-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IxPLmE/XFQE20DycxXV4nzaq07ENQvv4aJPABbm4qiud+Kl7NBiFR9p+9beKw2gu RptgtJ8VywVyzt/7qxiY8A== 0000783603-99-000014.txt : 19991117 0000783603-99-000014.hdr.sgml : 19991117 ACCESSION NUMBER: 0000783603-99-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991115 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN SAFETY INSURANCE GROUP LTD CENTRAL INDEX KEY: 0000783603 STANDARD INDUSTRIAL CLASSIFICATION: INSURANCE AGENTS BROKERS & SERVICES [6411] IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-14795 FILM NUMBER: 99755297 BUSINESS ADDRESS: STREET 1: 44 CHURCH STREET CITY: HAMILTON STATE: D0 BUSINESS PHONE: 4412955688 MAIL ADDRESS: STREET 1: 44 CHRUCH STREET CITY: HAMILTON STATE: D0 10-Q 1 AMERICAN SAFETY INSURANCE GROUP, LTD. < SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 ---------------------- FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999 Commission File Number 333-42749 AMERICAN SAFETY INSURANCE GROUP, LTD. (Exact name of Registrant as specified in its charter) Bermuda Not Applicable (State or other jurisdiction (I.R.S. Employer of incorporation) Identification No.) 44 Church Street P.O. Box HM2064 Hamilton HM HX, Bermuda (Address, zip code of principal executive offices) (441) 296-8560 (Registrant's telephone number, including area code) -------------- Indicate by check mark whether Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No___ The aggregate number of shares outstanding of Registrant's common stock, $.01 par value, on November 10, 1999 was 5,909,600. AMERICAN SAFETY INSURANCE GROUP, LTD. FORM 10-Q TABLE OF CONTENTS Page PART I - FINANCIAL INFORMATION Item 1. Financial Statements......................................... 3 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations........................ 10 Item 3. Quantitative and Qualitative Disclosures About Market Risks............................................... 16 PART II - OTHER INFORMATION Item 1. Legal Proceedings............................................ 17 Item 2. Changes in Securities and Use of Proceeds.................... 17 Item 3. Defaults Upon Senior Securities.............................. 17 Item 4. Submission of Matters to a Vote of Security Holders.......... 17 Item 5. Other Information............................................ 17 Item 6. Exhibits and Reports on Form 8-K............................. 17 -2- PART I - FINANCIAL INFORMATION Item 1. Financial Statements American Safety Insurance Group, Ltd. and Subsidiaries Consolidated Balance Sheets
December 31, September 30, Assets 1998 1999 ------ ------------ --------- (unaudited) Investments: Securities available for sale, at fair value: Fixed maturities $45,308,326 $39,313,312 Common stock 3,453,123 1,600,959 Investment in real estate - 11,122,271 Short-term investments 2,286,320 8,587,532 ----------- ----------- Total investments 51,047,769 60,624,074 Cash 4,737,132 2,315,700 Accrued investment and interest income 2,441,857 2,379,214 Notes receivable: Related parties 280,000 - Other 15,939,894 11,064,255 Premiums receivable 5,838,567 10,603,797 Commissions receivable 22,569 259,013 Ceded unearned premium 1,742,021 2,932,303 Reinsurance recoverable 1,840,884 3,137,802 Due from affiliate 668,074 301,603 Income tax recoverable 277,292 160,946 Deferred income taxes 362,951 587,271 Property, plant and equipment 185,807 1,094,349 Goodwill 252,239 238,910 Fund held by reinsureds - 318,400 Other assets 510,416 935,544 ----------- ----------- Total assets $86,147,472 $96,953,181 =========== =========== Liabilities and Shareholders' Equity Liabilities: Unpaid losses and loss adjustment expenses $14,700,473 $18,311,237 Unearned premiums 3,894,568 6,568,849 Liability for deductible fees held 244,998 - Reinsurance on paid loss and loss adjustment expenses 380,858 1,097,332 Reinsurance deposits on retroactive contract 332,430 89,389 Ceded premiums payable 4,382,922 6,973,157 Due to affiliate: Ceded premiums payable 201,778 110,044 Reinsurance on paid loss and loss adjustment expenses 52,151 247,833 Accounts payable and accrued expenses 2,688,001 1,344,255 Collateral held - 949,068 ----------- ----------- Total liabilities 26,878,179 35,691,164 ----------- ----------- Shareholders' equity: Preferred stock, $0.01 par value; authorized 5,000,000 shares; no shares issued and outstanding Common stock, $0.01 par value; authorized 15,000,000 shares; issued and outstanding at December 31, 1998, 6,074,770 shares, and at September 30, 1999, 5,934,200 shares 60,747 60,777 Treasury Stock - (1,101,144) Additional paid-in capital 33,809,141 33,810,387 Retained earnings 24,705,471 29,225,309 Other comprehensive income 693,934 (733,312) ----------- ----------- Total shareholders' equity 59,269,293 61,262,017 ----------- ----------- Total liabilities and shareholders' equity $86,147,472 $96,953,181 =========== ===========
See accompanying notes to consolidated financial statements (unaudited). -3- American Safety Insurance Group, Ltd. and Subsidiaries Consolidated Statements of Earnings (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30, --------------------------------------------------------- 1998 1999 1998 1999 ---- ---- ---- ---- Revenues: Direct premiums earned $1,051,603 $2,212,188 $3,086,805 $5,325,894 Assumed premiums earned: Affiliate 1,015,857 799,131 2,429,850 2,383,284 Nonaffiliates 895,562 2,279,402 3,936,552 6,066,682 --------- --------- --------- --------- Total assumed premiums earned 1,911,419 3,078,533 6,366,402 8,449,966 --------- --------- --------- --------- Ceded premiums earned: Affiliate 677,600 1,082,486 2,111,717 3,085,890 Nonaffiliates 485,547 682,013 1,264,067 1,108,583 ------- --------- --------- --------- Total ceded premiums earned 1,163,147 1,764,499 3,375,784 4,194,473 --------- --------- --------- --------- Net premiums earned 1,799,875 3,526,222 6,077,423 9,581,387 --------- --------- --------- ---------- Net investment income 825,279 746,194 2,307,049 2,159,959 Interest on notes receivable 791,060 512,289 1,486,678 2,019,851 Brokerage commission income 229,392 276,800 890,342 771,034 Management fees from affiliate 183,186 206,769 549,722 562,804 Net realized gains (losses) 60,529 120,207 155,608 218,064 Other income 3,900 245,007 15,483 706,056 --------- --------- --------- ---------- Total revenues 3,893,221 5,633,488 11,482,305 16,019,155 --------- --------- ---------- ---------- Expenses: Losses and loss adjustment expenses incurred 1,150,611 2,147,664 3,621,763 5,567,194 Acquisition expenses (85,635) 193,644 334,584 865,060 Payroll and related expenses 866,008 1,153,340 2,498,671 3,496,027 Other expenses 433,574 591,804 853,406 1,537,254 --------- --------- --------- --------- Total expenses 2,364,558 4,086,452 7,308,424 11,465,535 --------- --------- --------- ---------- Earnings before income taxes 1,528,663 1,547,036 4,173,881 4,553,620 Income taxes (69,520) 187,773 (29,862) 33,782 ----------- ---------- ---------- ---------- Net earnings $1,598,183 $1,359,263 $4,203,743 $4,519,838 ========== ========== ========== ========== Net earnings per share: Basic $ 0.26 $ 0.23 $ 0.76 $ 0.75 ========== ========= ========== ========== Diluted $ 0.26 $ 0.23 $ 0.75 $ 0.74 ========== ========= ========== ========== Common shares used in computing earnings per share: Basic 6,074,770 6,009,208 5,522,497 6,050,059 ========= ========= ========= ========= Diluted 6,119,089 6,027,667 5,607,457 6,077,700 ========= ========= ========= =========
See accompanying notes to consolidated financial statements (unaudited). -4- American Safety Insurance Group, Ltd. and Subsidiaries Consolidated Statements of Cash Flow (Unaudited)
Nine months ended September 30, 1998 1999 Cash flow from operating activities: Net earnings $ 4,203,743 $ 4,519,838 Adjustments to reconcile net earnings to net cash provided by operating activities: Realized losses (gains) on sale of investments (155,608) (218,064) Amortization of deferred acquisition costs 343,967 1,195,038 Change in: Accrued investment and interest income (1,415,097) (917,477) Premiums receivable 418,800 (4,765,230) Commissions receivable (21,968) (236,444) Reinsurance recoverable and ceded unearned premiums (795,310) (2,487,200) Funds held by reinsured - (318,401) Due from affiliate 60,580 366,471 Income taxes (48,125) (107,974) Unpaid losses and loss adjustment expenses 1,105,994 3,610,764 Unearned premiums 2,107,057 2,674,281 Liability for deductible fees held (850,735) (488,039) Ceded premiums payable (2,605,124) 2,590,235 Due to affiliate 665,574 103,948 Accounts payable and accrued expenses 880,493 (1,343,746) Collateral - 949,068 Other, net (156,138) (526,928) ----------- ----------- Net cash provided by operating activities 3,738,103 4,600,140 ---------- ---------- Cash flow from investing activities: Purchases of fixed maturities (72,086,248) (5,765,209) Purchases of Equity Investments (3,527,435) (1,321,179) Proceeds from maturity and redemption of fixed maturities 7,441,489 8,083,197 Proceeds from sale of fixed maturities 44,773,017 2,103,289 Proceeds from sale of equity investments 330,941 3,065,525 Decrease (increase) in Investment in Real Estate - (887,328) Decrease (increase) in short-term investments 786,781 (6,301,212) Decrease (increase) in notes receivable - related parties - 280,000 Decrease (increase) in notes receivable - other (9,025,384) (4,287,138) Purchase of fixed assets, net (68,137) (891,649) ------------ ----------- Net cash used in investing activities (31,374,976) (5,921,704) ------------ ----------- Cash flow from financing activities: Proceeds from sale of common stock 31,102,975 1,276 Purchase of treasury stock - (1,101,144) ---------- ------------- Net cash used in financing activities 31,102,975 (1,099,868) ---------- ------------- Net increase (decrease) in cash 3,446,102 (2,421,432) Cash at beginning of period 2,768,831 4,737,132 ---------- ---------- Cash at end of period $6,234,933 $2,315,700 ========== ========== NONCASH ITEMS Operating activities: Change in accrued interest income - 980,120 Investing activities: Decrease in notes receivable-other 9,162,777 Purchase of real estate - (10,142,897) Financing activities: No activity - - ---------- ---------- Net noncash adjustments - - ========== =========
See accompanying notes to consolidated financial statements (unaudited). -5- American Safety Insurance Group, Ltd. and Subsidiaries Consolidated Statements of Comprehensive Earnings (Unaudited)
Three months ended Nine Months ended September 30, September 30, --------------------------------- --------------------------------- 1998 1999 1998 1999 --------------------------------- --------------- ---------------- Net earnings $1,598,182 $1,359,263 $4,203,742 $4,519,838 Other comprehensive earnings before income taxes: Unrealized gains (losses) on securities available for sale 857,248 (564,704) 748,235 (1,687,589) Reclassification adjustment for realized gains included in net earnings 60,529 120,207 155,608 126,018 --------- -------- --------- ---------- Total other comprehensive earnings (loss) before taxes 917,777 (444,497) 903,843 (1,561,571) Income tax expense (benefit) related to items of comprehensive income 70,192 (22,649) 45,757 (134,325) --------- --------- --------- ----------- Other comprehensive earnings (loss) net of income taxes 847,585 (421,848) 858,086 (1,427,246) --------- --------- --------- ----------- Total comprehensive earnings $2,445,767 $937,415 $5,061,828 $3,092,592 ========= ======= ========= ========= See accompanying notes to consolidated financial statements (unaudited).
