Attached files
| file | filename |
|---|---|
| 8-K/A - FORM 8-K/A - Eastern Insurance Holdings, Inc. | d8ka.htm |
Exhibit 99.1
PRO FORMA FINANCIAL STATEMENTS
The following Unaudited Pro Forma Statements of Operations give effect to the disposition by Eastern Insurance Holdings, Inc. (“EIHI”) of Eastern Life and Health Insurance Company (“ELH”). These pro forma presentations have been prepared utilizing historical financial statements and notes thereto, as well as pro forma adjustments as described in the Notes to the Unaudited Pro Forma Financial Statements. A Pro Forma Balance Sheet has not been presented as EIHI’s June 30, 2010 balance sheet, filed with the Securities and Exchange Commission on August, 5, 2010, reflects the sale of ELH.
The Unaudited Pro Forma Statements of Operations for the three and six months ended June 30, 2010 and 2009 and for the years ended December 31, 2009, 2008 and 2007 include the operating results of EIHI and ELH assuming the disposition occurred on January 1, 2007. The disposition has been accounted for as a discontinued operation.
The Unaudited Pro Forma Statements of Operations are presented for illustrative purposes only and do not purport to represent what EIHI’s results of operations or financial position would have been had the disposition of ELH occurred on the dates indicated or the results of operations or financial position which may be obtained in the future. Such pro forma financial statements are qualified in their entirety by reference to, and should be read in conjunction with, the historical audited consolidated financial statements of EIHI. The pro forma financial statements should also be read in conjunction with the accompanying notes thereto.
Eastern Insurance Holdings, Inc.
Pro Forma Statement of Operations - Sale of ELH
For the Three Months Ended June 30, 2010
(Unaudited, in thousands, except share and per share data)
| EIHI Consolidated (a) |
ELH (b) | Pro Forma Adjustments |
EIHI Pro Forma | ||||||||||||
| Revenue |
|||||||||||||||
| Net premiums earned |
$ | 35,004 | $ | 9,086 | $ | — | $ | 25,918 | |||||||
| Net investment income |
1,120 | 146 | — | 974 | |||||||||||
| Change in equity interest in limited partnerships |
35 | 40 | — | (5 | ) | ||||||||||
| Net realized investment gains (losses) |
1,762 | 1,417 | 1,065 | (c) | (720 | ) | |||||||||
| Other revenue |
147 | 2 | — | 145 | |||||||||||
| Total revenue |
38,068 | 10,691 | 1,065 | 26,312 | |||||||||||
| Expenses |
|||||||||||||||
| Losses and loss adjustment expenses incurred |
28,103 | 7,425 | — | 20,678 | |||||||||||
| Acquisition and other underwriting expenses |
3,858 | 1,320 | — | 2,538 | |||||||||||
| Other expenses |
7,680 | 1,785 | 620 | (d) | 5,275 | ||||||||||
| Amortization of intangibles |
321 | — | — | 321 | |||||||||||
| Policyholder dividend expense |
221 | — | — | 221 | |||||||||||
| Segregated portfolio dividend expense |
(885 | ) | — | — | (885 | ) | |||||||||
| Total expenses |
39,298 | 10,530 | 620 | 28,148 | |||||||||||
| Income (loss) before income taxes |
(1,230 | ) | 161 | 445 | (1,836 | ) | |||||||||
| Income tax expense (benefit) |
219 | 41 | 303 | (125 | ) | ||||||||||
| Net income (loss) |
$ | (1,449 | ) | $ | 120 | $ | 142 | $ | (1,711 | ) | |||||
| Basic earnings per share |
$ | (0.16 | ) | $ | (0.19 | ) | |||||||||
| Diluted earnings per share |
$ | (0.16 | ) | $ | (0.19 | ) | |||||||||
| Basic shares outstanding |
9,048,929 | 9,048,929 | |||||||||||||
| Diluted shares outstanding |
9,048,929 | 9,048,929 | |||||||||||||
Eastern Insurance Holdings, Inc.
