FedNat Holding Company (the “Company”) (Nasdaq: FNHC) today
reported results for the three and nine months ended
September 30, 2020.
Q3 2020 highlights (as measured against the same three-month
period last year, except where noted):
- Net loss of $20.7 million or $1.51 per diluted share as
compared to net income of $4.7 million or $0.36 per diluted
share.
- Adjusted operating loss of $21.5 million or $1.57 per diluted
share as compared to adjusted operating income of $4.3 million or
$0.33 per diluted share.
- $44.9 million of claims, net of recoveries, pre-tax, from
catastrophe losses including Hurricanes Laura and Sally as well as
other severe weather events, which together impacted Florida,
Louisiana and other states, as previously communicated.
- 13.2% increase in gross written premiums to $180.2 million,
including $28.3 million from Maison.
- Combined ratio of 154.3%, up 48.8 percentage points, including
45.8 points of net catastrophe losses in the period.
- Quarter-end Florida homeowners in-force policies decreased 8.4%
to approximately 217,000, reflecting continued execution of our
strategy to limit our exposure in this market until rates more
accurately reflect increased costs of claims and reinsurance.
- 94.9% increase in non-Florida homeowners in-force policies to
approximately 152,000, in-line with our diversification
strategy.
- Non-insurance company liquidity of $63 million at
September 30, 2020.
- Book value per share decreased $2.56, or 14.8%, to $14.69 as
compared to $17.25 as of December 31, 2019, due primarily to a
net loss of $2.89 per share and dividends declared of $0.27 per
share, each for the nine months ended September 30, 2020, partially
offset by unrealized gains on our fixed-income portfolio of $0.40
and repurchases of stock of $0.27 per share.
"FedNat's results in the third quarter were impacted by an
elevated number of severe weather events during this year's
hurricane season," said Mr. Michael H. Braun, FedNat’s Chief
Executive Officer. “Our strong reinsurance program and
additional reinsurance purchases during the quarter enabled us to
maintain over $140 million of capital in our insurance companies as
of September 30, 2020 with liquidity over $60 million at the
holding company.”
Mr. Braun continued, “We remain committed to proactively
managing our capital while focusing for the remainder of 2020 and
throughout 2021 on continuing to implement increased rates in our
homeowners business in Florida and non-Florida markets. We are also
restricting business and shrinking our book in Florida as
appropriate until our rates meet our profitability targets. Based
on rate increases we have already implemented in 2020 and
anticipated rate increases in the balance of 2020 and in 2021, we
expect to generate over $65 million in incremental additional
premium in 2021 as compared to 2020.”
Revenues
- Total revenue decreased $2.2 million or 2.2%, to $97.3 million
for the three months ended September 30, 2020, compared with
$99.5 million for the three months ended September 30, 2019.
The slight decrease was driven by lower net premiums earned as
increases in ceded premiums outpaced the growth in gross premiums
earned. Additionally, lower net investment income was offset by
higher policy fees and higher brokerage income, all of which are
discussed in further detail below.
- Gross premiums written increased $21.1 million, or 13.2%, to
$180.2 million in the quarter compared with $159.1 million for the
same three-month period last year. Gross premiums written increased
by $7.0 million from FNIC's non-Florida business and $28.3 million
from Maison, which was partially offset by a $15.1 million decrease
in FNIC's Florida business, as we reduce our exposures in this
market.
- Gross premiums earned increased $38.0 million, or 26.1%, to
$183.5 million for the three months ended September 30, 2020,
as compared to $145.5 million for the three months ended
September 30, 2019. The higher gross premiums earned was
primarily driven by continued non-Florida growth, including $19.9
million from Maison's non-Florida business.
- Ceded premiums increased $41.8 million, or 71.9%, to $100.0
million in the quarter, compared to $58.2 million the same
three-month period last year. The increase was driven by
approximately $26 million higher excess of loss reinsurance spend,
as property exposures increased, including from the Maison
acquisition, this year as compared to last year. Additionally,
there was approximately $15 million of additional ceded premiums
related to the 50% quota-share treaty for FNIC's non-Florida book
of business that became effective July 1, 2020.
