GlobeNewswire Inc | Dec 30, 2021 04:00PM EST

December 30, 2021

HAMILTON, Bermuda, Dec. 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 $1.8 million, or $37.38 per diluted share, for the three months ended September 30, 2021. This compares to consolidated net income available to common shareholders of $0.5 million, or $11.58 per diluted share, for the three months ended September 30, 2020. Book value per weighted share at September 30, 2021 was $959.06, a decline from the book value per weighted share of $1,126.51 at September 30, 2020.

For the three months ended September 30, 2021, the Company had an operating loss of $1.8 million, or $37.68 per diluted share, compared to operating income of $0.6 million, or $11.90 per diluted share for the three months ended September 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 September 30, net earned property and casualty premiums increased $1.1 million from $4.3 million a year ago to $5.4 million, driven by an increase in existing and new programs. Fee income remained constant at $2.6 million quarter over quarter while gross written premiums increased $4.2 million, moving from $96.2 million to $100.4 million. Quarterly direct written premiums were positively impacted by continued expansion of new programs, rate increases, and overall economic recovery. Loss and loss adjustment expenses as a percentage of earned premium increased from 55.1% to 71.2%.

For the three months ended September 30, operating expenses increased $1.1 million from $2.6 million to $3.7 million primarily due to a $0.9 million increase in taxes, licenses and fees associated with program business written in Louisiana. For prior year quarterly results, the Company received credits associated with these expenses from its program partner. Additionally, the Company recognized latent charges related to current year to date expenses associated with Louisiana taxes, licenses and fees in the current quarter. The remaining $0.2 million increase in operating expense for the quarter is driven primarily by marketing activity returning to more normal levels in 2021 compared to 2020 expenditure levels, which were impacted by COVID related restrictions.

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 Limited Consolidated Balance Sheets (unaudited) As at September 30, 2021 and December 31, 2020 (dollars in thousands) September 30, December 31, 2021 2020Assets Investments: Fixed-maturity securities held as $ 92,473 $ 72,642 available for sale, at fair value Equity investments held as available for 3,574 4,143 sale, at fair value Cash and cash 37,544 24,254 equivalents Restricted cash 3,968 548 Accrued investment 443 355 income Premiums receivable 80,015 73,073 Deferred insurance 108,584 101,843 premiums Reinsurance balances 211,946 194,914 receivable, net Deferred policy 5,045 3,590 acquisition costs Intangible assets 4,800 4,800 Goodwill 33,050 33,050 Other assets 3,708 3,767 Total Assets $ 585,150 $ 516,979 Liabilities and Equity Liabilities: Loss and loss expense $ 204,340 $ 192,943 reserve Deferred commission 3,442 2,482 income Unearned premiums 113,425 105,678 Ceded premium payable 82,833 71,989 Payable to general 7,576 4,331 agents Funds withheld 100,333 64,980 Accounts payable and 10,873 7,922 accrued liabilities Notes payable 16,521 16,521 Non-owned interest in 300 300 VIE Interest payable 451 451 Total Liabilities 540,094 467,597 Shareholders' Equity: Common shares 4,698 4,698 Additional paid-in 189,179 189,151 capital Accumulated other 1,382 1,962 comprehensive income Retained deficit (156,256 ) (152,482 ) Total Shareholders' 39,003 43,329 Equity Non-controlling interest of preferred 6,053 6,053 shares of subsidiaries Total Equity 45,056 49,382 Total Liabilities $ 585,150 $ 516,979 and Equity See Notes to September 30, 2021 Consolidated Financial Statements available on American Overseas Group Ltd. Website at www.aoreltd.com

American Overseas Group Limited Consolidated Statements of Operations (unaudited) (dollars in thousands, except share and per share amounts) Three months ended Nine months ended September, September, 2021 2020 2021 2020 Revenues Net premiums $ 5,397 $ 4,337 $ 15,935 $ 8,775 earned Fee income 2,644 2,645 8,667 7,896 Net change in fair value of - - - 2 credit derivatives Net investment 46 60 208 652 income Net realized gains on 14 8 50 1,508 investments Fair value - (23 ) - 2,054 adjustment Other income 28 - 105 - Total 8,130 7,027 24,965 20,887 revenues Expenses Losses and loss adjustment 3,841 2,389 10,232 8,200 expenses Acquisition 1,931 1,537 5,506 3,775 expenses Operating 3,663 2,603 11,038 9,294 expenses Other expense - 46 - 330 Interest 451 451 1,352 1,352 expense Total 9,886 7,026 28,128 22,951 expenses Net (loss) income available to common $ (1,756 ) $ 1 $ (3,163 ) $ (2,064 ) shareholders Income tax - 539 (26 ) 322 (expense) Net (loss) income (1,756 ) 540 (3,189 ) (1,742 ) before dividends Dividends on preference - - (585 ) - shares of subsidiary Net (loss) income available to common $ (1,756 ) $ 540 $ (3,774 ) $ (1,742 ) shareholders Net (loss) income per common share: Basic $ (37.38 ) $ 11.64 $ (80.34 ) $ (37.61 ) Diluted (37.38 ) 11.58 (80.34 ) (37.17 ) Weighted-average number of common shares outstanding: Basic 46,979 46,386 46,979 46,326 Diluted 46,979 46,620 46,979 46,870 See Notes to September 30, 2021 Consolidated Financial Statements available onAmerican Overseas Group Ltd. Website at www.aoreltd.com

