SUNRISE, Fla., Aug. 07, 2017 (GLOBE NEWSWIRE) -- Federated National Holding Company (the “Company”) (Nasdaq:FNHC) today reported results for the three and six months ended June 30, 2017.

Q2 2017 highlights (as measured against the same three-month period last year, except where noted):

• Gross written premiums of $168.7 million
• 4.1% increase in Florida homeowners’ policies to approximately 280,000
• 56.7% increase in non-Florida homeowners’ policies to approximately 24,500
• 35.6% increase in total revenue to $97.6 million
• $2.8 million of claims, net of reinsurance, from rainstorms, tornados, and other severe weather events in Florida, Louisiana, and Texas
• $3.1 million of losses from prior year development related to Automobile and Homeowners lines of business
• Net income of $4.9 million or $0.37 per diluted share
• 4.4% increase in book value per share, excluding noncontrolling interest, to $16.97 as compared with $16.26 at December 31, 2016
• Total loss reserves at June 30, 2017 of $157.0 million
• Repurchased 390,923 shares of common stock at a weighted average price of $15.82, during the second quarter of 2017.

Commenting on the quarter, Mr. Michael H. Braun, the Company’s Chief Executive Officer, said, “Our net income of $4.9 million for the second quarter includes an expense of $2.8 million in claims, net of reinsurance, related to multiple severe weather events that impacted our policyholders. During the quarter, we also achieved multiple initiatives including finalization of our excess-of-loss catastrophe reinsurance program, replacement of our 10% Florida homeowners quota share treaty, and implementation of actions to improve underwriting results in our automobile book of business. We also continued with our previously announced share repurchase program.  Our 2016 statewide average rate increase of 5.6% on our Florida homeowners’ book of business will be fully reflected in our earned premium for the third quarter, and our additional statewide average rate increase of 9.9% takes effect beginning August 1^st.  We are also pleased to provide enhanced disclosures this quarter via the presentation of our results by line of business basis, demonstrating our continued commitment to transparency with the investing community.  It is our intent to provide this supplemental information on an ongoing basis.”

Line of Business Reporting and Income Statement Reclassifications

In order to provide greater transparency into our operating results, beginning this quarter the Company has provided supplemental line of business information. The “Homeowners” line of business consists of our homeowners and fire property and casualty insurance business, which currently operates in Florida, Alabama, Texas, Louisiana and South Carolina. The “Automobile” line of business consists of our nonstandard personal automobile insurance business which currently operates in Georgia, Texas, Alabama, and Florida. The “Other” line of business primarily consists of our commercial general liability and federal flood businesses, along with corporate and investment operations. As part of our initial presentation of line of business information, we have provided supplemental schedules of quarterly results dating back to the first quarter of 2016.

In conjunction with the inception of line of business reporting, the Company has reclassified certain items in the consolidated statement of operations.  These reclassifications have no impact on net income, but do impact Other income, Losses and loss adjustment expenses and Commissions and other underwriting expenses, and accordingly, the loss ratio, expense ratio and combined ratio.  These reclassifications are immaterial to the consolidated financial statements, but better reflect the substance of the underlying activities.  The items reclassified include: (1) ceding commission income in Automobile is now presented in Commissions and other underwriting expenses, having previously been presented in Other income; and (2) compensation costs associated with our claims management activities are now presented in Loss and loss adjustment expenses, having previously been presented in Commissions and other underwriting expenses.  To aid users of our financial statements, we have provided a schedule of consolidated quarterly results and operating ratios dating back to the first quarter of 2016.  These reclassifications are reflected in all consolidated and line of business results presented herein. 

Revenues

• Total revenues increased $25.6 million, or 35.6%, to $97.6 million for the three months ended June 30, 2017, compared with $71.9 million for the same three-month period last year.
  
  
• Gross written premiums decreased $2.5 million, or 1.5%, to $168.7 million in the quarter, compared with $171.2 million for the same three-month period last year. The decrease was driven by Automobile, which decreased $8.4 million, offset by Homeowners increasing $6.0 million.  The Automobile decrease was related to moving two of our programs into run-off during the second half of 2016, plus a third program in the first quarter of 2017, thus reducing the premiums being written this quarter.  Homeowners’ non-Florida continues to have significant growth in 2017, specifically in Louisiana and Texas, with Texas beginning to write policies in the first quarter of 2017.  Homeowners’ Florida written premiums this quarter, which include the 5.6% rate increase that became effective August 1, 2016, was in line with the same period last year.
  
