Specialty Underwriters' Alliance, Inc. Reports Third Quarter 2009 Financial Results

Share Name	Share Symbol	Market	Type
Specialty Underwriters Allianc (MM)	NASDAQ:SUAI	NASDAQ	Common Stock

Specialty Underwriters Alliance (NASDAQ:SUAI)
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CHICAGO, Nov. 9 /PRNewswire-FirstCall/ -- Specialty Underwriters' Alliance, Inc. (NASDAQ:SUAI) ("SUA" or the "Company") today announced financial results for the quarter and nine months ended September 30, 2009. Financial Results Gross written premiums were $70.5 million for the three months ended September 30, 2009, versus $44.2 million in the third quarter of 2008. For the nine months ended September 30, 2009, gross written premiums were $143.4 million versus $110.0 million for the same period in 2008. Earned premiums were $44.3 million for the third quarter of 2009 compared to $37.2 million for the same quarter of 2008. Earned premiums were $114.4 million for the nine months ended September 30, 2009 compared to $107.2 million for the comparable period in 2008. Total expenses for the three months ended September 30, 2009, were $48.1 million, consisting of loss and loss adjustment expenses of $31.8 million, acquisition expenses of $10.5 million and other operating expenses of $5.8 million. Total expenses for the three months ended September 30, 2008, were $37.2 million, consisting of loss and loss adjustment expenses of $22.4 million, acquisition expenses of $8.5 million and other operating expenses of $6.3 million. Total expenses for the nine months ended September 30, 2009, were $122.7 million, consisting of loss and loss adjustment expenses of $75.8 million, acquisition expenses of $27.4 million and other operating expenses of $19.5 million. Total expenses for the nine months ended September 30, 2008, were $106.5 million, consisting of loss and loss adjustment expenses of $64.4 million, acquisition expenses of 24.5 million and other operating expenses of $17.6 million. For the third quarter of 2009, net loss and loss adjustment expense ratio was 71.8 percent versus 60.2 percent for the comparable quarter in 2008. For the nine months ended September 30, 2009, net loss and loss adjustment expense ratio was 66.3 percent versus 60.1 percent for the comparable nine months in 2008. Net investment income for the three months ended September 30, 2009, was $2.7 million, compared to $2.6 million for the prior year period. Total revenues were $46.0 million for the third quarter of 2009, compared to $39.0 million for the third quarter of 2008. Net investment income for the nine months ended September 30, 2009, was $8.3 million, compared to $7.9 million for the prior year period. Total revenues were $121.3 million for the nine months ended September 30, 2009, compared to $114.3 million for the comparable period in 2008. Net loss for the quarter ended September 30, 2009, was $1.3 million, compared to net income of $1.3 million for the comparable period in 2008. Net loss for the nine months ended September 30, 2009, was $0.8 million, compared to net income of $7.0 million for the comparable period in 2008. Losses per share for the three months ended September 30, 2009, was $0.08 compared to earnings per share of $0.08 for the same period in 2008. Losses per share for the nine months ended September 30, 2009, was $0.05 compared to earnings per share of $0.45 for the same period in 2008. Financial Condition As of September 30, 2009, the Company reported investments of $304.6 million, total assets of $491.9 million, total liabilities of $347.6 million and stockholders' equity of $144.3 million. Book value per share as of September 30, 2009, was $9.06 and tangible book value per share was $8.39. As of December 31, 2008, the Company reported investments of $263.4 million, total assets of $454.9 million, total liabilities of $318.6 million and stockholders' equity of $136.3 million. Book value per share as of December 31, 2008 was $8.62 and tangible book value per share was $7.94. Book value includes unrealized gains of $5.5 million as of September 30, 2009 as compared to unrealized losses of $2.2 million as of December 31, 2008. About Specialty Underwriters' Alliance, Inc. Specialty Underwriters' Alliance, Inc., through its subsidiary SUA Insurance Company, is a specialty property and casualty insurance company providing commercial insurance products through exclusive wholesale Partner Agents that serve niche groups of insureds. These targeted customers require highly specialized knowledge due to their unique risk characteristics. Examples include tow trucks, professional employer organizations, public entities, and contractors. SUA's innovative approach provides products and claims handling, allowing the Partner Agent to focus on distribution and customer relationships. Safe Harbor Statement