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8-K - FORM 8-K - AMERICAN SAFETY INSURANCE HOLDINGS LTD | d389900d8k.htm |
Exhibit 99.1
American Safety Insurance Holdings, Ltd.
Reports Second Quarter Financial Results
HAMILTON, Bermuda, August 1, 2012 American Safety Insurance Holdings, Ltd. (NYSE:ASI) today reported net earnings of $2.2 million for the three months ended June 30, 2012, or $0.21 per diluted share, as compared to $4.1 million, or $0.38 per diluted share, for the same period of 2011.
Financial highlights for the quarter included1:
| Gross written premiums increased 6% to $87.5 million |
| Net earned premiums increased 5% to $62.0 million |
| Total revenues were $70.1 million compared to $68.2 million |
| The combined ratio was 107.1% compared to 105.6% |
| The combined ratio excluding net weather related property losses was 101.3% compared to 97.0% |
| Net operating earnings2 exclusive of net weather related property losses were $5.2 million compared to $7.3 million |
| Annualized return on average equity (exclusive of realized and unrealized gains from investments) was 3.0% |
| Book value was $32.28 per diluted share versus $30.80 at December 31, 2011 |
1 | All comparisons are with the same period last year unless stated otherwise. |
2 | Net operating earnings (loss) is a non-GAAP financial measure defined by the Company as net earnings adjusted for net realized gains (losses), net of applicable taxes. |
Second Quarter Results
Total revenues in the quarter increased to $70.1 million from $68.2 million in 2011 driven by an increase in net earned premiums, partially offset by a decrease in investment income. Net earnings include $3.0 million of after-tax net weather related property losses compared to $3.4 million in the 2011 quarter.
The combined ratio of 107.1% consists of a loss ratio of 65.8% and an expense ratio of 41.3%, compared to 67.4% and 38.2%, respectively, for the same quarter of 2011. Pre-tax net weather related property losses in the 2012 quarter were $3.6 million (or 5.8 points) compared to $5.1 million (or 8.6 points) for the 2011 quarter. The expense ratio increase was attributable to: (a) lower acquisition costs in 2011 due to the impact of property catastrophe losses on profit commissions, (b) mix of business and (c) costs associated with growth initiatives.
Year to Date Results
Total revenues for the six months ended 2012 were $140.1 million compared to $142.0 million in 2011. Net earned premiums increased 9% to $123.4 million, and net realized gains decreased $11.3 million.
The combined ratio was 104.2% compared to 110.8%, composed of a loss ratio of 63.3% and an expense ratio of 40.9%, compared to 72.3% and 38.5%, respectively, in the prior year. The decrease in the loss ratio is primarily attributable to lower pre-tax net weather related property losses of $3.6 million (or 2.9 points) for the six months ended June 30, 2012 compared to $10.8 million (or 9.5 points) for the same period in 2011. The 2011 loss ratio also included $5.0 million (or 4.4 points) of prior year loss reserve strengthening in the Assumed Reinsurance division. The increase in the expense ratio is due to the same factors discussed in the quarter results.
Net earnings for the six months ended June 30, 2012, were $6.2 million, or $0.59 per diluted share, compared to $12.0 million, or $1.11 per diluted share, for the same period in 2011. Net earnings for the six months ended June 30, 2012, include after-tax net weather related property losses of $3.0 million and minimal net realized gains. For the same six months of 2011, after-tax net weather related property losses totaled $8.4 million and net realized gains of $11.3 million. Net operating earnings, exclusive of net weather related property losses, were $9.2 million compared to $9.1 million.
Invested assets increased 2.9% to $908.6 million at June 30, 2012, from $883.1 million at December 31, 2011. Book yield on the portfolio was 3.6% net of investment fees compared to 3.9% in 2011.
Commenting on the results, Stephen R. Crim, President and Chief Executive Officer said, We achieved growth in the E&S and Reinsurance divisions, advancing our strategy to build scale in our product platform. During the quarter, the overall rate environment continued to improve, supporting our ability to generate growth in existing products. Based on our current capital position, we will repurchase shares under our current authorization and expect to complete it by the end of the year.
