NEW YORK, May 06, 2019 (GLOBE NEWSWIRE) -- National General Holdings Corp. (Nasdaq:NGHC) reported record first quarter 2019 net income of $83.9 million or $0.72 per diluted share, compared to net income of $60.3 million or $0.55 per diluted share in the first quarter of 2018. First quarter 2019 operating earnings (non-GAAP)⁽¹⁾ was $89.7 million or $0.77 per diluted share compared to $67.6 million or $0.62 per diluted share in the first quarter of 2018.

First Quarter 2019 Highlights Versus First Quarter 2018*

• Gross written premium grew $67.2 million or 5.0% to $1,404.2 million, driven by continued organic growth in our P&C segment of 3.8% and in our A&H segment of 10.6%.
• In the first quarter, our homeowners’ product experienced organic growth of 7.6%. Our personal auto product experienced organic growth of 5.7%, driven by a mixture of PIF increase and an increase in our overall average premium due to rate increase and business mix changes.
• The overall combined ratio^(9,13) was 89.0% compared to 90.7% in the prior year’s quarter, excluding non-cash amortization of intangible assets. The P&C segment reported a decrease in combined ratio to 90.1% from 90.9% in the prior year’s quarter, primarily driven by lower current accident year losses, lower weather-related losses, partially offset by lower favorable loss development. The A&H segment reported a combined ratio of 84.2% compared to 90.0% in the prior year’s quarter with the decrease driven by strong operating results in our small group self-funded and individual products and higher favorable loss development.
• Service and fee income grew 16.6% to $180.4 million, driven by organic growth in both our Accident & Health and Property & Casualty segments.
• Shareholders’ equity was $2.35 billion and fully diluted book value per share was $16.38 at March 31, 2019, growth of 6.0% and 7.4%, respectively, from December 31, 2018. Our trailing twelve month operating return on average equity (ROE)⁽¹⁴⁾ was 14.7% as of March 31, 2019.
• First quarter 2019 operating earnings (non-GAAP)⁽¹⁾ exclude primarily $5.7 million or $0.05 per share of non-cash amortization of intangible assets, net of tax.

Barry Karfunkel, National General’s CEO, stated: “I’m pleased to report that our first quarter 2019 results were a record for the company and continue to highlight the earnings capabilities of the platform that we have built. Our diversified approach to niche areas in personal lines insurance continues to pay dividends, with strength in both our Property and Casualty and Accident and Health segments.”

*NOTE: Unless specified otherwise, discussion of our first quarter 2019 and 2018 results do not include financial results from the Reciprocal Exchanges, which are presented within our consolidated financial results within this release but are not included in net income available to NGHC common stockholders.

Overview of First Quarter 2019 as Compared to First Quarter 2018 by Segment

• Property & Casualty - Gross written premium grew by 3.8% to $1,145.7 million, net written premium increased by 9.9% to $915.5 million, and net earned premium increased by 7.3% to $756.9 million. P&C gross written premium growth was primarily driven by organic growth of 7.6% from our homeowners’ product and 5.7% from our personal auto product. Service and fee income grew 8.9% to $119.4 million. Excluding non-cash amortization of intangible assets, the combined ratio^(9,13) was 90.1% with a loss ratio of 69.4% and an expense ratio^(9,12) of 20.7%, versus a prior year combined ratio of 90.9% with a loss ratio of 70.6% and an expense ratio of 20.3%. The combined ratio decrease was primarily driven by lower current accident year losses, lower weather-related losses, partially offset by lower favorable loss development. The loss ratio was impacted by pre-tax catastrophe losses of approximately $12.1 million primarily related to winter weather in the first quarter 2019, compared to $14.2 million of losses in the first quarter 2018. Favorable loss development was $5.5 million in the first quarter 2019, compared to $15.2 million in the first quarter 2018.
   
• Accident & Health - Gross written premium grew by 10.6% to $258.5 million, net written premium decreased by 10.4% to $200.2 million, and net earned premium grew by 5.0% to $161.6 million. The A&H gross written premium increase was driven by the continued growth across the entire book and the decrease in net written premium reflects a quota share agreement in our European book. Service and fee income was $61.0 million compared to $45.2 million in the prior year’s quarter, primarily driven by group benefit administration fees and third party distribution fees. Excluding non-cash amortization of intangible assets, the combined ratio^(9,13) was 84.2% with a loss ratio of 52.5% and an expense ratio^(9,12) of 31.7%, versus a prior year combined ratio of 90.0% with a loss ratio of 59.3% and an expense ratio of 30.7%. The loss ratio reflects continued strong performance in both small group self-funded and individual products and higher favorable loss development. Favorable loss development was $10.9 million in the first quarter 2019, compared to $3.4 million in the first quarter 2018.
   
