American Safety Insurance Holdings, Ltd. Reports Third Quarter Financial Results

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American Safety Insurance Holdings, Ltd. Reports Third Quarter Financial Results

Book Value Per Share Increased 6% to $34.13

HAMILTON, Bermuda--(BUSINESS WIRE)-- American Safety Insurance Holdings, Ltd. (NYS: ASI) today reported net earnings of $6.2 million for the three months ended September 30, 2012, or $0.60 per diluted share, as compared to $5.8 million, or $0.54 per diluted share, for the same period of 2011.


Financial highlights for the quarter included1:

  • Gross written premiums increased 8% to $79.1 million
  • Net earned premiums increased 7% to $63.1 million
  • Total revenues were $77.4 million compared to $68.1 million
  • The combined ratio was 106.9% compared to 101.1%
  • The combined ratio excluding weather related property losses was 103.7% compared to 101.1%
  • Annualized return on average equity (exclusive of realized and unrealized gains from investments) was 2.9%
  • Book value was $34.13 per diluted share versus $30.80 at December 31, 2011

1All comparisons are with the same period last year unless stated otherwise.

Third Quarter Results

The increase in total revenues was driven by a $4.1 million increase in net earned premiums and a $5.7 million increase in net realized gains offset in part by a reduction of $0.8 million in investment income.

The combined ratio of 106.9% consists of a loss ratio of 63.9% and an expense ratio of 43.0%, compared to 60.8% and 40.3%, respectively, for the same quarter of 2011. Pre-tax weather related property losses in the 2012 quarter were $2.0 million (or 3.2 points in the loss ratio) compared to no impact from weather related losses for the 2011 quarter. The expense ratio increase was attributable to: (a) higher acquisition costs in 2012, due primarily to profit commissions, (b) mix of business and (c) costs associated with growth initiatives.

Net operating earnings were $2.1 million compared to $5.8 million. The decrease in operating earnings is attributable to higher weather related losses, lower investment income and increased expenses primarily associated with growth initiatives. Net operating earnings (loss) is a non-GAAP financial measure defined by the Company as net earnings adjusted for net realized gains (losses), net of applicable taxes.

Year to Date Results

Total revenues for the nine months ended 2012 were $217.5 million compared to $210.0 million in 2011. Net earned premiums increased $14.0 million, or 8%, to $186.5 million, net investment income decreased $1.1 million, and net realized gains decreased $5.6 million.

The combined ratio was 105.1% compared to 107.5%, composed of a loss ratio of 63.5% and an expense ratio of 41.6%, compared to 68.4% and 39.1%, respectively, in the prior year. The decrease in the loss ratio is primarily attributable to lower weather related property losses of $5.6 million (or 3.0 points) for the nine months ended September 30, 2012 compared to $10.8 million (or 6.3 points) for the same period in 2011.

Net earnings for the nine months ended September 30, 2012, were $12.4 million, or $1.18 per diluted share, compared to $17.8 million, or $1.65 per diluted share, for the same period in 2011. Net earnings for the nine months ended September 30, 2012, include after-tax net weather related losses of $4.7 million and realized investment gains net of taxes of $4.1 million. For the same nine months of 2011, after-tax net weather related property losses totaled $8.4 million and realized investment gains net of taxes were $11.2 million.

Net operating earnings were $8.3 million in 2012 compared to $6.6 million in 2011. The increase in operating earnings is attributable to lower weather related losses during 2012 as compared to 2011. Net operating earnings in 2012 were also impacted by reduced investment income and increased expenses primarily associated with growth initiatives.

Invested assets increased 7.4% to $948.3 million at September 30, 2012, from $883.1 million at December 31, 2011. The book yield on the portfolio was 3.6% compared to 4.1% for the 2011 period.

Since June 30, 2012, the Company purchased 488,968 shares of its common stock for $8.8 million and completed its January 24, 2012 500,000 share authorization. On October 23, 2012, the Company's Board of Directors approved the repurchase of up to an additional 500,000 shares of the Company's outstanding common stock. Repurchases may be made from time to time on the open market or in privately negotiated block transactions.

Commenting on the results, Stephen R. Crim, President and Chief Executive Officer said, "While operating earnings for the quarter were impacted by a combination of weather related losses, declining investment yields and the impact from recent investments in growth initiatives, book value per share increased by 6% during the quarter. Our growth initiatives contributed to the strong premium growth achieved in the quarter and, as they continue to gain traction, will improve operating earnings over time."

Conference Call

A conference call to discuss third quarter 2012 results is scheduled for Thursday, November 1, 2012, at 9:00 a.m. (Eastern Daylight Time), which will be broadcast through Vcall's Investor Calendar at www.investorcalendar.com, or the Company's website at www.amsafety.com. If you are unable to participate at this time, a replay will be available for 30 days, beginning approximately two hours after the call.

