Tag - Insurance

Few sectors have been spared by the recent bear market, and technology is no exception. With the Dow Jones Technology Index down 16% year-to-date, Ebix, Inc. (Nasdaq:EBIX) has been one of the rare bright spots in 2008 in an otherwise discouraging industry.

Formerly started as Delphi Information Systems in 1976, the company, which changed its name in 2003, provides application software products for the insurance and financial service industries. It consists of a few hundred financial and technology consultants that work with clients to create systems that are customized for their clients’ e-commerce needs. Ebix designs products such as carrier systems, agency systems and exchanges.

The Atlanta-based small cap has experienced explosive growth and has been a remarkable success for its shareholders. Now at market cap $276 million, Ebix has seen its shares climb about 85% over the past 52 weeks and more than 1,000% over the past five years. This success has not gone unnoticed. In just the past month, the company was selected to join the Russell 2000 index and also was named one of the 100 fastest growing small public companies in the United States by Fortune Small Business magazine.

In May, company management reported a blow-out first quarter in which EPS reached the highest level in the organization’s 32-year history. Diluted EPS for the quarter surged 129.5% on a year-over-year basis and quarterly revenue rose by 84.5%. A major contributor to this growth was the company’s recent acquisition of Telstra eBusiness that occurred in January of this year. Going forward, Ebix expects . . .

CNinsure Inc. (Nasdaq: CISG) said this morning that it has formed a strategic partnership with Chinese insurance company Ping An Life Insurance Co. of China to distribute and design certain insurance products.

The independent insurance agency and brokerage company that operates in China said it will work with Ping An Life to distribute accident, health, endowment and medical insurance policies as well as co-design insurance policies in product development.

Under the partnership, CNinsure can exclusively distribute the customized products while Ping An Life Insurance provides comprehensive training and sales support, including incentive rewards to sales agents.

CNinsure says its partnership with Ping An Life will capitalize on the benefits of using its own distribution network and create greater differentiation from competitors through sales of Ping An Life’s customized products.

Shares of CNinsure (CISG) popped 19.02%, or $2.06, to $12.89 in pre-market trading. Shares of CNinsure have been trading in the range of $8.51 to $28.74 for the past 52 weeks.

Ambac Financial Group, Inc. (NYSE: ABK) shares are plunging after ratings agency Moody’s Investors Services placed the insurer’s credit rating on review for a potential downgrade from its “AAA” rating.

Ambac said in a statement that it is assessing the impact of Moody’s action and held a morning conference call to discuss the situation. Moody’s said Ambac’s recent quarterly losses, changes in management and plans to raise capital justify the credit review.

Ambac on Thursday said it's assessing its previously disclosed capital plan in light of what it called a "surprising" announcement by Moody's Investors Service in which the ratings agency said it was placing Ambac under review for a possible downgrade.

During the conference call, the New York City-based firm said it is “confident” about its insured portfolio and will discuss the Moody’s review on a conference call scheduled for Jan. 22.

In midday trading, ABK shares are down 54.36%, or $7.05, at $5.92. Shares have taken a wild ride over the last 52 weeks, ranging from $4.50 to $96.10.

Penn Treaty American Corp. (NYSE: PTA), which specializes in the sale and distribution of long-term care insurance products, said today that it will restate its financial statements for the year ended Dec. 31, 2005 due to the impact of certain errors on the previously reported quarterly results.

The small cap said the restatement is a reduction to book value of less than $1 million at Dec. 31, 2005. It noted that the impact of the errors is not material to periods before 2005. As a result, the company said it will not restate accounting periods prior to 2005.

Penn Treaty will release unaudited financial results for the year ended Dec. 31, 2006 by the week of Jan. 28.

Shares of Penn Treaty American (PTA) were up 1.18%, or $0.07, to $5.87 during morning trading. Over the last 52 weeks, shares have ranged between $5.05 and $8.23.

While competitive pressures are pushing rates and premiums down for many property and casualty insurance providers, two specialty suppliers, SeaBright Insurance Holdings, Inc. (Nasdaq: SEAB) and Tower Group Inc. (Nasdaq: TWGP) are continuing to post robust growth due to their niche focuses. 

Seabright Insurance Holdings specializes in niche products such as maritime workers insurance, alternative dispute resolution (ADR) insurance and State Act workers compensation insurance. It is licensed to sell insurance in 45 states and distributes its products through independent brokers and wholesalers. 

SeaBright is growing premiums faster than the overall market because of its focus on specialty segments of the workers compensation insurance market. Although workers compensation is a huge market (generating premiums of $46 billion annually), premiums declined last year because of competitive pricing. Premium growth is forecast at only 1.5% in 2007, the slowest growth since 1998.

This company is one of only a handful of insurance providers authorized to write maritime coverage under the USL&H Act, a federal law covering longshoremen injured in shipyards and vessel unloading areas. SeaBright is also authorized to provide coverage under the Jones Act, a federal law protecting seamen and offshore workers injured through employer negligence and under OCSLA, which covers maritime workers on off-shore drilling platforms.

