CRM Holdings, Ltd. Announces First Quarter Results

Net Income increases 71.7% to $5.0 million, or $0.30 Per Share

HAMILTON, Bermuda, May 6 /PRNewswire-FirstCall/ -- CRM Holdings, Ltd.
("CRM" or "the Company") (Nasdaq: CRMH), a leading provider of a full range of
products and services for the workers' compensation insurance industry, today
announced results for the first quarter ended March 31, 2008.
Three Months Ending March 31, 2008
During the first quarter of 2008, net income increased 71.7% to
$5.0 million, or $0.30 per diluted share, from $2.9 million, or $0.18 per
diluted share, a year ago. Total revenues were $37.7 million, up from
$34.7 million in the first quarter of 2007.
Net earned premiums from primary insurance and reinsurance increased 41.8%
to $32.4 million from $22.8 million a year ago. Twin Bridges, the Company's
reinsurance subsidiary, accounted for much of the increase with $14.8 million
of net earned premium, up from $6.0 million in the first quarter of 2007. Net
earned premium at Majestic, the Company's primary insurance subsidiary, was
$17.5 million, compared to $16.9 million a year ago. However the change in the
relative performances of the two divisions between the first quarter 2007 and
first quarter 2008 is largely accounted for by Twin Bridges' reinsuring a 40%
quota share of Majestic's primary insurance business. This has the effect of
increasing Twin Bridges' earned premiums and decreasing Majestic's earned
premiums when compared to the prior year.
Fee-based management services revenues declined to $3.8 million from
$9.5 million a year ago. The decline resulted from a decrease in the number of
New York self-insured groups managed by the Company, lower insurance rates in
California and reduced commissions on excess insurance policies placed with
Majestic.
Investment income during the quarter declined to $1.6 million from
$2.3 million in 2007, as a result of $1.2 million in losses on the equity
securities in the Company's investment portfolio.
Total expenses increased to $33.4 million from $31.6 million the prior
year. At Twin Bridges, the loss ratio (loss and loss adjustment expenses as a
percentage of net premiums earned) was 37.1%, compared to 32.0% a year ago, in
part due to the previously mentioned quota share reinsurance arrangement with
Majestic, where the loss ratio on the primary layer is higher than that for
the rest of Twin Bridges' portfolio, and in part offset by favorable loss
reserve development of $3.7 million in the quarter. Majestic's loss ratio was
52.4%, compared to 65.9% in the same quarter last year, in part due to
favorable loss reserve development of $3.4 million.
The combined ratio (total losses and loss adjustment, underwriting,
acquisition and general expenses as a percentage of net premiums earned) for
Twin Bridges during the first quarter of 2008 was 66.1%, compared to 60.0% in
the same quarter the prior year. The combined ratio for Majestic was 86.8%,
down from 100.1% a year ago.
"The first quarter represents a positive start to the year in our risk
based businesses. We are growing profitably in California and now in New York
and New Jersey," said Daniel G. Hickey, Jr., CEO of CRM Holdings Ltd. "Our
fee-based business in New York is in run-off mode as trusts in the state close
down in response to declining rates and difficult economics. The self-insured
group business in California turned in a solid performance in a very
competitive market. We were able to renew 97% of the expiring policies as of
January 1. Overall, an increase in book value of more than 30% compared to the
end of the first quarter last year and an 18% annualized return on average
equity for the quarter is gratifying in these markets."
Segment Results
Primary Insurance and Reinsurance Segments
In the primary insurance segment, Majestic's revenues (consisting of
premiums and investment income) were $18.6 million, compared to $18.4 million
