BISYS Reports Soft Market Hit On Earnings

BISYS said the soft market affected its insurance wholesale business as the company reported a 17 percent decline in its insurance services segment for the first half of the fiscal year after the release of its second-quarter earnings report.

As a whole, the company reported net income was down 36 percent, or $8 million, in the quarter from $22 million to $14 million. Earnings per share dropped from 19 cents to 12 cents. Revenues increased 7 percent, or $14 million, going from $207 million to $221 million.

The Roseland, N.J.-based investment and insurance services provider reported insurance services dropped $3.4 million for the three months ending Dec. 31, from $19.9 million to $16.5 million. Insurance services revenues rose 1 percent in the period, or $713,000, from $64.5 million to $65.2 million.

For the first half of its fiscal year, which runs July 1 to Dec. 31, operating earnings also dropped 17 percent, or $5.6 million, going from $32.7 million to $27.1 million. Revenues rose more than 3 percent, or $4 million, from $121 million to $125 million.

BISYS operates a wholesale insurance division that involves commercial property-casualty, long-term care, disability, annuity products and life insurance.

The company said the soft market impacted commercial insurance sales, producing weaker than expected renewal rates in some product lines.

In a statement BISYS said the decline in operating earnings was primarily due “to the near-term impact of acquisitions in both businesses and continuing investments in the businesses for long-term growth offset by a $1.9 million gain recognized in commercial insurance on the sale of a book of business during the quarter.”

The increase in the insurance services segment revenue, the company said, was due to the “positive contribution of recent acquisitions.”

The company added that organic revenues were down 4.5 percent with life insurance organic revenue virtually flat.

BISYS, in a Securities and Exchange Commission filing, said it paid $4.4 million for D&O Concepts Inc., David A. Ratner Associates Inc. and David A. Ratner Associates of New Jersey Inc., an agency and wholesale affiliate.

James C. Hermann & Associates Ltd. was purchased for $2.3 million. Both acquisitions took place in September and include earn-outs, payments for the performance of the book over a period of time.

BISYS said acquisition of Truckwriters Inc., which was part of the Zurich Group, was for $11 million. Truckwriters is a managing general agency program catering to transportation programs.

The company also reported that it has received $16 million from insurers on its directors and officers policy and $5 million on its errors and omissions policy related to litigation over its restatement of earnings and subsequent shareholders suits.

In a settlement arrangement, the company has agreed to pay $66.5 million.

For the company as a whole, in the first six months net income dropped 21 percent, or $7.4 million, from $35.7 million to $28.3 million. Earnings per share decreased from 30 cents to 24 cents. Revenues were up 5 percent, or $20 million, from $413 million to $433 million.

The drop in income was due to the loss of discontinued operations. Excluding discontinued operations, income rose 26 percent in the second fiscal quarter and rose 35 percent for the six months.