PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report
May 2, 2002
(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 May 2, 2002, the Registrant issued a press release announcing its results for the first quarter of 2002. 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 May 2, 2002.
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 May 2, 2002.
VESTA INSURANCE GROUP, INC.
By: /s/ John W. McCullough
Its: Vice President --
Associate General Counsel
EXHIBIT 99.1
FOR IMMEDIATE RELEASE Contact: Charles R. Lambert
Manager – Investor Relations
(205) 970-7030
CLambert@vesta.com
VESTA REPORTS FIRST QUARTER RESULTS
Net Premiums Written Increase by 147% over Prior-Year Period;
Dissolves Office of the Chairman
BIRMINGHAM, Ala. - May 2, 2002 - Vesta Insurance Group, Inc. (NYSE: VTA) today reported profitable results from its first quarter of operations, primarily due to the significant growth in the Company's specialty underwriting and agency segments.
Vesta reported operating earnings from continuing operations of $.5 million, or $0.01 per diluted share, for the quarter ending March 31, 2002 compared to operating earnings of $1.6 million, or $0.08 per diluted share, for the corresponding period in 2001. Net premiums written for the quarter were $151.1 million compared to $61.2 million in the first quarter of 2001, a 147% increase. Operating earnings from continuing operations for the quarter increased by $3.1 million compared to the fourth quarter of 2001.
Including non-operating items, the Company reported net income from continuing operations of $.9 million, or $0.03 per diluted share, in the first quarter of 2002 compared to earnings of $2.6 million, or $0.13 per diluted share, in the corresponding period in 2001. Net income from continuing operations increased by $2.9 million compared to the fourth quarter of 2001.
"The highlights of our first quarter results are the performance of our specialty underwriting and agency businesses and the improvement in our residential property line compared to the fourth quarter," said Norman W. Gayle, III, President. "We believe that the framework is in place for our Company to achieve growth and increased levels of profitability over the next 4-6 quarters."
Vesta also announced today that the Office of the Chairman has been dissolved and that Norman W. Gayle, III will continue as President and Chief Executive Officer. James E. Tait will remain as Chairman of Vesta's Board of Directors and will focus his attention on growing Vesta's consulting subsidiary, Tait Advisory Services.
"As we announced in last quarter's conference call, we expect to realign management so that we become more efficient and quicker to respond to opportunities and problems. Dissolving the Office of the Chairman is the first of these realignments; Norman will focus on our insurance operations while I will focus on the tremendous growth opportunities that currently exist in the consulting marketplace," said Tait.
With offices in Chicago, New York, Kansas City, Louisville and Birmingham, Tait Advisory Services offers financial, economic and strategic counsel to companies facing litigation and financial and management challenges.
Segment Results
Vesta's non-standard auto insurance underwriting results are presented in the specialty underwriting segment, which recorded a 140% increase in pre-tax income compared to the fourth quarter of 2001. The business that Vesta acquired through the renewal rights purchase from Gallant and Valor Insurance Companies produced a combined ratio of 97.6% for the quarter.
The Company's agency operations improved for the third consecutive quarter as it produced its first profitable quarter in reporting net earnings of $1.5 million. Vesta's agency operations have been bolstered by previously announced acquisitions.
"We are excited about the increasing profitability of our agency and non-standard underwriting operations," said Gayle. "We believe these operations will continue to produce strong revenue and operating income growth."
Vesta's standard property-casualty business reported net written premium of $97.7 million in the first quarter of 2002 compared to $52.2 million in the same period of 2001. The Company's GAAP combined ratio for its residential property business was 98.0% and it was 119.1% for the standard auto business for a total combined ratio of 103.6% for the standard property-casualty segment.
"We're clearly disappointed in the lack of improvement in our standard auto business and we will continue to review all actions and opportunities to improve its results," said Gayle. "Our residential property business continues to grow and we remain optimistic that its profitability will continue to improve in future quarters, barring catastrophes."
