Geico's earnings fall catastrophe losses cited

THE BALTIMORE SUN

Geico Corp. said its second-quarter earnings fell 17 percent, as Texas-sized hailstorms and bayou backwash made the three months that ended in June the most catastrophe-prone since 1992 for the Chevy Chase-based insurance company.

"Catastrophe losses were heavy during the second quarter," the company said in a prepared statement. "This quarter's losses of $35 million are greater than any total year loss except 1992, when Hurricane Andrew struck southern Florida. The major losses during the quarter were hailstorms in the Dallas/Fort Worth area and flooding in New Orleans."

Geico earned $47.8 million, down from $57.4 million during the second quarter of 1994. Its earnings worked out to 71 cents a share, which was in line with expectations of analysts. The storm losses reduced profits by another 34 cents a share. Wall Street took the profit dip calmly, as Geico shares yesterday closed at $55.75, up 25 cents. The key was that the catastrophic weather took place early in the quarter, and the company had time to warn investors that the dip was coming.

"The results were very good considering the storm losses," said Carol Manning, an analyst with Prudential Securities in New York. "Most [analysts] had the bulk of the loss in our estimates already, since they had announced that the floods and the hailstorms had occurred." Ms. Manning said that aside from the weather, the second quarter continued the status quo at Geico.

Geico Corp. .... .... .... .... Ticker .... .... .... .... ... Yesterday's

Chevy Chase .... .... .... .... Symbol .... .... .... Cls. ... .... Chg

.... .... .... .... ... ... ... GEC .... .... ... ... 55 3/4 . .... + 1/4

Period ended

06/30/95 .... .... .... .... 2nd qtr. .... .... ... Year ago .... Chg.

Revenue .... .... .... ..... $744,000 .... .... ... $665,000 .... +11.9%

Net Income .... .... ... ... $47,800 .... .... .... $57,400 ..... -16.7%

Primary EPS ..... .... ..... $0.71 ..... .... ..... $0.81 ... ... -12.3%

.... .... .... .... .... ... 6 mos. .... .... ..... Year ago .... Chg.

Revenue .... .... .... ..... $1,470,200 .... ... .. $1,313,800 .. +11.9%

Net Income .... .... ....... $110,000 .... .... ... $92,500 ..... +18.9%

Primary EPS .... .... ...... $1.62 ..... ..... .... $1.31 ... ... +23.7%

Figures in thousands (except per share data.)

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