Affirmative Insurance Holdings, Inc. Announces 2005 Third Quarter Results.ADDISON, Texas Addison is a city in Dallas County, Texas (USA). The population was 14,166 at the 2000 census. Addison is a northern suburb of Dallas. The city calls itself the Town of Addison but it is incorporated as a city. -- Affirmative AFFIRMATIVE. Averring a fact to be true; that which is opposed to negative. (q.v.) 2. It is a general rule of evidence that the affirmative of the issue must be proved. Bull. N. P. 298 ; Peake, Ev. 2. 3. Insurance Holdings, Inc. (Nasdaq:AFFM AFFM Adoptive and Foster Families of Maine (Old Town, Maine) AFFM Air Flow Field Modification ), a producer and provider of personal non-standard automobile insurance, today announced financial results for the quarter and nine months ended September September: see month. 30, 2005. Highlights for the Company's 2005 third quarter and nine months included: --Net income for the third quarter of 2005 was $6.0 million, essentially unchanged from net income reported for the third quarter of 2004; net income for the nine months ended September 30, 2005 was $19.9 million, an increase of 6.4% compared to $18.7 million for the same period last year. --Earnings per share for the third quarter of 2005 were $0.39 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share with an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. return on equity of 12.4%; earnings per share for the nine months ended September 30, 2005 were $1.23 per diluted share with an annualized return on equity of 13.3%. --Total revenues for the third quarter of 2005 were $95.8 million, an increase of 32.0% as compared to total revenue of $72.6 million for the same period of 2004; total revenues for the nine months ended September 30, 2005 were $281.7 million, an increase of 32.9% compared to $212.0 million for the same period last year. --Total controlled premium for the three months ended September 30, 2005 was $80.2 million, a decrease of $24.3 million, or 23.3%, as compared to $104.5 million for the same period in 2004. Total controlled premium for the nine months ended September 30, 2005 was $270.1 million, a decrease of $50.1 million, or 15.6%, as compared to $320.2 for the same period in 2004. --Book value per share was $13.14 as of September 30, 2005, as compared to book value per share of $12.19 as of December December: see month. 31, 2004, an increase of 7.8%. "In the third quarter we continued to achieve excellent underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. margins in each of our markets. We successfully completed our acquisition of an underwriting agency, which allowed us to expand into the state of Michigan Michigan (mĭsh`ĭgən), upper midwestern state of the United States. It consists of two peninsulas thrusting into the Great Lakes and has borders with Ohio and Indiana (S), Wisconsin (W), and the Canadian province of Ontario (N,E). . Affirmative continues to maintain underwriting and pricing discipline in the increasingly competitive pricing environment, which has created a short term drag on Verb 1. drag on - last unnecessarily long drag out last, endure - persist for a specified period of time; "The bad weather lasted for three days" 2. premium growth," said Thomas (language) Thomas - A language compatible with the language Dylan(TM). Thomas is NOT Dylan(TM). The first public release of a translator to Scheme by Matt Birkholz, Jim Miller, and Ron Weiss, written at Digital Equipment Corporation's Cambridge Research Laboratory runs E. Mangold, chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Affirmative Insurance Holdings, Inc. "We remain confident that the continued execution of our product, distribution and acquisition initiatives will create superior long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. shareholder value." Third Quarter Financial Results Third quarter 2005 consolidated net income was $6.0 million or $0.39 per diluted share, essentially unchanged from net income of $6.0 million or $0.37 per diluted share for the same period in 2004. Weighted average diluted shares for the third quarter of 2005 were 15.2 million compared to 16.2 million for the same quarter of the prior year. Consolidated revenues for the three months ended September 30, 2005 were $95.8 million, an increase of $23.2 million, or 32.0%, as compared to revenues of $72.6 million for the three months ended September 30, 2004. The increase in consolidated revenues was primarily due to increased retention of gross premiums written When a non-life insurance company closes a contract to provide insurance against loss, the revenues (premiums) expected to be received over the life of the contract are called gross premiums written. and increased invested assets in the insurance company operations. The increased capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. of the insurance companies from the proceeds of the Company's initial public offering in July July: see month. of 2004 and the issuance of trust preferred securities in December 2004 have enabled the Company to increase its retention of total controlled premium at July 2004, and again at January January: see month. 