American Safety Insurance Holdings, Ltd. Reports First Quarter 2013 Financial Results
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, | |||||||||||
2013 | 2012 | ||||||||||
INCOME STATEMENT DATA: | |||||||||||
Revenues: | |||||||||||
Direct earned premiums | $ | 63,571 | $ | 60,528 | |||||||
Assumed earned premiums | 14,929 | 13,865 | |||||||||
Ceded earned premiums | (16,576 | ) | (12,980 | ) | |||||||
Net earned premiums | 61,924 | 61,413 | |||||||||
Net investment income | 7,632 | 7,811 | |||||||||
Net realized gains | 1,454 | 53 | |||||||||
Fee income | 1,228 | 668 | |||||||||
Other income | 12 | 12 | |||||||||
Total revenues | 72,250 | 69,957 | |||||||||
Expenses: | |||||||||||
Losses and loss adjustment expenses | 37,964 | 37,281 | |||||||||
Acquisition expenses | 14,752 | 14,744 | |||||||||
Other underwriting expenses | 12,141 | 10,752 | |||||||||
Interest expense | 354 | 417 | |||||||||
Corporate and other expenses | 781 | 1,256 | |||||||||
Total expenses | 65,992 | 64,450 | |||||||||
Earnings before income taxes | 6,258 | 5,507 | |||||||||
Income tax expense | 677 | 1,106 | |||||||||
Net earnings | 5,581 | 4,401 | |||||||||
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 ratio | 61.3 | % | 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, 2013 | December 31, 2012 | |||||||||
(unaudited) | |||||||||||
Total investments | $ | 926,817 | $ | 930,648 | |||||||
Total assets | 1,370,875 | 1,373,131 | |||||||||
Unpaid losses and loss adjustment expenses | 726,566 | 725,244 | |||||||||
Total liabilities | 1,027,850 | 1,028,083 | |||||||||
Total shareholders' equity | 343,025 | 345,048 | |||||||||
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 | Reinsurance | Run-off | Total | |||||||||||||||||
Gross written premiums | $ | 47,953 | $ | 16,602 | $ | 16,644 | $ | - | $ | 81,199 | |||||||||||
Net written premiums | 37,546 | 9,879 | 16,644 | - | 64,069 | ||||||||||||||||
Net earned premiums | 36,541 | 11,162 | 14,221 | - | 61,924 | ||||||||||||||||
Fee & other income | 332 | 771 | - | 137 | 1,240 | ||||||||||||||||
Losses & loss adjustment expenses | 22,028 | 7,393 | 8,543 | - | 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) | 2,848 | 940 | 2,700 | (549 | ) | 5,939 | |||||||||||||||
Net realized gains | 1,454 | ||||||||||||||||||||
Interest and corporate expenses | 1,135 | ||||||||||||||||||||
Earnings before income taxes | 6,258 | ||||||||||||||||||||
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 ratio | 60.3 | % | 66.2 | % | 60.1 | % | NM | 61.3 | % | ||||||||||||
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 | |||||||||||||||||||||
Insurance | Other | ||||||||||||||||||||
E&S | ART | Reinsurance | Run-off | Total | |||||||||||||||||
Gross written premiums | $ | 38,611 | $ | 21,178 | $ | 13,976 | $ | - | $ | 73,765 | |||||||||||
Net written premiums | 30,733 | 16,143 | 13,976 | - | 60,852 | ||||||||||||||||
Net earned premiums | 31,150 | 16,344 | 13,919 | - | 61,413 | ||||||||||||||||
Fee & other income | - | 663 | - | 17 | 680 | ||||||||||||||||
Losses & loss adjustment expenses | 18,917 | 9,987 | 8,349 | 28 | 37,281 | ||||||||||||||||
Acquisition & other underwriting expenses | 13,916 | 6,388 | |||||||||||||||||||
