TORONTO, Feb. 28, 2012 /CNW/ - The Westaim Corporation ("Westaim") today announced it recorded net income of $9.2 million or $0.01 per share for the quarter ended December 31, 2011, compared to net income of $3.3 million or $0.01 per share for the quarter ended December 31, 2010. For the year ended December 31, 2011, Westaim recorded net income of $32.8 million or $0.05 per share, compared to net income of $54.1 million or $0.11 per share for the year ended December 31, 2010, which included a net gain of $22.1 million on the purchase of JEVCO Insurance Company ("Jevco"), a wholly-owned subsidiary. Income from continuing operations, before income taxes, was $3.5 million higher in the fourth quarter of 2011 when compared to the same quarter in 2010. Net income for the three months and year ended December 31, 2011 included a deferred income tax recovery of $2.9 million resulting from an internal corporate reorganization. Net income for the year ended December 31, 2010 included a deferred income tax recovery of $15.3 million resulting from an internal corporate reorganization. At December 31, 2011, Westaim's consolidated shareholders' equity was $417.3 million or $0.65 per share, an increase 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 fourth quarter of 2011, direct premiums written were $71.5 million and net premiums written were $67.5 million, compared to $72.1 million in direct premiums written and $65.9 million in net premiums written in the same quarter of 2010. In the three months ended December 31, 2011, net premiums earned were $74.0 million, producing a Combined Ratio of 92.9%. In the comparable quarter in 2010, net premiums earned were $69.2 million, producing a Combined Ratio of 99.2%. For the year ended December 31, 2011, direct premiums written were $350.0 million, net premiums written were $333.4 million, net premiums earned were $326.1 million, producing a Combined Ratio of 95.5%.
Total assets of Westaim at December 31, 2011 were $1.30 billion, compared to $1.27 billion at December 31, 2010. At December 31, 2011, the Company's investment portfolio of $1.02 billion was invested predominantly in corporate and government bonds. During the third quarter, the Company invested approximately 10% of its investment portfolio in Canadian dividend paying common equities with the intention of generating an attractive yield. In the three months ended December 31, 2011, net investment income and net realized investment gains, net of foreign exchange loss, of $9.4 million were included in net income; and net unrealized investment gains, net of income taxes, of $2.3 million were included in other comprehensive income. In the comparable period in 2010, net investment income and net realized investment gains, net of foreign exchange loss, of $9.9 million were included in net income; and net unrealized investment losses, net of income taxes, of $6.0 million were included in other comprehensive loss. For the year ended December 31, 2011, net investment income and net realized investment gains, including foreign exchange gain, of $40.4 million were included in net income; and net unrealized investment gains, net of income taxes, of $7.1 million were included in other comprehensive income. For the year ended December 31, 2010, net investment income and net realized investment gains, net of foreign exchange loss, of $33.8 million were included in net income; and net unrealized investment gains, net of income taxes, of $4.2 million were included in other comprehensive income.
"Westaim completed a positive year in 2011, with the Company's book value per share increasing to $0.65 at December 31, 2011, up by 10% from December 31, 2010. The Company has a strong balance sheet and is ready to respond to opportunities and execute its business plan. Our non-standard automobile line of business, in line with our industry peers, showed improved and profitable results in 2011 and we expect this improvement to continue in 2012. Increases in motorcycle premium rates will be in effect earlier in 2012 than 2011. We believe that the impact of the rate increases, along with certain product changes planned to be implemented in 2012, will further enhance the performance of this line of business going forward," said Cameron MacDonald, Chief Executive Officer of Westaim.
At December 31, 2011, Jevco had an MCT ratio of 326% 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, Quarterly Reports 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
|(thousands of Canadian dollars except percentage, share and per share data)|
|Three Months Ended December 31||Year Ended December 31|
|Direct premiums written||$ 71,480||$ 72,079||$ 349,953||$ 273,382|
|Net premiums written||$ 67,535||$ 65,889||$ 333,361||$ 254,872|
|Net premiums earned||$ 73,968||$ 69,215||$ 326,109||$ 236,304|
|Net investment income and net realized investment gains||9,852||10,575||40,359||34,911|
|Foreign exchange (loss) gain||(490)||(648)||33||(1,076)|
|Site restoration provision (expense) recovery||(13)||(5)||94||478|
|Gain on business acquisition||-||-||-||25,084|
|Costs of business acquisition||-||-||-||(2,936)|
|Income from continuing operations, before income taxes||9,988||6,492||44,250||50,575|
|Income taxes (expense) recovery||(727)||(3,153)||(11,329)||4,538|
|Income from continuing operations||9,261||3,339||32,921||55,113|
|Loss from discontinued operations, net of income taxes||(53)||(58)||(170)||(990)|
|Net income||$ 9,208||$ 3,281||$ 32,751||$ 54,123|
|Earnings per share|
|Income from continuing operations - basic and diluted||$ 0.01||$ 0.01||$ 0.05||$ 0.11|
|Net income - basic and diluted||$ 0.01||$ 0.01||$ 0.05||$ 0.11|
|Weighted average number of common and|
|Series 1 Class A preferred shares outstanding|
|Net income||$ 9,208||$ 3,281||$ 32,751||$ 54,123|
|Other comprehensive income (loss), net of income taxes||2,347||(6,000)||7,065||4,177|
|Comprehensive income (loss)||$ 11,555||$ (2,719)||$ 39,816||$ 58,300|
|Book value per common share at December 31||$ 0.65||$ 0.59|
|December 31, 2011||December 31, 2010|
|Cash and cash equivalents||$ 24,347||$ 32,897|
|Total assets||$ 1,296,133||$ 1,270,426|
|Total liabilities||$ 878,870||$ 893,102|
|Total liabilities and shareholders' equity||$ 1,296,133||$ 1,270,426|
For further information:
Jeff Sarfin, Chief Financial Officer
The Westaim Corporation