-6- American Safety Insurance Group, Ltd. and Subsidiaries Notes to Consolidated Financial Statements (Unaudited) Note 1 - Basis of Presentation The accompanying unaudited interim consolidated financial statements of American Safety Insurance Group, Ltd. ("American Safety") and its subsidiaries (collectively, the "Company") are prepared in accordance with generally accepted accounting principles in the United States and, in the opinion of management, reflect all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the interim period presented. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates, based on the best information available, in recording transactions resulting from business operations. The balance sheet amounts that involve a greater extent of accounting estimates and actuarial determinations subject to future changes are the Company's liabilities for unpaid losses and loss adjustment expenses. As additional information becomes available (or actual amounts are determinable), the recorded estimates may be revised and reflected in operating results. While management believes that the liability for unpaid losses and loss adjustment expenses is adequate to cover the ultimate liability, such estimates may be more or less than the amounts actually paid when claims are settled. The results of operations for the nine months ended September 30, 1999 may not be indicative of the results that may be expected for the full year ending December 31, 1999. These unaudited interim consolidated financial statements and notes should be read in conjunction with the financial statements and notes included in the audited consolidated financial statements of American Safety and its subsidiaries for the year ended December 31, 1998. The unaudited interim consolidated financial statements include the accounts of American Safety and each of its subsidiaries. All significant intercompany balances have been eliminated. Note 2 - Accounting Pronouncements In March 1998, the American Institute of Certified Public Accountants ("AICPA")issued Statement of Position (SOP) 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use". SOP 98-1 is effective for years beginning after December 15, 1998. The SOP specifies the types of costs that should be capitalized and those that should be expensed as incurred in connection with an internal-use software project. Capitalized costs begin amortizing when the software is ready for its intended use, regardless of when it is placed in service. Companies are required to evaluate capitalized costs for impairment using estimated future cash flows to determine if the asset is impaired. Implementation of this statement did not have a material impact on the Company's consolidated financial position and results of operations. In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activities. SFAS No. 133 is effective for years beginning after June 15, 2000. The standard requires that all derivatives be recorded as an asset or liability, at estimated fair value, regardless of the purpose or intent for holding the derivative. If a derivative is not utilized as a hedge, all gains or losses from the change in the derivative's estimated fair value are recognized in earnings. The gains or losses from the change in estimated fair value of certain derivatives utilized as hedges are recognized in earnings or other comprehensive income depending on the type of hedge relationship. The Company expects that adoption of SFAS No. 133 will have an immaterial impact on the Company's consolidated financial position and results of operations. In December 1997, the AICPA issued SOP 97-3, "Accounting by Insurance and Other Enterprises for Insurance-Related Assessments." SOP 97-3 suggests methods to determine when an entity should recognize a liability for guaranty fund and other insurance-related assessments, how to measure that liability, and when an asset may be recognized for the recovery of such assessments through premium tax offsets or policy surcharges. SOP 97.3 is effective for 1999, and the effect of initial adoption is to be reported as a cumulative catch-up adjustment. Restatement of previously issued financial statements is not allowed. Implementation of this statement did not have a material impact on the Company's consolidated financial position and results of operations. -7- In October 1998, the AICPA issued SOP 98-7, "Deposit Accounting: Accounting for Insurance and Reinsurance Contracts That Do Not Transfer Insurance Risk". SOP 98-7 provides guidance on how to account for insurance and reinsurance contracts that do not transfer insurance risk. It applies to all entities and all insurance and reinsurance contracts that do not transfer insurance risk except for long-duration life and health insurance contracts. The method used to account for insurance and reinsurance contracts that do not transfer insurance risk is referred to as deposit accounting. SOP 98-7 does not address when deposit accounting should be applied. SOP 98-7 is effective for financial statements for fiscal years beginning after June 15, 1999, with earlier adoption encouraged. Restatement of previously issued annual financial statements would not be permitted. The effect of initially adopting SOP 98-7 should be reported as a cumulative effect of a change in accounting principle (in accordance with the provisions of Accounting Principles Board Opinion No. 20, Accounting Changes). Implementation of SOP 98-7 did not have a material impact on the Company's consolidated financial position and results of operations. Note 3 - Nature of Operations The following is a description of certain risks facing casualty insurers: Legal/Regulatory Risk is the risk that changes in the legal or regulatory environment in which an insurer operates which will create additional expenses not anticipated by the insurer in pricing its products and beyond those recorded in the financial statements. Regulatory initiatives designed to reduce insurer profits or otherwise affecting the industry in which the Company operates, new legal theories or insurance company insolvencies through guaranty fund assessments, may create costs for the Company beyond those recorded in the financial statements. The Company attempts to mitigate this risk by writing insurance business in several states, thereby spreading this risk over a large geographic area. Potential Risk of United States Taxation of Bermuda Operations. Under current Bermuda law, American Safety is not required to pay any taxes in Bermuda on either income or capital gains. American Safety has received an undertaking from the Minister of Finance in Bermuda that will exempt American Safety from taxation until the year 2016 in the event of any such taxes being imposed. The Company, exclusive of its United States subsidiaries, does not consider itself to be engaged in a trade or business in the United States and accordingly does not expect to be subject to direct United States income taxation. The Company's U.S. subsidiaries are subject to taxation in the United States. Whether a foreign corporation is engaged in a United States trade or business or is carrying on an insurance business in the United States depends upon the level of activities conducted in the United States. If the activities of a foreign company are "continuous, regular, and considerable," the foreign company will be deemed to be engaged in a United States trade or business. Due to the fact that American Safety will continue to maintain an office in Bermuda and American Safety and its Bermuda subsidiary's business is reinsuring contracts via treaty reinsurance agreements, which are all signed outside of the United States, American Safety does not consider itself to be engaged in a trade or business in the United