Attached files
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| 8-K - FORM 8-K - ASSURANCEAMERICA CORP | d8k.htm |
Exhibit 99.1
ASSURANCEAMERICA CORPORATION REPORTS RESULTS FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2010.
ATLANTA-(BUSINESSWIRE-April 4, 2011-Atlanta-based ASSURANCEAMERICA CORPORATION (OTC BB: ASAM) today announced its audited financial results for the twelve months ended December 31, 2010.
Revenue for the twelve-month period of 2010 increased 4% to $69.9 million, compared to $67.0 million for the same period in 2009. The 2010 revenue includes a one-time gain of $3.5 million from extinguishment of debt. Excluding the one-time gain, revenue for the twelve-month period ending December 31, 2010 was 0.9% below the same period in 2009. Revenue in the wholesale division declined by $1.2 million due to soft market conditions and actions taken by the Company to reduce premium volume in unprofitable market segments. This reduction was partially offset by an increase of $0.6 million in the retail division revenues.
The Company’s income before income taxes for the twelve-month period ending December 31, 2010 was $1.9 million compared to $0.9 million for the same period in 2009. The 2010 income includes the $3.5 million gain on extinguishment of debt, partially offset by a $1.5 million goodwill impairment charge in the retail division. Excluding these extraordinary items, the 2010 income before income taxes is a loss of $57 thousand, a reduction of $1.0 million from 2009. The year-over-year reduction in earnings is primarily due to lower revenue in the wholesale division, as discussed above, and increased loss expense due to unfavorable loss development on prior year claims.
The Company’s net income for the twelve-month period ending December 31, 2010 was $0.9 million as compared to $0.4 million in 2009. The effect of the extraordinary items on the 2010 net income is a $2.2 million after-tax gain on the extinguishment of debt and a $0.7 million after-tax charge related to the goodwill impairment. Excluding these extraordinary items, 2010 resulted in an after-tax net loss of $0.6 million.
AssuranceAmerica focuses on the non-standard automobile insurance marketplace, primarily in Alabama, Arizona, Florida, Georgia, Indiana, Louisiana, Mississippi, South Carolina, Texas and Virginia. Its principal operating subsidiaries are TrustWay Insurance Agencies, LLC (“Agency”), which sells personal automobile insurance policies through its 50 retail agencies, AssuranceAmerica Managing General Agency, LLC (“MGA”), and AssuranceAmerica Insurance Company (“Carrier”).
Forward-Looking Statements
This press release contains certain statements that may be deemed to be “forward-looking statements”. All statements in this press release not dealing with historical results or current facts are forward-looking and are based on estimates, assumptions, and projections. Statements that include the words “assumes”, “believes,” “seeks,” “expects,” “may,” “should,” “intends,” “likely,” “targets,” “plans,” “anticipates,” “estimates” or the negative version of those words and similar statements of a future or forward-looking nature identify forward-looking statements.
The primary events or circumstances that could cause actual results to differ materially from those expected by AssuranceAmerica Corporation include determinations with respect to reserve adequacy, realized gains or losses on the investment portfolio including other-than-temporary impairments for credit losses, rising loss cost trends, actions of competitors and natural disasters. AssuranceAmerica Corporation undertakes no obligation to publicly update or revise any of the forward-looking statements. For a more detailed discussion of some of the foregoing risks and uncertainties which could cause actual results to differ from those contained in the forward-looking statements, see AssuranceAmerican Corporation filings with the Securities and Exchange Commission.
Contact:
AssuranceAmerica Corporation, Atlanta
Sheree S. Williams, Senior Vice President and Chief Financial Officer
(770) 952-0200 Ext. 6212
Mark Hain, General Counsel, Secretary, Executive Vice President
(770) 952-0200 Ext. 6259
ASSURANCEAMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(000’S OMITTED)
| For the Years Ended December 31, |
||||||||
| 2010 | 2009 | |||||||
| Revenue: |
||||||||
| Gross premiums written |
$ | 100,922 | 107,249 | |||||
| Ceded premiums written |
(67,795 | ) | (71,999 | ) | ||||
| Net premiums written |
33,127 | 35,250 | ||||||
| Change in unearned premiums |
245 | (826 | ) | |||||
| Net premiums earned |
33,372 | 34,424 | ||||||
| Commission income |
20,932 | 21,641 | ||||||
| Managing general agent fees |
11,004 | 10,277 | ||||||
| Gain on extinguishment of debt |
3,510 | 0 | ||||||
| Net investment income |
647 | 670 | ||||||
| Net investment losses on securities |
18 | (362 | ) | |||||
| Other fee income |
429 | 342 | ||||||
| Total revenue |
69,912 | 66,992 | ||||||
| Expenses: |
||||||||
| Losses and loss adjustment expenses |
25,022 | 25,248 | ||||||
| Selling, general, and administrative |
39,504 | 38,872 | ||||||
| Stock option expense |
411 | 334 | ||||||
| Depreciation and amortization expense |
1,168 | 1,183 | ||||||
| Goodwill impairment |
1,519 | 0 | ||||||
| Interest expense |
354 | 458 | ||||||
| Total operating expenses |
67,978 | 66,095 | ||||||
| Income before income taxes |
1,934 | 897 | ||||||
| Income tax provision expense |
1,041 | 449 | ||||||
| Net income |
$ | 893 | 448 | |||||
| Earnings per common share: |
||||||||
| Basic |
$ | 0.014 | $ | 0.007 | ||||
| Diluted |
$ | 0.014 | $ | 0.007 | ||||
| Weighted average shares outstanding-basis |
65,467,508 | 65,120,526 | ||||||
| Weighted average shares outstanding-diluted |
65,917,793 | 65,284,661 | ||||||
AssuranceAmerica Corporation also makes available an investor supplement on our website. To access the supplemental financial information, go to www.assuranceamerica.com.
ASSURANCEAMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| December 31, 2010 |
December 31, 2009 |
|||||||
| ASSETS | ||||||||
| Cash and cash equivalents |
$ | 8,379,014 | $ | 6,253,643 | ||||
| Cash restricted |
1,802,990 | 1,800,000 | ||||||
| Short-term investments |
145,085 | 365,717 | ||||||
| Long-term investments, at fair value (amortized cost $8,561,245 and $7,745,142) |
8,630,776 | 7,518,144 | ||||||
| Long-term investments, held to maturity at amortized cost (fair value $0 and $4,981,850) |
0 | 1,015,374 | ||||||
| Marketable equity securities, at fair value (cost $1,978,166 and $1,888,334) |
2,243,235 | 1,918,841 | ||||||
| Other long-term investments |
727,288 | 0 | ||||||
| Other securities |
0 | 155,000 | ||||||
| Investment income due and accrued |
180,487 | 180,719 | ||||||
| Receivable from insureds |
33,120,082 | 35,173,717 | ||||||
| Reinsurance recoverable (including $10,602,969 and $14,099,266 on paid losses) |
34,013,415 | 43,809,125 | ||||||
| Prepaid reinsurance premiums |
23,643,822 | 25,098,051 | ||||||
| Deferred acquisition costs |
2,286,118 | 2,457,647 | ||||||
| Property and equipment (net of accumulated depreciation of $5,135,550 and $4,344,673) |
2,152,632 | 2,012,963 | ||||||
| Other receivables |
1,776,332 | 1,766,762 | ||||||
| Prepaid expenses |
660,028 | 510,558 | ||||||
| Intangibles (net of accumulated amortization of $3,428,671 and $3,051,877) |
5,969,215 | 7,509,934 | ||||||
| Security deposits |
109,543 | 105,315 | ||||||
| Prepaid income tax |
106,864 | 249,452 | ||||||
| Deferred tax assets |
1,837,551 | 2,909,229 | ||||||
| Other assets |
0 | 335,526 | ||||||
| Total assets |
$ | 127,784,477 | $ | 141,145,717 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Accounts payable and accrued expenses |
$ | 8,797,715 | $ | 8,551,370 | ||||
| Unearned premium |
34,217,108 | 35,916,156 | ||||||
| Unpaid losses and loss adjustment expenses |
33,311,067 | 41,972,983 | ||||||
| Reinsurance payable |
29,426,944 | 28,523,284 | ||||||
| Provisional commission reserve |
3,289,272 | 3,599,289 | ||||||
| Funds withheld from reinsurers |
1,875,000 | 1,875,000 | ||||||
| Revolving line of credit |
1,500,000 | 1,500,000 | ||||||
| Notes payable and related party debt |
175,420 | 774,001 | ||||||
| Junior subordinated debentures payable |
0 | 4,981,850 | ||||||
| Total liabilities |
112,592,526 | 127,693,933 | ||||||
| Commitments and Contingencies |
||||||||
| Common stock, $.01 par value (authorized 120,000,000 and 80,000,000 outstanding 65,494,357 and 65,144,357) |
654,943 | 651,443 | ||||||
| Surplus-paid in |
17,875,779 | 17,363,620 | ||||||
| Accumulated deficit |
(3,547,896 | ) | (4,440,473 | ) | ||||
| Accumulated other comprehensive gains (losses): |
||||||||
| Net unrealized gains (losses) on investment securities, net of taxes |
209,125 | (122,806 | ) | |||||
| Total stockholders’ equity |
15,191,951 | 13,451,784 | ||||||
| Total liabilities and stockholders’ equity |
$ | 127,784,477 | $ | 141,145,717 | ||||