NASHVILLE, TN, May 8, 2013 -- First Acceptance
Corporation (NYSE: FAC) today reported its financial results for
the three month period ended March 31, 2013.
Operating
Results
Revenues for the three months ended March 31, 2013
were $59.3 million, compared with $55.5 million for the same period
in the prior year. Income before income taxes for the three months
ended March 31, 2013 was $2.1 million, compared with loss before
income taxes of $8.1 million for the same period in the prior year.
Net income for the three months ended March 31, 2013 was $2.0
million, or $0.05 per share on a basic and diluted basis, compared
with net loss of $8.2 million, or $0.20 per share on a basic and
diluted basis, for the same period in the prior year.
Premiums earned for the three months ended March
31, 2013 were $49.4 million, compared with $45.4 million for the
same period in the prior year. This improvement was primarily due
to our continued sales, marketing, customer interaction and product
initiatives, in addition to our recent pricing actions and a higher
percentage of policies in force with full coverage.
Loss and Loss Adjustment
Expense Ratio. The loss and loss adjustment expense ratio
was 67.8 percent for the three months ended March 31, 2013,
compared with 85.6 percent for the three months ended March 31,
2012. We experienced favorable development related to prior periods
of $2.4 million for the three months ended March 31, 2013, compared
with unfavorable development of $3.4 million for the three months
ended March 31, 2012. The favorable development for the three
months ended March 31, 2013 was primarily due to lower
than expected severity related to property damage liability and
no-fault claims that occurred in calendar year 2012, as well as
lower than expected severity related to bodily injury claims that
occurred in calendar years 2011 and 2012. In addition, the
favorable development for the three months ended March 31, 2013
included a recovery related to the 2011 settlement of a claim for
extra-contractual damages.
Excluding the development related to prior
periods, the loss and loss adjustment expense ratio for the three
months ended March 31, 2013 and 2012 were 72.7 percent and 78.1
percent, respectively. The year-over-year decrease in the loss and
loss adjustment expense ratio was primarily due to a decrease in
both frequency and severity and the impact of our recent pricing
changes.
Expense Ratio. The
expense ratio was 27.8 percent for the three months ended March 31,
2013, compared with 31.9 percent for the three months ended March
31, 2012. The year-over-year decrease in the expense ratio was
primarily due to the increase in premiums earned which resulted in
a lower percentage of fixed expenses in our retail operations (such
as rent and base salary).
Combined Ratio. The
combined ratio was 95.6 percent for the three months ended March
31, 2013, compared with 117.5 percent for the same period in the
prior year.
About First Acceptance
Corporation
We are a retailer, servicer and underwriter of
non-standard personal automobile insurance based in Nashville,
Tennessee. We currently write non-standard personal automobile
insurance in 12 states and are licensed as an insurer in 13
additional states. Non-standard personal automobile insurance is
made available to individuals who are categorized as "non-standard"
because of their inability or unwillingness to obtain standard
insurance coverage due to various factors, including payment
history, payment preference, failure in the past to maintain
continuous insurance coverage, driving record and/or vehicle type,
and in most instances who are required by law to buy a minimum
amount of automobile insurance.
At March 31, 2013, we leased and operated 367
retail locations, staffed with employee-agents. Our employee-agents
primarily sell non-standard personal automobile insurance products
underwritten by us, as well as certain commissionable ancillary
products. In most states, our employee-agents also sell a
complementary tenant homeowner insurance product underwritten by
us. In addition, during the three months ended March 31, 2013,
select retail locations in highly competitive markets in Illinois
and Texas began offering non-standard personal automobile insurance
serviced and underwritten by other third-party insurance carriers.
We are able to complete the entire sales process over the
phone or through our consumer-based website. In addition to our
retail, call center and website, we also sell our products through
13 retail locations operated by independent agents. Additional
information about First Acceptance Corporation can be found online
at www.acceptanceinsurance.com.
This press release contains forward-looking
statements. These statements, which have been included in reliance
on the "safe harbor" provisions of the federal securities laws,
involve risks and uncertainties. Investors are hereby cautioned
that these statements may be affected by important factors,
including, among others, the factors set forth under the caption
"Risk Factors" in Item 1A. of our Annual Report on Form 10-K for to
the year ended December 31, 2012 and in our other filings with the
Securities and Exchange Commission. Actual operations and results
may differ materially from the results discussed in the
forward-looking statements. Except as required by law, we undertake
no obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future
developments or otherwise.
