Exhibit 99
Press Release | Source: First Acceptance Corporation | |
| Contact: Michael Bodayle (615) 844-2885 |
First Acceptance Corporation Reports Operating Results for the Quarter Ended September 30, 2010
NASHVILLE, TN, November 4, 2010/Businesswire-FirstCall/ — First Acceptance Corporation (NYSE: FAC) today reported its financial results for the first quarter ended September 30, 2010 of its fiscal year ending June 30, 2011.
Operating Results
Revenues for the three months ended September 30, 2010 were $53.1 million, compared with $57.3 million for the same period in fiscal year 2010. Income before income taxes for the three months ended September 30, 2010 was $0.5 million, compared with $2.9 million in the same period in fiscal year 2010. Net income for the three months ended September 30, 2010 was $0.4 million, or $0.01 per share on a diluted basis, compared with $2.8 million, or $0.06 per share on a diluted basis, for the same period in fiscal year 2010.
Premiums earned for the three months ended September 30, 2010 were $43.9 million, compared with $48.5 million for the same period in fiscal year 2010. The decline was primarily due to the continued weak economic conditions, which have caused both a decline in the number of policies written, as well as an increase in the percentage of our customers purchasing liability-only coverage. The closure of underperforming stores also contributed to the decrease in policies written and premiums earned. At September 30, 2010, the number of policies in force was 150,175, compared with 152,866 at September 30, 2009. At September 30, 2010, we operated 393 stores, compared with 415 stores at September 30, 2009.
Loss and Loss Adjustment Expense Ratio.The loss and loss adjustment expense ratio was 73.0 percent for the three months ended September 30, 2010, compared with 68.4 percent for the three months ended September 30, 2009. For the three months ended September 30, 2010, we experienced favorable development related to prior periods of $2.1 million, compared with favorable development of $3.7 million for the three months ended September 30, 2009. The favorable development for the three months ended September 30, 2010 was primarily due to lower than anticipated severity of accidents, of which approximately $1.2 million related to losses occurring during the first six months of the 2010 calendar accident year and $0.9 million related to calendar accident years 2009 or prior.
Excluding the favorable development related to prior periods, the loss and loss adjustment expense ratios for the three months ended September 30, 2010 and 2009 were 77.7 percent and 75.9 percent, respectively. This increase is due to higher loss adjustment expense resulting from (i) the increase in the percentage of claims related to liability-only coverage policies and (ii) increased investigative efforts with regards to Personal Injury Protection claims in Florida.
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Expense Ratio.Our expense ratio for the three months ended September 30, 2010 was 25.5 percent, compared with 26.0 percent for the same period in fiscal year 2010. The year-over-year decrease in the expense ratio was due to the reduction in fixed costs and savings realized from the closure of underperforming stores.
Combined Ratio.The combined ratio was 98.5 percent for the three months ended September 30, 2010, compared with 94.4 percent for the same period in fiscal year 2010.
About First Acceptance Corporation
Our primary focus is the selling, servicing and underwriting of non-standard personal automobile insurance products underwritten by us as well as certain commissionable ancillary products, primarily through employee-agents. In certain states, our employee-agents also sell other complementary insurance products underwritten by us. At September 30, 2010, we leased and operated 393 retail offices in 12 states. Our insurance company subsidiaries are licensed to do business in 25 states. Additional information about First Acceptance Corporation can be found online at www.firstacceptancecorp.com.
This press release contains forward-looking statements. These statements, which have been included in reliance on the “safe harbor” provisions of the federal securities laws, involve risks and uncertainties. Investors are hereby cautioned that these statements may be affected by important factors, including, among others, the factors set forth under the caption “Risk Factors” in Item 1A. of our Annual Report on Form 10-K for the fiscal year ended June 30, 2010 and in our other filings with the Securities and Exchange Commission. Actual operations and results may differ materially from the results discussed in the forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.
