COLUMBUS, Ohio, Aug. 1, 2007 (PRIME NEWSWIRE) -- ProCentury Corporation (Nasdaq:PROS), a specialty property and casualty insurance holding company, reported net income for the three months ended June 30, 2007 of $6.5 million, or $0.48 per diluted share, compared to net income of $5.0 million, or $0.38 per diluted share, for the same period in 2006. Net income for the six months ended June 30, 2007 was $11.8 million, or $0.88 per diluted share, compared to net income of $9.6 million, or $0.73 per diluted share, for the six months ended June 30, 2006.
Highlights for the quarter ended June 30, 2007 include:
* A 28.7% increase in net income for the second quarter of 2007 compared to the second quarter of 2006; * A combined ratio of 92.0%; * Book value per share of $11.12 at June 30, 2007 compared to $10.75 at December 31, 2006; and * An increase in gross written premium of 3.2% for the second quarter of 2007 compared to the second quarter of 2006.
Edward Feighan, ProCentury's Chief Executive Officer said, "In a challenging market, we generated premium growth, but even more importantly, we are pleased with our bottom line results. Our continued focus on profitability allowed us to post net income of $0.48 per diluted share for the quarter on an increase of 28.7% in net income for the second quarter of 2007 compared to the second quarter of 2006. Additionally, book value, at $11.12 per share, continues to grow at an acceptable pace."
Results for the Second Quarter 2007
For the second quarter ended June 30, 2007, ProCentury's net income increased by 28.7% to $6.5 million, or $0.48 per diluted share, compared to net income of $5.0 million, or $0.38 per diluted share for the same period in 2006.
The combined ratio was 92.0% for the second quarter of 2007 compared to 94.5% for the second quarter of 2006. The second quarter 2007 combined ratio includes a loss ratio of 58.4% and an expense ratio of 33.6%. This compares to a loss ratio of 62.0% and expense ratio of 32.5% for the second quarter of 2006.
Gross premiums written for the second quarter of 2007 increased by 3.2% to $67.8 million compared to $65.7 million for the same period in 2006. Premiums earned were $56.7 million in the second quarter of 2007, an increase of 7.9% compared to $52.6 million in the second quarter of 2006. Investment income for the second quarter of 2007 increased by 17.1% to $5.5 million compared to $4.7 million in the second quarter of 2006.
During the second quarter of 2007, the Company explored the possibility of a public equity offering to provide additional capital for potential acquisitions, the partial repayment of debt, and to permit shares held by Stonehenge Opportunity Fund an affiliate of the Company, to be sold in a managed distribution. The Company and Stonehenge determined not to proceed in the near term with an offering because of unsatisfactory market conditions.
On June 15, 2007, the Company filed an acquisition shelf registration statement on Form S-4 with the Securities and Exchange Commission to register common shares that may be issued by the Company from time to time in connection with acquisitions.
Results for the Six Months Ended June 30, 2007
For the six months ended June 30, 2007, ProCentury's net income was $11.8 million, or $0.88 per diluted share, an increase of 23.1% from net income of $9.6 million or, $0.73 per diluted share, for the same period in 2006.
The combined ratio was 93.2% for the first six months of 2007 compared to 94.7% for the same period in 2006. The 2007 combined ratio for the first six months of the year consists of a loss ratio of 60.3% and an expense ratio of 32.9%. These compare to a loss ratio of 62.0% and an expense ratio of 32.7% for the same period in 2006.
For the six months ended June 30, 2007, gross premiums written were $126.2 million, an increase of 2.0% from $123.7 million for the same period in 2006. Premiums earned were $111.1 million for the first six months of 2007, up 9.4% compared to $101.6 million for the same period last year. Investment income for the six months ended June 30, 2007 was $10.9 million, an increase of 19.9% from $9.1 million reported for the first six months of 2006.
Future Outlook
The following forward-looking statement is based on current expectations and actual results may differ materially as explained more completely in the note on forward-looking statements below.
We continue to see softening market conditions, as well as troubling competitive pricing and terms. These circumstances make it very difficult to give specific growth guidance for the balance of 2007. Nevertheless, we continue to maintain our expectation that our core E&S book will continue to be stable, with potentially modest growth over last year. We believe that this year's growth, while modest, will result from continued focus on our new lines of business, including our new marine division, environmental consultants and contractors, Alternative Risk Transfer offerings, and our Program Unit.
Conference Call
ProCentury's 2007 second quarter results will be discussed by management in more detail on Thursday, August 2, 2007 at 10:00 a.m. EDT.
To listen to the call, please dial 1-877-407-0782, approximately five minutes prior to the start of the call. Additionally, the conference call will be broadcast live over the Internet and can be accessed by all interested parties on the Company's website at http://www.procentury.com For those who cannot listen to the live conference call, a replay will be available from approximately 1:00 p.m. EDT on August 2, 2007 until midnight on August 9, 2007. The access number for the replay is 1-877-660-6853. The account number is 286 and the conference ID is 249285. The replay will also be accessible through the company's website at http://www.procentury.com.
