American
Safety Insurance Holdings, Ltd.Reports
Increase in Second Quarter Insurance Earnings;
Book Value per Share Increases 6% to $17.01
HAMILTON, Bermuda, August 3, 2005 — American Safety Insurance Holdings, Ltd. (NYSE: ASI) today reported that earnings from insurance operations increased to $3.0 million in the second quarter of 2005 from a loss of $1.7 million for the same quarter in 2004. Net earnings for the second quarter were $3.1 million, or $0.44 per diluted share as compared to earnings of $4.1 million, or $0.55 per diluted share for the second quarter of 2004. Insurance earnings for the six months ended June 30, 2005 increased to $6.7 million from $420,000 for the six months ended June 30, 2004. Net earnings for the six months ended June 30, 2005 were $6.8 million, or $0.94 per diluted share as compared to $7.7 million, or $1.04 per diluted share for the six months ended June 30, 2004. Net earnings are detailed as follows (in thousands):
Quarter Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
Insurance Operations $ 3,049 $(1,691) $6,654 $420
Real Estate Operations 165 1,997 193 3,518
Other (75) 3,791 (62) 3,809
Net Earnings $3,139 $4,097 $6,785 $7,747
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Second quarter highlights included:
Gross written premiums rose 5% to $56 million
Net investment income increased 52% to $3.4 million
The loss ratio improved to 62% from 77%
The combined ratio decreased to 99% from 114%
The Final remaining units of the Harbour Village real estate project closed
The increase in insurance earnings for the quarter and the six months ended June 30, 2005 was due to improved underwriting results combined with increased investment income. The underwriting results for the quarter and the six months ended June 30, 2005 were driven by an improved loss ratio, which for the quarter decreased to 62% from 77% and for the six months decreased to 61% from 71% for the same period of 2004. The combined ratio decreased for the quarter to 99% from 114% and for the six months decreased to 97% from 106% for the same period in 2004. The combined ratio was adversely impacted from $1.1 million of reserve strengthening in discontinued lines and $500,000 for Sarbanes Oxley compliance and other regulatory expenses during the second quarter of 2005. The decrease in real estate earnings for the quarter and for the six months ended June 30, 2005 was due to the closing of the final remaining units of the Harbour Village project. This substantially completes the Company’s real estate operations. Other items for the second quarter and for the six months of 2004 include non-recurring earnings of $3.8 million, predominantly due to the recovery on an impaired note receivable.
Total revenues for the second quarter of 2005 decreased 29% to $39 million compared to the same quarter of 2004 as a result of the expected decrease in real estate income. Net premiums earned for the second quarter of 2005 increased 8% to $35 million compared to the same quarter of 2004 due to increases in the Company’s core business lines. Net investment income for the quarter increased 52% to $3.4 million from $2.2 million in the second quarter of 2004 due to increased invested assets and an increase in the annualized yield to 3.9% from 3.4%.
Total revenues for the six months ended June 30, 2005 decreased 25% to $79 million compared to the same period in 2004 as a result of the expected decrease in real estate income. Net premiums earned for the six months ended June 30, 2005 increased 4% to $69 million from the same period of 2004 due to increases in the Company’s core business lines. Net investment income for the six months ended June 30, 2005 increased 52% to $6.6 million from $4.3 million for the same period in 2004 due to increased invested assets and an increase in the annualized yield to 3.8% from 3.5%. Total invested assets increased 9% to $358 million from $327 million at December 31, 2004.
The Company’s book value per share increased 6% to $17.01 at June 30, 2005 from $16.04 at December 31, 2004, due to the contribution of net earnings during the six months ended June 30, 2005. The Company completed its stock repurchase authorization with the repurchase of 200,000 shares of its common stock at an average price of $14.79 per share during the quarter.
Commenting on the results, Stephen R. Crim, President and Chief Executive Officer of American Safety Insurance Holdings, Ltd., said, “I am pleased with the continued momentum in the growth in the profitability of our insurance operations. The increased insurance earnings have replaced earnings generated from real estate operations during 2004, and our book value has grown to more than $17 per share. The improved underwriting performance in our core business segments contributed significantly to our positive financial results. Based on the second quarter results, we are now anticipating a combined ratio for 2005 of approximately 96%”
Mr. Crim further stated, “While we continue to experience some softening of rates in the market, our focus on underserved markets has helped us achieve modest growth in our gross written premiums. Looking ahead, we will concentrate on improving the efficiency of our insurance operations and be poised to take advantage of organic and acquisitive growth opportunities presented to us by the market.” American Safety Insurance Holdings, Ltd. is a specialty insurance holding company which, through its subsidiaries, provides innovative insurance solutions in the alternative insurance market for environmental remediation, contracting and other specialty risks. Additional information about the Company can be found at www.americansafetyinsurance.com. This press release contains forward-looking statements. These forward-looking statements reflect the Company’s current views with respect to future events and financial performance, including insurance market conditions, premium growth, earnings, combined ratio, insurance claims and losses, and the Harbour Village real estate development project. 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 collectibility of reinsurance recoverables, market acceptance of new coverages and enhancements, changes in reinsurance costs and availability, potential adverse decisions in court and arbitration proceedings, and changes in levels of general business activity and economic conditions. For additional factors, which could influence the results of the Company’s operating and financial performance, see the Company’s filings with the Securities and Exchange Commission.
