CRM Holdings, Ltd. Announces First Quarter Results And Announces That It Is Seeking Strategic Alternatives

CRM Holdings, Ltd. ("CRM" or “the Company”) (Nasdaq: CRMH), a specialty provider of workers' compensation insurance products, announced results for the first quarter ended March 31, 2010.

For the first quarter of 2010, the Company incurred a net loss from continuing operations of $7.7 million, or $(0.46) per diluted share, compared to a net loss from continuing operations of $8.2 million, or $(0.49) per diluted share, for the same period in 2009. Effective January 1, 2010, the Company no longer reports multiple segments, which reflects the Company’s current business activities and organizational changes. Unless otherwise stated, all further results discussed in this release refer to continuing operations for 2010 and results on a comparable basis for 2009.

Total revenues in the first quarter of 2010 were $16.7 million, compared to $26.1 million in the same quarter of the prior year. This decline resulted from three factors. First, Majestic Insurance Company (Majestic) was not able to retain or compete for certain rating sensitive business based on the downgrade of its A.M. Best financial strength rating from A- to B++ in December 2009. Second, during the quarter Majestic sought to improve its overall price adequacy which caused some insureds to non-renew their policies. Third, Majestic’s quota share reinsurance treaty in place during the first quarter of 2010 entailed a cession rate approximately 15% higher than the treaty in place during the same period of 2009. Investment income decreased to $2.4 million for the first quarter 2010 from $2.8 million in 2009 due to lower asset yields.

The Company’s loss ratio increased to 106% for the first quarter of 2010 from 81% for the first quarter 2009. The higher loss ratio resulted from a higher current accident year loss ratio and unfavorable loss reserve development on prior accident years of $1.5 million for the first quarter of 2010 compared to $1.2 million for the same period in 2009. The higher current accident year loss ratio was due to decreased net earned premiums, the impact of lower ceding commission income on unallocated loss adjustment expenses, and an increase in claims severity trends on primary insurance policies underwritten in California.