Iowa-based Acceptance Insurance Companies Inc., an insurance holding company providing agricultural risk management products and services throughout the U.S., announced a net after-tax loss of $4.3 million, or $0.30 per share, for the three months ended March 31, 2002. This compares with a net after-tax loss of $3.8 million, or $0.27 per share, for the three months ended March 31, 2001.
The company’s agricultural segment experienced a net after-tax underwriting loss for the first quarter of 2002 of $2.5 million, or $0.17 per share, compared with a net after-tax underwriting loss of $521,000, or $0.04 per share, for the three-month period ended March 31. The company’s property and casualty segment had a net after-tax underwriting loss of $1.2 million, or $0.08 per share, for the quarter compared with a net after-tax underwriting loss of $5.2 million, or $0.36 per share, for the same period in 2001.
The primary factor in the agricultural segment underwriting loss was excessive rain in cotton producing areas in the Southeastern United States, which delayed processing of the 2001 cotton harvest into 2002 and damaged the cotton before it could be processed, combined with lower commodity prices for cotton. Because of the increased indemnity payments, the company reduced the underwriting profit share it expects to receive for the 2001 crop year under its primary reinsurance contract with the Federal Crop Insurance Corporation.
Acceptance Insurance plans to include estimated results from its 2002 multiple peril crop insurance operations in its financial statements for the fourth quarter of this year. Those results are not reflected in the first quarter earnings currently released.
The company said it also increased reserves, primarily for general liability claims, in its property and casualty segment by an after-tax amount of $540,000 as a result of its regular quarterly review of reserves. In the three-month period ending March 31, the Acceptance Insurance increased reserves for its property and casualty segment by an after-tax amount of $315,000 and also recognized an after-tax charge of approximately $910,000 for a contractually required minimum ceded reinsurance premium and severance costs in an after-tax amount of approximately $830,000.
Topics Profit Loss Underwriting Agribusiness Property Casualty
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