chief executive officer, said, "Our outstanding 1991 performance is largely attributable to the growth in new issue municipal volume, the greater demand for bond insurance, increased refundings caused by the lower interest rates, and new business generated from Enhance Group's specialty activities."
 1991 Financial Results
 For full-year 1991, Enhance Group total revenues increased 46.3 percent to $69.8 million, up from $47.8 million in 1990. Total revenues comprise premiums earned, investment income, realized gains, and other income. The increase in total revenues was partially attributable to the impact of the Asset Guaranty Inc. merger in June 1990. Total fourth quarter revenues increased 38.2 percent to $19.9 million, compared to $14.4 million for the same period in 1990.
 For full-year 1991, Enhance Group gross premiums written were $57.6 million, up 49.0 percent from $38.7 million in 1990. Enhance Group gross premiums written in fourth quarter 1991 increased 19.9 percent to $21.1 million, from $17.6 million in the comparable 1990 period.
 For full-year 1991, Enhance Group net premiums written increased 46.8 percent to $55.3 million, compared to $37.7 million the previous year. Of the 1991 net premiums written, $36.4 million was attributable to reinsurance of municipal bonds, $10.3 million to reinsurance of asset-backed debt obligations, and $8.6 million to Enhance Group's specialty insurance activities. Enhance Group net premiums written in fourth-quarter 1991 increased 12.8 percent to $19.6 million, from $17.4 million in the comparable 1990 period.
 On a yearly basis, Enhance Group premiums earned increased 45.2 percent to $35.9 million in 1991, up from $24.8 million in 1990. This increase was attributed to the higher level of refundings in 1991, resulting from lower interest rates, and the increased amortization of premiums into earnings from the growth in unearned premiums from business written in prior years. Fourth-quarter premiums earned grew 39.3 percent to $10.3 million from $7.4 million in the same period in 1990.
 For full-year 1991, Enhance Group net investment income increased 20.4 percent to $27.2 million, compared to $22.6 million in 1990. The net investment income amounts exclude net realized gains on the sales of investments of $6.2 million in 1991 compared to $0.1 million the previous year. Net investment income for the fourth quarter increased 6.4 percent to $7.2 million. At year-end 1991, Enhance Group's investment portfolio totaled $433 million, substantially all of which comprised fixed-income securities rated AA or better.
 Enhance Group total expenses for the year 1991 were $28.7 million compared to $16.0 million in 1990, an increase of 79.6 percent. The increase was due largely to a $2.9 million increase in losses and loss adjustment expenses, a $3.1 million increase in policy acquisition costs, which grew in line with earned premiums, and a $6.5 million increase in other operating expenses. The increase in other operating expenses was largely attributable to the effect of the Asset Guaranty Inc. merger in June 1990, the consolidation in 1991 of a previously unconsolidated subsidiary, and a fourth-quarter charge of $1.5 million reflecting the estimated cost in connection with Enhance Group's relocation in 1992.
 Completion of Initial Public Offering and
 Declaration of Initial Regular Dividend
 Last month Enhance Group offered 5.75 million shares (.75 million of which were new shares) to the public in an initial public offering. After the offering Enhance Group had 18.25 million common shares outstanding. The weighted average shares used to compute earnings per share reflect the 2.56 million shares issued in June 1990 in connection with the Asset Guaranty Inc. merger.
 On Feb. 20, 1992, Enhance Group declared its initial regular quarterly dividend of 6 cents per share.
 Enhance Financial Services Group Inc. is engaged in financial guaranty reinsurance and related activities, and has three wholly owned subsidiaries: Enhance Reinsurance Company, a financial guaranty reinsurer rated AAA by Standard & Poor's and Duff & Phelps; Asset Guaranty Reinsurance Company, a financial guaranty insurance company rated AAA by Duff & Phelps; and Guaranty Risk Services, an adviser on credit-enhanced real estate transactions.
 ENHANCE FINANCIAL SERVICES GROUP INC. AND SUBSIDIARIES
 Condensed Balance Sheets
 (Dollars in thousands except per share amounts)
 Dec. 31 1991 1990
 ASSETS
 Investments:
 Fixed maturities $395,497 $328,498
 Cash & short-term 37,200 26,029
 Other 707 7,418
 Total investments 433,404 361,945
 Deferred acquisition costs 48,390 41,377
 Other assets 26,836 26,463
 Total assets $508,630 $429,785
 LIABILITIES
 Losses and LAE $ 7,782 $ 2,976
 Unearned premiums 166,112 146,717
 Senior notes 9,000 --
 Other liabilities 37,661 26,808
 Total liabilities $220,555 $176,501
 SHAREHOLDERS' EQUITY
 Common stock $ 1,752 $ 1,752
 Additional paid-in capital 180,450 180,633
 Retained earnings 107,217 74,781
 Other (1,344) (3,882)
 Total shareholders' equity 288,075 253,284
 Total liabilities and
 shareholders' equity $508,630 $429,785
 Book value per share $16.46 $14.46
 Total shares outstanding
 (in thousands) 17,498 17,514
 ENHANCE FINANCIAL SERVICES GROUP INC. AND SUBSIDIARIES
 Condensed Statements of Income
 (Dollars in thousands except per share amounts)
 Periods ended Three Months Year
 Dec. 31 1991 1990 1991 1990
 Revenues:
 Gross premiums written $21,088 $17,591 $57,619 $38,680
 Net premiums written 19,618 17,398 55,274 37,650
 Premiums earned 10,325 7,412 35,950 24,758
 Net investment income 7,150 6,721 27,192 22,576
 Realized gains 2,650 197 6,239 131
 Other income (186) 102 466 294
 Total revenues 19,939 14,432 69,847 47,759
 Expenses:
 Losses and LAE 939 1,505 5,105 2,243
 Policy acquisition costs 2,703 2,245 10,682 7,576
 Profit commissions 226 144 905 606
 Other operating expenses 4,627 1,701 12,056 5,582
 Total expenses 8,495 5,595 28,748 16,007
 Income from operations 11,444 8,837 41,099 31,752
 Equity in affiliates (122) (328) (230) 468
 Income before taxes 11,322 8,509 40,869 32,220
 Income taxes 2,352 1,892 8,433 7,160
 Net income $ 8,970 $ 6,617 $32,436 $25,060
 Earnings per share $0.51 $0.38 $1.85 $1.60
 Weighted average shares
 (in thousands) 17,498 17,514 17,506 15,642
 ENHANCE FINANCIAL SERVICES GROUP INC.
 Selected Statutory Data (A)
 (Dollars in thousands)
 Dec. 31 1991 1990
 Balance Sheet
 Contingency reserve $ 43,269 $ 30,321
 Capital and surplus 200,221 167,158
 Qualified statutory capital 243,490 197,479
 Unearned premium reserve 190,724 167,040
 Losses and loss adjustment
 expense reserve 7,883 2,944
 Policyholders' reserves $442,097 $367,463
 Net insurance in force $32,591,947 $27,394,310
 Leverage ratio 134:1 139:1
 (A) -- Represents the combined statutory financial position of Enhance Reinsurance Company and Asset Guaranty Reinsurance Company.
 -0- 3/10/92
 /CONTACT: Sheila Brody of Enhance Financial Services Group, 212-983-3100/
 (EFS) CO: Enhance Financial Services Group Inc. ST: New York IN: FIN SU: ERN


GK-TS -- NY012 -- 6749 03/10/92 09:30 EST
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