NASHVILLE, TN / ACCESSWIRE / November 3, 2021 / First Acceptance Corporation (OTCQX:FACO) today reported its financial results for the three and nine months ended September 30, 2021. A quarterly report can be found at www.otcmarkets.com/stock/FACO/disclosure.
Loss before income taxes for the three months ended September 30, 2021 was $1.4 million, compared with net income of $5.3 million for the three months ended September 30, 2020. Net loss for the three months ended September 30, 2021 was $0.5 million, compared with net income of $4.0 million for the three months ended September 30, 2020. Diluted net loss per share was $0.01 for the three months ended September 30, 2021, compared with diluted net income per share of $0.10 for the same period in the prior year.
Income before income taxes for the nine months ended September 30, 2021 was $4.9 million, compared with $11.2 million for the nine months ended September 30, 2020. Net income for the nine months ended September 30, 2021 was $4.4 million, compared with $8.6 million for the nine months ended September 30, 2020. Diluted net income per share was $0.11 for the nine months ended September 30, 2021, compared with $0.22 for the same period in the prior year.
For the three months ended September 30, 2021, we recognized unfavorable prior period loss development of $4.1 million, compared with favorable prior period loss development of $3.0 million for the three months ended September 30, 2020. For the nine months ended September 30, 2021 and 2020, we recognized $2.2 million and $3.0 million of favorable prior period loss development, respectively.
Loss for the three months ended September 30, 2021 included $6.1 million in net gains on investments and foreclosed real estate held for sale. Income for the nine months ended September 30, 2021 included $7.0 million in net gains on investments and foreclosed real estate held for sale, compared with $2.0 million in net losses for the same period in the prior year.
President and Chief Executive Officer, Larry Willeford, commented, "Our third quarter operating results were significantly impacted by an unprecedented rapid rise in loss severity resulting from increased car prices and vehicle repair costs. From the end of the first quarter to the end of October, we have seen our average total loss settlement cost skyrocket over 40%. This increase in loss severity resulted in a higher-than-expected loss ratio for the third quarter. We believe that other auto insurers are also experiencing these trends, and we are acting as diligently as possible to respond to these increased risks."
Mr. Willeford further added, "I am however pleased to report that our quarter did include $6.1 million of non-recurring investment gains that partially offset our loss from operations. As we draw closer to the end of another year, Acceptance is well underway in planning its 2022 strategic initiatives and is focused on attaining sustained profitable revenue growth and maintaining cost-containment efforts in these challenging economic times where employment levels and costs remain major concerns."
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. We 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 339 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," 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 | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
Revenues | $ | 76,366 | $ | 69,656 | $ | 218,802 | $ | 202,082 | ||||||||
(Loss) Income before income taxes | $ | (1,421 | ) | $ | 5,255 | $ | 4,895 | $ | 11,161 | |||||||
Net (loss) income | $ | (532 | ) | $ | 4,010 | $ | 4,402 | $ | 8,576 | |||||||
Net (loss) income per diluted share | $ | (0.01 | ) | $ | 0.10 | $ | 0.11 | $ | 0.22 | |||||||
Average diluted shares outstanding | 38,242 | 38,331 | 38,478 | 39,293 | ||||||||||||
Statutory Combined Ratio: | ||||||||||||||||
Loss | 85.6 | % | 64.0 | % | 72.6 | % | 64.1 | % | ||||||||
Expense | 28.1 | % | 29.7 | % | 28.4 | % | 29.5 | % | ||||||||
Combined | 113.7 | % | 93.7 | % | 101.0 | % | 93.6 | % | ||||||||
INVESTOR RELATIONS CONTACT:
Michael J. Bodayle
615.844.2885
SOURCE: First Acceptance Corp.
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