First Acceptance Corporation Reports Operating Results for the Three and Six Months Ended June 30, 2019

NASHVILLE, TN / ACCESSWIRE / August 6, 2019 / First Acceptance Corporation (OTCQX:FACO) today reported its financial results for the three and six months ended June 30, 2019. A quarterly report can be found at www.otcmarkets.com/stock/FACO/disclosure.

Income before income taxes, for the three months ended June 30, 2019 was $7.8 million, compared with $6.2 million for the three months ended June 30, 2018. Net income for the three months ended June 30, 2019 was $6.1 million, compared with $4.8 million for the three months ended June 30, 2018. Diluted net income per share was $0.14 for the three months ended June 30, 2019, compared with $0.11 for the same period in the prior year.

Income before income taxes, for the six months ended June 30, 2019 was $16.1 million, compared with $13.5 million for the six months ended June 30, 2018. Net income for the six months ended June 30, 2019 was $12.6 million, compared with $10.2 million for the six months ended June 30, 2018. Diluted net income per share was $0.30 for the six months ended June 30, 2019, compared with $0.25 for the same period in the prior year.

For the three months ended June 30, 2019 and 2018, we recognized favorable prior period loss and LAE development of $9.1 million and $3.5 million, respectively. For the six months ended June 30, 2019 and 2018, we recognized $18.8 million and $7.2 million of favorable prior period loss and LAE development, respectively.

Net income for the three months ended June 30, 2019 included $146 thousand in unrealized gains on equity securities, compared with $67 thousand in unrealized losses on equity securities for the same period in the prior year. Net income for the six months ended June 30, 2019 included $950 thousand in unrealized gains on equity securities, compared with $453 thousand in unrealized losses on equity securities for the same period in the prior year.

President and Chief Executive Officer, Ken Russell, commented, “Acceptance’s profitable financial results for the second quarter continued to rebuild our statutory capital and surplus, which is now at its highest level since 2010. Over the past 36 months, we have made improvements to our insurance risk management standards that includes additional underwriting requirements and responsive risk pricing. Along with the improvement in our claims handling, these factors have positively contributed to revisions of our previous actuarial estimates, which resulted in a significant reduction to our loss reserves. As we begin to incorporate these positive changes into future actuarial assumptions, we expect the magnitude of prior period loss reserve adjustments to be less significant.

The employee-agents in our retail network continue to operate more effectively under the full insurance agency model that we rolled out in 2018. The availability of more automated tools and our continuous in-field training are having a positive impact on operations. A key objective for 2019 is to bring our newly-modeled agency operations to a level of effectiveness that will profitably increase our revenues. I believe that the progress in achieving this objective is well underway.”

Mr. Russell further added, “We are proud of the accomplishments that our management team has achieved over the past 36 months. I recently announced that, effective October 1, Larry Willeford, our Chief Claims Officer, will transition to President and Chief Operating Officer of Acceptance. Larry has been a major contributor in developing our current and future strategic direction, and I have full confidence that Acceptance’s agency and insurance company operations will benefit under his leadership. I look forward to playing a continued role in the Company’s future as a member of its board of directors and Chief Executive Officer.”

About First Acceptance Corporation

We are principally a retailer, servicer and underwriter of non-standard personal automobile insurance based in Nashville, Tennessee. Our insurance operations generate revenue from selling non-standard personal automobile insurance products and related products in 17 states. We currently conduct our insurance servicing and underwriting operations in 15 states and operate only as an insurance agency in two states. We are also licensed as an insurance company in 11 states where we do not conduct any business. Non-standard personal automobile insurance is sought after by individuals because of their inability or unwillingness to obtain standard insurance coverage due to various factors, including payment history, payment preference, failure in the past to maintain continuous insurance coverage or driving record and/or vehicle type.

We currently lease and operate 348 retail locations and a call center staffed with employee-agents. Our employee-agents primarily sell non-standard personal automobile insurance products underwritten by us and through third-party carriers for which we receive a commission. We also offer a variety of additional commissionable products, and, in most states, our employee-agents also sell an insurance product providing personal property and liability coverage for renters that is underwritten by us. In addition to our retail locations, we are able to complete the entire sales process over the phone via our call center or through the internet via our consumer-based website or mobile platform. On a limited basis, we also sell our products through selected retail locations operated by independent agents. Additional information about First Acceptance Corporation can be found online at www.acceptance.com.

Forward-Looking Statements

This press release contains forward-looking statements. All statements made other than statements of historical fact are forward-looking statements. You can identify these statements from our use of the words “believe,” “expect,” or the negative of these objective terms and similar expressions. These statements, which have been included in reliance on the “safe harbor” provisions of the federal securities laws, involve risks and uncertainties. Investors are hereby cautioned that these statements may be affected by important factors, including, among others, the factors set forth under the caption “Risk Factors” in our Annual Report for the year ended December 31, 2018 filed by the Company with the OTCQX. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

First Acceptance Corporation and Subsidiaries
Condensed Consolidated Statements of Income
(amounts in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2019 2018 2019 2018
Revenues
$ 77,112 $ 86,476 $ 153,681 $ 169,183
Income before income taxes
$ 7,801 $ 6,239 $ 16,095 $ 13,484
Net income
$ 6,079 $ 4,756 $ 12,593 $ 10,196
Net income per diluted share
$ 0.14 $ 0.11 $ 0.30 $ 0.25
Average diluted shares outstanding
42,002 41,448 41,934 41,429
Combined Ratio:
Loss
64.7 % 72.5 % 63.3 % 70.5 %
Expense
25.9 % 23.0 % 25.8 % 23.9 %
Combined
90.6 % 95.5 % 89.1 % 94.4 %

INVESTOR RELATIONS CONTACT:

Michael J. Bodayle
615.844.2885

SOURCE: First Acceptance Corporation

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