Darwin Announces 1st Q '08

FARMINGTON, Conn. — Darwin Professional Underwriters, Inc. announced its financial results for the first quarter ended March 31. Highlights include:

-- Gross premiums written for the first quarter are $80.0 million. First quarter gross premiums written are 7.8 percent ahead of our gross premiums for the same period a year ago. Net premiums written for the quarter of $58.0 million are up 18.5 percent over the first quarter of 2007.

-- Net income of $14.9 million for the quarter ended March 31, 2008 represents a 184.7 percent increase over the $5.2 million for the quarter ended March 31, 2007 and our highest net income in our operating history.

-- Overall, the combined ratio is 64.7 percent for the first quarter 2008, which compares favorably to the first quarter 2007 combined ratio of 92.8 percent.

The combined ratio excludes certain aspects of the Company's long-term incentive plan which is included in other expenses. The improvement in the Company's results is primarily driven by a decrease in the loss ratio (25.3 percent improvement to 38.4 percent). The first quarter results include approximately $11.5 million ($7.5 million, net of tax) in favorable loss reserve development and the corresponding ceded premiums, net of incentive compensation and profit sharing expenses stemming from the favorable development of the 2003 through 2007 accident years.

-- Earnings per diluted share for the three months ended March 31, 2008 are $0.87 compared to $0.31 per share for the same period in 2007.

-- Annualized return on average equity is 22.7 percent for the three months ended March 31, 2008, while shareholders' equity grew $15.1 million, or 5.9 percent in the first quarter, from $254.2 million at December 31, 2007 to $269.3 million at March 31, 2008. Book value per share grew 6.1 percent to $15.84 at March 31, 2008 from $14.93 at December 31, 2007.

Stephen Sills, Darwin's president and chief executive officer, commented, "We are gratified to have again achieved record earnings at Darwin this quarter. Our focus on distinct niches within the specialty lines market has allowed us to sustain excellent growth and operating results this quarter. Darwin's strategy has been to distinguish ourselves with great service, to add value to our clients through product innovation, and to provide risk management services wherever possible. We also remain focused on 'getting bigger' by 'getting smaller', that is, by building our small business franchise in all of our major lines of business. We are also pleased to report that we have renewed our two major reinsurance programs at favorable terms and have been able to increase the ceding commission we receive on business subject to these treaties.

"Darwin recorded a significant increase in net income and gross premiums written in the current quarter as compared to the first quarter of 2007, and we demonstrated our continued commitment to underwriting profitability with a first-quarter combined ratio of 64.7 percent. With significant expertise across all of our lines, we believe we're well positioned to take advantage of the continued opportunities we see in specialty insurance."

Source: Darwin Professional Underwriters, Inc