AOG announces second annual loss in a row
Bermuda-based American Overseas Group (AOG) has reported that it made a net loss of $10.6 million in 2017, a fall from the net loss of $7.5 million that it made in 2016.
The company said that its 2017 results were impacted by unrealised gains in credit derivatives of $8.1 million, and include fair value adjustments of $1.0 million related to the business combination accounting from the combination of Orpheus Group and AOG in 2013, when the entities came under common voting control. Book value per share at December 31, 2017 was $1,308.58, a decline from the book value per share of $1,530.98 at December 31, 2016.
For the year ended December 31, 2017, the company had an operating loss of $20.8 million, , compared to an operating loss of $14.6 million, for the year ended December 31, 2016. Operating income for the property and casualty segment in 2017 was $1.1 million, compared to the $3.0 million operating income in 2016 for this segment. The financial guaranty segment had operating losses of $24.1 million in 2017, largely driven by losses from the company's reinsurance of Puerto Rico-related credits.
Gross property and casualty premiums written, which are the primary driver of the company's fee income, were $422.0 million for 2017 compared to $426.3 million for 2016. Fees earned by the company's management companies were $13.4 million for 2017 compared to $14.2 million for 2016 before intercompany consolidation eliminations with their regulated affiliates. Net earned property and casualty premiums were $3.5 million for 2017 and compares to $3.6 million for 2016. There was an overall decrease for the property and casualty segment, from operating income of $3.0 million in 2016 to operating income of $1.1 million in 2017, driven primarily by underwriting results.
The company said that the legacy financial guaranty portfolio of American Overseas Reinsurance Company, excluding the company's exposure to Puerto Rico credits, continues to run-off satisfactorily. The financial guaranty segment operating loss increased from an operating loss of $16.2 million in 2016 to an operating loss of $24.1 million in 2017, primarily due to loss reserve increases related to its Puerto Rico credits. Insured par outstanding (net of escrowed transactions) declined to $2.1 billion at December 31, 2017 from $3.0 billion at December 31, 2016, a 30 percent decline.
AOG also announced that Ron Ballard has been appointed chief financial officer of the company effective immediately. Ballard has 25 years of experience in the P&C insurance industry in a variety of financial and business leadership roles and holds a BA in Economics from the University of Texas and a BBA, Accounting from Texas A&M University.
