Exhibit 99.1
National Atlantic Reports Fourth Quarter and Year End 2007 Financial Results
Year-End Highlights:
- Higher losses in bodily injury claims during the third and fourth quarters
- Total revenues up 4.8% for the year ended December 31, 2007
- Homeowners premiums up 27.2%
- Commercial lines premiums up 21.5%
FREEHOLD, N.J.--(BUSINESS WIRE)--National Atlantic Holdings Corporation (Nasdaq: NAHC), a provider of specialized property-casualty insurance products and related insurance services based in Freehold, N.J., today announced financial results for the fourth quarter and full year ended December 31, 2007.
The net loss for the three months ended December 31, 2007 was ($2.1) million or ($0.19) per share (diluted), compared with net income of $3.0 million or $0.26 per share (diluted) for the same period in 2006. The net loss for the full year ended December 31, 2007 was ($6.2) million or ($0.56) per share (diluted), compared with net income of $14.4 million or $1.26 per share (diluted) for the same period in 2006.
Diluted earnings per share for the three months ended December 31, 2007 were based on weighted average common shares of 11,013,894 compared with weighted average common shares (diluted) of 11,408,997 for the three months ended December 31, 2006. Diluted earnings per share for the full year ended December 31, 2007 were based on weighted average common shares of 11,078,064 compared with weighted average common shares (diluted) of 11,450,086 for the full year ended December 31, 2006. For the three months ended December 31, 2007, the effect of 92,630 stock options were excluded from the computation of diluted earnings per share because they would have been anti-dilutive. For the year ended December 31, 2007, the effect of 122,942 stock options were excluded from the computation of diluted earnings per share because they would have been anti-dilutive. Book value per share at December 31, 2007 decreased $0.47 to $13.10 from $13.57 at December 31, 2006.
Total revenues for the three months ended December 31, 2007 increased by $2.0 million, or 4.4%, to $47.2 million from $45.2 million for the three months ended December 31, 2006. Total revenues for the year ended December 31, 2007 increased by $8.4 million, or 4.8%, to $184.3 million from $175.9 million for year ended December 31, 2006.
“Our disappointing results for the year reflect an increase in bodily injury claims reserves,” said James V. Gorman, Chairman and Chief Executive Officer. “We have taken steps to correct the lack of profitability, including restructuring management, increasing product prices and improving the compliance with operating procedures within our bodily injury claims unit,” he said. “We believe we have put effective remedies in place and are focused upon restoring our profitability in 2008.”
Premiums
For the three months ended December 31, 2007, our direct written premiums increased by $1.9 million, or 5.3% to $37.5 million from $35.6 million in the comparable period in 2006. Direct written premiums for the year ended December 31, 2007 increased by $7.6 million, or 4.4%, to $178.7 million from $171.1 million in the comparable 2006 period.
Net written premiums for the three months ended December 31, 2007 increased by $1.5 million, or 4.5%, to $34.7 million from $33.2 million in the comparable 2006 period. Net written premiums for the year ended December 31, 2007 increased by $5.1 million, or 3.2%, to $166.2 million from $161.1 million in the comparable 2006 period.
Net premiums earned for the three months ended December 31, 2007 increased by $2.2 million, or 5.4%, to $42.6 million from $40.4 million in the comparable 2006 period. Net premiums earned for the year ended December 31, 2007 increased by $7.8 million, or 5.0%, to $165.2 million from $157.4 million in the comparable 2006 period.
Line of Business Data
The table below shows our revenues in each of our lines of business for the periods indicated and the year-over-year percentage changes.
