Buffett says government is doing the right things - Posted by Steven Wevodau
Billionaire Warren Buffett says US government is taking the right steps to help economy
- On Saturday May 2, 2009, 12:27 pm EDT
OMAHA, Nebraska (AP) — Billionaire Warren Buffett said Saturday the U.S. government is generally taking the right actions to help the economy recover, and it should be given some benefit of the doubt because officials have been reacting in the middle of a crisis.
The state of the economy was one of the first things addressed at Saturday’s daylong Berkshire Hathaway Inc. shareholders meeting. Roughly 35,000 people packed an arena and overflow rooms to listen to Buffett and Berkshire vice chairman Charlie Munger answer questions for hours.
“Overall, I commend the actions that were taken,” Buffett said. But he said no one should expect perfection because the economy experienced a “financial hurricane.”
But Buffett said he can’t predict how quickly the economy and the markets will improve. He said last fall that the U.S. was facing an “economic Pearl Harbor.”
To illustrate the challenges the U.S. faced last year, Buffett showed a sales receipt for $5 million in U.S. Treasury bonds that Berkshire sold in December for $90.07 more than face value, ensuring a negative return for the buyer. Buffett said he does not think most investors will see negative returns on U.S. bonds again in their lifetimes.
“It’s been a very extraordinary year,” he said.
In the exhibit hall Saturday morning, Buffett was mobbed like a movie star by shareholders seeking photos of the CEO as he walked between exhibits for subsidiaries Justin Boots and Dairy Queen.
The meeting began as usual with a humorous movie, but instead of the traditional comical cartoon, Berkshire offered a reassuring message from animated versions of its products.
An animated Mrs. See of See’s Candy told the crowd that it didn’t seem right to have a humorous cartoon when so many things in the world don’t seem sweet. And a talking Dairy Queen ice cream treat said the security of the company’s balance sheet would help it withstand any blizzard.
The economy, succession at the top of Berkshire and the state of the company, which last year had its worst year since Buffett took over in 1965, were on the minds of many shareholders.
Berkshire’s Class A stock lost 32 percent in 2008, and Berkshire’s book value — assets minus liabilities — declined 9.6 percent, to $70,530 per share. That was the biggest drop in book value under Buffett and only the second time its book value has declined.
But despite Berkshire’s rough year — which was depressed by unrealized multibillion-dollar derivative losses — the company still outpaced the market index Buffett uses as a measuring stick. The S&P 500 fell 37 percent in 2008.
Berkshire reported a 2008 profit of $4.99 billion, or $3,224 per Class A share. That was down 62 percent from the previous year, but better than many companies.
Retired shareholder Paul Gallmeyer of the Chicago area said he wasn’t especially worried about who will replace the 78-year-old Buffett as Berkshire’s chairman and CEO. He said all of Berkshire’s more than 60 subsidiaries are run by people who will keep the company going after Buffett is gone.
“I truly don’t see that as much of an issue as other people make it,” Gallmeyer said.
But some shareholders, like Dennis Hospodarsky of Waterloo, Iowa, were a little worried about the succession issue.
“I hope he’s as good at picking a successor as he is at stocks,” Hospodarsky said.
Buffett offered a few new clues about who will replace him at the helm of Berkshire Hathaway, but Buffett still refused to name the people who will become Berkshire’s next chief executive or its next chief investment officer. Buffett received several succession questions.
Three of Berkshire’s internal managers are candidates to be CEO. And the board has a list of four internal and external investment managers who could manage Berkshire’s $49 billion stock portfolio and investing its $24.3 billion cash.
Buffett says none of the investment managers likely beat the S&P 500 last year, but over the past 10 years they all beat the average performance at least modestly if not significantly.
Buffett said he doesn’t see any value in choosing a CEO successor now to follow him around Berkshire’s 19-person headquarters because all the candidates are already running businesses now. Plus the other two might leave Berkshire if a successor was named.
“It’d be a waste of talent,” Buffett said. “I don’t really see any advantages in having some crown prince around.”
Buffett has said his son Howard will take over as chairman to ensure Berkshire’s culture is preserved. Howard Buffett already serves on the board.
Berkshire Hathaway Inc.: http://www.berkshirehathaway.com/
United America Indemnity, Ltd. Sets Subscription Price for Previously Announced Rights Offering
Posted by Steven Wevodau
The rights will have a subscription price of $3.50 per share.
Under the Rights Offering, the Company will distribute to holders of record of the Company’s Class A Common Shares on March 16, 2009 (the “Record Date”) non-transferable rights to subscribe for Class A Common Shares and to holders of record of the Company’s Class B Common Shares on the Record Date non-transferable rights to subscribe for Class B Common Shares. Shareholders of record will receive one non-transferable right per common share. Each right-holder will be entitled to purchase 0.9013 common shares per right.
The Class A Common Shares will begin trading ex-rights on March 12, 2009. The Class B Common Shares are not publicly traded. Rights may be exercised at any time during the subscription period, which commences on the Record Date and ends at 5:00 PM EDT April 6, 2009 (the “Expiration Date”). There is no over-subscription privilege as part of the Rights Offering.
The Company has entered into a backstop commitment agreement with an affiliate of Fox Paine & Company, LLC (”Fox Paine”), the Company’s largest shareholder, pursuant to which the backstop provider intends to purchase any common shares not subscribed for pursuant to the Rights Offering.
IMPORTANT DATES*
Last Day to Buy Stock and
Receive Rights (1) March 11, 2009
Shares Trade Ex-Rights March 12, 2009
Record Date March 16, 2009
Subscription Period (2) March 16, 2009-April 6, 2009
Expiration Date (2) 5:00 P.M., EDT April 6, 2009
(1) Assumes T+3 settlement.
(2) Subject to extension if the Company extends the Expiration Date.
The Company intends to use the proceeds from the Offering to support its strategic initiatives, enhance liquidity and financial flexibility, and for other general corporate purposes. The Company has the right to terminate the Offering at any time throughout the subscription period.
