Press Release

1347 Property Insurance Holdings, Inc. Reports Second Quarter 2020 Financial Results

Company Release - 8/14/2020 8:45 AM ET

TAMPA, Fla.--(BUSINESS WIRE)-- 1347 Property Insurance Holdings, Inc. (Nasdaq: PIH) (the “Company”), a holding company which is implementing business plans to operate as a diversified holding company of reinsurance and investment management businesses, today announced the filing of its financial results for its second fiscal quarter ended June 30, 2020 on Form 10-Q, which can be found at the SEC’s website at www.sec.gov, or at PIH’s corporate website: www.1347pih.com.

Operating Results and Other Key Developments

Net loss attributable to common shareholders was $2.9 million for the quarter, or $0.48 per diluted share. Major items contributing to the net loss included:

  • Non-cash losses associated with the change in fair value of the Company’s investment in the common stock of FedNat Holding Company (Nasdaq: FNHC) (“FedNat”) of $726 thousand.
  • The Company’s charge of $520 thousand due to an allowance against its deferred tax assets.

During the second quarter, the Company announced the appointment of Larry Swets as Interim Chief Executive Officer, effective as of June 17, 2020. Mr. Swets will be responsible for leading the Company throughout the formation, launch, and initial execution of its future business strategies.

  • Cash and cash equivalents of $25.6 million.
  • Equity securities, consisting of 1,773,102 shares of common stock of FedNat, with a cost basis of $25.5 million. As of June 30, 2020, the equity securities were valued at $19.6 million, compared with $20.4 million as of March 31, 2020, as the share price declined modestly during the period.
  • Unrealized loss on investments of approximately $726 thousand for the second quarter, which was partially offset by dividends received of approximately $159 thousand.
  • Book value per share of approximately $5.59.

As of June 30, 2020, key balance sheet items included:

As noted in the Company’s Form 10-K for the fiscal year ended December 31, 2019; subsequent 10-Q filings; and press release issued on March 30, 2020(1347 Property Insurance Holdings, Inc. Reports Fiscal Year 2019 Financial Results; Provides Updates on Business Strategy and Corporate Name Change), the Company is proceeding with its business strategy to operate as a diversified holding company of reinsurance and investment management businesses. Subject to the approval of the Company’s stockholders at the Company’s 2020 Annual Meeting, the Company intends to change its name to Fundamental Global Financial Corporation (“FGFC”) to align with its future business plans. FGFC plans to carry out its business through three primary avenues: insurance, asset management, and real estate. The Company also intends to change the ticker symbols for its common stock and 8.00% cumulative preferred stock, Series A, and has reserved with Nasdaq the ticker symbols “FGI” and “FGIPP,” respectively.

Subsequent Events

As of August 11, 2020, the value of the Company’s investment in FedNat common stock was $18.1 million, resulting in a pre-tax, unrealized holding loss, of $1.5 million for the period beginning July 1 and ending August 11, 2020.

About 1347 Property Insurance Holdings, Inc.

1347 Property Insurance Holdings, Inc. is implementing business plans to operate as a diversified insurance, reinsurance and investment management holding company and is incorporated in Delaware. The Company endeavors to make opportunistic and value-oriented investments in insurance, reinsurance and related businesses. The Company’s principal business operations are conducted through its subsidiaries and affiliates. The Company also provides investment management services to unaffiliated companies.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements are therefore entitled to the protection of the safe harbor provisions of these laws. These statements may be identified by the use of forward-looking terminology such as “anticipate,” “believe,” “budget,” “can,” “contemplate,” “continue,” “could,” “envision,” “endeavor,” “estimate,” “expect,” “evaluate,” “forecast,” “goal,” “guidance,” “indicate,” “intend,” “likely,” “may,” “might,” “outlook,” “plan,” “possibly,” “potential,” “predict,” “probable,” “probably,” “pro-forma,” “project,” “seek,” “should,” “target,” “view,” “will,” “would,” “will be,” “will continue,” “will likely result” or the negative thereof or other variations thereon or comparable terminology. In particular, discussions and statements regarding the Company’s expectations as to its financial results for the quarter ended June 30, 2020, and the Company’s future business plans and initiatives are forward-looking in nature.