Direct Written Premiums by Line of Business (in thousands) |
| | |
| | For the three months ended December 31, |
| Direct Written Premiums | | | 2007 | | | 2006 | | Increase/ (Decrease) | | Change % |
| | ($ in thousands) |
| | | | | | | | |
| Private Passenger Automobile | | $ | 21,613 | | $ | 20,980 | | $ | 633 | | 3.0% |
| Homeowners | | | 8,820 | | | 7,714 | | | 1,106 | | 14.3% |
| Commercial Lines | | | 7,102 | | | 6,892 | | | 210 | | 3.0% |
| | $ | 37,535 | | $ | 35,586 | | $ | 1,949 | | 5.5% |
| | For the years ended December 31, |
| Direct Written Premiums | | | 2007 | | | 2006 | | Increase/ (Decrease) | | Change % |
| | ($ in thousands) |
| | | | | | | | |
| Private Passenger Automobile | | $ | 104,471 | | $ | 111,379 | | $ | (6,908) | | (6.2%) |
| Homeowners | | | 37,244 | | | 29,273 | | | 7,971 | | 27.2% |
| Commercial Lines | | | 36,964 | | | 30,417 | | | 6,547 | | 21.5% |
| | $ | 178,679 | | $ | 171,069 | | $ | 7,610 | | 4.4% |
Net Earned Premiums by Line of Business (in thousands) |
| | |
| | For the three months ended December 31, |
| Net Earned Premiums | | | 2007 | | | 2006 | | Increase/ (Decrease) | | Change % |
| | ($ in thousands) |
| | | | | | | | |
| Private Passenger Automobile | | $ | 25,950 | | $ | 26,879 | | $ | (929) | | (3.5%) |
| Homeowners | | | 8,306 | | | 6,553 | | | 1,753 | | 26.8% |
| Commercial Lines | | | 8,347 | | | 6,930 | | | 1,417 | | 20.4% |
| | $ | 42,603 | | $ | 40,362 | | $ | 2,241 | | 5.6% |
| | For the years ended December 31, |
| Net Earned Premiums | | | 2007 | | | 2006 | | Increase/ (Decrease) | | Change % |
| | ($ in thousands) |
| | | | | | | | |
| Private Passenger Automobile | | $ | 103,717 | | $ | 109,855 | | $ | (6,138) | | (5.6%) |
| Homeowners | | | 30,271 | | | 21,264 | | | 9,007 | | 42.4% |
| Commercial Lines | | | 31,232 | | | 26,235 | | | 4,997 | | 19.0% |
| | $ | 165,220 | | $ | 157,354 | | $ | 7,866 | | 5.0% |
Investment Income
Investment income for the three months ended December 31, 2007 increased by $0.2 million, or 4.8%, to $4.4 million from $4.2 million in the comparable 2006 period. Investment income for the year ended December 31, 2007 increased by $1.2 million, or 7.5%, to $17.3 million from $16.1 million in the comparable 2006 period. The increase was primarily due to an increase in average invested assets. Average invested assets for the year ended December 31, 2007 increased $11.6 million, or 3.7%, to $323.1 million from $311.4 million for the same period in the prior year.
Loss and loss adjustment expenses incurred
Losses and loss adjustment expenses incurred for the three months ended December 31, 2007 increased by $13.3 million, or 47.7%, to $41.2 million from $27.9 million in the comparable 2006 period. This increase can be attributed to an increase in claim frequency in private passenger automobile coverage and strengthening of prior year reserves by $7.6 million. As a percentage of net earned premiums, losses and loss adjustment expenses incurred for the three months ended December 31, 2007 were 96.7% compared to 69.1% for the three months ended December 31, 2006.
Loss and loss adjustment expenses incurred for the year ended December 31, 2007 increased by $41.3 million, or 39.8%, to $145.1 million from $103.8 million in the comparable 2006 period. This increase can be attributed to an increase in claim frequency in private passenger automobile coverage and strengthening of prior year reserves by $19.6 million. As a percentage of net earned premiums, losses and loss adjustment expenses incurred for the year ended December 31, 2007 were 87.8% compared to 66.0% for the year ended December 31, 2006.
Conference Call Details
The Company will host an investor conference call the morning of March 17, 2008 at 10:00 a.m. Eastern Time (ET). Following a brief presentation by management, participants will have the opportunity to ask questions.
The conference call can be accessed by dialing 888-663-2230 (U.S. callers) or 913-312-1448 (international callers). Those who intend to participate in the teleconference should register at least ten minutes in advance to ensure access to the call. The conference call can also be accessed via webcast through the Company’s web site at www.national-atlantic.com.
The teleconference will be recorded and a replay will be available from 1:00 p.m. ET on Monday, March 17, 2009 until 1:00 p.m. ET on Friday, March 21, 2008. To access the replay by telephone, dial 888-203-1112 (U.S. callers) or 719-457-0820 (international callers) and specify passcode 3969148. The teleconference will also be archived on the Investor Relations section of NAHC's website at www.national-atlantic.com.
About NAHC:
National Atlantic Holdings Corporation (NAHC) and its subsidiaries provide property and casualty insurance and insurance-related services to individuals, families and businesses.
The Company's insurance products are designed to attract a broad spectrum of policyholders for their private passenger automobile, homeowners, and personal excess ("umbrella") and specialty property liability coverage. For businesses, the Company offers a range of commercial insurance products, including commercial property, commercial general liability, and business auto, as well as claims administrative services to self-insured corporations.
National Atlantic distributes its products exclusively through independent insurance agents, known as "Partner Agents," who are required to become shareholders in National Atlantic in order to represent the Company as an agent. The Company offers insurance products through its subsidiaries, Proformance Insurance Company and Mayfair Reinsurance Company, and insurance-related services through Riverview Professional Services and the National Atlantic Insurance Agency.
