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Unico American Corporation Reports First Quarter 2010 Financial Results

Unico American Corporation (NASDAQ: UNAM) (“Unico,” the “Company”), announced today its consolidated financial results for the three months ended March 31, 2010. For the three months ended March 31, 2010, revenues were $9.9 million and net income was $0.5 million ($0.09 diluted income per share) compared with revenues of $10.6 million and net income of $1.0 million ($0.18 diluted income per share) for the three months ended March 31, 2009.

As of March 31, 2010, the Company had cash and investments (at amortized cost) of $137.0 million. Of that amount, $121.2 million, or 88%, were in long-term fixed maturity investments, and 78% of those long-term fixed maturity investments were U.S. treasury securities.

Stockholders’ equity was $73.7 million as of March 31, 2010, or $13.89 per common share including unrealized after-tax investment gains of $2.6 million, compared to Stockholders’ equity of $73.3 million as of December 31, 2009, or $13.82 per common share including unrealized after-tax investment gains of $2.7 million.

The marketplace continued to soften during the first quarter of 2010, causing further decline in the Company’s sales. Nonetheless, the Company remains optimistic and anticipates that its work to expand the Company’s products and services will ultimately prove successful. As the Company continues that work, it is also reducing expenses and deploying new procedures in order to maintain maximum efficiency.

Headquartered in Woodland Hills, California, Unico is an insurance holding company that underwrites property and casualty insurance through its insurance company subsidiary; provides property, casualty, and health insurance through its agency subsidiaries; and through its other subsidiaries provides insurance premium financing and membership association services. Unico has conducted the majority of its operations through its subsidiary Crusader Insurance Company since 1985. For more information concerning Crusader Insurance Company, please visit the Crusader’s Web site at www.crusaderinsurance.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Certain statements contained herein that are not historical facts are forward-looking. These statements, which may be identified by forward-looking words or phrases such as “anticipate,” “believe,” ”expect,” “intend,” “may,” “should,” and “would,” involve risks and uncertainties, many of which are beyond the control of the Company. Such risks and uncertainties could cause actual results to differ materially from these forward-looking statements. Factors which could cause actual results to differ materially include underwriting actions not being effective, rate increases for coverages not being sufficient, premium rate adequacy relating to competition or regulation, actual versus estimated claim experience, regulatory changes or developments, unforeseen calamities, general market conditions, and the Company’s ability to introduce new profitable products.

 
UNICO AMERICAN CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 
UNAUDITED
($ in thousands)
   
March 31 December 31

2010

2009

 

ASSETS

Investments
Available for sale:

Fixed maturities, at fair value (amortized cost: March 31, 2010 $121,227; December 31, 2009 $128,441)

$ 125,179 $ 132,595
Short-term investments, at cost   15,761   9,158
Total Investments 140,940 141,753
Cash 8 119
Accrued investment income 755 764
Premium and notes receivable, net 4,483 4,365
Reinsurance recoverable:
Paid losses and loss adjustment expenses 303 453
Unpaid losses and loss adjustment expenses 15,487 16,176
Deferred policy acquisition costs 4,847 4,956
Property and equipment (net of accumulated depreciation) 178 221
Deferred income taxes 721 633
Other assets   542   669
Total Assets $ 168,264 $ 170,109
 

 

LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES

Unpaid losses and loss adjustment expenses $ 69,537 $ 71,585
Unearned premium 17,891 18,812
Advance premium and premium deposits 1,365 1,034
Income taxes payable 95 -
Accrued expenses and other liabilities   5,695   5,363
Total Liabilities $ 94,583 $ 96,794
 

STOCKHOLDERS' EQUITY

Common stock, no par – authorized 10,000,000 shares; issued and outstanding shares 5,306,204 at March 31, 2010, and 5,306,204 at December 31, 2009

$ 3,437 $ 3,437
Accumulated other comprehensive income 2,609 2,742
Retained earnings   67,635   67,136
Total Stockholders’ Equity $ 73,681 $ 73,315
 
Total Liabilities and Stockholders' Equity $ 168,264 $ 170,109
 
 
UNICO AMERICAN CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
 
(UNAUDITED)
($ in thousands, except per share)
 
Three Months Ended

March 31

2010

 

2009

REVENUES

Insurance Company Revenues

Premium earned $ 9,389 $ 9,874
Premium (ceded)   (1,947 )   (2,255 )
Net premium earned 7,442 7,619
Net investment income 939 1,224
Other income   180     204  
Total Insurance Company Revenues 8,561 9,047
 
Other Revenues from Insurance Operations
Gross commissions and fees 1,249 1,440
Investment income 1 -
Finance charges and fees 86 99
Other income   1     2  
Total Revenues   9,898     10,588  
 

EXPENSES

Losses and loss adjustment expenses 5,308 4,635
Policy acquisition costs 1,887 1,954
Salaries and employee benefits 889 1,429
Commissions to agents/brokers 192 314
Other operating expenses   858     709  
Total Expenses   9,134     9,041  
 
Income Before Taxes 764 1,547
Income Tax Expense   265     518  
Net Income $ 499   $ 1,029  
 
 
 
PER SHARE DATA:
Basic
Earnings Per Share $ 0.09 $ 0.18
Weighted Average Shares 5,306 5,569
Diluted
Earnings Per Share $ 0.09 $ 0.18
Weighted Average Shares 5,350 5,607
 
 
UNICO AMERICAN CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
(UNAUDITED)
($ in thousands)
 
For the Three Months Ended

March 31

2010

 

2009

Cash Flows from Operating Activities:
Net Income $ 499 $ 1,029
Adjustments to reconcile net income to net cash from operations
Depreciation 31 49
Bond amortization, net 11 85
Changes in assets and liabilities
Premium, notes and investment income receivable (110 ) (864 )
Reinsurance recoverable 839 108
Deferred policy acquisition costs 109 (145 )
Other assets (65 ) (9 )
Unpaid losses and loss adjustment expenses (2,048 ) (3,210 )
Unearned premium (920 ) 743
Advance premium and premium deposits 331 438
Accrued expenses and other liabilities 333 (9 )
Income taxes current/deferred   267     (129 )
Net Cash (Used) by Operating Activities   (723 )   (1,914 )
 
Cash Flows from investing Activities
Purchase of fixed maturity investments (1,297 ) (2,196 )
Proceeds from maturity of fixed maturity investments 8,500 7,200
Net (increase) in short-term investments (6,603 ) (2,984 )
Write-offs (Additions) to property and equipment   12     (49 )
Net Cash Provided by Investing Activities   612     1,971  
 
Cash Flows from financing Activities
Repurchase of common stock -   (52 )
Net Cash (Used) by Financing Activities -   (52 )
 
Net (decrease) increase in cash (111 ) 5
Cash at beginning of period   119     28  
Cash at End of Period $ 8   $ 33  
 
Supplemental Cash Flow Information
Cash paid during the period for:
Interest - -
Income taxes - $ 650




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