- Third quarter net income of $511,000 vs. loss of $206,000 in prior year
- Third quarter earnings per share basic and diluted were $0.10 vs.
($0.04) a year ago
- Total revenues increased to $23.5 million from $20.1 million in prior
year
- Third quarter loss ratio of 53.7% as compared to 68.1% a year ago
- Company completes initial public offering
- Cash and invested assets were $149.3 million as of September 30, 2005
- Book value at the close of the quarter of $82.5 million, or $9.28 per
share
SOUTHFIELD, Mich., Nov. 10 /PRNewswire-FirstCall/ -- North Pointe Holdings
Corporation (Nasdaq: NPTE) today reported financial results for the third
quarter ended September 30, 2005. Net income in the third quarter increased
to $511,000 from a loss of $206,000 in the prior year period. Earnings per
basic and diluted share for the third quarter of $0.10 were based on 5.24
million weighted average diluted shares compared with a loss of $0.04 per
share for the third quarter of 2004, based on 4.89 million weighted average
diluted shares. The Company completed its initial public offering on
September 23, 2005.
James Petcoff, President and Chief Executive Officer, commented, "Our
strong third quarter results were mainly driven by growth and profitability in
our core specialty segments, in particular our commercial lines. We were
pleased to report $511,000 in net income despite the effect of $3.6 million
(after-tax) in losses related to hurricanes in the third quarter of 2005 and
to confirm that our rate actions and underwriting discipline continue to yield
favorable results. We see good opportunities in our targeted markets, and
following the successful completion of our IPO we are now in a position to
profitably expand our specialty products and geographic presence."
Third Quarter 2005 Highlights
Gross premiums written for the three months ended September 30, 2005 were
$18.4 million as compared to $22.3 million for 2004, a decrease of $3.9
million, or 17.5%. This decrease was principally a result of the Company
exiting the non-standard automobile line in October 2004. Gross premiums
written in the commercial lines segment for the three months ended September
30, 2005 were $17.3 million as compared to $15.9 million for the corresponding
period in 2004, an increase of $1.4 million, or 8.8%.
The Company's loss ratio for the three months ended September 30, 2005 was
53.7% as compared to 68.1% for the corresponding period in 2004. The primary
reasons for this improvement were a lower level of incurred losses due to
hurricanes, a general improvement in the Company's loss ratio in its
commercial business lines and the exit of the non-standard automobile line in
October 2004.
In the third quarter of 2005, the Company incurred $5.4 million in pre-tax
losses, net of reinsurance, as a result of Hurricanes Dennis, Katrina and
Rita. This compares to hurricane related losses of $7.3 million (pre-tax) in
the third quarter of 2004. In addition, the Company previously announced that
it had been assessed $2.1 million in the third quarter of 2005, by Citizens
Property Insurance Corporation ("Citizens"), relating to the shortfall
previously announced by Citizens. Citizens is a special purpose insurer
managed by the state of Florida that is principally funded by premiums from
its policyholders and, to the extent necessary, assessments on insurance
companies that underwrite policies in the state of Florida. Florida law
authorizes insurers who are subject to such assessment to impose special
surcharges on policyholders to recoup the full amount of the assessment.
The Company has since determined that $2,030,551 of this amount is
recoverable under its reinsurance treaties, and accordingly the Company has
recorded a pre-tax charge of $114,566, net of reinsurance, in the third
quarter of 2005 related to the Citizens assessment. The Company's loss ratio
increased from 29.4% to 53.7% as a result of the three hurricanes experienced
in the quarter.
On October 24, 2005, Hurricane Wilma crossed over Florida and the Gulf
Coast. The Company's insurance subsidiaries write commercial and personal
property and casualty insurance in the state of Florida. At this time, the
Company expects losses incurred, including reinstatement premiums, to be in
the range of $8.0 to $9.5 million pre-tax, due to Hurricane Wilma.
Mr. Petcoff concluded, "We were pleased with our third quarter results and
the underlying trends in our business. Going forward, we expect the insurance
market to remain competitive. However, we feel that our focus on specialty
markets, disciplined underwriting approach and additional capital position
will allow us to deliver strong returns to our shareholders. We remain
committed to the goals we laid out as part of our IPO to deliver compelling
growth in earnings and book value."
Conference Call Details
North Pointe will host a conference call today at 11:00 a.m. EST to
discuss third quarter results. The call may be accessed on North Pointe's web
site at http://www.npte.com or by dialing 800-817-4887.
A replay will be available through November 17, 2005 by dialing
888-203-1112 or 719-457-0820, passcode 4825762. You may also access the
replay on North Pointe's website for 90 days following the event.
