Chicago-based Specialty Underwriters’ Alliance, Inc., “SUA” recently reported net income of $2.2 million, or $0.14 per share, for the three months ended June 30, 2006, compared with a net loss of $4.0 million, or $0.27 per share, in the prior year quarter.
Net income for the first six months was $2.0 million, or $0.13 per share, compared with a loss of $8.5 million, or $0.58 per share in the prior year.
Courtney Smith, president and chief executive officer, said, “We are very pleased to announce that we have reached our stated objective of profitability in the first half of 2006.”
Total revenues for the three months ended June 30, 2006 were $26.7 million, comprised of earned insurance premiums of $25.2 million and investment income of $1.5 million. This compares with total revenues of $4.0 million, comprised of earned insurance premiums of $3.0 million and investment income of $1.0 million in the prior year period.
Total revenues for the six months ended June 30, 2006 were $51.1 million, comprised of earned premiums of $48.5 million and investment income of $2.6 million. Total revenues for the same period a year ago were $5.3 million comprised of earned premiums of $3.5 million and investment income of $1.8 million.
Gross written premiums for the three and six months ended June 30, 2006 were $37.4 million and $68.2 million, respectively, compared with $25.0 million and $33.5 million for the same periods ended June 30, 2005. Net written premiums were $34.9 million and $62.3 million, respectively, for the three and six months ended June 30, 2006, compared with $22.2 million and $29.8 million for the prior year periods.
For the second quarter of 2006, total expenses were $24.4 million – $14.5 million of losses and loss adjustment expenses and $9.9 million of acquisition costs and general administrative and operating expenses. General administrative expenses totaled $4.7 million. Other major categories of expense included $1.4 million of salaries and benefit costs (excluding $1.0 million of salary and benefit costs classified as loss adjustment and acquisition expenses), $0.8 million of professional and consulting fees, $0.6 million of depreciation and amortization and $1.9 million of other expenses.
During the second quarter of 2005, total expenses were $8.0 million – $2.3 million of losses and loss adjustment expenses and $5.7 million of acquisition costs and general administrative and operating expenses. General administrative expenses totaled $5.1 million, of which $2.2 million was service company fees with Syndicated Services Company (“SSC”). Other major categories of expense included $1.7 million of salaries and benefit costs (excluding $0.7 million of salary and benefit costs classified as loss adjustment and acquisition expenses), $0.6 million of professional and consulting fees, $0.3 million of depreciation and amortization and $0.3 million of other expenses.
For the six months ended June 30, 2006, total expenses were $49.0 million – $28.5 million of losses and loss adjustment expenses and $20.5 million of acquisition costs and general administrative and operating expenses. For this six month period, general administrative expenses totaled $9.8 million. Other major categories of expense included $2.8 million of salaries and benefit costs (excluding $2.1 million of salary and benefit costs classified as loss adjustment and acquisition expenses), $2.2 million of professional and consulting fees, $1.0 million of depreciation and amortization and $3.8 million of other expenses. Year to date expenses include a reclassification of first quarter expenses of $0.4 million resulting in a decrease in acquisition expense from $5.9 million to $5.5 million and an increase in operating expense from $4.6 million to $5.0 million for the three months ended March 31, 2006.
Smith noted, “We achieved a twenty-two percent increase over the prior quarter in written premium. Also, we improved our mix of business; workers’ compensation was 63 percent for the three months ended June 30, 2006 as compared to 69 percent for the year ended December 31, 2005. We continue to work toward signing new Partner Agents that diversify our book of business and fit our business model. In addition, we increased the number of states in which our current Partner Agents can produce business with more states to follow.”
Smith added, “In the second quarter, our net loss and loss adjustment expense ratio was 57.4 percent. As we balance our mix of business and grow our premium, this ratio should improve further. Our expenses remain controlled with plans to increase staff only as our business volume requires.”
Specialty Underwriters’ Alliance, Inc., through its subsidiary SUA Insurance Company, identifies itself as 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.
Source: Specialty Underwriters’ Alliance, Inc.
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