CRM Holdings, Ltd. ("CRM" or “the Company”) CRMH, a specialty provider of workers' compensation insurance products, announced results for the fourth quarter and year ended December 31, 2009.
Three Months Ended December 31, 2009
In the fourth quarter of 2009, the Company incurred a net loss from continuing operations of $19.0 million, or $(1.13) per diluted share. In the same quarter of the prior year, the Company incurred a net loss from continuing operations of $6.2 million, or $(0.38) per diluted share. Unless otherwise stated, all further results discussed in this release refer to continuing operations for 2009 and results on a comparable basis for 2008.
Total revenues in the fourth quarter of 2009 were $27.2 million, compared to $30.3 million in the same quarter of the prior year. Underwriting actions taken on business written by Majestic Insurance Company (“Majestic”), the Company’s primary insurance provider, in the states of New York and New Jersey, reduced net earned premiums by $3.0 million. Decreases in the Company’s net earned premiums and fee-based management services were offset by increases in investment income. Investment income during the quarter increased to $6.7 million from $4.6 million in the fourth quarter of 2008, as the Company realized gains on its portfolio of fixed income securities. Excluding the benefits of realized capital gains in both periods, interest income earned was $2.3 million in the fourth quarter of 2009, compared to $3.0 million in the same quarter a year ago, a reflection of lower prevailing interest rates in 2009.
Total underwriting expenses for the fourth quarter increased to $33.2 million from $28.2 million a year ago. This increase primarily resulted from higher current year loss and loss adjustment expenses at Majestic on policies underwritten in California, where paid and incurred losses recorded in the first three quarters of 2009 developed worse than expected. For the fourth quarter of 2009, the Company’s overall loss ratio was 151.7%, compared to 101.6% for the fourth quarter of 2008.
Operating expenses of $11.5 million compared to $9.0 million in the same quarter last year. This increase was due to a goodwill impairment charge of $2.7 million related to the full write down of goodwill resulting from the Company’s acquisition of Majestic in November 2006. For the fourth quarter of 2009, the Company’s overall combined ratio was 206.7%, compared to an overall combined ratio of 141.0% for the fourth quarter of 2008.
Primary Insurance
During the quarter, Majestic experienced a decline in revenues compared to the same quarter of 2008. Net earned premiums for the quarter ended December 31, 2009, were $17.2 million, compared to $20.4 million in the same quarter a year ago, largely as a result of underwriting actions taken on Majestic business underwritten in New York and New Jersey. While Majestic experienced lower volumes in the number of policies written in its major market of California during the fourth quarter of 2009, this decrease was offset by slightly higher pricing of policies underwritten. Despite declining payroll and deliberate underwriting actions, Majestic’s submissions and premium written remained strong through the end of 2009. In-force premiums from primary insurance policies at Majestic were $146.9 million at December 31, 2009, compared with $157.2 million at the same time last year.
Majestic’s loss ratio for the 2009 fourth quarter was 156.8%, compared to 93.7% for the fourth quarter of 2008. This increase resulted from a higher current accident year loss ratio as described above and $1.6 million of prior year unfavorable loss reserve development.
Majestic’s underwriting loss was $19.6 million for the fourth quarter of 2009, compared to an underwriting loss of $7.0 million in the same quarter in the prior year. This increase was principally due to the current year loss and loss adjustment expenses and the write off of goodwill. Majestic’s combined ratio for the quarter was 214.6%, compared to 134.1% a year ago.
Reinsurance
The Company’s reinsurance segment, Twin Bridges, generated $2.3 million of net earned premiums in the fourth quarter of 2009, down from $3.5 million in the fourth quarter of the prior year. The reduction was principally due to a decrease in the volume of reinsurance premiums assumed from Majestic. Twin Bridges’ loss ratio was 114.6% for the fourth quarter of 2009, compared to 148.0% in the fourth quarter of 2008. This decrease resulted from Twin Bridges recognizing less unfavorable development in 2009 as compared to 2008. The underwriting loss of $1.2 million for the quarter was an improvement over the underwriting loss of $2.8 million in the fourth quarter of 2008. Twin Bridges’ combined ratio for the quarter was 149.2%, compared to 182.0% a year ago.
Fee-based Business
Fee-based management services revenues were $1.1 million for the fourth quarter of 2009, compared to $1.9 million in the fourth quarter of 2008. The reduction reflected a decline in insured payroll in the self-insured groups under management and a reduction of the number of groups from 4 in the fourth quarter of 2008 to 2 in the fourth quarter of 2009. Effective January 1, 2010, the Contractors Access Program self-insured group terminated active operations and the Company has one self-insured group under management. The fee-based management services operations produced operating income of $161 thousand, compared to operating income of $241 thousand in the same quarter of 2008.
