Unico American Corporation Reports Second Quarter 2019 Financial Results
Results of Operations
|
Three Months Ended |
||||||||||||
|
|
|
|
|
Increase (Decrease) |
||||||||
|
2019 |
|
2018 |
|
$ |
|
% |
||||||
|
|
|
|
|
|||||||||
Direct written premium |
$ |
9,454,402 |
$ |
7,786,199 |
$ |
1,668,203 |
|
21 |
% |
||||
Net investment income |
$ |
530,747 |
$ |
452,606 |
$ |
78,141 |
|
17 |
% |
||||
Gross commission and fees |
$ |
527,825 |
$ |
671,449 |
$ |
(143,624 |
) |
(21 |
)% |
||||
Losses and loss adjustment expenses |
$ |
5,058,951 |
$ |
4,929,203 |
$ |
129,748 |
|
3 |
% |
||||
Policy acquisition costs |
$ |
1,289,481 |
$ |
1,515,476 |
$ |
(225,995 |
) |
(15 |
)% |
The increase in direct written premium during the three months ended
The increase in net investment income during the three months ended
The decrease in gross commission and fees during the three months ended
The increase in loss and loss adjustment expenses during the three months ended
The decrease in policy acquisition costs during the three months ended
|
Six Months Ended |
||||||||||||
|
|
|
|
|
Increase (Decrease) |
||||||||
|
2019 |
|
2018 |
|
$ |
|
% |
||||||
|
|
|
|
|
|||||||||
Direct written premium |
$ |
17,983,583 |
$ |
16,442,342 |
$ |
1,541,241 |
|
9 |
% |
||||
Net investment income |
$ |
1,063,384 |
$ |
897,404 |
$ |
165,980 |
|
18 |
% |
||||
Gross commission and fees |
$ |
1,075,270 |
$ |
1,278,106 |
$ |
(202,836 |
) |
(16 |
)% |
||||
Losses and loss adjustment expenses |
$ |
10,213,394 |
$ |
12,730,960 |
$ |
(2,517,566 |
) |
(20 |
)% |
||||
Policy acquisition costs |
$ |
2,376,194 |
$ |
3,136,981 |
$ |
(760,787 |
) |
(24 |
)% |
The increase in direct written premium during the six months ended
The increase in net investment income during the six months ended
The decrease in gross commission and fees during the six months ended
The decrease in loss and loss adjustment expenses during the six months ended
The decrease in policy acquisition costs during the six months ended
Management Commentary
“We posted a modest loss for the quarter in part due to the lower net earned premium associated with our lower direct written premium in 2018,” said
“On a positive note, our direct written premium grew 21% during this quarter, compared to the same period of 2018, through improvements in rate adequacy and expansion of niche programs in which we see profit opportunities. We continue to believe that the renewed emphasis on underwriting discipline implemented over the past 18 months will impact our loss ratios favorably. Our investment portfolio repositioning, which started in
Definitions and Non-GAAP Financial Measures
Written premium is a non-GAAP financial measure that is defined, under the statutory accounting practices prescribed or permitted by the
The following is a reconciliation of direct written premium (before premium ceded to reinsurers) to net earned premium (after premium ceded to reinsurers):
|
Three Months Ended |
|
Six Months Ended |
|||||||||||||
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|||||||||
|
|
|
|
|
||||||||||||
Direct written premium |
$ |
9,454,402 |
|
$ |
7,786,199 |
|
$ |
17,983,583 |
|
$ |
16,442,342 |
|
||||
Less: written premium ceded to reinsurers |
(1,732,839 |
) |
|
(1,690,611 |
) |
|
(3,416,529 |
) |
|
(3,442,442 |
) |
|||||
Net written premium |
|
7,721,563 |
|
|
6,095,588 |
|
|
14,567,054 |
|
|
12,999,900 |
|
||||
Change in direct unearned premium |
|
(1,200,032 |
) |
|
1,230,382 |
|
|
(1,761,809 |
) |
|
1,944,306 |
|
||||
Change in ceded unearned premium |
|
(3,419 |
) |
|
36,975 |
|
|
(22,983 |
) |
|
100,366 |
|
||||
Net earned premium |
$ |
6,518,112 |
|
$ |
7,362,945 |
|
$ |
12,782,262 |
|
$ |
15,044,572 |
|
About Unico
Headquartered in
Forward-Looking Statements
This press release may contain “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended (or “the Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (or “the Exchange Act”). In this context, forward-looking statements are not historical facts and include statements about the Company plans, objectives, beliefs and expectations. Forward-looking statements include statements preceded by, followed by, or that include the words “believes,” “expects,” “anticipates,” “seeks,” “plans,” “estimates,” “intends,” “projects,” “targets,” “should,” “could,” “may,” “will,” “can,” “can have,” “likely,” the negatives thereof or similar words and expressions.
