American Overseas Group Limited Announces Second Quarter 2013 Net Income of $11.9 Million and Operating Income of $2.1 Million

American Overseas Group Limited Announces Second Quarter 2013 Net Income of
$11.9 Million and Operating Income of $2.1 Million

HAMILTON, Bermuda, Sept. 30, 2013 (GLOBE NEWSWIRE) -- American Overseas Group
Limited (BSX:AORE.BH) (Pink Sheets:AORE.PK) ("AOG" or the "Company") today
reported net income of $11.9 million, or $4.34 per diluted share, for the
quarter ended June 30, 2013. This compares to a net loss of $2.5 million, or
$0.93 per diluted share, for the second quarter of 2012. The net loss for the
first six months of 2013 was $2.1 million, or $0.77 per diluted share. This
compares to a net loss of $6.9 million, or $2.61 per diluted share, for the
first six months of 2012. Property/casualty premiums earned for the six months
ended June 30, 2013 were $7.7 million compared to $0 for the first six months
of 2012. The results for the second quarter and first six months of 2013 were
impacted by net unrealized gains on credit derivatives of $10.6 million and a
net unrealized loss on credit derivatives of $7.6 million, respectively. Book
value per share at June 30, 2013 was $23.41, a decrease of 11% from year-end
2012 when book value per share was $26.20.

During the second quarter of 2013, operating income was $2.1 million, or $0.75
per diluted share, compared to operating income of $1.5 million, or $0.57 per
diluted share, during the second quarter of 2012. Operating income for the
first six months of 2013 was $6.2 million, or $2.28 per diluted share,
compared to operating income of $1.7 million, or $0.66 per diluted share, for
the first six months of 2012. Operating book value per share was $48.23 at
June 30, 2013, a decrease of less than 1% from year-end 2012 when operating
book value per share was $48.35. Operating income and operating book value per
share are non-GAAP financial measures. Please refer to "Explanation of
Non-GAAP Financial Measures" below for a description of operating income and
for a reconciliation of operating income to net income and operating book
value per share to book value per share.

Changes of Officers and Directors

David K. Steel has resigned as President and a Director of the Company and its
wholly-owned subsidiary, American Overseas Reinsurance Company Limited
("AORE") effective September 30, 2013. Mr. Steel will continue to assist AORE
with the run-off of its financial guarantee book of business as a consultant.

Debra J. Roberts, a Director of AOG and AORE since 2011, has been appointed as
President and CEO of AOG effective October 1, 2013. A successor for the
position of President of AORE has not yet been determined.

Rochelle P. Fyfe, CFO of Orpheus Group Ltd., has been appointed as a Director
of both AOG and AORE effective October 1, 2013.

Steven J. Tynan, Chairman, commenting on the above changes, said: "We want to
thank David for his significant contributions to the Company over the past
eight years. He has skillfully managed the run-off of our financial guarantee
book and successfully repositioned the Company in the property/casualty
reinsurance business. He will continue to assist us with the financial
guarantee run-off as a consultant, and we will be forever in his debt.

"We are also pleased that Debra has agreed to accept the position of President
and CEO of AOG. She is a consummate reinsurance professional and has already
served for two years on the Boards of both AOG and AORE. Debra was
instrumental in the re-domestication of AORE from Bermuda to Barbados and we
look forward to her continuing contributions as the Company develops its
property/casualty reinsurance business.

"Finally, please join me in welcoming Shelley to the Boards of AOG and AORE.
Shelley is a CPA, and her strong financial skills will benefit AOG and AORE in
the years to come."

