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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________________

FORM 10-Q

_______________________________

(Mark One)

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

or

¨

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For transition period from __________ to __________.

Commission File Number: 001-38046

ICC Holdings, Inc.

(Exact name of registrant as specified in its charter)

_______________________________

Pennsylvania

(State or other jurisdiction of
incorporation or organization)

 

81-3359409

(I.R.S. Employer
Identification No.)

 

225 20th Street, Rock Island, Illinois

(Address of principal executive offices)

 

61201

(Zip Code)

 

(309) 793-1700

(Registrant’s telephone number, including area code)

_______________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading
Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01 per share

ICCH

The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes    No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes    No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer   ¨

Accelerated filer   ¨

Non-accelerated filer    x

Smaller reporting company   x

Emerging growth company x

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. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ¨     No x

The number of shares of the registrant’s common stock outstanding as of November 10, 2021 was 3,292,788.

 


Table of Contents

Page 

PART I

Item 1.

Financial Statements

Condensed Consolidated Balance Sheets as of September 30, 2021 (unaudited) and December 31, 2020

3

Condensed Consolidated Statements of Earnings and Comprehensive Earnings for the Three-Month Periods Ended September 30, 2021 and 2020 (unaudited)

4

Condensed Consolidated Statements of Earnings and Comprehensive Earnings for the Nine-Month Periods Ended September 30, 2021 and 2020 (unaudited)

5

Condensed Consolidated Statements of Stockholders Equity for the Nine-Month Periods Ended September 30, 2021 and 2020 (unaudited)

6

Condensed Consolidated Statements of Cash Flows for the Nine-Month Periods Ended September 30, 2021 and 2020 (unaudited)

7

Notes to Unaudited Condensed Consolidated Financial Statements

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

20

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

33

Item 4.

Controls and Procedures

34

PART II

Item 1.

Legal Proceedings

35

Item 1A.

Risk Factors

35

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

35

Item 3.

Default Upon Senior Securities

35

Item 4.

Mine Safety Disclosures

35

Item 5.

Other Information

35

Item 6.

Exhibits

36

Signatures 

37

 

~ 2 ~


PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

ICC Holdings, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

 

As of

September 30,

December 31,

2021

2020

(Unaudited)

Assets

Investments and cash:

Fixed maturity securities (amortized cost of $103,846,072 at 9/30/2021 and $98,753,027 at 12/31/2020)

$

108,521,574

$

105,740,566

Common stocks at fair value

22,066,048

14,724,814

Preferred stocks at fair value

1,803,285

1,683,892

Other invested assets

1,837,430

1,772,867

Property held for investment, at cost, net of accumulated depreciation of $427,818 at 9/30/2021 and $465,364 at 12/31/2020

5,451,710

5,399,826

Cash and cash equivalents

2,639,480

6,598,842

Total investments and cash

142,319,527

135,920,807

Accrued investment income

713,585

660,793

Premiums and reinsurance balances receivable, net of allowances for uncollectible amounts of $150,000 at 9/30/2021 and 12/31/2020

26,162,183

23,506,171

Ceded unearned premiums

957,508

860,905

Reinsurance balances recoverable on unpaid losses and settlement expenses, net of allowances for uncollectible amounts of $0 at 9/30/2021 and 12/31/2020

14,476,233

13,019,865

Federal income taxes

104,751

372,986

Deferred policy acquisition costs, net

6,284,156

5,429,620

Property and equipment, at cost, net of accumulated depreciation of $6,113,613 at 9/30/2021 and $6,079,728 at 12/31/2020

3,085,985

2,860,331

Other assets

1,202,170

1,307,794

Total assets

$

195,306,098

$

183,939,272

Liabilities and Equity

Liabilities:

Unpaid losses and settlement expenses

$

61,290,612

$

61,575,666

Unearned premiums

34,920,950

29,788,834

Reinsurance balances payable

1,176,193

371,195

Corporate debt

18,458,022

13,465,574

Accrued expenses

4,246,487

3,472,511

Income taxes - deferred

964,625

1,231,271

Other liabilities

878,347

1,290,532

Total liabilities

121,935,236

111,195,583

Equity:

Common stock1

35,000

35,000

Treasury stock, at cost2

(3,119,646)

(3,153,838)

Additional paid-in capital

32,875,761

32,780,436

Accumulated other comprehensive earnings, net of tax

3,693,581

5,520,091

Retained earnings

42,288,985

40,140,115

Less: Unearned Employee Stock Ownership Plan shares at cost3

(2,402,819)

(2,578,115)

Total equity

73,370,862

72,743,689

Total liabilities and equity

$

195,306,098

$

183,939,272

1Par value $0.01; authorized: 2021 - 10,000,000 shares and 2020 – 10,000,000 shares; issued: 2021 – 3,500,000 shares and 2020 – 3,500,000 shares; outstanding: 2021 –3,293,961 and 2020 - 3,291,125 shares

22021 –206,039 shares and 2020 –208,875 shares

32021 –240,282 shares and 2020 –257,811 shares

See accompanying notes to consolidated financial statements. 

