RTW Inc. Reports Profitable 2ndQ
Minnesota-based RTW, Inc., a provider of products and services for cost-effective management of workers’ compensation programs, reported net income for the second quarter ended June 30, 2002, of $323,000, or $0.03 per basic and diluted share, compared to a net loss of $1.7 million, or $0.16 per basic and diluted share in the second quarter of 2001.
“We are pleased with our operating performance in the second quarter,” RTW president and CEO J. Alexander Fjelstad III, remarked. “We continued to make solid progress in positioning RTW for sustainable profitability. In addition, we announced a significant strategic initiative with the extension of our established and successful workers’ compensation product and service offerings to self- insured employers and other alternative markets. We intend to capitalize on our proven expertise in exceptional case and claims management by rolling out a new product offering that delivers high quality service and economic benefits to self-insured employers and associations, and provides us with a new growth vehicle and a source of additional long-term profitability.”
For the second quarter, total revenue was $5.5 million, compared to $1.9 million last year. Included in total revenue is investment income of $1.1 million, compared to $1.6 million last year, and a net realized investment loss of $12,000, compared to net realized investment gains of $28,000 in the second quarter of last year.
Premiums in force at June 30, 2002, were $59.1 million, compared with $99.4 million at June 30, 2001 and $83.7 million at December 31, 2001. Gross premiums earned followed the decrease in premiums in force decreasing to $14.4 million for the second quarter of 2002 from $25.8 million for the same period in the prior year and decreasing to $32.2 million for the six months ended June 30, 2002 from $51.9 million for the same period in the prior year.
“During the second quarter, we continued our planned transition by market, further eliminating and reducing premiums in force in Missouri and New England as they provide an inadequate return,” Fjelstad said. “We continue to see trends that will favorably affect our results as we move to the second half of the year. Renewal pricing continued to increase in the second quarter of 2002, increasing 4.3 percent over the prior year. We are also continuing to experience a reduction in the frequency of claims reported and continue to aggressively manage claims to closure. Given the upward trend in pricing, the improving trend in new claims reported and our emphasis on aggressive claims management, we continue to expect improved operating results going forward.”
For the six months ended June 30, 2002, RTW reported net income of $3.4 million, or $0.33 per basic and diluted share, compared to a net loss of $914,000, or $0.09 per basic and diluted share, in the comparable six-month period of 2001. Six-month results include a $3.0 million benefit, recorded in the first quarter, from reducing the accrual for the Minnesota Special Compensation Fund included in unpaid claim and claim settlement expenses. Last year’s six-month results includes a $3.6 million increase in claim and claim settlement expenses recorded in the first quarter of 2001 to reflect strengthening of 2000 and prior accident year reserves due to unfavorable claims experience in the first quarter of 2001.
Total revenue for the six-month period was $11.5 million, compared to $28.5 million last year. The decrease in total revenue is primarily attributable to the company’s successful actions to decrease premiums in force. Included in total revenue is investment income of $2.3 million, compared to $3.0 million last year, and net realized investment gains of $1.4 million, compared to $1.1 million last year.