Federated National Holding Company Announces a 50% Dividend Increase and Reports 2012 Fourth Quarter and Full Year Financial Results

Wed Mar 13, 2013 4:00pm EDT

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SUNRISE, Fla., March 13, 2013 (GLOBE NEWSWIRE) -- Federated National Holding Company (Nasdaq:FNHC)
(the "Company") a Florida-based provider of insurance, today reported results for the quarter and
year ended December 31, 2012 (see attached tables).

2012 full year highlights include:

* Net income of $4.3 million compared with a loss of $0.4 million in 2011
* Gross written premiums increased by $21.2 million, or 21.6%, compared with the same twelve
months the prior year
* Net premiums earned increased by $10.9 million, or 22.3%, compared with the same twelve months
the prior year
* Growth of unearned premiums at year-end by $11.1 million, or 23.1%, compared to December 31,
2011
* Book value increased to $8.26 at December 31, 2012, compared with $7.32 at December 31, 2011, a
13% improvement
* Homeowners' policy count grew from 43,793 at the start of 2012 to 61,102 at December 31, 2012,
or a 40% increase
* Continued improvement in underwriting results; loss ratio improved to 50.9% for the full year
2012, compared with 63.7% for the full year 2011

Mr. Michael H. Braun, the Company's Chief Executive Officer and President, said, "2012 marked a
turning point for our company; the actions we have taken over the past few years have built a
solid foundation for continued growth. This foundation includes four key pillars: disciplined
underwriting, risk management, expense control and product distribution. Disciplined underwriting
has resulted in an overall improvement of our loss ratios by 12.8%, and by applying solid risk
management principles we have geographically diversified our book of business resulting in a more
efficient and cost effective reinsurance structure. While total revenues grew by 14%, operating,
underwriting and salary expense as a percentage of revenue decreased 3%; as a management team we
strive to minimize our operating costs while not adversely impacting the underlying business.
During 2012, we also improved our product distribution channels, a testament to the positive
reputation we have fostered in the insurance community, which enabled us to grow our policy count
by approximately 40%.

Our annual results reflect focused execution on these four pillars and have poised us to
accelerate this trajectory in 2013 and beyond. Finally, I am pleased to announce that the Board
has approved a dividend increase of 50%. The dividend of $.03 per share will be paid on June 3,
2013 to shareholders on record as of May 6, 2013. This action reflects both our commitment to
returning capital to our shareholders and the Board's confidence in our business plan."

Fourth Quarter and Year-end 2012 Financial Review

* For the three months ended December 31, 2012, the Company reported net income of $1.1 million,
or $0.13 per share on 7.97 million average undiluted shares outstanding and 8.10 million diluted
shares outstanding, compared with net income of $2.0 million, or $0.25 per share on 7.95 million
average undiluted and diluted shares outstanding in the same three-month period last year. The
fourth quarter was adversely impacted by an assessment by the Florida Insurance Guaranty
Association of $813,759. This resulted in an after tax charge of approximately $520,806 or $.07
per share.
* For the twelve months ended December 31, 2012, the Company reported net income of $4.3 million,
or $0.53 per share on 7.95 million average undiluted shares outstanding and 8.02 million diluted
shares outstanding, compared with a net loss of $0.4 million, or $0.05 per share on 7.95 million
average undiluted and diluted shares in the same twelve-month period last year.   
* Gross premiums written increased $4.3 million, or 16.9%, to $29.8 million for the three months
ended December 31, 2012, compared with $25.5 million for the same three-month period last year.
Homeowners' gross written premium increased $4.0 million, or 18.3%, to $25.9 million for the three
months ended December 31, 2012, compared with $21.9 million for the same three-month period last
year.
* Gross premiums written increased $21.2 million, or 21.6%, to $119.5 million for the twelve
months ended December 31, 2012, compared with $98.3 million for the same twelve-month period last
year. Homeowners' gross written premium increased $21.4 million, or 26.7%, to $101.8 million for
the twelve months ended December 31, 2012, compared with $80.4 million for the same twelve-month
period last year.
* Unearned premiums increased $11.1 million, or 23.1%, to $59.0 million as of December 31, 2012,
compared with $47.9 million as of December 31, 2011.
* Net premiums earned increased $4.0 million, or 30.6%, to $16.8 million for the three months
ended December 31, 2012, compared with $12.8 million for the same three-month period last year.
Net premiums earned increased $10.9 million, or 22.3%, to $59.4 million for the twelve months
ended December 31, 2012, compared with $48.5 million for the same twelve-month period last year.
* Total revenues increased $3.1 million, or 18.9%, to $19.8 million for the three months ended
December 31, 2012, compared with $16.7 million for the same three-month period last year. Total
revenues increased $8.4 million, or 14.1%, to $68.6 million for the twelve months ended December
31, 2012, compared with $60.2 million for the same twelve-month period last year.

