EXHIBIT 99.1
NEWS RELEASE
CONTACT: Michael Budnitsky
Chief Financial Officer
818-591-9800
UNICO AMERICAN CORPORATION REPORTS
THIRD QUARTER 2016 FINANCIAL RESULTS
Calabasas, CA, November 8, 2016 – Unico American Corporation (NASDAQ – “UNAM”) (“Unico,” the “Company”), announced today its consolidated financial results for the three and nine months ended September 30, 2016. For the three months ended September 30, 2016, revenues were $9.0 million and net loss was $2.0 million ($0.37 diluted loss per share) compared with revenues of $8.5 million and net loss of $0.7 million ($0.12 diluted loss per share) for the three months ended September 30, 2015. For the nine months ended September 30, 2016, revenues were $26.3 million and net loss was $2.0 million ($0.38 diluted loss per share) compared with revenues of $24.6 million and net loss of $0.9 million ($0.17 diluted loss per share) for the nine months ended September 30, 2015.
Stockholders’ equity was $68.3 million as of September 30, 2016, or $12.87 per common share including unrealized gains, net of tax, of $0.03 million, compared to stockholders’ equity of $70.3 million as of December 31, 2015, or $13.23 per common share including unrealized investment losses, net of tax, of $0.03 million.
“We are disappointed with our third quarter results,” said Cary L. Cheldin, Unico’s President and Chief Executive Officer. “Nonetheless, Unico’s operations have always been managed conservatively and we are optimistic about the company’s future. Our management team remains diligent and committed to delivering better results.”
“Although most of the third quarter loss can be attributed to statistical aberration, it gave us new information specifically related to first-party property claims and to certain liability claims. Our management team reacts immediately whenever presented with new information, as we did in this case. Of the amount of losses and loss adjustment expenses that was higher than expected, about 49% came from prior accident year development in only one particular sector of liability claims, a sector where we are significantly raising rates and changing rules; and, approximately 37% came from current year first-party property claims, which management considers being a statistical aberration because our overall year-to-date loss ratio from that sector, including those losses, remains good.”
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 atwww.crusaderinsurance.com.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Certain statements contained herein that are not historical facts are forward-looking. These statements, which may be identified by forward-looking words or phrases such as “anticipate,” “appear,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “should,” and “would” involve risks and uncertainties, many of which are beyond the control of the Company. Such risks and uncertainties could cause actual results to differ materially from these forward-looking statements. Factors which could cause actual results to differ materially include: underwriting or marketing actions not being effective; rate increases for coverages not being sufficient; premium rate adequacy relating to competition or regulation; actual versus estimated claim experience; the outcome of rate change filings with regulatory authorities; acceptance by insureds of rate changes; adequacy of rate changes; changes in Crusader’s A.M. Best rating; regulatory changes or developments; the outcome of regulatory proceedings; unforeseen calamities; general market conditions; and the Company’s ability to introduce new profitable products.
