NASHVILLE, TN / ACCESSWIRE / November 4, 2020 / First Acceptance Corporation (OTCQX:FACO) today reported its financial results for the three and nine months ended September 30, 2020. A quarterly report can be found at www.otcmarkets.com/stock/FACO/disclosure.
Income before income taxes, for the three months ended September 30, 2020 was $5.3 million, compared with $6.2 million for the three months ended September 30, 2019. Net income for the three months ended September 30, 2020 was $4.0 million, compared with $4.8 million for the three months ended September 30, 2019. Diluted net income per share was $0.10 for the three months ended September 30, 2020, compared with $0.12 for the same period in the prior year.
Income before income taxes, for the nine months ended September 30, 2020 was $11.2 million, compared with $22.3 million for the nine months ended September 30, 2019. Net income for the nine months ended September 30, 2020 was $8.6 million, compared with $17.4 million for the nine months ended September 30, 2019. Diluted net income per share was $0.22 for the nine months ended September 30, 2020, compared with $0.42 for the same period in the prior year.
For the three months ended September 30, 2020 and 2019, we recognized favorable prior period loss and LAE development of $3.0 million and $9.8 million, respectively. For the nine months ended September 30, 2020 and 2019, we recognized $3.0 million and $24.0 million of favorable prior period loss and LAE development, respectively.
Net income for the nine months ended September 30, 2020 included $2.0 million in net losses on investments, compared with $0.9 million in net gains on investments for the same period in the prior year.
President and Chief Operations Officer, Larry Willeford, commented, "While our year-to-date revenues remain impacted from the business that was lost or delayed during the lockdown phase of the pandemic, Acceptance continued to experience year-over-year new business growth in the recent quarter. Despite the obstacles we all faced, I am proud that our team maintained its focus on keeping our customers insured and efficiently adjusting their claims. However, along with the phased reopening of the economy have come signs that claims frequency is beginning to return to normal levels. Nonetheless, Acceptance was still able to achieve its second consecutive profitable quarter during this difficult time."
Mr. Willeford further added, "During the past quarter, Acceptance made two significant strategic steps. As was previously announced, Acceptance is honored to be the presenting sponsor of the Heisman High School Scholarship program which I believe will help provide a greater national exposure for our brand. In addition, on September 30, 2020, we completed the sale of the retail locations in New Mexico and Nevada that were part of our 2015 acquisition from Nationwide. We determined that these "agency-only" states no longer fit into our overall strategic plan, and I am pleased to report that all of our team members have secured employment with the buyer. I believe that both these actions have strengthened our Company to move forward into 2021."
About First Acceptance Corporation
We own and operate "Acceptance Insurance," an insurance agency headquartered in Nashville, Tennessee that sells insurance and related products underwritten and serviced by our own insurance companies (known as the First Acceptance Insurance Group) and through third-party carriers for which we receive a commission. Through September 30, 2020, our operations generated revenue from sales in 17 states and from underwriting our own insurance company products in 15 of these states.
Acceptance Insurance primarily sells non-standard personal automobile insurance through our own insurance companies and third-party carriers. 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 their payment preference, failure to have maintained continuous insurance coverage, or their driving record. We also offer a variety of other commissionable third-party products such as roadside assistance and in most states, we also sell an insurance product for renters that we underwrite. We believe that our agency-focused operations provide us with a variety of insurance alternatives for our core customers as well as the ability to provide products that suit other potential customers.
Acceptance Insurance currently leases and operates 339 retail locations staffed with employee-agents. In addition to our retail locations, we are able to complete sales over the phone through employee-agents in our call center or through our consumer-based website and 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, 2019 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 | Nine Months Ended | ||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||
Revenues | $ | 69,656 | $ | 70,950 | $ | 202,082 | $ | 224,631 | |||||||||||
Income before income taxes | $ | 5,255 | $ | 6,180 | $ | 11,161 | $ | 22,275 | |||||||||||
Net income | $ | 4,010 | $ | 4,820 | $ | 8,576 | $ | 17,413 | |||||||||||
Net income per diluted share | $ | 0.10 | $ | 0.12 | $ | 0.22 | $ | 0.42 | |||||||||||
Average diluted shares outstanding | 38,331 | 41,873 | 39,293 | 41,875 | |||||||||||||||
Statutory Combined Ratio: | |||||||||||||||||||
Loss | 64.0 | % | 59.9 | % | 64.1 | % | 62.2 | % | |||||||||||
Expense | 29.7 | % | 32.0 | % | 29.5 | % | 27.6 | % | |||||||||||
Combined | 93.7 | % | 91.9 | % | 93.6 | % | 89.8 | % | |||||||||||
INVESTOR RELATIONS CONTACT:
Michael J. Bodayle
615.844.2885
SOURCE: First Acceptance Corporation
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