Allied Group: Reports Improved Second Quarter Contact: Jim Shaffer, CFO (515) 280-4326 ALLIED GROUP, INC. REPORTS IMPROVED SECOND QUARTER Des Moines, Iowa, July 22, 1997 -- ALLIED Group, Inc. (NYSE symbol GRP) today released earnings for the quarter ended June 30 and reported midyear results. Operating earnings for the second quarter were $0.73 per share compared with $0.32 for the same quarter of 1996. Chairman John Evans put the comparison in perspective: "Last year at this time, Midwestern storms interrupted our 23-quarter string of record earnings increases; this year we had our best second quarter ever." Year to date, operating earnings per share were $1.47 versus $0.94 for the first half of 1996, a 56.4% increase. For the first six months of 1997, wind and hail losses were down 32.4% to $0.50 per share from $0.74 for the same period of 1996. The statutory combined ratio (after policyholder dividends) improved to 93.8 from 99.4. The GAAP underwriting gain rose to $15.1 million from $706,000. Doug Andersen, President and Chief Executive Officer, reiterated the Company's annual goals, "We're working diligently to maintain double-digit premium growth, reduce the underwriting expense ratio by 50 basis points, and earn a return on equity of at least 15%." Through midyear 1997, net written premiums for the property- casualty pool, which includes ALLIED Mutual, were up 10.7% compared to the first six months of 1996. The property-casualty segment's earned premiums were up 11.5% to $251.4 million from $225.6 million. As of June 30, 1997, the underwriting expense ratio was down 49 basis points; the ROE for the trailing four quarters was 16.5%. Management reported midyear progress by familiar indicators: premiums from the nine newest states, growth in the exclusive AIDCO program, additional contracts for transfer business, and greater use of the centralized policy service function called Service Plus. Sales volume in emerging territories was up 23.9%. Appointments since year-end increased AIDCO agencies to 280 from 257; they generated nearly a third of the Company's personal lines business. In the first half of the year, the Company contracted $35.5 million in transfer business and increased the number of agencies receiving Service Plus to 497 from 433. "Over 80% of the independent agency force representing ALLIED products is linked to us electronically," said Andersen. "We're getting closer to doing business in a paperless manner." All other financial measures were positive. Consolidated invested assets at June 30, 1997 were $851.1 million compared with $819.6 million at year-end 1996. Investment income for the first half of 1997 was $25.5 million compared with $24.2 million for the six months ended June 30, 1996. Midyear consolidated revenues were up 11.2% to $322.5 million from $289.9 million a year ago. Consolidated pretax operating income was up 46.6% to $44.5 million from $30.3 million. Consolidated net income was $31.6 million compared with $21.5 million. ALLIED Group, Inc. is a regional property-casualty insurance holding company specializing in personal lines. The Company's property-casualty subsidiaries use independent agencies, exclusive agencies, and direct response marketing to offer products in central and western states. ALLIED GROUP, INC. SUMMARIZED CONSOLIDATED FINANCIAL HIGHLIGHTS Three Months Ended June 30, -------------------------------- 1997 1996 --------------- --------------- Earned premiums $ 135,876,244 $ 121,113,519 Investment income 12,874,225 12,044,210 Realized investment gains 7,384 30,511 Other income 14,949,010 13,396,168 --------------- --------------- Revenues 163,706,863 146,584,408 Losses and expenses 141,821,853 136,043,584 --------------- --------------- Income before income taxes and minority interest 21,885,010 10,540,824 Income taxes 6,104,415 2,992,758 Minority interest in income of consolidated subsidiary 125,014 --- --------------- --------------- Net income $ 15,655,581 $ 7,548,066 =============== =============== Dividends paid per common share $ 0.1700 $ 0.1467 =============== =============== Fully diluted earnings per share: Net operating income $ 0.73 $ 0.32 Realized investment gains, after tax 0.00 0.00 --------------- --------------- Net income $ 0.73 $ 0.32 =============== =============== Weighted average shares outstanding 20,274,716 20,865,710 =============== =============== Wind and hail losses per share $ 0.41 $ 0.63 =============== =============== Primary earnings per share Net operating income $ 0.73 $ 0.32 =============== =============== Net income $ 0.73 $ 0.32 =============== =============== Weighted average shares outstanding 20,274,176 20,865,710 =============== =============== ALLIED GROUP, INC. SUMMARIZED CONSOLIDATED FINANCIAL HIGHLIGHTS Six Months Ended June 30, -------------------------------- 1997 1996 --------------- --------------- Earned premiums $ 267,743,272 $ 239,983,724 Investment income 25,525,754 24,163,089 Realized investment gains 200 38,994 Other income 29,182,082 25,734,075 --------------- --------------- Revenues 322,451,308 289,919,882 Losses and expenses 277,989,463 259,594,664 --------------- --------------- Income before income taxes and minority interest 44,461,845 30,325,218 Income taxes 12,638,088 8,828,888 Minority interest in income of consolidated subsidiary 226,676 --- --------------- --------------- Net income $ 31,597,081 $ 21,496,330 =============== =============== Dividends paid per common share $ 0.3400 $ 0.2933 =============== =============== Fully diluted earnings per share: Net operating income $ 1.47 $ 0.94 Realized investment gains, after tax 0.00 0.00 --------------- --------------- Net income $ 1.47 $ 0.94 =============== =============== Weighted average shares outstanding 20,317,124 20,888,412 =============== =============== Wind and hail losses per share $ 0.50 $ 0.74 =============== =============== Primary earnings per share Net operating income $ 1.47 $ 1.04 =============== =============== Net income $ 1.47 $ 1.04 =============== =============== Weighted average shares outstanding 20,317,124 18,424,791 =============== =============== - - END - -