Financial Tables Follow –
UNICO AMERICAN CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ in thousands)
| | | September 30 | | | December 31 | |
| | | 2016 | | | 2015 | |
| | | (Unaudited) | | | | |
| ASSETS | | | | | | | | |
| Investments | | | | | | | | |
| Available for sale: | | | | | | | | |
| Fixed maturities, at fair value (amortized cost: September 30,2016; $82,608; December 31, 2015 $82,203) | | $ | 82,649 | | | $ | 82,161 | |
| Short-term investments, at fair value | | | 8,174 | | | | 15,641 | |
| Total Investments | | | 90,823 | | | | 97,802 | |
| Cash | | | 1,215 | | | | 334 | |
| Accrued investment income | | | 175 | | | | 86 | |
| Receivables, net | | | 6,143 | | | | 5,505 | |
| Reinsurance recoverable: | | | | | | | | |
| Paid losses and loss adjustment expenses | | | 497 | | | | 751 | |
| Unpaid losses and loss adjustment expenses | | | 9,654 | | | | 9,637 | |
| Deferred policy acquisition costs | | | 4,547 | | | | 4,233 | |
| Property and equipment, net | | | 10,396 | | | | 10,221 | |
| Deferred income taxes | | | 1,296 | | | | 1,334 | |
| Other assets | | | 16,064 | | | | 10,268 | |
| Total Assets | | $ | 140,810 | | | $ | 140,171 | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | | |
| | | | | | | | | |
| LIABILITIES | | | | | | | | |
| Unpaid losses and loss adjustment expenses | | $ | 49,822 | | | $ | 49,094 | |
| Unearned premiums | | | 19,402 | | | | 18,079 | |
| Advance premium and premium deposits | | | 489 | | | | 212 | |
| Accrued expenses and other liabilities | | | 2,774 | | | | 2,443 | |
| Total Liabilities | | $ | 72,487 | | | $ | 69,828 | |
| | | | | | | | | |
| Commitments and contingencies | | | | | | | | |
| | | | | | | | | |
| STOCKHOLDERS' EQUITY | | | | | | | | |
| Common stock, no par – authorized 10,000,000 shares; issued and outstanding shares 5,307,133 at September 30, 2016, and 5,315,945 at December 31, 2015 | | $ | 3,756 | | | $ | 3,743 | |
| Accumulated other comprehensive income | | | 27 | | | | (27 | ) |
| Retained earnings | | | 64,540 | | | | 66,627 | |
| Total Stockholders’ Equity | | $ | 68,323 | | | $ | 70,343 | |
| | | | | | | | | |
| Total Liabilities and Stockholders' Equity | | $ | 140,810 | | | $ | 140,171 | |
UNICO AMERICAN CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
($ in thousands, except per share)
| | | Three Months Ended | | | Nine Months Ended | |
| | | September 30 | | | September 30 | |
| | | 2016 | | | 2015 | | | 2016 | | | 2015 | |
| REVENUES | | | | | | | | | | | | | | | | |
| Insurance company revenues | | | | | | | | | | | | | | | | |
| Net premium earned | | $ | 7,981 | | | $ | 7,564 | | | $ | 23,271 | | | $ | 21,857 | |
| Investment income | | | 235 | | | | 129 | | | | 659 | | | | 314 | |
| Net realized investment losses | | | — | | | | — | | | | (1 | ) | | | — | |
| Other income | | | 66 | | | | 68 | | | | 201 | | | | 310 | |
| Total Insurance Company Revenues | | | 8,282 | | | | 7,761 | | | | 24,130 | | | | 22,481 | |
| | | | | | | | | | | | | | | | | |
| Other revenues from insurance operations | | | | | | | | | | | | | | | | |
| Gross commissions and fees | | | 697 | | | | 673 | | | | 2,064 | | | | 2,066 | |
| Finance charges and fees earned | | | 18 | | | | 17 | | | | 51 | | | | 48 | |
| Other income | | | 1 | | | | — | | | | 6 | | | | 2 | |
| Total Revenues | | | 8,998 | | | | 8,451 | | | | 26,251 | | | | 24,597 | |
| | | | | | | | | | | | | | | | | |
| EXPENSES | | | | | | | | | | | | | | | | |
| Losses and loss adjustment expenses | | | 8,038 | | | | 4,347 | | | | 17,983 | | | | 13,874 | |
