EX-99 2 form8kq220090729er.htm


 

American Safety Insurance Holdings, Ltd.

Reports Net Earnings of $6.9 Million

 

HAMILTON, Bermuda, July 29, 2009 – American Safety Insurance Holdings, Ltd. (NYSE:ASI) today reported net earnings of $6.9 million for the three months ended June 30, 2009, or $0.66 per diluted share, as compared to $6.8 million, or $0.63 per diluted share, for the same period of 2008.

 

Financial highlights for the quarter included:

 

 

•

Gross premiums written decreased 22% to $56.7 million.

 

•

Net premiums written decreased 25% to $42.9 million.

 

•

Net premiums earned decreased 14% to $41.6 million.

 

•

Investment income increased 6% to $7.7 million.

 

•

Cash flow from operations was $33.1 million compared to $2.4 million for the same period in 2008.

 

•

Combined ratio decreased to 97.0% compared to 103.7% for the same period of 2008.

 

•

Loss ratio decreased to 58.1% compared to 63.1% for the same period of 2008.

 

•

Expense ratio decreased to 38.9% from 40.6% for the same period of 2008.

 

•

Annualized return on average equity increased to 12.0% from 11.2% for the same period of 2008.

 

•

Book value increased to $23.80 per outstanding share and $22.96 per diluted share compared to $21.12 and $20.55, respectively, as of December 31, 2008.

 

Second Quarter Results

 

The increase in net earnings in the second quarter as compared to the 2008 quarter resulted from improved underwriting results, higher fee income and increased investment income, partially offset by a higher effective tax rate.

 

Revenues for the quarter decreased 10.2% to $50.8 million from $56.6 million in the 2008 quarter, due primarily to decreased net premiums earned. Net premiums earned totaled $41.6 million, a decrease of $6.5 million, resulting from a decline in the construction line of business and assumed reinsurance. The decline in our construction line was driven by the slow economy and our continued exercise of underwriting discipline in a competitive market. The decline in assumed reinsurance reflects the positive impact of a non-recurring assumed reinsurance transaction in the 2008 quarter. Eliminating the effect of this reinsurance transaction, second quarter net premiums earned declined 6% as compared to the 2008 quarter. Investment income totaled $7.8 million, an increase of $0.4 million, due to growth in the investment portfolio as a result of positive cash flow. The increased cash flow for the quarter was driven by lower ceded reinsurance premium payments and the timing of the settlement of investment security transactions. The book yield realized during the quarter on the investment portfolio was 4.4%.

 

The decrease in the loss ratio for the quarter as compared to the 2008 quarter was due to a combination of the mix of business and $1.5 million in adverse reserve development in the 2008 quarter in the environmental line. We had no prior year reserve development in the 2009 quarter. The expense ratio decline for the quarter is driven primarily by lower acquisition costs in the assumed reinsurance line of business. Corporate and other expenses increased by $2.6 million as the 2008 quarter included the impact of a $2.8 million reduction in accrued warranty expense related to our former real estate project in Florida.

 

 


 

 

Year to Date Results

 

Net earnings for the six months ended June 30, 2009 were $12.5 million, or $1.19 per diluted share, compared to $12.8 million, or $1.18 per diluted share for the same period in 2008. Results in 2009 were impacted by a higher effective tax rate and lower realized gains, partially offset by improved underwriting results, higher fee income and increased investment income.

 

Total revenues for the six-month period increased by $1.0 million primarily due to increased investment income and higher fee income in the Company’s alternative risk transfer segment.

 

The combined ratio for the six months ended June 30, 2009 was 99.1%, composed of a 59.4% loss ratio and a 39.7% expense ratio. The 2008 combined ratio was 102.2%, with a loss ratio of 60.8% and an expense ratio of 41.4%. The decrease in loss ratio was due to the combination of the mix of business and $1.5 million in adverse reserve development in 2008 in the environmental line, compared to no prior year reserve development in the 2009 period. The expense ratio reduction resulted from lower acquisition costs in the assumed reinsurance line of business.

 

Invested assets increased 9% to $733 million at June 30, 2009 from December 31, 2008. The book yield realized during the six months on the investment portfolio was 4.4%. Book value at June 30, 2009 increased 12.7% to $23.80 per outstanding share and 11.7% to $22.96 per diluted share as compared to December 31, 2008.

