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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. November 2, 2006
Unaudited Third Quarter Report Press Contact: G. Patrick Corydon
(317) 636-9800
corydon@baldwinandlyons.com
BALDWIN & LYONS ANNOUNCES RECORD OPERATING INCOME FOR QUARTER AND NINE
MONTHS AND RECORD YEAR-TO-DATE NET
INDIANAPOLIS, INDIANA, NOVEMBER 2, 2006--Baldwin & Lyons, Inc. (Nasdaq:
BWINA, BWINB) today announced record third quarter operating income, defined as
net income before investment gains or losses, of $8.0 million, or $.53 per
share, compared to an operating loss of $.8 million, or $.05 per share, reported
in 2005. The 2005 period was adversely impacted by losses, totaling $.57 per
share after tax, from hurricanes Katrina and Rita. Investment gains totaled $1.9
million, or $.12 per share, during the current quarter and compare to investment
gains of $5.4 million, or $.36 per share, in the prior year quarter. Including
investment gains, third quarter net income was $9.9 million, or $.65 per share,
compared to $4.7 million, or $.31 per share, for the third quarter of 2005.
For the nine months ended September 30, 2006, operating income totaled a record
$21.1 million, or $1.41 per share, compared to $13.5 million, or $.91 per share,
reported a year earlier. Investment gains totaled $5.7 million, or $.38 per
share, in the 2006 period compared to investment gains of $10.7 million a year
earlier. Including investment gains, net income for the current year-to-date
totaled a record $26.9 million, or $1.79 per share, compared to the previous
record of $24.2 million, or $1.63 per share, for the first nine months of 2005.
Net premium earned by the Company's insurance subsidiaries declined by 15% from
$49.8 million during the third quarter of 2005 to $42.3 million for the third
quarter of 2006. For the nine months, earned premium decreased by 9% to $127.7
million. Premium earned was level with the second quarter as the Company's two
largest products, fleet trucking and non-standard automobile, continue to see
pricing pressure.
The Company's quarterly consolidated combined ratio decreased to 89.1%,
producing underwriting profits of $4.6 million, compared to last year's third
quarter ratio of 114.0% and an underwriting loss of $7.0 million. The 2005
quarter was adversely impacted by $13.0 million in pre-tax hurricane losses.
Year-to-date, the consolidated combined ratio for 2006 was 90.8% compared to
98.0%, including hurricane losses which added 9.3 points to the loss ratio, for
the first nine months of 2005.
Gary W. Miller, CEO of the Company, stated, "While pleased with record operating
results, we are not pleased with the decline in premiums as commercial auto
pricing has trended down, often past the expected breakeven point. As a result,
we have lost some business to those that must have a more optimistic view of
future loss costs".
Investment income continues to improve as the fixed income portfolio is
increasingly benefited by higher yields. Pretax investment income was 38% higher
for the third quarter and 36% higher for the nine months of this year. After tax
investment income improved even more, at 42% and 38%, respectively, as more of
the fixed income portfolio has been allocated to municipal bonds this year.
After tax investment income also improved over 7% from the second quarter this
year. Net investment gains before tax were $3.0 million for the current quarter
compared to $8.3 million for the 2005 quarter. Year-to-date, net investment
gains were $8.8 million compared to $16.5 million for 2005 with the difference
attributable to extraordinarily favorable performance by our limited partnership
investments during 2005.
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Shareholders' equity increased by $10.7 million during the quarter and has
increased $4.3 million (1.3%) from December 31, 2005 after regular and extra
dividend payouts for the year-to-date totaling $31.6 million, or $2.10 per
share. The book value per share of the Company's stock was $23.20 on September
30, 2006, up $1.99 before dividends and down $.11 after dividends from December
31, 2005.
CONFERENCE CALL INFORMATION:
Baldwin & Lyons, Inc. has scheduled a conference call for November 2, 2006 at
11:00 AM (New York time) to discuss results for the third quarter ended
September 30, 2006. To gain access to the webcast of this call, please log on to
HTTP://VIAVID.NET/DCE.ASPX?SID=000035DE 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 February 2, 2007. 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 877-704-5386 (U.S./Canada)
or 913-312-1302 (International or local) at least five minutes prior to the
beginning of the call. A replay of the call will be available through November
9, 2006 by calling 888-203-1112 or 719-457-0820 and referencing passcode
3544744.
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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2006 2005 2006 2005
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Operating revenue $48,891 $ 55,227 $ 147,279 $ 155,853
Net investment gains 2,958 8,346 8,837 16,470
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TOTAL REVENUE $51,849 $ 63,573 $ 156,116 $ 172,323
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Operating income (loss) $ 7,956 ($ 773) $ 21,118 $ 13,492
Net investment gains,
net of federal income taxes 1,923 5,424 5,744 10,705
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NET INCOME $ 9,879 $ 4,651 $ 26,862 $ 24,197
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Per share data - diluted:
Average number of shares 15,130 14,873 15,013 14,854
Operating income (loss) $ .53 ($ .05) $ 1.41 $ .91
Net investment gains .12 .36 .38 .72
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NET INCOME $ .65 $ .31 $ 1.79 $ 1.63
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Dividends paid to shareholders $ .25 $ .35 $ 2.10 $ .70
Annualized return on average shareholders' equity:
Operating income (loss) 10.5% (1.1%) 9.2% 6.3%
Net income 13.1% 6.3% 11.7% 11.1%
Consolidated combined ratio of
insurance subsidiaries (GAAP basis) 89.1% 114.0% 90.8% 98.0%
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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.