SUNRISE, Fla., Feb. 26, 2020 (GLOBE NEWSWIRE) -- FedNat Holding Company (the “Company”) (Nasdaq: FNHC) today reported results for the three and twelve months ended December 31, 2019.

Q4 2019 highlights (as measured against the same three-month period last year, except where noted):

• Net loss of $6.9 million or $0.51 per diluted share
• Adjusted operating loss of $7.9 million of $0.59 per diluted share.
• $4.5 million of claims, net of recoveries, pre-tax, from Tropical Storms Olga and Nestor as well as other severe weather events impacting Texas, Florida and other states, as previously communicated.
• $12.0 million of claims, net of recoveries, pre-tax for adverse prior year reserve development, including $8.0 million of non-core losses, as previously communicated.
• $5.0 million of claims, net of recoveries, pre-tax, for current year strengthening in homeowners Florida, as a result of continued impact from assignment of benefits and related litigation costs, as previously communicated.
• Gross written premiums of $150.1 million, including $6.6 million from Maison.
• Net premiums earned increased 4.5% to $95.2 million, including $4.1 million from Maison.
• Combined ratio of 122.1%, up 3.8 points, representing 4.7 points of net catastrophe losses in the period, 12.6 points of adverse development and 5.3 points from current accident year reserve strengthening.
• Quarter-end Florida homeowners in-force policies of approximately 241,000.
• 202.3% increase in non-Florida homeowners in-force policies to approximately 133,000.
• Book value per share increased 2.4% to $17.25 as compared to $16.84 as of December 31, 2018, due primarily to unrealized gains on our bond portfolio, partially offset by the acquisition of Maison and dividends declared.
• Repurchased 238,000 shares of common stock at a total of $3.9 million during the fourth quarter of 2019.

“The claims environment in the Florida homeowners market remains challenging, even despite the enactment of AOB reform on July 1, 2019,” said Mr. Michael H. Braun, the Company’s Chief Executive Officer. "Increased litigation costs were a major factor in the reserve strengthening in our Florida homeowners line and also contributed to the adverse development in our non-core lines, which continue to be in run-off. While FedNat has been a leader in taking rate in Florida homeowners and ensuring stringent underwriting practices, nonetheless at this time we have a cautious near-term outlook in this market and do not expect our Florida policy count to grow in 2020."

Mr. Braun added, "Following the successful acquisition of Maison in 2019, we have expanded our presence in more stable and profitable coastal homeowners markets outside of Florida. Our non-Florida book of business was profitable in the fourth quarter, including Maison's contribution for the month of December. We believe our non-Florida growth opportunities position FedNat for improved financial performance in 2020, and long-term profitable growth. FedNat's balance sheet remains strong and will enable us to continue our commitment to returning value to shareholders through growth, as appropriate, and our dividend and share repurchases.”

Consolidated

• Net loss of $6.9 million or $0.51 per diluted share during the fourth quarter of 2019, as compared to net loss of $9.3 million or $0.73 per diluted share during the fourth quarter of 2018. The fourth quarter was significantly impacted by (all amounts on a pre-tax basis) $4.5 million of claims, net of recoveries from catastrophe severe weather events, $12.0 million of claims, net of recoveries, for adverse prior year reserve development, including $8.0 million of non-core losses, and $5.0 million of claims, net of recoveries, for current year strengthening, as previously communicated.
• Compared to September 30, 2019, book value per share decreased $1.20 to $17.25 at December 31, 2019. The decrease was predominantly driven by the acquisition of Maison of $0.57 per share, a net loss of $0.51 per share, as noted above, and dividends declared of $0.09 per share.

