CastlePoint Reports Second Quarter 2008 Results.HAMILTON, Bermuda -- CastlePoint Holdings, Ltd. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :CPHL CPHL Central Public Health Laboratory (London, UK) CPHL Central Professional Hockey League CPHL Calgary Puck Hockey League ) today reported net income of $10.3 million and basic and diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of of $0.27 for the second quarter of 2008. Operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before for the second quarter of 2008 were $13.2 million and $0.35 per share(a). Key Operating Highlights (all percentage increases compare the second quarter results to the same period in 2007): * Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. and operating earnings per share on a 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. basis increased by 25.5% and 29.6%, respectively, during the second quarter. * Operating return on average equity for the second quarter was 12.6%. * Net premiums written for the quarter were $128.1 million, an increase of 59.1% from the prior year period. * The combined ratio for our 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. and insurance segments combined was 91.3% for the quarter. (a)Note on Non-GAAP Financial Measures: Operating income excludes net realized gains Realized Gain A gain resulting from selling an asset at a price higher than the original purchase price. Notes: There may be tax consequences for a realized profit. (losses) and unrealized gains Unrealized Gain A profit that results from holding on to an asset rather than cashing it in and using the funds. Notes: Let's say you own a stock that has doubled, but you haven't sold it yet. This is said to be an unrealized gain. (losses) included in net investment income. Operating income, operating earnings per share, and operating return on average equity are common performance measurements for property and casualty insurance companies. We believe this presentation enhances the understanding of our results of operations by highlighting the underlying profitability of our insurance business. Additionally, these are key internal management performance measures. [TABLE OMITTED] Book value as of June 30, 2008 was $423.3 million, which was $11.05 per share. For the six months ended June 30, 2008, operating earnings was $24.3 million or $0.63 per share, and net income was $19.9 million or $0.52 per share. Net earned premiums Earned premium is the portion of an insurance written premium which is considered "earned" by the insurer, based on the part of the policy period that the insurance has been in effect, and during which the insurer has been exposed to loss. increased 101.7% to $110.8 million in the second quarter of 2008 from $54.9 million for the same period in 2007. Gross written premiums from clients other than Tower were 26% of total, which compares to 35% of gross written premiums from clients other than Tower in the first quarter 2008. The decline in the percentage of business from clients other than Tower reflects our desire to maintain 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. and pricing discipline in a more challenging reinsurance market environment. Net investment income increased by 1.7% to $8.2 million for the three months ended June 30, 2008, as compared to $8.1 million for the same period in 2007. The net investment income in the quarter includes charges for other-than-temporary-impairments of $3.4 million that are isolated to a small portion of our investment portfolio with carried value of approximately $12.4 million at June 30, 2008. In July 2008, $8.0 million of these investments were sold resulting in an additional loss of $2.1 million. The remaining $4.4 million of these assets are expected to be sold before year-end with no significant additional loss. The overall investment portfolio is $764.9 million and is comprised of highly rated investments with an average credit rating of AA. The overall book yield on the investment portfolio was 5.2% as of June 30, 2008. CastlePoint Re, our Bermuda-based reinsurance subsidiary, assumed 35% of Tower's brokerage business as well as 50% of CastlePoint Insurance Company's program business in the quarter. Net premiums written increased by 43.0% to $95.8 million for the three months ended June 30, 2008, compared to $67.0 million for the same period in the prior year. The net combined ratio was 90.7% in the quarter as compared to 86.7% for the same prior year period. CastlePoint Insurance Company had net written premiums in the second quarter of $32.3 million. The combined ratio for CastlePoint Insurance Company in the second quarter was 93.2% on a net basis primarily reflecting costs for ceded property catastrophe Catastrophe, from the Greek Καταστροφή (katastrephein), literally means "to turn" (strephein) "downwards" (kata-). protection, and was 84.0% on a gross basis before ceded reinsurance. Additional Highlights and Disclosures: Dividend Declaration CastlePoint Holdings, Ltd. Board of Directors previously had approved a quarterly dividend of $0.05 per share payable September 30, 2008 to stockholders of record as of September 15, 2008. About CastlePoint Holdings, Ltd. CastlePoint, a Bermuda-based holding company, through its subsidiaries, CastlePoint Reinsurance Company, CastlePoint Management Corp., and CastlePoint Insurance Company, provides property and casualty insurance and reinsurance business solutions, products and services to small insurance companies and program underwriting agents in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . CPHL-F Cautionary Note Regarding 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. 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 provides a "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. " for forward-looking statements. This press release or any other written or oral statements made by or on behalf of CastlePoint may include forward-looking statements that reflect CastlePoint's current views with respect to future events and financial performance. All statements other than statements of historical fact included in this press release are forward-looking statements. Forward-looking statements can generally be identified by the use of forward-looking terminology such as "may," "will," "plan," "expect," "project," "guide or guidance," "intend," "estimate," "anticipate," "believe" or "continue" or their negative or variations or similar terminology. All forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause CastlePoint's actual results to differ materially from those indicated in these statements. The company believes that these factors include, but are not limited to: ineffectiveness or obsolescence ob·so·les·cent adj. 1. Being in the process of passing out of use or usefulness; becoming obsolete. 2. Biology Gradually disappearing; imperfectly or only slightly developed. of its business strategy due to changes in current or future market conditions; increased competition on the basis of pricing, capacity, coverage terms or other factors; greater frequency or severity of claims and loss activity, including as a result of natural or man-made catastrophic events, than CastlePoint's underwriting, reserving or investment practices anticipate based on historical experience or industry data; the ability to obtain necessary governmental licenses; the ability to hire and retain executive officers and other key personnel; the ability to make certain acquisitions in a timely fashion necessary to fulfill ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. the company's business plan; the effects of acts of terrorism or war; developments in the world's financial and capital markets that adversely affect the performance of the company's investments; changes in regulations or laws applicable to CastlePoint, its subsidiaries, brokers or customers including tax laws in Bermuda and the United States; acceptance of CastlePoint's products and services, including new products and services; changes in the availability, cost or quality of reinsurance and failure of CastlePoint's reinsurers to pay claims timely or at all; decreased demand for the company's insurance or reinsurance products; the effects of mergers, acquisitions and divestitures; changes in rating agency policies or practices; changes in legal theories of liability under CastlePoint's insurance policies or the policies that it reinsures; changes in accounting policies or practices; and changes in general economic conditions, including inflation and other factors. Forward-looking statements speak only as of the date on which they are made, and CastlePoint undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise. For more information visit CastlePoint's website at http://www.castlepoint.bm/. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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