1347 Property Insurance Holdings, Inc. Announces 2017 Fourth Quarter and Full Year Financial Results
Q4 2017 Gross Premiums Written Up Over 100% From Prior
Conference Call Scheduled for
Fourth Quarter 2017 Financial and Operating Highlights
(unless noted all financial comparisons are to the prior-year quarter)
- Book value per share of
$7.82 atDecember 31, 2017 versus$7.62 atSeptember 30, 2017 . - Gross premiums written of
$23.9 million , up 101.5% from$11.8 million . - Net premiums earned increased 34.2% to
$10.2 million from$7.6 million . - Pre-tax income of
$3.0 million , which was a quarterly record for the Company, versus$2.3 million . - Net income was approximately
$1.4 million , or$0.23 per diluted share, compared to net income of$1.6 million , or$0.27 per diluted share. - As a result of the passage of the Tax Cuts and Jobs Act, the Company incurred a one-time charge of
$0.5 million to income tax expense, due to the reduction of the value of the Company’s net deferred tax assets to the new corporate federal income tax rate of 21%.
2017 Full-Year Financial and Operating Highlights
(unless noted all financial comparisons are to the prior-year period)
- Book value per share of
$7.82 atDecember 31, 2017 versus$7.78 atDecember 31, 2016 . - Gross premiums written were
$72.7 million , a 41.6% increase from$51.3 million . - Net premiums earned were
$35.2 million , a 15.6% increase from$30.4 million . - Net income was
$294 thousand for the full year 2017 compared with$11 thousand a year ago. On a fully diluted per share basis, 2017 net income was$0.05 compared to zero in the prior year. - Direct and assumed policy count at
December 31, 2017 increased to 50,671 up approximately 42% from 35,612 atDecember 31, 2016 .
Management Comments
Operating Review |
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(Unaudited) | (Audited) | ||||||||||||||||||||||
($ and share amounts in thousands) | Three Months Ended | Twelve Months Ended | |||||||||||||||||||||
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2017 | 2016 | Change | 2017 | 2016 | Change | ||||||||||||||||||
Gross premiums written | $ | 23,862 | $ | 11,843 | 101.5% | $ | 72,679 | $ | 51,327 | 41.6% | |||||||||||||
Ceded premiums written | $ | 6,157 | $ | 5,127 | 20.1% | $ | 22,583 | $ | 20,541 | 9.9% | |||||||||||||
Gross premiums earned | $ | 16,508 | $ | 13,125 | 25.8% | $ | 58,977 | $ | 48,947 | 20.5% | |||||||||||||
Ceded premiums earned | $ | 6,338 | $ | 5,546 | 14.3% | $ | 23,775 | $ | 18,499 | 28.5% | |||||||||||||
Net premiums earned | $ | 10,170 | $ | 7,579 | 34.2% | $ | 35,202 | $ | 30,448 | 15.6% | |||||||||||||
Total revenues | $ | 11,154 | $ | 8,132 | 37.2% | $ | 38,148 | $ | 32,256 | 18.3% | |||||||||||||
Gross losses and loss adjustment expenses | $ | 6,355 | $ | 3,461 | 83.6% | $ | 46,589 | $ | 31,786 | 46.6% | |||||||||||||
Ceded losses and loss adjustment expenses | $ | 4,264 | $ | 2,006 | 112.6% | $ | 30,689 | $ | 15,414 | 99.1% | |||||||||||||
Net losses and loss adjustment expenses | $ | 2,091 | $ | 1,455 | 43.7% | $ | 15,900 | $ | 16,372 | (2.9)% | |||||||||||||
Amortization of deferred policy acquisition costs | $ | 3,213 | $ | 2,344 | 37.1% | $ | 11,080 | $ | 8,492 | 30.5% | |||||||||||||
General and administrative expenses | $ | 2,769 | $ | 1,936 | 43.0% | $ | 9,304 | $ | 6,918 | 34.5% | |||||||||||||
Loss and amortization charges related to MSA termination | $ | 96 | $ | 92 | 4.3% | $ | 372 | $ | 355 | 4.8% | |||||||||||||
Income before tax expense | $ | 2,985 | $ | 2,305 | 29.5% | $ | 1,492 | $ | 119 | 1,153.8% | |||||||||||||
Net income | $ | 1,390 | $ | 1,592 | (12.7)% | $ | 294 | $ | 11 | 2,572.7% | |||||||||||||
Weighted average diluted shares outstanding | 6,005 | 5,962 | 0.7% | 5,970 | 6,048 | (1.3)% | |||||||||||||||||
Ratios to Gross Premiums Earned:(1) | |||||||||||||||||||||||
Ceded ratio | 12.6% | 27.0% | (14.4) pts | (11.7)% | 6.3% | (18.0) pts | |||||||||||||||||
Gross loss ratio | 38.5% | 26.4% | 12.1 pts | 79.0% | 64.9% | 14.1 pts | |||||||||||||||||
DPAC ratio | 19.5% | 17.9% | 1.6 pts | 18.8% | 17.3% | 1.5 pts | |||||||||||||||||
G&A ratio | 16.8% | 14.8% | 2.0 pts | 15.8% | 14.1% | 1.7 pts | |||||||||||||||||
Combined gross ratio | 87.4% | 86.1% | 1.3 pts | 101.9% | 102.6% | (0.7) pts | |||||||||||||||||
Ratios to Net Premiums Earned:(1) | |||||||||||||||||||||||
Net loss ratio | 20.6% | 19.2% | 1.4 pts | 45.2% | 53.8% | (8.6) pts | |||||||||||||||||
Net expense ratio | 59.8% | 57.7% | 2.1 pts | 59.0% | 51.8% | 7.2 pts | |||||||||||||||||
Net combined ratio | 80.4% | 76.9% | 3.5 pts | 104.2% | 105.6% | (1.4) pts | |||||||||||||||||
(1) See “Definitions of Non- |
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Quarterly Financial Review
Premiums
Gross premiums written grew 101.5% to
