Acceptance Insurance Companies Reports Losses

Iowa-based Acceptance Insurance Companies Inc. reported an after-tax net loss of $9.5 million, or $0.66 per share, for the third quarter of 2001. The company’s continuing crop insurance operations generated an after-tax net operating profit of $1.3 million, or $0.09 per share, for the quarter. Property and casualty operations resulted in an after-tax net operating loss of $11.9 million or $0.83 per share during this period. For the third quarter of 2000, the Company reported a net loss of $2.3 million or $0.16 per share.

Through the first nine months of 2001 Acceptance has a net loss of $14.2 million, or $0.99 per share. During the comparable period of 2000, the Company experienced an after-tax net loss of $4.7 million or $0.33 per share.

As a result of its continuing assessment of property and casualty reserves the company recorded a pre-tax increase in property and casualty loss reserves of $13.9 million in the third quarter of 2001. The reserve strengthening was concentrated primarily in the general liability lines of business for accident years 1999 and prior. The company also increased the estimated ultimate loss and loss adjustment expense ratios for its greatly reduced 2001 accident year property and casualty business.

According to Dwayne Hallman, the company’s CFO, the company made significant progress in reducing its property and casualty business and operations. Hallman reported the number of new reported claims and currently outstanding claims from the company’s discontinued and recently sold property and casualty lines have decreased significantly since January 2001. During the review of loss reserves, however, several unfavorable claim developments were identified with respect to certain books of business. As a result, Acceptance concluded that increasing its property and casualty loss reserves at this time was a prudent action to take.

The third quarter financial results released for the company’s continuing crop insurance operations include partial repayment for research and development costs expended by American Agrisurance, Inc., the company’s primary crop insurance marketing subsidiary, in creating the first and still most widely used form of crop revenue insurance, CropRevenueCoverage. The Federal Crop Insurance Corporation approved a one-time after-tax reimbursement of approximately $1.2 million under legislation enacted last year. More favorable weather conditions in several of the company’s primary marketing regions and the previously announced purchase of certain crop insurance assets from a former competitor also contributed to the financial results of the company’s crop insurance operations through September 30, 2001. Estimated results from the company’s 2001 multiple peril crop insurance operations are not included in this announcement.

In accordance with the company’s previously announced practice those estimated results will be included in its financial statements for the fourth quarter of 2001.

Topics Carriers Profit Loss Agribusiness Property Property Casualty Casualty