Seattle, WA -(BusinessWire)- SeaBright Holdings, Inc. (NYSE:SBX) recently announced results for the quarter ended March 31, 2012.
For the first quarter of 2012, the Company recorded net income of $8.1 million or $0.37 per diluted share compared to a net loss of ($0.1) million or ($0.01) per diluted share for the same period in 2011. Total revenue for the quarter increased 14.9% to $73.3 million versus $63.8 million in the year-earlier period. For the first quarter of 2012, net premiums earned increased 4.2% to $59.1 million compared to $56.7 million for the same period in 2011. Net realized gains totaled $8.0 million in the first quarter of 2012 compared to $0.3 million recorded in the same period in 2011. Net realized gains in 2012 resulted from the sale of investment securities in order to realize a portion of the Company’s tax loss carry forwards and to reduce exposure to interest rate risk.
“We were pleased with our first quarter performance as we mark a return to profitability as well as stable loss reserves,” said John Pasqualetto, SeaBright’s Chairman, President and Chief Executive Officer. “Our bottom line has benefitted from the impact of changes in our underwriting standards combined with enhancements in claims management. In addition, these results reflect the progress we have made in achieving consistent and meaningful price increases quarter over quarter in California, and over the past few quarters in selected other states.”
The net loss ratio for the first quarter of 2012 was 72.9% compared to 75.7% for the same period in 2011. During the first quarter of 2012, on a pre-tax basis, the Company recognized minimal development of prior years’ loss reserve estimates compared to $1.2 million in net adverse development for the same period of 2011. The net loss ratio for the first quarter 2012 includes the impact of an increase in the current accident year estimated net loss ratio from 62.5% to 65.0% when compared with the same period in 2011.
Total underwriting, acquisition and insurance expenses for the first quarter 2012 were $16.9 million compared to $19.0 million for the same period in 2011. The net underwriting expense ratio for the first quarter of 2012 was 28.6% compared to 33.5% in the same period in 2011.
The net combined ratio for the first quarter of 2012 was 101.5% compared to 109.2% for the same period in 2011.
Net investment income for the first quarter of 2012 was $5.0 million compared to $5.4 million for the same period in 2011 as a result of lower yields on the investment portfolio.
At March 31, 2012, SeaBright had approximately 1,400 customers compared to approximately 1,600 at March 31, 2011. Customer count in the Company’s core business decreased by approximately 250 year-over-year, while customer count in the program business increased by approximately 75 year-over-year. Average premium size at March 31, 2012 was $285,000 in the core business compared to $240,000 at March 31, 2011 and was $97,000 in the program business compared to $105,000 at March 31, 2011.
At March 31, 2012, the Company had $692.1 million in fixed income securities, of which none were rated below investment grade, with an average credit quality of AA-.
In October 2010, the Financial Accounting Standards Board issued a new accounting standard concerning the accounting for costs associated with acquiring or renewing insurance contracts. This new guidance allows insurers to defer only certain direct incremental costs associated with successful insurance contract acquisitions or renewals; all other costs related to the acquisition of insurance contracts must be expensed as incurred. We adopted this new guidance effective January 1, 2012 and have retrospectively adjusted our previously issued financial information. Adoption of this new standard reduced the carrying value of our deferred policy acquisition costs as of December 31, 2011 by $7.0 million and our stockholders’ equity by $4.5 million. Basic and diluted earnings per share for the year ended December 31, 2011 decreased by $0.02 and $0.01, respectively, and book value per share at December 31, 2011 decreased by $0.20 (1.3%) as a result of this change.
The complete earnings release is available here: SeaBright Holdings First Quarter 2012 Results