States and, accordingly, does not expect to be subject to United States income taxes. This position is consistent with the position taken by various other entities that have the same operational structure as American Safety. However, because the Internal Revenue Code of 1986, as amended, the Treasury Regulations and court decisions do not definitively identify activities that constitute being engaged in a United States trade or business, and because of the factual nature of the determination, there can be no assurance that the Internal Revenue Service will not contend that American Safety or its Bermuda subsidiary are engaged in a United States trade or business. In general, if American Safety or its Bermuda subsidiary are considered to be engaged in a United States trade or business, it would be subject to (i) United States Federal income tax on its taxable income that is effectively connected with a United States trade or business at graduated rates and (ii) the 30 percent branch profits tax on its effectively connected earnings and profits deemed repatriated from the United States. Credit Risk is the risk that issuers of securities owned by the Company or secured notes receivable will default or that other parties, including reinsurers that have obligations to the -8- insurer, will not pay or perform. The Company attempts to mitigate this risk by adhering to a conservative investment strategy, by obtaining sufficient collateral for secured note obligations and by maintaining sound reinsurance, credit and collection policies. Interest Rate Risk is the risk that interest rates will change and cause a decrease in the value of an insurer's investments. The Company attempts to mitigate this risk by attempting to match the maturities of its assets with the expected payouts of its liabilities. Note 4 - Investments The amortized cost and estimated fair values of investments at December 31, 1998 and September 30, 1999 are as follows:
Amount at which shown Gross Gross in the Amortized unrealized unrealized Estimated balance Cost gains losses fair value sheet -------------------------------------------------------------- ----------- December 31, 1998: Securities available for sale: Fixed maturities: U.S. Treasury securities and obligations of U.S. Government corporations and agencies $13,365,480 332,997 50,997 13,647,480 13,647,480 Obligations of states and political subdivisions 6,465,377 284,486 1,179 6,748,684 6,748,684 Corporate securities 19,688,443 364,650 53,841 19,999,252 19,999,252 Mortgage-backed securities 5,008,835 7,820 103,745 4,912,910 4,912,910 ---------- -------- ------- ---------- ---------- Total fixed maturities 44,528,135 989,953 209,762 45,308,326 45,308,326 Equity investments - common stocks 3,439,710 23,962 10,549 3,453,123 3,453,123 ---------- -------- ------- ---------- ---------- Total $47,967,845 1,013,915 220,311 48,761,449 48,761,449 ========== ========= ======= ========== ========== September 30, 1999: Securities available for sale: Fixed maturities: U.S. Treasury securities and obligations of U.S. Government corporations and agencies 13,570,154 31,798 413,387 13,188,565 13,188,565 Obligations of states and political subdivisions 6,538,394 76,168 69,899 6,544,663 6,544,663 Corporate securities 16,297,369 1,391 407,505 15,891,255 15,891,255 Mortgage-backed securities 3,673,926 108,246 93,343 3,688,829 3,688,829 ---------- ------- ------- ---------- ---------- Total fixed maturities 40,079,843 217,603 984,134 39,313,312 39,313,312 Equity investments - common stocks 1,602,395 1,436 1,600,959 1,600,959 ---------- ------- ------- ---------- ---------- Total $41,682,238 217,603 985,570 40,914,271 40,914,271 ========== ======= ======= ========== ==========
Note 5 - Segment Information (a) Factors used to identify the Company's reportable segments: The Company's United States and Bermuda operating segments were identified by management as separate operating segments based upon the regulatory environments of each of these countries. Significant differences exist under United States and Bermuda law concerning the regulation of insurance entities including differences in: types of permissible investments, minimum capital requirements, solvency monitoring, pricing, corporate taxation, etc. (b) Products and services from each reportable segment: The Company's United States and Bermuda operating segments, develop, underwrite, manage and market primary casualty insurance and reinsurance programs in the alternative insurance market for environmental remediation risks; employee leasing and staffing industry risks; and other specialty risks. The Company has demonstrated expertise in developing specialty insurance coverages and custom designed risk management programs not generally available in the standard insurance market. The United States operating segment's specialty insurance programs provide insurance and reinsurance for general, pollution and professional liability exposures, for workers' compensation and surety, as well as custom designed risk management programs for contractors, consultants and other business and property owners who are involved with environmental remediation, employee leasing and staffing, and other specialty risks. Through its United States brokerage and management services subsidiaries, the Company also provides specialized insurance program development, underwriting, risk and reinsurance placement, program management, brokerage, loss control, claims administration and marketing services. The Company also insures and places risks through its United States insurance subsidiary, as well as its non-subsidiary risk retention group affiliate and other unaffiliated insurance and reinsurance companies. Through its Bermuda operating segment, the Company places and reinsures a portion of the risks underwritten directly by its United States segment, its risk retention group affiliate and other insurers. (c) Information about segment profit or loss and assets:
Three Months Ended Nine Months Ended September 30 September 30 1998 1999 1998 1999 United States Net Premiums Earned - All Other 1,206,991 3,018,227 2,599,658 7,663,886 Net Premiums Earned - Intersegment (246,927) (1,121,623) 359,337 (2,870,232) Net investment income and interest on notes receivable 261,469 192,461 739,813 558,043 Other revenues 466,455 758,090 1,640,302 2,393,802 --------- --------- ----------- ---------- Total Revenues 1,687,988 2,847,155 5,339,110 7,745,499 Depreciation and amortization expense 23,106 24,699 60,922 71,097 Equity in net earnings of subsidiaries - 436,628 - 436,628 Income taxes (69,520) 187,773 (29,862) 33,782 Segment profit (loss) 3,129 429,961 263,767 146,094 Significant noncash items other than depreciation and amortization - - - - Property, plant and equipment 191,239 228,762 Total investments 14,455,281 12,777,808 Total assets 27,697,356 42,690,975 Total policy and contract 10,389,367 18,797,327 liabilities
-9-
