GlobeNewswire Inc | Sep 30, 2021 04:20PM EDT

September 30, 2021

HAMILTON, Bermuda, Sept. 30, 2021 (GLOBE NEWSWIRE) -- American Overseas Group Limited (BSX: AORE.BH) (Pink Sheets: AOREF.PK) (AOG or the Company) today reported consolidated net loss available to common shareholders of $3.0 million, or $63.75 per diluted share, for the three months ended June 30, 2021. This compares to consolidated net loss available to common shareholders of $1.4 million, or $30.97 per diluted share, for the three months ended June 30, 2020. Book value per weighted share at June 30, 2021 was $1,003.21 a decline from the book value per weighted share of $1,112.19 at June 30, 2020.

For the three months ended June 30, 2021, the Company had an operating loss of $2.4 million, or $51.26 per diluted share, compared to an operating loss of $20.7 million, or $443.09 per diluted share for the three months ended June 30, 2020. The financial guaranty segment ended in April of 2020 due to a commutation of the remaining portfolio of financial guaranty reinsurance business it had assumed from Assured Guaranty Municipal Corp (AGMC). The aggregate outstanding par value of the reinsurance portfolio commuted was $345.0 million.

For the three months ended June 30, net earned property and casualty premiums increased $1.5 million from $4.1 million a year ago to $5.6 million, driven by an increase in existing and new programs. Fee income increased 28.6% from $2.1 million to $2.7 million driven by an increase in gross written premiums year over year of $27.8 million, moving from $86.9 million to $114.7 million. Quarterly direct written premiums were positively impacted by continued expansion of new programs in Texas and other key states as well as overall economic recovery, causing volume increases in the personal auto market. Loss and loss adjustment expenses as a percentage of earned premium increased from 51.2% to 66.0%.

For the three months ended June 30, operating expenses increased $2.1 million from $2.8 million to $4.9 million primarily due to a one-time recognition of items previously held as a receivable against a personal guarantee contract. This contract is associated with a managing general agency program that was discontinued in the first quarter of 2020. Each quarter, the Company evaluates the collectability of the receivable, and has determined there to be a significant risk to collectability in the near term. The Company no longer holds a receivable balance for the matter in question, but continues to vigorously pursue its interests to recover expenses owed under the personal guarantee contract.

As part of its ongoing capital management efforts, the Company will continue to redirect excess capital within the group to debt reduction unless other compelling opportunities present themselves.

Forward-Looking Statements

This release contains statements that may be considered "forward-looking statements" within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include, without limitation, the Company's expectations respecting the volatility of its insured portfolio, losses, loss reserves and loss development, the adequacy and availability of its liquidity and capital resources, its current run off strategy, its strategy for writing other reinsurance businesses and its expense reduction measures. These statements are based on current expectations and the current views of the economic and operating environment and are not guarantees of future performance. A number of risks and uncertainties, including economic competitive conditions, could cause actual results to differ materially from those projected in forward-looking statements. The Company's actual results could differ materially from those expressed or implied in the forward-looking statements.

Explanation of Non-GAAP Financial Measures

The Company believes that the following non-GAAP financial measure included in this press release serve to supplement GAAP information and is meaningful to investors.

Operating income (loss): The Company believes operating income (loss) is a useful measure because it measures income from operations, unaffected by non-operating items such as realized investment gains or losses. Operating income (loss) is typically used by research analysts and rating agencies in their analysis of the Company.

Information About the Company

American Overseas Group Limited is an insurance holding company incorporated in Bermuda and a tax resident of the United Kingdom. Its operating subsidiaries provide specialty property/casualty insurance, reinsurance and insurance management services. More information can be found at www.aoreltd.com.

