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Results of Operations for the Three Months Ended June 30, 2022 – American Overseas Group Limited Announces Net Loss Of $0.3 Million and Operating Loss of $0.5 Million For the Three Months Ended June 30, 2022

| Source: American Overseas Group, Ltd.

HAMILTON, Bermuda, Sept. 30, 2022 (GLOBE NEWSWIRE) — American Overseas Group Limited BSX: AORE.BH) (Pink Sheets: AOREF.PK) (“AOG” or the “Company”) today reported consolidated net loss available to common shareholders of $0.3 million, or $6.28 per diluted share, for the three months ended June 30, 2022. This compares to consolidated net loss available to common shareholders of $3.0 million, or $63.75 per diluted share, for the three months ended June 30, 2021. Book value per weighted share at June 30, 2022 was $775.49, a decline from the book value per weighted share of $1,003.21 at June 30, 2021.

For the three months ended June 30, 2022, the Company had an operating loss of $0.5 million, or $11.58 per diluted share, compared to operating loss of $2.4 million, or $51.26 per diluted share for the three months ended June 30, 2021.

For the three months ended June 30, 2022, net earned property and casualty premiums decreased $0.4 million from $5.5 million a year ago to $5.1 million. Fee income remained constant at $2.7 million while gross written premiums increased $1.9 million, moving from $114.7 million to $116.6 million. Quarterly direct written premiums were positively impacted by rate increases in current business. Loss and loss adjustment expenses as a percentage of earned premium increased from 66.1% to 71.4% as loss costs continued to increase in 2022 due to both frequency and severity.

For the three months ended June 30, 2022, operating expenses decreased $2.1 million from $4.9 million to $2.8 million due to a one-time recognition in the amount of $1.2 million in the second quarter of 2021 of items previously held as a receivable against a personal guarantee contract and $0.9 million expense in 2021 year taxes, licenses and fees associated with program business written in Louisiana that was related to business written in the prior year.

As part of its ongoing capital management efforts, the Company will continue to redirect excess capital within the group to debt reduction unless other compelling opportunities present themselves.

Forward-Looking Statements

This release contains statements that may be considered “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include, without limitation, the Company’s expectations respecting the volatility of its insured portfolio, losses, loss reserves and loss development, the adequacy and availability of its liquidity and capital resources, its current run off strategy, its strategy for writing other reinsurance businesses and its expense reduction measures. These statements are based on current expectations and the current views of the economic and operating environment and are not guarantees of future performance. A number of risks and uncertainties, including economic competitive conditions, could cause actual results to differ materially from those projected in forward-looking statements. The Company’s actual results could differ materially from those expressed or implied in the forward-looking statements.

Explanation of Non-GAAP Financial Measures

The Company believes that the following non-GAAP financial measure included in this press release serve to supplement GAAP information and is meaningful to investors.

Operating income (loss): The Company believes operating income (loss) is a useful measure because it measures income from operations, unaffected by non-operating items such as realized investment gains or losses. Operating income (loss) is typically used by research analysts and rating agencies in their analysis of the Company.

Information About the Company

American Overseas Group Limited is an insurance holding company incorporated in Bermuda and a tax resident of the United Kingdom. Its operating subsidiaries provide specialty property/casualty insurance, reinsurance and insurance management services. More information can be found at www.aoreltd.com.

American Overseas Group Limited

info@aoreltd.com

American Overseas Group Limited
Consolidated Balance Sheets
(unaudited)
As at June 30, 2022 and December 31, 2021
      (dollars in thousands)     
                       
                       
                June 30, 2022     December 31, 2021
Assets                
                       
    Investments:            
      Fixed-maturity securities held as available for sale, at fair value     $ 109,497       $ 102,678  
      Equity investments held as available for sale, at fair value       2,619         3,781  
    Cash and cash equivalents       25,146         31,908  
    Restricted cash       2,232         4,440  
    Accrued investment income       417         553  
    Premiums receivable       89,048         76,626  
    Deferred insurance premiums       124,521         108,904  
    Reinsurance balances receivable, net       228,444         223,982  
    Deferred policy acquisition costs       4,424         4,588  
    Intangible assets       4,800         4,800  
    Goodwill       33,050         33,050  
    Other assets       4,491         3,166  
      Total Assets     $ 628,690       $ 598,476  
                       
