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SUNRISE, Fla., Aug. 06, 2019 (GLOBE NEWSWIRE) -- FedNat Holding Company (the “Company”) (Nasdaq: FNHC) today reported results for the three and six months ended June 30, 2019.
Q2 2019 highlights (as measured against the same three-month period last year, except where noted):
“FedNat made great progress toward achieving our strategies in the second quarter driven by our core fundamentals. We were pleased to generate strong performance in earnings sequentially, despite the impact of severe and unusual weather-related events during the quarter.” said Michael H. Braun, the Company’s Chief Executive Officer. “Our geographic diversification strategy is enhancing our operating metrics and our non-Florida business continued its strong growth in gross premiums earned and written. We believe that the recent AOB reform legislation, now in effect, will have a very positive impact on our Florida business, and create a much more favorable operating environment. Additionally, the pending acquisition of Maison will strengthen our core book of business and significantly accelerate our diversification strategy. The acquisition is scheduled to close in December 2019. In the second quarter, we also made the necessary steps needed to further wind down our non-core auto and commercial general liability businesses. Looking ahead, we believe we are well-positioned to benefit from the many positive developments as we enter the second half of the year and into 2020.”
Maison Update
The Company is also reporting the following recent developments related to the acquisition of the insurance operations of 1347 Property Insurance Holding, Inc. (“PIH”):
Consolidated
Revenues
Expenses
Line of Business Results
Non-GAAP Performance Measures
Performance measures that are not United States generally accepted accounting principles ("GAAP") measures do not replace the most directly comparable GAAP measures and we have included detailed reconciliations thereof on pages 12 and 13.
We exclude the after-tax (using our statutory income tax rate) effects of the following items from GAAP net income (loss) to arrive at adjusted operating income (loss):
We also exclude the pre-tax effect of the first bullet above from GAAP revenues to arrive at adjusted operating revenues.
Management believes these non-GAAP performance measures allow for a better understanding of the underlying trend in our business, as the excluded items are not necessarily indicative of our operating fundamentals or performance.
Similarly, we exclude accumulated other comprehensive income (loss) ("AOCI") from book value per share to arrive at book value per share, excluding AOCI.
Conference Call Information
The Company will hold an investor conference call at 9:00 AM (ET) Wednesday, August 7, 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: 7588547 |
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 an insurance holding company that controls substantially all aspects of the insurance underwriting, distribution and claims management 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 had been operating in Georgia, Texas, Alabama, and Florida and is being wound down. The “Other” line of business primarily consists of our commercial general liability and federal flood businesses, along with corporate and investment operations.
Forward-Looking Statements
Certain statements made by FedNat Holding Company or on its behalf may contain “forward-looking statements” within 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:
The risks and uncertainties include, without limitation, risks and uncertainties related to estimates, assumptions and projections generally; the nature of the Company’s business and its ability to integrate the operations to be acquired; 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. The Company does 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,
Bernard Kilkelly, Investor Relations (954) 308-1409,
or IR@fednat.com.