| Policy acquisition costs | | | 1,742 | | | | 1,659 | | | | 5,142 | | | | 4,752 | |
| Salaries and employee benefits | | | 1,319 | | | | 1,255 | | | | 3,980 | | | | 3,669 | |
| Commissions to agents/brokers | | | 40 | | | | 38 | | | | 121 | | | | 127 | |
| Other operating expenses | | | 826 | | | | 2,120 | | | | 2,053 | | | | 3,551 | |
| Total Expenses | | | 11,965 | | | | 9,419 | | | | 29,279 | | | | 25,973 | |
| | | | | | | | | | | | | | | | | |
| Loss before taxes | | | (2,967 | ) | | | (968 | ) | | | (3,028 | ) | | | (1,376 | ) |
| Income tax benefit | | | (1,013 | ) | | | (318 | ) | | | (1,027 | ) | | | (442 | ) |
| Net Loss | | $ | (1,954 | ) | | $ | (650 | ) | | $ | (2,001 | ) | | $ | (934 | ) |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| PER SHARE DATA: | | | | | | | | | | | | | | | | |
| Basic | | | | | | | | | | | | | | | | |
| Loss per share | | $ | (0.37 | ) | | $ | (0.12 | ) | | $ | (0.38 | ) | | $ | (0.17 | ) |
| Weighted average shares | | | 5,307,133 | | | | 5,335,319 | | | | 5,307,881 | | | | 5,338,619 | |
| Diluted | | | | | | | | | | | | | | | | |
| Loss per share | | $ | (0.37 | ) | | $ | (0.12 | ) | | $ | (0.38 | ) | | $ | (0.17 | ) |
| Weighted average shares | | | 5,307,133 | | | | 5,335,319 | | | | 5,307,881 | | | | 5,338,619 | |
UNICO AMERICAN CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
($ in thousands)
| | | Nine Months Ended | |
| | | September 30 | |
| | | 2016 | | | 2015 | |
| Cash flows from operating activities: | | | | | | | | |
| Net loss | | $ | (2,001 | ) | | $ | (934 | ) |
| Adjustments to reconcile net income to net cash from operations: | | | | | | | | |
| Depreciation and amortization | | | 361 | | | | 349 | |
| Bond amortization, net | | | (13 | ) | | | (14 | ) |
| Non-cash stock based compensation | | | 17 | | | | 17 | |
| Loss on asset impairment | | | — | | | | 1,287 | |
| Changes in assets and liabilities: | | | | | | | | |
| Net receivables and accrued investment income | | | (727 | ) | | | (754 | ) |
| Reinsurance recoverable | | | 237 | | | | (1,480 | ) |
| Deferred policy acquisitions costs | | | (314 | ) | | | (451 | ) |
| Other assets | | | (4,750 | ) | | | (371 | ) |
| Unpaid losses and loss adjustment expenses | | | 728 | | | | 1,184 | |
| Unearned premiums | | | 1,323 | | | | 1,907 | |
| Advance premium and premium deposits | | | 277 | | | | 165 | |
| Accrued expenses and other liabilities | | | 331 | | | | (759 | ) |
| Income taxes current/deferred | | | (1,037 | ) | | | (453 | ) |
| Net Cash Used by Operating Activities | | | (5,568 | ) | | | (307 | ) |
| | | | | | | | | |
| Cash flows from investing activities: | | | | | | | | |
| Purchase of fixed maturity investments | | | (12,032 | ) | | | (36,248 | ) |
| Proceeds from maturity of fixed maturity investments | | | 11,640 | | | | 3,249 | |
| Net decrease in short-term investments | | | 7,467 | | | | 34,008 | |
| Additions to property and equipment | | | (536 | ) | | | (490 | ) |
| Net Cash Provided by Investing Activities | | | 6,539 | | | | 519 | |
| | | | | | | | | |
| Cash flows from financing activities: | | | | | | | | |
| Repurchase of common stock | | | (90 | ) | | | (118 | ) |
| Net Cash Used by Financing Activities | | | (90 | ) | | | (118 | ) |
| | | | | | | | | |
| Net increase in cash | | | 881 | | | | 94 | |
| Cash at beginning of period | | | 334 | | | | 309 | |
| Cash at End of Period | | $ | 1,215 | | | $ | 403 | |
| | | | | | | | | |
| Supplemental Cash Flow Information | | | | | | | | |
| Cash paid during the period for: | | | | | | | | |
| Interest | | | — | | | | — | |
| Income taxes | | $ | 9 | | | $ | 9 | |
