American Overseas Group Ltd. :AOREF-US: Earnings Analysis: For the six months ended June 30, 2017 : September 29, 2017

American Overseas Group Ltd. reports financial results for the half-year ended June 30, 2017.


  • Summary numbers: Revenues of USD 8.82 million, Net Earnings of USD -8.22 million.
  • Earnings growth from operating margin improvements as well as from unusual items

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income (See complete table at the end of this report):

2017-06-30 2016-12-31 2016-06-30 2015-12-31 2015-06-30
Relevant Numbers (Semi-Annual)
Revenues 8.82 6.17 8.88 9.61 12.28
Revenue Growth (YOY) -0.67 -35.81 -27.67 -77.59 -20.42
Earnings -8.22 4.61 -12.12 10.34 8.21
Earnings Growth (YOY) 32.2 -55.38 -247.55 -73.82 880.21
Net Margin -93.15 74.74 -136.47 107.52 66.9
EPS -182.08 104.64 -273.96 204.73 165.63
Return on Equity -12.66 6.49 -16.59 12.33 10.44
Return on Assets -2.61 1.51 -4.14 3.47 2.65

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Market Share Versus Profits

Revenues History
Earnings History

Compared to the same period last year, AOREF-US’s change in revenue was close to the amount of its change in earnings. It remains to be seen how the rest of its peer group’s results will turn out and if AOREF-US’s performance is a sign of any major shift in the composition of market share in this sector. Also, for comparison purposes, revenues changed by 42.94% and earnings by -278.15% compared to the previous period.

Earnings Growth Analysis

Insurance companies sometimes tradeoff for improvements in premiums earned by relaxing standards in underwriting policies. A quick way to check against such activity is to compare the changes in loan loss provisions as well any chnages in the level of policy claims. If either of these checks point to a decline in the underwriting standards, it is quite possible that the company’s performance is a result of underwriting policy changes that could have a longer term impact compared to the shorter term pop in premiums earned.

Premiums Earned Percent History
Loss Ratio History

The company’s year-on-year decline in earnings has been influenced by the following factors: (1) Decline in premiums earned as a percent of total revenues from 27.77% to 21.40% and (2) issues with underwriting policies. As a result, loss ratio went from 259.22% to 659.47% in this period. For comparison, premiums earned as a percent of revenues were 10.17% and the loss ratio 1,256.71% in the immediate last period.


The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating margins after interest from -116.53% to -79.64% and (2) One-time items. The company’s pretax margins are now -93.11% compared to -136.43% for the same period last year.

EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for American Overseas Group Ltd.

Company Profile

American Overseas Group Ltd. is a holding company which provides insurance services. It offers writing short-term, non-catastrophe and property-casualty reinsurance services. The company operates through the following segments Financial Guaranty, Property/Casualty, financial Guaranty and Corporate/Other. The Financial Guaranty segment includes financial guaranty operations which are in run-off and which the company has no plans to re-enter. The Property/Casualty segment provides insurance and reinsurance primarily related to U.S. short-tail personal lines. American Overseas Group was founded on January 28, 1998 and is headquartered in Hamilton, Bermuda.

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