State National Companies Reports Second Quarter 2017 Results
Key Highlights - Second Quarter 2017 Financials Compared to the Second Quarter 2016:
- Total revenues were
$58.6 million , up 20% - Premiums earned were
$33.9 million , an increase of 17% - Ceding fees were
$21.0 million , up 24% - Net income was
$13.2 million , an increase of 33% - EPS of
$0.31 , up from$0.24 - EBITDA was
$22.1 million , up 29%
Commenting on the results,
Total revenues in the second quarter of 2017 were
Program Services Segment
The Program Services segment provides fronting to general agents and insurance carriers to leverage
In the second quarter of 2017, total revenues from the Program Services segment were
Lender Services Segment
In Lender Services, the collateral protection business is fully vertically integrated as
In the second quarter of 2017, net premiums written from the Lender Services segment were
Losses and loss adjustment expenses were
General and Administrative Expenses
General and administrative expenses in the second quarter of 2017 increased to
Balance Sheet
Approximately
Recent Developments
On
Non-GAAP Reconciliation
The last page of this press release provides a reconciliation of EBITDA, a non-GAAP financial measure, to net income, its most directly comparable financial measure calculated and presented in accordance with GAAP.
About
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
Various statements contained in this press release are forward-looking statements made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may include projections and estimates concerning the timing and success of specific projects and our future production, revenues, income and capital spending. Our forward-looking statements are generally, but not always, accompanied by words such as "estimate," "believe," "expect," "will," "plan," "target," "could" or other words that convey the uncertainty of future events or outcomes.
There can be no assurance that actual developments will be those anticipated by us. Actual results may differ materially from those expressed or implied in these statements as a result of significant risks and uncertainties, including, but not limited to, our ability to recover from our capacity providers, the cost and availability of reinsurance coverage, challenges to our use of issuing carrier or fronting arrangements by regulators or changes in state or federal insurance or other statutes or regulations, our dependence on a limited number of business partners, potential regulatory scrutiny of collateral protection insurance, level of new car sales, availability of credit for vehicle purchases and other factors affecting automobile financing, our ability to compete effectively, a downgrade in the financial strength ratings of our insurance subsidiaries, our ability to accurately underwrite and price our products and to maintain and establish accurate loss reserves, changes in interest rates or other changes in the financial markets, the effects of emerging claim and coverage issues, changes in the demand for our products, the effect of general economic conditions, breaches in data security or other disruptions with our technology, and changes in pricing or other competitive environments.
Forward-looking statements involve inherent risks and uncertainties that are difficult to predict, many of which are beyond our control. Additional information about these risks and uncertainties is contained in our filings with the Securities and Exchange Commission. The forward-looking statements in this press release speak only as of the date of this release, and we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.
|
|||||||
CONSOLIDATED BALANCE SHEETS |
|||||||
($ in thousands, except for share and per share information) |
|||||||
|
|
||||||
2017 |
2016 |
||||||
(Unaudited) |
|||||||
Assets: |
|||||||
Investments: |
|||||||
Fixed-maturity securities – available-for-sale, at fair value (amortized cost – |
$ |
382,518 |
$ |
332,107 |
|||
Equity securities – available-for-sale, at fair value (cost – |
2,134 |
3,224 |
|||||
Total investments |
384,652 |
335,331 |
|||||
Cash and cash equivalents |
47,979 |
91,698 |
|||||
Restricted cash and investments |
