1347 Property Insurance Holdings, Inc. Announces 2017 Second Quarter Financial Results
Q2 2017 Net Income of
Conference Call Scheduled For
Second Quarter 2017 Financial and Operating Highlights
(unless noted all financial comparisons are to the prior-year quarter)
- Gross premiums written increased 27.9% to
$18.8 million from$14.7 million . - Net premiums earned increased 9.5% to
$8.2 million from$7.5 million . - Net combined ratio was 89.5%; compared with 76.4% in the prior year quarter.
- Net income was approximately
$0.9 million , or$0.15 per diluted share, compared to net income of$1.3 million , or$0.22 per diluted share. - Book value per share of
$7.99 atJune 30, 2017 versus$7.83 atMarch 31, 2017 and$7.85 a year ago. - In-force policy count at
June 30, 2017 increased to 37,500 from 35,200 atMarch 31, 2017 and 30,800 a year ago.
Management Comments
Operating Review |
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(Unaudited) | (Unaudited) | ||||||||||||||||||||||
(amounts in thousands, except ratios) | Three Months Ended | Six Months Ended | |||||||||||||||||||||
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2017 | 2016 | Change | 2017 | 2016 | Change | ||||||||||||||||||
Gross premiums written | |
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27.9% | |
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24.0% | |||||||||||||||||
Ceded premiums written | |
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(23.3%) | |
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9.9% | |||||||||||||||||
Gross premiums earned | |
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20.0% | |
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18.4% | |||||||||||||||||
Ceded premiums earned | |
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38.6% | |
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48.0% | |||||||||||||||||
Net premiums earned | |
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9.5% | |
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4.2% | |||||||||||||||||
Total revenues | |
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13.0% | |
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7.0% | |||||||||||||||||
Gross losses and loss adjustment expenses | |
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50.7% | |
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(9.2%) | |||||||||||||||||
Ceded losses and loss adjustment expenses | |
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61.0% | |
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14.7% | |||||||||||||||||
Net losses and loss adjustment expenses | |
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29.7% | |
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(29.0%) | |||||||||||||||||
Amortization of deferred policy acquisition costs | |
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25.5% | |
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26.1% | |||||||||||||||||
General and administrative expenses | |
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31.7% | |
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32.1% | |||||||||||||||||
Amortization charges on Series B Preferred Shares | |
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5.8% | |
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5.2% | |||||||||||||||||
Net income | |
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(31.3%) | |
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418.7% | |||||||||||||||||
Weighted average diluted shares outstanding | 5,957 | 6,097 | (2.3%) | 5,957 | 6,104 | (2.4%) | |||||||||||||||||
Ratios to Gross Premiums Earned:(1) |
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Ceded ratio | (1.9%) | 3.6% | (5.5) pts | 11.3% | 2.3% | 9.0 pts | |||||||||||||||||
Gross loss ratio | 60.3% | 48.0% | 12.3 pts | 51.0% | 66.5% | (15.5) pts | |||||||||||||||||
DPAC ratio | 18.4% | 17.6% | 0.8 pts | 18.5% | 17.4% | 1.1 pts | |||||||||||||||||
