Exhibit 99.1
Press Release
December 4, 2002
For Immediate Release
For Information Contact:
R. Ray Pate, Jr., President and CEO - 202.969.1866
NCRIC Group, Inc. Announces increase in capital Through the issuance of trust
preferred securities
Washington, D.C. -- NCRIC Group, Inc. (Nasdaq: NCRI), a leading provider of
medical professional liability insurance and physician practice management
services in the Mid-Atlantic region, today announced that it completed the
private placement sale of $15 million of thirty-year floating rate trust
preferred securities. The placement agents on the pooled trust preferred
issuance were Keefe, Bruyette & Woods, Inc. and FTN Financial Capital Markets.
NCRIC Group will have the right to call the trust preferred securities at par
after five years from the date of issuance. The interest rate on the securities
is floating at three-month LIBOR plus 400 basis points. The initial rate was set
at 5.42%.
NCRIC Group will contribute $13.5 million of the funds raised to the statutory
surplus of its insurance subsidiaries and the funds will be managed under
existing portfolio guidelines. The additional capital will allow NCRIC Group's
insurance segment to expand its market share at what are believed to be
increasingly profitable insurance premium rates and it will enable NCRIC Group
to reduce its reliance on reinsurance. The remaining funds from the offering
will be retained by NCRIC Group to be available to meet future debt service
requirements.
"Current market conditions indicate a further contraction of professional
liability writers and continued upward pressure on prices," said R. Ray Pate,
Jr., President and Chief Executive Officer, NCRIC Group, Inc. "The additional
capital will provide the flexibility to respond to growth opportunities
available in our core market territories."
"This capital will also allow us to reorganize our reinsurance program," Pate
said. "Prices in the reinsurance market have risen dramatically over the last
two years. As a result of this environment, we conducted an analysis of our
reinsurance program and concluded that it would be prudent to increase our level
of retention for each loss. 2003 renewal premium rates increased in all
jurisdictions to account for the rising cost of claims and legal fees to defend
claims. Because the cost to acquire reinsurance coverage is higher than the net
cost of this new capital, the renewal rates would have been significantly higher
had we not executed this offering."
"Historically, the layer of risk covering losses in excess of $500,000 to $1
million has been covered under our primary reinsurance treaty which is placed
with non-affiliated reinsurers," Pate continued. "Over the last ten years, on a
cumulative basis, our primary reinsurance treaty program has produced
significant profits for the reinsurers."
"The expansion of our capital base will enable the implementation of our market
growth strategy and the reorganization of our reinsurance program. We believe
that these factors will combine to generate an increase in shareholder value,"
stated Pate.
2003 Earnings Estimates
After a final decision is made on the 2003 reinsurance structure and all
regulatory approvals have been received on 2003 insurance premium rate
increases, NCRIC Group will release guidance on earnings estimates for 2003
prior to the end of this year.
Second-Step Conversion
In addition to the issuance of the trust preferred securities, NCRIC Group
continues to evaluate the timing of a second-step conversion to raise additional
capital. The added capital would allow NCRIC Group to continue the
implementation of its business plan, including changes to the reinsurance
program and further new business expansion in the insurance segment.
Safe Harbor Information
This news release contains historical information, as well as forward-looking
statements, that are based on NCRIC Group's estimates and expectations of future
events. Associated with this are certain risks and uncertainties that could
cause actual results to materially differ from those reflected in the
forward-looking statements. NCRIC Group's financial position and
results of operations are subject to fluctuations due to a variety of factors.
These risks and uncertainties include:
o general economic conditions including changes in interest rates and the
performance of financial markets and their related impact on the value of
securities;
o the impact of interest rate changes on floating rate securities;
o uncertainties inherent in the estimate of loss and loss adjustment expense
reserves and reinsurance;
o the reduction of reinsurance and increased level of risk retention for
losses;
o uncertainties associated with expanding business; and
o ratings assigned by A.M. Best Company.
Other factors not currently anticipated by management may also materially and
adversely affect NCRIC Group's results of operations.
About NCRIC Group, Inc.
NCRIC Group, Inc. is a healthcare financial services organization that assists
individual physicians and groups of physicians in managing their practices by
providing medical professional liability insurance, practice management and
financial services and employee benefit plan design and pension administration.
In addition to its headquarters in Washington, D.C., NCRIC Group, Inc. has
offices in Richmond, Fredericksburg and Lynchburg, Virginia as well as
Greensboro, North Carolina and provides services to more than 4,500 physician
clients. Its primary insurance subsidiary, NCRIC, Inc., is rated A- (Excellent)
by A.M. Best Company.
For further information, contact R. Ray Pate, Jr., President and CEO, 1115 30th
Street, NW, Washington, D.C. 20007, or consult NCRIC Group's Web site,
www.ncric.com.
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December 4, 2002