a year ago. Income before taxes was $3.4 million, up from $1.5 million in the
first quarter of 2007. Under the 40% quota share agreement, Majestic's net
earned premiums for the quarter were reduced by $10.2 million.
In the first quarter of 2008, revenues in the reinsurance segment
increased 135% to $15.6 million from $6.6 million the prior year, largely as a
result of the quota share agreement between Twin Bridges and Majestic. Net
profit before taxes for the reinsurance segment was $5.7 million, compared to
net income before taxes of $3.0 million in the first quarter of 2007, also
largely due to the 40% quota share agreement. The quota share added
$10.2 million to Twin Bridges' net earned premium for the quarter.
Fee-based management services business
Fee-based management services revenues in the first quarter of 2008 were
$5.0 million, compared with $9.9 million in revenues in the first quarter of
2007, as the number of groups and group membership in New York experienced a
significant decline. Lower commissions paid by Majestic to CRM and declining
insurance rates in California also contributed to the reduction in revenues.
Premiums under management on March 31, 2008, were $90.9 million, compared to
$173.3 million a year ago. The Company's group membership in New York was
1,466, and premiums under management were $37.6 million on March 31, 2008,
compared to 2,082 and $116.7 million, on March 31, 2007. The decline reflects
the closure of a number of the Company's self-insured groups. Revenue from the
management of New York self-insured groups will be substantially eliminated
during the second quarter of 2008, due to the voluntary termination of all of
CRM's New York self-insured groups as of April 1, 2008.
Outlook
The Company continues to see the opportunity to build on its risk-based
and fee-based services in California, and on its risk-based business in New
York. The Company continues to face competitive market conditions in both
states. In California, despite the state regulator's zero rate cut advisory
for January 1, prices have continued to decline for policies renewed in 2008.
In New York, rates on January 1 reflected the mandatory 20.5% reduction that
became effective on October 1, 2007.
With regard to profit expectations for 2008, the Company believes that
growth in primary insurance, coupled with maintenance of the California fee
business and expense reductions, will produce results in line with the
Company's original expectations. The Company expects earnings per share for
the full year to be in the range of $1.00 to $1.15, which includes the
favorable loss reserve development recorded in our primary insurance and
reinsurance segments during the first quarter of 2008.
Conference Call The company will host a conference call at 9:00 a.m.
EDT on Wednesday,
May 7, 2008, to discuss earnings for the first quarter ended March 31, 2008.
To participate in the event by telephone, please dial 877-545-1409 five to 10
minutes prior to the start time (to allow time for registration) and reference
passcode 4259465. International callers should dial 719-325-4845. The
conference call will be broadcast live over the Internet and can be accessed
by all interested parties at CRM's Web site here. To listen to the call please go to
this Web site at least 15 minutes prior to the start of the call to register,
download, and install any necessary audio software. For those unable to
participate during the live webcast, an audio replay of the conference call
will be archived on CRM's Web site, here, for 90 days. A digital replay of the
call will also be available on Wednesday, May 7, at approximately 12:00 noon
EDT through Wednesday, May 14, at midnight EDT. Dial 888-203-1112 and enter
the conference ID number 4259465. International callers should dial
719-457-0820 and enter the same conference ID number.

