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 JACKSONVILLE, Fla., Nov. 2 /PRNewswire/ -- Independent Insurance Group, Inc. (NASDAQ: INDHK) today reported results for the third quarter of 1993. Throughout 1992 and 1993, the combination of Hurricane Andrew, required new accounting guidelines and actions taken as a result of our sharpened focus on Home Service operations make consistency of analysis complicated. As an example, during the current quarter, the Company adopted a required new accounting standard related to reinsurance, increased its corporate income tax rate from 34 percent to 35 percent due to the Revenue Reconciliation Act of 1993, updated its claims exposure from Hurricane Andrew, and initiated its biggest life insurance promotional campaign that set a record for production.
 Excluding the impact of Andrew and realized investment gains, pretax income from continuing operations amounted to $7.6 million for the current three months compared with $13.7 million a year ago. The decrease in this quarter-to-quarter comparison stems primarily from lower investment income due to interest rate reductions and property/casualty reinsurance costs which have doubled as a result of the tight catastrophe reinsurance market. The company's principal subsidiary, Independent Life, reported a pretax profit of $5.8 million in the current quarter compared to $9.7 million a year ago, excluding realized investment gains. Net investment income was $1.8 million lower due to the interest-rate environment. Also by comparison, in the third quarter of 1992 pretax profit increased $1.5 million from updating reserves for group accident and health claims. Property/casualty operations reflected a $606 thousand pretax gain for the quarter compared with $3.3 million in 1992. Lower net investment income due to interest rates and reduced investment assets, coupled with higher catastrophe premiums primarily resulted in the decrease in profit.
 "There are a number of positive events this quarter, despite the fact that pretax results did not match those of a year ago," said Wilford C. Lyon, Jr., chairman of Independent. "Our life insurance campaign begun in late September generated record production that should provide positive results in the future. We began to notice the benefits of cost reduction initiatives begun in early 1993 (principally from 264 staff reductions), and the wind down of all non-Home Service property/casualty operations is proceeding on target in all states and lines of business except the homeowners line in Florida, where the legislature declared a moratorium on non-renewing homeowners policies. We are aggressively pursuing the moratorium issue with the state insurance department."
 Net after-tax income for the third quarter of 1993 totaled $3.5 million or $.27 per share vs. a loss of $10.6 million or $.81 per share in 1992. Andrew reduced net income by $.10 and $1.98 per share in the 1993 and 1992 quarters, respectively. Additionally, results for the current quarter were reduced by $1.9 million, or $.15 per share, from the required implementation of a new accounting standard for reinsurance. In comparison, realized investment gains were lower than the year-ago quarter when, as previously reported, the company recorded after-tax gains of $4.7 million, or $.36 per share from selling mortgage-backed securities due to existing market conditions. The effect of the required change in corporate tax rates due to the Revenue Reconciliation Act of 1993 was minimal.
 In the first nine months of 1993, the net after-tax loss was $32.1 million or $2.44 per share, and was a loss of $725,000 or $.06 per share in the comparable 1992 period. "The nine-month comparative results are also skewed for a number of reasons" said Lyon. "In addition to Andrew's impact, thus far in 1993 we have recorded the cumulative impact of three newly required accounting standards (totaling $43.2 million, or $3.28 per share) which change the accounting methods but do not increase our out-of-pocket cost, we posted a $.53 per share gain on the sale of a nonessential subsidiary and recorded a one-time restructuring charge of $.50 per share for estimated phase-out costs associated with our announcement to exit all non-Home Service property/casualty lines of business."
 In other areas, the decrease in life premiums is primarily the result of the previously reported decision to have the company's retirement plans pay retirement benefits directly as opposed to purchasing annuities from Independent Life. This decision has no effect on profit, however, it will result in similar decreases in both life premiums and benefits. The decrease in accident and health premiums is divided between our individual and group lines of business. The decrease in property/casualty premiums is due to the nonrenewing of much of our catastrophe-exposed lines of homeowners policies since the first of the year, and to ceding an additional $34.1 million of premiums to other companies in order to restore statutory surplus. Benefits and administrative costs related to these premiums have also decreased. The cost of paying higher premiums for catastrophe reinsurance coverage further reduced property/casualty premiums.