                       
Liabilities and Equity            
                       
  Liabilities:            
    Loss and loss expense reserve     $ 220,290       $ 215,642  
    Deferred commission income       3,037         3,210  
    Unearned premiums       129,428         113,423  
    Ceded premium payable       94,424         82,059  
    Payable to general agents       5,783         7,121  
    Funds withheld       107,708         104,257  
    Accounts payable and accrued liabilities       14,319         12,420  
    Notes payable       16,521         16,521  
    Non-owned interest in VIE       300         300  
    Interest payable       451         451  
      Total Liabilities       592,259         555,404  
                       
  Shareholders’ Equity:            
    Common shares       4,698         4,698  
    Additional paid-in capital       189,179         189,179  
    Accumulated other comprehensive (loss) income       (5,328 )       1,124  
    Retained deficit       (157,570 )       (157,982 )
      Total Shareholders’ Equity       30,979         37,019  
    Non-controlling interest of preferred shares of subsidiaries       5,453         6,053  
    Total Equity       36,431         43,072  
                       
                       
      Total Liabilities and Equity     $ 628,690       $ 598,476  
                       
    See Notes to June 30, 2022 Consolidated Financial Statements available on American Overseas Group Ltd. Website at www.aoreltd.com
                       
American Overseas Group Limited
  Consolidated Statements of Operations
  (unaudited)
  (dollars in thousands, except share and per share amounts)
                               
                               
                  Three months ended June 30,   Six Months ended June 30,
                    2022       2021       2022     2021  
    Revenues                    
                               
      Net premiums earned     $ 5,093     $ 5,552     $ 10,181   $ 10,537  
      Fee income       2,709       2,736       6,004     6,022  
                               
      Net investment (expense) income       101       65       32     162  
      Net realized (losses) gains on investments       248       (2 )     237     36  
      Other income       55       44       896     77  
                               
                               
        Total revenues       8,206       8,395       17,349     16,834  
                               
    Expenses                    
      Losses and loss adjustment expenses       3,639       3,667       6,904     6,391  
      Acquisition expenses       1,653       1,799       3,351     3,575  
      Operating expenses       2,758       4,888       5,779     7,373  
      Other expense                      
      Interest expense       451       451       902     902  
                               
        Total expenses       8,501       10,805       16,936     18,241  
                               
                               
  Net income available to common shareholders     $ (295 )   $ (2,410 )   $ 413   $ (1,407 )
      Income tax (expense)                     (26 )
                               
  Net income before dividends       (295 )     (2,410 )     413     (1,433 )
      Dividends on preference shares of subsidiary             (585 )         (585 )
                               
                               
  Net income available to common shareholders     $ (295 )   $ (2,995 )   $ 413   $ (2,018 )
                               
                               
    Net income per common share:                  
    Basic         $ (6.28 )   $ (63.75 )   $ 8.79   $ (42.96 )
    Diluted           (6.28 )     (63.75 )     8.79     (42.96 )
                               
    Weighted-average number of common shares outstanding:                  
    Basic           46,979       46,979       46,979     46,979  
    Diluted           46,979       46,979       46,979     46,979  
                               
See Notes to June 30, 2022 Consolidated Financial Statements available on American Overseas Group Ltd. Website at www.aoreltd.com

                               
AMERICAN OVERSEAS GROUP LTD.      
NET INCOME AND OPERATING INCOME BY SEGMENT    
       
       
(dollars in thousands) Three months ended June 30, 2022
  Net Income

Available to

Common

Shareholders
Net Realized

(Gain)/Loss on Sales

of Investments
Operating

Income/(Loss)
Property and casualty:      
       
Net premiums earned $ 5,093       5,093  
Losses and loss adjustment expenses   (3,639 )     (3,639 )
Acquisition expenses   (1,653 )     (1,653 )
Property/Casualty Underwriting Income   (199 )     (199 )
       
