American Safety Insurance Issues Results
Bermuda holding company American Safety Insurance Holdings, Ltd. yesterday [Nov.2] reported net earnings of $5.8 million for the three months ended September 30, 2011, or $.54 per diluted share, as compared to $7.2 million, or $0.68 per diluted share, for the same period of 2010.
Financial highlights for the quarter included:
- Gross written premiums increased 2.4% to $73.2 million
- Net earned premiums increased 10.8% to $59.0 million
- The combined ratio was 101.3% compared to 98.3%
- Operating cash flow was $17.2 million compared to $17.0 million
- Book value was $31.31 per diluted share versus $29.00 at December 31, 2010
- Annualized return on average equity (exclusive of realized and unrealized gains from investments) was 8.0%
- 1All comparisons are with the same period last year unless stated otherwise.
Third Quarter Results
Total revenues in the quarter increased to $68.1 million from $63.3 million in 2010 due to increased earned premiums across all divisions, driven primarily by growth in newer products within the E&S division.
The combined ratio of 101.3% consists of a loss ratio of 60.8% and an expense ratio of 40.5%, compared to 59.0% and 39.3%, respectively, for the same quarter of 2010. The increase in the loss ratio was due primarily to current market conditions, but was not impacted by Hurricane Irene losses. The increase in the expense ratio was due primarily to the impact of technology investments placed in service during the quarter and lower fee income.
For the three months ended September 30, 2011, net operating earnings of $5.8 million compares to $6.7 million for the same quarter 2010. We have presented net operating earnings, which is a non-GAAP financial measure because we believe that investors’ understanding of operating performance is enhanced by this disclosure. Net operating earnings (loss) represent after tax operational results without consideration of after-tax net investment gains (losses).
Year to Date Results
Net earnings for the nine months ended September 30, 2011 were $17.8 million, or $1.65 per diluted share, compared to $19.9 million, or $1.87 per diluted share for the same period in 2010. Net earned premiums year to date increased 20.3% to $172.5 million. Pre-tax net realized gains on investments for the nine months ended September 30, 2011 were $11.3 million compared to $2.1 million during the same period in 2010.
The combined ratio was 107.7%, composed of a loss ratio of 68.4% and an expense ratio of 39.3%. The increase in the loss ratio to 68.4% from 60.0% for the 2010 period is primarily due to $10.1 million of catastrophe and weather related losses that occurred in the first six months of 2011. The expense ratio was 39.3% for the nine months ended September 30, 2011 compared to 39.8% in the same period in 2010.
Invested assets increased eight percent to $881.1 million at September 30, 2011 from $818.5 million at December 31, 2010. The pre-tax book yield realized during the nine months on the investment portfolio was 3.7% compared to 4.1% for the same period in 2010.
Book value at September 30, 2011 increased to $31.31 per diluted share compared to $29.00 at December 31, 2010. Since December 31, 2010, the company has repurchased 132,661 shares at an average price of $18.87 per share. There are 211,639 shares remaining under the current repurchase authorization.
Commenting on the results, Stephen R. Crim, president and CEO said, “We produced solid operating results in the third quarter with minimal impact from weather related events. We also achieved modest growth in gross written premiums resulting from our product diversification strategy. Overall, I am pleased with our 2011 results, with book value per diluted share increasing by eight percent year to date in the face of a competitive insurance market and difficult economy.”
For 25 years, American Safety Insurance Holdings, Ltd. a Bermuda holding company, has offered innovative solutions outside the US in the reinsurance and alternative risk markets through its subsidiaries, American Safety Reinsurance, Ltd. and American Safety Assurance, Ltd., and in the US for specialty risks and alternative risk markets through its program administrator, American Safety Insurance Services, Inc., and insurance company subsidiaries and affiliates, American Safety Casualty Insurance Company, American Safety Indemnity Company, American Safety Risk Retention Group, Inc. and American Safety Assurance (Vermont), Inc.. As a group, ASI’s insurance subsidiaries and affiliates are rated “A” (Excellent) IX by A.M. Best.
