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 ARLINGTON, Va., Oct. 29 /PRNewswire/ -- USLICO Corporation (NYSE: USC) today reported net income for the third quarter of 1993 of $12.8 million, or $1.19 per share, compared to net income of $2.3 million, or 22 cents per share, for the third quarter of 1992. Year-to-date 1993 net income was $18.2 million, or $1.70 per share, compared to net income of $1.5 million, or 15 cents per share, for the first nine months of 1992. The year-to-date earnings for 1992 were reduced by the cumulative effect of adopting two new accounting standards that produced a total after-tax charge against earnings of $9.8 million, or 91 cents per share.
 As previously announced in August 1993, the company sold its ship registry and corporate formation business realizing an after-tax gain of $10.9 million, or $1.01 per share. This gain is comprised of $2.1 million of net proceeds from sale in excess of carrying value and $8.8 million of previously unrecognized tax benefits that will be realized as a result of the sale. The gain is included in third quarter 1993 net income.
 FINANCIAL RESULTS are summarized in the following table by major components for the current year compared to 1992 (in millions):
 Three Months Nine Months
 Ended Sept. 30, Ended Sept. 30,
 1993 1992 1993 1992
 Life Insurance
 Operations $ 9.6 $ 3.1 $17.9 $16.2
 Realized Investment Gains(A) 2.2 1.7 5.7 5.5
 Interest Expense (2.0) (2.0) (6.0) (6.0)
 Federal Income Tax (3.4) (0.5) (6.0) (4.4)
 Total 6.4 2.3 11.6 11.3
 Special Items (Net of Tax):
 Ship Registry Business 10.9 -- 11.8 --
 Group Health Business (2.9) -- (3.6) --
 Tax Rate Increase (1.6) -- (1.6) --
 Accounting Changes -- -- -- (9.8)
 Net Income $12.8 $ 2.3 $18.2 $1.5
 (A) The deferred acquisition cost (DAC) amortization and the amortization of present value of future profits (PVFP) netted in the realized investment gains amount above, and the portion of federal income tax applicable to the net amount, are as follows (in millions).
 Three Months Nine Months
 Ended Sept. 30, Ended Sept. 30,
 1993 1992 1993 1992
 Realized investment gains $2.9 $3.3 $9.6 $8.8
 Amortization of DAC
 and PVFP (0.7) (1.6) (3.9) (3.3)
 Net 2.2 1.7 5.7 5.5
 Federal income tax (0.8) (0.6) (2.0) (1.9)
 Net realized
 investment gains $1.4 $1.1 $3.7 $3.6
 Pre-tax earnings from life insurance operations for the nine months are up in comparison to 1992 by $1.7 million or 10.5 percent. For the third quarter, earnings from life insurance operations are up $6.5 million compared to the same quarter of the prior year reflecting more favorable expense comparisons and substantially improved results from the group life line of business.
 Three special items also affected the results:
 (1) In addition to the third quarter gain on sale previously discussed, income of $0.9 million, net of tax, was recognized in the second quarter, representing a dividend from the company's ship registry subsidiary.
 (2) During the third quarter, the company gave significant attention to resolving various disputes growing out of the group health business which produced large losses in 1991. Management initiated settlement discussions with all of the parties and was successful in settling with the reinsurance companies with whom it had disputes without a material effect on the quarter's financial results. The company has been unable to resolve the remaining disputes on a satisfactory basis. Accordingly, estimates for future legal and other costs associated with pursuing this matter to final resolution and with defending the company in related claims litigation have been provided as of Sept. 30, 1993, in the amount of $1.7 million (net of tax). Expenses for the third quarter and the nine months included additional, related legal fees and other expenses of $1.2 million and $1.9 million (net of tax), respectively.
 (3) $1.6 million of additional income tax expense was recognized in the quarter to reflect the cumulative effect on the company's deferred tax liability resulting from the increase in the corporate tax rate from 34 percent to 35 percent, enacted during the third quarter of 1993.
 The accounting changes reported for the first six months of 1992 consisted of $9.5 million from adoption of a new accounting standard for deferred income taxes (Financial Accounting Standards Board Statement 109) and $0.3 million (net of tax) from adoption of a new accounting standard for postretirement benefits other than pensions (Financial Accounting Standards Board Statement 106). The adoption of these new standards in the fourth quarter of 1992 resulted in the retroactive restatement of the 1992 first quarter.