• Reciprocal Exchanges - Results for the Reciprocal Exchanges are not included in net income available to NGHC common stockholders. Gross written premium was $105.6 million, net written premium was $49.0 million, and net earned premium was $45.7 million. Reciprocal Exchanges combined ratio^(9,13) excluding non-cash amortization of intangible assets was 114.3% with a loss ratio of 92.0% and an expense ratio^(9,12) of 22.3%.

First quarter 2019 investment income grew to $34.3 million, compared to $25.0 million in the first quarter of 2018, with the growth primarily driven by an increase in our investment portfolio and improvement in the book yield. Total investments and cash and cash equivalents (including restricted cash) were $4.4 billion as of March 31, 2019. Accumulated other comprehensive income (loss) increased to a $0.6 million gain at March 31, 2019 from a $52.1 million loss at December 31, 2018, primarily due to the impact of lower interest rates which positively impacted bond valuations.

Interest expense was $13.0 million, up from $11.2 million in the prior year’s quarter. Debt was $710.2 million at March 31, 2019, up from $705.8 million at December 31, 2018.

The first quarter of 2019 provision for income taxes was $24.2 million and the effective tax rate for the quarter was 20.9% compared with income taxes of $18.6 million and an effective rate of 21.4% in the first quarter of 2018.

Shareholders’ equity was $2,353.2 million at March 31, 2019, growth of 6.0% from $2,220.8 million at December 31, 2018. Fully diluted book value per share was $16.38 at March 31, 2019, growth of 7.4% from $15.25 at December 31, 2018. Our trailing twelve month operating return on average equity (ROE)⁽¹⁴⁾ was 14.7% as of March 31, 2019.

Year-to-Date P&C Segment Notable Large Losses
Year		Quarter	Event		P&C Notable Large Losses and LAE ($ millions)		P&C Loss Ratio Points*		EPS Impact After Tax
2019		Q1	Winter Weather		$12.1		1.6%		$0.08
2018		Q1	Winter Weather		$14.2		2.0%		$0.10

* Loss ratio points related to P&C net earned premium in quarter the loss event was recorded.

Conference Call

On Tuesday, May 7, 2019 at 9:00 AM ET, Chief Executive Officer Barry Karfunkel and Chief Financial Officer Mike Weiner will review results and discuss business conditions via a conference call that may be accessed as follows:

Toll-Free U.S. Dial-in:  International Dial-in: Conference Entry Code:  Webcast Registration:	800-346-7359 973-528-0008 180811 http://ir.nationalgeneral.com/events-and-presentations

A replay of the conference call will be accessible from 2:00 PM ET on Tuesday, May 7, 2019 to 11:59 PM ET on Tuesday, May 21, 2019 by dialing either 800-332-6854 (toll-free) within the U.S. or 973-528-0005 outside the U.S. and entering passcode 180811. In addition, a replay of the webcast can also be retrieved at http://ir.nationalgeneral.com/events-and-presentations.

About National General Holdings Corp.

National General Holdings Corp., headquartered in New York City, is a specialty personal lines insurance holding company. National General traces its roots to 1939, has a financial strength rating of A- (excellent) from A.M. Best, and provides personal and commercial automobile, homeowners, umbrella, recreational vehicle, motorcycle, lender-placed, supplemental health and other niche insurance products.

