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 first
quarter ended March 31, 2021.
First Quarter 2021
Highlights
- Gross
written premiums increased 36.0% to $146.7 million, compared to
$107.9 million in the first quarter of 2020
- Net
earned premiums increased 83.2% to $41.1 million, compared to $22.5
million in the first quarter of 2020
- Loss
ratio of 60.5%, compared to 57.6% in the first quarter of 2020
- Expense
ratio of 28.9%, a 740 basis point improvement compared to 36.3% in
the first quarter of 2020
- Combined
ratio of 89.4%, a 450 basis point improvement versus 93.9% in the
prior-year period
- Net
income was $6.8 million and diluted earnings per share was
$0.13
- Adjusted
net income(1) was $8.0 million, and adjusted diluted earnings per
share was $0.16
-
Underwriting income(1) was $4.4 million, compared to $1.4 million
in the first quarter of 2020
- Return
on equity of 6.6%; Adjusted return on equity(1) of 7.8%; Adjusted
return on tangible equity was 16.4%(1)
(1) Adjusted net income, adjusted diluted
earnings per share, adjusted return on equity, adjusted return on
tangible equity and underwriting income are non-GAAP financial
measures. See discussion of “Key Metrics” below.
“Our momentum from 2020 carried straight through
into the first quarter of 2021, as we generated another quarter of
record gross written premiums and solid bottom-line results, driven
both by our new program partners and organic growth,” stated Andrew
M. O’Brien, President and Chief Executive Officer of Trean. “We
also delivered significant net earned and unearned premium growth –
the latter of which we view as a potential source of additional
future profit and further evidence of the success we are having in
growing profitably. Notably, our non-workers compensation liability
business continues to rapidly expand and encompass a larger portion
of our overall gross written premiums, increasing our
diversification efforts and further mitigating concentration risk.
We also maintained our prudent underwriting approach and continued
to invest in our business to enhance support for our program
partners and their ongoing efforts. Looking ahead, with our proven
and resilient business model, our numerous growth opportunities and
a robust balance sheet, we believe we are well positioned to
generate sustainable and profitable growth.”
Underwriting Results
Gross written premiums increased 36.0% to $146.7
million for the first quarter of 2021, compared to $107.9 million
for the first quarter of 2020, primarily attributable to the
addition of new program partners brought on board beginning in the
second quarter of 2020, growth in Trean’s existing program partner
business and the acquisition of 7710 Insurance Company in the
fourth quarter of 2020. Net earned premiums of $41.1 million grew
83.2% compared to the prior year’s first quarter, driven by the
increase in gross written and gross earned premiums, partially
offset by an increase in ceded earned premiums compared to the
prior-year period.
Underwriting income was $4.4 million,
resulting in a combined ratio of 89.4% for the first quarter of
2021, compared to underwriting income of $1.4 million and a
combined ratio of 93.9% for the prior-year period. Losses and loss
adjustment expenses for the first quarter of 2021 were $24.9
million, which resulted in a 60.5% loss ratio, compared to 57.6% in
the prior-year period. The increase in the loss ratio during the
first quarter of 2021 versus the prior-year period was primarily
attributable to property losses incurred in the first quarter of
2021.
General and administrative expenses were $11.9
million for the first quarter of 2021, compared to $8.1 million for
the prior-year period. The increase was due to higher salaries and
benefits resulting primarily from acquisitions made in 2020 and an
expanded workforce, an increase in rent and office-related
expenses, insurance and insurance-related expenses, and
professional service expenses. The Company’s expense ratio was
28.9% for the first quarter of 2021, a 740 basis point improvement
compared to 36.3% for the prior-year period. The improvement in the
expense ratio was primarily due to the year-over-year increase in
net earned premiums more than offsetting the impact of the increase
in general and administrative expenses.
Net income was $6.8 million for the first
quarter of 2021, compared to net income of $9.6 million for the
prior-year period. Diluted earnings per share for the first quarter
of 2021 was $0.13. The first quarters of 2021 and 2020 included
intangible asset amortization related to acquisitions and, in 2021,
included noncash stock compensation. Additionally, the first
quarter of 2020 included certain non-recurring legal and other
expenses. Adjusted net income(1), which excludes
these items and their related tax impact, was $8.0 million for the
first quarter of 2021, compared to adjusted net income of $6.3
million for the prior-year period. Adjusted diluted earnings per
share for the first quarter of 2021 was $0.16.