FEDNAT HOLDING COMPANY AND SUBSIDIARIES
Selected Financial Highlights
(Dollars in thousands, except per share data)
(Unaudited)
As of or For the | ||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||
2019 | 2018 | % Change | 2019 | 2018 | % Change | |||||||||||||||||
Net Income (Loss) Attributable to Common Shareholders | ||||||||||||||||||||||
Net income (loss): | ||||||||||||||||||||||
Homeowners | $ | 6,006 | $ | 8,430 | (28.8 | )% | $ | 4,583 | $ | 15,371 | (70.2 | )% | ||||||||||
Automobile | (949 | ) | (211 | ) | 349.8 | % | (1,628 | ) | (252 | ) | 546.0 | % | ||||||||||
Other | 2,053 | 601 | 241.6 | % | 290 | 1,164 | (75.1 | )% | ||||||||||||||
Consolidated | $ | 7,110 | $ | 8,820 | (19.4 | )% | $ | 3,245 | $ | 16,283 | (80.1 | )% | ||||||||||
Adjusted operating income (loss): | ||||||||||||||||||||||
Homeowners | $ | 6,020 | $ | 8,828 | (31.8 | )% | $ | 4,633 | $ | 15,945 | (70.9 | )% | ||||||||||
Automobile | (949 | ) | (200 | ) | 374.5 | % | (1,628 | ) | (220 | ) | 640.0 | % | ||||||||||
Other | 595 | 475 | 25.3 | % | 267 | 1,842 | (85.5 | )% | ||||||||||||||
Consolidated | $ | 5,666 | $ | 9,103 | (37.8 | )% | $ | 3,272 | $ | 17,567 | (81.4 | )% | ||||||||||
Per Common Share | ||||||||||||||||||||||
Net income (loss) - diluted | $ | 0.55 | $ | 0.69 | (19.6 | )% | $ | 0.25 | $ | 1.26 | (80.1 | )% | ||||||||||
Adjusted operating income (loss) - diluted | 0.44 | 0.71 | (37.9 | )% | 0.25 | 1.36 | (81.4 | )% | ||||||||||||||
Dividends declared | 0.08 | 0.08 | — | % | 0.16 | 0.16 | — | % | ||||||||||||||
Book value | 17.96 | 16.89 | 6.3 | % | 17.96 | 16.89 | 6.3 | % | ||||||||||||||
Book value, excluding AOCI | 17.24 | 17.31 | (0.4 | )% | 17.24 | 17.31 | (0.4 | )% | ||||||||||||||
Return to Shareholders | ||||||||||||||||||||||
Repurchases of common stock | $ | — | $ | 61 | (100.0 | )% | $ | — | $ | 5,061 | (100.0 | )% | ||||||||||
Dividends declared | 1,046 | 1,036 | 1.0 | % | 2,087 | 2,079 | 0.4 | % | ||||||||||||||
$ | 1,046 | $ | 1,097 | (4.6 | )% | $ | 2,087 | $ | 7,140 | (70.8 | )% | |||||||||||
Revenue | ||||||||||||||||||||||
Total revenues | $ | 105,301 | $ | 95,742 | 10.0 | % | $ | 206,498 | $ | 188,819 | 9.4 | % | ||||||||||
Adjusted operating revenues | 103,346 | 95,534 | 8.2 | % | 202,242 | 189,663 | 6.6 | % | ||||||||||||||
Gross premiums written | 169,170 | 166,734 | 1.5 | % | 301,403 | 301,129 | 0.1 | % | ||||||||||||||
Gross premiums earned | 141,220 | 146,890 | (3.9 | )% | 279,587 | 293,332 | (4.7 | )% | ||||||||||||||
Net premiums earned | 92,306 | 83,557 | 10.5 | % | 181,090 | 165,666 | 9.3 | % | ||||||||||||||
Ratios to Net Premiums Earned | ||||||||||||||||||||||
Net loss ratio | 70.8 | % | 56.9 | % | 73.0 | % | 56.5 | % | ||||||||||||||
Net expense ratio | 30.7 | % | 42.1 | % | 34.7 | % | 43.1 | % | ||||||||||||||
Combined ratio | 101.5 | % | 99.0 | % | 107.7 | % | 99.6 | % | ||||||||||||||
In-Force Homeowners Policies | ||||||||||||||||||||||
Florida | 239,585 | 256,506 | (6.6 | )% | 239,585 | 256,506 | (6.6 | )% | ||||||||||||||
Non-Florida | 60,251 | 37,904 | 59.0 | % | 60,251 | 37,904 | 59.0 | % | ||||||||||||||
299,836 | 294,410 | 1.8 | % | 299,836 | 294,410 | 1.8 | % |
FEDNAT HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statement of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Revenues: | ||||||||||||||||
Net premiums earned | $ | 92,306 | $ | 83,557 | $ | 181,090 | $ | 165,666 | ||||||||
Net investment income | 4,259 | 2,978 | 7,969 | 5,921 | ||||||||||||
Net realized and unrealized investment gains (losses) | 1,955 | 208 | 4,256 | (844 | ) | |||||||||||
Direct written policy fees | 2,403 | 3,313 | 4,794 | 6,889 | ||||||||||||
Other income | 4,378 | 5,686 | 8,389 | 11,187 | ||||||||||||
Total revenues | 105,301 | 95,742 | 206,498 | 188,819 | ||||||||||||
| ||||||||||||||||
Costs and expenses: | ||||||||||||||||
Losses and loss adjustment expenses | 65,340 | 47,570 | 132,179 | 93,641 | ||||||||||||
Commissions and other underwriting expenses | 22,562 | 29,873 | 50,796 | 60,094 | ||||||||||||
General and administrative expenses | 5,779 | 5,260 | 12,090 | 11,345 | ||||||||||||
Interest expense | 1,915 | 1,023 | 6,966 | 2,107 | ||||||||||||
Total costs and expenses | 95,596 | 83,726 | 202,031 | 167,187 | ||||||||||||
| ||||||||||||||||
Income (loss) before income taxes | 9,705 | 12,016 | 4,467 | 21,632 | ||||||||||||
Income tax expense (benefit) | 2,595 | 3,196 | 1,222 | 5,567 | ||||||||||||
Net income (loss) | 7,110 | 8,820 | 3,245 | 16,065 | ||||||||||||
Net income (loss) attributable to non-controlling interest | — | — | — | (218 | ) | |||||||||||
Net income (loss) attributable to FedNat Holding Company shareholders | $ | 7,110 | $ | 8,820 | $ | 3,245 | $ | 16,283 | ||||||||
| ||||||||||||||||
Net Income (Loss) Per Common Share | ||||||||||||||||
Basic | $ | 0.55 | $ | 0.69 | $ | 0.25 | $ | 1.27 | ||||||||
Diluted | $ | 0.55 | $ | 0.69 | $ | 0.25 | $ | 1.26 | ||||||||
| ||||||||||||||||
Weighted Average Number of Shares of Common Stock Outstanding | ||||||||||||||||
Basic | 12,844 | 12,726 | 12,820 | 12,788 | ||||||||||||
Diluted | 12,883 | 12,846 | 12,876 | 12,889 | ||||||||||||
| ||||||||||||||||
Dividends Declared Per Common Share | $ | 0.08 | $ | 0.08 | $ | 0.16 | $ | 0.16 |
FEDNAT HOLDING COMPANY AND SUBSIDIARIES
Selected Operating Metrics
(Unaudited)
| Three Months Ended | Six Months Ended | ||||||||||||||
| June 30, | June 30, | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||
| (In thousands) | |||||||||||||||
Gross premiums written: | ||||||||||||||||
Homeowners Florida | $ | 128,016 | $ | 133,006 | $ | 231,979 | $ | 241,377 | ||||||||
Homeowners non-Florida | 36,212 | 22,590 | 61,532 | 37,034 | ||||||||||||
Automobile | — | 5,322 | (1 | ) | 11,669 | |||||||||||
Commercial general liability | (49 | ) | 1,570 | (102 | ) | 4,084 | ||||||||||
Federal flood | 4,991 | 4,246 | 7,995 | 6,965 | ||||||||||||
Total gross premiums written | $ | 169,170 | $ | 166,734 | $ | 301,403 | $ | 301,129 |
| Three Months Ended | Six Months Ended | ||||||||||||||
| June 30, | June 30, | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||
| (In thousands) | |||||||||||||||
Gross premiums earned: | ||||||||||||||||
Homeowners Florida | $ | 112,747 | $ | 119,080 | $ | 225,419 | $ | 237,904 | ||||||||
Homeowners non-Florida | 24,327 | 15,449 | 45,497 | 29,088 | ||||||||||||
Automobile | 4 | 6,782 | 26 | 15,110 | ||||||||||||
Commercial general liability | 500 | 2,393 | 1,536 | 5,022 | ||||||||||||
Federal flood | 3,642 | 3,186 | 7,109 | 6,208 | ||||||||||||
Total gross premiums earned | $ | 141,220 | $ | 146,890 | $ | 279,587 | $ | 293,332 |
| Three Months Ended | Six Months Ended | ||||||||||||||
| June 30, | June 30, | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||
| (In thousands) | |||||||||||||||
Net premiums earned: | ||||||||||||||||
Homeowners | $ | 91,874 | $ | 79,647 | $ | 179,685 | $ | 157,052 | ||||||||
Automobile | 1 | 1,640 | 6 | 3,851 | ||||||||||||
Commercial general liability | 431 | 2,270 | 1,399 | 4,763 | ||||||||||||
Total net premiums earned | $ | 92,306 | $ | 83,557 | $ | 181,090 | $ | 165,666 |
FEDNAT HOLDING COMPANY AND SUBSIDIARIES
Selected Operating Metrics (continued)
(Unaudited)
| Three Months Ended | Six Months Ended | ||||||||||||||
| June 30, | June 30, | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||
| (In thousands) | |||||||||||||||
Commissions and other underwriting expenses: | ||||||||||||||||
Homeowners Florida | $ | 13,401 | $ | 14,175 | $ | 26,623 | $ | 28,538 | ||||||||
All others | 5,920 | 4,987 | 11,187 | 9,643 | ||||||||||||
Ceding commissions | (2,906 | ) | (4,373 | ) | (5,690 | ) | (8,088 | ) | ||||||||
Total commissions | 16,415 | 14,789 | 32,120 | 30,093 | ||||||||||||
Automobile | — | 1,296 | 3 | 2,763 | ||||||||||||
Homeowners non-Florida | 759 | 432 | 1,435 | 762 | ||||||||||||
Total fees | 759 | 1,728 | 1,438 | 3,525 | ||||||||||||
Salaries and wages | 3,072 | 4,369 | 6,394 | 8,135 | ||||||||||||
Other underwriting expenses | 2,316 | 8,987 | 10,844 | 18,341 | ||||||||||||
Total commissions and other underwriting expenses | $ | 22,562 | $ | 29,873 | $ | 50,796 | $ | 60,094 |
| Three Months Ended | Six Months Ended | ||||||||||
| June 30, | June 30, | ||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||
Net loss ratio | 70.8 | % | 56.9 | % | 73.0 | % | 56.5 | % | ||||
Net expense ratio | 30.7 | % | 42.1 | % | 34.7 | % | 43.1 | % | ||||
Combined ratio | 101.5 | % | 99.0 | % | 107.7 | % | 99.6 | % | ||||
Gross loss ratio | 60.8 | % | 151.1 | % | 135.3 | % | 137.3 | % | ||||
Gross expense ratio | 22.1 | % | 26.9 | % | 24.5 | % | 27.1 | % |
FEDNAT HOLDING COMPANY AND SUBSIDIARIES
Consolidated Balance Sheet
(Unaudited)
| June 30, | December 31, | ||||||
| 2019 | 2018 | ||||||
ASSETS | (In thousands) | |||||||
Investments: | ||||||||
Debt securities, available-for-sale, at fair value | $ | 451,124 | $ | 428,641 | ||||
Debt securities, held-to-maturity, at amortized cost | 4,499 | 5,126 | ||||||
