CastlePoint Reports Third Quarter 2007 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 $10.5 million 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 third quarter of 2007. Net income and diluted earnings per share excluding realized 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) were $11.5 million and $0.30 per share, respectively. Key Highlights: * For the first nine months of 2007, CastlePoint reported net income of $28.1 million and diluted earnings per share of $0.78. Excluding realized and unrealized gains (losses), reported net income was $29.1 million and $0.81 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, respectively. * Net premiums written for the quarter were $90.6 million, increased 107% from $43.7 for the same period in the prior year. * Net combined ratio for the total of 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 was 89.5% for the quarter. [TABLE OMITTED] Michael H. Lee, Chief Executive Officer of CastlePoint Holdings, Ltd. stated "Despite the softening softening /sof·ten·ing/ (sof´en-ing) malacia. softening a change of consistency, with loss of firmness or hardness. market conditions in the property and casualty industry, we continue to see very strong demand for our products at attractive margins. Our approach of providing paper, capital and insurance services to solve our clients' problems is resonating res·o·nate v. res·o·nat·ed, res·o·nat·ing, res·o·nates v.intr. 1. To exhibit or produce resonance or resonant effects. 2. strongly with our clients. Based upon the agreements that we have entered into thus far and the strong pipeline of business opportunities that we are seeing, we anticipate strong premium growth and earnings in the fourth quarter and in 2008." 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 143.0% to $65.6 million in the third quarter of 2007 as compared to $27.0 million for the same period in 2006. Net premiums earned represented 72.4% of net premiums written for the three months ended September 30, 2007 compared to 61.8% for the same period in 2006. Net investment income increased by 98.8% to $7.5 million for the three months ended September 30, 2007, compared to $3.8 million for the same period in 2006. Net investment income included a loss in a limited partnership of $0.7 million in the quarter, including $0.2 million in investment income, $0.4 million in 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. , and $1.3 million 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. . Excluding the realized and unrealized investment gains (losses), the overall yield on our investment portfolio was 5.2% for the three months ended September 30, 2007. The overall investment portfolio is AA+ rated, and the total exposure to subprime mortgages is approximately $11.0 million, $9.0 million of which is rated A or above, and only $0.1 million is rated below investment grade and relates to mortgages issued in 2005 and prior. CastlePoint Re, our Bermuda based reinsurance subsidiary, assumed 40% of Tower's brokerage business in the quarter and 27% of its premiums was from external clients other than Tower. 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. increased by 58.0% to $69.0 million for the three months ended September 30, 2007 compared to $43.7 million for the prior year period. The combined ratio was 87.8% in the quarter as compared to 87.1% for the same prior year period. CastlePoint Insurance Company had gross written premiums of $23.4 million from Tower's brokerage business in this quarter as well as $5.3 million in written premiums from clients other than Tower. Additional Highlights and Disclosures: Dividend Declaration CastlePoint Holdings, Ltd. Board of Directors has approved a quarterly dividend of $0.025 per share payable December 31, 2007 to stockholders of record as of December 17, 2007. 2007 Guidance For the fourth quarter of 2007, we project our net income to be in a range between $12.5 million and $15.5 million, and diluted earnings per share to be in a range between $0.32 and $0.40 per share. For the full year our guidance for net income is in a range of $40.5 million to $43.5 million with diluted earnings per share between $1.10 and $1.20. 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 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. 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," "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 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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