Investment Results
Net investment income was $1.6 million for the
first quarter of 2021, compared to $3.3 million in the prior-year
period, due primarily to a $2.0 million common stock investment
reclassification and fair value re-measurement made in the first
quarter of 2020. Cash and invested assets consist primarily of
fixed maturities, equity securities and cash equivalents. The
majority of the Company’s investment portfolio at March 31, 2021
was comprised of $378.1 million of fixed maturity securities that
were classified as available-for-sale. Also included in investments
at March 31, 2021 were $3.0 million of equity securities and $130.9
million of cash and cash equivalents. The Company’s fixed
maturities portfolio had an average rating of “AA” at both March
31, 2021 and December 31, 2020.
Other
Other revenue was $4.7 million for the first
quarter of 2021, compared to $4.4 million for the prior-year
period, largely driven by an increase in fee-based revenue
resulting from the July 2020 Compstar acquisition and management
fees, partially offset by reduced brokerage revenue.
Stockholders’ Equity and
Returns
Total stockholders’ equity was $413.0 million at
March 31, 2021, compared to $410.1 million at December 31, 2020.
Return on equity was 6.6% for the first quarter of 2021, compared
to 26.3% for the prior-year period, and adjusted return on
equity(1) was 7.8% for the first quarter of 2021, compared to 17.4%
for the prior-year period. The change in return on equity reflected
a significant increase in the Company’s stockholders’ equity,
primarily resulting from the increases in additional paid-in
capital related to the IPO and retained earnings since March 2020.
Return on tangible equity was 13.8% for the first quarter of 2021,
compared to 26.9% for the prior-year period and adjusted return on
tangible equity was 16.4% for the first quarter of 2021, compared
to 17.7% for the prior-year period.
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
(877) 407-3982 (toll-free) or (201) 493-6780 (international),
conference ID# 13718592. 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, investment revaluation gains, net realized capital gains or
losses, IPO-related expenses, intangible asset amortization,
noncash stock compensation, interest expense, other revenue and
other income and expenses. 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 various
specific events, including the consummation of the reorganization
transactions in connection with our IPO, noncash intangible asset
amortization and stock compensation, other expenses and 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
across periods. 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
stockholders’ 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
stockholders’ 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 stockholders’ equity is defined as
stockholders’ 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
stockholders’ 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 stockholders’ 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. These
statements may discuss the Company’s net income, cash flow,
financial condition, impairments, expenditures, growth, strategies,
plans, achievements, capital structure, organizational structure,
market opportunities and general market and industry conditions.
Such forward-looking statements can be identified 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. These statements
are only predictions and are not guarantees of future performance.
Forward-looking statements involve risks and uncertainties that
could cause actual results to differ materially from those in the
forward-looking statements if the underlying assumptions prove to
be incorrect or as a result of risks, uncertainties, and other
factors, including the impact of the COVID-19 pandemic on the
business and operations of the Company, our program partners and
other business relations. Other factors that may cause such
differences include the risks described in the Company’s filings
with the U.S. Securities and Exchange Commission, including the
Company’s Annual Report on Form 10-K for the year ended December
31, 2020. These forward-looking statements speak only as of the
date on which they are made. Except as required by applicable
securities laws, 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. Investors are cautioned not to place undue reliance on
the forward-looking statements contained in this press release or
in other filings and public statements of the Company.