About ProCentury Corporation
ProCentury Corporation (Nasdaq:PROS) is a specialty property and casualty insurance holding company. Its primary subsidiary, Century Surety Company, underwrites property and casualty insurance for small- and mid-sized businesses. Century Surety Company primarily writes excess and surplus lines insurance and markets its products through a select network of general agents.
The ProCentury Corporation logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=3677
NOTE ON FORWARD-LOOKING STATEMENTS
Statements in this press release that are not historical statements are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are derived from information that we currently have and assumptions that we make and may be identified by words such as "believes," "anticipates," "expects," "plans," "should," "estimates" and similar expressions. Our forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those stated or implied in our forward-looking statements, including but not limited to: 1) risks inherent in establishing loss and loss adjustment expense reserves; 2) uncertainties related to the ratings of our insurance subsidiary; 3) uncertainties related to governmental and regulatory policies; 4) uncertainties relating to the cyclical nature of our business; 5) changes in our relationships with, and the capacity of, our general agents; and 6) the risk that our reinsurers may not be able to fulfill their obligations to us. You are cautioned not to place undue reliance on forward-looking statements, which are made only as of the date of this press release. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. For additional disclosure regarding potential risks, please refer to documents we file with the Securities and Exchange Commission.
PROCENTURY CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
(dollars in thousands, except per share data)
Quarter Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
2007 2006 2007 2006
---------- ---------- ---------- ----------
Gross premiums
written $ 67,784 65,680 126,239 123,709
Net premiums written $ 58,584 58,489 108,644 108,921
Premiums earned $ 56,697 52,565 111,085 101,567
Net investment income 5,493 4,689 10,926 9,115
Net realized investment
losses (37) (62) (238) (41)
Other income 97 118 220 252
---------- ---------- ---------- ----------
Total revenues 62,250 57,130 121,993 110,893
---------- ---------- ---------- ----------
Losses and loss
expenses 33,124 32,575 67,001 63,014
Amortization of
deferred policy
acquisition costs 14,689 12,896 28,388 24,962
Other operating
expenses 4,353 4,193 8,204 8,250
Interest expense 668 567 1,354 1,110
---------- ---------- ---------- ----------
Total expenses 52,834 50,231 104,947 97,336
---------- ---------- ---------- ----------
Income before
income taxes 9,416 7,079 17,046 13,557
Income tax expense 2,948 2,054 5,199 3,932
---------- ---------- ---------- ----------
Net income $ 6,468 5,025 11,847 9,625
========== ========== ========== ==========
Net income per share:
Basic $ 0.49 0.38 0.90 0.73
========== ========== ========== ==========
Diluted $ 0.48 0.38 0.88 0.73
========== ========== ========== ==========
Weighted average of
shares outstanding
- basic 13,232,156 13,114,535 13,229,792 13,107,620
========== ========== ========== ==========
Weighted average of
shares outstanding
- diluted 13,419,481 13,247,528 13,420,544 13,224,050
========== ========== ========== ==========
Loss and loss expense
ratio 58.4% 62.0% 60.3% 62.0%
Expense ratio 33.6% 32.5% 32.9% 32.7%
---------- ---------- ---------- ----------
Combined ratio 92.0% 94.5% 93.2% 94.7%
========== ========== ========== ==========
PROCENTURY CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(dollars in thousands, except per share data)
June 30, 2007 December 31,
(unaudited) 2006
---------- ----------
Assets
Investments $ 445,740 428,102
Cash 10,709 7,960
Premiums in course of collection, net 39,937 37,428
Deferred policy acquisition costs 26,782 26,915
Prepaid reinsurance premiums 15,038 14,051
Reinsurance recoverable on paid
and unpaid losses, net 43,153 43,628
Other assets 26,599 20,964
---------- ----------
Total assets $ 607,958 579,048
========== ==========
Liabilities and
Shareholders' Equity
Loss and loss expense reserves $ 266,132 250,672
Unearned premiums 126,166 127,620
Long term debt 25,000 25,000
Other liabilities 42,120 33,368
---------- ----------
Total liabilities 459,418 436,660
---------- ----------
Shareholders' equity:
Common shares, without par value -- --
Additional paid-in capital 102,674 100,954
Retained earnings 54,608 43,830
Accumulated other comprehensive
loss, net of taxes (8,742) (2,396)
---------- ----------
Total shareholders' equity 148,540 142,388
---------- ----------
Total liabilities and
shareholders' equity $ 607,958 579,048
========== ==========
Book value per share $ 11.12 10.75
========== ==========
Number of common shares outstanding 13,358,867 13,248,323
========== ==========