A registration statement relating to the Class A Common Shares to be issued in the Offering has been filed with the U.S. Securities and Exchange Commission (the “SEC”) but has not yet become effective. The registration statement will be amended prior to its effectiveness to include the Class B Common Shares to be issued in the Offering. These securities may not be sold, nor may offers to buy be accepted, prior to the time the registration statement becomes effective. This news release does not constitute an offer to sell or the solicitation of an offer to buy any securities of the Company in any jurisdiction. Any such offer will be made solely by means of a prospectus meeting the requirements of the applicable securities laws.
Webcast
INDM has posted an investor presentation discussing the Offering on its website. The presentation may be accessed within the Investor Relations section at www.uai.ky. It will be available throughout the entire subscription period.
Additional information regarding the Offering may be obtained from the Company’s Information Agent, Georgeson Inc., 199 Water Street, 26th Floor, New York, NY 10038, (800) 501- 4416.
About United America Indemnity, Ltd.
United America Indemnity, Ltd. (Nasdaq: INDM - News), through its several direct and indirect wholly owned subsidiary insurance and reinsurance companies, is a national and international provider of excess and surplus lines and specialty property and casualty insurance and reinsurance, both on an admitted and non-admitted basis. The Company’s four principal divisions include:
-- Insurance Operations:
- Penn-America, which includes property and general liability products
for small commercial businesses distributed through a select network
of wholesale general agents with specific binding authority;
- United National, which includes property, general liability, and
professional lines products distributed through program
administrators with specific binding authority;
- Diamond State, which includes property, general liability, and
professional lines products distributed through wholesale brokers.
-- Reinsurance Operations:
- Wind River Reinsurance Company, Ltd., a Bermuda based treaty and
facultative reinsurer of excess and surplus lines and specialty
property and casualty insurance.
Forward-Looking Information
This release contains forward-looking information about United America Indemnity, Ltd. and the operations of United America Indemnity, Ltd. that is intended to be covered by the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts. These statements can be identified by the use of forward-looking terminology such as “believe,” “expect,” “may,” “will,” “should,” “project,” “plan,” “seek,” “intend,” or “anticipate” or the negative thereof or comparable terminology, and include discussions of strategy, financial projections and estimates and their underlying assumptions, statements regarding plans, objectives, expectations or consequences of the transactions, and statements about the future performance, operations, products and services of the companies.
The business and operations of United America Indemnity, Ltd. is and will be subject to a variety of risks, uncertainties and other factors. Consequently, actual results and experience may materially differ from those contained in any forward-looking statements.
For example, the Company’s forward-looking statements about the Rights Offering could be affected by risks including the Company’s inability to successfully complete the Rights Offering, material adverse changes in the Company’s business or general market conditions, conditions to the backstop provider’s obligations or the Company’s inability to profitability use the proceeds from the Rights Offering. Risks, uncertainties and other factors that could cause the Company’s results and experience to differ from those projected include, but are not limited to, the following: (1) the ineffectiveness of United America Indemnity, Ltd.’s business strategy due to changes in current or future market conditions; (2) the effects of competitors’ pricing policies, and of changes in laws and regulations on competition, including industry consolidation and development of competing financial products; (3) greater frequency or severity of claims and loss activity than United America Indemnity, Ltd.’s underwriting, reserving or investment practices have anticipated; (4) decreased level of demand for United America Indemnity, Ltd.’s insurance products or increased competition due to an increase in capacity of property and casualty insurers; (5) risks inherent in establishing loss and loss adjustment expense reserves; (6) uncertainties relating to the financial ratings of United America Indemnity, Ltd.’s insurance subsidiaries; (7) uncertainties arising from the cyclical nature of United America Indemnity, Ltd.’s business; (8) changes in United America Indemnity, Ltd.’s relationships with, and the capacity of, its general agents; (9) the risk that United America Indemnity, Ltd.’s reinsurers may not be able to fulfill obligations; (10) investment performance and credit risk; and (11) uncertainties relating to governmental and regulatory policies. The foregoing review of important factors should be read in conjunction with the other cautionary statements that are included in United America Indemnity, Ltd.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, as well as in the materials filed and to be filed with the SEC. United America Indemnity, Ltd. does not make any commitment to revise or update any forward-looking statements in order to reflect events or circumstances occurring or existing after the date any forward-looking statement is made.
Source: United America Indemnity, Ltd.
The Hartford Introduces Data Privacy Coverage For Technology Companies - Posted by Steven Wevodau
“Many technology companies are at risk for improper dissemination of non-public personal information or violation of data privacy laws. This endorsement is designed to address direct costs that would not be covered by third party technology professional liability coverage,” said David J. Selembo, assistant vice president of professional liability, underwriting & operations for The Hartford’s Technology Practice Group, which provides insurance coverage tailored to the risks of technology firms.
The Hartford’s Data Privacy Expense coverage pays for actual expenses incurred as a result of a policyholder’s negligent acts, errors or omissions that result in the improper dissemination of non-public personal information, or a breach or violation of data privacy laws. Specific components of the coverage may include:
1. Notification expenses incurred to comply with notification laws.
2. Crisis management expenses incurred for fees and costs associated with hiring a crisis management firm to perform services that minimize potential harm and maintain or restore confidence in the policyholder.
3. Data privacy regulatory and credit monitoring expenses incurred in connection with a statutory mandate requiring credit monitoring for third parties in compliance with data privacy laws, legal expenses in defense of a data privacy regulation proceeding, and certain fines or penalties, where insurable, in connection with a data privacy regulation proceeding.
4. Cyber investigation expenses incurred to have a third party investigate the policyholder’s computer system to determine the source of a data privacy breach.
The Hartford’s Cyber Extortion Expense coverage addresses expenses incurred by a policyholder in the event of an extortion threat to cause an actual interruption, suspension, or failure of the company’s computer system, including the failure to prevent unauthorized access or unauthorized use of the computer system.
To learn more about The Hartford’s FailSafe suite of customized solutions for the technology industry, agents and brokers should contact david.selembo@thehartford.com, their local Hartford sales representative, or a Technology Practice Group underwriter.
