Results of Operations for the Three Months Ended June 30, 2022 – American Overseas Group Limited Announces Net Loss Of $0.3 Million and Operating Loss of $0.5 Million For the Three Months Ended June 30, 2022

Sep 30th, 2022 16:05 EST

HAMILTON, Bermuda, Sept. 30, 2022 (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 $0.3 million, or $6.28 per diluted share, for the three months ended June 30, 2022. This compares to consolidated net loss available to common shareholders of $3.0 million, or $63.75 per diluted share, for the three months ended June 30, 2021. Book value per weighted share at June 30, 2022 was $775.49, a decline from the book value per weighted share of $1,003.21 at June 30, 2021.

For the three months ended June 30, 2022, the Company had an operating loss of $0.5 million, or $11.58 per diluted share, compared to operating loss of $2.4 million, or $51.26 per diluted share for the three months ended June 30, 2021.

For the three months ended June 30, 2022, net earned property and casualty premiums decreased $0.4 million from $5.5 million a year ago to $5.1 million. Fee income remained constant at $2.7 million while gross written premiums increased $1.9 million, moving from $114.7 million to $116.6 million. Quarterly direct written premiums were positively impacted by rate increases in current business. Loss and loss adjustment expenses as a percentage of earned premium increased from 66.1% to 71.4% as loss costs continued to increase in 2022 due to both frequency and severity.

For the three months ended June 30, 2022, operating expenses decreased $2.1 million from $4.9 million to $2.8 million due to a one-time recognition in the amount of $1.2 million in the second quarter of 2021 of items previously held as a receivable against a personal guarantee contract and $0.9 million expense in 2021 year taxes, licenses and fees associated with program business written in Louisiana that was related to business written in the prior year.

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

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

[email protected]

American Overseas Group Limited
Consolidated Balance Sheets
(unaudited)
As at June 30, 2022 and December 31, 2021
      (dollars in thousands)     
            
            
        June 30, 2022  December 31, 2021
Assets        
            
  Investments:      
   Fixed-maturity securities held as available for sale, at fair value  $109,497   $102,678 
   Equity investments held as available for sale, at fair value   2,619    3,781 
  Cash and cash equivalents   25,146    31,908 
  Restricted cash   2,232    4,440 
  Accrued investment income   417    553 
  Premiums receivable   89,048    76,626 
  Deferred insurance premiums   124,521    108,904 
  Reinsurance balances receivable, net   228,444    223,982 
  Deferred policy acquisition costs   4,424    4,588 
  Intangible assets   4,800    4,800 
  Goodwill   33,050    33,050 
  Other assets   4,491    3,166 
   Total Assets  $628,690   $598,476 
            
            
Liabilities and Equity      
            
 Liabilities:      
  Loss and loss expense reserve  $220,290   $215,642 
  Deferred commission income   3,037    3,210 
  Unearned premiums   129,428    113,423 
  Ceded premium payable   94,424    82,059 
  Payable to general agents   5,783    7,121 
  Funds withheld   107,708    104,257 
  Accounts payable and accrued liabilities   14,319    12,420 
  Notes payable   16,521    16,521 
  Non-owned interest in VIE   300    300 
  Interest payable   451    451 
   Total Liabilities   592,259    555,404 
            
 Shareholders' Equity:      
  Common shares   4,698    4,698 
  Additional paid-in capital   189,179    189,179 
  Accumulated other comprehensive (loss) income   (5,328)   1,124 
  Retained deficit   (157,570)   (157,982)
   Total Shareholders' Equity   30,979    37,019 
  Non-controlling interest of preferred shares of subsidiaries   5,453    6,053 
  Total Equity   36,431    43,072 
            
            
   Total Liabilities and Equity  $628,690   $598,476 
            
  See Notes to June 30, 2022 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 June 30, Six Months ended June 30,
          2022   2021   2022  2021 
  Revenues          
                
   Net premiums earned  $5,093  $5,552  $10,181 $10,537 
   Fee income   2,709   2,736   6,004  6,022 
                
   Net investment (expense) income   101   65   32  162 
   Net realized (losses) gains on investments   248   (2)  237  36 
   Other income   55   44   896  77 
                
                
    Total revenues   8,206   8,395   17,349  16,834 
                
  Expenses          
   Losses and loss adjustment expenses   3,639   3,667   6,904  6,391 
   Acquisition expenses   1,653   1,799   3,351  3,575 
   Operating expenses   2,758   4,888   5,779  7,373 
   Other expense   -     -  - 
   Interest expense   451   451   902  902 
                
    Total expenses   8,501   10,805   16,936  18,241 
                
                
 Net income available to common shareholders  $(295) $(2,410) $413 $(1,407)
   Income tax (expense)   -     -  (26)
                
