Exhibit 99
For Immediate Release Kevin Kaastra Vice President of Finance Fremont Michigan InsuraCorp, Inc. (231) 924-0300 or Don Hunt, Noel Ryan Investor Relations Lambert, Edwards & Associates, Inc. 616-233-0500 | ||
Fremont Michigan InsuraCorp, Inc. Reports
First Quarter 2008 Results Highlighted by 37.5% Increase in Net Income
Fremont, Michigan, May 5, 2008 — Fremont Michigan InsuraCorp, Inc. (Fremont) (OTC BB: FMMH) reported net income increased 37.5% for the first quarter 2008 to $1,104,000, or $.63 per share, compared to net income for the first quarter 2007 of $803,000 or $.46 per share. Underwriting profit increased 39.4% to $817,000 for the first quarter 2008 compared to $586,000 for the first quarter 2007. Stockholders’ equity increased to $39.7 million or $22.98 per share at March 31, 2008 compared to $39.4 million or $22.82 as of December 31, 2007.
“Fremont Insurance continues to provide exceptional top line growth in the highly competitive Michigan marketplace. Risk selection within our target markets by our agency partners coupled with sound internal underwriting, provides the framework for improvement in the comparative net income”, said Richard E. Dunning, President and CEO.
Consolidated Statement of Income (Unaudited)
Quarter Ended March 31, | ||||||||
2008 | 2007 | |||||||
Direct premiums written | $ | 12,063,702 | $ | 10,962,905 | ||||
Net premiums written | $ | 9,576,866 | $ | 8,631,809 | ||||
Net premiums earned | $ | 11,216,905 | $ | 10,265,293 | ||||
Loss and LAE | 6,336,499 | 5,830,670 | ||||||
Policy acquisition and other underwriting expenses | 4,063,034 | 3,848,134 | ||||||
Underwriting gain | 817,372 | 586,489 | ||||||
Other revenue (expense) items | ||||||||
Net investment income | 516,236 | 491,407 | ||||||
Net realized gains on investments | 158,602 | 27,979 | ||||||
Other income | 138,141 | 104,406 | ||||||
Interest expense | — | (50,580 | ) | |||||
Total other revenue (expense) items | 812,979 | 573,212 | ||||||
Income before federal income taxes | 1,630,351 | 1,159,701 | ||||||
Federal income tax expense | (525,897 | ) | (356,226 | ) | ||||
Net income | $ | 1,104,454 | $ | 803,475 | ||||
Loss and LAE ratio | 56.5 | % | 56.8 | % | ||||
Policy acquisition and other underwriting expense ratio | 36.2 | % | 37.5 | % | ||||
Combined ratio | 92.7 | % | 94.3 | % |
Underwriting
Direct premiums written increased 10.0% during the quarter led by continued growth in our personal auto and homeowners product lines while net premiums earned increased 9.3%. The combined ratio for the first quarter 2008 dropped to 92.7% from 94.3% in the first quarter 2007 as result of a reduction in the expense ratio. The expense ratio was positively affected in the first quarter of 2008 by the increased level of earned premium.
“Our ability to generate a combined ratio in the low nineties during the current soft market is a testament to the focus and hard work of our employees and independent agency force,” said Kevin G. Kaastra, Vice President of Finance. We are committed to maintaining a quality book of business while not compromising on our philosophy of ensuring that our products are adequately priced for the risk assumed.
Investments
Net investment income increased 5.1% to $516,000 for the first quarter of 2008 from $491,000 in the first quarter 2007. The increase is driven by a higher tax equivalent book yield in the fixed portfolio. As of March 31, 2008, the tax equivalent book yield for the fixed portfolio was 5.29%, an increase of 36 basis points as compared to 4.93% as of March 31, 2007. Net realized investments gains increased to $159,000 during the first quarter 2008 compared to $28,000 during the first quarter 2007.
Certain of the statements contained herein (other than statements of historical facts) are forward-looking statements. Such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and include estimates and assumptions related to economic, competitive and legislative developments. These forward- looking statements are subject to change and uncertainty that are, in many instances, beyond the company’s control and have been made based upon management’s expectations and beliefs concerning future developments and their potential effect on Fremont Michigan InsuraCorp, Inc. For a list of factors which could affect the Company’s results, see the Company’s filings with the Securities and Exchange Commission, including “Item 1A. Risk Factors,” set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007. There can be no assurance that future developments will be in accordance with management’s expectations so that the effect of future developments on the Company will be those anticipated by management.
