Birmingham, Ala.-based Vesta Insurance Group Inc. reported that for the first quarter 2003, its non-standard auto unit generated $4.9 million in net income and its standard auto division brought down its combine ratio to 95.6 percent, both improvements over the previous year’s first quarter.
Overall the company recorded net operating earnings of $2.6 million, or $0.08 per share in the first quarter compared to net operating earnings of $.4 million, or $0.01 per share for the corresponding period in 2002. Net income from continuing operations was $4.9 million, or $0.14 per share for the quarter ending March 31, 2003, compared to net income from continuing operations of $1.7 million, or $0.05 per share in the first quarter of 2002. Net operating earnings is a non-GAAP measure which excludes certain items, such as realized gains and losses and gains on debt extinguishments. Net earned premium for the quarter was $118.9 million compared to $106.8 million in the first quarter of 2002.
Vesta’s non-standard auto operations generated $4.9 million of net income from continuing operations combined in the first quarter of 2003 compared to $3.1 million in the same period in 2002. The non-standard auto underwriting segment posted a 95.2 percent combined ratio for the first quarter of 2003.
Vesta’s standard property-casualty segment posted a net loss from continuing operations of $2.1 million in the first quarter of 2003 compared to a net loss from continuing operations of $1.6 million in the first quarter of 2002. The standard property-casualty segment GAAP combined ratio was 104.3 percent for the first quarter of 2003 compared to 103.6 percent for the same period in 2002.
The standard auto business GAAP combined ratio was 95.6 percent for the first quarter of 2003 compared to 119.1 percent in the first quarter of 2002.
The residential property GAAP combined ratio was 106.9 percent in the first quarter of 2003 compared to 98 percent in the corresponding period last year.
In the first week of April, a severe hailstorm caused approximately $1.2 billion of total losses to the industry, including an estimated $540 million of residential property losses in Texas, according to the Insurance Services Office. Texas Select, Vesta’s residential property subsidiary in Texas, is currently estimated to have approximately $10 to $12 million in pre-tax losses, net of its 50 percent Texas quota share, in the second quarter as a result of this storm. Texas Select, which reported a 42 percent direct loss ratio in the first quarter, is expected to report a direct loss ratio in excess of 80 percent in the second quarter and barring additional catastrophes, the company forecasts a direct loss ratio less than 60 percent in Texas for the entire year.
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