ICC Holdings, Inc. (NASDAQ: ICCH) (the Company), parent
company of Illinois Casualty Company, a regional, multi-line
property and casualty insurance company focusing exclusively on the
food and beverage industry, today reported results for the second
quarter and six months ended June 30, 2017.
SECOND QUARTER AND SIX MONTHS ENDED JUNE 30, 2017 – FINANCIAL
RESULTS
For the six months ended June 30, 2017, the Company reported net
income of $614,000 or $0.19 per share, compared to $891,000 for the
same period in 2016. Net loss totaled $235,000 or $0.07 per share
for the second quarter ended June 30, 2017, compared to net income
of $421,000 for the second quarter of 2016.
Direct premiums written grew by $20,000, or 0.1%, to $13,821,000
for the three months ended June 30, 2017 from $13,801,000 for the
same period of 2016. For the six months ended June 30, 2017, direct
premiums grew by $532,000, or 2.1%, to $26,410,000 from $25,878,000
for the same period of 2016. Net premiums earned grew by 1.5% and
3.4% for the second quarter and first six months of 2017.
For the six months ended June 30, 2017, the Company ceded
$3,941,000 of earned premiums to reinsurers compared to $3,849,000
of earned premiums for the same period in 2016. For the second
quarter of 2017, the Company ceded to reinsurers $1,938,000 of
earned premiums, compared to $1,976,000 of earned premiums for the
second quarter of 2016.
For the six months ended June 30, 2017, net realized investment
gains increased by $250,000, or 181.2%, to $388,000 from $138,000
for the same period of 2016. These increases were a result of the
Company liquidating assets to secure the funding used to purchase
the ESOP shares in the first quarter of 2017. Net realized
investment losses were $57,000 compared to net realized investment
gains of $14,000 for the three months ended June 30, 2017 and 2016,
respectively.
For the six months ended June 30, 2017, net investment income
grew $391,000, or 50.8% to $1,161,000 from $770,000 for the same
period of 2016. Net investment income increased by $267,000, or
63.3%, during the three months ended June 30, 2017, as compared to
the same period of 2016. The growth in net investment income is
primarily from the increase in available for sale securities.
Losses and settlement expenses increased by $907,000, or 7.2%,
to $13,464,000 for the six months ended June 30, 2017, from
$12,557,000 for the same period in 2016. Losses and settlement
expenses increased by $687,000, or 11.1%, to $6,864,000 for the
three months ended June 30, 2017, from $6,177,000 for the same
period in 2016. The increase in losses and settlement expenses for
the second quarter ended June 30, 2017 is primarily due to an
increase in fire losses and higher retention of property losses
compared to the same period in 2016.
Policy acquisition costs are costs incurred to issue policies,
which include commissions, premium taxes, underwriting reports, and
underwriter compensation costs. The Company offsets the direct
commissions it pays with ceded commissions it receives from
reinsurers. Other operating expenses consist primarily of
information technology costs, accounting and internal control
salaries, as well as audit and legal expenses. Policy acquisitions
costs and other operating expenses increased by $912,000, or 12.1%,
to $8,455,000 for the six months ended June 30, 2017, from
$7,543,000 for the same period in 2016. Policy acquisitions costs
and other operating expenses increased by $709,000, or 17.7%, to
$4,720,000 for the second quarter of 2017 from $4,011,000 for the
same period in 2016. The increases in policy acquisition costs and
other operating expenses during the three and six months ended June
30, 2017 are primarily driven by increases in the other operating
expenses. This is due to additional costs associated with operating
as a public company which did not occur in previous years.
Total assets increased by 22.1% from $122,160,000 at
December 31, 2016 to $149,172,000 at June 30, 2017,
principally as a result of our initial public offering completed
during the first quarter of 2017. Our investment portfolio, which
consists of fixed maturity securities, common stocks, preferred
stocks, and property held for investment, increased by 31.7% from
$76,122,000 at December 31, 2016 to $100,231,000 at
June 30, 2017, as a result of deploying the net proceeds from
our completed initial public offering.
SECOND QUARTER AND SIX MONTHS ENDED JUNE 30, 2017 – FINANCIAL
RATIOS
The Company’s loss and settlement expense ratio (defined as loss
and settlement expenses divided by net premiums earned) was 64.1%
and 62.5% in the second quarter and six months ended June 30, 2017,
respectively, compared with 58.5% and 60.2% in the same periods of
2016, respectively.
The expense ratio (defined as the amortization of deferred
policy acquisition costs and underwriting and administrative
expenses divided by net premiums earned) was 44.1% and 39.2% in the
second quarter and six months ended June 30, 2017, respectively,
compared with 38.0% and 36.2% in the same periods of 2016,
respectively.
The Company’s GAAP combined ratio (defined as the sum of the
losses and settlement expense ratio and the expense ratio) was
108.2% and 101.7% in the second quarter and six months ended June
30, 2017, respectively, compared to 96.5% and 96.4% in the same
periods of 2016, respectively.
