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| 8-K - FORM8K20101027 - AMERICAN SAFETY INSURANCE HOLDINGS LTD | form8k20101027.htm |
American Safety Insurance Holdings, Ltd.
Reports Net Earnings of $7.2 Million
Book Value Per Diluted Share Increased to $29.81
HAMILTON, Bermuda, October 27, 2010 – American Safety Insurance Holdings, Ltd. (NYSE:ASI) today reported net earnings of $7.2 million for the three months ended September 30, 2010, or $0.68 per diluted share, as compared to $5.0 million, or $0.47 per diluted share for the same period of 2009.
Financial highlights for the quarter included:
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Total revenues increased 30% to $63.3 million
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Gross written premiums decreased 22% to $71.9 million
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Net operating cash flow increased 35% to $17.0 million
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The combined ratio improved to 98.3% from 100.2% for the 2009 quarter
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Annualized return on average equity was 10.3%, excluding realized and unrealized gains (losses) on investments
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Book value increased to $30.96 per outstanding share and $29.81 per diluted share
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Third Quarter Results
The increase in total revenue in the quarter from $48.6 million in the 2009 quarter was due to higher net earned premiums resulting from growth in each of our three divisions, primarily in our newer products and the dealer open lot property program added in 2009. The decrease in gross written premiums for the quarter was due to the non-renewal of a specialty program within the ART division that contributed $40.9 million of gross written premium in the 2009 quarter. That program was 100% reinsured and therefore had no impact on earned premiums.
Operating earnings for the quarter increased to $6.7 million from $4.9 million in 2009 due primarily to increased investment income. Investment income increased 13% reflecting positive cash flow and increased net written premiums. The 2009 quarter also included a $1.6 million receivable write-off. Operating earnings is a non-GAAP financial measure defined by the Company as net earnings adjusted for net realized gains/(losses), net of applicable taxes. Net realized gains on investments for the current quarter were approximately $560 thousand pre-tax compared to $60 thousand pre-tax for the 2009 quarter.
The combined ratio was 98.3%, composed of a loss ratio of 59.0% and an expense ratio of 39.3%. The loss ratio increased to 59.0% from 57.7% for the same quarter in 2009. The improvement in the expense ratio to 39.3% from 42.5% is attributable to increased net earned premiums in the 2010 quarter and the impact of the receivable write-off in 2009.
Year to Date Results
Net earnings for the nine months ended September 30, 2010 were $19.9 million, or $1.87 per diluted share, compared to $17.4 million, or $1.65 per diluted share for the same period in 2009. Total revenues increased 13% to $173.1 million from $152.8 million for the 2009 period. This increase was due primarily to higher net earned premiums resulting from growth in each of our three divisions, particularly in our newer products and the dealer open lot property program added in 2009.
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Gross written premiums increased 2% to $203.8 million compared to $200.2 million for the same period in 2009. Gross written premiums in the 2009 period include $40.9 million from the specialty program that was not renewed in 2010. Growth in gross written premiums during the 2010 period more than offset the impact of the non-renewal and resulted in a 35% increase in net written premiums to $163.3 million and a 14% increase in net earned premiums to $143.4 million.
Operating earnings for the nine months increased to $18.2 million from $17.5 million in 2009 due primarily increased investment income. Investment income increased 5% reflecting positive cash flow and increased net written premiums. Net realized gains on investments for the current nine month period were approximately $2.1 million pre-tax, compared to net realized gains on investments of $0.3 million during 2009.
The combined ratio was 99.8%, composed of a loss ratio of 60.0% and an expense ratio of 39.8%. The loss ratio increased to 60.0% from 58.9% for the 2009 period. The improvement in the expense ratio from 40.6% to 39.8% is attributable to the same factors noted in the third quarter results.
Invested assets increased 7% to $805.9 million at September 30, 2010 from $750.4 million at December 31, 2009 due to cash flow and net realized gains in the investment portfolio. The pre-tax book yield realized during the nine months on the investment portfolio was 4.1% compared to 4.3% for the same period in 2009.
