PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report
February 28, 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 February 28, 2002, the Registrant issued a press release announcing its results for the fourth quarter of 2001. 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 February 28, 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 February 28, 2002.
VESTA INSURANCE GROUP, INC.
By: /s/ Donald W. Thornton
Its: Senior Vice President --
General Counsel and Secretary
EXHIBIT 99.1
FOR IMMEDIATE RELEASE Contact: Charles R. Lambert
Manager – Investor Relations
(205) 970-7030
CLambert@vesta.com
VESTA REPORTS FOURTH QUARTER AND YEAR END RESULTS
2001 Revenues Increase by 40% Over Prior Year;
Vesta's Life & Health Segment Continues Excellent Results
BIRMINGHAM, Ala. - February 28, 2002 - Vesta Insurance Group, Inc. (NYSE: VTA) today reported a 40% increase in revenue in 2001 and its life and health segment continues to provide an excellent return on investment with a 128% increase in pre-tax income from continuing operations in 2001 compared to 2000.
Vesta reported a net operating loss from continuing operations of $2.6 million, or $0.08 per diluted share, for the quarter ending December 31, 2001 compared to operating earnings of $2.3 million, or $0.09 per diluted share, for the corresponding period in 2000. For the year ended December 31, 2001, Vesta reported net operating earnings from continuing operations of $6.1 million, or $0.23 per diluted share, compared to net operating earnings of $9.7 million, or $0.40 per diluted share, for 2000.
Including non-recurring items, the Company reported a net loss from continuing operations of $2.0 million, or $0.06 per diluted share, in the fourth quarter of 2001 compared to earnings of $2.1 million, or $0.09 per diluted share, in the corresponding period in 2000. For the year ended December 31, 2001, the net loss from continuing operations was $10.3 million, or $0.39 per diluted share, compared to earnings of $8.3 million, or $0.34 per diluted share, for 2000.
"While we are disappointed in our fourth quarter results, which include a number of unusual items that negatively affected our operating results, we remain committed to our strategic plan which is producing significant revenue growth," said James E. Tait, Chairman of Vesta Insurance Group. "We are comfortable that we will meet analysts' forecasts of operating earnings for 2002."
Segment Results
Vesta's standard property-casualty business reported net written premium of $77.0 million in the fourth quarter of 2001 compared to $47.0 million in the same period of 2000. The Company's GAAP combined ratio for the fourth quarter was 110.1% for its standard property-casualty segment. For fiscal year 2001, the Company's combined ratio was 99.7%.
The standard property-casualty results included a $4.0 million pre-tax charge to increase reserves and approximately $2.0 million of unusual expenses, including guaranty fund assessments related to the insolvency of Reliance Insurance Co. and bad debt expense in the quarter.
Our non-standard auto business segment broke even in the fourth quarter, as a result of income generated from strategic acquisitions completed in the period. The acquisition strategy has continued in the first quarter and company management is confident in continued improvement in 2002 as Vesta builds its retail agency operations and grows in the non-standard auto market.
Vesta's life and health segment posted $1.9 million in net operating earnings from continuing operations in the quarter, a 25% increase from the corresponding period in 2000. The Company also reported $1.2 million in losses, net of tax and minority interest, in the fourth quarter due to investments in Enron Corporation and $1.7 million in realized losses, net of tax and minority interest, related to collateral loans.
From October 1, 2001 to February 28, 2002, Vesta has repurchased 963,800 shares of its common stock at a cost ranging from $5.64 to $6.99 per share.
The Company's debt to total capital ratio was 33.8% as of December 31, 2001 compared to 36.7% as of December 31, 2000. On February 5, 2002, Vesta issued approximately 534,000 shares of common stock in exchange for $4.6 million face value of the Company's 8.75% Senior Debentures due 2025 and $.8 million face value of the Company's 8.525% Deferrable Capital Securities due 2027. On a pro forma basis, as of December 31, 2001, Vesta's debt to total capital ratio is 32.5%.
