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EXHIBIT 99
MEADOWBROOK INSURANCE GROUP, INC.
(NYSE: MIG)
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CONTACT: Karen M. Spaun
Vice President, Investor Relations
(248) 204-8178
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MEADOWBROOK INSURANCE GROUP REPORTS
OPERATING RESULTS FOR THE FOURTH QUARTER
AND FULL YEAR 2000
$19 MILLION AFTER-TAX CHARGE FOR RESERVE STRENGTHENING AND
LOSS RELATED EXPENSES;
ANNUAL REVENUES UP 15%
SOUTHFIELD, MICHIGAN
FEBRUARY 15, 2001
Fourth Quarter Results:
Meadowbrook Insurance Group, Inc. (NYSE: MIG), reported a fourth quarter net
loss of $19.2 million or $2.26 per share. This loss reflects the impact of an
after tax charge of $19 million to strengthen reserves, primarily related to
discontinued programs. This charge to earnings is a direct result of a
comprehensive reserve review by management in consultation with two independent
national actuarial firms.
Responding to the fourth quarter loss, Meadowbrook President and Chief Operating
Officer Robert S. Cubbin stated: "Although we are disappointed with these
results, the actions taken to strengthen our reserves place us in a stronger
position to swiftly return to profitability."
Revenues:
Revenues decreased $8.5 million, or 16.7% to $42.2 million in the fourth quarter
of 2000 from $50.7 million during the same period of 1999. The change in
revenues reflects the impact of an increase in the purchase of reinsurance.
Excluding the impact of additional reinsurance, revenues would have increased
6.2% in the quarter.
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PRESS RELEASE PAGE 2
Expenses:
Incurred losses increased to $42.8 million in the fourth quarter of 2000 from
$29.7 million in 1999. This increase in incurred losses reflects the impact of
the reserve strengthening on the three most recent accident years. Discontinued
programs accounted for a disproportionate share of the loss in the quarter,
representing over 45% of the net incurred losses on 13% of net earned premium in
the quarter.
For the fourth quarter, other operating expenses increased 2.5% to $29.0 million
in 2000 from $28.3 million in 1999.
Commenting on Meadowbrook's outlook, Chairman and Chief Executive Officer Merton
J. Segal stated, "The aggressive program action plans and strategies commenced
in late 1998, coupled with the restructuring of our management team in the first
quarter of 1999, began the process of returning Meadowbrook to profitability.
Clearly, industry pricing in recent years was too low. The current results
validate our previous decision to discontinue those programs that did not meet
our profit criteria. The profitability of the continuing programs is already
stronger due to steadily achieved premium increases, improved market conditions,
decreased competition and heightened underwriting scrutiny."
FULL YEAR RESULTS:
Revenues:
Revenues increased $26.5 million, or 15.1%, to $201.5 million for the year ended
December 31, 2000, from $175.0 million for the comparable period in 1999.
Excluding the impact of the additional reinsurance purchased in the fourth
quarter, revenues would have increased 21.8%.
Expenses:
Incurred losses were $127.6 million for the year ended December 31, 2000,
compared to $95.4 million for the comparable period in 1999. This increase in
incurred losses reflects the impact of the reserve strengthening.
Other operating expenses increased $7.8 million, or 8.3%, to $101.5 million for
the year ended December 31, 2000 from $93.7 million for the comparable period in
1999.
Other matters:
Shareholders' equity was $86.0 million, or $10.10 per share, at December 31,
2000, compared to $100.4 million, or $11.80 per share, at December 31, 1999.
Total assets were $661.2 million at December 31, 2000, compared to $552.0
million at December 31, 1999.
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PRESS RELEASE PAGE 3
The Company has retained the investment banking firm of Cochran, Caronia & Co.
to assist in its capital raising initiatives to supplement the company's capital
structure.
On February 15, 2001, Meadowbrook's Board of Directors declared a quarterly
dividend of $0.03 per share. The dividend is payable on April 6, 2001, to
shareholders of record as of March 16, 2001.
A leader in the alternative risk market, Meadowbrook is a program-oriented risk
management company, specializing in alternative risk management solutions for
agents, brokers, and insureds of all sizes. Meadowbrook Insurance Group, Inc.
common shares are listed on the New York Stock Exchange under the symbol "MIG".
For further information, please visit Meadowbrook's corporate web site at
www.meadowbrook.com.
