Specialty Underwriters' Alliance, Inc. Reports Record Quarterly Written Premium of $49 Million
August 02 2007 - 4:40PM
PR Newswire (US)
CHICAGO, Aug. 2 /PRNewswire-FirstCall/ -- Specialty Underwriters'
Alliance, Inc. (NASDAQ:SUAI) today announced financial results for
the quarter and six months ended June 30, 2007. Highlights: --
Gross written premium of $48.6 million for the quarter and $83.6
million year to date, up 30.0% and 22.6% over the prior year
periods -- Earned premium of $37.2 million for the quarter and
$72.6 million year to date, an increase of 47.6% and 49.7% over the
prior year periods -- Net income of $3.0 million, an increase of
36.4% from the prior year quarter -- Earnings per share of $0.20
for the quarter and $0.39 year to date, versus $0.14 and $0.13 for
the prior year periods Courtney Smith, president and chief
executive officer, stated, "We are pleased with our top line
growth. The P&C marketplace is becoming more competitive;
prices continue to decline as excess capacity seeks opportunity.
Despite this softer market, we are diligently working on growing
our top line through new business opportunities while maintaining
underwriting discipline. During the past several months, we have
explored several new partner agent relationships, strategic
reinsurance relationships and continued to work with our current
agents on business expansion. We are confident that there are
opportunities for profitable growth in this challenging market."
Gross written premiums were $48.6 million for the three months
ended June 30, 2007 versus $37.4 million in the second quarter of
2006. For the six months ended June 30, 2007, gross written
premiums were $83.6 million year to date versus $68.2 million for
the same period in 2006. Earned premiums were $37.2 million for the
second quarter of 2007 compared to $25.2 million in the second
quarter of 2006. Year to date, earned premiums were $72.6 million
versus $48.5 million in the prior year period. Net investment
income for the three months ended June 30, 2007 was $2.3 million,
compared to $1.5 million for the prior year period. Net investment
income for the six months ended June 30, 2007 was $4.4 million,
compared to $2.6 million for the prior year period. Total revenues
were $39.6 million for the second quarter of 2007, an increase of
48.3 percent from $26.7 million for the comparable period in 2006.
Total revenues for the six months ended June 30, 2007 were $77.0
million versus $51.1 million for the six months ended June 30,
2006. 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 $9.1 million and other
operating expenses of $5.5 million. Other operating expenses
consisted of $1.7 million of salaries and benefit costs (excluding
$1.6 million of salary and benefit costs classified as loss
adjustment and acquisition expenses), $0.5 million of professional
and consulting fees, $1.1 million of depreciation and amortization,
$0.4 million of stock based compensation expense and $1.8 million
of other expenses. Total expenses for the three months ended June
30, 2006 were $24.4 million. Total expenses consisted of loss and
loss adjustment expense of $14.5 million, acquisition expenses of
$5.2 million and other operating expenses of $4.7 million. Other
operating expenses consisted of $1.4 million of salaries and
benefit costs (excluding $1.0 million of salary and benefit costs
classified as loss adjustment and acquisition expenses), $0.8
million of professional and consulting fees, $0.6 million of
depreciation and amortization, $0.3 million of stock based
compensation expense and $1.6 million of other expenses. 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 $17.7 million and other operating expenses
of $11.1 million. Other operating expenses consisted of 3.3 million
of salaries and benefit costs (excluding $3.2 million of salary and
benefit costs classified as loss adjustment and acquisition
expenses), $1.7 million of professional and consulting fees, $2.1
million of depreciation and amortization, $0.7 million of stock
based compensation expense and $3.3 million of other expenses.
