SeaBright Insurance Holdings, Inc. (Nasdaq: SEAB) today announced
results for the second quarter and six-months ended June 30, 2008.
Net income for the quarter was $6.4 million or $0.30 per fully
diluted share compared to $10.2 million or $0.49 per fully diluted
share in the year-earlier period. For the second quarter, total
revenue increased 1.9% to $61.8 million compared to $60.7 million
for the same period in 2007. For the second quarter of 2008,
premiums earned increased 1.7% to $55.7 million compared to $54.8
million for the same period in 2007. During the second quarter
2008, the Company incurred a non-recurring charge of approximately
$1.0 million, or $0.03 per diluted share, related to the
accelerated vesting of stock options and restricted stock held by
our former chief financial officer, who passed away unexpectedly in
April. Also in the second quarter, net realized losses included a
pre-tax charge of $1.9 million, or $0.06 per diluted share, related
to other-than-temporary impairments of the Company�s investments in
preferred stock issued by Fannie Mae and Freddie Mac. John
Pasqualetto, SeaBright�s Chairman, President and Chief Executive
Officer, said, "The second quarter was a very challenging quarter,
encompassing the combination of increasingly competitive pricing
and the negative impact on premium growth driven by the general
economic slowdown. In the quarter, we did encounter more
competitors willing to price business at rates we deem inadequate.
Consistent with our dedication to make an underwriting profit, we
chose to walk away from under priced business. Experience has
taught us that long-term success is predicated on strong
underwriting discipline, exceptional customer service and a
specialized product mix. SeaBright remains committed to these
tenets and is confident that we are well positioned to operate
successfully throughout the cycle.� The net loss ratio for the
second quarter of 2008 was 57.0% compared to 52.4% in the same
period of 2007. During the second quarter 2008, on a pre-tax basis,
the Company recognized approximately $7.9 million in favorable
development of prior years� loss reserve estimates to reflect a
continuation of deflation trends in the paid loss data for recent
accident years. During the second quarter of 2007, on a pre-tax
basis, the Company recognized $7.8 million in favorable development
of prior years' loss reserve estimates. Total underwriting expenses
for the second quarter 2008 were $17.7 million compared to $14.7
million in the prior year period. The net underwriting expense
ratio for the first quarter was 31.6% compared to 26.8% in the same
period in 2007. The increase in the underwriting expense ratio over
the same period in 2007 is primarily the result of increased
production expenses to support our geographic expansion and entry
into additional workers� compensation niches, and the charge
related to the accelerated vesting of stock options and restricted
stock held by our former chief financial officer. The net combined
ratio for the second quarter of 2008 was 88.6% compared to 79.2 %
for the same period in 2007. Net investment income for the second
quarter of 2008 was $5.6 million compared to $4.9 million for the
same period in 2007 as the Company�s investment portfolio grew
19.8% or $89.2 million to $539.8 million at June 30, 2008 from
$450.6 million at June 30, 2007. At June 30, 2008, SeaBright had
1,032 customers, an increase of 25.2% compared to the same period
in 2007. At June 30, 2008, the average premium size per customer
was approximately $267,000 compared to approximately $294,000 at
June 30, 2007, a reflection of SeaBright�s continued geographic
diversification of its business and lower premium rates related to
the decline in loss costs. For the six months ended June 30, 2008,
net income was $17.3 million or $0.82 per diluted share compared to
$20.3 million or $0.97 per diluted share in the same period in
2007. Total revenue for the period increased 9.0% to $125.9 million
