Harleysville Group Inc. (NASDAQ:HGIC) in Pennsylvania reported diluted net income of $0.55 per share in the first quarter of 2004. The company had a diluted net loss of $0.11 per share in the first quarter of 2003.
Realized investment gains amounted to $0.27 per share in the first quarter of 2004, compared to a $0.01 per share realized loss in the first quarter of 2003.
There was no material reserve development in the first quarter of 2004. In 2003, the company’s first quarter earnings were reduced by $0.43 per share after tax due to a workers compensation reserve adjustment.
The company reported diluted operating income of $0.28 per share for the first quarter of 2004, compared to a diluted operating loss of $0.10 per share in the same period of 2003.
“We have improved our financial performance, but we’re just getting started,” commented Michael L. Browne, Harleysville Group’s chief executive officer. “We are significantly sharpening our focus on four areas – underwriting, claims, service to agents and policyholders, and productivity – the cornerstones of our business that have the greatest impact on our near- term performance and position us well for sustainable growth and profitability in the future.”
Harleysville Group’s overall statutory combined ratio was 107.2 percent in the first quarter of 2004, compared to 115.4 percent in the first quarter of 2003. In 2003, the workers compensation reserve adjustment added 10.0 points to the combined ratio.
First quarter net written premiums were $206.0 million in the first quarter of 2004, compared to $215.3 million in 2003.
First quarter pretax investment income increased 1 percent to $21.6 million, while after-tax investment income rose 2 percent to $16.8 million. Operating cash flow for the first quarter was $11.2 million.
Net written premiums in commercial lines declined 1 percent in the first quarter of 2004 to $168.2 million. The commercial lines statutory combined ratio was 104.7 percent in the first quarter of 2004, versus 114.1 percent in the first quarter of 2003. In 2003, the workers compensation reserve adjustment added 13.4 points to the quarter’s commercial lines statutory combined ratio.
Personal lines statutory combined ratio was 116.2 percent in the first quarter of 2004, versus 119.3 percent during the first quarter of 2003. In 2003, higher catastrophe losses contributed to the higher statutory combined ratio. Net written premiums were down 15 percent to $37.8 million in the first quarter of 2004.
Outlook “I am very encouraged by our core strengths – a strong balance sheet, a great franchise, a solid and loyal network of independent agents, and employees who every day are engaged in active dialogue with me on ways to improve the fundamentals of our business,” said Browne. “We are looking at our business and executing our strategy in a new and much more disciplined way. I am confident we will restore our company to its past high levels of financial performance.”
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