Meadowbrook Insurance Group, Inc. Reports Fourth Quarter and Full Year 2009 Results
SOUTHFIELD, Mich., Feb. 16 /PRNewswire-FirstCall/ --
- Fourth quarter net operating income up 10.5% to $13.6 million, or $0.24 per diluted share
- Full year net operating income up 37.9% to $53.5 million, or $0.93 per diluted share
- Fourth quarter net income up 113.4% to $16.4 million, or $0.29 per diluted share
- Full year net income up 92.2% to $52.7 million, or $0.92 per diluted share
- Combined ratio of 94.3% for the fourth quarter and 92.6% for the year
- Gross written premium up 32.1% in the fourth quarter and 50.5% for the year
- Book value per share of $9.06, up 18.6% for the year
Fourth Quarter 2009 Highlights and Overview:
- Net operating income, a non-GAAP measure, increased 10.5% to $13.6 million, or $0.24 per diluted share, in the fourth quarter of 2009 compared to $12.3 million, or $0.21 per diluted share, in the fourth quarter of 2008.
- Net income increased $8.7 million to $16.4 million, or $0.29 per diluted share, in the fourth quarter of 2009 compared to $7.7 million, or $0.13 per diluted share for the fourth quarter of 2008.
- The combined ratio was 94.3% in the fourth quarter of 2009, compared to 91.8% for the fourth quarter of 2008.
- Gross written premium increased by $44.4 million to $182.8 million in the fourth quarter of 2009 compared to $138.4 million in the fourth quarter of 2008.
- Book value per share increased by 18.6% year to date to $9.06 per share compared to $7.64 per share at December 31, 2008. Unrealized gains, net of tax, increased book value by $0.52 per share since December 31, 2008.
- We repurchased 1.6 million shares during the quarter and our Board of Directors authorized the repurchase of up to another 5.0 million shares, pursuant to a newly adopted share repurchase plan.
Full Year 2009 Highlights and Overview:
- 2009 net operating income, a non-GAAP measure, increased 37.9% to $53.5 million, or $0.93 per diluted share, compared to $38.8 million, or $0.86 per diluted share, in 2008.
- 2009 net income increased 92.2% to $52.7 million, or $0.92 per diluted share, compared to $27.4 million, or $0.61 per diluted share in 2008.
- The 2009 combined ratio improved to 92.6% compared to 93.3% in 2008.
- The 2009 accident year combined ratio, a non-GAAP measure, was 97.9%, relatively unchanged compared to an accident year combined ratio of 97.8% in 2008.
- Gross written premiums for 2009 grew by 50.5% to $688.7 million compared to $457.7 million in 2008.
Meadowbrook Insurance Group, Inc. (NYSE: MIG) reported that fourth quarter net operating income, a non-GAAP measure, grew by 10.5% to $13.6 million, or $0.24 per diluted share, compared to $12.3 million, or $0.21 per diluted share, in the fourth quarter of 2008. Net income increased $8.7 million to $16.4 million, or $0.29 per diluted share in the fourth quarter of 2009 compared to $7.7 million, or $0.13 per diluted share, in the fourth quarter of 2008. Fourth quarter 2009 net income includes net after-tax realized gains of $2.9 million related to the sale of certain investment securities. This compares to after-tax realized losses of $4.6 million in the fourth quarter of 2008 related to other than temporary impairments of certain preferred stocks, corporate bonds, asset-backed and mortgage-backed securities.
The fourth quarter 2009 GAAP combined ratio was 94.3%, compared to 91.8% for the fourth quarter of 2008. The loss ratio for the fourth quarter of 2009 was 60.6% compared to 59.5% for the fourth quarter of 2008. The fourth quarter 2009 loss ratio includes 5.3 percentage points of favorable prior year reserve development, compared to 4.5 percentage points of favorable prior year reserve development in the fourth quarter of 2008. Pre-tax favorable development on prior year accident reserves was $7.8 million in the fourth quarter of 2009 compared to $5.5 million in the fourth quarter of 2008. The expense ratio for the fourth quarter of 2009 was 33.7% compared to 32.3% for the fourth quarter of 2008.
Fourth quarter 2009 gross written premium increased 32.1% to $182.8 million compared to $138.4 million in the fourth quarter of 2008. The increase in gross written premium in the fourth quarter of 2009 was primarily due to programs initiated in 2008 and 2009.
Net commission and fee revenue for the fourth quarter of 2009 declined 4.9% to $8.5 million compared to $8.9 million in the fourth quarter of 2008. The decline was primarily the result of lower premium volume due to mandatory rate reductions and competition. Additionally, a program for which we previously provided policy administration services decided to perform those functions in-house.
Equity earnings of affiliates, net of tax, was $874,000 for the fourth quarter of 2009. This is related to a 2009 minority investment we made in an insurance company and related agency.
