State National Companies, Inc. (NASDAQ:SNC), a leading specialty
provider of property and casualty insurance, today reported its
financial results for the fourth quarter and full year ended
December 31, 2015. The Company also reaffirmed its 2016 outlook.
Fourth Quarter 2015 Financial Highlights
Compared to the Fourth Quarter 2014:
- Total revenues were $55.3 million, up 28.6%
- Premiums earned were $32.9 million, an increase of 21.4%
- Ceding fees were $18.6 million, up 46.5%
- Adjusted net income was $13.9 million, an increase of
75.9%
- Adjusted diluted EPS of $0.32, up from $0.18
- Combined ratio for Lender Services was 83.6%, down from
89.3%
Full Year 2015 Financial Highlights
Compared to the Full Year 2014
- Total revenues were $198.9 million, up
28.7%
- Premiums earned were $118.1 million, an increase of 22.1%
- Ceding fees were $68.0 million, up 48.8%
- Adjusted net income was $44.7 million, an increase of
55.7%
- Adjusted diluted EPS of $1.01, up from $0.73
- Adjusted ROE of 17.7%, up from 14.9%
- Combined ratio for Lender Services was 86.5%, down from
89.3%
Commenting on the results, State National’s
Chairman and Chief Executive Officer, Terry Ledbetter, said, “In
the fourth quarter and full year 2015, we generated strong earnings
growth in our Lender and Program Services segments. Through
our capital efficient business model, our adjusted return on equity
(ROE) increased to 17.7% in 2015 compared to 14.9% in 2014. We also
remain committed to enhancing shareholder value through strategic
and prudent capital allocation. During 2015, State National paid
dividends of $6.2 million ($0.14 per share) and as of March 7,
2016, repurchased approximately 2.0 million shares under our share
repurchase program that began in November 2015. We firmly believe
in our long-term growth prospects and our ability to generate
strong profits, cash flow and returns on equity. We are reaffirming
our 2016 outlook.”
Total revenues in the fourth quarter of 2015
were $55.3 million, up 28.6 percent from $43.0 million in the
fourth quarter of 2014. Adjusted net income, a non-GAAP
measure, was $13.9 million, or $0.32 per diluted share, in the
fourth quarter of 2015, compared to adjusted net income of $7.9
million, or $0.18 per diluted share, for the same period in
2014. Reported net income was $13.9 million, or $0.32 per
diluted share, in the fourth quarter of 2015. See below for a
reconciliation of non-GAAP financial measures.
Total revenues for 2015 were $198.9 million, up
28.7 percent from $154.5 million in 2014, primarily due to
increases in premiums earned and ceding fees. Adjusted net income
was $44.7 million, or $1.01 per diluted share in 2015, compared to
adjusted net income of $28.7 million or $0.73 per diluted share in
2014. Reported net income was $44.7 million in 2015, compared to
$11.0 million in 2014.
Lender Services Segment
In Lender Services, the Collateral Protection
Insurance, or CPI, business is fully vertically integrated and
State National manages all aspects of the CPI business for its
clients, including policy issuance and administration, underwriting
and claims. The Company differentiates itself from competitors by
establishing long-term relationships with clients, leveraging its
alliance with CUNA Mutual, and providing high-quality service and
advanced technology to more than 600 customers and over 6.2 million
loans.
In the fourth quarter of 2015, total revenues
from the Lender Services segment were $33.7 million, an increase of
$6.0 million, or 21.7 percent, from the fourth quarter of
2014. Premiums earned increased by $5.9 million, or 21.4
percent, to $32.9 million in the fourth quarter of 2015 from $27.1
million in the fourth quarter of 2014. Contributing to this
increase in Lender Services premiums are sales of new accounts and
growth in loan portfolios of existing accounts driven by rising
automobile sales and higher automobile loan sizes.
Total revenues from the Lender Services segment
for the full year 2015 were $121.0 million, an increase of $21.6
million, or 21.6 percent, from 2014, and premiums earned increased
by $21.4 million, or 22.1 percent, to $118.1 million in 2015 from
$96.7 million in 2014, primarily due to the same factors affecting
the fourth quarter.
