State National Companies, Inc. (NASDAQ:SNC), a leading specialty
provider of property and casualty insurance, today reported its
financial results for the third quarter ended September 30, 2015.
The Company also initiated 2016 outlook and revised its 2015
outlook.
Recent SNC Announcements
- Nephila Capital agreement extended through 2019 announced on
November 12, 2015
- Board authorized $50 million stock repurchase program announced
on October 12, 2015
Financial Highlights - Third Quarter
2015 Compared to the Third Quarter 2014:
- Total revenues were $51.2 million, up 26.1 percent
- Premiums earned were $30.2 million, an increase of 18.0
percent
- Ceding fees were $18.8 million, up 54.1 percent
- Adjusted net income was $12.4 million, or a 63.2 percent
increase
- Adjusted diluted EPS of $0.28, up from $0.17
- Reported 5th consecutive quarter of Adjusted EPS growth
- Combined ratio for Lender Services was 84.1%, down from
85.7%
Total revenues in the third quarter of 2015 were
$51.2 million, up 26.1 percent from $40.6 million in the third
quarter of 2014. Adjusted net income, a non-GAAP measure, was
$12.4 million, or $0.28 per diluted share, in the third quarter of
2015, compared to adjusted net income of $7.6 million, or $0.17 per
diluted share, for the same period in 2014. Reported net
income was $12.4 million, or $0.28 per diluted share, in the third
quarter of 2015. See below for a reconciliation of non-GAAP
financial measures.
Commenting on the quarter, State National’s
Chairman, President and Chief Executive Officer, Terry Ledbetter,
said, “We continued to achieve substantial growth in the third
quarter and are pleased with the performance in our Lender and
Program Services segments, which generated strong increases in cash
flows and profitability. Based on our current performance,
combined with our expectations for the remainder of the year, we
have revised our 2015 outlook, and we are issuing our preliminary
2016 outlook. We are also pleased to have announced the
Board’s authorization of a stock repurchase program last month,
which represents our commitment to managing our capital and
enhancing shareholder value.”
Mr. Ledbetter, continued. “In addition, we have
amended our agreement with Nephila Capital to extend our
partnership through 2019, which demonstrates Nephila’s long-term
commitment to access the primary market for U.S. catastrophe
exposed property business. State National will benefit from
the anticipated $51.5 million of contractual minimum fees over the
extended term.”
Lender Services Segment
In Lender Services, the Collateral Protection
Insurance, or CPI, business is fully vertically integrated and
State National manages all aspects of the CPI business for its
clients, including policy issuance and administration, underwriting
and claims. The Company differentiates itself from competitors by
establishing long-term relationships with clients, leveraging its
alliance with CUNA Mutual, and providing high-quality service and
advanced technology to more than 600 customers and over 6.2 million
loans.
In the third quarter of 2015, total revenues
from the Lender Services segment were $30.9 million, an increase of
$4.6 million, or 17.5 percent, from the third quarter of
2014. Premiums earned increased by $4.6 million, or 18.0
percent, to $30.2 million in the third quarter of 2015 from $25.6
million in the third quarter of 2014. Contributing to this
increase in Lender Services premiums are sales of new accounts and
growth in loan portfolios of existing accounts driven by rising
automobile sales and higher automobile loan sizes.
Losses and loss adjustment expenses were $13.7
million in the third quarter of 2015, compared to
$10.4 million in the same period last year, primarily a result
of increased exposure due to higher earned premiums, increased
retention for the business subject to the CUNA Mutual alliance and
increases in claim frequency and severity. Despite the
increase in losses, the combined ratio decreased from 85.7% to
84.1% reflecting an improved expense ratio, consistent with our
objective of 85 to 90 percent for the full year.
Program Services Segment
Our Program Services business provides fronting
to general agents and insurance carriers to leverage State
National’s “A” (Excellent) A.M. Best rating with its expansive
licenses and trusted reputation to provide access to the U.S.
property and casualty insurance market in exchange for ceding fees.
State National issues the policy, and the reinsurer assumes
the risk.
In the third quarter of 2015, total revenues
from the Program Services segment were $18.8 million, an increase
of $6.7 million, or 54.1 percent, from the third quarter of 2014.
