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American Overseas Group Limited Announces First Quarter 2013 Net Loss Available To Common Shareholders Of $14.0 Million And Operating Income Of $4.2 Million

Information About the Company

American Overseas Group Limited is a Bermuda-based holding company. Its operating subsidiary, American Overseas Reinsurance Company Ltd., has historically provided financial guaranty reinsurance for U.S. and international public finance and structured finance transactions and in 2012 commenced writing short tail non-catastrophe property/casualty reinsurance. More information can be found at www.aoreltd.com .

American Overseas Group Limited
Consolidated Balance Sheets
(unaudited)
As at March 31, 2013 and December 31, 2012
(dollars in thousands)
     
     
  March 31, 2013 December 31, 2012
Assets    
Investments:    
Fixed-maturity securities held as available for sale, at fair value
(Amortized cost: $159,023 and $154,334)  $ 169,428  $ 165,758
Other investments at fair value  8,595  -- 
Cash and cash equivalents  24,375  36,317
Restricted cash  41,997  45,139
Accrued investment income 1,109 1,189
Reinsurance balances receivable, net  11,900 11,561
Funds withheld 4,200 1,533
Recoverables on paid losses 7,479 6,687
Deferred policy acquisition costs 27,938 28,775
Deferred expenses 324 346
Other assets 638 90
Total Assets  $ 297,983  $ 297,396
     
     
Liabilities and Equity    
Liabilities:    
Loss and loss expense reserve  $ 21,873  $ 22,247
Unearned premiums 69,932 72,538
Accounts payable and accrued liabilities 633 698
Derivative liabilities  83,464  65,214
Redeemable Series A preference shares ($1,000 redemption value and $0.10 par value; authorized shares - 75,000; issued and outstanding shares - 59,700 at March 31, 2013 and December 31, 2012) 59,700 59,700
Total Liabilities 235,602 220,397
     
Shareholders' Equity:    
Common shares 2,707 2,677
Additional paid-in capital 232,180 231,891
Accumulated other comprehensive income 10,500 11,424
Retained deficit (190,017) (176,004)
Total Shareholders' Equity 55,370 69,988
     
Noncontrolling interest - Class B preference shares of subsidiary 7,011 7,011
Total Equity 62,381 76,999
Total Liabilities and Equity  $ 297,983  $ 297,396
     
     
American Overseas Group Limited
Consolidated Statements of Operations
(unaudited)
For the three months ended March 31, 2013 and 2012
(dollars in thousands except share and per share amounts)
     
     
  Three Months Ended March 31,
  2013 2012
Revenues    
Net premiums earned  $ 6,813  $ 3,026
     
Change in fair value of credit derivatives    
Realized gains and other settlements  426  574
Unrealized (losses)  (18,258)  (6,334)
Net change in fair value of credit derivatives  (17,832)  (5,760)
Net investment income  1,320  2,078
Net realized gains on sale of investments  46  --
Total other-than-temporary impairment losses  --  --
Portion of impairment losses recognized in other comprehensive income (loss)  --  --
Net other-than-temporary impairment losses (recognized in earnings)  --  --
     
Foreign currency (losses) gains  (224)  190
Total revenues  (9,876)  (466)
     
Expenses    
Losses and loss adjustment expenses  942  739
Acquisition expenses  1,862  1,498
Operating expenses  1,333  1,760
Total expenses  4,137  3,997
Net income (loss) available to common shareholders  $ (14,013)  $ (4,463)
     
Net (loss) per common share:    
Basic  $ (5.18)  $ (1.69)
Diluted  (5.13)  (1.69)
Weighted average number of common shares outstanding:    
Basic  2,706,279  2,643,243
Diluted  2,733,241  2,644,132
     
     
Reconciliation of net income (loss) to operating income (loss): (Dollars in thousands except share and per share amounts)
  Three Months Ended March 31,
  2013 2012
Operating income    
     
Net (loss) available to common shareholders  $ (14,013)  $ (4,463)
Less: Realized (gains) on sale of investments and other-than-temporary impairment losses  (46)  --
Less: Unrealized losses on credit derivatives  18,258  6,334
Add back: credit impairment on derivatives  (238)  (1,464)
Less: Foreign currency losses (gains)  224  (190)
     
Operating income  $ 4,184  $ 217
     
     
Net (loss) per diluted share  $ (5.13)  $ (1.69)
Less: Realized (gains) on sale of investments and other-than-temporary impairment losses (0.02) 0.00
Less: Unrealized losses on credit derivatives 6.68 2.40
Add back: credit impairment on derivatives (0.09) (0.55)
Less: Foreign currency losses (gains) 0.08 (0.07)
Operating income per diluted share  $ 1.53  $ 0.08
     
     
Reconciliation of book value per share to operating book value per share and adjusted operating book value per share:    
(Dollars in thousands except per share amounts)    
  As at As at
  Mar 31, 2013 Dec 31, 2012
     
Shares outstanding  2,707  2,677
Book Value Per Share  20.46  26.15
Shareholders' Equity (Book Value)  55,370  69,988
Derivative liability (1)  83,211  64,953
Credit impairments on derivatives  (5,776)  (5,537)
Operating book value per share  49.07  48.35
Noncontrolling interest in subsidiary - Class B preference shares  7,011  7,011
Unearned premiums (2)  70,582  73,205
Deferred acquisition costs  (27,938)  (28,775)
Present value of installment premiums (3)  8,011  8,942
Unrealized gains on investments  (10,500)  (11,424)
Adjusted operating book value per share  $ 66.49 $ 66.64
     
(1) Represents only the unrealized gains (losses) portion of the derivative liability.
     
(2) Includes unearned premium balances on financial guaranty, property casualty and credit derivative policies. The unearned premiums on financial guaranty policies include the present value of future installment premiums, net of ceding commissions.
     
(3) Estimated present value of future installments, net of ceding commissions, on policies written in credit derivative form only. At March 31, 2013 and December 31, 2012, the discount rate was 0.77% and 0.72%, respectively.

The Company has posted its first quarter 2013 financial results to its website at www.aoreltd.com under "Investor Information". If you are a shareholder of American Overseas Group Limited and wish to receive a hard copy of the financial statements by mail, please contact:

American Overseas Group Limited Maiden House, 1 st Floor 131 Front Street Hamilton, HM 12 Bermuda

Attention: David Steel Telephone: 441-296-6501 Email: info@aoreltd.com

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