Losses and loss adjustment expenses were $14.9
million in the fourth quarter of 2015, compared to
$11.7 million in the same period last year, primarily a result
of increased exposure due to higher earned premiums, and increases
in claim frequency and severity. Although we have experienced
a slightly higher loss ratio, it is more than offset by a decrease
in our expense ratio due to our ability to effectively leverage
fixed costs.
Losses and loss adjustment expenses were $53.8
million in 2015, compared to $40.6 million in 2014, again related
to an increased loss ratio and higher earned premiums. A
strengthening economy, an aging automobile fleet, and easier access
to credit have contributed to an increase in vehicle sales,
resulting in higher loan balances upon which the Company pays
claims. The net loss ratio increased to 45.5 percent for 2015 from
42.0 percent for 2014, which was also driven by an increase in
claim volume and severity that impacted the fourth quarter
performance. However, our net expense ratio decreased to 41.0
percent for 2015 from 47.3 percent for 2014 due to our ability to
effectively leverage fixed costs. The resulting net combined
ratio decreased to 86.5 percent for 2015 from 89.3 percent for
2014, consistent with our objective of 85 to 90 percent for a full
year.
Program Services Segment
The Program Services segment provides fronting
to general agents and insurance carriers to leverage State
National’s “A” (Excellent) A.M. Best rating with its expansive
licenses and trusted reputation to provide access to the U.S.
property and casualty insurance market in exchange for ceding fees.
State National issues the policy, and the reinsurer assumes
the risk.
In the fourth quarter of 2015, total revenues
from the Program Services segment were $18.6 million, an increase
of $5.9 million, or 46.5 percent, from the fourth quarter of 2014.
The growth in revenues was driven by increased ceding fees
from both new and existing client programs. The Nephila Capital
program contributed ceding fees of $4.4 million, consisting of $3.5
million of capacity fees and $0.9 million of premium related fees.
Total revenues from the Program Services segment
for the full year 2015 were $68.0 million, an increase of $22.3
million, or 48.8 percent, from 2014. This increase was primarily
driven by higher premium related ceding fees of $11.1 million, due
to the increase in gross earned premiums and increased capacity
fees of $11.2 million.
General and Administrative
Expenses
General and administrative expenses in the
fourth quarter of 2015 decreased 1.8 percent, to $16.3 million from
$16.6 million in the fourth quarter of 2014, primarily due to a
decrease in professional fees.
General and administrative expenses for 2015
increased by $4.1 million, or 7.0 percent, to $63.0 million from
$58.9 million in 2014, primarily due to significant public company
related expenses including SEC compliance and stock-based
compensation.
Balance Sheet
State National’s balance sheet reflects low
financial leverage with $44.5 million of subordinated
debentures. The subordinated debentures have limited covenant
requirements and are interest-only until the mid-2030s.
The Company had $6.0 million of goodwill and
other intangibles at December 31, 2015.
State National’s investment portfolio is
primarily comprised of fixed income securities, the majority of
which have investment grade ratings with short duration of
approximately four years and are laddered to allow for new funds to
reinvest annually as rates change. Most of the Company’s
reserves are ceded to reinsurers.
Share Repurchase Program
On October 12, 2015, the Company announced that
its Board of Directors authorized the repurchase of up to $50
million of the Company’s common stock from time to time through
open market or privately negotiated transactions, based on
prevailing market conditions. As of March 7, 2016, the Company had
purchased approximately 2.0 million shares for $18.9 million under
the repurchase program.
2016 Outlook
State National has reaffirmed its 2016
outlook:
- In Lender Services, the Company expects net earned premiums in
fiscal 2016 to be in the range of $115 to $125 million, with a
combined ratio of 85 to 90 percent.
- In Program Services, State National expects ceding fees in
fiscal 2016 to be in the range of $55 to $65 million.
Non-GAAP Reconciliation
This press release includes certain financial
measures that have been adjusted for items impacting comparability.
The accompanying information provides reconciliations of these
non-GAAP financial measures to their most directly comparable
financial measure calculated and presented in accordance with
accounting principles generally accepted in the United States of
America ("GAAP"). Our non-GAAP financial measures should not be
considered as alternatives to GAAP measures such as net income,
earnings per share, return on equity or any other GAAP measure of
liquidity or financial performance.
