ICC Holdings, Inc. Reports 2023 Fourth Quarter and Twelve Months Results
- Net earnings increased to $4,454,000 for the year from a loss of $582,000 in 2022.
- Direct premiums written increased by 14.5% for the fourth quarter and 12.4% for the year.
- Net investment income rose by 28.4% for the year.
- Total assets and equity increased by 9.8% and 10.9% respectively.
- Management is optimistic for 2024 with strong core insurance business and investment performance.
- Losses and settlement expenses increased by 10.7% for the fourth quarter and 7.6% for the year.
- Expense ratio increased slightly for the year.
- GAAP combined ratio increased slightly for the year.
Insights
The reported financial results by ICC Holdings, Inc. indicate a noteworthy improvement in net earnings for the twelve months of 2023 compared to the previous year. This reflects a positive trajectory in the company's profitability, which can be attributed to increased direct premiums written and net premiums earned, both showing double-digit growth percentages. Such a trend is significant as it suggests a growing market share and successful rate increases, which are vital for revenue generation in the insurance sector.
However, the increase in losses and settlement expenses, particularly due to prior year accident development, raises concerns about underwriting quality and reserve adequacy. Investors may scrutinize the company's loss ratio trends and the effectiveness of its underwriting measures, especially for Liquor Liability claims, which have been highlighted as a contributing factor to increased costs.
The improvement in book value per share is another positive indicator for shareholders, as it reflects the company's intrinsic value growth. The reported increase in net investment income, driven by higher interest rates and a larger investment portfolio, is also a favorable sign, as it suggests a healthy investment strategy that complements the core insurance business.
ICC Holdings' focus on the food and beverage industry presents a specialized market niche, which may offer competitive advantages such as tailored products and expertise in addressing industry-specific risks. The company's growth in direct premiums written indicates successful penetration and retention within this niche, an important factor for long-term sustainability.
Entering new states, as mentioned by the CEO, could further enhance premium growth, but also comes with regulatory and market risks that need to be managed effectively. The company's ability to maintain growth while managing these risks will be critical for future performance.
The slight uptick in the combined ratio, although still under the 100% threshold for the fourth quarter, suggests a balance between premiums earned and incurred losses and expenses. This ratio is a crucial metric for evaluating insurance company efficiency and profitability. Stakeholders will closely monitor this ratio in future periods for signs of sustained underwriting discipline.
The reported financial results should be considered within the broader economic context, including inflationary pressures mentioned by management. Inflation can impact both sides of an insurance company's balance sheet: it can lead to higher claim payouts and operating expenses, while also potentially increasing investment returns on assets tied to interest rates.
ICC Holdings' ability to navigate inflationary conditions, reflected in their operational results, will be crucial for maintaining profitability. The increase in policy acquisition costs and other operating expenses, even if partly due to business growth, warrants attention to ensure that expense growth does not outpace premium growth.
The insurance industry is also sensitive to market conditions, as evidenced by the company's unrealized gains on equity securities and fixed income holdings. Fluctuations in market conditions can lead to volatility in these gains or losses, affecting the company's financial stability and performance indicators such as book value per share.
FOURTH QUARTER AND TWELVE MONTHS ENDED DECEMBER 31, 2023 – FINANCIAL RESULTS
Net earnings totaled
Direct premiums written increased by
For the fourth quarter of 2023, the Company ceded to reinsurers
Net investment income increased by
Net unrealized gains on equity securities decreased
Losses and settlement expenses increased by
Policy acquisition costs and other operating expenses increased by
Total assets increased by
Total equity increased by
FOURTH QUARTER ENDED DECEMBER 31, 2023 – FINANCIAL RATIOS
The Company's losses and settlement expense ratio (defined as losses and settlement expenses divided by net premiums earned) was
The expense ratio (defined as the amortization of deferred policy acquisition costs and underwriting and administrative expenses divided by net premiums earned) was
The Company's GAAP combined ratio (defined as the sum of the losses and settlement expense ratio and the expense ratio) was
MANAGEMENT COMMENTARY
"We finished 2023 with a strong fourth quarter. The underwriting measures shared in the Q3 Earnings Release have taken hold, particularly with Liquor Liability, leading to a lower overall loss and settlement expense ratio of
"Improved investment market conditions in 2023 drove our net unrealized gains on fixed maturity securities and stocks up considerably from 2022. In addition, increased rates and holdings expanded our net investment income in 2023 and we expect that trend to continue in 2024.
"We continue to be optimistic for 2024 as our core insurance business remains strong, our investments are performing well, and the new states we are entering will enhance premium growth in 2024," stated Arron Sutherland, President and Chief Executive Officer.
ABOUT ICC HOLDINGS, INC.
ICC Holdings, Inc. is a vertically integrated company created to facilitate the growth, expansion, and diversification of its subsidiaries to maximize value to its stakeholders. The group of companies consolidated under ICC Holdings, Inc. engages in diverse, yet complementary business activities, including property and casualty insurance, real estate, and information technology.