Certain statements made by Meadowbrook Insurance Group, Inc. in this release may
constitute forward-looking statements. Please refer to the Company's most recent
10-K and 10-Q for more information on risk factors. Actual results could differ
materially. These forward-looking statements involve risks and uncertainties
including, but not limited to the following: the frequency and severity of
claims; uncertainties inherent in reserve estimates; catastrophic events; a
change in the demand for, pricing of, availability or collectibility of
reinsurance; increased rate pressure on premiums; obtainment of certain rate
increases in current market conditions; investment rate of return; changes in
and adherence to insurance regulation; obtainment of certain processing
efficiencies; changing rates of inflation; and general economic conditions.
Meadowbrook is not under any obligation to (and expressly disclaims any such
obligation to) update or alter its forward-looking statements whether as a
result of new information, future events or otherwise.
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EARNINGS RELEASE PAGE 4
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MEADOWBROOK INSURANCE GROUP, INC.
FINANCIAL INFORMATION
SUPPLEMENT TO THE EARNINGS RELEASE
UNAUDITED BALANCE SHEET INFORMATION
DECEMBER 31, DECEMBER 31,
(IN THOUSANDS, EXCEPT PER SHARE DATA) 2000 1999
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BALANCE SHEET DATA
ASSETS
Cash and invested assets $240,096 $225,523
Premium & agents balances 79,121 85,707
Reinsurance recoverable 185,387 115,795
Deferred policy acquisition costs 6,624 10,030
Prepaid reinsurance premiums 55,854 42,073
Intangible assets 35,946 32,885
Other assets 58,155 39,964
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TOTAL ASSETS $661,183 $551,977
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LIABILITIES
Loss and loss adjustment
expense reserves $341,824 $229,244
Unearned premium reserves 94,142 90,095
Notes payable, bank 53,034 58,463
Other liabilities 86,208 73,767
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TOTAL LIABILITIES 575,208 451,569
STOCKHOLDERS' EQUITY
Common stockholders' equity 85,975 100,408
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TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $661,183 $551,977
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BOOK VALUE PER COMMON SHARE $ 10.10 $ 11.80
BOOK VALUE PER COMMON SHARE EXCLUDING
UNREALIZED GAIN/LOSS ON AVAILABLE FOR SALE
SECURITIES, NET OF DEFERRED TAXES $ 9.93 $ 12.11
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EARNINGS RELEASE PAGE 5
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MEADOWBROOK INSURANCE GROUP, INC.
FINANCIAL INFORMATION
SUPPLEMENT TO THE EARNINGS RELEASE
UNAUDITED INCOME STATEMENT INFORMATION
(IN THOUSANDS, EXCEPT FOR THE QUARTER FOR THE YEAR
Share & Per Share Data) ENDED DECEMBER 31, ENDED DECEMBER 31,
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SUMMARY DATA 2000 1999 2000 1999
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Gross premiums written $ 55,946 $ 61,968 $ 287,852 $ 230,474
Net premiums written 83 31,978 136,324 122,819
REVENUES
Net premiums earned $ 27,126 $ 36,424 $ 146,000 $ 124,906
Commissions and fees (net) 10,662 11,194 41,251 38,697
Net investment income 3,687 3,313 13,715 11,618
Net capital gains (losses) 745 (262) 540 (227)
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TOTAL REVENUES 42,220 50,669 201,506 174,994
EXPENSES
Net losses & loss adj. expenses 42,828 29,671 127,619 95,358
Salaries & employee benefits 11,429 10,897 43,038 42,473
Interest on notes payable 1,240 1,138 5,135 3,636
Other operating expenses 16,301 16,217 53,316 47,583
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TOTAL EXPENSES 71,798 57,923 229,108 189,050
LOSS BEFORE TAXES (29,578) (7,254) (27,602) (14,056)
Federal income tax benefit (10,378) (3,069) (10,129) (6,209)
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NET LOSS BEFORE CUMULATIVE EFFECT OF ACCOUNTING
CHANGE $ (19,200) $ (4,185) $ (17,473) $ (7,847)
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Cumulative effect of accounting for insuance related
assessments net of deferred taxes -- -- -- (1,706)
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NET LOSS $ (19,200) $ (4,185) $ (17,473) $ (9,553)
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DILUTED EARNINGS PER COMMON SHARE
Before cumulative effect of accounting change $ (2.26) $ (0.49) $ (2.05) $ (0.91)
Cumulative effect of accounting change $ -- $ -- $ -- $ (0.20)
Net loss $ (2.26) $ (0.49) $ (2.05) $ (1.11)
Net operating loss $ (2.32) $ (0.47) $ (2.09) $ (0.90)
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 8,512,008 8,511,655 8,511,834 8,588,216
GAAP RATIOS:
Loss & LAE Ratio 162.8% 83.8% 90.9% 79.0%
Other Underwriting Expense Ratio 48.4% 36.6% 35.9% 34.5%
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GAAP Combined Ratio 211.2% 120.4% 126.8% 113.5%
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