ICC Holdings, Inc. (ICCH)·Q2 2024 Earnings Summary

Executive Summary

• Q2 2024 deteriorated versus both Q1 and prior year: consolidated revenue was $22.18M (-3.9% q/q), diluted EPS was $(0.24) vs $0.75 in Q1 and $0.20 in Q2 2023, and the GAAP combined ratio rose to 110.9% (from 98.9% in Q1 and 106.3% in Q2 2023) as losses and settlement expenses increased, especially in Liquor Liability and Business Owner’s Property lines .
• Premium growth remained solid: direct premiums written rose 7.6% YoY to $25.39M; net premiums earned were up 10.3% YoY to $20.40M, supported by targeted rate increases and increased policies in force .
• Management highlighted elevated legal/consulting costs tied to a proxy contest and pending merger; excluding these, the expense ratio was down 1.2% due to operational efficiencies, partially offsetting loss pressures .
• Merger process: management reiterated a Q4 2024 closing timeline and noted a positive stock effect; separate legal press releases referenced $23.50 per share cash consideration and ~$73.8M equity value in the transaction with Mutual Capital Holdings, a potential near‑term catalyst .
• Wall Street consensus estimates via S&P Global were unavailable for Q2 2024; beat/miss assessment to Street is not possible with SPGI data; investors should focus on combined ratio and claims trends as primary drivers near term.

What Went Well and What Went Wrong

What Went Well

• Premium growth momentum: direct premiums written +7.6% YoY to $25.39M; net premiums earned +10.3% YoY to $20.40M, driven by targeted rate increases and higher policies in force .
• Higher investment income: net investment income +23.5% YoY to $1.54M, reflecting reinvestment at higher rates and portfolio positioning .
• Operational efficiencies: “Excluding proxy contest and merger expenses, our expense ratio is down 1.2% as a result of continued improvements in operational efficiencies,” reinforcing cost discipline even amid growth .

What Went Wrong

• Underwriting pressure: losses and settlement expenses rose 19.2% YoY to $14.55M; loss ratio increased to 71.3% vs 66.0% in Q2 2023, driving the combined ratio to 110.9% .
• EPS reversal: diluted EPS fell to $(0.24), down from $0.75 in Q1 and $0.20 in Q2 2023, with elevated losses and higher general corporate/legal costs impacting bottom line .
• Reinsurance cessions up: earned premiums ceded increased to $3.67M from $2.70M YoY, reflecting both higher premium volumes and ceding allowance on first P&C reinsurance contracts; while risk‑transfer is prudent, it caps net earned premium growth .

Financial Results

Sequential comparison (oldest → newest)

YoY comparison (Q2 2024 vs Q2 2023)

KPIs (oldest → newest)

Guidance Changes

Earnings Call Themes & Trends

Note: An earnings call transcript for Q2 2024 was not available in our document set; themes reflect management commentary from press releases.

Management Commentary

• “We continue to have strong premium growth from targeted rate increases and in‑force policy count expansion, while utilizing our underwriting, actuarial, and loss control procedures to reduce risk in volatile territories.”
• “Excluding proxy contest and merger expenses, our expense ratio is down 1.2% as a result of continued improvements in operational efficiencies.”
• “The merger is proceeding as planned… ensure our Q4 2024 deadline for closing.”
• Q1 context: “We have maintained pricing discipline and increased earned premiums by 13.6% year over year… We are pleased to see another unusually strong first quarter.”
• Q4 context: “Underwriting measures… have taken hold, particularly with Liquor Liability… fewer open claims… expect lower loss and settlement expense ratio in 2024.”

Q&A Highlights

• No Q2 2024 earnings call transcript was available in our document set; thus, there are no Q&A items to report [ListDocuments returned none].

Estimates Context

• Wall Street consensus (S&P Global) for Q2 2024 EPS/Revenue was unavailable due to missing SPGI/Capital IQ mapping for ICCH; therefore, we cannot provide a beat/miss vs Street for Q2 2024 [SpgiEstimatesError].
• Given actuals (combined ratio 110.9%, loss ratio 71.3%, EPS $(0.24)), near‑term models should reflect elevated loss costs and legal/proxy expenses; management noted ex‑proxy/merger expense ratio improvement, implying core OpEx tailwind once extraordinary costs subside .

Key Takeaways for Investors

• Underwriting headwinds overshadowed premium growth: combined ratio spiked to 110.9% on higher Liquor Liability/BOP losses, pressuring EPS despite strong net investment income; watch LR trajectories into H2 .
• Premium growth intact: direct written premiums +7.6% YoY; net earned +10.3% YoY, supported by rates and in‑force expansion; growth runway persists with market/state expansion .
• Ex‑extraordinary costs, efficiency improved: expense ratio down 1.2% when excluding proxy/merger costs—indicative of underlying operational gains that can re‑emerge post‑deal .
• Merger path and valuation overlay: management reaffirmed Q4 2024 close; external legal PRs cite $23.50/share cash (~$73.8M equity value), anchoring potential takeout price and reducing trading to deal‑spread dynamics near term .
• Reinsurance usage increased: higher cessions (including ceding allowance) temper net earned growth but support risk management amid loss volatility; monitor net retention and treaty economics .
• Investment income tailwind: sustained higher reinvestment yields boosted NII; portfolio positioning offers earnings support while underwriting normalizes .
• Near‑term focus: claims severity management, rate adequacy, and merger milestones; absent Street estimates, track combined ratio and LR sequentially to gauge core trajectory .