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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 March 31, 2022

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 May 3, 2022 was 3,296,896.

 


Table of Contents

Page 

PART I

Item 1.

Financial Statements

Condensed Consolidated Balance Sheets as of March 31, 2022 (unaudited) and December 31, 2021

3

Condensed Consolidated Statements of Earnings and Comprehensive Earnings for the Three-Month Periods Ended March 31, 2022 and 2021 (unaudited)

4

Condensed Consolidated Statements of Stockholders Equity for the Three-Month Periods Ended March 31, 2022 and 2021 (unaudited)

5

Condensed Consolidated Statements of Cash Flows for the Three-Month Periods Ended March 31, 2022 and 2021 (unaudited)

6

Notes to Unaudited Condensed Consolidated Financial Statements

7

Item 2.

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

18

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

30

Item 4.

Controls and Procedures

31

PART II

Item 1.

Legal Proceedings

31

Item 1A.

Risk Factors

31

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

31

Item 3.

Default Upon Senior Securities

32

Item 4.

Mine Safety Disclosures

32

Item 5.

Other Information

32

Item 6.

Exhibits

33

Signatures 

34

 

~ 2 ~


PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

ICC Holdings, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

 

As of

March 31,

December 31,

2022

2021

(Unaudited)

Assets

Investments and cash:

Fixed maturity securities (amortized cost of $104,466,061 at 3/31/2022 and $102,145,223 at 12/31/2021)

$

101,872,420

$

105,841,543

Common stocks at fair value

22,795,115

23,608,197

Preferred stocks at fair value

2,858,036

2,780,450

Other invested assets

3,175,674

3,086,568

Property held for investment, at cost, net of accumulated depreciation of $504,718 at 3/31/2022 and $464,713 at 12/31/2021

5,871,484

5,509,114

Cash and cash equivalents

4,580,287

4,606,378

Total investments and cash

141,153,016

145,432,250

Accrued investment income

726,561

659,413

Premiums and reinsurance balances receivable, net of allowances for uncollectible amounts of $100,000 at 3/31/2022 and 12/31/2021

27,410,129

27,199,804

Ceded unearned premiums

948,000

967,022

Reinsurance balances recoverable on unpaid losses and settlement expenses, net of allowances for uncollectible amounts of $0 at 3/31/2022 and 12/31/2021

16,088,694

14,521,219

Federal income taxes

631,825

195,694

Deferred policy acquisition costs, net

7,156,770

6,538,844

Property and equipment, at cost, net of accumulated depreciation of $6,302,395 at 3/31/2022 and $6,243,055 at 12/31/2021

3,189,728

3,144,218

Other assets

1,305,288

1,343,504

Total assets

$

198,610,011

$

200,001,968

Liabilities and Equity

Liabilities:

Unpaid losses and settlement expenses

$

67,407,376

$

61,834,809

Unearned premiums

37,509,068

36,212,266

Reinsurance balances payable

503,656

1,368,294

Corporate debt

18,452,288

18,455,342

Accrued expenses

4,174,785

5,441,611

Income taxes - deferred

954,862

Other liabilities

872,609

1,030,870

Total liabilities

128,919,782

125,298,054

Equity:

Common stock1

35,000

35,000

Treasury stock, at cost2

(3,122,492)

(3,155,399)

Additional paid-in capital

32,989,963

32,965,136

Accumulated other comprehensive earnings, net of tax

(2,049,042)

2,920,027

Retained earnings

44,122,755

44,282,895

Less: Unearned Employee Stock Ownership Plan shares at cost3

(2,285,955)

(2,343,745)

Total equity

69,690,229

74,703,914

Total liabilities and equity

$

198,610,011

$

200,001,968

1Par value $0.01; authorized: 2022 - 10,000,000 shares and 2021 – 10,000,000 shares; issued: 2022 – 3,500,000 shares and 2021 – 3,500,000 shares; outstanding: 2022 –3,293,811 and 2021 - 3,291,852 shares

22022 –206,189 shares and 2021 –208,148 shares

32022 –228,595 shares and 2021 –234,374 shares

See accompanying notes to consolidated financial statements. 


