State National Companies, Inc. (Nasdaq:SNC) today reported its
financial results for the fourth quarter and full year ended
December 31, 2014.
Total revenues in the fourth quarter of 2014 were $43.0 million,
up 15.3 percent from $37.3 million in the fourth quarter of 2013.
Adjusted net income, a non-GAAP measure, was $7.9 million, or $0.18
per diluted share, in the fourth quarter of 2014, compared to
adjusted net income of $8.3 million, or $0.24 per diluted share,
for the same period in 2013. Reported net income was $6.8 million,
or $0.15 per diluted share, in the fourth quarter of 2014. See
below for a reconciliation of non-GAAP financial measures.
Total revenues for 2014 were $154.5 million, up 20.2 percent
from $128.5 million in 2013, primarily due to increases in premiums
earned and ceding fees. Adjusted net income was $28.7 million, or
$0.73 per diluted share in 2014, compared to adjusted net income of
$22.1 million or $0.65 per diluted share in 2013. Reported net
income was $11.0 million in 2014, compared to $22.7 million in
2013.
Commenting on the year, State National's Chairman, President and
Chief Executive Officer Terry Ledbetter, stated, "We are pleased
with our 2014 results, which reflect significant operational and
corporate accomplishments. State National achieved gross written
premiums of over $1.0 billion for the first time in our Company's
40-year history and reached record totals for premiums earned,
ceding fees and adjusted net income. Adjusted net income increased
29.9% over 2013 with a 14.9% adjusted return on equity, which was
very positive considering the 65.7% increase in equity over the
prior year. We continue to grow by distinguishing ourselves as a
trusted provider of customized insurance solutions, and by
delivering superior service to our clients through quality programs
in both our Program and Lender Services segments.
"State National simplifies insurance so that our clients can
protect more assets, businesses and people. By making insurance
products easily accessible to our customers, we ensure processes
are efficient and barriers are minimized," added Ledbetter. "In
October 2014 we completed the resale registration with the SEC of
our common stock sold in the private placement and in November
2014, our shares began trading on the NASDAQ Global Select Market.
Overall, State National's operating segments, competitive position
and foundation for profitable growth are all stronger today than
ever before."
Financial Highlights
2014 Fourth Quarter
- Gross written premiums were $250.9 million, down 4.7 percent
from $263.4 million in the fourth quarter 2013
- Premiums earned were $27.1 million, up 13.4 percent from $23.9
million in the fourth quarter 2013
- Ceding fees were $12.7 million, up 22.1 percent from $10.4
million in the fourth quarter 2013
- Adjusted net income was $7.9 million, down 4.8 percent from
$8.3 million in fourth quarter 2013
- Adjusted diluted EPS of $0.18 compared to $0.24 in fourth
quarter 2013
2014 Full Year
- Gross written premiums were just over $1.0 billion, up 27.7
percent from $810.0 million in 2013
- Premiums earned were $96.7 million, up 14.6 percent from $84.4
million in 2013
- Ceding fees were $45.7 million, up 38.9 percent from $32.9
million in 2013
- Adjusted net income was $28.7 million, up 29.9 percent from
$22.1 million in 2013
- Adjusted diluted EPS of $0.73 compared to $0.65 in 2013
- Adjusted return on equity was 14.9 percent
- Shareholders' equity was $240.9 million as of December 31,
2014, compared to $145.4 million as of December 31, 2013
Program Services Segment
Total revenues from the Program Services segment in the fourth
quarter of 2014 were $12.7 million, an increase of $2.3 million, or
22.1 percent, from the fourth quarter of 2013. The increase in
revenues was driven by a 22.1 percent increase in ceding fees to
$12.7 million in the fourth quarter of 2014 from $10.4 million in
the fourth quarter of 2013. The higher ceding fees were primarily
the result of an increase in gross earned premiums related to the
year over year increases from two significant programs.
