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ENHANCE FINANCIAL SERVICES GROUP REPORTS THIRD QUARTER INCOME UP 34 PERCENT

 ENHANCE FINANCIAL SERVICES GROUP REPORTS
 THIRD QUARTER INCOME UP 34 PERCENT
 NEW YORK, Nov. 12 /PRNewswire/ -- Enhance Financial Services Group Inc. (NYSE: EFS) today reported record net income for the third quarter and first nine months of 1992. Net income for the third quarter was $11.8 million, a 34 percent increase over third-quarter 1991 net income of $8.8 million. Net income for the first nine months of 1992 rose 27 percent to $29.8 million from $23.5 million for the same period in 1991.
 Earnings per share for the third quarter rose 30 percent to $0.65 from $0.50 for the third quarter of 1991. Earnings per share for the first nine months of 1992 rose 22 percent to $1.64 from $1.34 for the year-ago period. Book value per share as of Sept. 30, 1992 increased to $17.91 from $16.46 at Dec. 31, 1991.
 Wallace O. Sellers, president and chief executive officer, said, "Enhance Group continued to enjoy strong performance in the third quarter, with both municipal reinsurance and specialty activities contributing to the company's growth. We saw a strong quarter in the municipal reinsurance business, with premiums written up 39 percent over last year's third quarter. Our specialty activities continued to do well, and constituted 25 percent of net premiums written for the quarter."
 Total Enhance Group third-quarter revenues increased 36 percent to $24.5 million, up from $18.0 million in the third quarter of 1991. Total revenues for the first nine months were $64.5 million, up 29 percent from $49.9 million for the year-ago period. Total revenues comprise premiums earned, investment income, realized gains, and other income.
 Net premiums written for the third quarter increased 24 percent to $15.1 million, compared to $12.2 million for the third quarter of 1991. Of Enhance Group's 1992 third quarter net premiums written, $9.0 million was produced by reinsurance of municipal bonds, $2.3 million by reinsurance of asset-backed debt obligations, and $3.8 million by Enhance Group's specialty activities. These results compare to $6.5 million, $1.9 million, and $3.8 million, respectively, during the same period in 1991. Net premiums written for the first nine months increased 10 percent to $39.1 million, compared to $35.7 million for the year-ago period.
 Enhance Group's premiums earned for the third quarter grew 29 percent to $12.0 million, up from $9.3 million for the third quarter of 1991. The increase reflects $2.5 million from refundings in the third quarter, compared to $1.3 million in the third quarter of 1991, as well as the earned premiums generated from the growing unearned premium reserve. Premiums earned rose 32 percent in the first nine months to $33.8 million, from $25.6 million for the year-ago period. The 1992 amount includes $6.5 million from refundings, compared to $3.8 million in the year-ago period.
 Enhance Group net investment income for the third quarter increased 16 percent to $7.9 million, compared to $6.8 million for the third quarter of 1991. In addition, Enhance Group generated $4.0 million of net realized gains on the sale of investments, up 130 percent from $1.7 million in the third quarter of 1991. For the first nine months, net investment income rose to $22.6 million, up 13 percent from $20.0 million for the year-ago period. Net realized gain on investments for the first nine months was $7.1 million, up 97 percent from $3.6 million for the year-ago period.
 Incurred losses and loss adjustment expenses in the third quarter of 1992 totaled $1.4 million, down significantly from $2.5 million recorded in the third quarter of 1991. The 1992 amount includes a contribution to nonspecific reserves, reflecting the company's revised approach to reserving for estimated losses which was initiated in the second quarter of 1992. First nine months incurred losses and loss adjustment expenses, including the contribution to nonspecific reserves, totaled $5.4 million, compared to $4.2 million in the year-ago period.
 Operating expenses for the third quarter and first nine months, exclusive of losses and loss adjustment expenses, were $7.5 million and $20.1 million, respectively, compared with $5.6 million and $16.1 million, respectively, for the year-ago periods. Enhance Group's operating expense ratio decreased to 59.7 percent for the first nine months from 62.8 percent in the year-ago 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 Consolidated Balance Sheets
 (Dollars in thousands, except per share amounts)
 9/30/92 12/31/91
 (Unaudited)
 Assets
 Investments:
 Fixed maturities $437,379 $395,497
 Cash & short-term 49,559 37,200
 Other 1,019 707
 Total investments 487,957 433,404
 Deferred acquisition costs 51,039 48,390
 Other assets 26,168 26,836
 Total assets 565,164 508,630
 Liabilities
 Losses and LAE $ 12,426 $ 7,782
 Unearned premiums 171,429 166,112
 Senior notes 9,000 9,000
 Other liabilities 46,279 37,661
 Total liabilities 239,134 220,555
 Shareholders' equity
 Common stock 1,827 1,752
 Additional paid-in capital 192,211 180,450
 Retained earnings 133,708 107,217
 Other (1,716) (1,344)
 Total shareholders' equity 326,030 288,075
 Total liabilities & shareholders' equity 565,164 508,630
 Book value per share $17.91 $16.46
 Total shares outstanding (in thousands) 18,207 17,498
 ENHANCE FINANCIAL SERVICES GROUP, INC. AND SUBSIDIARIES
 Condensed Consolidated Statements of Income
 (Unaudited -- dollars in thousands, except per share amounts)
 Periods ended Three months Nine months
 Sept. 30 1992 1991 1992 1991
 Revenues:
 Gross premiums written $15,793 $12,752 $40,818 $36,531
 Net premiums written 15,146 12,166 39,077 35,656
 Premiums earned 11,982 9,305 33,762 25,625
 Net investment income 7,934 6,815 22,635 20,042
 Realized gains 4,004 1,744 7,072 3,589
 Other income 559 176 1,017 652
 Total revenues 24,479 18,040 64,486 49,908
 Expenses:
 Losses and LAE 1,378 2,478 5,437 4,166
 Policy acquisition costs 3,931 3,031 10,645 7,979
 Profit commissions 331 300 762 679
 Other operating expenses 3,246 2,242 8,735 7,429
 Interest expense 176 -- 531 --
 Total expenses 9,062 8,051 26,110 20,253
 Income from operations 15,417 9,989 38,376 29,655
 Equity in affiliates (1) (57) (139) (108)
 Income before taxes 15,416 9,932 38,237 29,547
 Income taxes 3,616 1,143 8,462 6,081
 Net income 11,800 8,789 29,775 23,466
 Earnings per share $0.65 $0.50 $1.64 $1.34
 Weighted average shares
 (in thousands) 18,241 17,498 18,120 17,509
 ENHANCE FINANCIAL SERVICES GROUP, INC. AND SUBSIDIARIES
 Selected Statutory Data(A)
 (Unaudited -- dollars in thousands)
 9/30/92 12/31/91
 Balance Sheet
 Contingency reserve $55,230 $43,269
 Capital and surplus 221,215 200,221
 Qualified statutory capital 276,445 243,490
 Unearned premium reserve 198,947 190,724
 Losses and loss adjustment expense reserve 11,727 7,883
 Policyholders' reserves 487,119 442,097
 Net insurance in force 33,899,147 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- 11/12/92
 /CONTACT: Sheila Brody of Enhance Financial Services Group Inc., 212-983-3100/
 (EFS) CO: Enhance Financial Services Group Inc. ST: New York IN: FIN SU: ERN


PS-OS -- NY012 -- 0050 11/12/92 09:36 EST
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Date:Nov 12, 1992
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