ADDISON, Texas, May 11, 2009 (GLOBE NEWSWIRE) -- Affirmative Insurance Holdings, Inc. (Nasdaq:AFFM), a leading distributor and producer of non-standard personal automobile insurance policies, today reported consolidated financial results for the first quarter ended March 31, 2009.
For the First Quarter of 2009:
-- Total gross premiums written for the three months ended March 31,
2009 decreased $7.0 million to $112.2 million, or 5.9%, compared
with the first quarter of 2008.
-- Net investment income declined by $2.1 million, or 45.8%, to $2.5
million for the three months ended March 31, 2009, compared with
$4.6 million in the first quarter of 2008. The average investment
yield in 2009 was 2.98% (4.17% on a taxable-equivalent basis),
compared with 4.29% (6.00% on a taxable-equivalent basis) in
2008.
-- Losses and loss adjustment expenses for the three months ended
March 31, 2009 decreased $1.7 million, or 2.4%, to 74.7% of net
earned premium (the loss ratio), compared with a loss ratio of
75.2% in the first quarter of 2008.
-- Selling, general and administrative expenses increased $6.2
million, or 17.7%, to $41.6 million, compared with $35.4 million
in the first quarter of 2008.
-- Operating income for the three months ended March 31, 2009 was
$4.2 million, a 64.5% decrease from the $11.9 million in the same
period of the prior year.
-- Total interest expense was $4.1 million, compared with $5.5
million in the same period of the prior year.
-- Net income for the three months ended March 31, 2009 of $10.8
million, or $0.70 per share, compared with net income of $4.6
million, or $0.30 per share, in the first quarter of 2008.
Additional Financial Information
Certain events affected the comparability of 2009 versus 2008 quarterly results, as outlined below.
-- On March 27, 2009, the Company entered into an amendment to our
senior secured credit facility, which was considered an
extinguishment of debt under generally accepted accounting
principles. As a result, the Company recorded a $19.4 million
pretax, non-cash gain on extinguishment of debt. The $19.4
million debt extinguishment gain resulted from a $24.2 million
discount representing the difference between the carrying value
of the original credit agreement and the fair value of the new
modified credit agreement, net of $0.7 million of term lender
consent fees and the write-off of $4.1 million of deferred debt
issuance costs relating to the original credit agreement.
-- As a result of the debt extinguishment, the Company's two
interest rate swaps no longer qualified for hedge accounting.
Accordingly, the amount recorded in accumulated other
comprehensive loss through March 27, 2009 of $4.4 million was
reclassified to earnings as loss on interest rate swaps.
-- $4.3 million of the increase in selling, general and
administrative expenses in the first quarter of 2009 was related
to a reduction in ceding commission income. Effective January 1,
2009, the Company discontinued ceding 25% of its Louisiana and
Alabama business under the previous quota share agreement.
Amortization of deferred policy acquisition costs is a major
component of selling, general and administrative expenses.
About Affirmative
Affirmative Insurance Holdings, Inc. is a distributor and producer of non-standard personal automobile insurance policies and related products and services for individual consumers in targeted geographic markets. Non-standard personal automobile insurance policies provide coverage to drivers who find it difficult to obtain insurance from standard automobile insurance companies due to their lack of prior insurance, age, driving record, limited financial resources or other factors. Non-standard personal automobile insurance policies generally require higher premiums than standard automobile insurance policies.
The Affirmative Insurance Holdings, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3443
AFFIRMATIVE INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
Three Months Ended
March 31,
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2009 2008
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(Unaudited)
Revenues
Net premiums earned $ 93,225 $ 94,868
Commission income and fees 21,620 21,485
Net investment income 2,469 4,559
Net realized gains (losses) (2,004) 22
Other income 2,598 --
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Total revenues 117,908 120,934
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Expenses
Losses and loss adjustment expenses 69,676 71,361
Selling, general and administrative expenses 41,616 35,368
Depreciation and amortization 2,413 2,352
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Total expenses 113,705 109,081
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Operating income 4,203 11,853
Gain on extinguishment of debt 19,434 --
Loss on interest rate swaps 4,430 --
Interest expense 4,142 5,513
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Income before income tax expense 15,065 6,340
Income tax expense 4,241 1,712
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Net income $ 10,824 $ 4,628
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Net income per common share:
Basic $ 0.70 $ 0.30
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Diluted $ 0.70 $ 0.30
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Weighted average common shares outstanding:
Basic 15,415 15,415
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Diluted 15,415 15,415
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Dividends declared per common share $ -- $ 0.02
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