CHICAGO, Aug. 7 /PRNewswire-FirstCall/ -- Specialty Underwriters'
Alliance, Inc. (NASDAQ:SUAI) today announced financial results for
the quarter ended June 30, 2008. Highlights -- Net income for the
second quarter of 2008 was $2.3 million, compared to $3.0 million
for the comparable quarter in 2007; -- Net income before income tax
was $3.3 million, an increase of 6.5% over the $3.1 million
reported for the comparable quarter in 2007; -- Gross written
premiums of $41.8 million for the second quarter of 2008, compared
to $48.6 million for the second quarter of 2007; -- Earned premium
of $34.2 million for the second quarter 2008, compared to $37.2
million for the comparable quarter in 2007; -- Book value per share
was $8.68 as of June 30, 2008, compared to $8.42 as of December 31,
2007; -- Company repurchased 275,000 shares of common stock.
Courtney Smith, president and chief executive officer, stated,
"Given the competitive insurance market, we are pleased with our
results for the second quarter and optimistic about the remainder
of this year. We see positive momentum in all of our customer
classes except for contractors. "Alternative staffing, PEO's and
temporary staffing, has shown strong retention and persistency
above 90 percent. Year to date, we have written 13 accounts in
temporary staffing for a total of $4.2 million and we expect
continued growth through the remainder of the year. Our small
business program, e-comp., is holding its own in California and we
are hopeful about additional opportunities in the Midwest. "We have
written during the third quarter approximately $16 million of
public entity business through our new 'A' paper fronting facility
and we expect additional business during the fourth quarter quoting
period. "Within our specialized trucking program, our two more
mature Partner Agents, ATM and AEON, are performing as expected.
Our two newer agents, First Light and Northern Star, have started
out well and we expect them to meet or exceed their targets due to
their placing renewal business with us from their existing book
with other carriers. "Our contractors' book continues to decline
due to economic conditions, which has led to declining prices and
coverage expansion. We expect this book to continue to face similar
pressures throughout the remainder of the year. "Finally, our loss
ratios are performing as expected, due to our disciplined
underwriting and pricing. At the same time we are controlling our
expenses and our infrastructure will allow us to add business
throughout this year and beyond with minimal increase in costs."
Financial Results Earned premiums were $34.2 million for the second
quarter of 2008 compared to $37.2 million for the second quarter of
2007. Earned premiums were $69.9 million for the six months ended
June 30, 2008 compared to $72.6 million for the comparable period
in 2007. Total expenses for the three months ended June 30, 2008,
were $ 33.6 million, consisting of loss and loss adjustment
expenses of $20.9 million, acquisition expenses of $7.3 million and
other operating expenses of $5.4 million. Total expenses for the
three months ended June 30, 2007, were $36.5 million, consisting of
loss and loss adjustment expenses of $21.9 million, acquisition
expenses of $9.2 million and other operating expenses of $5.4
million. Total expenses for the six months ended June 30, 2008,
were $69.3 million, consisting of loss and loss adjustment expenses
of $42.0 million, acquisition expenses of $16.0 million and other
operating expenses of $11.3 million. Total expenses for the six
months ended June 30, 2007, were $70.8 million, consisting of loss
and loss adjustment expenses of $42.0 million, acquisition expenses
of $17.9 million and other operating expenses of $10.9 million. For
the second quarter of 2008, net loss and loss adjustment expense
ratio was 61.2 percent versus 58.9 percent for the comparable
quarter in 2007. The increase was primarily driven by higher loss
ratios in our workers' compensation book of business due to lower
rates. This was partially offset by prior year reserve improvements
of approximately $0.6 million across all lines for prior accident
years. For the six months of 2008, net loss and loss adjustment
expense ratio was 60.0 percent versus 57.9 percent for the
comparable six months in 2007. The increase was primarily driven by
higher loss ratios in our workers' compensation book of business
due to lower rates. This was partially offset by prior year reserve
improvements of approximately $1.3 million primarily in our
commercial automobile business for prior accident years. Net
investment income for the three months ended June 30, 2008, was
$2.7 million, compared to $2.3 million for the prior year period.
