SeaBright Holdings, Inc. (NYSE: SBX) today announced results for
the quarter and year ended December 31, 2011.
For the fourth quarter of 2011, the Company recorded a net loss
of $0.6 million or $0.03 per basic and diluted share compared to
net income of $0.9 million or $0.04 per diluted share for the same
period in 2010. Total revenue for the quarter increased 3.6% to
$73.5 million versus $71.0 million in the year-earlier period. For
the fourth quarter of 2011, net premiums earned increased 6.0% to
$66.7 million compared to $63.0 million for the same period in
2010. Net realized gains totaled $0.4 million in the fourth quarter
of 2011 compared to $1.1 million recorded in the same period in
2010. Net realized gains in 2010 resulted from the sale of
investment securities in order to realize the Company’s capital
loss carry forwards.
For the year ended December 31, 2011, the Company recorded a net
loss of $14.5 million or $0.69 per basic and diluted share compared
to net loss of $1.6 million or $0.08 per basic and diluted share
for the same period in 2010. The reduction was primarily due to a
decrease in net realized gains of $14.4 million. Total revenue for
the period was $277.2 million versus $298.4 million in the
year-earlier period. For the year ended December 31, 2011, net
premiums earned were $249.6 million compared to $254.3 million for
the same period in 2010. Net realized gains totaled $1.1 million in
2011 compared to $15.4 million recorded in 2010.
“Our net results in the fourth quarter reflected a relatively
stable overall level of prior years’ loss reserves and a prudent
increase relating to our current year loss estimates,” commented
John Pasqualetto, SeaBright's Chairman, President and Chief
Executive Officer. “While we see the tough recessionary driven
claim environment persist, we are also seeing consistent movement
upward on rates and, in addition, we are experiencing the benefits
of improvements made in both our claims and underwriting
operations.”
The net loss ratio for the fourth quarter of 2011 was 80.3%
compared to 78.9% for the same period in 2010. During the fourth
quarter of 2011, on a pre-tax basis, the Company recognized $0.2
million in net adverse development of prior years’ loss reserve
estimates (consisting of $2.9 million of adverse development of
direct loss reserves, offset by $2.7 million of favorable
development related to ULAE, loss-based assessments and other
estimates) compared to $2.1 million in net adverse development for
the same period of 2010. The net loss ratio for the fourth quarter
2011 includes the impact of an increase in the current accident
year estimated net loss ratio from 62.5% to 65.0%.
Total underwriting, acquisition and insurance expenses for the
fourth quarter 2011 were $19.5 million compared to $18.8 million
for the same period in 2010. The net underwriting expense ratio for
the fourth quarter of 2011 was 29.2% compared to 29.8% in the same
period in 2010. The fourth quarter 2011 results include $1.0
million of previously announced severance and office closure costs
which were expensed during the quarter.
The net combined ratio for the fourth quarter of 2011 was 109.5%
compared to 108.7% for the same period in 2010.
Net investment income for the fourth quarter of 2011 was $5.2
million compared to $5.7 million for the same period in 2010 as a
result of lower yields on the investment portfolio.
The net loss ratio was 87.0% for the year ended December 31,
2011 compared to 87.4% for the same period in 2010. For the year
ended December 31, 2011, on a pre-tax basis, the Company recognized
$31.4 million in adverse development of prior years' loss reserve
estimates, compared to $32.6 million recorded in the same period in
2010.
Total underwriting, acquisition and insurance expenses for the
year ended December 31, 2011 were $75.5 million compared to $72.1
million in the prior year period and the net underwriting expense
ratio was 30.3% compared to 28.3% for the same period in 2010.
For the year ended December 31, 2011, the net combined ratio was
117.3% compared to 115.7% for the same period in 2010.
At December 31, 2011, SeaBright had approximately 1,500
customers compared to approximately 1,640 at December 31, 2010.
Customer count in the Company’s core business decreased by
approximately 240 year-over-year, while customer count in the
program business increased by approximately 100 year-over-year.
Average premium size at December 31, 2011 was $262,000 in the core
business compared to $236,000 at December 31, 2010 and was $101,000
in the program business compared to $100,000 at December 31,
2010.
At December 31, 2011, the Company had $700.3 million in fixed
income securities, of which none were rated below investment grade
and 91% were rated A- or above, excluding the impact of secondary
insurance on the municipal bond portfolio.
About SeaBright Holdings, Inc.