In addition, SeaBright is one of a few select insurance companies that provides coverage to employers subject to collectively bargained workers compensation agreements. These agreements, also known as ADR programs, reduce litigation costs by using informal arbitration rather than litigation to resolve disputes. ADR programs are prevalent in California. In addition, SeaBright provides coverage under State Act workers compensation laws, which vary from state to state. SeaBright focuses mainly on State Act workers compensation customers in California, Alaska, Illinois and Hawaii. 

CRM Holdings, Ltd. (Nasdaq: CRMH), a provider of a full range of products and services for the workers' compensation insurance industry, reported robust third-quarter results today, pushing shares up during afternoon trading.

For the three months ending Sept. 30, net income was $7.2 million, or $0.44 per diluted share, compared with $3.3 million, or $0.21 per diluted share, in the third quarter of 2006. No analyst estimates were available.

Total revenues were $39.5 million in the quarter, an increase of 129% from $17.3 million in the same quarter of 2006.

The small cap noted that its results were aided by the inclusion of results of Majestic Insurance Company, which it acquired Nov. 14, 2006.

Net earned premiums from primary insurance and reinsurance rose to $28.9 million from $6.3 million in the prior year. Majestic accounted for the majority of the increase with $21.6 million of net earned premium. The company's reinsurance subsidiary, Twin Bridges, also increased its net earned premiums to $7.3 million from $6.3 million a year ago, by assuming a larger share of the excess coverage purchased by self-insured groups administered by the company.

For the remainder of 2007, CRM said it expects its fee-based business will continue to experience soft market conditions in California and must absorb an impending rate cut in New York and the weakness of some of its managed trusts in the current legislative and rate environment.

Based on results in the company’s reinsurance and primary insurance segments, CRM has raised its guidance range for the full year to $1.20 to $1.25 per fully diluted share. No analyst estimates were available.

Shares of CRM Holdings (CRMH) jumped 18.24%, or $1.24, to $8.04 at 12:18 p.m. ET. Shares of CRM Holdings have been trading in the range of $5.75 to $10.10 for the last 52 weeks.

 

Shares of RTW Inc. (Nasdaq: RTWI) have soared to a new 52-week high following news before the opening that the provider of products and services to manage workers’ compensation will be purchased by Rockhill Holding Company for $67.6 million.

Minneapolis-based RTW has entered into a merger agreement in which insurance holding company Rockhill will acquire all outstanding shares of RTW stock for $12.45 per share in cash, the two companies announced this morning. The transaction has been approved by both boards.

“We believe we are putting RTW and its customers in very good hands,” said John Goodwyne, chair of RTW’s board, in a press release. “We are pleased that Rockhill will pay RTW shareholders a price per share that we believe is good value and provides immediate liquidity in a very thinly traded stock.”

After the completion of the deal, expected no later than Dec. 31, 2007, RTW will continue to operate as a separate wholly owned subsidiary of Rockhill.

At 11:30 a.m. ET, RTW’s (RTWI) shares were up $3.85, or 48%, to a new 52-week high of $11.95. The previous 52-week high of $10.30 was reached on Sept. 27.

Put financial services and insurance together in a sentence and most people think of some of the nation's largest companies in the industry: Berkshire Hathaway Inc. (NYSE: BRKA), American International Group, Inc. (NYSE: AIG), MetLife Inc. (NYSE: MET), Allstate Corp. (NYSE: ALL) and The Hartford Financial Services Group, Inc. (NYSE: HIG). But one ever-growing small-cap is poised to make a name for itself.
 
Meet American Physicians Service Group, Inc. (Nasdaq: AMPH), an Austin, Texas-based $130 million company that not only provides brokerage and asset management services to individuals and institutions, but also provides insurance services including medical malpractice insurance. The insurance services segment provides financial management service to banks and insurance companies that provide liability insurance to doctors, while its financial services segment provides brokerage, asset management and investment advisory services to individuals and institutions.
 
Though the company has been around since 1974, American Physicians Service Group is not exactly a household name. But with a strong second quarter under its belt and glowing future prospects, that is bound to change. The company owes much of its recent success to smart management. The ambitious firm is expanding from its rather modest local roots thanks largely to a savvy acquisition. In April 2007, the company completed its acquisition of American Physicians Insurance Company (API), a firm whose operations it had managed since the mid-1970s. 
 
In the quarter ended June 30, APS increased both revenue and earnings, reporting a net income of $12 million, or $2.37 a share, compared with $598,000, or $0.21 a share, in the same quarter last year. Revenues more than tripled to $29 million, compared with $8 million over the same period in 2006. In addition, the company posted a gain of $2.3 million related to the API merger. 2007 EPS projections of $3.38 are more than 300% higher than 2006 results.
 
