NEW YORK, March 4 /PRNewswire-FirstCall/ -- NYMAGIC, INC.
(NYSE:NYM) reported today the results of consolidated operations
for the fourth quarter ended December 31, 2008. The Company
reported net losses of $(19.8) million, or $(2.36) per diluted
share for the three months ended December 31, 2008, compared with
net losses of $(8.3) million, or $(.93) per diluted share, for the
fourth quarter of 2007. Net losses for the year ended December 31,
2008 totaled $(104.3) million, or $(12.23) per diluted share,
compared with net earnings of $13.4 million, or $1.46 per diluted
share, for the year ended December 31, 2007. Net losses for the
year and fourth quarter ended 2008 were increased by $(17.6)
million and $(8.1) million, respectively due to uncertainty that
the Company can fully utilize all deferred income taxes that arose
from capital losses incurred. To the extent that the Company
generates future capital gains to offset these losses, it may
recover some or all of this amount. INVESTMENTS Net investment loss
amounted to $(16.0) million for the fourth quarter of 2008 compared
with net investment income of $3.4 million for the same period of
2007. For the year ended December 31, 2008, net investment losses
were $(63.5) million as compared with net investment income of
$35.5 million for the same period of 2007. Investment losses in
2008 largely reflected losses of $(42.3) million in investments
categorized as trading securities as well as losses of $(26.8)
million from limited partnerships. Trading securities included
municipal bonds, preferred stocks, commercial middle market debt,
hedged positions and exchange-traded funds. Net realized investment
losses were $(1.4) million for the fourth quarter of 2008, as
compared with net realized investment losses of $(7.0) million for
the same period of 2007. Net realized investment losses for the
year ended December 31, 2008 were $(47.7) million compared with net
realized investment losses of $(6.9) million for the same period in
2007. The net realized investment losses for the year ended
December 31, 2008 were almost entirely attributable to the decline
in the market value of the Company's investments in "super senior"
residential mortgage backed securities. These securities are
collateralized by pools of "Alt-A" mortgages, and receive priority
payments from these pools. The Company's super senior securities
rank senior to subordinated tranches of debt collateralized by each
respective pool of mortgages. As of March 1, 2009 the levels of
subordination ranged from 27% to 51% of the total debt outstanding
for each pool. Delinquencies within the underlying mortgage pools
(defined as payments 60+ days past due plus foreclosures plus real
estate owned) ranged from 19.7% to 41.5% of total amounts
outstanding. While the delinquency rates increased from March 2008
when they ranged from 3.4% to 21.2%, current subordination levels
remain in excess of current delinquency rates for each pool.
Delinquency rates are not the same as loss rates, but are an
indication of the potential for some degree of loss in future
periods. All of these securities are currently rated AAA or AAA- by
Standard & Poor's and were also rated AAA by Moody's at
February 1, 2009. During February, however, Moody's adjusted their
ratings on these securities and these ratings now range from Caa1
to A1. Accumulated other comprehensive losses included in
shareholders equity as of December 31, 2008 amounted to $(2.9)
million and relate primarily to unrealized investment losses in the
municipal portfolio held as Available for Sale. At December 31,
2008 the Company's total cash, investments and net receivable for
securities sold amounted to $572.4 million. The investment
portfolio at December 31, 2008 consisted of cash, short-term
investments and net receivable for securities sold of $211.3
million, or 36.9%; fixed maturities and other debt investments of
$226.3 million, or 39.5%, limited partnership hedge funds of $123.0
million, or 21.5%; and preferred stocks of $11.8 million, or 2.1%.