Commenting on the results, Meadowbrook President and Chief Executive Officer Robert S. Cubbin stated: "We are very pleased with our results for the year. Gross written premiums increased by more than 50%, net operating EPS of $0.93 per share exceeded our range of expectations and, in a competitive market, our accident year combined ratio held steady at 97.9%. In 2009, we integrated Century and continue to implement and recognize additional synergies. With a return on average equity of 11.2% in 2009, we are back on track for sustainable, double digit return on average equity results."
"We continue to work from a strong capital and liquidity position and our investment portfolio remains conservatively positioned. During the fourth quarter of 2009, we repurchased 1.6 million shares. Our Board authorized the repurchase of up to another 5 million shares, pursuant to a newly adopted share repurchase plan."
Full Year 2009 Overview
Net operating income for the year ended December 31, 2009 increased 37.9% to $53.5 million, or $0.93 per diluted share, compared to $38.8 million, or $0.86 per diluted share in 2008. 2009 net income increased 92.2% to $52.7 million or $0.92 per share compared to $27.4 million or $0.61 per share in 2008. Our results for 2009 include $3.5 million of other than temporary impairment charges in our investment portfolio, compared to other than temporary impairment charges of $11.7 million in 2008. Offsetting the impairment charges in 2009 were $3.6 million in pre-tax realized gains recognized in the fourth quarter related to the sale of certain investment securities.
In 2009, gross written premiums increased $231.0 million, or 50.5%, to $688.7 million compared to $457.7 million in 2008. The increase is due to a full year of Century Insurance Group premiums, the further maturation of programs initiated in 2008 and new programs implemented in 2009. Excluding Century Insurance Group premiums, gross written premiums grew approximately 24% in 2009 compared to 2008.
Our year to date GAAP combined ratio for 2009 improved slightly to 92.6% compared to 93.3% for 2008. The loss ratio for 2009 was 60.7% compared to 62.0% for 2008. The expense ratio for 2009 was 31.9% compared to 31.3% for 2008. The 2009 combined ratio includes 0.7 points of extraordinary storm losses in the Midwest, and the 2008 combined ratio includes 2.3 points related to catastrophic storm losses from Hurricanes Gustav and Ike. Additionally, the 2009 combined ratio includes 5.3 points of favorable prior year development compared to 4.5 points of favorable prior year development in 2008. This continued favorable development is primarily attributable to our history of disciplined underwriting, controls over pricing, long-term loyal partners and strong claims management.
Other Matters
Shareholders' Equity:
At December 31, 2009, shareholders' equity was $502.9 million, or $9.06 per common share compared to $438.2 million, or $7.64 per common share, at December 31, 2008. The increase in shareholders' equity is due primarily to net income of $52.7 million and unrealized gains, net of deferred taxes of $29.1 million, partially offset by dividend payments of $5.2 million and share repurchases of $13.9 million.
The 18.6% increase in book value per share includes unrealized gains, net of tax of $0.52 per share since December 31, 2008.
At December 31, 2009, our debt-to-equity ratio was 26.0% compared to 32.2% at December 31, 2008. Our debt to equity ratio excluding debentures was 9.9% at December 31, 2009 compared to 13.8% at December 31, 2008.
Dividend and Share Repurchases:
On February 12, 2010, our Board of Directors declared a quarterly dividend of $0.03 per share payable on April 5, 2010 to shareholders of record as of March 19, 2010.
We repurchased 1.6 million shares during the fourth quarter of 2009 at an average cost of $7.08 per share. For the year, we repurchased 1.9 million shares at an average cost of $7.18 per share. On February 12, 2010, our Board of Directors authorized the repurchase of up to another 5.0 million shares, pursuant to a newly adopted share repurchase plan. The expiration of the new share repurchase plan is February 2012.
Investment Portfolio:
At December 31, 2009, our pre-tax book yield was 4.4%, and our average reinvestment yield for 2009 was 4.7%. The duration of the portfolio was 4.4 years at December 31, 2009, compared to 4.5 years at December 31, 2008.
Net investment income for the fourth quarter of 2009 was $12.9 million, up from $11.9 million in the fourth quarter of 2008. For the year, 2009 net investment income was $50.4 million compared to $36.6 million for 2008. The increase in net investment income is primarily related to investment income from the Century Insurance portfolio.
2010 Expectations
For 2010, we expect net operating income to be in a range of $48.5 million to $54.5 million. We expect gross written premium in a range of $790 million to $815 million, and the combined ratio should be in a range of 95.5% to 96.5%. Achieving results within these ranges would result in net operating income in a range of $0.85 to $0.95 per share.
Commenting on the 2010 outlook, Mr. Cubbin stated: "We are working from a position of strength going into 2010. We expect programs implemented in 2008 to further mature, and we anticipate growth from the regional workers' compensation initiatives we launched in 2009. We anticipate the market will remain competitive in 2010, and could look a lot like the second half of 2009--still competitive, but stabilizing. We have opportunities to grow profitably with adequate pricing, and we continue to work on implementing additional revenue enhancing synergies with Century."
