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ENHANCE FINANCIAL SERVICES GROUP REPORTS SECOND QUARTER INCOME UP 32 PERCENT

 ENHANCE FINANCIAL SERVICES GROUP REPORTS SECOND QUARTER INCOME
 UP 32 PERCENT
 NEW YORK, Aug. 13 /PRNewswire/ -- Enhance Financial Services Group Inc. (NYSE: EFS) today reported net income for the second quarter of 1992 of $9.9 million, a 32.4 percent increase over second-quarter 1991 net income of $7.4 million. Earnings per share for the second quarter grew 27 percent to $0.54 from $0.43. Book value per share at June 30, 1992 increased to $17.31 from $16.46 at Dec. 31, 1991.
 Net income for the first half of 1992 rose 22.5 percent to $18.0 million from $14.7 million in the same period in 1991. Earnings per share for the first six months of 1992 were $1, an increase of 19 percent from the 1991 period.
 In commenting on Enhance Group's 1992 earnings performance to date, Wallace O. Sellers, president and chief executive officer, noted that, "Enhance Group continued to benefit from hefty refunding volume in its Enhance Reinsurance Company subsidiary. Refundings, as well as the earnings generated from our growing unearned premium reserve, contributed to substantially higher earned premiums year-over-year."
 Sellers added, "On the revenue side, our Asset Guaranty subsidiary is a growing presence. Asset Guaranty's specialty activities provided almost 27 percent of Enhance Group net premiums written for the first half of 1992, up from only 8 percent in first-half 1991."
 Total Enhance Group 1992 second-quarter revenues increased 24.9 percent to $20.7 million, up from $16.6 million in second-quarter 1991. Total revenues for the first half of 1992 increased 25.5 percent to $40.0 million, up from $31.9 million in first-half 1991. Total revenues comprise premiums earned, investment income, realized gains, and other income.
 Gross premiums written for the second quarter were $12.9 million, down 31.6 percent from $18.9 million in second-quarter 1991, reflecting a high level of facultative activity in the 1991 period. Gross premiums written for the half rose 5.2 percent to $25.0 million from $23.8 million in first-half 1991.
 Enhance Group net premiums written decreased 31.3 percent to $12.9 million in the second quarter of 1992, compared to $18.7 million in second-quarter 1991, consistent with the decrease in gross premiums written. Of Enhance Group's 1992 second-quarter net premiums written, 62.9 percent was attributable to reinsurance of municipal bonds, 12.4 percent to reinsurance of asset-backed debt obligations, and 24.7 percent to Enhance Group's specialty activities. These results compare to 70.9 percent, 23.7 percent, and 5.4 percent, respectively, during the same period in 1991. For the half, net premiums written increased 1.9 percent to $23.9 million from $23.5 million in the same 1991 period.
 Enhance Group premiums earned grew 29.3 percent to $11.6 million in second-quarter 1992, up from $9.0 million during the comparable 1991 period. The increase reflects $3.0 million from refundings, as well as the earnings generated from the growing unearned premium balance. Premiums earned rose 33.5 percent to $21.8 million for the first half of 1992, from $16.3 million in first-half 1991. The first half 1992 amount includes $4.0 million from refundings compared with $2.4 million in first half 1991.
 Enhance Group net investment income increased 14.5 percent to $7.6 million in the second quarter, from $6.7 million in second-quarter 1991. In addition, Enhance Group generated $1.2 million of realized capital gains in the quarter, compared to $0.6 million during second-quarter 1991. For the half, net investment income rose 11.1 percent to $14.7 million from $13.2 million in the 1991 period. Realized capital gains for the first six months were $3.1 million compared with $1.8 million during the same period in 1991.
 In the second quarter of 1992, Enhance Group initiated the inclusion of a non-specific loss reserve in the estimation of reserves for losses and loss adjustment expenses. This revised estimation process produced a $0.9 million addition to reserves for estimated losses and loss adjustment expenses in the second quarter of 1992. The addition to reserves during second-quarter 1991, which was based on case reserves only, was $0.8 million. First-half 1992 addition to loss and loss adjustment expense reserves, including the newly established non- specific reserve, totaled $4.1 million, compared to $1.7 million in first-half 1991.
