AssuranceAmerica Corporation Reports Record Revenue and Profit for the Third Quarter and Year-to-Date
ATLANTA--Nov. 1, 20054, 2005--Atlanta-based ASSURANCEAMERICA CORPORATION (OTC BB: ASAM.OB), today announced its financial results for the third quarter and nine months ended September 30, 2005.Revenues for the third quarter increased 66% to $9.9 million, compared to $6.0 million for the third quarter of 2004. Pretax earnings and net income (which were the same) increased 681% for the third quarter of 2005 to $0.8 million, compared to a loss of $133,000 in the third quarter of 2004.
Revenues for the nine months of 2005 increased 44% to $25.9 million, compared with $18.0 million for the same period of 2004. The Company increased pretax earnings and net income 5671% for the first nine months of 2005 to $1.8 million, compared with a loss of $33,000, in the same period last year.
Total controlled premium (a non-GAAP financial measure), which includes gross written premium in the Carrier/MGA's underwriting operations plus premiums for policies sold in the retail Agency subsidiary, increased 69% from the third quarter of 2004 to $29.8 million for the third quarter of 2005. Total controlled premium increased 38% to $81.6 million for the nine months of 2005 from the comparable 2004 period. Total controlled premium is used as the primary measure of the underlying growth of the Company's revenue streams from period to period.
In announcing third quarter results, Lawrence (Bud) Stumbaugh, President and CEO of AssuranceAmerica Corporation said, "It is always good to produce positive results. It is even better to do so at a time when many insurance enterprises bemoan the 'summer valley' that the industry historically experiences following the 'winter/spring peak'. The fact that our record results beat the traditional summer doldrums adds immensely to the pride we take in our team's achievements."
AssuranceAmerica focuses on the specialty automobile insurance marketplace, primarily in Florida, Georgia, Alabama and South Carolina. Its principal operating subsidiaries are TrustWay Insurance Agencies ("Agency"), which sells personal automobile insurance policies through its 32 retail agencies, AssuranceAmerica Managing General Agency ("MGA"), and AssuranceAmerica Insurance Company ("Carrier").
This press release includes statements that may constitute "forward-looking" statements. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements, as discussed in the Company's filings with the U.S. Securities Exchange Commission (SEC).
ASSURANCEAMERICA CORPORATION
(Unaudited) CONSOLIDATED BALANCE SHEETS
September 30, 2005 and December 31, 2004
Sept. 30, Dec. 31,
2005 2004
----------- -----------
Assets
Cash and cash equivalents $10,917,304 $ 7,059,188
Short term investments 250,000 400,000
Long term investments 1,099,808 599,808
Investment income due and accrued 15,319 734
Receivables from insureds 11,801,411 5,170,840
Reinsurance recoverable (including $3,602,408
and $3,084,838 on paid losses) 12,633,788 10,543,775
Prepaid reinsurance premiums 10,480,366 5,291,830
Deferred acquisition costs 576,917 224,842
Property and equipment (net of accumulated
depreciation of $1,279,086 and $1,094,131) 1,345,113 1,185,081
Due from related party - 30,783
Other receivables 1,733,755 245,677
Prepaid expenses 334,251 52,260
Intangibles (net of accumulated amortization
of $1,295,893 and $1,198,396) 7,462,292 5,399,789
Security deposits 79,420 89,158
----------- -----------
Total assets $58,729,744 $36,293,765
=========== ===========
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses $ 4,470,072 $ 2,904,640
Unearned premiums 15,479,595 7,833,189
Unpaid losses and loss adjustment expenses 12,907,971 10,655,625
Reinsurance payable 9,318,506 4,936,933
Provisional commission reserve 1,175,121 1,060,883
Debt, related party 5,891,960 7,376,279
Dividends payable 126,600 -
Capital lease obligations 265,545 265,545
----------- -----------
Total liabilities 49,635,370 35,033,094
----------- -----------
Stockholders' equity
Common stock, 0.01 par value (authorized
80,000,000, outstanding 50,437,540 and
46,577,090 respectively) 504,377 465,771
Preferred stock, 0.01 par value (authorized
5,000,000, outstanding 1,266,000 and 426,000
respectively) 12,660 4,260
Surplus-paid in 15,198,712 8,872,943
Accumulated deficit (6,621,375) (8,082,303)
----------- -----------
Total stockholders' equity 9,094,374 1,260,671
----------- -----------
Total liabilities and stockholders' equity $58,729,744 $36,293,765
=========== ===========
See accompanying notes to consolidated financial statements.
