CHICAGO, Nov. 2 /PRNewswire-FirstCall/ -- Specialty Underwriters'
Alliance, Inc. (NASDAQ:SUAI) "SUA" today reported net income of
$3.6 million, or $0.24 per share, for the three months ended
September 30, 2006, compared with a net loss of $4.8 million, or
$0.32 per share, in the prior year quarter. Net income for the nine
months was $5.5 million, or $0.37 per share, compared with a net
loss of $13.3 million, or $0.90 per share in the prior year.
Courtney Smith, president and chief executive officer stated, "We
are pleased to see a healthy increase in our third quarter
revenues, profitability and earnings." Total revenues for the three
months ended September 30, 2006 were $33.6 million, comprised of
earned insurance premiums of $31.7 million, investment income of
$1.6 million and net realized gains of $0.3 million. This compares
with total revenues of $9.2 million, comprised of earned insurance
premiums of $8.3 million and investment income of $0.9 million in
the prior year period. Total revenues for the nine months ended
September 30, 2006 were $84.7 million, comprised of earned premiums
of $80.2 million, investment income of $4.2 million and net
realized gains of $0.3 million. Total revenues for the same period
a year ago were $14.5 million comprised of earned premiums of $11.8
million and investment income of $2.7 million. Gross written
premiums for the three and nine months ended September 30, 2006
were $38.9 million and $107.2 million, compared with $28.2 million
and $61.7 million for the same periods ended September 30, 2005.
Net written premiums were $36.4 million and $98.7 million,
respectively, for the three and nine months ended September 30,
2006, compared with $26.3 million and $59.3 million for the prior
year periods. For the third quarter of 2006, total expenses were
$30.0 million - $18.3 million of losses and loss adjustment
expenses and $11.7 million of acquisition costs and general
administrative and operating expenses. General administrative
expenses totaled $5.0 million. Other major categories of expense
included $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 and
$1.9 million of other expenses. During the third quarter of 2005,
total expenses were $14.0 million - $6.4 million of losses and loss
adjustment expenses and $7.6 million of acquisition costs and
general administrative and operating expenses. General
administrative expenses totaled $6.2 million, of which $2.2 million
was service company fees with Syndicated Services Company ("SSC").
Other major categories of expense included $1.2 million of salaries
and benefit costs (excluding $0.8 million of salary and benefit
costs classified as loss adjustment and acquisition expenses), $0.7
million of professional and consulting fees, $0.4 million of
depreciation and amortization and $1.7 million of other expenses.
For the nine months ended September 30, 2006, total expenses were
$78.9 million - $46.7 million of losses and loss adjustment
expenses and $32.2 million of acquisition costs and general
administrative and operating expenses. For this nine month period,
general administrative expenses totaled $14.8 million. Other major
categories of expense included $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 and $5.7 million of other expenses.
For the nine months ended September 30, 2005, total expenses were
$27.8 million - $9.2 million of losses and loss adjustment expenses
and $18.6 million of acquisition costs and general administrative
and operating expenses. For the nine month period, general
administrative expenses totaled $16.5 million, of which $6.6
million was service company fees with SSC. Other major categories
of expense included $3.4 million of salaries and benefit costs
(excluding $2.0 million of salary and benefit costs classified as
loss adjustment and acquisition expenses), $1.8 million of
professional and consulting fees, $1.3 million of depreciation and
amortization and $3.4 million of other expenses. As of September
30, 2006, the company reported investments of $151.4 million, total
assets of $339.2 million, total liabilities of $228.5 million and
shareholders' equity of $110.6 million. Book value per share was
$7.22 and tangible book value per share was $6.52. As of December
31, 2005, the company reported investments of $103.0 million, total
assets of $277.2 million, total liabilities of $176.4 million and
shareholders' equity of $100.8 million. Book value per share was
$6.76 and tangible book value per share was $6.04. Progress in
Premium Growth and Diversification Smith noted, "While not to our
desired level of written premium, we continue to show an increase
each quarter in spite of a softening market. We also modified our
mix of business; workers' compensation was 45 percent for the three
months ended September 30, 2006 as compared to 69 percent for the
year ended December 31, 2005. Our state mix continues to become
more diversified as well. California and Florida represented 82
percent of our business in 2005. For the third quarter of 2006,
those states were 64 percent. We continue to work toward signing
new Partner Agents that diversify our book of business and fit our
business model." Smith added, "In the third quarter, our net loss
and loss adjustment expense ratio was 57.6 percent, which
demonstrates our continued adherence to underwriting discipline.
Our expenses remain controlled and we continue to operate
efficiently." Partner Agent Summary Risk Transfer Holdings, Inc.
(RTH) SUA's largest producing 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, Michigan and
Nevada. RTH produced total premiums of $15.6 million and $56.1
million for the three and nine months ended September 30, 2006, as
compared to $9.3 million and $32.3 million for the three and nine
months ended September 30, 2005. 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. ATM also offers general liability, commercial auto and
garage coverages for local and intermediate trucking in California.
