1347 Property Insurance Holdings, Inc. Announces 2016 Fourth Quarter and Full Year Financial Results
Increase in Book Value per Share as Compared to Prior Year Despite Three CAT Events in 2016
2016 Gross Premiums Written of
Conference Call Scheduled for
Fourth Quarter 2016 Financial and Operating Highlights
(unless noted all financial comparisons are to the prior-year quarter)
- Book value per share of
$7.78 atDecember 31, 2016 versus$7.57 atSeptember 30, 2016 , an increase of 2.8%. - Gross premiums written remained level at
$11.8 million . - Net premiums earned increased 4.3% to
$7.6 million from$7.3 million . - Net income was approximately
$1.6 million , or$0.27 per diluted share, compared to net income of$0.6 million , or$0.09 per diluted share, due, in large part, to reduced claims activity in the fourth quarter of 2016 compared with the prior year period. - The Company bought back 23,603 shares of its common stock in the fourth quarter at an average price of
$7.32 under a previously approved share repurchase program which expired onDecember 31, 2016 .
2016 Full-Year Financial and Operating Highlights
(unless noted all financial comparisons are to the prior-year period)
- Book value per share of
$7.78 atDecember 31, 2016 , up from$7.74 atDecember 31, 2015 . - Gross premiums written were
$51.3 million , a 17.0% increase from$43.9 million - Net premiums earned were
$30.4 million , a 17.4% increase from$25.9 million - Net income was
$11 thousand for the full year 2016 compared with a loss of$1.7 million a year ago. On a per share basis, 2016 net income was zero compared to ($0.27 ) in the prior year period. - In-force policy count at
December 31, 2016 increased to 33,800 up approximately 19% from 28,400 atDecember 31, 2015 .
Management Comments
Operating Review
($ in thousands, except ratios and per share amounts) | (Unaudited) | (Audited) | ||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||
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2016 | 2015 | Change | 2016 | 2015 | Change | |||||||
Gross premiums written | |
|
(0.1%) | |
|
17.0% | ||||||
Ceded premiums written | |
|
43.7% | |
|
53.0% | ||||||
Gross premiums earned | |
|
23.7% | |
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28.4% | ||||||
Ceded premiums earned | |
|
65.8% | |
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51.9% | ||||||
Net premiums earned | |
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4.3% | |
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17.4% | ||||||
Total revenues | |
|
7.6% | |
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18.9% | ||||||
Gross losses and loss adjustment expenses | |
|
12.2% | |
|
205.5% | ||||||
Ceded losses and loss adjustment expenses | |
|
1,614.5% | |
|
3,200.6% | ||||||
Net losses and loss adjustment expenses | |
|
(51.0%) | |
|
64.7% | ||||||
Amortization of deferred policy acquisition costs | |
|
30.4% | |
|
29.2% | ||||||
General and administrative expenses | |
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5.3% | |
|
(4.6%) | ||||||
Loss and amortization charges related to MSA termination | |
|
4.5% | |
|
(93.8%) | ||||||
Income (Loss) before income tax expense (benefit) | |
|
167.1% | |
( |
NMF(2) | ||||||
Net income (loss) | |
|
175.0% | |
( |
NMF | ||||||
Weighted average diluted shares outstanding | 5,962 | 6,174 | 6,048 | 6,287 | ||||||||
Ratios to Gross Premiums Earned:(1) | ||||||||||||
Ceded ratio | 27.0% | 30.4% | (3.4) pts | 6.3% | 30.7% | (24.4) pts | ||||||
Gross loss ratio | 26.4% | 29.1% | (2.7) pts | 64.9% | 27.3% | 37.6 pts | ||||||
DPAC ratio | 17.9% | 16.9% | 1.0 pts | 17.3% | 17.2% | 0.1 pts | ||||||
G&A ratio | 14.8% | 17.3% | (2.5) pts | 14.1% | 19.0% | (4.9) pts | ||||||
Combined Gross Ratio | 86.1% | 93.7% | (7.6) pts | 102.6% | 94.2% | 8.4 pts | ||||||
Ratios to Net Premiums Earned:(1) | ||||||||||||
Net loss ratio | 19.2% | 40.9% | (21.7) pts | 53.8% | 38.3% | 15.5 pts | ||||||
Net expense ratio | 57.7% | 51.3% | 6.4 pts | 51.8% | 75.3% | (23.5) pts | ||||||
Net combined ratio | 76.9% | 92.2% | (15.3) pts | 105.6% | 113.6% | (8.0) pts | ||||||