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
|
Trean
Insurance Group, Inc. and Subsidiaries |
Condensed
Consolidated and Combined Statements of Operations |
(in thousands,
except for percentages, share and per share amounts) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
Percentage |
|
2021 |
|
2020 |
|
Change |
|
Change (1) |
Revenues |
|
|
|
|
|
|
|
Gross written premiums |
$ |
146,730 |
|
|
$ |
107,859 |
|
|
38,871 |
|
|
36.0% |
Increase in
gross unearned premiums |
|
(18,431 |
) |
|
|
(7,373 |
) |
|
(11,058 |
) |
|
150.0% |
Gross earned premiums |
|
128,299 |
|
|
|
100,486 |
|
|
27,813 |
|
|
27.7% |
Ceded earned
premiums |
|
(87,165 |
) |
|
|
(78,027 |
) |
|
(9,138 |
) |
|
11.7% |
Net earned premiums |
|
41,134 |
|
|
|
22,459 |
|
|
18,675 |
|
|
83.2% |
Net
investment income |
|
1,592 |
|
|
|
3,272 |
|
|
(1,680 |
) |
|
(51.3)% |
Net realized
capital gains |
|
13 |
|
|
|
3,234 |
|
|
(3,221 |
) |
|
(99.6)% |
Other
revenue |
|
4,655 |
|
|
|
4,392 |
|
|
263 |
|
|
6.0% |
Total revenue |
|
47,394 |
|
|
|
33,357 |
|
|
14,037 |
|
|
42.1% |
Expenses |
|
|
|
|
|
|
|
Losses and
loss adjustment expenses |
|
24,881 |
|
|
|
12,934 |
|
|
11,947 |
|
|
92.4% |
General and
administrative expenses |
|
11,891 |
|
|
|
8,149 |
|
|
3,742 |
|
|
45.9% |
Intangible
asset amortization |
|
1,414 |
|
|
|
11 |
|
|
1,403 |
|
|
NM |
Noncash
stock compensation |
|
211 |
|
|
|
- |
|
|
211 |
|
|
NM |
Interest
expense |
|
427 |
|
|
|
461 |
|
|
(34 |
) |
|
(7.4)% |
Total expenses |
|
38,824 |
|
|
|
21,555 |
|
|
17,269 |
|
|
80.1% |
Other
income |
|
121 |
|
|
|
14 |
|
|
107 |
|
|
NM |
Income before taxes |
|
8,691 |
|
|
|
11,816 |
|
|
(3,125 |
) |
|
(26.4)% |
Provision
for income taxes |
|
1,900 |
|
|
|
2,912 |
|
|
(1,012 |
) |
|
(34.8)% |
Equity
earnings in affiliates, net of tax |
|
- |
|
|
|
702 |
|
|
(702 |
) |
|
(100.0)% |
Net
income |
$ |
6,791 |
|
|
$ |
9,606 |
|
|
(2,815 |
) |
|
(29.3)% |
|
|
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
|
|
|
Basic |
$ |
0.13 |
|
|
$ |
0.26 |
|
|
|
|
|
Diluted |
$ |
0.13 |
|
|
$ |
0.26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
51,148,782 |
|
|
|
37,386,394 |
|
|
|
|
|
Diluted |
|
51,179,820 |
|
|
|
37,386,394 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The Company
defines increases or decreases greater than 200% as “NM” or not
meaningful. |
|
|
Key
Metrics |
|
|
|
Three Months Ended March 31, |
(in
thousands, except percentages) |
2021 |
|
2020 |
Key
metrics: |
|
|
|
Underwriting income (1) |
$ |
4,362 |
|
|
$ |
1,376 |
|
Adjusted net
income (1) |
$ |
8,042 |
|
|
$ |
6,333 |
|
Loss
ratio |
|
60.5 |
% |
|
|
57.6 |
% |
Expense
ratio |
|
28.9 |
% |
|
|
36.3 |
% |
Combined
ratio |
|
89.4 |
% |
|
|
93.9 |
% |
Return on
equity |
|
6.6 |
% |
|
|
26.3 |
% |
Adjusted
return on equity (1) |
|
7.8 |
% |
|
|
17.4 |
% |
Return on
tangible equity (1) |
|
13.8 |
% |
|
|
26.9 |
% |
Adjusted
return on tangible equity (1) |
|
16.4 |
% |
|
|
17.7 |
% |
|
|
|
|
|
|
|
|
(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. |
|
|
Trean
Insurance Group, Inc. and Subsidiaries |
Condensed
Consolidated Balance Sheets |
(in thousands) |
|
|
|
|
|
|
|
|
|
March 31, 2021 |
|
December 31, 2020 |
Assets |
(unaudited) |
|
|
Fixed maturities, available for sale |
$ |
378,131 |
|
|
$ |
405,604 |
|
Preferred
stock, available for sale |
|
237 |
|
|
|
240 |
|
Common
stock, available for sale |
|
2,741 |
|
|
|
3,534 |
|
Equity
method investments |
|
- |
|
|
|
232 |
|
Total investments |
|
381,109 |
|
|
|
409,610 |
|
|
|
|
|
Cash and
cash equivalents |
|
130,940 |
|
|
|
153,149 |
|
Restricted
cash |
|
5,996 |
|
|
|
4,085 |
|
Accrued
investment income |
|
2,253 |
|
|
|
2,458 |
|
Premiums and
other receivables |
|
121,740 |
|
|
|
109,217 |
|
Income taxes
receivable |
|
- |
|
|
|
1,322 |
|
Reinsurance
recoverable |
|
360,911 |
|
|
|
343,213 |
|
Prepaid
reinsurance premiums |
|
110,298 |
