American Safety Insurance Holdings, Ltd. Reports a 57% Increase in Second Quarter Earnings.HAMILTON, Bermuda -- American Safety Insurance Holdings, Ltd. (NYSE NYSE See: New York Stock Exchange :ASI ASI, n See Anxiety Sensitivity Index. ) today reported a 57% increase in net earnings for the three months ended June 30, 2007 to $7.3 million, or $0.66 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, compared to $4.6 million, or $0.62 per diluted share, for the same period of 2006. Financial highlights for the quarter included: * 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. decreased 6% to $57.9 million. * Net premiums written increased 7% to $44.5 million. * Net premiums written as a percentage of gross premiums written increased to 76.9% from 67.6% in 2006. * Net premiums earned increased 12% to $39.4 million. * Investment income increased 58% to $7.5 million. * Combined ratio decreased to 94.4% compared to 95.2% for the same period of 2006. * Loss ratio was 59.9% compared to 59.6% for the same period of 2006. * Expense ratio decreased to 34.5% from 35.7% for the same period of 2006. * 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 average equity declined to 14.1% from 15.8% for the same period of 2006 due to the impact of the 2006 equity offering. * Book value per share increased to $19.49 per outstanding share and $18.90 per diluted share compared to $18.59 and $17.88, respectively, as of December 31, 2006. Second Quarter Results The increase in net earnings for the quarter was primarily due to an 18% increase in total revenues, driven by a 58% increase in net investment income and a 12% increase in net premiums earned. Average invested assets increased 33% over June 30, 2006 due to the proceeds from the 2006 equity offering and positive cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses . The pre-tax investment yield increased 80 basis points to 5.3% as compared to 4.5% in the 2006 quarter. The increase in net premiums earned was primarily due to increased retention levels on the Company's core product lines and increased writings of assumed 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. . The combined ratio for the quarter was 94.4%, comprised of a 59.9% loss ratio and a 34.5% expense ratio. The increase in the loss ratio is the result of an increase in the 2007 accident year loss ratio due to the effects of the soft market. Book value per share increased by 4.8% and book value per diluted share increased by 5.7% despite the negative impact of $0.48 per share and $0.47 per diluted share due to the increase in unrealized losses Unrealized Loss A loss that results from holding onto an asset rather than cashing it in and officially taking the loss. Notes: Let's say you own a stock that is down 50%, but you haven't sold it to realize the loss yet. This is said to be an unrealized loss. on the investment portfolio as a result of higher interest rates. Year to Date Results Net earnings for the six months ended June 30, 2007 were $14.4 million, or $1.31 per diluted share, compared to $8.7 million, or $1.19 per diluted share, for the same period of 2006. The increase in net earnings was due mainly to a 17% increase in total revenues driven by an 11% increase in net premiums earned and a 59% increase in net investment income. Average invested assets increased 27% over June 30, 2006 due to the proceeds from the 2006 equity offering and positive cash flow from operations. The pre-tax investment yield increased 100 basis points to 5.2% as compared to 4.2% for the same period of 2006. The increase in net premiums earned was primarily due to increased retention levels on the Company's core product lines and increased writings of assumed reinsurance. The combined ratio for the six months ended June 30, 2007 was 95.0% comprised of a 61.2% loss ratio and a 33.8% expense ratio. The 2006 combined ratio was 97.3% comprised of a loss ratio of 61.7% and an expense ratio of 35.6%. Cash flow from operations totaled $45.7 million, an increase of $13.3 million over 2006 due to lower claims payments and increased receivable collections. The Company also announced the reversal by a Florida Court of Appeals of the $4.0 million trial court judgment against the Company in the Griggs case, which is associated with the Company's former real estate development project in Florida. This decision did not impact the financial results for the second quarter 2007. Commenting on the results, Stephen R. Crim, President and Chief Executive Officer said, "The soft market adversely impacted premium growth in the quarter as we continued to exercise 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. discipline. Our western states construction line was impacted the most, declining by approximately 50% during the quarter. Given the greater than anticipated decline in the insurance markets, we are revising our growth projection for 2007 to be flat in gross premiums written and modest growth in net premiums written. As previously announced, to further diversify diversify To acquire a variety of assets that do not tend to change in value at the same time. To diversify a securities portfolio is to purchase different types of securities in different companies in unrelated industries. our products we recently added an excess and surplus lines property underwriting team that has already begun producing premium. Our new products and our eastern states Eastern States can refer to several locations:
n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about the longer term prospects for profitable premium growth as a result of our product diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. strategy." Conference Call A conference call to discuss second quarter 2007 results is scheduled for Tuesday, July 31, 2007 at 9:00 a.m. (Eastern Time), which will be broadcast through Vcall's Investor Calendar at www.investorcalendar.com, or the Company's website at www.amsafety.com. If you are unable to participate at this time, a replay will be available for 30 days, beginning approximately two hours after the call. A transcript A generic term for any kind of copy, particularly an official or certified representation of the record of what took place in a court during a trial or other legal proceeding. A transcript of record of the call will be available on the Company's website beginning several days after the call. American Safety Insurance Holdings, Ltd., (NYSE:ASI), offers customized insurance and reinsurance products and solutions to small and medium sized businesses in industries that it believes are underserved by the standard insurance market. ASI provides reinsurance, excess and surplus lines and alternative risk transfer products through its Class III Bermuda reinsurance subsidiary, American Safety Reinsurance, Ltd., and through its captive captive said of naturally wild or feral animals kept in captivity for educational and scientific investigation with no attempt being made to domesticate them. , segregated cell subsidiary, American Safety Assurance, Ltd., and through its U.S. program administrator, American Safety Insurance Services, Inc., its insurance company subsidiaries, American Safety Casualty Insurance Company and American Safety Indemnity Company, and its non-subsidiary affiliate, American Safety Risk Retention Group, Inc. ASI specializes in underwriting these products for insureds with environmental risks and construction risks as well as in developing programs for other specialty classes of risk and reinsurance. ASI is rated "A" Excellent VIII by A.M. Best. This press release contains 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. . These forward-looking statements reflect the Company's current views with respect to future events and financial performance, including insurance market conditions, premium growth, acquisitions and new products. Forward-looking statements involve risks and uncertainties which may cause actual results to differ materially, including competitive conditions in the insurance industry, levels of new and renewal insurance business, developments in loss trends, adequacy and changes in loss reserves and actuarial ac·tu·ar·y n. pl. ac·tu·ar·ies A statistician who computes insurance risks and premiums. [Latin assumptions, timing or collectibility of reinsurance recoverables, market acceptance of new coverages and enhancements, changes in reinsurance costs and availability, potential adverse decisions in court and arbitration proceedings, the integration and other challenges attendant to acquisitions, and changes in levels of general business activity and economic conditions. For additional factors which could influence the Company's operating and financial performance, see the Company's Form 10-Q Form 10-Q See 10-Q. for the quarter ended March 31, 2007 as filed with the Securities and Exchange Commission. [TABLE OMITTED] [TABLE OMITTED] |
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