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 operating earnings and segment 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, including its combined ratio for the fiscal year ended December 31, 2002, may differ materially from those reflected in these forward-looking statements. Some of the factors that could affect the forward-looking statements contained herein include, without limitation: that further adverse development occurs in discontinued operations; that competitors may decide to target the Company's customer base by offering lower priced insurance; that the Company's independent agents may decide to discontinue sales of the Company's insurance to the individuals they represent; that new policy application levels may not rise to levels necessary to generate sufficient premium volume to achieve its financial performance goals; that A.M. Best may downgrade the Company's rating; that the Company is unable to execute its non-standard auto agency acquisition strategy; and that Vesta may ultimately be unable to recover a significant amount of paid losses currently reflected on its published financial statements as recoverable under a reinsurance treaty. 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 and the Prospectus dated June 20, 2001, 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.
4th Quarter 2001 Segment Comparison
(amounts in thousands)
Life and Health Standard Non-Standard Specialty Lines Corp & Other Consolidated
Insurance Property-Casualty Auto
2001 2000 2001 2000 2001 2000 2001 2000 2001 2000 2001 2000
---------------- -------------------- ------------------ ----------------- ---------------- -------------------
Revenues:
Net premiums written $8,260 $1,515 $76,984 $ 46,951 $5,460 $1,822 $90,704 $50,288
(Increase) decrease in unearned premiums -- -- (16,364) 5,572 (819) (866) (17,183) 4,706
---------------- -------------------- ------------------ ----------------- -------------------
Net premiums earned 8,260 1,515 60,620 52,523 -- -- 4,641 956 73,521 54,994
Net investment income 11,356 10,742 -- -- $ 16 -- -- -- $ 4,383 $ 6,046 15,755 16,788
Policy fees 1,045 1,035 1,262 -- -- -- 156 -- -- -- 2,463 1,035
Other 511 201 132 34 4,795 -- 1,087 819 1,970 (757) 8,495 297
---------------- -------------------- ------------------ ----------------- ---------------- -------------------
Total revenues 21,172 13,493 62,014 52,557 4,811 -- 5,884 1,775 6,353 5,289 100,234 73,114
Expenses:
Policyholder benefits 10,019 5,308 -- -- -- -- -- -- -- -- 10,019 5,308
Loss and LAE expenses incurred -- -- 44,228 32,312 -- -- 3,700 605 -- -- 47,928 32,917
Policy acquisition expenses 2,534 (472) 13,699 13,018 -- -- 1,127 210 -- -- 17,360 12,756
Operating expenses 2,705 2,831 10,213 6,277 4,687 -- 65 -- 4,474 3,171 22,144 12,279
Interest on debt 1,889 2,682 -- -- 83 -- -- -- 2,394 2,069 4,366 4,751
Goodwill and other intangible amortization -- -- -- -- -- -- -- -- 964 486 964 486
---------------- -------------------- ------------------ ----------------- ---------------- -------------------
Total expenses 17,147 10,349 68,140 51,607 4,770 -- 4,892 815 7,832 5,726 102,781 68,497
Income (loss) from continuing operations
before income taxes deferrable
capital securities, and minority interest 4,025 3,144 (6,126) 950 41 -- 992 960 (1,479) (437) (2,547) 4,617
Income taxes (benefit) 1,409 889 (2,144) 335 14 -- 347 326 (517) (237) (891) 1,313
Deferrable capital securities, net of tax -- -- -- -- -- -- -- -- 241 273 241 273
Minority interest in subsidiary, net of tax 711 737 -- -- 37 -- -- -- -- -- 748 737
---------------- -------------------- ------------------ ----------------- ---------------- -------------------
Net operating earnings (loss)
from continuing operations $1,905 $1,518 $(3,982) $ 615 $ (10) -- $ 645 $ 634 $ (1,203)$ (473) $ (2,645) $ 2,294
================ ==================== ================== ================= ================ ===================
Litigation settlement (charge)
reversal, net of tax 3,250 3,250
Realized gains (losses), net of
tax and minority nterest (2,186) (383) (170) (2,569) (170)
---------------- -------------------- ------------------ ----------------- ---------------- -------------------
Net income (loss) from continuing
operations $ (281)$ 1,518 $ (3,982) $ 615 $ (10) -- $ 645 $ 634 $ 1,664 $ (643) $ (1,964) $ 2,124
================ ==================== ================== ================= ================ ===================
*Excludes realized investment gains and losses
Vesta Insurance Group, Inc.