  
• Gross premiums earned increased $13.2 million, or 9.6%, to $150.6 million, driven primarily by growth in Homeowners spanning all states, and to a lesser extent by growth in Automobile. 
  
  
• Ceded premiums earned decreased $9.9 million, or 12.8%, to $67.4 million in the quarter, compared with the same three-month period last year.  The decrease in ceded premiums earned was driven primarily by the expiration of the 30% Florida-only property quota share treaty, which ended on July 1, 2016.  The effect of this expiration was partially offset by additional excess-of-loss reinsurance costs purchased for the 2016-2017 reinsurance programs, which became effective on June 1, 2016 and July 1, 2016.  Additionally, in Automobile, ceded premiums as a percentage of gross premiums earned decreased to 65% this quarter compared with 79% in the same period last year.  This decrease is the result of one of our auto programs exceeding the premium limit in the related reinsurance treaty.  This program was terminated effective July 1, 2017.
  
  
• Together, the increase in gross earned premium and the decrease in ceded premiums drove net premiums earned of $83.2 million, a $23.1 million increase, or 38.5%, from the same three-month period last year.
  
  
• Net realized investment gains were $2.6 million for the three months ended June 30, 2017, compared to less than $0.1 million in the prior year period.  This increase was driven by a redistribution of our equity portfolio between our investment managers during the second quarter of 2017.
   
• Other income decreased $0.1 million to $4.7 million for the current quarter, compared with $4.8 million in the prior year period.  The decrease was primarily the result of a profitability management decision to move from 12-month term Automobile policies to 6-month policy terms in one of our largest programs enabling rate increases to take effect more quickly.  Increases in other income in Homeowners and Other largely offset the decline from Automobile.

Expenses

• Losses and loss adjustment expenses (“LAE”) increased $6.0 million, or 12.2%, to $55.0 million for the three months ended June 30, 2017, compared with $49.0 million for the same three-month period last year.  Losses and LAE includes reported claims, whether paid or unpaid, as well as the provision of reserves for estimated reported claims.  Approximately $5 million of the increase in losses and LAE represents a volume variance driven strictly by growth in premiums in the second quarter of 2017 compared with the second quarter of 2016.  Losses were also impacted by claims, net of reinsurance of $2.8 million related to rainstorms, tornados, and other severe weather events during the quarter in the states of Florida, Louisiana and Texas.  Additionally, the Company experienced adverse development, net of reinsurance, of $3.1 million in Automobile and Homeowners. These increased losses were lower than the elevated level of losses in the second quarter of 2016 related to Homeowners’ adverse development and the impact of severe weather events, such as Tropical Storm Colin.  The remainder of the quarter-over-quarter variance is related to lower ceded losses in the 2017 quarter as a result of the expiration of the 30% Florida-only property quota share treaty, as noted above.
   
• During the quarter, we reclassified $3.5 million of net reserves related to our commercial general liability business, which resides in the Other line of business, to Homeowners.  This movement was a direct result of reassessing our reserves at a line of business level.  Previously, we assessed the adequacy of our loss reserves on a consolidated company basis.  This reclassification had no impact on net income on a consolidated basis and no impact to the overall consolidated net loss reserves.
   
• Commissions and other underwriting expenses increased $14.2 million, or 89.1%, to $30.2 million for the three months ended June 30, 2017, compared with $16.0 million for the three months ended June 30, 2016. The increase was the result of higher acquisition costs in support of the premium growth in Homeowners and the lower ceded commissions from the expiration of the 30% Florida-only property quota share treaty on July 1, 2016.

Stock Repurchase Program

• During the second quarter of 2017, the Company repurchased 390,923 shares of common stock for $6.2 million at a weighted average price of $15.82.  The Company has repurchased an additional 84,445 shares subsequent to quarter end.

