Increases Gross Written Premium in Second Quarter and Writes $40
Million Account in Third Quarter CHICAGO, Aug. 6
/PRNewswire-FirstCall/ -- Specialty Underwriters' Alliance, Inc.
(NASDAQ:SUAI) ("SUA" or the "Company") today announced financial
results for the quarter and six months ended June 30, 2009.
Courtney Smith, president and chief executive officer, stated, "We
are pleased that, despite the persistence of difficult economic
times, with respect to the second quarter we have increased our
gross written premium quarter over quarter. Also, we recently have
renewed contracts with our four original Partner Agents, Risk
Transfer, AEON, ATM and SRS. "Additionally, we recently renewed a
large municipality account in the third quarter, increasing the
written premiums from $13 million to approximately $40 million on
this account. "In alternative staffing, we renewed a large PEO in
the second quarter and continue to maintain a high renewal rate.
Also, our e-comp. program in the southeast grew almost 200% from
last year's comparable quarter. Countering these positive trends is
the decline in payroll that persists. "As in the first quarter of
2009, we increased our trucking book by approximately 30%. Our
contractors book continues to show weak top line but strong
profitability. We are optimistic that we will be able to grow this
profitable line when economic conditions improve. "We experienced a
net loss for the second quarter of approximately $0.5 million
compared to net income of $2.3 million for the comparable quarter
in 2008 due, in large part, to the one-time expenses of
approximately $1.6 million incurred as a result of both the proxy
contest waged in connection with our annual meeting of stockholders
held on May 5, 2009 and the negotiation of the merger agreement
entered into with Tower Group, Inc. on June 21, 2009. "Our net
income was also impacted by an increase in our net loss and loss
adjustment expense ratio. This increase was primarily attributable
to several large losses in our commercial automobile line of
business which was partially offset by favorable loss development
in prior years in our contractors lines of business. We are
implementing price increases in our trucking segment to ensure that
this book is profitable. "As previously disclosed, on June 22,
2009, we entered into a definitive agreement to merge with Tower
Group, Inc. (NASDAQ:TWGP). We continue to work towards completing
that transaction. On July 17, 2009, the Federal Trade Commission
granted early termination under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended. On July 15, 2009 Tower filed
a Form A with the Illinois Department of Insurance and the
California Department of Insurance. On July 31, 2009, we filed a
preliminary proxy statement with the Securities and Exchange
Commission on form PREM14A and Tower filed a registration statement
on Form S-4." Financial Results Gross written premiums were $43.9
million for the three months ended June 30, 2009, versus $41.8
million in the second quarter of 2008. For the six months ended
June 30, 2009, gross written premiums were $72.9 million versus
$65.9 million for the same period in 2008. Earned premiums were
$35.4 million for the second quarter of 2009 compared to $34.2
million for the same quarter of 2008. Earned premiums were $70.1
million for the six months ended June 30, 2009 compared to $69.9
million for the comparable period in 2008. Total expenses for the
three months ended June 30, 2009, were $38.6 million, consisting of
loss and loss adjustment expenses of $23.0 million, acquisition
expenses of $8.4 million and other operating expenses of $7.2
million. Total expenses for the three months ended June 30, 2008,
were $33.6 million, consisting of loss and loss adjustment expenses
of $20.9 million, acquisition expenses of $7.3 million and other
operating expenses of $5.4 million. Total expenses for the six
months ended June 30, 2009, were $74.6 million, consisting of loss
and loss adjustment expenses of $44.0 million, acquisition expenses
of $16.9 million and other operating expenses of $13.7 million.