Twelve Months Ended December 31, 2009
For the year ended December 31, 2009, the Company’s net loss from continuing operations was $45.0 million, or $(2.68) per diluted share, compared to net income from continuing operations of $2.0 million, or $0.12 per diluted share in 2008. Total revenues for the year declined to $101.5 million from $143.2 million in 2008.
The major factors contributing to the swing in profits were the establishment of a tax valuation allowance, a decrease in net earned premiums, which includes the reinstatement premiums incurred in the third quarter of 2009, an increased current accident year loss ratio, favorable loss reserve development in 2008 as compared to unfavorable development in 2009, the write-off of the goodwill, and severance expense related to the former co-CEOs incurred in the first quarter of 2009.
Investment Portfolio
At December 31, 2009, the Company had no exposure to equities, collateralized debt obligations or collateralized mortgage obligations. The overall credit rating of Majestic’s fixed income portfolio was AA+. The following tables illustrate Majestic’s investment portfolio distribution by sector and average credit rating.
| Portfolio Distribution by Sector | Portfolio Distribution by Credit Rating | ||||||||||||||||||||||||||||
| 12/31/2009 | 12/31/2008 | ||||||||||||||||||||||||||||
| Average | Average | ||||||||||||||||||||||||||||
| % of | Credit | % of | Credit | Quality | 12/31/2009 | 12/31/2008 | |||||||||||||||||||||||
| Portfolio | Rating | Portfolio | Rating | ||||||||||||||||||||||||||
| AAA | 46.9 | % | 58.7 | % | |||||||||||||||||||||||||
| Government | 21.1 | % | AAA | 17.1 | % | AAA | AA | 25.3 | % | 23.3 | % | ||||||||||||||||||
| Agency | 5.1 | % | AAA | 7.4 | % | AAA | A | 26.1 | % | 14.7 | % | ||||||||||||||||||
| Corporate | 30.0 | % | A | 16.5 | % | A | BBB | 1.4 | % | 3.3 | % | ||||||||||||||||||
| Mortgage backed securities | 17.4 | % | AAA | 20.4 | % | AAA | Below BBB | 0.3 | % | 0.0 | % | ||||||||||||||||||
| Asset backed securities | 3.4 | % | AA+ | 2.8 | % | AAA | 100.0 | % | 100.0 | % | |||||||||||||||||||
| Municipal | 23.0 | % | AA | 35.8 | % | AA | |||||||||||||||||||||||
| Total | 100.0 | % | AA+ | 100.0 | % | AA+ | Average credit rating | AA+ | AA+ | ||||||||||||||||||||
The effective portfolio duration was 3.5 years, and the average portfolio yield was 3.3%.
Conference Call
The Company will host a conference call at 9:00 a.m. ET on Thursday, March 4, 2010, to discuss earnings for the fourth quarter ended December 31, 2009. To participate in the event by telephone, please dial 877-303-2905 five to 10 minutes prior to the start time (to allow time for registration) and reference passcode 58681153. International callers should dial 408-427-3868. 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 for 90 days on CRM’s Web site at http://www.CRMHoldingsLtd.bm/events.cfm. A digital replay of the call will also be available on Thursday, March 4, at approximately 11:00 a.m. ET through Wednesday, March 10 at midnight ET. Dial 800-642-1687 and enter the conference ID number 58681153. International callers should dial 706-645-9291 and enter the same conference ID number.
About CRM Holdings, Ltd.
CRM Holdings, Ltd. is a specialty provider of workers’ compensation insurance products. Through its subsidiaries, CRM Holdings offers workers’ compensation insurance coverage, reinsurance, and fee-based management services for self-insured entities. The Company seeks to provide quality products and services that fit the needs of its insureds and clients and is dedicated to developing and maintaining a mutually beneficial, long-term relationship with them. The Company’s workers’ compensation insurance coverage is offered to employers in California, New York, New Jersey, Arizona, Nevada, and other states. The Company's reinsurance is underwritten from Bermuda, and the fee-based management services are provided to self-insured entities in California. Further information can be found on the Company’s website at http://www.CRMHoldingsLtd.bm.