Fee income   2,709       2,709  
Other income, net of other expense          
Operating expenses   (2,503 )     (2,503 )
Income tax          
Property and casualty   7         7  
       
Corporate and Investing      
       
Net investment income   101       101  
Net realized gain/(loss)   248     (248 )    
Operating expenses   (255 )     (255 )
Interest expense   (451 )     (451 )
Other income, net of other expense   54       54  
Corporate and investing   (303 )   (248 )   (551 )
       
Group total $ (296 ) $ (248 )   (544 )
       
AMERICAN OVERSEAS GROUP LTD.      
       
NET INCOME AND OPERATING INCOME BY SEGMENT    
       
       
(dollars in thousands) Three months ended June 30, 2021
  Net Income

Available to

Common

Shareholders
Net Realized

(Gain)/Loss on Sales

of Investments
Operating

(Loss)
Property and casualty:      
       
Net premiums earned $ 5,552     $ 5,552  
Losses and loss adjustment expenses   (3,667 )     (3,667 )
Acquisition expenses   (1,799 )     (1,799 )
Property/Casualty Underwriting Income   86       86  
       
Fee income   2,736       2,736  
Operating expenses   (4,468 )     (4,468 )
Income tax          
Property and casualty   (1,646 )       (1,646 )
       
Corporate and Investing      
       
Net investment income   65       65  
Net realized gain/(loss)   (2 )   2      
Operating expenses   (420 )     (420 )
Interest expense   (451 )     (451 )
Other income, net of other expense   44       44  
Corporate and investing   (764 )   2     (762 )
       
Group total $ (2,410 ) $ 2   $ (2,408 )
       
AMERICAN OVERSEAS GROUP LTD.      
NET INCOME AND OPERATING INCOME BY SEGMENT  
       
       
(dollars in thousands) Six months ended June 30, 2022
  Net Income

Available to

Common

Shareholders
Net Realized

(Gain)/Loss on Sales of

Investments
Operating

Income
Property and casualty:      
       
Net premiums earned $ 10,181     $ 10,181  
Losses and loss adjustment expenses   (6,904 )     (6,904 )
Acquisition expenses   (3,351 )     (3,351 )
Property/Casualty Underwriting Income   (74 )     (74 )
       
Fee income   6,004       6,004  
Other income, net of other expense   804       804  
Operating expenses   (5,232 )     (5,232 )
Income tax          
Property and casualty   1,502         1,502  
       
Corporate and Investing      
       
Net investment income   32       32  
Net realized gain/(loss)   237     (237 )    
Operating expenses   (547 )     (547 )
Interest expense   (902 )     (902 )
Other income, net of other expense   91       91  
Corporate and investing   (1,089 )   (237 )   (1,326 )
       
Group total $ 413   $ (237 ) $ 176  
       
AMERICAN OVERSEAS GROUP LTD.      
       
NET INCOME AND OPERATING INCOME BY SEGMENT  
       
       
(dollars in thousands) Six months ended June 30, 2021
  Net Income

Available to

Common

Shareholders
Net Realized

(Gain)/Loss on Sales

of Investments
Operating

(Loss)
Property and casualty:      
       
Net premiums earned $ 10,537     $ 10,537  
Losses and loss adjustment expenses   (6,391 )     (6,391 )
Acquisition expenses   (3,575 )     (3,575 )
Property/Casualty Underwriting Income   571       571  
       
Fee income   6,022       6,022  
Operating expenses   (6,745 )     (6,745 )
Income tax   (26 )     (26 )
Property and casualty   (178 )       (178 )
       
Corporate and Investing      
       
Net investment income   162       162  
Net realized gain/(loss)   36     (36 )    
Operating expenses   (628 )     (628 )
Interest expense   (902 )     (902 )
Other income, net of other expense   77       77  
Corporate and investing   (1,255 )   (36 )   (1,291 )
       
Group total $ (1,433 ) $ (36 ) $ (1,469 )
       

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