Ambac Reports First Quarter 2024 Results
First Quarter 2024 Highlights
-
Net income of
$20 million or$0.43 per diluted share and Adjusted net income of$38 million or$0.82 per diluted share -
Legacy Financial Guarantee segment generated net income of
$20 million -
Specialty P&C Insurance ("Everspan") produced a 98.4% combined ratio compared to 121.9% in the first quarter of 2023 -
Insurance Distribution ("Cirrata") generated net income of
$3 million and EBITDA of$5 million on$90 million of premiums placed -
Total P&C Premium Production of
$187 million , an increase of 45% from the first quarter of 2023 -
Book Value per share of
$30.19 and Adjusted Book Value per share of$29.03 were up marginally from the prior quarter
LeBlanc continued, “Regarding our Legacy Financial Guarantee Business, our strategic review is proceeding as planned. During the quarter we have been in active discussions with interested parties and we hope to be in a position to provide an update on our process on or before our 2nd quarter reporting."
|
||||||||||
|
|
|
|
|
|
B (W) Percent |
||||
($ in millions, except per share data)1 |
|
|
1Q2024 |
|
|
1Q2023 |
|
|
||
Gross written premium |
|
$ |
98.1 |
|
$ |
60.7 |
|
|
62 |
% |
Net premiums earned |
|
|
33.1 |
|
|
13.9 |
|
|
139 |
% |
Commission income |
|
|
17.7 |
|
|
14.5 |
|
|
22 |
% |
Program fees |
|
|
2.6 |
|
|
1.5 |
|
|
73 |
% |
Net investment income |
|
|
41.7 |
|
|
34.1 |
|
|
22 |
% |
Pretax income (loss) |
|
|
25.5 |
|
|
(28.8 |
) |
|
189 |
% |
Net income (loss) attributable to common stockholders |
|
|
20.1 |
|
|
(33.4 |
) |
|
160 |
% |
Net income (loss) attributable to common stockholders per diluted share2,3 |
|
$ |
0.43 |
|
$ |
(0.73 |
) |
|
159 |
% |
EBITDA2,4 |
|
|
54.5 |
|
|
(5.1 |
) |
|
1,179 |
% |
Adjusted net income (loss) 2 |
|
|
38.5 |
|
|
(13.8 |
) |
|
379 |
% |
Adjusted net income (loss) per diluted share 2, 3 |
|
$ |
0.82 |
|
$ |
(0.30 |
) |
|
373 |
% |
Weighted-average diluted shares outstanding (in millions) |
|
|
46.3 |
|
|
45.6 |
|
|
(2 |
)% |
|
||||||||||||
|
|
|
|
|
|
B(W) |
||||||
($ in millions, except per share data)1 |
|
|
|
Amount |
|
Percent |
||||||
|
|
$ |
1,365.2 |
|
$ |
1,361.7 |
|
$ |
3.6 |
|
— |
% |
|
|
$ |
30.19 |
|
$ |
30.13 |
|
$ |
0.06 |
|
— |
% |
Adjusted book value1,2 |
|
$ |
1,313.1 |
|
$ |
1,298.9 |
|
$ |
14.2 |
|
1 |
% |
Adjusted book value per share 1,2 |
|
$ |
29.03 |
|
$ |
28.74 |
|
$ |
0.29 |
|
1 |
% |
(1) |
Some financial data in this press release may not add up due to rounding | |
(2) |
See Non-GAAP Financial Data section of this press release for further information | |
(3) |
Per diluted share includes the impact of adjusting redeemable noncontrolling interests to current redemption value | |
(4) |
EBITDA is prior to the impact of noncontrolling interests, relating to subsidiaries where |
Results of Operations by Segment
Specialty Property & Casualty Insurance Segment |
|||||||||||
|
|
Three Months Ended |
|||||||||
($ in millions) |
|
|
2024 |
|
|
|
2023 |
|
|
% Change |
|
Gross premiums written |
|
$ |
96.4 |
|
|
$ |
51.8 |
|
|
86 |
% |
Net premiums written |
|
$ |
26.2 |
|
|
$ |
9.2 |
|
|
186 |
% |
Net premiums earned |
|
$ |
25.6 |
|
|
$ |
7.0 |
|
|
266 |
% |
Program fees earned |
|
$ |
2.6 |
|
|
$ |
1.5 |
|
|
73 |
% |
Losses and loss expense |
|
$ |
19.4 |
|
|
$ |
4.7 |
|
|
315 |
% |
Pretax income (loss) |
|
$ |
1.8 |
|
|
$ |
(0.8 |
) |
|
333 |
% |
Combined Ratio |
|
|
98.4 |
% |
|
|
121.9 |
% |
|
-2350 |
bps |
- Gross premium written ("GPW") and Net premium written ("NPW") grew substantially in the first quarter of 2024 relative to the first quarter of 2023 as Everspan continues to add new programs and existing programs scale; Net premiums earned ("NPE") growth outpaced that of NPW as a result of the impact of assumed reinsurance transactions closed in the second half of 2023.
