UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): | March 14, 2012 |
HALLMARK FINANCIAL SERVICES, INC.
(Exact Name of Registrant as Specified in Its Charter)
Nevada
(State or Other Jurisdiction of Incorporation)
001-11252 | 87-0447375 |
(Commission File Number) | (IRS Employer Identification No.) |
777 Main Street, Suite 1000, Fort Worth, Texas | 76102 |
(Address of Principal Executive Offices) | (Zip Code) |
817-348-1600
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(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 (see General Instruction A.2. below):
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 | Results of Operations and Financial Condition |
On March 14, 2012, the Registrant issued a press release announcing its financial results for the quarter and year ended December 31, 2011. A copy of the Registrant’s press release is attached as Exhibit 99.1 to this Current Report.
Item 9.01 | Financial Statements and Exhibits |
(c) | Exhibits. |
99.1 | Press release dated March 14, 2012 |
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 duly authorized.
HALLMARK FINANCIAL SERVICES, INC. | |||
Date: | March 14, 2012 | By: | /s/ Jeffrey R. Passmore |
Jeffrey R. Passmore, Chief Accounting Officer |
FOR IMMEDIATE RELEASE
HALLMARK FINANCIAL SERVICES, INC.
ANNOUNCES FOURTH QUARTER AND FISCAL YEAR 2011 RESULTS
FORT WORTH, Texas, (March 14, 2012) - Hallmark Financial Services, Inc. (NASDAQ: HALL) (“Hallmark”) today reported fourth quarter 2011 net income of $0.3 million compared to $0.4 million reported for fourth quarter 2010. Hallmark reported a net loss of $10.8 million for fiscal year 2011, compared to net income of $7.3 million reported for fiscal year 2010. On a fully diluted basis, fourth quarter 2011 net income was $0.02 per share as compared to net income of $0.02 per share for the fourth quarter of 2010. Hallmark reported net loss of $0.55 per diluted share for fiscal year 2011, as compared to net income of $0.36 per diluted share for fiscal year 2010. Total revenues were $83.1 million for the fourth quarter 2011 as compared to $79.3 million for the fourth quarter of 2010. Total revenues for fiscal year 2011 were $322.8 million, up 5% from the $307.1 million reported for fiscal year 2010.
Mark J. Morrison, President and Chief Executive Officer, said, “Our results for the fourth quarter reflect continued profitable underwriting results by our two commercial segments after a challenging first half of fiscal 2011. Our Standard Commercial Segment reported a profitable combined ratio of 98.0% for the quarter due in large part to exiting certain classes of business that historically contributed to large loss volatility. Our Specialty Commercial Segment also reported improved results as evidenced by its fourth quarter combined ratio of 84.8% compared to 96.5% last quarter. This improvement was primarily driven by improved loss experience in our general aviation business unit.”
Mr. Morrison continued, “As we discussed last quarter, we have taken and continue to take aggressive steps to address the unfavorable financial performance of our Personal Lines Segment. As these actions take effect over the next few quarters, we expect this unit to return to an acceptable level of profitability.”
Mark E. Schwarz, Executive Chairman of Hallmark, stated, “Book value per share increased 2% during the fourth quarter but declined 4% for fiscal 2011. Investment income increased 7% to $15.9 million for fiscal 2011 compared to fiscal 2010. Cash flow from operations was $10 million in the fourth quarter and $25 million for fiscal 2011.”
“Hallmark utilized $6.4 million of its cash during the year to repurchase 875,712 shares or 4% of its outstanding common stock and also deployed $13.3 million net cash during the year for the acquisitions of Hallmark National Insurance Company and Texas Builders Insurance Company. Additionally, total cash and investments increased 2% during fiscal 2011 to $508 million. On a per share basis, total cash and investments increased at a greater rate of 7% during fiscal 2011 to an all-time high of $26.40 per share, due to the repurchase of shares during the year. Hallmark continues to have a significant amount of cash of $83.8 million as of the end of the year,” said Mr. Schwarz.
Mr. Schwarz continued, “Since inception of the company’s buyback program, Hallmark has repurchased 1,625,712 shares or 8% of the then outstanding common stock. The total cost of shares repurchased to date is $11.7 million or $7.17 per share, equivalent to 64% of Hallmark’s year-end book value per share of $11.22. There are approximately 2.4 million shares remaining authorized under the Company’s stock buyback program.”