Conference Call Information

The Company will hold an investor conference call at 9:00 AM (ET) Tuesday, August 8, 2017. The Company’s CEO, Michael Braun, its CFO, Ronald Jordan, and its CAO, Erick Fernandez will discuss the financial results and review the outlook for the Company. Messrs. Braun, Jordan and Fernandez invite interested parties to participate in the conference call.

Listeners interested in participating in the Q&A session may dial-in with the number below:
(877) 303-6913

Conference ID: 53101026

A live webcast of the call will be available online via the “Conference Calls” section of the Company’s website at FedNat.com or interested parties can click on the following link:

http://www.fednat.com/investors/conference-calls/ 

Please call at least five minutes in advance to ensure that you are connected prior to the presentation.  A webcast replay of the conference call will be available shortly after the live webcast is completed and may be accessed via the Company’s website.

About the Company

The Company is authorized to underwrite, and/or place through our wholly owned subsidiaries, homeowners’ multi-peril, personal automobile, commercial general liability, federal flood, and various other lines of insurance in Florida and various other states.  The Company also serves as managing general agent for its joint venture, Monarch National Insurance Company. The Company markets and distributes its own and third-party insurers’ products and our other services through a network of independent agents. The Company also utilizes a select number of general agents for the same purpose.

Forward-Looking Statements /Safe Harbor Statements

Safe harbor statement under the Private Securities Litigation Reform Act of 1995:

Statements that are not historical fact are forward-looking statements that are subject to certain risks and uncertainties that could cause actual events and results to differ materially from those discussed herein. Without limiting the generality of the foregoing, words such as “anticipate,” “believe,” “budget,” “contemplate,” “continue,” “could,” “envision,” “estimate,” “expect,” “guidance,” “indicate,” “intend,” “may,” “might,” “plan,” “possibly,” “potential,” “predict,” “probably,” “pro-forma,” “project,” “seek,” “should,” “target,” or “will” or the negative thereof or other variations thereon and similar words or phrases or comparable terminology are intended to identify forward-looking statements.

Forward-looking statements might also include, but are not limited to, one or more of the following:

• Projections of revenues, income, earnings per share, dividends, capital structure or other financial items or measures;
• Descriptions of plans or objectives of management for future operations, insurance products/or services;
• Forecasts of future insurable events, economic performance, liquidity, need for funding and income; and
• Descriptions of assumptions or estimates underlying or relating to any of the foregoing.

The risks and uncertainties include, without limitation, risks and uncertainties related to estimates, assumptions and projections generally; the nature of the Company’s business; the adequacy of its reserves for losses and loss adjustment expense; claims experience; weather conditions (including the severity and frequency of storms, hurricanes, tornadoes and hail) and other catastrophic losses; reinsurance costs and the ability of reinsurers to indemnify the Company; raising additional capital and our potential failure to meet minimum capital and surplus requirements; potential assessments that support property and casualty insurance pools and associations; the effectiveness of internal financial controls; the effectiveness of our underwriting, pricing and related loss limitation methods; changes in loss trends, including as a result of insureds’ assignment of benefits; court decisions and trends in litigation; our potential failure to pay claims accurately; ability to obtain regulatory approval applications for requested rate increases, or to underwrite in additional jurisdictions, and the timing thereof; the impact that the results of the Monarch joint venture may have on our results of operations; inflation and other changes in economic conditions (including changes in interest rates and financial markets); pricing competition and other initiatives by competitors; legislative and regulatory developments; the outcome of litigation pending against the Company, and any settlement thereof; dependence on investment income and the composition of the Company’s investment portfolio; insurance agents; ratings by industry services; the reliability and security of our information technology systems; reliance on key personnel; acts of war and terrorist activities; and other matters described from time to time by the Company in releases and publications, and in periodic reports and other documents filed with the United States Securities and Exchange Commission.

In addition, investors should be aware that generally accepted accounting principles prescribe when a company may reserve for particular risks, including claims and litigation exposures. Accordingly, results for a given reporting period could be significantly affected if and when a reserve is established for a contingency. Reported results may therefore appear to be volatile in certain accounting periods.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made.  We do not undertake any obligation to update publicly or revise any forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.

