Exhibit 99.1
| Contact: | ||
| SeaBright Insurance Holdings, Inc. 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 Second Quarter 2005 Results
Reports Earnings of $0.25 per Diluted Share
Seattle, WA – July 27, 2005 – SeaBright Insurance Holdings, Inc. (Nasdaq:SEAB) today announced results for the second quarter ended June 30, 2005.
For the second quarter of 2005, net income was $4.2 million or $0.25 per share on a diluted basis compared to net income of $967,000 or $0.14 per share on a diluted basis for the same period in 2004. Total revenue for the second quarter of 2005 increased to $43.1 million versus $17.9 million in the year-earlier period.
Loss and loss adjustment expenses totaled $27.0 million in the second quarter of 2005 versus $11.4 million in the same period in 2004. Total underwriting expenses for the second quarter of 2005 were $8.6 million compared to $3.7 million in the prior year period. The net combined ratio for the second quarter of 2005 was 88.0% compared to 89.7% for the same period in 2004.
For the six months ended June 30, 2005, net income was $6.9 million, or $0.44 per share on a diluted basis, compared to net income of $1.3 million, or $0.19 per share on a diluted basis, for the six months ended June 30, 2004. Total revenue for the 2005 six-month period was $75.3 million versus $28.6 million in the corresponding period a year ago.
Loss and loss adjustment expenses totaled $47.3 million for the six-month period ended June 30, 2005 versus $18.0 million in the same period in 2004. Total underwriting expenses were $15.0 million for the first six months of 2005 compared to $6.2 million in the same period last year. The net combined ratio for the six months ended June 30, 2005 was 88.5% compared to 91.2% for the same period in 2004.
John Pasqualetto, SeaBright’s Chairman, President and Chief Executive Officer, said, “Our second quarter results, similar to the first quarter, were driven by strong demand for our workers’ compensation services and products, particularly in the California market. We have moved forward with our planned expansion in the second quarter, opening our new Chicago regional office and effectively entering the Midwest market. Our results continue to track well against our 2005 plan and our management team’s commitment to profitable growth and shareholder value.”
SeaBright Insurance Holdings, Inc. is an insurance holding company whose wholly owned subsidiary, SeaBright Insurance Company, operates as a specialty underwriter of multi-jurisdictional workers’ compensation insurance. SeaBright Insurance Company distributes its maritime, alternative dispute resolution and state act products through selected independent insurance brokers and through its in-house wholesale broker affiliate, PointSure Insurance Services. SeaBright Insurance Company provides workers’ compensation coverage to employers in the Midwestern, Southern and Western regions of the U.S. To learn more about SeaBright Insurance Company and SeaBright Insurance Holdings, visit our website at www.sbic.com.
Conference Call
The Company will host a conference call on Wednesday, July 27, 2005 at 11:00 a.m. Eastern Time featuring remarks by John G. Pasqualetto, President and CEO, Joseph S. De Vita, Senior Vice President and CFO, and Richard J. Gergasko, Executive Vice President — Operations. 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 (888) 695-0614. 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 our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 28, 2005, 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, which speak only as of the date of this release. The Company undertakes no obligation to update any forward-looking statements.
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Set forth in the tables below are summary results of operations for the three month and six month periods ended June 30, 2005 and 2004 as well as selected balance sheet data as of June 30, 2005 and December 31, 2004. The following information is preliminary and unaudited and is subject to change until final results are publicly distributed. The Company currently expects to file its unaudited condensed consolidated financial statements with the Securities and Exchange Commission as part of its quarterly report on Form 10-Q in a timely fashion on or before August 15, 2005.