The growth in revenues was driven by increased ceding fees
from both new and existing client programs. The Nephila
Capital program contributed ceding fees of $4.6 million, consisting
of $3.8 million of capacity fees and $0.8 million of premium
related fees. Approximately $1.9 million of capacity fees is
attributable to the re-estimation of premiums expected for 2015
from $150 to $100 million. As reported earlier today, the Company
has signed a contract amendment with Nephila to extend the
partnership through 2019, under which Nephila has agreed to pay
contractual minimum ceding fees anticipated to total $51.5 million
for 2016 through 2019.
General and Administrative
Expenses
General and administrative expenses in the third
quarter of 2015 decreased 2.0 percent, to $14.5 million from $14.8
million in the third quarter of 2014, primarily due to a decrease
in direct personnel costs.
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 $6.1 million of goodwill
and other intangibles at September 30, 2015.
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 and 2016 Outlook
The Company has revised its 2015 outlook:
- In Lender Services, State National expects net earned premiums
in fiscal 2015 to be in the range of $113 to $117 million, a
reduction from our previous range of $120 to $130 million, due
primarily to the current volume of gross written premiums. The
Company maintains its expectations for a combined ratio of 85 to 90
percent.
- In Program Services, the Company now expects ceding fees in
fiscal 2015 to be in the range of $61 to $64 million, up from the
previous range of $55 to $60 million. Contributing to the increased
range is the variation of fees recognized from the Nephila program
and from the Meadowbrook program as it is exceeding prior
expectations.
State National has also initiated its 2016
outlook:
- In Lender Services, the Company expects net earned premiums in
fiscal 2016 to be in the range of $115 to $125 million, with a
combined ratio of 85 to 90 percent.
- In Program Services, State National expects ceding fees in
fiscal 2016 to be in the range of $55 to $65 million.
Non-GAAP Reconciliation
This press release includes certain financial
measures that have been adjusted for items impacting
comparability. The accompanying information provides
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 adjustments to net income,
which is the most directly comparable measure calculated in
accordance with GAAP for 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, as applicable. 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 |
|
Nine Months Ended |
|
|
|
September 30, |
|
September 30, |
|
|
|
2015 |
|
2014 |
|
2015 |
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net
income |
|
$ |
12,396 |
|
$ |
7,634 |
|
$ |
30,752 |
|
$ |
20,796 |
|
Reconciliation of adjusted
net income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
12,396 |
|
$ |
6,959 |
|
$ |
30,752 |
|
$ |
4,166 |
|
Plus (less): Provision for income
taxes to reflect change to C corporation status (4) |
|
|
— |
|
|
— |
|
|
— |
|
|
4,193 |
|
Less: Recognition of deferred tax
asset upon conversion to C corporation (5) |
|
|
— |
|
|
— |
|
|
— |
|
|
14,480 |
|
Plus: Founder special compensation
(1) (6) |
|
|
— |
|
|
— |
|
|
— |
|
|
10,973 |
|
Plus: Offering-related expenses (2)
(6) |
|
|
— |
|
|
675 |
|
|
— |
|
|
5,041 |
|
Plus: Contract modification expense
(3) (6) |
|
|
— |
|
|
— |
|
|
— |
|
|
10,903 |
|
Adjusted net income |
|
$ |
12,396 |
|
$ |
7,634 |
|
$ |
30,752 |
|
$ |
20,796 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
Earnings Per Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
|
September 30, |
|
September 30, |
|
|
|
2015 |
|
2014 |
|
2015 |
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
diluted earnings per share |
|
$ |
0.28 |
|
$ |
0.17 |
|
$ |
0.70 |
|
$ |
0.55 |
|
Reconciliation of adjusted
diluted earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
0.28 |
|
$ |
0.16 |
|
$ |
0.70 |
|
$ |
0.11 |
|
Plus (less): Provision for income
taxes to reflect change to C corporation status (4) |
|
|
— |
|
|
0.01 |
|
|
— |
|
|
0.11 |
|
Less: Recognition of deferred tax
asset upon conversion to C corporation (5) |
|
|
— |
|
|
— |
|
|
— |
|
|
0.38 |
|
Plus: Founder special compensation
(1) (6) |
|
|
— |
|
|
— |
|
|
— |
|
|
0.29 |
|
Plus: Offering-related expenses (2)
(6) |
|
|
— |
|
|
— |
|
|
— |
|
|
0.13 |
|
Plus: Contract modification expense
(3) (6) |
|
|
— |
|
|
— |
|
|
— |
|
|
0.29 |
|
Adjusted diluted earnings per
share |
|
$ |
0.28 |
|
$ |
0.17 |
|
$ |
0.70 |
|
$ |
0.55 |
|
________________________ |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) 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 in 2014. |
|
(3) In connection with the 2014
amendment to the alliance agreement with CUNA Mutual, we agreed to
pay CUNA Mutual $17.8 million. As a result, we recorded contract
modification expense of $17.8 million as of June 30, 2014. |
|
(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. |
|
(5) As a result of the Company’s
conversion to a C Corporation, the deferred tax asset increased by
approximately $14 million as of June 30, 2014 primarily due to the
effects of eliminating deferred tax balances on the insurance
subsidiaries related to intercompany transactions. |
|
(6) Founder special compensation,
offering-related expenses and contract modification expense are
shown net of estimated statutory federal and state income taxes for
each period presented. |
Conference Call
State National will host a conference call
tomorrow morning, November 13, 2015 at 10:00 a.m. Eastern Time
(9:00 a.m. Central Time) to discuss its third quarter 2015 results.
