OPERATING DATA YEAR ENDED DECEMBER 31, ---------------------------------------------------- 2001 2000 1999 1998 1997 -------- ------- -------- -------- ------- (In thousands, except per share amounts) REVENUES:
Net premiums earned.........$ 84,633 $ 75,448 $ 56,155 $ 76,023 $ 87,537 Net investment income....... 17,388 18,076 18,642 20,803 21,325 Commission income........... 3,312 903 1,956 591 1,439 Realized investment gains... 2,874 5,247 12,504 8,615 10,425 Other income................ 285 1,059 237 396 293 -------- -------- -------- -------- -------- TOTAL REVENUES..............$108,492 $100,733 $ 89,494 $106,428 $121,019 -------- -------- -------- -------- --------
NET INCOME (LOSS)...........$(13,139) $ (5,502) $ 16,413 $ 18,523 $ 26,368 ======== ======== ======== ======== ========
Weighted average shares outstanding............... 9,232 9,244 9,687 9,679 9,849 Basic earnings (loss) per share.................$ (1.42) $ (.60) $ 1.69 $ 1.91 $ 2.68 ======== ======== ======== ======== ========
YEAR ENDED DECEMBER 31, ---------------------------------------------------- 2001 2000 1999 1998 1997 -------- ------- -------- -------- ------- (In thousands) Total investments...........$366,167 $371,291 $396,710 $443,022 $438,591 Total assets................ 856,997 720,329 764,304 730,320 707,903 Unpaid losses and loss adjustment expenses....... 534,189 411,267 425,469 401,584 388,402 Notes payable............... 7,911 7,458 12,458 17,458 22,458 Total shareholders' equity..$199,272 $216,290 $231,142 $228,180 $206,519
Ocean marine (a)................. $49,128 55% $60,100 67% $48,564 87% Inland marine.................... 656 1% 517 1% 153 -- Aircraft......................... 26,556 30% 25,060 28% 5,319 9% Other liability.................. 4,661 5% 3,239 4% 2,064 4% Other (b)........................ 8,691 9% 322 -- 6 -- --------------------------------------------- Total............................ $89,692 100% $89,238 100% $56,106 100% ============================================
NYMAGIC NET PREMIUMS EARNED BY LINE OF BUSINESS YEAR ENDED DECEMBER 31, - --------------------------- --------------------------------------------- 2001 2000 1999 --------------------------------------------- (Dollars in thousands)
Ocean marine (c)................. $47,707 56% $58,670 78% $48,159 86% Inland marine.................... 477 1% 381 1% 182 -- Aircraft......................... 28,318 34% 12,823 17% 5,310 9% Other liability.................. 2,770 3% 3,228 4% 2,529 5% Other (d)........................ 5,361 6% 346 -- (25) -- --------------------------------------------- Total............................ $84,633 100% $75,448 100% $56,155 100% =============================================
(a) Includes net premiums written from MMO London of $3,438, $27,654 and $17,365 for 2001, 2000 and 1999, respectively.
The Company reported net losses of $13.1 million, or $1.42 per diluted share, and net losses of $5.5 million, or $.60 per diluted share, for the years ended December 31, 2001 and 2000, respectively. The results from operations were adversely affected by net losses from MMO London of $9.9 million, or $1.07 per diluted share and $15.4 million or $1.66 per diluted share for the years ended December 31, 2001 and 2000, respectively. Results for the year ended December 31, 2001 include after-tax losses of approximately $9.0 million, or $.98 per diluted share, resulting from the September 11, 2001 terrorist attacks on the World Trade Center, the Pentagon and the hijacked airliner which crashed in Pennsylvania (collectively hereinafter referred to as the "WTC attack").
The Company reported operating losses, which excludes the effects of realized investment gains or losses after taxes, of $15.0 million, or $1.63 per diluted share, and operating losses of $8.9 million, or $.96 per diluted share, for the years ended December 31, 2001 and 2000, respectively.
Aircraft- net premiums earned in the aircraft line increased in 2001 primarily due to higher net retention levels and rate increases; however, they were offset by ceded reinstatement premiums incurred of $5.0 million from the WTC attack. The increase in net premiums earned was achieved despite reductions in policy count and more expensive reinsurance costs resulting from a tighter reinsurance market. Part of this increase was attributable to premium surcharges enacted after the WTC attack. The Company recorded approximately $12 million in net premiums written from premium surcharges, of which $6.5 million was earned, in 2001. These premium surcharges were enacted by the Federal Government and no assurance can be given as to the continuance or renewal of such premium in the future. In addition, net premiums written are expected to decline in 2002 in the aircraft line as the Company is not planning to write new or renewal aircraft policies on a direct basis subsequent to March 31, 2002.