Forward Looking Statements

This news release contains “forward-looking statements” that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements are based on the Company’s current expectations and beliefs concerning future developments and their potential effects on the Company. Forward-looking statements can generally be identified by the use of forward-looking terminology, such as “may,” “will,” “plan,” “expect,” “project,” “intend,” “estimate,” “anticipate” and “believe” or their variations or similar terminology. There can be no assurance that actual developments will be those anticipated by the Company. Actual results may differ materially from those expressed or implied in these statements as a result of significant risks and uncertainties, including, but not limited to, non-receipt of expected payments from insureds or reinsurers, changes in interest rates, a downgrade in the financial strength ratings of our insurance subsidiaries, the effect of the performance of financial markets on our investment portfolio, our ability to accurately underwrite and price our products and to maintain and establish accurate loss reserves, estimates of the fair value of investments, development of claims and the effect on loss reserves, large loss activity including hurricanes and wildfires, the cost and availability of reinsurance coverage, the effects of emerging claim and coverage issues, the effect of unpredictable catastrophic losses, changes in the demand for our products, our degree of success in integrating acquired businesses, the effect of general economic conditions, state and federal legislation, the effects of tax reform, regulations and regulatory investigations into industry practices, risks associated with conducting business outside the United States, developments relating to existing agreements, disruptions to our business relationships with third party vendors or agencies, breaches in data security or other disruptions involving our technology, heightened competition, changes in pricing environments, and changes in asset valuations. The forward-looking statements contained in this news release are made only as of the date of this release. The Company undertakes no obligation to publicly update any forward-looking statement except as may be required by law. Additional information about these risks and uncertainties, as well as others that may cause actual results to differ materially from those projected is contained in the Company’s filings with the Securities and Exchange Commission.

Income Statement - First Quarter
$ in thousands
(Unaudited)

		Three Months Ended March 31,
		2019													2018
		NGHC				Reciprocal Exchanges				Consolidated					NGHC				Reciprocal Exchanges				Consolidated
Revenues:
Gross written premium		$	1,404,209			$	105,569			$	1,509,778				$	1,337,042			$	97,689			$	1,433,130		(G)
Net written premium		1,115,709				48,955				1,164,664					1,056,065				50,578				1,106,643
Net earned premium		918,499				45,658				964,157					859,483				46,055				905,538
Ceding commission income		51,000				18,534				69,534					32,958				11,510				44,468
Service and fee income		180,388				1,370				165,507			(A)		154,760				2,446				142,122			(H)
Net investment income		34,283				2,170				33,445			(B)		25,019				2,144				25,011			(I)
Net gain (loss) on investments		766				(744		)		22					249				(131		)		118
Total revenues		$	1,184,936			$	66,988			$	1,232,665		(C)		$	1,072,469			$	62,024			$	1,117,257		(J)
Expenses:
Loss and loss adjustment expense		$	609,784			$	42,025			$	651,809				$	589,635			$	44,531			$	634,166
Acquisition costs and other underwriting expenses		203,333				8,585				211,918					157,608				11,102				168,710
General and administrative expenses		242,833				21,512				248,094			(D)		227,293				18,796				231,005			(K)
Interest expense		12,999				3,008				12,999			(E)		11,154				2,152				11,154			(L)
Total expenses		$	1,068,949			$	75,130			$	1,124,820		(F)		$	985,690			$	76,581			$	1,045,035		(M)
Income (loss) before provision (benefit) for income taxes		$	115,987			$	(8,142	)		$	107,845				$	86,779			$	(14,557	)		$	72,222
Provision (benefit) for income taxes		24,229				(1,723		)		22,506					18,571				(2,369		)		16,202
Net income (loss) before non-controlling interest and dividends on preferred shares		91,758				(6,419		)		85,339					68,208				(12,188		)		56,020
Less: net income (loss) attributable to non-controlling interest		—				(6,419		)		(6,419		)			—				(12,188		)		(12,188		)
Net income before dividends on preferred shares		91,758				—				91,758					68,208				—				68,208
Less: dividends on preferred shares		7,875				—				7,875					7,875				—				7,875
Net income available to common stockholders		$	83,883			$	—			$	83,883				$	60,333			$	—			$	60,333

NOTES: Consolidated column includes eliminations as follows: (A) $(16,251), (B) $(3,008), (C) $(19,259), (D) $(16,251), (E) $(3,008), (F) $(19,259), || (G) $(1,601), (H) $(15,084), (I) $(2,152), (J) $(17,236), (K) $(15,084), (L) $(2,152) and (M) $(17,236).

