Ceres Group Reports Second Quarter 2004 Results CLEVELAND, Aug. 4
/PRNewswire-FirstCall/ -- For the quarter: -- Net operating income
of $4.8 million ($0.14 per share) -- Net income of $4.9 million
($0.14 per share) -- Senior Segment pre-tax operating income of
$5.0 million -- Medical Segment pre-tax operating income of $3.0
million For the six months: -- Net operating income of $9.0 million
($0.26 per share) -- Net income of $11.1 million ($0.31 per share)
-- Senior Segment pre-tax operating income of $7.6 million --
Medical Segment pre-tax operating income of $7.5 million Ceres
Group, Inc. (NASDAQ:CERG) today reported net operating income of
$4.8 million ($0.14 per share), excluding $0.1 million from net
realized investment gains for the second quarter of 2004. This
compares to net operating income of $3.9 million ($0.11 per share)
for the second quarter of 2003, excluding $0.4 million ($0.01 per
share) from net realized investment gains and $2.7 million ($0.08
per share) related to a decrease in the valuation allowance for
deferred taxes. Net income was $4.9 million ($0.14 per share) in
the second quarter of 2004, compared to $6.9 million ($0.20 per
share) for the second quarter of 2003. (Logo:
http://www.newscom.com/cgi-bin/prnh/20000315/CRLOGO ) For the first
six months of 2004, the company reported net operating income of
$9.0 million ($0.26 per share), excluding $0.2 million from net
realized investment gains and $1.9 million ($0.05 per share)
related to a decrease in the valuation allowance for deferred
taxes. This compares to net operating income of $7.3 million ($0.21
per share) for the first six months of 2003, excluding $0.7 million
($0.02 per share) from net realized investment gains, $2.7 million
($0.08 per share) related to a decrease in the valuation allowance
for deferred taxes and income of $3.6 million ($0.11 per share)
from the discontinued operations of Pyramid Life Insurance Company,
a subsidiary that was sold on March 31, 2003. Net income was $11.1
million ($0.31 per share) in the first six months of 2004, compared
to $14.3 million ($0.42 per share) for the first six months of
2003, including $3.6 million ($0.11 per share) from discontinued
operations. "Our mid-year results are positive," said Tom Kilian,
president and chief executive officer of Ceres. "Both of our
business segments continued to be profitable, and overall new sales
increased compared to the first quarter of this year as well as the
second quarter and six-month period a year ago. As the year
progresses, we remain focused on our balanced strategy of growing
the Senior Segment and maximizing profitability in the Medical
Segment." Segment Results Ceres reports its financial results in
two primary business segments: Senior and Medical. For 2003, the
segment results exclude the discontinued operations of Pyramid Life
Insurance Company. Senior Segment (Medicare supplement, long-term
care, dental, life insurance, and annuities) Pre-tax operating
income for the quarter was $5.0 million, compared to $5.6 million
in the second quarter of 2003. Pre-tax income for the quarter was
$5.1 million, compared to $5.9 million in 2003. Pre-tax operating
income for the first six months was $7.6 million, compared to $7.8
million for the first six months of 2003. Pre-tax income for the
first six months was $7.6 million, compared to $8.4 million for the
same period of 2003. Benefits, claims, losses and settlement
expenses in the Senior Segment were $33.6 million, compared to
$30.6 million for the second quarter of 2003. The Senior Segment
benefit and claims loss ratio was 74.7%, compared to 72.2% in the
second quarter of 2003. The increase in the loss ratio was due
primarily to an increase in the Medicare supplement loss ratio,
partially offset by improved long-term care experience. For the six
months, benefits, claims, losses and settlement expenses in the
Senior Segment were $67.3 million, compared to $64.4 million for
the first six months of 2003. The Senior Segment benefit and claims
loss ratio was 76.0%, compared to 75.5% for the first six months of
2003. Medicare supplement claims were higher than expected in the
first half of the year, as well as compared to the same period a
year ago. The Medicare supplement loss ratio is expected to be
lower in the second half of the year due to a moderation of this
higher claim trend as well as the historical seasonality of this
product. "New sales in our Senior Segment continue to be promising,
and should contribute to future premium growth," Kilian said.
