Baldwin & Lyons Inc. (BWINA, Financial) filed Quarterly Report for the period ended 2009-03-31.
Baldwin & Lyons Inc. specializes in marketing and underwriting property and casualty insurance for companies in the motor carrier industry. The Company's principal lines of business consist of (1) the insurance brokerage and agency operations and specialized insurance-relatedservices carried on by Baldwin & Lyons Inc.; and (2) insurance underwriting operations carried on by B & L's three wholly-owned property/casualty insurance company subsidiaries: Protective InsuranceCompany; Sagamore Insurance Company; and B & L Insurance Ltd. Baldwin & Lyons Inc. has a market cap of $291.24 million; its shares were traded at around $19.74 with a P/E ratio of 11.68 and P/S ratio of 1.82. The dividend yield of Baldwin & Lyons Inc. stocks is 5.07%. Baldwin & Lyons Inc. had an annual average earning growth of 12.8% over the past 10 years.
Financing activity for the first three months of 2009 included regular dividend payments of $3.7 million ($.25 per share), and the purchase of $.9 million of the Company’s common stock on the open market under the Company’s previously announced stock repurchase program.
The Company’s assets at March 31, 2009 included $46.5 million in investments classified as cash equivalents that were readily convertible to cash without significant market penalty. An additional $183.5 million of fixed maturity investments will mature within the twelve-month period following March 31, 2009. The Company believes that these liquid investments are more than sufficient to provide for projected claim payments and operating cost demands.
Consolidated shareholders’ equity is composed largely of GAAP shareholders’ equity of the insurance subsidiaries. As such, there are statutory restrictions on the transfer of portions of this equity to the parent holding company. At March 31, 2009, $44.3 million may be transferred by dividend or loan to the parent company during the remainder of 2009 without approval by, or prior notification to, regulatory authorities. An additional $200.3 million of shareholder’s equity of the insurance subsidiaries could, theoretically, be advanced or loaned to the parent holding company with prior notification to, and approval from, regulatory authorities, although it is unlikely that transfers of this size would be practical. The Company believes that these restrictions pose no material liquidity concerns to the Company. The Company also believes that the financial strength and stability of the subsidiaries would permit ready access by the parent company to short-term and long-term sources of credit. The parent company had cash and marketable securities valued at $3.1 million at March 31, 2009.
10 The first quarter 2009 net investment losses of $1.2 million resulted from losses on limited partnerships. The first quarter 2008 investment losses were $13.6 million. The investment losses during the current quarter were impacted by the ongoing loss of value in the global equity markets. See footnote 2 to the enclosed financial statements for a more detailed discussion regarding the accounting policies and the net gains or losses reported for the Company’s investments in limited partnerships.
As a result of the factors mentioned above, net income increased $10.0 million to $5.4 million during the first quarter of 2009 as compared with a $4.6 million loss for the 2008 period.
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Baldwin & Lyons Inc. specializes in marketing and underwriting property and casualty insurance for companies in the motor carrier industry. The Company's principal lines of business consist of (1) the insurance brokerage and agency operations and specialized insurance-relatedservices carried on by Baldwin & Lyons Inc.; and (2) insurance underwriting operations carried on by B & L's three wholly-owned property/casualty insurance company subsidiaries: Protective InsuranceCompany; Sagamore Insurance Company; and B & L Insurance Ltd. Baldwin & Lyons Inc. has a market cap of $291.24 million; its shares were traded at around $19.74 with a P/E ratio of 11.68 and P/S ratio of 1.82. The dividend yield of Baldwin & Lyons Inc. stocks is 5.07%. Baldwin & Lyons Inc. had an annual average earning growth of 12.8% over the past 10 years.
Highlight of Business Operations:
The Company generally experiences positive cash flow from operations resulting from the fact that premiums are collected on insurance policies in advance of the disbursement of funds in payment of claims. Operating costs of the property/casualty insurance subsidiaries, other than loss and loss expense payments and commissions paid to related agency companies, generally average less than 30% of premiums earned and the remaining amount is available for investment for varying periods of time pending the settlement of claims relating to the insurance coverage provided. The Company’s cash flow relating to premiums is significantly affected by reinsurance programs in effect from time-to-time whereby the Company cedes both premium and risk to other insurance and reinsurance companies. These programs vary significantly among products. For the first three months of 2009, the Company experienced negative cash flow from operations totaling $1.6 million which compares to negative cash flow from operations of $6.3 million generated during the first three months of 2008. The $4.7 million improvement in cash flow from the 2008 period is primarily due to higher gross premiums received, the timing of reinsurance payable payments and other payments. These increases were partially offset by a $9.1 million increase in loss payments related to the settlement of several large claims during the quarter.Financing activity for the first three months of 2009 included regular dividend payments of $3.7 million ($.25 per share), and the purchase of $.9 million of the Company’s common stock on the open market under the Company’s previously announced stock repurchase program.
The Company’s assets at March 31, 2009 included $46.5 million in investments classified as cash equivalents that were readily convertible to cash without significant market penalty. An additional $183.5 million of fixed maturity investments will mature within the twelve-month period following March 31, 2009. The Company believes that these liquid investments are more than sufficient to provide for projected claim payments and operating cost demands.
Consolidated shareholders’ equity is composed largely of GAAP shareholders’ equity of the insurance subsidiaries. As such, there are statutory restrictions on the transfer of portions of this equity to the parent holding company. At March 31, 2009, $44.3 million may be transferred by dividend or loan to the parent company during the remainder of 2009 without approval by, or prior notification to, regulatory authorities. An additional $200.3 million of shareholder’s equity of the insurance subsidiaries could, theoretically, be advanced or loaned to the parent holding company with prior notification to, and approval from, regulatory authorities, although it is unlikely that transfers of this size would be practical. The Company believes that these restrictions pose no material liquidity concerns to the Company. The Company also believes that the financial strength and stability of the subsidiaries would permit ready access by the parent company to short-term and long-term sources of credit. The parent company had cash and marketable securities valued at $3.1 million at March 31, 2009.
10 The first quarter 2009 net investment losses of $1.2 million resulted from losses on limited partnerships. The first quarter 2008 investment losses were $13.6 million. The investment losses during the current quarter were impacted by the ongoing loss of value in the global equity markets. See footnote 2 to the enclosed financial statements for a more detailed discussion regarding the accounting policies and the net gains or losses reported for the Company’s investments in limited partnerships.
As a result of the factors mentioned above, net income increased $10.0 million to $5.4 million during the first quarter of 2009 as compared with a $4.6 million loss for the 2008 period.
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