The Pennsylvania-based Harleysville Group confirmed earlier announcements that it has suffered a $3.24 million first quarter net loss, compared to a $13.34 million profit for the same period in 2002.
Higher than expected workers compensation claims, winter storm and personal lines losses were largely to blame for the loss of around 11 cents per share. The group had earlier indicated that it was increasing its workers comp reserves by $20 million.
The higher losses somewhat obscured the company’s growth for the period, mainly in its core commercial business. Earned premiums rose to $198.829 million, compared to $182.505 million in the first quarter of 2002.
“We are disappointed in our results this quarter, but we have taken the quick action necessary to address workers compensation reserve adequacy,” commented chairman and CEO Walter R. Bateman. “Our decisive response to the adverse activity we saw late in the quarter underscores our commitment to maintaining reserve adequacy. Overall, our disciplined small commercial strategy continues to deliver double-digit premium growth and our balance sheet remains strong.”
The Group’s overall statutory combined ratio was 115.4 percent in the first quarter of 2003, compared to 103.3 percent in the first quarter of 2002. The company announcement noted that “the workers compensation reserve adjustment added 10.0 points to the combined ratio. The property catastrophe losses added 1.8 points, in contrast to the first quarter of 2002 when property catastrophe losses contributed 0.4 points to the combined ratio.”
The bulletin also indicated that “First quarter net written premiums rose 13 percent to $215.3 million in 2003 from $190.7 million in 2002. First quarter pretax investment income was unchanged at $21.4 million in 2003, while after-tax investment income rose 1 percent to $16.5 million. Operating cash flow for the first quarter was $37.5 million, $12.5 million higher than the prior year’s first quarter.”