16,746 |
2,958 |
|||||
Accounts receivable from agents, net |
120,214 |
35,964 |
|||||
Reinsurance recoverable on paid losses |
1,972 |
1,430 |
|||||
Deferred acquisition costs |
1,106 |
1,194 |
|||||
Reinsurance recoverables |
2,607,559 |
2,342,864 |
|||||
Property and equipment, net (includes land held for sale – |
16,876 |
16,163 |
|||||
Interest receivable |
2,333 |
2,112 |
|||||
Income taxes receivable |
174 |
329 |
|||||
Deferred income taxes, net |
28,202 |
28,858 |
|||||
|
14,539 |
12,588 |
|||||
Other assets |
6,656 |
5,248 |
|||||
Total assets |
$ |
3,249,008 |
$ |
2,876,737 |
|||
Liabilities: |
|||||||
Unpaid losses and loss adjustment expenses |
$ |
1,858,105 |
$ |
1,703,706 |
|||
Unearned premiums |
787,051 |
680,691 |
|||||
Allowance for policy cancellations |
54,541 |
66,418 |
|||||
Deferred ceding fees |
39,385 |
32,226 |
|||||
Accounts payable to agents |
2,121 |
2,639 |
|||||
Accounts payable to insurance companies |
94,259 |
14,871 |
|||||
Debt, net |
43,804 |
43,783 |
|||||
Other liabilities |
49,256 |
36,023 |
|||||
Total liabilities |
2,928,522 |
2,580,357 |
|||||
Shareholders' equity: |
|||||||
Common stock, |
42 |
42 |
|||||
Preferred stock, |
— |
— |
|||||
Additional paid-in capital |
231,654 |
229,297 |
|||||
Retained earnings |
85,910 |
66,230 |
|||||
Accumulated other comprehensive income |
2,880 |
811 |
|||||
Total shareholders' equity |
320,486 |
296,380 |
|||||
Total liabilities and shareholders' equity |
$ |
3,249,008 |
$ |
2,876,737 |
|
||||||||||||
CONSOLIDATED STATEMENTS OF INCOME |
||||||||||||
(Unaudited) |
||||||||||||
($ in thousands, except for per share information) |
||||||||||||
Three Months Ended |
Six Months Ended |
|||||||||||
|
|
|
|
|||||||||
2017 |
2016 |
2017 |
2016 |
|||||||||
Revenues: |
||||||||||||
Premiums earned |
$ |
33,934 |
$ |
28,916 |
$ |
70,442 |
$ |
60,593 |
||||
Commission income |
322 |
305 |
598 |
626 |
||||||||
Ceding fees |
20,998 |
16,917 |
38,643 |
33,161 |
||||||||
Net investment income |
2,288 |
2,100 |
4,439 |
4,140 |
||||||||
Realized net investment gains (losses) |
523 |
282 |
2,399 |
(356) |
||||||||
Other income |
530 |
459 |
1,061 |
915 |
||||||||
58,595 |
48,979 |
117,582 |
99,079 |
|||||||||
Expenses: |
||||||||||||
Losses and loss adjustment expenses |
16,135 |
13,743 |
34,966 |
28,832 |
||||||||
Commissions |
1,703 |
1,130 |
3,277 |
2,827 |
||||||||
Taxes, licenses, and fees |
914 |
804 |
1,866 |
1,506 |
||||||||
General and administrative |
18,618 |
17,148 |
37,746 |
34,142 |
||||||||
Interest expense |
612 |
553 |
1,200 |
1,090 |
||||||||
Total expenses |
37,982 |
33,378 |
79,055 |
68,397 |
||||||||
Income (loss) before income taxes |
20,613 |
15,601 |
38,527 |
30,682 |
||||||||
Income taxes: |
||||||||||||
Current tax expense (benefit) |
8,551 |
6,137 |
14,260 |
10,491 |
||||||||
Deferred tax expense (benefit) |
(1,173) |
(524) |
(458) |
533 |
||||||||
7,378 |
5,613 |
13,802 |
11,024 |
|||||||||
Net income (loss) |
$ |
13,235 |
$ |
9,988 |
$ |
24,725 |
$ |
19,658 |
||||
Net income (loss) per share attributable to common shareholders: |
||||||||||||
Basic earnings per share |
$ |
0.32 |
$ |
0.24 |
$ |
0.59 |
$ |
0.46 |
||||
Diluted earnings per share |
0.31 |
0.24 |
0.58 |
0.46 |
||||||||
Dividends, per share |
$ |
0.06 |
$ |
0.06 |
$ |
0.12 |
$ |
0.12 |
||||
Weighted-average common shares outstanding – basic |
41,669,172 |
42,310,242 |
41,641,374 |
42,326,799 |
||||||||
Weighted-average common shares outstanding – diluted |
42,908,190 |
42,321,607 |
42,710,444 |
42,357,960 |
Program Services Segment — Results of Operations |
||||||||||||
Unaudited |
||||||||||||
Three Months Ended |
Six Months Ended |
|||||||||||
|
|
|||||||||||
($ in thousands) |
2017 |
2016 |
2017 |
2016 |
||||||||
Revenues: |
||||||||||||
Ceding fees |
$ |
20,998 |
16,917 |
$ |
38,643 |
$ |
33,161 |
|||||
Total revenues |
20,998 |
16,917 |
38,643 |
33,161 |
||||||||
Expenses: |
||||||||||||
Losses and loss adjustment expenses |
80 |
396 |
(170) |
905 |
||||||||
Commissions |
2 |
2 |
4 |
3 |
||||||||
Taxes, licenses, and fees |
15 |
3 |
45 |
11 |
||||||||
General and administrative |
4,177 |
4,011 |
8,496 |
7,119 |
||||||||
Total expenses |
4,274 |
4,412 |
