ROCK ISLAND, Ill., March 3, 2021 /PRNewswire/ -- ICC Holdings,
Inc. (NASDAQ: ICCH) (the Company), parent company of Illinois
Casualty Company, a regional, multi-line property and casualty
insurance company focusing exclusively on the food and beverage
industry, today reported preliminary, unaudited results for the
fourth quarter and twelve months ended December 31, 2020.
FOURTH QUARTER AND TWELVE MONTHS ENDED DECEMBER 31, 2020 – FINANCIAL RESULTS
Net earnings totaled $4,319,000 or
$1.43 per share, for the fourth
quarter of 2020, compared to net earnings of $3,577,000 or $1.19
per share, for the fourth quarter of 2019. This fourth quarter's
net earnings reflect contributions from underwriting income,
improved investment markets and a one-time, non-taxable gain from
the SBA's forgiveness of our Paycheck Protection Program (PPP)
loan. For the twelve months ended December
31, 2020, the Company reported net earnings of $3,531,000 or $1.17
per share, compared to net earnings of $4,294,000 or $1.43
per share, for the same period in 2019. Book value per share
increased 9.7% to $22.08 at
December 31, 2020 from $20.13 at December 31,
2019. Results during 2020 were aided in part by the PPP loan
forgiveness gain during the fourth quarter of 2020 and a
year-over-year $3 million net-of-tax
increase in the Company's other comprehensive earnings.
Direct premiums written grew by $108,000, or 0.7%, to $14,742,000 for the fourth quarter of 2020 from
$14,634,000 for the same period in
2019. This year's fourth quarter growth was the highlight of 2020
when taking into consideration COVID-19's negative impact on the
food and beverage industry throughout the year. This growth is a
direct result of new business written in Arizona. For the twelve months ended
December 31, 2020, direct premiums
written decreased by $4,001,000, or
6.4%, to $58,982,000 from
$62,983,000 for the same period in
2019. As referred to in prior releases, this decrease is a
reflection of COVID-19's disproportionate impact on the Company's
market niche. Net premiums earned decreased by 6.3% to $12,767,000 for the fourth quarter of 2020 from
$13,622,000 for the same period in
2019. Net premiums earned decreased by 6.0% to $49,689,000 for the twelve months ended
December 31, 2020, from $52,842,000 for the same period in 2019. The
decrease in net premiums earned for each of the period comparisons
is due to reduced premium writings in 2020 as a result of the
negative impact of COVID-19 and the increased reinstatement
premiums associated with the civil unrest events.
For the fourth quarter of 2020, the Company ceded to reinsurers
$2,175,000 of earned premiums,
compared to $2,260,000 of earned
premiums for the fourth quarter of 2019. Lower reinsurance rates in
2020 and lower direct earned premium contributed to the fourth
quarter's slightly lower sessions as compared to 2019's fourth
quarter. For the twelve months ended December 31, 2020, the Company ceded $10,080,000 of earned premiums to reinsurers
compared to $9,925,000 of earned
premiums for the same period in 2019. The increase in ceded
premiums year-over-year was driven by additional reinstatement
premium caused by two civil unrest catastrophe claims arising in
Illinois and Minnesota during 2020.
Net realized investment gains net of other-than-temporary
impairment losses were $157,000 for
the fourth quarter of 2020 compared to gains of $460,000 for the same period in 2019. For the
twelve months ended December 31,
2020, net realized investment losses net of
other-than-temporary impairment losses were $245,000 compared to gains of $1,201,000 for the same period in 2019. The
fourth quarter and twelve month changes from prior year reflect the
typical rebalancing activities within the Company's investment
portfolio.
Net investment income increased by $75,000, or 9.6%, to $853,000 for the fourth quarter of 2020, as
compared to $778,000 for the same
period in 2019. For the twelve months ended December 31, 2020, net investment income
increased $313,000, or 9.8% to
$3,498,000 from $3,185,000 for the same period in 2019. The
favorable change in each of the period comparisons is attributable
to an increase in the bond portfolio's investment income and an
increase in new rental income from an investment property purchased
in 2020.
