Results of Operations for the Three Months Ended June 30, 2022 – American Overseas Group Limited Announces Net Loss Of $0.3 Million and Operating Loss of $0.5 Million For the Three Months Ended June 30, 2022
HAMILTON, Bermuda, Sept. 30, 2022 (GLOBE NEWSWIRE) — American Overseas Group Limited BSX: AORE.BH) (Pink Sheets: AOREF.PK) (“AOG” or the “Company”) today reported consolidated net loss available to common shareholders of $0.3 million, or $6.28 per diluted share, for the three months ended June 30, 2022. This compares to consolidated net loss available to common shareholders of $3.0 million, or $63.75 per diluted share, for the three months ended June 30, 2021. Book value per weighted share at June 30, 2022 was $775.49, a decline from the book value per weighted share of $1,003.21 at June 30, 2021.
For the three months ended June 30, 2022, the Company had an operating loss of $0.5 million, or $11.58 per diluted share, compared to operating loss of $2.4 million, or $51.26 per diluted share for the three months ended June 30, 2021.
For the three months ended June 30, 2022, net earned property and casualty premiums decreased $0.4 million from $5.5 million a year ago to $5.1 million. Fee income remained constant at $2.7 million while gross written premiums increased $1.9 million, moving from $114.7 million to $116.6 million. Quarterly direct written premiums were positively impacted by rate increases in current business. Loss and loss adjustment expenses as a percentage of earned premium increased from 66.1% to 71.4% as loss costs continued to increase in 2022 due to both frequency and severity.
For the three months ended June 30, 2022, operating expenses decreased $2.1 million from $4.9 million to $2.8 million due to a one-time recognition in the amount of $1.2 million in the second quarter of 2021 of items previously held as a receivable against a personal guarantee contract and $0.9 million expense in 2021 year taxes, licenses and fees associated with program business written in Louisiana that was related to business written in the prior year.
As part of its ongoing capital management efforts, the Company will continue to redirect excess capital within the group to debt reduction unless other compelling opportunities present themselves.
Forward-Looking Statements
This release contains statements that may be considered “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include, without limitation, the Company’s expectations respecting the volatility of its insured portfolio, losses, loss reserves and loss development, the adequacy and availability of its liquidity and capital resources, its current run off strategy, its strategy for writing other reinsurance businesses and its expense reduction measures. These statements are based on current expectations and the current views of the economic and operating environment and are not guarantees of future performance. A number of risks and uncertainties, including economic competitive conditions, could cause actual results to differ materially from those projected in forward-looking statements. The Company’s actual results could differ materially from those expressed or implied in the forward-looking statements.
Explanation of Non-GAAP Financial Measures
The Company believes that the following non-GAAP financial measure included in this press release serve to supplement GAAP information and is meaningful to investors.
Operating income (loss): The Company believes operating income (loss) is a useful measure because it measures income from operations, unaffected by non-operating items such as realized investment gains or losses. Operating income (loss) is typically used by research analysts and rating agencies in their analysis of the Company.
Information About the Company
American Overseas Group Limited is an insurance holding company incorporated in Bermuda and a tax resident of the United Kingdom. Its operating subsidiaries provide specialty property/casualty insurance, reinsurance and insurance management services. More information can be found at www.aoreltd.com.
