Revised Preliminary Results
March 10 2008 - 3:05AM
UK Regulatory
RNS Number:6973P
Alea Group Holdings(Bermuda) Ltd
10 March 2008
This announcement replaces the previous Preliminary Results announcement (RNS
numbers 4882P and 4883P), released at 07.01am on 6 March 2008.
Alea Group Holdings (Bermuda) Ltd
Audited results for the 12 months ended 31 December 2007
Alea announces full year 2007 results and provides an update on run-off
Financial Performance
* Insurance contracts liabilities decreased by 20.2% from $1,941.5 million
at 31 December 2006 to $1,549.9 million at 31 December 2007.
* Investment income of $73.1 million (20061: $94.8 million) reflecting a
decrease in invested assets as cash is used for claims payments and
commutations.
* Other operating expenses for 2007 were $59.7 million (2006: $66.6 million)
which includes $11.9 million of one-time transaction related expenses,
which on a per share2 basis3 was $0.07.
* Result of operating activities of $(56.4) million (2006: $17.1 million).
* Adverse reserve development, net of reinsurance excluding the impact of
commutations and discount in the year ended 31 December 2007 of $29.9
million (2006: adverse reserve development of $37.6 million, net of
reinsurance excluding the impact of commutations and discount).
* Agreements to commute two excess of loss reinsurance treaties resulted in
a loss of $33.8 million, which on a per share basis was $0.19.
* Loss after tax in 2007 of $78.2 million (2006: loss after tax of $0.8
million) which on a per share basis was $0.45 (2006: loss per share of
$0.00).
* Net asset value of $2.46 per share compared with 31 December 2006 of $2.79
per share including the impact of unrealised losses on investments.
* Subsequent to 31 December 2007 the Group repaid all of its outstanding
bank loans.
Operational Highlights
* Staff headcount reduced to 105 as at 31 December 2007 down from 137 as
at 31 December 2006.
Directorate Changes and Corporate Actions
Several events in 2007 resulted in a significant change in both the ownership
and the Board of Directors of Alea Group Holdings (Bermuda) Ltd. Following the
acquisition by FIN Acquisition Limited of approximately 67% of the Company's4
shares in issue, on 6 July 2007, the Group announced the resignation of each of
John Reeve, Timothy Faries, James Fisher, Todd Fisher, Perry Golkin, R. Glenn
Hilliard, and Scott Nuttall as directors of the Company with effect from 5 July
2007. The Group further announced the appointment of Robert Kauffman, Randal
Nardone and Greg Share as non-executive directors of the Company with
simultaneous effect. Mr Kauffman was also appointed Chairman of the Board.
On 10 July 2007, the Group announced the conversion of the currency in which the
Company's shares trade on the London Stock Exchange from pounds sterling to US
dollars. On 18 July 2007, the Group announced it had posted a circular to its
shareholders relating to the conversion of the Company's listing on the Official
List of the UK Listing Authority from a primary listing to a secondary listing,
with an effective date of 16 August 2007.
On 23 July 2007, FIN Acquisition Limited announced it had closed to further
acceptances on 20 July 2007, its recommended cash offer to acquire the shares of
Alea Group Holdings (Bermuda) Ltd, which increased its ownership to 72.4%.
Dividend
The Company has not proposed a dividend for the 2007 financial year (2006:
$Nil).
Notes
1. Except where specifically indicated all statements refer to the twelve months
ended 31 December 2007 or 31 December 2006.
2. Weighted average number of ordinary shares of 173.8 million (2006: 173.7
million).
3. Basic and diluted loss per share are the same value.
4. "Company" refers to Alea Group Holdings (Bermuda) Ltd only. "Group" refers to
Alea Group Holdings (Bermuda) Ltd and all its subsidiaries.
Financial information presented herein has been prepared in accordance with
International Financial Reporting Standards ("IFRS").
For further information, please contact:
Mark Cloutier
+1 441 296 9150
Financial Dynamics
Robert Bailhache
Nick Henderson
+44 20 7269 7114
Past performance cannot be relied upon as a guide to future performance.