 Operating expenses for 1992 second quarter and first half, exclusive of losses and loss adjustment expenses, were $6.6 million and $12.6 million, respectively, compared with $5.9 million and $10.5 million in 1991. Enhance Group's operating expense ratio decreased to 58.0 percent for the first half of 1992 from 64.4 percent in the same 1991 period.
 Enhance Financial Services Group Inc., through its wholly-owned subsidiaries, provides financial guaranty reinsurance, reinsurance of certain related specialty lines of business, and limited amounts of primary financial guaranty insurance.
 ENHANCE FINANCIAL SERVICES GROUP INC. AND SUBSIDIARIES
 Condensed Statements of Income
 (Unaudited, Dollars in Thousands Except Per Share Amounts)
 Period Ended Six Months Ended Three Months Ended
 June 30 1992 1991 1992 1991
 Revenues
 Gross premiums written $ 25,025 $ 23,779 $ 12,906 $ 18,879
 Net premiums written 23,931 23,490 12,850 18,713
 Premiums earned 21,780 16,320 11,590 8,965
 Net investment income 14,701 13,227 7,627 6,659
 Realized gains 3,068 1,845 1,243 649
 Other income 458 476 275 325
 Total revenues 40,007 31,868 20,735 16,598
 Expenses
 Losses and LAE 4,059 1,688 857 759
 Policy acquisition costs 6,714 4,948 3,377 2,650
 Profit commissions 431 379 322 233
 Other operating expenses 5,489 5,187 2,936 2,981
 Interest expense 355 -- 177 --
 Total expenses 17,048 12,202 7,669 6,623
 Income from operations 22,959 19,666 13,066 9,975
 Equity in affiliates (138) (51) 90 1
 Income before taxes 22,821 19,615 13,156 9,976
 Income taxes 4,846 4,938 3,297 2,530
 Net income 17,975 14,677 9,859 7,446
 Earnings per share $ 1.00 $ 0.84 $ 0.54 $ 0.43
 Weighted avg. shares
 (in thousands) 18,060 17,514 18,248 17,514
 ENHANCE FINANCIAL SERVICES GROUP INC. AND SUBSIDIARIES
 Condensed Balance Sheets
 (Dollars in thousands except per share amounts)
 Periods Ended 6/30/92 12/31/91
 (Unaudited)
 Assets
 Investments:
 Fixed maturities $ 419,704 $ 395,497
 Cash and short-term 52,021 37,200
 Other 1,049 707
 Total investments 472,774 433,404
 Deferred acquisition costs 49,869 48,390
 Other assets 24,561 26,863
 Total assets 547,204 508,630
 Liabilities
 Losses and LAE 11,697 7,782
 Unearned premiums 168,265 166,112
 Senior notes 9,000 9,000
 Other liabilities 42,317 37,661
 Total liabilities 231,279 220,555
 Shareholders' equity
 Common stock 1,827 1,752
 Additional paid-in capital 192,211 180,450
 Retained earnings 123,002 107,217
 Other (1,115) (1,344)
 Total shareholders' equity 315,925 288,075
 Total liabilities and
 shareholders' equity 547,204 508,630
 Book value per share 17.31 16.46
 Total shares outstanding
 (in thousands) 18,248 17,498
 ENHANCE FINANCIAL SERVICES GROUP INC.
 Selected Statutory Data (A)
 (Unaudited, Dollars in thousands)
 Periods Ended 6/30/92 12/31/91
 Balance sheet
 Contingency reserve $ 51,299 $ 43,296
 Capital and surplus 217,925 200,221
 Qualified statutory capital 269,224 243,490
 Unearned premium reserve 195,048 190,724
 Losses and loss adjustment
 expense reserve 11,506 7,883
 Policyholders' reserves 475,778 442,097
 Net insurance in force 33,059,933 32,591,947
 Leverage ratio (B) 123:1 134:1
 (A) Represents the combined statutory financial position of Enhance Reinsurance Company and Asset Guaranty Reinsurance Company.
 (B) Leverage ratio is net insurance in force divided by qualified statutory capital.
 -0- 8/13/92
 /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


TM-OS -- NY078 -- 9804 08/13/92 18:42 EDT
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Date:Aug 13, 1992
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