Revenues

• Total revenue increased $12.6 million or 13.0%, to $109.0 million for the three months ended December 31, 2019, compared with $96.4 million for the three months ended December 31, 2018. The increase was primarily driven by $4.1 million of higher net premiums earned (as discussed further below) $7.1 million of additional investment gains in the current period as compared to the prior year as well as higher other income.
• Gross written premiums increased $22.5 million, or 17.6%, to $150.1 million in the quarter, compared with $127.6 million for the same three-month period last year. Gross premiums written increased due to the growth in homeowners non-Florida, including $6.6 million from Maison. Our non-Florida business continues to show exceptional growth year over year, especially in the state of Texas, and now with Maison’s book of business, will allow us to leverage our infrastructure and diversify insurance risk.
• Gross premiums earned increased $15.4 million, or 10.9%, to $157.2 million for the three months ended December 31, 2019, as compared to $141.8 million for the three months ended December 31, 2018. The higher gross premiums earned was driven by a 12.5% increase in earned premiums in Homeowners, which includes $7.9 million from Maison, partially offset by the results of our decision to exit the Automobile and commercial general liability lines.
• Ceded premiums increased $11.3 million, or 22.4%, to $62.0 million in the quarter, compared to $50.7 million the same three-month period last year. The increase was driven by $7.5 million higher excess of loss reinsurance spend in Homeowners, as this years’ program became effective July 1, 2019 at a higher rate on-line than the program in the previous year and $3.8 million from Maison. These items were slightly offset by lower ceded premiums in Automobile as we have exited that line of business.

Expenses

• Losses and loss adjustment expenses (“LAE”) increased $6.5 million, or 9.0%, to $78.8 million for the three months ended December 31, 2019, compared with $72.3 million for the same three-month period last year. The net loss ratio increased 3.4 percentage points, to 82.8% in the current quarter, compared to 79.4% in the fourth quarter of 2018. The higher ratio was primarily the result of the increase in reinsurance spend, which reduces the net earned premium denominator of the loss ratio calculation. The fourth quarter of 2019 included $12.0 million of adverse prior year reserve development, including $8.0 million from non-core lines, as we exit these lines, as well as $6.0 million of catastrophe net losses from Tropical Storms Olga and Nestor and other catastrophe weather events ($3.0 million of these losses relate to non-Florida, which is subject to a 50% profit-sharing agreement) and $5.0 million of reserve strengthening in the current accident year. After a complete analysis of recent emerging trends, we recorded additional losses in current and prior accident years as a result of higher than expected tail trends in weather-related claims and higher litigation claims driving higher than expected severity in homeowners Florida. The adverse experience in our non-core lines was driven by claim reopenings across the remaining active claims in Automobile and high severity claims as well as late reported new claims across several accident years in our commercial general liability line of business. Additionally, higher homeowners gross premiums earned across periods drove additional losses of approximately $7.0 million. These items were offset by $23.7 million of net loss from Hurricane Michael and $6.5 million of non-core losses in the fourth quarter of 2018.
• The net expense ratio increased 0.4 percentage points, to 39.3% in the current quarter, as compared to 38.9% in the fourth quarter of 2018. Commissions and other underwriting expenses increased $1.9 million, or 6.4%, to $31.5 million for the three months ended December 31, 2019, compared with $29.6 million for the three months ended December 31, 2018. The slight increase is made up of higher acquisition costs from overall higher premiums, which were partially offset by lower profit share costs because of higher catastrophe losses in FNIC’s non-Florida book of business, as referenced above.
• General and administrative expenses increased $0.1 million, or 0.5%, to $5.9 million for the three months ended December 31, 2019, compared with $5.8 million for the three months ended December 31, 2018. However, excluding deal costs, general and administrative expenses decreased $0.3 million to $5.2 million in the fourth quarter of 2019, compared with $5.5 million for the fourth quarter of 2018. The current quarter includes $0.7 million due diligence related costs related to the Maison acquisition, which was finalized in the quarter.
• Interest expense increased $0.9 million to $1.9 million for the three months ended December 31, 2019, compared with $1.0 million in the prior year period, due to the Company having a higher outstanding debt in the current quarter as compared to the same quarter in the prior year.

Line of Business Results

• Homeowners net loss for the current quarter was $2.3 million, which included 6.5% growth in net premiums earned compared to the fourth quarter of 2018. The combined ratio for the current quarter was 111.4%, which includes (all amounts on a pre-tax basis) $4.0 million, net, of prior year development, $5.0 million, net, of current year strengthening and $4.5 million of catastrophe losses, net of reinsurance and profit share recoveries.
• Automobile's net loss for the fourth quarter of 2019 was $1.8 million, as compared with a loss of $4.0 million in the prior year quarter, primarily driven by lower adverse prior year development, as we exit this line of business.
• Other’s net loss of $2.8 million in the fourth quarter of 2019, was driven by (all amounts on a pre-tax basis) $5.4 million of prior year adverse development in our commercial general liability book of business, and $1.9 million of interest expense, partially offset by net investment income of $3.9 million and investment gains of $2.0 million.

2019 vs. 2018 Full Year Results

• The Company reported net income of $1.0 million, or $0.08 per diluted share, for 2019 as compared to net income of $14.9 million, or $1.16 per diluted share, for 2018. The performance in 2019 is the result of higher losses from catastrophe events, adverse loss experience and higher reinsurance costs in the second half of 2019.
• The Company's adjusted operating income (loss) was $(0.4) million or $(0.03) per diluted share in 2019, as compared to adjusted operating income of $20.0 million or $1.55 per diluted share in 2018.

Stock Repurchase Program

• During the fourth quarter of 2019, the Company repurchased 238,000 shares of common stock for $3.9 million at an average price per share of $16.27. As of February 25, 2020, in the first quarter of 2020, the Company has repurchased 188,111 shares of common stock for $3.0 million at an average price per share of $15.74.

Subsequent Event/Premium Rate Activity

• The Company applied for and was approved by the Florida Office of Insurance regulation (“OIR”) for a state-wide average rate increase of 2.8% for Florida homeowners multiple-peril insurance policies, which is expected to become effective for new and renewal policies on March 15, 2020.
• The Company applied for and is awaiting approval by the Florida OIR for a state-wide average rate increase of 7.4% for Florida homeowners multiple-peril insurance policies, which, subject to approval, would be expected to become effective for new and renewal policies on June 15, 2020.
• There are other rate actions being taken across our books of business. For further detail and information related to these rate actions, please refer to the Form 8-K published with the U.S. Securities and Exchange Commission on February 19, 2020.

Conference Call Information

The Company will hold an investor conference call at 9:00 AM (ET) Thursday, February 27, 2020. The Company’s CEO, Michael Braun and its CFO, Ronald Jordan will discuss the financial results and review the outlook for the Company. Messrs. Braun and Jordan invite interested parties to participate in the conference call.

Listeners interested in participating in the Q&A session may access the conference call as follows:

Toll-Free Dial-in: (877) 303-6913

Conference ID: 4880838

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

http://www.fednat.com/investor-relations/investor-presentations/

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

FedNat is a regional, insurance holding company that controls substantially all aspects of the insurance underwriting, distribution and claims processes through our subsidiaries and contractual relationships with independent agents and general agents. The Company, through our wholly owned subsidiaries, is authorized to underwrite, and/or place homeowners multi-peril, federal flood and other lines of insurance in Florida and other states. We market, distribute and service our own and third-party insurers’ products and other services through a network of independent and general agents.

The Company’s supplemental line of business information is designed to afford users greater transparency into our results. 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 operated 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.

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 or other variations thereof, 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 compliance with 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 our subsidiaries’ operations 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.

