EXHIBIT 99
COLUMBUS, Ohio (April 23, 2003) Bancinsurance Corporation (NASDAQ: BCIS), a
specialty insurance holding company today reported results for the three months
ended March 31, 2003. Net income was $1,029,003, or $0.20 per diluted share, for
first quarter 2003 compared with a net loss of $461,374, or $0.08 per diluted
share, for the same period last year. The Company adopted SFAS 142 "Goodwill and
Other Intangible Assets" in first quarter 2002 that resulted in a net after-tax
impairment charge of $1,481,858, or $0.25 per diluted share.
Net premiums earned increased 24.2% for the first quarter of 2003 compared with
the same period last year. Nonetheless, the strengthening of claims reserves in
the first quarter of 2003, in anticipation of increased loss experience in
future quarters, combined with higher experience rating adjustment and other
insurance operating expenses mitigated the Company's solid premium growth and
reduced operating margins.
Si Sokol, Chairman and Chief Executive Officer, stated, "We are generally
pleased with our results for first quarter 2003. They reflect positive
contributions from our growth strategy, which is focused on expanded customer
relationships, new products and increased market penetration. The solid
performance of creditor placed insurance is especially encouraging."
Mr. Sokol continued, "First quarter 2003 paid losses and loss adjustment
expenses were 2.8% below the same period last year; however, they increased
12.7% compared with fourth quarter 2002. We particularly experienced higher
claims severity for our unemployment insurance protection products and GAP
insurance product during the first three months of 2003 versus last year. These
factors combined with the uncertain national economy led us to further
strengthen our reserves for future claims during first quarter 2003. Therefore,
our outlook for the rest of 2003 remains cautious."
First Quarter Results
Net premiums earned rose to $11,160,976 for first quarter 2003 compared with
$8,987,460 a year ago. This was primarily due to a $1,457,496 increase in
premiums earned for collateral protection insurance products, which includes
ULTIMATE LOSS INSURANCE(R) and Creditor Placed Insurance. Premiums earned for
the guaranteed auto protection product, referred to as GAP insurance, grew
$294,890 to $443,125 as a result of a large financial institution customer
purchasing this product during first quarter 2003. Additionally, premiums earned
for unemployment insurance protection products rose $421,130 to $1,354,882 for
the quarter compared with $933,752 for the same period last year.
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Other revenue improved 13.4% to $1,629,550 for first quarter 2003. The most
significant quarter-over-quarter change was a $131,355 increase in codification
fees for the Company's American Legal Publishing subsidiary. New state, city and
municipal customers were added since first quarter 2002 which benefited
codification contract and subscription revenues. Net realized gain on
investments was $234,035 compared with net realized loss on investments of
$93,719. These contributions were partially offset by a $193,397 decline in
management fees, which fluctuate from time to time due to unemployment claims
experience, and a $130,209 decrease in other income principally due to the
release of a $100,000 reserve related to the dismissal of a dispute with an
unaffiliated party in the first quarter of 2002.
Losses and loss adjustment expenses, net of reinsurance recoveries, declined
3.8% to $6,138,910 for first quarter 2003 compared with a year ago. Paid losses
and loss adjustment expenses declined 2.8% for the quarter versus the same
period last year. Losses and loss adjustment expense incurred for unemployment
insurance protection products as well as GAP insurance rose $453,209 and
$254,900, respectively. Reserves for future claims were strengthened due to
persistent weakness in the national economy, which impacts both the
lender/dealer and unemployment insurance protection product segments.
Operating expenses rose to $5,106,127 for first quarter 2003 compared with
$2,603,696 a year ago. A substantial factor in the quarter-over-quarter
comparison was the change in the experience rating adjustments, which was
$1,938,365 higher than first quarter 2002. This quarterly adjustment is
primarily influenced by policy experience to date and premium growth. Other
insurance operating expenses and codification and subscription expenses
primarily rose in response to increased volumes.
Combined Ratio
Ohio Indemnity underwrites the Company's specialty insurance products. The
Company's combined ratio improved to 91.2% for first quarter 2003 from 94.5% for
the same period last year. The loss ratio declined to 55.0% for the quarter
versus 71.0% for first quarter 2002 primarily due to lower paid claims. This
decrease was partially offset by reserve strengthening in anticipation of higher
losses in future quarters as a result of prolonged weakness in the national
economy and recent automobile credit experience of Ohio Indemnity's customers.
The expense ratio rose to 36.2% for first quarter 2003 from 23.5% a year ago,
primarily due to the $1,938,365 increase in experience rating adjustments
expense, which fluctuates based on policy experience to date and premium growth.