~ 3 ~


ICC Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited)

X

 

For the Three-Months Ended

March 31,

2022

2021

Net premiums earned

$

16,016,677

$

12,048,713

Net investment income

917,081

801,406

Net realized investment gains

207,585

186,709

Net unrealized (losses) gains on equity securities

(1,292,692)

876,316

Other income

159,431

46,716

Consolidated revenues

16,008,082

13,959,860

Losses and settlement expenses

10,195,201

7,802,706

Policy acquisition costs and other operating expenses

5,772,400

4,467,578

Interest expense on debt

61,011

53,702

General corporate expenses

189,415

163,982

Total expenses

16,218,027

12,487,968

(Loss) earnings before income taxes

(209,945)

1,471,892

Total income tax (benefit) expense

(49,805)

309,951

Net (loss) earnings

$

(160,140)

$

1,161,941

Other comprehensive loss, net of tax

(4,969,069)

(2,226,522)

Comprehensive loss

$

(5,129,209)

$

(1,064,581)

Earnings per share:

Basic:

Basic net (loss) earnings per share

$

(0.05)

$

0.38

Diluted:

Diluted net (loss) earnings per share

$

(0.05)

$

0.38

Weighted average number of common shares outstanding:

Basic

3,060,208

3,034,233

Diluted

3,072,176

3,044,479

See accompanying notes to consolidated financial statements.

~ 4 ~


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, 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

(19,174)

(19,174)

Net earnings

1,161,941

1,161,941

Other comprehensive loss, net of tax

(2,226,522)

(2,226,522)

Restricted stock unit expense

77,947

1

(39,831)

38,116

ESOP compensation expense

57,790

24,960

82,750

Balance, March 31, 2021

$

35,000

$

(3,095,065)

$

(2,520,325)

$

32,765,565

$

41,302,055

$

3,293,569

$

71,780,799

 

Common stock

Treasury stock

Unearned ESOP

Additional paid-in capital

Retained
earnings

Accumulated
other
comprehensive
earnings (loss)

Total equity

Balance, January 1, 2022

$

35,000

$

(3,155,399)

$

(2,343,745)

$

32,965,136

$

44,282,895

$

2,920,027

$

74,703,914

Purchase of treasury stock

(25,574)

(25,574)

Net loss

(160,140)

(160,140)

Other comprehensive loss, net of tax

(4,969,069)

(4,969,069)

Restricted stock unit expense

58,481

1

(13,977)

44,504

ESOP compensation expense

57,790

38,804

96,594

Balance, March 31, 2022

$

35,000

$

(3,122,492)

$

(2,285,955)

$

32,989,963

$

44,122,755

$

(2,049,042)

$

69,690,229

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

See accompanying notes to consolidated financial statements.

~ 5 ~


ICC Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

Three-Month Periods Ended March 31,

2022

2021

Cash flows from operating activities:

Net (loss) earnings

$

(160,140)

$

1,161,941

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

Net realized investment gains

(207,585)

(186,709)

Net unrealized losses (gains) on equity securities

1,292,692

(876,316)

Depreciation

159,695

159,680

Deferred income tax

(234,026)

271,546

Amortization of bond premium and discount

62,566

67,997

Stock-based compensation expense

141,098

120,866

Change in:

Accrued investment income

(67,148)

(39,360)

Premiums and reinsurance balances receivable

(210,325)

908,120

Ceded unearned premiums

19,022

(1,009)

Reinsurance balances payable

(864,638)

(23,689)

Reinsurance balances recoverable

(1,567,475)

(991,294)

Deferred policy acquisition costs

(617,926)

(291,657)

Unpaid losses and settlement expenses

5,572,567

232,302

Unearned premiums

1,296,802

679,060

Accrued expenses

(1,266,826)

(450,758)

Current federal income tax

163,924

34,078

Other

(118,260)

(292,181)

Net cash provided by operating activities

3,394,017

482,617

Cash flows from investing activities:

Purchases of:

Fixed maturity securities, available-for-sale

(4,818,111)

(2,494,500)

Common stocks

(709,822)

(3,310,389)

Preferred stocks

(651,918)

(81,953)

Other invested assets

(100,000)

Property held for investment

(402,375)

(30,018)

Property and equipment

(170,989)

(80,497)

Proceeds from sales, maturities and calls of:

Fixed maturity securities, available-for-sale

2,445,125

3,484,432

Common stocks

636,104

687,015

Preferred stocks

365,508

78,469

Other invested assets

9,209

Property held for investment

243,588

Property and equipment

5,789

1,007

Net cash used in investing activities

(3,391,480)

(1,502,846)

Cash flows from financing activities:

Repayments of borrowed funds

(3,054)

(2,960)

Purchase of treasury stock

(25,574)

(19,174)

Net cash used in financing activities

(28,628)

(22,134)

Net decrease in cash and cash equivalents