Published:
Darwin Professional Underwriters, Inc. Reports First Quarter Net Income of $14.9 Million
FARMINGTON, Conn., April 28 /PRNewswire-FirstCall/ -- Darwin Professional
Underwriters, Inc. ("Darwin," the "Company," or "Our") (NYSE: DR) today
announced its financial results for the first quarter ended March 31, 2008.
Highlights include:
(Logo: http://www.newscom.com/cgi-bin/prnh/20060829/NETU014LOGO )
-- Gross premiums written for the first quarter are $80.0 million. First
quarter gross premiums written are 7.8% ahead of our gross premiums for
the same period a year ago. Net premiums written for the quarter of
$58.0 million are up 18.5% over the first quarter of 2007.
-- Net income of $14.9 million for the quarter ended March 31, 2008
represents a 184.7% increase over the $5.2 million for the quarter
ended March 31, 2007 and our highest net income in our operating
history.
-- Overall, the combined ratio is 64.7% for the first quarter 2008, which
compares favorably to the first quarter 2007 combined ratio of 92.8%.
The combined ratio excludes certain aspects of the Company's long-term
incentive plan which is included in other expenses. The improvement in
the Company's results is primarily driven by a decrease in the loss
ratio (25.3% improvement to 38.4%). The first quarter results include
approximately $11.5 million ($7.5 million, net of tax) in favorable
loss reserve development and the corresponding ceded premiums, net of
incentive compensation and profit sharing expenses stemming from the
favorable development of the 2003 through 2007 accident years.
-- Earnings per diluted share for the three months ended March 31, 2008
are $0.87 compared to $0.31 per share for the same period in 2007.
-- Annualized return on average equity is 22.7% for the three months ended
March 31, 2008, while shareholders' equity grew $15.1 million, or 5.9%
in the first quarter, from $254.2 million at December 31, 2007 to
$269.3 million at March 31, 2008. Book value per share grew 6.1% to
$15.84 at March 31, 2008 from $14.93 at December 31, 2007.
Stephen Sills, Darwin's president and chief executive officer, commented,
"We are gratified to have again achieved record earnings at Darwin this
quarter. Our focus on distinct niches within the specialty lines market has
allowed us to sustain excellent growth and operating results this quarter.
Darwin's strategy has been to distinguish ourselves with great service, to add
value to our clients through product innovation, and to provide risk
management services wherever possible. We also remain focused on 'getting
bigger' by 'getting smaller', that is, by building our small business
franchise in all of our major lines of business. We are also pleased to
report that we have renewed our two major reinsurance programs at favorable
terms and have been able to increase the ceding commission we receive on
business subject to these treaties.
"Darwin recorded a significant increase in net income and gross premiums
written in the current quarter as compared to the first quarter of 2007, and
we demonstrated our continued commitment to underwriting profitability with a
first-quarter combined ratio of 64.7 percent. With significant expertise
across all of our lines, we believe we're well positioned to take advantage of
the continued opportunities we see in specialty insurance."
Darwin executives will hold a conference call to discuss this press
release Monday, April 28, 2008, at 4:00 p.m. Eastern time. The live webcast of
Darwin's earnings conference call, as well as our financial supplement, can be
accessed through Darwin's web site at http://investor.darwinpro.com. Analysts
and investors interested in participating in the live conference call may dial
in to 866-356-3377 (International callers may dial 617-597-5392) and enter
passcode 79998326.
The webcast version of the conference call will be archived on Darwin's
web site following the date of the event. A telephonic replay of the earnings
conference call will be available shortly after the conclusion of the call on
April 28, 2008. To access the telephonic replay, domestic callers may dial
888-286-8010 (International callers may dial 617-801-6888) and enter passcode
86378293. The telephonic replay will be available until May 5, 2008.
Important Information
Certain matters discussed in this release are forward-looking statements.
Such statements involve risks and uncertainties that could cause actual
results to differ materially from those in the forward-looking statements.
Potential risks and uncertainties include the accuracy of assumptions
underlying the Company's outlook and other risks described in the Company's
filings with the Securities and Exchange Commission ("SEC"), including the
Company's Annual Report on Form 10-K for 2007 and Form 10-Q for first quarter
2008. These forward-looking statements represent the Company's judgment as of
the date of this release. The Company disclaims any intent or obligation to
update these forward-looking statements.
About Darwin Professional Underwriters, Inc.
Darwin is a specialty insurance group based inFarmington, Connecticut.