Total revenues from the Program Services segment for the full
year 2014 were $45.7 million, an increase of $13.3 million, or 41.0
percent, from 2013. This increase was primarily driven by a 38.9
percent increase in ceding fees to $45.7 million in 2014 from $32.9
million in 2013. The growth in ceding fees for two significant
programs that contributed to the fourth quarter performance also
drove the annual revenue increase. One of these programs
experienced growth in gross written premium in 2014 while the other
was added in mid-2013 and generated a full year of earned premiums
in 2014.
Lender Services Segment
Total revenues from the Lender Services segment in the fourth
quarter of 2014 were $27.7 million, an increase of $3.0 million, or
12.1 percent, from the fourth quarter of 2013. Premiums earned
increased by $3.2 million, or 13.4 percent, to $27.1 million in the
fourth quarter of 2014 from $23.9 million in the fourth quarter of
2013. Increases in Lender Services premiums were primarily driven
by rising automobile sales, higher average automobile loan balances
and increasing credit availability. In addition, the
amendment to the CUNA Mutual alliance agreement resulted in
additional net premiums earned due to the increase in our retention
of this business.
Total revenues from the Lender Services segment for the full
year 2014 were $99.5 million, an increase of $11.5 million, or 13.1
percent, from 2013, and premiums earned increased by $11.8 million,
or 13.9 percent, to $96.7 million in 2014 from $84.9 million in
2013, primarily due to the same factors affecting the fourth
quarter.
Losses and loss adjustment expenses (LAE) were $11.7 million in
the fourth quarter of 2014 compared to $8.6 million in the
same period last year, primarily a result of an increased loss
ratio, increased retention for the business subject to the CUNA
Mutual alliance and higher earned premium. The net loss ratio rose
to 43.3 percent in the fourth quarter of 2014 from 35.9 percent in
the fourth quarter of 2013, due to an increase in claim volume and
severity.
Losses and LAE were $40.6 million for 2014 compared to $31.6
million for 2013, again related to an increased loss ratio and
higher earned premiums. A strengthening economy, an aging
automobile fleet, and easier access to credit have contributed to
an increase in vehicle sales, resulting in higher loan balances
upon which the Company pays claims. The net loss ratio
increased to 42.0 percent for 2014 from 37.3 percent for 2013,
which was also driven by an increase in claim volume and severity
that impacted the fourth quarter performance.
General and Administrative Expenses
General and administrative expenses in the fourth quarter of
2014 increased by $3.3 million, or 24.8 percent, to $16.6 million
from $13.3 million in the fourth quarter of 2013, primarily due to
an increase in direct personnel costs, including stock-based
compensation expense incurred in 2014. The Company did not
have stock-based compensation expense in 2013.
General and administrative expenses for 2014 increased by $5.5
million, or 10.3 percent, to $58.9 million from $53.4 million in
2013, primarily due to the same factors affecting the fourth
quarter.
Non-GAAP Reconciliation
This press release includes certain financial measures that have
been adjusted for items impacting comparability. The
accompanying information provide reconciliations of these non-GAAP
financial measures to their most directly comparable financial
measure calculated and presented in accordance with accounting
principles generally accepted in the United States of America
("GAAP"). Our non-GAAP financial measures should not be considered
as alternatives to GAAP measures such as net income, earnings per
share, return on equity or any other GAAP measure of liquidity or
financial performance.