2005. For the three months ended September 30, 2005, the Company retained 90.7% of its total controlled premium, as compared to 67.3% in the same period of the prior year. Total controlled premium for the three months ended September 30, 2005 was $80.2 million, a decrease of $24.3 million, or 23.3%, as compared to $104.5 million for the same period in 2004. In the Retail distribution channel, total controlled premium decreased $5.6 million, or 17.9%, to $25.4 million in the third quarter of 2005, as compared to $31.0 million for the same period in 2004, principally due to decreases in the Midwest Midwest or Middle West, region of the United States centered on the western Great Lakes and the upper-middle Mississippi valley. It is a somewhat imprecise term that has been applied to the northern section of the land between the Appalachians and Texas retail operations as a result of increased advertising competition, partially offset by production in the Florida Florida, state, United States Florida (flôr`ĭdə, flŏr`–), state in the extreme SE United States. A long, low peninsula between the Atlantic Ocean (E) and the Gulf of Mexico (W), Florida is bordered by Georgia and retail operation, which was acquired in December of 2004. In the Independent Agency distribution channel, total controlled premium decreased $3.6 million, or 7.7%, to $43.0 million, from $46.6 million for the same period in 2004 primarily due to decreases in the Florida and Texas underwriting agencies as a result of increased price competition and planned reductions in the amount of business written in Miami-Dade County, partially offset by production in the Michigan underwriting agency, which was acquired in July of 2005. Total controlled premium from unaffiliated underwriting agencies decreased $15.2 million, or 56.3%, to $11.8 million in the third quarter of 2005, from $27.0 million in the third quarter of 2004, primarily due to the run-off run-off n (in contest, election) → desempate m (= extra race); carrera de desempate run-off n (in contest, election) → of programs in California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). , as well as run-off of programs in Alabama Alabama, indigenous people of North America Alabama (ăləbăm`ə), indigenous people of North America whose language belongs to the Muskogean branch of the Hokan-Siouan linguistic stock (see Native American languages). , Georgia Georgia, country, Asia Georgia (jôr`jə), Georgian Sakartvelo, Rus. Gruziya, officially Republic of Georgia, republic (2005 est. pop. 4,677,000), c.26,900 sq mi (69,700 sq km), in W Transcaucasia. , and Utah. The unaffiliated underwriting agencies that we contract with in Alabama, Georgia and Utah have received regulatory approval for licensing of their insurance companies from these states and are transitioning policies to their insurance companies. Revenues from agency operations for the third quarter of 2005 increased 0.3% to $42.3 million with a pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern margin of 11.8%, compared to revenues of $42.2 million with a pretax margin of 16.5% for the third quarter of 2004. Net income from agency operations decreased 24.0% to $3.0 million from $4.0 million in the same quarter of the prior year. Revenues from insurance company operations for the third quarter of 2005 were $85.6 million, an increase of 47.3% as compared to third quarter 2004 revenues of $58.1 million. The combined ratio for the third quarter of 2005 was 94.5% as compared to 94.4% for the third quarter of 2004. Net income from insurance company operations increased 59.7% to $3.9 million from $2.4 million in the same quarter of the prior year. Nine Months Financial Results For the nine months ended September 30, 2005 consolidated net income was $19.9 million or $1.23 per diluted share, up 6.4% from $18.7 million or $1.42 per diluted share for the same period in 2004. Weighted average diluted shares for the first nine months of 2005 were 16.2 million shares compared to 13.2 million for the same period last year. Consolidated revenues for the nine months ended September 30, 2005 were $281.7 million, an increase of $69.7 million or 32.9%, compared to $212.0 million for the nine months ended September 30, 2004. The increase in consolidated revenues was primarily due to increased retention of gross premiums written and increased invested assets in the insurance company operations. The Company retained 92.4% of its total controlled premiums for the nine months ended September 30, 2005, as compared to 49.5% for the same period of 2004. Total controlled premium for the nine months ended September 30, 2005 was $270.1 million, a decrease of $50.1 million, or 15.6%, as compared to $320.2 for the same period in 2004. In the Retail distribution channel, total controlled premium decreased $5.2 million, or 5.5%, to $90.8 million, as compared to $96.0 million for the same period in 2004, primarily due to decreases in the Midwest and Texas