In early January 2009, the Company sold its remaining preferred
stocks. During January and February, the Company increased its
holdings of municipal and corporate bonds and maintained a major
position in short term U.S. Treasury securities. At February 28,
2009 the Company's carrying value for the following classes of
securities are as follows: Cash in Banks: $3 million U.S. Treasury
Securities: 214 million Municipal Bonds: 135 million Mortgage
Securities: 61 million Corporate Bonds 31 million Commercial Loans
2 million Hedge Funds: 121 million Receivables - Redemptions: 2
million Total $569 million INSURANCE OPERATIONS Gross premiums
written of $42.6 million and net premiums written of $31.4 million
for the fourth quarter of 2008 decreased by 15% and 13%,
respectively, over the same period of 2007. Gross premiums written
of $217.3 million and net premiums written of $165.4 million
decreased by 5% and 1%, respectively, for the year ended December
31, 2008 compared to the same period of 2007. The reduction in
gross premiums written is largely attributable to the Company's
decision to terminate a cargo program with Southern Marine and
Aviation at the end of 2007. The smaller decrease in net premiums
written is consistent with our strategy of retaining more gross
premiums written. Net premiums earned of $38.6 million for the
fourth quarter decreased by 15% over the same period of 2007. Net
premiums earned of $167.1 million for the year ended December 31,
2008 increased 1% over the same period of 2007. The Company's
combined ratio was 100.3% for the three months ended December 31,
2008 as compared with 106.3% for the same period of 2007. The
Company's combined ratio was 112.1% for the year ended December 31,
2008 as compared with 98.5% for the same period of 2007. Hurricanes
Gustav and Ike contributed 4.0% to the year ended 2008 combined
ratio. Favorable loss reserve development amounted to $4.5 million
and $2.1 million during the fourth quarter of 2008 and 2007,
respectively. Adverse loss reserve development amounted to $(2.7)
million and favorable loss reserve development amounted to $13.8
million for the year ended December 31, 2008 and 2007,
respectively. Contributing to the adverse development of losses
during 2008 were reinsurance receivables written off during the
second quarter of 2008 amounting to $12.4 million. Favorable loss
reserve development for the year ended December 31, 2007 was
largely attributable to the novation of certain excess workers'
compensation policies and favorable reported loss trends arising
from the ocean marine line of business. George Kallop, President
and Chief Executive Officer, in commenting on the overall results
for the quarter said, "The Company has suffered major setbacks
during the past months, but we remain focused on building for the
future. We have made major adjustments to our investment strategy
with more emphasis on fixed income investments and less focus on
hedge fund investments and equities. We decided to sell our
remaining preferred stocks in December and early January. In
addition, we have been reducing our investment in hedge funds and
redeploying capital into selected municipal and corporate bonds.
Regarding insurance operations, we are hopeful that MMO Agencies
will become a substantial contributor to written premiums during
2009. During the past nine months, MMO Agencies has opened
relationships with over 40 agency offices. In addition, we continue
to add to our own underwriting staff. We expect that 2009 will be a
challenging year, but our goal is to achieve significant
profitability during the year." NYMAGIC, INC. will hold a
conference call on its fourth quarter 2008 financial results live
on Thursday, March 5, 2009 at 9:00 A.M. ET. The call will last for
up to one hour. Investors and interested parties will have the
opportunity to listen to and join in the call by calling
800-374-0763 entering ID# 86181069 and registering with the
operator. Please call no later than 10 minutes prior to the start
of the call to register. A replay of the conference call will be
available for 30 days by dialing 800-642-1687 and entering ID
86181069. NYMAGIC, INC. is an insurance holding company whose
property and casualty insurance subsidiaries specialize in writing
ocean marine, inland marine and non-marine liability insurance, and
whose agency subsidiaries specialize in establishing markets for
such business. The Company maintains offices in New York and
Chicago. This report contains certain forward-looking statements
concerning the Company's operations, economic performance and
financial condition, including, in particular, the likelihood of
the Company's success in developing and expanding its business. Any
forward-looking statements concerning the Company's operations,
economic performance and financial condition contained herein,
including statements related to the outlook for the Company's
performance in 2009 and beyond, are made under the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
These statements are based upon a number of assumptions and
estimates which inherently are subject to uncertainties and
contingencies, many of which are beyond the control of the Company.
Some of these assumptions may not materialize and unanticipated
events may occur which could cause actual results to differ
materially from such statements. These include, but are not limited
to, the cyclical nature of the insurance and reinsurance industry,
premium rates, investment results and risk assessments, the
estimation of loss reserves and loss reserve development,
uncertainties associated with asbestos and environmental claims,