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SEABRIGHT INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| June 30, 2005 | December 31, 2004 | |||||||
| (Unaudited) | ||||||||
| (in thousands) | ||||||||
| ASSETS | ||||||||
| Investment securities available for sale, at fair value | $ | 210,751 | $ | 105,661 | ||||
| Cash and cash equivalents | 28,158 | 8,279 | ||||||
| Accrued investment income | 2,256 | 1,096 | ||||||
| Premiums receivable, net of allowance | 9,752 | 7,397 | ||||||
| Deferred premiums | 78,534 | 59,243 | ||||||
| Retrospective premiums accrued | 4,146 | 1,086 | ||||||
| Federal income tax recoverable | – | 397 | ||||||
| Service income receivable | 333 | 304 | ||||||
| Reinsurance recoverables | 16,435 | 13,484 | ||||||
| Receivable under adverse development cover | 2,853 | 2,853 | ||||||
| Prepaid reinsurance | 5,554 | 5,254 | ||||||
| Property and equipment, net | 728 | 493 | ||||||
| Deferred federal income taxes, net | 6,445 | 3,604 | ||||||
| Deferred policy acquisition costs, net | 9,184 | 7,588 | ||||||
| Intangible assets, net | 1,727 | 2,093 | ||||||
| Goodwill | 1,527 | 1,821 | ||||||
| Other assets | 7,257 | 5,459 | ||||||
| Total assets | $ | 385,640 | $ | 226,112 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Liabilities: | ||||||||
| Unpaid loss and loss adjustment expense | $ | 103,896 | $ | 68,228 | ||||
| Unearned premiums | 86,424 | 67,626 | ||||||
| Reinsurance funds withheld and balances payable | 3,009 | 1,553 | ||||||
| Premiums payable | 3,423 | 3,128 | ||||||
| Accrued expenses and other liabilities | 29,423 | 15,207 | ||||||
| Federal income tax payable | 610 | – | ||||||
| Surplus notes | 12,000 | 12,000 | ||||||
| Total liabilities | 238,785 | 167,742 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| Series A preferred stock, $0.01 par value; 750,000 shares authorized; issued and outstanding – no shares at June 30, 2005 and 508,265.25 shares at December 31, 2004 | – | 5 | ||||||
| Undesignated preferred stock, $0.01 par value; 10,000,000 shares authorized; no shares issued and outstanding | – | – | ||||||
| Common stock, $0.01 par value; authorized – 75,000,000 shares at June 30, 2005 and 10,000,000 shares at December 31, 2004; issued and outstanding – 16,402,808 shares at June 30, 2005 and no shares at December 31, 2004 | 164 | – | ||||||
| Paid-in capital | 131,453 | 50,831 | ||||||
| Accumulated other comprehensive income | 1,310 | 530 | ||||||
| Retained earnings | 13,928 | 7,004 | ||||||
| Total stockholders’ equity | 146,855 | 58,370 | ||||||
| Total liabilities and stockholders’ equity | $ | 385,640 | $ | 226,112 | ||||
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SEABRIGHT INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2005 | 2004 | 2005 | 2004 | |||||||||||||
| (dollars in thousands, except income per share amounts) | ||||||||||||||||
| Revenue: (1) | ||||||||||||||||
| Premiums earned | $ | 39,645 | $ | 15,650 | $ | 68,804 | $ | 24,163 | ||||||||
| Net investment income | 1,796 | 497 | 3,095 | 945 | ||||||||||||
| Net realized gain (loss) | 118 | (10 | ) | 62 | 17 | |||||||||||
| Claims service income | 694 | 785 | 1,276 | 1,570 | ||||||||||||
| Other service income | 50 | 208 | 100 | 595 | ||||||||||||
| Other income | 812 | 755 | 1,986 | 1,308 | ||||||||||||
| 43,115 | 17,885 | 75,323 | 28,598 | |||||||||||||
| Losses and expenses: | ||||||||||||||||
| Loss and loss adjustment expenses | 26,988 | 11,370 | 47,255 | 17,969 | ||||||||||||
| Underwriting, acquisition and insurance expenses | 8,637 | 3,669 | 15,016 | 6,216 | ||||||||||||
| Other expenses | 1,510 | 1,335 | 3,231 | 2,350 | ||||||||||||
| 37,135 | 16,374 | 65,502 | 26,535 | |||||||||||||
| Income before federal income taxes | 5,980 | 1,511 | 9,821 | 2,063 | ||||||||||||
| Federal income tax expense (benefit): | ||||||||||||||||
| Current | 3,439 | 1,086 | 6,159 | 1,798 | ||||||||||||
| Deferred | (1,675 | ) | (542 | ) | (3,262 | ) | (1,056 | ) | ||||||||
| 1,764 | 544 | 2,897 | 742 | |||||||||||||
| Net income | $ | 4,216 | $ | 967 | $ | 6,924 | $ | 1,321 | ||||||||
| Basic earnings per share | $ | 0.26 | $ | – | $ | 0.47 | $ | – | ||||||||
| Diluted earnings per share | $ | 0.25 | $ | 0.14 | $ | 0.44 | $ | 0.19 | ||||||||
| Weighted average basic shares outstanding | 16,402,808 | – | 14,590,343 | – | ||||||||||||
| Weighted average diluted shares outstanding | 16,613,182 | 6,996,792 | 15,653,942 | 6,992,453 | ||||||||||||
| Net loss ratio (2) | 66.3 | % | 67.6 | % | 66.8 | % | 67.9 | % | ||||||||
| Net underwriting expense ratio (3) | 21.7 | % | 22.1 | % | 21.7 | % | 23.3 | % | ||||||||
| Net combined ratio (4) | 88.0 | % | 89.7 | % | 88.5 | % | 91.2 | % | ||||||||
| ______________________ | ||||||||||||||||
| (1) | Gross and net premiums written for the periods indicated are as follows: |
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
| 2005 | 2004 | 2005 | 2004 | ||||||||||||||
| (dollars in thousands) | |||||||||||||||||
| Gross premiums written | $ | 56,707 | $ | 39,924 | $ | 101,011 | $ | 63,610 | |||||||||
| Net premiums written | 50,152 | 35,835 | 89,193 | 56,632 | |||||||||||||
| (2) | The net loss ratio is calculated by dividing loss and loss adjustment expenses for the period less claims service income by premiums earned for the period. |
| (3) | The net underwriting expense ratio is calculated by dividing underwriting, acquisition and insurance expenses for the period less other service income by premiums earned for the period. |
| (4) | The net combined ratio is the sum of the net loss ratio and the net underwriting expense ratio. |
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