SeaBright Insurance Holdings Reports Second Quarter and Six-Month 2008 Results

SEATTLE--(Business Wire)--
SeaBright Insurance Holdings, Inc. (Nasdaq: SEAB) today announced
results for the second quarter and six-months ended June 30, 2008.

Net income for the quarter was $6.4 million or $0.30 per fully
diluted share compared to $10.2 million or $0.49 per fully diluted
share in the year-earlier period. For the second quarter, total
revenue increased 1.9% to $61.8 million compared to $60.7 million for
the same period in 2007. For the second quarter of 2008, premiums
earned increased 1.7% to $55.7 million compared to $54.8 million for
the same period in 2007.

During the second quarter 2008, the Company incurred a
non-recurring charge of approximately $1.0 million, or $0.03 per
diluted share, related to the accelerated vesting of stock options and
restricted stock held by our former chief financial officer, who
passed away unexpectedly in April. Also in the second quarter, net
realized losses included a pre-tax charge of $1.9 million, or $0.06
per diluted share, related to other-than-temporary impairments of the
Company's investments in preferred stock issued by Fannie Mae and
Freddie Mac.

John Pasqualetto, SeaBright's Chairman, President and Chief
Executive Officer, said, "The second quarter was a very challenging
quarter, encompassing the combination of increasingly competitive
pricing and the negative impact on premium growth driven by the
general economic slowdown. In the quarter, we did encounter more
competitors willing to price business at rates we deem inadequate.
Consistent with our dedication to make an underwriting profit, we
chose to walk away from under priced business. Experience has taught
us that long-term success is predicated on strong underwriting
discipline, exceptional customer service and a specialized product
mix. SeaBright remains committed to these tenets and is confident that
we are well positioned to operate successfully throughout the cycle."

The net loss ratio for the second quarter of 2008 was 57.0%
compared to 52.4% in the same period of 2007. During the second
quarter 2008, on a pre-tax basis, the Company recognized approximately
$7.9 million in favorable development of prior years' loss reserve
estimates to reflect a continuation of deflation trends in the paid
loss data for recent accident years. During the second quarter of
2007, on a pre-tax basis, the Company recognized $7.8 million in
favorable development of prior years' loss reserve estimates.

Total underwriting expenses for the second quarter 2008 were $17.7
million compared to $14.7 million in the prior year period. The net
underwriting expense ratio for the first quarter was 31.6% compared to
26.8% in the same period in 2007. The increase in the underwriting
expense ratio over the same period in 2007 is primarily the result of
increased production expenses to support our geographic expansion and
entry into additional workers' compensation niches, and the charge
related to the accelerated vesting of stock options and restricted
stock held by our former chief financial officer.

The net combined ratio for the second quarter of 2008 was 88.6%
compared to 79.2 % for the same period in 2007.

Net investment income for the second quarter of 2008 was $5.6
million compared to $4.9 million for the same period in 2007 as the
Company's investment portfolio grew 19.8% or $89.2 million to $539.8
million at June 30, 2008 from $450.6 million at June 30, 2007.

At June 30, 2008, SeaBright had 1,032 customers, an increase of
25.2% compared to the same period in 2007. At June 30, 2008, the
average premium size per customer was approximately $267,000 compared
to approximately $294,000 at June 30, 2007, a reflection of
SeaBright's continued geographic diversification of its business and
lower premium rates related to the decline in loss costs.

For the six months ended June 30, 2008, net income was $17.3
million or $0.82 per diluted share compared to $20.3 million or $0.97
per diluted share in the same period in 2007. Total revenue for the
period increased 9.0% to $125.9 million compared to $115.5 million for
the same period in 2007. For the six months ended June 30, 2008, net
premiums earned increased 8.7% to $112.4 million compared to $103.4
million for the comparable period in 2007.

The net loss ratio was 54.9% for the six months ended June 30,
2008 compared to 52.3% in the same period in 2007. For the six months
ended June 30, 2008, on a pre-tax basis, the Company recognized $15.9
million in favorable development of prior years' loss reserve
estimates, compared to $15.0 million recognized in the same period of
2007.

Total underwriting expenses for the six months ended June 30, 2008
were $33.3 million compared to $27.3 million in the prior year period
and the net underwriting expense ratio was 29.6% compared to 26.4% in
the same period in 2007.

For the six months ended June 30, 2008, the net combined ratio was
84.5% compared to 78.7% for the same period in 2007.

At June 30, 2008, the Company's investment portfolio totaled
$539.8 million and had an overall credit rating of AA. The Company
regularly reviews its investment portfolio for other than temporary
impairment declines in fair value considering, among other things, the
underlying credit quality of any insured or uninsured bonds.