CRMH-E
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 the Company believes that its plans, intentions and expectations are reasonable, the Company may not achieve such plans, intentions or expectations. There are or may be important factors that could cause actual results to differ materially from the forward-looking statements the Company makes in this document. Such risks and uncertainties are discussed in the Company's Form 10-K for the year ended December 31, 2008 and in other documents filed by the Company with the Securities and Exchange Commission. The Company believes that these factors include, but are not limited to the following:
- The cyclical nature of the insurance and reinsurance industry;
- Premium rates;
- Investment results;
- Legislative and 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, arbitration or regulatory 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.
| Table 1 | CRM Holdings, Ltd. | ||||||||||
| Consolidated Balance Sheets | |||||||||||
|
December 31, |
December 31, |
||||||||||
|
2009 |
2008 |
||||||||||
| (Dollars in thousands) | |||||||||||
| Assets | |||||||||||
| Investments | |||||||||||
| Fixed-maturity securities, available-for-sale (amortized cost $275,480 and $308,607) | $ | 276,593 | $ | 313,622 | |||||||
| Short-term investments | 4,893 | 113 | |||||||||
| Investment in unconsolidated subsidiary | 1,083 | 1,083 | |||||||||
| Total investments | 282,569 | 314,818 | |||||||||
| Cash and cash equivalents | 44,087 | 28,044 | |||||||||
| Restricted cash and cash equivalents | 5,922 | 2,000 | |||||||||
| Total cash and cash equivalents | 50,009 | 30,044 | |||||||||
| Accrued interest receivable | 2,542 | 3,184 | |||||||||
| Premiums receivable, net | 6,246 | 11,935 | |||||||||
| Reinsurance recoverable and prepaid reinsurance | 123,767 | 63,801 | |||||||||
| Accounts receivable, net | 3,178 | 3,099 | |||||||||
| Deferred policy acquisition costs | 758 | 1,084 | |||||||||
| Current income taxes, net | 6,979 | 3,208 | |||||||||
| Deferred income taxes, net | - | 7,809 | |||||||||
| Goodwill and other intangible assets, net | 436 | 3,252 | |||||||||
| Prepaid expenses | 3,675 | 1,836 | |||||||||
| Other assets | 2,788 | 3,330 | |||||||||
| Total assets | $ | 482,947 | $ | 447,400 | |||||||
| Liabilities and shareholders' equity | |||||||||||
| Reserve for losses and loss adjustment expenses | $ | 317,497 | $ | 245,618 | |||||||
| Reinsurance payable | 20,357 | 9,424 | |||||||||
| Unearned premiums | 10,599 | 13,090 | |||||||||
| Long-term debt | 44,083 | 44,083 | |||||||||
| Other liabilities | 29,677 | 26,325 | |||||||||
|
Total liabilities |
422,213 | 338,540 | |||||||||
| Common shares | |||||||||||
|
Authorized 50 billion shares; $0.01 par value per share; 16.5 and 16.2 million common shares issued and outstanding |
165 | 162 | |||||||||
| 0.4 million Class B shares issued and outstanding | 4 | 4 | |||||||||
| Additional paid-in capital | 71,057 | 69,743 | |||||||||
| Retained (deficit) earnings | (11,215 | ) | 35,619 | ||||||||
| Accumulated other comprehensive income | 723 | 3,332 | |||||||||
| Total shareholders' equity | 60,734 | 108,860 | |||||||||
| Total liabilities and shareholders' equity | $ | 482,947 | $ | 447,400 | |||||||
| Table 2 | ||||||||||||||||||||||
| CRM Holdings, Ltd. | ||||||||||||||||||||||
| Consolidated Statements of Operations | ||||||||||||||||||||||
|
Three Months Ended |
Years Ended |
|||||||||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||||||||
| (Dollars in thousands, except per share amounts) | ||||||||||||||||||||||
| Revenues | ||||||||||||||||||||||
| Net premiums earned | $ | 19,491 | $ | 23,902 | $ | 80,524 |
$ |
121,942 |
