NASHVILLE, TN / ACCESSWIRE / March 6, 2019 / First Acceptance Corporation (OTCQX: FACO) today reported its financial results for the quarter and year ended December 31, 2018. Our 2018 Annual Report can be found at www.otcmarkets.com/stock/FACO/disclosure.
Income before income taxes, for the three months ended December 31, 2018 was $2.6 million, compared with $3.1 million for the three months ended December 31, 2017. Net income for the three months ended December 31, 2018 was $2.4 million, compared with net loss of $10.4 million for the three months ended December 31, 2017. Diluted net income per share was $0.06 for the three months ended December 31, 2018, compared with diluted net loss per share of $0.25 for the same period in the prior year.
Income before income taxes, for the year ended December 31, 2018 was $22.6 million, compared with $6.6 million for the year ended December 31, 2017. Net income for the year ended December 31, 2018 was $17.7 million, compared with net loss of $8.6 million for the year ended December 31, 2017. Diluted net income per share was $0.43 for the year ended December 31, 2018, compared with diluted net loss of $0.21 for the same period in the prior year.
For the years ended December 31, 2018 and 2017, we recognized favorable prior period loss and loss adjustment expense development of $16.2 million and $2.3 million, respectively. The year ended December 31, 2017 was also unfavorably impacted by $2.4 million in catastrophic claims losses during the third quarter.
Net income for the year ended December 31, 2018 included $1.7 million in net unrealized losses on equity securities in accordance with a recently adopted accounting pronouncement.
The net loss for the year ended December 31, 2017 included a reduction in the deferred tax asset of $12.5 million as a result of the enactment of legislation to reduce the corporate income tax rate, and the provision for income taxes for the year ended December 31, 2018 reflects the lowering of the corporate tax rate from 35% to 21%.
President and Chief Executive Officer, Ken Russell, commented, ”Having achieved another profitable year, I am pleased to report that our Company has further evidenced recovery from its 2016 underwriting loss by now having attained $29.2 million of pre-tax income over the past two years. These financial results are a significant testament to the practices of disciplined underwriting, appropriate pricing and improved claims-handling that we have executed over this period. Our statutory surplus has returned to within 5% of its level before the 2016 decrease, and our underwriting leverage is again below the 3-to-1 (net premiums written to surplus) regulatory guideline. In addition to completing these primary financial objectives of our strategic plan, I am also delighted to report that Acceptance employee morale has strengthened along with this financial success.”
Mr. Russell further added, ”In addition to continuing our return to profitability, our other primary objective for 2018 was the migration of all of our sales distribution units to a full insurance agency model. I am proud to announce the successful completion of this major initiative. Our employee-agents are now all equipped to sell both Acceptance and third-party non-standard automobile insurance products, as well as other-than-auto insurance products. They also now have the support of a fully-implemented new agency management system, built upon a TechCanary/Salesforce platform, to facilitate product selection and provide more timely and robust sales management information. We look forward to 2019 with the agency model now in full force.”
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 16 states. We currently conduct our insurance servicing and underwriting operations in 14 states and operate only as an insurance agency in two states. We are also licensed as an insurance company in 12 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.
At December 31, 2018, we leased and operated 350 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.
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 word ”believe” or the negative of this term 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 possibility that there may not be an active trading market for our securities, the possibility that delisting and deregistration could adversely affect the price and liquidity of our securities, and the factors set forth under the caption ”Risk Factors” in our 2018 Annual Report as filed 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
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INVESTOR RELATIONS CONTACT:
Michael J. Bodayle
SOURCE: First Acceptance Corporation
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