Total revenues were $36.9 million for the second quarter of 2008,
compared to $39.6 million for the second quarter of 2007. Net
investment income for the six months ended June 30, 2008, was $5.3
million, compared to $4.4 million for the prior year period. Total
revenues were $75.3 million for the six months ended June 30, 2008,
compared to $77.0 million for the comparable period in 2007. Net
income for the quarter ended June 30, 2008, was $2.3 million,
compared to $3.0 million for the comparable period in 2007. The
primary reason for the decrease in net income was due to a change
in our tax position. In the second quarter of 2008 we became a full
taxpayer due to the utilization of prior period remaining tax loss
carry forwards. Net income for the six months ended June 30, 2008,
was $5.7 million, including a one-time accounting benefit for
deferred taxes of $0.7 million, compared to $6.0 million for the
comparable period in 2007. Earnings per share for the three months
ended June 30, 2008, was $0.14, compared to $0.20 for the same
period in 2007. Earnings per share for the six months ended June
30, 2008, was $0.37, basic and $0.36, diluted, compared to $0.39,
basic and diluted, for the same period in 2007. Financial Condition
As of June 30, 2008, the company reported investments of $240.2
million, total assets of $428.6 million, total liabilities of
$294.4 million and shareholders' equity of $134.2 million. Within
total investments, the company held $3.4 million in fair value, or
$4.7 million in book value, of securities with sub-prime exposure,
all of which were rated "A" or better by established rating
agencies. Book value per share as of June 30, 2008, was $8.68 and
tangible book value per share was $7.98. As of December 31, 2007,
the company reported investments of $229.4 million, total assets of
$422.5 million, total liabilities of $291.4 million and
shareholders' equity of $131.1 million. Book value per share as of
December 31, 2007 was $8.42 and tangible book value per share was
$7.73. Book value includes unrealized losses of $1.1 as of June 30,
2008 as compared to gains of $1.1 as of December 31, 2007. In the
second quarter of 2008, the company repurchased 275,000 shares of
its common stock at an average cost of $4.86 per share, not
including a $0.04 commission, for a total aggregate purchase price
of $1.3 million. With these purchases the company has completed the
repurchase program that was announced on April 8, 2008. Conference
Call Details SUAI will host a conference call on Friday, August 8,
2008 at 11:00 a.m. Eastern Time to discuss second quarter results.
Interested parties may access the call live by dialing 877-545-1490
or the live webcast by visiting the "Investor Relations" page of
SUAI's website at http://www.suainsurance.com/. A replay of the
call will be available by dialing 888-203-1112, and entering pass
code 4083153 through August 15, 2008. A replay of the call will
also remain on the company's website for at least 90 days following
the event. About Specialty Underwriters' Alliance, Inc. Specialty
Underwriters' Alliance, Inc., through its subsidiary SUA Insurance
Company, is a specialty property and casualty insurance company
providing commercial insurance products through exclusive wholesale
Partner Agents that serve niche groups of insureds. These targeted
customers require highly specialized knowledge due to their unique
risk characteristics. Examples include tow trucks, professional
employer organizations, public entities, and contractors. SUA's
innovative approach provides products and claims handling, allowing
the Partner Agent to focus on distribution and customer
relationships. Safe Harbor Statement The Private Securities
Litigation Reform Act of 1995 provides a "safe harbor" for
forward-looking statements. This release or any other written or
oral statements made by or on behalf of the company may include
forward-looking statements that reflect the company's current views
with respect to future events and financial performance. All
statements other than statements of historical fact included in
this 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 our actual results to differ materially
from those indicated in these statements. We believe that these
factors include but are not limited to ineffectiveness or
obsolescence of our 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 our
underwriting, reserving or investment practices anticipate based on
historical experience or industry data; the effects of acts of
terrorism or war; developments in the world's financial and capital
markets that adversely affect the performance of our investments;
changes in regulations or laws applicable to us, our subsidiaries,
brokers or customers; acceptance of our products and services,
including new products and services; changes in the availability,
cost or quality of reinsurance and failure of our reinsurers to pay
claims timely or at all; decreased demand for our insurance or
reinsurance products; loss of the services of any of our executive
officers or other key personnel; the effects of mergers,
acquisitions and divestitures; changes in rating agency policies or
practices; changes in legal theories of liability under our
insurance policies; 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 the company undertakes no obligation to
update publicly or revise any forward-looking statement, whether as
a result of new information, future developments or otherwise.