About North Pointe Holdings Corporation
North Pointe Holdings, founded in 1986, is a property and casualty insurer
that markets both specialty commercial and personal insurance products. With
a focus on owner-operated businesses, the company is the nation's largest
insurer of independent bowling centers and the largest insurer of liquor
liability insurance in Michigan. Commercial multi-peril insurance is offered
to small businesses, such as artisans and contractors, in Florida. North
Pointe's personal lines include non-standard homeowners' policies in Indiana
and Illinois, and traditional homeowners policies in Florida.
Safe Harbor Statement
Statements in this release that are "forward-looking statements" are based
on current expectations and assumptions that are subject to risks and
uncertainties. Actual results could differ materially because of factors such
as: North Pointe pricing accurately the risks it underwrites; the
establishment of adequate loss and loss adjustment expense reserves; retention
and recruiting of independent agents; failure to pay claims accurately; risks
associated with high concentration of North Pointe's business in certain
geographic markets; inability to implement North Pointe's growth strategies;
possible assessments for guaranty funds, other insurance-related assessments
and mandatory reinsurance arrangements and North Pointe's ability to recover
such assessments through future surcharges or other rate changes; the
occurrence of severe weather conditions and other catastrophes; the cyclical
and seasonal nature of the industries within which North Pointe operates;
intense competition with other insurance companies; the potential loss of key
personnel; North Pointe's ability to obtain and retain trade association
endorsements; performance of North Pointe's various operating subsidiaries;
restrictions that may limit the ability of North Pointe's subsidiaries to pay
dividends to North Pointe; existing and future regulations by the local, state
and federal governments; the compliance of subsidiaries with minimum capital
and surplus requirements; ratings of North Pointe's insurance company
subsidiaries by A.M. Best; the availability and pricing of reinsurance; the
potential for non-payment or delay in payment by reinsurers; the outcome of
current industry investigations; potential regulation limiting the use of
undisclosed contingent commission arrangements with independent agents;
adverse market conditions that could negatively impact North Pointe's
investment portfolio; reliance on information technology and telecommunication
systems; and management's ability to effectively manage a public company.
To learn more about North Pointe Holdings Corporation, please visit
http://www.npte.com
North Pointe Holdings Corporation and Subsidiaries
Consolidated Balance Sheets
September 30, 2005 (Unaudited) and December 31, 2004
2005 2004
(Dollars in thousands,
except share data)
ASSETS
Investments
Debt securities, available for sale,
at fair value $100,323 $76,068
Common stocks, at fair value 9,878 9,280
Total investments 110,201 85,348
Cash and cash equivalents 33,098 29,678
Restricted cash 6,031 200
Accrued investment income 838 575
Premiums and agent balances receivable, net 15,992 16,491
Reinsurance recoverables on
Paid losses 7,318 8,214
Unpaid losses 24,710 36,544
Prepaid reinsurance premiums 6,482 5,551
Deferred policy acquisition costs 9,553 9,793
Federal income tax recoverable 316 -
Deferred federal income taxes, net 6,092 5,865
Prepaid expenses and other assets 7,323 4,493
Total assets $227,954 $202,752
LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS' EQUITY
Liabilities
Losses and loss adjustment expenses $84,810 $96,561
Unearned premiums 46,841 42,251
Debt 5,047 20,062
Amounts due to reinsurers 638 1,221
Accounts payable and accrued expenses 6,841 5,551
Federal income tax payable - 1,332
Other liabilities 1,293 1,082
Total liabilities $145,470 $168,060
Commitments and Contingencies
Redeemable cumulative convertible
preferred stock no par value; 0 and
60,000 shares authorized in 2005 and
2004, respectively; 0 shares issued
and outstanding in 2004 - -
Shareholders' equity
Common stock, no par value; 50,000,000 shares
authorized; 8,891,687 and 4,889,187 issued
and outstanding in 2005 and 2004,
respectively 47,496 5,880
Preferred stock, no par value; 5,000,000 shares
authorized; 0 shares issued and outstanding
in 2005 - -
Unearned stock compensation (30) -
Retained earnings 35,449 28,803
Accumulated other comprehensive income
Net unrealized gains on investments, net
