A number of insurers have begun to release their financial results for Q2
2010. The following is a compilation of their announcements:
American International Group Inc. reported a net loss attributable to AIG of $2.7 billion for Q2 2010, or $(3.96) per diluted common share, compared to net income of $1.8 billion, or $2.30 per diluted common share, in Q2 2009. The Q2 2010 loss was primarily due to a $3.3 billion non-cash goodwill impairment charge included in discontinued operations, the company says.
AIG says that its Q2 2010 adjusted net income was $1.3 billion (compared to $1.1 billion in Q2 2009), including operating income of $2.2 billion from continuing insurance operations, mortgage guaranty operating income of $226 million, $604 million in income from the Asia life insurance operating segment (principally American International Assurance Co. Ltd. (AIA), and fair value gains on Maiden Lane III of $358 million, partially offset by interest and amortization on the Federal Reserve Bank of New York (FRBNY) Credit Facility and third-party debt, invested asset impairment charges and other net restructuring and legal settlement charges, and a decrease in the net deferred tax asset.
The insurer’s continuing insurance operations earned $2.2 billion before tax in Q2 2010, compared to $1.5 billion in Q2 2009.
“AIG’s continuing insurance operating results remain solid, while the company continues to execute on its restructuring plans and prepares for separation from the U.S. government,” says President and CEO Robert Benmosche. “Our overall strategy remains unchanged. We remain focused on monetizing AIA and ALICO as quickly as possible in order to repay taxpayers, at values reflecting the unique strengths of these highly attractive franchises. The sale of ALICO is proceeding as planned and is expected to close in the fourth quarter. Recently, we decided to re-initiate our plans to take AIA public, subject to regulatory approval and as market conditions permit.”
The Allstate Corp. reported its financial results for Q2 2010. Allstate’s Q2 operating income rose to $441 million compared to $297 million in the same period of 2009, reflecting improved results in both Property-Liability and Allstate Financial. Net income was $145 million in Q2 2010 compared to $389 million in Q2 2009 primarily due to realized capital losses in the 2010 quarter versus realized capital gains in the prior year period. Realized capital losses in Q2 2010 reflect risk management actions, including derivative losses that were offset by increased portfolio valuations. Book value rose to $33.24 per share at June 30, 2010 compared to $32.26 at March 31, 2010 and $27.87 at June 30, 2009, reflecting higher shareholders’ equity primarily resulting from increased market valuations for fixed income investments.
“We made continued progress in executing our strategies and achieving our 2010 goals in the second quarter,” says Thomas Wilson, chairman, president and CEO of The Allstate Corp. in a release. “Profitability at Allstate Protection met our underlying combined ratio outlook for the year. Implementation of growth initiatives reduced the impact of catastrophe risk management and profitability actions, but has not yet generated sufficient volume to increase overall policies in force. Allstate Financial’s operating income significantly rebounded reflecting progress on its strategic repositioning and the benefit of reserve actions. Strong investment results reflect our risk mitigation and return optimization strategies.
“Operating income was $0.81 per diluted share for the quarter compared to $0.55 per diluted share for the same quarter last year due to a decline in catastrophe losses from a record second quarter level in 2009,” Wlison continues. “Net income was $0.27 per diluted share as derivative losses reduced earnings. Derivative losses, however, were more than offset by corresponding increases in investment valuations so that book value per share increased by 3% in the quarter.”
Citizens Inc. reported results for the second quarter and six months ended June 30, 2010. According to a release, premium growth primarily related to life renewal premiums as international persistency trends were favorable. Claims and surrenders remained at consistent levels and were within the company’s expectations. Underwriting and other expenses decreased to $7 million and $14 million for the three and six months of 2010 from $7.8 million and $15.1 million in 2009. The decrease was due to lower legal and auditing fees, Citizens says.
The insurer announced that total revenue increased 1.6% for the three months ended June 30, 2010, but declined slightly for the six-month period. Total revenue excluding the change in fair value of warrants increased 3.0% and 3.1% for the same periods. Similarly, the decline in net income for the six-month periods was largely due to the change in the fair value of the warrants.
Additionally, book value rose 4.8% to $4.56 at June 30, 2010, compared with $4.35 at year-end 2009, reflected retain earnings and portfolio appreciation. The increase in 2010 investment income was due primarily to a higher level of invested assets held in fixed maturity securities, reflecting additional premium income invested related to new business over the past year.