2001 Segment Comparison
(amounts in thousands)
Life and Health Standard Non-Standard Specialty Lines Corp & Other Consolidated
Insurance Property-Casualty Auto
2001 2000 2001 2000 2001 2000 2001 2000 2001 2000 2001 2000
---------------- -------------------- ------------------ ----------------- ---------------- -------------------
Revenues:
Net premiums written $30,572 $3,093 $263,962 $205,461 $11,789 $2,188 $306,323 $210,742
(Increase) decrease in unearned premiums -- -- (17,899) 7,348 (1,620)(1,091) (19,519) 6,257
---------------- -------------------- ----------------- -------------------
Net premiums earned 30,572 3,093 246,063 212,809 -- -- 10,169 1,097 286,804 216,999
Net investment income 43,494 21,360 -- -- $ 325 -- -- -- $20,099 $24,543 63,918 45,903
Policy fees 3,971 2,209 3,547 2,177 -- -- 156 -- -- -- 7,674 4,386
Other 1,060 712 718 -- 5,892 -- 4,237 977 4,513 (786) 16,420 903
---------------- -------------------- ------------------ ----------------- ---------------- -------------------
Total revenues 79,097 27,374 250,328 214,986 6,217 -- 14,562 2,074 24,612 23,757 374,816 268,191
Expenses:
Policyholder benefits 35,950 9,610 -- -- -- -- -- -- -- -- 35,950 9,610
Loss and LAE expenses incurred -- -- 161,599 124,772 -- -- 7,997 660 -- -- 169,596 125,432
Policy acquisition expenses 8,092 619 54,795 52,361 -- -- 2,356 244 -- -- 65,243 53,224
Operating expenses 12,520 5,855 32,356 26,616 9,087 -- 276 -- 15,369 11,103 69,608 43,574
Interest on debt 8,584 5,179 -- -- 83 -- -- -- 8,898 9,926 17,565 15,105
Goodwill and other intangible amortization -- -- -- -- -- -- -- -- 3,394 1,591 3,394 1,591
---------------- -------------------- ------------------ ----------------- ---------------- -------------------
Total expenses 65,146 21,263 248,750 203,749 9,170 -- 10,629 904 27,661 22,620 361,356 248,536
Income (loss) from continuing operations
before income taxes deferrable capital
securities, and minority interest 13,951 6,111 1,578 11,237 (2,953) -- 3,933 1,170 (3,049) 1,137 13,460 19,655
Income taxes (benefit) 4,427 1,720 838 3,833 (1,034) -- 1,377 398 (1,068) 434 4,540 6,385
Deferrable capital securities, net of tax -- -- -- -- -- -- -- -- 1,394 1,986 1,394 1,986
Minority interest in subsidiary, net of tax 2,307 1,595 -- -- (897) -- -- -- -- -- 1,410 1,595
---------------- -------------------- ------------------ ----------------- ---------------- -------------------
Net operating earnings (loss)
from continuing operations $7,217 2,796 $740 $7,404 $(1,022) -- $2,556 $772 $ (3,375)$(1,283) $6,116 $9,689
================ ==================== ================== ================= ================ ===================
Litigation settlement (charge) reversal,
net of tax (16,250) (16,250)
Realized gains (loss), net of tax
and minority interest (1,537) 1,389 (1,340) (148) (1,340)
---------------- -------------------- ------------------ ----------------- ---------------- -------------------
Net income (loss) from continuing
operations $5,680 $2,796 $ 740 $ 7,404 $ (1,022) -- $ 2,556 $ 772 $(18,236)$(2,623) $(10,282) $8,349
================ ==================== ================== ================= ================ ===================
*Excludes realized investment gains and losses
Vesta Insurance Group, Inc.