Forward-looking statements are only predictions and are not guarantees of future performance. These statements are based on current expectations and assumptions involving judgments about, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the Company’s control. These predictions are also affected by known and unknown risks, uncertainties and other factors that may cause the Company’s actual results to be materially different from those expressed or implied by any forward-looking statement. Many of these factors are beyond the Company’s ability to control or predict. The Company’s actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors. Such factors include, but are not limited to, failure to meet minimum capital and surplus requirements; vulnerability to significant catastrophic property loss; a change in accounting standards issued by the
Please see Part I - Item 1A – “Risk Factors” in the Company’s 2018 Annual Report on Form 10-K as filed with the
Financial Tables Follow –
AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS ($ in thousands) |
|||||||
|
|
|
|
||||
|
2019 |
|
2018 |
||||
|
(Unaudited) |
|
|||||
ASSETS |
|
|
|||||
Investments |
|
|
|||||
Available-for-sale: |
|
|
|||||
Fixed maturities, at fair value (amortized cost: |
$ |
81,271 |
$ |
76,910 |
|
||
Held-to-maturity: |
|
|
|||||
Fixed maturities, at amortized cost (fair value: |
|
4,782 |
|
7,126 |
|
||
Short‑term investments, at fair value |
|
200 |
|
4,691 |
|
||
Total Investments |
|
86,253 |
|
88,727 |
|
||
Cash and cash equivalents |
|
5,591 |
|
4,918 |
|
||
Accrued investment income |
|
410 |
|
394 |
|
||
Receivables, net |
|
4,739 |
|
3,933 |
|
||
Reinsurance recoverable: |
|
|
|||||
Paid losses and loss adjustment expenses |
|
455 |
|
(1 |
) |
||
Unpaid losses and loss adjustment expenses |
|
11,139 |
|
9,532 |
|
||
Deferred policy acquisition costs |
|
3,629 |
|
3,490 |
|
||
Property and equipment, net |
|
9,910 |
|
9,692 |
|
||
Deferred income taxes |
|
4,089 |
|
4,375 |
|
||
Other assets |
|
257 |
|
557 |
|
||
Total Assets |
$ |
126,472 |
$ |
125,617 |
|
||
|
|
|
|||||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||||||
|
|
|
|||||
LIABILITIES |
|
|
|||||
Unpaid losses and loss adjustment expenses |
$ |
49,830 |
$ |
51,657 |
|
||
Unearned premiums |
|
17,726 |
|
15,965 |
|
||
Advance premium and premium deposits |
|
360 |
|
234 |
|
||
Accrued expenses and other liabilities |
|
1,650 |
|
1,845 |
|
||
Total Liabilities |
|
69,566 |
|
69,701 |
|
||
|
|
|
|||||
Commitments and contingencies |
|
|
|||||
|
|
|
|||||
STOCKHOLDERS' EQUITY |
|
|
|||||
Common stock, no par – authorized 10,000,000 shares; 5,306,747 and 5,307,103 shares issued and outstanding at |
|
3,773 |
|
3,773 |
|
||
Accumulated other comprehensive income (loss) |
|
840 |
|
(1,100 |
) |
||
Retained earnings |
|
52,293 |
|
53,243 |
|
||
Total Stockholders’ Equity |
|
56,906 |
|
55,916 |
|
||
|
|
|
|||||
Total Liabilities and Stockholders' Equity |
$ |
126,472 |
$ |
125,617 |
|
AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) ($ in thousands, except per share) |
|||||||||||||||
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
|
|
||||||||||||
|
2019 |
|
2018 |
|
2019 |
|
2018 |
||||||||
REVENUES |
|
|
|
|
|||||||||||
Insurance company operation: |
|
|
|
|
|||||||||||
Net earned premium |
$ |
6,518 |
|
$ |
7,363 |
$ |
12,782 |
|
$ |
15,045 |
|
||||
Investment income |
|
531 |
|
|
453 |
|
1,063 |
|
|
897 |
|
||||
Net realized investment losses |
|
(5 |
) |
|
- |
|
(12 |
) |
|
- |
|
||||
Other income (loss) |
|
169 |
|
|
112 |
|
(92 |
) |
|
168 |
|
||||
Total Insurance Company Operation |
|
7,213 |
|
|
7,928 |
|
13,741 |
|
|
16,110 |
|
||||
|
|
|
|
|
|||||||||||
Other insurance operations: |
|
|
|
|
|||||||||||
Gross commissions and fees |
|
528 |
|
|
671 |
|
1,075 |
|
|
1,278 |
|
||||
Finance charges and fees earned |