- Net investment income decreased $1.7 million, or 40.9%, to $2.4
million during the three months ended September 30, 2020, as
compared to $4.1 million during the three months ended
September 30, 2019. The decrease was due primarily to the
lower interest rate environment in 2020 and elevated third quarter
2019 income earned on debt proceeds that had not yet been deployed
on the Maison acquisition, partially offset by fixed income
portfolio growth in 2020 from the Maison acquisition.
- Direct written policy fees increased $1.1 million, or 43.3%, to
$3.6 million for the three months ended September 30, 2020, as
compared to $2.5 million during the three months ended
September 30, 2019. The increase is primarily driven by the
policy fees generated from Maison’s policies in-force and higher
fees as a result of FNIC's non-Florida premium growth.
- Other income increased $1.7 million, or 36.2%, to $6.4 million
in the quarter, compared with $4.7 million in the same three-month
period last year. The increase in other income was primarily driven
by higher brokerage revenue. The brokerage revenue increase is the
result of higher excess of loss reinsurance spend from the
reinsurance programs in place during the third quarter of 2020 as
compared to the third quarter of 2019.
Expenses
- Losses and loss adjustment expenses (“LAE”) increased $36.9
million, or 59.4%, to $99.0 million for the three months ended
September 30, 2020, compared with $62.1 million for the same
three-month period last year. The net loss ratio increased 47.4
percentage points, to 118.5% in the current quarter, as compared to
71.1% in the third quarter of 2019. The higher ratio was the result
of two main factors: higher ceded premiums, as discussed earlier,
which reduces net earned premium, the denominator of the net loss
ratio calculation, as well as higher catastrophe net losses as
compared to the prior year period. The third quarter of 2020
catastrophe net losses were $38.3 million, net of reinsurance,
which included Hurricanes Laura and Sally as well as other severe
weather events, which together impacted Florida, Louisiana and
other states. The $38.3 million represents $44.9 million of initial
net losses, as previously disclosed, less $6.6 million of benefit
from our claims handling services. By comparison, the third quarter
of 2019 catastrophe net losses were $11.0 million, net of
reinsurance, which primarily included impacts from Hurricane
Dorian, Hurricane Barry and other severe weather events.
Additionally, higher volume of policies in force drove
approximately $6 million of higher net losses as compared to
2019. The remaining variance was driven by higher loss pick
for FNIC's Florida book of business, as a result of adverse loss
experience, as compared to 2019.
- The net expense ratio increased 1.4% percentage points to 35.8%
in the third quarter of 2020, as compared to 34.4% in the third
quarter of 2019. The third quarter of 2020 net expense ratio was
further increased by lower net premiums earned reducing the
denominator of the net expense ratio calculation.
- Commissions and other underwriting expenses decreased $0.3
million, or 1.1%, to $24.6 million for the three months ended
September 30, 2020, compared with $24.9 million for the three
months ended September 30, 2019. The decrease was primarily
driven by a higher ceding commissions driven in part by the new 50%
quota share in FNIC's non-Florida book of business and lower other
underwriting expenses. When comparing these periods, this decrease
was partially offset by higher non-Florida acquisition related
costs as a result of premium growth.
- Income taxes (benefits) decreased $13.5 million, to $(12.8)
million for the three months ended September 30, 2020,
compared to $0.7 million for the three months ended
September 30, 2019. The decrease in income tax expense is
predominantly the result of the pre-tax loss during the current
quarter as compared to income during the third quarter of 2019.
Additionally, the Coronavirus Aid, Relief, and Economic Security
Act, signed into law on March 27, 2020, is allowing us to carry
back net operating loss to prior years when federal income taxes
were at 35%, which increased our effective tax rate during the
current quarter.
Subsequent Events
Today, the Company also announced:
- The declaration of the Company’s regular quarterly dividend of
$0.09 per share, payable on December 1, 2020 to shareholders of
record at the close of business on November 16, 2020.
- The formation of a Strategic Review Committee of the Board of
Directors to oversee a review of strategic alternatives and the
retention of Piper Sandler & Co. as the committee’s financial
advisor.
