Exhibit 99.1
FOR IMMEDIATE RELEASE Contact: Paul Breitnauer
Phone: 608-232-0402
CAPITOL TRANSAMERICA CORPORATION REPORTS
THIRD QUARTER RESULTS
Madison, Wisconsin, November 14, 2001 - Capitol Transamerica Corporation
(NASDAQ: CATA) reported a third quarter written premium increase of 30.3% on
$32.6 million of gross premiums written in 2001 compared to $25.0 million for
the same three months of 2000, the seventh consecutive double digit quarterly
increase. For the nine months ended September 30, gross written premiums were
$94.5 million, 23.0% higher than $76.8 million in written premiums for the same
period in 2000. The increased premium volume is attributable to approximately
30% in renewal rate increases and 70% in business growth, primarily in the
property and casualty lines.
For the quarter ended September 30, 2001, the Company had a net loss of
$2.2 million, or $0.20 per share, versus $3.3 million in income, or $0.30 per
share, the prior year. On a year-to-date basis, the net loss for 2001 was $2.6
million, or $0.23 per share compared to $12.4 million in income or $1.11 per
share in 2000. Excluding after-tax realized investment losses of $5.4 million,
net operating earnings for the first nine months of 2001 was $2.8 million
compared to $7.7 million in net operating earnings (which excluded $4.7 million
in after-tax realized gains) for the same period in 2000.
Pre-tax realized investment losses for the third quarter of 2001
represented $6.5 million of other-than-temporary market value declines for
certain securities held in the Company's portfolio. Year to date,
other-than-temporary market value losses recognized pursuant to Accounting FASB
Statement No. 115 equaled $14.7 million on a pre-tax basis. No such write-downs
were recognized in 2000.
Net comprehensive income, which includes after-tax unrealized investment
results, was $1.9 million, or $0.17 per share, for the nine months ended
September 30, 2001. For the same period last year, comprehensive income was
$15.5 million, or $1.41 per share. Net investment income for the nine month
period increased 9.4% from $6.8 million in 2000 to $7.4 million this year.
The Company's combined ratio for the first nine months of 2001 was 103.4%
versus 93.5% through September 30, 2000. A significant portion of the higher
ratio is attributable to development of prior year contract surety losses. For
comparison purposes, the overall industry average combined ratio was 111.2%
through the first half of 2001.
For the third quarter, the Company's 2001 underwriting loss was $0.7
million, or $0.06 per share compared to a loss of $1.2 million, or $0.11 per
share during the same period in 2000. The negative loss experience for both
contract surety and property lines continued to stabilize during the third
quarter.
Book value per share at September 30, 2001 stood at $13.19 compared to
$13.23 and $13.01 at December 31, 2000, and September 30, 2000, respectively.
Shareholders' equity was $144.5 million as of September 30, 2001 compared to
$145.7 million at December 31, 2000 and $143.8 million at September 30, 2000.
Total assets increased 5.4% to $298.5 million from $283.3 million as of year-end
2000. The Company distributed an $0.08 dividend per share during the third
quarter and $0.24 per share in dividends have been distributed in the first nine
months of 2001 compared to $0.21 per share in 2000.
Company Chairman George A. Fait stated that "The improvement in our
underwriting results during the third quarter is a positive step for the Company
and one we hope to build on for the fourth quarter and beyond. Top line growth
continued at a substantial rate and the ongoing "hardening" of the market bodes
well for future necessary premium rate increases. The $14.7 million of pre-tax
other-than-temporary market declines recorded in 2001 have been the primary
reason for our current year loss and we are well positioned for a rebound in the
investment area to improve corporate profitability. Despite the net loss being
reported this year, we are pleased that our cash flow position has increased at
a substantial rate."
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 previously announced the signing of a merger agreement under which
Alleghany Corporation (NYSE: Y) will acquire Capitol Transamerica at a $16.50
per share cash price, subject to shareholder and regulatory approvals. Details
of this press release, additional financial information, and recent filings can
be found at the Company's website http://www.captrans.com through the NASDAQ
Easy Links page.