Total expenses for the six months ended June 30, 2006 were $49.0
million. Total expenses consisted of loss and loss adjustment
expense of $28.5 million, acquisition expenses of $10.7 million and
other operating expenses of $9.8 million. Other operating expenses
consisted of $2.8 million of salaries and benefit costs (excluding
$2.1 million of salary and benefit costs classified as loss
adjustment and acquisition expenses), $2.2 million of professional
and consulting fees, $1.0 million of depreciation and amortization,
$0.5 million of stock based compensation expense and $3.3 million
of other expenses. For the second quarter of 2007, net loss and
loss adjustment expense ratio was 58.9 percent, an increase of 1.5
percent compared to the comparable quarter in 2006 and an increase
of 2.4 percent as compared to year-end. These increases were
primarily driven by an increase in large losses associated with our
commercial automobile business. Underwriting results in workers'
compensation, general liability and other lines continue to meet
expectations. Net income for the three months ended June 30, 2007
was $3.0 million compared to $2.2 million for the same comparable
period in 2006. Net income for the six months ended June 30, 2007
was $6.0 million compared to net income of $2.0 million for the
comparable period in 2006. As of June 30, 2007, the company
reported investments of $194.1 million, total assets of $394.4
million, total liabilities of $275.2 million and shareholders'
equity of $119.2 million. Book value per share as of June 30, 2007
was $7.73 and tangible book value per share was $7.04. As of
December 31, 2006, the company reported investments of $164.1
million, total assets of $363.3 million, total liabilities of
$249.3 million and shareholders' equity of $114.0 million. Book
value per share as of December 31, 2006 was $7.42 and tangible book
value per share was $6.72. Conference Call Details SUAI will host a
conference call on Friday, August 3, 2007 at 11:00 a.m. Eastern
Time to discuss second quarter results. Interested parties may
access a live webcast by going to the "Investor Relations" page of
SUAI's website at http://www.suainsurance.com/ or by calling
800-291-9234. A replay of the call will be available by dialing
888-286-8010, passcode 44640792 through August 10, 2007. A replay
of the call will also remain on the company's website for 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.
Financial Tables Follow Summary Financial Data (in millions, except
per share data) For the Three Months For the Six Months Ended June
30, Ended June 30, 2007 2006 2007 2006 Results of operations Gross
written premiums $48.6 $37.4 $83.6 $68.2 Net written premiums 46.2
34.9 77.8 62.3 Earned premiums $37.2 $25.2 $72.6 $48.5 Net
investment income 2.3 1.5 4.4 2.6 Net realized gains (losses) 0.1
0.0 0.0 0.0 Total revenues 39.6 26.7 77.0 51.1 Loss and loss
adjustment expenses 21.9 14.5 42.0 28.5 Acquisition expenses 9.1
5.2 17.7 10.7 Other operating expenses 5.5 4.7 11.1 9.8 Total
expenses 36.5 24.4 70.8 49.0 Pre-tax income 3.1 2.3 6.1 2.1 Federal
income tax (expense) (0.1) (0.1) (0.1) (0.1) Net income (loss) $3.0
$2.2 $6.0 $2.0 Key ratios Net loss and loss adjustment expense
ratio 58.9% 57.4% 57.9% 58.7% Ratio of acquisition expenses to
earned premiums 24.5% 20.6% 24.4% 22.1% Ratio of all other expenses
to gross written premiums 11.3% 12.7% 13.3% 14.3% Net income (loss)
per share Basic and diluted $0.20 $0.14 $0.39 $0.13 Weighted
average common shares outstanding (basic and diluted) 15.4 15.2
15.4 15.1 Summary Financial Data (in millions, except per share
data) As of As of June 30, December 31, Assets 2007 2006
Investments $194.1 $164.1 Cash 0.6 2.4 Insurance premiums
receivable 75.7 68.3 Reinsurance recoverable on unpaid loss and
loss adjustment expenses 77.9 81.0 Prepaid reinsurance premiums 0.7
3.6 Investment income accrued 1.7 1.6 Equipment and capitalized
software at cost (less accumulated depreciation of $6.0 and $3.9)
11.3 8.6 Intangible assets 10.7 10.7 Deferred acquisition costs
19.2 19.8 Other assets 2.5 3.2 Total assets $394.4 $363.3
Liabilities Loss and loss adjustment expense reserves* $160.6
$141.2 Unearned insurance premiums 95.0 89.8 Insured deposit funds
10.7 10.4 Accounts payable and other liabilities 8.9 7.9 Total
liabilities 275.2 249.3 Shareholders' equity Common stock at $.01
par value per share - authorized 30.0 shares; issued and
outstanding 14.7 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 0.7 and 0.7 shares 0.0 0.0 Paid in capital - common
stock 129.0 128.4 Paid in capital - Class B common stock 5.2 4.8
Accumulated deficit (12.3) (18.3) Accumulated other comprehensive
income (loss) (2.8) (1.0) Total stockholders' equity 119.2 114.0
Total liabilities and stockholders' equity $394.4 $363.3 Book value
data Weighted average shares outstanding 15.4 15.4 Book value per
share $7.73 $7.42 Tangible book value per share $7.04 $6.72 *
Includes $63.2 million and $71.6 million as of June 30, 2007 and
December 31, 2006 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) Three
Months Ended Three Months Ended June 30, 2007 June 30, 2006
Percentage Percentage Gross of Gross Gross of Gross Written Written
Written Written Premium Premium Premium Premium (dollars in
millions) AEON Insurance Group, Inc. $6.9 14.2% $4.1 11.0% American
Team Managers 9.0 18.5% 7.6 20.3% Appalachian Underwriters, Inc.