The Company's common shares trade on the NASDAQ Capital Market under the ticker symbol "ICCH". For more information about ICC Holdings, visit http://ir.iccholdingsinc.com.
FORWARD-LOOKING STATEMENTS
This press release, and oral statements made regarding the subjects of this release, contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, or the Reform Act, which may include, but are not limited to, statements regarding the Company's, plans, objectives, expectations, and intentions and other statements contained in this press release that are not historical facts, including statements identified by words such as "believe," "plan," "seek," "expect," "intend," "estimate," "anticipate," "will," and similar expressions. All statements addressing operating performance, events, or developments that the Company expects or anticipates will occur in the future, including statements relating to revenue and profit growth; future responses to and effects of the COVID-19 pandemic, including their effects on claims activity and the business operations of the Company and of our current and potential customers; new theories of liability; judicial, legislative, regulatory, and other governmental developments, including, but not limited to, liability related to business interruption claims related to COVID-19; litigation tactics and developments; product and segment expansion; regulatory approval in connection with expansion; downturns and volatility in global economies and equity and credit markets, including as a result of inflation and supply chain disruptions and continued labor shortages; interest rates and changes in rates could adversely affect the Company's business and profitability; and market share, as well as statements expressing optimism or pessimism about future operating results, are forward-looking statements within the meaning of the Reform Act. The forward-looking statements are based on management's current views and assumptions regarding future events and operating performance, and are inherently subject to significant business, economic, and competitive uncertainties and contingencies and changes in circumstances, many of which are beyond the Company's control. The statements in this press release are made as of the date of this press release, even if subsequently made available by the Company on its website or otherwise. The Company does not undertake any obligation to update or revise these statements to reflect events or circumstances occurring after the date of this press release.
Although the Company does not make forward-looking statements unless it believes it has a reasonable basis for doing so, the Company cannot guarantee their accuracy. The foregoing factors, among others, could cause actual results to differ materially from those described in these forward-looking statements. For a list of other factors which could affect the Company's results, see the Company's filings with the Securities and Exchange Commission, "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations," including "Forward-Looking Information," set forth in the Company's Annual Report on Form 10-K for the year ended December 31, 2022. No undue reliance should be placed on any forward-looking statements.
ICC Holdings, Inc. and Subsidiaries Condensed Consolidated Balance Sheets | ||||||||
As of | ||||||||
December 31, | December 31, | |||||||
2023 | 2022 | |||||||
Assets: | ||||||||
Investments and cash: | ||||||||
Fixed maturity securities (amortized cost of | $ | 110,955,697 | $ | 93,388,971 | ||||
Common stocks at fair value | 12,191,621 | 20,438,907 | ||||||
Preferred stocks at fair value | 2,896,296 | 2,772,605 | ||||||
Other invested assets | 8,937,409 | 4,722,137 | ||||||
Property held for investment, at cost, net of accumulated depreciation of | 5,910,864 | 6,002,233 | ||||||
Cash and cash equivalents | 1,632,063 | 3,139,986 | ||||||
Total investments and cash | 142,523,950 | 130,464,839 | ||||||
Accrued investment income | 915,156 | 791,812 | ||||||
Premiums and reinsurance balances receivable, net of allowances for credit losses of | 37,233,433 | 31,270,460 | ||||||
Ceded unearned premiums | 755,099 | 947,851 | ||||||
Reinsurance balances recoverable on unpaid losses and settlement expenses, net of allowances for credit losses of | 12,736,579 | 13,610,295 | ||||||
Income taxes - current | 120,355 | 22,042 | ||||||
Income taxes - deferred | 2,647,636 | 3,296,688 | ||||||
Deferred policy acquisition costs, net | 8,552,459 | 7,167,036 | ||||||
Property and equipment, at cost, net of accumulated depreciation of | 3,325,322 | 3,313,719 | ||||||
Other Assets, net of allowances for credit losses of | 2,256,286 | 1,277,469 | ||||||
Total assets | $ | 211,066,275 | $ | 192,162,211 | ||||
Liabilities: | ||||||||
Unpaid losses and settlement expenses | $ | 71,919,585 | $ | 67,614,063 | ||||
Unearned premiums | 47,259,637 | 40,527,182 | ||||||
