CHICAGO, Nov. 1 /PRNewswire-FirstCall/ -- Specialty Underwriters'
Alliance, Inc. (NASDAQ:SUAI) today announced financial results for
the quarter and nine months ended September 30, 2007. Gross written
premiums were $33.5 million for the three months ended September
30, 2007 versus $38.9 million in the third quarter of 2006. For the
nine months ended September 30, 2007, gross written premiums were
$117.1 million year to date versus $107.2 million for the same
period in 2006. The reduction in gross written premium resulted
from a single large account written by Risk Transfer Holdings, Inc.
in Florida that was originally written for $6.5 million in the
third quarter of 2006 and was subsequently cancelled and rewritten
in the fourth quarter of 2006 for approximately $10.0 million.
Overall, gross written premium in the third quarter of 2007 would
have increased nearly 12 percent over the prior comparable quarter
without this timing anomaly. Earned premiums were $40.4 million for
the third quarter of 2007 compared to $31.7 million in the third
quarter of 2006. Year to date, earned premiums were $112.9 million
versus $80.2 million in the prior year period. Net income for the
three months ended September 30, 2007 was $3.4 million compared to
$3.6 million for the same comparable period in 2006. Net income for
the nine months ended September 30, 2007 was $9.4 million, an
increase of 71 percent from $5.5 million for the comparable period
in 2006. Earnings per share for the three months ended September
30, 2007 was $0.22, compared to $0.24 for the same period in 2006.
Earnings per share for the nine months ended September 30, 2007 was
$0.61, versus $0.37 for the prior year period. Net investment
income for the three months ended September 30, 2007 was $2.5
million, compared to $1.6 million for the prior year period. Net
investment income for the nine months ended September 30, 2007 was
$7.0 million, compared to $4.2 million for the prior year period.
Total revenues were $42.9 million for the third quarter of 2007, an
increase of 27.7 percent from $33.6 million for the comparable
period in 2006. Total revenues for the nine months ended September
30, 2007 were $119.9 million versus $84.7 million for the nine
months ended September 30, 2006. Total expenses for the three
months ended September 30, 2007 were $39.5 million, consisting of
loss and loss adjustment expenses of $24.1 million, acquisition
expenses of $9.6 million and other operating expenses of $5.8
million. Other operating expenses consisted of $2.0 million of
salaries and benefit costs (excluding $1.4 million of salary and
benefit costs classified as loss adjustment and acquisition
expenses), $0.5 million of professional and consulting fees, $1.3
million of depreciation and amortization, $0.2 million of stock
based compensation expense and $1.8 million of other expenses.
Total expenses for the three months ended September 30, 2006 were
$30.0 million. Total expenses consisted of loss and loss adjustment
expense of $18.3 million, acquisition expenses of $6.7 million and
other operating expenses of $5.0 million. Other operating expenses
consisted of $1.4 million of salaries and benefit costs (excluding
$1.1 million of salary and benefit costs classified as loss
adjustment and acquisition expenses), $0.9 million of professional
and consulting fees, $0.8 million of depreciation and amortization,
$0.3 million of stock based compensation expense and $1.6 million
of other expenses. Total expenses for the nine months ended
September 30, 2007 were $110.3 million, consisting of loss and loss
adjustment expenses of $66.1 million, acquisition expenses of $27.3
million and other operating expenses of $16.9 million. Other
operating expenses consisted of $5.3 million of salaries and
benefit costs (excluding $4.6 million of salary and benefit costs
classified as loss adjustment and acquisition expenses), $2.2
million of professional and consulting fees, $3.4 million of
depreciation and amortization, $0.9 million of stock based
compensation expense and $5.1 million of other expenses. Total
expenses for the nine months ended September 30, 2006 were $78.9
million. Total expenses consisted of loss and loss adjustment
expense of $46.7 million, acquisition expenses of $17.4 million and
other operating expenses of $14.8 million. Other operating expenses