|
54 |
|
|
34 |
|
104 |
|
|
52 |
|
||||
Other income |
|
- |
|
|
10 |
|
11 |
|
|
10 |
|
||||
Total Revenues |
|
7,795 |
|
|
8,643 |
|
14,931 |
|
|
17,450 |
|
||||
|
|
|
|
|
|||||||||||
EXPENSES |
|
|
|
|
|||||||||||
Losses and loss adjustment expenses |
|
5,059 |
|
|
4,929 |
|
10,214 |
|
|
12,731 |
|
||||
Policy acquisition costs |
|
1,290 |
|
|
1,515 |
|
2,376 |
|
|
3,137 |
|
||||
Salaries and employee benefits |
|
1,013 |
|
|
1,127 |
|
2,041 |
|
|
2,415 |
|
||||
Commissions to agents/brokers |
|
41 |
|
|
41 |
|
91 |
|
|
82 |
|
||||
Other operating expenses |
|
735 |
|
|
744 |
|
1,364 |
|
|
1,610 |
|
||||
Total Expenses |
|
8,138 |
|
|
8,356 |
|
16,086 |
|
|
19,975 |
|
||||
|
|
|
|
|
|||||||||||
Income (loss) before taxes |
|
(343 |
) |
|
287 |
|
(1,155 |
) |
|
(2,525 |
) |
||||
Income tax expense (benefit) |
|
(66 |
) |
|
119 |
|
(207 |
) |
|
(486 |
) |
||||
Net Income (Loss) |
$ |
(277 |
) |
$ |
168 |
$ |
(948 |
) |
$ |
(2,039 |
) |
||||
|
|
|
|
|
|||||||||||
|
|
|
|
|
|||||||||||
|
|
|
|
|
|||||||||||
PER SHARE DATA: |
|
|
|
|
|||||||||||
Basic |
|
|
|
|
|||||||||||
Earnings (loss) per share |
$ |
(0.05 |
) |
$ |
0.03 |
$ |
(0.18 |
) |
$ |
(0.38 |
) |
||||
Weighted average shares |
|
5,306,938 |
|
|
5,307,133 |
|
5,307,021 |
|
|
5,307,133 |
|
||||
Diluted |
|
|
|
|
|||||||||||
Earnings (loss) per share |
$ |
(0.05 |
) |
$ |
0.03 |
$ |
(0.18 |
) |
$ |
(0.38 |
) |
||||
Weighted average shares |
|
5,306,938 |
|
|
5,307,133 |
|
5,307,021 |
|
|
5,307,133 |
|
AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) ($ in thousands) |
||||||||
|
Six Months Ended |
|||||||
|
|
|||||||
|
2019 |
2018 |
||||||
Cash flows from operating activities: |
|
|
||||||
Net Loss |
$ |
(948 |
) |
$ |
(2,039 |
) |
||
Adjustments to reconcile net loss to net cash from operations: |
|
|
||||||
Depreciation and amortization |
|
270 |
|
|
282 |
|
||
Bond amortization, net |
|
(5 |
) |
|
129 |
|
||
Bad debt expense |
|
(21 |
) |
|
- |
|
||
Net realized investment losses |
|
12 |
|
|
- |
|
||
Changes in assets and liabilities: |
|
|
||||||
Net receivables and accrued investment income |
|
(801 |
) |
|
1,627 |
|
||
Reinsurance recoverable |
|
(2,063 |
) |
|
(378 |
) |
||
Deferred policy acquisitions costs |
|
(139 |
) |
|
445 |
|
||
Other assets |
|
300 |
|
|
(50 |
) |
||
Unpaid losses and loss adjustment expenses |
|
(1,827 |
) |
|
989 |
|
||
Unearned premium |
|
1,761 |
|
|
(1,944 |
) |
||
Advance premium and premium deposits |
|
126 |
|
|
32 |
|
||
Accrued expenses and other liabilities |
|
(195 |
) |
|
(699 |
) |
||
Deferred income taxes |
|
(231 |
) |
|
(495 |
) |
||
|
|
(3,761 |
) |
|
(2,101 |
) |
||
|
|
|
||||||
Cash flows from investing activities: |
|
|
||||||
Purchase of fixed maturity investments |
|
(6,743 |
) |
|
(10,735 |
) |
||
Proceeds from maturity of fixed maturity investments |
|
3,703 |
|
|
8,741 |
|
||
Proceeds from sale or call of fixed maturity investments |
|
3,473 |
|
|
1,000 |
|
||
Net decrease in short-term investments |
|
4,491 |
|
|
1,648 |
|
||
Additions to property and equipment |
|
(488 |
) |
|
(85 |
) |
||
Net Cash Provided by Investing Activities |
|
4,436 |
|
|
569 |
|
||
|
|
|
||||||
Cash flows from financing activities: |
|
|
||||||
Repurchase of common stock |
|
(2 |
) |
|
- |
|
||
|
|
(2 |
) |
|
- |
|
||
|
|
|
||||||
Net increase (decrease) in cash and cash equivalents |
|
673 |
|
|
(1,532 |
) |
||
Cash and cash equivalents at beginning of period |
|
4,918 |
|
|
9,367 |
|
||
Cash and Cash Equivalents at End of Period |
$ |
5,591 |
|
$ |
7,835 |
|
||
|
|
|
||||||
Supplemental Cash Flow Information |
|
|
||||||
Cash paid during the period for: |
|
|
||||||
Interest |
|
- |
|
|
- |
|
||
Income taxes |
$ |
9 |
|
$ |
9 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20190814005742/en/
818-591-9800
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