UNAM Unico American Corp

Unico American Corporation (NASDAQ – “UNAM”) (“Unico,” the “Company”) announced today its consolidated financial results for the three months ended March 31, 2018. For the three months ended March 31, 2018, revenues were $8.8 million and net loss was $2.2 million ($0.42 diluted loss per share) compared with revenues of $9.0 million and net loss of $2.1 million ($0.40 diluted loss per share) for the three months ended March 31, 2017.

Stockholders’ equity was $56.8 million as of March 31, 2018, or $10.71 per common share including unrealized after-tax investment losses of $1.1 million, compared to stockholders’ equity of $59.9 million as of December 31, 2017, or $11.30 per common share including unrealized after-tax investment losses of $0.2 million.

“We continued to improve our foundation for future success during the first quarter of 2018,” said Cary L. Cheldin, Unico’s President and Chief Executive Officer. “While our losses for the quarter were unacceptably high, our investment yields improved and we took steps to contain our costs by reducing our workforce and implementing a rate increase and underwriting restrictions.”

About Unico

Headquartered in Calabasas, California, Unico is an insurance holding company that underwrites property and casualty insurance through its insurance company subsidiary; provides property, casualty and health insurance through its agency subsidiaries; and through its other subsidiaries provides insurance premium financing and membership association services. Unico has conducted the majority of its operations through its subsidiary, Crusader Insurance Company, since 1985. For more information concerning Crusader Insurance Company, please visit the Crusader’s Web site at www.crusaderinsurance.com.

Forward-Looking Statements

This press release may contain “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended (or “the Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (or “the Exchange Act”). In this context, forward-looking statements are not historical facts and include statements about the Company plans, objectives, beliefs and expectations. Forward-looking statements include statements preceded by, followed by, or that include the words “believes,” “expects,” “anticipates,” “seeks,” “plans,” “estimates,” “intends,” “projects,” “targets,” “should,” “could,” “may,” “will,” “can,” “can have,” “likely,” the negatives thereof or similar words and expressions.

Forward-looking statements are only predictions and are not guarantees of future performance. These statements are based on current expectations and assumptions involving judgments about, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the Company’s control. These predictions are also affected by known and unknown risks, uncertainties and other factors that may cause the Company’s actual results to be materially different from those expressed or implied by any forward-looking statement. Many of these factors are beyond the Company’s ability to control or predict. The Company’s actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors. Such factors include, but are not limited to, failure to meet minimum capital and surplus requirements; vulnerability to significant catastrophic property loss; a change in accounting standards issued by the Financial Accounting Standards Board; ability to adjust claims accurately; insufficiency of loss and loss adjustment expense reserves to cover future losses; changes in federal or state tax laws; ability to realize deferred tax assets; ability to accurately underwrite risks and charge adequate premium; ability to obtain reinsurance or collect from reinsurers and or losses in excess of reinsurance limits; extensive regulation and legislative changes; reliance on subsidiaries to satisfy obligations; downgrade in financial strength rating by A.M. Best; changes in interest rates; investments subject to credit, prepayment and other risks; geographic concentration; reliance on independent insurance agents and brokers; insufficient reserve for doubtful accounts; litigation; enforceability of exclusions and limitations in policies; reliance on information technology systems; ability to prevent or detect acts of fraud with disclosure controls and procedures; change in general economic conditions; dependence on key personnel; ability to attract, develop and retain employees and maintain appropriate staffing levels; insolvency, financial difficulties, or default in performance of obligations by parties with significant contracts or relationships; ability to effectively compete; maximization of long-term value and no focus on short-term earnings expectations; control by a small number of shareholders; failure to maintain effective system of internal controls; and difficulty in effecting a change of control or sale of any subsidiaries.

Please see Part I - Item 1A – “Risk Factors” in the Company’s 2017 Annual Report on Form 10-K as filed with the U.S. Securities and Exchange Commission (“SEC”), as well as other documents the Company files with the SEC from time-to-time, for other important factors that could cause the Company’s actual results to differ materially from its current expectations and from the forward-looking statements discussed herein. Because of these and other risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements. In addition, these statements speak only as of the date of this press release and, except as may be required by law, the Company undertakes no obligation to revise or update publicly any forward-looking statements for any reason.