Three Months Ended | ||||||||||||
December 31, | ||||||||||||
2011 | 2010 | % Change | ||||||||||
($ in thousands) | ||||||||||||
Gross premiums written | 84,047 | 73,735 | 14 | % | ||||||||
Net premiums written | 70,804 | 63,666 | 11 | % | ||||||||
Net premiums earned | 76,282 | 70,902 | 8 | % | ||||||||
Investment income, net of expenses | 4,115 | 4,336 | -5 | % | ||||||||
Net realized gain on investments | 456 | 2,645 | -83 | % | ||||||||
Total revenues | 83,102 | 79,333 | 5 | % | ||||||||
Net earnings (1) | 303 | 420 | -28 | % | ||||||||
Net earnings per share - basic | $ | 0.02 | $ | 0.02 | 0 | % | ||||||
Net earnings per share - diluted | $ | 0.02 | $ | 0.02 | 0 | % | ||||||
Book value per share | $ | 11.22 | $ | 11.72 | -4 | % | ||||||
Cash flow from operations | $ | 9,602 | $ | 7,426 | 29 | % |
Fiscal Year Ended | ||||||||||||
December 31, | ||||||||||||
2011 | 2010 | % Change | ||||||||||
($ in thousands) | ||||||||||||
Gross premiums written | 354,881 | 320,973 | 11 | % | ||||||||
Net premiums written | 303,876 | 281,641 | 8 | % | ||||||||
Net premiums earned | 293,041 | 278,271 | 5 | % | ||||||||
Investment income, net of expenses | 15,880 | 14,849 | 7 | % | ||||||||
Net realized gain on investments | 3,633 | 8,402 | -57 | % | ||||||||
Total revenues | 322,771 | 307,060 | 5 | % | ||||||||
Net (loss) earnings (1) | (10,821 | ) | 7,334 | NM | ||||||||
Net (loss) earnings per share - basic | $ | (0.55 | ) | $ | 0.36 | NM | ||||||
Net (loss) earnings per share - diluted | $ | (0.55 | ) | $ | 0.36 | NM | ||||||
Book value per share | $ | 11.22 | $ | 11.72 | -4 | % | ||||||
Cash flow from operations | $ | 24,610 | $ | 36,360 | -32 | % |
(1) | Net (loss) earnings is net (loss) income attributable to Hallmark Financial Services, Inc. as reported in the consolidated statements of operations as determined in accordance with GAAP. |
During the three months ended December 31, 2011 Hallmark’s total revenues were $83.1 million representing a 5% increase from the $79.3 million in total revenues for the same period of 2010. This increase in revenue was primarily attributable to increased earned premium due to increased production by the E&S Commercial business unit, a new space risk Specialty Program entered into during the first quarter of 2011 and the acquisition of the Workers Comp business unit during the third quarter of 2011. Further contributing to the increased revenues were favorable profit sharing commission revenue adjustments. These increases in revenue were partially offset by lower earned premium in the Standard Commercial business unit due to continued competition and continued soft market conditions and lower recognized gains on our investment portfolio.
During fiscal 2011, total revenues were $322.8 million, representing an approximate 5% increase over the $307.1 million in total revenues for fiscal 2010. This increase in revenue was primarily attributable to increased earned premium due to increased production by the Personal Lines and E&S Commercial business units, a new space risk Specialty Program entered into during the first quarter of 2011 and the acquisition of the Workers Comp business unit during the third quarter of 2011. Further contributing to the increased revenues were favorable profit sharing commission revenue adjustments and higher net investment income. These increases in revenue were partially offset by lower earned premium in the Standard Commercial business unit due to continued competition and continued soft market conditions and lower recognized gains on Hallmark’s investment portfolio.
Hallmark reported $0.3 million of net earnings for the three months ended December 31, 2011 as compared to net earnings of $0.4 million for the same period during 2010. Hallmark reported a net loss of $10.8 million for fiscal 2011, as compared to the $7.3 million net earnings reported for fiscal 2010. On a diluted basis per share, Hallmark reported net income of $0.02 per share for the three months ended December 31, 2011 and 2010. On a diluted basis per share, net loss was $0.55 per share for fiscal 2011 as compared to net income of $0.36 per share for fiscal 2010.