Adjusted net income is considered a non-GAAP
financial measure because it reflects adjustments to net income,
which is the most directly comparable measure calculated in
accordance with GAAP for the pro forma provision for income taxes
as if the Company had been treated as a C Corporation for each
period presented and the exclusion (net of tax benefit) of the
increase in the Company's deferred tax asset as a result of the
conversion to C Corporation status, the amount of founder special
compensation and the non-recurring offering-related expenses and
contract modification expense related to the amendment to our
alliance agreement with CUNA Mutual, as applicable. Management
believes this measure is helpful to investors because it provides
comparability in evaluating core financial performance between
periods. Those adjustments to the GAAP measures are only
applicable to 2014 and prior periods.
|
|
STATE NATIONAL COMPANIES, INC. |
|
Reconciliation of Non-GAAP Financial Measures |
|
(in
thousands, except per share data) |
|
|
|
Adjusted Net Income |
|
|
|
Three Months Ended |
|
Year Ended |
|
|
|
December 31, |
|
December 31, |
|
|
|
2015 |
|
2014 |
|
2015 |
|
2014 |
|
Adjusted net
income |
|
$ |
13,914 |
|
$ |
|
7,887 |
|
|
$ |
44,666 |
|
$ |
28,683 |
|
Reconciliation of adjusted
net income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
13,914 |
|
$ |
|
6,847 |
|
|
$ |
44,666 |
|
$ |
11,013 |
|
Plus (less): Provision for income
taxes to reflect change to C corporation status (4) |
|
|
— |
|
|
|
(103 |
) |
|
|
— |
|
|
4,090 |
|
Less: Recognition of deferred tax
asset upon conversion to C corporation (5) |
|
|
— |
|
|
|
(201 |
) |
|
|
— |
|
|
14,279 |
|
Plus: Founder special compensation
(1) (6) |
|
|
— |
|
|
|
230 |
|
|
|
— |
|
|
11,203 |
|
Plus: Offering-related expenses (2)
(6) |
|
|
— |
|
|
|
483 |
|
|
|
— |
|
|
5,524 |
|
Plus: Contract modification expense
(3) (6) |
|
|
— |
|
|
|
229 |
|
|
|
— |
|
|
11,132 |
|
Adjusted net income |
|
$ |
13,914 |
|
$ |
|
7,887 |
|
|
$ |
44,666 |
|
$ |
28,683 |
|
|
|
|
|
|
|
|
Adjusted Earnings Per Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Year Ended |
|
|
|
December 31, |
|
December 31, |
|
|
|
2015 |
|
2014 |
|
2015 |
|
2014 |
|
Adjusted
diluted earnings per share |
|
$ |
0.32 |
|
$ |
0.18 |
|
$ |
1.01 |
|
$ |
0.73 |
|
Reconciliation
of adjusted diluted earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
0.32 |
|
$ |
0.15 |
|
$ |
1.01 |
|
$ |
0.28 |
|
Plus (less): Provision for income
taxes to reflect change to C corporation status (4) |
|
|
— |
|
|
— |
|
|
— |
|
|
0.11 |
|
Less: Recognition of deferred tax
asset upon conversion to C corporation (5) |
|
|
— |
|
|
— |
|
|
— |
|
|
0.36 |
|
Plus: Founder special compensation
(1) (6) |
|
|
— |
|
|
0.01 |
|
|
— |
|
|
0.28 |
|
Plus: Offering-related expenses (2)
(6) |
|
|
— |
|
|
0.01 |
|
|
— |
|
|
0.14 |
|
Plus: Contract modification expense
(3) (6) |
|
|
— |
|
|
0.01 |
|
|
— |
|
|
0.28 |
|
Adjusted diluted earnings per
share |
|
$ |
0.32 |
|
$ |
0.18 |
|
$ |
1.01 |
|
$ |
0.73 |
|
|
|
(1) Prior to the completion of the private placement in June
2014, we made special compensation payments to our co-founders in
recognition of their service to our Company. We refer to
these payments as “founder special compensation.” Following
the completion of the private placement, we ceased paying founder
special compensation. |
|
|
|
(2) Offering related expenses are non-recurring expenses
related to the Company’s private placement of common stock in
2014. |
|
|
|
(3) In connection with the 2014 amendment to the alliance
agreement with CUNA Mutual, we agreed to pay CUNA Mutual $17.8
million. As a result, we recorded contract modification expense of
$17.8 million as of June 30, 2014. |
|
|
|
(4) Upon the completion of the private placement, our parent
company’s status as a Subchapter S corporation terminated and our
consolidated income became fully subject to U.S. federal income
taxes. This adjustment represents estimated income taxes as
if the Company had been treated as a C Corporation for each period
presented. |
|
|
|
(5) As a result of the Company’s conversion to a C
Corporation, the deferred tax asset increased by approximately
$14.3 million as of June 30, 2014 primarily due to the effects of
eliminating deferred tax balances on the insurance subsidiaries
related to intercompany transactions. |
|
|
|
(6) Founder special compensation, offering-related expenses
and contract modification expense are shown net of estimated
statutory federal and state income taxes for each period
presented. |
|
|
|
Conference Call
State National will host a conference tomorrow
morning, March 11, 2016 at 10:00 a.m. Eastern Time (9:00 a.m.