Conference Call
A conference call to discuss second quarter 2012 results is scheduled for Thursday, August 2, 2012, at 9:00 a.m. (Eastern Daylight Time), which will be broadcast through Vcalls Investor Calendar at www.investorcalendar.com, or the Companys 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.
This press release contains forward-looking statements. The forward-looking statements reflect the Companys current views with respect to future events and financial performance, including catastrophe and other losses. Forward-looking statements involve risks and uncertainties which may cause actual results to differ materially, including developments in loss trends and adequacy and changes in loss reserves and actuarial assumptions.
About Us:
For 25 years, American Safety Insurance Holdings, Ltd. (NYSE:ASI), a Bermuda holding company, has offered 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, American Safety Risk Retention Group, Inc., and American Safety Assurance (Vermont), Inc. As a group, ASIs insurance subsidiaries and affiliates are rated A (Excellent) IX by A.M. Best. For additional information, please visit www.asih.bm.
Contacts:
American Safety Insurance Holdings, Ltd. | American Safety Administrative Services, Inc. | |
Investor Relations | Media Relations | |
Stephen R. Crim | Patrick Driscoll, CPA, CPCU | |
scrim@amsafety.bm | patrick.driscoll@amsafety.com | |
(441) 296-8560 | (770) 916-1908 |
American Safety Insurance Holdings, Ltd. and Subsidiaries
Financial and Operating Highlights
(Unaudited)
(dollars in thousands)
Three Months Ended June 30, |
Six Months Ended June 30, |
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2012 | 2011 | 2012 | 2011 | |||||||||||||
INCOME STATEMENT DATA: |
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Revenues: |
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Direct earned premiums |
$ | 60,595 | $ | 60,801 | $ | 121,123 | $ | 118,456 | ||||||||
Assumed earned premiums |
15,259 | 13,851 | 29,124 | 25,135 | ||||||||||||
Ceded earned premiums |
(13,837 | ) | (15,502 | ) | (26,818 | ) | (30,073 | ) | ||||||||
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Net earned premiums |
62,017 | 59,150 | 123,429 | 113,518 | ||||||||||||
Net investment income |
7,402 | 8,050 | 15,214 | 15,486 | ||||||||||||
Net realized gains (losses) |
(13 | ) | 194 | 39 | 11,302 | |||||||||||
Fee income |
717 | 786 | 1,385 | 1,651 | ||||||||||||
Other income |
12 | 12 | 25 | 23 | ||||||||||||
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Total revenues |
70,135 | 68,192 | 140,092 | 141,980 | ||||||||||||
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Expenses: |
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Losses and loss adjustment expenses |
40,819 | 39,869 | 78,100 | 82,129 | ||||||||||||
Acquisition expenses |
14,337 | 13,239 | 29,081 | 24,994 | ||||||||||||
Other underwriting expenses |
12,013 | 10,171 | 22,764 | 20,370 | ||||||||||||
Interest expense |
367 | 354 | 785 | 740 | ||||||||||||
Corporate and other expenses |
848 | 1,026 | 2,104 | 1,852 | ||||||||||||
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Total expenses |
68,384 | 64,659 | 132,834 | 130,085 | ||||||||||||
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Earnings before income taxes |
1,751 | 3,533 | 7,258 | 11,895 | ||||||||||||
Income tax (benefit) expense |
(234 | ) | (549 | ) | 872 | (581 | ) | |||||||||
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Net earnings |
1,985 | 4,082 | 6,386 | 12,476 | ||||||||||||
Less: Net earnings (loss) attributable to the non-controlling interest |
(182 | ) | 30 | 163 | 523 | |||||||||||
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Net earnings attributable to ASIH, Ltd. |
$ | 2,167 | $ | 4,052 | $ | 6,223 | $ | 11,953 | ||||||||
