Unico American Corporation Reports Third Quarter 2014 Financial Results

WOODLAND HILLS, Calif.--()--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
 

Contacts

Unico American Corporation
Lester A. Aaron
Chief Financial Officer
818-591-9800

Contacts

Unico American Corporation
Lester A. Aaron
Chief Financial Officer
818-591-9800