- Combined ratio of 98.4% for the first quarter of 2024 compared to 121.9% in the first quarter of 2023 and 100.3% in the prior quarter.
- The loss and loss expense ratio for the first quarter of 2024 was 75.7% compared to 66.6% for the first quarter of 2023. This quarter's result include 4.4% of prior accident year development which is largely off-set from a economic perspective by a sliding scale benefit recorded as an offset to acquisition costs.
- Expense ratio(1) of 22.7% for the first quarter of 2024 was down from 55.3% in the prior year period as expenses continue to normalize on a relative basis. In addition, a sliding scale commission benefit reduced the expense ratio by 6.1% in the first quarter of 2024 compared to 0.6% in the prior year period. The first quarter 2024 expense ratio also included a 3.4% benefit from a reduction of 2023 compensation accruals.
(1) |
Expense Ratio is defined as acquisition costs and general and administrative expenses, reduced by program fees divided by net premiums earned |
Insurance Distribution Segment |
|||||||||||
|
|
Three Months Ended |
|||||||||
($ in millions) |
|
|
2024 |
|
|
|
2023 |
|
|
% Change |
|
Premiums placed |
|
$ |
90.1 |
|
|
$ |
77.1 |
|
|
17 |
% |
Gross commissions |
|
$ |
17.7 |
|
|
$ |
14.5 |
|
|
22 |
% |
Net commissions |
|
$ |
7.9 |
|
|
$ |
6.9 |
|
|
15 |
% |
General and administrative expenses |
|
$ |
3.1 |
|
|
$ |
2.4 |
|
|
29 |
% |
Pretax income |
|
$ |
3.8 |
|
|
$ |
3.6 |
|
|
7 |
% |
EBITDA1 |
|
$ |
5.0 |
|
|
$ |
4.5 |
|
|
10 |
% |
Pretax income margin2 |
|
|
21.5 |
% |
|
|
24.6 |
% |
|
-310 |
bps |
EBITDA margin 3 |
|
|
27.9 |
% |
|
|
31.3 |
% |
|
-340 |
bps |
(1) |
EBITDA is prior to the impact of noncontrolling interests, relating to subsidiaries where |
|
(2) |
Represents Pretax income divided by total revenues | |
(3) |
See Non-GAAP Financial Data section of this press release for further information |
-
Premiums placed and commission income grew meaningfully during the first quarter of 2024 compared to the first quarter of 2023 driven by the
August 2023 acquisition ofRiverton Insurance Agency and organic growth elsewhere, particularly within our specialty commercial auto platform. Growth in A&H was impacted by the timing of certain renewals shifting to second quarter. -
General and administrative expenses of
$3.1 million in the first quarter of 2024 compared to$2.4 million in the prior year period, the increase was largely related to recent acquisitions and growth initiatives at existing business. -
EBITDA of
$5.0 million for the quarter was up 9.6% over first quarter of 2023; EBITDA margin of 27.9% for the quarter compared to 31.3% last year was negatively impacted by business mix changes and growth initiatives.
