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Unico American Corporation Reports Third Quarter 2014 Financial Results

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Unico American Corporation (NASDAQ – “UNAM”) (“Unico,” the “Company”), announced today its consolidated financial results for the three and nine months ended September 30, 2014. For the three months ended September 30, 2014, revenues were $7.8 million and net income was $0.03 million ($0.01 diluted earnings per share) compared with revenues of $7.7 million and net loss of $0.4 million ($0.07 diluted loss per share) for the three months ended September 30, 2013. For the nine months ended September 30, 2014, revenues were $22.8 million and net income was $0.9 million ($0.17 diluted earnings per share) compared with revenues of $23.4 million and net loss of $0.1 million ($0.02 diluted loss per share) for the nine months ended September 30, 2013.

As of September 30, 2014, the Company had cash and investments (at amortized cost) of $107.6 million. $28.6 million, or 27% of these investments were fixed maturity investments, and 53% of those fixed maturity investments were U.S. treasury securities.

Stockholders’ equity was $71.8 million as of September 30, 2014, or $13.45 per common share including unrealized gains, net of tax, of $0.002 million, compared to stockholders’ equity of $70.9 million as of December 31, 2013, or $13.27 per common share including unrealized losses, net of tax, of $0.006 million.

Headquartered in Woodland Hills, 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.

Financial Tables Follow –

UNICO AMERICAN CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ in thousands)
September 30 December 31
2014 2013
(Unaudited)

ASSETS

Investments
Available for sale:
Fixed maturities, at fair value (amortized cost: September 30,
2014 $28,621; December 31, 2013 $11,945) $ 28,625 $ 11,936
Short-term investments, at fair value 78,799 93,807
Total Investments 107,424 105,743
Cash 164 376
Accrued investment income 16 5
Receivables, net 5,791 5,157
Reinsurance recoverable:
Paid losses and loss adjustment expenses 140 184
Unpaid losses and loss adjustment expenses 4,814 4,428
Deferred policy acquisition costs 3,856 3,636
Property and equipment, net 10,250 10,170
Deferred income taxes 1,484 1,373
Other assets 1,430 1,781
Total Assets $ 135,369 $ 132,853

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES

Unpaid losses and loss adjustment expenses $ 44,178 $ 43,877
Unearned premiums 16,469 15,261
Advance premium and premium deposits 405 465
Accrued expenses and other liabilities 2,501 2,354
Total Liabilities $ 63,553 $ 61,957
Commitments and contingencies

STOCKHOLDERS’ EQUITY

Common stock, no par – authorized 10,000,000 shares; issued and
outstanding shares 5,341,147 at September 30, 2014, and 5,341,147 at
December 31, 2013 $ 3,726 $ 3,709
Accumulated other comprehensive income (loss) 2 (6 )
Retained earnings 68,088 67,193
Total Stockholders’ Equity $ 71,816 $ 70,896
Total Liabilities and Stockholders’ Equity $ 135,369 $ 132,853
UNICO AMERICAN CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands, except per share)
Three Months Ended Nine months Ended
September 30 September 30
2014 2013 2014 2013

REVENUES

Insurance company revenues
Net premium earned $ 6,687 $ 6,759 $ 19,560 $ 20,206
Investment income 32 68 93 301
Other income 315 41 910 321
Total Insurance Company Revenues 7,034 6,868 20,563 20,828
Other revenues from insurance operations
Gross commissions and fees 713 779 2,197 2,490
Investment income 1 1
Finance charges and fees earned 17 19 50 57
Other income 1 17 16 20
Total Revenues 7,765 7,683 22,827 23,396

EXPENSES

Losses and loss adjustment expenses 4,156 4,766 10,697 13,213
Policy acquisition costs 1,512 1,538 4,459 4,516
Salaries and employee benefits 1,226 1,228 3,779 3,777
Commissions to agents/brokers 49 55 147 178
Other operating expenses 764 640 2,378 1,814
Total Expenses 7,707 8,227 21,460 23,498
Income (loss) before taxes 58 (544 ) 1,367 (102 )
Income tax expense (benefit) 25 (176 ) 472 8
Net Income (Loss) $ 33 $ (368 ) $ 895 $ (110 )

PER SHARE DATA:

Basic
Earnings (loss) per share $ 0.01 $ (0.07 ) $ 0.17 $ (0.02 )
Weighted average shares 5,341,147 5,341,147 5,341,147 5,341,147
Diluted
Earnings (loss) per share $ 0.01 $ (0.07 ) $ 0.17 $ (0.02 )
Weighted average shares 5,343,883 5,341,147 5,344,814 5,341,147
UNICO AMERICAN CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
($ in thousands)
For the Nine months Ended
September 30
2014 2013
Cash flows from operating activities:
Net income (loss) $ 895 $ (110 )
Adjustments to reconcile net income to net cash from operations:
Depreciation and amortization 422 161
Bond amortization, net (2 ) 4
Non-cash stock based compensation 17 17
Changes in assets and liabilities:
Net receivables and accrued investment income (645 ) 63

Reinsurance recoverable

(342 ) 1,759
Deferred policy acquisitions costs (220 ) (12 )
Other assets 450 (1,029 )
Unpaid losses and loss adjustment expenses 301 (2,908 )
Unearned premiums 1,208 (16 )
Advance premium and premium deposits (60 ) (232 )
Accrued expenses and other liabilities 147 (528 )
Income taxes current/deferred (215 ) (154 )
Net Cash Provided (Used) by Operating Activities 1,956 (2,985 )
Cash flows from investing activities:
Purchase of fixed maturity investments (18,074 ) (3,149 )
Proceeds from maturity of fixed maturity investments 1,400 22,791
Net decrease (increase) in short-term investments 15,008 (7,066 )
Acquisition of land and building (9,000 )
Additions to property and equipment (502 ) (587 )
Net Cash Provided (Used) by Investing Activities (2,168 ) 2,989
Cash flows from financing activities:
Net Cash Used by Financing Activities
Net increase (decrease) in cash (212 ) 4
Cash at beginning of period 376 160
Cash at End of Period $ 164 $ 164
Supplemental Cash Flow Information
Cash paid during the period for:
Interest
Income taxes $ 684 $ 159

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