View this article online: https://www.claimsjournal.com/news/southeast/2003/11/13/34130.htm
Alabama-based Vesta Insurance Group, Inc. reported net operating earnings from continuing operations of $6.4 million, or $0.18 per share in the third quarter compared to net operating earnings from continuing operations of $3.2 million, or $0.10 per share for the corresponding period in 2002.
Net operating earnings from continuing operations is a non-GAAP measure which excludes certain items, such as realized gains and losses, losses and awards from arbitration and litigation as well as gains on debt extinguishments. Net earned premiums for the quarter was $127.3 million compared to $131.9 million in the third quarter of 2002.
The net income from continuing operations was $6.4 million, or $0.18 per share for the quarter ending Sept. 30, 2003 compared to a net loss from continuing operations of $10.8 million, or $(0.32) per share in the third quarter of 2002.
For the nine months ended Sept. 30, 2003, net operating earnings from continuing operations were $3.2 million, or $0.09 per share compared to net operating earnings from continuing operations of $2.9 million, or $0.09 per share in 2002. For the first nine months, the company reported net income from continuing operations of $6.8 million, or $0.19 per share compared to a net loss from continuing operations of $10.8 million or $(0.32) per share in 2002.
“We are pleased with our third quarter results as all three business segments produced profits,” said Norman Gayle, III, president and CEO. “Our quarterly results demonstrate the earnings power and strength of our underlying operations.”
Operational results
Vesta’s standard property-casualty segment, which includes the residential property and standard auto businesses, posted net income from continuing operations of $3.9 million in the third quarter of 2003.
“While the states that we are exiting continue to negatively pressure our overall standard property-casualty results, our targeted states are performing exceptionally well as reflected by the 92.9% combined ratio for the segment in the quarter,” said Gayle.
Vesta has entered into a new 50% quota share reinsurance agreement on the residential property business in continuing states effective Sept. 30, 2003, excluding Texas, which is covered under a separate 50% quota share already in place.
The company’s non-standard auto underwriting business generated a GAAP combined ratio of 96.7% in the third quarter and 96.2% for the first nine months of 2003 compared to a 97.4% and a 97.2% combined ratio for the respective corresponding periods in 2002. The non-standard agency operations produced a 10.5% pre-tax margin in the quarter on commission and fee revenue of $35.0 million, before intercompany eliminations.
Vesta also incurred $2.0 million in net losses relating to discontinued operations in the quarter, primarily related to its health insurance operations, which were sold effective Sept. 30, 2003.