UNAM Unico American Corp

Unico American Corporation (NASDAQ: UNAM) (“Unico,” the “Company”), announced today its consolidated financial results for the three and six months ended June 30, 2018. For the three months ended June 30, 2018, revenues were $8.6 million and net income was $0.2 million ($0.03 diluted income per share) compared with revenues of $9.2 million and net loss of $0.9 million ($0.17 diluted loss per share) for the three months ended June 30, 2017. For the six months ended June 30, 2018, revenues were $17.5 million and net loss was $2.0 million ($0.38 diluted loss per share) compared with revenues of $18.2 million and net loss of $3.0 million ($0.57 diluted loss per share) for the six months ended June 30, 2017.

Stockholders’ equity was $56.8 million as of June 30, 2018, or $10.70 per common share, including unrealized after-tax investment losses of $1.4 million, compared to stockholders’ equity of $59.9 million as of December 31, 2017, or $11.30 per common share, including unrealized after-tax investment losses of $0.2 million.

“Our top priority remains the achievement of sustainable growth in profits. Our loss ratio and investment yields improved during the second quarter of 2018 compared to the first quarter of 2018 and the second quarter of 2017. Our immediate focus remains on premium adequacy, risk selection and expense control,” said Cary L. Cheldin, Unico’s President and Chief Executive Officer. “I believe our quarterly results demonstrate that the changes we made during the past 18 months are making a positive difference. We intend to continue making such changes.”

About Unico

Headquartered in Calabasas, 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.

Forward-Looking Statements

This press release may contain “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended (or “the Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (or “the Exchange Act”). In this context, forward-looking statements are not historical facts and include statements about the Company plans, objectives, beliefs and expectations. Forward-looking statements include statements preceded by, followed by, or that include the words “believes,” “expects,” “anticipates,” “seeks,” “plans,” “estimates,” “intends,” “projects,” “targets,” “should,” “could,” “may,” “will,” “can,” “can have,” “likely,” the negatives thereof or similar words and expressions.

Forward-looking statements are only predictions and are not guarantees of future performance. These statements are based on current expectations and assumptions involving judgments about, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the Company’s control. These predictions are also affected by known and unknown risks, uncertainties and other factors that may cause the Company’s actual results to be materially different from those expressed or implied by any forward-looking statement. Many of these factors are beyond the Company’s ability to control or predict. The Company’s actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors. Such factors include, but are not limited to, failure to meet minimum capital and surplus requirements; vulnerability to significant catastrophic property loss; a change in accounting standards issued by the Financial Accounting Standards Board; ability to adjust claims accurately; insufficiency of loss and loss adjustment expense reserves to cover future losses; changes in federal or state tax laws; ability to realize deferred tax assets; ability to accurately underwrite risks and charge adequate premium; ability to obtain reinsurance or collect from reinsurers and or losses in excess of reinsurance limits; extensive regulation and legislative changes; reliance on subsidiaries to satisfy obligations; downgrade in financial strength rating by A.M. Best; changes in interest rates; investments subject to credit, prepayment and other risks; geographic concentration; reliance on independent insurance agents and brokers; insufficient reserve for doubtful accounts; litigation; enforceability of exclusions and limitations in policies; reliance on information technology systems; ability to prevent or detect acts of fraud with disclosure controls and procedures; change in general economic conditions; dependence on key personnel; ability to attract, develop and retain employees and maintain appropriate staffing levels; insolvency, financial difficulties, or default in performance of obligations by parties with significant contracts or relationships; ability to effectively compete; maximization of long-term value and no focus on short-term earnings expectations; control by a small number of shareholders; failure to maintain effective system of internal controls; and difficulty in effecting a change of control or sale of any subsidiaries.

Please see Part I - Item 1A – “Risk Factors” in the Company’s 2017 Annual Report on Form 10-K as filed with the U.S. Securities and Exchange Commission (“SEC”), as well as other documents the Company files with the SEC from time-to-time, for other important factors that could cause the Company’s actual results to differ materially from its current expectations and from the forward-looking statements discussed herein. Because of these and other risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements. In addition, these statements speak only as of the date of this press release and, except as may be required by law, the Company undertakes no obligation to revise or update publicly any forward-looking statements for any reason.