- It has experienced impacts from Hurricanes Delta and Zeta, both
of which made landfall in the state of Louisiana during the month
of October. We expect each storm to exceed our single-event
aggregate reinsurance program retention. Our preliminary estimate
is that we will incur approximately $27 million (pre-tax) of
catastrophe losses, net of all recoveries, including reinsurance,
on a combined basis for these storms.
Non-GAAP Performance Measures
Non United States generally accepted accounting principles
("GAAP") measures do not replace the most directly comparable GAAP
measures and we have included detailed reconciliations thereof on
page 10.
We exclude the after-tax (using our statutory income tax rate)
effects of the following items from GAAP net income (loss) to
arrive at adjusted operating income (loss):
- Net realized and unrealized gains (losses), including, but not
limited to, gains (losses) associated with investments and early
extinguishment of debt;
- Acquisition, integration and other costs and the amortization
of specifically identifiable intangibles (other than value of
business acquired);
- Impairment of intangibles;
- Income (loss) from initial adoption of new regulations and
accounting guidance; and
- Income (loss) from discontinued operations.
We also exclude the pre-tax effect of the first bullet above
from GAAP revenues to arrive at adjusted operating revenues.
Management believes these non-GAAP performance measures allow
for a better understanding of the underlying trend in our business,
as the excluded items are not necessarily indicative of our
operating fundamentals or performance.
Similarly, we exclude accumulated other comprehensive income
(loss) ("AOCI") from book value per share to arrive at book value
per share, excluding AOCI.
Conference Call Information
The Company will hold an investor conference call at 5:00 PM
(ET) Wednesday, November 4, 2020. The Company’s CEO, Michael Braun
and its CFO, Ronald Jordan will discuss the financial results and
review the outlook for the Company. Messrs. Braun and Jordan invite
interested parties to participate in the conference call.
Listeners interested in participating in the Q&A session may
access the conference call as follows:
Toll-Free Dial-in: (877) 303-6913
Conference ID: 5182801
A live webcast of the call will be available online via the
“Conference Calls” section of the Company’s website at FedNat.com
or interested parties can click on the following link:
http://www.fednat.com/investors/conference-calls/
Please call at least five minutes in advance to ensure that you
are connected prior to the presentation. A webcast replay of the
conference call will be available shortly after the live webcast is
completed and may be accessed via the Company’s website.
About the Company
The Company is an insurance holding company that controls
substantially all aspects of the insurance underwriting,
distribution and claims processes through our subsidiaries and
contractual relationships with independent agents and general
agents. The Company, through our wholly owned subsidiaries, are
authorized to underwrite, and/or place homeowners multi-peril,
federal flood and other lines of insurance in Florida and other
states. We market, distribute and service our own and third-party
insurers’ products and other services through a network of
independent and general agents.
The Company presents users with data related to different
aspects of our business to afford users greater transparency into
our results. Homeowners Florida consists of data related to our
homeowners and fire property and casualty insurance business, which
currently operates in Florida. Homeowners non-Florida consists of
data related to our homeowners and fire property and casualty
insurance business, which currently operates in Alabama, Louisiana,
South Carolina, Texas and Mississippi. Non-core consists of
financial information related to nonstandard personal automobile
insurance business which operated in Florida, Georgia, Texas and
Alabama and our commercial general liability insurance
business.
Forward-Looking Statements
Safe harbor statement under the Private Securities Litigation
Reform Act of 1995:
Statements that are not historical fact are forward-looking
statements that are subject to certain risks and uncertainties that
could cause actual events and results to differ materially from
those discussed herein. Without limiting the generality of the
foregoing, words such as “anticipate,” “believe,” “budget,”
“contemplate,” “continue,” “could,” “envision,” “estimate,”
“expect,” “guidance,” “indicate,” “intend,” “may,” “might,” “plan,”
“possibly,” “potential,” “predict,” “probably,” “pro-forma,”
“project,” “seek,” “should,” “target,” or “will” or the negative or
other variations thereof, and similar words or phrases or
comparable terminology, are intended to identify forward-looking
statements.
