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IH

ICC Holdings, Inc. (ICCH)·Q3 2024 Earnings Summary

Executive Summary

  • Q3 delivered a sharp turnaround: consolidated revenues rose to $24.38M, diluted EPS was $0.69 (vs. $(0.26) in Q3’23), and the GAAP combined ratio improved to 98.7% from 106.4% YoY, driven by premium growth, better underwriting, and stronger investment results .
  • Premium momentum continued (direct premiums written +12.9% YoY to $27.66M) with net premiums earned +12.9% YoY, reflecting rate strength and policy count growth; investment income rose 16% YoY to $1.56M and equity marks swung to a $0.61M unrealized gain from a $(1.06)M loss .
  • Expense ratio improved to 33.6% despite ~$1.0M of merger/proxy costs YTD; management cited rate strengthening, tighter risk selection, and deployment of Charlee.ai as underwriting/claims productivity levers .
  • The pending merger remains on track: shareholder vote planned for late November with management reiterating an expected Q4 2024 close—an important potential stock catalyst alongside continued underwriting normalization .
  • Consensus estimates from S&P Global were unavailable for ICCH; no beat/miss determination versus Street is provided (S&P Global consensus unavailable).

What Went Well and What Went Wrong

  • What Went Well

    • Combined ratio improved to 98.7% (Q3) from 106.4% YoY; loss ratio fell to 65.1% (from 69.9%) and expense ratio to 33.6% (from 36.5%) .
    • Premium growth and pricing held: direct premiums written +12.9% YoY to $27.66M; net premiums earned +12.9% to $21.71M, reflecting rate increases and more policies in force .
    • Investment contribution strengthened: net investment income +16% YoY to $1.56M and unrealized gains of $0.61M vs. $(1.06)M YoY, aiding EPS inflection to $0.69 .
    • Quote: “Losses and settlement expenses are down due to our continued rate strengthening, tighter risk selection, and the introduction of Charlee.ai to improve efficiency and hasten claim resolution.” — Arron Sutherland, CEO .

  • What Went Wrong

    • Losses and settlement expenses rose 5.3% YoY to $14.14M, with pressure from Businessowner’s Liability claims; YTD loss growth (11.8%) driven by Liquor Liability severity/frequency .
    • Reinsurance cessions increased (Q3 earned ceded $3.48M vs. $2.88M), lowering net retention; management noted ceding allowances on first property & casualty reinsurance contracts .
    • Operating costs elevated by legal/consulting related to proxy contest/merger (~$1.0M YTD), tempering expense progress despite efficiency gains .

Financial Results

MetricQ3 2023Q1 2024Q2 2024Q3 2024
Consolidated Revenues ($USD Millions)$19.76 $23.08 $22.18 $24.38
Net Income ($USD Millions)$(0.77) $2.24 $(0.73) $2.05
Diluted EPS ($)$(0.26) $0.75 $(0.24) $0.69
Loss Ratio (%)69.9% 61.0% 71.3% 65.1%
Expense Ratio (%)36.5% 37.9% 39.6% 33.6%
Combined Ratio (%)106.4% 98.9% 110.9% 98.7%

KPIs and revenue composition:

KPIQ3 2023Q1 2024Q2 2024Q3 2024
Direct Premiums Written ($USD Millions)$24.50 $23.74 $25.39 $27.66
Net Premiums Earned ($USD Millions)$19.23 $20.22 $20.40 $21.71
Net Investment Income ($USD Millions)$1.34 $1.44 $1.54 $1.56
Net Realized Gains ($USD Millions)$0.20 $0.15 $(0.00) $0.44
Net Unrealized Gains (Losses) ($USD Millions)$(1.06) $1.27 $0.25 $0.61
Book Value/Share (Period-End)—$21.88 $21.51 $23.29

Notes:

  • Q3 revenue and EPS improved both YoY and sequentially versus Q2’s loss; combined ratio tightened materially from 110.9% in Q2 to 98.7% in Q3, reflecting lower expense ratio and improved loss ratio .
  • Increased cessions (Q3 earned ceded $3.48M vs. $2.88M) reflect reinsurance structure with ceding allowance and higher direct writings .

Estimates vs. Actuals: S&P Global consensus for ICCH was unavailable; no estimate comparisons are provided (S&P Global consensus unavailable).

