EX-99.1 4 doc3.txt FOR IMMEDIATE RELEASE Contact: Paul Breitnauer Phone: 608-232-0402 CAPITOL TRANSAMERICA CORPORATION REPORTS ---------------------------------------- SECOND QUARTER RESULTS ---------------------- MADISON, WISCONSIN, AUGUST 8, 2001 - Capitol Transamerica Corporation (NASDAQ: CATA) reported a second quarter written premium increase of 20.8 % on $34.3 million of gross premiums written in 2001 compared to $28.4 million for the same three months of 2000, the sixth consecutive double digit quarterly top line growth increase. For the six months ended June 30, gross written premiums were $61.9 million, 19.6 % higher than the $51.8 million for the same period in 2000. While a portion of the growth is attributable to premium rate increases on retained renewals, significant new business growth also occurred, particularly in the property and casualty lines. For the quarter ended June 30, 2001, the Company had a net loss of $2.2 million, or $0.20 per share (reported on a diluted share basis), versus a $3.4 million in income, or $0.31 per share, the prior year. On a year-to-date basis, the net loss for 2001 was $0.3 million, or $0.03 per share compared to $9.1 million in income or $0.81 per share in 2000. Excluding after-tax realized investment losses of $1.1 million, net operating income for the first six months of 2001 was $0.8 million compared to $6.5 million in net operating income (excluding $2.6 million in after-tax realized gains) for the same period in 2000. Pre-tax realized investment losses for the second quarter of 2001 included $6.2 million of other-than-temporary market value declines for certain securities held in the Company's portfolio. Year to date, other-than-temporary market value losses recognized pursuant to Accounting FASB Statement No. 115 equaled $8.2 million on a pre-tax basis. No such write-downs were recognized in 2000. Net comprehensive income, which includes after-tax unrealized investment results, was $5.2 million, or $0.47 per share, for the six months ended June 30, 2001. For the same period last year, comprehensive income was $7.4 million, or $0.66 per share. Net investment income for the six month period increased 7.6% from $4.5 million in 2000 to $4.8 million this year. The Company's combined ratio for the first six months of 2001 was 105.7% versus 87.6% for the first half of 2000. For comparison purposes, the overall industry average combined ratio was 106.2% for the first quarter of 2001. There were several causes for the weaker underwriting results during the quarter. Similar to prior periods, the contract surety loss experience continued to develop adversely though signs of stabilization occurred during the second quarter. In addition, unusually high losses in the property lines occurred in the past three months due to an unexpected high level of claims related to storm damage in the Midwest. Another factor is that the Company's written premium growth has not yet been fully experienced as earnings given that the earned premium increase year to date is 12.4 % compared to the 19.6 % written premium growth. Book value per share increased to $13.57 as of June 30, 2001, from $13.23 and $12.34 at December 31, 2000, and June 30, 2000, respectively. Shareholders' equity rose 2.0% from $145.7 million at December 31, 2000 to $148.6 million at June 30, 2001. Total assets increased 4.5% to $296.1 million from $283.3 million during the same six-month period. The Company distributed an $0.08 dividend per share during the second quarter compared to $0.07 per share for the same quarter in 2001. Company Chairman George A. Fait stated that "We continue to be pleased at our top line growth as well as our increased book value per share figure as of June 30. On the down side, we have written down several of our equity holdings due to stock market declines in the past year. Though already fully written down under generally accepted accounting principles on our balance sheet, recognizing these declines as other-than-temporary has negatively impacted our bottom line profitability thus far in 2001." "Additionally, persistent loss development in the contract bond portion of our fidelity and surety line in addition to early summer storm damage losses resulted in disappointing underwriting results thus far in 2001. To attain our corporate goals, management continues to focus on growth in the more profitable lines as well as forcefully managing claims activity where needed." Capitol Transamerica Corporation is an insurance holding company operating nationally and writing specialty lines of commercial property and casualty policies as well as fidelity and surety coverages through its subsidiary companies Capitol Indemnity Corporation and Capitol Specialty Insurance Corporation. A third subsidiary, Capitol Facilities Corporation, is a non-insurance entity available for other business opportunities. The Capitol Transamerica Group operates in 37 states and is rated A+ (Superior) by A.M. Best Company, Inc., an independent organization that analyzes the insurance industry. The Company recently announced the signing of a merger agreement under which Alleghany Corporation (NYSE: Y) will acquire Capitol Transamerica at a $16.50 per share cash price, subject to shareholder and regulatory approvals. Details of this press release, additional financial information, and recent filings can be found at the Company's website http://www.captrans.com through the NASDAQ ----------------------- Easy Links page. SAFE HARBOR STATEMENT - Some of the statements in this news release, as well as statements by the company in periodic press releases and oral statements made by the company's officials to analysts and shareholders in the course of presentations about the company, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, estimates subject to change in circumstances, uncertainties and other factors that may cause the actual results, performance or achievements of the company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. FINANCIAL HIGHLIGHTS FOLLOW
