Ascent Assurance Reports Fourth Quarter Results

Apr 18, 2001, 01:00 ET from Ascent Assurance, Inc.

    FORT WORTH, Texas, April 18 /PRNewswire/ -- Ascent Assurance, Inc.
 (OTC Bulletin Board:   AASR) reported today a net loss of ($16.7) million for
 the fourth quarter and ($18.9) million for the year ended December 31, 2000.
 The loss applicable to common stockholders was ($17.3) million or ($2.67) per
 common share for the fourth quarter and ($21.5) million or ($3.31) per common
 share for the year ended December 31, 2000 after deducting preferred stock
 dividends of $622,000 and $2.6 million, respectively.  For the fourth quarter
 of 1999, net income was $345,000 and loss applicable to common stockholders
 was ($286,000) or ($0.04) per common share after deducting preferred stock
 dividends of $631,000.  Preferred stock dividends are payable annually through
 the issuance of additional shares of preferred stock or cash, at the Company's
 option.  On December 31, 2000, preferred stock dividends accrued in 2000 were
 paid through the issuance of 2,575 shares of preferred stock.
     Total revenues were $38.4 million and $149.6 million for the fourth
 quarter and year ended December 31, 2000, respectively, as compared to
 $34.8 million and $142.8 million for the corresponding 1999 periods.  Total
 premium revenues increased by $2.6 million or 9% for the fourth quarter and
 $3.6 million or 3% for the year ended December 31, 2000 as compared to the
 corresponding prior year periods.  First year premiums increased by 53% to
 $8.6 million for the fourth quarter of 2000 as compared to $5.6 million for
 the 1999 fourth quarter.
     The benefits and claims to premium ratio was 99.8% and 85% for the fourth
 quarter and year ended December 31, 2000, respectively, as compared to 75.5%
 and 75.2% for the corresponding 1999 periods.  In July 2000, the Company
 discontinued marketing the principal medical expense product sold since 1998,
 as targeted profitability levels were not met.
     As a result of fourth quarter 2000 losses, the Company determined that a
 premium deficiency of $1.5 million existed at December 31, 2000 related to
 medical expense products issued subsequent to the fresh start date of
 March 31, 1999.  Accordingly, a non-cash charge was recorded to reduce
 deferred policy acquisition costs by $1.5 million at December 31, 2000.
     Also as a result of fourth quarter 2000 losses, the Company recorded a
 non-cash charge to increase the deferred tax asset valuation allowance by
 $10.4 million to $18.3 million at December 31, 2000 which fully reserves the
 Company's deferred tax asset.  Realization of the Company's deferred tax asset
 is dependent upon the Company's return to profitability.  Management believes
 that losses from discontinued medical expense products can be reduced through
 rate increase management.  However, under applicable accounting literature,
 projections of future profitability are given little weight when evaluating
 the recoverability of deferred tax assets.
     Patrick J. Mitchell, Chairman and CEO, commenting on fourth quarter
 operations said, "Our financial results for the quarter were again adversely
 impacted by a high benefits and claims to premium ratio.  We continue to focus
 our efforts on our operating strategies to enhance future results.  Sales of
 our new major medical product, introduced in July of 2000, continue to
 accelerate.  The new product, designed to produce a substantially lower
 benefits and claims to premium ratio, should begin to favorably impact
 operating results later this year."
     The Company also closed a debt financing arrangement with Credit Suisse
 First Boston Management Corporation, an affiliate of the Company's largest
 stockholder, enabling the Company to contribute the entire $11 million
 proceeds of the loan as a capital contribution to one of its insurance
 subsidiaries.  The loan bears interest at a rate of 12% per annum and matures
 in April, 2004.  Absent any acceleration following an event of default, the
 Company may elect to pay interest in kind by issuance of additional notes.
 The credit agreement relating to the loan provides for a facility fee of
 $1.5 million which is payable upon the earlier of maturity or a change in
 control, as defined.  The Company's obligations under this facility are
 secured by the capital stock of certain subsidiaries and other assets not
 pledged as collateral in connection with the Company's receivables financing
 facility.
     Mr. Mitchell commenting on the transaction stated "We are pleased that
 this additional investment will enable us to satisfy our statutory capital and
 surplus requirements and continue our long term commitment to our
 shareholders, the policyholders of our insurance subsidiaries and all other
 stakeholders of the Company."
     Book value at December 31, 2000 was $.63 per outstanding common share, or
 $1.17 per outstanding common share excluding the effects of the change in
 unrealized mark to market valuation of the Company's investment portfolio.
     Ascent Assurance, Inc. is an insurance holding company primarily engaged
 in the development, marketing, underwriting and administration of medical-
 surgical expense, supplemental health, life and disability insurance products
 to self-employed individuals and small business owners.  Marketing is achieved
 primarily through the career agency force of its marketing subsidiary.  The
 Company's goal is to combine the talents of its employees and agents to market
 competitive and profitable insurance products and provide superior customer
 service in every aspect of operations.  (www.ascentassurance.com)
 