SeaBright Holdings, Inc. is a holding company whose wholly-owned
subsidiary, SeaBright Insurance Company, operates as a specialty
underwriter of multi-jurisdictional workers’ compensation
insurance. SeaBright Insurance Company distributes its maritime,
alternative dispute resolution and state act products through
selected independent insurance brokers and through its wholesale
broker affiliate, PointSure Insurance Services, Inc. PointSure is
licensed in 50 states and also offers insurance products from
non-affiliated insurers. Paladin Managed Care Services, Inc.,
another SeaBright Holdings company, provides integrated managed
medical care services to help employers control costs associated
with on-the-job injuries. To learn more about SeaBright Holdings,
Inc., visit our website at www.sbxhi.com.
Conference Call
The Company will host a conference call on Wednesday, February
22, 2012 at 4:30 p.m. Eastern Time featuring remarks by John G.
Pasqualetto, Chairman, President and Chief Executive Officer of
SeaBright Holdings, Richard J. Gergasko, Chief Operating Officer
and Neal A. Fuller, Senior Vice President and CFO. The conference
call will be available via webcast and can be accessed through the
Investor Relations section of the Company’s website at
http://sbxhi.com/investors.html. Please allow extra time prior to
the call to visit the site and download any necessary software to
listen to the Internet broadcast. The dial-in number for the
conference call is 888-466-4587 (domestic) or 719-325-2199
(international), (Passcode: 5366546). Please call at least five
minutes before the scheduled start time.
For interested individuals unable to join the conference call, a
replay of the call will be available from February 22, 2012 at 7:30
p.m. ET through February 29, 2012, at 888-203-1112 (domestic) or
719-457-0820 (international), (Passcode: 5366546). The online
archive of the webcast will be available on the Company’s website
for 30 days following the call.
Cautionary Statement
Some of the statements contained in this press release are
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. In some cases, you can
identify forward-looking statements by terminology such as “may,”
“will,” “should,” “expect,” “plan,” “intend,” “anticipate,”
“believe,” “estimate,” “predict,” “potential” or “continue,” the
negative of these terms or other terminology. In particular, this
press release may contain forward-looking statements about Company
expectations with respect to loss reserves, the duration and
severity of claims or economic conditions in the United States.
Forward-looking statements are based on the opinions and estimates
of management at the time the statements are made and are subject
to certain risks and uncertainties that could cause actual results
to differ materially from those anticipated in the forward-looking
statements. Factors that could affect the Company's actual results
include, among others, the fact that our loss reserves are based on
estimates and may be inadequate to cover our actual losses; the
uncertain effects of emerging claim and coverage issues or economic
conditions in the U.S. on our business; the geographic
concentration of our business; an inability to obtain or collect on
our reinsurance protection; a downgrade in the A.M. Best rating of
our insurance subsidiary; the impact of extensive regulation of the
insurance industry and legislative and regulatory changes; a
failure to realize our investment objectives; the effects of
intense competition; the loss of one or more principal employees;
the inability to acquire additional capital on favorable terms; a
failure of independent insurance brokers to adequately market our
products; the loss of our rights to fee income and protective
arrangements that were established in connection with the
acquisition of our business; and the effects of acts of terrorism
or war. More information about these and other factors that
potentially could affect our financial results is included in our
2010 Annual Report on Form 10-K, filed with the U.S. Securities and
Exchange Commission on March 14, 2011, and in our other public
filings filed with the U.S. Securities and Exchange Commission.
Readers are cautioned not to place undue reliance upon these
forward-looking statements, which speak only as of the date of this
release. The Company undertakes no obligation to update any
forward-looking statements.
Set forth in the tables below are unaudited summary results of
operations for the three months and year ended December 31, 2011
and 2010 as well as selected balance sheet data as of December 31,
2011 and 2010. The following information is preliminary and
unaudited and is subject to change until final results are publicly
distributed upon the filing of the Company’s annual report on Form
10-K. The Company currently expects to file its audited
consolidated financial statements with the U.S. Securities and
Exchange Commission as part of its annual report on Form 10-K in a
timely fashion on or before March 15, 2012.