The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. This release or any other written or oral statements made by or on behalf of the company may include forward-looking statements that reflect the company's current views with respect to future events and financial performance. All statements other than statements of historical fact included in this release are forward-looking statements. Forward-looking statements can generally be identified by the use of forward-looking terminology such as "may," "will," "plan," "expect," "intend," "estimate," "anticipate," "believe" or "continue" or their negative or variations or similar terminology. All forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. We believe that these factors include but are not limited to ineffectiveness or obsolescence of our business strategy due to changes in current or future market conditions; increased competition on the basis of pricing, capacity, coverage terms or other factors; greater frequency or severity of claims and loss activity, including as a result of natural or man-made catastrophic events, than our underwriting, reserving or investment practices anticipate based on historical experience or industry data; the effects of acts of terrorism or war; developments in the world's financial and capital markets that adversely affect the performance of our investments; changes in regulations or laws applicable to us, our subsidiaries, brokers or customers; acceptance of our products and services, including new products and services; changes in the availability, cost or quality of reinsurance and failure of our reinsurers to pay claims timely or at all; decreased demand for our insurance or reinsurance products; loss of the services of any of our executive officers or other key personnel; the effects of mergers, acquisitions and divestitures; changes in rating agency policies or practices; changes in legal theories of liability under our insurance policies; changes in accounting policies or practices; and changes in general economic conditions, including inflation and other factors. Forward-looking statements speak only as of the date on which they are made, and the company undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise. Summary Financial Data (in millions, except per share data) For the Three Months For the Nine Moths Ended September 30, Ended September 30, 2009 2008 2009 2008 ---- ---- ---- ---- Results of operations Gross written premiums $70.5 $44.2 $143.4 $110.0 Net written premiums 68.3 42.1 137.1 103.8 Earned premiums $44.3 $37.2 $114.4 107.2 Net investment income 2.7 2.6 8.3 7.9 Net Realized gains (losses) (1.0) (0.8) (1.4) (0.8) ---- ----- ---- ---- Total revenues 46.0 39.0 121.3 114.3 ---- ---- ----- ----- Loss and loss adjustment expenses 31.8 22.4 75.8 64.4 Acquisition expenses 10.5 8.5 27.4 24.5 Other operating expenses 5.8 6.3 19.5 17.6 --- --- ---- ---- Total expenses 48.1 37.2 122.7 106.5 ---- ---- ----- ----- Pre-tax income (loss) (2.1) 1.8 (1.4) 7.8 Income tax benefit/(expense) 0.8 (0.5) 0.6 (0.8) --- ---- --- ---- Net income (loss) $(1.3) $1.3 $(0.8) $7.0 ===== ==== ===== ==== Key ratios Net loss and loss adjustment expense ratio 71.8% 60.2% 66.3% 60.1% Ratio of acquisition expenses to earned premiums 23.7% 22.8% 24.0% 22.9% Ratio of all other expenses to gross written premiums 8.2% 14.3% 13.6% 16.0% Net income (loss) per share Basic and diluted $(0.08) $0.08 $(0.05) $0.45 Weighted Average Shares Outstanding Basic 15.9 15.5 15.9 15.6 Diluted 15.9 15.6 15.9 15.7 Summary Financial Data (in millions, except per share data) As of As of September 30, December 31, Assets 2009 2008 ------ ---- ---- Investments $304.6 $263.4 Cash 1.5 0.2 Insurance premiums receivable 59.2 60.7 Reinsurance recoverable on unpaid loss and loss adjustment expenses* 73.9 79.6 Prepaid reinsurance premiums 0.3 0.3 Investment income accrued 2.5 2.5 Equipment and capitalized software at cost (less accumulated depreciation of $20.5 and $15.5) 12.4 13.6 Intangible assets 10.7 10.7 Deferred acquisition costs 21.4 18.2 Federal income tax recoverable 1.2 0.1 Deferred tax asset - 3.2 Other assets 4.2 2.4 --- --- Total assets $491.9 $454.9 ====== ====== Liabilities Loss and loss adjustment expense reserves* $222.2 $215.0 Unearned insurance premiums 103.3 80.6 Insured deposit funds 13.3 15.8 Deferred tax liability 0.7 - Accounts payable and other liabilities 8.1 7.2 --- --- Total liabilities 347.6 318.6 ----- ----- Stockholders' equity Common stock at $0.01 par value per share - authorized: 30.0 shares; issued: 14.8 and 14.7 shares; outstanding: 14.6 shares and 14.4 shares 0.1 0.1 Class B common stock at $0.01 par value per share - authorized: 2.0 shares; issued and outstanding: 1.4 shares and 1.4 shares 0.0 0.0 Paid in capital - Common Stock 130.6 129.9 Paid in capital - Class B Common Stock 7.8 8.1 Accumulated earnings 1.3 1.7 