Exhibit 99.1
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Baldwin & Lyons, Inc.
Protective Insurance Company
Sagamore Insurance Company
B & L Insurance, Ltd. (Bermuda)
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1099 North Meridian Street
Indianapolis, IN 46204
(317) 636-9800
Subj: Baldwin & Lyons, Inc. January 28, 2004
Unaudited Preliminary Press Contact: G. Patrick Corydon
Fourth Quarter/Annual Report (317) 636-9800
BALDWIN & LYONS, INC. REPORTS RECORD OPERATING INCOME AND NET INCOME FOR THE
FOURTH QUARTER AND YEAR
INDIANAPOLIS, INDIANA, JANUARY 28, 2004--Baldwin & Lyons, Inc. (NASD:
BWINA, BWINB) today announced record fourth quarter operating income, defined as
net income excluding capital gains or losses, of $7.1 million, or $.48 per
share, compared to $6.7 million, or $.46 per share, for the fourth quarter of
2002. Net capital gains of $3.0 million, or $.21 per share, were realized in the
2003 period in contrast to net capital losses of $.52 per share for the prior
year quarter. Including net capital gains, fourth quarter net income was a
record $10.1 million, or $.69 per share, compared to a net loss of $.8 million,
or $.06 per share, for the fourth quarter of 2002.
For the year ended December 31, 2003, operating income was also a record at
$26.6 million, or $1.81 per share, compared to the previous record of $23.1
million, or $1.57 per share, for the prior year, a 15% increase. Net capital
gains of $6.5 million, or $.44 per share, were realized in the 2003 period
compared to net capital losses of $.73 per share a year earlier. Net income for
the current year totaled a record $33.1 million, or $2.25 per share, compared to
$12.4 million, or $.84 per share, for 2002.
Direct and assumed premiums written increased 17% from the fourth quarter of
2002 to $57.1 million with Protective and Sagamore Insurance Companies
registering gains of 17% and 15%, respectively. For the year, record direct and
assumed premiums written of $227.6 are up 31% with Protective and Sagamore
producing increases of 32% and 28%, respectively. Net premiums earned during the
current quarter totaled $40.0 million, an increase of 34% from the $29.8 million
reported for the fourth quarter of 2002. For the year, 2003 premiums earned
increased 40% to $146.2 million. Both the quarterly and annual premium earned
totals represent record production for the Company. All products have, without
exception, experienced double-digit growth in earned premium for the current
quarter and calendar year.
Pre-tax investment income continues to reflect historically low interest rates
as well as the Company's heavier weighting to tax-exempt bonds, resulting in
declines of 10% and 14% for the quarter and year-to-date compared to the 2002
periods. After tax investment income declined 6% for the quarter and 12%
year-to-date. After-tax yields for the fourth quarter were 14% below the prior
year level while average invested assets increased 11% quarter-to-quarter. For
the year, after-tax yields declined almost 17% while funds invested increased 7%
compared to 2002, resulting from almost $56 million in positive cash flow from
operations during 2003.
The consolidated combined ratio of 93.2% produced an underwriting gain of $2.7
million compared to a combined ratio of 92.6% and an underwriting gain of $2.2
million for the fourth quarter of 2002. The consolidated loss and loss expense
ratio increased from 66.5% in the prior year period to 67.3%. The consolidated
underwriting expense ratio of 25.9% compares to 26.1% for the 2002 fourth
quarter. For the year, the consolidated combined ratio for 2003 was 92.0%
compared to 91.3% for 2002. All divisions produced an underwriting profit in the
current quarter except for Sagamore's commercial division which is comprised of
small fleet trucking and workers' compensation products. For the year, all
products produced an underwriting profit with the exception of Sagamore's
workers' compensation product.
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Shareholders' equity increased $40.0 million (14%) from December 31, 2002,
despite the doubling of dividend payouts during the year to $9.5 million. Record
operating earnings and excellent results from equity investment activity,
including after-tax realized and unrealized gains of $6.5 million and $15
million, respectively, contributed to the book value per common share
outstanding of $22.00 at December 31, 2003, an increase of $2.57, or 13%, from
year end 2002. Including the regular and special cash dividends paid,
shareholders enjoyed a combined return of almost 17% for the year on book value.
CONFERENCE CALL INFORMATION:
Baldwin & Lyons, Inc. has scheduled a conference call for January 29, 2004 at
11:00 AM (EST) to discuss results for the fourth quarter ended December 31,
2003. To gain access to the webcast of this call, please log on to
http://www.vcall.com at least 15 minutes prior to the call to register and to
download the necessary audio software. The webcast will be archived on the site
until April 29, 2004. You may also access the webcast through a link on our
investor relations page at www.baldwinandlyons.com.
To participate via teleconference, investors may dial 877-780-2271 (U.S./Canada)
or 973-582-2737 (International or local) at least five minutes prior to the
beginning of the call. A replay of the call will be available through February
5, 2004 by calling 877-519-4471 or 973-341-3080 and referencing passcode
4407420.
Also available on our investor relations page are complete interim financial
statements, information regarding our business segments, and copies of our
filings with the Securities and Exchange Commission.
The company plans to mail its 2003 Annual Report to shareholders on April 1,
2004.
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FINANCIAL HIGHLIGHTS (UNAUDITED)
Baldwin & Lyons, Inc. and Subsidiaries
(IN THOUSANDS, EXCEPT PER SHARE DATA) Three Months Ended Twelve Months Ended
December 31 December 31
--------------------------- --------------------------
2003 2002 2003 2002
----------- ------------ ----------- -----------
Operating revenue $45,108 $35,005 $165,258 $124,575
Realized gains (losses) 4,655 (11,573) 9,990 (16,445)
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TOTAL REVENUE $49,763 $23,432 $175,248 $108,130
=========== ============ =========== ===========
Income before realized capital transactions $ 7,094 $ 6,676 $26,581 $23,055
Realized net gains (losses) on investments,
net of federal income taxes 3,026 (7,522) 6,494 (10,689)
----------- ------------ ----------- -----------
NET INCOME (LOSS) $10,120 ($ 846) $33,075 $12,366
=========== ============ =========== ===========
Per share data - diluted:
Average number of shares 14,762 14,654 14,698 14,714
Income before realized capital transactions $ .48 $ .46 $ 1.81 $ 1.57
Realized net gains (losses) on investments .21 (.52) .44 (.73)
----------- ------------ ----------- -----------
NET INCOME (LOSS) $ .69 ($ .06) $ 2.25 $ .84
=========== ============ =========== ===========
Dividends paid to shareholders $ .35 $ .08 $ .65 $ .32
Annualized return on average
shareholders' equity:
Operating income 10.2% 10.3% 9.9% 8.9%
Net income (loss) 14.6% (1.3%) 12.4% 4.8%
Consolidated combined ratio of
insurance subsidiaries (GAAP basis) 93.2% 92.6% 92.0% 91.3%
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NOTE: ALL DATA PRESENTED HAS BEEN RESTATED TO REFLECT A FIVE-FOR-FOUR STOCK
SPLIT ISSUED IN FEBRUARY, 2003
FORWARD-LOOKING STATEMENTS IN THIS REPORT ARE MADE PURSUANT TO THE SAFE HARBOR
PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. INVESTORS
ARE CAUTIONED THAT SUCH FORWARD-LOOKING STATEMENTS INVOLVE INHERENT RISKS AND
UNCERTAINTIES. READERS ARE ENCOURAGED TO REVIEW THE COMPANY'S ANNUAL REPORT FOR
ITS FULL STATEMENT REGARDING FORWARD-LOOKING INFORMATION