Exhibit 99.1
American Safety Insurance Holdings, Ltd.
Reports Third Quarter Earnings
HAMILTON, Bermuda, November 3, 2004 - American Safety Insurance Holdings, Ltd. (NYSE: ASI) today reported net earnings of $3.3 million or $0.45 per diluted share for the third quarter ended September 30, 2004, as compared to $3.0 million or $0.58 per diluted share for the third quarter of 2003. Net earnings for the nine months ended September 30, 2004 are $11.0 million or $1.49 per diluted share, as compared to $8.0 million or $1.65 per diluted share for the same period in 2003.
Net earnings are detailed as follows (in thousands):
Quarter Ended Nine months Ended September 30, September 30, 2004 2003 2004 2003 Insurance Operations $ 992 $1,768 $1,410 $4,993 Real Estate Operations 2,288 1,173 5,807 998 Other (22) 21 3,787 2,005 Net Earnings $3,258 $2,962 $11,004 $7,996 ====== ====== ======= ======
The decrease in earnings from insurance operations for the third quarter of 2004 reflects approximately $3.0 million of reserve strengthening for prior accident years as a result of an actuarial reserve evaluation for the Company’s excess and surplus lines business, as previously announced. The increase in earnings from real estate operations for the third quarter of 2004 was due to higher profits from closings of condominium units at Harbour Village.
The decrease in earnings from insurance operations for the nine months ended September 30, 2004 reflects a total of $12.3 million of reserve strengthening for prior accident years. Of this amount, $7.7 million consists of reserve increases for the Company’s excess and surplus business, and the remaining $4.6 million represents reserve increases for discontinued lines. The increase in earnings from real estate operations for the nine months ended September 30, 2004 was due to higher profits from closings of condominium units at Harbour Village.
Total revenues for the third quarter of 2004 increased 27% to $57 million as compared to the same quarter of 2003 as a result of increased net premiums earned, investment income and real estate income. Net premiums earned for the third quarter of 2004 increased 26% to $35 million from the same period in 2003 due to increases in the Company’s core business lines. Net cash flow generated from operations was $22 million for the third quarter of 2004.
Total revenues for the nine months ended September 30, 2004 increased 34% to $162 million as compared to the same period in 2003 as a result of increased net premiums earned, investment income and real estate income. Net premiums earned for the nine months ended September 30, 2004 increased 35% to $101 million from the same period in 2003 due to increases in the Company’s core business lines. Net cash flow from operations increased to $66 million for the nine months ended September 30, 2004.
The Company’s book value per share increased 12% to $15.52 at September 30, 2004 from $13.80 at December 31, 2003. This increase in book value per share is due primarily to the Company’s net earnings during the nine months ended September 30, 2004 and the repurchase of 217,000 shares under its previously announced stock repurchase programs.
Commenting on the results, Stephen R. Crim, President and Chief Executive Officer of American Safety Insurance Holdings, Ltd., said: “While the reserve strengthening adversely affected the results for the quarter, we are pleased with the continued growth and profitability of our insurance operations. We achieved strong growth in revenue, cash flow, net premiums earned and investment income for the nine months, and successfully increased the Company’s book value by 12% over the year ended December 31, 2003. While we have begun to experience a leveling in our premium rates, we believe that the market conditions for the insurance business segments that the Company serves continue to present profitable opportunities.”