American Overseas Group Limited

info@aoreltd.com

American Overseas Group LimitedConsolidated Balance Sheets(unaudited)As at June 30, 2021 and December 31, 2020(dollars in thousands) June 30, 2021 December 31, 2020Assets Investments: Fixed-maturity securities held as available $ 64,496 $ 72,642 for sale, at fair valueEquity investments held as available for sale, 4,626 4,143 at fair valueCash and cash equivalents 26,940 24,254 Restricted cash 2,160 548 Accrued investment income 281 355 Premiums receivable 83,127 73,073 Deferred insurance premiums 114,583 101,843 Reinsurance balances receivable, net 199,565 194,914 Deferred policy acquisition costs 4,916 3,590 Intangible assets 4,800 4,800 Goodwill 33,050 33,050 Other assets 3,167 3,767 Total Assets $ 541,711 $ 516,979 Liabilities and Equity Liabilities: Loss and loss expense reserve $ 198,810 $ 192,943 Deferred commission income 3,283 2,482 Unearned premiums 119,370 105,678 Ceded premium payable 77,796 71,989 Payable to general agents 7,165 4,331 Funds withheld 60,660 64,980 Accounts payable and accrued liabilities 10,226 7,922 Notes payable 16,521 16,521 Non-owned interest in VIE 300 300 Interest payable 450 451 Total Liabilities 494,581 467,597 Shareholders' Equity: Common shares 4,698 4,698 Additional paid-in capital 189,179 189,151 Accumulated other comprehensive income 1,700 1,962 Retained deficit (154,500 ) (152,482 )Total Shareholders' Equity 41,077 43,329 Non-controlling interest of preferred shares 6,053 6,053 of subsidiariesTotal Equity 47,130 49,382 Total Liabilities and Equity $ 541,711 $ 516,979

See Notes to June 30, 2021 Consolidated Financial Statements available on American Overseas Group Ltd. Website at www.aoreltd.com

American Overseas Group LimitedConsolidated Statements of Operations(unaudited)(dollars in thousands, except share and per share amounts) Three months ended June, Six months ended June, 2021 2020 2021 2020 Revenues Net premiums $ 5,552 $ 610 $ 10,537 $ 4,438 earnedFee income 2,736 2,084 6,022 5,251 Net investment 65 92 162 592 incomeNet realized gains (2 ) 1,294 36 1,500 on investmentsFair value - 2,635 - 2,077 adjustmentOther income 44 - 77 - Total revenues 8,395 6,715 16,834 13,860 Expenses Losses and lossadjustment 3,667 4,107 6,391 5,811 expensesAcquisition 1,799 956 3,575 2,239 expensesOperating expenses 4,888 2,833 7,373 6,690 Other expense - (238 ) - 284 Interest expense 451 451 902 902 Total expenses 10,805 8,109 18,241 15,926 Net (loss)available to $ (2,410 ) $ (1,394 ) $ (1,407 ) $ (2,066 )commonshareholdersIncome tax - (52 ) (26 ) (216 )(expense) Net (loss) before (2,410 ) (1,446 ) (1,433 ) (2,282 )dividendsDividends onpreference shares (585 ) - (585 ) - of subsidiary Net (loss)available to $ (2,995 ) $ (1,446 ) $ (2,018 ) $ (2,282 )commonshareholders Net (loss) per common share:Basic $ (63.75 ) $ (31.18 ) $ (42.96 ) $ (49.29 )Diluted (63.75 ) (30.97 ) (42.96 ) (48.96 ) Weighted-averagenumber of common sharesoutstanding:Basic 46,979 46,379 46,979 46,295 Diluted 46,979 46,689 46,979 46,605

See Notes to June 30, 2021 Consolidated Financial Statements available on American Overseas Group Ltd. Website at www.aoreltd.com