FEDERATED NATIONAL HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
		Three Months Ended June 30,								Six Months Ended June 30,
			2017				2016				2017				2016
		(in thousands, except per share data)
Revenue:
	Gross premiums written	$	168,692			$	171,218			$	314,743			$	307,242
	Gross premiums earned		150,563				137,334				298,541				265,433
	Ceded premiums earned		(67,404)				(77,289)				(136,889)				(150,391)
	Net premiums earned		83,159				60,045				161,652				115,042
	Net investment income		2,560				2,194				4,878				4,234
	Net realized investment gains		2,648				7				2,543				934
	Direct written policy fees		4,486				4,925				9,571				9,127
	Other income		4,710				4,778				9,637				8,828
	Total revenue		97,563				71,949				188,281				138,165
Costs and expenses:
	Losses and loss adjustment expenses		54,956				48,983				108,722				80,243
	Commissions and other underwriting expenses		30,197				15,971				57,336				31,364
	General and administrative expenses		5,076				5,086				9,695				9,167
	Interest expense		82				94				166				178
	Total costs and expenses		90,311				70,134				175,919				120,952
Income before income taxes			7,252				1,815				12,362				17,213
	Income taxes		2,635				697				4,573				6,492
Net income			4,617				1,118				7,789				10,721
	Net (loss) income attributable to noncontrolling interest		(328)				127				(301)				195
Net income attributable to Federated National Holding Company shareholders		$	4,945			$	991			$	8,090			$	10,526
Net income per share:
	Basic	$	0.38			$	0.07			$	0.61			$	0.76
	Diluted	$	0.37			$	0.07			$	0.60			$	0.75
Number of shares used to calculate net income per share:
	Basic		13,171				13,805				13,305				13,816
	Diluted		13,256				13,988				13,405				14,013
Dividends declared per share of common stock		$	0.08			$	0.06			$	0.16			$	0.11

FEDERATED NATIONAL HOLDING COMPANY AND SUBSIDIARIES
Selected Operating Metrics
(Unaudited)
	Three Months Ended								Six Months Ended
	June 30,								June 30,
		2017				2016				2017				2016
Gross premiums written:	(in thousands)
Homeowners/Fire Florida	$	136,811			$	136,395			$	247,664			$	244,020
Homeowners/Fire non-Florida		14,815				9,253				25,183				16,295
Personal automobile		10,622				18,996				29,913				34,685
Commercial general liability		2,926				3,571				6,222				7,322
Federal flood		3,518				3,003				5,761				4,920
Total gross premiums written	$	168,692			$	171,218			$	314,743			$	307,242
	Three Months Ended								Six Months Ended
	June 30,								June 30,
		2017				2016				2017				2016
Gross premiums earned:	(in thousands)
Homeowners/Fire Florida	$	119,832			$	111,637			$	237,376			$	219,185
Homeowners/Fire non-Florida		10,230				6,785				19,330				12,639
Personal automobile		14,760				13,283				30,407				22,416
Commercial general liability		3,140				3,444				6,334				6,921
Federal flood		2,601				2,185				5,094				4,272
Total gross premiums earned	$	150,563			$	137,334			$	298,541			$	265,433
	Three Months Ended								Six Months Ended
	June 30,								June 30,
		2017				2016				2017				2016
Net premiums earned:	(in thousands)
Homeowners/Fire	$	74,958			$	54,028			$	145,554			$	104,135
Personal automobile		5,224				2,752				10,093				4,346
Commercial general liability		2,977				3,265				6,005				6,561
Total net premiums earned	$	83,159			$	60,045			$	161,652			$	115,042
	Three Months Ended								Six Months Ended
	June 30,								June 30,
		2017				2016				2017				2016
Commissions and other underwriting expenses:	(in thousands)
Homeowners/Fire Florida	$	14,407			$	13,739			$	28,464			$	26,025
All other lines of business		8,210				7,027				16,734				13,022
Ceded commissions		(4,633)				(14,366)				(9,696)				(27,788)
Total commissions and other fees		17,984				6,400				35,502				11,259
Salaries and wages		3,728				2,711				7,403				6,809
Other underwriting expenses		8,485				6,860				14,431				13,296
Total commissions and other underwriting expenses:	$	30,197			$	15,971			$	57,336			$	31,364

