Exhibit 99.1
| SeaBright Insurance Holdings, Inc. | Contact: | |
| 2101 4th Avenue Suite 1600 Seattle, WA 98121 | SeaBright Insurance Holdings, Inc. Joseph S. De Vita Chief Financial Officer 206-269-8500 investor@sbic.com |
SeaBright Insurance Holdings Reports Fourth Quarter and Year-End Results
Seattle, WA – March 3, 2005 – SeaBright Insurance Holdings, Inc. (Nasdaq: SEAB) today announced results for the fourth quarter and year ended December 31, 2004, the Company’s first full year of operations.
For the fourth quarter of 2004, net income was $3.2 million or $0.41 per weighted average common share equivalent outstanding. For the three months ended December 31, 2003, the Company reported a net loss of $0.2 million. Total fourth quarter revenue increased to $32.0 million in 2004 versus $5.3 million in the year-earlier period.
Loss and loss adjustment expenses totaled $18.8 million in the fourth quarter of 2004 versus $3.0 million in the same period in 2003. Total underwriting expenses for the fourth quarter of 2004 were $7.3 million compared to $1.8 million in the prior year period. The GAAP net combined ratio for the fourth quarter of 2004 was 85.7% compared to 114.5% for the same period in 2003.
For the year ended December 31, 2004, net income was $7.2 million, or $0.98 per weighted average common share equivalent outstanding, on total revenue of $86.7 million.
Loss and loss adjustment expenses totaled $53.7 million in 2004 and total underwriting expenses were $17.9 million. The GAAP net combined ratio was 87.0% for the full year 2004.
“We are pleased to report strong fourth quarter and year-end results, as 2004 represents the first full year of operations for SeaBright”, said John Pasqualetto, SeaBright’s Chairman, President and Chief Executive Officer. “Our performance reflects the substantial demand for our workers’ compensation insurance products and services in the maritime, alternative dispute resolution (ADR) and select state act markets. We believe our specialized product offerings, disciplined underwriting and customer-oriented service platform will continue to serve us well in the future. Finally, we successfully completed our initial public offering in January 2005, which should provide the necessary capital to support our growth.”
On January 26, 2005, the Company closed its initial public offering of 8,625,000 shares of common stock, including the underwriters’ over-allotment option, which was exercised in full, at a price of $10.50 per share. The offering generated net proceeds of approximately $80.8 million, after deducting underwriters’ fees, commissions and offering costs totaling approximately $9.8 million. On January 26, 2005, the Company contributed approximately $74.8 million of the net proceeds to SeaBright Insurance Company, its wholly-owned subsidiary. The remainder of the net proceeds will be used for general corporate purposes.
SeaBright Insurance Holdings, Inc. is an insurance holding company whose wholly owned subsidiary, SeaBright Insurance Company, operates as a specialty provider of multi-jurisdictional workers’ compensation insurance. SeaBright Insurance Company distributes its products through selected independent insurance brokers and through its in-house wholesale broker affiliate, PointSure Insurance Services. SeaBright Insurance Holdings was formed in 2003 by members of its current management and entities affiliated with Summit Partners, a leading private equity and venture capital firm, for the purpose of completing a management-led buyout that closed on September 30, 2003. SeaBright Insurance Company began writing new insurance contracts on October 1, 2003.
Conference Call
The Company will host a conference call on Thursday, March 3, 2005 at 11:00 a.m. EST featuring remarks by John G. Pasqualetto, Chairman, President and CEO, and Joseph S. De Vita, Senior Vice President and CFO. The conference call is available via webcast on the Company’s website and can be accessed by visiting http://www.sbic.com/intro.html. Once there, select “Investor Relations” from the menu at the top of the page, and proceed to “Webcasts and Presentations.” The dial-in number for the conference call is (800) 289-0493. Please call at least five minutes before the scheduled start time.
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Cautionary Statement
Some of the statements contained in this press release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” the negative of these terms or other terminology. Forward-looking statements are based on the opinions and estimates of management at the time the statements are made and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that could affect the Company’s actual results include, among others, the fact that our loss reserves are based on estimates and may be inadequate to cover our actual losses; the uncertain effects of emerging claim and coverage issues on our business; the geographic concentration of our business; an inability to obtain or collect on our reinsurance protection; a downgrade in the A.M Best rating of our insurance subsidiary; the impact of extensive regulation of the insurance industry and legislative and regulatory changes; a failure to realize our investment objectives; the effects of intense competition; the loss of one or more principal employees; the inability to acquire additional capital on favorable terms; a failure of independent insurance brokers to adequately market our products; the loss of our rights to fee income and protective arrangements that were established in connection with the acquisition of our business and the effects of acts of terrorism or war. More information about these and other factors that potentially could affect our financial results is included in the Registration Statement on Form S-1 (as amended) in connection with the initial public offering of our common stock and in our other public filings filed with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance upon these forward-looking statements that speak only as to the date of this release. The Company undertakes no obligation to update any forward-looking statements.
Set forth in the tables below are summary results of operations for the year ended December 31, 2004 and fourth quarters ended December 31, 2004 and 2003, and selected balance sheet data as of December 31, 2004 and 2003. The following information is preliminary and unaudited and is subject to change until audited results are publicly distributed. The Company currently expects to file its audited consolidated financial statements with the Securities and Exchange Commission as part of its Annual Report on Form 10-K in a timely fashion on or before April 19, 2005, the date on which our Annual Report is due.
