UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
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THIS FILING CONSISTS OF A PRESS RELEASE ISSUED BY THE REGISTRANT ON FEBRUARY 28, 2008.
AmCOMP Reports Fourth Quarter and Fiscal Year 2007 Results
North Palm Beach, FL, February 28, 2008 - AmCOMP Incorporated (Nasdaq: AMCP) today announced results for the fourth quarter and year ended December 31, 2007.
Full Year 2007 Results:
For the year ended December 31, 2007, net income increased 13.7% to $18.8 million, or $1.20 per diluted share, compared to net income of $16.6 million, or $1.11 per diluted share, for the year ended December 31, 2006. Weighted average diluted shares outstanding were 15,656,000 in 2007 compared to 14,931,000 in 2006. Total annual revenue decreased 12.3% to $249.1 million in 2007 compared to $283.9 million in the prior year.
The net combined ratio for the year ended December 31, 2007, improved to 93.8% from 95.8% for the same period in 2006. Loss and loss adjustment expenses for the year ended December 31, 2007, were $126.6 million versus $163.7 million in the same period in 2006. Total underwriting expenses for the year were $77.2 million in 2007 compared to $81.7 million in the prior year.
Fourth Quarter 2007 Results:
For the fourth quarter of 2007, net income was $2.4 million, or $0.16 per diluted share, compared to net income of $1.3 million, or $0.08 per diluted share, for the same period in 2006. Weighted average diluted shares outstanding for the fourth quarter of 2007 were 15,355,000 compared to 15,637,000 for the fourth quarter of 2006. Total revenue for the fourth quarter of 2007 was $61.9 million versus $68.7 million in the comparable period in 2006.
The net combined ratio for the fourth quarter improved to 99.1% compared to 103.7% for the same period in 2006. Loss and loss adjustment expenses for the fourth quarter 2006 were $33.7 million versus $44.4 million in the same period in 2006. Total underwriting expenses for the fourth quarter were $19.8 million compared to $20.0 million in the prior year period.
Book value per outstanding share was $10.35 at December 31, 2007, up 17.1% for the year compared to a book value per outstanding share of $8.84 as of December 31, 2006. AmCOMP’s return on equity was 12.7% at year end 2007.
Commenting on the Company’s 2007 financial results, Fred R. Lowe, AmCOMP’s President and Chief Executive Officer, said: “We are pleased with the bottom line results we achieved in the fourth quarter and overall for the 2007 fiscal year. Our earnings were strong and reflect our commitment to maintaining underwriting profitability and a solid balance sheet. We continued to see excellent development patterns in our paid and incurred losses, as we released reserve redundancies of $5.8 million in the fourth quarter and $36.5 million for the year, resulting from favorable loss development.
“The insurance industry environment is likely to remain challenging in 2008. In response to this difficult environment, which is adversely affecting our efforts to grow our top-line premium, we are focusing our marketing plans on entering new contiguous states, appointing new agencies and working hard to maintain our current agency partnerships while further diversifying our mix of business. At the same time, we continue to concentrate on containing our costs while sustaining our market leadership in customer service as well as sharing resources across our regions and consolidating tactical processes. We believe our continued investment in technology will make it easier to do business with us, reduce our expenses and improve our operating efficiencies.”
Mr. Lowe continued, “During the past year we took a number of steps to enhance shareholder value, including buying back approximately 3.7% of our shares outstanding and entering into a definitive agreement to be acquired by EMPLOYERS Holdings, Inc. The purchase price of $12.50 per share represents a premium of approximately 44% over the $8.68 closing share price of our stock on January 9, 2008, and provides an excellent return on the investments of our stockholders. The transaction also gives our agents and underwriters’ access to new geographical territories in the small business workers’ compensation market as well as paper currently rated A- by A.M. Best. With the closing of the transaction, we believe we will have delivered value to our stockholders, producers and employees. We appreciate the hard work of our nearly 500 team members, and the strong support and leadership of our Board of Directors for these value-enhancing initiatives.”
Previously Announced Definitive Agreement
On January 10, 2008, AmCOMP announced that it signed a definitive agreement to be acquired by EMPLOYERS Holdings, Inc. (“EMPLOYERS®”) (NYSE: EIG), a leading provider of workers’ compensation insurance to small U.S. businesses. Under the terms of the agreement, EMPLOYERS will acquire 100% of AmCOMP’s outstanding stock and its subsidiaries for approximately $194 million in cash, or $12.50 per share of common stock. The transaction, which is subject to regulatory approvals by the Florida Office of Insurance Regulation, approval by AmCOMP stockholders and customary conditions of closing, is expected to be completed by the end of the second quarter of 2008.
About AmCOMP
With roots dating back to 1982, AmCOMP Incorporated is an insurance holding company whose wholly owned subsidiaries, AmCOMP Preferred and AmCOMP Assurance, are mono-line workers' compensation insurers with products that focus on value-added services to policyholders. Currently marketing insurance policies in 17 core states and targeting small to mid-sized employers in a variety of industries, AmCOMP distributes its products through independent agencies.
Conference Call
The Company will host a conference call on Friday, February 29, 2008, at 8:00 AM ET; the conference call is available via webcast on the Company's website and can be accessed by visiting http://ir.amcomp.com/eventdetail.cfm?eventid=51147. The dial-in number for the conference call is 719-325-4939. Please call at least five minutes before the scheduled start time.
There will be an audio replay of the call, which will be available starting 11:00 AM ET through 11:59 PM ET, Sunday, March 2, 2008, and may be accessed by calling 888-203-1112 and using the pass code 4010423. The conference call webcast will be available on the Company’s website for 60 days.
Forward-looking Statements
Statements made in this press release, including those about the Company’s financial condition and results of operations and about its future plans and objectives that are not based on historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words “believe,” “expect,” “plans,” “intend,” “project,” “estimate,” “may,” “should,” “will,” “continue,” “potential,” “forecast” and “anticipate” and similar expressions identify forward-looking statements. Any such statements involve known and unknown risks, uncertainties and other factors, including those set forth under the heading “Risk Factors” in the Company’s filings with the Securities and Exchange Commission. Such factors may cause AmCOMP’s actual performance, condition and achievements to be materially different than any future performance, condition and achievement discussed in this press release. All subsequent written and oral forward-looking statements attributable to us or individuals acting on our behalf are expressly qualified in their entirety by these cautionary statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
In connection with the proposed transaction, the Company filed a preliminary proxy statement with the Securities and Exchange Commission. INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE DEFINITIVE PROXY STATEMENT WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders may obtain a free copy of the definitive proxy statement (when available) and other documents filed by the Company at the Securities and Exchange Commission’s web site at www.sec.gov. The proxy statement and such other documents may also be obtained for free from the Company by directing such request to the Company, Attention: George E. Harris, Secretary, AmCOMP Incorporated, 701 U.S. Highway One, North Palm Beach, Florida 33408, Telephone: (561) 840-7171.
The Company and its directors, executive officers and other members of its management and employees may be deemed to be participants in the solicitation of proxies from its stockholders in connection with the proposed transaction. Information concerning the interests of the Company’s participants in the solicitation is set forth in the Company’s proxy statements and Annual Reports on Form 10-K, previously filed with the Securities and Exchange Commission, and in the definitive proxy statement relating to the transaction when it becomes available.
Set forth in the tables below are summary results of operations for the three month and twelve month periods ended December 31, 2007 and 2006, as well as selected balance sheet data as of December 31, 2007 and 2006. The following information is preliminary and unaudited and is subject to change until final results are publicly distributed. The Company currently expects to file its audited consolidated financial statements with the Securities and Exchange Commission as part of its annual report on Form 10-K in a timely fashion on or before March 15, 2008.