About The Hartford
The Hartford is one of the nation’s largest financial services companies and a leading provider of investment products, life insurance and group benefits; automobile and homeowners products; and business property and casualty insurance. International operations are located in Japan, the United Kingdom, Canada, Brazil and Ireland. The Hartford’s Internet address is www.thehartford.com.
HIG-PC
Some of the statements in this release may be considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. We caution investors that these forward-looking statements are not guarantees of future performance, and actual results may differ materially. Investors should consider the important risks and uncertainties that may cause actual results to differ. These important risks and uncertainties include those discussed in our Quarterly Reports on Form 10-Q, our 2008 Annual Report on Form 10-K and the other filings we make with the Securities and Exchange Commission. We assume no obligation to update this release, which speaks as of the date issued.
The description herein is a summary only, is intended for informational purposes only and should not be relied upon. It does not include all terms, conditions and exclusions of the policies described. Please refer to the actual policies for complete details of coverage and exclusions. Coverage is provided by The Hartford companies and may not be available in all states.
Contact:
The Hartford Financial Services Group, Inc. Pamela Rekow, 860-547-8990 Pamela.rekow@thehartford.com or Thomas Hambrick, 860-547-9746 Thomas.hambrick@thehartford.com
Source: The Hartford Financial Services Group, Inc.
Donegal Group Inc. Announces Fourth Quarter and Full Year Earnings - Posted by Steven Wevodau
The Company’s combined ratio was 98.0% for the fourth quarter of 2008, compared to 90.5% for the fourth quarter of 2007. The Company’s loss ratio for the fourth quarter of 2008 was 66.8%, compared to 58.4% for the fourth quarter of 2007. The Company’s expense ratio was 30.9% for the fourth quarter of 2008, compared to 31.6% for the fourth quarter of 2007, reflecting the benefit of increased net premiums written during the quarter and decreased underwriting-based incentive compensation costs. The expense ratio for the fourth quarter of 2008 decreased in spite of a severance charge of approximately $1.3 million related to personnel reductions, which were part of the Company’s ongoing expense reduction program. The Company expects that the personnel reductions will result in expense savings of approximately $2.3 million in 2009 and subsequent years.
Net investment income was $5,468,308 for the fourth quarter of 2008, compared to $5,906,339 for the fourth quarter of 2007, reflecting reduced investment income due to increased holdings of short-term U.S. Treasury investments during the fourth quarter of 2008 and the use of invested assets to redeem $15.5 million of subordinated debentures in August 2008. Interest expense on subordinated debentures decreased by $448,623 during the fourth quarter of 2008 compared to the comparable period in 2007, with this decrease in expense more than offsetting the related decrease in investment income.
The Company reported net realized investment losses of $181,181, or $0.01 per Class A share on an after-tax basis, for the fourth quarter of 2008. The Company did not recognize any other than temporary impairments in the fourth quarter of 2008. Equity securities represented less than 1% of the Company’s investment portfolio at December 31, 2008.
As a result of the previously announced acquisition of Sheboygan Falls Insurance Company on December 1, 2008, the Company’s fourth quarter of 2008 financial statements include the results of Sheboygan Falls for the month of December 2008. The impact of the acquisition on fourth quarter results was not material.
Net income for the year ended December 31, 2008 was $25,541,978, compared to $38,279,905 reported for the year ended December 31, 2007. On a diluted basis, net income per share of Class A common stock for the year ended December 31, 2008 was $1.02, compared to $1.53 for the prior year. The Company’s net premiums written increased 16.3% during 2008 to $364,941,055, largely due to the change in the pooling agreement with Donegal Mutual Insurance Company effective March 1, 2008. The Company’s combined ratio for the full year 2008 was 97.2%, compared to its combined ratio of 91.3% for the full year 2007. The Company’s loss ratio was 64.7% for the full year 2008, compared to 57.4% for the full year 2007, with the increase reflecting increased weather-related claim activity and less favorable prior-accident-year reserve development. The Company’s expense ratio was 32.1% for the full year 2008, compared to 33.5% for the full year 2007.
The Company will adjust its financial statements for the first three quarters of 2008 to correct immaterial errors. Because of these errors, the Company overstated its reported net income for the nine months ended September 30, 2008 by approximately $1.7 million, or approximately $.07 per Class A share. The Company will include additional details related to this adjustment in its Annual Report on Form 10-K for the year ended December 31, 2008.
The Company’s total stockholders’ equity, or book value, increased to $363,583,865, a per common share amount of $14.29, at December 31, 2008, compared to $352,690,191, a per common share amount of $13.92, at December 31, 2007.
“We are pleased to be among a select few companies reporting an increase in book value for the year. This accomplishment can be attributed to our conservative investment philosophy as well as our achievement of underwriting profitability and solid investment returns in a difficult environment. We are operating from a position of financial strength and are continuing to follow our conservative business strategy in today’s challenging insurance and investment markets,” stated Donald H. Nikolaus, President and Chief Executive Officer of Donegal Group Inc.
The Company will hold a conference call and webcast on Wednesday, February 18, 2009, beginning at 11:00 A.M. Eastern Time. You may listen via the Internet by accessing the webcast link in the Investors area of the Company’s web site at http://www.donegalgroup.com. A replay of the conference call will also be available via the Company’s web site.
Donegal Group Inc. is an insurance holding company whose insurance subsidiaries offer personal and commercial property and casualty lines of insurance in five Mid-Atlantic states (Delaware, Maryland, New Hampshire, New York and Pennsylvania), eight Southeastern states (Alabama, Georgia, Louisiana, North Carolina, South Carolina, Tennessee, Virginia and West Virginia) and six Midwestern states (Iowa, Nebraska, Ohio, Oklahoma, South Dakota and Wisconsin).
