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Exhibit 99
CNA SURETY CORPORATION ANALYST CONTACT:
CNA Plaza John Heneghan
Chicago IL 60685 312-822-1908
[email protected]
MEDIA CONTACT:
Doreen Lubeck
773-583-4331
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FOR IMMEDIATE RELEASE
CNA Surety Announces 11% Increase in Second Quarter Operating Earnings
CHICAGO, August 7, 2000 -- CNA Surety Corporation (NYSE:SUR) today
reported higher earnings for the second quarter and six months ended June 30,
2000 primarily driven by increases in both underwriting and investment income.
Highlights of the second quarter 2000 results compared with the same period in
1999 include:
- Operating earnings, after income taxes, increased 11 percent to
$14.3 million, or 34 cents per share, from $12.8 million, or 29
cents per share, in 1999. Operating earnings for the second
quarter of 2000 exclude a non-recurring charge of 1 cent per share
related to costs incurred with respect to the proposed tender
offer by CNA Financial.
- Net income increased 10 percent to $14.1 million, or 33 cents
per share, compared to $12.8 million, or 29 cents per share,
in 1999.
- Investment income increased 18 percent to $7.3 million.
- Underwriting income increased 11 percent to $17.8 million.
- The combined ratio was 76.4 percent for the second quarter ended
June 30, 2000 compared with 76.9 percent in the second quarter
of 1999.
"In the second quarter, we continued to achieve earnings growth and
favorable underwriting results, despite an increasingly difficult business
environment," said Mark C. Vonnahme, President and Chief Executive Officer of
CNA Surety. "The outlook for CNA Surety's core business is for continued
conservative growth. We anticipate construction markets to maintain their
relative strength, but growth may slow as compared with last year. We are
working to offset some of the softness in our markets with continued
productivity improvements and operating efficiencies."
For the six months ended June 30, 2000, net income increased 9 percent
to $28.2 million, or 66 cents per share, compared to $25.9 million, or 59 cents
per share, in 1999. Operating earnings, after income taxes and excluding the
non-recurring charge, increased 11 percent to $28.4 million, or 67 cents per
share, from $25.6 million, or 58 cents per share, in 1999. These increases in
operating earnings were primarily attributable to improved underwriting results
as described below and a 16 percent increase in investment income resulting from
larger average invested assets and higher portfolio yield.
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For the second quarter of 2000, net written premiums increased 3
percent to $78.4 million. Excluding international reinsurance business assumed
from CNA Reinsurance Company, Limited (London), core direct net written premiums
increased 3 percent to $75.4 million for the quarter. Net written premium growth
for the second quarter of 2000 was reduced by increased reinsurance costs. The
reinsurance rate used to compute ceded premiums is based upon reinsurers' loss
experience under the Company's surety excess of loss reinsurance contract on a
one quarter lag. Due to increased claims reported to our reinsurers through
March 31, 2000, ceded premiums increased $2.0 million to $4.0 million in the
second quarter. Gross written premiums (before ceded premiums) increased 5
percent to $82.4 million for the second quarter of 2000. Gross written premiums
for contract surety increased 8 percent for the quarter to $42.2 million due to
generally favorable economic conditions for public construction nationwide.
Gross written premiums for core direct commercial surety increased 3 percent to
$30.7 million, primarily due to competitive market conditions for large
commercial products. Net written premiums for the second quarter increased 2
percent for contract surety and 3 percent for commercial surety reflecting the
foregoing changes in gross production and the effects of higher reinsurance
costs.
Gross written premiums for the first half of 2000 increased 9 percent
to $163.0 million with contract surety and commercial surety up 14 percent and 5
percent, respectively. Net written premiums for the first half of 2000 increased
8 percent to $157.6 million with contract surety and commercial surety up 10
percent and 5 percent, respectively.
