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|
|
|
|
Indiana
|
|
0-5534
|
|
35-0160330
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(State or Other Jurisdiction
of Incorporation)
|
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(Commission
File Number)
|
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(I.R.S. Employer
Identification No.)
|
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111 Congressional Boulevard, Carmel IN |
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46032
|
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(Address of Principal Executive Offices)
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(Zip Code)
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Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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|||||
Securities registered pursuant to Section 12(b) of the Act:
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||||||
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
||||
Class A Common Stock, No Par Value
|
PTVCA
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The Nasdaq Stock Market LLC
|
||||
Class B Common Stock, No Par Value
|
PTVCB
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The Nasdaq Stock Market LLC
|
||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of
1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ☐
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(d) |
Exhibits.
|
● |
Book value per share increased by $0.07 per share to $25.33 during the third quarter of 2019, an increase of 0.3% in the quarter and total value
creation of 0.7% including the $0.10 per share dividend paid to shareholders during the third quarter of 2019. Shareholders’ equity decreased by $4.0m during the third quarter of 2019, a decrease of 1.1%.
|
● |
Net investment income increased 20.2% for the third quarter of 2019 compared to the prior year and 21.4% during the first nine months of 2019
compared to prior year.
|
● |
Repurchased $10.6 million (618,032 shares) since January 1, 2019. These purchases are immediately accretive to book value per share, given an
average repurchase price of 68% of September 30, 2019 book value.
|
● |
Combined ratio of 107.1% for the third quarter of 2019 and 107.2% for the first nine months of 2019.
|
5% Increase in Ultimate Loss Ratio
|
10% Increase in Ultimate Loss Ratio
|
|||||||
Gross loss expense from further strengthening current reserve position
|
$
|
45.5
|
$
|
90.9
|
||||
Net financial loss
|
11.8
|
23.1
|
||||||
$/share (after tax)
|
$
|
0.64
|
$
|
1.25
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30
|
September 30
|
|||||||||||||||
2019
|
2018
|
2019
|
2018
|
|||||||||||||
Income (loss) before federal income tax expense (benefit)
|
$
|
(1,019
|
)
|
$
|
(15,569
|
)
|
$
|
4,445
|
$
|
(12,199
|
)
|
|||||
Less: Net realized gains on investments
|
1,141
|
449
|
1,468
|
1,740
|
||||||||||||
Less: Net unrealized gains (losses) - equity securities and limited partnerships
|
(1,016
|
)
|
1,924
|
7,573
|
(7,335
|
)
|
||||||||||
Income (loss) from core business operations
|
$
|
(1,144
|
)
|
$
|
(17,942
|
)
|
$
|
(4,596
|
)
|
$
|
(6,604
|
)
|
||||
Less: Net investment income
|
6,703
|
5,578
|
19,434
|
16,010
|
||||||||||||
Underwriting loss
|
$
|
(7,847
|
)
|
$
|
(23,520
|
)
|
$
|
(24,030
|
)
|
$
|
(22,614
|
)
|
Protective Insurance Corporation and Subsidiaries
|
||||||||
Unaudited Condensed Consolidated Balance Sheets
|
||||||||
(in thousands, except per share data)
|
||||||||
September 30
|
December 31
|
|||||||
2019
|
2018
|
|||||||
Assets
|
||||||||
Investments 1:
|
||||||||
Fixed income securities (2019: $744,762; 2018: $600,504)
|
$
|
757,841
|
$
|
592,645
|
||||
Equity securities
|
72,837
|
66,422
|
||||||
Limited partnerships, at equity
|
22,645
|
55,044
|
||||||
Commercial mortgage loans
|
9,418
|
6,672
|
||||||
Short-term 2
|
1,000
|
1,000
|
||||||
863,741
|
721,783
|
|||||||
Cash and cash equivalents
|
85,777
|
163,996