All statements contained in this press release that are not historic facts are based on current expectations. Such statements are forward-looking in nature (as defined in the Private Securities Litigation Reform Act of 1995) and necessarily involve risks and uncertainties. Actual results could vary materially. The factors that could cause actual results to vary materially include, but are not limited to, the ability of the Company to maintain profitable operations, the adequacy of the Company’s reserves for losses and loss adjustment expenses, business and economic conditions in the areas in which the Company operates, conditions resulting from the ongoing recession in the United States, severe weather events, competition from various insurance and non-insurance businesses, terrorism, the availability and cost of reinsurance, legal and judicial developments, changes in regulatory requirements and other risks that are described from time to time in the Company’s filings with the Securities and Exchange Commission. The Company disclaims any obligation to update such statements or to announce publicly the results of any revisions that may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.
Donegal Group Inc.
Financial Highlights
(unaudited)
Quarter Ended December 31
--------------------------
2008 2007
------------ ------------
Net premiums earned $ 89,067,548 $ 78,188,948
Investment income, net of investment
expenses 5,468,308 5,906,339
Net realized investment (losses) gains (181,181) 1,397,394
Total revenues 95,840,537 86,890,271
Net income $ 6,394,297 $ 10,796,583
Net income per common share:
Class A common stock - basic $ 0.26 $ 0.44
------------ ------------
Class A common stock - diluted $ 0.26 $ 0.43
------------ ------------
Class B common stock - basic and diluted $ 0.23 $ 0.39
------------ ------------
Year Ended December 31
--------------------------
2008 2007
------------ ------------
Net premiums earned $346,575,266 $310,071,534
Investment income, net of investment
expenses 22,755,784 22,785,252
Net realized investment (losses) gains (2,970,716) 2,051,050
Total revenues 372,312,162 340,618,294
Net income $ 25,541,978 $ 38,279,905
Net income per common share:
Class A common stock - basic $ 1.03 $ 1.55
------------ ------------
Class A common stock - diluted $ 1.02 $ 1.53
------------ ------------
Class B common stock - basic and diluted $ 0.92 $ 1.39
------------ ------------
Donegal Group Inc.
Consolidated Statements of Income
(unaudited; in thousands, except share data)
Quarter Ended December 31
--------------------------
2008 2007
------------ ------------
Net premiums earned $ 89,068 $ 78,189
Investment income, net of investment
expenses 5,468 5,906
Net realized investment (losses) gains (181) 1,397
Lease income 221 269
Installment payment fees 1,264 1,129
------------ ------------
Total revenues 95,840 86,890
------------ ------------
Net losses and loss expenses 59,451 45,628
Amortization of deferred policy
acquisition costs 15,141 13,315
Other underwriting expenses 12,397 11,397
Other expenses 352 400
Policyholder dividends 251 405
Interest 276 724
------------ ------------
Total expenses 87,868 71,869
------------ ------------
Income before income tax expense 7,972 15,021
Income tax expense 1,578 4,225
------------ ------------
Net income $ 6,394 $ 10,796
============ ============
Net income per common share:
Class A common stock - basic $ 0.26 $ 0.44
------------ ------------
Class A common stock - diluted $ 0.26 $ 0.43
------------ ------------
Class B common stock - basic and diluted $ 0.23 $ 0.39
------------ ------------
Supplementary Financial Analysts' Data
Weighted-average number of shares
outstanding:
Class A common stock - basic 19,914,130 19,717,747
------------ ------------
Class A common stock - diluted 19,918,941 19,949,711
------------ ------------
Class B common stock - basic and diluted 5,576,775 5,576,775
------------ ------------
Net written premiums $ 78,600 $ 70,781
------------ ------------
Book value per common share at end of
period $ 14.29 $ 13.92
------------ ------------
Donegal Group Inc.
Consolidated Statements of Income
(unaudited; in thousands, except share data)
Year Ended December 31
--------------------------
2008 2007
------------ ------------
Net premiums earned $ 346,575 $ 310,072
Investment income, net of investment
expenses 22,756 22,785
Net realized investment (losses) gains (2,971) 2,051
Lease income 927 1,060
Installment payment fees 5,025 4,650
------------ ------------
Total revenues 372,312 340,618
------------ ------------
Net losses and loss expenses 224,301 177,784
Amortization of deferred policy
acquisition costs 58,250 51,205
Other underwriting expenses 53,108 52,726
Other expenses 1,564 1,896
Policyholder dividends 1,176 1,273
Interest 1,821 2,885
------------ ------------
Total expenses 340,220 287,769
------------ ------------
Income before income tax expense 32,092 52,849
Income tax expense 6,550 14,569
------------ ------------
Net income $ 25,542 $ 38,280
============ ============
Net income per common share:
Class A common stock - basic $ 1.03 $ 1.55
------------ ------------
Class A common stock - diluted $ 1.02 $ 1.53
------------ ------------
Class B common stock - basic and diluted $ 0.92 $ 1.39
------------ ------------
Supplementary Financial Analysts' Data
Weighted-average number of shares
outstanding:
Class A common stock - basic 19,866,099 19,685,674
------------ ------------
Class A common stock - diluted 19,955,518 19,962,858
------------ ------------
Class B common stock - basic and diluted 5,576,775 5,576,775
------------ ------------
Net written premiums $ 364,941 $ 313,690
------------ ------------
Book value per common share at end of
period $ 14.29 $ 13.92
------------ ------------
Donegal Group Inc.
