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CST: 16/09/2019 15:58:55   

FedNat Holding Company Reports Fourth Quarter and Full Year 2018 Results

200 Days ago

SUNRISE, Fla., Feb. 27, 2019 (GLOBE NEWSWIRE) -- FedNat Holding Company (the “Company”) (Nasdaq: FNHC) today reported results for the three and twelve months ended December 31, 2018.

Q4 2018 highlights (as measured against the same three-month period last year, except where noted):

  • Net loss of $9.3 million or $0.73 per diluted share, including $23.7 million of pre-tax claims, net, from Hurricane Michael and other severe weather events.
  • Net loss of $5.5 million or $0.43 per diluted share, excluding investment losses of $5.1 million, pre-tax.
  • Gross written premiums of $127.6 million.
  • 4.1% increase in net premiums earned to $91.1 million, with Homeowners up 11.1%.
  • Quarter-end Florida homeowners’ in-force policies of approximately 247,000.
  • 45.5% increase in non-Florida homeowners in-force policies to approximately 44,000.
  • During 2018, decreased 105 positions representing over $6.0 million in annual savings as a result of management's initiatives to maximize operational efficiencies.
  • Book value per share decreased 3.5% to $16.84 as compared to $17.45 as of September 30, 2018, due to the impact of Hurricane Michael.
  • Book value per share excluding accumulated other comprehensive income increased 6.0% to $17.13 as of December 31, 2018 from $16.16 as of December 31, 2017.

Mr. Michael H. Braun, the Company’s Chief Executive Officer, said “In 2018, we continued to make excellent progress in strengthening our underwriting profitability, controlling our expense structure and positioning our core Homeowners business for growth and further diversification.  We generated a solid increase in earnings for the year despite the fourth quarter impact of severe weather events, including Hurricane Michael, a major storm that affected many of our policy holders in Florida’s Panhandle area.  Our thoughts go out to all those individuals that were impacted by the recent weather events and have deployed the appropriate resources to help our policyholders in their time of need.  Excluding the impact of net retained losses related to weather and the continued wind down of our non-core auto and commercial general liability business lines, our fourth quarter performance was strong. Our core Homeowners line continued to show improvement in non-catastrophe underwriting profitability and a decrease in our attritional loss ratio. We continue to expand our non-Florida homeowners business as gross premiums earned grew 49% compared to last year’s fourth quarter.  In looking at the full year performance, our prudent underwriting and exposure management resulted in a significant cost savings from our reinsurance program along with other initiatives that resulted in greater operating efficiencies. The progress we made on our growth objectives position us for long term, sustainable earnings growth. “

Mr. Braun added, “Adding to our excitement about our growth opportunity is the definitive agreement to acquire the insurance operations of 1347 Property Insurance Holding, Inc., announced earlier this week.  This acquisition is a great strategic and financial fit for FedNat, accelerating our geographic diversification while delivering immediate earnings accretion and attractive cost synergies. We believe that the combination of these quality homeowners insurers will help enhance value for FedNat shareholders.”

Consolidated

  • Net loss of $9.3 million or $0.73 per diluted share during the fourth quarter of 2018, as compared to net income of $6.3 million or $0.48 per diluted share during the fourth quarter of 2017.  The fourth quarter was significantly impacted by $23.7 million of additional losses related to Hurricane Michael and other severe weather events during the period.
  • Compared to September 30, 2018, book value per share decreased $0.61 to $16.84 at December 31, 2018.  The increase was predominantly driven by a net loss of $0.73 per share, as noted above, and dividends declared of $0.08 per share, partially offset by a decrease in our accumulated other comprehensive loss of $0.17 per share.

Revenues

  • Total revenue decreased $5.4 million or 5.2%, to $96.4 million for the three months ended December 31, 2018, compared with $101.8 million for the three months ended December 31, 2017.  The decrease was primarily driven by $5.4 million lower net earned premiums from the non-core lines of business we are exiting, investment losses of $5.1 million and lower brokerage income offset by higher net premiums earned in Homeowners as a result of decreased reinsurance spend for the three months ended December 31, 2018 as compared to the same period in 2017.
  • With continued focus on profitability and underwriting exposure, gross written premiums decreased $6.3 million, or 4.7%, to $127.6 million in the quarter, compared with $133.9 million for the same three-month period last year.  The decrease in premiums written is the result of declining premiums in the non-core businesses we are exiting, Automobile and commercial general liability.  Gross written premiums in Homeowners grew by 1.9%, with 52.4% non-Florida growth out-pacing the redirection from our exposure management efforts in Florida.  Our homeowners non-Florida business continues to write premiums at a significant growth rate across Texas and South Carolina, in particular.
  • Gross premiums earned decreased $10.1 million, or 6.6%, to $141.8 million for the three months ended December 31, 2018, as compared to $151.9 million for the three months ended December 31, 2017.  This result was driven by our decision to exit the Automobile and commercial general liability lines.  In homeowners Florida, our 10.0% rate increase, effective August 1, 2017, has earned out and homeowners non-Florida grew by 48.6% over the fourth quarter of 2017 on an earned basis.
  • Ceded premiums decreased $13.7 million, or 21.3%, to $50.7 million in the quarter, compared to $64.4 million the same three-month period last year.  The decrease was primarily driven by lower Homeowners excess of loss reinsurance spend and lower ceded premiums in Automobile as a result of decreases  in premiums earned during the period.
  • Other income decreased $3.7 million, or 46.1%, to $4.3 million in the quarter, compared with $8.0 million in the same three-month period last year, due to lower brokerage and fee income.  The brokerage revenue decrease is the result of lower excess of loss reinsurance spend from the new reinsurance program, effective July 1, 2018.  Commission income decreased as a result of lower Automobile fee income driving the reduction in premiums earned as well as lower fee income from other areas of the business.

Expenses

  • Losses and loss adjustment expenses (“LAE”) increased $13.4 million, or 22.8%, to $72.3 million for the three months ended December 31, 2018, compared with $58.9 million for the same three-month period last year.  The net loss ratio increased 12.1 percentage points, to 79.4% in the current quarter, compared to 67.3% in the fourth quarter of 2017.  The higher ratio was the result of net losses from Hurricane Michael and other severe weather ($23.7 million in the fourth quarter of 2018), partially offset by the decrease in the size of Automobile ($2.8 million lower losses, including adverse development) and improved loss experience in the homeowners Florida book of business.
  • Our gross losses from Hurricane Michael were $275 million with net losses being $23.0 million, as discussed above, and previously announced.  Additionally, we increased our Hurricane Irma ultimate from $634 million to $695 million across our two insurance companies, with no net income impact, as we are above our retention.
  • The net expense ratio increased 1.0 percentage points, to 38.9% in the current quarter, as compared to 37.9% in the fourth quarter of 2017.  Commissions and other underwriting expenses increased $1.6 million, or 5.9%, to $29.6 million for the three months ended December 31, 2018, compared with $28.0 million for the three months ended December 31, 2017.  The increase is made up of higher homeowners non-Florida commission costs and profit share costs as a result of higher premiums earned and good loss experience in our non-Florida book of business.
  • General and administrative expenses increased $0.6 million, or 11.7%, to $5.8 million for the three months ended December 31, 2018, compared with $5.2 million for the three months ended December 31, 2017.  The increase is the result of higher professional fees primarily related to due diligence costs related to the previously announced acquisition of the insurance operations of 1347 Property Insurance Holdings, Inc., also discussed in "Subsequent Event/Maison Acquisition" below.
  • Interest expense increased $0.9 million to $1.0 million for the three months ended December 31, 2018, compared with $0.1 million in the prior year period. The increase in interest expense is the result of the Company issuing $45.0 million of senior notes, late in December 2017.  During the fourth quarter of 2017, the Company had $5.0 million of debt outstanding.

Line of Business Results

  • Homeowners’ net loss for the current quarter was $1.4 million, which included 11.1% growth in net premiums earned compared to the fourth quarter of 2017.  The combined ratio for the current quarter was 108.7%, which includes $23.7 million from the impact of Hurricane Michael and other severe weather events, offset by improved homeowners Florida attritional loss experience in the current accident year.
  • Automobile's net loss for the fourth quarter of 2018 was $4.0 million, as compared with a loss of $2.2 million in the prior year quarter, primarily driven by adverse prior year development as we exit this line of business.
  • Other’s net loss of $4.0 million in the fourth quarter of 2018, was driven by $5.1 million of net investment losses, $1.0 million of interest expense, and $1.8 million of prior year development in our commercial general liability book of business, partially offset by net investment income of $3.4 million.

