ProCentury Corp. Unveils Q4, Full-Year Numbers

Ohio-based ProCentury Corp., a specialty property and casualty insurance holding company, announced financial results for the three months and the year ended Dec. 31, 2004.

Highlights include the following:
— Net income from continuing operations of $13.7 million for full year 2004, or $1.29 per diluted share.
— Combined ratio of 91.8% for the full year 2004.
— Book value per share of $8.76 at December 31, 2004.

Edward Feighan, ProCentury’s CEO said, “We produced
solid earnings for our shareholders in 2004. This achievement is the result of our disciplined underwriting and a concerted effort to strengthen our distribution network.

“We have momentum going into 2005; we have some excellent opportunities in the markets we serve, and we are well-positioned to continue profitable growth.”

For the full year 2004, ProCentury’s net income from continuing operations was $13.7 million, an improvement from the loss from continuing operations of $1.2 million reported for 2003. Net income from continuing operations per diluted share in 2004 was $1.29 compared with a net loss of $0.25 per diluted share. The 2003 per diluted share information is based on the historical weighted average shares outstanding for 2003 which does not include the shares issued as part of the April 2004 initial public offering.

The combined ratio for the full year 2004 was 91.8% compared to 109.0% in 2003. The improvement was generated by a decline in the loss ratio from 74.8% in 2003 to 59.9% in 2004 and a decline in the expense ratio from 34.2% in 2003 to 31.9% in 2004.

ProCentury’s net income for the full year 2004 was $15.0 million, a
$14.7 million increase from the net income of $300,000 reported for 2003. For 2004, net income per diluted share was $1.41 compared to net income of $0.06 per diluted share in 2003. Net income includes earnings from discontinued operations.

Gross premiums written were $191.4 million for the full year 2004, an
increase of 27.9% from $149.7 million for 2003. Premiums earned were $148.7 million in 2004, up 37.3% compared with $108.3 million earned in 2003. Investment income for 2004 was $10.0 million, an increase of 54.6% from the investment income of $6.5 million reported for 2003.

ProCentury’s net income from continuing operations for the fourth quarter of 2004 was $4.1 million or $0.31 per diluted share compared to net income from continuing operations of $2.7 million or $0.54 per diluted share based on the historical weighted average shares outstanding for the fourth quarter of 2003.

The combined ratio was 91.0% for the fourth quarter of 2004, compared to 91.6% for the fourth quarter of 2003. The loss ratio was 59.7% and expense ratio was 31.3% for the fourth quarter of 2004. This compares with a loss ratio of 60.5% and expense ratio of 31.1% for the same quarter of 2003.

ProCentury’s net income for the fourth quarter of 2004 was $5.4 million, a 64.7% increase from the $3.3 million net income for the fourth quarter of 2003. In the fourth quarter of 2004, net income per diluted share was $0.41 compared to $0.65 per diluted share based on the historical weighted average shares outstanding in the fourth quarter of 2003.

Gross premiums written increased to $49.3 million for the fourth quarter of 2004, up 21.4% from $40.6 million for the same period in 2003. Premiums earned were $41.3 million in the fourth quarter of 2004, up 35.2% compared with $30.5 million in the fourth quarter of 2003. Investment income for the fourth quarter of 2004 was $3.0 million, an increase of 65.1% from the investment income of $1.8 million reported for the fourth quarter of 2003.

The company is currently expecting gross written premiums for the year ended Dec. 31, 2005 to grow between 10% and 15%.