Losses and settlement expenses increased by $1,051,000, or 18.8%, to $6,648,000 for the fourth quarter of 2020, from
$5,597,000 for the same period in
2019. During the fourth quarter of 2019, we experienced an
unusually low loss expense, with the fourth quarter of 2020
returning to a more traditional level of claims experience. Losses
and settlement expenses decreased by $1,153,000, or 3.4% to $32,562,000 for the twelve months ended
December 31, 2020, from $33,715,000 for the same period in 2019. The
primary driver for the year-to-year decrease is two-fold:
this year's COVID-19 stay-at-home state mandates contributed to
insureds' business closures and a corresponding reduction of new
claims during a portion of 2020, and we experienced fewer
weather-related property losses, such as the 2019 Polar Vortex,
which contributed to higher losses that year. As of December 31, 2020, the Company has received 1,289
claims for business interruption related to COVID-19. As noted in
our prior disclosure, although a few court cases involving other
carriers have sided with policyholders in their claims for coverage
for these losses, at this time, the Company does not anticipate
that property claims of this nature will be found to trigger
coverage under its policy language which contains a virus
exclusion, and therefore does not expect to make any loss
payments.
Policy acquisition costs and other operating expenses decreased
by $690,000, or 12.6%, to
$4,788,000 for the fourth quarter of
2020 from $5,478,000 for the same
period in 2019. Policy acquisition costs and other operating
expenses decreased by $1,491,000, or
7.4% to $18,529,000 for the twelve
months ended December 31, 2020, from
$20,020,000 for the same period in
2019. The decreases for both period comparisons were primarily due
to a decrease in premium and loss-driven agency commissions.
Total assets increased by 12.8% from $163,004,000 at December
31, 2019 to $183,939,000 at
December 31, 2020 (aided in part from
$11.6 million in new borrowings
throughout 2020). Our investment portfolio, which consists of fixed
income securities, common stocks, preferred stock, property held
for investment, and other invested assets, increased by 15.7% from
$111,768,000 at December 31, 2019, to $129,322,000 at December
31, 2020.
FOURTH QUARTER AND TWELVE MONTHS ENDED DECEMBER 31, 2020 – FINANCIAL RATIOS
The Company's losses and settlement expense ratio (defined as
losses and settlement expenses divided by net premiums earned) was
52.1% for the fourth quarter and 65.5% for the twelve months ended
December 31, 2020, respectively,
compared with 41.1% and 63.8% in the same periods of 2019,
respectively.
The expense ratio (defined as the amortization of deferred
policy acquisition costs and underwriting and administrative
expenses divided by net premiums earned) was 37.5% and 37.3% in the
fourth quarter and twelve months ended December 31, 2020, respectively, compared to
40.2% and 37.9% in the same periods of 2019, respectively.
The Company's GAAP combined ratio (defined as the sum of the
losses and settlement expense ratio and the expense ratio) was
89.6% and 102.8% in the fourth quarter and twelve months ended
December 31, 2020, respectively,
compared to 81.3% and 101.7% in the same periods of 2019,
respectively.
MANAGEMENT COMMENTARY
"The Company was tested by extraordinary events in calendar year
2020, including government-ordered business closures due to
COVID-19, civil unrest, and a derecho windstorm. I am proud of the
Company's resiliency. Understanding the uniquely difficult
challenges faced by our food and beverage customers, multiple
measures were implemented to adjust insureds' premiums. The goal of
these efforts was to reduce cash flow burdens and properly
recognize reduced risks given insureds' business closures or
changing sales mixes.
"Unprecedented property catastrophe losses contributed to a
slightly higher combined ratio than the prior year. In response,
the Company reduced operational costs and improved its
year-over-year expense ratio by 0.6%. On a positive note, the
investment portfolio rebounded in the second half of the year to
contribute to net income and an increase in book value.
"Consistent with prior years, the Company has been focused on
underwriting discipline and generating a high quality book of
business. This is achieved through providing fair and adequate
rates, while accepting proper levels of exposure. Our property and
workers' compensation lines of business proved to be our most
challenging lines this year. These challenges were offset with
significant profitability in our liability lines, the investment
portfolio's rebound and the SBA's forgiveness of our PPP loan in
December 2020.
