Alabama-based Vesta Insurance Group Inc. reported net operating earnings from continuing operations of $8.6 million, or $0.24 per diluted share in the second quarter of 2004 compared to a net operating loss from continuing operations of $5.4 million, or $(0.16) per diluted share for the corresponding period in 2003.
Net income from continuing operations was $12.2 million, or $0.34 per
diluted share for the quarter ending June 30, 2004 compared to a net loss from continuing operations of $4.0 million, or $(0.12) per diluted share in the second quarter of 2003. Net operating earnings from continuing operations is a non-GAAP measure which excludes certain items, such as realized gains and losses and awards or settlements from litigation or arbitration.
In addition, the company’s Board of Directors declared a $0.075 per share cash dividend that is payable on August 31, 2004 to shareholders of record on Aug. 20, 2004.
“As previously announced, the Board of Directors determined it was prudent to defer consideration of a dividend until substantial progress was made in our capital initiatives. This $0.075 per share dividend represents the total of what the company would have paid in the first, second and third quarters of 2004,” said Norman Gayle, III, president and CEO.
In July, Vesta’s former non-standard auto insurance subsidiary,
Affirmative Insurance Holdings Inc., completed an initial public offering. Affirmative’s 2nd quarter results are reflected in the non-
standard underwriting and non-standard agency segments, including
eliminations. Vesta will realize a gross gain of approximately $11 million in the third quarter related to Affirmative’s initial public offering.
Beginning in the third quarter, Vesta’s approximate 43% ownership in Affirmative will be accounted for by the equity method of accounting and Vesta will record its pro rata share of Affirmative’s earnings in its statement of operations.
Vesta’s standard property-casualty segment, which includes the residential property and standard auto businesses, posted net income from continuing operations of $2.8 million in the second quarter of 2004.
Additionally, Vesta has reached a final settlement in a matter in federal litigation with NRMA Insurance Ltd. concerning a reinsurance dispute that resulted in approximately a $3.8 million gain in the 2nd Quarter.
Vesta incurred a $3.5 million charge related to discontinued operations in the current quarter, primarily related to commutations and settlements of its outstanding assumed reinsurance and commercial insurance obligations.
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