|
||||||
Restricted cash and cash equivalents
|
22,410
|
6,815
|
||||||
Accounts receivable
|
105,801
|
102,972
|
||||||
Reinsurance recoverable
|
418,031
|
392,436
|
||||||
Other assets
|
93,756
|
88,426
|
||||||
Current federal income taxes
|
4,267
|
7,441
|
||||||
Deferred federal income taxes
|
2,984
|
6,262
|
||||||
$
|
1,596,767
|
$
|
1,490,131
|
|||||
Liabilities and shareholders' equity
|
||||||||
Reserves for losses and loss expenses
|
$
|
960,695
|
$
|
865,339
|
||||
Reserves for unearned premiums
|
76,329
|
71,625
|
||||||
Borrowings under line of credit
|
20,000
|
20,000
|
||||||
Accounts payable and other liabilities
|
176,313
|
177,085
|
||||||
1,233,337
|
1,134,049
|
|||||||
Shareholders' equity:
|
||||||||
Common stock-no par value
|
613
|
634
|
||||||
Additional paid-in capital
|
53,670
|
54,720
|
||||||
Accumulated other comprehensive income ( loss)
|
9,594
|
(7,347
|
)
|
|||||
Retained earnings
|
299,553
|
308,075
|
||||||
363,430
|
356,082
|
|||||||
$
|
1,596,767
|
$
|
1,490,131
|
|||||
Number of common and common
|
||||||||
equivalent shares outstanding
|
14,347
|
14,869
|
||||||
Book value per outstanding share
|
$
|
25.33
|
$
|
23.95
|
||||
1 2019 & 2018 cost in parentheses
|
||||||||
2 Approximates cost
|
Protective Insurance Corporation and Subsidiaries
|
||||||||||||||||
Unaudited Condensed Consolidated Statements of Operations
|
||||||||||||||||
(in thousands, except per share data)
|
||||||||||||||||
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30
|
September 30
|
|||||||||||||||
2019
|
2018
|
2019
|
2018
|
|||||||||||||
Revenues
|
||||||||||||||||
Net premiums earned
|
$
|
110,288
|
$
|
96,807
|
$
|
335,931
|
$
|
314,209
|
||||||||
Net investment income
|
6,703
|
5,578
|
19,434
|
16,010
|
||||||||||||
Commissions and other income
|
2,716
|
3,413
|
6,761
|
7,488
|
||||||||||||
Net realized gains on investments, excluding impairment losses
|
1,199
|
449
|
1,872
|
1,740
|
||||||||||||
Other-than-temporary impairment losses on investments
|
(58
|
)
|
-
|
(404
|
)
|
-
|
||||||||||
Net unrealized gains (losses) on equity securities and limited partnership investments
|
(1,016
|
)
|
1,924
|
7,573
|
(7,335
|
)
|
||||||||||
Net realized and unrealized gains (losses) on investments
|
125
|
2,373
|
9,041
|
(5,595
|
)
|
|||||||||||
119,832
|
108,171
|
371,167
|
332,112
|
|||||||||||||
Expenses
|
||||||||||||||||
Losses and loss expenses incurred
|
84,781
|
94,540
|
262,336
|
244,327
|
||||||||||||
Other operating expenses
|
36,070
|
29,200
|
104,386
|
99,984
|
||||||||||||
120,851
|
123,740
|
366,722
|
344,311
|
|||||||||||||
Income (loss) before federal income tax expense (benefit)
|
(1,019
|
)
|
(15,569
|
)
|
4,445
|
(12,199
|
)
|
|||||||||
Federal income tax expense (benefit)
|
(312
|
)
|
(3,244
|
)
|
869
|
(2,691
|
)
|
|||||||||
Net income (loss)
|
$
|
(707
|
)
|
$
|
(12,325
|
)
|
$
|
3,576
|
$
|
(9,508
|
)
|
|||||
Per share data - diluted:
|
||||||||||||||||
Income (loss) before net gains (losses) on investments
|
$
|
(.06
|
)
|
$
|
(.95
|
)
|
$
|
(.24
|
)
|
$
|
(.34
|
)
|
||||
Net gains (losses) on investments
|
.01
|
.13
|
.48
|
(.29
|
)
|
|||||||||||
Net income (loss)
|
$
|
(.05
|
)
|
$
|
(.82
|
)
|
$
|
.24
|
$
|
(.63
|
)
|
|||||
Reconciliation of shares outstanding:
|
||||||||||||||||
Average shares outstanding - basic
|
14,361
|
14,969
|
14,607
|
14,998
|
||||||||||||
Dilutive effect of share equivalents
|
-
|
-
|
77
|
-
|
||||||||||||
Average shares outstanding - diluted
|
14,361
|
14,969
|
14,684
|
14,998
|
Protective Insurance Corporation and Subsidiaries
|
||||||||
Unaudited Condensed Consolidated Statements of Cash Flows
|
||||||||
(in thousands)
|
||||||||
Nine Months Ended
|
||||||||
September 30
|
||||||||
2019
|
2018
|
|||||||
Net cash provided by operating activities
|
$
|
62,322
|
$
|
60,370
|
||||
Investing activities:
|
||||||||
Purchases of available-for-sale investments
|
(342,299
|
)
|
(330,217
|
)
|
||||
Purchases of limited partnership interests
|
-
|
(450
|
