CHICAGO, May 3 /PRNewswire-FirstCall/ -- Specialty Underwriters'
Alliance, Inc. (NASDAQ:SUAI) "SUA" today reported a net loss of
$0.2 million, or $0.01 per share, for the three months ended March
31, 2006. Courtney Smith, president and chief executive officer
stated, "We are pleased with our first quarter results. We have
essentially reached break even operating results and are poised for
future profitability. These results demonstrate that our model is
working." Total revenues for the three months were $24.4 million,
comprised of earned insurance premiums of $23.3 million and
investment income of $1.1 million. Gross written premiums for the
three months ended March 31, 2006 were $30.8 million. For the three
months ended March 31, 2005, the first quarter of the company's
operations, SUA reported a net loss of $4.5 million, or $0.31 per
share. Total revenues were $1.3 million, comprised of earned
insurance premiums of $0.5 million and investment income of $0.8
million. Gross written premiums for the three months ended March
31, 2005, were $8.5 million. For the first quarter of 2006, premium
by Partner Agent was as follows: Risk Transfer Holdings, Inc. (RTH)
$18.3 million; American Team Managers (ATM) $7.2 million; AEON
Insurance Group, Inc. (AEON) $3.5 million; and Appalachian
Underwriters, Inc. (AUI) $1.8 million. As was expected, Specialty
Risk Solutions, LLC (SRS) and American Patriot Insurance Agency,
Inc. (API) did not write any business in the first quarter. For the
three months ended March 31, 2006, total expenses were $24.5
million, $14.0 million of losses and loss adjustment expenses and
$10.5 million of acquisition costs and general administrative and
operating expenses. During the first quarter, general
administrative expenses totaled $4.6 million, which included the
following major categories of expense: $1.4 million of salaries and
benefit costs (excluding $1.1 million of salary and benefit costs
classified as loss adjustment and acquisition expenses), $1.1
million of professional and consulting fees, $0.4 million of
depreciation and amortization and $1.7 million of other expenses.
Also included in other expenses for the first time was compensation
expense of $0.3 million associated with SUA's stock option program.
This represents a change in the company's accounting policies
through the adoption of FAS No. 123 (revised 2004), "Share-Based
Payment," whereby compensation expense is recognized for stock
options. The company did not incur any service company expenses
during the period since it terminated its service company contract
effective December 31, 2005. For the three months ended March 31,
2005, total expenses were $5.8 million, $0.5 million of losses and
loss adjustment expenses and $5.3 million of acquisition costs and
general administrative and operating expenses. During the first
quarter, general administrative expenses totaled $5.2 million, of
which $2.2 million was service company fees with Syndicated
Services Company, Inc. (SSC). Other major categories of expense
included $1.1 million of salaries and benefit costs (excluding $0.4
million of salary and benefit costs classified as loss adjustment
and acquisition expenses), $0.6 million of professional and
consulting fees, $0.5 million of depreciation and amortization and
$0.8 million of other expenses. As of March 31, 2006, the company
reported total investments of $121.3 million, total assets of
$295.1 million, total liabilities of $193.7 million and
shareholders' equity of $101.4 million. Book value per share was
$6.71 and tangible book value per share was $6.00. As of March 31,
2005, total investments were $97.3 million, total assets were
$220.4 million, total liabilities were $107.0 million, and
shareholders' equity was $113.4 million. Book value per share was
$7.70 and tangible book value per share was $6.97. Increasing and
Diversifying Premium Income Smith noted, "Our written premium
continues to build quarter over quarter and should be further
enhanced by future renewals. Our first quarter 2006 business was
approximately 68 percent workers' compensation and we are working
to produce a balanced book of business by line and by state. "We
are expanding customer classes with our existing agents. We will
now be offering through ATM a specialized local to intermediate
trucking for general liability, commercial auto and garage
coverages in California with potential for expansion to other
states. We are also working to add Partner Agents to increase our
premiums. We continue to move forward with the due diligence
process with a potential Partner Agent writing general liability
and commercial auto for artisan contractors in the western region.
