American Overseas Group Limited (AOREF: OTC Pink No Information) | American Overseas Group Limited Issues Supplement Information and Updated Earnings Release Regarding Net Income and Operating Loss for the Year Ended December 31, 2014

OTC

HAMILTON, Bermuda, July 03, 2015 (GLOBE NEWSWIRE) — American Overseas Group Limited (BSX:AOREF.BH) (Pink Sheets:AOREF.PK) (“AOG” or the “Company”) today reported consolidated net income of $38.4 million, or $1,797.58 per diluted share, for the year ended December 31, 2014.  This compares to a consolidated net loss of $0.3 million, or $16.39 per diluted share, for the year ended December 31, 2013.  The 2013 financial statements of AOG have been restated to reflect the fact that AOG and Orpheus Group Ltd. came under common voting control on June 26, 2013, and to include the results of Orpheus Group Ltd. from that date.  The results for 2014 were impacted by fair value adjustments of $22.8 million and unrealized gains in credit derivatives of $18.2 million.  Book value per share at December 31, 2014 was $1,327.28.

For the year ended December 31, 2014, the Company had an operating loss of $3.2 million, or $150.13 per diluted share, compared to operating income of $3.1 million, or $147.52 per diluted share for the year ended December 31, 2013 as restated.

Gross property and casualty premiums written, which are the primary driver of the Company’s fee income, were $418.3 million for 2014 compared to $224.9 million for 2013.  Fees earned by the Company’s management companies were $13.6 million for 2014 compared to $7.0 million for 2013 before intercompany consolidation eliminations with their regulated affiliates.  EBITDA margins earned on these fees were 34% for 2014 and 2013.  Net earned property and casualty premiums were $36.5 million for 2014 compared to $35.1 million for 2013.  The drop in net premiums earned is the direct result of the termination of a large assumed reinsurance treaty in May of 2014 in accordance with the Company’s decision to deemphasize the retention of underwriting risk.

The legacy financial guaranty portfolio of American Overseas Reinsurance Company Limited continues to run-off satisfactorily.  Insured par outstanding (net of escrowed transactions) declined to $6.2 billion at December 31, 2014 from $7.6 billion at December 31, 2013, a 18.4% decline.

As part of its ongoing capital management efforts, the Company will continue to redirect excess capital within the group to debt reduction unless compelling acquisition or investment 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.  Among the factors that could cause results to differ materially are: (i) the Company’s reviewing the results of our entire portfolio of polices.  Management considers credit derivative policies as a normal extension of AORE’s financial guaranty business and reinsurance in substance. 

Explanation of Non-GAAP Financial Measures

The Company believes that the following non-GAAP financial measures included in this press release serve to supplement GAAP information and are 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        OPERATING INCOME BY SEGMENT       December 31, 2014   Property/ Financial    (dollars in thousands)Casualty Guaranty Corporate Total Net premiums earned$  36,466  $  (168) $  –  $  36,298 Net change in fair value of credit derivatives   –     18,760     –     18,760 Losses and loss adjustment expenses   (35,897)    23,211     –     (12,686)Acquisition expenses   (7,107)    175     –     (6,932)Underwriting gain (loss)   (6,538)    41,978     –     35,440         Fee income   12,818     –     –     12,818 Net investment income   –     –     4,363     4,363 Net realized gains on sales of investments   –     –     4,844     4,844 Fair value adjustment   –     –     4,520     4,520 Operating expenses   (8,614)    (7,019)    (704)    (16,337)Interest expense   –     –     (2,535)    (2,535)Amortization expense   (2,707)    –     –     (2,707)Other expense   –     –     (500)    (500)Income tax   (7)    –     –     (7)Net income (loss) before noncontrolling interest$  (5,048) $  34,959  $  9,988  $  39,899         Net income (loss) before noncontrolling interest$  (5,048) $  34,959  $  9,988  $  39,899 Less after tax adjustments:        Net realized gains on sales of investments   –     –     (4,844)    (4,844) Net change in fair value of credit derivatives   –     (18,173)    –     (18,173) Fair value adjustments   –     (18,278)    (4,520)    (22,798) Amortization of intangibles   2,707     –     –     2,707 Operating income (loss)$  (2,341) $  (1,492) $  624  $  (3,209)              As Adjusted December 31, 2013   Property/ Financial    (dollars in thousands)Casualty Guaranty Corporate Total Net premiums earned$  35,128  $  711  $  –  $  35,839 Net change in fair value of credit derivatives   –     1,917     –     1,917 Losses and loss adjustment expenses   (33,794)    2,559     –     (31,235)Acquisition expenses   (8,512)    (769)    –     (9,281)Underwriting gain (loss)   (7,178)    4,418     –     (2,760)        Fee income   6,264     –     –     6,264 Net investment income   –     –     5,000     5,000 Net realized gains on sales of investments   –     –     2,337     2,337 Fair value adjustment   –     –     1,652     1,652 Operating expenses   (4,411)    (5,458)    (139)    (10,008)Interest expense   –     –     (640)    (640)Amortization expense   (2,290)    –     –     (2,290)Other expense   –     –     99     99 Income tax   (4)    –     –     (4)Net income (loss) before non controlling interest$  (7,619) $  (1,040) $  8,309  $  (350)        Net income (loss) before non controlling interest$  (7,619) $  (1,040) $  8,309  $  (350)Less after tax adjustments:        Net realized gains on sales of investments   –     –     (2,337)    (2,337) Net change in fair value of credit derivatives   –     (162)    –     (162) Fair value adjustments   –     5,360     (1,652)    3,708  Amortization of intangibles   2,290     –     –     2,290 Operating income (loss)$  (5,329) $  4,158  $  4,320  $  3,149         

 

Contact: American Overseas Group Limited 
info@aoreltd.com

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