American Safety Insurance Holdings, Ltd. Reports First Quarter 2013 Financial Results

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American Safety Insurance Holdings, Ltd. Reports First Quarter 2013 Financial Results

HAMILTON, Bermuda--(BUSINESS WIRE)-- American Safety Insurance Holdings, Ltd. (NYS: ASI) today reported net earnings of $5.5 million for the three months ended March 31, 2013, or $0.56 per diluted share, as compared to $4.1 million, or $0.39 per diluted share, for the same period of 2012. For the three months ended March 31, 2013, net operating earnings1 were $4.3 million or $0.44 per diluted share, compared to net operating earnings of $4.0 million or $0.38 per diluted share for the same quarter of 2012.

Financial highlights for the quarter included2:

  • Gross written premiums increased 10.0% to $81.2 million
  • Total revenues increased 3.3% to $72.3 million
  • Net earned premiums totaled $61.9 million versus $61.4 million
  • The combined ratio was 102.7% compared to 101.1%
  • Book value was $34.05 per diluted share versus $34.21 at December 31, 2012.

1 Net operating earnings is a non-GAAP financial measure defined by the Company as net earnings adjusted for net realized gains (losses), net of applicable taxes.

2All comparisons are with the same period last year unless stated otherwise.

First Quarter Results

E&S gross written premiums totaled $48.0 million compared to $38.6 million, ART gross written premiums were $16.6 million compared to $21.2 million, and Reinsurance gross written premiums were $16.6 million compared to $14.0 million. The growth in the E&S gross written premiums resulted primarily from the surety acquisition and Midwest casualty underwriting teams, both added after the first quarter of 2012. The decrease in ART gross written premiums is due to the de-emphasis of the specialty programs business while the increase in Reinsurance gross written premiums was due to increased January 2013 new business.

The increase in total revenue to $72.3 million was attributable to increases in net earned premiums, net realized gains and fee income, partially offset by lower investment income. The combined ratio for the quarter ended March 31, 2013 was 102.7%, composed of a loss ratio of 61.3% and an expense ratio of 41.4%, compared to the prior year combined ratio of 101.1%, composed of a loss ratio of 60.7% and expense ratio of 40.4%. The loss ratio for the quarters ended March 31, 2013 and 2012 do not include any prior accident year loss reserve adjustments. The expense ratio increased due primarily to the surety acquisition and other underwriting teams, both added after the first quarter of 2012.

Book value per diluted share decreased to $34.05 due primarily to declines during the quarter in the valuation of mortgage and corporate fixed income securities in the portfolio.

Commenting on the results, Stephen R. Crim, Chief Executive Officer, said: "We had a solid first quarter with strong growth coming from our excess and surplus lines division. We continue the process of reviewing strategic alternatives and will make an announcement when a definitive agreement has been reached or the process is concluded."

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 March 31,
20132012
INCOME STATEMENT DATA:
Revenues:
Direct earned premiums$63,571$60,528
Assumed earned premiums14,92913,865
Ceded earned premiums (16,576) (12,980)
Net earned premiums61,92461,413
Net investment income7,6327,811
Net realized gains1,45453
Fee income1,228668
Other income 12  12 
Total revenues 72,250  69,957 
Expenses:
Losses and loss adjustment expenses37,96437,281
Acquisition expenses14,75214,744
Other underwriting expenses12,14110,752
Interest expense354417
Corporate and other expenses 781  1,256 
Total expenses 65,992  64,450 
Earnings before income taxes6,2585,507
Income tax expense 677  1,106 
Net earnings5,5814,401
Less: Net earnings attributable
to the non-controlling interest 88  345 
Net earnings attributable to ASIH, Ltd.$5,493 $4,056 
Net earnings per share:
Basic$0.58 $0.40 
Diluted$0.56 $0.39 
Weighted average number of shares outstanding:
Basic 9,441,533  10,220,700 
Diluted 9,749,263  10,533,732 
 
Loss ratio61.3%60.7%
Expense ratio 41.4% 40.4%
Combined ratio 102.7% 101.1%
 
Net operating earnings:
Net earnings attributable to ASIH, Ltd.$5,493$4,056

Less: Realized investment gains, net of taxes

 1,155  35 
Net operating earnings$4,338 $4,021 
 
 
BALANCE SHEET DATA:March 31, 2013December 31, 2012
(unaudited)
Total investments$926,817$930,648
Total assets1,370,8751,373,131
Unpaid losses and loss adjustment expenses726,566725,244
Total liabilities1,027,8501,028,083
Total shareholders' equity343,025345,048
Book value per share-diluted$34.05$34.21
 
American Safety Insurance Holdings, Ltd. and Subsidiaries
Segment Data
(Unaudited) (Dollars in thousands)
           
Three Months Ended March 31, 2013
Insurance Other  
E&S ART ReinsuranceRun-off Total
Gross written premiums$47,953$16,602$16,644$-$81,199

 

Net written premiums37,5469,87916,644-64,069

 

Net earned premiums36,54111,16214,221-61,924

 

Fee & other income332771-1371,240

 

Losses & loss adjustment expenses22,0287,3938,543-37,964

 

Acquisition & other underwriting expenses 16,595  4,830  4,648  820  26,893 

 

Underwriting profit (loss)(1,750)(290)1,030(683)(1,693)

 

Net investment income 4,598  1,230  1,670  134  7,632 

 

Pre-tax operating income (loss)2,8489402,700(549)5,939

 

Net realized gains1,454

 

Interest and corporate expenses 1,135 

 

Earnings before income taxes6,258

 

Income tax expense 677 

 

Net earnings$5,581

 

Less: Net earnings attributable to the

non-controlling interest

 88 

 

Net earnings attributable to ASIH, Ltd.$5,493 

 

 

Loss ratio60.3%66.2%60.1%NM61.3%

 

Expense ratio 44.5% 36.4% 32.7% NM  41.4%

 

Combined ratio(2) 104.8% 102.6% 92.8%(1)NM  102.7%

 

 
         
Three Months Ended March 31, 2012
InsuranceOther 
E&SARTReinsuranceRun-off Total
Gross written premiums$38,611$21,178$13,976$-$73,765
Net written premiums30,73316,14313,976-60,852
Net earned premiums31,15016,34413,919-61,413
Fee & other income-663-17680
Losses & loss adjustment expenses18,9179,9878,3492837,281
Acquisition & other underwriting expenses 13,916  6,388  Read Full Story

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