EX-99 2 pr33108.htm


 

 


American Safety Insurance Holdings, Ltd.

Reports Net Earnings of $6.0 Million

 

HAMILTON, Bermuda, April 28, 2008 - American Safety Insurance Holdings, Ltd. (NYSE: ASI) today reported first quarter net earnings of $6.0 million, or $0.55 per diluted share, a decrease of 15%, from $7.1 million, or $0.65 per diluted share, for the same period in 2007.

 

Financial highlights for the quarter included:

•

Gross premiums written decreased 2% to $54.4 million.

•

Net premiums earned declined 1% to $38 million.

•

Net investment income increased 1.4% to $7.3 million.

•

Cash flow used in operations was $1.8 million compared to $18.9 million generated from operations for the same period of 2007.

•

Combined ratio was 100.4% compared to 95.5%.

•

Loss ratio was 57.9% compared to 62.4%.

•

Expense ratio increased to 42.5% from 33.1%.

•

Annualized return on average equity was 9.8% compared to 14.2% for the same period of 2007.

•

Book value per share increased to $22.11 from $21.53 at December 31, 2007.

First Quarter Results

 

Net earnings for the quarter decreased to $6.0 million, or $0.55 per diluted share, compared to $7.1 million, or $0.65 per diluted share, for the 2007 quarter. The decline in net earnings is the result of changes in the mix of business as premium writings for the quarter included a greater portion from newer products added as a part of the Company’s diversification strategy. The newer products will generate lower profit margins than our more mature product lines until they attain critical mass.

 

Revenues for the quarter were essentially flat at $46.6 million, compared to $46.1 million for the 2007 quarter. Net premiums earned for the quarter totaled $38 million, an increase of $0.3 million. Investment income was relatively flat at $7.3 million. While invested assets increased to $605 million from $569 million, the average yield on the portfolio declined 40 basis points to 4.8% due to lower rates. Uses of cash in the quarter included higher paid losses, premium payments under the casualty reinsurance treaty, acquisition of our healthcare division and repurchase of our common stock.

 

The combined ratio for the quarter was 100.4%, composed of a loss ratio of 57.9% and an expense ratio of 42.5%, compared to a combined ratio of 95.5%, with a loss ratio of 62.4% and an expense ratio of 33.1%, for the 2007 quarter. The decrease in the loss ratio was due primarily to the impact of the casualty reinsurance treaty as more losses were ceded than under our previous treaties. The increased expense ratio was due primarily to the impact of the casualty reinsurance treaty and the increase in the proportion of premiums generated by assumed reinsurance, which carries higher acquisition expenses.

 

Pursuant to our announced stock repurchase program, the Company repurchased 119,600 shares during the quarter at an average price of $17.62 per share.

 

 

Commenting on the results, Stephen R. Crim, President and Chief Executive Officer of American Safety Insurance Holdings, Ltd., said, “The first quarter demonstrated continued momentum in the execution of our product diversification plan, with $16 million, or 29% of gross premiums written coming from newer products, compared to $5.5 million, or 10%, for the first quarter of 2007. Net earnings declined 15% over the first quarter of 2007 due to the impact of the soft market. The largest contributor to the earnings decline was a 49% decrease in net premiums earned in our construction business line, historically one of our more profitable lines. This premium decrease was largely offset by premium increases in newer products that carry a lower profit margin. We also reserve these newer lines at what we believe are conservative loss ratios until there is an established track record of underwriting results. The investment in these newer products is key to our future success as they create a broader platform for growth when market conditions improve. Based on the current growth opportunities we see in assumed reinsurance, we expect to exceed our previous projection for growth in gross premiums written in 2008. However, we expect the impact of the soft market, in combination with the change in the mix of business from our original expectations, to place downward pressure on underwriting profitability, and we expect to fall short of our previous projection of 10-11% for return on equity.”

 

About Us:

American Safety Insurance Holdings, Ltd. (NYSE:ASI), a Bermuda holding company, offers innovative insurance 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 and American Safety Risk Retention Group, Inc. As a group, ASI’s insurance subsidiaries and affiliates are rated "A" (Excellent) VIII by A.M. Best.

 

Contacts:

American Safety Insurance Services, Inc.

 

American Safety Insurance Services, Inc.

