NASHVILLE, TN / ACCESSWIRE / March 1, 2021 / First Acceptance Corporation (OTCQX:FACO) today reported its financial results for the quarter and year ended December 31, 2020. Our 2020 Annual Report can be found at www.otcmarkets.com/stock/FACO/disclosure.
Income before income taxes, for the three months ended December 31, 2020 was $2.5 million, compared with a loss of $2.6 million for the three months ended December 31, 2019. Net income for the three months ended December 31, 2020 was $1.8 million, compared with a net loss of $2.1 million for the three months ended December 31, 2019. Diluted net income per share was $0.05 for the three months ended December 31, 2020, compared with diluted net loss per share of $0.05 for the same period in the prior year.
Income before income taxes, for the year ended December 31, 2020 was $13.6 million, compared with $19.7 million for the year ended December 31, 2019. Net income for the year ended December 31, 2020 was $10.4 million, compared with $15.4 million for the year ended December 31, 2019. Diluted net income per share was $0.27 for the year ended December 31, 2020, compared with $0.37 for the prior year.
For the three months ended December 31, 2020 and 2019, we recognized favorable prior period loss and loss adjustment expense development of $2.7 million and $3.0 million, respectively. For the years ended December 31, 2020 and 2019, we recognized favorable prior period loss and loss adjustment expense development of $4.2 million and $25.4 million, respectively.
For the three months ended December 31, 2020 and 2019, income (loss) before income taxes included net gains on investments of $0.9 million and $0.5 million, respectively. For the year ended December 31, 2020, income before income taxes included a net loss on investments of $1.0 million compared with a net gain on investments of $1.4 million in the prior year.
President and Chief Operations Officer, Larry Willeford, commented, "A year ago, just six months after assuming leadership of Acceptance, I wrote to you the morning after a devastating tornado struck Nashville where we are headquartered amidst the uncertain economic impact of the looming COVID-19 pandemic. While never losing faith in sustaining our mission to keep our customers insured and our business strong, it is still remarkable how considering these setbacks, we attained our fourth consecutive profitable year with pre-tax operating income (excluding a $1.0 million loss on investments) of $14.6 million. This amazing effort is a testament to the best management team and team members that our Company has ever assembled."
Mr. Willeford further added, "While I try to recognize our accomplishments with a degree of modesty, I do take great pride in the recent rating upgrade Acceptance received from the AM Best Company. Likewise, I am also proud of how our team has embraced our "Acceptance Pledge" campaign declaring that they want to live in a kinder, more just world, and I encourage you to do the same at pledge.acceptanceinsurance.com. I am also encouraged by how we closed out the year. During the fourth quarter, our operating revenues continued their strong post-COVID lockdown recovery, and both claims frequency and severity have remained stable. These recent positive trends, combined with our ability to further capitalize on the investments and initiatives we made during the year on our processes and brand, make me look forward to continued success in 2021."
About First Acceptance Corporation
We own and operate "Acceptance Insurance," an insurance agency headquartered in Nashville, Tennessee that sells insurance and related products underwritten and serviced by our own insurance companies (known as the First Acceptance Insurance Group) and through third-party carriers for which we receive a commission. Following the September 30, 2020, sale of our retail locations in New Mexico and Nevada, we now operate under an "Agency Model" in 15 states where we sell both our own underwritten insurance policies and those issued by third-party insurers for which we earn commissions.
Acceptance Insurance primarily sells non-standard personal automobile insurance through our own insurance companies and third-party carriers. Non-standard personal automobile insurance is sought after by individuals because of their inability or unwillingness to obtain standard insurance coverage due to various factors including their payment preference, failure to have maintained continuous insurance coverage, or their driving record. We also offer a variety of other commissionable third-party products such as roadside assistance and in most states, we also sell an insurance product for renters that we underwrite. We believe that our agency-focused operations provide us with a variety of insurance alternatives for our core customers as well as the ability to provide products that suit other potential customers.
Acceptance Insurance currently leases and operates 338 retail locations staffed with employee-agents. In addition to our retail locations, we are able to complete sales over the phone through employee-agents in our call center or through our consumer-based website and mobile platform. On a limited basis, we also sell our products through selected retail locations operated by independent agents.
Additional information about First Acceptance Corporation can be found online at www.acceptance.com.
Forward-Looking Statements
This press release contains forward-looking statements. All statements made other than statements of historical fact are forward-looking statements. You can identify these statements from our use of the words "believe," "expect," "look," or the negative of these objective terms and similar expressions. These statements, which have been included in reliance on the "safe harbor" provisions of the federal securities laws, involve risks and uncertainties. Investors are hereby cautioned that these statements may be affected by important factors, including, among others, the factors set forth under the caption "Risk Factors" in our Annual Report for the year ended December 31, 2020 filed by the Company with the OTCQX. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.
First Acceptance Corporation and Subsidiaries
Condensed Consolidated Statements of Operations
(amounts in thousands, except per share data)
| Three Months Ended | Year Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Revenues | $ | 67,498 | $ | 68,060 | $ | 269,580 | $ | 292,691 | ||||||||
| Income (loss) before income taxes | $ | 2,477 | $ | (2,560) | $ | 13,639 | $ | 19,715 | ||||||||
| Net income (loss) | $ | 1,841 | $ | (2,057) | $ | 10,418 | $ | 15,336 | ||||||||
| Net income (loss) per diluted share | $ | 0.05 | $ | (0.05) | $ | 0.27 | $ | 0.37 | ||||||||
| Average diluted shares outstanding | 38,432 | 41,534 | 39,117 | 41,914 | ||||||||||||
| Loss Ratio | 66.7 | % | 71.2 | % | 64.8 | % | 64.3 | % | ||||||||
| Expense Ratio | 29.9 | % | 34.6 | % | 29.6 | % | 29.3 | % | ||||||||
| Combined Ratio | 96.6 | % | 105.8 | % | 94.4 | % | 93.6 | % | ||||||||
INVESTOR RELATIONS CONTACT:
Michael J. Bodayle
615.844.2885
SOURCE: First Acceptance Corporation
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