123118 ICCH 8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549



 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

 

February 25, 2019

Date of Report (Date of earliest event reported)

 

ICC Holdings, Inc.

(Exact name of registrant as specified in its charter)

 



 

 

 

 

Pennsylvania

 

1-681903

 

81-3359409

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Ident. No.)

 

 

 

 

 

225 20th Street, Rock Island, Illinois

 

61201

(Address of principal executive offices)

 

(Zip Code)

 

(309) 793-1700

Registrant’s telephone number, including area code

 

N/A

(Former name or former address, if changed since last report.)



 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c))



Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).



Emerging growth company



If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  


 

 



Item 2.02Results of Operations and Financial Condition.



On February 25, 2019, ICC Holdings, Inc. issued a press release containing financial information regarding its results of operations and financial condition for the period ended December 31, 2018. A copy of the press release is furnished as part of this Current Report on Form 8-K and is attached hereto as Exhibit 99.1.



Item 9.01Financial Statements and Exhibits.



(d)Exhibits:

 



 

99.1

Press release, dated February 25, 2019.





SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 



 

 

 

 

 

ICC HOLDINGS, INC.

 

 

 

Dated:  February 25, 2019

 

 

 

 

 

 

By:

/s/  Arron K. Sutherland

 

 

 

 

Arron K. Sutherland

 

 

 

President, Chief Executive Officer and

Director

 

 

 

 

 




 

EXHIBIT INDEX

 

oo

 

 

Exhibit Number

 

Description

 

 

 

99.1

 

Press release, dated February 25, 2019.






123118 ICCH Earnings Release

Picture 2

Contact Info:Arron K. Sutherland, President and CEO 

ICC Holdings, Inc.

(309) 732-0105

arrons@ilcasco.com

225 20th Street, Rock Island, IL  61201



ICC Holdings, Inc. Reports 2018 Fourth Quarter and Year-End Results

FOR IMMEDIATE RELEASE: 02/25/2019



Rock Island, IL. – February 25, 2019 – ICC Holdings, Inc. (NASDAQ: ICCH) (the Company), parent company of Illinois Casualty Company, a regional, multi-line property and casualty insurance company focusing exclusively on the food and beverage industry, today reported preliminary, unaudited results for the fourth quarter and twelve months ended December 31, 2018.  

FOURTH QUARTER AND TWELVE MONTHS ENDED DECEMBER  31, 2018 – FINANCIAL RESULTS

Net earnings totaled $635,000, or $0.21 per share, for the fourth quarter of 2018, compared to $443,000 or $0.14 per share for the fourth quarter of 2017. For the twelve months ended December 31, 2018, the Company reported net earnings of $893,000, or $0.29 per share, compared to $708,000, or $0.22 per share, for the same period in 2017.

Direct premiums written grew by $1,399,000, or 10.6%, to $14,543,000 for the fourth quarter of 2018 from $13,144,000 for the same period in 2017.  For the twelve months ended December 31, 2018, direct premiums written grew by $7,455,000, or 13.9%, to $61,125,000 from $53,670,000 for the same period in 2017. Net premiums earned grew by 6.3% to $12,197,000 for the fourth quarter of 2018 from $11,473,000 for the same period in 2017. Net premiums earned grew by 6.6% to $47,117,000 for the twelve months ended December 31, 2018, from $44,213,000 for the same period in 2017.

For the fourth quarter of 2018, the Company ceded to reinsurers $2,811,000 of earned premiums, compared to $1,956,000 of earned premiums for the fourth quarter of 2017. For the twelve months ended December 31, 2018, the Company ceded $10,759,000 of earned premiums to reinsurers compared to $7,948,000 of earned premiums for the same period in 2017.  

Net realized investment losses net of other-than-temporary impairment losses were $127,000 for the fourth quarter of 2018 compared to gains of 622,000 for the same period in 2017, respectively. For the twelve months ended December 31, 2018, net realized investment gains net of other-than-temporary impairment losses, decreased by $48,000 to $960,000 from $1,008,000 for the same period in 2017. For the three and twelve months ended December 31, 2018, the decrease resulted from liquidating common stock holdings that no longer fit with our investment objectives and resulted in a realized loss during the fourth quarter of 2018. 

