CRM Holdings, Ltd. News
CRM Holdings, Ltd. Announces First Quarter Results
Three Months Ending
During the first quarter of 2008, net income increased 71.7% to
Net earned premiums from primary insurance and reinsurance increased 41.8% to
Fee-based management services revenues declined to
Investment income during the quarter declined to
Total expenses increased to
The combined ratio (total losses and loss adjustment, underwriting, acquisition and general expenses as a percentage of net premiums earned) for
"The first quarter represents a positive start to the year in our risk based businesses. We are growing profitably in
Segment Results
Primary Insurance and Reinsurance Segments
In the primary insurance segment, Majestic's revenues (consisting of premiums and investment income) were
In the first quarter of 2008, revenues in the reinsurance segment increased 135% to
Fee-based management services business
Fee-based management services revenues in the first quarter of 2008 were
Outlook
The Company continues to see the opportunity to build on its risk-based and fee-based services in
With regard to profit expectations for 2008, the Company believes that growth in primary insurance, coupled with maintenance of the
Conference Call
The company will host a conference call at 9:00 a.m. EDT on Wednesday, May 7, 2008, to discuss earnings for the first quarter ended March 31, 2008. To participate in the event by telephone, please dial 877-545-1409 five to 10 minutes prior to the start time (to allow time for registration) and reference passcode 4259465. International callers should dial 719-325-4845. The conference call will be broadcast live over the Internet and can be accessed by all interested parties at CRM's Web site at http://www.CRMHoldingsLtd.bm/events.cfm. To listen to the call please go to this Web site at least 15 minutes prior to the start of the call to register, download, and install any necessary audio software. For those unable to participate during the live webcast, an audio replay of the conference call will be archived on CRM's Web site, at http://www.CRMHoldingsLtd.bm/events.cfm, for 90 days. A digital replay of the call will also be available on Wednesday, May 7, at approximately 12:00 noon EDT through Wednesday, May 14, at midnight EDT. Dial 888-203-1112 and enter the conference ID number 4259465. International callers should dial 719-457-0820 and enter the same conference ID number.
About CRM Holdings, Ltd.
CRM Holdings, Ltd. is a provider of workers' compensation insurance products. Its main business activities include underwriting primary workers' compensation policies, underwriting workers' compensation reinsurance and excess insurance policies, and providing fee-based management and other services to self-insured entities. The Company provides primary workers' compensation insurance to employers in
CRMH-E Contact Information: Mark Collinson CCG Investor Relations 10960 Wilshire Blvd., Ste. 2050 Los Angeles, CA 90024 (310) 231-8600 ext. 117
Forward-Looking statements
This press release contains forward-looking statements within the meaning of federal securities law, including statements concerning plans, objectives, goals, strategies, projections of future events or performance and underlying assumptions (many of which are based, in turn, upon further assumptions). These statements are based on our current expectations and projections about future events and are identified by terminology such as "may," "will," "should," "expect," "scheduled," "plan," "seek," "intend," "anticipate," "believe," "estimate," "aim," "potential," or "continue" or the negative of those terms or other comparable terminology.
All forward-looking statements involve risks and uncertainties. Although we believe that our plans, intentions and expectations are reasonable, we may not achieve our plans, intentions or expectations. There are or may be important factors that could cause actual results to differ materially from the forward-looking statements we make in this document. Such risks and uncertainties are discussed in the Company's Form 10-K for the year ended
— The cyclical nature of the insurance and reinsurance industry; — Premium rates; — Investment results; — Regulatory changes; — The estimation of loss reserves and loss reserve development; — Reinsurance may be unavailable on acceptable terms, and we may be unable to collect reinsurance; — The occurrence and effects of wars and acts of terrorism; — The effects of competition; — The possibility that the outcome of any litigation or arbitration proceeding is unfavorable; — Failure to retain key personnel; — Economic downturns; and — Natural disasters.
These risks and others could cause actual results to differ materially from those expressed in any forward-looking statements made. The Company undertakes no obligation to update publicly or revise any forward-looking statements made.