retail operations as a result increased advertising competition, partially offset by acquisitions of retail stores in Florida and Texas. In the Independent Agency distribution channel, total controlled premium decreased $16.0 million, or 11.3%, to $125.9 million compared to $142.0 million for the same period of 2004, due to decreases in the Florida underwriting agency as a result of increased price competition and planned reductions in the amount of business written in Miami-Dade County, as well as decreased production in the Texas and Midwest underwriting agencies as a result of increased price competition. These decreases were partially offset by production in the Michigan underwriting agency that was acquired in July of 2005. Total controlled premium from unaffiliated underwriting agencies decreased $28.7 million, or 35.0%, to $53.4 million as compared to $82.2 million for the same period of the prior year, primarily due to the run-off of programs in California, Alabama, Georgia and Utah. Revenues for the first nine months of 2005 for agency operations were $131.4 million, an increase of $6.3 million, or 5.0%, as compared to $125.1 million of revenues for the same period of 2004. Pretax margin for the nine months ended September 30, 2005 was 14.6%, as compared to the 17.1% for the nine months ended September 30, 2004. Net income from agency operations for the nine months ended September 30, 2005 was $11.8 million, a decrease of 8.4% from $12.9 million for the same period last year. Revenues from insurance company operations for the nine months ended September 30, 2005 were $246.8 million, an increase of $83.0 million, or 50.6% from the $163.8 million for the nine months ended September 30, 2004. The combined ratio for the first nine months of 2005 was 94.9% compared to 94.1% for the same period of 2004. Net income for the nine months ended September 30, 2005 was $10.5 million, an increase of $3.6 million, or 51.8%, as compared to net income of $6.9 million for the nine months ended September 30, 2004. Recent Events Affirmative announced on October October: see month. 7, 2005, the appointment of Katherine Katherine “intolerably curst and shrewd and froward.” [Br. Lit.: The Taming of the Shrew] See : Shrewishness C. Nolan as president, Retail Division, succeeding George George, river, c.345 mi (560 km) long, rising in a lake on the Quebec-Labrador boundary, E Canada. It flows N through Indian Lake (125 sq mi/324 sq km) to Ungava Bay (an arm of Hudson Strait). M. Daly, who resigned from the company effective November November: see month. 30, 2005. Ms. Nolan remains an executive vice president of Affirmative Insurance Holdings, Inc. On October 11, 2005, Affirmative announced that A.M. Best Co. had affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. the financial strength rating of B+ (Very Good) for Affirmative Insurance Group and assigned as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. issuer credit ratings of "bb-" to Affirmative Insurance Holdings, Inc. and "bbb-" to its insurance companies. All rating outlooks were changed from stable to positive. Also on October 11, 2005, Affirmative said it had experienced negligible  This article or section is written like a personal reflection or and may require .Please [ improve this article] by rewriting this article or section in an . losses from Hurricane Rita Hurricane Rita was the fourth-most intense Atlantic hurricane ever recorded and the most intense tropical cyclone ever observed in the Gulf of Mexico. Rita caused $11.3 billion in damage on the U.S. Gulf Coast in September 2005. . Pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta losses estimated to be less than $100,000 were attributable to the third quarter of 2005. In addition, the Company's preliminary estimates losses from Hurricane Wilma Hurricane Wilma was the most intense hurricane ever recorded in the Atlantic basin. Exceeding the 21 storms of the 1933 season, Wilma was the twenty-second storm (including the subtropical storm discovered in reanalysis), thirteenth hurricane, sixth major hurricane, and fourth are expected to be less than $50,000, which will be attributable to the fourth quarter of 2005. On October 28, 2005 and pursuant to Section 14(f) of the Securities Exchange Act of 1934 and Rule 14f-1 thereunder, the Company filed with the U.S. Securities and Exchange Commission a Schedule 14f-1 ("Information Statement") regarding a planned change One of the foundational definitions in the field of organizational development (aka OD) is planned change: “Organization Development is an effort planned, organization-wide, and managed from the top, to increase organization effectiveness and health through planned of majority in directors of its board. Consistent with such filing, ten days from the date of mailing of the Information Statement, Lucius E. Burch, III, Mark E. Pape and Mark E. Watson, Jr. resigned as directors of the Company. Messrs Thomas E. Mangold, Thomas C. Davis and Paul Z. Zucconi and Ms. Suzanne T. Porter remain as directors of the Company after