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American Safety Insurance Holdings, Ltd.
Reports Net Earnings of $6.2 Million
Book Value Per Share Increased to $28.32
HAMILTON, Bermuda, July 28, 2010 – American Safety Insurance Holdings, Ltd. (NYSE:ASI) today reported net earnings of $6.2 million for the three months ended June 30, 2010, or $0.58 per diluted share, as compared to $6.9 million, or $0.66 per diluted share, for the same period of 2009.
Financial highlights for the quarter included:
· | Gross premiums written increased 28% to $72.6 million |
· | Total revenues increased 12% to $56.8 million |
· | Net operating cash flow was $24.7 million |
· | The combined ratio was 99.4% |
· | Annualized return on average equity was 9.0%, excluding realized and unrealized gains (losses) on investments |
· | Book value increased to $29.38 per outstanding share and $28.32 per diluted share |
Second Quarter Results
Gross premiums written for the quarter increased 28% to $72.6 million, reflecting growth across all three underwriting divisions. The increase was due primarily to growth from the addition of a property underwriting team in the first quarter of 2010, the Victore surety acquisition in 2009 and a dealer open lot property program added in late 2009.
Total revenues for the quarter increased 12% to $56.8 million from $50.8 million in the 2009 quarter primarily due to approximately $5.6 million of increased premiums earned. Operating earnings for the quarter declined to $5.7 million from $6.9 million for the same period in 2009 primarily due to storm-related property losses of $1.3 million. Operating earnings is a non-GAAP financial measure defined by the Company as net earnings adjusted for net realized gains/(losses), net of applicable taxes.
The combined ratio was 99.4%, composed of a loss ratio of 61.9% and an expense ratio of 37.4%. The increase in the loss ratio to 61.9% from 58.1% was primarily due to storm-related property losses. The reduction in the expense ratio to 37.4% for the quarter compared to 38.8% in the 2009 quarter is due to increased fronting fees offset in part by increased underwriting expenses related to additional personnel hired to support growth initiatives.
Year to Date Results
Net earnings for the six months ended June 30, 2010 were $12.7 million, or $1.19 per diluted share, compared to $12.5 million, or $1.19 per diluted share for the same period in 2009. Gross premiums written year to date increased 23% to $131.9 million, which also resulted in increased earned premiums of $3.9 million year to date. Net realized gains on investments for the current six month period were approximately $1.5 million pre-tax compared to net realized gains on investments of $0.2 million during 2009.
The combined ratio was 100.8%, composed of a loss ratio of 60.6% and an expense ratio of 40.2%. The increase in the loss ratio to 60.6% from 59.4% for the 2009 period is primarily due to storm-related property losses. The increase in the expense ratio to 40.2% for the six months ended compared to 39.7% in the 2009 six months is due primarily to increased underwriting expenses related to additional personnel hired to support growth initiatives.
Invested assets increased 4.0% to $778.6 million at June 30, 2010 from $750.4 million at December 31, 2009. The pretax book yield realized during the six months on the investment portfolio was 4.1% compared to 4.4% for the same period in 2009.
Book value at June 30, 2010 increased to $29.38 per outstanding share and to $28.32 per diluted share due to net earnings and net unrealized gains in the investment portfolio.
As a part of the stock repurchase plan authorized by the Board of Directors on March 2, 2010, the Company repurchased a total of 155,700 shares of common stock at a cost of approximately $2.6 million during the quarter ended June 30, 2010.
Commenting on the results, Stephen R. Crim, President and Chief Executive Officer said, “I am pleased with the results we achieved during the second quarter with solid growth in book value per share and revenue, as well as strong cash flow from operations. We continued to execute our growth strategy while maintaining our commitment to disciplined underwriting to preserve the integrity of our balance sheet."
Conference Call
A conference call to discuss 2nd quarter 2010 results is scheduled for Thursday, July 29, 2010 at 9:00 a.m. (Eastern Daylight Time), which will be broadcast through Vcall’s Investor Calendar at www.investorcalendar.com, or the Company’s website at www.amsafety.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. A transcript of the call will be available on the Company’s website beginning several days after the call.
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 a nd 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) IX by A.M. Best. For additional information, please visit www.asih.bm.