||||||||||||||
| Fee-based management services | 1,014 | 1,732 | 4,651 | 7,329 | ||||||||||||||||||
| Investment income | 6,724 | 4,628 | 16,286 | 13,900 | ||||||||||||||||||
| Total revenues | 27,229 | 30,262 | 101,461 | 143,171 | ||||||||||||||||||
| Expenses | ||||||||||||||||||||||
| Losses and loss adjustment expenses | 29,572 | 24,277 | 81,654 | 85,506 | ||||||||||||||||||
| Policy acquisition costs | 3,601 | 3,950 | 15,240 | 19,153 | ||||||||||||||||||
| Fees paid to general agents and brokers | 342 | 510 | 1,939 | 3,983 | ||||||||||||||||||
| Selling, general and administrative expenses | 11,126 | 8,536 | 39,628 | 30,725 | ||||||||||||||||||
| Interest expense | 1,060 | 920 | 3,798 | 3,718 | ||||||||||||||||||
| Total expenses | 45,701 | 38,193 | 142,259 | 143,085 | ||||||||||||||||||
| (Loss) income from continuing operations before income taxes | (18,472 | ) | (7,931 | ) | (40,798 | ) | 86 | |||||||||||||||
| Tax provision (benefit) from continuing operations | 572 | (1,684 | ) | 4,186 | (1,937 | ) | ||||||||||||||||
| (Loss) income from continuing operations | (19,044 | ) | (6,247 | ) | (44,984 | ) | 2,023 | |||||||||||||||
| Discontinued operations | ||||||||||||||||||||||
| (Loss) income from discontinued operations before income taxes | (330 | ) | 648 | (1,807 | ) | (5,360 | ) | |||||||||||||||
| Tax (benefit) provision from discontinued operations | (306 | ) | 156 | 43 | (1,841 | ) | ||||||||||||||||
| (Loss) income from discontinued operations | (24 | ) | 492 | (1,850 | ) | (3,519 | ) | |||||||||||||||
| Net Loss | $ | (19,068 | ) | $ | (5,755 | ) | $ | (46,834 | ) | $ | (1,496 | ) | ||||||||||
| (Loss) earnings per share from continuing operations | ||||||||||||||||||||||
| Basic |
$ |
(1.13 |
) |
$ |
(0.38 |
) |
$ |
(2.68 |
) |
$ | 0.12 | |||||||||||
| Diluted |
$ |
(1.13 |
) |
$ |
(0.38 |
) |
$ |
(2.68 |
) |
$ | 0.12 | |||||||||||
| Earnings (loss) per share from discontinued operations | ||||||||||||||||||||||
| Basic | $ | 0.00 | $ | 0.03 |
$ |
(0.11 |
) |
$ |
(0.21 |
) |
||||||||||||
| Diluted | $ | 0.00 | $ | 0.03 |
$ |
(0.11 |
) |
$ |
(0.21 |
) |
||||||||||||
| Net loss per share | ||||||||||||||||||||||
| Basic |
$ |
(1.13 |
) |
$ |
(0.35 |
) |
$ |
(2.79 |
) |
$ |
(0.09 |
) |
||||||||||
| Diluted |
$ |
(1.13 |
) |
$ |
(0.35 |
) |
$ |
(2.79 |
) |
$ |
(0.09 |
) |
||||||||||
| Weighted average shares outstanding | ||||||||||||||||||||||
| Basic | 16,868 | 16,491 | 16,780 | 16,441 | ||||||||||||||||||
| Diluted | 16,868 | 16,491 | 16,780 | 16,441 | ||||||||||||||||||
| Table 3 | ||||||||||||
| CRM Holdings, Ltd. | ||||||||||||
| Unaudited Consolidated Statements of Cash Flow | ||||||||||||
| Years Ended December 31, | ||||||||||||
| 2009 | 2008 | |||||||||||
| (Dollars in thousands) | ||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||
| Net loss | $ | (46,834 | ) | $ | (1,496 | ) | ||||||
|
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |
||||||||||||
| Depreciation and amortization | 778 | 1,635 | ||||||||||
| Amortization of unearned compensation, restricted stock | 1,260 | 1,420 | ||||||||||
| Amortization of premiums and discounts on available-for-sale investments | 1,604 | 686 | ||||||||||
| Net realized gains on sale of available-for-sale investments | (6,254 | ) | (3,687 | ) | ||||||||
| Other-than-temporary impairment losses on available-for-sale investments | 30 | 762 | ||||||||||
| Impairment of goodwill and other intangible assets | 2,661 | 196 | ||||||||||
| Write off of uncollectible premiums receivable | 1,625 | 1,346 | ||||||||||
| Deferred income taxes | 9,103 | (913 | ) | |||||||||
| Changes in: | ||||||||||||
| Accrued interest receivable | 642 | (418 | ) | |||||||||
