Unico American Corporation Reports Fourth Quarter and Full Year 2017 Financial Results

Unico American Corporation (NASDAQ – “UNAM”) (“Unico,” the “Company”), announced today its consolidated financial results for the three and twelve months ended December 31, 2017. For the three months ended December 31, 2017, revenues were $9.3 million and net loss was $2.8 million ($0.52 diluted loss per share) compared with revenues of $9.0 million and net income of $0.6 million ($0.11 diluted earnings per share) for the three months ended December 31, 2016. For the twelve months ended December 31, 2017, revenues were $36.8 million and net loss was $8.7 million ($1.64 diluted loss per share) compared with revenue of $35.3 million and net loss of $1.4 million ($0.26 diluted loss per share) for the twelve months ended December 31, 2016.

Stockholders’ equity was $59.9 million as of December 31, 2017, or $11.30 per common share including net unrealized after-tax investment losses of $0.2 million, compared to stockholders’ equity of $68.9 million as of December 31, 2016, or $12.98 per common share including net unrealized after-tax investment gains of $0.008 million.

“While we realized a loss during our fourth quarter, we also experienced improving trends in both loss ratios and investment yields, and we assigned top priority to the achievement of immediate, less speculative results,” said Cary L. Cheldin, Unico’s President and Chief Executive Officer. “To achieve those results, we have realigned priorities, focusing our attention on the improvement of loss ratios and the reduction of expenses. In fact, loss ratios improved during the quarter and we expect continued improvement as increased rates and a refined risk selection process both take hold. It is important to note that over three quarters of our net loss during the quarter was due to adjustments from the 2017 Tax Cuts and Jobs Act. The management team and I are excited about the opportunities ahead of us and we are optimistic about our future.”

About Unico

Headquartered in Calabasas, 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 its subsidiary, Crusader Insurance Company, since 1985. For more information concerning Crusader Insurance Company, please visit the Crusader’s Web site at www.crusaderinsurance.com.

Forward-Looking Statements

Certain statements in this press release are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995 and the Company intends that such forward-looking statements are subject to the safe harbors created thereby. These statements, which may be identified by words or phrases such as “anticipate,” “appear,” “believe,” “estimate,” “expect,” “intend,” “plan,” “predict,” “will,” “may,” “likely,” “future,” “should,” “could,” and “would” and similar words, are intended to identify forward-looking statements. In addition, any statements that refer to projections of the Company’s future financial performance, trends in its businesses, or other characterizations of future events or circumstances are forward-looking statements.

The forward-looking statements included herein are based on current expectations of the Company’s management based on available information and involve certain 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 those anticipated by these forward-looking statements. Factors that could cause actual results to differ materially include, among others: failure to meet minimum capital and surplus requirements; vulnerability to significant catastrophic property loss; a change in accounting standards issued by the Financial Accounting Standards Board; ability to adjust claims accurately; insufficiency of loss and loss adjustment expense reserves to cover future losses; changes in federal or state tax laws; ability to realize deferred tax assets; ability to accurately underwrite risks and charge adequate premium; ability to obtain reinsurance or collect from reinsurers; losses in excess of reinsurance limits; extensive regulation and legislative changes; reliance on subsidiaries to satisfy obligations; downgrade in financial strength rating by A.M. Best; changes in interest rates; investments subject to credit, prepayment and other risks; geographic concentration; reliance on independent insurance agents and brokers; insufficient reserve for doubtful accounts; litigation; enforceability of exclusions and limitations in policies; reliance on information technology systems; ability to prevent or detect acts of fraud with disclosure controls and procedures; change in general economic conditions; dependence on key personnel; ability to attract, develop and retain employees and maintain appropriate staffing levels; insolvency, financial difficulties, or default in performance of obligations by parties with significant contracts or relationships; ability to effectively compete; maximization of long-term value and no focus on short-term earnings expectations; control by a small number of shareholders; failure to maintain effective system of internal controls; and difficulty in effecting a change of control or sale of any subsidiaries. Except as may be required by law, the Company undertakes no obligation to update any forward-looking statements to reflect new information or events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

    
      
        
        
        
           
        
        
        
        
           
        
        
        
      
      
        
          UNICO AMERICAN CORPORATION
        
      
      