Contacts: American Safety Insurance Services, Inc. Cameron Associates Stephen Crim or Steven Mathis Kevin McGrath (770) 916-1908 (212) 245-4577
American Safety Insurance Holdings, Ltd. and Subsidiaries
Financial and Operating Highlights
Three Months Ended Six Months Ended
June 30,
2005 2004 2005 2004
INCOME STATEMENT DATA:
Revenues:
Direct and assumed premiums earned $ 59,076,332 $ 54,682,498 $ 114,328,394 $ 110,106,931
Ceded premiums earned (24,541,747) (22,592,774) (45,173,198) (43,898,470)
Net premiums earned 34,534,585 32,089,724 69,155,196 66,208,461
Net investment income 3,427,475 2,249,139 6,583,856 4,320,251
Net realized gains (96,697) (5,139) (44,465) 20,272
Real estate income 691,078 20,176,157 3,000,078 34,128,311
Other income 33,807 113,511 35,756 144,624
Total revenues $ 38,590,248 $ 54,623,392 $ 78,730,421 $ 104,821,919
Expenses:
Losses and loss adjustment expenses $ 21,507,779 $ 24,555,449 $ 42,288,823 $ 46,914,891
Acquisition expenses 6,883,652 6,513,912 14,010,031 13,124,130
Payroll and related expenses 3,181,498 2,705,771 6,148,484 5,329,147
Real estate expenses 423,933 16,993,188 2,688,462 28,487,023
Other expenses 3,199,767 896,898 5,705,086 2,993,440
Minority interest (48,616) 162,543 539,282 336,654
Expense due to rescission 11,561 (1,745,544) 22,429 (1,715,970)
Total expenses $ 35,159,574 $ 50,082,217 $ 71,402,597 $ 95,469,315
Earnings before income taxes 3,430,674 4,541,175 7,327,824 9,352,604
Income taxes 291,920 444,406 542,727 1,606,016
Net earnings $ 3,138,754 $ 4,096,769 $ 6,785,097 $ 7,746,588
Net earnings per share:
Basic $ 0.47 $ 0.59 $ 1.00 $ 1.12
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Diluted $ 0.44 $ 0.55 $ 0.94 $ 1.04
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Average number of shares outstanding:
Basic 6,718,269 6,932,237 6,754,670 6,919,668
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Diluted 7,118,651 7,447,155 7,197,091 7,419,104
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GAAP combined ratio 98.9% 114.0% 96.7% 105.7%
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June 30, December 31,
BALANCE SHEET DATA: 2005 2004
Total investments excluding real estate $ 357,870,132 $ 327,036,980
Total assets 623,556,448 584,159,976
Unpaid losses and loss adjustment expenses 354,536,534 321,623,730
Total liabilities 509,583,630 475,380,293
Total shareholders' equity 113,972,818 108,779,683
Book value per share $ 17.01 $ 16.04
American Safety Insurance Holdings, Ltd. and Subsidiaries
Financial and Operating Highlights
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
PREMIUM SUMMARY (in Thousands)
Gross Written Premium:
Environmental $ 13,696 $ 13,131 $ 27,290 $ 22,290
Excess and Surplus 20,982 19,482 48,035 47,379
Program Business 21,076 20,745 44,136 41,993
Other 438 376 942 1,426
Total 56,192 53,734 120,403 113,088
Net Written Premium:
Environmental 13,157 10,606 24,124 17,678
Excess and Surplus 16,155 14,685 38,340 38,472
Program Business 5,909 4,510 9,312 7,584
Other 220 103 435 727
Total 35,441 29,904 72,211 64,461
Net Earned Premium:
Environmental 9,777 7,720 18,522 14,636
Excess and Surplus 19,858 18,559 40,962 38,400
Program Business 4,684 3,033 9,082 7,731
Other 215 2,778 589 5,442
Total $ 34,534 $32,090 $ 69,155 $ 66,209