5.7 11.7% 3.2 8.5% Flying Eagle Insurance Services, Inc. 1.1 2.3% -
0.0% Insential, Inc. 0.5 1.0% 0.4 1.1% Risk Transfer Holdings, Inc.
23.4 48.2% 22.1 59.1% Specialty Risk Solutions, LLC 1.2 2.5% - 0.0%
Involuntary risk 0.8 1.6% - 0.0% Total $48.6 100.0% $37.4 100.0%
Six Months Ended Six Months Ended June 30, 2007 June 30, 2006
Percentage Percentage Gross of Gross Gross of Gross Written Written
Written Written Premium Premium Premium Premium (dollars in
millions) AEON Insurance Group, Inc. $11.9 14.2% $7.6 11.2%
American Team Managers 20.2 24.2% 14.8 21.7% Appalachian
Underwriters, Inc. 10.1 12.1% 5.0 7.3% Flying Eagle Insurance
Services, Inc. 1.1 1.3% - 0.0% Insential, Inc. 0.8 0.9% 0.4 0.6%
Risk Transfer Holdings, Inc. 37.5 44.9% 40.4 59.2% Specialty Risk
Solutions, LLC 1.2 1.4% - 0.0% Involuntary risk 0.8 1.0% - 0.0%
Total $83.6 100.0% $68.2 100.0% Three Months Ended Three Months
Ended June 30, 2007 June 30, 2006 Percentage Percentage Gross of
Gross Gross of Gross Written Written Written Written Premium
Premium Premium Premium (dollars in millions) California $14.9
30.6% $11.6 31.0% Florida 15.2 31.3% 18.4 49.2% Other States 18.5
38.1% 7.4 19.8% Total $48.6 100.0% $37.4 100.0% Six Months Ended
Six Months Ended June 30, 2007 June 30, 2006 Percentage Percentage
Gross of Gross Gross of Gross Written Written Written Written
Premium Premium Premium Premium (dollars in millions) California
$28.7 34.3% $22.0 32.3% Florida 22.5 26.9% 28.2 41.3% Other States
32.4 38.8% 18.0 26.4% Total $83.6 100.0% $68.2 100.0% Three Months
Ended Three Months Ended June 30, 2007 June 30, 2006 Percentage
Percentage Gross of Gross Gross of Gross Written Written Written
Written Premium Premium Premium Premium (dollars in millions)
Workers' compensation $27.2 56.0% $23.5 62.8% General liability
10.0 20.6% 7.6 20.3% Commercial automobile 10.3 21.2% 5.7 15.3% All
other 1.1 2.2% 0.6 1.6% Total $48.6 100.0% $37.4 100.0% Six Months
Ended Six Months Ended June 30, 2007 June 30, 2006 Percentage
Percentage Gross of Gross Gross of Gross Written Written Written
Written Premium Premium Premium Premium (dollars in millions)
Workers' compensation $45.9 54.9% $44.5 65.2% General liability
18.6 22.2% 13.7 20.1% Commercial automobile 17.3 20.7% 9.0 13.2%
All other 1.8 2.2% 1.0 1.5% Total $83.6 100.0% $68.2 100.0% 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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