           

UNICO AMERICAN CORPORATION

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

($ in thousands)

  March 31 December 31 2018 2017 (Unaudited)

ASSETS

Investments Available-for-sale: Fixed maturities, at fair value (amortized cost: March 31, 2018 $65,628; December 31, 2017 $58,153) $ 64,191 $ 57,849 Held-to-maturity: Fixed maturities, at amortized cost (fair value: March 31, 2018 $23,848; December 31, 2017 $28,098) 23,848 28,098 Short-term investments, at fair value   6,012     10,440   Total Investments 94,051 96,387 Cash and restricted assets 263 774 Accrued investment income 377 491 Receivables, net 5,585 6,006 Reinsurance recoverable: Paid losses and loss adjustment expenses 540 127 Unpaid losses and loss adjustment expenses 11,570 8,394 Deferred policy acquisition costs 3,939 4,163 Property and equipment, net 9,912 10,015 Deferred income taxes 4,232 3,381 Other assets   521     561   Total Assets $ 130,990   $ 130,299    

LIABILITIES AND STOCKHOLDERS' EQUITY

 

LIABILITIES

Unpaid losses and loss adjustment expenses $ 53,914 $ 49,077 Unearned premiums 18,054 18,768 Advance premium and premium deposits 309 208 Accrued expenses and other liabilities   1,870     2,301   Total Liabilities $ 74,147   $ 70,354     Commitments and contingencies  

STOCKHOLDERS' EQUITY

Common stock, no par – authorized 10,000,000 shares; issued and outstanding shares 5,307,133 at March 31, 2018, and December 31, 2017 $ 3,773 $ 3,773 Accumulated other comprehensive income (1,135 ) (240 ) Retained earnings   54,205     56,412   Total Stockholders’ Equity $ 56,843   $ 59,945     Total Liabilities and Stockholders' Equity $ 130,990   $ 130,299          

UNICO AMERICAN CORPORATION

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

($ in thousands, except per share)

  Three Months Ended March 31 2018       2017

REVENUES

Insurance company operation:

Net premium earned $ 7,682 $ 7,921 Investment income 445 212 Other income   55     68   Total Insurance Company Revenues 8,182 8,201   Other insurance operations: Gross commissions and fees 607 742 Finance fees earned   18     18   Total Revenues   8,807     8,961    

EXPENSES

Losses and loss adjustment expenses 7,802 8,525 Policy acquisition costs 1,622 1,498 Salaries and employee benefits 1,288 1,349 Commissions to agents/brokers 40 42 Other operating expenses   867     814   Total Expenses   11,619     12,228     Loss before taxes (2,812 ) (3,267 ) Income tax benefit   605     1,120   Net Loss $ (2,207 ) $ (2,147 )      

PER SHARE DATA:

Basic Loss Per Share $ (0.42 ) $ (0.40 ) Weighted Average Shares 5,307,133 5,307,133   Diluted Loss Per Share $ (0.42 ) $ (0.40 ) Weighted Average Shares 5,307,133 5,307,133        

UNICO AMERICAN CORPORATION

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

($ in thousands)

  Three Months Ended March 31 2018       2017 Cash flows from operating activities: Net Loss $ (2,207 ) $ (2,147 ) Adjustments to reconcile net loss to net cash from operations: Depreciation and amortization 140 132 Bond amortization, net 99 (3 ) Bad debt expense - 13 Non-cash stock based compensation - 6 Changes in assets and liabilities: Net receivables and accrued investment income 535 (292 ) Reinsurance recoverable (3,589 ) (262 ) Deferred policy acquisition costs 224 11 Other assets 34 377 Unpaid losses and loss adjustment expenses 4,837 2,834 Unearned premiums (714 ) 22 Advance premium and premium deposits 101 169 Accrued expenses and other liabilities (431 ) (141 ) Income taxes current/deferred   (607 )   (1,118 ) Net Cash Used by Operating Activities   (1,578 )   (399 )   Cash flows from investing activities: Purchase of fixed maturity investments (8,161 ) (100 ) Proceeds from maturity of fixed maturity investments 4,837 12,238 Net decrease (increase) in short-term investments 4,428 (11,598 ) Additions to property and equipment   (37 )   (35 ) Net Cash Provided by Investing Activities   1,067     505     Cash flows from financing activities: Net Cash Used by Financing Activities   -     -     Net (decrease) increase in cash and restricted cash (511 ) 106 Cash and restricted cash at beginning of period   774     13,496   Cash and Restricted Cash at End of Period $ 263   $ 13,602     Supplemental cash flow information Cash paid during the period for: Interest - - Income taxes - -  

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Unico American CorporationMichael BudnitskyChief Financial Officer818-591-9800