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Net earnings per share: |
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Basic |
$ | 0.21 | $ | 0.39 | $ | 0.61 | $ | 1.15 | ||||||||
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Diluted |
$ | 0.21 | $ | 0.38 | $ | 0.59 | $ | 1.11 | ||||||||
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Weighted average number of shares outstanding: |
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Basic |
10,256,634 | 10,429,188 | 10,238,667 | 10,436,848 | ||||||||||||
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Diluted |
10,555,222 | 10,764,542 | 10,544,627 | 10,776,398 | ||||||||||||
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Loss ratio |
65.8 | % | 67.4 | % | 63.3 | % | 72.3 | % | ||||||||
Expense ratio |
41.3 | % | 38.2 | % | 40.9 | % | 38.5 | % | ||||||||
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Combined ratio |
107.1 | % | 105.6 | % | 104.2 | % | 110.8 | % | ||||||||
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Net operating earnings: |
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Net earnings attributable to ASIH, Ltd. |
$ | 2,167 | $ | 4,052 | $ | 6,223 | $ | 11,953 | ||||||||
Less: Realized investment gains (losses), net of taxes |
(13 | ) | 146 | 20 | 11,208 | |||||||||||
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Net operating earnings |
$ | 2,180 | $ | 3,906 | $ | 6,203 | $ | 745 | ||||||||
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BALANCE SHEET DATA: | June 30, 2012 | December 31, 2011 | ||||||
(unaudited | ) | |||||||
Total investments |
$ | 908,626 | $ | 883,099 | ||||
Total assets |
1,328,057 | 1,286,532 | ||||||
Unpaid losses and loss adjustment expenses |
698,465 | 680,201 | ||||||
Total liabilities |
977,683 | 951,852 | ||||||
Total shareholders equity |
350,374 | 334,680 | ||||||
Book value per share-diluted |
$ | 32.28 | $ | 30.80 |
American Safety Insurance Holdings, Ltd. and Subsidiaries
Segment Data
(Unaudited)
(dollars in thousands)
Three Months Ended June 30, 2012 | ||||||||||||||||||||
Insurance | Other | |||||||||||||||||||
E&S | ART | Reinsurance | Run-off | Total | ||||||||||||||||
Gross written premiums |
$ | 50,448 | $ | 21,498 | $ | 15,603 | $ | | $ | 87,549 | ||||||||||
Net written premiums |
39,735 | 14,579 | 15,603 | | 69,917 | |||||||||||||||
Net earned premiums |
33,600 | 13,157 | 15,260 | | 62,017 | |||||||||||||||
Fee & other income |
| 738 | | (9 | ) | 729 | ||||||||||||||
Losses & loss adjustment expenses |
20,221 | 11,875 | 8,751 | (28 | ) | 40,819 | ||||||||||||||
Acquisition & other underwriting expenses*** |
15,140 | 5,865 | 4,471 | 874 | 26,350 | |||||||||||||||
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Underwriting profit (loss) |
(1,761 | ) | (3,845 | ) | 2,038 | (855 | ) | (4,423 | ) | |||||||||||
Net investment income |
4,285 | 1,348 | 1,595 | 174 | 7,402 | |||||||||||||||
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Pre-tax operating income (loss) |
2,524 | (2,497 | ) | 3,633 | (681 | ) | 2,979 | |||||||||||||
Net realized gains |
| | | | (13 | ) | ||||||||||||||
Interest and corporate expenses**** |
| | | | 1,215 | |||||||||||||||
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Earnings before income taxes |
| | | | 1,751 | |||||||||||||||
Income tax expense |
| | | | (234 | ) | ||||||||||||||
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Net earnings |
| | | | $ | 1,985 | ||||||||||||||
Less: Net earnings attributable to the non-controlling interest |
| | | | (182 | ) | ||||||||||||||
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Net earnings attributable to ASIH, Ltd. |
| | | | $ | 2,167 | ||||||||||||||
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Loss ratio |
60.2 | % | 90.3 | % | 57.3 | % | *NM | 65.8 | % | |||||||||||