The Company has continued to evaluate its existing book of business with an emphasis on risk-adjusted returns and rate adequacy. Accordingly, we have terminated our quota-share agreement with
Net premiums earned increased 34.2% 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 2017 was
General and Administrative Expenses
General and administrative expenses for the fourth quarter of 2017 were
Net Income
In the fourth quarter of 2017, the Company reported net income of
Balance Sheet / Investment Portfolio Highlights
As of
Yearly Financial Review
Premiums
Gross premiums written increased 41.6% to
Losses and Adjustment Expenses
The gross loss ratio for the year ended
The following table reflects the four major components to our net loss ratio for the years ended
Year ended |
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2017 | 2016 | ||||||||||||||
Losses ($) | Loss Ratio (%) | Losses ($) | Loss Ratio (%) | ||||||||||||
Weather-Related Non-Catastrophe Losses | $ | 3,551 | 10.1% | $ | 1,133 | 3.7% | |||||||||
Non-Weather Related Losses | 7,858 | 22.3% | 5,815 | 19.1% | |||||||||||
Subtotal Core Losses(1) | 11,409 | 32.4% | 6,948 | 22.8% | |||||||||||
Catastrophe Losses(2) | 6,700 | 19.0% | 9,805 | 32.2% | |||||||||||
Prior |
(2,209) | (6.2)% | (381) | (1.2)% | |||||||||||
Total | $ | 15,900 | 45.2% | $ | 16,372 | 53.8% | |||||||||
(1) | We define Core Loss as net losses and LAE less the sum of Catastrophe Losses and prior period development (redundancy). | ||
(2) | Property Claims Services (PCS) defines a catastrophic event as an event where the insurance industry is estimated to incur over |
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(3) | Prior |
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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
For the year ended
Subsequent Activity
On
Conference Call Details |
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Date: | |
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Time: | |
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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 Internet via the “Investor Relations” section of PIH’s website at www.1347pih.com or by clicking on the conference call link: http://1347pih.equisolvewebcast.com/q4-2017. An audio recording of the call will be archived on the Company’s website.
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.
About
Forward Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements are therefore entitled to the protection of the safe harbor provisions of these laws. These statements may be identified by the use of forward-looking terminology such as “anticipate,” “believe,” “budget,” “contemplate,” “continue,” “could,” “envision,” “estimate,” “expect,” “forecast,” “goal,” “guidance,” “indicate,” “intend,” “may,” “might,” “outlook,” “plan,” “possibly,” “potential,” “predict,” “probably,” “pro-forma,” “project,” “seek,” “should,” “target,” “will,” “would,” “will be,” “will continue,” “will likely result” or the negative thereof or other variations thereon or comparable terminology. We have based these forward-looking statements on our current expectations, assumptions, estimates, and projections. While we believe these to be reasonable, such forward-looking statements are only predictions and involve a number of risks and uncertainties, many of which are beyond our control. These and other important factors may cause our actual results, performance, or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. Management cautions that the forward-looking statements in this press release are not guarantees of future performance, and we cannot assume that such statements will be realized or the forward-looking events and circumstances will occur. Factors that might cause such a difference include, without limitation: our limited operating history as a publicly traded company; our ability to obtain market share; our ability to access capital; changes in economic, business and industry conditions; legal, regulatory and tax developments; our ability to comply with regulations imposed by the states of
Our expectations may not be realized. If one of these risks or uncertainties materialize, or if our underlying assumptions prove incorrect, actual results may vary materially from those expected, estimated or projected. You are cautioned not to place undue reliance on forward-looking statements. The forward-looking statements included in this press release are made only as of the date hereof and do not necessarily reflect our outlook at any other point time. We do not undertake and specifically decline any obligation to update any such statements or to publicly announce the results of any revisions to any such statements to reflect new information, future events or developments.