Investment Portfolio
The investment portfolio rose 4.4% during the first quarter and totaled
$55,066,512 at March 31, 2003. While short-term investments declined $8,901,796,
equity securities increased $6,597,343. Our equity portfolio includes $7,011,285
of variable rate preferred stock with reset provisions at par. Net realized gain
on investments was $234,035 compared with net realized loss on investments of
$93,719 for the same period last year. Investment income for first quarter 2003
was impacted by lower interest rates and yields versus a year ago.
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SHAREHOLDERS' EQUITY
Shareholders' equity was $29,409,075 at March 31, 2003 compared with $28,901,838
at year-end 2002. The $1,029,003 first quarter increase in retained earnings was
partially offset by a decline in accumulated other comprehensive income of
$296,765 due to recognition of unrealized holding losses on securities, and the
repurchase of 50,000 shares of common stock for $225,000 during the quarter.
Book value per diluted share was $5.94 at March 31, 2003 versus $5.78 at
December 31, 2002.
Bancinsurance Corporation
Bancinsurance Corporation, headquartered in Columbus, Ohio, is principally
engaged through its property/casualty insurance subsidiary, Ohio Indemnity
Company, in underwriting specialty insurance. Lender/dealer insurance products
protect banks and other lenders against risk arising from theft or damage to
certain loan collateral where the borrower has failed to secure or maintain
adequate insurance coverage. The Company's surety products include bonds for
unemployment insurance servicing commitments for national administrative firms
that perform services for non-profit organizations as well as bail bond
coverage.
With the exception of historical information, this press release includes
forward-looking statements that involve risks and uncertainties, including, but
not limited to, the Company's emphasis on larger accounts, economic trends, and
short-term programs offered by captive automobile finance companies. These
statements involve risks and uncertainties, which have been detailed from time
to time in the Company's Securities and Exchange filings, including the
Company's Form 10-K for the year ended December 31, 2002. Actual results may
differ materially from management's expectations. All forward-looking statements
made in this news release are based on information presently available to
management of the Company. The Company assumes no obligation to update any
forward-looking statements.
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BANCINSURANCE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income (Loss)
(Unaudited)
THREE MONTHS ENDED
MARCH 31,
2003 2002
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Income:
Premiums earned $ 12,694,234 $ 9,068,619
Premiums ceded (1,533,258) (81,159)
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Net premiums earned 11,160,976 8,987,460
Investment income 372,794 314,898
Net realized gain (loss) on investments 234,035 (93,719)
Codification and subscription fees 879,716 748,361
Management fees 128,116 321,513
Commission fees 709 1,406
Other income 14,180 144,389
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Total revenue 12,790,526 10,424,308
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Losses and operating expenses:
Losses and loss adjustment expenses 7,334,912 6,420,906
Reinsurance recoveries (1,196,002) (39,966)
Experience rating adjustments 1,574,131 (364,234)
Commission expense 1,391,250 1,458,060
Other insurance operating expenses 1,235,188 854,125
Codification and subscription expenses 730,224 574,070
General and administrative expenses 173,456 77,042
Interest expense 1,878 4,633
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Total expenses 11,245,037 8,984,636
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Income before federal income taxes, provision
for trust preferred securities dividends and
cumulative effect of change in accounting principle 1,545,489 1,439,672
Federal income tax expense 408,532 419,188
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Income before provision for trust preferred
securities dividends and cumulative effect
of change in accounting principle 1,136,957 1,020,484
Preferred dividends in minority interest in consolidated
subsidiary - redeemable preferred securities of
subsidiary trust 107,954 --
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Income before cumulative effect of change in
accounting principle 1,029,003 1,020,484
Cumulative effect of change in accounting principle -- (1,481,858)
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Net income (loss) $ 1,029,003 $ (461,374)
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Basic net income (loss) per share:
Before cumulative effect of change in accounting principle $ .20 $ .18
Cumulative effect of change in accounting principle -- $ (.26)
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Basic net income (loss) per share $ .20 $ (.08)
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Dilutive net income (loss) per share:
Before cumulative effect of change in accounting principle $ .20 $ .17
Cumulative effect of change in accounting principle -- $ (.25)
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Diluted net income (loss) per share $ .20 $ (.08)
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MARCH 31, 2003 DECEMBER 31, 2002
Total assets $ 80,282,101 $ 72,455,204
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Total shareholders' equity $ 29,409,075 $ 28,901,838
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