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