EXHIBIT 99.1

 

NEWS RELEASE

 

 

CONTACT: Michael Budnitsky

Chief Financial Officer

818-591-9800

 

UNICO AMERICAN CORPORATION REPORTS

SECOND QUARTER 2020 FINANCIAL RESULTS

 

Calabasas, CA, August 14, 2020

– Unico American Corporation (NASDAQ – “UNAM”) (“Unico” or the “Company”), announced today its consolidated financial results for the three and six months ended June 30, 2020. For the three months ended June 30, 2020, net loss was $434,814 ($0.08 diluted loss per share) compared to net loss of $276,677 ($0.05 diluted loss per share) for the three months ended June 30, 2019. For the six months ended June 30, 2020, net loss was $1,478,640 ($0.28 diluted loss per share) compared to net loss $947,751 ($0.18 diluted loss per share) for the six months ended June 30, 2019. Book value per share was $10.37 and $10.38 at June 30, 2020, and December 31, 2019, respectively.

 

Results of Operations

 

   Three Months Ended June 30
           Decrease
     2020    2019    $    %
                     
Gross written premium  $8,781,127   $9,454,402   $(673,275)   (7)%
Net investment income  $489,498   $530,745   $(41,247)   (8)%
Gross commission and fees  $457,886   $527,825   $(69,939)   (13)%
Losses and loss adjustment expenses  $4,888,906   $5,058,951   $(170,045)   (3)%
Policy acquisition costs  $1,202,026   $1,289,481   $(87,455)   (7)%

 

The decrease in gross written premium during the three months ended June 30, 2020, was due primarily to coronavirus-related contraction in the Food, Beverage & Entertainment underwriting vertical for Crusader Insurance Company (“Crusader”), the Company’s wholly owned subsidiary.

 

The decrease in net investment income during the three months ended June 30, 2020, was due primarily to a decrease in average invested assets.

 

The decrease in gross commission and fees during the three months ended June 30, 2020, was due primarily to decreases in property and casualty insurance policy fee income and health insurance program commission income.

 

The decrease in loss and loss adjustment expenses during the three months ended June 30, 2020, was due primarily to decreases in incurred losses and loss adjusted expenses on reported claims as a result of lower severity of Apartments & Commercial Buildings claims.

 

The decrease in policy acquisition costs during the three months ended June 30, 2020, was due primarily to relatively higher sales in Crusader’s Transportation underwriting vertical which pays a lower commission rate than the other verticals.

 

1 of 7 

 

 

   Six Months Ended June 30
             Increase (Decrease)
    2020    2019    $   %
                     
Gross written premium  $17,988,013   $17,983,583   $4,430    0%
Net investment income  $1,010,190   $1,063,375   $(53,185)   (5)%
Gross commission and fees  $926,955   $1,075,270   $(148,315)   (14)%
Losses and loss adjustment expenses  $10,766,291   $10,213,394   $552,897    5%
Policy acquisition costs  $2,346,451   $2,376,194   $(29,743)   (1)%

 

The increase in gross written premium during the six months ended June 30, 2020, was due primarily to growth in the Transportation underwriting vertical for Crusader.

 

The decrease in net investment income during the six months ended June 30, 2020, was due primarily to a decrease in average invested assets.

 

The decrease in gross commission and fees during the six months ended June 30, 2020, was due primarily to decreases in property and casualty insurance policy fee income and health insurance program commission income.

 

The increase in loss and loss adjustment expenses during the six months ended June 30, 2020, was due primarily to higher claims costs related to underwriting activities in the Transportation vertical.

 

The decrease in policy acquisition costs during the six months ended June 30, 2020, was due primarily to relatively higher sales in Crusader’s Transportation underwriting vertical which pays a lower commission rate than the other verticals.

 

Management Commentary

 

“The second quarter results of the organization are clearly unsatisfactory. Numerous factors contributed to the disappointing net effect on shares and operating ratios. Certainly COVID-19 has impacted revenue in several industry-focused “verticals”, coupled with a systemic “business-as-unusual” transaction environment. The quarter includes several expenses that were incurred as a result of activating our new excess & special (E&S) risk initiative, permitting a venue to more accurately price acceptable but challenging opportunities. Regardless of the drivers, our focus is on improving the bottom line,” said Ron Closser, recently appointed Interim CEO, President and Board Chair.

