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Affirmative Insurance Holdings Inc. (AFFM) filed Quarterly Report for the period ended 2011-09-30.
Affirmative Insurance Holdings Inc. has a market cap of $21.4 million; its shares were traded at around $1.35 .
This is the annual revenues and earnings per share of AFFM over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of AFFM.
Highlight of Business Operations:
Total gross premiums written for the three months ended September 30, 2011 decreased $38.8 million, or 41.6%, compared with the prior year quarter. Total gross premiums written for the nine months ended September 30, 2011 decreased $101.4 million, or 35.8%, compared with the prior year period. This decrease was due to a number of actions taken during 2010 and into 2011 to increase prices and strengthen underwriting standards to improve the profitability of the gross premiums written. Improved processes and monitoring of pricing activity have been put in place. We suspended or constrained new business production for unprofitable independent agent relationships, which included our withdrawal from the Michigan market. We expect that these actions will continue to have a negative effect on premium production levels in 2011, but should improve the profitability of the business.Total revenues for the three months ended September 30, 2011 decreased $51.2 million, or 46.3%, compared with the three months ended September 30, 2010. The decrease was due to decreases in net premiums earned, commission income and fees, net realized gains and net investment income, partially offset by an increase in other income.
Commissions, premium finance and agency fees are earned on sales of third-party companies’ products sold by our retail agencies. As described above, in our owned stores, there can be a shift in the relative proportion of the sales of third-party insurance products as compared to sales of our own carriers’ products due to the relative competitiveness of our insurance products that could result in an increase in our commission income and fees from non-affiliated third-party insurers. We negotiate commission rates with the various third-party carriers whose products we agree to sell in our retail stores. As a result, the level of third-party commission income will also vary depending upon the mix by carrier of third-party products that are sold. In addition, we earn fees from the sales of other products and services such as auto club memberships and bond cards offered by unaffiliated companies.
Total revenues for the nine months ended September 30, 2011 decreased $153.1 million, or 43.7%, compared with the nine months ended September 30, 2010. The decrease was due to decreases in net premiums earned, commission income and fees, and net realized gains, partially offset by an increase in other income and net investment income.
State insurance laws restrict the ability of our insurance company subsidiaries to declare stockholder dividends. These subsidiaries may not make an “extraordinary dividend” until 30 days after the applicable commissioner of insurance has received notice of the intended dividend and has not objected in such time or until the commissioner has approved the payment of the extraordinary dividend within the 30-day period. In most states, an extraordinary dividend is defined as any dividend or distribution of cash or other property whose fair market value, together with that of other dividends and distributions made within the preceding 12 months, exceeds the greater of 10.0% of the insurance company’s surplus as of the preceding year-end or the insurance company’s net income for the preceding year, in each case determined in accordance with statutory accounting practices. In addition, dividends may only be paid from unassigned earnings and an insurance company’s remaining surplus must be both reasonable in relation to its outstanding liabilities and adequate to its financial needs. As of September 30, 2011, our insurance companies could not pay ordinary dividends to us without prior regulatory approval due to a negative unassigned surplus position of Affirmative Insurance Company. However, as mentioned previously, our non-insurance company subsidiaries provide adequate cash flow to fund their own operations.
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