Adjusted net income is considered a non-GAAP financial measure
because it reflects the following adjustments to net income, which
is the most directly comparable measure calculated in accordance
with GAAP: the pro forma provision for income taxes as if the
Company had been treated as a C Corporation for each period
presented, and the exclusion (net of tax benefit) of the increase
in the Company's deferred tax asset as a result of the conversion
to C Corporation status, the amount of founder special compensation
and the non-recurring offering-related expenses and contract
modification expense related to the amendment to our alliance
agreement with CUNA Mutual. Management believes this measure
is helpful to investors because it provides comparability in
evaluating core financial performance between periods.
|
STATE NATIONAL COMPANIES,
INC. |
Reconciliation of
Non-GAAP Financial Measures |
(in thousands, except per share
data) |
|
Adjusted Net Income |
|
|
|
Three Months
Ended |
Year
Ended |
|
December 31, |
December 31, |
|
2014 |
2013 |
2014 |
2013 |
Adjusted net income |
$ 7,887 |
$ 8,337 |
$ 28,683 |
$ 22,084 |
Reconciliation of adjusted net
income: |
|
|
|
|
Net income |
$6,847 |
$ 13,926 |
$ 11,013 |
$ 22,711 |
Plus (less): Provision for income taxes
to reflect change to C corporation status (4) |
(103) |
(5,589) |
4,090 |
(6,938) |
Less: Recognition of deferred tax asset
upon conversion to C corporation (5) |
(201) |
— |
14,279 |
— |
Plus: Founder special compensation (1)
(6) |
230 |
— |
11,203 |
6,311 |
Plus: Offering-related expenses (2)
(6) |
483 |
— |
5,524 |
— |
Plus: Contract modification expense (3)
(6) |
229 |
— |
11,132 |
— |
Adjusted net income |
$ 7,887 |
$ 8,337 |
$ 28,683 |
$ 22,084 |
|
|
|
|
|
|
Adjusted Earnings Per
Share |
|
|
|
Three Months
Ended |
Year
Ended |
|
December 31, |
December 31, |
|
2014 |
2013 |
2014 |
2013 |
Adjusted diluted earnings per
share |
$ 0.18 |
$ 0.24 |
$ 0.73 |
$ 0.65 |
Reconciliation of adjusted
diluted earnings per share: |
|
|
|
|
Net income |
$ 0.15 |
$ 0.41 |
$ 0.28 |
$ 0.66 |
Plus (less): Provision for income taxes
to reflect change to C corporation status (4) |
— |
(0.17) |
0.11 |
(0.19) |
Less: Recognition of deferred tax asset
upon conversion to C corporation (5) |
— |
— |
0.36 |
— |
Plus: Founder special compensation (1)
(6) |
0.01 |
— |
0.28 |
0.18 |
Plus: Offering-related expenses (2)
(6) |
0.01 |
— |
0.14 |
— |
Plus: Contract modification expense (3)
(6) |
0.01 |
— |
0.28 |
— |
Adjusted diluted earnings per share |
$ 0.18 |
$ 0.24 |
$ 0.73 |
$ 0.65 |
|
|
|
|
Adjusted Return on
Equity |
|
|
For the
year ended |
|
December
31, |
|
2014 |
Adjusted
return on equity |
14.9% |
Reconciliation of adjusted return on equity: |
|
Net income |
5.7% |
Plus: Provision
for income taxes to reflect change to C corporation status (4) |
2.1% |
Less: Recognition
of deferred tax asset upon conversion to C corporation (5) |
7.4% |
Plus: Founder
special compensation (1) (6) |
5.8% |
Plus:
Offering-related expenses (2) (6) |
2.9% |
Plus: Contract
modification expense (3) (6) |
5.8% |
Adjusted return
on equity |
14.9% |
___________________
(1) During the periods presented, we made special
compensation payments to our co-founders and principal executive
officers, Lonnie Ledbetter and Terry Ledbetter in recognition of
their service to our Company. We refer to these as "founder
special compensation." Following the completion of the private
placement, we ceased paying founder special compensation.
(2) Offering-related expenses are non-recurring
expenses related to the Company's private placement of common
stock.
(3) In connection with the 2014 amendment to the
alliance agreement with CUNA Mutual, we paid CUNA Mutual $17.8
million. As a result, we recorded non-recurring contract
modification expense of $17.8 million.
