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Unico American Corporation Reports Second Quarter 2012 Financial Results

Stocks in this article: UNAM

Unico American Corporation (NASDAQ:UNAM) (“Unico,” the “Company”) announced today its consolidated financial results for the three and six months ended June 30, 2012. For the three months ended June 30, 2012, revenues were $8.3 million and net income was $0.2 million ($0.03 diluted income per share) compared with revenues of $8.6 million and net income of $0.7 million ($0.13 diluted income per share) for the three months ended June 30, 2011. For the six months ended June 30, 2012, revenues were $16.6 million and net income of $0.7 million ($0.12 diluted income per share) compared with revenues of $17.2 million and net income of $1.8 million ($0.34 diluted income per share) for the six months ended June 30, 2011.

As of June 30, 2012, the Company had cash and investments (at amortized cost) of $124.4 million. $67.9 million, or 55% of these investments were fixed maturity investments, and 80% of those fixed maturity investments were U.S. treasury securities.

Stockholders’ equity was $74.8 million as of June 30, 2012, or $14.00 per common share including unrealized gains, net of tax, of $0.3 million, compared to stockholders’ equity of $75.8 million as of December 31, 2011, or $14.20 per common share including unrealized gains, net of tax, of $1 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,” “appears,” “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
2012 2011
( Unaudited)
ASSETS
Investments
Available for sale:
Fixed maturities, at fair value (amortized cost: June 30,
2012 $67,859; December 31, 2011 $89,903) $ 68,377 $ 91,357
Short-term investments, at fair value   56,244   38,139
Total Investments 124,621 129,496
Cash 297 467
Accrued investment income 563 681
Premiums and notes receivable, net 6,072 5,304
Reinsurance recoverable:
Paid losses and loss adjustment expenses 317 60
Unpaid losses and loss adjustment expenses 8,370 7,975
Deferred policy acquisition costs 4,026 4,158
Property and equipment (net of accumulated depreciation) 561 231
Deferred income taxes 1,815 1,394
Other assets   1,477   609
Total Assets $ 148,119 $ 150,375
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
LIABILITIES
Unpaid losses and loss adjustment expenses $ 52,591 $ 54,487
Unearned premiums 16,647 15,912
Advance premium and premium deposits 1,025 818
Accrued expenses and other liabilities   3,078   3,310
Total Liabilities $ 73,341 $ 74,527
 
Commitments and contingencies
 
STOCKHOLDERS' EQUITY
Common stock, no par – authorized 10,000,000 shares; issued and
outstanding shares 5,340,784 at June 30, 2012, and 5,341,992 at
December 31, 2011 $ 3,622 $ 3,611
Accumulated other comprehensive income 342 960
Retained earnings   70,814   71,277
Total Stockholders’ Equity $ 74,778 $ 75,848
 
Total Liabilities and Stockholders' Equity $ 148,119 $ 150,375
 

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
2012 2011 2012 2011
REVENUES
Insurance Company Revenues
Premium earned $ 8,041 $ 8,040 $ 16,003 $ 16,000
Premium ceded   1,260   1,330   2,507   2,653
Net premium earned 6,781 6,710 13,496 13,347
Investment income 474 767 1,056 1,539
Other income   184   169   296   339
Total Insurance Company Revenues 7,439 7,646 14,848 15,225
 
Other Revenues from Insurance Operations
Gross commissions and fees 809 911 1,715 1,915
Investment income 1 1 1 1
Finance charges and fees earned 16 18 32 39
Other income   2   3   6   7
Total Revenues   8,267   8,579   16,602   17,187
 
EXPENSES
Losses and loss adjustment expenses 4,326 3,871 8,048 7,259
Policy acquisition costs 1,707 1,772 3,468 3,545
Salaries and employee benefits 1,305 1,110 2,665 2,122
Commissions to agents/brokers 57 57 117 111
Other operating expenses   673   681   1,332   1,336
Total Expenses   8,068   7,491   15,630   14,373
 
Income Before Taxes 199 1,088 972 2,814
Income tax expense   42   381   315   993
Net Income $ 157 $ 707 $ 657 $ 1,821
 
 
 
PER SHARE DATA:
Basic
Earnings Per Share $ 0.03 $ 0.13 $ 0.12 $ 0.34
Weighted Average Shares 5,344 5,334 5,343 5,334
Diluted
Earnings Per Share $ 0.03 $ 0.13 $ 0.12 $ 0.34
Weighted Average Shares 5,360 5,358 5,361 5,358
 

UNICO AMERICAN CORPORATION

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

($ in thousands)

 
 
For the Six Months Ended
June 30
  2012     2011  
Cash flows from operating activities:
Net Income $ 657 $ 1,821
Adjustments to reconcile net income to net cash from operations
Depreciation 40 29
Bond amortization, net 54 80
Non cash stock based compensation 12 -
Changes in assets and liabilities
Premium, notes and investment income receivable (651 ) (1,264 )
Reinsurance recoverable (652 ) 2,159
Deferred policy acquisitions costs 132 (77 )
Other assets (779 ) 17
Unpaid losses and loss adjustment expenses (1,896 ) (4,494 )
Unearned premiums 735 454
Advance premium and premium deposits 207 265
Accrued expenses and other liabilities (232 ) (492 )
Income taxes current/deferred   (191 )   237  
Net Cash Used by Operating Activities   (2,564 )   (1,265 )
 
Cash flows from investing activities:
Purchase of fixed maturity investments (350 ) (3,849 )
Proceeds from maturity of fixed maturity investments 22,340 10,810
Net increase in short-term investments (18,104 ) (5,561 )
Additions to property and equipment   (371 )   (99 )
Net Cash Provided by Investing Activities   3,515     1,301  
 
Cash flows from financing activities:
Proceeds from exercise of stock options 1 -
Repurchase of common stock (54 ) (11 )
Dividends paid to stockholders   (1,068 )   -  
Net Cash Used by Financing Activities   (1,121 )   (11 )
 
Net (decrease) increase in cash (170 ) 25
Cash at beginning of period   467     45  
Cash at End of Period $ 297   $ 70  
 
Supplemental Cash Flow Information
Cash paid during the period for:
Interest - -
Income taxes $ 509 $ 759
 




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