A conference call to discuss third quarter 2004 results is scheduled for Thursday, November 4, 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 insurance market conditions, future insurance claims and losses, and profitability 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, developments in loss trends, adequacy and changes in loss reserves and actuarial assumptions, 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 (including the outcome of the Principal Management acquisition rescission litigation), 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, weather, litigation, changes in interest rates and the availability of mortgage financing for prospective purchasers of condominium units, 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, 2004 2003 2004 2003 INCOME STATEMENT DATA: Revenues: Direct and assumed premiums earned $ 58,581,683 $ 45,981,956 $ 168,688,614 $129,932,740 Ceded premiums earned (24,000,183) (18,546,047) (67,898,653) (55,196,018) Net premiums earned 34,581,500 27,435,909 100,789,961 74,736,722 Net investment income 2,529,210 1,410,336 6,849,461 3,869,085 Net realized gains 99,567 13,748 119,839 3,115,743 Real estate income 19,938,557 16,280,674 54,066,868 38,877,894 Other income 46,982 88,263 191,606 119,536 Total revenues $ 57,195,816 $ 45,228,930 $ 162,017,735 $ 120,718,980 Expenses: Losses and loss adjustment expenses $ 23,730,614 $ 16,377,079 $ 70,645,505 $ 43,824,379 Acquisition expenses 6,954,856 5,340,796 20,078,986 14,823,234 Payroll and related expenses 2,433,557 2,339,400 7,762,704 6,660,651 Real estate expenses 16,605,783 14,400,544 45,092,806 37,277,178 Other expenses 2,687,602 2,832,560 5,681,042 7,195,492 Minority interest 275,182 97,558 611,836 321,014 Expense due to rescission 59,825 45,112 (1,656,145) 189,624 Total expenses $ 52,747,419 $ 41,433,049 $148,216,734 $110,291,572 Earnings before income taxes 4,448,397 3,795,881 13,801,001 10,427,408 Income taxes 1,190,605 833,831 2,796,621 2,431,1089 Net earnings $ 3,257,792 $ 2,962,050 $ 11,004,380 $ 7,996,319 ================== ================== ================== =================== Net earnings per share: Basic $ 0.47 $ 0.62 $ 1.59 $ 1.69 ================== ================== ================== =================== Diluted $ 0.45 $ 0.58 $ 1.49 $ 1.65 ================== ================== ================== =================== Average number of shares outstanding: Basic 6,876,380 4,749,266 6,905,133 4,743,048 ================== ================== ================== =================== Diluted 7,275,259 5,099,421 7,394,730 4,836,454 ================== ================== ================== =================== GAAP combined ratio 101.3% 95.0% 104.2% 95.6% ================== ================== ================== =================== September 30, December 31, BALANCE SHEET DATA: 2004 2003 Total investments, excluding real estate $ 302,025,696 $ 222,418,973 Total assets 559,827,318 514,259,644 Unpaid losses and loss adjustment expenses 299,573,135 230,103,754 Total liabilities 455,576,260 418,916,521 Total shareholders' equity 104,251,058 95,343,123 Book value per share $ 15.52 $ 13.80
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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, 2004 2003 2004 2003 PREMIUM SUMMARY (in Thousands) Gross Written Premium: Environmental $ 10,589 $ 7,593 $ 32,879 $ 25,173 Excess and Surplus 23,731 21,926 71,110 56,420 Program Business 19,772 25,633 61,048 62,243 Other 484 1,507 2,627 5,735 Total 54,576 56,659 167,664 149,571 Net Written Premium: Environmental 8,569 6,195 26,247 19,402 Excess and Surplus 18,546 18,858 57,018 47,851 Program Business 5,821 9,797 12,735 17,105 Other 73 994 1,470 4,172 Total 33,009 35,844 97,470 88,530 Net Earned Premium: Environmental 8,697 5,831 23,333 15,895 Excess and Surplus 19,733 14,456 58,133 38,110 Program Business 5,254 5,638 16,000 16,183 Other 897 1,511 3,324 4,549 Total $ 34,581 $ 27,436 $ 100,790 $ 74,737
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Exhibit 99 Harbour Village Development Status (000)s except references to Condo Units Unaudited Phase 1 Phase 2 Townhouses The The Marina Oak Links Links Total Condos Hammock Riverwalk North South Condos Boat Slips Total 9/30/2004 Planned Number of Condo Units and Boat Slips 248 18 28 188 188 670 142 812 Condo Units and Boat Slips under Contract 248 18 28 187 180 661 142 803 Value of Pre-sale Contracts (Note 1) 62,892 8,680 10,916 48,206 51,190 181,884 13,082 194,966 Number of Buildings 8 4 6 4 4 26 Number of Closed Units 248 18 28 187 153 634 142 776 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 4 Certificate of Occupancy Received 8 4 6 4 4 3rd Quarter Actual Units Closed - 1 1 2 67 71 2 73 Sales Value of Closed Units - 750 454 686 18,811 20,701 267 20,968 Revenue Recognized Condos and Boat Slips (354) 706 400 395 18,230 19,377 155 19,532 Land Sales and Other Revenue 407 Total Revenue 19,939 Gross Profit Recognized Condos and Boat Slips 45 78 85 421 4,974 5,603 546 6,149 Land Sales and Other Revenue 223 Total Gross Profit 6,372 Other Expense (Income) Items (3,039) Pre-Tax Profit 3,333 Outlook For 4th Quarter of 2004 Units Closed - - - - 25 25 - 25 Sales Value of Closed Units - - - - 7,600 7,600 - 7,600 Revenue Recognized Condos and Boat Slips - - - - 7,448 7,448 - 7,448 Land Sales and Other Revenue 1,525 Total Revenue 8,973 Gross Profit Recognized Condos and Boat Slips - - - - 1,601 1,601 - 1,601 Land Sales and Other Revenue 991 Total Gross Profit 2,592 Other Expense (Income) Items 1,575 Pre-Tax Profit 1,017
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.