FIRST
ACCEPTANCE CORPORATION AND SUBSIDIARIES
Consolidated Statements of
Operations
(in thousands, except per share
data)
(Unaudited)
|
|
Three
Months Ended |
|
|
March 31, |
|
|
2013 |
|
2012 |
Revenues: |
|
|
|
|
Premiums earned |
|
$49,403 |
|
$45,419 |
Commission and fee income |
|
8,597 |
|
8,252 |
Investment income |
|
1,276 |
|
1,770 |
Net realized gains on investments, available-for-sale
(includes $13 and $26, respectively, of accumulated other
comprehensive income reclassifications for unrealized gains) |
|
13 |
|
26 |
|
|
59,289 |
|
55,467 |
|
|
|
|
|
Costs and expenses: |
|
|
|
|
Losses and loss adjustment expenses |
|
33,505 |
|
38,864 |
Insurance operating expenses |
|
22,340 |
|
22,762 |
Other operating expenses |
|
229 |
|
266 |
Stock-based compensation |
|
84 |
|
295 |
Depreciation and amortization |
|
571 |
|
429 |
Interest expense |
|
443 |
|
979 |
|
|
57,172 |
|
63,595 |
|
|
|
|
|
Income (loss) before income taxes |
|
2,117 |
|
(8,128) |
Provision for income taxes (includes $5 and $9, respectively,
of income tax expense from reclassification items) |
|
93 |
|
79 |
Net income (loss) |
|
$2,024 |
|
$(8,207) |
|
|
|
|
|
Net income (loss) per share: |
|
|
|
|
Basic |
|
$0.05 |
|
$(0.20) |
Diluted |
|
$0.05 |
|
$(0.20) |
|
|
|
|
|
Number of shares used to calculate net income (loss) per
share: |
|
|
|
|
Basic |
|
40,910 |
|
40,843 |
Diluted |
|
40,939 |
|
40,843 |
FIRST
ACCEPTANCE CORPORATION AND SUBSIDIARIES
Consolidated Balance
Sheets
(in thousands, except per share
data)
|
|
March
31, |
December
31, |
|
|
2013 |
|
2012 |
|
|
|
(Unaudited) |
|
|
|
ASSETS |
|
|
|
|
|
Investments, available-for-sale at fair value (amortized cost
of
$125,725 and $130,342, respectively) |
|
$ 134,026 |
|
$ 139,046 |
|
Cash and cash equivalents |
|
71,215 |
|
59,104 |
|
Premiums and fees receivable, net of allowance of $281 and
$306 |
|
57,678 |
|
45,286 |
|
Other assets |
|
5,819 |
|
6,190 |
|
Property and equipment, net |
4,456 |
4,656 |
|
Deferred acquisition costs |
|
3,712 |
|
3,221 |
|
Identifiable intangible assets |
|
4,800 |
|
4,800 |
|
TOTAL ASSETS |
|
$
281,706 |
|
$ 262,303 |
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
|
|
|
Loss and loss adjustment expense reserves |
|
$
80,612 |
|
$ 79,260 |
|
Unearned premiums and fees |
|
71,231 |
|
55,092 |
|
Debentures payable |
|
40,271 |
|
40,261 |
|
Other liabilities |
|
15,097 |
|
14,897 |
|
Total liabilities |
|
207,211 |
|
189,510 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
Preferred stock, $.01 par value, 10,000 shares
authorized |
|
-- |
|
-- |
Common stock, $.01 par value, 75,000 shares authorized;
40,945
and 40,962 shares issued and outstanding,
respectively |
|
410 |
|
410 |
Additional paid-in capital |
|
456,786 |
|
456,705 |
Accumulated other comprehensive income |
|
8,301 |
|
8,704 |
Accumulated deficit |
|
(391,002) |
|
(393,026) |
Total stockholders' equity |
|
74,495 |
|
72,793 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
|
$
281,706 |
|
$ 262,303 |
FIRST
ACCEPTANCE CORPORATION AND SUBSIDIARIES
Supplemental Data
(Unaudited)
PREMIUMS EARNED
BY STATE
|
Three
Months Ended |
|
March 31, |
|
|
2013 |
|
2012 |
|
Gross premiums earned: |
|
|
|
|
Georgia |
$ 9,651 |
|
$ 9,529 |
|
Florida |
7,621 |
|
6,069 |
|
Texas |
5,822 |
|
5,677 |
|
Illinois |
5,317 |
|
5,538 |
|
Alabama |
5,048 |
|
4,228 |
|
Ohio |
4,360 |
|
3,802 |
|
South Carolina |
3,659 |
|
3,012 |
|
Tennessee |
3,040 |
|
2,954 |
|
Pennsylvania |
2,144 |
|
2,047 |
|
Indiana |
1,245 |
|
1,176 |
|
Missouri |
887 |
|
788 |
|
Mississippi |
657 |
|
646 |
|
Total gross premiums earned |
49,451 |
|
45,466 |
|
Premiums ceded to reinsurer |
(48) |
|
(47) |
|
Total net premiums earned |
$ 49,403 |
|
$ 45,419 |
|
COMBINED RATIOS (INSURANCE
OPERATIONS)
|
Three
Months Ended |
March 31, |
|
2013 |
|
2012 |
Loss and loss adjustment expense |
67.8% |
|
85.6% |
Expense |
27.8% |
|
31.9% |
Combined |
95.6% |
|
117.5% |
POLICIES IN
FORCE
|
|
Three
Months Ended |
|
|
March 31, |
|
|
|
2013 |
|
2012 |
|
Policies in force - beginning of
period |
147,176 |
|
141,862 |
|
Net increase during
period |
27,280 |
|
28,392 |
|
Policies in force - end of
period |
174,456 |
|
170,254 |
|
The following tables present total PIF for the
insurance operations segregated by policies that were sold through
retail locations, independent agents, call center and
website, and include those sold on behalf of third party carriers.