of deferred federal income tax benefit
(expense) of $223 and ($3), respectively (431) 9
Total shareholders' equity 82,484 34,692
Total liabilities, redeemable preferred
stock and shareholders' equity $227,954 $202,752
North Pointe Holdings Corporation and Subsidiaries
Unaudited Consolidated Statements of Income
For the Three Months Ended September 30, 2005 and 2004
Three Months Ended
September 30,
2005 2004
(Dollars in thousands,
except share data)
Revenues
Direct premiums written $18,443 $22,223
Assumed premiums written (10) 119
Premiums ceded (5,854) (5,301)
Net premiums written 12,579 17,041
Decrease in unearned premiums 9,073 1,640
Net premiums earned 21,652 18,681
Investment income, net of investment expenses 1,067 613
Net realized capital (losses) gains 75 (4)
Installment fees and other income 695 568
Gain on sale of business - 285
Total revenues 23,489 20,143
Expenses
Losses and loss adjustment expenses 11,991 13,116
Policy acquisition costs 5,844 4,648
Other underwriting and operating expenses 4,686 3,193
Interest expense 390 232
Total expenses 22,911 21,189
Income before federal income tax expense
(benefit) 578 (1,046)
Federal income tax expense (benefit) 67 (840)
Net income (loss) $511 $(206)
Earnings Per Share
Basic and Diluted $0.10 $(0.04)
Weighted average number of shares
Basic 5,237,013 4,889,187
Diluted 5,237,015 4,889,187
North Pointe Holdings Corporation and Subsidiaries
Unaudited Consolidated Statements of Income
For the Nine Months Ended September 30, 2005 and 2004
Nine Months Ended
September 30,
2005 2004
(Dollars in thousands,
except share data)
Revenues
Direct premiums written $86,078 $70,013
Assumed premiums written 613 1,457
Premiums ceded (14,548) (12,363)
Net premiums written 72,143 59,107
Increase in unearned premiums (5,299) (2,068)
Net premiums earned 66,844 57,039
Investment income, net of investment expenses 2,755 1,676
Net realized capital (losses) gains (155) 59
Installment fees and other income 1,474 1,779
Gain on sale of business - 285
Total revenues 70,918 60,838
Expenses
Losses and loss adjustment expenses 30,356 31,917
Policy acquisition costs 17,109 14,105
Other underwriting and operating expenses 12,379 9,938
Interest expense 884 518
Total expenses 60,728 56,478
Income before federal income tax expense
and extraordinary item 10,190 4,360
Federal income tax expense 3,544 1,006
Income before extraordinary item 6,646 3,354
Extraordinary item - 2,905
Net income $6,646 $6,259
Earnings Per Share
Basic and Diluted
Income before extraordinary item $1.33 $0.47
Extraordinary item - 0.57
Net income $1.33 $1.04
Weighted average number of shares
Basic 5,006,403 5,106,896
Diluted 5,006,404 5,106,896
Results of Operations by Segment for the Three Months
and Nine Months Ended September 30, 2005, and 2004
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
(Dollars in thousands)
Gross premiums written:
Commercial lines $17,295 $15,945 $55,261 $50,800
Personal lines 1,138 6,397 31,430 20,670
Total gross premiums written 18,433 22,342 86,691 71,470
Net premiums written:
Commercial lines 14,082 11,922 46,284 42,130
Personal lines (1,503) 5,119 25,859 16,977
Total net premiums written 12,579 17,041 72,143 59,107
Revenues:
Net premiums earned 21,652 18,681 66,844 57,039
Investment income, net 1,067 613 2,755 1,676
Net realized capital gains (losses) 75 (4) (155) 59
Installment fees and other income 695 568 1,474 1,779
Gains on sale of business - 285 - 285
Total revenues 23,489 20,143 70,918 60,838
Expenses:
Losses and loss adjustment expenses 11,991 13,116 30,356 31,917
Policy acquisition costs 5,844 4,648 17,109 14,105
Other underwriting and operating
expenses 4,686 3,193 12,379 9,938
Interest expense 390 232 884 518
Total expenses 22,911 21,189 60,728 56,478
Income before federal income tax
expense (benefit) and extraordinary
item 578 (1,046) 10,190 4,360
Federal income tax expense (benefit) 67 (840) 3,544 1,006
Income before extraordinary item 511 (206) 6,646 3,354
Extraordinary item - - - 2,905
Net income $511 $(206) $6,646 $6,259
Loss Ratio:
Commercial lines 39.3% 77.7% 40.5% 52.4%
Personal lines 98.8% 52.7% 57.3% 64.3%
Consolidated 53.7% 68.1% 44.4% 54.3%
Expense Ratio 47.1% 40.7% 43.2% 40.9%
Combined Ratio 100.8% 108.8% 87.6% 95.2%
SOURCE North Pointe Holdings Corporation
 back to top
Related links:
http://www.npte.com
CONTACT:
Company: Brian J. Roney, Senior Vice
President - Finance of North Pointe Holdings Corporation,
+1-248-358-1171, invrelations@npte.com; or General Inquiries:
Leslie Loyet, +1-312-640-6672, or Media Inquiries: Tim Grace,
+1-312-640-6667, both of Financial Relations Board
|
