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| 8-K - FORM8K20110309 - AMERICAN SAFETY INSURANCE HOLDINGS LTD | form8k20110309.htm |
American Safety Insurance Holdings, Ltd.
Reports Fourth Quarter and Year End Results
Book Value Per Diluted Share Increased to $29.00, a 13.9% Increase Year Over Year
HAMILTON, Bermuda, March 9, 2011 – American Safety Insurance Holdings, Ltd. (NYSE:ASI) today reported net earnings of $10.6 million, or $.99 per diluted share, for the 2010 fourth quarter, compared to $6.9 million, or $.65 per diluted share, for the same period in 2009. Net earnings for the twelve months ended 2010 were $30.5 million, or $2.87 per diluted share, compared to $24.3 million, or $2.30 per diluted share, for the same period of 2009.
Financial highlights for the quarter included:
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Gross written premiums increased 38.4% to $73.7 million.
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Total revenues increased 27.5% to $66.2 million.
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Net investment income increased 4.4% to $8.0 million.
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The combined ratio was 101.4% compared to 99.2% for the same 2009 quarter.
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Financial highlights for the year included:
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Gross written premiums increased 9.5% to $277.6 million.
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Total revenues increased 16.9% to $239.3 million.
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Net investment income increased 5.2% to $32.1 million.
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The combined ratio was 100.3% compared to 99.4% for the 2009 year.
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Cash flow from operations increased 11.7% to $59.6 million.
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Book value increased 13.9% to $29.00 per diluted share.
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Return on average equity (adjusted for realized and unrealized gains and losses from investments) for 2010 increased to 10.9% from 10.8% in 2009.
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Fourth Quarter Results
The growth in gross written premiums is attributable to newer products, the addition of underwriting teams, the surety acquisition and new programs. Total revenue increased from $51.9 million in the 2009 quarter to $66.2 million due to higher net earned premiums and increased investment income partially offset by lower fee income.
Net operating earnings for the quarter increased to $10.4 million from $7.6 million in 2009 due primarily to a $3.6 million tax benefit that includes a reversal of the remaining valuation allowance established in 2008. Net 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.
The combined ratio was 101.4%, composed of a loss ratio of 59.8% and an expense ratio of 41.6%. The loss ratio increased to 59.8% from 55.2% for the same quarter 2009. The 2010 and 2009 loss ratios include $0.8 million and $4.5 million, respectively, of favorable development on prior year loss reserves. The expense ratio improved to 41.6% from 44.0% due primarily to economies of scale associated with increased net earned premiums.
Year End Results
The growth in gross written premiums is attributable to the same factors noted in the Fourth Quarter Results. Gross written premiums in 2009 included $43.4 million from a specialty program that was non-renewed in 2010 and was 100% reinsured. Total revenue increased from $204.7 million in 2009 to $239.3 million in 2010 due to higher net earned premiums and increased investment income offset partially by lower fee income.
Net operating earnings increased to $28.7 million from $25.1 million in 2009 due primarily to a $2.1 million tax benefit that includes a reversal of the remaining valuation allowance. Investment income increased $1.6 million and net earned premiums increased $32.2 million contributing to the increased net operating earnings. Net realized gains on investments for 2010 were approximately $2.3 million pre-tax, compared to net realized gains on investments of $0.2 million during 2009.
The combined ratio was 100.3% composed of a loss ratio of 59.9% and an expense ratio of 40.4%. The loss ratio increased to 59.9% from 57.9% for the 2009 and includes development on prior accident year loss reserves of $0.4 million compared to $4.5 million in 2009 of favorable development. The improvement in the expense ratio from 41.5% to 40.4% is attributable to economies of scale associated with increased net earned premiums, partially offset by a decline in fee income.
Commenting on the results, Stephen R. Crim, Chief Executive Officer, said: “We finished 2010 with a solid quarter driven by premium growth from the execution of our product diversification strategy which contributed to the 9.5% growth in gross written premium and favorably impacted the Company’s expense ratio. Looking forward to 2011, we expect the market to remain competitive, placing upward pressure on the combined ratio. Our diversification strategy, however, should create modest premium growth, which we expect to be in the 5% range.”
Conference Call
A conference call to discuss fourth quarter and year end 2010 results is scheduled for Thursday, March 10, 2011 at 9:00 a.m. (Eastern Standard Time), which will be broadcast through Vcall’s Investor Calendar at www.investorcalendar.com, or the Company’s website at www.amsafety.bm. 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.