Contacts:
American Safety Insurance Holdings, Ltd. |
Investor Relations |
Stephen R. Crim |
scrim@amsafety.bm |
(441) 542-7933 |
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American Safety Insurance Holdings, Ltd. and Subsidiaries
Financial and Operating Highlights
(Unaudited) (in thousands)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
INCOME STATEMENT DATA: Revenues: | ||||||||||||||||
Direct premiums earned | $ | 60,976 | $ | 50,400 | $ | 116,718 | $ | 101,179 | ||||||||
Assumed premiums earned | 9,270 | 9,056 | 18,290 | 20,096 | ||||||||||||
Ceded premiums earned | (23,006 | ) | (17,867 | ) | (44,800 | ) | (35,006 | ) | ||||||||
Net premiums earned | 47,240 | 41,589 | 90,208 | 86,269 | ||||||||||||
Net investment income | 7,929 | 7,729 | 15,834 | 15,519 | ||||||||||||
Net realized gains | 509 | 281 | 1,520 | 237 | ||||||||||||
Fee income | 1,155 | 1,185 | 2,248 | 2,118 | ||||||||||||
Other income | 10 | 65 | 30 | 84 | ||||||||||||
Total revenues | 56,843 | 50,849 | 109,840 | 104,227 | ||||||||||||
Expenses: | ||||||||||||||||
Losses and loss adjustment expenses | 29,251 | 24,175 | 54,652 | 51,248 | ||||||||||||
Acquisition expenses | 8,995 | 8,873 | 18,825 | 19,077 | ||||||||||||
Other underwriting expenses | 9,849 | 8,470 | 19,676 | 17,316 | ||||||||||||
Interest expense | 685 | 810 | 1,444 | 1,551 | ||||||||||||
Corporate and other expenses | 751 | 743 | 1,466 | 1,425 | ||||||||||||
Total expenses | 49,531 | 43,071 | 96,063 | 90,617 | ||||||||||||
Earnings before income taxes | 7,312 | 7,778 | 13,777 | 13,610 | ||||||||||||
Income taxes | 950 | 766 | 851 | 974 | ||||||||||||
Net Earnings | $ | 6,362 | $ | 7,012 | $ | 12,926 | $ | 12,636 | ||||||||
Less: Net earnings attributable to the noncontrolling interest | 199 | 93 | 256 | 172 | ||||||||||||
Net earnings attributable to ASIH, Ltd. | $ | 6,163 | $ | 6,919 | $ | 12,670 | $ | 12,464 | ||||||||
Net earnings per share: | ||||||||||||||||
Basic | $ | 0.60 | $ | 0.67 | $ | 1.23 | $ | 1.21 | ||||||||
Diluted | $ | 0.58 | $ | 0.66 | $ | 1.19 | $ | 1.19 | ||||||||
Weighted average number of shares outstanding: | ||||||||||||||||
Basic | 10,246,100 | 10,302,511 | 10,288,718 | 10,294,390 | ||||||||||||
Diluted | 10,589,708 | 10,523,511 | 10,616,956 | 10,515,391 | ||||||||||||
Loss Ratio | 61.9 | % | 58.1 | % | 60.6 | % | 59.4 | % | ||||||||
Expense Ratio | 37.5 | % | 38.9 | % | 40.2 | % | 39.7 | % | ||||||||
GAAP combined ratio | 99.4 | % | 97.0 | % | 100.8 | % | 99.1 | % | ||||||||
Operating Earnings: | ||||||||||||||||
Net earnings attributable to ASIH, Ltd. | $ | 6,163 | $ | 6,919 | $ | 12,670 | $ | 12,464 | ||||||||
Less: Realized investment gains (losses), net of taxes | 431 | (25 | ) | 1,173 | (79 | ) | ||||||||||
Operating earnings | $ | 5,731 | $ | 6,944 | $ | 11,497 | $ | 12,543 |
At | ||||||||
BALANCE SHEET DATA: | 6/30/2010 | 12/31/2009 | ||||||
(unaudited) | ||||||||
Total investments | $ | 778,615 | $ | 750,425 | ||||
Total assets | 1,194,884 | 1,147,660 | ||||||
Unpaid losses and loss adjustment expenses | 647,932 | 616,444 | ||||||