Summary Financial Data (in millions, except per share data) For the
Three Months For the Six Months Ended June 30, Ended June 30, 2008
2007 2008 2007 Results of operations Gross written premiums $41.8
$48.6 $65.9 $83.6 Net written premiums 39.9 46.2 61.6 77.8 Earned
premiums $34.2 $37.2 $69.9 $72.6 Net investment income 2.7 2.3 5.3
4.4 Net Realized gains - 0.1 0.1 - Total revenues 36.9 39.6 75.3
77.0 Loss and loss adjustment expenses 20.9 21.9 42.0 42.0
Acquisition expenses 7.3 9.2 16.0 17.9 Other operating expenses 5.4
5.4 11.3 10.9 Total expenses 33.6 36.5 69.3 70.8 Pre-tax income 3.3
3.1 6.0 6.1 Federal income tax benefit/(expense) (1.0) (0.1) (0.3)
(0.1) Net income (loss) $2.3 $3.0 $5.7 $6.0 Key ratios Net loss and
loss adjustment expense ratio 61.2% 58.9% 60.0% 57.9% Ratio of
acquisition expenses to earned premiums 21.3% 24.7% 22.8% 24.7%
Ratio of all other expenses to gross written premiums 13.0% 11.1%
17.2% 13.1% Net income (loss) per share Basic $0.14 $0.20 $0.37
$0.39 Diluted $0.14 $0.20 $0.36 $0.39 Weighted Average Shares
Outstanding Basic 15.7 15.4 15.6 15.4 Diluted 15.8 15.4 15.8 15.4
Summary Financial Data (in millions, except per share data) As of
As of June 30, December 31, Assets 2008 2007 Investments $240.2
$229.4 Cash 0.1 1.0 Insurance premiums receivable 68.4 68.9
Reinsurance recoverable on unpaid loss and loss adjustment
expenses* 73.4 77.2 Prepaid reinsurance premiums 0.4 0.6 Investment
income accrued 2.2 1.9 Equipment and capitalized software at cost
(less accumulated depreciation of $12.1 and $8.9) 13.3 12.8
Intangible assets 10.7 10.7 Deferred acquisition costs 15.8 17.5
Deferred tax asset 1.5 - Other assets 2.6 2.5 Total assets $428.6
$422.5 Liabilities Loss and loss adjustment expense reserves*
$194.9 $184.7 Unearned insurance premiums 78.5 86.8 Insured deposit
funds 13.8 12.5 Accounts payable and other liabilities 7.2 7.4
Total liabilities 294.4 291.4 Shareholders' equity Common stock at
$.01 par value per share - authorized: 30.0 shares; issued: 14.7
shares; outstanding: 14.4 shares and 14.7 shares 0.1 0.1 Class B
common stock at $.01 par value per share - authorized: 2.0 shares;
issued and outstanding: 1.0 shares and 0.9 shares 0.0 0.0 Paid in
capital - common stock 129.6 129.5 Paid in capital - Class B common
stock 6.9 6.1 Accumulated deficit - (5.7) Treasury stock (1.3) -
Accumulated other comprehensive income (1.1) 1.1 Total
stockholders' equity 134.2 131.1 Total liabilities and
stockholders' equity $428.6 $422.5 Book value data Weighted average
shares outstanding 15.6 15.4 Book value per share $8.68 $8.42
Tangible book value per share $7.98 $7.73 * Includes $57.6 million
and $63.5 million as of June 30, 2008 and December 31, 2007 of
direct gross loss and loss adjustment expense reserves of Potomac
Insurance Company of Illinois, which reinsured all of its direct
liabilities to OneBeacon Insurance Company and is reflected on
SUA's balance sheet as a reinsurance recoverable. Gross Written
Premium Data For the Three Months Ended June 30 (in millions,
except percentages) Three Months Ended Three Months Ended June 30,
2008 June 30, 2007 Percentage of Percentage of Gross Written Gross
Written Gross Written Gross Written Premium Premium Premium Premium