Forward-looking statements might also include, but are not
limited to, one or more of the following:
- Projections of revenues, income, earnings per share, dividends,
capital structure or other financial items or measures;
- Descriptions of plans or objectives of management for future
operations, insurance products or services;
- Forecasts of future insurable events, economic performance,
liquidity, need for funding and income; and
- Descriptions of assumptions or estimates underlying or relating
to any of the foregoing.
The risks and uncertainties include, without limitation, risks
and uncertainties related to estimates, assumptions and projections
generally; the nature of the Company’s business; the adequacy of
its reserves for losses and loss adjustment expense; claims
experience; weather conditions (including the severity and
frequency of storms, hurricanes, tornadoes and hail) and other
catastrophic losses; reinsurance costs and the ability of
reinsurers to indemnify the Company; raising additional capital and
our compliance with minimum capital and surplus requirements;
potential assessments that support property and casualty insurance
pools and associations; the effectiveness of internal financial
controls; the effectiveness of our underwriting, pricing and
related loss limitation methods; changes in loss trends, including
as a result of insureds’ assignment of benefits; court decisions
and trends in litigation; our potential failure to pay claims
accurately; ability to obtain regulatory approval applications for
requested rate increases, or to underwrite in additional
jurisdictions, and the timing thereof; the impact that the results
of our subsidiaries’ operations may have on our results of
operations; inflation and other changes in economic conditions
(including changes in interest rates and financial markets);
pricing competition and other initiatives by competitors;
legislative and regulatory developments; the outcome of litigation
pending against the Company, and any settlement thereof; dependence
on investment income and the composition of the Company’s
investment portfolio; insurance agents; ratings by industry
services; the reliability and security of our information
technology systems; reliance on key personnel; acts of war and
terrorist activities; and other matters described from time to time
by the Company in releases and publications, and in periodic
reports and other documents filed with the United States Securities
and Exchange Commission.
In addition, investors should be aware that generally accepted
accounting principles prescribe when a company may reserve for
particular risks, including claims and litigation exposures.
Accordingly, results for a given reporting period could be
significantly affected if and when a reserve is established for a
contingency. Reported results may therefore appear to be volatile
in certain accounting periods.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date on
which they are made. We do not undertake any obligation to update