)
|
|||||
Proceeds from sales or maturities
|
||||||||
of available-for-sale investments
|
183,261
|
228,487
|
||||||
Proceeds from sales of equity securities
|
19,408
|
117,692
|
||||||
Purchase of insurance company-owned life insurance
|
-
|
(10,000
|
)
|
|||||
Purchase of commercial mortgage loans
|
(2,746
|
)
|
-
|
|||||
Distributions from limited partnerships
|
33,395
|
369
|
||||||
Other investing activities
|
(1,655
|
)
|
(4,352
|
)
|
||||
Net cash provided by (used in) investing activities
|
(110,636
|
)
|
1,529
|
|||||
Financing activities:
|
||||||||
Dividends paid to shareholders
|
(4,429
|
)
|
(12,652
|
)
|
||||
Repurchase of common shares
|
(10,283
|
)
|
(2,620
|
)
|
||||
Net cash used in financing activities
|
(14,712
|
)
|
(15,272
|
)
|
||||
Effect of foreign exchange rates on cash and cash equivalents
|
402
|
(209
|
)
|
|||||
Increase (decrease) in cash, cash equivalents and restricted cash and cash equivalents
|
(62,624
|
)
|
46,418
|
|||||
Cash, cash equivalents and restricted cash and cash equivalents at beginning of period
|
170,811
|
68,713
|
||||||
Cash, cash equivalents and restricted cash and cash equivalents at end of period
|
$
|
108,187
|
$
|
115,131
|
Protective Insurance Corporation and Subsidiaries
|
||||||||||||||||
(In thousands, except per share data)
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||
September 30
|
September 30
|
|||||||||||||||
2019
|
2018
|
2019
|
2018
|
|||||||||||||
Annualized
|
||||||||||||||||
Book value per share beginning of period
|
$
|
25.26
|
$
|
27.14
|
$
|
23.95
|
$
|
27.83
|
||||||||
Book value per share end of period
|
25.33
|
25.96
|
25.33
|
25.96
|
||||||||||||
Change in book value per share
|
$
|
0.07
|
$
|
(1.18
|
)
|
$
|
1.38
|
$
|
(1.87
|
)
|
||||||
Dividends paid
|
0.10
|
0.28
|
0.30
|
0.84
|
||||||||||||
Change in book value per share plus dividends paid
|
$
|
0.17
|
$
|
(0.90
|
)
|
$
|
1.68
|
$
|
(1.03
|
)
|
||||||
Total value creation 1
|
2.7
|
%
|
(13.3
|
%)
|
9.4
|
%
|
(4.9
|
%)
|
||||||||
Return on average shareholders' equity:
|
||||||||||||||||
Average shareholders' equity
|
365,423
|
397,640
|
359,771
|
403,430
|
||||||||||||
Net income
|
(707
|
)
|
(12,325
|
)
|
3,576
|
(9,508
|
)
|
|||||||||
Less: Net realized gains (losses) on investments, net of tax
|
99
|
1,875
|
7,142
|
(4,420
|
)
|
|||||||||||
Net operating income (loss)
|
(806
|
)
|
(14,200
|
)
|
(3,566
|
)
|
(5,088
|
)
|
||||||||
Return on net income 2
|
(0.8
|
%)
|
(12.4
|
%)
|
1.3
|
%
|
(3.1
|
%)
|
||||||||
Return on net operating income (loss) 2
|
(0.9
|
%)
|
(14.3
|
%)
|
(1.3
|
%)
|
(1.7
|
%)
|
||||||||
Loss and LAE expenses incurred
|
$
|
84,781
|
$
|
94,540
|
$
|
262,336
|
$
|
244,327
|
||||||||
Net premiums earned
|
110,288
|
96,807
|
335,931
|
314,209
|
||||||||||||
Loss and LAE ratio
|
76.9
|
%
|
97.7
|
%
|
78.1
|
%
|
77.8
|
%
|
||||||||
Other operating expenses
|
$
|
36,070
|
$
|
29,200
|
$
|
102,658
|
$
|
99,984
|
||||||||
Less: Commissions and other income
|
2,716
|
3,413
|
5,033
|
7,488
|
||||||||||||
Other operating expenses, less commissions and other income
|
$
|
33,354
|
$
|
25,787
|
$
|
97,625
|
$
|
92,496
|
||||||||
Net premiums earned
|
110,288
|
96,807
|
335,931
|
314,209
|
||||||||||||
Expense ratio
|
30.2
|
%
|
26.6
|
%
|
29.1
|
%
|
29.4
|
%
|
||||||||
Combined ratio 3
|
107.1
|
%
|
124.3
|
%
|
107.2
|
%
|
107.2
|
%
|
||||||||
Gross premiums written
|
$
|
137,145
|
$
|
138,699
|
$
|
433,191
|
$
|
429,792
|
||||||||
Net premiums written
|
109,292
|
97,014
|
340,309
|
324,702
|
||||||||||||
1 Total Value Creation equals change in book value plus dividends paid, divided by beginning book value. Quarterly amounts have been annualized.
|
||||||||||||||||
2 Quarterly and year-to-date amounts have been annualized
|
||||||||||||||||
3 The combined ratio is calculated as ratio of losses and loss expenses incurred, plus other operating expenses, less commission and other income to net premiums earned.
|
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