Exhibit 99.1
National Atlantic Reports Third Quarter 2006 Financial Results
FREEHOLD, N.J.--(BUSINESS WIRE)--Nov. 10, 2006--National Atlantic
Holdings Corporation (Nasdaq: NAHC), a provider of specialized
property-casualty insurance products and related insurance services
based in Freehold, N.J., today announced financial results for the
third quarter and nine months ended September 30, 2006.
Net income for the three months ended September 30, 2006 was $4.4
million or $0.38 per share (diluted), compared with a net loss of $1.6
million or $0.15 per share (diluted) for the three months ended
September 30, 2005. Net income for the nine months ended September 30,
2006 was $11.4 million or $0.99 per share (diluted), compared with net
income of $4.3 million or $0.47 per share (diluted) for the nine
months ended September 30, 2005.
Diluted earnings per share for the three months ended September
30, 2006 were based on weighted average common shares (diluted) of
11,500,074 compared with weighted average common shares (diluted) of
11,480,222 for the three months ended September 30, 2005. Diluted
earnings per share for the nine months ended September 30, 2006 were
based on weighted average common shares (diluted) of 11,466,542
compared with weighted average common shares (diluted) 9,108,389 for
the nine months ended September 30, 2005. Book value per share for the
nine months ended September 30, 2006 was $13.32, compared with $12.34
for the year ended December 31, 2005, representing an 8% growth in
book value.
Total revenues for the three months ended September 30, 2006
decreased by $2.8 million, or 5.9%, to $44.4 million from $47.2
million for the three months ended September 30, 2005. Total revenues
for the nine months ended September 30, 2006 decreased by $12.2
million, or 8.5%, to $130.6 million from $142.8 million for the nine
months ended September 30, 2005.
"During the third quarter, our Partner Agents added new policies
in virtually all of our lines of business - commercial, homeowners, as
well as private passenger automobile," said James V. Gorman, Chairman
and Chief Executive Officer. "We are pleased with the policy count
growth we are experiencing in all lines of business," he said.
"The growth in earnings-per-share for the quarter was generated
primarily by core growth in our insurance operations and is a
reflection of our partner agents' marketing efforts, as well as our
completion of the clean-up on books of business acquired through
replacement carrier transactions in prior years," said Frank J.
Prudente, Executive Vice President, Treasurer and Chief Accounting
Officer.
"We have regained some of our customers lost to direct writers in
prior quarters," Mr. Gorman said. "Although the auto market in New
Jersey remains highly competitive, we feel that the level of
competition has stabilized," he said.
Premiums
Direct written premiums for the three months ended September 30,
2006 increased by $3.7 million, or 8.8%, to $45.6 million from $41.9
million in the comparable 2005 period. Direct written premiums for the
nine months ended September 30, 2006 decreased by $29.5 million, or
17.9%, to $135.5 million from $165.0 million in the comparable 2005
period. The increase was primarily due to new business generated by
our Partner Agents, offset by attrition of business acquired as part
of previous replacement carrier transactions.
Net written premiums for the three months ended September 30, 2006
increased by $1.5 million, or 3.6%, to $43.4 million from $41.9
million in the comparable 2005 period. Net written premiums for the
nine months ended September 30, 2006 decreased by $30.4 million, or
19.2%, to $127.9 million from $158.3 million in the comparable 2005
period.
Net earned premiums for the three months ended September 30, 2006
decreased by $3.6 million, or 8.3%, to $39.7 million from $43.3
million in the comparable 2005 period. Net earned premiums for the
nine months ended September 30, 2006 decreased by $15.4 million, or
11.6%, to $117.0 million from $132.4 million in the comparable 2005
period.
Line of Business Data
The table below shows our revenues in each of our lines of
business for the periods indicated and the year-over-year percentage
changes.
