Republic Companies Notes Increase in Q2 Net Income

Dallas-based Republic Companies Group Inc. has reported revenues of $66.2 million and net income of $2.9 million for the quarter ended June 30, 2005. Shareholders’ equity increased to $159.7 million, and the statutory surplus of the company’s principal insurance subsidiary increased to $164.2 million as of June 30, 2005.

Republic’s 2005 second quarter revenues were $66.2 million and, compared to the second quarter of 2004, represent an increase of 11.9%. On a year-to- date basis, revenues through June 30, 2005 were $129.7 million and, compared to $120.3 million for the comparable period in 2004, represent an increase of 7.8%.

Net written premiums of $68.5 million for the second quarter of 2005
were 9.5% higher than for the comparable period in 2004. Net insurance premiums earned of $62.2 million for the second quarter of 2005 were 11.2% higher than for the comparable period in 2004. Net insurance premiums earned in 2004 were negatively impacted by amortization of the purchase accounting fair value adjustment of unearned premium reserves related to the company’s 2003 acquisition.

Republic’s 2005 second quarter net income was $2.9 million and, compared to the second quarter of 2004, represents an increase of 2.0%. On a year-to-date basis, net income was $10.3 million through June 30, 2005 and, compared to net income of $9.5 million for the comparable period in 2004, represents an increase of 8.4%. The net combined ratio for the quarter was 100.1%, slightly higher than the net combined ratio of 98.6% in the comparable period in 2004.

Excluding “catastrophe losses,” the net loss ratio for the quarter was 49.7%, down from 60.2% in the comparable period in 2004. On a year-to-date basis, the net combined ratio was 93.7%, an improvement from 94.6% in the comparable period in 2004. Excluding “catastrophe losses,” the net loss ratio for the year-to-date was 48.8%, down from 59.1% in the comparable period in 2004.

Parker Rush, president and CEO, commented, “We are pleased to report improved underwriting results for the second quarter, which
is typically our most challenging period due to seasonal weather patterns. Our catastrophe weather related losses, which are generally greatest in the second quarter due to hail season, were favorably low compared to historic norms, but were higher than the extraordinarily low level we experienced in 2004.

“The strong improvement in net loss ratio excluding catastrophe losses is evidence of our continuing effort to shape our business mix to emphasize growth and profitability in underserved markets that are less vulnerable to broad market competition. We believe this strategy will continue to produce favorable and increasing returns on equity for our investors in the coming quarters.”