"Despite the year's challenges, the Company, again, produced
positive earnings per share and a nearly 10% growth in book value
per share. Continuing the trend established in 2019, book
value per share rose to a new high, ending 2020 above $22 per share. The Company's geographic
diversification has contributed greatly to the Company's ability to
weather events like those we experienced in 2020. The Company's
accelerated expansion into Arizona
paid dividends by generating a needed influx of premium in
2020.
"The Company's human capital has been key to our continued
success which was truly demonstrated in 2020. Our employees'
seamless shift to the work-from-home environment coupled with
minimal turnover kept the operational wheels turning. The Company's
solid foundation and growth prospects are making space for positive
movement in the year to come," stated Arron
Sutherland, President and Chief Executive Officer.
ABOUT ICC HOLDINGS, INC.
ICC Holdings, Inc. is a vertically integrated company created to
facilitate the growth, expansion and diversification of its
subsidiaries in order to maximize value to its stakeholders. The
group of companies consolidated under ICC Holdings, Inc. engages in
diverse, yet complementary business activities, including property
and casualty insurance, real estate, and information
technology.
The Company's common shares trade on the NASDAQ Capital Market
under the ticker symbol "ICCH". For more information about ICC
Holdings, visit http://ir.iccholdingsinc.com.
FORWARD-LOOKING STATEMENTS
This press release, and oral statements made regarding the
subjects of this release, contains forward-looking statements,
within the meaning of the Private Securities Litigation Reform Act
of 1995, or the Reform Act, which may include, but are not limited
to, statements regarding the Company's, plans, objectives,
expectations, and intentions and other statements contained in this
press release that are not historical facts, including statements
identified by words such as "believe," "plan," "seek," "expect,"
"intend," "estimate," "anticipate," "will," and similar
expressions. All statements addressing operating performance,
events, or developments that the Company expects or anticipates
will occur in the future, including statements relating to revenue
and profit growth; future responses to and effects of the COVID-19
pandemic, including their effects on our business operations and
claims activity; new theories of liability; judicial, legislative,
regulatory and other governmental developments, including, but not
limited to, liability related to business interruption claims
related to COVID-19; litigation tactics and developments; product
and segment expansion; regulatory approval in connection with
expansion; and market share, as well as statements expressing
optimism or pessimism about future operating results, are
forward-looking statements within the meaning of the Reform Act.
The forward-looking statements are based on management's current
views and assumptions regarding future events and operating
performance, and are inherently subject to significant business,
economic, and competitive uncertainties and contingencies and
changes in circumstances, many of which are beyond the Company's
control. The statements in this press release are made as of the
date of this press release, even if subsequently made available by
the Company on its website or otherwise. The Company does not
undertake any obligation to update or revise these statements to
reflect events or circumstances occurring after the date of this
press release.
Although the Company does not make forward-looking statements
unless it believes it has a reasonable basis for doing so, the
Company cannot guarantee their accuracy. The foregoing factors,
among others, could cause actual results to differ materially from
those described in these forward-looking statements. For a list of
other factors which could affect the Company's results, see the
Company's filings with the Securities and Exchange Commission,
"Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations," including "Forward-Looking
Information," set forth in the Company's Annual Report on Form 10-K
for the year ended December 31, 2019.
No undue reliance should be placed on any forward-looking
statements.
Contact Info:
Arron K. Sutherland, President and
CEO
Illinois Casualty Company
(309) 732-0105
arrons@ilcasco.com
225 20th Street, Rock
Island, IL 61201
ICC Holdings, Inc.