AMERICAN OVERSEAS GROUP LTD. NET INCOME AND OPERATING INCOME BY SEGMENT (dollars in Three months ended June 30, 2021thousands) Net Income Net Realized Net Change Available to (Gain)/Loss in Fair Fair Value Restructuring Operating Common on Sales of Value of Adjustments Charges Income Shareholders Investments Credit DerivativesProperty and casualty: Net premiums $ 5,552 $ 5,552 earnedLosses andloss (3,667 ) (3,667 )adjustmentexpensesAcquisition (1,799 ) (1,799 )expensesProperty/Casualty 86 86 UnderwritingIncome Fee income 2,736 2,736 Operating (4,468 ) (4,468 )expensesIncome tax - - Property and (1,646 ) - - - - (1,646 )casualty Financial guaranty: Net premiums - - earnedNet changein fairvalue of - - creditderivativesLosses andloss - - adjustmentexpensesAcquisition - - expensesOperating - - expensesFinancial - - - - - - guaranty Corporateand Investing Netinvestment 65 65 incomeNet realized (2 ) 2 - gain/(loss)Operating (420 ) (420 )expensesInterest (451 ) (451 )expenseOtherincome, net 44 44 of otherexpenseCorporateand (764 ) 2 - - - (762 )investing Group total $ (2,410 ) $ 2 $ - $ - $ - $ (2,408 ) (dollars in Three months ended June 30, 2020thousands) Net Income Net Realized Net Change Available to (Gain)/Loss in Fair Fair Value Restructuring Operating Common on Sales of Value of Adjustments Charges Income Shareholders Investments Credit DerivativesProperty and casualty: Net premiums $ 4,120 $ 4,120 earnedLosses andloss (2,111 ) (2,111 )adjustmentexpensesAcquisition (1,085 ) (1,085 )expensesProperty/Casualty 924 923 UnderwritingIncome Fee income 2,084 2,084 Operating (2,483 ) (2,483 )expensesIncome tax (53 ) (53 )Property and 472 - - - - 472 casualty Financial guaranty: Net premiums (3,510 ) 3,510 - earnedNet changein fairvalue of - - - creditderivativesLosses andloss (1,995 ) (18,657 ) (20,652 )adjustmentexpensesAcquisition 129 (129 ) - expensesOperating 37 37 expensesFinancial (5,339 ) - - (15,276 ) - (20,615 )guaranty Corporateand Investing Netinvestment 92 92 incomeNet realized 1,293 (20,793 ) 19,500 - gain/(loss)Fair value 2,635 (2,635 ) - adjustmentOperating (386 ) (386 )expensesInterest (451 ) (451 )expenseOtherincome, net 238 238 of otherexpenseCorporateand 3,421 (20,793 ) - 16,865 - (507 )investing Group total $ (1,446 ) $ (20,793 ) $ - $ 1,589 $ - $ (20,650 )

AMERICAN OVERSEAS GROUP LTD.NET INCOME AND OPERATING INCOME BY SEGMENT (dollars in Six months ended June 30, 2021thousands) Net Income Net Realized Net Change Available to (Gain)/Loss in Fair Fair Value Restructuring Operating Common on Sales of Value of Adjustments Charges Income Shareholders Investments Credit DerivativesProperty and casualty: Net premiums $ 10,537 $ 10,537 earnedLosses andloss (6,391 ) (6,391 )adjustmentexpensesAcquisition (3,575 ) (3,575 )expensesProperty/Casualty 571 571 UnderwritingIncome Fee income 6,022 6,022 Operating (6,745 ) (6,745 )expensesIncome tax (26 ) (26 )Property and (178 ) - - - - (178 )casualty Financial guaranty: Net premiums - - earnedNet changein fairvalue of - - creditderivativesLosses andloss - - adjustmentexpensesAcquisition - - expensesOperating - - expensesFinancial - - - - - - guaranty Corporateand Investing Netinvestment 162 162 incomeNet realized 36 (36 ) - gain/(loss)Operating (628 ) (628 )expensesInterest (902 ) (902 )expenseOtherincome, net 77 77 of otherexpenseCorporateand (1,255 ) (36 ) - - - (1,291 )investing Group total $ (1,433 ) $ (36 ) $ - $ - $ - $ (1,469 ) (dollars in Six months ended June 30, 2020thousands) Net Income Net Realized Net Change Available to (Gain)/Loss in Fair Fair Value Restructuring Operating Common on Sales of Value of Adjustments Charges Income Shareholders Investments Credit DerivativesProperty and casualty: Net premiums $ 7,951 $ 7,951 earnedLosses andloss (4,234 ) (4,234 )adjustmentexpensesAcquisition (2,370 ) (2,370 )expensesProperty/Casualty 1,347 1,347 UnderwritingIncome Fee income 5,251 5,251 Operating (5,625 ) 362 (5,263 )expensesIncome tax (217 ) (76 ) (293 )Property and 756 - - - 286 1,042 casualty Financial guaranty: Net premiums (3,513 ) 3,703 190 earnedNet changein fairvalue of 2 (2 ) - creditderivativesLosses andloss (1,577 ) (19,546 ) (21,123 )adjustmentexpensesAcquisition 131 (153 ) (22 )expensesOperating (67 ) (67 )expensesFinancial (5,024 ) - (2 ) (15,996 ) - (21,022 )guaranty Corporateand Investing Netinvestment 592 592 incomeNet realized 1,500 (21,000 ) 19,500 - gain/(loss)Fair value 2,077 (2,077 ) - adjustmentOperating (998 ) (998 )expensesInterest (902 ) (902 )expenseOtherincome, net (283 ) (283 )of otherexpenseCorporateand 1,986 (21,000 ) - 17,423 - (1,591 )investing Group total $ (2,282 ) $ (21,000 ) $ (2 ) $ 1,427 $ 286 $ (21,571 )