Total Specialty P&C Insurance Production
|
|
Three Months Ended |
|||||||
($ in millions) |
|
|
2024 |
|
|
2023 |
|
% Change |
|
Specialty Property & Casualty Insurance Gross Premiums Written |
|
$ |
96.4 |
|
$ |
51.8 |
|
86 |
% |
Insurance Distribution Premiums Placed |
|
|
90.1 |
|
|
77.1 |
|
17 |
% |
Specialty P&C Insurance Production |
|
$ |
186.5 |
|
$ |
128.9 |
|
45 |
% |
Legacy Financial Guarantee Insurance Segment |
|||||||||||
|
|
Three Months Ended |
|||||||||
($ in millions) |
|
|
2024 |
|
|
|
2023 |
|
|
% Change |
|
Net premiums earned |
|
$ |
7.5 |
|
|
$ |
6.9 |
|
|
9 |
% |
Net investment income |
|
$ |
38.0 |
|
|
$ |
31.2 |
|
|
22 |
% |
Losses and loss adjustment expenses (benefit) |
|
$ |
(20.7 |
) |
|
$ |
13.0 |
|
|
(259 |
)% |
General and administrative expenses |
|
$ |
21.4 |
|
|
$ |
28.1 |
|
|
(24 |
)% |
Pretax income (loss) |
|
$ |
24.8 |
|
|
$ |
(32.1 |
) |
|
177 |
% |
EBITDA1 |
|
$ |
52.4 |
|
|
$ |
(9.3 |
) |
|
663 |
% |
(1) |
See Non-GAAP Financial Data section of this press release for further information |
-
Net premiums earned of
$7.5 million in the first quarter of 2024 increased slightly from$6.9 million in the prior year period. This increase was a result of the favorable impact of proactive de-risking transactions in the quarter on both normal and accelerated premiums earned more than offsetting the impact of insured portfolio run-off. -
Net investment income of
$38.0 million increased 21.9% over first quarter of 2023 on higher yields and gains on securities classified as trading. -
Losses and loss adjustment expenses for the first quarter of 2024 were a
$20.7 million benefit, compared to a$13.0 million loss in the first quarter of 2023. The improvement was driven mainly by higher discount rates. The first quarter of 2024 also benefited from favorable credit developments. - General and administrative expenses for the first quarter of 2024 were down 24.0% compared to the first quarter 2023 driven by reduced legal expenses and timing of intercompany cost allocations, partially offset by costs associated with the ongoing strategic review.
-
Watch List and Adversely Classified Credits ("WLACC") decreased 4.0% (3.6%, excluding the impact of FX) to$5.5 billion in first quarter of 2024, fromDecember 31, 2023 . -
NPO was
$19.0 billion at first quarter of 2023 a decrease of 2.6% (2.1%, excluding the impact of FX) fromDecember 31, 2023 , due to de-risking, run-off and the impact of FX rates.
Consolidated Financial Information
Net Premiums Earned
During the first quarter of 2024, net premiums earned of
Net Investment Income
Net investment income for the first quarter of 2024 was
Losses and Loss Expenses(Benefit)
Incurred Losses (Benefit) for the first quarter of 2024 were
The Incurred Benefit for the first quarter of 2024 was driven by a
General and Administrative Expenses
General and administrative expenses for the first quarter 2024 were
AFG (holding company only) Assets
AFG on a standalone basis, excluding its ownership interests in its
Consolidated
Stockholders’ equity at
Non-GAAP Financial Data
In addition to reporting the Company’s quarterly financial results in accordance with GAAP, the Company is reporting non-GAAP financial measures: EBITDA, Adjusted Net Income, Adjusted Book Value and EBITDA Margin. These amounts are derived from our consolidated financial information, but are not presented in our consolidated financial statements prepared in accordance with GAAP.
We present non-GAAP supplemental financial information because we believe such information is of interest to the investment community, and that it provides greater transparency and enhanced visibility into the underlying drivers and performance of our businesses on a basis that may not be otherwise apparent on a GAAP basis. We view these non-GAAP financial measures as important indicators when assessing and evaluating our performance on a segmented and consolidated basis and they are presented to improve the comparability of our results between periods by eliminating the impact of the items that may not be representative of our core operating performance. These non-GAAP financial measures are not substitutes for the Company’s GAAP reporting, should not be viewed in isolation and may differ from similar reporting provided by other companies, which may define non-GAAP measures differently.