Three Months Ended Nine Months Ended September 30 September 30 1998 1999 1998 1999 Total liabilities 17,427,594 33,292,874 Bermuda Net Premiums Earned - All Other 592,884 507,995 3,477,765 1,917,501 Net Premiums Earned - Intersegment 246,927 1,121,623 (359,337) 2,870,232 Net investment income and interest on notes receivable 1,354,870 1,066,022 3,053,914 3,621,767 Other revenues 56,108 240,262 151,187 249,941 ---------- --------- --------- --------- Total revenues 2,250,789 2,935,902 6,323,529 8,659,441 Depreciation and amortization expense - - - - Equity in net earnings of subsidiaries 807,537 319,232 1,631,448 1,718,391 Income Taxes - - - - Segment profit (loss) 1,595,052 929,302 3,939,975 4,373,744 Significant noncash items other than depreciation and amortization - - - - Property, plant and equipment - 865,587 Total investments 48,315,253 39,667,590 Total assets 72,663,021 76,243,379 Total policy and contract liabilities 10,995,115 12,754,433 Total liabilities 14,665,914 14,981,362 Intersegment Eliminations Net Premiums Earned - All Other - - - - Net Premiums Earned - Intersegment - - - - Net investment income and interest on notes receivable - - - - Other revenues (45,556) (149,569) (180,334) (385,785) ----------- --------- ----------- ----------- Total revenues (45,556) (149,569) (180,334) (385,785) Depreciation and amortization expense - - - - Equity in net earnings of subsidiaries (807,537) (755,860) (1,631,448) (2,155,019) Income taxes - - - - Segment profit (loss) - - - - Significant noncash items other than depreciation and amortization - - - - Property, plant and equipment - - Total investments (10,269,762) (9,397,445) Total assets (14,709,420) (21,509,860) Total policy and contract liabilities (4,268,312) (6,200,361) Total liabilities (4,439,657) (12,111,759) Total Net Premiums Earned - All Other 1,799,875 3,526,222 6,077,423 9,581,387 Net Premiums Earned - Intersegment - - - - Net investment income and interest on notes receivable 1,616,339 1,258,483 3,793,727 4,179,810 Other revenues 477,007 848,783 1,611,155 2,257,958 ---------- ---------- ----------- ---------- Total revenues 3,893,221 5,633,488 11,482,305 16,019,155 Depreciation and amortization expense 23,106 24,699 60,922 71,097 Equity in net earnings of subsidiaries - - - - Income taxes (69,520) 187,773 (29,862) 33,782 Segment profit (loss) 1,598,181 1,359,263 4,203,742 4,519,838 -10-
Three Months Ended Nine Months Ended September 30 September 30 1998 1999 1998 1999 Significant noncash items other than depreciation and amortization - - - - Property, plant and equipment 191,239 1,094,349 Total investments 55,500,772 43,047,953 Total assets 85,650,957 97,424,494 Total policy and contract liabilities 17,116,170 25,351,399 Total liabilities 27,653,851 36,162,477
Note 6 - Shareholder Matters Effective February 1, 1999, the Company's Board of Directors authorized a share repurchase program. During the quarter ended September 30, 1999, the Company repurchased 127,350 shares of its stock at a total price of $986,790 in open market transactions. Note 7 - Notes Receivable On May 29, 1998, American Safety Reinsurance, Ltd. ("American Safety Re"), a subsidiary of Registrant, purchased an existing secured loan in the original principal amount of $8,850,000 (the "Project Loan") from an affiliate of Citibank Mortgage Corp., which loan was made to Ponce Marina, Inc. (the "Developer") in connection with its planned development of 710 condominium units, a marina with 142 condominium boat slips and a yacht club, a beach club and a par 3 golf course on a 172 acre site located in Ponce Inlet, Florida (the "Property"). American Safety Re purchased the Project Loan at a discount for $5,850,082, and made additional advances to the Developer and incurred other Property related costs totaling $2,009,815 following its purchase of the Project Loan. The Developer was unable to obtain construction financing for the Property and failed to make a $6,400,000 payment on the Project Loan due March 31, 1999. Immediately following the Developer's default, American Safety Re obtained a judgment against the Developer for $12,117,857 (which includes accrued interest), foreclosed on the Property and received a certificate of title to the Property on April 13, 1999. American Safety Re has invested through September 30, 1999, a total of $11,122,271 (which includes accrued interest) in the Project Loan and the Property. As a result of the Developer's default on the Project Loan, the Company's operating results for the quarter ended September 30, 1999 were reduced by approximately $300,000 in interest on notes receivable (or $0.05 per share). American Safety Re has entered into a contract to sell the Property which is subject to customary real estate contract contingencies. The Property was recently appraised for a third party by an independent appraisal firm for an amount substantially in excess of American Safety Re's investment in the Project Loan. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations General American Safety is a specialty insurance and financial services holding company which, through its subsidiaries, develops, underwrites, manages and markets primary casualty insurance and reinsurance programs in the alternative insurance market for environmental remediation risks, employee leasing and staffing industry risks, and other specialty risks, as well as provides a broad range of financial services and products to middle market businesses. The Company has demonstrated expertise in developing specialty insurance coverages and custom designed risk management programs not generally available in the standard insurance market. The Company's specialty insurance programs include coverages for general liability, pollution liability, professional liability, workers' compensation and surety, as well as custom designed risk management programs (including captive and rent-a-captive programs), for contractors, consultants and other businesses and property owners who are involved with environmental remediation or exposures, employee leasing and staffing, and other specialty risks. Through its U.S. brokerage and management services subsidiaries, the Company also provides -11- specialized insurance program development, underwriting, risk placement, reinsurance, program management, brokerage, loss control, claims administration and marketing services. The Company insures and places risks through its U.S. insurance subsidiary, American Safety Casualty Insurance Company, as well as its non-subsidiary risk retention group affiliate, American Safety Risk Retention Group, Inc., and substantial unaffiliated insurance and reinsurance companies. The Company also reinsures and places, through its Bermuda reinsurance subsidiary, American Safety Reinsurance, Ltd., and substantial unaffiliated reinsurers, a portion of the risk underwritten directly by its U.S. insurance subsidiary, its risk retention group affiliate and other insurers. Substantially all of the reinsurance business that the Company currently assumes is for primary insurance programs that the Company has developed and underwritten. The Company is able to select its roles as program developer, primary underwriter, reinsurer, program manager and broker based on its assessment of each risk profile. After determining its roles, the Company utilizes its insurance and reinsurance subsidiaries, its insurance brokerage and management services subsidiaries, and its risk retention group affiliate to generate risk premium revenues, program management fees, insurance and reinsurance commissions and investment income as appropriate. A.M. Best Company ("A.M. Best"), an independent nationally recognized insurance rating service and publisher, has assigned a rating of "A (Excellent)" on a group basis to American Safety, as well as its U.S. insurance subsidiary and its non-subsidiary risk retention group affiliate. A.M. Best's ratings are an independent opinion of an insurer's ability to meet its obligations to policyholders, which opinion is of concern primarily to policyholders, insurance agents and brokers, and should not be considered an investment recommendation. The Company's consolidated financial position and results of operation are subject to change based on various factors, including competitive conditions in the insurance industry, unpredictable developments in loss trends, changes in loss reserves, market acceptance of new coverages and enhancements, and changes in levels of general business activity and economic conditions. During this decade, the Company has operated in a soft market cycle which is characterized