Contact
Fremont Michigan InsuraCorp, Inc.
Kevin G. Kaastra
Vice President of Finance
231-924-0300
FREMONT MICHIGAN INSURACORP, INC. AND SUBSIDIARY
Consolidated Balance Sheets
(Unaudited)
March 31, 2008 | December 31, 2007 | |||||
Assets | ||||||
Investments: | ||||||
Fixed maturities available for sale, at fair value | $ | 49,823,840 | $ | 50,528,874 | ||
Equity securities available for sale, at fair value | 7,356,610 | 8,305,133 | ||||
Mortgage loans on real estate from related parties | 251,792 | 253,656 | ||||
Total investments | 57,432,242 | 59,087,663 | ||||
Cash and cash equivalents | 4,561,774 | 4,033,158 | ||||
Premiums due from policyholders, net | 7,426,189 | 7,852,730 | ||||
Amounts due from reinsurers | 6,202,141 | 6,588,847 | ||||
Prepaid reinsurance premiums | 319,942 | 258,875 | ||||
Accrued investment income | 561,082 | 533,843 | ||||
Deferred policy acquisition costs | 3,075,821 | 3,334,001 | ||||
Deferred federal income taxes | 3,311,254 | 2,920,648 | ||||
Property and equipment, net of accumulated depreciation | 2,485,196 | 2,500,988 | ||||
Other assets | 3,327 | 43,905 | ||||
$ | 85,378,968 | $ | 87,154,658 | |||
Liabilities and Stockholders' Equity | ||||||
Liabilities: | ||||||
Losses and loss adjustment expenses | $ | 17,928,231 | $ | 18,058,919 | ||
Unearned premiums | 21,068,457 | 22,727,515 | ||||
Reinsurance balances payable | 35,791 | 199,463 | ||||
Accrued expenses and other liabilities | 6,612,179 | 6,742,803 | ||||
Total liabilities | 45,644,658 | 47,728,700 | ||||
Commitments and contingencies | ||||||
Stockholders' Equity | ||||||
Preferred stock, no par value, authorized 4,500,000 shares, no shares issued and outstanding | — | — | ||||
Class A common stock, no par value, authorized 5,000,000 shares, 1,729,236 and 1,727,456 shares issued and outstanding at March 31, 2008 and December 31, 2007, respectively | — | — | ||||
Class B common stock, no par value, authorized 500,000 shares, no shares issued and outstanding | — | — | ||||
Additional paid-in capital | 7,765,021 | 7,722,424 | ||||
Retained earnings | 31,500,225 | 30,395,771 | ||||
Accumulated other comprehensive income | 469,064 | 1,307,763 | ||||
Total stockholders' equity | 39,734,310 | 39,425,958 | ||||
Total liabilities and stockholders' equity | $ | 85,378,968 | $ | 87,154,658 | ||
FREMONT MICHIGAN INSURACORP, INC. AND SUBSIDIARY
Consolidated Statements of Operations
(Unaudited)
Quarter Ended March 31, | ||||||
2008 | 2007 | |||||
Revenues: | ||||||
Net premiums earned | $ | 11,216,905 | $ | 10,265,293 | ||
Net investment income | 516,236 | 491,407 | ||||
Net realized gains on investments | 158,602 | 27,979 | ||||
Other income, net | 138,141 | 104,406 | ||||
Total revenues | 12,029,884 | 10,889,085 | ||||
Expenses: | ||||||
Losses and loss adjustment expenses, net | 6,336,499 | 5,830,670 | ||||
Policy acquisition and other underwriting expenses | 4,063,034 | 3,848,134 | ||||
Interest expense | — | 50,580 | ||||
Total expenses | 10,399,533 | 9,729,384 | ||||
Income before federal income tax expense | 1,630,351 | 1,159,701 | ||||
Federal income tax expense | 525,897 | 356,226 | ||||
Net income | $ | 1,104,454 | $ | 803,475 | ||
Earnings per share | ||||||
Basic | $ | .64 | $ | .47 | ||
Diluted | $ | .63 | $ | .46 |