Attached files
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| 8-K - Protective Insurance Corp | form8k.htm |
Baldwin & Lyons, Inc. May 10, 2017
Unaudited First Quarter Financial Statements Investor Contact: William Vens
investors@baldwinandlyons.com
(317) 429-2554
BALDWIN & LYONS ANNOUNCES RESULTS FOR THE FIRST QUARTER OF 2017
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Gross premiums written during the first quarter of 2017 totaled a record $110.0 million, 14.4% higher than the first quarter of 2016.
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Net premiums earned during the first quarter of 2017 totaled $74.0 million, 10.6% higher than the first quarter of 2016.
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Combined ratio during the first quarter of 2017 was 99.7%, reflecting the challenging commercial auto market.
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Carmel, Indiana, May 10, 2017—Baldwin & Lyons, Inc. (NASDAQ: BWINA, BWINB) today announced first quarter net income of $6.8 million, or $0.45 per share, which compares to net income of $14.1 million, or $0.94 per share, for the prior year's first quarter.
Gross premiums written for the current quarter was a record $110.0 million, 14.4% higher than the $96.2 million written during the first quarter of 2016. The increase was primarily driven by the continued strong performance of the Company's commercial automobile and workers' compensation products.
Net premiums earned for the first quarter of 2017 was $74.0 million, 10.6% higher than last year's first quarter total, primarily driven by increases in premiums earned from the commercial automobile and workers' compensation products.
Net investment income of $3.7 million, reflected an increase of 7.3% compared to the first quarter of 2016 due to higher bond yields.
Underwriting operations produced a combined ratio of 99.7% during the first quarter of 2017, which compares to a combined ratio of 86.5% for the 2016 first quarter. The combined ratio difference was mainly the result of unusually favorable loss experience during the first quarter of 2016 and unfavorable loss experience during the first quarter of 2017 due in part to a severe charter bus loss.
Book value per share on March 31, 2017 was $27.34, an increase of $0.53 per share during the first quarter, after the payment of cash dividends to shareholders totaling $0.27 per share. The combination of the increase in book value and dividends represents an 11.9% total return on beginning book value for the three months ended March 31, 2017.
The Company's net income, determined in accordance with U.S. generally accepted accounting principles (GAAP), includes items that may not be indicative of ongoing operations. The following table reconciles income before federal income taxes to underwriting income, a non-GAAP financial measure that is a useful tool for investors and analysts in analyzing ongoing operating trends.
- 1 -
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Three Months Ended
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March 31
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2017
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2016
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Income before federal income taxes
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$
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10,178
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$
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21,438
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Less: Net realized gains on investments
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6,294
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9,012
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Operating income, before federal income taxes
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$
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3,884
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$
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12,426
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Less: Investment income
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3,692
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3,440
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Underwriting income
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$
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192
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$
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8,986
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Three months ended March 31, 2017
Operating Income
Operating income, before federal income taxes, was $3.9 million for the first quarter of 2017 which compares to operating income, before federal income taxes, of $12.4 million during the first quarter of 2016.
Conference Call Information:
Baldwin & Lyons, Inc. has scheduled its quarterly conference call for Wednesday, May 10, 2017, at 11:00 AM ET (New York City time) to discuss results for the first quarter ended March 31, 2017.
To participate via teleconference, investors may dial 1-877-705-6003 (U.S./Canada) or 1-201-493-6725 (International or local) at least five minutes prior to the beginning of the call. A replay of the call will be available through May 17, 2017 by calling 1-844-512-2921 or 1-412-317-6671 and referencing passcode 13657859. Investors and interested parties may also listen to the call via a live webcast, accessible on the company's web site via a link at the top of the main Investor Relations page. To participate in the webcast, please register at least fifteen minutes prior to the start of the call. The webcast will be archived on this site until November 10, 2017. The webcast may be accessed directly at: http://public.viavid.com/player/index.php?id=123410.
Also available on the investor relations section of our web site are complete interim financial statements and copies of our filings with the Securities and Exchange Commission.
Forward-looking statements in this report are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve inherent risks and uncertainties. Readers are encouraged to review the Company's annual report for its full statement regarding forward-looking information.
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Financial Highlights (unaudited)
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Baldwin & Lyons, Inc. and Subsidiaries
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(In thousands, except per share data)
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Three Months Ended
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March 31
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2017
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2016
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Operating revenue
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$
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78,647
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$
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71,713
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Net realized gains on investments
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6,294
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9,012
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Total revenue
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$
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84,941
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$
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80,725
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Net operating income
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$
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2,665
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$
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8,254
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Net realized gains on investments,
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net of federal income taxes
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4,091
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5,858
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Net income
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$
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6,756
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$
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14,112
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Per share data - diluted:
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Average number of shares
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15,104
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15,076
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Net operating income
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$
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.18
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$
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.55
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Net investment gains
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.27
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.39
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Net income
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$
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.45
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$
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.94
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Dividends paid to shareholders
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$
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.27
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$
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.26
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Comprehensive income, net of tax
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Net income
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$
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6,756
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$
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14,112
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Unrealized net gains (losses) on securities
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5,335
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(8,050
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)
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Foreign currency translation adjustments
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65
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419
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Comprehensive income
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$
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12,156
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$
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6,481
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Annualized:
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Total Value Creation 1
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11.9
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%
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6.4
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%
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Return on average shareholders' equity:
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Net operating income
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2.9
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%
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9.1
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%
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Net income
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7.3
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%
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15.6
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%
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Consolidated combined ratio of
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insurance subsidiaries (GAAP basis):
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99.7
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%
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86.5
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%
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1 Total Value Creation equals: (1) change in book value plus dividends paid, divided by (2) beginning book value
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- 3 -
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Baldwin & Lyons, Inc. and Subsidiaries
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Unaudited Consolidated Balance Sheets
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(in thousands, except per share data)
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March 31
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December 31
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2017
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2016
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Assets
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Investments 1:
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Fixed maturities ($507,952)
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$
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508,802
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$
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491,904
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Equity securities ($75,770)
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135,514
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119,945
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Limited partnerships, at equity
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65,739
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76,469
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Short-term 2
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1,500
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1,500
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711,555
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689,818
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Cash and cash equivalents
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61,761
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62,976
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Accounts receivable
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67,303
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64,984
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Reinsurance recoverable
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262,423
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255,024
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Other assets
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75,148
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78,732
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Current federal income taxes
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-
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2,603
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$
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1,178,190
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$
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1,154,137
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Liabilities and shareholders' equity
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Reserves for losses and loss expenses
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$
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578,841
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$
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576,330
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Reserves for unearned premiums
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25,968
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21,694
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Borrowings under line of credit
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20,000
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20,000
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Accounts payable and other liabilities
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125,375
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120,356
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Current federal income taxes
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946
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-
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Deferred federal income taxes
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14,158
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11,412
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765,288
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749,792
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Shareholders' equity:
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Common stock-no par value
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645
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644
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Additional paid-in capital
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54,766
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54,286
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Unrealized net gains on investments
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39,386
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34,051
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Retained earnings
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318,105
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315,364
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412,902
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404,345
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$
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1,178,190
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$
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1,154,137
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Number of common and common
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equivalent shares outstanding
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15,104
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15,084
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Book value per outstanding share
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$
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27.34
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$
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26.81
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1 2016 cost in parentheses
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2 Approximates cost
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March 31
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December 31
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Selected Financial Data:
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2017
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2016
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Net GAAP loss and loss expense reserves
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$
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322,044
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$
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324,767
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Net statutory loss and loss expense reserves
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325,775
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328,404
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Consolidated statutory surplus
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404,568
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399,314
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- 4 -
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Baldwin & Lyons, Inc. and Subsidiaries
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Unaudited Consolidated Statements of Operations
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(in thousands, except per share data)
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Three Months Ended
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March 31
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2017
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2016
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Revenues
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Net premiums earned
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$
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73,974
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$
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66,909
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Net investment income
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3,692
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3,440
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Net realized gains on investments
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6,294
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9,012
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Commissions and other income
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981
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1,364
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84,941
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80,725
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Expenses
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Losses and loss expenses incurred
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48,599
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38,623
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Other operating expenses
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26,164
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20,664
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74,763
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59,287
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Income before federal income taxes
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10,178
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21,438
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Federal income taxes
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3,422
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7,326
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Net income
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$
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6,756
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$
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14,112
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Per share data - diluted:
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Income before net gains on investments
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$
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.18
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$
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.55
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Net gains on investments
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.27
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.39
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Net income
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$
|
.45
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$
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.94
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Dividends
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$
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.27
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$
|
.26
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Reconciliation of shares outstanding:
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Average shares outstanding - basic
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15,096
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15,044
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Dilutive effect of share equivalents
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8
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32
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Average shares outstanding - diluted
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15,104
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15,076
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Non-GAAP Financial Information:
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Three Months Ended
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March 31
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2017
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2016
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Gross premiums written
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$
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110,028
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$
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96,153
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Net premiums written
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77,530
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64,565
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Loss and LAE ratio
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65.7
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%
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57.7
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%
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Expense ratio
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34.0
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%
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28.8
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%
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Combined ratio 1
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99.7
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%
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86.5
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%
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1 The combined ratio is calculated as ratio of (A) losses and loss expenses incurred, plus other operating expenses, less commission and other income to (B) net premiums earned.
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- 5 -
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Baldwin & Lyons, Inc. and Subsidiaries
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Unaudited Consolidated Statements of Cash Flows
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(in thousands)
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Three Months Ended
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March 31
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2017
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2016
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Net cash provided by operating activities
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$
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6,398
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$
|
1,973
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Investing activities:
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Purchases of available-for-sale investments
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(115,947
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)
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(112,301
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)
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Proceeds from sales or maturities
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of available-for-sale investments
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105,282
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89,042
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Net (purchases) sales of short-term investments
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(7,290
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)
|
5
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|||||
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Other investing activities
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14,357
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(1,154
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)
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Net cash used in investing activities
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(3,598
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)
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(24,408
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)
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Financing activities:
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Dividends paid to shareholders
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(4,080
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)
|
(3,977
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)
|
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Net cash used in financing activities
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(4,080
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)
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(3,977
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)
|
||||
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Effect of Foreign exchange rates on cash and cash equivalents
|
65
|
419
|
||||||
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Decrease in cash and cash equivalents
|
(1,215
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)
|
(25,993
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)
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Cash and cash equivalents at beginning of period
|
62,976
|
73,538
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Cash and cash equivalents at end of period
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$
|
61,761
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$
|
47,545
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- 6 -
Baldwin & Lyons, Inc. and Subsidiaries
Notes to Unaudited Consolidated Financial Statements
| (1) |
The accompanying unaudited condensed financial statements have been prepared in accordance with the instructions to Form 10-Q but do not include all of the information and footnotes as disclosed in the Company's annual audited financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. Operating results for the interim periods are not necessarily indicative of the results that may be expected for the year ended December 31, 2017. Interim financial statements should be read in conjunction with the Company's annual audited financial statements.
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| (2) |
Forward-looking statements in this report are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve inherent risks and uncertainties. Readers are encouraged to review the Company's annual report for its full statement regarding forward-looking information.
|
- 7 -