American Safety Insurance Holdings, Ltd.
Reports Net Earnings of $6.9 Million for the Fourth Quarter and
$24.3 Million for the Year Ended December 31, 2009
Book Value Per Share Increased 24.7% Year Over Year
HAMILTON, Bermuda, March 3, 2010 – American Safety Insurance Holdings, Ltd. (NYSE:ASI) today reported net earnings of $6.9 million for the 2009 fourth quarter, compared to a net loss of $8.2 million for the same period in 2008. Net earnings for the twelve months ended 2009 were $24.3 million, or $2.30 per diluted share, compared to $0.3 million, or $0.03 per diluted share, for the same period of 2008.
Financial Highlights for the quarter and year included:
§ | Book value increased to $26.33 per outstanding share and $25.47 per diluted share, compared to $21.12 per outstanding share and $20.55 per diluted share, at December 31, 2009 and 2008, respectively. |
§ | Return on average equity (adjusted for realized and unrealized gains and losses from investments) for 2009 increased to 10.8% from 6.6% in 2008. |
§ | Total revenue quarter over quarter and year over year increased more than 6%. |
§ | Gross premiums written decreased 9.6% for the quarter and 2.6% for the year. |
§ | Net premiums written increased 1.0% for the quarter and decreased 8.4% for the year. |
§ | Net investment income increased 3.4% for the quarter and 3.3% for the year. |
§ | Cash flow from operations totaled $13.2 million for the quarter and $53.4 million for the year, compared to $30.8 million and $101.0 million, respectively, for the same periods in 2008. |
§ | The combined ratio improved to 99.2% for the quarter and 99.4% for the year compared to 115.4% and 106.0%, respectively, for the same periods in 2008. |
Fourth Quarter Results
Pre-tax operating income increased to $9.0 million for the 2009 quarter as compared to $0.9 million for the same quarter in 2008 due to improved underwriting results. The combined ratio for the 2009 quarter was 99.2% with improvements in both the loss ratio and expense ratio. The loss ratio for the three months ended December 31, 2009 was 55.2% compared to 70.1% for the same period in 2008 while the expense ratio was 44.0% compared to 45.3% in 2008.
Total revenue for the quarter increased 7% to $51.9 million as fee income increased $1.5 million, investment income increased modestly and net realized losses on investments were $0.1 million in the 2009 quarter as compared to $6.0 million in 2008.
Net earnings for the quarter of $6.9 million, or $.65 per diluted share compare to a net loss of $8.2 million or $.80 per diluted share for the 2008 quarter. The 2009 results include $1.2 million net favorable adjustments to loss reserves comprised of: $5.2 million of favorable development on prior year loss reserves, which was offset, in part, by a $4.0 million increase in 2009 accident year losses primarily to reflect changes in estimated ceded losses recoverable. Additionally during the fourth quarter the tax provision includes a $0.9 million benefit representing a partial reversal of the valuation allowance established in 2008 relative to deferred taxes associated with the investment portfolio.
For the quarter ended December 31, 2008, the net loss of $8.2 million, or $.80 per fully diluted share, included pre-tax charges of: (a) $6.0 million of realized losses due to other-than-temporary-impairment of investments (b) $3.9 million of net adverse reserve development on prior year loss reserves (c) $1.6 million of reinsurance reinstatement premiums and (d) a $2.5 million increase in the allowance for reinsurance recoverables.
Year End Results
Pre-tax operating income increased 62% to $34.6 million from $21.4 million. The combined ratio for 2009 was 99.4% with improvements in both the loss ratio and expense ratio. The 2009 loss ratio improved to 57.9% compared to 63.1% in 2008 while the 2009 expense ratio was 41.5% compared to 42.9% in 2008. The combined ratios reflect net favorable adjustments to loss reserves of $1.2 million in 2009 compared to $5.4 million of net unfavorable loss reserve adjustments in 2008.
Total revenue for the year increased 6% to $204.7 million as fee income increased $2.8 million, investment income increased modestly and net realized gains on investments were $0.2 million in 2009 compared to $14.3 million of net realized losses in 2008.
Net earnings for the year of $24.3 million, or $2.30 per diluted share, includes the fourth quarter reserve changes noted previously, an increase in fee income and an increase in other underwriting expenses due to the write-off of a receivable in the third quarter of 2009. Net earnings for 2008 of $0.3 million, or $.03 per fully diluted share, were impacted by $14.3 million of net realized losses on investments primarily due to other-than-temporary-impairment of investments, $5.4 million of net adverse development from prior year loss reserves and the reinstatement premium and allowance on reinsurance recoverables noted previously.