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FIRST ACCEPTANCE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations (Unaudited)
(in thousands, except per share data)
Consolidated Statements of Operations (Unaudited)
(in thousands, except per share data)
| Three Months Ended | ||||||||
| September 30, | ||||||||
| 2010 | 2009 | |||||||
| Revenues: | ||||||||
| Premiums earned | $ | 43,934 | $ | 48,467 | ||||
| Commission and fee income | 7,276 | 6,954 | ||||||
| Investment income | 2,137 | 1,913 | ||||||
| Net realized losses on investments, available-for-sale | (224 | ) | (22 | ) | ||||
| 53,123 | 57,312 | |||||||
| Costs and expenses: | ||||||||
| Losses and loss adjustment expenses | 32,057 | 33,153 | ||||||
| Insurance operating expenses | 18,508 | 19,570 | ||||||
| Other operating expenses | 387 | 273 | ||||||
| Litigation settlement | — | (381 | ) | |||||
| Stock-based compensation | 192 | 383 | ||||||
| Depreciation and amortization | 476 | 464 | ||||||
| Interest expense | 991 | 989 | ||||||
| 52,611 | 54,451 | |||||||
| Income before income taxes | 512 | 2,861 | ||||||
| Provision for income taxes | 120 | 101 | ||||||
| Net income | $ | 392 | $ | 2,760 | ||||
| Net income per share: | ||||||||
| Basic and diluted | $ | 0.01 | $ | 0.06 | ||||
| Number of shares used to calculate net income per share: | ||||||||
| Basic | 48,037 | 47,877 | ||||||
| Diluted | 48,509 | 48,308 | ||||||
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FIRST ACCEPTANCE CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except per share data)
Consolidated Balance Sheets
(in thousands, except per share data)
| September 30, | June 30, | |||||||
| 2010 | 2010 | |||||||
| (Unaudited) | ||||||||
ASSETS | ||||||||
| Investments, available-for-sale at fair value (amortized cost of $185,048 and $187,907, respectively) | $ | 197,511 | $ | 196,550 | ||||
| Cash and cash equivalents | 28,871 | 26,184 | ||||||
| Premiums and fees receivable, net of allowance of $436 and $418 | 44,665 | 41,276 | ||||||
| Other assets | 9,519 | 8,733 | ||||||
| Property and equipment, net | 3,155 | 3,524 | ||||||
| Deferred acquisition costs | 4,053 | 3,623 | ||||||
| Goodwill | 70,092 | 70,092 | ||||||
| Identifiable intangible assets | 6,360 | 6,360 | ||||||
| TOTAL ASSETS | $ | 364,226 | $ | 356,342 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Loss and loss adjustment expense reserves | $ | 71,191 | $ | 73,198 | ||||
| Unearned premiums and fees | 55,011 | 52,563 | ||||||
| Debentures payable | 41,240 | 41,240 | ||||||
| Other liabilities | 15,190 | 12,151 | ||||||
| Total liabilities | 182,632 | 179,152 | ||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, $.01 par value, 10,000 shares authorized | — | — | ||||||
| Common stock, $.01 par value, 75,000 shares authorized; 48,509 shares issued and outstanding | 485 | 485 | ||||||
| Additional paid-in capital | 466,023 | 465,831 | ||||||
| Accumulated other comprehensive income | 12,463 | 8,643 | ||||||
| Accumulated deficit | (297,377 | ) | (297,769 | ) | ||||
| Total stockholders’ equity | 181,594 | 177,190 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 364,226 | $ | 356,342 | ||||
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FIRST ACCEPTANCE CORPORATION AND SUBSIDIARIES
Supplemental Data
(Unaudited)
Supplemental Data
(Unaudited)
GROSS PREMIUMS EARNED BY STATE
| Three Months Ended | ||||||||
| September 30, | ||||||||
| 2010 | 2009 | |||||||
| Premiums earned: | ||||||||
| Georgia | $ | 9,591 | $ | 10,902 | ||||
| Texas | 5,910 | 5,912 | ||||||
| Illinois | 5,806 | 6,331 | ||||||
| Florida | 4,818 | 5,261 | ||||||
| Alabama | 4,386 | 5,210 | ||||||
| Ohio | 3,224 | 2,952 | ||||||
| Tennessee | 2,714 | 3,104 | ||||||
| South Carolina | 2,500 | 3,138 | ||||||
| Pennsylvania | 2,416 | 2,819 | ||||||
| Indiana | 1,145 | 1,221 | ||||||
| Missouri | 738 | 827 | ||||||
| Mississippi | 686 | 790 | ||||||
| Total premiums earned | $ | 43,934 | $ | 48,467 | ||||
COMBINED RATIOS (INSURANCE OPERATIONS)
| Three Months Ended | ||||||||
| September 30, | ||||||||
| 2010 | 2009 | |||||||
| Loss and loss adjustment expense | 73.0 | % | 68.4 | % | ||||
| Expense | 25.5 | % | 26.0 | % | ||||
| Combined | 98.5 | % | 94.4 | % | ||||
POLICIES IN FORCE
| Three Months Ended | ||||||||
| September 30, | ||||||||
| 2010 | 2009 | |||||||
| Policies in force — beginning of period | 154,655 | 158,222 | ||||||
| Net decrease during period | (4,480 | ) | (5,356 | ) | ||||
| Policies in force — end of period | 150,175 | 152,866 | ||||||
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FIRST ACCEPTANCE CORPORATION AND SUBSIDIARIES
Supplemental Data (continued)
(Unaudited)
Supplemental Data (continued)
(Unaudited)
NUMBER OF RETAIL LOCATIONS
Retail location counts are based upon the date that a location commenced or ceased writing business.
| Three Months Ended | ||||||||
| September 30, | ||||||||
| 2010 | 2009 | |||||||
| Retail locations — beginning of period | 394 | 418 | ||||||
| Opened | — | — | ||||||
| Closed | (1 | ) | (3 | ) | ||||
| Retail locations — end of period | 393 | 415 | ||||||
RETAIL LOCATIONS BY STATE
| September 30, | June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| Alabama | 25 | 25 | 25 | 25 | ||||||||||||
| Florida | 31 | 36 | 31 | 39 | ||||||||||||
| Georgia | 60 | 61 | 60 | 61 | ||||||||||||
| Illinois | 74 | 78 | 74 | 78 | ||||||||||||
| Indiana | 17 | 18 | 17 | 18 | ||||||||||||
| Mississippi | 8 | 8 | 8 | 8 | ||||||||||||
| Missouri | 12 | 12 | 12 | 12 | ||||||||||||
| Ohio | 27 | 27 | 27 | 27 | ||||||||||||
| Pennsylvania | 16 | 17 | 16 | 17 | ||||||||||||
| South Carolina | 26 | 27 | 26 | 27 | ||||||||||||
| Tennessee | 19 | 20 | 19 | 20 | ||||||||||||
| Texas | 78 | 86 | 79 | 86 | ||||||||||||
| Total | 393 | 415 | 394 | 418 | ||||||||||||
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