and Subsidiaries
|
Condensed
Consolidated Balance Sheets
|
|
|
|
As of
|
|
|
December
31,
|
|
December
31,
|
|
|
2020
|
|
2019
|
|
|
(Unaudited)
|
|
|
Assets
|
|
|
|
|
Investments and
cash:
|
|
|
|
|
Fixed maturity
securities (cost or amortized cost - $98,753,027 at 12/31/2020 and
$88,348,415 at 12/31/2019)
|
|
$
105,740,566
|
|
$
92,087,572
|
Common stocks at fair
value
|
|
14,724,814
|
|
14,448,773
|
Preferred stocks at
fair value
|
|
1,683,892
|
|
—
|
Other invested
assets
|
|
1,772,867
|
|
877,900
|
Property held for
investment, at cost, net of accumulated depreciation of $465,364 at
12/31/2020 and $332,218 at 12/31/2019
|
|
5,399,826
|
|
4,353,713
|
Cash and cash
equivalents
|
|
6,598,842
|
|
6,626,585
|
Total investments and
cash
|
|
135,920,807
|
|
118,394,543
|
Accrued investment
income
|
|
660,793
|
|
646,504
|
Premiums and
reinsurance balances receivable, net of allowances for
uncollectible amounts of $150,000 at 12/31/2020 and $100,000 at
12/31/2019
|
|
23,506,171
|
|
22,368,526
|
Ceded unearned
premiums
|
|
860,905
|
|
822,818
|
Reinsurance balances
recoverable on unpaid losses and settlement expenses, net of
allowances for uncollectible amounts of $0 at 12/31/2020 and
12/31/2019
|
|
13,019,865
|
|
11,036,170
|
Income taxes -
current
|
|
372,986
|
|
192,559
|
Deferred policy
acquisition costs, net
|
|
5,429,620
|
|
5,269,256
|
Property and
equipment, at cost, net of accumulated depreciation of $6,079,728
at 12/31/2020 and $5,619,706 at 12/31/2019
|
|
2,860,331
|
|
3,033,348
|
Other
assets
|
|
1,307,794
|
|
1,239,794
|
Total
assets
|
|
$
183,939,272
|
|
$
163,003,518
|
Liabilities and
Equity
|
|
|
|
|
Liabilities:
|
|
|
|
|
Unpaid losses and
settlement expenses
|
|
$
61,575,666
|
|
$
56,838,307
|
Unearned
premiums
|
|
29,788,834
|
|
30,392,817
|
Reinsurance balances
payable
|
|
371,195
|
|
374,998
|
Corporate
debt
|
|
13,465,574
|
|
3,475,088
|
Accrued
expenses
|
|
3,472,511
|
|
4,216,988
|
Income taxes -
deferred
|
|
1,231,271
|
|
39,213
|
Other
liabilities
|
|
1,290,532
|
|
1,324,273
|
Total
liabilities
|
|
111,195,583
|
|
96,661,684
|
Equity:
|
|
|
|
|
Common
stock1
|
|
35,000
|
|
35,000
|
Treasury stock, at
cost2
|
|
(3,153,838)
|
|
(3,146,576)
|
Additional paid-in
capital
|
|
32,780,436
|
|
32,703,209
|
Accumulated other
comprehensive earnings, net of tax
|
|
5,520,091
|
|
2,953,936
|
Retained
earnings
|
|
40,140,115
|
|
36,608,750
|
Less: Unearned
Employee Stock Ownership Plan shares at cost3
|
|
(2,578,115)
|
|
(2,812,485)
|
Total
equity
|
|
72,743,689
|
|
66,341,834
|
Total liabilities and
equity
|
|
$
183,939,272
|
|
$
163,003,518
|
|
|
1
|
Par value $0.01;
authorized: 2020 – 10,000,000 shares and 2019 – 10,000,000 shares;
issued: 2020 – 3,500,000 shares and 2019 – 3,500,000 shares;
outstanding: 2020 – 3,033,314 and 2019 – 3,014,941
shares.
|
2
|
2020 – 208,875
shares and 2019 – 203,811 shares
|
3
|
2020 – 257,811
shares and 2019 – 281,248 shares
|
ICC Holdings, Inc.