publicly or revise any forward-looking statements to reflect
circumstances or events that occur after the date the
forward-looking statements are made.
Contacts
Michael H. Braun, CEO (954) 308-1322,Ronald
Jordan, CFO (954) 308-1363,Bernard Kilkelly, Investor Relations
(954) 308-1409,or investorrelations@fednat.com
FEDNAT HOLDING COMPANY AND SUBSIDIARIESSelected
Financial Highlights(Dollars in thousands, except per share
data)(Unaudited)
|
|
As of or For the |
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
|
2020 |
|
2019 |
|
% Change |
|
2020 |
|
2019 |
|
% Change |
Net Income (Loss)
Attributable to Common Shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(20,745 |
) |
|
|
$ |
4,659 |
|
|
(545.3 |
) |
% |
|
$ |
(40,091 |
) |
|
|
$ |
7,904 |
|
|
(607.2 |
) |
% |
Adjusted operating income
(loss) |
|
(21,501 |
) |
|
|
4,292 |
|
|
(601.0 |
) |
% |
|
(45,303 |
) |
|
|
7,564 |
|
|
(698.9 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Common
Share |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) -
diluted |
|
$ |
(1.51 |
) |
|
|
$ |
0.36 |
|
|
(518.9 |
) |
% |
|
$ |
(2.89 |
) |
|
|
$ |
0.61 |
|
|
(570.3 |
) |
% |
Adjusted operating income
(loss) - diluted |
|
(1.57 |
) |
|
|
0.33 |
|
|
(571.3 |
) |
% |
|
(3.26 |
) |
|
|
0.59 |
|
|
(655.4 |
) |
% |
Dividends declared |
|
0.09 |
|
|
|
0.08 |
|
|
12.5 |
|
% |
|
0.27 |
|
|
|
0.24 |
|
|
12.5 |
|
% |
Book value |
|
14.69 |
|
|
|
18.45 |
|
|
(20.4 |
) |
% |
|
14.69 |
|
|
|
18.45 |
|
|
(20.4 |
) |
% |
Book value, excluding
AOCI |
|
13.54 |
|
|
|
17.54 |
|
|
(22.8 |
) |
% |
|
13.54 |
|
|
|
17.54 |
|
|
(22.8 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Return to
Shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
Repurchases of common
stock |
|
$ |
— |
|
|
|
$ |
— |
|
|
NCM |
|
$ |
10,000 |
|
|
|
$ |
— |
|
|
NCM |
Dividends declared |
|
1,259 |
|
|
|
1,046 |
|
|
20.4 |
% |
|
3,819 |
|
|
|
3,133 |
|
|
21.9 |
|
% |
|
|
$ |
1,259 |
|
|
|
$ |
1,046 |
|
|
20.4 |
% |
|
$ |
13,819 |
|
|
|
$ |
3,133 |
|
|
341.1 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
$ |
97,316 |
|
|
|
$ |
99,476 |
|
|
(2.2 |
) |
% |
|
$ |
347,034 |
|
|
|
$ |
305,974 |
|
|
13.4 |
|
% |
Adjusted operating
revenues |
|
95,992 |
|
|
|
98,682 |
|
|
(2.7 |
) |
% |
|
338,152 |
|
|
|
300,924 |
|
|
12.4 |
|
% |
Gross premiums written |
|
180,152 |
|
|
|
159,131 |
|
|
13.2 |
|
% |
|
558,492 |
|
|
|
460,534 |
|
|
21.3 |
|
% |
Gross premiums earned |
|
183,518 |
|
|
|
145,546 |
|
|
26.1 |
|
% |
|
538,988 |
|
|
|
425,133 |
|
|
26.8 |
|
% |
Net premiums earned |
|
83,546 |
|
|
|
87,374 |
|
|
(4.4 |
) |
% |
|
300,934 |
|
|
|
268,464 |
|
|
12.1 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios to Net Premiums
Earned |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss ratio |
|
118.5 |
|
% |
|
71.1 |
% |
|
|
|
99.0 |
|
% |
|
72.4 |
% |
|
|
Net expense ratio |
|
35.8 |
|
% |
|
34.4 |
% |
|
|
|
35.7 |
|
% |
|
34.6 |
% |
|
|
Combined ratio |
|
154.3 |
|
% |
|
105.5 |
% |
|
|
|
134.7 |
|
% |
|
