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Unico American Corporation Reports Third Quarter 2010 Financial Results

Unico American Corporation (NASDAQ – “UNAM”) (“Unico,” the “Company”), announced today its consolidated financial results for the three and nine months ended September 30, 2010. For the three months ended September 30, 2010, revenues were $9.1 million and net income was $0.6 million ($0.12 diluted income per share) compared with revenues of $10.3 million and net income of $0.6 million ($0.11 diluted income per share) for the three months ended September 30, 2009. For the nine months ended September 30, 2010, revenues were $28.4 million and net income of $1.6 million ($0.29 diluted income per share) compared with revenues of $31.5 million and net income of $2.3 million ($0.42 diluted income per share) for the nine months ended September 30, 2009.

As of September 30, 2010, the Company had cash and investments (at amortized cost) of $133.4 million. $119.2 million, or 89% of these investments were fixed maturity investments, and 74% of those fixed maturity investments were U.S. treasury securities.

Stockholders’ equity was $74.9 million as of September 30, 2010, or $14.09 per common share including unrealized after-tax investment gains of $2.7 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)

       
September 30 December 31
2010 2009
( Unaudited)

ASSETS

Investments
Available for sale:

Fixed maturities, at fair value (amortized cost: September 30, 2010 $119,152; December 31, 2009 $128,441)

$

123,269

$

132,595

Short-term investments, at cost   13,951   9,158
Total Investments 137,220 141,753
Cash 301 119
Accrued investment income 670 764
Premiums and notes receivable, net 4,191 4,365
Reinsurance recoverable:
Paid losses and loss adjustment expenses 69 453
Unpaid losses and loss adjustment expenses 13,537 16,176
Deferred policy acquisition costs 4,530 4,956
Property and equipment (net of accumulated depreciation) 1,319 221
Deferred income taxes 861 633
Other assets   509   669
Total Assets $ 163,207 $ 170,109
 

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES

Unpaid losses and loss adjustment expenses $ 64,150 $ 71,585
Unearned premiums 16,805 18,812
Advance premium and premium deposits 1,148 1,034
Accrued expenses and other liabilities   6,208   5,363
Total Liabilities $ 88,311 $ 96,794
 

STOCKHOLDERS' EQUITY

Common stock, no par – authorized 10,000,000 shares; issued and

outstanding shares 5,317,054at September 30, 2010, and 5,306,204 at

December 31, 2009 $ 3,471 $ 3,437
Accumulated other comprehensive income 2,718 2,742
Retained earnings   68,707   67,136
Total Stockholders’ Equity $ 74,896 $ 73,315
 
Total Liabilities and Stockholders' Equity $ 163,207 $ 170,109
 

UNICO AMERICAN CORPORATION

 AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

($ in thousands, except per share)

       

Three Months Ended

Nine Months Ended

September 30

September 30

2010

2009

2010

2009

REVENUES

Insurance Company Revenues

Premium earned $   8,784 $   10,089 $   27,136 $   30,185
Premium ceded   1,837   2,337   5,658   6,950
Net premium earned 6,947 7,752 21,478 23,235
Investment income 839 1,012 2,685 3,379
Other income   150   175   505   575
Total Insurance Company Revenues 7,936 8,939 24,668 27,189
 
Other Revenues from Insurance Operations
Gross commissions and fees 1,078 1,278 3,456 4,072
Investment income 1 - 3 1
Finance charges and fees 70 86 237 279
Other income   4   1   10   5
Total Revenues   9,089   10,304   28,374   31,546
 

EXPENSES

Losses and loss adjustment expenses 4,501 4,931 14,384 14,353
Policy acquisition costs 1,806 1,846 5,536 5,771
Salaries and employee benefits 1,112 1,305 3,281 4,016
Commissions to agents/brokers 154 252 517 860
Other operating expenses   829   1,071   2,570   3,103
Total Expenses   8,402   9,405   26,288   28,103
 
Income Before Taxes 687 899 2,086 3,443
Income tax provision   63   281   515   1,112
Net Income $ 624 $ 618 $ 1,571 $ 2,331
 
 
 
PER SHARE DATA:
Basic
Earnings Per Share $ 0.12 $ 0.11 $ 0.30 $ 0.42
Weighted Average Shares 5,317 5,500 5,311 5,545
Diluted
Earnings Per Share $ 0.12 $ 0.11 $ 0.29 $ 0.42
Weighted Average Shares 5,353 5,542 5,351 5,585
 

UNICO AMERICAN CORPORATION

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

($ in thousands)

 
For the Nine Months Ended

September 30

2010

2009

Cash Flows from Operating Activities:
Net Income $ 1,571 $ 2,331
Adjustments to reconcile net income to net cash from operations
Depreciation 96 147
Bond amortization, net 75 212
Changes in assets and liabilities
Premium, notes and investment income receivable 268 376
Reinsurance recoverable 3,023 2,305
Deferred policy acquisitions costs 426 107
Other assets 15 106
Unpaid losses and loss adjustment expenses (7,435 ) (5,167 )
Unearned premium (2,006 ) (310 )
Advance premium and premium deposits 114 70
Accrued expenses and other liabilities (272 ) (457 )
Income taxes current/deferred   (70 )   (1,198 )
Net Cash Used by Operating Activities   (4,195 )   (1,478 )
 
Investing Activities
Purchase of fixed maturity investments (24,586 ) (22,652 )
Proceeds from maturity of fixed maturity investments 33,799 42,700
Net (increase) in short-term investments (4,793 ) (16,169 )
(Additions) to property and equipment   (76 )   (56 )
Net Cash Provided by Investing Activities   4,344     3,823  
 
Financing Activities
Dividends paid to shareholders - (1,002 )
Proceeds from issuance of common stock 34 -
Repurchase of common stock   -     (1,303 )

Net Cash Provided (Used) by Financing Activities

  34     (2,305 )
 
Net Increase in Cash 183 40
Cash at beginning of period   118     28  
Cash at End of Period $ 301   $ 68  
 
Supplemental Cash Flow Information
Cash paid during the period for:
Interest - -
Income taxes $ 584 $ 2,309
 
Supplemental Schedule of Non-Cash Investing Activities
Acquisition of fixed assets $ 1,118 -
 




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