(1) See “Definitions of Non- |
||||||||||||
(2) NMF – Not Meaningful | ||||||||||||
Quarterly Financial Review
Premiums
Gross premiums written remained flat at
Net premiums earned increased 4.3% to
Losses and Loss Adjustment Expenses
The gross loss ratio for the quarter ended
Amortization of Deferred Policy Acquisition Costs
Amortization of deferred policy acquisition costs for the fourth quarter of 2016 was
General and Administrative Expenses
General and administrative expenses for the fourth quarter of 2016 were
Net Income (Loss)
In the fourth quarter of 2016, the Company reported net income of
Balance Sheet / Investment Portfolio Highlights
As of
Yearly Financial Review
Premiums
Gross premiums written increased 17.0% to
Losses and Adjustment Expenses
The gross loss ratio for the year ended
Amortization of Deferred Policy Acquisition Costs
Amortization of deferred policy acquisition costs for the year ended
General and Administrative Expenses
General and administrative expenses for the year ended
Net Income (Loss)
For the year ended
Subsequent Activity
As announced in a press release dated
Conference Call Details
Date:
Time:
Participant Dial-In Numbers:
Domestic callers: (877) 407-0619
International callers: (412) 902-1012
Access by Webcast
The call will also be simultaneously webcast over the
Termination of Management Services Agreement
As previously communicated, on
DEFINITION OF NON-
The Company assesses its results of operations using certain non-
The non-
The Company analyzes performance based on ratios common in the insurance industry such as loss ratio, expense ratio and combined ratio. The Company’s ratios are calculated as shown in the following table.
Ratio | Numerator | Divisor | ||
Ceded ratio | Ceded premium earned minus ceded losses and loss adjustment expenses | Gross premium earned | ||
Gross loss ratio | Gross losses and loss adjustment expenses | Gross premium earned | ||
DPAC ratio | Amortization of deferred policy acquisition costs | Gross premium earned | ||
G&A ratio | General and administrative expenses | Gross premium earned | ||
Net loss ratio | Net losses and loss adjustment expenses | Net premium earned | ||
Net expense ratio | Deferred policy acquisition costs plus general and administrative expenses plus loss and amortization charges related to MSA termination | Net premium earned | ||
The gross combined ratio is calculated as the sum of the ceded ratio, gross loss ratio, DPAC ratio, and G&A ratio. The net combined ratio is calculated as the sum of the net loss ratio and the net expense ratio. A combined ratio below 100% demonstrates underwriting profit whereas a combined ratio over 100% demonstrates an underwriting loss.
The reconciliation of net income before catastrophe events as well as earnings per share before catastrophe events is as follows:
In 000’s |
Year ended |
|
Net income, as reported | |
|
Plus: net loss and lae from catastrophe events | 9,805 | |
Less: income tax expense on catastrophe event loss and lae | (3,334) | |
Net income before catastrophe events | |
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Divided by: weighted average shares outstanding, basic and diluted | 6,048 | |
Earnings per share before catastrophe events | |
|
About
Forward Looking Statements
This press release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. Words such as "expects", "believes", "anticipates", "intends", "estimates", "seeks" and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect Company management's current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the section entitled "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended
Additional Information
Additional information about 1347
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Consolidated Statements of Operations and Comprehensive Income (Loss) | ||||||||||||
($ in thousands, except per share amounts) | ||||||||||||
(Unaudited) | (Audited) | |||||||||||
Three months ended |
Twelve months ended |
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2016 | 2015 | 2016 | 2015 | |||||||||
