Trean Insurance Group, Inc. (Nasdaq: TIG) (“Trean” or the
“Company”), a leading provider of products and services to the
specialty insurance market, today reported results for the second
quarter ended June 30, 2020.
Trean completed its initial public offering
(“IPO”) in July 2020 and the results detailed below reflect the
pre-IPO combined entities of BIC Holdings LLC and Trean Holdings
LLC, as well as costs related to the IPO and the Company’s public
company readiness efforts.
Second Quarter 2020 Highlights and
Subsequent Events
- Gross written premiums increased by
5.0% to $109.6 million, compared to $104.4 million in the second
quarter of 2019
- Loss ratio of 57.0%, compared to
55.7% in the second quarter of 2019
- Expense ratio of 38.9% compared to
26.5% in the second quarter of 2019, primarily driven by $1.8
million of additional professional service expenses related to
legal, consulting and other IPO and public company readiness
efforts, as well as expenses associated with an increased
workforce
- Combined ratio of 95.9%, primarily
driven by the increased expense ratio
- Net income was $3.7 million;
Adjusted net income(1) was $4.8 million
- Return on equity of 10.3%; Adjusted
return on equity(1) of 13.2%
- Upon completion of the
reorganization transactions in connection with the IPO, acquired
the remaining 55% interest in Compstar Holding Company LLC
(“Compstar”) and now owns 100% of Compstar, the parent of a general
agent underwriting workers’ compensation insurance coverage for
California contractors
- Subsequent to the second quarter,
entered into agreement to acquire 7710 Insurance Company and its
associated program manager and agency
(1) Adjusted
net income, adjusted return on equity and underwriting income are
non-GAAP financial measures. See discussion of “Key Metrics”
below.
“Having recently completed a successful initial
public offering in July, our focus remains on executing on our
proven 24-year business model to drive future growth,” said Andrew
M. O’Brien, President and Chief Executive Officer of Trean. “The
COVID-19 pandemic continues to provide significant uncertainty to
many businesses throughout the country, including the insurance
industry, but we believe Trean’s operating strategy will continue
to demonstrate the stability and effectiveness of our approach. We
remain committed to supporting our program partners, responsibly
accepting new opportunities, seeking proper rate levels and quickly
and fairly resolving claims. We are confident about the growth
opportunities in our largest product line – workers compensation –
and in deriving the benefits from our newly added program partners
and acquisitions we completed earlier in 2020. We are excited by
our performance thus far in 2020, and look forward to building
additional value for shareholders in the coming years.”
Underwriting Results
Gross written premiums increased 5.0% to $109.6
million for the second quarter of 2020, compared to $104.4 million
for the second quarter of 2019, primarily attributable to the
addition of new program partners brought on board during the second
quarter of 2020. Net earned premiums of $21.4 million declined 8.5%
compared to the prior year’s second quarter, driven by the increase
in gross unearned premiums, which was due to the addition of second
quarter new program partners whose premiums have not yet been
earned, and the timing of the effective dates of new policies
written during the second quarter.
Underwriting income(1) was $0.9 million,
resulting in a combined ratio of 95.9%, for the second quarter of
2020, compared to underwriting income of $4.2 million and a
combined ratio of 82.2% for the prior-year period. Losses and loss
adjustment expenses for the second quarter of 2020 were $12.2
million, which resulted in a 57.0% loss ratio. Loss activity during
the second quarter was directly attributable to the decrease in net
earned premiums during the period, offset by a decrease in
favorable loss reserve estimate true-ups made during the second
quarter of 2020 versus the second quarter of 2019.
General and administrative expenses increased
$2.1 million, or 34.3%, to $8.3 million for the second quarter of
2020, compared to $6.2 million for the prior-year period. The
Company’s expense ratio was 38.9% for the second quarter of 2020,
compared to 26.5% for the prior-year period. The increase was
primarily attributable to an increase in professional service
expenses, higher salaries and benefits resulting from an expanded
workforce and a rise in net agent commissions resulting from an
increase in written premiums.
The second quarters of 2020 and 2019 included
certain expenses related to the IPO, transaction and other one-time
consulting expenses, expenses related to debt refinancing and
management fee expenses including cash bonuses paid to unitholders.
Adjusted net income(1), which excludes those items, for the second
quarter of 2020 was $4.8 million, compared to $6.9 million for the
prior-year period.
Investment Results
Net investment income was $1.5 million for the
second quarter of 2020, compared to $1.6 million for the prior-year
period. Cash and invested assets consist primarily of fixed
maturities, equity securities and cash equivalents. The majority of
the investment portfolio was comprised of fixed maturity securities
of $375.7 million at June 30, 2020, that were classified as
available-for-sale. Also included in investments at June 30, 2020
were $3.8 million of equity securities and $97.3 million of cash
and cash equivalents. The Company’s investment portfolio had an
average rating of “AA” at both June 30, 2020 and June 30, 2019.
Other
Other revenue decreased $0.4 million, or 19.2%,
to $1.5 million for the second quarter of 2020, compared to $1.9
million for the prior-year period, largely driven by a decrease in
third-party administrator fees and brokerage fees earned.
Equity earnings, net of tax was $1.2 million for
the second quarter of 2020, compared to $0.9 million for the second
quarter of 2019. The increase is due to increased income of the
Company’s equity method investments.
Members’ Equity and Returns
Total members’ equity was $139.3 million at June
30, 2020, compared to $141.6 million at December 31, 2019. Return
on equity was 10.3% for the second quarter of 2020, compared to
21.1% for the prior-year period, and adjusted return on equity(1)
was 13.2% for the second quarter of 2020, compared to 22.9% for the
prior-year period. The change in return on equity reflected a
significant increase in the Company’s members’ equity, primarily
due to the increase in retained earnings since December 2019.
Webcast and Conference Call
A webcast and conference call to discuss the
Company’s results will be held today beginning at 5:00 p.m.
(Eastern Time). The audio webcast is accessible through the
investor relations section of the Company’s website at
https://investors.trean.com.
The dial-in number for the conference call is
(833) 519-1344 (toll-free) or (914) 800-3906 (international),
conference ID# 2439999. Any person interested in listening to the
call should dial in or access the website at least 10 minutes
before the call.
A replay of the call will be available at
https://investors.trean.com for one year following the call.
Key Metrics
The Company discusses certain key financial and
operating metrics, described below, which provide useful
information about its business and the operational factors
underlying its financial performance.
Underwriting income is a non-GAAP financial
measure defined as income before taxes excluding net investment
income, net realized capital gains or losses, other revenue,
interest expense and other income. See “Reconciliation of Non-GAAP
Financial Measures” for a reconciliation of underwriting income to
income before taxes in accordance with GAAP.
Adjusted net income is a non-GAAP financial
measure defined as net income excluding the impact of unusual
events, including the consummation of the reorganization
transactions in connection with the IPO, or gains or losses that
the Company does not believe reflect its core operating
performance, which items may have a disproportionate effect in a
given period, affecting comparability of the Company’s results. See
“Reconciliation of Non-GAAP Financial Measures” for a
reconciliation of adjusted net income to net income in accordance
with GAAP.
Loss ratio, expressed as a percentage, is the
ratio of losses and loss adjustment expenses to net earned
premiums.
Expense ratio, expressed as a percentage, is the
ratio of general and administrative expenses to net earned
premiums.
Combined ratio is the sum of the loss ratio and
the expense ratio. A combined ratio under 100% generally indicates
an underwriting profit. A combined ratio over 100% generally
indicates an underwriting loss.
Return on equity is net income expressed on an
annualized basis as a percentage of average beginning and ending
members’ equity during the period.
Adjusted return on equity is a non-GAAP
financial measured defined as adjusted net income expressed on an
annualized basis as a percentage of average beginning and ending
members’ equity during the period. See “Reconciliation of Non-GAAP
Financial Measures” for a reconciliation of adjusted return on
equity to return on equity in accordance with GAAP.
Tangible members’ equity is defined as members’
equity less goodwill and other intangible assets.
Return on tangible equity is a non-GAAP
financial measure defined as net income expressed on an annualized
basis as a percentage of average beginning and ending tangible
members’ equity during the period.
Adjusted return on tangible equity is a non-GAAP
financial measure defined as adjusted net income expressed on an
annualized basis as a percentage of average beginning and ending
tangible members’ equity during the period. See “Reconciliation of
Non-GAAP Financial Measures” for a reconciliation of adjusted
return on tangible equity to return on equity in accordance with
GAAP.