        
          AND SUBSIDIARIES
        
      
      
        
          CONSOLIDATED BALANCE SHEETS
        
      
      
        
          ($ in thousands)
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          December 31
        
        
        
        
          December 31
        
      
      
        
        
        
        
        
           
        
        
          

2017

2016

        
      
      
        
        
        
        
        
          (Unaudited)
        
        
        
        
        
      
      
        
          

ASSETS

        
        
        
        
        
        
        
        
        
      
      
        
          Investments
        
        
        
        
        
        
        
        
        
      
      
        
          

Available-for-sale:

        
        
        
        
        
        
        
        
        
      
      
        
          Fixed maturities, at fair value (amortized cost: December 31,
        
        
        
        
        
        
        
        
        
      
      
        
          2017 $58,153; December 31, 2016 $19,092)
        
        
        
        
          $
        
        
          57,849
        
        
        
        
        
        
          $
        
        
          19,104
        
      
      
        
          Held-to-maturity:
        
        
        
        
        
        
        
        
        
      
      
        
          Fixed maturities, at amortized cost (fair value: December 31,
        
        
        
        
        
        
        
        
        
      
      
        
          2017 $28,098; December 31, 2016 $61,280)
        
        
        
        
        
        
          28,098
        
        
        
        
        
        
        
        
          61,280
        
      
      
        
          Short-term investments, at fair value
        
        
        
        
           
        
        
          

10,440

10,205

        
      
      
        
          Total Investments
        
        
        
        
        
        
          96,387
        
        
        
        
        
        
        
        
          90,589
        
      
      
        
          Cash and restricted cash
        
        
        
        
        
        
          774
        
        
        
        
        
        
        
        
          13,497
        
      
      
        
          Accrued investment income
        
        
        
        
        
        
          491
        
        
        
        
        
        
        
        
          186
        
      
      
        
          Receivables, net
        
        
        
        
        
        
          6,006
        
        
        
        
        
        
        
        
          6,008
        
      
      
        
          Reinsurance recoverable:
        
        
        
        
        
        
        
        
        
      
      
        
          Paid losses and loss adjustment expenses
        
        
        
        
        
        
          127
        
        
        
        
        
        
        
        
          261
        
      
      
        
          Unpaid losses and loss adjustment expenses
        
        
        
        
        
        
          8,394
        
        
        
        
        
        
        
        
          9,521
        
      
      
        
          Deferred policy acquisition costs
        
        
        
        
        
        
          4,163
        
        
        
        
        
        
        
        
          4,432
        
      
      
        
          Property and equipment, net
        
        
        
        
        
        
          10,015
        
        
        
        
        
        
        
        
          10,283
        
      
      
        
          Deferred income taxes
        
        
        
        
        
        
          3,381
        
        
        
        
        
        
        
        
          1,177
        
      
      
        
          Other assets
        
        
        
        
           
        
        
          

561

2,268

        
      
      
        
          Total Assets
        
        
        
        
          $
        
        
          

130,299

        
        
           
        
        
        
        
          $
        
        
          

138,222

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES

        
        
        
        
        
        
        
        
        
      
      
        
          Unpaid losses and loss adjustment expenses
        
        
        
        
          $
        
        
          49,077
        
        
        
        
        
        
          $
        
        
          47,056
        
      
      
        
          Unearned premiums
        
        
        
        
        
        
          18,768
        
        
        
        
        
        
        
        
          19,375
        
      
      
        
          Advance premium and premium deposits
        
        
        
        
        
        
          208
        
        
        
        
        
        
        
        
          224
        
      
      
        
          Accrued expenses and other liabilities
        
        
        
        
           
        
        
          

2,301

2,661

        
      
      
        
          Total Liabilities
        
        
        
        
          $
        
        
          

70,354

        
        
           
        
        
        
        
          $
        
        
          

69,316

        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Commitments and contingencies
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          

STOCKHOLDERS' EQUITY

        
        
        
        
        
        
        
        
        
      
      
        
          Common stock, no par – authorized 10,000,000 shares; issued and
        
        
        
        
        
        
        
        
        
      
      
        
          outstanding shares 5,307,133 at December 31, 2017 and 2016
        
        
        
        
          $
        
        
          3,773
        
        
        
        
        