"We continue to manage Citizens for the long-term as we face the current challenging business and investing environments,” says Rick Riley, vice chairman and president. “We were encouraged in the second quarter by strong persistency in our international life insurance business, accompanied by claims and surrenders within our expectations."
Eastern Insurance Holdings Inc. (EIHI) reported earnings for the three months ended June 30, 2010. EIHI reported a net loss of $1.4 million, or $0.16 per diluted share, for Q2 2010, compared to net income of $3.0 million, or $0.32 per diluted share, for the same period in 2009. EIHI's net loss from continuing operations was $1.7 million, or $0.19 per diluted share, for Q2 2010 compared to net income from continuing operations of $1.9 million, or $0.20 per diluted share, for the same period in 2009. EIHI's diluted book value per share was $15.95 as of June 30, 2010 compared to $15.78 as of Dec. 31, 2009.
"Our workers' compensation insurance business segment continued its solid performance in 2010 with a combined ratio of 89.6% for the three months ended June 30, 2010, despite challenging insurance market and economic conditions, which have materially affected employers' payrolls," says Bruce Eckert, CEO. "We returned $810,000 of audit premium to insureds for the three months ended June 30, 2010, compared to additional audit premium to the Company of $431,000 for the same period in 2009, a decrease of $1.2 million. Despite the return premium and 2010 renewal rate decreases of 2.2%, we grew direct written premium by 6.8% for Q2 2010 compared to 2009 and experienced favorable premium renewal retention of 87.0%.
“Importantly,” Wilson adds, “our profitable performance was consistent among our Mid-Atlantic, Southeast and Midwest regions. Our favorable results were driven by solid growth in workers' compensation insurance production, more favorable workers' compensation reinsurance terms, disciplined underwriting in an environment with high unemployment and continued extensive claims management, including the use of return to work initiatives and medical cost containment strategies. "
Infinity Property and Casualty Corp., a national provider of personal automobile insurance, reported results for the three and six months ended June 30, 2010.
Gross written premium grew 15.4% during Q2 2010 compared with the same period in 2009 primarily from growth in Florida, California, Pennsylvania, Texas, Illinois and Arizona. Premium in California, Infinity's largest state, increased 6.0% during Q2 2010.
Infinity says that favorable development on prior accident period loss and loss adjustment expense reserves recognized in earnings during Q2 and first six months of 2010 was $20.3 million, pre-tax ($0.99 per diluted share after-tax) and $37.0 million, pre-tax ($1.78 per diluted share after-tax), respectively. The favorable development during Q2 2010 primarily resulted from bodily injury coverages in the states of California, Connecticut, Florida, Texas and Georgia related to accident years 2009, 2008 and 2007. The favorable development during the first six months of 2010 primarily resulted from bodily injury and collision coverages in the states of California, Connecticut, Florida, Georgia and Arizona related to accident years 2009, 2008 and 2007.
"During the second quarter, we grew in seven of our eight Focus States and in 18 of our 21 targeted Urban Zones and we are currently running ahead of our premium plan for the first six months of the year,” says James Gober, Infinity's chairman, president and CEO While we expect to show strong premium growth for all of 2010, our continued focus on underwriting profit will result in a more moderate growth rate in the second half of the year than we have seen during the first half."
Liberty Mutual Group reported net income of $220 million for the three months ended June 30, 2010, a decrease of $48 million from the same period in 2009.
Revenues for the three months ended June 30, 2010 were $8.066 billion, an increase of $236 million or 3.0% over the same period in 2009. Net written premium for the three months ended June 30, 2010 was $7.283 billion, an increase of $379 million or 5.5 % over the same period in 2009.
Pre-tax operating income before private equity income for the three months ended June 30, 2010 was $183 million, a decrease of $235 million or 56.2% from the same period in 2009. Pre-tax operating income for the three months ended June 30, 2010 was $188 million, a decrease of $210 million or 52.8% from the same period in 2009. Net income for the three months ended June 30, 2010 was $220 million, a decrease of $48 million or 17.9% from the same period in 2009. Cash flow from operations for the three months ended June 30, 2010 was $586 million, a decrease of $17 million or 2.8% from the same period in 2009.
Additionally, the combined ratio before catastrophes and net incurred losses attributable to prior years for the three months ended June 30, 2010, was 96.6%, a decrease of 2.3 points from the same period in 2009. Including the impact of catastrophes and net incurred losses attributable to prior years, Liberty Mutual says its combined ratio for the three months ended June 30, 2010, increased 4.4 points to 104.7%.