Investor Relations

 

Media Relations

William Tepe

 

Julie McDonald

btepe@amsafety.com

 

jmcdonald@amsafety.com

(770) 916-1908

 

(770) 916-1908

 

 

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American Safety Insurance Holdings, Ltd. and Subsidiaries

Financial and Operating Highlights

 

 

 

Three Months Ended
March 31,

 

 

(Unaudited)
2008

 

(Unaudited)
2007

PREMIUM SUMMARY (in Thousands)

 

 

 

 

 

 

 

 

 

 

 

Gross Premiums Written:
Excess and Surplus Lines Segment

 

 

 

 

 

Environmental

 

$ 13,247

 

$ 13,138

 

Construction

 

8,864

 

15,993

 

Excess

 

2,461

 

1,969

 

Healthcare

 

1,742

 

-

 

Products Liability

 

1,365

 

811

 

Property

 

1,849

 

-

 

Surety

 

2,025

 

1,310

 

Total Excess & Surplus Lines Segment

 

31,553

 

33,221

 

Alternative Risk Transfer Segment

 

 

 

 

 

Specialty Programs

 

14,275

 

19,433

 

 

 

 

 

 

 

Assumed Reinsurance Segment

 

8,526

 

2,769

 

Total Gross Premiums Written

 

$ 54,354

 

$ 55,423

 

 

 

 

 

 

 

Net Premiums Written:

 

 

 

 

 

Excess and Surplus Lines Segment

 

 

 

 

 

Environmental

 

$ 8,927

 

$ 10,747

 

Construction

 

6,213

 

15,702

 

Excess

 

221

 

261

 

Healthcare

 

1,132

 

-

 

Products Liability

 

1,080

 

406

 

Property

 

1,297

 

-

 

Surety

 

1,697

 

1,270

 

Total Excess & Surplus Lines Segment

 

20,567

 

28,386

 

 

 

 

 

 

 

Alternative Risk Transfer Segment

 

 

 

 

 

Specialty Programs

 

9,413

 

7,687

 

 

 

 

 

 

 

Assumed Reinsurance Segment

 

8,526

 

2,769

 

Total Net Premiums Written

 

$ 38,506

 

$ 38,842

 

 

 

 

 

 

 

Net Premiums Earned:

 

 

 

 

 

Excess and Surplus Lines Segment:

 

 

 

 

 

Environmental

 

$ 8,606

 

$ 9,526

 

Construction

 

10,353

 

20,365

 

Excess

 

179

 

227

 

Healthcare

 

84

 

-

 

Products Liability

 

1,015

 

461

 

Property

 

726

 

-

 

Surety

 

1,626

 

915

 

Total Excess & Surplus Lines Segment

 

22,589

 

31,494

 

 

 

 

 

 

 

Alternative Risk Transfer Segment

 

 

 

 

 

Specialty Programs

 

7,766

 

5,351

 

 

 

 

 

 

 

Assumed Reinsurance Segment

 

7,694

 

1,513

 

Total Net Premiums Earned

 

$ 38,049

 

$ 38,358

 

 

 

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American Safety Insurance Holdings, Ltd. and Subsidiaries

Financial and Operating Highlights

 

(In thousands except per share data)

 

 

 

 

 

 

 

 

Three Months Ended
March 31,

 

 

(Unaudited)

 

(Unaudited)

 

 

2008

 

2007

INCOME STATEMENT DATA:

 

 

 

 

 

Revenues:

 

 

 

 

 

Direct and assumed premiums earned

 

$ 54,062

 

$ 56,635

 

Ceded premiums earned

 

(16,013)

 

(18,277)

 

Net premiums earned

 

38,049

 

38,358

 

 

 

 

 

 

 

Net investment income

 

7,327

 

7,224

 

Net realized gains

 

504

 

19

 

Fee income

 

727

 

516

 

Other income

 

15

 

17

 

Total revenues

 

46,622

 

46,134

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

Losses and loss adjustment expenses

 

22,030

 

23,952

 

Acquisition expenses

 

9,076

 

6,118

 

Payroll and related expenses

 

4,683

 

4,154

 

Real estate expenses

 

1

 

23

 

Interest expense

 

832

 

816

 

Other Expenses

 

3,693

 

3,405

 

Minority interest

 

38

 

15

 

Total expenses

 

40,453

 

38,583

 

 

 

 

 

 

 

Earnings before income taxes

 

6,169

 

7,551

 

Income taxes

 

148

 

459

 

Net earnings

 

$ 6,021

 

$ 7,092

 

 

 

 

 

 

 


Net earnings per share:

 

 

 

 

 

Basic

 

$ .56

 

$ .67

 

Diluted

 

$ .55

 

$ .65

 

Average number of shares outstanding:

 

 

 

 

 

Basic

 

10,696

 

10,556

 

Diluted

 

10,990

 

10,931

 

 

 

 

 

 

 

 

 

As of

 

BALANCE SHEET DATA:

 

3/31/2008

 

12/31/2007

 

 

 

(unaudited)

 

(audited)

 

Total investments

 

$604,813

 

$617,211

 

Total assets

 

932,390

 

934,009

 

Unpaid losses and loss adjustment expenses

 


512,267

 


504,779

 

Total liabilities

 

697,959

 

703,609

 

Total shareholders’ equity

 

234,431

 

230,400

 

 

 

 

 

 

 

Book value per share

 

$ 22.11

 

$ 21.53

 

 

 

 

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