Subsequent Events:

On July 18, 2013, AORE completed a private repurchase of nine (9) Class B
Preference Shares (the "Shares") from a holder (the "Holder"). Under the terms
of the repurchase agreement, AORE repurchased the Shares at a price of $25,000
per share from the Holder, for an aggregate price of $225,000. The Company
expects that the repurchase of the Shares will result in a reduction of
Noncontrolling interest of $146,056 on the Company's consolidated balance
sheet during the third quarter of 2013, leaving $6,864,799 of Noncontrolling
interest subsequent to the repurchase. The Company expects that a reduction of
$78,944 of shareholders' equity also will be recorded on the Company's
consolidated balance sheet during the third quarter of 2013 as a result of the
repurchase of the Shares.

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 ability to execute
its business strategy, including with respect to new reinsurance businesses;
(ii) changes in general economic conditions, including inflation, foreign
currency exchange rates, interest rates and other factors; (iii) the loss of
significant customers with which AORE has a concentration of its reinsurance
in force; (iv) legislative and regulatory developments; (v) changes in
regulations or tax laws applicable to the Company or AORE or its customers;
(vi) more severe or more frequent losses associated with AORE's reinsured
portfolio; (vii) losses on credit derivatives; (viii) changes in the Company's
accounting policies and procedures that impact the Company's reported
financial results; (ix) the effects of ongoing and future litigation and (x)
other risks and uncertainties that have not been identified at this time. The
Company undertakes no obligation to revise or update any forward-looking
statement to reflect changes in conditions, events, or expectations, except as
required by law.

Explanation of Non-GAAP Financial Measures

The Company believes that the following non-GAAP financial measures included
in this press release serve to supplement GAAP information and are 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, unrealized
gains or losses on credit derivatives and foreign currency gains or losses.
Operating income (loss) is typically used by research analysts and rating
agencies in their analysis of the Company.

Operating book value per share and adjusted operating book value per share:
The Company believes the presentation of operating book value per share and
adjusted operating book value per share to be useful because they give a
measure of the value of the Company, excluding non-operating items such as
unrealized gains and losses on credit derivatives. The Company derives
operating book value by beginning with GAAP book value and adding back the
unrealized gain or loss portion of its derivative liability, excluding the
impact of credit impairments. Adjusted operating book value per share begins
with operating book value as calculated above and then adding or subtracting
the value of:

a. GAAP unearned premium reserves (on policies classified as financial
guarantee);

b. Deferred acquisition costs;

c. Unearned premiums reserves and the present value of estimated future
installment premiums net of ceding commissions on credit derivative policies
(discounted at 1.41% at June 30, 2013, and 0.72% at December 31, 2012);

d. Unrealized appreciation or depreciation of investments; and

e. Noncontrolling interest in subsidiary – Class B preference shares.

Credit impairments on insured credit default swap ("CDS") contracts:
Management measures and monitors credit impairments on AORE's credit
derivatives, which are expected to be paid out over the term of the CDS
contracts. The credit impairments are a non-GAAP financial measure which
management believes to be useful to analysts and investors in reviewing the
results of our entire portfolio of policies. Management considers credit
derivative policies as a normal extension of AORE's financial guarantee
business and reinsurance in substance.

Reconciliations of these non-GAAP financial measures to the most comparable
GAAP measures are set forth below.

Information About the Company

American Overseas Group Limited is a Bermuda-based holding company. Its
operating subsidiary, American Overseas Reinsurance Company Ltd., is a
property/casualty reinsurance company that currently writes short tail
non-catastrophe property/casualty reinsurance and historically wrote financial
guaranty reinsurance for U.S. and international public finance and structured
finance transactions. The Company's financial guaranty reinsurance business is
in run-off. More information can be found at www.aoreltd.com.