"Medicare supplement sales, the foundation of our senior business,
rose compared to the first quarter and showed substantial growth
from a year ago. To meet our objective of expanding this segment,
we plan to continue strengthening relationships with our
distribution partners and concentrating our efforts on competitive
markets, as well as refining and enhancing our products." Medical
Segment (catastrophic and comprehensive medical plans) Pre-tax
operating income for the quarter was $3.0 million, compared to
pre-tax operating income of $1.3 million in the second quarter of
2003. Pre- tax income for the quarter was $3.0 million, compared to
$1.5 million in the second quarter of 2003. Pre-tax operating
income for the six months was $7.5 million, compared to $5.1
million for the first six months of 2003. Pre- tax income for the
first six months of 2004 was $7.5 million, compared to $5.4 million
in 2003. Benefits, claims, losses and settlement expenses in the
Medical Segment were $43.9 million, compared to $58.8 million in
the second quarter of 2003. The Medical Segment benefit and claims
loss ratio was 70.0%, compared to 74.4% for the second quarter of
2003. This improvement was due to lower health claims trends in
2004 and favorable run-off of prior quarter claim reserves. For the
six months, benefits, claims, losses and settlement expenses in the
Medical Segment were $86.7 million, compared to $121.3 million for
the first six months of 2003. The Medical Segment benefit and
claims loss ratio was 67.8%, compared to 73.9% for the first six
months of 2003. This improvement was due to lower health claim
trends in 2004 and favorable run-off of prior year claim reserves.
The company expects that medical claims and the loss ratio will
increase in the second half of the year as policyholders meet their
annual required co-payments and deductibles. "Our Medical Segment
results were strong for both the quarter and the six months,"
Kilian said. "This success was primarily driven by our niche
marketing strategy which has proven effective. In addition, new
sales increased significantly compared with the same period a year
ago. The early sales results of our health savings account (HSA)
qualified products are also encouraging. HSAs offer our customers
an excellent opportunity to take more control of their healthcare
dollars and save for future health expenses on a tax-free basis.
Since these products have less first-dollar coverage, they are also
a good risk-sharing plan for our company. We intend to continue
refining our product portfolio and pricing, while targeting
profitable states and working with our producers to remain
competitive in this challenging market." Outlook "Our results so
far this year confirm that our strategy is working," Kilian said.
"We are confident in our ability to grow our Senior Segment while
we carefully manage our Medical Segment to ensure ongoing
profitability. Our goal remains to achieve a 50/50 revenue split
between our business segments. We believe achieving this balance
will help us produce stable and positive results for the long
term." As previously stated, the company expects to achieve net
operating income per diluted share of $0.53 for 2004, based on the
company's prospects for growth in the Senior Segment and continued
profitability in the Medical Segment. Net operating income excludes
certain items that, in the opinion of management, are not
indicative of overall operating trends. In the company's results
for the first half of 2004 and its outlook for 2004, net operating
income excludes the impact of net realized investment gains and the
reduction in the deferred tax valuation allowance. A conference
call with management regarding second quarter 2004 results is
scheduled for noon (Eastern) on Thursday, August 5, 2004. To listen
to the live conference call over the Internet, go to
http://www.ceresgp.com/ or
http://phx.corporate-ir.net/playerlink.zhtml?c=71415&s=wm&e=920063
. To listen to the webcast, please log onto this site at least 15
minutes prior to the call to register, download and install any
necessary audio software. For those who cannot listen to the live