|
|
|
107,971 |
|
Deferred
policy acquisition cost, net |
|
5,029 |
|
|
|
1,332 |
|
Property and
equipment, net |
|
8,050 |
|
|
|
8,254 |
|
Right of use
asset |
|
5,844 |
|
|
|
6,338 |
|
Goodwill |
|
140,640 |
|
|
|
140,640 |
|
Intangible
assets, net |
|
73,903 |
|
|
|
75,316 |
|
Other
assets |
|
9,334 |
|
|
|
6,878 |
|
Total assets |
$ |
1,356,047 |
|
|
$ |
1,369,783 |
|
|
|
|
|
Liabilities |
|
|
|
Unpaid loss
and loss adjustment expenses |
$ |
485,532 |
|
|
$ |
457,817 |
|
Unearned
premiums |
|
176,460 |
|
|
|
157,987 |
|
Funds held
under reinsurance agreements |
|
151,268 |
|
|
|
174,704 |
|
Reinsurance
premiums payable |
|
56,975 |
|
|
|
57,069 |
|
Accounts
payable and accrued expenses |
|
23,148 |
|
|
|
61,240 |
|
Lease
liability |
|
6,372 |
|
|
|
6,893 |
|
Income taxes
payable |
|
1,224 |
|
|
|
- |
|
Deferred tax
liability |
|
10,620 |
|
|
|
12,329 |
|
Debt |
|
31,473 |
|
|
|
31,637 |
|
Total liabilities |
|
943,072 |
|
|
|
959,676 |
|
|
|
|
|
Stockholders' Equity |
|
|
|
Common
stock |
|
511 |
|
|
|
511 |
|
Additional
paid-in capital |
|
287,321 |
|
|
|
287,110 |
|
Retained
earnings |
|
119,750 |
|
|
|
112,959 |
|
Accumulated
other comprehensive loss |
|
5,393 |
|
|
|
9,527 |
|
Total stockholders' equity |
|
412,975 |
|
|
|
410,107 |
|
Total liabilities and stockholders' equity |
$ |
1,356,047 |
|
|
$ |
1,369,783 |
|
|
|
|
|
Reconciliation of Non-GAAP Financial
Measures
Underwriting income
The Company defines underwriting income as
income before taxes excluding net investment income, investment
revaluation gains, net realized capital gains or losses,
IPO-related expenses, intangible asset amortization, noncash stock
compensation, interest expense, other revenue and other income and
expenses. 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, IPO-related expenses, intangible asset
amortization, noncash stock compensation, interest expense, other
revenue and other income and expenses. The Company uses this metric
because the Company believes it gives management and other users of
the Company’s financial information useful insight into the
Company’s underwriting business performance by adjusting for these
expenses and sources of income. 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 March 31, |
|
Percentage |
(in
thousands, except percentages) |
2021 |
|
2020 |
|
Change (1) |
Net income |
$ |
6,791 |
|
|
$ |
9,606 |
|
|
(29.3)% |
Income tax
expense |
|
1,900 |
|
|
|
2,912 |
|
|
(34.8)% |
Equity
earnings in affiliates, net of tax |
|
- |
|
|
|
(702 |
) |
|
(100.0)% |
Income
before taxes |
|
8,691 |
|
|
|
11,816 |
|
|
(26.4)% |
Other
revenue |
|
(4,655 |
) |
|
|
(4,392 |
) |
|
6.0% |
Net
investment income |
|
(1,592 |
) |
|
|
(3,272 |
) |
|
(51.3)% |
Net realized
capital gains |
|
(13 |
) |
|
|
(3,234 |
) |
|
(99.6)% |
Interest
expense |
|
427 |
|
|
|
461 |
|
|
(7.4)% |
Intangible
asset amortization |
|
1,414 |
|
|
|
11 |
|
|
NM |
Noncash
stock compensation |
|
211 |
|
|
|
- |
|
|
NM |
Other
income |
|
(121 |
) |
|
|
(14 |
) |
|
NM |
Underwriting income |
$ |
4,362 |
|
|
$ |
1,376 |
|
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
(1) The Company
defines increases or decreases greater than 200% as “NM” or not
meaningful. |
|
Adjusted net income
The Company defines adjusted net income as net
income excluding the impact of certain items, including the
consummation of the reorganization transactions in connection with
the IPO, noncash intangible asset amortization and stock
compensation, other expenses and gains or losses that the Company
believes do not reflect its core operating performance, which items
may have a disproportionate effect in a given period, affecting
comparability the Company’s results across periods. The Company
calculates the tax impact only on adjustments that 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 by eliminating the effects of these items.