| Premiums receivable, net | 4,064 | 611 | ||||||||||
| Reinsurance recoverable and prepaid reinsurance | (59,966 | ) | (25,217 | ) | ||||||||
| Accounts receivable, net | (41 | ) | 1,842 | |||||||||
| Deferred policy acquisition costs | 326 | (461 | ) | |||||||||
| Current income taxes, net | (3,771 | ) | (3,483 | ) | ||||||||
| Prepaid expenses | (1,880 | ) | 324 | |||||||||
| Other assets | 49 | 117 | ||||||||||
| Reserve for losses and loss adjustment expenses | 71,879 | 56,770 | ||||||||||
| Reinsurance payable | 10,933 | 3,683 | ||||||||||
| Unearned premiums | (2,491 | ) | 4,237 | |||||||||
| Other liabilities | 3,355 | 1,650 | ||||||||||
| Net cash (used in) provided by operating activities | (12,928 | ) | 39,604 | |||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||
| Purchases of available-for-sale investments | (473,901 | ) | (297,371 | ) | ||||||||
| Proceeds from sales of available-for-sale investments | 209,831 | 183,144 | ||||||||||
| Proceeds from maturities of available-for-sale investments | 301,815 | 70,030 | ||||||||||
| Net purchases, sales and maturities of short-term investments | (4,780 | ) | 673 | |||||||||
| (Increase) decrease in receivable for securities sold | (38 | ) | 60 | |||||||||
| Increase in payable for investments purchased | - | (123 | ) | |||||||||
| Acquisition of intangible assets | - | (102 | ) | |||||||||
| Purchases of fixed assets | (142 | ) | (908 | ) | ||||||||
| Disposals of fixed assets | 51 | 619 | ||||||||||
| Net cash provided by (used in) investing activities | 32,836 | (43,978 | ) | |||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
| Change in restricted cash and cash equivalents | (3,922 | ) | (2,000 | ) | ||||||||
| Repayments under long-term debt | - | (1 | ) | |||||||||
| Issuance of common shares - shared-based compensation | 75 | 190 | ||||||||||
| Retirement of common shares - share-based compensation | (18 | ) | (57 | ) | ||||||||
| Net cash used in financing activities | (3,865 | ) | (1,868 | ) | ||||||||
| Net increase (decrease) in cash | 16,043 | (6,242 | ) | |||||||||
| Cash and cash equivalents | ||||||||||||
| Beginning | 28,044 | 34,286 | ||||||||||
| Ending | $ | 44,087 | $ | 28,044 | ||||||||
| Table 4 | |||||||||||||||||||||||||||||||
| CRM Holdings, Ltd. | |||||||||||||||||||||||||||||||
| Quarter to Date | |||||||||||||||||||||||||||||||
| Income by Segments | |||||||||||||||||||||||||||||||
| For the three months ended December 31, 2009 | |||||||||||||||||||||||||||||||
|
Primary |
Reinsurance |
Fee-Based |
Corporate |
Elimina |
Total |
||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||||
| Net premiums earned | $ | 17,153 | $ | 2,338 | $ | - | $ | - | $ | - | $ | 19,491 | |||||||||||||||||||
| Fee-based management services | - | - | 1,140 | - | (126 | ) | 1,014 | ||||||||||||||||||||||||
| Net investment income | 2,280 | 341 | (3 | ) | 19 | (335 | ) | 2,302 | |||||||||||||||||||||||
| Net realized gains | 4,422 | - | - | - | - | 4,422 | |||||||||||||||||||||||||
| Total revenues | 23,855 | 2,679 | 1,137 | 19 | (461 | ) | 27,229 | ||||||||||||||||||||||||
| Expenses: | |||||||||||||||||||||||||||||||
| Underwriting expenses | 29,980 | 3,319 | - | - | (126 | ) | 33,173 | ||||||||||||||||||||||||
| Operating expenses | 6,822 | 169 | 976 | 3,501 | - | 11,468 | |||||||||||||||||||||||||
| Interest expense | 519 | - | - | 876 | (335 | ) | 1,060 | ||||||||||||||||||||||||
| Total expenses | 37,321 | 3,488 | 976 | 4,377 | (461 | ) | 45,701 | ||||||||||||||||||||||||
|
(Loss) income from continuing operations before taxes |
$ | (13,466 | ) | $ | (809 | ) | $ | 161 | $ | (4,358 | ) | $ | - | $ | (18,472 | ) | |||||||||||||||
