American Overseas Group Limited Announces Fourth Quarter 2013 Net Income of $3.4 Million and Operating Income of $1.1 Million

American Overseas Group Limited Announces Fourth Quarter 2013 Net Income of
$3.4 Million and Operating Income of $1.1 Million

HAMILTON, Bermuda, May 19, 2014 (GLOBE NEWSWIRE) -- American Overseas Group
Limited (BSX:AORE.BH) (Pink Sheets:AORE) ("AOG" or the "Company") today
reported net income of $3.4 million, or $1.24 per diluted share, for the
quarter ended December 31, 2013. This compares to a net loss of $21.8 million,
or $8.08 per diluted share, for the fourth quarter of 2012. The net income for
the year of 2013 was $10.9 million, or $3.96 per diluted share. This compares
to a net loss of $22.9 million, or $8.58 per diluted share, for the year of
2012. Property/casualty premiums earned for the year ended December 31, 2013
were $16.8 million compared to $6 million for the year of 2012. The results
for the fourth quarter and year of 2013 were primarily impacted by the
positive movement on the reserves related to the financial guaranty business,
with the property/casualty business recording an approximately breakeven
result. Book value per share at December 31, 2013 was $27.54, an increase of
5% from year-end 2012 when book value per share was $26.15.

During the fourth quarter of 2013, operating income was $1.1 million, or $0.39
per diluted share, compared to operating loss of $9.6 million, or $3.54 per
diluted share, during the fourth quarter of 2012. Operating income for the
year of 2013 was $8.9 million, or $3.25 per diluted share, compared to
operating loss of $6.9 million, or $2.57 per diluted share, for the year of
2012. Operating book value per share was $49.38 at December 31, 2013, an
increase of 2% 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.

As a cost saving measure, the Company will be publicly reporting financial
results and publishing financial statements semi-annually rather than
quarterly. This is effective for reporting on periods beginning January 1,
2014.

Subsequent Events:

On February 14, 2014, the Company established an irrevocable trust (the
"Series A Trust") for the benefit of the holders of the Series A Preferences
Shares. The Company deposited assets valued at $3 million in the Series A
Trust. An established trust provider in Bermuda was appointed as Trustee of
the Series A Trust. The Company believes that the funds deposited in the
Series A Trust will be sufficient to meet its obligation to the holders of the
Series A Preference Shares at maturity on December 15, 2066. Establishment of
the Series A Trust does not alter the Company's obligations to the holders of
the Series A 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 1.75% at December 31, 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 December 31, 2013 and 2012
(dollars in thousands)
                                                           
                                                           
                                          December 31, 2013 December 31, 2012
Assets                                                      
Investments:                                               
Fixed-maturity securities held as                           
available for sale, at fair value
(Amortized cost: $137,930 and $154,334)    $141,124        $165,758
Fixed income security held to maturity, at 4,700            --
amortized cost
Equity investments available for sale, at  23,100           --
fair value (Cost: $21,000 and $Nil)
Cash and cash equivalents                  12,775           36,317
Restricted cash                            43,688           45,139
Unsettled trades                           9,068            
Accrued investment income                  777               1,189
Reinsurance balances receivable, net       10,611           11,561
Funds withheld                             12,351            1,533
Salvage and subrogation recoverable        6,684             6,687
Deferred policy acquisition costs          24,264            28,775
Deferred expenses                          259               346
Other assets                               800               90
Total Assets                               $290,201        $297,396
                                                           
                                                           
Liabilities and Equity                                      
Liabilities:                                                
Loss and loss expense reserve              $21,783         $22,247
Unearned premiums                          62,002            72,538
Accounts payable and accrued liabilities   745               698
Derivative liabilities                     64,974           65,214
Redeemable Series A preference shares
($1,000 redemption value and $0.10 par
value; authorized shares - 75,000;issued  59,700            59,700
and outstanding shares - 59,700 at
September 30, 2013 and December 31, 2012)
Total Liabilities                          209,204           220,397
                                                           
Shareholders' Equity:                                       
Common shares                              2,721             2,677
Additional paid-in capital                 232,578           231,891
Accumulated other comprehensive income     5,295             11,424
Retained deficit                           (165,650)         (176,004)
Total Shareholders' Equity                 74,944            69,988
                                                           
Noncontrolling interest- Class B          6,053             7,011
preference shares of subsidiary
                                                           
Total Equity                               80,997            76,999
                                                           
Total Liabilities and Equity               $290,201        $297,396

                                                                         
                                                                         
American Overseas Group Limited                                           
Consolidated Statements of Operations                                     
(unaudited)                                                               
For the year ended December 31, 2013 and 2012                             
(dollars in thousands except share and per share amounts)                 
                                                                    
                                                                    
                    Three Months Ended           Year Ended             
                     December 31,                  December 31,
                    2013       2012              2013       2012        
Revenues                                                             
                                                                    