Expense ratio |
45.1 | % | 39.0 | % | 29.3 | % | NM | 41.3 | % | |||||||||||
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Combined ratio** |
105.3 | % | 129.3 | % | 86.6 | % | NM | 107.1 | % | |||||||||||
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Three Months Ended June 30, 2011 | ||||||||||||||||||||
Insurance | Other | |||||||||||||||||||
E&S | ART | Reinsurance | Run-off | Total | ||||||||||||||||
Gross written premiums |
$ | 43,929 | $ | 23,923 | $ | 15,028 | (1 | ) | $ | 82,879 | ||||||||||
Net written premiums |
34,413 | 17,140 | 14,864 | (1 | ) | 66,416 | ||||||||||||||
Net earned premiums |
29,085 | 15,616 | 14,450 | (1 | ) | 59,150 | ||||||||||||||
Fee & other income |
(5 | ) | 770 | | 33 | 798 | ||||||||||||||
Losses & loss adjustment expenses |
17,885 | 12,830 | 9,153 | 1 | 39,869 | |||||||||||||||
Acquisition & other underwriting expenses*** |
12,412 | 5,916 | 4,249 | 833 | 23,410 | |||||||||||||||
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Underwriting profit (loss) |
(1,217 | ) | (2,360 | ) | 1,048 | (802 | ) | (3,331 | ) | |||||||||||
Net investment income |
5,081 | 1,232 | 1,586 | 151 | 8,050 | |||||||||||||||
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Pre-tax operating income (loss) |
3,864 | (1,128 | ) | 2,634 | (651 | ) | 4,719 | |||||||||||||
Net realized gains |
| | | | 194 | |||||||||||||||
Interest and corporate expenses**** |
| | | | 1,380 | |||||||||||||||
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Earnings before income taxes |
| | | | 3,533 | |||||||||||||||
Income tax benefit |
| | | | (549 | ) | ||||||||||||||
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Net earnings |
| | | | $ | 4,082 | ||||||||||||||
Less: Net earnings attributable to the non-controlling interest |
| | | | 30 | |||||||||||||||
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Net earnings attributable to ASIH, Ltd. |
| | | | $ | 4,052 | ||||||||||||||
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Loss ratio |
61.5 | % | 82.2 | % | 63.3 | % | *NM | 67.4 | % | |||||||||||
Expense ratio |
42.7 | % | 33.0 | % | 29.4 | % | NM | 38.2 | % | |||||||||||
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Combined ratio** |
104.2 | % | 115.2 | % | 92.7 | % | NM | 105.6 | % | |||||||||||
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* | NM = Ratio is not meaningful |
** | The U.S. GAAP combined ratio is a measure of underwriting performance and represents the relationship of losses and loss adjustment expenses, acquisition expenses, and other underwriting expenses net of fee income to earned premiums. |
*** | Reclassifications between divisions and segments were made to allocate indirect corporate overhead costs. |
**** | Excise taxes have been classified as corporate expenses resulting in a reclassification of expenses for prior year. |
American Safety Insurance Holdings, Ltd. and Subsidiaries
Segment Data
(Unaudited)
(dollars in thousands)
Six Months Ended June 30, 2012 | ||||||||||||||||||||
Insurance | Other | |||||||||||||||||||
E&S | ART | Reinsurance | Run-off | Total | ||||||||||||||||
Gross written premiums |
$ | 89,059 | $ | 42,676 | $ | 29,579 | $ | | $ | 161,314 | ||||||||||
Net written premiums |
70,468 | 30,722 | 29,579 | | 130,769 | |||||||||||||||
Net earned premiums |
64,750 | 29,501 | 29,178 | | 123,429 | |||||||||||||||
Fee & other income |
| 1,402 | | 8 | 1,410 | |||||||||||||||
Losses & loss adjustment expenses |
39,138 | 21,862 | 17,100 | | 78,100 | |||||||||||||||
Acquisition & other underwriting expenses*** |
29,057 | 12,253 | 8,801 | 1,734 | 51,845 | |||||||||||||||
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Underwriting profit (loss) |
(3,445 | ) | (3,212 | ) | 3,277 | (1,726 | ) | (5,106 | ) | |||||||||||
Net investment income |