Total liabilities | 890,615 | 872,148 | ||||||
Total shareholders’ equity | 304,269 | 275,512 | ||||||
Book value per share-diluted | $ | 28.32 | $ | 25.47 |
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American Safety Insurance Holdings, Ltd. and Subsidiaries
Segment Data (Unaudited)
(Dollars in thousands)
Three Months Ended June 30, 2010 | ||||||||||||||||||||
Insurance | Other | |||||||||||||||||||
E&S | ART | Reinsurance | Run-off | Total | ||||||||||||||||
Gross Premiums Written | $ | 36,477 | $ | 23,886 | $ | 12,215 | $ | - | $ | 72,578 | ||||||||||
Net Premiums Written | 29,475 | 17,346 | 10,945 | - | 57,766 | |||||||||||||||
Net Premiums Earned | 24,242 | 12,900 | 10,098 | - | 47,240 | |||||||||||||||
Underwriting Profit (Loss) | (1,396 | ) | 735 | 149 | (6 | ) | (518 | ) | ||||||||||||
Segment Fee Income | 203 | 873 | 55 | 24 | 1,155 | |||||||||||||||
Other Fee Income | 30 | 30 | ||||||||||||||||||
Investment Income | 5,385 | 1,139 | 1,178 | 227 | 7,929 | |||||||||||||||
Pre-tax Operating Income | 4,192 | 2,747 | 1,382 | 275 | 8,596 | |||||||||||||||
Realized Gains | 509 | |||||||||||||||||||
Interest and Holding Company Expenses | 1,793 | |||||||||||||||||||
Earnings Before Taxes | 7,312 | |||||||||||||||||||
Income Taxes | 950 | |||||||||||||||||||
Earnings After Taxes | 6,362 | |||||||||||||||||||
Earnings from Non-Controlling Interest | 199 | |||||||||||||||||||
Net Earnings Attributable to ASIH, Ltd. | $ | 6,163 | ||||||||||||||||||
Loss Ratio | 56.6 | % | 65.7 | % | 69.8 | % | NM | 61.9 | % | |||||||||||
Expense Ratio | 48.3 | % | 21.8 | % | 28.1 | % | NM | 37.5 | % | |||||||||||
Combined Ratio | 104.9 | % | 87.5 | % | 97.9 | % | NM | 99.4 | % |
Three Months Ended June 30, 2009 | ||||||||||||||||||||
Insurance | Other | |||||||||||||||||||
E&S | ART | Reinsurance | Run-off | Total | ||||||||||||||||
Gross Premiums Written | $ | 29,670 | $ | 17,228 | $ | 9,830 | - | $ | 56,728 | |||||||||||
Net Premiums Written | 22,903 | 10,154 | 9,848 | - | 42,905 | |||||||||||||||
Net Premiums Earned | 23,368 | 9,836 | 8,385 | - | 41,589 | |||||||||||||||
Underwriting Profit (Loss) | (694 | ) | 1,632 | 34 | - | 972 | ||||||||||||||
Segment Fee Income | 231 | 885 | 69 | - | 1,185 | |||||||||||||||
Other Fee Income | 84 | 84 | ||||||||||||||||||
Investment Income | 5,520 | 1,009 | 959 | 241 | 7,729 | |||||||||||||||
Pre-tax Operating Income | 5,057 | 3,526 | 1,062 | 325 | 9,970 | |||||||||||||||
Realized Gains | 281 | |||||||||||||||||||
Interest and Holding Company Expenses | 2,473 | |||||||||||||||||||
Earnings Before Taxes | 7,778 | |||||||||||||||||||
Income Taxes | 766 | |||||||||||||||||||
Earnings After Taxes | 7,012 | |||||||||||||||||||
Earnings from Non-Controlling Interest | 93 | |||||||||||||||||||
Net Earnings Attributable to ASIH, Ltd. | $ | 6,919 | ||||||||||||||||||
Loss Ratio | 58.3 | % | 51.6 | % | 65.4 | % | NM | 58.1 | % | |||||||||||
Expense Ratio | 43.7 | % | 22.8 | % | 33.4 | % | NM | 38.9 | % | |||||||||||
