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TMCNet:  Unico American Corporation Reports First Quarter 2018 Financial Results

[May 15, 2018]

Unico American Corporation Reports First Quarter 2018 Financial Results

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 (News - Alert)"), 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 (News - Alert) 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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