NI Holdings, Inc. Files Results for Second Quarter and Six Months Ended June 30, 2020
The Company reported a 25.9 percent increase in net earned premiums for the three months ended
Dollars in thousands, except earnings per share (unaudited)
|6M 2020||6M 2019||Change||Q2 2020||Q2 2019||Change|
|Net income attributable to
|Direct written premiums (1)||+10.6%||+9.2%|
|Net earned premiums||+21.8%||+25.9%|
|Loss and LAE ratio (2)||58.8%||64.4%||-5.6 pts||63.9%||74.0%||-10.1 pts|
|Expense ratio (3)||28.3%||29.1%||-0.8 pts||23.9%||26.0%||-2.1 pts|
|Combined ratio (4)||87.1%||93.5%||-6.4 pts||87.8%||100.0%||-12.2 pts|
|Return on average equity||9.7%||11.5%||-1.8 pts||24.2%||3.4%||+20.8 pts|
|Basic earnings per share||-
|(1) Direct written premiums is a non-GAAP financial measure, representing the amount of insurance premiums purchased by policyholders during the period.|
|(2) Loss and LAE ratio is a non-GAAP financial measure. It equals losses and loss adjustment expenses, divided by net premiums earned.|
|(3) Expense ratio is a non-GAAP financial measure. It equals amortization of deferred policy acquisition costs and other underwriting and general expenses, divided by net premiums earned.|
|(4) Combined ratio is a non-GAAP financial measure. It equals losses and loss adjustment expenses, amortization of deferred policy acquisition costs, and other underwriting and general expenses, divided by net premiums earned.|
Second quarter highlights included:
- Net income of
$18,733versus net income of $2,478for the prior year. Underwriting gain of $10,017versus underwriting loss of $19for the prior year.
- Reported combined ratio of 87.8% for the quarter.
- Growth in direct written premiums of 9.2% due to the addition of the Westminster commercial business.
- After-tax benefit of
$8,553in net unrealized gain in our equity securities portfolio versus a $1,056increase for the prior year. Earnings per share impact of +$0.40.
- After-tax increase of
$8,982in shareholders’ equity due to net unrealized gain in our fixed income securities portfolio.
“The first six months of 2020 have produced excellent financial results”, said
“Growth in our direct written premiums for the first six months is primarily the result of the addition of the Westminster book of business. Premium writings for the non-standard auto book have decreased as cancellations have outpaced new business writings in this segment. Private passenger auto, homeowners, and farmowners have remained relatively flat for the first half of 2020.”
“Our commercial segment is now mostly comprised of the Westminster commercial book of business. While the Nodak commercial premium now makes up less than 10% of the total commercial segment, it generally ran a very low combined ratio but was subject to large swings due to severity and weather-related losses. With the addition of Westminster, we anticipate more consistent combined ratios but these will likely run somewhat higher than our Nodak-only combined ratios. Westminster is still experiencing some impact of the COVID-19 pandemic through state mandates relating to policy cancellation for non-payment of premiums and the requirement to offer premium payment plans. While many states have now let these mandates expire, there are still some that continue to require these offerings.”
“The COVID-19 pandemic and related economic implications initially impacted our first quarter results primarily through the fair values of our equity securities portfolio. During the second quarter, those fair values experienced a significant gain. While not back to year-end levels, our losses have been mostly offset with the gains. The first quarter decline in net unrealized gains in our equity portfolio was
“COVID-19 has impacted our businesses this year. We have experienced less sales activity, particularly in our non-standard auto segment. The frequency of auto claims decreased in the second quarter as people drove less, although we believe that frequency will return to historical levels as people are beginning to return to normal driving habits. The overall impact of COVID-19 on the auto insurance industry in our markets will continue to develop over time.”
Shareholders’ equity increased
Earnings Conference Call
The Company will not hold an earnings conference call for second quarter 2020. Our Quarterly Report on Form 10-Q as filed with the
Non-GAAP Financial Measures
About the Company
NI Holdings’ financial statements are the consolidated financial results of
Safe Harbor Statement
Some of the statements included in this news release, particularly those anticipating future financial performance, business prospects, growth and operating strategies, and similar matters, are forward-looking statements within the meaning of the
For a detailed discussion of the risk factors that could affect our actual results, please refer to the risk factors identified in our
Investor Relations Contacts:
Executive Vice President and Chief Financial Officer
Vice President, Finance
Source: NI Holdings, Inc.