Conference Call
Meadowbrook's 2009 fourth quarter and full year results will be discussed by management in more detail on Wednesday, February 17, 2010 at 9:00 a.m. Eastern Time.
To listen to the call, please dial 1-877-407-8035 approximately five minutes prior to the start of the call and ask for the Meadowbrook conference call. Additionally, the conference call will be broadcast live over the Internet and can be accessed by all interested parties via the investor relations section of our website at www.meadowbrook.com or www.investorcalendar.com.
For those who cannot listen to the live conference call, a replay of the call will be available through Tuesday, February 23, 2010 by dialing 1-877-660-6853 and referring to conference ID 343345 and account number 286. The webcast will be archived and available for replay through Monday, May 17, 2010.
About Meadowbrook Insurance Group
Meadowbrook Insurance Group, Inc., based in Southfield, Michigan, is a leader in the specialty program management market. Meadowbrook includes several agencies, claims and loss prevention facilities, self-insured management organizations and seven property and casualty insurance underwriting companies, including one in Bermuda. Meadowbrook has twenty-six locations in the United States. Meadowbrook is a risk management organization, specializing in specialty risk management solutions for agents, professional and trade associations, and small to medium-sized insureds. Meadowbrook Insurance Group, Inc. common shares are listed on the New York Stock Exchange under the symbol "MIG". For further information, please visit Meadowbrook's corporate web site at www.meadowbrook.com.
Certain statements made by Meadowbrook Insurance Group, Inc. in this release may constitute forward-looking statements including, but not limited to, those statements that include the words "believes," "expects," "anticipates," "estimates," or similar expressions. Please refer to the Company's most recent 10-K, 10-Q, and other Securities and Exchange Commission filings for more information on risk factors. Actual results could differ materially. These forward-looking statements involve risks and uncertainties including, but not limited to the following: the frequency and severity of claims; uncertainties inherent in reserve estimates; catastrophic events; a change in the demand for, pricing of, availability or collectability of reinsurance; increased rate pressure on premiums; obtainment of certain rate increases in current market conditions; investment rate of return; changes in and adherence to insurance regulation; actions taken by regulators, rating agencies or lenders; obtainment of certain processing efficiencies; changing rates of inflation; and general economic conditions. Meadowbrook is not under any obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise.
EARNINGS RELEASE PAGE 5
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MEADOWBROOK INSURANCE GROUP, INC.
FINANCIAL INFORMATION
SUPPLEMENT TO THE EARNINGS RELEASE
UNAUDITED BALANCE SHEET INFORMATION
DECEMBER 31, DECEMBER 31,
(In Thousands, Except Per Share Data) 2009 2008
------------------------------------- ---- ----
BALANCE SHEET DATA
ASSETS
Cash and invested assets $1,203,215 $1,085,648
Premium & agents balances 155,327 117,675
Reinsurance recoverable 274,525 268,703
Deferred policy acquisition costs 68,787 56,454
Prepaid reinsurance premiums 35,298 31,885
Goodwill 118,842 119,028
Other assets 133,822 134,523
------- -------
Total Assets $1,989,816 $1,813,916
========== ==========
LIABILITIES
Loss and loss adjustment expense reserves $949,177 $885,697
Unearned premium reserves 325,915 282,086
Debt 49,875 60,250
Debentures 80,930 80,930
Other liabilities 81,038 66,783
------ ------
Total Liabilities 1,486,935 1,375,746
STOCKHOLDERS' EQUITY
Common stockholders' equity 502,881 438,170
------- -------
Total Liabilities & Stockholders' Equity $1,989,816 $1,813,916
========== ==========
Book value per common share $9.06 $7.64
Book value per common share excluding
unrealized gain/loss, net of deferred taxes $8.59 $7.70
EARNINGS RELEASE PAGE 6
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MEADOWBROOK INSURANCE GROUP, INC.