such resignations and pursuant to a resolution of the Board, increased the number of members of the board from seven to nine and filled the five resulting vacancies on the Board by appointing the following five individuals who, following inquiry by the Board, were designated by New Affirmative: Kevin R. Callahan, Nimrod Nimrod, in the Bible, descendant of Cush who is recorded as a mighty hunter. Nimrod Biblical hunter of great prowess. [O.T.: Genesis 10:9; Br. Lit.: Paradise Lost] See : Hunting T. Frazer, David L. Heller, Avshalom Y. Kalichstein, and Michael J. Ryan. Guidance and Supplemental Information Based on its current expectations of market conditions, Affirmative is confirming its guidance for 2005 and estimates full year earnings to be in the range of $1.55 to $1.70 per diluted share. This guidance is based on 15.9 million diluted shares, and does not include the impact from any acquisitions that may occur in the future. To provide a more complete understanding of Affirmative's financial results, the Company has posted supplemental financial data on the investor relations Investor relations The process by which the corporation communicates with its investors. portion of the Company's Web site, www.affirmativeholdings.com. The data pertains to third quarter financial results for 2004 and 2005. Conference call Affirmative will hold a conference today, Thursday, November 10, at 11:00 a.m. Eastern, 10:00 a.m. Central. Following a brief presentation, participants will have the opportunity to ask questions. To participate in the call, dial 866-362-4666 (international dial 617-597-5313) ten minutes before the conference call begins and use passcode 22871926. A real-time 1. real-time - Describes an application which requires a program to respond to stimuli within some small upper limit of response time (typically milli- or microseconds). Process control at a chemical plant is the classic example. audio webcast of the conference call will also be available. To listen to the live webcast, select the webcast icon from the investor relations section of Affirmative's Web site www.affirmativeholdings.com at least 10 minutes before the start of the call in order to register, download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. and install any necessary audio software. Individuals accessing the audio webcast will be "listen only" and will not have the ability to participate in the Q&A session. A digital replay will be available approximately one hour after the conclusion of the call. Interested individuals can access the webcast replay at www.affirmativeholdings.com, by clicking on the webcast link. The webcast replay will be available for 30 days after the call. Phone replay will be available through November 17, 2005, and may be accessed by dialing 888-286-8010 (international dial 617-801-6888), then enter passcode 41031157. About Affirmative Insurance Holdings, Inc. Headquartered in Addison, Texas, Affirmative Insurance Holdings, Inc., is a producer and provider of personal non-standard automobile insurance policies to individual consumers in highly targeted geographic markets. Affirmative currently offers products and services in 12 states, including Texas, Illinois Illinois, river, United States Illinois, river, 273 mi (439 km) long, formed by the confluence of the Des Plaines and Kankakee rivers, NE Ill., and flowing SW to the Mississippi at Grafton, Ill. It is an important commercial and recreational waterway. , California and Florida. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Disclosure Certain information in this news release and other statements or materials are not historical facts but are forward-looking statements relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc such matters as: assumed future results of the Company's business; financial condition; liquidity; results of operations; plans; and objectives. In connection with the "safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995, the Company provides the following cautionary remarks regarding important factors which, among others, could cause the Company's actual results and experience to differ materially from the anticipated results or other expectations expressed in the Company's forward-looking statements. The risks and uncertainties that may affect the operations, performance, results of the Company's business, and the other matters referred to above include, but are not limited to: general volatility of the non-standard personal automobile and reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. markets; the market price of our common stock; changes in business strategy; severe weather conditions; availability, terms and deployment of capital; the degree and nature of competitor product and pricing activity; changes in the non-standard personal automobile insurance industry, interest rates or the general economy; identification and integration of potential acquisitions; claims experience; availability of qualified personnel; and the loss of one or more members of the Company's management team.