Commenting on the results, Stephen R. Crim, President and Chief Executive Officer said, “I am pleased with the results for the third quarter with solid growth in book value per share and revenue, as well as strong cash flow from operations. The higher revenue in the quarter was driven by increased premiums in newer products added in connection with our diversification strategy. We will continue to evaluate opportunities for acquisitive growth, such as the professional liability underwriting team announced last week, to build our product platform and position the Company for more substantial growth when market conditions improve.”
Conference Call
A conference call to discuss 3rd quarter 2010 results is scheduled for Thursday, October 28, 2010 at 9:00 a.m. (Eastern Daylight Time), which will be broadcast through Vcall’s Investor Calendar at www.investorcalendar.com, or the Company’s website at www.amsafety.com. If you are unable to participate at this time, a replay will be available for 30 days, beginning approximately two hours after the call. A transcript of the call will be available on the Company’s website beginning several days after the call.
This report contains forward-looking statements and non-GAAP financial measures. The forward-looking statements reflect the Company’s current views with respect to future events and financial performance, including insurance market conditions, combined ratio, premium growth, acquisitions and new products and the impact of new accounting standards. Forward-looking statements involve risks and uncertainties which may cause actual results to differ materially, including competitive conditions in the insurance industry, levels of new and renewal insurance business, developments in loss trends, adequacy and changes in loss reserves and actuarial assumptions, timing or collectability of reinsurance recoverables, market acceptance of new coverages and enhancements, changes in reinsurance costs and availability, potential adverse decisions in court and arbitration proceedings, the integration and other challenges attendant to acquisitions, and changes in levels of general business activity and economic conditions.
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About Us:
American Safety Insurance Holdings, Ltd. (NYSE:ASI), a Bermuda holding company, offers innovative solutions outside the U.S. in the reinsurance and alternative risk markets through its subsidiaries, American Safety Reinsurance, Ltd. and American Safety Assurance, Ltd., and in the U.S. for specialty risks and alternative risk markets through its program administrator, American Safety Insurance Services, Inc., and insurance company subsidiaries and affiliates, American Safety Casualty Insurance Company, American Safety Indemnity Company and American Safety Risk Retention Group, Inc. and American Safety Assurance (Vermont), Inc. and Victore Insurance Company. As a group, ASI’s insurance subsidiaries and affiliates are rated “A” (Excellent) IX by A.M. Best. For additional information, please visit www.asih.bm.
Contacts:
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American Safety Insurance Holdings, Ltd.
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Investor Relations
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Stephen R. Crim
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scrim@amsafety.bm
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(441) 542-7933
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American Safety Insurance Holdings, Ltd. and Subsidiaries
Financial and Operating Highlights
(Unaudited) (in thousands)
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Three Months Ended September 30,
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Nine Months Ended September 30,
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2010
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2009
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2010
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2009
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INCOME STATEMENT DATA:
Revenues:
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Direct earned premiums
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$ | 55,941 | $ | 58,877 | $ | 172,659 | $ | 160,057 | ||||||||
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Assumed earned premiums
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10,861 | 6,895 | 29,151 | 26,991 | ||||||||||||
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Ceded earned premiums
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(13,582 | ) | (25,791 | ) | (58,382 | ) | (60,798 | ) | ||||||||
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Net earned premiums
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53,220 | 39,981 | 143,428 | 126,250 | ||||||||||||
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Net investment income
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8,265 | 7,331 | 24,099 | 22,850 | ||||||||||||
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Net realized gains
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560 | 61 | 2,080 | 298 | ||||||||||||
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Fee income
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1,474 | 1,250 | 3,722 | 3,368 | ||||||||||||
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Other income (loss)
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(260 | ) | (40 | ) | (230 | ) | 44 | |||||||||
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Total revenues
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63,259 | 48,583 | 173,099 | 152,810 | ||||||||||||
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Expenses:
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Losses and loss adjustment expenses
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31,378 | 23,074 | 86,030 | 74,322 | ||||||||||||
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Acquisition expenses
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12,393 | 7,843 | 31,218 | 26,920 | ||||||||||||
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Other underwriting expenses
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9,996 | 10,366 | 29,672 | 27,682 | ||||||||||||
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Interest expense
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586 | 828 | 2,030 | 2,379 | ||||||||||||
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Corporate and other expenses
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965 | 651 | 2,431 | 2,076 | ||||||||||||
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Total expenses
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55,318 | 42,762 | 151,381 | 133,379 | ||||||||||||
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Earnings before income taxes
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7,941 | 5,821 | 21,718 | 19,431 | ||||||||||||
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Income taxes
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635 | 446 | 1,486 | 1,420 | ||||||||||||
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Net Earnings
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7,306 | 5,375 | 20,232 | 18,011 | ||||||||||||
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Less: Net earnings attributable to the non-controlling interest
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104 | 421 | 360 | 593 | ||||||||||||
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Net earnings attributable to ASIH, Ltd.
