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Unico American Corporation Reports Second Quarter 2010 Financial Results

Unico American Corporation (NASDAQ: UNAM) (“Unico,” the “Company”), announced today its consolidated financial results for the three and six months ended June 30, 2010. For the three months ended June 30, 2010, revenues were $9.4 million and net income was $0.4 million ($0.08 diluted income per share) compared with revenues of $10.7 million and net income of $0.7 million ($0.12 diluted income per share) for the three months ended June 30, 2009. For the six months ended June 30, 2010, revenues were $19.3 million and net income of $0.9 million ($0.18 diluted income per share) compared with revenues of $21.2 million and net income of $1.7 million ($0.31 diluted income per share) for the six months ended June 30, 2009.

As of June 30, 2010, the Company had cash and investments (at amortized cost) of $135.0 million. $122.0 million, or 90% of these investments were fixed maturity investments, and 77% of those fixed maturity investments were U.S. treasury securities.

Stockholders’ equity was $74.4 million as of June 30, 2010, or $14.00 per common share including unrealized after-tax investment gains of $2.9 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.

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
($ in thousands)
     
June 30 December 31

2010

2009

(Unaudited)

ASSETS

Investments
Available for sale:

Fixed maturities, at fair value (amortized cost: June 30, 2010 $122,014; December 31, 2009 $128,441)

$126,340 $132,595
Short-term investments, at cost 12,954 9,158
Total Investments 139,294 141,753
Cash 33 119
Accrued investment income 734 764
Premiums and notes receivable, net 4,379 4,365
Reinsurance recoverable:
Paid losses and loss adjustment expenses 151 453
Unpaid losses and loss adjustment expenses 14,143 16,176
Deferred policy acquisition costs 4,681 4,956
Property and equipment (net of accumulated depreciation) 382 221
Deferred income taxes 606 633
Other assets 702 669
Total Assets $ 165,105 $ 170,109
 

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES

Unpaid losses and loss adjustment expenses $66,921 $71,585
Unearned premiums 17,474 18,812
Advance premium and premium deposits 1,089 1,034
Accrued expenses and other liabilities 5,213 5,363
Total Liabilities $ 90,697 $ 96,794
 

STOCKHOLDERS' EQUITY

Common stock, no par – authorized 10,000,000 shares; issued and outstanding shares 5,316,454 at June 30, 2010, and 5,306,204 at December 31, 2009

$3,469 $3,437
Accumulated other comprehensive income 2,855 2,742
Retained earnings 68,084 67,136
Total Stockholders’ Equity $ 74,408 $ 73,315
 
Total Liabilities and Stockholders' Equity $ 165,105 $ 170,109
 
 
UNICO AMERICAN CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
($ in thousands, except per share)
     
Three Months Ended Six Months Ended

June 30

June 30

2010

 

2009

2010

 

2009

 

REVENUES

Insurance Company Revenues
Premium earned $8,962 $10,222 $18,352 $20,096
Premium ceded 1,873 2,359 3,821 4,614
Net premium earned 7,089 7,863 14,531 15,482
Investment income 907 1,144 1,846 2,367
Other income 175 196 355 401
Total Insurance Company Revenues 8,171 9,203 16,732 18,250
 
Other Revenues from Insurance Operations
Gross commissions and fees 1,129 1,354 2,378 2,794
Investment income 1 1 2 1
Finance charges and fees 82 94 167 193
Other income 4 1 6 4
Total Revenues 9,387 10,653 19,285 21,242
 

EXPENSES

Losses and loss adjustment expenses 4,575 4,787 9,883 9,422
Policy acquisition costs 1,843 1,971 3,730 3,925
Salaries and employee benefits 1,280 1,281 2,169 2,710
Commissions to agents/brokers 171 295 363 609
Other operating expenses 883 1,323 1,741 2,032
Total Expenses 8,752 9,657 17,886 18,698
 
Income Before Taxes 635 996 1,399 2,544
Income tax provision 187 312 452 831
Net Income $ 448 $ 684 $ 947 $ 1,713
 
 
 
PER SHARE DATA:
Basic
Earnings Per Share $0.08 $0.12 $0.18 $0.31
Weighted Average Shares 5,309 5,567 5,307 5,568
Diluted
Earnings Per Share $0.08 $0.12 $0.18 $0.31
Weighted Average Shares 5,350 5,605 5,350 5,606
 
 
UNICO AMERICAN CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
($ in thousands)
 
For the Six Months Ended

June 30

2010

   

2009

 
Cash Flows from Operating Activities:
Net Income $947 $1,713
Adjustments to reconcile net income to net cash from operations
Depreciation 64 98
Bond amortization, net 39 172
Changes in assets and liabilities
Premium, notes and investment income receivable 15 (343)
Reinsurance recoverable 2,336 1,895
Deferred policy acquisitions costs 274 (12)
Other assets (59) 35
Reserve for unpaid losses and loss adjustment expenses (4,664) (4,073)
Unearned premium reserve (1,338) 428
Funds held as security and advanced premiums 55 155
Accrued expenses and other liabilities (322) (12)
Income taxes current/deferred (3) ( 1,224)
Net Cash (Used in) Operations ( 2,656) ( 1,168)
 
Investing Activities
Purchase of fixed maturity investments (15,962) (12,409)
Proceeds from maturity of fixed maturity investments 22,350 20,500
Net (increase) in short-term investments (3,796) (5,790)
(Additions) to property and equipment (53) (57)
Net Cash Provided by Investing Activities 2,539 2,244
 
Financing Activities
Dividends paid to shareholders - (1,002)
Proceeds from issuance of common stock 32 -
Repurchase of common stock - (76)
Net Cash Used in Financing Activities 32 ( 1,078)
 
Net decrease in cash (85) (2)
Cash at beginning of period 118 28
Cash at End of Period $ 33 $ 26
 
Supplemental Cash Flow Information
Cash paid during the period for:
Interest - -
Income taxes $459 $2,059




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