broadcast, a replay will be available after the call. FINANCIAL
TABLES TO FOLLOW CERES GROUP, INC. and SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS Unaudited (in thousands,
except per share amounts) Three Months Ended Six Months Ended June
30, June 30, ------------------ ------------------ 2004 2003 2004
2003 -------- -------- -------- -------- REVENUES Premiums, net
Medical $62,665 $79,042 $127,892 $164,161 Senior and other 44,914
42,402 88,516 85,259 -------- -------- -------- -------- Total
premiums, net 107,579 121,444 216,408 249,420 Net investment income
6,686 6,460 12,949 11,984 Net realized gains 130 562 238 1,146 Fee
and other income 4,294 7,396 9,102 13,738 Amortization of deferred
reinsurance gain 352 419 761 1,076 -------- -------- --------
-------- 119,041 136,281 239,458 277,364 -------- -------- --------
-------- BENEFITS, LOSSES AND EXPENSES Benefits, claims, losses and
settlement expenses Medical 43,885 58,799 86,699 121,305 Senior and
other 33,558 30,604 67,308 64,404 -------- -------- --------
-------- Total benefits, claims, losses and settlement expenses
77,443 89,403 154,007 185,709 Selling, general and administrative
expenses 32,963 37,218 66,574 75,388 Net amortization and change in
acquisition costs and value of business acquired 965 2,656 4,439
3,057 Interest expense and financing costs 166 306 338 735 --------
-------- -------- -------- 111,537 129,583 225,358 264,889 --------
-------- -------- -------- Income from continuing operations before
federal income taxes 7,504 6,698 14,100 12,475 Federal income tax
expense (benefit) 2,612 (253) 3,034 1,767 -------- --------
-------- -------- Income from continuing operations 4,892 6,951
11,066 10,708 -------- -------- -------- -------- Discontinued
operations Income from operations of Pyramid Life (less tax expense
of $3,223) - - - 5,732 Loss on sale of Pyramid Life (less tax
benefit of $0 and $79, respectively) - (39) - (2,149) --------
-------- -------- -------- Income (loss) from discontinued
operations - (39) - 3,583 -------- -------- -------- -------- Net
income $4,892 $6,912 $11,066 $14,291 ======== ======== ========
======== Basic earnings per share Continuing operations $0.14 $0.20
$0.32 $0.31 Discontinued operations - - - 0.11 -------- --------
------- -------- Net income $0.14 $0.20 $0.32 $0.42 ========
======== ======= ======== Diluted earnings per share Continuing
operations $0.14 $0.20 $0.31 $0.31 Discontinued operations - - -
0.11 -------- -------- -------- -------- Net income $0.14 $0.20
$0.31 $0.42 ======== ======== ======== ======== Basic weighted
average shares outstanding 34,459 34,297 34,427 34,267 Diluted
weighted average shares outstanding 35,275 34,320 35,161 34,272
CERES GROUP, INC. and SUBSIDIARIES RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES Unaudited (in thousands, except per share
amounts) In this press release, the company presented net operating
income, net operating income per share, and Medical and Senior
Segment pre-tax operating income, which are non-GAAP financial
measures. Management uses non-GAAP financial measures to evaluate
the company's performance for the periods presented, and believes
that these measures of profitability provide a meaningful
presentation of the underlying earnings of the company's
operations. Net operating income, net operating income per share,
and Medical and Senior Segment pre-tax operating income exclude
certain items that, in the opinion of management, may not be
indicative of overall operating trends. These non-GAAP measures
should not be considered an alternative to measurements required by
GAAP. Ceres' calculation of these measures may differ from similar
measures used by other companies and investors should be careful
when comparing the company's non-GAAP financial measures to those
of other companies. For the periods presented, net operating
income, net operating income per share, and Medical and Senior
Segment pre-tax operating income exclude the results of the
discontinued operations of Pyramid Life Insurance Company (a
subsidiary that was sold on March 31, 2003), realized gains on the