Pro Forma Statement of Operations - Sale of ELH
For the Three Months Ended June 30, 2009
(Unaudited, in thousands, except share and per share data)
| EIHI Consolidated (a) |
ELH (b) | Pro Forma Adjustments |
EIHI Pro Forma | ||||||||||||
| Revenue |
|||||||||||||||
| Net premiums earned |
$ | 34,018 | $ | 8,927 | $ | — | $ | 25,091 | |||||||
| Net investment income |
1,728 | 415 | — | 1,313 | |||||||||||
| Change in equity interest in limited partnerships |
443 | 131 | — | 312 | |||||||||||
| Net realized investment gains (losses) |
(140 | ) | 830 | — | (970 | ) | |||||||||
| Other revenue |
124 | — | — | 124 | |||||||||||
| Total revenue |
36,173 | 10,303 | — | 25,870 | |||||||||||
| Expenses |
|||||||||||||||
| Losses and loss adjustment expenses incurred |
21,297 | 5,966 | — | 15,331 | |||||||||||
| Acquisition and other underwriting expenses |
4,376 | 1,352 | — | 3,024 | |||||||||||
| Other expenses |
6,344 | 1,522 | (125 | )(e) | 4,947 | ||||||||||
| Amortization of intangibles |
433 | — | — | 433 | |||||||||||
| Policyholder dividend expense |
(62 | ) | — | — | (62 | ) | |||||||||
| Segregated portfolio dividend expense |
87 | — | — | 87 | |||||||||||
| Total expenses |
32,475 | 8,840 | (125 | ) | 23,760 | ||||||||||
| Income before income taxes |
3,698 | 1,463 | 125 | 2,110 | |||||||||||
| Income tax expense |
721 | 486 | 44 | 191 | |||||||||||
| Net income |
$ | 2,977 | $ | 977 | $ | 81 | $ | 1,919 | |||||||
| Basic earnings per share |
$ | 0.32 | $ | 0.20 | |||||||||||
| Diluted earnings per share |
$ | 0.32 | $ | 0.20 | |||||||||||
| Basic shares outstanding |
9,008,967 | 9,008,967 | |||||||||||||
| Diluted shares outstanding |
9,008,967 | 9,008,967 | |||||||||||||
Eastern Insurance Holdings, Inc.
Pro Forma Statement of Operations - Sale of ELH
For the Six Months Ended June 30, 2010
(Unaudited, in thousands, except share and per share data)
| EIHI Consolidated (a) |
ELH (b) | Pro Forma Adjustments |
EIHI Pro Forma | ||||||||||||
| Revenue |
|||||||||||||||
| Net premiums earned |
$ | 69,526 | $ | 18,262 | $ | — | $ | 51,264 | |||||||
| Net investment income |
2,795 | 469 | — | 2,326 | |||||||||||
| Change in equity interest in limited partnerships |
327 | 73 | — | 254 | |||||||||||
| Net realized investment gains |
3,096 | 1,754 | 1,065 | (c) | 277 | ||||||||||
| Other revenue |
296 | 5 | — | 291 | |||||||||||
| Total revenue |
76,040 | 20,563 | 1,065 | 54,412 | |||||||||||
| Expenses |
|||||||||||||||
| Losses and loss adjustment expenses incurred |
51,455 | 13,626 | — | 37,829 | |||||||||||
| Acquisition and other underwriting expenses |
8,537 | 2,713 | — | 5,824 | |||||||||||
| Other expenses |
14,255 | 3,272 | 614 | (d) | 10,369 | ||||||||||
| Amortization of intangibles |
642 | — | — | 642 | |||||||||||
| Policyholder dividend expense |
399 | — | — | 399 | |||||||||||
| Segregated portfolio dividend expense |
(702 | ) | — | — | (702 | ) | |||||||||
| Total expenses |
74,586 | 19,611 | 614 | 54,361 | |||||||||||
| Income before income taxes |
1,454 | 952 | 451 | 51 | |||||||||||
| Income tax expense |
1,001 | 301 | 305 | 395 | |||||||||||
| Net income (loss) |
$ | 453 | $ | 651 | $ | 146 | $ | (344 | ) | ||||||
| Basic earnings per share |
$ | 0.05 | $ | (0.04 | ) | ||||||||||
| Diluted earnings per share |
$ | 0.05 | $ | (0.04 | ) | ||||||||||
| Basic shares outstanding |
9,081,716 | 9,081,716 | |||||||||||||
| Diluted shares outstanding |
9,130,773 | 9,130,773 | |||||||||||||
Eastern Insurance Holdings, Inc.