 

Commenting on the results, Stephen R. Crim, President and Chief Executive Officer said, “We are encouraged by the second quarter results following a solid first quarter. In particular, the continued improvement in the Company’s expense and loss ratios confirms that initiatives we have taken are positively impacting results. I am particularly pleased with our results given both a difficult economy and competitive insurance environment. Based on the six month results, we are revising our combined ratio estimate for the full year to 100% to 102%, from 102% to 104%.”

 

Conference Call

 

A conference call to discuss second quarter 2009 results is scheduled for Thursday, July 30, 2009 at 9:00 a.m. (Eastern Daylight Time), which will be broadcast through Vcall’s Investor Calendar at www.investorcalendar.com, or the Company’s website at www.amsafety.com. If you are unable to participate at this time, a replay will be available for 30 days, beginning approximately two hours after the call. A transcript of the call will be available on the Company’s website beginning several days after the call.

 

This report 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:

American Safety Insurance Holdings, Ltd. (NYSE:ASI), a Bermuda holding company, offers 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) VIII by A.M. Best. For additional information, please visit www.asih.bm.

 

 


 

 

Contacts:

 

American Safety Insurance Holdings, Ltd.

Investor Relations

Stephen R. Crim

scrim@amsafety.bm

(441) 296-8560

 

 

 


 

 

American Safety Insurance Holdings, Ltd. and Subsidiaries

Financial and Operating Highlights

(Unaudited)

(dollars in thousands )

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

2009

 

2008

 

2009

 

2008

PREMIUM SUMMARY

 

 

 

 

 

 

 

Gross Premiums Written:

 

 

 

 

 

 

 

Excess and Surplus Lines Segment

 

 

 

 

 

 

 

Environmental

$10,405

 

$ 13,085

 

$ 22,818

 

$ 26,332

Construction

6,314

 

11,206

 

10,841

 

20,070

Products Liability

2,233

 

1,748

 

4,216

 

3,113

Excess

1,447

 

1,869

 

3,308

 

4,330

Property

2,736

 

2,441

 

5,187

 

4,290

Surety

3,153

 

2,594

 

5,754

 

4,619

Healthcare

    3,382

 

    3,362

 

6,385

 

5,103

Total Excess and Surplus Lines Segment

29,670

 

36,305

 

58,509

 

67,857

 

 

 

 

 

 

 

 

Alternative Risk Transfer Segment:

 

 

 

 

 

 

 

Specialty Programs

17,228

 

    16,224

 

30,884

 

    30,498

Total Alternative Risk Transfer Segment

17,228

 

16,224

 

30,884

 

30,498

 

 

 

 

 

 

 

 

Assumed Reinsurance   Segment

   9,830

 

    20,102

 

18,228

 

    28,628

 

 

 

 

 

 

 

 

Total Gross Premiums Written

$56,728

 

$ 72,631

 

$107,621

 

$ 126,983

 

 

 

 

 

 

 

 

Net Premiums Written:

 

 

 

 

 

 

 

Excess and Surplus Lines Segment

 

 

 

 

 

 

 

Environmental

$ 8,712

 

$ 9,694

 

$ 18,825

 

$ 18,620

Construction

5,255

 

8,689

 

8,978

 

14,902

Products Liability

1,879

 

1,411

 

3,530

 

2,491

Excess

243

 

410

 

499

 

632

Property

2,424

 

1,715

 

4,210

 

3,012

Surety

2,192

 

1,980

 

4,068

 

3,677

Healthcare

   2,198

 

    2,185

 

   4,150

 

    3,317

Total Excess and Surplus Lines Segment

22,903

 

26,084

 

44,260

 

46,651

 

 

 

 

 

 

 

 

Alternative Risk Transfer Segment

 

 

 

 

 

 

 

Specialty Programs

  10,154

 

   11,055

 

19,644

 

   20,469

Total Alternative Risk Transfer Segment

10,154

 

11,055

 

19,644

 

20,469

 

 

 

 

 

 

 

 

Assumed Reinsurance Segment

   9,848

 

    20,102

 

18,732

 

    28,628

 

 

 

 

 

 

 

 

Total Net Premiums Written

$42,905

 

$57,241

 

$82,636

 

$95,748

 

 

 

 

 

 

 

 

Net Premiums Earned:

 

 

 

 

 

 

 

Excess and Surplus Lines Segment

 

 

 

 

 

 

 

Environmental

$ 9,451

 

$ 9,223

 

$ 18,406

 

$ 17,829

Construction

6,052

 

10,335

 

12,597

 