To access the call live, dial (716) 247-5810 and use the
passcode 53788912# 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 November 20, 2015 and may be
accessed by calling (404) 537-3406 and using pass code
53788912#. Also, an archive of the webcast will be available
after the call for a period of 90 days on the “Investor Relations”
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 ceding fees. 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. The Company routinely posts important
company information on its website.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING
STATEMENTS Various statements contained in this press release 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,”
“will,” “plan,” “target,” “could” or other words that convey
the uncertainty of future events or outcomes.
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 that are difficult to predict, many of
which are beyond our control. Additional information about these
risks and uncertainties is contained 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.UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEETS($ in thousands, except for share and per
share information) |
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
December 31, |
|
|
|
|
2015 |
|
2014 |
|
|
Assets |
|
|
(Unaudited) |
|
|
|
|
|
Investments: |
|
|
|
|
|
|
|
|
Fixed-maturity
securities – available-for-sale, at fair value (amortized cost
– $328,271, $305,019, respectively) |
|
$ |
331,478 |
|
$ |
309,911 |
|
|
Equity
securities – available-for-sale, at fair value (cost –
$5,594, $1,419, respectively) |
|
|
6,443 |
|
|
2,642 |
|
|
Total
investments |
|
|
337,921 |
|
|
312,553 |
|
|
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
|
47,732 |
|
|
38,348 |
|
|
Restricted
cash and investments |
|
|
3,716 |
|
|
6,597 |
|
|
Accounts
receivable from agents, net |
|
|
25,988 |
|
|
18,528 |
|
|
Reinsurance
recoverable on paid losses |
|
|
1,046 |
|
|
1,200 |
|
|
Deferred
acquisition costs |
|
|
957 |
|
|
1,036 |
|
|
Reinsurance
recoverables |
|
|
1,842,427 |
|
|
1,656,534 |
|
|
Property
and equipment, net (includes land held for sale – $1,034, $1,034,
respectively) |
|
|
17,367 |
|
|
18,397 |
|
|
Interest
receivable |
|
|
1,985 |
|
|
1,795 |
|
|
Deferred
income taxes, net |
|
|
28,822 |
|
|
23,864 |
|
|
Goodwill
and intangible assets, net |
|
|
6,139 |
|
|
6,683 |
|
|
Other
assets |
|
|
4,522 |
|
|
6,229 |
|
|
Total
assets |
|
$ |
2,318,622 |
|
$ |
2,091,764 |
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
Unpaid
losses and loss adjustment expenses |
|
$ |
1,301,173 |
|
$ |
1,209,905 |
|
|
Unearned
premiums |
|
|
575,935 |
|
|
480,124 |
|
|
Allowance
for policy cancellations |
|
|
56,927 |
|
|
55,500 |
|
|
Deferred
ceding fees |
|
|
29,446 |
|
|
23,612 |
|
|
Accounts
payable to agents |
|
|
2,124 |
|
|
2,448 |
|
|
Accounts
payable to insurance companies |
|
|
4,437 |
|
|
4,399 |
|
|
Subordinated debentures |
|
|
44,500 |
|
|
44,500 |
|
|
Income
taxes payable |
|
|
2,920 |
|
|
1,762 |
|
|
Other liabilities |
|
|
31,556 |
|
|
28,642 |
|
|
Total liabilities |
|
|
2,049,018 |
|
|
1,850,892 |
|
|
|
|
|
|
|
|
|
|
|
Shareholders’
equity |
|
|
|
|
|
|
|
|
Common stock, $.001 par
value (150,000,000 shares authorized; 44,488,190 and 44,247,102
shares issued at September 30, 2015 and December 31,
