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Message #23
From: Stock News Bot
Date: November 10, 2006 02:02:00 PM

ASAM News AssuranceAmerica Corporation Announces September 2006 Results Showing Continuing Profits

ATLANTA--(BUSINESS WIRE)--Atlanta-based ASSURANCEAMERICA CORPORATION (OTC BB: ASAM), today announced its unaudited financial results for September 2006 and the nine and three months ended September 30, 2006.

Revenues for the month of September 2006 increased 23% to $4.3 million, compared to $3.5 million for the same month of 2005. Revenues for the three-month period ended September 30, 2006 increased 32% to $13.1 million, compared with $9.9 million for the same period of 2005. Revenues for the nine months of 2006 increased 60 to $41.5 million, compared with $26.0 million for the same period of 2005.

Pretax earnings decreased 70% for the month of September 2006 to $183,000, compared to $602,000 in September 2005. Prior year pretax earnings included a quarter-end adjustment of approximately $200,000 which, by comparison with the current year, is now recorded on a monthly basis. The Company increased pretax earnings 10% for the three-month period ended September 30, 2006 to $0.9 million, compared with $0.8 million in the same period last year. The Company increased pretax earnings 39% for the first nine months of 2006 to $2.6 million, compared with $1.8 million in the same period last year.

Net income for the month of September decreased 62% to $230,000, compared with $602,000 in the same period of 2005. Prior year net income included a quarter-end adjustment of approximately $200,000 which, by comparison with the current year, is now recorded on a monthly basis. Net income for the three-month period ended September 30, 2006 increased 2% to $783,000, compared with $772,000 for the same period of 2005. Net income for the first nine months increased 6% to $1.9 million, compared with $1.8 million for the same period of 2005. Net income in 2005 reflected no provision for income taxes as the Company was able to fully utilize net operating tax loss carry forwards.

Gross Premiums Produced (a non-GAAP financial measure), which includes gross written premium in the Carrier/MGA's underwriting operations plus premiums for policies sold in the retail Agency subsidiary, increased 11% from $9.9 million in September 2005 to $11.0 million in September 2006. Gross Premiums Produced increased 18% from $28.8 million for the three months ended September 30, 2005 to $34.2 million for the same period of 2006. Gross Premiums Produced increased 42% from $81.9 million for the nine months ended September 30, 2005 to $116.1 million for the same period of 2006. Gross Premiums Produced is used by management as the primary measure of the underlying growth of the Company's revenue streams from period to period.

In announcing September's and year-to-date results, Lawrence (Bud) Stumbaugh, President and CEO of AssuranceAmerica Corporation said, “Recent rate increases we filed, and that were approved in all the states where our Carrier/MGA writes, somewhat slowed our revenue growth. That’s not all bad as we don’t ever want to be a commodity bought on the basis of price alone. We’ve also added some expenses to strengthen our foundation so we can expand into other states at the end of this year and early into 2007. This negatively impacted the profit increases we are used to seeing each month. Nonetheless, we take great pride in 2006 year to date pre-tax earnings of $2.6 million when the same nine months a year earlier generated $1.8 million. We are headed for our best year ever and are making the right investments to enable us to improve in future periods.”

AssuranceAmerica focuses on the non-standard automobile insurance marketplace, primarily in Alabama, Florida, Georgia, South Carolina, and Texas. Its principal operating subsidiaries are TrustWay Insurance Agencies, LLC ("Agency"), which sells personal automobile insurance policies through its 45 retail agencies, AssuranceAmerica Managing General Agency, LLC ("MGA"), and AssuranceAmerica Insurance Company ("Carrier").

This press release includes statements that may constitute "forward-looking" statements. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements, as discussed in the Company's filings with the U.S. Securities Exchange Commission (SEC). Historical results are not indicative of future performance.