Consolidated Balance Sheets
(in thousands)
December 31,
--------------------------
2008 2007
------------ ------------
(unaudited)
ASSETS
Investments:
Fixed maturities:
Held to maturity, at amortized cost $ 99,878 $ 154,290
Available for sale, at fair value 445,816 336,318
Equity securities, at fair value 5,895 36,361
Investments in affiliates 8,594 8,649
Short-term investments, at cost 71,953 70,252
------------ ------------
Total investments 632,136 605,870
Cash 1,831 4,289
Premiums receivable 55,337 51,038
Reinsurance receivable 79,953 78,897
Accrued investment income 6,656 5,875
Deferred policy acquisition costs 29,541 26,235
Prepaid reinsurance premiums 51,436 47,286
Property and equipment, net 6,687 5,608
Deferred tax asset, net 10,995 7,026
Other assets 5,537 1,972
------------ ------------
Total assets $ 880,109 $ 834,096
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Losses and loss expenses $ 239,809 $ 226,432
Unearned premiums 229,014 203,431
Accrued expenses 14,150 12,313
Subordinated debentures 15,465 30,929
Due to affiliate 3,148 242
Accounts payable - securities 1,821 --
Other liabilities 13,118 8,059
------------ ------------
Total liabilities 516,525 481,406
------------ ------------
Stockholders' equity:
Preferred stock -- --
Class A common stock 205 202
Class B common stock 56 56
Additional paid-in capital 163,137 156,851
Accumulated other comprehensive income 1,714 6,974
Retained earnings 207,182 193,807
Treasury stock, at cost (8,710) (5,200)
------------ ------------
Total stockholders' equity 363,584 352,690
------------ ------------
Total liabilities and stockholders'
equity $ 880,109 $ 834,096
============ ============
Contact:
Donegal Group Inc.
Jeffrey D. Miller, Senior Vice President & Chief Financial
Officer
(717) 426-1931
Fax: (717) 426-7009
jeffmiller@donegalgroup.com
Source: Donegal Group Inc
Posted by Steven Wevodau
Harleysville Insurance Names Toth Chief Underwriting Officer
Posted by Steven Wevodau
Toth joined Harleysville in 2005 as vice president, associate general counsel and chief litigation counsel. He was named senior vice president of claims later that year. Prior to that, he was an attorney in the litigation department of the law firm of Reed Smith LLP in Philadelphia.
Toth earned a bachelor’s degree from Temple University and a juris doctor degree from the Temple University School of Law, where he has also served as an adjunct professor of trial advocacy and coach of Temple’s national trial team.
Harleysville Insurance is a leading regional provider of insurance products and services for small and mid-sized businesses, as well as for individuals, and ranks among the top 60 U.S. property/casualty insurance groups based on net written premiums. Harleysville was listed recently as #30 in the InformationWeek 500, the publication’s annual listing of the most innovative information technology organizations in the U.S., and has been ranked on the list in each of the last three years. Harleysville Mutual Insurance Company owns 52 percent of Harleysville Group Inc. (NASDAQ: HGIC - News), a publicly traded holding company for eight regional property/casualty insurance companies collectively rated A- (Excellent) by A.M. Best Company. Harleysville Group is listed on the NASDAQ Global Select Market, which is comprised of the top third of all NASDAQ member companies and has the highest initial listing standards of any exchange in the world based on financial and liquidity requirements. Harleysville Insurance—which distributes its products exclusively through independent insurance agencies and reflects that commitment to its agency force by being a Trusted Choice® company partner—currently operates in 32 eastern and midwestern states. Further information can be found on the company’s Web site at www.harleysvillegroup.com.
Contact:
Harleysville Insurance Randy Buckwalter 215.256.5288 (office) 267.718.3766 (cell) rbuckwalter@harleysvillegroup.com
Source: Harleysville Insurance
AIG Vice Chairman Frank G. Wisner Announces Retirement - Posted by Steven Wevodau
Commenting on Ambassador Wisner’s retirement, AIG Chairman and Chief Executive Officer Edward M. Liddy said, “Throughout his tenure with AIG, Frank Wisner brought his deep knowledge of international affairs and public policy to AIG’s businesses in vibrant markets throughout the world. On behalf of all AIG colleagues who have benefited from his many contributions and tireless leadership over the years, we wish Ambassador Wisner the very best in the future.”
American International Group, Inc. (AIG), a world leader in insurance and financial services, is the leading international insurance organization with operations in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer. In addition, AIG companies are leading providers of retirement services, financial services and asset management around the world. AIG’s common stock is listed on the New York Stock Exchange, as well as the stock exchanges in Ireland and Tokyo.
Contact:
AIG Joe Norton, 212-770-3144 Director of Public Relations
Source: American International Group, Inc.
A.M. Best Withdraws Ratings of Seaboard Surety Company Due to Merger With Affiliate - Posted by Steven Wevodau
OLDWICK, N.J.–(BUSINESS WIRE)–A.M. Best Co. has withdrawn the financial strength rating (FSR) of A+ (Superior) and ICR of “aa-” and assigned a category NR-5 (Not Formally Followed) to the FSR and an “nr” to the ICR of Seaboard Surety Company (Seaboard) (New York, NY).
The withdrawal of the ratings reflects the merger of Seaboard with and into the separately rated entity, Travelers Casualty and Surety Company of America (TCSA) (Hartford, CT), an affiliate, effective January 2, 2009, following the approvals of the New York and Connecticut insurance departments. Prior to the merger, Seaboard was a wholly owned indirect property/casualty subsidiary of The Travelers Companies, Inc. (St. Paul, MN) [NYSE: TRV] and a member of Travelers Group.
The FSRs of A+ (Superior) and ICRs of “aa-” of Travelers Group and TCSA are unchanged as a result of this merger.
For Best’s Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.
The principal methodologies used in determining these ratings, including any additional methodologies and factors, which may have been considered, can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.
Contact:
A.M. Best Co. Analysts Michael J. Lagomarsino, CFA, 908-439-2200, ext. 5810 michael.lagomarsino@ambest.com or W. Dolson Smith, CFA, 908-439-2200, ext. 5379 w.dolson.smith@ambest.com or Public Relations Jim Peavy, 908-439-2200, ext. 5644 james.peavy@ambest.com or Rachelle Morrow, 908-439-2200, ext. 5378 rachelle.morrow@ambest.com
Harleysville Group to Hold Fourth Quarter 2008 Earnings Conference Call on February 20, 2009
Posted by Steven Wevodau
HARLEYSVILLE, Pa.–(BUSINESS WIRE)–Harleysville Group Inc. (NASDAQ:HGIC - News) will hold a live Webcast on Friday, February 20, 2009, beginning at 8 a.m. (ET) to discuss its fourth quarter 2008 earnings. The company will release its results on Thursday, February 19, 2009, after the close of regular trading on the NASDAQ Stock Market.
