PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report
July 31, 2001
(Date of earliest event reported)
VESTA INSURANCE GROUP, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 63-1097283 |
| (State or other jurisdiction of | (I.R.S. Employer |
| incorporation or organization) | Identification No.) |
| 3760 River Run Drive | 35243 |
| Birmingham, Alabama | (Zip Code) |
| (Address of principal executive offices) |
(205) 970-7000
(Registrant's telephone number, including area code)
Item 5. Other Events.
On July 31, 2001, the Registrant issued a press release announcing its results for the second quarter of 2001. A
copy of this press release is attached as Exhibit 99.1 and incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
Exhibit No. Description
99.1 Press Release dated July 31, 2001.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.
Dated as of August 1, 2001.
VESTA INSURANCE GROUP, INC.
By: /s/ Donald W. Thornton
Its: Senior Vice President --
General Counsel and Secretary
EXHIBIT 99.1
FOR IMMEDIATE RELEASE Contact: Charles R. Lambert
Manager – Investor Relations
(205) 970-7030
CLambert@vesta.com
VESTA ANNOUNCES SECOND QUARTER RESULTS
Standard Property-Casualty Combined Ratio of 92.0% in 2nd Quarter;
Debt to Total Capital Ratio Drops to 30.4%
BIRMINGHAM, Ala., -- July 31, 2001 -- Vesta Insurance Group, Inc. (NYSE: VTA) today reported approximately an 14% increase in net operating earnings from continuing operations for the second quarter of 2001 compared to the same period in 2000.
Net operating earnings from continuing operations were $5.8 million, or $0.24 per diluted share, for the quarter ending June 30, 2001 compared to $5.1 million, or $0.21 per diluted share, for the corresponding period in 2000. For the six months ended June 30, net operating earnings from continuing operations were $7.5 million, or $0.33 per diluted share compared to $3.4 million, or $0.14 per diluted share for the first half of 2000.
The Company reported net income from continuing operations of $7.2 million or $0.30 per diluted share in the second quarter of 2001 compared to $5.1 million or $0.21 per diluted share in the corresponding period in 2000. For the six months ended June 30, net income from continuing operations were $9.8 million, or $0.43 per diluted share compared to $3.4 million, or $0.14 per diluted share for the first half of 2000.
"We remain on track of reaching our previously announced target for 2001 of providing a 12% return on equity," said James E. Tait, Chairman of Vesta. In addition, we're pleased to report that our debt to total capital ratio has been reduced to 30.4% as of June 30."
Segment Results
Net written premium for Vesta's standard property-casualty segment increased 16% to $64.8 million for the quarter ending June 30, 2001 compared to the same period in 2000. The increase in net written premium is mostly due to the acquisition of Florida Select. The standard property-casualty segment's GAAP combined ratio was 92.0% in the second quarter of 2001. This is the fifth consecutive quarter that Vesta's standard property-casualty combined ratio has been under 100%.
"The strong underwriting results from our standard property-casualty segment is due to a significant portion of our business being in Hawaii, and Florida," said Norman W. Gayle, III, President of Vesta. "Over the past two years, we have continually refined our book of business and we expect these type of results barring catastrophes."
Vesta's life and health segment continues to provide solid results, earning $2.4 million in net income in the quarter. Vesta's non-standard segment showed approximately $.3 million loss in the second quarter and is expected to turn positive by the end of 2001.
Vesta management will hold its quarterly conference call to discuss the first quarter results on August 1, 2001 at 10:00 a.m. EST. The conference call will be simultaneously webcast live online through Vesta's corporate website, www.vesta.com and http://www.videonewswire.com/event.asp?id=405.
About Vesta Insurance Group, Inc.
Vesta, headquartered in Birmingham, Ala., is a holding company for a group of insurance and financial services companies that offer a wide range of consumer-based products.