Affirmative Insurance Holdings, Inc.
Consolidated Statements of Operations - Unaudited
(dollars in thousands, except per share data)
Three months ended Nine months ended
September 30, September 30,
2005 2004 2005 2004
----------- ----------- ------------ -----------
Revenues
Net premiums earned $77,544 $50,328 $222,921 $141,276
Commissions and fees 16,819 21,436 54,711 69,308
Net investment income 1,447 799 4,057 1,389
Realized gains
(losses) 5 11 11 (9)
----------- ----------- ------------ -----------
Total revenues 95,815 72,574 281,700 211,964
----------- ----------- ------------ -----------
Expenses
Losses and loss
adjustment expenses 46,347 35,468 142,131 95,325
Policy acquisition and
operating expenses 38,732 26,397 105,283 84,528
Interest expense 1,124 135 2,499 526
----------- ----------- ------------ -----------
Total expenses 86,203 62,000 249,913 180,379
----------- ----------- ------------ -----------
Net income before
income taxes,
minority interest
and equity interest
in unconsolidated
subsidiaries 9,612 10,574 31,787 31,585
Income tax expense 3,408 4,150 11,266 11,668
Minority interest, net
of income taxes 217 274 576 581
Equity interest in
unconsolidated
subsidiaries, net of
income taxes - 173 - 596
----------- ----------- ------------ -----------
Net income $5,987 $5,977 $19,945 $18,740
=========== =========== ============ ===========
Net income per
common share
- Basic $0.40 $0.38 $1.25 $1.43
=========== =========== ============ ===========
Net income per
common share
- Diluted $0.39 $0.37 $1.23 $1.42
=========== =========== ============ ===========
Weighted average
shares - Basic 14,893,310 15,931,171 15,978,852 13,072,295
Weighted average
shares - Diluted 15,165,677 16,181,166 16,231,333 13,237,835
Affirmative Insurance Holdings, Inc.
Condensed Consolidated Balance Sheets
(dollars in thousands)
September 30, December 31,
2005 2004
------------- -------------
(Unaudited)
Assets
Fixed maturities - available for sale $178,776 $157,666
Short-term investments 480 1,995
---------------------------
179,256 159,661
Cash and cash equivalents 45,099 24,096
Fiduciary and restricted cash 24,063 16,267
Premiums and fees receivable 126,143 107,411
Commissions receivable 7,925 11,890
Receivable from reinsurers 39,889 75,403
Deferred acquisition costs 26,757 19,118
Other assets 112,352 107,074
------------- -------------
Total assets $561,484 $520,920
============= =============
Liabilities and Stockholders' Equity
Liabilities
Reserves for losses and loss adjustment
expenses 123,845 93,030
Unearned premium 106,995 90,695
Amounts due reinsurers 27,804 43,167
Deferred revenue 28,101 24,478
Other liabilities 78,909 64,244
------------- -------------
Total liabilities 365,654 315,614
------------- -------------
Stockholders' equity
Common stock 169 168
Additional paid-in capital 152,773 151,752
Treasury stock (28,000) -
Accumulated other comprehensive
income (loss) (1,221) 251
Retained earnings 72,109 53,135
------------- -------------
Total stockholders' equity 195,830 205,306
------------- -------------
Total liabilities and
stockholders' equity $561,484 $520,920
============= =============
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