Exhibit 99.7
Page 1 of 3
KAYE GROUP INC.
122 EAST 42ND STREET
NEW YORK, NY 10168
www.kayegroup.com
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NEWS RELEASE Contact Person: Michael P. Sabanos
------------ Executive VP & C.F.O.
FOR IMMEDIATE RELEASE Phone: (212) 338-2273
Fax: (212) 867-0368
E-Mail: [email protected]
KAYE REPORTS 40% THIRD QUARTER EPS GROWTH
Lawrence Greenfield Re-appointed To Expanded Board
NEW YORK, NY October 23, 2000- KAYE GROUP INC. (Nasdaq-KAYE) today reported
consolidated net income for the third quarter ended September 30, 2000 of
$2,349,000, or $.28 per share, compared to $1,723,000, or $.20 per share, for
the third quarter of 1999, an EPS increase of 40%. Results for the nine months
of 2000 were $6,888,000, or $.81 per share, compared to net income for last
year's nine months of $5,205,000, or $.62 per share, a 31% EPS gain. Earnings
per share at September 30, 2000 for the previous twelve months was a record
$1.09.
Consolidated revenues increased by $2,338,000, or 14%, in the third quarter and
by $6,535,000, or 13%, for the nine months, compared with similar periods in
1999. Consolidated revenues for the twelve months ended September 30, 2000 were
an all-time high $75,279,000. Brokerage commissions and fees this year increased
by 15% in the third quarter and 11% for the nine months over the same 1999
periods. $2,350,000 of new brokerage business was added in the third quarter and
$6,512,000 for the nine months. Property and Casualty companies' revenues
increased $1,078,000, or 14%, for the third quarter and $3,746,000, or 17%, for
the nine months over like periods in 1999.
Consolidated expenses for the third quarter of 2000 increased by $1,383,000, or
10%, and for the nine months $3,952,000, or 9%, over the comparable periods last
year. In brokerage operations, expenses increased $856,000, or 10%, for the
quarter, and $651,000, or 2% for the nine months, compared to the same periods
last year. The third quarter combined loss and expense ratio for the Property
and Casualty companies was 72%, a reduction of 2% from last year's third
quarter. This resulted primarily from a reduction of redundant property loss
reserves due to better than anticipated prior year claims experience. For the
nine months, the combined ratio increased to 78% from last year's nine month
figure of 72%. This increase, as previously discussed by the Company, is
attributable mainly to higher reinsurance costs, consistent with current market
conditions. The combined ratio measures incurred losses and loss related
expenses plus underwriting expenses, all as a percentage of earned premiums.
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Bruce D. Guthart, Company Chairman, President and Chief Executive Officer,
commenting on the results, said, "We are very pleased to continue reporting
excellent results. Brokerage commissions and fees are up due to new business
production, excellent retention of existing accounts and an overall increase in
premiums. Much of the new business comes from our wholesale operations, and that
feeds revenue to our insurance companies as well. The trend toward more rational
pricing of property and casualty coverages appears to be taking hold among many
classes of business. Rate increases are, of course, encouraging for future
growth. But, more significantly, even as our clients and prospects face higher
insurance costs, our account servicing staff is successfully renewing existing
business; and the fine efforts of our production staff, as well as the agents
and brokers in our wholesale network, continue to bring new business in the
door."
In other news, the Company announced that Lawrence Greenfield has been
re-appointed to its Board of Directors bringing the total number of directors to
nine. Mr. Greenfield has been with the Company for 39 years and, during 1997,
stepped down from his position as Vice-Chairman of the Board.
Kaye Group Inc. offers insurance brokerage, risk management, and underwriting
services countrywide through traditional distribution methods, various
business-to-business e-commerce channels and strategic alliances. Kaye's retail
and wholesale insurance brokerage subsidiaries procure property/casualty and
employee benefits insurance and provide a full range of brokerage and risk
management services for commercial and individual clients, as well as other
insurance agents and brokers. Kaye's principal insurance company subsidiary is
Old Lyme Insurance Company of Rhode Island, Inc. (A.M. Best rated A-
(Excellent)). Old Lyme underwrites low limits of property and casualty insurance
for certain niche/affinity group accounts produced by the brokerage
subsidiaries. These accounts include residential real estate, restaurants, "Main
Street" stores and service establishments, automobile service stations,
contractors, and other businesses.
(CONDENSED CONSOLIDATED STATEMENTS OF INCOME ATTACHED)
CAUTIONARY STATEMENT
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements. This press release or any other written or oral
statements made by or on behalf of the Company may include forward-looking
statements that reflect the Company's current views with respect to future
events and financial performance. These forward-looking statements are subject
to certain uncertainties and other factors that could cause actual results to
differ materially from such statements. These uncertainties and other factors
(which are described in more detail elsewhere in documents filed by the Company
with the Securities and Exchange Commission) include, but are not limited to,
uncertainties relating to general economic conditions and cyclical industry
conditions, uncertainties relating to government and regulatory policies,
volatile and unpredictable developments (including storms and catastrophes), the
legal environment, the uncertainties of the reserving process, and the
competitive environment in which the Company operates. The words "believe",
"expect", "anticipate", "project", "plan", and similar expressions identify
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of their dates. The
Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events, or otherwise.
# # #
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KAYE GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the three months and nine months ended September 30, 2000 and 1999
(Unaudited) (in thousands, except per share amounts)
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<TABLE>
<CAPTION>
Three months ended Nine months ended
------------------------- -------------------------
2000 1999 2000 1999
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<S> <C> <C> <C> <C>
REVENUES:
Brokerage commissions and fees - net $ 9,984 $ 8,660 $ 30,237 $ 27,240
Underwriting net premiums earned 7,795 6,804 22,385 19,733
Investment income:
Brokerage 390 509 1,021 1,114
Underwriting 742 658 2,769 2,072
Corporate 5 (50) 94 209
Other 21 18 450 53
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Total revenues 18,937 16,599 56,956 50,421
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EXPENSES:
Brokerage compensation and benefits 5,959 5,492 17,451 17,279
Underwriting losses and loss expenses 2,506 2,490 8,464 6,786
Brokerage amortization of intangibles 295 313 862 941
Acquisition and other operating expenses:
Brokerage 3,396 3,014 9,956 9,500
Underwriting 3,121 2,547 9,046 7,422
Corporate 63 102 355 297
Interest:
Brokerage 234 209 655 553
Corporate 56 80 185 244
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Total expenses 15,630 14,247 46,974 43,022
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INCOME BEFORE INCOME TAXES 3,307 2,352 9,982 7,399
Provision for income taxes 958 629 3,094 2,194
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NET INCOME $ 2,349 $ 1,723 $ 6,888 $ 5,205
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EARNINGS PER SHARE:
Basic $ 0.28 $ 0.20 $ 0.81 $ 0.62
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Diluted $ 0.27 $ 0.20 $ 0.80 $ 0.60
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Weighted average of shares outstanding - basic 8,473 8,460 8,467 8,460
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Weighted average shares outstanding and share
equivalents outstanding - diluted 8,610 8,655 8,609 8,621
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</TABLE>