consisted of $4.2 million of salaries and benefit costs (excluding
$3.2 million of salary and benefit costs classified as loss
adjustment and acquisition expenses), $3.1 million of professional
and consulting fees, $1.8 million of depreciation and amortization,
$0.8 million of stock based compensation expense and $4.9 million
of other expenses. For the third quarter of 2007, net loss and loss
adjustment expense ratio was 59.6 percent, an increase of 2.0
percent compared to the comparable quarter in 2006 and an increase
of 3.1 percent as compared to year-end. For the nine months ended
September 30, 2007, net loss and loss adjustment expense ratio was
58.5 percent, an increase of 0.2 percent compared to the comparable
period in 2006 and an increase of 2.0 percent as compared to
year-end. These increases were primarily driven by an increase in
large losses associated with our commercial automobile business
partially offset by current and prior year period favorable loss
development in workers' compensation, general liability and other
lines. As of September 30, 2007, the company reported investments
of $215.0 million, total assets of $399.8 million, total
liabilities of $274.7 million and shareholders' equity of $125.1
million. Within total investments, the company held $4.8 million in
fair value, or $5.0 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 September
30, 2007 was $8.11 and tangible book value per share was $7.41. 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. On October 1, 2007 SUA signed First
Light Program Managers, Inc., or FLT, as a Partner Agent, writing
commercial general liability and commercial automobile for selected
customer classes in the trucking industry. FLT will write these
classes in the southeastern region. SUA also entered into a
fronting partner relationship with American Safety Indemnity
Company in October to provide general liability, commercial
automobile and workers' compensation, all on an excess basis, to
public entities and educational institutions. The relationship will
allow SUA to write accounts that require "A" rated paper. Courtney
Smith, president and chief executive officer, stated: "We continue
to pursue ways to grow our top line in this softening marketplace,
as we are seeing greater competition, lower rates and reduced
exposure bases in our lines of business. We signed First Light, our
eighth agent, to write trucking in the southeastern region, which
should be a great addition to our transportation segment. We look
forward to a long-term partnership with this very experienced
agent. Also, we are delighted with our fronting agreement with
American Safety. We are optimistic that this will expand premium
with our public entity segment and we look forward to exploring
other opportunities with them. While the P&C marketplace is
more competitive and prices are declining, we are confident that we
will find additional creative business opportunities." Conference
Call Details SUAI will host a conference call on Friday, November
2, 2007 at 11:00 a.m. Eastern Time to discuss third 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 866-272-9941. A replay
of the call will be available by dialing 888-286-8010, passcode
57498797 through November 9, 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.
Summary Financial Data (in millions, except per share data) For the
Three Months For the Nine Months Ended September 30, Ended
September 30, 2007 2006 2007 2006 Results of operations Gross
written premiums $33.5 $38.9 $117.1 $107.2 Net written premiums
30.9 36.4 108.7 98.7 Earned premiums $40.4 $31.7 112.9 $80.2 Net
investment income 2.5 1.6 7.0 4.2 Net realized gains (losses) - 0.3
- 0.3 Total revenues 42.9 33.6 $119.9 84.7 Loss and loss adjustment
expenses 24.1 18.3 $66.1 46.7 Acquisition expenses 9.6 6.7 27.3
17.4 Other operating expenses 5.8 5.0 16.9 14.8 Total expenses 39.5
30.0 $110.3 78.9 Pre-tax income 3.4 3.6 $9.6 5.7 Federal income tax
(expense) - - (0.2) (0.2) Net income (loss) $3.4 $3.6 $9.4 $5.5 Key
ratios Net loss and loss adjustment expense ratio 59.6% 57.6% 58.5%
58.3% Ratio of acquisition expenses to earned premiums 23.8% 21.1%
24.2% 21.7% Ratio of all other expenses to gross written premiums
17.4% 12.9% 14.4% 13.8% Net income (loss) per share Basic and