 SALES. The company reported that sales in the individual life, payroll deduction and variable annuity lines of business continue to exceed sales levels of the previous year. On the other hand, sales of fixed annuities during the third quarter experienced a significant decrease in pace. This decreased activity reflects both a general trend in the industry itself stemming from the low interest rate environment and the results of a USLICO management initiative which reduced commission rates to enhance overall profitability of the line.
 Annualized Premium Sales
 (in thousands)
 Three Months Nine Months
 Ended Sept. 30, Ended Sept. 30,
 1993 1992 1993(A) 1992
 Individual Life $ 3,864 $ 3,590 $ 11,968 $ 11,477
 Payroll Deduction 2,897 2,704 7,826 7,191
 Group Life 727 484 1,058 1,326
 Annuities 26,604 36,630 122,798 116,532
 Total $34,092 $43,408 $143,650 $136,526
 (A) Totals reflect adjustments to prior period sales.
 ASSET QUALITY. USLICO also reported that the high quality of its investment portfolio continues to be among its greatest strengths. At Sept. 30, 1993, 97.9 percent of all bonds held were investment grade quality and all bonds were current as to interest and principal. The Company also reported that its consolidated 60-day mortgage delinquency rate on commercial mortgage loans was 2.03 percent at Sept. 30, compared to the most recently published industry average of 6.14 percent.
 QUARTERLY DIVIDEND. USLICO also announced that a quarterly dividend of 6 cents per share of common stock would be paid Dec. 15, to shareholders of record on Dec. 1.
 Supplemental Financial Information
 (In millions, except per share data and percentage)
 Three Months Nine Months
 Ended Sept. 30, Ended Sept. 30,
 1993 1992 1993 1992
 Premiums collected:
 Life and health insurance $ 66.3 $ 64.5 $204.7 $204.9
 Annuities 29.5 47.7 137.0 139.3
 Total premiums collected 95.8 112.2 341.7 344.2
 Insurance policy income 46.4 42.0 142.0 132.8
 Net investment income 49.6 46.8 148.5 140.2
 Realized investment gains(A) 2.2 1.7 5.7 5.5
 Total revenues 103.5 94.7 311.4 289.6
 Income from continuing
 operations(B) 12.8 2.3 18.2 11.3
 Cumulative effect of
 accounting changes -- -- -- (9.8)
 Net income 12.8 2.3 18.2 1.5
 Annualized new premiums written:
 Individual life insurance 6.8 6.3 19.8 18.7
 Group life insurance 0.7 0.5 1.1 1.3
 Annualized return on average
 equity (in percent) 19.6 2.9 9.3 0.6
 Average Shares Outstanding:
 Primary 10.8 10.8 10.8 10.8
 Fully diluted 14.1 14.1 14.1 14.1
 Earnings per common share:
 Primary Income from
 continuing operations $1.19 $0.22 $1.70 $1.05
 Cumulative effect of
 accounting changes -- -- -- (0.91)
 Total $1.19 $0.22 $1.70 $0.14
 Fully diluted
 Income from continuing
 operations $1.00 $0.22 $1.57 $ 1.05
 Cumulative effect of
 accounting changes -- -- -- (0.91)
 Total $1.00 $0.22 $1.57 $ 0.14
 As of: Sept. 30, 1993 Dec. 31, 1992
 Invested assets $ 2,491.1 $ 2,309.2
 Total assets 3,407.1 3,193.6(C)
 Long-term debt 96.1 96.1
 Shareholders' equity 271.2 253.9
 Life insurance in force $52,718.5 $52,306.7
 Book Value per share 25.22 23.61
 Closing stock price 17-1/2 18
 (A) After deducting the effect of accelerated amortization of deferred acquisition costs and the present value of future profits caused by realization of investment gains, in the amount of $0.7 million and $3.9 million for the third quarter and first nine months of 1993, respectively, and $1.6 million and $3.3 million for the third quarter and first nine months of 1992, respectively.
 (B) Before cumulative effect of accounting changes in 1992.
 (C) The company adopted Financial Accounting Standards Board Statement No. 113, which specifies the accounting for the reinsuring of insurance contracts, in the first quarter of 1993. Prior year assets have been restated to reflect the effect of this new standard, which is immaterial. The standard has no effect on USLICO's net income.
 An insurance holding company, USLICO Corporation is headquartered in Arlington. Its primary subsidiaries, United Services Life Insurance Company and Bankers Security Life Insurance Society, focus on life insurance and annuity sales. United Services Life markets individual life and annuity products to military personnel and civilians. Bankers Security Life offers payroll deduction, individual annuities, and group and individual life insurance.
 -0- 10/29/93 R
 /CONTACT: Glenn H. Gettier Jr., executive vice president and chief financial officer, of USLICO, 703-875-3417/

CO: USLICO Corporation ST: Virginia IN: INS SU: ERN

OP -- DC020R -- 8790 10/29/93 19:44 EDT
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Date:Oct 29, 1993

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