(4) Upon the completion of the private placement,
our parent company's status as a Subchapter S corporation
terminated and our consolidated income became fully subject to U.S.
federal income taxes. This adjustment represents estimated
income taxes as if the Company had been treated as a C Corporation
for each period presented. The estimated tax was calculated
assuming the Company's blended statutory federal and state income
tax rates of 37.5% for the year ended December 31, 2014 and 38.1%
for the year ended December 31, 2013, respectively.
(5) As a result of the Company's conversion to a C
Corporation, the deferred tax asset increased by approximately
$14.3 million primarily due to the effects of eliminating deferred
tax balances on the insurance subsidiaries related to intercompany
transactions. This excludes the tax effect related to contract
modification expense of $6.7 million.
(6) Founder special compensation, offering-related
expenses, and contract modification expense are shown net of the
estimated tax benefit for each period presented. The estimated
tax was calculated assuming the Company's blended statutory federal
and state income tax rates of 37.5% and 38.1% for the periods ended
December 31, 2014 and 2013, respectively.
Balance Sheet
State National's balance sheet reflects low financial leverage
with $44.5 million of subordinated debentures. The
subordinated debentures have limited covenant requirements and are
interest-only until the mid-2030s. The Company had only $6.7
million of goodwill or other intangibles at December 31, 2014.
State National's investment portfolio is primarily comprised of
fixed income securities, the majority of which have investment
grade ratings with short duration of approximately four years and
are laddered to allow for new funds to reinvest annually as rates
change. Most of the Company's reserves are ceded to
reinsurers.
2015 Outlook
In 2014, our Lender Services segment had the highest level of
new sales in our Company's history. We expect that momentum to
carry into 2015 because of our strong sales and marketing efforts
coupled with the ongoing success of our relationship with CUNA
Mutual. The trend of rising automobile sales, higher average
automobile loan balances and increasing credit availability should
also contribute to growth in 2015. Based on these factors we expect
net earned premiums in 2015 to be in the range of $120 to $130
million, up from $96.7 million in 2014, with an expected combined
ratio of 85 to 90 percent.
In Program Services, increased capital in the property and
casualty insurance market, including the increased role of
alternative capital markets in reinsurance, and the growth of
offshore reinsurance markets generally should drive demand for our
services, as many of these firms do not have direct access to the
U.S. market. We also anticipate downgrades of certain insurance
companies to create increased demand for our issuing carrier
capacities. We have a robust pipeline that is partially a result of
new dedicated staff that was added in the summer of 2014, calling
directly on general agents. In 2015, we expect fees for Program
Services to be in the range of $55 to $60 million. Included in this
projection is our expectation of approximately $21 to $25 million
in fees from Meadowbrook and Nephila, each of which individually
contribute $10 to $13 million in fees.
Conference Call
State National will host a conference tomorrow morning, March
20, 2015 at 9:00 a.m. Central Time to discuss further its fourth
quarter and full year 2014 results. To access the call live, dial
(716) 247-5810 and use the passcode 82008889# at least 10 minutes
prior to the start time. Alternatively, investors can listen live
over the Internet by visiting the Company's website at
http://ir.statenational.com/. For those who cannot listen to the
live call, a telephonic replay will be available through March 27,
2015 and may be accessed by calling (404) 537-3406 and using
pass code 82008889 #. Also, an archive of the webcast will be
available after the call for a period of 90 days on the "Investors"
section of the Company's website at
http://www.statenational.com/.
About State National Companies, Inc.
State National Companies, Inc. (Nasdaq:SNC) is a leading
specialty provider of property and casualty insurance operating in
two niche markets across the United States. In its Program Services
segment, the Company leverages its "A" (Excellent) A.M. Best
rating, expansive licenses and reputation to provide access to the
U.S. property and casualty insurance market in exchange for a
ceding fee. In its Lender Services segment, the company specializes
in providing collateral protection insurance, which insures
personal automobiles and other vehicles held as collateral for
loans made by credit unions, banks and specialty finance companies.