Contacts

Michael H. Braun, CEO (954) 308-1322,
Ronald Jordan, CFO (954) 308-1363,
Bernard Kilkelly, Investor Relations (954) 308-1409,
or investorrelations@fednat.com

FEDNAT HOLDING COMPANY AND SUBSIDIARIES
Selected Financial Highlights
(Dollars in thousands, except per share data)
(Unaudited)

		As of or For the
		Three Months Ended														Twelve Months Ended
		2019					2018					% Change				2019					2018					% Change
Net Income (Loss) Attributable to Common Shareholders
Net income (loss):
Homeowners		$	(2,316	)			$	(1,354	)			71.0		%		$	5,665				$	22,175				(74.5	)	%
Automobile		(1,799		)			(3,980		)			(54.8	)	%		(4,040		)			(5,648		)			(28.5	)	%
Other		(2,778		)			(3,971		)			(30.0	)	%		(614		)			(1,599		)			(61.6	)	%
Consolidated		$	(6,893	)			$	(9,305	)			(25.9	)	%		$	1,011				$	14,928				(93.2	)	%
Adjusted operating income (loss):
Homeowners		$	(2,306	)			$	(1,049	)			119.8		%		$	5,912				$	23,663				(75.0	)	%
Automobile		(1,799		)			(3,979		)			(54.8	)	%		(4,035		)			(5,578		)			(27.7	)	%
Other		(3,820		)			91					NCM				(2,238		)			1,905					(217.5	)	%
Consolidated		$	(7,925	)			$	(4,937	)			60.5		%		$	(361	)			$	19,990				(101.8	)	%
Per Common Share
Net income (loss) - diluted		$	(0.51	)			$	(0.73	)			(29.4	)	%		$	0.08				$	1.16				(93.3	)	%
Adjusted operating income (loss) - diluted		(0.59		)			(0.39		)			53.0		%		(0.03		)			1.55					(101.8	)	%
Dividends declared		0.09					0.08					12.5		%		0.33					0.24					37.5		%
Book value		17.25					16.84					2.4		%		17.25					16.84					2.4		%
Book value, excluding AOCI		16.54					17.13					(3.5	)	%		16.54					17.13					(3.5	)	%
Return to Shareholders
Repurchases of common stock		$	3,867				$	—				NCM				$	3,867				$	5,061				(23.6	)	%
Dividends declared		1,176					1,043					12.8		%		4,309					3,120					38.1		%
		$	5,043				$	1,043				383.5		%		$	8,176				$	8,181				(0.1	)	%
Revenue
Total revenues		$	108,987				$	96,442				13.0		%		$	414,961				$	396,093				4.8		%
Adjusted operating revenues		106,953					101,502					5.4		%		407,877					400,237					1.9		%
Gross premiums written		150,074					127,613					17.6		%		610,608					567,764					7.5		%
Gross premiums earned		157,201					141,781					10.9		%		582,334					580,020					0.4		%
Net premiums earned		95,188					91,098					4.5		%		363,652					355,257					2.4		%
Ratios to Net Premiums Earned
Net loss ratio		82.8			%		79.4			%						75.1			%		64.3			%
Net expense ratio		39.3			%		38.9			%						35.9			%		40.3			%
Combined ratio		122.1			%		118.3			%						111.0			%		104.6			%
In-Force Homeowners Policies
Florida		241,000					247,000					(2.4	)	%		241,000					247,000					(2.4	)	%
Non-Florida		133,000					44,000					202.3		%		133,000					44,000					202.3		%
		374,000					291,000					28.5		%		374,000					291,000					28.5		%

FEDNAT HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statement of Operations
(In thousands, except per share data)
(Unaudited)

		Three Months Ended										Twelve Months Ended
		December 31,										December 31,
		2019					2018					2019					2018
Revenues:
Net premiums earned		$	95,188				$	91,098				$	363,652				$	355,257
Net investment income		3,864					3,402					15,901					12,460
Net realized and unrealized investment gains (losses)		2,034					(5,060		)			7,084					(4,144		)
Direct written policy fees		2,892					2,681					10,200					13,366
Other income		5,009					4,321					18,124					19,154
Total revenues		108,987					96,442					414,961					396,093
Costs and expenses:
Losses and loss adjustment expenses		78,796					72,318					273,080					228,416
Commissions and other underwriting expenses		31,539					29,642					107,189					121,109
General and administrative expenses		5,867					5,838					23,203					22,183
Interest expense		1,916					1,038					10,776					4,177
Total costs and expenses		118,118					108,836					414,248					375,885
Income (loss) before income taxes		(9,131		)			(12,394		)			713					20,208
Income tax expense (benefit)		(2,238		)			(3,089		)			(298		)			5,498
Net income (loss)		(6,893		)			(9,305		)			1,011					14,710
Net income (loss) attributable to non-controlling interest		—					—					—					(218		)
Net income (loss) attributable to FedNat Holding Company shareholders		$	(6,893	)			$	(9,305	)			$	1,011				$	14,928
Net Income (Loss) Per Common Share
Basic		$	(0.51	)			$	(0.73	)			$	0.08				$	1.17
Diluted		$	(0.51	)			$	(0.73	)			$	0.08				$	1.16
Weighted Average Number of Shares of Common Stock Outstanding
Basic		13,409					12,777					12,977					12,775
Diluted		13,409					12,777					13,023					12,867
Dividends Declared Per Common Share		$	0.09				$	0.08				$	0.33				$	0.24

FEDNAT HOLDING COMPANY AND SUBSIDIARIES
Selected Operating Metrics
(Unaudited)

		Three Months Ended										Twelve Months Ended
		December 31,										December 31,
		2019					2018					2019					2018
		(In thousands)
Gross premiums written:
Homeowners Florida		$	104,536				$	102,834				$	451,856				$	458,652
Homeowners non-Florida		42,163					21,941					142,485					81,037
Automobile		—					(25		)			(1		)			8,603
Commercial general liability		(24		)			(135		)			(145		)			5,384
Federal flood		3,399					2,998					16,413					14,088
Total gross premiums written		$	150,074				$	127,613				$	610,608				$	567,764

		Three Months Ended									Twelve Months Ended
		December 31,									December 31,
		2019					2018				2019				2018
		(In thousands)
Gross premiums earned:
Homeowners Florida		$	114,249				$	116,614			$	452,730			$	473,121
Homeowners non-Florida		38,908					19,499				112,836				66,571
Automobile		—					526				26				18,402
Commercial general liability		(24		)			1,650				1,669				8,794
Federal flood		4,068					3,492				15,073				13,132
Total gross premiums earned		$	157,201				$	141,781			$	582,334			$	580,020

		Three Months Ended									Twelve Months Ended
		December 31,									December 31,
		2019					2018				2019				2018
		(In thousands)
Net premiums earned:
Homeowners		$	95,212				$	89,390			$	362,183			$	342,247
Automobile		—					132				6				4,658
Commercial general liability		(24		)			1,576				1,463				8,352
Total net premiums earned		$	95,188				$	91,098			$	363,652			$	355,257

FEDNAT HOLDING COMPANY AND SUBSIDIARIES
Selected Operating Metrics (continued)
(Unaudited)

		Three Months Ended										Twelve Months Ended
		December 31,										December 31,
		2019					2018					2019					2018
		(In thousands)
Commissions and other underwriting expenses:
Homeowners Florida		$	13,152				$	13,897				$	52,962				$	56,693
All others		7,695					5,460					25,491					19,948
Ceding commissions		(3,235		)			(3,966		)			(12,128		)			(12,743		)
Total commissions		17,612					15,391					66,325					63,898
Automobile		—					93					3					4,322
Homeowners non-Florida		1,028					793					3,365					2,147
Total fees		1,028					886					3,368					6,469
Salaries and wages		3,024					2,997					12,114					14,279
Other underwriting expenses		9,875					10,368					25,382					36,463
Total commissions and other underwriting expenses		$	31,539				$	29,642				$	107,189				$	121,109

		Three Months Ended						Twelve Months Ended
		December 31,						December 31,
		2019			2018			2019			2018
Net loss ratio		82.8	%		79.4	%		75.1	%		64.3	%
Net expense ratio		39.3	%		38.9	%		35.9	%		40.3	%
Combined ratio		122.1	%		118.3	%		111.0	%		104.6	%
Gross loss ratio		100.8	%		277.6	%		120.5	%		149.8	%
Gross expense ratio		25.9	%		27.8	%		24.5	%		26.9	%

FEDNAT HOLDING COMPANY AND SUBSIDIARIES
Consolidated Balance Sheet
(Unaudited)

		December 31,
		2019				2018
ASSETS		(In thousands)
Investments:
Debt securities, available-for-sale, at fair value (amortized cost of $512,645 and $433,664, respectively)		$	526,265			$	428,641
Debt securities, held-to-maturity, at amortized cost		4,337				5,126
Equity securities, at fair value		20,039				17,758
Total investments		550,641				451,525
Cash and cash equivalents		133,361				64,423
Prepaid reinsurance premiums		145,659				108,577
Premiums receivable, net of allowance of $159 and $77, respectively		41,422				29,791
Reinsurance recoverable, net		209,615				211,424
Deferred acquisition costs and value of business acquired, net		56,136				39,436
Income taxes, net		2,552				5,220
Goodwill		10,997				—
Other assets		28,633				14,975
Total assets		$	1,179,016			$	925,371

LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Loss and loss adjustment expense reserves		$	324,362			$	296,230
Unearned premiums		360,870				281,992
Reinsurance payable		102,467				63,599
Long-term debt, net of deferred financing costs of $1,478 and $596, respectively		98,522				44,404
Deferred revenue		6,856				4,585
Other liabilities		37,246				19,302
Total liabilities		930,323				710,112
Shareholders' Equity
Preferred stock, $0.01 par value: 1,000,000 shares authorized		—				—
Common stock, $0.01 par value: 25,000,000 shares authorized; 14,414,821 and 12,784,444 shares issued and outstanding, respectively		144				128
Additional paid-in capital		167,677				141,128
Accumulated other comprehensive income (loss)		10,281				(3,750		)
Retained earnings		70,591				77,753
Total shareholders’ equity attributable to FedNat Holding Company shareholders		248,693				215,259
Non-controlling interest		—				—
Total shareholders’ equity		248,693				215,259
Total liabilities and shareholders' equity		$	1,179,016			$	925,371

FEDNAT HOLDING COMPANY AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
Statements of Operations and Operating Metrics by Line of Business
(Unaudited)

	Three Months Ended December 31,
	2019																				2018
	Homeowners					Automobile					Other					Consolidated					Homeowners					Automobile					Other					Consolidated
	(Dollars in thousands)
Revenues:
Gross premiums written	$	146,699				$	—				$	3,375				$	150,074				$	124,775				$	(25	)			$	2,863				$	127,613
Gross premiums earned	153,157					—					4,044					157,201					136,113					526					5,142					141,781
Ceded premiums	(57,945		)			—					(4,068		)			(62,013		)			(46,723		)			(394		)			(3,566		)			(50,683		)
Net premiums earned	95,212					—					(24		)			95,188					89,390					132					1,576					91,098
Net investment income	—					—					3,864					3,864					—					—					3,402					3,402
Net realized and unrealized investment gains (losses)	—					—					2,034					2,034					—					—					(5,060		)			(5,060		)
Direct written policy fees	2,833					—					59					2,892					2,506					93					82					2,681
Other income	4,570					1					438					5,009					3,461					64					796					4,321
Total revenues	102,615					1					6,371					108,987					95,357					289					796					96,442
Costs and expenses:
Losses and loss adjustment expenses	70,777					2,334					5,685					78,796					64,634					4,840					2,844					72,318
Commissions and other underwriting expenses	30,799					—					740					31,539					27,819					730					1,093					29,642
General and administrative expenses	4,498					50					1,319					5,867					4,718					50					1,070					5,838
Interest expense	—					—					1,916					1,916					—					—					1,038					1,038
Total costs and expenses	106,074					2,384					9,660					118,118					97,171					5,620					6,045					108,836
Income (loss) before income taxes	(3,459		)			(2,383		)			(3,289		)			(9,131		)			(1,814		)			(5,331		)			(5,249		)			(12,394		)
Income tax expense (benefit)	(1,143		)			(584		)			(511		)			(2,238		)			(460		)			(1,351		)			(1,278		)			(3,089		)
Net income (loss)	$	(2,316	)			$	(1,799	)			$	(2,778	)			$	(6,893	)			$	(1,354	)			$	(3,980	)			$	(3,971	)			$	(9,305	)
Ratios to net premiums earned:
Net loss ratio	74.3			%		NCM					NCM					82.8			%		72.3			%		NCM					180.5			%		79.4			%
Net expense ratio	37.1			%												39.3			%		36.4			%												38.9			%
Combined ratio	111.4			%												122.1			%		108.7			%												118.3			%