FEDERATED NATIONAL HOLDING COMPANY AND SUBSIDIARIES
Selected Operating Metrics (continued)
(Unaudited)
	Three Months Ended June 30,								Six Months Ended June 30,
		2017				2016				2017				2016
Net Loss Ratio		66.1%				81.6%				67.3%				69.8%
Net Expense Ratio		42.4%				35.1%				41.5%				35.2%
Combined Ratio		108.5%				116.6%				108.7%				105.0%
Gross Loss Ratio		48.5%				54.5%				49.3%				48.4%
Gross Expense Ratio		26.5%				25.8%				25.7%				25.7%
Book value per share excluding noncontrolling interest	$	16.97			$	17.92			$	16.97			$	17.92

FEDERATED NATIONAL HOLDING COMPANY AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
Quarterly Statements of Operations and Operating Metrics
(Unaudited)
	Consolidated
	Three Months Ended
	March 31, 2016			June 30, 2016			Sept 30, 2016			Dec 31, 2016			March 31, 2017			June 30, 2017
	(in thousands)
Revenue:
Gross premiums written	$	136,024		$	171,218		$	161,137		$	137,105		$	146,051		$	168,692
Gross premiums earned		128,099			137,334			147,624			152,365			147,978			150,563
Ceded premiums earned		(73,102)			(77,289)			(78,219)			(76,940)			(69,485)			(67,404)
Net premiums earned		54,997			60,045			69,405			75,425			78,493			83,159
Net investment income		2,040			2,194			2,164			2,665			2,318			2,560
Net realized investment gains		927			7			1,126			985			(105)			2,648
Direct written policy fees		4,202			4,925			4,318			4,285			5,085			4,486
Other income		4,050			4,778			4,493			4,071			4,927			4,710
Total revenue		66,216			71,949			81,506			87,431			90,718			97,563
Costs and expenses:
Losses and loss adjustment expenses		31,260			48,983			45,973			69,765			53,766			54,956
Commissions and other underwriting expenses		15,393			15,971			29,867			29,622			27,139			30,197
General and administrative expenses		4,081			5,086			4,044			3,975			4,619			5,076
Interest expense		84			94			81			89			84			82
Total costs and expenses		50,818			70,134			79,965			103,451			85,608			90,311
Income (loss) before income taxes		15,398			1,815			1,541			(16,020)			5,110			7,252
Income taxes		5,795			697			103			(3,912)			1,938			2,635
Net income (loss)		9,603			1,118			1,438			(12,108)			3,172			4,617
Net income (loss) attributable to noncontrolling interest		68			127			44			8			27			(328)
Net income (loss) attributable to Federated National Holding Company shareholders	$	9,535		$	991		$	1,394		$	(12,116)		$	3,145		$	4,945
Net Loss Ratio		56.8%			81.6%			66.2%			92.5%			68.5%			66.1%
Net Expense Ratio		35.4%			35.1%			48.9%			44.5%			40.5%			42.4%
Combined Ratio		92.2%			116.6%			115.1%			137.0%			109.0%			108.5%
Gross Loss Ratio		41.9%			54.5%			48.9%			79.6%			50.0%			48.5%
Gross Expense Ratio		25.7%			25.8%			26.5%			24.7%			24.8%			26.5%

FEDERATED NATIONAL HOLDING COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
			June 30,			December 31,
			2017			2016
ASSETS			(in thousands, except share and per share data)
Investments
	Debt securities, available-for-sale, at fair value		$	383,910		$	374,756
	Debt securities, held-to-maturity, at amortized cost			5,421			5,551
	Equity securities, available-for-sale, at fair value			45,445			29,375
		Total investments		434,776			409,682
Cash and cash equivalents				99,529			74,593
Prepaid reinsurance premiums				120,589			156,932
Premiums receivable, net of allowance				59,422			54,854
Reinsurance recoverable, net				41,090			48,530
Deferred acquisition costs				41,299			37,477
Income taxes receivable				13,468			13,871
Property and equipment, net				4,298			4,194
Other assets				11,250			11,509
TOTAL ASSETS			$	825,721		$	811,642
LIABILITIES
Loss and loss adjustment expense reserves			$	156,973		$	158,476
Unearned premiums				310,224			294,022
Reinsurance payable				69,782			79,154
Debt from consolidated variable interest entity				4,919			4,909
Deferred income taxes, net				7,397			1,433
Other liabilities				36,589			35,792
	Total liabilities			585,884			573,786
SHAREHOLDERS’ EQUITY
Preferred stock, $0.01 par value: 1,000,000 shares authorized				-			-
Common stock, $0.01 par value: 25,000,000 shares authorized; 13,060,207 and 13,473,120 shares issued and outstanding, respectively				130			134
Additional paid-in capital				138,191			136,779
Accumulated other comprehensive income				5,157			1,941
Retained earnings				78,190			80,275
	Total Federated National Holding Company shareholders’ equity			221,668			219,129
Noncontrolling interest				18,169			18,727
	Total shareholders' equity			239,837			237,856
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY			$	825,721		$	811,642

FEDERATED NATIONAL HOLDING COMPANY AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
Statements of Operations and Operating Metrics by Line of Business
(Unaudited)
	Three Months Ended June 30,
		2017													2016
	Homeowners			Automobile			Other			Consolidated				Homeowners			Automobile			Other			Consolidated
	(in thousands)
Revenue:
Gross premiums written	$	151,626		$	10,622		$	6,444		$	168,692			$	145,648		$	18,996		$	6,574		$	171,218
Gross premiums earned		130,062			14,760			5,741			150,563				118,422			13,283			5,629			137,334
Ceded premiums earned		(55,104)			(9,536)			(2,764)			(67,404)				(64,394)			(10,531)			(2,364)			(77,289)
Net premiums earned		74,958			5,224			2,977			83,159				54,028			2,752			3,265			60,045
Net investment income		—			—			2,560			2,560				—			—			2,194			2,194
Net realized investment gains		—			—			2,648			2,648				—			—			7			7
Direct written policy fees		2,559			1,767			160			4,486				2,398			2,356			171			4,925
Other income		2,753			970			987			4,710				2,092			1,889			797			4,778
Total revenue		80,270			7,961			9,332			97,563				58,518			6,997			6,434			71,949
Costs and expenses:
Losses and loss adjustment expenses		49,095			7,086			(1,225)			54,956				43,478			2,203			3,302			48,983
Commissions and other underwriting expenses		25,741			3,217			1,239			30,197				12,830			2,008			1,133			15,971
General and administrative expenses		3,883			175			1,018			5,076				3,900			150			1,036			5,086
Interest expense		82			—			—			82				94			—			—			94
Total costs and expenses		78,801			10,478			1,032			90,311				60,302			4,361			5,471			70,134
Income (loss) before income taxes		1,469			(2,517)			8,300			7,252				(1,784)			2,636			963			1,815
Income taxes		567			(970)			3,038			2,635				(688)			1,016			369			697
Net income (loss)		902			(1,547)			5,262			4,617				(1,096)			1,620			594			1,118
Net (loss) income attributable to noncontrolling interest		(328)			—			—			(328)				127			—			—			127
Net income (loss) attributable to Federated National Holding Company shareholders	$	1,230		$	(1,547)		$	5,262		$	4,945			$	(1,223)		$	1,620		$	594		$	991
Net loss ratio		65.5%			135.6%			(41.1)%			66.1%				80.5%			80.1%			101.1%			81.6%
Net expense ratio		39.5%			64.9%						42.4%				31.0%			78.4%						35.1%
Combined ratio		105.0%			200.6%						108.5%				111.4%			158.5%						116.6%