Central Time) to discuss its fourth quarter and full year 2015
results. To access the call live, dial (716) 247-5810 and use
the passcode 44927415# at least 10 minutes prior to the start time.
Alternatively, investors can listen live over the Internet by
visiting the Company’s website at http://ir.statenational.com/.
For those who cannot listen to the live call, a telephonic
replay will be available through March 18, 2016 and may be accessed
by calling (404) 537-3406 and using pass code 44927415#.
Also, an archive of the webcast will be available after the
call for a period of 90 days on the “Investor Relations” section of
the Company's website at http://www.statenational.com/.
About State National Companies,
Inc.
State National Companies, Inc. (NASDAQ:SNC) is a
leading specialty provider of property and casualty insurance
operating in two niche markets across the United States. In
its Program Services segment, the Company leverages its “A”
(Excellent) A.M. Best rating, expansive licenses and reputation to
provide access to the U.S. property and casualty insurance market
in exchange for ceding fees. In its Lender Services segment,
the company specializes in providing collateral protection
insurance, which insures personal automobiles and other vehicles
held as collateral for loans made by credit unions, banks and
specialty finance companies. To learn more, please visit
www.statenational.com. The Company routinely posts important
company information on its website.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING
STATEMENTS
Various statements contained in this press
release are forward-looking statements made pursuant to the Safe
Harbor Provisions of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements may include projections
and estimates concerning the timing and success of specific
projects and our future production, revenues, income and capital
spending. Our forward-looking statements are generally, but not
always, accompanied by words such as “estimate,” “believe,”
“expect,” “will,” “plan,” “target,” “could” or other words
that convey the uncertainty of future events or outcomes.
There can be no assurance that actual
developments will be those anticipated by us. Actual results may
differ materially from those expressed or implied in these
statements as a result of significant risks and uncertainties,
including, but not limited to, our ability to recover from our
capacity providers, the cost and availability of reinsurance
coverage, challenges to our use of issuing carrier or fronting
arrangements by regulators or changes in state or federal
insurance or other statutes or regulations, our dependence on a
limited number of business partners, potential regulatory scrutiny
of lender-placed automobile insurance, level of new car sales,
availability of credit for vehicle purchases and other factors
affecting automobile financing, our ability to compete effectively,
a downgrade in the financial strength ratings of our insurance
subsidiaries, our ability to accurately underwrite and price our
products and to maintain and establish accurate loss reserves,
changes in interest rates or other changes in the financial
markets, the effects of emerging claim and coverage issues, changes
in the demand for our products, the effect of general economic
conditions, breaches in data security or other disruptions with our
technology, and changes in pricing or other competitive
environments.