The Company is focused on the specialty liability insurance market and
underwrites D&O liability insurance for public and private companies, E&O
liability insurance, medical malpractice liability insurance, and other
specialty coverages. Darwin member companies include Darwin Professional
Underwriters, Inc., Darwin National Assurance Company ("DNA"), and Darwin
Select Insurance Company ("Darwin Select"). DNA and Darwin Select have earned
a financial strength rating of "A- (Excellent)" from A.M. Best Company. Darwin
is traded on the New York Stock Exchange under the ticker symbol, "DR." For
more information about Darwin, visit www.darwinpro.com.
Additional information concerning Darwin, its finances, and business
operations can be found in the Quarterly Report on Form 10-Q for the quarter
ended March 31, 2008 which will be filed with the SEC.
Darwin Professional Underwriters, Inc. and Subsidiaries
Selected Consolidated Statements of Operations Data
Three Months Ended March 31, 2008 and March 31, 2007
(Unaudited)
(Dollars in thousands, except per share amounts)
Three Months Ended
March 31,
2008 2007
Gross premiums written $80,043 $74,278
Net premiums written $58,014 $48,942
Revenues:
Net premiums earned $51,983 $39,997
Net investment income 6,069 5,239
Other income 73 -
Net realized investment losses - -
Total revenues $58,125 $45,236
Costs and expenses:
Losses and loss adjustment expenses 19,964 25,470
Commissions and brokerage expenses 6,446 5,180
Other underwriting, acquisition and
operating expenses 7,200 6,485
Other expenses 3,477 577
Interest expense 69 -
Total costs and expenses 37,156 37,712
Earnings before income taxes 20,969 7,524
Income tax expense 6,109 2,304
Net earnings $14,860 $5,220
Basic earnings per share:
Net earnings per share $0.88 0.32
Weighted average shares outstanding 16,891,858 16,126,882
Diluted earnings per share:
Net earnings per share $0.87 $0.31
Weighted average shares outstanding 17,086,472 17,074,730
Combined ratio:
Loss ratio 38.4% 63.7%
Expense ratio 26.3% 29.1%
Combined ratio(1) 64.7% 92.8%
See accompanying notes to Condensed Consolidated Financial Statements.
Darwin Professional Underwriters, Inc. and Subsidiaries
Selected Consolidated Balance Sheets Data
March 31, 2008 and December 31, 2007
(Dollars in thousands, except per share amounts)
March 31, December 31,
2008 2007
ASSETS: (Unaudited)
Available for sale securities, at
fair value:
Equity securities (cost: 2008,
$4,000; 2007, $4,000) $3,358 $3,680
Fixed maturity securities (amortized
cost: 2008, $513,520; 2007, $439,748) 520,778 445,661
Short-term investments, at cost which
approximates fair value 82,110 107,597
Total investments 606,246 556,938
Cash 6,387 7,469
Premiums receivable (net of allowance
for doubtful accounts of $75 as of
March 31, 2008 and December 31, 2007) 22,037 30,986
Reinsurance recoverable on paid and
unpaid losses 144,912 136,370
Ceded unearned reinsurance premiums 47,382 43,244
Deferred insurance acquisition costs 14,210 13,814
Property and equipment at cost, less
accumulated depreciation 1,839 1,783
Goodwill and intangible assets 12,448 7,455
Net deferred income tax asset 13,848 13,546
Other assets 17,861 15,530
Total assets $887,170 $827,135
LIABILITIES AND STOCKHOLDERS' EQUITY:
Loss and loss adjustment expense reserves $410,948 $387,865
Unearned premium reserves 151,294 141,126
Reinsurance payable 24,490 20,999
Debt 5,000 5,000
Income taxes payable 5,824 1,155
Accrued expenses and other liabilities 20,274 16,817
Total liabilities 617,830 572,962
Stockholders' equity:
Common stock; $0.01 par value;
authorized 50,000,000 shares; issued
and outstanding 17,007,046 shares at
March 31, 2008 and 17,025,501 shares
at December 31, 2007 170 170
Additional paid-in capital 204,226 204,583
Retained earnings 60,650 45,790
Accumulated other comprehensive income 4,294 3,630
Total stockholders' equity 269,340 254,173
Total liabilities and stockholders'
equity $887,170 $827,135
Book value per common share:
Book value per common share $15.84 $14.93
Tangible book value per common share $15.11 $14.49
Net income return on average equity(2) 22.7% 13.7%
(1) Excludes other expenses which primarily consist of the company's
long-term incentive plan.
(2) Return on average equity for first quarter is annualized.
SOURCE Darwin Professional Underwriters, Inc.
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