About CRM Holdings, Ltd.
CRM Holdings, Ltd. is a provider of workers' compensation insurance
products. Its main business activities include underwriting primary workers'
compensation policies, underwriting workers' compensation reinsurance and
excess insurance policies, and providing fee-based management and other
services to self-insured entities. The Company provides primary workers'
compensation insurance to employers in California, Arizona, Florida, Nevada,
New Jersey, New York, and other states. The Company reinsures some of the
primary business underwritten and provides excess workers' compensation
coverage for self-insured organizations. CRM is also a provider of fee-based
management services to self-insured groups in California and New York. Further
information can be found on the CRM Web site at www.CRMHoldingsLtd.bm.

CRMH-E

Contact Information:
Mark Collinson
CCG Investor Relations
10960 Wilshire Blvd., Ste. 2050
Los Angeles, CA 90024
(310) 231-8600 ext. 117

Forward-Looking statements
This press release contains forward-looking statements within the meaning
of federal securities law, including statements concerning plans, objectives,
goals, strategies, projections of future events or performance and underlying
assumptions (many of which are based, in turn, upon further assumptions).
These statements are based on our current expectations and projections about
future events and are identified by terminology such as "may," "will,"
"should," "expect," "scheduled," "plan," "seek," "intend," "anticipate,"
"believe," "estimate," "aim," "potential," or "continue" or the negative of
those terms or other comparable terminology.
All forward-looking statements involve risks and uncertainties. Although
we believe that our plans, intentions and expectations are reasonable, we may
not achieve our plans, intentions or expectations. There are or may be
important factors that could cause actual results to differ materially from
the forward-looking statements we make in this document. Such risks and
uncertainties are discussed in the Company's Form 10-K for the year ended
March 31, 2007 and in other documents filed by the Company with the Securities
and Exchange Commission. We believe that these factors include, but are not
limited to the following:
-- The cyclical nature of the insurance and reinsurance industry;
-- Premium rates;
-- Investment results;
-- Regulatory changes;
-- The estimation of loss reserves and loss reserve development;
-- Reinsurance may be unavailable on acceptable terms, and we may be
unable to collect reinsurance;
-- The occurrence and effects of wars and acts of terrorism;
-- The effects of competition;
-- The possibility that the outcome of any litigation or arbitration
proceeding is unfavorable;
-- Failure to retain key personnel;
-- Economic downturns; and
-- Natural disasters.

These risks and others could cause actual results to differ materially
from those expressed in any forward-looking statements made. The Company
undertakes no obligation to update publicly or revise any forward-looking
statements made.
(Financial tables and contact information follow)

Table 1
CRM Holdings, Ltd.
Consolidated Balance Sheets

(Unaudited)
March December
31, 31,
2008 2007
(Dollars in thousands)
Assets
Investments:
Fixed-maturity securities, available-for-sale $245,669 $242,969
(amortized cost $241,207 and $240,467)
Equity securities, available-for-sale 20,120 22,374
(cost $19,610 and $21,704)
Short-term investments 90 786
Investment in unconsolidated subsidiary 1,083 1,083
Total investments 266,962 267,212
Cash and cash equivalents 37,333 33,477
Cash and cash equivalents, restricted 811 809
Accrued interest receivable 2,819 2,766
Premiums receivable, net 16,373 13,151
Reinsurance recoverable 45,041 38,584
Accounts receivable 4,439 5,000
Deferred policy acquisition costs 2,140 623
Net deferred tax asset 6,343 7,473
Goodwill and other intangible assets 3,476 3,521
Prepaid expenses 1,778 2,233
Other assets 4,438 4,546
Total assets $391,953 $379,395

Liabilities and shareholders' equity
Reserve for losses and loss adjustment expenses $196,308 $188,848
Reinsurance payable 4,407 5,001
Unearned premiums 10,768 8,853
Unearned management fees and commissions 159 261
Long-term debt and other secured borrowings 44,083 44,084
Accrued expenses 22,363 24,810
Total liabilities 278,088 271,857

Common shares
Authorized 50 billion shares; $.01 par value;
16.0 million common shares issued and outstanding 160 160
0.4 million Class B shares issued and outstanding 4 4
Additional paid-in capital 68,342 68,192
Retained earnings 42,090 37,115
Accumulated other comprehensive gain, net of tax 3,269 2,067
Total shareholders' equity 113,865 107,538
Total liabilities and shareholders' equity $391,953 $379,395

Table 2
CRM Holdings, Ltd.
Consolidated Statements of Income (Unaudited)

Three Months Ended
March 31,
2008 2007
(Amounts in thousands,
except per share data)

Revenues
Net premiums earned $32,352 $22,822
Fee-based management services 3,752 9,513
Investment income 1,642 2,317
Total revenues 37,746 34,652

Expenses
Losses and loss adjustment expenses 13,963 13,010
Fees paid to general agents and brokers 1,418 2,760
Policy acquisition costs 4,407 4,052
Selling, general and administrative expenses 12,664 10,848
Interest expense 975 972
Total expenses 33,427 31,642

Income before taxes 4,319 3,010
Provision for income taxes (656) 112

Net Income $4,975 $2,898

Earnings per share:
Basic $0.30 $0.18
Diluted $0.30 $0.18

Weighted average shares outstanding:
Basic 16,371 16,274
Diluted 16,371 16,274

Table 3
CRM Holdings, Ltd.
Consolidated Statements of Cash Flow (Unaudited)

