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Fednat Holding Co (FNHC) SEC Filing 10-K Annual report for the fiscal year ending Monday, December 31, 2018

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Fednat Holding Co

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CIK: 1069996 Ticker: FNHC




FEDNAT HOLDING COMPANY REPORTS
FOURTH QUARTER AND FULL YEAR 2018 RESULTS

Sunrise, Florida, February 27, 2019
- FedNat Holding Company (the “Company”) (Nasdaq: FNHC) today reported results for the three and twelve months ended December 31, 2018.

Q4 2018 highlights (as measured against the same three-month period last year, except where noted):
•
Net loss of $9.3 million or $0.73 per diluted share, including $23.7 million of pre-tax claims, net, from Hurricane Michael and other severe weather events.
•
Net loss of $5.5 million or $0.43 per diluted share, excluding investment losses of $5.1 million, pre-tax.
•
Gross written premiums of $127.6 million.
•
4.1% increase in net premiums earned to $91.1 million, with Homeowners up 11.1%.
•
Quarter-end Florida homeowners’ in-force policies of approximately 247,000.
•
45.5% increase in non-Florida homeowners in-force policies to approximately 44,000.
•
During 2018, decreased 105 positions representing over $6.0 million in annual savings as a result of management's initiatives to maximize operational efficiencies.
•
Book value per share decreased 3.5% to $16.84 as compared to $17.45 as of September 30, 2018, due to the impact of Hurricane Michael.
•
Book value per share excluding accumulated other comprehensive income increased 6.0% to $17.13 as of December 31, 2018 from $16.16 as of December 31, 2017.

Mr. Michael H. Braun, the Company’s Chief Executive Officer, said “In 2018, we continued to make excellent progress in strengthening our underwriting profitability, controlling our expense structure and positioning our core Homeowners business for growth and further diversification.  We generated a solid increase in earnings for the year despite the fourth quarter impact of severe weather events, including Hurricane Michael, a major storm that affected many of our policy holders in Florida’s Panhandle area. Our thoughts go out to all those individuals that were impacted by the recent weather events and have deployed the appropriate resources to help our policyholders in their time of need. Excluding the impact of net retained losses related to weather and the continued wind down of our non-core auto and commercial general liability business lines, our fourth quarter performance was strong. Our core Homeowners line continued to show improvement in non-catastrophe underwriting profitability and a decrease in our attritional loss ratio. We continue to expand our non-Florida homeowners business as gross premiums earned grew 49% compared to last year’s fourth quarter.  In looking at the full year performance, our prudent underwriting and exposure management resulted in a significant cost savings from our reinsurance program along with other initiatives that resulted in greater operating efficiencies. The progress we made on our growth objectives position us for long term, sustainable earnings growth. “
 
Mr. Braun added, “Adding to our excitement about our growth opportunity is the definitive agreement to acquire the insurance operations of 1347 Property Insurance Holding, Inc., announced earlier this week.  This acquisition is a great strategic and financial fit for FedNat, accelerating our geographic diversification while delivering immediate earnings accretion and attractive cost synergies. We believe that the combination of these quality homeowners insurers will help enhance value for FedNat shareholders.”

Consolidated

•
Net loss of $9.3 million or $0.73 per diluted share during the fourth quarter of 2018, as compared to net income of $6.3 million or $0.48 per diluted share during the fourth quarter of 2017. The fourth quarter was significantly impacted by $23.7 million of additional losses related to Hurricane Michael and other severe weather events during the period.
•
Compared to September 30, 2018, book value per share decreased $0.61 to $16.84 at December 31, 2018. The increase was predominantly driven by a net loss of $0.73 per share, as noted above, and dividends declared of $0.08 per share, partially offset by a decrease in our accumulated other comprehensive loss of $0.17 per share.

Revenues

•
Total revenue decreased $5.4 million or 5.2%, to $96.4 million for the three months ended December 31, 2018, compared with $101.8 million for the three months ended December 31, 2017. The decrease was primarily driven by $5.4 million lower net earned premiums from the non-core lines of business we are exiting, investment losses of $5.1 million and lower brokerage income offset by higher net premiums earned in Homeowners as a result of decreased reinsurance spend for the three months ended December 31, 2018 as compared to the same period in 2017.
•
With continued focus on profitability and underwriting exposure, gross written premiums decreased $6.3 million, or 4.7%, to $127.6 million in the quarter, compared with $133.9 million for the same three-month period last year. The decrease in

1
The following information was filed by Fednat Holding Co (FNHC) on Wednesday, February 27, 2019 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Inside Fednat Holding Co's 10-K Annual Report:

Financial Statements, Disclosures and Schedules

Inside this 10-K Annual Report

Document And Entity Information
Schedule Ii - Condensed Financial Information Of Registrant
Schedule Ii - Condensed Financial Information Of Registrant - Condensed Balance Shsets (Details)
Schedule Ii - Condensed Financial Information Of Registrant - Condensed Statements Of Cash Flows (Details)
Schedule Ii - Condensed Financial Information Of Registrant - Condensed Statements Of Earnings (Details)
Schedule V - Valuation And Qualifying Accounts
Schedule V - Valuation And Qualifying Accounts - (Details)
Schedule Vi - Supplemental Information Concerning Insurance Operations
Schedule Vi - Supplemental Information Concerning Insurance Operations - (Details)
Consolidated Balance Sheets
Consolidated Balance Sheets (Parenthetical)
Consolidated Statements Of Cash Flows
Consolidated Statements Of Changes In Shareholders' Equity
Consolidated Statements Of Comprehensive Income (Loss)
Consolidated Statements Of Operations
Commitments And Contingencies
Commitments And Contingencies (Tables)
Commitments And Contingencies - (Schedule Of Future Minimum Lease Payments) (Details)
Earnings Per Share
Earnings Per Share (Tables)
Earnings Per Share - (Narrative) (Details)
Earnings Per Share - (Schedule Of Calculation Of Basic And Diluted Net Income Per Common Share) (Details)
Employee Benefit Plan
Employee Benefit Plan - (Details)
Fair Value
Fair Value (Tables)
Fair Value - (Financial Instruments Measured At Fair Value) (Details)
Fair Value - (Held-To-Maturity Financial Instruments Measured At Fair Value) (Details)
Income Taxes
Income Taxes (Tables)
Income Taxes - (Effective Federal And State Tax Rates To Income Before Income Tax Expense) (Details)
Income Taxes - (Narrative) (Details)
Income Taxes - (Reconciliation Of Tax Positions Taken During The Year) (Details)
Income Taxes - (Significant Components Of Net Deferred Tax Liability) (Details)
Income Taxes - (Summary Of Provision For Income Tax Expense) (Details)
Investments
Investments (Tables)
Investments - (Amortized Cost And Estimated Fair Value Of Debt Securities By Contractual Maturity) (Details)
Investments - (Gross Unrealized Losses And Related Fair Values For Debt And Equity Securities, Grouped By Duration Of Time In Continuous Unrealized Loss Position) (Details)
Investments - (Narrative) (Details)
Investments - (Net Realized Gains (Losses) By Major Investment Category (Details)
Investments - (Summary Of Amortized Cost And Fair Value Of Debt And Equity Securities) (Details)
Investments - (Summary Of Net Investment Income) (Details)
Long-Term Debt
Long-Term Debt (Tables)
Long-Term Debt - (Narrative) (Details)
Long-Term Debt - (Schedule Of Debt) (Details)
Long-Term Debt - (Schedule Of Maturities Of Long-Term Debt) (Details)
Loss And Loss Adjustment Reserves
Loss And Loss Adjustment Reserves (Tables)
Loss And Loss Adjustment Reserves - (Average Annual Percentage Payout Of Incurred Claims By Age, Net Of Reinsurance) (Details)
Loss And Loss Adjustment Reserves - (Narrative) (Details)
Loss And Loss Adjustment Reserves - (Schedule Of Activity In Liability For Loss And Lae Reserves) (Details)
Loss And Loss Adjustment Reserves - (Schedule Of Cumulative Paid Losses And Alae, Net Of Reinsurance Recoverable) (Details)
Loss And Loss Adjustment Reserves - (Schedule Of Incurred Losses And Alae, Net Of Reinsurance) (Details)
Loss And Loss Adjustment Reserves - (Schedule Of Reconciliation Of Net Incurred And Paid Development) (Details)
Organization, Consolidation And Basis Of Presentation
Organization, Consolidation And Basis Of Presentation - (Narrative) (Details)
Quarterly Results Of Operations
Quarterly Results Of Operations (Tables)
Quarterly Results Of Operations - (Summary Of Unaudited Quarterly Results Of Operations) (Details)
Reinsurance
Reinsurance (Tables)
Reinsurance - (Narrative) (Details)
Reinsurance - (Premiums Written And Earned) (Details)
Reinsurance - (Reinsurance Recoverables) (Details)
Related Party Transactions
Related Party Transactions - (Details)
Shareholders' Equity
Shareholders' Equity (Tables)
Shareholders' Equity - (Narrative) (Details)
Shareholders' Equity - (Reconciliation Of Changes In Accumulated Other Comprehensive Income) (Details)
Shareholders' Equity - (Schedule Of Share-Based Compensation Arrangements) (Details)
Shareholders' Equity - (Summary Information About Stock Options Outstanding And Exercisable) (Details)
Shareholders' Equity - (Summary Of Restricted Stock Activity) (Details)
Shareholders' Equity - (Summary Of Stock Option Activity) (Details)
Significant Accounting Policies And Practices
Significant Accounting Policies And Practices (Policies)
Significant Accounting Policies And Practices - (Narrative) (Details)
Statutory Accounting And Dividend Restrictions
Statutory Accounting And Dividend Restrictions - (Details)
Subsequent Events
Subsequent Events - (Narrative) (Details)
Variable Interest Entity
Variable Interest Entity (Tables)
Variable Interest Entity - (Carrying Amount Of Vie Consolidated Assets And Liabilities) (Details)
Variable Interest Entity - (Narrative) (Details)
Ticker: FNHC
CIK: 1069996
Form Type: 10-K Annual Report
Accession Number: 0001069996-19-000018
Submitted to the SEC: Thu Mar 07 2019 11:59:19 AM EST
Accepted by the SEC: Thu Mar 07 2019
Period: Monday, December 31, 2018
Industry: Fire Marine And Casualty Insurance

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