SOUTHFIELD, Mich., March 28 /PRNewswire-FirstCall/ -- North Pointe
Holdings Corporation (NASDAQ:NPTE) today reported financial results
for the fourth quarter and full year ended December 31, 2007. Full
Year 2007 Highlights -- Gross written premiums from continuing
operations of $119.3 million compared with $90.2 million in 2006 --
Net premiums earned from continuing operations of $94.2 million
compared with $66.7 million in 2006 -- Net income of $1.14 per
diluted share versus $0.51 a year ago -- Book value per share
increased 14.0% to $11.02 -- Cash and investments of $271.9 million
-- Acquired Capital City Holdings, Inc. in July -- Announced sale
of Home Pointe Insurance Company in October Fourth Quarter
Highlights -- Gross premiums written from continuing operations of
$39.2 million versus $22.6 million in 2006 -- Net premiums earned
from continuing operations of $28.8 million versus $15.1 million in
2006 -- Net income per diluted share of $0.43 versus $0.05 in 2006
James Petcoff, president and chief executive officer, commented,
"In 2007 we faced a challenging market environment, yet we focused
our efforts on growing our specialty niches, organically and by
acquisition. We accomplished the goal of strengthening North
Pointe's commercial platform, by acquiring Capital City, and
reduced our catastrophic exposure by selling Home Pointe. Our
balance sheet is strong, and we look to take advantage of market
opportunities as they come available." Full Year 2007 Gross
premiums written from continuing operations for the year ended
December 31, 2007 were $119.3 million compared to $90.2 million in
2006. This represents a $29.1 million increase, or 32.2 percent.
Gross premiums written from continuing operations in the Company's
commercial lines segment for 2007 increased $26.6 million, or 32.5
percent as a result of $29.2 million of gross premiums written by
Capital City Insurance. This increase was offset by a $10.7 million
decrease in the North Pointe Crop program, which was discontinued
for 2007. Gross premiums written in the Company's personal lines
segment increased $2.5 million, or 30.1 percent driven by $5.1
million of gross premiums written in the Pets Best program, which
was new in 2007, and an increase of $1.3 million of gross premiums
written in the Company's Midwest and Western homeowners lines of
business. These increases were offset by a decrease of $3.9 million
in the Florida homeowners line. Net premiums written from
continuing operations for 2007 were $107.4 million as compared to
$61.1 million in 2006, an increase of $46.3 million, or 75.8
percent. Net premiums earned from continuing operations for 2007
were $94.2 million as compared to $66.7 million for 2006, an
increase of $27.5 million, or 41.2 percent. Net income was $10.3
million in 2007, which is just over double the 2006 net income of
$4.7 million. North Pointe's loss ratio for 2007 was 53.1 percent
as compared to 45.4 percent in 2006. The loss ratio for the
commercial lines in 2007 was 58.1 percent as compared to 39.9
percent for 2006. The higher loss ratio produced by Capital City is
a significant factor in the increase in the overall ratio as loss
ratios for Capital City have been traditionally higher than those
reported historically by North Pointe. The $3.3 million deficiency
in net reserves in 2007 was mainly attributable to adverse
developments in the Florida commercial lines of business. The
Company does not expect future adverse results. Fourth Quarter 2007
Highlights Gross premiums written from continuing operations for
the three months ended December 31, 2007, were $39.2 million
compared to $22.6 million for 2006. Gross premiums written
increased $13.9 million, or 64.6 percent, in our commercial lines,
and increased $4.8 million, or 418.2 percent, in our personal
lines, in the fourth quarter of 2007 compared with the prior year
period. Total revenues from continuing operations in the fourth
quarter of 2007 were $36.9 million, as compared to $17.2 million in
the corresponding period in 2006, an increase of $19.7 million and
114 percent. Net premiums earned from continuing operations were
$28.8 million in 2007, versus $15.1 million in 2006. The Company
reported net income of $3.9 million for the fourth quarter, or
$0.43 per diluted share. This compares to net income of $414,000,
or $0.05 per diluted share for the fourth quarter of 2006. The
fourth quarter 2007 results include pre-tax expenses attributable