20,688

Products Liability

1,482

 

1,168

 

2,863

 

2,183

Excess

207

 

183

 

641

 

363

Property

1,647

 

1,029

 

3,133

 

1,755

Surety

2,233

 

1,726

 

4,234

 

3,352

Healthcare

  2,296

 

      637

 

   4,559

 

      721

Total Excess and Surplus Lines Segment

23,368

 

24,301

 

46,433

 

46,891

 

 

 

 

 

 

 

 

Alternative Risk Transfer Segment

 

 

 

 

 

 

 

Specialty Programs

  9,836

 

     9,422

 

   20,496

 

   17,188

Total Alternative Risk Transfer Segment

9,836

 

9,422

 

20,496

 

17,188

 

 

 

 

 

 

 

 

Assumed Reinsurance Segment

   8,391

 

   14,419

 

   19,346

 

   22,112

 

 

 

 

 

 

 

 

Total Net Premiums Earned

$41,595

 

$48,142

 

$86,275

 

$86,191

 

 

 


 

 

American Safety Insurance Holdings, Ltd. and Subsidiaries

Financial and Operating Highlights

(Unaudited)

(in thousands except per share data and percentages)

 

 

 

Three Months Ended

June 30,

 

 

 

 

Six Months Ended

June 30,

 

2009

 

2008

 

2009

 

2008

INCOME STATEMENT DATA:

Revenues:

 

 

 

 

 

 

 

Direct premiums earned

$ 50,401

 

$47,903

 

$ 101,179

 

$ 94,271

Assumed premiums earned

9,056

 

14,419

 

20,096

 

22,113

Ceded premiums earned

(17,868)

 

  (14,180)

 

(35,006)

 

  (30,193)

Net premiums earned

41,589

 

48,142

 

86,269

 

86,191

 

 

 

 

 

 

 

 

Net investment income

7,729

 

7,316

 

15,519

 

14,643

Net realized gains

281

 

291

 

237

 

795

Fee income

1,185

 

791

 

2,118

 

1,518

Other income

      66

 

        16

 

       84

 

          30

Total revenues

50,850

 

56,556

 

104,227

 

103,177

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

Losses and loss adjustment expenses

24,175

 

30,380

 

51,248

 

52,410

Acquisition expenses

8,873

 

11,962

 

19,077

 

21,038

Payroll and related expenses

5,704

 

5,374

 

11,521

 

9,859

Other underwriting expenses

2,766

 

3,000

 

5,795

 

6,316

Interest Expense

810

 

824

 

1,551

 

1,655

Corporate and other expenses

     744

 

  (1,882)

 

   1,425

 

   (1,306)

Total expenses

43,072

 

49,658

 

90,617

 

89,972

 

 

 

 

 

 

 

 

Earnings before income taxes

7,778

 

6,898

 

13,610

 

13,205

Income taxes

    766

 

         95

 

     974

 

          243

Net earnings before noncontrolling interest

7,012

 

6,803

 

12,636

 

12,962

Less: Net earnings attributable to the

noncontrolling interest

     93

 

       14

 

     172

 

        152

 

 

 

 

 

 

 

 

Net earnings

$6,919

 

$6,789

 

$12,464

 

$12,810

 

 

 

 

 

 

 

 

Net earnings per share:

 

 

 

 

 

 

 

Basic

$0.67

 

$0.64

 

$1.21

 

$1.21

Diluted

$0.66

 

$0.63

 

$1.19

 

$1.18

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

Basic

10,302,511

 

10,543,397

 

10,294,390

 

10,619,552

Diluted

10,523,511

 

10,803,446

 

10,515,391

 

10,896,841

 

 

 

 

 

 

 

 

Loss Ratio

58.1%

 

63.1%

 

59.4%

 

60.8%

Expense Ratio

38.9%

 

   40.6%

 

39.7%

 

   41.4%

GAAP combined ratio

97.0%

 

103.7%

 

99.1%

 

102.2%

 

 

 

As of

BALANCE SHEET DATA:

 

6/30/2009

 

12/31/2008

 

 

(unaudited)

 

 

Total investments

 

$733,395

 

$ 673,739

Total assets

 

1,086,901

 

1,026,364

Unpaid losses and loss adjustment expenses

 

605,478

 

586,647

Total liabilities

 

838,300

 

806,242

Total shareholders' equity

 

245,189

 

217,024

 

 

 

 

 

Book value per share

 

$23.80

 

$21.12