| FOR IMMEDIATE RELEASE | Contact: | Paul Breitnauer |
| Phone: | 608-232-0402 | |
CAPITOL TRANSAMERICA CORPORATION REPORTS Madison, Wisconsin, October 25, 2000 - With a continuing trend of strong revenue growth, Capitol Transamerica Corporation (NASDAQ: CATA) reported a 20.2% written premium increase from $20.8 million to $25.0 million for the three months ended September 30, 2000 over the 1999 period. Substantial premium growth occurred in all lines with the property-casualty business segment increasing slightly more than fidelity-surety. Net income for the third quarter of 2000 was $3.3 million or $0.30 per share (diluted unless otherwise noted) vs. $3.1 million or $0.28 per share for the same period in 1999. Net operating earnings (excluding after-tax realized investment gains) for the quarter were $1.2 million or $0.11 per share vs. $1.5 million or $0.13 per share last year. Year-to-date gross written premiums for the nine months ended September 30 were $76.8 million, a 17.3 % increase over the $65.5 million level for the first nine months of 1999. The nine-month written premium volume represents an all-time high for the Company. Year-to-date net income, including $4.7 million of after tax realized investment gains, was $12.4 million, or $1.11 per share. This compares to earnings of $14.4 million, or $1.27 per share, including $5.1 million of after tax realized investment gains, for 1999. Higher than expected claims activity for Contract Bond Surety business resulted in a combined ratio of 93.5% through nine months of 2000 compared to a 90.8% ratio for the same time period in 1999. The Company's combined ratio continues to compare very favorably to the industry-wide average, which was 108.3% through June 30, 2000. Total assets increased 7.8% since year-end 1999 from $257.6 million to $277.1 million. Unearned premiums increased $6.9 million over the same span, which should result in a benefit to bottom line earnings in future periods. With total shareholders' equity of $143.8 million at September 30, 2000, book value per share calculated on shares outstanding increased 10.1% to $13.01 from the December 31, 1999 book value of $11.82, based on $133.2 million in equity at that time. The Company continued its regular dividend payment of $0.07 per share during the third quarter. |
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Commenting on the results, Chairman George A. Fait stated that "We are pleased with the Company's premium growth of more than 17% thus far in 2000. Additionally, we feel that this top line growth can be maintained as pricing levels in general continue to firm up and our property-casualty rate increases take effect. Some unexpected loss activity, along with general overhead costs, have increased our combined ratio over last year. Management therefore continues to concentrate on underwriting results to bring loss levels more in line with historical experience and expects the future increase in earned premiums to compensate for the expense factors. Along with the increased book value, the premium growth and our focus on minimizing claims experience bodes well for our shareholders and the Company's future." Capitol Transamerica Corporation is an insurance holding company operating nationally and writing specialty lines of commercial property and casualty policies as well as fidelity and surety coverages through its subsidiary companies Capitol Indemnity Corporation and Capitol Specialty Insurance Corporation. A third subsidiary, Capitol Facilities Corporation, is a non-insurance entity available