HAMILTON, Bermuda, Sept. 30, 2021 (GLOBE NEWSWIRE) -- American Overseas Group Limited (BSX: AORE.BH) (Pink Sheets: AOREF.PK) (“AOG” or the “Company”) today reported consolidated net loss available to common shareholders of $3.0 million, or $63.75 per diluted share, for the three months ended June 30, 2021. This compares to consolidated net loss available to common shareholders of $1.4 million, or $30.97 per diluted share, for the three months ended June 30, 2020. Book value per weighted share at June 30, 2021 was $1,003.21 a decline from the book value per weighted share of $1,112.19 at June 30, 2020.  

For the three months ended June 30, 2021, the Company had an operating loss of $2.4 million, or $51.26 per diluted share, compared to an operating loss of $20.7 million, or $443.09 per diluted share for the three months ended June 30, 2020. The financial guaranty segment ended in April of 2020 due to a commutation of the remaining portfolio of financial guaranty reinsurance business it had assumed from Assured Guaranty Municipal Corp (“AGMC”). The aggregate outstanding par value of the reinsurance portfolio commuted was $345.0 million.

For the three months ended June 30, net earned property and casualty premiums increased $1.5 million from $4.1 million a year ago to $5.6 million, driven by an increase in existing and new programs. Fee income increased 28.6% from $2.1 million to $2.7 million driven by an increase in gross written premiums year over year of $27.8 million, moving from $86.9 million to $114.7 million. Quarterly direct written premiums were positively impacted by continued expansion of new programs in Texas and other key states as well as overall economic recovery, causing volume increases in the personal auto market. Loss and loss adjustment expenses as a percentage of earned premium increased from 51.2% to 66.0%.

For the three months ended June 30, operating expenses increased $2.1 million from $2.8 million to $4.9 million primarily due to a one-time recognition of items previously held as a receivable against a personal guarantee contract. This contract is associated with a managing general agency program that was discontinued in the first quarter of 2020. Each quarter, the Company evaluates the collectability of the receivable, and has determined there to be a significant risk to collectability in the near term. The Company no longer holds a receivable balance for the matter in question, but continues to vigorously pursue its interests to recover expenses owed under the personal guarantee contract.

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

info@aoreltd.com

American Overseas Group Limited
Consolidated Balance Sheets
(unaudited)
As at June 30, 2021 and December 31, 2020
(dollars in thousands)
    
    
 June 30, 2021 December 31, 2020
Assets   
Investments:   
Fixed-maturity securities held as available for sale, at fair value$64,496  $72,642 
Equity investments held as available for sale, at fair value 4,626   4,143 
Cash and cash equivalents 26,940   24,254 
Restricted cash 2,160   548 
Accrued investment income 281   355 
Premiums receivable 83,127   73,073 
Deferred insurance premiums 114,583   101,843 
Reinsurance balances receivable, net 199,565   194,914 
Deferred policy acquisition costs 4,916   3,590 
Intangible assets 4,800   4,800 
Goodwill 33,050   33,050 
Other assets 3,167   3,767 
Total Assets$541,711  $516,979 
    
    
Liabilities and Equity   
Liabilities:   
Loss and loss expense reserve$198,810  $192,943 
Deferred commission income 3,283   2,482 
Unearned premiums 119,370   105,678 
Ceded premium payable 77,796   71,989 
Payable to general agents 7,165   4,331 
Funds withheld 60,660   64,980 
Accounts payable and accrued liabilities 10,226   7,922 
Notes payable 16,521   16,521 
Non-owned interest in VIE 300   300 
Interest payable 450   451 
Total Liabilities 494,581   467,597 
    
Shareholders' Equity:   
Common shares 4,698   4,698 
Additional paid-in capital 189,179   189,151 
Accumulated other comprehensive income 1,700   1,962 
Retained deficit (154,500)  (152,482)
Total Shareholders' Equity 41,077   43,329 
Non-controlling interest of preferred shares of subsidiaries 6,053   6,053 
Total Equity 47,130   49,382 
    
    
Total Liabilities and Equity$541,711  $516,979 
    

See Notes to June 30, 2021 Consolidated Financial Statements available on American Overseas Group Ltd. Website at www.aoreltd.com

American Overseas Group Limited
Consolidated Statements of Operations
(unaudited)
(dollars in thousands, except share and per share amounts)
        
        
 Three months ended June, Six months ended June,
  2021  2020  2021   2020 
Revenues       
        
Net premiums earned$5,552  $610  $10,537  $4,438 
Fee income 2,736   2,084   6,022   5,251 
        
Net investment income 65   92   162   592 
Net realized gains on investments (2)  1,294   36   1,500 
Fair value adjustment -   2,635   -   2,077 
Other income 44   -   77   - 
        
Total revenues  8,395     6,715     16,834     13,860  
        
Expenses       
Losses and loss adjustment expenses 3,667   4,107   6,391   5,811 
Acquisition expenses 1,799   956   3,575   2,239 
Operating expenses 4,888   2,833   7,373   6,690 
Other expense -   (238)  -   284 
Interest expense 451   451   902   902 
        
Total expenses  10,805     8,109     18,241     15,926  
        
        
Net (loss) available to common shareholders$ (2,410) $ (1,394) $ (1,407) $ (2,066)
Income tax (expense) -   (52)  (26)  (216)
        
