Exhibit 99.1
American Safety Insurance Holdings, Ltd. Reports
Increase in Net Earnings for Third Quarter
Hamilton, Bermuda, October 30, 2003 -- American Safety Insurance Holdings, Ltd. (NYSE: ASI) today reported net earnings for the third quarter ended September 30, 2003 increased 187% to $3.0 million, or $0.58 per diluted share, as compared to $1.0 million, or $0.21 per diluted share in the third quarter of 2002. Third quarter net earnings are detailed as follows (in thousands):
Quarter Ended Quarter Ended September 30, 2003 September 30, 2002 Insurance Operations $1,768 $1,248 Real Estate Operations 1,173 679 Other, including realized gains and (losses) 21 (893) Net Earnings $2,962 $1,034 ====== =====
The increase in net earnings for the third quarter of 2003 was due to strong increases in net earnings from both insurance and real estate operations. Net premiums earned for the third quarter of 2003 increased 45% to $26 million from the same quarter of 2002 due to increases in the Company’s core environmental, excess and surplus, and program business net premiums earned. Total revenues for the third quarter of 2003 increased 47% to $44 million as compared to the same quarter of 2002 as a result of increased net premiums earned, investment income and real estate income. Net cash flow generated from operations increased 27% to $28 million for the third quarter of 2003 from $22 million in the same quarter of 2002.
Net earnings for the first nine months of 2003 were $8.0 million, or $1.65 per diluted share, an increase of 62% as compared to $4.9 million, or $1.01 per diluted share for the same period of 2002. Nine month net earnings are detailed as follows (in thousands):
Nine Months Ended Nine Months Ended September 30, 2003 September 30, 2002 Insurance Operations $4,993 $2,846 Real Estate Operations 998 3,560 Other, including realized gains and (losses) 2,005 (1,474) Net Earnings $7,996 $4,932 ===== =====
The increase in net earnings for the nine months ended September 30, 2003 was due to strong net earnings from insurance operations and net realized gains from the sale of investments of $2.1 million. Net premiums earned for the nine months ended September 30, 2003 increased 51% to $70 million from the same period of 2002. This increase was due to an increase in net premiums earned in the Company’s core lines of business. Total revenues for the nine months ended September 30, 2003 increased 23% to $116 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 $60 million for the nine months ended September 30, 2003 from $29 million in the same period of 2002.
The Company’s book value per share increased 12% to $14.73 at September 30, 2003 from $13.18 at December 31, 2002. This increase in book value per share is due primarily to the Company’s net earnings during the nine months ended September 30, 2003 offset, in part, by a decrease in unrealized gains on investments.
Commenting on the results, Stephen R. Crim, President and Chief Executive Officer of American Safety Insurance Holdings, Ltd., said, “This has been another excellent quarter for American Safety Insurance. Our results for the first three quarters of 2003 have demonstrated our ability to achieve consistent top line and bottom line growth. The healthy underwriting profits and strong cash flow generated in our insurance business clearly support the soundness of our business plan. We are also pleased that our strong results have brought our book value to a record high.” A conference call to discuss third quarter of 2003 results is scheduled for Friday, October 31, 2003 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 athttp://www.americansafetyinsurance.com.
This press release contains forward-looking statements, including the Company’s outlook for the remainder of 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 Services, Inc. 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 Nine Months Ended September 30 September 30, 2003 2002 2003 2002 INCOME STATEMENT DATA: Revenues: Direct and assumed premiums earned $ 45,236,887 $ 35,530,891 $ 127,291,031 $ 102,754,848 Ceded premiums earned (19,357,205) (17,679,881) (57,373,690) (56,456,260) Net premiums earned 25,879,682 17,851,010 69,917,341 46,298,588 Net investment income 1,308,856 973,320 3,568,093 2,848,195 Management fees from related party 313,346 246,563 835,498 739,744 Net realized gains (losses) 35 (56,183) 3,039,718 (521,885) Real estate income 16,280,674 10,723,526 38,877,894 44,659,187 Other income 83,346 64,548 114,619 255,698 Total revenues 43,865,939 29,802,784 116,353,163 94,279,527 Expenses: Losses and loss adjustment expenses 15,723,008 10,648,265 41,700,351 28,178,777 Acquisition expenses 4,923,888 3,139,299 13,359,502 7,823,886 Payroll and related expenses 2,339,400 2,300,400 6,660,651 6,604,500 Real estate expenses 14,400,544 9,626,848 37,277,178 38,781,328 Other expenses 2,638,106 1,723,424 6,738,449 4,418,676 Expense due to rescission 45,112 1,152,876 189,624 1,506,468 Total expenses 40,070,058 28,591,112 105,925,755 87,313,635 Earnings before income taxes 3,795,881 1,211,672 10,427,408 6,965,892 Income taxes 833,831 178,143 2,431,089 2,033,436 Net earnings $ 2,962,050 $ 1,033,529 $ 7,996,319 $ 4,932,456 ================== =================== ================= ================== Net earnings per share: Basic $ 0.62 $ 0.22 $ 1.69 $ 1.04 ================== =================== ================= ================== Diluted $ 0.58 $ 0.21 $ 1.65 $ 1.01 ================== =================== ================= ================== Average number of shares outstanding: Basic 4,749,266 4,746,695 4,743,048 4,731,822 ================== =================== ================= ================== Diluted 5,099,421 4,864,450 4,836,454 4,876,659 ================== =================== ================= ================== GAAP combined ratio 94.6% 97.2% 95.2% 99.3% BALANCE SHEET DATA: September 30 December 31, 2003 2002 Total investments, excluding real estate $ 157,359,140 $ 104,416,529 Total assets 441,722,167 365,082,338 Unpaid losses and loss adjustment expenses 196,054,242 160,628,579 Total liabilities 371,768,645 302,630,489 Total shareholders' equity 69,953,522 62,451,849 Book value per share $ 14.73 $ 13.18
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Harbour Village Development Status (000)s except references to Condo Units Phase 1 Phase 2 Townhouses The The Marina Oak Links Links Total Condos Hammock Riverwalk North South Condos Boat Slips Total 9/30/2003 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 26 176 161 626 142 768 Value of Pre-sale Contracts - Note 1 62,892 6,696 10,130 44,506 44,674 168,898 13,082 181,980 Number of Buildings 8 4 6 4 4 26 Number of Closed Units 248 15 22 109 - 394 137 531 Number of Buildings Complete by Task Building Foundation 8 4 6 4 4 Vertical Building Completed 8 4 6 4 4 Interior Finish Completed 8 4 6 3 - Certificate of Occupancy Received 8 4 6 3 - 3rd Quarter Actual Units Closed - 2 3 50 - 55 4 59 Revenue Recognized 148 846 1,462 12,736 - 15,192 404 15,596 Other Revenue 685 Total Revenue 16,281 Gross Profit Recognized (614) (102) 77 3,061 - 2,422 181 2,603 Other Expense (Income) Items - Note 2 723 Pre-Tax Profit 1,880 Outlook For 4th Quarter of 2003 Units Closed - - - 59 59 - 59 Revenue Recognized 31 - - 16,405 16,436 - 16,436 Other Revenue 250 Total Revenue 16,686 Gross Profit Recognized 3 - - 2,871 2,874 - 2,874 Other Expense (Income) Items - Note 2 1,717 Pre-Tax Profit 1,157
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.