Earnings and Per Share Data
$ in thousands, except shares and per share data
(Unaudited)

		Three Months Ended March 31,
		2019				2018
Net income available to common stockholders		$	83,883			$	60,333
Basic net income per common share		$	0.74			$	0.57
Diluted net income per common share		$	0.72			$	0.55
Operating earnings attributable to NGHC (non-GAAP)(1)		$	89,716			$	67,623
Basic operating earnings per common share (non-GAAP)(1)		$	0.79			$	0.63
Diluted operating earnings per common share (non-GAAP)(1)		$	0.77			$	0.62
Dividends declared per common share		$	0.04			$	0.04
Weighted average number of basic shares outstanding		113,014,711				106,758,641
Weighted average number of diluted shares outstanding		116,075,226				108,950,984
Shares outstanding, end of period		113,137,346				106,887,566
Fully diluted shares outstanding, end of period		116,197,861				109,079,909
Book value per share		$	16.82			$	14.38
Fully diluted book value per share		$	16.38			$	14.09

Reconciliation of Net Income to Operating Earnings (Non-GAAP)
$ in thousands, except per share data
(Unaudited)

		Three Months Ended March 31,
		2019				2018
Net income available to common stockholders		$	83,883			$	60,333
Add (subtract):
Net (gain) on investments		(766		)		(249		)
Equity in (earnings) losses of equity method investments		934				1,469
Non-cash amortization of intangible assets		7,216				6,920
Income tax expense (benefit)		(1,551		)		(850		)
Operating earnings attributable to NGHC (non-GAAP)(1)		$	89,716			$	67,623
Operating earnings per common share (non-GAAP):
Basic operating earnings per common share (non-GAAP)		$	0.79			$	0.63
Diluted operating earnings per common share (non-GAAP)		$	0.77			$	0.62

Balance Sheet
$ in thousands
(Unaudited)

		March 31, 2019													December 31, 2018
ASSETS		NGHC				Reciprocal Exchanges				Consolidated					NGHC				Reciprocal Exchanges				Consolidated
Total investments (2)		$	4,130,083			$	318,914			$	4,341,655		(A)		$	4,013,699			$	314,411			$	4,226,806		(H)
Cash and cash equivalents, including restricted cash		219,979				293				220,272					233,383				200				233,583
Premiums and other receivables, net		1,547,958				60,293				1,608,251			(B)		1,338,485				61,327				1,399,812
Reinsurance balances (3)		1,873,657				252,932				2,126,589					2,023,911				253,501				2,277,412
Intangible assets, net		369,452				3,360				372,812					376,532				3,405				379,937
Goodwill		180,183				—				180,183					180,183				—				180,183
Other (4)		780,960				29,215				781,805			(B)		739,068				27,879				741,547			(I)
Total assets		$	9,102,272			$	665,007			$	9,631,567		(C)		$	8,905,261			$	660,723			$	9,439,280		(J)
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Unpaid loss and loss adjustment expense reserves		$	2,674,301			$	196,022			$	2,870,323				$	2,778,689			$	178,470			$	2,957,159
Unearned premiums and other revenue		2,181,579				258,701				2,440,280					2,014,965				265,763				2,280,728
Reinsurance payable		493,280				31,579				524,859					615,872				40,393				656,265
Accounts payable and accrued expenses (5)		356,107				34,530				362,267			(D)		390,338				33,120				398,058			(K)
Debt		710,196				107,342				710,196			(E)		705,795				101,304				705,795			(L)
Other		333,621				58,539				392,160					178,764				61,640				240,404
Total liabilities		$	6,749,084			$	686,713			$	7,300,085		(F)		$	6,684,423			$	680,690			$	7,238,409		(M)
Stockholders’ equity:
Common stock (6)		$	1,131			$	—			$	1,131				$	1,129			$	—			$	1,129
Preferred stock (7)		450,000				—				450,000					450,000				—				450,000
Additional paid-in capital		1,058,061				—				1,058,061					1,057,783				—				1,057,783
Accumulated other comprehensive income (loss)		581				—				581					(52,130		)		—				(52,130		)
Retained earnings		843,415				—				843,415					764,056				—				764,056
Total National General Holdings Corp. stockholders’ equity		2,353,188				—				2,353,188					2,220,838				—				2,220,838
Non-controlling interest		—				(21,706		)		(21,706		)			—				(19,967		)		(19,967		)
Total stockholders’ equity		$	2,353,188			$	(21,706	)		$	2,331,482				$	2,220,838			$	(19,967	)		$	2,200,871
Total liabilities and stockholders’ equity		$	9,102,272			$	665,007			$	9,631,567		(G)		$	8,905,261			$	660,723			$	9,439,280		(N)

NOTES: Consolidated column includes eliminations as follows: (A) $(107,342), (B) $(28,370), (C) $(135,712), (D) $(28,370), (E) $(107,342), (F) $(135,712), (G) $(135,712), || (H) $(101,304), (I) $(25,400), (J) $(126,704), (K) $(25,400), (L) $(101,304), (M) $(126,704) and (N) $(126,704).

Segment Information - First Quarter
$ in thousands
(Unaudited)

		Three Months Ended March 31,
		2019																		2018
		P&C				A&H				NGHC					Reciprocal Exchanges					P&C				A&H				NGHC					Reciprocal Exchanges
Gross written premium		$	1,145,665			$	258,544			$	1,404,209				$	105,569				$	1,103,266			$	233,776			$	1,337,042				$	97,689
Net written premium		915,528				200,181				1,115,709					48,955					832,712				223,353				1,056,065					50,578
Net earned premium		756,919				161,580				918,499					45,658					705,607				153,876				859,483					46,055
Ceding commission income		48,409				2,591				51,000					18,534					32,700				258				32,958					11,510
Service and fee income		119,376				61,012				180,388					1,370					109,573				45,187				154,760					2,446
Total underwriting revenues		$	924,704			$	225,183			$	1,149,887				$	65,562				$	847,880			$	199,321			$	1,047,201				$	60,011
Loss and loss adjustment expense		525,035				84,749				609,784					42,025					498,357				91,278				589,635					44,531
Acquisition costs and other underwriting expenses		145,485				57,848				203,333					8,585					114,000				43,608				157,608					11,102
General and administrative expenses		184,195				58,638				242,833					21,512					176,685				50,608				227,293					18,796
Total underwriting expenses		$	854,715			$	201,235			$	1,055,950				$	72,122				$	789,042			$	185,494			$	974,536				$	74,429
Underwriting income (loss)		69,989				23,948				93,937					(6,560		)			58,838				13,827				72,665					(14,418		)
Non-cash amortization of intangible assets		5,485				1,731				7,216					11					5,400				1,520				6,920					(27		)
Underwriting income (loss) before amortization and impairment		$	75,474			$	25,679			$	101,153				$	(6,549	)			$	64,238			$	15,347			$	79,585				$	(14,445	)
Underwriting ratios
Loss and loss adjustment expense ratio (8)		69.4		%		52.5		%		66.4		%			92.0		%			70.6		%		59.3		%		68.6		%			96.7		%
Operating expense ratio (Non-GAAP) (9,10)		21.4		%		32.7		%		23.4		%			22.3		%			21.0		%		31.7		%		22.9		%			34.6		%
Combined ratio (Non-GAAP) (9,11)		90.8		%		85.2		%		89.8		%			114.3		%			91.6		%		91.0		%		91.5		%			131.3		%
Underwriting ratios (before amortization and impairment)
Loss and loss adjustment expense ratio (8)		69.4		%		52.5		%		66.4		%			92.0		%			70.6		%		59.3		%		68.6		%			96.7		%
Operating expense ratio (Non-GAAP) (9,12)		20.7		%		31.7		%		22.6		%			22.3		%			20.3		%		30.7		%		22.1		%			34.7		%
Combined ratio before amortization and impairment (Non-GAAP) (9,13)		90.1		%		84.2		%		89.0		%			114.3		%			90.9		%		90.0		%		90.7		%			131.4		%

NOTE: Loss and loss adjustment expenses for the three months ended March 31, 2019 included $5,514 of favorable development on prior accident year loss and loss adjustment expense reserves in the P&C segment, and $10,852 of favorable development in the A&H segment, versus $15,169 of favorable development in the P&C segment, and $3,383 of favorable development in the A&H segment for the three months ended March 31, 2018.

Reconciliation of Operating Expense Ratio (Non-GAAP)
$ in thousands
(Unaudited)