We will be diligent and sign contracts only with Partner Agents
whose business fits within our model." Improving Loss Ratio "For
the quarter ended, our net loss and loss adjustment expense ratio
was 60.2 percent. This represents our adherence to conservative
pricing and underwriting. As our mix of business becomes more
balanced and our growth continues, we should see further
improvements," Smith stated. Controlling Expense "Our expenses have
been reduced due primarily to the termination of our contract with
SSC at the end of 2005. We are pleased with the reduction in
expenses associated with the transition. We remain committed to
operating efficiently and increasing staff only as our business
volume requires." Partner Agents Risk Transfer Holdings, Inc. (RTH)
SUA's Partner Agent, RTH, specializes in providing workers'
compensation coverage to PEOs, which are organizations that provide
small employers with human resource services, employee benefits,
and workers' compensation insurance. SUA is conducting business
with RTH in California, Florida, Georgia, Alabama, South Carolina,
Texas, Illinois, and Michigan. RTH produced total premiums of $18.3
million for the three months ended March 31, 2006, as compared to
$5.3 million for the three months ended March 31, 2005. Smith
stated, "This past quarter was the biggest to date for RTH despite
not renewing one of our larger accounts due to pricing
considerations. RTH continues to be our largest producer and we are
optimistic they will meet expectations for the year." American Team
Managers (ATM) ATM specializes in general liability coverage for
artisan contractors (electricians, plumbers and other trades) and
general contractors and small to midsize workers' compensation
niches within California. Premium was $7.2 million for the three
months ended March 31, 2006, as compared to $1.7 million for the
three months ended March 31, 2005. Smith noted, "We have recently
agreed to offer specialized local and intermediate trucking in
California through ATM. ATM will provide commercial auto, general
liability and garage coverages through a dedicated retail agent
with principals who have an average of over thirty years experience
in this industry. This new program provides an opportunity for us
to continue building our relationship with ATM as they have proven
to be a valuable Partner Agent. It will also help further our goal
of balancing our book of business. This customer class has an
existing book of business of approximately $10 million, which we
will expect to transition as it comes up for renewal. We are
excited about this opportunity as there are approximately 4,500
trucking enterprises in this region and we intend to begin writing
this business during the second quarter." AEON Insurance Group,
Inc. (AEON) AEON, the company's Partner Agent specializing in
commercial auto, general liability and inland marine for tow trucks
and repossession segments, produced written premiums of $3.5
million for the three months ended March 31, 2006, as compared to
$1.5 million for the three months ended March 31, 2005. Smith
stated, "We continue to work with AEON to ensure that our goals are
reached for 2006." Specialty Risk Solutions, LLC (SRS) SRS
specializes in providing general liability to the public entity
segment including schools, municipalities and special districts.