For the Quarter Ended September 30,
Direct Written Premiums by Line of Business,
(in thousands)
2006 2005 Change % Change
Private Passenger Auto* $29,247 $30,996 $(1,749) (5.6)%
Homeowners 9,172 5,636 3,536 62.7 %
Total Commercial Lines 7,226 5,266 1,960 37.2 %
-------- -------- --------
Total $45,645 $41,898 $3,747 8.9 %
* No adjustment has been made for comparison purposes for the effect
of policy annualization which occurred in auto in 2005
For the Quarter Ended September 30,
Net Earned Premiums by Line of Business
(in thousands)
2006 2005 Change % Change
Private Passenger Auto $27,217 $32,096 $(4,878) (15.2)%
Homeowners 5,552 3,983 1,568 39.4 %
Total Commercial Lines 6,913 7,188 (274) (3.8)%
-------- -------- --------
Total $39,682 $43,267 $(3,585) (8.3)%
For the Nine Months Ended September 30,
Direct Written Premiums by Line of Business
(in thousands)
2006 2005 Change % Change
Private Passenger Auto* $ 90,398 $133,047 $(42,649) (32.1)%
Homeowners 21,559 15,859 5,700 35.9 %
Total Commercial Lines 23,526 16,055 7,471 46.5 %
--------- --------- ---------
Total $135,483 $164,961 $(29,478) (17.9)%
* No adjustment has been made for comparison purposes for the effect
of policy annualization which occurred in auto in 2005
For the Nine Months Ended September 30,
Net Earned Premiums by Line of Business
(in thousands)
2006 2005 Change % Change
Private Passenger Auto $ 82,976 $107,047 $(24,071) (22.5)%
Homeowners 14,711 11,650 3,061 26.3 %
Total Commercial Lines 19,305 13,679 5,626 41.1 %
--------- --------- ---------
Total $116,992 $132,376 $(15,384) (11.6)%
Net Investment Income
Net investment income for the three months ended September 30,
2006 increased by $0.7 million, or 20.6%, to $4.1 million from $3.4
million in the comparable 2005 period. Net investment income for the
nine months ended September 30, 2006 increased by $3.1 million, or
35.2%, to $11.9 million from $8.8 million in the comparable 2005
period. The increase was primarily due to an increase in our average
book yield to maturity which was 5.45% and 5.12% at September 30, 2006
and 2005, respectively. The increase in yield was due to the purchase
of securities with higher yields. In addition, invested assets
increased to $314.9 million at September 30, 2006 from $293.7 million
at September 30, 2005.
Loss and loss adjustment expenses
Loss and loss adjustment expenses for the three months ended
September 30, 2006 decreased by $11.3 million, or 30.6%, to $25.6
million from $36.9 million in the comparable 2005 period. Loss and
loss adjustment expenses for the nine months ended September 30, 2006
decreased by $25.8 million, or 25.3%, to $76.0 million from $101.8
million in the comparable 2005 period. As a percentage of net earned
premiums, losses and loss adjustment expenses incurred for the three
months ended September 30, 2006 was 64.5% compared to 85.2% for the
three months ended September 30, 2005. As a percentage of net earned
premiums, losses and loss adjustment expenses incurred for the nine
months ended September 30, 2006 was 64.9% compared to 76.9% for the
nine months ended September 30, 2005. The ratio of net incurred
losses, excluding loss adjustment expenses, to net earned premiums
during 2006 was 60.0% compared to 65.3% for the comparable 2005
period.
Conference Call Details
The Company will host a conference call the morning of November
13, 2006, at 10:00 a.m. Eastern Time (ET). Following a brief
presentation by management, participants will have the opportunity to
ask questions.
The conference call can be accessed by dialing 800-810-0924 (U.S.
callers) or 913-981-4900 (international callers). Those who intend to
participate in the teleconference should register at least ten minutes
in advance to ensure access to the call. The conference call can also
be accessed via webcast through the Company's web site at
www.national-atlantic.com.
The teleconference will be recorded and a replay will be available
from 1:00 p.m. ET on November 13, 2006 until midnight ET on November
17, 2006. To access the replay by telephone, dial 888-203-1112 (U.S.
callers) or 719-457-0820 (international callers) and specify passcode
1848800. The teleconference will also be archived on the Investor
Relations section of NAHC's website at www.national-atlantic.com.
About NAHC:
National Atlantic Holdings Corporation (NAHC) and its subsidiaries
provide property and casualty insurance and insurance-related services
to individuals, families and businesses in the State of New Jersey.
The Company's flagship insurance product to personal insurance
customers is the "High Proformance Policy." This product is designed
to attract a broad spectrum of New Jersey residents for their private
passenger automobile, homeowners, and personal excess ("umbrella") and
specialty property liability coverage.