		Three Months Ended March 31,
		2019																		2018
		P&C				A&H				NGHC					Reciprocal Exchanges					P&C				A&H				NGHC					Reciprocal Exchanges
Total underwriting expenses		$	854,715			$	201,235			$	1,055,950				$	72,122				$	789,042			$	185,494			$	974,536				$	74,429
Less: Loss and loss adjustment expense		525,035				84,749				609,784					42,025					498,357				91,278				589,635					44,531
Less: Ceding commission income		48,409				2,591				51,000					18,534					32,700				258				32,958					11,510
Less: Service and fee income		119,376				61,012				180,388					1,370					109,573				45,187				154,760					2,446
Operating expense		161,895				52,883				214,778					10,193					148,412				48,771				197,183					15,942
Net earned premium		$	756,919			$	161,580			$	918,499				$	45,658				$	705,607			$	153,876			$	859,483				$	46,055
Operating expense ratio (Non-GAAP)		21.4		%		32.7		%		23.4		%			22.3		%			21.0		%		31.7		%		22.9		%			34.6		%
Total underwriting expenses		$	854,715			$	201,235			$	1,055,950				$	72,122				$	789,042			$	185,494			$	974,536				$	74,429
Less: Loss and loss adjustment expense		525,035				84,749				609,784					42,025					498,357				91,278				589,635					44,531
Less: Ceding commission income		48,409				2,591				51,000					18,534					32,700				258				32,958					11,510
Less: Service and fee income		119,376				61,012				180,388					1,370					109,573				45,187				154,760					2,446
Less: Non-cash amortization of intangible assets		5,485				1,731				7,216					11					5,400				1,520				6,920					(27		)
Operating expense before amortization and impairment		156,410				51,152				207,562					10,182					143,012				47,251				190,263					15,969
Net earned premium		$	756,919			$	161,580			$	918,499				$	45,658				$	705,607			$	153,876			$	859,483				$	46,055
Operating expense ratio before amortization and impairment (Non-GAAP)		20.7		%		31.7		%		22.6		%			22.3		%			20.3		%		30.7		%		22.1		%			34.7		%

Premiums by Product Line
$ in thousands
(Unaudited)

	Three Months Ended March 31,
	Gross Written Premium												Net Written Premium												Net Earned Premium
	2019				2018				Change				2019				2018				Change				2019				2018				Change
Property & Casualty
Personal Auto	$	766,681			$	725,212			5.7	%			$	658,920			$	553,997			18.9	%			$	510,554			$	454,216			12.4	%
Homeowners	152,042				141,287				7.6	%			85,245				92,596				(7.9	)%			84,058				82,195				2.3	%
RV/Packaged	51,851				49,464				4.8	%			51,597				49,189				4.9	%			50,305				45,689				10.1	%
Small Business Auto	85,878				86,244				(0.4	)%			74,186				64,727				14.6	%			67,633				58,562				15.5	%
Lender-placed insurance	75,938				84,934				(10.6	)%			42,070				63,214				(33.4	)%			41,718				60,469				(31.0	)%
Other	13,275				16,125				(17.7	)%			3,510				8,989				(61.0	)%			2,651				4,476				(40.8	)%
Total Premium	$	1,145,665			$	1,103,266			3.8	%			$	915,528			$	832,712			9.9	%			$	756,919			$	705,607			7.3	%
Accident & Health
Group	64,938				56,060				15.8	%			53,950				45,637				18.2	%			53,963				45,639				18.2	%
Individual	84,192				75,048				12.2	%			84,123				75,048				12.1	%			82,235				73,866				11.3	%
International	109,414				102,668				6.6	%			62,108				102,668				(39.5	)%			25,382				34,371				(26.2	)%
Total Premium	$	258,544			$	233,776			10.6	%			$	200,181			$	223,353			(10.4	)%			$	161,580			$	153,876			5.0	%
Total National General	$	1,404,209			$	1,337,042			5.0	%			$	1,115,709			$	1,056,065			5.6	%			$	918,499			$	859,483			6.9	%
Reciprocal Exchanges
Personal Auto	$	36,862			$	34,297			7.5	%			$	15,645			$	13,495			15.9	%			$	15,861			$	12,997			22.0	%
Homeowners	67,800				62,521				8.4	%			33,016				36,808				(10.3	)%			29,491				32,771				(10.0	)%
Other	907				871				4.1	%			294				275				6.9	%			306				287				6.6	%
Total Premium	$	105,569			$	97,689			8.1	%			$	48,955			$	50,578			(3.2	)%			$	45,658			$	46,055			(0.9	)%
Consolidated Total (A)	$	1,509,778			$	1,433,130			5.3	%			$	1,164,664			$	1,106,643			5.2	%			$	964,157			$	905,538			6.5	%

NOTES: (A) Consolidated Total includes eliminations between National General and the Reciprocal Exchanges of $(567) in Personal Auto and $(1,034) in Homeowners Gross Written Premium in 2018, respectively.

