American Safety Insurance Holdings, Ltd. Reports
Increase in Net Earnings for Second Quarter
Hamilton, Bermuda, August 5, 2003 -- American Safety Insurance Holdings, Ltd. (NYSE: ASI) today reported second quarter ended June 30, 2003 net earnings increased 106% to $3.8 million, or $0.79 per diluted share, as compared to $1.9 million, or $0.38 per diluted share in the second quarter of 2002. Second quarter net earnings are detailed as follows (in thousands):
Quarter Ended Quarter Ended June 30, 2003 June 30, 2002 Insurance Operations $1,602 $ 994 Real Estate Operations 283 1,419 Other, including realized gains and (losses) 1,929 (560) Net Earnings $3,814 $1,853
The increase in net earnings was attributable to strong underwriting performance and net realized gains from the sale of investments of $2 million in the second quarter of 2003. The net earnings for the second quarter of 2002 included net realized investment losses of $477,000. Net premiums earned for the second quarter of 2003 increased 56% to $23 million from the same quarter of 2002. This increase is attributable to a 77% increase in the Company's core environmental, excess and surplus, and program business net premiums earned. Total revenues for the second quarter of 2003 increased 48% to $44.2 million as compared to the same quarter of 2002 as a result of increased net earned premiums, investment income, real estate income, and realized gains from the sale of investments. Net cash flow generated from operations increased to $23 million for the second quarter of 2003 from $5.1 million in the same quarter of 2002.
The Company's book value per share at June 30, 2003 increased 8% to $14.25 from $13.18 at December 31, 2002. This increase in per share book value is primarily attributable to the Company's profit and changes in unrealized gains on investments during the six months ended June 30, 2003.
Net earnings for the first six months of 2003 were $5.0 million, or $1.05 per diluted share, an increase of 29% as compared to $3.9 million, or $0.80 per diluted share for the same period of 2002. Six month net earnings are detailed as follows (in thousands):
Six Months Ended Six Months Ended June 30, 2003 June 30, 2002 Insurance Operations $3,225 $1,599 Real Estate Operations (174) 2,882 Other, including realized gains and (losses) 1,983 (582) Net Earnings $5,034 $3,899
The increase in net earnings was attributable to strong underwriting performance and net realized gains from the sale of investments of $2.1 million for the six months ended June 30, 2003. The net earnings for the first six months of 2002 included net realized investment losses of $393,000. Net premiums earned for the six months ended June 30, 2003 increased 55% to $44 million from the same period of 2002. This increase was attributable to an 81% increase in net premiums earned in the Company’s core lines of business. Total revenues for the six months ended June 30, 2003 increased 12% to $72.5 million as compared to the same period of 2002 as a result of increased net premiums earned, investment income, and realized gains from the sale of investments. Net cash flow from operations increased to $32 million for the six months ended June 30, 2003 from $6.2 million in the same period of 2002.
Commenting on the results, Stephen R. Crim, President and Chief Executive Officer of American Safety Insurance Holdings, Ltd., said, “Solid execution in our core insurance business lines contributed to the Company’s strong cash flow and insurance earnings, as well as book value growth. Pricing and profitability trends continue to be favorable in our targeted markets. Looking ahead, we believe the insurance marketplace is attractive for specialty niche insurers like American Safety Insurance. The recent strengthening of our capital base from an $8 million trust preferred offering has supported the continued growth of our insurance business, and we expect that our underwriting profits will continue for the balance of the year.” A conference call to discuss second quarter of 2003 results is scheduled for Wednesday, August 6, at 11:00 a.m. (Eastern Time), which will be broadcast through the Investor Broadcast Network’s Vcall website at http://www.vcall.com or the Company’s website athttp://www.americansafetyinsurance.com. A replay will be available on the Company’s website. American Safety Insurance Holdings, Ltd. is a specialty insurance holding company which, through its subsidiaries, provides innovative insurance solutions in the alternative insurance market for environmental remediation, contracting and other specialty risks. Additional information about American Safety Insurance can be found at “http://www.americansafetyinsurance.com”
This press release contains forward-looking statements, including the Company’s outlook for 2003. These forward-looking statements reflect the Company’s current views with respect to future events and financial performance, including future insurance claims and losses, and the Company’s expectations with respect to the outcome of the Principal Management acquisition rescission litigation, and the future profitability and the value of the Harbour Village real estate development project. Forward-looking statements involve risks and uncertainties which may cause actual results to differ materially, and are subject to change based on various factors, including competitive conditions in the insurance industry, levels of new and renewal insurance business, unpredictable developments in loss trends, adequacy and changes in loss reserves, timing or collectibility of reinsurance recoverables, market acceptance of new coverages and enhancements, changes in reinsurance costs and availability, potential adverse decisions in court and arbitration proceedings, and changes in levels of general business activity and economic conditions. With respect to the development of the Harbour Village project, such forward looking statements involve risks and uncertainties which may cause actual results to differ materially, and are subject to change based on various real estate development industry factors, including competitive housing conditions in the local market area, risks inherent in real estate development and new construction, increases in construction costs, construction delays, weather, zoning, litigation, changes in interest rates and the availability of mortgage financing for prospective purchasers of condominium units and boat slips, and changes in local and national levels of general business activity and economic conditions. For additional factors, which could influence the results of the Company’s operating and financial performance, see the Company’s filings with the Securities and Exchange Commission.