(Financial tables and contact information follow) Table 1 CRM Holdings, Ltd. Consolidated Balance Sheets (Unaudited) March December 31, 31, 2008 2007 (Dollars in thousands) Assets Investments: Fixed-maturity securities, available-for-sale $245,669 $242,969 (amortized cost $241,207 and $240,467) Equity securities, available-for-sale 20,120 22,374 (cost $19,610 and $21,704) Short-term investments 90 786 Investment in unconsolidated subsidiary 1,083 1,083 Total investments 266,962 267,212 Cash and cash equivalents 37,333 33,477 Cash and cash equivalents, restricted 811 809 Accrued interest receivable 2,819 2,766 Premiums receivable, net 16,373 13,151 Reinsurance recoverable 45,041 38,584 Accounts receivable 4,439 5,000 Deferred policy acquisition costs 2,140 623 Net deferred tax asset 6,343 7,473 Goodwill and other intangible assets 3,476 3,521 Prepaid expenses 1,778 2,233 Other assets 4,438 4,546 Total assets $391,953 $379,395 Liabilities and shareholders' equity Reserve for losses and loss adjustment expenses $196,308 $188,848 Reinsurance payable 4,407 5,001 Unearned premiums 10,768 8,853 Unearned management fees and commissions 159 261 Long-term debt and other secured borrowings 44,083 44,084 Accrued expenses 22,363 24,810 Total liabilities 278,088 271,857 Common shares Authorized 50 billion shares; $.01 par value; 16.0 million common shares issued and outstanding 160 160 0.4 million Class B shares issued and outstanding 4 4 Additional paid-in capital 68,342 68,192 Retained earnings 42,090 37,115 Accumulated other comprehensive gain, net of tax 3,269 2,067 Total shareholders' equity 113,865 107,538 Total liabilities and shareholders' equity $391,953 $379,395 Table 2 CRM Holdings, Ltd. Consolidated Statements of Income (Unaudited) Three Months Ended March 31, 2008 2007 (Amounts in thousands, except per share data) Revenues Net premiums earned $32,352 $22,822 Fee-based management services 3,752 9,513 Investment income 1,642 2,317 Total revenues 37,746 34,652 Expenses Losses and loss adjustment expenses 13,963 13,010 Fees paid to general agents and brokers 1,418 2,760 Policy acquisition costs 4,407 4,052 Selling, general and administrative expenses 12,664 10,848 Interest expense 975 972 Total expenses 33,427 31,642 Income before taxes 4,319 3,010 Provision for income taxes (656) 112 Net Income $4,975 $2,898 Earnings per share: Basic $0.30 $0.18 Diluted $0.30 $0.18 Weighted average shares outstanding: Basic 16,371 16,274 Diluted 16,371 16,274 Table 3 CRM Holdings, Ltd. Consolidated Statements of Cash Flow (Unaudited) Three Months Ended March 31, 2008 2007 (Dollars in thousands) CASH FLOWS FROM OPERATING ACTIVITIES Net income $4,975 $2,898 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of other assets and other intangible assets 293 194 Amortization of unearned compensation, restricted stock 124 260 Amortization of premiums and discounts on available-for-sale investments (115) (360) Net realized losses on sale of investments 1,042 29 Deferred income tax benefit 531 (1,290) Changes in: - - Cash and cash equivalents, restricted (2) 2,699 Accrued interest receivable (52) 179 Premiums receivable (3,222) 6,215 Reinsurance recoverable (6,458) (773) Accounts receivable 562 (161) Policy acquisition costs (1,517) 703 Prepaid expenses 445 (356) Other assets (16) 8 Reserve for losses and loss adjustment expenses 7,480 3,513 Reinsurance payable (594) (2,172) Unearned premiums 1,914 (1,796) Unearned management fees and commissions (102) 318 Other accrued expenses (2,448) 4,435 Net cash provided by operating activities 2,840 14,543 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of available-for-sale investments (20,212) (44,362) Proceeds from sales of available-for-sale investments 10,836 6,315 Proceeds from maturities of available-for-sale investments 9,803 17,546 Net sales and maturities of short-term investments 696 373 Purchases of fixed assets, net (133) (432) Net cash provided by (used in) investing activities 990 (20,560) CASH FLOWS FROM FINANCING ACTIVITIES Repayments under long-term debt and other secured borrowings - (11) Issuance of common shares - employee stock purchase plan 58 - Retirement of common shares - share-based compensation (32) (12) Net cash provided by (used in) financing activities 26 (23) Net increase (decrease) in cash 3,856 (6,040) Cash and cash equivalents Beginning 33,477 21,546 Ending $37,333 $15,506 Table 4 CRM Holdings, Ltd. Income By Segment For the three months ended March 31, 2008 Fee-Based Corporate Management Primary and Services Insurance Reinsurance Other Eliminations Total (Dollars in thousands) Revenues: Net premiums earned $- $17,518 $14,834 $- $- $32,352 Management fees 4,970 - - - (1,218) 3,752 Investment income (2) 1,054 716 75 (201) 1,642 Total revenues 4,968 18,572 15,550 75 (1,419) 37,746 Expenses: Underwriting expenses - 9,997 9,591 - (1,218) 18,370 Interest expense 22 202 - 952 (201) 975 Depreciation and amortization 198 85 - 10 - 293 Operating expenses 7,189 4,913 219 1,468 - 