SRS became a Partner Agent in May 2005 and did not write any
business in the first quarter of 2006. Smith noted, "SRS was not
expected to write any business in the first quarter. SRS
selectively targets a limited number of accounts that are
attractively priced and that will most likely occur in the second
and third quarters." Appalachian Underwriters, Inc. (AUI) AUI
specializes in providing general liability and commercial auto to
small artisan and general contractors business such as carpentry,
electricians, and interior decorators, as well as suppliers to the
construction industry such as drywall suppliers. AUI has expanded
its offering from 12 to 14 midwest and southeast states. In the
first full quarter of operations, AUI produced $1.8 million for the
three months ended March 31, 2006. "AUI is off to a great start and
is in line with expectations for the year," Smith stated. American
Patriot Insurance Agency, Inc. (API) API, SUA's newest Partner
Agent, was signed in January of this year and specializes in
general liability and commercial auto for small to medium roofing
contractors and markets directly and through retail brokers. API
has not yet produced premium. Smith stated, "API represents a
significant market opportunity as they leverage their existing
relationships in the roofing industry. We expect API to begin
producing business in the second quarter." Potential New Partner
Agent SUA continues discussions with a potential Partner Agent
writing general liability and commercial auto for artisan
contractors in the western region. Smith noted, "We're moving
forward with this potential agent and, if the results of our due
diligence process are positive, we expect to sign them up in the
near future." Smith concluded, "We are essentially at break even
operating results. Our written and earned premium is increasing and
our renewals have begun. Our loss ratios are solid and should
improve as our mix of business improves. Our expenses have declined
as expected and we will continue to monitor costs. We look forward
to fully and prudently deploying our capital this year and
achieving profitability." Conference Call Details SUA will host a
conference call on Thursday, May 4 at 10:00 a.m. Eastern Time (9:00
a.m. Central Time) to discuss first quarter results. Interested
parties may access a live webcast by going to SUA's website at
http://www.suainsurance.com/ , clicking on "Investor Relations,"
and clicking on "Live Webcast" or by calling (866) 277-1182. 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
employee 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. Summary Financial Data (in millions, except for per
share data) Three Months Three Months Ended Ended March 31, March
31, 2006 2005 Results of operations Gross written premiums $30.8
$8.5 Earned premiums $23.3 $0.5 Net investment income 1.1 0.8 Total
revenues 24.4 1.3 Net loss and loss adjustment expense 14.0 0.5
Amortization of deferred acquisition costs 5.9 0.1 Service company
fees 0.0 2.2 Other operating expenses 4.6 3.0 Total expenses 24.5
5.8 Federal Income Tax Expense 0.1 - Net income (loss) $(0.2)
$(4.5) Key ratios Net loss and loss adjustment expense ratio 60.2%
100.0% Ratio of amortization of deferred acquisition expense to
earned premium 25.6% 21.3% Ratio of all other expenses to gross
written premium 14.9% 61.3% Net income(loss) per share Basic and
diluted $(0.01) $(0.31) Average common shares outstanding (basic
and diluted) 15.0 14.7 Financial condition Investments $121.3 $97.3
Total assets $295.1 $220.4 Loss and loss adjustment expense
reserves* $113.6 $95.8 Unearned insurance premiums $62.7 $8.0 Other
liabilities $17.4 $3.2 Shareholders' equity $101.4 $113.4 Book
value data Shares outstanding 15.1 14.7 Book value per share $6.71
$7.70 Tangible book value per share $6.00 $6.97 * Represents $81.2
million and $95.5 million as of March 31, 2006 and March 31, 2005,
respectively, 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 (in millions, except percentages) Gross
Written Premium by State as a Percentage of Total Gross Written
Premium For the Quarter For the Year Ended Ended March 31, December
31, State 2006 2005 California 33.8% 39.4% Florida 31.8% 42.6%
Other States 34.4% 18.0% Total 100.0% 100.0% Gross Written Premium
by Line of Business as a Percentage of Total Gross Written Premium
For the Quarter For the Year Ended Ended March 31, December 31,
Line of business 2006 2005 Workers' compensation 68.0% 68.8%
Commercial automobile 10.7% 10.4% General liability 20.0% 11.8% All
other 1.3% 9.0% Total 100.0% 100.0% To learn more about Specialty
Underwriters' Alliance Inc., please visit
http://www.suainsurance.com/ . 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.
DATASOURCE: Specialty Underwriters' Alliance, Inc. CONTACT: Leslie
Loyet of Financial Relations Board, +1-312-640-6672, or Scott
Goodreau of Specialty Underwriters' Alliance, Inc., +1-888-782-4672
Web site: http://www.suainsurance.com/
Copyright
Specialty Underwriters Alliance (NASDAQ:SUAI)
Historical Stock Chart
From Aug 2024 to Sep 2024
Specialty Underwriters Alliance (NASDAQ:SUAI)
Historical Stock Chart
From Sep 2023 to Sep 2024