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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. May 1, 2006
Unaudited First Quarter Report Press Contact: G. Patrick Corydon
(317) 636-9800
corydon@baldwinandlyons.com
BALDWIN & LYONS ANNOUNCES
RECORD QUARTERLY NET INCOME
INDIANAPOLIS, INDIANA, MAY 1, 2006--Baldwin & Lyons, Inc. (NASD: BWINA,
BWINB) reported its highest ever quarterly net income of $11.6 million, or $.78
per share, aided by strong investment gains. This compares to the year earlier
first quarter net income of $10.3 million, or $.70 per share. Operating income,
defined as net income before capital gains and losses, was $7.0 million, or $.47
per share, compared to $7.1 million, or $.48 per share, for the first quarter of
2005. Net investment gains totaled $4.6 million, or $.31 per share, during the
current quarter compared to gains of $3.2 million, or $.22 per share, in the
prior year quarter.
Net premium written for the current quarter totaled $51.3 million, level with
the first quarter of 2005 and 18% higher than the fourth quarter of 2005. The
increase in premium written from the previous quarter reflects normal seasonal
fluctuations in the private passenger products and a 70% increase in premium
written by the small fleet trucking division. Net premiums earned during the
current quarter totaled $43.2 million, down 7% from the $46.7 million reported
for the first quarter of 2005. Net premiums earned from the Company's two
largest product groups, fleet trucking and private passenger automobile, each
declined from prior year levels. Competitive pressures in both divisions have
resulted in the loss of business. Gary Miller, C.E.O., noted that the Company's
long-standing policy of pricing to profitability and knowing when to stop when
competitive pricing leaves little chance of profit is reflected in the first
quarter premium earned. The discontinuance of the small business workers'
compensation program late in 2004 also contributed to the drop in net premiums
earned when compared to the prior year first quarter. These decreases were
partially offset by increases of 32% and 27% for the Company's reinsurance
assumed and small fleet trucking products, respectively. Increases in premium
assumed resulted primarily from rate increases related to the renewal of
programs effective January 1, 2006.
Pre-tax investment income increased 38% from the first quarter of last year.
Continuing positive cash flow created more funds to invest and short-term yields
have increased nearly two-fold during the past year.
The consolidated combined ratio of 89.3% produced an underwriting gain of $4.6
million compared to a combined ratio of 90.6% and an underwriting gain of $4.4
million for the first quarter of 2005. The consolidated loss and loss expense
ratio decreased slightly from 67.8% in the prior year period to 67.0%. The
consolidated underwriting expense ratio of 22.3% compares to 22.8% for the 2005
first quarter. Including fee income, the consolidated combined ratio was 86.8%
with all products generating underwriting profits in the current year's first
quarter.
Net investment gains for the first quarter of 2006 were $7.0 million compared to
$4.9 million for the 2005 first quarter. Current quarter investment gains
include approximately $4.7 million attributable to the increase in the fair
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value of limited partnership investments held by the Company. Of this total, an
estimated $4.1 million is composed of unrealized gains at the partnership level;
however, applicable accounting pronouncements require the Company, as investor,
to record the increase in unrealized limited partnership appreciation as part of
revenue and income. First quarter, 2005 investment gains included $2.8 million
from limited partnership investments.
Shareholders' equity increased $9.4 million (2.7%) from December 31, 2005, after
cash dividends paid during the quarter totaling $5.2 million ($.35 per share).
Book value per common share outstanding was $23.89 at March 31, 2006, an
increase of $.58 from year end 2005.
CONFERENCE CALL INFORMATION:
Baldwin & Lyons, Inc. has scheduled a conference call for May 1, 2006 at 11:00
AM ET (New York Time) to discuss results for the first quarter ended March 31,
2006. To gain access to the webcast of this call, please log on to
http://viavid.net/dce.aspx?sid=00002F31 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 August 1, 2006.
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 800-811-8824 (U.S./Canada)
or 913-981-4903 (International or local) at least five minutes prior to the
beginning of the call. A replay of the call will be available through May 8,
2006 by calling 888-203-1112 or 719-457-0820 and referencing passcode 4729691.
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
MARCH 31,
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2006 2005
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Operating revenue $49,641 $ 51,803
Net investment gains 7,014 4,936
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TOTAL REVENUE $56,655 $ 56,739
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Operating income $ 6,997 $ 7,138
Net investment gains,
net of federal income taxes 4,559 3,208
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NET INCOME $11,556 $ 10,346
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Per share data - diluted:
Average number of shares 14,889 14,845
Operating income $ .47 $ .48
Net investment gains .31 .22
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NET INCOME $ .78 $ .70
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Dividends paid to shareholders $ .35 $ .25
Annualized return on average shareholders' equity:
Operating income 9.1% 10.0%
Net income 15.0% 14.5%
Consolidated combined ratio of insurance
subsidiaries (GAAP basis):
Without fee income 89.3% 90.6%
Including fee income 86.8% 88.2%
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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.