Forward-looking statements involve inherent
risks and uncertainties that are difficult to predict, many of
which are beyond our control. Additional information about these
risks and uncertainties is contained in our filings with the
Securities and Exchange Commission. The forward-looking statements
in this press release speak only as of the date of this release,
and we undertake no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future developments or otherwise, except as may be required by
law.
|
|
STATE NATIONAL COMPANIES, INC. |
|
CONSOLIDATED BALANCE SHEETS |
|
($ in thousands, except for share and per share
information) |
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
December 31, |
|
|
|
2015 |
|
2014 |
|
Assets |
|
|
(Unaudited) |
|
|
|
|
Investments: |
|
|
|
|
|
|
|
Fixed-maturity securities –
available-for-sale, at fair value (amortized cost – $327,764,
$305,019, respectively) |
|
$ |
329,522 |
|
$ |
309,911 |
|
Equity securities –
available-for-sale, at fair value (cost – $4,796, $1,419,
respectively) |
|
|
5,544 |
|
|
2,642 |
|
Total investments |
|
|
335,066 |
|
|
312,553 |
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents |
|
|
51,770 |
|
|
38,348 |
|
Restricted cash and
investments |
|
|
3,717 |
|
|
6,597 |
|
Accounts receivable
from agents, net |
|
|
23,913 |
|
|
18,528 |
|
Reinsurance recoverable
on paid losses |
|
|
1,187 |
|
|
1,200 |
|
Deferred acquisition
costs |
|
|
1,075 |
|
|
1,036 |
|
Reinsurance
recoverables |
|
|
1,911,660 |
|
|
1,656,534 |
|
Property and equipment,
net (includes land held for sale – $1,034, $1,034,
respectively) |
|
|
17,163 |
|
|
18,397 |
|
Interest
receivable |
|
|
2,158 |
|
|
1,795 |
|
Income taxes
receivable |
|
|
3,330 |
|
|
— |
|
Deferred income taxes,
net |
|
|
26,208 |
|
|
23,864 |
|
Goodwill and intangible
assets, net |
|
|
5,958 |
|
|
6,683 |
|
Other assets |
|
|
5,113 |
|
|
6,229 |
|
Total assets |
|
$ |
2,388,318 |
|
$ |
2,091,764 |
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
Unpaid losses and loss
adjustment expenses |
|
$ |
1,364,774 |
|
$ |
1,209,905 |
|
Unearned premiums |
|
|
585,448 |
|
|
480,124 |
|
Allowance for policy
cancellations |
|
|
59,610 |
|
|
55,500 |
|
Deferred ceding
fees |
|
|
29,119 |
|
|
23,612 |
|
Accounts payable to
agents |
|
|
2,458 |
|
|
2,448 |
|
Accounts payable to
insurance companies |
|
|
3,801 |
|
|
4,399 |
|
Subordinated
debentures |
|
|
44,500 |
|
|
44,500 |
|
Income taxes
payable |
|
|
— |
|
|
1,762 |
|
Other liabilities |
|
|
35,151 |
|
|
28,642 |
|
Total liabilities |
|
|
2,124,861 |
|
|
1,850,892 |
|
|
|
|
|
|
|
|
|
Shareholders’
equity |
|
|
|
|
|
|
|
Common stock, $.001 par
value (150,000,000 shares authorized; 42,699,550 and 44,247,102
shares issued at December 31, 2015 and December 31, 2014,
respectively) |
|
|
43 |
|
|
44 |
|
Preferred stock, $.001
par value (10,000,000 shares authorized; no shares issued and
outstanding at December 31, 2015 and December 31,
2014) |
|
|
— |
|
|
— |
|
Additional paid-in
capital |
|
|
224,719 |
|
|
220,577 |
|
Retained earnings |
|
|
37,322 |
|
|
16,108 |
|
Accumulated other
comprehensive income |
|
|
1,373 |
|
|
4,143 |
|
Total shareholders’
equity |
|
|
263,457 |
|
|
240,872 |
|
Total liabilities and
shareholders’ equity |
|
$ |
2,388,318 |
|
$ |
2,091,764 |
|
|
|
|
|
|
|
|
|
|
|
STATE NATIONAL COMPANIES, INC. |
|
