Unico American Corp. (UNAM, Financial) filed Quarterly Report for the period ended 2011-09-30.
Unico American Corp. has a market cap of $60.23 million; its shares were traded at around $11.29 with a P/E ratio of 18.82 and P/S ratio of 1.62.
The Company generates revenue from its investment portfolio, which consisted of approximately $128,860,587 (at amortized cost) at September 30, 2011, compared to $129,766,929 (at amortized cost) at December 31, 2010. Investment income decreased $106,420 (13%) and $413,919 (15%) for the three and nine months ended September 30, 2011, respectively, as compared to the prior year periods. The decrease in investment income is primarily a result of a decrease in invested assets and a decrease in the Company’s annualized weighted average investment yield on its fixed maturity obligations to 2.3% for the three and nine months ended September 30, 2011, compared to 2.5% and 2.6% for the three and nine months ended September 30, 2010, respectively. Due to the current interest rate environment, management believes it is prudent to purchase fixed maturity investments with maturities of five years or less and with minimal credit risk.
The Company had net income of $1,274,652 for the three months ending September 30, 2011, compared to net income of $623,962 for the three months ended September 30, 2010, an increase in net income of $650,690 (104%). For the nine months ended September 30, 2011, the Company had net income of $3,095,686 compared to net income of $1,571,378 for the nine months ended September 30, 2010, an increase of $1,524,308 (97%). Total revenues decreased $10,995 (less than 1%) to $9,077,819 for the three months and $2,108,999 (7%) to $26,264,663 for the nine months ended September 30, 2011, compared to total revenues of $9,088,814 for the three months and $28,373,662 for the nine months ended September 30, 2010. Revenues for the three and nine months ended September 30, 2011 included other income of $626,073 from the final settlement of provisional rated reinsurance treaties covering the years 1985 through 1997.
The 2007 through 2011 excess of loss treaties do not provide for a contingent commission. Crusader’s 2006 1st layer primary excess of loss treaty provides for a contingent commission equal to 20% of the net profit, if any, accruing to the reinsurer. The first accounting period for the contingent commission covers the period from January 1, 2006, through December 31, 2006. The 2005 excess of loss treaties do not provide for a contingent commission. Crusader’s 2004 and 2003 1st layer primary excess of loss treaties provide for a contingent commission to the Company equal to 45% of the net profit, if any, accruing to the reinsurer. The first accounting period for the contingent commission covers the period from January 1, 2003, through December 31, 2004. For each accounting period as described above, the Company will calculate and report to the reinsurers its net profit (excluding incurred but not reported losses), if any, within 90 days after 36 months following the end of the first accounting period, and within 90 days after the end of each twelve-month period thereafter until all losses subject to the agreement have been finally settled. Any contingent commission payment received is subject to return based on future development of ceded losses and loss adjustment expenses. As of September 30, 2011, the Company has received a total net contingent commission of $3,643,768 for the years subject to contingent commission. Of this amount, the Company has recognized $2,742,509 of contingent commission income, of which $108,614 and $418,641 was recognized in the three and nine months ended September 30, 2011, respectively. The remaining balance of the net payments received of $901,259 is currently unearned and included in “Accrued Expenses and Other Liabilities” in the consolidated balance sheet at September 30, 2011. The unearned contingent commission may be subsequently earned or returned to the reinsurer depending on the future development of the ceded IBNR for the years subject to contingent commission.
Income tax provision was an expense of $671,702 (35% of pre-tax income) and $1,664,528 (35% of pre-tax income) for the three and nine months ended September 30, 2011, respectively, compared to an income tax expense of $63,359 (9% of pre-tax income) and $515,045 (25% of pre-tax income) for the three and nine months ended September 30, 2010, respectively. The increase in the Company’s effective income tax rate in the three and nine months ended September 30, 2011, compared to the prior year periods is primarily due to the establishment of a valuation allowance account that limited the carry-forward of certain state tax benefits in the current year. The increase in income tax expense was primarily due to an increase in pre-tax income to $1,946,354 and $4,760,214 in the three months and nine months ended September 30, 2011, respectively, compared to pre-tax income of $687,321 and $2,086,423 in the three months and nine months ended September 30, 2010, respectively, and was also due to the effect of the adjustment to recognize a decrease in the percentage of Crusader’s retained earnings subject to California franchise tax that reduced the Company’s deferred tax liability by approximately $143,000 during the three and nine months ended September 30, 2010. Excluding the adjustment to the deferred tax expense, the effective tax rate would have been 30% and 32% for the three and nine months ended September 30, 2010, respectively, and, therefore, would have been more comparable.
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Unico American Corp. has a market cap of $60.23 million; its shares were traded at around $11.29 with a P/E ratio of 18.82 and P/S ratio of 1.62.
Highlight of Business Operations:
Total revenue for the three months ended September 30, 2011, was $9,077,819 compared to $9,088,814 for the three months ended September 30, 2010, a decrease of $10,995 (less than 1%). Total revenue for the nine months ended September 30, 2011, was $26,264,663 compared to $28,373,662 for the nine months ended September 30, 2010, a decrease of $2,108,999 (7%). The Company had net income of $1,274,652 for the three months ended September 30, 2011, compared to $623,962 for the three months ended September 30, 2010, an increase of $650,690 (104%). For the nine months ended September 30, 2011, the Company had net income of $3,095,686, compared to $1,571,378 for the nine months ended September 30, 2010, an increase of $1,524,308 (97%). Revenues for the three and nine months ended September 30, 2011 included other income of $626,073 from the final settlement of provisional rated reinsurance treaties covering the years 1985 through 1997.The Company generates revenue from its investment portfolio, which consisted of approximately $128,860,587 (at amortized cost) at September 30, 2011, compared to $129,766,929 (at amortized cost) at December 31, 2010. Investment income decreased $106,420 (13%) and $413,919 (15%) for the three and nine months ended September 30, 2011, respectively, as compared to the prior year periods. The decrease in investment income is primarily a result of a decrease in invested assets and a decrease in the Company’s annualized weighted average investment yield on its fixed maturity obligations to 2.3% for the three and nine months ended September 30, 2011, compared to 2.5% and 2.6% for the three and nine months ended September 30, 2010, respectively. Due to the current interest rate environment, management believes it is prudent to purchase fixed maturity investments with maturities of five years or less and with minimal credit risk.
The Company had net income of $1,274,652 for the three months ending September 30, 2011, compared to net income of $623,962 for the three months ended September 30, 2010, an increase in net income of $650,690 (104%). For the nine months ended September 30, 2011, the Company had net income of $3,095,686 compared to net income of $1,571,378 for the nine months ended September 30, 2010, an increase of $1,524,308 (97%). Total revenues decreased $10,995 (less than 1%) to $9,077,819 for the three months and $2,108,999 (7%) to $26,264,663 for the nine months ended September 30, 2011, compared to total revenues of $9,088,814 for the three months and $28,373,662 for the nine months ended September 30, 2010. Revenues for the three and nine months ended September 30, 2011 included other income of $626,073 from the final settlement of provisional rated reinsurance treaties covering the years 1985 through 1997.
The 2007 through 2011 excess of loss treaties do not provide for a contingent commission. Crusader’s 2006 1st layer primary excess of loss treaty provides for a contingent commission equal to 20% of the net profit, if any, accruing to the reinsurer. The first accounting period for the contingent commission covers the period from January 1, 2006, through December 31, 2006. The 2005 excess of loss treaties do not provide for a contingent commission. Crusader’s 2004 and 2003 1st layer primary excess of loss treaties provide for a contingent commission to the Company equal to 45% of the net profit, if any, accruing to the reinsurer. The first accounting period for the contingent commission covers the period from January 1, 2003, through December 31, 2004. For each accounting period as described above, the Company will calculate and report to the reinsurers its net profit (excluding incurred but not reported losses), if any, within 90 days after 36 months following the end of the first accounting period, and within 90 days after the end of each twelve-month period thereafter until all losses subject to the agreement have been finally settled. Any contingent commission payment received is subject to return based on future development of ceded losses and loss adjustment expenses. As of September 30, 2011, the Company has received a total net contingent commission of $3,643,768 for the years subject to contingent commission. Of this amount, the Company has recognized $2,742,509 of contingent commission income, of which $108,614 and $418,641 was recognized in the three and nine months ended September 30, 2011, respectively. The remaining balance of the net payments received of $901,259 is currently unearned and included in “Accrued Expenses and Other Liabilities” in the consolidated balance sheet at September 30, 2011. The unearned contingent commission may be subsequently earned or returned to the reinsurer depending on the future development of the ceded IBNR for the years subject to contingent commission.
Income tax provision was an expense of $671,702 (35% of pre-tax income) and $1,664,528 (35% of pre-tax income) for the three and nine months ended September 30, 2011, respectively, compared to an income tax expense of $63,359 (9% of pre-tax income) and $515,045 (25% of pre-tax income) for the three and nine months ended September 30, 2010, respectively. The increase in the Company’s effective income tax rate in the three and nine months ended September 30, 2011, compared to the prior year periods is primarily due to the establishment of a valuation allowance account that limited the carry-forward of certain state tax benefits in the current year. The increase in income tax expense was primarily due to an increase in pre-tax income to $1,946,354 and $4,760,214 in the three months and nine months ended September 30, 2011, respectively, compared to pre-tax income of $687,321 and $2,086,423 in the three months and nine months ended September 30, 2010, respectively, and was also due to the effect of the adjustment to recognize a decrease in the percentage of Crusader’s retained earnings subject to California franchise tax that reduced the Company’s deferred tax liability by approximately $143,000 during the three and nine months ended September 30, 2010. Excluding the adjustment to the deferred tax expense, the effective tax rate would have been 30% and 32% for the three and nine months ended September 30, 2010, respectively, and, therefore, would have been more comparable.
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