"This is our first quarter to report combined results with API . . . and those results have exceeded our expectations. Due to continued positive claims trends, we lowered claims reserves and related reinsurance reserves by $14.1 million in aggregate this quarter. However, we remain very conservatively reserved at the upper end of the actuarial range," Chairman Ken Shifrin said in a statement. "In addition to favorable development in reserves, our policyholder count continues to increase. During the twelve months ended June 30, 2007, our total policyholder count increased by 462 to 4,802. This is largely due to our favorable 90% retention rate in 2007. Though the market continues to be characterized by rate pressure, our profit margin remains strong due to continued favorable trends in the frequency of claims.”

Shifrin also said that American Physicians financial services segment has performed very well, with revenues up 46% for the first six months of 2007, compared with the same period last year, and pretax profits up an impressive 68% in that same time frame.
 
Wall Street has taken notice.

Shares of First Acceptance Corp. (NYSE: FAC) are tumbling today after the retailer, servicer and underwriter of non-standard personal automobile insurance reported late Thursday that it swung to a loss in the fourth quarter.

For the three months ended June 30, 2007, the Nashville, Tenn.-based company reported a net loss of $23.9 million, or $0.50 per share, compared with net income of $14.7 million, or $0.30 per share, for the fourth quarter in fiscal 2006.

First Acceptance attributed the loss to a loss adjustment expense ratio and adverse development of $12.6 million related to prior accident periods. The company also said a $16.9 million increase in the provision for income taxes contributed to its loss. Specifically, the company experienced a reduction in a deferred tax asset as a result of expired net operating loss carryforwards and a reduction in estimated future taxable income available to use net operating loss carryforwards expiring in fiscal years 2008 and 2009.

First Acceptance booked revenues of $92.2 million, compared with $75.2 million in fiscal 2006.

Shares of First Acceptance plummeted $2.42, or 31.23%, to $5.33 in morning trading Friday.

Shares of SeaBright Insurance Holdings, Inc. (Nasdaq: SEAB) are on a rampage today after Friedman Billings Ramsey upgraded the provider of multi-jurisdictional workers' compensation insurance to a rating of “outperform” from “marketperform” on stellar second quarter top and bottom line results.

For the three months ended June 30, the Seattle, Wash.-based company late Tuesday reported income of $10.2 million, or $0.49 cents per share, compared with earnings of $9.4 million, or $0.45 per share, in the second quarter of 2006. Analysts polled by Thomson Financial had anticipated earnings of $0.43 per share.

Total revenue for the quarter increased 29.4% to $60.7 million, compared with $46.9 million in the second quarter last year.

On account of the second quarter results, Friedman Billings Ramsey analyst Bijan Moazami is raising his EPS estimates and target price. “The robust top-line growth, combined with favorable loss development in the workers' compensation segment, is giving us enough confidence to increase our projected EPS,” Moazami wrote.

Moazami is raising his earnings per share estimates to $1.95 for 2007 and $2.05 for 2008, up from his previously forecasted estimates of $1.80 and $1.85,respectively. Additionally, Moazami raised his price target to $22 from $21.

Meadowbrook Insurance Group Inc. (NYSE: MIG) cut its 2007 and 2008 earnings guidance Monday while the insurance broker and risk-management consultant also announced a proposed public offering of 7.3 million shares.

The Southfield, Mich.-based company said it now expects 2007 earnings of between $0.73 and $0.79 per share compared with previously forecasted net income of between $0.80 and $0.85 per share.  Three analysts surveyed by Thomson Financial expected the company to report earnings of $0.85 per share for the fiscal 2007 year.

Meadowbrook lowered its guidance on account of its public offering and its recent acquisition of U.S. Specialty Underwriters Inc. The company said the new guidance includes costs from amortization of intangible assets related to the acquisition of about $1.9 million, or $0.04 per share.

The public offering, also announced today, is for a total of 7.3 million shares; 1.8 million of the shares will be offered by Meadowbrook’s Chairman Merton Segal and his wife or her trust plan.

The company said the proceeds from the offering will be used to reduce the balance on the company's line of credit, support growth within its underwriting operations and fund potential acquisitions.

A workers’ comp insurer that seeks out not the safest but the most hazardous industries might seem counter-intuitive as a surefire way to profit. But Amerisafe, Inc. (Nasdaq: AMSF) is stringing together an earnings record that makes a strong case for believing it. All four analysts with ratings have the stock at a strong buy, and the company has routinely beat earnings estimates.

The United States loves its drugs. And we’re just talking the legal kind here.

From $2.2 billion in 1996, the amount spent on prescription drugs soared to $3.7 billion in 2006.

What’s behind the rise? An ageing population, increased drug usage, higher prices, and the direct-to-consumer marketing of lifestyle drugs have all played a part. Then there’s the U.S. federal program to subsidize the cost of prescription drugs for Medicare beneficiaries that went into effect in 2006 (Medicare Part D).

It’s all good news for Systems Xcellence Inc. (Nasdaq: SXCI), which seems to have written itself a prescription for profitability by helping companies in the prescription drug supply chain process transactions and administer drug benefit programs.

While the company was founded in Canada and is headquartered in Milton, Ontario, just outside Toronto, 95% of its revenues come from the United States.

Systems Xcellence – with 400 employees – has two distinct types of customers to which it sells two different solutions.