ESG Re Limited Reports Results for the Six Months Ended June 30, 2004.HAMILTON Hamilton, city, Bermuda Hamilton, city (1990 est. pop. 3,100), capital of Bermuda, on Bermuda Island. It is a port at the head of Great Sound, a huge lagoon and deepwater harbor protected by coral reefs. , Bermuda Bermuda (bûrmy  `də), British dependency (2005 est. pop. 65,400), 21 sq mi (53 sq km), comprising some 150 coral rocks, islets, and islands (of which some 20 are inhabited), in the -- ESG ESG Enterprise Strategy Group (Veritas)ESG Emergency Shelter Grant (Florida, USA) ESG Expeditionary Strike Group ESG Electronic Service Guide (used in DVB) Re Limited (ESREF.PK) today reported its financial results for the six months ended June June: see month. 30, 2004. The Company reported total revenues of $39.1 million for the period including 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. of $37.3 million and realized investment losses of $0.1 million. This compares to total revenues of $43.8 million for the six months ended June 30, 2003, including net earned premiums of $38.0 million and realized investment gains of $3.4 million. The underwriting profit Underwriting profit is a term used in the insurance industry. It consists of the earned premium remaining after losses have been paid and administrative expenses have been deducted. It does not include any investment income earned on held premiums. for the six months ended June 30, 2004 was $7.4 million, an increase of $3.2 million (76%) over the comparable period in 2003. 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. for the six months ended June 30, 2004, totalled $38.6 million. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. for the period amounted to $12.8 million, a $0.3 million decrease compared to the 2003 period. Overall the net loss before accounting for realized gains/losses on the investment portfolio was $3.5 million or $0.32 per share compared to a net loss of $6.7 million or $0.60 per share for the six months ended June 30, 2003. After accounting for the realized gains/losses on the investment portfolio the net loss for the period ended June 30, 2004 was $3.6 million or $0.33 per share compared to a net loss of $3.3 million or $0.30 per share for the six months ended June 30, 2003. In assessing the results for the half year, Alasdair Davis, 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. stated that "The results for the six months ended June 30, 2004 were satisfactory and are in line with expectations. We continue to successfully expand our other Direct Marketing operations and we are making great strides in re-capturing business lost in 2003 in the North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. 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. Market". Our full report for the quarter ended June 30, 2004 will be available on our website (www.esg-world.com) later today. Recent Developments New Director The Board of Directors appointed ap·point tr.v. ap·point·ed, ap·point·ing, ap·points 1. To select or designate to fill an office or a position: appointed her the chief operating officer of the company. 2. Dr. Gesualdo Pianciamore as a Class I Director, effective August 3, 2004. Dr. Pianciamore was the Finance Director of The Generali Group for twenty years TWENTY YEARS. The lapse of twenty years raises a presumption of certain facts, and after such a time, the party against whom the presumption has been raised, will be required to prove a negative to establish his rights. 2. and prior to that the Finance Director at Banco di Roma. He is currently a consultant in the areas of finance for both corporations and family owned businesses. Further Information Alasdair Davis, Chief Executive Officer, and Aodh O'Murchu, Senior Financial Officer, will be available from 2pm to 5pm GMT (Greenwich Mean Time) See UTC. GMT - Universal Time 1 today (August 16) to take questions from shareholders and the investment community. They may be contacted at +353 1 6750200 during this time period. After 5pm GMT questions may be submitted via email to investor.relations@esg-world.com. Responses to relevant questions will be posted on the Company's website at www.esg-world.com as soon as possible. ESG Re Ltd provides medical, personal accident, credit life, disability and special risks re-insurance RE-INSURANCE, mar. contr. An insurance made by a former insurer, his executors, administrators, or assigns, to protect himself and his estate from a risk to which they were liable by the first insurance. 2. It differs from a double insurance (q.v. to insurers and selected re-insurers on a worldwide basis. The company distinguishes itself from its competition by offering re-insurance products and services that help its ceding cede tr.v. ced·ed, ced·ing, cedes 1. To surrender possession of, especially by treaty. See Synonyms at relinquish. 2. clients to manage their risks more effectively. ESG provides solutions to specific 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. problems, actuarial ac·tu·ar·y n. pl. ac·tu·ar·ies A statistician who computes insurance risks and premiums. [Latin support, product design and loss prevention. ESG is building on its reinsurance expertise by developing its direct marketing business. ESG will deliver innovative business opportunities and client focused solutions to its affinity The relationship that a person has to the blood relatives of a spouse by virtue of the marriage. The doctrine of affinity developed from a Maxim of Canon Law that a Husband and Wife were made one by their marriage. There are three types of affinity. partners using distribution methods such as direct mail, telemarketing telemarketing, the practice of selling goods or services to customers by means of the telephone or of surveying consumer preferences in telephone conversations. and bancassurance Bancassurance A French term referring to the selling of insurance through a bank's established distribution channels. Notes: The result is a bank that can offer banking, insurance, lending, and investment products to a customer. . Uncertainties related to forward looking statements: Certain statements and information included in this Press Release may constitute "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , and Section 21E of the Securities Exchange Act of 1934 as amended. These statements express our intentions, strategies, or predictions for the future. These forward looking statements involve unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of ESG to be materially different from any future results, performance or achievements expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by the 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. . A further discussion of factors that could affect ESG's results is included in our published Annual Report for the years 2002 and 2003 reports as supplied to shareholders and available through our website, www.esg-world.com. ESG RE LIMITED CONDENSED con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. CONSOLIDATED BALANCE SHEETS consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm.
