AMCP Amcomp Incorporated (MM)

AmCOMP Incorporated (Nasdaq:AMCP) today announced results for the second quarter and six months ended June 30, 2007. Fred R. Lowe, AmCOMP�s Chairman, President and Chief Executive Officer, remarked, �I am pleased to report we increased our net income this quarter by 10% year-over-year and 37.5% over this year�s first quarter. Additionally, we improved our combined ratio, which measures the overall profitability of our business, to 91.5% compared to 94.4% for the same period in 2006 and 96.4% in the first quarter of 2007. �These positive results are a direct reflection of the effectiveness of our risk selections and proactive claims management. I would like to congratulate our team of underwriters for its continuing and successful efforts, despite the competitiveness of the market, in maintaining discipline and securing adequate pricing. We also appreciate the efforts of our loss control specialists, who assist our underwriters in determining the risks we choose to insure. Our claims adjusters should be recognized, too, for their ability to proactively manage claims, closing them quickly and appropriately, thereby reducing our exposure to development from prior years� claims. �We have always maintained that our business should not be judged on a quarter-by-quarter basis. The pay-out tails in workers� compensation insurance are long and many variables can affect the top and bottom line business results in the short-term. Additionally, we cannot predict the level of our quarterly reserve redundancies, as we book to the exact point estimate of our independent actuary. �In the long-term, it is the solvency of the business model, the sustained track record and the strength of the management team that are the real measurements of success. Our initiatives are focused on the achievement of these primary outcomes: continued building of loyal relationships with our independent agents and policyholders, implementation of technology to make it easier to do business with us, an unmatched customer experience, disciplined and profitable underwriting, and cost containment and expense reductions. We are energized by our opportunities, and we are continuing to work hard to compete effectively in our markets for a bright, long-term future for AmCOMP,� Mr. Lowe concluded. Financial Results for the Second Quarter of 2007 For the second quarter of 2007, net income was $5.5 million, or $0.35 per diluted share, compared to net income of $5.0 million, or $0.31 per diluted share, for the second quarter of 2006. Weighted average diluted shares outstanding were 15,776,000 as of June 30, 2007, compared to 15,584,000 as of June 30, 2006. Total revenue decreased 17.0% to $60.2 million in the second quarter of 2007 versus $72.5 million in the prior year�s second quarter. Direct premiums written decreased 19.7% to $49.5 million for the three months ended June 30, 2007, from $61.6 million in the comparable period in 2006. In Florida, our largest market, direct premiums written decreased $13.9 million in the second quarter compared to the corresponding 2006 quarter. The decrease in Florida premiums is the result of a 15.7% rate decrease in 2007, a 6.9% decline in in-force policies as of June 30, 2007 compared to June 30, 2006, and a reduction in construction-related payrolls. Net investment income increased by $0.7 million, or 16.9%, for the same three-month period in 2007 over the comparable quarter in 2006. The net combined ratio, including policyholder dividends for the quarter ended June 30, 2007, was 91.5% compared to 94.4% for the same period in 2006. Loss and loss adjustment expenses ratios were 47.3% and 59.3% of net premiums earned in the three months ended June 30, 2007 and 2006, respectively. Total expenses were 32.7% and 31.3% of net premiums earned in the three months ended June 30, 2007 and 2006, respectively. During the second quarter of 2007, the Company accrued $4.1 million for estimated additional Florida dividends based on its statutory underwriting results pursuant to Florida Statute 627.215 and applicable regulations. AmCOMP�s ultimate liability will be based on its premiums earned, loss reserves and expenses compiled in accordance with the statute and regulations. Financial Results for the First Six Months of 2007 Net income for the six months ended June 30, 2007 was $9.5 million, or $0.61 per diluted share, compared to $11.0 million, or $0.77 per diluted share, in the first half of 2006. Weighted average diluted shares outstanding were 15,777,000 as of June 30, 2007, compared to 14,241,000 as of June 30, 2006. Six month revenue in 2007 was $124.3 million; a 12.9% decrease from revenue of $142.6 million for the first six months of 2006. For the first six months of 2007, direct premiums written decreased 17.5% to $123.8 million from $150.0 million in the comparable period in 2006. In Florida, direct premiums written decreased $25.8 million for the first six months of 2007 compared to the same period in 2006. The net combined ratio, including policyholder dividends, for the six months ended June 30, 2007, was 93.9% compared to 92.7% for the same period in 2006. Loss and loss adjustment expenses were 53.3% and 58.1% of net premiums earned in the six months ended June 30, 2007 and 2006, respectively. Total expenses for the first six months of 2007 were 33.1% of net premiums earned compared to 30.7% in the prior year period. Book value as of June 30, 2007 was $9.39. The annualized return on equity for the three months ended June 30, 2007 and 2006, was 15.2% and 16.0%, respectively. The annualized return on equity for the six months ended June 30, 2007 and 2006, was 13.4% and 21.9%, respectively. The Company does not have any exposure to sub-prime debt in its balance sheet. Conference Call The Company will host a conference