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First Acceptance Corporation Reports Operating Results for the Quarter Ended March 31, 2018

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NASHVILLE, Tenn., May 08, 2018 (GLOBE NEWSWIRE) -- First Acceptance Corporation (OTCQX:FACO) today reported its financial results for the quarter ended March 31, 2018. A quarterly report can be found at www.otcmarkets.com/stock/FACO/disclosure.

Income before income taxes, for the three months ended March 31, 2018 was $7.2 million, compared with income before income taxes of $1.6 million for the three months ended March 31, 2017. Net income for the three months ended March 31, 2018 was $5.4 million, compared with net income of $0.7 million for the three months ended March 31, 2017. Basic and diluted net income per share were $0.13 for the three months ended March 31, 2018, compared with a basic and diluted net income per share of $0.02 for the same period in the prior year. Net income for the three months ended March 18, 2018 reflects the lowering of the federal corporate tax rate to 21% from 35% in the prior year as a result of the recent tax legislation.

For the three months ended March 31, 2018 and 2017, we recognized favorable prior period loss and loss adjustment expense development of $4.1 million and $0.5 million, respectively. For the three months ended March 31, 2018, we also recognized $386 thousand in unrealized losses on equity securities which are now a component of net income in accordance with newly-adopted accounting standards.

President and Chief Executive Officer, Ken Russell, commented, "Driven by an improved loss ratio for the current accident period and favorable loss development for prior periods, the Company's first quarter results exceeded our expectations. Both reflect the significant efforts our team made over the past six quarters in appropriately pricing and risk-assessing our Acceptance-branded auto insurance products and improving the efficiency of our claims-handling processes. Along with the other strategic actions we have taken, I believe that these accomplishments have helped to establish a foundation upon which we can sustain profitable future growth.

Mr. Russell further added "The Company has also continued to take significant strategic actions that will benefit us in the near and longer term. In April, we made several organizational changes in our sales management team and other operational departments to position the Company towards a broader distribution of insurance products. In this regard, we have now deployed our agency model of offering third-party non-standard automobile insurance products alongside our Acceptance products in several key states, and plan to convert the other states throughout the remainder this year. Our intention is not for this model to reduce the premiums earned from our own product, but rather to supplement them by accommodating the insurance needs of the customer whose underwriting profile better suits other insurance carriers that we represent as an agency. Additionally, our retail agency efforts now incorporate an increased emphasis on "other-than-auto" insurance products in all of our markets. This effort towards a broader insurance product distribution will remain as an important focus for us throughout 2018.

Finally, I would like to acknowledge the passing of Mr. Harvey B. Cash, a member of our Board of Directors since 1996. For the many that have come to know him, "Berry" will be missed for both his dedication to the oversight and guidance of our Company and his warm influence on our organization."

About First Acceptance Corporation 
First Acceptance Corporation is principally a retailer, servicer and underwriter of non-standard personal automobile insurance based in Nashville, Tennessee. Its insurance operations generate revenue from selling non-standard personal automobile insurance products and related products in 16 states. The company currently conducts its insurance servicing and underwriting operations in 13 states and operates only as an insurance agency in three states. The company is also licensed as an insurance company in 13 states where it does 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.

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 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 Item 1A. of our Annual Report on Form 10-K for the year ended December 31, 2017 and in our other filings with the SEC. 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  
    March 31,  
    2018     2017  
Revenues   $ 82,707     $ 88,069  
Income before income taxes   $ 7,245     $ 1,576  
Net income   $ 5,440     $ 730  
Net income per diluted share   $ 0.13     $ 0.02  
Average diluted shares outstanding     41,363       41,181  
                 
Loss Ratio     68.7 %     80.6 %
Expense Ratio     19.1 %     16.6 %
Combined Ratio     87.8 %     97.2 %
 

 

SOURCE: First Acceptance Corporation

INVESTOR RELATIONS CONTACT:
Michael J. Bodayle
615.844.2885

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