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Press release content from Globe Newswire. The AP news staff was not involved in its creation.
PRESS RELEASE: Paid content from Globe Newswire
Press release content from Globe Newswire. The AP news staff was not involved in its creation.

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

December 30, 2021 GMT

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.

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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

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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

info@aoreltd.com

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 ShareholdersNet Realized (Gain)/Loss on Sales of InvestmentsNet Change in Fair Value of Credit DerivativesFair Value AdjustmentsRestructuring ChargesOperating Income/(Loss) Net Income Available to Common ShareholdersNet Realized (Gain)/Loss on Sales of InvestmentsNet Change in Fair Value of Credit DerivativesFair Value AdjustmentsRestructuring ChargesOperating 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 ShareholdersNet Realized (Gain)/Loss on Sales of InvestmentsNet Change in Fair Value of Credit DerivativesFair Value AdjustmentsRestructuring ChargesOperating Income/(Loss) Net Income Available to Common ShareholdersNet Realized (Gain)/Loss on Sales of InvestmentsNet Change in Fair Value of Credit DerivativesFair Value AdjustmentsRestructuring ChargesOperating 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)