Net investment income decreased by $17,000, or 2.2%,  to $766,000 for the fourth quarter of 2018, as compared to $783,000 for the same period in 2017.  For the twelve months ended December 31, 2018, net investment income grew by $258,000, or 9.8%, to $2,890,000 from $2,632,000 for the same period in 2017. The growth in net investment income for the twelve months ended December 31, 2018, was primarily due to investing the IPO proceeds for the entire year in 2018 as compared to a partial year in 2017.

Losses and settlement expenses decreased by $619,000, or 8.3%, to $6,864,000 for the fourth quarter of 2018, from $7,483,000 for the same period in 2017.  Losses and settlement expenses increased by $2,252,000, or 7.8%, to $31,262,000 for the twelve months ended December 31, 2018, from $29,010,000 for the same period in 2017. Although the Company experienced increased weather-related loss activity, Businessowners Property results improved $2,208,000 for the twelve months ended December  31, 2018,  compared to the same period in 2017.


 

Losses and settlement expenses increased for the twelve months ended December 31, 2018, primarily due to weaker Businessowners Liability.

Policy acquisition costs and other operating expenses increased by $617,000, or 13.7%, to $5,126,000 for the fourth quarter of 2018 from $4,509,000 for the same period in 2017.  Policy acquisition costs and other operating expenses increased by $907,000, or 5.2%, to $18,215,000 for the twelve months ended December 31, 2018, from $17,308,000 for the same period in 2017. The primary drivers are an increase in direct commission expense associated with the increase in direct written premium coupled with an increase in self-funded employee medical expenses of $535,000 for the twelve months ended December  31, 2018, as compared to the same period in 2017. While total policy acquisition costs and other operating expenses were up for the twelve months ended December 31, 2018, the expense ratio is down for the same period as referenced below.

Total assets decreased by 1.3% from $152,335,000 at December 31, 2017 to $150,283,000 at December 31, 2018.  Our investment portfolio, which consists of fixed maturity securities, common stocks, preferred stocks, and property held for investment, decreased by 0.5% from $105,133,000 at December 31, 2017, to $104,565,000 at December 31, 2018.

FOURTH QUARTER AND TWELVE MONTHS ENDED DECEMBER 31, 2018 – FINANCIAL RATIOS

The Company’s losses and settlement expense ratio (defined as losses and settlement expenses divided by net premiums earned) was 56.3% and 66.3% in the fourth quarter and twelve months ended December 31, 2018, respectively, compared with 65.2% and 65.6% in the same periods of 2017.

The expense ratio (defined as the amortization of deferred policy acquisition costs and underwriting and administrative expenses divided by net premiums earned) was 42.0% and 38.7% in the fourth quarter and twelve months ended December 31, 2018, respectively, compared to 39.3% and 39.1% in the same periods of 2017.

The Company’s GAAP combined ratio (defined as the sum of the losses and settlement expense ratio and the expense ratio) was 98.3% and 105.0% in the fourth quarter and twelve months ended December 31, 2018, respectively, compared to 104.5% and 104.8% in the same periods of 2017.

MANAGEMENT COMMENTARY

“I am pleased to report improved results for this past quarter.  As stated above, we had a quarterly combined ratio below 100 for the first time since the first quarter of 2017. The Company experienced improved loss experience due to improved Workers’ Compensation results and continued stability in the Liquor Liability line of business.  Partially offsetting these results were continuing challenges in the Businessowners line of business. The Company recognized improved patterns in the closing of claims, whereby reserves are reaching ultimate faster. This reduced the amount of additional reserve needed for incurred but not reported claims at the end of 2018. We recognize the need to further strengthen the adequacy of rates in the Businessowners line and streamline operations for expense savings. These efforts will continue into 2019. The Company experienced loss activity related to the polar vortex in the Midwest during the first quarter of 2019, negatively impacting property results. I am excited about the future of ICCH and the quality book of business that we continue to build,” stated Arron Sutherland, President and Chief Executive Officer.

EARNINGS CONFERENCE CALL

The Company will hold a conference call on March 15, 2019, at 10:30 a.m. CT to discuss results for the fourth quarter and twelve months ended December 31, 2018.

Teleconference:

Dial-in information for the call is 1-866-595-5224 (toll-free) or 1-636-812-6497, passcode 4856807.



ABOUT ICC HOLDINGS, INC.

