Kaye Reports Record First Quarter Revenues and Profit; Sixth Straight Quarter of Record Results

Apr 23, 2001, 01:00 ET from Kaye Group Inc.

    NEW YORK, April 23 /PRNewswire Interactive News Release/ --
 Kaye Group Inc. (Nasdaq: KAYE) today reported record consolidated net income
 for the first quarter ended March 31, 2001 of $1,766,000, or $.21 per share,
 compared to $1,622,000, or $.19 per share, for the same period last year, an
 earnings per share increase of 11%. The results include expenses of $469,000,
 or $.06 per share, related to the previously announced pending merger with Hub
 International Limited.  Exclusive of these expenses, first quarter earnings
 per share increased 42% over the same period last year.  Results in insurance
 brokerage and underwriting both improved.  Total revenues for the twelve
 months ended March 31, 2001 were a record $80,650,000 compared to $70,036,000
 for the comparable 2000 quarter, a 15% increase.
     Consolidated revenues for the first quarter were $19,627,000, a record for
 any first quarter, and an increase of $2,252,000, or 13%, over last year's
 first quarter.  New business in brokerage operations generated $2,577,000 in
 gross commissions and fees.  Both client retention and price increases
 contributed to brokerage revenue growth.  In property and casualty
 underwriting operations, net premiums earned grew $1,032,000, or 15%, over the
 quarter ended March 31, 2000.  First quarter investment income of $965,000 was
 $551,000 less than last year's first quarter.  This was chiefly due to prior
 year net realized public equity portfolio gains and current year net realized
 public equity portfolio losses.  The current year first quarter net investment
 loss resulted from our previously announced decision during the quarter to
 replace all public equity investments with United States Treasury Bonds.
     Consolidated expenses for the first quarter increased by $1,682,000, or
 11%, over last year's first quarter.  This resulted primarily from growth in
 both insurance company and brokerage operations, the Company's incentive
 compensation programs and an increase in the insurance company's combined loss
 and expense ratio.  The combined ratio for the first quarter was 83% compared
 to 78% in the first quarter of 2000.  This ratio remains within the Company's
 historical range and significantly better than the Property & Casualty
 Industry's average.  The higher ratio resulted from the continued increase in
 volume of general liability business, which requires a more conservative loss
 reserving practice, relative to property insurance business.  The combined
 ratio measures incurred losses and loss related expenses plus underwriting
 expenses, all as a percentage of earned premiums.
     Bruce D. Guthart, Company Chairman, President and Chief Executive Officer,
 commenting on the results, said, "We're very happy to report our sixth
 straight quarter of record revenues and earnings with all segments of the
 Company performing excellently.  It is particularly gratifying to see
 continued robust growth in our brokerage operations in which income before
 merger expenses and income taxes improved by $1,200,000 over last year's first
 quarter."  Mr. Guthart added, "Both the Kaye and Hub organizations look
 forward to our merger, completion of which is subject, in part, to regulatory
 approval."
     Kaye Group Inc., which recently announced an agreement to be acquired by
 Toronto-based Hub International Limited (Toronto Stock Exchange symbol: HBG),
 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.
 
     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.
 
 
     KAYE GROUP INC.
 
     CONDENSED CONSOLIDATED STATEMENTS OF INCOME
     For the three months ended March 31, 2001 and 2000 (Unaudited)
     (in thousands, except per share amounts)
 
                                                      2001              2000
     REVENUES:
 
     Brokerage commissions and fees - net           $10,546            $8,777
     Underwriting net premiums earned                 8,096             7,064
     Investment income:
           Brokerage                                    284               333
           Underwriting                                 678             1,169
           Corporate                                      3                14
     Other                                               20                18
 
     Total revenues                                  19,627            17,375
 
     EXPENSES:
 
     Brokerage compensation and benefits              5,981             5,645
     Underwriting losses and loss
      expenses                                        3,380             2,751
     Brokerage amortization of
      intangibles                                       345               287
     Acquisition and other operating
      expenses:
           Brokerage                                  3,330             3,174
           Underwriting                               3,315             2,775
           Corporate                                    103                83
     Interest:
           Brokerage                                    178               208
           Corporate                                     40                67
 
     Total expenses                                  16,672            14,990
 
     INCOME BEFORE MERGER EXPENSES AND
      INCOME TAXES                                    2,955             2,385
 
     Merger expenses                                    469                 0
 
     INCOME BEFORE INCOME TAXES                       2,486             2,385
 
     Provision for income taxes                         720               763
 
     NET INCOME                                      $1,766            $1,622
 
     EARNINGS PER SHARE:
 
           Basic                                      $0.21             $0.19
 
           Diluted                                    $0.20             $0.19
 
     Weighted average of shares
      outstanding - basic                             8,485             8,461
 
     Weighted average shares outstanding
      and share equivalents outstanding
      - diluted                                       8,956             8,669
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X48434167
 
