SUNRISE, Fla., Aug. 07, 2017 (GLOBE NEWSWIRE) -- Federated National Holding Company (the “Company”) (Nasdaq:FNHC) today reported results for the three and six months ended June 30, 2017.
Q2 2017 highlights (as measured against the same three-month period last year, except where noted):
- Gross written premiums of $168.7 million
- 4.1% increase in Florida homeowners’ policies to approximately 280,000
- 56.7% increase in non-Florida homeowners’ policies to approximately 24,500
- 35.6% increase in total revenue to $97.6 million
- $2.8 million of claims, net of reinsurance, from rainstorms, tornados, and other severe weather events in Florida, Louisiana, and Texas
- $3.1 million of losses from prior year development related to Automobile and Homeowners lines of business
- Net income of $4.9 million or $0.37 per diluted share
- 4.4% increase in book value per share, excluding noncontrolling interest, to $16.97 as compared with $16.26 at December 31, 2016
- Total loss reserves at June 30, 2017 of $157.0 million
- Repurchased 390,923 shares of common stock at a weighted average price of $15.82, during the second quarter of 2017.
Commenting on the quarter, Mr. Michael H. Braun, the Company’s Chief Executive Officer, said, “Our net income of $4.9 million for the second quarter includes an expense of $2.8 million in claims, net of reinsurance, related to multiple severe weather events that impacted our policyholders. During the quarter, we also achieved multiple initiatives including finalization of our excess-of-loss catastrophe reinsurance program, replacement of our 10% Florida homeowners quota share treaty, and implementation of actions to improve underwriting results in our automobile book of business. We also continued with our previously announced share repurchase program. Our 2016 statewide average rate increase of 5.6% on our Florida homeowners’ book of business will be fully reflected in our earned premium for the third quarter, and our additional statewide average rate increase of 9.9% takes effect beginning August 1st. We are also pleased to provide enhanced disclosures this quarter via the presentation of our results by line of business basis, demonstrating our continued commitment to transparency with the investing community. It is our intent to provide this supplemental information on an ongoing basis.”
Line of Business Reporting and Income Statement Reclassifications
In order to provide greater transparency into our operating results, beginning this quarter the Company has provided supplemental line of business information. The “Homeowners” line of business consists of our homeowners and fire property and casualty insurance business, which currently operates in Florida, Alabama, Texas, Louisiana and South Carolina. The “Automobile” line of business consists of our nonstandard personal automobile insurance business which currently operates in Georgia, Texas, Alabama, and Florida. The “Other” line of business primarily consists of our commercial general liability and federal flood businesses, along with corporate and investment operations. As part of our initial presentation of line of business information, we have provided supplemental schedules of quarterly results dating back to the first quarter of 2016.
In conjunction with the inception of line of business reporting, the Company has reclassified certain items in the consolidated statement of operations. These reclassifications have no impact on net income, but do impact Other income, Losses and loss adjustment expenses and Commissions and other underwriting expenses, and accordingly, the loss ratio, expense ratio and combined ratio. These reclassifications are immaterial to the consolidated financial statements, but better reflect the substance of the underlying activities. The items reclassified include: (1) ceding commission income in Automobile is now presented in Commissions and other underwriting expenses, having previously been presented in Other income; and (2) compensation costs associated with our claims management activities are now presented in Loss and loss adjustment expenses, having previously been presented in Commissions and other underwriting expenses. To aid users of our financial statements, we have provided a schedule of consolidated quarterly results and operating ratios dating back to the first quarter of 2016. These reclassifications are reflected in all consolidated and line of business results presented herein.
Revenues
- Total revenues increased $25.6 million, or 35.6%, to $97.6 million for the three months ended June 30, 2017, compared with $71.9 million for the same three-month period last year.
- Gross written premiums decreased $2.5 million, or 1.5%, to $168.7 million in the quarter, compared with $171.2 million for the same three-month period last year. The decrease was driven by Automobile, which decreased $8.4 million, offset by Homeowners increasing $6.0 million. The Automobile decrease was related to moving two of our programs into run-off during the second half of 2016, plus a third program in the first quarter of 2017, thus reducing the premiums being written this quarter. Homeowners’ non-Florida continues to have significant growth in 2017, specifically in Louisiana and Texas, with Texas beginning to write policies in the first quarter of 2017. Homeowners’ Florida written premiums this quarter, which include the 5.6% rate increase that became effective August 1, 2016, was in line with the same period last year.
- Gross premiums earned increased $13.2 million, or 9.6%, to $150.6 million, driven primarily by growth in Homeowners spanning all states, and to a lesser extent by growth in Automobile.
- Ceded premiums earned decreased $9.9 million, or 12.8%, to $67.4 million in the quarter, compared with the same three-month period last year. The decrease in ceded premiums earned was driven primarily by the expiration of the 30% Florida-only property quota share treaty, which ended on July 1, 2016. The effect of this expiration was partially offset by additional excess-of-loss reinsurance costs purchased for the 2016-2017 reinsurance programs, which became effective on June 1, 2016 and July 1, 2016. Additionally, in Automobile, ceded premiums as a percentage of gross premiums earned decreased to 65% this quarter compared with 79% in the same period last year. This decrease is the result of one of our auto programs exceeding the premium limit in the related reinsurance treaty. This program was terminated effective July 1, 2017.
- Together, the increase in gross earned premium and the decrease in ceded premiums drove net premiums earned of $83.2 million, a $23.1 million increase, or 38.5%, from the same three-month period last year.
- Net realized investment gains were $2.6 million for the three months ended June 30, 2017, compared to less than $0.1 million in the prior year period. This increase was driven by a redistribution of our equity portfolio between our investment managers during the second quarter of 2017.
- Other income decreased $0.1 million to $4.7 million for the current quarter, compared with $4.8 million in the prior year period. The decrease was primarily the result of a profitability management decision to move from 12-month term Automobile policies to 6-month policy terms in one of our largest programs enabling rate increases to take effect more quickly. Increases in other income in Homeowners and Other largely offset the decline from Automobile.
Expenses
- Losses and loss adjustment expenses (“LAE”) increased $6.0 million, or 12.2%, to $55.0 million for the three months ended June 30, 2017, compared with $49.0 million for the same three-month period last year. Losses and LAE includes reported claims, whether paid or unpaid, as well as the provision of reserves for estimated reported claims. Approximately $5 million of the increase in losses and LAE represents a volume variance driven strictly by growth in premiums in the second quarter of 2017 compared with the second quarter of 2016. Losses were also impacted by claims, net of reinsurance of $2.8 million related to rainstorms, tornados, and other severe weather events during the quarter in the states of Florida, Louisiana and Texas. Additionally, the Company experienced adverse development, net of reinsurance, of $3.1 million in Automobile and Homeowners. These increased losses were lower than the elevated level of losses in the second quarter of 2016 related to Homeowners’ adverse development and the impact of severe weather events, such as Tropical Storm Colin. The remainder of the quarter-over-quarter variance is related to lower ceded losses in the 2017 quarter as a result of the expiration of the 30% Florida-only property quota share treaty, as noted above.
- During the quarter, we reclassified $3.5 million of net reserves related to our commercial general liability business, which resides in the Other line of business, to Homeowners. This movement was a direct result of reassessing our reserves at a line of business level. Previously, we assessed the adequacy of our loss reserves on a consolidated company basis. This reclassification had no impact on net income on a consolidated basis and no impact to the overall consolidated net loss reserves.
- Commissions and other underwriting expenses increased $14.2 million, or 89.1%, to $30.2 million for the three months ended June 30, 2017, compared with $16.0 million for the three months ended June 30, 2016. The increase was the result of higher acquisition costs in support of the premium growth in Homeowners and the lower ceded commissions from the expiration of the 30% Florida-only property quota share treaty on July 1, 2016.
Stock Repurchase Program
- During the second quarter of 2017, the Company repurchased 390,923 shares of common stock for $6.2 million at a weighted average price of $15.82. The Company has repurchased an additional 84,445 shares subsequent to quarter end.
Conference Call Information
The Company will hold an investor conference call at 9:00 AM (ET) Tuesday, August 8, 2017. The Company’s CEO, Michael Braun, its CFO, Ronald Jordan, and its CAO, Erick Fernandez will discuss the financial results and review the outlook for the Company. Messrs. Braun, Jordan and Fernandez invite interested parties to participate in the conference call.
Listeners interested in participating in the Q&A session may dial-in with the number below:
(877) 303-6913
Conference ID: 53101026
A live webcast of the call will be available online via the “Conference Calls” section of the Company’s website at FedNat.com or interested parties can click on the following link:
http://www.fednat.com/investors/conference-calls/
Please call at least five minutes in advance to ensure that you are connected prior to the presentation. A webcast replay of the conference call will be available shortly after the live webcast is completed and may be accessed via the Company’s website.
About the Company
The Company is authorized to underwrite, and/or place through our wholly owned subsidiaries, homeowners’ multi-peril, personal automobile, commercial general liability, federal flood, and various other lines of insurance in Florida and various other states. The Company also serves as managing general agent for its joint venture, Monarch National Insurance Company. The Company markets and distributes its own and third-party insurers’ products and our other services through a network of independent agents. The Company also utilizes a select number of general agents for the same purpose.
Forward-Looking Statements /Safe Harbor Statements
Safe harbor statement under the Private Securities Litigation Reform Act of 1995:
Statements that are not historical fact are forward-looking statements that are subject to certain risks and uncertainties that could cause actual events and results to differ materially from those discussed herein. Without limiting the generality of the foregoing, words such as “anticipate,” “believe,” “budget,” “contemplate,” “continue,” “could,” “envision,” “estimate,” “expect,” “guidance,” “indicate,” “intend,” “may,” “might,” “plan,” “possibly,” “potential,” “predict,” “probably,” “pro-forma,” “project,” “seek,” “should,” “target,” or “will” or the negative thereof or other variations thereon and similar words or phrases or comparable terminology are intended to identify forward-looking statements.
Forward-looking statements might also include, but are not limited to, one or more of the following:
- Projections of revenues, income, earnings per share, dividends, capital structure or other financial items or measures;
- Descriptions of plans or objectives of management for future operations, insurance products/or services;
- Forecasts of future insurable events, economic performance, liquidity, need for funding and income; and
- Descriptions of assumptions or estimates underlying or relating to any of the foregoing.
The risks and uncertainties include, without limitation, risks and uncertainties related to estimates, assumptions and projections generally; the nature of the Company’s business; the adequacy of its reserves for losses and loss adjustment expense; claims experience; weather conditions (including the severity and frequency of storms, hurricanes, tornadoes and hail) and other catastrophic losses; reinsurance costs and the ability of reinsurers to indemnify the Company; raising additional capital and our potential failure to meet minimum capital and surplus requirements; potential assessments that support property and casualty insurance pools and associations; the effectiveness of internal financial controls; the effectiveness of our underwriting, pricing and related loss limitation methods; changes in loss trends, including as a result of insureds’ assignment of benefits; court decisions and trends in litigation; our potential failure to pay claims accurately; ability to obtain regulatory approval applications for requested rate increases, or to underwrite in additional jurisdictions, and the timing thereof; the impact that the results of the Monarch joint venture may have on our results of operations; inflation and other changes in economic conditions (including changes in interest rates and financial markets); pricing competition and other initiatives by competitors; legislative and regulatory developments; the outcome of litigation pending against the Company, and any settlement thereof; dependence on investment income and the composition of the Company’s investment portfolio; insurance agents; ratings by industry services; the reliability and security of our information technology systems; reliance on key personnel; acts of war and terrorist activities; and other matters described from time to time by the Company in releases and publications, and in periodic reports and other documents filed with the United States Securities and Exchange Commission.
In addition, investors should be aware that generally accepted accounting principles prescribe when a company may reserve for particular risks, including claims and litigation exposures. Accordingly, results for a given reporting period could be significantly affected if and when a reserve is established for a contingency. Reported results may therefore appear to be volatile in certain accounting periods.
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We do not undertake any obligation to update publicly or revise any forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.
FEDERATED NATIONAL HOLDING COMPANY AND SUBSIDIARIES | ||||||||||||||||
Consolidated Statements of Operations | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(in thousands, except per share data) | ||||||||||||||||
Revenue: | ||||||||||||||||
Gross premiums written | $ | 168,692 | $ | 171,218 | $ | 314,743 | $ | 307,242 | ||||||||
Gross premiums earned | 150,563 | 137,334 | 298,541 | 265,433 | ||||||||||||
Ceded premiums earned | (67,404) | (77,289) | (136,889) | (150,391) | ||||||||||||
Net premiums earned | 83,159 | 60,045 | 161,652 | 115,042 | ||||||||||||
Net investment income | 2,560 | 2,194 | 4,878 | 4,234 | ||||||||||||
Net realized investment gains | 2,648 | 7 | 2,543 | 934 | ||||||||||||
Direct written policy fees | 4,486 | 4,925 | 9,571 | 9,127 | ||||||||||||
Other income | 4,710 | 4,778 | 9,637 | 8,828 | ||||||||||||
Total revenue | 97,563 | 71,949 | 188,281 | 138,165 | ||||||||||||
Costs and expenses: | ||||||||||||||||
Losses and loss adjustment expenses | 54,956 | 48,983 | 108,722 | 80,243 | ||||||||||||
Commissions and other underwriting expenses | 30,197 | 15,971 | 57,336 | 31,364 | ||||||||||||
General and administrative expenses | 5,076 | 5,086 | 9,695 | 9,167 | ||||||||||||
Interest expense | 82 | 94 | 166 | 178 | ||||||||||||
Total costs and expenses | 90,311 | 70,134 | 175,919 | 120,952 | ||||||||||||
Income before income taxes | 7,252 | 1,815 | 12,362 | 17,213 | ||||||||||||
Income taxes | 2,635 | 697 | 4,573 | 6,492 | ||||||||||||
Net income | 4,617 | 1,118 | 7,789 | 10,721 | ||||||||||||
Net (loss) income attributable to noncontrolling interest | (328) | 127 | (301) | 195 | ||||||||||||
Net income attributable to Federated National Holding Company shareholders | $ | 4,945 | $ | 991 | $ | 8,090 | $ | 10,526 | ||||||||
Net income per share: | ||||||||||||||||
Basic | $ | 0.38 | $ | 0.07 | $ | 0.61 | $ | 0.76 | ||||||||
Diluted | $ | 0.37 | $ | 0.07 | $ | 0.60 | $ | 0.75 | ||||||||
Number of shares used to calculate net income per share: | ||||||||||||||||
Basic | 13,171 | 13,805 | 13,305 | 13,816 | ||||||||||||
Diluted | 13,256 | 13,988 | 13,405 | 14,013 | ||||||||||||
Dividends declared per share of common stock | $ | 0.08 | $ | 0.06 | $ | 0.16 | $ | 0.11 |
FEDERATED NATIONAL HOLDING COMPANY AND SUBSIDIARIES | |||||||||||||||
Selected Operating Metrics | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Gross premiums written: | (in thousands) | ||||||||||||||
Homeowners/Fire Florida | $ | 136,811 | $ | 136,395 | $ | 247,664 | $ | 244,020 | |||||||
Homeowners/Fire non-Florida | 14,815 | 9,253 | 25,183 | 16,295 | |||||||||||
Personal automobile | 10,622 | 18,996 | 29,913 | 34,685 | |||||||||||
Commercial general liability | 2,926 | 3,571 | 6,222 | 7,322 | |||||||||||
Federal flood | 3,518 | 3,003 | 5,761 | 4,920 | |||||||||||
Total gross premiums written | $ | 168,692 | $ | 171,218 | $ | 314,743 | $ | 307,242 | |||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Gross premiums earned: | (in thousands) | ||||||||||||||
Homeowners/Fire Florida | $ | 119,832 | $ | 111,637 | $ | 237,376 | $ | 219,185 | |||||||
Homeowners/Fire non-Florida | 10,230 | 6,785 | 19,330 | 12,639 | |||||||||||
Personal automobile | 14,760 | 13,283 | 30,407 | 22,416 | |||||||||||
Commercial general liability | 3,140 | 3,444 | 6,334 | 6,921 | |||||||||||
Federal flood | 2,601 | 2,185 | 5,094 | 4,272 | |||||||||||
Total gross premiums earned | $ | 150,563 | $ | 137,334 | $ | 298,541 | $ | 265,433 | |||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net premiums earned: | (in thousands) | ||||||||||||||
Homeowners/Fire | $ | 74,958 | $ | 54,028 | $ | 145,554 | $ | 104,135 | |||||||
Personal automobile | 5,224 | 2,752 | 10,093 | 4,346 | |||||||||||
Commercial general liability | 2,977 | 3,265 | 6,005 | 6,561 | |||||||||||
Total net premiums earned | $ | 83,159 | $ | 60,045 | $ | 161,652 | $ | 115,042 | |||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Commissions and other underwriting expenses: | (in thousands) | ||||||||||||||
Homeowners/Fire Florida | $ | 14,407 | $ | 13,739 | $ | 28,464 | $ | 26,025 | |||||||
All other lines of business | 8,210 | 7,027 | 16,734 | 13,022 | |||||||||||
Ceded commissions | (4,633) | (14,366) | (9,696) | (27,788) | |||||||||||
Total commissions and other fees | 17,984 | 6,400 | 35,502 | 11,259 | |||||||||||
Salaries and wages | 3,728 | 2,711 | 7,403 | 6,809 | |||||||||||
Other underwriting expenses | 8,485 | 6,860 | 14,431 | 13,296 | |||||||||||
Total commissions and other underwriting expenses: | $ | 30,197 | $ | 15,971 | $ | 57,336 | $ | 31,364 | |||||||
FEDERATED NATIONAL HOLDING COMPANY AND SUBSIDIARIES | |||||||||||||||
Selected Operating Metrics (continued) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net Loss Ratio | 66.1% | 81.6% | 67.3% | 69.8% | |||||||||||
Net Expense Ratio | 42.4% | 35.1% | 41.5% | 35.2% | |||||||||||
Combined Ratio | 108.5% | 116.6% | 108.7% | 105.0% | |||||||||||
Gross Loss Ratio | 48.5% | 54.5% | 49.3% | 48.4% | |||||||||||
Gross Expense Ratio | 26.5% | 25.8% | 25.7% | 25.7% | |||||||||||
Book value per share excluding noncontrolling interest | $ | 16.97 | $ | 17.92 | $ | 16.97 | $ | 17.92 |
FEDERATED NATIONAL HOLDING COMPANY AND SUBSIDIARIES | ||||||||||||||||||
SUPPLEMENTAL INFORMATION | ||||||||||||||||||
Quarterly Statements of Operations and Operating Metrics | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
Consolidated | ||||||||||||||||||
Three Months Ended | ||||||||||||||||||
March 31, 2016 | June 30, 2016 | Sept 30, 2016 | Dec 31, 2016 | March 31, 2017 | June 30, 2017 | |||||||||||||
(in thousands) | ||||||||||||||||||
Revenue: | ||||||||||||||||||
Gross premiums written | $ | 136,024 | $ | 171,218 | $ | 161,137 | $ | 137,105 | $ | 146,051 | $ | 168,692 | ||||||
Gross premiums earned | 128,099 | 137,334 | 147,624 | 152,365 | 147,978 | 150,563 | ||||||||||||
Ceded premiums earned | (73,102) | (77,289) | (78,219) | (76,940) | (69,485) | (67,404) | ||||||||||||
Net premiums earned | 54,997 | 60,045 | 69,405 | 75,425 | 78,493 | 83,159 | ||||||||||||
Net investment income | 2,040 | 2,194 | 2,164 | 2,665 | 2,318 | 2,560 | ||||||||||||
Net realized investment gains | 927 | 7 | 1,126 | 985 | (105) | 2,648 | ||||||||||||
Direct written policy fees | 4,202 | 4,925 | 4,318 | 4,285 | 5,085 | 4,486 | ||||||||||||
Other income | 4,050 | 4,778 | 4,493 | 4,071 | 4,927 | 4,710 | ||||||||||||
Total revenue | 66,216 | 71,949 | 81,506 | 87,431 | 90,718 | 97,563 | ||||||||||||
Costs and expenses: | ||||||||||||||||||
Losses and loss adjustment expenses | 31,260 | 48,983 | 45,973 | 69,765 | 53,766 | 54,956 | ||||||||||||
Commissions and other underwriting expenses | 15,393 | 15,971 | 29,867 | 29,622 | 27,139 | 30,197 | ||||||||||||
General and administrative expenses | 4,081 | 5,086 | 4,044 | 3,975 | 4,619 | 5,076 | ||||||||||||
Interest expense | 84 | 94 | 81 | 89 | 84 | 82 | ||||||||||||
Total costs and expenses | 50,818 | 70,134 | 79,965 | 103,451 | 85,608 | 90,311 | ||||||||||||
Income (loss) before income taxes | 15,398 | 1,815 | 1,541 | (16,020) | 5,110 | 7,252 | ||||||||||||
Income taxes | 5,795 | 697 | 103 | (3,912) | 1,938 | 2,635 | ||||||||||||
Net income (loss) | 9,603 | 1,118 | 1,438 | (12,108) | 3,172 | 4,617 | ||||||||||||
Net income (loss) attributable to noncontrolling interest | 68 | 127 | 44 | 8 | 27 | (328) | ||||||||||||
Net income (loss) attributable to Federated National Holding Company shareholders | $ | 9,535 | $ | 991 | $ | 1,394 | $ | (12,116) | $ | 3,145 | $ | 4,945 | ||||||
Net Loss Ratio | 56.8% | 81.6% | 66.2% | 92.5% | 68.5% | 66.1% | ||||||||||||
Net Expense Ratio | 35.4% | 35.1% | 48.9% | 44.5% | 40.5% | 42.4% | ||||||||||||
Combined Ratio | 92.2% | 116.6% | 115.1% | 137.0% | 109.0% | 108.5% | ||||||||||||
Gross Loss Ratio | 41.9% | 54.5% | 48.9% | 79.6% | 50.0% | 48.5% | ||||||||||||
Gross Expense Ratio | 25.7% | 25.8% | 26.5% | 24.7% | 24.8% | 26.5% |
FEDERATED NATIONAL HOLDING COMPANY AND SUBSIDIARIES | |||||||
Consolidated Balance Sheets | |||||||
(Unaudited) | |||||||
June 30, | December 31, | ||||||
2017 | 2016 | ||||||
ASSETS | (in thousands, except share and per share data) | ||||||
Investments | |||||||
Debt securities, available-for-sale, at fair value | $ | 383,910 | $ | 374,756 | |||
Debt securities, held-to-maturity, at amortized cost | 5,421 | 5,551 | |||||
Equity securities, available-for-sale, at fair value | 45,445 | 29,375 | |||||
Total investments | 434,776 | 409,682 | |||||
Cash and cash equivalents | 99,529 | 74,593 | |||||
Prepaid reinsurance premiums | 120,589 | 156,932 | |||||
Premiums receivable, net of allowance | 59,422 | 54,854 | |||||
Reinsurance recoverable, net | 41,090 | 48,530 | |||||
Deferred acquisition costs | 41,299 | 37,477 | |||||
Income taxes receivable | 13,468 | 13,871 | |||||
Property and equipment, net | 4,298 | 4,194 | |||||
Other assets | 11,250 | 11,509 | |||||
TOTAL ASSETS | $ | 825,721 | $ | 811,642 | |||
LIABILITIES | |||||||
Loss and loss adjustment expense reserves | $ | 156,973 | $ | 158,476 | |||
Unearned premiums | 310,224 | 294,022 | |||||
Reinsurance payable | 69,782 | 79,154 | |||||
Debt from consolidated variable interest entity | 4,919 | 4,909 | |||||
Deferred income taxes, net | 7,397 | 1,433 | |||||
Other liabilities | 36,589 | 35,792 | |||||
Total liabilities | 585,884 | 573,786 | |||||
SHAREHOLDERS’ EQUITY | |||||||
Preferred stock, $0.01 par value: 1,000,000 shares authorized | - | - | |||||
Common stock, $0.01 par value: 25,000,000 shares authorized; 13,060,207 and 13,473,120 shares issued and outstanding, respectively | 130 | 134 | |||||
Additional paid-in capital | 138,191 | 136,779 | |||||
Accumulated other comprehensive income | 5,157 | 1,941 | |||||
Retained earnings | 78,190 | 80,275 | |||||
Total Federated National Holding Company shareholders’ equity | 221,668 | 219,129 | |||||
Noncontrolling interest | 18,169 | 18,727 | |||||
Total shareholders' equity | 239,837 | 237,856 | |||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 825,721 | $ | 811,642 | |||
FEDERATED NATIONAL HOLDING COMPANY AND SUBSIDIARIES | |||||||||||||||||||||||||
SUPPLEMENTAL INFORMATION | |||||||||||||||||||||||||
Statements of Operations and Operating Metrics by Line of Business | |||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||
Three Months Ended June 30, | |||||||||||||||||||||||||
2017 | 2016 | ||||||||||||||||||||||||
Homeowners | Automobile | Other | Consolidated | Homeowners | Automobile | Other | Consolidated | ||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||
Revenue: | |||||||||||||||||||||||||
Gross premiums written | $ | 151,626 | $ | 10,622 | $ | 6,444 | $ | 168,692 | $ | 145,648 | $ | 18,996 | $ | 6,574 | $ | 171,218 | |||||||||
Gross premiums earned | 130,062 | 14,760 | 5,741 | 150,563 | 118,422 | 13,283 | 5,629 | 137,334 | |||||||||||||||||
Ceded premiums earned | (55,104) | (9,536) | (2,764) | (67,404) | (64,394) | (10,531) | (2,364) | (77,289) | |||||||||||||||||
Net premiums earned | 74,958 | 5,224 | 2,977 | 83,159 | 54,028 | 2,752 | 3,265 | 60,045 | |||||||||||||||||
Net investment income | — | — | 2,560 | 2,560 | — | — | 2,194 | 2,194 | |||||||||||||||||
Net realized investment gains | — | — | 2,648 | 2,648 | — | — | 7 | 7 | |||||||||||||||||
Direct written policy fees | 2,559 | 1,767 | 160 | 4,486 | 2,398 | 2,356 | 171 | 4,925 | |||||||||||||||||
Other income | 2,753 | 970 | 987 | 4,710 | 2,092 | 1,889 | 797 | 4,778 | |||||||||||||||||
Total revenue | 80,270 | 7,961 | 9,332 | 97,563 | 58,518 | 6,997 | 6,434 | 71,949 | |||||||||||||||||
Costs and expenses: | |||||||||||||||||||||||||
Losses and loss adjustment expenses | 49,095 | 7,086 | (1,225) | 54,956 | 43,478 | 2,203 | 3,302 | 48,983 | |||||||||||||||||
Commissions and other underwriting expenses | 25,741 | 3,217 | 1,239 | 30,197 | 12,830 | 2,008 | 1,133 | 15,971 | |||||||||||||||||
General and administrative expenses | 3,883 | 175 | 1,018 | 5,076 | 3,900 | 150 | 1,036 | 5,086 | |||||||||||||||||
Interest expense | 82 | — | — | 82 | 94 | — | — | 94 | |||||||||||||||||
Total costs and expenses | 78,801 | 10,478 | 1,032 | 90,311 | 60,302 | 4,361 | 5,471 | 70,134 | |||||||||||||||||
Income (loss) before income taxes | 1,469 | (2,517) | 8,300 | 7,252 | (1,784) | 2,636 | 963 | 1,815 | |||||||||||||||||
Income taxes | 567 | (970) | 3,038 | 2,635 | (688) | 1,016 | 369 | 697 | |||||||||||||||||
Net income (loss) | 902 | (1,547) | 5,262 | 4,617 | (1,096) | 1,620 | 594 | 1,118 | |||||||||||||||||
Net (loss) income attributable to noncontrolling interest | (328) | — | — | (328) | 127 | — | — | 127 | |||||||||||||||||
Net income (loss) attributable to Federated National Holding Company shareholders | $ | 1,230 | $ | (1,547) | $ | 5,262 | $ | 4,945 | $ | (1,223) | $ | 1,620 | $ | 594 | $ | 991 | |||||||||
Net loss ratio | 65.5% | 135.6% | (41.1)% | 66.1% | 80.5% | 80.1% | 101.1% | 81.6% | |||||||||||||||||
Net expense ratio | 39.5% | 64.9% | 42.4% | 31.0% | 78.4% | 35.1% | |||||||||||||||||||
Combined ratio | 105.0% | 200.6% | 108.5% | 111.4% | 158.5% | 116.6% |
FEDERATED NATIONAL HOLDING COMPANY AND SUBSIDIARIES | |||||||||||||||||||||||||
SUPPLEMENTAL INFORMATION | |||||||||||||||||||||||||
Statements of Operations and Operating Metrics by Line of Business | |||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||
(Continued) | |||||||||||||||||||||||||
Six Months Ended June 30, | |||||||||||||||||||||||||
2017 | 2016 | ||||||||||||||||||||||||
Homeowners | Automobile | Other | Consolidated | Homeowners | Automobile | Other | Consolidated | ||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||
Revenue: | |||||||||||||||||||||||||
Gross premiums written | $ | 272,847 | $ | 29,913 | $ | 11,983 | $ | 314,743 | $ | 260,315 | $ | 34,685 | $ | 12,242 | $ | 307,242 | |||||||||
Gross premiums earned | 256,706 | 30,407 | 11,428 | 298,541 | 231,824 | 22,416 | 11,193 | 265,433 | |||||||||||||||||
Ceded premiums earned | (111,152) | (20,314) | (5,423) | (136,889) | (127,689) | (18,070) | (4,632) | (150,391) | |||||||||||||||||
Net premiums earned | 145,554 | 10,093 | 6,005 | 161,652 | 104,135 | 4,346 | 6,561 | 115,042 | |||||||||||||||||
Net investment income | - | - | 4,878 | 4,878 | - | - | 4,234 | 4,234 | |||||||||||||||||
Net realized investment gains | - | - | 2,543 | 2,543 | - | - | 934 | 934 | |||||||||||||||||
Direct written policy fees | 4,629 | 4,622 | 320 | 9,571 | 4,288 | 4,500 | 339 | 9,127 | |||||||||||||||||
Other income | 5,485 | 2,487 | 1,665 | 9,637 | 3,908 | 3,520 | 1,400 | 8,828 | |||||||||||||||||
Total revenue | 155,668 | 17,202 | 15,411 | 188,281 | 112,331 | 12,366 | 13,468 | 138,165 | |||||||||||||||||
Costs and expenses: | |||||||||||||||||||||||||
Losses and loss adjustment expenses | 93,897 | 13,512 | 1,313 | 108,722 | 70,812 | 3,729 | 5,702 | 80,243 | |||||||||||||||||
Commissions and other underwriting expenses | 48,155 | 6,695 | 2,486 | 57,336 | 25,642 | 3,399 | 2,323 | 31,364 | |||||||||||||||||
General and administrative expenses | 7,373 | 350 | 1,972 | 9,695 | 7,094 | 300 | 1,773 | 9,167 | |||||||||||||||||
Interest expense | 166 | - | - | 166 | 178 | - | - | 178 | |||||||||||||||||
Total costs and expenses | 149,591 | 20,557 | 5,771 | 175,919 | 103,726 | 7,428 | 9,798 | 120,952 | |||||||||||||||||
Income (loss) before income taxes | 6,077 | (3,355) | 9,640 | 12,362 | 8,605 | 4,938 | 3,670 | 17,213 | |||||||||||||||||
Income taxes | 2,345 | (1,294) | 3,522 | 4,573 | 3,320 | 1,904 | 1,268 | 6,492 | |||||||||||||||||
Net income (loss) | 3,732 | (2,061) | 6,118 | 7,789 | 5,285 | 3,034 | 2,402 | 10,721 | |||||||||||||||||
Net (loss) income attributable to noncontrolling interest | (301) | - | - | (301) | 195 | - | - | 195 | |||||||||||||||||
Net income (loss) attributable to Federated National Holding Company shareholders | $ | 4,033 | $ | (2,061) | $ | 6,118 | $ | 8,090 | $ | 5,090 | $ | 3,034 | $ | 2,402 | $ | 10,526 | |||||||||
Net loss ratio | 64.5% | 133.9% | 21.9% | 67.3% | 68.0% | 85.8% | 86.9% | 69.8% | |||||||||||||||||
Net expense ratio | 38.1% | 69.8% | 41.5% | 31.4% | 85.1% | 35.2% | |||||||||||||||||||
Combined ratio | 102.7% | 203.7% | 108.7% | 99.4% | 170.9% | 105.0% | |||||||||||||||||||
FEDERATED NATIONAL HOLDING COMPANY AND SUBSIDIARIES | ||||||||||||||||||
SUPPLEMENTAL INFORMATION | ||||||||||||||||||
Quarterly Statements of Operations and Operating Metrics by Line of Business | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
(Continued) | ||||||||||||||||||
Homeowners | ||||||||||||||||||
Three Months Ended | ||||||||||||||||||
March 31, 2016 | June 30, 2016 | Sept 30, 2016 | Dec 31, 2016 | March 31, 2017 | June 30, 2017 | |||||||||||||
(in thousands) | ||||||||||||||||||
Revenue: | ||||||||||||||||||
Gross premiums written | $ | 114,667 | $ | 145,648 | $ | 133,532 | $ | 118,890 | $ | 121,221 | $ | 151,626 | ||||||
Gross premiums earned | 113,402 | 118,422 | 124,709 | 127,821 | 126,644 | 130,062 | ||||||||||||
Ceded premiums earned | (63,295) | (64,394) | (62,288) | (59,996) | (56,048) | (55,104) | ||||||||||||
Net premiums earned | 50,107 | 54,028 | 62,421 | 67,825 | 70,596 | 74,958 | ||||||||||||
Direct written policy fees | 1,890 | 2,398 | 2,190 | 1,926 | 2,070 | 2,559 | ||||||||||||
Other income | 1,816 | 2,092 | 2,765 | 2,673 | 2,732 | 2,753 | ||||||||||||
Total revenue | 53,813 | 58,518 | 67,376 | 72,424 | 75,398 | 80,270 | ||||||||||||
Costs and expenses: | ||||||||||||||||||
Losses and loss adjustment expenses | 27,334 | 43,478 | 40,399 | 58,709 | 44,802 | 49,095 | ||||||||||||
Commissions and other underwriting expenses | 12,812 | 12,830 | 23,875 | 23,088 | 22,414 | 25,741 | ||||||||||||
General and administrative expenses | 3,194 | 3,900 | 3,033 | 2,952 | 3,490 | 3,883 | ||||||||||||
Interest expense | 84 | 94 | 81 | 89 | 84 | 82 | ||||||||||||
Total costs and expenses | 43,424 | 60,302 | 67,388 | 84,838 | 70,790 | 78,801 | ||||||||||||
Income (loss) before income taxes | 10,389 | (1,784) | (12) | (12,414) | 4,608 | 1,469 | ||||||||||||
Income taxes | 4,008 | (688) | (4) | (4,787) | 1,778 | 567 | ||||||||||||
Net income (loss) | 6,381 | (1,096) | (8) | (7,627) | 2,830 | 902 | ||||||||||||
Net income (loss) attributable to noncontrolling interest | 68 | 127 | 44 | 8 | 27 | (328) | ||||||||||||
Net income (loss) attributable to Federated National Holding Company shareholders | $ | 6,313 | $ | (1,223) | $ | (52) | $ | (7,635) | $ | 2,803 | $ | 1,230 | ||||||
Net Loss Ratio | 54.6% | 80.5% | 64.7% | 86.6% | 63.5% | 65.5% | ||||||||||||
Net Expense Ratio | 31.9% | 31.0% | 43.1% | 38.4% | 36.7% | 39.5% | ||||||||||||
Combined Ratio | 86.5% | 111.4% | 107.8% | 125.0% | 100.2% | 105.0% |
FEDERATED NATIONAL HOLDING COMPANY AND SUBSIDIARIES | |||||||||||||||||||