Pro Forma Statement of Operations - Sale of ELH
For the Six Months Ended June 30, 2009
(Unaudited, in thousands, except share and per share data)
| EIHI Consolidated (a) |
ELH (b) | Pro Forma Adjustments |
EIHI Pro Forma | ||||||||||||
| Revenue |
|||||||||||||||
| Net premiums earned |
$ | 67,756 | $ | 17,818 | $ | — | $ | 49,938 | |||||||
| Net investment income |
3,672 | 874 | — | 2,798 | |||||||||||
| Change in equity interest in limited partnerships |
277 | 58 | — | 219 | |||||||||||
| Net realized investment gains (losses) |
(1,739 | ) | 1,292 | — | (3,031 | ) | |||||||||
| Other revenue |
363 | — | — | 363 | |||||||||||
| Total revenue |
70,329 | 20,042 | — | 50,287 | |||||||||||
| Expenses |
|||||||||||||||
| Losses and loss adjustment expenses incurred |
43,884 | 12,614 | — | 31,270 | |||||||||||
| Acquisition and other underwriting expenses |
8,956 | 2,716 | — | 6,240 | |||||||||||
| Other expenses |
12,876 | 3,044 | (250 | )(e) | 10,082 | ||||||||||
| Amortization of intangibles |
866 | — | — | 866 | |||||||||||
| Policyholder dividend expense |
123 | — | — | 123 | |||||||||||
| Segregated portfolio dividend expense |
(652 | ) | — | — | (652 | ) | |||||||||
| Total expenses |
66,053 | 18,374 | (250 | ) | 47,929 | ||||||||||
| Income before income taxes |
4,276 | 1,668 | 250 | 2,358 | |||||||||||
| Income tax expense |
1,854 | 522 | 88 | 1,244 | |||||||||||
| Net income |
$ | 2,422 | $ | 1,146 | $ | 162 | $ | 1,114 | |||||||
| Basic earnings per share |
$ | 0.27 | $ | 0.12 | |||||||||||
| Diluted earnings per share |
$ | 0.26 | $ | 0.12 | |||||||||||
| Basic shares outstanding |
8,931,101 | 8,931,101 | |||||||||||||
| Diluted shares outstanding |
9,046,738 | 9,046,738 | |||||||||||||
Eastern Insurance Holdings, Inc.
Pro Forma Statement of Operations - Sale of ELH
For the Year Ended December 31, 2009
(Unaudited, in thousands, except share and per share data)
| EIHI Consolidated (a) |
ELH (b) | Pro Forma Adjustments |
EIHI Pro Forma | |||||||||||
| Revenue |
||||||||||||||
| Net premiums earned |
$ | 134,986 | $ | 35,937 | $ | — | $ | 99,049 | ||||||
| Net investment income |
7,097 | 1,590 | — | 5,507 | ||||||||||
| Change in equity interest in limited partnerships |
1,261 | 195 | — | 1,066 | ||||||||||
| Net realized investment gains (losses) |
952 | 3,021 | — | (2,069 | ) | |||||||||
| Other revenue |
645 | 2 | — | 643 | ||||||||||
| Total revenue |
144,941 | 40,745 | — | 104,196 | ||||||||||
| Expenses |
||||||||||||||
| Losses and loss adjustment expenses incurred |
84,552 | 24,936 | — | 59,616 | ||||||||||
| Acquisition and other underwriting expenses |
18,183 | 5,389 | — | 12,794 | ||||||||||
| Other expenses |
26,382 | 6,263 | (500 | )(e) | 20,619 | |||||||||
| Amortization of intangibles |
1,732 | — | — | 1,732 | ||||||||||
| Policyholder dividend expense |
432 | — | — | 432 | ||||||||||
| Segregated portfolio dividend expense |
1,238 | — | — | 1,238 | ||||||||||
| Total expenses |
132,519 | 36,588 | (500 | ) | 96,431 | |||||||||
| Income before income taxes |
12,422 | 4,157 | 500 | 7,765 | ||||||||||
| Income tax expense |
4,021 | 1,349 | 175 | 2,497 | ||||||||||
| Net income |
$ | 8,401 | $ | 2,808 | $ | 325 | $ | 5,268 | ||||||
| Basic earnings per share |
$ | 0.92 | $ | 0.58 | ||||||||||
| Diluted earnings per share |
$ | 0.91 | $ | 0.57 | ||||||||||
| Basic shares outstanding |
8,984,644 | 8,984,644 | ||||||||||||
| Diluted shares outstanding |
9,051,701 | 9,051,701 | ||||||||||||
Eastern Insurance Holdings, Inc.