Conference Call Information

The Company will hold an investor conference call at 4:30 PM (ET) today, March 13, 2013. The
Company's CEO and its CFO, Peter J. Prygelski, III, will discuss the financial results and review
the outlook for the Company. Messrs. Braun and Prygelski 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

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://fednat.com/investors/conference-calls/
http://www.globenewswire.com/newsroom/ctr?d=10025027&l=11&u=http%3A%2F%2Ffednat.com%2Finvestors%2Fconference-calls%2F


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, through its subsidiaries, underwrites homeowners' property and casualty, commercial
general liability, commercial residential property, flood, personal automobile, commercial
automobile, inland marine, workers' compensation and personal umbrella insurance. The Company is
an admitted carrier for these lines in the state of Florida. The Company is also licensed as an
admitted carrier in the states of Alabama, Georgia, Louisiana and Texas to offer coverage for more
than 300 classes of commercial general liability business, including special events. The Company
is approved to operate as a surplus lines/non-admitted carrier in the states of Arkansas,
Kentucky, Maryland, Missouri, Nevada, Oklahoma, South Carolina, Tennessee, and Virginia and offers
the same general liability products. The Company is licensed and has the facilities to market and
underwrite other insurance carriers' lines of business, as well as to process and adjust claims
for third party insurance carriers.

Forward-Looking Statements /Safe Harbor Statements

Safe harbor statements 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, uncertainties related to estimates,
assumptions and projections generally; risks related to the nature of the Company's business; the
adequacy of its liability for loss and loss adjustment expense; claims experience; weather
conditions (including the severity and frequency of storms, hurricanes, tornadoes and hail) and
other catastrophe losses; changes in loss trends; court decisions and trends in litigation,
ability to obtain regulatory approval applications to for requested rate increases or to
underwrite in additional jurisdictions, and the timing thereof; 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; 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                                                                                                    
 Consolidated Statements of Operations                                                                                                 
 (Unaudited)                                                                                                                           
                                                                                                                                   
                                                                           Three Months Ended           Twelve Months Ended          
                                                                           Dec 31,                      Dec 31,                      
                                                                           2012          2011          2012          2011          
 Revenue:                                                                                                                          
 Gross premiums written                                                    $29,776,835   $25,469,319   $119,459,385  $98,269,445   
 Gross premiums ceded                                                      (1,767,073)   (1,621,031)   (51,084,807)  (46,292,959)  
                                                                                                                                   
 Net premiums written                                                      28,009,762    23,848,288    68,374,578    51,976,486    
                                                                                                                                   
 (Decrease) increase in prepaid reinsurance premiums                       (11,158,959)  (10,022,359)  2,058,326     (2,655,724)   
 Increase in unearned premiums                                             (91,194)      (997,994)     (11,073,786)  (796,990)     
 Net change in prepaid reinsurance premiums and unearned premiums          (11,250,153)  (11,020,353)  (9,015,460)   (3,452,714)   
                                                                                                                                   
 Net premiums earned                                                       16,759,609    12,827,935    59,359,118    48,523,772    
 Commission income                                                         275,155       134,616       1,376,528     993,874       
 Finance revenue                                                           132,965       106,634       495,711       517,322       
 Managing general agent fees                                               477,395       381,943       2,006,792     1,583,264     
 Net investment income                                                     969,254       1,025,074     3,818,597     4,078,822     
 Net realized investment gains                                             1,155,802     1,672,755     1,072,454     2,724,841     
 Regulatory assessments recovered                                          --            --            --            108,826       
 Other income                                                              49,876        519,791       517,455       1,632,367     
                                                                                                                                   