CONSOLIDATED STATEMENTS OF
INCOME |
|
($ in thousands, except for per share
information) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Year Ended |
|
|
December 31, |
|
December 31, |
|
December 31, |
|
December 31, |
|
|
2015 |
|
2014 |
|
2015 |
|
2014 |
|
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
Premiums earned |
$ |
32,923 |
|
$ |
|
27,065 |
|
|
$ |
|
118,068 |
|
|
$ |
|
96,650 |
|
|
Commission income |
|
391 |
|
|
|
366 |
|
|
|
|
1,465 |
|
|
|
|
1,533 |
|
|
Ceding fees |
|
18,596 |
|
|
|
12,707 |
|
|
|
|
67,956 |
|
|
|
|
45,732 |
|
|
Net investment income |
|
1,987 |
|
|
|
1,440 |
|
|
|
|
7,948 |
|
|
|
|
4,841 |
|
|
Realized net investment gains
(losses) |
|
1,008 |
|
|
|
125 |
|
|
|
|
1,888 |
|
|
|
|
1,311 |
|
|
Other income |
|
395 |
|
|
|
1,323 |
|
|
|
|
1,623 |
|
|
|
|
4,460 |
|
|
Total revenues |
|
55,300 |
|
|
|
43,026 |
|
|
|
|
198,948 |
|
|
|
|
154,527 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Losses and loss adjustment
expenses |
|
14,798 |
|
|
|
11,812 |
|
|
|
|
55,753 |
|
|
|
|
40,821 |
|
|
Commissions |
|
1,538 |
|
|
|
1,444 |
|
|
|
|
5,502 |
|
|
|
|
3,882 |
|
|
Taxes, licenses, and fees |
|
945 |
|
|
|
779 |
|
|
|
|
3,130 |
|
|
|
|
2,832 |
|
|
General and administrative |
|
16,329 |
|
|
|
16,570 |
|
|
|
|
62,978 |
|
|
|
|
58,891 |
|
|
Founder special compensation |
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
17,914 |
|
|
Offering-related expenses |
|
— |
|
|
|
603 |
|
|
|
|
— |
|
|
|
|
8,833 |
|
|
Contract modification expense |
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
17,800 |
|
|
Interest expense |
|
516 |
|
|
|
509 |
|
|
|
|
2,031 |
|
|
|
|
2,237 |
|
|
Total expenses |
|
34,126 |
|
|
|
31,717 |
|
|
|
|
129,394 |
|
|
|
|
153,210 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes |
|
21,174 |
|
|
|
11,309 |
|
|
|
|
69,554 |
|
|
|
|
1,317 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes: |
|
|
|
|
|
|
|
|
|
|
|
|
Current tax expense (benefit) |
|
3,863 |
|
|
|
7,009 |
|
|
|
|
25,741 |
|
|
|
|
11,514 |
|
|
Deferred tax expense (benefit) |
|
3,397 |
|
|
|
(2,547 |
) |
|
|
|
(853 |
) |
|
|
|
(21,210 |
) |
|
|
|
7,260 |
|
|
|
4,462 |
|
|
|
|
24,888 |
|
|
|
|
(9,696 |
) |
|
Net
income (loss) |
$ |
13,914 |
|
$ |
|
6,847 |
|
|
$ |
|
44,666 |
|
|
$ |
|
11,013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share attributable to common shareholders: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
$ |
0.32 |
|
$ |
|
0.15 |
|
|
$ |
|
1.01 |
|
|
$ |
|
0.28 |
|
|
Diluted earnings per share |
|
0.32 |
|
|
|
0.15 |
|
|
|
|
1.01 |
|
|
|
|
0.28 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends, per
share |
$ |
0.06 |
|
$ |
|
0.01 |
|
|
$ |
|
0.14 |
|
|
$ |
|
0.49 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding –
basic |
|
43,946,013 |
|
|
|
44,235,102 |
|
|
|
|
44,165,458 |
|
|
|
|
39,383,641 |
|
|
Weighted-average common shares outstanding –
diluted |
|
44,005,264 |
|
|
|
44,247,102 |
|
|
|
|
44,188,593 |
|
|
|
|
39,389,855 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Program Services Segment — Results of
Operations |
|
Unaudited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Year Ended |
|
|
|
December 31, |
|
|
December 31, |
|
($ in thousands) |
|
2015 |
|
2014 |
|
|
2015 |
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums earned |
|
$ |
|
9 |
|
|
$ |
11 |
|
|
$ |
|
(1 |