To learn more, please visit www.statenational.com
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
Various statements contained in this press release, including
those that express a belief, expectation or intention, as well as
those that are not statements of historical fact, are
forward-looking statements made pursuant to the Safe Harbor
Provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements may include projections and
estimates concerning the timing and success of specific projects
and our future production, revenues, income and capital spending.
Our forward-looking statements are generally, but not always,
accompanied by words such as "estimate," "believe," "expect,"
"anticipate," "would," "will," "may," "plan," "goal," "target,"
"could," "continue," "intend" or other words that convey the
uncertainty of future events or outcomes. While our management
considers these expectations and assumptions to be reasonable, they
are inherently subject to significant business, economic,
competitive, regulatory and other risks, contingencies and
uncertainties, most of which are difficult to predict and many of
which are beyond our control.
Examples of forward-looking statements include the plans and
objectives of management for future operations, including those
relating to future growth of our business, and are based on current
expectations that involve assumptions that are difficult or
impossible to predict accurately and many of which are beyond our
control. There can be no assurance that actual developments will be
those anticipated by us. Actual results may differ materially from
those expressed or implied in these statements as a result of
significant risks and uncertainties, including, but not limited to,
our ability to recover from our capacity providers, the cost and
availability of reinsurance coverage, challenges to our use of
issuing carrier or fronting arrangements by regulators or changes
in state or federal insurance or other statutes or regulations, our
dependence on a limited number of business partners, potential
regulatory scrutiny of lender-placed automobile insurance, level of
new car sales, availability of credit for vehicle purchases and
other factors affecting automobile financing, our ability to
compete effectively, a downgrade in the financial strength ratings
of our insurance subsidiaries, our ability to accurately underwrite
and price our products and to maintain and establish accurate loss
reserves, changes in interest rates or other changes in the
financial markets, the effects of emerging claim and coverage
issues, changes in the demand for our products, the effect of
general economic conditions, breaches in data security or other
disruptions with our technology, and changes in pricing or
other competitive environments.
Forward-looking statements involve inherent risks and
uncertainties and State National Companies cautions readers that
various factors could cause its actual financial and operational
results to differ materially from those indicated by
forward-looking statements made from time-to-time in news releases,
reports, proxy statements, registration statements, and other
written communications, as well as oral statements made from time
to time by representatives of State National Companies. These