Underwriting income for the second quarter ended June 30, 2000
increased $1.7 million, or 11 percent, to $17.8 million. The Company's loss and
combined ratios were 18.1 percent and 76.4 percent, respectively, for the second
quarter of 2000 compared with loss and combined ratios for the comparable 1999
quarter of 16.9 percent and 76.9 percent, respectively. The loss and combined
ratios for the second quarter of 2000 include net favorable loss reserve
development of $1.8 million compared with net favorable loss reserve development
of $2.4 million for the second quarter of 1999. The expense ratio decreased to
58.3 percent in the second quarter of 2000 compared with the expense ratio of
60.0 percent in the comparable quarter of 1999, reflecting an 8 percent increase
in net earned premiums.
For the first half of 2000, underwriting income increased $3.1 million,
or 10 percent, to $35.1 million. The loss and combined ratios were 18.0 percent
and 76.8 percent, respectively, for the first half of 2000, compared to 17.2
percent and 76.7 percent, respectively, for the same period in 1999. The loss
and combined ratios for the first half of 2000 and the comparable period of 1999
include net favorable loss reserve development of $3.9 million and $4.1 million,
respectively. The expense ratio decreased 0.7 percentage points to 58.8 percent
for the first half of 2000.
Through June 30, 2000, the Company has repurchased approximately 1.2
million of its shares at an aggregate cost of $13.0 million. As of December 31,
1999, the Company had repurchased approximately 1.1 million of its shares at an
aggregate cost of $11.8 million.
CNA Surety Corporation is the largest publicly traded surety company in
the country. Through its principal subsidiaries, Western Surety Company and
Universal Surety of America, CNA Surety provides surety and fidelity bonds in
all 50 states through a combined network of approximately 37,000 independent
agencies. Visit us at www.cnasurety.com on the World Wide Web.
CNA is a registered service mark, trade name and domain name of CNA
Financial Corporation.
# # #
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CNA SURETY CORPORATION
Press Release Investor Data
{Amounts in thousands, except per share data}
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------- --------------------
2000 1999 2000 1999
-------- -------- -------- --------
OPERATING RESULTS:
Gross written premiums $ 82,376 $ 78,181 $163,031 $149,705
======== ======== ======== ========
Net written premiums $ 78,410 $ 76,173 $157,589 $145,535
======== ======== ======== ========
Revenues:
Net earned premiums $ 75,554 $ 69,688 $151,241 $137,558
Net investment income 7,267 6,172 14,468 12,513
Net realized investment gains 234 24 230 420
-------- -------- -------- --------
Total revenues 83,055 75,884 165,939 150,491
-------- -------- -------- --------
Expenses:
Net losses and loss
adjustment expenses 13,688 11,758 27,260 23,672
Net commissions, brokerage and
other underwriting 44,025 41,838 88,833 81,816
Interest expense 1,729 1,331 3,350 2,820
Non-recurring charge 500 -- 500 --
Amortization of intangible
assets 1,523 1,475 3,048 2,950
-------- -------- -------- --------
Total expenses 61,465 56,402 122,991 111,258
-------- -------- -------- --------
Income before income taxes 21,590 19,482 42,948 39,233
Income taxes 7,483 6,644 14,728 13,352
-------- -------- -------- --------
NET INCOME $ 14,107 $ 12,838 $ 28,220 $ 25,881
======== ======== ======== ========
Basic earnings per common share $ 0.33 $ 0.29 $ 0.66 $ 0.59
======== ======== ======== ========
Diluted earnings per common share $ 0.33 $ 0.29 $ 0.66 $ 0.59
======== ======== ======== ========
Basic weighted average
shares outstanding 42,898 44,098 42,930 44,099
======== ======== ======== ========
Diluted weighted average
shares outstanding 43,080 44,267 43,080 44,238
======== ======== ======== ========
OPERATING EARNINGS, AFTER INCOME TAXES:
Net realized income $ 14,107 $ 12,838 $ 28,220 25,881
Net realized investment gains (152) (16) (150) (273)
Non-recurring charge 325 -- 325 --
-------- -------- -------- --------
Operating earnings $ 14,280 $ 12,822 $ 28,395 $ 25,608
======== ======== ======== ========
DILUTED PER SHARE DATA:
Net income $ 0. 33 $ 0.29 $ 0.66 $ 0.59
Net realized investment gains -- -- -- (.01)
Non-recurring charge 0.01 -- 0.01 --
-------- -------- -------- --------
OPERATING EARNINGS $ 0. 34 $ 0.29 $ 0.67 $ 0.58
======== ======== ======== ========
----------------------------------
See notes to Press Release Investor Data on page 4.