13,789 Total expenses 7,409 15,197 9,810 2,430 (1,419) 33,427 Income before taxes $(2,441) $3,375 $5,740 $(2,355) $- $4,319 Total assets $6,440 $348,000 $84,803 $15,105 $(62,395) $391,953 For the three months ended March 31, 2007 Fee-Based Corporate Management Primary and Services Insurance Reinsurance Other Eliminations Total (Dollars in thousands) Revenues: Net premiums earned $- $16,852 $5,970 $- $- $22,822 Management fees 9,866 - - - (353) 9,513 Investment income 34 1,538 652 93 - 2,317 Total revenues 9,900 18,390 6,622 93 (353) 34,652 Expenses: Underwriting expenses - 14,060 3,355 - (353) 17,062 Interest expense - - - 972 - 972 Depreciation and amortization 167 27 - - - 194 Operating expenses 9,170 2,772 224 1,248 - 13,414 Total expenses 9,337 16,859 3,579 2,220 (353) 31,642 Income before taxes $563 $1,531 $3,043 $(2,127) $- $3,010 Total assets $7,094 $225,167 $73,227 $9,668 $(893) $314,263 Table 5 CRM Holdings, Ltd. Revenues by Segment For the three months ended March 31, 2008 2007 (Dollars in thousands) Revenues from Fee-Based Management Services California $2,781 $2,508 New York 2,189 7,358 4,970 9,866 Revenues from Primary Insurance California 11,944 15,500 New York/New Jersey 4,781 25 Other (1) 793 1,327 17,518 16,852 Revenues from Reinsurance California 9,342 2,576 New York/New Jersey 5,091 3,394 Other (2) 401 - 14,834 5,970 Investment Income (3) 1,642 2,317 Eliminations (4) (1,218) (353) Total Revenues $37,746 $34,652 (1) Includes primary insurance premiums for policies written in Washington, Alaska, Arizona and Nevada. (2) Includes reinsurance premiums assumed from Majestic for policies written in Washington, Alaska, Arizona and Nevada under the 40% quota share and under Twin Bridges' participation in Majestic's excess of loss treaty and direct policies written in Hawaii. (3) Includes the elimination of $201 thousand of Twin Bridges intercompany interest income on funds withheld by Majestic. (4) Elimination of CRM New York and CRM California intercompany commissions from Majestic. Table 6 CRM Holdings, Ltd. Fee-Based Management Services Segment Data March 31, 2008 2007 Number of Groups New York 2 8 California 5 5 Texas - 1 Number of Group Members New York 1,466 2,082 California 408 404 Texas - 12 Aggregate Annualized Premiums (1) New York $37,576,000 $116,690,000 California $53,356,000 $56,256,000 Texas $- $354,000 (1) Aggregate annualized premiums are the annualized total of the actual premiums payable to our groups by their members as in effect at the dates specified. CRM management monitors the period-to-period changes in these amounts because we believe that it is a meaningful indicator of the change in our expected fee-based management services revenue in the future. Our management fees are based on a percentage of the premiums our groups charge their members and are recognized as income over the year for which such premiums are fixed. Increases and decreased in the aggregate amount of these annualized premiums are an indications of the increase or decrease in the amount of management fees we expect to earn in the future as our unearned management fees are recognized as income. Table 7 CRM Holdings, Ltd. Primary Insurance Segment Data For the three months ended March 31, 2008 2007 Primary Insurance Premiums $17,518 $16,852 Loss and Loss Adjustments Expenses 9,180 11,100 Underwriting, Acquisition and Insurance Expenses (1) 6,017 5,774 Underwriting Profit (Loss) $2,321 $(22) Loss Ratio (2) 52.4% 65.9% Expense Ratio (3) 34.3% 34.3% Combined Ratio (4) 86.7% 100.1% (1) Does not include the elimination of $1.2 million and $353 thousand of Majestic policy acquisition costs against commissions due to CRM New York and CRM California and does not include the elimination of $201 thousand and nil of Majestic's intercompany interest expense on funds withheld from Twin Bridges for the three months ended March 31, 2008 and 2007, respectively. (2) The loss ratio is calculated by dividing loss and loss adjustment expense by net reinsurance premiums. (3) The expense ratio is calculated by dividing underwriting, acquisition and insurance expenses for the period by net reinsurance premiums. (4) The combined ratio is the sum of the loss ratio and the expense ratio. Table 8 CRM Holdings, Ltd. Reinsurance Segment Data For the three months ended March 31, 2008 2007 Net Reinsurance Premiums $14,834 $5,970 Loss and Loss Adjustments Expenses 5,503 1,910 Underwriting, Acquisition and Insurance Expenses 4,307 1,669 Underwriting (Loss) Profit $5,024 $2,331 Loss Ratio (1) 37.1% 32.0% Expense Ratio (2) 29.0% 28.0% Combined Ratio (3) 66.1% 60.0% (1) The loss ratio is calculated by dividing loss and loss adjustment expense by net reinsurance premiums. (2) The expense ratio is calculated by dividing underwriting, acquisition and insurance expenses for the period by net reinsurance premiums. (3) The combined ratio is the sum of the loss ratio and the expense ratio.
SOURCE CRM Holdings, Ltd.
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