Forward-Looking Statements
This press release contains forward-looking
statements as that term is defined in the Private Securities
Litigation Reform Act of 1995. Forward-looking statements include
statements that are not historical or current facts. You can
identify forward-looking statements by words such as “anticipate,”
“estimate,” “expect,” “intend,” “plan,” “predict,” “project,”
“believe,” “seek,” “outlook,” “future,” “will,” “would,” “should,”
“could,” “may,” “can have,” “likely” and similar terms.
Forward-looking statements are based on management’s current
expectations and assumptions about future events. Forward-looking
statements involve risks and uncertainties that could cause actual
results to differ materially from those in the forward-looking
statements. Factors that may cause such differences include the
risks described in the Company’s filings with the Securities and
Exchange Commission, including its Quarterly Report on Form 10-Q
for the quarter ended June 30, 2020. These forward-looking
statements speak only as of the date of this press release. The
Company disclaims any obligation to update or revise any
forward-looking statement, whether as a result of new information,
future developments, changes in assumptions or otherwise.
About Trean Insurance Group,
Inc.
Trean Insurance Group, Inc. (Nasdaq: TIG)
provides products and services to the specialty insurance market.
Trean underwrites specialty casualty insurance products both
through its program partners and its own managing general agencies.
Trean also provides its program partners with a variety of services
including issuing carrier services, claims administration and
reinsurance brokerage. Trean is licensed to write business across
49 states and the District of Columbia. For more information,
please visit www.trean.com.
Contacts
Investor Relationsinvestor.relations@trean.com(952) 974-2260
|
BIC Holdings LLC - Trean Holdings LLC |
Condensed Combined Statements of Operations |
(in thousands, except for percentages) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
|
Percentage |
|
Six Months Ended June 30, |
|
|
|
Percentage |
|
2020 |
|
2019 |
|
Change |
|
Change |
|
2020 |
|
2019 |
|
Change |
|
Change |
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross written premiums |
$ |
109,612 |
|
|
$ |
104,420 |
|
|
5,192 |
|
|
5.0% |
|
$ |
217,471 |
|
|
$ |
205,954 |
|
|
11,517 |
|
|
5.6% |
Increase in gross unearned premiums |
|
(9,265 |
) |
|
|
(1,535 |
) |
|
(7,730 |
) |
|
503.6% |
|
|
(16,638 |
) |
|
|
(12,487 |
) |
|
(4,151 |
) |
|
33.2% |
Gross earned premiums |
|
100,347 |
|
|
|
102,885 |
|
|
(2,538 |
) |
|
(2.5)% |
|
|
200,833 |
|
|
|
193,467 |
|
|
7,366 |
|
|
3.8% |
Ceded earned premiums |
|
(78,968 |
) |
|
|
(79,508 |
) |
|
540 |
|
|
(0.7)% |
|
|
(156,995 |
) |
|
|
(150,466 |
) |
|
(6,529 |
) |
|
4.3% |
Net earned premiums |
|
21,379 |
|
|
|
23,377 |
|
|
(1,998 |
) |
|
(8.5)% |
|
|
43,838 |
|
|
|
43,001 |
|
|
837 |
|
|
1.9% |
Net investment income |
|
1,524 |
|
|
|
1,570 |
|
|
(46 |
) |
|
(2.9)% |
|
|
4,796 |
|
|
|
2,857 |
|
|
1,939 |
|
|
67.9% |
Net realized capital gains (losses) |
|
(4 |
) |
|
|
111 |
|
|
(115 |
) |
|
(103.6)% |
|
|
3,230 |
|
|
|
723 |
|
|
2,507 |
|
|
346.7% |
Other revenue |
|
1,530 |
|
|
|
1,893 |
|
|
(363 |
) |
|
(19.2)% |
|
|
5,922 |
|
|
|
5,488 |
|
|
434 |
|
|
7.9% |
Total revenue |
|
24,429 |
|
|
|
26,951 |
|
|
(2,522 |
) |
|
(9.4)% |
|
|
57,786 |
|
|
|
52,069 |
|
|
5,717 |
|
|
11.0% |
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Losses and loss adjustment expenses |
|
12,183 |
|
|
|
13,014 |
|
|
(831 |
) |
|
(6.4)% |
|
|
25,117 |
|
|
|
24,470 |
|
|
647 |
|
|
2.6% |
General and administrative expenses |
|
8,316 |
|
|
|
6,193 |
|
|
2,123 |
|
|
34.3% |
|
|
16,476 |
|
|
|
10,162 |
|
|
6,314 |
|
|
62.1% |
Interest expense |
|
501 |
|
|
|
561 |
|
|
(60 |
) |
|
(10.7)% |
|
|
962 |
|
|
|
1,185 |
|
|
(223 |
) |
|
(18.8)% |
Total expenses |
|
21,000 |
|
|
|
19,768 |
|
|
1,232 |
|
|
6.2% |
|
|
42,555 |
|
|
|
35,817 |
|
|
6,738 |
|
|
18.8% |
Other income |
|
40 |
|
|
|
33 |
|
|
7 |
|
|
21.2% |
|
|
54 |
|
|
|
126 |
|
|
(72 |
) |
|
(57.1)% |
Income before taxes |
|
3,469 |
|
|
|
7,216 |
|
|
(3,747 |
) |
|
(51.9)% |
|
|
15,285 |
|
|
|
16,378 |
|
|
(1,093 |
) |
|
(6.7)% |
Provision for income taxes |
|
979 |
|
|
|
1,690 |
|
|
(711 |
) |
|
(42.1)% |
|
|
3,891 |
|
|
|
3,009 |
|
|
882 |
|
|
29.3% |
Equity earnings in affiliates, net of tax |
|
1,230 |
|
|
|
865 |
|
|
365 |
|
|
42.2% |
|
|
1,932 |
|
|
|
1,473 |
|
|
459 |
|
|
31.2% |
Net income |
$ |
3,720 |
|
|
$ |
6,391 |
|
|
(2,671 |
) |
|
(41.8)% |
|
$ |
13,326 |
|
|
$ |
14,842 |
|
|
(1,516 |
) |
|
(10.2)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Metrics |
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
(in thousands, except percentages) |
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
Underwriting income (1) |
$ |
880 |
|
|
$ |
4,170 |
|
|
$ |
2,245 |
|
|
$ |
8,369 |
|
Adjusted net income (1) |
$ |
4,771 |
|
|
$ |
6,934 |
|
|
$ |
11,095 |
|
|
$ |
15,303 |
|
Loss ratio |
|
57.0 |
% |
|
|
55.7 |
% |
|
|
57.3 |
% |
|
|
56.9 |
% |
Expense ratio |
|
38.9 |
% |
|
|
26.5 |
% |
|
|
37.6 |
% |
|
|
23.6 |
% |
Combined ratio |
|
95.9 |
% |
|
|
82.2 |
% |
|
|
94.9 |
% |
|
|
80.5 |
% |
Return on equity |
|
10.3 |
% |
|
|
21.1 |
% |
|
|
19.0 |
% |
|
|
25.9 |
% |
Adjusted return on equity (1) |
|
13.2 |
% |
|
|
22.9 |
% |
|
|
15.8 |
% |
|
|
26.7 |
% |
Return on tangible equity (1) |
|
10.5 |
% |
|
|
21.6 |
% |
|
|
19.5 |
% |
|
|
26.6 |
% |
Adjusted return on tangible equity (1) |
|
13.5 |
% |
|
|
23.4 |
% |
|
|
16.2 |
% |
|
|
27.4 |
% |
|
|
|
|
|
|
|
|
(1) Adjusted net income, adjusted return on equity, return on
tangible equity, adjusted return on tangible equity and
underwriting income are non-GAAP financial measures. See
“Reconciliation of Non-GAAP Financial Measures” below for a
reconciliation to the applicable GAAP measure. |
|
|
|
|
|
|
|
|
BIC Holdings LLC - Trean Holdings LLC |
Condensed Combined Balance Sheets |
(in thousands) |
(unaudited) |
|
|
|
|
|
June 30, 2020 |
|
December 31, 2019 |
Assets |
|
|
|
|
|
Fixed maturities, available for sale |
$ |
375,705 |
|
|
$ |
337,865 |
|
Preferred stock, available for sale |
|
325 |
|
|
|
343 |
|
Common stock, available for sale |
|
3,428 |
|
|
|
492 |
|
Equity method investments |
|
11,693 |
|
|
|
12,173 |
|
Total investments |
|
391,151 |
|
|
|
350,873 |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
97,326 |
|
|
|
74,268 |
|
Restricted cash |
|
7,746 |
|
|
|
1,800 |
|
Accrued investment income |
|
2,605 |
|
|
|
2,468 |
|
Premiums and other receivables |
|
75,017 |
|
|
|
62,460 |
|
Related party receivables |
|
20,385 |
|
|
|
22,221 |
|
Reinsurance recoverable |
|
334,124 |
|
|
|
307,338 |
|
Prepaid reinsurance premiums |
|
91,311 |
|
|
|
80,088 |
|
Deferred policy acquisition cost, net |
|
2,951 |
|
|
|
2,115 |
|
Property and equipment, net |
|
8,130 |
|
|
|
7,937 |
|
Right of use asset |
|
5,958 |
|
|
|
- |
|
Deferred tax asset |
|
- |
|
|
|
1,367 |
|
Goodwill |
|
3,339 |
|
|
|
2,822 |
|
Other assets |
|
9,889 |
|
|
|
3,277 |
|
Total assets |
$ |
1,049,932 |
|
|
$ |
919,034 |
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
Unpaid loss and loss adjustment expenses |
$ |
442,500 |
|
|
$ |
406,716 |
|
Unearned premiums |
|
120,427 |
|
|
|
103,789 |
|
Funds held under reinsurance agreements |
|
165,371 |
|
|
|
163,445 |
|
Reinsurance premiums payable |
|
54,030 |
|
|
|
53,620 |
|
Accounts payable and accrued expenses |
|
73,325 |
|
|
|
14,995 |
|
Lease liability |
|
6,186 |
|
|
|
- |
|
Income taxes payable |
|
3,999 |
|
|
|
714 |
|
Deferred tax liability |
|
12 |
|
|
|
- |
|
Long-term debt |
|
39,698 |
|
|
|
29,040 |
|
Total
liabilities |
|
905,548 |
|
|
|
772,319 |
|
|
|
|
|
|
|
Redeemable preferred stock |
|
5,100 |
|
|
|
5,100 |
|
|
|
|
|
|
|
Members' Equity |
|
|
|
|
|
Members' equity |
|
78,478 |
|
|
|
78,438 |
|
Additional paid-in capital |
|
16,542 |
|
|
|
17,995 |
|
Retained earnings |
|
35,561 |
|
|
|
40,361 |
|
Accumulated other comprehensive loss |
|
8,703 |
|
|
|
4,821 |
|
Total members' equity |
|
139,284 |
|
|
|
141,615 |
|
Total liabilities and members'
equity |
$ |
1,049,932 |
|
|
$ |
919,034 |
|
|
|
|
|
|
|
Reconciliation of Non-GAAP Financial
Measures
Underwriting income
The Company defines underwriting income as
income before taxes excluding net investment income, net realized
capital gains or losses, other revenue, interest expense and other
income. Underwriting income represents the pre-tax profitability of
the Company’s underwriting operations and allows management to
evaluate the Company’s underwriting performance without regard to
investment income, interest expense and other revenue and income.
The Company uses this metric as the Company believes it gives
management and other users of the Company’s financial information
useful insight into the Company’s underlying business performance.
Underwriting income should not be viewed as a substitute for net
income calculated in accordance with GAAP, and other companies may
define underwriting income differently.
|
|
Three Months Ended June 30, |
|
Percentage |
|
Six Months Ended June 30, |
|
Percentage |
(in thousands, except percentages) |
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
Net income |
$ |
3,720 |
|
|
$ |
6,391 |
|
|
(41.8)% |
|
$ |
13,326 |
|
|
$ |
14,842 |
|
|
(10.2)% |
Income tax expense |
|
979 |
|
|
|
1,690 |
|
|
(42.1)% |
|
|
3,891 |
|
|
|
3,009 |
|
|
29.3% |
Equity earnings in affiliates, net of tax |
|
(1,230 |
) |
|
|
(865 |
) |
|
42.2% |
|
|
(1,932 |
) |
|
|
(1,473 |
) |
|
31.2% |
Income before taxes |
|
3,469 |
|
|
|
7,216 |
|
|
(51.9)% |
|
|
15,285 |
|
|
|
16,378 |
|
|
(6.7)% |
Other revenue |
|
(1,530 |
) |
|
|
(1,893 |
) |
|
(19.2)% |
|
|
(5,922 |
) |
|
|
(5,488 |
) |
|
7.9% |
Net investment income |
|
(1,524 |
) |
|
|
(1,570 |
) |
|
(2.9)% |
|
|
(4,796 |
) |
|
|
(2,857 |
) |
|
67.9% |
Net realized capital (gains) losses |
|
4 |
|
|
|
(111 |
) |
|
(103.6)% |
|
|
(3,230 |
) |
|
|
(723 |
) |
|
346.7% |
Interest expense |
|
501 |
|
|
|
561 |
|
|
(10.7)% |
|
|
962 |
|
|
|
1,185 |
|
|
(18.8)% |
Other income |
|
(40 |
) |
|
|
(33 |
) |
|
21.2% |
|
|
(54 |
) |
|
|
(126 |
) |
|
(57.1)% |
Underwriting income |
$ |
880 |
|
|
$ |
4,170 |
|
|
(78.9)% |
|
$ |
2,245 |
|
|
$ |
8,369 |
|
|
(73.2)% |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income
The Company defines adjusted net income as net
income excluding the impact of various unusual events, including
the consummation of the reorganization transactions in connection
with the IPO, or gains or losses that the Company does not believe
reflect its core operating performance, which items may have a
disproportionate effect in a given period, affecting comparability
of the Company’s results. The Company calculates the tax impact
only on adjustments which would be included in calculating the
Company’s income tax expense using the effective tax rate at the
end of each period. The Company uses adjusted net income as an
internal performance measure in the management of its operations
because the Company believes it gives its management and other
users of its financial information useful insight into the
Company’s results of operations and underlying business
performance. Adjusted net income should not be viewed as a
substitute for net income calculated in accordance with GAAP, and
other companies may define adjusted net income differently.
|
|
Three Months Ended June 30, |
|
Percentage |
(in thousands, except percentages) |
2020 |
|
2019 |
|
Change |
Net income |
$ |
3,720 |
|
|
$ |
6,391 |
|
|
(41.8)% |
Expenses associated with Altaris management fee, including cash
bonuses paid to unitholders |
|
442 |
|
|
|
441 |
|
|
0.2% |
Expenses associated with IPO and other one-time legal and
consulting expenses |
|
788 |
|
|
|
215 |
|
|
266.5% |
Expenses related to debt issuance costs |
|
135 |
|
|
|
25 |
|
|
440.0% |
Total adjustments |
|
1,365 |
|
|
|
681 |
|
|
100.4% |
Tax impact of adjustments |
|
(314 |
) |
|
|
(138 |
) |
|
127.5% |
Adjusted net income |
$ |
4,771 |
|
|
$ |
6,934 |
|
|
(31.2)% |
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
Percentage |
(in thousands, except percentages) |
2020 |
|
2019 |
|
Change |
Net income |
$ |
13,326 |
|
|
$ |
14,842 |
|
|
(10.2)% |
Expenses associated with Altaris management fee, including cash
bonuses paid to unit holders |
|
883 |
|
|
|
882 |
|
|
0.1% |
Expenses associated with IPO and other one-time legal and
consulting expenses |
|
1,200 |
|
|
|
442 |
|
|
171.5% |
Expenses related to debt issuance costs |
|
135 |
|
|
|
50 |
|
|
170.0% |
FMV adjustment of remaining investment in affiliate |
|
(2,000 |
) |
|
|
- |
|
|
100.0% |
Net loss gain on purchase & disposal of affiliates |
|
(3,115 |
) |
|
|
(634 |
) |
|
391.3% |
Total adjustments |
|
(2,897 |
) |
|
|
740 |
|
|
(491.5)% |
Tax impact of adjustments |
|
666 |
|
|
|
(279 |
) |
|
(338.7)% |
Adjusted net income |
$ |
11,095 |
|
|
$ |
15,303 |
|
|
(27.5)% |
|
|
|
|
|
|
Adjusted return on equity
The Company defines adjusted return on equity as
adjusted net income expressed on an annualized basis as a
percentage of average beginning and ending members’ equity during
the period. The Company uses adjusted return on equity as an
internal performance measure in the management of its operations
because the Company believes it gives management and other users of
the Company’s financial information useful insight into the
Company’s results of operations and underlying business
performance. Adjusted return on equity should not be viewed as a
substitute for return on equity calculated in accordance with GAAP,
and other companies may define adjusted return on equity
differently.
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
(in thousands, except percentages) |
2020 |
|
2019 |
|
2020 |
|
2019 |
Adjusted return on equity calculation: |
|
|
|
|
|
|
Numerator: adjusted net income |
$ |
4,771 |
|
|
$ |
6,934 |
|
|
$ |
11,095 |
|
|
$ |
15,303 |
|
Denominator: average members' equity |
|
144,733 |
|
|
|
121,292 |
|
|
|
140,450 |
|
|
|
114,742 |
|
Adjusted return on equity |
|
13.2 |
% |
|
|
22.9 |
% |
|
|
15.8 |
% |
|
|
26.7 |
% |
Return on equity |
|
10.3 |
% |
|
|
21.1 |
% |
|
|
19.0 |
% |
|
|
25.9 |
% |
|
|
|
|
|
|
|
|
Return on tangible equity and adjusted
return on tangible equity
The Company defines tangible members’ equity as
members’ equity less goodwill and other intangible assets. The
Company defines return on tangible equity as net income expressed
on an annualized basis as a percentage of average beginning and
ending tangible members’ equity during the period. The Company
defines adjusted return on tangible equity as adjusted net income
expressed on an annualized basis as a percentage of average
beginning and ending tangible members’ equity during the period.
The Company regularly evaluates acquisition opportunities and have
historically made acquisitions that affect members’ equity. The
Company uses return on tangible equity and adjusted return on
tangible equity as internal performance measures in the management
of the Company’s operations because the Company believes they give
management and other users of its financial information useful
insight into the Company’s results of operations and underlying
business performance. Return on tangible equity and adjusted return
on tangible equity should not be viewed as substitutes for return
on equity calculated in accordance with GAAP, and other companies
may define return on tangible equity and adjusted return on
tangible equity differently.
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
(in thousands, except percentages) |
2020 |
|
2019 |
|
2020 |
|
2019 |
Return on tangible equity calculation: |
|
|
|
|
|
|
|
Numerator: net income |
$ |
3,720 |
|
|
$ |
6,391 |
|
|
$ |
13,326 |
|
|
$ |
14,842 |
|
Denominator: |
|
|
|
|
|
|
|
Average members' equity |
|
144,733 |
|
|
|
121,292 |
|
|
|
140,450 |
|
|
|
114,742 |
|
Less: Average goodwill and other intangible
assets |
|
3,453 |
|
|
|
3,006 |
|
|
|
3,459 |
|
|
|
3,012 |
|
Average tangible members' equity |
|
141,280 |
|
|
|
118,286 |
|
|
|
136,991 |
|
|
|
111,730 |
|
Return on tangible equity |
|
10.5 |
% |
|
|
21.6 |
% |
|
|
19.5 |
% |
|
|
26.6 |
% |
Return on equity |
|
10.3 |
% |
|
|
21.1 |
% |
|
|
19.0 |
% |
|
|
25.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Adjusted return on tangible equity
calculation: |
|
|
|
|
|
|
|
Numerator: adjusted net income |
$ |
4,771 |
|
|
$ |
6,934 |
|
|
$ |
11,095 |
|
|
$ |
15,303 |
|
Denominator: average tangible members' equity |
|
141,280 |
|
|
|
118,286 |
|
|
|
136,991 |
|
|
|
111,730 |
|
Adjusted return on tangible equity |
|
13.5 |
% |
|
|
23.4 |
% |
|
|
16.2 |
% |
|
|
27.4 |
% |
Return on equity |
|
10.3 |
% |
|
|
21.1 |
% |
|
|
19.0 |
% |
|
|
25.9 |
% |
|
|
|
|
|
|
|
|
Trean Insurance (NASDAQ:TIG)
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