For our retail locations, PIF are further segregated by (i) new and
renewal and (ii) liability-only or full coverage. New policies are
defined as those policies issued to both first-time customers and
customers who have reinstated a lapsed or cancelled policy. Renewal
policies are those policies which renewed after completing their
full uninterrupted policy term. Liability-only policies are defined
as those policies including only bodily injury (or no-fault) and
property damage coverages, which are the required coverages in most
states.
|
March 31, |
|
|
2013 |
|
2012 |
|
Retail locations: |
|
|
|
|
New............. |
91,217 |
|
89,737 |
|
Renewal........... |
77,799 |
|
77,468 |
|
|
169,016 |
|
167,205 |
|
|
|
|
|
|
Independent agents........ |
2,023 |
|
2,407 |
|
Call center and website...... |
3,417 |
|
642 |
|
Total policies in force........ |
174,456 |
|
170,254 |
|
|
March 31, |
|
|
2013 |
|
2012 |
|
Retail locations: |
|
|
|
|
Liability-only......... |
97,493 |
|
98,931 |
|
Full coverage......... |
71,523 |
|
68,274 |
|
|
169,016 |
|
167,205 |
|
|
|
|
|
|
Independent agents........ |
2,023 |
|
2,407 |
|
Call center and website...... |
3,417 |
|
642 |
|
Total policies in force........ |
174,456 |
|
170,254 |
|
NUMBER OF
RETAIL LOCATIONS
Retail location counts are
based upon the date that a location commenced or ceased writing
business.
|
Three
Months Ended |
March 31, |
|
2013 |
|
2012 |
Retail locations - beginning of period |
369 |
|
382 |
Opened |
-- |
|
--
|
Closed |
(2) |
|
(4) |
Retail locations - end of period |
367 |
|
378 |
RETAIL
LOCATIONS BY STATE
|
March 31, |
|
December 31, |
|
2013 |
|
2012 |
|
2012 |
|
2011 |
Alabama |
24 |
|
24 |
|
24 |
|
24 |
Florida |
30 |
|
30 |
|
30 |
|
30 |
Georgia |
60 |
|
60 |
|
60 |
|
60 |
Illinois |
62 |
|
66 |
|
63 |
|
67 |
Indiana |
17 |
|
17 |
|
17 |
|
17 |
Mississippi |
7 |
|
8 |
|
7 |
|
8 |
Missouri |
11 |
|
12 |
|
11 |
|
12 |
Ohio |
27 |
|
27 |
|
27 |
|
27 |
Pennsylvania |
16 |
|
16 |
|
16 |
|
16 |
South Carolina |
26 |
|
26 |
|
26 |
|
26 |
Tennessee |
19 |
|
19 |
|
19 |
|
20 |
Texas |
68 |
|
73 |
|
69 |
|
75 |
Total |
367 |
|
378 |
|
369 |
|
382 |
SOURCE: First
Acceptance Corporation
INVESTOR RELATIONS
CONTACT:
Michael J. Bodayle
615.844.2885
This
announcement is distributed by Thomson Reuters on behalf of Thomson
Reuters clients.
The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the
information contained therein.
Source: First Acceptance Corporation via Thomson Reuters
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