Total expenses for the six months ended June 30, 2008, were $69.3
million, consisting of loss and loss adjustment expenses of $42.0
million, acquisition expenses of 16.0 million and other operating
expenses of $11.3 million. For the second quarter of 2009, net loss
and loss adjustment expense ratio was 65.0 percent versus 61.2
percent for the comparable quarter in 2008. Also, the Company's
results were primarily impacted by several large losses in its
commercial automobile line of business. The Company has increased
prices in this line of business and continues to evaluate its
underwriting policies. For the second quarter of 2009, SUA
experienced favorable prior year loss development of $1.0 million,
primarily attributable to favorable loss development in its
contractors line of business, as compared to favorable prior year
loss development of $0.6 million across all lines for the three
months ended June 30, 2008. For the six months ended June 30, 2009,
net loss and loss adjustment expense ratio was 62.8 percent versus
60.0 percent for the comparable six months in 2008. For the six
months ended June 30, 2009, favorable prior year loss development
of $1.8 million primarily attributable to favorable loss
development in the Company's contractors and workers' compensation
lines of business. For the six months ended June 30, 2008 SUA
experienced favorable prior year loss development of $1.3 million
primarily within its commercial automobile line of business. Net
investment income for the three months ended June 30, 2009, was
$2.8 million, compared to $2.7 million for the prior year period.
Total revenues were $37.9 million for the second quarter of 2009,
compared to $36.9 million for the second quarter of 2008. Net
investment income for the six months ended June 30, 2009, was $5.6
million, compared to $5.3 million for the prior year period. Total
revenues were $75.3 million for the six months ended June 30, 2009,
and for the comparable period in 2008. Net loss for the quarter
ended June 30, 2009, was $0.5 million, compared to net income of
$2.3 million for the comparable period in 2008. Net income for the
six months ended June 30, 2009, was $0.5 million, compared to $5.7
million for the comparable period in 2008. Losses per share for the
three months ended June 30, 2009, was $0.03 compared to earnings
per share of $0.14 for the same period in 2008. Earnings per share
for the six months ended June 30, 2009, was $0.03, basic and
diluted, compared to $0.37, basic, and $0.36, diluted, for the same
period in 2008. Financial Condition As of June 30, 2009, the
Company reported investments of $265.0 million, total assets of
$462.5 million, total liabilities of $321.8 million and
stockholders' equity of $140.7 million. Book value per share as of
June 30, 2009, was $8.85 and tangible book value per share was
$8.17. As of December 31, 2008, the Company reported investments of
$263.4 million, total assets of $454.7 million, total liabilities
of $318.4 million and stockholders' equity of $136.3 million. Book
value per share as of December 31, 2008 was $8.62 and tangible book
value per share was $7.94. Book value includes unrealized gains of
$1.3 million as of June 30, 2009 as compared to unrealized losses
of $2.2 million as of December 31, 2008. 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. To
learn more about Specialty Underwriters' Alliance Inc., please
visit http://www.suainsurance.com/. Summary Financial Data (in
millions, except per share data) For the Three Months For the Year
Ended June 30, Ended June 30, 2009 2008 2009 2008 ---------