8,375 |
8,038 |
||||||||
Income (loss) before income taxes |
$ |
16,724 |
$ |
12,505 |
$ |
30,268 |
$ |
25,123 |
||||
Gross premiums written |
$ |
482,843 |
$ |
336,395 |
$ |
827,841 |
$ |
607,421 |
||||
Gross premiums earned |
$ |
385,479 |
$ |
293,602 |
$ |
716,886 |
$ |
560,627 |
Lender Services Segment — Results of Operations |
|||||||||||||
Unaudited |
|||||||||||||
Three Months Ended |
Six Months Ended |
||||||||||||
|
|
||||||||||||
($ in thousands) |
2017 |
2016 |
2017 |
2016 |
|||||||||
Revenues: |
|||||||||||||
Premiums earned |
$ |
33,934 |
$ |
28,916 |
$ |
70,442 |
$ |
60,593 |
|||||
Commission income |
322 |
305 |
598 |
626 |
|||||||||
Other income |
534 |
471 |
1,073 |
919 |
|||||||||
Total revenues |
34,790 |
29,692 |
72,113 |
62,138 |
|||||||||
Expenses: |
|||||||||||||
Losses and loss adjustment expenses |
16,055 |
13,347 |
35,136 |
27,927 |
|||||||||
Commissions |
1,701 |
1,128 |
3,273 |
2,824 |
|||||||||
Taxes, licenses, and fees |
899 |
801 |
1,821 |
1,495 |
|||||||||
General and administrative |
10,960 |
10,528 |
22,699 |
21,135 |
|||||||||
Total expenses |
29,615 |
25,804 |
62,929 |
53,381 |
|||||||||
Income (loss) before income taxes |
$ |
5,175 |
$ |
3,888 |
$ |
9,184 |
$ |
8,757 |
|||||
Net loss ratio |
47.3 |
% |
46.2 |
% |
49.9 |
% |
46.1 |
% |
|||||
Net expense ratio |
40.0 |
% |
43.1 |
% |
39.4 |
% |
42.0 |
% |
|||||
Net combined ratio |
87.3 |
% |
89.3 |
% |
89.3 |
% |
88.1 |
% |
|||||
Gross premiums written |
$ |
39,825 |
$ |
36,483 |
$ |
81,819 |
$ |
68,942 |
|||||
Net premiums written |
$ |
32,787 |
$ |
29,884 |
$ |
66,624 |
$ |
56,916 |
Corporate Segment — Results of Operations |
|||||||||||||
Unaudited |
|||||||||||||
Three Months Ended |
Six Months Ended |
||||||||||||
|
|
||||||||||||
($ in thousands) |
2017 |
2016 |
2017 |
2016 |
|||||||||
Revenues: |
|||||||||||||
Net investment income |
$ |
2,288 |
$ |
2,100 |
$ |
4,439 |
$ |
4,140 |
|||||
Realized net investment gains (losses) |
523 |
282 |
2,399 |
(356) |
|||||||||
Other income |
(4) |
(12) |
(12) |
(4) |
|||||||||
Total revenues |
2,807 |
2,370 |
6,826 |
3,780 |
|||||||||
Expenses: |
|||||||||||||
General and administrative |
3,481 |
2,609 |
6,551 |
5,888 |
|||||||||
Interest expense |
612 |
553 |
1,200 |
1,090 |
|||||||||
Total expenses |
4,093 |
3,162 |
7,751 |
6,978 |
|||||||||
Income (loss) before income taxes |
(1,286) |
(792) |
(925) |
(3,198) |
|||||||||
Income tax expense (benefit) |
7,378 |
5,613 |
13,802 |
11,024 |
|||||||||
Net income (loss) |
$ |
(8,664) |
$ |
(6,405) |
$ |
(14,727) |
$ |
(14,222) |
Non-GAAP Reconciliation
The accompanying information provides a reconciliation of this non-GAAP financial measure to its most directly comparable financial measure calculated and presented in accordance with accounting principles generally accepted in
Earnings before interest, taxes, depreciation and amortization or EBITDA, is considered a non-GAAP financial measure because it reflects adjustments to net income for interest expense, income tax expense, and depreciation and amortization. Management believes this measure is helpful to investors because it provides a supplemental measure of evaluating core financial performance between periods.
|
|||||||||||||
Reconciliation of Non-GAAP Financial Measures |
|||||||||||||
(unaudited) |
|||||||||||||
($ in thousands) |
|||||||||||||
Three Months Ended |
Six Months Ended |
||||||||||||
|
|
||||||||||||
2017 |
2016 |
2017 |
2016 |
||||||||||
EBITDA |
$ |
22,121 |
$ |
17,160 |
$ |
41,558 |
$ |
33,797 |
|||||
Reconciliation of EBITDA: |
|||||||||||||
Net income |
$ |
13,235 |
$ |
9,988 |
$ |
24,725 |
$ |
19,658 |
|||||
Plus: Interest expense |
612 |
553 |
1,200 |
1,090 |
|||||||||
Plus: Income tax expense |
7,378 |
5,613 |
13,802 |
11,024 |
|||||||||
Plus: Depreciation and amortization |
896 |
1,006 |
1,831 |
2,025 |
|||||||||
EBITDA |
$ |
22,121 |
$ |
17,160 |
$ |
41,558 |
$ |
33,797 |
CONTACTS: |
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|
817-265-2000 |
|
Dennard • |
|
|
|
713-529-6600 |
View original content:http://www.prnewswire.com/news-releases/state-national-companies-reports-second-quarter-2017-results-300501314.html
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