UA
UNICO AMERICAN CORP (UNAM)·Q1 2021 Earnings Summary
Executive Summary
- Q1 2021 headline profit was driven by a one-time $3.69M gain on the sale-leaseback of the Calabasas headquarters; core insurance operations posted an underwriting loss as the combined ratio remained elevated at 116% and the loss ratio at 85% .
- Total revenues rose to $11.47M, up sharply year over year due to the real estate gain; net income was $2.27M ($0.43 EPS) vs. a $(1.04)M loss in Q1 2020, primarily due to the building sale .
- Gross written premium increased 14% year over year to $10.48M (California-focused), with CMP as the dominant line; ceded reinsurance rose as a share of earned premium (30%), reflecting costlier excess-of-loss treaties .
- Risk disclosures tightened: A.M. Best revised Crusader’s and Unico’s outlooks to negative in February; Unico submitted an RBC Plan to the CA DOI in March; COVID-related business interruption litigation (including a March class action) remains a tail risk .
- No Q1 2021 earnings press release (Item 2.02) or earnings call transcript was filed; Street consensus estimates were not available for UNAM, so “vs. estimates” comparisons are not applicable .
What Went Well and What Went Wrong
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What Went Well
- Real estate monetization provided a $3.69M gain, flipping the quarter to profitability: “The increase in net income was primarily due to the realized gain on [the] sale [of the Calabasas Building]” .
- Gross written premium growth (+14% YoY to $10.48M) supported by the Transportation vertical; CMP represented ~99.5% of written premium .
- Investment portfolio stability: net investment income was steady at $0.515M; equity securities gains and short-term investments grew, while the fixed income book remained high quality with Level 1/2 pricing .
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What Went Wrong
- Core underwriting remains challenged: underwriting loss before tax (≈$3K), loss ratio 85%, and combined ratio 116% in the quarter, underscoring ongoing profitability pressure absent one-offs .
- Higher reinsurance cost burden: ceded earned premium rose to 30% of gross earned premium amid higher excess-of-loss pricing, pressuring net earned premium leverage .
- Legal/ratings overhang: COVID BI litigation (including a March 2021 putative class action) and A.M. Best negative outlooks add execution and capital risk to the recovery narrative .
Financial Results
Segment/line mix (Q1 2021):
- Insurance Company Operation revenues: $10,992,655 (includes $3,693,858 real-estate sale gain; net earned premium $6,603,760; net investment income $514,723) .
- Other Insurance Operations: gross commissions/fees $433,461; finance charges/fees $44,998 .
Underwriting and premium KPIs:
- Gross written premium: $10,482,545 (CA: 100%) .
- Ceded earned premium ratio: 30% (ceded earned premium $2,783,874 vs. gross earned premium $9,387,634) .
- Underwriting (pre-tax): $(3,418) .
Guidance Changes
Earnings Call Themes & Trends
No earnings call transcript was filed for Q1 2021; themes summarized from MD&A and filings.
Management Commentary
- “The increase in net income was primarily due to the realized gain on [the] sale of the Calabasas Building” (Q1 2021 MD&A Overview) .
- “The following table shows the loss ratios, expense ratios, and combined ratios of Crusader: Loss ratio 85%; Expense ratio 31%; Combined ratio 116%” (Q1 2021) .
- “On February 5, 2021, A.M. Best… revised the outlooks to negative… and affirmed [FSR B++]… The negative outlooks capture… declining underwriting performance [and] execution risk” .
- “On March 23, 2021, ten policyholders sued Crusader in a putative class action… alleging wrongly denied COVID-19 business interruption claims” .
- “Crusader’s gross written premium… California $10,482,545… Total $10,482,545” (concentration) .
Q&A Highlights
No Q1 2021 earnings call was filed; no Q&A disclosures were available in company documents .
Estimates Context
- Street consensus estimates (EPS and revenue) for Q1 2021 were not available for UNAM on S&P Global; as a result, no “vs. estimates” comparisons are presented [GetEstimates error; no public consensus mapping available].
Key Takeaways for Investors
- Reported profitability hinges on one-time real estate gains; underlying insurance results remain subpar (85% loss ratio; 116% combined ratio), implying continued remediation needed in underwriting, pricing, and claims .
- Reinsurance costs are rising (ceded ratio 30%), dampening net earned premium leverage; expect net margins to stay constrained unless loss experience improves or ceded costs ease .
- Capital and regulatory posture is in focus (negative A.M. Best outlooks; RBC Plan filed), a catalyst path that could influence distribution access and pricing power .
- Legal overhang persists via COVID-19 BI litigation (including a California putative class action); outcomes and defense costs are key monitoring items for reserve adequacy and volatility .
- Premium growth is concentrated in California CMP (Transportation), which aided GWP growth (+14% YoY) but leaves the book exposed to regional/regulatory dynamics; diversification remains a medium-term strategic lever .
- No formal guidance and no earnings call limit external visibility; near-term catalysts include underwriting trend progression, reinsurance renewal terms, regulatory feedback on the RBC Plan, and litigation developments .