FINANCIAL INFORMATION
SUPPLEMENT TO THE EARNINGS RELEASE
UNAUDITED INCOME STATEMENT INFORMATION
(In Thousands, Except FOR THE QUARTER FOR THE TWELVE MONTHS
Share & Per Share Data) ENDED DECEMBER 31, ENDED DECEMBER 31,
------------------------- ------------------ ---------------------
SUMMARY DATA 2009 2008 2009 2008
------------ ---- ---- ---- ----
Gross written premiums $182,820 $138,427 $688,687 $457,683
Net written premiums 153,273 115,259 580,018 375,194
REVENUES
Net earned premiums $146,025 $122,425 $539,602 $369,721
Net commissions and fees 8,495 8,932 37,881 42,904
Net investment income 12,863 11,937 50,366 36,624
Net realized gains
(losses) 3,467 (3,955) (225) (11,422)
Total Revenues 170,850 139,339 627,624 437,827
EXPENSES
Net losses & loss
adjustment expenses (1) 83,283 67,750 307,087 212,885
Salaries & employee benefits 21,522 18,908 80,923 62,862
Interest expense 2,535 2,783 10,596 7,681
Policy acquisition and other
underwriting expenses (1) 30,783 23,961 110,715 69,294
Amortization expense 1,431 1,665 5,781 6,310
Other administrative
expenses 10,090 10,153 39,413 35,000
------ ------ ------ ------
Total Expenses 149,644 125,220 554,515 394,032
INCOME BEFORE INCOME TAXES AND
EQUITY EARNINGS OF AFFILIATES
AND UNCONSOLIDATED
SUBSIDIARIES 21,206 14,119 73,109 43,795
Income tax expense 5,473 6,539 21,321 16,667
Equity earnings of
affiliates, net of tax 874 - 874 -
Equity earnings of
unconsolidated
subsidiaries, net of tax (161) 126 (12) 269
---- --- --- ---
NET INCOME $16,446 $7,706 $52,650 $27,397
======= ====== ======= =======
Less: Net realized gains
(losses), net of tax 2,888 (4,562) (865) (11,420)
NET OPERATING INCOME (2) $13,558 $12,268 $53,515 $38,817
======= ======= ======= =======
Amortization expense 1,431 1,665 5,781 6,310
NET OPERATING INCOME,
excluding amortization
expense (3) $14,989 $13,933 $59,296 $45,127
======= ======= ======= =======
Diluted earnings per common
share
Net income $0.29 $0.13 $0.92 $0.61
Net operating income $0.24 $0.21 $0.93 $0.86
Net operating income,
excluding amortization
expense $0.26 $0.24 $1.03 $1.00
Diluted weighted average
common shares outstanding 56,884,403 57,780,625 57,413,391 44,995,712
GAAP ratios:
Loss & LAE ratio 60.6% 59.5% 60.7% 62.0%
Other underwriting
expense ratio 33.7% 32.3% 31.9% 31.3%
---- ---- ---- ----
GAAP combined ratio 94.3% 91.8% 92.6% 93.3%
==== ==== ==== ====
(1) Both the loss and loss adjustment and expense ratios are calculated
based upon the unconsolidated insurance company operations. The
following supplemental information sets forth the intercompany fees,
which are eliminated upon consolidation.
(2) While net operating income is a non-GAAP disclosure, management
believes this information is beneficial to reviewing the financial
statements. Net operating income is net income less realized gains
(losses) net of taxes associated with such gains (losses).
(3) While net operating income, excluding amortization expense, is a non-
GAAP disclosure, management believes this information is beneficial to
reviewing the financial statements. Management believes this information
is beneficial as amortization expense reflects an interim non-cash charge
and in the long-term cash earnings will reflect GAAP earnings as we
complete the amortization periods associated with current acquisitions.
Net operating income, excluding amortization expense, is net income less
realized gains (losses) net of taxes associated with such gains (losses)
and less amortization expense.
EARNINGS RELEASE PAGE 7
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MEADOWBROOK INSURANCE GROUP, INC.
FINANCIAL INFORMATION
SUPPLEMENT TO THE EARNINGS RELEASE
UNAUDITED UNCONSOLIDATED GAAP DATA
FOR THE QUARTER FOR THE TWELVE MONTHS
ENDED DECEMBER 31, ENDED DECEMBER 31,
------------------ ---------------------
(In Thousands)
--------------
2009 2008 2009 2008
---- ---- ---- ----
Unconsolidated GAAP data - Ratio
Calculation Table:
Net earned premiums $146,025 $122,425 $539,602 $369,721
Consolidated net loss and LAE (1) $83,283 $67,750 $307,087 $212,885
Intercompany claim fees 5,187 5,053 20,339 16,296
----- ----- ------ ------
Unconsolidated net loss and LAE $88,470 $72,803 $327,426 $229,181
======= ======= ======== ========
GAAP loss and LAE ratio 60.6% 59.5% 60.7% 62.0%
Consolidated policy acquisition
and other underwriting
expenses (1) $30,783 $23,949 $110,715 $69,349
Intercompany administrative and
other underwriting fees 18,427 15,630 61,422 46,371
------ ------ ------ ------
Unconsolidated policy
acquisition and other
underwriting expenses $49,210 $39,579 $172,137 $115,720
======= ======= ======== ========
GAAP other underwriting
expense ratio 33.7% 32.3% 31.9% 31.3%
GAAP combined ratio 94.3% 91.8% 92.6% 93.3%
---- ---- ---- ----
2009 2008 2009 2008
---- ---- ---- ----
Unconsolidated GAAP data -
Gross Commissions and Fees:
Managed programs:
Management fees $3,659 $3,990 $18,901 $21,168
Claims fees 1,654 2,090 7,428 8,879
Loss control fees 473 467 1,975 2,069
Reinsurance brokerage 443 157 931 728
--- --- --- ---
Total managed programs 6,229 6,704 29,235 32,844
Agency commissions 2,565 2,425 9,561 11,064
Intersegment revenue (299) (197) (915) (1,004)
---- ---- ---- ------
Net commissions and fees 8,495 8,932 37,881 42,904
Intercompany commissions and fees 23,614 20,683 81,761 62,667
------ ------ ------ ------
Gross commissions and fees $32,109 $29,615 $119,642 $105,571
======= ======= ======== ========
Fee-for-service pre-tax income,
excluding amortization $2,093 $1,528 $4,812 $11,245
====== ====== ====== =======
Pre-tax margin on fee-for-
service income 6.5% 5.2% 4.0% 10.7%
(1) Both the loss and loss adjustment and expense ratios are calculated
based upon the unconsolidated insurance company operations. The above
table sets forth the intercompany fees, which are eliminated in
consolidation. The GAAP combined ratio is the sum of the GAAP loss and
loss adjustment expense ratio and the GAAP expense ratio. The GAAP
loss and loss adjustment expense ratio is the unconsolidated net loss
and loss adjustment expense in relation to net earned premium. The
GAAP expense ratio is the unconsolidated policy acquisition and other
underwriting expenses in relation to net earned premium.