8,910 | 2,778 | 3,216 | 310 | 15,214 | |||||||||||||||
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Pre-tax operating income (loss) |
5,465 | (434 | ) | 6,493 | (1,416 | ) | 10,108 | |||||||||||||
Net realized gains |
| | | | 39 | |||||||||||||||
Interest and corporate expenses**** |
| | | | 2,889 | |||||||||||||||
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Earnings before income taxes |
| | | | 7,258 | |||||||||||||||
Income tax benefit |
| | | | 872 | |||||||||||||||
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Net earnings |
| | | | $ | 6,386 | ||||||||||||||
Less: Net earnings attributable to the non-controlling interest |
| | | | 163 | |||||||||||||||
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Net earnings attributable to ASIH, Ltd. |
| | | | $ | 6,223 | ||||||||||||||
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Loss ratio |
60.4 | % | 74.1 | % | 58.6 | % | *NM | 63.3 | % | |||||||||||
Expense ratio |
44.9 | % | 36.8 | % | 30.2 | % | NM | 40.9 | % | |||||||||||
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Combined ratio** |
105.3 | % | 110.9 | % | 88.8 | % | NM | 104.2 | % | |||||||||||
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Six Months Ended June 30, 2011 | ||||||||||||||||||||
Insurance | Other | |||||||||||||||||||
E&S | ART | Reinsurance | Run-off | Total | ||||||||||||||||
Gross written premiums |
$ | 79,924 | $ | 45,801 | $ | 31,500 | (1 | ) | $ | 157,224 | ||||||||||
Net written premiums |
64,015 | 32,046 | 30,366 | (1 | ) | 126,426 | ||||||||||||||
Net earned premiums |
57,079 | 29,971 | 26,469 | (1 | ) | 113,518 | ||||||||||||||
Fee & other income |
| 1,630 | | 44 | 1,674 | |||||||||||||||
Losses & loss adjustment expenses |
35,638 | 21,844 | 24,647 | | 82,129 | |||||||||||||||
Acquisition & other underwriting expenses*** |
24,633 | 11,964 | 7,114 | 1,653 | 45,364 | |||||||||||||||
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Underwriting profit (loss) |
(3,192 | ) | (2,207 | ) | (5,292 | ) | (1,610 | ) | (12,301 | ) | ||||||||||
Net investment income |
9,896 | 2,352 | 2,935 | 303 | 15,486 | |||||||||||||||
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Pre-tax operating income (loss) |
6,704 | 145 | (2,357 | ) | (1,307 | ) | 3,185 | |||||||||||||
Net realized gains |
| | | | 11,302 | |||||||||||||||
Interest and corporate expenses**** |
| | | | 2,592 | |||||||||||||||
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Earnings before income taxes |
| | | | 11,895 | |||||||||||||||
Income tax benefit |
| | | | (581 | ) | ||||||||||||||
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Net earnings |
| | | | $ | 12,476 | ||||||||||||||
Less: Net earnings attributable to the non-controlling interest |
| | | | 523 | |||||||||||||||
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Net earnings attributable to ASIH, Ltd. |
| | | | $ | 11,953 | ||||||||||||||
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Loss ratio |
62.4 | % | 72.9 | % | 93.1 | % | *NM | 72.3 | % | |||||||||||
Expense ratio |
43.2 | % | 34.5 | % | 26.9 | % | NM | 38.5 | % | |||||||||||
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Combined ratio** |
105.6 | % | 107.4 | % | 120.0 | % | NM | 110.8 | % | |||||||||||
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* | NM = Ratio is not meaningful |
** | The U.S. GAAP combined ratio is a measure of underwriting performance and represents the relationship of losses and loss adjustment expenses, acquisition expenses, and other underwriting expenses net of fee income to earned premiums. |
*** | Reclassifications between divisions and segments were made to allocate indirect corporate overhead costs. |
**** | Excise taxes have been classified as corporate expenses resulting in a reclassification of expenses for prior year. |