Contacts: American Safety Insurance Holdings, Ltd Cameron Associates Fred J. Pinckney Kevin McGrath Investor Relations/General Counsel (212) 245 4577 (770) 916-1908
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AMERICAN SAFETY INSURANCE HOLDINGS, LTD. AND SUBSIDIARIES Financial and Operating Highlights Three Months Ended Six Months Ended Six Months Ended June 30, June 30, June 31, 2003 2002 2003 2002 INCOME STATEMENT DATA: Revenues: Direct and assumed premiums earned $ 41,582,706 $ 33,130,159 $ 82,054,144 $ 67,223,957 Ceded premiums earned (18,836,567) (18,559,548) (38,016,485) (38,776,379) Net premiums earned 22,746,139 14,570,611 44,037,659 28,447,578 Net investment income 1,144,822 $ 899,318 $ 2,259,237 $ 1,874,875 Management fees from related party 244,249 75,754 522,152 493,181 Net realized gains (losses) 2,888,968 (547,949) 3,039,683 (465,702) Real estate income 17,167,373 14,896,921 22,597,220 33,935,661 Other income 16,879 74,217 31,273 191,150 Total revenues $ 44,208,430 $ 29,968,872 $ 72,487,224 $ 64,476,743 Expenses: Losses and loss adjustment expenses $ 13,883,281 $ 8,561,371 $ 25,977,343 $ 17,530,512 Acquisition expenses 4,278,628 2,308,560 8,435,614 4,684,587 Payroll and related expenses 2,099,339 2,202,352 4,321,251 4,304,100 Real estate expenses 16,714,993 12,459,152 22,876,634 29,154,480 Other expenses 1,754,587 1,559,663 4,100,343 2,695,252 Expense due to rescission 60,953 142,844 144,512 353,592 Total expenses 38,791,781 27,233,942 65,855,697 58,722,523 Earnings before income taxes 5,416,649 2,734,930 6,631,527 5,754,220 Income taxes 1,602,733 881,534 1,597,258 1,855,293 Net earnings $ 3,813,916 $ 1,853,396 $ 5,034,269 $ 3,898,927 ====================================================== ==================== =================== =================== ==================== Net earnings per share: Basic $ 0.80 $ 0.39 $ 1.06 $ 0.83 ====================================================== ==================== =================== =================== ==================== Diluted $ 0.79 $ 0.38 $ 1.05 $ 0.80 ====================================================== ==================== =================== =================== ==================== Average number of shares outstanding: Basic 4,739,888 4,743,803 4,739,888 4,724,263 ====================================================== ==================== =================== =================== ==================== Diluted 4,814,216 4,882,899 4,802,124 4,875,679 ====================================================== ==================== =================== =================== ==================== GAAP combined ratio 86.6% 82.5% 86.0% 84.5% ====================================================== ==================== =================== =================== ==================== BALANCE SHEET DATA June 30, 2003 December 31, 2002 Total investments including receivables for securities $ 132,341,596 $ 104,416,529 sold (excluding real estate) Total assets 416,010,268 365,407,338 Unpaid losses and loss adjustment expenses 185,982,249 160,628,579 Total liabilities 348,456,125 302,955,489 Total shareholders' equity 67,554,143 62,451,849 Book value per share $ 14.25 $ 13.18
Harbour Village Development Status (000)s except references to Condo Units (Unaudited) Phase 1 Phase 2 ------------------------------------------------------------------------------- Townhouses The The --------------------------------- Marina Oak Links Links Total 6/30/2003 Condos Hammock Riverwalk North South Condos Boat Slips Total - ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ Planned Number of Condo Units and Boat Slips 248 18 28 188 188 670 142 812 Condo Units and Boat Slips under Contract 248 15 26 173 156 618 142 760 Value of Pre-sale Contracts (Note 1) 62,892 6,696 10,081 43,525 42,984 166,178 13,089 179,267 Number of Buildings 8 4 6 4 4 26 Number of Buildings Complete by Task Building Foundation 8 4 6 4 4 Vertical Building Completed 8 4 6 4 2 Interior Finish Completed 8 4 5 2 - Certificate of Occupancy Received 8 4 5 2 - Outlook For 3rd Quarter of 2003 - ------------------------------------------------------------ Units Closed - 1 3 56 60 3 63 Revenue Recognized 31 555 1,361 13,418 15,365 328 15,693 Other Revenue 100 Total Revenue 15,793 Gross Profit Recognized 3 1 27 1,811 1,842 139 1,981 Other Expense (Income) Items 1,507 Pre-Tax Profit 474 2nd Quarter Actual - ------------------------------------------------------------ Units Closed - 4 4 59 - 67 5 72 Revenue Recognized 71 1,736 1,439 13,182 - 16,428 563 16,991 Other Revenue 176 Total Revenue 17,167 Gross Profit Recognized (27) (131) (24) 1,625 - 1,443 261 1,704 Other Expense (Income) Items 1,252 Pre-Tax Profit 452
Note 1 - No assurance can be given that purchasers under binding pre-sale contracts with deposits will close each contemplated transaction .
Note 2 - Other includes net brokerage commissions, advertising, promotion, and other general and administrative costs. These items are not allocated to specific buildings.
The projected results contained above for unit closings, revenue, gross profit, fixed costs and pre-tax profit are forward looking statements. With respect to the Company’s development of the Harbour Village property, such forward looking statements involve risks and uncertainties which may cause actual results to differ materially, and are subject to change based on various real estate development industry factors, including competitive housing conditions in the local market area, risks inherent in real estate development and new construction, increases in construction costs, construction delays, weather, litigation, changes in interest rates and the availability of mortgage financing for prospective purchasers of condominium units and boat slips and changes in local and national levels of general business activity and economic conditions.