G&A ratio | 16.4% | 14.9% | 1.5 pts | 15.9% | 14.3% | 1.6 pts | |||||||||||||||||
Combined gross ratio | 93.2% | 84.1% | 9.1 pts | 96.7% | 100.5% | (3.8) pts | |||||||||||||||||
Ratios to Net Premiums Earned:(1) |
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Net loss ratio | 29.0% | 24.5% | 4.5 pts | 36.7% | 53.9% | (17.2) pts | |||||||||||||||||
Net expense ratio | 60.5% | 51.9% | 8.6 pts | 59.1% | 48.0% | 11.1 pts | |||||||||||||||||
Net combined ratio | 89.5% | 76.4% | 13.1 pts | 95.8% | 101.9% | (6.1) pts | |||||||||||||||||
(1) See “Definition of Non- |
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Quarterly Financial Review
Premiums
Gross premiums written increased 27.9% to
Net premiums earned increased 9.5% to
Losses and Loss Adjustment Expenses
The gross loss ratio for the quarter ended
(amounts in thousands) | Three months ended |
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2017 | 2016 | ||||||||||||||
Losses ($) | Loss Ratio (%) | Losses ($) | Loss Ratio (%) | ||||||||||||
Non-catastrophe weather losses | $ | 1,421 | 17.3% | $ | (1,272) | (16.9)% | |||||||||
Non-weather losses | 1,852 | 22.5% | 2,055 | 27.4% | |||||||||||
Core loss(1) | 3,273 | 39.8% | 783 | 10.5% | |||||||||||
Catastrophe loss(2) | 3 | -% | 1,007 | 13.4% | |||||||||||
Prior period (redundancy) development(3) | (893) | (10.8)% | 48 | 0.6% | |||||||||||
Net losses and LAE incurred | $ | 2,383 | 29.0% | $ | 1,838 | 24.5% | |||||||||
Six months ended |
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2017 | 2016 | ||||||||||||||
Losses ($) | Loss Ratio (%) | Losses ($) | Loss Ratio (%) | ||||||||||||
Non-catastrophe weather losses | $ | 1,872 | 11.4% | $ | 379 | 2.4% | |||||||||
Non-weather losses | 3,664 | 22.4% | 3,228 | 20.5% | |||||||||||
Core loss(1) | 5,536 | 33.8% | 3,607 | 22.9% | |||||||||||
Catastrophe loss(2) | 1,700 | 10.4% | 4,986 | 31.7% | |||||||||||
Prior period (redundancy) development(3) | (1,222) | (7.5)% | (119) | (0.7)% | |||||||||||
Net losses and LAE incurred | $ | 6,014 | 36.7% | $ | 8,474 | 53.9% | |||||||||
(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 period development is the amount of ultimate actual loss settlement value which is more than the estimated reserves recorded for a particular liability or loss, while redundancy represents the ultimate actual loss settlement value which is less than the estimated and determined reserves recorded for a particular liability or loss. | ||
Amortization of Deferred Policy Acquisition Costs
Amortization of deferred policy acquisition costs for the second quarter of 2017 was
General and Administrative Expenses
General and administrative expenses for the second quarter of 2017 were
Net Income
In the second quarter of 2017, the Company reported net income of
Balance Sheet / Investment Portfolio Highlights
At
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
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 |
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 Sections 27A of the Securities Act of 1933, as amended, and 21E of the Securities Exchange Act of 1934, as amended. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and other similar expressions to identify forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. Although we believe that the plans, objectives, expectations, and prospects reflected in or suggested by our forward-looking statements are reasonable, those statements involve risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements express or implied by these forward-looking statements, and we can give no assurance that our plans, objectives, expectations, and prospects will be achieved.
Important factors that may cause our actual results to differ materially from the results contemplated by the forward looking statements are contained in Item 1A. Risk Factors and elsewhere on the Company’s Form 10-K for the year ended
We disclaim any obligation to update or revise any forward-looking statements as a result of new information, future events, or for any other reason.