| Total assets | $ | 486,790 | $ | 56,566 | $ | 4,086 | $ | 271,259 | $ | (339,302 | ) | $ | 479,399 | ||||||||||||||||||
| For the three months ended December 31, 2008 | |||||||||||||||||||||||||||||||
|
Primary Insurance |
Reinsurance |
Fee-Based |
Corporate |
Elimina- |
Total |
||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||||
| Net premiums earned | $ | 20,433 | $ | 3,469 | $ | - | $ | - | $ | - | $ | 23,902 | |||||||||||||||||||
| Fee-based management services | - | - | 1,910 | - | (178 | ) | 1,732 | ||||||||||||||||||||||||
| Net investment income | 2,829 | 517 | (2 | ) | 28 | (350 | ) | 3,022 | |||||||||||||||||||||||
| Net realized gains | 1,606 | - | - | - | - | 1,606 | |||||||||||||||||||||||||
| Total revenues | 24,868 | 3,986 | 1,908 | 28 | (528 | ) | 30,262 | ||||||||||||||||||||||||
| Expenses: | |||||||||||||||||||||||||||||||
| Underwriting expenses | 22,381 | 6,024 | - | - | (178 | ) | 28,227 | ||||||||||||||||||||||||
| Operating expenses | 5,013 | 290 | 1,667 | 2,078 | - | 9,048 | |||||||||||||||||||||||||
| Interest expense | 350 | - | - | 918 | (350 | ) | 918 | ||||||||||||||||||||||||
| Total expenses | 27,744 | 6,314 | 1,667 | 2,996 | (528 | ) | 38,193 | ||||||||||||||||||||||||
|
(Loss) income from continuing operations before taxes |
$ | (2,876 | ) | $ | (2,328 | ) | $ | 241 | $ | (2,968 | ) | $ | - | $ | (7,931 | ) | |||||||||||||||
| Total assets | $ | 434,473 | $ | 60,962 | $ | 4,807 | $ | 305,461 | $ | (362,289 | ) | $ | 443,414 | ||||||||||||||||||
| Table 4 | ||||||||||||||||||||||||||||||
| CRM Holdings, Ltd. | ||||||||||||||||||||||||||||||
| Year to Date | ||||||||||||||||||||||||||||||
| Income by Segments | ||||||||||||||||||||||||||||||
| For the year ended December 31, 2009 | ||||||||||||||||||||||||||||||
|
Primary |
Reinsurance |
Fee-Based |
Corporate |
Elimina- |
Total |
|||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||
| Net premiums earned | $ | 70,396 | $ | 10,128 | $ | - | $ | - | $ | - | $ | 80,524 | ||||||||||||||||||
| Fee-based management services | - | - | 5,128 | - | (477 | ) | 4,651 | |||||||||||||||||||||||
| Net investment income | 9,765 | 1,445 | (17 | ) | 85 | (1,216 | ) | 10,062 | ||||||||||||||||||||||
| Net realized gains | 6,194 | 30 | - | - | - | 6,224 | ||||||||||||||||||||||||
| Total revenues | 86,355 | 11,603 | 5,111 | 85 | (1,693 | ) | 101,461 | |||||||||||||||||||||||
| Expenses: | ||||||||||||||||||||||||||||||
| Underwriting expenses | 86,659 | 10,712 | - | - | (477 | ) | 96,894 | |||||||||||||||||||||||
| Operating expenses | 19,831 | 876 | 5,018 | 15,842 | - | 41,567 | ||||||||||||||||||||||||
| Interest expense | 1,474 | - | - | 3,540 | (1,216 | ) | 3,798 | |||||||||||||||||||||||
| Total expenses | 107,964 | 11,588 | 5,018 | 19,382 | (1,693 | ) | 142,259 | |||||||||||||||||||||||
|
(Loss) income from continuing operations before taxes |
$ | (21,609 | ) | $ | 15 | $ | 93 | $ | (19,297 | ) | $ | - | $ | (40,798 | ) | |||||||||||||||
| Total assets | $ | 486,790 | $ | 56,566 | $ | 4,086 | $ | 271,259 | $ | (339,302 | ) | $ | 479,399 | |||||||||||||||||
| For the year ended December 31, 2008 | ||||||||||||||||||||||||||||||
|
Primary |
Reinsurance |
Fee-Based |
Corporate |
Elimina- |
Total |
|||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||
| Net premiums earned | $ | 93,337 | $ | 28,605 | $ | - | $ | - | $ | - | $ | 121,942 | ||||||||||||||||||
| Fee-based management services | - | - | 8,216 | - | (887 | ) | 7,329 | |||||||||||||||||||||||
| Net investment income | 9,738 | 2,080 | (6 | ) | 211 | (1,047 | ) | 10,976 | ||||||||||||||||||||||
| Net realized gains | 2,900 | 24 | - | - | - | 2,924 | ||||||||||||||||||||||||
