American Safety Insurance Holdings, Ltd.
Reports an Increase of 73% in Net Earnings to $7.1 Million
HAMILTON, Bermuda, April 30, 2007 — American Safety Insurance Holdings, Ltd. (NYSE: ASI) today reported a 73% increase in first quarter net earnings to $7.1 million, or $0.65 per diluted share, from $4.1 million, or $0.57 per diluted share, for the same period in 2006.
Financial highlights for the quarter included:
• Gross premiums written increased 5% to $55.4 million.
• Net premiums written rose 16% to $38.8 million.
• Net premiums earned grew 11% to $38.4 million.
• Investment income increased 59% to $7.2 million.
• Cash flow from operations was $19 million compared to $10 million for the same period of 2006.
• Combined ratio was 95.5% compared to 99.5% for same period of 2006.
• Loss ratio was 62.4% compared to 63.9% for the same period of 2006.
• Expense ratio decreased to 33.1% from 35.6% for the same period of 2006.
• Annualized return on average equity was 14.2% compared to 12.5% for the same period of 2006.
• Book value per share increased to $19.37 from $18.59 as of December 31, 2006.
First Quarter Results
The increase in net earnings for the quarter was primarily due to increased investment income and improved underwriting results. Investment income was $7.2 million for the quarter, a 59% increase over the same period in 2006 due to greater invested assets and improved yields. Invested assets increased 35% over March 31, 2006 due to the proceeds from the 2006 equity offering, increased market value of the portfolio and cash flow from operations. The investment yield increased 82 basis points to 5.2% as compared to 4.3% in the 2006 quarter. The combined ratio for the quarter was 95.5%, composed of a loss ratio of 62.4% and an expense ratio of 33.1%. The first quarter 2006 combined ratio, which was negatively impacted by the settlement of a prior year claim, was 99.5%, with a loss ratio of 63.9% and an expense ratio of 35.6%. The 2006 prior year claim settlement reduced net premiums earned by $1.8 million and increased losses and loss adjustment expense by $1 million.
Commenting on the results, Stephen R. Crim, President and Chief Executive Officer of American Safety Insurance Holdings, Ltd., said, Growth in many of our core business lines in addition to the efforts to diversify our product portfolio resulted in a 5% increase in gross premiums written over 2006. We continued to exercise underwriting discipline in the softening market, resulting in a substantial decrease in our construction premium writings in western states during the quarter. Net premiums written during the quarter increased by 16%, driven primarily by premium growth in environmental, increased retentions in specialty programs and premium production in assumed reinsurance. While the impact of the soft market on our construction results will make it more difficult, we believe our product diversification strategy will provide the opportunity to achieve our previously announced growth targets for 2007. Annualized return on average equity increased by nearly two percentage points over 2006 to 14.2%, despite the increased capital from the common equity offering completed last June. We remain on track to effectively deploy the new capital and increase shareholder value. ”
This press release contains forward-looking statements regarding insurance market conditions, gross premium growth, net premium growth and combined ratio. 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.
William C. Tepe
(770) 916-1908
American Safety Insurance Holdings, Ltd. and Subsidiaries Financial and Operating Highlights (Unaudited) (in thousands except per share data and percentages) Three Months Ended March 31, ------------------ -- ---------------- 2007 2006 - ------------------------------------------------------------------------------------------
INCOME STATEMENT DATA: Revenues: Direct and assumed premiums earned $ 56,635 $ 55,835 Ceded premiums earned (18,277) (21,145) ------------------ ------------- Net premiums earned 38,358 34,690 Net investment income 7,224 4,543 Net realized gains 19 363 Fee income 516 492 Other income 17 17 -------------- ------------ Total revenues 46,134 40,105 --------------- ------------ Expenses: Losses and loss adjustment expenses 23,952 22,155 Acquisition expenses 6,118 7,055 Payroll and related expenses 4,154 3,542 Real estate expenses 23 67 Interest expense 816 903 Other expenses 3,405 2,738 Minority interest 115 (472) ------------------ ------------- Total expenses 38,583 35,988 ------------------ ------------- Earnings before income taxes 7,551 4,117 Income taxes: 459 16 ------------------ ------------- Net earnings $ 7,092 $ 4,101 ================== ============= Net earnings per share: Basic $ 0.67 $ 0.61 Diluted $ 0.65 $ 0.57 Average number of shares outstanding: Basic 10,556 6,763 Diluted 10,931 7,164 GAAP combined ratio 95.5% 99.5% BALANCE SHEET DATA: March 31, December 31, 2007 2006 Total investments $ 569,393 $ 551,158 Total assets 864,253 847,130 Unpaid losses and loss adjustment expenses 452,451 439,673 Total liabilities 659,758 650,980 Total shareholders' equity 204,495 196,150 Book value per outstanding share $19.37 $ 18.59
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American Safety Insurance Holdings, Ltd. and Subsidiaries Financial and Operating Highlights (Unaudited) Three Months Ended March 31, ------------------ -- ---------------- 2007 2006 - ------------------------------------------------------ ------------------ -- ----------------
PREMIUM SUMMARY (in Thousands) Gross Premiums Written: Excess and Surplus Lines Segment Environmental $ 13,138 $ 12,641 Construction 15,993 22,453 Excess 1,969 611 Non Construction 811 0 Surety 1,310 870 ------------------ --------------- Total Excess and Surplus Lines Segment 33,221 36,575 Alternative Risk Transfer Segment Specialty Programs 19,433 16,345 ------------------ --------------- Total Alternative Risk Transfer Segment 19,433 16,345 Assumed Reinsurance 2,769 0 ------------------ --------------- Runoff 0 0 ------------------ ---------------- Total Gross Premiums Written $55,423 $ 52,920 ================== ================ Total Fully Funded Fees Written $ 526 $ 173 ================== ================ Net Premiums Written: Excess and Surplus Lines Segment Environmental 10,747 $ 8,071 Construction 15,702 20,185 Excess 261 168 Non Construction 406 0 Surety 1,270 440 ------------------ ---------------- Total Excess and Surplus Lines Segment 28,386 28,864 Alternative Risk Transfer Segment Specialty Programs 7,687 4,526 ------------------ ---------------- ------------------ ---------------- Total Alternative Risk Transfer Segment 7,687 4,526 Assumed Reinsurance 2,769 0 ------------------ ---------------- Runoff 0 0 ------------------ --------------- Total Net Premiums Written $ 38,842 $ 33,390 ================== ================ Total Fully Funded Fees Written $ 526 $ 173 ================== ================ Net Premiums Earned: Excess and Surplus Lines Segment Environmental $ 9,526 $ 8,320 Construction 20,365 20,913 Excess 227 122 Non Construction 461 0 Surety 915 353 --------------- ---------------- Total Excess and Surplus Lines Segment 31,494 29,708 Alternative Risk Transfer Segment Specialty Programs 5,351 4,982 ------------------ ---------------- Total Alternative Risk Transfer Segment 5,531 4,982 Assumed Reinsurance 1,513 0 ------------------ ---------------- Runoff 0 0 ---------------- --------------- Total Net Premiums Earned $ 38,358 $ 34,690 ================== ================ Total Fully Funded Fees Earned $ 516 $ 492 ================== ================
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