NAAC up 30% today.
PAR on NAAC: J Freedman upgrades Buy
recommendation, shortens $10 target to 6-18 mos
NEW YORK--(BUSINESS WIRE)--Oct. 27, 1997--
Date of Report: October 27, 1997 Price: 2-1/8 (10/24/97) Price Range: 0.62 to 5.37 (12 months) Price Target:
10 (6 to 18 months) Industry Sector: Insurance Shares Outstanding: 8,786,415 Estimated Float: 3,250,973
Assets: $11,106,359 (2Q97) Recommendation / Rating: Speculative Buy.
PRIMARY CHANGES IN REPORT STATUS: Previous report stated price target of 10 in 12 to 18 months,
this report 6 to 18- months; 'Speculative Buy on Growth Prospects' slightly upgraded to 'Speculative Buy'.
NATIONAL AFFILIATED CORP. (NAAC / OTC) QUARTERLY REVIEW
National Affiliated Corporation (''NAAC'' or the ''Company''), which we first discussed in our March 10,
1997 analysis, and then our quarterly on July 22, 1997, has reported 2nd quarter earnings
of $381,137 for the period ending June 30, 1997 or $0.04 per share. This compares to a loss of $423,723 or
($0.12) per share for the year ago period. Total revenues rose 106% to $1,377,172 in 1997 from $668,536 in
1996. Insurance premiums rose to $610,529 from $469,636 in 1996.
NAAC is a newly invigorated life and health insurance holding company licensed to conduct business in 17
states and the District of Columbia. Recapitalized last year by Maryland-based The Southern
Group, the Company intends to emulate the remarkable success of Conseco with an aggressive program of
acquiring underperforming life insurance companies.
The Company's new management has thoroughly revamped its book of business, reducing unprofitable
product lines and applying to regulatory agencies for rate increases of up to 33%.
Whereas the firm's original focus was on life insurance for residents of rural areas, NAAC is looking to
develop niche markets like ERISA health trust plans for small businesses. The Company has also enlisted
Conseco Capital Management to support its acquisitions program and manage assets.
Additionally, management has downsized its staff by 76%, and outsourced services such as computer and
policy administrations. Operating expenses and salaries have been cut with further decreases likely in 1997
after more thorough evaluation. Other income also increased due to restructuring of the New Mexico Health
program. Other benefits and policy claims increased in the first half by 28% or
$197,277, due to large health claims in the first four months. Management reported in June that four material
lawsuits in Alabama had been settled without incurring additional charges.
We continue to recommend NAAC as a SPECULATIVE BUY and look for a share price of $10 in the next 6
to 18 months.
--- JANE FREEDMAN, SUPERVISORY ANALYST
Public Analysis & Review (PAR) is an independent analyst program of the Investors Research Institute, Inc.
(IRI), a non-profit membership organization, and is administered by J. Freedman & Associates, member-New
York Society of Security Analysts.
Scrutiny via continuing quarterly coverage by a PAR analyst is a requirement for continued membership in
PAR. J. Freedman & Associates is an independent financial services group located in
Miami, FL. The author's experience includes: security analyst, supervisory analyst, with over 15 years on
Wall Street firms such as Bear Stearns & Co., Inc., Kidder Peabody & Co., Phillips, Appel &
Walden & Co., Inc., and more recently J.W. Charles/CSG.
Information, opinions or recommendations contained in this report or study are submitted solely for advisory
and information purposes. The information used and statements of fact made have been
obtained from sources considered reliable but neither guarantee or representation is made as to the
completeness or accuracy. Such information and the opinions expressed are subject to change without
notice. This report or study is not intended as an offering or a solicitation of an offer to buy or sell the
securities mentioned or discussed. The author of this report was paid for preparing the report by IRI,Inc.,
administrators for the Investors Research Institute. (c) Copyright, 1997, by IR/j: Investors Research Journal,
div., IRI, Inc.
CONTACT:
PAR: J. Freedman & Associates, P.O. 1397, Safety Harbor, FL 34695 800-413-1522, Fax 813-669-0094
Investors Research Institute, Inc., P.O. 750471, Forest Hills, NY 11375-0471 / 212-484-4747, Fax
718-523-2137 (iri@netcapital.com)
National Affiliated Corporation, 7212 Old Stage Rd., North Bethesda, MD 20852 / 301-984-0800, Fax
301-984-1626
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Contact:
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800-413-1522
or
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or
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