Results of Operations for the Three Months Ended September 30, 2021 - American Overseas Group Limited Announces Net Loss Of $1.8 Million and Operating Loss of $1.8 Million For the Three Months Ended September 30, 2021 - Insurance News

HAMILTON, Bermuda, Dec. 30, 2021 (GLOBE NEWSWIRE) -- American Overseas Group Limited BSX: AORE.BH) (Pink Sheets: AOREF.PK) (“AOG” or the “Company”) today reported consolidated net loss available to common shareholders of $1.8 million, or $37.38 per diluted share, for the three months ended September 30, 2021. This compares to consolidated net income available to common shareholders of $0.5 million, or $11.58 per diluted share, for the three months ended September 30, 2020. Book value per weighted share at September 30, 2021 was $959.06, a decline from the book value per weighted share of $1,126.51 at September 30, 2020.

For the three months ended September 30, 2021, the Company had an operating loss of $1.8 million, or $37.68 per diluted share, compared to operating income of $0.6 million, or $11.90 per diluted share for the three months ended September 30, 2020. The financial guaranty segment ended in April of 2020 due to a commutation of the remaining portfolio of financial guaranty reinsurance business it had assumed from Assured Guaranty Municipal Corp (“AGMC”). The aggregate outstanding par value of the reinsurance portfolio commuted was $345.0 million.

For the three months ended September 30, net earned property and casualty premiums increased $1.1 million from $4.3 million a year ago to $5.4 million, driven by an increase in existing and new programs. Fee income remained constant at $2.6 million quarter over quarter while gross written premiums increased $4.2 million, moving from $96.2 million to $100.4 million. Quarterly direct written premiums were positively impacted by continued expansion of new programs, rate increases, and overall economic recovery. Loss and loss adjustment expenses as a percentage of earned premium increased from 55.1% to 71.2%.

For the three months ended September 30, operating expenses increased $1.1 million from $2.6 million to $3.7 million primarily due to a $0.9 million increase in taxes, licenses and fees associated with program business written in Louisiana. For prior year quarterly results, the Company received credits associated with these expenses from its program partner. Additionally, the Company recognized latent charges related to current year to date expenses associated with Louisiana taxes, licenses and fees in the current quarter. The remaining $0.2 million increase in operating expense for the quarter is driven primarily by marketing activity returning to more normal levels in 2021 compared to 2020 expenditure levels, which were impacted by COVID related restrictions.

As part of its ongoing capital management efforts, the Company will continue to redirect excess capital within the group to debt reduction unless other compelling opportunities present themselves.

Forward-Looking Statements

This release contains statements that may be considered "forward-looking statements" within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include, without limitation, the Company's expectations respecting the volatility of its insured portfolio, losses, loss reserves and loss development, the adequacy and availability of its liquidity and capital resources, its current run off strategy, its strategy for writing other reinsurance businesses and its expense reduction measures. These statements are based on current expectations and the current views of the economic and operating environment and are not guarantees of future performance. A number of risks and uncertainties, including economic competitive conditions, could cause actual results to differ materially from those projected in forward-looking statements. The Company's actual results could differ materially from those expressed or implied in the forward-looking statements.

Explanation of Non-GAAP Financial Measures

The Company believes that the following non-GAAP financial measure included in this press release serve to supplement GAAP information and is meaningful to investors.

Operating income (loss): The Company believes operating income (loss) is a useful measure because it measures income from operations, unaffected by non-operating items such as realized investment gains or losses. Operating income (loss) is typically used by research analysts and rating agencies in their analysis of the Company.

Information About the Company

American Overseas Group Limited is an insurance holding company incorporated in Bermuda and a tax resident of the United Kingdom. Its operating subsidiaries provide specialty property/casualty insurance, reinsurance and insurance management services. More information can be found at www.aoreltd.com.