     (Forward-Looking Statements:  The Private Securities Litigation Reform Act
 of 1995 provides a "safe harbor" for forward-looking statements.  This press
 release contains forward-looking statements regarding the intent, belief or
 current expectations of the Company and members of its senior management team.
 While the Company believes that its expectations are based on reasonable
 assumptions within the bounds of its knowledge of its business and operations,
 prospective investors are cautioned that any such forward-looking statements
 are not guarantees of future performance, and involve risks and uncertainties,
 and that actual results may differ materially from those contemplated by such
 forward-looking statements.  Factors that would cause actual results to differ
 materially from those contemplated within this press release can be found in
 the Company's Form 10-K for the year ended December 31, 2000 and Forms 10-Q
 for the quarters ended March 31, 2000, June 30, 2000 and September 30, 2000.)
 
 
                             ASCENT ASSURANCE, INC.
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 (000's omitted, except for per share amounts)
 
                                                             Nine      Three
                                Three Months     Year        Months    Months
                                  Ended          Ended       Ended     Ended
                                 Dec. 31,       Dec. 31,    Dec. 31,  March 31,
                             2000       1999      2000        1999      1999
                                                                     Westbridge
                                                                 Capital Corp.*
 
     First-year premium  $   8,626  $   5,638  $  30,984  $  14,350  $   3,121
     Renewal premium        22,218     22,647     88,924     72,021     26,827
       Total premium        30,844     28,285    119,908     86,371     29,948
 
     Net investment income   2,772      2,186      9,741      6,740      2,562
     Fee and service income  4,994      4,367     20,391     13,069      4,263
     Net realized (loss)
      gain on investments     (246)       (38)      (454)      (208)        41
       Total revenue        38,364     34,800    149,586    105,972     36,814
 
     Benefits and claims    30,780     21,347    101,940     65,699     21,799
     Commissions             6,209      5,962     25,010     17,891      6,688
     General and
      administrative
      expenses               9,010      7,527     35,159     21,034      7,229
     Recognition of
      premium deficiency     1,500        ---      1,500        ---        ---
     Taxes, licenses
      and fees               1,167        940      5,105      3,422      1,059
     Increase in deferred
      acquisition costs       (925)    (1,595)    (6,818)    (4,354)      (862)
     Interest expense on
      notes payable            194         80        629        284        119
     Interest expense on
      retired/canceled debt    ---        ---        ---        ---        507
     Resolution of
      preconfirmation
      contingencies            ---        ---        ---     (1,235)       ---
       Total expenses       47,935     34,261    162,525    102,741     36,539
 
     Pretax (loss) income   (9,571)       539    (12,939)     3,231        275
     Federal income tax
      benefit (expense)     (7,148)      (194)    (6,003)    (1,125)       (67)
     Net (loss) income   $ (16,719) $     345  $ (18,942) $   2,106  $     208
 