Combined Ratio | 102.0 | % | 74.4 | % | 98.8 | % | NM | 97.0 | % |
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American Safety Insurance Holdings, Ltd. and Subsidiaries
Segment Data (Unaudited)
(Dollars in thousands)
Six Months Ended June 30, 2010 | ||||||||||||||||||||
Insurance | Other | |||||||||||||||||||
E&S | ART | Reinsurance | Run-off | Total | ||||||||||||||||
Gross Premiums Written | $ | 66,106 | $ | 42,119 | $ | 23,670 | $ | - | $ | 131,895 | ||||||||||
Net Premiums Written | 53,828 | 31,438 | 21,281 | - | 106,457 | |||||||||||||||
Net Premiums Earned | 46,394 | 24,064 | 19,750 | - | 90,208 | |||||||||||||||
Underwriting Profit (Loss) | (3,917 | ) | 746 | 905 | (7 | ) | (2,273 | ) | ||||||||||||
Segment Fee Income | 349 | 1,704 | 171 | 24 | 2,248 | |||||||||||||||
Other Fee Income | 30 | 30 | ||||||||||||||||||
Investment Income | 10,834 | 2,268 | 2,266 | 466 | 15,834 | |||||||||||||||
Pre-tax Operating Income | 7,266 | 4,718 | 3,342 | 513 | 15,839 | |||||||||||||||
Realized Gains | 1,520 | |||||||||||||||||||
Interest and Holding Company Expenses | 3,582 | |||||||||||||||||||
Earnings Before Taxes | 13,777 | |||||||||||||||||||
Income Taxes | 851 | |||||||||||||||||||
Earnings After Taxes | 12,926 | |||||||||||||||||||
Earnings from Non-Controlling Interest | 256 | |||||||||||||||||||
Net Earnings Attributable to ASIH, Ltd. | $ | 12,670 | ||||||||||||||||||
Loss Ratio | 57.9 | % | 61.9 | % | 65.2 | % | NM | 60.6 | % | |||||||||||
Expense Ratio | 49.7 | % | 27.9 | % | 29.4 | % | NM | 40.2 | % | |||||||||||
Combined Ratio | 107.7 | % | 89.8 | % | 94.6 | % | NM | 100.8 | % |
Six Months Ended June 30, 2009 | ||||||||||||||||||||
Insurance | Other | |||||||||||||||||||
E&S | ART | Reinsurance | Run-off | Total | ||||||||||||||||
Gross Premiums Written | $ | 58,509 | $ | 30,884 | $ | 18,228 | $ | - | $ | 107,621 | ||||||||||
Net Premiums Written | 44,260 | 19,644 | 18,732 | - | 82,636 | |||||||||||||||
Net Premiums Earned | 46,433 | 20,496 | 19,340 | - | 86,269 | |||||||||||||||
Underwriting Profit (Loss) | (1,993 | ) | 2,494 | (359 | ) | - | 142 | |||||||||||||
Segment Fee Income | 408 | 1,481 | 229 | 2,118 | ||||||||||||||||
Other Fee Income | 84 | 84 | ||||||||||||||||||
Investment Income | 11,153 | 2,016 | 1,845 | 505 | 15,519 | |||||||||||||||
Pre-tax Operating Income | 9,568 | 5,991 | 1,715 | 589 | 17,863 | |||||||||||||||
Realized Gains | 237 | |||||||||||||||||||
Interest and Holding Company Expenses | 4,490 | |||||||||||||||||||
Earnings Before Taxes | 13,610 | |||||||||||||||||||
Income Taxes | 974 | |||||||||||||||||||
Earnings After Taxes | 12,636 | |||||||||||||||||||
Earnings from Non-Controlling Interest | 172 | |||||||||||||||||||
Net Earnings Attributable to ASIH, Ltd. | $ | 12,464 | ||||||||||||||||||
Loss Ratio | 58.6 | % | 52.3 | % | 68.8 | % | NM | 59.4 | % | |||||||||||
Expense Ratio | 44.8 | % | 28.3 | % | 31.9 | % | NM | 39.7 | % | |||||||||||
Combined Ratio | 103.4 | % | 80.6 | % | 100.7 | % | NM | 99.1 | % |
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