ASSURANCEAMERICA CORPORATION

(Unaudited) CONSOLIDATED BALANCE SHEETS

September 30, 2006 and December 31, 2005

 
September 30, 2006 December 31, 2005
Assets
Cash and cash equivalents $ 5,470,746  $ 8,668,827 
Short term investments and other invested assets 900,350  120,000 
Long term investments, available for sale at fair value 13,528,382  8,419,835 
Investment income due and accrued 178,969  81,150 
Receivable from insured 19,100,835  13,821,477 
Reinsurance recoverable (including $4,731,970 and $4,213,187 on paid losses) 21,059,684  14,790,099 
Prepaid reinsurance premiums 14,730,805  11,211,270 
Deferred acquisition costs 889,956  798,539 
Property and equipment (net of accumulated depreciation of $2,013,797 and $1,606,200) 2,112,994  1,400,667 
Other receivables 2,819,299  1,674,184 
Prepaid expenses 416,712  161,415 
Intangibles (net of accumulated amortization of $1,700,818 and $1,398,244) 11,028,971  7,359,850 
Security deposits 99,961  75,072 
Prepaid income taxes 172,030  — 
Deferred tax assets 372,615  — 
Other assets 375,703  378,758 
Total assets $ 93,258,012  $ 68,961,143 
Liabilities and Stockholders’ Equity
Accounts payable and accrued expenses $ 5,815,860  $ 4,802,223 
Unearned premium 21,691,636  16,574,473 
Unpaid losses and loss adjustment expenses 23,325,306  15,109,874 
Reinsurance payable 16,925,355  10,238,081 
Provisional commission reserve 2,033,347  1,704,379 
Notes payable 6,113,464  5,568,535 
Dividends payable 84,000  — 
Debentures payable 4,805,185  4,800,185 
Capital lease obligations 286,157  220,155 
Total liabilities 81,080,310  59,017,905 
Stockholders’ equity
Common stock, .01 par value (authorized 120,000,000 and 80,000,000; outstanding 56,072,971 and 51,167,321) 560,730  511,673 
Preferred stock, .01 par value (authorized 5,000,000, outstanding 840,000 and 1,266,000) 8,400  12,660 
Surplus-paid in 16,230,513  15,678,015 
Accumulated deficit (4,652,661) (6,259,110)
Accumulated other comprehensive (loss) income:
Net unrealized (loss) gain on investment securities 30,720  — 
Total stockholders’ equity 12,177,702  9,943,238 
Total liabilities and stockholders’ equity $ 93,258,012  $ 68,961,143 

ASSURANCEAMERICA CORPORATION

(Unaudited) CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three and Nine Months Ended September 30, 2006 and 2005

 
Three Months

Nine Months

2006 

2005 

2006 

2005 

Revenue:
Gross premiums written $ 18,334,710  $ 15,186,281  $ 53,839,302  $ 35,763,663 
Gross premiums ceded (12,530,148) (10,258,321) (36,609,876) (24,279,794)
Net premiums written 5,804,562  4,927,960  17,229,426  11,483,869 
Decrease (increase) in unearned premiums, net of prepaid reinsurance premiums
(600,836) (1,423,800) (1,597,628) (2,457,869)
Net premiums earned 5,203,726  3,504,160  15,631,798  9,026,000 
Commission income 5,251,593  4,517,482  17,676,337  12,285,770 
Managing general agent fees 2,308,140  1,632,912  7,163,620  3,858,543 
Net investment income 215,447  90,149  520,659  128,982 
Other fee income 148,298  170,564  498,663  566,984 
Total revenue 13,127,204  9,915,267  41,491,077  25,866,279 
Expenses:
Losses and loss adjustment expenses 3,359,596  2,298,469  11,371,346  5,946,922 
Selling expenses 4,589,521  3,891,711  15,029,042  10,434,211 
General and administrative expenses 3,767,109  2,728,813  10,951,784  6,940,860 
Depreciation and amortization expense 269,420  96,713  710,171  282,452 
Interest expense 289,823  127,750  866,372  421,106 
Total operating expenses 12,275,469  9,143,456  38,928,715  24,025,551 
Income before provision for income tax expense 851,735  771,811  2,562,362  1,840,728 
Income tax provision 68,428  —  618,715  — 
Net income 783,307  771,811  1,943,647  1,840,728 
Dividends on preferred stock 84,000  126,600  337,200  379,800 
Net income attributable to common stockholders $ 699,307  $ 645,211  $ 1,606,447  $ 1,460,928 
 
Earnings per common share
Basic 0.013  0.013  0.030  0.029 
Diluted 0.011  0.010  0.026  0.023 
Weighted average shares outstanding-basic 54,857,778  50,434,801  52,779,929  50,183,303 
Weighted average shares outstanding-diluted 64,470,290  63,589,401  62,392,441  63,337,903 

ASSURANCEAMERICA CORPORATION

(Unaudited) CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended September 30, 2006 and 2005

 
2006  2005 
Cash flows from operating activities:
Net income $ 1,943,647  $ 1,840,728 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 710,171  282,452 
Stock-based compensation 233,572  — 
Changes in assets and liabilities:
Receivables (6,424,473) (8,087,866)
Prepaid expenses and other assets (277,131) (272,254)
Unearned premiums and other payables 5,117,163 

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