107.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In-Force Homeowners
Policies |
|
|
|
|
|
|
|
|
|
|
|
|
Florida |
|
217,000 |
|
|
|
237,000 |
|
|
(8.4 |
) |
% |
|
217,000 |
|
|
|
237,000 |
|
|
(8.4 |
) |
% |
Non-Florida |
|
152,000 |
|
|
|
78,000 |
|
|
94.9 |
|
% |
|
152,000 |
|
|
|
78,000 |
|
|
94.9 |
|
% |
|
|
369,000 |
|
|
|
315,000 |
|
|
17.1 |
|
% |
|
369,000 |
|
|
|
315,000 |
|
|
17.1 |
|
% |
FEDNAT HOLDING COMPANY AND
SUBSIDIARIESConsolidated Statement of Operations(In thousands,
except per share data)(Unaudited)
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Revenues: |
|
|
|
|
|
|
|
|
Net premiums earned |
|
$ |
83,546 |
|
|
$ |
87,374 |
|
|
$ |
300,934 |
|
|
$ |
268,464 |
|
Net investment income |
|
2,404 |
|
|
4,068 |
|
|
9,637 |
|
|
12,037 |
|
Net realized and unrealized investment gains (losses) |
|
1,324 |
|
|
794 |
|
|
8,882 |
|
|
5,050 |
|
Direct written policy fees |
|
3,603 |
|
|
2,514 |
|
|
10,662 |
|
|
7,308 |
|
Other income |
|
6,439 |
|
|
4,726 |
|
|
16,919 |
|
|
13,115 |
|
Total revenues |
|
97,316 |
|
|
99,476 |
|
|
347,034 |
|
|
305,974 |
|
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
Losses and loss adjustment expenses |
|
99,016 |
|
|
62,105 |
|
|
297,862 |
|
|
194,284 |
|
Commissions and other underwriting expenses |
|
24,580 |
|
|
24,854 |
|
|
90,205 |
|
|
75,650 |
|
General and administrative expenses |
|
5,333 |
|
|
5,246 |
|
|
17,241 |
|
|
17,336 |
|
Interest expense |
|
1,915 |
|
|
1,894 |
|
|
5,745 |
|
|
8,860 |
|
Total costs and expenses |
|
130,844 |
|
|
94,099 |
|
|
411,053 |
|
|
296,130 |
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
(33,528 |
) |
|
5,377 |
|
|
(64,019 |
) |
|
9,844 |
|
Income tax expense
(benefit) |
|
(12,783 |
) |
|
718 |
|
|
(23,928 |
) |
|
1,940 |
|
Net income (loss) |
|
$ |
(20,745 |
) |
|
$ |
4,659 |
|
|
$ |
(40,091 |
) |
|
$ |
7,904 |
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) Per
Common Share |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(1.51 |
) |
|
$ |
0.36 |
|
|
$ |
(2.89 |
) |
|
$ |
0.62 |
|
Diluted |
|
(1.51 |
) |
|
0.36 |
|
|
(2.89 |
) |
|
0.61 |
|
|
|
|
|
|
|
|
|
|
Weighted Average
Number of Shares of Common Stock Outstanding |
|
|
|
|
|
|
|
|
Basic |
|
13,708 |
|
|
12,854 |
|
|
13,890 |
|
|
12,831 |
|
Diluted |
|
13,708 |
|
|
12,897 |
|
|
13,890 |
|
|
12,880 |
|
|
|
|
|
|
|
|
|
|
Dividends Declared Per
Common Share |
|
$ |
0.09 |
|
|
$ |
0.08 |
|
|
$ |
0.27 |
|
|
$ |
0.24 |
|
FEDNAT HOLDING COMPANY AND SUBSIDIARIESSelected
Operating Metrics(Unaudited)
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
(In thousands) |
Gross premiums written: |
|
|
|
|
|
|
|
|
Homeowners Florida |
|
$ |
106,101 |
|
|
$ |
115,341 |
|
|
$ |
339,799 |
|
|
$ |
347,320 |
|
Homeowners non-Florida |
|
68,447 |
|
|
38,790 |
|
|
203,897 |
|
|
100,322 |
|
Federal flood |
|
5,660 |
|
|
5,019 |
|
|
14,967 |
|
|
13,014 |
|
Non-core |
|
(56 |
) |
|
(19 |
) |
|
(171 |
) |
|
(122 |
) |
Total gross premiums written |
|
$ |
180,152 |
|
|
$ |
159,131 |
|
|
$ |
558,492 |
|
|
$ |