diluted $0.22 $0.24 $0.61 $0.37 Weighted average common shares
outstanding (basic and diluted) 15.4 15.3 15.4 15.2 Summary
Financial Data (in millions, except per share data) As of As of
September 30, December 31, Assets 2007 2006 Investments $215.0
$164.1 Cash 0.9 2.4 Insurance premiums receivable 63.7 68.3
Reinsurance recoverable on unpaid loss and loss adjustment expenses
76.2 81.0 Prepaid reinsurance premiums 0.2 3.6 Investment income
accrued 1.4 1.6 Equipment and capitalized software at cost (less
accumulated depreciation of $7.3 and $3.9) 12.0 8.6 Intangible
assets 10.7 10.7 Deferred acquisition costs 17.5 19.8 Other assets
2.2 3.2 Total assets $399.8 $363.3 Liabilities Loss and loss
adjustment expense reserves* $169.0 $141.2 Unearned insurance
premiums 85.6 89.8 Insured deposit funds 11.5 10.4 Accounts payable
and other liabilities 8.6 7.9 Total liabilities 274.7 249.3
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 shares and 0.7
shares 0.0 0.0 Paid in capital - common stock 129.3 128.4 Paid in
capital - Class B common stock 5.3 4.8 Accumulated deficit (8.9)
(18.3) Accumulated other comprehensive income (loss) (0.7) (1.0)
Total stockholders' equity 125.1 114.0 Total liabilities and
stockholders' equity $399.8 $363.3 Book value data Weighted average
shares outstanding 15.4 15.4 Book value per share $8.11 $7.42
Tangible book value per share $7.41 $6.72 * Includes $61.1 million
and $71.6 million as of September 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 Sept. 30, 2007 Sept. 30, 2006 Percentage of
Percentage of Gross Gross Gross Gross Written Written Written
Written Premium Premium Premium Premium (dollars in millions) AEON
Insurance Group, Inc. $7.9 23.6% $8.1 20.8% American Team Managers
7.1 21.2% 8.9 22.9% Appalachian Underwriters, Inc. 2.7 8.0% 3.5
9.0% Flying Eagle Insurance Services, Inc. 1.2 3.6% - 0.0%
Insential, Inc. 0.5 1.5% 0.6 1.6% Risk Transfer Holdings, Inc. 12.1
36.1% 15.6 40.1% Specialty Risk Solutions, LLC 1.8 5.4% 2.0 5.1%
Involuntary risk 0.2 0.6% 0.2 0.5% Total $33.5 100.0% $38.9 100.0%
Nine Months Ended Nine Months Ended Sept. 30, 2007 Sept. 30, 2006
Percentage of Percentage of Gross Gross Gross Gross Written Written
Written Written Premium Premium Premium Premium (dollars in
millions) AEON Insurance Group, Inc. $19.7 16.8% $15.7 14.7%
American Team Managers 27.3 23.3% 23.6 22.0% Appalachian
Underwriters, Inc. 12.9 11.0% 8.5 7.9% Flying Eagle Insurance
Services, Inc. 2.3 2.0% - 0.0% Insential, Inc. 1.3 1.1% 1.0 0.9%
Risk Transfer Holdings, Inc. 49.6 42.3% 56.1 52.3% Specialty Risk
Solutions, LLC 3.0 2.6% 2.0 1.9% Involuntary risk 1.0 0.9% 0.3 0.3%
Total $117.1 100.0% $107.2 100.0% Three Months Ended Three Months
Ended Sept. 30, 2007 Sept. 30, 2006 Percentage of Percentage of
Gross Gross Gross Gross Written Written Written Written Premium
Premium Premium Premium (dollars in millions) California $14.1
42.1% $13.7 35.2% Florida 2.8 8.4% 11.2 28.8% Other States 16.6
49.5% 14.0 36.0% Total $33.5 100.0% $38.9 100.0% Nine Months Ended
Nine Months Ended Sept. 30, 2007 Sept. 30, 2006 Percentage of
Percentage of Gross Gross Gross Gross Written Written Written
Written Premium Premium Premium Premium (dollars in millions)
California $42.8 36.6% $35.7 33.3% Florida 25.3 21.6% 39.4 36.8%
Other States 49.0 41.8% 32.1 29.9% Total $117.1 100.0% $107.2
100.0% Three Months Ended Three Months Ended Sept. 30, 2007 Sept.
30, 2006 Percentage of Percentage of Gross Gross Gross Gross
Written Written Written Written Premium Premium Premium Premium
(dollars in millions) Workers' compensation $14.3 42.7% $17.5 45.0%
General liability 9.5 28.3% 11.7 30.0% Commercial automobile 8.5
25.4% 8.8 22.6% All other 1.2 3.6% 0.9 2.4% Total $33.5 100.0%
$38.9 100.0% Nine Months Ended Nine Months Ended Sept. 30, 2007
Sept. 30, 2006 Percentage of Percentage of Gross Gross Gross Gross
Written Written Written Written Premium Premium Premium Premium
(dollars in millions) Workers' compensation $60.2 51.4% $62.0 57.8%
General liability 28.1 24.0% 25.4 23.7% Commercial automobile 25.8
22.0% 17.9 16.7% All other 3.0 2.6% 1.9 1.8% Total $117.1 100.0%
$107.2 100.0% 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, ; or Scott Goodreau of
Specialty Underwriters' Alliance, Inc., 1-888-782-4672, Web site:
http://www.suainsurance.com/
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