American Overseas Group reports $5m net loss – The Royal Gazette | Bermuda News, Business, Sports, Events, & Community

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American Overseas Group reports $5m net loss

American Overseas Group Ltd, a Bermudian-based holding company, has reported a net loss of $5 million and an operating loss of $22.4 million for the year ending December 31, 2020.

The company also announced that it has exited from the financial guaranty line of business.

AOGL said its net loss last year compares to a net loss of $3.7 million for the year ended December 31, 2019.

The operating loss compares to an operating loss of $9.1 million for the previous year.

The company said the result for the year was heavily impacted by losses in its financial guaranty segment related to a commutation of the remaining portfolio of financial guaranty reinsurance business it had assumed from Assured Guaranty Municipal Corp.

The financial guaranty segment produced a $22.8 million operating loss for 2020 which was $11.8 million above the prior year operating loss of $11 million.

In April of 2020, the financial guaranty reinsurance business at AORE was eliminated as a result of the commutation with AGMC. The aggregate outstanding par value of the reinsurance portfolio commuted was $345 million.

This commutation was the primary driver of the operating loss of $22.8 million in 2020, compared to operating losses of $11 million in 2019, the company said.

As of December 31, AORE said it no longer has any financial guaranty exposure remaining.

Operating income for the property and casualty segment in 2020 was $1.2 million, compared to the $900,000 in 2019 for this segment.

Despite lower written premiums in 2020 due to temporary business contractions related to Covud-19, net earned property and casualty premiums increased $7 million from $8.8 million in 2019 to $15.8 million in 2020, driven both by a full year of new programmes in key states outside of Texas as well as increased reinsurance participation on underlying non standard auto programmes in Texas, the company said.

Loss and loss adjustment expenses as a percentage of earned premium increased from 41.9 per cent to 56.5 per cent primarily due to both lower favourable prior year loss and loss adjustment expense development and higher loss and loss adjustment expense on current accident year claims, however underwriting income increased from $400,000 to $1.9 million driven by higher earned premiums.

Fee income decreased from $11.6 million to $9.9 million as underlying direct written premium volumes declined primarily impacted by temporary business contractions related to Covid-19.

Operating expenses decreased $800,000 or 5.9 per cent to $12.8 million in 2020.

As part of its ongoing capital management efforts, the company said it will continue to redirect excess capital within the group to debt reduction unless other compelling opportunities present themselves.

American Overseas Group Ltd 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.

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Published June 28, 2021 at 1:01 pm (Updated June 28, 2021 at 1:03 pm)

American Overseas Group reports $5m net loss

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