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$ | 7,202 | $ | 4,954 | $ | 19,872 | $ | 17,418 | ||||||||
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Net earnings per share:
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Basic
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$ | 0.70 | $ | 0.48 | $ | 1.93 | $ | 1.69 | ||||||||
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Diluted
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$ | 0.68 | $ | 0.47 | $ | 1.87 | $ | 1.65 | ||||||||
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Weighted average number of shares
outstanding:
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Basic
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10,271,184 | 10,303,121 | 10,282,976 | 10,297,303 | ||||||||||||
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Diluted
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10,612,281 | 10,608,138 | 10,615,548 | 10,536,027 | ||||||||||||
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Loss Ratio
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59.0 | % | 57.7 | % | 60.0 | % | 58.9 | % | ||||||||
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Expense Ratio
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39.3 | % | 42.5 | % | 39.8 | % | 40.6 | % | ||||||||
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GAAP combined ratio
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98.3 | % | 100.2 | % | 99.8 | % | 99.5 | % | ||||||||
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Operating Earnings:
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Net earnings attributable to ASIH, Ltd.
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$ | 7,202 | $ | 4,954 | $ | 19,872 | $ | 17,418 | ||||||||
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Less: Realized investment gains (losses), net of taxes
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487 | 39 | 1,660 | (40 | ) | |||||||||||
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Operating earnings
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$ | 6,715 | $ | 4,915 | $ | 18,212 | $ | 17,458 | ||||||||
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At
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BALANCE SHEET DATA:
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9/30/2010
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12/31/2009
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Total investments
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$ | 805,941 | $ | 750,425 | ||||
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Total assets
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1,220,712 | 1,147,660 | ||||||
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Unpaid losses and loss adjustment expenses
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648,952 | 616,444 | ||||||
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Total liabilities
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898,314 | 872,148 | ||||||
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Total shareholders’ equity
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322,398 | 275,512 | ||||||
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Book value per share-diluted
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$ | 29.81 | $ | 25.47 | ||||
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American Safety Insurance Holdings, Ltd. and Subsidiaries
Segment Data
(Unaudited) (Dollars in thousands)
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Three Months Ended September 30, 2010
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Insurance
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Other
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E&S
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ART
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Reinsurance
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Run-off
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Total
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Gross Written Premiums
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$ | 34,121 | $ | 24,847 | $ | 12,971 | $ | (6 | ) | $ | 71,933 | |||||||||
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Net Written Premiums
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27,423 | 17,063 | 12,258 | (6 | ) | 56,738 | ||||||||||||||
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Net Earned Premiums
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26,347 | 15,114 | 11,765 | (6 | ) | 53,220 | ||||||||||||||
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Underwriting Profit (Loss)
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(1,161 | ) | 736 | 181 | (303 | ) | (547 | ) | ||||||||||||
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Fee Income
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266 | 1,150 | 57 | 1 | 1,474 | |||||||||||||||
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Other Income (Loss)
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(223 | ) | - | - | (37 | ) | (260 | ) | ||||||||||||
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Investment Income
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5,286 | 1,366 | 1,488 | 125 | 8,265 | |||||||||||||||
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Pre-tax Operating Income
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4,168 | 3,252 | 1,726 | (214 | ) | 8,932 | ||||||||||||||
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Realized Gains
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560 | |||||||||||||||||||
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Interest and Holding Company Expenses
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1,551 | |||||||||||||||||||
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Earnings Before Income Taxes
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7,941 | |||||||||||||||||||
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Income Taxes
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635 | |||||||||||||||||||
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Net Earnings
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7,306 | |||||||||||||||||||
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Less: Net Earnings Attributable to the Non-controlling Interest
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104 | |||||||||||||||||||
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Net Earnings Attributable to ASIH, Ltd.
