The Harleysville Group Inc. of Harleysville, Pa. announced results for the third quarter of 2002.
Company chairman and CEO Walter Bateman noted that commercial lines also achieved a combined ratio of 100 percent. “Our combined ratios in commercial auto and commercial multi-peril are in the low 90s and pricing is solid,” he said. “In personal lines, our improved results compared to a year ago show our actions to upgrade the quality of our risk portfolio are taking hold.”
Third quarter diluted operating earnings per share increased 43 percent to $0.50 in 2002, compared to $0.35 for the same period in 2001. For the first nine months, Harleysville Group’s diluted operating earnings per share rose 24 percent to $1.39 in 2002, compared to $1.12 in 2001. Third quarter 2001 operating earnings were reduced by $0.08 per share for losses resulting from the acts of terrorism on September 11, 2001. Excluding those losses, operating earnings would have increased 16 percent in both the quarter and the year to date.
Diluted net income per share for the third quarter of 2002 was $0.50, versus $0.26 in the third quarter of 2001. On a per share basis, the company had $0.09 of realized investment losses in the third quarter of 2001, but had none in the third quarter of 2002. For the nine-month period, diluted net income per share was $0.95 in 2002, compared to $0.96 in 2001. Realized investment losses amounted to $0.44 per share and $0.16 per share during the first nine months of 2002 and 2001, respectively.
Harleysville Group’s overall statutory combined ratio was 101.7 percent in the third quarter of 2002, an improvement over the 104.6 percent combined ratio reported in the third quarter of 2001. For the nine months, the statutory combined ratio was 101.9 percent, compared to 104.1 percent in 2001. The events of September 11 added 1.9 points to 2001’s third quarter combined ratio and 0.7 points to 2001’s nine-month combined ratio.
Third quarter net written premiums rose 6 percent to $204.6 million in 2002, while net written premiums through nine months also increased by 6 percent to $606.7 million. Excluding those markets where Harleysville has intentionally reduced personal lines volume, net written premiums grew 9 percent in the third quarter of 2002 and 10 percent during the first nine months.
Net written commercial lines premiums climbed 16 percent in both the third quarter and first nine months of this year, to $151.0 million and $455.3 million, respectively. The increase in written premiums is primarily the result of higher pricing. The commercial lines combined ratio was 100.0 percent in the third quarter of 2002, versus 103.0 percent in the third quarter of 2001. For the nine months, the combined ratio was 99.9 percent in 2002, compared to 99.5 percent in 2001.
Third quarter pretax investment income increased 2 percent to $21.7 million in 2002, while nine-month pretax investment income was up 1 percent to $64.7 million. After-tax investment income for the third quarter rose 1 percent to $16.5 million in 2002, but was unchanged for nine months at $49.1 million. On August 21, the company announced a 10 percent increase to its quarterly cash dividend to $0.165 per share from $0.15 per share. The company’s board of directors has increased the regular annual cash dividend every year since the company went public in 1986. The company has paid a dividend for 65 consecutive quarters.
The company’s personal lines combined ratio improved to 106.4 percent in the third quarter of 2002, versus 108.0 percent during the third quarter of 2001. For the first nine months, the combined ratio was 106.7 percent in 2002, compared to 113.5 percent in 2001. For the quarter, net written premiums declined by 15 percent to $53.6 million in 2002 and were down by 16 percent to $151.5 million for the year, the result of the company’s focus on profitable segments.
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