CAPITOL TRANSAMERICA CORPORATION SELECTED FINANCIAL DATA CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE) Six months ended Three months ended June 30, June 30, ----------------- ------------------ 2001 2000 2001 2000 -------- ------- -------- -------- REVENUES Gross premiums written $61,884 $51,758 $34,311 $28,393 Net premiums written 54,732 47,896 30,342 25,948 ======== ======= ======== ======== Net premiums earned $47,320 $42,081 $24,477 $21,414 EXPENSES Claims and claim expenses 33,590 22,046 21,334 14,207 Other underwriting expenses 18,217 15,732 9,325 7,802 -------- ------- -------- -------- Total Losses and Expenses Incurred 51,807 37,778 30,659 22,009 -------- ------- -------- -------- Underwriting (loss) income (4,487) 4,303 (6,182) (595) Investment income 4,843 4,503 2,389 2,244 Realized investment (losses) gains (1,748) 3,979 75 2,933 Other income 268 157 142 86 -------- ------- -------- -------- (Loss) Income Before Income Tax (1,124) 12,942 (3,576) 4,668 Income tax (benefit) expense (811) 3,869 (1,363) 1,276 -------- ------- -------- -------- NET (LOSS) INCOME $ (313) $ 9,073 $(2,213) $ 3,392 ======== ======= ======== ======== (LOSS) EARNINGS PER SHARE- BASIC $ (0.03) $ 0.81 $ (0.20) $ 0.31 ======== ======= ======== ======== (LOSS) EARNINGS PER SHARE- DILUTED $ (0.03) $ 0.81 $ (0.20) $ 0.31 ======== ======= ======== ========
COMPARATIVE FINANCIAL HIGHLIGHTS - SIX MONTHS ENDED JUNE 30, 2001 2000 1999 1998 1997 --------- --------- --------- --------- --------- PER SHARE INFORMATION: Book value per share $ 13.57 $ 12.34 $ 13.10 $ 12.95 $ 11.18 (Loss) earnings per share - diluted (0.03) 0.81 1.00 0.93 0.24 COMPANY STATISTICS: Gross premiums written $ 61,884 $ 51,758 $ 44,659 $ 46,464 $ 47,449 Net investment income 4,843 4,503 4,439 4,583 4,120 Realized investment (losses) gains (1,748) 3,979 5,260 7,538 379 (Loss) income before income tax (1,124) 12,942 16,413 14,692 3,069 Net (loss) income (313) 9,073 11,257 10,493 2,664 Net operating earnings 823 6,487 7,838 5,593 2,418 Comprehensive income 5,177 7,406 7,533 7,213 10,360 Cash and invested assets 245,144 215,826 239,510 243,858 208,948 Total assets 296,123 270,022 284,729 288,942 252,218 Shareholders' investment 148,595 136,800 147,627 145,307 124,692 Dividends paid 1,754 1,565 1,574 1,569 2,676 INSURANCE OPERATING RATIOS, STATUTORY BASIS: Loss and loss adjustment expenses 71.1% 52.6% 47.9% 60.4% 61.9% Underwriting expenses 34.6% 35.0% 36.7% 33.7% 34.8% --------- --------- --------- --------- --------- Combined ratios 105.7% 87.6% 84.6% 94.1% 96.7% ========= ========= ========= ========= =========
CAPITOL TRANSAMERICA CORPORATION SELECTED FINANCIAL DATA BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE) June 30, December 31, June 30, 2001 2000 2000 --------- --------- --------- ASSETS Investments Available-for-sale investments, at fair value U.S. Government bonds (cost $28, $34 and $37, respectively) $ 30 $ 36 $ 38 State and municipal bonds (cost $94,846, $84,236 and $77,473, respectively) 99,652 89,732 80,913 Corporate bonds (cost $1,095, $1,100 and $1,119, respectively) 1,072 1,074 1,091 Common stock (cost $112,753, $123,504 and $125,727, respectively) 116,991 119,413 114,457 Preferred stock (cost $5,344, $6,470 and $5,810, respectively) 5,195 5,516 5,007 Investment real estate 11,385 11,009 10,800 Short-term investments 6,249 5,587 2,398 --------- --------- --------- Total Investments 240,574 232,367 214,704 Cash 4,570 3,642 1,122 Receivables 31,100 28,942 35,494 Other assets 19,879 18,307 18,702 --------- --------- --------- TOTAL ASSETS $296,123 $283,258 $270,022 ========= ========= ========= LIABILITIES Reserves for losses and loss adjustment expenses $ 77,401 $ 77,981 $ 77,858 Unearned premiums 53,590 45,588 45,540 Other liabilities 16,537 13,989 9,824 --------- --------- --------- TOTAL LIABILITIES $147,528 $137,558 $133,222 --------- --------- --------- SHAREHOLDERS' EQUITY Common stock, $1.00 par value, authorized 15,000 shares, issued 11,561, 11,559 and 11,558 shares, respectively $ 11,561 $ 11,559 $ 11,558 Paid-in surplus 22,745 22,733 22,728 Accumulated other comprehensive income (loss), net of deferred taxes of $3,107, $149 and ($3,031), respectively 5,767 278 (5,629) Retained earnings 113,084 114,944 111,085 Less treasury stock, 611, 550 and 476 shares, respectively, at cost (4,562) (3,814) (2,942) --------- --------- --------- TOTAL SHAREHOLDERS' EQUITY 148,595 145,700 136,800 --------- --------- --------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $296,123 $283,258 $270,022 ========= ========= ========= BOOK VALUE PER SHARE $ 13.57 $ 13.23 $ 12.34 ========= ========= ========= SHARES OUTSTANDING 10,950 11,009 11,082 ========= ========= =========