June 30, December
2004 31,
(unaudited) 2003
----------------------
U.S. dollars in
thousands except
shares and share data
ASSETS
Investments $65,348 $76,876
Cash and cash equivalents 12,267 14,735
Other investments 5,566 5,637
----------------------
Total investments and cash 83,181 97,248
Accrued investment income 983 1,264
Management fees receivable 257 317
Reinsurance balances receivable 77,884 82,328
Reinsurance recoverable 3,592 8,338
Funds held by ceding companies 24,427 23,464
Prepaid reinsurance premiums 219 --
Receivables for securities sold 1,273 --
Deferred acquisition costs 32,755 31,033
Fair value of Foreign currency forward contracts -- 14
Other assets 7,632 8,500
Cash and cash equivalents held in a fiduciary
capacity 130 545
----------------------
TOTAL ASSETS $232,333 $253,051
----------------------
LIABILITIES
Unpaid losses and loss expenses $97,799 $109,562
Unearned premiums 57,092 56,481
Acquisition costs payable 10,805 12,218
Reinsurance balances payable 32,144 35,321
Fair value of foreign currency forward contracts 80 --
Payable for securities purchased 1,322 --
Accrued expenses, accounts payable, and other
liabilities 4,641 5,862
Fiduciary liabilities 130 545
----------------------
Total liabilities 204,013 219,989
----------------------
Commitments and contingencies (Note 4)
SHAREHOLDERS' EQUITY
Common shares, par value $1 per share;
100,000,000 shares authorized; shares issued
and outstanding for 2004 and 11,060,848 shares
issued and outstanding for 2003 11,061 11,061
Additional paid-in capital 208,915 208,895
Foreign currency translation adjustments (3,062) (3,287)
Unrealized gains/(losses) on securities 921 2,308
----------------------
Accumulated other comprehensive income (2,141) (979)
----------------------
Retained deficit (189,515) (185,915)
----------------------
Total shareholders' equity 28,320 33,062
----------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $232,333 $253,051
----------------------
The accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. notes are an integral part of the condensed consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge . ESG RE LIMITED CONDENSED CONSOLIDATED con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: STATEMENT OF OPERATIONS See Income statement.
Six Months Ended
June 30, June 30,
2004 2003
U.S. dollars in
thousands except shares
REVENUES and share data
----------------------------------------------
Net premiums written $38,111 $(933)
Change in unearned premiums (808) 38,976
------------------------
Net premiums earned 37,303 38,043
Management fee revenue 303 385
Net investment income 1,612 1,923
Net realized investment (losses)/gains (72) 3,408
------------------------
39,146 43,759
------------------------
EXPENSES
----------------------------------------------
Losses and loss expenses 14,191 19,126
Acquisition costs 15,752 14,720
Administrative expenses 12,794 13,085
------------------------
42,737 46,931
------------------------
LOSS FROM OPERATIONS BEFORE TAXES (3,591) (3,172)
----------------------------------------------
Income tax charge (9) (112)
------------------------
NET LOSS AFTER TAXES $ (3,600) $ (3,284)
------------------------
PER SHARE DATA
Basic net loss per share $ (0.33) $ (0.30)
Diluted net loss per share $(0.33) $(0.30)
------------------------
Weighed Average of Common Shares
Outstanding
Basic 11,060,848 11,099,017
Diluted 11,060,848 11,099,017
------------------------
ESG RE LIMITED Product Mix (Gross Written Premium) ESG Reinsurance Segment The distribution of gross premiums written, by line of business after excluding the write down of estimated premiums in the six months ended June 30, 2003, for the six months ended June 30, 2004 and 2003 and for the year ended December December: see month. 31, 2003 was as follows:
Six months Six months Year ended
ended ended December 31,
June 30, 2004 June 30, 2003 2003
----------------------------------------------------------------------
Medical 56.8% 33.8% 24.5%
Personal Accident 38.6% 56.0% 68.7%
Credit -- 2.0% 1.4%
Life 4.6% 2.7% 2.1%
Other -- 5.5% 3.3%
---------------------------------------------------------
Total 100.0% 100.0 % 100.0 %