SeaBright Insurance Holdings, Inc. and Subsidiaries
Consolidated Balance Sheets (Unaudited)
($ in thousands)
| December 31 | ||||||||
| 2004 | 2003 | |||||||
| ASSETS | ||||||||
| Investment securities available-for-sale, at fair value | $ | 105,661 | $ | 51,881 | ||||
| Cash and cash equivalents | 8,279 | 5,008 | ||||||
| Premiums receivable, net of allowance | 66,640 | 19,818 | ||||||
| Reinsurance recoverables | 13,484 | 12,050 | ||||||
| Receivable under reserve guarantee | 2,853 | 2,468 | ||||||
| Prepaid reinsurance | 5,254 | 2,340 | ||||||
| Deferred federal income taxes, net | 3,604 | 991 | ||||||
| Deferred policy acquisition costs, net | 7,588 | 1,936 | ||||||
| Goodwill and other intangible assets, net | 3,914 | 4,886 | ||||||
| Other assets | 8,835 | 4,702 | ||||||
| Total assets | $ | 226,112 | $ | 106,080 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Liabilities: | ||||||||
| Unpaid loss and loss adjustment expense | $ | 68,228 | $ | 29,733 | ||||
| Unearned premiums | 67,626 | 18,602 | ||||||
| Premiums payable | 3,128 | 3,976 | ||||||
| Accrued expenses and other liabilities | 16,760 | 8,164 | ||||||
| Surplus notes | 12,000 | — | ||||||
| Total liabilities | 167,742 | 60,475 | ||||||
| Stockholders’ equity: | ||||||||
| Preferred stock | 5 | 5 | ||||||
| Paid in capital | 50,831 | 45,670 | ||||||
| Retained earnings | 7,004 | (202 | ) | |||||
| Accumulated other comprehensive income | 530 | 132 | ||||||
| Total stockholders’ equity | 58,370 | 45,605 | ||||||
| Total liabilities and stockholders’ equity | $ | 226,112 | $ | 106,080 | ||||
SeaBright Insurance Holdings, Inc. and Subsidiaries
Consolidated Statements of Operations (Unaudited)
($ in thousands)
| Twelve | ||||||||||||
| Three Months Ended | Months Ended | |||||||||||
| December 31, | December 31, | |||||||||||
| 2004 | 2003 (1) | 2004 | ||||||||||
| Revenues: (2) | ||||||||||||
| Net premiums earned | $ | 29,758 | $ | 3,134 | $ | 77,960 | ||||||
| Net investment income | 831 | 313 | 2,468 | |||||||||
| Net realized gain (loss) | 20 | (4 | ) | 38 | ||||||||
| Claims service income | 618 | 663 | 2,916 | |||||||||
| Other service income | 68 | 561 | 794 | |||||||||
| Other income | 693 | 655 | 2,493 | |||||||||
| Total revenues | 31,988 | 5,322 | 86,669 | |||||||||
| Expenses: | ||||||||||||
| Loss and loss adjustment expenses | 18,837 | 3,024 | 53,660 | |||||||||
| Underwriting, acquisition, and insurance expenses | 7,347 | 1,789 | 17,854 | |||||||||
| Other expenses | 1,121 | 812 | 4,514 | |||||||||
| Interest expense | 241 | — | 415 | |||||||||
| Total expenses | 27,546 | 5,625 | 76,443 | |||||||||
| Income (loss) before federal income taxes | 4,442 | (303 | ) | 10,226 | ||||||||
| Federal income taxes (benefit) | 1,251 | (101 | ) | 3,020 | ||||||||
| Net income (loss) | $ | 3,191 | $ | (202 | ) | $ | 7,206 | |||||
| Fully diluted income per common share equivalent | $ | 0.41 | $ | 0.98 | ||||||||
| Weighted average common share equivalents outstanding | 7,777,808 | 7,387,276 | ||||||||||
| Net loss ratio (3) | 61.2 | % | 75.3 | % | 65.1 | % | ||||||
| Net underwriting expense ratio (4) | 24.5 | % | 39.2 | % | 21.9 | % | ||||||
| Net combined ratio (5) | 85.7 | % | 114.5 | % | 87.0 | % | ||||||
(1) There was no activity for the Company from June 19, 2003, its date of inception, through September 30, 2003.
(2) Gross and net premiums written for the periods indicated are as follows:
| Twelve | ||||||||||||
| Three Months Ended | Months Ended | |||||||||||
| December 31, | December 31, | |||||||||||
| 2004 | 2003 | 2004 | ||||||||||
| Gross premiums written | $ | 49,585 | $ | 22,154 | $ | 135,682 | ||||||
| Net premiums written | 39,794 | 19,395 | 119,615 | |||||||||
(3) The GAAP net loss ratio is calculated by dividing loss and loss adjustment expenses for the period less claim service income by the net premiums earned for the period.
(4) The GAAP net underwriting expense ratio is calculated by dividing the underwriting, acquisition and insurance expenses for the period less other service income by the net premiums earned for the period.
(5) The GAAP net combined ratio is the sum of the net loss ratio and the net underwriting expense ratio.