Equity securities, at fair value | 22,112 | 17,758 | ||||||
Total investments | 477,735 | 451,525 | ||||||
Cash and cash equivalents | 133,787 | 64,423 | ||||||
Prepaid reinsurance premiums | 82,781 | 108,577 | ||||||
Premiums receivable, net of allowance | 31,239 | 29,791 | ||||||
Reinsurance recoverable, net | 199,313 | 211,424 | ||||||
Deferred acquisition costs, net | 45,539 | 39,436 | ||||||
Income taxes, net | 2,369 | 5,220 | ||||||
Other assets | 23,520 | 14,975 | ||||||
Total assets | $ | 996,283 | $ | 925,371 | ||||
| ||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Liabilities | ||||||||
Loss and loss adjustment expense reserves | $ | 268,735 | $ | 296,230 | ||||
Unearned premiums | 303,808 | 281,992 | ||||||
Reinsurance payable | 52,760 | 63,599 | ||||||
Long-term debt, net of deferred financing costs | 98,442 | 44,404 | ||||||
Deferred revenue | 5,122 | 4,585 | ||||||
Other liabilities | 36,631 | 19,302 | ||||||
Total liabilities | 765,498 | 710,112 | ||||||
Shareholders' Equity | ||||||||
Preferred stock, $0.01 par value: 1,000,000 shares authorized | — | — | ||||||
Common stock, $0.01 par value: 25,000,000 shares authorized; 12,849,319 and 12,784,444 shares issued and outstanding, respectively | 128 | 128 | ||||||
Additional paid-in capital | 142,486 | 141,128 | ||||||
Accumulated other comprehensive income (loss) | 9,260 | (3,750 | ) | |||||
Retained earnings | 78,911 | 77,753 | ||||||
Total shareholders’ equity attributable to FedNat Holding Company shareholders | 230,785 | 215,259 | ||||||
Non-controlling interest | — | — | ||||||
Total shareholders’ equity | 230,785 | 215,259 | ||||||
Total liabilities and shareholders' equity | $ | 996,283 | $ | 925,371 |
FEDNAT HOLDING COMPANY AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
Statements of Operations and Operating Metrics by Line of Business
(Unaudited)
| Three Months Ended June 30, | ||||||||||||||||||||||||||||||
| 2019 | 2018 | |||||||||||||||||||||||||||||
| Homeowners | Automobile | Other | Consolidated | Homeowners | Automobile | Other | Consolidated | |||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||
Gross premiums written | $ | 164,228 | $ | — | $ | 4,942 | $ | 169,170 | $ | 155,596 | $ | 5,322 | $ | 5,816 | $ | 166,734 | |||||||||||||||
Gross premiums earned | 137,074 | 4 | 4,142 | 141,220 | 134,529 | 6,782 | 5,579 | 146,890 | |||||||||||||||||||||||
Ceded premiums | (45,200 | ) | (3 | ) | (3,711 | ) | (48,914 | ) | (54,882 | ) | (5,142 | ) | (3,309 | ) | (63,333 | ) | |||||||||||||||
Net premiums earned | 91,874 | 1 | 431 | 92,306 | 79,647 | 1,640 | 2,270 | 83,557 | |||||||||||||||||||||||
Net investment income | — | — | 4,259 | 4,259 | — | — | 2,978 | 2,978 | |||||||||||||||||||||||
Net realized and unrealized investment gains (losses) | — | — | 1,955 | 1,955 | — | — | 208 | 208 | |||||||||||||||||||||||
Direct written policy fees | 2,331 | — | 72 | 2,403 | 1,857 | 1,296 | 160 | 3,313 | |||||||||||||||||||||||