Net premiums earned  $8,428   $9,316          $28,383  $21,508   
                                                                    
Change in fair value
of credit                                                            
derivatives
Realized gains and   299       425              1,755     2,271      
other settlements
Unrealized gains     650       (11,886)         162       (17,073)   
(losses)
Net change in fair
value of credit      949       (11,461)         1,917     (14,802)   
derivatives
Net investment       1,219     1,421            5,019     6,946      
income
Net realized gains
on sale of           1,288     382              2,081     737        
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     60        57               (87)      66         
losses (gains)
Total revenues       11,944    (284)            37,314    14,455     
                                                                    
Expenses                                                             
Losses and loss      4,492     16,267           12,318    22,052     
adjustment expenses
Acquisition expenses 2,626     3,771            8,566     9,114      
Operating expenses   1,394     1,502            5,558     6,190      
Total expenses       8,512     21,539           26,442    37,356     
                                                                    
Net income (loss)   $3,432   $(21,823)       $10,871  $(22,901) 
                                                                    
Net income (loss)                                                    
per common share:
Basic                $1.26    $(8.16)         $4.01    $(8.60)   
Diluted              1.24      (8.08)           3.96      (8.58)     
Weighted average
number of common                                                     
shares outstanding:
Basic                2,721,182 2,675,284        2,714,309 2,662,318  
Diluted              2,757,119 2,699,306        2,743,184 2,669,674  
                                                                    
                                                                    
                    Three Months Ended            Year Ended
                     December 31, 2013             December 31, 2013
Segment information  P&C        FG          Total  P&C        FG          Total
                                                                    
Net earned premiums  $4,832   $3,596    $     $16,807  $11,576   $28,383
                                            8,428
                                                                    
Incurred losses      3,463     1,028      4,492 12,746    (428)      12,318
Impairment on credit --        359        359   --        (174)      (174)
derivatives
Acquisition costs    1,624     1,002      2,626 4,424     4,142      8,566
                                                                    
Net underwriting     $(256)   $1,207    $951 $(363)   $8,036    $7,673
(loss) gain
                                                                    
                                                                    
Loss ratio           71.7%      38.6%       57.6%  75.8%      -5.2%       42.8%
Expense ratio        33.6%      27.9%       31.2%  26.3%      35.8%       30.2%
Combined ratio       105.3%     66.5%       88.7%  102.2%     30.6%       73.0%

Reconciliation of net income (loss) to operating income (loss):
(Dollars in thousands except share and per share amounts)

                                   Three Months Ended   Year Ended
                                    December 31,         December 31,
                                   2013     2012        2013      2012
Operating income                                               
                                                               
Net income (loss)                  $3,432 $(21,823) $10,871 $(22,901)
Less: Realized (gains) on sale of
investments and                     (1,288) (382)      (2,081)  (737)
other-than-temporary impairment
losses
Less: Unrealized (gains) losses on  (650)   11,886     (162)    17,073
credit derivatives
Add back: credit impairment on      (359)    828         174       (254)
derivatives
Less: Foreign currency (gains)      (60)    (57)       87       (66)
losses
                                                               
Operating income                    $1,075 $(9,549)  $8,889  $(6,885)
                                                               
                                                               
Net income (loss) per diluted share $1.24  $(8.08)   $3.96   $(8.58)
Less: Realized (gains) on sale of
investments and                     (0.47)   (0.14)      (0.76)    (0.28)
other-than-temporary impairment
losses
Less: Unrealized (gains) losses on  (0.24)   4.40        (0.06)    6.40
credit derivatives
Add back: credit impairment on      (0.13)   0.31        0.06      (0.10)
derivatives
Less: Foreign currency (gains)      (0.02)   (0.02)      0.03      (0.02)
losses
Operating income per diluted share  $0.39  $(3.54)   $3.25   $(2.57)

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
                                                    Dec 31, 2013 Dec 31, 2012
                                                                
Shares outstanding                                  2,721       2,677
Book Value Per Share                                 27.54       26.15
Shareholders' Equity (Book Value)                    74,944      69,988
Derivative liability ^(1)                            64,792      64,953
Credit impairments on derivatives                    (5,363)     (5,537)
Operating book value per share                       49.38       48.35
Noncontrolling interest in subsidiary - Class B      6,053       7,011
preference shares
Unearned premiums ^(2)                               62,445      73,205
Deferred acquisition costs                           (24,264)    (28,775)
Present value of installment premiums ^(3)           6,471       8,942
Unrealized gains on investments                      (5,295)     (11,424)
Adjusted operating book value per share              $66.07     $66.64

(1) Represents 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 December 31, 2013 and
December 31, 2012, the discount rate was 1.75% and 0.72%, respectively.

The Company has posted its fourth quarter 2013 financial results to its
website at www.aoreltd.com under "Investor Information."

CONTACT: American Overseas Group Limited
         info@aoreltd.com
 
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