The Webcast and a replay will be available from the Investors section of the company’s Web site (www.harleysvillegroup.com).
Harleysville Insurance is a leading regional provider of insurance products and services for small and mid-sized businesses, as well as for individuals, and ranks among the top 60 U.S. property/casualty insurance groups based on net written premiums. Harleysville was listed recently as #30 in the InformationWeek 500, the publication’s annual listing of the most innovative information technology organizations in the U.S., and has been ranked on the list in each of the last three years. Harleysville Mutual Insurance Company owns 52 percent of Harleysville Group Inc. (NASDAQ: HGIC - News), a publicly traded holding company for eight regional property/casualty insurance companies collectively rated A- (Excellent) by A.M. Best Company. Harleysville Group is listed on the NASDAQ Global Select Market, which is comprised of the top third of all NASDAQ member companies and has the highest initial listing standards of any exchange in the world based on financial and liquidity requirements. Harleysville Insurance—which distributes its products exclusively through independent insurance agencies and reflects that commitment to its agency force by being a Trusted Choice® company partner—currently operates in 32 eastern and midwestern states. Further information can be found on the company’s Web site at www.harleysvillegroup.com.
Certain of the statements made during this presentation (other than statements of historical facts) are forward-looking statements. Such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and include estimates and assumptions related to economic, competitive and legislative developments. These forward-looking statements are subject to change and uncertainty that are, in many instances, beyond the company’s control and have been made based upon management’s expectations and beliefs concerning future developments and their potential effect on Harleysville Group Inc. There can be no assurance that future developments will be in accordance with management’s expectations so that the effect of future developments on Harleysville Group will be those anticipated by management. Actual financial results, including operating return on equity, premium growth and underwriting results, could differ materially from those anticipated by Harleysville Group depending on the outcome of certain factors, which may include changes in property and casualty loss trends and reserves; catastrophe losses; the insurance product pricing environment; changes in applicable law; government regulation and changes therein that may impede the ability to charge adequate rates; performance of and instability in the financial markets; investment losses; fluctuations in interest rates; availability and price of reinsurance; and the status of the labor markets in which the company operates.
Contact:
Harleysville Group Inc. Investors: Mark Cummins, 215-256-5025 mcummins@harleysvillegroup.com or Media: Randy Buckwalter, 215-256-5288 rbuckwalter@harleysvillegroup.com
Markel Muscles Its Way Forward - Posted by Steven Wevodau
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http://www.fool.com/investing/value/2009/02/04/markel-muscles-its-way-forward.aspx Toby Shute
Whereas I nominated Fairfax Financial (NYSE: FFH) for the Overall Most Foolish category in our recent Fool Awards, Markel (NYSE: MKL) was the insurer/investor to ultimately take home the statue. Since then, I’ve committed to digging deeper into both of these businesses, and I intend to give them fuller Foolish coverage going forward. That task begins today, with Markel’s fourth-quarter and full-year results. For the full year, Markel’s combined ratio was nominally positive at 99% (sub-100% results indicate profitable underwriting). Just as with Chubb (NYSE: CB), Hurricanes Ike and Gustav caused a five-point drag on this ratio. Still, you can’t wave away the effects of catastrophes in this business. As they say on The Wire: all in the game. That 99% combined ratio isn’t great, but it’s comparable to that reported by Allstate (NYSE: ALL) and others, and tolerable in a soft market. As for the insurance outlook, there are forces that may eventually work in Markel’s favor. The economic recession will drive down premium dollars, as businesses have lower coverage needs. Markel thinks it can make up for this decline with higher rates, driving rates per unit of exposure — and by extension, underwriting margins — higher. Competitors may undercut Markel on rates in the near term, but that’s their loss — literally. They risk underestimating the coming rise in claims, if Steve Markel is correct that people are “more likely to make claims and be unhappy” in this environment. On the investment side, Markel’s equity portfolio shed 34%, so it outpaced the market slightly. The largest realized losses in stocks stemmed from positions in General Electric (NYSE: GE), Citigroup (NYSE: C), and Bank of America (NYSE: BAC). Fortunately, the firm has been scaling back its equity exposure since 2006. In sum, the total investment portfolio lost 6.9%. In that light, Markel’s performance in 2008 was rock solid, especially compared to those aforementioned portfolio companies. Resident Markel investing genius Tom Gayner noted that he’s modestly buying stocks for the first time in 18 months. He cautions that this isn’t a bottom call on the market by any means, but he does believe that the stock market is pricing in “depression-like conditions.” On that assessment, he’s happy to ratchet up Markel’s exposure to quality stocks, as long as the insurance market firms from here. |
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Aspen Insurance Holdings Reports Results for Fourth Quarter and Twelve Months of 2008 - Steven Wevodau
Diluted book value per share of $28.10, up 3.8% over 2007 and 7.2% over the third quarter of 2008. Full year net income of $103.8 million and fourth quarter net income of $21.8 million, down 78.8% on 2007 and 83.9% over the same quarter last year. Total investment return of $117.1 million or a simple 2% yield, including losses from funds of hedge funds, impairment charges and changes in unrealized gains in fixed income portfolio. Full year net investment income of $139.2 million and fourth quarter net investment income of $10.3 million, down 53.4% on 2007 and 87.2% over the same quarter last year. Operating earnings per share of $1.44 for 2008, down 71.1% on 2007 and $0.17 for the quarter, down 88.4% on the fourth quarter of 2007. Operating return on equity of 5.4% for the twelve months, down from 21.1% for 2007, and annualized 2.4% for the quarter, down from 23.2% for the fourth quarter of 2007. Combined ratio for the twelve months of 95.6% and 93.4% for the quarter up from 83.0% and 79.4% for the respective periods in 2007. Expense ratio for the twelve months of 29.8% and 28.5% for the quarter, down from 29.9% on 2007 and 31.8% over the same quarter last year.