The increase in revenue for the three months and fiscal year ended December 31, 2011 was offset by increased loss and loss adjustment expenses due primarily to higher current accident year loss estimates. The increase in revenue for the fiscal year ended December 31, 2011 was also offset by unfavorable prior year loss development of $16.4 million recognized during the fiscal year ended December 31, 2011, as compared to unfavorable prior year development of $9.2 million recognized during the fiscal year ended December 31, 2010. Of the $16.4 million unfavorable development recognized for fiscal 2011, $19.7 million was a result of adverse prior year loss reserve development in the Personal Lines Segment, of which $10.3 million was directly attributable to loss development in Florida. In addition, the results for fiscal 2011 include $10.3 million in current accident year net losses from weather related claims, nearly all of which was incurred in the first half of 2011. As a result of the pre-tax loss and an increase in the proportion of tax-exempt income relative to total pre-tax loss, Hallmark reported an income tax benefit of $8.9 million, or an effective income tax rate of 45.3%, for fiscal 2011, as compared to income tax expense of $0.8 million, or an effective rate of 10.0%, for fiscal 2010.
Hallmark's consolidated net loss ratio was 75.2% and 81.6% for the three months and fiscal year ended December 31, 2011 as compared to 79.1% and 72.8% for the same periods in 2010. The adverse prior year development and the losses from the weather related claims contributed 9.1% to the 81.6% consolidated net loss ratio for the fiscal year ended December 31, 2011. Hallmark's net expense ratio was 29.3% and 30.8% for the three months and fiscal year ended December 31, 2011 as compared to 29.9% and 29.6% for the same periods in 2010. Hallmark’s net combined ratio was 104.5% and 112.4% for the three months and fiscal year ended December 31, 2011 as compared to 109.0% and 102.4% for the same periods in 2010.
Hallmark Financial Services, Inc. is an insurance holding company which, through its subsidiaries, engages in the sale of property/casualty insurance products to businesses and individuals. Hallmark’s business involves marketing, distributing, underwriting and servicing commercial insurance, personal insurance and general aviation insurance, as well as providing other insurance related services. The Company is headquartered in Fort Worth, Texas and its common stock is listed on NASDAQ under the symbol "HALL."
Forward-looking statements in this release are made pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that actual results may differ substantially from such forward-looking statements. Forward-looking statements involve risks and uncertainties including, but not limited to, continued acceptance of the Company’s products and services in the marketplace, competitive factors, interest rate trends, general economic conditions, the availability of financing, underwriting loss experience and other risks detailed from time to time in the Company’s filings with the Securities and Exchange Commission.
For further information, please contact:
Mark J. Morrison, President and Chief Executive Officer at 817.348.1600
www.hallmarkgrp.com
HALLMARK FINANCIAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 2011 and 2010
($ in thousands)
ASSETS | 2011 | 2010 | ||||||
Investments: | ||||||||
Debt securities, available-for-sale, at fair value (cost; $380,578 in 2011 and $383,530 in 2010) | $ | 380,469 | $ | 388,399 | ||||
Equity securities, available-for-sale, at fair value (cost; $30,465 in 2011 and $32,469 in 2010) | 44,159 | 44,042 | ||||||
Total investments | 424,628 | 432,441 | ||||||
