DR Darwin Professional Underwriters

Net income increases 185% and net premiums written increase 19% over the comparable year-earlier results. FARMINGTON, Conn., April 28 /PRNewswire-FirstCall/ -- Darwin Professional Underwriters, Inc. ("Darwin," the "Company," or "Our") (NYSE:DR) today announced its financial results for the first quarter ended March 31, 2008. Highlights include: (Logo: http://www.newscom.com/cgi-bin/prnh/20060829/NETU014LOGO ) -- Gross premiums written for the first quarter are $80.0 million. First quarter gross premiums written are 7.8% ahead of our gross premiums for the same period a year ago. Net premiums written for the quarter of $58.0 million are up 18.5% over the first quarter of 2007. -- Net income of $14.9 million for the quarter ended March 31, 2008 represents a 184.7% increase over the $5.2 million for the quarter ended March 31, 2007 and our highest net income in our operating history. -- Overall, the combined ratio is 64.7% for the first quarter 2008, which compares favorably to the first quarter 2007 combined ratio of 92.8%. The combined ratio excludes certain aspects of the Company's long-term incentive plan which is included in other expenses. The improvement in the Company's results is primarily driven by a decrease in the loss ratio (25.3% improvement to 38.4%). The first quarter results include approximately $11.5 million ($7.5 million, net of tax) in favorable loss reserve development and the corresponding ceded premiums, net of incentive compensation and profit sharing expenses stemming from the favorable development of the 2003 through 2007 accident years. -- Earnings per diluted share for the three months ended March 31, 2008 are $0.87 compared to $0.31 per share for the same period in 2007. -- Annualized return on average equity is 22.7% for the three months ended March 31, 2008, while shareholders' equity grew $15.1 million, or 5.9% in the first quarter, from $254.2 million at December 31, 2007 to $269.3 million at March 31, 2008. Book value per share grew 6.1% to $15.84 at March 31, 2008 from $14.93 at December 31, 2007. Stephen Sills, Darwin's president and chief executive officer, commented, "We are gratified to have again achieved record earnings at Darwin this quarter. Our focus on distinct niches within the specialty lines market has allowed us to sustain excellent growth and operating results this quarter. Darwin's strategy has been to distinguish ourselves with great service, to add value to our clients through product innovation, and to provide risk management services wherever possible. We also remain focused on 'getting bigger' by 'getting smaller', that is, by building our small business franchise in all of our major lines of business. We are also pleased to report that we have renewed our two major reinsurance programs at favorable terms and have been able to increase the ceding commission we receive on business subject to these treaties. "Darwin recorded a significant increase in net income and gross premiums written in the current quarter as compared to the first quarter of 2007, and we demonstrated our continued commitment to underwriting profitability with a first-quarter combined ratio of 64.7 percent. With significant expertise across all of our lines, we believe we're well positioned to take advantage of the continued opportunities we see in specialty insurance." Darwin executives will hold a conference call to discuss this press release Monday, April 28, 2008, at 4:00 p.m. Eastern time. The live webcast of Darwin's earnings conference call, as well as our financial supplement, can be accessed through Darwin's web site at http://investor.darwinpro.com/. Analysts and investors interested in participating in the live conference call may dial in to 866-356-3377 (International callers may dial 617-597-5392) and enter passcode 79998326. The webcast version of the conference call will be archived on Darwin's web site following the date of the event. A telephonic replay of the earnings conference call will be available shortly after the conclusion of the call on April 28, 2008. To access the telephonic replay, domestic callers may dial 888-286-8010 (International callers may dial 617-801-6888) and enter passcode 86378293. The telephonic replay will be available until May 5, 2008. Important Information Certain matters discussed in this release are forward-looking statements. Such statements involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Potential risks and uncertainties include the accuracy of assumptions underlying the Company's outlook and other risks described in the Company's filings with the Securities and Exchange Commission ("SEC"), including the Company's Annual Report on Form 10-K for 2007 and Form 10-Q for first quarter 2008. These forward-looking statements represent the Company's judgment as of