     Preferred stock
      dividends                622        631      2,576      1,874        ---
     (Loss) income
      applicable to common
      stockholders       $ (17,341) $    (286) $ (21,518) $     232  $     208
 
     Basic and diluted
      (loss) income per
      common share       $   (2.67) $    (.04) $   (3.31) $     .04  $     .03
     Weighted average shares
      outstanding
       Basic                 6,500      6,500      6,500      6,500      7,032
       Diluted               6,500      6,500      6,500      6,510      7,032
 
     *  The Company changed its name to Ascent Assurance, Inc. on
        March 24, 1999, the effective date of its reorganization and adoption
        of "fresh-start" accounting in accordance with generally accepted
        accounting principles.
 
 
                             ASCENT ASSURANCE, INC.
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                 (000's omitted, except for per share amounts)
 
                                            December 31,     December 31,
                                                2000             1999
     Assets
     Investment assets                      $   109,577      $   110,193
     Cash                                         2,658            5,110
     Accrued investment income                    1,965            2,030
     Deferred policy acquisition costs           24,711           19,393
     Agent receivables, net                       8,737            7,062
     Deferred tax asset, net                        ---            7,086
     Property and equipment                       6,375            6,272
     Other assets                                 6,455            6,544
 
     Total Assets                           $   160,478      $   163,690
 
     Liabilities and Equity
     Policy liabilities                     $   104,084      $    95,895
     Notes payable                                8,947            7,162
     Other liabilities                           15,667           13,592
       Total Liabilities                        128,698          116,649
 
     Redeemable Convertible Preferred Stock      27,705           23,257
 
     Stockholders' Equity *                       4,075           23,784
 
     Total Liabilities and Equity           $   160,478      $   163,690
 
       Book Value Per Outstanding
         Common Share*                      $       .63      $      3.66
 
     *  Excluding pre-tax unrealized investment losses of $3,521 for
        December 31, 2000 and after-tax unrealized investment losses of $3,851
        for December 31, 1999, book value per outstanding common share was
        $1.17 at December 31, 2000 and $4.25 at December 31, 1999.
 
 