Cash and cash equivalents | 74,471 | 60,519 | ||||||
Restricted cash | 9,372 | 5,277 | ||||||
Ceded unearned premiums | 19,470 | 25,504 | ||||||
Premiums receivable | 53,513 | 47,337 | ||||||
Accounts receivable | 3,946 | 7,051 | ||||||
Receivable for securities | 2,617 | 2,215 | ||||||
Reinsurance recoverable | 42,734 | 39,505 | ||||||
Deferred policy acquisition costs | 23,408 | 21,679 | ||||||
Goodwill | 44,695 | 44,695 | ||||||
Intangible assets, net | 26,654 | 30,241 | ||||||
Federal income tax recoverable | 6,738 | 3,645 | ||||||
Prepaid expenses | 1,458 | 1,987 | ||||||
Other assets | 13,209 | 15,207 | ||||||
$ | 746,913 | $ | 737,303 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Liabilities: | ||||||||
Revolving credit facility payable | $ | 4,050 | $ | 2,800 | ||||
Subordinated debt securities | 56,702 | 56,702 | ||||||
Reserves for unpaid losses and loss adjustment expenses | 296,945 | 251,677 | ||||||
Unearned premiums | 146,104 | 140,965 | ||||||
Unearned revenue | 55 | 116 | ||||||
Reinsurance balances payable | 3,139 | 3,122 | ||||||
Accrued agent profit sharing | 959 | 1,301 | ||||||
Accrued ceding commission payable | 1,071 | 4,231 | ||||||
Pension liability | 3,971 | 2,833 | ||||||
Payable for securities | 203 | 2,493 | ||||||
Payable for acquisition | - | 14,000 | ||||||
Deferred federal income taxes, net | 434 | 4,154 | ||||||
Accounts payable and other accrued expenses | 15,869 | 15,786 | ||||||
529,502 | 500,180 | |||||||
Commitments and contingencies | ||||||||
Redeemable non-controlling interest | 1,284 | 1,360 | ||||||
Stockholders’ equity: | ||||||||
Common stock, $.18 par value, authorized 33,333,333 shares in 2011 and 2010; issued 20,872,831 shares in 2011 and 2010 | 3,757 | 3,757 | ||||||
Additional paid-in capital | 122,487 | 121,815 | ||||||
Retained earnings | 94,995 | 105,816 | ||||||
Accumulated other comprehensive income | 6,446 | 9,637 | ||||||
Treasury stock (1,609,374 shares in 2011 and 748,662 in 2010), at cost | (11,558 | ) | (5,262 | ) | ||||
Total stockholders’ equity | 216,127 | 235,763 | ||||||
$ | 746,913 | $ | 737,303 |
Hallmark Financial Services, Inc. and Subsidiaries
Consolidated Statements of Operations
($ in thousands, except per share amounts)
Three Months Ended | Fiscal Year Ended | |||||||||||||||
December 31 | December 31 | |||||||||||||||
(unaudited) | ||||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Gross premiums written | $ | 84,047 | $ | 73,735 | $ | 354,881 | $ | 320,973 | ||||||||
Ceded premiums written | (13,243 | ) | (10,069 | ) | (51,005 | ) | (39,332 | ) | ||||||||
Net premiums written | 70,804 | 63,666 | 303,876 | 281,641 | ||||||||||||
Change in unearned premiums | 5,478 | 7,236 | (10,835 | ) | (3,370 | ) | ||||||||||
Net premiums earned | 76,282 | 70,902 | 293,041 | 278,271 | ||||||||||||
Investment income, net of expenses | 4,115 | 4,336 | 15,880 | 14,849 | ||||||||||||
Net realized gains | 456 | 2,645 | 3,633 | 8,402 | ||||||||||||
Finance charges | 1,678 | 1,807 | 6,826 | 7,054 | ||||||||||||
Commission and fees | 558 | (371 | ) | 3,175 | (1,575 | ) | ||||||||||
Other income | 13 | 14 | 216 | 59 | ||||||||||||
Total revenues | 83,102 | 79,333 | 322,771 | 307,060 | ||||||||||||
Losses and loss adjustment expenses | 57,394 | 56,095 | 239,235 | 202,544 | ||||||||||||
Other operating expenses | 23,228 | 22,033 | 94,998 | 87,989 | ||||||||||||
Interest expense | 1,161 | 1,151 | 4,631 | 4,598 | ||||||||||||
Amortization of intangible assets | 896 | 916 | 3,586 | 3,665 | ||||||||||||
Total expenses | 82,679 | 80,195 | 342,450 | 298,796 | ||||||||||||
Income (loss) before tax | 423 | (862 | ) | (19,679 | ) | 8,264 | ||||||||||
Income tax (benefit) expense | 90 | (1,317 | ) | (8,916 | ) | 825 | ||||||||||
