Printer Friendly

PHYSICIANS INSURANCE COMPANY OF MICHIGAN REPORTS SOLID BUT LOWER THIRD-QUARTER RESULTS

 OKEMOS, Mich., Oct. 28 /PRNewswire/ -- Physicians Insurance Company of Michigan (PICOM) (NASDAQ: PICM) posted solid third-quarter earnings today. Shareholders' equity rose 5.1 percent for the quarter.
 Revenues for the quarter were $20.0 million and net income was a noteworthy $4.0 million, equivalent to $1.50 per share. The year before, revenues were $22.5 million and net income was $5.1 million, or $1.90 per share.
 Victor Adamo, president, said the change in third-quarter revenues and net income from the year-earlier period were principally attributable to a $2.4 million decline in realized capital gains, along with slightly lower investment income resulting from lower prevailing interest rates.
 For the nine months ended Sept. 30, 1993, revenues were $52.7 million, compared with prior year's revenues of $55.8 million. The difference for the nine-month period, again, principally reflects lower realized capital gains and a drop in investment income resulting from lower prevailing interest rates. Income before the cumulative effect of the accounting change for the nine months was $7.1 million, or $2.64 per share, compared to prior-year income of $7.5 million, or $2.80 per share.
 Year-to-date net income was affected by a $1.32 million accounting change made during the third quarter. This change, combined with a similar second-quarter change, had the cumulative effect of reducing net income by $1.98 million, or $.74 per share. The change increased reserves and strengthened the balance sheet by lowering the discount rate used in determining the present value of loss and loss adjustment expense reserves. The discount rate is now fixed at 3 percent for all accident years. The change in the discount rate is a cumulative effect accounting change and has been included in restated first-quarter results (see attached financial supplement). A similar accounting change was made during 1992 in the amount of $5.3 million, or $1.99 per share.
 At the close of the quarter, shareholders' equity stood at $61.1 million or $22.81 per share, up 11.1 percent from year-end 1992 figures.
 Adamo said PICOM continues to expand its insurance services to meet the rapidly changing needs of the health care industry. He noted the company has added a third hospital to its book of health care institutional insureds. An experienced hospital risk manager has been added to staff to better serve the hospital market and help these providers control their professional liability risks.
 Physicians Insurance Company of Michigan is the state's leading liability insurer for health care professionals. Founded in 1980, PICOM had traded on the over-the-counter market since 1982 and is now traded on the NASDAQ Exchange under the symbol PICM.
 PHYSICIANS INSURANCE COMPANY OF MICHIGAN
 CONSOLIDATED INCOME STATEMENTS
 Third Quarter 1993 Financial Supplement
 (Dollars in thousands, except per-share data; unaudited)
 1st Qtr 2nd Qtr 3rd Qtr
 1993 1993 1993
 Revenues:
 Premiums earned, net $11,826 $12,183 $12,114
 Investment income, net 3,208 3,108 3,308
 Net realized gain (loss) 749 1,690 4,528
 Total revenues 15,783 16,980 19,951
 Expenses:
 Losses and loss adjustment
 expenses, net 12,137 12,076 11,760
 Extended reporting period
 expenses 500 0 0
 Policy acquisition and
 other underwriting
 expenses 1,503 1,885 2,121
 Total expenses 14,141 13,962 13,881
 Income before income taxes
 and cumulative effect of
 accounting change 1,643 3,018 6,070
 Federal income taxes (559) (1,026) (2,064)
 Income before cumulative
 effect of accounting
 change 1,084 1,992 4,006
 Cumulative effect of change
 in the discount rate, net
 of deferred income taxes (1,980) 0 0
 Net income (loss) ($896) $1,992 $4,006
 Net income per
 common share:
 Income before cumulative
 effect of accounting
 change $0.41 $0.74 $1.50
 Cumulative effect of
 accounting change ($0.74) --- ---
 Net income (loss)
 per common share ($0.33) $0.74 $1.50
 1st Qtr 2nd Qtr 3rd Qtr
 1992 1992 1992
 Revenues:
 Premiums earned, net $13,716 $11,272 $11,950
 Investment income, net 4,049 3,368 3,615
 Net realized gain (loss) 348 550 6,929
 Total revenues 18,112 15,189 22,494
 Expenses:
 Losses and loss adjustment
 expenses, net 14,516 10,930 11,179
 Extended reporting period
 expenses 423 423 1,443
 Policy acquisition and
 other underwriting
 expenses 1,728 1,645 2,157
 Total expenses 16,667 12,998 14,779
 Income before income taxes
 and cumulative effect of
 accounting change 1,446 2,192 7,715
 Federal income taxes (492) (745) (2,623)
 Income before cumulative
 effect of accounting
 change 954 1,447 5,092
 Cumulative effect of change
 in the discount rate, net
 of deferred income taxes (5,312) 0 0
 Net income (loss) ($4,358) $1,447 $5,092
 Net income per
 common share:
 Income before cumulative
 effect of accounting
 change $0.36 $0.54 $1.90
 Cumulative effect of
 accounting change ($1.99) --- ---
 Net income (loss)
 per common share ($1.63) $0.54 $1.90
 4th Qtr Total
 1992 1992
 Revenues:
 Premiums earned, net $11,841 $48,778
 Investment income, net 3,302 14,333
 Net realized gain (loss) (342) 7,485
 Total revenues 14,801 70,596
 Expenses:
 Losses and loss adjustment
 expenses, net 8,837 45,463
 Extended reporting period
 expenses 1,443 3,731
 Policy acquisition and
 other underwriting
 expenses 1,921 7,450
 Total expenses 12,201 56,644
 Income before income taxes
 and cumulative effect of
 accounting change 2,600 13,952
 Federal income taxes (1,001) (4,861)
 Income before cumulative
 effect of accounting
 change 1,598 9,091
 Cumulative effect of change
 in the discount rate, net
 of deferred income taxes 0 (5,312)
 Net income (loss) $1,598 $3,779
 Net income per
 common share:
 Income before cumulative
 effect of accounting
 change $0.60 $3.40
 Cumulative effect of
 accounting change --- ($1.99)
 Net income (loss)
 per common share $0.60 $1.41
 During 1992 and 1993, PICOM strengthened reserves by reducing the discount rate assumption used in the present value calculation of reserves. The strengthening of reserves reduces net income and is treated as a cumulative effect accounting change. Generally accepted accounting principles (GAAP) require that all cumulative effect type changes made during the fiscal year be reported as though they occurred at the beginning of the fiscal year. Accordingly, the entire $5,312,000 reduction in net income in 1992 and the $1,980,000 reduction to date in 1993, resulting from changes in the discount rate made throughout each year, have been included in the respective first-quarter results. The above presentation restates the financial information to reflect the cumulative effect changes.
 PHYSICIANS INSURANCE COMPANY OF MICHIGAN
 CONSOLIDATED BALANCE SHEETS
 ASSETS
 Sept. 30, Dec. 31,
 Unaudited 1993 1992
 Investments:
 Bonds and U.S. government
 securities $189,717,593 $199,111,725
 Common stocks, including
 affiliate 1,544,889 1,527,282
 Short-term investments 59,573,330 34,451,738
 250,835,812 235,090,745
 Cash 1,043,816 866,112
 Premiums receivable 12,251,100 7,645,171
 Accrued investment income 2,233,541 2,403,430
 Reinsurance recoverable 2,397,992 2,477,352
 Property and equipment, net of
 accumulated depreciation 2,739,077 2,308,184
 Deferred policy acquisition costs 1,133,600 905,490
 Prepaid reinsurance premiums 1,130,718 998,122
 Deferred federal income taxes 28,640,127 31,550,279
 Total assets $302,405,783 $284,244,885
 LIABILITIES AND SHAREHOLDERS' EQUITY
 Liabilities:
 Loss and loss adjustment
 expense reserves $193,909,210 $184,757,664
 Unearned extended reporting
 period premium reserves 11,986,000 11,486,000
 Unearned premiums 27,869,544 24,304,669
 Drafts outstanding 2,381,538 3,462,285
 Accrued expenses and other
 liabilities 5,164,370 5,260,138
 Total liabilities 241,310,662 229,270,756
 Shareholders' equity:
 Common stock, $1 par value;
 10 million shares authorized;
 2,678,701 in 1993 and 1992
 issued and outstanding 2,678,701 2,678,701
 Additional paid-in capital 818,075 818,075
 Net unrealized (depreciation)
 appreciation on investments 509,183 (509,455)
 Retained earnings 57,089,162 51,986,808
 Total shareholders' equity 61,095,121 54,974,129
 Total liabilities and
 shareholders' equity $302,405,783 $284,244,885
 PHYSICIANS INSURANCE COMPANY OF MICHIGAN
 CONSOLIDATED STATEMENT OF INCOME
 For the nine-month period ending Sept. 30, 1993 and 1992
 Unaudited 1993 1992
 Revenues:
 Premiums earned, net $36,123,487 $36,937,396
 Investment income, net of
 expenses of $ 728,320
 and $ 723,533 9,623,673 11,031,249
 Net realized investment gains 6,967,029 7,827,063
 Total revenues 52,714,189 55,795,708
 Expenses:
 Losses and loss adjustment
 expenses, net 35,973,833 36,625,750
 Extended reporting period expenses 500,000 2,288,000
 Policy acquisition and other
 underwriting expenses 5,509,517 5,529,402
 Total expenses 41,983,350 44,443,152
 Income before income taxes and
 cumulative effect of
 accounting change 10,730,839 11,352,556
 Federal income taxes (3,648,485) (3,859,869)
 Income before cumulative
 effect of accounting change 7,082,354 7,492,687
 Cumulative effect of change
 in discount rate, net of
 deferred federal income
 taxes of $1,020,000
 and $2,736,000 (1,980,000) (5,312,000)
 Net income $5,102,354 $2,180,687
 Net income per common share:
 Income before cumulative effect
 of accounting change $2.64 $2.80
 Cumulative effect of accounting change (0.74) (1.99)
 Net income per common share $1.90 $0.81
 For additional information, see financial supplement.
 -0- 10/28/93
 /CONTACT: Kevin Clinton of Physicians Insurance Company of Michigan, 517-349-6500; or Mike Marcotte of Marcotte PR, 313-656-3873, for Physicians Insurance Company of Michigan/
 (PICM)


CO: Physicians Insurance Company of Michigan ST: Michigan IN: INS SU: ERN

JG-CJ -- DE032 -- 8169 10/28/93 17:03 EDT
COPYRIGHT 1993 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Oct 28, 1993
Words:1648
Previous Article:MCI TO PROVIDE FREE LONG DISTANCE CALLS TO CALIFORNIA FIRE VICTIMS
Next Article:QUESTAR BOARDS DECLARE DIVIDENDS
Topics:

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters