Unico American Corporation Reports Second Quarter 2017 Financial Results

CALABASAS, Calif.–(BUSINESS WIRE)–Unico American Corporation (NASDAQ – “UNAM”) (“Unico,” the “Company”), announced today its consolidated financial results for the three and six months ended June 30, 2017. For the three months ended June 30, 2017, revenues were $9.2 million and net loss was $0.9 million ($0.17 diluted loss per share) compared with revenues of $8.7 million and net income of $0.2 million ($0.03 diluted income per share) for the three months ended June 30, 2016. For the six months ended June 30, 2017, revenues were $18.2 million and net loss was $3.0 million ($0.57 diluted loss per share) compared with revenues of $17.3 million and net loss of $0.05 million ($0.01 diluted loss per share) for the six months ended June 30, 2016.

Stockholders’ equity was $65.9 million as of June 30, 2017, or $12.41 per common share including unrealized losses, net of tax, of $0.003 million, compared to stockholders’ equity of $68.9 million as of December 31, 2016, or $12.98 per common share including unrealized investment gains, net of tax, of $0.008 million.

„We continued making significant changes to infrastructure during the second quarter and the costs of these changes, including employee severance and IT consulting, impacted our results,” said Cary L. Cheldin, Unico’s President and Chief Executive Officer. Cheldin continued: “While we were successful in bringing new leadership to our P&C underwriting and marketing operations and we adopted important rate increases later in the quarter, our claims experience from prior accident years was unfavorable. Nonetheless, I am confident that the numerous initiatives that we implemented during the first half of 2017 will make a positive impact upon our future results.”

Headquartered in Calabasas, California, Unico is an insurance holding company that underwrites property and casualty insurance through its insurance company subsidiary; provides property, casualty, and health insurance through its agency subsidiaries; and through its other subsidiaries provides insurance premium financing and membership association services. Unico has conducted the majority of its operations through its subsidiary Crusader Insurance Company since 1985. For more information concerning Crusader Insurance Company, please visit the Crusader’s Web site at www.crusaderinsurance.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Certain statements contained herein that are not historical facts are forward-looking. These statements, which may be identified by forward-looking words or phrases such as “anticipate,” “appears,” “believe,” ”expect,” “intend,” “may,” “should,” and “would,” involve risks and uncertainties, many of which are beyond the control of the Company. Such risks and uncertainties could cause actual results to differ materially from these forward-looking statements. Factors which could cause actual results to differ materially include underwriting actions not being effective, rate increases for coverages not being sufficient, premium rate adequacy relating to competition or regulation, actual versus estimated claim experience, regulatory changes or developments, unforeseen calamities, general market conditions, and the Company’s ability to introduce new profitable products.

 

UNICO AMERICAN CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

($ in thousands)

 
    June 30   December 31

2017

2016

(Unaudited)

ASSETS

Investments
Available for sale:
Fixed maturities, at fair value (amortized cost: $83,878 at
June 30, 2017, and $80,372 at December 31, 2016) $ 83,874 $ 80,384
Short-term investments, at fair value

5,093

10,205

Total Investments 88,967 90,589
Cash and restricted cash 13,586 13,496
Accrued investment income 239 186
Receivables, net 6,258 6,008
Reinsurance recoverable:
Paid losses and loss adjustment expenses 81 261
Unpaid losses and loss adjustment expenses 12,492 9,521
Deferred policy acquisition costs 4,423 4,432
Property and equipment, net 10,113 10,283
Deferred income taxes 1,170 1,177
Other assets

3,449

2,269

Total Assets

$

140,778

$

138,222

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

LIABILITIES

Unpaid losses and loss adjustment expenses $ 51,939 $ 47,056
Unearned premiums 19,877 19,375
Advance premium and premium deposits 385 224
Accrued expenses and other liabilities

2,708

2,661

Total Liabilities $

74,909

$

69,316

 
Commitments and contingencies
 

STOCKHOLDERS’ EQUITY

Common stock, no par – authorized 10,000,000 shares; issued and
outstanding shares 5,307,133 at June 30, 2017, and
December 31, 2016 $ 3,773 $ 3,761
Accumulated other comprehensive income (loss) (3 ) 8
Retained earnings

62,099

65,137

Total Stockholders’ Equity $

65,869

$

68,906

 
Total Liabilities and Stockholders’ Equity $

140,778

$

138,222

 
 

UNICO AMERICAN CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

($ in thousands, except per share)

 
    Three Months Ended   Six Months Ended

June 30

June 30

2017

 

2016

2017

 

2016

REVENUES

Insurance company operation:
Net earned premium $ 8,220 $ 7,718 $ 16,141 $ 15,290
Investment income 264 212 476 424
Net realized investment losses (1 )
Other income

68

68

136

136

Total Insurance Company Operation 8,552 7,998 16,753 15,849
 
Other insurance operations:
Gross commissions and fees 671 709 1,413 1,366
Finance fees earned 18 15 36 32
Other income 5
Total Revenues

9,241

8,722

18,202

17,252

 

EXPENSES

Losses and loss adjustment expenses 5,909 4,859 14,434 9,944
Policy acquisition costs 1,591 1,701 3,089 3,401
Salaries and employee benefits 1,965 1,279 3,313 2,661
Commissions to agents/brokers 45 41 87 81
Other operating expenses

1,082

633

1,897

1,226

Total Expenses

10,592

8,513

22,820

17,313

 
Income (loss) before taxes (1,351 ) 209 (4,618 ) (61 )
Income tax expense (benefit)

(460

)

58

(1,580

)

(13

)
Net Income (Loss) $

(891

)

$

151

$

(3,038

) $ (48 )
 
 
 
PER SHARE DATA:
Basic
Earnings (loss) per share $ (0.17 ) $ 0.03 $ (0.57 ) $ (0.01 )
Weighted average shares 5,307,133 5,307,133 5,307,133 5,308,255
Diluted
Earnings (loss) per share $ (0.17 ) $ 0.03 $ (0.57 ) $ (0.01 )
Weighted average shares 5,308,501 5,308,501 5,307,133 5,308,255
 
 

UNICO AMERICAN CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

($ in thousands)

 
    Six Months Ended

June 30

2017

 

2016

Cash flows from operating activities:
Net Loss $ (3,038 ) $ (48 )
Adjustments to reconcile net loss to net cash from operations:
Depreciation and amortization 265 240
Bond amortization, net (426 ) (8 )
Bad debt expense 15
Non-cash stock based compensation 12 12
Changes in assets and liabilities:
Net receivables and accrued investment income (318 ) (826 )
Reinsurance recoverable (2,791 ) 460
Deferred policy acquisitions costs 9 (262 )
Other assets 416 604
Unpaid losses and loss adjustment expenses 4,883 (107 )
Unearned premium 502 1,186
Advance premium and premium deposits 161 229
Accrued expenses and other liabilities 47 122
Income taxes current/deferred

(1,584

)

(18

)
Net Cash (Used) Provided by Operating Activities

(1,847

)

1,584

 
Cash flows from investing activities:
Purchase of fixed maturity investments (29,348 ) (5,194 )
Proceeds from maturity of fixed maturity investments 25,218 300
Proceeds from sale of fixed maturity investments 1,050 746
Net decrease in short-term investments 5,112 8,682
Additions to property and equipment

(95

)

(522

)
Net Cash Provided by Investing Activities

1,937

4,012

 
Cash flows from financing activities:

 

Repurchase of common stock

(90

)
Net Cash Used by Financing Activities

(90

)
 
Net increase in cash and restricted cash 90 5,506
Cash and restricted cash at beginning of period

13,496

8,259

Cash and Restricted Cash at End of Period $

13,586

$

13,765

 
Supplemental Cash Flow Information
Cash paid during the period for:
Interest
Income taxes $ 9 $ 9