to a South Carolina Property and Casualty Insurance Guaranty
Association assessment of $678,000. The Company's loss ratio for
the fourth quarter was 56.6 percent compared with 41.4 percent for
the corresponding period in 2006 primarily due to North Pointe's
Capital City acquisition. The Company's combined ratio for the
fourth quarter was 101.8 percent compared with 113.8 percent for
the corresponding period in 2006. Home Pointe Sale In October 2007,
the Company signed an agreement to sell Home Pointe Insurance. On
January 23, 2008, the Company through its wholly owned subsidiary,
North Pointe Financial, completed the sale of Home Pointe Insurance
to American Capital Assurance Corp., a subsidiary of Safe Harbour
Holdings, LLC, a Florida domiciled insurance holding company. As a
result, Home Pointe has been presented in our financials as a
discontinued operation. Home Pointe conducted all of the Company's
Florida homeowners and dwelling fire operations in 2007. QBE Merger
Agreement On January 3, 2008, the Company entered into a definitive
merger agreement to be acquired by QBE Holdings, Inc. ("QBE"), a
wholly owned direct subsidiary of QBE Insurance Group Ltd. Under
the terms of the merger agreement, QBE will acquire all of North
Pointe's outstanding common stock shares for $16.00 per share and
North Pointe will continue as the surviving corporation and a
wholly owned subsidiary of QBE. The closing of the merger is
expected to occur early in the second quarter. The merger is
subject to the approval of the Company's shareholders at a Special
Stockholders Meeting scheduled for April 10, 2008, certain
regulatory approvals and the satisfaction or waiver of other
customary closing conditions. The merger is not subject to a
financing condition. Petcoff concluded, "The merger with QBE is on
track and we expect completion of this agreement early in the
second quarter of 2008. The combination of QBE and North Pointe
assets is very complimentary and an advantageous partnership for
both companies. Going forward, we will continue to work on reducing
our expenses and focusing on driving premium growth as we leverage
QBE's strength to ensure accomplishing our future growth plans."
Conference Call Details North Pointe will host a conference call
today, March 28, 2008, for investors and other interested parties
at 11:00 a.m. Eastern Time to discuss fourth quarter and full year
2007 results. Individuals may either access the call by dialing
800-218-0713 or logging on to the company's website at
http://www.npte.com/. Please allow 15 minutes to download the
necessary software. For those unable to listen to the call live, a
taped rebroadcast will be available beginning one hour following
the completion of the call and will continue through April 4, 2008.
To access the rebroadcast, please dial 800-405-2236, passcode
11110265. A replay of the call will also be available on the
Internet at http://www.npte.com/ for 30 days following the event.
About North Pointe Holdings Corporation North Pointe Holdings is a
property and casualty insurer that markets both specialty
commercial and personal insurance products. With a focus on
owner-operated businesses, the company is the nation's largest
insurer of independent bowling centers and the largest insurer of
liquor liability insurance in Michigan. About QBE Holdings, Inc.
QBE Holdings, Inc. is a subsidiary of Australia's QBE Insurance
Group Ltd, one of the top 25 insurers and reinsurers worldwide with
$12.5 billion of annualized gross written premium. QBE Holdings,
headquartered in New York, is a leading North and South American
insurer and reinsurer. It conducts business through various
property and casualty insurance subsidiaries in eight countries.
Additional Information and Where to Find It In connection with the
proposed Merger, the Company has filed a proxy statement with the
Securities and Exchange Commission. SHAREHOLDERS ARE STRONGLY
ADVISED TO READ THE PROXY STATEMENT, BECAUSE IT CONTAINS IMPORTANT
INFORMATION. Shareholders may obtain a free copy of the proxy
statement and other documents filed by North Pointe Holdings
Corporation at the Securities and Exchange Commission's website at
http://www.sec.gov/. The proxy statement and such other documents
may also be obtained free of charge by directing such request to
Investor Relations, North Pointe Holdings Corporation, 28819
Franklin Road, Southfield, Michigan, 48034, telephone: (248)
358-1171, or on the Company's website at http://www.npic.com/.