Reinsurance balances payable | 1,132,301 | 1,405,337 | ||||||
Corporate debt | 15,000,000 | 15,000,000 | ||||||
Accrued expenses | 7,504,566 | 6,072,020 | ||||||
Other liabilities | 1,218,895 | 1,102,678 | ||||||
Total liabilities | 144,034,984 | 131,721,280 | ||||||
Equity: | ||||||||
Common stock1 | 35,000 | 35,000 | ||||||
Treasury stock, at cost2 | (5,710,324) | (5,463,535) | ||||||
Additional paid-in capital | 33,330,846 | 33,119,125 | ||||||
Accumulated other comprehensive (loss), net of tax | (6,790,801) | (8,841,517) | ||||||
Retained earnings | 48,041,575 | 43,701,233 | ||||||
Less: Unearned Employee Stock Ownership Plan shares at cost3 | (1,875,005) | (2,109,375) | ||||||
Total equity | 67,031,291 | 60,440,931 | ||||||
Total liabilities and equity | $ | 211,066,275 | $ | 192,162,211 | ||||
1 Par value |
2 2023 – 361,024 shares and 2022 – 346,259 shares |
3 2023 – 187,498 shares and 2022 – 210,935 shares |
ICC Holdings, Inc. and Subsidiaries Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited) | ||||||||
For the Three-Months Ended | ||||||||
December 31, | ||||||||
2023 | 2022 | |||||||
Net premiums earned | $ | 20,188,241 | $ | 18,291,583 | ||||
Net investment income | 1,380,911 | 1,137,327 | ||||||
Net realized investment gains | 404,481 | 88,870 | ||||||
Net unrealized gains on equity securities | 1,071,317 | 1,475,087 | ||||||
Other income | 76,231 | 87,143 | ||||||
Consolidated revenues | 23,121,181 | 21,080,010 | ||||||
Losses and settlement expenses | 11,230,999 | 10,142,399 | ||||||
Policy acquisition costs and other operating expenses | 7,662,496 | 6,760,016 | ||||||
Interest expense on debt | 46,409 | 46,409 | ||||||
General corporate expenses | 168,003 | 213,121 | ||||||
Total expenses | 19,107,907 | 17,161,945 | ||||||
Earnings before income taxes | 4,013,274 | 3,918,065 | ||||||
Income tax expense (benefit): | ||||||||
Current | 676,800 | 448,656 | ||||||
Deferred | 278,444 | 391,904 | ||||||
Total income tax expense | 955,244 | 840,560 | ||||||
Net earnings | $ | 3,058,030 | $ | 3,077,505 | ||||
Other comprehensive earnings, net of tax | 4,243,947 | 608,594 | ||||||
Comprehensive earnings | $ | 7,301,977 | $ | 3,686,099 | ||||
Earnings per share: | ||||||||
Basic: | ||||||||
Basic net earnings per share | $ | 1.04 | $ | 1.05 | ||||
Diluted: | ||||||||
Diluted net earnings per share | $ | 1.03 | $ | 1.05 | ||||
Weighted average number of common shares outstanding: | ||||||||
Basic | 2,947,623 | 2,939,218 | ||||||
Diluted | 2,967,409 | 2,939,218 | ||||||
ICC Holdings, Inc. and Subsidiaries Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited) | ||||||||
For the Twelve-Months Ended | ||||||||
December 31, | ||||||||
2023 | 2022 | |||||||
Net premiums earned | $ | 75,717,108 | $ | 69,057,343 | ||||
Net investment income | 5,179,343 | 4,034,228 | ||||||
Net realized investment gains | 672,857 | 874,470 | ||||||
Net unrealized gains (losses) on equity securities | 1,350,417 | (4,706,405) | ||||||
Other income | 236,945 | 420,202 | ||||||
Consolidated revenues | 83,156,670 | 69,679,838 | ||||||
Losses and settlement expenses | 47,929,630 | 44,532,729 | ||||||
Policy acquisition costs and other operating expenses | 28,486,101 | 24,896,120 | ||||||
Interest expense on debt | 184,122 | 196,070 | ||||||
General corporate expenses | 784,307 | 776,747 | ||||||
Total expenses | 77,384,160 | 70,401,666 | ||||||
Earnings (loss) before income taxes | 5,772,510 | (721,828) | ||||||
Income tax expense: | ||||||||
Current | 1,184,243 | 984,897 | ||||||
Deferred | 134,165 | (1,125,063) | ||||||
Total income tax expense (benefit) | 1,318,408 | (140,166) | ||||||
Net earnings (loss) | $ | 4,454,102 | $ | (581,662) | ||||
Earnings per share: | ||||||||
Basic: | ||||||||
Basic net earnings (loss) per share | $ | 1.51 | $ | (0.19) | ||||
Diluted: | ||||||||
Diluted net earnings (loss) per share | $ | 1.50 | $ | (0.19) | ||||
Weighted average number of common shares outstanding: | ||||||||
Basic | 2,946,892 | 3,032,155 | ||||||
Diluted | 2,966,679 | 3,032,155 | ||||||
Net earnings (loss) | $ | 4,454,102 | $ | (581,662) | ||||
Other comprehensive earnings (loss), net of tax | ||||||||
Unrealized gains and losses on fixed maturity securities: | ||||||||
Unrealized holdings gains (losses) arising during the period, net of income tax expense (benefit) of | $ | 2,004,296 | $ | (11,770,084) | ||||
Reclassification adjustment for losses included in net income, net of income tax (benefit) of | 46,420 | 8,540 | ||||||
Total other comprehensive earnings (loss) | 2,050,716 | (11,761,544) | ||||||
Comprehensive earnings (loss) | $ | 6,504,818 | $ | (12,343,206) | ||||
Contact Info: Arron K. Sutherland, President and CEO
Illinois Casualty Company
(309) 732-0105
arrons@ilcasco.com
225 20th Street,
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SOURCE ICC Holdings, Inc.
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