Comments by Management:
Commenting on the results, Stephen R. Crim, Chief Executive Officer, said; “I am pleased with the improvements in the Company’s expense ratio, loss ratio and return on equity in the face of a competitive insurance market and difficult economy. We achieved growth in our newer excess and surplus lines products, as well as in shorter tail lines, resulting in a more balanced product portfolio. Looking to 2010, we expect the market to remain very competitive, and will maintain our focus on underwriting discipline to preserve the integrity of the Company’s balance sheet. Also, given our capital position at year end, we expect A.M. Best to increase our financial size category from A VIII to A IX.”
Conference Call
A conference call to discuss fourth quarter 2009 results is scheduled for Thursday, March 4, 2010 at 9:00 a.m. (Eastern Standard Time), which will be broadcast through Vcall’s Investor Calendar at www.investorcalendar.com, or the Company’s website at www.amsafety.bm. If you are unable to participate at this time, a replay will be available for 30 days, beginning approximately two hours after the call. A transcript of the call will be available on the Company’s website beginning several days after the call.
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This report contains forward-looking statements and non-GAAP financial measures. The forward-looking statements reflect the Company’s current views with respect to future events and financial performance, including insurance market conditions, combined ratio, premium growth, acquisitions and new products and the impact of new accounting standards. 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 collectability 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.
About Us:
American Safety Insurance Holdings, Ltd. (NYSE:ASI), a Bermuda holding company, offers innovative solutions outside the U.S. in the reinsurance and alternative risk markets through its subsidiaries, American Safety Reinsurance, Ltd. and American Safety Assurance, Ltd., and in the U.S. for specialty risks and alternative risk markets through its program administrator, American Safety Insurance Services, Inc., and insurance company subsidiaries and affiliates, American Safety Casualty Insurance Company, American Safety Indemnity Company and American Safety Risk Retention Group, Inc. and American Safety Assurance (Vermont), Inc. and Victore Insurance Company. As a group, ASI’s insurance subsidiaries and affiliates are rated “A” (Excellent) VIII by A.M. Best. For additional information, please visit www.asih.bm.
Contacts:
American Safety Insurance Holdings, Ltd. | American Safety Administrative Services, Inc. | |
Investor Relations | Media Relations | |
Mark W. Haushill | Julie McDonald | |
mark.haushill@amsafety.bm | jmcdonald@amsafety.com | |
(441) 296-8560 | (770) 916-1908 |
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American Safety Insurance Holdings, Ltd. and Subsidiaries
Financial and Operating Highlights
(Unaudited)
(in thousands except per share data and percentages)
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
INCOME STATEMENT DATA: Revenues: | ||||||||||||||||
Direct premiums earned | $ | 56,654 | $ | 53,678 | $ | 216,710 | $ | 201,735 | ||||||||
Assumed premiums earned | 8,131 | 12,869 | 35,123 | 48,089 | ||||||||||||
Ceded premiums earned | (22,518 | ) | (19,959 | ) | (83,316 | ) | (75,353 | ) | ||||||||
Net premiums earned | 42,267 | 46,588 | 168,517 | 174,471 | ||||||||||||
Net investment income | 7,704 | 7,450 | 30,554 | 29,591 | ||||||||||||
Net realized (losses) gains | (135 | ) | (5,990 | ) | 163 | (14,348 | ) | |||||||||
Fee income | 2,080 | 615 | 5,448 | 2,632 | ||||||||||||
Other income (loss) | 7 | (16 | ) | 51 | (24 | ) | ||||||||||
Total revenues | $ | 51,923 | $ | 48,647 | $ | 204,733 | $ | 192,322 | ||||||||
