American Safety Insurance Holdings, Ltd.
Reports 199% Increase in First Quarter Earnings;
30% Increase in Insurance Earnings
HAMILTON, Bermuda, May, 12, 2004 - American Safety Insurance Holdings, Ltd. (NYSE: ASI) today reported earnings of $3.6 million or $0.49 per diluted share, from its insurance and real estate operations for the first quarter ended March 31, 2004, as compared to $1.2 million or $0.25 per diluted share for the first quarter of 2003, an increase of 199%.
First quarter net earnings were as follows (in thousands):
Quarter Ended Quarter Ended March 31, 2004 March 31, 2003 Insurance Operations $2,111 $1,628 Real Estate Operations 1,521 (458) Other, including realized gains and (losses) 18 50 Net Earnings $3,650 $1,220 ===== =====
Earnings for the first quarter of 2004 from insurance operations increased by 30% to $2.1 million from $1.6 million for the same period of 2003. The increase in earnings from insurance operations was due to strong underwriting results in the Company’s core environmental, excess and surplus, and program business lines. The increase in earnings from real estate operations was due to increased closings of condominiums units and boat slips at Harbour Village.
Total revenues for the first quarter of 2004 increased 69% to $50 million as compared to the same quarter of 2003 as a result of increased net premiums earned, investment income and real estate income. For the quarter, revenue from our insurance operations increased by 51% to $36 million from $24 million for the first quarter of 2003.
Net premiums earned for the first quarter of 2004 increased 50% to $34 million from the same quarter of 2003 due to increases in the Company’s core lines of business. Net cash flow generated from operations increased to $23 million for the first quarter of 2004 from $10 million in the same quarter of 2003.
The Company’s book value per share increased to $14.64 at March 31, 2004 from $13.80 at December 31, 2003. This increase in book value per share is due to the Company’s net earnings and an increase of $2.3 million in unrealized gains on fixed income investments during the first quarter of 2004. However, increases in market interest rates in April have offset unrealized gains on the Company’s fixed income investments.
Commenting on the results, Stephen R. Crim, President and Chief Executive Officer of American Safety Insurance Holdings, Ltd., said, “The first quarter of 2004 produced record results for American Safety Insurance, with strong growth in revenue, cash flow and net earnings. For the quarter, revenue from our insurance operations increased by 51% to $36 million and earnings from insurance operations increased by 30% to $2.1 million as compared to the same period of 2003. We expect to continue growing our insurance business in the current favorable market and obtain rate increases where possible. We also are pleased with the first quarter results from our real estate operations, which produced nearly $14 million in revenue and $1.5 million of earnings. We expect the Harbour Village real estate project to be substantially complete by the end of 2004 and will redeploy our invested capital to our insurance operations.”A conference call to discuss first quarter 2004 results is scheduled for Thursday, May 13, 2004 at 11:00 a.m. (Eastern Time), which will be broadcast through the Investor Broadcast Network’s Vcall website at www.vcall.com or the Company’s website at 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 the Company can be found at www.americansafetyinsurance.com.
This press release contains forward-looking statements. 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 March 31 2004 2003 INCOME STATEMENT DATA: Revenues: Direct and assumed premiums earned $ 55,424,433 $ 42,808,901 Ceded premiums earned (21,305,696) (19,996,906) Net premiums earned 34,118,737 22,811,995 Net investment income 2,071,112 1,219,743 Net realized gains 25,411 150,715 Real estate income 13,952,154 5,429,847 Other income 31,113 14,394 Total revenues $ 50,198,527 $ 29,626,694 Expenses: Losses and loss adjustment expenses $ 22,359,442 $ 12,816,638 Acquisition expenses 6,610,218 4,677,225 Payroll and related expenses 2,623,376 2,221,912 Real estate expenses 11,493,835 6,161,641 Other expenses 2,096,542 2,379,455 Minority interest 174,111 71,386 Expense due to rescission 29,574 83,559 Total expenses $ 45,387,098 28,411,816 Earnings before income taxes 4,811,429 1,214,878 Income taxes 1,161,610 (5,475) Net earnings $ 3,649,819 $ 1,220,353 ================== =================== Net earnings per share: Basic $ 0.53 $ 0.26 ================== =================== Diluted $ 0.49 $ 0.25 ================== =================== Average number of shares outstanding: Basic 6,916,099 4,739,888 ================== =================== Diluted 7,408,663 4,796,772 ================== =================== GAAP combined ratio 97.8% 95.2% BALANCE SHEET DATA: March 31 December 31 2004 2003 Total investments, excluding real estate $ 266,452,582 $ 222,418,972 Total assets 558,160,818 514,259,644 Unpaid losses and loss adjustment expenses 250,108,070 230,103,754 Total liabilities 456,812,795 418,916,521 Total shareholders' equity 101,348,023 95,343,123 Book value per share $ 14.64 $ 13.80
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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 ---------------------------------------------------- --------------------------------- ----------------- ----------------- ----------------- 3/31/2004 - ----------------------------------------------- Planned Number of Condo Units and Boat Slips 248 18 28 188 188 670 142 812 Condo Units and Boat Slips under Contract 248 17 27 181 168 641 142 783 Value of Pre-sale Contracts (Note 1) 62,892 7,931 10,479 46,178 47,070 174,550 13,082 187,632 Number of Buildings 8 4 6 4 4 26 Number of Closed Units 248 17 26 180 24 495 139 634 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 4 2 Certificate of Occupancy Received 8 4 6 4 2 1st Quarter Actual - ----------------------------------------------- Units Closed - 2 1 9 24 36 1 37 Revenue Recognized Condos and Boat Slips 154 1,204 386 3,039 6,770 11,553 190 11,743 Land Sales and Other Revenue 2,209 Total Revenue 13,952 Gross Profit Recognized Condos and Boat Slips 76 32 10 679 1,697 2,494 97 2,591 Land Sales and Other Revenue 856 Total Gross Profit 3,447 Other Expense (Income) Items (989) Pre-Tax Profit 2,458 Outlook For 2nd Quarter of 2004 - ----------------------------------------------- Units Closed - - - 2 50 52 - 52 Sales Value of Closed Units - - - 678 13,569 14,247 - 14,247 Revenue Recognized Condos and Boat Slips - - - 658 13,162 13,820 - 13,820 Land Sales and Other Revenue 200 Total Revenue 14,020 Gross Profit Recognized Condos and Boat Slips - - - 135 2,172 2,307 - 2,307 Land Sales and Other Revenue 74 Total Gross Profit 2,381 Other Expense (Income) Items (885) Pre-Tax Profit 1,496
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.