2018 vs. 2017 Full Year Results

  • The Company reported net income of $14.9 million, or $1.16 per diluted share, for 2018 as compared to net income of $8.0 million, or $0.60 per diluted share, for 2017.  The improved performance in 2018 is the result of lower reinsurance spend in Homeowners and improved attritional loss experience, offset by investment losses in 2018.
  • Excluding investment gains and losses in both periods, the Company's net income was $18.0 million or $1.40 per diluted share in 2018, as compared net income of $2.7 million or $0.21 per diluted share in 2017, up $15.3 million.
  • Full year earnings in our Homeowners business were $22.2 million in 2018, as compared to $3.2 million in 2017.

Subsequent Event/Maison Acquisition

As previously announced on February 25th, 2019, the Company has executed a definitive agreement for the acquisition of the insurance operations of 1347 Property Insurance Holdings, Inc. ("PIH").  The purchase price is $51.0 million, which includes $25.5 million in cash and $25.5 million in shares of the Company’s common stock.  Additionally, in connection with the acquisition, the Company announced an offering of $100 million of Senior Unsecured Fixed Rate Notes due 2029 at an interest rate of 7.5%.  The cash from the offering will be used to purchase PIH, retire the full $45.0 million of outstanding debt (thereby lowering our overall cost of borrowing) and other general corporate purposes.

The acquisition is expected to be immediately accretive to earnings per share and return on equity as well, in part due to significant reinsurance and operating synergies inherent therein. See the Company's Form 8-K filing dated February 25, 2019 for further information.

The Company applied for and was approved by the Florida Office of Insurance regulation for a state-wide average rate increase of 4.6% for Florida homeowners multiple-peril insurance policies, which is expected to become effective for new and renewal policies on April 20, 2019.

Conference Call Information

The Company will hold an investor conference call at 9:00 AM (ET) Thursday, February 28, 2019. The Company’s CEO, Michael Braun and its CFO, Ronald Jordan will discuss the financial results and review the outlook for the Company. Messrs. Braun and Jordan invite interested parties to participate in the conference call.

Listeners interested in participating in the Q&A session may access the conference call as follows:

Toll-Free Dial-in:  (877) 303-6913

Conference ID:  5898179

A live webcast of the call will be available online via the “Presentations and Events” section of the Company’s website at FedNat.com or interested parties can click on the following link:

http://www.fednat.com/investor-relations/investor-presentations/ 

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 an insurance holding company that controls substantially all aspects of the insurance underwriting, distribution and claims processes through our subsidiaries and contractual relationships with independent agents and general agents. The Company, through our wholly owned subsidiaries, are authorized to underwrite, and/or place homeowners multi-peril, federal flood and other lines of insurance in Florida and other states. We market, distribute and service our own and third-party insurers’ products and other services through a network of independent and general agents.

The Company’s supplemental line of business information is designed to afford users greater transparency into our results.  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, pending our withdrawal. The “Other” line of business primarily consists of our commercial general liability (pending our withdrawal) and federal flood businesses, along with corporate and investment operations.

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 or other variations thereof, 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 compliance with 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 our subsidiaries’ operations 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.

Contacts

Michael H. Braun, CEO (954) 308-1322,
Ronald Jordan, CFO (954) 308-1363,
or Erick A. Fernandez, CAO (954) 308-1341


FEDNAT HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statement of Operations
(In thousands, except per share data)
(Unaudited)


    Three Months Ended   Twelve Months Ended
    December 31,   December 31,
    2018   2017   2018   2017
Revenues:                
Net premiums earned   $ 91,098     $ 87,503     $ 355,257     $ 333,481  
Net investment income   3,402     2,773     12,460     10,254  
Net realized and unrealized investment gains (losses)   (5,060 )   (96 )   (4,144 )   8,548  
Direct written policy fees   2,681     3,556     13,366     17,173  
Other income   4,321     8,016     19,154     22,206  
Total revenues   96,442     101,752     396,093     391,662  
                