As of June 30, 2008, the overall credit quality of our $276.0
million fixed income municipal portfolio (including secondary
insurance) stood at AA/AA-. With secondary insurance removed, the
average rating of the municipal portfolio would be AA-. As of June 30,
2008, the Company had $205.5 million in insured municipal bonds with a
weighted average credit rating of AA/AA-. The underlying rating of the
insured bonds was AA-. The Company also had $70.5 million in uninsured
municipal bonds with a weighted average credit rating of AA/AA-.

At June 30, 2008, the Company had $2.8 million invested in
collateralized mortgage obligations, $2.2 million in adjustable rate
mortgages, $13.1 million in asset backed securities, none of which
were sub prime, and $8.0 million in preferred stock and $9.8 million
in debt securities issued by Fannie Mae and Freddie Mac.

About SeaBright Insurance Holdings, Inc.

SeaBright Insurance Holdings, Inc. is an insurance holding company
whose wholly owned subsidiary, SeaBright Insurance Company, operates
as a specialty underwriter of multi-jurisdictional workers'
compensation insurance. SeaBright Insurance Company distributes its
maritime, alternative dispute resolution and state act products
through selected independent insurance brokers and through its
in-house wholesale broker affiliate, PointSure Insurance Services.
SeaBright Insurance Company provides workers' compensation coverage to
employers in selected regions nationwide. To learn more about
SeaBright Insurance Company and SeaBright Insurance Holdings, Inc.,
visit our website at www.sbic.com.

Conference Call

The Company will host a conference call on Tuesday, July 22, 2008
at 4:30 p.m. Eastern Time featuring remarks by John G. Pasqualetto,
President and CEO, Richard J. Gergasko, Executive Vice President -
Operations, and M. Philip Romney, Vice President, Finance and
Principal Accounting Officer. The conference call is available via
webcast on the Company's website and can be accessed by visiting
http://investor.sbic.com. Once there, select "Webcasts and
Presentations" on the left side of the page. The dial-in number for
the conference call is (877) 419-6603. Please call at least five
minutes before the scheduled start time.

Cautionary Statement

Some of the statements contained in this press release are
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. In some cases, you can
identify forward-looking statements by terminology such as "may,"
"will," "should," "expect," "plan," "intend," "anticipate," "believe,"
"estimate," "predict," "potential" or "continue," the negative of
these terms or other terminology. Forward-looking statements are based
on the opinions and estimates of management at the time the statements
are made and are subject to certain risks and uncertainties that could
cause actual results to differ materially from those anticipated in
the forward-looking statements. Factors that could affect the
Company's actual results include, among others, the fact that our loss
reserves are based on estimates and may be inadequate to cover our
actual losses; the uncertain effects of emerging claim and coverage
issues on our business; the geographic concentration of our business;
an inability to obtain or collect on our reinsurance protection; a
downgrade in the A.M Best rating of our insurance subsidiary; the
impact of extensive regulation of the insurance industry and
legislative and regulatory changes; a failure to realize our
investment objectives; the effects of intense competition; the loss of
one or more principal employees; the inability to acquire additional
capital on favorable terms; a failure of independent insurance brokers
to adequately market our products; the loss of our rights to fee
income and protective arrangements that were established in connection
with the acquisition of our business; and the effects of acts of
terrorism or war. More information about these and other factors that
potentially could affect our financial results is included in our 2007
Annual Report on Form 10-K, filed with the U.S. Securities and
Exchange Commission on March 17, 2008, and in our other public filings
filed with the U.S. Securities and Exchange Commission. Readers are
cautioned not to place undue reliance upon these forward-looking
statements, which speak only as of the date of this release. The
Company undertakes no obligation to update any forward-looking
statements.

Set forth in the tables below are summary results of operations
for the three and six month periods ended June 30, 2008 and 2007 as
well as selected balance sheet data as of June 30, 2008 and December
31, 2007. The following information is preliminary and unaudited and
is subject to change until final results are publicly distributed upon
the filing of the Company's quarterly report on Form 10-Q. The Company
currently expects to file its unaudited condensed consolidated
financial statements with the U.S. Securities and Exchange Commission
as part of its quarterly report on Form 10-Q in a timely fashion on or
before August 11, 2008.