FEDERATED NATIONAL HOLDING COMPANY AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
Statements of Operations and Operating Metrics by Line of Business
(Unaudited)
(Continued)
	Six Months Ended June 30,
		2017													2016
	Homeowners			Automobile			Other			Consolidated				Homeowners			Automobile			Other			Consolidated
	(in thousands)
Revenue:
Gross premiums written	$	272,847		$	29,913		$	11,983		$	314,743			$	260,315		$	34,685		$	12,242		$	307,242
Gross premiums earned		256,706			30,407			11,428			298,541				231,824			22,416			11,193			265,433
Ceded premiums earned		(111,152)			(20,314)			(5,423)			(136,889)				(127,689)			(18,070)			(4,632)			(150,391)
Net premiums earned		145,554			10,093			6,005			161,652				104,135			4,346			6,561			115,042
Net investment income		-			-			4,878			4,878				-			-			4,234			4,234
Net realized investment gains		-			-			2,543			2,543				-			-			934			934
Direct written policy fees		4,629			4,622			320			9,571				4,288			4,500			339			9,127
Other income		5,485			2,487			1,665			9,637				3,908			3,520			1,400			8,828
Total revenue		155,668			17,202			15,411			188,281				112,331			12,366			13,468			138,165
Costs and expenses:
Losses and loss adjustment expenses		93,897			13,512			1,313			108,722				70,812			3,729			5,702			80,243
Commissions and other underwriting expenses		48,155			6,695			2,486			57,336				25,642			3,399			2,323			31,364
General and administrative expenses		7,373			350			1,972			9,695				7,094			300			1,773			9,167
Interest expense		166			-			-			166				178			-			-			178
Total costs and expenses		149,591			20,557			5,771			175,919				103,726			7,428			9,798			120,952
Income (loss) before income taxes		6,077			(3,355)			9,640			12,362				8,605			4,938			3,670			17,213
Income taxes		2,345			(1,294)			3,522			4,573				3,320			1,904			1,268			6,492
Net income (loss)		3,732			(2,061)			6,118			7,789				5,285			3,034			2,402			10,721
Net (loss)  income attributable to noncontrolling interest		(301)			-			-			(301)				195			-			-			195
Net income (loss) attributable to Federated National Holding Company shareholders	$	4,033		$	(2,061)		$	6,118		$	8,090			$	5,090		$	3,034		$	2,402		$	10,526
Net loss ratio		64.5%			133.9%			21.9%			67.3%				68.0%			85.8%			86.9%			69.8%
Net expense ratio		38.1%			69.8%						41.5%				31.4%			85.1%						35.2%
Combined ratio		102.7%			203.7%						108.7%				99.4%			170.9%						105.0%

FEDERATED NATIONAL HOLDING COMPANY AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
Quarterly Statements of Operations and Operating Metrics by Line of Business
(Unaudited)
(Continued)
	Homeowners
	Three Months Ended
	March 31, 2016			June 30, 2016			Sept 30, 2016			Dec 31, 2016			March 31, 2017			June 30, 2017
	(in thousands)
Revenue:
Gross premiums written	$	114,667		$	145,648		$	133,532		$	118,890		$	121,221		$	151,626
Gross premiums earned		113,402			118,422			124,709			127,821			126,644			130,062
Ceded premiums earned		(63,295)			(64,394)			(62,288)			(59,996)			(56,048)			(55,104)
Net premiums earned		50,107			54,028			62,421			67,825			70,596			74,958
Direct written policy fees		1,890			2,398			2,190			1,926			2,070			2,559
Other income		1,816			2,092			2,765			2,673			2,732			2,753
Total revenue		53,813			58,518			67,376			72,424			75,398			80,270
Costs and expenses:
Losses and loss adjustment expenses		27,334			43,478			40,399			58,709			44,802			49,095
Commissions and other underwriting expenses		12,812			12,830			23,875			23,088			22,414			25,741
General and administrative expenses		3,194			3,900			3,033			2,952			3,490			3,883
Interest expense		84			94			81			89			84			82
Total costs and expenses		43,424			60,302			67,388			84,838			70,790			78,801
Income (loss) before income taxes		10,389			(1,784)			(12)			(12,414)			4,608			1,469
Income taxes		4,008			(688)			(4)			(4,787)			1,778			567
Net income (loss)		6,381			(1,096)			(8)			(7,627)			2,830			902
Net income (loss) attributable to noncontrolling interest		68			127			44			8			27			(328)
Net income (loss) attributable to Federated National Holding Company shareholders	$	6,313		$	(1,223)		$	(52)		$	(7,635)		$	2,803		$	1,230
Net Loss Ratio		54.6%			80.5%			64.7%			86.6%			63.5%			65.5%
Net Expense Ratio		31.9%			31.0%			43.1%			38.4%			36.7%			39.5%
Combined Ratio		86.5%			111.4%			107.8%			125.0%			100.2%			105.0%