EARNINGS RELEASE PAGE 8
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MEADOWBROOK INSURANCE GROUP, INC.
FINANCIAL INFORMATION
SUPPLEMENT TO THE EARNINGS RELEASE
UNAUDITED ADJUSTED GAAP EXPENSE RATIO SUMMARY
FOR THE QUARTER FOR THE TWELVE MONTHS
ENDED DECEMBER 31, ENDED DECEMBER 31,
------------------ ---------------------
(In Thousands)
--------------
2009 2008 2009 2008
---- ---- ---- ----
Net earned premiums $146,025 $122,425 $539,602 $369,721
Less: Unconsolidated net loss
and LAE 88,470 72,803 327,426 229,181
Unconsolidated policy
acquisition and other
underwriting expenses 49,210 39,579 172,137 115,720
------ ------ ------- -------
Underwriting income $8,345 $10,043 $40,039 $24,820
====== ======= ======= =======
GAAP combined ratio as reported 94.3% 91.8% 92.6% 93.3%
Specialty insurance operations
pre-tax income $28,559 $19,739 $97,346 $60,125
Less: Underwriting income 8,345 10,043 40,039 24,820
Net investment income and
capital losses 16,330 7,982 50,141 25,202
Equity earnings of
affiliates (1) 1,344 0 1,344 0
----- --- ----- ---
Fee-based operations pre-tax
income 2,540 1,714 5,822 10,103
Agency operations pre-tax
(loss) income (447) (186) (1,010) 1,142
---- ---- ------ -----
Total fee-for-service pre-tax
income $2,093 $1,528 $4,812 $11,245
====== ====== ====== =======
GAAP expense ratio as reported 33.7% 32.3% 31.9% 31.3%
Adjustment to include pre-tax
income from total fee-for-
service income (2) 1.4% 1.2% 0.9% 3.0%
--- --- --- ---
GAAP expense ratio as adjusted (3) 32.3% 31.1% 31.0% 28.3%
GAAP loss and LAE ratio as reported 60.6% 59.5% 60.7% 62.0%
---- ---- ---- ----
GAAP combined ratio as adjusted 92.9% 90.6% 91.7% 90.3%
==== ==== ==== ====
Reconciliation of consolidated
pre-tax income:
------------------------------
Specialty insurance operations
pre-tax income:
Fee-based operations pre-tax
income $2,540 $1,714 $5,822 $10,103
Underwriting income 8,345 10,043 40,039 24,820
Net investment income and
capital losses 16,330 7,982 50,141 25,202
Equity earnings of
affiliates (1) 1,344 0 1,344 0
----- --- ----- ---
Total specialty insurance
operations pre-tax income 28,559 19,739 97,346 60,125
Agency operations pre-tax
(loss) income (447) (186) (1,010) 1,142
Less: Holding company expenses 1,596 986 5,506 3,481
Interest expense 2,535 2,783 10,596 7,681
Amortization expense 1,431 1,665 5,781 6,310
Equity earnings of
affiliates (1) 1,344 0 1,344 0
----- --- ----- ---
Consolidated pre-tax income $21,206 $14,119 $73,109 $43,795
======= ======= ======= =======
(1) For segment reporting purposes, equity earnings of affiliates is
shown gross of tax. Equity earnings of affiliates relates to the
Company's proportionate share of its investment in an insurance company,
which management considers to be consistent with its specialty
insurance operations and, therefore, have included the respective
earnings of this affiliate within this segment.
(2) Adjustment to include pre-tax income from total fee-for-service
income is calculated by dividing total fee-for-service income by net
earned premiums.