- Wednesday February 4, 2009, 6:09 pm EST
HAMILTON, Bermuda–(BUSINESS WIRE)–Aspen Insurance Holdings Limited (NYSE:AHL - News) today reported a net profit after tax for 2008 of $103.8 million or an operating profit of $1.44 per diluted ordinary share and net profit after tax for the fourth quarter of 2008 of $21.8 million or an operating profit of $0.17 per diluted ordinary share. This compares to a net profit after tax of $489.0 million for 2007, or operating earnings of $4.99 per diluted share and net profit after tax of $135.2 million, or operating earnings of $1.47 per diluted share for the fourth quarter last year.
Book value per share on a diluted basis of $28.10 has increased by $1.02 when compared to December 31, 2007 and by $1.89 since the end of September 2008, mainly as a result of net income after tax and increased unrealized gains in the investment portfolio.
Operating income after tax was $151.5 million for the full year and $20.5 million for the fourth quarter of 2008 compared with $478.6 million for 2007 and $138.0 million for the fourth quarter last year. Operating income, excluding losses from our funds of hedge funds, net of taxes, was $66.5 million for the quarter and $237.9 million for the year. Annualized operating return on equity for the quarter was 2.4% and 5.4% for the year. Annualized operating return on equity excluding losses from our investments in funds of hedge funds, net of taxes, was 10.6% for the quarter and 9.2% for the year.
The funds of hedge funds performance within the Company’s net investment income accounted for $0.55 of the reduction in diluted earnings per share for the fourth quarter of 2008 and a reduction of $1.01 for the twelve months. Losses from Hurricanes Ike and Gustav accounted for $2.00 in earnings per share for the year.
The effective tax rate in the fourth quarter of 2008 was 47.4% compared to 14.3% in the fourth quarter of 2007. The increase was mainly driven by the distribution of insurance and investment-related losses within the group in the fourth quarter of 2008. As a result, the effective tax rate for the year was 26.0% compared to 14.8% in 2007.
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Fourth Quarter 2008 Financial Highlights ($ in millions, except per share amounts and percentages) (Unaudited) |
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Q4 2008 |
Q4 2007 | Change | ||||
| Gross written premium | $435.4 | $305.0 | 42.8% | |||
| Net earned premium | $478.6 | $423.7 | 13.0% | |||
| Net investment income | $10.3 | $80.3 | (87.2)% | |||
| Net income after tax | $21.8 | $135.2 | (83.9)% | |||
| Diluted operating earnings per share | $0.17 | $1.47 | (88.4)% | |||
| Net income annualized return on equity | 2.8% | 22.8% | ||||
| Annualized operating return on equity | 2.4% | 23.2% | ||||
| Combined ratio | 93.4% | 79.4% | ||||
| Diluted book value per share | $28.10 | $27.08 | 3.8% | |||
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Twelve Months 2008 Financial Highlights ($ in millions, except per share amounts and percentages) (Unaudited) |
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| 2008 | 2007 | Change | ||||
| Gross written premium | $2,001.7 | $1,818.5 | 10.1% | |||
| Net earned premium | $1,701.7 | $1,733.6 | (1.8)% | |||
| Net investment income | $139.2 | $299.0 | (53.4)% | |||
| Net income after tax | $103.8 | $489.0 | (78.8)% | |||
| Combined ratio | 95.6% | 83.0% | ||||
| Net income return on equity | 3.3% | 21.6% | ||||
| Operating return on equity | 5.4% | 21.1% | ||||
| Diluted operating earnings per share | $1.44 | $4.99 | (71.1)% | |||
Chris O’Kane, Chief Executive Officer said, “We enter 2009 with a strong capital position and expanded product range despite difficult underwriting and investment conditions in 2008. Global economic stress will continue to provide challenges, but current signs are that rates are firming across many sectors and business flows remain strong as customers respond to Aspen’s combination of specialist expertise and balance sheet strength.”
Business Segment Highlights
A summary of the operating highlights for each of Aspen’s four business segments is presented below.
Property Reinsurance
The property reinsurance segment recorded a combined ratio of 85.2% for the fourth quarter compared with 74.8% for the same period in 2007. The quarter was impacted by a $7.8 million increase in losses reported for Hurricanes Ike and Gustav. For the twelve-month period, as of December 31, 2008, taking into account losses from Hurricanes Ike and Gustav, this segment performed well and had a combined ratio of 91.1% compared to 72.6% in the comparative period in 2007. The current year has been impacted by losses of $128.3 million, net of reinstatement premiums, from Hurricanes Ike and Gustav. Gross written premium of $81.5 million for the fourth quarter of 2008 and $589.0 million for the twelve months are broadly in line with those for the equivalent periods in 2007.
Casualty Reinsurance
The combined ratio for the casualty reinsurance segment improved to 92.0% for the quarter from 96.1% in the fourth quarter of 2007. For the twelve-month period ending December 31, 2008, the combined ratio has improved to 92.0% compared to 94.6% in 2007. The improvement in the combined ratio for the year and the fourth quarter is due largely to favorable development on prior accident years. Gross written premium for the fourth quarter of 2008 was $97.7 million, an increase of $46.4 million over the same period in 2007 due mainly to favorable prior year premium adjustments and increased contribution from our U.S. and Bermudian operations. For the twelve-month period, gross written premium decreased by 3.5% to $416.3 million when compared to 2007.
International Insurance
The international insurance segment reported a combined ratio for the fourth quarter of 104.9% compared with 70.5% for the same period in 2007. The fourth quarter of 2008 has been impacted by reserve deterioration associated mainly with a 2007 loss in our specialty insurance lines and an $8.4 million increase in estimated hurricane losses. For the twelve months ended December 31, 2008, the combined ratio for the segment has increased to 99.8% compared to 80.7% for the same period in 2007 mainly as a result of losses associated with Hurricane Ike in our energy and specialty liability lines. The combined ratio has also been impacted by net reserve deterioration of $3.9 million for the full year 2008, compared with net reserve releases of $80.8 million for the same period in 2007. Gross written premium in the quarter increased by 52.7% to $228.8 million. For the twelve-month period, gross written premium increased to $867.8 million from $663.0 million in 2007.