~ 3 ~


ICC Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited)

 

For the Three-Months Ended

September 30,

2021

2020

Net premiums earned

$

14,079,395

$

12,532,967

Net investment income

823,912

900,950

Net realized investment gains (losses)

287,455

(59,333)

Net unrealized (losses) gains on equity securities

(212,136)

981,779

Other income (loss)

58,590

(36,333)

Consolidated revenues

15,037,216

14,320,030

Losses and settlement expenses

8,814,522

8,863,053

Policy acquisition costs and other operating expenses

5,442,542

4,722,485

Interest expense on debt

62,379

58,724

General corporate expenses

171,105

171,860

Total expenses

14,490,548

13,816,122

Earnings before income taxes

546,668

503,908

Total income tax expense

122,405

99,919

Net earnings

$

424,263

$

403,989

Other comprehensive (loss) earnings, net of tax

(680,975)

440,838

Comprehensive (loss) earnings

$

(256,712)

$

844,827

Earnings per share:

Basic:

Basic net earnings per share

$

0.14

$

0.13

Diluted:

Diluted net earnings per share

$

0.14

$

0.13

Weighted average number of common shares outstanding:

Basic

3,068,199

3,030,571

Diluted

3,083,867

3,039,658

See accompanying notes to consolidated financial statements.

~ 4 ~


ICC Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited)

 

For the Nine-Months Ended

September 30,

2021

2020

Net premiums earned

$

38,860,915

$

36,921,702

Net investment income

2,409,036

2,644,900

Net realized investment gains (losses)

824,070

(402,320)

Net unrealized gains on equity securities

1,392,999

2,195

Other income

196,624

82,934

Consolidated revenues

43,683,644

39,249,411

Losses and settlement expenses

25,281,508

25,913,619

Policy acquisition costs and other operating expenses

14,957,143

13,741,725

Interest expense on debt

174,095

150,773

General corporate expenses

531,222

471,616

Total expenses

40,943,968

40,277,733

Earnings (loss) before income taxes

2,739,676

(1,028,322)

Total income tax expense (benefit)

590,806

(240,980)

Net earnings (loss)

$

2,148,870

$

(787,342)

Other comprehensive (loss) earnings, net of tax

(1,826,510)

2,254,721

Comprehensive earnings

$

322,360

$

1,467,379

Earnings per share:

Basic:

Basic net earnings (loss) per share

$

0.71

$

(0.26)

Diluted:

Diluted net earnings (loss) per share

$

0.70

$

(0.26)

Weighted average number of common shares outstanding:

Basic

3,042,035

3,023,794

Diluted

3,057,704

3,032,881

See accompanying notes to consolidated financial statements.

~ 5 ~


ICC Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

Common stock

Treasury stock

Unearned ESOP

Additional paid-in capital

Retained
earnings

Accumulated
other
comprehensive
earnings (loss)

Total equity

Balance, January 1, 2020

$

35,000

$

(3,146,576)

$

(2,812,485)

$

32,703,209

$

36,608,750

$

2,953,936

$

66,341,834

Purchase of treasury stock

(109,460)

(109,460)

Net (loss)

(787,342)

(787,342)

Other comprehensive earnings, net of tax

2,254,721

2,254,721

Restricted stock unit expense

143,380

1

(16,792)

126,588

ESOP compensation expense

175,457

31,078

206,535

Balance, September 30, 2020

$

35,000

$

(3,112,656)

$

(2,637,028)

$

32,717,495

$

35,821,408

$

5,208,657

$

68,032,876

 

Common stock

Treasury stock

Unearned ESOP

Additional paid-in capital

Retained
earnings

Accumulated
other
comprehensive
earnings (loss)

Total equity

Balance, January 1, 2021

$

35,000

$

(3,153,838)

$

(2,578,115)

$

32,780,436

$

40,140,115

$

5,520,091

$

72,743,689

Purchase of treasury stock

(103,407)

(103,407)

Net earnings

2,148,870

2,148,870

Other comprehensive loss, net of tax

(1,826,510)

(1,826,510)

Restricted stock unit expense

137,599

1

(544)

137,055

ESOP compensation expense

175,296

95,869

271,165

Balance, September 30, 2021

$

35,000

$

(3,119,646)

$

(2,402,819)

$

32,875,761

$

42,288,985

$

3,693,581

$

73,370,862

1Amount represents restricted stock units that have fully vested in the period.

See accompanying notes to consolidated financial statements.

~ 6 ~


ICC Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

Nine-Month Periods Ended September 30,

2021

2020

Cash flows from operating activities:

Net earnings (loss)

$

2,148,870

$

(787,342)

Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities

Net realized investment (gains) losses

(824,070)

402,320

Net unrealized gains on equity securities

(1,392,999)

(2,195)

Depreciation

485,688

508,152

Deferred income tax

218,885

(423,896)

Amortization of bond premium and discount

209,740

175,114