Other income | 3,094 | 2 | 1,282 | 4,378 | 3,970 | 405 | 1,311 | 5,686 | |||||||||||||||||||||||
Total revenues | 97,299 | 3 | 7,999 | 105,301 | 85,474 | 3,341 | 6,927 | 95,742 | |||||||||||||||||||||||
Costs and expenses: | |||||||||||||||||||||||||||||||
Losses and loss adjustment expenses | 62,482 | 1,208 | 1,650 | 65,340 | 42,617 | 1,932 | 3,021 | 47,570 | |||||||||||||||||||||||
Commissions and other underwriting expenses | 21,796 | 16 | 750 | 22,562 | 27,281 | 1,616 | 976 | 29,873 | |||||||||||||||||||||||
General and administrative expenses | 4,976 | 50 | 753 | 5,779 | 4,285 | 75 | 900 | 5,260 | |||||||||||||||||||||||
Interest expense | — | — | 1,915 | 1,915 | — | — | 1,023 | 1,023 | |||||||||||||||||||||||
Total costs and expenses | 89,254 | 1,274 | 5,068 | 95,596 | 74,183 | 3,623 | 5,920 | 83,726 | |||||||||||||||||||||||
Income (loss) before income taxes | 8,045 | (1,271 | ) | 2,931 | 9,705 | 11,291 | (282 | ) | 1,007 | 12,016 | |||||||||||||||||||||
Income tax expense (benefit) | 2,039 | (322 | ) | 878 | 2,595 | 2,861 | (71 | ) | 406 | 3,196 | |||||||||||||||||||||
Net income (loss) | $ | 6,006 | $ | (949 | ) | $ | 2,053 | $ | 7,110 | $ | 8,430 | $ | (211 | ) | $ | 601 | $ | 8,820 | |||||||||||||
Ratios to net premiums earned: | |||||||||||||||||||||||||||||||
Net loss ratio | 68.0 | % | NCM | 382.8 | % | 70.8 | % | 53.5 | % | 117.8 | % | 133.1 | % | 56.9 | % | ||||||||||||||||
Net expense ratio | 29.1 | % | 30.7 | % | 39.6 | % | 42.1 | % | |||||||||||||||||||||||
Combined ratio | 97.1 | % | 101.5 | % | 93.1 | % | 99.0 | % |
FEDNAT HOLDING COMPANY AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
Statements of Operations and Operating Metrics by Line of Business
(Unaudited)
| Six Months Ended June 30, | ||||||||||||||||||||||||||||||
| 2019 | 2018 | |||||||||||||||||||||||||||||
| Homeowners | Automobile | Other | Consolidated | Homeowners | Automobile | Other | Consolidated | |||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||
Gross premiums written | $ | 293,511 | $ | (1 | ) | $ | 7,893 | $ | 301,403 | $ | 278,411 | $ | 11,669 | $ | 11,049 | $ | 301,129 | ||||||||||||||
Gross premiums earned | 270,916 | 26 | 8,645 | 279,587 | 266,992 | 15,110 | 11,230 | 293,332 | |||||||||||||||||||||||
Ceded premiums | (91,231 | ) | (20 | ) | (7,246 | ) | (98,497 | ) | (109,940 | ) | (11,259 | ) | (6,467 | ) | (127,666 | ) | |||||||||||||||
Net premiums earned | 179,685 | 6 | 1,399 | 181,090 | 157,052 | 3,851 | 4,763 | 165,666 | |||||||||||||||||||||||
Net investment income | — | — | 7,969 | 7,969 | — | — | 5,921 | 5,921 | |||||||||||||||||||||||
Net realized and unrealized investment gains (losses) | — | — | 4,256 | 4,256 | — | — | (844 | ) | (844 | ) | |||||||||||||||||||||
Direct written policy fees | 4,629 | 3 | 162 | 4,794 | 3,780 | 2,763 | 346 | 6,889 | |||||||||||||||||||||||
Other income | 6,636 | 14 | 1,739 | 8,389 | 7,947 | 893 | 2,347 | 11,187 | |||||||||||||||||||||||
Total revenues | 190,950 | 23 | 15,525 | 206,498 | 168,779 | 7,507 | 12,533 | 188,819 | |||||||||||||||||||||||