Safe Harbor Statement Regarding Forward-Looking Statements
Management believes certain statements in this press release may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are necessarily based on estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and risks, many of which are subject to change. As a consequence, current plans, anticipated actions and future financial condition and results may differ from those expressed in any forward-looking statements made by or on behalf of the Company. Additionally, forward-looking statements speak only as of the date they are made, and we undertake no obligation to release publicly the results of any future revisions or updates we may make to forward-looking statements to reflect new information or circumstances after the date hereof or to reflect the occurrence of future events.
NATIONAL ATLANTIC HOLDINGS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share data) |
| | | | |
| | December 31, | | December 31, |
| | | 2007 | | | 2006 |
| Investments: | | | | |
| Fixed maturities held-to-maturity (fair value at December 31, 2007 and 2006 | | $ | 42,130 | | $ | 42,168 |
| was $41,913 and $41,401, respectively) | | | | |
| Fixed maturities available-for-sale (amortized cost at December 31, 2007 and 2006 | | | 270,519 | | | 273,724 |
| was $269,784 and $275,810, respectively) | | | | |
| Equity securities (cost at December 31, 2007 and 2006 was $1,014 and $2,288, respectively) | | | 1,012 | | | 2,427 |
| Short-term investments (cost at December 31, 2007 and 2006, was $457 and | | | 457 | | | 453 |
| $453, respectively) | | | | |
| | | | |
| Total investments | | | 314,118 | | | 318,772 |
| Cash and cash equivalents | | | 28,098 | | | 26,288 |
| Accrued investment income | | | 3,950 | | | 4,122 |
| Premiums receivable | | | 47,753 | | | 49,976 |
| Reinsurance recoverables and receivables | | | 20,831 | | | 26,914 |
| Deferred acquisition costs | | | 18,934 | | | 18,601 |
| Property and equipment - net | | | 3,143 | | | 1,988 |
| Income taxes recoverable | | | 8,455 | | | - |
| Other assets | | | 4,393 | | | 6,169 |
| | | | |
| Total assets | | $ | 449,675 | | $ | 452,830 |
| | | | |
| Liabilities and Stockholders' Equity: | | | | |
| | | | |
| Liabilities: | | | | |
| Unpaid losses and loss adjustment expenses | | $ | 197,105 | | $ | 191,386 |
| Unearned premiums | | | 86,823 | | | 85,523 |
| Accounts payable and accrued expenses | | | 2,446 | | | 2,420 |
| Deferred income taxes | | | 10,829 | | | 9,967 |
| Income taxes payable | | | - | | | 3,026 |
| Other liabilities | | | 8,296 | | | 9,620 |
| | | | |
| Total liabilities | | | 305,499 | | | 301,942 |
| | | | |
| Commitments and Contingencies: | | | - | | | - |
| Stockholders' equity: | | | | |
| Common Stock, no par value (50,000,000 shares authorized; 11,425,790 issued, 11,007,487 outstanding | | | 97,820 | | | 97,570 |
| as of December 31, 2007; 11,288,190 issued, 11,121,941 outstanding as of December 31, 2006, respectively) | | | | |
| Retained earnings | | | 50,541 | | | 56,735 |
| Accumulated other comprehensive income (loss) | | | 107 | | | (1,694) |
| Common stock held in treasury, at cost (418,303 and 166,249 shares held as of December 31, 2007 | | | | |
| and 2006, respectively) | | | (4,292) | | | (1,723) |
| | | | |
| Total stockholders' equity | | | 144,176 | | | 150,888 |
| | | | |
| Total liabilities and stockholders' equity | | $ | 449,675 | | $ | 452,830 |
NATIONAL ATLANTIC HOLDINGS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) |
| | |
| | For the years ended December 31, |
| | | | | | |
| | | 2007 | | | 2006 | | | 2005 |
| | | | | | |
| Revenue: | | | | | | |
| Net premiums earned | | $ | 165,220 | | $ | 157,354 | | $ | 172,782 |
| Net investment income | | | 17,276 | | | 16,082 | | | 12,403 |
| Net realized investment gains | | | 72 | | | 979 | | | 411 |
| Other income | | | 1,703 | | | 1,441 | | | 1,745 |
| | | | | | |
| Total revenue | | | 184,271 | | | 175,856 | | | 187,341 |
