American Safety Insurance Holdings, Ltd.
Reports a 47% Increase in Second Quarter Earnings
HAMILTON, Bermuda, August 2, 2006 – American Safety Insurance Holdings, Ltd. (NYSE:ASI) today reported a 47% increase in net earnings for the three months ended June 30, 2006 to $4.6 million, or $0.62 per diluted share, compared to $3.1 million, or $0.44 per diluted share, for the same period of 2005.
Financial highlights in the quarter included:
o Gross Premiums Written increased 13% to $63.4 million. o Net Premiums Written increased 23% to $43.5 million. o Net Premiums Earned increased 5% to $36.1 million. o Net investment income increased 40% to $4.8 million. o The combined ratio improved to 95.2% from 98.9%. o Book value decreased to $16.77 per outstanding share and $16.14 per diluted share.
Revenues for the quarter totaled $40.9 million compared to $38.6 million in 2005 due to increased premiums earned and investment income. Net premiums earned increased $1.5 million or 5% to $36.1 million, primarily from increased retention levels in our construction and specialty program lines of business. The second quarter combined ratio improved 3.7 percentage points to 95.2%, and is comprised of a loss ratio of 59.3% and an expense ratio of 35.9%. Net investment income increased 40% to $4.8 million as average invested assets increased 23% to $429 million and the tax equivalent yield increased 68 basis points to 4.9%. Annualized return on average equity for the quarter increased to 15.8% as compared to 11.7% for the same period of 2005.
For the six months ended June 30, 2006, net earnings improved 29% to $8.7 million, or $1.19 per diluted share compared to $6.8 million, or $.94 per diluted share for 2005. Total revenues of $80.6 million increased 2% due to increased net premiums earned and net investment income. Net premiums earned increased 3% to $70.9 million due to increased retention levels in construction and specialty program business lines. The year to date combined ratio is 97.3% and is comprised of a loss ratio of 61.1% and an expense ratio of 36.2%. Net investment income increased 41% to $9.3 million due to greater invested assets and increased yields. Annualized return on average equity for the six months ended June 30, 2006 improved to 13.4% from 12.5% for the same period of 2005.
With the completion of a common equity offering of 3.2 million shares during the quarter, and a fully exercised over-allotment option of 480,000 shares in July, ASI successfully raised $53.3 million of additional capital, net of offering expenses. The offering, including the over-allotment, increased the number of shares outstanding 54% to 10,525,966 shares. As of June 30, 2006, book value per outstanding share decreased to $16.77 from $17.54 at December 31, 2005 due to an increase in unrealized losses on investments and the increase in common shares outstanding.
Commenting on the results, Stephen R. Crim, President and Chief Executive Officer of American Safety Insurance Holdings, Ltd., said, “I am pleased with the completion of our common equity offering to support the execution of our growth strategy. The proceeds from the offering were invested in high quality fixed maturity securities at an average yield of 5.9% and an average duration of four. We have already made significant progress in the deployment of the new capital through increased net retentions and growth in our core business lines, as reflected in our second quarter results. The Company remains well positioned to achieve our objectives of increasing our net retentions, growing our core business, developing new products, leveraging our infrastructure investments and actively managing our capital.”