Adjusted Net Income (Loss) — We define Adjusted Net Income (Loss) as net income (loss) attributable to common stockholders adjusted to reflect the following items: (i) net investment (gains) losses, including impairments; (ii) amortization of intangible assets; (iii) litigation costs, including attorneys fees and other expenses to defend litigation against the Company, excluding loss adjustment expenses; (iv) foreign exchange (gains) losses; (v) workforce change costs, which primarily include severance and other costs related to employee terminations; and (vi) net (gain) loss on extinguishment of debt. Adjusted Net Income is also adjusted for the effect of the above items on both income taxes and noncontrolling interests. The income tax effects are determined by applying the statutory tax rate in each jurisdiction that generate these adjustments. The noncontrolling interest adjustments relate to subsidiaries where
Adjusted Net Income (Loss) was
The following table reconciles net income (loss) attributable to common stockholders to the non-GAAP measure, Adjusted Net Income (Loss), for the three-month periods ended
|
|
Three Months Ended |
||||||||||||||
|
|
2024 |
|
2023 |
||||||||||||
($ in millions, other than per share data) |
|
$ Amount |
|
Per Share |
|
$ Amount |
|
Per Share |
||||||||
Net income (loss) attributable to common shareholders |
|
$ |
20.1 |
|
|
$ |
0.43 |
|
|
$ |
(33.4 |
) |
|
$ |
(0.73 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
||||||||
Net investment (gains) losses, including impairments |
|
|
(0.6 |
) |
|
|
(0.01 |
) |
|
|
4.4 |
|
|
|
0.10 |
|
Intangible amortization |
|
|
12.5 |
|
|
|
0.26 |
|
|
|
6.9 |
|
|
|
0.15 |
|
Litigation costs |
|
|
6.3 |
|
|
|
0.13 |
|
|
|
8.8 |
|
|
|
0.19 |
|
Foreign exchange (gains) losses |
|
|
0.4 |
|
|
|
0.01 |
|
|
|
(0.3 |
) |
|
|
(0.01 |
) |
Workforce change costs |
|
|
0.1 |
|
|
|
— |
|
|
|
0.8 |
|
|
|
0.02 |
|
Pretax adjusted net income (loss) |
|
|
38.8 |
|
|
|
0.82 |
|
|
|
(12.8 |
) |
|
|
(0.28 |
) |
Income tax effects |
|
|
(0.1 |
) |
|
|
— |
|
|
|
(0.8 |
) |
|
|
(0.02 |
) |
Net (gains) attributable to noncontrolling interests |
|
|
(0.2 |
) |
|
|
— |
|
|
|
(0.2 |
) |
|
|
— |
|
Adjusted Net Income (Loss) |
|
$ |
38.5 |
|
|
$ |
0.82 |
|
|
$ |
(13.8 |
) |
|
$ |
(0.30 |
) |
Weighted-average diluted shares outstanding (in millions) |
|
|
|
|
46.3 |
|
|
|
|
|
45.6 |
|
(1) |
Per Diluted share includes the impact of adjusting the Insurance Distribution segment related noncontrolling interest to current redemption value |
EBITDA — We define EBITDA as net income (loss) before interest expense, income taxes, depreciation and amortization of intangible assets.
The following table reconciles net income (loss) attributable to common shareholders to the non-GAAP measure, EBITDA on a consolidation and segment basis.
|
|
Legacy |
|
Specialty |
|
Insurance |
|
Corporate |
|
Consolidated |
|||||||||
Three Months Ended |
|
|
|
|
|
|
|
|
|
|
|||||||||
Net income (loss) |
|
$ |
20.2 |
|
|
$ |
1.7 |
|
|
$ |
3.7 |
|
$ |
(4.9 |
) |
|
$ |
20.8 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|||||||||
Interest expense |
|
|
16.0 |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
16.0 |
|
Income taxes |
|
|
4.6 |
|
|
|
0.1 |
|
|
|
0.1 |
|
|
(0.1 |
) |
|
|
4.8 |
|
Depreciation |
|
|
0.2 |
|
|
|
— |
|
|
|
— |
|
|
0.3 |
|
|
|
0.5 |
|
Amortization of intangible assets |
|
|
11.3 |
|
|
|
— |
|
|
|
1.1 |
|
|
— |
|
|
|
12.5 |
|
EBITDA (2) |
|
$ |
52.4 |
|
|
$ |
1.8 |
|
|
$ |
5.0 |
|
$ |
(4.7 |
) |
|
$ |
54.5 |
|
Three Months Ended |
|
|
|
|
|
|
|
|
|
|
|||||||||
Net income (loss) |
|
$ |
(35.9 |
) |
|
$ |
(0.8 |
) |
|
$ |
3.5 |
|
$ |
0.4 |
|
|
$ |
(32.7 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|||||||||
Interest expense |
|
|
16.4 |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
16.4 |
|
Income taxes |
|
|
3.8 |
|
|
|
— |
|
|
|
0.1 |
|
|
— |
|
|
|
3.9 |
|
Depreciation |
|
|
0.4 |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
0.5 |
|
Amortization of intangible assets |
|
|
5.9 |
|
|
|
— |
|
|
|
1.0 |
|
|
— |
|
|
|
6.9 |
|
EBITDA (2) |
|
$ |
(9.3 |
) |
|
$ |
(0.8 |
) |
|
$ |
4.5 |
|
$ |
0.5 |
|
|
$ |
(5.1 |
) |
(1) |
Net income (loss) is prior to the impact of noncontrolling interests. | |
(2) |
EBITDA is prior to the impact of noncontrolling interests, relating to subsidiaries where |
|
(3) |
EBITDA margin — We define EBITDA margin as EBITDA divided by total revenues. We report EBITDA margin for the Insurance Distribution segment only. |
Adjusted Book Value. Adjusted book value is defined as
- Insurance intangible asset: Elimination of the financial guarantee insurance intangible asset that arose as a result of Ambac’s emergence from bankruptcy and the implementation of Fresh Start reporting. This adjustment ensures that all financial guarantee contracts are accounted for within adjusted book value consistent with the provisions of the Financial Services—Insurance Topic of the ASC.