This news release contains statements concerning management's beliefs, plans or objectives for Vesta's future operations or financial performance, including return on stockholders equity, the company's standard property-casualty combined ratio, and segment profitability. These statements, whether expressed or implied, are only predictions and should be considered "forward-looking statements" under applicable securities laws. You should be aware that Vesta's actual operations and financial performance, including its combined ratio for the fiscal year ended December 31, 2001, may differ materially from those reflected in these forward-looking statements. Some of the factors that could affect the forward-looking statements contained herein include, without limitation: that competitors may decide to target the Company's customer base by offering lower priced insurance; that the Company's independent agents may decide to discontinue sales of the Company's insurance to the individuals they represent; that new policy application levels may not rise to levels necessary to generate sufficient premium volume to achieve its financial performance goals; that A.M. Best may downgrade the Company's rating; that Vesta may be compelled to pay damages or settlement costs incurred in connection with a pending class action lawsuit in excess of available coverage under Vesta's Directors' and Officers' insurance policies; and that Vesta may ultimately be unable to recover a significant amount of paid losses currently reflected on its published financial statements as recoverable under a reinsurance treaty. Please refer to the documents Vesta files from time to time with the Securities and Exchange Commission, specifically Vesta's most recent Form 10-K and Exhibit 99.1 attached thereto, which contains and identifies additional important factors that could cause the actual results to differ materially from those contained in the projections or forward-looking statements.
# # #
2nd Quarter 2001 Segment Comparison
(amounts in thousands)
Life & Health Standard
Insurance Property-Casualty Non-Standard Specialty Lines Corp & Other Consolidated
2001 2000 2001 2000 2001 2000 2001 2000 2001 2000 2001 2000
---------------- -------------------- ------------------ ----------------- ---------------- ------------------
Revenues:
Net premiums written $ 7,482 -- $ 64,773 $ 55,896 -- -- $ 2,000 -- $ 74,255 $ 55,896
Decrease in unearned premiums -- -- (67) (3,758) -- -- 3 -- (64) (3,758)
---------------- -------------------- ------------------ ----------------- ------------------
Net premiums earned 7,482 -- 64,706 52,138 -- -- 2,003 -- 74,191 52,138
Net investment income 11,010 -- -- -- $ 103 -- -- -- $ 5,997 $ 5,258 17,110 5,258
Policy fees 1,052 -- 676 239 -- -- -- -- -- -- 1,728 239
Other 183 -- 420 -- 356 -- 961 -- 676 1,085 2,596 1,085
---------------- -------------------- ------------------ ----------------- ---------------- ------------------
Total revenues 19,727 -- 65,802 52,377 459 -- 2,964 -- 6,673 6,343 95,625 58,720
Expenses:
Policyholder benefits 8,938 -- -- -- -- -- -- -- -- -- 8,938 --
Loss and LAE expenses incurred -- -- 37,573 25,815 -- -- 1,498 -- -- -- 39,071 25,815
Policy acquisition expenses 1,934 -- 14,519 11,994 -- -- 421 -- -- -- 16,874 11,994
Operating expenses 2,806 -- 8,043 6,484 1,438 -- 96 -- 2,853 2,457 15,236 8,941
Interest on debt 2,198 -- -- -- -- -- -- -- 2,289 2,763 4,487 2,763
Goodwill and other intangible amortization -- -- -- -- -- -- -- -- 969 603 969 603
---------------- -------------------- ------------------ ----------------- ---------------- ------------------
Total expenses 15,876 -- 60,135 44,293 1,438 2,015 6,111 5,823 85,575 50,116
Income (loss) from continuing operations
before income taxes deferrable capital
securities, and minority interest 3,851 -- 5,667 8,084 (979) -- 949 -- 562 520 10,050 8,604
Income taxes (benefit) 1,062 -- 2,211 2,782 (343) -- 332 -- 196 179 3,458 2,961
Deferrable capital securities, net of tax -- -- -- -- -- -- -- -- 383 571 383 571
Minority interest in subsidiary, net of tax 717 -- -- -- (305) -- -- -- -- -- 412 --
---------------- -------------------- ------------------ ----------------- ---------------- -----------------
Net operating earnings (loss) from
continuing operations* $ 2072 -- $ 3,456 $ 5,302 $ (331) -- $ 617 -- $ (17)$ (230) $ 5,797 $ 5,072
================ ==================== ================== ================= ================ ==================
Realized gains, net of tax and
minority interest 296 -- 1,122 $ 1,418
---------------- -------------------- ------------------ ----------------- ---------------- ------------------
Net income (loss)from continuing
operations $ 2,368 -- $ 3,456 $ 5,302 $ (331) -- $ 617 -- $ 1,105 $ (230) $ 7,215 $ 5,072
================ ==================== ================== ================= ================ ==================
*Excludes realized investment gains and losses
Vesta Insurance Group, Inc.