| Total revenues | 105,975 | 30,709 | 8,210 | 211 | (1,934 | ) | 143,171 | |||||||||||||||||||||||
| Expenses: | ||||||||||||||||||||||||||||||
| Underwriting expenses | 81,006 | 24,540 | - | - | (887 | ) | 104,659 | |||||||||||||||||||||||
| Operating expenses | 19,074 | 1,023 | 7,842 | 6,769 | - | 34,708 | ||||||||||||||||||||||||
| Interest expense | 1,047 | - | - | 3,718 | (1,047 | ) | 3,718 | |||||||||||||||||||||||
| Total expenses | 101,127 | 25,563 | 7,842 | 10,487 | (1,934 | ) | 143,085 | |||||||||||||||||||||||
|
Income (loss) from continuing operations before taxes |
$ | 4,848 | $ | 5,146 | $ | 368 | $ | (10,276 | ) | $ | - | $ | 86 | |||||||||||||||||
| Total assets | $ | 434,473 | $ | 60,962 | $ | 4,807 | $ | 305,461 | $ | (362,289 | ) | $ | 443,414 | |||||||||||||||||
| Table 5 | |||||||||||||||||||||||||
| CRM Holdings, Ltd. | |||||||||||||||||||||||||
| Revenues by Segment | |||||||||||||||||||||||||
| Three months ended | Years ended | ||||||||||||||||||||||||
| December 31, | December 31, | ||||||||||||||||||||||||
| 2009 | 2008 | 2009 | 2008 | ||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||
| Revenues from Fee-Based Management Services | |||||||||||||||||||||||||
| California | $ | 1,140 | $ | 1,910 | $ | 5,128 | $ | 8,216 | |||||||||||||||||
| 1,140 | 1,910 | 5,128 | 8,216 | ||||||||||||||||||||||
| Revenues from Primary Insurance | |||||||||||||||||||||||||
| California | 12,062 | 11,997 | 44,960 | 55,946 | |||||||||||||||||||||
| New York/New Jersey | 4,434 | 7,469 | 22,340 | 33,607 | |||||||||||||||||||||
| Other (1) | 657 | 967 | 3,096 | 3,784 | |||||||||||||||||||||
| 17,153 | 20,433 | 70,396 | 93,337 | ||||||||||||||||||||||
| Revenues from Reinsurance | |||||||||||||||||||||||||
| California | 2,245 | 3,012 | 8,299 | 18,842 | |||||||||||||||||||||
| New York/New Jersey | 363 | 543 | 1,745 | 7,835 | |||||||||||||||||||||
| Other (2) | (270 | ) | (86 | ) | 84 | 1,928 | |||||||||||||||||||
| 2,338 | 3,469 | 10,128 | 28,605 | ||||||||||||||||||||||
| Investment income (3) | 6,724 | 4,628 | 16,286 | 13,900 | |||||||||||||||||||||
| Eliminations (4) | (126 | ) | (178 | ) | (477 | ) | (887 | ) | |||||||||||||||||
| Total revenues from continuing operations | $ | 27,229 | $ | 30,262 | $ | 101,461 | $ | 143,171 | |||||||||||||||||
|
(1) |
Includes primary insurance premiums for policies written in Washington, Alaska, Arizona, Nevada, Florida, Oregon & Hawaii. |
|||
|
(2) |
Includes reinsurance premiums for policies written in Washington, Alaska, Arizona, Nevada, Florida, Oregon & Hawaii. |
|||
|
(3) |
Includes the elimination of $335 thousand and $350 thousand of Twin Bridges intercompany interest income on funds withheld by Majestic for the three months ended December 31, 2009 and 2008, respectively, and the elimination of $1,216 thousand and $1,047 thousand of Twin Bridges intercompany interest income on funds withheld by Majestic for the twelve months ended December 31, 2009 and 2008, respectively. |
|||
|
(4) |
Elimination of fee-based management intercompany commissions against primary insurance policy acquisition costs for the three months ended December 31, 2009 and 2008, respectively. Elimination of fee-based management intercompany commissions against primary insurance policy acquisition costs for the twelve months ended December 31, 2009 and 2008, respectively. |
|||
|
|
||||
|
|
||||
| Table 6 | ||||||||||||||
| CRM Holdings, Ltd. | ||||||||||||||
| Fee-Based Management Services Segment Data (1) | ||||||||||||||
| December 31, | ||||||||||||||
| 2009 | 2008 | |||||||||||||
| Number of Groups | ||||||||||||||
| California | 2 | 4 | ||||||||||||
| Number of Group Members | ||||||||||||||
