EX-99.1 2 news0308.htm NEWS 0308 news0308.htm
EXHIBIT 99.1

CONTACT:    Lester A. Aaron
Chief Financial Officer
(818) 591-9800

For Immediate Release

Unico American Corporation Reports First Quarter 2008 Financial Results

 
Woodland Hills, Calif., May 15, 2008 - Unico American Corp. (NASDAQ - “UNAM”) (“Unico,” the “Company”), an insurance holding company that, through its subsidiaries, including Crusader Insurance Company, offers a variety of property and casualty insurance products and services, today announced its financial results for the first quarter ended March 31, 2008.
 
First Quarter Highlights
 
Ø  
Product Development Activity:
 
·  
We improved the flexibility and marketability of our coverage to owners of Auto Repair & Body Shops, and owners of Apartment Buildings, via the adoption of new coverage enhancement endorsements,
 
·  
We increased the competitiveness of our Used Car Dealer program,
 
·  
We broadened our access to the property insurance market by increasing the limits of coverage offered for property risks, from $6 million to $10 million.
 
 
Ø  
Customer Services Activity.  During the quarter we improved the speed and efficiency of our business and made the Company a more attractive partner for brokers and agents:
 
·  
We introduced broker/agent communication options for direct delivery and correspondence to consumers,
 
·  
We introduced “paperless” electronic distribution of policies, endorsements and correspondence as an option for brokers and agents,
 
·  
We introduced an on-line forms library, and on-line, easy-issuance of Certificates and Binders options,
 
·  
We redesigned and simplified various risk management and renewal survey processes, to be more user friendly for consumers, agents and brokers,
 
·  
We re-engineered procedures in order to accommodate more policy reinstatement requests and to improve cancellation and coverage change requests,
 
·  
We introduced a new and renewal business grace-period binding process that will assist in selling escrow opportunities.
 
 
Ø  
Sales Force Development:
 
·  
We appointed five agents in pursuit of our target of twelve agents by the end of this year.
 
 
Ø  
The Company increased book value per share by 4%, to $12.76 per diluted share as of March 31, 2008, as compared to $12.28 per diluted share as of December 31, 2007.
 
 
Ø  
A.M. Best upgraded Crusader’s rating outlook, from “stable” to “positive.”
 
 

 
First Quarter 2008 Results
 
In the first quarter ended March 31, 2008, total revenues were $12.3 million, compared with revenues of $12.9 million a year ago.

Net premium earned was $8.9 million, or 73% of revenues, compared to net premium earned of $9.7 million, or 75% of revenues, in the first quarter of 2007.  Revenue softening was primarily the result of continued competition in the California insurance marketplace.

Net investment income for the quarter was $1.6 million, or 13% of revenues, compared with $1.7 million, or 13% of revenues, a year ago. Total insurance company revenues were $10.6 million, or 87% of total revenues, compared to total insurance company revenues of $11.3 million, or 88% of total revenues, in the first quarter of 2007.

Gross commissions and fees during the quarter increased 8% to $1.5 million, or 12% of revenues, from $1.4 million, or 11% of revenues, a year ago.

Loss and loss adjustment expenses were $6.2 million, or 69% of net premium earned, compared to 61% for the same period in the prior year. The increase in loss and loss adjustment expenses was primarily the result of an increase in current accident year losses incurred and a decline in favorable development from prior accident years’ losses and loss adjustment expenses.  Current accident year losses were 73% of net premium earned compared to 70% in the same period in the prior year.  Net favorable development incurred for the first quarter ending March 31, 2008 was $0.4 million compared to $0.8 million in the same quarter last year.

Policy acquisition costs were $2.1 million, or 17% of total revenues, compared to $2.0 million, or 15% of total revenues, in the first quarter of 2007.

Commissions to agents and brokers increased $0.1 million to $0.3 million for the three months ended March 31, 2008, from $0.2 million for the three months ended march 31, 2007, as written premiums in the health insurance program increased, resulting in a related increased in commission income from that program.

Total expenses during the quarter ended March 31, 2008, were $10.8 million, compared to $10.3 million for the quarter ended March 31, 2007.

For the first quarter of 2008, net income was $1 million, or $0.17 per diluted share, compared with net income of $1.7 million, or $0.30 per diluted share for the first quarter of 2007.

“During the first quarter of 2008, Unico continued to improve its long-term prospects with new initiatives while, at the same time, remaining profitable and increasing book value per share.  We were also gratified at the recognition by A.M. Best of our stronger financial condition,” said Mr. Erwin Cheldin, President of Unico. “While our markets remain competitive and some of the market is now under-priced, our legacy of innovative risk management practice allows us unique access to what remains a substantial addressable market of well-priced underwriting opportunities.  Having begun to re-engineer the business for further innovation, productivity and efficiency, we are more confident of our ability to work with our agents and broker partners and to play an enhanced role in those markets.”

Financial Condition

As of March 31, 2008, the Company had cash and investments of $149 million (at amortized cost).  Stockholders’ equity was $71.8 million, or $12.76 per common share, compared to stockholders’ equity of $69.1 million, or $12.28 per common share, at December 31, 2007.  Of the Company’s $149 million of investments (at amortized cost), $134 million are fixed maturity investments, of which $125 million (93%) are U.S. treasury securities.

About Unico American Corp.
 
Headquartered in Woodland Hills, 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 Crusader Insurance Company since 1985. For more information, please visit the Company’s Web site at www.crusaderinsurance.com.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: Certain statements contained herein, including the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” that are not historical facts are forward-looking. These statements, which may be identified by forward-looking words or phrases such as “anticipate,” “believe,” ”expect,” “intend,” “may,” “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 actions not being effective, rate increases for coverages not being sufficient, premium rate adequacy relating to competition or regulation, actual versus estimated claim experience, regulatory changes or developments, 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)

   
March 31,
   
December 31,
 
   
2008
   
2007
 
   
(Unaudited)
       
ASSETS
           
Investments
           
   Available for sale:
           
Fixed maturities, at market value (amortized cost:  March 31, 2008 $134,111; December 31, 2007 $139,992)
  $ 139,609     $ 142,896  
   Short-term investments, at cost
    14,986       7,356  
Total Investments
    154,595       150,252  
Cash
    46       109  
Accrued investment income
    1,227       1,555  
Premiums and notes receivable, net
    4,817       5,067  
Reinsurance recoverable:
               
   Paid losses and loss adjustment expenses
    990       318  
   Unpaid losses and loss adjustment expenses
    24,489       28,425  
Deferred policy acquisition costs
    5,524       5,723  
Property and equipment (net of accumulated depreciation)
    516       557  
Deferred income taxes
    -       687  
Other assets
    761       1,083  
Total Assets
  $ 192,965     $ 193,776  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
LIABILITIES
               
Unpaid losses and loss adjustment expenses
  $ 89,086     $ 94,731  
Unearned premiums
    21,547       22,743  
Advance premium and premium deposits
    2,540       2,159  
Income taxes payable
    94       -  
Deferred income taxes
    187       -  
Accrued expenses and other liabilities
    7,736       5,040  
Total Liabilities
  $ 121,190     $ 124,673  
                 
STOCKHOLDERS'  EQUITY
               
Common stock, no par – authorized 10,000,000 shares; issued and outstanding shares 5,625,308 at March 31, 2008, and 5,625,308 at December 31, 2007
  $ 3,594     $ 3,594  
Accumulated other comprehensive gain
    3,628       1,916  
Retained earnings
    64,553       63,593  
Total Stockholders’ Equity
  $ 71,775     $ 69,103  
                 
Total Liabilities and Stockholders' Equity
  $ 192,965     $ 193,776  
 
 

 

 
UNICO AMERICAN CORPORATION AND SUBSIDIARIES
SUMMARY OF CONSOLIDATED FINANCIAL DATA
(UNAUDITED)
($ in thousands, except per share)

   
Three Months Ended
 
   
March 31
 
   
2008
   
2007
 
REVENUES
           
Insurance Company Revenues
           
     Premium earned
  $ 11,147     $ 12,740  
     Premium ceded
    2,222       3,031  
          Net premium earned
    8,925       9,709  
     Net investment income
    1,597       1,622  
Net realized investment gains
    6       -  
     Other income
    115       10  
          Total Insurance Company Revenues
    10,643       11,341  
                 
Other Revenues from Insurance Operations
               
     Gross commissions and fees
    1,471       1,366  
     Investment income
    25       38  
     Finance charges and fees earned
    125       149  
     Other income
    4       3  
          Total Revenues
    12,268       12,897  
                 
EXPENSES
               
Losses and loss adjustment expenses
    6,196       5,934  
Policy acquisition costs
    2,081       1,996  
Salaries and employee benefits
    1,437       1,422  
Commissions to agents/brokers
    321       204  
Other operating expenses
    787       765  
     Total Expenses
    10,822       10,321  
Income Before Taxes
    1,446       2,576  
Income Tax Provision
    486       854  
     Net Income
  $ 960     $ 1,722  
                 
PER SHARE DATA
               
Basic Shares Outstanding
    5,625       5,596  
Basic Earnings Per Share
  $ 0.17     $ 0.31  
                 
Diluted Shares Outstanding
    5,670       5,680  
Diluted Earnings Per Share
  $ 0.17     $ 0.30  



 
UNICO AMERICAN CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
($ in thousands)

   
Three Months Ended
 March 31,
 
   
2008
   
2007
 
Cash Flows from Operating Activities:
           
   Net Income
  $ 960     $ 1,722  
   Adjustments to reconcile net income to net cash from operations
               
      Depreciation
    53       58  
      Bond amortization, net
    57       (25 )
Net realized investment gains
    (6 )     -  
   Changes in assets and liabilities
               
      Premium, notes and investment income receivable
    577       474  
      Reinsurance recoverable
    3,265       (584 )
      Deferred policy acquisitions costs
    199       175  
      Other assets
    (81 )     (10 )
      Reserve for unpaid losses and loss adjustment expenses
    (5,645 )     (744 )
      Unearned premium reserve
    (1,196 )     (2,440 )
      Funds held as security and advanced premiums
    381       507  
      Accrued expenses and other liabilities
    2,696       1,311  
      Income taxes current/deferred
     489       (796 )
Net Cash Provided (Used) from Operations
    1,749       (352 )
                 
Investing Activities
               
Purchase of fixed maturity investments
    (11,185 )     (3,196 )
Proceeds from maturity of fixed maturity investments
    16,510       6,000  
Proceeds from sale of fixed maturity investments
    506       -  
Net (increase) in short-term investments
    (7,630 )     (2,398 )
Additions to property and equipment
    (12 )     (30 )
Net Cash Provided (Used) by Investing Activities
    (1,811 )     376  
                 
Financing Activities
               
Proceeds from issuance of common stock
    -       46  
Net Cash Provided by Financing Activities
    -       46  
                 
Net increase (decrease) in cash
    (62 )     70  
Cash at beginning of period
    108       34  
Cash at End of Period
  $ 46     $ 104  
                 
Supplemental Cash Flow Information
               
Cash paid during the period for:
               
Interest
    -       -  
Income taxes
    -     $ 1,650