ICC Holdings, Inc. is a vertically integrated company created to facilitate the growth, expansion and diversification of its subsidiaries in order 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, product and segment expansion, regulatory approval in connection with expansion, 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, 2017. 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,



 

2018

 

2017



 

(Unaudited)

 

 

 

Assets

 

 

 

 

 

 

Investments and cash:

 

 

 

 

 

 

Available for sale securities, at fair value

 

 

 

 

 

 

Fixed maturity securities (amortized cost - $89,252,906 at

 

$

88,981,159 

 

$

89,605,073 

12/31/2018 and $87,773,047 at 12/31/2017)

 

 

 

 

 

 

Common stocks¹ (cost - $13,572,713 at

 

 

11,843,223 

 

 

8,534,109 

12/31/2018 and $7,631,180 at 12/31/2017)

 

 

 

 

 

 

Preferred stocks (cost - $0 at

 

 

 —

 

 

3,867,429 

12/31/2018 and $3,783,311 at 12/31/2017)

 

 

 

 

 

 

Other invested assets

 

 

154,200 

 

 

 —

Property held for investment, at cost, net of accumulated depreciation of

 

 

3,586,273 

 

 

3,126,566 

$222,825 at 12/31/2018 and $127,161 at 12/31/2017

 

 

 

 

 

 

Cash and cash equivalents

 

 

4,644,784 

 

 

6,876,519 

Total investments and cash

 

 

109,209,639 

 

 

112,009,696 

Accrued investment income

 

 

648,321 

 

 

687,453 

Premiums and reinsurance balances receivable, net of allowances for

 

 

21,404,344 

 

 

19,013,262 

uncollectible amounts of $50,000 at 12/31/2018 and 12/31/2017

 

 

 

 

 

 

Ceded unearned premiums

 

 

796,065 

 

 

274,972 

Reinsurance balances recoverable on unpaid losses and settlement expenses,

 

 

6,735,964 

 

 

10,029,834 

net of allowances for uncollectible amounts of $0 at 12/31/2018 and 12/31/2017

 

 

 

 

 

 

Current federal income taxes

 

 

847,271 

 

 

573,147 

Net deferred federal income taxes

 

 

1,021,398 

 

 

349,258 

Federal income taxes

 

 

1,868,669 

 

 

922,405 

Deferred policy acquisition costs, net

 

 

5,247,188 

 

 

4,592,415 

Property and equipment, at cost, net of accumulated depreciation of

 

 

3,332,810 

 

 

3,503,904 

$5,099,090 at 12/31/2018 and $4,896,041 at 12/31/2017

 

 

 

 

 

 

Other assets

 

 

1,040,193 

 

 

1,301,420 

Total assets

 

$

150,283,193 

 

$

152,335,361 

Liabilities and Equity

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

Unpaid losses and settlement expenses

 

$

51,447,440 

 

$

51,074,126 

Unearned premiums

 

 

29,972,623 

 

 

26,555,582 

Reinsurance balances payable

 

 

993,004 

 

 

327,483 

Corporate debt

 

 

3,484,606 

 

 

4,339,208 

Accrued expenses

 

 

4,536,218 

 

 

4,274,002 

Other liabilities

 

 

1,256,003 

 

 

1,663,415 

Total liabilities

 

 

91,689,894 

 

 

88,233,816 

Equity:

 

 

 

 

 

 

Common stock2  

 

 

35,000 

 

 

35,000 

Treasury stock, at cost3

 

 

(2,999,995)

 

 

 —

Additional paid-in capital

 

 

32,505,423 

 

 

32,333,290 

Accumulated other comprehensive (loss) earnings, net of tax

 

 

(1,580,976)

 

 

2,227,069 

Retained earnings

 

 

33,680,702 

 

 

32,787,406 

Less: Unearned Employee Stock Ownership Plan shares at cost4

 

 

(3,046,855)

 

 

(3,281,220)

Total equity

 

 

58,593,299 

 

 

64,101,545 

Total liabilities and equity

 

$

150,283,193 

 

$

152,335,361 



1At December 31, 2018, common stock securities consist primarily of individual common stocks. At December 31, 2017, common stock consisted of exchange trade funds (ETF) made up primarily of Dividends Select and the S&P 500.500

2Par value $0.01; authorized: 2018 - 10,000,000 shares and 2017  10,000,000 shares; issued: 2018 - 3,500,000 and 2017  3,500,000 shares; outstanding: 2018 - 2,992,734 and 2017  3,171,878 shares.