Certain statements made in this document that are not based on current or
historical facts are forward-looking in nature including, without limitation,
statements containing words "believes," "anticipates," "plans," "projects,"
"intends," "expects," "estimates," "predicts," and words of similar import. All
statements other than statements of historical facts including, without
limitation, those regarding the Group's financial position, business strategy,
plans and objectives of management for future operations (including development
plans and objectives) are forward-looking statements. Such forward-looking
statements involve known and unknown risks, uncertainties and other important
factors that could cause the actual results, performance or achievements of the
Group to be materially different from future results, performance or
achievements expressed or implied by such forward-looking statements. In
particular, forecasting of reserves for future losses is based on historical
experience and future assumptions. As a result they are inherently subjective
and may fluctuate based on actual future experience and changes to current or
future trends in the legal, social or economic environment. Such forward-looking
statements are based on numerous assumptions regarding the Group's present and
future business strategies and the environment in which the Group will operate
in the future. These forward-looking statements speak only as at the date of
this document or other information concerned. Alea Group Holdings (Bermuda) Ltd
expressly disclaims any obligations or undertaking (other than reporting
obligations imposed on us in relation to our listing on the London Stock
Exchange) to disseminate any updates or revisions to any forward-looking
statements contained herein to reflect any changes in the Group's expectations
with regard thereto or any change in events, conditions or circumstances on
which any such statement is based. References in this paragraph to the Group are
to Alea Group Holdings (Bermuda) Ltd and its subsidiaries from time to time.
This document is the revised Annual Financial Report and financial statements
and replaces the Annual Financial Report and original financial statements which
were approved by the Board of Directors on 5 March 2008 and issued to the market
on 6 March 2008.
The Financial Review and note 4 to the financial statements contain tables (i)
presenting the Alea Group's booked gross claims outstanding before claims
handling provisions and before discount as at 31 December 2007 by class of
business and year and (ii) analysing Alea's gross claims outstanding between
incurred but not reported ("IBNR") and case reserves at 31 December 2007. In the
original financial statements, due to an arithmetical error, the analysis
between classes was incorrect, although the totals by year and the grand totals
were correct, and the analysis between IBNR and case reserves was incorrect. No
other note disclosures, primary financial statements or commentary in the
Financial Review was affected. These inaccuracies have been corrected in the
revised Annual Financial Report and financial statements.
MANAGEMENT REPORT
CHIEF EXECUTIVE OFFICER'S REPORT
2007 was another year of significant change for Alea Group. While we continued
to focus on the orderly run-off of the Group's balance sheet we also completed a
number of major transactions including the purchase of a majority interest in
the Group by FIN Acquisition Limited, a Company formed at the direction of
Fortress Investment Group.
As we have stated previously, our goal is to crystallise, preserve and, if
possible, grow our capital base and, through our run-off activities, free-up
excess capital which can be returned to shareholders or reinvested in the
business. While our reported results for 2007 were impacted by several one-time
events that require further explanation, we can report significant further
progress in our efforts to deleverage the Group's balance sheet and secure and
release capital for the benefit of our shareholders.
During the course of the year, we completed a number of commutation transactions
that met our economic objectives, and we believe, reduced volatility in our
provisions for claims outstanding. In our direct insurance portfolio we closed
in excess of 3,000 claims representing a considerable reduction of open claims
outstanding, further reducing uncertainty in our claims provisions. Our total
gross claims provision at 31 December 2007 is $1,549.9 million compared to
$1,938.0 million at 31 December 2006, a reduction of $388.1 million,
representing a considerable further deleveraging of our capital.
Our income statement for 2007 was impacted by a number of one-time items. The
acquisition by FIN Acquisition Limited of 72.4% of our issued share capital
resulted in one-time transaction expenses of $11.9 million. During the year we
commuted an outwards reinsurance agreement resulting in a $25.0 million charge
to earnings. Also, on 11 January 2008 we announced that we had reached agreement
to commute another outwards reinsurance treaty effective 31 December 2007,
resulting in an $8.8 million charge to our income statement, but no impact in
the period to our balance sheet. These transactions, resulting in a total charge
of $45.7 million, are expected to enhance the value of the Group in the long
term and with respect to the commutations will result in a simplification of our
financial statements and accounting for reinsurance recoverables.
In addition to the one-time items, we also experienced net adverse development
of $29.9 million in our claims provisions, occurring principally in our North
American reinsurance portfolio. While less than last year (2006: $37.6 million),
the net adverse development is particularly disappointing given our efforts to
identify and where possible reduce volatility in our claims provisions. With
respect to our claims provisions, we have also made an adjustment to the
discount rate applied to those provisions which are carried at a discount to
reflect the expected performance of the assets supporting those provisions. This
adjustment results in an additional charge of $6.2 million to the income
statement.
The exceptional one-time items, adverse development and the discount rate
adjustment combined to impact operating income by $81.8 million ($0.47 per
share).
While reporting a loss of any kind is disappointing, we continue to make
progress in our efforts to align operating costs with the reducing asset base,
address volatility in the balance sheet and reduce the amount of capital
required to support the business.
Evidence of that progress is found in the fact that during 2007 and shortly
thereafter we repaid the full $200.0 million of bank debt carried by the Group.
Repayment was achieved through funds made available through distributions from
regulated subsidiaries. This action further strengthens the Group's balance
sheet and provides more flexibility in terms of capital management initiatives.