--------- --------- --------- Results of operations Gross written
premiums $43.9 $41.8 $72.9 $65.9 Net written premiums 41.8 39.9
68.8 61.6 Earned premiums $35.4 $34.2 $70.1 69.9 Net investment
income 2.8 2.7 5.6 5.3 Net Realized gains (losses) (0.3) - (0.4)
0.1 --------- --------- --------- --------- Total revenues 37.9
36.9 75.3 75.3 --------- --------- --------- --------- Loss and
loss adjustment expenses 23.0 20.9 44.0 42.0 Acquisition expenses
8.4 7.3 16.9 16.0 Other operating expenses 7.2 5.4 13.7 11.3
--------- --------- --------- --------- Total expenses 38.6 33.6
74.6 69.3 --------- --------- --------- --------- Pre-tax income
(loss) (0.7) 3.3 0.7 6.0 Income tax benefit/(expense) 0.2 (1.0)
(0.2) (0.3) --------- --------- --------- --------- Net income
(loss) $(0.5) $2.3 $0.5 $5.7 ========= ========= =========
========= Key ratios Net loss and loss adjustment expense ratio
65.0% 61.2% 62.8% 60.0% Ratio of acquisition expenses to earned
premiums 23.7% 21.3% 24.1% 22.8% Ratio of all other expenses to
gross written premiums 16.4% 13.0% 18.8% 17.2% Net income (loss)
per share Basic $(0.03) $0.14 $0.03 $0.37 Diluted $(0.03) $0.14
$0.03 $0.36 Weighted Average Shares Outstanding Basic 15.9 15.7
15.8 15.6 Diluted 15.9 15.8 15.9 15.8 Summary Financial Data (in
millions, except per share data) As of As of June 30, December 31,
Assets 2009 2008
-------------------------------------------------------------------------
Investments $265.0 $263.4 Cash 1.4 0.2 Insurance premiums
receivable 68.5 60.7 Reinsurance recoverable on unpaid loss and
loss adjustment expenses* 79.7 79.6 Prepaid reinsurance premiums
0.2 0.3 Investment income accrued 2.6 2.5 Equipment and capitalized
software at cost (less accumulated depreciation of $18.8 and $15.5)
12.9 13.6 Intangible assets 10.7 10.7 Deferred acquisition costs
17.0 18.2 Deferred tax asset 1.6 3.1 Other assets 2.9 2.4 ---------
--------- Total assets $462.5 $454.7 ========= =========
Liabilities Loss and loss adjustment expense reserves* $218.4
$214.9 Unearned insurance premiums 79.3 80.6 Insured deposit funds
13.7 15.8 Accounts payable and other liabilities 10.4 7.1 ---------
--------- Total liabilities 321.8 318.4 --------- ---------
Stockholders' equity Common stock at $0.01 par value per share -
authorized: 30.0 shares; issued: 14.8 and 14.7 shares; outstanding:
14.6 shares and 14.4 shares 0.1 0.1 Class B common stock at $0.01
par value per share - authorized: 2.0 shares; issued and
outstanding: 1.3 shares and 1.4 shares 0.0 0.0 Paid in capital -
Common Stock 130.4 129.9 Paid in capital - Class B Common Stock 7.7
8.1 Accumulated earnings 2.6 1.7 Treasury stock (1.0) (1.3)
Accumulated other comprehensive income (loss) 0.9 (2.2) ---------
--------- Total stockholders' equity 140.7 136.3 ---------
--------- Total liabilities and stockholders' equity $462.5 $454.7
========= ========= Book value data Weighted average shares
outstanding 15.9 15.8 Book value per share $8.85 $8.62 Tangible
book value per share $8.17 $7.94 * Includes $49.5 million and $53.2
million as of June 30, 2009 and December 31, 2008 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 Months Ended June 30 (in millions, except percentages)
Three Months Ended Three Months Ended June 30, 2009 June 30, 2008
------------------- ------------------- Percentage Percentage of of
Gross Gross Gross Gross Written Written Written Written Premium
Premium Premium Premium ------- ------- ------- ------- (dollars in
millions) Risk Transfer Programs, LLC $17.6 40.1% $22.3 53.3%
American Team Managers 6.4 14.6% 6.5 15.6% Appalachian
Underwriters, Inc. 5.9 13.4% 2.1 5.0% Specialty Risk Solutions, LLC