(3) While the adjusted GAAP expense ratio is a non-GAAP disclosure,
management believes this information is beneficial to reviewing the
financial statements. The adjusted GAAP expense ratio is the GAAP
expense ratio, as reported, less the adjustment to include pre-tax
income from total fee-for-service income. Management believes this
information is beneficial as our GAAP expense ratio includes the impact
of the margin associated with our fee-based operations. If the profit
margin from our fee-for-service business is recognized as an offset to
our underwriting expense, a more realistic picture of our operating
efficiency emerges.
''
EARNINGS RELEASE PAGE 9
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MEADOWBROOK INSURANCE GROUP, INC.
FINANCIAL INFORMATION
SUPPLEMENT TO THE EARNINGS RELEASE
UNAUDITED HISTORICAL INCOME STATEMENT INFORMATION
(In Thousands, Except
Share & Per Share Data)
-------------------------
2006A 2007A Q108A Q208A
----- ----- ----- -----
SUMMARY DATA
------------
Gross written premiums $330,872 $346,451 $90,468 $94,370
Net written premiums 262,668 280,211 71,399 76,071
INCOME STATEMENT
----------------
REVENUES
Net earned premiums $254,920 $268,197 $66,022 $77,031
Commissions and fees
(net) 41,172 45,988 12,031 9,632
Net investment income 22,075 26,400 7,148 6,917
Net realized gains
(losses) 69 150 (31) (146)
--- --- --- ----
Total Revenues 318,236 340,735 85,170 93,434
EXPENSES
Net losses & loss
adjustment expenses 146,293 150,969 37,661 43,542
Policy acquisition
and other
underwriting expenses 50,479 53,717 13,147 12,716
Other administrative
expenses 28,824 32,269 8,832 7,960
Salaries & employee
benefits 54,569 56,433 12,755 14,143
Amortization expense 590 1,930 1,551 1,563
Interest expense 5,976 6,030 1,311 1,254
----- ----- ----- -----
Total Expenses 286,731 301,348 75,257 81,178
INCOME BEFORE TAXES AND
EQUITY EARNINGS 31,505 39,387 9,913 12,256
Income tax expense 9,599 11,726 2,911 3,879
Equity earnings of
affiliates, net of tax - - - -
Equity earnings of
unconsolidated
subsidiaries, net of tax 128 331 56 61
--- --- --- ---
NET INCOME $22,034 $27,992 $7,058 $8,438
Net realized capital
gain (loss), net of tax 45 97 (20) (95)
--- --- --- ---
OPERATING INCOME $21,989 $27,895 $7,078 $8,533
======= ======= ====== ======
Amortization expense 590 1,930 1,551 1,563
OPERATING INCOME,
excluding amortization
expense $22,579 $29,825 $8,629 $10,096
======= ======= ====== =======
Weighted average
common shares
outstanding 29,566,141 33,101,965 37,103,270 37,126,911
Shares O/S at end of
the period 29,107,818 36,996,287 37,021,032 37,021,032
PER SHARE DATA (Diluted)
Net income $0.75 $0.85 $0.19 $0.23
Net realized gain
(loss), net of tax $0.01 $0.01 $- $-
Operating income $0.74 $0.84 $0.19 $0.23
Operating income,
excluding
amortization expense $0.76 $0.90 $0.23 $0.27
OPERATING RATIO ANALYSIS
------------------------
GAAP Loss & LAE ratio 62.3% 61.2% 61.7% 61.2%
GAAP Expense ratio 34.5% 34.2% 32.2% 29.3%
---- ---- ---- ----
GAAP Combined ratio 96.8% 95.4% 93.9% 90.5%
==== ==== ==== ====
Unconsolidated GAAP
data - Ratio
Calculation Table:
------------------- -------- -------- ------- -------
Net earned premiums $254,920 $268,197 $66,022 $77,031
Consolidated net loss
and LAE $146,293 $150,969 $37,661 $43,542
Intercompany claim fees 12,553 13,058 3,106 3,629
------ ------ ----- -----
Unconsolidated net loss
and LAE $158,846 $164,027 $40,767 $47,171
======== ======== ======= =======
GAAP Net loss and LAE
ratio 62.3% 61.2% 61.7% 61.2%
Consolidated Policy
acquisition and other
underwriting expenses $50,479 $53,717 $13,147 $12,716
Intercompany
administrative and
other underwriting fees 37,442 37,890 8,088 9,832
------ ------ ----- -----
Unconsolidated policy
acquisition and other
underwriting expenses $87,921 $91,607 $21,235 $22,548
======= ======= ======= =======
GAAP Expense ratio 34.5% 34.2% 32.2% 29.3%
GAAP Combined Ratio 96.8% 95.4% 93.9% 90.5%
---- ---- ---- ----
Unconsolidated Commissions
& Fees Managed programs:
Management fees $18,714 $23,963 $6,032 $4,174