Pro Forma Statement of Operations - Sale of ELH
For the Year Ended December 31, 2008
(Unaudited, in thousands, except share and per share data)
| EIHI Consolidated (a) |
ELH (b) | Pro Forma Adjustments |
EIHI Pro Forma | |||||||||||||
| Revenue |
||||||||||||||||
| Net premiums earned |
$ | 135,807 | $ | 36,723 | $ | — | $ | 99,084 | ||||||||
| Net investment income |
9,631 | 2,578 | — | 7,053 | ||||||||||||
| Change in equity interest in limited partnerships |
(3,970 | ) | (430 | ) | — | (3,540 | ) | |||||||||
| Net realized investment gains (losses) |
(11,117 | ) | (5,366 | ) | — | (5,751 | ) | |||||||||
| Other revenue |
853 | — | — | 853 | ||||||||||||
| Total revenue |
131,204 | 33,505 | — | 97,699 | ||||||||||||
| Expenses |
||||||||||||||||
| Losses and loss adjustment expenses incurred |
99,188 | 24,444 | — | 74,744 | ||||||||||||
| Acquisition and other underwriting expenses |
18,918 | 5,602 | — | 13,316 | ||||||||||||
| Other expenses |
25,338 | 5,698 | (500 | )(e) | 20,140 | |||||||||||
| Amortization of intangibles |
1,373 | — | — | 1,373 | ||||||||||||
| Policyholder dividend expense |
551 | — | — | 551 | ||||||||||||
| Segregated portfolio dividend expense |
2,155 | — | — | 2,155 | ||||||||||||
| Total expenses |
147,523 | 35,744 | (500 | ) | 112,279 | |||||||||||
| Income (loss) before income taxes |
(16,319 | ) | (2,239 | ) | 500 | (14,580 | ) | |||||||||
| Income tax expense (benefit) |
1,064 | (1,083 | ) | 175 | 1,972 | |||||||||||
| Net income (loss) |
$ | (17,383 | ) | $ | (1,156 | ) | $ | 325 | $ | (16,552 | ) | |||||
| Basic earnings per share |
$ | (1.90 | ) | $ | (1.81 | ) | ||||||||||
| Diluted earnings per share |
$ | (1.90 | ) | $ | (1.81 | ) | ||||||||||
| Basic shares outstanding |
8,954,098 | 8,954,098 | ||||||||||||||
| Diluted shares outstanding |
8,954,098 | 8,954,098 | ||||||||||||||
Eastern Insurance Holdings, Inc.
Pro Forma Statement of Operations - Sale of ELH
For the Year Ended December 31, 2007
(Unaudited, in thousands, except share and per share data)
| EIHI Consolidated (a) |
ELH (b) | Pro Forma Adjustments |
EIHI Pro Forma | |||||||||||
| Revenue |
||||||||||||||
| Net premiums earned |
$ | 129,495 | $ | 35,863 | $ | — | $ | 93,632 | ||||||
| Net investment income |
11,669 | 3,277 | — | 8,392 | ||||||||||
| Change in equity interest in limited partnerships |
759 | (39 | ) | — | 798 | |||||||||
| Net realized investment gains |
2,888 | 1,531 | — | 1,357 | ||||||||||
| Other revenue |
683 | — | — | 683 | ||||||||||
| Total revenue |
145,494 | 40,632 | — | 104,862 | ||||||||||
| Expenses |
||||||||||||||
| Losses and loss adjustment expenses incurred |
73,588 | 23,253 | — | 50,335 | ||||||||||
| Acquisition and other underwriting expenses |
17,056 | 5,556 | — | 11,500 | ||||||||||
| Other expenses |
21,801 | 5,073 | (500 | )(e) | 17,228 | |||||||||
| Amortization of intangibles |
1,738 | — | — | 1,738 | ||||||||||
| Policyholder dividend expense |
543 | — | — | 543 | ||||||||||
| Segregated portfolio dividend expense |
4,423 | — | — | 4,423 | ||||||||||
| Total expenses |
119,149 | 33,882 | (500 | ) | 85,767 | |||||||||
| Income before income taxes |
26,345 | 6,750 | 500 | 19,095 | ||||||||||
| Income tax expense |
7,662 | 1,973 | 175 | 5,514 | ||||||||||
| Net income |
$ | 18,683 | $ | 4,777 | $ | 325 | $ | 13,581 | ||||||
| Basic earnings per share |
$ | 1.78 | $ | 1.29 | ||||||||||
| Diluted earnings per share |
$ | 1.72 | $ | 1.25 | ||||||||||
| Basic shares outstanding |
10,264,369 | 10,264,369 | ||||||||||||
| Diluted shares outstanding |
10,604,349 | 10,604,349 | ||||||||||||
NOTES TO THE UNAUDITED PRO FORMA FINANCIAL STATEMENTS (dollars in thousands)
| (a) | Represents the historical consolidated statement of operations of EIHI as appropriate. |
| (b) | Reflects the removal of ELH’s statement of operations from the EIHI historical consolidated statement of operations. |
| (c) | Represents the gain on sale of ELH of $645 and gain related to the transfer of ELH’s benefit plan liabilities to EIHI totaling $420. A corresponding loss of $420 is included in ELH’s results of the operations for the three and six months ended June 30, 2010. |
The ELH benefit plans were excluded from the transaction and, therefore, the related liabilities were transferred to EIHI.
| (d) | Represents transaction expenses related to the sale of ELH of $745 and $864 for the three and six months ended June 30, 2010, reduced by corporate overhead allocation of $125 and $250, respectively, to continuing operations. |
| (e) | Represents corporate overhead allocation to continuing operations. |