 

“There are some positives: In addition to the E&S venue, the organization recognized gains on investments that reflect an evolving perspective toward returns. The corporation remains strongly capitalized with solid surplus. Quarterly losses (case incurred) show some positive improvement that will continue to be closely scrutinized for frequency and severity trends in order to determine if these promising trends are an anomaly, COVID-specific, or more pervasively reflect risk selection and retention. Most importantly, there is a reinvigorated philosophy within the organization: underwriting, claims management and organizational costs must directly correlate to stronger results. It might take a little more time to fully integrate this philosophy throughout the operation, but the fundamentals are being diagnosed and addressed.”

 

2 of 7 

 

 

Definitions and Non-GAAP Financial Measures

 

Written premium is a non-GAAP financial measure that is defined, under the statutory accounting practices prescribed or permitted by the California Department of Insurance, as the contractually determined amount charged by the insurance company to the policyholder for the effective period of the contract based on the expectation of risk, policy benefits, and expenses associated with the coverage provided by the terms of the policies. Written premium is a required statutory measure. Written premium is defined under U.S. generally accepted accounting principles (“GAAP”) in Accounting Standards Codification Topic 405, “Liabilities,” as “premiums on all policies an entity has issued in a period.” Earned premium, the most directly comparable GAAP measure to written premium, represents the portion of written premium that is recognized as income in the financial statements for the period presented and earned on a pro-rata basis over the terms of the policies. Written premium is intended to reflect production levels and is meant as supplemental information and not intended to replace earned premium. Such information should be read in conjunction with the GAAP financial results.

 

The following is a reconciliation of gross written premium (before premium ceded to reinsurers) to net earned premium (after premium ceded to reinsurers):

   Three Months Ended June 30  Six Months Ended June 30
   2020  2019  2020  2019
             
Gross written premium  $8,781,127   $9,454,402   $17,988,013   $17,983,583 
Less: written premium ceded to reinsurers   (2,003,311)   (1,732,839)   (3,982,438)   (3,416,529)
Net written premium   6,777,816    7,721,563    14,005,575    14,567,054 
Change in gross unearned premium   (20,263)   (1,200,032)   (317,324)   (1,761,809)
Change in ceded unearned premium   12,558    (3,419)   (7,006)   (22,983)
Net earned premium  $6,770,111   $6,518,112   $13,681,245   $12,782,262 

 

About Unico

 

Headquartered in Calabasas, California, Unico is an insurance holding company whose subsidiaries underwrite and market property and casualty insurance, and transact health insurance, insurance premium financing and membership association services. Since 1985, the majority of Unico’s financial activity has been related to the operations of its Crusader Insurance Company subsidiary. For more information concerning Crusader Insurance Company, please visit Crusader’s website at www.crusaderinsurance.com.

 

3 of 7 

 

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’s 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, the ongoing impact of the COVID-19 outbreak; 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 2019 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 or furnishes with the SEC from time-to-time, for other important risks and uncertainties 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, whether as a result of changed circumstances, new information, future events or otherwise, for any reason.

 

 

 

 

 

Financial Tables Follow –

 

4 of 7 

 

 

UNICO AMERICAN CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

($ in thousands)

 

   June 30  December 31
   2020  2019
    (Unaudited)      
ASSETS          
Investments          
Available-for-sale:          
Fixed maturities, at fair value (amortized cost: $80,941 at June 30, 2020, and $82,002 at December 31, 2019)  $84,214   $83,500 
Held-to-maturity:          
Fixed maturities, at amortized cost (fair value: $798 at June 30, 2020, and $798 at December 31, 2019)   798    798 
Equity securities, at fair value (cost: $503 at June 30, 2020, and $0 at December 31, 2019)   525    —   
Short-term investments, at fair value   2,199    2,197 
Total Investments   87,736    86,495 
Cash and cash equivalents   4,675    5,782 
Accrued investment income   395    397 
Receivables, net   4,160    4,019 
Reinsurance recoverable:          
Paid losses and loss adjustment expenses   361    686 
Unpaid losses and loss adjustment expenses   15,807    14,726 
Deferred policy acquisition costs   3,668    3,620 
Property and equipment, net   10,237    10,227 
Deferred income taxes   3,604    3,925 
Other assets   369    430 
Total Assets  $131,012   $130,307 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
           