 Net income before dividends   (295)  (2,410)  413  (1,433)
   Dividends on preference shares of subsidiary   -   (585)  -  (585)
                
                
 Net income available to common shareholders  $(295) $(2,995) $413 $(2,018)
                
                
  Net income per common share:         
  Basic    $(6.28) $(63.75) $8.79 $(42.96)
  Diluted     (6.28)  (63.75)  8.79  (42.96)
                
  Weighted-average number of common shares outstanding:         
  Basic     46,979   46,979   46,979  46,979 
  Diluted     46,979   46,979   46,979  46,979 
                
See Notes to June 30, 2022 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 June 30, 2022
 Net Income Available to Common ShareholdersNet Realized (Gain)/Loss on Sales of InvestmentsOperating Income/(Loss)
Property and casualty:   
    
Net premiums earned$5,093   5,093 
Losses and loss adjustment expenses (3,639)  (3,639)
Acquisition expenses (1,653)  (1,653)
Property/Casualty Underwriting Income (199)  (199)
    
Fee income 2,709   2,709 
Other income, net of other expense -   - 
Operating expenses (2,503)  (2,503)
Income tax -   - 
Property and casualty 7  -  7 
    
Corporate and Investing   
    
Net investment income 101   101 
Net realized gain/(loss) 248  (248) - 
Operating expenses (255)  (255)
Interest expense (451)  (451)
Other income, net of other expense 54   54 
Corporate and investing (303) (248) (551)
    
Group total$(296)$(248) (544)
    
AMERICAN OVERSEAS GROUP LTD.   
    
NET INCOME AND OPERATING INCOME BY SEGMENT  
    
    
(dollars in thousands)Three months ended June 30, 2021
 Net Income Available to Common ShareholdersNet Realized (Gain)/Loss on Sales of InvestmentsOperating (Loss)
Property and casualty:   
    
Net premiums earned$5,552  $5,552 
Losses and loss adjustment expenses (3,667)  (3,667)
Acquisition expenses (1,799)  (1,799)
Property/Casualty Underwriting Income 86   86 
    
Fee income 2,736   2,736 
Operating expenses (4,468)  (4,468)
Income tax -   - 
Property and casualty (1,646) -  (1,646)
    
Corporate and Investing   
    
Net investment income 65   65 
Net realized gain/(loss) (2) 2  - 
Operating expenses (420)  (420)
Interest expense (451)  (451)
Other income, net of other expense 44   44 
Corporate and investing (764) 2  (762)
    
Group total$(2,410)$2 $(2,408)
    

AMERICAN OVERSEAS GROUP LTD.   
NET INCOME AND OPERATING INCOME BY SEGMENT 
    
    
(dollars in thousands)Six months ended June 30, 2022
 Net IncomeAvailable toCommonShareholdersNet Realized(Gain)/Loss on Sales ofInvestmentsOperatingIncome
Property and casualty:   
    
Net premiums earned$10,181  $10,181 
Losses and loss adjustment expenses (6,904)  (6,904)
Acquisition expenses (3,351)  (3,351)
Property/Casualty Underwriting Income (74)  (74)
    
Fee income 6,004   6,004 
Other income, net of other expense 804   804 
Operating expenses (5,232)  (5,232)
Income tax -   - 
Property and casualty 1,502  -  1,502 
    
Corporate and Investing   
    
Net investment income 32   32 
Net realized gain/(loss) 237  (237) - 
Operating expenses (547)  (547)
Interest expense (902)  (902)
Other income, net of other expense 91   91 
Corporate and investing (1,089) (237) (1,326)
    
Group total$413 $(237)$176 
    
AMERICAN OVERSEAS GROUP LTD.   
    
NET INCOME AND OPERATING INCOME BY SEGMENT 
    
    
(dollars in thousands)Six months ended June 30, 2021
 Net IncomeAvailable toCommonShareholdersNet Realized(Gain)/Loss on Salesof InvestmentsOperating(Loss)
Property and casualty:   
    
Net premiums earned$10,537  $10,537 
Losses and loss adjustment expenses (6,391)  (6,391)
Acquisition expenses (3,575)  (3,575)
Property/Casualty Underwriting Income 571   571 
    
Fee income 6,022   6,022 
Operating expenses (6,745)  (6,745)
Income tax (26)  (26)
Property and casualty (178) -  (178)
    
Corporate and Investing   
    
Net investment income 162   162 
Net realized gain/(loss) 36  (36) - 
Operating expenses (628)  (628)
Interest expense (902)  (902)
Other income, net of other expense 77   77 
Corporate and investing (1,255) (36) (1,291)
    
Group total$(1,433)$(36)$(1,469)
    

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