Participants in the Solicitation The Company and its directors,
executive officers and certain other members of its management and
employees may be deemed to be participants in the solicitation of
proxies from the Company's shareholders in connection with the
proposed Merger. Information regarding the interests of such
directors and executive officers is included in the Company's proxy
statement relating to the proposed Merger. Safe Harbor Statement
Statements in this release that are "forward-looking statements"
are based on current expectations and assumptions that are subject
to risks and uncertainties. Actual results could differ materially
because of factors such as: North Pointe pricing accurately the
risks it underwrites; the establishment of adequate loss and loss
adjustment expense reserves; risks associated with achieving the
business integration objectives expected with the Capital City
acquisition; retention and recruiting of independent agents;
failure to pay claims accurately; risks associated with high
concentration of North Pointe's business in certain geographic
markets; inability to implement North Pointe's growth strategies;
possible assessments for guaranty funds, other insurance-related
assessments and mandatory reinsurance arrangements and North
Pointe's ability to recover such assessments through future
surcharges or other rate changes; the occurrence of severe weather
conditions and other catastrophes; the cyclical and seasonal nature
of the industries within which North Pointe operates; intense
competition with other insurance companies; the potential loss of
key personnel; North Pointe's ability to obtain and retain trade
association endorsements; performance of North Pointe's various
operating subsidiaries; restrictions that may limit the ability of
North Pointe's subsidiaries to pay dividends to North Pointe;
existing and future regulations by the local, state and federal
governments; the compliance of subsidiaries with minimum capital
and surplus requirements; ratings of North Pointe's insurance
company subsidiaries by A.M. Best; the availability and pricing of
reinsurance; the potential for non-payment or delay in payment by
reinsurers; the outcome of current industry investigations;
potential regulation limiting the use of undisclosed contingent
commission arrangements with independent agents; adverse market
conditions that could negatively impact North Pointe's investment
portfolio; reliance on information technology and telecommunication
systems; and management's ability to effectively manage a public
company. To learn more about North Pointe Holdings Corporation,
please visit http://www.npte.com/ Financial Tables Follow ... North
Pointe Holdings Corporation and Subsidiaries Results of Operations
for the Periods Ended December 31, 2007 and 2006 Three Months Ended
Twelve Months Ended December 31, December 31, 2007 2006 2007 2006
(Dollars in thousands) Gross premiums written: Commercial lines
$35,301 $21,448 $108,480 $81,901 Personal lines 5,907 1,140 10,884
8,284 Total gross premiums written 41,208 22,588 119,364 90,185 Net
premiums written: Commercial lines 30,140 16,788 96,808 56,140
Personal lines 5,824 758 10,600 4,987 Total net premiums written
35,964 17,456 107,408 61,127 Revenues: Net premiums earned:
Commercial lines 26,713 13,370 88,431 59,456 Personal lines 2,084
1,702 5,748 7,195 Total net premiums earned 28,797 15,072 94,179
66,651 Investment income, net 2,767 1,593 8,676 5,731 Net realized
capital gains (losses) 2,545 36 3,320 (214) Fees and other income
2,806 456 6,649 1,369 Total revenues 36,915 17,157 112,824 73,537
Expenses: Losses and loss adjustment expenses 17,884 6,429 53,548
30,874 Policy acquisition costs 1,574 4,340 21,663 19,036 Other
underwriting and operating expenses 12,707 6,903 27,981 21,781
Interest expense 1,226 502 3,261 1,711 Total expenses 33,391 18,174
106,453 73,402 Income (loss) before federal income tax expense
(benefit) and extraordinary item 3,524 (1,017) 6,371 135 Federal
income tax expense (benefit) 1,175 (375) 1,755 10 Income from
continuing operations 2,349 (642) 4,616 125 Net income from
discontinued operations 1,504 1,056 5,709 4,551 Net income (loss)
$3,853 $414 $10,325 $4,676 Loss Ratio: Commercial lines 62.3% 43.6%
58.1% 39.9% Personal lines 59.6 35.3 37.7 99.0 Consolidated 56.6