Other liability - net premiums earned in the other liability line declined in 2001 due to the non-renewal of assumed auto liability business in 2001. However, net premiums written increased primarily due to additional premium volume through expansion opportunities and firmer pricing. Contributing to the growth in 2001 was approximately $700,000 in net premiums written from policies covering errors and omissions/professional liability risks.
Premiums earned from MMO London decreased in 2001 by 46%. Excluding a prior year transaction, which involved a one-time assumption of ocean marine and casualty premiums, net premiums earned in MMO London during 2001 would have decreased by 25% which reflected a reduction in capacity for premium writings at Lloyd's. Current year net premiums written and earned include approximately $7.8 million and $4.9 million, respectively, resulting from the Company's interest in Lloyd's Syndicate 2010 which, effective January 1, 2001, primarily wrote assumed reinsurance of aircraft and property risks. Premiums earned are expected to further decrease in MMO London in 2002 as the Company will not be providing capacity (the ability to write premiums) to any Lloyd's syndicate for the 2002 underwriting year.
Net losses and loss adjustment expenses incurred as a percentage of net premiums earned (the "loss ratio") was 103.9% for the year ended December 31,
Realized investment gains were $2.9 million and $5.2 million for the years ended December 31, 2001 and 2000, respectively. The current year's amount reflects larger write-downs from other than temporary declines in the fair value of equity securities. The prior year's amount reflects larger gains from the sale of equity securities.
Commission income rose to $3.3 million for the year ended December 31, 2001 from approximately $900,000 for the year ended December 31, 2000. The increase in the current year largely reflects larger profit commissions based upon the ceded results of reinsurance treaties.
Other income decreased in the current year as the prior year amount reflects a gain of $700,000 resulting from the sale of the Company's Lloyd's agency.
Interest expense decreased to $395,000 for the year ended December 31, 2001 from $712,000 for the same period of the prior year as a result of a decrease in average loan principal outstanding throughout the year.
Total income taxes for the years ended December 31, 2001 and 2000 include increases of $5.2 million and $3.7 million, respectively, in the valuation allowance for deferred income taxes with respect to tax loss carryforwards.
Other liabilities as of December 31, 2001 increased to $23.2 million from $9.8 million as of the prior year end as a result of increases in funds held from reinsurers in order to collateralize their obligations to the Company as required by provisions of various reinsurance treaties. Funds obtained from reinsurers are invested for the benefit of the Company in the insurance pool managed by MMO.
Unpaid losses and loss adjustment expenses and reinsurance receivables as of December 31, 2001 increased to $534.2 million and $361.7 million, respectively, primarily as a result of gross losses of $154.9 million and
reinsurance receivables of $146.9 million, respectively, incurred from the WTC attack.
Other liability premiums earned increased 28% in 2000. The growth in premiums is attributable to writing a new class of assumed auto liability business in 2000.
Inland marine premiums increased mainly due to increased policy counts in 2000.
Interest expense decreased to $712,000 for the year ended December 31, 2000 from $1,058,000 for the prior year primarily as a result of a decrease in loan principal outstanding.
The Company maintains a position of investments in bonds from various states and municipalities. Such securities receive favorable tax treatment under existing tax laws. The investment position is monitored regularly, and as a result, the Company may change its investment in such securities from year to year after consideration of the alternative minimum tax.
Under the Common Stock Repurchase Plan, the Company may purchase up to $55,000,000 of the Company's issued and outstanding shares of common stock on the open market. During 2000, the Company repurchased 529,400 shares of common stock, under the Company's Common Stock Repurchase Plan, for a total cost of approximately $6.9 million. During 2001 and 2000, the Company issued 4,540 and 9,074 treasury shares, respectively, in connection with the compensation of its Directors. As of December 31, 2001, the Company had repurchased, net of treasury shares issued, a total of 2,639,868 shares of common stock at a total cost of approximately $45,219,570 at market prices ranging from $12.38 to $28.81 per share.
Unpaid losses and loss adjustment expenses are based on individual case estimates for losses reported. A provision is also included, based on actuarial estimates utilizing historical trends in the frequency and severity of paid and reported claims, for losses incurred but not reported, salvage and subrogation recoveries and for loss adjustment expenses. Unpaid losses with respect to
The allowance for doubtful accounts is based on management's review of amounts due from insolvent or financially impaired companies. Allowances are estimated for both premium receivables and reinsurance receivables. Management continually reviews and updates such estimates for any changes in the financial status of companies. For a further discussion concerning reinsurance receivables see "REINSURANCE CEDED". The allowance for doubtful accounts on reinsurance receivables amounted to $17.6 million and $7.7 million at December 31, 2001 and 2000, respectively. The allowance for doubtful accounts on premiums and other receivables amounted to $450,000 at December 31, 2001 and 2000.
The Company uses derivatives, in the form of an interest rate swap, for hedging purposes as part of its strategy for interest rate management. The Company adopted SFAS 133 on January 1, 2001 and such adoption did not have a material effect on its financial statements.