Net income (loss) | 333 | 455 | (10,763 | ) | 7,439 | |||||||||||
Less: Net income attributable to non-controlling interest | 30 | 35 | 58 | 105 | ||||||||||||
Net income (loss) attributable to Hallmark Financial Services, Inc. | $ | 303 | $ | 420 | $ | (10,821 | ) | $ | 7,334 | |||||||
Net income (loss) attributable to Hallmark Financial | ||||||||||||||||
Services, Inc. common stockholders: | ||||||||||||||||
Basic | $ | 0.02 | $ | 0.02 | $ | (0.55 | ) | $ | 0.36 | |||||||
Diluted | $ | 0.02 | $ | 0.02 | $ | (0.55 | ) | $ | 0.36 |
Hallmark Financial Services, Inc
Consolidated Segment Data
(Unaudited)
Three Months Ended December 31, 2011 | ||||||||||||||||||||
Standard | Specialty | |||||||||||||||||||
Commercial | Commercial | Personal | ||||||||||||||||||
Segment | Segment | Segment | Corporate | Consolidated | ||||||||||||||||
Gross premiums written | 16,718 | 47,988 | 19,341 | - | 84,047 | |||||||||||||||
Ceded premiums written | (1,423 | ) | (11,702 | ) | (118 | ) | - | (13,243 | ) | |||||||||||
Net premiums written | 15,295 | 36,286 | 19,223 | - | 70,804 | |||||||||||||||
Change in unearned premiums | 1,509 | 528 | 3,441 | - | 5,478 | |||||||||||||||
Net premiums earned | 16,804 | 36,814 | 22,664 | - | 76,282 | |||||||||||||||
Total revenues | 18,904 | 38,405 | 24,795 | 998 | 83,102 | |||||||||||||||
Losses and loss adjustment expenses | 11,823 | 20,559 | 25,012 | - | 57,394 | |||||||||||||||
Pre-tax income (loss), net of | ||||||||||||||||||||
non-controlling interest | 2,213 | 7,361 | (7,274 | ) | (1,907 | ) | 393 | |||||||||||||
Net loss ratio (1) | 70.4 | % | 55.8 | % | 110.4 | % | 75.2 | % | ||||||||||||
Net expense ratio (1) | 27.6 | % | 29.0 | % | 24.3 | % | 29.3 | % | ||||||||||||
Net combined ratio (1) | 98.0 | % | 84.8 | % | 134.7 | % | 104.5 | % |
Three Months Ended December 31, 2010 | ||||||||||||||||||||
Standard | Specialty | |||||||||||||||||||
Commercial | Commercial | Personal | ||||||||||||||||||
Segment | Segment | Segment | Corporate | Consolidated | ||||||||||||||||
Gross premiums written | 15,357 | 38,018 | 20,360 | - | 73,735 | |||||||||||||||
Ceded premiums written | (1,168 | ) | (8,814 | ) | (87 | ) | - | (10,069 | ) | |||||||||||
Net premiums written | 14,189 | 29,204 | 20,273 | - | 63,666 | |||||||||||||||
Change in unearned premiums | 1,799 | 2,413 | 3,024 | - | 7,236 | |||||||||||||||
Net premiums earned | 15,988 | 31,617 | 23,297 | - | 70,902 | |||||||||||||||
Total revenues | 17,160 | 33,573 | 25,355 | 3,245 | 79,333 | |||||||||||||||
Losses and loss adjustment expenses | 12,017 | 20,496 | 23,582 | - | 56,095 | |||||||||||||||
Pre-tax income (loss), net of | ||||||||||||||||||||
non-controlling interest | 727 | 3,486 | (5,230 | ) | 120 | (897 | ) | |||||||||||||
Net loss ratio (1) | 75.2 | % | 64.8 | % | 101.2 | % | 79.1 | % | ||||||||||||
Net expense ratio (1) | 27.0 | % | 30.9 | % | 24.3 | % | 29.9 | % | ||||||||||||
Net combined ratio (1) | 102.2 | % | 95.7 | % | 125.5 | % | 109.0 | % |
1 | The net loss ratio is calculated as incurred losses and LAE divided by net premiums earned, each determined in accordance with GAAP. The net expense ratio is calculated for the business units that retain 100% of produced premium as total operating expenses for the unit offset by agency fee income divided by net premiums earned, each determined in accordance with GAAP. For the business units that do not retain 100% of the produced premium, the net expense ratio is calculated as underwriting expenses of the insurance company subsidiaries for the unit offset by agency fee income, divided by net premiums earned, each determined in accordance with GAAP. The net combined ratio is calculated as the sum of the net loss ratio and the net expense ratio. |
Hallmark Financial Services, Inc.