including difficulties with assessing latent injuries and the
impact of litigation settlements, bankruptcies and potential
legislation, the uncertainty surrounding the loss amounts related
to the attacks of September 11, 2001, and hurricanes Katrina and
Rita, the occurrence and effects of wars and acts of terrorism, net
loss retention, the effect of competition, the ability to collect
reinsurance receivables and the timing of such collections, the
availability and cost of reinsurance, the possibility that the
outcome of any litigation or arbitration proceeding is unfavorable,
the ability to pay dividends, regulatory changes, changes in the
ratings assigned to the Company by rating agencies, failure to
retain key personnel, the possibility that our relationship with
Mariner Partners, Inc. could terminate or change, and the fact that
ownership of our common stock is concentrated among a few major
stockholders and is subject to the voting agreement, as well as
assumptions underlying any of the foregoing and are generally
expressed with words such as "intends," "intend," "intended,"
"believes," "estimates," "expects," "anticipates," "plans,"
"projects," "forecasts," "goals," "could have," "may have" and
similar expressions. These and other risks could cause actual
results for the 2009 year and beyond to differ materially from
those expressed in any forward-looking statements made. Investors
are referred to the full discussion of risks and uncertainties
included in the Company's Annual Report on Form 10-K for the year
ended December 31, 2008, including those specified under the
caption "I. A. Risk Factors" and in other documents filed by the
Company with the U.S. Securities and Exchange Commission. The
Company undertakes no obligation to update publicly or revise any
forward-looking statements made. (Comparative Table Attached)
NYMAGIC, INC. TABLE OF RESULTS (Unaudited) (In thousands, except
per share data) Three Months Ended Year Ended December 31, December
31, 2008 2007 2008 2007 Revenues: Net premiums earned $38,599
$45,302 $167,073 $166,096 Net investment income (loss) (15,963)
3,396 (63,503) 35,489 Realized investment (losses) (1,351) (6,970)
(47,665) (6,903) Commission and other income 168 (4,913) 276
(4,246) ------- ------- ------- ------- Total revenues 21,453
36,815 56,181 190,436 Expenses: Net losses & loss adjustment
exp. 18,987 25,774 109,958 89,844 Policy acquisition expenses 9,271
11,270 38,670 37,694 General & administrative Expenses 10,470
11,128 38,612 36,018 Interest expense 1,680 1,699 6,716 6,726
------- ------- ------- ------- Total expenses 40,408 49,871
193,956 170,282 Income (loss) before income taxes (18,955) (13,056)
(137,775) 20,154 Total income tax expense (benefit) 812 (4,786)
(33,440) 6,782 ------- ------- ------- ------- Net income (loss)
$(19,767) $(8,270) $(104,335) $13,372 Earnings per share: Basic
$(2.36) ($.93) $(12.23) $1.50 ------- ------- ------- -------
Diluted $(2.36) ($.93) $(12.23) $1.46 ------- ------- -------
------- Weighted average shares outstanding: Basic 8,388 8,908
8,534 8,896 Diluted 8,388 8,908 8,534 9,190 Balance sheet data:
December 31, December 31, 2008 2007 Shareholders' equity $164,073
$279,446 Book value per share (1) $19.11 $31.56 (1) Calculated on a
fully diluted basis. Supplementary information: NYMAGIC Gross
Premiums Written By Segment Three months ended December 31, Year
ended December 31, 2008 2007 Change 2008 2007 Change (Dollars in
thousands) Ocean marine $13,818 $19,374 (29%) $82,751 $98,689 (16%)
Inland marine/fire 3,443 5,501 (37%) 16,128 18,625 (13%) Other
liability 25,343 25,194 1% 118,378 110,986 7% Subtotal 42,604
50,069 (15%) 217,257 228,300 (5%) Runoff lines (Aircraft) (31) 64
NM (3) 88 NM Total $42,573 $50,133 (15%) $217,254 $228,388 (5%)
NYMAGIC Net Premiums Written By Segment Three months ended December
31, Year ended December 31, 2008 2007 Change 2008 2007 Change
(Dollars in thousands) Ocean marine $9,862 $12,930 (24%) $59,200
$68,192 (13%) Inland marine/fire 714 2,068 (65%) 4,538 6,935 (35%)
Other liability 20,634 20,967 (2%) 101,424 92,618 10% Subtotal
31,210 35,965 (13%) 165,162 167,745 (2%) Runoff lines (Aircraft)
203 39 NM 222 108 NM Total $31,413 $36,004 (13%) $165,384 $167,853
(1%) NYMAGIC Net Premiums Earned By Segment Three months ended
December 31, Year ended December 31, 2008 2007 Change 2008 2007
Change (Dollars in thousands) Ocean marine $13,279 $16,905 (21%)
$64,713 $71,637 (10%) Inland marine/fire 1,120 1,894 (41%) 5,710
6,978 (18%) Other liability 23,997 26,457 (9%) 96,428 87,373 10%
Subtotal 38,396 45,256 (15%) 166,851 165,988 1% Runoff lines
(Aircraft) 203 46 NM 222 108 NM Total $38,599 $45,302 (15%)
$167,073 $166,096 1% Investment income results: Three months ended
Year ended December 31, December 31, 2008 2007 2008 2007 (in
millions) Fixed maturities, held for sale $0.8 $-- $0.8 $-- Fixed
maturities, available for Sale 1.8 2.6 7.4 13.9 Fixed maturities,
trading Securities (5.1) 0.4 (42.3) 2.3 Short-term investments 0.9
2.6 3.0 8.7 Equity in earnings of limited partnerships (12.9) (1.7)
(26.8) 13.0 Commercial loans (0.9) -- (1.5) -- Total investment
income (loss) (15.4) 3.9 (59.4) 37.9 Investment expenses (0.6)
(0.5) (4.1) (2.4) Net investment income (loss) $(16.0) $3.4 $(63.5)
$35.5 CONTACTS: NYMAGIC, INC. A. George Kallop, 212-551-0744 or
Richard Lewis Communications Cecelia Heer or Gregory Tiberend,
212-827-0020 DATASOURCE: NYMAGIC, INC. CONTACT: A. George Kallop of
NYMAGIC, INC., +1-212-551-0744; or Cecelia Heer or Gregory
Tiberend, both of Richard Lewis Communications, +1-212-827-0020
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