factors and other risks and uncertainties are described in detail
in our filings with the Securities and Exchange
Commission. The forward-looking statements in this
press release speak only as of the date of this release, and we
undertake no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future developments or otherwise, except as may be required by
law.
|
|
|
STATE NATIONAL
COMPANIES, INC. |
CONSOLIDATED BALANCE
SHEETS |
(Unaudited) |
($ in thousands, except
for share and per share information) |
|
|
|
|
December 31, |
December 31, |
|
2014 |
2013 |
Assets |
|
|
Investments: |
|
|
Fixed-maturity securities –
available-for-sale, at fair value (amortized cost -- $305,019,
$178,901, respectively) |
$ 309,911 |
$ 180,954 |
Equity securities –
available-for-sale, at fair value (cost – $1,419, $1,340,
respectively) |
2,642 |
2,301 |
Total investments |
312,553 |
183,255 |
|
|
|
Cash and cash equivalents |
38,348 |
69,431 |
Restricted cash and investments |
6,597 |
6,800 |
Accounts receivable from agents, net |
18,528 |
17,306 |
Reinsurance recoverable on paid losses |
1,200 |
880 |
Deferred acquisition costs |
1,036 |
1,095 |
Reinsurance recoverables |
1,656,534 |
1,372,225 |
Property and equipment, net (includes land
held for sale –$1,034, $1,034, respectively) |
18,397 |
19,265 |
Interest receivable |
1,795 |
1,333 |
Income taxes receivable |
— |
1,451 |
Deferred income taxes, net |
23,864 |
3,728 |
Goodwill and intangible assets, net |
6,683 |
7,906 |
Other assets |
6,229 |
6,276 |
Total assets |
$ 2,091,764 |
$ 1,690,951 |
|
|
|
Liabilities |
|
|
Unpaid losses and loss adjustment
expenses |
$ 1,209,905 |
$ 1,016,641 |
Unearned premium |
480,124 |
386,279 |
Allowance for policy cancellations |
55,500 |
39,623 |
Deferred ceding fees |
23,612 |
18,735 |
Accounts payable to agents |
2,448 |
2,564 |
Accounts payable to insurance companies |
4,399 |
5,285 |
Subordinated debentures |
44,500 |
52,000 |
Income taxes payable |
1,762 |
— |
Other liabilities |
28,642 |
24,370 |
Other payables, affiliate |
— |
100 |
Total liabilities |
1,850,892 |
1,545,597 |
|
|
|
Shareholders' equity |
|
|
Common stock, $.001 par value (150,000,000
shares authorized; 44,247,102 and 40,627,200 shares issued at
December 31, 2014 and December 31, 2013, respectively) |
44 |
41 |
Preferred stock, $.001 par value (10,000,000
and zero shares authorized at December 31, 2014 and December 31,
2013, respectively; no shares issued and outstanding at December
31, 2014 and December 31, 2013) |
— |
— |
Additional paid-in capital |
220,577 |
24,367 |
Retained earnings |
16,108 |
128,830 |
Treasury stock (zero and 6,450,304 shares at
cost at December 31, 2014 and December 31, 2013, respectively) |
— |
(10,000) |
Accumulated other comprehensive income |
4,143 |
2,116 |
Total shareholders' equity |
240,872 |
145,354 |
Total liabilities and shareholders'
equity |
$ 2,091,764 |
$ 1,690,951 |
|
|
|
|
|
STATE NATIONAL
COMPANIES, INC. |
CONSOLIDATED STATEMENTS
OF INCOME |
(Unaudited) |
($ in thousands, except
for per share information) |
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
Years
Ended |
|
December 31, |
December 31, |
December 31, |
December 31, |
|
2014 |
2013 |
2014 |
2013 |
Revenues: |
|
|
|
|
Premiums earned |