460,534 |
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
(In thousands) |
Gross premiums earned: |
|
|
|
|
|
|
|
|
Homeowners Florida |
|
$ |
115,346 |
|
|
$ |
113,062 |
|
|
$ |
347,237 |
|
|
$ |
338,481 |
|
Homeowners non-Florida |
|
63,759 |
|
|
28,431 |
|
|
179,071 |
|
|
73,928 |
|
Federal flood |
|
4,469 |
|
|
3,896 |
|
|
12,851 |
|
|
11,005 |
|
Non-core |
|
(56 |
) |
|
157 |
|
|
(171 |
) |
|
1,719 |
|
Total gross premiums earned |
|
$ |
183,518 |
|
|
$ |
145,546 |
|
|
$ |
538,988 |
|
|
$ |
425,133 |
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
(In thousands) |
Net premiums earned: |
|
|
|
|
|
|
|
|
Homeowners Florida |
|
$ |
54,326 |
|
|
$ |
65,975 |
|
|
$ |
190,627 |
|
|
$ |
207,857 |
|
Homeowners non-Florida |
|
29,276 |
|
|
21,311 |
|
|
110,478 |
|
|
59,114 |
|
Non-core |
|
(56 |
) |
|
88 |
|
|
(171 |
) |
|
1,493 |
|
Total net premiums earned |
|
$ |
83,546 |
|
|
$ |
87,374 |
|
|
$ |
300,934 |
|
|
$ |
268,464 |
|
FEDNAT HOLDING COMPANY AND SUBSIDIARIESSelected
Operating Metrics (continued)(Unaudited)
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
(In thousands) |
Commissions and other
underwriting expenses: |
|
|
|
|
|
|
|
|
Homeowners Florida |
|
$ |
13,736 |
|
|
$ |
13,187 |
|
|
$ |
41,181 |
|
|
$ |
39,810 |
|
All others |
|
13,337 |
|
|
6,610 |
|
|
37,789 |
|
|
17,796 |
|
Ceding commissions |
|
(7,909 |
) |
|
(3,203 |
) |
|
(13,969 |
) |
|
(8,893 |
) |
Total commissions |
|
19,164 |
|
|
16,594 |
|
|
65,001 |
|
|
48,713 |
|
|
|
|
|
|
|
|
|
|
Fees |
|
1,358 |
|
|
902 |
|
|
3,694 |
|
|
2,340 |
|
Salaries and wages |
|
3,351 |
|
|
2,696 |
|
|
10,068 |
|
|
9,090 |
|
Other underwriting expenses |
|
707 |
|
|
4,662 |
|
|
11,442 |
|
|
15,507 |
|
Total commissions and other underwriting expenses |
|
$ |
24,580 |
|
|
$ |
24,854 |
|
|
$ |
90,205 |
|
|
$ |
75,650 |
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
|
Net loss ratio |
|
118.5 |
% |
|
71.1 |
% |
|
99.0 |
% |
|
72.4 |
% |
Net expense ratio |
|
35.8 |
% |
|
34.4 |
% |
|
35.7 |
% |
|
34.6 |
% |
Combined ratio |
|
154.3 |
% |
|
105.5 |
% |
|
134.7 |
% |
|
107.0 |
% |
Gross loss ratio |
|
213.0 |
% |
|
113.1 |
% |
|
142.0 |
% |
|
127.7 |
% |
Gross expense ratio |
|
20.6 |
% |
|
22.9 |
% |
|
22.5 |
% |
|
24.0 |
% |
FEDNAT HOLDING COMPANY AND
SUBSIDIARIESConsolidated Balance Sheet(Unaudited)
|
|
September 30, |
|
December 31, |
|
|
2020 |
|
2019 |
ASSETS |
|
(In thousands) |
Investments: |
|
|
|
|
Debt securities, available-for-sale, at fair value |
|
$ |
540,443 |
|
|
$ |
526,265 |
|
Debt securities, held-to-maturity, at amortized cost |
|
— |
|
|
4,337 |
|
Equity securities, at fair value |
|
13,108 |
|
|
20,039 |
|
Total investments |
|
553,551 |
|
|
550,641 |
|
Cash and cash equivalents |
|
49,286 |
|
|
133,361 |
|
Prepaid reinsurance
premiums |
|
286,128 |
|
|
145,659 |
|
Premiums receivable, net of
allowance |
|
52,753 |
|
|
41,422 |
|
Reinsurance recoverable,
net |
|
452,194 |
|
|
209,615 |
|
Deferred acquisition costs and
value of business acquired, net |
|
51,157 |
|
|