41.4 53.1 45.4 Expense Ratio 45.2 72.4 49.2 60.0 Combined Ratio
101.8 113.8 102.3 105.4 North Pointe Holdings Corporation and
Subsidiaries Consolidated Balance Sheets As of December 31, 2007
and 2006 2007 2006 (Dollars in thousands, except share data) ASSETS
Investments Debt securities, available for sale, at fair value
(amortized cost of $198,184 and $108,911 in 2007 and 2006,
respectively) $200,681 $107,334 Common stocks, at fair value (cost
of $3,335 and $9,302 in 2007 and 2006, respectively) 3,054 11,376
Preferred stock (cost of $1,000 and $0 in 2007 and 2006,
respectively) 1,037 - Other investments 2,241 1,088 Total
investments 207,013 119,798 Cash and cash equivalents 64,890 46,039
Accrued investment income 2,136 1,236 Premiums and agent balances
receivable, net 31,346 18,088 Reinsurance recoverables on: Paid
losses 5,337 4,168 Unpaid losses 51,141 33,321 Prepaid reinsurance
premiums 7,770 11,881 Deferred policy acquisition costs 13,731
8,848 Deferred federal income taxes, net 9,375 5,061 Federal income
tax recoverable 3,496 523 Fixed assets, net of accumulated
depreciation 5,743 5,946 Prepaid expenses and other assets 3,263
2,668 Goodwill 11,550 - Assets of discontinued operations 14,276 -
Total assets $431,067 $257,577 LIABILITIES, REDEEMABLE PREFERRED
STOCK AND SHAREHOLDERS' EQUITY Liabilities Unpaid losses and loss
adjustment expenses $172,264 $89,755 Unearned premiums 63,309
42,320 Debt 54,287 23,131 Amounts due to reinsurers 1,118 1,930
Accrued expenses and other liabilities 24,871 7,122 Premiums in
advance 368 4,970 Amounts withheld for others 8,311 114 Liabilities
of discontinued operations 8,285 - Total liabilities 332,813
169,342 Commitments and contingent liabilities Shareholders' equity
Common stock, no par value; 50,000,000 shares authorized 8,919,329
and 9,122,687 issued and outstanding in 2007 and 2006, respectively
49,041 50,578 Preferred stock, no par value; 5,000,000 shares
authorized; and 0 shares issued and outstanding in 2007 and 2006,
respectively - - Retained earnings 47,654 37,329 Accumulated other
comprehensive income: Net unrealized gains on investments, net of
deferred federal income tax expense of $769 and $169, respectively
1,559 328 Total shareholders' equity 98,254 88,235 Total
liabilities and shareholders' equity $431,067 $257,577 The
accompanying notes are an integral part of these condensed
consolidated financial statements. North Pointe Holdings
Corporation and Subsidiaries Consolidated Statements of Income For
the Years Ended December 31, 2007 and 2006 2007 2006 (Dollars in
thousands, except share data) Revenues Direct premiums written
$115,666 $90,175 Assumed premiums written 3,658 10 Gross premiums
written 119,324 90,185 Premiums ceded (11,916) (29,058) Net
premiums written 107,408 61,127 (Increase)/decrease in unearned
premiums (13,229) 5,524 Net premiums earned 94,179 66,651
Investment income, net of investment expenses 8,676 5,731 Net
realized capital gains (losses) 3,320 (214) Fees and other income
6,649 1,369 Total revenues 112,824 73,537 Expenses Losses and loss
adjustment expenses, net 53,548 30,874 Policy acquisition costs
21,663 19,036 Other underwriting and operating expenses 27,981
21,781 Interest expense 3,261 1,711 Total expenses 106,453 73,402
Income before federal income tax expense and discontinued
operations Federal income tax expense 6,371 135 Income from
discontinued operations 1,755 10 Income from continuing operations
4,616 125 Discontinued Operations (Note 3) Income from operations
of discontinued subsidiary 8,632 6,891 Federal income tax expense
2,923 2,340 Income from discontinued operations 5,709 $4,551 Net
Income $10,325 $4,676 Earnings Per Share Basic Continuing
operations $0.51 $0.01 Discontinued operations 0.63 0.50 Net income
$1.14 $0.51 Diluted Continuing operations $0.51 $0.01 Discontinued
operations 0.63 0.50 Net income $1.14 $0.51 Weighted average number
of shares Basic 9,009,578 9,114,452 Diluted 9,015,881 9,116,516 The
accompanying notes are an integral part of these condensed
consolidated financial statements. DATASOURCE: North Pointe
Holdings Corporation CONTACT: Brian J. Roney, Chief Financial
Officer of North Pointe Holdings Corporation, +1-248-358-1171, ; or
Leslie Loyet, General Inquiries, +1-312-640-6672, , for North
Pointe Holdings Corporation Web site: http://www.npte.com/
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