NASHVILLE, TN / ACCESSWIRE / March 5, 2024 / First Acceptance Corporation (OTCQX:FACO) today reported its financial results for the quarter and year ended December 31, 2023. Our 2023 Annual Report can be found at www.otcmarkets.com/stock/FACO/disclosure.
Income before income taxes, for the three months ended December 31, 2023, was $84.0 million, compared with loss before income taxes of $2.4 million for the three months ended December 31, 2022. Net income for the three months ended December 31, 2023, was $62.4 million, compared with net loss of $2.1 million for the three months ended December 31, 2022. Diluted net income per share was $1.62 for the three months ended December 31, 2023, compared with diluted net loss per share of $0.06 for the same period in the prior year.
Income before income taxes, for the year ended December 31, 2023, was $99.0 million, compared with loss before income taxes of $22.0 million for the year ended December 31, 2022. Net income for the year ended December 31, 2023, was $73.9 million, compared with net loss of $17.5 million for the year ended December 31, 2022. Diluted net income per share was $1.92 for the year ended December 31, 2023, compared with diluted net loss per share of $0.46 for the same period in the prior year.
On December 1, 2023, the Company sold its wholly owned subsidiary, Acceptance Insurance Agency of Tennessee, Inc. ("the Insurance Agency"). The Insurance Agency was the retail sales agency operation of the Company, and principally sold non-standard automobile insurance and related products through employee-agents operating from 288 leased retail locations in 13 states. The Company has recognized a gain of $73.0 million on this sale, net of disposals of goodwill and intangible assets and net of transaction and other related costs.
Excluding the gain on sale of the Insurance Agency of $73.0 million, income before income taxes for the year ended December 31, 2023 was $26.0 million compared with loss before income taxes of $22.0 million for the year ended December 31, 2022, and income before income taxes for the three months ended December 31, 2023 was $11.0 million compared with loss before income taxes of $2.1 million for the three months ended December 31, 2022.
The Company's President and Chief Executive Officer, Ken Russell, commented "Following the sale of our retail insurance agency operations on December 1, 2023, our Company began a transition from an automobile insurance carrier with a primarily captive retail-based distribution to a solely independent agent-based distribution. As presented in our 2023 financial statements, this transaction provided the financial benefits of increased stockholder value and both current and future additional statutory surplus for our insurance companies. It has also allowed us to narrow our operational focus to the underwriting results of our insurance companies."
"In connection with our transition and reorganization, I am pleased to announce some organizational changes effective March 1, 2024. Doug Jensen, previously our insurance carrier's Chief Insurance Operations Officer, has been named Chief Operating Officer of First Acceptance Corporation and will manage all day-to-day corporate operations. I will retain the position of President and Chief Executive Officer continuing to strategically direct the Company and provide our executive team with guidance and support. Additionally, Anthony Delaney, previously in-charge of Product and Underwriting for the insurance carrier, has been promoted to Executive Vice President and named the Chief Insurance Operations Officer, replacing Mr. Jensen, and Sarannah McMurtry, the Company's General Counsel, has been promoted to Executive Vice President - General Counsel."
Mr. Russell further commented "We have now seen a full year of favorable impact from our premium rate increases and the moderation of physical damage loss severities. In addition, we have experienced premium and policy growth in both our former retail channel (now part of the independent agent channel) and our existing expanded independent agent channel. We believe that the current market conditions for the Company remain favorable, and we expect these positive trends to continue."
About First Acceptance Corporation
First Acceptance Corporation is an insurance holding company headquartered in Nashville that underwrites non-standard personal automobile insurance through insurance companies known as the First Acceptance Insurance Group.
Additional information about First Acceptance Corporation can be found online at www.firstacceptance.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," "look," 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, 2023, 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 | Year Ended | ||||||||||||||||
| December 31, | December 31, | ||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||
Revenues |
$ | 216,395 | $ | 87,858 | $ | 560,576 | $ | 302,296 | |||||||||
Income (loss) before income taxes |
$ | 84,021 | $ | (2,434 | ) | $ | 99,033 | $ | (22,033 | ) | |||||||
Net income (loss) |
$ | 62,395 | $ | (2,146 | ) | $ | 73,912 | $ | (17,488 | ) | |||||||
Net income (loss) per diluted share |
$ | 1.62 | $ | (0.06 | ) | $ | 1.92 | $ | (0.46 | ) | |||||||
Average diluted shares outstanding |
38,553 | 37,799 | 38,409 | 37,795 | |||||||||||||
Loss Ratio |
67.3 | % | 80.0 | % | 69.6 | % | 78.7 | % | |||||||||
Expense Ratio |
29.5 | % | 30.0 | % | 27.6 | % | 30.6 | % | |||||||||
Combined Ratio |
96.8 | % | 110.0 | % | 97.2 | % | 109.3 | % | |||||||||
Book Value per Common Share |
$ | 3.71 | $ | 1.73 | |||||||||||||
INVESTOR RELATIONS CONTACT:
Michael J. Bodayle
mbodayle@firstacceptance.com
SOURCE: First Acceptance Corporation
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