Higher than anticipated mortality in some older acquired life insurance blocks of business negatively impacted the results from Vesta's life and health segment as it posted $1.0 million in net operating earnings in the quarter.
The Company's debt to total capital ratio was 33.02% as of March 31, 2002 compared to 33.8% at December 31, 2001.
Vesta management will hold its quarterly conference call to discuss first quarter 2002 results on May 3, 2002 at 10 AM 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=4681.
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 segment growth and 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 may differ materially from those reflected in these forward-looking statements. The main factor that could affect the forward-looking statements contained herein is that frequency and severity of insured losses in our standard property-casualty segment or specialty underwriting segment could increase beyond expected levels. 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.
# # #
Vesta Insurance Group, Inc.
1st Quarter 2002 Segment Comparison
(amounts in thousands)
Life & Health Standard Agency Specialty Corp & Other Eliminations Consolidated
Insurance Property-Casualty Underwriting
2002 2001 2002 2001 2002 2001 2002 2001 2002 2001 2002 2001 2002 2001
--------------- ------------------ ---------------- ------------------------------- -------------- ----------------
Revenues:
Net premiums written $ 8,074 $ 7,465 $ 97,720 $ 52,225 -- -- $ 45,303 $ 1,522 -- $ 151,097$ 61,212
(Increase) decrease in unearned premiums -- -- (29,877) 4,622 -- -- (9,429) (439) -- (39,306) 4,183
--------------- ------------------ ---------------- ---------------- -------------- -----------------
Net premiums earned 8,074 7,465 67,843 56,847 -- -- 35,874 1,083 -- 111,791 65,395
Net investment income 9,419 10,780 -- -- -- $ 157 -- -- $ 4,382 $ 4,666 $ (120) -- 13,681 15,603
Policy fees 983 898 1,302 355 1,133 -- -- -- -- -- 3,418 1,253
Agents fees and commissions -- -- -- -- $ 23,588 442 -- -- -- -- (5,208) -- 18,380 442
Other 337 52 -- -- -- -- 1,608 843 1,429 751 -- -- 3,374 1,646
--------------- ------------------ ---------------- ------------------------------- -------------- -----------------
Total revenues 18,813 19,195 69,145 57,202 23,588 599 38,615 1,926 5,811 5,417 (5,328) -- 150,644 84,339
Expenses:
Policyholder benefits 10,645 8,057 -- -- -- -- -- -- -- -- -- -- 10,645 8,057
Loss and LAE expenses incurred -- -- 47,079 37,902 -- -- 23,615 799 -- -- -- -- 70,694 38,701
Policy acquisition expenses 1,623 2,122 15,415 12,058 -- -- 9,318 222 -- -- (5,208) -- 21,148 14,402
Operating expenses 3,286 3,761 9,172 6,362 20,736 1,389 3,296 61 6,263 3,080 -- -- 42,753 14,653
Interest on debt 1,576 2,430 -- -- 120 -- -- -- 2,375 2,228 (120) -- 3,951 4,658
Goodwill and other intangible amortization -- -- -- -- -- -- -- -- 84 526 -- -- 84 526
--------------- ------------------ ---------------- ------------------------------- -------------- -----------------
Total expenses 17,130 16,370 71,666 56,322 20,856 1,389 36,229 1,082 8,722 5,834 (5,328) -- 149,275 80,997
Income (loss) from continuing operations
before income taxes, deferrable capital
securities, and minority interest 1,683 2,825 (2,521) 880 2,732 (790) 2,386 844 (2,911) (417) -- -- 1,369 3,342
Income taxes (benefit) 589 989 (882) 308 998 (277) 835 295 (1,061) (125) -- -- 479 1,190
Deferrable capital securities, net of tax -- -- -- -- -- -- -- -- 129 383 -- -- 129 383
Minority interest in subsidiary, net of tax 36 382 -- -- 245 (246) -- -- -- -- -- -- 281 136
--------------- ------------------ ---------------- ------------------------------- -------------- -----------------
Net operating earnings (loss) from
continuing operations $1,058 $1,454 $(1,639) $ 572 $ 1,489 $ (267) $ 1,551 $ 549 $ (1,979$ (675) -- -- $ 480 $ 1,633
=============== ================== ================ =============================== ============== =================
Realized gains, net of tax
and minority interest 343 277 93 719 $ 436 $ 996
--------------- ------------------ ---------------- ------------------------------- -------------- -----------------
Net income (loss) from continuing
operations $1,401 $ 1,731 $ (1,639) $ 572 $ 1,489 $ (267) $ 1,551 $ 549 $ (1,886) $ 44 -- -- $ 916 $ 2,629
=============== ================== ================ =============================== ============== =================
*Excludes realized investment gains and losses
Vesta Insurance Group, Inc.