AMERICAN OVERSEAS GROUP LTD. NET INCOME AND OPERATING INCOME BY SEGMENT (dollars in Three months ended September 30, 2021 Nine months ended September 30, 2021 thousands) Net Income Net Net Change Net Income Net Realized Net Change Available to Realized in Fair Fair Value Restructuring Operating Available to (Gain)/Loss in Fair Fair Value Restructuring Operating Common (Gain)/Loss Value of Adjustments Charges Income/ Common on Sales of Value of Adjustments Charges Income/(Loss) Shareholders on Sales of Credit (Loss) Shareholders Investments Credit Investments Derivatives Derivatives Property and casualty: Net premiums $ 5,397 $ 5,397 $ 15,935 $ 15,935 earned Losses and loss (3,841 ) (3,841 ) (10,232 ) (10,232 ) adjustment expenses Acquisition (1,931 ) (1,931 ) (5,506 ) (5,506 ) expenses Property/ Casualty (375 ) (375 ) 197 197 Underwriting Income Fee income 2,644 2,644 8,667 8,667 Operating (3,307 ) (3,307 ) (10,052 ) (10,052 ) expenses Income tax - - (26 ) (26 ) Property and (1,038 ) - - - - (1,038 ) (1,214 ) - - - - (1,214 ) casualty Financial guaranty: Net premiums - - - - earned Net change in fair value of - - - - credit derivatives Losses and loss - - - - adjustment expenses Acquisition - - - - expenses Operating - - - - expenses Financial - - - - - - - - - - - - guaranty Corporate and Investing Net investment 46 46 208 208 income Net realized 14 (14 ) - 50 (50 ) - gain/(loss) Operating (356 ) (356 ) (986 ) (986 ) expenses Interest (451 ) (451 ) (1,352 ) (1,352 ) expense Other income, net 29 29 105 105 of other expense Corporate and (718 ) (14 ) - - - (732 ) (1,975 ) (50 ) - - - (2,025 ) investing Group total $ (1,756 ) $ (14 ) $ - $ - $ - $ (1,770 ) $ (3,189 ) $ (50 ) $ - $ - $ - $ (3,239 ) (dollars in Three months ended September 30, 2020 Nine months ended September 30, 2020 thousands) Net Income Net Net Change Net Income Net Realized Net Change Available to Realized in Fair Fair Value Restructuring Operating Available to (Gain)/Loss in Fair Fair Value Restructuring Operating Common (Gain)/Loss Value of Adjustments Charges Income/ Common on Sales of Value of Adjustments Charges Income/(Loss) Shareholders on Sales of Credit (Loss) Shareholders Investments Credit Investments Derivatives Derivatives Property and casualty: Net premiums $ 4,337 $ 4,337 $ 12,288 $ 12,288 earned Losses and loss (2,388 ) (2,388 ) (6,622 ) (6,622 ) adjustment expenses Acquisition (1,536 ) (1,536 ) (3,906 ) (3,906 ) expenses Property/ Casualty 413 413 1,760 1,760 Underwriting Income Fee income 2,645 2,645 7,896 7,896 Operating (2,200 ) (2,200 ) (7,383 ) 362 (7,021 ) expenses Income tax 539 539 322 (76 ) 246 Property and 1,397 - - - - 1,397 2,595 - - - 286 2,881 casualty Financial guaranty: Net premiums - - (3,513 ) 3,703 190 earned Net change in fair value of - - 2 (2 ) - credit derivatives Losses and loss - - (1,577 ) (19,546 ) (21,123 ) adjustment expenses Acquisition - - 131 (153 ) (22 ) expenses Operating - - (509 ) (509 ) expenses Financial - - - - - - (5,466 ) - (2 ) (15,996 ) - (21,464 ) guaranty Corporate and Investing Net investment 60 60 652 652 income Net realized 8 (8 ) - 1,508 (21,008 ) 19,500 - gain/(loss) Fair value (23 ) 23 - 2,054 (2,054 ) - adjustment Operating (403 ) (403 ) (1,402 ) (1,402 ) expenses Interest (451 ) (451 ) (1,352 ) (1,352 ) expense Other income, net (48 ) (48 ) (331 ) (331 ) of other expense Corporate and (857 ) (8 ) - 23 - (842 ) 1,129 (21,008 ) - 17,446 - (2,433 ) investing Group total $ 540 $ (8 ) $ - $ 23 $ - $ 555 $ (1,742 ) $ (21,008 ) $ (2 ) $ 1,450 $ 286 $ (21,016 )