2014, respectively) |
|
|
44 |
|
|
44 |
|
|
Preferred stock, $.001 par
value (10,000,000 shares authorized; no shares issued and
outstanding at September 30, 2015 and December 31,
2014) |
|
|
— |
|
|
— |
|
|
Additional paid-in
capital |
|
|
223,429 |
|
|
220,577 |
|
|
Retained earnings |
|
|
43,303 |
|
|
16,108 |
|
|
Accumulated other
comprehensive income |
|
|
2,828 |
|
|
4,143 |
|
|
Total shareholders’
equity |
|
|
269,604 |
|
|
240,872 |
|
|
Total liabilities and
shareholders’ equity |
|
$ |
2,318,622 |
|
$ |
2,091,764 |
|
|
STATE NATIONAL COMPANIES,
INC.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
INCOME($ in thousands, except for per share
information) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
|
2015 |
|
2014 |
|
2015 |
|
2014 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
Premiums earned |
$ |
|
30,156 |
|
|
$ |
25,599 |
|
$ |
|
85,145 |
|
|
$ |
|
69,585 |
|
|
Commission income |
|
|
340 |
|
|
|
405 |
|
|
|
1,074 |
|
|
|
|
1,167 |
|
|
Ceding fees |
|
|
18,837 |
|
|
|
12,167 |
|
|
|
49,360 |
|
|
|
|
33,025 |
|
|
Net investment income |
|
|
2,008 |
|
|
|
1,183 |
|
|
|
5,961 |
|
|
|
|
3,401 |
|
|
Realized net investment gains
(losses) |
|
|
(571 |
) |
|
|
291 |
|
|
|
880 |
|
|
|
|
1,186 |
|
|
Other income |
|
|
381 |
|
|
|
926 |
|
|
|
1,228 |
|
|
|
|
3,137 |
|
|
Total revenues |
|
|
51,151 |
|
|
|
40,571 |
|
|
|
143,648 |
|
|
|
|
111,501 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Losses and loss adjustment
expenses |
|
|
14,773 |
|
|
|
10,695 |
|
|
|
40,955 |
|
|
|
|
29,009 |
|
|
Commissions |
|
|
1,207 |
|
|
|
1,209 |
|
|
|
3,964 |
|
|
|
|
2,438 |
|
|
Taxes, licenses, and fees |
|
|
910 |
|
|
|
823 |
|
|
|
2,185 |
|
|
|
|
2,053 |
|
|
General and administrative |
|
|
14,456 |
|
|
|
14,813 |
|
|
|
46,649 |
|
|
|
|
42,321 |
|
|
Founder special compensation |
|
— |
|
|
— |
|
|
— |
|
|
|
17,914 |
|
|
Offering-related expenses |
|
— |
|
|
1,101 |
|
|
— |
|
|
|
8,230 |
|
|
Contract modification expense |
|
— |
|
|
— |
|
|
— |
|
|
|
17,800 |
|
|
Interest expense |
|
|
510 |
|
|
|
580 |
|
|
|
1,515 |
|
|
|
|
1,728 |
|
|
Total expenses |
|
|
31,856 |
|
|
|
29,221 |
|
|
|
95,268 |
|
|
|
|
121,493 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes |
|
|
19,295 |
|
|
|
11,350 |
|
|
|
48,380 |
|
|
|
|
(9,992 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes: |
|
|
|
|
|
|
|
|
|
|
|
|
Current tax expense (benefit) |
|
|
8,864 |
|
|
|
752 |
|
|
|
21,878 |
|
|
|
|
4,505 |
|
|
Deferred tax expense (benefit) |
|
|
(1,965 |
) |
|
|
3,639 |
|
|
|
(4,250 |
) |
|
|
|
(18,663 |
) |
|
|
|
|
6,899 |
|
|
|
4,391 |
|
|
|
17,628 |
|
|
|
|
(14,158 |
) |
|
Net
income (loss) |
$ |
|
12,396 |
|
|
$ |
6,959 |
|
$ |
|
30,752 |
|
|
$ |
|
4,166 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share attributable to common shareholders: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
$ |
|
0.28 |
|
|
$ |
0.16 |
|
$ |
|
0.70 |
|
|
$ |
|
0.11 |
|
|
Diluted earnings per share |
|
|
0.28 |
|
|
|
0.16 |
|
|
|
0.70 |
|
|
|
|
0.11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends, per
share |
$ |
|
0.06 |
|
|
$ |
— |
|
$ |
|
0.08 |
|
|
$ |
|
0.48 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common
shares outstanding – basic |
|
|
44,247,102 |
|
|
|
44,231,336 |
|
|
|
44,239,410 |