        
          $
        
        
          3,761
        
      
      
        
          Accumulated other comprehensive (loss) income
        
        
        
        
        
        
          (240
        
        
          )
        
        
        
        
        
        
          8
        
      
      
        
          Retained earnings
        
        
        
        
           
        
        
          

56,412

65,137

        
      
      
        
          Total Stockholders’ Equity
        
        
        
        
          $
        
        
          

59,945

        
        
           
        
        
        
        
          $
        
        
          

68,906

        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Total Liabilities and Stockholders' Equity
        
        
        
        
          $
        
        
          

130,299

        
        
           
        
        
        
        
          $
        
        
          

138,222

        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
    
    
      
        
        
        
           
        
        
        
        
           
        
        
        
      
      
        
          UNICO AMERICAN CORPORATION
        
      
      
        
          AND SUBSIDIARIES
        
      
      
        
          CONSOLIDATED STATEMENTS OF OPERATIONS
        
      
      
        
          ($ in thousands, except per share)
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          Three Months Ended
        
        
        
        
          Twelve Months Ended
        
      
      
        
        
        
        
        
          

December 31

December 31

2017

2016

2017

2016

        
        
           
        
      
      
        
        
        
        
        
          (Unaudited)
        
        
        
        
          (Unaudited)
        
        
        
        
          (Unaudited)
        
        
        
        
        
      
      
        
          

REVENUES

Insurance company operation:

        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Net premium earned
        
        
        
        
          $
        
        
          8,034
        
        
        
        
        
        
          $
        
        
          8,085
        
        
        
        
          $
        
        
          32,343
        
        
        
        
        
        
          $
        
        
          31,356
        
        
        
      
      
        
          Investment income
        
        
        
        
        
        
          505
        
        
        
        
        
        
        
        
          222
        
        
        
        
        
        
          1,290
        
        
        
        
        
        
        
        
          881
        
        
        
      
      
        
          Net realized investment gains (losses)
        
        
        
        
        
        
          -
        
        
        
        
        
        
        
        
          -
        
        
        
        
        
        
          1
        
        
        
        
        
        
        
        
          (1
        
        
          )
        
      
      
        
          Other income
        
        
        
        
           
        
        
          

94

16

338

218

        
        
           
        
      
      
        
          Total Insurance Company Revenues
        
        
        
        
        
        
          8,633
        
        
        
        
        
        
        
        
          8,323
        
        
        
        
        
        
          33,972
        
        
        
        
        
        
        
        
          32,454
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Other insurance operations:
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Gross commissions and fees
        
        
        
        
        
        
          646
        
        
        
        
        
        
        
        
          675
        
        
        
        
        
        
          2,744
        
        
        
        
        
        
        
        
          2,738
        
        
        
      
      
        
          Investment income
        
        
        
        
        
        
          1
        
        
        
        
        
        
        
        
          -
        
        
        
        
        
        
          1
        
        
        
        
        
        
        
        
          -
        
        
        
      
      
        
          Finance fees earned
        
        
        
        
        
        
          17
        
        
        
        
        
        
        
        
          18
        
        
        
        
        
        
          75
        
        
        
        
        
        
        
        
          69
        
        
        
      
      
        
          Other income
        
        
        
        
           
        
        
          

-

1

-

7

        
        
           
        
      
      
        
          Total Revenues
        
        
        
        
           
        
        
          

9,297

9,017

36,792

35,268

EXPENSES

        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Losses and loss adjustment expenses
        
        
        
        
        
        
          6,139
        
        
        
        
        
        
        
        
          4,845
        
        
        
        
        
        
          30,491
        
        
        
        
        
        
        
        
          22,827
        
        
        
      
      
        
          Policy acquisition costs
        
        
        
        
        
        
          1,521
        
        
        
        
        
        
        
        
          1,753
        
        
        
        
        
        
          6,464
        
        
        
        
        
        
        
        
          6,895
        
        
        
      
      
        
          Salaries and employee benefits
        
        
        
        
        
        
          1,309
        
        
        
        
        
        
        
        
          946
        
        
        
        
        
        
          5,844
        
        
        
        
        
        
        
        
          4,926
        
        
        
      
      
        
          Commissions to agents/brokers
        
        
        
        
        
