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TheStreet Open House

Unico American Corporation Reports Third Quarter 2011 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, 2011. For the three months ended September 30, 2011, revenues were $9.1 million and net income was $1.3 million ($0.24 diluted income per share) compared with revenues of $9.1 million and net income of $0.6 million ($0.12 diluted income per share) for the three months ended September 30, 2010. For the nine months ended September 30, 2011, revenues were $26.3 million and net income was $3.1 million ($0.58 diluted income per share) compared with revenues of $28.4 million and net income of $1.6 million ($0.29 diluted income per share) for the nine months ended September 30, 2010. Revenues for the three and nine months ended September 30, 2011, includes other income of $0.6 million from the final settlement of provisional rated reinsurance treaties covering the years 1985 through 1997.

As of September 30, 2011, the Company had cash and investments (at amortized cost) of $128.9 million. $101.7 million, or 79% of these investments were fixed maturity investments, and 82% of those fixed maturity investments were U.S. treasury securities.

Stockholders’ equity was $75.9 million as of September 30, 2011, or $14.24 per common share including unrealized after-tax investment gains of $1.7 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)

 
September 30 December 31

2011

2010

(Unaudited)

ASSETS

Investments
Available for sale:

Fixed maturities, at fair value (amortized cost: September 30, 2011 - $101,719;December 31, 2010 - $123,301)

$ 104,343 $ 126,712
Short-term investments, at cost   27,142   6,466
Total Investments 131,485 133,178
Cash 71 45
Accrued investment income 604 691
Premiums and notes receivable, net 5,560 4,364
Reinsurance recoverable:
Paid losses and loss adjustment expenses 22 49
Unpaid losses and loss adjustment expenses 8,402 11,816
Deferred policy acquisition costs 4,294 4,301
Property and equipment (net of accumulated depreciation) 206 1,631
Deferred income taxes 1,079 1,060
Other assets   461   540
Total Assets $ 152,184 $ 157,675
 

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES

Unpaid losses and loss adjustment expenses $ 55,232 $ 61,560
Unearned premiums 16,067 15,930
Advance premium and premium deposits 1,222 830
Income taxes payable 258 1
Accrued expenses and other liabilities   3,461   6,000
Total Liabilities $ 76,240 $ 84,321
 
Commitments and contingencies

 

 

 

STOCKHOLDERS' EQUITY

Common stock, no par – authorized 10,000,000 shares; issued and outstanding shares5,334,992 at September 30, 2011, and 5,333,081 at December 31, 2010

$ 3,579 $ 3,555
Accumulated other comprehensive income 1,732 2,251
Retained earnings   70,633   67,548
Total Stockholders’ Equity $ 75,944 $ 73,354
 
Total Liabilities and Stockholders' Equity $ 152,184 $ 157,675
 
 
     
 

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

2011

 

2010

2011

 

2010

REVENUES

Insurance Company Revenues
Premium earned $ 8,022 $ 8,784 $ 24,021 $ 27,136
Premium ceded   1,321   1,837   3,974   5,658
Net premium earned 6,701 6,947 20,047 21,478
Investment income 733 839 2,272 2,685
Other income   746   150   1,086   505
Total Insurance Company Revenues 8,180 7,936 23,405 24,668
 
Other Revenues from Insurance Operations
Gross commissions and fees 876 1,078 2,791 3,456
Investment income 1 1 2 3
Finance charges and fees earned 16 70 55 237
Other income   5   4   12   10
Total Revenues   9,078   9,089   26,265   28,374
 

EXPENSES

Losses and loss adjustment expenses 3,358 4,501 10,616 14,384
Policy acquisition costs 1,778 1,806 5,323 5,536
Salaries and employee benefits 1,148 1,112 3,270 3,281
Commissions to agents/brokers 55 154 167 517
Other operating expenses   792   829   2,128   2,570
Total Expenses   7,131   8,402   21,504   26,288
 
Income Before Taxes 1,947 687 4,761 2,086
Income tax provision   672   63   1,665   515
Net Income $ 1,275 $ 624 $ 3,096 $ 1,571
 
 
 

PER SHARE DATA:

Basic
Earnings Per Share $ 0.24 $ 0.12 $ 0.58 $ 0.30
Weighted Average Shares 5,335 5,317 5,334 5,311
Diluted
Earnings Per Share $ 0.24 $ 0.12 $ 0.58 $ 0.29
Weighted Average Shares 5,358 5,353 5,359 5,351
 
 
   
 

UNICO AMERICAN CORPORATION

 AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

($ in thousands)

 
For the Nine Months Ended

September 30

2011

   

2010

Cash flows from operating activities:
Net Income $ 3,096 $ 1,571
Adjustments to reconcile net income to net cash from operations
Depreciation 43 96
Bond amortization, net 121 75
Non-cash stock based compensation 23 -
Changes in assets and liabilities
Premium, notes and investment income receivable (1,109 ) 268
Reinsurance recoverable 3,441 3,023
Deferred policy acquisitions costs 7 426
Other assets 81 15
Unpaid losses and loss adjustment expenses (6,328 ) (7,435 )
Unearned premiums 137 (2,006 )
Advance premium and premium deposits 392 114
Accrued expenses and other liabilities (1,108 ) (272 )
Income taxes current/deferred   504     (70 )
Net Cash (Used) by Operating Activities   (700 )   (4,195 )
 
Cash flows from investing activities:
Purchase of fixed maturity investments (6,045 ) (24,586 )
Proceeds from maturity of fixed maturity investments 27,506 33,799
Net increase in short-term investments (20,676 ) (4,793 )
Additions to property and equipment   (50 )   (76 )
Net Cash Provided by Investing Activities   735     4,344  
 
Cash flows from financing activities:
Proceeds from issuance of common stock 2 34
Repurchase of common stock   (11 )   -  
Net Cash (Used) Provided by Financing Activities   (9 )   34  
 
Net increase in cash 26 183
Cash at beginning of period   45     118  
Cash at End of Period $ 71   $ 301  
 
Supplemental Cash Flow Information
Cash paid during the period for:
Interest - -
Income taxes $ 1,159 $ 584
 
Supplemental Schedule of Non-Cash Investing Activities
(Write-offs) acquisition of fixed assets $ (1,432 ) $ 1,118
 




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