Premium was $8.9 million and $23.6 million, respectively, for the
three and nine months ended September 30, 2006, as compared to $7.4
million and $14.6 million for the three and nine months ended
September 30, 2005. 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 $8.1 million and $15.7
million, respectively, for the three and nine months ended
September 30, 2006, as compared to $4.5 million and $7.8 million
for the three and nine months ended September 30, 2005. Specialty
Risk Solutions, LLC (SRS) SRS specializes in providing general
liability to the public entity segment including schools,
municipalities and special districts. SRS produced written premiums
of $2.0 million for the three and nine months ended September 30,
2006. SRS became a Partner Agent in May 2005 and produced gross
written premiums of $7.0 million in the third quarter of 2005.
Appalachian Underwriters, Inc. (AUI) AUI specializes in providing
general liability and commercial auto to small artisan and general
contractors such as carpentry professionals, electricians and
interior decorators, as well as suppliers to the construction
industry, such as drywall suppliers. AUI writes business in 14
midwest and southeast states. AUI became a Partner Agent in October
2005 and produced $3.5 million and $8.5 million, respectively, for
the three and nine months ended September 30, 2006. American
Patriot Insurance Agency, Inc. (API) API specializes in general
liability and commercial auto for small to medium roofing
contractors and markets directly and through retail brokers. API
became a Partner Agent in January 2006 and produced $0.6 million
and $1.0 million, respectively, for the three and nine months ended
September 30, 2006. Smith concluded, "While the market tends to be
softening, we are encouraged by the continued growth with our
Partner Agents. We continue to be diligent with our underwriting
discipline and cost management and are focused on delivering book
value growth." Conference Call Details SUA will host a conference
call on Friday, November 3 at 9:00 a.m. Central Time to discuss
third quarter results. Interested parties may access a live webcast
by going to the "Investor Relations" page of SUA's website at
http://www.suainsurance.com/ or by calling 866-543-6408. 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. 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 for per share data) For
the For the For the For the Three Months Three Months Nine Months
Nine Months Ended Ended Ended Ended September 30, September 30,
September 30, September 30, 2006 2005 2006 2005 Results of
operations Gross written premiums $38.9 $28.2 $107.2 $61.7 Net
written premiums $36.4 $26.3 $98.7 $59.3 Earned premiums $31.7 $8.3
$80.2 $11.8 Net investment income 1.6 0.9 4.2 2.7 Net realized gain
(loss) 0.3 0.0 0.3 0.0 Total revenues 33.6 9.2 84.7 14.5 Net loss
and loss adjustment expense 18.3 6.4 46.7 9.2 Amortization of
deferred acquisition costs 6.7 1.4 17.4 2.1 Service company fees
0.0 2.2 0.0 6.6 Other operating expenses 5.0 4.0 14.8 9.9 Total
expenses 30.0 14.0 78.9 27.8 Pre-tax income 3.6 (4.8) 5.7 (13.3)
Federal income tax (expense) 0.0 0.0 (0.2) 0.0 Net income (loss)
$3.6 $(4.8) $5.5 $(13.3) Key ratios Net loss and loss adjustment
expense ratio 57.6% 77.5% 58.3% 78.2% Ratio of amortization of
deferred acquisition costs to earned premiums 21.1% 16.7% 21.7%
18.0% Ratio of all other expenses to gross written premiums 12.9%
21.9% 13.8% 26.7% Net income(loss) per share Basic and diluted
$0.24 $(0.32) $0.37 $(0.90) Average common shares outstanding
(basic and diluted) 15.3 14.8 15.2 14.7 Summary Financial Data (in
millions, except for per share data) Financial Condition As of As
of September 30, 2006 December 31, 2005 Investments $151.4 $103.0
Total assets $339.2 $277.2 Loss and loss adjustment expense
reserves* $134.2 $104.9 Unearned insurance premiums $77.1 $58.6
Other liabilities $17.2 $12.9 Shareholders' equity $110.6 $100.8
Book value data Shares outstanding 15.3 14.9 Book value per share
$7.22 $6.76 Tangible book value per share $6.52 $6.04 * Includes
$73.9 million and $86.7 million as of September 30, 2006 and
December 31, 2005 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 For the Nine For the
Months Ended Months Ended Year Ended September 30, September 30,
December 31, 2006 2006 2005 California 35.2% 33.3% 39.4% Florida
28.8% 36.8% 42.6% Other States 36.0% 29.9% 18.0% Total 100.0%
100.0% 100.0% For the Three For the Nine For the Months Ended
Months Ended Year Ended September 30, September 30, December 31,
2006 2006 2005 Workers' compensation 45.0% 57.8% 68.8% Commercial
automobile 22.6% 16.7% 10.4% General liability 30.0% 23.7% 11.8%
All other 2.4% 1.8% 9.0% Total 100.0% 100.0% 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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