) |
|
$ |
|
(4 |
) |
|
Ceding fees |
|
|
|
18,596 |
|
|
|
12,707 |
|
|
|
|
67,956 |
|
|
|
|
45,732 |
|
|
Other income |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
Total
revenues |
|
|
|
18,605 |
|
|
|
12,718 |
|
|
|
|
67,955 |
|
|
|
|
45,728 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Losses and loss adjustment
expenses |
|
|
|
(70 |
) |
|
|
104 |
|
|
|
|
1,987 |
|
|
|
|
217 |
|
|
Commissions |
|
|
|
3 |
|
|
|
3 |
|
|
|
|
5 |
|
|
|
|
2 |
|
|
Taxes, licenses, and fees |
|
|
|
6 |
|
|
|
5 |
|
|
|
|
14 |
|
|
|
|
8 |
|
|
General and administrative |
|
|
|
3,456 |
|
|
|
2,853 |
|
|
|
|
12,446 |
|
|
|
|
10,855 |
|
|
Total
expenses |
|
|
|
3,395 |
|
|
|
2,965 |
|
|
|
|
14,452 |
|
|
|
|
11,082 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss)
before income taxes |
|
$ |
|
15,210 |
|
|
$ |
9,753 |
|
|
$ |
|
53,503 |
|
|
$ |
|
34,646 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Program gross
expense ratio |
|
|
|
1.2 |
% |
|
|
1.3 |
% |
|
|
|
1.1 |
% |
|
|
|
1.2 |
% |
|
Gross premiums
written |
|
$ |
|
277,092 |
|
|
$ |
216,241 |
|
|
$ |
|
1,119,125 |
|
|
$ |
|
909,501 |
|
|
Gross premiums
earned |
|
$ |
|
271,286 |
|
|
$ |
222,941 |
|
|
$ |
|
1,016,693 |
|
|
$ |
|
815,189 |
|
|
|
|
Lender Services Segment — Results of
Operations |
|
Unaudited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Year Ended |
|
|
|
December 31, |
|
|
December 31, |
|
($ in thousands) |
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums earned |
|
$ |
32,914 |
|
|
$ |
27,054 |
|
|
$ |
118,069 |
|
|
$ |
|
96,654 |
|
|
Commission income |
|
|
391 |
|
|
|
366 |
|
|
|
1,465 |
|
|
|
|
1,533 |
|
|
Other income |
|
|
395 |
|
|
|
328 |
|
|
|
1,498 |
|
|
|
|
1,266 |
|
|
Total
revenues |
|
|
33,700 |
|
|
|
27,748 |
|
|
|
121,032 |
|
|
|
|
99,453 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Losses and loss adjustment
expenses |
|
|
14,868 |
|
|
|
11,708 |
|
|
|
53,766 |
|
|
|
|
40,604 |
|
|
Commissions |
|
|
1,535 |
|
|
|
1,441 |
|
|
|
5,497 |
|
|
|
|
3,880 |
|
|
Taxes, licenses, and fees |
|
|
939 |
|
|
|
774 |
|
|
|
3,116 |
|
|
|
|
2,824 |
|
|
General and administrative |
|
|
10,156 |
|
|
|
10,238 |
|
|
|
39,837 |
|
|
|
|
38,995 |
|
|
Contract modification expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
17,800 |
|
|
Total
expenses |
|
|
27,498 |
|
|
|
24,161 |
|
|
|
102,216 |
|
|
|
|
104,103 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss)
before income taxes |
|
$ |
6,202 |
|
|
$ |
3,587 |
|
|
$ |
18,816 |
|
|
$ |
|
(4,650 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
pre-tax income (loss) |
|
$ |
6,202 |
|
|
$ |
3,587 |
|
|
$ |
18,816 |
|
|
$ |
|
13,150 |
|
|
Reconciliation of adjusted
pre-tax income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income (loss) |
|
$ |
6,202 |
|
|
$ |
3,587 |
|
|
$ |
18,816 |
|
|
$ |
|
(4,650 |
) |
|
Plus: Contract modification expense
(1) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
17,800 |
|
|
Adjusted pre-tax income (loss) |
|
$ |
6,202 |
|
|
$ |
3,587 |
|
|
$ |
18,816 |
|
|
$ |
|
13,150 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
ratio |
|
|
45.2 |
% |
|
|
43.3 |
% |
|
|
45.5 |
% |
|
|
|
42.0 |
% |
|
Net expense
ratio |
|
|
38.4 |
% |
|
|
46.0 |
% |
|
|
41.0 |
% |
|
|
|
47.3 |
% |
|
Net combined
ratio |
|
|
83.6 |
% |
|
|
89.3 |
% |
|
|
86.5 |
% |
|
|
|
