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Unico American Corporation Reports Third Quarter 2012 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, 2012. For the three months ended September 30, 2012, revenues were $8.2 million and net income was $0.7 million ($0.14 diluted income per share) compared with revenues of $9.1 million and net income of $1.3 million ($0.24 diluted income per share) for the three months ended September 30, 2011. For the nine months ended September 30, 2012, revenues were $24.8 million and net income was $1.4 million ($0.26 diluted income per share) compared with revenues of $26.3 million and net income of $3.1 million ($0.58 diluted income per share) for the nine months ended September 30, 2011.

As of September 30, 2012, the Company had cash and investments (at amortized cost) of $124.6 million. $46.5 million, or 37% of these investments were fixed maturity investments, and 76% of those fixed maturity investments were U.S. treasury securities.

Stockholders’ equity was $75.2 million as of September 30, 2012, or $14.11 per common share including unrealized gains, net of tax, of $0.2 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 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.

Financial Tables Follow –

 
UNICO AMERICAN CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ in thousands)
 

 

  September 30   December 31

2012

2011

(Unaudited)

ASSETS

Investments
Available for sale:

Fixed maturities, at fair value (amortized cost: September 30, 2012 $46,499; December 31, 2011 $89,903)

$46,797 $91,357
Short-term investments, at fair value 78,046 38,139
Total Investments 124,843 129,496
Cash 95 467
Accrued investment income 270 681
Premiums and notes receivable, net 6,020 5,304
Reinsurance recoverable:
Paid losses and loss adjustment expenses 12 60
Unpaid losses and loss adjustment expenses 7,814 7,975
Deferred policy acquisition costs 3,928 4,158
Property and equipment (net of accumulated depreciation) 665 231
Deferred income taxes 1,836 1,394
Other assets 1,396 609
Total Assets $ 146,879 $ 150,375
 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

LIABILITIES

Unpaid losses and loss adjustment expenses $51,029 $54,487
Unearned premiums 16,591 15,912
Advance premium and premium deposits 930 818
Accrued expenses and other liabilities 3,103 3,310
Total Liabilities $ 71,653 $ 74,527
 
Commitments and contingencies
 

STOCKHOLDERS' EQUITY

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

Issued and outstanding shares 5,329,597 at September 30, 2012; and at December 31, 2011

$3,633 $3,611
Accumulated other comprehensive income 196 960
Retained earnings 71,397 71,277
Total Stockholders’ Equity $ 75,226 $ 75,848
 
Total Liabilities and Stockholders' Equity $ 146,879 $ 150,375
 
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

2012

 

2011

2012

 

2011

REVENUES

Insurance Company Revenues
Premium earned $8,233 $8,022 $24,236 $24,021
Premium ceded 1,292 1,321 3,799 3,974
Net premium earned 6,941 6,701 20,437 20,047
Investment income 303 733 1,359 2,272
Other income 141 746 438 1,086
Total Insurance Company Revenues 7,385 8,180 22,234 23,405
 
Other Revenues from Insurance Operations
Gross commissions and fees 821 876 2,536 2,791
Investment income - 1 1 2
Finance charges and fees earned 19 16 51 55
Other income 4 5 9 12
Total Revenues 8,229 9,078 24,831 26,265

 

EXPENSES

Losses and loss adjustment expenses 3,572 3,358 11,620 10,616
Policy acquisition costs 1,660 1,778 5,128 5,323
Salaries and employee benefits 1,253 1,148 3,917 3,270
Commissions to agents/brokers 59 55 176 167
Other operating expenses 550 792 1,883 2,128
Total Expenses 7,094 7,131 22,724 21,504
 
Income Before Taxes 1,135 1,947 2,107 4,761
Income tax expense 389 672 704 1,665
Net Income $ 746 $ 1,275 $ 1,403 $ 3,096
 
 
 

PER SHARE DATA:

Basic
Earnings Per Share $0.14 $0.24 $0.26 $0.58
Weighted Average Shares 5,338 5,335 5,341 5,334
Diluted
Earnings Per Share $0.14 $0.24 $0.26 $0.58
Weighted Average Shares 5,350 5,358 5,357 5,359
 
UNICO AMERICAN CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
($ in thousands)
 
  For the Nine Months Ended

September 30

2012

 

2011

Cash flows from operating activities:
Net Income $1,403 $3,096
Adjustments to reconcile net income to net cash from operations
Depreciation 91 43
Bond amortization, net 69 121
Non-cash stock based compensation 17 23
Changes in assets and liabilities
Premium, notes and investment income receivable (306 ) (1,109 )
Reinsurance recoverable 209 3,441
Deferred policy acquisitions costs 230 7
Other assets (779 ) 81
Unpaid losses and loss adjustment expenses (3,457 ) (6,328 )
Unearned premiums 678 137
Advance premium and premium deposits 112 392
Accrued expenses and other liabilities (206 ) (1,108 )
Income taxes current/deferred (57 ) 504  
Net Cash Used by Operating Activities (1,996 ) (700 )
 
Cash flows from investing activities:
Purchase of fixed maturity investments (1,300 ) (6,045 )
Proceeds from maturity of fixed maturity investments 44,635 27,506
Net increase in short-term investments (39,907 ) (20,676 )
Additions to property and equipment (525 ) (50 )
Net Cash Provided by Investing Activities 2,903   735  
 
Cash flows from financing activities:
Proceeds from exercise of stock options 15 2
Repurchase of common stock (226 ) (11 )
Dividends paid to stockholders (1,068 ) -  
Net Cash Used by Financing Activities (1,279 ) (9 )
 
Net (decrease) increase in cash (372 ) 26
Cash at beginning of period 467   45  
Cash at End of Period $ 95   $ 71  
 
Supplemental Cash Flow Information
Cash paid during the period for:
Interest - -
Income taxes $759 $1,159
 
Supplemental Schedule of Non-Cash Investing Activities
Write-offs of property and equipment - $1,432




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