American Safety Insurance Group, Ltd. announced results for the fourth quarter and full year ended Dec. 31, 2002.
Total revenues for the fourth quarter of 2002 decreased 35 percent to $29.7 million compared to the same quarter of 2001. The decrease is a result of lower real estate revenues from the company’s development of the Harbour Village Golf & Yacht Club in Ponce Inlet, Fla., which were $7.1 million in the fourth quarter of 2002, as compared to $24.4 million during the fourth quarter of 2001. Net premiums earned for the fourth quarter of 2002 increased 2 percent to $19.6 million over the same quarter of 2001. This increase is attributable to a 48 percent increase in the company’s core environmental, excess and surplus, and program business net premiums earned, which was offset in part by a 61 percent decrease in net premiums earned from the company’s de-emphasized workers’ compensation, surety, and commercial lines. Net loss for the fourth quarter of 2002 was $2.4 million or $0.51 per diluted share, compared with net income of $328,000 or $0.07 per diluted share for the fourth quarter of 2001.
The net loss for the fourth quarter includes accruals totaling $3.2 million for impaired real estate notes receivable as a result of an appraised market value decrease in collateral and disputed reinsurance recoverables in recognition of a settlement offer made by the company to one of the company’s former reinsurers, Berkley Insurance Company.
The fourth quarter of 2002 was also impacted by a net loss of $1.6 million in connection with the company’s development of the Harbour Village project. The company previously announced that it expected its real estate operations to report a loss for the fourth quarter due to the timing of construction activities and unit closings. On April 11, 2003, the company and the Town of Ponce Inlet agreed to settle pending disputes as to the company’s development plan for the last phase of Harbour Village as a result of zoning litigation filed by the Town. Under the settlement, the company will reduce the size of the Harbour Village project from 809 to 676 condominium units and make other accommodations to the Town.
As a result, the company has reallocated the common and land costs of the Harbour Village project over such reduced number of condominium units, which increased the net loss for the fourth quarter of 2002.
Total revenues for 2002 increased 23 percent to $124.0 million from $100.5 million in 2001 due to increases in real estate revenues and net premiums earned. Net premiums earned for the year increased 5% to $65.9 million from $63.0 million in the prior year. The increase in net premiums earned for 2002 was attributable to a 63 percent increase in net premiums earned from the company’s core business lines, which was offset in part by a 63 percent decrease in net premiums earned from the company’s de-emphasized business lines.
Total real estate revenues for the year increased to $51.8 million from $27.6 million in the prior year due to increased unit closings. Net earnings for 2002 decreased to $2.5 million or $0.51 per diluted share, compared to $4.2 million or $0.84 per diluted share for 2001. Net earnings for 2002 were adversely impacted by the $3.2 million in accruals and the $1.6 million loss discussed above, as well as from the previously announced $1 million Principal Management rescission litigation charge.
The company’s book value per share at Dec. 31, 2002 increased 3% to $13.18 from $12.77 at Dec. 31, 2001. This increase in per share book value is primarily attributable to the company’s profit for 2002 and an increase in the unrealized gain on the company’s bond portfolio of $2.1 million during the year 2001.
The company previously reported that one of its former reinsurers, Berkley Insurance Company, has disputed its obligations under several reinsurance treaties. In April 2002, the company demanded arbitration against the reinsurer to collect the amounts owed. The arbitration panel has scheduled a hearing in May 2003.
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