Treasury stock (1.0) (1.3) Accumulated other comprehensive income (loss) 5.5 (2.2) --- ----- Total stockholders' equity 144.3 136.3 ----- ----- Total liabilities and stockholders' equity $491.9 $454.9 ====== ====== Book value data Shares outstanding at end of period 16.1 15.8 Book value per share $9.06 $8.62 Tangible book value per share $8.39 $7.94 * Includes $43.7 million and $53.2 million as of September 30, 2009 and December 31, 2008 of direct gross loss and loss adjustment expense reserves of Potomac Insurance Company of Illinois, which reinsured all of its direct liabilities to OneBeacon Insurance Company and is reflected on SUA's balance sheet as a reinsurance recoverable. Gross Written Premium Data For the Three Months Ended September 30 (in millions, except percentages) Three Months Ended Three Months Ended September 30, 2009 September 30, 2008 ------------------ ------------------ Percentage Percentage Gross of Gross Gross of Gross Written Written Written Written Premium Premium Premium Premium ------- ------- ------- ------- (dollars in millions) Specialty Risk Solutions, LLC $42.6 60.4% $16.1 36.5% Risk Transfer Programs, LLC 6.7 9.5% 12.5 28.3% American Team Managers 6.1 8.7% 6.2 14.0% Appalachian Underwriters, Inc. 5.7 8.1% 1.6 3.6% AEON Insurance Group, Inc. 3.8 5.4% 5.1 11.5% Northern Star Management, Inc. 3.7 5.2% 1.6 3.6% First Light Program Manages, Inc. 1.6 2.3% 0.6 1.4% Insential, Inc. 0.2 0.3% 0.3 0.7% Flying Eagle Insurance Services, Inc. - 0.0% 0.1 0.2% Other 0.1 0.1% 0.1 0.2% --- ---- --- ---- Total $70.5 100.0% $44.2 100.0% ===== ====== ===== ====== Three Months Ended Three Months Ended September 30, 2009 September 30, 2008 ------------------ ------------------ Percentage Percentage Gross of Gross Gross of Gross Written Written Written Written Premium Premium Premium Premium ------- ------- ------- ------- (dollars in millions) California $51.0 72.4% $26.0 58.8% Florida 5.1 7.2% 3.3 7.5% Texas 2.5 3.5% 6.9 15.6% Other states 11.9 16.9% 8.0 18.1% ---- ----- --- ----- Total $70.5 100.0% $44.2 100.0% ===== ====== ===== ====== Three Months Ended Three Months Ended September 30, 2009 September 30, 2008 ------------------ ------------------ Percentage Percentage Gross of Gross Gross of Gross Written Written Written Written Premium Premium Premium Premium ------- ------- ------- ------- (dollars in millions) General liability $43.5 61.7% $18.8 42.5% Workers' compensation 15.5 22.0% 15.7 35.5% Commercial automobile 10.9 15.4% 9.0 20.4% All other 0.6 0.9% 0.7 1.6% --- ---- --- ---- Total $70.5 100.0% $44.2 100.0% ===== ====== ===== ====== Gross Written Premium Data For the Nine months Ended September 30 (in millions, except percentages) Nine months Ended Nine months Ended September 30, 2009 September 30, 2008 ------------------ ------------------ Percentage Percentage Gross of Gross Gross of Gross Written Written Written Written Premium Premium Premium Premium ------- ------- ------- ------- (dollars in millions) Specialty Risk Solutions, LLC $46.7 32.6% $17.0 15.4% Risk Transfer Programs, LLC 35.3 24.6% 44.0 40.0% American Team Managers 18.0 12.6% 18.9 17.2% Appalachian Underwriters, Inc. 17.1 11.9% 5.5 5.0% AEON Insurance Group, Inc. 11.2 7.8% 15.8 14.4% Northern Star Management, Inc. 8.3 5.8% 3.6 3.3% First Light Program Manages, Inc. 5.8 4.0% 2.0 1.8% Insential, Inc. 0.6 0.4% 1.0 0.9% Flying Eagle Insurance Services, Inc. 0.1 0.1% 0.6 0.5% Other 0.3 0.2% 1.6 1.5% --- ---- --- ---- Total $143.4 100.0% $110.0 100.0% ====== ====== ====== ====== Nine months Ended Nine months Ended September 30, 2009 September 30, 2008 ------------------ ------------------ Percentage Percentage Gross of Gross Gross of Gross Written Written Written Written Premium Premium Premium Premium ------- ------- ------- ------- (dollars in millions) California $70.9 49.5% $51.7 47.0% Florida 18.7 13.0% 15.7 14.3% Texas 9.6 6.7% 13.1 11.9% Other states 44.2 30.8% 29.5 26.8% ---- ----- ---- ----- Total $143.4 100.0% $110.0 100.0% ====== ====== ====== ====== Nine months Ended Nine months Ended September 30, 2009 September 30, 2008 ------------------ ------------------ Percentage Percentage Gross of Gross Gross of Gross Written Written Written Written Premium Premium Premium Premium ------- ------- ------- ------- (dollars in millions) Workers' compensation $59.6 41.6% $53.9 49.0% General liability 49.8 34.7% 26.9 24.5% Commercial automobile 32.3 22.5% 27.0 24.5% All other 1.7 1.2% 2.2 2.0% --- ---- --- ---- Total $143.4 100.0% $110.0 100.0% ====== ====== ====== ====== DATASOURCE: Specialty Underwriters' Alliance, Inc. CONTACT: Scott Goodreau of Specialty Underwriters' Alliance, Inc., 1-888-782-4672, ; or Leslie Loyet of Financial Relations Board, +1-312-640-6672, , for Specialty Underwriters' Alliance, Inc.

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SUAI Specialty Underwriters Allianc (MM)