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$ | 7,202 | ||||||||||||||||||
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Loss Ratio
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57.3 | % | 53.1 | % | 70.2 | % |
NM
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59.0 | % | |||||||||||
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Expense Ratio
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46.1 | % | 34.4 | % | 27.7 | % |
NM
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39.3 | % | |||||||||||
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Combined Ratio
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103.4 | % | 87.5 | % | 97.9 | % |
NM
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98.3 | % | |||||||||||
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Three Months Ended September 30, 2009
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Insurance
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Other
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E&S
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ART
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Reinsurance
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Run-off
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Total
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Gross Written Premiums
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$ | 26,910 | $ | 58,593 | $ | 7,100 | $ | - | $ | 92,603 | ||||||||||
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Net Written Premiums
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19,667 | 11,351 | 7,044 | - | 38,062 | |||||||||||||||
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Net Earned Premiums
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22,025 | 11,261 | 6,695 | - | 39,981 | |||||||||||||||
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Underwriting Profit (Loss)
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(677 | ) | 167 | (236 | ) | (556 | ) | (1,302 | ) | |||||||||||
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Fee Income
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265 | 939 | 80 | (34 | ) | 1,250 | ||||||||||||||
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Other Income (Loss)
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(40 | ) | (40 | ) | ||||||||||||||||
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Investment Income
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5,100 | 1,104 | 905 | 222 | 7,331 | |||||||||||||||
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Pre-tax Operating Income
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4,688 | 2,210 | 749 | (408 | ) | 7,239 | ||||||||||||||
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Realized Gains
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61 | |||||||||||||||||||
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Interest and Holding Company Expenses
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1,479 | |||||||||||||||||||
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Earnings Before Income Taxes
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5,821 | |||||||||||||||||||
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Income Taxes
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446 | |||||||||||||||||||
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Net Earnings
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5,375 | |||||||||||||||||||
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Less: Net Earnings Attributable to the Non-controlling Interest
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421 | |||||||||||||||||||
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Net Earnings Attributable to ASIH, Ltd.