- Net unearned premiums and fees in excess of expected losses: Addition of the value of the unearned premium revenue ("UPR") on financial guarantee contracts, in excess of expected losses, net of reinsurance. This non-GAAP adjustment presents the economics of UPR and expected losses for financial guarantee contracts on a consistent basis. In accordance with GAAP, stockholders’ equity reflects a reduction for expected losses only to the extent they exceed UPR. However, when expected losses are less than UPR for a financial guarantee contract, neither expected losses nor UPR have an impact on stockholders’ equity. This non-GAAP adjustment adds UPR in excess of expected losses, net of reinsurance, to stockholders’ equity for financial guarantee contracts where expected losses are less than UPR. This adjustment is only made for financial guarantee contracts since such premiums are non-refundable.
- Net unrealized investment (gains) losses in Accumulated Other Comprehensive Income: Elimination of the unrealized gains and losses on the Company’s investments that are recorded as a component of accumulated other comprehensive income (“AOCI”), net of income taxes.
Adjusted book value was
The following table reconciles
|
|
|
|
|
||||||||||||
($ in millions, other than per share data) |
|
$ Amount |
|
Per Share |
|
$ Amount |
|
Per Share |
||||||||
Total AFG Stockholders' Equity |
|
$ |
1,365.2 |
|
|
$ |
30.19 |
|
|
$ |
1,361.7 |
|
|
$ |
30.13 |
|
Adjustments: |
|
|
|
|
|
|
|
|
||||||||
Insurance intangible asset |
|
|
(233.1 |
) |
|
|
(5.16 |
) |
|
|
(245.1 |
) |
|
|
(5.43 |
) |
Net unearned premiums and fees in excess of expected losses |
|
|
153.7 |
|
|
|
3.40 |
|
|
|
162.1 |
|
|
|
3.59 |
|
Net unrealized investment (gains) losses in Accumulated Other Comprehensive Income |
|
|
27.2 |
|
|
|
0.60 |
|
|
|
20.2 |
|
|
|
0.45 |
|
Adjusted book value |
|
$ |
1,313.1 |
|
|
$ |
29.03 |
|
|
$ |
1,298.9 |
|
|
$ |
28.74 |
|
Shares outstanding (in millions) |
|
|
|
|
45.2 |
|
|
|
|
|
45.2 |
|
Earnings Call and Webcast
On
The webcast will be archived on
Additional information is included in an operating supplement and presentations at
About
The Amended and Restated Certificate of Incorporation of
Forward-Looking Statements
In this press release, statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as “estimate,” “project,” “plan,” “believe,” “anticipate,” “intend,” “planned,” “potential” and similar expressions, or future or conditional verbs such as “will,” “should,” “would,” “could,” and “may,” or the negative of those expressions or verbs, identify forward-looking statements. We caution readers that these statements are not guarantees of future performance. Forward-looking statements are not historical facts but instead represent only our beliefs regarding future events, which may by their nature be inherently uncertain and some of which may be outside our control. These statements may relate to plans and objectives with respect to the future, among other things which may change. We are alerting you to the possibility that our actual results may differ, possibly materially, from the expected objectives or anticipated results that may be suggested, expressed or implied by these forward-looking statements. Important factors that could cause our results to differ, possibly materially, from those indicated in the forward-looking statements include, among others, those discussed under “Risk Factors” in our most recent
