NASHVILLE, TN, August 5, 2014 -- First Acceptance
Corporation (NYSE: FAC) today reported its financial results for
the three and six month periods ended June 30, 2014.
Income before income taxes for the three months ended June 30, 2014
was $3.7 million, compared with income before income taxes of $2.3
million for the same period in the prior year. Net income for the
three months ended June 30, 2014 was $3.5 million, or $0.08 per
share on a basic and diluted basis, compared with net income of
$2.1 million, or $0.05 per share on a basic and diluted basis, for
the same period in the prior year.
Income before income taxes for the six months ended June 30, 2014
was $4.3 million, compared with income before income taxes of $4.4
million for the same period in the prior year. Net income for the
six months ended June 30, 2014 was $4.0 million, or $0.10 per share
on a basic and diluted basis, compared with net income of $4.1
million, or $0.10 per share on a basic and diluted basis, for the
same period in the prior year.
Joe Borbely, the Company's President commented "We are pleased that
the recent investment in our people, operations and product is
being realized in our top-line results. Acceptance is becoming
recognized as a market leader for auto insurance in the communities
we serve. Our multi-channel approach offers our customers the
ability to purchase insurance products the way they want: by
clicking, calling or visiting one of our 353 neighborhood
locations."
Revenues. Revenues for the three
months ended June 30, 2014 were $67.1 million, compared with $62.5
million for the same period in the prior year. Revenues for the six
months ended June 30, 2014 were $129.7 million, compared with
$121.8 million for the same period in the prior year.
Premiums earned for the three months ended June
30, 2014 were $55.9 million, compared with $52.1 million for the
same period in the prior year. Premiums earned for the six months
ended June 30, 2014 were $107.6 million, compared with $101.5
million for the same period in the prior year. This improvement was
primarily due to a higher percentage of full coverage policies sold
and our recent pricing actions.
Loss Ratio. The loss ratio was 73.5
percent for the three months ended June 30, 2014, compared with
75.0 percent for the three months ended June 30, 2013. The loss
ratio was 72.4 percent for the six months ended June 30, 2014,
compared with 71.5 percent for the six months ended June 30, 2013.
We experienced favorable development related to prior periods of
$2.4 million for the three months ended June 30, 2014, compared
with favorable development of $1.4 million for the three months
ended June 30, 2013. For the six months ended June 30, 2014, we
experienced favorable development related to prior periods of $4.4
million, compared with favorable development of $2.5 million for
the six months ended June 30, 2013. The favorable development for
the three and six month periods ended June 30, 2014 was primarily
due to lower than expected development
related to bodily injury emergence in recent accident quarters.
Excluding the development related to prior
periods, the loss ratios for the three months ended June 30, 2014
and 2013 were 77.8 percent and 77.7 percent, respectively.
Excluding the development related to prior periods, the loss ratios
for the six months ended June 30, 2014 and 2013 were 76.5 percent
and 74.0 percent, respectively. The year-over-year increase in the
loss ratio was primarily due to weather-related claims frequency in
the collision and property damage coverages.
Expense Ratio. The
expense ratio was 20.7 percent for the three months ended June 30,
2014, compared with 21.7 percent for the three months ended June
30, 2013. The expense ratio was 24.9 percent for the six months
ended June 30, 2014, compared with 25.2 percent for the six months
ended June 30, 2013. 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 94.2 percent for the three months ended June 30,
2014, compared with 96.7 percent for the same period in the prior
year. For the six months ended June 30, 2014, the combined ratio
was 97.3 percent, compared with 96.7 percent for the same period in
the prior year.
About First Acceptance
Corporation
We are principally 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 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 June 30, 2014, we leased and operated 353
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 insurance product providing personal property and
liability coverage to renters underwritten by us. In addition,
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.
