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American Safety Insurance Holdings, Ltd. Reports First Quarter Financial Results

^{Published on 2011-05-04 21:20:29 - Market Wire}
 

HAMILTON, Bermuda--([ BUSINESS WIRE ])--American Safety Insurance Holdings, Ltd. (NYSE:ASI) today reported net earnings of $7.9 million for the three months ended March 31, 2011, or $0.73 per diluted share, as compared to $6.5 million, or $0.61 per diluted share, for the same period of 2010.

"Property catastrophe losses contributed to a difficult quarter, but those losses were in line with established risk tolerance levels. I am, however, pleased with the progress we made in our product diversification strategy, which was a primary driver of premium growth in the quarter."

Financial highlights for the quarter included¹:

• Net earned premiums increased 27% to $54.4 million
• Net realized gains on investments were $11.1 million compared to $1.0 million
• Property losses, including catastrophic events, were $5.8 million, contributing approximately 11 points to the combined ratio
• The combined ratio was 116.7% compared to 102.3%
• Net operating cash flow was $26.5 million compared to $10.6 million
• Book value was $28.57 per diluted share versus $29.00 at December 31, 2010

¹All comparisons are with the same period last year unless stated otherwise.

Total revenues in the quarter increased to $73.8 million from $53.0 million in 2010 due to higher net earned premiums across all insurance divisions and net realized gains on investments, partially offset by a decrease in investment and fee income.

The combined ratio consists of a loss ratio of 77.7% and an expense ratio of 39.0%, compared to 59.1% and 43.2%, respectively, for the same quarter of 2010. The loss ratio was impacted by prior year reserve strengthening of $6.8 million and includes: (a) weather related property losses in the E&S division of $1.4 million; (b) property losses in the ART division of $0.8 million; and (c) $4.6 million primarily attributable to two non-renewed casualty contracts in the Assumed Reinsurance division. The loss ratio was also impacted by $3.6 million in net catastrophe losses attributable to New Zealand and Japan in the Assumed Reinsurance division. The expense ratio decreased to 39.0% from 43.2% a year ago primarily as a result of economies of scale associated with an increase in net earned premiums.

For the three months ended March 31, 2011, a net operating loss of $3.2 million compares to net operating earnings of $5.8 million for the same quarter 2010. The 2011 net operating loss is primarily the result of property and other losses noted above. Investment income decreased 5.9% to $7.4 million as a result of the sale of fixed income securities totaling $81.6 million and subsequent reinvestment in shorter duration, lower yielding securities. Net operating earnings (loss) is a non-GAAP financial measure defined by the Company as net earnings adjusted for net realized gains (losses), net of applicable taxes.

Since December 31, 2010, the company repurchased 37,566 shares at an average price of $19.89 per share. Remaining shares under the current authorization are 306,734.

Commenting on the results, Stephen R. Crim, President and Chief Executive Officer said, aProperty catastrophe losses contributed to a difficult quarter, but those losses were in line with established risk tolerance levels. I am, however, pleased with the progress we made in our product diversification strategy, which was a primary driver of premium growth in the quarter.a

Conference Call

A conference call to discuss first quarter 2011 results is scheduled for Thursday, May 5, 2011 at 9:00 a.m. (Eastern Daylight Time), which will be broadcast through Vcalla™s Investor Calendar at [ www.investorcalendar.com ], or the Companya™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 Companya™s website beginning several days after the call.

This report contains forward-looking statements.The forward-looking statements reflect the Companya™s current views with respect to future events and financial performance, including catastrophe and other losses.Forward-looking statements involve risks and uncertainties which may cause actual results to differ materially, including developments in loss trends and adequacy and changes in loss reserves and actuarial assumptions.

About Us:

For 25 years, American Safety Insurance Holdings, Ltd. (NYSE:ASI), a Bermuda holding company, has offered 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 and American Safety Risk Retention Group, Inc. and American Safety Assurance (Vermont), Inc. and Victore Insurance Company.As a group, ASIa™s insurance subsidiaries and affiliates are rated aAa (Excellent) IX by A.M. Best. For additional information, please visit [ www.asih.bm ].