This press release contains forward-looking statements and non-GAAP financial measures. The forward-looking statements reflect the Company's current views with respect to future events and financial performance, including insurance market conditions, combined ratio, premium growth, acquisitions and new products and the impact of new accounting standards. Forward-looking statements involve risks and uncertainties which may cause actual results to differ materially, including competitive conditions in the insurance industry, levels of new and renewal insurance business, developments in loss trends, adequacy and changes in loss reserves and actuarial assumptions, timing or collectability of reinsurance recoverables, market acceptance of new coverages and enhancements, changes in reinsurance costs and availability, potential adverse decisions in court and arbitration proceedings, the integration and other challenges attendant to acquisitions, and changes in levels of general business activity and economic conditions.

About Us:

For 25 years, American Safety Insurance Holdings, Ltd. (NYS: ASI) , a Bermuda holding company, has offered innovative solutions outside the U.S. in the reinsurance and alternative risk markets through its subsidiaries, American Safety Reinsurance, Ltd., and American Safety Assurance, Ltd., and in the U.S. for specialty risks and alternative risk markets through its program administrator, American Safety Insurance Services, Inc., and insurance company subsidiaries and affiliates, American Safety Casualty Insurance Company, American Safety Indemnity Company, American Safety Risk Retention Group, Inc., and American Safety Assurance (Vermont), Inc. As a group, ASI's insurance subsidiaries and affiliates are rated "A" (Excellent) IX by A.M. Best. For additional information, please visitwww.asih.bm.

American Safety Insurance Holdings, Ltd. and Subsidiaries
Financial and Operating Highlights
(Unaudited)
(dollars in thousands)
          

Three months Ended
September 30,

Nine months Ended
September 30,

 2012  2011  2012  2011 
INCOME STATEMENT DATA:
Revenues:
Direct earned premiums$63,547$62,498$184,670$180,955
Assumed earned premiums15,08812,28744,21237,422
Ceded earned premiums (15,540) (15,793) (42,358) (45,866)
Net earned premiums63,09558,992186,524172,511
Net investment income7,3648,19622,57723,682
Net realized gains5,693105,73211,311
Fee income1,2518432,6362,494
Other income 12  12  37  35 
Total revenues 77,415  68,053  217,506  210,033 
Expenses:
Losses and loss adjustment expenses40,28935,867118,389117,997
Acquisition expenses15,97113,68945,05238,683
Other underwriting expenses12,39610,94135,15931,309
Interest expense4153751,2001,116
Corporate and other expenses 916  284  3,020  2,136 
Total expenses 69,987  61,156  202,820  191,241 
Earnings before income taxes7,4286,89714,68618,792
Income tax expense 1,350  1,169  2,222  588 
Net earnings6,0785,72812,46418,204
Less: Net earnings (loss) attributable to the non-controlling interest (128) (69) 35  454 
Net earnings attributable to ASIH, Ltd.$6,206 $5,797 $12,429 $17,750 
Net earnings per share:
Basic$0.61 $0.56 $1.22 $1.70 
Diluted$0.60 $0.54 $1.18 $1.65 
Weighted average number of shares outstanding:
Basic 10,113,871  10,377,890  10,196,538  10,416,979 
Diluted 10,420,777  10,701,959  10,502,816  10,751,312 
Loss ratio63.9%60.8%63.5%68.4%
Expense ratio 43.0% 40.3% 41.6% 39.1%
Combined ratio 106.9% 101.1% 105.1% 107.5%
Net operating earnings:
Net earnings attributable to ASIH, Ltd.$6,206$5,796$12,429$17,750
Less: Realized investment gains,

net of taxes

 4,106  (7) 4,126  11,199 
Net operating earnings$2,100 $5,803 $8,303 $6,551 
 
 
 
BALANCE SHEET DATA: 9/30/2012  12/31/2011 
(unaudited)
Total investments$948,314$883,099
Total assets1,368,5881,286,532
Unpaid losses and loss adjustment expenses683,011680,201
Total liabilities1,012,779951,852
Total shareholders' equity355,809334,680
Book value per share-diluted$34.13$30.80
 
 
American Safety Insurance Holdings, Ltd. and Subsidiaries
Segment Data
(Unaudited)
(dollars in thousands)
      
Three Months Ended September 30, 2012
Insurance Other
E&S   ART   ReinsuranceRun-offTotal
Gross written premiums$49,192$16,146$13,807$-$79,145
Net written premiums39,0048,77213,806-61,582
Net earned premiums35,65013,29514,150-63,095
Fee & other income294915-541,263
Losses & loss adjustment expenses20,97910,4238,887-40,289
Acquisition & other underwriting expenses*** 16,812  6,280  4,303  972  28,367 
Underwriting profit (loss)(1,847 Read Full Story

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