$ 27,065 |
$ 23,945 |
$ 96,650 |
$ 84,378 |
Commission income |
366 |
537 |
1,533 |
2,031 |
Ceding fees |
12,707 |
10,407 |
45,732 |
32,898 |
Net investment income |
1,440 |
1,235 |
4,841 |
4,901 |
Realized net investment gains |
125 |
434 |
1,311 |
1,764 |
Other income |
1,323 |
720 |
4,460 |
2,531 |
Total revenues |
43,026 |
37,278 |
154,527 |
128,503 |
|
|
|
|
|
Expenses: |
|
|
|
|
Losses and loss adjustment expenses |
11,812 |
8,897 |
40,821 |
32,090 |
Commissions |
1,444 |
245 |
3,882 |
2,378 |
Taxes, licenses, and fees |
779 |
825 |
2,832 |
2,594 |
General and administrative |
16,570 |
13,255 |
58,891 |
53,418 |
Founder special compensation |
— |
— |
17,914 |
10,202 |
Offering-related expenses |
603 |
— |
8,833 |
— |
Contract modification expense |
— |
— |
17,800 |
— |
Interest expense |
509 |
579 |
2,237 |
2,323 |
Total expenses |
31,717 |
23,801 |
153,210 |
103,005 |
|
|
|
|
|
Income before income taxes |
11,309 |
13,477 |
1,317 |
25,498 |
|
|
|
|
|
Income taxes: |
|
|
|
|
Current tax expense |
7,009 |
412 |
11,514 |
4,845 |
Deferred tax benefit |
(2,547) |
(861) |
(21,210) |
(2,058) |
|
4,462 |
(449) |
(9,696) |
2,787 |
Net income |
$ 6,847 |
$ 13,926 |
$ 11,013 |
$ 22,711 |
|
|
|
|
|
Net income per share attributable to common
shareholders: |
|
|
|
|
Basic earnings per share |
$ 0.15 |
$ 0.41 |
$ 0.28 |
$ 0.66 |
Diluted earnings per share |
$ 0.15 |
$ 0.41 |
$ 0.28 |
$ 0.66 |
|
|
|
|
|
Pro Forma: |
|
|
|
|
Income taxes expense |
$ 4,364 |
$ 5,140 |
$ 493 |
$ 9,725 |
Net income |
6,945 |
8,337 |
824 |
15,773 |
Basic earnings per share |
0.16 |
0.24 |
0.02 |
0.46 |
Diluted earnings per share |
0.16 |
0.24 |
0.02 |
0.46 |
|
|
|
|
|
Program Services
Segment — Results of Operations |
Unaudited |
|
|
|
|
|
|
Three Months
Ended |
Years
Ended |
|
December
31, |
December
31, |
($ in thousands) |
2014 |
2013 |
2014 |
2013 |
Revenues: |
|
|
|
|
Premiums earned |
$ 11 |
$ 35 |
$ (4) |
$ (501) |
Ceding fees |
12,707 |
10,407 |
45,732 |
32,898 |
Other income |
— |
3 |
— |
3 |
Total revenues |
12,718 |
10,445 |
45,728 |
32,400 |
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
Losses and loss adjustment expenses |
104 |
324 |
217 |
465 |
Commissions |
3 |
6 |
2 |
389 |
Taxes, licenses, and fees |
5 |
8 |
8 |
10 |
General and administrative |
2,853 |
2,838 |
10,855 |
11,010 |
Total expenses |
2,965 |
3,176 |
11,082 |
11,874 |
|
|
|
|
|
Income before income
taxes |
$ 9,753 |
$ 7,269 |
$ 34,646 |
$ 20,526 |
|
|
|
|
|
Program gross expense
ratio |
1.3% |
1.3% |
1.2% |
1.6% |
Gross premiums written |
$ 216,241 |
$ 225,473 |
$ 909,501 |
$ 691,067 |
Gross premiums earned |
$ 222,941 |
$ 183,223 |
$ 815,189 |
$ 562,965 |
|
|
|
|
|
Lender Services Segment —
Results of Operations |
Unaudited |
|
|
|
|
|
|
Three Months
Ended |
Years
Ended |
|
December
31, |
December
31, |
($ in thousands) |
2014 |
2013 |
2014 |
2013 |
|
|
|
|
|
Revenues: |
|
|
|
|
Premiums earned |
$ 27,054 |
$ 23,910 |
$ 96,654 |
$ 84,879 |
Commission income |
366 |
537 |
1,533 |
2,031 |
Other income |
328 |
304 |
1,266 |
1,101 |
Total revenues |
27,748 |
24,751 |
99,453 |
88,011 |
|
|
|
|
|
Expenses: |
|
|
|
|
Losses and loss adjustment expenses |
11,708 |
8,573 |
40,604 |
31,625 |
Commissions |
1,441 |
239 |
3,880 |
1,989 |
Taxes, licenses, and fees |
