Unico American Corporation Reports Fourth Quarter and Full Year 2018 Financial Results

CALABASAS, Calif.–(BUSINESS WIRE)–Unico American Corporation (NASDAQ: UNAM) (“Unico,” the “Company”),
announced today its consolidated financial results for the three and
twelve months ended December 31, 2018. For the three months ended
December 31, 2018, revenues were $8.0 million and net loss was $0.5
million ($0.09 diluted loss per share) compared with revenues of $9.3
million and net loss of $2.8 million ($0.52 diluted loss per share) for
the three months ended December 31, 2017. For the twelve months ended
December 31, 2018, revenues were $33.6 million and net loss was $3.2
million ($0.60 diluted loss per share) compared with revenue of $36.8
million and net loss of $8.7 million ($1.64 diluted loss per share) for
the twelve months ended December 31, 2017.

Stockholders’ equity was $55.9 million as of December 31, 2018, or
$10.54 per common share including net 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
net unrealized after-tax investment losses of $0.2 million.

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; single operating location; 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; limited trading of stock; 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)
 
December 31 December 31
  2018     2017  
(Unaudited)

ASSETS

Investments
Available-for-sale:
Fixed maturities, at fair value (amortized cost: December 31,
2018 $78,303; December 31, 2017 $58,153) $ 76,910 $ 57,849
Held-to-maturity:
Fixed maturities, at amortized cost (fair value: December 31,

2018 $7,126; December 31, 2017 $28,098)

7,126 28,098
Short-term investments, at fair value   4,691     1,848  
Total Investments 88,727 87,795
Cash, cash equivalents, and restricted cash 4,918 9,366
Accrued investment income 394 491
Receivables, net 3,933 6,006
Reinsurance recoverable:
Paid losses and loss adjustment expenses (1 ) 127
Unpaid losses and loss adjustment expenses 9,532 8,394
Deferred policy acquisition costs 3,490 4,163
Property and equipment, net 9,561 10,015
Deferred income taxes 4,375 3,381
Other assets   688     561  
Total Assets $ 125,617   $ 130,299  
 

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES

Unpaid losses and loss adjustment expenses $ 51,657 $ 49,077
Unearned premiums 15,965 18,768
Advance premium and premium deposits 234 208
Accrued expenses and other liabilities   1,845     2,301  
Total Liabilities $ 69,701   $ 70,354  
 
Commitments and contingencies
 
STOCKHOLDERS’ EQUITY
Common stock, no par – authorized 10,000,000 shares; 5,307,103
and 5,307,133 shares issued and outstanding at
December 31, 2018, and at December 31, 2017, respectively $ 3,773 $ 3,773
Accumulated other comprehensive loss (1,100 ) (240 )
Retained earnings   53,243     56,412  
Total Stockholders’ Equity $ 55,916   $ 59,945  
 
Total Liabilities and Stockholders’ Equity $ 125,617   $ 130,299  
 
   
UNICO AMERICAN CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands, except per share)
 
Three Months Ended Twelve Months Ended
December 31 December 31
  2018       2017     2018       2017  
(Unaudited) (Unaudited) (Unaudited)

REVENUES

Insurance company operation:
Net premium earned $ 6,786 $ 8,034 $ 28,755 $ 32,343
Investment income 523 505 1,908 1,290
Net realized investment gains 1
Other income   72     94     366     338  
Total Insurance Company Revenues 7,381 8,633 31,029 33,972
 
Other insurance operations:
Gross commissions and fees 573 646 2,429 2,744
Investment income 1 1
Finance fees earned 47 17 145 75
Other income           10      
Total Revenues   8,001     9,297     33,613     36,792  
 

EXPENSES

Losses and loss adjustment expenses 5,188 6,139 23,558 30,491
Policy acquisition costs 1,397 1,521 5,909 6,464
Salaries and employee benefits 1,035 1,309 4,593 5,844
Commissions to agents/brokers 51 39 176 166
Other operating expenses   920     1,115     3,303     3,707  
Total Expenses   8,591     10,123     37,539     46,672  
 
Loss before taxes (590 ) (826 ) (3,926 ) (9,880 )
Income tax expense (benefit)   (121 )   1,950     (757 )   (1,155 )
Net Loss $ (469 ) $ (2,776 ) $ (3,169 ) $ (8,725 )
 
 
 

PER SHARE DATA:

Basic
Loss per share $ (0.09 ) $ (0.52 ) $ (0.60 ) $ (1.64 )
Weighted average shares 5,307,103 5,307,133 5,307,121 5,307,133
Diluted
Loss per share $ (0.09 ) $ (0.52 ) $ (0.60 ) $ (1.64 )
Weighted average shares 5,307,103 5,307,133 5,307,121 5,307,133
 
 
UNICO AMERICAN CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
 
Twelve Months Ended
December 31
  2018       2017  
(Unaudited)
Cash flows from operating activities:
Net loss $ (3,169 ) $ (8,725 )
Adjustments to reconcile net loss to net cash from operations:
Depreciation and amortization (153 ) 518
Bond amortization, net 201 (664 )
Non-cash stock based compensation 12
Net realized investment gains (1 )
Bad debt expense 24 16
Changes in assets and liabilities:
Net receivables and accrued investment income 2,146 (319 )
Reinsurance recoverable (1,010 ) 1,261
Deferred policy acquisition costs 673 269
Other assets (123 ) 400
Unpaid losses and loss adjustment expenses 2,580 2,021
Unearned premiums (2,803 ) (607 )
Advance premium and premium deposits 26 (16 )
Accrued expenses and other liabilities (456 ) (360 )
Income taxes current/deferred   (769 )   (828 )
Net Cash Used by Operating Activities   (2,833 )   (7,023 )
 
Cash flows from investing activities:
Purchase of fixed maturity investments (25,633 ) (60,292 )
Proceeds from maturity of fixed maturity investments 24,984 53,936
Proceeds from sale or call of fixed maturity investments 1,270 1,142
Net increase in short-term investments (2,843 ) (750 )
Changes in property and equipment   607     (250 )
Net Cash Used by Investing Activities   (1,615 )   (6,214 )
 
Cash flows from financing activities:
Repurchase of common stock        
Net Cash Used by Financing Activities        
 
Net decrease in cash, cash equivalents, and restricted cash (4,448 ) (13,237 )
Cash, cash equivalents, and restricted cash at beginning of period   9,366     22,603  
Cash, Cash Equivalents, and Restricted Cash at End of Period $ 4,918   $ 9,366  
 
Supplemental Cash Flow Information
Cash paid during the period for:
Interest
Income taxes $ 9 $ 9

Contacts

Michael Budnitsky
Chief Financial Officer
818-591-9800

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