for other business opportunities. The Capitol Transamerica Group operates in 37 states and is rated A+ (Superior) by A.M. Best Company, Inc., an independent organization that analyzes the insurance industry. The Company's website is http://www.captrans.com. With 11.2 million shares outstanding, Capitol Transamerica's common stock is traded on the NASDAQ Stock Exchange under the symbol CATA. SAFE HARBOR STATEMENT - Some of the statements in this news release, as well as statements by the company in periodic press releases and oral statements made by the company's officials to analysts and shareholders in the course of presentations about the company, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, estimates subject to change in circumstances, uncertainties and other factors that may cause the actual results, performance or achievements of the company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Financial Highlights Follow |
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| CAPITOL TRANSAMERICA CORPORATION SELECTED FINANCIAL DATA CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share) | |||||||||||||||
| | Nine months ended September 30, | Three months ended September 30, | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | 2000 | 1999 | 2000 | 1999 | |||||||||||
| REVENUES | |||||||||||||||
| Gross premiums written | $ | 76,777 | $ | 65,474 | $ | 25,019 | $ | 20,815 | |||||||
| Net premiums written | $ | 71,335 | $ | 61,433 | $ | 23,439 | $ | 19,415 | |||||||
| Net premiums earned | $ | 64,833 | $ | 62,486 | $ | 22,752 | $ | 20,969 | |||||||
| EXPENSES | |||||||||||||||
| Claims and claim expenses | 37,740 | 33,160 | 15,694 | 13,371 | |||||||||||
| Other underwriting expenses | 23,959 | 23,232 | 8,227 | 8,090 | |||||||||||
| Total Losses and Expenses Incurred | 61,699 | 56,392 | 23,921 | 21,461 | |||||||||||
| Underwriting income (loss) | 3,134 | 6,094 | (1,169 | ) | (492 | ) | |||||||||
| Investment income | 6,800 | 6,739 | 2,297 | 2,300 | |||||||||||
| Realized investment gains | 7,275 | 7,796 | 3,296 | 2,536 | |||||||||||
| Other income | 253 | 181 | 96 | 52 | |||||||||||
| Income Before Income Tax | 17,462 | 20,810 | 4,520 | 4,396 | |||||||||||
| Income tax expense | 5,066 | 6,445 | 1,197 | 1,289 | |||||||||||
| NET INCOME | $ | 12,396 | $ | 14,365 | $ | 3,323 | $ | 3,107 | |||||||
| EARNINGS PER SHARE- BASIC | $ | 1.11 | $ | 1.28 | $ | 0.30 | $ | 0.28 | |||||||
| EARNINGS PER SHARE- DILUTED | $ | 1.11 | $ | 1.27 | $ | 0.30 | $ | 0.28 | |||||||
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| COMPARATIVE FINANCIAL HIGHLIGHTS - Nine Months Ended September 30, (in thousands, except per share) | ||||||||||||||||||||||
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| | 2000 | 1999 | 1998 | 1997 | 1996 | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| PER SHARE INFORMATION: | ||||||||||||||||||||||
| Book value per share | $ | 13.01 | $ | 12.02 | $ | 11.65 | $ | 12.11 | $ | 9.62 | ||||||||||||
| Income per share- diluted | 1.11 | 1.27 | 1.18 | 0.59 | 1.06 | |||||||||||||||||
| COMPANY STATISTICS: | ||||||||||||||||||||||
| Gross premiums written | $ | 76,777 | $ | 65,474 | $ | 68,228 | $ | 75,017 | $ | 67,444 | ||||||||||||
| Underwriting income (loss) | 3,134 | 6,094 | 4,118 | (1,508 | ) | 8,214 | ||||||||||||||||
| Net investment income | 6,800 | 6,739 | 6,892 | 6,241 | 5,261 | |||||||||||||||||
| Realized investment gains | 7,275 | 7,796 | 7,569 | 4,030 | 2,590 | |||||||||||||||||
| Other income | 253 | 181 | 76 | 21 | 82 | |||||||||||||||||