Costs and expenses:                
Losses and loss adjustment expenses   72,318     58,874     228,416     247,557  
Commissions and other underwriting expenses   29,642     27,984     121,109     114,867  
General and administrative expenses   5,838     5,226     22,183     19,963  
Interest expense   1,038     101     4,177     348  
Total costs and expenses   108,836     92,185     375,885     382,735  
                
Income (loss) before income taxes   (12,394 )   9,567     20,208     8,927  
Income tax expense (benefit)   (3,089 )   3,943     5,498     3,585  
Net income (loss)   (9,305 )   5,624     14,710     5,342  
Net income (loss) attributable to non-controlling interest       (672 )   (218 )   (2,647 )
Net income (loss) attributable to FedNat Holding Company shareholders   $ (9,305 )   $ 6,296     $ 14,928     $ 7,989  
                
Net Income (Loss) Per Common Share                
Basic   $ (0.73 )   $ 0.48     $ 1.17     $ 0.61  
Diluted   $ (0.73 )   $ 0.48     $ 1.16     $ 0.60  
                
Weighted Average Number of Shares of Common Stock Outstanding                
Basic   12,777     13,131     12,775     13,170  
Diluted   12,777     13,197     12,867     13,250  
                
Dividends Declared Per Common Share   $ 0.08     $ 0.08     $ 0.24     $ 0.32  


FEDNAT HOLDING COMPANY AND SUBSIDIARIES
Selected Operating Metrics
(Unaudited)


   Three Months Ended   Twelve Months Ended
   December 31,   December 31,
   2018   2017   2018   2017
   (In thousands)
Gross premiums written:                
Homeowners Florida   $ 102,834     $ 108,106     $ 458,652     $ 482,039  
Homeowners non-Florida   21,941     14,393     81,037     54,716  
Automobile   (25 )   6,416     8,603     43,505  
Commercial general liability   (135 )   2,280     5,384     11,048  
Federal flood   2,998     2,697     14,088     12,109  
Total gross premiums written   $ 127,613     $ 133,892     $ 567,764     $ 603,417  


   Three Months Ended   Twelve Months Ended
   December 31,   December 31,
   2018   2017   2018   2017
   (In thousands)
Gross premiums earned:                
Homeowners Florida   $ 116,614     $ 122,188     $ 473,121     $ 481,541  
Homeowners non-Florida   19,499     13,125     66,571     43,983  
Automobile   526     10,747     18,402     54,679  
Commercial general liability   1,650     2,877     8,794     12,216  
Federal flood   3,492     2,936     13,132     10,774  
Total gross premiums earned   $ 141,781     $ 151,873     $ 580,020     $ 603,193  


   Three Months Ended   Twelve Months Ended
   December 31,   December 31,
   2018   2017   2018   2017
   (In thousands)
Net premiums earned:                
Homeowners   $ 89,390     $ 80,435     $ 342,247     $ 298,255  
Automobile   132     4,339     4,658     23,642  
Commercial general liability   1,576     2,729     8,352     11,584  
Total net premiums earned   $ 91,098     $ 87,503     $ 355,257     $ 333,481  


FEDNAT HOLDING COMPANY AND SUBSIDIARIES
Selected Operating Metrics (continued)
(Unaudited)


   Three Months Ended   Twelve Months Ended
   December 31,   December 31,
   2018   2017   2018   2017
   (In thousands)
Commissions and other underwriting expenses:                
Homeowners Florida   $ 13,897     $ 11,740     $ 56,693     $ 57,151  
All others   5,460     4,653     19,948     20,135  
Ceding commissions   (3,966 )   (1,216 )   (12,743 )   (16,299 )
Total commissions   15,391     15,177     63,898     60,987  
                 
Automobile   93     1,194     4,322     7,847  
Homeowners non-Florida   793     240     2,147     1,223  
Total fees   886     1,434     6,469     9,070  
                 
Salaries and wages   2,997     3,160     14,279     14,521  
Other underwriting expenses   10,368     8,213     36,463     30,289  
Total commissions and other underwriting expenses   $ 29,642     $ 27,984     $ 121,109     $ 114,867  


   Three Months Ended   Twelve Months Ended
   December 31,   December 31,
   2018   2017   2018   2017
                 
