News Column

1347 Property Insurance Holdings, Inc. Announces 2014 Second Quarter Financial Results

August 14, 2014

TAMPA, Fla.--(BUSINESS WIRE)-- 1347 Property Insurance Holdings, Inc. (NASDAQ:PIH) (“PIH” or “the Company”), a property and casualty insurance holding company offering homeowners’ and dwelling insurance to individuals in Louisiana through its wholly-owned subsidiary, Maison Insurance Company (“Maison”), today announced financial results for its second quarter ended June 30, 2014. ($ amounts in thousands, except per share data)

Management Comments

Douglas N. Raucy, Chief Executive Officer, commented, “Our second quarter financial results were highlighted by substantial growth in direct written premiums. Since the beginning of 2014, we have increased our total policy count by 46% due to organic growth in our voluntary independent agency production in Louisiana, which began in April 2013. This led to the solid combined ratio of 79.7% for the second quarter. We were also pleased to complete a follow-on offering that will provide our Company with the capital to enter new coastal markets that fit our growth criteria, such as Florida. We feel that this will enable PIH to further enhance its growth potential while also diversifying its book of business.”

Financial and Operating Highlights

(unless noted all financial comparisons are to the prior-year quarter)

  • PIH earned net income of $616, or $0.15 per diluted share, in the second quarter of 2014, compared to a net loss of $(523), or $(0.52) per diluted share.
  • Direct premiums written were $8,877 for the quarter ended June 30, 2014, representing a 273.0% increase over the $2,380 reported in the prior year period.
  • In-force policy count at June 30, 2014 increased to 16,800 from 11,500 at December 31, 2013, a 46% increase.
  • The Company's combined ratio was 79.7% in the second quarter of 2014; compared with 190.1% in the second quarter of 2013.
  • On June 13, 2014, the Company completed an underwritten public offering of 2,875,000 shares of its common stock at a price to the public of $8.00 per share, which included full exercise by the underwriters of their over-allotment option, for total net proceeds of $21,281 after deducting underwriting discounts and commissions and other offering expenses payable by the Company. Total outstanding common shares of the Company are 6,358,125 as of June 30, 2014.
  • In July 2014, the Company made its initial application to obtain a certificate of authority from the Florida Office of Insurance Regulation for producing personal property and casualty insurance products related to personal residential property located in the state of Florida. This application process is pending and no assurances can be provided whether the Company will obtain this certificate.

    NON-U.S. GAAP FINANCIAL MEASURES

    We assess our results of operations using certain non-U.S. GAAP financial measures, in addition to U.S. GAAP financial measures. These non-U.S. GAAP financial measures are defined below. We believe these non-U.S. GAAP financial measures provide useful information to investors and others in understanding and evaluating our operating performance in the same manner as management does.

    The non-U.S. GAAP financial measures should be considered in addition to, and not as a substitute for or superior to, any financial measures prepared in accordance with U.S. GAAP. Our non-U.S. GAAP financial measures may be defined differently from time to time and may be defined differently than similar terms used by other companies, and accordingly, care should be exercised in understanding how we define our non-U.S. GAAP financial measures.

    Underwriting Ratios

    The Company, like many insurance companies, analyzes performance based on underwriting ratios such as loss ratio, expense ratio and combined ratio. The loss ratio is derived by dividing the amount of net losses and loss adjustment expenses by net premiums earned. The expense ratio is derived by dividing the sum of amortization of deferred policy acquisition costs and general and administrative expenses by net premiums earned. All items included in the loss and expense ratios are presented in the Company’s U.S. GAAP financial statements. The combined ratio is the sum of the loss ratio and the expense ratio. A combined ratio below 100% demonstrates underwriting profit whereas a combined ratio over 100% demonstrates an underwriting loss.

           
    For the quarters ended
    June 30, 2014           June 30, 2013
    Components of Combined Ratio
    Loss ratio (1) 24.8% 92.5%
    Expense ratio (2) 54.9% 97.6%
    Combined Ratio 79.7% 190.1%
     


    (1) Derived by dividing net losses and loss adjustment expenses of approximately $1,175 by net premiums earned of approximately $4,740 for the quarter ended June 30, 2014, and by dividing net losses and loss adjustment expenses of $642 by net premiums earned of $694 for the quarter ended June 30, 2013.

    (2) Derived by dividing the sum of amortization of deferred policy acquisition costs of $1,100 and general and administrative expenses of $1,500 by net premiums earned of $4,740 for the quarter ended June 30, 2014, and by dividing the sum of amortization of deferred policy acquisition costs of $220 and general and administrative expenses of $457 by net premiums earned of $694 for the quarter ended June 30, 2013.

    About 1347 Property Insurance Holdings, Inc.

    1347 Property Insurance Holdings, Inc. is a property and casualty insurance holding company incorporated in Delaware. In December 2012, the Company began providing property and casualty insurance to individuals in Louisiana through its wholly-owned subsidiary Maison Insurance Company. The Company’s insurance offerings currently include homeowners’ insurance, manufactured home insurance and dwelling fire insurance.