Additional Information
Additional information about 1347
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Consolidated Statements of Operations and Comprehensive Income | ||||||||||||
(in thousands, except share and per share data) | ||||||||||||
(Unaudited) | ||||||||||||
Three months ended |
Six months ended |
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2017 | 2016 | 2017 | 2016 | |||||||||
Revenue: | ||||||||||||
Net premiums earned | $ | 8,228 | $ | 7,512 | $ | 16,400 | $ | 15,733 | ||||
Net investment income | 284 | 127 | 452 | 242 | ||||||||
Other income | 411 | 254 | 788 | 517 | ||||||||
Total revenue | 8,923 | 7,893 | 17,640 | 16,492 | ||||||||
Expenses: | ||||||||||||
Net losses and loss adjustment expenses | 2,383 | 1,838 | 6,014 | 8,474 | ||||||||
Amortization of deferred policy acquisition costs | 2,590 | 2,063 | 5,112 | 4,053 | ||||||||
General and administrative expenses | 2,299 | 1,746 | 4,390 | 3,324 | ||||||||
Accretion of discount on Series B Preferred Shares | 91 | 86 | 183 | 174 | ||||||||
Total expenses | 7,363 | 5,733 | 15,699 | 16,025 | ||||||||
Income before income tax expense | 1,560 | 2,160 | 1,941 | 467 | ||||||||
Income tax expense | 639 | 820 | 774 | 242 | ||||||||
Net income | $ | 921 | $ | 1,340 | $ | 1,167 | $ | 225 | ||||
Net earnings per common share: | ||||||||||||
Basic | $ | 0.15 | $ | 0.22 | $ | 0.20 | $ | 0.04 | ||||
Diluted | $ | 0.15 | $ | 0.22 | $ | 0.20 | $ | 0.04 | ||||
Weighted average common shares outstanding: | ||||||||||||
Basic | 5,956,766 | 6,097,043 | 5,956,766 | 6,104,061 | ||||||||
Diluted | 5,956,766 | 6,097,043 | 5,956,766 | 6,104,061 | ||||||||
Consolidated Statements of Comprehensive Income | ||||||||||||
Net income | $ | 921 | $ | 1,340 | $ | 1,167 | $ | 225 | ||||
Unrealized gains on investments available for sale, net of income taxes | 14 | 93 | 69 | 321 | ||||||||
Comprehensive income | $ | 935 | $ | 1,433 | $ | 1,236 | $ | 546 | ||||
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Consolidated Balance Sheets | ||||||
(in thousands, except share and per share data) | ||||||
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ASSETS | ||||||
Investments: | ||||||
Fixed income securities, at fair value (amortized cost of |
$ | 40,203 | $ | 26,559 | ||
Equity investments, at fair value (cost of |
1,258 | 1,136 | ||||
Short-term investments, at cost | 1,459 | 196 | ||||
Other investments, at cost | 945 | 505 | ||||
Total investments | 43,865 | 28,396 | ||||
Cash and cash equivalents | 35,133 | 43,045 | ||||
Deferred policy acquisition costs, net | 5,545 | 4,389 | ||||
Premiums receivable, net of allowance for credit losses of |
2,263 | 2,923 | ||||
Ceded unearned premiums | 4,060 | 4,847 | ||||
Reinsurance recoverable on paid losses | 4,539 | 444 | ||||
Reinsurance recoverable on loss and loss adjustment expense reserves | 6,012 | 3,652 | ||||
Funds deposited with reinsured companies | – | 500 | ||||
Current income taxes recoverable | 47 | 1,195 | ||||
Deferred tax asset, net | 247 | 420 | ||||
Property and equipment, net | 226 | 250 | ||||
Other assets | 768 | 788 | ||||
Total assets | $ | 102,705 | $ | 90,849 | ||
LIABILITIES | ||||||
Loss and loss adjustment expense reserves | $ | 9,583 | $ | 6,971 | ||
Unearned premium reserves | 29,913 | 25,821 | ||||
Ceded reinsurance premiums payable | 6,304 | 5,229 | ||||
Agency commissions payable | 921 | 497 | ||||
Premiums collected in advance | 2,226 | 1,128 | ||||
Funds held under reinsurance treaties | 50 | 73 | ||||
Accounts payable and other accrued expenses | 3,451 | 2,065 | ||||
Series B Preferred Shares, |
2,651 | 2,708 | ||||
Total liabilities | $ | 55,099 | $ | 44,492 | ||
Commitments and contingencies | ||||||
SHAREHOLDERS’ EQUITY | ||||||
Common stock, |
$ | 6 | $ | 6 | ||
Additional paid-in capital | 46,822 | 46,809 | ||||
Retained earnings | 1,783 | 616 | ||||
Accumulated other comprehensive income (loss) | 4 | (65) | ||||
48,615 | 47,366 | |||||
Less: treasury stock at cost; 151,359 shares for both periods | (1,009) | (1,009) | ||||
Total shareholders’ equity | 47,606 | 46,357 | ||||
Total liabilities and shareholders’ equity | $ | 102,705 | $ | 90,849 | ||
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Investor Relations:
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Source:
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