As we move into 2008, we believe we have better positioned the Group by
simplifying our balance sheet, strengthening our reserves and significantly
reducing our debt obligations. We will remain keenly focused on reducing
expenses, further reducing insurance contract liabilities and preserving our
capital and assets. We continue to explore various options for the future of the
Group, including our new addition, Alea Syndicate Management Ltd., which we
formed in 2007 as a vehicle to pursue Lloyd's Reinsurance to Close (RITC)
opportunities.
Both Kirk Lusk and I would also like to extend our gratitude to the staff at
Alea for continuing to contribute to the run-off of the Company and under very
demanding circumstances. Their hard work and dedication has made a significant
contribution to the progress of the run-off and the outlook for the Group.
Mark Cloutier
Chief Executive Officer
7 March 2008
FINANCIAL REVIEW
Consolidated income statement
Year ended Year ended
31 December 2007 31 December 2006
$'million $'million
Gross premiums written 12.7 (74.9)
Revenue
Premium revenue 17.7 303.3
Premium received from/(ceded to) reinsurers 4.7 (87.4)
Net insurance premium revenue 22.4 215.9
Fee income 1.9 3.2
Investment income 73.1 94.8
Net realised losses on financial assets (1.3) (2.5)
Net realised gains on sale of subsidiary - 4.3
Net realised losses on sale of renewal rights (1.7) (5.0)
Total revenue 94.4 310.7
Expenses
Insurance claims and loss adjustment expenses 44.8 173.4
Insurance claims and loss adjustment expenses 34.4 (16.7)
paid to/(recovered from) reinsurers
Net insurance claims 79.2 156.7
Acquisition costs 10.3 69.2
Other operating expenses 59.7 66.6
Restructuring costs 1.6 1.1
Total expenses 150.8 293.6
Results of operating activities (56.4) 17.1
Finance costs (21.7) (24.4)
Loss before income tax (78.1) (7.3)
Income tax (expense)/credit (0.1) 6.5
Loss for the year (78.2) (0.8)
Performance indicators and comparison to prior years
The Group ceased underwriting new and renewal business and was placed into
run-off in the fourth quarter of 2005. The Group's business has therefore
changed significantly and as a result the standard indicators used to assess the
performance of participants in the insurance industry are not considered
appropriate for the Group. Performance indicators that are relevant to the
Group's run-off strategy are provided where these provide meaningful and useful
comparisons.
Reserves and claims
At 31 December 2007 the total insurance contracts balance comprising gross
claims outstanding less discount on claims outstanding, claims handling
provisions and provision for unearned premiums was $1,549.9 million, a decrease
of 20.2% from 31 December 2006 ($1,941.5 million). The claims outstanding, net
of reinsurance at 31 December 2007 was $1,003.1 million (31 December 2006:
$1,075.6 million). Excluding the impact of the commuted Group excess of loss
reinsurance treaty the change in claims outstanding, net of reinsurance was
29.6% (31 December 2006: 29.6%).
The balances are analysed below:
As at As at
31 December 2007 31 December 2006
$'million $'million
Gross claims outstanding
Provision for claims outstanding, reported and not reported 1,605.6 2,026.1
Discount (67.5) (105.9)
1,538.1 1,920.2
Claims handling provisions 11.8 17.8
Total gross claims outstanding 1,549.9 1,938.0
Provision for unearned premiums on insurance contracts - 3.5
Total insurance contracts 1,549.9 1,941.5
Aggregate excess reinsurance
Provision for claims outstanding, reported and not reported 41.2 299.6
Discount - (7.7)
Net aggregate excess reinsurance 41.2 291.9
Other reinsurance
Provision for claims outstanding, reported and not reported 508.6 573.2
Discount (3.0) (2.7)
Net other reinsurance 505.6 570.5
Total reinsurance
Provision for claims outstanding, reported and not reported 549.8 872.8
Discount (3.0) (10.4)
Total reinsurers' share of claims outstanding 546.8 862.4
Provision for unearned premiums on reinsurance contracts - 1.0
Total reinsurance contracts 546.8 863.4
Undiscounted claims outstanding, net of reinsurance 1, 067.6 1,171.1
Discount (64.5) (95.5)
Claims outstanding, net of reinsurance 1,003.1 1,075.6
Please follow the link below to view the full text of the announcement;
http://www.rns-pdf.londonstockexchange.com/rns/6909p_-2008-3-10.pdf
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR DXGDXXDGGGIC
Alea (LSE:ALEA)
Historical Stock Chart
From Jun 2024 to Jul 2024
Alea (LSE:ALEA)
Historical Stock Chart
From Jul 2023 to Jul 2024