In addition to our retail locations, we are able to complete the
entire sales process over the phone via our call center or through
the internet via our consumer-based website or mobile platform. We
also sell our products through 11 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 the year ended
December 31, 2013 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
Income
(Unaudited)
(in thousands, except per share
data)
|
|
Three
Months Ended |
|
Six
Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2014 |
|
2013 |
|
2014 |
|
2013 |
Revenues: |
|
|
|
|
|
|
|
|
Premiums
earned |
|
$55,854 |
|
$52,118 |
|
$107,602 |
|
$101,521 |
Commission and fee income |
|
10,051 |
|
9,162 |
|
19,226 |
|
17,759 |
Investment income |
|
1,257 |
|
1,268 |
|
2,794 |
|
2,544 |
Net
realized gains (losses) on investments, |
|
|
|
|
|
|
|
|
available-for-sale (includes $(42), $(55), $40 and $(42),
respectively, of accumulated other comprehensive income (loss)
reclassification for unrealized gains (losses)) |
(42) |
|
(55) |
|
40 |
|
(42) |
|
|
67,120 |
|
62,493 |
|
129,662 |
|
121,782 |
|
|
|
|
|
|
|
|
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
Losses
and loss adjustment expenses |
|
41,066 |
|
39,087 |
|
77,883 |
|
72,592 |
Insurance
operating expenses |
|
21,162 |
|
19,909 |
|
45,191 |
|
42,249 |
Other
operating expenses |
|
245 |
|
223 |
|
478 |
|
452 |
Stock-based compensation |
|
66 |
|
56 |
|
112 |
|
140 |
Depreciation and amortization |
|
437 |
|
537 |
|
880 |
|
1,108 |
Interest
expense |
|
421 |
|
427 |
|
848 |
|
870 |
|
|
63,397 |
|
60,239 |
|
125,392 |
|
117,411 |
|
|
|
|
|
|
|
|
|
Net
income before income taxes |
|
3,723 |
|
2,254 |
|
4,270 |
|
4,371 |
Provision
for income taxes (includes $(15), $(19), $14 and $(15),
respectively, of income tax expense from reclassifications
items) |
|
254 |
|
188 |
|
290 |
|
281 |
Net
income |
|
$ 3,469 |
|
$ 2,066 |
|
$ 3,980 |
|
$ 4,090 |
|
|
|
|
|
|
|
|
|
Net
income per share: |
|
|
|
|
|
|
|
|
Basic |
|
$ 0.08 |
|
$ 0.05 |
|
$ 0.10 |
|
$ 0.10 |
Diluted |
|
$ 0.08 |
|
$ 0.05 |
|
$ 0.10 |
|
$ 0.10 |
|
|
|
|
|
|
|
|
|
Number of
shares used to calculate net income per share: |
|
|
|
|
|
|
|
|
Basic |
|
40,978 |
|
40,921 |
|
40,974 |
|
40,915 |
Diluted |
|
41,274 |
|
40,948 |
|
41,278 |
|
40,942 |
FIRST
ACCEPTANCE CORPORATION AND SUBSIDIARIES
Consolidated Balance
Sheets
(in thousands, except per share
data)
|
|
June 30, |
|
December 31, |
|
2014 |
|
2013 |
|
|
(Unaudited) |
|
|
ASSETS |
|
|
|
|
Investments, available-for-sale at fair value (amortized cost of
$124,959 and $126,873, respectively) |
|
$ 131,284 |
|
$ 130,248 |
Cash and
cash equivalents |
|
85,408 |
|
72,033 |
Premiums
and fees receivable, net of allowance of $407 and $311 |
|
53,185 |
|
46,228 |
Limited
partnership
interests |
|
9,053 |
|
7,513 |
Other
assets |
|
5,974 |
|
6,471 |
Property
and equipment, net |
3,121 |
3,512 |
Deferred
acquisition costs |
|
3,314 |
|
2,902 |
Identifiable intangible assets |
|
4,800 |
|
4,800 |
TOTAL
ASSETS |
|
$ 296,139 |
|
$ 273,707 |
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
|
|
Loss and
loss adjustment expense reserves |
|
$ 88,797 |
|
$ 84,286 |
Unearned
premiums and fees |
|
65,617 |
|
55,983 |
Debentures payable |
|
40,321 |
|
40,301 |
Other
liabilities |
|
17,406 |
|
16,205 |
Total
liabilities |
|
212,141 |
|
196,775 |
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
Preferred
stock, $.01 par value, 10,000 shares authorized |
|
-- |
|
-- |
Common
stock, $.01 par value, 75,000 shares authorized; 401,000 and 40,983
shares issued and outstanding, respectively |
