Results of Operations
The following table summarizes our results of operations for the three & six months ended June 30, 2019 and 2018 (amounts in thousands, except percentages and per share amounts):
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| | | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| | | 2019 | | | 2018 | | | Change | | | 2019 | | | 2018 | | | Change | |
Total revenues | | $ | 122,843 | | | $ | 117,972 | | | | 4 | % | | $ | 241,104 | | | $ | 229,998 | | | | 5 | % |
Net Income | | $ | 721 | | | $ | 2,408 | | | | (70 | )% | | $ | 7,685 | | | $ | 17,238 | | | | (55 | )% |
Per Share | | $ | 0.02 | | | $ | 0.09 | | | | (73 | )% | | $ | 0.26 | | | $ | 0.65 | | | | (60 | )% |
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Book value per share | | $ | 14.99 | | | $ | 14.98 | | | | 0 | % | | $ | 14.99 | | | $ | 14.98 | | | | 0 | % |
Return on equity | | | 0.7 | % | | | 2.5 | % | | | (2 | ) pts | | | 3.6 | % | | | 9.0 | % | | | (5 | ) pts |
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Underwriting summary | | | | | | | | | | | | | | | | | | | | | | | | |
Gross premiums written | | $ | 254,840 | | | $ | 263,664 | | | | (3 | )% | | $ | 465,188 | | | $ | 468,030 | | | | (1 | )% |
Gross premiums earned | | $ | 229,958 | | | $ | 230,971 | | | | (0 | )% | | $ | 458,548 | | | $ | 458,134 | | | | 0 | % |
Ceded premiums | | $ | (115,875 | ) | | $ | (119,767 | ) | | | (3 | )% | | $ | (234,774 | ) | | $ | (240,822 | ) | | | (3 | )% |
Net premiums earned | | $ | 114,083 | | | $ | 111,204 | | | | 3 | % | | $ | 223,774 | | | $ | 217,312 | | | | 3 | % |
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Ceded premium ratio | | | 50.4 | % | | | 51.9 | % | | | (1 | ) pts | | | 51.2 | % | | | 52.6 | % | | | (1 | ) pts |
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Ratios to Net Premiums Earned: | | | | | | | | | | | | | | | | | | | | | | | | |
Loss ratio | | | 65.1 | % | | | 59.3 | % | | | 6 pts | | | | 61.0 | % | | | 54.8 | % | | | 6 pts | |
Expense ratio | | | 39.9 | % | | | 39.4 | % | | | 0 pts | | | | 40.3 | % | | | 35.9 | % | | | 4 pts | |
Combined ratio | | | 105.0 | % | | | 98.7 | % | | | 6 pts | | | | 101.3 | % | | | 90.7 | % | | | 11 pts | |
Ratios
Ceded premium ratio represents ceded premiums earned as a percentage of gross premiums earned.
Net loss ratio represents net losses and loss adjustment expenses (LAE) as a percentage of net premiums earned.
Net expense ratio represents policy acquisition costs (PAC) and general and administrative expenses (G&A) as a percentage of net premiums earned. Ceding commission income is reported as a reduction of policy acquisition costs and G&A expenses.
Net combined ratio represents the sum of net losses and LAE, PAC and G&A expenses as a percentage of net premiums earned. The net combined ratio is a key measure of underwriting performance traditionally used in the property and casualty insurance industry. A net combined ratio under 100% generally reflects profitable underwriting results.
Quarterly Financial Results
Second quarter 2019 net income was $0.7 million compared to $2.4 million in the prior year quarter. The decrease primarily reflects a higher net loss ratio stemming from higher catastrophe andnon-catastrophe weather losses in the current year quarter.
Gross premiums written were $254.8 million in second quarter 2019, down 3.3% from $263.7 million in the prior year quarter. The decrease reflects an 11.9% exposure management driven decline in Florida, particularly in theTri-County region, partly offset by 8.4% growth outside Florida.Premiums-in-force were $922.5 million, down 0.9% year-over-year, with the decrease stemming from a 16.3% decline inTri-County, Florida, partly offset by 6.3% growth outside Florida and 0.8% growth innon-Tri-County, Florida.
Gross premiums earned were $230.0 million in second quarter 2019, down 0.4% from $231.0 million in the prior year quarter. The decrease stems from the same items impacting gross premiums written.
The ceded premium ratio was 50.4% in second quarter 2019, down 1.5 points from 51.9% in the prior year quarter. The decrease is primarily attributable to NBIC-related reinsurance synergies and a reduction in NBIC’s gross quota share reinsurance program, which decreased from 18.8% to 8.0% as of June 1, 2018 and was eliminated as of June 1, 2019. NBIC’s gross quota share reduction was partly offset by additional catastropheexcess-of-loss reinsurance coverage and an increase in NBIC’s net quota share reinsurance program from 49.5% to 52.0% as of December 31, 2018.
The net loss ratio was 65.1% in second quarter 2019, up 5.8 points from 59.3% in the prior year quarter. The increase largely relates to higher catastrophe andnon-catastrophe weather losses in the current year quarter, partly offset by better reserve development and a lower ceded premium ratio.
The net expense ratio was 39.9% in second quarter 2019, up 0.5 points from 39.4% in the prior year quarter. The increase primarily stems from the favorable impact of NBIC-related purchase accounting on the prior year quarter and reduced ceding commission income in the current year quarter associated with a reduction to NBIC’s overall quota share reinsurance programs, partly offset by a lower ceded premium ratio.