SEABRIGHT HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, December 31, 2011 2010
(Unaudited) (Audited) (in thousands, except share
and per share amounts) ASSETS Fixed income
securities available for sale, at fair value $ 700,346 $ 672,968
Cash and cash equivalents 28,503 15,958 Accrued investment income
6,987 7,085 Premiums receivable, net of allowance 18,332 15,023
Deferred premiums 142,486 168,842 Due from reinsurer 4,814 4,420
Reinsurance recoverables 94,173 56,746 Receivable under reserve
guarantee 3,117 2,965 Prepaid reinsurance 4,424 4,288 Property and
equipment, net 6,337 6,277 Federal income tax recoverable 12,823
11,749 Deferred income taxes, net 19,233 23,458 Deferred policy
acquisition costs, net 21,834 25,574 Intangible assets, net 1,244
1,330 Goodwill 2,794 2,794 Other assets
11,391
7,085 Total assets
$
1,078,838 $ 1,026,562
LIABILITIES AND STOCKHOLDERS’ EQUITY Liabilities:
Unpaid loss and loss adjustment expense $ 518,044 $ 440,919
Unearned premiums 130,300 155,786 Reinsurance funds withheld and
balances payable 7,079 6,739 Premiums payable 6,351 8,645 Accrued
expenses and other liabilities 51,553 51,456 Surplus notes
12,000 12,000 Total liabilities
725,327 675,545
Commitments and contingencies Series A Preferred stock,
$0.01 par value; 750,000 shares authorized; no shares issued and
outstanding – – Undesignated preferred stock, $0.01 par value;
10,000,000 shares authorized; no shares issued and outstanding – –
Common stock, $0.01 par value; 75,000,000 shares authorized; issued
and outstanding – 22,327,749 shares at December 31, 2011 and
22,025,450 shares at December 31, 2010 223 220 Paid-in capital
213,746 209,941 Accumulated other comprehensive income 23,269 5,591
Retained earnings
116,273
135,265 Total stockholders’ equity
353,511 351,017 Total liabilities
and stockholders’ equity
$ 1,078,838
$ 1,026,562 SEABRIGHT
HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited) Three Months Ended
December 31, Year Ended December
31, 2011
2010 2011
2010
(in thousands, except share and
earnings (loss) per share
information)
Revenue: (1) Premiums earned $ 66,739 $ 62,967 $ 249,551 $ 254,326
Claims service income 285 215 1,261 889 Net investment income 5,208
5,701 21,041 23,466 Net realized gains 388 1,138 1,051 15,425 Other
income
919 949
4,257 4,253
73,539 70,970
277,161
298,359 Losses and expenses: Loss and loss
adjustment expenses 53,854 49,924 218,413 223,050 Underwriting,
acquisition and insurance expenses 19,518 18,751 75,521 72,084
Interest expense 135 132 525 528 Goodwill impairment – – – 1,527
Other expenses
1,969
1,935 8,028
7,509 75,476
70,742 302,487
304,698 Income (loss) before taxes
(1,937 ) 228 (25,326 ) (6,339 ) Income tax benefit
(1,346 )
(704 )
(10,800 )
(4,756 ) Net income
(loss)
(591 )
932 (14,526 )
(1,583 ) Other
comprehensive income: Net unrealized gains (losses) on investment
securities available for sale 5,479 (21,498 ) 28,319 4,227 Less:
Reclassification adjustment for net realized gains recorded into
income (388 ) (1,138 ) (1,051 ) (15,425 ) Income tax benefit
(expense) related to items of other comprehensive income
(1,692 ) 7,866 (9,590 ) 3,862
Other comprehensive income (loss)
3,399
(14,770 )
17,678
(7,336 ) Comprehensive income (loss)
$ 2,808 $
(13,838 ) $
3,152 $ (8,919 )
Basic earnings (loss) per share $ (0.03 ) $ 0.04 $ (0.69 ) $
(0.08 ) Diluted earnings (loss) per share $ (0.03 ) $ 0.04 $ (0.69
) $ (0.08 ) Weighted average basic shares outstanding
21,167,193 20,919,033 21,118,711 20,867,720 Weighted average
diluted shares outstanding 21,167,193 21,573,599 21,118,711
20,867,720 Net loss ratio (2) 80.3 % 78.9 % 87.0 % 87.4 %
Net underwriting expense ratio (3)
29.2
% 29.8 %
30.3 % 28.3
% Net combined ratio (4)
109.5
% 108.7 %
117.3 % 115.7
% (1) Gross and net premiums written for the
periods indicated were as follows:
Three Months
Ended December 31, Year Ended December
31, 2011
2010 2011
2010 (in thousands)
Gross premiums written $ 67,267 $ 72,670 $ 261,392 $ 264,323 Net
premiums written 61,366 62,389 225,624 240,214 (2) The net
loss ratio is calculated by dividing loss and loss adjustment
expenses for the period less claims service income by the net
premiums earned for the period. (3) The net underwriting
expense ratio is calculated by dividing underwriting, acquisition
and insurance expenses for the period by the net premiums earned
for the period. (4) The net combined ratio is the sum of the
net loss ratio and the net underwriting expense ratio.
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