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
CAPITOL TRANSAMERICA CORPORATION
SELECTED FINANCIAL DATA
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share)
Nine Months Ended Three Months Ended
September 30, September 30,
----------------------------- -----------------------------
2001 2000 2001 2000
------------- ------------- ------------- -------------
REVENUES
Gross premiums written $ 94,474 $ 76,777 $ 32,590 $ 25,019
=========== =========== =========== ===========
Net premiums written $ 83,379 $ 71,335 $ 28,647 $ 23,439
=========== =========== =========== ===========
Net premiums earned $ 73,457 $ 64,833 $ 26,137 $ 22,752
----------- ----------- ----------- -----------
EXPENSES
Claims and claim expenses 50,730 37,740 17,140 15,694
Other underwriting expenses 27,865 23,959 9,648 8,227
----------- ----------- ----------- -----------
Total Losses and
Expenses Incurred 78,595 61,699 26,788 23,921
----------- ----------- ----------- -----------
Underwriting (loss) income (5,138) 3,134 (651) (1,169)
Investment income 7,442 6,800 2,599 2,297
Realized investment
(losses) gains (8,240) 7,275 (6,492) 3,296
Other income 450 253 182 96
----------- ----------- ----------- -----------
(Loss) Income Before
Income Tax (5,486) 17,462 (4,362) 4,520
Income tax (benefit) expense (2,924) 5,066 (2,113) 1,197
----------- ----------- ----------- -----------
NET (LOSS) INCOME $ (2,562) $ 12,396 $ (2,249) $ 3,323
=========== =========== =========== ===========
(LOSS) EARNINGS PER SHARE
- BASIC $ (0.23) $ 1.11 $ (0.20) $ 0.30
=========== =========== =========== ===========
(LOSS) EARNINGS PER SHARE
- DILUTED $ (0.23) $ 1.11 $ (0.20) $ 0.30
=========== =========== =========== ===========
COMPARATIVE FINANCIAL HIGHLIGHTS - Nine Months Ended September 30,
2001 2000 1999 1998 1997
---- ---- ---- ---- ----
PER SHARE INFORMATION:
Book value per share $ 13.19 $ 13.01 $ 12.02 $ 11.65 $ 12.11
(Loss) earnings per share
- diluted (0.23) 1.11 1.27 1.18 0.59
COMPANY STATISTICS (in
thousands):
Gross premiums written $ 94,474 $ 76,777 $ 65,474 $ 68,228 $ 75,017
Net investment income 7,442 6,800 6,739 6,892 6,241
Realized investment
(losses) gains (8,240) 7,275 7,796 7,569 4,030
(Loss) income before
income tax (5,486) 17,462 20,810 18,655 8,784
Net (loss) income (2,562) 12,396 14,365 13,300 6,661
Net operating earnings 2,794 7,667 9,298 8,380 4,042
Comprehensive income (loss) 1,860 15,542 (3,896) (6,632) 21,628
Cash and invested assets 245,069 224,919 221,534 221,856 226,816
Total assets 298,518 277,138 264,026 265,271 274,423
Shareholders' investment 144,500 143,819 135,388 130,692 135,250
Dividends paid 2,630 2,339 2,375 2,372 3,487
INSURANCE OPERATING RATIOS,
STATUTORY BASIS:
Loss and loss adjustment
expenses 69.2% 58.4% 53.3% 59.4% 68.2%
Underwriting expenses 34.2% 35.1% 37.5% 34.4% 33.0%
-------- -------- -------- -------- --------
Combined ratios 103.4% 93.5% 90.8% 93.8% 101.2%
======== ======== ======== ======== ========
CAPITOL TRANSAMERICA CORPORATION
SELECTED FINANCIAL DATA
BALANCE SHEETS
(in thousands, except per share)
September 30, December 31, September 30,
2001 2000 2000
------------- ------------ -------------
ASSETS
Investments
Available-for-sale investments,
at fair value
U.S. Government bonds (cost $25,
$34 and $35, respectively) $ 27 $ 36 $ 37
State and municipal bonds (cost
$104,411, $84,236 and $79,613,
respectively) 110,507 89,732 83,464
Corporate bonds (cost $1,078,
$1,100 and $1,102, respectively) 1,063 1,074 1,075
Common stock (cost $105,871,
$123,504 and $123,862,
respectively) 107,616 119,413 119,542
Preferred stock (cost $5,344,
$6,470 and $6,009, respectively) 4,747 5,516 5,247
Investment real estate 11,507 11,009 10,944
Short-term investments 6,048 5,587 3,140
--------- --------- ---------
Total Investments 241,515 232,367 223,449
Cash 3,554 3,642 1,470
Receivables 32,851 28,942 33,233
Other assets 20,598 18,307 18,986
--------- --------- ---------
TOTAL ASSETS $ 298,518 $ 283,258 $ 277,138
========= ========= =========
LIABILITIES
Reserves for losses and loss adjustment
expenses $ 79,119 $ 77,981 $ 76,793
Unearned premiums 56,233 45,588 46,349
Other liabilities 18,666 13,989 10,177
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TOTAL LIABILITIES $ 154,018 $ 137,558 $ 133,319
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SHAREHOLDERS' EQUITY
Common stock, $1.00 par value,
authorized 15,000 shares, issued
11,563, 11,559 and 11,558 shares,
respectively $ 11,563 $ 11,559 $ 11,558
Paid-in surplus 22,760 22,733 22,728
Accumulated other comprehensive income
(loss), net of deferred taxes of
$2,515, $149 and ($440), respectively 4,716 278 (816)
Retained earnings 110,023 114,944 113,635
Less treasury stock, 611, 550 and 506
shares, respectively, at cost (4,562) (3,814) (3,286)
--------- --------- ---------
TOTAL SHAREHOLDERS' EQUITY 144,500 145,700 143,819
--------- --------- ---------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 298,518 $ 283,258 $ 277,138
========= ========= =========
BOOK VALUE PER SHARE $ 13.19 $ 13.23 $ 13.01
========= ========= =========
SHARES OUTSTANDING 10,952 11,009 11,052
========= ========= =========