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 March 31, |
|
Percentage |
(in
thousands, except percentages) |
2021 |
|
2020 |
|
Change (1) |
Net income |
$ |
6,791 |
|
|
$ |
9,606 |
|
|
(29.3)% |
Intangible
asset amortization |
|
1,414 |
|
|
|
11 |
|
|
NM |
Noncash
stock compensation |
|
211 |
|
|
|
- |
|
|
NM |
Expenses
associated with Altaris management fee, including cash bonuses paid
to unitholders |
|
- |
|
|
|
441 |
|
|
(100.0)% |
Expenses
associated with IPO and other one-time legal and consulting
expenses |
|
- |
|
|
|
412 |
|
|
(100.0)% |
FMV
adjustment of remaining investment in subsidiary |
|
- |
|
|
|
(2,000 |
) |
|
(100.0)% |
Net gain on
purchase & disposal of subsidiaries |
|
- |
|
|
|
(3,115 |
) |
|
(100.0)% |
Total
adjustments |
|
1,625 |
|
|
|
(4,251 |
) |
|
(138.2)% |
Tax impact
of adjustments |
|
(374 |
) |
|
|
978 |
|
|
(138.2)% |
Adjusted net income |
$ |
8,042 |
|
|
$ |
6,333 |
|
|
27.0% |
|
|
|
|
|
|
|
|
|
|
|
|
(1) The Company
defines increases or decreases greater than 200% as “NM” or not
meaningful. |
|
|
|
|
|
|
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 stockholders’ 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
by adjusting for items that the Company believes do not reflect its
core operating performance and that may diminish comparability
across periods. 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 March 31, |
(in
thousands, except percentages) |
2021 |
|
2020 |
Adjusted return on equity calculation: |
|
|
|
Numerator: adjusted net income |
$ |
8,042 |
|
|
$ |
6,333 |
|
Denominator:
average stockholders' equity |
|
411,541 |
|
|
|
145,898 |
|
Adjusted return on equity |
|
7.8 |
% |
|
|
17.4 |
% |
Return on
equity |
|
6.6 |
% |
|
|
26.3 |
% |
|
|
|
|
Return on tangible equity and adjusted return on
tangible equity
The Company defines tangible stockholders’
equity as stockholders’ 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 stockholders’ 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 stockholders’
equity during the period. The Company regularly evaluates
acquisition opportunities and have historically made acquisitions
that affect stockholders’ 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 by
adjusting for the effects of acquisitions on the Company’s
stockholders’ equity and, in the case of adjusted return on
tangible equity, by adjusting for items that the Company believes
do not reflect its core operating performance and that may diminish
comparability across periods. 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 March 31, |
(in
thousands, except percentages) |
2021 |
|
2020 |
Return on tangible equity calculation: |
|
|
|
Numerator: net income |
$ |
6,791 |
|
|
$ |
9,606 |
|
Denominator: |
|
|
|
Average stockholders' equity |
|
411,541 |
|
|
|
145,898 |
|
Less: Average goodwill and other intangible assets |
|
215,250 |
|
|
|
2,971 |
|
Average
tangible stockholders' equity |
|
196,291 |
|
|
|
142,927 |
|
Return on tangible equity |
|
13.8 |
% |
|
|
26.9 |
% |
Return on
equity |
|
6.6 |
% |
|
|
26.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
(in
thousands, except percentages) |
2021 |
|
2020 |
Adjusted return on tangible equity
calculation: |
|
|
|
Numerator:
adjusted net income |
$ |
8,042 |
|
|
$ |
6,333 |
|
Denominator:
average tangible stockholders' equity |
|
196,291 |
|
|
|
142,927 |
|
Adjusted return on tangible equity |
|
16.4 |
% |
|
|
17.7 |
% |
Return on
equity |
|
6.6 |
% |
|
|
26.3 |
% |
|
|
|
|
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