the date of this release. The Company disclaims any intent or obligation to update these forward-looking statements. About Darwin Professional Underwriters, Inc. Darwin is a specialty insurance group based in Farmington, Connecticut. The Company is focused on the specialty liability insurance market and underwrites D&O liability insurance for public and private companies, E&O liability insurance, medical malpractice liability insurance, and other specialty coverages. Darwin member companies include Darwin Professional Underwriters, Inc., Darwin National Assurance Company ("DNA"), and Darwin Select Insurance Company ("Darwin Select"). DNA and Darwin Select have earned a financial strength rating of "A- (Excellent)" from A.M. Best Company. Darwin is traded on the New York Stock Exchange under the ticker symbol, "DR." For more information about Darwin, visit http://www.darwinpro.com/. Additional information concerning Darwin, its finances, and business operations can be found in the Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 which will be filed with the SEC. Darwin Professional Underwriters, Inc. and Subsidiaries Selected Consolidated Statements of Operations Data Three Months Ended March 31, 2008 and March 31, 2007 (Unaudited) (Dollars in thousands, except per share amounts) Three Months Ended March 31, 2008 2007 Gross premiums written $80,043 $74,278 Net premiums written $58,014 $48,942 Revenues: Net premiums earned $51,983 $39,997 Net investment income 6,069 5,239 Other income 73 - Net realized investment losses - - Total revenues $58,125 $45,236 Costs and expenses: Losses and loss adjustment expenses 19,964 25,470 Commissions and brokerage expenses 6,446 5,180 Other underwriting, acquisition and operating expenses 7,200 6,485 Other expenses 3,477 577 Interest expense 69 - Total costs and expenses 37,156 37,712 Earnings before income taxes 20,969 7,524 Income tax expense 6,109 2,304 Net earnings $14,860 $5,220 Basic earnings per share: Net earnings per share $0.88 0.32 Weighted average shares outstanding 16,891,858 16,126,882 Diluted earnings per share: Net earnings per share $0.87 $0.31 Weighted average shares outstanding 17,086,472 17,074,730 Combined ratio: Loss ratio 38.4% 63.7% Expense ratio 26.3% 29.1% Combined ratio(1) 64.7% 92.8% See accompanying notes to Condensed Consolidated Financial Statements. Darwin Professional Underwriters, Inc. and Subsidiaries Selected Consolidated Balance Sheets Data March 31, 2008 and December 31, 2007 (Dollars in thousands, except per share amounts) March 31, December 31, 2008 2007 ASSETS: (Unaudited) Available for sale securities, at fair value: Equity securities (cost: 2008, $4,000; 2007, $4,000) $3,358 $3,680 Fixed maturity securities (amortized cost: 2008, $513,520; 2007, $439,748) 520,778 445,661 Short-term investments, at cost which approximates fair value 82,110 107,597 Total investments 606,246 556,938 Cash 6,387 7,469 Premiums receivable (net of allowance for doubtful accounts of $75 as of March 31, 2008 and December 31, 2007) 22,037 30,986 Reinsurance recoverable on paid and unpaid losses 144,912 136,370 Ceded unearned reinsurance premiums 47,382 43,244 Deferred insurance acquisition costs 14,210 13,814 Property and equipment at cost, less accumulated depreciation 1,839 1,783 Goodwill and intangible assets 12,448 7,455 Net deferred income tax asset 13,848 13,546 Other assets 17,861 15,530 Total assets $887,170 $827,135 LIABILITIES AND STOCKHOLDERS' EQUITY: Loss and loss adjustment expense reserves $410,948 $387,865 Unearned premium reserves 151,294 141,126 Reinsurance payable 24,490 20,999 Debt 5,000 5,000 Income taxes payable 5,824 1,155 Accrued expenses and other liabilities 20,274 16,817 Total liabilities 617,830 572,962 Stockholders' equity: Common stock; $0.01 par value; authorized 50,000,000 shares; issued and outstanding 17,007,046 shares at March 31, 2008 and 17,025,501 shares at December 31, 2007 170 170 Additional paid-in capital 204,226 204,583 Retained earnings 60,650 45,790 Accumulated other comprehensive income 4,294 3,630 Total stockholders' equity 269,340 254,173 Total liabilities and stockholders' equity $887,170 $827,135 Book value per common share: Book value per common share $15.84 $14.93 Tangible book value per common share $15.11 $14.49 Net income return on average equity(2) 22.7% 13.7% (1) Excludes other expenses which primarily consist of the company's long-term incentive plan. (2) Return on average equity for first quarter is annualized. http://www.newscom.com/cgi-bin/prnh/20060829/NETU014LOGO http://photoarchive.ap.org/ DATASOURCE: Darwin Professional Underwriters, Inc. CONTACT: Analyst and investor inquiries, Jack Sennott, +1-860-284-1918, , Press and media inquiries, Drake Manning, +1-860-284-1500, , both of Darwin Professional Underwriters, Inc. Web site: http://www.darwinpro.com/

Copyright