We have based these forward-looking statements on our current expectations, assumptions, estimates, and projections. While we believe these to be reasonable, such forward-looking statements are only predictions and involve a number of risks and uncertainties, many of which are beyond our control. These and other important factors may cause our actual results, performance, or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements, and may impact our ability to implement and execute on our future business plans and initiatives. You should be aware that many of the risks listed below were, and are expected to continue to be, exacerbated by the COVID-19 pandemic. Management cautions that the forward-looking statements in this press release are not guarantees of future performance, and we cannot assume that such statements will be realized or the forward-looking events and circumstances will occur. Factors that might cause such a difference include, without limitation: risks associated with our limited business operations since the closing of the sale of all of the issued and outstanding equity of three of the Company’s wholly-owned insurance subsidiaries to FedNat Holding Company (the “Asset Sale”); risks associated with our inability to identify and realize business opportunities, and the undertaking of any new such opportunities, following the Asset Sale; our ability to spend or invest the net proceeds from the Asset Sale in a manner that yields a favorable return; general conditions in the global economy, including the impact of health and safety concerns from the current COVID-19 pandemic and the impact of governmental measures taken in response thereto; the uncertainty and difficulty in predicting the ultimate impact of the COVID-19 pandemic on our business; our lack of operating history or established reputation in the reinsurance industry; our inability to obtain or maintain the necessary approvals to operate reinsurance subsidiaries; risks associated with operating in the reinsurance industry, including inadequately priced insured risks, credit risk associated with brokers we may do business with, and inadequate retrocessional coverage; our inability to execute on our investment and investment management strategy, including our strategy to invest in real estate assets; potential loss of value of investments; risk of becoming an investment company; fluctuations in our short-term results as we implement our new business strategy; risks of being unable to attract and retain qualified management and personnel to implement and execute on our business and growth strategy; failure of our information technology systems, data breaches and cyber-attacks; our ability to establish and maintain an effective system of internal controls; our limited operating history as a publicly traded company; the requirements of being a public company and losing our status as a smaller reporting company or becoming an accelerated filer; any potential conflicts of interest between us and our controlling stockholders and different interests of controlling stockholders; potential conflicts of interest between us and our directors and executive officers; the impact of the COVID-19 pandemic on the business of FedNat Holding Company; continued volatility or further decline in the value of the shares of FedNat Holding Company common stock received by us as consideration in the Asset Sale or limitations and restrictions with respect to our ownership of such shares; risks of being a minority stockholder of FedNat Holding Company; and risks of our inability to continue to satisfy the continued listing standards of the Nasdaq following completion of the Asset Sale.

Our expectations and future plans and initiatives may not be realized. If one of these risks or uncertainties materialize, or if our underlying assumptions prove incorrect, actual results may vary materially from those expected, estimated or projected. You are cautioned not to place undue reliance on forward-looking statements. The forward-looking statements included in this press release are made only as of the date hereof and do not necessarily reflect our outlook at any other point in time. We do not undertake and specifically decline any obligation to update any such statements or to publicly announce the results of any revisions to any such statements to reflect new information, future events or developments.

1347 PROPERTY INSURANCE HOLDINGS, INC.

Consolidated Statements of Operations and Comprehensive Income (Loss)

($ in thousands, except share and per share data)

(Unaudited)

 

Three months ended
June 30,

 

Six months ended

June 30,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

Revenue:

 

 

 

 

 

 

 

Net investment income (loss)

$

(571)

 

$

277

 

$

(9,277)

 

$

734

Other income

 

25

 

 

 

 

54

 

 

Total revenue

 

(546)

 

 

277

 

 

(9,223)

 

 

734

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

General and administrative expenses

 

1,505

 

 

688

 

 

2,310

 

 

1,641

Total expenses

 

1,505

 

 

688

 

 

2,310

 

 

1,641

 

 

 

 

 

 

 

 

Loss from continuing operations before income tax benefit

 

(2,051)

 

 

(411)

 

 

(11,533)

 

 

(907)

Income tax expense (benefit)

 