56,136 |
|
Current and deferred income
taxes, net |
|
24,099 |
|
|
2,552 |
|
Goodwill |
|
10,997 |
|
|
10,997 |
|
Other assets |
|
34,643 |
|
|
28,633 |
|
Total assets |
|
$ |
1,514,808 |
|
|
$ |
1,179,016 |
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
Liabilities |
|
|
|
|
Loss and loss adjustment
expense reserves |
|
$ |
553,980 |
|
|
$ |
324,362 |
|
Unearned premiums |
|
380,374 |
|
|
360,870 |
|
Reinsurance payable and funds
withheld liabilities |
|
230,987 |
|
|
102,467 |
|
Long-term debt, net of
deferred financing costs |
|
98,643 |
|
|
98,522 |
|
Deferred revenue |
|
6,795 |
|
|
6,856 |
|
Other liabilities |
|
42,553 |
|
|
37,246 |
|
Total liabilities |
|
1,313,332 |
|
|
930,323 |
|
Shareholders'
Equity |
|
|
|
|
Preferred stock, $0.01 par
value: 1,000,000 shares authorized |
|
— |
|
|
— |
|
Common stock, $0.01 par value:
25,000,000 shares authorized; 13,717,525 and 14,414,821 shares
issued and outstanding, respectively |
|
137 |
|
|
144 |
|
Additional paid-in
capital |
|
168,912 |
|
|
167,677 |
|
Accumulated other
comprehensive income (loss) |
|
15,763 |
|
|
10,281 |
|
Retained earnings |
|
16,664 |
|
|
70,591 |
|
Total shareholders’ equity |
|
201,476 |
|
|
248,693 |
|
Total liabilities and shareholders' equity |
|
$ |
1,514,808 |
|
|
$ |
1,179,016 |
|
FEDNAT HOLDING COMPANY AND SUBSIDIARIESGAAP to
Non-GAAP Reconciliations(Dollars in thousands)(Unaudited)
|
|
As of or For the |
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Revenue |
|
|
|
|
|
|
|
|
Total revenues |
|
$ |
97,316 |
|
|
$ |
99,476 |
|
|
$ |
347,034 |
|
|
$ |
305,974 |
|
Less: |
|
|
|
|
|
|
|
|
Net realized and unrealized investment gains (losses) |
|
1,324 |
|
|
794 |
|
|
8,882 |
|
|
5,050 |
|
Adjusted operating revenues |
|
$ |
95,992 |
|
|
$ |
98,682 |
|
|
$ |
338,152 |
|
|
$ |
300,924 |
|
|
|
|
|
|
|
|
|
|
Net Income
(Loss) |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(20,745 |
) |
|
$ |
4,659 |
|
|
$ |
(40,091 |
) |
|
$ |
7,904 |
|
Less: |
|
|
|
|
|
|
|
|
Net realized and unrealized investment gains (losses) |
|
793 |
|
|
634 |
|
|
5,320 |
|
|
3,812 |
|
Acquisition and other costs |
|
(15 |
) |
|
(238 |
) |
|
(41 |
) |
|
(774 |
) |
Amortization of identifiable intangibles |
|
(22 |
) |
|
— |
|
|
(67 |
) |
|
— |
|
Gain (loss) on early extinguishment of debt |
|
— |
|
|
(29 |
) |
|
— |
|
|
(2,698 |
) |
Adjusted operating income (loss) |
|
$ |
(21,501 |
) |
|
$ |
4,292 |
|
|
$ |
(45,303 |
) |
|
$ |
7,564 |
|
|
|
|
|
|
|
|
|
|
Income tax rate assumed for
reconciling items above |
|
40.10 |
% |
|
18.26 |
% |
|
40.10 |
% |
|
24.52 |
% |
|
|
|
|
|
|
|
|
|
Per Common
Share |
|
|
|
|
|
|
|
|
Book value |
|
$ |
14.69 |
|
|
$ |
18.45 |
|
|
$ |
14.69 |
|
|
$ |
18.45 |
|
Less: |
|
|
|
|
|
|
|
|
AOCI |
|
1.15 |
|
|
0.91 |
|
|
1.15 |
|
|
0.91 |
|
Book value, excluding AOCI |
|
$ |
13.54 |
|
|
$ |
17.54 |
|
|
$ |
13.54 |
|
|
$ |
17.54 |
|
FedNat (NASDAQ:FNHC)
Historical Stock Chart
From Aug 2024 to Sep 2024
FedNat (NASDAQ:FNHC)
Historical Stock Chart
From Sep 2023 to Sep 2024