|
410 |
|
410 |
Additional paid-in capital |
|
457,129 |
|
456,993 |
Accumulated other comprehensive income |
|
6,325 |
|
3,375 |
Accumulated deficit |
|
(379,866) |
|
(383,846) |
Total
stockholders' equity |
|
83,998 |
|
76,932 |
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
$ 296,139 |
|
$ 273,707 |
FIRST
ACCEPTANCE CORPORATION AND SUBSIDIARIES
Supplemental Data
(Unaudited)
PREMIUMS EARNED
BY STATE
|
Three
Months Ended |
|
Six Months
Ended |
June 30, |
|
June 30, |
|
2014 |
|
2013 |
|
2014 |
|
2013 |
Gross
premiums earned: |
|
|
|
|
|
|
|
Georgia |
$ 10,322 |
|
$ 9,887 |
|
$ 19,902 |
|
$ 19,538 |
Florida |
8,657 |
|
8,092 |
|
16,620 |
|
15,713 |
Texas |
7,169 |
|
6,168 |
|
13,638 |
|
11,990 |
Ohio |
5,757 |
|
4,684 |
|
10,906 |
|
9,044 |
Alabama |
5,604 |
|
5,523 |
|
10,857 |
|
10,571 |
Illinois |
5,092 |
|
5,327 |
|
9,821 |
|
10,644 |
South
Carolina |
4,235 |
|
4,036 |
|
8,242 |
|
7,694 |
Tennessee |
3,208 |
|
3,182 |
|
6,394 |
|
6,222 |
Pennsylvania |
2,257 |
|
2,228 |
|
4,403 |
|
4,372 |
Indiana |
1,562 |
|
1,355 |
|
2,994 |
|
2,599 |
Missouri |
1,275 |
|
982 |
|
2,413 |
|
1,870 |
Mississippi |
789 |
|
703 |
|
1,539 |
|
1,361 |
Total
gross premiums
earned |
55,927 |
|
52,167 |
|
107,729 |
|
101,618 |
Premiums ceded to
reinsurer |
(73) |
|
(49) |
|
(127) |
|
(97) |
Total
net premiums
earned |
$ 55,854 |
|
$ 52,118 |
|
$ 107,602 |
|
$ 101,521 |
COMBINED RATIOS (INSURANCE
OPERATIONS)
|
Three
Months Ended |
|
Six Months
Ended |
June 30, |
|
June 30, |
|
2014 |
|
2013 |
|
2014 |
|
2013 |
Loss |
73.5% |
|
75.0% |
|
72.4% |
|
71.5% |
Expense |
20.7% |
|
21.7% |
|
24.9% |
|
25.2% |
Combined |
94.2% |
|
96.7% |
|
97.3% |
|
96.7% |
POLICIES IN FORCE (FAC
ONLY)
|
Three
Months Ended |
|
Six Months
Ended |
June 30, |
|
June 30, |
|
2014 |
|
2013 |
|
2014 |
|
2013 |
Policies
in force - beginning of period |
168,607 |
|
169,424 |
|
143,077 |
|
145,938 |
Net change during period |
(9,314) |
|
(15,829) |
|
16,216 |
|
7,657 |
Policies
in force - end of period |
159,293 |
|
153,595 |
|
159,293 |
|
153,595 |
NUMBER OF
RETAIL LOCATIONS
Retail location counts are based upon the date that a location
commenced or ceased writing business.
|
Three
Months Ended |
|
Six Months
Ended |
June 30, |
|
June 30, |
|
2014 |
|
2013 |
|
2014 |
|
2013 |
Retail
locations - beginning of period |
355 |
|
367 |
|
360 |
|
369 |
Opened |
-- |
|
-- |
|
-- |
|
-- |
Closed |
(2) |
|
(1) |
|
(7) |
|
(3) |
Retail
locations - end of period |
353 |
|
366 |
|
353 |
|
366 |
RETAIL
LOCATIONS BY STATE
|
June 30, |
|
March 31, |
|
December 31, |
|
2014 |
|
2013 |
|
2014 |
|
2013 |
|
2013 |
|
2012 |
Alabama |
24 |
|
24 |
|
24 |
|
24 |
|
24 |
|
24 |
Florida |
30 |
|
30 |
|
30 |
|
30 |
|
30 |
|
30 |
Georgia |
60 |
|
60 |
|
60 |
|
60 |
|
60 |
|
60 |
Illinois |
60 |
|
62 |
|
61 |
|
62 |
|
61 |
|
63 |
Indiana |
17 |
|
17 |
|
17 |
|
17 |
|
17 |
|
17 |
Mississippi |
7 |
|
7 |
|
7 |
|
7 |
|
7 |
|
7 |
Missouri |
10 |
|
11 |
|
11 |
|
11 |
|
11 |
|
11 |
Ohio |
27 |
|
27 |
|
27 |
|
27 |
|
27 |
|
27 |
Pennsylvania |
16 |
|
16 |
|
16 |
|
16 |
|
16 |
|
16 |
South
Carolina |
25 |
|
26 |
|
25 |
|
26 |
|
25 |
|
26 |
Tennessee |
19 |
|
19 |
|
19 |
|
19 |
|
19 |
|
19 |
Texas |
58 |
|
67 |
|
58 |
|
68 |
|
63 |
|
69 |
Total |
353 |
|
366 |
|
355 |
|
367 |
|
360 |
|
369 |
SOURCE: First
Acceptance Corporation
INVESTOR RELATIONS
CONTACT:
Michael J. Bodayle
615.844.2885
This
announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: First Acceptance Corporation via
Globenewswire
HUG#1846689
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