Exhibit 99.1
[COMPANY LOGO]
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. July 27, 2004
Unaudited Second Quarter Report Press Contact: G. Patrick Corydon
(317) 636-9800
corydon@baldwinandlyons.com
BALDWIN & LYONS, INC. REPORTS RECORD SECOND QUARTER OPERATING INCOME
INDIANAPOLIS, INDIANA, JULY 27, 2004-- Baldwin & Lyons, Inc. (NASD:
BWINA, BWINB) today announced record second quarter operating income, defined as
net income before capital gains or losses, of $7.4 million, or $.50 per share,
compared to the previous second quarter record of $6.6 million, or $.45 per
share, reported in 2003. Capital gains of $1.5 million, or $.10 per share, were
realized during the current quarter and compare to capital gains of $3.7
million, or $.25 per share in the prior year quarter. Including capital gains,
second quarter net income was $8.9 million, or $.60 per share, compared to $10.3
million, or $.70 per share, for the second quarter of 2003.
For the six months ended June 30, 2004, operating income totaled $14.5 million,
also a record at $.98 per share, up 14% from the previous record of $12.7
million, or $.87 per share, reported a year earlier. Capital gains of $5.3
million, or $.36 per share, were realized in the 2004 period compared to capital
gains of $2.1 million a year earlier. Including capital gains, net income for
the current year-to-date totaled a record $19.8 million, or $1.34 per share,
eclipsing the previous record of $14.8 million, or $1.01 per share, for the
first six months of 2003.
Direct and assumed premiums written increased 12% from the second quarter of
2003 due primarily to a 20% increase in writings for Protective Insurance
Company. This increase was offset partially by a 4% decrease in writings for
Sagamore Insurance Company reflecting increased competition in both the personal
and commercial automobile markets. For the six months, direct and assumed
premiums written are up 12% with Protective and Sagamore producing increases of
17% and 4%, respectively. Net premiums earned by the Company's insurance
subsidiaries during the second quarter totaled $43.4 million, an increase of 17%
from the $37.0 million reported for the second quarter of 2003. For the
year-to-date, 2004 premiums earned increased 19% to $81.9 million.
Pre-tax investment income decreased 4% from the 2003 quarter due to a higher
concentration of funds in tax-exempt municipal bonds in the 2004 quarter as a
12% increase in average funds invested was offset by a similar decline in the
average after-tax yield from the prior year. This pattern was repeated from the
first quarter and, for the year-to-date, pre-tax investment income decreased 5%
while after tax income declined less than 2%.
The consolidated combined ratio of 93.4% produced an underwriting gain of $2.8
million compared to a combined ratio of 91.2% and an underwriting gain of $3.3
million for the second quarter of 2003. The consolidated loss and loss expense
ratio increased from 64.7% in the prior year period to 68.5% primarily as the
result of increased severity of losses in the Company's fleet trucking lines.
The consolidated underwriting expense ratio of 24.9% compares to 26.5% for the
2003 second quarter. Year-to-date, the consolidated combined ratio for 2004 was
92.9% compared to 91.5% for the first six months of 2003. All products produced
an underwriting profit in the current quarter and six month period except for
small business workers' compensation which continues with higher than acceptable
loss ratios.
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The Company has paid substantially increased dividends of 90 cents per share in
the first six months of 2004 and $1.35 in the past twelve months. The book value
per share of the Company's stock rose by 11 cents from year end and by $1.30 in
the past twelve months ending at $22.11 on June 30, 2004 with total
shareholders' equity of $326.4 million.
CONFERENCE CALL INFORMATION:
Baldwin & Lyons, Inc. has scheduled a conference call for July 28, 2004 at 11:00
AM (New York time) to discuss results for the second quarter ended June 30,
2004. To gain access to the webcast of this call, please log on to
HTTP://WWW.VIAVID.NET/DETAILPAGE.ASPX?SID=00001C84 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 October 28, 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 August 4,
2004 by calling 877-519-4471 or 973-341-3080 and referencing passcode 4880796.
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.
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FINANCIAL HIGHLIGHTS (UNAUDITED)
Baldwin & Lyons, Inc. and Subsidiaries
(IN THOUSANDS, EXCEPT PER SHARE DATA) Three Months Ended Six Months Ended
June 30 June 30
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2004 2003 2004 2003
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Operating revenue $48,214 $41,527 $91,789 $78,103
Realized gains 2,290 5,739 8,108 3,287
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TOTAL REVENUE $50,504 $47,266 $99,897 $81,390
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Income before realized capital transactions $ 7,376 $ 6,570 $14,493 $12,696
Realized net gains on investments,
net of federal income taxes 1,488 3,731 5,270 2,137
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NET INCOME $ 8,864 $10,301 $19,763 $14,833
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Per share data - diluted:
Average number of shares 14,795 14,715 14,803 14,672
Income before realized capital transactions $ .50 $ .45 $ .98 $ .87
Realized net gains on investments .10 .25 .36 .14
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NET INCOME $ .60 $ .70 $ 1.34 $ 1.01
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Dividends paid to shareholders $ .40 $ .10 $ .90 $ .20
Annualized return on average shareholders' equity:
Operating income 10.4% 10.0% 10.2% 9.7%
Net income 12.4% 15.7% 14.0% 11.4%
Consolidated combined ratio of
insurance subsidiaries (GAAP basis) 93.4% 91.2% 92.9% 91.5%
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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.