American Safety Insurance Holdings, Ltd.Reports
71% Increase for First Quarter Insurance
Earnings
HAMILTON, Bermuda, May, 4, 2005 — American Safety Insurance Holdings, Ltd. (NYSE: ASI) today reported that earnings from insurance operations increased by 71% to $3.6 million from $2.1 million for the first quarter of 2004. Net earnings for the quarter were $3.6 million, or $0.50 per diluted share, for the first quarter ended March 31, 2005 as compared to earnings of $3.6 million, or $0.49 per diluted share for the first quarter of 2004. First quarter net earnings are detailed as follows:
Quarter Ended Quarter Ended
March 31, 2005 March 31, 2004
Insurance Operations $3,604,917 $2,110,829
Real Estate Operations 27,737 1,521,118
Other, including realized gains and
(losses) 13,689 17,873
Net Earnings $3,646,343 $3,649,820
The increase in insurance earnings for the quarter was due to strong underwriting results combined with increased investment income. The underwriting results for the quarter were driven by an improved loss ratio, which decreased to 60% from 66% in the first quarter of 2004. The Company experienced no adverse reserve development in the first quarter of 2005. The decrease in real estate earnings for the quarter was due to the substantial completion of the Harbour Village project at the end of 2004.
Total revenues for the first quarter of 2005 decreased 20% to $40 million as compared to the same quarter of 2004 due to a decrease in real estate revenues. For the quarter, revenue from insurance operations increased by 4% to $38 million from $36 million for the first quarter of 2004. Net premiums earned for the first quarter of 2005 increased 1.5% to $35 million from the same quarter of 2004 due to increases in earned premium in the Company’s core lines of business. Net investment income increased 52% to $3.2 million from $2.1 million in the first quarter of 2004 as a result of increased invested assets and an increase in the investment yield to 3.8% from 3.4%. Net cash flow generated from operations decreased to $18 million for the quarter compared to $23 million in the same quarter of 2004 due to an increase in paid losses. The Company’s book value per share remained unchanged at $16.04 compared to December 31, 2004 as a result of an unrealized loss on the Company’s investment portfolio due to rising interest rates.
Commenting on the results, Stephen R. Crim, President and Chief Executive Officer of American Safety Insurance Holdings, Ltd., said, “I am pleased with the increase in earnings and solid underwriting results from our insurance operations. We experienced no adverse reserve development this quarter and the growth in our insurance earnings replaced the earnings from the Harbour Village project. While we are experiencing some softening rates in the market, our focus on underserved markets has helped us achieve modest growth in our gross written premiums for the quarter. Looking ahead, I believe that current market conditions in our core lines of business continue to present opportunities for modest premium growth and we anticipate strong earnings based on our targeted combined ratio of 95% in 2005.”
A conference call to discuss first quarter 2005 results is scheduled for Thursday, May 5, 2005 at 9:00 a.m. (Eastern Time), which will be broadcast through the Investor Broadcast Network’s Vcall website at www.vcall.com or the Company’s website at www.americansafetyinsurance.com. A replay will be available on the Company’s website.
American Safety Insurance Holdings, Ltd. is a specialty insurance holding company which, through its subsidiaries, provides innovative insurance solutions for specialty risks in underserved markets. Additional information about the Company can be found at www.americansafetyinsurance.com.
This press release contains forward-looking statements. These forward-looking statements reflect the Company’s current views with respect to future events and financial performance, including insurance market conditions, premium growth, earnings, combined ratio, insurance claims and losses, and the Harbour Village real estate development project. 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 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, and changes in levels of general business activity and economic conditions. For additional factors, which could influence the results of the Company’s operating and financial performance, see the Company’s filings with the Securities and Exchange Commission.
Contacts: American Safety Insurance Services, Inc. Cameron Associates Stephen Crim or Steven Mathis Kevin McGrath (770) 916-1908 (212) 245-4577
Three Months Ended
March 31
2005 2004
INCOME STATEMENT DATA:
Revenues:
Direct and assumed premiums earned $ 55,252,062 $ 55,424,433
Ceded premiums earned (20,631,451) (21,305,696)
Net premiums earned 34,620,611 34,118,737
Net investment income 3,156,381 2,071,112
Net realized gains 52,232 25,411
Real estate income 2,309,000 13,952,154
Other income 1,949 31,113
Total revenues $ 40,140,173 $ 50,198,527
Expenses:
Losses and loss adjustment expenses $ 20,781,044 $ 22,359,442
Acquisition expenses 7,126,379 6,610,218
Payroll and related expenses 2,966,986 2,623,376
Real estate expenses 2,264,529 11,493,835
Other expenses 2,505,319 2,096,542
Minority interest 587,898 174,111
Expense due to rescission 10,868 29,574
Total expenses $ 36,243,023 45,387,098
Earnings before income taxes 3,897,150 4,811,429
Income taxes 250,807 1,161,610
Net earnings $ 3,646,343 $ 3,649,819
Net earnings per share:
Basic $ 0.54 $ 0.53
Diluted $ 0.50 $ 0.49
Average number of shares outstanding:
Basic 6,791,476 6,916,099
Diluted 7,265,523 7,408,663
GAAP combined ratio 94.5% 97.8%
BALANCE SHEET DATA: March 31 December 31
2005 2004
Total investments, excluding real estate $ 339,951,478 $ 327,036,980
Total assets 609,382,260 584,159,976
Unpaid losses and loss adjustment expenses 336,842,713 321,623,730
Total liabilities 500,321,143 475,380,293
Total shareholders' equity 109,061,117 108,779,683
Book value per share $ 16.04 $ 16.04
Three Months Ended
December 31,
2005 2004
PREMIUM SUMMARY (in Thousands)
Gross Written Premium:
Environmental $ 13,594 $ 9,159
Excess and Surplus 27,053 27,897
Program Business 23,060 21,248
Other 504 1,050
Total 64,211 59,354
Net Written Premium:
Environmental 10,967 7,072
Excess and Surplus 22,185 23,787
Program Business 3,403 3,074
Other 215 624
Total 36,770 34,557
Net Earned Premium:
Environmental 8,745 6,916
Excess and Surplus 21,104 19,841
Program Business 4,398 4,698
Other 374 2,664
Total $ 34,621 $ 34,119