Bermuda-based American Safety Insurance Holdings Ltd. has reported that earnings from insurance operations increased to $3.0 million in the second quarter of 2005 from a loss of $1.7 million for the same quarter in 2004.
Net earnings for the second quarter were $3.1 million, or $0.44 per diluted share as compared to earnings of $4.1 million, or $0.55 per diluted share for the second quarter of 2004. Insurance earnings for the six months ended June 30, 2005 increased to $6.7 million from $420,000 for the six months ended June 30, 2004. Net earnings for the six months ended June 30, 2005 were $6.8 million, or $0.94 per diluted share as compared to $7.7 million, or $1.04 per diluted share for the six months ended June 30, 2004.
The increase in insurance earnings for the quarter and the six months ended June 30, 2005 was due to improved underwriting results combined with increased investment income. The underwriting results for the quarter and the six months ended June 30, 2005 were driven by an improved loss ratio, which for the quarter decreased to 62% from 77% and for the six months decreased to 61% from 71% for the same period of 2004.
The combined ratio decreased for the quarter to 99% from 114% and for the six months decreased to 97% from 106% for the same period in 2004. The combined ratio was adversely impacted from $1.1 million of reserve strengthening in discontinued lines and $500,000 for Sarbanes Oxley compliance and other regulatory expenses during the second quarter of 2005.
Total revenues for the second quarter of 2005 decreased 29% to $39 million compared to the same quarter of 2004 as a result of the expected decrease in real estate income. Net premiums earned for the second quarter of 2005 increased 8% to $35 million compared to the same quarter of 2004 due to increases in the company’s core business lines. Net investment income for the quarter increased 52% to $3.4 million from $2.2 million in the second quarter of 2004 due to increased invested assets and an increase in the annualized yield to 3.9% from 3.4%.
Commenting on the results, Stephen Crim, president and CEO, noted, “I am pleased with the growth in the profitability of our insurance operations. The increased insurance earnings have replaced earnings generated from real estate operations during 2004, and our book value has grown to more than $17 per share. The improved underwriting performance in our core business segments contributed significantly to our positive financial results. Based on the second quarter results, we are now anticipating a combined ratio for 2005 of approximately 96%.
“While we continue to experience some softening of rates in the market, our focus on underserved markets has helped us achieve modest growth in our gross written premiums. Looking ahead, we will concentrate on improving the efficiency of our insurance operations and be poised to take advantage of organic and acquisitive growth opportunities presented to us by the market.”
American Safety Insurance Holdings Ltd. is a specialty insurance holding company which, through its subsidiaries, provides insurance solutions in the alternative insurance market for environmental remediation, contracting and other specialty risks.
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