American Safety Insurance Holdings, Ltd.
Reports a 12.5% Increase in First Quarter Earnings
HAMILTION, Bermuda, April 26, 2006 – American Safety Insurance Holdings, Ltd. (NYSE:ASI) today reported a 12.5% increase in net earnings for the three months ended March 31, 2006, to $4.1 million, or $0.57 per diluted share, compared to $3.6 million, or $0.50 per diluted share, for the same period of 2005.
Financial highlights in the quarter included:
o Book value increased to $17.66 per outstanding share and $16.65 per diluted share. o Net investment income increased 44.0% to $4.5 million. o Net premiums written decreased 8.7% to $33.6 million. o Net premiums earned increased 1.3% to $35.1 million. o The combined ratio increased to 99.6% from 94.5%.
The 2006 first quarter results include a $2.8 million charge related to the settlement of a prior year claim. The settlement reduced net premiums earned by $1.8 million due to reinsurance reinstatement premiums, and increased losses and loss adjustment expenses by $1.0 million. Net of $1.3 million in minority interest and taxes, the impact of the settlement of the claim on net earnings was $1.5 million. The combined ratio for the quarter increased to 99.6%, comprised of a loss ratio of 63.2% and an expense ratio of 36.4%. The claim settlement increased the loss ratio by 5.7 percentage points and the expense ratio by 1.8 percentage points. The 2005 first quarter combined ratio was 94.5%, comprised of a loss ratio of 60.0% and expense ratio of 34.5%.
Revenues for the quarter totaled $40.0 million compared to $40.1 million in 2005 as increased premiums earned, investment income and realized gains on investments significantly offset the non-recurring real estate income generated during the first quarter of 2005. Book value per outstanding share increased to $17.66 from $17.54 at December 31, 2005 due to net earnings of $4.1 million, partially offset by an increase in net unrealized losses on investments due to changes in market interest rates.
Commenting on the results, Stephen R. Crim, President and Chief Executive Officer of American Safety Insurance Holdings, Ltd., said, “Overall it was a solid quarter for the Company. We produced a 12.5% improvement in net earnings despite the negative impact of this claim, which primarily arose from our run-off workers’ compensation line. We do not expect a recurrence of this type of claim in the future. Excluding the effect of the claim, net premiums written declined $1.4 million and net premiums earned increased $2.2 million for the quarter. The decline in net premiums written was driven primarily by decreased premium writings in our construction line. Within our excess and surplus lines segment, we experienced strong premium growth in our ProStar Online environmental liability, environmental impairment liability, excess liability and surety products during the first quarter. I remain confident that we will achieve premium growth during 2006 by increasing our net retentions on business we write, growing our core business lines and developing new products for underserved markets.”
Conference Call
A conference call to discuss first quarter 2006 results is scheduled for Thursday, April 27, 2006 at 9:00 a.m. (Eastern Time), which will be broadcast through Vcall’s Investor Calendar at www.investorcalendar.com or the Company’s website at www.americansafetyinsurance.com. If you are unable to participate at this time, a replay will be available for 30 days, beginning approximately two hours after the call.
American Safety Insurance Holdings, Ltd., (NYSE:ASI), offers customized insurance products and solutions to small and medium sized businesses in industries that it believes are underserved by the standard insurance market. ASI provides excess and surplus lines and alternative risk transfer products through its U.S. program administrator, American Safety Insurance Services, Inc., its insurance company subsidiaries, American Safety Casualty Insurance Company and American Safety Indemnity Company, and its non-subsidiary affiliate, American Safety Risk Retention Group, Inc. ASI specializes in underwriting these products for insureds with environmental risks and construction risks as well as in developing programs for other specialty classes of risk. ASI is rated “A” Excellent VIII by A.M. Best.
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. 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 Form 10-K for the year ended December 31, 2005 as filed with the Securities and Exchange Commission.
Contacts: American Safety Insurance Services, Inc. Cameron Associates Stephen Crim or William Tepe Kevin McGrath (770) 916-1908 (212) 245-4577
American Safety Insurance Holdings, Ltd. and Subsidiaries
Financial and Operating Highlights
(Unaudited)
Three Months Ended March 31, 2006 2005 INCOME STATEMENT DATA: Revenues: Direct and assumed premiums earned $ 56,595,812 $ 55,252,062 Ceded premiums earned (21,538,347) (20,631,451) Net premiums earned 35,057,465 34,620,611 Net investment income 4,543,643 3,156,381 Net realized gains 362,984 52,232 Real estate income - 2,309,000 Other income 64,070 1,949 Total revenues 40,028,162 40,140,173 Expenses: Losses and loss adjustment expenses 22,155,055 20,781,044 Acquisition expenses 6,977,322 7,126,379 Payroll and related expenses 3,542,467 2,966,986 Real estate expenses 67,040 2,264,529 Interest expense 903,046 266,679 Other expenses 2,738,489 2,249,508 Minority interest (472,456) 587,898 Total expenses 35,910,963 36,243,023 Earnings before income taxes 4,117,199 3,897,150 Income taxes 16,200 250,807 Net earnings $ 4,100,999 $ 3,646,343 =========== =========== Net earnings per share: Basic $ 0.61 $ 0.54 ========= ========= Diluted $ 0.57 $ 0.50 ========= ========= Average number of shares outstanding: Basic 6,762,687 6,791,476 ========= ========= Diluted 7,164,244 7,265,523 ========= ========= GAAP combined ratio 99.6% 94.5% BALANCE SHEET DATA: March 31, 2006 December 31, 2005 Total investments $ 421,543,709 $ 415,496,577 Total assets 709,574,544 697,134,863 Unpaid losses and loss adjustment expenses 403,197,196 394,872,581 Loans payable 37,793,777 37,810,099 Total liabilities 589,867,046 578,699,616 Total shareholders' equity 119,707,498 118,435,247 Book value per outstanding share $ 17.66 $ 17.54
American Safety Insurance Holdings, Ltd. and Subsidiaries
Financial and Operating Highlights
(Unaudited)
Three Months Ended 2006 2005 PREMIUM SUMMARY (in Thousands) Gross Premiums Written: Excess and Surplus Lines Segment Environmental $ 12,641 $ 13,594 Construction 23,064 27,053 Surety 870 497 Total Excess and Surplus Lines Segment 36,575 41,144 Alternative Risk Transfer Segment Specialty Programs 16,345 22,743 Fully Funded 263 317 Total Alternative Risk Transfer Segment 16,608 23,060 Runoff 0 7 Total Gross Premiums Written $53,183 $64,211 ======== ======== Net Premiums Written: Excess and Surplus Lines Segment Environmental $ 8,071 $ 10,967 Construction 20,353 22,185 Surety 440 250 Total Excess and Surplus Lines Segment 28,864 33,402 Alternative Risk Transfer Segment Specialty Programs 4,526 3,270 Fully Funded 188 133 Total Alternative Risk Transfer Segment 4,714 3,403 Runoff 0 (35) Total Net Premiums Written $33,578 $36,770 ======== ======== Net Premiums Earned: Excess and Surplus Lines Segment Environmental $ 8,320 $ 8,745 Construction 21,035 21,104 Surety 353 219 Total Excess and Surplus Lines Segment 29,708 30,068 Alternative Risk Transfer Segment Specialty Programs 4,981 4,309 Fully Funded 368 89 Total Alternative Risk Transfer Segment 5,349 4,398 Runoff 0 155 Total Net Premiums Earned $35,057 $34,621 ======== ========