Any or all of management’s forward-looking statements here or in other publications may turn out to be incorrect and are based on management’s current belief or opinions. Ambac Financial Group’s (“AFG”) and its subsidiaries’ (collectively, “Ambac” or the “Company”) actual results may vary materially, and there are no guarantees about the performance of Ambac’s securities. Among events, risks, uncertainties or factors that could cause actual results to differ materially are: (1) the high degree of volatility in the price of AFG’s common stock; (2) uncertainty concerning the Company’s ability to achieve value for holders of its securities, whether from
|
||||||||
Consolidated Statements of Income (Loss) (Unaudited) |
||||||||
|
|
Three Months Ended |
||||||
|
|
|
||||||
($ in millions, except share data) |
|
|
2024 |
|
|
|
2023 |
|
Revenues: |
|
|
|
|
||||
Net premiums earned |
|
$ |
33 |
|
|
$ |
14 |
|
Commission income |
|
|
18 |
|
|
|
14 |
|
Program fees |
|
|
3 |
|
|
|
1 |
|
Net investment income |
|
|
42 |
|
|
|
34 |
|
Net investment gains (losses), including impairments |
|
|
1 |
|
|
|
(4 |
) |
Net gains (losses) on derivative contracts |
|
|
2 |
|
|
|
(4 |
) |
Income (loss) on variable interest entities |
|
|
3 |
|
|
|
(1 |
) |
Other income |
|
|
3 |
|
|
|
3 |
|
Total revenues and other income |
|
|
103 |
|
|
|
58 |
|
Expenses: |
|
|
|
|
||||
Losses and loss adjustment expenses (benefit) |
|
|
(1 |
) |
|
|
18 |
|
Amortization of deferred acquisition costs, net |
|
|
4 |
|
|
|
1 |
|
Commission expense |
|
|
10 |
|
|
|
8 |
|
General and administrative expenses |
|
|
36 |
|
|
|
36 |
|
Intangible amortization |
|
|
12 |
|
|
|
7 |
|
Interest expense |
|
|
16 |
|
|
|
16 |
|
Total expenses |
|
|
77 |
|
|
|
86 |
|
Pretax income (loss) |
|
|
26 |
|
|
|
(29 |
) |
Provision for income taxes |
|
|
5 |
|
|
|
4 |
|
Net income (loss) |
|
|
21 |
|
|
|
(33 |
) |
Less: net (gain) attributable to noncontrolling interest |
|
|
(1 |
) |
|
|
(1 |
) |
Net income (loss) attributable to common stockholders |
|
$ |
20 |
|
|
$ |
(33 |
) |
|
|
|
|
|
||||
Net income (loss) per basic share |
|
$ |
0.44 |
|
|
$ |
(0.73 |
) |
Net income (loss) per diluted share |
|
$ |
0.43 |
|
|
$ |
(0.73 |
) |
|
|
|
|
|
||||
Weighted-average number of common shares outstanding: |
|
|
|
|
||||
Basic |
|
|
45,827,076 |
|
|
|
45,564,276 |
|
Diluted |
|
|
46,348,776 |
|
|
|
45,564,276 |
|
|
||||||||
Consolidated Balance Sheets (Unaudited) |
||||||||
($ in millions, except share data) |
|
|
|
|
||||
Assets: |
|
|
|
|
||||
Investments: |
|
|
|
|
||||
Fixed maturity securities, at fair value (amortized cost: |
|
$ |
1,687 |
|
|
$ |
1,710 |
|
Fixed maturity securities pledged as collateral, at fair value (amortized cost: |
|
|
26 |
|
|
|
— |
|
Fixed maturity securities - trading |
|
|
29 |
|
|
|
27 |
|
Short-term investments, at fair value (amortized cost: |
|
|
382 |
|
|
|
426 |
|
Short-term investments pledged as collateral, at fair value (amortized cost: |
|
|
— |
|
|
|
27 |
|
Other investments (includes |
|
|
558 |
|
|
|
475 |
|
Total investments (net of allowance for credit losses of |
|
|
2,682 |
|
|
|
2,664 |
|
Cash and cash equivalents (including |
