American Overseas Group Limited Announces Results of Operations for the Year Ended December 31, 2016

Hamilton, Bermuda – June 27, 2017 – American Overseas Group Limited (“AOG” or the “Company”; Ticker: AORE.BH; Pink Sheets: AOREF.PK) announces results of operations for the year ended December 31, 2016. The filing stated:

American Overseas Group Limited (BSX:  AOREF.BH) (Pink Sheets:  AOREF.PK) (“AOG” or the “Company”) today reported consolidated net loss available to common shareholders of $7.5 million, or $169.14 per diluted share, for the year ended December 31, 2016.  This compares to consolidated net income available to common shareholders of $16.2 million, or $370.36 per diluted share, for the year ended December 31, 2015.

The results for 2016 were impacted by unrealized gains in credit derivatives of $8.2 million, and include fair value adjustments of $0.8 million related to the business combination accounting from the combination of Orpheus Group Ltd. and AOG in 2013, when the entities came under common voting control.  Book value per share at December 31, 2016 was $1,530.98, a decline from the book value per share of $1,650.27 at December 31, 2015.

For the year ended December 31, 2016, the Company had an operating loss of $14.6 million, or $328.90 per diluted share, compared to an operating loss of $14.7 million, or $334.86 per diluted share for the year ended December 31, 2015.  Operating income for the property and casualty segment in 2016 was $3.0 million, compared to the $4.9 million operating income in 2015 for this segment.  The financial guaranty segment had operating losses of $16.2 million in 2016, largely driven by losses from the Company’s reinsurance of Puerto Rico-related credits.

Gross property and casualty premiums written, which are the primary driver of the Company’s fee income, were $426.3 million for 2016 compared to $385.0 million for 2015.  Fees earned by the Company’s management companies were $14.2 million for 2016 compared to $13.4 million for 2015 before intercompany consolidation eliminations with their regulated affiliates.  EBITDA margins earned on these fees were 27% for 2016 and 44% for 2015.  Net earned property and casualty premiums were $3.6 million for 2016 compared to $6.4 million for 2015.  The drop in net premiums earned is the direct result of the Company’s success in deemphasizing the retention of underwriting risk.  This contributed to the overall decrease for the property and casualty segment, from operating income of $4.9 million in 2015 to operating income of $3.0 million in 2016. 

The legacy financial guaranty portfolio of American Overseas Reinsurance Company Limited continues to run-off satisfactorily, notwithstanding loss reserve increases mainly due to the Company’s continued exposure to Puerto Rico credits.  The financial guaranty operating loss of $16.2 million in 2016 compares to an operating loss of $16.1 million in 2015. Insured par outstanding (net of escrowed transactions) declined to $3.0 billion at December 31, 2016 from $4.7 billion at December 31, 2015, a 36% decline.

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.  Among the factors that could cause actual results to differ materially are: (i) the Company's reviewing the results of our entire portfolio of policies. Management considers credit derivative policies as a normal extension of AORE’s financial guaranty business and reinsurance in substance.

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

The complete Consolidated Financial Statements can be found by using the following link:

www.bsx.com/CompanyDocuments/1099937146/AOG%20Financial%20Statements%2012312016.pdf