“We turned in another quarter of solid earnings during a period of significant natural catastrophe activity,” says Edmund Kelly, chairman and CEO of Liberty Mutual Group “Our operating results reflect the benefits of our diversified and global operating model, and our commitment to disciplined underwriting and reserving in order to maintain balance sheet strength.”
Manulife Financial Corp. (MFC) reported a net loss attributed to shareholders of $2.4 billion for the second quarter ended June 30, 2010, equating to a fully diluted loss per share of $1.36. For Q2 2009, MFC reported net income of $1.8 billion or $1.09 per share.
During the quarter, net results were impacted as equity markets retreated globally and interest rates declined materially, particularly in the U.S. Non-cash charges related to equity market declines in the quarter amounted to $1.7 billion. Non-cash charges related to lower interest rates amounted to $1.5 billion in the quarter.
"Our results for the second quarter were disappointing,” says CEO Donald Guloien. “Lower equity markets and historically low interest rates resulted, on a Canadian GAAP basis, in large non-cash charges in the form of mark-to-market increases to our reserves for policyholder liabilities. We would expect to see most of these charges reverse into earnings in the future if interest rates rise and if equity markets grow faster than the long-term growth rates used in the valuation of policy liabilities. In fact, the turnaround in equity markets in July alone, if sustained, should reverse a substantial portion of these losses. As a point of comparison, under U.S. GAAP we expect to report a small profit for the second quarter and our Shareholders' Equity under U.S. GAAP is expected to be $7 billion higher than under the Canadian GAAP equivalent."
"Repositioning of the business is underway. Over several quarters we have been making progress on rebalancing our business mix, re-pricing and re-designing some products to reduce risk, and dramatically accelerating the growth of others. We are building positive sales momentum, particularly in Asia and Canada and in the Retirement Plan Services and Mutual Fund businesses in the United States," he says.
Markel Corp. reported diluted net income per share of $2.12 for the quarter ended June 30, 2010, compared to $3.34 for Q2 2009. Diluted net income per share was $6.46 for the six months ended June 30, 2010 compared to $5.00 for the same period of 2009. The combined ratio for Q2 2010 was 103% compared to 99% for Q2 2009. The combined ratio was 102% for the six months ended June 30, 2010 compared to 97% for the same period of 2009. For the six months ended June 30, 2010, the combined ratio included $32.7 million, or 4 points, of underwriting loss on the Chilean earthquake and the Deepwater Horizon drilling rig explosion, which occurred in February 2010 and April 2010, respectively. Book value per common share outstanding increased 3% to $291.71 at June 30, 2010, from $282.55 at Dec. 31, 2009.
"We continue to operate in a difficult underwriting environment; however, we remain committed to underwriting profitability in any environment,” says Alan Kirshner, chairman and CEO. “While intense pressure on pricing persists, we are excited about the opportunities we see to expand into new product areas, as evidenced by our recently announced agreement to acquire Aspen Holdings, Inc., a Nebraska-based provider of workers' compensation insurance."
Markel also announced that it filed its Form 10-Q for the quarter ended June 30, 2010, with the SEC. A copy of the Form 10-Q is available on the company's website http://www.markelcorp.com.
National Western Life announced second quarter 2010 consolidated net earnings of $20.8 million, or $5.88 per diluted Class A common share, compared with consolidated net earnings of $18.8 million, or $5.34 per diluted Class A common share, for Q2 2009. For the six months ended June 30, 2010, the company reported consolidated net earnings of $39.2 million, or $11.08 per diluted Class A common share, compared with $33.9 million, or $9.60 per diluted Class A common share, a year ago. National Western Life said its book value per share increased to $326.10 as of June 30, 2010 from $315.73 as of March 31, 2010.
Net earnings for the quarter ended June 30, 2010 included after-tax investment gains of $33,000, or $0.01 per diluted Class A share. For the first six months of 2010, the Company reported after-tax investment losses of $0.2 million, or $0.07 per diluted Class A share, versus after-tax losses of $3.4 million, or $0.95 per diluted Class A share, for the corresponding period in 2009.
Operating revenues, excluding realized investment gains (losses) and realized and unrealized gains (losses) on index options, totaled $140.8 million for the quarter ended June 30, 2010, compared to $133.6 million reported in Q2 2009, an increase in excess of 5%.