For businesses, the Company offers a range of commercial insurance
products, including commercial property, commercial general liability,
and business auto, as well as claims administrative services to
self-insured corporations.
National Atlantic distributes its products exclusively through
independent insurance agents, known as "Partner Agents," who are
required to become shareholders in National Atlantic in order to
represent the Company as an agent. The Company offers insurance
products through its subsidiaries, Proformance Insurance Company and
Mayfair Reinsurance Company, and insurance-related services through
Riverview Professional Services and the National Atlantic Insurance
Agency.
Safe Harbor Statement Regarding Forward-Looking Statements
Management believes certain statements in this press release may
constitute "forward-looking statements" within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Forward-looking statements are necessarily based
on estimates and assumptions that are inherently subject to
significant business, economic and competitive uncertainties and
risks, many of which are subject to change. As a consequence, current
plans, anticipated actions and future financial condition and results
may differ from those expressed in any forward-looking statements made
by or on behalf of the Company. Additionally, forward-looking
statements speak only as of the date they are made, and we undertake
no obligation to release publicly the results of any future revisions
or updates we may make to forward-looking statements to reflect new
information or circumstances after the date hereof or to reflect the
occurrence of future events.
NATIONAL ATLANTIC HOLDINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
September 30, December 31,
--------------------------
2006 2005
(Unaudited) (Unaudited)
--------------------------
Assets:
Investments: (Note 4)
Fixed maturities held-to-maturity (fair
value at September 30, 2006 and December
31, 2005 was $41,399 and $0,
respectively) $ 42,200 $ -
Fixed maturities available-for-sale
(amortized cost at September 30, 2006 and
December 31, 2005 was $269,207 and
$281,010, respectively) 267,466 278,384
Equity securities (cost at September 30,
2006 and December 31, 2005 was $4,535 and
$12,636, respectively) 4,769 12,836
Short-term investments (cost at September
30, 2006 and December 31, 2005, was $453
and $8,800, respectively) 453 8,800
--------------------------
Total investments 314,888 300,020
Cash and cash equivalents 29,115 39,836
Accrued investment income 4,169 3,560
Premiums receivable - net 57,277 49,926
Reinsurance recoverables and receivables 34,031 41,057
Deferred acquisition costs 17,944 17,134
Property and equipment - net 2,074 2,062
Income taxes recoverable - 1,152
Other assets 8,179 7,989
--------------------------
Total assets $467,677 $462,736
--------------------------
Liabilities and Stockholders' Equity:
Liabilities:
Unpaid losses and loss adjustment expenses $201,033 $219,361
Unearned premiums 92,884 81,546
Accounts payable and accrued expenses 2,916 2,578
Deferred income taxes 11,026 11,069
Income taxes payable 2,440 -
Other liabilities 8,667 9,973
--------------------------
Total liabilities 318,966 324,527
--------------------------
Commitments and contingencies - -
--------------------------
Stockholders' equity:
Common stock, $0.01 par value (50,000,000
shares authorized; 11,283,890 issued,
11,168,234 outstanding as of September 30,
2006; 11,202,190 issued and outstanding as
of December 31, 2005, respectively) 97,558 97,458
Retained earnings 53,746 42,353
Accumulated other comprehensive loss (1,446) (1,602)
Common stock held in treasury, at cost
(115,656 and 0 shares held as of September
30, 2006 and December 31, 2005,
respectively) (1,147) -
--------------------------
Total stockholders' equity 148,711 138,209
--------------------------
Total liabilities and stockholders' equity $467,677 $462,736
--------------------------
NATIONAL ATLANTIC HOLDINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except earnings per share data)
Three Months ended Nine Months ended
September 30, September 30,
----------------------- -----------------------
2006 2005 2006 2005
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ----------- ----------- -----------
Revenue:
Net premiums earned $39,682 $43,267 $116,992 $132,376
Net investment