520

 

 

(83)

 

 

(665)

 

 

(150)

Net loss from continuing operations

 

(2,571)

 

 

(328)

 

 

(10,868)

 

 

(757)

Net loss from discontinued operations, net of income taxes

 

 

 

(4,204)

 

 

 

 

(3,677)

Net loss

$

(2,571)

 

$

(4,532)

 

$

(10,868)

 

$

(4,434)

 

 

 

 

 

 

 

 

Dividends declared on Series A Preferred Shares

 

350

 

 

350

 

 

700

 

 

700

Loss attributable to common shareholders

$

(2,921)

 

$

(4,882)

 

$

(11,568)

 

$

(5,134)

 

 

 

 

 

 

 

 

Basic and diluted earnings (loss) per common share:

 

 

 

 

 

 

 

Continuing operations

$

(0.48)

 

$

(0.11)

 

$

(1.91)

 

$

(0.24)

Discontinued operations

 

 

 

(0.70)

 

 

 

 

(0.61)

Loss per share attributable to common shareholders

$

(0.48)

 

$

(0.81)

 

$

(1.91)

 

$

(0.85)

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

Basic and diluted

 

6,068,106

 

 

6,012,764

 

 

6,067,975

 

 

6,012,764

 

 

 

 

 

 

 

 

Consolidated Statement of Comprehensive Income (Loss)

 

 

 

 

 

 

 

 

Net loss

$

(2,571)

 

$

(4,532)

 

$

(10,868)

 

$

(4,434)

Unrealized gains on investments available for sale, net of income taxes

 

 

 

964

 

 

 

 

1,875

Comprehensive loss

$

(2,571)

 

$

(3,568)

 

$

(10,868)

 

$

(2,559)

 

 

 

 

 

 

 

 

1347 PROPERTY INSURANCE HOLDINGS, INC.

Consolidated Balance Sheets

($ in thousands, except share and per share data)

 

 

June 30, 2020
(unaudited)

 

December 31,
2019

ASSETS

 

 

 

 

Equity securities, at fair value (cost basis of $25,500 as of both periods)

 

$

19,628

 

$

29,487

Limited liability investments

 

 

4,009

 

 

4,005

Cash and cash equivalents

 

 

25,638

 

 

28,509

Current income taxes recoverable

 

 

1,824

 

 

1,265

Other assets

 

 

722

 

 

188

Total assets

 

$

51,821

 

$

63,454

 

 

 

 

 

LIABILITIES

 

 

 

 

Accounts payable

 

$

294

 

$

400

Deferred tax liability, net

 

 

 

 

106

Other liabilities

 

 

76

 

 

33

Total liabilities

 

$

370

 

$

539

 

 

 

 

 

SHAREHOLDERS’ EQUITY

 

 

 

 

Series A Preferred Shares, $25.00 par value, 1,000,000 shares authorized, 700,000 shares

issued and outstanding as of both periods

 

$

17,500

 

$

17,500

Common stock, $0.001 par value; 10,000,000 shares authorized; 6,219,465 and 6,217,307

shares issued as of June 30, 2020 and December 31, 2019, respectively, and 6,068,106

and 6,065,948 shares outstanding as of June 30, 2020 and December 31, 2019,

respectively

 

 

6

 

 

6

Additional paid-in capital

 

 

46,858

 

 

46,754

Accumulated deficit

 

 

(11,904)

 

 

(336)

 

 

 

52,460

 

 

63,924

Less: treasury stock at cost; 151,359 shares for both periods

 

 

(1,009)

 

 

(1,009)

Total shareholders’ equity

 

 

51,451

 

 

62,915

Total liabilities and shareholders’ equity

 

$

51,821

 

$

63,454

 

 

 

 

 

 

1347 Property Insurance Holdings, Inc.
Kyle Cerminara
Chairman of the Board of Directors
(704) 323-6851 / kyle@fundamentalglobal.com

-OR-

INVESTOR RELATIONS:
The Equity Group Inc.
Jeremy Hellman, CFA
Vice President
(212) 836-9626 / jhellman@equityny.com

Source: 1347 Property Insurance Holdings, Inc.