774 |
817 |
2,824 |
2,584 |
General and administrative |
10,238 |
8,705 |
38,995 |
36,020 |
Contract modification expense |
— |
— |
17,800 |
— |
Total expenses |
24,161 |
18,334 |
104,103 |
72,218 |
|
|
|
|
|
Income (loss) before income
taxes |
$ 3,587 |
$ 6,417 |
$ (4,650) |
$ 15,793 |
|
|
|
|
|
|
|
|
|
|
Adjusted pre-tax income |
$ 3,587 |
$ 6,417 |
$ 13,150 |
$ 15,793 |
Reconciliation of adjusted
pre-tax income: |
|
|
|
|
Pre-tax income (loss) |
3,587 |
6,417 |
(4,650) |
15,793 |
Plus: Contract modification expense
(1) |
— |
— |
17,800 |
— |
Adjusted pre-tax income |
$ 3,587 |
$ 6,417 |
$ 13,150 |
$ 15,793 |
|
|
|
|
|
|
|
|
|
|
Net loss ratio |
43.3% |
35.9% |
42.0% |
37.3% |
Net expense ratio |
46.0% |
40.8% |
47.3% |
47.8% |
Net combined ratio |
89.3% |
76.7% |
89.3% |
85.1% |
|
|
|
|
|
Gross premiums written |
$ 34,646 |
$ 37,961 |
$ 124,624 |
$ 118,898 |
Net premiums written |
$ 29,292 |
$ 27,563 |
$ 99,079 |
$ 87,791 |
___________________
(1) In connection with the amendment to the alliance
agreements with CUNA Mutual, we paid CUNA Mutual $17.8
million. As a result, we recorded non-recurring contract
modification expense of $17.8 million.
|
|
|
|
|
Corporate
Segment — Results of Operations |
Unaudited |
|
|
|
|
|
|
Three Months
Ended |
Years
Ended |
|
December
31, |
December 31, |
($ in thousands) |
2014 |
2013 |
2014 |
2013 |
|
|
|
|
|
Revenues: |
|
|
|
|
Net investment income |
$ 1,440 |
$ 1,235 |
$ 4,841 |
$ 4,901 |
Realized net investment gains |
125 |
434 |
1,311 |
1,764 |
Other income |
995 |
413 |
3,194 |
1,427 |
Total revenues |
2,560 |
2,082 |
9,346 |
8,092 |
|
|
|
|
|
Expenses: |
|
|
|
|
General and administrative |
3,479 |
1,712 |
9,041 |
6,388 |
Founder special compensation |
— |
— |
17,914 |
10,202 |
Offering-related expenses |
603 |
— |
8,833 |
— |
Interest expense |
509 |
579 |
2,237 |
2,323 |
Total expenses |
4,591 |
2,291 |
38,025 |
18,913 |
|
|
|
|
|
Income (loss) before income
taxes |
(2,031) |
(209) |
(28,679) |
(10,821) |
|
|
|
|
|
Income tax expense
(benefit) |
4,462 |
(449) |
(9,696) |
2,787 |
|
|
|
|
|
Net income (loss) |
$ (6,493) |
$ 240 |
$ (18,983) |
$ (13,608) |
|
|
|
|
|
|
|
|
|
|
Adjusted pre-tax income
(loss) |
(1,428) |
(209) |
(1,932) |
(619) |
Reconciliation of adjusted
pre-tax income (loss): |
|
|
|
|
Pre-tax income (loss) |
(2,031) |
(209) |
(28,679) |
(10,821) |
Plus: Founder special compensation
(1) |
— |
— |
17,914 |
10,202 |
Plus: Offering-related expenses (2) |
603 |
— |
8,833 |
— |
Pre-tax income (loss) |
$ (1,428) |
$ (209) |
$ (1,932) |
$ (619) |
___________________
(1) During the periods presented, we made special
compensation payments to our co-founders and principal executive
officers, Lonnie Ledbetter and Terry Ledbetter in recognition of
their service to our Company. We refer to these payments as
"Founder special compensation." Following the completion of
the private placement, we ceased paying Founder special
compensation.
(2) Offering-related expenses are non-recurring
expenses related to the Company's private placement of common
stock.
CONTACT: State National Companies, Inc.
David Hale, COO & CFO
817-265-2000
Dennard * Lascar Associates
Rick Black
713-529-6600
State National Companies, Inc. (NASDAQ:SNC)
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