|
|
|
|
37,748,716 |
|
|
Weighted-average common
shares outstanding – diluted |
|
|
44,247,827 |
|
|
|
44,437,559 |
|
|
|
44,244,247 |
|
|
|
|
37,821,990 |
|
|
Program Services Segment — Results of
OperationsUnaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
($ in thousands) |
|
2015 |
|
2014 |
|
|
2015 |
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums earned |
|
$ |
|
4 |
|
|
$ |
1 |
|
|
$ |
|
(10 |
) |
|
$ |
|
(15 |
) |
|
Ceding fees |
|
|
|
18,837 |
|
|
|
12,167 |
|
|
|
|
49,360 |
|
|
|
|
33,025 |
|
|
Total
revenues |
|
|
|
18,841 |
|
|
|
12,168 |
|
|
|
|
49,350 |
|
|
|
|
33,010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Losses and loss adjustment
expenses |
|
|
|
1,090 |
|
|
|
266 |
|
|
|
|
2,057 |
|
|
|
|
113 |
|
|
Commissions |
|
|
— |
|
|
1 |
|
|
|
|
2 |
|
|
|
|
(1 |
) |
|
Taxes, licenses, and fees |
|
|
|
(1 |
) |
|
|
4 |
|
|
|
|
8 |
|
|
|
|
3 |
|
|
General and administrative |
|
|
|
2,857 |
|
|
|
2,797 |
|
|
|
|
8,990 |
|
|
|
|
8,002 |
|
|
Total
expenses |
|
|
|
3,946 |
|
|
|
3,068 |
|
|
|
|
11,057 |
|
|
|
|
8,117 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss)
before income taxes |
|
$ |
|
14,895 |
|
|
$ |
9,100 |
|
|
$ |
|
38,293 |
|
|
$ |
|
24,893 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Program gross
expense ratio |
|
|
|
1.0 |
|
% |
|
1.1 |
% |
|
|
|
1.1 |
|
% |
|
|
1.2 |
|
% |
Gross premiums
written |
|
$ |
|
280,975 |
|
|
$ |
257,175 |
|
|
$ |
|
842,033 |
|
|
$ |
|
693,260 |
|
|
Gross premiums
earned |
|
$ |
|
258,621 |
|
|
$ |
217,000 |
|
|
$ |
|
745,407 |
|
|
$ |
|
592,248 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lender Services Segment — Results of
OperationsUnaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
($ in thousands) |
|
2015 |
|
2014 |
|
|
2015 |
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums earned |
|
$ |
30,152 |
|
$ |
25,598 |
|
|
$ |
85,155 |
|
$ |
|
69,600 |
|
|
Commission income |
|
|
340 |
|
|
405 |
|
|
|
1,074 |
|
|
|
1,167 |
|
|
Other income |
|
|
381 |
|
|
318 |
|
|
|
1,103 |
|
|
|
938 |
|
|
Total
revenues |
|
|
30,873 |
|
|
26,321 |
|
|
|
87,332 |
|
|
|
71,705 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Losses and loss adjustment
expenses |
|
|
13,683 |
|
|
10,429 |
|
|
|
38,898 |
|
|
|
28,896 |
|
|
Commissions |
|
|
1,207 |
|
|
1,208 |
|
|
|
3,962 |
|
|
|
2,439 |
|
|
Taxes, licenses, and fees |
|
|
911 |
|
|
819 |
|
|
|
2,177 |
|
|
|
2,050 |
|
|
General and administrative |
|
|
9,550 |
|
|
9,480 |
|
|
|
29,681 |
|
|
|
28,757 |
|
|
Contract modification expense |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
17,800 |
|
|
Total
expenses |
|
|
25,351 |
|
|
21,936 |
|
|
|
74,718 |
|
|
|
79,942 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss)
before income taxes |
|
$ |
5,522 |
|
$ |
4,385 |
|
|
$ |
12,614 |
|
$ |
|
(8,237 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
pre-tax income (loss) |
|
$ |
5,522 |
|
$ |
4,385 |
|
|
$ |
12,614 |
|
$ |
|
9,563 |
|
|
Reconciliation of adjusted
pre-tax income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income (loss) |
|
$ |
5,522 |
|
$ |
4,385 |
|
|
$ |
12,614 |
|
$ |
|
(8,237 |
) |
|
Plus: Contract modification expense
(1) |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
17,800 |
|
|
Adjusted pre-tax income (loss) |
|
$ |
5,522 |
|
$ |
4,385 |