 "Investment quality remains high, and the market value of our fixed- maturity portfolio exceeds cost by nearly $60 million," commented Lyon. "It is important to note that our shareholders' equity does not include this unrealized gain."
 As previously reported, the gain on disposition of discontinued operations is related to our consumer finance subsidiary which was sold in the first quarter of 1993. Also previously reported, in accordance with a new accounting standard, all reinsurance recoverable for 1993 and 1992 have been shown separately as an asset as opposed to being netted against liabilities, with no effect on income.
 Shareholders' equity grew to $304 million and book value increased to $23.07 per share. The regular quarterly dividend of $.06 per share was declared by the Board, payable Dec. 1, 1993, to shareholders of record on Nov. 10, 1993.
 Independent Insurance Group, Inc., is a Jacksonville, Fla.-based holding company whose subsidiaries provide an extensive range of insurance services. Its history traces to 1920. Its core business is the operations of The Independent Life and Accident Insurance Company, a recognized leader in the Home Service insurance industry. Home Service property and casualty premiums are written through the Company's property and casualty subsidiaries. A multi-line of products are marketed primarily in the Southeast through the company's own Home Service field force.
 Consolidated Statements of Operations
 (In Thousands, Except Per Share Amounts - Unaudited)
 Three Months Ended Nine Months Ended
 9/30/93 9/30/92 9/30/93 9/30/92
 Life Premiums $ 42,721 $ 44,808 $132,770 $131,764
 Property & casualty premiums 27,317 40,363 80,155 124,740
 Accident & health premiums 23,353 24,992 72,826 76,768
 Net investment income 17,869 20,833 55,711 62,832
 Realized investment gains 2,515 8,023 13,736 11,366
 Other 2,461 2,568 8,800 7,640
 116,236 141,587 363,998 415,110
 Benefits and Expenses
 Life benefits 22,684 25,219 77,556 78,862
 Property & casualty benefits 18,728 58,725 64,921 108,206
 Accident & health benefits 9,034 9,526 28,860 36,485
 Amortization of acquisition
 costs 7,706 13,315 41,691 44,875
 Other 50,079 52,586 137,425 153,758
 Restructuring charge 0 0 10,000 0
 108,231 159,371 360,453 422,186
 Income (loss) from
 continuing operations
 before income taxes 8,005 (17,784) 3,545 (7,076)
 Provision (credit)
 for federal income taxes 2,045 (6,622) (80) (4,782)
 Income (loss) from
 continuing operations 5,960 (11,162) 3,625 (2,294)
 Income from discontinued
 operations (net of taxes) 0 538 492 1,569
 Gain on disposition of
 discontinued operations 0 0 6,980 0
 Income before cumulative
 effect of change in
 accounting principles 5,960 (10,624) 11,097 (725)
 Cumulative effect of change
 in accounting principles (2,460) 0 (43,214) 0
 Net Income (loss) $ 3,500 $(10,624) $(32,117) $ (725)
 Per Share
 Income (loss) from
 continuing operations $ .45 $(.85) $ .27 $(.18)
 Discontinued operations .00 .04 .57 .12
 Income before cumulative
 effect of change in
 accounting principles .45 (.81) .84 (.06)
 Cumulative effect of
 change in accounting
 principles (.18) .00 (3.28) .00
 Net Income (loss) $ .27 $(.81) $(2.44) $(.06)
 Realized investment gains $ .11 $ .42 $ .67 $ .60
 Dividends $ .06 $ .22 $ .18 $ .66
 Average Shares Outstanding 13,165 13,165 13,165 13,165
 Consolidated Balance Sheets
 (In Thousands - Unaudited)
 Sept. 30
 1993 1992
 Fixed maturities held for investment $ 462,448 $ 610,312
 Fixed maturities held for sale 245,057 0
 Equity securities 143,882 137,471
 Mortgage loans 170,036 214,657
 Real estate 19,076 16,348
 Policy loans 32,849 31,494
 Short term 31,950 122,927
 Cash 11,577 11,326
 Receivables 6,914 14,423
 Reinsurance recoverable 50,653 113,304
 Property & equipment, net 50,346 54,884
 Deferred acquisition costs 203,835 212,570
 Other 47,243 45,831
 Net assets of discontinued operations 0 11,446
 $1,475,866 $1,596,993
 Liabilities and Equity
 Policy liabilities $1,027,424 $1,156,118
 Notes payable 7,000 8,092
 Income taxes payable (receivable) (13,561) 9,608
 Other 151,245 64,736
 Shareholders' equity 303,758 358,439
 $1,475,866 $1,596,993
 -0- 11/2/93
 /CONTACT: B. Lane Bussey III of Independent Insurance Group, 904-358-5470/

CO: Independent Insurance Group, Inc. ST: Florida IN: INS SU: ERN

AW -- FL008 -- 9709 11/02/93 14:02 EST
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Publication:PR Newswire
Date:Nov 2, 1993

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