compared to $115.5 million for the same period in 2007. For the six
months ended June 30, 2008, net premiums earned increased 8.7% to
$112.4 million compared to $103.4 million for the comparable period
in 2007. The net loss ratio was 54.9% for the six months ended June
30, 2008 compared to 52.3% in the same period in 2007. For the six
months ended June 30, 2008, on a pre-tax basis, the Company
recognized $15.9 million in favorable development of prior years�
loss reserve estimates, compared to $15.0 million recognized in the
same period of 2007. Total underwriting expenses for the six months
ended June 30, 2008 were $33.3 million compared to $27.3 million in
the prior year period and the net underwriting expense ratio was
29.6% compared to 26.4% in the same period in 2007. For the six
months ended June 30, 2008, the net combined ratio was 84.5%
compared to 78.7% for the same period in 2007. At June 30, 2008,
the Company�s investment portfolio totaled $539.8 million and had
an overall credit rating of AA. The Company regularly reviews its
investment portfolio for other than temporary impairment declines
in fair value considering, among other things, the underlying
credit quality of any insured or uninsured bonds. As of June 30,
2008, the overall credit quality of our $276.0 million fixed income
municipal portfolio (including secondary insurance) stood at
AA/AA-. With secondary insurance removed, the average rating of the
municipal portfolio would be AA-. As of June 30, 2008, the Company
had $205.5 million in insured municipal bonds with a weighted
average credit rating of AA/AA-. The underlying rating of the
insured bonds was AA-. The Company also had $70.5 million in
uninsured municipal bonds with a weighted average credit rating of
AA/AA-. At June 30, 2008, the Company had $2.8 million invested in
collateralized mortgage obligations, $2.2 million in adjustable
rate mortgages, $13.1 million in asset backed securities, none of
which were sub prime, and $8.0 million in preferred stock and $9.8
million in debt securities issued by Fannie Mae and Freddie Mac.
About SeaBright Insurance Holdings, Inc. SeaBright Insurance
Holdings, Inc. is an insurance 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 in-house
wholesale broker affiliate, PointSure Insurance Services. SeaBright
Insurance Company provides workers' compensation coverage to
employers in selected regions nationwide. To learn more about
SeaBright Insurance Company and SeaBright Insurance Holdings, Inc.,
visit our website at www.sbic.com. Conference Call The Company will
host a conference call on Tuesday, July 22, 2008 at 4:30 p.m.
Eastern Time featuring remarks by John G. Pasqualetto, President
and CEO, Richard J. Gergasko, Executive Vice President -
Operations, and M. Philip Romney, Vice President, Finance and
Principal Accounting Officer. The conference call is available via
webcast on the Company�s website and can be accessed by visiting
http://investor.sbic.com. Once there, select �Webcasts and
Presentations� on the left side of the page. The dial-in number for
the conference call is (877) 419-6603. Please call at least five
minutes before the scheduled start time. 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. 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 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 2007 Annual Report on Form 10-K, filed
with the U.S. Securities and Exchange Commission on March 17, 2008,
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 summary results of operations for the three and six month
periods ended June 30, 2008 and 2007 as well as selected balance
sheet data as of June 30, 2008 and December 31, 2007. 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 quarterly report on Form 10-Q. The Company currently
expects to file its unaudited condensed consolidated financial
statements with the U.S. Securities and Exchange Commission as part
of its quarterly report on Form 10-Q in a timely fashion on or
before August 11, 2008. SEABRIGHT INSURANCE HOLDINGS, INC. AND
SUBSIDIARIES � CONDENSED CONSOLIDATED BALANCE SHEETS � � June 30,
2008 � December 31, 2007 (Unaudited) (Audited) (in thousands)
ASSETS � Fixed income securities available-for-sale, at fair value
$ 489,292 $ 474,756 Equity securities available-for-sale, at fair
value 12,747 11,193 Preferred stock available-for-sale, at fair
value 8,281 8,488 Cash and cash equivalents 29,470 20,292 Accrued
investment income 5,491 5,055 Premiums receivable, net of allowance
10,791 9,223 Deferred premiums 162,147 150,066 Service income
receivable 228 436 Reinsurance recoverables 15,718 14,210
Receivable under adverse development cover 2,533 2,533 Prepaid
reinsurance 1,812 1,820 Property and equipment, net 4,539 1,707
Deferred income taxes, net 20,862 16,488 Deferred policy
acquisition costs, net 22,310 19,832 Intangible assets, net 1,228
1,233 Goodwill 2,881 2,881 Other assets � 19,286 � � 15,356 Total
assets $ 809,616 � $ 755,569 � LIABILITIES AND STOCKHOLDERS� EQUITY
� Liabilities: Unpaid loss and loss adjustment expense $ 263,708 $
250,085 Unearned premiums 155,477 147,033 Reinsurance funds
withheld and balances payable 1,377 220 Premiums payable 4,876
4,136 Accrued expenses and other liabilities 62,063 47,789 Surplus
notes � 12,000 � � 12,000 Total liabilities � 499,501 � � 461,263 �
Commitments and contingencies � Stockholders� equity: 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 � 21,222,703 shares at June 30,
2008 and 20,831,102 shares at December 31, 2007 � 212 � 208 Paid-in
capital 197,282 194,023 Accumulated other comprehensive
income/(loss) (3,100 ) 1,638 Retained earnings � 115,721 � � 98,437
Total stockholders� equity � 310,115 � � 294,306 Total liabilities
and stockholders� equity $ 809,616 � $ 755,569 SEABRIGHT INSURANCE
HOLDINGS, INC. AND SUBSIDIARIES � CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS (Unaudited) � � � Three Months Ended June 30, Six
Months Ended June 30, � 2008 � � 2007 � � 2008 � � 2007 � (dollars
in thousands, except income per share amounts) Revenue: (1)
Premiums earned $ 55,685 $ 54,757 $ 112,407 $ 103,388 Claims
service income 424 343 830 899 Other service income 82 25 99 49 Net
investment income 5,557 4,854 11,281 9,612 Net realized loss (2,012
) (8 ) (2,129 ) (60 ) Other income � 2,043 � � 685 � � 3,451 � �
1,642 � � 61,779 � � 60,656 � � 125,939 � � 115,530 � Losses and
expenses: Loss and loss adjustment expenses 32,156 29,012 62,565
54,930 Underwriting, acquisition and insurance expenses 17,678
14,692 33,324 27,323 Interest expense 210 284 461 565 Other
expenses � 2,367 � � 1,652 � � 4,353 � � 3,203 � � 52,411 � �
45,640 � � 100,703 � � 86,021 � Income before taxes � 9,368 � �
15,016 � � 25,236 � � 29,509 � � Income tax expense (benefit):
Current 3,354 5,692 9,665 10,166 Deferred � (417 ) � (879 ) �
(1,713 ) � (933 ) � 2,937 � � 4,813 � � 7,952 � � 9,233 � Net
income $ 6,431 � $ 10,203 � $ 17,284 � $ 20,276 � � Basic earnings
per share $ 0.31 $ 0.50 $ 0.85 $ 1.00 Diluted earnings per share $
0.30 $ 0.49 $ 0.82 $ 0.97 � Weighted average basic shares
outstanding 20,456,084 20,338,526 20,408,153 20,329,662 Weighted
average diluted shares outstanding 21,174,566 20,960,268 21,080,929
20,913,518 � Net loss ratio (2) 57.0 % 52.4 % 54.9 % 52.3 % Net
underwriting expense ratio (3) � 31.6 % � 26.8 % � 29.6 % � 26.4 %
Net combined ratio (4) � 88.6 % � 79.2 % � 84.5 % � 78.7 % � (1)
Gross and net premiums written for the periods indicated were as
follows: � Three Months Ended June 30, Six Months Ended June 30, �
2008 � � 2007 � � 2008 � � 2007 � (in thousands) Gross premiums
written $ 66,254 $ 67,559 $ 129,821 $ 127,485 Net premiums written
63,006 63,645 123,349 119,905 � (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 less other service income 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.
Seabright (MM) (NASDAQ:SEAB)
Historical Stock Chart
From Aug 2024 to Sep 2024
Seabright (MM) (NASDAQ:SEAB)
Historical Stock Chart
From Sep 2023 to Sep 2024