Fee Income
$ in thousands
(Unaudited)

	Three Months Ended March 31,
	2019			2018			Change
Property & Casualty
Service and Fee Income	$	119,376		$	109,573		8.9	%
Ceding Commission Income	48,409			32,700			48.0	%
Property & Casualty	$	167,785		$	142,273		17.9	%
Accident & Health
Service and Fee Income
Group	$	30,374		$	24,814		22.4	%
Individual	2,136			1,297			64.7	%
Third Party Fee	28,502			19,076			49.4	%
Total Service and Fee Income	61,012			45,187			35.0	%
Ceding Commission Income	2,591			258			904.3	%
Accident and Health	$	63,603		$	45,445		40.0	%
Total National General	$	231,388		$	187,718		23.3	%
Reciprocal Exchanges
Service and Fee Income	$	1,370		$	2,446		(44.0	)%
Ceding Commission Income	18,534			11,510			61.0	%
Reciprocal Exchanges	$	19,904		$	13,956		42.6	%
Consolidated Total (A)	$	235,041		$	186,590		26.0	%

NOTES: (A) Consolidated Total includes eliminations between National General and the Reciprocal Exchanges of $(16,251) and $(15,084) in Service and Fee Income in 2019 and 2018, respectively.

Additional Disclosures

(1) References to operating earnings and basic and diluted operating earnings per share (“EPS”) are non-GAAP financial measures defined by the Company as net income/loss and basic and diluted earnings per share excluding after-tax net gain or loss on investments (including foreign exchange gain or loss), other-than-temporary impairment losses, earnings or losses of equity method investments (related parties), deferred tax asset impairment, non-cash impairment of goodwill and non-cash amortization of intangible assets, and any significant non-recurring or infrequent items that may not be indicative of ongoing operations. The Company believes operating earnings and basic and diluted operating EPS are relevant measures of the Company’s profitability because operating earnings and basic and diluted operating EPS contain the components of net income upon which the Company’s management has the most influence and excludes factors outside management’s direct control and non-recurring items. Other companies may calculate these measures differently, and therefore, their measures may not be comparable to those used by National General. Please see the Non-GAAP Financial Measures table within this release for the reconciliation of these non-GAAP measures to the most directly comparable GAAP measure.

(2) Total investments includes $233,555 and $233,723 in related parties at March 31, 2019 and December 31, 2018, respectively.

(3) Reinsurance balances includes $6,136 and $7,425 from related parties at March 31, 2019 and December 31, 2018, respectively.

(4) Other includes $1,188 and $2,362 from related parties at March 31, 2019 and December 31, 2018, respectively.

(5) Accounts payable and accrued expenses includes $19,196 and $69,874 to related parties at March 31, 2019 and December 31, 2018, respectively.

(6) Common stock: $0.01 par value - authorized 150,000,000 shares, issued and outstanding 113,137,346 shares - March 31, 2019; authorized 150,000,000 shares, issued and outstanding 112,940,595 shares - December 31, 2018.

(7) Preferred stock: $0.01 par value - authorized 10,000,000 shares, issued and outstanding 2,565,120 shares - March 31, 2019; authorized 10,000,000 shares, issued and outstanding 2,565,120 shares - December 31, 2018.

(8) Loss and loss adjustment expense ratio is calculated by dividing loss and loss adjustment expense by net earned premium.

(9) Operating expense ratio and combined ratio are considered non-GAAP financial measures under applicable SEC rules because a component of those ratios, operating expense, is calculated by offsetting acquisition and other underwriting costs and general and administrative expenses by ceding commission income and service and fee income. Management uses operating expense ratio (non-GAAP) and combined ratio (non-GAAP) to evaluate financial performance against historical results and establish targets on a consolidated basis. The Company believes this presentation enhances the understanding of our results by eliminating what we believe are volatile and unusual events and presenting the ratios with what we believe are the underlying run rates of the business. Other companies may calculate these measures differently, and, therefore, their measures may not be comparable to those used by National General. Please see the Non-GAAP Financial Measures table within this release for the reconciliation of these non-GAAP measures to the most directly comparable GAAP measure.

(10) Operating expense ratio is a non-GAAP measure defined by the Company, that is commonly used in the insurance industry. The Company calculates the ratio by dividing operating expense by net earned premium. Operating expense consists of the sum of acquisition and other underwriting costs and general and administrative expenses less ceding commission income and service and fee income. The ratio is used as an indicator of the Company’s efficiency in acquiring and servicing its business. Other companies may calculate these measures differently, and therefore, their measures may not be comparable to those used by National General. Please see the Non-GAAP Financial Measures table within this release for the reconciliation of these non-GAAP measures to the most directly comparable GAAP measure.