-0-
*T
SEABRIGHT INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, December 31,
2008 2007
------------- ------------
(Unaudited) (Audited)
------------- ------------
(in thousands)
ASSETS

Fixed income securities available-for-sale,
at fair value $ 489,292 $ 474,756
Equity securities available-for-sale, at
fair value 12,747 11,193
Preferred stock available-for-sale, at fair
value 8,281 8,488
Cash and cash equivalents 29,470 20,292
Accrued investment income 5,491 5,055
Premiums receivable, net of allowance 10,791 9,223
Deferred premiums 162,147 150,066
Service income receivable 228 436
Reinsurance recoverables 15,718 14,210
Receivable under adverse development cover 2,533 2,533
Prepaid reinsurance 1,812 1,820
Property and equipment, net 4,539 1,707
Deferred income taxes, net 20,862 16,488
Deferred policy acquisition costs, net 22,310 19,832
Intangible assets, net 1,228 1,233
Goodwill 2,881 2,881
Other assets 19,286 15,356
------------- ------------
Total assets $ 809,616 $ 755,569
============= ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
Unpaid loss and loss adjustment expense $ 263,708 $ 250,085
Unearned premiums 155,477 147,033
Reinsurance funds withheld and balances
payable 1,377 220
Premiums payable 4,876 4,136
Accrued expenses and other liabilities 62,063 47,789
Surplus notes 12,000 12,000
------------- ------------
Total liabilities 499,501 461,263
------------- ------------

Commitments and contingencies

Stockholders' equity:
Series A preferred stock, $0.01 par
value; 750,000 shares authorized; no
shares issued and outstanding - -
Undesignated preferred stock, $0.01 par
value; 10,000,000 shares authorized; no
shares issued and outstanding - -
Common stock, $0.01 par value; 75,000,000
shares authorized; issued and
outstanding - 21,222,703 shares at June
30, 2008 and 20,831,102 shares at
December 31, 2007 212 208
Paid-in capital 197,282 194,023
Accumulated other comprehensive
income/(loss) (3,100) 1,638
Retained earnings 115,721 98,437
------------- ------------
Total stockholders' equity 310,115 294,306
------------- ------------
Total liabilities and stockholders'
equity $ 809,616 $ 755,569
============= ============
*T

-0-
*T
SEABRIGHT INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2008 2007 2008 2007
-------------- ------------ ------------ ------------
(dollars in thousands, except income per share
amounts)
Revenue: (1)
Premiums earned $ 55,685 $ 54,757 $ 112,407 $ 103,388
Claims service
income 424 343 830 899
Other service
income 82 25 99 49
Net investment
income 5,557 4,854 11,281 9,612
Net realized
loss (2,012) (8) (2,129) (60)
Other income 2,043 685 3,451 1,642
-------------- ------------ ------------ ------------
61,779 60,656 125,939 115,530
-------------- ------------ ------------ ------------
Losses and
expenses:
Loss and loss
adjustment
expenses 32,156 29,012 62,565 54,930
Underwriting,
acquisition
and insurance
expenses 17,678 14,692 33,324 27,323
Interest
expense 210 284 461 565
Other expenses 2,367 1,652 4,353 3,203
-------------- ------------ ------------ ------------
52,411 45,640 100,703 86,021
-------------- ------------ ------------ ------------
Income before
taxes 9,368 15,016 25,236 29,509
-------------- ------------ ------------ ------------

Income tax
expense
(benefit):
Current 3,354 5,692 9,665 10,166
Deferred (417) (879) (1,713) (933)
-------------- ------------ ------------ ------------
2,937 4,813 7,952 9,233
-------------- ------------ ------------ ------------
Net income $ 6,431 $ 10,203 $ 17,284 $ 20,276
============== ============ ============ ============

Basic earnings
per share $ 0.31 $ 0.50 $ 0.85 $ 1.00
Diluted earnings
per share $ 0.30 $ 0.49 $ 0.82 $ 0.97

Weighted average
basic shares
outstanding 20,456,084 20,338,526 20,408,153 20,329,662
Weighted average
diluted shares
outstanding 21,174,566 20,960,268 21,080,929 20,913,518

Net loss ratio
(2) 57.0% 52.4% 54.9% 52.3%
Net underwriting
expense ratio
(3) 31.6% 26.8% 29.6% 26.4%
-------------- ------------ ------------ ------------
Net combined
ratio (4) 88.6% 79.2% 84.5% 78.7%
============== ============ ============ ============

(1) Gross and net premiums written for the periods indicated were as
follows:

Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2008 2007 2008 2007
-------------- ------------ ------------ ------------
(in thousands)
Gross premiums
written $ 66,254 $ 67,559 $ 129,821 $ 127,485
Net premiums
written 63,006 63,645 123,349 119,905

(2) The net loss ratio is calculated by dividing loss and loss
adjustment expenses for the period less claims service income by the
net premiums earned for the period.

(3) The net underwriting expense ratio is calculated by dividing
underwriting, acquisition and insurance expenses for the period less
other service income by the net premiums earned for the period.

(4) The net combined ratio is the sum of the net loss ratio and the
net underwriting expense ratio.
*T

SeaBright Insurance Holdings, Inc.
M. Philip Romney, 206-269-8500
Vice President, Finance
and Principal Accounting Officer
investor@sbic.com

Copyright Business Wire 2008