FEDNAT HOLDING COMPANY AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
Statements of Operations and Operating Metrics by Line of Business (continued)
(Unaudited)

	Year Ended December 31,
	2019																				2018
	Homeowners					Automobile					Other					Consolidated					Homeowners					Automobile					Other					Consolidated
	(Dollars in thousands)
Revenues:
Gross premiums written	$	594,341				$	(1	)			$	16,268				$	610,608				$	539,689				$	8,603				$	19,472				$	567,764
Gross premiums earned	565,566					26					16,742					582,334					539,692					18,402					21,926					580,020
Ceded premiums	(203,383		)			(20		)			(15,279		)			(218,682		)			(197,445		)			(13,744		)			(13,574		)			(224,763		)
Net premiums earned	362,183					6					1,463					363,652					342,247					4,658					8,352					355,257
Net investment income	—					—					15,901					15,901					—					—					12,460					12,460
Net realized and unrealized investment gains (losses)	—					—					7,084					7,084					—					—					(4,144		)			(4,144		)
Direct written policy fees	9,915					3					282					10,200					8,484					4,322					560					13,366
Other income	15,202					19					2,903					18,124					14,021					1,148					3,985					19,154
Total revenues	387,300					28					27,633					414,961					364,752					10,128					21,213					396,093
Costs and expenses:
Losses and loss adjustment expenses	257,297					5,128					10,655					273,080					206,062					11,617					10,737					228,416
Commissions and other underwriting expenses	104,071					51					3,067					107,189					111,103					5,751					4,255					121,109
General and administrative expenses	18,818					200					4,185					23,203					18,079					325					3,779					22,183
Interest expense	—					—					10,776					10,776					100					—					4,077					4,177
Total costs and expenses	380,186					5,379					28,683					414,248					335,344					17,693					22,848					375,885
Income (loss) before income taxes	7,114					(5,351		)			(1,050		)			713					29,408					(7,565		)			(1,635		)			20,208
Income tax expense (benefit)	1,449					(1,311		)			(436		)			(298		)			7,451					(1,917		)			(36		)			5,498
Net income (loss)	5,665					(4,040		)			(614		)			1,011					21,957					(5,648		)			(1,599		)			14,710
Net income (loss) attributable to non-controlling interest	—					—					—					—					(218		)			—					—					(218		)
Net income (loss) attributable to FNHC shareholders	$	5,665				$	(4,040	)			$	(614	)			$	1,011				$	22,175				$	(5,648	)			$	(1,599	)			$	14,928
Ratios to net premiums earned:
Net loss ratio	71.0			%		NCM					NCM					75.1			%		60.2			%		249.4			%		128.6			%		64.3			%
Net expense ratio	34.0			%												35.9			%		37.8			%												40.3			%
Combined ratio	105.0			%												111.0			%		98.0			%												104.6			%

FEDNAT HOLDING COMPANY AND SUBSIDIARIES
GAAP to Non-GAAP Reconciliations
(Dollars in thousands)
(Unaudited)

		As of or For the Three Months Ended December 31,
		2019																				2018
		Homeowners					Automobile					Other					Consolidated					Homeowners					Automobile					Other					Consolidated
Revenue
Total revenues		$	102,615				$	1				$	6,371				$	108,987				$	95,357				$	289				$	796				$	96,442
Less:
Net realized and unrealized investment gains (losses)		—					—					2,034					2,034					—					—					(5,060		)			(5,060		)
Adjusted operating revenues		$	102,615				$	1				$	4,337				$	106,953				$	95,357				$	289				$	5,856				$	101,502
Net Income (Loss)
Net income (loss)		$	(2,316	)			$	(1,799	)			$	(2,778	)			$	(6,893	)			$	(1,354	)			$	(3,980	)			$	(3,971	)			$	(9,305	)
Less:
Net realized and unrealized investment gains (losses)		—					—					1,535					1,535					—					—					(3,778		)			(3,778		)
Acquisition and other costs		—					—					(493		)			(493		)			(305		)			(1		)			(284		)			(590		)
Amortization of identifiable intangibles		(10		)			—					—					(10		)			—					—					—					—
Gain (loss) on early extinguishment of debt		—					—					—					—					—					—					—					—
Adjusted operating income (loss)		$	(2,306	)			$	(1,799	)			$	(3,820	)			$	(7,925	)			$	(1,049	)			$	(3,979	)			$	91				$	(4,937	)
Income tax rate assumed for reconciling items above		24.52			%		24.52			%		24.52			%		24.52			%		25.35			%		25.35			%		25.35			%		25.35			%
Per Common Share
Book value																	$	17.25																			$	16.84
Less:
AOCI																	0.71																				(0.29		)
Book value, excluding AOCI																	$	16.54																			$	17.13

FEDNAT HOLDING COMPANY AND SUBSIDIARIES
GAAP to Non-GAAP Reconciliations (continued)
(Dollars in thousands)
(Unaudited)

		As of or For the Year Ended
		2019																				2018
		Homeowners					Automobile					Other					Consolidated					Homeowners					Automobile					Other					Consolidated
Revenue
Total revenues		$	387,300				$	28				$	27,633				$	414,961				$	364,752				$	10,128				$	21,213				$	396,093
Less:
Net realized and unrealized investment gains (losses)		—					—					7,084					7,084					—					—					(4,144		)			(4,144		)
Adjusted operating revenues		$	387,300				$	28				$	20,549				$	407,877				$	364,752				$	10,128				$	25,357				$	400,237
Net Income (Loss)
Net income (loss)		$	5,665				$	(4,040	)			$	(614	)			$	1,011				$	22,175				$	(5,648	)			$	(1,599	)			$	14,928
Less:
Net realized and unrealized investment gains (losses)		—					—					5,347					5,347					—					—					(3,094		)			(3,094		)
Acquisition and other costs		(237		)			(5		)			(1,025		)			(1,267		)			(1,488		)			(70		)			(410		)			(1,968		)
Amortization of identifiable intangibles		(10		)			—					—					(10		)			—					—					—					—
Gain (loss) on early extinguishment of debt		—					—					(2,698		)			(2,698		)			—					—					—					—
Adjusted operating income (loss)		$	5,912				$	(4,035	)			$	(2,238	)			$	(361	)			$	23,663				$	(5,578	)			$	1,905				$	19,990
Income tax rate assumed for reconciling items above		24.52			%		24.52			%		24.52			%		24.52			%		25.35			%		25.35			%		25.35			%		25.35			%
Per Common Share
Book value																	$	17.25																			$	16.84
Less:
AOCI																	0.71																				(0.29		)
Book value, excluding AOCI																	$	16.54																			$	17.13