(11) Combined ratio is a non-GAAP measure defined by the Company, that is commonly used in the insurance industry. The Company calculates the ratio by adding the loss and loss adjustment expense ratio and the operating expense ratio (non-GAAP) together. The ratio is used as an indicator of the Company’s underwriting discipline, efficiency in acquiring and servicing its business, and overall underwriting profit. A combined ratio under 100% generally indicates an underwriting profit, while over 100% an underwriting loss. Other companies may calculate these measures differently, and therefore, their measures may not be comparable to those used by National General.

(12) Operating expense ratio before amortization and impairment is a non-GAAP measure defined by the Company, that is commonly used in the insurance industry. The Company calculates the ratio by dividing the operating expense before amortization and impairment by net earned premium. Operating expense before amortization and impairment consists of the sum of acquisition and other underwriting costs and general and administrative expenses less ceding commission income and service and fee income less non-cash amortization of intangible assets and non-cash impairment of goodwill. The ratio is used as an indicator of the Company’s efficiency in acquiring and servicing its business. Other companies may calculate these measures differently, and therefore, their measures may not be comparable to those used by National General. Please see the Non-GAAP Financial Measures table within this release for the reconciliation of these non-GAAP measures to the most directly comparable GAAP measure.

(13) Combined ratio before amortization and impairment is a non-GAAP measure defined by the Company, that is commonly used in the insurance industry. The Company calculates the ratio by adding the loss and loss adjustment expense ratio and the operating expense ratio before amortization and impairment (non-GAAP) together. The ratio is used as an indicator of the Company’s underwriting discipline, efficiency in acquiring and servicing its business, and overall underwriting profit. A combined ratio under 100% generally indicates an underwriting profit, while over 100% an underwriting loss. Other companies may calculate these measures differently, and therefore, their measures may not be comparable to those used by National General. Please see the Non-GAAP Financial Measures table within this release for the reconciliation of these non-GAAP measures to the most directly comparable GAAP measure.

(14) Trailing twelve month operating return on average equity is the ratio of the previous twelve months operating earnings (non-GAAP) to average shareholders’ equity for the periods presented. Average shareholders’ equity is the sum of the shareholders’ equity excluding preferred stock at the beginning and end of the period presented divided by two. In the opinion of the Company’s management this ratio is an important indicator of how well management creates value for its shareholders through its operating activities and capital management. Other companies may calculate these measures differently, and therefore, their measures may not be comparable to those used by National General. Please see the Non-GAAP Financial Measures table within this release for the reconciliation of net income to operating earnings, which is the Non-GAAP component of the operating return on average equity.

(15) Combined ratio excluding losses from various weather-related events, is calculated by taking the combined ratio as defined in Note 13, and adjusting it to exclude the total net losses of $12.1 million and $14.2 million from these events for the three months ended March 31, 2019 and 2018, respectively. The company believes this measure enhances investors’ understanding of our results by eliminating what we believe are volatile and unusual events.

Year				Combined Ratio		Impact of Weather-related Events		Combined Ratio Excluding Weather-related Events
2019		P&C Segment		90.1%		1.6%		88.5%
2019		Overall NGHC		89.0%		1.3%		87.7%
2018		P&C Segment		90.9%		2.0%		88.9%
2018		Overall NGHC		90.7%		1.7%		89.0%

(16) Our products in the P&C segment include personal auto, homeowners, RV/Packaged, small business auto, lender-placed insurance and other products. The personal auto segment includes policies for standard, preferred and nonstandard automobile insurance. The homeowners product includes multiple-peril policies and personal umbrella coverage to the homeowner. The RV/Packaged product offers policies that include RV automatic personal effects coverage, optional replacement cost coverage, RV storage coverage and full-time liability coverage. The small business auto product offers policies that include liability and physical damage coverage for light-to-medium duty commercial vehicles. The lender-placed insurance product offers fire, home and flood products, as well as collateral protection insurance and guaranteed asset protection products for automobiles. Our products in the A&H segment include group, individual and third party fees. The group product includes revenue from our small group self-funded product. The individual product line includes revenue from our supplemental products including short-term medical, accident/AD&D, hospital indemnity, cancer/critical illness, dental and term life insurance. Third party fees include commission and general agent fees for selling policies issued by third-party insurance companies, fees generated through selling our technology products to third parties and fees from our International health insurance offerings.

Investor Contact

Christine Worley
Director of Investor Relations
Phone: 212-380-9462
Email: Christine.Worley@NGIC.com