income 4,116 3,448 11,905 8,798
Net realized
investment gain 297 40 595 416
Other income 330 472 1,123 1,186
----------- ----------- ----------- -----------
Total revenue 44,425 47,227 130,615 142,776
----------- ----------- ----------- -----------
Costs and Expenses:
Loss and loss
adjustment
expenses incurred 25,586 36,871 75,972 101,754
Underwriting,
acquisition and
insurance related
expenses 12,195 9,636 36,243 30,594
Other operating and
general expenses 566 2,965 1,757 3,897
----------- ----------- ----------- -----------
Total costs and
expenses 38,347 49,472 113,972 136,245
----------- ----------- ----------- -----------
Income (loss) before
income taxes 6,078 (2,245) 16,643 6,531
Provision (benefit)
for income taxes 1,697 (607) 5,250 2,231
----------- ----------- ----------- -----------
Net Income (Loss) $ 4,381 $(1,638) $ 11,393 $ 4,300
----------- ----------- ----------- -----------
Net income per share
Common Stock - Basic $ 0.39 $ (0.15) $ 1.01 $ 0.50
Net income per share
Common Stock -
Diluted $ 0.38 $ (0.15) $ 0.99 $ 0.47
NATIONAL ATLANTIC HOLDINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
For the nine months
ended September 30,
-----------------------
2006 2005
(Unaudited) (Unaudited)
----------- -----------
Net Income $11,393 $ 4,300
Other comprehensive income - net of tax:
Net holding (losses) arising during the
period (327) (1,274)
Reclassification adjustment for realized
losses included in net income 483 21
----------- -----------
Total other comprehensive income (loss) 156 (1,253)
----------- -----------
Comprehensive Income $11,549 $ 3,047
----------- -----------
EARNINGS PER SHARE
AND BOOK VALUE CALCULATIONS
For the three months For the nine months
ended September 30, ended September 30,
--------------------------- ---------------------------
2006 2005 2006 2005
------------- ------------- ------------- -------------
Net Income
applicable to
common
stockholders $ 4,381,341 $ (1,638,336) $ 11,393,244 $ 4,299,601
Weighted
average
common shares
- basic 11,266,323 10,926,990 11,230,184 8,555,157
Effect of
dilutive
securities:
Options 233,751 553,232 236,358 553,232
------------- ------------- ------------- -------------
Weighted
average
common shares
- diluted 11,500,074 11,480,222 11,466,542 9,108,389
------------- ------------- ------------- -------------
Basic Earnings
Per Share $ 0.39 $ (0.15) $ 1.01 $ 0.50
------------- ------------- ------------- -------------
Diluted
Earnings per
Share $ 0.38 $ (0.15) $ 0.99 $ 0.47
------------- ------------- ------------- -------------
Book Value Net Tangible Book Value
As of As of As of As of
September 30, December 31, September 30, December 31,
------------- ------------- ------------- -------------
2006 2005 2006 2005
------------- ------------- ------------- -------------
Total
Shareholders
Equity $148,711,738 $138,209,495 $148,711,738 $138,209,495
Less: Deferred
Acquisition
Cost Asset
(DAC) - - (17,944,098) (17,133,562)
------------- ------------- ------------- -------------
Shareholders
Equity - net 148,711,738 138,209,495 130,767,640 121,075,933
Total Common
Shares
Outstanding 11,168,234 11,202,190 11,168,234 11,202,190
------------- ------------- ------------- -------------
Book Value $ 13.32 $ 12.34 $ 11.71 $ 10.81
------------- ------------- ------------- -------------
NATIONAL ATLANTIC HOLDINGS CORPORATION AND SUBSIDIARIES
INSURANCE RATIOS - STAT AND GAAP
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
INSURANCE RATIOS:
STATUTORY RATIOS:
For the three For the nine
months ended months ended
September 30, September 30, 2006
------------------- --------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Loss and LAE ratio 71.95% 88.37% 67.97% 80.42%
Underwriting expense ratio 25.63% 26.71% 25.72% 21.11%
--------- --------- --------- ---------
Combined ratio 97.58% 115.08% 93.69% 101.53%
--------- --------- --------- ---------
GAAP RATIOS:
For the three For the nine
months ended months ended
September 30, September 30, 2006
------------------- --------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Loss and LAE ratio 64.48% 85.22% 64.94% 76.87%
Underwriting expense ratio 28.10% 23.01% 28.34% 19.33%
--------- --------- --------- ---------
Combined ratio 92.58% 108.23% 93.28% 96.20%
--------- --------- --------- ---------
CONTACT: National Atlantic Holdings Corporation
Frank J. Prudente, 732-665-1145
Executive Vice President - Corporate Finance