Contacts:
Kumar Gursahaney
Chief Financial Officer
561-840-7171 ext. 11700
Gale A. Blackburn
Vice President of Investor Relations
561-840-7171 ext. 11586
AmCOMP Incorporated and Subsidiaries | ||||||||||||||||
Condensed Consolidated Statements of Operations | ||||||||||||||||
(in thousands, except per share amounts and ratios) | ||||||||||||||||
(unaudited) | ||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Statement of Operations Data: | ||||||||||||||||
Revenue: | ||||||||||||||||
Net premiums earned | $ | 56,648 | $ | 63,991 | $ | 229,349 | $ | 266,456 | ||||||||
Net investment income | 5,202 | 4,682 | 20,102 | 17,461 | ||||||||||||
Net realized investment loss | (6 | ) | (13 | ) | (473 | ) | (307 | ) | ||||||||
Other income | 24 | 88 | 127 | 333 | ||||||||||||
Total revenue | 61,868 | 68,748 | 249,105 | 283,943 | ||||||||||||
Expenses: | ||||||||||||||||
Losses and loss adjustment expenses | 33,663 | 44,434 | 126,562 | 163,670 | ||||||||||||
Policy acquisition expenses | 10,456 | 15,015 | 41,180 | 49,547 | ||||||||||||
Underwriting and other expenses | 9,323 | 4,998 | 36,014 | 32,175 | ||||||||||||
Dividends to policyholders | 2,687 | 1,915 | 11,334 | 9,926 | ||||||||||||
Interest expense | 940 | 1,190 | 3,717 | 3,807 | ||||||||||||
Total expenses | 57,069 | 67,552 | 218,807 | 259,125 | ||||||||||||
Income before income taxes | 4,799 | 1,196 | 30,298 | 24,818 | ||||||||||||
Income tax expense (benefit) | 2,386 | (60 | ) | 11,462 | 8,256 | |||||||||||
Net income | $ | 2,413 | $ | 1,256 | $ | 18,836 | $ | 16,562 | ||||||||
Operating Data: | ||||||||||||||||
Direct premiums written | $ | 45,780 | $ | 53,448 | $ | 220,565 | $ | 266,827 | ||||||||
Gross premiums written | 46,780 | 54,589 | 225,545 | 273,713 | ||||||||||||
Net premiums written | 45,122 | 52,796 | 221,084 | 264,788 | ||||||||||||
Per Share Data: | ||||||||||||||||
Earnings per share | ||||||||||||||||
Basic | $ | 0.16 | $ | 0.08 | $ | 1.20 | $ | 1.15 | ||||||||
Diluted | 0.16 | 0.08 | 1.20 | 1.11 | ||||||||||||
Weighted average common shares outstanding | ||||||||||||||||
Basic | 15,348 | 15,596 | 15,647 | 14,452 | ||||||||||||
Diluted | 15,355 | 15,637 | 15,656 | 14,931 | ||||||||||||
Selected Insurance Ratios: | ||||||||||||||||
Net loss ratio1 | 59.4 | % | 69.4 | % | 55.2 | % | 61.4 | % | ||||||||
Net policy acquisition expense ratio2 | 18.5 | % | 23.5 | % | 18.0 | % | 18.6 | % | ||||||||
Underwriting and other expense ratio3 | 16.5 | % | 7.8 | % | 15.7 | % | 12.1 | % | ||||||||
Net combined ratio, excluding policyholder dividends4 | 94.4 | % | 100.7 | % | 88.9 | % | 92.1 | % | ||||||||
Dividend ratio5 | 4.7 | % | 3.0 | % | 4.9 | % | 3.7 | % | ||||||||
Net combined ratio, including policyholder dividends6 | 99.1 | % | 103.7 | % | 93.8 | % | 95.8 | % |
6 Sum of ratios computed in footnotes 1, 2, 3 and 5
AmCOMP Incorporated and Subsidiaries | ||||||||
Consolidated Balance Sheets | ||||||||
(in thousands) | ||||||||
(unaudited) | ||||||||
December 31, | December 31, | |||||||
2007 | 2006 | |||||||
Assets: | ||||||||
Cash and investments | $ | 454,199 | $ | 436,775 | ||||
Premiums receivable – net | 88,486 | 106,270 | ||||||
Reinsurance recoverables | 67,807 | 75,360 | ||||||
Deferred policy acquisition costs | 19,116 | 20,749 | ||||||
Deferred income taxes – net | 19,889 | 21,613 | ||||||
Other assets | 19,666 | 23,730 | ||||||
Total Assets | $ | 669,163 | $ | 684,497 | ||||
Liabilities and stockholders’ equity: | ||||||||
Unpaid losses and loss adjustment expenses | $ | 324,224 | $ | 334,363 | ||||
Unearned and advance premiums | 102,672 | 115,218 | ||||||
Notes payable | 36,464 | 38,250 | ||||||
Other liabilities | 47,626 | 57,378 | ||||||
Total liabilities | $ | 510,986 | $ | 545,209 | ||||
Total stockholders’ equity | 158,177 | 139,288 | ||||||
Total Liabilities and stockholders’ equity | $ | 669,163 | $ | 684,497 |
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