Three Months Ended
March 31,
2008 2007
(Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $4,975 $2,898
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization of other assets and
other intangible assets 293 194
Amortization of unearned compensation, restricted
stock 124 260
Amortization of premiums and discounts on
available-for-sale investments (115) (360)
Net realized losses on sale of investments 1,042 29
Deferred income tax benefit 531 (1,290)
Changes in: - -
Cash and cash equivalents, restricted (2) 2,699
Accrued interest receivable (52) 179
Premiums receivable (3,222) 6,215
Reinsurance recoverable (6,458) (773)
Accounts receivable 562 (161)
Policy acquisition costs (1,517) 703
Prepaid expenses 445 (356)
Other assets (16) 8
Reserve for losses and loss adjustment expenses 7,480 3,513
Reinsurance payable (594) (2,172)
Unearned premiums 1,914 (1,796)
Unearned management fees and commissions (102) 318
Other accrued expenses (2,448) 4,435
Net cash provided by operating activities 2,840 14,543

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of available-for-sale investments (20,212) (44,362)
Proceeds from sales of available-for-sale
investments 10,836 6,315
Proceeds from maturities of available-for-sale
investments 9,803 17,546
Net sales and maturities of short-term investments 696 373
Purchases of fixed assets, net (133) (432)
Net cash provided by (used in) investing activities 990 (20,560)

CASH FLOWS FROM FINANCING ACTIVITIES
Repayments under long-term debt and other secured
borrowings - (11)
Issuance of common shares - employee stock purchase plan 58 -
Retirement of common shares - share-based compensation (32) (12)
Net cash provided by (used in) financing activities 26 (23)
Net increase (decrease) in cash 3,856 (6,040)
Cash and cash equivalents
Beginning 33,477 21,546
Ending $37,333 $15,506

Table 4
CRM Holdings, Ltd.
Income By Segment

For the three months ended March 31, 2008
Fee-Based Corporate
Management Primary and
Services Insurance Reinsurance Other Eliminations Total
(Dollars in thousands)
Revenues:
Net premiums
earned $- $17,518 $14,834 $- $- $32,352
Management
fees 4,970 - - - (1,218) 3,752
Investment
income (2) 1,054 716 75 (201) 1,642
Total
revenues 4,968 18,572 15,550 75 (1,419) 37,746
Expenses:
Underwriting
expenses - 9,997 9,591 - (1,218) 18,370
Interest
expense 22 202 - 952 (201) 975
Depreciation
and
amortization 198 85 - 10 - 293
Operating
expenses 7,189 4,913 219 1,468 - 13,789
Total
expenses 7,409 15,197 9,810 2,430 (1,419) 33,427

Income
before
taxes $(2,441) $3,375 $5,740 $(2,355) $- $4,319

Total
assets $6,440 $348,000 $84,803 $15,105 $(62,395) $391,953

For the three months ended March 31, 2007
Fee-Based Corporate
Management Primary and
Services Insurance Reinsurance Other Eliminations Total
(Dollars in thousands)
Revenues:
Net premiums
earned $- $16,852 $5,970 $- $- $22,822
Management
fees 9,866 - - - (353) 9,513
Investment
income 34 1,538 652 93 - 2,317
Total
revenues 9,900 18,390 6,622 93 (353) 34,652
Expenses:
Underwriting
expenses - 14,060 3,355 - (353) 17,062
Interest
expense - - - 972 - 972
Depreciation
and
amortization 167 27 - - - 194
Operating
expenses 9,170 2,772 224 1,248 - 13,414
Total
expenses 9,337 16,859 3,579 2,220 (353) 31,642

Income
before
taxes $563 $1,531 $3,043 $(2,127) $- $3,010

Total
assets $7,094 $225,167 $73,227 $9,668 $(893) $314,263

Table 5
CRM Holdings, Ltd.
Revenues by Segment

For the three months
ended
March 31,
2008 2007
(Dollars in thousands)

Revenues from Fee-Based Management Services
California $2,781 $2,508
New York 2,189 7,358
4,970 9,866