|
|
44 |
|
|
|
28 |
|
Premium receivables (net of allowance for credit losses of |
|
|
299 |
|
|
|
290 |
|
Reinsurance recoverable on paid and unpaid losses (net of allowance for credit losses of |
|
|
224 |
|
|
|
195 |
|
Deferred ceded premium |
|
|
217 |
|
|
|
204 |
|
Deferred acquisition costs |
|
|
12 |
|
|
|
11 |
|
Subrogation recoverable |
|
|
130 |
|
|
|
137 |
|
Intangible assets, less accumulated amortization |
|
|
293 |
|
|
|
307 |
|
|
|
|
70 |
|
|
|
70 |
|
Other assets |
|
|
129 |
|
|
|
129 |
|
Variable interest entity assets: |
|
|
|
|
||||
Fixed maturity securities, at fair value |
|
|
2,162 |
|
|
|
2,167 |
|
Restricted cash |
|
|
252 |
|
|
|
246 |
|
Loans, at fair value |
|
|
1,604 |
|
|
|
1,663 |
|
Derivative and other assets |
|
|
313 |
|
|
|
318 |
|
Total assets |
|
$ |
8,429 |
|
|
$ |
8,428 |
|
Liabilities and Stockholders’ Equity: |
|
|
|
|
||||
Liabilities: |
|
|
|
|
||||
Unearned premiums |
|
$ |
429 |
|
|
$ |
422 |
|
Loss and loss adjustment expense reserves |
|
|
851 |
|
|
|
893 |
|
Ceded premiums payable |
|
|
110 |
|
|
|
90 |
|
Deferred program fees and reinsurance commissions |
|
|
7 |
|
|
|
6 |
|
Long-term debt |
|
|
512 |
|
|
|
508 |
|
Accrued interest payable |
|
|
487 |
|
|
|
475 |
|
Other liabilities |
|
|
259 |
|
|
|
199 |
|
Variable interest entity liabilities: |
|
|
|
|
||||
Long-term debt (includes |
|
|
2,925 |
|
|
|
2,967 |
|
Derivative liabilities |
|
|
1,170 |
|
|
|
1,197 |
|
Other liabilities |
|
|
245 |
|
|
|
240 |
|
Total liabilities |
|
|
6,993 |
|
|
|
6,997 |
|
Redeemable noncontrolling interest |
|
|
17 |
|
|
|
17 |
|
Stockholders’ equity: |
|
|
|
|
||||
Preferred stock, par value |
|
|
— |
|
|
|
— |
|
Common stock, par value |
|
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
|
291 |
|
|
|
292 |
|
Accumulated other comprehensive income (loss) |
|
|
(175 |
) |
|
|
(160 |
) |
Retained earnings |
|
|
1,266 |
|
|
|
1,246 |
|
|
|
|
(17 |
) |
|
|
(17 |
) |
|
|
|
1,365 |
|
|
|
1,362 |
|
Nonredeemable noncontrolling interest |
|
|
53 |
|
|
|
53 |
|
Total stockholders’ equity |
|
|
1,418 |
|
|
|
1,415 |
|
Total liabilities, redeemable noncontrolling interest and stockholders’ equity |
|
$ |
8,429 |
|
|
$ |
8,428 |
|
The following table presents segment financial results and includes the non-GAAP measure, EBITDA on a segment and consolidated basis.
($ in millions) |
|
Legacy |
|
Specialty |
|
Insurance |
|
Corporate & |
|
Consolidated |
||||||||
Three Months Ended |
|
|
|
|
|
|
|
|
|
|
||||||||
Gross premiums written |
|
$ |
1.7 |
|
|
$ |
96.4 |
|
|
|
|
|
$ |
98.1 |
|
|||
Net premiums written |
|
|
1.5 |
|
|
|
26.2 |
|
|
|
|
|
|
27.8 |
|
|||
Revenues: |
|
|
|
|
|
|
|
|
|
|
||||||||
Net premiums earned |
|
|
7.5 |
|
|
|
25.6 |
|
|
|
|
|
|
33.1 |
|
|||
Commission income |
|
|
|
|
|
$ |
17.7 |
|
|
|
|
17.7 |
|
|||||
Program fees |
|
|
|
|
2.6 |
|
|
|
|
|
|
2.6 |
|
|||||
Net investment income |
|
|
38.0 |
|
|
|
1.4 |
|
|
0.1 |
|
$ |
2.2 |
|
|
|
41.7 |
|
Net investment gains (losses), including impairments |
|
|
0.6 |
|
|
|
— |
|
|
|
|
— |
|
|
|
0.6 |
|
|
Net gains (losses) on derivative contracts |
|
|
1.8 |
|
|
|
|
|
|
|
— |
|
|
|
1.7 |
|
||
Other income |
|
|
5.2 |
|
|
|
— |
|
|
0.1 |
|
|
— |
|
|
|
5.3 |
|
Total revenues and other income |
|
|
53.1 |
|
|
|
29.5 |
|
|
17.9 |
|
|
2.1 |
|
|
|