by excess insurance capacity and declining insurance premium rates. The Company's reported combined ratio for its insurance operations may not provide an indication of the Company's overall profitability from insurance and reinsurance programs due to the exclusion of fee and commission income and expenses generated in related management and agency subsidiaries. Certain of the Company's insurance policies and reinsurance assumed, including general and pollution liability policies covering environmental remediation risks, as well as workers' compensation policies, may be subject to claims brought years after an incident has occurred or the policy period has ended. The Company is required to maintain reserves to cover its estimated liability for losses and loss adjustment expenses with respect to reported and unreported claims incurred. The Company engages an independent internationally recognized actuarial consulting firm to provide reserve studies, opinions and rate studies. Reserves are estimates at a given time, which are established from actuarial and statistical projections by the Company of the ultimate settlement and administration costs of claims occurring on or prior to such time, including claims that have not yet been reported to the insurer. The establishment of appropriate loss reserves is an inherently uncertain process, and there can be no assurance that the ultimate payments will not materially exceed the Company's reserves. Any statements made in this Report that are not based on historical information are deemed to be "forward-looking statements" under applicable federal securities laws. Forward-looking statements reflect the Company's current views with respect to future events and financial performance and involve risks and uncertainties which may cause actual results to differ. Forward-looking statements are subject to change based on various factors, including competitive conditions in the insurance industry, unpredictable developments in loss trends, changes in loss reserves, market acceptance of new coverages and enhancements, changes in levels of general business activity and economic conditions, and other factors identified in the Company's filings with the Securities and Exchange Commission. -12- Results of Operations The following table sets forth the Company's consolidated revenues:
Three Nine Months Months Three Months Nine Months Ended Ended Ended Sept. 30, Ended Sept. 30, Sept. 30, Sept. 30, ------------------------------------------------------------- 1998 to 1998 to 1998 1999 1998 1999 1999 1999 ------------------------------------------------------------- (Dollars in thousands) ------------------------------------------------------------- Net Premiums earned: Reinsurance: Workers' compensation $ 742 $2,339 $3,633 $5,541 215.2% 52.5% General liability from affiliate 904 487 2,020 2,301 (46.1) 13.9 Auto Liability 6 28 ------ ------ ----- ----- Total reinsurance 1,646 2,832 5,653 7,870 72.1 39.2 Primary insurance: Surety 153 694 424 1,711 353.6 303.5 ----- ------ ----- ----- Total primary insurance 153 694 424 1,711 353.6 303.5 ----- ------ ----- ----- Total net premiums earned 1,799 3,526 6,077 9,581 96.0 57.7 ----- ------ ----- ------ Net investment income 825 746 2,307 2,160 (9.6) (6.4) Interest on notes receivable 791 512 1,487 2,020 (35.3) 35.8 Commission and fee income: Brokerage commission income 229 277 890 771 21.0 (13.4) Management fees from affiliate 183 207 550 563 13.1 2.4 ----- ------ ----- ------ Total commission and fee income 412 484 1,440 1,334 17.5 (7.4) ----- ------ ----- ------ Net realized gains (losses) 61 120 156 218 96.7 39.7 Other income 4 245 15 706 6,182.2 4,460.2 ----- ------ ----- ------ Total Revenues $3,892 $5,633 $11,482 $16,019 44.7% 39.5% ------ ------ ------- -------
The following table sets forth the components of the Company's GAAP combined ratio for the periods indicated:
Three months ended Nine Months ended September 30, September 30, 1997 1998 1999 1997 1998 1999 ---- ---- ---- ---- ---- ---- Insurance operations: Loss and loss adjustment expense ratio 51.1% 63.9% 60.9% 54.3% 59.6% 58.1% Expense ratio 41.1 4.1 15.0 33.7 9.2 14.9 ----- ----- ----- ----- ----- ----- Combined ratio 92.2% 68.0% 75.9% 88.0% 68.8% 73.0% ----- ----- ----- ----- ----- -----
Quarter Ended September 30, 1999 Compared to Quarter Ended September 30, 1998 Net Premiums Earned. Net premiums earned increased 96.0% from $1.8 million in the quarter ended September 30, 1998 to $3.5 million in the quarter ended September 30, 1999. The principal factor accounting for the increase was the Company's assumption of workers' compensation reinsurance business from an unaffiliated insurance carrier, which increased net premiums earned from workers' compensation reinsurance by 215.2% from $742,000 in the quarter ended September 30, 1998 to $2.3 million in the quarter ended September 30, 1999. This increase was a result of additional premiums from new insureds in this line of business. Another factor accounting for the increase was an increase of the Company's surety business by 353.6% from $153,000 in the quarter ended September 30, 1998 to $694,000 in the quarter ended September 30, 1999. The increase in surety business is attributable to additional premiums from new business and the Company's new reinsurance program. -13- Net Investment Income. Net investment income decreased 9.6% from $825,000 in the quarter ended September 30, 1998 to $746,000 in the quarter ended September 30, 1999 due to a reduction in the investment portfolio. The average pre-tax yield on investments was 6.2% in the quarter ended September 30, 1998 and 5.6% in the quarter ended September 30, 1999. The average after-tax yield on investments was 5.7% in the quarter ended September 30, 1998 and 5.4% in the quarter ended September 30, 1999. Interest from Notes Receivable. Interest from notes receivable decreased 35.3% from $791,000 in the quarter ended September 30, 1998 to $512,000 in the quarter ended September 30, 1999 as a result of a decrease in the average outstanding notes receivable. See note 7 to consolidated financial statements (unaudited). Brokerage Commission Income. Income from insurance brokerage operations increased 21.0% from $229,000 in the quarter ended September 30, 1998 to $277,000 in the quarter ended September 30, 1999 as a result of increased production of agency business relating to the Company's risk retention group affiliate during the quarter. Management Fees. Management fees increased 13.1% from $183,000 in the quarter ended September 30, 1998 to $207,000 in the quarter ended September 30, 1999 as a result of increased service levels, provided by the Company, to its risk retention group affiliate. Net Realized Gains (Losses). Net realized gains increased 96.7% from $61,000 in the quarter ended September 30,1998 to $120,000 for the quarter ended September 30, 1999 due to the sale of mutual funds. Other Income. Other income increased from $4,000 in the quarter ended September 30, 1998 to $245,000 for the quarter ended September 30, 1999 as a result the Company's new financial services subsidiary, which is engaged in the business of arranging third-party financing for a fee and earnings from the companys prepaid legal program. Losses and Loss Adjustment Expenses. Losses and loss adjustment expenses increased 86.7% from $1.2 million in the quarter ended September 30, 1998 to $2.1 million in the quarter ended September 30, 1999 primarily due to an increase in net premiums earned. Increases in workers' compensation premiums accounted for the largest portion of the increase in the losses and loss adjustment expenses, as that line of business has a higher loss ratio than the general liability or surety lines of business. Acquisition Expenses. Policy