 Total revenue                                                             19,820,056    16,668,748    68,646,655    60,163,088    
                                                                                                                                   
 Expenses:                                                                                                                         
 Loss and loss adjustment expenses                                         9,295,632     6,779,817     30,208,509    30,895,954    
 Operating and underwriting expenses                                       3,167,506     2,387,800     9,996,502     9,916,578     
 Salaries and wages                                                        2,153,829     1,941,375     8,438,593     8,003,821     
 Policy acquisition costs, net of amortization                             3,542,669     2,813,025     13,254,854    12,347,235    
                                                                                                                                   
 Total expenses                                                            18,159,636    13,922,017    61,898,458    61,163,588    
                                                                                                                                   
 Income (loss) before provision for income tax expense (benefit)           1,660,420     2,746,731     6,748,197     (1,000,500)   
 Provision for income tax expense (benefit)                                591,535       792,931       2,435,197     (570,379)     
 Net income (loss)                                                         $1,068,885    $1,953,800    $4,313,000    ($430,121)    
 Basic net income (loss) per share                                         $0.13         $0.25         $0.53         ($0.05)       
 Fully diluted net income (loss) per share                                 $0.13         $0.25         $0.53         ($0.05)       
                                                                                                                                   
 Weighted average number of common shares outstanding                      7,965,103     7,946,384     7,951,906     7,946,384     
                                                                                                                                   
 Weighted average number of common shares outstanding (assuming dilution)  8,095,922     7,946,384     8,016,110     7,946,384     
                                                                                                                                   
 Dividends paid per share                                                  $0.02         $0.00         $0.02         $0.00         


                                                                                                  
 FEDERATED NATIONAL HOLDING COMPANY                                                                   
 Other Selected Data                                                                                  
 (Unaudited)                                                                                          
                                                                                                  
 Balance Sheet                                                                                    
                                          Period Ended                                             
                                          12/31/12      12/31/11                                  
 Total Cash and Investments               $151,237,429  $144,671,932                              
 Total Assets                             $185,887,693  $179,980,481                              
 Unpaid Loss and Loss Adjustment Expense  $49,907,759   $59,982,564                               
 Total Liabilities                        $119,983,192  $121,835,657                              
 Total Shareholders' Equity               $65,904,501   $58,144,824                               
 Common Stock Outstanding                 7,979,488     7,946,384                                 
 Book Value Per Share                     $8.26         $7.32                                     
                                                                                                  
                                                                                                  
 Premium Breakout                                                                                 
                                          3 Months Ended               12 Months Ended              
 Line of Business                         12/31/12      12/31/11      12/31/12      12/31/11      
                                          (Dollars in thousands)       (Dollars in thousands)       
 Homeowners'                              $25,900       $21,885       $101,832      $80,402       
 Commercial General Liability             2,008         2,158         9,338         10,125        
 Other                                    1,869         1,426         8,289         7,742         
                                                                                                  
 Gross Written Premiums                   $29,777       $25,469       $119,459      $98,269       
                                                                                                  
                                                                                                  
 Loss Ratios                                                                                      
                                          3 Months Ended               12 Months Ended              
 Line of Business                         12/31/12      12/31/11      12/31/12      12/31/11      
 Homeowners'                              50.3%         56.7%         51.9%         57.8%         
 Commercial General Liability             70.3%         10.5%         32.9%         60.1%         
 Automobile                               160.2%        167.2%        175.2%        181.7%        
 All Lines                                55.5%         52.9%         50.9%         63.7%         
                                                                                                  
 The loss ratio is calculated as losses and loss adjustment expense divided by net premiums earned for each line of business in the given measured period. 


The loss ratio is calculated as losses and loss adjustment expense divided by net premiums earned
for each line of business in the given measured period.

CONTACT: Michael H. Braun, CEO (954) 308-1322
         or Peter J. Prygelski, CFO (954) 308-1252
         Federated National Holding Company