| | | | | | |
| | | | | | |
| Costs and Expenses: | | | | | | |
| Loss and loss adjustment expenses incurred | | | 145,085 | | | 103,824 | | | 132,794 |
| Underwriting, acquisition and insurance related expenses | | | 49,652 | | | 48,275 | | | 42,264 |
| Other operating and general expenses | | | 539 | | | 2,268 | | | 3,989 |
| | | | | | |
| Total costs and expenses | | | 195,276 | | | 154,367 | | | 179,047 |
| | | | | | |
| (Loss) income before income taxes | | | (11,005) | | | 21,489 | | | 8,294 |
| (Benefit) provision for income taxes | | | (4,811) | | | 7,107 | | | 1,858 |
| | | | | | |
| Net (Loss) Income | | $ | (6,194) | | $ | 14,382 | | $ | 6,436 |
| | | | | | |
| | | | | | |
| Net (loss) income per share Common Stock - Basic | | $ | (0.56) | | $ | 1.28 | | $ | 0.70 |
| Net (loss) income per share Common Stock - Diluted | | $ | (0.56) | | $ | 1.26 | | $ | 0.68 |
NATIONAL ATLANTIC HOLDINGS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands) |
| | | |
| | For the years ended December 31, |
| | | | | | |
| | 2007 | | 2006 | | 2005 |
| | | | | | |
| Net (Loss) Income | | $ | (6,194) | | $ | 14,382 | | $ | 6,436 |
| | | | | | |
| Other comprehensive income (loss) - net of tax: | | | | | | |
| Net holding gains (losses) arising during the period | | | 1,388 | | | (462) | | | (1,806) |
| Reclassification adjustment for realized losses | | | | | | |
| included in net income | | | 354 | | | 311 | | | 22 |
| Amortization of unrealized loss recorded on transfer | | | | | | |
| of fixed income securities to held-to-maturity | | | 59 | | | 59 | | | - |
| | | | | | |
| Total other comprehensive income (loss) | | | 1,801 | | | (92) | | | (1,784) |
| | | | | | |
| Comprehensive (Loss) Income | | $ | (4,393) | | $ | 14,290 | | $ | 4,652 |
EARNINGS PER SHARE AND BOOK VALUE CALCULATIONS |
| | | | |
| | For the three months ended December 31, | | For the years ended December 31, |
| | 2007 | | 2006 | | 2007 | | 2006 |
| | | | | | | | |
| Net Income applicable to common stockholders | | $ | (2,134,916) | | $ | 2,989,150 | | $ | (6,194,001) | | $ | 14,382,394 |
| | | | | | | | |
| Weighted average common shares - basic | | | 11,013,894 | | | 11,163,983 | | | 11,078,064 | | | 11,213,463 |
| Effect of dilutive securities: | | | | | | | | |
| Options | | | - | | | 245,014 | | | - | | | 236,623 |
| | | | | | | | |
| Weighted average common shares - diluted | | | 11,013,894 | | | 11,408,997 | | | 11,078,064 | | | 11,450,086 |
| | | | | | | | |
| Basic Earnings Per Share | | $ | (0.19) | | $ | 0.27 | | $ | (0.56) | | $ | 1.28 |
| | | | | | | | |
| Diluted Earnings per Share | | $ | (0.19) | | $ | 0.26 | | $ | (0.56) | | $ | 1.26 |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | Book Value | | Net Tangible Book Value |
| | As of | | As of | | As of | | As of |
| | December 31, | | December 31, | | December 31, | | December 31, |
| | 2007 | | 2006 | | 2007 | | 2006 |
| | | | | | | | |
| Total Shareholders Equity | | $ | 144,176,394 | | $ | 150,888,328 | | $ | 144,176,394 | | $ | 150,888,328 |
| Less: Deferred Acquisition Cost Asset (DAC) | | | - | | | - | | | (18,933,568) | | | (18,601,390) |
| Shareholders Equity - net | | | 144,176,394 | | | 150,888,328 | | | 125,242,826 | | | 132,286,938 |
| Total Common Shares Outstanding | | | 11,007,487 | | | 11,121,941 | | | 11,007,487 | | | 11,121,941 |
| | | | | | | | |
| | | | | | | | |
| Book Value | | $ | 13.10 | | $ | 13.57 | | $ | 11.38 | | $ | 11.89 |
For the three months ended December 31, 2007, the effect of 92,630 stock options were excluded from the computation of diluted earnings per share because they would have been anti-dilutive. For the year ended December 31, 2007, the effect of 122,942 stock options were excluded from the computation of diluted earnings per share because they would have been anti-dilutive.
CONTACT:
National Atlantic Holdings Corporation
Frank J. Prudente, 732-665-1145
Executive Vice President, Treasurer and
Chief Financial Officer