acquisition expenses increased 326.1% from ($86,000) in the quarter ended September 30, 1998 to $194,000 in the quarter ended September 30, 1999 as a result of increased premiums production and the Company's new reinsurance program for surety business which eliminated the ceding commissions. Payroll and Other Expenses. Payroll and other expenses increased 34.3% from $1.3 million in the quarter ended September 30, 1998 to $1.7 million in the quarter ended September 30, 1999 as a result of increases in salary, benefits and operating expense primarily due to increased staffing for new and existing programs combined with operating expenses from the Company's new financial services subsidiary. Income Taxes. Federal and state income taxes increased from a benefit of $70,000 in the quarter ended September 30, 1998 to an expense of $188,000 in the quarter ended September 30, 1999 due to increased taxable income in the Company's U.S. subsidiaries. Nine Months Ended September 30, 1999 Compared to Nine Months Ended September 30, 1998 Net Premiums Earned. Net premiums earned increased 57.7% from $6.1 million in the nine months ended September 30, 1998 to $9.6 million in the nine months ended September 30, 1999. The principal factor accounting for the increase was the Company's assumption of workers' compensation reinsurance business from an unaffiliated insurance carrier, which increased net premiums earned from workers' compensation reinsurance by 52.5% from $3.6 million in the nine months ended September 30, 1998 to $5.5 million in the nine months ended September 30, 1999. This increase was a result of additional premiums from new insureds in this line of business. Another factor accounting for the increase was an increase of the Company's surety business by 303.5% from $424,000 in the nine months ended September 30, 1998 to $1.7 million in the nine -14- months ended September 30, 1999. The increase in surety business is attributable to additional premiums from new business and the Company's new reinsurance program. Interest from Notes Receivable. Interest from notes receivable increased 35.9% from $1.5 million in the nine months ended September 30, 1998 to $2.0 million in the nine months ended September 30, 1999 as a result of an increase in the average outstanding notes receivable. See note 7 to consolidated statements (unaudited). Brokerage Commission Income. Income from insurance brokerage operations decreased 13.4% from $890,000 in the nine months ended September 30, 1998 to $771,000 in the nine months ended September 30, 1999 as a result of lower production in our agency business due to a change in personnel partially offset by increased production with our risk retention group affiliate. Management Fees. Management fees increased 2.4% from $550,000 in the nine months ended September 30, 1998 to $563,000 in the nine months ended September 30, 1999 as a result of increased service levels provided by the Company to its risk retention group affiliate. Net Realized Gains. Net realized gains (losses) increased 40.1% from a gain of $156,000 in the nine months ended September 30, 1998 to a gain of $218,000 in the nine months ended September 30, 1999. Other Income. Other income increased from $15,000 in the nine months ended September 30, 1998 to $706,000 for the nine months ended September 30, 1999 as a result of the Company's new financial services subsidiary which is engaged in the business of arranging third-party financing for a fee and earnings from the companys prepaid legal program. Losses and Loss Adjustment Expenses. Losses and loss adjustment expenses increased 53.7% from $3.6 million in the nine months ended September 30, 1998 to $5.6 million in the nine months ended September 30, 1999 primarily due to an increase in net premiums earned. Increases in workers' compensation premiums accounted for the largest portion of the increase in the losses and loss adjustment expenses, as that line of business has a higher loss ratio than the general liability or surety lines of business. Acquisition Expenses. Policy acquisition expenses increased 158.5% from $335,000 in the nine months ended September 30, 1998 to $865,000 in the nine months ended September 30, 1999 as a result of increased premiums production and the Company's new reinsurance program for surety business which eliminated the ceding commissions. Payroll and Other Expenses. Payroll and other expenses increased 50.2% from $3.4 million in the nine months ended September 30, 1998 to $5.0 million in the nine months ended September 30, 1999 as a result of increases in salary, benefits and operating expense primarily due to increased staffing for new and existing programs combined with operating expenses from the Company's new financial services subsidiary. Income Taxes. Federal and state income taxes increased from a benefit of $30,000 in the nine months ended September 30, 1998 to an expense of $34,000 in the nine months ended September 30, 1999 due to increased taxable income in the Company's U.S. subsidiaries. Liquidity and Capital Resources The Company historically has met its cash requirements and financed its growth principally through cash flows generated from operations. The Company's primary sources of cash flow are proceeds from the sale or maturity of invested assets, premiums earned, investment income, commission income and management fees. The Company's short-term cash requirements are primarily for claims payments, reinsurance premiums, commissions, salaries, employee benefits -15- and other operating expenses, and the purchase of investment securities, which have historically been satisfied from operating cash flows. Due to the uncertainty regarding settlement of unpaid claims, the long-term liquidity requirements of the Company may vary, and the Company has attempted to structure its investment portfolio to take into account the historical payout patterns. Management believes that the Company's current cash flows are sufficient for its short-term needs and the Company's invested assets are sufficient for its long-term needs. The Company also purchases reinsurance to mitigate the effect of large claims and to stabilize demands on its liquidity. The Company has repurchased 168,150 shares in open market transactions, through November 10, 1999, pursuant to its stock repurchase program. On a consolidated basis, net cash provided from operations was $3.7 million for the nine months ended September 30, 1998 and $4.6 million for the nine months ended September 30, 1999. The positive cash flows for both periods were primarily attributable to net premiums written, net earnings, and increases in reserves for unpaid losses. Because workers' compensation and general liability claims may be paid over an extended period of time, the Company has established appropriate loss reserves for such lines of business. The assets supporting the Company's reserves continue to earn investment income until claims payments are made. Total assets increased from $86.1 million at December 31, 1998 to $97.0 million at September 30, 1999, primarily due to increases in premiums receivable, reinsurance recoverable and real estate investments and slightly offset by a decrease in notes receivable. Cash, invested assets and notes receivable were $72.0 million at December 31, 1998 and September 30, 1999. American Safety is an insurance and financial services holding company whose principal assets are its investment portfolio and its investment in the capital stock of its subsidiaries. As an insurance holding company, American Safety's ability to pay dividends to its shareholders will depend, to a significant degree, on the ability of the Company's subsidiaries to pay dividends to American Safety. The jurisdictions in which American Safety