Quarter vs. Quarter and YTD vs. YTD
(amounts in thousands), except per share data
3 Months Ended December 31, 12 Months Ended December 31,
2001 2000 2001 2000
------------- -------------- ------------- --------------
Revenues:
Net premiums written $ 90,704 $ 50,288 $ 306,323 $ 210,742
(Increase) decrease in unearned premiums (17,183) 4,706 (19,519) 6,257
------------- -------------- ------------- --------------
Net premiums earned 73,521 54,994 286,804 216,999
Net investment income 15,755 16,788 63,918 45,903
Policy fees 2,463 1,035 7,674 4,386
Other 8,495 297 16,420 903
------------- -------------- ------------- --------------
Total revenues 100,234 73,114 374,816 268,191
Expenses:
Policyholder benefits 10,019 5,308 35,950 9,610
Loss and LAE expenses incurred 47,928 32,917 169,596 125,432
Policy acquisition expenses 17,360 12,756 65,243 53,224
Operating expenses 22,144 12,279 69,608 43,574
Interest on debt 4,366 4,751 17,565 15,105
Goodwill and other intangible amortization 964 486 3,394 1,591
------------- -------------- ------------- --------------
Total expenses 102,781 68,497 361,356 248,536
Income (loss) from continuing operations before income taxes
deferrable capital securities, and minority interest (2,547) 4,617 13,460 19,655
Income taxes (891) 1,313 4,540 6,385
Deferrable capital securities, net of tax 241 273 1,394 1,986
Minority interest in subsidiary, net of tax 748 737 1,410 1,595
------------- -------------- ------------- --------------
Net operating earnings (loss)
from continuing operations (2,645) 2,294 6,116 9,689
Securities litigation settlement charge, net of tax 3,250 - (16,250) -
Realized gains (losses), net of tax and minority interest (2,569) (170) (148) (1,340)
Net income (loss) from continuing operations (1,964) 2,124 (10,282) 8,349
Loss from discontinued operations, net of tax - (4,570) (19,958) (2,397)
Extraordinary gain on debt extinguishments, net of tax - 910 5,250
Net income (loss) (1,964) (2,446) (29,330) 11,202
Gain on redemption of preferred securities 1,404 9,190 7,068 9,190
Preferred stock dividend - (1,272) (163) (3,670)
------------- -------------- ------------- --------------
Income (loss) available to common shareholders $ (560) $ 5,472 $ (22,425) $ 16,722
============= ============== ============= ==============
Weighted average diluted shares outstanding 31,985 24,256 26,652 24,255
Net operating earnings (loss) from continuing
operations per share (0.08) $ 0.09 $ 0.23 $ 0.40
Realized gains (losses) per share $ (0.08) $ (0.01) $ (0.01) $ (0.06)
Net income (loss) from continuing operations per share $ (0.06) $ 0.09 $ (0.39) $ 0.34
Income (loss) available to common shareholders per share $ (0.02) $ 0.28 $ (0.84) $ 0.84
Vesta Insurance Group, Inc.
Condensed Consolidated Balance Sheet
(amounts in thousands)
December 31, 2001 September 30, 2001
------------------------- -----------------------
Assets:
Invested assets $ 1,038,353 $ 1,039,244
Cash 24,206 33,375
Other assets 780,577 691,306
-------------------------- -----------------------
Total assets $ 1,843,136 $ 1,763,925
========================= =======================
Liabilities:
Future policy benefits $ 691,462 $ 689,068
Losses and loss adjustment expenses 282,311 275,856
Unearned premiums 172,966 145,259
Debt 109,396 89,405
Other liabilities 304,444 277,003
-------------------------- ----------------------
Total liabilities 1,560,579 1,476,591
Deferrable capital securities 23,250 29,750
Stockholders' equity 259,307 257,584
-------------------------- ----------------------
Total liabilities and stockholders' equity $ 1,843,136 $ 1,763,925
========================= ======================
Book value per share $ 7.34 $ 7.57
Book value per share excluding unrealized $ 7.12 $ 7.14
investment gains and losses
Shares Outstanding at period end* 35,323 34,011
* Excludes shares in the Vesta Agents Stock Incentive Plan Trust