Revenue: | ||||||||||||
Net premiums earned | $ | 7,579 | $ | 7,264 | $ | 30,448 | $ | 25,934 | ||||
Net investment income | 150 | 160 | 544 | 362 | ||||||||
Other income | 403 | 132 | 1,264 | 834 | ||||||||
Total revenue | 8,132 | 7,556 | 32,256 | 27,130 | ||||||||
Expenses: | ||||||||||||
Net losses and loss adjustment expenses | 1,455 | 2,968 | 16,372 | 9,939 | ||||||||
Amortization of deferred policy acquisition costs | 2,344 | 1,798 | 8,492 | 6,571 | ||||||||
General and administrative expenses | 1,936 | 1,839 | 6,918 | 7,253 | ||||||||
Loss on termination of Management Services Agreement | — | — | — | 5,421 | ||||||||
Accretion of discount on Series B Preferred Shares | 92 | 88 | 355 | 282 | ||||||||
Total expenses | 5,827 | 6,693 | 32,137 | 29,466 | ||||||||
Income (Loss) before income tax expense (benefit) | 2,305 | 863 | 119 | (2,336) | ||||||||
Income tax expense (benefit) | 713 | 284 | 108 | (663) | ||||||||
Net income (loss) | $ | 1,592 | $ | 579 | $ | 11 | $ | (1,673) | ||||
(Loss) Earnings per share – net (loss) income attributable to
common shareholders: |
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Basic | $ | 0.27 | $ | 0.09 | $ | — | $ | (0.27) | ||||
Diluted | $ | 0.27 | $ | 0.09 | $ | — | $ | (0.27) | ||||
Weighted average common shares outstanding | ||||||||||||
Basic | 5,962,032 | 6,174,145 | 6,047,979 | 6,286,706 | ||||||||
Diluted | 5,962,032 | 6,174,145 | 6,047,979 | 6,286,706 | ||||||||
Consolidated Statements of Comprehensive (Loss) Income | ||||||||||||
Net income (loss) | $ | 1,592 | $ | 579 | $ | 11 | $ | (1,673) | ||||
Unrealized losses on investment available for sale, net of taxes | (313) | (121) | (3) | (62) | ||||||||
Comprehensive income (loss) | $ | 1,279 | $ | 458 | $ | 8 | $ | (1,735) | ||||
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Consolidated Balance Sheets | ||||||
Audited | ||||||
($ in thousands, except per share amounts) | ||||||
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Assets | ||||||
Investments: | ||||||
Fixed income securities, at fair value (amortized cost of |
$ | 26,559 | $ | 20,238 | ||
Equity investments, at fair value (cost of |
1,136 | — | ||||
Short-term investments, at cost | 196 | 1,149 | ||||
Limited liability investments, at cost | 505 | 248 | ||||
Total investments | 28,396 | 21,635 | ||||
Cash and cash equivalents | 43,045 | 47,957 | ||||
Deferred policy acquisition costs, net | 4,389 | 4,030 | ||||
Premiums receivable, net of allowance for credit losses of |
2,923 | 2,395 | ||||
Ceded unearned premiums | 4,847 | 2,805 | ||||
Reinsurance recoverable on paid losses | 444 | — | ||||
Reinsurance recoverable on loss and loss adjustment expense reserves | 3,652 | 120 | ||||
Funds deposited with reinsured companies | 500 | 725 | ||||
Current income taxes recoverable | 1,195 | 965 | ||||
Net deferred income taxes | 420 | 506 | ||||
Property and equipment, net | 250 | 234 | ||||
Intangible assets, net of accumulated amortization of |
— | 6 | ||||
Other assets | 788 | 705 | ||||
Total Assets | $ | 90,849 | $ | 82,083 | ||
Liabilities | ||||||
Loss and loss adjustment expense reserves | $ | 6,971 | $ | 2,123 | ||
Unearned premium reserves | 25,821 | 23,442 | ||||
Ceded reinsurance premiums payable | 5,229 | 3,283 | ||||
Agent commissions payable | 497 | 403 | ||||
Premiums collected in advance | 1,128 | 870 | ||||
Funds held under reinsurance treaties | 73 | — | ||||
Accounts payable and other accrued expenses | 2,065 | 1,863 | ||||
Series B Preferred Shares, |
2,708 | 2,593 | ||||
Total Liabilities | $ | 44,492 | $ | 34,577 | ||
Shareholders’ Equity | ||||||
Common stock, |
$ | 6 | $ | 6 | ||
Additional paid-in capital | 46,809 | 48,688 | ||||
Retained earnings | 616 | 605 | ||||
Accumulated other comprehensive income (loss) | (65) | (62) | ||||
47,366 | 49,237 | |||||
Less: treasury stock at cost, 151,359 and 223,851 shares as of |
(1,009) | (1,731) | ||||
Total Shareholders’ Equity | 46,357 | 47,506 | ||||
Total Liabilities and Shareholders’ Equity | $ | 90,849 | $ | 82,083 | ||
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