sale of investments, and reductions to the valuation allowance for
deferred taxes. The following is a reconciliation to the most
directly comparable GAAP financial measure: Three Months Ended Six
Months Ended June 30, June 30, ------------------
------------------ 2004 2003 2004 2003 -------- -------- --------
-------- NET OPERATING INCOME Net operating income $4,807 $3,895
$9,010 $7,272 Net realized gains 130 562 238 1,146 Income taxes on
net realized gains (1) (45) (197) (83) (401) Reduction to the
valuation allowance for deferred taxes -- 2,691 1,901 2,691
-------- -------- -------- -------- Income from continuing
operations $4,892 $6,951 $11,066 $10,708 ======== ======== ========
======== NET OPERATING INCOME PER SHARE DATA (DILUTED) Net
operating income per share $0.14 $0.11 $0.26 $0.21 Net realized
gains, net of tax (1) -- 0.01 -- 0.02 Reduction to the valuation
allowance for deferred taxes -- 0.08 0.05 0.08 -------- --------
-------- -------- Net income per share from continuing operations
$0.14 $0.20 $0.31 $0.31 ======== ======== ======== ======== SENIOR
SEGMENT PRE-TAX OPERATING INCOME Senior Segment pre-tax operating
income $5,045 $5,586 $7,610 $7,782 Net realized gains (losses) 27
285 (9) 584 -------- -------- -------- -------- Senior Segment
profit before federal income taxes $5,072 $5,871 $7,601 $8,366
======== ======== ======== ======== MEDICAL SEGMENT PRE-TAX
OPERATING INCOME Medical Segment pre-tax operating income $2,990
$1,281 $7,523 $5,093 Net realized gains (losses) (8) 169 26 346
-------- -------- -------- -------- Medical Segment profit before
federal income taxes $2,982 $1,450 $7,549 $5,439 ======== ========
======== ======== (1) Taxes on net realized gains are based upon a
35% effective tax rate for all periods. CERES GROUP, INC. and
SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands,
except per share amounts) June 30, December 31, 2004 2003 ---------
--------- (Unaudited) ASSETS Investments $488,819 $484,280 Cash and
cash equivalents 17,439 26,394 Reinsurance receivable 140,394
143,397 Deferred acquisition costs 66,815 69,609 Value of business
acquired 12,638 13,034 Goodwill and licenses 14,097 14,097 Other
assets 22,509 23,103 --------- --------- Total assets $762,711
$773,914 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY
Policy liabilities and benefits accrued $497,758 $504,493 Deferred
reinsurance gain 8,695 9,456 Other policyholders' funds 19,605
20,821 Debt 11,875 13,000 Other liabilities 33,130 41,005 ---------
--------- Total liabilities 571,063 588,775 Stockholders' equity
191,648 185,139 --------- --------- Total liabilities and
stockholders' equity $762,711 $773,914 ========= ========= Equity
per common share: After accumulated other comprehensive income (1)
$5.56 $5.38 Before accumulated other comprehensive income (1) 5.49
5.17 Book value per share excluding goodwill and licenses 5.15 4.97
--------- (1) Accumulated other comprehensive income relates
primarily to the net unrealized gain (loss) on available-for-sale
securities. CERES GROUP, INC. and SUBSIDIARIES INDUSTRY SEGMENT
DATA (excluding operations of Pyramid Life Insurance Company)
Unaudited (in thousands) Three Months Ended Six Months Ended June
30, June 30, ------------------ ------------------ 2004 2003 2004
2003 -------- -------- -------- -------- MEDICAL Revenues Net
premiums $62,665 $79,042 $127,892 $164,161 Net investment income
1,248 1,458 2,494 2,933 Net realized gains (losses) (8) 169 26 346
Other income 3,932 5,531 8,657 12,022 -------- -------- --------
-------- 67,837 86,200 139,069 179,462 -------- -------- --------
-------- Expenses Benefits and claims 43,885 58,799 86,699 121,305
Other operating expenses 20,970 25,951 44,821 52,718 --------
-------- -------- -------- 64,855 84,750 131,520 174,023 --------
-------- -------- -------- Segment profit before federal income
taxes $2,982 $1,450 $7,549 $5,439 ======== ======== ========
======== SENIOR AND OTHER Revenues Net premiums $44,914 $42,402
$88,516 $85,259 Net investment income 5,438 5,011 10,455 9,051 Net
realized gains (losses) 27 285 (9) 584 Other income 714 2,284 1,206
2,792 -------- -------- -------- -------- 51,093 49,982 100,168