"Our annuity sales continue to be strong with a 101% increase this quarter compared to last year's second quarter,” says President Ross Moody. “We have also seen some momentum in life insurance sales internationally with total life sales increasing 13% in Q2 2010 versus what we achieved in last year. The climate for our industry remains very challenging so it is gratifying to see growth in the midst of the current market environment."
NYMAGIC INC. reported the results of consolidated operations for the second quarter ended June 30, 2010. NYMAGIC said its net income was $6.9 million, or $.78 per diluted share for the three months ended June 30, 2010, compared with net income of $14.2 million, or $1.65 per diluted share, for Q2 2009. Net income for the six months ended June 30, 2010 totaled $13.7 million, or $1.56 per diluted share, compared with $17.7 million, or $2.05 per diluted share, for the six months ended June 30, 2009.
Book value per share, calculated on a fully diluted basis, increased to $26.19 at June 30, 2010 from $24.84 at Dec. 31, 2009.
Net income for the second quarter and six months ended June 30, 2010, included tax benefits of $3.1 million, or $.35 per diluted share, and $6.3 million, or $.72 per diluted share, respectively, as a result of the partial reversal of the deferred tax valuation allowance previously provided for capital losses, NYMAGIC says. Net income for the second quarter and six months ended June 30, 2009 included tax benefits of $3.3 million or $.38 per diluted share also as a result of the partial reversal of the deferred tax valuation allowance.
Gross premiums written totaled $56.2 million and net premiums written totaled $44.9 million for Q2 2010, compared with gross premiums written of $50.3 million and net premiums written of $35.3 million during Q2 2009. This represented increases of 12% and 27%, respectively.
NYMAGIC‘s combined ratio was 111.7% for the three months ended June 30, 2010, as compared with 93.0% for the same period of 2009. The company's combined ratio was 107.5% for the six months ended June 30, 2010 as compared with 96.4% for the same period of 2009.
Sino Assurance Inc. announced financial results for its fiscal 2010 second quarter ended June 30, 2010. The company posted a Q2 net income of $970,363, or $0.02 per diluted share. These results compare to a net income of $168,443, or $0.00 per diluted share, in Q2 2009. Gross profit margin was 84%, up from 76% in Q2 2009. Contributing to the increase in earnings was volume growth in sales both from the company's commercial and personal services segment.
During Q2 2010, Sino Assurance’s total revenues totaled $2,415,032, up 160% versus $928,447 in Q2 2009. Higher balances of performance guarantee services contributed the largest share of the growth in total revenue during the second quarter. Comparing to the second quarter in 2009, the revenues from performance guarantee service grows 268%. Gross profit margin for the quarter was 84% up from 76% in Q2 2009.
Income from operations reached $1,234,181 in Q2 2010 compared with $180,487 in the same period in 2009. GAAP diluted earnings per share for the quarter was $0.02, compared with $0.00 for the second quarter in 2009. The solid growth in income and earnings per shares reflected strong results across all business segments, good execution on sustained growth in performance guarantees and cost initiatives, the company said.
The Hartford Financial Services Group Inc. reported second quarter 2010 net income of $76 million, or $0.14 per diluted share. In Q2 2009, the company reported a net loss of $15 million, or $(0.06) per diluted share. Core earnings for Q2 2010 were $92 million, or $0.17 per diluted share, compared with core earnings of $622 million, or $1.90 per diluted share, for the prior year period. Excluding the effects of the second quarter 2010 DAC unlock charge, goodwill impairment, elevated P&C catastrophe losses, and P&C prior year reserve development, core earnings were $460 million, or $0.92 per diluted share.
"The Hartford performed well, reporting another quarter of profitability in spite of market volatility, higher than expected catastrophes and several one-time events," says Liam McGee, The Hartford's chairman, president and CEO. "Book value per share grew 6% sequentially and net unrealized losses declined by more than 50%. The company showed good sales momentum in many segments. Small commercial written premium grew 3% over the prior year with strong profitability in a competitive market. Sales and deposits meaningfully increased from 2009 levels in the mutual funds, retirement plans and life insurance businesses."
"We are executing on our strategy and seeing encouraging signs. We have fully transitioned to a new organizational structure, enabling us to increase the focus on customers, simplify The Hartford and drive efficiencies throughout the businesses. Sales, distribution and operational initiatives are underway to maximize shareholder value and deliver sustainable, profitable growth," adds McGee.
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