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CNA SURETY CORPORATION
Press Release Investor Data
{Amounts in thousands, except per share data}
THREE MONTHS ENDED SIX MONTHS ENDED
-------------------- --------------------
JUNE 30, JUNE 30,
2000 1999 2000 1999
-------- -------- -------- --------
UNDERWRITING RESULTS:
Gross written premiums:
Contract $ 42,152 $ 39,004 $ 79,567 $ 69,717
Commercial 33,739 32,902 69,486 66,267
Fidelity and other 6,485 6,275 13,978 13,721
-------- -------- -------- --------
$ 82,376 $ 78,181 $163,031 $149,705
======== ======== ======== ========
Net written premiums:
Contract $ 38,546 $ 37,838 $ 74,476 $ 67,497
Commercial 33,354 32,511 68,669 65,395
Fidelity and other 6,510 5,824 14,444 12,643
-------- -------- -------- --------
$ 78,410 $ 76,173 $157,589 $145,535
======== ======== ======== ========
Net earned premiums $ 75,554 $ 69,688 $151,241 $137,558
Net losses and loss
adjustment expenses (1) 13,688 11,758 27,260 23,672
Net commissions, brokerage
and other underwriting expenses 44,025 41,838 88,833 81,816
-------- -------- -------- --------
Underwriting income $ 17,841 $ 16,092 $ 35,148 $ 32,070
======== ======== ======== ========
Loss ratio (1) 18.1% 16.9% 18.0% 17.2%
Expense ratio 58.3 60.0 58.8 59.5
-------- -------- -------- --------
Combined ratio (1) 76.4% 76.9% 76.8% 76.7%
======== ======== ======== ========
CASH FLOW DATA:
Net cash provided by operations (1,788) (5,373) 38,631 16,005
JUNE 30, December 31,
CONSOLIDATED BALANCE SHEET DATA: 2000 1999
-------- --------
Invested assets and cash $525,514 $499,400
Intangible assets, net 152,931 155,980
Total assets 879,808 851,575
Insurance reserves 373,514 357,233
Long-term debt 101,900 101,900
Total stockholders' equity 348,311 326,304
Book value per share $ 8.12 $ 7.59
======== ========
Outstanding shares 42,899 43,006
======== ========
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NOTES TO PRESS RELEASE INVESTOR DATA
(1) Includes the effect of recording revisions of prior year reserves. The
dollar amount and the percentage point effect on the loss ratio of
these reserve revisions, all of which were reductions, were $1,777 or
2.4% and $2,448 or 3.5 % for three months ended June 30, 2000 and 1999
, and $3,878 or 2.6% and $4,113 or 3.0% for six months ended June 30,
2000 and 1999, respectively.
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995: The statements which are not historical facts contained in this release
are forward-looking statements that involve risks and uncertainties, including,
but not limited to, product and policy demand and market response risks, the
effect of economic conditions, the impact of competitive products, policies and
pricing, product and policy development, regulatory changes and conditions,
rating agency policies and practices, development of claims and the effect on
loss reserves, the performance of reinsurance companies under reinsurance
contracts with the Company, investment portfolio developments and reaction to
market conditions, the results of financing efforts, the actual closing of
contemplated transactions and agreements, the effect of the Company's accounting
policies, and other risks detailed in CNA Surety Corporation's Securities and
Exchange Commission filings. No assurance can be given that the actual results
of operations and financial condition will conform to the forward-looking
statements contained herein.