Claims fees 8,776 9,025 2,180 2,305
Loss control fees 2,216 2,151 510 625
Reinsurance brokerage 735 929 296 98
--- --- --- --
Total managed programs 30,441 $36,068 9,018 7,202
Agency commissions 12,285 11,316 3,328 2,681
Intersegment
commissions and fees (1,554) (1,396) (315) (251)
------ ------ ---- ----
Net Commissions and fees 41,172 45,988 12,031 9,632
Intercompany commissions
and fees 49,995 50,948 11,194 13,461
------ ------ ------ ------
Gross commissions and
fees $91,167 $96,936 $23,225 $23,093
======= ======= ======= =======
Q308A Q408A 2008A Q109A
----- ----- ----- -----
SUMMARY DATA
------------
Gross written premiums $134,418 $138,427 $457,683 $159,991
Net written premiums 112,465 115,259 375,194 133,516
INCOME STATEMENT
----------------
REVENUES
Net earned premiums $104,243 $122,425 $369,721 $129,038
Commissions and fees
(net) 12,309 8,932 42,904 10,237
Net investment income 10,622 11,937 36,624 12,342
Net realized gains
(losses) (7,290) (3,955) (11,422) (1,992)
------ ------ ------- ------
Total Revenues 119,884 139,339 437,827 149,625
EXPENSES
Net losses & loss
adjustment expenses 63,932 67,750 212,885 69,787
Policy acquisition
and other
underwriting expenses 19,470 23,961 69,294 23,969
Other administrative
expenses 8,055 10,153 35,000 10,393
Salaries & employee
benefits 17,056 18,908 62,862 19,827
Amortization expense 1,531 1,665 6,310 1,508
Interest expense 2,333 2,783 7,681 2,782
----- ----- ----- -----
Total Expenses 112,377 125,220 394,032 128,266
INCOME BEFORE TAXES AND
EQUITY EARNINGS 7,507 14,119 43,795 21,359
Income tax expense 3,338 6,539 16,667 7,869
Equity earnings of
affiliates, net of tax - - - -
Equity earnings of
unconsolidated
subsidiaries, net of tax 26 126 269 50
--- --- --- ---
NET INCOME $4,195 $7,706 $27,397 $13,540
Net realized capital
gain (loss), net of tax (6,743) (4,562) (11,420) (2,797)
------ ------ ------- ------
OPERATING INCOME $10,938 $12,268 $38,817 $16,337
======= ======= ======= =======
Amortization expense 1,531 1,665 6,310 1,508
OPERATING INCOME,
excluding amortization
expense $12,469 $13,933 $45,127 $17,845
======= ======= ======= =======
Weighted average
common shares
outstanding 47,595,572 57,780,625 44,995,712 57,410,327
Shares O/S at end of
the period 57,644,022 57,341,989 57,341,989 57,447,707
PER SHARE DATA (Diluted)
Net income $0.09 $0.13 $0.61 $0.24
Net realized gain
(loss), net of tax $(0.14) $(0.08) $(0.25) $(0.04)
Operating income $0.23 $0.21 $0.86 $0.28
Operating income,
excluding
amortization expense $0.26 $0.24 $1.00 $0.31
OPERATING RATIO ANALYSIS
------------------------
GAAP Loss & LAE ratio 65.7% 59.5% 62.0% 58.0%
GAAP Expense ratio 31.0% 32.3% 31.3% 29.7%
---- ---- ---- ----
GAAP Combined ratio 96.7% 91.8% 93.3% 87.7%
==== ==== ==== ====
Unconsolidated GAAP
data - Ratio
Calculation Table:
------------------- -------- -------- -------- --------
Net earned premiums $104,243 $122,425 $369,721 $129,038
Consolidated net loss
and LAE $63,932 $67,750 $212,885 $69,787
Intercompany claim fees 4,508 5,053 16,296 5,108
----- ----- ------ -----
Unconsolidated net loss
and LAE $68,440 $72,803 $229,181 $74,895
======= ======= ======== =======
GAAP Net loss and LAE
ratio 65.7% 59.5% 62.0% 58.0%
Consolidated Policy
acquisition and other
underwriting expenses $19,537 $23,949 $69,349 $23,969
Intercompany
administrative and
other underwriting fees 12,821 15,630 46,371 14,366
------ ------ ------ ------
Unconsolidated policy
acquisition and other
underwriting expenses $32,358 $39,579 $115,720 $38,335
======= ======= ======== =======
GAAP Expense ratio 31.0% 32.3% 31.3% 29.7%
GAAP Combined Ratio 96.7% 91.8% 93.3% 87.7%
---- ---- ---- ----
Unconsolidated Commissions
& Fees Managed programs:
Management fees $6,972 $3,990 $21,168 $5,278
Claims fees 2,304 2,090 8,879 1,966
Loss control fees 467 467 2,069 489
Reinsurance brokerage 177 157 728 65
--- --- --- --
Total managed programs 9,920 6,704 $32,844 7,798
Agency commissions 2,630 2,425 11,064 2,794
Intersegment
commissions and fees (241) (197) (1,004) (355)
---- ---- ------ ----