SOURCE Ascent Assurance, Inc.
    FORT WORTH, Texas, April 18 /PRNewswire/ -- Ascent Assurance, Inc.
 (OTC Bulletin Board:   AASR) reported today a net loss of ($16.7) million for
 the fourth quarter and ($18.9) million for the year ended December 31, 2000.
 The loss applicable to common stockholders was ($17.3) million or ($2.67) per
 common share for the fourth quarter and ($21.5) million or ($3.31) per common
 share for the year ended December 31, 2000 after deducting preferred stock
 dividends of $622,000 and $2.6 million, respectively.  For the fourth quarter
 of 1999, net income was $345,000 and loss applicable to common stockholders
 was ($286,000) or ($0.04) per common share after deducting preferred stock
 dividends of $631,000.  Preferred stock dividends are payable annually through
 the issuance of additional shares of preferred stock or cash, at the Company's
 option.  On December 31, 2000, preferred stock dividends accrued in 2000 were
 paid through the issuance of 2,575 shares of preferred stock.
     Total revenues were $38.4 million and $149.6 million for the fourth
 quarter and year ended December 31, 2000, respectively, as compared to
 $34.8 million and $142.8 million for the corresponding 1999 periods.  Total
 premium revenues increased by $2.6 million or 9% for the fourth quarter and
 $3.6 million or 3% for the year ended December 31, 2000 as compared to the
 corresponding prior year periods.  First year premiums increased by 53% to
 $8.6 million for the fourth quarter of 2000 as compared to $5.6 million for
 the 1999 fourth quarter.
     The benefits and claims to premium ratio was 99.8% and 85% for the fourth
 quarter and year ended December 31, 2000, respectively, as compared to 75.5%
 and 75.2% for the corresponding 1999 periods.  In July 2000, the Company
 discontinued marketing the principal medical expense product sold since 1998,
 as targeted profitability levels were not met.
     As a result of fourth quarter 2000 losses, the Company determined that a
 premium deficiency of $1.5 million existed at December 31, 2000 related to
 medical expense products issued subsequent to the fresh start date of
 March 31, 1999.  Accordingly, a non-cash charge was recorded to reduce
 deferred policy acquisition costs by $1.5 million at December 31, 2000.
     Also as a result of fourth quarter 2000 losses, the Company recorded a
 non-cash charge to increase the deferred tax asset valuation allowance by
 $10.4 million to $18.3 million at December 31, 2000 which fully reserves the
 Company's deferred tax asset.  Realization of the Company's deferred tax asset
 is dependent upon the Company's return to profitability.  Management believes
 that losses from discontinued medical expense products can be reduced through
 rate increase management.  However, under applicable accounting literature,
 projections of future profitability are given little weight when evaluating
 the recoverability of deferred tax assets.
     Patrick J. Mitchell, Chairman and CEO, commenting on fourth quarter
 operations said, "Our financial results for the quarter were again adversely
 impacted by a high benefits and claims to premium ratio.  We continue to focus
 our efforts on our operating strategies to enhance future results.  Sales of
 our new major medical product, introduced in July of 2000, continue to
 accelerate.  The new product, designed to produce a substantially lower
 benefits and claims to premium ratio, should begin to favorably impact
 operating results later this year."
     The Company also closed a debt financing arrangement with Credit Suisse
 First Boston Management Corporation, an affiliate of the Company's largest
 stockholder, enabling the Company to contribute the entire $11 million
 proceeds of the loan as a capital contribution to one of its insurance
 subsidiaries.  The loan bears interest at a rate of 12% per annum and matures
 in April, 2004.  Absent any acceleration following an event of default, the
 Company may elect to pay interest in kind by issuance of additional notes.
 The credit agreement relating to the loan provides for a facility fee of
 $1.5 million which is payable upon the earlier of maturity or a change in
 control, as defined.  The Company's obligations under this facility are
 secured by the capital stock of certain subsidiaries and other assets not
 pledged as collateral in connection with the Company's receivables financing
 facility.
     Mr. Mitchell commenting on the transaction stated "We are pleased that
 this additional investment will enable us to satisfy our statutory capital and
 surplus requirements and continue our long term commitment to our
 shareholders, the policyholders of our insurance subsidiaries and all other
 stakeholders of the Company."
     Book value at December 31, 2000 was $.63 per outstanding common share, or
 $1.17 per outstanding common share excluding the effects of the change in
 unrealized mark to market valuation of the Company's investment portfolio.
     Ascent Assurance, Inc. is an insurance holding company primarily engaged
 in the development, marketing, underwriting and administration of medical-
 surgical expense, supplemental health, life and disability insurance products
 to self-employed individuals and small business owners.  Marketing is achieved
 primarily through the career agency force of its marketing subsidiary.  The
 Company's goal is to combine the talents of its employees and agents to market
 competitive and profitable insurance products and provide superior customer
 service in every aspect of operations.  (www.ascentassurance.com)
 
     (Forward-Looking Statements:  The Private Securities Litigation Reform Act
 of 1995 provides a "safe harbor" for forward-looking statements.  This press
 release contains forward-looking statements regarding the intent, belief or
 current expectations of the Company and members of its senior management team.
 While the Company believes that its expectations are based on reasonable
 assumptions within the bounds of its knowledge of its business and operations,
 prospective investors are cautioned that any such forward-looking statements
 are not guarantees of future performance, and involve risks and uncertainties,
 and that actual results may differ materially from those contemplated by such
 forward-looking statements.  Factors that would cause actual results to differ
 materially from those contemplated within this press release can be found in
 the Company's Form 10-K for the year ended December 31, 2000 and Forms 10-Q
 for the quarters ended March 31, 2000, June 30, 2000 and September 30, 2000.)
 