4.1 9.3% 0.9 2.2% Northern Star Management, Inc. 3.5 8.0% 2.0 4.8%
AEON Insurance Group, Inc. 3.4 7.7% 5.2 12.4% First Light Program
Manages, Inc. 2.9 6.6% 1.0 2.4% Insential, Inc. 0.2 0.5% 0.4 1.0%
Flying Eagle Insurance Services, Inc. - 0.0% 0.3 0.7% Other (0.1)
-0.2% 1.1 2.6% ------- ------- ------- ------- Total $43.9 100.0%
$41.8 100.0% ======= ======= ======= ======= Three Months Ended
Three Months Ended June 30, 2009 June 30, 2008 -------------------
------------------- Percentage Percentage of of Gross Gross Gross
Gross Written Written Written Written Premium Premium Premium
Premium ------- ------- ------- ------- (dollars in millions)
Florida $12.2 27.8% $10.7 25.6% California 11.0 25.1% 14.2 34.0%
Texas 4.5 10.3% 1.3 3.1% Other states 16.2 36.8% 15.6 37.3% -------
------- ------- ------- Total $43.9 100.0% $41.8 100.0% =======
======= ======= ======= Three Months Ended Three Months Ended June
30, 2009 June 30, 2008 ------------------- -------------------
Percentage Percentage of of Gross Gross Gross Gross Written Written
Written Written Premium Premium Premium Premium ------- -------
------- ------- (dollars in millions) Workers' compensation $25.7
58.6% $26.4 63.2% Commercial automobile 13.0 29.6% 10.4 24.9%
General liability 4.7 10.7% 4.2 10.0% All other 0.5 1.1% 0.8 1.9%
------- ------- ------- ------- Total $43.9 100.0% $41.8 100.0%
======= ======= ======= ======= Gross Written Premium Data For the
Six Months Ended June 30 (in millions, except percentages) Six
Months Ended Six Months Ended June 30, 2009 June 30, 2008
------------------- ------------------- Percentage Percentage of of
Gross Gross Gross Gross Written Written Written Written Premium
Premium Premium Premium ------- ------- ------- ------- (dollars in
millions) Risk Transfer Programs, LLC $28.6 39.3% $31.5 47.7%
American Team Managers 11.9 16.3% 12.7 19.3% Appalachian
Underwriters, Inc. 11.4 15.6% 3.9 5.9% AEON Insurance Group, Inc.
7.4 10.2% 10.8 16.4% Northern Star Management, Inc. 4.6 6.3% 2.0
3.0% First Light Program Manages, Inc. 4.2 5.8% 1.4 2.1% Specialty
Risk Solutions, LLC 4.1 5.6% 0.9 1.4% Insential, Inc. 0.4 0.5% 0.7
1.1% Flying Eagle Insurance Services, Inc. 0.1 0.1% 0.5 0.8% Other
0.2 0.3% 1.5 2.3% ------- ------- ------- ------- Total $72.9
100.0% $65.9 100.0% ======= ======= ======= ======= Six Months
Ended Six Months Ended June 30, 2009 June 30, 2008
------------------- ------------------- Percentage Percentage of of
Gross Gross Gross Gross Written Written Written Written Premium
Premium Premium Premium ------- ------- ------- ------- (dollars in
millions) California $19.9 27.3% $25.7 39.0% Florida 13.6 18.7%
12.4 18.8% Texas 7.1 9.7% 6.2 9.4% Other states 32.3 44.3% 21.6
32.8% ------- ------- ------- ------- Total $72.9 100.0% $65.9
100.0% ======= ======= ======= ======= Six Months Ended Six Months
Ended June 30, 2009 June 30, 2008 -------------------
------------------- Percentage Percentage of of Gross Gross Gross
Gross Written Written Written Written Premium Premium Premium
Premium ------- ------- ------- ------- (dollars in millions)
Workers' compensation $44.1 60.5% $38.3 58.1% Commercial automobile
21.4 29.4% 18.0 27.3% General liability 6.3 8.6% 8.1 12.3% All
other 1.1 1.5% 1.5 2.3% ------- ------- ------- ------- Total $72.9
100.0% $65.9 100.0% ======= ======= ======= ======= DATASOURCE:
Specialty Underwriters' Alliance, Inc. CONTACT: Scott Goodreau of
Specialty Underwriters' Alliance, Inc., 1-888-782-4672, ; or Leslie
Loyet of Financial Relations Board, +1-312-640-6672, , for
Specialty Underwriters' Alliance, Inc., Web Site:
http://www.suainsurance.com/
Copyright