89.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross premiums
written |
|
$ |
43,327 |
|
|
$ |
34,646 |
|
|
$ |
145,962 |
|
|
$ |
|
124,624 |
|
|
Net premiums
written |
|
$ |
36,059 |
|
|
$ |
29,292 |
|
|
$ |
120,511 |
|
|
$ |
|
99,079 |
|
|
|
(1) In connection with the 2014 amendment to the alliance
agreement with CUNA Mutual, we agreed to pay CUNA Mutual $17.8
million. As a result, we recorded contract modification expense of
$17.8 million as of June 30, 2014. |
|
|
|
Corporate Segment — Results of
Operations |
|
Unaudited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Year Ended |
|
|
|
December 31, |
|
December 31, |
|
($ in thousands) |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income |
|
$ |
|
1,987 |
|
|
$ |
|
1,440 |
|
|
$ |
|
7,948 |
|
|
$ |
|
4,841 |
|
|
Realized net investment gains
(losses) |
|
|
|
1,008 |
|
|
|
|
125 |
|
|
|
|
1,888 |
|
|
|
|
1,311 |
|
|
Other income |
|
|
|
— |
|
|
|
|
995 |
|
|
|
|
125 |
|
|
|
|
3,194 |
|
|
Total
revenues |
|
|
|
2,995 |
|
|
|
|
2,560 |
|
|
|
|
9,961 |
|
|
|
|
9,346 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
|
|
2,717 |
|
|
|
|
3,479 |
|
|
|
|
10,695 |
|
|
|
|
9,041 |
|
|
Founder special compensation |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
17,914 |
|
|
Offering-related expenses |
|
|
|
— |
|
|
|
|
603 |
|
|
|
|
— |
|
|
|
|
8,833 |
|
|
Interest expense |
|
|
|
516 |
|
|
|
|
509 |
|
|
|
|
2,031 |
|
|
|
|
2,237 |
|
|
Total
expenses |
|
|
|
3,233 |
|
|
|
|
4,591 |
|
|
|
|
12,726 |
|
|
|
|
38,025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss)
before income taxes |
|
|
|
(238 |
) |
|
|
|
(2,031 |
) |
|
|
|
(2,765 |
) |
|
|
|
(28,679 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense (benefit) |
|
|
|
7,260 |
|
|
|
|
4,462 |
|
|
|
|
24,888 |
|
|
|
|
(9,696 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss) |
|
$ |
|
(7,498 |
) |
|
$ |
|
(6,493 |
) |
|
$ |
|
(27,653 |
) |
|
$ |
|
(18,983 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
pre-tax income (loss) |
|
$ |
|
(238 |
) |
|
$ |
|
(1,428 |
) |
|
$ |
|
(2,765 |
) |
|
$ |
|
(1,932 |
) |
|
Reconciliation of adjusted
pre-tax income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income (loss) |
|
$ |
|
(238 |
) |
|
$ |
|
(2,031 |
) |
|
$ |
|
(2,765 |
) |
|
$ |
|
(28,679 |
) |
|
Plus: Founder special compensation
(1) |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
17,914 |
|
|
Plus: Offering-related expenses
(2) |
|
|
|
— |
|
|
|
|
603 |
|
|
|
|
— |
|
|
|
|
8,833 |
|
|
Adjusted pre-tax income (loss) |
|
$ |
|
(238 |
) |
|
$ |
|
(1,428 |
) |
|
$ |
|
(2,765 |
) |
|
$ |
|
(1,932 |
) |
|
|
|
(1) During the
periods presented, we made special compensation payments to our
co-founders in recognition of their service to our Company.
We refer to these payments as “founder special compensation.”
Following the completion of the private placement, we ceased paying
founder special compensation. |
|
|
|
(2) Offering related
expenses are non-recurring expenses related to the Company’s
private placement of common stock in 2014. |
|
|
|
CONTACTS:
State National Companies, Inc.
David Hale, COO & CFO
817-265-2000
Dennard ▪ Lascar Associates
Rick Black
713-529-6600
State National Companies, Inc. (NASDAQ:SNC)
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State National Companies, Inc. (NASDAQ:SNC)
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