        
          39
        
        
        
        
        
        
        
        
          40
        
        
        
        
        
        
          166
        
        
        
        
        
        
        
        
          162
        
        
        
      
      
        
          Other operating expenses
        
        
        
        
           
        
        
          

1,115

519

3,707

2,572

        
        
           
        
      
      
        
          Total Expenses
        
        
        
        
           
        
        
          

10,123

8,103

46,672

37,382

        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Income (loss) before taxes
        
        
        
        
        
        
          (826
        
        
          )
        
        
        
        
        
        
          914
        
        
        
        
        
        
          (9,880
        
        
          )
        
        
        
        
        
        
          (2,114
        
        
          )
        
      
      
        
          Income tax expense (benefit)
        
        
        
        
           
        
        
          

1,950

317

        
        
        
        
           
        
        
          (1,155
        
        
          )
        
        
        
        
           
        
        
          (710
        
        
          )
        
      
      
        
          Net Income (loss)
        
        
        
        
          $
        
        
          (2,776
        
        
          )
        
        
        
        
          $
        
        
          

597

        
        
        
        
          $
        
        
          (8,725
        
        
          )
        
        
        
        
          $
        
        
          (1,404
        
        
          )
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          

PER SHARE DATA:

        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Basic
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Earnings (loss) per share
        
        
        
        
          $
        
        
          (0.52
        
        
          )
        
        
        
        
          $
        
        
          0.11
        
        
        
        
          $
        
        
          (1.64
        
        
          )
        
        
        
        
          $
        
        
          (0.26
        
        
          )
        
      
      
        
          Weighted average shares
        
        
        
        
        
        
          5,307,133
        
        
        
        
        
        
        
        
          5,307,133
        
        
        
        
        
        
          5,307,133
        
        
        
        
        
        
        
        
          5,307,694
        
        
        
      
      
        
          Diluted
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Earnings (loss) per share
        
        
        
        
          $
        
        
          (0.52
        
        
          )
        
        
        
        
          $
        
        
          0.11
        
        
        
        
          $
        
        
          (1.64
        
        
          )
        
        
        
        
          $
        
        
          (0.26
        
        
          )
        
      
      
        
          Weighted average shares
        
        
        
        
        
        
          5,307,133
        
        
        
        
        
        
        
        
          5,307,837
        
        
        
        
        
        
          5,307,133
        
        
        
        
        
        
        
        
          5,307,694
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
    
    
      
        
        
        
           
        
        
        
      
      
        
          UNICO AMERICAN CORPORATION
        
      
      
        
          AND SUBSIDIARIES
        
      
      
        
          CONSOLIDATED STATEMENTS OF CASH FLOWS
        
      
      
        
          ($ in thousands)
        
      
      
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          Twelve Months Ended
        
      
      
        
        
        
        
        
          

December 31

2017

2016

        
        
           
        
      
      
        
        
        
        
        
          (Unaudited)
        
        
        
        
        
      
      
        
          Cash flows from operating activities:
        
        
        
        
        
        
        
        
        
      
      
        
          Net loss
        
        
        
        
          $
        
        
          (8,725
        
        
          )
        
        
        
        
          $
        
        
          (1,404
        
        
          )
        
      
      
        
          Adjustments to reconcile net loss to net cash from operations:
        
        
        
        
        
        
        
        
        
      
      
        
          Depreciation and amortization
        
        
        
        
        
        
          518
        
        
        
        
        
        
        
        
          483
        
        
        
      
      
        
          Bond amortization, net
        
        
        
        
        
        
          (664
        
        
          )
        
        
        
        
        
        
          (16
        
        
          )
        
      
      
        
          Non-cash stock based compensation
        
        
        
        
        
        
          12
        
        
        
        
        
        
        
        
          23
        
        
        
      
      
        
          Net realized investment (gains) losses
        
        
        
        
        
        
          (1
        
        
          )
        
        
        
        
        
        
          1
        
        
        
      
      
        
          Bad debt expense
        
        
        
        
        
        
          16
        
        
        
        
        
        
        
        
          6
        
        
        
      
      
        
          Changes in assets and liabilities:
        
        
        
        
        
        
        
        
        
      
      
        
          Net receivables and accrued investment income
        
        
        
        
        