32018  196,721 shares and 2017  0 shares

42018 –304,685 shares and 2017 – 328,122 shares


 

ICC Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited)









 

 

 

 

 

 

 

 

 

 

 

 

 



 

For the Three-Months Ended



 

December 31,



 

2018

 

2017

Net premiums earned

 

$

12,197,256 

 

$

11,472,959 

Net investment income

 

 

766,207 

 

 

783,077 

Net realized investment (losses) gains

 

 

(111,236)

 

 

621,632 

Other-than-temporary impairment losses

 

 

(16,178)

 

 

 —

Other income

 

 

66,427 

 

 

127,480 

Consolidated revenues

 

 

12,902,476 

 

 

13,005,148 

Losses and settlement expenses

 

 

6,864,453 

 

 

7,482,790 

Policy acquisition costs and other operating expenses

 

 

5,125,902 

 

 

4,508,621 

Interest expense on debt

 

 

32,542 

 

 

51,030 

General corporate expenses

 

 

147,127 

 

 

103,449 

Total expenses

 

 

12,170,024 

 

 

12,145,890 

Earnings before income taxes

 

 

732,452 

 

 

859,258 

Income tax (benefit) expense:

 

 

 

 

 

 

Current

 

 

(238,145)

 

 

379,844 

Deferred

 

 

336,023 

 

 

36,701 

Total income tax expense

 

 

97,878 

 

 

416,545 

Net earnings

 

$

634,574 

 

$

442,713 



 

 

 

 

 

 

Other comprehensive (loss), net of tax

 

 

(1,418,631)

 

 

(188,174)

Comprehensive (loss) earnings

 

$

(784,057)

 

$

254,539 



 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

Basic net loss per share

 

$

0.21 

 

$

0.14 

Diluted:

 

 

 

 

 

 

Diluted net loss per share

 

$

0.21 

 

$

0.14 



 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

Basic

 

 

2,994,775 

 

 

3,167,344 

Diluted

 

 

2,995,947 

 

 

3,167,344 










 

ICC Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited)











 

 

 

 

 

 

 

 

 

 

 

 

 



 

For the Twelve-Months Ended



 

December 31,



 

2018

 

2017

Net premiums earned

 

$

47,116,961 

 

$

44,213,271 

Net investment income

 

 

2,890,266 

 

 

2,632,498 

Net realized investment gains

 

 

975,993 

 

 

1,064,577 

Other-than-temporary impairment losses

 

 

(16,178)

 

 

(57,316)

Other income

 

 

196,649 

 

 

325,127 

Consolidated revenues

 

 

51,163,691 

 

 

48,178,157 

Losses and settlement expenses

 

 

31,262,462 

 

 

29,009,833 

Policy acquisition costs and other operating expenses

 

 

18,214,983 

 

 

17,307,700 

Interest expense on debt

 

 

140,877 

 

 

225,379 

General corporate expenses

 

 

545,986 

 

 

555,109 

Total expenses

 

 

50,164,308 

 

 

47,098,021 

Earnings before income taxes

 

 

999,383 

 

 

1,080,136 

Income tax (benefit) expense:

 

 

 

 

 

 

Current

 

 

(234,037)

 

 

197,200 

Deferred

 

 

340,124 

 

 

175,085 

Total income tax expense

 

 

106,087 

 

 

372,285 

Net earnings

 

$

893,296 

 

$

707,851 



 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

Basic net earnings per share

 

$

0.29 

 

$

0.22 

Diluted:

 

 

 

 

 

 

Diluted net earnings per share

 

$

0.29 

 

$

0.22 



 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

Basic

 

 

3,119,968 

 

 

3,158,163 

Diluted

 

 

3,121,140 

 

 

3,158,163 



 

 

 

 

 

 

Other comprehensive earnings, net of tax

 

 

 

 

 

 

Unrealized gains and losses on investments:

 

 

 

 

 

 

Unrealized holding (losses) gains arising during the period,

 

 

 

 

 

 

net of income tax (benefit) of $(810,701) in 2018

 

 

 

 

 

 

and income tax expense of $706,378 in 2017

 

$

(3,049,791)

 

$

1,371,206 

Reclassification adjustment for (gains) included in net

 

 

 

 

 

 

income, net of income tax expense of $201,561 in 2018

 

 

 

 

 

 

and expense of $342,469 in 2017

 

 

(758,254)

 

 

(664,792)

Total other comprehensive earnings

 

 

(3,808,045)

 

 

706,414 

Comprehensive earnings

 

$

(2,914,749)

 

$

1,414,265