Conference Call
A conference call to discuss second quarter 2006 results is scheduled for Thursday, August 3, 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-Q for the quarter ended March 31, 2006 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 Six Months Ended June 30, June 30, 2006 2005 2006 2005 INCOME STATEMENT DATA: Revenues: Direct and assumed premiums earned $54,038,204 $59,076,332 $110,634,016 $114,328,394 Ceded premiums earned (17,962,376) (24,541,747) (39,739,307) (45,173,198) Net premiums earned 36,075,828 34,534,585 70,894,709 69,155,196 Net investment income 4,794,702 3,427,475 9,269,713 6,583,856 Net realized gains (3,169) (96,697) 359,815 (44,465) Real estate income - 691,078 - 3,000,078 Other income 23,193 33,807 87,263 35,756 Total revenues 40,890,554 38,590,248 80,611,500 78,730,421 Expenses: Losses and loss adjustment expenses 21,387,969 21,507,779 43,311,993 42,288,823 Acquisition expenses 6,431,653 6,883,652 13,407,790 14,010,031 Payroll and related expenses 3,991,686 3,181,498 7,534,153 6,148,484 Real estate expenses 102,461 423,933 169,501 2,688,462 Interest Expense 837,623 262,961 1,740,669 529,640 Other expenses 2,951,627 2,948,367 5,615,116 5,197,875 Minority interest (39,174) (48,616) (511,630) 539,282 Total expenses 35,663,845 35,159,574 71,267,592 71,402,597 Earnings before income taxes 5,226,709 3,430,674 9,343,908 7,327,824 Income taxes 599,575 291,920 615,775 542,727 Net earnings $4,627,134 $3,138,754 $8,728,133 $6,785,097 ========== ========== ========== ========= Net earnings per share: Basic $0.65 $0.47 $1.26 $1.00 ===== ===== ===== ===== Diluted $0.62 $0.44 $1.19 $0.94 ===== ===== ===== ===== Average number of shares outstanding: Basic 7,106,393 6,718,269 6,935,489 6,754,670 ========= ========= ========= ========= Diluted 7,498,006 7,118,651 7,328,958 7,197,091 ========= ========= ========= ========= GAAP combined ratio 95.2% 98.9% 97.3% 96.7% ========= ======== ========= =========
BALANCE SHEET DATA: June 30, December 31, 2006 2005 Total investments $478,917,144 $415,496,577 Total assets 773,834,927 697,134,863 Unpaid losses and loss adjustment expenses 412,150,889 394,872,581 Total liabilities 605,334,814 578,699,616 Total shareholders' equity 168,500,113 118,435,247 Book value per share $16.77 $17.54
American Safety Insurance Holdings, Ltd. and Subsidiaries
Financial and Operating Highlights
(Unaudited)
Six Months Ended Three Months Ended June 30, June 30, 2006 2005 2006 2005 Gross Premiums Written: Excess and Surplus Lines Segment Environmental $ 26,885 $ 27,290 $ 14,244 $ 13,696 Construction 47,578 47,046 25,126 20,335 Excess 1,469 989 858 647 Surety 1,955 935 1,085 438 Total Excess and Surplus Lines Segment 77,887 76,260 41,313 35,116 Alternative Risk Transfer Segment Specialty Programs 36,640 43,326 20,295 20,583 Fully Funded 2,019 810 1,756 493 Total Alternative Risk Transfer Segment 38,659 44,136 22,051 21,076 Runoff 0 7 0 0 Total Gross Premiums Written $116,546 $120,403 $ 63,364 $ 56,192 ======== ======== ======== ======== Net Premiums Written: Excess and Surplus Lines Segment Environmental $ 19,808 $ 24,124 $ 11,737 $ 13,157 Construction 44,048 38,142 23,863 16,026 Excess 382 198 214 129 Surety 1,083 470 643 220 Total Excess and Surplus Lines Segment 65,321 62,934 36,457 29,532 Alternative Risk Transfer Segment Specialty Programs 9,705 8,784 5,922 5,514 Fully Funded 1,317 528 1,129 395 Total Alternative Risk Transfer Segment 11,022 9,312 7,051 5,909 Runoff 0 (35) 0 0 Total Net Premiums Written $ 76,343 $ 72,211 $ 43,508 $ 35,441 ======== ======== ======== ======== Net Premiums Earned: Excess and Surplus Lines Segment Environmental $ 17,360 $ 18,522 $ 9,040 $ 9,777 Construction 41,895 40,734 20,981 19,742 Excess 239 228 117 116 Surety 784 434 431 215 Total Excess and Surplus Lines Segment 60,278 59,918 30,569 29,850 Alternative Risk Transfer Segment Specialty Programs 9,677 8,789 4,935 4,480 Fully Funded 940 293 572 204 Total Alternative Risk Transfer Segment 10,617 9,082 5,507 4,684 Runoff 0 155 0 0 Total Net Premiums Earned $ 70,895 $ 69,155 $ 36,076 $ 34,534 ======== ======== ======== ========