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Merger vote timingQ4 2024Targeted Q4 2024 close; working diligently toward deadline Shareholder vote planned for late November; still expect Q4 2024 closing Maintained
Financial guidance (revenue, margins, tax, OpEx)—None providedNone provided—
Dividend—Not discussedNot discussed—

Earnings Call Themes & Trends

Note: No earnings call transcript was located; themes reflect management commentary from press releases.

TopicPrevious Mentions (Q1 & Q2 2024)Current Period (Q3 2024)Trend
Underwriting/pricing disciplineMaintained pricing discipline; net premiums earned +13.6% YoY in Q1 . Continued targeted rate increases; in-force policy count expansion in Q2 .Rate strengthening and tighter risk selection cited for loss improvement .Improving
Claims trends by lineQ1 losses up with earned premium growth . Q2 pressure from Liquor Liability and Business Owner’s Property claims .Q3 increase driven by Businessowner’s Liability; YTD increase driven by Liquor Liability .Mixed but stabilizing
Expense managementQ1 expense ratio 37.9% . Q2 elevated OpEx; legal/consulting +$0.8M YTD (proxy/merger) .Expense ratio improved to 33.6% despite ~$1.0M YTD legal/consulting for proxy/merger; operational efficiencies .Improving
Investment income/marketsQ1 NII +19% YoY; higher rates and portfolio alignment . Q2 NII +24% YoY .Q3 NII +16% YoY; equity marks reversed to gains; “investment conditions improved greatly” .Improving
Reinsurance program/cedingHigher ceded premiums with additional direct writings; ceding allowance noted (Q2) .Q3 earned ceded $3.48M vs. $2.88M YoY; ceding allowance on first P&C reinsurance contracts .Stable/structural
Technology/analyticsNot highlighted in Q1/Q2 PRs.Introduction of Charlee.ai to improve efficiency and hasten claim resolution .New positive driver
M&A (pending merger)Proceeding as planned; Q4 2024 closing targeted; “very positive effect on stock price” (Q2) .Vote planned late November; still expect Q4 close .On track

Management Commentary

  • “We have seen year-over-year improvement in both our losses and settlement expense ratio and underwriting expense ratio… due to our continued rate strengthening, tighter risk selection, and the introduction of Charlee.ai to improve efficiency and hasten claim resolution.” — Arron Sutherland, CEO .
  • “Underwriting expenses are down despite the $1.0M spent on the merger and successful proxy contest as a result of operational efficiencies.” .
  • “Investment conditions improved greatly in Q3 leading to more positive investment results in net income and earnings per share.” .
  • “The merger has been moving forward as anticipated… vote on the merger is planned for late November. We still expect a Q4 2024 closing.” .

Q&A Highlights

  • No earnings call transcript was available; no Q&A disclosures to summarize. Analysis relies on the company’s press release disclosures .

Estimates Context

  • S&P Global (Capital IQ) consensus estimates for ICCH were unavailable; we were unable to retrieve EPS or revenue consensus for Q3 2024. As a result, we cannot assess beat/miss versus Street this quarter (S&P Global consensus unavailable).

Key Takeaways for Investors

  • Sequential normalization: Combined ratio improved dramatically from 110.9% (Q2) to 98.7% (Q3), aided by a lower expense ratio and modestly better loss ratio; EPS swung from $(0.24) to $0.69 .
  • Premium/pricing tailwind persists: Direct premiums written +12.9% and NPE +12.9% YoY reflect effective rate actions and policy growth, supporting further operating leverage if loss trends remain contained .
  • Investment income/marks are supportive: Higher reinvestment yields and positive equity marks lifted earnings and book value per share ($23.29 at 9/30) .
  • Claims mix remains a watch item: Businessowner’s Liability drove Q3 loss growth; YTD Liquor Liability still a headwind—ongoing underwriting and risk selection initiatives are crucial .
  • Cost discipline despite transaction costs: Expense ratio improved even with ~$1.0M YTD merger/proxy spend, implying underlying efficiency gains .
  • Reinsurance strategy: Higher cessions with ceding allowance help manage volatility but cap net retention; watch impact on net earned premium growth vs. earnings stability .
  • Near-term catalyst: Merger vote in late November with Q4 2024 close expected—potential inflection for valuation and liquidity profile if consummated .

Cited sources: Q3 2024 press release and 8-K Exhibit 99.1 (including financial statements and ratios), Q2 and Q1 2024 8-K press releases for trend analysis.

  • Q3 2024:
  • Q2 2024:
  • Q1 2024: