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Results of Operations for the Three Months Ended September 30, 2021 - American Overseas Group Limited Announces Net Loss Of $1.8 Million and Operating Loss of $1.8 Million For the Three Months Ended September 30, 2021

HAMILTON, Bermuda, Dec. 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 $1.8 million, or $37.38 per diluted share, for the three months ended September 30, 2021. This compares to consolidated net income available to common shareholders of $0.5 million, or $11.58 per diluted share, for the three months ended September 30, 2020. Book value per weighted share at September 30, 2021 was $959.06, a decline from the book value per weighted share of $1,126.51 at September 30, 2020.

For the three months ended September 30, 2021, the Company had an operating loss of $1.8 million, or $37.68 per diluted share, compared to operating income of $0.6 million, or $11.90 per diluted share for the three months ended September 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 September 30, net earned property and casualty premiums increased $1.1 million from $4.3 million a year ago to $5.4 million, driven by an increase in existing and new programs. Fee income remained constant at $2.6 million quarter over quarter while gross written premiums increased $4.2 million, moving from $96.2 million to $100.4 million. Quarterly direct written premiums were positively impacted by continued expansion of new programs, rate increases, and overall economic recovery. Loss and loss adjustment expenses as a percentage of earned premium increased from 55.1% to 71.2%.

For the three months ended September 30, operating expenses increased $1.1 million from $2.6 million to $3.7 million primarily due to a $0.9 million increase in taxes, licenses and fees associated with program business written in Louisiana. For prior year quarterly results, the Company received credits associated with these expenses from its program partner. Additionally, the Company recognized latent charges related to current year to date expenses associated with Louisiana taxes, licenses and fees in the current quarter. The remaining $0.2 million increase in operating expense for the quarter is driven primarily by marketing activity returning to more normal levels in 2021 compared to 2020 expenditure levels, which were impacted by COVID related restrictions.

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 September 30, 2021 and December 31, 2020

(dollars in thousands)

September 30, 2021

December 31, 2020

Assets

Investments:

Fixed-maturity securities held as available for sale, at fair value

$

92,473

$

72,642

Equity investments held as available for sale, at fair value

3,574

4,143

Cash and cash equivalents

37,544

24,254

Restricted cash

3,968

548

Accrued investment income

443

355

Premiums receivable

80,015

73,073

Deferred insurance premiums

108,584

101,843

Reinsurance balances receivable, net

211,946

194,914

Deferred policy acquisition costs

5,045

3,590

Intangible assets

4,800

4,800

Goodwill

33,050

33,050

Other assets

3,708

3,767

Total Assets

$

585,150

$

516,979

Liabilities and Equity

Liabilities:

Loss and loss expense reserve

$

204,340

$

192,943

Deferred commission income

3,442

2,482

Unearned premiums

113,425

105,678

Ceded premium payable

82,833

71,989

Payable to general agents

7,576

4,331

Funds withheld

100,333

64,980

Accounts payable and accrued liabilities

10,873

7,922

Notes payable

16,521

16,521

Non-owned interest in VIE

300

300

Interest payable

451

451

Total Liabilities

540,094

467,597

Shareholders' Equity:

Common shares

4,698

4,698

Additional paid-in capital

189,179

189,151

Accumulated other comprehensive income

1,382

1,962

Retained deficit

(156,256

)

(152,482

)

Total Shareholders' Equity

39,003

43,329

Non-controlling interest of preferred shares of subsidiaries

6,053

6,053

Total Equity

45,056

49,382

Total Liabilities and Equity

$

585,150

$

516,979

See Notes to September 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 September,

Nine months ended September,

2021

2020

2021

2020

Revenues

Net premiums earned

$

5,397

$

4,337

$

15,935

$

8,775

Fee income

2,644

2,645

8,667

7,896

Net change in fair value of credit derivatives

-

-

-

2

Net investment income

46

60

208

652

Net realized gains on investments

14

8

50

1,508

Fair value adjustment

-

(23

)

-

2,054

Other income

28

-

105

-

Total revenues

8,130

7,027

24,965

20,887

Expenses

Losses and loss adjustment expenses

3,841

2,389

10,232

8,200

Acquisition expenses

1,931

1,537

5,506

3,775

Operating expenses

3,663

2,603

11,038

9,294

Other expense

-

46

-

330

Interest expense

451

451

1,352

1,352

Total expenses

9,886

7,026

28,128

22,951

Net (loss) income available to common shareholders

$

(1,756

)

$

1

$

(3,163

)

$

(2,064

)

Income tax (expense)

-

539

(26

)

322

Net (loss) income before dividends

(1,756

)

540

(3,189

)

(1,742

)

Dividends on preference shares of subsidiary

-

-

(585

)

-

Net (loss) income available to common shareholders

$

(1,756

)

$

540

$

(3,774

)

$

(1,742

)

Net (loss) income per common share:

Basic

$

(37.38

)

$

11.64

$

(80.34

)

$

(37.61

)

Diluted

(37.38

)

11.58

(80.34

)

(37.17

)

Weighted-average number of common shares outstanding:

Basic

46,979

46,386

46,979

46,326

Diluted

46,979

46,620

46,979

46,870

See Notes to September 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 September 30, 2021

Nine months ended September 30, 2021

Net Income Available to Common Shareholders

Net Realized (Gain)/Loss on Sales of Investments

Net Change in Fair Value of Credit Derivatives

Fair Value Adjustments

Restructuring Charges

Operating Income/(Loss)

Net Income Available to Common Shareholders

Net Realized (Gain)/Loss on Sales of Investments

Net Change in Fair Value of Credit Derivatives

Fair Value Adjustments

Restructuring Charges

Operating Income/(Loss)

Property and casualty:

Net premiums earned

$

5,397

$

5,397

$

15,935

$

15,935

Losses and loss adjustment expenses

(3,841

)

(3,841

)

(10,232

)

(10,232

)

Acquisition expenses

(1,931

)

(1,931

)

(5,506

)

(5,506

)

Property/Casualty Underwriting Income

(375

)

(375

)

197

197

Fee income

2,644

2,644

8,667

8,667

Operating expenses

(3,307

)

(3,307

)

(10,052

)

(10,052

)

Income tax

-

-

(26

)

(26

)

Property and casualty

(1,038

)

-

-

-

-

(1,038

)

(1,214

)

-

-

-

-

(1,214

)

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

46

46

208

208

Net realized gain/(loss)

14

(14

)

-

50

(50

)

-

Operating expenses

(356

)

(356

)

(986

)

(986

)

Interest expense

(451

)

(451

)

(1,352

)

(1,352

)

Other income, net of other expense

29

29

105

105

Corporate and investing

(718

)

(14

)

-

-

-

(732

)

(1,975

)

(50

)

-

-

-

(2,025

)

Group total

$

(1,756

)

$

(14

)

$

-

$

-

$

-

$

(1,770

)

$

(3,189

)

$

(50

)

$

-

$

-

$

-

$

(3,239

)

(dollars in thousands)

Three months ended September 30, 2020

Nine months ended September 30, 2020

Net Income Available to Common Shareholders

Net Realized (Gain)/Loss on Sales of Investments

Net Change in Fair Value of Credit Derivatives

Fair Value Adjustments

Restructuring Charges

Operating Income/(Loss)

Net Income Available to Common Shareholders

Net Realized (Gain)/Loss on Sales of Investments

Net Change in Fair Value of Credit Derivatives

Fair Value Adjustments

Restructuring Charges

Operating Income/(Loss)

Property and casualty:

Net premiums earned

$

4,337

$

4,337

$

12,288

$

12,288

Losses and loss adjustment expenses

(2,388

)

(2,388

)

(6,622

)

(6,622

)

Acquisition expenses

(1,536

)

(1,536

)

(3,906

)

(3,906

)

Property/Casualty Underwriting Income

413

413

1,760

1,760

Fee income

2,645

2,645

7,896

7,896

Operating expenses

(2,200

)

(2,200

)

(7,383

)

362

(7,021

)

Income tax

539

539

322

(76

)

246

Property and casualty

1,397

-

-

-

-

1,397

2,595

-

-

-

286

2,881

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

-

-

(509

)

(509

)

Financial guaranty

-

-

-

-

-

-

(5,466

)

-

(2

)

(15,996

)

-

(21,464

)

Corporate and Investing

Net investment income

60

60

652

652

Net realized gain/(loss)

8

(8

)

-

1,508

(21,008

)

19,500

-

Fair value adjustment

(23

)

23

-

2,054

(2,054

)

-

Operating expenses

(403

)

(403

)

(1,402

)

(1,402

)

Interest expense

(451

)

(451

)

(1,352

)

(1,352

)

Other income, net of other expense

(48

)

(48

)

(331

)

(331

)

Corporate and investing

(857

)

(8

)

-

23

-

(842

)

1,129

(21,008

)

-

17,446

-

(2,433

)

Group total

$

540

$

(8

)

$

-

$

23

$

-

$

555

$

(1,742

)

$

(21,008

)

$

(2

)

$

1,450

$

286

$

(21,016

)