American Safety Insurance Holdings, Ltd.Reports
Increase in Third Quarter Insurance Earnings
HAMILTON, Bermuda, November 2, 2005 — American Safety Insurance Holdings, Ltd. (NYSE: ASI) today reported that earnings from insurance operations increased to $3.2 million in the third quarter of 2005 compared to $992,000 for the same quarter in 2004. Net earnings for the third quarter were $3.3 million, or $0.47 per diluted share, as compared to earnings of $3.3 million, or $0.45 per diluted share, for the third quarter of 2004. Insurance earnings for the nine months ended September 30, 2005 increased to $9.8 million from $1.4 million for the nine months ended September 30, 2004. Net earnings for the nine months ended September 30, 2005 were $10.1 million, or $1.41 per diluted share, as compared to $11.0 million, or $1.49 per diluted share, for the nine months ended September 30, 2004.
Net earnings are detailed as follows (in thousands):
Quarter Ended Nine Months Ended September 30, September 30, 2005 2004 2005 2004 Insurance Operations $3,192 $992 $9,845 $1,410 Real Estate Operations 142 2,288 335 5,807 Other 13 (22) (48) 3,787 Net Earnings $3,347 $3,258 $10,132 $11,004
Third quarter highlights included:
o Gross written premiums rose 11% to $61 million o Net earned premiums decreased 10% to $31 million o Net investment income increased 44% to $3.7 million o The loss ratio improved to 63% from 69% o The combined ratio decreased to 98% from 101%
The increase in insurance earnings for the quarter and the nine months ended September 30, 2005 was due to improved underwriting results combined with increased investment income. The underwriting results for the quarter and the nine months ended September 30, 2005 were driven by an improved loss ratio, which for the quarter decreased to 63% from 69% and for the nine months decreased to 62% from 70% as compared to the same periods of 2004. The underwriting results for the quarter and nine months ended September 30, 2005 included a charge of $552,000 resulting from the commutation of a reinsurance treaty with a former reinsurer and a reinstatement reinsurance premium accrual of $2.3 million on certain reinsurance contracts associated with the Company’s discontinued lines. The combined ratio decreased for the quarter to 98% from 101% and for the nine months decreased to 97% from 104% as compared to the same periods in 2004. The decrease in real estate earnings for the quarter and for the nine months ended September 30, 2005 was due to the substantial completion of the Company’s real estate operations. Other items for the nine months ended September 30, 2004 include non-recurring earnings of $3.8 million, predominantly due to the recovery on an impaired note receivable.
Total revenues for the third quarter of 2005 decreased 39% to $35 million compared to the same quarter of 2004 as a result of an expected decrease in real estate income. Net premiums earned for the third quarter of 2005 decreased 10% to $31 million compared to the same quarter of 2004 due to the accrual of reinstatement reinsurance premiums previously mentioned. Net investment income for the third quarter of 2005 increased 44% to $3.7 million from $2.5 million in the third quarter of 2004 due to increased invested assets and an increase in the annualized yield to 3.9% from 3.6%.
Total revenues for the nine months ended September 30, 2005 decreased 30% to $114 million compared to the same period in 2004 as a result of the expected decrease in real estate income. Net premiums earned for the nine months ended September 30, 2005 remained unchanged at $100 million. Net investment income for the nine months ended September 30, 2005 increased 50% to $10.2 million from $6.8 million for the same period in 2004 due to increased invested assets and an increase in the annualized yield to 3.8% from 3.5%. Total invested assets increased 18% to $385 million from $327 million at December 31, 2004.
The Company’s book value per share increased 6.4% to $17.06 at September 30, 2005 from $16.04 at December 31, 2004, due to the contribution of net earnings during the nine months ended September 30, 2005 offset in part by the change in unrealized loss on the Company’s investment portfolio during the year due to increases in interest rates.
Commenting on the results, Stephen R. Crim, President and Chief Executive Officer of American Safety Insurance Holdings, Ltd., said, “I am pleased that increases in earnings from our insurance operations have remained strong and we continue to be successful in replacing lost earnings from our discontinued real estate operations. While the marketplace has become more competitive, our underwriting results continue to improve due to our focus on underserved markets. Looking ahead, we see continued opportunities for profitable growth through acquisitions and the introduction of new products, in addition to assuming more risk on selected areas of our insurance business.”