First Quarter Results
(amounts in thousands, excpet per share data)
3 Months Ended March 31,
2002 2001
---------------- ----------------
Revenues:
Net premiums written $ 151,097 $ 61,212
(Increase) decrease in unearned premiums (39,306) 4,183
---------------- ----------------
Net premiums earned 111,791 65,395
Net investment income 13,681 15,603
Policy fees 3,418 1,253
Agents fees and commissions 18,380 442
Other 3,374 1,646
---------------- ----------------
Total revenues 150,644 84,339
Expenses:
Policyholder benefits 10,645 8,057
Loss and LAE expenses incurred 70,694 38,701
Policy acquisition expenses 21,148 14,402
Operating expenses 42,753 14,653
Interest on debt 3,951 4,658
Goodwill and other intangible amortization 84 526
---------------- ----------------
Total expenses 149,275 80,997
Income from continuing operations before income taxes,
deferrable capital securities, and minority interest 1,369 3,342
Income taxes 479 1,190
Deferrable capital securities, net of tax 129 383
Minority interest in subsidiary, net of tax 281 136
---------------- ----------------
Net operating earnings from continuing operations 480 1,633
Realized gains, net of tax and minority interest 436 996
Net income from continuing operations 916 2,629
Income (loss) from discontinued operations, net of tax (64) 5
Extraordinary gain on debt extinguishments, net of tax 897 -
Net income 1,749 2,634
Gain on redemption of preferred securities 210 565
Preferred stock dividend - (163)
---------------- ----------------
Income available to common shareholders $ 1,959 $ 3,036
================ ================
Weighted average diluted shares outstanding for the period 33,842 21,094
Net operating earnings from continuing operations earnings per share $ 0.01 $ 0.08
Realized gains per share $ 0.01 $ 0.05
Net income from continuing operating earnings per share $ 0.03 $ 0.13
Income available to common shareholders per share $ 0.06 $ 0.15
Vesta Insurance Group, Inc.
Condensed Consolidated Balance Sheet
(amounts in thousands)
March 31, 2002 December 31, 2001
--------------------- --------------------
Assets:
Invested assets $ 1,037,229 $ 1,035,749
Cash 21,781 23,579
Other assets 889,977 771,554
--------------------- --------------------
Total assets $ 1,948,987 $ 1,830,882
===================== =====================
Liabilities:
Future policy benefits $ 689,004 $ 695,170
Losses and loss adjustment expenses 298,661 280,997
Unearned premiums 271,225 179,879
Debt 104,752 109,396
Other liabilities 304,940 282,883
--------------------- ----------------------
Total liabilities 1,668,582 1,548,325
Deferrable capital securities 22,445 23,250
Stockholders' equity 257,960 259,307
--------------------- -----------------------
Total liabilities and stockholders' equity $ 1,948,987 $ 1,830,882
==================== =======================
Equity per share $ 7.22 $ 7.34
Equity per share excluding unrealized 7.18 7.12
investment gains and losses
Shares Outstanding at period end* 35,726 35,323
* Excludes shares in the Vesta Agents Stock Incentive Plan Trust