2001 YTD Segment Comparison
(amounts in thousands)
Life and Health Standard
Insurance Property-Casualty Non-Standard Specialty lines Corp & Other Consolidated
2001 2000 2001 2000 2001 2000 2001 2000 2001 2000 2001 2000
---------------- -------------------- ------------------ ----------------- ---------------- ------------------
Revenues:
Net premiums written $ 14,947 -- $ 116,998 $ 105,023 -- -- $ 3,522 -- $ 135,467 $ 105,023
Decrease in unearned prem iums -- -- 4,555 3,680 -- -- (436) -- 4,119 3,680
---------------- -------------------- ------------------ ----------------- ------------------
Net premiums earned 14,947 -- 121,553 108,703 -- -- 3,086 -- 139,586 108,703
Net investment income 21,790 -- -- -- $ 260 -- -- -- $ 10,663 $12,261 32,713 12,261
Policy fees 1,950 -- 1,031 239 -- -- -- -- -- -- 2,981 239
Other 235 -- 420 -- 798 -- 1,804 -- 1,485 1,412 4,742 1,412
---------------- -------------------- ------------------ ----------------- ---------------- ------------------
Total revenues 38,922 -- 123,004 108,942 1,058 -- 4,890 -- 12,148 13,673 180,022 122,615
Expenses:
Policyholder benefits 16,995 -- -- -- -- -- -- -- -- -- 16,995 --
Loss and LAE expenses incurred -- -- 75,475 65,594 -- -- 2,297 -- -- -- 77,772 65,594
Policy acquisition expenses 4,024 -- 26,577 24,437 -- -- 643 -- -- -- 31,244 24,437
Operating expenses 6,567 -- 14,405 13,127 2,827 -- 157 -- 5,933 5,799 29,889 18,926
Interest on debt 4,628 -- -- -- -- -- -- -- 4,517 6,166 9,145 6,166
Goodwill and other intangible amortization -- -- -- -- -- -- -- -- 1,495 754 1,495 754
---------------- -------------------- ------------------ ----------------- ---------------- ------------------
Total expenses 32,214 -- 116,457 103,158 2,827 -- 3,097 -- 11,945 12,719 166,540 115,877
Income (loss) from continuing operations
before income taxes deferrable
capital securities, and minority interest 6,708 -- 6,547 5,784 (1,769) -- 1,793 203 954 13,482 6,738
Income taxes (benefit) 2,050 -- 2,577 1,933 (619) -- 628 70 251 4,706 2,184
Deferrable capital securities, net of tax -- -- -- -- -- -- -- 766 1,142 766 1,142
Minority interest in subsidiary, net of tax 1,108 -- -- -- (552) -- -- -- -- 556 --
---------------- -------------------- ------------------ ----------------- ---------------- ------------------
Net operating earnings (loss)
from continuing operations $ 3,550 -- $ 3,970 $ 3,851 $ (598) -- $ 1,165 $ (633) $ (439) $ 7,454 $ 3,412
================ ==================== ================== ================= ================ ==================
Realized gains, net of tax
and minority interest 551 1,840 $ 2,391
---------------- -------------------- ------------------ ----------------- ---------------- ------------------
Net income (loss) from
continuing operations $ 4,101 -- $ 3,970 $ 3,851 $ (598) -- $ 1,165 -- $1,207 $ (439) $ 9,845 $ 3,412
================ ==================== ================== ================= ================ ==================
*Excludes realized investment gains and losses
Vesta Insurance Group, Inc.
