TORONTO, May 15, 2012 /CNW/ - The Westaim Corporation ("Westaim") today announced it recorded net income of $4.4 million or $0.01 per share for the quarter ended March 31, 2012, compared to net income of $5.7 million or $0.01 per share for the quarter ended March 31, 2011. At March 31, 2012, Westaim's consolidated shareholders' equity was $424.0 million or $0.66 per share, an increase from $417.3 million or $0.65 per share at December 31, 2011.
Westaim's wholly-owned subsidiary, Jevco Insurance Company ("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 first quarter of 2012, direct premiums written were $79.3 million and net premiums written were $75.8 million, compared to $66.3 million in direct premiums written and $62.9 million in net premiums written in the same quarter of 2011. In the three months ended March 31, 2012, net premiums earned were $77.0 million, producing a Combined Ratio of 93.3%. In the comparable quarter in 2011, net premiums earned were $70.5 million, producing a Combined Ratio of 99.9%.
Total assets of Westaim were $1.3 billion at March 31, 2012 and December 31, 2011. At March 31, 2012, the Company's investment portfolio of $1.0 billion was invested predominantly in corporate and government bonds. In the three months ended March 31, 2012, net investment income and net realized investment gains, net of foreign exchange loss, of $9.3 million were included in net income; and net unrealized investment gains, net of income taxes, of $2.4 million were included in other comprehensive income. In the comparable period in 2011, net investment income and net realized investment gains, net of foreign exchange loss, of $8.7 million were included in net income; and net unrealized investment losses, net of income taxes, of $2.6 million were included in other comprehensive loss.
At March 31, 2012, Jevco had an MCT ratio of 314% and in March, A.M. Best affirmed its financial strength rating of Jevco of B++ (Good) and revised the outlook for the rating to positive from stable.
On May 2, 2012, Westaim announced that it had entered into an agreement with Intact Financial Corporation ("Intact") pursuant to which, subject to shareholder and regulatory approval, among other terms and conditions, Westaim agreed to sell to Intact all of the issued and outstanding shares in the capital of Jevco for $530 million in cash (the "Transaction"). The Transaction is expected to close in the fall of 2012. Adjusting for a $30 million cash dividend paid by Jevco to Westaim during the first quarter of fiscal 2012, the purchase price is approximately 1.38 times the net book value of Jevco as at December 31, 2011.
"Westaim completed a positive first quarter in 2012. Our non-standard automobile line of business, in line with our industry peers, continues to reflect profitable results and we expect this to continue in the remainder of 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.
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 the proposed sale of Jevco; 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) failure to complete the sale of Jevco on the terms described herein or at all, (ii) changes in market conditions or deterioration in underlying investments; (iii) general economic, market, financing, regulatory and industry developments and conditions; (iv) the risks relating to Jevco's business; and (v) 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 March 31|
|Direct premiums written||$||79,309||$||66,304|
|Net premiums written||$||75,813||$||62,897|
|Net premiums earned||$||76,972||$||70,537|
|Net investment income and net realized investment gains||9,642||9,401|
|Foreign exchange loss||(304)||(719)|
|Site restoration provision (expense) recovery||(12)||147|
|Income before income taxes||7,854||8,003|
|Income tax expense||(3,500)||(2,271)|
|Earnings per share|
|Net income - basic and diluted||$||0.01||$||0.01|
|Weighted average number of common and|
|Series 1 Class A preferred shares outstanding|
|Other comprehensive income (loss), net of income taxes||2,409||(2,552)|
|Book value per common share at March 31||$||0.66||$||0.59|
|March 31, 2012||December 31, 2011|
|Cash and cash equivalents||$||49,445||$||24,347|
|Total liabilities and shareholders' equity||$||1,286,584||$||1,296,133|
For further information:
Jeff Sarfin, Chief Financial Officer
The Westaim Corporation