Consolidated Segment Data
Fiscal Year Ended December 31, 2011 | ||||||||||||||||||||
Standard | Specialty | |||||||||||||||||||
Commercial | Commercial | Personal | ||||||||||||||||||
Segment | Segment | Segment | Corporate | Consolidated | ||||||||||||||||
Gross premiums written | 69,420 | 185,020 | 100,441 | - | 354,881 | |||||||||||||||
Ceded premiums written | (5,476 | ) | (40,743 | ) | (4,786 | ) | - | (51,005 | ) | |||||||||||
Net premiums written | 63,944 | 144,277 | 95,655 | - | 303,876 | |||||||||||||||
Change in unearned premiums | 642 | (8,784 | ) | (2,693 | ) | - | (10,835 | ) | ||||||||||||
Net premiums earned | 64,586 | 135,493 | 92,962 | - | 293,041 | |||||||||||||||
Total revenues | 72,830 | 142,838 | 101,351 | 5,752 | 322,771 | |||||||||||||||
Losses and loss adjustment expenses | 50,940 | 87,265 | 101,030 | - | 239,235 | |||||||||||||||
Pre-tax income (loss), net of | ||||||||||||||||||||
non-controlling interest | 1,329 | 14,421 | (29,606 | ) | (5,881 | ) | (19,737 | ) | ||||||||||||
Net loss ratio (1) | 78.9 | % | 64.4 | % | 108.7 | % | 81.6 | % | ||||||||||||
Net expense ratio (1) | 31.2 | % | 29.8 | % | 26.2 | % | 30.8 | % | ||||||||||||
Net combined ratio (1) | 110.1 | % | 94.2 | % | 134.9 | % | 112.4 | % |
Fiscal Year Ended December 31, 2010 | ||||||||||||||||||||
Standard | Specialty | |||||||||||||||||||
Commercial | Commercial | Personal | ||||||||||||||||||
Segment | Segment | Segment | Corporate | Consolidated | ||||||||||||||||
Gross premiums written | 67,832 | 157,849 | 95,292 | - | 320,973 | |||||||||||||||
Ceded premiums written | (4,260 | ) | (34,876 | ) | (196 | ) | - | (39,332 | ) | |||||||||||
Net premiums written | 63,572 | 122,973 | 95,096 | - | 281,641 | |||||||||||||||
Change in unearned premiums | 1,999 | 1,125 | (6,494 | ) | - | (3,370 | ) | |||||||||||||
Net premiums earned | 65,571 | 124,098 | 88,602 | - | 278,271 | |||||||||||||||
Total revenues | 69,670 | 131,076 | 96,741 | 9,573 | 307,060 | |||||||||||||||
Losses and loss adjustment expenses | 51,468 | 78,911 | 72,165 | - | 202,544 | |||||||||||||||
Pre-tax income (loss), net of | ||||||||||||||||||||
non-controlling interest | (2,316 | ) | 13,315 | (705 | ) | (2,135 | ) | 8,159 | ||||||||||||
Net loss ratio (1) | 78.5 | % | 63.6 | % | 81.4 | % | 72.8 | % | ||||||||||||
Net expense ratio (1) | 30.7 | % | 29.7 | % | 22.4 | % | 29.6 | % | ||||||||||||
Net combined ratio (1) | 109.2 | % | 93.3 | % | 103.8 | % | 102.4 | % |
1 | The net loss ratio is calculated as incurred losses and LAE divided by net premiums earned, each determined in accordance with GAAP. The net expense ratio is calculated for the business units that retain 100% of produced premium as total operating expenses for the unit offset by agency fee income divided by net premiums earned, each determined in accordance with GAAP. For the business units that do not retain 100% of the produced premium, the net expense ratio is calculated as underwriting expenses of the insurance company subsidiaries for the unit offset by agency fee income, divided by net premiums earned, each determined in accordance with GAAP. The net combined ratio is calculated as the sum of the net loss ratio and the net expense ratio. |
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