LIABILITIES          
Unpaid losses and loss adjustment expenses  $54,877   $55,067 
Unearned premiums   18,128    17,810 
Advance premium and premium deposits   289    219 
Accrued expenses and other liabilities   2,720    2,130 
Total Liabilities    76,014    75,226 
           
Commitments and contingencies          
           
STOCKHOLDERS'  EQUITY          
Common stock, no par value – authorized 10,000,000 shares; 5,305,742 and 5,306,720, shares issued and outstanding at June 30, 2020, and December 31, 2019, respectively  3,772   3,773 
Accumulated other comprehensive income   2,585    1,183 
Retained earnings   48,641    50,125 
Total Stockholders’ Equity  54,998    55,081 
           
Total Liabilities and Stockholders' Equity  $131,012   $130,307 

5 of 7 

 

 

UNICO AMERICAN CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

($ in thousands, except per share)

 

   Three Months Ended  Six Months Ended
   June 30 June 30
  2020 2019  2020 2019
REVENUES            
Insurance company operation:                    
  Net earned premium  $6,770   $6,518   $13,681   $12,782 
  Investment income   489    531    1,010    1,063 
  Net realized investments gains (losses)   —      (5)   2    (12)
  Net unrealized investments gains on equity securities   68        23     
  Other income (loss)   124    169    204    (92)
     Total Insurance Company Operation   7,451    7,213    14,920    13,741 
                     
Other insurance operations:                    
  Gross commissions and fees   458    528    927    1,075 
  Finance charges and fees earned   67    54    134    104 
  Other income   —      —      —      11 
     Total Revenues   7,976    7,795    15,981    14,931 
                     
EXPENSES                    
Losses and loss adjustment expenses   4,889    5,059    10,766    10,214 
Policy acquisition costs   1,202    1,290    2,346    2,376 
Salaries and employee benefits   1,252    1,013    2,374    2,041 
Commissions to agents/brokers   24    41    50    91 
Other operating expenses   994    735    1,975    1,364 
     Total Expenses   8,361    8,138    17,511    16,086 
                     
Loss before taxes   (385)   (343)   (1,530)   (1,155)
Income tax expense (benefit)   50    (66)   (51)   (207)
     Net Loss  $(435)  $(277)  $(1,479)  $(948)
                     
                     
                     
PER SHARE DATA:                    
Basic                    
Loss per share  $(0.08)  $(0.05)  $(0.28)  $(0.18)
Weighted average shares   5,305,742    5,306,938    5,306,231    5,307,021 
Diluted                    
Loss per share  $(0.08)  $(0.05)  $(0.28)  $(0.18)
Weighted average shares   5,305,742    5,306,938    5,306,231    5,307,021 

 

6 of 7 

 

 

UNICO AMERICAN CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

($ in thousands)

 

   Six Months Ended
   June 30
   2020  2019
           
Cash flows from operating activities:          
   Net loss  $(1,479)  $(948)
   Adjustments to reconcile net loss to net cash from operations:          
      Depreciation and amortization   378    270 
      Bond amortization, net   (236)   (5)
      Bad debt expense   1    (21)
      Net realized investment (gains) losses   (2)   12 
      Net unrealized investment gains on equity securities   (23)   —   
   Changes in assets and liabilities:          
      Net receivables and accrued investment income   (139)   (801)
      Reinsurance recoverable   (756)   (2,063)
      Deferred policy acquisition costs   (48)   (139)
      Other assets   61    300 
      Unpaid losses and loss adjustment expenses   (190)   (1,827)
      Unearned premiums   318    1,761 
      Advance premium and premium deposits   70    126 
      Accrued expenses and other liabilities   590    (195)
      Income taxes current/deferred   (53)   (231)
Net Cash Used by Operating Activities   (1,508)   (3,761)
           