SUPPLEMENTAL INFORMATION | |||||||||||||||||||
Quarterly Statements of Operations and Operating Metrics by Line of Business | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
(Continued) | |||||||||||||||||||
Automobile | |||||||||||||||||||
Three Months Ended | |||||||||||||||||||
March 31, 2016 | June 30, 2016 | Sept 30, 2016 | Dec 31, 2016 | March 31, 2017 | June 30, 2017 | ||||||||||||||
(in thousands) | |||||||||||||||||||
Revenue: | |||||||||||||||||||
Gross premiums written | $ | 15,689 | $ | 18,996 | $ | 21,523 | $ | 13,271 | $ | 19,291 | $ | 10,622 | |||||||
Gross premiums earned | 9,133 | 13,283 | 17,163 | 18,732 | 15,647 | 14,760 | |||||||||||||
Ceded premiums earned | (7,539) | (10,531) | (13,409) | (14,308) | (10,778) | (9,536) | |||||||||||||
Net premiums earned | 1,594 | 2,752 | 3,754 | 4,424 | 4,869 | 5,224 | |||||||||||||
Direct written policy fees | 2,144 | 2,356 | 1,977 | 2,216 | 2,855 | 1,767 | |||||||||||||
Other income | 1,631 | 1,889 | 1,318 | 604 | 1,517 | 970 | |||||||||||||
Total revenue | 5,369 | 6,997 | 7,049 | 7,244 | 9,241 | 7,961 | |||||||||||||
Costs and expenses: | |||||||||||||||||||
Losses and loss adjustment expenses | 1,526 | 2,203 | 3,498 | 5,829 | 6,426 | 7,086 | |||||||||||||
Commissions and other underwriting expenses | 1,391 | 2,008 | 4,883 | 5,325 | 3,478 | 3,217 | |||||||||||||
General and administrative expenses | 150 | 150 | 150 | 150 | 175 | 175 | |||||||||||||
Total costs and expenses | 3,067 | 4,361 | 8,531 | 11,304 | 10,079 | 10,478 | |||||||||||||
Income (loss) before income taxes | 2,302 | 2,636 | (1,482) | (4,060) | (838) | (2,517) | |||||||||||||
Income taxes | 888 | 1,016 | (572) | (1,566) | (324) | (970) | |||||||||||||
Net income (loss) attributable to Federated National Holding Company shareholders | $ | 1,414 | $ | 1,620 | $ | (910) | $ | (2,494) | $ | (514) | $ | (1,547) | |||||||
Net Loss Ratio | 95.7% | 80.1% | 93.2% | 131.8% | 132.0% | 135.6% | |||||||||||||
Net Expense Ratio | 96.7% | 78.4% | 134.1% | 123.8% | 75.0% | 64.9% | |||||||||||||
Combined Ratio | 192.4% | 158.5% | 227.3% | 255.5% | 207.0% | 200.6% |
FEDERATED NATIONAL HOLDING COMPANY AND SUBSIDIARIES | ||||||||||||||||||
SUPPLEMENTAL INFORMATION | ||||||||||||||||||
Quarterly Statements of Operations and Operating Metrics by Line of Business | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
(Continued) | ||||||||||||||||||
Other | ||||||||||||||||||
Three Months Ended | ||||||||||||||||||
March 31, 2016 | June 30, 2016 | Sept 30, 2016 | Dec 31, 2016 | March 31, 2017 | June 30, 2017 | |||||||||||||
(in thousands) | ||||||||||||||||||
Revenue: | ||||||||||||||||||
Gross premiums written | $ | 5,668 | $ | 6,574 | $ | 6,082 | $ | 4,944 | $ | 5,539 | $ | 6,444 | ||||||
Gross premiums earned | 5,564 | 5,629 | 5,752 | 5,812 | 5,687 | 5,741 | ||||||||||||
Ceded premiums earned | (2,268) | (2,364) | (2,522) | (2,636) | (2,659) | (2,764) | ||||||||||||
Net premiums earned | 3,296 | 3,265 | 3,230 | 3,176 | 3,028 | 2,977 | ||||||||||||
Net investment income | 2,040 | 2,194 | 2,164 | 2,665 | 2,318 | 2,560 | ||||||||||||
Net realized investment gains | 927 | 7 | 1,126 | 985 | (105) | 2,648 | ||||||||||||
Direct written policy fees | 168 | 171 | 151 | 143 | 160 | 160 | ||||||||||||
Other income | 603 | 797 | 410 | 794 | 678 | 987 | ||||||||||||
Total revenue | 7,034 | 6,434 | 7,081 | 7,763 | 6,079 | 9,332 | ||||||||||||
Costs and expenses: | ||||||||||||||||||
Losses and loss adjustment expenses | 2,400 | 3,302 | 2,076 | 5,227 | 2,538 | (1,225) | ||||||||||||
Commissions and other underwriting expenses | 1,190 | 1,133 | 1,109 | 1,209 | 1,247 | 1,239 | ||||||||||||
General and administrative expenses | 737 | 1,036 | 861 | 873 | 954 | 1,018 | ||||||||||||
Interest expense | - | - | - | - | - | - | ||||||||||||
Total costs and expenses | 4,327 | 5,471 | 4,046 | 7,309 | 4,739 | 1,032 | ||||||||||||
Income before income taxes | 2,707 | 963 | 3,035 | 454 | 1,340 | 8,300 | ||||||||||||
Income taxes | 899 | 369 | 679 | 2,441 | 484 | 3,038 | ||||||||||||
Net income (loss) attributable to Federated National Holding Company shareholders | $ | 1,808 | $ | 594 | $ | 2,356 | $ | (1,987) | $ | 856 | $ | 5,262 | ||||||
Net Loss Ratio | 72.8% | 101.1% | 64.3% | 164.6% | 83.8% | (41.1)% |