----------------------------------------------------------------------
ESG Direct Segment The distribution of gross premiums written by line of business for the six months ended June 30, 2004 and 2003 and for the year ended December 31, 2003 was as follows:
Six months Six months Year ended
ended ended December 31,
June 30, 2004 June 30, 2003 2003
----------------------------------------------------------------------
Personal Accident 82.9% 66.9% 81.3%
Credit 17.1% 33.1% 18.7%
----------------------------------------------------------------------
Total 100.0% 100.0% 100.0%
----------------------------------------------------------------------
Geographic geographic /geo·graph·ic/ (je?o-graf´ik) in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map. geographic pertaining to geography. Mix (Gross Written Premium) The distribution of gross premiums written, by geographic region, after excluding the write down of estimated premiums in the six months ended June 30, 2003, for the six months ended June 30, 2004 and 2003 and for the year ended December 31, 2003 was as follows: ESG Reinsurance
Six months Six months Year ended
ended ended December 31,
June 30, 2004 June 30, 2003 2003
----------------------------------------------------------------------
Western Europe (12.9)% 54.7% 49.2%
North America 92.6% 13.5% 2.9%
Latin America 8.0% 25.6% 35.1%
Asia (0.3)% 0.2% --
Other 12.6% 6.0% 12.8%
----------------------------------------------------------------------
Total 100.0% 100.0 % 100.0 %
----------------------------------------------------------------------
The distribution of gross premiums written by geographic region for the six months ended June 30, 2004 and 2003 and for the year ended December 31, 2003 was as follows: ESG Direct
Six months Six months Year ended
ended ended December 31,
June 30, 2004 June 30, 2003 2003
----------------------------------------------------------------------
Western Europe 20.2% 33.5% 19.1%
Asia 79.8% 66.5% 80.9%
----------------------------------------------------------------------
Total 100.0 % 100.0% 100.0 %
----------------------------------------------------------------------
Historic Development of the Portfolio; Technical Result by Business Segment by Underwriting Year The technical profit by business segment underwriting year for the financial years ended December 31, 1998 through 2003 and for the period ended June 30, 2004 are as follows; Reinsurance Segment
Technical Results Underwriting Year
($'m)
Financial Year ended 1997 1998 1999 2000 2001 2002 2003 2004 Total
------------------------------------------------
1998 n/a 10.8 - - - - - - 10.8
1999 n/a (11.2) (5.0) - - - - - (16.2)
2000 n/a (18.1) (6.6)(6.8) - - - - (31.5)
2001 n/a 0.3 (7.9) 3.5 2.1 - - - (2.0)
2002 (1.7) (9.3)(12.8) 0.2 1.9 4.6 - - (17.1)
2003 0.0 0.5 3.4 1.7 (4.9)(0.3) 2.3 - 2.7
2004 0.0 1.7 (2.5) 0.0 0.6 0.6 1.6 0.7 2.7
------------------------------------------------
Total (1.7)(25.3)(31.4)(1.4)(0.3) 4.9 3.9 0.7 (50.6)
Direct Segment
Technical Results Underwriting Year
($'m)
Financial Year ended 1999 2000 2001 2002 2003 2004 Total
----------------------------------------------
1999 0.0 - - - - - -
2000 0.2 2.1 - - - - 2.3
2001 0.1 0.3 4.4 - - - 4.8
2002 (0.2) 0.3 0.5 0.1 - - 0.7
2003 0.0 0.1 (1.1) (0.6) 5.6 - 4.0
2004 0.0 0.0 0.2 0.2 1.0 3.3 4.7
----------------------------------------------
Total 0.1 2.8 4.0 (0.3) 6.6 3.3 16.5
Loss & Acquisition Ratios by Underwriting Year The loss and acquisition cost ratios by underwriting year as at the financial years ended December 31, 1998 through 2003 and as at the period ended June 30, 2004 are as follows:
L&A Ratio (%) Underwriting Year
1998 1999 2000 2001 2002 2003 2004
-------------------------------------------------
L&A at 31 Dec. 1998 89% - - - - - -
L&A at 31 Dec. 1999 102% 102% - - - - -
L&A at 31 Dec. 2000 110% 105% 104% - - - -
L&A at 31 Dec. 2001 112% 107% 100% 76% - - -
L&A at 31 Dec. 2002 120% 112% 101% 88% 72% - -
L&A at 31 Dec. 2003 119% 112% 100% 91% 82% 79% -
L&A at 30 June 2004 118% 113% 100% 90% 82% 74% 81%
Loss & Acquisition Ratios by Business Segment by Underwriting Year The loss and acquisition cost ratios by business segment by underwriting year as at the financial years ended December 31, 1998 through 2003 and as at the period ended June 30, 2004 are as follows; Reinsurance Segment