97,686 -------- -------- -------- -------- Expenses Benefits and
claims 33,558 30,604 67,308 64,404 Other operating expenses 12,463
13,507 25,259 24,916 -------- -------- -------- -------- 46,021
44,111 92,567 89,320 -------- -------- -------- -------- Segment
profit before federal income taxes $5,072 $5,871 $7,601 $8,366
======== ======== ======== ======== CORPORATE AND OTHER Revenues
Net investment income $- $(9) $- $- Net realized gains 111 108 221
216 -------- -------- -------- -------- 111 99 221 216 --------
-------- -------- -------- Expenses Interest expense and financing
costs 166 306 338 735 Other operating expenses 495 416 933 811
-------- -------- -------- -------- 661 722 1,271 1,546 --------
-------- -------- -------- Segment loss before federal income taxes
$(550) $(623) $(1,050) $(1,330) ======== ======== ======== ========
Income from continuing operations before federal income taxes
$7,504 $6,698 $14,100 $12,475 ======== ======== ======== ========
Medical loss ratio 70.0% 74.4% 67.8% 73.9% Senior loss ratio 74.7%
72.2% 76.0% 75.5% Overall loss ratio 72.0% 73.6% 71.2% 74.5% About
Ceres Group Ceres Group, Inc., through its insurance subsidiaries,
provides a wide array of health and life insurance products through
two primary business segments. Ceres' Medical Segment includes
major medical health insurance for individuals, families,
associations and small businesses. The Senior Segment includes
senior health, life and annuity products for Americans age 55 and
over. To help control medical costs, Ceres also provides medical
cost management services to its insureds. Ceres' nationwide
distribution channels include independent agents and its electronic
distribution system. Ceres is included in the Russell 3000(R)
Index. For more information, visit http://www.ceresgp.com/ . This
news release contains certain forward-looking statements with
respect to the financial condition, results of operations and
business of the company. Forward-looking statements are statements
other than historical information or statements of current
condition. In light of the risks and uncertainties inherent in all
future projections, the inclusion of forward-looking statements
herein should not be regarded as representation by the company or
any other person that the objectives or plans of the company will
be achieved. Many factors could cause actual results to differ
materially from those contemplated by such forward-looking
statements, including, among others, failure to accurately predict
claims liabilities, rising healthcare costs, business conditions
and competition in the healthcare industry, developments in
healthcare reform and other regulatory issues (including failure to
meet statutory capital requirements), adverse outcomes in
litigation, ability to develop and administer competitive products,
performance of our reinsurers and failure to comply with financial
and other covenants in our loan agreements, and the failure to
successfully implement the business plans for the company and its
subsidiaries. This review of important factors should not be
construed as exhaustive. Investors and others should refer to
Ceres' filings with the Securities and Exchange Commission,
including its annual report on Form 10-K for the year ended
December 31, 2003, and its quarterly reports on Form 10-Q and other
periodic filings, for a description of the foregoing and other
factors. Ceres undertakes no obligation to update forward-looking
statements to reflect events or circumstances after the date hereof
or to reflect the occurrence of unanticipated events.
http://www.newscom.com/cgi-bin/prnh/20000315/CRLOGO
http://photoarchive.ap.org/ DATASOURCE: Ceres Group, Inc. CONTACT:
David I. Vickers, Chief Financial Officer, +1-440-878-2941, or
Gayle M. Vixler, Senior Vice President, +1-440-572-8848, both of
Ceres Group, Inc. Web site: http://www.ceresgp.com/
http://phx.corporate-ir.net/playerlink.zhtml?c=71415&s=wm&e=920063
Copyright
Ceres (NASDAQ:CERG)
Graphique Historique de l'Action
De Août 2024 à Sept 2024
Ceres (NASDAQ:CERG)
Graphique Historique de l'Action
De Sept 2023 à Sept 2024