Net Commissions and fees 12,309 8,932 42,904 10,237
Intercompany
commissions and fees 17,329 20,683 62,667 19,474
------ ------ ------ ------
Gross commissions and
fees $29,638 $29,615 $105,571 $29,711
======= ======= ======== =======
Q209A Q309A Q409A 2009A
----- ----- ----- -----
SUMMARY DATA
------------
Gross written premiums $156,891 $188,985 $182,820 $688,687
Net written premiums 134,524 158,705 153,273 580,018
INCOME STATEMENT
----------------
REVENUES
Net earned premiums $127,140 $137,399 $146,025 $539,602
Commissions and fees
(net) 8,396 10,753 8,495 37,881
Net investment income 12,397 12,764 12,863 50,366
Net realized gains
(losses) (958) (742) 3,467 (225)
---- ---- ----- ----
Total Revenues 146,975 160,174 170,850 627,624
EXPENSES
Net losses & loss
adjustment expenses 70,464 83,553 83,283 307,087
Policy acquisition
and other
underwriting expenses 27,139 28,824 30,783 110,715
Other administrative
expenses 9,917 9,013 10,090 39,413
Salaries & employee
benefits 19,945 19,629 21,522 80,923
Amortization expense 1,420 1,422 1,431 5,781
Interest expense 2,659 2,620 2,535 10,596
----- ----- ----- ------
Total Expenses 131,544 145,061 149,644 554,515
INCOME BEFORE TAXES AND
EQUITY EARNINGS 15,431 15,113 21,206 73,109
Income tax expense 3,823 4,156 5,473 21,321
Equity earnings of
affiliates, net of
tax - - 874 874
Equity earnings of
unconsolidated
subsidiaries, net of
tax 37 62 (161) (12)
--- --- ---- ---
NET INCOME $11,645 $11,019 $16,446 $52,650
Net realized capital
gain (loss), net of tax (287) (669) 2,888 (865)
---- ---- ----- ----
OPERATING INCOME $11,932 $11,688 $13,558 $53,515
======= ======= ======= =======
Amortization expense 1,420 1,422 1,431 5,781
OPERATING INCOME,
excluding amortization
expense $13,352 $13,110 $14,989 $59,296
======= ======= ======= =======
Weighted average
common shares
outstanding 57,516,750 57,563,263 56,884,403 57,413,391
Shares O/S at end of
the period 57,447,707 57,147,872 55,519,970 55,519,970
PER SHARE DATA (Diluted)
Net income $0.20 $0.19 $0.29 $0.92
Net realized gain
(loss), net of tax $(0.01) $(0.01) $0.05 $(0.01)
Operating income $0.21 $0.20 $0.24 $0.93
Operating income,
excluding
amortization expense $0.23 $0.23 $0.26 $1.03
OPERATING RATIO ANALYSIS
------------------------
GAAP Loss & LAE ratio 59.4% 64.5% 60.6% 60.7%
GAAP Expense ratio 33.3% 30.8% 33.7% 31.9%
---- ---- ---- ----
GAAP Combined ratio 92.7% 95.3% 94.3% 92.6%
==== ==== ==== ====
Unconsolidated GAAP
data - Ratio
Calculation Table:
------------------- -------- -------- -------- --------
Net earned premiums $127,140 $137,399 $146,025 $539,602
Consolidated net loss
and LAE $70,464 $83,553 $83,283 $307,087
Intercompany claim fees 4,995 5,049 5,187 20,339
----- ----- ----- ------
Unconsolidated net loss
and LAE $75,459 $88,602 $88,470 $327,426
======= ======= ======= ========
GAAP Net loss and LAE
ratio 59.4% 64.5% 60.6% 60.7%
Consolidated Policy
acquisition and other
underwriting expenses $27,139 $28,824 $30,783 $110,715
Intercompany
administrative and
other underwriting fees 15,201 13,428 18,427 61,422
------ ------ ------ ------
Unconsolidated policy
acquisition and other
underwriting expenses $42,340 $42,252 $49,210 $172,137
======= ======= ======= ========
GAAP Expense ratio 33.3% 30.8% 33.7% 31.9%
GAAP Combined Ratio 92.7% 95.3% 94.3% 92.6%
---- ---- ---- ----
Unconsolidated Commissions
& Fees Managed programs:
Management fees $3,821 $6,142 $3,659 $18,901
Claims fees 2,006 1,802 1,654 7,428
Loss control fees 520 493 473 1,975
Reinsurance brokerage 90 333 443 931
--- --- --- ---
Total managed programs 6,437 8,770 6,229 $29,235
Agency commissions 2,171 2,031 2,565 9,561
Intersegment
commissions and fees (212) (48) (299) (915)
---- --- ---- ----
Net Commissions and fees 8,396 10,753 8,495 37,881
Intercompany
commissions and fees 20,196 18,477 23,614 81,761
------ ------ ------ ------
Gross commissions and
fees $28,592 $29,230 $32,109 $119,642
======= ======= ======= ========
SOURCE Meadowbrook Insurance Group, Inc.
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