FOR IMMEDIATE RELEASE Contact: Paul Breitnauer
Phone: 608-232-0402
CAPITOL TRANSAMERICA CORPORATION REPORTS
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FIRST QUARTER RESULTS
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MADISON, WISCONSIN, MAY 9, 2001 - Capitol Transamerica Corporation (NASDAQ:
CATA) reported a first quarter written premium increase of 18.0% on $27.6
million of gross premiums written in 2001 compared to $23.4 million for the same
three months of 2000 continuing the positive trend from last year. First
quarter net investment income increased 8.6% from $2.3 million in 2000 to $2.5
million this year.
Net income, reported on a diluted share basis for the quarter ended March
31, 2001, was $1.9 million, or $0.17 per share, versus $5.7 million, or $0.50
per share, the prior year. Excluding after-tax realized investment losses of
$1.2 million, net operating income for first quarter 2001 was $3.1 million
compared to $5.0 million in net operating income (excluding nearly $700,000 in
after-tax realized gains) for the same period in 2000.
The Company's first quarter 2001 combined ratio improved to 90.5% and resulted
in underwriting income of $1.7 million for the three month period. This
compares to a combined ratio of 100.5% and an underwriting loss for calendar
year 2000. The Company's ratio continues to compare favorably to the overall
industry average combined loss and expense ratio of 110.4% for calendar year
2000.
These results were impacted by a number of factors. The contract surety
loss experience continued to develop adversely during the first quarter. The
Company absorbed realized losses of $2.0 million pursuant to Accounting FASB
Statement No. 115 for other than temporary market value declines for certain
securities held in the portfolio. The recent downturn of the stock market
contributed to a drop in first quarter net comprehensive income, which includes
after-tax unrealized investment results, to $372,000 or $0.03 per share compared
to net comprehensive income of $5.8 million or $0.52 per share for the first
quarter of 2000.
Since December 31, 2000, total assets remained at the same $283.0 million
level while shareholders' equity decreased slightly to $144.5 million, resulting
in book value per share of $13.20. The number of shares outstanding was 10.9
million as of March 31, 2001. The Company increased its dividend payment from
$0.07 per share in previous quarters to $0.08 per share in the first quarter of
2001.
Company Chairman George A. Fait stated that "We continue to be somewhat
disappointed in the overall underwriting results primarily caused by ongoing
contract bond losses in the fidelity and surety line. Despite these higher than
expected loss levels, we were pleased to return to an operating profit this
quarter due to concentrated claims management efforts as well as premium growth.
Most of our recent premium growth has been in the more profitable
property/casualty and non-contract bond areas, which should benefit us in the
long run. Management will also continue to strongly focus on positive
underwriting results in the future in order to return to loss ratio levels more
reflective of our corporate history."
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.
Additional financial information and recent filings can be found at the
Company's website http://www.captrans.com through the NASDAQ Easy Links page.
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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
(IN THOUSANDS, EXCEPT PER SHARE)
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended March 31,
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2001 2000
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REVENUES
Gross premiums written $27,573 $23,365
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Net premiums written $24,390 $21,948
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Net premiums earned $22,843 $20,667
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EXPENSES
Claims and claim expenses 12,256 7,839
Other underwriting expenses 8,892 7,930
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Total losses and expenses incurred 21,148 15,769
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Underwriting income 1,695 4,898
Investment income 2,454 2,259
Realized investment (losses) gains (1,823) 1,046
Other income 126 71
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Income before income tax 2,452 8,274
Income tax expense 552 2,593
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NET INCOME $ 1,900 $ 5,681
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EARNINGS PER SHARE - BASIC $ 0.17 $ 0.50
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EARNINGS PER SHARE - DILUTED $ 0.17 $ 0.50
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COMPARATIVE FINANCIAL HIGHLIGHTS - THREE MONTHS ENDED MARCH 31,
2001 2000 1999 1998 1997
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PER SHARE INFORMATION:
Book value per share $ 13.20 $ 12.26 $ 12.23 $ 13.13 $ 10.28
Earnings per share - diluted 0.17 0.50 0.39 0.31 0.18
COMPANY STATISTICS:
Gross premiums written $ 27,573 $ 23,365 $ 19,336 $ 21,675 $ 20,287
Net investment income 2,454 2,259 2,145 2,296 2,147
Realized investment (losses) gains (1,823) 1,046 2,354 897 346
Income before income tax 2,452 8,274 6,539 4,680 2,474
Net income 1,900 5,681 4,525 3,461 2,040
Net operating earnings 3,085 5,001 2,995 2,878 1,816
Comprehensive income (loss) 372 5,835 (3,258) 8,453 (418)
Cash and invested assets 235,803 223,096 232,712 254,056 189,338
Total assets 283,031 264,572 273,929 293,890 226,628
Shareholders' investment 144,510 137,442 137,311 147,105 114,669
Dividends paid 906 793 792 790 1,911
INSURANCE OPERATING RATIOS, STATUTORY BASIS:
Loss and loss adjustment expenses 53.8% 38.1% 57.2% 59.0% 61.4%
Underwriting expenses 36.7% 37.3% 39.4% 34.6% 36.7%
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Combined ratios 90.5% 75.4% 96.6% 93.6% 98.1%
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CAPITOL TRANSAMERICA CORPORATION
SELECTED FINANCIAL DATA
BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE)
March 31, March 31,
2001 2000
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ASSETS
Investments
Available-for-sale investments, at fair value
U.S. Government bonds (cost $33 and $38, respectively) $ 35 $ 40
State and municipal bonds (cost $91,871 and $78,144, respectively) 98,441 81,759
Corporate bonds (cost $1,098 and $1,122, respectively) 1,073 1,092
Common stock (cost $124,493 and $128,276, respectively) 116,341 119,476
Preferred stock (cost $5,844 and $5,441, respectively) 5,524 4,795
Investment real estate 11,238 10,670
Short-term investments 1,464 3,928
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Total Investments 234,116 221,760
Cash 1,687 1,336
Receivables 28,465 24,270
Other assets 18,763 17,206
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TOTAL ASSETS $ 283,031 $ 264,572
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LIABILITIES
Reserves for losses and loss adjustment expenses $ 74,065 $ 75,746
Unearned premiums 47,321 40,803
Other liabilities 17,135 10,581
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TOTAL LIABILITIES $ 138,521 $ 127,130
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SHAREHOLDERS' EQUITY
Common stock, $1.00 par value, authorized 15,000
shares, issued 11,561 and 11,558 shares, respectively $ 11,561 $ 11,558
Paid-in surplus 22,743 22,728
Accumulated other comprehensive (loss) income, net of
deferred taxes of ($673) and ($2,050), respectively (1,251) (3,808)
Retained earnings 116,029 108,469
Less treasury stock, 611 and 352 shares,
respectively, at cost (4,572) (1,505)
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TOTAL SHAREHOLDERS' EQUITY 144,510 137,442
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 283,031 $ 264,572
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BOOK VALUE PER SHARE $ 13.20 $ 12.26
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SHARES OUTSTANDING 10,949 11,206
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