U.S. Insurance
The combined ratio in the fourth quarter for the U.S. insurance segment has improved significantly to 59.0% compared with 77.0% in the fourth quarter of 2007 due mainly to favorable loss experience in the current quarter. The combined ratio for the twelve months was 105.8% with Hurricanes Ike and Gustav accounting for 14.9 percentage points of the increase in the combined ratio. This compares with 98.3% for the same period in 2007. Gross written premium increased by 12.8% when compared to the fourth quarter of 2007 and 5.0% for the twelve-month period.
Investment Performance
Net investment income for the quarter was $10.3 million compared with $80.3 million in the fourth quarter of 2007 due primarily to the performance of the funds of hedge funds. Funds of hedge funds have been materially impacted by the turmoil in the financial markets, with performance, measured by funds net asset value, down by 9.5% or $49.0 million in the quarter and by 17.3% or $97.3 million for the twelve months. In the prior year, funds of hedge funds returned 2.4% in the fourth quarter of 2007 and 11.1% for the twelve months of 2007. We have reduced our exposure to funds of hedge funds by redeeming approximately 40% of these investments on December 31, 2008 with the remaining funds of hedge funds accounting for 5.0% of our investment assets and less than 10.3% of total shareholders’ equity. Other-than-temporary impairment charges were $3.8 million for the fourth quarter of 2008 and $59.6 million for the year.
The book yield on the fixed income portfolio was 4.64% at the end of the fourth quarter of 2008, down from 5.05% at the end of 2007. Unrealized gains on the fixed income portfolio at the end of December 2008 were $67.4 million, an increase of $138.3 million from the end of the third quarter of 2008. This was also an increase of $25.7 million when compared with unrealized gains of $41.7 million at the end of 2007. The increase in unrealized gains during the year is due mainly to price increases in government, agency and agency mortgage-backed securities, in addition to declines in yields on corporate bonds.
The portfolio consists of high quality, diversified assets, with 32.2% of fixed maturities invested in U.S. Government and other foreign government bonds and 24.6% invested in agency-rated mortgage-backed securities. The average credit quality of the portfolio remains AAA with an average duration of 3.12 years.
Outlook for 2009
Many of the Company’s lines of business began re-pricing in January 2009 and the Company expects this to accelerate, a least in its property, marine and energy lines throughout the year. The Company believes its investment portfolio is well positioned to benefit from any recovery in investment markets. Nevertheless, recession-related risks are real and the Company will be trading with the right level of caution in what could be another turbulent year for the global economy. The Company anticipates, for 2009, total gross written premium of $2 billion +/- 5%, premium ceded of 10% to 12% of gross earned premium, a combined ratio in the range of 90% to 96%, a tax rate of 13% to 16% and a cat-load of $170 million assuming normal loss experience.
Earnings conference call
Aspen will hold a conference call to discuss its financial results on Thursday, February 5, 2009 at 8:30 a.m. (Eastern Time).
CONFERENCE CALL PARTICIPATION DETAILS – February 5, 2009 at 8:30 a.m. (EST)
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Participant Dial-In Numbers: |
+1 (888) 459-5609 (US Toll Free) |
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Conference ID: |
78437042 |
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Please call to register at least 10 minutes before the conference call begins. |
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The conference call will be webcast live in the ‘presentations’ section of the Investor Relations page of Aspen’s website, which is located at www.aspen.bm. The earnings press release and a detailed financial supplement will be posted to the website, as well as a brief slide presentation which may be used for reference during the earnings call.
REPLAY DETAILS
A replay of the call will be available for 14 days via telephone and Internet starting two hours following the end of the live call.
| Replay Access: | +1 (800) 642-1687 (US Toll Free) | |||
| +1 (706) 645-9291 (International) | ||||
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Aspen Insurance Holdings Limited Summary Consolidated Balance Sheet ($ in millions, except per share data) (Unaudited) |
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As at December 31, 2008 |
As at December 31, 2007 |
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| ASSETS | ||||||
| Total investments | 4,944.9 | 5,227.3 | ||||
| Cash and cash equivalents | 809.1 | 651.4 | ||||
| Reinsurance recoverable | 329.6 | 381.7 | ||||
| Premiums receivable | 677.5 | 575.6 | ||||
| Other assets | 527.7 | 365.3 | ||||
| Total assets | 7,288.8 | 7,201.3 | ||||
| LIABILITIES | ||||||
| Losses and loss adjustment expenses | 3,070.3 | 2,946.0 | ||||
| Unearned premiums | 810.7 | 757.6 | ||||
| Other payables | 379.2 | 430.6 | ||||
| Long-term debt | 249.5 | 249.5 | ||||
| Total liabilities | 4,509.7 | 4,383.7 | ||||
| SHAREHOLDERS’ EQUITY | ||||||
| Total shareholders’ equity | 2,779.1 | 2,817.6 | ||||
| Total liabilities and shareholders’ equity | 7,288.8 | 7,201.3 | ||||
| Tangible book value per share | 28.85 | 27.95 | ||||
| Diluted book value per share (treasury stock method) | 28.10 | 27.08 | ||||
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Aspen Insurance Holdings Limited Summary Consolidated Statements of Income ($ in millions, except share, per share data and ratios) (Unaudited) |
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Three Months Ended December 31, 2008 |
Three Months Ended December 31, 2007 |
Twelve Months Ended December 31, 2008 |
Twelve Months Ended December 31, 2007 |
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| UNDERWRITING REVENUES | ||||||||||
| Gross written premiums | 435.4 | 305.0 | 2,001.7 | 1,818.5 | ||||||
| Premiums ceded | (29.3) | (26.0) | (166.2) | (217.1) | ||||||
| Net written premiums | 406.1 | 279.0 | 1,835.5 | 1,601.4 | ||||||
| Change in unearned premiums | ||||||||||