American Overseas Group Limited
Consolidated Balance Sheets
(unaudited)
As at June 30, 2013 and December 31, 2012
(dollars in thousands)
                                                           
                                                           
                                              June 30, 2013 December 31, 2012
Assets                                                      
                                                           
Investments:                                               
Fixed-maturity securities held as available                 
for sale, at fair value
(Amortized cost: $147,439 and $154,334)        $154,161    $165,758
Other investments, at fair value (Cost:        20,983       --
$21,000 and $Nil)
Cash and cash equivalents                      22,261       36,317
Restricted cash                                42,601       45,139
Accrued investment income                      960           1,189
Reinsurance balances receivable, net           13,299       11,561
Funds withheld                                 5,622         1,533
Recoverables on paid losses                    5,607         6,687
Deferred policy acquisition costs              27,020        28,775
Deferred expenses                              302           346
Other assets                                   1,214         90
Total Assets                                   $294,031    $297,396
                                                           
                                                           
Liabilities and Equity                                      
                                                           
Liabilities:                                                
Loss and loss expense reserve                  $22,316     $22,247
Unearned premiums                              68,109        72,538
Accounts payable and accrued liabilities       717           698
Derivative liabilities                         72,584       65,214
Redeemable Series A preference shares ($1,000
redemption value and $0.10 par value;
authorized shares - 75,000;issued and         59,700        59,700
outstanding shares - 59,700 at June 30, 2013
and December 31, 2012)
Total Liabilities                              223,426       220,397
                                                           
Shareholders' Equity:                                       
                                                           
Common shares                                  2,716         2,677
Additional paid-in capital                     232,292       231,891
Accumulated other comprehensive income         6,705         11,424
Retained deficit                               (178,119)     (176,004)
Total Shareholders' Equity                     63,594        69,988
                                                           
Noncontrolling interest- Class B preference   7,011         7,011
shares of subsidiary
                                                           
Total Equity                                   70,605        76,999
                                                           
Total Liabilities and Equity                   $294,031    $297,396



American Overseas Group Limited
Consolidated Statements of Operations
(unaudited)
For the six months ended June 30, 2013 and 2012
(dollars in thousands except share and per share amounts)                 
                                                        
                                                        
                        Three Months Ended June Six Months Ended June
                         30,                     30,
                        2013        2012        2013       2012
Revenues                                                 
                                                        
Net premiums earned      $6,641    $5,369    $13,454  $8,395
                                                        
Change in fair value of credit derivatives                 
Realized gains and other 674        674        1,100     1,248
settlements
Unrealized gains         10,615     (3,034)    (7,642)   (9,368)
(losses)
                                                        
Net change in fair value 11,289     (2,360)    (6,542)   (8,120)
of credit derivatives
                                                        
Net investment income    1,265      1,884      2,585     3,962
Net realized gains on    --         --         46        --
sale of investments
                                                        
Total
other-than-temporary     --         --         --        --
impairment losses
Portion of impairment
losses recognized in     --         --         --        --
other comprehensive
income (loss)
Net other-than-temporary
impairment losses        --         --         --        --
(recognized in earnings)
                                                        
Foreign currency losses  (168)      (286)      (392)     (97)
                                                        
Total revenues           19,027     4,607      9,151     4,140
                                                        
Expenses                                                 
Losses and loss          3,693      3,381      4,635     4,120
adjustment expenses
Acquisition expenses     1,954      2,305      3,816     3,803
Operating expenses       1,482      1,376      2,815     3,135
                                                        
Total expenses           7,129      7,061      11,266    11,058
                                                        
                                                        
Net income (loss)       $11,897   $(2,454)  $(2,116) $(6,918)
                                                        
                                                        
Net income (loss) per common share:                        
Basic                    $4.38     $(0.93)   $(0.78)  $(2.62)
Diluted                  4.34       (0.93)     (0.77)    (2.61)
Weighted average number of common shares outstanding:
Basic                    2,713,424  2,647,178  2,709,852 2,645,210
Diluted                  2,743,121  2,651,411  2,738,181 2,647,772
                                                        

                                              
                   Three Months Ended June 30, Six Months Ended June 30, 2013
                    2013
Segment information P&C       FG       Total    P&C       FG        Total
                                                              
