Affirmative Insurance Holdings Inc
Affirmative Insurance — Piper Jaffray 16th Annual Financial Services Conference 2005
16 slides from Affirmative Insurance's conference presentation, Mar 16, 2005
Slide 1: Piper Jaffray 16th Annual Financial Services Conference
Piper Jaffray 16th Annual Financial Services Conference March 16, 2005 NASDAQ: AFFM
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain information included in this presentation and other statements or materials published or to be published by the Company are not historical facts but are forward-looking statements relating to such matters as assumed future results of the Company's business, financi
Slide 3: Overview of Affirmative Insurance
Overview of Affirmative Insurance Focused provider of personal non-standard automobile insurance Target 11 states representing 50% of overall market Two insurance companies licensed in 32 states with $139.3 million of policyholders surplus Differentiated and advantaged approach to marketing Five est
Slide 4: Attractive Industry Dynamics
$34.1 billion non-standard personal auto insurance market Strong industry fundamentals Highly fragmented market with Affirmative market share less than 1.3% Attractive Industry Dynamics 1995 2003 East 104.2 155 1995 2003 East 0.162 0.22 Growth in Personal Auto Lines Non-Standard as a % of Personal A
Slide 5: Flexible Operating Model
Flexible Operating Model Operate as an integrated unit to capture: Fee income Commissions Underwriting profits Investment Income Operate with third-parties on an unbundled basis to: Maximize penetration Leverage developed infrastructure / capabilities Capture incremental fee income Maximizes Sales a
Slide 6: Market Sensitive Strategy: Hard Market
Unaffiliated Owned Underwriting Agencies Our Insurance Companies Underwriting Agencies Insurance Companies Market Sensitive Strategy When the market is "hard" Seek to capture a larger share of the Total Controlled Premium when the underwriting margins are most attractive Unaffiliated 181 Retail Agen
Slide 7: Market Sensitive Strategy: Soft Market
Unaffiliated Unaffiliated Owned Underwriting Agencies Our Insurance Companies Market Sensitive Strategy When the market is "soft" Will reduce our share of the Total Controlled Premium in favor of increased commission and fee revenues from third parties Underwriting Agencies Insurance Companies 181 R
Slide 8: Multiple Distribution Channels
Our Retail Stores Independent Agencies Through Our Underwriting Agencies Independent Agencies Through Unaffiliated Underwriting Agencies East 121.5 177.6 108.2 Multiple Distribution Channels $407.3 million in Total Controlled Premium for full year 2004 29.8% 43.6% 26.6%
Slide 9: Targeted Geographic Focus
Targeted Geographic Focus 11 States Represent Over 50% of Overall Market Solely through unaffiliated underwriting agencies Solely through independent agencies Through our retail stores and independent agencies
Slide 10: Strong Retail Branding
Strong Retail Branding 181 stores in six states Operate under five well-established retail brands Illinois Indiana Missouri Texas South Carolina Missouri Florida
Slide 11: 2004 Highlights & Recent Events
2004 Highlights & Recent Events A breakout year for Affirmative Raised significant capital and contributed proceeds to insurance company surplus Initial public offering and separation from Vesta in July Trust preferred securities offering in December $139.3 million surplus in insurance companies as
Slide 12: Historical Results of Operations
Historical Results of Operations Total Revenues 2001 2002 2003 2004 East -2.45 13.715 19.057 24.4 Net Income 2001 2002 2003 2004 Actual 8.4 85.4 104 288.7 (in millions) (in millions)
Slide 13: Key Operating Metrics
Key Operating Metrics 2003 2004 Loss Ratio 0.595000000131482 0.579000000131482 Expense Ratio 0.357 0.358 Insurance Segment Combined Ratio Expense Ratio Loss Ratio 95.2% Agency Segment Pretax Operating Margin 2002 2003 2004 Agency Segment 0.093 0.143 0.158 Pro Forma 93.6%
Slide 14: Potential for Significant Income Recapture
Potential for Significant Income Recapture 2004 Net Premiums Written 215.3 Total Controlled Premiums 192 Our Net Premiums Written (in millions) Opportunity for Recapture of Underwriting Income In 2005 expect to capture approximately 90% of Total Controlled Premium 2003 Net Premiums Written 179.6 Tot
Slide 15: Investment Highlights
Investment Highlights Attractive industry dynamics Return on equity focused culture Flexible operating model with multiple distribution channels Strong retail branding Metrics-driven, best practices operations Acquisitions add to growth potential
Slide 16: Affirmative Insurance Holdings, Inc.
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