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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. October 25, 2004
Unaudited Third Quarter Report Press Contact: G. Patrick Corydon
(317) 636-9800
corydon@baldwinandlyons.com
FOR IMMEDIATE RELEASE
INDIANAPOLIS, INDIANA, OCTOBER 25, 2004--Baldwin & Lyons, Inc. (NASD:
BWINA, BWINB) today announced third quarter operating income, defined as net
income before capital gains or losses, of $3.4 million, or $.23 per share,
compared to $6.8 million, or $.46 per share, reported in 2003. Capital gains
were negligible during the current quarter compared to $1.3 million, or $.09 per
share in the prior year quarter. Including capital gains, third quarter net
income was $3.5 million, or $.23 per share, compared to $8.1 million, or $.55
per share, for the third quarter of 2003. The 2004 quarter showed the effect of
approximately $3.2 million ($.22 per share) in after-tax losses resulting from
the Company's participation in certain property catastrophe reinsurance pools
covering the recent hurricanes in Florida and other southeastern states.
For the nine months ended September 30, 2004, operating income totaled $17.9
million, or $1.21 per share, and compares to the previously established record
of $19.5 million, or $1.33 per share, reported a year earlier. Capital gains of
$5.3 million, or $.36 per share, were realized in the 2004 period compared to
gains of $3.5 million a year earlier. Including capital gains, net income for
the current year-to-date totaled $23.2 million, or $1.57 per share, just
surpassing the previous record of $23.0 million, or $1.56 per share, for the
2003 period.
Direct and assumed premiums written increased 10% from the third quarter of
2003. For the nine months, direct and assumed premiums written are up 11%. Net
premiums earned by the Company's insurance subsidiaries during the third quarter
totaled $44.4 million, an increase of 18% from the $37.5 million reported for
the third quarter of 2003. For the year-to-date, 2004 premiums earned increased
19% to a record $126.3 million.
Investment income for the third quarter reflected a 10% increase in average
funds invested from positive cash flow, a small decrease in replacement yields
on maturing instruments, the Company's continuing accumulation of very short
maturities, reflecting a belief of soon to be higher interest rates, and a shift
from taxable to non-taxable investments resulting in lower pre-tax yields.
After-tax investment income increased 3% for the quarter over the prior year and
was flat for the first nine months of 2004 versus 2003.
The consolidated combined ratio of 106.4% produced an underwriting loss of $2.8
million compared to a combined ratio of 91.4% and an underwriting gain of $3.2
million for the third quarter of 2003. The current quarter combined ratio was
adversely impacted by hurricane losses totaling $5.0 million, pre-tax, or 11.3
points of the consolidated combined ratio. Without hurricane losses, the
consolidated loss and loss expense ratio increased from 65.1% in the prior year
period to 71.9%. This increase was primarily the result of an increased severity
of losses in Protective's fleet trucking lines as well as high loss levels in
Sagamore's small business workers' compensation product line. The consolidated
underwriting expense ratio of 23.2% compares to 26.3% for the 2003 third
quarter. Year-to-date, the consolidated combined ratio for 2004 was 97.7%
compared to 91.5% for the first nine months of 2003. Without
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hurricane losses, the current year combined ratio is 93.7%. All products
produced an underwriting profit in the current nine month period except for
small business workers' compensation. The Company has announced that this
product line has been placed in runoff status with the discontinuance of new
business and the non-renewal of in force business at normal expiration.
The Company has paid substantially increased dividends of $1.05 per share in the
first nine months of 2004 and $1.40 in the past twelve months. The book value
per share of the Company's stock rose by 17 cents from year end and by $.81 in
the past twelve months, totaling $22.17 on September 30, 2004 with total
shareholders' equity of $326.7 million.
CONFERENCE CALL INFORMATION:
Baldwin & Lyons, Inc. has scheduled a conference call for October 26, 2004 at
12:00 AM (New York time) to discuss results for the third quarter ended
September 30, 2004. To gain access to the webcast of this call, please log on to
HTTP://VIAVID.NET/DCE.ASPX?SID=00001F18 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 January 26, 2005. 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 November
2, 2004 by calling 877-519-4471 or 973-341-3080 and referencing passcode
5245254.
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 Nine Months Ended
September 30 September 30
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2004 2003 2004 2003
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Operating revenue $49,094 $42,047 $ 140,883 $120,150
Realized gains 27 2,048 8,135 5,335
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TOTAL REVENUE $49,121 $44,095 $ 149,018 $125,485
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Income before realized capital transactions $ 3,442 $ 6,791 $ 17,935 $ 19,487
Realized net gains on investments,
net of federal income taxes 18 1,331 5,288 3,468
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NET INCOME $ 3,460 $ 8,122 $ 23,223 $ 22,955
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Per share data - diluted:
Average number of shares 14,785 14,742 14,795 14,698
Income before realized capital transactions $ .23 $ .46 $ 1.21 $ 1.33
Realized net gains on investments - .09 .36 .23
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NET INCOME $ .23 $ .55 $ 1.57 $ 1.56
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Dividends paid to shareholders $ .15 $ .10 $ 1.05 $ .30
Annualized return on average
shareholders' equity:
Operating income 4.8% 10.0% 8.4% 9.8%
Net income 4.8% 12.0% 10.9% 11.6%
Consolidated combined ratio of
insurance subsidiaries (GAAP basis) 106.4% 91.4% 97.7% 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.