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Unico American Corporation Reports Second Quarter 2011 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, 2011. For the three months ended June 30, 2011, revenues were $8.6 million and net income was $0.7 million ($0.13 diluted income per share) compared with revenues of $9.4 million and net income of $0.4 million ($0.08 diluted income per share) for the three months ended June 30, 2010. For the six months ended June 30, 2011, revenues were $17.2 million and net income of $1.8 million ($0.34 diluted income per share) compared with revenues of $19.3 million and net income of $0.9 million ($0.18 diluted income per share) for the six months ended June 30, 2010.

As of June 30, 2011, the Company had cash and investments (at amortized cost) of $128.4 million. $116.3 million, or 91% of these investments were fixed maturity investments, and 82% of those fixed maturity investments were U.S. treasury securities.

Stockholders’ equity was $75.2 million as of June 30, 2011, or $14.11 per common share including unrealized after-tax investment gains of $2.3 million, compared to stockholders’ equity of $73.4 million as of December 31, 2010, or $13.75 per common share including unrealized after-tax investment gains of $2.3 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,

2011

2010

( Unaudited)

ASSETS
Investments
Available for sale:

Fixed maturities, at fair value (amortized cost: June 30, 2011 - $116,260; December 31, 2010 - $123,301)
$ 119,764 $ 126,712
Short-term investments, at cost   12,027   6,466
Total Investments 131,791 133,178
Cash 70 45
Accrued investment income 665 691
Premiums and notes receivable, net 5,654 4,364
Reinsurance recoverable:
Paid losses and loss adjustment expenses 49 49
Unpaid losses and loss adjustment expenses 9,657 11,816
Deferred policy acquisition costs 4,378 4,301
Property and equipment (net of accumulated depreciation) 1,701 1,631
Deferred income taxes 780 1,060
Other assets   533   540
Total Assets $ 155,278 $ 157,675
 

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
Unpaid losses and loss adjustment expenses $ 57,066 $ 61,560
Unearned premiums 16,384 15,930
Advance premium and premium deposits 1,095 830
Income taxes payable - 1
Accrued expenses and other liabilities   5,508   6,000
Total Liabilities $ 80,053 $ 84,321
 
Commitments and contingencies

 

 

STOCKHOLDERS' EQUITY

Common stock, no par – authorized 10,000,000 shares; issued and outstanding shares 5,333,159 at June 30, 2011, and 5,333,081 at December 31, 2010
$ 3,554 $ 3,555
Accumulated other comprehensive income 2,313 2,251
Retained earnings   69,358   67,548
Total Stockholders’ Equity $ 75,225 $ 73,354
 
Total Liabilities and Stockholders' Equity $ 155,278 $ 157,675
 
 
               

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,

2011
     

2010

2011
     

2010

REVENUES
Insurance Company Revenues
Premium earned $ 8,040 $ 8,962 $ 16,000 $ 18,352
Premium ceded   1,330   1,873   2,653   3,821
Net premium earned 6,710 7,089 13,347 14,531
Investment income 767 907 1,539 1,846
Other income   169   175   339   355
Total Insurance Company Revenues 7,646 8,171 15,225 16,732
 
Other Revenues from Insurance Operations
Gross commissions and fees 911 1,129 1,915 2,378
Investment income 1 1 1 2
Finance charges and fees earned 18 82 39 167
Other income   3   4   7   6

Total Revenues
  8,579   9,387   17,187   19,285
 

EXPENSES
Losses and loss adjustment expenses 3,871 4,575 7,259 9,883
Policy acquisition costs 1,772 1,843 3,545 3,730
Salaries and employee benefits 1,110 1,280 2,122 2,169
Commissions to agents/brokers 57 171 111 363
Other operating expenses   681   883   1,336   1,741
Total Expenses   7,491   8,752   14,373   17,886
 
Income Before Taxes 1,088 635 2,814 1,399
Income tax provision   381   187   993   452
Net Income $ 707 $ 448 $ 1,821 $ 947
 
 
 

PER SHARE DATA:
Basic
Earnings Per Share $ 0.13 $ 0.08 $ 0.34 $ 0.18
Weighted Average Shares 5,334 5,309 5,334 5,307
Diluted
Earnings Per Share $ 0.13 $ 0.08 $ 0.34 $ 0.18
Weighted Average Shares 5,358 5,350 5,358 5,350
 
 
         

UNICO AMERICAN CORPORATION

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

($ in thousands)
 
For the Six Months Ended

June 30,

2011
               

2010
Cash flows from operating activities:
Net Income $ 1,821 $ 947
Adjustments to reconcile net income to net cash from operations
Depreciation 29 64
Bond amortization, net 80 39
Changes in assets and liabilities
Premium, notes and investment income receivable (1,264 ) 15
Reinsurance recoverable 2,159 2,336
Deferred policy acquisitions costs (77 ) 274
Other assets 17 (59 )
Unpaid losses and loss adjustment expenses (4,494 ) (4,664 )
Unearned premiums 454 (1,338 )
Advance premium and premium deposits 265 55
Accrued expenses and other liabilities (492 ) (322 )
Income taxes current/deferred   237     (3 )
Net Cash (Used) by Operating Activities   (1,265 )   (2,656 )
 
Cash flows from investing activities:
Purchase of fixed maturity investments (3,849 ) (15,962 )
Proceeds from maturity of fixed maturity investments 10,810 22,350
Net increase in short-term investments (5,561 ) (3,796 )
Additions to property and equipment   (99 )   (53 )
Net Cash Provided by Investing Activities   1,301     2,539  
 
Cash flows from financing activities:
Proceeds from issuance of common stock - 32
Repurchase of common stock   (11 )   -  
Net Cash (Used) Provided by Financing Activities   (11 )   32  
 
Net increase (decrease) in cash 25 (85 )
Cash at beginning of period   45     118  
Cash at End of Period $ 70   $ 33  
 
Supplemental Cash Flow Information
Cash paid during the period for:
Interest - -
Income taxes $ 759 $ 459

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