Expenses: | ||||||||||||||||
Losses and loss adjustment expenses | 23,324 | 32,678 | 97,646 | 110,146 | ||||||||||||
Acquisition expenses | 10,283 | 12,761 | 37,203 | 43,484 | ||||||||||||
Payroll and related expenses | 5,818 | 4,493 | 22,661 | 19,891 | ||||||||||||
Other underwriting expenses | 4,573 | 4,440 | 15,412 | 13,991 | ||||||||||||
Interest expense | 814 | 793 | 3,193 | 3,163 | ||||||||||||
Corporate and other expenses | 1,300 | 766 | 3,375 | 153 | ||||||||||||
Total expenses | $ | 46,112 | $ | 55,931 | $ | 179,490 | $ | 190,828 | ||||||||
Earnings (loss) before income taxes | 5,811 | (7,284 | ) | 25,243 | 1,494 | |||||||||||
Income taxes | (879 | ) | (391 | ) | 541 | 31 | ||||||||||
Net earnings (loss) before noncontrolling interest | $ | 6,690 | $ | (6,893 | ) | $ | 24,702 | $ | 1,463 | |||||||
Net earnings (loss) attributable to the noncontrolling interest | (216 | ) | 1,312 | 377 | 1,153 | |||||||||||
Net earnings (loss) | $ | 6,906 | $ | (8,205 | ) | $ | 24,325 | $ | 310 | |||||||
Net (loss) earnings per share: | ||||||||||||||||
Basic | $ | 0.67 | $ | (0.80 | ) | $ | 2.36 | $ | 0.03 | |||||||
Diluted | $ | 0.65 | $ | (0.80 | ) | $ | 2.30 | $ | 0.03 | |||||||
Weighted average number of shares outstanding: | ||||||||||||||||
Basic | 10,323,875 | 10,274,368 | 10,307,592 | 10,459,161 | ||||||||||||
Diluted | 10,628,992 | 10,274,368 | 10,557,751 | 10,685,933 | ||||||||||||
Loss Ratio | 55.2 | % | 70.1 | % | 57.9 | % | 63.1 | % | ||||||||
Expense Ratio | 44.0 | % | 45.3 | % | 41.5 | % | 42.9 | % | ||||||||
GAAP combined ratio | 99.2 | % | 115.4 | % | 99.4 | % | 106.0 | % | ||||||||
BALANCE SHEET DATA: | As Of | |||||||||||||||
12/31/2009 | 12/31/2008 | |||||||||||||||
Total investments | $ | 750,425 | $ | 673,739 | ||||||||||||
Total assets | 1,147,660 | 1,026,364 | ||||||||||||||
Unpaid losses and loss adjustment expenses | 616,444 | 586,647 | ||||||||||||||
Total liabilities | 872,148 | 806,242 | ||||||||||||||
Total shareholders’ equity | 271,837 | 217,030 | ||||||||||||||
Book value per share | $ | 26.33 | $ | 21.12 |
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American Safety Insurance Holdings, Ltd.
Segment Data (unaudited)
($ Thousands) | Twelve Months Ended Dec 31, 2009 | |||||||||||||||||||
E&S | ART | Reinsurance | Run-off | Total | ||||||||||||||||
Gross Premiums Written | $ | 116,968 | $ | 103,155 | $ | 33,397 | $ | (1 | ) | $ | 253,519 | |||||||||
Net Premiums Written | 89,517 | 39,036 | 36,247 | (91 | ) | 164,709 | ||||||||||||||
Net Premiums Earned | 91,970 | 40,612 | 36,026 | (91 | ) | 168,517 | ||||||||||||||
Underwriting Profit (Loss) | 4,640 | (110 | ) | (5,176 | ) | (712 | ) | (1,358 | ) | |||||||||||
Fee Income | 710 | 4,183 | 555 | - | 5,448 | |||||||||||||||
Investment Income | 21,255 | 4,563 | 3,840 | 896 | 30,554 | |||||||||||||||
Pre-tax Operating Income | 26,605 | 8,636 | (781 | ) | 184 | 34,644 | ||||||||||||||
Realized Gains (Losses) | 163 | |||||||||||||||||||
Interest and Holding Company Expenses | 9,564 | |||||||||||||||||||
Income Before Taxes | 25,243 | |||||||||||||||||||
Provision for Taxes | 541 | |||||||||||||||||||
Income After Taxes | 24,702 | |||||||||||||||||||
Earnings from Non-Controlling Interest | (377 | ) | ||||||||||||||||||
Net Income Attributable to ASIH, Ltd. | $ | 24,325 | ||||||||||||||||||
Loss Ratio | 48.1 | % | 60.3 | % | 78.5 | % | NM | 57.9 | % | |||||||||||
Expense Ratio | 46.1 | % | 29.7 | % | 34.3 | % | NM | 41.5 | % | |||||||||||
Combined Ratio | 94.2 | % | 90.0 | % | 112.8 | % | NM | 99.4 | % | |||||||||||
($ Thousands) | Twelve Months Ended Dec 31, 2008 | |||||||||||||||||||
E&S | ART | Reinsurance | Run-off | Total | ||||||||||||||||
Gross Premiums Written | $ | 128,103 | $ | 79,249 | $ | 53,032 | $ | - | $ | 260,384 | ||||||||||
Net Premiums Written | 89,846 | 43,849 | 45,913 | 257 | 179,865 | |||||||||||||||
