Fundamental Global Inc. Reports Fourth Quarter and Full Year 2023 Financial Results
- Increased net reinsurance premiums earned and net investment income in 2023.
- Completion of a merger with FG Group Holdings Inc., rebranding as Fundamental Global Inc.
- Significant rise in net income attributable to common shareholders in 2023.
- Key balance sheet items show increased investment holdings and total shareholders' equity.
- Strong performance in reinsurance and merchant banking initiatives.
- Issuance of additional common stock contributing to the growth in total shareholders' equity.
- None.
Insights
The reported increase in net reinsurance premiums and net investment income are indicative of Fundamental Global Inc.'s strategic effectiveness in capital deployment, particularly in loss-capped reinsurance arrangements. This strategy appears to have paid off, as evidenced by the growth in premiums and the successful business combination contributing to investment gains. The increase in net income to $2.1 million from a net loss in the previous year demonstrates a notable turnaround in profitability, which is a positive signal for investors and stakeholders.
The rise in general and administrative expenses, primarily due to non-cash stock compensation, suggests a focus on aligning management incentives with shareholder value, which could be seen as a long-term investment in leadership. However, the increase in expenses warrants monitoring to ensure it aligns with the company's growth trajectory and does not unduly burden the financials.
The balance sheet strength, with a $5.2 million increase in shareholders' equity and substantial investment holdings, positions the company well for future growth. The diversified nature of the company's operations could offer stability, but also requires careful management to avoid overextension.
Fundamental Global's performance in the reinsurance sector and its investment outcomes are reflective of broader market trends, where companies with diversified portfolios can leverage synergies across different business units. The successful execution of their reinsurance strategy and the gains from business combinations like FG Merger Corp. and iCoreConnect Inc. highlight the company's ability to capitalize on market opportunities.
The dividend payment on the 8% Series A Preferred Stock is a commitment to returning value to shareholders, which could enhance investor confidence and potentially attract income-focused investors. This move, coupled with the company's increased net income, may signal a strong value proposition to both current and prospective shareholders.
Looking ahead, the market will likely be interested in the consolidated results post-merger, which will offer a clearer picture of the new entity's financial health and strategic direction. The company's approach to reducing public company costs and focusing on high ROIC businesses will be key areas of interest for stakeholders evaluating the company's efficiency and potential for sustained growth.
Continued Growth in Reinsurance and Investment Results leads to Net Income in 2023
D. Kyle Cerminara, Chairman and CEO of Fundamental Global, commented, “We are pleased to have completed the merger transaction with FG Group Holdings Inc. Today, we are operating as Fundamental Global Inc., a unified public company combining the legacy businesses of FG Group Holdings Inc. and FG Financial Group, Inc. Our goal is to consolidate and simplify all of our operations, reduce public company costs and focus our efforts on accelerating growth in select scalable and high ROIC businesses. Our reinsurance portfolios and investments generated strong results as we deployed capital in those areas driving a significant increase in net income in the legacy FG Financial Group, Inc. business during 2023. We look forward to implementing our plans with a focus on shareholder returns.”
Select 2023 Fourth Quarter and Full Year Results and Highlights
Note: The financial results for the fourth quarter and full year 2023 reflect the financial results of FG Financial Group, Inc. and do not include the financial results of FG Group Holdings Inc., which was merged into FG Group LLC, a wholly owned subsidiary of the Company, subsequent to the end of the year. Starting in the first quarter of 2024, results will be reported on a consolidated basis.
Fundamental Global Inc.’s 2023 fourth quarter and full year financial results included:
-
Net reinsurance premiums earned increased to
$5.1 million $3.2 million $16.6 million $13.0 million -
Net investment income for the three months ended December 31, 2023, was
$1.5 million $1.7 million $9.8 million $6.8 million -
The Company paid dividends on its
8% Series A Preferred Stock of$1.8 million $2.00 -
General and administrative expenses were
$2.4 million $9.7 million $2.3 million $8.4 million
Net income attributable to common shareholders for the year ended December 31, 2023, was
Balance Sheet Highlights
As of December 31, 2023, Fundamental Global’s key balance sheet items included:
-
Investment holdings totaling
$30.9 million -
Total shareholders’ equity of
$42.5 million $5.2 million $37.3 million
Fundamental Global Inc.
Fundamental Global Inc. (Nasdaq: FGF, FGFPP) and its subsidiaries engage in diverse business activities including reinsurance, asset management, merchant banking, manufacturing and managed services.
The FG® logo and Fundamental Global® are registered trademarks of Fundamental Global LLC.
Forward Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements are therefore entitled to the protection of the safe harbor provisions of these laws. These statements may be identified by the use of forward-looking terminology such as “anticipate,” “believe,” “budget,” “can,” “contemplate,” “continue,” “could,” “envision,” “estimate,” “expect,” “evaluate,” “forecast,” “goal,” “guidance,” “indicate,” “intend,” “likely,” “may,” “might,” “outlook,” “plan,” “possibly,” “potential,” “predict,” “probable,” “probably,” “pro-forma,” “project,” “seek,” “should,” “target,” “view,” “will,” “would,” “will be,” “will continue,” “will likely result” or the negative thereof or other variations thereon or comparable terminology. In particular, discussions and statements regarding the Company’s future business plans and initiatives are forward-looking in nature. We have based these forward-looking statements on our current expectations, assumptions, estimates, and projections. While we believe these to be reasonable, such forward-looking statements are only predictions and involve a number of risks and uncertainties, many of which are beyond our control. These and other important factors may cause our actual results, performance, or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements, and may impact our ability to implement and execute on our future business plans and initiatives. Management cautions that the forward-looking statements in this release are not guarantees of future performance, and we cannot assume that such statements will be realized or the forward-looking events and circumstances will occur. Factors that might cause such a difference include, without limitation: risks associated with our inability to identify and realize business opportunities, and the undertaking of any new such opportunities; our lack of operating history or established reputation in the reinsurance industry; our inability to obtain or maintain the necessary approvals to operate reinsurance subsidiaries; risks associated with operating in the reinsurance industry, including inadequately priced insured risks, credit risk associated with brokers we may do business with, and inadequate retrocessional coverage; our inability to execute on our investment holdings and asset management strategy, including our strategy to invest in the risk capital of special purpose acquisition companies (SPACs); our ability to maintain and expand our revenue streams to compensate for the lower demand for our digital cinema products and installation services; potential interruptions of supplier relationships or higher prices charged by suppliers in connection with our Strong Global business; our ability to successfully compete and introduce enhancements and new features that achieve market acceptance and that keep pace with technological developments; our ability to maintain Strong Global’s brand and reputation and retain or replace its significant customers; challenges associated with Strong Global’s long sales cycles; the impact of a challenging global economic environment or a downturn in the markets; the effects of economic, public health, and political conditions that impact business and consumer confidence and spending, including rising interest rates, periods of heightened inflation and market instability; potential loss of value of investment holdings; risk of becoming an investment company; fluctuations in our short-term results as we implement our new business strategy; risks of being unable to attract and retain qualified management and personnel to implement and execute on our business and growth strategy; failure of our information technology systems, data breaches and cyber-attacks; our ability to establish and maintain an effective system of internal controls; our limited operating history as a public company; the requirements of being a public company and losing our status as a smaller reporting company or becoming an accelerated filer; any potential conflicts of interest between us and our controlling stockholders and different interests of controlling stockholders; potential conflicts of interest between us and our directors and executive officers; risks associated with our related party transactions and investment holdings; and risks associated with our investments in SPACs, including the failure of any such SPAC to complete its initial business combination. Our expectations and future plans and initiatives may not be realized. If one of these risks or uncertainties materializes, or if our underlying assumptions prove incorrect, actual results may vary materially from those expected, estimated or projected. You are cautioned not to place undue reliance on forward-looking statements. The forward-looking statements are made only as of the date hereof and do not necessarily reflect our outlook at any other point in time. We do not undertake and specifically decline any obligation to update any such statements or to publicly announce the results of any revisions to any such statements to reflect new information, future events or developments.