| California | 197 | 376 | ||||||||||||
| Aggregate Annualized Premiums (2) | ||||||||||||||
| California ($000's) | $ | 27,663 | $ | 49,035 | ||||||||||
|
(1) |
Excludes the fee-based management services segment data for CRM NY, which has been reclassified as discontinued operations for all periods presented. |
||||
|
(2) |
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. |
||||
|
|
|||||
| Table 7 | |||||||||||||||||||||||
| CRM Holdings, Ltd. | |||||||||||||||||||||||
| Primary Insurance Segment Data | |||||||||||||||||||||||
| Three months ended | Years ended | ||||||||||||||||||||||
| December 31, | December 31, | ||||||||||||||||||||||
| 2009 | 2008 | 2009 | 2008 | ||||||||||||||||||||
| (Dollars in thousands) | (Dollars in thousands) | ||||||||||||||||||||||
| Net primary insurance premiums earned | $ | 17,153 | $ | 20,433 | $ | 70,396 | $ | 93,337 | |||||||||||||||
| Loss and loss adjustments expenses | 26,894 | 19,143 | 73,737 | 68,326 | |||||||||||||||||||
| Underwriting, acquisition and insurance expenses (1) | 9,908 | 8,251 | 32,753 | 31,754 | |||||||||||||||||||
| Underwriting loss | $ | (19,649 | ) | $ | (6,961 | ) | $ | (36,094 | ) | $ | (6,743 | ) | |||||||||||
| Loss Ratio (2) | 156.8 | % | 93.7 | % | 104.7 | % | 73.2 | % | |||||||||||||||
| Expense Ratio (3) | 57.8 | % | 40.4 | % | 46.5 | % | 34.0 | % | |||||||||||||||
| Combined Ratio (4) | 214.6 | % | 134.1 | % | 151.2 | % | 107.2 | % | |||||||||||||||
|
(1) |
Does not include the elimination of $126 thousand and $178 thousand of Majestic policy acquisition costs against fee-based management commissions for the three months ended December 31, 2009 and 2008, respectively. Does not include the elimination of $477 thousand and $887 thousand of Majestic policy acquisition costs against fee-based management commission for the nine months ended December 31, 2009 and 2008, respectively. |
|||
|
(2) |
The loss ratio is calculated by dividing loss and loss adjustment expense by net primary insurance premiums earned. |
|||
|
(3) |
The expense ratio is calculated by dividing underwriting, acquisition and insurance expenses for the period by net primary insurance premiums earned. |
|||
|
(4) |
The combined ratio is the sum of the loss ratio and the expense ratio. |
|||
| Table 8 | ||||||||||||||||||||||
| CRM Holdings, Ltd. | ||||||||||||||||||||||
| Reinsurance Segment Data | ||||||||||||||||||||||
| Three months ended | Years ended | |||||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||||||||
| (Dollars in thousands) | (Dollars in thousands) | |||||||||||||||||||||
| Net reinsurance premiums earned | $ | 2,338 | $ | 3,469 | $ | 10,128 | $ | 28,605 | ||||||||||||||
| Loss and loss adjustments expenses | 2,679 | 5,133 | 7,916 | 17,180 | ||||||||||||||||||
| Underwriting, acquisition and insurance expenses | 809 | 1,181 | 3,672 | 8,383 | ||||||||||||||||||
| Underwriting (loss) income | $ | (1,150 | ) | $ | (2,845 | ) | $ | (1,460 | ) | $ | 3,042 | |||||||||||
| Loss Ratio (1) | 114.6 | % | 148.0 | % | 78.2 | % | 60.1 | % | ||||||||||||||
| Expense Ratio (2) | 34.6 | % | 34.0 | % | 36.3 | % | 29.3 | % | ||||||||||||||
| Combined Ratio (3) | 149.2 | % | 182.0 | % | 114.5 | % | 89.4 | % | ||||||||||||||
|
(1) |
The loss ratio is calculated by dividing loss and loss adjustment expense by net reinsurance premiums earned. |
|||
|
(2) |
The expense ratio is calculated by dividing underwriting, acquisition and insurance expenses for the period by net reinsurance premiums earned. |
|||
|
(3) |
The combined ratio is the sum of the loss ratio and the expense ratio. |
|||
CCG Investor Relations
Mark Collinson, 310-954-1343
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