MANAGEMENT COMMENTARY
“The Company faced a variety of challenges in the second
quarter, which led to a net loss for the quarter. Although top line
growth was hindered by continued soft market conditions, ICC
successfully began conducting business in both Kansas and Colorado
in the second quarter. It is expected that as these markets
build momentum, premium growth will improve in the second half of
2017. Plans continue for expansion into Michigan in early
2018.
“In terms of losses, the Company experienced an atypical influx
of property losses, including increased storm activity. The
Company continues to enhance its already robust loss control
processes to further reduce this exposure and return to historical
loss levels. The costs of operational and administrative
changes to ensure compliance with the requirements of being
publically traded were fully recognized in the second quarter,
creating a negative impact on expense ratio.
“The continued development of new markets in Ohio, Kansas, and
Colorado, combined with increased marketing efforts in established
states, will bolster premium growth. We remain confident that the
Company’s experience in the core liquor liability line of business
will continue to be consistent and profitable going forward. The
Company’s focus on the underwriting discipline will continue to
differentiate ICC in the markets we serve,” stated Arron
Sutherland, President and Chief Executive Officer.
EARNINGS CONFERENCE CALL
The Company will hold a conference call on Tuesday, August 15th,
2017, at 1:30 CT to discuss results for the second quarter and six
months ended June 30, 2017.
Teleconference and Webcast:
Dial-in and webcast information for the call is 1-872-240-3212
and https://global.gotomeeting.com/join/718052477, access code
718-052-477.
ABOUT ICC HOLDINGS, INC.
ICC Holdings, Inc. is a vertically integrated company created to
facilitate the growth, expansion and diversification of its
subsidiaries in order to maximize value to its stakeholders. The
group of companies consolidated under ICC Holdings, Inc. engages in
diverse, yet complementary business activities, including property
and casualty insurance, real estate, and information
technology.
The Company’s common shares trade on the NASDAQ Capital Market
under the ticker symbol “ICCH”. For more information about ICC
Holdings, visit http://ir.iccholdingsinc.com.
FORWARD-LOOKING STATEMENTS
This press release, and oral statements made regarding the
subjects of this release, contains forward-looking statements,
within the meaning of the Private Securities Litigation Reform Act
of 1995, or the Reform Act, which may include, but are not limited
to, statements regarding the Company’s, plans, objectives,
expectations and intentions and other statements contained in this
press release that are not historical facts, including statements
identified by words such as “believe,” “plan,” “seek,” “expect,”
“intend,” “estimate,” “anticipate,” “will,” and similar
expressions. All statements addressing operating performance,
events, or developments that the Company expects or anticipates
will occur in the future, including statements relating to revenue
and profit growth, product and segment expansion, regulatory
approval in connection with expansion, and market share, as well as
statements expressing optimism or pessimism about future operating
results, are forward-looking statements within the meaning of the
Reform Act. The forward-looking statements are based on
management's current views and assumptions regarding future events
and operating performance, and are inherently subject to
significant business, economic, and competitive uncertainties and
contingencies and changes in circumstances, many of which are
beyond the Company’s control. The statements in this press release
are made as of the date of this press release, even if subsequently
made available by the Company on its website or otherwise. The
Company does not undertake any obligation to update or revise these
statements to reflect events or circumstances occurring after the
date of this press release.
Although the Company does not make forward-looking statements
unless it believes it has a reasonable basis for doing so, the
Company cannot guarantee their accuracy. The foregoing factors,
among others, could cause actual results to differ materially from
those described in these forward-looking statements. For a list of
other factors which could affect the Company’s results, see the
Company’s filings with the Securities and Exchange Commission,“Item
7. Management's Discussion and Analysis of Financial Condition and
Results of Operations,” including “Forward-Looking Information,”
set forth in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2016. No undue reliance should be placed on any
forward-looking statements.