and Subsidiaries
|
Condensed
Consolidated Statements of Earnings and Comprehensive Earnings
(Unaudited)
|
|
|
|
For the Three-Months
Ended
|
|
|
December
31,
|
|
|
2020
|
|
2019
|
Net premiums
earned
|
|
$
12,767,500
|
|
$
13,621,884
|
Net investment
income
|
|
852,802
|
|
778,188
|
Net realized
investment gains
|
|
156,997
|
|
459,642
|
Net unrealized gains
on equity securities
|
|
2,165,222
|
|
634,389
|
Gain on
extinguishment of debt
|
|
1,641,299
|
|
—
|
Other
(loss)
|
|
(313,958)
|
|
(9,459)
|
Consolidated
revenues
|
|
17,269,862
|
|
15,484,644
|
Losses and settlement
expenses
|
|
6,648,369
|
|
5,597,468
|
Policy acquisition
costs and other operating expenses
|
|
4,787,721
|
|
5,478,019
|
Interest expense on
debt
|
|
56,946
|
|
32,437
|
General corporate
expenses
|
|
170,147
|
|
134,879
|
Total
expenses
|
|
11,663,183
|
|
11,242,803
|
Earnings before
income taxes
|
|
5,606,679
|
|
4,241,841
|
Income tax expense
(benefit):
|
|
|
|
|
Current
|
|
354,162
|
|
806,106
|
Deferred
|
|
933,811
|
|
(141,687)
|
Total income tax
expense
|
|
1,287,973
|
|
664,419
|
Net
earnings
|
|
$
4,318,706
|
|
$
3,577,422
|
|
|
|
|
|
Other comprehensive
earnings (loss), net of tax
|
|
311,434
|
|
(254,618)
|
Comprehensive
earnings
|
|
$
4,630,140
|
|
$
3,322,804
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
Basic:
|
|
|
|
|
Basic net earnings per
share
|
|
$
1.43
|
|
$
1.19
|
Diluted:
|
|
|
|
|
Diluted net earnings
per share
|
|
$
1.42
|
|
$
1.19
|
|
|
|
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
Basic
|
|
3,028,868
|
|
3,011,034
|
Diluted
|
|
3,042,863
|
|
3,015,038
|
ICC Holdings, Inc.
and Subsidiaries
|
Condensed
Consolidated Statements of Earnings and Comprehensive Earnings
(Unaudited)
|
|
|
|
For the Twelve-Months
Ended
|
|
|
December
31,
|
|
|
2020
|
|
2019
|
Net premiums
earned
|
|
$
49,689,202
|
|
$
52,841,766
|
Net investment
income
|
|
3,497,702
|
|
3,185,153
|
Net realized
investment (losses) gains
|
|
(245,323)
|
|
1,200,765
|
Net unrealized gains
on equity securities
|
|
2,167,417
|
|
2,350,513
|
Gain on
extinguishment of debt
|
|
1,641,299
|
|
—
|
Other
(loss)
|
|
(231,024)
|
|
(53,297)
|
Consolidated
revenues
|
|
56,519,273
|
|
59,524,900
|
Losses and settlement
expenses
|
|
32,561,988
|
|
33,714,837
|
Policy acquisition
costs and other operating expenses
|
|
18,529,446
|
|
20,020,005
|
Interest expense on
debt
|
|
207,719
|
|
128,790
|
General corporate
expenses
|
|
641,763
|
|
579,708
|
Total
expenses
|
|
51,940,916
|
|
54,443,340
|
Earnings before
income taxes
|
|
4,578,357
|
|
5,081,560
|
Income tax
expense:
|
|
|
|
|
Current
|
|
537,078
|
|
568,893
|
Deferred
|
|
509,915
|
|
218,322
|
Total income tax
expense
|
|
1,046,993
|
|
787,215
|
Net
earnings
|
|
$
3,531,364
|
|
$
4,294,345
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
Basic:
|
|
|
|
|
Basic net earnings per
share
|
|
$
1.17
|
|
$
1.43
|
Diluted:
|
|
|
|
|
Diluted net earnings
per share
|
|
$
1.16
|
|
$
1.42
|
|
|
|
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
Basic
|
|
3,027,903
|
|
3,008,564
|
Diluted
|
|
3,041,898
|
|
3,013,867
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
$
3,531,364
|
|
$
4,294,345
|
Other comprehensive
earnings, net of tax
|
|
|
|
|
Unrealized gains and
losses on investments:
|
|
|
|
|
Unrealized holding
gains arising during the period, net of income tax expense of
$202,313 in 2020 and $617,319 in 2019
|
|
3,019,434
|
|
3,393,585
|
Reclassification
adjustment for (gains) included in net income, net of income tax
expense of $120,492 in 2020 and $59,802 in 2019
|
|
(453,279)
|
|
(224,970)
|
Total other
comprehensive earnings
|
|
2,566,155
|
|
3,168,615
|
Comprehensive
earnings
|
|
$
6,097,519
|
|
$
7,462,960
|
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SOURCE ICC Holdings, Inc.