TORONTO, ONTARIO–(Marketwired – Nov. 11, 2016) – Crosswinds Holdings Inc. (“Crosswinds” or the “Company”) (TSX:CWI) today announced its financial results as at and for the three and nine months ended September 30, 2016.
Business Highlights
- Crosswinds formed Crosswinds Re, a new specialty Cayman-domiciled reinsurance company. Crosswinds Re has been issued a license from the Cayman Islands Monetary Authority to operate as a Class B (iii) reinsurer.
- During Q3 2016, Monarch Delaware Holdings LLC and its subsidiaries (“Monarch”) continued to achieve profitability.
- As previously announced, in April 2016, Monarch received approval for a rate decrease on its homeowners’ insurance program from the Florida Office of Insurance Regulation. Following the rate decrease, premium volumes for Monarch have grown.
- Crosswinds’ future results are expected to be driven by growth in asset management and net income associated with Monarch. A key metric to evaluate these results will be Monarch’s premium growth.
- During Q3 2016, the Company continued to explore capital raising opportunities as additional capital will be required to execute the Company’s insurance and reinsurance strategy.
Q3 2016 Financial Highlights
For the three months ended September 30, 2016, the Company reported:
- Net loss of $(282,230) or $(0.05) per common share (“Share”) compared to net loss of $(397,100) or $(0.07) per Share for the three months ended September 30, 2015;
- Share of income from Monarch of $0.1 million compared to $.01 million for the three months ended September 30, 2015; and
- Shareholders’ equity attributable to Crosswinds’ shareholders (or net book value(1)) of $19.8 million or $3.73 per Share(1) compared to $21.0 million or $3.96 per Share(1) at December 31, 2015.
For the nine months ended September 30, 2016, the Company reported:
- Net loss of $(994,502) or $(0.19) per Share compared to net loss of $(1,028,793) or $(0.19) per Share for the nine months ended September 30, 2015; and
- Share of income from Monarch of $0.3 million compared to a loss of $(0.7) million for the nine months ended September 30, 2015.
The Company’s net loss for the three and nine months ended September 30, 2016 was primarily attributable to:
- foreign exchange fluctuations between the Canadian dollar (“CAD”) and the U.S. dollar (“USD”) as Monarch, which represents the majority of the Company’s assets, is a USD denominated investment. This resulted in an increase of $0.3 million in the statement of other comprehensive loss for the third quarter and a loss of $0.9 million for the nine months ended September 30, 2016 on translation from USD to CAD. This was partially offset by the Company’s share of income in Monarch in the amount of $0.1 million for the third quarter and $0.3 million for the nine months ended September 30, 2016;
- non-cash compensation expense related to deferred share units (“DSUs”) in the amount of $0.1 million for the third quarter and $0.3 million for the nine months ended September 30, 2016; and
- decline in interest income following the Salbro repayment of $1.8 million in December 2015 and the interest rate reduction on the remaining outstanding debentures.
(1) Net book value per share is a non-IFRS financial measure and is calculated as total shareholders’ equity under International Financial Reporting Standards (IFRS) divided by the number of common shares outstanding as at the period end. See the cautionary statement regarding use of Non-IFRS financial measures at the end of this release.
Statement of Operations Highlights
| Three months ended Sept. 30 | Nine months ended Sept. 30 | |||||||||||
| In CAD thousands, except per Share amounts | 2016 | 2015 | 2016 | 2015 | ||||||||
| Revenue | $ | 110 | $ | 185 | $ | 319 | $ | 426 | ||||
| Net results of investments | 117 | 74 | 260 | 254 | ||||||||
| Expenses | (495 | ) | (654 | ) | (1,526 | ) | (1,808 | ) | ||||
| Net loss | $ | (268 | ) | $ | (395 | ) | $ | (947 | ) | (1,128 | ) | |
| Non-controlling interest’s (income) loss | (14 | ) | (2 | ) | (48 | ) | 99 | |||||
| Net loss attributable to the shareholders of Crosswinds | $ | (282 | ) | $ | (397 | ) | $ | (995 | ) | (1,029 | ) | |
| Net loss per Share | $ | (0.05 | ) | $ | (0.07 | ) | $ | (0.19 | ) | $ | (0.19 | ) |
For the quarter ended September 30, 2016, the Company reported:
- Cash of $1.8 million compared to $3.0 million at December 31, 2015; and
- Carrying value of $18.0 million for Monarch compared to $18.3 million at December 31, 2015.