Additional Information
Additional information about
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Consolidated Statements of Income and Comprehensive Income |
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($ in thousands, except per share amounts) |
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Quarter ended |
Year ended |
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2017 |
2016 |
2017 | 2016 | ||||||||||||||
Revenue: | |||||||||||||||||
Net premiums earned | $ | 10,170 | $ | 7,579 | $ | 35,202 | $ | 30,448 | |||||||||
Net investment income | 265 | 151 | 965 | 544 | |||||||||||||
Other income | 719 | 402 | 1,981 | 1,264 | |||||||||||||
Total revenue | 11,154 | 8,132 | 38,148 | 32,256 | |||||||||||||
Expenses: | |||||||||||||||||
Net losses and loss adjustment expenses | 2,091 | 1,455 | 15,900 | 16,372 | |||||||||||||
Amortization of deferred policy acquisition costs | 3,213 | 2,344 | 11,080 | 8,492 | |||||||||||||
General and administrative expenses | 2,769 | 1,936 | 9,304 | 6,918 | |||||||||||||
Accretion of discount on Series B Preferred Shares | 96 | 92 | 372 | 355 | |||||||||||||
Total expenses | 8,169 | 5,827 | 36,656 | 32,137 | |||||||||||||
Income before income tax expense | 2,985 | 2,305 | 1,492 | 119 | |||||||||||||
Income tax expense | 1,595 | 713 | 1,198 | 108 | |||||||||||||
Net income | $ | 1,390 | $ | 1,592 | $ | 294 | $ | 11 | |||||||||
Net earnings per common share: | |||||||||||||||||
Basic and diluted | $ | 0.23 | $ | 0.27 | $ | 0.05 | $ | - | |||||||||
Weighted average common shares outstanding: | |||||||||||||||||
Basic | 5,984,766 | 5,962,032 | 5,965,051 | 6,047,979 | |||||||||||||
Diluted | 6,004,784 | 5,962,032 | 5,970,096 | 6,047,979 | |||||||||||||
Consolidated Statements of Comprehensive Income | |||||||||||||||||
Net income | $ | 1,390 | $ | 1,592 | $ | 294 | $ | 11 | |||||||||
Unrealized losses on investments available for sale, net of income taxes | (198) | (313) | (104) | (3) | |||||||||||||
Comprehensive income | $ | 1,192 | $ | 1,279 | $ | 190 | $ | 8 | |||||||||
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Consolidated Balance Sheets |
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($ in thousands, except per share amounts) |
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ASSETS | |||||||||
Investments: | |||||||||
Fixed income securities, at fair value (amortized cost of |
$ | 51,122 | $ | 26,559 | |||||
Equity investments, at fair value (cost of |
2,707 | 1,136 | |||||||
Short-term investments, at cost | 417 | 196 | |||||||
Other investments, at cost |
945 | 505 | |||||||
Total investments | 55,191 | 28,396 | |||||||
Cash and cash equivalents | 23,575 | 43,045 | |||||||
Deferred policy acquisition costs, net | 6,785 | 4,389 | |||||||
Premiums receivable, net of allowance for credit losses of |
10,831 | 2,923 | |||||||
Ceded unearned premiums | 3,655 | 4,847 | |||||||
Reinsurance recoverable on paid losses | 1,952 | 444 | |||||||
Reinsurance recoverable on loss and loss adjustment expense reserves | 8,971 | 3,652 | |||||||
Funds deposited with reinsured companies | 2,250 | 500 | |||||||
Current income taxes recoverable | 64 | 1,195 | |||||||
Deferred tax asset, net | 70 | 420 | |||||||
Property and equipment, net | 205 | 250 | |||||||
Other assets | 888 | 788 | |||||||
Total assets | $ | 114,437 | $ | 90,849 | |||||
LIABILITIES | |||||||||
Loss and loss adjustment expense reserves | $ | 13,488 | $ | 6,971 | |||||
Unearned premium reserves | 39,523 | 25,821 | |||||||
Ceded reinsurance premiums payable | 5,532 | 5,229 | |||||||
Agency commissions payable | 695 | 497 | |||||||
Premiums collected in advance | 1,078 | 1,128 | |||||||
Funds held under reinsurance treaties | 206 | 73 | |||||||
Accounts payable and other accrued expenses | 4,273 | 2,065 | |||||||
Series B Preferred Shares, shares issued and outstanding at |
2,840 | 2,708 | |||||||
Total liabilities | 67,635 | 44,492 | |||||||
Commitments and contingencies | |||||||||
SHAREHOLDERS’ EQUITY | |||||||||
Common stock, |
6 | 6 | |||||||
Additional paid-in capital | 47,064 | 46,809 | |||||||
Retained earnings | 910 | 616 | |||||||
Accumulated other comprehensive loss | (169) | (65) | |||||||
47,811 | 47,366 | ||||||||
Less: treasury stock at cost, 151,359 shares as of |
(1,009) | (1,009) | |||||||
Total shareholders’ equity | 46,802 | 46,357 | |||||||
Total liabilities and shareholders’ equity | $ | 114,437 | $ | 90,849 | |||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20180326006052/en/
Chief Executive Officer
[email protected]
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INVESTOR RELATIONS:
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