 
                             ASCENT ASSURANCE, INC.
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 (000's omitted, except for per share amounts)
 
                                                             Nine      Three
                                Three Months     Year        Months    Months
                                  Ended          Ended       Ended     Ended
                                 Dec. 31,       Dec. 31,    Dec. 31,  March 31,
                             2000       1999      2000        1999      1999
                                                                     Westbridge
                                                                 Capital Corp.*
 
     First-year premium  $   8,626  $   5,638  $  30,984  $  14,350  $   3,121
     Renewal premium        22,218     22,647     88,924     72,021     26,827
       Total premium        30,844     28,285    119,908     86,371     29,948
 
     Net investment income   2,772      2,186      9,741      6,740      2,562
     Fee and service income  4,994      4,367     20,391     13,069      4,263
     Net realized (loss)
      gain on investments     (246)       (38)      (454)      (208)        41
       Total revenue        38,364     34,800    149,586    105,972     36,814
 
     Benefits and claims    30,780     21,347    101,940     65,699     21,799
     Commissions             6,209      5,962     25,010     17,891      6,688
     General and
      administrative
      expenses               9,010      7,527     35,159     21,034      7,229
     Recognition of
      premium deficiency     1,500        ---      1,500        ---        ---
     Taxes, licenses
      and fees               1,167        940      5,105      3,422      1,059
     Increase in deferred
      acquisition costs       (925)    (1,595)    (6,818)    (4,354)      (862)
     Interest expense on
      notes payable            194         80        629        284        119
     Interest expense on
      retired/canceled debt    ---        ---        ---        ---        507
     Resolution of
      preconfirmation
      contingencies            ---        ---        ---     (1,235)       ---
       Total expenses       47,935     34,261    162,525    102,741     36,539
 
     Pretax (loss) income   (9,571)       539    (12,939)     3,231        275
     Federal income tax
      benefit (expense)     (7,148)      (194)    (6,003)    (1,125)       (67)
     Net (loss) income   $ (16,719) $     345  $ (18,942) $   2,106  $     208
 
     Preferred stock
      dividends                622        631      2,576      1,874        ---
     (Loss) income
      applicable to common
      stockholders       $ (17,341) $    (286) $ (21,518) $     232  $     208
 
     Basic and diluted
      (loss) income per
      common share       $   (2.67) $    (.04) $   (3.31) $     .04  $     .03
     Weighted average shares
      outstanding
       Basic                 6,500      6,500      6,500      6,500      7,032
       Diluted               6,500      6,500      6,500      6,510      7,032
 
     *  The Company changed its name to Ascent Assurance, Inc. on
        March 24, 1999, the effective date of its reorganization and adoption
        of "fresh-start" accounting in accordance with generally accepted
        accounting principles.
 
 
                             ASCENT ASSURANCE, INC.
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                 (000's omitted, except for per share amounts)
 
                                            December 31,     December 31,
                                                2000             1999
     Assets
     Investment assets                      $   109,577      $   110,193
     Cash                                         2,658            5,110
     Accrued investment income                    1,965            2,030
     Deferred policy acquisition costs           24,711           19,393
     Agent receivables, net                       8,737            7,062
     Deferred tax asset, net                        ---            7,086
     Property and equipment                       6,375            6,272
     Other assets                                 6,455            6,544
 
     Total Assets                           $   160,478      $   163,690
 
     Liabilities and Equity
     Policy liabilities                     $   104,084      $    95,895
     Notes payable                                8,947            7,162
     Other liabilities                           15,667           13,592
       Total Liabilities                        128,698          116,649
 
     Redeemable Convertible Preferred Stock      27,705           23,257
 
     Stockholders' Equity *                       4,075           23,784
 
     Total Liabilities and Equity           $   160,478      $   163,690
 
       Book Value Per Outstanding
         Common Share*                      $       .63      $      3.66
 
     *  Excluding pre-tax unrealized investment losses of $3,521 for
        December 31, 2000 and after-tax unrealized investment losses of $3,851
        for December 31, 1999, book value per outstanding common share was
        $1.17 at December 31, 2000 and $4.25 at December 31, 1999.
 
 SOURCE  Ascent Assurance, Inc.