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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American Safety Administrative Services, Inc.
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Investor Relations
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Media Relations
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Stephen R. Crim
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Patrick Driscoll
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scrim@amsafety.bm
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patrick.driscoll@amsafety.com
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(441) 542-7933
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(770) 916-1908
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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 | ||||
American Safety Insurance Holdings, Ltd. and Subsidiaries
Segment Data
(Unaudited) (in thousands)
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Three Months Ended December 31, 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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$ | 37,939 | $ | 21,818 | $ | 13,977 | $ | (1 | ) | $ | 73,733 | |||||||||
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Net Written Premiums
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32,972 | 13,865 | 13,119 | (1 | ) | 59,955 | ||||||||||||||
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Net Earned Premiums
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30,166 | 14,574 | 12,566 | (1 | ) | 57,305 | ||||||||||||||
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Underwriting Profit (Loss)
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808 | (4,762 | ) | 1,243 | 998 | (1,713 | ) | |||||||||||||
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Fee Income
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109 | 761 | 41 | (2 | ) | 909 | ||||||||||||||
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Other Income (Loss)
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- | - | - | (213 | ) | (213 | ) | |||||||||||||
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Investment Income
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5,211 | 1,257 | 1,478 | 93 | 8,039 | |||||||||||||||
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Pre-tax Operating Income (Loss)
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6,128 | (2,744 | ) | 2,762 | 876 | 7,022 | ||||||||||||||
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Realized Gains (Losses)
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171 | |||||||||||||||||||
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Interest and Holding Company Expenses
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1,042 | |||||||||||||||||||
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Earnings Before Income Taxes
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6,151 | |||||||||||||||||||
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Income Taxes (Benefit)
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(3,568 | ) | ||||||||||||||||||
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Net Earnings
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$ | 9,719 | ||||||||||||||||||
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Less: Net Loss Attributable to the
Non-Controlling Interest
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(917 | ) | ||||||||||||||||||
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Net Earnings Attributable to ASIH, Ltd.
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$ | 10,636 | ||||||||||||||||||
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Loss Ratio
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53.5 | % | 80.5 | % | 61.7 | % |
NM
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59.8 | % | |||||||||||
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Expense Ratio
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43.4 | % | 46.9 | % | 28.1 | % |
NM
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41.6 | % | |||||||||||
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Combined Ratio
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96.9 | % | 127.4 | % | 89.8 | % |
NM
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101.4 | % | |||||||||||
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Three Months Ended December 31, 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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$ | 31,548 | $ | 13,671 | $ | 8,069 | $ | (1 | ) | $ | 53,287 | |||||||||
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Net Written Premiums
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25,591 | 9,477 | 8,953 | (1 | ) | 44,020 | ||||||||||||||
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Net Earned Premiums
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23,512 | 10,178 | 8,578 | (1 | ) | 42,267 | ||||||||||||||
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Underwriting Profit (Loss)
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7,311 | (2,020 | ) | (5,334 | ) | (1,688 | ) | (1,731 | ) | |||||||||||
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Fee Income
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95 | 1,763 | 222 | - | 2,080 | |||||||||||||||
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Other Income (Loss)
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- | - | - | 7 | 7 | |||||||||||||||
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Investment Income
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5,360 | 1,151 | 968 | 225 | 7,704 | |||||||||||||||
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Pre-tax Operating Income (Loss)
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12,766 | 894 | (4,144 | ) | (1,456 | ) | 8,060 | |||||||||||||
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Realized Gains (Losses)
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(135 | ) | ||||||||||||||||||
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Interest and Holding Company Expenses
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2,114 | |||||||||||||||||||
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Earnings Before Income Taxes
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5,811 | |||||||||||||||||||
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Income Taxes (Benefit)
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(879 | ) | ||||||||||||||||||
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Net Earnings
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$ | 6,690 | ||||||||||||||||||
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Less: Net Loss Attributable to the
Non-Controlling Interest
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(216 | ) | ||||||||||||||||||
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Net Earnings Attributable to ASIH, Ltd.