102.6 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
||||||||
Losses and loss adjustment expenses (benefit) |
|
|
(20.7 |
) |
|
|
19.4 |
|
|
|
|
|
|
(1.4 |
) |
|||
Commission expense |
|
|
|
|
|
|
9.8 |
|
|
|
|
9.8 |
|
|||||
Amortization of deferred acquisition costs, net |
|
|
— |
|
|
|
4.4 |
|
|
|
|
|
|
4.4 |
|
|||
General and administrative expenses |
|
|
21.4 |
|
|
|
3.9 |
|
|
3.1 |
|
|
6.8 |
|
|
|
35.2 |
|
Total expenses included for EBITDA |
|
|
0.7 |
|
|
|
27.7 |
|
|
12.9 |
|
|
6.8 |
|
|
|
48.1 |
|
EBITDA |
|
|
52.4 |
|
|
|
1.8 |
|
|
5.0 |
|
|
(4.7 |
) |
|
|
54.5 |
|
Less: Interest expense |
|
|
16.0 |
|
|
|
|
|
|
|
|
|
16.0 |
|
||||
Less: Depreciation expense |
|
|
0.2 |
|
|
|
— |
|
|
— |
|
|
0.3 |
|
|
|
0.5 |
|
Less: Intangible amortization |
|
|
11.3 |
|
|
|
|
|
1.1 |
|
|
|
|
12.5 |
|
|||
Pretax income (loss) |
|
|
24.8 |
|
|
|
1.8 |
|
|
3.8 |
|
|
(5.0 |
) |
|
|
25.5 |
|
Income tax expense (benefit) |
|
|
4.6 |
|
|
|
0.1 |
|
|
0.1 |
|
|
(0.1 |
) |
|
|
4.8 |
|
Net income (loss) |
|
$ |
20.2 |
|
|
$ |
1.7 |
|
$ |
3.7 |
|
$ |
(4.9 |
) |
|
$ |
20.8 |
|
Three Months Ended |
|
|
|
|
|
|
|
|
|
|
|||||||||
Gross premiums written |
|
$ |
8.9 |
|
|
$ |
51.8 |
|
|
|
|
|
|
$ |
60.7 |
|
|||
Net premiums written |
|
|
8.8 |
|
|
|
9.2 |
|
|
|
|
|
|
|
18.0 |
|
|||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|||||||||
Net premiums earned |
|
|
6.9 |
|
|
|
7.0 |
|
|
|
|
|
|
|
13.9 |
|
|||
Commission income |
|
|
|
|
|
$ |
14.5 |
|
|
|
|
14.5 |
|
||||||
Program fees |
|
|
|
|
1.5 |
|
|
|
|
|
|
|
1.5 |
|
|||||
Net investment income |
|
|
31.2 |
|
|
|
0.8 |
|
|
|
|
$ |
2.1 |
|
|
|
34.1 |
|
|
Net investment gains (losses), including impairments |
|
|
(4.5 |
) |
|
|
— |
|
|
|
|
|
0.1 |
|
|
|
(4.4 |
) |
|
Net gains (losses) on derivative contracts |
|
|
(3.4 |
) |
|
|
|
|
|
|
(0.2 |
) |
|
|
(3.6 |
) |
|||
Other income |
|
|
1.6 |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
1.7 |
|
Litigation recoveries |
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|||||
Total revenues and other income |
|
|
31.8 |
|
|
|
9.2 |
|
|
|
14.5 |
|
|
2.0 |
|
|
|
57.5 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|||||||||
Losses and loss adjustment expenses (benefit) |
|
|
13.0 |
|
|
|
4.7 |
|
|
|
|
|
|
|
17.7 |
|
|||
Amortization of deferred acquisition costs, net |
|
|
— |
|
|
|
1.4 |
|
|
|
|
|
|
|
1.4 |
|
|||
Commission expense |
|
|
|
|
|
|
7.6 |
|
|
|
|
7.6 |
|
||||||
General and administrative expenses |
|
|
28.1 |
|
|
|
4.0 |
|
|
|
2.4 |
|
|
1.5 |
|
|
|
36.0 |
|
Total expenses included for EBITDA |
|
|
41.1 |
|
|
|
10.0 |
|
|
|
10.0 |
|
|
1.5 |
|
|
|
62.6 |
|
EBITDA |
|
|
(9.3 |
) |
|
|
(0.8 |
) |
|
|
4.5 |
|
|
0.5 |
|
|
|
(5.1 |
) |
Less: Interest expense |
|
|
16.4 |
|
|
|
|
|
|
|
|
|
16.4 |
|
|||||
Less: Depreciation expense |
|
|
0.4 |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
0.5 |
|
Less: Intangible amortization |
|
|
5.9 |
|
|
|
|
|
1.0 |
|
|
|
|
6.9 |
|
||||
Pretax income (loss) |
|
|
(32.1 |
) |
|
|
(0.8 |
) |
|
|
3.6 |
|
|
0.4 |
|
|
|
(28.8 |
) |
Income tax expense (benefit) |
|
|
3.8 |
|
|
|
— |
|
|
|
0.1 |
|
|
— |
|
|
|
3.9 |
|
Net income (loss) |
|
$ |
(35.9 |
) |
|
$ |
(0.8 |
) |
|
$ |
3.5 |
|
$ |
0.4 |
|
|
$ |
(32.7 |
) |
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Source:
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