Results of Operations for the Year Ended December 31, 2021 – American Overseas Group Limited Announces Net Loss Of $5.5 Million and Operating Loss of $5.0 Million For the Year Ended December 31, 2021

HAMILTON, Bermuda, April 29, 2022 (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 $5.5 million, or $117.07 per diluted share, for the year ended December 31, 2021. This compares to consolidated net loss available to common shareholders of $5.0 million, or $107.24 per diluted share, for the year ended December 31, 2020. Book value per weighted share at December 31, 2021 was $916.83, a decline from the book value per weighted share of $1,062.22 at December 31, 2020.

For the year ended December 31, 2021, the Company had an operating loss of $5.0 million, or $105.79 per diluted share, compared to operating loss of $22.1 million, or $473.66 per diluted share for the year ended December 31, 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 year ended December 31, 2021, net earned property and casualty premiums increased $5.0 million from $15.8 million a year ago to $20.8 million, driven by an increase in existing and new programs. Fee income increased $1.3 million from $9.9 million a year ago to $11.2 million while gross written premiums increased $55.6 million, moving from $364.9 million to $420.5 million. 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 56.5% to 69.1%.

For the year ended December 31, 2021, operating expenses increased $1.4 million from $12.8 million to $14.2 million due to several items. The Company incurred a $1.9 million increase in taxes, licenses and fees associated with program business written in Louisiana, of which $0.9 million of that increase was related to business written in the prior year, for which the Company received credits associated from its program partner in the prior year. Additionally, the Company recognized a one-time $1.2 million charge related to items previously held as a receivable against a personal guarantee contract. This contract is associated with a managing general agency program that was discontinued in the first quarter of 2020. While the Company no longer holds a receivable for the matter in question it continues to vigorously pursue its interests to recover expenses owed under the personal guarantee contract. Offsetting these non-recurring items were decreases in personnel costs of $1.3 million, depreciation of $0.2 million, and consulting and outsourcing costs of $0.2 million. The Company completed multiple steps that began in the second quarter of 2020 to reorganize and streamline its operations in mid 2021.

For the three months ended December 31, 2021, the Company had an operating loss of $1.7 million, or $36.85 per diluted share, compared to an operating loss of $1.1 million, or $23.58 per diluted share for the three months ended December 31, 2020.

For the three months ended December 31, 2021, net earned property and casualty premiums increased $1.4 million from $3.5 million a year ago to $4.9 million, driven by an increase in existing and new programs. Fee income increased $0.5 million from $2.1 million a year ago to $2.6 million while gross written premiums increased $18.1 million, moving from $83.4 million to $101.5 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 65.5% to 84.8% as loss costs significantly increased throughout 2021 due to both frequency and severity pressures.

For the three months ended December 31, 2021, operating expenses decreased $0.3 million from $3.5 million to $3.2 million primarily driven by reduced personnel costs.

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]

Source: American Overseas Group, Ltd.