Net (loss) before dividends (2,410)  (1,446)  (1,433)  (2,282)
Dividends on preference shares of subsidiary (585)  -   (585)  - 
        
        
Net (loss) available to common shareholders$ (2,995) $ (1,446) $ (2,018) $ (2,282)
        
        
Net (loss) per common share:       
Basic$(63.75) $(31.18) $(42.96) $(49.29)
Diluted (63.75)  (30.97)  (42.96)  (48.96)
        
Weighted-average number of common shares outstanding:       
Basic 46,979   46,379   46,979   46,295 
Diluted 46,979   46,689   46,979   46,605 
        

See Notes to June 30, 2021 Consolidated Financial Statements available on American Overseas Group Ltd. Website at www.aoreltd.com

AMERICAN OVERSEAS GROUP LTD.    
NET INCOME AND OPERATING INCOME BY SEGMENT    
       
       
(dollars in thousands)Three months ended June 30, 2021
 Net Income Available to Common ShareholdersNet Realized (Gain)/Loss on Sales of InvestmentsNet Change in Fair Value of Credit DerivativesFair Value AdjustmentsRestructuring ChargesOperating Income
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)
       
Financial guaranty:      
       
Net premiums earned -      - 
Net change in fair value of credit derivatives -      - 
Losses and loss adjustment expenses -      - 
Acquisition expenses -      - 
Operating expenses -      - 
Financial guaranty -  -  - -  - - 
       
Corporate and Investing      
       
Net investment income 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)
       
       
(dollars in thousands)Three months ended June 30, 2020
 Net Income Available to Common ShareholdersNet Realized (Gain)/Loss on Sales of InvestmentsNet Change in Fair Value of Credit DerivativesFair Value AdjustmentsRestructuring ChargesOperating Income
Property and casualty:      
       
Net premiums earned$4,120     $4,120 
Losses and loss adjustment expenses (2,111)     (2,111)
Acquisition expenses (1,085)     (1,085)
Property/Casualty Underwriting Income 924      923 
       
Fee income 2,084      2,084 
Operating expenses (2,483)     (2,483)
Income tax (53)     (53)
Property and casualty 472  -  - -  - 472 
       
Financial guaranty:      
       
Net premiums earned (3,510)   3,510   - 
Net change in fair value of credit derivatives -   -   - 
Losses and loss adjustment expenses (1,995)   (18,657)  (20,652)
Acquisition expenses 129    (129)  - 
Operating expenses 37      37 
Financial guaranty (5,339) -  - (15,276) - (20,615)
       
Corporate and Investing      
       
Net investment income 92      92 
Net realized gain/(loss) 1,293  (20,793)  19,500   - 
Fair value adjustment 2,635    (2,635)  - 
Operating expenses (386)     (386)
Interest expense (451)     (451)
Other income, net of other expense 238      238 
Corporate and investing 3,421  (20,793) - 16,865  - (507)
       
Group total$(1,446)$(20,793)$-$1,589 $-$(20,650)
                 


AMERICAN OVERSEAS GROUP LTD.     
NET INCOME AND OPERATING INCOME BY SEGMENT     
       
       
(dollars in thousands)Six months ended June 30, 2021
 Net Income Available to Common ShareholdersNet Realized (Gain)/Loss on Sales of InvestmentsNet Change in Fair Value of Credit DerivativesFair Value AdjustmentsRestructuring ChargesOperating Income
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)
       
Financial guaranty:      
       
Net premiums earned -      - 
Net change in fair value of credit derivatives -      - 
Losses and loss adjustment expenses -      - 
Acquisition expenses -      - 
Operating expenses -      - 
Financial guaranty -  -  -  -  -  - 
       
Corporate and Investing      
       
Net investment income 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)
       
       
(dollars in thousands)Six months ended June 30, 2020
 Net Income Available to Common ShareholdersNet Realized (Gain)/Loss on Sales of InvestmentsNet Change in Fair Value of Credit DerivativesFair Value AdjustmentsRestructuring ChargesOperating Income
Property and casualty:      
       
Net premiums earned$7,951     $7,951 
Losses and loss adjustment expenses (4,234)     (4,234)
Acquisition expenses (2,370)     (2,370)
Property/Casualty Underwriting Income 1,347      1,347 
       
Fee income 5,251      5,251 
Operating expenses (5,625)    362  (5,263)
Income tax (217)    (76) (293)
Property and casualty 756  -  -  -  286  1,042 
       
Financial guaranty:      
       
Net premiums earned (3,513)   3,703   190 
Net change in fair value of credit derivatives 2   (2)   - 
Losses and loss adjustment expenses (1,577)   (19,546)  (21,123)
Acquisition expenses 131    (153)  (22)
Operating expenses (67)     (67)
Financial guaranty (5,024) -  (2) (15,996) -  (21,022)
       
Corporate and Investing      
       
Net investment income 592      592 
Net realized gain/(loss) 1,500  (21,000)  19,500   - 
Fair value adjustment 2,077    (2,077)  - 
Operating expenses (998)     (998)
Interest expense (902)     (902)
Other income, net of other expense (283)     (283)
Corporate and investing 1,986  (21,000) -  17,423  -  (1,591)
       
Group total$(2,282)$(21,000)$(2)$1,427 $286 $(21,571)