ASSURANCEAMERICA CORPORATION
(Unaudited) CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended September 30, 2005 and 2004
Three Months Nine Months
2005 2004 2005 2004
------------ ----------- ------------ ------------
Revenue:
Gross premiums
written $ 15,186,281 $ 7,188,610 $ 35,763,663 $ 23,525,816
Gross premiums
ceded (10,258,321) (4,843,586) (24,279,794) (16,029,472)
Net premiums
written 4,927,960 2,345,024 11,483,869 7,496,344
Decrease (increase)
in unearned
premiums, net of
prepaid
reinsurance
premiums (1,423,800) 83,844 (2,457,869) (829,091)
Net premiums earned 3,504,160 2,428,868 9,026,000 6,667,253
Commission
income 4,517,482 2,511,388 12,285,770 8,066,268
Managing
general agent
fees 1,632,912 844,069 3,858,543 2,536,996
Net investment
income 90,149 6,741 128,982 17,794
Other fee
income 170,564 193,803 566,984 687,052
------------ ----------- ------------ ------------
Total revenue 9,915,267 5,984,869 25,866,279 17,975,363
Expenses:
Losses and loss
adjustment
expenses 2,298,469 1,790,091 5,946,922 5,122,048
Selling,
general and
administrative
expenses 6,620,524 4,089,916 17,375,071 12,237,173
Depreciation
and
amortization
expense 96,713 92,987 282,452 220,864
Interest
expense 127,750 144,683 421,106 428,317
------------ ----------- ------------ ------------
Total operating
expenses 9,143,456 6,117,677 24,025,551 18,008,402
------------ ----------- ------------ ------------
Income (loss)
before provision
for income tax
expense 771,811 (132,808) 1,840,728 (33,039)
Income tax
provision - - - -
------------ ----------- ------------ ------------
Net income (loss) 771,811 (132,808) 1,840,728 (33,039)
------------ ----------- ------------ ------------
Dividends on
preferred stock 126,600 33,300 379,800 33,300
------------ ----------- ------------ ------------
Net income (loss)
attributable to
common
stockholders $ 645,211 $ (166,108)$ 1,460,928 $ (66,339)
============ =========== ============ ============
Earnings per common
share
Basic 0.013 (0.004) 0.029 (0.001)
Diluted 0.010 (0.004) 0.023 (0.001)
Weighted average
shares
outstanding-basic 50,434,801 45,498,718 50,183,303 45,498,718
Weighted average
shares
outstanding-
diluted 63,589,401 45,498,718 63,337,903 46,498,718
See accompanying notes to consolidated financial statements.
ASSURANCEAMERICA CORPORATION
(Unaudited) CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 2005 and 2004
2005 2004
----------- -----------
Cash flows from operating activities:
Net income (loss) $ 1,840,728 $ (33,039)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 282,452 220,864
Changes in assets and liabilities:
Receivables (8,087,866) (687,350)
Prepaid expenses and other assets (272,254) 19,203
Unearned premiums and other payables 7,646,406 2,295,025
Unpaid loss and loss adjustment expenses 2,252,346 5,715,154
Ceded reinsurance payable 4,381,573 2,147,187
Reinsurance recoverable (2,090,013) (5,272,204)
Prepaid reinsurance premiums (5,188,536) (1,465,933)
Accounts payable and accrued expenses 1,565,433 341,955
Deferred acquisition costs (352,075) (89,423)
Provisional commission reserve 114,238 (574,786)
----------- -----------
Net cash provided by operating activities 2,092,432 2,616,653
----------- -----------
Cash flows from investing activities:
Purchases of property and equipment (344,987) (65,590)
(Acquisitions)/Disposals - (1,300,000)
Purchases of investments and accrued
investment income (364,585) (17,687)
----------- -----------
Net cash (used) by investing activities (709,572) (1,383,277)
----------- -----------
Cash flows from financing activities:
Related party debt, net (1,484,319) (522,000)
Preferred dividends paid (253,200) -
Capital contribution - 2,090,536
Stock issued 4,212,775 681,500
----------- -----------
Net cash provided by financing activities 2,475,256 2,250,036
----------- -----------
Net increase in cash and cash equivalents 3,858,116 3,483,412
Cash and cash equivalents, beginning of period 7,059,188 3,130,553
----------- -----------
Cash and cash equivalents, end of period $10,917,304 $ 6,613,965
=========== ===========
See accompanying notes to consolidated financial statements