Revenues from Primary Insurance
California 11,944 15,500
New York/New Jersey 4,781 25
Other (1) 793 1,327
17,518 16,852
Revenues from Reinsurance
California 9,342 2,576
New York/New Jersey 5,091 3,394
Other (2) 401 -
14,834 5,970

Investment Income (3) 1,642 2,317

Eliminations (4) (1,218) (353)

Total Revenues $37,746 $34,652

(1) Includes primary insurance premiums for policies written in
Washington, Alaska, Arizona and Nevada.
(2) Includes reinsurance premiums assumed from Majestic for policies
written in Washington, Alaska, Arizona and Nevada under the 40% quota
share and under Twin Bridges' participation in Majestic's excess of
loss treaty and direct policies written in Hawaii.
(3) Includes the elimination of $201 thousand of Twin Bridges intercompany
interest income on funds withheld by Majestic.
(4) Elimination of CRM New York and CRM California intercompany
commissions from Majestic.

Table 6
CRM Holdings, Ltd.
Fee-Based Management Services Segment Data

March 31,
2008 2007

Number of Groups
New York 2 8
California 5 5
Texas - 1

Number of Group Members
New York 1,466 2,082
California 408 404
Texas - 12

Aggregate Annualized Premiums (1)
New York $37,576,000 $116,690,000
California $53,356,000 $56,256,000
Texas $- $354,000

(1) Aggregate annualized premiums are the annualized total of the actual
premiums payable to our groups by their members as in effect at the
dates specified. CRM management monitors the period-to-period changes
in these amounts because we believe that it is a meaningful indicator
of the change in our expected fee-based management services revenue in
the future. Our management fees are based on a percentage of the
premiums our groups charge their members and are recognized as income
over the year for which such premiums are fixed. Increases and
decreased in the aggregate amount of these annualized premiums are an
indications of the increase or decrease in the amount of management
fees we expect to earn in the future as our unearned management fees
are recognized as income.

Table 7
CRM Holdings, Ltd.
Primary Insurance Segment Data

For the three months
ended
March 31,
2008 2007

Primary Insurance Premiums $17,518 $16,852
Loss and Loss Adjustments Expenses 9,180 11,100
Underwriting, Acquisition and Insurance Expenses (1) 6,017 5,774
Underwriting Profit (Loss) $2,321 $(22)

Loss Ratio (2) 52.4% 65.9%
Expense Ratio (3) 34.3% 34.3%
Combined Ratio (4) 86.7% 100.1%

(1) Does not include the elimination of $1.2 million and $353 thousand of
Majestic policy acquisition costs against commissions due to CRM New
York and CRM California and does not include the elimination of
$201 thousand and nil of Majestic's intercompany interest expense on
funds withheld from Twin Bridges for the three months ended March 31,
2008 and 2007, respectively.
(2) The loss ratio is calculated by dividing loss and loss adjustment
expense by net reinsurance premiums.
(3) The expense ratio is calculated by dividing underwriting, acquisition
and insurance expenses for the period by net reinsurance premiums.
(4) The combined ratio is the sum of the loss ratio and the expense ratio.

Table 8
CRM Holdings, Ltd.
Reinsurance Segment Data

For the three months
ended
March 31,
2008 2007

Net Reinsurance Premiums $14,834 $5,970
Loss and Loss Adjustments Expenses 5,503 1,910
Underwriting, Acquisition and Insurance Expenses 4,307 1,669
Underwriting (Loss) Profit $5,024 $2,331

Loss Ratio (1) 37.1% 32.0%
Expense Ratio (2) 29.0% 28.0%
Combined Ratio (3) 66.1% 60.0%

(1) The loss ratio is calculated by dividing loss and loss adjustment
expense by net reinsurance premiums.
(2) The expense ratio is calculated by dividing underwriting, acquisition
and insurance expenses for the period by net reinsurance premiums.
(3) The combined ratio is the sum of the loss ratio and the expense ratio.

SOURCE CRM Holdings, Ltd.

Mark Collinson of CCG Investor Relations, +1-310-231-8600, ext. 117, for CRM
Holdings, Ltd.