Costs and expenses: | |||||||||||||||||||||||||||||||
Losses and loss adjustment expenses | 125,812 | 2,052 | 4,315 | 132,179 | 84,572 | 4,168 | 4,901 | 93,641 | |||||||||||||||||||||||
Commissions and other underwriting expenses | 49,163 | 51 | 1,582 | 50,796 | 54,637 | 3,476 | 1,981 | 60,094 | |||||||||||||||||||||||
General and administrative expenses | 9,836 | 100 | 2,154 | 12,090 | 9,174 | 200 | 1,971 | 11,345 | |||||||||||||||||||||||
Interest expense | — | — | 6,966 | 6,966 | 100 | — | 2,007 | 2,107 | |||||||||||||||||||||||
Total costs and expenses | 184,811 | 2,203 | 15,017 | 202,031 | 148,483 | 7,844 | 10,860 | 167,187 | |||||||||||||||||||||||
Income (loss) before income taxes | 6,139 | (2,180 | ) | 508 | 4,467 | 20,296 | (337 | ) | 1,673 | 21,632 | |||||||||||||||||||||
Income tax expense (benefit) | 1,556 | (552 | ) | 218 | 1,222 | 5,143 | (85 | ) | 509 | 5,567 | |||||||||||||||||||||
Net income (loss) | 4,583 | (1,628 | ) | 290 | 3,245 | 15,153 | (252 | ) | 1,164 | 16,065 | |||||||||||||||||||||
Net income (loss) attributable to non-controlling interest | — | — | — | — | (218 | ) | — | — | (218 | ) | |||||||||||||||||||||
Net income (loss) attributable to FNHC shareholders | $ | 4,583 | $ | (1,628 | ) | $ | 290 | $ | 3,245 | $ | 15,371 | $ | (252 | ) | $ | 1,164 | $ | 16,283 | |||||||||||||
Ratios to net premiums earned: | |||||||||||||||||||||||||||||||
Net loss ratio | 70.0 | % | NCM | 308.4 | % | 73.0 | % | 53.8 | % | 108.2 | % | 102.9 | % | 56.5 | % | ||||||||||||||||
Net expense ratio | 32.9 | % | 34.7 | % | 40.7 | % | 43.1 | % | |||||||||||||||||||||||
Combined ratio | 102.9 | % | 107.7 | % | 94.5 | % | 99.6 | % |
FEDNAT HOLDING COMPANY AND SUBSIDIARIES
GAAP to Non-GAAP Reconciliations
(Dollars in thousands)
(Unaudited)
As of or For the Three Months Ended June 30, | ||||||||||||||||||||||||||||||||
2019 | 2018 | |||||||||||||||||||||||||||||||
Homeowners | Automobile | Other | Consolidated | Homeowners | Automobile | Other | Consolidated | |||||||||||||||||||||||||
Revenue | ||||||||||||||||||||||||||||||||
Total revenues | $ | 97,299 | $ | 3 | $ | 7,999 | $ | 105,301 | $ | 85,474 | $ | 3,341 | $ | 6,927 | $ | 95,742 | ||||||||||||||||
Less: | ||||||||||||||||||||||||||||||||
Net realized and unrealized investment gains (losses) | — | — | 1,955 | 1,955 | — | — | 208 | 208 | ||||||||||||||||||||||||
Adjusted operating revenues | $ | 97,299 | $ | 3 | $ | 6,044 | $ | 103,346 | $ | 85,474 | $ | 3,341 | $ | 6,719 | $ | 95,534 | ||||||||||||||||
Net Income (Loss) | ||||||||||||||||||||||||||||||||
Net income (loss) | $ | 6,006 | $ | (949 | ) | $ | 2,053 | $ | 7,110 | $ | 8,430 | $ | (211 | ) | $ | 601 | $ | 8,820 | ||||||||||||||
Less: | ||||||||||||||||||||||||||||||||
Net realized and unrealized investment gains (losses) | — | — | 1,460 | 1,460 | — | — | 155 | 155 | ||||||||||||||||||||||||
Acquisition and other costs | (14 | ) | — | (2 | ) | (16 | ) | (398 | ) | (11 | ) | (29 | ) | (438 | ) | |||||||||||||||||