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 atwww.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, premium growth, acquisitions and new products and the Harbour Village real estate development project. Forward-looking statements involve risks and uncertainties which may cause actual results to differ materially, 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, the integration and other challenges attendant to acquisitions, and changes in levels of general business activity and economic conditions. For additional factors, which could influence 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 Stephen Crim or Steven Mathis Kevin McGrath (770) 916-1908 (212) 245-4577
American Safety Insurance Holdings, Ltd. and Subsidiaries Financial and Operating Highlights Three Months Ended Nine Months Ended September 30, September 30, 2005 2004 2005 2004 Revenues: Direct and assumed premiums earned $ 55,497,873 $ 58,581,683 $ 169,826,267 $ 168,688,614 Ceded premiums earned (24,260,302) (24,000,183) (69,433,500) (67,898,653) Net premiums earned 31,237,571 34,581,500 100,392,767 100,789,961 Net investment income 3,653,075 2,529,210 10,236,931 6,849,461 Net realized gains 24,602 99,567 (19,863) 119,839 Real estate income - 19,938,557 3,000,078 54,066,868 Other income 20,278 46,982 56,034 191,606 Total revenues $ 34,935,526 $ 57,195,816 $ 113,665,947 $ 162,017,735 Expenses: Losses and loss adjustment expenses $ 19,580,076 $ 23,730,614 $ 61,868,899 $ 70,645,505 Acquisition expenses 6,692,005 6,954,856 20,702,036 20,078,986 Payroll and related expenses 2,344,439 2,433,557 8,492,923 7,762,704 Real estate expenses (601,506) 16,605,783 2,086,956 45,092,806 Other expenses 2,577,721 2,687,602 8,282,807 5,681,042 Minority interest (93,408) 275,182 445,874 611,836 Expense due to rescission 5,832 59,825 28,261 (1,656,145) Total expenses $ 30,505,159 $ 52,747,419 $ 101,907,756 $ 148,216,734 Earnings before income taxes 4,430,367 4,448,397 11,758,191 13,801,001 4,811,429 Income taxes 1,083,069 1,190,605 1,625,796 2,796,621 Net earnings $ 3,347,298 $ 3,257,792 $ 10,132,395 $ 11,004,380 Net earnings per share: Basic $ 0.50 $ 0.47 $ 1.50 $ 1.59 ============== ============== ============== ================ Diluted $ 0.47 $ 0.45 $ 1.41 $ 1.49 ============== ============== ============== ================ Average number of shares outstanding: Basic 6,702,609 6,876,380 6,737,126 6,905,133 ============== ============== ============== ================ Diluted 7,146,664 7,275,259 7,172,497 7,394,730 ============== ============== ============== ================ GAAP combined ratio 97.9% 101.3% 97.1% 104.2% ============== ============== ============== ================ September 30, December 31, BALANCE SHEET DATA: 2005 2004 Total investments excluding real estate $ 384,924,205 $ 327,036,980 Total assets 649,704,251 584,159,976 Unpaid losses and loss adjustment expenses 369,314,017 321,623,730 Total liabilities 535,347,490 475,380,293 Total shareholders' equity 114,356,761 108,779,683 Book value per share $ 17.06 $ 16.04
American Safety Insurance Holdings, Ltd. and Subsidiaries Financial and Operating Highlights Three Months Ended Nine Months Ended September 30, September 30, 2005 2004 2005 2004 PREMIUM SUMMARY (in Thousands) Gross Written Premium: Environmental $ 12,393 $ 10,589 $ 39,683 $ 32,879 Excess and Surplus 21,625 23,731 69,660 71,110 Program Business 25,926 19,772 70,062 61,765 Other 647 484 1,589 1,910 Total 60,591 54,576 180,994 167,664 Net Written Premium: Environmental 8,988 8,569 33,112 26,247 Excess and Surplus 17,524 18,546 55,864 57,018 Program Business 6,618 5,867 15,930 13,451 Other (1,640) 27 (1,205) 754 Total 31,490 33,009 103,701 97,470 Net Earned Premium: Environmental 9,542 8,697 28,064 23,333 Excess and Surplus 18,433 19,733 59,395 58,133 Program Business 4,993 4,968 14,075 12,699 Other (1,730) 1,183 (1,141) 6,625 Total $ 31,238 $ 34,581 $ 100,393 $ 100,790