American Overseas Group Limited
| American Overseas Group Limited | |||||||||||||||
| Consolidated Balance Sheets | |||||||||||||||
| (unaudited) | |||||||||||||||
| As at June 30, 2022 and December 31, 2021 | |||||||||||||||
| (dollars in thousands) | |||||||||||||||
| June 30, 2022 | December 31, 2021 | ||||||||||||||
| Assets | |||||||||||||||
| Investments: | |||||||||||||||
| Fixed-maturity securities held as available for sale, at fair value | $ | 109,497 | $ | 102,678 | |||||||||||
| Equity investments held as available for sale, at fair value | 2,619 | 3,781 | |||||||||||||
| Cash and cash equivalents | 25,146 | 31,908 | |||||||||||||
| Restricted cash | 2,232 | 4,440 | |||||||||||||
| Accrued investment income | 417 | 553 | |||||||||||||
| Premiums receivable | 89,048 | 76,626 | |||||||||||||
| Deferred insurance premiums | 124,521 | 108,904 | |||||||||||||
| Reinsurance balances receivable, net | 228,444 | 223,982 | |||||||||||||
| Deferred policy acquisition costs | 4,424 | 4,588 | |||||||||||||
| Intangible assets | 4,800 | 4,800 | |||||||||||||
| Goodwill | 33,050 | 33,050 | |||||||||||||
| Other assets | 4,491 | 3,166 | |||||||||||||
| Total Assets | $ | 628,690 | $ | 598,476 | |||||||||||
| Liabilities and Equity | |||||||||||||||
| Liabilities: | |||||||||||||||
| Loss and loss expense reserve | $ | 220,290 | $ | 215,642 | |||||||||||
| Deferred commission income | 3,037 | 3,210 | |||||||||||||
| Unearned premiums | 129,428 | 113,423 | |||||||||||||
| Ceded premium payable | 94,424 | 82,059 | |||||||||||||
| Payable to general agents | 5,783 | 7,121 | |||||||||||||
| Funds withheld | 107,708 | 104,257 | |||||||||||||
| Accounts payable and accrued liabilities | 14,319 | 12,420 | |||||||||||||
| Notes payable | 16,521 | 16,521 | |||||||||||||
| Non-owned interest in VIE | 300 | 300 | |||||||||||||
| Interest payable | 451 | 451 | |||||||||||||
| Total Liabilities | 592,259 | 555,404 | |||||||||||||
| Shareholders’ Equity: | |||||||||||||||
| Common shares | 4,698 | 4,698 | |||||||||||||
| Additional paid-in capital | 189,179 | 189,179 | |||||||||||||
| Accumulated other comprehensive (loss) income | (5,328 | ) | 1,124 | ||||||||||||
| Retained deficit | (157,570 | ) | (157,982 | ) | |||||||||||
| Total Shareholders’ Equity | 30,979 | 37,019 | |||||||||||||
| Non-controlling interest of preferred shares of subsidiaries | 5,453 | 6,053 | |||||||||||||
| Total Equity | 36,431 | 43,072 | |||||||||||||
| Total Liabilities and Equity | $ | 628,690 | $ | 598,476 | |||||||||||
| See Notes to June 30, 2022 Consolidated Financial Statements available on American Overseas Group Ltd. Website at www.aoreltd.com | |||||||||||||||
| American Overseas Group Limited | ||||||||||||||||||||||
| Consolidated Statements of Operations | ||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||
| (dollars in thousands, except share and per share amounts) | ||||||||||||||||||||||
| Three months ended June 30, | Six Months ended June 30, | |||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
| Revenues | ||||||||||||||||||||||
| Net premiums earned | $ | 5,093 | $ | 5,552 | $ | 10,181 | $ | 10,537 | ||||||||||||||
| Fee income | 2,709 | 2,736 | 6,004 | 6,022 | ||||||||||||||||||
| Net investment (expense) income | 101 | 65 | 32 | 162 | ||||||||||||||||||