| Consolidated gross income | 17,462 | 20,810 | 18,655 | 8,784 | 16,147 | |||||||||||||||||
| Consolidated net income | 12,396 | 14,365 | 13,300 | 6,661 | 11,741 | |||||||||||||||||
| Consolidated net operating earnings | 7,667 | 9,298 | 8,380 | 4,042 | 10,058 | |||||||||||||||||
| Cash and invested assets | 224,919 | 221,534 | 221,856 | 226,816 | 171,111 | |||||||||||||||||
| Total assets | 277,138 | 264,026 | 265,271 | 274,423 | 207,856 | |||||||||||||||||
| Shareholders' investment | 143,819 | 135,388 | 130,692 | 135,250 | 106,575 | |||||||||||||||||
| Dividends paid | 2,339 | 2,375 | 2,372 | 3,487 | 2,979 | |||||||||||||||||
| INSURANCE OPERATING RATIOS, STATUTORY BASIS: | ||||||||||||||||||||||
| Loss and loss adjustment expenses | 58.4% | 53.3% | 59.4% | 68.2% | 51.5% | |||||||||||||||||
| Underwriting expenses | 35.1% | 37.5% | 34.4% | 33.0% | 31.8% | |||||||||||||||||
| Combined ratios | 93.5% | 90.8% | 93.8% | 101.2% | 83.3% | |||||||||||||||||
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| CAPITOL TRANSAMERICA CORPORATION SELECTED FINANCIAL DATA BALANCE SHEETS (in thousands, except per share) | |||||||||||||
| | September 30, 2000 | December 31, 1999 | September 30, 1999 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ASSETS | |||||||||||||
| Investments: | |||||||||||||
| Available-for-sale investments, at fair value | |||||||||||||
| U.S. Government bonds (cost $35, $39 and $41, respectively) | $ | 37 | $ | 42 | $ | 43 | |||||||
| State and municipal bonds (cost $79,613, $78,856 and $77,683, respectively) | 83,464 | 82,075 | 81,875 | ||||||||||
| Corporate bonds (cost $1,102, $1,124 and $876, respectively) | 1,075 | 1,094 | 849 | ||||||||||
| Common stock (cost $123,862, $125,914 and $124,591, respectively) | 119,542 | 116,657 | 119,874 | ||||||||||
| Preferred stock (cost $6,009, $5,726 and $5,976, respectively) | 5,247 | 5,695 | 6,154 | ||||||||||
| Investment real estate | 10,944 | 10,540 | 10,327 | ||||||||||
| Short-term investments | 3,140 | 1,982 | 1,554 | ||||||||||
| Total Investments | 223,449 | 218,085 | 220,676 | ||||||||||
| Cash | $ | 1,470 | $ | 1,081 | $ | 858 | |||||||
| Receivables | 33,233 | 22,371 | 25,146 | ||||||||||
| Other assets | 18,986 | 16,086 | 17,346 | ||||||||||
| TOTAL ASSETS | $ | 277,138 | $ | 257,623 | $ | 264,026 | |||||||
| LIABILITIES | |||||||||||||
| Reserves for losses and loss adjustment expenses | $ | 76,793 | $ | 77,256 | $ | 77,617 | |||||||
| Unearned premiums | 46,349 | 39,454 | 40,913 | ||||||||||
| Other liabilities | 10,177 | 7,686 | 10,108 | ||||||||||
| TOTAL LIABILITIES | $ | 133,319 | $ | 124,396 | $ | 128,638 | |||||||
| SHAREHOLDERS' EQUITY | |||||||||||||
| Common stock, $1.00 par value, authorized 15,000 shares, issued 11,558, 11,539 and 11,536 shares, respectively | $ | 11,558 | $ | 11,539 | $ | 11,536 | |||||||
| Paid-in surplus | 22,728 | 22,595 | 22,571 | ||||||||||
| Accumulated other comprehensive loss, net of deferred tax benefit of ($440), ($2,134) and ($130), respectively | (816 | ) | (3,962 | ) | (241 | ) | |||||||
| Retained earnings | 113,635 | 103,577 | 102,018 | ||||||||||
| Less treasury stock, 506, 271 and 268 shares, respectively, at cost | (3,286 | ) | (522 | ) | (496 | ) | |||||||
| TOTAL SHAREHOLDERS' EQUITY | $ | 143,819 | $ | 133,227 | $ | 135,388 | |||||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 277,138 | $ | 257,623 | $ | 264,026 | |||||||
| SHAREHOLDERS' EQUITY PER SHARE | $ | 13.01 | $ | 11.82 | $ | 12.02 | |||||||
| SHARES OUTSTANDING | 11,052 | 11,268 | 11,268 | ||||||||||
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