        
          (319
        
        
          )
        
        
        
        
        
        
          (609
        
        
          )
        
      
      
        
          Reinsurance recoverable
        
        
        
        
        
        
          1,261
        
        
        
        
        
        
        
        
          606
        
        
        
      
      
        
          Deferred policy acquisition costs
        
        
        
        
        
        
          269
        
        
        
        
        
        
        
        
          (199
        
        
          )
        
      
      
        
          Other assets
        
        
        
        
        
        
          400
        
        
        
        
        
        
        
        
          297
        
        
        
      
      
        
          Unpaid losses and loss adjustment expenses
        
        
        
        
        
        
          2,021
        
        
        
        
        
        
        
        
          (2,038
        
        
          )
        
      
      
        
          Unearned premiums
        
        
        
        
        
        
          (607
        
        
          )
        
        
        
        
        
        
          1,296
        
        
        
      
      
        
          Advance premium and premium deposits
        
        
        
        
        
        
          (16
        
        
          )
        
        
        
        
        
        
          12
        
        
        
      
      
        
          Accrued expenses and other liabilities
        
        
        
        
        
        
          (360
        
        
          )
        
        
        
        
        
        
          218
        
        
        
      
      
        
          Income taxes current/deferred
        
        
        
        
           
        
        
          (828
        
        
          )
        
        
        
        
           
        
        
          (85
        
        
          )
        
      
      
        
          Net Cash Used by Operating Activities
        
        
        
        
           
        
        
          (7,023
        
        
          )
        
        
        
        
           
        
        
          (1,409
        
        
          )
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Cash flows from investing activities:
        
        
        
        
        
        
        
        
        
      
      
        
          Purchase of fixed maturity investments
        
        
        
        
        
        
          (60,292
        
        
          )
        
        
        
        
        
        
          (16,772
        
        
          )
        
      
      
        
          Proceeds from maturity of fixed maturity investments
        
        
        
        
        
        
          53,936
        
        
        
        
        
        
        
        
          17,873
        
        
        
      
      
        
          Proceeds from sale of fixed maturity investments
        
        
        
        
        
        
          1,142
        
        
        
        
        
        
        
        
          745
        
        
        
      
      
        
          Net (increase) decrease in short-term investments
        
        
        
        
        
        
          (236
        
        
          )
        
        
        
        
        
        
          5,436
        
        
        
      
      
        
          Additions to property and equipment
        
        
        
        
           
        
        
          (250
        
        
          )
        
        
        
        
           
        
        
          (545
        
        
          )
        
      
      
        
          Net Cash (Used) Provided by Investing Activities
        
        
        
        
           
        
        
          (5,700
        
        
          )
        
        
        
        
           
        
        
          

6,737

        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Cash flows from financing activities:
        
        
        
        
        
        
        
        
        
      
      
        
          Repurchase of common stock
        
        
        
        
           
        
        
          

-

        
        
           
        
        
        
        
           
        
        
          (90
        
        
          )
        
      
      
        
          Net Cash Used by Financing Activities
        
        
        
        
           
        
        
          

-

        
        
           
        
        
        
        
           
        
        
          (90
        
        
          )
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Net (decrease) increase in cash and restricted cash
        
        
        
        
        
        
          (12,723
        
        
          )
        
        
        
        
        
        
          5,238
        
        
        
      
      
        
          Cash and restricted cash at beginning of period
        
        
        
        
           
        
        
          

13,497

8,259

        
        
           
        
      
      
        
          Cash and Restricted Cash at End of Period
        
        
        
        
          $
        
        
          

774

        
        
           
        
        
        
        
          $
        
        
          

13,497

        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Supplemental Cash Flow Information
        
        
        
        
        
        
        
        
        
      
      
        
          Cash paid during the period for:
        
        
        
        
        
        
        
        
        
      
      
        
          Interest
        
        
        
        
        
        
          -
        
        
        
        
        
        
        
        
          -
        
        
        
      
      
        
          Income taxes
        
        
        
        
          $
        
        
          9
        
        
        
        
        
        
          $
        
        
          9
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
    
    

View source version on businesswire.com: https://www.businesswire.com/news/home/20180402005852/en/

Unico American CorporationMichael BudnitskyChief Financial Officer818-591-9800