Quarter vs. Quarter and YTD vs. YTD
(amounts in thousands, except share data)
3 Months Ended June 30, 6 Months Ended June 30,
2001 2000 2001 2000
------------- ------------ ----------- -------------
Revenues:
Net premiums written $ 74,255 $ 55,896 $ 135,467 $ 105,023
Decrease in unearned premiums (64) (3,758) 4,119 3,680
------------- ------------ ----------- -------------
Net premiums earned 74,191 52,138 139,586 108,703
Net investment income 17,110 5,258 32,713 12,261
Policy Fees 1,728 239 2,981 239
Other 2,596 1,085 4,742 1,412
------------- ------------ ----------- -------------
Total revenues 95,625 58,720 180,022 122,615
Expenses:
Policyholder benefits 8,938 - 16,995 -
Loss and LAE expenses incurred 39,071 25,815 77,772 65,594
Policy acquisition expenses 16,874 11,994 31,244 24,437
Operating expenses 15,236 8,941 29,889 18,926
Interest on debt 4,487 2,763 9,145 6,166
Goodwill and other intangible amortization 969 603 1,495 754
------------- ------------ ----------- -------------
Total expenses 85,575 50,116 166,540 115,877
Income from continuing operations before income taxes
deferrable capital securities, and minority interest 10,050 8,604 13,482 6,738
Income taxes 3,458 2,961 4,706 2,184
Deferrable capital securities, net of tax 383 571 766 1,142
Minority interest in subsidiary, net of tax 412 - 556 -
------------- ------------ ----------- -------------
Net operating earnings from continuing operations 5,797 5,072 7,454 3,412
Realized gains/losses, net of tax and minority interest 1,418 - 2,391 -
Net income from continuing operations 7,215 5,072 9,845 3,412
Income (loss) from discontinued operations, net of tax (163) (2,833) (158) 1,080
Extraordinary gain on debt extinguishments, net of tax - 683 - 5,250
Net income 7,052 2,922 9,687 9,742
Gain on redemption of preferred securities - - 565 -
Preferred stock dividend - (563) (163) (1,126)
------------- ------------ ----------- -------------
Income available to common shareholders $ 7,052 $ 2,359 $ 10,089 $ 8,616
============= ============ =========== =============
Weighted average diluted shares outstanding for the period 24,282 24,249 22,731 24,521
Net operating earnings from continuing operations earnings per share $ 0.24 $ 0.21 $ 0.33 $ 0.14
Realized gains per share $ 0.06 $ - $ 0.11 $ -
Net income from continuing operating earnings per share $ 0.30 $ 0.21 $ 0.43 $ 0.14
Income available to common shareholders per share $ 0.29 $ 0.12 $ 0.45 $ 0.40
Vesta Insurance Group, Inc.
Condensed Consolidated Balance Sheet
(amounts in thousands)
June 30, 2001 March 31, 2001
---------------- -------------------
Assets:
Invested assets $ 1,016,237 $ 963,508
Cash 76,328 31,104
Other assets 691,952 615,930
---------------- -------------------
Total assets $ 1,784,517 $ 1,610,542
================ ===================
Liabilities:
Future policy benefits $ 664,137 $ 664,214
Losses and loss adjustment expenses 250,614 262,474
Unearned premiums 138,804 104,110
Debt 91,427 101,420
Other liabilities 331,995 244,501
----------------- -------------------
Total liabilities 1,476,977 1,376,719
Deferrable capital securities 29,750 29,750
Stockholders' equity 277,790 204,073
----------------- -------------------
Total liabilites and stockholders' equity $ 1,784,517 $ 1,610,542
================= ===================
Book value per share $ 8.59 $ 8.62
Book value per share excluding unrealized
investment gains and losses 8.36 8.42
Shares Outstanding at period end* 32,328 23,675
* Excludes shares in the Vesta Agents Stock Incentive Plan Trust