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$ | 4,954 | ||||||||||||||||||
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Loss Ratio
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56.4 | % | 54.0 | % | 68.9 | % |
NM
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57.7 | % | |||||||||||
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Expense Ratio
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45.5 | % | 36.3 | % | 33.4 | % |
NM
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42.5 | % | |||||||||||
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Combined Ratio
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101.9 | % | 90.3 | % | 102.3 | % |
NM
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100.2 | % | |||||||||||
5
American Safety Insurance Holdings, Ltd. and Subsidiaries
Segment Data
(Unaudited) (Dollars in thousands)
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Nine Months Ended September 30, 2010
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Insurance
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Other
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E&S
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ART
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Reinsurance
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Run-off
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Total
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Gross Written Premiums
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$ | 100,227 | $ | 66,966 | $ | 36,641 | $ | (6 | ) | $ | 203,828 | |||||||||
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Net Written Premiums
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81,251 | 48,501 | 33,539 | (6 | ) | 163,285 | ||||||||||||||
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Net Earned Premiums
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72,741 | 39,178 | 31,515 | (6 | ) | 143,428 | ||||||||||||||
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Underwriting Profit (Loss)
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(5,078 | ) | 1,482 | 1,086 | (982 | ) | (3,492 | ) | ||||||||||||
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Fee Income
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615 | 2,854 | 228 | 25 | 3,722 | |||||||||||||||
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Other Income (Loss)
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(223 | ) | - | - | (7 | ) | (230 | ) | ||||||||||||
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Investment Income
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16,120 | 3,634 | 3,753 | 592 | 24,099 | |||||||||||||||
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Pre-tax Operating Income
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11,434 | 7,970 | 5,067 | (372 | ) | 24,099 | ||||||||||||||
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Realized Gains
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2,080 | |||||||||||||||||||
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Interest and Holding Company Expenses
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4,461 | |||||||||||||||||||
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Earnings Before Income Taxes
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21,718 | |||||||||||||||||||
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Income Taxes
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1,486 | |||||||||||||||||||
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Net Earnings
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20,232 | |||||||||||||||||||
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Less: Net Earnings Attributable to the Non-controlling Interest
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360 | |||||||||||||||||||
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Net Earnings Attributable to ASIH, Ltd.
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$ | 19,872 | ||||||||||||||||||
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Loss Ratio
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57.7 | % | 58.5 | % | 67.1 | % |
NM
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60.0 | % | |||||||||||
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Expense Ratio
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48.4 | % | 30.4 | % | 28.8 | % |
NM
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39.8 | % | |||||||||||
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Combined Ratio
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106.1 | % | 88.9 | % | 95.9 | % |
NM
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99.8 | % | |||||||||||
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Nine Months Ended September 30, 2009
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Insurance
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Other
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E&S
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ART
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Reinsurance
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Run-off
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Total
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Gross Written Premiums
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$ | 85,420 | $ | 89,477 | $ | 25,327 | $ | - | $ | 200,224 | ||||||||||
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Net Written Premiums
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63,927 | 30,995 | 25,776 | - | 120,698 | |||||||||||||||
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Net Earned Premiums
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68,451 | 31,758 | 26,041 | - | 126,250 | |||||||||||||||
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Underwriting Profit (Loss)
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(2,670 | ) | 2,661 | (595 | ) | (2,070 | ) | (2,674 | ) | |||||||||||
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Fee Income
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673 | 2,420 | 309 | (34 | ) | 3,368 | ||||||||||||||
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Other Income
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- | - | - | 44 | 44 | |||||||||||||||
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Investment Income
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16,253 | 3,120 | 2,750 | 727 | 22,850 | |||||||||||||||
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Pre-tax Operating Income
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14,256 | 8,201 | 2,464 | (1,333 | ) | 23,588 | ||||||||||||||
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Realized Gains
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298 | |||||||||||||||||||
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Interest and Holding Company Expenses
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4,455 | |||||||||||||||||||
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Earnings Before Income Taxes
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19,431 | |||||||||||||||||||
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Income Taxes
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1,420 | |||||||||||||||||||
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Net Earnings
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18,011 | |||||||||||||||||||
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Less: Net Earnings Attributable to the Non-controlling Interest
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593 | |||||||||||||||||||
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Net Earnings Attributable to ASIH, Ltd.
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$ | 17,418 | ||||||||||||||||||
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Loss Ratio
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57.9 | % | 52.9 | % | 68.8 | % |
NM
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58.9 | % | |||||||||||
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Expense Ratio
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45.0 | % | 31.1 | % | 32.3 | % |
NM
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40.6 | % | |||||||||||
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Combined Ratio
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102.9 | % | 84.0 | % | 101.1 | % |
NM
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99.5 | % | |||||||||||
6