|
|
$ |
12,614 |
|
$ |
|
9,563 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
ratio |
|
|
45.4 |
% |
|
40.7 |
% |
|
|
45.7 |
% |
|
|
41.5 |
|
% |
Net expense
ratio |
|
|
38.7 |
% |
|
45.0 |
% |
|
|
42.1 |
% |
|
|
47.8 |
|
% |
Net combined
ratio |
|
|
84.1 |
% |
|
85.7 |
% |
|
|
87.8 |
% |
|
|
89.3 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross premiums
written |
|
$ |
40,522 |
|
$ |
34,688 |
|
|
$ |
102,635 |
|
$ |
|
89,978 |
|
|
Net premiums
written |
|
$ |
33,039 |
|
$ |
29,097 |
|
|
$ |
84,452 |
|
$ |
|
69,787 |
|
|
________________________ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) In
connection with the 2014 amendment to the alliance agreement with
CUNA Mutual, we agreed to pay CUNA Mutual $17.8 million. As a
result, we recorded contract modification expense of $17.8 million
as of June 30, 2014. |
Corporate Segment — Results of
OperationsUnaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
|
September 30, |
|
September 30, |
|
($ in thousands) |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income |
|
$ |
|
2,008 |
|
|
$ |
|
1,183 |
|
|
$ |
|
5,961 |
|
|
$ |
|
3,401 |
|
|
Realized net investment gains
(losses) |
|
|
|
(571 |
) |
|
|
|
291 |
|
|
|
|
880 |
|
|
|
|
1,186 |
|
|
Other income |
|
|
— |
|
|
|
608 |
|
|
|
|
125 |
|
|
|
|
2,199 |
|
|
Total
revenues |
|
|
|
1,437 |
|
|
|
|
2,082 |
|
|
|
|
6,966 |
|
|
|
|
6,786 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
|
|
2,049 |
|
|
|
|
2,536 |
|
|
|
|
7,978 |
|
|
|
|
5,562 |
|
|
Founder special compensation |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
17,914 |
|
|
Offering-related expenses |
|
|
|
— |
|
|
|
|
1,101 |
|
|
|
|
— |
|
|
|
|
8,230 |
|
|
Interest expense |
|
|
|
510 |
|
|
|
|
580 |
|
|
|
|
1,515 |
|
|
|
|
1,728 |
|
|
Total
expenses |
|
|
|
2,559 |
|
|
|
|
4,217 |
|
|
|
|
9,493 |
|
|
|
|
33,434 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss)
before income taxes |
|
|
|
(1,122 |
) |
|
|
|
(2,135 |
) |
|
|
|
(2,527 |
) |
|
|
|
(26,648 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense (benefit) |
|
|
|
6,899 |
|
|
|
|
4,391 |
|
|
|
|
17,628 |
|
|
|
|
(14,158 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss) |
|
$ |
|
(8,021 |
) |
|
$ |
|
(6,526 |
) |
|
$ |
|
(20,155 |
) |
|
$ |
|
(12,490 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
pre-tax income (loss) |
|
$ |
|
(1,122 |
) |
|
$ |
|
(1,034 |
) |
|
$ |
|
(2,527 |
) |
|
$ |
|
(504 |
) |
|
Reconciliation of adjusted
pre-tax income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income (loss) |
|
$ |
|
(1,122 |
) |
|
$ |
|
(2,135 |
) |
|
$ |
|
(2,527 |
) |
|
$ |
|
(26,648 |
) |
|
Plus: Founder special compensation
(1) |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
17,914 |
|
|
Plus: Offering-related expenses
(2) |
|
|
|
— |
|
|
|
|
1,101 |
|
|
|
|
— |
|
|
|
|
8,230 |
|
|
Adjusted pre-tax income (loss) |
|
$ |
|
(1,122 |
) |
|
$ |
|
(1,034 |
) |
|
$ |
|
(2,527 |
) |
|
$ |
|
(504 |
) |
|
________________________ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) 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 in 2014. |
CONTACTS:
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)
Historical Stock Chart
From Jun 2024 to Jul 2024
State National Companies, Inc. (NASDAQ:SNC)
Historical Stock Chart
From Jul 2023 to Jul 2024