American Overseas Group Limited

[email protected]

American Overseas Group Limited
Consolidated Balance Sheets
(unaudited)
As at September 30, 2021 and December 31, 2020
(dollars in thousands)


				September 30, 2021			December 31, 2020
Assets

		Investments:
			Fixed-maturity securities held as available for sale, at fair value	$	92,473		$	72,642
			Equity investments held as available for sale, at fair value		3,574			4,143
		Cash and cash equivalents			37,544			24,254
		Restricted cash			3,968			548
		Accrued investment income			443			355
		Premiums receivable			80,015			73,073
		Deferred insurance premiums			108,584			101,843
		Reinsurance balances receivable, net			211,946			194,914
		Deferred policy acquisition costs			5,045			3,590
		Intangible assets			4,800			4,800
		Goodwill			33,050			33,050
		Other assets			3,708			3,767
			Total Assets	$	585,150		$	516,979


Liabilities and Equity

	Liabilities:
		Loss and loss expense reserve		$	204,340		$	192,943
		Deferred commission income			3,442			2,482
		Unearned premiums			113,425			105,678
		Ceded premium payable			82,833			71,989
		Payable to general agents			7,576			4,331
		Funds withheld			100,333			64,980
		Accounts payable and accrued liabilities			10,873			7,922
		Notes payable			16,521			16,521
		Non-owned interest in VIE			300			300
		Interest payable			451			451
			Total Liabilities		540,094			467,597

	Shareholders' Equity:
		Common shares			4,698			4,698
		Additional paid-in capital			189,179			189,151
		Accumulated other comprehensive income			1,382			1,962
		Retained deficit			(156,256	)		(152,482	)
			Total Shareholders' Equity		39,003			43,329
		Non-controlling interest of preferred shares of subsidiaries			6,053			6,053
		Total Equity			45,056			49,382


			Total Liabilities and Equity	$	585,150		$	516,979


		See Notes to September 30, 2021 Consolidated Financial Statements available on American Overseas Group Ltd. Website at www.aoreltd.com

American Overseas Group Limited
	Consolidated Statements of Operations
	(unaudited)
	(dollars in thousands, except share and per share amounts)


					Three months ended September,						Nine months ended September,
						2021			2020			2021			2020
		Revenues

			Net premiums earned		$	5,397		$	4,337		$	15,935		$	8,775
			Fee income			2,644			2,645			8,667			7,896

			Net change in fair value of credit derivatives			-			-			-			2

			Net investment income			46			60			208			652
			Net realized gains on investments			14			8			50			1,508
			Fair value adjustment			-			(23	)		-			2,054
			Other income			28			-			105			-


				Total revenues		8,130			7,027			24,965			20,887

		Expenses
			Losses and loss adjustment expenses			3,841			2,389			10,232			8,200
			Acquisition expenses			1,931			1,537			5,506			3,775
			Operating expenses			3,663			2,603			11,038			9,294
			Other expense			-			46			-			330
			Interest expense			451			451			1,352			1,352

				Total expenses		9,886			7,026			28,128			22,951


	Net (loss) income available to common shareholders				$	(1,756	)	$	1		$	(3,163	)	$	(2,064	)
			Income tax (expense)			-			539			(26	)		322

	Net (loss) income before dividends					(1,756	)		540			(3,189	)		(1,742	)
			Dividends on preference shares of subsidiary			-			-			(585	)		-


	Net (loss) income available to common shareholders				$	(1,756	)	$	540		$	(3,774	)	$	(1,742	)


		Net (loss) income per common share:
		Basic			$	(37.38	)	$	11.64		$	(80.34	)	$	(37.61	)
		Diluted				(37.38	)		11.58			(80.34	)		(37.17	)

		Weighted-average number of common shares outstanding:
		Basic				46,979			46,386			46,979			46,326
		Diluted				46,979			46,620			46,979			46,870

See Notes to September 30, 2021 Consolidated Financial Statements available on American Overseas Group Ltd. Website at www.aoreltd.com

AMERICAN OVERSEAS GROUP LTD.
NET INCOME AND OPERATING INCOME BY SEGMENT


(dollars in thousands)	Three months ended September 30, 2021															Nine months ended September 30, 2021
	Net Income Available to Common Shareholders			Net Realized (Gain)/Loss on Sales of Investments			Net Change in Fair Value of Credit Derivatives		Fair Value Adjustments		Restructuring Charges		Operating Income/(Loss)			Net Income Available to Common Shareholders			Net Realized (Gain)/Loss on Sales of Investments			Net Change in Fair Value of Credit Derivatives			Fair Value Adjustments			Restructuring Charges			Operating Income/(Loss)
Property and casualty:

Net premiums earned	$	5,397											$	5,397		$	15,935														$	15,935
Losses and loss adjustment expenses		(3,841	)											(3,841	)		(10,232	)														(10,232	)
Acquisition expenses		(1,931	)											(1,931	)		(5,506	)														(5,506	)
Property/Casualty Underwriting Income		(375	)											(375	)		197															197

Fee income		2,644												2,644			8,667															8,667
Operating expenses		(3,307	)											(3,307	)		(10,052	)														(10,052	)
Income tax		-												-			(26	)														(26	)
Property and casualty		(1,038	)		-			-		-		-		(1,038	)		(1,214	)		-			-			-			-			(1,214	)

Financial guaranty:

Net premiums earned		-												-			-															-
Net change in fair value of credit derivatives		-												-			-															-
Losses and loss adjustment expenses		-												-			-															-
Acquisition expenses		-												-			-															-
Operating expenses		-												-			-															-
Financial guaranty		-			-			-		-		-		-			-			-			-			-			-			-

Corporate and Investing

Net investment income		46												46			208															208
Net realized gain/(loss)		14			(14	)								-			50			(50	)											-
Operating expenses		(356	)											(356	)		(986	)														(986	)
Interest expense		(451	)											(451	)		(1,352	)														(1,352	)
Other income, net of other expense		29												29			105															105
Corporate and investing		(718	)		(14	)		-		-		-		(732	)		(1,975	)		(50	)		-			-			-			(2,025	)

Group total	$	(1,756	)	$	(14	)	$	-	$	-	$	-	$	(1,770	)	$	(3,189	)	$	(50	)	$	-		$	-		$	-		$	(3,239	)


(dollars in thousands)	Three months ended September 30, 2020															Nine months ended September 30, 2020
	Net Income Available to Common Shareholders			Net Realized (Gain)/Loss on Sales of Investments			Net Change in Fair Value of Credit Derivatives		Fair Value Adjustments		Restructuring Charges		Operating Income/(Loss)			Net Income Available to Common Shareholders			Net Realized (Gain)/Loss on Sales of Investments			Net Change in Fair Value of Credit Derivatives			Fair Value Adjustments			Restructuring Charges			Operating Income/(Loss)
Property and casualty:

Net premiums earned	$	4,337											$	4,337		$	12,288														$	12,288
Losses and loss adjustment expenses		(2,388	)											(2,388	)		(6,622	)														(6,622	)
Acquisition expenses		(1,536	)											(1,536	)		(3,906	)														(3,906	)
Property/Casualty Underwriting Income		413												413			1,760															1,760

Fee income		2,645												2,645			7,896															7,896
Operating expenses		(2,200	)											(2,200	)		(7,383	)											362			(7,021	)
Income tax		539												539			322												(76	)		246
Property and casualty		1,397			-			-		-		-		1,397			2,595			-			-			-			286			2,881

Financial guaranty:

Net premiums earned		-												-			(3,513	)								3,703						190
Net change in fair value of credit derivatives		-												-			2						(2	)								-
Losses and loss adjustment expenses		-												-			(1,577	)								(19,546	)					(21,123	)
Acquisition expenses		-												-			131									(153	)					(22	)
Operating expenses		-												-			(509	)														(509	)
Financial guaranty		-			-			-		-		-		-			(5,466	)		-			(2	)		(15,996	)		-			(21,464	)

Corporate and Investing

Net investment income		60												60			652															652
Net realized gain/(loss)		8			(8	)								-			1,508			(21,008	)					19,500						-
Fair value adjustment		(23	)							23				-			2,054									(2,054	)					-
Operating expenses		(403	)											(403	)		(1,402	)														(1,402	)
Interest expense		(451	)											(451	)		(1,352	)														(1,352	)
Other income, net of other expense		(48	)											(48	)		(331	)														(331	)
Corporate and investing		(857	)		(8	)		-		23		-		(842	)		1,129			(21,008	)		-			17,446			-			(2,433	)

Group total	$	540		$	(8	)	$	-	$	23	$	-	$	555		$	(1,742	)	$	(21,008	)	$	(2	)	$	1,450		$	286		$	(21,016	)