Net earned premiums $2,199  $4,442 $6,641 $5,763  $7,691  $13,454
                                                              
Incurred losses     (36)     3,729   3,693   (1,412)  6,047    4,635
Impairment on       --       (600)   (600)   --       (362)    (362)
credit derivatives
Acquisition costs   907      1,048   1,954   2,023    1,793    3,816
                                                              
Net underwriting    $1,328  $266   $1,594 $5,152  $213    $5,365
(loss) gain
                                                              
Loss ratio          -1.6%     70.4%    46.6%    -24.5%    73.9%     31.8%
Expense ratio       41.2%     23.6%    29.4%    35.1%     23.3%     28.4%
Combined ratio      39.6%     94.0%    76.0%    10.6%     97.2%     60.1%
                                                              

                                                   
Reconciliation of net income
(loss) to operating income                          
(loss):
(Dollars in thousands except                        
share and per share amounts)
                                                   
                            Three Months Ended June Six Months Ended June 30,
                             30,
                            2013        2012        2013         2012
Operating income                                              
                                                              
Net income (loss)           $11,897   $(2,454)  $(2,116)   $(6,918)
Less: Realized (gains) on
sale of investments and      --        --         (46)        --
other-than-temporary
impairment losses
Less: Unrealized losses on   (10,615)   3,034      7,642       9,368
credit derivatives
Add back: credit impairment  600        653        362         (812)
on derivatives
Less: Foreign currency       168        286        392         97
losses
                                                              
Operating income             $2,051    $1,518    $6,235     $1,735
                                                              
                                                              
Net income (loss) per        $4.34     $(0.93)   $(0.77)    $(2.61)
diluted share
Less: Realized (gains) on
sale of investments and      0.00        0.00        (0.02)       0.00
other-than-temporary
impairment losses
Less: Unrealized (gains)     (3.87)      1.14        2.79         3.54
losses on credit derivatives
Add back: credit impairment  0.22        0.25        0.13         (0.31)
on derivatives
Less: Foreign currency       0.06        0.11        0.14         0.04
losses
Operating income per diluted $0.75     $0.57     $2.28      $0.66
share



Reconciliation of book value per share to operating book value per share and
adjusted operating book value per share:
(Dollars in thousands except per share amounts)              
                                         As at              As at
                                         Jun 30, 2013       Dec 31, 2012
                                                           
Shares outstanding                       2,716             2,677
Book Value Per Share                      23.41             26.15
Shareholders' Equity (Book Value)         63,594            69,988
Derivative liability ^(1)                 72,596            64,953
Credit impairments on derivatives         (5,175)           (5,537)
Operating book value per share            48.23             48.35
Noncontrolling interest in subsidiary -   7,011             7,011
Class B preference shares
Unearned premiums ^(2)                    68,590            73,205
Deferred acquisition costs                (27,020)          (28,775)
Present value of installment premiums     7,360             8,942
^(3)
Unrealized gains on investments           (6,705)           (11,424)
Adjusted operating book value per share   $ 66.36           $66.64
                                                           
(1) Represents only the unrealized gains (losses) portion of the derivative
liability.
                                                           
(2) Includes unearned premium balances on financial guaranty, property
casualty and credit derivative policies.The unearned premiums on financial
guaranty policies include the present value of future installment premiums,
net of ceding commissions.
                                                           
(3) Estimated present value of future installments, net of ceding commissions,
on policies written in credit derivative form only.At June 30, 2013 and
December 31, 2012, the discount rate was 1.41% and 0.72%, respectively.

The Company has posted its second quarter 2013 financial results to its
website at www.aoreltd.com under "Investor Information". If you are a
shareholder of American Overseas Group Limited and wish to receive a hard copy
of the financial statements by mail, please contact:

American Overseas Group Limited
Maiden House, 1^st Floor
131 Front Street
Hamilton, HM 12
Bermuda

CONTACT: American Overseas Group Limited
         info@aoreltd.com
 
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