(dollars in millions) Risk Transfer Holdings, Inc. $22.3 53.3% 23.4
48.2% American Team Managers 6.5 15.6% 9.0 18.5% AEON Insurance
Group, Inc. 5.2 12.4% 6.9 14.2% Appalachian Underwriters, Inc. 2.1
5.0% 5.7 11.7% Northern Star Management, Inc. 2.0 4.8% - - First
Light Program Manages, Inc 1.0 2.4% - - Specialty Risk Solutions,
LLC 0.9 2.2% 1.2 2.5% Insential, Inc. 0.4 1.0% 0.5 1.0% Flying
Eagle Insurance Services, Inc. 0.3 0.7% 1.1 2.3% Other 1.1 2.6% 0.8
1.6% Total $41.8 100.0% $48.6 100.0% Three Months Ended Three
Months Ended June 30, 2008 June 30, 2007 Percentage of Percentage
of Gross Written Gross Written Gross Written Gross Written Premium
Premium Premium Premium (dollars in millions) California $14.2
34.0% $14.9 30.6% Florida 10.7 25.6% 15.2 31.3% Texas 1.3 3.1% 3.3
6.8% Other States 15.6 37.3% 15.2 31.3% Total $41.8 100.0% $48.6
100.0% Three Months Ended Three Months Ended June 30, 2008 June 30,
2007 Percentage of Percentage of Gross Written Gross Written Gross
Written Gross Written Premium Premium Premium Premium (dollars in
millions) Workers' compensation $26.4 56.6% $27.2 56.0% Commercial
automobile 10.4 27.2% 10.3 21.1% General liability 4.2 11.5% 10.0
20.6% All Other 0.8 4.7% 1.1 2.3% Total $41.8 100.0% $48.6 100.0%
Gross Written Premium Data For the Six Months Ended June 30 (in
millions, except percentages) Six Months Ended Six Months Ended
June 30, 2008 June 30, 2007 Percentage of Percentage of Gross
Written Gross Written Gross Written Gross Written Premium Premium
Premium Premium (dollars in millions) Risk Transfer Holdings, Inc.
$31.5 47.8% 37.5 44.8% American Team Managers 12.7 19.2% 20.2 24.2%
AEON Insurance Group, Inc. 10.8 16.4% 11.9 14.2% Appalachian
Underwriters, Inc. 3.9 5.9% 10.1 12.1% Northern Star Management,
Inc. 2.0 3.0% - - First Light Program Manages, Inc. 1.4 2.1% - -
Specialty Risk Solutions, LLC 0.9 1.4% 1.2 1.4% Insential, Inc. 0.7
1.1% 0.8 1.0% Flying Eagle Insurance Services, Inc. 0.5 0.8% 1.1
1.3% Other 1.5 2.3% 0.8 1.0% Total $65.9 100.0% $83.6 100.0% Six
Months Ended Six Months Ended June 30, 2008 June 30, 2007
Percentage of Percentage of Gross Written Gross Written Gross
Written Gross Written Premium Premium Premium Premium (dollars in
millions) California $25.7 39.0% $28.7 34.3% Florida 12.4 18.8%
22.5 26.9% Texas 6.2 9.4% 8.3 9.9% Other States 21.6 32.8% 24.1
28.9% Total $65.9 100.0% $83.6 100.0% Six Months Ended Six Months
Ended June 30, 2008 June 30, 2007 Percentage of Percentage of Gross
Written Gross Written Gross Written Gross Written Premium Premium
Premium Premium (dollars in millions) Workers' compensation $38.3
63.2% $45.9 54.9% Commercial automobile 18.0 24.9% 17.3 20.7%
General liability 8.1 10.0% 18.6 22.2% All Other 1.5 1.9% 1.8 2.2%
Total $65.9 100.0% $83.6 100.0% To learn more about Specialty
Underwriters' Alliance Inc., please visit
http://www.suainsurance.com/. DATASOURCE: Specialty Underwriters'
Alliance, Inc. CONTACT: Leslie Loyet of Financial Relations Board,
+1-312-640-6672, , for Specialty Underwriters' Alliance, Inc.; or
Scott Goodreau of Specialty Underwriters' Alliance, Inc.,
1-888-782-4672, Web Site: http://www.suainsurance.com/
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