American Overseas Group Limited Announces Results of Operations for the Six Months Ended June 30, 2017

Hamilton, Bermuda – September 25, 2017 - In a filing with the Bermuda Stock Exchange (“BSX”), American Overseas Group Limited (“AOG” or the “Company”; Ticker: AORE.BH; Pink Sheets: AOREF.PK) announced results of operations for the six months ended June 30^th, 2017.The filing stated:

American Overseas Group Limited Announces Net Loss Of $8.2 Million and Operating Loss of $13.4 Million For The Six Months Ended June 30, 2017.

HAMILTON, Bermuda, September 25, 2017 (BUSINESS WIRE) -- 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 $8.2 million, or $182.08 per diluted share, for the six months ended June 30, 2017.  This compares to consolidated net loss available to common shareholders of $12.1 million, or $273.96 per diluted share, for the six months ended June 30, 2016.

The results for the six months ended June 30, 2017 were largely the result of losses from the Company’s reinsurance of Puerto Rico-related credits in its financial guaranty segment.  Book value per share at June 30, 2017 was $1,355.07, a decline from the book value per share of $1,530.98 at December 31, 2016. 

For the six months ended June 30, 2017, the Company had an operating loss of $13.4 million, or $297.14 per diluted share, compared to an operating loss of $5.5 million, or $124.84 per diluted share for the six months ended June 30, 2016.  Operating income for the property and casualty segment in 2017 was $4.3 million, compared to the $5.7 million operating income in 2016 for this segment.  The financial guaranty segment had operating losses of $14.9 million for the first six months of 2017, largely driven by losses from the Company’s reinsurance of Puerto Rico-related credits.  This compares to financial guaranty operating losses of $6.5 million in the first six months of 2016.  Interest expense on debt of $1.2 million was $0.6 million lower for the first six months of 2017 as compared to the first six months of 2016, due to debt reduction.

Net earned property and casualty premiums were $1.8 million for the first six months of 2017, which is comparable to $1.9 million for the same period in 2016.  Loss and loss adjustment expenses were $2.5 million for the first six months of 2017, which was $0.9 million higher than the same period in 2016. This was caused by higher loss costs and includes both prior year development and current year losses. This contributed to the overall decline for the property and casualty segment, from operating income of $5.7 million in 2016 to operating income of $4.3 million in 2017. 

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 $14.9 million in 2017 compares to an operating loss of $6.5 million in 2016.

Operating expenses of $6.9 million were $1.3 million lower in the first six months of 2017 as compared to the first six months of 2016.  This is mainly reflective of the cost saving initiatives implemented by the Company in 2016 and 2017. 

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 report can be found using the following link:

www.bsx.com/CompanyDocuments/1099937146/American%20Overseas%20Group%20Ltd%20June%2030%202017.pdf