ROCK ISLAND, Ill., Feb. 28, 2022 — ICC Holdings, Inc. (NASDAQ: ICCH) (the Company), parent company of Illinois Casualty Company, a regional, multi-line property and casualty insurance company focusing exclusively on the food and beverage industry, today reported unaudited results for the twelve months ended December 31, 2021.
FOURTH QUARTER AND TWELVE MONTHS ENDED DECEMBER 31, 2021 – FINANCIAL RESULTS
Direct premiums written grew by $4,305,000, or 29.2%, to $19,047,000 for the fourth quarter of 2021 from $14,742,000 for the same period in 2020. For the twelve months ended December 31, 2021, direct premiums written grew by $12,110,000, or 20.5%, to $71,092,000 compared to $58,982,000 for the same period in 2020. The fourth quarter witnessed positive insurance market activity which bolstered the Company’s steady growth trend established in the prior three quarters. Our insureds’ businesses were open substantially all year long in 2021 which was a stark contrast to the prior year’s business closures. Net premiums earned grew by 17.7% or $2,265,000 to $15,032,000 for the three months ended December 31, 2021, from $12,767,000 for the same period in 2020. Net premiums earned grew by 8.5% to $53,893,000 for the twelve months ended December 31, 2021, from $49,689,000 for the same period in 2020. The increase in net premiums earned for each of the period comparisons is consistent with the increased premium writings experienced throughout the year.
Net earnings totaled $2,141,000, or $0.69 per share, for the fourth quarter of 2021, compared to net earnings of $4,319,000, or $1.43 per share, for the fourth quarter of 2020. The change in fourth quarter’s net earnings as compared to the same quarter last year was driven primarily by prior year’s one-time increase of $1,641,000 from the PPP loan forgiveness. For the twelve months ended December 31, 2021, the Company reported net earnings of $4,290,000, or $1.41 per share, compared to net earnings of $3,531,000, or $1.17 per share, for the same period in 2020. This increase in net earnings is the result of a substantial increase in premium earnings and realized investment gains offset in part by an increase in losses and policy acquisition costs. Book value per share increased to $22.74 at December 31, 2021, from $22.07 at December 31, 2020, as a result of solid organic growth throughout the current year.
For the fourth quarter of 2021, the Company ceded to reinsurers $2,767,000 of earned premiums, compared to $2,175,000 of earned premiums for the fourth quarter of 2020. For the twelve months ended December 31, 2021, the Company ceded earned premiums of $10,854,000, compared to $10,080,000 for the same period in 2020. The slight increase in 2021’s ceded earned premiums reflects a natural increase in risk assumption as a result of policy writings growth, as well as less severe catastrophic events in the current year.
Net realized investment gains net of other-than-temporary impairment losses were $158,000 for the fourth quarter of 2021 compared to similar gains of $157,000 for the same period in 2020. For the twelve months ended December 31, 2021, net realized gains net of other-than-temporary impairment losses were $983,000, compared to losses of $245,000 for the same period in 2020. The moderate current period gains are primarily attributed to a turnaround in the equity markets during the first three quarters of the year. In addition, the Company’s ordinary investment portfolio rebalancing activities helped offset the current year’s market volatility.
Net investment income increased by $152,000, or 17.8%, to $1,005,000 for the fourth quarter of 2021, as compared to $853,000 for the same period in 2020. For the twelve months ended December 31, 2021, net investment income decreased $84,000, or 2.4%, to $3,414,000, from $3,498,000 for the same period in 2020. Our bond portfolio, which is sensitive to interest rate changes, experienced lower investment income in 2021 due to a significant decline in reinvestment rates during 2020.
Losses and settlement expenses increased by $2,770,000, or 41.7%, to $9,418,000 for the fourth quarter of 2021, from $6,648,000 for the same period in 2020. Losses and settlement expenses increased by $2,138,000, or 6.6%, to $34,700,000 for the twelve months ended December 31, 2021, from $32,562,000 for the same period in 2020. The current year’s increase in losses reflects ordinary activity without the inclusion of catastrophic events like those experienced in 2020. Thus far, the Company has not paid any business interruption claims related to COVID-19.
Policy acquisition costs and other operating expenses increased by $1,080,000, or 22.6%, to $5,868,000 for the fourth quarter of 2021 from $4,788,000 for the same period in 2020. These costs also increased by $2,296,000, or 12.4%, to $20,825,000 for the twelve months ended December 31, 2021, from $18,529,000 for the same period in 2020. Direct commissions, a key component of policy acquisition costs, increased 20.0% in alignment with the 20.5% increase in written premiums. These commissions are expensed as premiums are earned and the increase in acquisition costs directly correlates with 2021’s positive earned premium growth.
Total assets increased by 8.8% from $183,939,000 at December 31, 2020, to $200,149,000 at December 31, 2021. Our investment portfolio, which consists of fixed income securities, common stocks, preferred stock, property held for investment, and other invested assets, increased by 8.9% from $129,322,000 at December 31, 2020, to $140,826,000 at December 31, 2021.
FOURTH QUARTER AND TWELVE MONTHS ENDED DECEMBER 31, 2021 – FINANCIAL RATIOS
The Company’s losses and settlement expense ratio (defined as losses and settlement expenses divided by net premiums earned) was 62.7% and 64.4% for the fourth quarter and twelve months ended December 31, 2021, respectively, compared with 52.1% and 65.5% for the same periods of 2020, respectively.
The expense ratio (defined as the amortization of deferred policy acquisition costs and underwriting and administrative expenses divided by net premiums earned) was 39.0% and 38.6% for the fourth quarter and twelve months ended December 31, 2021, respectively, compared to 37.5% and 37.3% for the same periods of 2020, respectively.
The Company’s GAAP combined ratio (defined as the sum of the losses and settlement expense ratio and the expense ratio) was 101.7% and 103.0% for the fourth quarter and twelve months ended December 31, 2021, respectively, compared to 89.6% and 102.8% for the same periods of 2020, respectively.
MANAGEMENT COMMENTARY
“Following the uncertainty of the prior year, the Company welcomed 2021 with a continued commitment to providing best in class insurance coverage to the food and beverage industry. Our in-house experts balanced organic growth with risk mitigation and a focus on operational efficiency with innovation. The Company continues a conservative growth strategy from both a geographic expansion and product offering perspective.
“We ended the year with close to double-digit premium growth in each of the twelve states we do business. We kicked the fourth quarter off with the acquisition of a full-service food safety and education company, Katkin. This exciting addition enables the offering of new, high-quality policyholder education. Sharing our expertise with insureds is a critical component in mitigating future claims experience.
“Consistent with prior quarters, our sustained premium growth outpaced our claims. This proved invaluable to securing a positive bottom line while weathering a challenging investment market. We ended another year with favorable earnings per share.
“While staying hyper-focused on our operations is key, we are excited to explore new ways in which the Company can strengthen its stewardship of our environment, our relationships, and our governance. We look forward to finding new ways in which our expertise can make a difference in our communities and our industry in the new year,” stated Arron Sutherland, President and Chief Executive Officer.
ABOUT ICC HOLDINGS, INC.
ICC Holdings, Inc. is a vertically integrated company created to facilitate the growth, expansion, and diversification of its subsidiaries in order to maximize value to its stakeholders. The group of companies consolidated under ICC Holdings, Inc. engages in diverse, yet complementary business activities, including property and casualty insurance, real estate, and information technology.
The Company’s common shares trade on the NASDAQ Capital Market under the ticker symbol “ICCH”. For more information about ICC Holdings.
Image Courtesy ICC Holdings
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