    Forward Looking Statements

    This press release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. Words such as "expects", "believes", "anticipates", "intends", "estimates", "seeks" and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect Company management's current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward looking statements, please refer to the section entitled "Risk Factors" in the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2014. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward looking statements whether as a result of new information, future events or otherwise.

    Additional Information

    Additional information about 1347 Property Insurance Holding, Inc., including its Quarterly Report on Form 10-Q for the quarter ended June 30, 2014, can be found at the U.S. Securities and Exchange Commission's website at www.sec.gov, or at PIH’s corporate website: www.1347pih.com.

     

    Consolidated Statements of Operations and Comprehensive Income (Loss)

    (in thousands, except per share data) (Unaudited)

             
      Three months ended June 30,   Six months ended June 30,
        2014     2013     2014     2013  
    Revenues:        
    Net premiums earned $ 4,740 $ 694 $ 8,854 $ 1,609
    Net investment income 24 21 28 42
    Other-than-temporary impairment loss (188 ) (188 )
    Other income   65     6     120     6  
    Total revenues 4,829 533 9,002 1,469
    Expenses:
    Net losses and loss adjustment expenses 1,175 642 1,559 2,489
    Amortization of deferred policy acquisition costs 1,100 220 1,981 423
    General and administrative expenses   1,500     457     2,101     813  
    Total expenses 3,775 1,319 5,641 3,725
    Income (loss) before income tax expense (benefit) 1,054 (786 ) 3,361 (2,256 )
    Income tax expense (benefit)   438     (263 )   1,042     (767 )
    Net income (loss) $ 616 $ (523 ) 2,319 (1,489 )

    Less: Beneficial conversion feature on convertible

    preferred shares

              500      

    Net income (loss) attributable to common

    shareholders

      $ 616     $ (523 )   $ 1,819     $ (1,489 )

    Earnings (loss) per share – net income (loss)

    attributable to common shareholders:

    Basic: $ 0.15 $ (0.52 ) $ 0.71 $ (1.49 )
    Diluted: $ 0.15 $ (0.52 ) 0.70 (1.49 )
    Weighted average shares outstanding (in '000s):
    Basic: 4,052 1,000 2,548 1,000
    Diluted: 4,135 1,000 2,598 1,000
     

    Consolidated Statements of Comprehensive Income

    (Loss)

     
    Net income (loss) $ 616 $ (523 ) 2,319 (1,489 )
    Other comprehensive income, net of taxes(1):
    Unrealized gains on fixed income securities:
    Unrealized gains arising during the period 13 10
    Other comprehensive income   13         10      
    Comprehensive income (loss)   $ 629     $ (523 )   $ 2,329     $ (1,489 )

    1) Net of income tax benefit of $(7) and $0 for the quarters ended June 30, 2014 and June 30, 2013, respectively ($(6) and $0 year to date,

    respectively).

     
     

    Consolidated Balance Sheets

    (in thousands, except per share data)

             
        June 30, 2014   December 31, 2013
      (unaudited)  
    Assets
    Investments:

    Fixed income securities, at fair value (amortized cost of $5,893 and $301,

    respectively)

    $ 5,908 $ 301
    Short-term investments, at cost which approximates fair value 100   100  
    Total investments 6,008 401
    Cash and cash equivalents 56,899 15,007
    Premiums receivable, net of allowance for doubtful accounts of $2 and $0, respectively 1,653 3,805
    Ceded unearned premiums 1,614 1,126
    Deferred policy acquisition costs 2,610 1,925
    Net deferred income taxes 411 571
    Other assets   433     343  
    Total Assets   $ 69,628     $ 23,178  
    Liabilities and Shareholders' Equity
     
    Liabilities:
    Loss and loss adjustment expense reserves $ 433 $ 354
    Unearned premium reserves 14,393 11,004
    Ceded reinsurance premiums payable 2,578 50
    Agent commissions payable 559 254
    Premiums collected in advance 1,031 213
    Payable to related party 237 2,668
    Current income taxes payable 462
    Accrued expenses and other liabilities   1,247     753  
    Total Liabilities   $ 20,940     $ 15,296  
    Shareholders' Equity:            

    Preferred stock, $25.00 par value; 1,000 shares authorized; zero issued and outstanding at

    June 30, 2014 and December 31, 2013, respectively

    $ $

    Common stock, $0.001 par value; 10,000 shares authorized; 6,358 and 1,000 issued and

    outstanding at June 30, 2014 and December 31, 2013, respectively

    6 1
    Additional paid-in capital 47,721 8,749
    Retained earnings (accumulated deficit) 951 (868 )
    Accumulated other comprehensive income   10      
    Total Shareholders' Equity   48,688     7,882  
    Total Liabilities and Shareholders' Equity   $ 69,628     $ 23,178  





    1347 Property Insurance Holdings, Inc.

    Douglas N. Raucy

    Chief Executive Officer

    (225) 361-8747 / draucy@maisonins.com

    or

    INVESTOR RELATIONS:

    The Equity Group Inc.

    Forrest Hunt

    Associate

    (212) 836-9610 / fhunt@equityny.com

    Source: 1347 Property Insurance Holdings, Inc.


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