Net loss ratio   79.4 %   67.3 %   64.3 %   74.2 %
Net expense ratio   38.9 %   37.9 %   40.3 %   40.5 %
Combined ratio   118.3 %   105.2 %   104.6 %   114.7 %
Gross loss ratio   277.6 %   77.4 %   149.8 %   108.3 %
Gross expense ratio   27.8 %   25.0 %   26.9 %   25.5 %
Book value per share excluding non-controlling interest   $ 16.84     $ 16.29     $ 16.84     $ 16.29  


FEDNAT HOLDING COMPANY AND SUBSIDIARIES
Consolidated Balance Sheet
(Unaudited)


   December 31,
   2018   2017
ASSETS   (In thousands)
Investments:        
Debt securities, available-for-sale, at fair value (amortized cost of $433,664 and $422,300, respectively)   $ 428,641     $ 423,238  
Debt securities, held-to-maturity, at amortized cost   5,126     5,349  
Equity securities, at fair value   17,758     15,434  
Total investments (including $0 and $26,284 related to the VIE, respectively)   451,525     444,021  
Cash and cash equivalents (including $0 and $14,211 related to the VIE, respectively)   64,423     86,228  
Prepaid reinsurance premiums   108,577     135,492  
Premiums receivable, net of allowance of $77 and $70, respectively (including $0 and $1,184 related to the VIE, respectively)   29,791     46,393  
Reinsurance recoverable, net   211,424     124,601  
Deferred acquisition costs, net   39,436     40,893  
Income taxes, net   5,220     9,817  
Property and equipment, net   4,819     4,025  
Other assets (including $0 and $2,322 related to the VIE, respectively)   10,156     13,403  
Total assets   $ 925,371     $ 904,873  
        
LIABILITIES AND SHAREHOLDERS’ EQUITY        
Liabilities        
Loss and loss adjustment expense reserves   $ 296,230     $ 230,515  
Unearned premiums   281,992     294,423  
Reinsurance payable   63,599     71,944  
Long-term debt, net of deferred financing costs of $596 and $749, respectively   44,404     49,251  
Deferred revenue   4,585     6,222  
Other liabilities   19,302     25,059  
Total liabilities   710,112     677,414  
Shareholders' Equity        
Preferred stock, $0.01 par value: 1,000,000 shares authorized        
Common stock, $0.01 par value: 25,000,000 shares authorized; 12,784,444 and 12,988,247 shares issued and outstanding, respectively   128     130  
Additional paid-in capital   141,128     139,728  
Accumulated other comprehensive income (loss)   (3,750 )   1,770  
Retained earnings   77,753     70,009  
Total shareholders’ equity attributable to FedNat Holding Company shareholders   215,259     211,637  
Non-controlling interest       15,822  
Total shareholders’ equity   215,259     227,459  
Total liabilities and shareholders' equity   $ 925,371     $ 904,873  


FEDNAT HOLDING COMPANY AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
Statements of Operations and Operating Metrics by Line of Business
(Unaudited)


 Three Months Ended December 31,
 2018   2017
 Homeowners   Automobile   Other   Consolidated   Homeowners   Automobile   Other   Consolidated
 (Dollars in thousands)
Revenues:                              
Gross premiums written $ 124,775     $ (25 )   $ 2,863     $ 127,613     $ 122,499     $ 6,416     $ 4,977     $ 133,892  
Gross premiums earned 136,113     526     5,142     141,781     135,313     10,747     5,813     151,873  
Ceded premiums (46,723 )   (394 )   (3,566 )   (50,683 )   (54,878 )   (6,408 )   (3,084 )   (64,370 )
Net premiums earned 89,390     132     1,576     91,098     80,435     4,339     2,729     87,503  
Net investment income         3,402     3,402             2,773     2,773  
Net realized and unrealized investment gains (losses)         (5,060 )   (5,060 )           (96 )   (96 )
Direct written policy fees 2,506     93     82     2,681     2,214     1,194     148     3,556  
Other income 3,461     64     796     4,321     4,957     616     2,443     8,016  
Total revenues 95,357     289     796     96,442     87,606     6,149     7,997     101,752  
                               