| Net realized (losses) gains on investments | 248 | (2 | ) | 237 | 36 | |||||||||||||||||
| Other income | 55 | 44 | 896 | 77 | ||||||||||||||||||
| Total revenues | 8,206 | 8,395 | 17,349 | 16,834 | ||||||||||||||||||
| Expenses | ||||||||||||||||||||||
| Losses and loss adjustment expenses | 3,639 | 3,667 | 6,904 | 6,391 | ||||||||||||||||||
| Acquisition expenses | 1,653 | 1,799 | 3,351 | 3,575 | ||||||||||||||||||
| Operating expenses | 2,758 | 4,888 | 5,779 | 7,373 | ||||||||||||||||||
| Other expense | – | – | – | |||||||||||||||||||
| Interest expense | 451 | 451 | 902 | 902 | ||||||||||||||||||
| Total expenses | 8,501 | 10,805 | 16,936 | 18,241 | ||||||||||||||||||
| Net income available to common shareholders | $ | (295 | ) | $ | (2,410 | ) | $ | 413 | $ | (1,407 | ) | |||||||||||
| Income tax (expense) | – | – | (26 | ) | ||||||||||||||||||
| Net income before dividends | (295 | ) | (2,410 | ) | 413 | (1,433 | ) | |||||||||||||||
| Dividends on preference shares of subsidiary | – | (585 | ) | – | (585 | ) | ||||||||||||||||
| Net income available to common shareholders | $ | (295 | ) | $ | (2,995 | ) | $ | 413 | $ | (2,018 | ) | |||||||||||
| Net income per common share: | ||||||||||||||||||||||
| Basic | $ | (6.28 | ) | $ | (63.75 | ) | $ | 8.79 | $ | (42.96 | ) | |||||||||||
| Diluted | (6.28 | ) | (63.75 | ) | 8.79 | (42.96 | ) | |||||||||||||||
| Weighted-average number of common shares outstanding: | ||||||||||||||||||||||
| Basic | 46,979 | 46,979 | 46,979 | 46,979 | ||||||||||||||||||
| Diluted | 46,979 | 46,979 | 46,979 | 46,979 | ||||||||||||||||||
| See Notes to June 30, 2022 Consolidated Financial Statements available on American Overseas Group Ltd. Website at www.aoreltd.com | ||||||||||||||||||||||
| AMERICAN OVERSEAS GROUP LTD. | |||||||||
| NET INCOME AND OPERATING INCOME BY SEGMENT | |||||||||
| (dollars in thousands) | Three months ended June 30, 2022 | ||||||||
| Net Income Available to Common Shareholders | Net Realized (Gain)/Loss on Sales of Investments | Operating Income/(Loss) | |||||||
| Property and casualty: | |||||||||
| Net premiums earned | $ | 5,093 | 5,093 | ||||||
| Losses and loss adjustment expenses | (3,639 | ) | (3,639 | ) | |||||
| Acquisition expenses | (1,653 | ) | (1,653 | ) | |||||
| Property/Casualty Underwriting Income | (199 | ) | (199 | ) | |||||
| Fee income | 2,709 | 2,709 | |||||||
| Other income, net of other expense | – | – | |||||||
| Operating expenses | (2,503 | ) | (2,503 | ) | |||||
| Income tax | – | – | |||||||
| Property and casualty | 7 | – | 7 | ||||||
| Corporate and Investing | |||||||||
| Net investment income | 101 | 101 | |||||||
| Net realized gain/(loss) | 248 | (248 | ) | – | |||||
| Operating expenses | (255 | ) | (255 | ) | |||||
| Interest expense | (451 | ) | (451 | ) | |||||
| Other income, net of other expense | 54 | 54 | |||||||
| Corporate and investing | (303 | ) | (248 | ) | (551 | ) | |||
| Group total | $ | (296 | ) | $ | (248 | ) | (544 | ) | |
| AMERICAN OVERSEAS GROUP LTD. | |||||||||
| NET INCOME AND OPERATING INCOME BY SEGMENT | |||||||||
| (dollars in thousands) | Three months ended June 30, 2021 | ||||||||
| Net Income Available to Common Shareholders | Net Realized (Gain)/Loss on Sales of Investments | Operating (Loss) | |||||||
| Property and casualty: | |||||||||
| Net premiums earned | $ | 5,552 | $ | 5,552 | |||||
| Losses and loss adjustment expenses | (3,667 | ) | (3,667 | ) | |||||
| Acquisition expenses | (1,799 | ) | (1,799 | ) | |||||
| Property/Casualty Underwriting Income | 86 | 86 | |||||||
| Fee income | 2,736 | 2,736 | |||||||
| Operating expenses | (4,468 | ) | (4,468 | ) | |||||
| Income tax | – | – | |||||||
| Property and casualty | (1,646 | ) | – | (1,646 | ) | ||||
| Corporate and Investing | |||||||||
| Net investment income | 65 | 65 | |||||||
| Net realized gain/(loss) | (2 | ) | 2 | – | |||||
| Operating expenses | (420 | ) | (420 | ) | |||||
| Interest expense | (451 | ) | (451 | ) | |||||
| Other income, net of other expense | 44 | 44 | |||||||
| Corporate and investing | (764 | ) | 2 | (762 | ) | ||||
| Group total | $ | (2,410 | ) | $ | 2 | $ | (2,408 | ) | |
| AMERICAN OVERSEAS GROUP LTD. | |||||||||
| NET INCOME AND OPERATING INCOME BY SEGMENT | |||||||||
| (dollars in thousands) | Six months ended June 30, 2022 | ||||||||
| Net Income Available to Common Shareholders | Net Realized (Gain)/Loss on Sales of Investments | Operating Income | |||||||
| Property and casualty: | |||||||||
| Net premiums earned | $ | 10,181 | $ | 10,181 | |||||
| Losses and loss adjustment expenses | (6,904 | ) | (6,904 | ) | |||||
| Acquisition expenses | (3,351 | ) | (3,351 | ) | |||||
| Property/Casualty Underwriting Income | (74 | ) | (74 | ) | |||||
| Fee income | 6,004 | 6,004 | |||||||
| Other income, net of other expense | 804 | 804 | |||||||
| Operating expenses | (5,232 | ) | (5,232 | ) | |||||
| Income tax | – | – | |||||||
| Property and casualty | 1,502 | – | 1,502 | ||||||
| Corporate and Investing | |||||||||
| Net investment income | 32 | 32 | |||||||
| Net realized gain/(loss) | 237 | (237 | ) | – | |||||
| Operating expenses | (547 | ) | (547 | ) | |||||
| Interest expense | (902 | ) | (902 | ) | |||||
| Other income, net of other expense | 91 | 91 | |||||||
| Corporate and investing | (1,089 | ) | (237 | ) | (1,326 | ) | |||
| Group total | $ | 413 | $ | (237 | ) | $ | 176 | ||
| AMERICAN OVERSEAS GROUP LTD. | |||||||||
| NET INCOME AND OPERATING INCOME BY SEGMENT | |||||||||
| (dollars in thousands) | Six months ended June 30, 2021 | ||||||||
| Net Income Available to Common Shareholders | Net Realized (Gain)/Loss on Sales of Investments | Operating (Loss) | |||||||
| Property and casualty: | |||||||||
| Net premiums earned | $ | 10,537 | $ | 10,537 | |||||
| Losses and loss adjustment expenses | (6,391 | ) | (6,391 | ) | |||||
| Acquisition expenses | (3,575 | ) | (3,575 | ) | |||||
| Property/Casualty Underwriting Income | 571 | 571 | |||||||
| Fee income | 6,022 | 6,022 | |||||||
| Operating expenses | (6,745 | ) | (6,745 | ) | |||||
| Income tax | (26 | ) | (26 | ) | |||||
| Property and casualty | (178 | ) | – | (178 | ) | ||||
| Corporate and Investing | |||||||||
| Net investment income | 162 | 162 | |||||||
| Net realized gain/(loss) | 36 | (36 | ) | – | |||||
| Operating expenses | (628 | ) | (628 | ) | |||||
| Interest expense | (902 | ) | (902 | ) | |||||
| Other income, net of other expense | 77 | 77 | |||||||
| Corporate and investing | (1,255 | ) | (36 | ) | (1,291 | ) | |||
| Group total | $ | (1,433 | ) | $ | (36 | ) | $ | (1,469 | ) |