  UNICO AMERICAN CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS ($ in thousands)     June 30   December 31

2018

2017

(Unaudited)

ASSETS

Investments Available-for-sale:

Fixed maturities, at fair value (amortized cost: June 30, 2018 $66,514; and December 31, 2017 $58,153)

$ 64,768 $ 57,849 Held-to-maturity:

Fixed maturities, at amortized cost (fair value: June 30, 2018 $20,602; December 31, 2017 $28,098)

20,602 28,098 Short-term investments, at fair value   200     1,848   Total Investments 85,570 87,795 Cash, cash equivalents, and restricted cash 7,835 9,367 Accrued investment income 320 491 Receivables, net 4,550 6,006 Reinsurance recoverable: Paid losses and loss adjustment expenses 94 127 Unpaid losses and loss adjustment expenses 8,805 8,394 Deferred policy acquisition costs 3,718 4,163 Property and equipment, net 9,818 10,015 Deferred income taxes 4,178 3,381 Other assets   611     560   Total Assets $ 125,499   $ 130,299    

LIABILITIES AND STOCKHOLDERS' EQUITY

 

LIABILITIES

Unpaid losses and loss adjustment expenses $ 50,066 $ 49,077 Unearned premiums 16,824 18,768 Advance premium and premium deposits 240 208 Accrued expenses and other liabilities   1,602     2,301   Total Liabilities $ 68,732   $ 70,354     Commitments and contingencies  

STOCKHOLDERS' EQUITY

Common stock, no par – authorized 10,000,000 shares; issued and outstanding shares 5,307,133 at June 30, 2018, and December 31, 2017

$ 3,773 $ 3,773 Accumulated other comprehensive loss (1,379 ) (240 ) Retained earnings   54,373     56,412   Total Stockholders’ Equity $ 56,767   $ 59,945     Total Liabilities and Stockholders' Equity $ 125,499   $ 130,299       UNICO AMERICAN CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) ($ in thousands, except per share)     Three Months Ended   Six Months Ended

June 30

June 30

2018

 

2017

2018

 

2017

REVENUES

Insurance company operation: Net earned premium $ 7,363 $ 8,220 $ 15,045 $ 16,141 Investment income 453 264 897 476 Other income   112   68     168     136   Total Insurance Company Operation 7,928 8,552 16,110 16,753   Other insurance operations: Gross commissions and fees 671 671 1,278 1,413 Finance charges and fees earned 34 18 52 36 Other income   10   -     10     -   Total Revenues   8,643   9,241     17,450     18,202    

EXPENSES

Losses and loss adjustment expenses 4,929 5,909 12,731 14,434 Policy acquisition costs 1,515 1,591 3,137 3,089 Salaries and employee benefits 1,127 1,965 2,415 3,313 Commissions to agents/brokers 41 45 82 87 Other operating expenses   744   1,082     1,610     1,897   Total Expenses   8,356   10,592     19,975     22,820     Income (loss) before taxes 287 (1,351 ) (2,525 ) (4,618 ) Income tax expense (benefit)   119   (460 )   (486 )   (1,580 ) Net Income (Loss) $ 168 $ (891 ) $ (2,039 ) $ (3,038 )       PER SHARE DATA: Basic Earnings (loss) per share $ 0.03 $ (0.17 ) $ (0.38 ) $ (0.57 ) Weighted average shares 5,307,133 5,307,133 5,307,133 5,307,133 Diluted Earnings (loss) per share $ 0.03 $ (0.17 ) $ (0.38 ) $ (0.57 ) Weighted average shares 5,307,133 5,307,133 5,307,133 5,307,133     UNICO AMERICAN CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) ($ in thousands)     Six Months Ended

June 30

2018

 

2017

Cash flows from operating activities: Net Loss $ (2,039 ) $ (3,038 ) Adjustments to reconcile net loss to net cash from operations: Depreciation and amortization 282 265 Bond amortization, net 129 (426 ) Bad debt expense - 15 Non-cash stock based compensation - 12 Changes in assets and liabilities: Net receivables and accrued investment income 1,627 (318 ) Reinsurance recoverable (378 ) (2,791 ) Deferred policy acquisitions costs 445 9 Other assets (47 ) 416 Unpaid losses and loss adjustment expenses 989 4,883 Unearned premium (1,944 ) 502 Advance premium and premium deposits 32 161 Accrued expenses and other liabilities (699 ) 47 Income taxes current/deferred   (498 )   (1,584 ) Net Cash Used by Operating Activities   (2,101 )   (1,847 )   Cash flows from investing activities: Purchase of fixed maturity investments (10,735 ) (29,348 ) Proceeds from maturity of fixed maturity investments 8,741 25,218 Proceeds from sale or call of fixed maturity investments 1,000 1,050 Net decrease (increase) in short-term investments 1,648 (2,101 ) Additions to property and equipment   (85 )   (95 ) Net Cash Provided (Used) by Investing Activities   569     (5,276 )   Cash flows from financing activities: Net Cash Used by Financing Activities   -     -     Net decrease in cash, cash equivalents, and restricted cash (1,532 ) (7,123 ) Cash, cash equivalents, and restricted cash at beginning of period   9,367     22,603   Cash, Cash Equivalents, and Restricted Cash at End of Period $ 7,835   $ 15,480     Supplemental Cash Flow Information Cash paid during the period for: Interest - - Income taxes $ 9 $ 9  

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Unico American CorporationMichael BudnitskyChief Financial Officer818-591-9800