Net Premiums Earned | 92,976 | 38,695 | 42,544 | 256 | 174,471 | |||||||||||||||
Underwriting Profit (Loss) | (6,818 | ) | 882 | (3,077 | ) | (1,819 | ) | (10,832 | ) | |||||||||||
Fee Income | 456 | 1,675 | 501 | - | 2,632 | |||||||||||||||
Investment Income | 21,608 | 3,849 | 3,079 | 1,055 | 29,591 | |||||||||||||||
Pre-tax Operating Income | 15,246 | 6,406 | 503 | (764 | ) | 21,391 | ||||||||||||||
Realized Gains (Losses) | (14,348 | ) | ||||||||||||||||||
Interest and Holding Company Expenses | 5,549 | |||||||||||||||||||
Income Before Taxes | 1,494 | |||||||||||||||||||
Provision for Taxes | 31 | |||||||||||||||||||
Income After Taxes | 1,463 | |||||||||||||||||||
Earnings from Non-Controlling Interest | (1,153 | ) | ||||||||||||||||||
Net Income Attributable to ASIH, Ltd. | $ | 310 | ||||||||||||||||||
Loss Ratio | 64.2 | % | 50.6 | % | 67.6 | % | NM | 63.1 | % | |||||||||||
Expense Ratio | 42.6 | % | 42.8 | % | 38.4 | % | NM | 42.9 | % | |||||||||||
Combined Ratio | 106.8 | % | 93.4 | % | 106.1 | % | NM | 106.0 | % |
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Segment Data (unaudited)
($ Thousands) | Three Months Ended Dec 31, 2009 | |||||||||||||||||||
E&S | ART | Reinsurance | Run-off | Total | ||||||||||||||||
Gross Premiums Written | $ | 31,548 | $ | 13,671 | $ | 8,069 | $ | (1 | ) | $ | 53,287 | |||||||||
Net Premiums Written | 25,591 | 9,477 | 8,953 | (1 | ) | 44,020 | ||||||||||||||
Net Premiums Earned | 23,512 | 10,178 | 8,578 | (1 | ) | 42,267 | ||||||||||||||
Underwriting Profit (Loss) | 7,311 | (2,020 | ) | (5,334 | ) | (712 | ) | (755 | ) | |||||||||||
Fee Income | 95 | 1,763 | 222 | 2,080 | ||||||||||||||||
Investment Income | 5,360 | 1,151 | 968 | 225 | 7,704 | |||||||||||||||
Pre-tax Operating Income | 12,766 | 894 | (4,144 | ) | (487 | ) | 9,029 | |||||||||||||
Realized Gains (Losses) | (135 | ) | ||||||||||||||||||
Interest and Holding Company Expenses | 3,083 | |||||||||||||||||||
Income Before Taxes | 5,811 | |||||||||||||||||||
Provision for Taxes | (879 | ) | ||||||||||||||||||
Income After Taxes | 6,690 | |||||||||||||||||||
Earnings from Non-Controlling Interest | 216 | |||||||||||||||||||
Net Income Attributable to ASIH, Ltd. | $ | 6,906 | ||||||||||||||||||
Loss Ratio | 19.6 | % | 79.2 | % | 116.0 | % | NM | 55.2 | % | |||||||||||
Expense Ratio | 48.9 | % | 23.3 | % | 43.3 | % | NM | 44.0 | % | |||||||||||
Combined Ratio | 68.5 | % | 102.5 | % | 159.3 | % | NM | 99.2 | % | |||||||||||
($ Thousands) | Three Months Ended Dec 31, 2008 | |||||||||||||||||||
E&S | ART | Reinsurance | Run-off | Total | ||||||||||||||||
Gross Premiums Written | $ | 29,693 | $ | 18,663 | $ | 10,575 | $ | - | $ | 58,931 | ||||||||||
Net Premiums Written | 19,174 | 12,829 | 11,310 | 257 | 43,570 | |||||||||||||||
Net Premiums Earned | 22,539 | 11,270 | 12,523 | 256 | 46,588 | |||||||||||||||
Underwriting Profit (Loss) | (3,105 | ) | (1,367 | ) | (851 | ) | (1,818 | ) | (7,141 | ) | ||||||||||
Fee Income | 118 | 433 | 64 | - | 615 | |||||||||||||||
Investment Income | 5,440 | 969 | 775 | 266 | 7,450 | |||||||||||||||
Pre-tax Operating Income | 2,453 | 35 | (12 | ) | (1,552 | ) | 924 | |||||||||||||
Realized Gains (Losses) | (5,990 | ) | ||||||||||||||||||
Interest and Holding Company Expenses | 2,218 | |||||||||||||||||||
Income Before Taxes | (7,284 | ) | ||||||||||||||||||
Provision for Taxes | (391 | ) | ||||||||||||||||||
Income After Taxes | (6,893 | ) | ||||||||||||||||||
Earnings from Non-Controlling Interest | (1,312 | ) | ||||||||||||||||||
Net Income Attributable to ASIH, Ltd. | $ | (8,205 | ) | |||||||||||||||||
Loss Ratio | 80.5 | % | 36.3 | % | 66.7 | % | NM | 70.1 | % | |||||||||||
Expense Ratio | 32.7 | % | 71.9 | % | 39.5 | % | NM | 45.3 | % | |||||||||||
Combined Ratio | 113.2 | % | 108.3 | % | 106.3 | % | NM | 115.4 | % | |||||||||||
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