Costs and expenses:                              
Losses and loss adjustment expenses 64,634     4,840     2,844     72,318     47,345     7,633     3,896     58,874  
Commissions and other underwriting expenses 27,819     730     1,093     29,642     25,038     1,885     1,061     27,984  
General and administrative expenses 4,718     50     1,070     5,838     4,115     150     961     5,226  
Interest expense         1,038     1,038     101             101  
Total costs and expenses 97,171     5,620     6,045     108,836     76,599     9,668     5,918     92,185  
                               
Income (loss) before income taxes (1,814 )   (5,331 )   (5,249 )   (12,394 )   11,007     (3,519 )   2,079     9,567  
Income tax expense (benefit) (460 )   (1,351 )   (1,278 )   (3,089 )   4,246     (1,358 )   1,055     3,943  
Net income (loss) (1,354 )   (3,980 )   (3,971 )   (9,305 )   6,761     (2,161 )   1,024     5,624  
Net income (loss) attributable to non-controlling interest                 (672 )           (672 )
Net income (loss) attributable to FNHC shareholders $ (1,354 )   $ (3,980 )   $ (3,971 )   $ (9,305 )   $ 7,433     $ (2,161 )   $ 1,024     $ 6,296  
                               
Ratios to net premiums earned:                              
Net loss ratio 72.3 %   3,666.7 %   180.5 %   79.4 %   58.9 %   175.9 %   142.8 %   67.3 %
Net expense ratio 36.4 %           38.9 %   36.2 %           37.9 %
Combined ratio 108.7 %           118.3 %   95.1 %           105.2 %


FEDNAT HOLDING COMPANY AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
Statements of Operations and Operating Metrics by Line of Business
(Unaudited)


 Year Ended December 31,
 2018   2017
 Homeowners   Automobile   Other   Consolidated   Homeowners   Automobile   Other   Consolidated
 (Dollars in thousands)
Revenues:                              
Gross premiums written $ 539,689     $ 8,603     $ 19,472     $ 567,764     $ 536,755     $ 43,505     $ 23,157     $ 603,417  
Gross premiums earned 539,692     18,402     21,926     580,020     525,524     54,679     22,990     603,193  
Ceded premiums (197,445 )   (13,744 )   (13,574 )   (224,763 )   (227,269 )   (31,037 )   (11,406 )   (269,712 )
Net premiums earned 342,247     4,658     8,352     355,257     298,255     23,642     11,584     333,481  
Net investment income         12,460     12,460             10,254     10,254  
Net realized and unrealized investment gains (losses)         (4,144 )   (4,144 )           8,548     8,548  
Direct written policy fees 8,484     4,322     560     13,366     8,715     7,846     612     17,173  
Other income 14,021     1,148     3,985     19,154     13,662     3,277     5,267     22,206  
Total revenues 364,752     10,128     21,213     396,093     320,632     34,765     36,265     391,662  
                               
Costs and expenses:                              
Losses and loss adjustment expenses 206,062     11,617     10,737     228,416     206,842     32,752     7,963     247,557  
Commissions and other underwriting expenses 111,103     5,751     4,255     121,109     97,111     12,976     4,780     114,867  
General and administrative expenses 18,079     325     3,779     22,183     15,403     650     3,910     19,963  
Interest expense 100         4,077     4,177     348             348  
Total costs and expenses 335,344     17,693     22,848     375,885     319,704     46,378     16,653     382,735  
                               
Income (loss) before income taxes 29,408     (7,565 )   (1,635 )   20,208     928     (11,613 )   19,612     8,927  
Income tax expense (benefit) 7,451     (1,917 )   (36 )   5,498     360     (4,481 )   7,706     3,585  
Net income (loss) 21,957     (5,648 )   (1,599 )   14,710     568     (7,132 )   11,906     5,342  
Net income (loss) attributable to non-controlling interest (218 )           (218 )   (2,647 )           (2,647 )
Net income (loss) attributable to FNHC shareholders $ 22,175     $ (5,648 )   $ (1,599 )   $ 14,928     $ 3,215     $ (7,132 )   $ 11,906     $ 7,989  
                               
Ratios to net premiums earned:                              
Net loss ratio 60.2 %   249.4 %   128.6 %   64.3 %   69.4 %   138.5 %   68.7 %   74.2 %
Net expense ratio 37.8 %           40.3 %   37.7 %           40.5 %
Combined ratio 98.0 %           104.6 %   107.1 %           114.7 %

 

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