FEDERATED NATIONAL HOLDING COMPANY AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
Quarterly Statements of Operations and Operating Metrics by Line of Business
(Unaudited)
(Continued)
	Automobile
	Three Months Ended
	March 31, 2016			June 30, 2016			Sept 30, 2016			Dec 31, 2016			March 31, 2017			June 30, 2017
	(in thousands)
Revenue:
Gross premiums written	$	15,689		$	18,996		$	21,523		$	13,271		$	19,291		$	10,622
Gross premiums earned		9,133			13,283			17,163			18,732			15,647			14,760
Ceded premiums earned		(7,539)			(10,531)			(13,409)			(14,308)			(10,778)			(9,536)
Net premiums earned		1,594			2,752			3,754			4,424			4,869			5,224
Direct written policy fees		2,144			2,356			1,977			2,216			2,855			1,767
Other income		1,631			1,889			1,318			604			1,517			970
Total revenue		5,369			6,997			7,049			7,244			9,241			7,961
Costs and expenses:
Losses and loss adjustment expenses		1,526			2,203			3,498			5,829			6,426			7,086
Commissions and other underwriting expenses		1,391			2,008			4,883			5,325			3,478			3,217
General and administrative expenses		150			150			150			150			175			175
Total costs and expenses		3,067			4,361			8,531			11,304			10,079			10,478
Income (loss) before income taxes		2,302			2,636			(1,482)			(4,060)			(838)			(2,517)
Income taxes		888			1,016			(572)			(1,566)			(324)			(970)
Net income (loss) attributable to Federated National Holding Company shareholders	$	1,414		$	1,620		$	(910)		$	(2,494)		$	(514)		$	(1,547)
Net Loss Ratio		95.7%			80.1%			93.2%			131.8%			132.0%			135.6%
Net Expense Ratio		96.7%			78.4%			134.1%			123.8%			75.0%			64.9%
Combined Ratio		192.4%			158.5%			227.3%			255.5%			207.0%			200.6%

FEDERATED NATIONAL HOLDING COMPANY AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
Quarterly Statements of Operations and Operating Metrics by Line of Business
(Unaudited)
(Continued)
	Other
	Three Months Ended
	March 31, 2016			June 30, 2016			Sept 30, 2016			Dec 31, 2016			March 31, 2017			June 30, 2017
	(in thousands)
Revenue:
Gross premiums written	$	5,668		$	6,574		$	6,082		$	4,944		$	5,539		$	6,444
Gross premiums earned		5,564			5,629			5,752			5,812			5,687			5,741
Ceded premiums earned		(2,268)			(2,364)			(2,522)			(2,636)			(2,659)			(2,764)
Net premiums earned		3,296			3,265			3,230			3,176			3,028			2,977
Net investment income		2,040			2,194			2,164			2,665			2,318			2,560
Net realized investment gains		927			7			1,126			985			(105)			2,648
Direct written policy fees		168			171			151			143			160			160
Other income		603			797			410			794			678			987
Total revenue		7,034			6,434			7,081			7,763			6,079			9,332
Costs and expenses:
Losses and loss adjustment expenses		2,400			3,302			2,076			5,227			2,538			(1,225)
Commissions and other underwriting expenses		1,190			1,133			1,109			1,209			1,247			1,239
General and administrative expenses		737			1,036			861			873			954			1,018
Interest expense		-			-			-			-			-			-
Total costs and expenses		4,327			5,471			4,046			7,309			4,739			1,032
Income before income taxes		2,707			963			3,035			454			1,340			8,300
Income taxes		899			369			679			2,441			484			3,038
Net income (loss) attributable to Federated National Holding Company shareholders	$	1,808		$	594		$	2,356		$	(1,987)		$	856		$	5,262
Net Loss Ratio		72.8%			101.1%			64.3%			164.6%			83.8%			(41.1)%

 

CONTACT:  
Michael H. Braun, CEO (954) 308-1322,
Ronald Jordan, CFO (954) 308-1363,
or Erick A. Fernandez, CAO (954) 308-1341
Federated National Holding Company

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