May 11, 2011 (Canada NewsWire Group) --
TORONTO, May 11 /CNW/ - The Westaim Corporation ("Westaim") today announced it recorded net income of $5.7 million or $0.01 per share for the quarter ended March 31, 2011, compared to net income of $24.2 million or $0.23 per share for the quarter ended March 31, 2010, which included a net gain on the purchase of JEVCO Insurance Company ("Jevco"), a wholly-owned subsidiary, of $22.1 million. At March 31, 2011, Westaim's consolidated shareholders' equity increased to $380.5 million or $0.59 per share, from $377.3 million or $0.59 per share at December 31, 2010.
Westaim's acquisition of Jevco closed on March 29, 2010. As a result, Westaim consolidated the results of Jevco beginning in the second quarter of 2010. Jevco is a leading Canadian specialty insurer offering products through two divisions. The Personal Lines Division provides insurance in the non-standard automobile, standard automobile, motorcycle and recreational vehicles product lines. The Commercial Lines Division offers property and liability, niche commercial automobile and surety product lines.
In the first quarter of 2011, direct premiums written were $66.3 million and net premiums written were $62.9 million. Net premiums earned in the period were $70.5 million, producing a Combined Ratio of 99.9%. The first quarter is Jevco's seasonally slowest quarter by revenue as premiums relating to the motorcycle line of business are recognized over the period of use, predominantly the second and third quarters. Included in the first quarter results as other income is $2.25 million received by Westaim in exchange for releasing Kingsway Financial Services Inc. from a reserve guarantee of $20 million provided to Westaim upon acquisition of Jevco on March 29, 2010, in respect of certain claims reserve development. Since the acquisition, Jevco has achieved positive reserve development specific to this agreement and management is comfortable with the remaining claims reserves.
Total assets of Westaim at March 31, 2011 were $1.25 billion, compared to $1.27 billion at December 31, 2010. At March 31, 2011, the Company's investment portfolio of $996.4 million was invested predominantly in corporate and government bonds. For the first quarter, net investment income and net realized investment gains of $8.7 million were included in net income; and net unrealized investment losses, net of income taxes, of $2.5 million were included in other comprehensive income.
"The acquisition and profitability of Jevco resulted in Westaim's book value appreciating 18% from $0.50 per share at March 31, 2010 (excluding the accounting net gain on the acquisition of Jevco) to $0.59 per share at March 31, 2011. We are pleased by the profitable results of Jevco for the first quarter which were in line with our expectations. In addition, we are cautiously encouraged by the early improving trends in our Ontario non-standard automobile line of business. Westaim remains well capitalized and our focus remains active in growing our business organically and by sourcing additional complementary opportunities", said Cameron MacDonald, Chief Executive Officer of Westaim.
At March 31, 2011, Jevco had an MCT ratio of 337% and a B++ credit rating from A.M. Best.
Westaim is a financial holding company focused on the property and casualty insurance industry. Westaim's common shares are listed on The Toronto Stock Exchange under the trading symbol WED.
Certain portions of this press release as well as other public statements by Westaim contain forward-looking statements. Such forward-looking statements include but are not limited to statements concerning JEVCO's business and the industry in which it operates; investment strategies and expected rates of return; and strategic alternatives to maximize value for shareholder. These statements are based on current expectations that are subject to risks, uncertainties and assumptions and Westaim can give no assurance that these expectations are correct. Westaim's actual results could differ materially from those anticipated by forward-looking statements for various reasons generally beyond our control, including but not limited to: (i) changes in market conditions or deterioration in underlying investments; (ii) general economic, market, financing, regulatory and industry developments and conditions; (iii) the risks relating to JEVCO's business; and (iv) other risk factors set forth in Westaim's Annual Report or Annual Information Form. Westaim disclaims any intention or obligation to revise forward-looking statements whether as a result of new information, future developments or otherwise except as required by law. All forward-looking statements are expressly qualified in their entirety by this cautionary statement.
| THE WESTAIM CORPORATION | ||||
| Financial Highlights | ||||
| (thousands of Canadian dollars except percentage, share and per share data) | ||||
| Three Months Ended March 31 | ||||
| 2011 | 2010 | |||
| Direct premiums written | $ 66,304 | $ - | ||
| Net premiums written | $ 62,897 | $ - | ||
| Net premiums earned | $ 70,537 | $ - | ||
| Underwriting expenses | (70,425) | - | ||
| Underwriting income | 112 | - | ||
| Net investment income and net gain on sale of investments | 9,401 | 3,995 | ||
| Foreign exchange loss | (719) | (262) | ||
| Corporate costs | (3,127) | (1,663) | ||
| Site restoration provision recovery | 147 | 511 | ||
| Other income | 2,250 | - | ||
| Gain on business acquisition | - | 25,084 | ||
| Costs of business acquisition | - | (2,936) | ||
| Income from continuing operations, before income taxes | 8,064 | 24,729 | ||
| Income tax expense | (2,271) | - | ||
| Income from continuing operations | 5,793 | 24,729 | ||
| Loss from discontinued operations, net of income taxes | (61) | (524) | ||
| Net income | 5,732 | 24,205 | ||
| Other comprehensive loss, net of income taxes | (2,552) | - | ||
| Comprehensive income | $ 3,180 | $ 24,205 | ||
| Loss ratio | 72.5% | n/a | ||
| Expense ratio | 27.4% | n/a | ||
| Combined ratio | 99.9% | n/a | ||
| Earnings per share | ||||
| Income from continuing operations | ||||
| - basic and diluted | $ 0.01 | $ 0.23 | ||
| Net income | ||||
| - basic | $ 0.01 | $ 0.23 | ||
| - diluted | $ 0.01 | $ 0.22 | ||
| Book value per common share | $ 0.59 | $ 0.53 | ||
| Weighted average number of | ||||
| common shares outstanding (in thousands) | ||||
| - basic | 644,425 | 106,443 | ||
| - diluted | 657,435 | 108,119 | ||
| March 31, 2010 | December 31, 2010 | |||
| Cash and cash equivalents | $ 17,680 | $ 32,897 | ||
| Investments | 996,358 | 993,279 | ||
| Other | 236,917 | 244,250 | ||
| Total assets | $ 1,250,955 | $ 1,270,426 | ||
| Total liabilities | $ 870,436 | $ 893,102 | ||
| Shareholders' equity | 380,519 | 377,324 | ||
| Total liabilities and shareholders' equity | $ 1,250,955 | $ 1,270,426 | ||
Jeff Sarfin, Chief Financial Officer
The Westaim Corporation
info@westaim.com
416-203-2253