and its insurance and reinsurance subsidiaries are domiciled place limitations on the amount of dividends or other distributions payable by insurance companies in order to protect the solvency of insurers. In January 1997, the Securities and Exchange Commission approved rule amendments regarding disclosures concerning derivative financial instruments, other financial instruments and derivative commodity instruments (the "Release"). The Release requires inclusion in the footnotes to the financial statements of extensive detail about the accounting policies followed by a company in connection with its accounting for derivative financial instruments and derivative commodity instruments. As of September 30, 1999, the Company had no investments in derivative instruments. Income Taxes American Safety is incorporated under the laws of Bermuda and, under current Bermuda law, is not obligated to pay any taxes in Bermuda based upon income or capital gains. American Safety has received an undertaking from the Minister of Finance in Bermuda pursuant to the provisions of The Exempted Undertakings Tax Protection Act 1966, which exempts American Safety and its shareholders, other than shareholders ordinarily resident in Bermuda, from any Bermuda taxes computed on profits, income or any capital asset, gain or appreciation, or any tax in the nature of estate, duty or inheritance until March 28, 2016. The Company, exclusive of its United States subsidiaries, does not consider itself to be engaged in a trade or business in the United States and accordingly does not expect to be subject to direct United States income taxation. The Company's U.S. subsidiaries are subject to taxation in the United States. Inflation Property and casualty insurance premiums are established before the amounts of losses and loss adjustment expenses are known and therefore before the extent by which inflation may affect such expenses is known. Consequently, the Company attempts, in establishing its premiums, to anticipate the potential impact of inflation. However, for competitive and regulatory reasons, the Company may be limited in raising its premiums consistent with anticipated inflation, in which event the Company, rather than its insureds, would absorb inflation costs. Inflation also affects the rate of investment return on the Company's investment portfolio with a corresponding effect on the Company's investment income. -16- Year 2000 The Year 2000 issue is the result of computer programs being written using two digits rather than four digits to define the applicable year. If not corrected, computer applications could fail or create erroneous results by or at the Year 2000. The Company, together with consulting outside vendors, has reviewed its information technology systems (i.e., underwriting, insureds, claims and accounting) and believes that the systems will process date information accurately and without interruption when required to process dates in the year 1999 and beyond. In the context of Year 2000 issues, the Company has identified the following general categories of business partners as material to the Company's ability to conduct its operations: software, hardware and telecommunication providers, banks and investment managers, insurance brokers, agents and producers, reinsurers and reinsurance intermediaries and utilities. The Company has been in contact with its material business partners to determine their state of readiness with regard to Year 2000 compliance and the potential impact on the Company. Based on the information available to the Company, the Company has not currently identified a material business partner that will not be compliant with respect to Year 2000 issues. However, there can be no assurance that such material business partners will be Year 2000 compliant, and such noncompliance could have a material affect on the Company's financial condition and results of operations. The Company has conducted a review of its underwriting guidelines and policies, and has determined that the insurance policies issued by the Company did not insure Year 2000 claims. However, changing social and legal trends may create unintended coverage for claims by reinterpreting insurance contracts and exclusions. It is impossible to predict what, if any, exposure insurance companies may ultimately have for Year 2000 claims whether coverage for the issue was specifically excluded or included. The Company has completed its year 2000 testing. The Company's contingency plan for any Year 2000 noncompliance of its information technology systems involves the manual entering and outputting of business records. The Company believes it has sufficient employees and other staff available to maintain its current level of customer service. To date, the Company has spent less than $100,000 on hardware and software relating to Year 2000 compliance and the Company does not anticipate any significant additional expenditures with respect to the Year 2000 issue. Item 3. Quantitative and Qualitative Disclosures About Market Risks. The Company's market risk has not changed materially since December 31, 1998. [The remainder of this page is intentionally left blank.] -17- PART II - OTHER INFORMATION Item 1. Legal Proceedings. Not applicable. Item 2. Changes in Securities and Use of Proceeds. Not applicable. Item 3. Defaults Upon Senior Securities. Not applicable. Item 4. Submission of Matters to a Vote of Security Holders. Not applicable. Item 5. Other Information. Not applicable. Item 6. Exhibits and Reports on Form 8-K. (a) The following exhibits are filed as part of this Report: Exhibit No. Description 11 Computation of Earnings Per Share 27 Financial Data Schedule (b) Reports on Form 8-K. Not applicable. -18- SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 12th day of November 1999. American Safety Insurance Group, Ltd. By: /s/ Lloyd A. Fox Lloyd A. Fox President and Chief Executive Officer By: /s/ Steven B. Mathis Steven B. Mathis Chief Financial Officer (Principal Financial Officer) EX-11 2 COMPUTATION OF EARNINGS PER SHARE -19- Exhibit 11 American Safety Insurance Group, Ltd. and subsidiaries Computation of Earnings Per Share
Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 1998 1999 1998 1999 ------ ------ ------ ----- Basic: Earnings Available to Common Shareholders.............................. $1,598,183 $1,359,263 $4,203,743 $4,519,838 ========== ========== ========== ========== Weighted Average Common Shares Outstanding............................... 6,074,770 6,009,208 5,522,497 6,050,059 Basic Earnings Per Common Shares ................................... $ .26 $ .23 $ .76 $ .75 ========== ========== ========== ========== Diluted: Earnings Available to Common Shareholders.............................. $1,598,183 $1,359,263 $4,203,743 $4,519,838 ========== ========== ========== ========== Weighted Average Common Shares Outstanding............................... 6,074,770 6,009,208 5,522,497 6,050,059 Weighted Average Common Shares Equivalents Associated with Options................................... 44,319 18,459 84,960 27,641 Total Weighted Average Common Shares.................................... 6,119,089 6,027,667 5,607,457 6,077,700 ========= ========= ========= ========= Diluted Earnings per Common Shares.................................... $ .26 $ .23 $ .75 $ .74 ========== ========== ========== ==========
EX-27 3 FINANCIAL DATA SCHEDULE WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE. <
7 1,000 3-MOS DEC-31-1999 JUN-30-1999 SEP-30-1999 39,313 0 0 1,601 0 11,122 60,624 2,316 6,070 230 96,953 18,311 6,569 0 0 0 0 0 61 61,201 96,953 3,526 746 120 245 2,148 605 1,745 1,547 188 1,359 0 0 0 1,359 .23 .23 15,145 0 0 0 0 15,173 0
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