Adjusted operating income (loss) | $ | 6,020 | $ | (949 | ) | $ | 595 | $ | 5,666 | $ | 8,828 | $ | (200 | ) | $ | 475 | $ | 9,103 | ||||||||||||||
Income tax rate assumed for reconciling items above | 25.35 | % | 25.35 | % | 25.35 | % | 25.35 | % | 25.35 | % | 25.35 | % | 25.35 | % | 25.35 | % | ||||||||||||||||
Per Common Share | ||||||||||||||||||||||||||||||||
Book value | $ | 17.96 | $ | 16.89 | ||||||||||||||||||||||||||||
Less: | ||||||||||||||||||||||||||||||||
AOCI | 0.72 | (0.42 | ) | |||||||||||||||||||||||||||||
Book value, excluding AOCI | $ | 17.24 | $ | 17.31 |
FEDNAT HOLDING COMPANY AND SUBSIDIARIES
GAAP to Non-GAAP Reconciliations
(Dollars in thousands)
(Unaudited)
As of or For the Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||||||
2019 | 2018 | |||||||||||||||||||||||||||||||||||||||||||||||
Homeowners | Automobile | Other | Consolidated | Homeowners | Automobile | Other | Consolidated | |||||||||||||||||||||||||||||||||||||||||
Revenue | ||||||||||||||||||||||||||||||||||||||||||||||||
Total revenues | $ | 190,950 | $ | 23 | $ | 15,525 | $ | 206,498 | $ | 168,779 | $ | 7,507 | $ | 12,533 | $ | 188,819 | ||||||||||||||||||||||||||||||||
Less: | ||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized investment gains (losses) | — | — | 4,256 | 4,256 | — | — | (844 | ) | (844 | ) | ||||||||||||||||||||||||||||||||||||||
Adjusted operating revenues | $ | 190,950 | $ | 23 | $ | 11,269 | $ | 202,242 | $ | 168,779 | $ | 7,507 | $ | 13,377 | $ | 189,663 | ||||||||||||||||||||||||||||||||
Net Income (Loss) | ||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | $ | 4,583 | $ | (1,628 | ) | $ | 290 | $ | 3,245 | $ | 15,371 | $ | (252 | ) | $ | 1,164 | $ | 16,283 | ||||||||||||||||||||||||||||||
Less: | ||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized investment gains (losses) | — | — | 3,178 | 3,178 | — | — | (630 | ) | (630 | ) | ||||||||||||||||||||||||||||||||||||||
Acquisition and other costs | (50 | ) | — | (486 | ) | (536 | ) | (574 | ) | (32 | ) | (48 | ) | (654 | ) | |||||||||||||||||||||||||||||||||
Gain (loss) on early extinguishment of debt | — | — | (2,669 | ) | (2,669 | ) | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
Adjusted operating income (loss) | $ | 4,633 | $ | (1,628 | ) | $ | 267 | $ | 3,272 | $ | 15,945 | $ | (220 | ) | $ | 1,842 | $ | 17,567 | ||||||||||||||||||||||||||||||
— | — | |||||||||||||||||||||||||||||||||||||||||||||||
Income tax rate assumed for reconciling items above | 25.35 | % | 25.35 | % | 25.35 | % | 25.35 | % | 25.35 | % | 25.35 | % | 25.35 | % | 25.35 | % | ||||||||||||||||||||||||||||||||
Per Common Share | ||||||||||||||||||||||||||||||||||||||||||||||||
Book value | $ | 17.96 | $ | 16.89 | ||||||||||||||||||||||||||||||||||||||||||||
Less: | ||||||||||||||||||||||||||||||||||||||||||||||||
AOCI | 0.72 | (0.42 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Book value, excluding AOCI | $ | 17.24 | $ | 17.31 |