Darwin Professional Underwriters, Inc. Reports $246 Million of Gross Premiums for 2006 and $63 Million for Fourth Quarter
Darwin Professional Underwriters, Inc. (“Darwin,” the “Company,” or “Our”) (NYSE: DR) today announced its financial results for the full year 2006 and fourth quarter ended December 31, 2006. Highlights include:
– Gross premiums written for the full year 2006 are $246.3 million, with fourth quarter gross premiums totaling $62.9 million. Gross premiums for 2006 are 48.5% in excess of the comparable 2005 year, and fourth quarter gross premium writings are 20.2% ahead of our writings for the same period a year ago. – Net premiums written for the full year 2006 are $157.0 million, an increase of $56.4 million or 56% over 2005. Net premiums written for the quarter of $41.9 million are up 25.6% over the fourth quarter of 2005. – Net earnings of $16.0 million for the year ended December 31, 2006 represent a 331% increase over the $3.7 million for the year ended December 31, 2005. Fourth quarter 2006 net earnings of $5.8 million represent a 225% increase over the $1.8 million net earnings for the same period in 2005. – Overall, the combined ratio is 89.2% for the fourth quarter 2006, which compares favorably to 95.3% for the comparable 2005 quarter. The combined ratio improvement is primarily driven by a decrease in the loss ratio (6.3% improvement to 61.3%) for the quarter. The fourth quarter loss ratio improvement includes approximately $1.8 million in favorable loss reserve development ($1.2 million, net of tax) stemming from the 2003 and 2004 accident years as well as a decrease of $0.9 million ($0.6 million, net of tax) in ceded premiums earned due to the corresponding changes in the underlying variable rated reinsurance in- force during those accident years. The improvement in the expense ratio is due to the spreading of general and administrative costs over a larger premium base. – The full year 2006 combined ratio is 94.3% as compared to 97.3% for the comparable period in 2005. Improvements in the loss ratio (2.3%) and the expense ratio (0.7%) are the reasons for the combined ratio improvement. The 2006 loss ratio improvement includes approximately $2.3 million in favorable loss reserve development ($1.5 million, net of tax) stemming from the 2003 and 2004 accident years as well as a decrease of $1.7 million ($1.1 million, net of tax) in ceded premiums earned due to the corresponding changes in the underlying variable rated reinsurance in-force during those accident years. The improvement in the expense ratio is due to the spreading of general and administrative costs over a larger premium base. – Earnings per diluted share for the twelve months ended December 31, 2006 are $0.95 compared to $0.46 for the same period in 2005. Earnings per diluted share are $0.34 for the fourth quarter of 2006 as compared to $0.22 for the fourth quarter of 2005. – Return on average equity is 7.7% for the twelve months ended December 31, 2006, and shareholders’ equity grew $20.5 million or 10.4% during the twelve months, from $197.4 million at December 31, 2005 to $217.9 million at December 31, 2006.
For the quarter ended December 31, 2006, the break-down of gross premiums written by business line is as follows: medical malpractice liability, $21.5 million; errors and omissions (“E&O”) liability, $30.0 million; and directors and officers (“D&O”) liability, $11.4 million. For the twelve-month period, the comparable figures were $94.6 million, $111.1 million, and $40.6 million for medical malpractice, E&O, and D&O, respectively.
Stephen Sills, Darwin’s president and chief executive officer, commented, “Our focus in distinct niches within the specialty lines market has allowed us to produce excellent growth and operating results in 2006. Darwin recorded a significant increase in gross premiums written over 2005 and demonstrated our continued commitment to underwriting profitability with a fourth quarter combined ratio under 90 percent. With significant expertise across all of our lines, we believe we’re well positioned to take advantage of the continued opportunities we see in specialty insurance.
“Darwin has achieved many milestones this past year as we had our successful IPO and were the first company to list on the NYSE Arca in May 2006. And, in less than one year, our earnings have reached a level that makes us eligible to transition from NYSE Arca to the New York Stock Exchange. We anticipate moving to the NYSE in mid-April and we believe we will be the first issuer to transition from the NYSE Arca to the NYSE. It is an achievement all of us at Darwin are very proud of.” Darwin will retain its existing ticker symbol (NYSE: “DR”) upon transition to the Big Board.
Darwin executives will hold a conference call to discuss this press release tomorrow morning, February 28, 2007, at 10:00 a.m. Eastern time. The live webcast of Darwin’s earnings conference call, as well as our financial supplement, can be accessed through Darwin’s web site at http://investor.darwinpro.com. Analysts and investors interested in participating in the live conference call may dial in to 800-299-0148 (International callers may dial 617-801-9711) and enter passcode 49531447.
The webcast version of the conference call will be archived on Darwin’s web site following the date of the event. A telephonic replay of the earnings conference call will be available shortly after the conclusion of the call on February 28, 2007. To access the telephonic replay, domestic callers may dial 888-286-8010 (International callers may dial 617-801-6888) and enter passcode 68485151. The telephonic replay will be available until March 8, 2007.
Certain matters discussed in this release are forward-looking statements. Such statements involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Potential risks and uncertainties include the accuracy of assumptions underlying the Company’s outlook and other risks described in the Company’s filings with the Securities and Exchange Commission (“SEC”), including the Company’s May 2006 Registration Statement on Form S-1 and its Annual Report on Form 10-k for 2006. These forward-looking statements represent the Company’s judgment as of the date of this release. The Company disclaims any intent or obligation to update these forward-looking statements.
About Darwin Professional Underwriters, Inc.
Darwin is a specialty insurance group based in Farmington, Connecticut. The company is focused on the specialty liability insurance market and underwrites D&O liability insurance for public and private companies, E&O liability insurance, and medical malpractice liability insurance. Darwin member companies include Darwin Professional Underwriters, Inc., Darwin National Assurance Company (“DNA”), and Darwin Select Insurance Company (“Darwin Select”). DNA and Darwin Select have earned a financial strength rating of “A- (Excellent)” from A.M. Best Company. Darwin is traded on the NYSE Arca exchange under the ticker symbol, “DR.” The company became NYSE Arca’s first listed company with its initial public offering on May 19, 2006. For more information about Darwin, visit www.darwinpro.com.
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