 

SOURCE Kaye Group Inc.
    NEW YORK, April 23 /PRNewswire Interactive News Release/ --
 Kaye Group Inc. (Nasdaq: KAYE) today reported record consolidated net income
 for the first quarter ended March 31, 2001 of $1,766,000, or $.21 per share,
 compared to $1,622,000, or $.19 per share, for the same period last year, an
 earnings per share increase of 11%. The results include expenses of $469,000,
 or $.06 per share, related to the previously announced pending merger with Hub
 International Limited.  Exclusive of these expenses, first quarter earnings
 per share increased 42% over the same period last year.  Results in insurance
 brokerage and underwriting both improved.  Total revenues for the twelve
 months ended March 31, 2001 were a record $80,650,000 compared to $70,036,000
 for the comparable 2000 quarter, a 15% increase.
     Consolidated revenues for the first quarter were $19,627,000, a record for
 any first quarter, and an increase of $2,252,000, or 13%, over last year's
 first quarter.  New business in brokerage operations generated $2,577,000 in
 gross commissions and fees.  Both client retention and price increases
 contributed to brokerage revenue growth.  In property and casualty
 underwriting operations, net premiums earned grew $1,032,000, or 15%, over the
 quarter ended March 31, 2000.  First quarter investment income of $965,000 was
 $551,000 less than last year's first quarter.  This was chiefly due to prior
 year net realized public equity portfolio gains and current year net realized
 public equity portfolio losses.  The current year first quarter net investment
 loss resulted from our previously announced decision during the quarter to
 replace all public equity investments with United States Treasury Bonds.
     Consolidated expenses for the first quarter increased by $1,682,000, or
 11%, over last year's first quarter.  This resulted primarily from growth in
 both insurance company and brokerage operations, the Company's incentive
 compensation programs and an increase in the insurance company's combined loss
 and expense ratio.  The combined ratio for the first quarter was 83% compared
 to 78% in the first quarter of 2000.  This ratio remains within the Company's
 historical range and significantly better than the Property & Casualty
 Industry's average.  The higher ratio resulted from the continued increase in
 volume of general liability business, which requires a more conservative loss
 reserving practice, relative to property insurance business.  The combined
 ratio measures incurred losses and loss related expenses plus underwriting
 expenses, all as a percentage of earned premiums.
     Bruce D. Guthart, Company Chairman, President and Chief Executive Officer,
 commenting on the results, said, "We're very happy to report our sixth
 straight quarter of record revenues and earnings with all segments of the
 Company performing excellently.  It is particularly gratifying to see
 continued robust growth in our brokerage operations in which income before
 merger expenses and income taxes improved by $1,200,000 over last year's first
 quarter."  Mr. Guthart added, "Both the Kaye and Hub organizations look
 forward to our merger, completion of which is subject, in part, to regulatory
 approval."
     Kaye Group Inc., which recently announced an agreement to be acquired by
 Toronto-based Hub International Limited (Toronto Stock Exchange symbol: HBG),
 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.
 
     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.
 
 
     KAYE GROUP INC.
 
     CONDENSED CONSOLIDATED STATEMENTS OF INCOME
     For the three months ended March 31, 2001 and 2000 (Unaudited)
     (in thousands, except per share amounts)
 
                                                      2001              2000
     REVENUES:
 
     Brokerage commissions and fees - net           $10,546            $8,777
     Underwriting net premiums earned                 8,096             7,064
     Investment income:
           Brokerage                                    284               333
           Underwriting                                 678             1,169
           Corporate                                      3                14
     Other                                               20                18
 
     Total revenues                                  19,627            17,375
 
     EXPENSES:
 
     Brokerage compensation and benefits              5,981             5,645
     Underwriting losses and loss
      expenses                                        3,380             2,751
     Brokerage amortization of
      intangibles                                       345               287
     Acquisition and other operating
      expenses:
           Brokerage                                  3,330             3,174
           Underwriting                               3,315             2,775
           Corporate                                    103                83
     Interest:
           Brokerage                                    178               208
           Corporate                                     40                67
 
     Total expenses                                  16,672            14,990
 
     INCOME BEFORE MERGER EXPENSES AND
      INCOME TAXES                                    2,955             2,385
 
     Merger expenses                                    469                 0
 
     INCOME BEFORE INCOME TAXES                       2,486             2,385
 
     Provision for income taxes                         720               763
 
     NET INCOME                                      $1,766            $1,622
 
     EARNINGS PER SHARE:
 
           Basic                                      $0.21             $0.19
 
           Diluted                                    $0.20             $0.19
 
     Weighted average of shares
      outstanding - basic                             8,485             8,461
 
     Weighted average shares outstanding
      and share equivalents outstanding
      - diluted                                       8,956             8,669
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X48434167
 
 SOURCE  Kaye Group Inc.