Balance Sheet Highlights
| In CAD thousands, except per Share amounts | September 30, 2016 |
December 31, 2015 |
||||
| Cash | $ | 1,826 | $ | 3,014 | ||
| Investments in an associate and private entity | 20,425 | 20,745 | ||||
| Other assets | 225 | 211 | ||||
| Total Assets | $ | 22,476 | $ | 23,970 | ||
| Total Liabilities | 152 | 368 | ||||
| Total Shareholders’ Equity | $ | 22,324 | $ | 23,602 | ||
| Non-controlling interests | (2,567 | ) | (2,609 | ) | ||
| Shareholders’ Equity attributable to the shareholders of Crosswinds | $ | 19,757 | $ | 20,993 | ||
| Number of shares outstanding (millions) | 5.3 | 5.3 | ||||
| Net book value per Share attributable to the shareholders of Crosswinds | $ | 3.73 | $ | 3.96 | ||
Financial Information
For a comprehensive review of the Company’s results, shareholders are encouraged to read the Company’s condensed interim consolidated financial statements and accompanying Interim Management’s Discussion and Analysis for the period ended September 30, 2016, copies of which will be available on the Company’s website at www.crosswindsinc.com and on SEDAR at www.sedar.com.
Crosswinds Holdings Inc.
Crosswinds is a publicly traded private equity firm and asset manager targeting strategic and opportunistic investments in the financial services sector with a particular focus on the insurance industry.
Caution Regarding Forward-Looking Information
This release includes certain forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “should”, “plans” or “continue” or the negative thereof or variations thereon or similar terminology. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. These forward-looking statements are subject to a number of risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements. Reference should be made to the risk factors in the Company’s 2015 Annual Information Form, in the Management’s Discussion and Analysis for the year ended December 31, 2015 and in our other filings with Canadian securities regulators. Additional important factors that could cause actual results to differ materially from expectations include, among other things, general economic and market factors, competition, interest rates, tax related matters, loss of personnel, reliance on key personnel, ability of the Company to generate positive future returns for investors, ability of the Company to execute its strategies from time to time; the receipt of any regulatory approvals or consents required from time to time. This news release makes reference to the net book value per share which is a non-IFRS financial measure. The Company calculates the net book value per share as it believes it to be an important metric that shareholders use and frequently request and refer to because shareholders often view the Company as an holding company of investments in private entities. Net book value is a non-IFRS financial measure that does not have any standardized meaning prescribed by International Financial Reporting Standards and therefore it is unlikely to be comparable to similar measures presented by other issuers. This classification is not an IFRS measure and should not be considered either in isolation of, or as a substitute for, measures prepared in accordance with IFRS.
Cautionary Statement Regarding the Valuation of Investments in Private Entities
In the absence of an active market for its investments in private entities, fair values are determined by management using the appropriate valuation methodologies after considering the history and nature of the business, operating results and financial conditions, the outlook and prospects, the general economic, industry and market conditions, capital market and transaction market conditions, contractual rights relating to the investment, public market comparables, private market transactions multiples and, where applicable, other pertinent considerations. The process of valuing investments for which no active market exists is inevitably based on inherent uncertainties and the resulting values may differ from values that would have been used had an active market existed. The amounts at which the Company’s investments in private entities could be disposed of may differ from the fair value assigned and the differences could be material. Estimated costs of disposition are not included in the fair value determination.