L&A Ratio (%) Underwriting Year
1998 1999 2000 2001 2002 2003 2004
-------------------------------------------------
L&A at 31 Dec. 1998 89% - - - - - -
L&A at 31 Dec. 1999 102% 102% - - - - -
L&A at 31 Dec. 2000 110% 104% 107% - - - -
L&A at 31 Dec. 2001 112% 107% 102% 92% - - -
L&A at 31 Dec. 2002 120% 112% 102% 95% 90% - -
L&A at 31 Dec. 2003 119% 113% 102% 100% 93% 94% -
L&A at 30 June 2004 118% 113% 102% 100% 93% 91% 81%
Direct Segment
L&A Ratio (%)
1999 2000 2001 2002 2003 2004
-------------------------------------------------
L&A at 31 Dec. 1999 86% - - - - -
L&A at 31 Dec. 2000 46% 58% - - - -
L&A at 31 Dec. 2001 42% 53% 74% - - -
L&A at 31 Dec. 2002 37% 43% 52% 49% - -
L&A at 31 Dec. 2003 38% 43% 59% 56% 79% -
L&A at 30 June 2004 38% 43% 58% 56% 59% 74%
ESG RE LIMITED Reinsurance Operating Ratios Operating Ratio A ratio that shows the efficiency of management by comparing operating expense to net sales: (Net Earned Premium) The key operating ratios for the Reinsurance Segment for the six ended June 30, 2004 and 2003 are as follows;
Six months ended Personal
June 30, 2004 Medical Accident Credit Life Other Total
----------------------------------------------------------------------
Loss ratio 51.0% 62.6% 13.7% 56.6% n/m 53.1%
Acquisition expense ratio 34.1% 29.9% (3.9)% 13.3% n/m 32.3%
----------------------------------------------------------------------
Loss and Acquisition
Expense Ratio 85.1% 92.5% 9.8% 69.9% n/m 85.4%
----------------------------------------------------------------------
Operating expense ratio 31.9%
------
Combined ratio 117.3%
======
Six months ended Personal
June 30, 2003 Medical Accident Credit Life Other Total
----------------------------------------------------------------------
Loss ratio 107.2% 9.8% 282.7% 70.7% 38.5% 64.3%
Acquisition expense ratio 17.2% 39.5% (1.1)% 0.9% 38.2% 26.6%
----------------------------------------------------------------------
Loss and Acquisition
Expense Ratio 124.4% 49.3% 281.6% 71.6% 76.7% 90.9%
----------------------------------------------------------------------
Operating expense ratio 26.9%
------
Combined ratio 117.8%
======
ESG RE LIMITED Direct Marketing Operating Ratios (Net Earned Premium) The key operating ratios for the Direct Marketing segment for the six months ended June 30, 2004 and 2003 are as follows;
Six months ended Personal
June 30, 2004 Accident Credit Total
----------------------------------------------------------------------
Loss Ratio 26.5% 3.7% 23.9%
Acquisition expense Ratio 52.6% 43.1% 51.5%
----------------------------------------------------------------------
Loss and Acquisition
Expense Ratio 79.1% 46.8% 75.4%
----------------------------------------------------------------------
Operating expense Ratio 35.3%
--------------
Combined Ratio 110.7%
==============
Six months ended Personal
June 30, 2003 Accident Credit Total
----------------------------------------------------------------------
Loss Ratio 21.8% 60.1% 27.1%
Acquisition expense Ratio 60.5% 46.9% 58.6%
----------------------------------------------------------------------
Loss and Acquisition
Expense Ratio 82.3% 107.0% 85.7%
----------------------------------------------------------------------
Operating expense Ratio 46.2%
--------------
Combined Ratio 131.9%
==============
ESG RE LIMITED Fixed Maturity Investment Portfolio at June 30, 2004
Average
U.S. dollars in thousands Fair Duration Market Credit
Value (Years) Yield Rating
----------------------------------------------------------------------
Corporate securities $14,808 2.3 3.3% AA+
U.S. treasury securities and
obligations of U.S. government AAA
corporations and agencies 19,440 1.5 2.5%
Mortgage & Asset backed securities 3,715 2.2 3.7% AAA
Obligations of states and political AA+
subdivisions 5,209 2.1 3.3%
Foreign currency debt securities 22,176 2.1 3.1% AA+
----------------------------------------------------------------------
Total $ 65,348 2.0 3.0% AA+
----------------------------------------------------------------------
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