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$ | 6,906 | ||||||||||||||||||
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Loss Ratio
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19.6 | % | 79.2 | % | 116.0 | % |
NM
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55.2 | % | |||||||||||
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Expense Ratio
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48.9 | % | 23.3 | % | 43.6 | % |
NM
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44.0 | % | |||||||||||
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Combined Ratio
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68.5 | % | 102.5 | % | 159.6 | % |
NM
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99.2 | % | |||||||||||
American Safety Insurance Holdings, Ltd. and Subsidiaries
Segment Data (Unaudited)
(Dollars in Thousands)
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Twelve Months Ended December 31, 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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$ | 138,166 | $ | 88,784 | $ | 50,618 | $ | (7 | ) | $ | 277,561 | |||||||||
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Net Written Premiums
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114,223 | 62,366 | 46,658 | (7 | ) | 223,240 | ||||||||||||||
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Net Earned premiums
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102,907 | 53,752 | 44,081 | (7 | ) | 200,733 | ||||||||||||||
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Underwriting Profit (Loss)
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(4,270 | ) | (3,280 | ) | 2,329 | 16 | (5,205 | ) | ||||||||||||
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Fee Income
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724 | 3,615 | 269 | 23 | 4,631 | |||||||||||||||
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Other Income (Loss)
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(223 | ) | - | - | (220 | ) | (443 | ) | ||||||||||||
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Investment Income
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21,331 | 4,891 | 5,231 | 685 | 32,138 | |||||||||||||||
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Pre-tax Operating Income
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17,562 | 5,226 | 7,829 | 504 | 31,121 | |||||||||||||||
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Realized Gains
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2,251 | |||||||||||||||||||
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Interest and Holding Company Expenses
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5,503 | |||||||||||||||||||
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Earnings Before Income Taxes
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27,869 | |||||||||||||||||||
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Income Tax Benefit
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(2,082 | ) | ||||||||||||||||||
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Net Earnings
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$ | 29,951 | ||||||||||||||||||
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Less: Net Loss Attributable to the
Non-Controlling Interest
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(557 | ) | ||||||||||||||||||
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Net Earnings Attributable to ASIH, Ltd.
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$ | 30,508 | ||||||||||||||||||
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Loss Ratio
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56.5 | % | 64.5 | % | 65.5 | % |
NM
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59.9 | % | |||||||||||
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Expense Ratio
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47.0 | % | 34.9 | % | 28.6 | % |
NM
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40.4 | % | |||||||||||
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Combined Ratio
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103.5 | % | 99.4 | % | 94.1 | % |
NM
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100.3 | % | |||||||||||
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Twelve Months Ended December 31, 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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$ | 116,968 | $ | 103,155 | $ | 33,397 | $ | (1 | ) | $ | 253,519 | |||||||||
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Net Written Premiums
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89,517 | 39,036 | 36,247 | (91 | ) | 164,709 | ||||||||||||||
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Net Earned Premiums
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91,970 | 40,612 | 36,026 | (91 | ) | 168,517 | ||||||||||||||
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Underwriting Profit (Loss)
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4,640 | (110 | ) | (5,176 | ) | (3,759 | ) | (4,405 | ) | |||||||||||
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Fee Income
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710 | 4,183 | 555 | - | 5,448 | |||||||||||||||
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Other Income (Loss)
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- | - | - | 51 | 51 | |||||||||||||||
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Investment Income
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21,255 | 4,563 | 3,840 | 896 | 30,554 | |||||||||||||||
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Pre-tax Operating Income (Loss)
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26,605 | 8,636 | (781 | ) | (2,812 | ) | 31,648 | |||||||||||||
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Realized Gains (Losses)
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163 | |||||||||||||||||||
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Interest and Holding Company Expenses
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6,568 | |||||||||||||||||||
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Earnings Before Income Taxes
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25,243 | |||||||||||||||||||
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Income Taxes Expense
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541 | |||||||||||||||||||
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Net Earnings
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$ | 24,702 | ||||||||||||||||||
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Less: Net Earnings Attributable to the
Non-Controlling Interest
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377 | |||||||||||||||||||
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Net Earnings Attributable to ASIH, Ltd.
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$ | 24,325 | ||||||||||||||||||
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Loss Ratio
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48.1 | % | 60.3 | % | 78.5 | % |
NM
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57.9 | % | |||||||||||
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Expense Ratio
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46.1 | % | 29.7 | % | 34.3 | % |
NM
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41.5 | % | |||||||||||
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Combined Ratio
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94.2 | % | 90.0 | % | 112.8 | % |
NM
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99.4 | % | |||||||||||