Cash flows from investing activities:          
Purchase of fixed maturity investments   (11,764)   (6,743)
Purchase of equity securities   (503)   —   
Proceeds from maturity of fixed maturity investments   9,370    3,703 
Proceeds from sale or call of fixed maturity investments   3,694    3,473 
Net (increase) decrease in short-term investments   (2)   4,491 
Additions to property and equipment   (388)   (488)
Net Cash Provided by Investing Activities   407    4,436 
           
Cash flows from financing activities:          
   Repurchase of common stock   (6)   (2)
Net Cash Used by Financing Activities   (6)   (2)
           
Net (decrease) increase in cash and cash equivalents   (1,107)   673 
Cash and cash equivalents at beginning of period   5,782    4,918 
Cash and Cash Equivalents at End of Period  $4,675   $5,591 
           
Supplemental cash flow information          
Cash paid during the period for:          
Interest   —      —   
Income taxes  $9   $9 

  

7 of 7 

 

 

 


The following information was filed by Unico American Corp (UNAM) on Friday, August 14, 2020 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-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

View differences made from one quarter to another to evaluate Unico American Corp's financial trajectory

Compare SEC Filings Year-over-Year (YoY) and Quarter-over-Quarter (QoQ)
Sample 10-K Year-over-Year (YoY) Comparison

Compare this 10-Q Quarterly Report to its predecessor by reading our highlights to see what text and tables were  removed  ,   added    and   changed   by Unico American Corp.

Continue

Never Miss A New SEC Filing Again


Real-Time SEC Filing Notifications
Screenshot taken from Gmail for a new 10-K Annual Report
Last10K.com Member Feature

Receive an e-mail as soon as a company files an Annual Report, Quarterly Report or has new 8-K corporate news.

Continue

We Highlighted This SEC Filing For You


SEC Filing Sentiment Analysis - Bullish, Bearish, Neutral
Screenshot taken from Wynn's 2018 10-K Annual Report
Last10K.com Member Feature

Read positive and negative remarks made by management in their entirety without having to find them in a 10-K/Q.

Continue

Widen Your SEC Filing Reading Experience


Increased Reading Area for SEC Filings
Screenshot taken from Adobe Inc.'s 10-Q Quarterly Report
Last10K.com Member Feature

Remove data columns and navigations in order to see much more filing content and tables in one view

Continue

Uncover Actionable Information Inside SEC Filings


SEC Filing Disclosures
Screenshot taken from Lumber Liquidators 10-K Annual Report
Last10K.com Member Feature

Read both hidden opportunities and early signs of potential problems without having to find them in a 10-K/Q

Continue

Adobe PDF, Microsoft Word and Excel Downloads


Download Annual and Quarterly Reports as PDF, Word and Excel Documents
Screenshots of actual 10-K and 10-Q SEC Filings in PDF, Word and Excel formats
Last10K.com Member Feature

Export Annual and Quarterly Reports to Adobe PDF, Microsoft Word and Excel for offline viewing, annotations and analysis

Continue

FREE Financial Statements


Download Annual and Quarterly Reports as PDF, Word and Excel Documents
Screenshot of actual balance sheet from company 10-K Annual Report
Last10K.com Member Feature

Get one-click access to balance sheets, income, operations and cash flow statements without having to find them in Annual and Quarterly Reports

Continue for FREE

Intrinsic Value Calculator


Intrinsic Value Calculator
Screenshot of intrinsic value for AT&T (2019)
Last10K.com Member Feature

Our Intrinsic Value calculator estimates what an entire company is worth using up to 10 years of financial ratios to determine if a stock is overvalued or not

Continue

Financial Stability Report


Financial Stability Report
Screenshot of financial stability report for Coco-Cola (2019)
Last10K.com Member Feature

Our Financial Stability reports uses up to 10 years of financial ratios to determine the health of a company's EPS, Dividends, Book Value, Return on Equity, Current Ratio and Debt-to-Equity

Continue

Get a Better Picture of a Company's Performance


Financial Ratios
Available Financial Ratios
Last10K.com Member Feature

See how over 70 Growth, Profitability and Financial Ratios perform over 10 Years

Continue

Log in with your credentials

or    

Forgot your details?

Create Account