FUNDAMENTAL GLOBAL INC. |
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Consolidated Balance Sheets |
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($ in thousands, except per share data) |
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December 31,
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December 31,
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ASSETS |
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Equity securities, at fair value (cost basis of |
|
$ |
4,552 |
|
|
|
$ |
841 |
|
Other investments |
|
|
26,301 |
|
|
|
|
24,839 |
|
Cash and cash equivalents |
|
|
2,396 |
|
|
|
|
3,010 |
|
Deferred policy acquisition costs |
|
|
1,660 |
|
|
|
|
1,527 |
|
Reinsurance balances receivable (net of current expected losses allowance of |
|
|
21,571 |
|
|
|
|
9,269 |
|
Funds deposited with reinsured companies |
|
|
8,002 |
|
|
|
|
9,277 |
|
Other assets |
|
|
1,254 |
|
|
|
|
712 |
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Total assets |
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$ |
65,736 |
|
|
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$ |
49,475 |
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LIABILITIES |
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Loss and loss adjustment expense reserves |
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$ |
9,016 |
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$ |
4,409 |
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Unearned premium reserves |
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|
13,476 |
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|
|
|
6,823 |
|
Accounts payable |
|
|
206 |
|
|
|
|
723 |
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Other liabilities |
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|
546 |
|
|
|
|
225 |
|
Total liabilities |
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23,244 |
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|
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12,180 |
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SHAREHOLDERS’ EQUITY |
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Series A Preferred Shares, |
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22,365 |
|
|
|
22,365 |
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Common stock, |
|
|
10 |
|
|
|
|
9 |
|
Additional paid-in capital |
|
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53,264 |
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|
|
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50,021 |
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Accumulated deficit |
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(33,147 |
) |
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(35,100 |
) |
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Total shareholders’ equity |
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42,492 |
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|
|
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37,295 |
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Total liabilities and shareholders’ equity |
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$ |
65,736 |
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|
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$ |
49,475 |
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FUNDAMENTAL GLOBAL INC. |
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Consolidated Statements of Operations |
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($ in thousands, except per share data) |
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(Unaudited) |
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Three months ended
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Full year ended
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2023 |
2022 |
2023 |
2022 |
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Revenue: |
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Net premiums earned |
$ |
5,097 |
|
$ |
3,189 |
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$ |
16,631 |
|
$ |
12,998 |
|
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Net investment income |
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1,526 |
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|
1,663 |
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|
9,798 |
|
|
6,777 |
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Other income |
|
329 |
|
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55 |
|
|
413 |
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320 |
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Total revenue |
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6,952 |
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4,907 |
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26,842 |
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20,095 |
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Expenses: |
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Net losses and loss adjustment expenses |
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3,631 |
|
|
1,686 |
|
|
9,713 |
|
|
7,484 |
|
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Amortization of deferred policy acquisition costs |
|
1,090 |
|
|
742 |
|
|
3,623 |
|
|
3,169 |
|
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General and administrative expenses (includes related party expense of |
|
2,441 |
|
|
2,345 |
|
|
9,661 |
|
|
8,354 |
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Total expenses |
|
7,162 |
|
|
4,773 |
|
|
22,997 |
|
|
19,007 |
|
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Net (loss) income |
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(210 |
) |
|
134 |
|
|
3,845 |
|
|
1,088 |
|
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Dividends declared on Series A Preferred Shares |
|
447 |
|
|
447 |
|
|
1,786 |
|
|
1,789 |
|
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(Loss) income attributable to common shareholders |
$ |
(657 |
) |
$ |
(313 |
) |
$ |
2,059 |
|
$ |
(701 |
) |
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Basic and diluted net (loss) income per common share: |
$ |
(0.06 |
) |
$ |
(0.03 |
) |
$ |
0.21 |
|
$ |
(0.09 |
) |
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Weighted average common shares outstanding: |
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Basic and diluted |
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10,521,784 |
|
|
9,396,559 |
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9,991,980 |
|
8,030,106 |
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View source version on businesswire.com: https://www.businesswire.com/news/home/20240314427051/en/
investors@fundamentalglobal.com
Source: Fundamental Global Inc.
FAQ
What is the ticker symbol for Fundamental Global Inc.?
What were the net reinsurance premiums earned in the fourth quarter of 2023?
What was the net investment income for the full year ended 2023?
How much was paid as dividends on the 8% Series A Preferred Stock for the year ended December 31, 2023?
What was the net income attributable to common shareholders for the year ended December 31, 2023?
What was the total shareholders' equity as of December 31, 2023?