call on Thursday, August 9, 2007, at 8:00 AM ET, featuring remarks by Fred Lowe, President and Chief Executive Officer, Debra Ruedisili, Executive Vice President and Chief Operating Officer, and Kumar Gursahaney, Senior Vice President, Chief Financial Officer and Treasurer. The conference call is available via webcast on the Company�s website and can be accessed by clicking on the following link: http://ir.amcomp.com/eventdetail.cfm?eventid=42633. The dial-in number for the conference call is 913-981-5532. Please call at least five minutes before the scheduled start time. There will be an audio replay of the call, which will be available starting at 11:00 AM ET through 11:59 PM ET August 12th and can be accessed by calling 719-457-0820 or 888-203-1112 and using the pass code 4116284. The conference call webcast will be available on the Company�s website for 60 days. About AmCOMP With roots dating back to 1982, AmCOMP Incorporated is an insurance holding company whose wholly owned subsidiaries, AmCOMP Preferred and AmCOMP Assurance, are mono-line workers� compensation insurers with products that focus on value-added services to policyholders. Currently marketing insurance policies in 15 core states and targeting small to mid-sized employers in a variety of industries, AmCOMP distributes its products through independent agencies. Forward-looking Statements Statements made in this press release, including those about the Company�s financial condition and results of operations and about its future plans and objectives, which are not based on historical facts, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words �believe,� �expect,� �plans,� �intend,� �project,� �estimate,� �may,� �should,� �will,� �continue,� �potential,� �forecast� and �anticipate� and similar expressions identify forward-looking statements. Any such statements involve known and unknown risks, uncertainties and other factors, including those set forth under the heading �Risk Factors� in the Company�s filings with the Securities and Exchange Commission, including AmCOMP�s Form 10-K for fiscal year ended December 31, 2006. Such factors may cause AmCOMP�s actual performance, condition and achievements to be materially different than any future performance, condition and achievement set forth in this press release. All subsequent written and oral forward-looking statements attributable to us or individuals acting on our behalf are expressly qualified in their entirety by these cautionary statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Set forth in the tables below are summary results of operations for the three month and six month periods ended June 30, 2007 and 2006, as well as selected balance sheet data as of June 30, 2007 and December 31, 2006. The following information is preliminary and unaudited and is subject to change until final results are publicly distributed. AmCOMP Incorporated and Subsidiaries Condensed Consolidated Statements of Operations (in thousands, except per share amounts and ratios) (unaudited) � Three Months Ended June 30, Six Months Ended June 30, 2007 2006 2007 2006 Statement of Operations Data: Revenue: Net premiums earned $55,424 $68,388 $114,637 $134,358 Net investment income 4,941 4,228 9,803 8,271 Net realized investment losses (212 ) (198 ) (212 ) (197 ) Other income 18 � 106 � 48 � 191 � Total revenue 60,171 72,524 124,276 142,623 Expenses: Losses and loss adjustment expenses 26,188 40,582 61,106 78,049 Policy acquisition expenses 11,478 11,555 20,681 24,369 Underwriting and other expenses 6,672 9,843 17,365 16,830 Dividends to policyholders 6,357 2,580 8,598 5,243 Interest expense 901 � 868 � 1,855 � 1,706 � Total expenses 51,596 65,428 109,605 126,197 � � � � Income before income taxes 8,575 7,096 14,671 16,426 Income tax expense 3,048 � 2,089 � 5,124 � 5,444 � Net income $ 5,527 � $ 5,007 � $ 9,547 � $ 10,982 � � Operating Data: Direct premiums written $49,479 $61,640 $123,835 $150,020 Gross premiums written 50,902 64,491 126,481 154,031 Net premiums written 49,965 62,041 125,035 148,737 Per Share Data: Earnings per share Basic $0.35 $0.31 $.61 $.83 Diluted 0.35 0.31 .61 .77 Weighted average common shares outstanding Basic 15,769 15,559 15,764 13,306 Diluted 15,776 15,584 15,777 14,241 Selected Insurance Ratios: Net loss ratio1 47.3 % 59.3 % 53.3 % 58.1 % Net policy acquisition expense ratio2 20.7 % 17.0 % 18.0 % 18.2 % Underwriting and other expense ratio3 12.0 % 14.3 % 15.1 % 12.5 % Net combined ratio, excluding policyholder dividends4 80.0 % 90.6 % 86.4 % 88.8 % Dividend ratio5 11.5 % 3.8 % 7.5 % 3.9 % Net combined ratio, including policyholder dividends6 91.5 % 94.4 % 93.9 % 92.7 % � 1 Losses and loss adjustment expenses divided by net premiums earned, after the effects of reinsurance 2 Net policy acquisition expenses divided by net premiums earned 3 Underwriting and other expenses divided by net premiums earned 4 Sum of ratios computed in footnotes 1, 2 and 3 5 Dividends to policyholders divided by net premiums earned 6 Sum of ratios computed in footnotes 1, 2, 3 and 5 AmCOMP Incorporated and Subsidiaries Consolidated Balance Sheets (in thousands) (unaudited) � June 30, December 31, 2007 � 2006 Assets: Cash and investments $443,657 $436,775 Premiums receivable � net 106,697 106,270 Reinsurance recoverables 70,104 75,360 Deferred policy acquisition costs 22,641 20,749 Deferred income taxes � net 23,875 21,613 Other assets 18,576 � 23,730 Total Assets $685,550 � $684,497 � Liabilities and stockholders� equity: Unpaid losses and loss adjustment expenses $323,424 $334,363 Unearned and advance premiums 121,517 115,218 Notes payable 37,357 38,250 Other liabilities 55,125 � 57,378 Total liabilities $537,423 $545,209 Total stockholders� equity 148,127 � 139,288 Total liabilities and stockholders� equity $685,550 � $684,497