ICC Holdings, Inc. and Subsidiaries Condensed
Consolidated Balance Sheets As of June 30,
December 31, 2017 2016 (Unaudited) Assets Investments and cash:
Available for sale securities, at fair value
Fixed maturity securities (amortized cost
- $81,233,167 at 6/30/2017 and $62,929,091 at 12/31/2016)
$ 83,005,975 $ 64,134,023
Common stocks¹ (cost - $9,823,126 at
6/30/2017 and $6,311,708 at 12/31/2016)
10,590,764 6,982,547
Preferred stocks (cost - $3,669,342 at
6/30/2017 and $2,925,434 at 12/31/2016)
3,782,049 2,798,413
Property held for investment, at cost, net
of accumulated depreciation of $83,872 at 6/30/2017 and $50,948 at
12/31/2016
2,852,216 2,207,424 Cash and cash equivalents 10,102,965
4,376,847 Total investments and cash
110,333,969 80,499,254 Accrued investment income
647,126 524,156
Premiums and reinsurance balances
receivable, net of allowances for uncollectible amounts of $50,000
at 6/30/2017 and 12/31/2016
17,841,248 17,479,487 Ceded unearned premiums 296,208 270,751
Reinsurance balances recoverable on unpaid
losses and settlement expenses, net of allowances for uncollectible
amounts of $0 at 6/30/2017 and 12/31/2016
9,750,254 12,114,998 Federal income taxes 1,023,361 1,037,506
Deferred policy acquisition costs, net 4,302,888 4,162,927
Property and equipment, at cost, net of
accumulated depreciation of $4,571,613 at 6/30/2017 and $4,308,246
at 12/31/2016
3,657,217 3,719,535 Other assets 1,319,812
2,351,347 Total assets $ 149,172,083 $ 122,159,961
Liabilities and Equity Liabilities: Unpaid losses and settlement
expenses $ 49,691,372 $ 52,817,254 Unearned premiums 25,800,387
24,777,712 Reinsurance balances payable 130,221 109,790 Corporate
debt 4,991,138 3,786,950 Accrued expenses 3,181,956 4,827,042 Other
liabilities 1,312,382 2,241,003 Total
liabilities 85,107,456 88,559,751 Equity:
Common stock2 35,000 — Additional paid-in capital 32,631,781 —
Accumulated other comprehensive earnings, net of tax 1,751,083
1,154,175 Retained earnings 33,059,956 32,446,035 Less: Unearned
Employee Stock Ownership Plan shares at cost3 (3,413,193 )
— Total equity 64,064,627 33,600,210
Total liabilities and equity $ 149,172,083 $ 122,159,961
1Common stock securities consist of
exchange trade funds (ETF) made up primarily of Dividends Select
and the S&P 500
2Par value $0.01; authorized: 2017 -
10,000,000 shares and 2016 - 0 shares; issued: 2017 - 3,500,000 and
2016 - 0 shares; outstanding: 2017 - 3,151,946 and 2016 - 0
shares.
32017 - 348,054 shares and 2016 - 0
shares
ICC Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings and Comprehensive
Earnings For the Three-Months Ended Ended June
30, 2017 2016 Net premiums earned $ 10,710,758 $ 10,555,466 Net
investment income 688,963 422,068 Net realized investment gains (3
) 13,970 Other-than-temporary impairment charges (57,316 ) — Other
income 64,722 17,536 Consolidated revenues
11,407,124 11,009,040 Losses and settlement
expenses 6,864,258 6,177,420 Policy acquisition costs and other
operating expenses 4,720,298 4,011,294 Interest expense on debt
57,229 50,275 General corporate expenses 128,905
106,582 Total expenses 11,770,690
10,345,571 (Loss) earnings before income taxes (363,566 ) 663,469
Total income tax (benefit) expense (128,443 ) 242,897
Net (loss) earnings $ (235,123 ) $ 420,572 Other
comprehensive earnings, net of tax 542,427
810,414 Comprehensive earnings $ 307,304 $ 1,230,986
(Loss) earnings per share1: Basic: Basic net (loss) earnings per
share
$
(0.07
)
$
0.13
Diluted: Diluted net (loss) earnings per share
$
(0.07
)
$
0.13
Weighted average number of common shares outstanding2: Basic
3,153,876 3,150,000 Diluted 3,153,876 3,150,000
1The unaudited pro forma earnings per
share for the three months ended June 30, 2016 is provided as a
basis for comparison of current period earnings.
2Weighted average number of common shares
outstanding for the three months ended June 30, 2016 is based off
of the resulting shares from the initial public offering that was
completed in March 2017.
ICC Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings and Comprehensive
Earnings For the Six-Months Ended June 30, 2017
2016 Net premiums earned $ 21,548,864 $ 20,846,228 Net investment
income 1,161,287 769,894 Net realized investment gains 444,778
138,218 Other-than-temporary impairment charges (57,316 ) — Other
income 148,980 75,861 Consolidated revenues
23,246,593 21,830,201 Losses and settlement
expenses 13,463,642 12,556,916 Policy acquisition costs and other
operating expenses 8,454,950 7,543,274 Interest expense on debt
109,539 91,622 General corporate expenses 268,120
199,471 Total expenses 22,296,251
20,391,283 Earnings before income taxes 950,342 1,438,918 Total
income tax expense 336,421 548,350 Net
earnings $ 613,921 $ 890,568 Other comprehensive
earnings (loss), net of tax 596,908 1,819,432
Comprehensive earnings $ 1,210,829 $ 2,710,000
Earnings per share1: Basic: Basic net earnings per share
$
0.19
$
0.28
Diluted: Diluted net earnings per share
$
0.19
$
0.28
Weighted average number of common shares outstanding2: Basic
3,151,946 3,150,000 Diluted 3,151,946 3,150,000
1The unaudited pro forma earnings per
share for the six months ended June 30, 2016 is provided as a basis
for comparison of current period earnings.
2Weighted average number of common shares
outstanding for the six months ended June 30, 2016 is based off of
the resulting shares from the initial public offering that was
completed in March 2017.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170731006260/en/
Illinois Casualty CompanyArron K. Sutherland, President and
CEO309-732-0105arrons@ilcasco.com
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